Item 6. Exhibits

Registrant’s telephone number, including area code: (713) 654-2200

Comparison of the Results of Operations for the Three Months Ended September 30, 2017March 31, 2021 and June 30, 20172020

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



	FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 30, 2017~~March 31, 2021

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

For the Transition Period from to

Commission File No. 001-34037

Commission Company Name: SUPERIOR ENERGY SERVICES INC

SUPERIOR ENERGY SERVICES, INC.

(Exact name of registrant as specified in its charter)


	Delaware		75-2379388
	(State or other jurisdiction of		(I.R.S. Employer
	incorporation or organization)		Identification No.)

	1001 Louisiana Street, Suite 2900		77002
	Houston, TX		(Zip Code)
	(Address of principal executive offices)

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 ☐x

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ☒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~~Accelerated filer ☒¨		Accelerated filer ☐¨
Non-accelerated filer ☐x	~~(do not check if smaller reporting company)~~	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 ☒ x

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 x

The number of shares of the registrant’s Class A common stock outstanding on ~~October 20, 2017~~September 28, 2021 was 15~~3,083,270.~~

19,998,695.
‎

~~Table Of Contents~~

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Quarterly Report on Form 10-Q for

the Quarterly Period Ended ~~September 30, 2017~~March 31, 2021

TABLE OF CONTENTS



		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements and Notes	2
	Unaudited Condensed Consolidated Balance Sheets	3
	Unaudited Condensed Consolidated Statements of Operations	5
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Unaudited Condensed Consolidated Statements of Cash Flows	6
	Unaudited Consolidated Statements of Changes in Stockholders' Equity (Deficit)	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2 33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2
~~Item 4.~~	~~Controls and Procedures~~	2
		42
~~PART II.~~Item 4.	~~OTHER INFORMATION~~Controls and Procedures	42

PART II.	OTHER INFORMATION

Item ~~1A.~~1.	~~Risk Factors~~Legal Proceedings	2 44
Item 2.1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities ~~and Use of Proceeds~~	2 44
Item 6.	Exhibits	2 45

SIGNATURES		46

‎

~~Table Of Contents~~

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements and Notes



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES	SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES				SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets	Condensed Consolidated Balance Sheets				Condensed Consolidated Balance Sheets
September 30, 2017 and December 31, 2016
(in thousands, except share data)	(in thousands, except share data)				(in thousands, except share data)
(unaudited)	(unaudited)				(unaudited)
	9/30/2017		12/31/2016
					Successor		Predecessor
ASSETS					March 31, 2021		December 31, 2020
Current assets:
Cash and cash equivalents	$	167,025	$	187,591	$	197,307	$	188,006
Accounts receivable, net of allowance for doubtful accounts of $27,075 and
$29,740 at September 30, 2017 and December 31, 2016, respectively		424,776		297,164
Restricted cash - current						16,751		-
Accounts receivable, net of allowance for doubtful accounts of $0 and $24,629 at March 31, 2021 and December 31, 2020, respectively						182,519		183,964
Income taxes receivable		-		101,578		-		8,891
Prepaid expenses		38,709		37,288		41,666		36,651
Inventory and other current assets		139,828		130,772		105,772		96,141
Assets held for sale		27,330		27,158		41,881		47,635
Total current assets		797,668		781,551		585,896		561,288
Property, plant and equipment, net of accumulated depreciation and depletion of $2,711,597 and $2,454,339 at September 30, 2017 and December 31, 2016, respectively		1,379,560		1,605,365

Property, plant and equipment, net						612,597		542,090
Operating lease right-of-use assets						45,965		50,192
Goodwill		807,488		803,917		-		138,677
Notes receivable		59,226		56,650		73,677		72,612
Intangible and other long-term assets, net of accumulated amortization of $80,122 and $69,588 at September 30, 2017 and December 31, 2016, respectively		167,189		222,772
Restricted cash						80,056		80,178
Intangible and other long-term assets, net						25,649		56,042
Total assets	$	3,211,131	$	3,470,255	$	1,423,840	$	1,501,079

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	126,368	$	94,831	$	61,543	$	55,873
Accrued expenses		237,823		218,192		162,063		130,332
Income taxes payable		801		694		1,561		-
Current portion of decommissioning liabilities		27,237		22,164		358		3,765
Liabilities held for sale		8,755		8,653		1,177		4,079
Total current liabilities		400,984		344,534		226,702		194,049

Decommissioning liabilities						174,224		138,981
Operating lease liabilities						29,416		40,258
Deferred income taxes		150,612		243,611		54,473		5,288
Decommissioning liabilities		101,544		101,513
Long-term debt, net		1,281,714		1,284,600
Other long-term liabilities		161,522		192,077		72,969		125,356

Stockholders’ equity:
Preferred stock of $0.01 par value. Authorized - 5,000,000 shares; none issued		-		-
Common stock of $0.001 par value
Authorized-250,000,000, Issued and Outstanding - 153,083,270 at September 30, 2017 Authorized-250,000,000, Issued and Outstanding - 151,861,661 at December 31, 2016		153		152
Additional paid in capital		2,705,526		2,691,553
Total non-current liabilities						331,082		309,883
Liabilities Subject to Compromise						-		1,335,794

Total liabilities						557,784		1,839,726

Stockholders’ equity (deficit):
Predecessor common stock $0.001 par value; Authorized - 25,000,000, Issued - 15,799,318, Outstanding - 14,826,906 at December 31, 2020						-		16
Successor Class A common stock $0.01 par value; Authorized - 50,000,000 shares 19,995,581 shares issued and outstanding at March 31, 2021						200		-
Additional paid-in capital						902,486		2,756,889
Predecessor Treasury stock at cost, 972,412 shares at December 31, 2020						-		(4,290)
Accumulated other comprehensive loss, net		(68,873)		(80,248)		-		(67,947)
Retained deficit		(1,522,051)		(1,307,537)
Total stockholders’ equity		1,114,755		1,303,920
Total liabilities and stockholders’ equity	$	3,211,131	$	3,470,255
Accumulated deficit						(36,630)		(3,023,315)
Total stockholders’ equity (deficit)						866,056		(338,647)
Total liabilities and stockholders’ equity (deficit)					$	1,423,840	$	1,501,079

See accompanying notes to condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.					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 period February 3, 2021 through March 31,		For the Period January 1, 2021 through February 2,		Three Months Ended March 31,
	2021		2021		2020
Revenues:
Services	$	69,801	$	30,189	$	180,236
Rentals		32,915		15,123		100,105
Product sales		26,379		11,335		41,156
Total revenues		129,095		56,647		321,497
Costs and expenses:
Cost of services		58,473		25,182		140,199
Cost of rentals		14,280		6,724		40,043
Cost of sales		16,945		8,056		31,444
Cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		89,698		39,962		211,686
Depreciation, depletion, amortization and accretion - services		28,516		5,564		23,159
Depreciation, depletion, amortization and accretion - rentals		13,466		2,834		12,820
Depreciation, depletion, amortization and accretion - sales		10,825		2,100		5,376
General and administrative expenses		20,937		12,164		65,157
Restructuring and other expenses		8,383		1,270		-
Reduction in value of assets		-		-		16,522
Loss from operations		(42,730)		(7,247)		(13,223)

Other income (expense):
Interest income (expense), net		215		204		(25,134)
Reorganization items, net		-		335,560		-
Other income (expense):		(2,845)		(2,104)		(4,232)
Income (loss) from continuing operations before income taxes		(45,360)		326,413		(42,589)
Income tax (expense) benefit		7,852		(59,901)		10,254
Net income (loss) from continuing operations		(37,508)		266,512		(32,335)
Income (loss) from discontinued operations, net of income tax		878		2,265		(47,129)
Net income (loss)	$	(36,630)	$	268,777	$	(79,464)

Income (loss) per share -basic
Net income (loss) from continuing operations	$	(1.87)	$	17.96	$	(2.18)
Income (loss) from discontinued operations		0.04		0.15		(3.18)
Net income (loss)	$	(1.83)	$	18.11	$	(5.36)

Income (loss) per share - diluted:
Net income (loss) from continuing operations	$	(1.87)	$	17.88	$	(2.18)
Income (loss) from discontinued operations		0.04		0.15		(3.18)
Net income (loss)	$	(1.83)	$	18.03	$	(5.36)

Weighted-average Class A shares outstanding - basic		19,996		14,845		14,809
Weighted-average Class A shares outstanding - diluted		19,996		14,905		14,809

See accompanying notes to condensed consolidated financial statements.

‎

~~Table Of Contents~~

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2017 and 2016
(in thousands, except per share data)
(unaudited)

Three Months

Nine Months

2017

2016

2017

2016
Revenues:

Services
$
431,874

$
266,093

$
1,170,455

$
873,985
Rentals

74,155

60,132

206,578

221,644
Total revenues

506,029

326,225

1,377,033

1,095,629
Costs and expenses:

Cost of services (exclusive of depreciation, depletion, amortization and accretion)

340,401

223,766

959,630

703,061
Cost of rentals (exclusive of depreciation, depletion, amortization and accretion)

27,878

34,402

82,437

99,081
Depreciation, depletion, amortization and accretion - services

92,814

100,579

281,097

312,713
Depreciation, depletion, amortization and accretion - rentals

15,937

22,729

50,054

79,304
General and administrative expenses

74,372

86,743

226,573

270,467
Reduction in value of assets

9,953

-

9,953

462,461
Loss from operations

(55,326)

(141,994)

(232,711)

(831,458)

Other income (expense):

Interest expense, net

(29,096)

(21,771)

(76,679)

(68,325)
Other income (expense)

(970)

3,667

(2,477)

22,103
Loss from continuing operations before income taxes

(85,392)

(160,098)

(311,867)

(877,680)
Income taxes

(28,203)

(46,185)

(102,978)

(210,599)
Net loss from continuing operations

(57,189)

(113,913)

(208,889)

(667,081)
Loss from discontinued operations, net of income tax

(1,860)

(4,085)

(5,625)

(8,577)
Net loss
$
(59,049)

$
(117,998)

$
(214,514)

$
(675,658)

Loss per share information:

Basic and diluted:

Net loss from continuing operations
$
(0.37)

$
(0.75)

$
(1.37)

$
(4.40)
Loss from discontinued operations

(0.02)

(0.03)

(0.04)

(0.06)
Net loss
$
(0.39)

$
(0.78)

$
(1.41)

$
(4.46)

Cash dividends declared per share
$
-

$
-

$
-

0.08

Weighted average common shares used in computing loss per share:

Basic and diluted

153,082

151,707

152,624

151,337

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
Three and Nine Months Ended September 30, 2017 and 2016
(in thousands)

Three Months

Nine Months

2017

2016

2017

2016
Net loss
$
(59,049)

$
(117,998)

$
(214,514)

$
(675,658)
Change in cumulative translation adjustment, net of tax

3,629

(4,693)

11,375

(26,616)
Comprehensive loss
$
(55,420)

$
(122,691)

$
(203,139)

$
(702,274)

See accompanying notes to condensed consolidated financial statements.


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
	Successor		Predecessor
	For the period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		Three Months Ended March 31, 2020
Net income (loss)		(36,630)		268,777		(79,464)
Change in cumulative translation adjustment, net of tax		-		67,947		(4,538)
Comprehensive income (loss)	$	(36,630)	$	336,724	$	(84,002)

See accompanying notes to unaudited condensed consolidated financial statements.

~~Table Of Contents~~
‎

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2017 and 2016
(in thousands)
(unaudited)

2017

2016
Cash flows from operating activities:

Net loss

$
(214,514)

$
(675,658)
Adjustments to reconcile net loss to net cash provided by operating
activities:

Depreciation, depletion, amortization and accretion

331,151

392,017
Deferred income taxes

(92,999)

(186,232)
Reduction in value of assets

9,953

462,461
Stock based compensation expense

29,780

34,167
Other reconciling items, net

(2,408)

(10,392)
Changes in operating assets and liabilities:

Accounts receivable

(116,989)

155,717
Inventory and other current assets

(8,510)

(5,028)
Accounts payable

24,821

(8,692)
Accrued expenses

7,182

(41,617)
Income taxes

100,969

(4,515)
Other, net

(13,028)

34,447
Net cash provided by operating activities

55,408

146,675

Cash flows from investing activities:

Payments for capital expenditures

(109,635)

(74,071)
Decrease in cash held in escrow

30,600

-
Other

15,647

6,238
Net cash used in investing activities

(63,388)

(67,833)

Cash flows from financing activities:

Proceeds from issuance of long-term debt

500,000

-
Principal payments on long-term debt

(500,000)

(337,576)
Payment of debt issuance costs

(9,091)

(2,675)
Proceeds from revolving line of credit

-

325,123
Payments on revolving line of credit

-

(325,123)
Cash dividends

-

(12,111)
Other

(6,789)

(5,410)
Net cash used in financing activities

(15,880)

(357,772)
Effect of exchange rate changes on cash

3,294

(6,932)
Net decrease in cash and cash equivalents

(20,566)

(285,862)
Cash and cash equivalents at beginning of period

187,591

564,017
Cash and cash equivalents at end of period

$
167,025

$
278,155

See accompanying notes to condensed consolidated financial statements.


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

	Successor		Predecessor
	For the period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		Three Months Ended March 31, 2020
Cash flows from operating activities:
Net income (loss)	$	(36,630)	$	268,777	$	(79,464)

Adjustments to reconcile net loss to net cash provided by ‎ operating activities:
Depreciation, depletion, amortization and accretion		52,807		10,498		41,355
Deferred income taxes		(5,051)		54,322		3,882
Amortization of debt acquisition costs		82		-		16,522
Reduction in value of assets held for sale		-		(2,654)		46,358
Assets held for sale		(71)		-		-
Right-of-use assets amortization		2,544		1,372		4,373
Reorganization items, net		-		(354,279)		-
Retirement and deferred compensation plans expense, net		(2,007)		260		3,584
Bad debt		(4,398)		(210)		-
Gain on sale of assets and businesses		(2,673)		58		-
Other reconciling items, net		(710)		(307)		1,776
Changes in operating assets and liabilities:
Accounts receivable		2,414		3,602		(3,448)
Prepaid expenses		(4,625)		(340)		4,129
Inventory and other current assets		2,496		(221)		(2,077)
Accounts payable		4,592		(2,365)		(17,086)
Accrued expenses		9,857		24,425		(20,540)
Income taxes		5,134		340		(28,479)
Operating lease liabilities and other, net		(2,360)		2,105	(3,125)
Net cash provided by (used in) operating activities		21,401		5,383		(32,240)

Cash flows from investing activities:
Payments for capital expenditures		(4,119)		(3,035)		(18,563)
Proceeds from sales of assets		7,148		775	33,045
Net cash provided by (used in) investing activities		3,029		(2,260)		14,482

Cash flows from financing activities:
Credit facility costs		(14)		(1,920)		-
Tax withholdings for vested restricted stock units		-		-		(208)
Net cash used in financing activities		(14)		(1,920)		(208)
Effect of exchange rate changes on cash		-		311	(2,428)
Net change in cash, cash equivalents, and restricted cash		24,416		1,514		(20,394)
Cash, cash equivalents, and restricted cash at beginning of period		269,698		268,184		275,388
Cash, cash equivalents, and restricted cash at end of period	$	294,114	$	269,698	$	254,994


See accompanying notes to unaudited condensed consolidated financial statements.

~~Table Of Contents~~

‎



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(in thousands, except share data)
(unaudited)

								Accumulated
	Common			Additional				other
	stock	Common		paid-in		Treasury		comprehensive		Accumulated
	shares	stock		capital		stock		loss, net		deficit		Total
Balances, December 31, 2020 (Predecessor)	15,799,318	$	16	$	2,756,889	$	(4,290)	$	(67,947)	$	(3,023,315)	$	(338,647)
Net income	-		-		-		-		-		268,777		268,777
Foreign currency translation adjustment	-		-		-		-		67,947		-		67,947
Extinguishment of unrecognized compensation expense	-		-		988		-		-		-		988
Stock-based compensation expense,													-
net of forfeitures	-		-		935		-		-		-		935
Restricted stock units vested	48,903		-		-		-		-		-		-
Shares withheld and retired	(14,701)		-		-		-		-		-		-
Cancellation of Predecessor equity	(15,833,520)		(16)		(2,758,812)		4,290		-		2,754,538		-
Issuance of Successor Class A common stock	19,995,581		200		902,486		-		-		-		902,686
Balances, February 2, 2021 (Predecessor)	19,995,581		200		902,486		-		-		-		902,686

Balances, February 3, 2021 (Successor)	19,995,581		200		902,486		-		-		-		902,686
Net loss	-		-		-		-		-		(36,630)		(36,630)
Balances, March 31, 2021 (Successor)	19,995,581	$	200	$	902,486	$	-	$	-	$	(36,630)	$	866,056


Balances, December 31, 2019 (Predecessor)	15,689,463		16		2,752,859		(4,290)		(71,927)		(2,627,085)		49,573
Net loss	-		-		-		-		-		(79,464)		(79,464)
Foreign currency translation adjustment	-		-		-		-		(4,538)		-		(4,538)
Stock-based compensation expense,
net of forfeitures	-		-		2,527		-		-		-		2,527
Transactions under stock plans	108,965		-		(208)		-		-		-		(208)
Balances, March 31, 2020 (Predecessor)	15,798,428	$	16	$	2,755,178	$	(4,290)	$	(76,465)	$	(2,706,549)	$	(32,110)

See accompanying notes to unaudited condensed consolidated financial statements.

‎

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

~~Nine Months Ended September 30, 2017~~

(1)Basis of Presentation

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

As used herein, the “Company,” “we,” “us” and similar terms refer to (i) prior to the Emergence Date (as defined below), SESI Holdings, Inc. (formerly known as Superior Energy Services, Inc.) (the “Former Parent”) and its subsidiaries and (ii) after the Emergence Date, Superior Energy Services, Inc. (formerly known as Superior Newco, Inc.) and its subsidiaries.

These financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in Superior Energy Services, Inc.’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020. As described below, as a result of the application of fresh start accounting and ~~Management’s Discussion and Analysis~~the effects of ~~Financial Condition and Results~~the implementation of ~~Operations herein.~~our Plan (as defined below), the financial statements after the Emergence Date are not comparable with the consolidated financial statements on or before that date. Refer to Note 3 – “Fresh Start Accounting” below for additional information.

~~The financial information of Superior Energy Services, Inc. and subsidiaries (the Company) for the three and nine months ended September 30, 2017 and 2016 has not been audited. However, in~~In the opinion of ~~management,~~the Company, the accompanying unaudited condensed financial statements contain all adjustments, consisting primarily of normal recurring adjustments, necessary ~~to present fairly the~~for a fair statement of its financial position as of March 31, 2021, and its results of operations for the ~~periods presented have been included therein. Certain previously reported amounts have been reclassified to conform~~three months ended March 31, 2021 and 2020, and cash flows for the three months ended March 31, 2021, and 2020. The condensed balance sheet at December 31, 2020, was derived from audited annual financial statements but does not contain all the footnote disclosures from the annual financial statements. See “Changes in Accounting Policies” below for further information. The year-end condensed consolidated balance sheet for the Predecessor (as defined below) was derived from audited financial statements but does not include all disclosures required by GAAP.

Effective as of February 2, 2021 (the “Emergence Date”), the entity now known as Superior Energy Services, Inc. (formerly known as Superior Newco, Inc.) became the successor reporting company to the ~~2017 presentation. The results~~Former Parent pursuant to Rule 15d-5 of ~~operations~~the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Between December 7, 2020 (the “Petition Date”) and the Emergence Date, the Company operated as a debtor-in-possession under the supervision of the United States Bankruptcy Court for the ~~first nine months~~Southern District of Texas Houston Division (the “Bankruptcy Court”). For financial reporting purposes, close of business on February 2, 2021 represents the ~~year are not necessarily indicative of the results of operations that might be expected for the entire year.~~

~~Due to the nature~~date of the Company’s ~~business,~~emergence from bankruptcy. As used herein, the following terms refer to the Company ~~is involved, from time to time, in routine litigation or subject to disputes or claims regarding~~and its business activities. Legal costs related to these matters are expensed as incurred. In management’s opinion, none of the pending litigation, disputes or claims is expected to have a material adverse effect on the Company’s financial condition, results of operations or liquidity.operations:


"Predecessor"	The Company, prior to the Emergence Date
"Current Predecessor Period"	The Company's operations, January 1, 2021 – February 2, 2021
"Prior Predecessor Quarter"	The Company's operations, January 1, 2020 - March 31, 2020
"Successor"	The Company, after the Emergence Date
"Successor Period"	The Company's operations, February 3, 2021 - March 31, 2021

The Company evaluates events that occur after the balance sheet date but before the financial statements are issued for potential recognition or disclosure. ~~Based~~

Recent Developments

Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code

On December 4, 2020, the Former Parent and certain of its direct and indirect wholly-owned domestic subsidiaries (together with the Former Parent, the “Affiliate Debtors”) entered into an Amended and Restated Restructuring Support Agreement (the “Amended RSA”) that amended and restated in its entirety the Restructuring Support Agreement, dated September 29, 2020, with certain holders of SESI, L.L.C.’s (“SESI”) outstanding (i) 7.125% senior unsecured notes due 2021 (the “7.125% Notes”) and (ii) 7.750% senior unsecured notes due 2024 (the “7.750% Notes”). The parties to the Amended RSA agreed to the principal terms of a proposed financial restructuring of the Affiliate Debtors, which was implemented through the Plan (as defined below).

On December 7, 2020, the Affiliate Debtors filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the Bankruptcy Court, and, in connection therewith, the Affiliate Debtors filed with the Bankruptcy Court the proposed Joint Prepackaged Plan of Reorganization under the Bankruptcy Code (as amended, modified or supplemented from time to time, the “Plan”).

On January 19, 2021, the Bankruptcy Court entered an order, Docket No. 289, confirming and approving the Plan. On the Emergence Date, the conditions to effectiveness of the Plan were satisfied or waived and we emerged from Chapter 11.

On the Emergence Date, the Company qualified for and adopted fresh start accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852 – Reorganizations (ASC 852), which specifies the accounting and financial reporting requirements for entities reorganizing through Chapter 11 bankruptcy proceedings. The application of fresh start accounting resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the implementation of the Plan and the application of fresh start accounting, these unaudited condensed consolidated financial statements after the Emergence Date are not comparable to the consolidated financial statements before that date and the historical financial statements on or before the Emergence Date are not a reliable indicator of its financial condition and results of operations for any period after the Company’s adoption of fresh start accounting.

The accompanying unaudited condensed consolidated financial statements have been prepared as if the Company is a going concern and in accordance with ASC 852.

During the Current Predecessor Period, the Predecessor applied ASC 852 in preparing the unaudited condensed consolidated financial statements, which requires distinguishing transactions associated with the reorganization separate from activities related to the ongoing operations of the business. Accordingly, pre-petition liabilities that could have been impacted by the Chapter 11 Cases were classified as liabilities subject to compromise. Additionally, certain expenses, realized gains and losses and provisions for losses that were realized or incurred during and directly related to the Chapter 11 Cases, including fresh start valuation adjustments and gains on liabilities subject to compromise were recorded as reorganization items, net in the condensed consolidated statements of operations in the Current Predecessor Period. See Note 2 – “Emergence from Voluntary Reorganization under Chapter 11” for more information on the ~~evaluation,~~events of the Chapter 11 Cases as well as the accounting and reporting impacts of the reorganization during the Current Predecessor Period.

Use of Estimates — In preparing the accompanying financial statements, the Company makes various estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities reported as of the dates of the balance sheets and the amounts of revenues and expenses reported for the periods shown in the income statements and statements of cash flows. All estimates, assumptions, valuations and financial projections related to fresh start accounting, including the fair value adjustments, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, we cannot assure you that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially. For information about the use of estimates relating to fresh start accounting, see – Note 3 – “Fresh Start Accounting” below.

Due to the lack of comparability with historical financials, the Company’s unaudited consolidated condensed financial statements and related footnotes are presented with a “black line” division to emphasize the lack of comparability between amounts presented as of and after February 2, 2021 (the “Fresh Start Reporting Date”) and amounts presented for all prior periods. The Successor’s financial results for future periods following the application of fresh start accounting will be different from historical trends and the differences may be material.

Changes in Accounting Policies

Accounting policies are disclosed in the Predecessor Company’s Annual Report on Form 10-K. As of the Emergence Date, the amounts for these accounts have been recorded at fair value. After the Emergence Date, the Company will continue to follow the accounting policies within the Predecessor Company’s Annual Report on Form 10-K except for the policies discussed below. As part of the adoption of fresh start accounting and effective upon emergence from bankruptcy, the Company has adopted new presentations for certain items within our condensed consolidated balance sheets and statement of operations. The presentation changes are described below:

The functional currency of certain international subsidiaries changed from the local currency to US dollars. This brings alignment so that the entire Company’s functional currency is US dollars. Management considered the economic factors outlined in FASB ASC Topic No. 830 - Foreign Currency Matters in the determination of the functional currency. Management concluded that the predominance of factors support the use of the Successor parent’s currency as the functional currency and resulted in a change in functional currency to US dollars for all international subsidiaries.

The reportable segments were changed to Global and North America. Reportable segments in the Predecessor Company’s Annual Report on Form 10-K were Drilling Products and Services, Onshore Completion and Workover Services, Production Services and Technical Solutions.

The Predecessor recognized bad debt expense and gains/losses on sales of assets within general and administrative expenses. The Successor recognizes these expenses within cost of revenues. See Note 3 – “Fresh Start Accounting” for additional information.

Additional Detail of Account Balances

Restricted Cash — The restricted cash balance included in current assets as of March 31, 2021 reflects the Professional Fees Escrow and General Unsecured Creditors Escrow balance of $16.8 million that will be released as amounts are paid in accordance with the Plan. Restricted cash as of March 31, 2021 primarily represents cash of $77.4 million held in a collateral account for the payment and performance of secured obligations including the reimbursement of letters of credit, and $2.6 million relates to cash held in escrow to secure the future decommissioning obligations related to the sole oil and gas property.

(2)Emergence from Voluntary Reorganization under Chapter 11

Plan of Reorganization under Chapter 11 of the Bankruptcy Code

On December 7, 2020, the Affiliate Debtors commenced the Chapter 11 Cases as described in Note 1 – “Basis of Presentation” above. After commencement of the Chapter 11 Cases, the Affiliate Debtors continued to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

Executory Contracts

Subject to certain exceptions, under the Bankruptcy Code, the Affiliate Debtors could assume, assign, or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the debtors from performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance.

Bankruptcy Claims

During the Chapter 11 Cases, the Affiliate Debtors filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Affiliate Debtors, subject to the assumptions filed in connection therewith. Certain holders of pre-petition claims that were not governmental units were required to file proofs of claim by the bar date of January 7, 2021. As of September 24, 2021, the Affiliate Debtors’ have received approximately 646proofs of claim, primarily representing general unsecured claims, for an amount of approximately $1.7 billion. The Bankruptcy Court does not allow for claims that have been acknowledged as duplicates. Approximately 562 claims totaling approximately $1.4 billion have been withdrawn, disallowed or are pending approval to be disallowed. Differences in amounts recorded and claims filed by creditors are currently being investigated and resolved, including through filing objections with the Bankruptcy Court, where appropriate. The Company may ask the Bankruptcy Court to disallow claims that the Company believes are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons. In light of the substantial number of claims filed, the claims resolution process may take considerable time to complete and is continuing even after the Affiliate Debtors emerged from bankruptcy. As a result of the ongoing claims resolution process post-emergence, the Affiliate Debtors agreed to allow certain claims in the amount of $232.0 million classified per the Plan of Reorganization as Class 6 General Unsecured Claims against the Parent. Each holder of a Class 6 claim receives their pro rata share of the $125,000 general unsecured claim cash pool described below. Per ASC 852-10, liabilities are measured at their allowed claim amount, and the result of allowing these claims increased liabilities subject to compromise prior to emergence. The resolution of these Class 6 claims is considered in the $125,000 cash pool as part of the emergence transaction.

On the Emergence Date, the conditions to effectiveness of the Plan were satisfied or waived and the Company emerged from Chapter 11.

On the Emergence Date and pursuant to the Plan:

Administrative expense claims, priority tax claims, other priority claims and other secured claims were paid or will be paid in full in the ordinary course (or receive such other treatment rendering such claims unimpaired);

General unsecured creditors for the Affiliate Debtors remained unimpaired and received payment in cash, in full, in the ordinary course;

General unsecured creditors for the Former Parent receive their pro rata share of a cash pool in the amount of $125,000;

Eligible holders of the claims arising as a result of holding either the 7.125% Notes or the 7.750% Notes against the Affiliate Debtors received their pro rata share of:

A payment equal to 2% of the principal amount of 7.125% Notes or 7.750% Notes held by all holders who did not opt of receiving a cash payout; or

Solely to the extent that such a holder timely and validly elected to opt out of receiving the cash payout, (A) 100% of the Class A common stock issued and outstanding on the Emergence Date, subject to dilution, and (B), to the extent such holder was an “accredited investor” or “qualified institutional buyer” within the meaning of the SEC’s rules, subscription rights to participate in an equity rights offering (the “Equity Rights Offering”);

The Affiliate Debtors conducted the Equity Rights Offering through an offering of subscription rights for the purchase of Class A common stock on a pro rata basis; and

Prior parent equity interests and common stock of the Affiliate Debtors were cancelled and new Class A common stock was issued to settle claims arising as a result of holding either the 7.125% Notes or the 7.750% Notes, as noted above.

The costs of efforts to restructure the Company’s capital, prior to and during the Chapter 11 Cases, along with all other costs incurred in connection with the Chapter 11 Cases, have been material.

On the Emergence Date, pursuant to the terms of the Plan, the Company filed an amended and restated certificate of incorporation (the “Certificate of Incorporation”) and a certificate of amendment of the amended and restated certificate of incorporation (the “Certificate of Amendment”).

Also, on the Emergence Date, and pursuant to the terms of the Plan, the Company adopted amended and restated bylaws (the “Bylaws”). The descriptions of the Certificate of Incorporation and the Bylaws are qualified in their entirety by reference to the full texts of the Certificate of Incorporation, Bylaws, and Certificate of Amendment.

(3)Fresh Start Accounting

Fresh Start Accounting

In connection with the emergence from bankruptcy and in accordance with ASC 852, the Company qualified for and adopted fresh start accounting on the Emergence Date because (1) the holders of the then existing common shares of the Predecessor received less than 50 percent of the new common shares of the Successor outstanding upon emergence and (2) the reorganization value of the Predecessor’s assets immediately prior to confirmation of the Plan of $1,456.8 million was less than the total of all post-petition liabilities and allowed claims of $2,076.1 million.

In accordance with ASC 852, upon adoption of fresh start accounting, the reorganization value derived from the enterprise value as disclosed in the Plan was allocated to the Company’s assets and liabilities based on their fair values (except for deferred income taxes) in accordance with FASB ASC Topic No. 805 - Business Combinations (ASC 805) and FASB ASC Topic No. 820 - Fair Value Measurements (ASC 820). The reorganization value represents the fair value of the Successor’s assets before considering certain liabilities and is intended to represent the approximate amount a willing buyer would pay for the Company’s assets immediately after reorganization. The amount of deferred income taxes recorded due to the fair value adjustments to assets and liabilities was determined in accordance with FASB ASC Topic No. 740 - Income Taxes.

Reorganization Value

The reorganization value represents the fair value of the Successor’s total assets before considering certain liabilities and is intended to approximate the amount a willing buyer would pay for the Successor’s assets immediately after restructuring. The Plan confirmed by the Bankruptcy Court estimated a range of enterprise values between $710.0 million and $880.0 million.

The following table reconciles the enterprise value to the reorganization value of Successor’s assets that ~~there~~has been allocated to the Company’s individual assets as of the Fresh Start Reporting Date (in thousands):



	Fresh Start Reporting Date
Selected Enterprise Value within Bankruptcy Court Range	$	729,918
Plus: Cash and cash equivalents		172,768
Plus: Liabilities excluding the decommissioning liabilities		380,496
Plus: Decommissioning liabilities		173,622
Reorganization Value		1,456,804

Management determined the enterprise and corresponding equity value of the Successor using various valuation methods, including (i) discounted cash flow analysis (“DCF”), (ii) comparable company analysis and (iii) precedent transaction analysis. The use of each approach provides corroboration for the other approaches.

In order to estimate the enterprise value using the DCF analysis approach, management’s estimated future cash flow projections, plus a terminal value which was calculated by applying a multiple based on the Company’s internal rate of return (“IRR”) of 17.6% and a perpetuity growth rate of 3.0% to the terminal year’s projected earnings before interest, tax, depreciation and amortization (“EBITDA”). These estimated future cash flows were ~~no material subsequent events~~then discounted to an assumed present value using our estimated weighted-average cost of capital, which is represented by the Company’s IRR.

The comparable company analysis provides an estimate of a Company’s value relative to other publicly traded companies with similar operating and financial characteristics, by which a range of EBITDA multiples of the comparable companies was then applied to management’s projected EBITDA to derive an estimated enterprise value.

Precedent transaction analysis provides an estimate of enterprise value based on recent sale transactions of similar companies, by deriving the implied EBITDA multiple of those transactions, based on sales prices, which was then applied to management’s projected EBITDA.

The enterprise value and corresponding equity value are dependent upon achieving the future financial results set forth in our valuations, as well as the realization of certain other assumptions. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, we cannot assure you that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially.

Valuation Process

The reorganization value was allocated to the Successor’s reporting segments using the discounted cash flow approach. The reorganization value was then allocated to the Successor’s identifiable assets and liabilities using the fair value principle as contemplated in ASC 820. The specific approach, or approaches, used to allocate reorganization value by asset class are noted below.

Inventory

The fair value of the inventory was determined by using both a cost approach and income approach. Inventory was segregated into raw materials, spare parts, work in process (“WIP”), and finished goods. Fair value of raw materials and spare parts inventory were determined using the cost approach. Fair value of finished goods and WIP inventory were determined by using the net realizable value approach. The fair value of finished goods was measured using an estimate of the costs to sell or dispose of the inventory plus a reasonable profit allowance on those efforts adjusted for ~~recognition~~holding costs. The fair value of WIP was measured using an estimate of the costs to complete and sell or ~~disclosure~~consume the inventory plus a reasonable profit allowance on those efforts adjusted for holding costs.

Property, Plant and Equipment

Real Property

The fair values of real property locations were estimated using the sales comparison (market) approach and cost approach. As part of the valuation process, information was obtained on the Successor’s current usage, building type, year built, and cost history for all properties valued. In determining the fair value and remaining useful life for real property assets, functional and economic obsolescence was considered and taken as an adjustment at the asset level.

Tangible Assets Excluding Real Property and Oil and Gas Assets

The fair values of the Company’s tangible assets were calculated using either the cost or market approach. For most tangible asset categories, a cost approach was utilized relying on purchase year, historic costs, and industry/equipment based trend factors to determine replacement cost new of the assets. Readily available market transaction data was used and adjusted for current market conditions for asset categories with active secondary markets such as heavy trucks and computer equipment. In both approaches, consideration was made for the effects of physical deterioration as well as functional and economic obsolescence in determining both estimates of fair value and the remaining useful lives of the assets.

Oil and Gas Assets

The oil and gas assets were valued as of January 31, 2021, for the purposes of the February 2, 2021 condensed consolidated balance sheet, using estimates of the reserve volumes and associated income data based on escalated price and cost parameters.

Decommissioning Liabilities

In accordance with FASB ASC Topic No. 410 – Asset Retirement and Environmental Obligations (“ASC 410”), the asset retirement obligations associated with the Successor’s oil and gas assets were valued using the income approach. Estimates were used for future retirement costs and the expected time to retirement, then adjusted for an estimated inflation rate over the time period prior to retirement and discounted future cash outflows by a credit adjusted risk-free rate of 5.6%. As such, the Successor changed its presentation to consolidate the fair value of the Predecessor’s decommissioning liabilities previously recorded to other long-term liabilities into the Successor’s decommissioning liabilities.

Internally-Developed Software

Internally-developed software was valued using the cost approach in which a replacement cost was estimated based on the software developer time, materials, and other supporting services required to replicate the software.

Intangible Assets

Intangible assets were identified apart from goodwill using the guidance provided in ASC 805. Intangible assets that were identified as either separable or arose from contract or other legal rights were valued using either the cost or income approaches. The principal intangible assets identified were trademarks and patents. Trademarks and patents were valued using the relief from royalty method in which the subject intangible asset is valued by reference to the amount of royalty income it could generate if it was licensed in an arm’s length transaction to a third party.

Lease Liabilities and Right of Use Assets

The fair value of lease liabilities was measured as the present value of the remaining lease payments, as if the lease were a new lease as of the Fresh Start Reporting Date. The Successor used its incremental borrowing rate of 5.3% commensurate with the Successor's capital structure as the discount rate in determining the present value of the remaining lease payments.

Consolidated Successor Balance Sheet

The adjustments included in the following fresh start consolidated condensed balance sheet as of February 2, 2021 reflect the effects of the transactions contemplated by the Plan and executed by the Successor on the Fresh Start Reporting Date (reflected in the column Reorganization Adjustments), and fair value and other required accounting adjustments resulting from the adoption of fresh start accounting (reflected in the column Fresh Start Adjustments). The explanatory notes provide additional information with regard to the adjustments recorded, the methods used to determine the fair values and significant assumptions.

The consolidated condensed balance sheet as of the Fresh Start Reporting Date was as follows (in thousands):



	As of February 2, 2021
	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
ASSETS
Current assets:
Cash and cash equivalents	$	194,671	$	(21,903)	⁽¹⁾	$	-		$	172,768
Restricted cash - current		-		16,751	⁽²⁾		-			16,751
Accounts receivable, net of allowance for doubtful accounts		180,525		11	⁽³⁾		-			180,536
Income taxes receivable		9,146		-			(170)	⁽¹⁶⁾		8,976
Prepaid expenses		37,041		-			-			37,041
Inventory and other current assets		99,843		-			8,426	⁽¹⁷⁾		108,269
Assets held for sale		47,120		-			(2,126)	⁽¹⁸⁾		44,994
Total current assets		568,346		(5,141)			6,130			569,335

Property, plant and equipment, net of accumulated depreciation and depletion		533,147		-			125,120	⁽¹⁹⁾		658,267
Operating lease right-of-use assets		48,733		-			1,785	⁽²⁰⁾		50,518
Goodwill		138,934		-			(138,934)	⁽²¹⁾		-
Notes receivable		72,967		-			-			72,967
Restricted cash - non-current		80,179		-			-			80,179
Intangible and other long-term assets, net of accumulated amortization		55,105		(10,080)	⁽⁴⁾		(19,487)	⁽²²⁾		25,538
Total assets	$	1,497,411	$	(15,221)		$	(25,386)		$	1,456,804

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	55,546	$	(700)	⁽⁵⁾	$	-		$	54,846
Accrued expenses		143,697		9,812	⁽⁶⁾		2,026	⁽²³⁾		155,535
Current portion of decommissioning liabilities		3,776		-			(3,418)	⁽²⁴⁾		358
Liabilities held for sale		552		844	⁽⁷⁾		-			1,396
Total current liabilities		203,571		9,956			(1,392)			212,135

Decommissioning liabilities		139,503		-			33,761	⁽²⁵⁾		173,264
Operating lease liabilities		32,735		-			(405)	⁽²⁶⁾		32,330
Deferred income taxes		4,853		3,100	(8)		51,569	⁽²⁷⁾		59,522
Other long-term liabilities		122,691		-			(45,824)	⁽²⁸⁾		76,867

Total non-current liabilities		299,782		3,100			39,101			341,983

Liabilities subject to compromise		1,572,772		(1,572,772)	⁽⁹⁾		-			-

Total liabilities		2,076,125		(1,559,716)			37,709			554,118
Stockholders’ equity (deficit):
Predecessor common stock $0.001 par value		16		(16)	⁽¹⁰⁾		-			-
Predecessor Additional paid-in capital		2,757,824		(2,757,824)	⁽¹¹⁾		-			-
Predecessor Treasury stock at cost		(4,290)		4,290	⁽¹²⁾		-			-
Successor Class A common stock $0.001 par value		-		200	⁽¹³⁾		-			200
Successor Additional paid-in capital		-		902,486	⁽¹⁴⁾		-			902,486
Accumulated other comprehensive loss, net		(67,532)		-			67,532	⁽²⁹⁾		-
Accumulated deficit		(3,264,732)		3,395,359	⁽¹⁵⁾		(130,627)	⁽³⁰⁾		-
Total stockholders’ equity (deficit)		(578,714)		1,544,495			(63,095)			902,686
Total liabilities and stockholders’ equity (deficit)	$	1,497,411	$	(15,221)		$	(25,386)		$	1,456,804

Reorganization Adjustments (in thousands)

(1)Changes in cash and cash equivalents included the following:


Payment of debtor in possession financing fees	(183)
Payment of professional fees at the Emergence Date	(2,649)
Payment of lease rejection damages classified as liabilities subject to compromise	(400)
Transfers from cash to restricted cash for Professional Fees Escrow and General Unsecured Creditors Escrow	(16,751)
Payment of debt issuance costs for the Credit Facility	(1,920)
Net change in cash and cash equivalents	(21,903)

(2)Changes to restricted cash - current included the following:


Transfer from cash for Professional Fee Escrow	16,626
Transfer from cash for General Unsecured Creditors Escrow	125
Net change in restricted cash - current	16,751

(3)Changes of $11 to accounts receivable reflect a receivable from the solicitor for excess proceeds received during the Rights Offering.

(4)Changes to intangibles and other long-term assets included the following:


Write-off of deferred financing costs related to the Delayed-Draw Term Loan	(12,000)
Capitalization of debt issuance costs associated with the Credit Facility	1,920
Net change in intangibles and other long-term assets	(10,080)

(5)Changes to accounts payable included the following:


Payment of professional fees at the Emergence Date	(2,649)
Professional fees recognized and payable at the Emergence Date	1,949
Net change in accounts payable	(700)

(6)Changes in accrued liabilities include the following:


Payment of debtor in possession financing fees	(183)
Accrual of professional fees	6,500
Accrual for transfer taxes	1,900
Reinstatement of lease rejection liabilities to be settled post-emergence	1,470
Accrual of general unsecured claims against parent	125
Net change in accrued liabilities	9,812

(7)Changes in liabilities held for sale reflect the fair value reinstatement of rejected leases claims related to PumpCo to be settled post-emergence.

(8)Changes in deferred income taxes are due to reorganization adjustments.

(9)The resulting gain on liabilities subject to compromise was determined as follows:


Prepetition 7.125% and 7.750% notes including accrued interest and unpaid interest	1,335,794
Rejected lease liability claims	4,956
Allowed Class 6 General Unsecured Claims against Parent	232,022
Liabilities subject to compromise settled in accordance with the Plan	1,572,772


Reinstatement of accrued liabilities for lease rejection claims	(1,470)
Reinstatement of liabilities held for sale for Pumpco lease claims	(844)
Payment to settle lease rejection claims	(400)
Cash proceeds from rights offering	963
Cash payout provided to cash opt-in noteholders	(952)
Cash Pool to settle GUCs against Parent	(125)
Issuance of common stock to prepetition noteholders, incremental to rights offering (par value)	(193)
Additional paid-in capital attributable to successor common stock issuance	(869,311)
Successor common stock issued to cash opt-out noteholders in the rights offering (par value)	(7)
Additional paid-in capital attributable to rights offering shares	(33,175)
Gain on settlement of liabilities subject to compromise	667,258

The Equity Rights Offering generated $963 in proceeds used to settle $952 in Cash Opt-in Noteholder claims. The Equity Rights Offering shares were offered at a price of $1.31/share to Cash Opt-out Noteholders. As such, the Equity Rights Offering

shares generated the $963 in cash proceeds from the share issuance as well as an implied discount to the Cash Opt-in claimants of $32.2 million, recorded as a loss on share issuance in reorganization items, net. The loss on the Equity Rights Offering share issuance is offset by the gain on share issuance of $32.2 million implied by the issuance of shares to settle Cash Opt-out Noteholder claims at a value of $46.82/share compared to the reorganization value implied share price of $45.14/share.

(10)Changes of $16 in Predecessor common stock reflect the cancellation of the Predecessor’s common stock.

(11)Changes in Predecessor additional paid-in capital (APIC) include the following:


Extinguishment of APIC related to Predecessor's outstanding equity interests	(2,758,812)
Extinguishment of RSUs for the Predecessor's incentive plan	988
Net change in Predecessor's additional paid-in capital	(2,757,824)

(12)Reflects $4.3 million cancellation of Predecessor treasury stock held at cost.

(13)Changes in the Successor’s Class A common stock include the following:


Issuance of successor Class A common stock to prepetition noteholders, incremental to rights offering (par value)	193
Successor Class A common stock issued to cash opt-out noteholders in the rights offering (par value)	7
Net change in Successor Class A common stock	200

(14)Changes in Successor additional paid-in capital include the following:


Additional paid-in capital (Successor Class A common stock)	869,311
Additional paid-in capital (rights offering shares)	33,175
Net change in Successor additional paid-in capital	902,486

(15)Changes to retained earnings (deficit) include the following:


Gain on settlement of liabilities subject to compromise	667,258
Accrual for transfer tax	(1,900)
Extinguishment of RSUs for Predecessor incentive plan	(988)
Adjustment to net deferred tax liability taken to tax expense	(3,100)
Professional fees earned and payable as a result of consummation of the Plan of Reorganization	(8,449)
Write-off of deferred financing costs related to the Delayed-Draw Term Loan	(12,000)
Extinguishment of Predecessor equity (par value, APIC, and treasury stock)	2,754,538
Net change in retained earnings (deficit)	3,395,359

Fresh Start Adjustments (in thousands)

(16)Changes of $170 in income tax receivable reflects the decrease to current deferred tax assets due to the adoption of fresh start accounting.

(17)Changes in inventory and other current assets included the following:


Fair value adjustment to inventory - North America Segment	1,097
Fair value adjustment to inventory - Global Segment	12,137
Adjustment to Predecessor decommissioning balances due to the adoption of fresh start accounting	(3,498)
Fair value adjustment to other current assets	(1,310)
Net change in inventory and other current assets due to the adoption of fresh start accounting	8,426

(18)Changes of $2.1 million in assets held for sale reflect a fair value adjustment to real property.

(19)Changes of $125.1 million to property, plant and equipment reflect the fair value adjustment.


	Successor Fair Value	Predecessor Book Value
Land, Buildings, and Associated Improvements	150,089	281,989
Machinery and Equipment	374,643	1,605,074
Rental Services Equipment	92,861	617,762
Other Depreciable or Depletable Assets	35,762	49,242
Construction in Progress	4,912	4,912
	658,267	2,558,979
Less: Accumulated Depreciation and Depletion	-	(2,025,832)
Property, Plant and Equipment, net	658,267	533,147

(20)Reflects $1.8 million due to the fair value adjustment increasing operating lease right-of-use assets.

(21)Changes of $138.9 million to goodwill reflect the derecognition of the Predecessor’s goodwill due to the adoption of fresh start accounting.

(22)The fair value changes of $0.2 million to intangibles assets are reflected in the table below:


	Successor Fair Value	Predecessor Net Book Value
Customer Relationships	-	4,455
Trade Names	4,898	2,268
Patents	2,120	447
Intangible Assets, Net	7,018	7,170

Reduction of other long-term assets was due to the adoption of fresh start accounting and include $19.3 million in decommissioning liabilities related to Predecessor long-term assets fair valued and presented in the Successor’s property, plant, and equipment.

(23)Changes of $2.0 million to accrued expenses reflect the fair value adjustment increasing the current portion of operating lease liabilities.

(24)Reflects the $3.4 million fair value adjustment decreasing the current portion of decommissioning liabilities.

(25)Reflects the $33.8 million fair value adjustment increasing the non-current portion of decommissioning liabilities.

(26)Reflects the $0.4 million fair value adjustment decreasing the non-current portion of operating lease liabilities.

(27)Reflects the $70.4 million increase of deferred tax liabilities netted against an $18.8 million increase in realizable deferred tax assets due to the adoption of fresh start accounting.

(28)Changes of $45.8 million in other long-term liabilities reflects the reclassification of amounts associated with the Predecessor’s decommissioning liability balances that were fair valued and presented in the Successor’s decommissioning liabilities, as well as an increase in FIN48 liabilities of $1.5 million.

(29) Changes to accumulated other comprehensive loss reflect the elimination of Predecessor currency translation adjustment balances

due to the adoption of fresh start accounting on Predecessor currency translation adjustment balances.

(30)Changes reflect the cumulative impact of fresh start accounting adjustments discussed above and the elimination of the Predecessor’s accumulated other comprehensive loss and the Predecessor’s accumulated deficit.



Fresh start valuation adjustments	(77,376)
Adjustment to net deferred tax liability taken to tax expense	(53,251)
Net impact to accumulated other comprehensive loss and accumulated deficit	(130,627)

Reorganization Items, net

The Predecessor incurred costs associated with the reorganization, primarily unamortized debt issuance costs, expenses related to rejected leases and post-petition professional fees. In accordance with applicable guidance, costs associated with the Chapter 11 Cases have been recorded as reorganization items, net within the accompanying consolidated statement of operations for the Current Predecessor Period ended February 2, 2021. Reorganization items, net was 0 for the Successor Period, with 0 cash used in operating activities during the Successor Period. Reorganization items, net was $335.6 million for the Current Predecessor Period, with $3.1 million representing cash used in operating activities during the Current Predecessor Period, $2.7 million and $0.4 million paid for professional fees and to settle lease rejection damages, respectively.

‎



		Predecessor
		For the Period January 1, 2021 through February 2, 2021
Gain on settlement of liabilities subject to compromise	$	667,258
Allowed claim adjustment for Class 6 claims		(232,022)
Fresh Start valuation adjustments		(77,376)
Professional fees		(16,005)
Predecessor lease liabilities rejected per the Plan		13,347
Write off of deferred financing costs related to the Delayed-Draw Term Loan		(12,000)
Lease rejection damages		(4,956)
Extinguishment of RSU's for the Predecessor's incentive plan		(988)
Other items		(1,698)
Total reorganization items, net	$	335,560

Restructuring and other expenses

The Company has embarked on a transformation project as part of its emergence from bankruptcy to reconfigure its operations and organization to maximize shareholder value and margin growth. The project is focused around three sequential phases:

Business Unit Review – Analyzing strategic changes that emphasize product optimization and margin enhancement to maximize the cash flow profile of the Company’s business units and focus on the Company’s core competencies;

Geographic Focus – Review the Company’s footprint and improve capital efficiency by focusing on low-risk, high reward geographies to maximize returns; and

Right Size Support – Streamline support to match optimized business units that represent the Company’s core portfolio and consolidate its operational footprint to align the size of the Company’s operations with current demand to provide a superior value proposition and exhibit capital discipline.

In connection with this initiative, during the three months ended March 31, 2021, we incurred costs of $8.4 million in the Successor Period and $1.3 million in the Current Predecessor Period, which primarily relate to professional fees and separation costs related to former executives and personnel.

(4)Revenue

Revenue Recognition

Revenues are recognized when performance obligations are satisfied in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services rendered, rentals provided, and products sold. Taxes collected from customers and remitted to governmental authorities and revenues are reported on a net basis in the Company’s financial statements.

Performance Obligations

A performance obligation arises under contracts with customers to render services, provide rentals or sell products, and is the unit of account under FASB Accounting Standards Update 2014-09 - Revenue from Contracts with Customers (Topic 606). The Company accounts for services rendered and rentals provided separately if they are distinct and the service or rental is separately identifiable from other items provided to a customer and if a customer can benefit from the services rendered or rentals provided on its own or with other resources that are readily available to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. A contract’s selling prices are determined based on prices the Company charges for its services rendered, rentals provided, and products sold. The majority of the Company’s performance obligations are satisfied over time, which is generally represented by a period of 30 days or less. The Company’s payment terms vary by the type of products or services offered. The term between invoicing and when the payment is due is typically 30 days.

Services Revenue: primarily represents amounts charged to customers for the completion of services rendered, including labor, products and supplies necessary to perform the service. Rates for these services vary depending on the type of services provided and can be based on a per job, per hour or per day basis.

Rentals Revenue: primarily priced on a per day, per man hour or similar basis and consists of fees charged to customers for the use of the Company’s rental equipment over the term of the rental period, which is generally less than ~~those disclosed herein.~~twelve months.

~~(2)Inventory~~

Product Sales Revenue: products are generally sold based upon purchase orders or contracts with the Company’s customers that include fixed or determinable prices but do not include right of return provisions or other significant post-delivery obligations. The Company recognizes revenue from product sales when title passes to the customer, the customer assumes risks and rewards of ownership, collectability is reasonably assured and delivery occurs as directed by the customer.

The Company expenses sales commissions when incurred because the amortization period would be one year or less.

Disaggregation of Revenue

The following table presents the Company’s revenues by segment disaggregated by geography (in thousands):



	Successor		Predecessor
	For the Period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		Three Months Ended March 31, 2020
U.S. land
Global	$	11,660	$	7,472	$	41,376
North America		24,819		11,543		93,302
Total U.S. land	$	36,479	$	19,015	$	134,678

U.S. offshore
Global	$	28,010	$	11,894	$	59,114
North America		11,815		3,673		20,942
Total U.S. offshore	$	39,825	$	15,567	$	80,056

International
Global	$	51,152	$	21,512	$	104,296
North America		1,639		553		2,467
Total International	$	52,791	$	22,065	$	106,763
Total Revenues	$	129,095	$	56,647	$	321,497

The following table presents the Company’s revenues by segment disaggregated by type (in thousands):



	Successor		Predecessor
	For the Period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		Three Months Ended March 31, 2020
Services
Global	$	44,586	$	19,203	$	91,313
North America		25,215		10,986		88,923
Total Services	$	69,801	$	30,189	$	180,236

Rentals
Global	$	27,063	$	12,920	$	79,824
North America		5,852		2,203		20,281
Total Rentals	$	32,915	$	15,123	$	100,105

Product Sales
Global	$	19,173	$	8,755	$	33,646
North America		7,206		2,580		7,510
Total Product Sales	$	26,379	$	11,335	$	41,156
Total Revenues	$	129,095	$	56,647	$	321,497

(5)Inventory

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



					Successor		Predecessor
	September 30, 2017		December 31, 2016		March 31, 2021		December 31, 2020
Finished goods	$	59,263	$	49,888	$	44,282	$	44,123
Raw materials		13,360		17,948		8,474		11,345
Work-in-process		5,289		5,214
WIP						5,936		6,185
Supplies and consumables		29,748		30,029		38,789		25,070
Total	$	107,660	$	103,079	$	97,481	$	86,723

~~(3)~~

(6)Notes Receivable

Notes receivable consist of a commitment from the seller of an oil and gas property acquired by the Company related to costs associated with the abandonment of the acquired property. Pursuant to an agreement with the seller, the Company ~~will invoice~~invoices the seller an agreed upon amount at the completion of certain decommissioning ~~activities.~~activities for the offshore platform. The gross amount of ~~this~~the seller’s obligation to the Company totals $115.0 million and is recorded at present value, ~~using~~which totaled $73.2 million as of March 31, 2021. The related discount, which is based on an effective interest rate of 6.58%~~. The related discount~~, is amortized to interest income based on the expected timing of completion of the decommissioning activities. The ~~Company~~Successor recorded interest income related to notes receivable of ~~$2.6 million and $2.7~~$0.7 million for the ~~nine~~Successor Period. The Predecessor recorded interest income related to notes receivable of $0.4 million and $1.2 million for the Current Predecessor Period and the Prior Predecessor Quarter, respectively. Interest receivable is considered paid in kind and is compounded into the carrying amount of the note.

(7) Property, Plant and Equipment

Property, plant and equipment are stated at cost, except for assets for which reduction in value is recorded during the period and assets acquired using purchase accounting and through fresh start accounting, which are recorded at fair value as of the date of acquisition. Depreciation on acquired assets is computed using the straight-line method over the estimated useful lives of the related assets as follows:

A summary of property, plant and equipment is as follows (in thousands):



		Successor		Predecessor
	March 31, 2021		December 31, 2020
Machinery and equipment	$	459,973	$	2,228,539
Buildings, improvements and leasehold improvements		106,790		227,828
Automobiles, trucks, tractors and trailers		8,523		12,395
Furniture and fixtures		20,644		34,246
Construction-in-progress		5,375		4,793
Land		43,734		53,952
Oil and gas producing assets		19,067		15,117
Total		664,106		2,576,870
Accumulated depreciation and depletion		(51,509)		(2,034,780)
Property, plant and equipment, net	$	612,597	$	542,090

Depreciation expense (excluding depletion, amortization and accretion) for the Successor Period, Current Predecessor Period and Prior Predecessor Quarter was $50.9 million, $9.5 million and $28.6 million, respectively.

As discussed above, in connection with the valuation process under fresh start accounting, certain fully depreciated assets were assigned an estimated fair value of approximately $282.1 million and remaining useful life of less than 36 months. Depreciation

expense for the remainder of 2021 is expected to be approximately $203.8 million and approximately $86.9 million and $50.0 million for the years ended December 31, 2022 and 2023, respectively. See Note 3 – “Fresh Start Accounting” for additional information.

(8) Intangibles

Intangible assets consist of the following (in thousands):



		Successor						Predecessor
		March 31, 2021						December 31, 2020
	Estimated	Gross		Accumulated		Net		Gross		Accumulated		Net
	Useful Lives	Amount		Amortization		Balance		Amount		Amortization		Balance
Trade Names	10		4,898		(84)		4,814		9,045		(6,270)		2,775
Customer Relationships	17		-		-		-		14,592		(10,077)		4,515
Patents	10		2,120		(35)		2,085		-		-		-
Non-Compete Agreements	3		-		-		-		3,478		(3,478)		-
Total		$	7,018	$	(119)	$	6,899	$	27,115	$	(19,825)	$	7,290

Amortization expense for the Successor Period, Current Predecessor Period and Prior Predecessor Quarter was $0.1 million, $0.1 million and $0.4 million, respectively. Based on the carrying values of intangible assets at March 31, 2021, amortization expense for the next five years (2021 through 2025) is estimated to be $0.5 million for the remainder of 2021 and $0.7 million for the years 2022 through 2025.

See Note 3 – “Fresh Start Accounting” for additional information.

(9)Debt

Credit Facility

On the Emergence Date, pursuant to the Plan, the Former Parent, as parent guarantor, and SESI, as borrower, entered into a Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders and letter of credit issuers named therein providing for a $120.0 million asset-based secured revolving credit facility (the “Credit Facility”), which provides for revolving loans and is available for the issuances of letters of credit. The Credit Facility will mature on December 9, 2024. The borrowing base under the Credit Facility is determined by reference to SESI’s and its subsidiary guarantors’ (i) eligible accounts receivable, (ii) eligible inventory, (iii) solely during the period from February 2, 2021 until the earlier of December 9, 2022 and the date that unrestricted cash of SESI and its wholly-owned subsidiaries is less than $75.0 million, eligible premium rental drill pipe and (iv) so long as there are no loans outstanding at such time, certain cash of SESI and its subsidiary guarantors, less reserves established by the administrative agent in its permitted discretion.

Availability under the Credit Facility at any time is equal to the lesser of (i) the aggregate commitments under the Credit Facility and (ii) the borrowing base at such time. As of March 31, 2021, the borrowing base under the Credit Facility was approximately $120.0 million and the Company had $47.5 million of letters of credit outstanding that reduced its borrowing availability under the revolving credit facility. Subject to certain conditions, upon request and with the consent of the participating lenders, the total commitments under the Credit Facility may be increased to $170.0 million. SESI’s obligations under the Credit Facility are guaranteed by the Former Parent and all of SESI’s material domestic subsidiaries, and secured by substantially all of the personal property of the Former Parent, SESI and SESI’s material domestic subsidiaries, in each case, subject to certain customary exceptions.

Borrowings under the Credit Facility bear interest, at SESI’s option, at either an adjusted LIBOR rate plus an applicable margin ranging from 3.00% to 3.50% per annum, or an alternate base rate plus an applicable margin ranging from 2.00% to 2.50% per annum, in each case, on the basis of the then applicable consolidated fixed charge coverage ratio. In addition, SESI is required to pay (i) a letter of credit fee ranging from 3.00% to 3.50% per annum on the basis of the consolidated fixed charge coverage ratio on the aggregate face amount of all outstanding letters of credit, (ii) to the issuing lender of each letter of credit, a fronting fee of no less than 0.25% per annum on the outstanding amount of each such letter of credit and (iii) commitment fees of 0.50% per annum on the daily unused amount of the Credit Facility, in each case, quarterly in arrears.

The Credit Facility contains various covenants requiring compliance, including, but not limited to, limitations on the incurrence of indebtedness, permitted investments, liens on assets, making distributions, transactions with affiliates, mergers, consolidations, dispositions of assets and other provisions customary in similar types of agreements. The Credit Facility requires compliance with a fixed charge coverage ratio of 1.0 to 1.0 if either (i) an event of default has occurred and is continuing or (ii) availability under the Credit Facility is less than the greater of $20.0 million or 15% of the lesser of the aggregate commitments and the borrowing base. The covenant and other restrictions of the Credit Facility significantly restrict the ability to incur borrowings other than letters of credit.

On May 13, 2021, SESI, SESI Holdings, Inc and the subsidiary guarantors party thereto entered into a first amendment and waiver to the Credit Facility (the “First Amendment and Waiver to the Credit Facility”) to, among other things, (i) extend the deadline thereunder

for the delivery of the Company’s consolidated unaudited financial statements for the quarter ended March 31, 2021 to June 1, 2021 and (ii) obtain a limited waiver of potential defaults under the Credit Facility related to a delayed public filing of such financial statements after the original deadline for delivery of such financial statements.

On May 28, 2021, SESI, L.L.C., SESI Holdings, Inc. and the subsidiary guarantors party thereto entered into a waiver to the Credit Facility to (i) extend the deadline under the Credit Agreement for the delivery of Superior Energy Services, Inc.’s consolidated unaudited financial statements for the quarter ended March 31, 2021 and the calendar months ending April 30, 2021 and May 31, 2021 to July 15, 2021 and (ii) agree that until the unaudited financial statements and a revised borrowing base certificate in connection therewith are delivered, the lenders will not be required to make any advances requested.

On July 15, 2021, SESI, the Former Parent, and the subsidiary guarantors party thereto entered into a waiver to the Credit Facility with JPMorgan Chase Bank, N.A., as administrative agent and lender, and certain other financial institutions and other parties thereto as lenders to (i) extend the deadline under the Credit Facility for the delivery of the Company’s consolidated unaudited financial statements (x) as of and for the quarter ended March 31, 2021 to September 30, ~~2017~~2021 and ~~2016, respectively.~~ (y) as of and for the quarter ended June 30, 2021 and the calendar months ending April 30, 2021, May 31, 2021, July 31, 2021 and August 31, 2021 to October 30, 2021, (ii) obtain a limited waiver of potential defaults under the Credit Facility related to a delayed public filing of the quarterly report on Form 10-Q with respect to the fiscal quarter ended June 30, 2021 (including related financial statements) after the original deadline (and confirmation of such waiver as it pertains to this quarterly report on Form 10-Q with respect to the fiscal quarter ended March 31, 2021), and (iii) agree that until the quarterly unaudited financial statements and a revised borrowing base certificate in connection with each such quarter is delivered, the lenders will not be required to make any advances requested.

Delayed-Draw Term Loan Commitment Letter

~~(4)~~

On September 29, 2020, the Predecessor entered into a commitment letter (the “Delayed-Draw Term Loan Commitment Letter”) with certain of the consenting noteholders (such consenting noteholders, the “Backstop Commitment Parties”). The Backstop Commitment Parties committed to provide a delayed draw term loan facility (the “Delayed-Draw Term Loan Facility”) in an aggregate principal amount not to exceed $200.0 million, upon the Company’s emergence from bankruptcy on the terms and subject to the conditions of the Delayed-Draw Term Loan Commitment Letter.

The Predecessor paid $12.0 million of fees in consideration for the commitment by the Backstop Commitment Parties during 2020. On the Emergence Date, the Delayed-Draw Term Loan Commitment Letter terminated in accordance with its terms upon the effectiveness of the Credit Facility without the establishment of the Delayed-Draw Term Loan Facility. The termination resulted in the Predecessor recognizing $12.0 million of reorganization items, net during the Current Predecessor Period.

Debtor-in-Possession Financing

In connection with the Chapter 11 Cases, the Affiliate Debtors filed a motion for approval of a debtor-in-possession financing facility, and on December 8, 2020, the Bankruptcy Court approved such motion and entered into an order approving the financings (the “DIP Order”). In accordance with the DIP Order, on December 9, 2020, the Predecessor, as guarantor, and SESI, as borrower, entered into a $120.0 million Senior Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Facility”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

On the Emergence Date, the Credit Facility replaced the DIP Credit Facility and approximately $46.6 million of undrawn letters of credit outstanding under the former DIP Credit Facility were deemed outstanding under the Credit Facility. All accrued and unpaid fees and other amounts outstanding thereunder were paid in full as well.

Prepetition Indebtedness

The Predecessor’s outstanding debt was as follows (in thousands) for the periods indicated:



	Stated Interest Rate (%)	December 31, 2020
Senior unsecured notes due September 2024	7.750	$	500,000
Senior unsecured notes due December 2021	7.125		800,000
Total debt, gross			1,300,000
Reclassification to liabilities subject to compromise			(1,300,000)
Unamortized debt issuance costs			-
Total debt, net		$	-

The Predecessor had outstanding $800.0 million of senior unsecured notes due December 2021. The indenture governing the 7.125% senior unsecured notes due 2021 required semi-annual interest payments on June 15 and December 15of each year through the maturity date of December 15, 2021.

The Predecessor also had outstanding $500.0 million of senior unsecured notes due September 2024. The indenture governing the 7.75% senior unsecured notes due 2024 required semi-annual interest payments on March 15 and September 15 of each year through the maturity date of September 15, 2024.

At the Petition Date, there was pre-petition accrued interest of $35.8 million under the two issuances of senior secured notes. As a result of the automatic stay from bankruptcy, principal and interest was not paid during the bankruptcy proceedings. On the Emergence Date, obligations under these notes, including principal and accrued interest of $35.8 million, were fully extinguished in exchange for cash and equity in the Successor.

(10)Decommissioning Liabilities

The Company accounts for decommissioning liabilities under ASC 410 – Asset Retirement Obligations. The Company’s decommissioning liabilities associated with an oil and gas property and its related assets ~~consist of costs~~include liabilities related to the plugging of wells, ~~the~~ removal of the related platform and equipment and site restoration. The Company reviews the adequacy of its decommissioning liabilities whenever indicators suggest that the estimated cash flows and/or relating timing needed to satisfy the ~~liabilities~~liability have changed materially. The ~~Company~~Successor had decommissioning liabilities of ~~$128.8~~$174.5 million as of March 31, 2021 and ~~$123.7~~the Predecessor had decommissioning liabilities of $142.7 million ~~at September 30, 2017 and~~as of December 31, ~~2016,~~2020, respectively. In connection with fresh start accounting, the Company now presents all asset retirement obligations separately as decommissioning liabilities on the balance sheet. Previously, certain of these decommissioning liabilities were included as a component of other long-term liabilities.

6(11) Leases

~~Table Of Contents~~Accounting Policy for Leases

~~(5)Debt~~

The Company determines if an arrangement is a lease at inception. All of the Company’s leases are operating leases and are included in right-of-use (“ROU”) assets, accounts payable and operating lease liabilities in the condensed consolidated balance sheet.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligations to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the respective lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s ~~outstanding debt is~~lease terms may include options to extend or terminate the lease.

Overview

The Company’s operating leases are primarily for real estate, machinery and equipment, and vehicles. The terms and conditions for these leases vary by the type of underlying asset. Total operating lease expense was as follows (in thousands):

September 30, 2017

December 31, 2016

Long-term

Long-term
Senior Notes due September 2024

$
500,000

$
-
Senior Notes due December 2021

800,000

800,000
Senior Notes due May 2019

-

500,000
Total debt, gross

1,300,000

1,300,000
Unamortized debt issuance costs

(18,286)

(15,400)
Total debt, net

$
1,281,714

$
1,284,600



	Successor		Predecessor
	For the Period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		Three Months Ended March 31, 2020
Long-term fixed lease expense	$	3,782	$	1,824	$	7,473
Long-term variable lease expense		29		19		124
Short-term lease expense		1,616		789		4,423
Total operating lease expense	$	5,427	$	2,632	$	12,020

~~Credit Facility~~

In February 2017, the Company amended its credit facility to, among other things, reduce the size of the credit facility from $400.0 million to $300.0 million (with a $100.0 million accordion feature) and amend the financial covenants, in part to suspend the interest coverage ratio until the third quarter of 2017. Borrowings under the credit facility bear interest at LIBOR plus margins that depend on the Company’s credit rating. Indebtedness under the credit facility is secured by substantially all of the Company’s assets, including the pledge of the stock of its principal domestic subsidiaries. The credit facility contains customary events of default and requires that the Company satisfy various financial covenants. The credit facility also limits the Company’s ability to pay dividends or make distributions, make acquisitions, create liens or incur additional indebtedness.

Subsequent to the quarter end, the Company extended its revolving credit facility maturity to October 2022 with a $300 million asset-based revolving credit facility. The borrowing base under the credit facility will be calculated as the Company’s subsidiary guarantors’ eligible accounts receivable, eligible inventory and eligible premium rental drill pipe less reserves. Availability under the credit facility will be the lesser of (i) the commitments, (ii) the borrowing base and (iii) the highest principal amount permitted to be secured under the indenture governing 7 1/8% senior unsecured notes due 2021. At October 20, 2017, availability was $285.6 million, and may increase or decrease as a result of, among other things, changes to the Company’s consolidated tangible assets. The credit agreement contains various covenants, including, but not limited to, limitations on the incurrence of indebtedness, permitted investments, liens on assets, making distributions, transactions with affiliates, merger, consolidations, dispositions of assets and other provisions customary in similar types of agreements.

~~Senior Unsecured Notes~~

~~In August 2017, the Company issued $500 million of~~ 7 3/4% senior unsecured notes due September 2024 in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). Costs associated with the issuance of these notes were $8.9 million which will be amortized over the term of the notes. The Company used the net proceeds of the notes offering and cash on hand to redeem all of the outstanding $500 million 6 3/8% senior unsecured notes due 2019. In connection with the redemption of the senior unsecured notes due 2019, the Company recorded $2.6 million for the write-off of unamortized debt issuance costs. ~~The indenture governing the 7 3/4% senior unsecured notes due 2024 requires semi-annual interest payments beginning on March 15, 2018, until the maturity date of September 15, 2024.~~

The Company also has outstanding $800 million of 7 1/8% senior unsecured notes due December 2021. The indenture governing the 7 1/8% senior unsecured notes due 2021 requires semi-annual interest payments on June 15 and December 15~~of each year through the maturity date of December 15, 2021.~~

~~(6)~~ ~~Derivative Financial Instruments~~

The Company had three interest rate swaps for notional amounts of $100 million each, related to its 7 1/8% senior notes maturing in December 2021. In January 2017, the Company sold these interest rate swaps to the counterparties for a net amount of $0.8 million. The remaining balance of the derivative asset is being amortized to interest expense over the remaining term of the related notes. For the nine months ended September 30, 2017, $1.5 ~~million of expense related to the amortization of the remaining derivative asset was recorded.~~

Supplemental Balance Sheet and Cash Flows Information

Operating leases were as follows (in thousands):


	Successor		Predecessor
	March 31, 2021		December 31, 2020
Operating lease ROU assets	$	45,965	$	50,192

Accrued expenses	$	16,835	$	18,491
Operating lease liabilities		29,416		40,258
Total operating lease liabilities	$	46,251	$	58,749

Weighted-average remaining lease term		10 years		9 years
Weighted-average discount rate		5.33%		6.35%

~~Table Of Contents~~


	Successor		Predecessor
	For the Period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		Three Months Ended March 31, 2020
Cash paid for operating leases	$	2,929	$	1,575	$	7,757
ROU assets obtained in exchange for lease obligations	$	261	$	453	$	1,465

~~The location and effect~~Maturities of ~~the derivative asset on the condensed consolidated statement of operations, presented on a pre-tax basis,~~operating lease liabilities at March 31, 2021 are as follows ~~(in~~(in thousands):

Effect of derivative asset

Location of (gain) loss recognized

Three Months Ended September 30, 2016

Nine Months Ended September 30, 2016
Interest rate swap

Interest expense, net

$
1,791

$
(4,329)
Hedged item - debt

Interest expense, net

(1,805)

365

$
(14)

$
(3,964)



Remainder of 2021	$	13,591
2022		9,863
2023		7,207
2024		4,948
2025		3,844
Thereafter		22,140
Total lease payments		61,593
Less imputed interest		(15,342)
Total	$	46,251

~~For the three and nine months ended September 30, 2016, $0and $4.0~~ ~~million of interest income, respectively, was related to the ineffectiveness associated with this derivative asset.~~

~~(7)~~ (12) 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.~~ 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 (in thousands):

Fair Value at September 30, 2017

Level 1

Level 2

Level 3

Total
Intangible and other long-term assets, net

Non-qualified deferred compensation assets

$
369

$
13,341

$
-

$
13,710
Accounts payable

Non-qualified deferred compensation liabilities

$
-

$
1,157

$
-

$
1,157
Other long-term liabilities

Non-qualified deferred compensation liabilities

$
-

$
20,250

$
-

$
20,250

Fair Value at December 31, 2016

Level 1

Level 2

Level 3

Total
Intangible and other long-term assets, net

Non-qualified deferred compensation assets

$
368

$
11,992

$
-

$
12,360
Interest rate swaps

$
-

$
8,579

$
-

$
8,579
Accounts payable

Non-qualified deferred compensation liabilities

$
-

$
1,115

$
-

$
1,115
Other long-term liabilities

Non-qualified deferred compensation liabilities

$
-

$
18,489

$
-

$
18,489




	Successor Fair Value at March 31, 2021
	Level 1		Level 2		Level 3		Total
Intangible and other long-term assets, net:
Non-qualified deferred compensation assets	$	-	$	15,265	$	-	$	15,265
Accounts payable:
Non-qualified deferred compensation liabilities	$	-	$	2,112	$	-	$	2,112
Other long-term liabilities:
Non-qualified deferred compensation liabilities	$	-	$	19,068	$	-	$	19,068


	Predecessor Fair Value at December 31, 2020
	Level 1		Level 2		Level 3		Total
Intangible and other long-term assets, net:
Non-qualified deferred compensation assets	$	-	$	15,013	$	-	$	15,013
Accounts payable:
Non-qualified deferred compensation liabilities	$	-	$	2,869	$	-	$	2,869
Other long-term liabilities:
Non-qualified deferred compensation liabilities	$	-	$	20,697	$	-	$	20,697
Total debt	$	409,050	$	-	$	-	$	409,050

The Company’s non-qualified deferred compensation plans allow officers, certain highly compensated employees and non-employee directors to defer receipt of a portion of their compensation and contribute such amounts to one or more hypothetical investment funds. The Company entered into separate trust agreements, subject to general creditors, to segregate the assets of each plan and reports the accounts of the trusts in its condensed consolidated financial statements. These 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 ~~Levels 1 and~~Level 2 ~~respectively,~~ in the fair value hierarchy. Commencement of the Chapter 11 Cases automatically stayed payments under the non-qualified deferred compensation plans. As a result of the consummation of the Plan, restricted stock units issued prior to the Fresh Start Accounting Date under the Company’s stock incentive plans were cancelled for 0 consideration.

~~Table Of Contents~~

The carrying amount of cash equivalents, accounts receivable, accounts payable and accrued expenses, as reflected in the condensed consolidated balance sheets, approximates fair value due to the short maturities. The fair value of the Company’s cash equivalents, accounts receivable and current maturities of long-term debt approximates their carrying amounts. The fair value of the Company’s long-term debt was approximately $1,351.6 million and $1,307.6 ~~million~~ ~~at September 30, 2017 and December 31, 2016, respectively. The fair value of these~~ debt instruments is determined by reference to the market value of ~~the~~such instruments as quoted in an over-the-counter ~~markets,~~market, which ~~are~~represents Level 1 ~~inputs.~~in the fair value hierarchy.

~~(8)~~ The following table reflects the fair value measurements used in testing the impairment of long-lived assets (in thousands):


	Prior Predecessor Quarter
	Impairment		Fair Value
Property, plant and equipment, net	$	16,522	$	13,593

See Note 14 – “Reduction in Value of Assets” for a discussion of the reduction in value of assets recorded during the Prior Predecessor Quarter.

(13) Segment Information

~~Business Segments~~

~~The~~In connection with our emergence from bankruptcy, the reportable segments were changed to Global and North America. Reportable segments in the Predecessor’s Annual Report on Form 10-K were Drilling Products and Services, Onshore Completion and Workover Services, Production Services and Technical Solutions.

Business Segments

The Global segment ~~rents~~operates in both the domestic and ~~sells~~international markets. Its products and service offerings are provided through its five global brands: Workstrings International, which provides value-added engineering services and high-specification premium ~~drill pipe,~~downhole tubular and accessory rentals; Stabil Drill, which provides design, engineering, manufacturing and rental of premium bottom hole ~~assemblies, tubulars~~assemblies; ISS, which provides hydraulic workover and snubbing services; Wild Well Control, which provides engineering, risk management, well control and training solutions; and Superior Completion Services, which provides design, engineering and manufacturing of premium sand control tools. Additionally, through its International Services operations, the Global segment provides intervention services such as coiled tubing, cased hole and mechanical wireline, production testing and optimization and remedial

pumping services. The Global segment also includes the Company’s oil and gas production related to its 51% ownership interest in its sole federal offshore oil and gas property and related assets.

The North America segment provides domestic intervention services such as coiled tubing, cased hole and mechanical wireline, production testing and optimization, and remedial pumping services. It also rents accommodation units and specialized equipment for use with onshore and offshore oil and gas well drilling, completion, production and workover activities. It also provides on-site accommodations and machining services. The Onshore Completion and Workover Services segment provides pressure pumping services used to complete and stimulate production in new oil and gas wells,Additionally, fluid handling, ~~services and well servicing rigs that provide a variety of well completion,~~ workover and maintenance ~~services. The Production Services segment provides intervention~~ services such as coiled tubing, cased hole and mechanical wireline, hydraulic workover and snubbing, production testing and optimization, and remedial pumping services. The Technical Solutions segment provides services typically requiring specialized engineering, manufacturing or project planning, including well containment systems, stimulation and sand control services and well plug and abandonment services. It also includes production and sale of oil and gas. are performed by the North America segment.

The Company evaluates the performance of its reportable segments based on income or loss from ~~operations.~~operations excluding corporate expenses. The segment measure is calculated as follows: segment revenues less segment operating expenses, depreciation, depletion, amortization and accretion expense and reduction in value of assets and allocated corporate general and administrative expenses. Corporate general and administrative expenses are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, other methods that the Company believes to be a reasonable reflection of the utilization of services provided.assets. The Company ~~believes~~uses this segment measure ~~is useful in evaluating the performance of~~to evaluate its reportable segments because it ~~highlights operating trends~~is the measure that is most consistent with how the Company organizes and ~~aids analytical comparisons.~~manages its business operations. Corporate and other costs primarily include expenses related to support functions, salaries and benefits for corporate employees and stock-based compensation expenses.

Summarized financial information for the Company’s segments is as follows (in thousands):

Three Months Ended September 30, 2017

Onshore

Drilling

Completion

Products and

and Workover

Production

Technical

Consolidated

Services

Services

Services

Solutions

Unallocated

Total
Revenues

$
77,206

$
248,405

$
97,333

$
83,085

$
-

$
506,029
Cost of services and rentals (exclusive of

depreciation, depletion, amortization and accretion)

31,715

210,103

78,074

48,387

-

368,279
Depreciation, depletion, amortization

and accretion

32,055

48,828

19,606

8,262

-

108,751
General and administrative expenses

16,491

22,931

17,441

17,509

-

74,372
Reduction in value of assets

-

1,838

-

8,115

-

9,953
Income (loss) from operations

(3,055)

(35,295)

(17,788)

812

-

(55,326)
Interest income (expense), net

-

-

-

926

(30,022)

(29,096)
Other expense

-

-

-

-

(970)

(970)
Income (loss) from continuing operations

before income taxes

$
(3,055)

$
(35,295)

$
(17,788)

$
1,738

$
(30,992)

$
(85,392)



Successor
For the period February 3, 2021 through March 31, 2021
			North		Corporate and		Consolidated
	Global		America		Other		Total
Revenues	$	90,823	$	38,272	$	-	$	129,095
Cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		57,607		32,091		-		89,698
Depreciation, depletion, amortization
and accretion		36,079		15,456		1,272		52,807
General and administrative expenses		10,611		3,636		6,690		20,937
Restructuring and other expenses		-		-		8,383		8,383
Loss from operations		(13,474)		(12,911)		(16,345)		(42,730)
Interest income (expense), net		710		-		(495)		215
Reorganization items, net		-		-		-		-
Other income		-		-		(2,845)		(2,845)
Loss from continuing operations
before income taxes	$	(12,764)	$	(12,911)	$	(19,685)	$	(45,360)




Predecessor
For the period January 1, 2021 through February 2, 2021
					Corporate and		Consolidated
	Global		North America		Other		Total
Revenues	$	40,878	$	15,769	$	-	$	56,647
Cost of revenues (exclusive of depreciation,
depletion, amortization and accretion)		24,898		15,064		-		39,962
Depreciation, depletion, amortization
and accretion		7,135		3,049		314		10,498
General and administrative expenses		5,521		1,786		4,857		12,164
Restructuring and other expenses		-		-		1,270		1,270
Income (loss) from operations		3,324		(4,130)		(6,441)		(7,247)
Interest income (expense), net		355		-		(151)		204
Reorganization items, net		39,416		(76,238)		372,382		335,560
Other expense		-		-		(2,104)		(2,104)
Income (loss) from continuing operations
before income taxes	$	43,095	$	(80,368)	$	363,686	$	326,413

926


Three Months Ended March 31, 2020
				Onshore
				Completion
		Drilling Products		and Workover		Production		Technical		Corporate and		Consolidated
		and Services		Services		Services		Solutions		Other		Total
Revenues	$	103,993	$	61,218	$	101,504	$	54,782	$	-	$	321,497
Cost of revenues (exclusive of depreciation, depletion, amortization and accretion)		34,963		52,589		82,612		41,522		-		211,686
Depreciation, depletion, amortization
and accretion		17,790		6,313		10,838		5,345		1,069		41,355
General and administrative expenses		14,513		5,314		7,855		13,991		23,484		65,157
Reduction in value of assets		-		-		4,096		12,426		-		16,522
Income (loss) from operations		36,727		(2,998)		(3,897)		(18,502)		(24,553)		(13,223)
Interest income (expense), net		-		-				1,173		(26,307)		(25,134)
Other income		-		-						(4,232)		(4,232)
Income (loss) from continuing operations
before income taxes	$	36,727	$	(2,998)	$	(3,897)	$	(17,329)	$	(55,092)	$	(42,589)



Identifiable Assets
			North		Corporate and		Consolidated
	Global		America		Other		Total
March 31, 2021 - Successor	$	970,767	$	308,373	$	144,700	$	1,423,840

~~Table Of Contents~~

Three Months Ended September 30, 2016

Onshore

Drilling

Completion

Products and

and Workover

Production

Technical

Consolidated

Services

Services

Services

Solutions

Unallocated

Total
Revenues

$
59,587

$
125,022

$
77,523

$
64,093

$
-

$
326,225
Cost of services and rentals (exclusive of

depreciation, depletion, amortization and accretion)

26,955

124,747

66,000

40,466

-

258,168
Depreciation, depletion, amortization and accretion

37,950

51,346

23,131

10,881

-

123,308
General and administrative expenses

20,431

23,124

19,712

23,476

-

86,743
Loss from operations

(25,749)

(74,195)

(31,320)

(10,730)

-

(141,994)
Interest income (expense), net

-

-

(17)

870

(22,624)

(21,771)
Other income

-

-

-

-

3,667

3,667
Loss from continuing operations
before income taxes

$
(25,749)

$
(74,195)

$
(31,337)

$
(9,860)

$
(18,957)

$
(160,098)




		Drilling Products		Completion and Workover		Production		Technical		Corporate and		Consolidated
		and Services		Services		Services		Solutions		Other		Total
December 31, 2020 - Predecessor	$	557,469	$	183,065	$	368,185	$	260,339	$	132,021	$	1,501,079

Nine Months Ended September 30, 2017

Onshore

Drilling

Completion

Products and

and Workover

Production

Technical

Consolidated

Services

Services

Services

Solutions

Unallocated

Total
Revenues

$
214,464

$
702,463

$
254,544

$
205,562

$
-

$
1,377,033
Cost of services and rentals (exclusive of

depreciation, depletion, amortization and accretion)

94,191

610,154

210,778

126,944

-

1,042,067
Depreciation, depletion, amortization and accretion

100,859

144,090

60,905

25,297

-

331,151
General and administrative expenses

50,576

73,522

50,113

52,362

-

226,573
Reduction in value of assets

-

1,838

-

8,115

-

9,953
Loss from operations

(31,162)

(127,141)

(67,252)

(7,156)

-

(232,711)
Interest income (expense), net

-

-

-

2,627

(79,306)

(76,679)
Other expense

-

-

-

-

(2,477)

(2,477)
Loss from continuing operations

before income taxes

$
(31,162)

$
(127,141)

$
(67,252)

$
(4,529)

$
(81,783)

$
(311,867)

Nine Months Ended September 30, 2016

Onshore

Drilling

Completion

Products and

and Workover

Production

Technical

Consolidated

Services

Services

Services

Solutions

Unallocated

Total
Revenues

$
224,213

$
373,387

$
267,389

$
230,640

$
-

$
1,095,629
Cost of services and rentals (exclusive of

depreciation, depletion, amortization and accretion)

92,487

363,447

210,823

135,385

-

802,142
Depreciation, depletion, amortization and accretion

125,831

158,885

72,959

34,342

-

392,017
General and administrative expenses

71,403

68,250

61,214

69,600

-

270,467
Reduction in value of assets

47,659

188,741

226,061

-

-

462,461
Loss from operations

(113,167)

(405,936)

(303,668)

(8,687)

-

(831,458)
Interest income (expense), net

-

-

(1,330)

2,669

(69,664)

(68,325)
Other income

-

-

-

-

22,103

22,103
Loss from continuing operations

before income taxes

$
(113,167)

$
(405,936)

$
(304,998)

$
(6,018)

$
(47,561)

$
(877,680)

~~Table Of Contents~~

Identifiable Assets

Onshore

Drilling

Completion

Products and

and Workover

Production

Technical

Consolidated

Services

Services

Services

Solutions

Total
September 30, 2017

$
686,609

$
1,564,596

$
531,809

$
428,117

$
3,211,131
December 31, 2016

$
849,046

$
1,573,801

$
598,909

$
448,499

$
3,470,255

Geographic Segments

The Company attributes revenue to various countries based on the location of where services are performed or the destination of the drilling products or equipment sold or rented. Long-lived assets consist primarily of property, plant and equipment and are attributed to various countries based on the physical location of the asset at the end of a period. The Company’s revenue attributed to the U.S. and to other countries and the value of its long-lived assets by those locations are as follows (in thousands):



Revenues
	Three Months Ended September 30,				Nine Months Ended September 30,				Successor		Predecessor
	2017		2016		2017		2016		For the period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		Three Months Ended March 31, 2020
United States	$	423,137	$	243,586		1,158,810	$	808,546	$	76,304	$	34,582	$	214,734
Other countries		82,892		82,639		218,223		287,083		52,791		22,065		106,763
Total	$	506,029	$	326,225	$	1,377,033	$	1,095,629	$	129,095	$	56,647	$	321,497

Long-Lived Assets
	September 30, 2017		December 31, 2016
									Successor		Predecessor
									March 31, 2021		December 31, 2020
United States	$	1,095,568	$	1,288,077					$	438,538	$	387,097
Other countries		283,992		317,288						174,059		154,993
Total	$	1,379,560	$	1,605,365					$	612,597	$	542,090

~~(9)Stock-Based Compensation Plans~~

The Company maintains various stock incentive plans that provide long-term incentives to the Company’s key employees, including officers, directors, consultants and advisors (Eligible Participants). Under the stock incentive plans, the Company may grant incentive stock options, restricted stock, restricted stock units, stock appreciation rights, other stock-based awards or any combination thereof to Eligible Participants. The Company’s total compensation expense related to these plans was approximately $29.2 million and $32.4 million for the nine months ended September 30, 2017 and 2016, respectively, which is reflected in general and administrative expenses.

~~(10)~~ ~~Income Taxes~~

~~The Company had $29.9 million of unrecorded tax benefits~~ ~~as of September 30, 2017 and December 31, 2016,~~ all of which would impact the Company’s effective tax rate if recognized. It is the Company’s policy to recognize interest and applicable penalties, if any, related to uncertain tax positions in income tax expense.

~~(11)Earnings per Share~~

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed in the same manner as basic earnings per share except that the denominator is increased to include the number of additional common shares that could have been outstanding assuming the exercise of stock options and the conversion of restricted stock units.

~~Table Of Contents~~

~~For the three and nine months ended September 30, 2017 and 2016, the Company incurred a loss from continuing operations; therefore the impact of any incremental shares would be anti-dilutive.~~

~~(12)~~ (14)Reduction in Value of Assets

~~For~~During the ~~nine months ended September 30, 2017, the Company recorded $9.9 million~~first quarter of 2020, in ~~expense related to the reduction in value of assets of property, plant and equipment, primarily in the Technical Solutions segment.~~

For the three and nine months ended September 30, 2016, the Company recorded $0 and $462.5 million in expense related to the reduction in value of assets, respectively. The components of the reduction in value of assets are as follows (in thousands):




~~Reduction in value of goodwill~~	$	~~330,500~~
~~Reduction in value of long-lived assets~~		~~105,859~~
~~Retirements of long-lived assets~~		~~26,102~~
~~Total reduction in value of assets~~	$	~~462,461~~

~~Reduction in Value of Goodwill~~

~~Goodwill is tested for impairment annually as of October 1~~st or on an interim basis if events or circumstances indicate that the fair value of the asset has decreased below its carrying value. The Company’s goodwill impairment evaluation as of June 30, 2016, indicated that the carrying values of the Onshore Completion and Workover Services and Production Services segments exceeded their fair values so that goodwill was potentially impaired. The Company then performed the second step of the goodwill impairment test, which involved calculating the implied fair value of the segments’ goodwill by allocating the fair values of the Onshore Completion and Workover Services and Production Services segments to all of their assets and liabilities (other than goodwill) and comparing them to the carrying amounts of the goodwill. To estimate the fair value of the reporting unit (which is consistentline with the ~~reported business segment),~~rapidly changing market conditions, the ~~Company used a weighting of the discounted cash flow method and the public company guideline method of determining fair value of the reporting unit.~~Predecessor’s market capitalization deteriorated. The Company weighted the discounted cash flow method 80% and the public company guideline method 20% due to differences between the Company’s reporting unit and peer companies’ size, profitability and diversity of operations.

During the nine months ended September 30, 2016, the Company recorded a $330.5 million reduction in value of goodwill relating to its Onshore Completion and Workover Services and Production Services segments. The CompanyPredecessor determined that the ~~implied fair value~~recent events constituted a triggering event that required the Predecessor to review the recoverability of its long-lived assets and to perform an interim goodwill ~~for the Onshore Completion and Workover Services segment was less than its carrying value and recorded a $140.0 million~~ impairment as of the Onshore Completion and Workover Services segment’s goodwill. In addition, the Company determined that the implied fair value of its goodwill for the Production Services segment was less than its carrying value and recorded a $190.5 million impairment of the Production Services segment’s goodwill. March 31, 2020.

~~At September 30, 2017 and December 31, 2016, the Company’s accumulated reduction in value of goodwill was $1,748.2 million.~~

Reduction in Value of Long-Lived Assets

Long-lived assets, such as property, plant and equipment and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of such assets to their fair value calculated, in part, by the estimated undiscounted future cash flows expected to be generated by the assets. Cash flow estimates are based upon, among other things, historical results adjusted to reflect the best estimate of future market rates, utilization levels, and operating performance. Estimates of cash flows may differ from actual cash flows due to, among other things, changes in economic conditions or changes in an asset’s operating performance. The Company’s assets are grouped by line of business or division for the impairment testing, which ~~represent~~represents the lowest level of identifiable cash flows. If the asset grouping’s fair value is less than the carrying amount of ~~those items,~~the asset grouping, impairment losses are recorded in the amount by which the carrying amount of ~~such assets~~asset grouping exceeds the fair value. The estimate of fair value represents the Company’s best estimate based on industry trends and reference to market transactions and is subject to variability.

During the ~~nine months ended September 30, 2016,~~Prior Predecessor Quarter, the ~~Company~~Predecessor recorded ~~$105.9~~$16.5 million in connection with the reduction in the value of its long-lived assets. The reduction in value of assets was comprised of ~~$2.9~~$16.5 million related to property, plant and equipment in the Global segment.

(15) Goodwill

As part of the Successor’s emergence from the Chapter 11 Cases, the Successor adopted fresh start accounting and ~~$45.9~~began reporting as a new accounting entity as of the Fresh Start Reporting Date. Due to the fair value measurement of the Company’s assets and liabilities as required by ASC 852, the Company determined that the Successor retained 0 goodwill balance based on the assignment of reorganization value to the Successor’s identifiable assets and liabilities. As noted in Note 3 – “Fresh Start Accounting,” the Predecessor’s goodwill balance of $138.9 million was eliminated during the fresh start adjustments to the consolidated condensed balance sheet as of February 2, 2021.

(16) Stock-Based Compensation Plans

As noted in Note 2 – “Emergence from Voluntary Reorganization under Chapter 11,” the Former Parent’s equity interests were cancelled as of the Emergence Date and new Class A common stock was issued to settle claims arising as a result of holding either the 7.125% Notes or the 7.750% Notes. As a result of the consummation of the Plan, restricted stock units issued prior to the fresh start accounting date under the Company’s stock incentive plans were cancelled for zero consideration. The balance sheet effect of the cancellation is noted in Note 3 – “Fresh Start Accounting.”

See Note 23 – “Subsequent Events” for further information on stock-based compensation plans and the 2021 Management Incentive Plan (the “Incentive Plan”).

(17) Income Taxes

The effective tax rate for the Successor Period and the Current Predecessor Period was 17.3% and 18.4%, respectively, on income from continuing operations. The tax rate in the Successor Period is different from the statutory rate of 21% primarily from non-deductible items and foreign losses for which 0 tax benefit is being recorded. The tax rate in the Current Predecessor Period is different from the statutory rate of 21% primarily from the adoption of fresh start accounting during the period.

The effective tax rate for the three-month ending March 31, 2020 was 24.1% on income from continuing operations. The tax rate is different from the statutory rate of 21% primarily because of the impact of the CARES Act legislation which allowed the company to carryback losses from 2018, 2019 and 2020 to prior periods for refunds of prior year income tax. The CARES Act was intended to provide economic stimulus to address the impact of the COVID-19 pandemic.

The Successor had $14.7 million of unrecognized tax benefits as of March 31, 2021 and the Predecessor had $13.2 million of unrecognized tax benefits as of December 31, 2020, all of which would impact the Company’s effective tax rate if recognized. It is the Company’s policy to recognize interest and applicable penalties, if any, related to ~~intangibles~~uncertain tax positions in income tax expense.

As of March 31, 2021, we have a valuation allowance of $97.2 million recorded against our deferred tax assets that relate to US foreign tax credits, US state net operating losses and other non-US deferred tax assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the carryforward period. The Company assesses the realizability of deferred tax assets quarterly and considers carryback availability, the scheduled reversal of deferred tax liabilities, and tax planning strategies in making this assessment.

(18) Earnings per Share

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 in the ~~fluid management~~same manner as basic earnings per share, except that the denominator is increased to include the number of additional shares of common stock that could have been outstanding assuming the exercise of stock options and the conversion of restricted stock units.

The Successor Period and Predecessor Prior Quarter did 0t have any potentially dilutive shares as these periods reflected a net loss.

(19) Contingencies

Due to the nature of the Company’s business, the Company is involved, from time to time, in various routine litigation or subject to disputes or claims or actions, including those commercial in nature, regarding its business activities in the ~~Onshore Completion and Workover Services segment and $12.4 million~~ordinary course of business. Legal costs related to ~~equipment~~these matters are expensed as incurred. Management is of the opinion that none of the claims and ~~$21.0~~actions will have a material adverse impact on the Company's financial position, results of operations or cash flows.

A subsidiary of the Company is involved in legal proceedings with 2 former employees regarding the payment of royalties for a patentable product paid for by the subsidiary and developed while they worked for the subsidiary. On April 2, 2018, the former employees and their corporation filed a lawsuit (the “First Case) in the Harris County District Court (the “District Court”) alleging that the royalty payments they had invoiced at 25% and for which they received payments since 2010, should have been paid at a rate of 50%. In May 2019, the jury issued a verdict in favor of the plaintiffs. On October 25, 2019, the court issued a final judgment against the Company, which the Company has fully secured with a supersedeas bond. The Company strongly disagrees with the verdict and believes the District Court committed several legal errors that should result in a reversal or remand of the case by the Court of Appeals.

A second case (the “Second Case”) was filed in District Court against the same subsidiary of the Company bringing the same claims and seeking damages post judgment from the First Case until discontinuation of the sale of the product at issue by the subsidiary. In December 2020, the Court entered a final judgement for the Plaintiffs’ and the Second Case was stayed for the duration of the Company’s bankruptcy. As of March 31, 2021, the appeal has not yet been perfected in this case. The Company intends to file an appeal and a Motion to Abate the Second Case pending the appeal of the First Case. As of March 31, 2021, the Company has reserved $5.5 million ~~related~~for the judgements in the First Case and Second Case.

An Indian subsidiary of the Company had entered into a contract with an Indian oil and gas company to ~~intangibles, primarily~~provide an off-shore vessel for various types of work. A dispute arose over the performability of the terms of the contract. The potential loss of this possible onerous contract is approximately $7.3 million.

Commencement of the Chapter 11 Cases automatically stayed certain proceedings and actions against the Predecessor. These cases have continued after the Emergence Date.

(20) Discontinued Operations

On December 10, 2019, the Predecessor’s indirect, wholly owned subsidiary, Pumpco Energy Services, Inc. (Pumpco), completed its existing hydraulic fracturing field operations and determined to discontinue, wind down and exit its hydraulic fracturing operations. The Successor intends to maintain an adequate number of employees to efficiently wind down Pumpco’s business on or around December 31, 2021. The financial results of Pumpco’s operations have historically been included in the Predecessor’s North America segment. The Successor continued to sell Pumpco’s fixed assets as of March 31, 2021.

The following table summarizes the components of discontinued operations, net of tax (in thousands):


	Successor		Predecessor
	For the Period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		Three Months Ended March 31, 2020
Revenues	$	-	$	-	$	254
Cost of services (1)		(1,808)		210		5,459

Income (loss) from discontinued operations before tax		878		2,265		(59,651)
Income (loss) from discontinued operations, net of income tax		878		2,265		(47,129)

(1)As discussed above under “Changes in Accounting Policies” gains and losses from asset sales are included as a component of Cost of services in the Successor period.

For the Prior Predecessor Quarter, loss from discontinued operations included $46.4 million in the reduction in value of assets relating to the ~~cementing business in~~impairment of property, plant and equipment. Income taxes for the Production Services segment. In addition, the Company recorded $23.7 million related to the reduction in carrying values of certain accommodation units included in the Drilling Products and Services segment. Prior Predecessor Quarter were $12.5 million.

~~Table Of Contents~~

~~Retirements of Long-Lived Assets~~

During the nine months ended September 30, 2016, the Company recorded $23.9 million in the Drilling Products and Services segment for retirement and abandonment of excess and inoperable and/or functionally obsolete long-lived assets that would require a significant cost to refurbish.

~~(13)Discontinued Operations~~

At September 30, 2017, the assets of the Company’s former subsea construction business were being actively marketed and the Company’s management is committed to selling the remaining assets, which were classified as held for sale.

The following summarizes the assets and liabilities related to the ~~businesses~~Pumpco business reported as discontinued operations (in thousands):




	September 30, 2017		December 31, 2016		Successor		Predecessor
Current assets	$	330	$	158
					March 31, 2021		December 31, 2020
Current assets:
Other current assets					$	1,997	$	2,155
Total current assets						1,997		2,155

Property, plant and equipment, net		27,000		27,000		39,863		45,397
Operating lease ROU assets						21		83
Total assets	$	27,330	$	27,158	$	41,881	$	47,635
Current liabilities	$	8,755	$	8,653

Current liabilities:
Accounts payable					$	-	$	165
Accrued expenses						1,177		1,326
Total current liabilities						1,177		1,491

Operating lease liabilities						-		2,588
Total liabilities					$	1,177	$	4,079

~~Loss~~Significant operating non-cash items relating to Pumpco and cash flows from ~~discontinued operations~~investing activities were as follows (in thousands):



	Successor		Predecessor
	For the Period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		Three Months Ended March 31, 2020
Cash flows from discontinued operating activities:
Reduction in value of assets	$	-	$	-	$	46,358

Cash flows from discontinued investing activities:
Proceeds from sales of assets		5,024		486		8,449

(21) Supplemental Cash Flow Information

The table below is a reconciliation of cash, cash equivalents and restricted cash for the ~~three~~beginning and ~~nine months ended September 30, 2017 was $1.9 million and $5.6 million, respectively. Loss from discontinued operations~~the end of the period for ~~the three and nine months ended September 30, 2016 was $4.1 million and $8.6 million, respectively.~~ all periods presented:



	Successor		Predecessor
	For the period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		Three Months Ended March 31, 2020


Cash, cash equivalents, and restricted cash, beginning of period
Cash and cash equivalents	$	172,768	$	188,006	$	272,624
Restricted cash-current		16,751		-		-
Restricted cash-non-current		80,179		80,178		2,764
Cash, cash equivalents, and restricted cash, beginning of period	$	269,698	$	268,184	$	275,388

Cash, cash equivalents, and restricted cash, end of period
Cash and cash equivalents	$	197,307	$	172,768	$	252,221
Restricted cash-current		16,751		16,751		-
Restricted cash-non-current		80,056		80,179		2,773
Cash, cash equivalents, and restricted cash, end of period	$	294,114	$	269,698	$	254,994

~~(14)~~

(22) New Accounting Pronouncements

~~Standards adopted~~

~~In January 2017, the Financial~~Recently Issued Accounting Standards ~~Board (FASB) issued accounting standards update (ASU) 2017-04,~~ ~~Intangibles- Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.~~ The amendments eliminate Step 2 from the goodwill impairment test. The annual or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The amendments should be applied on a prospective basis. The new standard is effective for the Company on January 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted the accounting guidance as of January 1, 2017. The newly adopted accounting principle is preferable because it reduces the cost and complexity of evaluating goodwill for impairment. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

In ~~March~~June 2016, the FASB issued ASU ~~2016-09,~~ ~~Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,~~ which relates to the accounting for employee share-based payments. The guidance in this update addresses several aspects of the accounting for share-based payments, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company adopted the accounting guidance as of January 1, 2017. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

~~In July 2015, the FASB issued ASU No. 2015-11,~~ ~~Inventory (Topic 330) – Simplifying the~~2016-13 - Measurement of ~~Inventory, which applies to inventory measured~~Credit Losses on Financial Instruments (ASU 2016-13). This update improves financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope by using ~~first-in, first-out or average cost.~~the Current Expected Credit Losses (the “CECL”) model. The ~~guidance in this update states that inventory within its scope shall be measured~~CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses on financial instruments at the ~~lower of cost~~time the asset is originated or net realizable value, and when the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss in earnings. The Company adopted the accounting guidance as of January 1, 2017. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

~~Standards not yet adopted~~

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.~~ ~~The guidance in this ASU applies~~acquired. This update will apply to all entities that change the terms or conditions of a share-based payment award. The amendments provide clarity and reduce diversity in practice as well as cost and complexity when applying the guidance in Topic 718, ~~Compensation – Stock Compensation,~~ to the modification of the terms and conditions of a share-based payment award. The amendments in ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718.receivables arising from revenue transactions. The new standard is effective for the Company beginning on January 1, ~~2018 and should be applied prospectively to awards modified on or after the adoption date.~~2023. The Company ~~does not expect~~has concluded that the adoption of ~~this~~ ASU to2016-13 will not have a material impact on its ~~condensed~~ consolidated financial statements.

~~Table Of Contents~~

In ~~January 2017,~~December 2019, the FASB issued ASU ~~2017-01,~~ ~~Business Combinations (Topic 805): Clarifying~~2019-12 - Simplifying the ~~Definition~~Accounting for Income Taxes (ASU 2019-12). This update simplifies the accounting for income taxes by removing the following exceptions: (1) the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items; (2) the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment; (3) the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary; and (4) the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The update also (1) requires an entity to recognize a franchise tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax; (2) requires an entity to evaluate when a step up in the tax basis of ~~a Business.~~ The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are intended to help companies and other organizations evaluate whether transactionsgoodwill should be ~~accounted~~considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; (3) specifies that an entity is not required to allocate the consolidate amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; (4) requires an entity to reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date; and (5) makes minor codification improvements for income taxes related to employee stock ownership plans. The Company’s adoption of ASU 2019-12 as ~~acquisitions (or disposals)~~ of assets or businesses. The amendments provide a more robust framework to use in determining when a set of assets and activities is a business. The new standard is effective for the Company beginning on January 1, ~~2018. The Company does~~2021 has not ~~expect the adoption of this ASU to have~~had a material impact on its ~~condensed consolidated~~ financial ~~statements.~~

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statements~~position, results of ~~Cash Flows (Topic 230): Restricted Cash.~~ ~~The guidance in this ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash~~operations or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard is effective for the Company beginning on January 1, 2018 and should be applied on a retrospective basis. The Company does not expect the adoption of this ASU to have a material impact on its condensed consolidated financial statements.

In ~~October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.~~ The guidance in this ASU requires entities to recognize at the transaction date the income tax consequences of intercompany asset transfers other than inventory. The new standard is effective for the Company beginning on January 1, 2018. The Company is evaluating the effect that ASU 2016-16 will have on its condensed consolidated financial statements and related disclosures.

~~In February 2016,~~March 2020, the FASB issued ASU No. ~~2016-02,~~ ~~Leases~~2020-04, Reference Rate Reform — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic ~~842), which requires lessees~~848). This update provides an optional expedient and exceptions for applying GAAP to ~~recognize the assets~~contracts, hedging relationships, and ~~liabilities arising from leases on the balance sheet. This new ASU will require the lessee to recognize a lease liability equal~~other transactions affected by reference rate reform if certain criteria are met. In response to the ~~present value~~concerns about structural risks of interbank offered rates (IBORs) and, particularly, the risk of cessation of the ~~lease payments~~London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and ~~a right-of-use asset representing its right~~less susceptible to ~~use~~manipulation. The ASU provides companies with optional guidance to ease the ~~underlying asset for the lease term for all leases longer than 12 months. For leases~~potential accounting burden associated with a term of 12 month or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities and recognize the lease expense for such leases generally on a straight-line basis over the lease term. Under the new guidance, the Company will revise its leasing policies to require most of the leases, where the Company is the lessee,transitioning away from reference rates that are expected to be recognized on the balance sheet as a lease and lease liability. Further, the Company will separate leases from other contracts where the Company is either the lessor or lessee when the rights conveyed under the contracts indicate there is a lease. The Company is evaluating the effect ASU 2016-02 will have on its condensed consolidated financial statements. The Company anticipates that its assets and liabilities will increase by a significant amount. The new standard is effective for the Company beginning ondiscontinued. In January ~~1, 2019.~~

~~In May 2014,~~2021, the FASB issued ASU No. ~~2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~,2021-01, which ~~will replace most existing revenue recognition guidance~~clarifies that certain provisions in ~~GAAP. The guidance in this ASU requires~~Topic 848, if elected by an entity, apply to ~~recognize the amount~~derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of ~~revenue that it expects to be entitled for the transfer of promised goods or services to customers.~~reference rate reform. The ~~new standard is~~amendments in these ASUs are effective for ~~the Company beginning on January 1, 2018.~~all entities as of March 12, 2020 through December 31, 2022. The Company is still evaluating the effect of adopting this guidance.

(23) Subsequent Events

2021 Management Incentive Plan

On June 1, 2021, the Company’s Board of Directors (the “Board”) and the Compensation Committee of the Board (the “Compensation Committee”) approved and adopted the Company’s Incentive Plan), which provides for the grant of share-based and cash-based awards and, in connection therewith, the issuance from time to time of up to 1,999,869 shares of the Company’s Class B common stock, par value $0.01 per share. The accounting and related disclosures will be incorporated into the Company’ Form 10-Q for the period ending June 30, 2021.

Restricted Stock Grants

On June1, 2021, the Board and the Compensation Committee approved the forms of restricted stock award agreements for (i) employee participants (the “Employee Restricted Stock Award Agreement”) and (ii) non-employee directors (the “Director Restricted Stock Award Agreement”).

On June 1, 2021, the Board and the Compensation Committee approved, pursuant to the applicable Employee Restricted Stock Award Agreements and Director Restricted Stock Award Agreements, the issuance (without giving effect to tax withholding) of 113,840 restricted shares of Class B common stock under the Incentive Plan to certain of the Company’s non-employee directors and officers, including 33,519 and 12,649shares to Michael Y. McGovern, the Company’s Executive Chairman of the Board, and James W. Spexarth, the Company’s Executive Vice President, Chief Financial Officer and Treasurer, respectively (the “Restricted Stock Grants”). The Restricted Stock Grants will vest over a period of three years, subject to earlier vesting and forfeiture on terms and conditions set forth in the ~~process of determining the impacts the new standard will have on its various revenue streams.~~applicable award agreement. The ~~Company’s approach includes performing a detailed review of key contracts representative~~issuance of the ~~different businesses and comparing historical accounting policies and practices~~restricted Class B common stock pursuant to the ~~new accounting guidance. The Company’s services~~applicable Employee Restricted

Stock Award Agreements and ~~rental contracts are primarily short-term in nature, and therefore, based on~~Director Restricted Stock Award Agreements under the ~~initial assessment,~~Incentive Plan is exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

Divestiture

On July 9, 2021, the Company ~~does not expect~~entered into a Securities Purchase and Sale Agreement (the “Purchase Agreement”) with SES Holdings, LLC (the “Parent”), Select Energy Services, Inc. (the “Buyer”) (solely to the ~~adoption~~extent stated therein), and Complete Energy Services, Inc. (“Complete”). Pursuant to the Purchase Agreement, the Buyer acquired certain of ~~this ASU~~the Company’s onshore oilfield services operations in the United States through the acquisition of 100% of the equity interests of Complete, for a purchase price of approximately $14.0 million in cash and the issuance of 3.6 million shares of Class A common stock, $0.01 par value, of the Parent, subject to have a material impact on its condensed consolidated financial statements, other than the additional disclosure requirements. Remaining implementation matters include establishing new policies, procedures, controls, and quantifying any adoption datecustomary post-closing adjustments. The Purchase Agreement also contains certain registration rights of the Company ~~will adopt this standard~~which requires the Parent to file a registration statement with the SEC for the resale of the Class A common stock issued to the Company. The Purchase Agreement contains customary representations, warranties and covenants. The loss on ~~January 1, 2018 utilizing~~sale was $16.7 million in the ~~modified retrospective method.~~Successor Period.

14Transformation Project

~~Table Of Contents~~In connection with the Company’s previously announced transformation project, subsequent to March 31, 2021, we have disposed of certain assets with a net book value of approximately $51 million. Proceeds from the sales of these assets have totaled approximately $57 million through September 28, 2021.

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


“Predecessor”	The Company, prior to the Emergence Date
“Current Predecessor Period”	The Company's operations, January 1, 2021 – February 2, 2021
“Prior Predecessor Quarter”	The Company's operations, January 1, 2020 - March 31, 2020
“Successor”	The Company, after the Emergence Date
“Successor Period”	The Company's operations, February 3, 2021 - March 31, 2021

Effective as of the Emergence Date, the entity now known as Superior Energy Services, Inc. (formerly known as Superior Newco, Inc.) became the successor reporting company to the Former Parent pursuant to Rule 15d-5 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Critical Accounting Policies and Estimates

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020, and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the discussion of our Critical Accounting Policies and Estimates. The below is an update to those policies:

Fresh Start Accounting

50% of the new common shares of the Successor outstanding upon emergence and (2) the reorganization value of the Predecessor’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims. See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 1 – “Basis of Presentation” and Note 3 – “Fresh Start Accounting” for additional information.

Forward-Looking Statements

This ~~Quarterly Report~~quarterly report on Form 10-Q and other documents filed by us with the SEC contain, and future oral or written statements or press releases by us and our management may contain, forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks” and “estimates,” variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words. All statements other than statements of historical fact included in this ~~Quarterly Report~~quarterly report on Form 10-Q or such other materials regarding our financial position, financial performance, liquidity, strategic alternatives, market outlook, future capital needs, capital allocation plans, business strategies and other plans and objectives of our management for future operations and activities are forward-looking statements. These statements are based on certain assumptions and analyses made by our management in light of its 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 ~~cyclicality~~voluntary petitions for relief filed by the Affiliate Debtors (as defined below) on December 7, 2020 (the “Chapter 11 Cases”) under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas Houston Division (the “Bankruptcy Court”), including but not limited to: the continuing effects of the Chapter 11 Cases on us and ~~volatility~~our various constituents; attendant risks associated with restrictions on our ability to pursue our business strategies; and uncertainty and continuing risks associated with our ability to achieve our stated goals;

the likelihood that our historical financial information may no longer be indicative of our future performance; and our implementation of fresh start accounting;

the difficulty to predict our long-term liquidity requirements and the adequacy of our capital resources;

restrictive covenants in the $120.0 million asset-based secured revolving Credit Facility (define 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;

our ability to prepare and file our quarterly report for the quarter ended June 30, 2021 or deliver other required financial information within the time periods prescribed by our Credit Facility or to obtain additional waivers from our lenders;

the conditions in the oil and gas industry;

the effects of public health threats, pandemics and epidemics, and the adverse impact thereof on our business, financial condition, results of operations and liquidity, including, but not limited to, our growth, operating costs, supply chain, labor availability, logistical capabilities, customer demand and industry demand generally, margins, utilization, cash position, taxes, the price of our securities, and our ability to access capital markets, including ~~changes in prevailing~~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 ~~gas prices~~production controls;

necessary capital financing may not be available at economic rates or ~~expectations about future prices;~~ at all;

operating hazards, including the significant possibility of accidents resulting in personal injury or death, ~~property damage~~ or ~~environmental~~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 ~~(including regarding worker health and safety laws)~~ and environmental matters on our operations or ~~prospects, including~~ prospects;

the ~~risk~~impact that ~~future changes in the regulation of hydraulic fracturing~~unfavorable or unusual weather conditions could reduce or eliminate demand for our pressure pumping services, or that future changes in climate change legislation could result in increased operating costs or reduced commodity demand globally; counterparty risks associated with reliancehave on ~~key suppliers; risks associated with the uncertainty of macroeconomic and business conditions worldwide; changes in competitive and technological factors affecting~~ our operations; ~~credit risk associated with our customer base;~~

the potential inability to retain key employees and skilled workers; challenges with estimating our oil and natural gas reserves and potential liabilities related to our oil and natural gas property; risks associated with potential changes of Bureau of Ocean Energy management security and bonding requirements for offshore platforms; risks inherent in acquiring businesses; risks associated with cyber-attacks; risks associated with business growth during an industry recovery outpacing the capabilities of our infrastructure and workforce;

political, legal, economic and other risks and uncertainties associated with our international operations;

laws, regulations or practices in foreign countries could materially restrict our operations or expose us to additional risks;

potential changes in tax laws, adverse positions taken by tax authorities or tax audits impacting our operating results;

changes in competitive and technological factors affecting our operations;

risks associated with the uncertainty of macroeconomic and business conditions worldwide;

our ~~outstanding debt obligations~~operations may be subject to cyber-attacks;

counterparty risks associated with reliance on key suppliers;

challenges with estimating our potential liabilities related to our oil and natural gas property;

risks associated with potential changes of Bureau of Ocean Energy Management security and bonding requirements for offshore platforms;

the ~~potential effect~~likelihood that the interests of ~~limiting~~ our ~~future growth~~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, for which there is no public market;

the likelihood that the Stockholders Agreement (as defined below) may prevent certain transactions that could otherwise be beneficial to our stockholders; and ~~operations;~~

our ~~continued access~~ability to ~~credit markets on favorable terms; and~~remediate the ~~impact that unfavorable or unusual weather conditions could have on~~identified material weakness in our ~~operations.~~ internal control over financial reporting.

These risks and other uncertainties related to our business are described in detail in Item 1A of our Annual Report on Form 10-K (the “Annual Report”) for the year ended December 31, ~~201~~6.2020. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Investors are cautioned that many of the assumptions on which our forward-looking statements are based are likely to change after such statements are made, including for example the market prices of oil and gas and regulations affecting oil and gas operations, which we cannot control or anticipate. Further, we may make changes to our business strategies and plans (including our capital spending and capital allocation plans) at any time and without notice, based on any changes in the above-listed factors, our assumptions or otherwise, any of which could or will affect our results. For all these reasons, actual events and results may differ materially from those anticipated, estimated, projected or implied by us in our forward-looking statements. We undertake no obligation to update any of our forward-looking statements for any reason, ~~and,~~ notwithstanding any changes in our assumptions, changes in our business plans, our actual experience, or other changes. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

Executive Summary

General

We provide a wide variety of services and products to the energy industry. 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. ~~We report our~~The Successor reports its operating results in ~~four~~two business segments: ~~Drilling Products~~Global and ~~Services; Onshore Completion~~North America.

Recent Developments

Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code

See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and ~~Workover Services; Production Services;~~Notes” – Note 1 – “Basis of Presentation” for information regarding the Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code.

Fresh Start Accounting

Beginning on the Emergence Date, we applied fresh start accounting, which resulted in a new basis of accounting and ~~Technical Solutions.~~ we became a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan, the consolidated financial statements after February 2, 2021 are not comparable with the consolidated financial statements on or prior to that date. See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 3 – “Fresh Start Accounting” for additional information.

Divestiture

See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 23 – “Subsequent Events” for additional information.

Waivers to Credit Agreement

See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 23 – “Subsequent Events” for additional information.

Credit Facility

See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 9 – “Debt” for additional information.

Stockholders Agreement

On the Emergence Date, in order to implement the governance related provisions reflected in the Plan, the stockholder’s agreement, dated February 2, 2021 (the “Stockholders Agreement”), was executed, to provide for certain governance matters. Other than the obligations related to Confidential Information (as defined in the Stockholders Agreement), the rights and preferences of each stockholder under the Stockholders Agreement will terminate when such stockholder ceases to own any shares of Class A common stock.

The foregoing description of the Stockholders Agreement is qualified in its entirety by the full text of the document, which is incorporated herein by reference.

Amendments to Stockholders Agreement

The Company and stockholders holding a majority of the Company’s Class A common stock entered into that certain amendment to the Stockholders Agreement, effective May 14, 2021, extending the deadline to provide its stockholders unaudited consolidated quarterly financial statements from 45 days after the conclusion of a quarter to 60 days after such quarter (or, if applicable, the first business day thereafter).

The Company and stockholders holding a majority of the Company’s Class A common stock entered into that certain Second Amendment to the Stockholders Agreement, effective May 31, 2021, extending the deadline to provide its stockholders the unaudited consolidated quarterly financial statements for the quarter ended March 31, 2021 to no later than July 15, 2021.

The Company and stockholders holding a majority of the Company’s Class A common stock entered into that certain Third Amendment to the Stockholders Agreement, effective as of July 14, 2021, extending the deadline to provide its stockholders the unaudited consolidated quarterly financial statements for the quarters ended March 31, 2021 and June 30, 2021 to no later than September 30, 2021 and October 31, 2021, respectively.

Departure and Appointment of Directors

Pursuant to the Plan, as of the Emergence Date, the following directors ceased to serve on the Predecessor’s board of directors: Terence E. Hall, Peter D. Kinnear, Janiece M. Longoria, Michael M. McShane, James M. Funk and W. Matt Ralls. All officers immediately prior to the Emergence Date were retained in their existing positions upon the Emergence Date, subject to the terms of the Plan.

Pursuant to the Plan and the Stockholders Agreement, our current Board of Directors (the “Board”) consists of the following six members:

Joseph Citarrella

Daniel E. Flores

Michael Y. McGovern

Julie J. Robertson

Krishna Shivram

Timothy J. Winfrey

Departure of Executive Officers

On March 22, 2021, the Company announced that David Dunlap, the Company’s President and Chief Executive Officer and a member of the Board, and Westy Ballard, the Company’s Executive Vice President, Chief Financial Officer and Treasurer, had each resigned from all positions with the Company effective March 16, 2021 (the “Resignation Date”). Mr. Dunlap and Mr. Ballard resigned from the Company to pursue other opportunities and their departures are not related to any disagreements regarding financial disclosures, accounting matters or other business issues. Each of Mr. Dunlap and Mr. Ballard have entered into a waiver and release agreement which contains, among other things, a release of claims and an acknowledgment that the individuals will continue to be bound by the terms of their existing restrictive covenant agreements with the Company contained in their respective employment agreements, and an acknowledgment that each will receive predetermined amounts under such employment agreements, provided that such individual does not subsequently revoke his waiver and release agreement, as follows: (i) the executive’s base salary through the date of termination, earned and vested benefits under Company long-term incentive and employee benefit plans and programs, and medical or other welfare benefits required by law or the applicable plan (including payment of the executive’s accrued deferred compensation and supplemental retirement plan benefits, as applicable, and the payments, if any, earned under the executive’s previously-disclosed 2018 and 2019 performance share unit awards, provided that any payment under the 2019 performance share unit award will be pro-rated for the portion of the performance period elapsed prior to termination); (ii) a lump sum payment equal to (x) two times the sum of the executive’s annual salary plus target annual bonus, and (y) the executive’s pro-rated target annual bonus for the year of termination, the payments in this clause (ii) resulting in a lump sum cash payment to Mr. Dunlap and Mr. Ballard of approximately $3.7 million and $1.7 million, in each case minus required withholding and deductions, respectively; and (iii) Company-paid healthcare continuation benefits for up to 24 months for the individual and the individual’s spouse and family.

On March 18, 2021, Michael Y. McGovern, the Chairman of the Company’s Board, was appointed Executive Chairman and effective as of the Resignation Date assumed the functions of the Company’s Principal Executive Officer on an interim basis until Mr. Dunlap’s successor is identified, and James Spexarth, the Company’s former Chief Accounting Officer, effective as of the Resignation Date was appointed to also serve as interim Chief Financial Officer of the Company. Effective August 19, 2021, the Board announced the appointment of Mr. Spexarth to serve as the Company’s Executive Vice President, Chief Financial Officer and Treasurer. See the filed 8-K dated August 19, 2021 for further information.

Effective April 21, 2021, William B. Masters, a named executive officer of the Company, resigned from his position as the Company’s Executive Vice President and General Counsel and transitioned to the role of a senior advisor to the Company.

The Company and Mr. Masters entered into a Transition Agreement, dated April 21, 2021 (the “Transition Agreement”), which replaced the June 15, 2013 employment agreement between Mr. Masters and the Company in its entirety except for certain surviving provisions set forth in the Transition Agreement, including the restrictive covenant agreements contained in his employment agreement (other than

the one-year non-compete covenant that otherwise would apply if Mr. Masters voluntarily resigns his employment with the Company with or without good cause).

On July 7, 2021, Blaine Edwards was promoted to Executive Vice President and General Counsel. Mr. Edwards previously served as Assistant General Counsel and has been employed at the Company for ten years.

On September 9, 2021, A. Patrick Bernard, a named executive officer of the Company, and the Company mutually agreed that Mr. Bernard will retire from his position as the Company’s Executive Vice President, effective March 31, 2023. On September 9, 2021, Mr. Bernard was also assigned to serve as President of the Company’s International segment in connection with the transitioning of Mr. Bernard’s duties, in accordance with the terms of the Transition and Retirement Agreement (as defined below).

In connection with his retirement, Mr. Bernard entered into a Transition and Retirement Agreement with the Company on September 9, 2021 (the “Transition and Retirement Agreement”), which was approved by the Board. Pursuant to the terms of the Transition and Retirement Agreement, Mr. Bernard will continue to serve with the Company through the first to occur of March 31, 2023 or his earlier termination of employment. Mr. Bernard’s separation from the Company will deemed to be a termination without Cause under section 5(a)(iv) of his employment agreement with the Company, effective June 15, 2013 (“Employment Agreement”), a composite form of which was previously filed with the SEC. Between September 9, 2021 and March 31, 2023, Mr. Bernard will be paid an amount based on his current annualized base salary of $400,000 (increased as of July 1, 2021 from his previous base of $302,400) bi-weekly, and Mr. Bernard and his family will remain eligible for continued participation in all medical and other welfare benefit plans generally available to the Company’s executive officers. Following March 31, 2023 (or earlier retirement date, if applicable), pursuant to governing law and independent of the Transition and Retirement Agreement, Mr. Bernard may elect COBRA benefit continuation coverage.

Unless earlier terminated, on March 31, 2023, Mr. Bernard will be entitled to, among other things, the severance payments set forth in section 6(c) of his Employment Agreement. Mr. Bernard’s severance payments include a payment equal to two times the sum of the applicable base salary then in effect and the applicable target bonus in the Company’s annual incentive plan for that fiscal year. Under the terms of the Transition and Retirement Agreement, Mr. Bernard has agreed to release the Company from various claims and agrees not to sue the Company for those claims, subject to certain exceptions required by applicable law.

2021 Management Incentive Plan

See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 23 – “Subsequent Events” for additional information.

Restricted Stock Grants

See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 23 – “Subsequent Events” for additional information.

Senior Notes-Prepetition Indebtedness

As part of the transactions undertaken pursuant to the Plan, the record holders of certain of the 7.125% Notes and the 7.750% Notes contributed all of their allowed claims described in the Plan in exchange for either (i) a cash payout to be entirely funded by the Equity Rights Offering, or (ii) shares of the Class A common stock. See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 2 “Emergence from Voluntary Reorganization under Chapter 11” and Note 9 – “Debt” for additional information.

COVID-19 Pandemic and Market Conditions

Our operations continue to be disrupted due to the circumstances surrounding the COVID-19 pandemic. The significant business disruption resulting from the COVID-19 pandemic has impacted customers, vendors and suppliers in all geographical areas where we operate. The closure of non-essential business facilities and restrictions on travel put in place by governments around the world have significantly reduced economic activity. Also, the COVID-19 pandemic has impacted and may further impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates, and interest rates. For example, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital. Additionally, recognized health risks associated with the COVID-19 pandemic have altered the policies of companies operating around the world, resulting in these companies instituting safety programs similar to what both domestic and international governmental agencies have implemented, including stay at home orders, social distancing mandates, and other community oriented health objectives. We are complying with all such ordinances in our operations across the globe. Management believes it has proactively addressed many of the known operational impacts of the COVID-19 pandemic to the extent possible and will strive to continue to do so, but there can be no guarantee the measures will be fully effective.

Commodity prices during 2021 will continue to be impacted by the global containment of the virus, pace of economic recovery, as well as changes to OPEC+ production levels. There is increased economic optimism in 2021 as governments worldwide continue to distribute the COVID-19 vaccines. However, although vaccination campaigns are underway, several regions, including areas of the United States,

have been and continue to deal with a rebound in the pandemic. There is also concern about whether vaccines will be effective against different strains of the virus that have developed and may develop in the future. West Texas Intermediate (WTI) oil spot prices have recovered to pre-pandemic levels. OPEC+ continues to meet regularly to review the state of global oil supply, demand and inventory levels. Even though signs of economic recovery centered on COVID-19 mitigation, global vaccine distribution and re-opening efforts make demand for oil and gas difficult to project, we believe demand is recovering and prices will be positively impacted.

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~~The Company’s 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.



	March 31,
	2021		2020		% Change
Worldwide Rig Count ⁽¹⁾
U.S.:
Land		378		764	-51%
Offshore		15		21	-29%
Total		393		785	-50%
International ⁽²⁾		698		1,074	-35%
Worldwide Total		1,091		1,859	-41%

Commodity Prices (average)
Crude Oil (West Texas Intermediate)	$	58.09	$	41.00	42%
Natural Gas (Henry Hub)	$	3.50	$	1.90	84%

~~Table Of Contents~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

% Change

2017

2016

% Change
Worldwide Rig Count (1)

U.S.:

Land

927

461

101%

841

459

83%
Offshore

19

18

6%

20

23

-13%
Total

946

479

97%

861

482

79%

International (2)

947

936

1%

948

965

-2%
Worldwide Total

1,893

1,415

34%

1,809

1,447

25%

Commodity Prices (average)

Crude Oil (West Texas Intermediate)

$
48.18

$
44.85

7%

$
49.30

$
41.35

19%
Natural Gas (Henry Hub)

$
2.95

$
2.88

2%

$
3.01

$
2.34

29%

⁽¹⁾ Estimate of drilling activity as measured by the average active drilling rigs based on Baker Hughes ~~a GE company,~~Co. rig count information.

⁽²⁾ Excludes Canadian Rig Count.

The following table sets forth consolidated results of operations for the periods indicated. The Successor Period and the Current Predecessor Period are distinct reporting periods as a result of the emergence from bankruptcy on the Emergence Date. References in these results of operations to changes in comparison to the Prior Predecessor Quarter combine the Successor Period and Current Predecessor Period results for the three months ended March 31, 2021 in order to provide some comparability of such information to the Prior Predecessor Quarter. While this combined presentation is not presented according to generally accepted accounting principles in the United States of America (“GAAP”) and no comparable GAAP measures are presented, management believes that providing this financial information is the most relevant and useful method for making comparisons to the corresponding Prior Predecessor Quarter as reviewing the Successor Period results in isolation would not be useful in identifying trends in or reaching conclusions regarding our overall operating performance.



		Successor		Predecessor		Non-GAAP		Predecessor
		For the period February 3, 2021 through March 31, 2021		For the Period January 1, 2021 through February 2, 2021		For the Combined Three Months ended March 31, 2021		For the Three Months Ended March 31, 2020		Change

Revenues	$	129,095	$	56,647	$	185,742	$	321,497	$	(135,755)

Cost of revenues		89,698		39,962		129,660		211,686		(82,026)
Depreciation, depletion, amortization and accretion		52,807		10,498		63,305		41,355		21,950
General and administrative expenses		20,937		12,164		33,101		65,157		(32,056)
Restructuring and other expenses		8,383		1,270		9,653		-		9,653
Reduction in value of assets		-		-		-		16,522		(16,522)
Loss from operations		(42,730)		(7,247)		(49,977)		(13,223)		(36,754)

Other income (expense):
Interest income (expense), net		215		204		419		(25,134)		25,553
Reorganization items, net		-		335,560		335,560		-		335,560
Other income (expense):		(2,845)		(2,104)		(4,949)		(4,232)		(717)
Income (loss) from continuing operations before income taxes		(45,360)		326,413		281,053		(42,589)		323,642
Income tax benefit (expense)		7,852		(59,901)		(52,049)		10,254		(62,303)
Net income (loss) from continuing operations		(37,508)		266,512		229,004		(32,335)		261,339
Income (loss) from discontinued operations, net of income tax		878		2,265		3,143		(47,129)		50,272
Net income (loss)	$	(36,630)	$	268,777	$	232,147	$	(79,464)	$	311,611

~~For~~Net income for the combined three months ended ~~September 30, 2017, revenue~~March 31, 2021 (the “Combined Current Quarter”) was ~~$506.0~~$232.1 million, ~~and~~which was driven primarily by recognition of a $335.6 million gain in Reorganization items, net ~~loss~~due to debt forgiveness as part of the Company’s emergence from ~~continuing operations~~bankruptcy. Also included in the results for Combined Current Quarter was ~~$57.2~~a pre-tax charge of $9.7 million ~~or a $0.37 loss per share. Net loss was $59.0 million, or $0.39 loss per share.~~related to restructuring activities. This compares to a net loss ~~from continuing operations of $62.0 million, or a $0.41 loss per share~~ for the ~~three months ended June 30, 2017, on revenue~~Prior Predecessor Quarter of ~~$470.1~~$79.5 million. ~~Net loss~~

Revenues and Cost of Revenues

Revenue for the ~~three months ended June 30, 2017 was $63.8 million, or $0.42 loss per share. Worldwide rig count increased~~Combined Current Quarter decreased by 2% for the three months ended September 30, 2017 from 1,853 rigs for the three months ended June 30, 2017. U.S. land rig count increased by 6% for the three months ended September 30, 2017 from 874 rigs for the three months ended June 30, 2017. The increase in U.S land market drilling activity largely contributed42% to ~~the overall increase in our total revenues for the three months ended September 30, 2017.~~

~~Third quarter 2017 revenue in our Drilling Products and Services segment increased 12% sequentially to $77.2~~$185.7 million, as compared to ~~$68.8~~$321.5 million for the Prior Predecessor Quarter. Cost of revenues for the Combined Current Quarter decreased by 38%, to $131.2 million, as compared to $211.7 million for the Prior Predecessor Quarter. Both revenues and cost of revenues were severely impacted by the effects of COVID-19 on the worldwide economy, and the Company’s results were impacted by a decline in the second quarter of 2017. U.S. land revenue increased 22% sequentially to $33.8 million due to the increase in drilling activity during the quarter. Gulf of Mexico revenue increased 5% sequentially to $23.2 million and international revenue increased 7% sequentially to $20.2 million due to an increaseall business lines. The Company experienced a decline in rentals of

premium drill pipe and bottom hole assemblies ~~in those markets.~~

Third quarter 2017 revenue in our Onshore Completion and Workover Services segment remained flat at $248.4 million. All of this segment’s revenue is derived from the U.S. land market area. On a sequential basis, revenue increases related to the 6% increase in U.S. land rig count were partially offset by adverse weather conditions experienced during the quarter due to Hurricane Harvey.

~~Third quarter 2017 revenue in our Production Services segment increased 10% sequentially to $97.3 million,~~ as ~~compared to $88.6 million in the second quarter of 2017. U.S. land revenue increased 22% sequentially to $40.1 million primarily due to an increase in~~ well testing and coiled tubing activities. International revenue increased 14% sequentially to $40.7 million primarily due to an increase in hydraulic workover and snubbing activities. Gulf of Mexico revenue decreased 18% sequentially to $16.5 million, primarily as a ~~result of decreased demand for specialty rentals.~~

Third quarter 2017 revenue in our Technical Solutions segment increased 31% sequentially to $83.1 million, as compared to $63.6 million in the second quarter of 2017. Gulf of Mexico revenue increased 24% sequentially to $52.0 million due to the increased completion tools and products revenue. U.S. land revenue increased 14% sequentially to $9.1 million and international revenue increased 62% sequentially to $22.0 million primarily due to an increase in demand for well control services.

~~Comparison of the Results of Operations for the Three Months Ended September 30, 2017 and 2016~~

For the three months ended September 30, 2017, our revenue was $506.0 million, an increase of $179.8 million or 55%, as compared to the same period in 2016. The increase is largely attributable to a 34% increase in the worldwide rig count. The net loss from continuing operations was $57.2 million, or a $0.37 loss per share. Net loss was $59.0 million, or a $0.39 loss per share. This compares to a net loss from continuing operations for the three months ended September 30, 2016 of $113.9 million, or a $0.75 loss per share. Net loss was $118.0 million, or a $0.78 loss per share.

~~Table Of Contents~~

The following table compares our operating results for the three months ended September 30, 2017 and 2016 (in thousands, except percentages). Cost of services and rentals excludes depreciation, depletion, amortization and accretion for each of our business segments.

Revenue

Cost of Services and Rentals

2017

2016

Change

%

2017

%

2016

%

Change
Drilling Products and

Services
$
77,206

$
59,587

$
17,619

30%

$
31,715

41%

$
26,955

45%

$
4,760
Onshore Completion and

Workover Services

248,405

125,022

123,383

99%

210,103

85%

124,747

100%

85,356
Production Services

97,333

77,523

19,810

26%

78,074

80%

66,000

85%

12,074
Technical Solutions

83,085

64,093

18,992

30%

48,387

58%

40,466

63%

7,921
Total
$
506,029

$
326,225

$
179,804

55%

$
368,279

73%

$
258,168

79%

$
110,111

~~The following provides a discussion of our results on a segment basis:~~

~~Drilling Products and Services Segment~~

Revenue from our Drilling Products and Services segment increased 30% to $77.2 million for the three months ended September 30, 2017, as compared to $59.6 million for the same period in 2016. Cost of services and rentals as a percentage of revenue decreased to 41% of segment revenue for the three months ended September 30, 2017, as compared to 45% for the same period in 2016. Revenue from the Gulf of Mexico market area increased 3% primarily due to increasesdecline in revenues from rentals of premium drill pipe and accommodation units. The revenue from the international market areas decreased 7% primarily due to decreases in revenues from rentals of premium drill pipe and accommodation units. Revenue in the U.S. land market increased 122% as a result of increases in revenues from rentals of premium drill pipe, bottom hole assemblies and accommodation units, ~~as demand for these rental products increased along with the increase in U.S. land rig count.~~

~~Onshore Completion and Workover Services Segment~~

Revenue from our Onshore Completion and Workover Services segment increased 99% to $248.4 million for the three months ended September 30, 2017, as compared to $125.0 million for the same period in 2016. All of this segment’s revenue is derived from the U.S. land market area, in which rig count increased by 101%. Cost of services and rentals as a percentage of revenue decreased to 85% of segment revenue for the three months ended September 30, 2017, as compared to100% for the same period in 2016, primarily due to improved pricing and efficiencies due to higher activity levels, partially offset by periodic delays caused by supply chain tightness and general oilfield inefficiencies. The increase in revenue is primarily attributable to an increase in activity in our pressure pumping business. During the three months ended September 30, 2017, we recorded $1.8 million in reduction in value of assets.

~~Production Services Segment~~

Revenue from our Production Services segment for the three months ended September 30, 2017 increased by 26% to $97.3 million, as compared to $77.6 million for the same period in 2016. Cost of services and rentals as a percentage of revenue decreased to 80% of segment revenue for the three months ended September 30, 2017, as compared to 85% for the same period in 2016. Revenue from the U.S. land market area increased 108%, primarily due to increased activity in coiled tubing and well testing services. The revenue from the international market areas increased 2%, primarily due to an increase in hydraulic workover and snubbing, offset by decreased activity in coiled tubing and well testing services. Revenue derived from the Gulf of Mexico market area decreased 9%, as compared to the same period in 2016, primarily due to a decrease in slickline services and ~~specialty rentals.~~ plug and abandonment activities.

~~Technical Solutions Segment~~

Revenue from our Technical Solutions segment increased 30% to $83.1 million for the three months ended September 30, 2017, as compared to $64.0 million for the same period in 2016. Cost of services and rentals as a percentage of revenue decreased to 58% of segment revenue for the three months ended September 30, 2017, as compared to 63% for the same period in 2016. Revenue derived from the Gulf of Mexico market area increased 59%, primarily due to an increase in completion tools and products revenue, offset by a decrease in subsea intervention activities. Revenue from the U.S. land market area decreased 15%, primarily due to a decrease in demand for completion tools and products. Revenue from the international market areas increased 6%, primarily due to an increase in demand for well control services. During the three months ended September 30, 2017, we recorded $8.1 million in reduction in value of assets.

~~Table Of Contents~~

Depreciation, Depletion, Amortization and Accretion

Depreciation, depletion, amortization and accretion ~~decreased to $108.8~~was $63.3 million during the ~~three months ended September 30, 2017 from $123.3~~Combined Current Quarter compared to $41.4 million during the same period in 2016. Depreciation and amortization expense decreased for our Drilling Products and Services segment by $5.9 million, or 16%; for our Onshore Completion and Workover Services segment by $2.5 million, or 5%; for our Production Services segment by $3.5 million, or 15% and for our Technical Solutions segment by $2.6 million, or 24%.Prior Predecessor Quarter. The ~~decrease~~increase in depreciation, depletion, amortization and accretion is ~~primarily due~~related to both an increase in the carrying value of our assets ~~becoming fully depreciated~~ and ~~reduced levels~~lower average remaining useful lives as a result of ~~capital expenditures.~~the fair value adjustment recorded as a part of fresh start accounting.

General and Administrative Expenses

General and administrative expense was $33.1 million during the Combined Current Quarter compared to $65.2 million during the Prior Predecessor Quarter. The decrease is the result of our continued focus on limiting spending and reducing our cost structure.

Restructuring and Other Expenses

Restructuring and other expenses ~~decreased 14%~~were $9.7 million during the Combined Current Quarter and primarily relate to ~~$74.4~~the severance expenses and costs related to executive officers that resigned during the period.

Reorganization items, net

Reorganization items, net were $335.6 million during the Current Predecessor Period. See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 3 – “Fresh Start Accounting” for additional information on reorganization items, net.

Interest Expense

Contractual interest expense on the Predecessor’s senior unsecured notes was $8.0 million for the ~~three months ended September 30, 2017 as compared to $86.7~~Current Predecessor Period, which is in excess of the $0.2 million ~~for~~included in interest expense, net in the ~~same period~~condensed consolidated statements of operations because the Predecessor discontinued accruing interest with the commencement of the Chapter 11 Cases in 2016. The decrease is primarily attributable to significant cost reduction initiatives implemented during 2016. These cost reduction initiatives resulted in significantly lower expenses for salariesaccordance with the terms of the Plan and ~~wages, other employee-related expenses and infrastructure-related expenses.~~ASC 852.

~~Reduction in Value of Assets~~

The reduction in value of assets recorded during the three months ended September 30, 2017 included $9.9 million related to the reduction in value of long-lived assets within the Onshore Completion and Workover Services and Technical Solutions segments.

Income Taxes

~~Our~~The effective ~~income~~ tax rate for the ~~three months ended September 30, 2017~~three-month period ending March 31, 2021 was ~~33% compared to a 29%~~18.5% on income from continuing operations. The tax rate is different from the statutory rate of 21% primarily from the adoption of fresh start accounting during the period.

The effective ~~income~~ tax rate for the ~~same period in 2016.~~three-month ending March 31, 2020 was 24.1% on income from continuing operations. The ~~difference in the effective~~ tax rate is different from the statutory rate of 21% primarily because of the impact of the CARES Act legislation which allowed the company to carryback losses from 2018, 2019 and 2020 to prior periods for refunds of prior year income tax.

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.

Also impacting liquidity is ~~primarily~~the state of the global economy, which impacts oil and natural gas consumption. The Company’s operations continue to be disrupted due to the ~~reduction~~circumstances surrounding the COVID-19 pandemic. The significant business disruption resulting from the COVID-19 pandemic has impacted customers, vendors and suppliers in ~~value~~all geographical areas where the Company operates. The closure of ~~goodwill~~non-essential business facilities and restrictions on travel put in ~~2016, which~~place by governments around the world have significantly reduced economic activity. Also, the COVID-19 pandemic has impacted and may further impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates and interest rates. There is ~~non-deductible for income tax purposes.~~

~~Comparison~~increased economic optimism in 2021 as governments worldwide continue to distribute the COVID-19 vaccines. However, although vaccination campaigns are underway, several regions, including areas of the ~~Results of Operations for the Nine Months Ended September 30, 2017~~United States, have been and ~~2016~~

~~For the nine months ended September 30, 2017, our revenue was $1,377.0 million, an increase of $281.4 million or 26%, as compared~~continue to ~~the same period in 2016. The increase is largely attributable to~~deal with a ~~25% increase~~rebound in the worldwide rig count. The net loss from continuing operations was $208.9 million, or a $1.37 loss per share. Net loss was $214.5 million, or a $1.41 loss per share. This compares to a net loss from continuing operations forpandemic. There is also concern about whether vaccines will be effective against different strains of the ~~nine months ended September 30, 2016 of $667.1 million, or a $4.40 loss per share. Net loss was $675.7 million, or a $4.46 loss per share for the nine months ended September 30, 2016.~~

~~The following table compares our operating results for the nine months ended September 30, 2017~~virus that have developed and ~~2016 (in thousands, except percentages). Cost of services and rentals excludes depreciation, depletion, amortization and accretion for each of our business segments.~~

Revenue

Cost of Services and Rentals

2017

2016

Change

%

2017

%

2016

%

Change

Drilling Products and

Services
$
214,464

$
224,213

$
(9,749)

-4%

$
94,191

44%

$
92,487

41%

$
1,704
Onshore Completion and

Workover Services

702,463

373,387

329,076

88%

610,154

87%

363,447

97%

246,707
Production Services

254,544

267,389

(12,845)

-5%

210,778

83%

210,823

79%

(45)
Technical Solutions

205,562

230,640

(25,078)

-11%

126,944

62%

135,385

59%

(8,441)
Total
$
1,377,033

$
1,095,629

$
281,404

26%

$
1,042,067

76%

$
802,142

73%

$
239,925

~~The following provides a discussion of our results on a segment basis:~~

~~Drilling Products and Services Segment~~

Revenue from our Drilling Products and Services segment decreased 4% to $214.5 million for the nine months ended September 30, 2017, as compared to $224.2 million for the same period in 2016. Cost of services and rentals as a percentage of revenue increased to 44% of segment revenue for the nine months ended September 30, 2017, as compared to 41% for the same period in 2016, primarily due to a decrease in revenue. Revenue from the Gulf of Mexico market area decreased 27% and revenue from the international market areas decreased 25%. The decline in revenue in these market areas is primarily attributable to decreases in revenues from rentals of

~~Table Of Contents~~

premium drill pipe, bottom hole assemblies and accommodation units, primarily driven by a decrease in offshore and international rig counts. These decreases were partially offset by a 78% increase in revenue generatedmay develop in the ~~U.S. land market area. The revenue in the U.S. land market area increased primarily as a result~~future. Even though signs of ~~increases in revenues from rentals of premium drill pipe, bottom hole assemblies~~economic recovery centered on COVID-19 mitigation, global vaccine distribution, and ~~accommodation units, as~~re-opening efforts make demand for ~~these rental products increased along with the increase in U.S. land rig count. During the nine months ended September 30, 2016,~~oil and gas difficult to project, we ~~recorded $47.7 million in reduction in value~~believe demand is recovering and prices will be positively impacted.

Financial Condition and Sources of ~~assets.~~ Liquidity

~~Onshore Completion and Workover Services Segment~~

Revenue from our Onshore Completion and Workover Services segment increased 88% to $702.4 million for the nine months ended September 30, 2017, as compared to $373.4 million for the same period in 2016. All of this segment’s revenue is derived from the U.S. land market area, in which rig count was up 83%. Cost of services and rentals as a percentage of revenues decreased to 87% of segment revenue for the nine months ended September 30, 2017, as compared to 97% for the same period in 2016, primarily due to improved pricing and efficiencies due to higher activity levels, partially offset by periodic delays caused by supply chain tightness and general oilfield inefficiencies. The increase in revenue is primarily attributable to an increase in activity in our pressure pumping business. During the nine months ended September 30, 2017, we recorded $1.8 million in reduction in value of assets, as compared to $188.7 million recorded for the same period in 2016.

~~Production Services Segment~~

Revenue from our Production Services segment for the nine months ended September 30, 2017 decreased by 5% to $254.5 million, as compared to $267.4 million for the same period in 2016. Cost of services and rentals as a percentage of revenue increased to 83% of segment revenue for the nine months ended September 30, 2017, as compared to 79% for the same period in 2016, primarily due to a decrease in revenue. Revenue derived from the Gulf of Mexico market area decreased 13%, primarily due to decreased demand for specialty rentals. Revenue from the international market areas decreased 25%, primarily due to decreased activity from hydraulic workover and snubbing in the Latin America and Asia Pacific regions and well testing and coiled tubing services in the Latin America region. These decreases were partially offset by a 43% increase in revenue generated from the U.S. land market area. The increase in revenue in the U.S. land market area is primarily due to an increase in coiled tubing and well testing services driven primarily by the increase in U.S. land rig count. During the nine months ended September 30, 2016, we recorded $226.1 million in reduction in value of assets.

~~Technical Solutions Segment~~

Revenue from our Technical Solutions segment decreased 11% to $205.6 million for the nine months ended September 30, 2017, as compared to $230.6 million for the same period in 2016. Cost of services and rentals as a percentage of revenue increased to 62% of segment revenue for the nine months ended September 30, 2017, as compared to 59% for the same period in 2016. Revenue derived from the Gulf of Mexico market area decreased 5%, primarily due to a decrease in demand for subsea intervention services, partially offset by an increase in demand for completion tools and products. Revenue from the U.S. land market area decreased 13% and revenue from the international market areas decreased 22%, primarily due to a decrease in demand for completion tools and products and well control services. During the nine months ended September 30, 2017, we recorded $8.1 million in reduction in value of assets.

~~Depreciation, Depletion, Amortization and Accretion~~

Depreciation, depletion, amortization and accretion decreased to $331.2 million during the nine months ended September 30, 2017 from $392.0 million during the same period in 2016. Depreciation and amortization expense decreased for our Drilling Products and Services segment by $25.0 million, or 20%; for our Onshore Completion and Workover Services segment by $14.8 million, or 9%; for our Production Services segment by $12.0 million, or 17%, and for our Technical Solutions segment by $9.0 million, or 26%. The decrease in depreciation, depletion, amortization and accretion is primarily due to assets becoming fully depreciated and reduced levels of capital expenditures.

~~General and Administrative Expenses~~

General and administrative expenses decreased 16% to $226.6 million for the nine months ended September 30, 2017 as compared to $270.5 million for the same period in 2016. The decrease is primarily attributable to significant cost reduction initiatives implemented during 2016. These cost reduction initiatives resulted in significantly lower expenses for salaries and wages, other employee-related expenses and infrastructure-related expenses.

~~Reduction in Value of Assets~~

The reduction in value of assets recorded during the three months ended September 30, 2017 included $9.9 million related to reduction in value of long-lived assets within the Onshore Completion and Workover Services and Technical Solutions segments. Reduction in value of assets for the nine months ended September 30, 2016 was $462.5 million, which included $190.5 million related to the Production Services segment goodwill impairment and $140.0 million related to the Onshore Completion and Workover Services

~~Table Of Contents~~

segment goodwill impairment. In addition, the reduction in value of assets included $132.0 million related to reduction in value of long-lived assets within the Drilling Products and Services, Onshore Completion and Workover Services and Production Services segments.

~~Other Income/Expense~~

Other income/expense for the nine months ended September 30, 2017 was $2.5 million loss as compared to $22.1 million income for the same period in 2016. The decrease in other income is primarily attributable to foreign currency fluctuations.

~~Income Taxes~~

Our effective income tax rate for the nine months ended September 30, 2017 was 33% compared to 24% effective income tax rate for the same period in 2016. The difference in the effective tax rate from the statutory rate is primarily due to the reduction in value of goodwill in 2016, which is non-deductible for income tax purposes.

~~Liquidity and Capital Resources~~

For the nine months ended September 30, 2017, we generated net cash from operating activities of $55.4 million, as compared to $146.7 million in the same period of 2016. Our primary liquidity needs during the next twelve months are for working capital and capital expenditures. Our primary sources of liquidity ~~are cash flows from operations and available borrowings under our credit facility. We had~~during the period covered by this quarterly report on Form 10-Q have been cash and cash equivalents, availability under credit facilities, and cash generated from operations. As of ~~$167.0~~March 31, 2021, we had cash, cash equivalents and restricted cash of $294.1 million. During the Successor Period and the Current Predecessor Period net cash provided by operating activities was $21.4 million ~~at September 30, 2017, compared to $187.6~~and $5.4 million, ~~at December~~respectively. During the Successor Period and the Current Predecessor Period, $7.2 million and $0.8 million were received in cash proceeds from the sale assets, respectively.

At March 31, ~~2016.~~ ~~At September 30, 2017, approximately $39.9~~2021, the borrowing base on the Credit Facility was $120.0 million and the Successor had $47.5 million of letters of credit outstanding that reduced the borrowing availability under the Credit Facility.

The energy industry faces growing negative sentiment in the market which may affect the ability to access appropriate amounts of capital and under suitable terms. While we have confidence in the level of support from our ~~cash balance was held outside~~lenders, this negative sentiment in the ~~United States. Cash balances held~~energy industry has not only impacted our customers in ~~foreign jurisdictions could be repatriated~~North America, it is also affecting the availability and the pricing for most credit lines extended to participants in the industry. From time to time we may continue to enter into transactions to dispose of businesses or capital assets that no longer fit the Company’s long-term strategy.

Uses of Liquidity

The primary uses of liquidity are to provide support for operating activities, restructuring activities and capital expenditures. The Company has incurred significant costs associated with the Chapter 11 Cases, including fees for legal, financial and restructuring advisors to the ~~United States, however, they would be subject~~Company, and certain of the creditors. During the Current Predecessor Period, the Predecessor incurred $18.3 million of advisory and professional fees relating to ~~federal income taxes, less applicable foreign tax credits. We have~~the Chapter 11 Cases and $12.0 million of fees paid in consideration for the commitment by the Backstop Commitment Parties to provide the Delayed-Draw Term Loan Facility upon the emergence from bankruptcy (which ultimately did not ~~provided U.S. income tax expense on earnings of our foreign subsidiaries because we expect to reinvest the undistributed earnings indefinitely.~~

Weoccur). The Successor spent ~~$109.6~~$4.1 million of cash on capital expenditures during the ~~nine months ended September 30, 2017. Approximately $15.9~~Successor Period and the Predecessor spent $3.0 million ~~was used to expand and maintain our Drilling Products and Services segment’s equipment inventory, and approximately $74.9million, $8.3million and $10.5million was spent to expand and maintain the asset bases~~ of ~~our Onshore Completion and Workover Services, Production Services and Technical Solutions segments, respectively. We expect to spend approximately $150 million~~cash on capital expenditures during ~~2017.~~ the Current Predecessor Period.

~~Subsequent~~Debt Instruments

On the Emergence Date, pursuant to the ~~quarter end,~~Plan, the ~~Company extended its~~Former Parent, as parent guarantor, and SESI, as borrower, entered into a Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders and letter of credit issuers named therein providing for a $120.0 million asset-based secured revolving credit facility ~~maturity to October 2022 with a $300 million asset-based~~(the “Credit Facility”), which provides for revolving ~~credit facility.~~loans and is available for the issuances of letters of credit. The Credit Facility will mature on December 9, 2024. The borrowing base under the ~~credit facility will be calculated as the Company’s~~Credit Facility is determined by reference to SESI’s and its subsidiary guarantors’ (i) eligible accounts receivable, (ii) eligible inventory, (iii) solely during the period from February 2, 2021 until the earlier of December 9, 2022 and the date that unrestricted cash of SESI and its wholly-owned subsidiaries is less than $75.0 million, eligible premium rental drill pipe and (iv) so long as there are no loans outstanding at such time, certain cash of SESI and its subsidiary guarantors, less ~~reserves.~~ reserves established by the administrative agent in its permitted discretion. On March 31, 2021 approximately $46.6 million of undrawn letters of credit were outstanding under the Credit Facility.

Availability under the ~~credit facility will be~~Credit Facility at any time is equal to the lesser of (i) the aggregate commitments under the Credit Facility and (ii) the borrowing base at such time. As of March 31, 2021, the borrowing base under the Credit Facility was approximately $120.0 million and the Company had $47.5 million of letters of credit outstanding that reduced its borrowing availability under the revolving credit facility. Subject to certain conditions, upon request and with the consent of the participating lenders, the total commitments under the Credit Facility may be increased to $170.0 million. SESI’s obligations under the Credit Facility are guaranteed by the Former Parent and all of SESI’s material domestic subsidiaries, and secured by substantially all of the personal property of the Former Parent, SESI and SESI’s material domestic subsidiaries, in each case, subject to certain customary exceptions.

Borrowings under the Credit Facility bear interest, at SESI’s option, at either an adjusted LIBOR rate plus an applicable margin ranging from 3.00% to 3.50% per annum, or an alternate base rate plus an applicable margin ranging from 2.00% to 2.50% per annum, in each case, on the basis of the then applicable consolidated fixed charge coverage ratio. In addition, SESI is required to pay (i) a letter of credit fee ranging from 3.00% to 3.50% per annum on the basis of the consolidated fixed charge coverage ratio on the aggregate face amount of all outstanding letters of credit, (ii) to the issuing lender of each letter of credit, a fronting fee of no less than 0.25% per annum on the outstanding amount of each such letter of credit and (iii) commitment fees of 0.50% per annum on the ~~highest principal~~daily unused amount ~~permitted to be secured under~~of the indenture governing 7 1/8% senior unsecured notes due 2021. At October 20, 2017, availability was $285.6 million, and may increase or decrease as a result of, among other things, changes to the Company’s consolidated tangible assets. Credit Facility, in each case, quarterly in arrears.

The ~~credit agreement~~Credit Facility contains various covenants requiring compliance, including, but not limited to, limitations on the incurrence of indebtedness, permitted investments, liens on assets, making distributions, transactions with affiliates, ~~merger,~~mergers, consolidations, dispositions of assets and other provisions customary in similar types of agreements. ~~At September 30, 2017, we were in~~The Credit Facility requires compliance with ~~all such covenants.~~

~~In August 2017, the Company issued $500 million~~a fixed charge coverage ratio of ~~7 3/4% unsecured senior notes due September 2024 in a private placement conducted pursuant~~1.0 to ~~Rule 144A~~1.0 if either (a) an event of default has occurred and ~~Regulation S~~is continuing or (b) availability under the ~~Securities Act. Costs associated with~~Credit Facility is less than the ~~issuance~~greater of ~~these notes were $8.9~~$20.0 million ~~which will be amortized over the term~~or 15% of the ~~notes. The Company used the net proceeds~~lesser of the ~~notes offering~~aggregate commitments and ~~cash on hand to redeem all~~the borrowing base. The covenant and other restrictions of the ~~outstanding $500 million~~ ~~6 3/8% senior unsecured notes due 2019. In connection with~~Credit Facility significantly restrict the ~~redemption~~ability to incur borrowings other than letters of credit.

See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 23 – “Subsequent Events” for additional information regarding waivers to the ~~senior unsecured notes due May 2019,~~Credit Facility and our inability to require the ~~Company recorded $2.6 million for the write-off of unamortized debt issuance costs.~~ ~~The indenture governing the 7 3/4% senior notes requires semi-annual interest payments beginning on March 15, 2018,~~ lenders to make any requested advances

until the maturity date of September 15, 2024. The indenture contains customary events of default and requires that we satisfy various covenants. At September 30, 2017, we were in compliance with all such covenants. conditions described therein are satisfied.

We also have outstanding $800 million of 7 1/8% unsecured senior notes due December 2021. The indenture governing the 7 1/8% senior notes due 2021 requires semi-annual interest payments on June 15 and December 15~~of each year through the maturity date of December 15, 2021. The indenture contains customary events of default and requires that we satisfy various covenants.~~ At ~~September 30, 2017, we were in compliance with all such covenants.~~

Other Matters

Off-Balance Sheet Arrangements and Hedging Activities

At ~~September 30, 2017, we~~March 31, 2021, the Successor had no off-balance sheet arrangements and no hedging contracts.

~~Table Of Contents~~

Recently ~~Issued~~Adopted Accounting Guidance

See Part I,1, Item 1, ~~“Financial~~“Unaudited Condensed Consolidated Financial Statements and Notes” – Note 1421 – “New Accounting Pronouncements.”

Item 3. Quantitative and Qualitative Disclosures about Market Risk

~~We are~~The Company is exposed to market risks associated with foreign currency fluctuations and changes in interest rates. A discussion of our market risk exposure in financial instruments follows.

Foreign Currency Exchange Rates Risk

~~Because we operate in a number~~Prior to the first quarter of ~~countries throughout~~2021, the ~~world, we conduct a portion~~functional currency of ~~our business in currencies other than~~ the ~~U.S. dollar. The~~majority of the international subsidiaries was US dollars and the functional currency for ~~our~~certain of the international ~~operations, other than~~subsidiaries was the local currency.

Beginning with the first quarter of 2021, as part of adopting a new accounting policy at fresh start accounting, the functional currency of certain ~~operations~~international subsidiaries changed from the local currency to US dollars. This brings alignment so that the entire Company’s functional currency is US dollars. Management considered the economic factors outlined in FASB ASC Topic No. 830 - Foreign Currency Matters in the ~~United Kingdom and Europe, is the U.S. dollar, but a portion~~determination of the ~~revenues from our international operations is paid in foreign currencies. The effects~~functional currency. Management concluded that the predominance of ~~foreign~~factors support the use of the Successor parent’s currency fluctuations are partly mitigated because local expenses of such international operations are also generally denominated in the same currency. We continually monitor the currency exchange risks associated with all contracts not denominated in the U.S. dollar.

Assets and liabilities of certain subsidiaries in the United Kingdom and Europe are translated at end of period exchange rates, while income and expenses are translated at average rates for the period. Translation gains and losses are reported as the ~~foreign~~functional currency and resulted in a change in functional currency to US dollars for all international subsidiaries.

The change in functional currency is applied on a prospective basis beginning with the first quarter of 2021 and translation adjustments for prior periods will continue to remain as a component of accumulated other comprehensive ~~loss in stockholders’ equity.~~ loss.

~~We do~~The Company does not hold derivatives for trading purposes or use derivatives with complex features. When ~~we believe~~ prudent, ~~we enter~~the Company enters into forward foreign exchange contracts to hedge the impact of foreign currency fluctuations. ~~We do~~The Company does not enter into forward foreign exchange contracts for trading or speculative purposes. At ~~September 30, 2017, we~~March 31, 2021, the Successor had no outstanding foreign currency forward contracts.

Interest Rate Risk

At ~~September 30, 2017, we~~March 31, 2021, the Successor had no variable rate debt outstanding.

Commodity Price Risk

~~Our~~The Company’s 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 natural gas that can economically be produced.

For additional discussion, see Part 1, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Item 4. Controls and Procedures

~~(a)~~	~~Evaluation of disclosure controls and procedures.~~ As of the end of the period covered by this quarterly report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation, that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) are effective for ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures and is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

~~(b)~~	~~Changes in internal control. There has been no change in our internal control over financial reporting that occurred during the~~ ~~three months ended September 30, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.~~

Evaluation of disclosure controls and procedures

Our management has established and maintains a system of disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is appropriately recorded, processed, summarized and reported within the time periods specified by the SEC. In addition, our disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, 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 Chief Executive Officer (CEO) and Chief Financial Officer (CFO), regarding the effectiveness of our disclosure controls

2142

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, 2021 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 required by 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 disclosures as a result of the material weakness in our internal control over financial reporting described below.

~~Table Of Contents~~Material Weakness in Internal Control Over Financial Reporting

A material weakness is 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 the company's annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness was identified in our internal control over financial reporting as we did not effectively operate control activities to appropriately consider all potential income tax alternatives relating to uncertain tax positions.

This material weakness did not result in a misstatement to the consolidated financial statements, however this material weakness could result in a misstatement of the income tax related accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Management’s Plan to Remediate Material Weakness

In order to address the material weakness described above under “Material weakness in internal control over financial reporting”, the Company’s management has implemented a remediation plan to address the control deficiency that led to this material weakness, including the following:

Reinforcing the Company’s controls for identifying and reviewing potential uncertain tax positions; and

Reinforcing the Company’s controls to evaluate, resolve, and document the related conclusions and accounting treatment for uncertain tax positions.

Although we have implemented the enhancements described above, the material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Based on its evaluation, the controls described above have not had sufficient time for management to conclude that they are operating effectively. Therefore, the material weakness described above existed at March 31, 2021 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

There have been no changes in internal control over financial reporting during the quarter ended March 31. 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

‎

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company is involved in various legal actions incidental to our business. The outcome of these proceedings is unpredictable. See Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 19 – “Contingencies.”

For more information on the Chapter 11 Cases, see Part 1, Item 1, “Unaudited Condensed Consolidated Financial Statements and Notes” – Note 1 – “Basis of Presentation”and Part 1, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Item 1A. Risk Factors

For information regarding certain risks relating to ~~our~~the Company’s operations, any of which could negatively affect ~~our~~the Company’s business, financial condition, operating results or prospects, see Part I, Item 1A, “Risk Factors” of the Annual Report. There have been no material changes to the risk factors previously disclosed under the caption “Risk Factors” in the Annual Report except as set forth below. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may materially adversely affect our business, financial condition or results of operations or result in changes to the risk factors previously disclosed under the caption “Risk Factors” in our Annual ~~Report~~Report. The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding any statement in this report or elsewhere. The following information should be read in conjunction with the condensed consolidated financial statements and related notes herein and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this quarterly report on Form ~~10-K~~10-Q.

In connection with the preparation of our consolidated financial statements as of and for the ~~year~~quarter ended ~~December~~March 31, ~~2016.~~2021, our previous independent registered public accounting firm identified a material weakness in our internal control over financial reporting related to the design of the Company’s control to engage the appropriate specialists to assist in evaluating the income tax consequences of complex non-routine transactions, such as the Plan. If we are not able to remediate the material weakness and otherwise to maintain an effective system of internal control over financial reporting in the future, our financial statements may be materially misstated and investors may lose confidence in the accuracy and completeness of our financial reports. A material weakness is 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. We are working to remediate the material weakness and are taking steps to strengthen our internal control over financial reporting. While we are undertaking efforts to remediate this material weakness, the material weakness will not be considered remediated until our remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively. At this time, we cannot predict the success of such efforts or the outcome of our assessment of the remediation efforts. We cannot assure you that our efforts will remediate this material weakness in our internal control over financial reporting, or that additional material weaknesses will not be identified in the future.

Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds~~Proceeds

~~Issuer Purchases~~On the Emergence Date, all existing shares of the Predecessor’s common stock were cancelled pursuant to the Plan, and the Successor issued 19,995,581 shares of Class A common stock to the holders of certain allowed claims arising under the Prepetition Notes (as defined in the Plan). The Class A common stock issued was exempt from registration under the Securities Act, pursuant to Section 1145 of the Bankruptcy Code (which generally exempts from such registration requirements the issuance of securities under a plan of reorganization).

By the Emergence Date, the Company had completed the Equity Rights Offering in accordance with the Plan, which resulted in the issuance of 735,189 shares of Class A common stock to certain Accredited Cash Opt-Out Noteholders (as defined in the Plan). The Class A common stock issued in the Equity Rights Offering was exempt from registration under the Securities

Period

(a)
Total Number
of Shares
Purchased (1)

(b)
Average Price Paid per Share

July 1 - 31, 2017

2,644

$
9.92

August 1 - 31, 2017

197

$
10.51

September 1 - 30, 2017

-

$
-

Total

2,841

$
9.96

Act pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. See Part 1, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary – Senior Notes.”

~~(1) Through our stock incentive plans, 2,841 shares were delivered to us by our employees to satisfy their tax withholding requirements upon vesting of restricted stock units.~~

‎

Machinery and equipment

Buildings, improvements and leasehold improvements

Automobiles, trucks, tractors and trailers

Furniture and fixtures

~~(a) The following exhibits are filed with this Form 10-Q:~~

2.1	First Amended Joint Prepackaged Plan of Reorganization for Superior Energy Services, Inc. and its Affiliate Debtors Under Chapter 11 of the Bankruptcy Code (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed on January 20, 2021 (File No. 001-34037))
~~Exhibit No.~~2.2	~~Description~~Agreement and Plan of Merger, dated as of February 2, 2021, by and among Superior Energy Services, Inc., Superior BottomCo Inc. and Superior NewCo, Inc. (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed on February 3, 2021 (File No. 001-34037))
3.1	Amended and Restated Certificate of Incorporation ~~of Superior Energy Services, Inc.~~ (incorporated ~~herein by reference to Exhibit 3.1 to Superior Energy Services, Inc.’s Quarterly Report on Form 10-Q filed August 7, 2013 (File No. 001-34037)).~~
~~3.2~~	~~Amended and Restated Bylaws of Superior Energy Services, Inc. (as amended through March 7, 2012) (incorporated herein~~ by reference to Exhibit 3.1 to Superior Energy Services, Inc.’s Current Report on Form 8-K filed ~~March 12, 2012~~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)).
10.1	Credit Agreement, dated as of February 2, 2021, among SESI Holdings, Inc., as parent, SESI, L.L.C., as borrower, JPMorgan Chase Bank, N.A., as administrative agent and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on February 3, 2021 (File No. 001-34037))
~~31.1~~10.*2	Stockholders Agreement, dated as of February 2, 2021, among Superior Energy Services, Inc., each stockholder who is deemed a party thereto pursuant to the Plan and any other stock holder who thereafter becomes a party thereto (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed on February 3, 2021 (File No. 001-34037))
10.3	Form of Indemnity Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, filed on February 3, 2021 (File No. 001-34037))
10.4^*	Waiver and Release, dated as of March 21, 2021, between Westervelt Ballard and Superior Energy Services, Inc.
10.5^*	Waiver and Release, dated as of March 22, 2021, between David D. Dunlap and Superior Energy Services, Inc.
10.6^*	Transition Agreement, dated as of April 21, 2021, between William B. Masters and Superior Energy Services, Inc.
10.7	First Amendment and Waiver to the Credit Agreement dated, as of May 13, 2021, by and among SESI, L.L.C., SESI Holdings, Inc., the subsidiary guarantors party thereto, JPMorgan Chase Bank, N.A., as administrative agent and lender, and certain other financial institutions and other parties thereto as lenders (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 18, 2021 (File No. 001-34037))
10.8	Waiver to Credit Agreement, dated as of May 28, 2021, by and among SESI, L.L.C., SESI Holdings, Inc., the subsidiary guarantors party thereto, JPMorgan Chase Bank, N.A., as administrative agent and lender, and certain other financial institutions and other parties thereto as lenders (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on June 4, 2021 (File No. 001-34037))
10.9^	2021 Management Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on June 4, 2021 (File No. 001-34037))
10.10^	Form of Employee Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on June 4, 2021 (File No. 001-34037))
10.11^	Form of Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed on June 4, 2021 (File No. 001-34037))
10.12	First Amendment to the Stockholders Agreement, dated as of February 2, 2021, by and among Superior Energy Services, Inc. and the stockholders party thereto (incorporated by reference to Exhibit 10.1 to Superior Energy Services, Inc.'s Current Report on Form 8-K filed on June 14, 2021 (File No. 001-34037))
10.13	Second Amendment to the Stockholders Agreement, dated as of May 31, 2021, by and among Superior Energy Services, Inc. and the stockholders party thereto (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed on June 14, 2021 (File No. 001-34037))
10.14	Waiver to Credit Agreement, dated as of July 15, 2021, by and among SESI, L.L.C., SESI Holdings, Inc., the subsidiary guarantors party thereto, JPMorgan Chase Bank, N.A., as administrative agent and lender, and certain other financial institutions and other parties thereto as lenders (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on July 21, 2021 (File No. 001-34037))
10.15	Third Amendment to the Stockholders Agreement, dated as of July 14, 2021, by and among Superior Energy Services, Inc. and the stockholders party thereto (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed on July 21, 2021 (File No. 001-34037))
10.16^	Transition and Retirement Agreement between A. Patrick Bernard and Superior Energy Services, Inc., dated September 9, 2021 (incorporated by reference to Exhibit 10.1 to Superior Energy Services, Inc.'s Form 8-K filed on September 13, 2021 (File No. 001-34037))
31.1*	Officer’s certification pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002
31.2*	Officer’s certification pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002
32.1*	Officer’s certification pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
32.2*	Officer’s certification pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

*Filed ~~herein~~herewith

^Management contract or compensatory plan or arrangement

‎

2245

SIGNATURES

~~Table Of Contents~~

~~SIGNATURE~~

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:~~	~~October 25, 2017~~	~~By:~~	~~/s/ Robert S. Taylor~~
Date:	September 30, 2021	By:	~~Robert S. Taylor~~/s/ Michael Y. McGovern
			~~Executive Vice President, Treasurer and~~Michael Y. McGovern
			~~Chief Financial~~Principal Executive Officer
			(~~Principal Financial and Accounting~~Duly Authorized Officer)


		By:	/s/ James W. Spexarth
			James W. Spexarth Chief Financial Officer
			(Principal Financial Officer)



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2017 and 2016
(in thousands, except per share data)
(unaudited)
	Three Months				Nine Months
	2017		2016		2017		2016
Revenues:
Services	$	431,874	$	266,093	$	1,170,455	$	873,985
Rentals		74,155		60,132		206,578		221,644
Total revenues		506,029		326,225		1,377,033		1,095,629
Costs and expenses:
Cost of services (exclusive of depreciation, depletion, amortization and accretion)		340,401		223,766		959,630		703,061
Cost of rentals (exclusive of depreciation, depletion, amortization and accretion)		27,878		34,402		82,437		99,081
Depreciation, depletion, amortization and accretion - services		92,814		100,579		281,097		312,713
Depreciation, depletion, amortization and accretion - rentals		15,937		22,729		50,054		79,304
General and administrative expenses		74,372		86,743		226,573		270,467
Reduction in value of assets		9,953		-		9,953		462,461
Loss from operations		(55,326)		(141,994)		(232,711)		(831,458)

Other income (expense):
Interest expense, net		(29,096)		(21,771)		(76,679)		(68,325)
Other income (expense)		(970)		3,667		(2,477)		22,103
Loss from continuing operations before income taxes		(85,392)		(160,098)		(311,867)		(877,680)
Income taxes		(28,203)		(46,185)		(102,978)		(210,599)
Net loss from continuing operations		(57,189)		(113,913)		(208,889)		(667,081)
Loss from discontinued operations, net of income tax		(1,860)		(4,085)		(5,625)		(8,577)
Net loss	$	(59,049)	$	(117,998)	$	(214,514)	$	(675,658)

Loss per share information:
Basic and diluted:
Net loss from continuing operations	$	(0.37)	$	(0.75)	$	(1.37)	$	(4.40)
Loss from discontinued operations		(0.02)		(0.03)		(0.04)		(0.06)
Net loss	$	(0.39)	$	(0.78)	$	(1.41)	$	(4.46)

Cash dividends declared per share	$	-	$	-	$	-		0.08

Weighted average common shares used in computing loss per share:
Basic and diluted		153,082		151,707		152,624		151,337


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
Three and Nine Months Ended September 30, 2017 and 2016
(in thousands)
	Three Months				Nine Months
	2017		2016		2017		2016
Net loss	$	(59,049)	$	(117,998)	$	(214,514)	$	(675,658)
Change in cumulative translation adjustment, net of tax		3,629		(4,693)		11,375		(26,616)
Comprehensive loss	$	(55,420)	$	(122,691)	$	(203,139)	$	(702,274)

See accompanying notes to condensed consolidated financial statements.


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2017 and 2016
(in thousands)
(unaudited)
	2017		2016
Cash flows from operating activities:
Net loss	$	(214,514)	$	(675,658)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		331,151		392,017
Deferred income taxes		(92,999)		(186,232)
Reduction in value of assets		9,953		462,461
Stock based compensation expense		29,780		34,167
Other reconciling items, net		(2,408)		(10,392)
Changes in operating assets and liabilities:
Accounts receivable		(116,989)		155,717
Inventory and other current assets		(8,510)		(5,028)
Accounts payable		24,821		(8,692)
Accrued expenses		7,182		(41,617)
Income taxes		100,969		(4,515)
Other, net		(13,028)		34,447
Net cash provided by operating activities		55,408		146,675

Cash flows from investing activities:
Payments for capital expenditures		(109,635)		(74,071)
Decrease in cash held in escrow		30,600		-
Other		15,647		6,238
Net cash used in investing activities		(63,388)		(67,833)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		500,000		-
Principal payments on long-term debt		(500,000)		(337,576)
Payment of debt issuance costs		(9,091)		(2,675)
Proceeds from revolving line of credit		-		325,123
Payments on revolving line of credit		-		(325,123)
Cash dividends		-		(12,111)
Other		(6,789)		(5,410)
Net cash used in financing activities		(15,880)		(357,772)
Effect of exchange rate changes on cash		3,294		(6,932)
Net decrease in cash and cash equivalents		(20,566)		(285,862)
Cash and cash equivalents at beginning of period		187,591		564,017
Cash and cash equivalents at end of period	$	167,025	$	278,155

See accompanying notes to condensed consolidated financial statements.



	September 30, 2017		December 31, 2016
	Long-term		Long-term
Senior Notes due September 2024	$	500,000	$	-
Senior Notes due December 2021		800,000		800,000
Senior Notes due May 2019		-		500,000
Total debt, gross		1,300,000		1,300,000
Unamortized debt issuance costs		(18,286)		(15,400)
Total debt, net	$	1,281,714	$	1,284,600


Effect of derivative asset	Location of (gain) loss recognized	Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
Interest rate swap	Interest expense, net	$	1,791	$	(4,329)
Hedged item - debt	Interest expense, net		(1,805)		365
		$	(14)	$	(3,964)




	Fair Value at September 30, 2017
	Level 1		Level 2		Level 3		Total
Intangible and other long-term assets, net
Non-qualified deferred compensation assets	$	369	$	13,341	$	-	$	13,710
Accounts payable
Non-qualified deferred compensation liabilities	$	-	$	1,157	$	-	$	1,157
Other long-term liabilities
Non-qualified deferred compensation liabilities	$	-	$	20,250	$	-	$	20,250

	Fair Value at December 31, 2016
	Level 1		Level 2		Level 3		Total
Intangible and other long-term assets, net
Non-qualified deferred compensation assets	$	368	$	11,992	$	-	$	12,360
Interest rate swaps	$	-	$	8,579	$	-	$	8,579
Accounts payable
Non-qualified deferred compensation liabilities	$	-	$	1,115	$	-	$	1,115
Other long-term liabilities
Non-qualified deferred compensation liabilities	$	-	$	18,489	$	-	$	18,489



Three Months Ended September 30, 2017

			Onshore
	Drilling		Completion
	Products and		and Workover		Production		Technical				Consolidated
	Services		Services		Services		Solutions		Unallocated		Total
Revenues	$	77,206	$	248,405	$	97,333	$	83,085	$	-	$	506,029
Cost of services and rentals (exclusive of
depreciation, depletion, amortization and accretion)		31,715		210,103		78,074		48,387		-		368,279
Depreciation, depletion, amortization
and accretion		32,055		48,828		19,606		8,262		-		108,751
General and administrative expenses		16,491		22,931		17,441		17,509		-		74,372
Reduction in value of assets		-		1,838		-		8,115		-		9,953
Income (loss) from operations		(3,055)		(35,295)		(17,788)		812		-		(55,326)
Interest income (expense), net		-		-		-		926		(30,022)		(29,096)
Other expense		-		-		-		-		(970)		(970)
Income (loss) from continuing operations
before income taxes	$	(3,055)	$	(35,295)	$	(17,788)	$	1,738	$	(30,992)	$	(85,392)



Nine Months Ended September 30, 2017

			Onshore
	Drilling		Completion
	Products and		and Workover		Production		Technical				Consolidated
	Services		Services		Services		Solutions		Unallocated		Total
Revenues	$	214,464	$	702,463	$	254,544	$	205,562	$	-	$	1,377,033
Cost of services and rentals (exclusive of
depreciation, depletion, amortization and accretion)		94,191		610,154		210,778		126,944		-		1,042,067
Depreciation, depletion, amortization and accretion		100,859		144,090		60,905		25,297		-		331,151
General and administrative expenses		50,576		73,522		50,113		52,362		-		226,573
Reduction in value of assets		-		1,838		-		8,115		-		9,953
Loss from operations		(31,162)		(127,141)		(67,252)		(7,156)		-		(232,711)
Interest income (expense), net		-		-		-		2,627		(79,306)		(76,679)
Other expense		-		-		-		-		(2,477)		(2,477)
Loss from continuing operations
before income taxes	$	(31,162)	$	(127,141)	$	(67,252)	$	(4,529)	$	(81,783)	$	(311,867)



	Revenue							Cost of Services and Rentals
	2017		2016		Change		%	2017		%	2016		%	Change
Drilling Products and
Services	$	77,206	$	59,587	$	17,619	30%	$	31,715	41%	$	26,955	45%	$	4,760
Onshore Completion and
Workover Services		248,405		125,022		123,383	99%		210,103	85%		124,747	100%		85,356
Production Services		97,333		77,523		19,810	26%		78,074	80%		66,000	85%		12,074
Technical Solutions		83,085		64,093		18,992	30%		48,387	58%		40,466	63%		7,921
Total	$	506,029	$	326,225	$	179,804	55%	$	368,279	73%	$	258,168	79%	$	110,111



Period	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid per Share
July 1 - 31, 2017	2,644	$	9.92
August 1 - 31, 2017	197	$	10.51
September 1 - 30, 2017	-	$	-
Total	2,841	$	9.96