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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 September 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 November 1, 2019 was 146,849,439.

1


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q for

the Quarterly Period Ended September 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)

September 30, 2019

December 31, 2018

ASSETS

Current assets:

Cash and cash equivalents

$

259,889

$

158,050

Accounts receivable, net of allowance for doubtful accounts of $14,500 and

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

368,530

447,353

Prepaid expenses

64,760

45,802

Inventory and other current assets

139,840

121,700

Total current assets

833,019

772,905

Property, plant and equipment, net of accumulated depreciation and depletion of
$2,620,197 and $2,640,344 at September 30, 2019 and December 31, 2018, respectively

891,540

1,109,126

Operating lease right-of-use assets

96,190

-

Goodwill

135,922

136,788

Notes receivable

67,042

63,993

Restricted cash

2,753

5,698

Intangible and other long-term assets, net of accumulated amortization of $24,686
and $76,358 at September 30, 2019 and December 31, 2018, respectively

97,285

127,452

Total assets

$

2,123,751

$

2,215,962

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

110,398

$

139,325

Accrued expenses

220,623

219,180

Income taxes payable

3,842

734

Current portion of decommissioning liabilities

3,621

3,538

Total current liabilities

338,484

362,777

Long-term debt, net

1,285,755

1,282,921

Decommissioning liabilities

131,263

126,558

Operating lease liabilities

76,255

-

Other long-term liabilities

148,907

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 - 156,573,565 at September 30, 2019
Authorized - 250,000,000, Issued and Outstanding - 154,885,418 at December 31, 2018

157

155

Additional paid in capital

2,748,477

2,735,125

Accumulated other comprehensive loss, net

(76,987)

(73,177)

Retained deficit

(2,528,560)

(2,371,364)

Total stockholders’ equity

143,087

290,739

Total liabilities and stockholders’ equity

$

2,123,751

$

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 September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Revenues:

Services

$

325,946

$

471,218

$

1,046,388

$

1,317,798

Rentals

99,771

101,850

282,820

273,136

Total revenues

425,717

573,068

1,329,208

1,590,934

Costs and expenses:

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

255,087

372,837

801,143

1,017,102

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

39,119

31,552

119,654

100,557

Depreciation, depletion, amortization and accretion - services

51,889

81,911

178,088

251,398

Depreciation, depletion, amortization and accretion - rentals

15,500

17,981

46,958

52,186

General and administrative expenses

62,768

68,895

208,597

214,611

Reduction in value of assets

9,571

-

40,952

-

Loss from operations

(8,217)

(108)

(66,184)

(44,920)

Other expense:

Interest expense, net

(24,505)

(24,952)

(74,275)

(74,733)

Other income (expense)

(3,353)

(277)

(4,476)

(4,394)

Loss from continuing operations before income taxes

(36,075)

(25,337)

(144,935)

(124,047)

Income taxes

2,366

(3,521)

12,261

(16,846)

Net loss from continuing operations

(38,441)

(21,816)

(157,196)

(107,201)

Loss from discontinued operations, net of income tax

-

-

-

(729)

Net loss

$

(38,441)

$

(21,816)

$

(157,196)

$

(107,930)

Basic and diluted loss per share:

Net loss from continuing operations

$

(0.25)

$

(0.14)

$

(1.01)

$

(0.70)

Loss from discontinued operations

-

-

-

-

Net loss

$

(0.25)

$

(0.14)

$

(1.01)

$

(0.70)

Weighted average shares outstanding

156,573

154,529

155,808

154,047

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Net loss

$

(38,441)

$

(21,816)

$

(157,196)

$

(107,930)

Change in cumulative translation adjustment, net of tax

(2,967)

(826)

(3,810)

(3,491)

Comprehensive loss

$

(41,408)

$

(22,642)

$

(161,006)

$

(111,421)

See accompanying notes to condensed consolidated financial statements.

 

4


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Nine Months Ended September 30,

2019

2018

Cash flows from operating activities:

Net loss

$

(157,196)

$

(107,930)

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

Depreciation, depletion, amortization and accretion

225,044

303,584

Deferred income taxes

-

(25,475)

Reduction in value of assets

40,952

-

Right-of-use assets amortization

16,341

-

Stock based compensation expense

14,155

23,303

Other reconciling items, net

(9,340)

(8,255)

Changes in operating assets and liabilities:

Accounts receivable

68,239

(95,806)

Prepaid expenses

(20,012)

1,742

Inventory and other current assets

(19,966)

(16,879)

Accounts payable

(8,221)

18,367

Accrued expenses

(25,054)

(9,543)

Other, net

(8,438)

248

Net cash provided by operating activities

116,504

83,356

Cash flows from investing activities:

Payments for capital expenditures

(105,393)

(186,283)

Proceeds from sales of assets

90,696

29,595

Net cash used in investing activities

(14,697)

(156,688)

Cash flows from financing activities:

Tax withholding for vested restricted stock units

(1,677)

(5,189)

Other

621

1,239

Net cash used in financing activities

(1,056)

(3,950)

Effect of exchange rate changes on cash

(1,857)

(1,834)

Net change in cash, cash equivalents, and restricted cash

98,894

(79,116)

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

163,748

192,483

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

$

262,642

$

113,367

See accompanying notes to condensed consolidated financial statements.

 

5


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

Nine Months Ended September 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