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10-Q

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 June 30, 2022

 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 July 31, 2022 was 19,998,695.

The number of shares of the registrant’s Class B common stock outstanding on July 31, 2022 was 76,269.

TABLE OF CONTENTS




		Page
	Information Regarding Forward-Looking Statements	3

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets	4
	Unaudited Condensed Consolidated Statements of Operations	5
	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	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32

SIGNATURES		33

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. All statements, other than statements of historical fact, included in this Form 10-Q 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;

•

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 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 uncertainties associated with our international operations 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;

•

risks to our operations from potential 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.

These risks and other uncertainties related to our business are described in detail in our Annual Report on Form 10-K for the year ended December 31, 2021. We undertake no obligation to update any of our forward-looking statements in this discussion. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

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)


	June 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	391,219		$	314,974
Accounts receivable, net		211,014			182,432
Income taxes receivable		5,091			5,099
Prepaid expenses		18,513			15,861
Inventory		67,201			60,603
Investment in equity securities		16,524			25,735
Other current assets		5,349			6,701
Assets held for sale		25,629			37,528
Total current assets		740,540			648,933
Property, plant and equipment, net		286,927			356,274
Note receivable		65,140			60,588
Restricted cash		79,595			79,561
Other long-term assets, net		50,374			54,152
Total assets	$	1,222,576		$	1,199,508

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	44,334		$	43,080
Accrued expenses		111,839			108,610
Income taxes payable		10,449			8,272
Liabilities held for sale		4,200			5,607
Total current liabilities		170,822			165,569
Decommissioning liability		142,740			190,380
Deferred income taxes		16,225			12,441
Other long-term liabilities		82,169			89,385
Total liabilities		411,956			457,775

Stockholders’ equity (deficit):
Class A common stock $0.01 par value; 50,000 shares authorized; 19,999 shares issued and outstanding at June 30, 2022 and December 31, 2021		200			200
Class B common stock $0.01 par value; 2,000 shares authorized; 114 shares issued and 76 shares outstanding at June 30, 2022 and December 31, 2021		1			1
Class A Additional paid-in capital		902,486			902,486
Class B Additional paid-in capital		2,767			1,224
Accumulated deficit		(94,834	)		(162,178	)
Total stockholders’ equity		810,620			741,733
Total liabilities and stockholders’ equity	$	1,222,576		$	1,199,508

See accompanying notes to unaudited condensed consolidated financial statements

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	For the Three Months Ended June 30,
	2022			2021
Revenues:
Services	$	100,066		$	79,787
Rentals		76,993			53,238
Product sales		47,581			32,867
Total revenues		224,640			165,892
Cost of revenues:
Services		73,530			53,642
Rentals		24,235			24,750
Product sales		23,203			24,653
Total cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		120,968			103,045
Depreciation, depletion, amortization and accretion:
Services		8,292			28,384
Rentals		6,492			18,940
Product sales		8,562			11,694
Total depreciation, depletion, amortization and accretion		23,346			59,018
General and administrative expenses		30,231			32,308
Restructuring expenses		1,663			7,438
Other (gains) and losses, net		(18,013	)		534
Income (loss) from operations		66,445			(36,451	)
Other income (expense):
Interest income, net		1,459			535
Other income (expense)		(13,471	)		2,570
Income (loss) from continuing operations before income taxes		54,433			(33,346	)
Income tax (expense) benefit		(10,871	)		1,747
Net income (loss) from continuing operations		43,562			(31,599	)
Income (loss) from discontinued operations, net of income tax		(1,944	)		(19,400	)
Net income (loss)	$	41,618		$	(50,999	)

Income (loss) per share - basic:
Net income (loss) from continuing operations	$	2.18		$	(1.58	)
Income (loss) from discontinued operations, net of income tax		(0.10	)		(0.97	)
Net income (loss)	$	2.08		$	(2.55	)

Income (loss) per share - diluted:
Net income (loss) from continuing operations	$	2.17		$	(1.58	)
Income (loss) from discontinued operations, net of income tax		(0.10	)		(0.97	)
Net income (loss)	$	2.07		$	(2.55	)

Weighted-average shares outstanding - basic		20,024			19,999
Weighted-average shares outstanding - diluted		20,076			19,999

See accompanying notes to unaudited condensed consolidated financial statements

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Successor						Predecessor
	For the Six Months Ended June 30, 2022			For the Period February 3, 2021 through June 30, 2021			For the Period January 1, 2021 through February 2, 2021
Revenues:
Services	$	191,505		$	123,466		$	19,234
Rentals		144,155			84,552			14,434
Product sales		86,910			63,717			12,260
Total revenues		422,570			271,735			45,928
Cost of revenues:
Services		133,698			95,113			15,080
Rentals		48,848			34,949			5,876
Product sales		50,802			41,020			8,817
Total cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		233,348			171,082			29,773
Depreciation, depletion, amortization and accretion:
Services		21,958			44,748			3,500
Rentals		16,529			30,841			2,627
Product sales		18,944			23,459			2,231
Total depreciation, depletion, amortization and accretion		57,431			99,048			8,358
General and administrative expenses		62,249			50,746			11,052
Restructuring expenses		3,218			15,821			1,270
Other (gains) and losses, net		(16,866	)		365			-
Income (loss) from operations		83,190			(65,327	)		(4,525	)
Other income (expense):
Interest income, net		2,638			747			202
Reorganization items, net		-			-			335,560
Other income (expense)		476			(275	)		(2,105	)
Income (loss) from continuing operations before income taxes		86,304			(64,855	)		329,132
Income tax (expense) benefit		(18,755	)		6,032			(60,003	)
Net income (loss) from continuing operations		67,549			(58,823	)		269,129
Income (loss) from discontinued operations, net of income tax		(205	)		(28,806	)		(352	)
Net income (loss)	$	67,344		$	(87,629	)	$	268,777

Income (loss) per share - basic:
Net income (loss) from continuing operations	$	3.38		$	(2.94	)	$	18.13
Income (loss) from discontinued operations, net of income tax		(0.01	)		(1.44	)		(0.02	)
Net income (loss)	$	3.37		$	(4.38	)	$	18.11

Income (loss) per share - diluted:
Net income (loss) from continuing operations	$	3.37		$	(2.94	)	$	18.06
Income (loss) from discontinued operations, net of income tax		(0.01	)		(1.44	)		(0.03	)
Net income (loss)	$	3.36		$	(4.38	)	$	18.03

Weighted-average shares outstanding - basic		20,011			19,997			14,845
Weighted-average shares outstanding - diluted		20,065			19,997			14,905

See accompanying notes to unaudited condensed consolidated financial statements

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)


	For the Three Months Ended June 30,
	2022		2021
Net income (loss)	$	41,618	$	(50,999	)
Change in cumulative translation adjustment, net of tax		-		-
Comprehensive income (loss)	$	41,618	$	(50,999	)


	Successor					Predecessor
	For the Six Months Ended June 30, 2022		For the Period February 3, 2021 through June 30, 2021			For the Period January 1, 2021 through February 2, 2021
Net income (loss)	$	67,344	$	(87,629	)	$	268,777
Change in cumulative translation adjustment, net of tax		-		-			67,947
Comprehensive income (loss)	$	67,344	$	(87,629	)	$	336,724

See accompanying notes to unaudited condensed consolidated financial statements

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

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

(in thousands)

(unaudited)


									Additional							Accumulated
	Common Stock								paid-in							other
	Class A				Class B				capital				Treasury			comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Class A		Class B		stock			loss, net			deficit			Total

Balances, December 31, 2020 (Predecessor)		15,799	$	16		-	$	-	$	2,756,889	$	-	$	(4,290	)	$	(67,947	)	$	(3,023,315	)	$	(338,647	)
Net income		-		-