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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 March 31, 2023

 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 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 (§ 232.405 of this chapter) 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 ☐
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 28, 2023 was 19,998,695.

The number of shares of the registrant’s Class B common stock outstanding on April 28, 2023 was 152,030.

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 Changes in Stockholders' Equity	6
	Unaudited Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	20

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 6.	Exhibits	21

SIGNATURES		22

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (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;

•

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, 2022 (the “Form 10-K”). We undertake no obligation to update any of our forward-looking statements in the Form 10-Q. 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. Financial Statements

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

(unaudited)


	March 31, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	324,128		$	258,999
Accounts receivable, net		228,283			249,808
Income taxes receivable		7,540			6,665
Prepaid expenses		20,183			17,299
Inventory		72,324			65,587
Other current assets		5,886			6,276
Assets held for sale		4,421			11,978
Total current assets		662,765			616,612
Property, plant and equipment, net		294,094			282,376
Note receivable		70,643			69,679
Restricted cash		80,599			80,108
Deferred tax assets		81,652			97,492
Other assets, net		43,050			44,745
Total assets	$	1,232,803		$	1,191,012

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	46,209		$	31,570
Accrued expenses		110,602			116,575
Income taxes payable		15,198			11,682
Decommissioning liability		19,361			9,770
Liabilities held for sale		3,516			3,349
Total current liabilities		194,886			172,946
Decommissioning liability		143,278			150,901
Deferred tax liabilities		3,181			3,388
Other liabilities		78,425			80,893
Total liabilities		419,770			408,128

Stockholders’ equity:
Class A common stock $0.01 par value; 50,000 shares authorized; 19,999 shares issued and outstanding at March 31, 2023 and December 31, 2022		200			200
Class B common stock $0.01 par value; 2,000 shares authorized; 156 shares issued and 152 shares outstanding at March 31, 2023 and 84 shares issued and 80 shares outstanding at December 31, 2022		2			1
Class A Additional paid-in capital		902,486			902,486
Class B Additional paid-in capital		5,831			5,896
Accumulated deficit		(95,486	)		(125,699	)
Total stockholders’ equity		813,033			782,884
Total liabilities and stockholders’ equity	$	1,232,803		$	1,191,012

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
	March 31,
	2023			2022
Revenues:
Services	$	93,290		$	91,439
Rentals		85,610			67,162
Product sales		41,237			39,329
Total revenues		220,137			197,930
Cost of revenues:
Services		65,079			62,216
Rentals		29,048			24,613
Product sales		23,594			25,551
Total cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		117,721			112,380
Depreciation, depletion, amortization and accretion:
Services		7,295			13,666
Rentals		6,694			10,037
Product sales		6,150			10,382
Total depreciation, depletion, amortization and accretion		20,139			34,085
General and administrative expenses		30,990			32,018
Restructuring expenses		1,983			1,555
Other (gains) and losses, net		(1,398	)		1,147
Income from operations		50,702			16,745
Other income (expense):
Interest income, net		5,439			1,179
Other income (expense)		(2,152	)		13,947
Income from continuing operations before income taxes		53,989			31,871
Income tax expense		(24,065	)		(7,884	)
Net income from continuing operations		29,924			23,987
Income from discontinued operations, net of income tax		289			1,739
Net income	$	30,213		$	25,726

Income per share - basic:
Net income from continuing operations	$	1.49		$	1.20
Income from discontinued operations, net of income tax		0.01			0.09
Net income	$	1.50		$	1.29

Income per share - diluted:
Net income from continuing operations	$	1.49		$	1.20
Income from discontinued operations, net of income tax		0.01			0.08
Net income	$	1.50		$	1.28

Weighted-average shares outstanding
Basic		20,107			19,999
Diluted		20,131			20,056

See accompanying notes to unaudited condensed consolidated financial statements

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders' Equity

(in thousands)

(unaudited)


										Additional
	Common Stock									paid-in
	Class A				Class B					capital					Accumulated
	Shares		Amount		Shares			Amount		Class A		Class B			deficit			Total

Balances, December 31, 2021		19,999	$	200		76		$	1	$	902,486	$	1,224		$	(162,178	)	$	741,733
Net income		-		-		-			-		-		-			286,465			286,465
Cash dividends ($12.45 per share)		-		-		-			-		-		-			(249,986	)		(249,986	)
Stock-based compensation expense, net		-		-		-			-		-		4,807			-			4,807
Restricted stock units vested		-		-		10			-		-		-			-			-
Share withheld and retired		-		-		(2	)		-		-		(135	)		-			(135	)
Shares placed in treasury		-		-		(4	)		-		-		-			-			-
Balances, December 31, 2022		19,999		200		80			1		902,486		5,896			(125,699	)		782,884
Net income		-		-		-			-		-		-			30,213			30,213
Restricted stock units vested		-		-		91			1		-		(1	)		-			-
Shares withheld and retired		-		-		(19	)		-		-		(1,116	)		-			(1,116	)
Stock-based compensation expense, net		-		-		-			-		-		1,052			-			1,052
Balances, March 31, 2023		19,999	$	200		152		$	2	$	902,486	$	5,831		$	(95,486	)	$	813,033

See accompanying notes to unaudited condensed consolidated financial statements

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	For the Three Months Ended
	March 31,
	2023				2022
Cash flows from operating activities:
Net income	$	30,213			$	25,726
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, depletion, amortization and accretion		20,139				34,085
Deferred income taxes		15,677				(2,769	)
Stock based compensation expense		1,052				585
Bad debt		732				(1,203	)
Gain on sale of equity securities		-				(1,761	)
Unrealized gain on investment in equity securities		-				(6,474	)
Other gains, net		(2,225	)			(5,755	)
Other reconciling items, net		(837	)			126
Changes in operating assets and liabilities:
Accounts receivable		20,793				(13,359	)
Prepaid expenses		(2,884	)			(176	)
Inventory and other current assets		(7,292	)			1,562
Accounts payable		1,963				3,888
Accrued expenses		(8,045	)			(3,673	)
Income taxes		2,641				4,239
Other, net		1,326				49
Net cash from operating activities		73,253				35,090
Cash flows from investing activities:
Payments for capital expenditures		(18,086	)			(11,297	)
Proceeds from sales of assets		11,569				13,379
Proceeds from sales of equity securities		-				7,365
Net cash from investing activities		(6,517	)			9,447
Cash flows from financing activities:
Tax withholdings for vested restricted stock units		(1,116	)	-		-
Net cash from financing activities		(1,116	)			-
Net change in cash, cash equivalents, and restricted cash		65,620				44,537
Cash, cash equivalents, and restricted cash at beginning of period		339,107				394,535
Cash, cash equivalents, and restricted cash at end of period	$	404,727			$	439,072

See accompanying notes to unaudited condensed consolidated financial statements

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

(unless noted otherwise, amounts in thousands, except share data)

(1) Basis of Presentation

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”); however, management believes the disclosures are adequate such that the information presented is not misleading.

As used herein, the “Company,” “we,” “us” and similar terms refer to Superior Energy Services, Inc. and its consolidated subsidiaries, unless otherwise specifically stated.

These financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting primarily of normal recurring adjustments, necessary for a fair statement of our financial position as of March 31, 2023, and our results of operations and cash flows for the three months ended March 31, 2023 and 2022. The balance sheet as of December 31, 2022, was derived from our audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements.

(2) Revenue

Disaggregation of Revenue

The following table presents our revenues by segment disaggregated by geography:


	For the Three Months Ended
	March 31,
	2023		2022
U.S. land
Rentals	$	45,133	$	33,962
Well Services		6,355		4,548
Total U.S. land		51,488		38,510

U.S. offshore
Rentals		35,670		32,753
Well Services		16,321		28,321
Total U.S. offshore		51,991		61,074