10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

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

For the quarterly period ended March 31, 2022

or

 

TRANSITION 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

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

 

 

 

 

1001 Louisiana Street, Suite 2900

Houston, TX

(Address of principal executive offices)

 

77002

(Zip Code)

 

 

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

 None

N/A

None

 

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 ☒ 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 ☒ 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 ☐

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

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No 

 

The number of shares of the registrant’s Class A common stock outstanding on April 30, 2022 was 19,998,695.

The number of shares of the registrant’s Class B common stock outstanding on April 30, 2022 was 76,269.

1

 


TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

Page

 

Information Regarding Forward-Looking Statements

3

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Unaudited Condensed Consolidated Financial Statements and Notes

 

 

Unaudited Condensed Consolidated Balance Sheets

5

 

Unaudited Condensed Consolidated Statements of Operations

6

 

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

7

 

Unaudited Consolidated Statements of Changes in Stockholders' Equity (Deficit)

8

 

Unaudited Condensed Consolidated Statements of Cash Flows

9

 

Notes to Unaudited Condensed Consolidated Financial Statements

10

Item 2.

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

20

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

24

Item 4.

Controls and Procedures

25

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

26

Item 3.

Defaults Upon Senior Securities

26

Item 4.

Mine Safety Disclosures

26

Item 5.

Other Information

26

Item 6.

Exhibits

27

 

 

 

SIGNATURES

 

28

 

 

 

2

 


INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (the “Form 10-Q”) and other documents filed by us with the Securities and Exchange Commission (the “SEC”) contain, and future oral or written statements or press releases by us and our management may contain, forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks” and “estimates,” variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words. All statements other than statements of historical fact included in this Form 10-Q or such other materials regarding our financial position, financial performance, liquidity, strategic alternatives, market outlook, future capital needs, capital allocation plans, business strategies and other plans and objectives of our management for future operations and activities are forward-looking statements. These statements are based on certain assumptions and analyses made by our management in light of their experience and prevailing circumstances on the date such statements are made. Such forward-looking statements, and the assumptions on which they are based, are inherently speculative and are subject to a number of risks and uncertainties that could cause our actual results to differ materially from such statements. Such risks and uncertainties include, but are not limited to:

 

risks and uncertainties regarding the continuing effects of residual bankruptcy proceedings on us and our various constituents; attendant risks associated with restrictions on our ability to pursue our business strategies; uncertainty and continuing risks associated with our ability to achieve our stated goals;
the likelihood that our historical financial information may no longer be indicative of our future performance due to our implementation of fresh start accounting;
the difficulty to predict our long-term liquidity requirements and the adequacy of our capital resources;
restrictive covenants in the Credit Facility (as defined below) could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests;
the conditions in the oil and gas industry;
U.S. and global market and economic conditions, including impacts relating to inflation and supply chain disruptions;
the effects of public health threats, pandemics and epidemics, and the adverse impact thereof on our business, financial condition, results of operations and liquidity, including, but not limited to, our growth, operating costs, supply chain, labor availability, logistical capabilities, customer demand and industry demand generally, margins, utilization, cash position, taxes, the price of our securities, and our ability to access capital markets, including the macroeconomic effects from the continuing COVID-19 pandemic;
the ability of the members of Organization of Petroleum Exporting Countries (“OPEC+”) to agree on and to maintain crude oil price and production controls;
operating hazards, including the significant possibility of accidents resulting in personal injury or death, or property damage for which we may have limited or no insurance coverage or indemnification rights;
the possibility of not being fully indemnified against losses incurred due to catastrophic events;
claims, litigation or other proceedings that require cash payments or could impair financial condition;
credit risk associated with our customer base;
the effect of regulatory programs and environmental matters on our operations or prospects;
the impact that unfavorable or unusual weather conditions could have on our operations;
the potential inability to retain key employees and skilled workers;
political, legal, economic and other risks and uncertainties associated with our international operations;
laws, regulations or practices in foreign countries could materially restrict our operations or expose us to additional risks;
potential changes in tax laws, adverse positions taken by tax authorities or tax audits impacting our operating results;
changes in competitive and technological factors affecting our operations;
risks associated with the uncertainty of macroeconomic and business conditions worldwide;
our operations may be subject to cyber-attacks;
counterparty risks associated with reliance on key suppliers;
challenges with estimating our potential liabilities related to our oil and natural gas property;
risks associated with potential changes of Bureau of Ocean Energy Management (“BOEM”) security and bonding requirements for offshore platforms;
the likelihood that the interests of our significant stockholders may conflict with the interests of our other stockholders;
the risks associated with owning our Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), for which there is no public market; and
the likelihood that our stockholders agreement may prevent certain transactions that could otherwise be beneficial to our stockholders.

 

3

 


These risks and other uncertainties related to our business are described in detail in our Form 10-K. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Investors are cautioned that many of the assumptions on which our forward-looking statements are based are likely to change after such statements are made, including for example the market prices of oil and gas and regulations affecting oil and gas operations, which we cannot control or anticipate. Further, we may make changes to our business strategies and plans (including our capital spending and capital allocation plans) at any time and without notice, based on any changes in the above-listed factors, our assumptions or otherwise, any of which could or will affect our results. For all these reasons, actual events and results may differ materially from those anticipated, estimated, projected or implied by us in our forward-looking statements. We undertake no obligation to update any of our forward-looking statements for any reason, notwithstanding any changes in our assumptions, changes in our business plans, our actual experience, or other changes. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

 

4

 


PART I. FINANCIAL INFORMATION

 

Item 1. Unaudited Condensed Consolidated Financial Statements and Notes

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

(unaudited)

 

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 ASSETS

 

 

 

 

 

 

 Current assets:

 

 

 

 

 

 

 Cash and cash equivalents

 

$

359,511

 

 

$

314,974

 

 Accounts receivable, net

 

 

197,602

 

 

 

182,432

 

 Income taxes receivable

 

 

5,578

 

 

 

5,099

 

 Prepaid expenses

 

 

16,037

 

 

 

15,861

 

 Inventory

 

 

59,830

 

 

 

60,603

 

 Investment in equity securities

 

 

26,605

 

 

 

25,735

 

 Other current assets

 

 

5,748

 

 

 

6,701

 

 Assets held for sale

 

 

28,491

 

 

 

37,528

 

 Total current assets

 

 

699,402

 

 

 

648,933

 

 Property, plant and equipment, net

 

 

331,499

 

 

 

356,274

 

 Notes receivable

 

 

61,566

 

 

 

60,588

 

 Restricted cash

 

 

79,561

 

 

 

79,561

 

 Other long-term assets, net

 

 

52,331

 

 

 

54,152

 

 Total assets

 

$

1,224,359

 

 

$

1,199,508

 

 

 

 

 

 

 

 

 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 Current liabilities:

 

 

 

 

 

 

 Accounts payable

 

$

43,573

 

 

$

43,080

 

 Accrued expenses

 

 

107,027

 

 

 

108,610

 

 Income taxes payable

 

 

12,990

 

 

 

8,272

 

 Liabilities held for sale

 

 

3,678

 

 

 

5,607

 

 Total current liabilities

 

 

167,268

 

 

 

165,569

 

 Decommissioning liabilities

 

 

193,041

 

 

 

190,380

 

 Deferred income taxes

 

 

9,725

 

 

 

12,441

 

 Other long-term liabilities

 

 

86,281

 

 

 

89,385

 

 Total liabilities

 

 

456,315

 

 

 

457,775

 

 

 

 

 

 

 

 

 Stockholders’ equity (deficit):

 

 

 

 

 

 

 Class A common stock $0.01 par value; 50,000,000 shares authorized;
    
19,998,695 shares issued and outstanding
    at March 31, 2022 and December 31, 2021

 

 

200

 

 

 

200

 

 Class B common stock $0.01 par value; 2,000,000 shares authorized;
    
113,840 shares issued and 76,269 shares outstanding
    at March 31, 2022 and December 31, 2021

 

 

1

 

 

 

1

 

 Class A Additional paid-in capital

 

 

902,486

 

 

 

902,486

 

 Class B Additional paid-in capital

 

 

1,809

 

 

 

1,224

 

 Accumulated deficit

 

 

(136,452

)

 

 

(162,178

)

 Total stockholders’ equity

 

 

768,044

 

 

 

741,733

 

 Total liabilities and stockholders’ equity

 

$

1,224,359

 

 

$

1,199,508

 

 

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 

 

 

 

 

5

 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

 

(unaudited)

 

 

Successor

 

 

 

Predecessor

 

 

 

For the Three Months Ended March 31, 2022

 

 

For the Period
February 3, 2021
through
March 31, 2021

 

 

 

For the Period
January 1, 2021
through
February 2, 2021

 

 Revenues:

 

 

 

 

 

 

 

 

 

 

 Services

 

$

91,439

 

 

$

43,679

 

 

 

$

19,234

 

 Rentals

 

 

67,162

 

 

 

31,314

 

 

 

 

14,434

 

 Product sales

 

 

39,329

 

 

 

30,850

 

 

 

 

12,260

 

 Total revenues

 

 

197,930

 

 

 

105,843

 

 

 

 

45,928

 

 Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 Services

 

 

62,216

 

 

 

41,471

 

 

 

 

15,080

 

 Rentals

 

 

24,613

 

 

 

10,199

 

 

 

 

5,876

 

 Product sales

 

 

25,551

 

 

 

16,367

 

 

 

 

8,817

 

 Total cost of revenues (exclusive of depreciation, depletion, amortization and accretion)

 

 

112,380

 

 

 

68,037

 

 

 

 

29,773

 

 Depreciation, depletion, amortization and accretion:

 

 

 

 

 

 

 

 

 

 

 Services

 

 

13,666

 

 

 

16,364

 

 

 

 

3,500

 

 Rentals

 

 

10,037

 

 

 

11,901

 

 

 

 

2,627

 

 Product sales

 

 

10,382

 

 

 

11,765

 

 

 

 

2,231

 

 Total depreciation, depletion, amortization and accretion

 

 

34,085

 

 

 

40,030

 

 

 

 

8,358

 

 General and administrative expenses

 

 

32,018

 

 

 

18,438

 

 

 

 

11,052

 

 Restructuring expenses

 

 

1,555

 

 

 

8,383

 

 

 

 

1,270

 

 Other (gains) and losses, net

 

 

1,147

 

 

 

(169

)

 

 

 

-

 

 Income (loss) from operations

 

 

16,745

 

 

 

(28,876

)

 

 

 

(4,525

)

 Other income (expense):

 

 

 

 

 

 

 

 

 

 

 Interest income, net

 

 

1,179

 

 

 

212

 

 

 

 

202

 

 Reorganization items, net

 

 

-

 

 

 

-

 

 

 

 

335,560

 

 Other income (expense)

 

 

13,947

 

 

 

(2,845

)

 

 

 

(2,105

)

 Income (loss) from continuing operations before income taxes

 

 

31,871

 

 

 

(31,509

)

 

 

 

329,132

 

 Income tax (expense) benefit

 

 

(7,884

)

 

 

4,285

 

 

 

 

(60,003

)

 Net income (loss) from continuing operations

 

 

23,987

 

 

 

(27,224

)

 

 

 

269,129

 

 Income (loss) from discontinued operations, net of income tax

 

 

1,739

 

 

 

(9,406

)

 

 

 

(352

)

 Net income (loss)

 

$

25,726

 

 

$

(36,630

)

 

 

$

268,777

 

 

 

 

 

 

 

 

 

 

 

 

 Income (loss) per share -basic

 

 

 

 

 

 

 

 

 

 

 Net income (loss) from continuing operations

 

$

1.20

 

 

$

(1.36

)

 

 

$

18.13

 

 Income (loss) from discontinued operations, net of income tax

 

 

0.09

 

 

 

(0.47

)

 

 

 

(0.02

)

 Net income (loss)

 

$

1.29

 

 

$

(1.83

)

 

 

$

18.11

 

 

 

 

 

 

 

 

 

 

 

 

 Income (loss) per share - diluted:

 

 

 

 

 

 

 

 

 

 

 Net income (loss) from continuing operations

 

$

1.20

 

 

$

(1.36

)

 

 

$

18.06

 

 Income (loss) from discontinued operations, net of income tax

 

 

0.08

 

 

 

(0.47

)

 

 

 

(0.03

)

 Net income (loss)

 

$

1.28

 

 

$

(1.83

)

 

 

$

18.03

 

 

 

 

 

 

 

 

 

 

 

 

 Weighted-average shares outstanding - basic

 

 

19,999

 

 

 

19,996

 

 

 

 

14,845

 

 Weighted-average shares outstanding - diluted

 

 

20,056

 

 

 

19,996

 

 

 

 

14,905

 

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 

 

 

 

 

 

 

 

6

 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

 

 

Successor

 

 

 

Predecessor

 

 

 

For the Three Months Ended March 31, 2022

 

 

For the Period
February 3, 2021
through
March 31, 2021

 

 

 

For the Period
January 1, 2021
through
February 2, 2021

 

 Net income (loss)

 

$

25,726

 

 

$

(36,630

)

 

 

$

268,777

 

 Change in cumulative translation adjustment, net of tax

 

 

-

 

 

 

-

 

 

 

 

67,947

 

 Comprehensive income (loss)

 

$

25,726

 

 

$

(36,630

)

 

 

$

336,724

 

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 

7

 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class B

 

 

Additional paid-in capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Class A

 

 

Class B

 

 

Treasury stock

 

 

Accumulated other comprehensive loss, net

 

 

Accumulated deficit

 

 

Total

 

 Balances, December 31, 2020 (Predecessor)

 

 

15,799

 

 

 

16

 

 

 

-

 

 

 

-

 

 

 

2,756,889

 

 

 

-

 

 

 

(4,290

)

 

 

(67,947

)

 

 

(3,023,315

)

 

 

(338,647

)

 Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

268,777

 

 

 

268,777

 

 Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

67,947

 

 

 

-

 

 

 

67,947

 

 Extinguishment of unrecognized compensation expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

988

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

988

 

 Stock-based compensation expense, net

 

 

-

 

 

 

 

 

 

-

 

 

 

-

 

 

 

935

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

935

 

 Restricted stock units vested

 

 

49

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 Shares withheld and retired

 

 

(15

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 Cancellation of Predecessor equity

 

 

(15,833

)

 

 

(16

)

 

 

-

 

 

 

-

 

 

 

(2,758,812

)

 

 

-

 

 

 

4,290

 

 

 

-

 

 

 

2,754,538

 

 

 

-

 

 Issuance of Successor Class A common stock

 

 

19,996

 

 

 

200

 

 

 

-

 

 

 

-

 

 

 

902,486

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

902,686

 

 Balances, February 2, 2021 (Predecessor)

 

 

19,996

 

 

$

200

 

 

 

-

 

 

$

-

 

 

$

902,486

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

902,686

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balances, February 3, 2021 (Successor)

 

 

19,996

 

 

$

200

 

 

 

-

 

 

$

-

 

 

$

902,486

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

902,686

 

 Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(36,630

)

 

 

(36,630

)

 Balances, March 31, 2021 (Successor)

 

 

19,996

 

 

$

200

 

 

 

-

 

 

$

-

 

 

$

902,486

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

(36,630

)

 

$

866,056

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balances, December 31, 2021 (Successor)

 

 

19,999

 

 

$

200

 

 

 

76

 

 

$

1

 

 

$

902,486

 

 

$

1,224

 

 

$

-

 

 

$

-

 

 

$

(162,178

)

 

$

741,733

 

 Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,726

 

 

 

25,726

 

 Stock-based compensation expense, net

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

585

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

585

 

 Balances, March 31, 2022 (Successor)

 

 

19,999