SEC Filing | Superior Energy Services

View:

Download DOC

Download PDF

Download XLS

Download XBRL

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 September 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		87-4613576
	(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 October 31, 2022 was 19,998,695.

The number of shares of the registrant’s Class B common stock outstanding on October 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	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
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 and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35

SIGNATURES		36

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 (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 (the "Form 10-K") and this Form 10-Q Part II, Item 1A, "Risk Factors". 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)


	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	453,682		$	314,974
Accounts receivable, net		222,646			182,432
Income taxes receivable		5,527			5,099
Prepaid expenses		16,029			15,861
Inventory		69,962			60,603
Investment in equity securities		16,888			25,735
Other current assets		5,790			6,701
Assets held for sale		18,314			37,528
Total current assets		808,838			648,933
Property, plant and equipment, net		283,906			356,274
Note receivable		66,078			60,588
Restricted cash		79,757			79,561
Other long-term assets, net		48,636			54,152
Total assets	$	1,287,215		$	1,199,508

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	51,398		$	43,080
Accrued expenses		107,972			108,610
Income taxes payable		15,900			8,272
Liabilities held for sale		3,666			5,607
Total current liabilities		178,936			165,569
Decommissioning liability		144,781			190,380
Deferred income taxes		21,761			12,441
Other long-term liabilities		80,616			89,385
Total liabilities		426,094			457,775

Stockholders’ equity (deficit):
Class A common stock $0.01 par value; 50,000 shares authorized; 19,999 shares issued and outstanding at September 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 September 30, 2022 and December 31, 2021		1			1
Class A Additional paid-in capital		902,486			902,486
Class B Additional paid-in capital		4,743			1,224
Accumulated deficit		(46,309	)		(162,178	)
Total stockholders’ equity		861,121			741,733
Total liabilities and stockholders’ equity	$	1,287,215		$	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
	September 30, 2022
	2022			2021
Revenues:
Services	$	99,763		$	85,667
Rentals		80,173			59,420
Product sales		42,351			33,496
Total revenues		222,287			178,583
Cost of revenues:
Services		66,205			71,688
Rentals		25,816			26,011
Product sales		24,060			28,371
Total cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		116,081			126,070
Depreciation, depletion, amortization and accretion:
Services		8,266			28,426
Rentals		6,749			19,717
Product sales		5,493			11,065
Total depreciation, depletion, amortization and accretion		20,508			59,208
General and administrative expenses		31,841			33,671
Restructuring expenses		1,223			4,712
Other (gains) and losses, net		(13,397	)		(1,097	)
Income (loss) from operations		66,031			(43,981	)
Other income (expense):
Interest income, net		3,373			647
Other income (expense)		(6,838	)		(6,224	)
Income (loss) from continuing operations before income taxes		62,566			(49,558	)
Income tax (expense) benefit		(14,058	)		9,518
Net income (loss) from continuing operations		48,508			(40,040	)
Income (loss) from discontinued operations, net of income tax		17			(5,161	)
Net income (loss)	$	48,525		$	(45,201	)

Income (loss) per share - basic:
Net income (loss) from continuing operations	$	2.42		$	(2.00	)
Income (loss) from discontinued operations, net of income tax		-			(0.26	)
Net income (loss)	$	2.42		$	(2.26	)

Income (loss) per share - diluted:
Net income (loss) from continuing operations	$	2.41		$	(2.00	)
Income (loss) from discontinued operations, net of income tax		0.01			(0.26	)
Net income (loss)	$	2.42		$	(2.26	)

Weighted-average shares outstanding - basic		20,024			19,999
Weighted-average shares outstanding - diluted		20,090			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 Nine Months Ended September 30, 2022			For the Period February 3, 2021 through September 30, 2021			For the Period January 1, 2021 through February 2, 2021
Revenues:
Services	$	291,268		$	209,133		$	19,234
Rentals		224,328			143,972			14,434
Product sales		129,261			97,213			12,260
Total revenues		644,857			450,318			45,928
Cost of revenues:
Services		199,903			166,801			15,080
Rentals		74,664			60,960			5,876
Product sales		74,862			69,391			8,817
Total cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		349,429			297,152			29,773
Depreciation, depletion, amortization and accretion:
Services		30,224			73,174			3,500
Rentals		23,278			50,558			2,627
Product sales		24,437			34,524			2,231
Total depreciation, depletion, amortization and accretion		77,939			158,256			8,358
General and administrative expenses		94,090			84,417			11,052
Restructuring expenses		4,441			20,533			1,270
Other (gains) and losses, net		(30,263	)		(732	)		-
Income (loss) from operations		149,221			(109,308	)		(4,525	)
Other income (expense):
Interest income, net		6,011			1,394			202
Reorganization items, net		-			-			335,560
Other income (expense)		(6,362	)		(6,499	)		(2,105	)
Income (loss) from continuing operations before income taxes		148,870			(114,413	)		329,132
Income tax (expense) benefit		(32,813	)		15,550			(60,003	)
Net income (loss) from continuing operations		116,057			(98,863	)		269,129
Income (loss) from discontinued operations, net of income tax		(188	)		(33,967	)		(352	)
Net income (loss)	$	115,869		$	(132,830	)	$	268,777

Income (loss) per share - basic:
Net income (loss) from continuing operations	$	5.80		$	(4.94	)	$	18.13
Income (loss) from discontinued operations, net of income tax		(0.01	)		(1.70	)		(0.02	)
Net income (loss)	$	5.79		$	(6.64	)	$	18.11

Income (loss) per share - diluted:
Net income (loss) from continuing operations	$	5.78		$	(4.94	)	$	18.06
Income (loss) from discontinued operations, net of income tax		(0.01	)		(1.70	)		(0.03	)
Net income (loss)	$	5.77		$	(6.64	)	$	18.03

Weighted-average shares outstanding - basic		20,016			19,997			14,845
Weighted-average shares outstanding - diluted		20,074			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
	September 30, 2022
	2022		2021
Net income (loss)	$	48,525	$	(45,201	)
Change in cumulative translation adjustment, net of tax		-		-
Comprehensive income (loss)	$	48,525	$	(45,201	)


	Successor					Predecessor
	For the Nine Months Ended September 30, 2022		For the Period February 3, 2021 through September 30, 2021			For the Period January 1, 2021 through February 2, 2021
Net income (loss)	$	115,869	$	(132,830	)	$	268,777
Change in cumulative translation adjustment, net of tax		-		-			67,947
Comprehensive income (loss)	$	115,869	$	(132,830	)	$	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