ITEM 1.
FINANCIAL STATEMENTS
Basic Energy Services, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
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June 30,
2017
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December 31,
2016
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(Unaudited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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34,244
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$
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98,875
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Restricted cash
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2,432
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2,429
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Trade accounts receivable, net of allowance of $1,751 and $0, respectively
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150,475
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108,655
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Accounts receivable - related parties
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22
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31
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Income tax receivable
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1,270
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1,271
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Inventories
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36,680
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35,691
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Prepaid expenses
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21,483
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15,575
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Other current assets
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3,942
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|
2,003
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Total current assets
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250,548
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264,530
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Property and equipment, net
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520,575
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488,848
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Deferred debt costs, net of amortization
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56
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—
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Intangible assets, net of amortization
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3,339
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3,458
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Other assets
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11,848
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11,324
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Total assets
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$
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786,366
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$
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768,160
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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Accounts payable
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$
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80,993
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$
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47,959
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Accrued expenses
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57,457
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51,329
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Current portion of long-term debt, net
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46,456
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38,468
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Other current liabilities
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780
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2,065
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Total current liabilities
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185,686
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139,821
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Long-term debt, net
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207,487
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184,752
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Deferred tax liabilities
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389
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—
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Other long-term liabilities
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30,278
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29,179
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Commitments and contingencies
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Stockholders' equity:
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Preferred stock; $0.01 par value; 5,000,000 shares authorized; none designated or issued at June 30, 2017 and December 31, 2016
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—
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—
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Common stock; $0.01 par value; 80,000,000 shares authorized; 26,095,434 shares issued and 26,027,213 shares outstanding at June 30, 2017; 26,095,431 shares issued and 25,998,844 shares outstanding at December 31, 2016
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261
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261
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Additional paid-in capital
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427,289
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417,624
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Accumulated deficit
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(62,567
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)
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—
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Treasury stock, at cost, 68,221 and 96,587 shares at June 30, 2017 and December 31, 2016, respectively
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(2,457
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)
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(3,477
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)
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Total stockholders' equity
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362,526
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414,408
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Total liabilities and stockholders' equity
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$
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786,366
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$
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768,160
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See accompanying notes to
unaudited
consolidated financial statements.
Basic Energy Services, Inc.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share amounts)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2017
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2016
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2017
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2016
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(Unaudited)
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(Unaudited)
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(Successor)
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(Predecessor)
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(Successor)
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(Predecessor)
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Revenues:
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Completion and remedial services
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$
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107,385
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$
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36,228
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$
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187,817
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$
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75,924
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Fluid services
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50,740
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45,491
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100,946
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95,741
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Well servicing
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53,054
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36,824
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101,672
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75,731
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Contract drilling
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2,117
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1,461
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4,880
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2,965
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Total revenues
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213,296
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120,004
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395,315
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250,361
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Expenses:
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Completion and remedial services
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81,199
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32,860
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148,451
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67,648
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Fluid services
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41,580
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38,619
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83,118
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79,786
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Well servicing
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41,796
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31,847
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82,712
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66,318
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Contract drilling
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1,863
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1,368
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4,271
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2,929
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General and administrative, including stock-based compensation of $6,275 and $2,277 in the three months ended June 30, 2017 and 2016 and $10,723 and $5,117 for the six months ended June 30, 2017 and 2016, respectively
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36,037
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27,078
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70,241
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56,640
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Depreciation and amortization
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25,956
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54,847
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51,369
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110,999
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(Gain) loss on disposal of assets
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(223
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)
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336
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(690
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)
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261
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Total expenses
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228,208
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186,955
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439,472
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384,581
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Operating loss
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(14,912
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)
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(66,951
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)
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(44,157
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)
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(134,220
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)
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Other income (expense):
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Interest expense
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(9,179
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)
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(22,521
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)
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(18,289
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)
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(43,235
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)
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Interest income
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6
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7
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18
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9
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Other income
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144
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|
244
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235
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|
340
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Loss before income taxes
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(23,941
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)
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(89,221
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)
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(62,193
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)
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(177,106
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)
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Income tax benefit (expense)
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—
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(662
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)
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(374
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)
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3,884
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Net loss
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$
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(23,941
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)
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$
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(89,883
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)
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$
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(62,567
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)
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$
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(173,222
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)
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Loss per share of common stock:
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Basic
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$
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(0.92
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)
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$
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(2.11
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)
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$
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(2.41
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)
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$
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(4.14
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)
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Diluted
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$
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(0.92
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)
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$
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(2.11
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)
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$
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(2.41
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)
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$
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(4.14
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)
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See accompanying notes to
unaudited
consolidated financial statements.
Basic Energy Services, Inc.
Consolidated Statements of Stockholders’ Equity
(in thousands, except share data)
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Additional
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Total
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Common Stock
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Paid-In
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Treasury
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Accumulated
|
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Stockholders'
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Shares
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Amount
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Capital
|
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Stock
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Deficit
|
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Equity
|
Balance - December 31, 2016
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26,095,431
|
|
|
$
|
261
|
|
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$
|
417,624
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$
|
(3,477
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)
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$
|
—
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$
|
414,408
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Issuance of stock
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3
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—
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—
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—
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—
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—
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Amortization of share-based compensation
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—
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—
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10,723
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—
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—
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10,723
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Treasury stock, net
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—
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—
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(1,058
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)
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1,020
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—
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(38
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)
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Net loss
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—
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—
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—
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—
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(62,567
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)
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(62,567
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)
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Balance - June 30, 2017 (unaudited)
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26,095,434
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$
|
261
|
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$
|
427,289
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|
|
$
|
(2,457
|
)
|
|
$
|
(62,567
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)
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$
|
362,526
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|
See accompanying notes to
unaudited
consolidated financial statements.
Basic Energy Services, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
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Six Months Ended June 30,
|
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2017
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2016
|
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(Successor)
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(Predecessor)
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Cash flows from operating activities:
|
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|
|
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Net loss
|
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$
|
(62,567
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)
|
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|
$
|
(173,222
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)
|
Adjustments to reconcile net loss to net cash
|
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|
used in operating activities:
|
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|
|
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Depreciation and amortization
|
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51,369
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|
|
|
110,999
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|
Accretion on asset retirement obligation
|
|
79
|
|
|
|
72
|
|
Change in allowance for doubtful accounts
|
|
1,751
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|
|
|
(641
|
)
|
Amortization of deferred financing costs
|
|
19
|
|
|
|
4,486
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|
Amortization of debt discounts
|
|
3,862
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(138
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)
|
Non-cash compensation
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|
10,723
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|
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|
5,117
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|
(Gain) loss on disposal of assets
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(690
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)
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|
|
261
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|
Deferred income taxes
|
|
389
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|
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(4,404
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)
|
Changes in operating assets and liabilities, net of acquisitions:
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|
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Accounts receivable
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(43,562
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)
|
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|
24,010
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|
Inventories
|
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(989
|
)
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|
4,440
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|
Income tax receivable
|
|
1
|
|
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|
552
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|
Prepaid expenses and other current assets
|
|
(5,958
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)
|
|
|
294
|
|
Other assets
|
|
(524
|
)
|
|
|
(85
|
)
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Accounts payable
|
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26,841
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|
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|
(21,488
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)
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Other liabilities
|
|
(265
|
)
|
|
|
(8,338
|
)
|
Accrued expenses
|
|
6,128
|
|
|
|
16,077
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|
Net cash used in operating activities
|
|
(13,393
|
)
|
|
|
(42,008
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)
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchase of property and equipment
|
|
(33,745
|
)
|
|
|
(11,561
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)
|
Proceeds from sale of assets
|
|
4,976
|
|
|
|
1,451
|
|
Net cash used in investing activities
|
|
(28,769
|
)
|
|
|
(10,110
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
Payments of debt
|
|
(22,266
|
)
|
|
|
(25,422
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)
|
Proceeds from debt
|
|
—
|
|
|
|
165,000
|
|
Change in restricted cash
|
|
(3
|
)
|
|
|
(30,196
|
)
|
Shares added to treasury stock as a result of net share settlements due to vesting of restricted stock
|
|
(38
|
)
|
|
|
(640
|
)
|
Deferred loan costs and other financing activities
|
|
(162
|
)
|
|
|
(17,256
|
)
|
Net cash (used in) provided by financing activities
|
|
(22,469
|
)
|
|
|
91,486
|
|
Net (decrease) increase in cash and equivalents
|
|
(64,631
|
)
|
|
|
39,368
|
|
Cash and cash equivalents - beginning of period
|
|
$
|
98,875
|
|
|
|
46,732
|
|
Cash and cash equivalents - end of period
|
|
$
|
34,244
|
|
|
|
$
|
86,100
|
|
See accompanying notes to
unaudited
consolidated financial statements.
BASIC ENERGY SERVICES, INC.
Notes to Consolidated Financial Statements
June 30, 2017
(unaudited)
1. Basis of Presentation and Nature of Operations
Basis of Presentation
The accompanying unaudited consolidated financial statements of Basic Energy Services, Inc. and subsidiaries (“Basic” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. Certain information relating to our organization and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in this Quarterly Report on Form 10-Q in accordance with GAAP and financial statement requirements promulgated by the U.S. Securities and Exchange Commission (“SEC”). The notes to the consolidated financial statements (unaudited) should be read in conjunction with the notes to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016
. In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair presentation have been made in the accompanying unaudited financial statements.
Emergence from Chapter 11
In connection with the Company’s emergence from its bankruptcy cases (the "Chapter 11 Cases"), on December 23, 2016 ("the Effective Date"), the Company applied the provisions of fresh start accounting, pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 852, Reorganizations, to its consolidated financial statements. We elected to apply fresh start accounting effective December 31, 2016, to coincide with the timing of our normal December accounting period close.
The implementation of the First Amended Joint Prepackaged Chapter 11 Plan of Basic Energy Services, Inc. and its Affiliated Debtors (as confirmed, the "Prepackaged Plan") and the application of fresh start accounting materially changed the carrying amounts and classifications reported in our consolidated financial statements and resulted in the Company becoming a new entity for financial reporting purposes. Accordingly, our consolidated financial statements for periods prior to December 31, 2016 will not be comparable to our consolidated financial statements as of December 31, 2016 or for periods subsequent to December 31, 2016.
References to “Successor” or “Successor Company” refer to the Company on or after December 31, 2016, after giving effect to the implementation of the Prepackaged Plan and the application of fresh start accounting. References to “Predecessor” or “Predecessor Company” refer to the Company prior to December 31, 2016. Additionally, references to periods on or after December 31, 2016 refer to the Successor and references to periods prior to December 31, 2016 refer to the Predecessor.
Liquidity and Capital Resources
As of
June 30, 2017
, our primary capital resources were utilization of capital leases and borrowings under our
$75.0 million
Second Amended and Restated ABL Credit Agreement (the "ABL Facility"), partially offset by net cash used in operations. As of
June 30, 2017
, we had unrestricted cash and cash equivalents of
$34.2 million
compared to
$98.9 million
as of December 31, 2016. An additional amount of
$2.4 million
is classified as restricted cash. We have utilized, and expect to utilize in the future, bank and capital lease financing and sales of equity to obtain capital resources. When appropriate, we will consider public or private debt and equity offerings and non-recourse transactions to meet our liquidity needs.
Nature of Operations
Basic provides a wide range of well site services to oil and natural gas drilling and producing companies, including completion and remedial services, fluid services, well servicing and contract drilling. These services are primarily provided using Basic’s fleet of equipment. Basic’s operations are concentrated in the major United States onshore oil and gas producing regions in Texas, New Mexico, Oklahoma, Arkansas, Kansas, Louisiana, California, the Rocky Mountains and Appalachia.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Basic and its wholly owned subsidiaries. Basic has no variable interest in any other organization, entity, partnership or contract. All intercompany transactions and balances have been eliminated.
Accounting Estimates
Preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management uses historical and other pertinent information to determine these estimates. Actual results could differ from those estimates. Areas where critical accounting estimates are made by management include:
•
Depreciation and amortization of property and equipment and intangible assets;
•
Impairment of property and equipment, and intangible assets;
•
Allowance for doubtful accounts;
•
Litigation and self-insured risk reserves;
•
Fair value of assets acquired and liabilities assumed in an acquisition;
•
Stock-based compensation; and
•
Income taxes.
2. Property and Equipment
Property and equipment consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
Land
|
|
$
|
20,843
|
|
|
$
|
21,010
|
|
Buildings and improvements
|
|
40,026
|
|
|
39,588
|
|
Well service units and equipment
|
|
106,118
|
|
|
96,365
|
|
Frac equipment/test tanks
|
|
108,869
|
|
|
75,506
|
|
Pumping equipment
|
|
105,812
|
|
|
85,247
|
|
Fluid services equipment
|
|
68,074
|
|
|
57,359
|
|
Disposal facilities
|
|
49,900
|
|
|
47,507
|
|
Contract drilling equipment
|
|
11,051
|
|
|
12,257
|
|
Rental equipment
|
|
34,114
|
|
|
32,582
|
|
Light vehicles
|
|
16,059
|
|
|
12,722
|
|
Software
|
|
641
|
|
|
641
|
|
Other
|
|
3,969
|
|
|
3,885
|
|
Construction equipment
|
|
1,638
|
|
|
1,485
|
|
Brine and fresh water stations
|
|
2,786
|
|
|
2,694
|
|
|
|
569,900
|
|
|
488,848
|
|
Less accumulated depreciation and amortization
|
|
49,325
|
|
|
—
|
|
Property and equipment, net
|
|
$
|
520,575
|
|
|
$
|
488,848
|
|
Basic is obligated under various capital leases for certain vehicles and equipment that expire at various dates during the next
five years
. The gross amount of property and equipment and related accumulated amortization recorded under capital leases and included above consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
Fluid services equipment
|
|
$
|
60,419
|
|
|
$
|
29,372
|
|
Pumping equipment
|
|
26,979
|
|
|
12,806
|
|
Light vehicles
|
|
8,881
|
|
|
5,729
|
|
Contract drilling equipment
|
|
906
|
|
|
999
|
|
Well service units and equipment
|
|
—
|
|
|
—
|
|
Construction equipment
|
|
28
|
|
|
28
|
|
|
|
97,213
|
|
|
48,934
|
|
Less accumulated amortization
|
|
6,948
|
|
|
—
|
|
Property and equipment under capital lease, net
|
|
$
|
90,265
|
|
|
$
|
48,934
|
|
Amortization of assets held under capital leases is included in depreciation and amortization expense in the consolidated statements of operations. Amortization amounts consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
|
2016
|
|
2017
|
|
|
2016
|
|
|
(Successor)
|
|
|
(Predecessor)
|
|
(Successor)
|
|
|
(Predecessor)
|
Lease amortization expense
|
|
$
|
3,893
|
|
|
|
$
|
9,167
|
|
|
$
|
7,588
|
|
|
|
$
|
18,802
|
|
3. Intangible Assets
Basic had trade names of
$3.4 million
as of each of
June 30, 2017
and December 31, 2016. Trade names have a
15
-year life and are tested for impairment annually.
Basic’s intangible assets were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
Trade names
|
|
$
|
3,410
|
|
|
$
|
3,410
|
|
Other intangible assets
|
|
48
|
|
|
48
|
|
|
|
$
|
3,458
|
|
|
$
|
3,458
|
|
Less accumulated amortization
|
|
119
|
|
|
—
|
|
Intangible assets subject to amortization, net
|
|
$
|
3,339
|
|
|
$
|
3,458
|
|
Amortization expense of intangible assets for the three and six months ended
June 30, 2017
and
2016
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
|
2016
|
|
2017
|
|
|
2016
|
|
|
(Successor)
|
|
|
(Predecessor)
|
|
(Successor)
|
|
|
(Predecessor)
|
Intangible amortization expense
|
|
$
|
60
|
|
|
|
$
|
2,200
|
|
|
$
|
119
|
|
|
|
$
|
4,500
|
|
4. Long-Term Debt and Interest Expense
Long-term debt consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
Credit facilities:
|
|
|
|
|
Term Loan
|
|
$
|
163,350
|
|
|
$
|
164,175
|
|
Capital leases and other notes
|
|
105,818
|
|
|
78,046
|
|
Unamortized discounts, premiums, and deferred debt costs
|
|
(15,225
|
)
|
|
(19,001
|
)
|
Total principal amount of debt instruments, net
|
|
253,943
|
|
|
223,220
|
|
Less current portion
|
|
46,456
|
|
|
38,468
|
|
Long-term debt
|
|
$
|
207,487
|
|
|
$
|
184,752
|
|
Debt Discounts
The following discounts on debt represent the unamortized discount to fair value of our Amended and Restated Term Loan Credit Agreement (the "Term Loan Agreement") and the short-term and long-term portions of the fair value discount of capital leases:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
Unamortized discount on Term Loan
|
|
$
|
10,308
|
|
|
$
|
11,401
|
|
Unamortized discount on Capital Leases - short-term
|
|
1,657
|
|
|
1,600
|
|
Unamortized discount on Capital Leases - long-term
|
|
3,173
|
|
|
6,000
|
|
Unamortized deferred debt costs
|
|
87
|
|
|
—
|
|
|
|
$
|
15,225
|
|
|
$
|
19,001
|
|
As of
June 30, 2017
, Basic had
no
borrowings and
$54.8 million
of letters of credit outstanding under its ABL Facility, giving Basic
$20.2 million
of available borrowing capacity subject to covenant constraints under our ABL Facility, including our fixed charge coverage ratio.
Basic’s interest expense consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
|
2016
|
|
2017
|
|
|
2016
|
|
|
(Successor)
|
|
|
(Predecessor)
|
|
(Successor)
|
|
|
(Predecessor)
|
Cash payments for interest
|
|
$
|
8,040
|
|
|
|
$
|
13,862
|
|
|
$
|
9,308
|
|
|
|
$
|
32,560
|
|
Commitment and other fees paid
|
|
170
|
|
|
|
599
|
|
|
187
|
|
|
|
1,272
|
|
Amortization of debt issuance costs and discounts
|
|
2,321
|
|
|
|
1,426
|
|
|
3,881
|
|
|
|
4,348
|
|
Change in accrued interest
|
|
(1,364
|
)
|
|
|
6,617
|
|
|
4,878
|
|
|
|
5,010
|
|
Other
|
|
12
|
|
|
|
17
|
|
|
35
|
|
|
|
45
|
|
|
|
$
|
9,179
|
|
|
|
$
|
22,521
|
|
|
$
|
18,289
|
|
|
|
$
|
43,235
|
|
5. Fair Value Measurements
The following is a summary of the carrying amounts and estimated fair values of our financial instruments as of
June 30, 2017
and
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
June 30, 2017
|
|
December 31, 2016
|
|
Hierarchy Level
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|
|
|
(In thousands)
|
Term Loan
|
3
|
|
$
|
153,042
|
|
|
$
|
156,901
|
|
|
$
|
152,838
|
|
|
$
|
152,838
|
|
The fair value of the Term Loan Agreement is based upon our discounted cash flows model using a third-party discount rate. The carrying amount of our ABL Facility approximates fair value due to its variable-rate characteristics.
The carrying amounts of cash and cash equivalents, trade accounts receivable, accounts receivable-related parties, capital leases, accounts payable and accrued expenses approximate fair value due to the short maturities of these instruments.
6. Commitments and Contingencies
Environmental
Basic is subject to various federal, state and local environmental laws and regulations that establish standards and requirements for protection of the environment. Basic cannot predict the future impact of such standards and requirements, which are subject to change and can have retroactive effectiveness. Basic continues to monitor the status of these laws and regulations. Management believes that the likelihood of any of these items resulting in a material adverse impact to Basic’s financial position, liquidity, capital resources or future results of operations is remote.
Currently, Basic has not been fined, cited or notified of any environmental violations that would have a material adverse effect upon its financial position, liquidity or capital resources. However, management does recognize that by the very nature of its business, material costs could be incurred in the near term to bring Basic into total compliance with the laws and regulations. The amount of such future expenditures is not determinable due to several factors, including the unknown magnitude of possible contamination, the unknown timing and extent of the corrective actions which may be required, the determination of Basic’s liability in proportion to other responsible parties and the extent to which such expenditures are recoverable from insurance or indemnification.
Litigation
From time to time, Basic is a party to litigation or other legal proceedings that Basic considers to be a part of the ordinary course of business. Basic is not currently involved in any legal proceedings that it considers probable or reasonably possible, individually or in the aggregate, to result in a material adverse effect on its financial condition, results of operations or liquidity.
Self-Insured Risk Accruals
Basic is self-insured up to retention limits as it relates to workers’ compensation, general liability claims, and medical and dental coverage of its employees. Basic generally maintains no physical property damage coverage on its workover rig fleet, with the exception of certain of its 24-hour workover rigs and newly manufactured rigs. Basic has deductibles per occurrence for workers’ compensation, general liability claims, automobile liability and medical coverage of
$5.0 million
,
$1.0 million
,
$1.0 million
, and
$400,000
, respectively. Basic maintains accruals in the accompanying consolidated balance sheets related to self-insurance retentions based upon third-party data and claims history.
At
June 30, 2017
and
December 31, 2016
, self-insured risk accruals totaled approximately
$35.0 million
and are included in other long-term liabilities and accrued expenses.
7. Stockholders’ Equity
Common Stock
In February 2017, Basic granted certain members of management
801,322
performance-based restricted stock units and
320,532
performance-based stock option awards, which each vest over a
three
-year period.
Treasury Stock
Basic has acquired treasury shares through net share settlements for payment of payroll taxes upon the vesting of certain restricted stock units and awards. Basic acquired a total of
1,032
shares through net share settlements during the first
six
months of
2017
and issued
29,398
shares from treasury stock for accelerated vestings and stock grants in the first
six
months of 2017 (Successor). Basic acquired
220,391
shares through net share settlements during the first
six
months of
2016
(Predecessor).
8. Incentive Plan
The following table reflects compensation activity related to the management incentive plan for the
six
-month period ending
June 30, 2017
(dollar amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense for three months ended June 30, 2017
|
Compensation expense for six months ended June 30, 2017
|
Unrecognized compensation expense
|
Weighted average remaining life
|
Fair value of share based awards vested
|
|
|
|
|
|
|
Restricted stock
|
|
$
|
5,212
|
|
$
|
8,828
|
|
$
|
40,444
|
|
2.2
|
$
|
101
|
|
Restricted stock options
|
|
$
|
1,063
|
|
$
|
1,896
|
|
$
|
10,089
|
|
9.6
|
$
|
—
|
|
During the three and
six
months ended
June 30, 2017
and
2016
, there was
no
excess tax benefit related to equity incentive compensation. Awards granted prior to the Effective Date were subsequently cancelled. All outstanding awards at
June 30, 2017
were granted after the Effective Date as part of the Prepackaged Plan or during the current
six
-month period, and relate to the Company's newly issued shares.
Stock Option Awards
The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Stock options granted under the Company's management incentive plan expire
ten
years from the date they are granted, and vest over a
three
-year service period.
The following table reflects changes during the
six
-month period and a summary of stock options outstanding at
June 30, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Weighted
|
|
Remaining
|
|
Aggregate
|
|
|
Number of
|
|
Average
|
|
Contractual
|
|
Intrinsic
|
|
|
Options
|
|
Exercise
|
|
Term
|
|
Value
|
|
|
Granted
|
|
Price
|
|
(Years)
|
|
(000's)
|
Non-statutory stock options:
|
|
|
|
|
|
|
|
|
Outstanding, beginning of period
|
|
323,770
|
|
|
$
|
36.55
|
|
|
|
|
|
Options granted
|
|
320,532
|
|
|
41.90
|
|
|
|
|
|
Options forfeited
|
|
(2,158
|
)
|
|
36.55
|
|
|
|
|
|
Options exercised
|
|
—
|
|
|
—
|
|
|
|
|
|
Outstanding, end of period
|
|
642,144
|
|
|
$
|
39.22
|
|
|
9.6
|
|
$
|
—
|
|
Exercisable, end of period
|
|
1,080
|
|
|
$
|
36.55
|
|
|
9.5
|
|
$
|
—
|
|
Vested or expected to vest, end of period
|
|
642,144
|
|
|
$
|
39.22
|
|
|
9.6
|
|
$
|
—
|
|
There were
no
stock options exercised during the
six
months ended
June 30, 2017
and
2016
.
Restricted Stock Unit Awards
A summary of the status of Basic’s non-vested restricted stock units at
June 30, 2017
and changes during the
six
months ended
June 30, 2017
is presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
Number of
|
|
Grant Date Fair
|
Non-vested Units
|
|
Shares
|
|
Value Per Share
|
Non-vested at beginning of period
|
|
539,606
|
|
|
$
|
36.55
|
|
Granted during period
|
|
828,022
|
|
|
41.46
|
|
Vested during period
|
|
(2,698
|
)
|
|
36.55
|
|
Forfeited during period
|
|
(2,698
|
)
|
|
36.55
|
|
Non-vested at end of period
|
|
1,362,232
|
|
|
$
|
39.53
|
|
Restricted Stock Awards
On May 25, 2017, Basic’s Board of Directors, the "Board", approved grants of restricted stock awards to non-employee members of the Board. The number of restricted shares granted was
26,700
. These grants are subject to vesting over a
ten
-month period and are subject to accelerated vesting under certain circumstances.
Phantom
Stock Awards
On March 15, 2017, the Board approved grants of phantom restricted stock awards to certain key employees. The number of phantom shares issued was
42,820
. These grants remain subject to vesting annually in one-third increments over a
two
-year period, with the first portion vested on March 15, 2017 and are subject to accelerated vesting in certain circumstances.
On June 1, 2017 Basic’s Board of Directors approved grants of phantom restricted stock awards to certain key employees. The number of phantom shares issued was
79,440
. These grants remain subject to vesting annually in one-third increments over a
three
-year period, with the first portion vesting on March 15, 2018 and are subject to accelerated vesting in certain circumstances.
9. Related Party Transactions
Basic had receivables from employees of approximately
$22,000
and
$31,000
as of
June 30, 2017
and
December 31, 2016
, respectively.
10. Earnings Per Share
The following table sets forth the computation of unaudited basic and diluted loss per share (in thousands, except share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
|
2016
|
|
2017
|
|
|
2016
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
(Successor)
|
|
|
(Predecessor)
|
|
(Successor)
|
|
|
(Predecessor)
|
Numerator (both basic and diluted):
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(23,941
|
)
|
|
|
$
|
(89,883
|
)
|
|
$
|
(62,567
|
)
|
|
|
$
|
(173,222
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic loss per share
|
|
26,011,369
|
|
|
|
42,602,128
|
|
|
26,005,409
|
|
|
|
41,869,855
|
|
Denominator for diluted loss per share
|
|
26,011,369
|
|
|
|
42,602,128
|
|
|
26,005,409
|
|
|
|
41,869,855
|
|
Basic loss per common share:
|
|
$
|
(0.92
|
)
|
|
|
$
|
(2.11
|
)
|
|
$
|
(2.41
|
)
|
|
|
$
|
(4.14
|
)
|
Diluted loss per common share:
|
|
$
|
(0.92
|
)
|
|
|
$
|
(2.11
|
)
|
|
$
|
(2.41
|
)
|
|
|
$
|
(4.14
|
)
|
Unvested restricted stock awards of approximately
1,346,095
and
1,362,232
were excluded from the computation of diluted loss per share for the three and
six
months ended
June 30, 2017
, and unvested restricted stock awards of
803,240
and
781,526
were excluded in the computation of diluted loss per share for the three and
six
months ended
June 30, 2016
, as the effect would have been anti-dilutive.
11. Business Segment Information
The following table sets forth certain financial information with respect to Basic’s reportable segments (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completion
|
|
|
|
|
|
|
and Remedial
|
Fluid
|
Well
|
Contract
|
Corporate
|
|
|
Services
|
Services
|
Servicing
|
Drilling
|
and Other
|
Total
|
Three Months Ended June 30, 2017 (Unaudited)
|
(Successor)
|
|
|
|
|
|
Operating revenues
|
$
|
107,385
|
|
50,740
|
|
53,054
|
|
2,117
|
|
$
|
—
|
|
$
|
213,296
|
|
Direct operating costs
|
(81,199
|
)
|
(41,580
|
)
|
(41,796
|
)
|
(1,863
|
)
|
—
|
|
$
|
(166,438
|
)
|
Segment profits
|
$
|
26,186
|
|
$
|
9,160
|
|
$
|
11,258
|
|
$
|
254
|
|
$
|
—
|
|
$
|
46,858
|
|
Depreciation and amortization
|
$
|
12,412
|
|
$
|
6,637
|
|
$
|
4,636
|
|
$
|
501
|
|
$
|
1,770
|
|
$
|
25,956
|
|
Capital expenditures (excluding acquisitions)
|
$
|
25,849
|
|
$
|
8,916
|
|
$
|
5,116
|
|
$
|
(36
|
)
|
$
|
1,004
|
|
$
|
40,849
|
|
Three Months Ended June 30, 2016 (Unaudited)
|
(Predecessor)
|
|
|
|
|
|
Operating revenues
|
$
|
36,228
|
|
$
|
45,491
|
|
$
|
36,824
|
|
$
|
1,461
|
|
$
|
—
|
|
$
|
120,004
|
|
Direct operating costs
|
(32,860
|
)
|
(38,619
|
)
|
(31,847
|
)
|
(1,368
|
)
|
—
|
|
(104,694
|
)
|
Segment profits
|
$
|
3,368
|
|
$
|
6,872
|
|
$
|
4,977
|
|
$
|
93
|
|
$
|
—
|
|
$
|
15,310
|
|
Depreciation and amortization
|
$
|
18,954
|
|
$
|
16,145
|
|
$
|
13,886
|
|
$
|
3,201
|
|
$
|
2,661
|
|
$
|
54,847
|
|
Capital expenditures (excluding acquisitions)
|
$
|
935
|
|
$
|
3,031
|
|
$
|
2,303
|
|
$
|
—
|
|
$
|
1,526
|
|
$
|
7,795
|
|
Six Months Ended June 30, 2017 (Unaudited)
|
(Successor)
|
|
|
|
|
|
Operating revenues
|
$
|
187,817
|
|
100,946
|
|
101,672
|
|
4,880
|
|
$
|
—
|
|
$
|
395,315
|
|
Direct operating costs
|
(148,451
|
)
|
(83,118
|
)
|
(82,712
|
)
|
(4,271
|
)
|
—
|
|
$
|
(318,552
|
)
|
Segment profits
|
$
|
39,366
|
|
$
|
17,828
|
|
$
|
18,960
|
|
$
|
609
|
|
$
|
—
|
|
$
|
76,763
|
|
Depreciation and amortization
|
$
|
24,563
|
|
$
|
13,136
|
|
$
|
9,176
|
|
$
|
991
|
|
$
|
3,503
|
|
$
|
51,369
|
|
Capital expenditures (excluding acquisitions)
|
$
|
58,058
|
|
$
|
16,337
|
|
$
|
13,493
|
|
$
|
17
|
|
$
|
1,247
|
|
$
|
89,152
|
|
Identifiable assets
|
$
|
268,381
|
|
$
|
133,557
|
|
$
|
109,817
|
|
$
|
10,025
|
|
$
|
264,586
|
|
$
|
786,366
|
|
Six Months Ended June 30, 2016 (Unaudited)
|
(Predecessor)
|
|
|
|
|
|
Operating revenues
|
$
|
75,924
|
|
$
|
95,741
|
|
$
|
75,731
|
|
$
|
2,965
|
|
$
|
—
|
|
$
|
250,361
|
|
Direct operating costs
|
(67,648
|
)
|
(79,786
|
)
|
(66,318
|
)
|
(2,929
|
)
|
—
|
|
(216,681
|
)
|
Segment profits
|
$
|
8,276
|
|
$
|
15,955
|
|
$
|
9,413
|
|
$
|
36
|
|
$
|
—
|
|
$
|
33,680
|
|
Depreciation and amortization
|
$
|
38,359
|
|
$
|
32,673
|
|
$
|
28,102
|
|
$
|
6,479
|
|
$
|
5,386
|
|
$
|
110,999
|
|
Capital expenditures (excluding acquisitions)
|
$
|
1,511
|
|
$
|
6,178
|
|
$
|
3,454
|
|
$
|
113
|
|
$
|
2,506
|
|
$
|
13,762
|
|
Identifiable assets
|
$
|
324,114
|
|
$
|
227,006
|
|
$
|
209,498
|
|
$
|
45,976
|
|
$
|
271,764
|
|
$
|
1,078,358
|
|
The following table reconciles the segment profits reported above to the operating loss as reported in the consolidated statements of operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
|
2016
|
|
2017
|
|
|
2016
|
|
|
(Successor)
|
|
|
(Predecessor)
|
|
(Successor)
|
|
|
(Predecessor)
|
Segment profits
|
|
$
|
46,858
|
|
|
|
$
|
15,310
|
|
|
$
|
76,763
|
|
|
|
$
|
33,680
|
|
General and administrative expenses
|
|
(36,037
|
)
|
|
|
(27,078
|
)
|
|
(70,241
|
)
|
|
|
(56,640
|
)
|
Depreciation and amortization
|
|
(25,956
|
)
|
|
|
(54,847
|
)
|
|
(51,369
|
)
|
|
|
(110,999
|
)
|
Gain (loss) on disposal of assets
|
|
223
|
|
|
|
(336
|
)
|
|
690
|
|
|
|
(261
|
)
|
Operating loss
|
|
$
|
(14,912
|
)
|
|
|
$
|
(66,951
|
)
|
|
$
|
(44,157
|
)
|
|
|
$
|
(134,220
|
)
|
12. Supplemental Schedule of Cash Flow Information
The following table reflects non-cash financing and investing activity during the following periods:
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
2016
|
|
|
(In thousands)
|
Capital leases and notes issued for equipment
|
|
$
|
49,214
|
|
|
$
|
2,201
|
|
Asset retirement obligation additions (retirements)
|
|
—
|
|
|
(21
|
)
|
Change in accrued property and equipment
|
|
6,193
|
|
|
—
|
|
Basic paid
no
income taxes during the
six
months ended
June 30, 2017
and
2016
. Basic paid interest of approximately
$9.3 million
and
$32.6 million
during the
six
months ended
June 30, 2017
and
2016
, respectively.
13.
Recent Accounting Pronouncements
Recently adopted
In March 2016, the FASB issued ASU 2016-09, “
Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting.
” The purpose of this update to is to simplify overly complex areas of GAAP, while maintaining or improving the usefulness of the information. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update was adopted for Basic beginning January 1, 2017, and did not have a material impact on our consolidated financial statements.
In July 2015, the FASB issued ASU 2015-11,
“Simplifying the Measurement of Inventory,
” to simplify the measurement of inventory, which requires inventory measured using the first in, first out (FIFO) or average cost methods to be subsequently measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. Currently, these inventory methods are required to be subsequently measured at the lower of cost or market. "Market" could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. This update was adopted for Basic beginning January 1, 2017, and did not have a material impact on our consolidated financial statements.
Not yet adopted
In August 2015, the FASB issued ASU 2015-14, “
Revenue from Contracts with Customers-Deferral of the Effective Date,
” that defers by one year the effective date of ASU 2014-09,
“Revenue from Contracts with Customers.”
The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. ASU 2014-09 - “
Revenue from Contracts with Customers"
represented a comprehensive revenue recognition standard to supersede existing revenue recognition guidance and align GAAP more closely with International Financial Reporting Standards (IFRS).
The core principle of the new guidance is that a company should recognize revenue to match the delivery of goods or services to customers to the consideration the company expects to be entitled in exchange for those goods or services. The standard creates a five step model that requires companies to exercise judgment when considering the terms of a contract and all relevant facts and circumstances. The standard allows for several transition methods: (a) a full retrospective adoption in which the standard is applied to all of the periods presented, or (b) a modified retrospective adoption in which the standard is applied only to the most current period presented in the financial statements, including additional disclosures of the standard’s application impact to individual financial statement line items.
We are currently determining the impact of the new standard on the revenue streams from the services we provide. Our approach will include performing a detailed review of key contracts representative of our different businesses and comparing historical accounting policies and practices to the new standard. Our services are primarily short-term in nature, and our assessment is that we do not expect the new revenue recognition standard will have a material impact on our operating results, however may impact our financial statement disclosures upon adoption. We intend to adopt the new standard as of January 1, 2018.
In February 2016, the FASB issued ASU 2016-02, “
Leases (Topic 842).
” The purpose of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for Basic in annual periods beginning after
December 15, 2018, including interim periods within those fiscal years. Basic expects to recognize additional right-of-use assets and liabilities related to operating leases with terms longer than one year.
In August 2016, the FASB issued ASU 2016-15-
"Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments."
This standard is effective for Basic for fiscal years beginning after December 15, 2017. The amendments in this update are intended to clarify cash flow treatment of certain cash flow issues with the objective of reducing diversity in practice. Early adoption is permitted, including adoption in an interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Basic intends to adopt this standard as of January 1, 2018, and does not expect significant changes to the cash flow statement as a result.
In November 2016 the FASB issued ASU 2016-18- "
Statement of Cash Flows (Topic 230): Restricted Cash,"
which clarifies the treatment of cash inflows into and cash payments from restricted cash. Restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. The amendments of this ASU should be applied using a retrospective transition method and are effective for reporting periods beginning after December 15, 2017, Basic intends to adopt this standard as of January 1, 2018, and does not expect significant changes to the cash flow statement as a result.
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Overview
We provide a wide range of well site services to oil and natural gas drilling and producing companies, including completion and remedial services, well servicing, fluid services and contract drilling. Our emergence from bankruptcy, and various market fluctuations, may make our revenues, expenses and income not directly comparable between periods.
Our total hydraulic horsepower (“hhp”) increased to 518,000 at the end of the second quarter of 2017 compared to 444,000 for the second quarter of 2016. Weighted average horsepower increased to 488,000 for the second quarter of 2017 from 444,000 in the second quarter of 2016. Our weighted average number of fluid service trucks decreased to
943
in the
second
quarter of
2017
from 976 in the
second
quarter of
2016
. Our weighted average number of well servicing rigs remained constant at 421 during the
second
quarter of
2017
compared to the
second
quarter of 2016.
Our operating revenues from each of our segments, and their relative percentages of our total revenues, consisted of the following (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
|
2016
|
|
|
(Successor)
|
|
|
(Predecessor)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Completion and remedial services
|
|
$
|
187.8
|
|
|
47
|
%
|
|
|
$
|
75.9
|
|
|
30
|
%
|
Fluid services
|
|
$
|
100.9
|
|
|
26
|
%
|
|
|
$
|
95.8
|
|
|
38
|
%
|
Well servicing
|
|
$
|
101.7
|
|
|
26
|
%
|
|
|
$
|
75.7
|
|
|
31
|
%
|
Contract drilling
|
|
$
|
4.9
|
|
|
1
|
%
|
|
|
$
|
3.0
|
|
|
1
|
%
|
Total revenues
|
|
$
|
395.3
|
|
|
100
|
%
|
|
|
$
|
250.4
|
|
|
100
|
%
|
During the fourth quarter of 2015, oil prices declined to levels below $50 per barrel (WTI Cushing) and dropped to levels below $30 in early 2016 before rebounding in late 2016. During the first half of
2017
, oil prices gradually improved with pricing in the mid-$50 range before declining to the mid-$40 range by the end of the second quarter. As a result of the overall increase in pricing, our customers’ activity levels and utilization of our equipment has gradually improved. General improvement in customer confidence has caused the North American onshore drilling rig count to rise, resulting in a significant increase in completion-related activity during the first half of 2017. Additionally, production related activities, such as well servicing and fluid services, have seen increases as customers have increased their maintenance and workover budgets in 2017.
As a result of increased concentration of equipment and activity, utilization and pricing for our services has remained competitive in our oil-based operating areas. Natural gas prices have been depressed for a prolonged period and utilization and pricing for our services in our natural gas-based operating areas remained challenged.
We believe that the most important performance measures for our business segments are as follows:
|
|
•
|
Completion and Remedial Services
— segment profits as a percent of revenues;
|
|
|
•
|
Well Servicing
— rig hours, rig utilization rate, revenue per rig hour, profits per rig hour and segment profits as a percent of revenues;
|
|
|
•
|
Fluid Services —
trucking hours, revenue per truck, segment profits per truck and segment profits as a percent of revenues; and
|
|
|
•
|
Contract Drilling
— rig operating days, revenue per drilling day, profits per drilling day and segment profits as a percent of revenues.
|
Segment profits are computed as segment operating revenues less direct operating costs. These measurements provide important information to us about the activity and profitability of our lines of business. For a detailed analysis of these indicators for the Company, see “Segment Overview” below.
Selected Acquisitions
and Divestitures
During the year ended December 31, 2016 and through the first
six
months of
2017
, we did not make any business acquisitions or divestitures.
Segment Overview
Completion and Remedial Services
During the first
six
months of
2017
, our completion and remedial services segment represented approximately
47%
of our revenues. Revenues from our completion and remedial services segment are generally derived from a variety of services designed to complete and stimulate new oil and natural gas production or place cement slurry within the wellbores. Our completion and remedial services segment includes pumping services, rental and fishing tool operations, coiled tubing services, nitrogen services, snubbing and other services.
Our pumping services provide both large and mid-sized fracturing services in selected markets, including vertical and horizontal wellbores. Cementing and acidizing services also are included in our pumping services operations. Our total hydraulic horsepower capacity for our pumping operations was
518,000
at
June 30, 2017
and 444,000 at June 30,
2016
, respectively. Weighted average horsepower increased to 488,000 for the second quarter of 2017 from 444,000 in the second quarter of 2016.
In this segment, we derive our revenues on a project-by-project basis in a competitive bidding process. Our bids are based on the amount and type of equipment and personnel required, with the materials consumed billed separately. During the extended period of decreased spending by oil and gas companies in 2015 and 2016, we discounted our rates to remain competitive, which has caused lower segment profits. As activity has improved in the first half of 2017, we have gained limited pricing increases.
The following is an analysis of our completion and remedial services segment for each of the quarters in
2016
, the full year ended
December 31, 2016
and the quarters ended March 31, 2017 and
June 30, 2017
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
|
|
|
Revenues
|
|
Profits %
|
2016: (Predecessor)
|
|
|
|
|
First Quarter
|
|
$
|
39,696
|
|
|
12
|
%
|
Second Quarter
|
|
$
|
36,228
|
|
|
9
|
%
|
Third Quarter
|
|
$
|
49,424
|
|
|
18
|
%
|
Fourth Quarter
|
|
$
|
59,219
|
|
|
14
|
%
|
Full Year
|
|
$
|
184,567
|
|
|
14
|
%
|
2017: (Successor)
|
|
|
|
|
First Quarter
|
|
$
|
80,431
|
|
|
16
|
%
|
Second Quarter
|
|
$
|
107,385
|
|
|
24
|
%
|
The increase in completion and remedial services revenue to
$107.4 million
in the
second
quarter of
2017
from
$80.4 million
in the first quarter of 2017 resulted primarily from increased activity particularly in our coil tubing and fracing operations. Segment profits as a percentage of revenue increased to
24%
in the
second
quarter of
2017
from
16%
in first quarter of 2017 on the incremental effect of higher revenues and improved pricing and utilization of our equipment.
Fluid Services
During the first
six
months of
2017
, our fluid services segment represented approximately
26%
of our revenues. Revenues in our fluid services segment are earned from the sale, transportation, treatment, and recycling, storage and disposal of fluids used in the drilling, production and maintenance of oil and natural gas wells. Revenues also include well site construction and maintenance services. The fluid services segment has a base level of business consisting of transporting and disposing of salt water produced as a by-product of the production of oil and natural gas. These services are necessary for our customers and usually have a stable demand, but produce lower relative segment profits than other parts of our fluid services segment. Fluid services for completion and workover projects require fresh or brine water for making drilling mud, circulating fluids or frac fluids used during a job, and all of these fluids require storage tanks and hauling and disposal. Because we can provide a full complement of fluid sales, trucking, storage and disposal required on most drilling and workover projects, the add-on services associated with drilling and workover activity generally enable us to generate higher segment profits. The higher segment profits for these add-on services are due to the relatively small incremental labor costs associated with providing these services
in addition to our base fluid services segment. Revenues from our water treatment and recycling services include the treatment, recycling and disposal of wastewater, including frac water and flowback, to reuse this water in the completion and production processes. Revenues from our well site construction services are derived primarily from preparing and maintaining access roads and well locations, installing small diameter gathering lines and pipelines, constructing foundations to support drilling rigs and providing maintenance services for oil and natural gas facilities. We price fluid services by the job, by the hour, or by the quantities sold, disposed of or hauled.
The following is an analysis of our fluid services operations for each of the quarters in
2016
, the full year ended
December 31, 2016
and the quarters ended March 31, 2017 and
June 30, 2017
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Segment
|
|
|
|
|
Average
|
|
|
|
Revenue
|
|
Profits Per
|
|
|
|
|
Number of
|
|
|
|
Per Fluid
|
|
Fluid
|
|
|
|
|
Fluid Service
|
|
Trucking
|
|
Service
|
|
Service
|
|
Segment
|
|
|
Trucks
|
|
Hours
|
|
Truck
|
|
Truck
|
|
Profits %
|
2016: (Predecessor)
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
985
|
|
|
521,500
|
|
|
$
|
51
|
|
|
$
|
10
|
|
|
18
|
%
|
Second Quarter
|
|
976
|
|
|
474,400
|
|
|
$
|
47
|
|
|
$
|
7
|
|
|
15
|
%
|
Third Quarter
|
|
962
|
|
|
499,900
|
|
|
$
|
49
|
|
|
$
|
8
|
|
|
17
|
%
|
Fourth Quarter
|
|
944
|
|
|
503,200
|
|
|
$
|
52
|
|
|
$
|
7
|
|
|
13
|
%
|
Full Year
|
|
966
|
|
|
1,999,000
|
|
|
$
|
199
|
|
|
$
|
31
|
|
|
16
|
%
|
2017: (Successor)
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
935
|
|
|
484,300
|
|
|
$
|
54
|
|
|
$
|
9
|
|
|
17
|
%
|
Second Quarter
|
|
943
|
|
|
473,500
|
|
|
$
|
54
|
|
|
$
|
10
|
|
|
18
|
%
|
Revenue per fluid service truck remained constant at
$54,000
in the second quarter of
2017
compared to the first quarter of 2017 on continued high levels of disposal well utilization and hot oiling services revenues. Segment profit percentage increased to
18%
in the
second
quarter of 2017 from
17%
in the
first
quarter of
2017
primarily due to the incremental effect of higher revenues.
Well Servicing
During the first
six
months of
2017
, our well servicing segment represented
26%
of our revenues. Revenue in our well servicing segment is derived from maintenance, workover, completion, manufacturing and plugging and abandonment services. We provide maintenance-related services as part of the normal, periodic upkeep of producing oil and natural gas wells. Maintenance-related services represent a relatively consistent component of our business. Workover and completion services generate more revenue per hour than maintenance work due to the use of auxiliary equipment, but demand for workover and completion services fluctuates more with the overall activity level in the industry. We also have a rig manufacturing and servicing facility that builds new workover rigs, performs large-scale refurbishments of used workover rigs and provides maintenance services on previously manufactured rigs.
We charge our well servicing rig customers for services on an hourly basis at rates that are determined by the type of service and equipment required, market conditions in the region in which the rig operates, the ancillary equipment provided on the rig and the necessary personnel. Depending on the type of job, we may also charge by the project or by the day. We measure the activity levels of our well servicing rigs on a weekly basis by calculating a rig utilization rate based on a 55-hour work week per rig. Our fleet remained constant in 2016 and 2017 at a weighted average number of 421 rigs.
The following is an analysis of our well servicing operations for each of the quarters in
2016
, the full year ended
December 31, 2016
and the quarters ended March 31, 2017 and
June 30, 2017
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
Rig
|
|
Revenue
|
|
|
|
|
|
|
Number
|
|
|
|
Utilization
|
|
Per Rig
|
|
Profits Per
|
|
|
|
|
of Rigs
|
|
Rig hours
|
|
Rate
|
|
Hour
|
|
Rig hour
|
|
Profits %
|
2016: (Predecessor)
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
421
|
|
|
108,400
|
|
|
36
|
%
|
|
$
|
321
|
|
|
$
|
44
|
|
|
11
|
%
|
Second Quarter
|
|
421
|
|
|
113,700
|
|
|
38
|
%
|
|
$
|
308
|
|
|
$
|
44
|
|
|
14
|
%
|
Third Quarter
|
|
421
|
|
|
136,600
|
|
|
45
|
%
|
|
$
|
313
|
|
|
$
|
60
|
|
|
19
|
%
|
Fourth Quarter
|
|
421
|
|
|
146,200
|
|
|
49
|
%
|
|
$
|
300
|
|
|
$
|
43
|
|
|
14
|
%
|
Full Year
|
|
421
|
|
|
504,900
|
|
|
42
|
%
|
|
$
|
310
|
|
|
$
|
47
|
|
|
14
|
%
|
2017: (Successor)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
421
|
|
|
157,600
|
|
|
52
|
%
|
|
$
|
307
|
|
|
$
|
49
|
|
|
16
|
%
|
Second Quarter
|
|
421
|
|
|
162,300
|
|
|
54
|
%
|
|
$
|
321
|
|
|
$
|
69
|
|
|
21
|
%
|
Rig utilization was
54%
in the
second
quarter of
2017
, up from
52%
in the first quarter of 2017. The higher utilization rate in the
second
quarter of
2017
resulted from an increase in well servicing hours caused by increases in customer demand and activity in selected basins. Our segment profit percentage increased to
21%
for the
second
quarter of
2017
from
16%
in the first quarter of 2017, primarily due to increased utilization, pricing and improved plugging and abandonment activity.
Contract Drilling
During the first
six
months of
2017
, our contract drilling segment represented approximately
1%
of our revenues. Revenues from our contract drilling segment are derived primarily from the drilling of new wells.
Within this segment, we charge our drilling rig customers a “daywork” daily rate, or “footage” at an established rate per number of feet drilled. We measure the activity level of our drilling rigs on a weekly basis by calculating a rig utilization rate based on a seven-day work week per rig. Our contract drilling rig fleet had a weighted average of 11 rigs during the
second
quarter of
2017
, which is down from 12 during the first quarter of 2017.
The following is an analysis of our contract drilling segment for each of the quarters in
2016
, the full year ended
December 31, 2016
and the quarters ended March 31, 2017 and
June 30, 2017
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
Rig
|
|
|
|
|
|
|
|
|
Number of
|
|
Operating
|
|
Revenue Per
|
|
Profits Per
|
|
Segment
|
|
|
Rigs
|
|
Days
|
|
Drilling Day
|
|
Drilling Day
|
|
Profits %
|
2016: (Predecessor)
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
12
|
|
|
91
|
|
|
$
|
16.5
|
|
|
$
|
(0.6
|
)
|
|
(4
|
)%
|
Second Quarter
|
|
12
|
|
|
91
|
|
|
$
|
16.1
|
|
|
$
|
1
|
|
|
6
|
%
|
Third Quarter
|
|
12
|
|
|
92
|
|
|
$
|
20.1
|
|
|
$
|
1.8
|
|
|
9
|
%
|
Fourth Quarter
|
|
12
|
|
|
139
|
|
|
$
|
17.5
|
|
|
$
|
0.8
|
|
|
(2
|
)%
|
Full Year
|
|
12
|
|
|
413
|
|
|
$
|
17.5
|
|
|
$
|
0.8
|
|
|
2
|
%
|
2017: (Successor)
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
12
|
|
|
135
|
|
|
$
|
20.5
|
|
|
$
|
2.6
|
|
|
13
|
%
|
Second Quarter
|
|
11
|
|
|
91
|
|
|
$
|
23.3
|
|
|
$
|
2.8
|
|
|
12
|
%
|
Revenue per drilling day
increased
to
$23,300
in the
second
quarter of
2017
compared to
$20,500
in the first quarter of 2017. The increase in revenue per drilling day in the
second
quarter of
2017
was due to an increase in rig trucking revenues and utilization. Segment profit percentage decreased to
12%
in the second quarter of
2017
compared to segment profit of
13%
in the first quarter of 2017 due to decreased utilization of our contract drilling rigs.
Operating Cost Overview
Our operating costs are comprised primarily of labor, including workers’ compensation and health insurance, repair and maintenance, fuel and insurance. The majority of our employees are paid on an hourly basis. We also incur costs to employ personnel to sell and supervise our services and perform maintenance on our fleet. These costs, however, are not directly tied to our level of business activity. Repair and maintenance is performed by our crews, company maintenance personnel and outside service providers. Compensation for our administrative personnel in local operating yards and in our corporate office is accounted for as general and administrative expenses. Insurance is generally a fixed cost regardless of utilization and relates to the number of rigs, trucks and other equipment in our fleet, employee payroll and safety record.
Critical Accounting Policies and Estimates
Our unaudited consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of our significant accounting policies is included in Note 1.
Basis of Presentation and Nature of Operations
of the Financial Statements and Supplementary Data in our most recent Annual Report on Form 10-K.
Results of Operations
The following is a comparison of our results of operations for the three and six months ended
June 30, 2017
compared to the three and six months ended
June 30, 2016
. The implementation of the First Amended Joint Prepackaged Chapter 11 Plan of Basic Energy Services, Inc. and its Affiliated Debtors and the application of fresh start accounting materially changed the carrying amounts and classifications reported in our consolidated financial statements and resulted in the Company becoming a new entity for financial reporting purposes. Accordingly, our consolidated financial statements for periods prior to December 31, 2016 will not be comparable to our consolidated financial statements as of December 31, 2016 or for periods subsequent to December 31, 2016. For additional segment-related information and trends, please read “Segment Overview” above.
Three Months Ended
June 30, 2017
Compared to Three Months Ended
June 30, 2016
Revenues.
Revenues
increased
by
78%
to
$213.3 million
during the
second
quarter of
2017
from
$120.0 million
during the same period in
2016
. This increase was primarily due to increased demand for our services by our customers, particularly completion and remedial services, compared to the same period in 2016, when our customers were working with reduced capital budgets. After the prolonged period of lower oil prices, our customers have gradually begun to increase their capital and operating spending levels.
Completion and remedial services revenues
increased
by
196%
to
$107.4 million
during the
second
quarter of
2017
compared to
$36.2 million
in the same period in
2016
. The increase in revenue between these periods was primarily due to improved demand for completion related activities and slightly improved pricing for our services, particularly in our pumping services and coil tubing lines of business. Total hydraulic horsepower increased to
518,000
at
June 30, 2017
from 444,000 at
June 30, 2016
due to the acquisition of 74,000 HHP during the second quarter of 2017. Weighted average horsepower increased to 488,000 for the second quarter of 2017 from 444,000 in the second quarter of 2016.
Fluid services revenues
increased
to
$50.7 million
during the
second
quarter of
2017
compared to
$45.5 million
in the same period in
2016
. Our revenue per fluid service truck increased
15%
to
$54,000
in the
second
quarter of
2017
compared to
$47,000
in the same period in
2016
mainly due to increases in trucking activity, disposal utilization and skim oil revenues. Our weighted average number of fluid service trucks decreased to
943
during the
second
quarter of
2017
compared to
976
in the same period in
2016
.
Well servicing revenues
increased
by
44%
to
$53.1 million
during the
second
quarter of
2017
compared to
$36.8 million
during the same period in
2016
. The increase was driven by an increase in utilization of our equipment, primarily due to increases in customer demand. Our weighted average number of well servicing rigs remained constant at 421 during the
second
quarter of
2017
and
2016
. Utilization was
54%
in the
second
quarter of
2017
, compared to
38%
in the comparable quarter of
2016
. Revenue per rig hour in the
second
quarter of
2017
was
$321
, increasing from
$308
in the comparable quarter of
2016
due to rate increases to customers.
Contract drilling revenues increased by
45%
to
$2.1 million
during the
second
quarter of
2017
compared to
$1.5 million
in the same period in
2016
. The number of rig operating days remained constant at
91
in the
second
quarter of
2017
from
91
in the
second
quarter of
2016
. The increase in revenue was due to an increase in drilling activity and rig trucking activity in the Permian Basin.
Direct Operating Expenses.
Direct operating expenses, which primarily consist of labor, including workers’ compensation and health insurance, repair and maintenance, fuel and insurance,
increased
to
$166.4 million
during the
second
quarter of
2017
from
$104.7 million
in the same period in
2016
, primarily due to increases in activity and corresponding increases in employee headcount and wages to adapt to current activity levels.
Direct operating expenses for the completion and remedial services segment
increased
by
147%
to
$81.2 million
during the
second
quarter of
2017
compared to
$32.9 million
for the same period in
2016
due primarily to increased activity levels overall, especially in our pumping and coil tubing services. Segment profits
increased
to
24%
of revenues during the
second
quarter of
2017
compared to
9%
for the same period in
2016
, due to the improved utilization of equipment and incremental margins from a higher revenue base.
Direct operating expenses for the fluid services segment
increased
by
8%
to
$41.6 million
during the
second
quarter of
2017
compared to
$38.6 million
for the same period in
2016
, mainly due to activity levels improving in 2017. Segment profits were
18%
of revenues during the
second
quarter of
2017
compared to
15%
for the same period in
2016
, due to an increase in incremental margins from a higher revenue base.
Direct operating expenses for the well servicing segment
increased
by
31%
to
$41.8 million
during the
second
quarter of
2017
compared to
$31.8 million
for the same period in
2016
. The increase in direct operating expenses corresponds to increased workover and plugging activity levels. Segment profits
increased
to
21%
of revenues during the
second
quarter of
2017
compared to
14%
of revenues during the
second
quarter of
2016
due to improved utilization of our equipment and incremental margins from a higher revenue base.
Direct operating expenses for the contract drilling segment
increased
36%
to
$1.9 million
during the
second
quarter of
2017
compared to
$1.4 million
for the same period in
2016
, due to increased activity and rig operating days. Segment profits
increased
to
12%
of revenues during the
second
quarter of
2017
from a segment profit of
6%
during the
second
quarter of
2016
due to an increase in drilling projects during the
second
quarter of
2017
.
General and Administrative Expenses.
General and administrative expenses increased by
33%
to
$36.0 million
during the
second
quarter of
2017
from
$27.1 million
for the same period in
2016
, due to costs related to increased stock-based compensation expense and $1.0 million of restructuring fees associated with the implementation of our fresh start accounting process. General and administrative expenses included $6.3 million and $2.3 million of stock-based compensation expense during the
second
quarters of
2017
and
2016
, respectively.
Depreciation and Amortization
Expenses.
Depreciation and amortization expenses were
$26.0 million
during the
second
quarter of
2017
compared to
$54.8 million
for the same period in
2016
. The decrease in depreciation and amortization expense is due to the revaluation of our asset base as of December 31, 2016 as part of the adoption of the fresh start accounting associated with our emergence from bankruptcy.
Interest Expense.
Interest expense decreased to
$9.2 million
during the
second
quarter of
2017
compared to
$22.5 million
during the
second
quarter of
2016
. The decrease in interest expense is due to the cancellation of our unsecured notes as part of our emergence from bankruptcy.
Income Tax Expense.
There was no income tax expense during the
second
quarter of
2017
compared to an income tax benefit of
$662,000
for the same period in
2016
. Excluding the impact of the valuation allowance, our effective tax rate during the
second
quarter of
2017
and
2016
was approximately 36%.
Six Months Ended
June 30, 2017
Compared to Six Months Ended
June 30, 2016
Revenues.
Revenues
increased
by
58%
to
$395.3 million
during the six months ended
June 30, 2017
from
$250.4 million
during the same period in
2016
. This increase was primarily due to increased demand for our services by our customers, particularly completion and remedial services, compared to the same period in 2016, when our customers were working with reduced capital budgets and ramping down projects. After the prolonged period of lower oil prices, our customers have gradually begun to increase capital budgets.
Completion and remedial services revenues
increased
by
147%
to
$187.8 million
during the six months ended
June 30, 2017
compared to
$75.9 million
in the same period in
2016
. The increase in revenue between these periods was primarily due to improved demand for completion related activities and slightly improved pricing for our services, particularly in our pumping services and coil tubing lines of business. Total hydraulic horsepower increased to
518,000
at
June 30, 2017
from 444,000 at
June 30, 2016
due to the acquisition of 74,000 HHP during the second quarter of 2017. Weighted average horsepower increased to 488,000 for the second quarter of 2017 from 444,000 in the second quarter of 2016.
Fluid services revenues
increased
by
5%
to
$100.9 million
during the six months ended
June 30, 2017
compared to
$95.7 million
during the same period in
2016
. Our revenue per fluid service truck increased
10%
to
$108,000
in the six months ended
June 30, 2017
compared to
$98,000
in the same period in
2016
mainly due to increases in trucking activity, disposal utilization and skim oil revenues. Our weighted average number of fluid service trucks decreased to
939
during the six months ended
June 30, 2017
compared to
980
in the same period in
2016
.
Well servicing revenues
increased
by
34%
to
$101.7 million
during the six months ended
June 30, 2017
compared to
$75.7 million
during the same period in
2016
. The increase was driven by an increase in utilization of our equipment, primarily due to increases in customer demand. Our weighted average number of well servicing rigs remained constant at 421 during the six
months ended
June 30, 2017
and
2016
. Utilization was
53%
in the six months ended
June 30, 2017
, compared to
37%
in the comparable quarter of
2016
. Revenue per rig hour in the six months ended
June 30, 2017
was
$314
, essentially flat from
$315
in the comparable period of
2016
.
Contract drilling revenues
increased
by
65%
to
$4.9 million
during the six months ended
June 30, 2017
compared to
$3.0 million
in the same period in
2016
. The number of rig operating days
increased
24%
to
226
in the six months ended
June 30, 2017
compared to
182
in the six months ended June 30,
2016
. The increase in revenue and rig operating days was due to an increase in drilling activity in the Permian Basin.
Direct Operating Expenses.
Direct operating expenses, which primarily consist of labor, including workers’ compensation and health insurance, repair and maintenance, fuel and insurance,
increased
to
$318.6 million
during the six months ended
June 30, 2017
from
$216.7 million
in the same period in
2016
, primarily due to increases in activity and corresponding increases in employee headcount and wages to adapt to current activity levels.
Direct operating expenses for the completion and remedial services segment
increased
by
119%
to
$148.5 million
during the six months ended
June 30, 2017
compared to
$67.6 million
for the same period in
2016
due primarily to increased activity levels overall, especially in our pumping and coil tubing services. Segment profits
increased
to
21%
of revenues during the six months ended
June 30, 2017
compared to
11%
for the same period in
2016
, due to the improved utilization and pricing of equipment and incremental margins from a higher revenue base.
Direct operating expenses for the fluid services segment
increased
by
4%
to
$83.1 million
during the six months ended
June 30, 2017
compared to
$79.8 million
for the same period in
2016
, mainly due to activity levels improving in 2017. Segment profits were
18%
of revenues during the six months ended
June 30, 2017
compared to
17%
for the same period in
2016
, due to higher levels of disposal utilization and skim oil sales.
Direct operating expenses for the well servicing segment
increased
by
25%
to
$82.7 million
during the six months ended
June 30, 2017
compared to
$66.3 million
for the same period in
2016
. The increase in direct operating expenses corresponds to increased workover and plugging activity levels. Segment profits
increased
to
19%
of revenues during the six months ended
June 30, 2017
compared to
12%
of revenues during the six months ended June 30,
2016
due to improved utilization of our equipment and incremental margins from a higher revenue base.
Direct operating expenses for the contract drilling segment
increased
46%
to
$4.3 million
during the six months ended
June 30, 2017
compared to
$2.9 million
for the same period in
2016
, due to increased activity and rig operating days. Segment profits
increased
to
12%
of revenues during the six months ended
June 30, 2017
from a segment profit of
1%
during the six months ended of
2016
due to an increase in drilling projects during the
second
quarter of
2017
.
General and Administrative Expenses.
General and administrative expenses increased by
24%
to
$70.2 million
during the six months ended
June 30, 2017
from
$56.6 million
for the same period in
2016
, due to costs related to increased stock-based compensation expense and restructuring fees associated with the implementation of our fresh start accounting process. General and administrative expenses included $10.7 million and $5.1 million of stock-based compensation expense during the six months ended
June 30, 2017
and
2016
, respectively.
Depreciation and Amortization
Expenses.
Depreciation and amortization expenses were
$51.4 million
during the six months ended
June 30, 2017
compared to
$111.0 million
for the same period in
2016
. The decrease in depreciation and amortization expense is due to the revaluation of our asset base as of December 31, 2016 as part of the adoption of the fresh start accounting associated with our emergence from bankruptcy.
Interest Expense.
Interest expense decreased to
$18.3 million
during the six months ended
June 30, 2017
compared to
$43.2 million
during the six months ended June 30,
2016
. The decrease in interest expense is due to the cancellation of our unsecured notes as part of our emergence from bankruptcy.
Income Tax Expense.
There was income tax expense of $374,000 during the six months ended
June 30, 2017
compared to an income tax benefit of
$3.9 million
for the same period in
2016
. Excluding the impact of the valuation allowance, our effective tax rate during each of the six months ended
June 30, 2017
and
2016
was approximately 36%.
Liquidity and Capital Resources
As of
June 30, 2017
, our primary capital resources were utilization of capital leases and borrowings under our $75.0 million Second Amended and Restated ABL Credit Agreement (the "ABL Facility"), partially offset by net cash used in operations. As of
June 30, 2017
, we had unrestricted cash and cash equivalents of
$34.2 million
compared to
$98.9 million
as of December 31, 2016. An additional amount of
$2.4 million
is classified as restricted cash. We have utilized, and expect to utilize in the future, bank and capital lease financing and sales of equity to obtain capital resources. When appropriate, we will consider public or private debt and equity offerings and non-recourse transactions to meet our liquidity needs.
Net Cash Used in Operating Activities
Cash used in operating activities was
$13.4 million
for the six months ended
June 30, 2017
, a decrease compared to cash used in operating activities of
$42.0 million
during the same period in 2016. Operating cash flow usage in the first
six
months of 2017 was lower than the same period in 2016 due to improved operating results and improved working capital levels.
Our liquidity, including our ability to meet our ongoing operational obligations, is dependent upon, among other things, our ability to maintain adequate cash on hand and our ability to generate cash flow from operations. Our ability to maintain adequate liquidity depends upon industry conditions and financial, competitive, and other factors beyond our control. In the event that cash on hand and cash flow from operations is not sufficient to meet our liquidity needs, we may have limited access to additional financing.
Capital Expenditures
Cash capital expenditures during the first
six
months of 2017 were $39.9 million compared to $11.6 million in the same period of 2016. We added $49.2 million of additional assets through our capital lease program and other financing arrangements during the first
six
months of 2017 compared to $2.2 million of additional assets in the same period in 2016.
We currently have planned capital expenditures for the full year of 2017 of under $115.0 million, including capital leases of $70.0 million. We do not budget acquisitions in the normal course of business, and we regularly engage in discussions related to potential acquisitions related to the oilfield services industry.
Capital Resources and Financing
Our current primary capital resources are cash flow from our operations, our ABL Facility, the ability to enter into capital leases, the ability to incur additional secured indebtedness, and a cash balance of $34.2 million at
June 30, 2017
. We had no borrowings and $54.8 million in letters of credit outstanding under the ABL Facility, as of
June 30, 2017
, giving us $20.2 million of available borrowing capacity subject to covenant constraints under our ABL Facility, including our fixed charge coverage ratio. In 2017, we financed activities in excess of cash flow from operations primarily through the use of cash, capital leases and other financing arrangements. Our Amended and Restated Term Loan Agreement (the "Term Loan Agreement") had $163.4 million aggregate outstanding principal amount of loans as of
June 30, 2017
and no additional borrowing capacity.
On April 13, 2017, the Company filed a universal shelf registration statement on Form S-3 covering $1 billion of securities. As of July 31, 2017, the registration statement has not been declared effective by the SEC.
Contractual Obligations
We have significant contractual obligations in the future that will require capital resources. Our primary contractual obligations are (1) our capital leases, (2) our operating leases, (3) our asset retirement obligations and (4) our other long-term liabilities. The following table outlines our contractual obligations as of
June 30, 2017
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations Due in
|
|
|
|
|
Periods Ended June 30,
|
|
|
Contractual Obligations
|
|
Total
|
|
2017
|
|
2018 to 2019
|
|
2020 to 2021
|
|
Thereafter
|
Term Loan Credit Agreement
|
|
$
|
163,350
|
|
|
$
|
825
|
|
|
$
|
3,300
|
|
|
$
|
159,225
|
|
|
$
|
—
|
|
Capital leases and other financing arrangements
|
|
105,818
|
|
|
22,985
|
|
|
71,750
|
|
|
10,987
|
|
|
96
|
|
Operating leases
|
|
20,868
|
|
|
2,960
|
|
|
9,231
|
|
|
6,779
|
|
|
1,898
|
|
Asset retirement obligation
|
|
2,515
|
|
|
548
|
|
|
491
|
|
|
553
|
|
|
923
|
|
Total
|
|
$
|
292,551
|
|
|
$
|
27,318
|
|
|
$
|
84,772
|
|
|
$
|
177,544
|
|
|
$
|
2,917
|
|
Interest on long-term debt relates to our future contractual interest obligations under the Term Loan Agreement and our capital leases. Our capital leases relate primarily to light-duty and heavy-duty vehicles and trailers. Our operating leases relate primarily to real estate. Our asset retirement obligation relates to disposal wells.
Our ability to access additional sources of financing will be dependent on our operating cash flows and demand for our services, which could be negatively impacted due to the extreme volatility of commodity prices.
Other Matters
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Net Operating Losses
As of
June 30, 2017
, Basic had approximately $655.3 million of net operating loss carryforwards ("NOL"), for federal income tax purposes, which begin to expire in 2031 and $245.5 million of NOL carryforwards for state income tax purposes which begin to expire in 2017.
Basic provides a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. As of
June 30, 2017
, a valuation allowance of $225.0 million was recorded against the Company's net deferred tax assets for all jurisdictions that are not expected to be realized.
Recent Accounting Pronouncements
The Company's consideration of recent accounting pronouncements is included in Note 13.
Recent Accounting Pronouncements
to the consolidated financial statements included in this quarterly report.
Impact of Inflation on Operations
Management is of the opinion that inflation has not had a significant impact on our business.