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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, 2020

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 (1)

Name of each exchange on which registered (1)

Common Stock, $.001 par value

SPNX

NONE

(1) On September 17, 2020, our common stock was suspended from trading on the New York Stock Exchange (the NYSE). On September 18, 2020, our common stock began trading on the OTCQX Marketplace maintained by the OTC Markets Group, Inc. under the symbol “SPNX.” On October 2, 2020, the NYSE filed a Form 25 with the Securities and Exchange Commission (the SEC) to delist our common stock from trading on the NYSE and to remove it from registration under Section 12(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act). The delisting became effective 10 days after the filing of the Form 25. In accordance with Rule 12d2-2 of the Exchange Act, the de-registration of our common stock under Section 12(b) of the Exchange Act will become effective 90 days, or such shorter period as the SEC may determine, from the date of the Form 25 filing.

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 every Interactive Data File required to be submitted 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 ¨

Accelerated Filer x

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 3, 2020 was 14,826,906.

1


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q for

the Quarterly Period Ended September 30, 2020

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

24

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

32

Item 4.

Controls and Procedures

33

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Securities

39

Item 3.

Defaults Upon Senior Securities

39

Item 4.

Mine Safety Disclosures

39

Item 5.

Other Information

39

Item 6.

Exhibits

40

 


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, 2020

December 31, 2019

ASSETS

Current assets:

Cash and cash equivalents

$

207,781

$

272,624

Accounts receivable, net of allowance for doubtful accounts of $18,414 and $12,156 at
September 30, 2020 and December 31, 2019, respectively

181,666

332,047

Income taxes receivable

4,119

740

Prepaid expenses

42,465

49,132

Inventory and other current assets

108,639

117,629

Assets held for sale

51,748

216,197

Total current assets

596,418

988,369

Property, plant and equipment, net of accumulated depreciation and depletion of
$2,184,340 and $2,214,116 at September 30, 2020 and December 31, 2019, respectively

574,588

664,949

Operating lease right-of-use assets

56,198

80,906

Goodwill

137,142

137,695

Notes receivable

71,472

68,092

Restricted cash

80,175

2,764

Intangible and other long-term assets, net of accumulated amortization of $24,675
and $23,199 at September 30, 2020 and December 31, 2019, respectively

58,253

50,455

Total assets

$

1,574,246

$

1,993,230

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$

60,042

$

92,966

Accrued expenses

159,395

182,934

Current portion of decommissioning liabilities

3,735

3,649

Liabilities held for sale

5,760

44,938

Total current liabilities

228,932

324,487

Long-term debt, net

1,289,288

1,286,629

Decommissioning liabilities

137,315

132,632

Operating lease liabilities

38,649

62,354

Deferred income taxes

3,599

3,247

Other long-term liabilities

126,199

134,308

Stockholders’ equity (deficit):

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

-

-

Common stock of $0.001 par value

Authorized - 25,000,000, Issued - 15,799,318, Outstanding - 14,826,906 at September 30, 2020

16

16

Authorized - 25,000,000, Issued - 15,689,463, Outstanding - 14,717,051 at December 31, 2019

Additional paid-in capital

2,756,031

2,752,859

Treasury stock at cost, 972,412 shares at September 30, 2020 and December 31, 2019, respectively

(4,290)

(4,290)

Accumulated other comprehensive loss, net

(72,534)

(71,927)

Accumulated deficit

(2,928,959)

(2,627,085)

Total stockholders’ equity (deficit)

(249,736)

49,573

Total liabilities and stockholders’ equity (deficit)

$

1,574,246

$

1,993,230

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,

2020

2019

2020

2019

Revenues:

Services

$

97,001

$

211,540

$

367,846

$

689,248

Rentals

42,562

99,771

196,006

282,819

Product sales

27,365

45,274

108,426

117,230

Total revenues

166,928

356,585

672,278

1,089,297

Costs and expenses:

Cost of services

81,535

162,469

303,134

510,075

Cost of rentals

22,879

39,119

83,904

119,656

Cost of sales

11,819

30,339

69,684

71,781

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

116,233

231,927

456,722

701,512

Depreciation, depletion, amortization and accretion - services

20,400

26,646

61,584

96,594

Depreciation, depletion, amortization and accretion - rentals

9,145

15,500

32,633

46,958

Depreciation, depletion, amortization and accretion - sales

5,627

3,016

19,096

9,224

General and administrative expenses

54,966

60,866

178,543

203,015

Restructuring expense

25,746

-

27,033

-

Reduction in value of assets

2,929

9,571

19,451

17,128

Income (loss) from operations

(68,118)

9,059

(122,784)

14,866

Other income (expense):

Interest expense, net

(24,794)

(24,505)

(74,677)

(74,275)

Other income (expense):

(1,399)

(3,353)

(4,810)

(4,476)

Loss from continuing operations before income taxes

(94,311)

(18,799)

(202,271)

(63,885)

Income taxes

4,990

1,708

(11,772)

7,707

Net loss from continuing operations

(99,301)

(20,507)

(190,499)

(71,592)

Loss from discontinued operations, net of income tax

(58,003)

(17,934)

(111,375)

(85,604)

Net loss

$

(157,304)

$

(38,441)

$

(301,874)

$

(157,196)

Basic and diluted loss per share:

Net loss from continuing operations

$

(6.70)

$

(1.31)

$

(12.87)

$

(4.60)

Loss from discontinued operations

(3.91)

(1.15)

(7.53)

(5.49)

Net loss

$

(10.61)

$

(2.46)

$

(20.40)

$

(10.09)

Weighted average shares outstanding

14,827

15,657

14,795

15,581

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Net loss

(157,304)

(38,441)

(301,874)

(157,196)

Change in cumulative translation adjustment, net of tax

4,216

(2,967)

(607)

(3,810)

Comprehensive loss

$

(153,088)

$

(41,408)

$

(302,481)

$

(161,006)

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,

2020

2019

Cash flows from operating activities:

Net loss

$

(301,874)

$

(157,196)

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

Depreciation, depletion, amortization and accretion

113,313

225,044

Deferred income taxes

352

-

Reduction in value of assets

19,451

40,952

Reduction in value of assets held for sale

109,591

-

Right-of-use assets amortization

14,738

16,341

Stock-based compensation expense

6,074

14,155

Other reconciling items, net

(3,537)

(9,340)

Changes in operating assets and liabilities:

Accounts receivable

126,439

68,239

Prepaid expenses

352

(20,012)

Inventory and other current assets

15,380

(19,966)

Accounts payable

(35,828)

(8,221)

Accrued expenses

(26,409)

(25,054)

Income taxes

(3,114)

3,314

Other, net

(16,331)

(11,752)

Net cash provided by operating activities

18,597

116,504

Cash flows from investing activities:

Payments for capital expenditures

(37,408)

(105,393)

Proceeds from sales of assets

44,097

90,696

Net cash provided by (used in) investing activities

6,689

(14,697)

Cash flows from financing activities:

Delayed draw term loan commitment fee

(11,700)

-

Tax withholdings for vested restricted stock units

(208)

(1,677)

Other

(432)

621

Net cash used in financing activities

(12,340)

(1,056)

Effect of exchange rate changes on cash

(378)

(1,857)

Net change in cash, cash equivalents, and restricted cash

12,568

98,894

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

275,388

163,748

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

$

287,956

$

262,642

See accompanying notes to condensed consolidated financial statements.

 

5