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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 |
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TEXAS
|
|
74-2088619
|
(State or other jurisdiction
of incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
|
|
|
1250 N.E. Loop 410, Suite 1000
San Antonio, Texas
|
|
78209
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Registrant’s telephone number, including area code: (855) 884-0575
|
Securities registered pursuant to Section 12(b) of the Act
|
||
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Large accelerated filer
|
o
|
Accelerated filer
|
x
|
|
|
|
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
x
|
|
|
|
|
Emerging Growth Company
|
o
|
|
|
|
Page
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
(unaudited)
|
|
(audited)
|
||||
|
(in thousands, except share data)
|
||||||
ASSETS
|
|
||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
26,955
|
|
|
$
|
53,566
|
|
Restricted cash
|
998
|
|
|
998
|
|
||
Receivables:
|
|
|
|
||||
Trade, net of allowance for doubtful accounts
|
81,039
|
|
|
76,924
|
|
||
Unbilled receivables
|
20,906
|
|
|
24,822
|
|
||
Insurance recoveries
|
23,186
|
|
|
23,656
|
|
||
Other receivables
|
7,421
|
|
|
5,479
|
|
||
Inventory
|
22,086
|
|
|
18,898
|
|
||
Assets held for sale
|
6,233
|
|
|
3,582
|
|
||
Prepaid expenses and other current assets
|
6,991
|
|
|
7,109
|
|
||
Total current assets
|
195,815
|
|
|
215,034
|
|
||
Property and equipment, at cost
|
1,118,488
|
|
|
1,118,215
|
|
||
Less accumulated depreciation
|
633,233
|
|
|
593,357
|
|
||
Net property and equipment
|
485,255
|
|
|
524,858
|
|
||
Operating lease assets
|
7,692
|
|
|
—
|
|
||
Other noncurrent assets
|
931
|
|
|
1,658
|
|
||
Total assets
|
$
|
689,693
|
|
|
$
|
741,550
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
32,127
|
|
|
$
|
34,134
|
|
Deferred revenues
|
1,616
|
|
|
1,722
|
|
||
Accrued expenses:
|
|
|
|
||||
Employee compensation and related costs
|
22,489
|
|
|
24,598
|
|
||
Insurance claims and settlements
|
22,991
|
|
|
23,593
|
|
||
Insurance premiums and deductibles
|
6,036
|
|
|
5,482
|
|
||
Interest
|
1,008
|
|
|
6,148
|
|
||
Other
|
12,035
|
|
|
9,091
|
|
||
Total current liabilities
|
98,302
|
|
|
104,768
|
|
||
Long-term debt, less unamortized discount and debt issuance costs
|
466,887
|
|
|
464,552
|
|
||
Noncurrent operating lease liabilities
|
6,189
|
|
|
—
|
|
||
Deferred income taxes
|
4,708
|
|
|
3,688
|
|
||
Other noncurrent liabilities
|
459
|
|
|
3,484
|
|
||
Total liabilities
|
576,545
|
|
|
576,492
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, 10,000,000 shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock $.10 par value; 200,000,000 shares authorized; 79,202,216 and 78,214,550 shares outstanding at September 30, 2019 and December 31, 2018, respectively
|
8,008
|
|
|
7,900
|
|
||
Additional paid-in capital
|
552,453
|
|
|
550,548
|
|
||
Treasury stock, at cost; 877,047 and 789,532 shares at September 30, 2019 and December 31, 2018, respectively
|
(5,090
|
)
|
|
(4,965
|
)
|
||
Accumulated deficit
|
(442,223
|
)
|
|
(388,425
|
)
|
||
Total shareholders’ equity
|
113,148
|
|
|
165,058
|
|
||
Total liabilities and shareholders’ equity
|
$
|
689,693
|
|
|
$
|
741,550
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
146,398
|
|
|
$
|
149,332
|
|
|
$
|
445,809
|
|
|
$
|
448,592
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Operating costs
|
108,059
|
|
|
108,961
|
|
|
332,614
|
|
|
325,924
|
|
||||
Depreciation
|
22,924
|
|
|
23,501
|
|
|
68,428
|
|
|
70,535
|
|
||||
General and administrative
|
30,485
|
|
|
14,043
|
|
|
68,271
|
|
|
58,066
|
|
||||
Bad debt expense (recovery), net
|
196
|
|
|
111
|
|
|
(90
|
)
|
|
(311
|
)
|
||||
Impairment
|
—
|
|
|
239
|
|
|
1,378
|
|
|
2,607
|
|
||||
Loss (gain) on dispositions of property and equipment, net
|
17
|
|
|
(1,861
|
)
|
|
(2,184
|
)
|
|
(2,922
|
)
|
||||
Total costs and expenses
|
161,681
|
|
|
144,994
|
|
|
468,417
|
|
|
453,899
|
|
||||
Income (loss) from operations
|
(15,283
|
)
|
|
4,338
|
|
|
(22,608
|
)
|
|
(5,307
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense, net of interest capitalized
|
(10,013
|
)
|
|
(9,811
|
)
|
|
(30,003
|
)
|
|
(28,966
|
)
|
||||
Other income (expense), net
|
(588
|
)
|
|
498
|
|
|
445
|
|
|
1,046
|
|
||||
Total other expense, net
|
(10,601
|
)
|
|
(9,313
|
)
|
|
(29,558
|
)
|
|
(27,920
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss before income taxes
|
(25,884
|
)
|
|
(4,975
|
)
|
|
(52,166
|
)
|
|
(33,227
|
)
|
||||
Income tax expense
|
(132
|
)
|
|
(258
|
)
|
|
(1,909
|
)
|
|
(1,297
|
)
|
||||
Net loss
|
$
|
(26,016
|
)
|
|
$
|
(5,233
|
)
|
|
$
|
(54,075
|
)
|
|
$
|
(34,524
|
)
|
|
|
|
|
|
|
|
|
||||||||
Loss per common share - Basic
|
$
|
(0.33
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.44
|
)
|
|
|
|
|
|
|
|
|
||||||||
Loss per common share - Diluted
|
$
|
(0.33
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.44
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding—Basic
|
78,473
|
|
|
78,136
|
|
|
78,405
|
|
|
77,897
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding—Diluted
|
78,473
|
|
|
78,136
|
|
|
78,405
|
|
|
77,897
|
|
|
As of and for the nine months ended September 30, 2019
|
||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Additional Paid In Capital
|
|
Accumulated
Deficit
|
|
Total Shareholders’ Equity
|
||||||||||||||||
Common
|
|
Treasury
|
Common
|
|
Treasury
|
||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
Balance as of December 31, 2018
|
79,005
|
|
|
(790
|
)
|
|
$
|
7,900
|
|
|
$
|
(4,965
|
)
|
|
$
|
550,548
|
|
|
$
|
(388,425
|
)
|
|
$
|
165,058
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,115
|
)
|
|
(15,115
|
)
|
|||||
Purchase of treasury stock
|
—
|
|
|
(84
|
)
|
|
—
|
|
|
(120
|
)
|
|
—
|
|
|
—
|
|
|
(120
|
)
|
|||||
Cumulative-effect adjustment due to adoption of ASC Topic 842
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
277
|
|
|
277
|
|
|||||
Issuance of restricted stock
|
326
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
867
|
|
|
—
|
|
|
867
|
|
|||||
Balance as of March 31, 2019
|
79,331
|
|
|
(874
|
)
|
|
$
|
7,933
|
|
|
$
|
(5,085
|
)
|
|
$
|
551,382
|
|
|
$
|
(403,263
|
)
|
|
$
|
150,967
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,944
|
)
|
|
(12,944
|
)
|
|||||
Purchase of treasury stock
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||
Issuance of restricted stock
|
667
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
327
|
|
|
—
|
|
|
327
|
|
|||||
Balance as of June 30, 2019
|
79,998
|
|
|
(877
|
)
|
|
$
|
8,000
|
|
|
$
|
(5,090
|
)
|
|
$
|
551,642
|
|
|
$
|
(416,207
|
)
|
|
$
|
138,345
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,016
|
)
|
|
(26,016
|
)
|
|||||
Issuance of restricted stock
|
81
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
819
|
|
|
—
|
|
|
819
|
|
|||||
Balance as of September 30, 2019
|
80,079
|
|
|
(877
|
)
|
|
$
|
8,008
|
|
|
$
|
(5,090
|
)
|
|
$
|
552,453
|
|
|
$
|
(442,223
|
)
|
|
$
|
113,148
|
|
|
As of and for the nine months ended September 30, 2018
|
||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Additional Paid In Capital
|
|
Accumulated
Deficit
|
|
Total Shareholders’ Equity
|
||||||||||||||||
Common
|
|
Treasury
|
Common
|
|
Treasury
|
||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
Balance as of December 31, 2017
|
78,350
|
|
|
(631
|
)
|
|
$
|
7,835
|
|
|
$
|
(4,416
|
)
|
|
$
|
546,158
|
|
|
$
|
(339,481
|
)
|
|
$
|
210,096
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,139
|
)
|
|
(11,139
|
)
|
|||||
Purchase of treasury stock
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
(96
|
)
|
|
—
|
|
|
—
|
|
|
(96
|
)
|
|||||
Cumulative-effect adjustment due to adoption of ASC Topic 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
67
|
|
|||||
Issuance of restricted stock
|
105
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,259
|
|
|
—
|
|
|
1,259
|
|
|||||
Balance as of March 31, 2018
|
78,455
|
|
|
(659
|
)
|
|
$
|
7,845
|
|
|
$
|
(4,512
|
)
|
|
$
|
547,407
|
|
|
$
|
(350,553
|
)
|
|
$
|
200,187
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,152
|
)
|
|
(18,152
|
)
|
|||||
Exercise of options
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|||||
Purchase of treasury stock
|
—
|
|
|
(131
|
)
|
|
—
|
|
|
(453
|
)
|
|
—
|
|
|
—
|
|
|
(453
|
)
|
|||||
Issuance of restricted stock
|
547
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
(55
|
)
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,097
|
|
|
—
|
|
|
1,097
|
|
|||||
Balance as of June 30, 2018
|
79,005
|
|
|
(790
|
)
|
|
$
|
7,900
|
|
|
$
|
(4,965
|
)
|
|
$
|
548,461
|
|
|
$
|
(368,705
|
)
|
|
$
|
182,691
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,233
|
)
|
|
(5,233
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,039
|
|
|
—
|
|
|
1,039
|
|
|||||
Balance as of September 30, 2018
|
79,005
|
|
|
(790
|
)
|
|
$
|
7,900
|
|
|
$
|
(4,965
|
)
|
|
$
|
549,500
|
|
|
$
|
(373,938
|
)
|
|
$
|
178,497
|
|
|
Nine months ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(54,075
|
)
|
|
$
|
(34,524
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
68,428
|
|
|
70,535
|
|
||
Allowance for doubtful accounts, net of recoveries
|
(90
|
)
|
|
(311
|
)
|
||
Write-off of obsolete inventory
|
502
|
|
|
—
|
|
||
Gain on dispositions of property and equipment, net
|
(2,184
|
)
|
|
(2,922
|
)
|
||
Stock-based compensation expense
|
2,013
|
|
|
3,395
|
|
||
Phantom stock compensation expense
|
(99
|
)
|
|
2,808
|
|
||
Amortization of debt issuance costs and discount
|
2,335
|
|
|
2,153
|
|
||
Impairment
|
1,378
|
|
|
2,607
|
|
||
Deferred income taxes
|
1,020
|
|
|
189
|
|
||
Change in other noncurrent assets
|
3,125
|
|
|
541
|
|
||
Change in other noncurrent liabilities
|
(4,163
|
)
|
|
(735
|
)
|
||
Changes in current assets and liabilities:
|
|
|
|
||||
Receivables
|
(2,126
|
)
|
|
(16,549
|
)
|
||
Inventory
|
(3,652
|
)
|
|
(4,934
|
)
|
||
Prepaid expenses and other current assets
|
30
|
|
|
329
|
|
||
Accounts payable
|
2,346
|
|
|
1,527
|
|
||
Deferred revenues
|
(106
|
)
|
|
(173
|
)
|
||
Accrued expenses
|
(6,044
|
)
|
|
(2,446
|
)
|
||
Net cash provided by operating activities
|
8,638
|
|
|
21,490
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(40,543
|
)
|
|
(48,778
|
)
|
||
Proceeds from sale of property and equipment
|
4,778
|
|
|
4,665
|
|
||
Proceeds from insurance recoveries
|
641
|
|
|
980
|
|
||
Net cash used in investing activities
|
(35,124
|
)
|
|
(43,133
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from exercise of options
|
—
|
|
|
12
|
|
||
Purchase of treasury stock
|
(125
|
)
|
|
(549
|
)
|
||
Net cash used in financing activities
|
(125
|
)
|
|
(537
|
)
|
||
|
|
|
|
||||
Net decrease in cash, cash equivalents and restricted cash
|
(26,611
|
)
|
|
(22,180
|
)
|
||
Beginning cash, cash equivalents and restricted cash
|
54,564
|
|
|
75,648
|
|
||
Ending cash, cash equivalents and restricted cash
|
$
|
27,953
|
|
|
$
|
53,468
|
|
|
|
|
|
||||
Supplementary disclosure:
|
|
|
|
||||
Interest paid
|
$
|
32,773
|
|
|
$
|
31,872
|
|
Income tax paid
|
$
|
3,103
|
|
|
$
|
2,739
|
|
Noncash investing and financing activity:
|
|
|
|
||||
Change in capital expenditure accruals
|
$
|
(4,267
|
)
|
|
$
|
3,564
|
|
|
Multi-well, Pad-capable
|
||||||
|
AC rigs
|
|
SCR rigs
|
|
Total
|
||
Domestic drilling
|
17
|
|
|
—
|
|
|
17
|
International drilling
|
—
|
|
|
8
|
|
|
8
|
|
|
|
|
|
25
|
|
550 HP
|
|
600 HP
|
|
Total
|
Well servicing rigs, by horsepower (HP) rating
|
112
|
|
12
|
|
124
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
Wireline services units
|
|
93
|
|||
Coiled tubing services units
|
|
9
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Current deferred revenues
|
$
|
1,616
|
|
|
$
|
1,722
|
|
Current deferred costs
|
2,418
|
|
|
1,543
|
|
||
|
|
|
|
||||
Noncurrent deferred revenues
|
$
|
77
|
|
|
$
|
437
|
|
Noncurrent deferred costs
|
130
|
|
|
679
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Amortization of deferred revenues
|
$
|
1,219
|
|
|
$
|
720
|
|
|
$
|
3,453
|
|
|
$
|
1,762
|
|
Amortization of deferred costs
|
1,293
|
|
|
1,100
|
|
|
3,389
|
|
|
2,050
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||
|
2019
|
|
2019
|
||||
Long-term operating lease expense
|
$
|
1,272
|
|
|
$
|
2,943
|
|
Short-term operating lease expense
|
$
|
3,754
|
|
|
$
|
11,490
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Within 1 year
|
$
|
2,499
|
|
|
$
|
3,318
|
|
In the second year
|
1,970
|
|
|
2,032
|
|
||
In the third year
|
1,624
|
|
|
1,721
|
|
||
In the fourth year
|
1,235
|
|
|
1,407
|
|
||
In the fifth year
|
909
|
|
|
1,110
|
|
||
Thereafter
|
1,041
|
|
|
1,738
|
|
||
Total undiscounted lease obligations
|
$
|
9,278
|
|
|
$
|
11,326
|
|
Impact of discounting
|
(909
|
)
|
|
|
|||
Discounted value of operating lease obligations
|
$
|
8,369
|
|
|
|
||
|
|
|
|
||||
Current operating lease liabilities
|
$
|
2,180
|
|
|
|
||
Noncurrent operating lease liabilities
|
6,189
|
|
|
|
|||
|
$
|
8,369
|
|
|
|
|
September 30, 2019
|
|
Weighted-average remaining lease term (in years)
|
4.7
|
|
Weighted-average discount rate
|
4.5
|
%
|
5.
|
Valuation Allowances on Deferred Tax Assets
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Domestic net operating loss carryforward
|
$
|
101,332
|
|
|
$
|
96,777
|
|
Foreign net operating loss carryforward
|
6,931
|
|
|
9,582
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
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%)
|
(2,077
|
)
|
|
(2,668
|
)
|
||
Less unamortized debt issuance costs
|
(6,036
|
)
|
|
(7,780
|
)
|
||
|
$
|
466,887
|
|
|
$
|
464,552
|
|
•
|
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.
|
7.
|
Fair Value of Financial Instruments
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
Hierarchy Level
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Senior notes
|
2
|
|
$
|
297,628
|
|
|
$
|
114,000
|
|
|
$
|
296,988
|
|
|
$
|
186,750
|
|
Senior secured term loan
|
3
|
|
169,259
|
|
|
$
|
166,250
|
|
|
167,564
|
|
|
175,875
|
|
|||
|
|
|
$
|
466,887
|
|
|
$
|
280,250
|
|
|
$
|
464,552
|
|
|
$
|
362,625
|
|
8.
|
Earnings (Loss) Per Common Share
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator (both basic and diluted):
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(26,016
|
)
|
|
$
|
(5,233
|
)
|
|
$
|
(54,075
|
)
|
|
$
|
(34,524
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares (denominator for basic earnings (loss) per share)
|
78,473
|
|
|
78,136
|
|
|
78,405
|
|
|
77,897
|
|
||||
Dilutive effect of outstanding stock options, restricted stock and restricted stock unit awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Denominator for diluted earnings (loss) per share
|
78,473
|
|
|
78,136
|
|
|
78,405
|
|
|
77,897
|
|
||||
Loss per common share - Basic
|
$
|
(0.33
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.44
|
)
|
Loss per common share - Diluted
|
$
|
(0.33
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.44
|
)
|
Potentially dilutive securities excluded as anti-dilutive
|
5,577
|
|
|
3,964
|
|
|
4,962
|
|
|
4,895
|
|
9.
|
Stock-Based Compensation Plans
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Stock option awards
|
$
|
31
|
|
|
$
|
101
|
|
|
$
|
105
|
|
|
$
|
342
|
|
Restricted stock awards
|
135
|
|
|
116
|
|
|
370
|
|
|
344
|
|
||||
Restricted stock unit awards
|
653
|
|
|
822
|
|
|
1,538
|
|
|
2,709
|
|
||||
|
$
|
819
|
|
|
$
|
1,039
|
|
|
$
|
2,013
|
|
|
$
|
3,395
|
|
Phantom stock unit awards
|
$
|
(150
|
)
|
|
$
|
(3,722
|
)
|
|
$
|
(99
|
)
|
|
$
|
2,808
|
|
|
Nine months ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Restricted Stock:
|
|
|
|
||||
Restricted stock awards granted
|
729,112
|
|
|
78,632
|
|
||
Weighted-average grant-date fair value (per share)
|
$
|
0.73
|
|
|
$
|
5.85
|
|
Time-based RSUs:
|
|
|
|
||||
Time-based RSUs granted
|
870,648
|
|
|
788,377
|
|
||
Weighted-average grant-date fair value (per unit)
|
$
|
1.38
|
|
|
$
|
3.85
|
|
|
Nine months ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Performance-based:
|
|
|
|
||||
Phantom stock unit awards granted
|
2,467,776
|
|
|
1,188,216
|
|
||
Weighted-average grant-date fair value (per unit)
|
$
|
1.10
|
|
|
$
|
3.06
|
|
Maximum cash value per unit (three times the grant date stock price)
|
$
|
4.62
|
|
|
$
|
9.66
|
|
Time-based:
|
|
|
|
||||
Phantom stock unit awards granted
|
810,648
|
|
|
—
|
|
||
Weighted-average grant-date fair value (per unit)
|
$
|
1.17
|
|
|
$
|
—
|
|
Maximum cash value per unit (three times the grant date stock price)
|
$
|
4.62
|
|
|
$
|
—
|
|
10.
|
Segment Information
|
|
As of and for the three months ended September 30,
|
|
As of and for the nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Domestic drilling
|
$
|
38,168
|
|
|
$
|
36,586
|
|
|
$
|
115,829
|
|
|
$
|
108,146
|
|
International drilling
|
21,617
|
|
|
23,131
|
|
|
68,682
|
|
|
62,515
|
|
||||
Drilling services
|
59,785
|
|
|
59,717
|
|
|
184,511
|
|
|
170,661
|
|
||||
Well servicing
|
30,293
|
|
|
24,369
|
|
|
86,053
|
|
|
68,645
|
|
||||
Wireline services
|
43,874
|
|
|
52,654
|
|
|
137,134
|
|
|
171,392
|
|
||||
Coiled tubing services
|
12,446
|
|
|
12,592
|
|
|
38,111
|
|
|
37,894
|
|
||||
Production services
|
86,613
|
|
|
89,615
|
|
|
261,298
|
|
|
277,931
|
|
||||
Consolidated revenues
|
$
|
146,398
|
|
|
$
|
149,332
|
|
|
$
|
445,809
|
|
|
$
|
448,592
|
|
|
|
|
|
|
|
|
|
||||||||
Operating costs:
|
|
|
|
|
|
|
|
||||||||
Domestic drilling
|
$
|
21,931
|
|
|
$
|
21,650
|
|
|
$
|
69,098
|
|
|
$
|
64,297
|
|
International drilling
|
15,844
|
|
|
19,013
|
|
|
50,884
|
|
|
49,038
|
|
||||
Drilling services
|
37,775
|
|
|
40,663
|
|
|
119,982
|
|
|
113,335
|
|
||||
Well servicing
|
21,414
|
|
|
17,193
|
|
|
61,348
|
|
|
49,443
|
|
||||
Wireline services
|
38,349
|
|
|
40,840
|
|
|
119,500
|
|
|
130,042
|
|
||||
Coiled tubing services
|
10,521
|
|
|
10,265
|
|
|
31,784
|
|
|
33,104
|
|
||||
Production services
|
70,284
|
|
|
68,298
|
|
|
212,632
|
|
|
212,589
|
|
||||
Consolidated operating costs
|
$
|
108,059
|
|
|
$
|
108,961
|
|
|
$
|
332,614
|
|
|
$
|
325,924
|
|
|
|
|
|
|
|
|
|
||||||||
Gross margin:
|
|
|
|
|
|
|
|
||||||||
Domestic drilling
|
$
|
16,237
|
|
|
$
|
14,936
|
|
|
$
|
46,731
|
|
|
$
|
43,849
|
|
International drilling
|
5,773
|
|
|
4,118
|
|
|
17,798
|
|
|
13,477
|
|
||||
Drilling services
|
22,010
|
|
|
19,054
|
|
|
64,529
|
|
|
57,326
|
|
||||
Well servicing
|
8,879
|
|
|
7,176
|
|
|
24,705
|
|
|
19,202
|
|
||||
Wireline services
|
5,525
|
|
|
11,814
|
|
|
17,634
|
|
|
41,350
|
|
||||
Coiled tubing services
|
1,925
|
|
|
2,327
|
|
|
6,327
|
|
|
4,790
|
|
||||
Production services
|
16,329
|
|
|
21,317
|
|
|
48,666
|
|
|
65,342
|
|
||||
Consolidated gross margin
|
$
|
38,339
|
|
|
$
|
40,371
|
|
|
$
|
113,195
|
|
|
$
|
122,668
|
|
|
|
|
|
|
|
|
|
||||||||
Identifiable Assets:
|
|
|
|
|
|
|
|
||||||||
Domestic drilling (1)
|
$
|
354,534
|
|
|
$
|
375,982
|
|
|
$
|
354,534
|
|
|
$
|
375,982
|
|
International drilling (1) (2)
|
47,320
|
|
|
41,807
|
|
|
47,320
|
|
|
41,807
|
|
||||
Drilling services
|
401,854
|
|
|
417,789
|
|
|
401,854
|
|
|
417,789
|
|
||||
Well servicing
|
118,686
|
|
|
123,933
|
|
|
118,686
|
|
|
123,933
|
|
||||
Wireline services
|
80,054
|
|
|
96,585
|
|
|
80,054
|
|
|
96,585
|
|
||||
Coiled tubing services
|
34,339
|
|
|
34,866
|
|
|
34,339
|
|
|
34,866
|
|
||||
Production services
|
233,079
|
|
|
255,384
|
|
|
233,079
|
|
|
255,384
|
|
||||
Corporate
|
54,760
|
|
|
79,702
|
|
|
54,760
|
|
|
79,702
|
|
||||
Consolidated identifiable assets
|
$
|
689,693
|
|
|
$
|
752,875
|
|
|
$
|
689,693
|
|
|
$
|
752,875
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation:
|
|
|
|
|
|
|
|
||||||||
Domestic drilling
|
$
|
10,864
|
|
|
$
|
10,358
|
|
|
$
|
32,297
|
|
|
$
|
30,946
|
|
International drilling
|
1,512
|
|
|
1,463
|
|
|
4,228
|
|
|
4,211
|
|
||||
Drilling services
|
12,376
|
|
|
11,821
|
|
|
36,525
|
|
|
35,157
|
|
||||
Well servicing
|
5,132
|
|
|
4,903
|
|
|
14,956
|
|
|
14,688
|
|
||||
Wireline services
|
3,537
|
|
|
4,518
|
|
|
11,519
|
|
|
13,727
|
|
||||
Coiled tubing services
|
1,660
|
|
|
1,991
|
|
|
4,719
|
|
|
6,137
|
|
||||
Production services
|
10,329
|
|
|
11,412
|
|
|
31,194
|
|
|
34,552
|
|
||||
Corporate
|
219
|
|
|
268
|
|
|
709
|
|
|
826
|
|
||||
Consolidated depreciation
|
$
|
22,924
|
|
|
$
|
23,501
|
|
|
$
|
68,428
|
|
|
$
|
70,535
|
|
|
|
|
|
|
|
|
|
|
As of and for the three months ended September 30,
|
|
As of and for the nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Capital Expenditures:
|
|
|
|
|
|
|
|
||||||||
Domestic drilling
|
$
|
2,777
|
|
|
$
|
6,274
|
|
|
$
|
14,344
|
|
|
$
|
13,768
|
|
International drilling
|
1,162
|
|
|
264
|
|
|
3,444
|
|
|
4,177
|
|
||||
Drilling services
|
3,939
|
|
|
6,538
|
|
|
17,788
|
|
|
17,945
|
|
||||
Well servicing
|
2,146
|
|
|
2,989
|
|
|
8,182
|
|
|
8,441
|
|
||||
Wireline services
|
775
|
|
|
3,973
|
|
|
5,198
|
|
|
12,563
|
|
||||
Coiled tubing services
|
1,756
|
|
|
4,498
|
|
|
4,567
|
|
|
12,479
|
|
||||
Production services
|
4,677
|
|
|
11,460
|
|
|
17,947
|
|
|
33,483
|
|
||||
Corporate
|
44
|
|
|
419
|
|
|
541
|
|
|
914
|
|
||||
Consolidated capital expenditures
|
$
|
8,660
|
|
|
$
|
18,417
|
|
|
$
|
36,276
|
|
|
$
|
52,342
|
|
(1)
|
Identifiable assets for our drilling segments include the impact of a $37.5 million and $39.4 million intercompany balance, as of September 30, 2019 and 2018, 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.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Consolidated gross margin
|
$
|
38,339
|
|
|
$
|
40,371
|
|
|
$
|
113,195
|
|
|
$
|
122,668
|
|
Depreciation
|
(22,924
|
)
|
|
(23,501
|
)
|
|
(68,428
|
)
|
|
(70,535
|
)
|
||||
General and administrative
|
(30,485
|
)
|
|
(14,043
|
)
|
|
(68,271
|
)
|
|
(58,066
|
)
|
||||
Bad debt (expense) recovery, net
|
(196
|
)
|
|
(111
|
)
|
|
90
|
|
|
311
|
|
||||
Impairment
|
—
|
|
|
(239
|
)
|
|
(1,378
|
)
|
|
(2,607
|
)
|
||||
Gain (loss) on dispositions of property and equipment, net
|
(17
|
)
|
|
1,861
|
|
|
2,184
|
|
|
2,922
|
|
||||
Income (loss) from operations
|
$
|
(15,283
|
)
|
|
$
|
4,338
|
|
|
$
|
(22,608
|
)
|
|
$
|
(5,307
|
)
|
11.
|
Commitments and Contingencies
|
12.
|
Guarantor/Non-Guarantor Condensed Consolidating Financial Statements
|
|
September 30, 2019
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
22,195
|
|
|
$
|
—
|
|
|
$
|
4,760
|
|
|
$
|
—
|
|
|
$
|
26,955
|
|
Restricted cash
|
998
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
998
|
|
|||||
Receivables, net of allowance
|
258
|
|
|
96,704
|
|
|
34,979
|
|
|
611
|
|
|
132,552
|
|
|||||
Intercompany receivable (payable)
|
(28,105
|
)
|
|
65,374
|
|
|
(37,269
|
)
|
|
—
|
|
|
—
|
|
|||||
Inventory
|
—
|
|
|
10,103
|
|
|
11,983
|
|
|
—
|
|
|
22,086
|
|
|||||
Assets held for sale
|
—
|
|
|
6,233
|
|
|
—
|
|
|
—
|
|
|
6,233
|
|
|||||
Prepaid expenses and other current assets
|
2,497
|
|
|
2,994
|
|
|
1,500
|
|
|
—
|
|
|
6,991
|
|
|||||
Total current assets
|
(2,157
|
)
|
|
181,408
|
|
|
15,953
|
|
|
611
|
|
|
195,815
|
|
|||||
Net property and equipment
|
1,853
|
|
|
456,106
|
|
|
27,296
|
|
|
—
|
|
|
485,255
|
|
|||||
Investment in subsidiaries
|
545,141
|
|
|
32,086
|
|
|
—
|
|
|
(577,227
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
44,277
|
|
|
—
|
|
|
—
|
|
|
(44,277
|
)
|
|
—
|
|
|||||
Operating lease assets
|
3,234
|
|
|
3,852
|
|
|
606
|
|
|
—
|
|
|
7,692
|
|
|||||
Other noncurrent assets
|
512
|
|
|
415
|
|
|
4
|
|
|
—
|
|
|
931
|
|
|||||
Total assets
|
$
|
592,860
|
|
|
$
|
673,867
|
|
|
$
|
43,859
|
|
|
$
|
(620,893
|
)
|
|
$
|
689,693
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
1,441
|
|
|
$
|
26,000
|
|
|
$
|
4,686
|
|
|
$
|
—
|
|
|
$
|
32,127
|
|
Deferred revenues
|
—
|
|
|
424
|
|
|
1,192
|
|
|
—
|
|
|
1,616
|
|
|||||
Accrued expenses
|
8,342
|
|
|
50,166
|
|
|
5,440
|
|
|
611
|
|
|
64,559
|
|
|||||
Total current liabilities
|
9,783
|
|
|
76,590
|
|
|
11,318
|
|
|
611
|
|
|
98,302
|
|
|||||
Long-term debt, less unamortized discount and debt issuance costs
|
466,887
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
466,887
|
|
|||||
Noncurrent operating lease liabilities
|
2,859
|
|
|
2,875
|
|
|
455
|
|
|
—
|
|
|
6,189
|
|
|||||
Deferred income taxes
|
—
|
|
|
48,985
|
|
|
—
|
|
|
(44,277
|
)
|
|
4,708
|
|
|||||
Other noncurrent liabilities
|
183
|
|
|
276
|
|
|
—
|
|
|
—
|
|
|
459
|
|
|||||
Total liabilities
|
479,712
|
|
|
128,726
|
|
|
11,773
|
|
|
(43,666
|
)
|
|
576,545
|
|
|||||
Total shareholders’ equity
|
113,148
|
|
|
545,141
|
|
|
32,086
|
|
|
(577,227
|
)
|
|
113,148
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
592,860
|
|
|
$
|
673,867
|
|
|
$
|
43,859
|
|
|
$
|
(620,893
|
)
|
|
$
|
689,693
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
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
|
|
|
Three months ended September 30, 2019
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
124,781
|
|
|
$
|
21,617
|
|
|
$
|
—
|
|
|
$
|
146,398
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating costs
|
—
|
|
|
92,216
|
|
|
15,843
|
|
|
—
|
|
|
108,059
|
|
|||||
Depreciation
|
219
|
|
|
21,193
|
|
|
1,512
|
|
|
—
|
|
|
22,924
|
|
|||||
General and administrative
|
15,979
|
|
|
13,640
|
|
|
1,001
|
|
|
(135
|
)
|
|
30,485
|
|
|||||
Intercompany leasing
|
—
|
|
|
(1,215
|
)
|
|
1,215
|
|
|
—
|
|
|
—
|
|
|||||
Bad debt expense, net of recovery
|
—
|
|
|
196
|
|
|
—
|
|
|
—
|
|
|
196
|
|
|||||
Loss (gain) on dispositions of property and equipment, net
|
—
|
|
|
28
|
|
|
(11
|
)
|
|
—
|
|
|
17
|
|
|||||
Total costs and expenses
|
16,198
|
|
|
126,058
|
|
|
19,560
|
|
|
(135
|
)
|
|
161,681
|
|
|||||
Income (loss) from operations
|
(16,198
|
)
|
|
(1,277
|
)
|
|
2,057
|
|
|
135
|
|
|
(15,283
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
(640
|
)
|
|
1,164
|
|
|
—
|
|
|
(524
|
)
|
|
—
|
|
|||||
Interest expense
|
(10,020
|
)
|
|
3
|
|
|
4
|
|
|
—
|
|
|
(10,013
|
)
|
|||||
Other income (expense)
|
86
|
|
|
236
|
|
|
(775
|
)
|
|
(135
|
)
|
|
(588
|
)
|
|||||
Total other income (expense), net
|
(10,574
|
)
|
|
1,403
|
|
|
(771
|
)
|
|
(659
|
)
|
|
(10,601
|
)
|
|||||
Income (loss) before income taxes
|
(26,772
|
)
|
|
126
|
|
|
1,286
|
|
|
(524
|
)
|
|
(25,884
|
)
|
|||||
Income tax (expense) benefit 1
|
756
|
|
|
(766
|
)
|
|
(122
|
)
|
|
—
|
|
|
(132
|
)
|
|||||
Net income (loss)
|
$
|
(26,016
|
)
|
|
$
|
(640
|
)
|
|
$
|
1,164
|
|
|
$
|
(524
|
)
|
|
$
|
(26,016
|
)
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Three months ended September 30, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
126,202
|
|
|
$
|
23,130
|
|
|
$
|
—
|
|
|
$
|
149,332
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating costs
|
—
|
|
|
89,950
|
|
|
19,011
|
|
|
—
|
|
|
108,961
|
|
|||||
Depreciation
|
269
|
|
|
21,769
|
|
|
1,463
|
|
|
—
|
|
|
23,501
|
|
|||||
General and administrative
|
2,260
|
|
|
11,152
|
|
|
736
|
|
|
(105
|
)
|
|
14,043
|
|
|||||
Intercompany leasing
|
—
|
|
|
(1,215
|
)
|
|
1,215
|
|
|
—
|
|
|
—
|
|
|||||
Bad debt expense, net of recovery
|
—
|
|
|
111
|
|
|
—
|
|
|
—
|
|
|
111
|
|
|||||
Impairment
|
—
|
|
|
239
|
|
|
—
|
|
|
—
|
|
|
239
|
|
|||||
Gain on dispositions of property and equipment, net
|
—
|
|
|
(1,856
|
)
|
|
(5
|
)
|
|
—
|
|
|
(1,861
|
)
|
|||||
Total costs and expenses
|
2,529
|
|
|
120,150
|
|
|
22,420
|
|
|
(105
|
)
|
|
144,994
|
|
|||||
Income (loss) from operations
|
(2,529
|
)
|
|
6,052
|
|
|
710
|
|
|
105
|
|
|
4,338
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
5,011
|
|
|
618
|
|
|
—
|
|
|
(5,629
|
)
|
|
—
|
|
|||||
Interest expense
|
(9,802
|
)
|
|
(12
|
)
|
|
3
|
|
|
—
|
|
|
(9,811
|
)
|
|||||
Other income
|
244
|
|
|
222
|
|
|
137
|
|
|
(105
|
)
|
|
498
|
|
|||||
Total other income (expense), net
|
(4,547
|
)
|
|
828
|
|
|
140
|
|
|
(5,734
|
)
|
|
(9,313
|
)
|
|||||
Income (loss) before income taxes
|
(7,076
|
)
|
|
6,880
|
|
|
850
|
|
|
(5,629
|
)
|
|
(4,975
|
)
|
|||||
Income tax (expense) benefit 1
|
1,843
|
|
|
(1,869
|
)
|
|
(232
|
)
|
|
—
|
|
|
(258
|
)
|
|||||
Net income (loss)
|
$
|
(5,233
|
)
|
|
$
|
5,011
|
|
|
$
|
618
|
|
|
$
|
(5,629
|
)
|
|
$
|
(5,233
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
1 The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.
|
|
Nine months ended September 30, 2019
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
377,127
|
|
|
$
|
68,682
|
|
|
$
|
—
|
|
|
$
|
445,809
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating costs
|
—
|
|
|
281,735
|
|
|
50,879
|
|
|
—
|
|
|
332,614
|
|
|||||
Depreciation
|
709
|
|
|
63,491
|
|
|
4,228
|
|
|
—
|
|
|
68,428
|
|
|||||
General and administrative
|
30,882
|
|
|
35,665
|
|
|
2,129
|
|
|
(405
|
)
|
|
68,271
|
|
|||||
Intercompany leasing
|
—
|
|
|
(3,645
|
)
|
|
3,645
|
|
|
—
|
|
|
—
|
|
|||||
Bad debt recovery, net of expense
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|||||
Impairment
|
—
|
|
|
1,378
|
|
|
—
|
|
|
—
|
|
|
1,378
|
|
|||||
Gain on dispositions of property and equipment, net
|
—
|
|
|
(2,077
|
)
|
|
(107
|
)
|
|
—
|
|
|
(2,184
|
)
|
|||||
Total costs and expenses
|
31,591
|
|
|
376,457
|
|
|
60,774
|
|
|
(405
|
)
|
|
468,417
|
|
|||||
Income (loss) from operations
|
(31,591
|
)
|
|
670
|
|
|
7,908
|
|
|
405
|
|
|
(22,608
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
5,433
|
|
|
7,059
|
|
|
—
|
|
|
(12,492
|
)
|
|
—
|
|
|||||
Interest expense
|
(29,953
|
)
|
|
(12
|
)
|
|
(38
|
)
|
|
—
|
|
|
(30,003
|
)
|
|||||
Other income (expense)
|
383
|
|
|
903
|
|
|
(436
|
)
|
|
(405
|
)
|
|
445
|
|
|||||
Total other income (expense), net
|
(24,137
|
)
|
|
7,950
|
|
|
(474
|
)
|
|
(12,897
|
)
|
|
(29,558
|
)
|
|||||
Income (loss) before income taxes
|
(55,728
|
)
|
|
8,620
|
|
|
7,434
|
|
|
(12,492
|
)
|
|
(52,166
|
)
|
|||||
Income tax (expense) benefit 1
|
1,653
|
|
|
(3,187
|
)
|
|
(375
|
)
|
|
—
|
|
|
(1,909
|
)
|
|||||
Net income (loss)
|
$
|
(54,075
|
)
|
|
$
|
5,433
|
|
|
$
|
7,059
|
|
|
$
|
(12,492
|
)
|
|
$
|
(54,075
|
)
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Nine months ended September 30, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
386,077
|
|
|
$
|
62,515
|
|
|
$
|
—
|
|
|
$
|
448,592
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating costs
|
—
|
|
|
276,893
|
|
|
49,031
|
|
|
—
|
|
|
325,924
|
|
|||||
Depreciation
|
826
|
|
|
65,498
|
|
|
4,211
|
|
|
—
|
|
|
70,535
|
|
|||||
General and administrative
|
18,628
|
|
|
37,781
|
|
|
1,972
|
|
|
(315
|
)
|
|
58,066
|
|
|||||
Intercompany leasing
|
—
|
|
|
(3,645
|
)
|
|
3,645
|
|
|
—
|
|
|
—
|
|
|||||
Bad debt recovery, net of expense
|
—
|
|
|
(311
|
)
|
|
—
|
|
|
—
|
|
|
(311
|
)
|
|||||
Impairment
|
—
|
|
|
2,607
|
|
|
—
|
|
|
—
|
|
|
2,607
|
|
|||||
Gain on dispositions of property and equipment, net
|
—
|
|
|
(2,890
|
)
|
|
(32
|
)
|
|
—
|
|
|
(2,922
|
)
|
|||||
Total costs and expenses
|
19,454
|
|
|
375,933
|
|
|
58,827
|
|
|
(315
|
)
|
|
453,899
|
|
|||||
Income (loss) from operations
|
(19,454
|
)
|
|
10,144
|
|
|
3,688
|
|
|
315
|
|
|
(5,307
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
10,081
|
|
|
3,305
|
|
|
—
|
|
|
(13,386
|
)
|
|
—
|
|
|||||
Interest expense
|
(28,963
|
)
|
|
(14
|
)
|
|
11
|
|
|
—
|
|
|
(28,966
|
)
|
|||||
Other income
|
405
|
|
|
664
|
|
|
292
|
|
|
(315
|
)
|
|
1,046
|
|
|||||
Total other income (expense), net
|
(18,477
|
)
|
|
3,955
|
|
|
303
|
|
|
(13,701
|
)
|
|
(27,920
|
)
|
|||||
Income (loss) before income taxes
|
(37,931
|
)
|
|
14,099
|
|
|
3,991
|
|
|
(13,386
|
)
|
|
(33,227
|
)
|
|||||
Income tax (expense) benefit 1
|
3,407
|
|
|
(4,018
|
)
|
|
(686
|
)
|
|
—
|
|
|
(1,297
|
)
|
|||||
Net income (loss)
|
$
|
(34,524
|
)
|
|
$
|
10,081
|
|
|
$
|
3,305
|
|
|
$
|
(13,386
|
)
|
|
$
|
(34,524
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
1 The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.
|
|
Nine months ended September 30, 2019
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash flows from operating activities
|
$
|
(38,177
|
)
|
|
$
|
41,854
|
|
|
$
|
4,961
|
|
|
$
|
—
|
|
|
$
|
8,638
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property and equipment
|
(637
|
)
|
|
(36,644
|
)
|
|
(3,262
|
)
|
|
—
|
|
|
(40,543
|
)
|
|||||
Proceeds from sale of property and equipment
|
—
|
|
|
4,688
|
|
|
90
|
|
|
—
|
|
|
4,778
|
|
|||||
Proceeds from insurance recoveries
|
—
|
|
|
641
|
|
|
—
|
|
|
—
|
|
|
641
|
|
|||||
|
(637
|
)
|
|
(31,315
|
)
|
|
(3,172
|
)
|
|
—
|
|
|
(35,124
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of treasury stock
|
(125
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(125
|
)
|
|||||
Intercompany contributions/distributions
|
10,784
|
|
|
(10,539
|
)
|
|
(245
|
)
|
|
—
|
|
|
—
|
|
|||||
|
10,659
|
|
|
(10,539
|
)
|
|
(245
|
)
|
|
—
|
|
|
(125
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(28,155
|
)
|
|
—
|
|
|
1,544
|
|
|
—
|
|
|
(26,611
|
)
|
|||||
Beginning cash, cash equivalents and restricted cash
|
51,348
|
|
|
—
|
|
|
3,216
|
|
|
—
|
|
|
54,564
|
|
|||||
Ending cash, cash equivalents and restricted cash
|
$
|
23,193
|
|
|
$
|
—
|
|
|
$
|
4,760
|
|
|
$
|
—
|
|
|
$
|
27,953
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Nine months ended September 30, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash flows from operating activities
|
$
|
(43,466
|
)
|
|
$
|
60,269
|
|
|
$
|
4,687
|
|
|
$
|
—
|
|
|
$
|
21,490
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property and equipment
|
(762
|
)
|
|
(43,374
|
)
|
|
(4,642
|
)
|
|
—
|
|
|
(48,778
|
)
|
|||||
Proceeds from sale of property and equipment
|
—
|
|
|
4,648
|
|
|
17
|
|
|
—
|
|
|
4,665
|
|
|||||
Proceeds from insurance recoveries
|
—
|
|
|
965
|
|
|
15
|
|
|
—
|
|
|
980
|
|
|||||
|
(762
|
)
|
|
(37,761
|
)
|
|
(4,610
|
)
|
|
—
|
|
|
(43,133
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of options
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||
Purchase of treasury stock
|
(549
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(549
|
)
|
|||||
Intercompany contributions/distributions
|
22,784
|
|
|
(22,508
|
)
|
|
(276
|
)
|
|
—
|
|
|
—
|
|
|||||
|
22,247
|
|
|
(22,508
|
)
|
|
(276
|
)
|
|
—
|
|
|
(537
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net decrease in cash, cash equivalents and restricted cash
|
(21,981
|
)
|
|
—
|
|
|
(199
|
)
|
|
—
|
|
|
(22,180
|
)
|
|||||
Beginning cash, cash equivalents and restricted cash
|
72,385
|
|
|
—
|
|
|
3,263
|
|
|
—
|
|
|
75,648
|
|
|||||
Ending cash, cash equivalents and restricted cash
|
$
|
50,404
|
|
|
$
|
—
|
|
|
$
|
3,064
|
|
|
$
|
—
|
|
|
$
|
53,468
|
|
|
|
ITEM 2.
|
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 17 AC rigs in the US and 8 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
|
|
5
|
|
Permian Basin and Eagle Ford
|
|
10
|
|
Bakken
|
|
2
|
|
International drilling
|
|
8
|
|
|
|
25
|
|
•
|
Production Services— Our production services business segments provide well, wireline and coiled tubing services to producers primarily in Texas and the Mid-Continent and Rocky Mountain regions, as well as in North Dakota, Louisiana and Mississippi.
|
•
|
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 September 30, 2019, we have a fleet of 112 rigs with 550 horsepower and 12 rigs with 600 horsepower with operations in 9 locations concentrated in Texas, as well as in North Dakota, Colorado and Mississippi.
|
•
|
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 September 30, 2019, we have a fleet of 93 wireline units, including 2 greaseless, EcoQuietTM units designed to reduce noise when operating in proximity to urban areas and an additional 6 units that offer greaseless electric wireline used to reach further depths in longer laterals. Our fleet is deployed through 10 operating locations concentrated in Texas and the Rocky Mountain and Mid-Continent regions, as well as in Louisiana and North Dakota.
|
•
|
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 September 30, 2019, we have a current fleet of 9 coiled tubing units, consisting of 4 small-diameter and 5 large-diameter units (larger than two inches), deployed through 2 operating locations that provide services in Texas, Wyoming and surrounding areas.
|
|
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
|
|
|
12
|
|
|
6
|
|
|
3
|
|
|
2
|
|
|
—
|
|
|
1
|
|
International rigs
|
—
|
|
|
6
|
|
|
4
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
18
|
|
|
10
|
|
|
5
|
|
|
2
|
|
|
—
|
|
|
1
|
|
•
|
total cash and cash equivalents ($28.0 million as of September 30, 2019);
|
•
|
cash generated from operations ($8.6 million during the nine months ended September 30, 2019);
|
•
|
proceeds from sales of assets; ($4.8 million during the nine months ended September 30, 2019); and
|
•
|
the availability under our asset-based lending facility ($50.6 million as of September 30, 2019).
|
•
|
working capital needs;
|
•
|
debt service; and
|
•
|
capital expenditures.
|
|
September 30,
2019 |
|
December 31,
2018 |
|
Change
|
||||||
Cash and cash equivalents
|
$
|
26,955
|
|
|
$
|
53,566
|
|
|
$
|
(26,611
|
)
|
Restricted cash
|
998
|
|
|
998
|
|
|
—
|
|
|||
Receivables:
|
|
|
|
|
|
||||||
Trade, net of allowance for doubtful accounts
|
81,039
|
|
|
76,924
|
|
|
4,115
|
|
|||
Unbilled receivables
|
20,906
|
|
|
24,822
|
|
|
(3,916
|
)
|
|||
Insurance recoveries
|
23,186
|
|
|
23,656
|
|
|
(470
|
)
|
|||
Other receivables
|
7,421
|
|
|
5,479
|
|
|
1,942
|
|
|||
Inventory
|
22,086
|
|
|
18,898
|
|
|
3,188
|
|
|||
Assets held for sale
|
6,233
|
|
|
3,582
|
|
|
2,651
|
|
|||
Prepaid expenses and other current assets
|
6,991
|
|
|
7,109
|
|
|
(118
|
)
|
|||
Current assets
|
195,815
|
|
|
215,034
|
|
|
(19,219
|
)
|
|||
Accounts payable
|
32,127
|
|
|
34,134
|
|
|
(2,007
|
)
|
|||
Deferred revenues
|
1,616
|
|
|
1,722
|
|
|
(106
|
)
|
|||
Accrued expenses:
|
|
|
|
|
|
||||||
Employee compensation and related costs
|
22,489
|
|
|
24,598
|
|
|
(2,109
|
)
|
|||
Insurance claims and settlements
|
22,991
|
|
|
23,593
|
|
|
(602
|
)
|
|||
Insurance premiums and deductibles
|
6,036
|
|
|
5,482
|
|
|
554
|
|
|||
Interest
|
1,008
|
|
|
6,148
|
|
|
(5,140
|
)
|
|||
Other
|
12,035
|
|
|
9,091
|
|
|
2,944
|
|
|||
Current liabilities
|
98,302
|
|
|
104,768
|
|
|
(6,466
|
)
|
|||
Working capital
|
$
|
97,513
|
|
|
$
|
110,266
|
|
|
$
|
(12,753
|
)
|
•
|
Cash and cash equivalents — The decrease in cash and cash equivalents during 2019 is primarily due to $40.5 million of cash used for the purchase of property and equipment, offset in part by $8.6 million of cash provided by operating activities and $4.8 million of proceeds from the sale of property and equipment.
|
•
|
Trade and unbilled receivables — The net increase in our total trade and unbilled receivables during 2019 is primarily due to the 3% increase in our revenues during the quarter ended September 30, 2019, as compared to the quarter ended December 31, 2018. Our domestic trade receivables generally turn over within 60 days, and our Colombian trade receivables generally turn over within 120 days.
|
•
|
Other receivables — The increase in other receivables during 2019 is primarily due to an increase in recoverable income tax receivables attributable to the increase in activity for our international operations.
|
•
|
Inventory — The increase in inventory during 2019 is primarily due to an increase in inventory for our international operations’ spare parts and supplies supporting rigs working in remote locations.
|
•
|
Assets held for sale — As of September 30, 2019, our condensed consolidated balance sheet reflects assets held for sale of $6.2 million, which includes the fair value of buildings and yards for one domestic drilling yard and two closed wireline locations, both of which were designated as held for sale in 2019, one domestic SCR drilling rig, two coiled tubing units, and spare support equipment. As of December 31, 2018, our condensed consolidated balance sheet reflects assets held for sale of $3.6 million, which primarily represents the fair value of one domestic SCR drilling rig and related spare equipment and three coiled tubing units. For additional information, see Note 4, Property and Equipment of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.
|
•
|
Prepaid expenses and other current assets — The decrease in prepaid expenses and other current assets during 2019 is primarily due to the amortization of prepaid insurance premiums which are generally paid annually in October, which
|
•
|
Accounts payable — Our accounts payable generally turn over within 90 days. The decrease in accounts payable during 2019 is primarily due to a $4.3 million decrease in our accruals for capital expenditures, which was partially offset by an increase in accounts payable primarily attributable to the 4% increase in our operating costs for the quarter ended September 30, 2019 as compared to the quarter ended December 31, 2018.
|
•
|
Deferred revenues — The decrease in deferred revenues during 2019 is primarily due to deferred revenue amortization, offset by increases associated with the deployment of rigs under five new domestic and four new international contracts in 2019.
|
•
|
Employee compensation and related costs — The decrease in employee compensation and related costs during 2019 resulted from a decrease in accrued incentive cash compensation associated with the payment of 2018 annual bonuses in the first quarter of $6.6 million, the $3.5 million settlement of our phantom stock unit awards that vested in April 2019, and the termination of both our annual and long-term cash incentive awards in September 2019. The overall decrease was net of $9.8 million of incentive compensation that was granted in September 2019 and paid in October 2019.
|
•
|
Accrued interest — The decrease in accrued interest expense during 2019 is primarily due to the payment of interest on our Senior Notes which is due semi-annually on March 15th and September 15th each year.
|
•
|
Other accrued expenses — The increase in other accrued expenses during 2019 is primarily due to the recognition of $2.2 million of current operating lease liabilities upon our adoption of ASU No. 2016-02, Leases, and its related amendments, as of January 1, 2019. For additional information about adoption of this standard, see Note 1, Organization and Summary of Significant Accounting Policies and Note 3, Leases, of the Notes to Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q. The increase in other accrued expenses during 2019 is also related to an increase in accrued taxes associated with the increase in revenues for our international 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
|
|
|
$
|
—
|
|
|
$
|
475,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest on debt
|
93,713
|
|
|
35,525
|
|
|
58,188
|
|
|
—
|
|
|
—
|
|
|||||
Purchase commitments
|
4,238
|
|
|
4,238
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
|
9,278
|
|
|
2,499
|
|
|
3,594
|
|
|
2,144
|
|
|
1,041
|
|
|||||
Incentive compensation
|
10,820
|
|
|
10,163
|
|
|
657
|
|
|
—
|
|
|
—
|
|
|||||
|
$
|
593,049
|
|
|
$
|
52,425
|
|
|
$
|
537,439
|
|
|
$
|
2,144
|
|
|
$
|
1,041
|
|
•
|
Debt — Debt obligations at September 30, 2019 consist 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 December 14, 2021. As of September 30, 2019, 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 9.8% interest rate that was in effect at September 30, 2019, and (2) the principal balance of $175 million at September 30, 2019, 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 September 30, 2019, our purchase commitments primarily pertain to $1.8 million of inventory and job supplies for our coiled tubing operations as well as various refurbishments and upgrades to our drilling and production services fleets.
|
•
|
Operating leases — Our operating lease obligations relate to long-term 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. At September 30, 2019, our incentive compensation payable primarily relates to $9.8 million of incentive compensation for awards which were granted in September, in conjunction with the termination of the 2019 annual bonus incentive awards and the cancellation of all prior long-term cash incentive awards, and which was subsequently paid in October 2019.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Domestic drilling
|
$
|
38,168
|
|
|
$
|
36,586
|
|
|
$
|
115,829
|
|
|
$
|
108,146
|
|
International drilling
|
21,617
|
|
|
23,131
|
|
|
68,682
|
|
|
62,515
|
|
||||
Drilling services
|
59,785
|
|
|
59,717
|
|
|
184,511
|
|
|
170,661
|
|
||||
Well servicing
|
30,293
|
|
|
24,369
|
|
|
86,053
|
|
|
68,645
|
|
||||
Wireline services
|
43,874
|
|
|
52,654
|
|
|
137,134
|
|
|
171,392
|
|
||||
Coiled tubing services
|
12,446
|
|
|
12,592
|
|
|
38,111
|
|
|
37,894
|
|
||||
Production services
|
86,613
|
|
|
89,615
|
|
|
261,298
|
|
|
277,931
|
|
||||
Consolidated revenues
|
$
|
146,398
|
|
|
$
|
149,332
|
|
|
$
|
445,809
|
|
|
$
|
448,592
|
|
|
|
|
|
|
|
|
|
||||||||
Operating costs:
|
|
|
|
|
|
|
|
||||||||
Domestic drilling
|
$
|
21,931
|
|
|
$
|
21,650
|
|
|
$
|
69,098
|
|
|
$
|
64,297
|
|
International drilling
|
15,844
|
|
|
19,013
|
|
|
50,884
|
|
|
49,038
|
|
||||
Drilling services
|
37,775
|
|
|
40,663
|
|
|
119,982
|
|
|
113,335
|
|
||||
Well servicing
|
21,414
|
|
|
17,193
|
|
|
61,348
|
|
|
49,443
|
|
||||
Wireline services
|
38,349
|
|
|
40,840
|
|
|
119,500
|
|
|
130,042
|
|
||||
Coiled tubing services
|
10,521
|
|
|
10,265
|
|
|
31,784
|
|
|
33,104
|
|
||||
Production services
|
70,284
|
|
|
68,298
|
|
|
212,632
|
|
|
212,589
|
|
||||
Consolidated operating costs
|
$
|
108,059
|
|
|
$
|
108,961
|
|
|
$
|
332,614
|
|
|
$
|
325,924
|
|
|
|
|
|
|
|
|
|
||||||||
Gross margin:
|
|
|
|
|
|
|
|
||||||||
Domestic drilling
|
$
|
16,237
|
|
|
$
|
14,936
|
|
|
$
|
46,731
|
|
|
$
|
43,849
|
|
International drilling
|
5,773
|
|
|
4,118
|
|
|
17,798
|
|
|
13,477
|
|
||||
Drilling services
|
22,010
|
|
|
19,054
|
|
|
64,529
|
|
|
57,326
|
|
||||
Well servicing
|
8,879
|
|
|
7,176
|
|
|
24,705
|
|
|
19,202
|
|
||||
Wireline services
|
5,525
|
|
|
11,814
|
|
|
17,634
|
|
|
41,350
|
|
||||
Coiled tubing services
|
1,925
|
|
|
2,327
|
|
|
6,327
|
|
|
4,790
|
|
||||
Production services
|
16,329
|
|
|
21,317
|
|
|
48,666
|
|
|
65,342
|
|
||||
Consolidated gross margin
|
$
|
38,339
|
|
|
$
|
40,371
|
|
|
$
|
113,195
|
|
|
$
|
122,668
|
|
|
|
|
|
|
|
|
|
||||||||
Consolidated:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(26,016
|
)
|
|
$
|
(5,233
|
)
|
|
$
|
(54,075
|
)
|
|
$
|
(34,524
|
)
|
Adjusted EBITDA (1)
|
$
|
7,053
|
|
|
$
|
28,576
|
|
|
$
|
47,643
|
|
|
$
|
68,881
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(amounts in thousands)
|
||||||||||||||
Net loss
|
$
|
(26,016
|
)
|
|
$
|
(5,233
|
)
|
|
$
|
(54,075
|
)
|
|
$
|
(34,524
|
)
|
Depreciation
|
22,924
|
|
|
23,501
|
|
|
68,428
|
|
|
70,535
|
|
||||
Impairment
|
—
|
|
|
239
|
|
|
1,378
|
|
|
2,607
|
|
||||
Interest expense
|
10,013
|
|
|
9,811
|
|
|
30,003
|
|
|
28,966
|
|
||||
Income tax expense
|
132
|
|
|
258
|
|
|
1,909
|
|
|
1,297
|
|
||||
Adjusted EBITDA
|
7,053
|
|
|
28,576
|
|
|
47,643
|
|
|
68,881
|
|
||||
General and administrative
|
30,485
|
|
|
14,043
|
|
|
68,271
|
|
|
58,066
|
|
||||
Bad debt expense (recovery), net
|
196
|
|
|
111
|
|
|
(90
|
)
|
|
(311
|
)
|
||||
Loss (gain) on dispositions of property and equipment, net
|
17
|
|
|
(1,861
|
)
|
|
(2,184
|
)
|
|
(2,922
|
)
|
||||
Other expense (income)
|
588
|
|
|
(498
|
)
|
|
(445
|
)
|
|
(1,046
|
)
|
||||
Consolidated gross margin
|
$
|
38,339
|
|
|
$
|
40,371
|
|
|
$
|
113,195
|
|
|
$
|
122,668
|
|
•
|
Drilling Services — Our drilling services revenues increased slightly for the three months ended September 30, 2019 and by $13.9 million, or 8%, for the nine months ended September 30, 2019, as compared to the corresponding periods in 2018, while operating costs decreased by $2.9 million, or 7%, and increased by $6.6 million, or 6%, respectively. The increases in margin for the three and nine months ended September 30, 2019 are primarily due to the deployment of our newest AC drilling rig in March 2019, the benefit of early termination revenues during 2019 on two domestic drilling contracts and increased revenues associated with the demobilization of rigs in Colombia. The following table provides operating statistics for each of our drilling services segments:
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Domestic drilling:
|
|
|
|
|
|
|
|
||||||||
Average number of drilling rigs
|
17
|
|
|
16
|
|
|
17
|
|
|
16
|
|
||||
Utilization rate
|
88
|
%
|
|
99
|
%
|
|
94
|
%
|
|
100
|
%
|
||||
Revenue days
|
1,383
|
|
|
1,459
|
|
|
4,279
|
|
|
4,353
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Average revenues per day
|
$
|
27,598
|
|
|
$
|
25,076
|
|
|
$
|
27,069
|
|
|
$
|
24,844
|
|
Average operating costs per day
|
15,858
|
|
|
14,839
|
|
|
16,148
|
|
|
14,771
|
|
||||
Average margin per day
|
$
|
11,740
|
|
|
$
|
10,237
|
|
|
$
|
10,921
|
|
|
$
|
10,073
|
|
|
|
|
|
|
|
|
|
||||||||
International drilling:
|
|
|
|
|
|
|
|
||||||||
Average number of drilling rigs
|
8
|
|
|
8
|
|
|
8
|
|
|
8
|
|
||||
Utilization rate
|
71
|
%
|
|
76
|
%
|
|
79
|
%
|
|
79
|
%
|
||||
Revenue days
|
521
|
|
|
562
|
|
|
1,724
|
|
|
1,733
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Average revenues per day
|
$
|
41,491
|
|
|
$
|
41,158
|
|
|
$
|
39,839
|
|
|
$
|
36,073
|
|
Average operating costs per day
|
30,411
|
|
|
33,831
|
|
|
29,515
|
|
|
28,297
|
|
||||
Average margin per day
|
$
|
11,080
|
|
|
$
|
7,327
|
|
|
$
|
10,324
|
|
|
$
|
7,776
|
|
•
|
Production Services — Our revenues from production services decreased by $3.0 million, or 3%, and $16.6 million, or 6%, for the three and nine months ended September 30, 2019, respectively, as compared to the corresponding periods in 2018, while operating costs increased $2.0 million, or 3%, for the three months ended September 30, 2019, and operating costs for the nine months ended September 30, 2019 were comparable with the corresponding period in 2018. The decrease in revenue is a result of the decreased demand for wireline completion services, partially offset by increased demand for our well servicing business which experienced a 25% increase in revenue and a 29% increase in gross margin during 2019. The following table provides operating statistics for each of our production services segments:
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Well servicing:
|
|
|
|
|
|
|
|
||||||||
Average number of rigs
|
125
|
|
|
125
|
|
|
125
|
|
|
125
|
|
||||
Utilization rate
|
59
|
%
|
|
51
|
%
|
|
58
|
%
|
|
49
|
%
|
||||
Rig hours
|
52,210
|
|
|
44,155
|
|
|
151,169
|
|
|
127,800
|
|
||||
Average revenue per hour
|
$
|
580
|
|
|
$
|
552
|
|
|
$
|
569
|
|
|
$
|
537
|
|
|
|
|
|
|
|
|
|
||||||||
Wireline services:
|
|
|
|
|
|
|
|
||||||||
Average number of units
|
94
|
|
|
104
|
|
|
98
|
|
|
107
|
|
||||
Number of jobs
|
2,077
|
|
|
2,684
|
|
|
6,697
|
|
|
8,536
|
|
||||
Average revenue per job
|
$
|
21,124
|
|
|
$
|
19,618
|
|
|
$
|
20,477
|
|
|
$
|
20,079
|
|
|
|
|
|
|
|
|
|
||||||||
Coiled tubing services:
|
|
|
|
|
|
|
|
||||||||
Average number of units
|
9
|
|
|
11
|
|
|
9
|
|
|
13
|
|
||||
Revenue days
|
339
|
|
|
362
|
|
|
997
|
|
|
1,126
|
|
||||
Average revenue per day
|
$
|
36,714
|
|
|
$
|
34,785
|
|
|
$
|
38,226
|
|
|
$
|
33,654
|
|
•
|
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. For more information, see Note 2, Revenue from Contracts with Customers, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.
|
•
|
In accordance with ASC Topic 360, Property, Plant and Equipment, we monitor all indicators of potential impairments. Due to lower than anticipated operating results and a decline in our projected cash flows for the coiled tubing reporting unit, we performed an impairment analysis of this reporting unit at September 30, 2019. As a result of this analysis, we concluded that this reporting unit was not at risk of impairment because the estimated fair value of the reporting unit’s assets was in excess of the carrying value. The assumptions we use in the evaluation for impairment are inherently uncertain and require management judgment. Although we believe the assumptions and estimates used in our impairment analysis are reasonable, different assumptions and estimates could materially impact the analysis and resulting conclusions. The most significant inputs used in our impairment analysis include the projected utilization and pricing of our services, as well as the estimated proceeds upon any future sale or disposal of the assets, all of which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures. If commodity prices decrease or remain at current levels for an extended period of time, or if the demand for any of our services decreases below what we are currently projecting, our estimated cash flows may decrease and our estimates of the fair value of certain assets may decrease as well. If any of the foregoing were to occur, we could incur impairment charges on the related assets. For more information, see Note 4, Property and Equipment, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.
|
•
|
As of September 30, 2019, we had $101.3 million and $6.9 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 result, as of September 30, 2019, we had a valuation allowance of $69.7 million that offsets a portion of our domestic and foreign net deferred tax assets. Since 2017, market conditions and operating results for our Colombian operations have improved, and if they continue to improve, then we may determine that there is sufficient evidence that future taxable income will be generated to utilize our foreign deferred tax assets which would result in the reversal of a portion of the valuation allowance relating to our foreign deferred tax assets. For more information, see Note 5, Valuation Allowances on Deferred Tax Assets, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.
|
•
|
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 under both our general liability insurance and auto liability insurance, as well as an additional annual aggregate deductible of
|
•
|
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 condensed 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, Stock-Based Compensation Plans, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
PIONEER ENERGY SERVICES CORP.
|
|
/s/ Lorne E. Phillips
|
Lorne E. Phillips
|
Executive Vice President and Chief Financial Officer
|
(Principal Financial Officer and Duly Authorized Officer)
|
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