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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

International
Rentals		28,018		22,041
Well Services		88,640		76,305
Total International		116,658		98,346
Total Revenues	$	220,137	$	197,930

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


	For the Three Months Ended
	March 31,
	2023		2022
Services
Rentals	$	17,145	$	11,158
Well Services		76,145		80,281
Total Services		93,290		91,439

Rentals
Rentals		82,075		65,247
Well Services		3,535		1,915
Total Rentals		85,610		67,162

Product Sales
Rentals		9,601		12,351
Well Services		31,636		26,978
Total Product Sales		41,237		39,329
Total Revenues	$	220,137	$	197,930

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount or the earned amount but not yet invoiced and do not bear interest. We maintain our allowance for doubtful accounts at net realizable value. The allowance for doubtful accounts is based on our best estimate of probable uncollectible amounts in existing accounts receivable. We assess individual customers and overall receivables balances to identify amounts that are believed to be uncertain of collection. The aging of the receivable balance as well as economic factors concerning the customer factor into the judgment and estimation of allowances, which often involve significant dollar amounts. Adjustments to the allowance in future periods may be made based on changing customer conditions. Our allowance for doubtful accounts as of March 31, 2023 and December 31, 2022 was approximately $6.9 million and $6.1 million, respectively.

(3) Inventory

Inventories are stated at the lower of cost or net realizable value. We apply net realizable value and obsolescence to the gross value of inventory. Cost is determined using the first-in, first-out or weighted-average cost methods for finished goods and work-in-process. Supplies and consumables consist principally of products used in the services provided to our customers. The components of inventory balances are as follows:


	March 31, 2023		December 31, 2022
Finished goods	$	38,904	$	36,136
Raw materials		7,290		8,351
Work-in-process		12,150		4,718
Supplies and consumables		13,980		16,382
Total	$	72,324	$	65,587

Finished goods inventory includes component parts awaiting assembly of approximately $22.9 million and $20.7 million as of March 31, 2023 and December 31, 2022, respectively.

(4) Decommissioning Liability

Our total decommissioning liability was $162.6 million and $160.7 million as of March 31, 2023 and December 31, 2022, respectively. We account for our decommissioning liability under ASC 410 – Asset Retirement Obligations. Our decommissioning liability is associated with our oil and gas property and includes costs related to the plugging of wells, decommissioning of the related platform and equipment and site restoration. We review the adequacy of our decommissioning liability whenever indicators suggest that the estimated cash flows and/or relating timing needed to satisfy the liability have changed materially.

The following table presents our total decommissioning liability as of the periods indicated:


	March 31, 2023			December 31, 2022
Wells	$	97,223		$	96,171
Platform		65,416			64,500
Total decommissioning liability		162,639			160,671
Note receivable		(70,643	)		(69,679	)
Total decommissioning liability, net of note receivable	$	91,996		$	90,992

Accretion expense for the three months ended March 31, 2023 and 2022 was $2.3 million and $2.7 million, respectively. Additionally, during the three months ended March 31, 2023, we incurred well decommissioning costs of $0.4 million.

(5) Note Receivable

Our note receivable consist of a commitment from the seller of oil and gas property for costs associated with abandonment. Pursuant to an agreement with the seller, we invoice the seller an agreed upon amount at the completion of certain decommissioning activities. The gross amount of the seller’s obligation to us totals $105.2 million and is recorded at its present value, which totaled $70.6 million as of March 31, 2023.

The discount on the note receivable, which is currently based on an effective interest rate of 5.6%, is amortized to interest income over the expected timing of the completion of the decommissioning activities, which are expected to be completed during the second quarter of 2031. Interest receivable is considered paid in kind and is compounded into the carrying amount of the note.

Non-cash interest income related to the note receivable was $1.0 million for both the three months ended March 31, 2023 and 2022. As the interest income on the note receivable is non-cash, it is included in other reconciling items, net in the Condensed Consolidated Statements of Cash Flows.

(6) Property, Plant and Equipment, Net

A summary of property, plant and equipment, net is as follows:


	March 31, 2023			December 31, 2022
Machinery and equipment	$	397,539		$	378,907
Buildings, improvements and leasehold improvements		69,691			70,816
Automobiles, trucks, tractors and trailers		6,689			6,376
Furniture and fixtures		19,378			19,373
Construction-in-progress		12,191			5,185
Land		26,049			26,695
Oil and gas producing assets		12,582			11,714
Total		544,119			519,066
Accumulated depreciation and depletion		(250,025	)		(236,690	)
Property, plant and equipment, net	$	294,094		$	282,376

Depreciation and depletion expense associated with our property, plant and equipment for the three months ended March 31, 2023 and 2022 was $17.6 million and $31.2 million, respectively.

Other (gains) and losses, net include gains and losses on the disposal of assets, as well as impairments related to long-lived assets. During the three months ended March 31, 2023, we recognized net gains of $1.4 million. During the three months ended March 31, 2022, we recognized net losses of $1.1 million.

(7) Debt

We have a Credit Agreement providing for a $120.0 million asset-based secured revolving Credit Facility, all of which is available for the issuance of letters of credit (the “Credit Facility”) which matures in December 2024. The issuance of letters of credit reduces availability under the Credit Facility on a dollar-for-dollar basis.

As of March 31, 2023, our borrowing base, as defined in the Credit Agreement, was approximately $115.8 million, and we had $34.9 million of letters of credit outstanding that reduced the borrowing availability. We had no outstanding borrowings under the Credit Facility as of March 31, 2023. We were in compliance with all required covenants as of March 31, 2023.

(8) Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in determining fair value are characterized according to a hierarchy that prioritizes those inputs based on the degree to which they are observable. The three input levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2: Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical assets or liabilities in inactive markets; or model-derived valuations or other inputs that can be corroborated by observable market data.

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

The following tables provide a summary of the financial assets and liabilities measured at fair value on a recurring basis:


	March 31, 2023		December 31, 2022
Non-qualified deferred compensation assets and liabilities
Other long-term assets, net	$	16,384	$	16,299
Accrued expenses		1,663		1,831
Other long-term liabilities		14,616		15,855

Our non-qualified deferred compensation plans investments are reported at fair value based on unadjusted quoted prices in active markets for identifiable assets and observable inputs for similar assets and liabilities, which represent a Level 2 in the fair value hierarchy.

The carrying amount of cash equivalents, accounts receivable, accounts payable and accrued expenses, as reflected in the consolidated balance sheets, approximates fair value due to the short maturities.

(9) Other Income (Expense)

Other income (expense) primarily relates to re-measurement gains and losses associated with our foreign currencies and realized and unrealized gains and losses on our investment in equity securities.

Losses on foreign currencies were $1.8 million for the three months ended March 31, 2023. Gains on foreign currencies were $5.6 million for the three months ended March 31, 2022. Gains and losses on foreign currencies are primarily related to our operations in Brazil and Argentina.

During the three months ended March 31, 2022, proceeds from the disposal of equity securities totaled $7.4 million and we recognized gains of $1.8 million in connection with these transactions. Unrealized gains related to our investment in equity securities during the three months ended March 31, 2022 were $6.5 million. All investments in equity securities were disposed of prior to December 31, 2022.

(10) Segment Information

Our reportable segments are Rentals and Well Services.

The products and service offerings of Rentals are comprised of value-added engineering and design services, rental of premium drill strings, tubing, landing strings, completion tubulars and handling accessories, manufacturing and rental of bottom hole assemblies, and rentals of accommodation units.

The products and service offerings of Well Services are comprised of risk management, well control and training solutions, hydraulic workover and snubbing services, engineering and manufacturing of premium sand control tools, and onshore international production services. The Well Services segment also includes the operations of our offshore oil and gas property.

We evaluate the performance of our reportable segments based on income or loss from operations. The segment measure is calculated as segment revenues less segment operating expenses, including general and administrative expenses, depreciation, depletion, amortization and accretion expense and other (gains) and losses, net. We use this segment measure to evaluate our reportable segments as it is the measure that is most consistent with how we organize and manage our business operations. Corporate and other costs primarily include expenses related to support functions, including salaries and benefits for corporate employees.

Summarized financial information for our segments is as follows:


For the Three Months Ended March 31, 2023				Well			Corporate and			Consolidated
	Rentals			Services			Other			Total
Revenues	$	108,821		$	111,316		$	-		$	220,137
Cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		36,468			81,253			-			117,721
Depreciation, depletion, amortization and accretion		12,168			7,077			894			20,139
General and administrative expenses		7,202			11,499			12,289			30,990
Restructuring expenses		-			-			1,983			1,983
Other (gains) and losses, net		(31	)		(1,367	)		-			(1,398	)
Income (loss) from operations	$	53,014		$	12,854		$	(15,166	)	$	50,702

For the Three Months Ended March 31, 2022				Well			Corporate and			Consolidated
	Rentals			Services			Other			Total
Revenues	$	88,756		$	109,174		$	-		$	197,930
Cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		31,752			80,628			-			112,380
Depreciation, depletion, amortization and accretion		20,989			11,728			1,368			34,085
General and administrative expenses		7,365			11,401			13,252			32,018
Restructuring expenses		-			-			1,555			1,555
Other (gains) and losses, net		(135	)		1,282			-			1,147
Income (loss) from operations	$	28,785		$	4,135		$	(16,175	)	$	16,745

Identifiable Assets


			Well		Corporate		Consolidated
	Rentals		Services		and Other		Total
March 31, 2023	$	488,613	$	541,724	$	202,466	$	1,232,803
December 31, 2022		432,437		533,327		225,248		1,191,012

Geographic Segments

We operate in both the U.S. and internationally. Our international operations are primarily focused in Latin America and the Middle East regions. We attribute revenue geographically based on the location where the services are performed or the destination of the drilling products or equipment sold or rented. See Note 2 – Revenue for a detail of revenues attributable to our U.S and International operations.

Long-lived assets consist of property, plant and equipment and are identified geographically based on the physical location of the asset at the end of a period. The value of our long-lived assets by U.S. and International locations are as follows:

Long-Lived Assets


	March 31, 2023		December 31, 2022
United States	$	226,091	$	212,534
International		68,003		69,842
Total	$	294,094	$	282,376

(11) Stock-Based Compensation Plans

We have a Management Incentive Plan (“MIP”), which provides the issuance of up to 1,999,869 shares of our Class B common stock, par value $0.01 per share (the “Class B Common Stock”) for the grant of share-based and cash-based awards.

To date, grants under the MIP have been in the form of shares of Class B common stock (“RSAs”), restricted stock units which will be settled in Class B common stock upon the satisfaction of time-based vesting conditions (“RSUs”) and performance stock units which will be settled in Class B common stock upon the satisfaction of time and performance-based vesting conditions (“PSUs”).

The RSAs vest over a period of three years, subject to earlier vesting and forfeiture on terms and conditions set forth in the applicable award agreement. RSUs granted in 2022 generally vest in three equal annual installments over the three-year period, subject generally to continued employment and the other terms and conditions set forth in the forms of the RSU award agreements. RSUs granted in 2021 vested in full during the current quarter. PSUs may be earned between 25% and 100% of the target award based on achievement of share price goals set forth in the forms of the PSU award agreements and will vest to the extent that share price goals are achieved based on the terms and conditions set forth in the forms of the PSU award agreements.

The following sets forth issuances under the MIP for the three months ended March 31, 2023 and 2022:


	Grants of Share-Based Awards
			July/
	June		August			March			July
	2021		2021			2022			2022			Total
Awards outstanding, December 31, 2022		29,976		37,947			72,050			88,215			228,188
Vested		-		(37,947	)		(24,017	)		(29,405	)		(91,369	)
Awards outstanding, March 31, 2023		29,976		-			48,033			58,810			136,819

Estimated grant date fair value	$	39.53	$	39.53		$	58.80		$	58.80

Unamortized grant date fair value, December 31, 2022 (in millions)	$	0.9	$	-		$	3.1		$	4.2		$	8.2
Unamortized grant date fair value, March 31, 2023 (in millions)	$	0.7	$	-		$	2.7		$	3.7		$	7.1


	Grants of Share-Based Awards
			July/
	June		August		March
	2021		2021		2022		Total
Awards outstanding, December 31, 2021		76,269		50,596		-		126,865
Granted		-		-		72,050		72,050
Awards outstanding, March 31, 2022		76,269		50,596		72,050		198,915

Estimated grant date fair value	$	39.53	$	39.53	$	58.80

Unamortized grant date fair value, December 31, 2021 (in millions)	$	2.4	$	1.4	$	-	$	3.8
Unamortized grant date fair value, March 31, 2022 (in millions)	$	2.2	$	1.0	$	4.2	$	7.4

During the three months ended March 31, 2023 and 2022, we recognized $1.1 million and $0.6 million, respectively, in compensation expense associated with grants of RSAs and RSUs. We are currently not amortizing our PSUs as we have not concluded that it is probable that the performance condition will be achieved.

(12) Income Taxes

The effective tax rate for the three months ended March 31, 2023 was an expense of 44.6% on income from continuing operations and is different from the U.S. federal statutory rate of 21.0% due to non-deductible items and foreign losses for which no tax benefit was recorded. The Latin American and Middle East jurisdictions in which we currently, and will continue to, operate have tax rates significantly in excess of the U.S. federal statutory rate. Additionally, we identified an error in the tax provision for the year ended December 31, 2022 pertaining to certain net operating loss carryforwards that should have been eliminated as part of a worthless stock deduction taken in the fourth quarter of 2022. As such, we recognized an additional income tax expense of $7.6 million during the three months ended March 31, 2023 with a corresponding decrease to deferred tax assets to correct this immaterial misstatement. Management has determined that this misstatement was not material to any of its previously issued financial statements.

On August 16, 2022, the Inflation Reduction Act (the IRA) was signed into law in the U.S. Among other changes, the IRA introduced a corporate minimum tax on certain corporations with average adjusted financial statement income over a three-tax year period in excess of $1.0 billion and an excise tax on certain stock repurchases by certain covered corporations for taxable years beginning after December 31, 2022 and several tax incentives to promote clean energy. Based on our current analysis and pending future guidance to be issued by Treasury, we do not believe these provisions will have a material impact on our consolidated financial statements.

The effective tax rate for the three months ended March 31, 2022 was an expense of 24.7% on income from continuing operations and is different from the U.S. federal statutory rate of 21.0% primarily from non-deductible items and foreign losses for which no tax benefit was recorded.

We had $14.3 million and $14.0 million of unrecognized tax benefits as of March 31, 2023 and December 31, 2022, respectively, all of which would impact our effective tax rate if recognized except for $0.5 million offset in deferred income taxes. It is reasonably possible $10.2 million of unrecognized tax benefits could be settled in the next twelve months due to the conclusion of tax audits or statutes of limitations expiration. It is our policy to recognize interest and applicable penalties, if any, related to uncertain tax positions in income tax expense.

(13) Earnings per Share

Our common equity consists of Class A Common Stock and Class B Common Stock (the “Common Stock”).

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of shares of Common Stock outstanding during the period. Diluted earnings per share is computed using the weighted average number of Common Stock outstanding during the period plus any potentially dilutive Common Stock, such as restricted stock awards, restricted stock units, and performance-based units calculated using the treasury stock method.

The following table presents the reconciliation between the weighted average number of shares for basic and diluted earnings per share.


	For the Three Months Ended
	March 31,
		2023	2022
Weighted-average shares outstanding - basic		20,107	19,999
Potentially dilutive stock awards and units		24	57
Weighted-average shares outstanding - diluted		20,131	20,056

(14) Contingencies

Due to the nature of our business, we are involved, from time to time, in various routine litigation or subject to disputes or claims or actions, including those commercial in nature, regarding our business activities in the ordinary course of business. Legal costs related to these matters are expensed as incurred. Management is of the opinion that none of the claims and actions will have a material adverse impact on our financial position, results of operations or cash flows.

We are currently involved in legal proceedings with the Washington State Board of Tax Appeals (the “Tax Board”) in relation to a dispute arising in April 2019 pertaining to a use tax assessment from 2016 as a result of the construction of a vessel by one of our subsidiaries. As of March 31, 2023, the assessment, including interest, totaled $27.0 million. While we are confident that the assessment is legally insupportable, if the Tax Board upholds the assessment, we will be responsible for payment of the full assessment within thirty days of the decision. Although we are unable to estimate the probability of the outcome of this matter or the range of reasonably possible loss, if any, we have reserved an amount we believe to be adequate to cover any final assessment levied by the state.

(15) Discontinued Operations

The following table summarizes the components of discontinued operations, net of tax:


	For the Three Months Ended
	March 31,
	2023			2022
General and administrative expenses	$	461		$	3,742
Other gains, net		(827	)		(5,943	)
Income from discontinued operations before tax		366			2,201
Income tax benefit (expense)		(77	)		(462	)
Income from discontinued operations, net of income tax	$	289		$	1,739

The following summarizes the assets and liabilities related to discontinued operations:


	March 31, 2023		December 31, 2022
Assets:
Accounts receivable, net	$	340	$	350
Property, plant and equipment, net		3,947		11,468
Other assets		134		160
Total assets held for sale	$	4,421	$	11,978

Liabilities:
Accounts payable	$	-	$	86
Accrued expenses		3,444		3,192
Other liabilities		72		71
Total liabilities held for sale	$	3,516	$	3,349

Significant operating non-cash items and cash flows from investing activities for our discontinued operations were as follows:


	For the Three Months Ended
	March 31,
	2023			2022
Cash flows from discontinued operating activities:
Other gains, net	$	(827	)	$	(5,943	)
Cash flows from discontinued investing activities:
Proceeds from sales of assets	$	8,740		$	13,194

(16) Supplemental Cash Flow Information

The table below is a reconciliation of cash, cash equivalents and restricted cash for the beginning and the end of the periods presented:


	March 31,
	2023		2022
Cash and cash equivalents	$	258,999	$	314,974
Restricted cash-non-current		80,108		79,561
Cash, cash equivalents, and restricted cash, beginning of period	$	339,107	$	394,535

Cash and cash equivalents	$	324,128	$	359,511
Restricted cash-non-current		80,599		79,561
Cash, cash equivalents, and restricted cash, end of period	$	404,727	$	439,072

(17) New Accounting Pronouncements

There were no material changes in recently issued or adopted accounting standards from those disclosed in our Form 10-K.

(18) Subsequent Events

On May 8, 2023, SESI, L.L.C., as borrower, SESI Holdings, Inc., as parent, and the subsidiary guarantors party thereto entered into an Amendment No. 5 to Credit Agreement (the “Fifth Amendment to Credit Agreement”) to, among other things, replace the interest rate based on the London interbank offered rate (“LIBOR”) and related LIBOR-based mechanics applicable to borrowings under the Credit Agreement with a forward-looking interest rate based on the secured overnight financing rate (“Term SOFR”) (including a customary spread adjustment) and related Term SOFR-based mechanics and make certain other conforming changes.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. In addition, the following discussion and analysis and information contains forward-looking statements about our business, operations and financial performance based on our current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors. including, but not limited to, those identified below and any discussed in the sections titled “Risk Factors” and under the heading “Information Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

Executive Summary

General

We serve major, national and independent oil and natural gas exploration and production companies around the world and offer products and services with respect to the various phases of a well’s economic life cycle.

Historically, we provided a wide variety of services and products to many markets within the energy industry. Our core businesses focus on products and services that we believe meet the criteria of:

•

being critical to our customers’ oil and gas operations;

•

limiting competition from the three largest global oilfield service companies;

•

requiring deep technical expertise through the design or use of our products or services, such as premium drill pipe and drilling bottom hole assembly accessory rentals;

•

unlikely to become a commoditized product or service to our customers; and

•

providing strong cash flow generation capacity and opportunities.

The result of this approach is a portfolio of business lines grounded in our core mission of providing high quality products and services while maintaining the trust and serving the needs of our customers, with an emphasis on free cash flow generation and capital efficiency.

Industry Trends

The oil and gas industry is both cyclical and seasonal. The level of spending by oil and gas companies is highly influenced by current and expected demand and future prices of oil and natural gas. Changes in spending result in an increased or decreased demand for our services and products. Rig count is an indicator of the level of spending by oil and gas companies.

Our financial performance is significantly affected by the rig count in the U.S. land and offshore market areas as well as oil and natural gas prices and worldwide rig activity, which are summarized in the tables below:


	Three Months Ended
	March 31,		December 31,
	2023		2022		% Change
Worldwide Rig Count (1)
U.S.:
Land		744		760	(2.1%)
Offshore		16		16	0.0%
Total		760		776	(2.1%)
International (2)		915		907	0.9%
Worldwide Total		1,675		1,683	(0.5%)

Commodity Prices (average)
Crude Oil (West Texas Intermediate)	$	72.43	$	82.79	(12.5%)
Natural Gas (Henry Hub)	$	2.65	$	5.55	(52.3%)

(1)

Estimate of drilling activity as measure by the average active drilling rigs based on Baker Hughes Co. rig count information

(2)

Excludes Canadian rig count

Comparison of the Results of Operations for the Three Months Ended March 31, 2023 and December 31, 2022

We reported net income from continuing operations for the three months ended March 31, 2023 (the “Current Quarter”) of $29.9 million on revenue of $220.1 million. This compares to a net income from continuing operations for the three months ended December 31, 2022 (the “Prior Quarter”) of $175.0 million on revenues of $239.1 million. The decrease in net income from continuing operations in the Current Quarter is largely attributable to recognition of a worthless stock deduction and valuation allowance releases in the Prior Quarter with estimated net tax benefits of $104.0 million and $18.5 million, respectively. An immaterial misstatement was identified and recorded in the Current Quarter related to the worthless stock deduction, resulting in additional income tax expense of $7.6 million.


	Three Months Ended						Change
	March 31,			December 31,
	2023			2022			$			%
Revenues
Rentals	$	108,821		$	105,900		$	2,921		2.8%
Well Services		111,316			133,203			(21,887	)	(16.4%)
Total revenues		220,137			239,103			(18,966	)
Cost of revenues
Rentals		36,468			36,376			92		0.3%
Well Services		81,253			91,146			(9,893	)	(10.9%)
Total cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		117,721			127,522			(9,801	)
Depreciation, depletion, amortization and accretion		20,139			20,121			18		0.1%
General and administrative expenses		30,990			34,204			(3,214	)	(9.4%)
Restructuring expenses		1,983			1,934			49		2.5%
Other (gains) and losses, net		(1,398	)		1,129			(2,527	)	(223.8%)
Income from operations		50,702			54,193			(3,491	)
Other income (expense)
Interest income, net		5,439			5,702			(263	)	(4.6%)
Other income (expense)		(2,152	)		4,558			(6,710	)	(147.2%)
Income from continuing operations before income taxes		53,989			64,453			(10,464	)
Income tax (expense) benefit		(24,065	)		110,532			(134,597	)	(121.8%)
Net income from continuing operations		29,924			174,985			(145,061	)
Income (loss) from discontinued operations, net of income tax		289			(4,389	)		4,678		(106.6%)
Net income	$	30,213		$	170,596		$	(140,383	)

** Not a meaningful percentage

Revenues and Cost of Revenues

Revenues from our Rentals segment increased by $2.9 million, or 2.8%, in the Current Quarter as compared to the Prior Quarter primarily due to increased pricing and service revenue for both bottom hole assembly accessories and premium drill pipe product lines in our U.S onshore and offshore markets. These increases resulted in a higher gross margin of 66.5% for the Current Quarter as compared to 65.7% in the Prior Quarter.

Revenues from our Well Services segment in the Current Quarter decreased $21.9 million, or 16.4%, from the Prior Quarter. The decline in revenue is a result of a comparatively stronger performance in the Prior Quarter in the U.S offshore market from our completion services business unit. Additionally, our International market experienced a decline in revenues related to hydraulic workover and snubbing activities, which was offset by improvements in both completion and well control services. Cost of revenues decreased $9.9 million, or 10.9%, in the Current Quarter as compared to the Prior Quarter as a result of the declines in completion services in our U.S offshore market and declines in hydraulic workover and snubbing activities on our International market. Gross margin for the Current Quarter decreased to 27.0% as compared to 31.6% for the Prior Quarter.

General and Administrative Expenses

General and administrative expenses for the Current Quarter decreased $3.2 million, or 9.4%, as compared to the Prior Quarter. The decrease is primarily related to a reduction in employee related costs, including bonus incentives in the Current Quarter.

Other (gains) and losses, net

Other gains, net for the Current Quarter were $1.4 million compared to other losses, net of $1.1 million for the Prior Quarter. Other (gains) and losses, net include gains and losses on the disposal of assets, as well as impairments related to long-lived assets.

Other Income (Expense)

Other income (expense) during the Current Quarter and Prior Quarter primarily relate to re-measurement losses associated with our foreign currencies and realized gains on our investment in equity securities.

Losses on foreign currencies were $1.8 million and $0.7 million for the Current Quarter and Prior Quarter, respectively. Losses on foreign currencies during both periods were primarily related to our operations in Argentina.

During the Prior Quarter, we disposed of all of our remaining investment in equity securities for $21.3 million and recognized gains totaling $5.3 million.

Income Taxes

The effective tax rate for the Current Quarter was an expense of 44.6% on income from continuing operations and is different from the U.S. federal statutory rate of 21.0% due to non-deductible items and foreign losses for which no tax benefit was recorded. The Latin American and Middle East jurisdictions in which we currently, and will continue to, operate have tax rates significantly in excess of the U.S. federal statutory rate. Additionally, we identified an error in the tax provision for the year ended December 31, 2022 pertaining to certain net operating loss carryforwards that should have been eliminated as part of a worthless stock deduction taken in the fourth quarter of 2022. As such, we recognized an additional income tax expense of $7.6 million during the three months ended March 31, 2023 with a corresponding decrease to deferred tax assets to correct this immaterial misstatement. Management has determined that this misstatement was not material to any of its previously issued financial statements.

The effective tax rate for the Prior Quarter was a benefit of 171.5% on income from continuing operations and is different from the U.S. federal statutory rate of 21.0% primarily from the worthless stock deduction. In addition, in the Prior Quarter, we recognized valuation allowance releases primarily for Brazil deferred tax assets and a portion of U.S. foreign tax credits .

Unrecognized tax benefit as of the March 31, 2023 and December 31, 2022 was $14.3 million and $14.0 million, respectively, all of which would impact our effective tax rate if recognized except for $0.5 million offset in deferred income taxes. It is reasonably possible $10.2 million of unrecognized tax benefits could be settled in the next twelve months due to the conclusion of tax audits or statute of limitations expirations. It is our policy to recognize interest and applicable penalties, if any, related to uncertain tax positions in income tax expense.

Liquidity and Capital Resources

Cash flows depend, to a large degree, on the level of spending by oil and gas companies for exploration, development and production activities. Certain sources and uses of cash, such as our level of discretionary capital expenditures and divestitures of non-core assets, are within our control and are adjusted as necessary based on market conditions.

Financial Condition and Liquidity

Our primary sources of liquidity have been cash and cash equivalents, cash generated from our operations and from asset sales, and availability under our Credit Facility. As of March 31, 2023, we had cash, cash equivalents and restricted cash of $404.7 million. During the three months ended March 31, 2023 net cash provided by operating activities was $73.3 million, and we received $11.6 million in cash proceeds from the sale of assets. The primary uses of liquidity are to provide support for operating activities and capital expenditures. We spent $18.1 million of cash on capital expenditures during the three months ended March 31, 2023.

The energy industry faces growing negative sentiment in the market which may affect our ability to access capital on terms favorable to us. While we have confidence in the level of support from our lenders, this negative sentiment in the energy industry has not only impacted our customers in North America, but also affected the availability and pricing for most credit lines extended to participants in the energy industry. From time to time, we may enter into transactions to dispose of businesses or capital assets that no longer fit our long-term strategy.

Debt Instruments

We have a Credit Agreement providing for a $120.0 million asset-based secured revolving Credit Facility, all of which is available for the issuance of letters of credit (the “Credit Facility”), which matures in December 2024. The issuance of letters of credit reduces availability under the Credit Facility on a dollar-for-dollar basis.

As of March 31, 2023, our borrowing base, as defined in the Credit Agreement, was approximately $115.8 million and we had $34.9 million of letters of credit outstanding that reduced the borrowing availability. We had no outstanding borrowings under the Credit Facility as of March 31, 2023. We were in compliance with all required covenants as of March 31, 2023.

Other Matters

New Accounting Pronouncements

See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 17 – “New Accounting Pronouncements.”

Critical Accounting Policies and Estimates

There have been no changes to the critical accounting policies reported in our Annual Report on Form 10-K for the period ended December 31, 2022 (the “Form 10-K”) that affect our significant judgments and estimates used in the preparation of our Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. Please refer to the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in the Form 10-K.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks associated with foreign currency fluctuations and changes in commodity prices.

Foreign Currency Exchange Rates Risk

We do not hold derivatives for trading purposes or use derivatives with complex features. When we believe it is prudent, we may enter into forward foreign exchange contracts to hedge the impact of foreign currency fluctuations. As of March 31, 2023, we did not have any outstanding foreign currency forward contracts.

Commodity Price Risk

Our revenues, profitability and future rate of growth significantly depend upon the market prices of oil and natural gas. Lower prices may also reduce the amount of oil and gas that can economically be produced.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. In addition, the disclosure controls and procedures provide reasonable assurance that such information is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. An evaluation was carried out, under the supervision and with the participation of our management, including our CEO and CFO, regarding the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures as of March 31, 2023 were not effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure as a result of the material weakness in our internal control over financial reporting described below.

Material Weakness in Internal Control Over Financial Reporting

A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Management identified a material weakness in our internal control over financial reporting as we did not design and maintain effective controls to review the reasonableness of assumptions determined by, and accuracy of calculations performed by, our external tax service providers. This material weakness resulted in an adjustment to deferred tax benefit and income tax benefit that was recorded in the consolidated financial statements as of and for the year ended December 31, 2022. Additionally, this material weakness could result in misstatements of income tax related balances that would result in a material misstatement to the annual or interim consolidated financial statements which would not be prevented or detected.

Remediation Plan for Material Weakness

In order to address the material weakness described above, management has implemented a remediation plan that includes implementing enhancements to our controls around reviewing the reasonableness of assumptions determined by, and the accuracy of calculations performed by, our external tax service providers. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address the material weakness.

Based on its evaluation, the controls described above have not had sufficient time for management to conclude that the controls are operating effectively. Therefore, the material weakness described above existed at March 31, 2023, and will continue to exist until the controls described above have had sufficient time for management to conclude that they are effective.

Changes in Internal Control Over Financial Reporting

Other than the changes related to the remediation plan above, there were no changes in internal control over financial reporting during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in various legal actions incidental to our business. However, based on current circumstances, we do not believe that the ultimate resolution of these proceedings after considering available defenses and any insurance coverage or indemnification rights will have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors

As of March 31, 2023, there have been no material changes in risk factors previously disclosed in our Form 10-K.

Item 6. Exhibits


Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Superior Energy Services, Inc.’s Current Report on Form 8-K filed on February 3, 2021(File No. 001-34037)).
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Superior Energy Services, Inc.’s Current Report on Form 8-K filed on February 3, 2021(File No. 001-34037)).
3.3	Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to Superior Energy Services, Inc.’s Current Report on Form 8-K filed on February 3, 2021(File No. 001-34037)).
31.1*	Officer’s certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
31.2*	Officer’s certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1*	Officer’s certification pursuant to Section 1350 of Title 18 of the U.S. Code.
32.2*	Officer’s certification pursuant to Section 1350 of Title 18 of the U.S. Code.
101.INS*	Inline XBRL Instance Document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
104*	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SUPERIOR ENERGY SERVICES, INC.

(Registrant)


Date:	May 15, 2023	By:	/s/ Brian K. Moore
			Brian K. Moore
			President and Chief Executive Officer
			(Principal Executive Officer)

		By:	/s/ James W. Spexarth
			James W. Spexarth
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Brian K. Moore, President and Chief Executive Officer of Superior Energy Services, Inc., certify that:

I have reviewed this quarterly report on Form 10-Q of Superior Energy Services, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 15, 2023		/s/ Brian K. Moore
		Brian K. Moore
		President and Chief Executive Officer (Principal Executive Officer)
		Superior Energy Services, Inc.

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, James W. Spexarth, Executive Vice President and Chief Financial Officer of Superior Energy Services, Inc., certify that:

I have reviewed this quarterly report on Form 10-Q of Superior Energy Services, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 15, 2023		/s/ James W. Spexarth
		James W. Spexarth
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)
		Superior Energy Services, Inc.

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

SECTION 1350 OF TITLE 18 OF THE U.S. CODE

I, Brian K. Moore, President and Chief Executive Officer of Superior Energy Services, Inc. (the “Company”), certify, pursuant to Section 1350 of Title 18 of the U.S. Code, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to my knowledge:

the quarterly report on Form 10-Q of the Company for the quarter ended March 31, 2023 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: May 15, 2023		/s/ Brian K. Moore
		Brian K. Moore
		President and Chief Executive Officer (Principal Executive Officer)
		Superior Energy Services, Inc.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

SECTION 1350 OF TITLE 18 OF THE U.S. CODE

I, James W. Spexarth, Executive Vice President and Chief Financial Officer of Superior Energy Services, Inc. (the “Company”), certify, pursuant to Section 1350 of Title 18 of the U.S. Code, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to my knowledge:

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date: May 15, 2023		/s/ James W. Spexarth
		James W. Spexarth
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)
		Superior Energy Services, Inc.