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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File No. 001-34037

Commission Company Name: SUPERIOR ENERGY SERVICES INC

SUPERIOR ENERGY SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

75-2379388

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

1001 Louisiana Street, Suite 2900

77002

Houston, TX

(Zip Code)

(Address of principal executive offices)

Registrant’s telephone number, including area code: (713) 654-2200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $.001 par value

SPN

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer x

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company ¨

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of the registrant’s common stock outstanding on July 19, 2019 was 156,573,160.

1


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q for

the Quarterly Period Ended June 30, 2019

TABLE OF CONTENTS

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements and Notes

3

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

30

Item 4.

Controls and Procedures

31

PART II.

OTHER INFORMATION

Item 1

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 6.

Exhibits

32

 


2


PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements and Notes

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)

June 30, 2019

December 31, 2018

ASSETS

Current assets:

Cash and cash equivalents

$

234,132

$

158,050

Accounts receivable, net of allowance for doubtful accounts of $13,217 and

$12,080 at June 30, 2019 and December 31, 2018, respectively

369,834

447,353

Prepaid expenses

61,989

45,802

Inventory and other current assets

133,815

121,700

Total current assets

799,770

772,905

Property, plant and equipment, net of accumulated depreciation and depletion of
$2,618,764 and $2,640,344 at June 30, 2019 and December 31, 2018, respectively

940,933

1,109,126

Operating lease right-of-use assets

99,004

-

Goodwill

136,787

136,788

Notes receivable

66,010

63,993

Restricted cash

2,739

5,698

Intangible and other long-term assets, net of accumulated amortization of $23,037
and $76,358 at June 30, 2019 and December 31, 2018, respectively

101,054

127,452

Total assets

$

2,146,297

$

2,215,962

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

95,894

$

139,325

Accrued expenses

218,882

219,180

Income taxes payable

3,734

734

Current portion of decommissioning liabilities

3,593

3,538

Total current liabilities

322,103

362,777

Long-term debt, net

1,284,814

1,282,921

Decommissioning liabilities

129,604

126,558

Operating lease liabilities

78,973

-

Other long-term liabilities

150,412

152,967

Stockholders’ equity:

Preferred stock of $0.01 par value. Authorized - 5,000,000 shares; none issued

-

-

Common stock of $0.001 par value

Authorized - 250,000,000, Issued and Outstanding - 156,573,160 at June 30, 2019
Authorized - 250,000,000, Issued and Outstanding - 154,885,418 at December 31, 2018

157

155

Additional paid in capital

2,744,373

2,735,125

Accumulated other comprehensive loss, net

(74,020)

(73,177)

Retained deficit

(2,490,119)

(2,371,364)

Total stockholders’ equity

180,391

290,739

Total liabilities and stockholders’ equity

$

2,146,297

$

2,215,962

See accompanying notes to condensed consolidated financial statements.

3


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Revenues:

Services

$

344,304

$

446,812

$

720,443

$

846,580

Rentals

92,011

88,736

183,048

171,286

Total revenues

436,315

535,548

903,491

1,017,866

Costs and expenses:

Cost of services (exclusive of depreciation, depletion, amortization and accretion)

257,578

333,126

546,132

644,265

Cost of rentals (exclusive of depreciation, depletion, amortization and accretion)

38,850

36,684

80,459

69,005

Depreciation, depletion, amortization and accretion - services

59,423

81,740

126,199

169,487

Depreciation, depletion, amortization and accretion - rentals

15,795

16,233

31,458

34,205

General and administrative expenses

71,984

69,896

145,829

145,716

Reduction in value of assets

31,381

-

31,381

-

Loss from operations

(38,696)

(2,131)

(57,967)

(44,812)

Other expense:

Interest expense, net

(24,650)

(24,894)

(49,771)

(49,781)

Other income (expense)

490

(2,382)

(1,122)

(4,117)

Loss from continuing operations before income taxes

(62,856)

(29,407)

(108,860)

(98,710)

Income taxes

8,194

(3,970)

9,895

(13,325)

Net loss from continuing operations

(71,050)

(25,437)

(118,755)

(85,385)

Loss from discontinued operations, net of income tax

-

(953)

-

(729)

Net loss

$

(71,050)

$

(26,390)

$

(118,755)

$

(86,114)

Basic and diluted loss per share:

Net loss from continuing operations

$

(0.46)

$

(0.16)

$

(0.76)

$

(0.56)

Loss from discontinued operations

-

(0.01)

-

-

Net loss

$

(0.46)

$

(0.17)

$

(0.76)

$

(0.56)

Weighted average shares outstanding

155,997

154,278

155,383

153,728

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Net loss

$

(71,050)

$

(26,390)

$

(118,755)

$

(86,114)

Change in cumulative translation adjustment, net of tax

(1,916)

(7,053)

(843)

(2,665)

Comprehensive loss

$

(72,966)

$

(33,443)

$

(119,598)

$

(88,779)

See accompanying notes to condensed consolidated financial statements.

 

4


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Six Months Ended June 30,

2019

2018

Cash flows from operating activities:

Net loss

$

(118,755)

$

(86,114)

Adjustments to reconcile net loss to net cash provided by operating
  activities:

Depreciation, depletion, amortization and accretion

157,657

203,692

Deferred income taxes

-

(19,300)

Reduction in value of assets

31,381

-

Right-of-use assets amortization

11,286

-

Stock based compensation expense

13,507

16,552

Other reconciling items, net

(7,005)

(2,595)

Changes in operating assets and liabilities:

Accounts receivable

67,506

(44,415)

Prepaid expenses

(16,953)

(862)

Inventory and other current assets

(13,680)

(24,854)

Accounts payable

(21,931)

32,852

Accrued expenses

(28,089)

(35,729)

Other, net

(6,094)

188

Net cash provided by operating activities

68,830

39,415

Cash flows from investing activities:

Payments for capital expenditures

(79,136)

(119,841)

Proceeds from sales of assets

84,557

23,297

Net cash provided by (used in) investing activities

5,421

(96,544)

Cash flows from financing activities:

Tax withholding for vested restricted stock units

(1,677)

(5,183)

Other

651

1,283

Net cash used in financing activities

(1,026)

(3,900)

Effect of exchange rate changes on cash

(102)

(1,311)

Net change in cash, cash equivalents, and restricted cash

73,123

(62,340)

Cash, cash equivalents, and restricted cash at beginning of period

163,748

192,483

Cash, cash equivalents, and restricted cash at end of period

$

236,871

$

130,143

See accompanying notes to condensed consolidated financial statements.

 

5


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

Six Months Ended June 30, 2019

(in thousands, except share data)

(unaudited)

Accumulated

Common

Additional

other

stock

Common

paid-in

comprehensive

Retained

shares

stock

capital

loss, net

deficit

Total

Balances, December 31, 2018

154,885,418

$

155

$

2,735,125

$

(73,177)

$

(2,371,364)

$

290,739

Net loss

-

-

-

-

(47,705)

(47,705)

Foreign currency translation adjustment

-

-

-

1,073

-

1,073

Stock-based compensation expense,

net of forfeitures

-

-

5,625

-

-

5,625

Transactions under stock plans

1,071,182

1

(1,667)

-

-

(1,666)

Balances, March 31, 2019

155,956,600

$

156

$

2,739,083

$

(72,104)

$

(2,419,069)

$

248,066

Net loss

-

-

-

-

(71,050)

(71,050)

Foreign currency translation adjustment

-

-

-

(1,916)

-

(1,916)

Stock-based compensation expense,

net of forfeitures

-

-

4,650

-

-

4,650

Transactions under stock plans

116,374

-

(10)

-

-

(10)

Shares issued under Employee Stock Purchase Plan

500,186

1

650

-

-

651

Balances, June 30, 2019

156,573,160

$

157

$

2,744,373

$

(74,020)

$

(2,490,119)

$

180,391

See accompanying notes to condensed consolidated financial statements.

6


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

Six Months Ended June 30, 2018

(in thousands, except share data)

(unaudited)

Accumulated

Common

Additional

other

stock