Notes to Consolidated Financial Statements
Years Ended December 31, 2018, 2017 and 2016
(1) Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Superior Energy Services, Inc. and subsidiaries (the Company). All significant intercompany accounts and transactions are eliminated in consolidation. Certain previously reported amounts have been reclassified to conform to the 2018 presentation.
Business
The Company provides a wide variety of services and products to the energy industry. The Company serves major, national and independent oil and natural gas companies around the world and offers products and services with respect to the various phases of a well’s economic life cycle. The Company reports its operating results in
four
business segments: Drilling Products and Services; Onshore Completion and Workover Services; Production Services; and Technical Solutions. Given the Company’s long-term strategy of expanding geographically, the Company also provides supplemental segment revenue information in
three
geographic areas: U.S. land; Gulf of Mexico; and International.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Major Customers and Concentration of Credit Risk
The majority of the Company’s business is conducted with major and independent oil and gas companies. The Company evaluates the financial strength of its customers and provides allowances for probable credit losses when deemed necessary.
The market for the Company’s services and products is the oil and gas industry in the U.S. land and Gulf of Mexico areas and select international market areas. Oil and gas companies make capital expenditures on exploration, development and production operations. The level of these expenditures historically has been characterized by significant volatility.
The Company derives a large amount of revenue from a small number of major and independent oil and gas companies. There were
no
customers that exceeded 10% of the Company’s total revenues in 2018. Anadarko accounted for approximately
13%
and
11%
of the Company’s revenues in 2017 and 2016, respectively, primarily within the Onshore Completion and Workover Services segment.
The Company’s assets that are potentially exposed to concentrations of credit risk consist primarily of cash, cash equivalents and trade receivables. The financial institutions in which the Company transacts business are large,
investment grade
financial institutions
which are “well capitalized” under applicable regulatory capital adequacy guidelines
, thereby minimizing it
s
exposure to credit risks for deposits in excess of federally insured amounts.
Cash Equivalents
The Company considers all short-term investments with a maturity of
90
days or less when purchased to be cash equivalents.
Accounts Receivable and Allowances
Trade accounts receivable are recorded at the invoiced amount or the earned amount but not yet invoiced and do not bear interest. The Company maintains allowances for estimated uncollectible receivables, including bad debts and other items. The allowance for doubtful accounts is based on the Company’s best estimate of probable uncollectible amounts in existing accounts receivable. The Company determines the allowance based on historical write-off experience and specific identification.
Inventory
Inventories are stated at the lower of cost or net realizable value. The Company applies net realizable value and obsolescence to the gross value of the inventory. Cost is determined using the first-in, first-out or weighted-average cost methods for finished goods and work-in-process. Supplies and consumables consist principally of products used in the Company’s services provided to its customers.
The components of inventory balances are as follows (in thousands):
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|
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|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2018
|
|
2017
|
Finished goods
|
|
$
|
54,144
|
|
$
|
61,764
|
Raw materials
|
|
|
16,795
|
|
|
13,727
|
Work-in-process
|
|
|
5,544
|
|
|
6,174
|
Supplies and consumables
|
|
|
30,822
|
|
|
24,923
|
Total
|
|
$
|
107,305
|
|
$
|
106,588
|
|
|
|
|
|
|
|
Property, Plant and Equipment
Property, plant and equipment are stated at cost, except for assets for which reduction in value is recorded during the period and assets acquired using purchase accounting, which are recorded at fair value as of the date of acquisition. Depreciation is computed using the straight line method over the estimated useful lives of the related assets as follows:
Buildings and improvements
|
5
|
to
|
40
|
years
|
Marine vessels and equipment
|
5
|
to
|
25
|
years
|
Machinery and equipment
|
2
|
to
|
25
|
years
|
Automobiles, trucks, tractors and trailers
|
3
|
to
|
10
|
years
|
Furniture and fixtures
|
2
|
to
|
10
|
years
|
Reduction in Value of Long-Lived Assets
Long-lived assets, such as property, plant and equipment and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of such assets to their fair value calculated, in part, by the estimated undiscounted future cash flows expected to be generated by the assets. Cash flow estimates are based upon, among other things, historical results adjusted to reflect the best estimate of future market rates, utilization levels, and operating performance. Estimates of cash flows may differ from actual cash flows due to, among other things, changes in economic conditions or changes in an asset’s operating performance. The Company’s assets are grouped by subsidiary or division for the impairment testing, which represent the lowest level of identifiable cash flows. If the asset grouping’s fair value is less than the carrying amount of those items, impairment losses are recorded in the amount by which the carrying amount of such assets exceeds the fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less estimated costs to sell. The net carrying value of assets not fully recoverable is reduced to fair value. The estimate of fair value represents the Company’s best estimate based on industry trends and reference to market transactions and is subject to variability. The oil and gas industry is cyclical and estimates of the period over which future cash flows will be generated, as well as the predictability of these cash flows, can have a significant impact on the carrying values of these assets and, in periods of prolonged down cycles, may result in impairment charges. See note 10 for a discussion of the reduction in value of long-lived assets recorded during 2018, 2017 and 2016.
Goodwill
The following table summarizes the activity for the Company’s goodwill (in thousands):
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|
|
|
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|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Onshore
|
|
|
|
|
|
|
|
Drilling
|
|
Completion
|
|
|
|
|
|
|
|
Products
|
|
and Workover
|
|
Production
|
|
|
|
|
and Services
|
|
Services
|
|
Services
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2016
|
$
|
135,961
|
|
$
|
583,550
|
|
$
|
84,406
|
|
$
|
803,917
|
Foreign currency translation adjustment
|
|
2,532
|
|
|
-
|
|
|
1,411
|
|
|
3,943
|
Balance, December 31, 2017
|
|
138,493
|
|
|
583,550
|
|
|
85,817
|
|
|
807,860
|
Foreign currency translation adjustment
|
|
(1,705)
|
|
|
-
|
|
|
(529)
|
|
|
(2,234)
|
Reduction in value of assets
|
|
-
|
|
|
(583,550)
|
|
|
(85,288)
|
|
|
(668,838)
|
Balance, December 31, 2018
|
$
|
136,788
|
|
$
|
-
|
|
$
|
-
|
|
$
|
136,788
|
|
|
|
|
|
|
|
|
|
|
|
|
During 2017, the Company adopted the Financial Accounting Standards Board (FASB) update (ASU) 2017-04,
Intangibles- Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.
The amendments in the ASU eliminate Step 2 from the goodwill impairment test. The annual or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value.
The Company performs the goodwill impairment test on an annual basis as of October 1 or more often if events or circumstances indicate there may be impairment. Goodwill impairment testing is performed at the reporting unit level, which is consistent with the reporting segments. The Company assesses whether any indicators of impairment exist, which requires a significant amount of judgment. Such indicators may include
a sustained decrease
in the Company’s stock price and market capitalization; a decline in the expected future cash flows; overall weakness in the industry; and slower growth rates.
Goodwill impairment exists when the estimated fair value of the reporting unit is below the carrying value. In estimating the fair value of the reporting units, the Company uses a combination of an income approach and a market-based approach.
|
·
|
|
Income approach – The Company discounts the expected cash flows of each reporting unit. The discount rate used represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in the Company’s operations and cash flows and the rate of return an outside investor would expect to earn.
|
|
·
|
|
Market-based approach – The Company uses the guideline public company method, which focuses on comparing the Company’s risk profile and growth prospects to select reasonably similar publicly traded companies.
|
The Company weighted the income approach
80%
and the market-based approach
20%
due to differences between the Company’s reporting units and the peer companies’ size, profitability and diversity of operations. In order to validate the reasonableness of the estimated fair values obtained for the reporting units, a reconciliation of fair value to market capitalization was performed for each unit on a standalone basis. A control premium, derived from market transaction data, was used in this reconciliation to ensure that fair values were reasonably stated in conjunction with the Company’s capitalization. The Company uses all available information to estimate fair value of the reporting units, including discounted cash flows. A significant amount of judgment was involved in performing these evaluations given that the results are based on estimated future events.
During the fourth quarter of 2018, the industry climate deteriorated rapidly due to the dramatic decline in crude oil prices and the related large sell-off in the equity markets for issuers in the energy industry. As a result of the adverse changes in the business environment that occurred during the fourth quarter of 2018 and the strategic review of the Company’s expected near-term cash flows from operations, the Company reviewed the goodwill for impairment. It was concluded that at December 31, 2018, the Onshore Completion and Workover Services segment’s goodwill of
$583.6
million and the Production Services segment’s goodwill of
$85.3
million were fully impaired. The fair value of the Drilling Products and Services segment was substantially in excess of its carrying value. A significant amount of judgment was involved in performing these evaluations given that the results are based on estimated future events. See note 10 for a discussion of the reduction in value of goodwill recorded during 2018 and 2016. At December 31, 2018 and 2017, the Company’s accumulated reduction in value of goodwill was
$2,417.1
million and
$1,748.2
million, respectively.
Notes Receivable
The Company’s wholly owned subsidiary, Wild Well, has decommissioning obligations related to its ownership of the oil and gas property and related assets. Notes receivable consist of a commitment from the seller of the
property’s sole
platform towards its eventual abandonment. Pursuant to an agreement with the seller, the Company will invoice the seller an agreed upon amount at the completion of certain decommissioning activities. The gross amount of this obligation totaled $115.0 million and is recorded at present value using an effective interest rate of 6.58%. The related discount is amortized to interest income based on the expected timing of the platform’s removal. The Company recorded interest income related to notes receivable of $3.9 million during 2018 and $3.6 million in each of 2017 and 2016.
Restricted Cash
Restric
ted cash represents cash held in
escrow to secure the future decommissioning obligations related to the oil and gas property.
Intangible and Other Long-Term Assets
Intangible assets consist of the following (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2018
|
|
2017
|
|
|
Estimated
|
|
Gross
|
|
Accumulated
|
|
Net
|
|
Gross
|
|
Accumulated
|
|
Net
|
|
|
Useful Lives
|
|
Amount
|
|
Amortization
|
|
Balance
|
|
Amount
|
|
Amortization
|
|
Balance
|
Customer relationships
|
|
17 years
|
|
$
|
133,374
|
|
$
|
(59,711)
|
|
$
|
73,663
|
|
$
|
165,036
|
|
$
|
(62,930)
|
|
$
|
102,106
|
Tradenames
|
|
10 years
|
|
|
20,717
|
|
|
(13,334)
|
|
|
7,383
|
|
|
30,732
|
|
|
(17,188)
|
|
|
13,544
|
Non-compete agreements
|
|
3 years
|
|
|
4,474
|
|
|
(3,313)
|
|
|
1,161
|
|
|
4,299
|
|
|
(3,241)
|
|
|
1,058
|
Total
|
|
|
|
$
|
158,565
|
|
$
|
(76,358)
|
|
$
|
82,207
|
|
$
|
200,067
|
|
$
|
(83,359)
|
|
$
|
116,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense was $
12.7
million,
$12.7
million and
$16.2
million during 2018, 2017 and 2016, respectively. Based on the carrying values of intangible assets at December 31, 2018, amortization expense for the next five years (2019 through 2023) is estimated to be $
10
.0
million per year.
During 2018, the Company recorded
$21.7
million of expense related to the reduction in carrying values of intangibles in the Onshore Completion and Workover Services and Production Services segments (see note 10).
Decommissioning Liabilities
The Company’s decommissioning liabilities associated with the oil and gas property and its related assets consist of costs related to the plugging of wells, the removal of the related platform and equipment, and site restoration. The Company reviews the adequacy of its decommissioning liabilities whenever indicators suggest that the estimated cash flows and/or relating timing needed to satisfy the liability have changed materially.
The following table summarizes the activity for the Company’s decommissioning liabilities (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2018
|
|
2017
|
Balance at beginning of period
|
|
$
|
130,397
|
|
$
|
123,677
|
Accretion
|
|
|
4,906
|
|
|
6,837
|
Liability acquisitions and dispositions
|
|
|
-
|
|
|
(117)
|
Liabilities settled
|
|
|
(5,207)
|
|
|
-
|
Balance at end of period
|
|
$
|
130,096
|
|
$
|
130,397
|
|
|
|
|
|
|
|
Income Taxes
The Company accounts for income taxes and the related accounts under the asset and liability method. Deferred income taxes reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and rates that are in effect when the temporary differences are expected to reverse. The effect of a change in tax rates on the deferred income taxes is recognized in income in the period in which the change occurs. A valuation allowance is recorded when management believes it is more likely than not that at least some portion of any deferred tax asset will not be realized. It is the Company’s policy to recognize interest and applicable penalties related to uncertain tax positions in income tax expense.
Earnings per Share
Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed in the same manner as basic earnings per share except that the denominator is increased to include the number of additional shares of common stock that could have been outstanding assuming the exercise of stock options and conversion of restricted stock units.
During 2018, 2017 and 2016, the Company incurred losses from continuing operations; as such, the impact of any incremental shares would be anti-dilutive.
Foreign Currency
Results of operations for foreign subsidiaries with functional currencies other than the U.S. dollar are translated using average exchange rates during the period. Assets and liabilities of these foreign subsidiaries are translated using the exchange rates in effect at the balance sheet dates, and the resulting translation adjustments are reported as accumulated other comprehensive loss in the Company’s stockholders’ equity.
For international subsidiaries where the functional currency is the U.S. dollar,
financial statements are remeasured into U.S. dollars using the historical exchange rate for most of the long-term assets and liabilities and the balance sheet date exchange rate for most of the current assets and liabilities. An average exchange rate is used for each period for revenues and expenses. These transaction gains and losses, as well as any other transactions in a currency other than the functional currency, are included in other income (expense) in the consolidated statements of operations in the period in which the currency exchange rates change. During 2018, 2017 and 2016, the Company recorded foreign currency gains/(losses) of
$(1.9)
million,
$(2.2)
million and
$23.5
million, respectively.
Stock-Based Compensation
The Company records compensation costs relating to share-based payment transactions and includes such costs in general and administrative expenses in the consolidated statements of operations. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award).
Self-Insurance Reserves
The Company is self-insured, through deductibles and retentions, up to certain levels for losses under its insurance programs. The Company accrues for these liabilities based on estimates of the ultimate cost of claims incurred as of the balance sheet date. The Company regularly reviews the estimates of asserted and unasserted claims and provides for losses through reserves. The Company obtains actuarial reviews to evaluate the reasonableness of internal estimates for losses related to workers’ compensation, auto liability and group medical on an annual basis.
New Accounting Pronouncements
Standards adopted
In May 2017, the FASB issued ASU 2017-09,
Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.
The guidance in this ASU applies to all entities that change the terms or conditions of a share-based payment award. The amendments provide clarity and reduce diversity in practice as well as cost and complexity when applying the guidance in Topic 718,
Compensation – Stock Compensation,
to the modification of the terms and conditions of a share-based payment award. The amendments in ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The Company adopted the accounting guidance as of January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01,
Business Combinations (Topic 805): Clarifying the Definition of a Business.
The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments provide a more robust framework to use in determining when a set of assets and activities is a business. The Company adopted the accounting guidance as of January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18,
Statements of Cash Flows (Topic 230): Restricted Cash.
The guidance in this ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.
The Company adopted the accounting guidance as of January 1, 2018 and applied it retrospectively to the periods presented in the Company’s consolidated statements of cash flows. For 2017, net cash used in investing activities was adjusted to exclude the change in restricted cash related to cash held in escrow for the future decommissioning obligations associated with an oil and gas property. The adjustment resulted in a
$30.6
million decrease in net cash used in investing activities for the year ended December 31, 2017.
In October 2016, the FASB issued ASU 2016-16,
Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.
The guidance in this ASU requires entities to recognize at the transaction date the income tax consequences of intercompany asset transfers other than inventory. The Company adopted the accounting guidance as of January 1, 2018. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606)
, which replaced most existing revenue recognition guidance in GAAP. The guidance in this ASU requires an entity to recognize the amount of revenue that it expects to be entitled for the transfer of promised goods or services to customers. The Company adopted this ASU as of January 1, 2018.
The Company adopted this ASU using the modified retrospective adoption method.
The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements
and no cumulative effect adjustment was recognized.
In February 2016, the FASB issued ASU No. 2016-02,
Leases (Topic 842)
, which requires lessees to recognize the assets and liabilities arising from leases on the balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.
The Company adopted the new standard on January 1, 2019 and used the effective date as the date of initial application. Therefore, prior period financial information that will be presented in the Company’s future filings will not be adjusted and will continue to be reflected in accordance with the Company’s historical accounting policy.
The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients,” which, among other things, allows the Company to carry forward its historical lease classification.
On January 1, 2019, the Company recognized additional operating liabilities of approximately
$100.0
million, with corresponding ROU assets of the same amount based on the present value of the remaining minimum rental payments for existing operating leases.
Subsequent Events
In accordance with authoritative guidance, the Company has evaluated and disclosed all material subsequent events that occurred after the balance sheet date, but before financial statements were issued
.
(2) Revenue
Adoption of ASU 2014-09, Revenue from Contracts with Customers
Effective January 1, 2018, the Company adopted ASU 2014-09,
Revenue from Contracts with Customers
(Topic 606). The Company adopted this ASU using the modified retrospective adoption method. There was no impact on the consolidated financial statements and no cumulative effect adjustment was recognized.
Revenue Recognition
Revenues are recognized when performance obligations are satisfied in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services rendered or rentals provided. Taxes collected from customers and remitted to governmental authorities and revenues are reported on a net basis in the Company’s financial statements.
Performance Obligations
A performance obligation arises under contracts with customers to render services or provide rentals, and is the unit of account under Topic 606. The Company accounts for services rendered and rentals provided separately if they are distinct and the service or rental is separately identifiable from other items provided to a customer and if a customer can benefit from the services rendered or rentals provided on its own or with other resources that are readily available to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. A contract’s standalone selling prices are determined based on the prices that the Company charges for its services rendered and rentals provided. The majority of the Company’s performance obligations are satisfied over time, which is generally represented by a period of 30 days or less. The Company’s payment terms vary by the type of products or services offered. The term between invoicing and when the payment is due is typically 30 days.
Services revenue
primarily represents amounts charged to customers for the completion of services rendered, including labor, products and supplies necessary to perform the service. Rates for these services vary depending on the type of services provided and can be based on a per job, per hour or per day basis.
Rentals revenue
is primarily priced on a per day, per man hour or similar basis and consists of fees charged to customers for use of the Company’s rental equipment over the term of the rental period, which is generally less than twelve months.
The Company expenses sales commissions when incurred because the amortization period would have been one year or less.
Disaggregation of revenue
The following table presents the Company’s revenues by segment disaggregated by geography (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
U.S. land
|
|
|
|
|
|
|
|
|
Drilling Products and Services
|
$
|
176,448
|
|
$
|
117,856
|
|
$
|
64,251
|
Onshore Completion and Workover Services
|
|
1,057,656
|
|
|
935,183
|
|
|
523,966
|
Production Services
|
|
195,363
|
|
|
151,632
|
|
|
87,434
|
Technical Solutions
|
|
31,137
|
|
|
34,283
|
|
|
42,097
|
Total U.S. land
|
$
|
1,460,604
|
|
$
|
1,238,954
|
|
$
|
717,748
|
|
|
|
|
|
|
|
|
|
Gulf of Mexico
|
|
|
|
|
|
|
|
|
Drilling Products and Services
|
$
|
100,855
|
|
$
|
91,507
|
|
$
|
120,323
|
Onshore Completion and Workover Services
|
|
-
|
|
|
-
|
|
|
-
|
Production Services
|
|
66,512
|
|
|
74,033
|
|
|
84,839
|
Technical Solutions
|
|
160,507
|
|
|
161,766
|
|
|
157,603
|
Total Gulf of Mexico
|
$
|
327,874
|
|
$
|
327,306
|
|
$
|
362,765
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
Drilling Products and Services
|
$
|
106,416
|
|
$
|
84,327
|
|
$
|
108,968
|
Onshore Completion and Workover Services
|
|
-
|
|
|
-
|
|
|
-
|
Production Services
|
|
156,650
|
|
|
147,116
|
|
|
176,090
|
Technical Solutions
|
|
78,721
|
|
|
76,373
|
|
|
84,476
|
Total International
|
$
|
341,787
|
|
$
|
307,816
|
|
$
|
369,534
|
Total Revenues
|
$
|
2,130,265
|
|
$
|
1,874,076
|
|
$
|
1,450,047
|
|
|
|
|
|
|
|
|
|
The following table presents the Company’s revenues by segment disaggregated by type (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
Services
|
|
|
|
|
|
|
|
|
Drilling Products and Services
|
$
|
101,969
|
|
$
|
81,788
|
|
$
|
77,628
|
Onshore Completion and Workover Services
|
|
1,015,908
|
|
|
903,048
|
|
|
503,777
|
Production Services
|
|
381,957
|
|
|
354,445
|
|
|
308,226
|
Technical Solutions
|
|
250,135
|
|
|
254,859
|
|
|
272,613
|
Total services
|
$
|
1,749,969
|
|
$
|
1,594,140
|
|
$
|
1,162,244
|
|
|
|
|
|
|
|
|
|
Rentals
|
|
|
|
|
|
|
|
|
Drilling Products and Services
|
$
|
281,750
|
|
$
|
211,902
|
|
$
|
215,915
|
Onshore Completion and Workover Services
|
|
41,748
|
|
|
32,135
|
|
|
20,188
|
Production Services
|
|
36,568
|
|
|
18,336
|
|
|
40,137
|
Technical Solutions
|
|
20,230
|
|
|
17,563
|
|
|
11,563
|
Total rentals
|
$
|
380,296
|
|
$
|
279,936
|
|
$
|
287,803
|
Total Revenues
|
$
|
2,130,265
|
|
$
|
1,874,076
|
|
$
|
1,450,047
|
|
|
|
|
|
|
|
|
|
(3) Property, Plant and Equipment
A summary of property, plant and equipment is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2018
|
|
2017
|
Machinery and equipment
|
|
$
|
3,229,793
|
|
$
|
3,505,171
|
Buildings, improvements and leasehold improvements
|
|
|
278,339
|
|
|
293,133
|
Automobiles, trucks, tractors and trailers
|
|
|
26,522
|
|
|
32,185
|
Furniture and fixtures
|
|
|
52,045
|
|
|
62,632
|
Construction-in-progress
|
|
|
38,119
|
|
|
37,236
|
Land
|
|
|
58,047
|
|
|
58,363
|
Oil and gas producing assets
|
|
|
66,605
|
|
|
64,844
|
Total
|
|
|
3,749,470
|
|
|
4,053,564
|
Accumulated depreciation and depletion
|
|
|
(2,640,344)
|
|
|
(2,736,620)
|
Property, plant and equipment, net
|
|
$
|
1,109,126
|
|
$
|
1,316,944
|
The Company had $
74.9
million and
$73.6
million of leasehold improvements at December 31, 2018 and 2017, respectively. These leasehold improvements are depreciated over the shorter of the life of the asset or the term of the lease using the straight line method. Depreciation expense (excluding depletion, amortization and accretion) was $
374.5
million,
$419.2
million and $
486.9
million during 2018, 2017 and 2016, respectively. During 2018, the Company recorded $49.1 million related to reduction in value of property, plant and equipment (see note 10).
(4) Debt
The Company’s outstanding debt is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2018
|
|
2017
|
|
|
Long-term
|
|
Long-term
|
Senior unsecured notes due September 2024
|
|
$
|
500,000
|
|
$
|
500,000
|
Senior unsecured notes due December 2021
|
|
|
800,000
|
|
|
800,000
|
Total debt, gross
|
|
|
1,300,000
|
|
|
1,300,000
|
Unamortized debt issuance costs
|
|
|
(17,079)
|
|
|
(20,229)
|
Total debt, net
|
|
$
|
1,282,921
|
|
$
|
1,279,771
|
Debt maturities presented as of December 31, 2018 are as follows (in thousands):
|
|
|
|
|
|
2019
|
$
|
-
|
2020
|
|
-
|
2021
|
|
800,000
|
2022
|
|
-
|
2023
|
|
-
|
Thereafter
|
|
500,000
|
Total
|
$
|
1,300,000
|
Credit Facility
The Company has an asset-based revolving credit facility which matures in October 2022. The borrowing base under the credit facility is calculated based on a formula referencing the borrower’s and the subsidiary guarantors’ eligible accounts receivable, eligible inventory and eligible premium rental drill pipe less reserves. Availability under the credit facility is the lesser of (i) the commitments, (ii) the borrowing base and (iii) the highest principal amount permitted to be secured under the indenture governing the 7 1/8% senior unsecured notes due 2021. At December 31, 2018, the borrowing base was
$2
49.6
million and the Company had
$52.3
million of letters of credit outstanding that reduced its borrowing availability under the revolving credit facility. The credit agreement contains various covenants, including, but not limited to, limitations on the incurrence of indebtedness, permitted investments, liens on assets, making distributions, transactions with affiliates, merger, consolidations, dispositions of assets and other provisions customary in similar types of agreements.
Senior Unsecured Notes
The Company has outstanding
$500
million of
7
3/4% senior unsecured notes due September 2024. The indenture governing the 7 3/4% senior unsecured notes due 2024 requires semi-annual interest payments on March 15 and September 15 of each year through the maturity date of September 15, 2024.
The Company also has outstanding $
800
million of
7
1/8% senior unsecured notes due December 2021. The indenture governing the 7 1/8% senior unsecured notes due 2021 requires semi-annual interest payments on June 15 and December 15
of each year through the maturity date of December 15, 2021.
(5) Stock-Based and Long-Term Incentive Compensation
The Company is authorized to grant restricted stock units, stock options, performance share units and other cash and stock awards as part of the Long-Term Incentive Program (LTIP). The Compensation Committee determines the recipients of the equity awards, the type of awards made, the required performance measures, and the timing and duration of each grant. At December 31, 2018,
5,877,000
shares of the Company’s common stock were available for future grants under the plan.
Total stock-based compensation expense and the associated tax benefits are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
2018
|
|
2017
|
|
2016
|
Stock options
|
|
$
|
4,247
|
|
$
|
4,289
|
|
$
|
4,870
|
Restricted stock
|
|
|
-
|
|
|
-
|
|
|
382
|
Restricted stock units
|
|
|
19,828
|
|
|
21,899
|
|
|
24,762
|
Performance share units
|
|
|
6,912
|
|
|
9,740
|
|
|
10,167
|
Total compensation expense
|
|
|
30,987
|
|
|
35,928
|
|
|
40,181
|
|
|
|
|
|
|
|
|
|
|
Related income taxes
|
|
|
7,189
|
|
|
8,335
|
|
|
14,867
|
Total compensation expense, net of income taxes
|
|
$
|
23,798
|
|
$
|
27,593
|
|
$
|
25,314
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense is reflected in general and administrative expenses in the consolidated statements of operations.
Stock Options
Stock options are granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. The stock options generally vest in equal installments over
three
years and expire in
ten
years from the grant date. Non-vested stock options are generally forfeited upon termination of employment.
The Company recognizes compensation expense for stock option grants based on the fair value at the date of grant using the Black-Scholes-Merton option pricing model. The Company uses historical data, among other factors, to estimate the expected volatility and the expected life of the stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected life of the stock option. The dividend yield is based on our historical and projected dividend payouts.
The weighted average fair values of stock options granted and the assumptions used in estimating those fair values are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Weighted average fair value of stock options granted
|
|
$
|
5.61
|
|
|
$
|
8.36
|
|
|
$
|
3.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Black-Scholes-Merton Assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk free interest rate
|
|
|
2.43
|
%
|
|
|
1.96
|
%
|
|
|
1.46
|
%
|
Expected life (years)
|
|
|
6
|
|
|
|
6
|
|
|
|
5
|
|
Volatility
|
|
|
51.21
|
%
|
|
|
48.22
|
%
|
|
|
55.72
|
%
|
Dividend yield
|
|
|
-
|
|
|
|
-
|
|
|
|
3.28
|
|
The following table summarizes stock option activity for 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Options
|
|
Weighted Average Option Price
|
|
Weighted Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value
(in thousands)
|
Outstanding at beginning of period
|
|
6,138,653
|
|
$
|
18.75
|
|
5.4
|
|
$
|
-
|
Granted
|
|
567,967
|
|
$
|
11.04
|
|
|
|
|
|
Exercised
|
|
-
|
|
$
|
-
|
|
|
|
|
|
Expired
|
|
(271,167)
|
|
$
|
14.1
|
|
|
|
|
|
Outstanding at end of period
|
|
6,435,453
|
|
$
|
18.27
|
|
5.0
|
|
$
|
-
|
Exercisable at end of period
|
|
5,022,592
|
|
$
|
20.13
|
|
4.2
|
|
$
|
-
|
Options expected to vest at end of period
|
|
1,412,861
|
|
$
|
11.65
|
|
8.0
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
The total intrinsic value of stock options exercised during 2018, 2017 and 2016 was
$0
, $
0
and
$0.3
million, respectively. The Company received
$0
,
$0.1
million and
$0.5
million during 2018, 2017 and 2016, respectively, from employee stock option exercises. The Company has reported tax benefits of $
0
,
$0
and
$0.1
million from the exercise of stock options for 2018, 2017 and 2016, respectively.
The following table summarizes non-vested stock option activity for 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Options
|
|
Weighted Average Grant Date Fair Value
|
Non-vested at beginning of period
|
|
|
1,748,933
|
|
$
|
12.18
|
Granted
|
|
|
567,967
|
|
$
|
11.04
|
Vested
|
|
|
(904,039)
|
|
$
|
12.3
|
Non-vested at end of period
|
|
|
1,412,861
|
|
$
|
8.00
|
|
|
|
|
|
|
|
At December 31, 2018, the unrecognized compensation expense related to non-vested stock options was
$3.3
million. The Company expects to recognize
$2.2
million and
$1.1
million of compensation expense associated with these options during 2019 and 2020, respectively.
Restricted Stock Units
Restricted stock unit awards (RSUs) vest in equal annual installments over
three
years. On the vesting date, each RSU is converted to one share of the Company’s common stock having an aggregate value determined by the Company’s closing stock price on the vesting date. Holders of RSUs are not entitled to any rights of a stockholder, such as the right to vote shares.
The following table summarizes RSU activity for 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of RSUs
|
|
Weighted Average Grant Date Fair Value
|
Non-vested at beginning of period
|
|
3,192,000
|
|
$
|
14.87
|
Granted
|
|
2,030,896
|
|
$
|
11.31
|
Vested
|
|
(1,534,153)
|
|
$
|
14.26
|
Forfeited
|
|
(266,307)
|
|
$
|
12.51
|
Non-vested at end of period
|
|
3,422,436
|
|
$
|
13.22
|
At December 31, 2018, there was
$21.0
million of unrecognized compensation expense related to unvested RSUs. The Company expects to recognize
$13.7
million,
$7.0
million, and
$0.3
million associated with unvested RSUs for 2019, 2020, and 2021, respectively.
Performance Share Units
The Company has issued performance share units (PSUs) to its employees as part of the Company’s LTIP. There is a
three
-year performance period associated with each PSU grant. The two performance metrics are the Company’s return on assets and total stockholder return relative to those of the Company’s pre-defined “peer group.” The PSUs will settle in cash or a combination of cash and up to
50
% of equivalent value in the Company’s common stock, at the discretion of the Compensation Committee. At December 31, 2018, there were
320,284
PSUs outstanding (
115,397
,
97,044
and
107,843
related to performance periods ending December 31, 2018, 2019 and 2020, respectively). The Company has recorded both current and long-term liabilities for this liability-based compensation award.
Employee Stock Purchase Plan (ESPP)
Eligible employees are allowed to purchase shares of the Company’s common stock at a discount during six-month offering periods beginning on January 1st and July 1st of each year and ending on June 30 and December 31 of each year, respectively.
The following table summarizes ESPP activity (in thousands except shares):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
2018
|
|
2017
|
|
2016
|
Cash received for shares issued
|
|
$
|
2,625
|
|
$
|
3,074
|
|
$
|
3,681
|
Compensation expense
|
|
$
|
463
|
|
$
|
542
|
|
$
|
1,492
|
Shares issued
|
|
|
550,950
|
|
|
360,465
|
|
|
290,987
|
401(k)/Profit Sharing Plan
The Company maintains a defined contribution profit sharing plan for employees who have satisfied minimum service requirements. Employees may contribute up to
75
% of their eligible earnings to the plan subject to the contribution limitations imposed by the Internal Revenue Service.
The Company provides a nondiscretionary match of
100
% of an employee’s contributions to the plan, up to
4
% of the employee’s salary. The Company made contributions of $
10.0
million, $
8.4
million and $
8.7
million 2018, 2017 and 2016, respectively.
Non-Qualified Deferred Compensation Plans
The Company maintains a non-qualified deferred compensation plan which allows senior management to defer up to
75
% of their base salary, up to
100
% of their bonus, up to
100
% of the cash portion of their PSU compensation and up to 100% of the vested RSUs to the plan. The Company also maintains a non-qualified deferred compensation plan for its non-employee directors which allows each director to defer up to
100
% of their cash compensation paid by the Company and up to 100% of their vested RSUs to the plan. Payments are made to participants based on their annual enrollment elections and plan balances.
The following table summarizes deferred compensation balances (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Balance sheet location
|
|
2018
|
|
2017
|
Deferred compensation assets
|
|
Intangible and other long-term assets, net
|
|
$
|
13,306
|
|
$
|
14,187
|
Deferred compensation liabilities, short-term
|
|
Accounts payable
|
|
$
|
1,138
|
|
$
|
1,253
|
Deferred compensation liabilities, long-term
|
|
Other long-term liabilities
|
|
$
|
19,766
|
|
$
|
21,085
|
Supplemental Executive Retirement Plan
The Company has a supplemental executive retirement plan (SERP). The SERP provides retirement benefits to the Company’s executive officers and certain other designated key employees. The SERP is an unfunded, non-qualified defined contribution retirement plan, and all contributions under the plan are unfunded credits to a notional account maintained for each participant. Under the SERP, the Company will generally make annual contributions to a retirement account based on age and years of service.
The participants in the plan receive contributions ranging from
5
% to
35
% of salary and annual cash bonus, which totaled
$1.
2
million, $
0.
9
million and
$2.2
million during 2018, 2017 and 2016, respectively.
During 2018, 2017 and 2016, the Company paid $
0
,
$0
and $
1.4
million, respectively, to eligible participants in the SERP.
(6) Income Taxes
The components of loss from continuing operations before income taxes are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
2018
|
|
2017
|
|
2016
|
Domestic
|
|
$
|
(880,988)
|
|
$
|
(336,095)
|
|
$
|
(1,097,109)
|
Foreign
|
|
|
(21,831)
|
|
|
(41,656)
|
|
|
(3,232)
|
|
|
$
|
(902,819)
|
|
$
|
(377,751)
|
|
$
|
(1,100,341)
|
The components of income tax benefit (provision) are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
2018
|
|
2017
|
|
2016
|
Current:
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
-
|
|
$
|
-
|
|
$
|
(101,578)
|
State
|
|
|
2,118
|
|
|
(750)
|
|
|
(159)
|
Foreign
|
|
|
14,856
|
|
|
9,137
|
|
|
19,156
|
|
|
|
16,974
|
|
|
8,387
|
|
|
(82,581)
|
Deferred:
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(68,469)
|
|
|
(201,768)
|
|
|
(179,721)
|
State
|
|
|
(4,161)
|
|
|
6,109
|
|
|
(9,348)
|
Foreign
|
|
|
10,223
|
|
|
(3,468)
|
|
|
4,649
|
|
|
|
(62,407)
|
|
|
(199,127)
|
|
|
(184,420)
|
|
|
$
|
(45,433)
|
|
$
|
(190,740)
|
|
$
|
(267,001)
|
A reconciliation of the U.S. statutory federal tax rate to the consolidated effective tax rate is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
2018
|
|
2017
|
|
2016
|
Computed expected tax benefit
|
|
$
|
(189,592)
|
|
$
|
(132,213)
|
|
$
|
(385,119)
|
Increase (decrease) resulting from
|
|
|
|
|
|
|
|
|
|
State and foreign income taxes
|
|
|
10,437
|
|
|
16,437
|
|
|
(8,038)
|
Reduction in value of assets
|
|
|
115,253
|
|
|
-
|
|
|
115,725
|
U.S. Tax Reform
|
|
|
-
|
|
|
(76,529)
|
|
|
-
|
Other
|
|
|
18,469
|
|
|
1,565
|
|
|
10,431
|
Income tax benefit
|
|
$
|
(45,433)
|
|
$
|
(190,740)
|
|
$
|
(267,001)
|
During 2018, the Company recorded a $668.9 million reduction in value of goodwill relating to its Onshore Completion and Workover Services and Production Services segments.
For tax purposes, the goodwill impairment generated a reduction to the permanent book-tax basis difference of
$548.8
million and a reduction to the book-tax temporary basis difference of
$102.0
million net of current year amortization expense of
$18.0
million.
On December 22, 2017, U.S. Tax Reform was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from
35%
to
21%
effective for tax years beginning after December 31, 2017 and the transition of U.S. international taxation from a worldwide tax system to a modified territorial system. As a result, the Company recorded a provisional income tax benefit of $76.5 million during the fourth quarter of 2017. During 2018, the Company finalized its assessment of the impact of U.S. Tax Reform and no material adjustments were recorded.
The tax effects of temporary differences that give rise to significant components of deferred income tax assets and liabilities are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2018
|
|
2017
|
Deferred tax assets:
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
856
|
|
$
|
5,717
|
Operating loss and tax credit carryforwards
|
|
|
146,926
|
|
|
118,687
|
Compensation and employee benefits
|
|
|
38,006
|
|
|
38,261
|
Decommissioning liabilities
|
|
|
27,979
|
|
|
26,875
|
Other
|
|
|
25,331
|
|
|
28,807
|
|
|
|
239,098
|
|
|
218,347
|
Valuation allowance
|
|
|
(25,571)
|
|
|
(8,722)
|
Net deferred tax assets
|
|
|
213,527
|
|
|
209,625
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
146,971
|
|
|
177,231
|
Notes receivable
|
|
|
12,977
|
|
|
12,977
|
Goodwill and other intangible assets
|
|
|
38,955
|
|
|
64,746
|
Other
|
|
|
14,624
|
|
|
15,729
|
Deferred tax liabilities
|
|
|
213,527
|
|
|
270,683
|
Net deferred tax liability
|
|
$
|
-
|
|
$
|
61,058
|
At December 31, 2018, the Company had $
222.8
million in U.S. net operating loss carryforwards, which are available to reduce future taxable income. The expiration date for utilization of the U.S. loss carryforwards is 2037 for losses generated before 2018. Losses generated in 2018 and later cannot be carried back and have an indefinite carryforward that is limited to
80%
of taxable income. At December 31, 2018, the Company also had various state net operating loss carryforwards with expiration dates from 2019 to 2038.
A net deferred tax asset of $
24.6
million reflects the expected future tax benefit for the state loss carryforwards. At December 31, 2018, the Company also had a U.S. foreign tax credit carryforward of
$54.5
million with expiration dates from 2021 to 2028.
The net deferred tax assets reflect management’s estimate of the amount that will be realized from future profitability and the reversal of taxable temporary differences that can be predicted with reasonable certainty. After considering all available evidence at December
31, 2018, the Company determined that it was more likely than not that a portion of the carryforwards would not be realized. Accordingly, the Company increased deferred income tax expense by an additional
$16.
8
million in the valuation allowance.
The Company has not provided income tax expense on earnings of its foreign subsidiaries, since the Company has reinvested or expects to reinvest undistributed earnings outside the U.S. indefinitely. At December 31, 2018, the Company’s foreign subsidiaries had an overall accumulated deficit in earnings. The Company does not intend to repatriate the earnings of its profitable foreign subsidiaries. The Company has not provided U.S. income taxes for such earnings, except to the extent that such earnings were previously subject to U.S. income taxes. These earnings could become subject to U.S. income tax if repatriated. It is not practicable to estimate the amount of taxes that might be payable on such undistributed earnings.
The U.S. Tax Reform imposes a tax on post-1986 earnings of non-U.S. affiliates that have not been repatriated for purposes of US federal income tax, with those earnings taxed at rates of
15.5%
for earnings reflected by cash and cash equivalent items and
8%
for other assets. The cash tax effects of this deemed repatriation can be remitted in installments over an eight-year period. The Company made reasonable estimates of the effects and determined the impact was not material to its financial statements.
The Company files income tax returns in the U.S., including federal and various state filings, and certain foreign jurisdictions. The number of years that are open under the statute of limitations and subject to audit varies depending on the tax jurisdiction. The Company remains subject to U.S. federal tax examinations for years after 2017.
The Company had unrecognized tax benefits of $30.6 million, $30.7 million and $29.9 million as of
December 31, 2018, 2017 and 2016
, respectively, all of which would impact the Company’s effective tax rate if recognized.
The activity in unrecognized tax benefits is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
2018
|
|
2017
|
|
2016
|
Unrecognized tax benefits at beginning of period
|
|
$
|
30,656
|
|
$
|
29,956
|
|
$
|
29,715
|
Additions based on tax positions related to prior years
|
|
|
1,899
|
|
|
5,576
|
|
|
6,874
|
Reductions based on tax positions related to prior years
|
|
|
(1,864)
|
|
|
(4,671)
|
|
|
(3,582)
|
Reductions as a result of a lapse of the applicable statute of limitations
|
|
|
(133)
|
|
|
(205)
|
|
|
(3,051)
|
Unrecognized tax benefits at end of period
|
|
$
|
30,558
|
|
$
|
30,656
|
|
$
|
29,956
|
The amounts above include accrued interest and penalties of
$9.7
million,
$9.7
million and
$7.4
million at December 31, 2018, 2017 and 2016, respectively
. The Company recorded
$0
,
$2.2
million and
$2.5
million of interest and penalties for 2018, 2017 and 2016, respectively, classified as a component of income tax expense in the consolidated statements of operations.
(7) Segment Information
Business Segments
The Drilling Products and Services segment rents and sells bottom hole assemblies, premium drill pipe, tubulars and specialized equipment for use with onshore and offshore oil and gas well drilling, completion, production and workover activities. It also provides on-site accommodations and machining services. The Onshore Completion and Workover Services segment provides pressure pumping services used to complete and stimulate production in new oil and gas wells, fluid handling services and well servicing rigs that provide a variety of well completion, workover and maintenance services. The Production Services segment provides intervention services such as coiled tubing, cased hole and mechanical wireline, hydraulic workover and snubbing, production testing and optimization, and remedial pumping services. The Technical Solutions segment provides services typically requiring specialized engineering, manufacturing or project planning, including well containment systems, stimulation and sand control services, well plug and abandonment services and the production and sale of oil and gas.
The Company evaluates the performance of its reportable segments based on income or loss from operations excluding allocated corporate expenses. The segment measure is calculated as follows: segment revenues less segment operating expenses, depreciation, depletion, amortization and accretion expense and reduction in value of assets. The Company uses this segment measure to evaluate its reportable segments because it is the measure that is most consistent with how the Company organizes and manages its business operations. Corporate and other costs primarily include expenses related to support functions, salaries and benefits for corporate employees and stock-based compensation expense.
Summarized financial information for the Company’s segments is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Onshore
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling
|
|
Completion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products and
|
|
and Workover
|
|
Production
|
|
Technical
|
|
Corporate and
|
|
Consolidated
|
|
|
Services
|
|
Services
|
|
Services
|
|
Solutions
|
|
Other
|
|
Total
|
Revenues
|
|
$
|
383,719
|
|
$
|
1,057,656
|
|
$
|
418,525
|
|
$
|
270,365
|
|
$
|
-
|
|
$
|
2,130,265
|
Cost of services and rentals (exclusive of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation, depletion, amortization and accretion)
|
|
|
148,019
|
|
|
846,907
|
|
|
342,420
|
|
|
164,758
|
|
|
-
|
|
|
1,502,104
|
Depreciation, depletion, amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and accretion
|
|
|
112,111
|
|
|
190,592
|
|
|
66,993
|
|
|
25,653
|
|
|
5,499
|
|
|
400,848
|
General and administrative expenses
|
|
|
53,688
|
|
|
37,170
|
|
|
41,499
|
|
|
57,600
|
|
|
99,295
|
|
|
289,252
|
Reduction in value of assets
|
|
|
-
|
|
|
644,813
|
|
|
92,252
|
|
|
-
|
|
|
2,660
|
|
|
739,725
|
Income (loss) from operations
|
|
|
69,901
|
|
|
(661,826)
|
|
|
(124,639)
|
|
|
22,354
|
|
|
(107,454)
|
|
|
(801,664)
|
Interest income (expense), net
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,915
|
|
|
(103,392)
|
|
|
(99,477)
|
Other expense
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,678)
|
|
|
(1,678)
|
Income (loss) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before income taxes
|
|
$
|
69,901
|
|
$
|
(661,826)
|
|
$
|
(124,639)
|
|
$
|
26,269
|
|
$
|
(212,524)
|
|
$
|
(902,819)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Onshore
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling
|
|
Completion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products and
|
|
and Workover
|
|
Production
|
|
Technical
|
|
Corporate and
|
|
Consolidated
|
|
|
Services
|
|
Services
|
|
Services
|
|
Solutions
|
|
Other
|
|
Total
|
Revenues
|
|
$
|
293,690
|
|
$
|
935,183
|
|
$
|
372,781
|
|
$
|
272,422
|
|
$
|
-
|
|
$
|
1,874,076
|
Cost of services and rentals (exclusive of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation, depletion, amortization and accretion)
|
|
|
128,381
|
|
|
791,581
|
|
|
303,256
|
|
|
175,477
|
|
|
-
|
|
|
1,398,695
|
Depreciation, depletion, amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and accretion
|
|
|
131,394
|
|
|
193,098
|
|
|
78,999
|
|
|
29,506
|
|
|
5,719
|
|
|
438,716
|
General and administrative expenses
|
|
|
51,265
|
|
|
44,766
|
|
|
48,655
|
|
|
51,679
|
|
|
99,142
|
|
|
295,507
|
Reduction in value of assets
|
|
|
1,356
|
|
|
4,684
|
|
|
-
|
|
|
8,115
|
|
|
-
|
|
|
14,155
|
Income (loss) from operations
|
|
|
(18,706)
|
|
|
(98,946)
|
|
|
(58,129)
|
|
|
7,645
|
|
|
(104,861)
|
|
|
(272,997)
|
Interest income (expense), net
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,567
|
|
|
(105,022)
|
|
|
(101,455)
|
Other expense
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,299)
|
|
|
(3,299)
|
Income (loss) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before income taxes
|
|
$
|
(18,706)
|
|
$
|
(98,946)
|
|
$
|
(58,129)
|
|
$
|
11,212
|
|
$
|
(213,182)
|
|
$
|
(377,751)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Onshore
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling
|
|
Completion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products and
|
|
and Workover
|
|
Production
|
|
Technical
|
|
Corporate and
|
|
Consolidated
|
|
|
Services
|
|
Services
|
|
Services
|
|
Solutions
|
|
Other
|
|
Total
|
Revenues
|
|
$
|
293,543
|
|
$
|
523,965
|
|
$
|
348,363
|
|
$
|
284,176
|
|
$
|
-
|
|
$
|
1,450,047
|
Cost of services and rentals (exclusive of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation, depletion, amortization and accretion)
|
|
|
136,719
|
|
|
515,784
|
|
|
276,223
|
|
|
194,548
|
|
|
-
|
|
|
1,123,274
|
Depreciation, depletion, amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and accretion
|
|
|
159,937
|
|
|
207,038
|
|
|
93,878
|
|
|
42,393
|
|
|
6,725
|
|
|
509,971
|
General and administrative expenses
|
|
|
64,182
|
|
|
48,837
|
|
|
49,687
|
|
|
65,299
|
|
|
118,601
|
|
|
346,606
|
Reduction in value of assets
|
|
|
48,903
|
|
|
190,835
|
|
|
235,067
|
|
|
25,600
|
|
|
-
|
|
|
500,405
|
Income (loss) from operations
|
|
|
(116,198)
|
|
|
(438,529)
|
|
|
(306,492)
|
|
|
(43,664)
|
|
|
(125,326)
|
|
|
(1,030,209)
|
Interest income (expense), net
|
|
|
-
|
|
|
-
|
|
|
(1,343)
|
|
|
3,553
|
|
|
(94,963)
|
|
|
(92,753)
|
Other expense
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
22,621
|
|
|
22,621
|
Income (loss) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before income taxes
|
|
$
|
(116,198)
|
|
$
|
(438,529)
|
|
$
|
(307,835)
|
|
$
|
(40,111)
|
|
$
|
(197,668)
|
|
$
|
(1,100,341)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Onshore
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling
|
|
Completion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products and
|
|
and Workover
|
|
Production
|
|
Technical
|
|
Corporate and
|
|
Consolidated
|
|
|
Services
|
|
Services
|
|
Services
|
|
Solutions
|
|
Other
|
|
Total
|
December 31, 2018
|
|
$
|
587,264
|
|
$
|
808,037
|
|
$
|
434,430
|
|
$
|
340,161
|
|
$
|
46,070
|
|
$
|
2,215,962
|
December 31, 2017
|
|
$
|
662,968
|
|
$
|
1,501,214
|
|
$
|
512,256
|
|
$
|
377,549
|
|
$
|
56,238
|
|
$
|
3,110,225
|
December 31, 2016
|
|
$
|
824,287
|
|
$
|
1,534,008
|
|
$
|
598,167
|
|
$
|
439,521
|
|
$
|
74,272
|
|
$
|
3,470,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Onshore
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling
|
|
Completion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products and
|
|
and Workover
|
|
Production
|
|
Technical
|
|
Corporate and
|
|
Consolidated
|
|
|
Services
|
|
Services
|
|
Services
|
|
Solutions
|
|
Other
|
|
Total
|
December 31, 2018
|
|
$
|
46,649
|
|
$
|
147,793
|
|
$
|
8,651
|
|
$
|
16,221
|
|
$
|
2,056
|
|
$
|
221,370
|
December 31, 2017
|
|
$
|
27,219
|
|
$
|
115,415
|
|
$
|
7,860
|
|
$
|
13,296
|
|
$
|
1,143
|
|
$
|
164,933
|
December 31, 2016
|
|
$
|
35,413
|
|
$
|
20,094
|
|
$
|
20,848
|
|
$
|
3,829
|
|
$
|
364
|
|
$
|
80,548
|
Geographic Segments
The Company attributes revenue to various countries based on the location where services are performed or the destination of the drilling products or equipment sold or rented. Long-lived assets consist primarily of property, plant and equipment and are attributed to various countries based on the physical location of the asset at the end of a period. The Company’s revenue attributed to the U.S. and to other countries and the value of its long-lived assets by those locations is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
2018
|
|
2017
|
|
2016
|
United States
|
|
$
|
1,788,478
|
|
$
|
1,566,260
|
|
$
|
1,080,513
|
Other countries
|
|
|
341,787
|
|
|
307,816
|
|
|
369,534
|
Total
|
|
$
|
2,130,265
|
|
$
|
1,874,076
|
|
$
|
1,450,047
|
|
|
|
|
|
|
|
|
|
|
Long-Lived Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
2018
|
|
2017
|
|
|
United States
|
|
$
|
903,520
|
|
$
|
1,064,823
|
|
|
|
Other countries
|
|
|
205,606
|
|
|
252,121
|
|
|
|
Total
|
|
$
|
1,109,126
|
|
$
|
1,316,944
|
|
|
|
(8) Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in determining fair value are characterized according to a hierarchy that prioritizes those inputs based on the degree to which they are observable. The three input levels of the fair value hierarchy are as follows:
Level 1
: Unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2
: Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical assets or liabilities in inactive markets or model-derived valuations or other inputs that can be corroborated by observable market data; and
Level 3
: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.
The following tables provide a summary of the financial assets and liabilities measured at fair value on a recurring basis (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at December 31, 2018
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Intangible and other long-term assets, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified deferred compensation assets
|
|
$
|
376
|
|
$
|
12,930
|
|
$
|
-
|
|
$
|
13,306
|
Accounts payable:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified deferred compensation liabilities
|
|
$
|
-
|
|
$
|
1,138
|
|
$
|
-
|
|
$
|
1,138
|
Other long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified deferred compensation liabilities
|
|
$
|
-
|
|
$
|
19,766
|
|
$
|
-
|
|
$
|
19,766
|
Total debt
|
|
$
|
1,084,711
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,084,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at December 31, 2017
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Intangible and other long-term assets, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified deferred compensation assets
|
|
$
|
370
|
|
$
|
13,817
|
|
$
|
-
|
|
$
|
14,187
|
Accounts payable:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified deferred compensation liabilities
|
|
$
|
-
|
|
$
|
1,253
|
|
$
|
-
|
|
$
|
1,253
|
Other long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-qualified deferred compensation liabilities
|
|
$
|
-
|
|
$
|
21,085
|
|
$
|
-
|
|
$
|
21,085
|
Total debt
|
|
$
|
1,346,985
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,346,985
|
The Company’s non-qualified deferred compensation plans allow officers, certain highly compensated employees and non-employee directors to defer receipt of a portion of their compensation and contribute such amounts to one or more hypothetical investment funds (see note 5). The Company entered into separate trust agreements, subject to general creditors, to segregate assets of each plan and reports the accounts of the trusts in its consolidated financial statements. These investments are reported at fair value based on unadjusted quoted prices in active markets for identifiable assets and observable inputs for similar assets and liabilities, which represent Levels 1 and 2, respectively, in the fair value hierarchy.
The carrying amount of cash equivalents, accounts receivable, accounts payable and accrued expenses, as reflected in the consolidated balance sheets, approximates fair value due to the short maturities. The fair value of the debt instruments
is determined by reference to the market value of the instrument as quoted in an over-the-counter market.
The following table reflects the fair value measurements used in testing the impairment of long-lived assets and goodwill (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, 2018
|
|
|
Impairment
|
|
Fair Value
|
Property, plant and equipment, net
|
|
$
|
49,198
|
|
$
|
65,441
|
Goodwill
|
|
$
|
668,838
|
|
$
|
-
|
Intangible assets
|
|
$
|
21,689
|
|
$
|
-
|
|
|
|
|
|
|
|
Fair value is measured as of the impairment date using Level 3 inputs. See note 10 for discussion of reduction in value of assets recorded during 2018.
(9) Commitments and Contingencies
The Company leases most of its office, service and assembly facilities under operating leases. In addition, the Company also leases certain assets used in providing services under operating leases. The leases expire at various dates over an extended period of time. For 2018, total operating lease expense, which includes short-term and variable lease expenses, was $
53.9
million. For 2017 and 2016, total rent expense was $
15.3
million and $
24.1
million, respectively. Future minimum lease payments under long-term leases for the five years ending December 31, 2019 through 2023 and thereafter are as follows: $
30.8
million, $
24.3
million, $
16.6
million, $
9.8
million and $
6.9
million, respectively.
Due to the nature of the Company’s business, the Company is involved, from time to time, in routine litigation or subject to disputes or claims regarding its business activities. Legal costs related to these matters are expensed as incurred. However, based on current circumstances, the Company does not believe that the ultimate resolution of these proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on its financial position, results of operations or cash flows.
(10) Reduction in Value of Assets
During 2018, 2017 and 2016, the Company recorded $739.7 million, $14.2 million and $500.4 million in expense related to reduction in value of assets, respectively. The components of the reductions in value of assets are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
2018
|
|
|
2017
|
|
2016
|
Reduction in value of goodwill
|
$
|
668,838
|
|
$
|
-
|
|
$
|
330,500
|
Reduction in value of long-lived assets
|
|
70,887
|
|
|
14,155
|
|
|
143,803
|
Retirements of long-lived assets
|
|
-
|
|
|
-
|
|
|
26,102
|
Total reduction in value of assets
|
$
|
739,725
|
|
$
|
14,155
|
|
$
|
500,405
|
|
|
|
|
|
|
|
|
|
Reduction in Value of Goodwill
During 2018, the Company recorded a $668.9 million reduction in value of goodwill relating to its Onshore Completion and Workover Services and Production Services segments. The Company determined that the fair value of its goodwill for the Onshore Completion and Workover Services segment was less than its carrying value and fully wrote-off the goodwill balance of
$583.6
million. In addition, the Company determined that the fair value of its goodwill for the Production Services segment was less than its carrying value and fully wrote-off the goodwill balance of
$85.3
million.
During 2016, the Company recorded a $330.5 million reduction in value of goodwill relating to its Onshore Completion and Workover Services and Production Services segments. The Company determined that the implied fair value of its goodwill for the Onshore Completion and Workover Services segment was less than its carrying value and recorded a
$140.0
million impairment of the Onshore Completion and Workover Services segment’s goodwill. In addition, the Company determined that the implied fair value of its goodwill for the Production Services segment was less than its carrying value and recorded a
$190.5
million impairment of the Production Services segment’s goodwill.
Reduction in Value of Long-Lived Assets
During 2018, the Company recorded $70.8 million in connection with the reduction in value of its long-lived assets. The reduction in value of assets was comprised of
$41.4
million and
$19.8
million related to property, plant and equipment and intangibles, respectively, in the well servicing rigs business in the Onshore Completion and Workover Services segment and
$5.1
million related to property, plant and equipment and
$1.9
million related to intangibles in the Production Services segment. The reduction in value of assets recorded during 2018 was primarily driven by the decline in demand for these services and the forecast did not indicate a timely recovery sufficient to support the carrying values of these assets. In addition, the Company recorded a
$2.6
million reduction in carrying value of its former corporate facility and its related assets.
During 2017, the Company recorded $14.2 million in connection with the reduction in value of its long-lived assets. The reduction in value of assets was comprised of
$8.1
million related to property, plant and equipment in the Technical Solutions segment and
$6.1
million related to property, plant and equipment primarily in the Onshore Completion and Workover Services segment.
During 2016, the Company recorded $143.8 million in connection with the reduction in value of its long-lived assets. The reduction in value of assets was comprised of
$4.9
million related to equipment and
$45.9
million related to intangibles in the fluid management business in the Onshore Completion and Workover Services segment and
$21.4
million related to equipment and
$21.0
million related to intangibles, primarily relating to the cementing business in the Production Services segment. Also, the Company recorded
$25.0
million related to the reduction in carrying values of certain accommodation units included in the Drilling Products and Services segment. In addition, the Company recorded
$25.6
million related to the reduction in carrying values of the marine vessels and equipment in the conventional decommissioning division in its Technical Solutions segment. The reduction in value of assets recorded during 2016 was primarily driven by the decline in demand for these services.
Retirements of Long-Lived Assets
During 2016, the Company recorded
$26.1
million, primarily in the Drilling Products and Services segment, for retirement and abandonment of excess and inoperable and/or functionally obsolete long-lived assets that would require a significant cost to refurbish.
(11) Discontinued Operations
During 2018, the remaining marine vessels and equipment of the Company’s former subsea construction business were disposed of, resulting in a
$0.8
million loss on sale. Loss from discontinued operations for 2018, 2017 and 2016 was
$0.7
million,
$18.9
million and
$53.6
million, respectively.
The following summarizes the assets and liabilities related to the business reported as discontinued operations (in thousands):
|
|
|
|
|
|
|
December 31, 2017
|
Current assets
|
$
|
3,144
|
Property, plant and equipment, net
|
|
10,500
|
Total assets
|
$
|
13,644
|
Current liabilities
|
$
|
6,463
|
(12) Supplemental Guarantor Information
SESI, L.L.C. (the Issuer), a
100%
owned subsidiary of Superior Energy Services, Inc. (Parent), has
$500
million of
7
3/4% senior unsecured notes due 2024. The Parent, along with certain of its 100% owned domestic subsidiaries, fully and unconditionally guaranteed the senior unsecured notes, and such guarantees are joint and several.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Condensed Consolidating Balance Sheets
|
December 31, 2018
|
(in thousands)
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
-
|
|
$
|
102,224
|
|
$
|
707
|
|
$
|
55,119
|
|
$
|
-
|
|
$
|
158,050
|
Accounts receivable, net
|
|
|
-
|
|
|
160
|
|
|
367,497
|
|
|
79,696
|
|
|
-
|
|
|
447,353
|
Intercompany accounts receivable
|
|
|
-
|
|
|
12,279
|
|
|
74,906
|
|
|
3,489
|
|
|
(90,674)
|
|
|
-
|
Other current assets
|
|
|
-
|
|
|
12,805
|
|
|
111,560
|
|
|
43,137
|
|
|
-
|
|
|
167,502
|
Total current assets
|
|
|
-
|
|
|
127,468
|
|
|
554,670
|
|
|
181,441
|
|
|
(90,674)
|
|
|
772,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
-
|
|
|
10,129
|
|
|
920,978
|
|
|
178,019
|
|
|
-
|
|
|
1,109,126
|
Goodwill
|
|
|
-
|
|
|
-
|
|
|
80,544
|
|
|
56,244
|
|
|
-
|
|
|
136,788
|
Notes receivable
|
|
|
-
|
|
|
-
|
|
|
63,993
|
|
|
-
|
|
|
-
|
|
|
63,993
|
Long-term intercompany accounts receivable
|
|
|
2,243,431
|
|
|
-
|
|
|
1,991,912
|
|
|
182,284
|
|
|
(4,417,627)
|
|
|
-
|
Equity investments of consolidated subsidiaries
|
|
|
(1,952,647)
|
|
|
3,754,887
|
|
|
5,992
|
|
|
-
|
|
|
(1,808,232)
|
|
|
-
|
Restricted cash
|
|
|
-
|
|
|
-
|
|
|
5,653
|
|
|
45
|
|
|
-
|
|
|
5,698
|
Intangible and other long-term assets, net
|
|
|
-
|
|
|
19,255
|
|
|
100,847
|
|
|
7,350
|
|
|
-
|
|
|
127,452
|
Total assets
|
|
$
|
290,784
|
|
$
|
3,911,739
|
|
$
|
3,724,589
|
|
$
|
605,383
|
|
$
|
(6,316,533)
|
|
$
|
2,215,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
-
|
|
$
|
8,807
|
|
$
|
109,903
|
|
$
|
20,615
|
|
$
|
-
|
|
$
|
139,325
|
Accrued expenses
|
|
|
45
|
|
|
102,845
|
|
|
86,926
|
|
|
29,364
|
|
|
-
|
|
|
219,180
|
Income taxes payable
|
|
|
-
|
|
|
1,237
|
|
|
-
|
|
|
(503)
|
|
|
-
|
|
|
734
|
Intercompany accounts payable
|
|
|
-
|
|
|
724
|
|
|
6,869
|
|
|
83,081
|
|
|
(90,674)
|
|
|
-
|
Current portion of decommissioning liabilities
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,538
|
|
|
-
|
|
|
3,538
|
Total current liabilities
|
|
|
45
|
|
|
113,613
|
|
|
203,698
|
|
|
136,095
|
|
|
(90,674)
|
|
|
362,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decommissioning liabilities
|
|
|
-
|
|
|
-
|
|
|
126,558
|
|
|
-
|
|
|
-
|
|
|
126,558
|
Long-term debt, net
|
|
|
-
|
|
|
1,282,921
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,282,921
|
Long-term intercompany accounts payable
|
|
|
-
|
|
|
4,417,627
|
|
|
-
|
|
|
-
|
|
|
(4,417,627)
|
|
|
-
|
Other long-term liabilities
|
|
|
-
|
|
|
50,225
|
|
|
76,543
|
|
|
26,199
|
|
|
-
|
|
|
152,967
|
Total stockholders' equity (deficit)
|
|
|
290,739
|
|
|
(1,952,647)
|
|
|
3,317,790
|
|
|
443,089
|
|
|
(1,808,232)
|
|
|
290,739
|
Total liabilities and stockholders' equity
|
|
$
|
290,784
|
|
$
|
3,911,739
|
|
$
|
3,724,589
|
|
$
|
605,383
|
|
$
|
(6,316,533)
|
|
$
|
2,215,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Condensed Consolidating Balance Sheets
|
December 31, 2017
|
(in thousands)
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
-
|
|
$
|
126,533
|
|
$
|
440
|
|
$
|
45,027
|
|
$
|
-
|
|
$
|
172,000
|
Accounts receivable, net
|
|
|
-
|
|
|
-
|
|
|
332,402
|
|
|
70,889
|
|
|
(5,235)
|
|
|
398,056
|
Income taxes receivable
|
|
|
-
|
|
|
-
|
|
|
(221)
|
|
|
1,180
|
|
|
-
|
|
|
959
|
Intercompany accounts receivable
|
|
|
-
|
|
|
6,460
|
|
|
58,375
|
|
|
5,865
|
|
|
(70,700)
|
|
|
-
|
Other current assets
|
|
|
-
|
|
|
11,895
|
|
|
129,970
|
|
|
34,295
|
|
|
-
|
|
|
176,160
|
Assets held for sale
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
13,644
|
|
|
-
|
|
|
13,644
|
Total current assets
|
|
|
-
|
|
|
144,888
|
|
|
520,966
|
|
|
170,900
|
|
|
(75,935)
|
|
|
760,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
-
|
|
|
12,055
|
|
|
1,093,446
|
|
|
211,443
|
|
|
-
|
|
|
1,316,944
|
Goodwill
|
|
|
-
|
|
|
-
|
|
|
657,099
|
|
|
150,761
|
|
|
-
|
|
|
807,860
|
Notes receivable
|
|
|
-
|
|
|
-
|
|
|
60,149
|
|
|
-
|
|
|
-
|
|
|
60,149
|
Long-term intercompany accounts receivable
|
|
|
2,221,697
|
|
|
-
|
|
|
2,032,056
|
|
|
177,842
|
|
|
(4,431,595)
|
|
|
-
|
Equity investments of consolidated subsidiaries
|
|
|
(1,088,736)
|
|
|
4,481,702
|
|
|
6,590
|
|
|
-
|
|
|
(3,399,556)
|
|
|
-
|
Restricted cash
|
|
|
-
|
|
|
-
|
|
|
20,483
|
|
|
-
|
|
|
-
|
|
|
20,483
|
Intangible and other long-term assets, net
|
|
|
-
|
|
|
22,118
|
|
|
113,632
|
|
|
8,220
|
|
|
-
|
|
|
143,970
|
Total assets
|
|
$
|
1,132,961
|
|
$
|
4,660,763
|
|
$
|
4,504,421
|
|
$
|
719,166
|
|
$
|
(7,907,086)
|
|
$
|
3,110,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
-
|
|
$
|
14,339
|
|
$
|
89,714
|
|
$
|
20,898
|
|
$
|
(5,235)
|
|
$
|
119,716
|
Accrued expenses
|
|
|
532
|
|
|
116,767
|
|
|
80,825
|
|
|
23,633
|
|
|
-
|
|
|
221,757
|
Intercompany accounts payable
|
|
|
-
|
|
|
724
|
|
|
7,918
|
|
|
62,058
|
|
|
(70,700)
|
|
|
-
|
Current portion of decommissioning liabilities
|
|
|
-
|
|
|
-
|
|
|
25,670
|
|
|
1,591
|
|
|
-
|
|
|
27,261
|
Liabilities held for sale
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,463
|
|
|
-
|
|
|
6,463
|
Total current liabilities
|
|
|
532
|
|
|
131,830
|
|
|
204,127
|
|
|
114,643
|
|
|
(75,935)
|
|
|
375,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
-
|
|
|
(147,116)
|
|
|
205,386
|
|
|
2,788
|
|
|
-
|
|
|
61,058
|
Decommissioning liabilities
|
|
|
-
|
|
|
-
|
|
|
101,293
|
|
|
1,843
|
|
|
-
|
|
|
103,136
|
Long-term debt, net
|
|
|
-
|
|
|
1,279,771
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,279,771
|
Long-term intercompany accounts payable
|
|
|
-
|
|
|
4,431,595
|
|
|
-
|
|
|
-
|
|
|
(4,431,595)
|
|
|
-
|
Other long-term liabilities
|
|
|
-
|
|
|
53,419
|
|
|
79,061
|
|
|
26,154
|
|
|
-
|
|
|
158,634
|
Total stockholders' equity (deficit)
|
|
|
1,132,429
|
|
|
(1,088,736)
|
|
|
3,914,554
|
|
|
573,738
|
|
|
(3,399,556)
|
|
|
1,132,429
|
Total liabilities and stockholders' equity
|
|
$
|
1,132,961
|
|
$
|
4,660,763
|
|
$
|
4,504,421
|
|
$
|
719,166
|
|
$
|
(7,907,086)
|
|
$
|
3,110,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Condensed Consolidating Statements of Operations
|
Year Ended December 31, 2018
|
(in thousands)
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenues
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,889,751
|
|
|
271,769
|
|
|
(31,255)
|
|
$
|
2,130,265
|
Cost of services and rentals (exclusive of depreciation,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depletion, amortization and accretion)
|
|
|
-
|
|
|
(13,265)
|
|
|
1,355,524
|
|
|
191,100
|
|
|
(31,255)
|
|
|
1,502,104
|
Depreciation, depletion, amortization and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accretion
|
|
|
-
|
|
|
3,945
|
|
|
351,974
|
|
|
44,929
|
|
|
-
|
|
|
400,848
|
General and administrative expenses
|
|
|
-
|
|
|
95,725
|
|
|
142,451
|
|
|
51,076
|
|
|
-
|
|
|
289,252
|
Reduction in value of assets
|
|
|
-
|
|
|
-
|
|
|
647,441
|
|
|
92,284
|
|
|
-
|
|
|
739,725
|
Income (loss) from operations
|
|
|
-
|
|
|
(86,405)
|
|
|
(607,639)
|
|
|
(107,620)
|
|
|
-
|
|
|
(801,664)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
-
|
|
|
(103,594)
|
|
|
3,950
|
|
|
167
|
|
|
-
|
|
|
(99,477)
|
Other income (expense)
|
|
|
-
|
|
|
71
|
|
|
1,014
|
|
|
(2,763)
|
|
|
-
|
|
|
(1,678)
|
Equity in earnings (losses) of consolidated subsidiaries
|
|
|
(858,115)
|
|
|
(707,348)
|
|
|
(597)
|
|
|
-
|
|
|
1,566,060
|
|
|
-
|
Income (loss) from operations before income taxes
|
|
|
(858,115)
|
|
|
(897,276)
|
|
|
(603,272)
|
|
|
(110,216)
|
|
|
1,566,060
|
|
|
(902,819)
|
Income taxes
|
|
|
-
|
|
|
(39,161)
|
|
|
(6,554)
|
|
|
282
|
|
|
-
|
|
|
(45,433)
|
Net loss from continuing operations
|
|
|
(858,115)
|
|
|
(858,115)
|
|
|
(596,718)
|
|
|
(110,498)
|
|
|
1,566,060
|
|
|
(857,386)
|
Loss from discontinued operations, net of income tax
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(729)
|
|
|
-
|
|
|
(729)
|
Net income (loss)
|
|
$
|
(858,115)
|
|
$
|
(858,115)
|
|
$
|
(596,718)
|
|
$
|
(111,227)
|
|
$
|
1,566,060
|
|
$
|
(858,115)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Consolidating Statements of Comprehensive Loss
|
Year Ended December 31, 2018
|
(in thousands)
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net income (loss)
|
|
$
|
(858,115)
|
|
$
|
(858,115)
|
|
$
|
(596,718)
|
|
$
|
(111,227)
|
|
$
|
1,566,060
|
|
$
|
(858,115)
|
Change in cumulative translation adjustment, net of tax
|
|
|
(5,750)
|
|
|
(5,750)
|
|
|
-
|
|
|
(5,750)
|
|
|
11,500
|
|
|
(5,750)
|
Comprehensive income (loss)
|
|
$
|
(863,865)
|
|
$
|
(863,865)
|
|
$
|
(596,718)
|
|
$
|
(116,977)
|
|
$
|
1,577,560
|
|
$
|
(863,865)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Condensed Consolidating Statements of Operations
|
Year Ended December 31, 2017
|
(in thousands)
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenues
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,655,114
|
|
$
|
234,663
|
|
$
|
(15,701)
|
|
$
|
1,874,076
|
Cost of services and rentals (exclusive of depreciation,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depletion, amortization and accretion)
|
|
|
-
|
|
|
(4,123)
|
|
|
1,242,486
|
|
|
176,033
|
|
|
(15,701)
|
|
|
1,398,695
|
Depreciation, depletion, amortization and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accretion
|
|
|
-
|
|
|
4,149
|
|
|
383,713
|
|
|
50,854
|
|
|
-
|
|
|
438,716
|
General and administrative expenses
|
|
|
-
|
|
|
86,840
|
|
|
152,076
|
|
|
56,591
|
|
|
-
|
|
|
295,507
|
Reduction in value of assets
|
|
|
-
|
|
|
-
|
|
|
6,038
|
|
|
8,117
|
|
|
-
|
|
|
14,155
|
Loss from operations
|
|
|
-
|
|
|
(86,866)
|
|
|
(129,199)
|
|
|
(56,932)
|
|
|
-
|
|
|
(272,997)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
-
|
|
|
(105,585)
|
|
|
4,451
|
|
|
(321)
|
|
|
-
|
|
|
(101,455)
|
Other income (expense)
|
|
|
-
|
|
|
(1,350)
|
|
|
202
|
|
|
(2,151)
|
|
|
-
|
|
|
(3,299)
|
Equity in losses of consolidated subsidiaries
|
|
|
(205,921)
|
|
|
(76,394)
|
|
|
(964)
|
|
|
-
|
|
|
283,279
|
|
|
-
|
Loss from continuing operations before income taxes
|
|
|
(205,921)
|
|
|
(270,195)
|
|
|
(125,510)
|
|
|
(59,404)
|
|
|
283,279
|
|
|
(377,751)
|
Income taxes
|
|
|
-
|
|
|
(64,274)
|
|
|
(118,347)
|
|
|
(8,119)
|
|
|
-
|
|
|
(190,740)
|
Net loss from continuing operations
|
|
|
(205,921)
|
|
|
(205,921)
|
|
|
(7,163)
|
|
|
(51,285)
|
|
|
283,279
|
|
|
(187,011)
|
Loss from discontinued operations, net of income tax
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(18,910)
|
|
|
-
|
|
|
(18,910)
|
Net loss
|
|
$
|
(205,921)
|
|
$
|
(205,921)
|
|
$
|
(7,163)
|
|
$
|
(70,195)
|
|
$
|
283,279
|
|
$
|
(205,921)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Consolidating Statements of Comprehensive Loss
|
Year Ended December 31, 2017
|
(in thousands)
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net loss
|
|
$
|
(205,921)
|
|
$
|
(205,921)
|
|
$
|
(7,163)
|
|
$
|
(70,195)
|
|
$
|
283,279
|
|
$
|
(205,921)
|
Change in cumulative translation adjustment, net of tax
|
|
|
12,821
|
|
|
12,821
|
|
|
-
|
|
|
12,821
|
|
|
(25,642)
|
|
|
12,821
|
Comprehensive loss
|
|
$
|
(193,100)
|
|
$
|
(193,100)
|
|
$
|
(7,163)
|
|
$
|
(57,374)
|
|
$
|
257,637
|
|
$
|
(193,100)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Condensed Consolidating Statements of Operations
|
Year Ended December 31, 2016
|
(in thousands)
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenues
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,193,233
|
|
$
|
281,310
|
|
$
|
(24,496)
|
|
$
|
1,450,047
|
Cost of services and rentals (exclusive of depreciation,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depletion, amortization and accretion)
|
|
|
-
|
|
|
6,582
|
|
|
944,349
|
|
|
196,839
|
|
|
(24,496)
|
|
|
1,123,274
|
Depreciation, depletion, amortization and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accretion
|
|
|
-
|
|
|
4,592
|
|
|
452,180
|
|
|
53,199
|
|
|
-
|
|
|
509,971
|
General and administrative expenses
|
|
|
-
|
|
|
117,781
|
|
|
176,430
|
|
|
52,395
|
|
|
-
|
|
|
346,606
|
Reduction in value of assets
|
|
|
-
|
|
|
-
|
|
|
486,976
|
|
|
13,429
|
|
|
-
|
|
|
500,405
|
Loss from operations
|
|
|
-
|
|
|
(128,955)
|
|
|
(866,702)
|
|
|
(34,552)
|
|
|
-
|
|
|
(1,030,209)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
-
|
|
|
(95,040)
|
|
|
3,425
|
|
|
(1,138)
|
|
|
-
|
|
|
(92,753)
|
Other income (expense)
|
|
|
-
|
|
|
(4,345)
|
|
|
196
|
|
|
26,770
|
|
|
-
|
|
|
22,621
|
Equity in losses of consolidated subsidiaries
|
|
|
(886,899)
|
|
|
(738,047)
|
|
|
(643)
|
|
|
-
|
|
|
1,625,589
|
|
|
-
|
Loss from continuing operations before income taxes
|
|
|
(886,899)
|
|
|
(966,387)
|
|
|
(863,724)
|
|
|
(8,920)
|
|
|
1,625,589
|
|
|
(1,100,341)
|
Income taxes
|
|
|
-
|
|
|
(79,488)
|
|
|
(189,850)
|
|
|
2,337
|
|
|
-
|
|
|
(267,001)
|
Net loss from continuing operations
|
|
|
(886,899)
|
|
|
(886,899)
|
|
|
(673,874)
|
|
|
(11,257)
|
|
|
1,625,589
|
|
|
(833,340)
|
Loss from discontinued operations, net of income tax
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(53,559)
|
|
|
-
|
|
|
(53,559)
|
Net loss
|
|
$
|
(886,899)
|
|
$
|
(886,899)
|
|
$
|
(673,874)
|
|
$
|
(64,816)
|
|
$
|
1,625,589
|
|
$
|
(886,899)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Consolidating Statements of Comprehensive Loss
|
Year Ended December 31, 2016
|
(in thousands)
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net loss
|
|
$
|
(886,899)
|
|
$
|
(886,899)
|
|
$
|
(673,874)
|
|
$
|
(64,816)
|
|
$
|
1,625,589
|
|
$
|
(886,899)
|
Change in cumulative translation adjustment, net of tax
|
|
|
(34,554)
|
|
|
(34,554)
|
|
|
-
|
|
|
(34,554)
|
|
|
69,108
|
|
|
(34,554)
|
Comprehensive loss
|
|
$
|
(921,453)
|
|
$
|
(921,453)
|
|
$
|
(673,874)
|
|
$
|
(99,370)
|
|
$
|
1,694,697
|
|
$
|
(921,453)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Condensed Consolidating Statements of Cash Flows
|
Year Ended December 31, 2018
|
(in thousands)
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
$
|
23,866
|
|
$
|
(2,013)
|
|
$
|
150,510
|
|
$
|
(4,023)
|
|
$
|
(3,283)
|
|
$
|
165,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for capital expenditures
|
|
-
|
|
|
(2,055)
|
|
|
(207,640)
|
|
|
(11,675)
|
|
|
-
|
|
|
(221,370)
|
Proceeds from sales of assets
|
|
-
|
|
|
-
|
|
|
20,003
|
|
|
13,296
|
|
|
-
|
|
|
33,299
|
Net cash used in investing activities
|
|
-
|
|
|
(2,055)
|
|
|
(187,637)
|
|
|
1,621
|
|
|
-
|
|
|
(188,071)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany dividends
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,283)
|
|
|
3,283
|
|
|
-
|
Changes in notes with affiliated companies, net
|
|
(21,734)
|
|
|
(19,787)
|
|
|
22,564
|
|
|
18,957
|
|
|
-
|
|
|
-
|
Other
|
|
(2,132)
|
|
|
(454)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,586)
|
Net cash provided by (used in) financing activities
|
|
(23,866)
|
|
|
(20,241)
|
|
|
22,564
|
|
|
15,674
|
|
|
3,283
|
|
|
(2,586)
|
Effect of exchange rate changes on cash
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,135)
|
|
|
-
|
|
|
(3,135)
|
Net decrease in cash, cash equivalents, and restricted cash
|
|
-
|
|
|
(24,309)
|
|
|
(14,563)
|
|
|
10,137
|
|
|
-
|
|
|
(28,735)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and restricted cash at beginning of period
|
|
-
|
|
|
126,533
|
|
|
20,923
|
|
|
45,027
|
|
|
-
|
|
|
192,483
|
Cash, cash equivalents, and restricted cash at end of period
|
$
|
-
|
|
$
|
102,224
|
|
$
|
6,360
|
|
$
|
55,164
|
|
$
|
-
|
|
$
|
163,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Condensed Consolidating Statements of Cash Flows
|
Year Ended December 31, 2017
|
(in thousands)
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
|
Consolidated
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
$
|
26,221
|
|
$
|
3,369
|
|
$
|
89,739
|
|
$
|
(22,903)
|
|
|
$
|
96,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for capital expenditures
|
|
-
|
|
|
(1,041)
|
|
|
(148,738)
|
|
|
(15,154)
|
|
|
|
(164,933)
|
Other
|
|
-
|
|
|
-
|
|
|
23,485
|
|
|
4,784
|
|
|
|
28,269
|
Net cash used in investing activities
|
|
-
|
|
|
(1,041)
|
|
|
(125,253)
|
|
|
(10,370)
|
|
|
|
(136,664)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
-
|
|
|
500,000
|
|
|
-
|
|
|
-
|
|
|
|
500,000
|
Principal payments on long-term debt
|
|
-
|
|
|
(500,000)
|
|
|
-
|
|
|
-
|
|
|
|
(500,000)
|
Payment of debt issuance costs
|
|
-
|
|
|
(11,967)
|
|
|
-
|
|
|
-
|
|
|
|
(11,967)
|
Changes in notes with affiliated companies, net
|
|
(21,163)
|
|
|
8,727
|
|
|
4,648
|
|
|
7,788
|
|
|
|
-
|
Other
|
|
(5,058)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
(5,058)
|
Net cash provided by (used in) financing activities
|
|
(26,221)
|
|
|
(3,240)
|
|
|
4,648
|
|
|
7,788
|
|
|
|
(17,025)
|
Effect of exchange rate changes on cash
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,654
|
|
|
|
3,654
|
Net decrease in cash, cash equivalents, and restricted cash
|
|
-
|
|
|
(912)
|
|
|
(30,866)
|
|
|
(21,831)
|
|
|
|
(53,609)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and restricted cash at beginning of period
|
|
-
|
|
|
127,445
|
|
|
51,789
|
|
|
66,858
|
|
|
|
246,092
|
Cash, cash equivalents, and restricted cash at end of period
|
$
|
-
|
|
$
|
126,533
|
|
$
|
20,923
|
|
$
|
45,027
|
|
|
$
|
192,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
|
Condensed Consolidating Statements of Cash Flows
|
Year Ended December 31, 2016
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
29,149
|
|
$
|
(139,666)
|
|
$
|
248,627
|
|
$
|
(1,091)
|
|
$
|
(75,767)
|
|
$
|
61,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for capital expenditures
|
|
|
-
|
|
|
(405)
|
|
|
(64,478)
|
|
|
(15,665)
|
|
|
-
|
|
|
(80,548)
|
Other
|
|
|
-
|
|
|
-
|
|
|
6,501
|
|
|
-
|
|
|
-
|
|
|
6,501
|
Net cash used in investing activities
|
|
|
-
|
|
|
(405)
|
|
|
(57,977)
|
|
|
(15,665)
|
|
|
-
|
|
|
(74,047)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from revolving credit facility
|
|
|
-
|
|
|
325,123
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
325,123
|
Payments on revolving credit facility
|
|
|
-
|
|
|
(325,123)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(325,123)
|
Payments on long-term debt
|
|
|
-
|
|
|
(325,000)
|
|
|
-
|
|
|
(12,576)
|
|
|
-
|
|
|
(337,576)
|
Payment of debt issuance costs
|
|
|
-
|
|
|
(2,711)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,711)
|
Intercompany dividends
|
|
|
-
|
|
|
-
|
|
|
(73,017)
|
|
|
(2,750)
|
|
|
75,767
|
|
|
-
|
Changes in notes with affiliated companies, net
|
|
|
(13,956)
|
|
|
185,950
|
|
|
(127,595)
|
|
|
(44,399)
|
|
|
-
|
|
|
-
|
Dividends paid
|
|
|
(12,111)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(12,111)
|
Other
|
|
|
(3,082)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,082)
|
Net cash provided by (used in) financing activities
|
|
|
(29,149)
|
|
|
(141,761)
|
|
|
(200,612)
|
|
|
(59,725)
|
|
|
75,767
|
|
|
(355,480)
|
Effect of exchange rate changes on cash
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(7,959)
|
|
|
-
|
|
|
(7,959)
|
Net decrease in cash, cash equivalents, and restricted cash
|
|
|
-
|
|
|
(281,832)
|
|
|
(9,962)
|
|
|
(84,440)
|
|
|
-
|
|
|
(376,234)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and restricted cash at beginning of period
|
|
|
-
|
|
|
409,277
|
|
|
61,751
|
|
|
151,298
|
|
|
-
|
|
|
622,326
|
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
-
|
|
$
|
127,445
|
|
$
|
51,789
|
|
$
|
66,858
|
|
$
|
-
|
|
$
|
246,092
|
(13) Interim Financial Information (Unaudited)
The following is a summary of consolidated interim financial information (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
Revenues
|
|
$
|
482,318
|
|
$
|
535,548
|
|
$
|
573,068
|
|
$
|
539,331
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and rentals (exclusive of
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation, depletion, amortization and accretion)
|
|
|
343,460
|
|
|
369,810
|
|
|
404,389
|
|
|
384,445
|
Depreciation, depletion, amortization and accretion
|
|
|
105,719
|
|
|
97,973
|
|
|
99,892
|
|
|
97,264
|
Gross profit
|
|
|
33,139
|
|
|
67,765
|
|
|
68,787
|
|
|
57,622
|
Reduction in value of assets
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
739,725
|
Income (loss) from continuing operations
|
|
|
(59,948)
|
|
|
(25,437)
|
|
|
(21,816)
|
|
|
(750,185)
|
Income (loss) from discontinued operations, net of tax
|
|
|
224
|
|
|
(953)
|
|
|
-
|
|
|
-
|
Net loss
|
|
$
|
(59,724)
|
|
$
|
(26,390)
|
|
$
|
(21,816)
|
|
$
|
(750,185)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.39)
|
|
$
|
(0.16)
|
|
$
|
(0.14)
|
|
$
|
(4.85)
|
Loss per share from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
-
|
|
$
|
(0.01)
|
|
$
|
-
|
|
$
|
(4.85)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
Revenues
|
|
$
|
400,936
|
|
$
|
470,068
|
|
$
|
506,029
|
|
$
|
497,043
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and rentals (exclusive of
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation, depletion, amortization and accretion)
|
|
|
321,986
|
|
|
351,802
|
|
|
368,279
|
|
|
356,628
|
Depreciation, depletion, amortization and accretion
|
|
|
114,281
|
|
|
108,119
|
|
|
108,751
|
|
|
107,565
|
Gross profit
|
|
|
(35,331)
|
|
|
10,147
|
|
|
28,999
|
|
|
32,850
|
Reduction in value of assets
|
|
|
-
|
|
|
-
|
|
|
9,953
|
|
|
4,202
|
Income (loss) from continuing operations
|
|
|
(89,661)
|
|
|
(62,039)
|
|
|
(57,189)
|
|
|
21,878
|
Loss from discontinued operations, net of tax
|
|
|
(1,998)
|
|
|
(1,767)
|
|
|
(1,860)
|
|
|
(13,285)
|
Net income (loss)
|
|
$
|
(91,659)
|
|
$
|
(63,806)
|
|
$
|
(59,049)
|
|
$
|
8,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.59)
|
|
$
|
(0.41)
|
|
$
|
(0.37)
|
|
$
|
0.14
|
Diluted
|
|
|
(0.59)
|
|
|
(0.41)
|
|
|
(0.37)
|
|
|
0.14
|
Loss per share from discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01)
|
|
$
|
(0.01)
|
|
$
|
(0.02)
|
|
$
|
(0.08)
|
Diluted
|
|
|
(0.01)
|
|
|
(0.01)
|
|
|
(0.02)
|
|
|
(0.08)
|