UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(MARK ONE)


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

		FOR THE QUARTERLY PERIOD ENDED ~~March 31,~~June 30, 2010


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

		FOR THE TRANSITION PERIOD FROM ~~___TO __.~~TO.

Commission File Number: 1-32858

Complete Production Services, Inc.

(Exact name of registrant as specified in its charter)


Delaware		72-1503959
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		~~(I.R.S. Employer~~ Identification No.)

11700 Katy Freeway,
Suite 300
Houston, Texas		77079
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:(281) 372-2300

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. Yesþ Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesoþ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filerþ	Accelerated filero	Non-accelerated filero		Smaller reporting companyo
		(Do not check if a smaller reporting company)	~~Smaller reporting company~~ o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

Number of shares of the common stock, par value $0.01 per share, of the registrant outstanding as of ~~April 27,~~July 26, 2010: ~~77,741,681~~77,764,562

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Balance Sheets
~~March 31,~~

June 30, 2010 (unaudited) and December 31, 2009


	2010			2009				2010			2009
	(In thousands, except							(In thousands, except
	share data)							share data)
ASSETS							ASSETS
Current assets:
Cash and cash equivalents	$	105,439		$	77,360			$	141,648		$	77,360
Accounts receivable, net		206,485			171,284				252,614			171,284
Inventory, net		34,121			37,464				32,358			37,464
Prepaid expenses		15,071			17,943				22,071			17,943
Income tax receivable		56,478			57,606				10,460			57,606
Current deferred tax assets		8,158			8,158				8,158			8,158
Other current assets		163			111				163			111

Total current assets		425,915			369,926				467,472			369,926
Property, plant and equipment, net		908,692			941,133				893,599			941,133
Intangible assets, net of accumulated amortization of $16,681 and $15,476, respectively		11,597			13,243
Deferred financing costs, net of accumulated amortization of $7,028 and $6,266, respectively		11,983			12,744
Intangible assets, net of accumulated amortization of $18,549 and $15,476, respectively									9,638			13,243
Deferred financing costs, net of accumulated amortization of $7,791 and $6,266, respectively									11,220			12,744
Goodwill		243,823			243,823				244,840			243,823
Other long-term assets		8,115			7,985				6,066			7,985

Total assets	$	1,610,125		$	1,588,854			$	1,632,835		$	1,588,854


LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	193		$	228			$	166		$	228
Accounts payable		32,507			31,745				47,186			31,745
Accrued liabilities		44,647			41,102				39,027			41,102
Accrued payroll and payroll burdens		20,593			13,559				22,691			13,559
Accrued interest		15,778			3,206				2,775			3,206
Notes payable		—			1,069				—			1,069
Income taxes payable		221			813				356			813

Total current liabilities		113,939			91,722				112,201			91,722
Long-term debt		650,000			650,002				650,000			650,002
Deferred income taxes		146,415			148,240				151,995			148,240

Total liabilities		910,354			889,964				914,196			889,964
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 75,922,199 (2009 — 75,278,406) issued		759			752
Common stock, $0.01 par value per share, 200,000,000 shares authorized,76,086,612 (2009 — 75,278,406) issued									761			752
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding		—			—				—			—
Additional paid-in capital		640,321			636,904				645,086			636,904
Retained earnings		39,245			42,007				54,916			42,007
Treasury stock, 164,575 (2009 — 54,313) shares at cost		(1,717	)		(334	)
Treasury stock, 166,616 (2009 — 54,313) shares at cost									(1,744	)		(334	)
Accumulated other comprehensive income		21,163			19,561				19,620			19,561

Total stockholders’ equity		699,771			698,890				718,639			698,890

Total liabilities and stockholders’ equity	$	1,610,125		$	1,588,854			$	1,632,835		$	1,588,854

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statements of Operations

Quarters and Six Months Ended ~~March 31,~~June 30, 2010 and 2009 (unaudited)


	Quarters Ended
	March 31,						Quarter Ended						Six Months Ended
	2010			2009			June 30,						June 30,
	(In thousands, except per						2010			2009			2010			2009
	share data)						(In thousands, except per share data)
Revenue:
Service	$	301,392		$	322,917		$	350,905		$	221,150		$	652,297		$	544,067
Product		8,312			13,764			9,340			17,248			17,652			31,012

		309,704			336,681			360,245			238,398			669,949			575,079
Service expenses		206,820			211,213			223,564			150,773			430,384			361,986
Product expenses		6,124			10,495			7,323			13,492			13,447			23,987
Selling, general and administrative expenses		40,852			49,278			44,017			45,633			84,869			94,911
Depreciation and amortization		45,319			51,689			45,472			51,402			90,791			103,091

Income before interest and taxes		10,589			14,006
Income (loss) before interest and taxes								39,869			(22,902	)		50,458			(8,896	)
Interest expense		14,741			14,458			14,760			13,899			29,501			28,357
Interest income		(48	)		(10	)		(95	)		(20	)		(143	)		(30	)

Loss before taxes		(4,104	)		(442	)
Income (loss) before taxes								25,204			(36,781	)		21,100			(37,223	)
Taxes		(1,342	)		(106	)		9,533			(10,949	)		8,191			(11,055	)

Net loss	$	(2,762	)	$	(336	)
Net income (loss)							$	15,671		$	(25,832	)	$	12,909		$	(26,168	)


Loss per share information:
Basic loss per share	$	(0.04	)	$	(0.00	)
Earnings (loss) per share information:
Basic earnings (loss) per share							$	0.21		$	(0.34	)	$	0.17		$	(0.35	)


Diluted loss per share	$	(0.04	)	$	(0.00	)
Diluted earnings (loss) per share							$	0.20		$	(0.34	)	$	0.17		$	(0.35	)


Weighted average shares:
Basic		75,699			74,895			76,036			75,036			75,869			74,966
Diluted		75,699			74,895			77,318			75,036			77,194			74,966

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statement of Stockholders’ Equity
~~Quarter~~

Six Months Ended ~~March 31,~~June 30, 2010 (unaudited)


															Accumulated
						Additional									Other																		Accumulated
	Number			Common		Paid-in			Retained			Treasury			Comprehensive										Additional								Other
	of Shares			Stock		Capital			Earnings			Stock			Income		Total			Number			Common		Paid-in			Retained		Treasury			Comprehensive
	(In thousands, except share data)																			of Shares			Stock		Capital			Earnings		Stock			Income		Total
																				(In thousands, except share data)
Balance at December 31, 2009		75,278,406		$	752	$	636,904		$	42,007		$	(334	)	$	19,561	$	698,890			75,278,406		$	752	$	636,904		$	42,007	$	(334	)	$	19,561	$	698,890
Net loss		—			—		—			(2,762	)		—			—		(2,762	)
Net income																					—			—		—			12,909		—			—		12,909
Cumulative translation adjustment		—			—		—			—			—			1,602		1,602			—			—		—			—		—			59		59
Issuance of common stock:
Exercise of stock options		86,129			—		696			—			—			—		696			245,750			2		2,261			—		—			—		2,263
Expense related to employee stock options		—			—		750			—			—			—		750			—			—		1,343			—		—			—		1,343
Excess tax benefit from share-based compensation		—			—		94			—			—			—		94			—			—		273			—		—			—		273
Purchase of treasury shares		(110,262	)		—		—						(1,383	)		—		(1,383	)		(112,303	)		—		—			—		(1,410	)		—		(1,410	)
Vested restricted stock		667,926			7		(7	)		—			—			—		—			674,759			7		(7	)		—		—			—		—
Amortization of non-vested restricted stock		—			—		1,884			—			—			—		1,884			—			—		4,312			—		—			—		4,312

Balance at March 31, 2010		75,922,199		$	759	$	640,321		$	39,245		$	(1,717	)	$	21,163	$	699,771
Balance at June 30, 2010																					76.086.612		$	761	$	645,086		$	54,916	$	(1,744	)	$	19,620	$	718,639

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statements of Cash Flows
~~Quarters~~

Six Months Ended ~~March 31,~~June 30, 2010 and 2009 (unaudited)


	Quarters Ended						Six Months Ended
	March 31,						June 30,
	2010			2009			2010			2009
	(In thousands)						(In thousands)
Cash provided by (used in):
Cash provided by:
Operating activities:
Net loss	$	(2,762	)	$	(336	)
Net income (loss)							$	12,909		$	(26,168	)
Items not affecting cash:
Depreciation and amortization		45,319			51,689			90,791			103,091
Deferred income taxes		(1,485	)		4,837			4,106			10,856
Excess tax benefit from share-based compensation		(94	)		(15	)		(273	)		(65	)
Non-cash compensation expense		2,634			3,460			5,655			6,706
Loss on non-monetary asset exchange		—			4,868
(Gain) loss on non-monetary asset exchange								(458	)		4,868
Provision for bad debt expense		150			1,497			1,177			4,830
Provision for write-off of note receivable								1,926			—
(Gain) loss on retirement of assets								(92	)		3,293
Other		794			803			1,524			940
Changes in operating assets and liabilities:
Accounts receivable		(34,289	)		99,811			(82,463	)		159,442
Inventory		3,391			(11,270	)		5,334			(1,924	)
Prepaid expense and other current assets		2,835			6,535			42,611			6,225
Accounts payable		741			(27,139	)		15,404			(33,365	)
Accrued liabilities and other		23,247			(2,384	)		6,364			(19,003	)

Net cash provided by operating activities		40,481			132,356			104,515			219,726

Investing activities:
Additions to property, plant and equipment		(11,343	)		(12,828	)		(41,894	)		(22,760	)
Acquisitions								(1,365	)		—
Proceeds from disposal of capital assets		518			7,156			3,117			8,218

Net cash used in investing activities		(10,825	)		(5,672	)		(40,142	)		(14,542	)

Financing activities:
Issuances of long-term debt		—			3,146			—			3,204
Repayments of long-term debt		(37	)		(123,047	)		(64	)		(200,376	)
Repayment of notes payable		(1,069	)		(1,353	)		(1,069	)		(4,220	)
Proceeds from issuances of common stock		696			25			2,263			88
Purchase of treasury shares		(1,383	)		(68	)		(1,410	)		(123	)
Excess tax benefit from share-based compensation		94			15			273			65

Net cash used in financing activities		(1,699	)		(121,282	)		(7	)		(201,362	)

Effect of exchange rate changes on cash		122			286			(78	)		(289	)

Change in cash and cash equivalents		28,079			5,688			64,288			3,533
Cash and cash equivalents, beginning of period		77,360			19,090			77,360			18,500

Cash and cash equivalents, end of period	$	105,439		$	24,778		$	141,648		$	22,033


Supplemental cash flow information:
Cash paid for interest, net of interest capitalized	$	1,384		$	701		$	28,243		$	26,361
Cash paid (refund received) for income taxes	$	(660	)	$	2,697		$	(42,734	)	$	(18,690	)

COMPLETE PRODUCTION SERVICES, INC.

Notes to Consolidated Financial Statements

(Unaudited, in thousands, except share and per share data)

1. General:

(a) Nature of operations:

Complete Production Services, Inc. is a provider of specialized services and products focused on developing hydrocarbon reserves, reducing operating costs and enhancing production for oil and gas companies. Complete Production Services, Inc. focuses its operations on basins within North America and manages its operations from regional field service facilities located throughout the U.S. Rocky Mountain region, Texas, Oklahoma, Louisiana, Arkansas, Pennsylvania, western Canada, Mexico and Southeast Asia.

References to “Complete,” the “Company,” “we,” “our” and similar phrases used throughout this Quarterly Report on Form 10-Q relate collectively to Complete Production Services, Inc. and its consolidated affiliates.

On April 21, 2006, our common stock began trading on the New York Stock Exchange under the symbol “CPX”.

(b) Basis of presentation:

The unaudited interim consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of the financial position of Complete as of ~~March 31,~~June 30, 2010 and the statements of operations and the statements of comprehensive income for the quarters and six-month periods ended ~~March 31,~~June 30, 2010 and 2009, as well as the statement of stockholders’ equity for the ~~quarter~~six months ended ~~March 31,~~June 30, 2010 and the statements of cash flows for the ~~quarters~~six months ended ~~March 31,~~June 30, 2010 and 2009. Certain information and disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission on February 19, 2010. We believe that these financial statements contain all adjustments necessary so that they are not misleading.

In preparing financial statements, we make informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. We review our estimates on an on-going basis, including those related to impairment of long-lived assets and goodwill, contingencies and income taxes. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.

The results of operations for interim periods are not necessarily indicative of the results of operations that could be expected for the full year.

2. Accounts receivable:


	March 31,		December 31,		June 30,		December 31,
	2010		2009		2010		2009
Trade accounts receivable	$	172,682	$	155,871	$	210,529	$	155,871
Related party receivables		14,561		6,593		24,209		6,593
Unbilled revenue		27,535		19,409		28,295		19,409
Other receivables		2,647		1,975		1,308		1,975

		217,425		183,848		264,341		183,848
Allowance for doubtful accounts		10,940		12,564		11,727		12,564

	$	206,485	$	171,284	$	252,614	$	171,284

On October 31, 2006, we ~~recorded~~completed the new assets acquired at the fair market value of the assets surrendered which had a carrying value of $9,284. We incurred costs to sell totaling approximately $71. We determined the fair value of the assets with the assistancesale of a ~~third-party appraiser, assuming~~disposal group which included certain manufacturing and production enhancement operations of a subsidiary located in Alberta, Canada, as well as operations in south Texas. We sold this disposal group to an ~~orderly liquidation methodology,~~oilfield service company located in Calgary, Alberta, Canada. In conjunction with this asset disposal, the buyer issued a note to us for $2,000 denominated in Canadian dollars. During the second quarter of 2010, we were notified that the seller was in default on a term loan and security agreement which was senior to our note. Therefore, management recorded a provision of $1,926 for bad debt associated with this note as of June 30, 2010, but we will continue to pursue our interest in this note to the extent a portion may be ~~$4,487, resulting~~recoverable in a loss on the exchange of $4,868. Of the total value assigned to the new assets, $4,209 was included in property, plant and equipment and $279 was included in inventory in the accompanying balance sheet as of December 31, 2009. The fair market value of the assets received was determined to be $5,497, using the same methodology applied to the assets surrendered. We believe that these e-line assets will generate cash flows in excess of the cash flows that would have been received from the production testing assets due to relatively higher demand from our customers for e-line services.future period.

April 2010. Concurrently, we renewed our workers’ compensation, general liability and auto insurance policies through our insurance broker for the same policy term. Our accounting policy has been to record a prepaid asset associated with certain of these policies which is amortized over the term and which takes into account actual premium payments and deposits made to date, to record an accrued liability for premiums which are contractually committed for the policy term and to make monthly premium payments in accordance with our premium commitments and monthly note payments for amounts financed. Effective May 1, 2010, we renewed and prepaid our annual insurance ~~policies. Our primary insurance policies extend~~premiums for the policy term May 1, 2010 through April 30, ~~2010~~2011, but chose to prepay our premiums which had been financed through a note arrangement in prior renewals. As a result, we recorded a prepaid asset of $4,267 associated with these renewals. We will continue to make monthly premium payments through our broker for our workers’ compensation, general liability and ~~we expect to renew these~~auto insurance policies ~~effective May 1, 2010.~~during this twelve-month policy term.

6.7. Long-term debt:

The following table summarizes long-term debt as of ~~March 31,~~June 30, 2010 and December 31, 2009:


	2010		2009		2010		2009
U.S. revolving credit facility (a)	$	—	$	—	$	—	$	—
Canadian revolving credit facility (a)		—		—		—		—
8.0% senior notes (b)		650,000		650,000		650,000		650,000
Capital leases and other		193		230		166		230

		650,193		650,230		650,166		650,230
Less: current maturities of long-term debt and capital leases		193		228		166		228

	$	650,000	$	650,002	$	650,000	$	650,002


		as a pledge of approximately 66% of the stock of our first-tier foreign subsidiaries. Additionally, all of the obligations under the U.S. portion of the Amended Credit Agreement are guaranteed by substantially all of our U.S. subsidiaries. The obligations under the Canadian portion of the Amended Credit Agreement are secured by first priority liens on substantially all of our assets and the assets of our subsidiaries (other than our Mexican subsidiary). Additionally, all of the obligations under the Canadian portion of the Amended Credit Agreement are guaranteed by us as well as certain of our subsidiaries.

		Subject to certain limitations set forth in the Amended Credit Agreement, we have the ability to elect how interest under the Amended Credit Agreement will be computed. Interest under the Amended Credit Agreement may be determined by reference to (1) the London Inter-bank Offered Rate, or LIBOR, plus an applicable margin between 3.75% and 4.25% per annum (with the


		applicable margin depending upon our “excess availability amount”, as defined in the Amended Credit Agreement) or (2) the “Base Rate” (which means the higher of the Prime Rate, Federal Funds Rate plus 0.50%, 3-month LIBOR plus 1.00% and 3.50%), plus the applicable margin, as described above. For the period from the effective date of the Third Amendment until the six month anniversary of the effective date of the Third Amendment, interest ~~will be~~was computed ~~as described above~~ with an applicable margin rate of 4.00%. If an event of default exists or continues under the Amended Credit Agreement, advances will bear interest as described above with an applicable margin rate of 4.25% plus 2.00%. Additionally, if an event of default exists under the Amended Credit Agreement, as defined therein, the lenders could accelerate the maturity of the obligations outstanding thereunder and exercise other rights and remedies. Interest is payable monthly.

		There were no borrowings outstanding under our U.S. or Canadian revolving credit facilities as of ~~or during the quarter ended March 31,~~June 30, 2010. There were letters of credit outstanding under the U.S. revolving portion of the facility totaling ~~$54,649,~~$48,489, which reduced the available borrowing capacity as of ~~March 31,~~June 30, 2010. We incurred fees related to our letters of credit ~~for~~as of June 30, 2010 at 4.0% per annum. For the ~~quarter~~six months ended ~~March 31,~~June 30, 2010, ~~which was~~fees related to our letters of credit were calculated using a 360-day provision, at 4.1% per annum. The availability of the U.S. and Canadian revolving credit facilities is determined by our borrowing base less any borrowings and letters of credit outstanding. The net excess availability under our borrowing base calculations for the U.S. and Canadian revolving facilities at ~~March 31,~~June 30, 2010 was ~~$104,370~~$148,466 and ~~$9,932,~~$3,928, respectively.

		We ~~will~~ incur unused commitment fees under the Amended Credit Agreement ranging from 0.50% to 1.00% based on the average daily balance of amounts outstanding. The unused commitment fees were calculated at 1.00% as of ~~March 31,~~June 30, 2010.

(b)		On December 6, 2006, we issued 8.0% senior notes with a face value of $650,000 through a private placement of debt. These notes mature in 10 years, on December 15, 2016, and require semi-annual interest payments, paid in arrears and calculated based on an annual rate of 8.0%, on June 15 and December 15, of each year, which commenced on June 15, 2007. There was no discount or premium associated with the issuance of these notes. The senior notes are guaranteed by all of our current domestic subsidiaries. The senior notes have covenants which, among other things: (1) limit the amount of additional indebtedness we can incur; (2) limit restricted payments such as a dividend; (3) limit our ability to incur liens or encumbrances; (4) limit our ability to purchase, transfer or dispose of significant assets; (5) limit our ability to purchase or redeem stock or subordinated debt; (6) limit our ability to enter into transactions with affiliates; (7) limit our ability to merge with or into other companies or transfer all or substantially all of our assets; and (8) limit our ability to enter into sale and leaseback transactions. We have the option to redeem all or part of these notes on or after December 15, 2011. Additionally, we may redeem some or all of the notes prior to December 15, 2011 at a price equal to 100% of the principal amount of the notes plus a make-whole premium.

		Pursuant to a registration rights agreement with the holders of our 8.0% senior notes, on June 1, 2007, we filed a registration statement on Form S-4 with the SEC which enabled these holders to exchange their notes for publicly registered notes with substantially identical terms. These holders exchanged 100% of the notes for publicly traded notes on July 25, 2007. On August 28, 2007, we entered into a supplement to the indenture governing the 8.0% senior notes, whereby additional domestic subsidiaries became guarantors under the indenture. Effective April 1, 2009, we entered into a second supplement to this indenture whereby additional domestic subsidiaries became guarantors under the indenture.

stock options, we issue our common stock.

We calculate stock compensation expense for our stock-based compensation awards by measuring the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, with limited exceptions, by using an option pricing model to determine fair value. A further description can be found in our Annual Report on Form 10-K as of December 31, 2009.

Effective January 29, 2010, the Compensation Committee of our Board of Directors approved the annual grant of stock options and non-vested restricted stock to certain employees, officers and directors. Pursuant to this authorization, we issued 790,396 shares of non-vested restricted stock on January 29, 2010 at a grant price of $12.53 per share. We expect to recognize compensation expense associated with these grants of non-vested restricted stock totaling $9,904 ratably over the three-year vesting periods. In addition, we granted 5,000 and 2,400 shares of non-vested restricted stock on March 1, 2010 and March 8, 2010, at a grant price of $14.50 and $14.98, respectively. We expect to recognize compensation expense of $108 associated with these March 2010 grants. On January 29, 2010, we granted 510,300 stock options to purchase shares of our common stock at an exercise price of $12.53 per share. We will recognize compensation expense associated with these stock option grants ratably over the three-year vesting period. The fair value of the stock options granted during the ~~quarter~~six months ended ~~March 31,~~June 30, 2010 was determined by applying a Black-Scholes option pricing model based on the following assumptions:


	~~Quarter~~Six Months Ended
	~~March 31,~~June 30,
Assumptions:	2010
Risk-free rate	1.38% to 2.34%
Expected term (in years)		3.7 to 5.1
Volatility		50.4%
Calculated fair value per option	$	4.83 to $5.81

We calculated an average volatility factor for our common stock for the three-year period just prior to the grant date of ~~this~~the award. This volatility calculation was used to compute ~~the calculation of~~ the fair market value of stock option grants made during the ~~quarter~~six months ended ~~March 31,~~June 30, 2010.

We projected a rate of stock option forfeitures based upon historical experience and management assumptions related to the expected term of the options. After adjusting for these forfeitures, we expect to recognize expense totaling $2,635 over the vesting period of these 2010 stock option grants. For the quarter and six months ended ~~March 31,~~June 30, 2010, we have recognized expense related to these stock option grants totaling ~~$151,~~$217 and $368, respectively, which represents a reduction of net income before taxes. The impact on net income for the ~~net loss~~quarter and six months ended June 30, 2010 was a decrease of $133 and $225, respectively, with a $0.01 reduction in basic earnings per share for the quarter ended ~~March 31,~~June 30, 2010 ~~was an increase of $102, with~~and no impact on ~~diluted~~ earnings per share ~~as reported.~~for the six months ended June 30, 2010. The unrecognized compensation costs related to the non-vested portion of these awards was ~~$2,484~~$2,267 as of ~~March 31,~~June 30, 2010 and will be recognized over the applicable remaining vesting periods.

For the quarters ended ~~March 31,~~June 30, 2010 and 2009, we recognized compensation expense associated with all stock option awards totaling ~~$750~~$593 and ~~$1,338,~~$1,053, respectively, resulting in a decrease in net income of $363 and an increase in net loss of ~~$504 and $1,017, respectively, and~~$740, respectively. The impact of this compensation expense on earnings per share was a $0.01 reduction in diluted earnings per share for each of the quarters ended ~~March 31,~~June 30, 2010 and 2009. For the six months ended June 30, 2010 and 2009, we recognized compensation

expense associated with all stock option awards totaling $1,343 and $2,392 respectively, resulting in a decrease in net income of $821 and an increase in net loss of $1,682, respectively. This resulted in a $0.01 impact on earnings per share for the six months ended June 30, 2010 and a $0.02 impact on earnings per share for the six months ended June 30, 2009. Total unrecognized compensation expense associated with outstanding stock option awards at ~~March 31,~~June 30, 2010 was ~~$3,921~~$3,325 or ~~$2,639,~~$2,034, net of tax.

The following tables provide a roll forward of stock options from December 31, 2009 to ~~March 31,~~June 30, 2010 and a summary of stock options outstanding by exercise price range at ~~March 31,~~June 30, 2010:


	Options Outstanding					Options Outstanding
				Weighted					Weighted
				Average					Average
				Exercise					Exercise
	Number			Price		Number			Price
Balance at December 31, 2009		3,383,620		$	13.09		3,383,620		$	13.09
Granted		510,300		$	12.53		510,300		$	12.53
Exercised		(86,129	)	$	8.10		(245,750	)	$	9.22
Cancelled		(48,773	)	$	11.58		(116,072	)	$	17.96

Balance at March 31, 2010		3,759,018		$	13.15
Balance at June 30, 2010							3,532,098		$	13.12


	Options Outstanding						Options Exercisable						Options Outstanding						Options Exercisable
			Weighted		Weighted				Weighted		Weighted				Weighted		Weighted				Weighted		Weighted
	Outstanding at		Average		Average		Exercisable at		Average		Average		Outstanding at		Average		Average		Exercisable at		Average		Average
	March 31,		Remaining		Exercise		March 31,		Remaining		Exercise		June 30,		Remaining		Exercise		June 30,		Remaining		Exercise
Range of Exercise Price	2010		Life (months)		Price		2010		Life (months)		Price		2010		Life (months)		Price		2010		Life (months)		Price
$2.00		7,396		6	$	2.00		7,396		6	$	2.00		7,396		2	$	2.00		7,396		2	$	2.00
$4.79		14,087		1	$	4.79		14,087		1	$	4.79
$5.00		82,750		38	$	5.00		82,750		38	$	5.00		78,750		35	$	5.00		78,750		35	$	5.00
$6.41 – $8.16		1,457,266		87	$	6.53		858,979		74	$	6.61		1,425,065		84	$	6.54		830,112		70	$	6.62
$11.66 – $12.53		750,386		44	$	12.25		240,086		66	$	11.66		641,053		37	$	12.35		130,753		63	$	11.66
$15.90		303,667		94	$	15.90		202,445		82	$	15.90		303,667		91	$	15.90		202,445		79	$	15.90
$17.60 – $19.87		599,754		82	$	19.83		599,754		82	$	19.83		574,588		79	$	19.83		574,588		79	$	19.83
$22.55 – $24.07		445,878		73	$	23.95		443,045		73	$	23.95		405,079		70	$	23.95		403,412		70	$	23.96
$26.26 – $27.11		45,000		86	$	26.35		30,000		86	$	26.35		45,000		83	$	26.35		45,000		83	$	26.35
$29.88		40,000		98	$	29.88		13,333		98	$	29.88		40,000		95	$	29.88		26,667		95	$	29.88
$34.19		12,834		99	$	34.19		4,278		99	$	34.19		11,500		96	$	34.19		3,833		96	$	34.19

		3,759,018		75	$	13.15		2,496,153		74	$	14.43		3,532,098		73	$	13.12		2,302,956		72	$	14.68

(c) Treasury Shares:

In accordance with the provisions of the 2008 Incentive Award Plan, as amended, holders of non-vested restricted stock were given the option to either remit to us the required withholding taxes associated with the vesting of restricted stock, or to authorize us to ~~repurchase~~purchase shares equivalent to the cost of the withholding tax and to remit the withholding taxes on behalf of the holder. Pursuant to this provision, we ~~repurchased~~purchased the following shares inof our common stock during the ~~quarter~~six months ended ~~March 31,~~June 30, 2010:

Average Price Extended
Period Purchased Paid per Share Amount
January 1 - 31, 2010 109,360 $ 12.53 $ 1,370
March 1 - 31, 2010 902 $ 14.06 13

110,262 $ 1,383


			Average Price		Extended
Period	Purchased		Paid per Share		Amount
January 1 – 31, 2010		109,360	$	12.53	$	1,370
March 1 – 31, 2010		902		14.06		13
April 1 – 30, 2010		426		11.84		5
May 1 – 31, 2010		1,260		14.48		18
June 1 – 30, 2010		355		14.83		4

		112,303			$	1,410

8.9. Earnings per share:

We compute basic earnings per share by dividing net income by the weighted average number of

common shares outstanding during the period. Diluted earnings per common and potential common share includes the weighted average of additional shares associated with the incremental effect of dilutive employee stock options and non-vested restricted stock, as determined using the treasury stock method prescribed by the Financial Accounting Standards Board (“FASB”) guidance on earnings per share. The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share for the quarters and six months ended June 30, 2010 and 2009:


	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2010		2009		2010		2009
	(In thousands)
Weighted average basic common shares outstanding		76,036		75,036		75,869		74,966
Effect of dilutive securities:
Employee stock options		553		—		565		—
Non-vested restricted stock		729		—		760		—

Weighted average diluted common and potential common shares outstanding		77,318		75,036		77,194		74,966

For each of the ~~quarters~~quarter and six months ended ~~March 31, 2010 and~~June 30, 2009, we incurred a net ~~losses~~loss and thus all potential common shares were deemed to be anti-dilutive. We excluded the impact of anti-dilutive potential common shares from the calculation of diluted weighted average shares for the ~~quarters~~quarter and six months ended ~~March 31,~~June 30, 2010 and 2009. If these potential common shares were included in the calculation, the impact would have been a decrease in diluted weighted average shares outstanding of ~~386,688~~342,931 shares and ~~5,147,144~~2,878,172 shares for the quarters ended ~~March 31,~~June 30, 2010 and 2009, respectively and 364,171 shares and 3,978,165 shares for the six months ended June 30, 2010 and 2009, respectively.

9.10. Segment information:

We report segment information based on how our management organizes the operating segments to make operational decisions and to assess financial performance. We evaluate performance and allocate resources based on net income (loss) from continuing operations before net interest expense, taxes, depreciation and amortization, non-controlling interest and impairment loss (“Adjusted EBITDA”). The calculation of Adjusted EBITDA should not be viewed as a substitute for calculations under U.S. GAAP, in particular net income. Adjusted EBITDA is included in this Quarterly Report on Form 10-Q because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our

performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using Adjusted EBITDA. In addition, we use Adjusted EBITDA in evaluating acquisition targets. Management also believes that Adjusted EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and Adjusted EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. Adjusted EBITDA is not a substitute for the GAAP measures of earnings or cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA has material limitations as a performance measure because it excludes interest expense, taxes, depreciation and ~~amortization and non-controlling interest.~~amortization. Adjusted EBITDA calculated by us may not be comparable to the calculation of EBITDA as defined and used under our credit facilities (see Note 7, Long-term debt in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2009 for a description of the calculation of EBITDA under our existing credit facility, as amended). See also the table below for a reconciliation of Adjusted EBITDA to operating income (loss) by segment.

We have three reportable operating segments: completion and production services (“C&PS”), drilling services and product sales. The accounting policies of our reporting segments are the same as those used to prepare our consolidated financial statements as of ~~March 31,~~June 30, 2010. Inter-segment transactions are accounted for on a cost recovery basis.


			Drilling		Product										Drilling		Product
	C&PS		Services		Sales		Corporate			Total			C&PS		Services		Sales		Corporate			Total
Quarter Ended March 31, 2010
Quarter Ended June 30, 2010												Quarter Ended June 30, 2010
Revenue from external customers	$	266,288	$	35,104	$	8,312	$	—		$	309,704		$	310,460	$	40,445	$	9,340	$	—		$	360,245
Inter-segment revenues	$	27	$	149	$	607	$	(783	)	$	—		$	165	$	152	$	784	$	(1,101	)	$	—
Adjusted EBITDA, as defined	$	57,756	$	5,419	$	1,562	$	(8,829	)	$	55,908		$	84,748	$	8,663	$	1,250	$	(9,320	)	$	85,341
Depreciation and amortization	$	39,793	$	4,458	$	576	$	492		$	45,319		$	39,770	$	4,644	$	561	$	497		$	45,472

Operating income (loss)	$	17,963	$	961	$	986	$	(9,321	)	$	10,589		$	44,978	$	4,019	$	689	$	(9,817	)	$	39,869
Capital expenditures	$	8,419	$	2,838	$	86	$	—		$	11,343		$	25,296	$	4,526	$	18	$	711		$	30,551

As of March 31, 2010
Segment assets	$	1,287,033	$	172,556	$	37,147	$	113,389		$	1,610,125

Quarter Ended March 31, 2009
Revenue from external customers	$	287,526	$	35,391	$	13,764	$	—		$	336,681
Inter-segment revenues	$	24	$	285	$	807	$	(1,116	)	$	—
Adjusted EBITDA, as defined	$	66,224	$	6,887	$	2,551	$	(9,967	)	$	65,695
Depreciation and amortization	$	44,926	$	5,548	$	634	$	581		$	51,689


				Drilling			Product
	C&PS			Services			Sales		Corporate			Total
Quarter Ended June 30, 2009
Revenue from external customers	$	196,441		$	24,709		$	17,248	$	—		$	238,398
Inter-segment revenues	$	154		$	277		$	1,478	$	(1,909	)	$	—
Adjusted EBITDA, as defined	$	31,424		$	3,569		$	2,085	$	(8,578	)	$	28,500
Depreciation and amortization	$	44,723		$	5,488		$	624	$	567		$	51,402

Operating income (loss)	$	(13,299	)	$	(1,919	)	$	1,461	$	(9,145	)	$	(22,902	)
Capital expenditures	$	8,697		$	1,092		$	143	$	—		$	9,932

As of June 30, 2010
Segment assets	$	1,318,437		$	173,523		$	33,668	$	107,207		$	1,632,835

Six Months Ended June 30, 2010
Revenue from external customers	$	576,748		$	75,549		$	17,652	$	—		$	669,949
Inter-segment revenues	$	193		$	301		$	1,390	$	(1,884	)	$	—
Adjusted EBITDA, as defined	$	142,504		$	14,082		$	2,812	$	(18,149	)	$	141,249
Depreciation and amortization	$	79,563		$	9,102		$	1,137	$	989		$	90,791

Operating income (loss)	$	62,941		$	4,980		$	1,675	$	(19,138	)	$	50,458
Capital expenditures	$	33,715		$	7,364		$	104	$	711		$	41,894

Six Months Ended June 30, 2009
Revenue from external customers	$	483,967		$	60,100		$	31,012	$	—		$	575,079
Inter-segment revenues	$	179		$	562		$	2,285	$	(3,026	)	$	—
Adjusted EBITDA, as defined	$	97,648		$	10,456		$	4,635	$	(18,544	)	$	94,195
Depreciation and amortization	$	89,649		$	11,036		$	1,258	$	1,148		$	103,091

Operating income (loss)	$	7,999		$	(580	)	$	3,377	$	(19,692	)	$	(8,896	)
Capital expenditures	$	21,397		$	1,092		$	183	$	88		$	22,760

As of December 31, 2009
Segment assets	$	1,292,199		$	172,605		$	37,270	$	86,780		$	1,588,854

Drilling Product
C&PS Services Sales Corporate Total
Operating income (loss) $ 21,298 $ 1,339 $ 1,917 $ (10,548 ) $ 14,006
Capital expenditures $ 12,700 $ — $ 40 $ 88 $ 12,828

As of December 31, 2009

Segment assets $ 1,292,199 $ 172,605 $ 37,270 $ 86,780 $ 1,588,854

We do not allocate net interest expense or tax expense to the operating segments. The following table reconciles operating income (loss) as reported above to net ~~loss~~income (loss) for the quarters and six months ended ~~March 31,~~June 30, 2010 and 2009:


	Quarters Ended						Quarters Ended						Six Months Ended
	March 31,						June 30,						June 30,
	2010			2009			2010			2009			2010			2009
Segment operating income	$	10,589		$	14,006
Segment operating income (loss)							$	39,869		$	(22,902	)	$	50,458		$	(8,896	)
Interest expense		14,741			14,458			14,760			13,899			29,501			28,357
Interest income		(48	)		(10	)		(95	)		(20	)		(143	)		(30	)
Income taxes		(1,342	)		(106	)		9,533			(10,949	)		8,191			(11,055	)

Net loss	$	(2,762	)	$	(336	)
Net income (loss)							$	15,671		$	(25,832	)	$	12,909		$	(26,168	)

~~12.~~13. Guarantor and Non-Guarantor Condensed Consolidating Financial Statements:

The following tables present the financial data required pursuant to SEC Regulation S-X Rule 3-10(f), which includes: (1) unaudited condensed consolidating balance sheets as of ~~March 31,~~June 30, 2010 and December 31, 2009; (2) unaudited condensed consolidating statements of operations for the quarters and six months ended ~~March 31,~~June 30, 2010 and 2009 and (3) unaudited condensed consolidating statements of cash flows for the ~~quarters~~six months ended ~~March 31,~~June 30, 2010 and 2009.

Condensed Consolidating Balance Sheet
~~March 31,~~June 30, 2010


						Non-												Non-
				Guarantor		guarantor		Eliminations/								Guarantor		guarantor		Eliminations/
	Parent			Subsidiaries		Subsidiaries		Reclassifications			Consolidated		Parent			Subsidiaries		Subsidiaries		Reclassifications			Consolidated
Current assets
Cash and cash equivalents	$	93,731		$	658	$	16,403	$	(5,353	)	$	105,439	$	128,986		$	823	$	18,764	$	(6,925	)	$	141,648
Accounts receivable, net		594			173,109		32,782		—			206,485		552			223,733		28,329		—			252,614
Inventory, net		—			21,981		12,140		—			34,121		—			19,979		12,379		—			32,358
Prepaid expenses		1,946			11,609		1,516		—			15,071		8,362			11,311		2,398		—			22,071
Income tax receivable		35,407			17,136		3,935		—			56,478		(8,469	)		15,650		3,279		—			10,460
Current deferred tax assets		8,158			—		—		—			8,158		8,158			—		—		—			8,158
Other current assets		—			163		—		—			163		—			163		—		—			163

Total current assets		139,836			224,656		66,776		(5,353	)		425,915		137,589			271,659		65,149		(6,925	)		467,472
Property, plant and equipment, net		3,891			845,962		58,839		—			908,692		4,268			833,605		55,726		—			893,599
Investment in consolidated subsidiaries		770,383			112,507		—		(882,890	)		—		796,841			110,128		—		(906,969	)		—
Inter-company receivable		577,694			—		—		(577,694	)		—		568,529			—		—		(568,529	)		—
Goodwill		15,531			225,434		2,858		—			243,823		15,531			226,451		2,858		—			244,840
Other long-term assets, net		15,250			12,193		4,252		—			31,695		14,489			10,605		1,830		—			26,924

Total assets	$	1,522,585		$	1,420,752	$	132,725	$	(1,465,937	)	$	1,610,125	$	1,537,247		$	1,452,448	$	125,563	$	(1,482,423	)	$	1,632,835

Current liabilities
Current maturities of long-term debt	$	—		$	193	$	—	$	—		$	193	$	—		$	166	$	—	$	—		$	166
Accounts payable		(738	)		32,262		6,336		(5,353	)		32,507		499			46,748		6,864		(6,925	)		47,186
Accrued liabilities		15,396			19,587		9,664		—			44,647		16,171			17,073		5,783		—			39,027
Accrued payroll and payroll burdens		459			17,406		2,728		—			20,593		1,686			19,592		1,413		—			22,691
Accrued interest		15,770			—		8		—			15,778		2,731			36		8		—			2,775
Accrued taxes payable		—			—		221		—			221		—			—		356		—			356

Total current liabilities		30,887			69,448		18,957		(5,353	)		113,939		21,087			83,615		14,424		(6,925	)		112,201
Long-term debt		650,000			—		—		—			650,000		650,000			—		—		—			650,000
Inter-company payable		—			577,129		565		(577,694	)		—		—			568,197		332		(568,529	)		—
Deferred income taxes		141,927			3,792		696		—			146,415		147,521			3,795		679		—			151,995

Total liabilities		822,814			650,369		20,218		(583,047	)		910,354		818,608			655,607		15,435		(575,454	)		914,196
Stockholders’ equity
Total stockholders’ equity		699,771			770,383		112,507		(882,890	)		699,771		718,639			796,841		110,128		(906,969	)		718,639

Total liabilities and stockholders’ equity	$	1,522,585		$	1,420,752	$	132,725	$	(1,465,937	)	$	1,610,125	$	1,537,247		$	1,452,448	$	125,563	$	(1,482,423	)	$	1,632,835


					Non-											Non-
			Guarantor		guarantor		Eliminations/							Guarantor		guarantor		Eliminations/
	Parent		Subsidiaries		Subsidiaries		Reclassifications			Consolidated		Parent		Subsidiaries		Subsidiaries		Reclassifications			Consolidated
Current assets
Cash and cash equivalents												$	64,871	$	519	$	17,001	$	(5,031	)	$	77,360
Accounts receivable, net													610		143,135		27,539		—			171,284
Inventory, net													—		23,001		14,463		—			37,464
Prepaid expenses													3,897		13,052		994		—			17,943
Income tax receivable													35,404		20,201		2,001		—			57,606
Current deferred tax assets													8,158		—		—		—			8,158
Other current assets													—		111		—		—			111

Total current assets													112,940		200,019		61,998		(5,031	)		369,926
Property, plant and equipment, net													4,222		876,304		60,607		—			941,133
Investment in consolidated subsidiaries													755,435		104,974		—		(860,409	)		—
Inter-company receivable													607,325		—		—		(607,325	)		—
Goodwill		15,531		225,434		2,858		—			243,823		15,531		225,434		2,858		—			243,823
Other long-term assets, net		16,026		13,803		4,143		—			33,972		16,026		13,803		4,143		—			33,972

Total assets	$	1,511,479	$	1,420,534	$	129,606	$	(1,472,765	)	$	1,588,854	$	1,511,479	$	1,420,534	$	129,606	$	(1,472,765	)	$	1,588,854

Current liabilities
Current maturities of long-term debt	$	—	$	228	$	—	$	—		$	228	$	—	$	228	$	—	$	—		$	228
Accounts payable		445		30,028		6,303		(5,031	)		31,745		445		30,028		6,303		(5,031	)		31,745
Accrued liabilities		14,064		18,257		8,781		—			41,102		14,064		18,257		8,781		—			41,102
Accrued payroll and payroll burdens		388		10,847		2,324		—			13,559		388		10,847		2,324		—			13,559
Accrued interest		3,198		—		8		—			3,206		3,198		—		8		—			3,206
Notes payable		1,068		1		—		—			1,069		1,068		1		—		—			1,069
Income taxes payable		—		—		813		—			813		—		—		813		—			813

Total current liabilities		19,163		59,361		18,229		(5,031	)		91,722		19,163		59,361		18,229		(5,031	)		91,722
Long-term debt		650,000		—		2		—			650,002		650,000		—		2		—			650,002
Inter-company payable		—		601,947		5,378		(607,325	)		—		—		601,947		5,378		(607,325	)		—
Deferred income taxes		143,427		3,793		1,020		—			148,240		143,427		3,793		1,020		—			148,240

Total liabilities		812,590		665,101		24,629		(612,356	)		889,964		812,590		665,101		24,629		(612,356	)		889,964
Stockholders’ equity
Total stockholders’ equity		698,889		755,433		104,977		(860,409	)		698,890		698,889		755,433		104,977		(860,409	)		698,890

Total liabilities and stockholders’ equity	$	1,511,479	$	1,420,534	$	129,606	$	(1,472,765	)	$	1,588,854	$	1,511,479	$	1,420,534	$	129,606	$	(1,472,765	)	$	1,588,854

Condensed Consolidated Statement of Operations
Quarter Ended ~~March 31,~~June 30, 2009


							Non-															Non-
				Guarantor			guarantor			Eliminations/									Guarantor			guarantor			Eliminations/
	Parent			Subsidiaries			Subsidiaries			Reclassifications			Consolidated			Parent			Subsidiaries			Subsidiaries			Reclassifications			Consolidated
Revenue:
Service	$	—		$	291,407		$	32,667			(1,157	)	$	322,917		$	—		$	197,826		$	24,587		$	(1,263	)	$	221,150
Product		—			3,983			9,781			—			13,764			—			9,850			7,398			—			17,248

		—			295,390			42,448			(1,157	)		336,681			—			207,676			31,985			(1,263	)		238,398
Service expenses		—			189,611			22,759			(1,157	)		211,213			—			133,628			18,408			(1,263	)		150,773
Product expenses		—			3,337			7,158			—			10,495			—			9,418			4,074			—			13,492
Selling, general and administrative expenses		9,966			30,839			8,473			—			49,278			8,573			32,124			4,936			—			45,633
Depreciation and amortization		391			47,712			3,586			—			51,689			385			47,928			3,089			—			51,402

Income (loss) before interest and taxes		(10,357	)		23,891			472			—			14,006			(8,958	)		(15,422	)		1,478			—			(22,902	)
Interest expense		14,547			1,905			57			(2,051	)		14,458			13,932			1,529			37			(1,599	)		13,899
Interest income		(2,057	)		(2	)		(2	)		2,051			(10	)		(1,618	)		(1	)		—			1,599			(20	)
Equity in earnings of consolidated affiliates		(14,787	)		(832	)		—			15,619			—			11,956			(1,676	)		—			(10,280	)		—

Income (loss) before taxes		(8,060	)		22,820			417			(15,619	)		(442	)		(33,228	)		(15,274	)		1,441			10,280			(36,781	)
Taxes		(7,724	)		8,033			(415	)		—			(106	)		(7,396	)		(3,318	)		(235	)		—			(10,949	)

Net income (loss)	$	(336	)	$	14,787		$	832		$	(15,619	)	$	(336	)	$	(25,832	)	$	(11,956	)	$	1,676		$	10,280		$	(25,832	)

Condensed Consolidated Statement of Cash Flows
~~Quarter~~Six Months Ended ~~March 31,~~June 30, 2010


							Non-															Non-
				Guarantor			guarantor			Eliminations/									Guarantor			guarantor			Eliminations/
	Parent			Subsidiaries			Subsidiaries			Reclassifications			Consolidated			Parent			Subsidiaries			Subsidiaries			Reclassifications			Consolidated
Cash provided by:
Net income (loss)	$	(2,762	)	$	13,354		$	5,929		$	(19,283	)	$	(2,762	)	$	12,909		$	41,355		$	5,084		$	(46,439	)	$	12,909
Items not affecting cash:
Equity in earnings of consolidated affiliates		(13,354	)		(5,929	)		—			19,283			—			(41,355	)		(5,084	)		—			46,439			—
Depreciation and amortization		332			41,706			3,281			—			45,319			666			83,616			6,509			—			90,791
Other		3,302			(1,285	)		(18	)		—			1,999			8,832			5,196			(463	)		—			13,565
Changes in operating assets and liabilities		13,373			(12,300	)		(4,826	)		(322	)		(4,075	)		44,921			(52,801	)		(2,976	)		(1,894	)		(12,750	)

Net cash provided by (used in) operating activities		891			35,546			4,366			(322	)		40,481
Net cash provided by (used for) operating activities																	25,973			72,282			8,154			(1,894	)		104,515

Investing activities:
Additions to property, plant and equipment		—			(11,004	)		(339	)		—			(11,343	)		(711	)		(39,825	)		(1,358	)		—			(41,894	)
Inter-company receipts		29,631			—			—			(29,631	)		—			38,796			—			—			(38,796	)		—
Acquisitions																	—			(1,365	)		—			—			(1,365	)
Proceeds from the disposal of capital assets		—			450			68			—			518			—			3,024			93			—			3,117

Net cash provided by (used in) investing activities		29,631			(10,554	)		(271	)		(29,631	)		(10,825	)
Net cash provided by (used for) investing activities																	38,085			(38,166	)		(1,265	)		(38,796	)		(40,142	)

Financing activities:
Repayments of long-term debt		—			(35	)		(2	)		—			(37	)		—			(62	)		(2	)		—			(64	)
Repayments of notes payable		(1,069	)		—			—			—			(1,069	)		(1,069	)		—			—			—			(1,069	)
Inter-company borrowings		—			(24,818	)		(4,813	)		29,631			—			—			(33,750	)		(5,046	)		38,796			—
Proceeds from issuances of common stock		696			—			—			—			696			2,263			—			—			—			2,263
Purchase of treasury shares		(1,383	)		—			—			—			(1,383	)		(1,410	)		—			—			—			(1,410	)
Other		94			—			—			—			94			273			—			—			—			273

Net cash provided by (used in) financing activities		(1,662	)		(24,853	)		(4,815	)		29,631			(1,699	)		57			(33,812	)		(5,048	)		38,796			(7	)
Effect of exchange rate changes on cash		—			—			122			—			122			—			—			(78	)		—			(78	)

Change in cash and cash equivalents		28,860			139			(598	)		(322	)		28,079			64,115			304			1,763			(1,894	)		64,288
Cash and cash equivalents, beginning of period		64,871			519			17,001			(5,031	)		77,360			64,871			519			17,001			(5,031	)		77,360

Cash and cash equivalents, end of period	$	93,731		$	658		$	16,403		$	(5,353	)	$	105,439		$	128,986		$	823		$	18,764		$	(6,925	)	$	141,648

Guarantor Non-guarantor Eliminations/
Parent Subsidiaries Subsidiaries Reclassifications Consolidated
(in thousands)
Proceeds from issuances of common stock 25 — — — 25
Other (53 ) — — — (53 )

Net cash provided by (used in) financing activities (117,378 ) (69,773 ) (283 ) 66,152 (121,282 )
Effect of exchange rate changes on cash — — 286 — 286

Change in cash and cash equivalents (1,931 ) 356 1,302 5,961 5,688
Cash and cash equivalents, beginning of period 25,399 936 5,078 (12,323 ) 19,090

Cash and cash equivalents, end of period $ 23,468 $ 1,292 $ 6,380 $ (6,362 ) $ 24,778

~~13.~~14. Recent accounting pronouncements and authoritative literature:

In May 2009, the FASB issued a standard regarding subsequent events that provides guidance as to when an entity should recognize events or transactions occurring after a balance sheet date in its financial statements and the necessary disclosures related to these events. Specifically, the entity should recognize subsequent events that provide evidence about conditions that existed at the balance sheet date, including significant estimates used to prepare financial statements. Originally, this standard required entities to disclose the date through which subsequent events had been evaluated and whether that date was the date the financial statements were issued or the date the financial statements were available to be issued. We adopted this accounting standard effective June 30, 2009 and applied its provisions prospectively. In February 2010, the FASB modified this standard to eliminate the requirement for ~~an SEC filing entity~~publicly-traded entities to disclose the date through which subsequent events have been evaluated. Therefore, we omitted the disclosure in this Quarterly Report on Form 10-Q as of ~~March 31,~~June 30, 2010.

In January 2010, the FASB issued “Fair Value Measurements and Disclosure (Topic 820)” which clarified the disclosure requirements of existing U.S. GAAP related to fair value measurements. This standard requires additional disclosures about recurring and non-recurring fair value measurements as follows: (1) for transfers in and out of Level 1 and Level 2 fair value measurements, as those terms are currently defined in existing authoritative literature, a reporting entity is required to disclose the amount of the movement between levels and an explanation for the movement; (2) for activity at Level 3, primarily fair value measurements based on unobservable inputs, a reporting entity is required to present separately information about purchases, sales, issuances and settlements, as opposed to presenting such transactions on a net basis; (3) in the event of a disaggregation, a reporting entity is required to provide fair value measurement disclosure for each class of assets and liabilities; and (4) a reporting entity is required to provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and non-recurring fair value measurements for items that fall in either Level 2 or Level 3. These disclosure requirements are effective for interim and annual reporting periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements for which disclosure becomes effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. This standard did not impact our financial position, results of operations and cash flows as of and for the quarter ended ~~March 31,~~June 30, 2010.

On March 30, 2010, the President of the United States signed the Health Care and Education Reconciliation Act of 2010, which is a reconciliation bill that amends the Patient Protection and Affordable Care Act that was signed by the President on March 23, 2010. We are currently awaiting guidance from the FASB and SEC related to the implications of this new legislation on accounting and disclosure requirements. We expect that this legislation will have an impact on our financial position, results of operations and cash flows, but we cannot determine the extent of the impact at this time.

~~14. Subsequent Events:~~

In April 2010, we received federal income tax refunds totaling $43.7 million in connection with our 2009 federal income tax return, partially resulting from the realization of certain net operating loss carry backs for fiscal years 2006, 2007 and 2008.

1820

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements and information in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about us and the oil and gas industry. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. These forward-looking statements involve risks and uncertainties that may be outside of our control and could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: market prices for oil and gas, the level of oil and gas drilling, economic and competitive conditions, capital expenditures, regulatory changes and other uncertainties. Other factors that could cause our actual results to differ from our projected results are described in: (1) Part II, “Item 1A. Risk Factors” and elsewhere in this report, (2) our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, (3) our reports and registration statements filed from time to time with the SEC and (4) other announcements we make from time to time. In light of these risks, uncertainties and assumptions, the forward-looking events discussed below may not occur. Unless otherwise required by law, we undertake no obligation to update publicly any forward-looking statements, even if new information becomes available or other events occur in the future.

The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” “expect” and similar expressions are intended to identify forward-looking statements. All statements other than statements of current or historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements.

Reference to “Complete,” the “Company,” “we,” “our” and similar phrases used throughout this Quarterly Report on Form 10-Q relate collectively to Complete Production Services, Inc. and its consolidated subsidiaries.

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

The following discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes as of ~~March 31,~~June 30, 2010 and for the quarters and six months ended ~~March 31,~~June 30, 2010 and 2009, included elsewhere herein.

Overview

We are a leading provider of specialized services and products focused on helping oil and gas companies develop hydrocarbon reserves, reduce operating costs and enhance production. We focus on basins within North America that we believe have attractive long-term potential for growth, and we deliver targeted, value-added services and products required by our customers within each specific basin. We believe our range of services and products positions us to meet the many needs of our customers at the wellsite, from drilling and completion through production and eventual abandonment. We manage our operations from regional field service facilities located throughout the U.S. Rocky Mountain region, Texas, Oklahoma, Louisiana, Arkansas, Pennsylvania, western Canada, Mexico and Southeast Asia.

We operate in three business segments:

Completion and Production Services. Through our completion and production services segment, we establish, maintain and enhance the flow of oil and gas throughout the life of a well. This segment is divided into the following primary service lines:

•

Intervention Services.Well intervention requires the use of specialized equipment to perform an array of wellbore services. Our fleet of intervention service equipment includes coiled tubing units, pressure pumping units, nitrogen units, well service rigs, snubbing units and a variety of support equipment. Our intervention services provide customers with innovative solutions to increase production of oil and gas.

1921

•

Downhole and Wellsite Services.Our downhole and wellsite services include electric-line, slickline, production optimization, production testing, rental and fishing services.


	•		Fluid Handling.We provide a variety of services to help our customers obtain, move, store and dispose of fluids that are involved in the development and production of their reservoirs. Through our fleet of specialized trucks, frac tanks and other assets, we provide fluid transportation, heating, pumping and disposal services for our customers.

Drilling Services. Through our drilling services segment, we provide services and equipment that initiate or stimulate oil and gas production by providing land drilling and specialized rig logistics services. ~~Our drilling rigs operate primarily in and around the Barnett Shale region of north Texas.~~

Product Sales. We provide oilfield service equipment and refurbishment of used equipment through our Southeast Asian business, and we provide repair work and fabrication services for our customers at a business located in Gainesville, Texas.

Substantially all service and rental revenue we earn is based upon a charge for a period of time (an hour, a day, a week) for the actual period of time the service or rental is provided to our customer or on a fixed per-stage-completed fee. Product sales are recorded when the actual sale occurs and title or ownership passes to the customer.

General

The primary factors influencing demand for our services and products are the level of drilling and workover activity of our customers and the complexity of such activity, which in turn, depends on current and anticipated future oil and gas prices, production depletion rates and the resultant levels of cash flows generated and allocated by our customers to their drilling and workover budgets. As a result, demand for our services and products is cyclical, substantially depends on activity levels in the North American oil and gas industry and is highly sensitive to current and expected oil and natural gas prices.

We consider the drilling and well service rig counts to be an indication of spending by our customers in the oil and gas industry for exploration and development of new and existing hydrocarbon reserves. These spending levels are a primary driver of our business, and we believe that our customers tend to invest more in these activities when oil and gas prices are at higher levels, are increasing, or are expected to increase. The following tables summarize average North American drilling and well service rig activity, as measured by Baker Hughes Incorporated (“BHI”) and the Cameron International Corporation/Guiberson /AESC Service Rig Count for “Active ~~Rigs.”~~Rigs”:

AVERAGE RIG COUNTS


	Quarter		Quarter		Year		Quarter		Quarter		Six Months		Six Months
	Ended		Ended		Ended		Ended		Ended		Ended		Ended
	3/31/10		3/31/09		12/31/09		6/30/10		6/30/09		6/30/10		6/30/09
BHI Rotary Rig Count:
U.S. Land		1,300		1,287		1,046		1,464		885		1,385		1,086
U.S. Offshore		46		57		44		42		50		43		53

Total U.S.		1,346		1,344		1,090		1,506		935		1,428		1,139
Canada		469		332		222		163		89		310		211

Total North America		1,815		1,676		1,312		1,669		1,024		1,738		1,350

During the first ~~quarter~~six months of 2010, we have ~~begun to see~~seen favorable trends ~~for~~in our business relative to the challenging market conditions we experienced in 2009. Since the end of 2009, we experienced an increase in our asset utilization and pricing in most of our business lines ~~particularly our pressure pumping business,~~ and in most of our operating ~~areas utilization levels began to improve.~~areas. Although we cannot be certain that these improvements will continue, we believe the ~~improving~~sustainability of current oil prices, due to economic indicators of an improved global economy relative to 2009, and ~~the resulting increases in oil prices along with~~ the need for our customers to hold recently acquired acreage, ~~should~~will create incentives to maintain, if not expand, activity in ~~liquids-rich~~oil and liquid-rich fields and emerging basins such as the Bakken Shale in North Dakota, the ~~Eagle-Ford~~Eagle Ford Shale in south Texas and the Marcellus Shale in ~~Pennsylvania and the Haynesville Shale in Louisiana.~~Pennsylvania. However, activity levels in the more mature gas markets are less certain and may experience declines due to current natural gas prices. In addition, we believe that any near-term growth will be largely related to multi-stage, horizontal well completions. Since we have invested heavily in equipment that is configured for horizontal completions, we believe we are well positioned to be opportunistic in the basins in which we serve our customers.

Effective June 30, 2010, we exchanged certain property, plant and equipment used in our fluid handling business for other equipment. This exchange was determined to have commercial substance for us and therefore we recorded the new assets at the fair market value of the assets received, which was more readily determinable than the fair market value of the assets surrendered. The fair market value of the assets received was $0.8 million, resulting in a gain on the non-monetary exchange of $0.5 million.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires the use of estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, and provide a basis for making judgments about the carrying value of assets and liabilities that are not readily available through open market quotes. Estimates and assumptions are reviewed periodically, and actual results may differ from those estimates under different assumptions or conditions. We must use our judgment related to uncertainties in order to make these estimates and assumptions.

For a description of our critical accounting policies and estimates as well as certain sensitivity disclosures related to those estimates, see our Annual Report on Form 10-K for the year ended December 31, 2009. Our critical accounting policies and estimates have not changed materially during the ~~quarter~~six months ended ~~March 31,~~June 30, 2010.

Results of Operations


										Percent												Percent
	Quarter			Quarter			Change			Change			Quarter			Quarter			Change			Change
	Ended			Ended			2010/			2010/			Ended			Ended			2010/			2010/
	3/31/10			3/31/09			2009			2009			6/30/10			6/30/09			2009			2009
	(unaudited, in thousands)												(unaudited, in thousands)
Revenue:
Completion and production services	$	266,288		$	287,526		$	(21,238	)		(7	%)	$	310,460		$	196,441		$	114,019			58	%
Drilling services		35,104			35,391			(287	)		(1	%)		40,445			24,709			15,736			64	%
Product sales		8,312			13,764			(5,452	)		(40	%)		9,340			17,248			(7,908	)		(46	%)

Total	$	309,704		$	336,681		$	(26,977	)		(8	%)	$	360,245		$	238,398		$	121,847			51	%


Adjusted EBITDA:
Completion and production services	$	57,756		$	66,224		$	(8,468	)		(13	%)	$	84,748		$	31,424		$	53,324			170	%
Drilling services		5,419			6,887			(1,468	)		(21	%)		8,663			3,569			5,094			143	%
Product sales		1,562			2,551			(989	)		(39	%)		1,250			2,085			(835	)		(40	%)
Corporate		(8,829	)		(9,967	)		1,138			(11	%)		(9,320	)		(8,578	)		(742	)		9	%

Total	$	55,908		$	65,695		$	(9,787	)		(15	%)	$	85,341		$	28,500		$	56,841			199	%

“Adjusted EBITDA” consists of net income (loss) from continuing operations before net interest expense, taxes, depreciation and amortization, non-controlling interest and impairment loss. Adjusted EBITDA is a non-GAAP measure of performance. We use Adjusted EBITDA as the primary internal management measure for evaluating performance and allocating additional resources because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using Adjusted EBITDA. In addition, we use Adjusted EBITDA in evaluating acquisition targets. Management also believes that Adjusted EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and Adjusted EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. Adjusted EBITDA is not a substitute for the GAAP measures of earnings or cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA has material limitations as a performance measure because it excludes interest expense, taxes, depreciation and amortization and non-controlling interest. The calculation of Adjusted EBITDA is different from the calculation of “EBITDA,” as defined and used in our credit facilities. For a discussion of the definition of “EBITDA” under our existing credit facilities, as recently amended, see Note 7, Long-term debt in the Notes to Consolidated Financial Statements to our Annual Report on Form 10-K for the year ended December 31, 2009. The following table reconciles Adjusted EBITDA for the quarters ended

~~March 31, 2010 and 2009 to the most comparable U.S. GAAP measure, operating income (loss).~~


		“Adjusted EBITDA” consists of net income (loss) from continuing operations before net interest expense, taxes, depreciation and amortization, non-controlling interest and impairment loss. Adjusted EBITDA is a non-GAAP measure of performance. We use Adjusted EBITDA as the primary internal management measure for evaluating performance and allocating additional resources because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using Adjusted EBITDA. In addition, we use Adjusted EBITDA in evaluating acquisition targets. Management also believes that Adjusted EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and Adjusted EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. Adjusted EBITDA is not a substitute for the GAAP measures of earnings or cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA has material limitations as a performance measure because it excludes interest expense, taxes, depreciation and amortization. The calculation of Adjusted EBITDA is different from the calculation of “EBITDA,” as defined and used in our credit facilities. For a discussion of the definition of “EBITDA” under our existing credit facilities, as recently amended, see Note 7, Long-term debt in the Notes to Consolidated Financial Statements to our Annual Report on Form 10-K for the year ended December 31, 2009. The following table reconciles Adjusted EBITDA for the quarters and six-month periods ended June 30, 2010 and 2009 to the most comparable U.S. GAAP measure, operating income (loss).

Reconciliation of Adjusted EBITDA to Most Comparable U.S. GAAP Measure—Operating Income (Loss)


	Completion											Completion
	and											and
	Production		Drilling		Product							Production			Drilling			Product
	Services		Services		Sales		Corporate			Total		Services			Services			Sales		Corporate			Total
	(unaudited, in thousands)											(unaudited, in thousands)
Quarter Ended March 31, 2010
Quarter Ended June 30, 2010
Adjusted EBITDA, as defined	$	57,756	$	5,419	$	1,562	$	(8,829	)	$	55,908	$	84,748		$	8,663		$	1,250	$	(9,320	)	$	85,341
Depreciation and amortization	$	39,793	$	4,458	$	576	$	492		$	45,319	$	39,770		$	4,644		$	561	$	497		$	45,472

Operating income (loss)	$	17,963	$	961	$	986	$	(9,321	)	$	10,589	$	44,978		$	4,019		$	689	$	(9,817	)	$	39,869


Quarter Ended March 31, 2009
Quarter Ended June 30, 2009
Adjusted EBITDA, as defined	$	66,224	$	6,887	$	2,551	$	(9,967	)	$	65,695	$	31,424		$	3,569		$	2,085	$	(8,578	)	$	28,500
Depreciation and amortization	$	44,926	$	5,548	$	634	$	581		$	51,689	$	44,723		$	5,488		$	624	$	567		$	51,402

Operating income (loss)	$	21,298	$	1,339	$	1,917	$	(10,548	)	$	14,006	$	(13,299	)	$	(1,919	)	$	1,461	$	(9,145	)	$	(22,902	)


Six Months Ended June 30, 2010
Adjusted EBITDA, as defined												$	142,504		$	14,082		$	2,812	$	(18,149	)	$	141,249
Depreciation and amortization												$	79,563		$	9,102		$	1,137	$	989		$	90,791

Operating income (loss)												$	62,941		$	4,980		$	1,675	$	(19,138	)	$	50,458


Six Months Ended June 30, 2009
Adjusted EBITDA, as defined												$	97,648		$	10,456		$	4,635	$	(18,544	)	$	94,195
Depreciation and amortization												$	89,649		$	11,036		$	1,258	$	1,148		$	103,091

Operating income (loss)												$	7,999		$	(580	)	$	3,377	$	(19,692	)	$	(8,896	)

Below is a discussion of our operating results by segment for these periods.

Quarter Ended ~~March 31,~~June 30, 2010 Compared to the Quarter Ended ~~March 31,~~June 30, 2009 (Unaudited)

Revenue

Revenue for the quarter ended ~~March 31,~~June 30, 2010 ~~decreased~~increased by ~~$27.0~~$121.8 million, or 8%51%, to ~~$309.7~~$360.2 million from ~~$336.7~~$238.4 million for the same period in 2009. The changes by segment were as follows:

•

Completion and Production Services.Segment revenue ~~decreased $21.2~~increased $114.0 million, or 7%58%, for the quarter primarily due to ~~lower pricing caused by an overall decline~~a substantial increase in investment by our customers in oil and gas exploration and development activities ~~which began~~resulting in ~~late 2008~~higher utilization of our equipment. Activity levels and ~~continued throughout 2009. Activity levels~~pricing in some service lines and select geographic areas began to improve during the latter part of the fourth quarter of 2009 ~~but pricing remains below~~and continued improving throughout the ~~levels we experienced for the first quarter of 2009.~~six months ended June 30, 2010.


	•		Drilling Services.Segment revenue ~~decreased $0.3~~increased $15.7 million, or 1%64%, for the ~~quarter. On a year-over-year basis, this business segment has been impacted by lower~~quarter primarily due to improved utilization ~~rates and pricing in our contract drilling operations and lower pricing~~ in our rig ~~logistics business.~~relocation and contract drilling businesses. The drilling services segment ~~has~~ benefitted from ~~a number of~~ long rig moves ~~in the first quarter of 2010,~~ as customers ~~reposition~~repositioned assets in to emerging markets such as the Bakken ~~Shale~~ and ~~Eagle-Ford Shale.~~Eagle Ford Shales.


	•		Product Sales.Segment revenue decreased ~~$5.5~~$7.9 million, or ~~40%~~46%, for the quarter ~~primarily~~due to lower third-party sales at our fabrication and repair business in Texas. During the first quarter of 2009, we completed several projects including a well service rig for a customer and sold several large inventory items. This business had less activity during the first quarter of 2010, as a result of the overall declineTexas, partially offset by an increase in ~~spending by~~product sales from our ~~customers on new equipment.~~Asian operations.

Service and Product Expenses

Service and product expenses include labor costs associated with the execution and support of our services, materials used in the performance of those services and other costs directly related to the support and maintenance of equipment. These expenses ~~decreased $8.8~~increased $66.6 million, or 4%41%, to ~~$212.9~~$230.9 million for the quarter ended ~~March 31,~~June 30, 2010 from ~~$221.7~~$164.3 million for the quarter ended ~~March 31,~~June 30, 2009. The following table summarizes service and product expenses as a percentage of revenues for the quarters ended ~~March 31,~~June 30, 2010 and 2009:

	•		~~Completion and Production Services.~~Service and product expenses as a percentage of revenue for this business segment increased when comparing the quarter ended March 31, 2010 to the same period in 2009 due to lower revenue in the first quarter offor the products segments remained consistent for the quarters ended June 30, 2010 and ~~cost-saving measures implemented in late 2008 and early~~ 2009.

	•		~~Drilling Services.~~Service and product expenses as a percentage of revenue for this business segment increased for the quarter ended March 31, 2010 compared to the same period in 2009 due to lower revenue and the benefit received from the aforementioned cost-saving measures.

	•		~~Product Sales.~~Service and product expenses as a percentage of revenue for the products segments decreased for the quarter ended March 31, 2010 compared to the same period in 2009. Impacting the results for the first quarter of 2009 was the sale of several large inventory items at lower margins. Therefore, although year-over-year sales were down for the products business, the mix of product sales for the first quarter of 2010 was more favorable than that of the comparable quarter in 2009.

administrative expenses decreased ~~$8.4~~$1.6 million, or ~~17%~~4%, for the quarter ended ~~March 31,~~June 30, 2010 to ~~$40.9~~$44.0 million from ~~$49.3~~$45.6 million during the quarter ended ~~March 31,~~June 30, 2009. ~~Included~~Increases in incentive compensation costs were more than offset by a decline in bad debt expense and losses on asset dispositions when compared to the results for the quarter ended March 31, 2009 was a $4.9 million loss on a non-monetary exchange of assets in Canada. In addition, the year-over-year results were impacted by the timing of cost-saving measures implemented by management during the firstsecond quarter of ~~2009 in response to unfavorable market conditions.~~2009. As a percentage of revenues, selling, general and administrative expense was ~~13%~~12% and ~~15%~~19% for the quarters ended ~~March 31,~~June 30, 2010 and 2009, respectively.

Depreciation and Amortization

Depreciation and amortization expense decreased ~~$6.4~~$5.9 million, or 12%, to ~~$45.3~~$45.5 million for the quarter ended ~~March 31,~~June 30, 2010 from ~~$51.7~~$51.4 million for the quarter ended ~~March 31,~~June 30, 2009. The decrease in depreciation and amortization expense was primarily due to asset retirements in 2009, including impairments taken related to our drilling rig business in Texas during the third quarter of 2009. Depreciation and amortization expense for the second quarter of 2010 was also impacted by the impairment of certain intangible assets during the fourth quarter of 2009. As a percentage of revenue, depreciation and amortization was ~~15%~~13% and 22% for the quarters ended ~~March 31,~~June 30, 2010 and 2009, respectively.

Interest expense

Interest expense increased 6%, or $0.9 million, to $14.8 million for the quarter ended June 2010 compared to $13.9 million for the quarter ended June 30, 2009, primarily due to higher costs associated with our credit facility, which was amended during the fourth quarter of 2009.

Taxes

We recorded a ~~tax benefit~~provision of ~~$1.3~~$9.5 million for the quarter ended ~~March 31,~~June 30, 2010 at an effective rate of approximately ~~33%~~39% and a tax benefit of ~~$0.1~~$10.9 million for the quarter ended ~~March 31,~~June 30, 2009 at an effective rate of approximately ~~24%~~30%. The increase in the effective tax rate was primarily due to an increase in pre-tax earnings in various tax jurisdictions resulting in higher state income taxes and a decrease in benefit from the foreign tax rate differential.

Six Months Ended June 30, 2010 Compared to the Six Months Ended June 30, 2009 (Unaudited)

Revenue

Revenue for the ~~quarter~~six months ended ~~March 31, 2009 was impacted~~June 30, 2010 increased by ~~a $4.9~~$94.9 million, ~~loss on a non-monetary asset exchange~~or 16%, to $669.9 million from $575.1 million for the same period in ~~Canada.~~2009. The changes by segment were as follows:

	•		Completion and Production Services.Segment revenue increased $92.8 million, or 19%, for the six months primarily due to an increase in demand for our services and an overall increase in activity levels for the oil and gas industry during 2010 compared to 2009, resulting in higher utilization of our equipment. Activity levels and pricing in some service lines and select geographic areas began to improve during the latter part of the fourth quarter of 2009 and continued improving throughout the six months ended June 30, 2010.

	•		Drilling Services.Segment revenue increased $15.4 million, or 26%, for the six months primarily due to improved utilization in our rig relocation business partially offset by lower average pricing and utilization in our contract drilling business. The drilling services segment benefitted from long rig moves as customers repositioned assets in to emerging markets such as the Bakken and Eagle Ford Shales.

	•		Product Sales.Segment revenue decreased $13.4 million, or 43%, for the six months due primarily to lower third-party sales at our repair and fabrication shop in north Texas during the first six months of 2010. Revenues also declined in our Southeast Asia business during the six months ended June 30, 2010 compared to the same period in 2009 due to a change in the sales mix and the timing of product sales and equipment refurbishment, which tends to be project-specific.

2427

Service and Product Expenses

Service and product expenses increased $57.9 million, or 15%, to $443.8 million for the six months ended June 30, 2010 from $386.0 million for the six months ended June 30, 2009. The following table summarizes service and product expenses as a percentage of revenues for the six months ended June, 2010 and 2009:

Service and Product Expenses as a Percentage of Revenue


	Six Months Ended
	6/30/10			6/30/09			Change
Segment:
Completion and production services		65	%		66	%		(1	%)
Drilling services		72	%		71	%		1	%
Product sales		76	%		77	%		(1	%)
Total		66	%		67	%		(1	%)

Service and product expenses as a percentage of revenue decreased slightly for the six months ended June 30, 2010 compared to the same period in 2009. Margins by business segment were primarily impacted by utilization and pricing.

	•		Completion and Production Services.Service and product expenses as a percentage of revenue for this business segment decreased when comparing the six months ended June 30, 2010 to the same period in 2009. The year-over-year favorable margin improvement was attributable primarily to the service mix with an increase in sales for historically higher-margin offerings, partially offset by some inflationary factors including higher labor costs.

	•		Drilling Services.Service and product expenses as a percentage of revenue for this business segment increased slightly for the six months ended June 30, 2010 compared to the same period in 2009 primarily due to a shift in service mix which resulted in a larger percentage of revenue from our rig logistics business.

	•		Product Sales.Service and product expenses as a percentage of revenue for the products segments decreased for the six months ended June 30, 2010 compared to the same period in 2009, primarily due to the product mix for this business.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $10.0 million, or 11% to $84.9 million, for the six months ended June 30, 2010 compared to $94.9 million for the same period in 2009. Higher costs associated with incentive compensation were more than offset by a decrease in bad debt expense and a decline in losses associated with asset dispositions. We recorded a loss on the non-monetary exchange of certain assets in Canada during the first quarter of 2009 which totaled $4.9 million. Excluding the impact of this non-monetary asset exchange in 2009, as a percentage of revenues, selling, general and administrative expense was 13% and 16% for the six months ended June 30, 2010 and 2009, respectively.

Depreciation and Amortization

Depreciation and amortization expense decreased $12.3 million, or 12%, to $90.8 million for the six months ended June 30, 2010 from $103.1 million for the six months ended June 30, 2009. The decrease in depreciation and amortization expense was primarily due to asset retirements in 2009, including impairments taken related to our drilling rig business in Texas during the third quarter of 2009. Depreciation and amortization expense for the six months ended June 30, 2010 was also impacted by the impairment of certain intangible assets during the fourth quarter of 2009. As a percentage of revenue, depreciation and amortization expense decreased to 14% from 18% for the six months ended June 30, 2010 and 2009, respectively.

Interest Expense

Interest expense increased $1.1 million, or 4%, to $29.5 million for the six months ended June 30, 2010 from $28.4 million for the six months ended June 30, 2009. The increase in interest expense was primarily attributable to higher costs associated with our credit facility, which was amended during the fourth quarter of 2009, and an increase in the average balance of letters of credit outstanding. The weighted-average interest rate of borrowings outstanding at June 30, 2010 and 2009 was 8.0%.

Taxes

We recorded a tax provision of $8.2 million for the six months ended June 30, 2010 at an effective rate of approximately 39% and a tax benefit of $11.1 million for the six months ended June 30, 2009 at an effective rate of 30%. The lower effective rate for the six months ended June 30, 2009 was due to our foreign tax rate differential, the impact of state and provincial tax expense relative to our operating loss and certain non-deductible items for the years in which losses occurred.

Liquidity and Capital Resources

The disruption in the credit markets which occurred in 2008 and 2009 resulted in a significant adverse impact on the availability of credit from a number of financial institutions. We are not currently a party to any interest rate swaps, currency hedges or derivative contracts of any type and have no exposure to commercial paper or auction rate securities markets. We will continue to closely monitor our liquidity and the overall health of the credit markets. However, we cannot predict with any certainty the impact that any further disruption in the credit environment would have on us.

Our primary liquidity needs are to fund capital expenditures and general working capital. In addition, we have historically obtained capital to fund strategic business acquisitions. Our primary sources of funds have been cash flow from operations, proceeds from borrowings under bank credit facilities, a private placement of debt that was subsequently exchanged for publicly registered debt and the issuance of equity securities in our initial public offering.

As of ~~March 31,~~June 30, 2010, we had working capital, net of cash, of ~~$206.5~~$213.6 million and cash and cash equivalents of ~~$105.4~~$141.6 million, compared to working capital, net of cash, of $200.8 million and cash and cash equivalents of $77.4 million at December 31, 2009. Our working capital, net of cash, remained relatively consistent at ~~March 31,~~June 30, 2010 and December 31, 2009. Cash increased primarily due to ~~collection~~favorable operating results for the first six months of ~~trade receivables.~~2010.

We anticipate that we will rely on cash generated from operations, borrowings under our amended revolving credit facility, future debt offerings and/or future public equity offerings to satisfy our liquidity needs. We believe that funds from these sources ~~or funds received from our newly amended credit facility,~~ will be sufficient to meet both our short-term working capital requirements and our long-term capital requirements. If our plans or assumptions change, are inaccurate, or if we make further acquisitions, we may have to raise additional capital. Our ability to fund planned capital expenditures and to make acquisitions will depend upon our future operating performance, and more broadly, on the availability of equity and debt financing, which will be affected by prevailing economic conditions in our industry, and general financial, business and other factors, some of which are beyond our control. In addition,new debt obtained could include service requirements based on higher interest paid and shorter maturities and could impose a significant burden on our results of operations and financial condition. The issuance of additional equity securities could result in significant dilution to stockholders.

On October 13, 2009, we completed an amendment to our existing revolving credit facilities (the “Third Amendment”) which modified the structure of the credit facility to an asset-based facility subject to borrowing base restrictions. This amendment provided us with less restrictive financial debt covenants and reduced borrowing capacity under the facility. We believe the amended revolving credit facility will allow us to better manage our cash flow needs, provide greater certainty of access to funds in the future and allow us to use our asset base for future financing needs.

Net cash provided by operating activities decreased ~~$91.9~~$115.2 million for the ~~quarter~~six months ended ~~March 31,~~June 30, 2010 compared to the same period in 2009. ~~This~~Operating cash flows for 2009 were positively impacted by an increase in cash receipts, as overall oilfield activity levels declined and receivables were collected. During the first six months of 2010, and in the quarter ended June 30, 2010 in particular, cash receipts activity has remained favorable, but has been offset by higher receivables balances at June 30, 2010 due to increases in activity levels and sales volumes. Partially offsetting this decrease in operating cash flows ~~in the first quarter of 2010 was primarily due to higher cash receipts in 2009 as~~associated with trade receivables were collected. As market conditions deteriorated, sales declined and fewer new receivables were recorded, thereby generating higher operating cash flows in 2009 relative to 2010. Also impacting operating cash flows was the ~~timing~~receipt of ~~payroll related accruals at March 31, 2010 relative to March 31, 2009.~~a $43.7 million tax refund in April 2010.

compared to the same period in 2009. This was primarily driven by ~~lower cash proceeds from the disposal of assets~~a relative increase in capital spending during the first ~~quarter~~six months of ~~2010 compared to the same period in 2009, partially offset by a $1.5 million decrease in capital spending in the first quarter of 2010 compared to the same period in 2009.~~2010.

Net cash used in financing activities ~~was $1.7~~decreased $201.4 million for the ~~quarter~~six months ended ~~March 31,~~June 30, 2010 compared to ~~$121.3 million for~~ the same period in 2009. In the first ~~quarter~~six months of 2009, we repaid ~~$119.9~~$197.2 million of net borrowings under our debt facilities. No borrowings or repayments were made under these debt facilities for the first ~~quarter~~half of 2010. Our long-term debt, including current maturities, was $650.2 million as of ~~March 31,~~June 30, 2010 and December 31, 2009.

We believe that our cash balance, operating cash flows and borrowing capacity will be sufficient to fund our operations for the next twelve months.

Dividends

We did not pay dividends on our $0.01 par value common stock during the ~~quarter~~six months ended ~~March 31,~~June 30, 2010 or during the years ended December 31, 2009, 2008 and 2007. We do not intend to pay dividends in the foreseeable future, but rather plan to build our cash balance near-term and reinvest such funds in our business. Furthermore, our credit facility contains restrictive debt covenants which preclude us from paying future dividends on our common stock.

Description of Our Indebtedness

Senior Notes.

On December 6, 2006, we issued 8.0% senior notes with a face value of $650.0 million through a private placement of debt. These notes mature in 10 years, on December 15, 2016, and require semi-annual interest payments, paid in arrears and calculated based on an annual rate of 8.0%, on June 15 and December 15, of each year, which commenced on June 15, 2007. There was no discount or premium associated with the issuance of these notes. The senior notes are guaranteed by all of our current domestic subsidiaries. The senior notes have covenants which, among other things: (1) limit the amount of additional indebtedness we can incur; (2) limit restricted payments such as a dividend; (3) limit our ability to incur liens or encumbrances; (4) limit our ability to purchase, transfer or dispose of significant assets; (5) limit our ability to purchase or redeem stock or subordinated debt; (6) limit our ability to enter into transactions with affiliates; (7) limit our ability to merge with or into other companies or transfer all or substantially all of our assets; and (8) limit our ability to enter into sale and leaseback transactions. We have the option to redeem all or part of these notes on or after December 15, 2011. Additionally, we may redeem some or all of the notes prior to December 15, 2011 at a price equal to 100% of the principal amount of the notes plus a make-whole premium.

Pursuant to a registration rights agreement with the holders of our 8.0% senior notes, on June 1, 2007, we filed a registration statement on Form S-4 with the SEC which enabled these holders to exchange their notes for publicly registered notes with substantially identical terms. These holders exchanged 100% of

the notes for publicly traded notes on July 25, 2007. On August 28, 2007, we entered into a supplement to the indenture governing the 8.0% senior notes, whereby additional domestic subsidiaries became guarantors under the indenture. Effective April 1, 2009, we entered into a second supplement to this indenture whereby additional domestic subsidiaries became guarantors under the indenture.

Credit Facility.

We maintain a senior secured facility (the “Credit Agreement”) with Wells Fargo Bank, National Association, as U.S. Administrative Agent, HSBC Bank Canada, as Canadian Administrative Agent, and certain other financial institutions. On October 13, 2009, we entered into the Third Amendment (the Credit Agreement after giving effect to the Third Amendment, the “Amended Credit Agreement”) and modified the structure of our existing credit facility to an asset-based facility subject to borrowing base restrictions. In connection with the Third Amendment, Wells Fargo Capital Finance, LLC (formerly known as Wells Fargo Foothill, LLC) replaced Wells Fargo Bank, National Association, as U.S. Administrative Agent and also serves as U.S. Issuing Lender and U.S. Swingline Lender under the Amended Credit Agreement. The Amended Credit Agreement provides for a U.S. revolving credit facility of up to $225 million that matures

in December 2011 and a Canadian revolving credit facility of up to $15 million (with Integrated Production Services Ltd., one of our wholly-owned subsidiaries, as the borrower thereof (“Canadian Borrower”)) that matures in December 2011. The Amended Credit Agreement includes a provision for a “commitment increase”, as defined therein, which permits us to effect up to two separate increases in the aggregate commitments under the Amended Credit Agreement by designating one or more existing lenders or other banks or financial institutions, subject to the bank’s sole discretion as to participation, to provide additional aggregate financing up to $75 million, with each committed increase equal to at least $25 million in the U.S., or $5 million in Canada, and in accordance with other provisions as stipulated in the Amended Credit Agreement. Certain portions of the credit facilities are available to be borrowed in U.S. dollars, Canadian dollars and other currencies approved by the lenders.

We were ~~in compliance with~~not subject to the fixed charge coverage ratio covenant in the Amended Credit Agreement as of ~~March 31,~~June 30, 2010 since the Excess Availability Amount plus Qualified Cash Amount (each as defined in the Amended Credit Agreement) exceeded $50 million. If we were subject to the fixed charge coverage ratio covenant, we would have been in compliance as of June 30, 2010. For a discussion of the methodology to calculate the borrowing base for the U.S. and Canadian portions of the facility, as well as our debt covenant requirements, prepayment options and potential exposure in the event of a default under the Amended Credit Agreement, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K as of December 31, 2009.

All of the obligations under the U.S. portion of the Amended Credit Agreement are secured by first priority liens on substantially all of our assets and the assets of our U.S. subsidiaries as well as a pledge of approximately 66% of the stock of our first-tier foreign subsidiaries. Additionally, all of the obligations under the U.S. portion of the Amended Credit Agreement are guaranteed by substantially all of our U.S. subsidiaries. The obligations under the Canadian portion of the Amended Credit Agreement are secured by first priority liens on substantially all of our assets and the assets of our subsidiaries (other than our Mexican subsidiary). Additionally, all of the obligations under the Canadian portion of the Amended Credit Agreement are guaranteed by us as well as certain of our subsidiaries.

Subject to certain limitations set forth in the Amended Credit Agreement, we have the ability to elect how interest under the Amended Credit Agreement will be computed. Interest under the Amended Credit Agreement may be determined by reference to (1) the London Inter-bank Offered Rate, or LIBOR, plus an applicable margin between 3.75% and 4.25% per annum (with the applicable margin depending upon our “excess availability amount”, as defined in the Amended Credit Agreement) or (2) the “Base Rate” (which means the higher of the Prime Rate, Federal Funds Rate plus 0.50%, 3-month LIBOR plus 1.00% and 3.50%), plus the applicable margin, as described above. For the period from the effective date of the Third Amendment until the six month anniversary of the effective date of the Third Amendment, interest ~~will be~~was computed ~~as described above~~ with an applicable margin rate of 4.00%. If an event of default exists or continues under the Amended Credit Agreement, advances will bear interest as described above with an applicable margin rate of 4.25% plus 2.00%. Additionally, if an event of default exists under the Amended Credit Agreement, as defined therein, the lenders could accelerate the maturity of the obligations outstanding thereunder and exercise other rights and remedies. Interest is payable monthly.

There were no borrowings outstanding under our U.S. or Canadian revolving credit facilities as of or during the ~~quarter~~six months ended ~~March 31,~~June 30, 2010. There were letters of credit outstanding under the U.S. revolving portion of the facility totaling ~~$54.6~~$48.9 million, which reduced the available borrowing capacity as of ~~March 31,~~June 30, 2010. We incurred fees related to our letters of credit ~~for~~as of June 30, 2010 at 4.0% per annum. For the ~~quarter~~six months ended ~~March 31,~~June 30, 2010, ~~which was~~fees related to our letters of credit were calculated using a 360-day provision, at 4.1% per annum. The net excess availability under our borrowing base calculations for the U.S. and Canadian revolving facilities at ~~March 31,~~June 30, 2010 was ~~$104.4~~$148.5 million and ~~$9.9~~$3.9 million respectively.

We ~~will~~ incur unused commitment fees under the Amended Credit Agreement ranging from 0.50% to 1.00% based on the average daily balance of amounts outstanding. The unused commitment fees were calculated at 1.00% as of ~~March 31,~~June 30, 2010.

Outstanding Debt and Commitments

Our contractual commitments have not changed materially since December 31, ~~2009.~~

We2009, however we have entered into agreements to purchase certain equipment for use in our ~~business.~~business during the first six months of 2010 that are in excess of $1.0 million. The manufacture of this equipment requires lead-time and we generally are committed to accept this equipment at the time of delivery, unless arrangements have been made to cancel delivery in accordance with the

purchase agreement terms. We believe that our cash on hand, available borrowing capacity under our credit facilities and our operating cash flows should be sufficient to fund our firm purchase commitments.

We expect to continue to acquire complementary companies and evaluate potential acquisition targets. We may use cash from operations, proceeds from future debt or equity offerings and borrowings under our amended revolving credit facility for this purpose.

Recent Accounting Pronouncements and Authoritative Guidance

In May 2009, the Financial Accounting Standards Board (“FASB”) issued a standard regarding subsequent events that provides guidance as to when an entity should recognize events or transactions occurring after a balance sheet date in its financial statements and the necessary disclosures related to these events. Specifically, the entity should recognize subsequent events that provide evidence about conditions that existed at the balance sheet date, including significant estimates used to prepare financial statements. Originally this standard required entities to disclose the date through which subsequent events had been evaluated and whether that date was the date the financial statements were issued or the date the financial statements were available to be issued. We adopted this accounting standard effective June 30, 2009 and applied its provisions prospectively. In February 2010, the FASB modified this standard to eliminate the requirement for ~~an SEC entity~~publicly-traded entities to disclose the date through which subsequent events have been evaluated. Therefore, we omitted the disclosure in this Quarterly Report on Form 10-Q as of ~~March 31,~~June 30, 2010.

In January 2010, the FASB issued “Fair Value Measurements and Disclosure (Topic 820)” which clarified the disclosure requirements of existing U.S. GAAP related to fair value measurements. This standard requires additional disclosures about recurring and non-recurring fair value measurements as follows: (1) for transfers in and out of Level 1 and Level 2 fair value measurements, as those terms are currently defined in existing authoritative literature, a reporting entity is required to disclose the amount of the movement between levels and an explanation for the movement; (2) for activity at Level 3, primarily fair value measurements based on unobservable inputs, a reporting entity is required to present separately information about purchases, sales, issuances and settlements, as opposed to presenting such transactions on a net basis; (3) in the event of a disaggregation, a reporting entity is required to provide fair value measurement disclosure for each class of assets and liabilities; and (4) a reporting entity is required to provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and non-recurring fair value measurements for items that fall in either Level 2 or Level 3. These disclosure requirements are effective for interim and annual reporting periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements, for which disclosure becomes effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. This standard did not impact our financial position, results of operations and cash flows as of and for the quarter ended ~~March 31,~~June 30, 2010.

Off Balance Sheet Arrangements

We have entered into operating lease arrangements for our light vehicle fleet, certain of our specialized equipment and for our office and field operating locations in the normal course of business. The terms of the facility leases range from monthly to ten years. The terms of the light vehicle leases range from three to four years. The terms of the specialized equipment leases range from monthly to seven years.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The demand, pricing and terms for oil and gas services provided by us are largely dependent upon the level of activity for the U.S. and Canadian gas industry. Industry conditions are influenced by numerous

factors over which we have no control, including, but not limited to: the supply of and demand for oil and gas; the level of prices, and expectations about future prices, of oil and gas; the cost of exploring for, developing, producing and delivering oil and gas; the expected rates of declining current production; the discovery rates of new oil and gas reserves; available pipeline and other transportation capacity; weather conditions; domestic and worldwide economic conditions; political instability in oil-producing countries; technical advances affecting energy consumption; the price and availability of alternative fuels; the ability of oil and gas producers to raise equity capital and debt financing; and merger and divestiture activity among oil and gas producers.

The level of activity in the U.S. and Canadian oil and gas exploration and production industry is volatile. No assurance can be given that our expectations of trends in oil and gas production activities will reflect actual future activity levels or that demand for our services will be consistent with the general activity level of the industry. Any prolonged substantial reduction in oil and gas prices would likely affect oil and gas exploration and development efforts and therefore affect demand for our services. A material decline in oil and gas prices or U.S. and Canadian activity levels could have a material adverse effect on our business, financial condition, results of operations and cash flows.

For the ~~quarter~~six months ended ~~March 31,~~June 30, 2010, approximately 7%5% of our revenues and approximately 4% of our total assets were denominated in Canadian dollars, our functional currency in Canada. As a result, a material decrease in the value of the Canadian dollar relative to the U.S. dollar may negatively impact our revenues, cash flows and net income. Each one percentage point change in the value of the Canadian dollar would have impacted our revenues for the ~~quarter~~six months ended ~~March 31,~~June 30, 2010 by approximately ~~$0.2~~$0.4 million. We do not currently use hedges or forward contracts to offset this risk.

Our Mexican operation uses the U.S. dollar as its functional currency, and as a result, all transactions and translation gains and losses are recorded currently in the ~~financial statements.~~statement of operations. The balance sheet amounts are translated into U.S. dollars at the exchange rate at the end of the month and the income statement amounts are translated at the average exchange rate for the month. We estimate that a hypothetical one percentage point change in the value of the Mexican peso relative to the U.S. dollar would have impacted our revenues for the ~~quarter~~six months ended ~~March 31,~~June 30, 2010 by approximately ~~$0.1~~$0.43 million. Currently, we conduct a portion of our business in Mexico in the local currency, the Mexican peso.

Item 4. Controls and Procedures.

Our management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as such terms are defined in Rules 13a —– 15(e) and 15d —– 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed

by us in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of ~~March 31,~~June 30, 2010 at the reasonable assurance level.

There have been no changes in our internal control over financial reporting during the quarter ended ~~March 31,~~June 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

In the normal course of our business, we are a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including warranty and product liability claims and occasional claims by individuals alleging exposure to hazardous materials, on the job injuries and fatalities as a result of our products or operations. Many of the claims filed against us relate to motor vehicle accidents which can result in the loss of life or serious bodily injury. Some of these claims relate to matters occurring prior to our acquisition of businesses. In certain cases, we are entitled to indemnification from the sellers of such businesses.

Although we cannot know or predict with certainty the outcome of any claim or proceeding or the effect such outcomes may have on us, we believe that any liability resulting from the resolution of any of these matters, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on our financial position, results of operations or liquidity.

We have historically incurred additional insurance premium related to a cost-sharing provision of our general liability insurance policy, and we cannot be certain that we will not incur additional costs until either existing claims become further developed or until the limitation periods expire for each respective policy year. Any such additional premiums should not have a material adverse effect on our financial position, results of operations or liquidity.

Item 1A. Risk Factors.

Our business faces many risks. Any of the risks discussed elsewhere in this Form 10-Q or our other SEC filings, could have a material impact on our business, financial position or results of operations. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. For a detailed discussion of the risk factors that should be understood by any investor contemplating investment in our stock, please refer to the section entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009. ~~There~~

Petróleos Mexicanos (“PEMEX”), our primary customer in Mexico, is experiencing budget limitations that may affect its ability to make timely payments to us under our existing contracts.

The majority of our business in Mexico is performed for PEMEX pursuant to multi-year contracts. Recent regulatory and financial uncertainty regarding PEMEX’s drilling programs and development budget could adversely impact PEMEX’s ability to fulfill certain of its payment obligations under these contracts in a timely manner. A failure of PEMEX to make required payments to us would adversely affect our Mexico-based financial performance.

Mexico has ~~been no material change~~experienced a period of increasing criminal violence and such activities could affect our Mexico-based operations and financial performance.

Recently, Mexico has experienced a period of increasing criminal violence, primarily due to the ~~risk factors set forth~~activities of drug cartels and related organized crime. Although the Mexican government has implemented various security measures and strengthened its military and police forces, drug-related crime continues to exist in Mexico and has impacted our ~~Annual Report~~ability to safely conduct business in certain areas of the country. Our inability to conduct business in certain areas of Mexico, and the safety risks in the areas of Mexico where we do conduct business, could have a negative impact on ~~Form 10-K for the year ended December 31, 2009.~~Mexico-based financial performance.

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

In accordance with the provisions of the 2008 Incentive Award Plan, as amended, holders of unvested restricted stock were given the option to either remit to us the required withholding taxes associated with the vesting of restricted stock, or to authorize us to ~~repurchase~~purchase shares equivalent to the cost of the withholding tax and to remit the withholding taxes on behalf of the holder. Such ~~repurchases~~purchases for the quarter ended ~~March 31,~~June 30, 2010 are summarized in the following table:

(d)
Maximum
Number (or
Approximate
(c) Total Dollar
number of Value) of
Shares shares
Purchased that May
(b) as Part of Yet Be
Average Publicly Purchased
(a) Total Number Price Announced Under the
of Shares Paid per Plans or Plans or
Period Purchased Share Programs Programs
January 1 — 31, 2010 109,360 $ 12.53 * *
March 1 — 31, 2010 902 $ 14.06 * *

3034

(d)

Maximum

Number (or

Approximate

Dollar

number of

Value) of

Purchased

that May

(b)

as Part of

Yet Be

Average

Publicly

Purchased

(a) Total Number

Price

Announced

Under the

of Shares

Paid per

Plans or

Period

Purchased

Programs

April 1 – 30, 2010

426

11.84

May 1 – 31, 2010

1,260

14.48

June 1 – 30, 2010

355

14.83


*		We do not have a publicly announced stock repurchase program. We had ~~1,715,942~~1,684,909 shares of non-vested restricted stock outstanding at ~~March 31,~~June 30, 2010. The holders of these shares have the option to either remit taxes due related to the vesting of these shares or to authorize us to purchase the shares at the current market value in a sufficient amount to settle the related tax withholding. The amount purchased will depend on the market value at the time and whether or not the holders choose to surrender shares in settlement of the related tax withholding.

Item 3. Defaults Upon Senior Securities.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits listed in the accompanying Exhibit Index are incorporated by reference into this Item 6.

3135

EXHIBIT INDEX


Exhibit
No.		Exhibit Title
~~10.1*+~~	—	~~Complete Production Services, Inc. Amended and Restated Deferred Compensation Plan~~

31.1*	—	Certification of Chief Executive Officer Pursuant to Rule 13a —– 14(a) and Rule 15a —– 14(a) of the Securities and Exchange Act of 1934, as Amended

31.2*	—	Certification of Chief Financial Officer Pursuant to Rule 13a —– 14(a) and Rule 15a —– 14(a) of the Securities and Exchange Act of 1934, as Amended

32.1*	—	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*	—	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101	—	Complete Production Services, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets at June 30, 2010 and December 31, 2009, (ii) the Consolidated Statements of Operations for the three and six months ended June 30, 2010, and June 30, 2009, (iii) the Consolidated Stockholders’ Equity for the six months ended June 30, 2010, (iv) the Consolidated Statements of Cash Flows for the six months ended June 30, 2010, and June 30, 2009, and (v) the Notes to Consolidated Financial Statements (tagged as blocks of text).


*		Filed or furnished herewith.

+		~~Management employment agreements, compensatory arrangements or option plans.~~

3337


	Page
PART I—FINANCIAL INFORMATION
			~~Page~~
	~~PART I—FINANCIAL INFORMATION~~Item 1. Financial Statements

~~Item 1.~~	~~Financial Statements.~~
	Consolidated Balance Sheets as of ~~March 31,~~June 30, 2010 and December 31, 2009			3
	Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) for the Quarters and Six Months Ended ~~March 31,~~June 30, 2010 and 2009			4
	Consolidated Statement of Stockholders’ Equity for the ~~Quarter~~Six Months Ended ~~March 31,~~June 30, 2010			5
	Consolidated Statements of Cash Flows for the ~~Quarters~~Six Months Ended ~~March 31,~~June 30, 2010 and 2009			6
	Notes to Consolidated Financial Statements			7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations			1921

Item 3.	Quantitative and Qualitative Disclosures About Market ~~Risk.~~Risk			2833

Item 4.	Controls and ~~Procedures.~~Procedures			2933

				PART II—OTHER INFORMATION

~~PART II—OTHER INFORMATION~~Item 1. Legal Proceedings		34

Item 1.	~~Legal Proceedings.~~1A. Risk Factors			3034

Item ~~1A.~~	~~Risk Factors.~~2. Unregistered Sales of Equity Securities and Use of Proceeds			3034

Item 2.	~~Unregistered Sales of Equity~~3. Defaults Upon Senior Securities ~~and Use of Proceeds.~~			3035

Item 3.	~~Defaults Upon Senior Securities.~~5. Other Information			3135

Item 5.	~~Other Information.~~6. Exhibits			3135

~~Item 6.~~	~~Exhibits.~~			31

	Signatures			32
~~EX-10.1~~
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT


	March 31,		December 31,		June 30,		December 31,
	2010		2009		2010		2009
Finished goods	$	20,812	$	23,435	$	21,611	$	23,435
Manufacturing parts, materials and other		13,683		14,486		12,843		14,486
Work in process		557		431		314		431

		35,052		38,352		34,768		38,352
Inventory reserves		931		888		2,410		888

	$	34,121	$	37,464	$	32,358	$	37,464


			Accumulated						Accumulated
March 31, 2010	Cost		Depreciation		Net Book Value
June 30, 2010							Cost		Depreciation		Net Book Value
Land	$	9,135	$	—	$	9,135	$	9,446	$	—	$	9,446
Buildings		30,146		3,475		26,671		30,368		3,733		26,635
Field equipment		1,303,698		535,629		768,069		1,302,221		564,957		737,264
Vehicles		124,983		57,650		67,333		130,575		62,710		67,865
Office furniture and computers		17,114		9,683		7,431		17,228		10,197		7,031
Leasehold improvements		25,146		5,044		20,102		25,114		5,772		19,342
Construction in progress		9,951		—		9,951		26,016		—		26,016

	$	1,520,173	$	611,481	$	908,692	$	1,540,968	$	647,369	$	893,599


			Accumulated
December 31, 2009	Cost		Depreciation		Net Book Value
Land	$	8,884	$	—	$	8,884
Buildings		30,200		3,168		27,032
Field equipment		1,293,292		497,632		795,660
Vehicles		126,256		55,035		71,221
Office furniture and computers		17,087		9,108		7,979
Leasehold improvements		25,006		4,771		20,235
Construction in progress		10,122		—		10,122

	$	1,510,847	$	569,714	$	941,133


	Non-vested					Non-vested
	Restricted Stock					Restricted Stock
				Weighted					Weighted
				Average					Average
	Number			Grant Price		Number			Grant Price
Balance at December 31, 2009		1,635,565		$	10.27		1,635,565		$	10.27
Granted		797,796		$	12.55		801,096		$	12.56
Vested		(667,926	)	$	10.95		(674,760	)	$	10.88
Forfeited		(49,492	)	$	10.59		(73,692	)	$	11.18

Balance at March 31, 2010		1,715,942		$	11.06
Balance at June 30, 2010							1,688,209		$	11.07


(a)		On May 11, 2010, we acquired certain assets of a provider of gas lift services based in Oklahoma City, Oklahoma for $1,365 in cash, subject to an additional $75 holdback. We recorded goodwill of $1,017 and fixed assets, inventory and other working capital of $348. The purchase price allocation is preliminary as of June 30, 2010. We believe this acquisition supplements our plunger lift service offering for the completion and production services business segment.


				Guarantor			Non-guarantor			Eliminations/												Non-
	Parent			Subsidiaries			Subsidiaries			Reclassifications			Consolidated						Guarantor			guarantor			Eliminations/
	(in thousands)															Parent			Subsidiaries			Subsidiaries			Reclassifications			Consolidated
Cash provided by:
Net income (loss)	$	(336	)	$	14,787		$	832		$	(15,619	)	$	(336	)	$	(26,168	)	$	2,361		$	2,038		$	(4,399	)	$	(26,168	)
Items not affecting cash:
Equity in earnings of consolidated affiliates		(14,787	)		(832	)		—			15,619			—			(2,361	)		(2,038	)		—			4,399			—
Depreciation and amortization		391			47,712			3,586			—			51,689			776			95,640			6,675			—			103,091
Other		3,914			5,151			6,385			—			15,450			7,581			16,717			7,130			—			31,428
Changes in operating assets and liabilities		60,622			7,999			(9,029	)		5,961			65,553

Changes in operating assets and liabilities, net of effect of acquisitions																	85,030			28,885			(10,635	)		8,095			111,375

Net cash provided by operating activities		49,804			74,817			1,774			5,961			132,356			64,858			141,565			5,208			8,095			219,726

Investing activities:
Additions to property, plant and equipment		(88	)		(11,754	)		(986	)		—			(12,828	)		(88	)		(20,762	)		(1,910	)		—			(22,760	)
Inter-company receipts		65,731			—			421			(66,152	)		—			118,672			—			—			(118,672	)		—
Proceeds from the disposal of capital assets		—			7,066			90			—			7,156			—			8,049			169			—			8,218

Net cash provided by (used in) investing activities		65,643			(4,688	)		(475	)		(66,152	)		(5,672	)
Net cash provided by (used for) investing activities																	118,584			(12,713	)		(1,741	)		(118,672	)		(14,542	)

Financing activities:
Issuances of long-term debt		1,641			—			1,505			—			3,146			1,645			—			1,559			—			3,204
Repayments of long-term debt		(117,638	)		(3,621	)		(1,788	)		—			(123,047	)		(187,638	)		(3,684	)		(9,054	)		—			(200,376	)
Repayments of notes payable		(1,353	)		—			—			—			(1,353	)		(4,220	)		—			—			—			(4,220	)
Inter-company borrowings (repayments)		—			(66,152	)		—			66,152			—
Inter-company borrowings																	—			(124,150	)		5,478			118,672			—
Proceeds from issuances of common stock																	88			—			—			—			88
Other																	(58	)		—			—			—			(58	)

Net cash provided by (used in) financing activities																	(190,183	)		(127,834	)		(2,017	)		118,672			(201,362	)
Effect of exchange rate changes on cash																	—			—			(289	)		—			(289	)

Change in cash and cash equivalents																	(6,741	)		1,018			1,161			8,095			3,533
Cash and cash equivalents, beginning of period																	25,399			346			5,078			(12,323	)		18,500

Cash and cash equivalents, end of period																$	18,658		$	1,364		$	6,239		$	(4,228	)	$	22,033


Source:		Cameron International Corporation/Guiberson/AESC Well Service Rig Count for “Active Rigs,” formerly the Weatherford/AESC Service Rig Count for “Active Rigs.”


“Corporate” includes amounts related to corporate personnel costs, other general expenses and stock-based compensation charges.


	COMPLETE PRODUCTION SERVICES, INC.
~~Date: April 30,~~July 29, 2010	By:	/s/ Jose A. Bayardo
Date		Jose A. Bayardo
		Sr. Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)