The New Credit Facility will be secured by accounts receivable, inventory and certain
related assets and will be jointly and severally guaranteed by substantially all of the Companys existing and future domestic subsidiaries. The amount available to be borrowed under the New Credit Facility at any time will be limited to the
lesser of the aggregate commitments under the New Credit Facility and the borrowing base, which will be based on a percentage of the value of its eligible billed and unbilled accounts receivable. Loans under the New Credit Facility may be base rate
loans or LIBOR loans. Base rate loans will bear interest at a rate equal to a base rate plus an applicable margin ranging from 0.75% to 1.25%, and LIBOR loans will bear interest at a rate equal to LIBOR plus an applicable margin ranging from 1.75%
to 2.25%, in each case depending on the average daily excess availability under the New Credit Facility from time to time. In addition, a commitment fee ranging between 0.375% and 0.500% will be charged on the average daily unused portion of the
commitments under the New Credit Facility depending on the amount outstanding under the New Credit Facility. The New Credit Facility will contain various restrictive covenants that may limit the Companys ability to incur additional
indebtedness, incur liens, make investments, enter into mergers and similar transactions, make or declare dividends, sell assets and engage in certain other transactions without the prior consent of the lenders. The New Credit Facility will not have
any financial covenants other than a springing fixed charge coverage ratio of 1.0 to 1.0 which will be tested if excess availability under the New Credit Facility is less than 12.5% of the borrowing base or $18.75 million.
The Company has received written or verbal commitments from bank lenders for the New Credit Facility totaling $150.0 million. There can
be no assurance that the New Credit Facility will become effective, and the consummation of the Offering is not conditioned upon the effectiveness of the New Credit Facility. In the event the New Credit Facility becomes effective, the New Credit
Facility will replace its existing $150.0 million Credit Facility.
Certain of the initial purchasers or their affiliates are lenders
and/or agents under the Companys existing Credit Facility and may receive customary fees and reimbursement of expenses in connection with the New Credit Facility.
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The Company provides
services to a diverse group of over 2,000 oil and gas companies and employs more than 4,200 employees in 118 service points throughout the major United States onshore oil and natural gas producing regions located in Texas, New Mexico, Oklahoma,
Arkansas, Kansas, Louisiana, Wyoming, North Dakota, California and Colorado.
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The Company currently conducts its business from 118 area offices, 79 of which it owns and 39 of which it leases.
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Of the Companys 118
area offices, 73 are located in Texas, seven are in New Mexico, ten are in Oklahoma, three are in North Dakota and eight are in Colorado, four are in Wyoming and Louisiana, three are in Kansas, California and Pennsylvania each have two, and
Montana and Arkansas each have one.
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The Company intends to continue growing its business through organic new build programs, upgrading its existing assets and/or selected
acquisitions.
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The
Companys water logistics segment (24% of its revenues in the first six months of 2018) utilizes pipelines (accounting for 30% of its disposal volumes in August 2018, approximately 23% of total disposal volumes and approximately 40% of Permian
disposal volumes during the second quarter of 2018) and its fleet of 85 salt water disposal wells and facilities (32 of which are in the Permian Basin), water wells, 882 fluid service trucks and related assets, water treatment and construction and
other related equipment.
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The Companys well servicing segment (25% of its revenues in the first six months of 2018) operates its fleet of 310 active well
servicing rigs and related equipment. This business segment encompasses a full range of services performed with a mobile well servicing rig, including the installation and removal of downhole equipment and the completion of the well bore to initiate
production of oil and natural gas.
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The largest portion of the completion and remedial business segment, by revenue, consists of pumping services focused on cementing, acidizing
and fracturing services. Rental and fishing tools represent a growing portion of segment revenues (17% in the second quarter of 2018) and are largely driven by the rental revenue from larger equipment used in conjunction with service rigs engaged in
completions or larger workover projects.
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