UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended ~~June 30, 2019~~March 31, 2020



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

For the transition period from _____ to _____

Commission file number: 001-16337

OIL STATES INTERNATIONAL, INC.

______________

(Exact name of registrant as specified in its charter)



Delaware		76-0476605
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Three Allen Center, 333 Clay Street
Suite 4620		77002
Houston,	Texas	(Zip Code)
(Address of principal executive offices)

(713) 652-0582

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	OIS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes	☒	No	☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).



Yes	☒	No	☐

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



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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



Yes	☐	No	☒

As of ~~July 25, 2019,~~April 24, 2020, the number of shares of common stock outstanding was ~~60,507,750.~~60,941,131.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX


	Page No.			Page No.
Part I – FINANCIAL INFORMATION

Item 1. Financial Statements:

Condensed Consolidated Financial Statements
Unaudited Consolidated Statements of Operations	Unaudited Consolidated Statements of Operations		3	Unaudited Consolidated Statements of Operations		3
Unaudited Consolidated Statements of Comprehensive Loss	Unaudited Consolidated Statements of Comprehensive Loss		4	Unaudited Consolidated Statements of Comprehensive Loss		4
Consolidated Balance Sheets	Consolidated Balance Sheets		5	Consolidated Balance Sheets		5
Unaudited Consolidated Statements of Stockholders' Equity	Unaudited Consolidated Statements of Stockholders' Equity		6	Unaudited Consolidated Statements of Stockholders' Equity		6
Unaudited Consolidated Statements of Cash Flows	Unaudited Consolidated Statements of Cash Flows		8	Unaudited Consolidated Statements of Cash Flows		7
Notes to Unaudited Condensed Consolidated Financial Statements	9	–	21	8	–	19

Cautionary Statement Regarding Forward-Looking Statements	22	–	23	21	–	22

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	23	–	37	22	–	33

Item 3. Quantitative and Qualitative Disclosures About Market Risk	Item 3. Quantitative and Qualitative Disclosures About Market Risk		38	Item 3. Quantitative and Qualitative Disclosures About Market Risk		33

Item 4. Controls and Procedures	Item 4. Controls and Procedures		39	Item 4. Controls and Procedures		34

Part II – OTHER INFORMATION

Item 1. Legal Proceedings	Item 1. Legal Proceedings		40	Item 1. Legal Proceedings		35

Item 1A. Risk Factors	Item 1A. Risk Factors		40	Item 1A. Risk Factors		35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		40	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		36

Item 3. Defaults Upon Senior Securities	Item 3. Defaults Upon Senior Securities		40	Item 3. Defaults Upon Senior Securities		36

Item 4. Mine Safety Disclosures	Item 4. Mine Safety Disclosures		40	Item 4. Mine Safety Disclosures		36

Item 5. Other Information	Item 5. Other Information		40	Item 5. Other Information		36

Item 6. Exhibits	Item 6. Exhibits		41	Item 6. Exhibits		37

Signature Page	Signature Page		42	Signature Page		38

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Revenues:
Products	$	124,965		$	136,182		$	241,293		$	265,008		$	102,980		$	116,328
Services	139,720			149,663			274,003			274,413			116,714			134,283
	264,685			285,845			515,296			539,421			219,694			250,611

Costs and expenses:
Product costs	95,289			95,324			184,557			188,300			89,746			89,268
Service costs	112,823			118,079			223,433			214,993			107,856			110,610
Cost of revenues (exclusive of depreciation and amortization expense presented below)	208,112			213,403			407,990			403,293			197,602			199,878
Selling, general and administrative expense	31,484			35,919			61,592			70,114			26,124			30,108
Depreciation and amortization expense	31,883			30,922			63,434			60,112			26,409			31,551
Other operating income, net	(399		)	(3,099		)	(485		)	(1,884		)
Impairments of goodwill													406,056			—
Impairment of fixed assets													5,198			—
Other operating expense (income), net													107			(86		)
	271,080			277,145			532,531			531,635			661,496			261,451
Operating income (loss)	(6,395		)	8,700			(17,235		)	7,786
Operating loss													(441,802		)	(10,840		)

Interest expense, net	(4,617		)	(4,790		)	(9,369		)	(9,244		)	(3,504		)	(4,752		)
Other income	1,009			571			1,676			1,218
Income (loss) before income taxes	(10,003		)	4,481			(24,928		)	(240		)
Income tax (provision) benefit	263			(1,739		)	540			(510		)
Net income (loss)	$	(9,740	)	$	2,742		$	(24,388	)	$	(750	)
Other income, net													774			667
Loss before income taxes													(444,532		)	(14,925		)
Income tax benefit													39,491			277
Net loss													$	(405,041	)	$	(14,648	)

Net income (loss) per share:
Net loss per share:
Basic	$	(0.16	)	$	0.05		$	(0.41	)	$	(0.01	)	$	(6.79	)	$	(0.25	)
Diluted	(0.16		)	0.05			(0.41		)	(0.01		)	(6.79		)	(0.25		)

Weighted average number of common shares outstanding:
Basic	59,406			59,005			59,332			58,396			59,654			59,258
Diluted	59,406			59,005			59,332			58,396			59,654			59,258

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In Thousands)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Net income (loss)	$	(9,740	)	$	2,742		$	(24,388	)	$	(750	)
Net loss													$	(405,041	)	$	(14,648	)

Other comprehensive income (loss):
Currency translation adjustments	(2,329		)	(13,733		)	137			(8,699		)	(14,791		)	2,466
Comprehensive loss	$	(12,069	)	$	(10,991	)	$	(24,251	)	$	(9,449	)	$	(419,832	)	$	(12,182	)

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts)


	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	12,406		$	19,316		$	24,308		$	8,493
Accounts receivable, net	263,453			283,607			222,472			233,487
Inventories, net	210,006			209,393			209,180			221,342
Income taxes receivable							43,950			2,568
Prepaid expenses and other current assets	25,514			21,715			14,638			17,539
Total current assets	511,379			534,031			514,548			483,429

Property, plant, and equipment, net	520,324			540,427			429,002			459,724
Operating lease assets, net	48,235			—			40,902			43,616
Goodwill, net	646,984			647,018			75,757			482,306
Other intangible assets, net	242,886			255,301			223,958			230,091
Other noncurrent assets	27,893			27,044			27,843			28,701
Total assets	$	1,997,701		$	2,003,821		$	1,312,010		$	1,727,867

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion of long-term debt	$	25,583		$	25,561		$	25,643		$	25,617
Accounts payable	83,909			77,511			75,392			78,368
Accrued liabilities	53,478			60,730			43,227			48,840
Current operating lease liabilities	8,997			—			8,361			8,311
Income taxes payable	4,243			3,072			2,845			4,174
Deferred revenue	15,360			14,160			20,721			17,761
Total current liabilities	191,570			181,034			176,189			183,071

Long-term debt	272,784			306,177			239,229			222,552
Long-term operating lease liabilities	39,268			—			33,323			35,777
Deferred income taxes	50,224			53,831			38,506			38,079
Other noncurrent liabilities	24,127			23,011			22,131			24,421
Total liabilities	577,973			564,053			509,378			503,900

Stockholders' equity:
Common stock, $.01 par value, 200,000,000 shares authorized, 72,521,801 shares and 71,753,937 shares issued, respectively	726			718
Common stock, $.01 par value, 200,000,000 shares authorized, 73,212,778 shares and 72,546,321 shares issued, respectively							732			726
Additional paid-in capital	1,106,340			1,097,758			1,115,677			1,114,521
Retained earnings	1,005,130			1,029,518			392,669			797,710
Accumulated other comprehensive loss	(71,260		)	(71,397		)	(82,537		)	(67,746		)
Treasury stock, at cost, 12,039,547 and 11,784,242 shares, respectively	(621,208		)	(616,829		)
Treasury stock, at cost, 12,268,293 and 12,045,065 shares, respectively							(623,909		)	(621,244		)
Total stockholders' equity	1,419,728			1,439,768			802,632			1,223,967
Total liabilities and stockholders' equity	$	1,997,701		$	2,003,821		$	1,312,010		$	1,727,867

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In Thousands)


Three Months Ended June 30, 2019	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders' Equity
Balance, March 31, 2019	$	725	$	1,102,176	$	1,014,870		$	(68,931	)	$	(621,196	)	$	1,427,644
Three Months Ended March 31, 2020																	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders' Equity
Balance, December 31, 2019																	$	726	$	1,114,521	$	797,710		$	(67,746	)	$	(621,244	)	$	1,223,967
Net loss	—		—		(9,740		)	—			—			(9,740		)	—		—		(405,041		)	—			—			(405,041		)
Currency translation adjustments (excluding intercompany advances)	—		—		—			(2,946		)	—			(2,946		)	—		—		—			(6,085		)	—			(6,085		)
Currency translation adjustments on intercompany advances	—		—		—			617			—			617			—		—		—			(8,706		)	—			(8,706		)
Stock-based compensation expense:
Restricted stock	1		4,164		—			—			—			4,165			6		1,156		—			—			—			1,162
Stock options	—		—		—			—			—			—
Stock repurchases	—		—		—			—			—			—
Surrender of stock to settle taxes on restricted stock awards	—		—		—			—			(12		)	(12		)	—		—		—			—			(2,665		)	(2,665		)
Balance, June 30, 2019	$	726	$	1,106,340	$	1,005,130		$	(71,260	)	$	(621,208	)	$	1,419,728
Balance, March 31, 2020																	$	732	$	1,115,677	$	392,669		$	(82,537	)	$	(623,909	)	$	802,632

Six Months Ended June 30, 2019
Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Treasury
Stock

Total
Stockholders'
Equity
Balance, December 31, 2018 $ 718
$ 1,097,758
$ 1,029,518
$ (71,397 ) $ (616,829 ) $ 1,439,768
Net loss —
—
(24,388 ) —
—
(24,388 )
Currency translation adjustments (excluding intercompany advances) —
—
—
(393 ) —
(393 )
Currency translation adjustments on intercompany advances —
—
—
530
—
530
Stock-based compensation expense:
Restricted stock 8
8,529
—
—
—
8,537
Stock options —
53
—
—
—
53
Stock repurchases —
—
—
—
(757 ) (757 )
Surrender of stock to settle taxes on restricted stock awards —
—
—
—
(3,622 ) (3,622 )
Balance, June 30, 2019 $ 726
$ 1,106,340
$ 1,005,130
$ (71,260 ) $ (621,208 ) $ 1,419,728

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~

~~(In Thousands)~~

Three Months Ended June 30, 2018 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity
Balance, March 31, 2018 $ 717
$ 1,080,216
$ 1,045,131
$ (53,459 ) $ (616,590 ) $ 1,456,015
Net income —
—
2,742
—
—
2,742
Currency translation adjustments (excluding intercompany advances) —
—
—
(11,242 ) —
(11,242 )
Currency translation adjustments on intercompany advances —
—
—
(2,491 ) —
(2,491 )
Stock-based compensation expense:
Restricted stock 1
5,617
—
—
—
5,618
Stock options —
94
—
—
—
94
Issuance of common stock in connection with GEODynamics acquisition —
—
—
—
—
—
Issuance of 1.50% convertible senior notes, net of income taxes of $7,744 —
—
—
—
—
—
Surrender of stock to settle taxes on restricted stock awards —
—
—
—
(83 ) (83 )
Balance, June 30, 2018 $ 718
$ 1,085,927
$ 1,047,873
$ (67,192 ) $ (616,673 ) $ 1,450,653


Six Months Ended June 30, 2018	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders' Equity
Balance, December 31, 2017	$	627	$	754,607	$	1,048,623		$	(58,493	)	$	(612,651	)	$	1,132,713
Three Months Ended March 31, 2019																	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders' Equity
Balance, December 31, 2018																	$	718	$	1,097,758	$	1,029,518		$	(71,397	)	$	(616,829	)	$	1,439,768
Net loss	—		—		(750		)	—			—			(750		)	—		—		(14,648		)	—			—			(14,648		)
Currency translation adjustments (excluding intercompany advances)	—		—		—			(6,138		)	—			(6,138		)	—		—		—			2,553			—			2,553
Currency translation adjustments on intercompany advances	—		—		—			(2,561		)	—			(2,561		)	—		—		—			(87		)	—			(87		)
Stock-based compensation expense:
Restricted stock	4		10,557		—			—			—			10,561			7		4,365		—			—			—			4,372
Stock options	—		300		—			—			—			300			—		53		—			—			—			53
Issuance of common stock in connection with GEODynamics acquisition	87		294,823		—			—			—			294,910
Issuance of 1.50% convertible senior notes, net of income taxes of $7,744	—		25,640		—			—			—			25,640
Stock repurchases																	—		—		—			—			(757		)	(757		)
Surrender of stock to settle taxes on restricted stock awards	—		—		—			—			(4,022		)	(4,022		)	—		—		—			—			(3,610		)	(3,610		)
Balance, June 30, 2018	$	718	$	1,085,927	$	1,047,873		$	(67,192	)	$	(616,673	)	$	1,450,653
Balance, March 31, 2019																	$	725	$	1,102,176	$	1,014,870		$	(68,931	)	$	(621,196	)	$	1,427,644

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)


	Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Cash flows from operating activities:
Net loss	$	(24,388	)	$	(750	)	$	(405,041	)	$	(14,648	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense	63,434			60,112			26,409			31,551
Impairments of goodwill							406,056			—
Impairments of inventories							25,230			—
Impairment of fixed assets							5,198			—
Stock-based compensation expense	8,590			10,861			1,162			4,425
Amortization of debt discount and deferred financing costs	3,894			3,613			1,681			1,937
Deferred income tax provision (benefit)	(3,495		)	481
Deferred income tax benefit							(40,832		)	(1,513		)
Gain on disposals of assets	(1,245		)	(927		)	(513		)	(418		)
Other, net	141			2,520			771			(340		)
Changes in operating assets and liabilities, net of effect from acquired businesses:
Changes in operating assets and liabilities:
Accounts receivable	19,884			(19,134		)	4,617			21,893
Inventories	(534		)	(1,768		)	(15,332		)	2,735
Accounts payable and accrued liabilities	1,200			(2,251		)	(8,625		)	(9,576		)
Income taxes payable	943			(31		)	(1,100		)	1,878
Other operating assets and liabilities, net	(2,421		)	(5,792		)	5,768			(3,632		)
Net cash flows provided by operating activities	66,003			46,934			5,449			34,292

Cash flows from investing activities:
Capital expenditures	(31,577		)	(38,261		)	(5,881		)	(17,922		)
Acquisitions of businesses, net of cash acquired	—			(379,676		)
Proceeds from disposition of property, plant and equipment	2,151			1,197			4,092			368
Other, net	(1,459		)	(985		)	(256		)	(304		)
Net cash flows used in investing activities	(30,885		)	(417,725		)	(2,045		)	(17,858		)

Cash flows from financing activities:
Issuance of 1.50% convertible senior notes	—			200,000
Revolving credit facility borrowings	119,252			704,469			72,173			57,874
Revolving credit facility repayments	(156,208		)	(546,564		)	(52,404		)	(73,774		)
Other debt and finance lease repayments, net	(301		)	(266		)
Payment of financing costs	(8		)	(7,366		)
Purchase of 1.50% convertible senior notes							(4,737		)	—
Other debt and finance lease activity, net							35			(142		)
Shares added to treasury stock as a result of net share settlements due to vesting of restricted stock							(2,665		)	(3,610		)
Purchase of treasury stock	(757		)	—			—			(757		)
Shares added to treasury stock as a result of net share settlements due to vesting of restricted stock	(3,622		)	(4,022		)
Net cash flows provided by (used in) financing activities	(41,644		)	346,251			12,402			(20,409		)

Effect of exchange rate changes on cash and cash equivalents	(384		)	183			9			(32		)
Net change in cash and cash equivalents	(6,910		)	(24,357		)	15,815			(4,007		)
Cash and cash equivalents, beginning of period	19,316			53,459			8,493			19,316
Cash and cash equivalents, end of period	$	12,406		$	29,102		$	24,308		$	15,309

Cash paid for:
Interest	$	5,285		$	4,033		$	2,436		$	3,460
Income taxes, net of refunds	2,002			2,978			2,499			(487		)

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS


1.	Organization and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Oil States International, Inc. and its subsidiaries (referred to in this report as "we" or the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission") pertaining to interim financial information. Certain information in footnote disclosures normally included inwith financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to these rules and regulations. The unaudited financial statements included in this report reflect all the adjustments, consisting of normal recurring adjustments, which the Company considers necessary for a fair statement of the results of operations for the interim periods covered and for the financial condition of the Company at the date of the interim balance sheet. Results for the interim periods are not necessarily indicative of results for the full year. Certain prior-year amounts in the Company's unaudited condensed consolidated financial statements have been reclassified to conform to the current year presentation.

As further discussed in Note 13, "Commitments and Contingencies," the impact of the Coronavirus Disease 2019 ("COVID-19") pandemic and related economic, business and market disruptions is evolving rapidly and its future effects are uncertain. The actual impact of these recent developments on the Company will depend on many factors, many of which are beyond management's control and knowledge. It is therefore difficult for management to assess or predict with precision the broad future effect of this health crisis on the global economy, the energy industry or the Company. During the first quarter of 2020, the Company recorded asset impairments and recorded severance and facility closure charges in response to these recent developments, as further discussed in Note 3, "Asset Impairments and Other Charges." As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, further adjustments may be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Examples of such estimates include, but are not limited to, goodwill and ~~long-lived~~other asset ~~impairment analyses,~~impairments, revenue and income recognized over time, valuation allowances recorded on deferred tax assets, ~~the fair value of assets and liabilities acquired and identification of associated goodwill and intangible assets,~~ reserves on inventory, allowances for doubtful accounts, ~~warranty obligations~~ and potential future adjustments related to contractual indemnification and other agreements. ~~If the underlying estimates and assumptions, upon which the financial statements are based, change in future periods, actual amounts may~~Actual results could materially differ from those ~~included in the accompanying condensed consolidated financial statements.~~estimates.

The financial statements included in this report should be read in conjunction with the Company's audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, ~~2018 (the "2018 Form 10‑K").~~2019.


2.	Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the "FASB"), which are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption.

In ~~February~~June 2016, the FASB issued guidance on ~~leases~~credit impairment for short-term receivables which, as amended, ~~introduced~~introduces the recognition of ~~lease assets and lease liabilities by lessees for all leases~~management's current estimate of credit losses that are ~~not short-term in nature.~~expected to occur over the remaining life of a financial asset. The Company adopted this guidance on January 1, ~~2019,~~2020, using the optional transition method of recognizing any cumulative effect of adopting this guidance as an adjustment to the opening balance of retained earnings. The cumulative impact of the adoption of the new standard was not material to the Company's consolidated financial statements. Prior periods were not retrospectively adjusted. In addition, the Company elected a package of practical expedients permitted under transition guidance for the new standard which, among other things, allowed for the carryforward of historical lease classification. The Company has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. Most of the Company's leases do not provide an implicit interest rate. Therefore, the Company's incremental borrowing rate, based on available information at the lease commencement date, is used to determine the present value of lease payments.

In connection with the adoption of the new standard, the Company recorded $47.7 million of operating lease assets and liabilities as of January 1, 2019. The standard did not materially impact our consolidated statement of operations and had no impact on cash flows.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)


3.	~~Business Acquisitions, Goodwill~~Asset Impairments and Other ~~Intangible Assets~~Charges

~~GEODynamics Acquisition~~In March of 2020, the spot price of West Texas Intermediate ("WTI") crude oil declined over 50% in response to reductions in global demand due to the COVID-19 pandemic and announcements by Saudi Arabia and Russia of plans to increase crude oil production. Following this unprecedented collapse in crude oil prices, the spot price of Brent and WTI crude oil closed at $15 and $21 per barrel, respectively, on March 31, 2020. Crude oil prices further declined in April of 2020 to record low levels.

On January 12, 2018, the Company acquired GEODynamics, Inc. ("GEODynamics"), which provides oil and gas perforation systems and downhole tools in support of completion, intervention, wireline and well abandonment operations (the "GEODynamics Acquisition"). Total recorded purchase price consideration was $615.3 million, consisting of (i) $295.4 million in cash (net of cash acquired), which was funded through borrowings under the Company's Revolving Credit Facility (as defined in Note 6, "Long-term Debt"), (ii) approximately 8.66 million sharesDemand for most of the Company's ~~common stock (having a market value of approximately $295 million based~~products and services depends substantially on the ~~closing share price~~level of ~~$34.05 as~~capital expenditures by the oil and natural gas industry. This decline in oil prices is expected to result in further near-term reductions to most of the ~~closing date of the acquisition)~~Company's customers' drilling, completion and (iii) an unsecured $25 million promissory note that bears interest at 2.5% per annum. Under the terms of the purchase agreement, the Company is entitled to indemnification in respect of certain matters occurring prior to the acquisitionproduction activities and ~~payments due under the promissory note are subject to set-off, in part or in full, regarding such indemnified matters. See Note 14, "Commitments~~their related spending on products and ~~Contingencies."~~

~~GEODynamics' results of operations have been included~~services, particularly in the ~~Company's~~U.S. shale play regions. These conditions may also result in a material adverse impact on certain customers' liquidity and financial ~~statements subsequent~~position, leading to ~~the closing of the acquisition on January 12, 2018. The acquired GEODynamics operations are reported as the Downhole Technologies segment. See Note 13, "Segments and Related Information" for~~ further ~~information with respect to the Downhole Technologies segment operations.~~

~~Falcon Acquisition~~

On February 28, 2018, the Company acquired Falcon Flowback Services, LLC ("Falcon"), a full service provider of flowback and well testing services for the separation and recovery of fluids, solid debris and proppant used during hydraulic fracturing operations. Falcon provides additional scale and diversity to our Completion Services well testing operations in key shale playsspending reductions, delays in the ~~United States. The purchase price was $84.2 million (net~~collection of ~~cash acquired). The Falcon acquisition was funded by borrowings under~~amounts owed and in certain instances, non-payment of amounts owed.

Consistent with oilfield service industry peers, the Company's Revolving Credit Facility. Under the terms of the purchase agreement, the Company may be entitled to indemnification in respect of certain matters occurring prior to acquisition. Falcon's results of operations have been included in the Company's financial statements and has been reported within the Completion Services business subsequent to the closing of the acquisition on February 28, 2018.

~~Transaction-Related Costs~~

~~During~~stock price declined dramatically during the first quarter of ~~2018,~~2020, with its market capitalization falling substantially below the carrying value of stockholders' equity.

Following these March 2020 events, the Company ~~expensed transaction-related~~immediately expanded its cost reduction initiatives. The Company also assessed the carrying value of goodwill, long-lived assets and other assets based on the current industry outlook regarding overall demand for and pricing of its products and services, other market considerations and the financial condition of the Company's customers. As a result of these events, actions and assessments, the Company recorded the following charges during the first quarter of 2020 (in thousands):



	Completion Services		Drilling Services		Downhole Technologies		Offshore/ Manufactured Products		Pre-tax Total		Tax		After-tax Total
Impairment of goodwill	$	127,054	$	—	$	192,502	$	86,500	$	406,056	$	19,600	$	386,456
Impairment of fixed assets	—		5,198		—		—		5,198		1,092		4,106
Impairment of inventories (Note 4)	8,981		—		—		16,249		25,230		4,736		20,494
Severance and facility closure costs	331		217		—		112		660		139		521

In addition, the Company further reduced its workforce in the United States in April of 2020, which will result in additional severance costs in the second quarter of ~~$2.6~~2020.

Goodwill

The Company has three reporting units – Completion Services, Downhole Technologies and Offshore/Manufactured Products – with goodwill balances totaling $482.3 million ~~which are included~~as of December 31, 2019. Goodwill is allocated to each reporting unit from acquisitions made by the Company. In accordance with current accounting guidance, the Company does not amortize goodwill, but rather assesses goodwill for impairment annually and when an event occurs or circumstances change that indicate the carrying amounts may not be recoverable. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is recorded. Given the significance of the March 2020 events described above, the Company performed a quantitative assessment of goodwill for impairment as of March 31, 2020. This interim assessment indicated that the fair value of each of the reporting units was less than their respective carrying amounts.

Management utilizes, depending on circumstances, a combination of valuation methodologies including a market approach and an income approach, as well as guideline public company comparables. The valuation techniques used in ~~selling, general and administrative expense and in other operating income~~the March 31, 2020 assessment were consistent with those used during the December 1, 2019 assessment, except for the ~~six months ended June 30, 2018.~~

~~Supplemental Unaudited Pro Forma Financial Information~~

Completion Services reporting unit where the income approach was used to estimate its fair value – with the market approach used only to validate the results in 2020. The ~~following supplemental unaudited pro forma results~~fair values of ~~operations data for the six months ended June 30, 2018 gives pro forma effect to the consummation~~each of the GEODynamics and Falcon acquisitions as if they had occurred on January 1, 2018. The supplemental unaudited pro forma financial information was prepared based on historical financial information, adjusted to give pro forma effect toCompany's reporting units were determined using significant unobservable inputs (Level 3 fair value ~~adjustments~~measurements). This approach estimates fair value by discounting the Company's forecasts of future cash flows by a discount rate (expected return) that a market participant is expected to require.

Significant assumptions and estimates used in the income approach include, among others, estimated future net annual cash flows and discount rates for each reporting unit, current and anticipated market conditions, estimated growth rates and historical data. These estimates rely upon significant management judgment, particularly given the continued uncertainties regarding the COVID-19 pandemic and its impact on ~~depreciation~~activity levels and amortization expense, interest expense, and related tax effects, among others. The pro forma results for the six months ended June 30, 2018 also reflect adjustments to exclude the after-tax impact of transaction costs totaling $2.0 million. The supplemental unaudited pro forma financial information may not reflect what the results of the combined operations would have been had the acquisitions occurred on January 1, 2018. As such, it is presented for informational purposes only (in thousands, except per share amount).

Six Months Ended
June 30, 2018
Revenue $ 566,045
Net income $ 1,750
Diluted net income per share $ 0.03
Diluted weighted average common shares outstanding 58,922

commodity prices as well as future global economic growth.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

~~Goodwill~~Based on this quantitative assessment, the Company concluded that goodwill recorded in the Completion Services and Downhole Technologies businesses was fully impaired while goodwill recorded in the Offshore/Manufactured Products business was partially impaired. The Company therefore recognized non-cash goodwill impairment charges totaling $406.1 million in the first quarter of 2020. These impairment charges do not impact the Company's liquidity position, debt covenants or cash flows. Following impairment, the Offshore/Manufactured Products reporting unit did not have a fair value substantially in excess of its carrying amount.

~~Changes~~The discount rates used to value the Company's reporting units ranged between 16.8% and 18.5%. Holding all other assumptions and inputs used in the discounted cash flow analysis constant, a 50 basis point increase in the discount rate assumption for the Offshore/Manufactured Products reporting unit would have increased the goodwill impairment charge by approximately $10 million.

A summary of changes in the carrying ~~amount~~values of goodwill ~~for~~by reporting unit in the ~~six-month period ended June 30, 2019 were as follows (in thousands):~~first quarter of 2020 is presented in Note 4, "Details of Selected Balance Sheet Accounts."

Well Site Services Downhole Technologies Offshore/
Manufactured Products Total
Completion Services Drilling Services Subtotal
Balance as of December 31, 2018
Goodwill $ 221,582
$ 22,767
$ 244,349
$ 357,502
$ 162,462
$ 764,313
Accumulated impairment losses (94,528 ) (22,767 ) (117,295 ) —
—
(117,295 )
127,054
—
127,054
357,502
162,462
647,018
Foreign currency translation —
—
—
—
(34 ) (34 )
Balance as of June 30, 2019 $ 127,054
$ —
$ 127,054
$ 357,502
$ 162,428
$ 646,984

~~Other Intangible~~Long-lived Assets

The ~~following table presents~~Company also assessed the ~~gross~~ carrying ~~amount, accumulated amortization and net carrying amount for major intangible asset classes as of June 30, 2019 and December 31, 2018 (in thousands):~~

June 30, 2019 December 31, 2018

Gross
Carrying
Amount

Accumulated
Amortization
Net Carrying Amount
Gross
Carrying
Amount

Accumulated
Amortization
Net Carrying Amount
Customer relationships $ 168,266
$ 38,729
$ 129,537
$ 167,811
$ 33,247
$ 134,564
Patents/Technology/Know-how 85,423
27,268
58,155
84,903
23,418
61,485
Noncompete agreements 17,100
8,418
8,682
18,705
7,544
11,161
Tradenames and other 53,708
7,196
46,512
53,708
5,617
48,091
$ 324,497
$ 81,611
$ 242,886
$ 325,127
$ 69,826
$ 255,301

For the three months ended June 30, 2019 and 2018, amortization expense was $6.8 million and $6.4 million, respectively. Amortization expense was $13.5 million and $12.0 million for the six months ended June 30, 2019 and 2018, respectively.

~~The Company's industry is highly cyclical, and this cyclicality impacts the determination of whether a decline in~~ value of ~~the Company's~~ long-lived assets, including ~~definite-lived intangibles, and/or goodwill has occurred. The Company is required to periodically review the long-lived~~property, plant and equipment, operating lease assets and ~~goodwill~~other intangible assets held by each of its four reporting units for potential impairment in value if circumstances, some of which are beyond the Company's control, indicate that the carrying amounts will not be recoverable. The Company performed a qualitative assessment at June 30, 2019 and concluded that no further impairment evaluation was required.units. As a result ~~no impairments were recorded~~of this assessment, the Company concluded that property and equipment held by the Drilling Services reporting unit was further impaired and recognized a non-cash fixed asset impairment charge of $5.2 million in the ~~second~~first quarter of ~~2019.~~ 2020.

Should, among other events and circumstances, global economic and industry conditions further deteriorate, the COVID-19 pandemic business and market disruptions worsen, the outlook for future operating results and cash flow for any of the Company's reporting units decline, income tax rates increase or regulations change, costs of equity or debt capital increase, valuations for comparable public companies or comparable acquisition valuations decrease, or ~~the Company's market capitalization experiences a material, sustained decline below its book value,~~management implement strategic decisions based on industry conditions, the Company may need to recognize additional impairment losses in future periods.


4.	Details of Selected Balance Sheet Accounts

Additional information regarding selected balance sheet accounts at March 31, 2020 and December 31, 2019 is presented below (in thousands):



	March 31, 2020			December 31, 2019
Accounts receivable, net:
Trade	$	174,041		$	178,813
Unbilled revenue	29,086			28,341
Contract assets	23,148			26,034
Other	4,883			9,044
Total accounts receivable	231,158			242,232
Allowance for doubtful accounts	(8,686		)	(8,745		)
	$	222,472		$	233,487

Allowance for doubtful accounts as a percentage of total accounts receivable	4		%	4		%



	March 31, 2020		December 31, 2019
Deferred revenue (contract liabilities)	$	20,721	$	17,761

For the three months ended March 31, 2020, the $2.9 million net decrease in contract assets was primarily attributable to $18.7 million transferred to accounts receivable, which was partially offset by $16.1 million in revenue recognized during the period. Deferred revenue (contract liabilities) increased by $3.0 million in 2020, primarily reflecting $10.5 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of $7.4 million of revenue that was deferred at the beginning of the period.

As of March 31, 2020 and December 31, 2019, 74% and 73%, respectively, of total accounts receivables related to revenues generated in the United States. As of March 31, 2020 and December 31, 2019, 10% of total accounts receivables related to revenues generated in the United Kingdom. No other country or single customer accounted for more than 10% of the Company's total accounts receivables at these dates.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make required payments. Determination of the collectability of amounts due from customers requires us to make judgments regarding future events and trends. Allowances for doubtful accounts are established through an assessment of the Company's portfolio on an individual customer and consolidated basis taking into account current and expected future market conditions and trends. This process consists of a thorough review of historical collection experience, current aging status of the customer accounts, and financial condition of the Company's customers as well as political and economic factors in countries of operations and other customer-specific factors. Based on a review of these factors, the Company establishes or adjusts allowances for trade and unbilled receivables as well as contract assets. If a customer receivable is deemed to be uncollectible, the receivable is charged-off against allowance for doubtful accounts. If the financial condition of the Company's customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. The following provides a summary of activity in the allowance for doubtful accounts for the three months ended March 31, 2020 (in thousands):



	2020			2019
Allowance for doubtful accounts – December 31	$	8,745		$	6,701
Provision	589			(134		)
Write-offs	(1,785		)	—
Other	1,137			157
Allowance for doubtful accounts – March 31	8,686			6,724



	March 31, 2020			December 31, 2019
Inventories, net:
Finished goods and purchased products	$	106,833		$	107,691
Work in process	30,175			21,963
Raw materials	114,818			110,719
Total inventories	251,826			240,373
Allowance for excess or obsolete inventory	(42,646		)	(19,031		)
	$	209,180		$	221,342

The Company recorded impairment charges totaling $25.2 million in the first quarter of 2020 to reduce the carrying value of inventories to their estimated net realizable value following the March 2020 decline in crude oil prices, which is expected to reduce the near-term utility of certain goods within the Offshore/Manufactured Products and Completion Services operations.



	March 31, 2020			December 31, 2019
Property, plant and equipment, net:
Land	$	34,917		$	37,507
Buildings and leasehold improvements	265,924			273,384
Machinery and equipment	238,599			246,826
Completion Services equipment	513,101			510,737
Office furniture and equipment	37,554			45,309
Vehicles	93,301			97,264
Construction in progress	11,358			13,281
Total property, plant and equipment	1,194,754			1,224,308
Accumulated depreciation	(765,752		)	(764,584		)
	$	429,002		$	459,724

For the three months ended March 31, 2020 and 2019, depreciation expense was $20.1 million and $24.8 million, respectively.

As discussed in Note 3, "Asset Impairments and Other Charges," during the first quarter of 2020 the Drilling Services reporting unit recognized a non-cash impairment charge of $5.2 million to reduce the carrying value of the business's fixed assets to their estimated realizable value.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)



	March 31, 2020		December 31, 2019
Other noncurrent assets:
Deferred compensation plan	$	21,327	$	22,268
Other	6,516		6,433
	$	27,843	$	28,701



	March 31, 2020		December 31, 2019
Accrued liabilities:
Accrued compensation	$	16,340	$	24,930
Insurance liabilities	8,563		9,108
Accrued taxes, other than income taxes	4,335		3,424
Accrued commissions	2,089		1,481
Other	11,900		9,897
	$	43,227	$	48,840



Goodwill:	Well Site Services									Downhole Technologies			Offshore/ Manufactured Products			Total
	Completion Services			Drilling Services			Subtotal			Downhole Technologies			Offshore/ Manufactured Products			Total
Balance as of December 31, 2019
Goodwill	$	221,582		$	22,767		$	244,349		$	357,502		$	162,750		$	764,601
Accumulated impairment losses	(94,528		)	(22,767		)	(117,295		)	(165,000		)	—			(282,295		)
	127,054			—			127,054			192,502			162,750			482,306
Goodwill impairments⁽¹⁾	(127,054		)	—			(127,054		)	(192,502		)	(86,500		)	(406,056		)
Foreign currency translation	—			—			—			—			(493		)	(493		)
Balance as of March 31, 2020	$	—		$	—		$	—		$	—		$	75,757		$	75,757

________________


(1)	See Note 3, "Asset Impairments and Other Charges" for discussion of first quarter 2020 goodwill impairments.



Other Intangible Assets:	March 31, 2020						December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	168,260	$	47,056	$	121,204	$	168,278	$	44,296	$	123,982
Patents/Technology/Know-how	86,123		32,291		53,832		85,919		30,791		55,128
Noncompete agreements	17,087		12,291		4,796		17,125		11,061		6,064
Tradenames and other	53,708		9,582		44,126		53,708		8,791		44,917
	$	325,178	$	101,220	$	223,958	$	325,030	$	94,939	$	230,091

For the three months ended March 31, 2020 and 2019, amortization expense was $6.3 million and $6.7 million, respectively.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)


4.	~~Details of Selected Balance Sheet Accounts~~

~~Additional information regarding selected balance sheet accounts at June 30, 2019 and December 31, 2018 is presented below (in thousands):~~

June 30,
2019 December 31,
2018
Accounts receivable, net:
Trade $ 208,175
$ 227,052
Unbilled revenue 37,518
35,674
Contract assets 20,113
21,201
Other 3,950
6,381
Total accounts receivable 269,756
290,308
Allowance for doubtful accounts (6,303 ) (6,701 )
$ 263,453
$ 283,607

June 30,
2019 December 31,
2018
Deferred revenue (contract liabilities) $ 15,360
$ 14,160

For the six months ended June 30, 2019, the $1.1 million net decrease in contract assets was primarily attributable to $13.1 million transferred to accounts receivable, which was partially offset by $12.1 million in revenue recognized during the period. Deferred revenue increased by $1.2 million in 2019, primarily reflecting $5.9 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of $5.0 million of revenue that was deferred at the beginning of the period.

June 30,
2019 December 31,
2018
Inventories, net:
Finished goods and purchased products $ 105,285
$ 96,195
Work in process 21,838
20,552
Raw materials 103,139
111,197
Total inventories 230,262
227,944
Allowance for excess or obsolete inventory (20,256 ) (18,551 )
$ 210,006
$ 209,393

Estimated
Useful Life (years)
June 30,
2019 December 31,
2018
Property, plant and equipment, net:
Land $ 37,758
$ 37,545
Buildings and leasehold improvements 2 – 40 259,981
259,834
Machinery and equipment 1 – 28 493,121
483,629
Completion Services equipment 2 – 10 505,427
492,183
Office furniture and equipment 3 – 10 45,013
43,654
Vehicles 2 – 10 114,729
122,982
Construction in progress 23,337
29,451
Total property, plant and equipment 1,479,366
1,469,278
Accumulated depreciation (959,042 ) (928,851 )
$ 520,324
$ 540,427

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

June 30,
2019 December 31,
2018
Other noncurrent assets:
Deferred compensation plan $ 21,593
$ 20,468
Deferred income taxes 633
761
Other 5,667
5,815
$ 27,893
$ 27,044

June 30,
2019 December 31,
2018
Accrued liabilities:
Accrued compensation $ 20,722
$ 29,867
Insurance liabilities 12,080
9,177
Accrued taxes, other than income taxes 7,990
4,530
Accrued commissions 1,470
1,484
Accrued claims 258
2,983
Other 10,958
12,689
$ 53,478
$ 60,730


5.	Net ~~Income (Loss)~~Loss Per Share

The table below provides a reconciliation of the numerators and denominators of basic and diluted net ~~income (loss)~~loss per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands, except per share amounts):


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Numerators:
Net income (loss)	$	(9,740	)	$	2,742		$	(24,388	)	$	(750	)
Net loss													$	(405,041	)	$	(14,648	)
Less: Income attributable to unvested restricted stock awards	—			(44		)	—			—			—			—
Numerator for basic net income (loss) per share	(9,740		)	2,698			(24,388		)	(750		)
Numerator for basic net loss per share													(405,041		)	(14,648		)
Effect of dilutive securities:
Unvested restricted stock awards	—			—			—			—			—			—
Numerator for diluted net income (loss) per share	$	(9,740	)	$	2,698		$	(24,388	)	$	(750	)
Numerator for diluted net loss per share													$	(405,041	)	$	(14,648	)

Denominators:
Weighted average number of common shares outstanding	60,458			59,964			60,353			59,389			60,770			60,249
Less: Weighted average number of unvested restricted stock awards outstanding	(1,052		)	(959		)	(1,021		)	(993		)	(1,116		)	(991		)
Denominator for basic net income (loss) per share	59,406			59,005			59,332			58,396
Effect of dilutive securities:
Unvested restricted stock awards	—			—			—			—
Assumed exercise of stock options	—			—			—			—
1.50% convertible senior notes	—			—			—			—
Denominator for basic and diluted net loss per share													59,654			59,258
	—			—			—			—
Denominator for diluted net income (loss) per share	59,406			59,005			59,332			58,396

Net income (loss) per share:
Net loss per share:
Basic	$	(0.16	)	$	0.05		$	(0.41	)	$	(0.01	)	$	(6.79	)	$	(0.25	)
Diluted	(0.16		)	0.05			(0.41		)	(0.01		)	(6.79		)	(0.25		)

The calculation of diluted net loss per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 excluded ~~664~~629 thousand shares and 676 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect. The calculation of diluted net income (loss) per share for the three and six months ended June 30, 2018 excluded 695 thousand shares and 697687 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect. Additionally, shares issuable upon conversion of the 1.50% convertible senior notes were not convertible and therefore excluded for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ due to their antidilutive effect.


6.	Long-term Debt

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, long-term debt consisted of the following (in thousands):


	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Revolving credit facility⁽¹⁾	$	97,465		$	134,096		$	70,471		$	50,534
1.50% convertible senior notes⁽²⁾	170,663			167,102			164,370			167,594
Promissory note	25,000			25,000			25,000			25,000
Other debt and finance lease obligations	5,239			5,540			5,031			5,041
Total debt	298,367			331,738			264,872			248,169
Less: Current portion	(25,583		)	(25,561		)	(25,643		)	(25,617		)
Total long-term debt	$	272,784		$	306,177		$	239,229		$	222,552

____________________


(1)	Presented net of ~~$1.7~~$1.2 million and ~~$2.0~~$1.4 million of unamortized debt issuance costs as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.


(2)	The outstanding principal amount of the 1.50% convertible senior notes ~~is $200.0 million. See "1.50% Convertible Senior Notes" below.~~was $186.6 million and $192.3 million as of March 31, 2020 and December 31, 2019, respectively.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

Revolving Credit Facility

The Company's senior secured revolving credit facility, as amended (the "Revolving Credit Facility") is governed by a credit agreement with Wells Fargo Bank, N.A., as administrative agent for the lenders party thereto and collateral agent for the secured parties thereunder, and the lenders and other financial institutions from time to time party thereto, dated as of January 30, 2018, as amended and restated (the "Credit Agreement"), and matures on January 30, 2022. The ~~Credit Agreement governs our Revolving Credit Facility. The~~ Revolving Credit Facility provides for ~~$350~~$350.0 million in lender ~~commitments with an option to increase the maximum borrowings to $500 million subject to additional lender commitments prior to its maturity on January 30, 2022.~~commitments. Under the Revolving Credit Facility, ~~$50~~$50.0 million is available for the issuance of letters of credit.

As of ~~June 30, 2019,~~March 31, 2020, the Company had ~~$99.2~~$71.7 million of borrowings ~~outstanding under the Credit Agreement~~ and ~~$16.1~~$19.1 million of outstanding letters of credit under the Revolving Credit Facility, leaving ~~$96.0~~$107.6 million available to be drawn. The total amount available to be drawn under ~~our~~the Revolving Credit Facility was less than the total lender commitments ~~as of June 30, 2019,~~ due to limits imposed by maintenance covenants in the Credit Agreement. As of March 31, 2020, the Company was in compliance with its debt covenants under the Credit Agreement.

Amounts outstanding under the Revolving Credit Facility bear interest at LIBOR plus a margin of 1.75% to 3.00%, or at a base rate plus a margin of 0.75% to 2.00%, in each case based on a ratio of the Company's total net funded debt to consolidated EBITDA (as defined in the Credit Agreement). The Company must also pay a quarterly commitment fee of 0.25% to 0.50%, based on the Company's ratio of total net funded debt to consolidated EBITDA, on the unused commitments under the Credit Agreement.

The Credit Agreement contains customary financial covenants and restrictions. Specifically, the Company must maintain an interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least ~~3.00~~3.0 to 1.0, a maximum senior secured leverage ratio, defined as the ratio of senior secured debt to consolidated EBITDA, of no greater than 2.25 to 1.0 and a total net leverage ratio, defined as the ratio of total net funded debt to consolidated EBITDA, of no greater than 3.75 to 1.0. The financial covenants give pro forma effect to acquired businesses and the annualization of EBITDA for acquired businesses.

~~Each of the factors considered~~The various components used in the calculation of these ratios are defined in the Credit Agreement. Consolidated EBITDA and consolidated interest expense, as defined, exclude non-cash goodwill ~~impairments,~~and fixed asset impairment charges, losses on extinguishment of debt, debt discount amortization, stock-based compensation expense and other non-cash charges.

Borrowings under the Credit Agreement are secured by a pledge of substantially all of the Company's assets and the assets of its domestic subsidiaries. The Company's obligations under the Credit Agreement are guaranteed by its significant domestic subsidiaries. The Credit Agreement also contains negative covenants that limit the Company's ability to borrow additional funds, encumber assets, pay dividends, sell assets and enter into other significant transactions.

Under the Credit Agreement, the occurrence of specified change of control events involving the Company would constitute an event of default that would permit the banks to, among other things, accelerate the maturity of the facility and cause it to become immediately due and payable in full.

AsThe Company is working with its bank group regarding an amendment to the Revolving Credit Facility. The amendment entails converting the Company's existing cash flow-based revolving credit facility into an asset-based revolving credit facility (the "Amended Facility"). The Company currently expects to complete the amendment process in the second quarter of ~~June 30, 2019,~~2020. The amendment process remains subject to completion of final documentation and credit approval by the bank group and, accordingly, the Company ~~was~~cannot be certain that it will be able to complete the amendment process.

If the Company is not successful in amending the Revolving Credit Facility, its borrowings would be governed by the existing Credit Agreement, which contains financial covenants and restrictions as further described above. Based on Company forecasts, the Company anticipates that it could be out of compliance with the total net leverage ratio covenant in the third quarter of 2020 as a result of projected declines in consolidated EBITDA resulting from current industry conditions caused by the global response to the COVID-19 pandemic and the resulting collapse in crude oil prices. However, the Company believes that it will have sufficient liquidity over the next twelve months to fund its liabilities as they become due.

If the Company does not complete the amendment process and subsequently is not in compliance with the total net leverage ratio under its ~~debt covenants.~~Revolving Credit Facility, the Company believes that it will have sufficient cash on hand, together with cash flow from operations (after investments in capital expenditures), to repay the borrowings outstanding under the Revolving Credit Facility or that it could seek to obtain an amendment or waiver from its lenders in order to avoid a default.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

1.50% Convertible Senior Notes

On January 30, 2018, the Company issued $200 million aggregate principal amount of its 1.50% convertible senior notes due 2023 (the "Notes") pursuant to an indenture, dated as of January 30, 2018 (the "Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee. Net proceeds from the Notes, after deducting issuance costs, were approximately $194 million, which was used by the Company to repay a portion of the outstanding borrowings under the Revolving Credit Facility during

During the first quarter of ~~2018.~~2020, the Company repurchased $5.7 million in principal amount of the outstanding Notes for $4.7 million, which approximated the net carrying amount of the related liability. Since December 31, 2018, the Company has repurchased $13.5 million in principal amount of the outstanding notes for $11.5 million.

The initial carrying amount of the Notes recorded in the consolidated balance sheet was less than the $200 million in principal amount of the Notes, in accordance with applicable accounting principles, reflective of the estimated fair value of a similar debt instrument that does not have a conversion feature. The Company recorded the value of the conversion feature as a debt discount, which is amortized as interest expense over the term of the Notes, with a similar amount allocated to additional paid-in capital. As a result of this amortization, the interest expense the Company recognizes related to the Notes for accounting purposes is based on an effective interest rate of approximately ~~6.0%~~6%, which is greater than the cash interest payments the Company is obligated to pay on the Notes. ~~Interest~~Reported interest expense associated with the Notes for both the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 was $2.5 million, ~~and~~

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

~~$5.1 million, respectively,~~ while the related contractual cash interest expense totaled ~~$0.8~~$0.7 million and $1.5 million, respectively. Interest expense associated with the Notes for the three and six months ended June 30, 2018 was $2.4 million and $4.1 million, respectively, while the related contractual interest expense totaled $0.8 ~~million and $1.3~~ million, respectively.

The following table presents the carrying amount of the Notes in the consolidated balance sheets as of March 31, 2020 and December 31, 2019 (in thousands):


	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Principal amount of the liability component	$	200,000	$	200,000	$	186,550	$	192,250
Less: Unamortized discount	25,669		28,825		19,366		21,544
Less: Unamortized issuance costs	3,668		4,073		2,814		3,112
Net carrying amount of the liability	$	170,663	$	167,102
Net carrying amount of the liability component					$	164,370	$	167,594

Net carrying amount of the equity component					$	25,683	$	25,683

The Notes bear interest at a rate of 1.50% per year until maturity. Interest is payable semi-annually in arrears on February 15 and August 15 of each ~~year, beginning on August 15, 2018.~~year. In addition, additional interest and special interest may accrue on the Notes under certain circumstances as described in the Indenture. The Notes will mature on February 15, 2023, unless earlier repurchased, redeemed or converted. The initial conversion rate is 22.2748 shares of the Company's common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $44.89 per share of common stock). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the Indenture. The Company's intent is to repay the principal amount of the Notes in cash and the conversion feature in shares of the Company's common stock.

Noteholders may convert their Notes, at their option, only in the following circumstances: (1) if the last reported sale price per share of the Company's common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the ~~five~~5 consecutive business days immediately after any five consecutive trading day period (such ~~five~~5 consecutive trading day period, the "measurement period") in which the trading price per $1,000 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company's common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company's common stock, as described in the Indenture; or (4) if the Company calls the Notes for redemption, or at any time from, and including, November 15, 2022 until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of common stock or a combination of cash and shares of common stock, at the Company's election, based on the applicable conversion rate(s). If the Company elects to deliver cash or a combination of cash and shares of common stock, then the consideration due upon conversion will be based on a defined observation period.

The Notes will be redeemable, in whole or in part, at the Company's option at any time, and from time to time, on or after February 15, 2021, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of common stock exceeds

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice.

If specified change in control events involving the Company as defined in the Indenture occur, then noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest. Additionally, the ~~Notes contain~~Indenture contains certain events of default, ~~as set forth in~~including certain defaults by the ~~Indenture.~~Company with respect to other indebtedness of at least $40.0 million. As of ~~June 30, 2019,~~March 31, 2020, none of the conditions allowing holders of the Notes to convert, or requiring usthe Company to repurchase the Notes, had been met.

Promissory Note

In connection with the 2018 acquisition of GEODynamics, ~~Acquisition,~~Inc. ("GEODynamics"), the Company issued a $25.0 million promissory note that bears interest at 2.50% per annum and was scheduled to mature on July 12, 2019. Payments due under the promissory note are subject to set off, in part or in full, against certain ~~indemnifications~~indemnification claims related to matters occurring prior to the Company's acquisition of GEODynamics. As more fully described in Note ~~14,~~13, "Commitments and Contingencies," the Company has provided notice to and asserted an indemnification ~~claim~~claims against the seller of GEODynamics. As a result, the maturity date of the note is extended until the resolution of ~~the~~these indemnity ~~claim.~~claims. The Company expects that the amount ultimately paid in respect of such note ~~may~~will be reduced as a result of ~~this~~these indemnification ~~claim.~~claims.

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~


7.	Fair Value Measurements

The Company's financial instruments consist of cash and cash equivalents, investments, receivables, payables and debt instruments. The Company believes that the carrying values of these instruments, other than the Notes, on the accompanying consolidated balance sheets approximate their fair values. The estimated fair value of the Notes as of ~~June 30, 2019 and December~~March 31, ~~2018~~2020 was ~~approximately $178~~$78.5 million ~~and $166 million, respectively,~~ based on quoted market prices (a Level 1 fair value measurement), which compares to the ~~$200~~$186.6 million in principal amount of the Notes.


8.	~~Leases~~

The Company leases a portion of its facilities, office space, equipment and vehicles. Leases with an initial term of 12 months or less are not recorded in the consolidated balance sheet as of June 30, 2019. Substantially all of the Company's future lease obligations are related to operating leases. Consistent with the Company's historical practice, finance (capital) lease obligations, which totaled $0.7 million as of June 30, 2019, are classified within long-term debt while related assets are included within property, plant and equipment.

Most of the Company's operating leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of lease-related assets and leasehold improvements are limited by the expected lease term. Certain operating lease agreements include rental payments adjusted periodically for inflation. The Company's operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. While the Company rents or subleases certain real estate to third parties, such amounts are not material. Cash outflows related to operating leases are presented within cash flows from operations.

~~The following tables summarize the financial statement information regarding of the Company's operating leases for the three and six months ended June 30, 2019 (in thousands):~~

Three Months Ended
June 30, 2019 Six Months Ended
June 30, 2019
Operating lease expense components:
Leases with initial term of greater than 12 months $ 2,897
$ 5,858
Leases with initial term of 12 months or less 1,413
2,766
$ 4,310
$ 8,624

Operating lease assets obtained in exchange for operating lease liabilities:
Upon adoption of standard (January 1, 2019) $ 47,721
Subsequent to adoption 5,332
Non-cash operating lease amounts $ 53,053

~~The following table provides the maturities of operating lease liabilities as of June 30, 2019 (in thousands):~~

Operating Leases
2019 (less six months ended June 30) $ 5,654
2020 10,125
2021 8,282
2022 6,176
2023 5,192
After 2023 22,861
Total lease payments 58,290
Less: Imputed interest (10,025 )
Present value of operating lease liabilities 48,265
Less: Current portion (8,997 )
Total long-term operating lease liabilities $ 39,268
Weighted-average remaining lease term (years) 7.7
Weighted-average discount rate 5.0 %

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~


9.	Stockholders' Equity

The following table provides details with respect to the changes to the number of shares of common stock, $0.01 par value, outstanding during the first ~~six months~~quarter of ~~2019:~~2020 (in thousands):



Shares of common stock outstanding – December 31, ~~2018~~2019	~~59,969,695~~60,501
Restricted stock awards, net of forfeitures	~~767,864~~666
Shares withheld for taxes on vesting of restricted stock awards and transferred to treasury	(~~204,505~~	)
~~Purchase of treasury stock~~	~~(50,800~~223	)
Shares of common stock outstanding – ~~June 30, 2019~~March 31, 2020	~~60,482,254~~60,944

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company had 25,000,000 shares of preferred stock, $0.01 par value, authorized, with no0 shares issued or outstanding.

OnThe Company maintains a share repurchase program which was extended to July 29, ~~2015,~~2020 by the Company's Board of Directors approved a share repurchase program providing for the repurchase of up to $150.0 million of the Company's common stock, which, following extensions, was scheduled to expire on July 29, 2019. On July 24, 2019, our Board of Directors extended the share repurchase program for one year to July 29, 2020.Directors. During the first ~~six months~~quarter of ~~2019,~~2020, the Company ~~repurchased approximately 51 thousand shares of~~did 0t repurchase any common stock under the program. The amount remaining under the Company's share repurchase authorization as of ~~June 30, 2019~~March 31, 2020 was $119.8 million. Subject to applicable securities laws, such purchases will be at such times and in such amounts as the Company deems appropriate.


~~10.~~9.	Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, reported as a component of stockholders' equity, ~~decreased slightly during the first half of 2019~~increased from ~~$71.4~~$67.7 million at December 31, ~~2018~~2019 to ~~$71.3~~$82.5 million at ~~June 30, 2019,~~March 31, 2020, due to changes in currency exchange rates. Accumulated other comprehensive loss is primarily related to fluctuations in the currency exchange rates compared to the U.S. dollar which are used to translate certain of the international operations of ~~our~~the Company's reportable segments. For the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2020 and 2019, currency translation adjustments recognized as a component of other comprehensive ~~loss~~income were primarily attributable to the United Kingdom and ~~Brazil, due to~~Brazil. As of March 31, 2020, the exchange ~~rates~~rate for the British pound and the Brazilian real ~~weakening~~compared to the U.S. dollar weakened by 2%6% and ~~14%~~22%, respectively, compared to the ~~U.S. dollar, and~~exchange rate at December 31, 2019, contributing to other comprehensive loss of ~~$8.7~~$14.8 million reported for the three months ended March 31, 2020. During the first three months of 2019, the exchange rate for the British pound strengthened by 2% compared to the U.S. dollar, contributing to other comprehensive income of $2.5 million.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)


~~11.~~10.	Long-Term Incentive Compensation

The following table presents a summary of activity for stock options, service-based restricted stock awards and performance-based stock unit awards for the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020 (in thousands):


	Stock Options			Service-based Restricted Stock			Performance-based Stock Units			Stock Options			Service-based Restricted Stock			Performance-based Stock Units
Outstanding – December 31, 2018	681,894			929,554			227,124
Outstanding – December 31, 2019										636			1,064			248
Granted	—			674,923			76,793			—			594			181
Vested/Exercised	—			(534,661		)	(105,988		)	—			(472		)	(125		)
Forfeited	(45,624		)	(13,047		)	—			(14		)	(52		)	—
Outstanding – June 30, 2019	636,270			1,056,769			197,929
Weighted average grant date fair value (2019 awards)	$	—		$	17.65		$	17.58
Outstanding – March 31, 2020										622			1,134			304
Weighted average grant date fair value (2020 awards)										$	—		$	11.06		$	11.15

The restricted stock program consists of a combination of service-based restricted stock and performance-based stock units. Service-based restricted stock awards generally vest on a straight-line basis over their term, which is generally three years. Performance-based restricted stock awards generally vest at the end of a three-year period, with the number of shares ultimately issued under the program dependent upon achievement of predefined specific performance measures.

In the event the predefined targets are exceeded for any performance-based award, additional shares up to a maximum of 200% of the target award may be granted. Conversely, if actual performance falls below the predefined target, the number of shares vested is reduced. If the actual performance falls below the threshold performance level, no restricted shares will vest. The performance measure for outstanding awards ~~issued in 2017~~ is ~~relative total stockholder return compared to a peer group of companies. The performance measures for performance-based stock units granted during 2018 and 2019 are based on~~ the Company's EBITDA growth rate over a three-year period.

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

During the first quarters of ~~2019~~2020 and ~~2018,~~2019, the Company issued conditional long-term cash incentive awards ("Cash Awards") of approximately ~~$1.3~~$2.0 million ~~each,~~and $1.4 million, respectively, with the ultimate dollar amount to be awarded ranging from ~~zero~~0 to a maximum of $4.0 million for the 2020 Cash Award and from 0 to a maximum of $2.7 million ~~each.~~for the 2019 Cash Award. The performance measure for these Cash Awards is relative total stockholder return compared to a peer group of companies measured over a three-year period. The ultimate dollar amount to be awarded for the 2020 and 2019 Cash Awards is limited to their targeted award value ($2.0 million and $1.4 million, respectively) if the Company's total stockholder return is negative over the performance period. The obligation related to the Cash Awards is classified as a liability and recognized over the vesting period.

Stock-based compensation pre-tax expense recognized in the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 totaled ~~$4.2~~$1.2 million and ~~$8.6 million, respectively. Stock-based compensation pre-tax expense recognized in the three and six months ended June 30, 2018 totaled $6.0 million and $11.2~~$4.4 million, respectively. As of ~~June 30, 2019,~~March 31, 2020, there was ~~$22.4~~$15.6 million of pre-tax compensation costs related to service-based and performance-based stock awards, which will be recognized in future periods as vesting conditions are satisfied.


~~12.~~11.	Income Taxes

The income tax benefit for the three ~~and six~~ month periods ended ~~June 30, 2019~~March 31, 2020 was calculated using a discrete approach. This methodology was used because minor changes in the Company's results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. For the three months ended ~~June 30, 2019,~~March 31, 2020, the Company's income tax benefit was ~~$0.3~~$39.5 million ~~or 2.6%~~on a pre-tax loss of ~~pre-tax losses. For the six months ended June 30, 2019, the Company's~~$444.5 million, which included non-cash goodwill charges (approximately $313.1 million) and other expenses that are not deductible for income tax purposes. The impact of these non-deductible expenses was partially offset by a $14.8 million discrete tax benefit ~~was $0.5 million, or 2.2%~~related to the carryback of ~~pre-tax losses.~~U.S. net operating losses under the CARES Act (discussed below). This compares to an income tax ~~provision~~benefit of ~~$1.7~~$0.3 million ~~or 38.8%~~on a pre-tax loss of ~~pre-tax income, and an income tax provision of $0.5~~$14.9 million, ~~or 212.5% of pre-tax losses,~~which includes certain non-deductible expenses, for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)


~~13.~~12.	Segments and Related Information

The Company operates through ~~three~~3 reportable segments: Well Site Services, Downhole Technologies and Offshore/Manufactured Products. The Company's reportable segments represent strategic business units that generally offer different products and services. They are managed separately because each business often requires different technologies and marketing strategies. ~~Recent acquisitions, except for the acquisition of GEODynamics in 2018, have been direct extensions to our business segments.~~

Financial information by business segment for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ is summarized in the following tables (in thousands).


	Revenues		Depreciation and amortization		Operating income (loss)			Capital expenditures		Total assets		Revenues		Depreciation and amortization		Operating income (loss)			Capital expenditures		Total assets
Three months ended June 30, 2019
Three months ended March 31, 2020
Well Site Services –
Completion Services(1)	$	103,320	$	17,248	$	(507	)	$	7,201	$	507,028	$	82,926	$	14,766	$	(139,603	)	$	2,938	$	313,349
Drilling Services(2)	12,646		3,224		(2,601		)	965		59,322		4,531		270		(5,351		)	114		7,506
Total Well Site Services	115,966		20,472		(3,108		)	8,166		566,350		87,457		15,036		(144,954		)	3,052		320,855
Downhole Technologies(3)	46,740		5,256		(1,462		)	3,460		707,878		41,065		5,584		(192,691		)	1,649		333,518
Offshore/Manufactured Products(4)	101,979		5,973		9,809			1,720		677,644		91,172		5,628		(95,496		)	1,065		562,179
Corporate	—		182		(11,634		)	309		45,829		—		161		(8,661		)	115		95,458
Total	$	264,685	$	31,883	$	(6,395	)	$	13,655	$	1,997,701	$	219,694	$	26,409	$	(441,802	)	$	5,881	$	1,312,010

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

Revenues Depreciation and
amortization Operating income (loss) Capital
expenditures Total assets
Three months ended June 30, 2018
Well Site Services –
Completion Services $ 108,368
$ 16,816
$ 1,204
$ 14,590
$ 526,551
Drilling Services 16,756
3,551
(2,957 ) 1,801
69,256
Total Well Site Services 125,124
20,367
(1,753 ) 16,391
595,807
Downhole Technologies 59,274
4,532
11,600
3,168
677,367
Offshore/Manufactured Products 101,447
5,786
12,664
4,108
710,125
Corporate —
237
(13,811 ) 356
41,827
Total $ 285,845
$ 30,922
$ 8,700
$ 24,023
$ 2,025,126

Revenues Depreciation and
amortization Operating income (loss) Capital
expenditures Total assets
Six months ended June 30, 2019
Well Site Services –
Completion Services $ 203,962
$ 34,534
$ (4,001 ) $ 18,883
$ 507,028
Drilling Services 20,396
6,565
(7,160 ) 1,914
59,322
Total Well Site Services 224,358
41,099
(11,161 ) 20,797
566,350
Downhole Technologies 101,030
10,322
2,592
7,076
707,878
Offshore/Manufactured Products 189,908
11,560
15,068
3,266
677,644
Corporate —
453
(23,734 ) 438
45,829
Total $ 515,296
$ 63,434
$ (17,235 ) $ 31,577
$ 1,997,701


	Revenues		Depreciation and amortization		Operating income (loss)			Capital expenditures		Total assets		Revenues		Depreciation and amortization		Operating income (loss)			Capital expenditures		Total assets
Six months ended June 30, 2018
Three months ended March 31, 2019
Well Site Services –
Completion Services	$	191,208	$	32,198	$	(3,267	)	$	22,515	$	526,551	$	100,642	$	17,286	$	(3,494	)	$	11,682	$	521,553
Drilling Services	34,315		7,419		(5,268		)	3,026		69,256		7,750		3,341		(4,559		)	949		55,785
Total Well Site Services	225,523		39,617		(8,535		)	25,541		595,807		108,392		20,627		(8,053		)	12,631		577,338
Downhole Technologies	105,055		8,416		19,654			5,066		677,367		54,290		5,066		4,054			3,616		715,217
Offshore/Manufactured Products	208,843		11,600		25,116			7,131		710,125		87,929		5,587		5,259			1,546		677,907
Corporate	—		479		(28,449		)	523		41,827		—		271		(12,100		)	129		46,765
Total	$	539,421	$	60,112	$	7,786		$	38,261	$	2,025,126	$	250,611	$	31,551	$	(10,840	)	$	17,922	$	2,017,227

~~One~~________________


(1)	Operating loss includes a non-cash goodwill impairment charge of $127.1 million to reduce the carrying value of the Completion Services reporting unit to its estimated fair value and an inventory impairment charge of $9.0 million to reduce the carrying value of the Completion Services reporting unit's inventory to its estimated net realizable value.


(2)	Operating loss includes a non-cash fixed asset impairment charge of $5.2 million to reduce the carrying value of the Drilling Services business's fixed assets to their estimated realizable value.


(3)	Operating loss includes non-cash goodwill impairment charge of $192.5 million to reduce the carrying value of the Downhole Technologies reporting unit to its estimated fair value.


(4)	Operating loss includes a non-cash goodwill impairment charge of $86.5 million to reduce the carrying value of the Offshore/Manufactured Products reporting unit to its estimated fair value and an inventory impairment charge of $16.2 million to reduce the carrying value of the Offshore/Manufactured Products reporting unit's inventory to its estimated net realizable value.

See Note 3, "Asset Impairments and Other Charges" and Note 4, "Details of Selected Balance Sheet Accounts," for further discussion of impairment charges recorded during the first quarter of 2020.

No customer individually accounted for 10% of the Company's consolidated ~~product and service~~ revenue for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2020 and ~~individually represented 11% of the Company's consolidated total accounts receivable as of December 31, 2018.~~2019.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

The following table provides supplemental disaggregated revenue from contracts with customers by business segment for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands):

Well Site Services Downhole Technologies Offshore/Manufactured Products Total
2019 2018 2019 2018 2019 2018 2019 2018
Three months ended June 30
Major revenue categories -
Project-driven products $ —
$ —
$ —
$ —
$ 38,517
$ 35,225
$ 38,517
$ 35,225
Short-cycle:
Completion products and services 103,320
108,368
46,740
59,274
29,265
29,783
179,325
197,425
Drilling services 12,646
16,756
—
—
—
—
12,646
16,756
Other products —
—
—
—
5,746
7,565
5,746
7,565
Total short-cycle 115,966
125,124
46,740
59,274
35,011
37,348
197,717
221,746
Other products and services —
—
—
—
28,451
28,874
28,451
28,874
$ 115,966
$ 125,124
$ 46,740
$ 59,274
$ 101,979
$ 101,447
$ 264,685
$ 285,845

Percentage of total revenue by type -
Products — % — % 98 % 98 % 78 % 77 % 47 % 48 %
Services 100 % 100 % 2 % 2 % 22 % 23 % 53 % 52 %

Well Site Services Downhole Technologies Offshore/Manufactured Products Total
2019 2018 2019 2018 2019 2018 2019 2018
Six months ended June 30
Major revenue categories -
Project-driven products $ —
$ —
$ —
$ —
$ 65,762
$ 76,024
$ 65,762
$ 76,024
Short-cycle:
Completion products and services 203,962
191,208
101,030
105,055
53,540
62,755
358,532
359,018
Drilling services 20,396
34,315
—
—
—
—
20,396
34,315
Other products —
—
—
—
13,484
15,011
13,484
15,011
Total short-cycle 224,358
225,523
101,030
105,055
67,024
77,766
392,412
408,344
Other products and services —
—
—
—
57,122
55,053
57,122
55,053
$ 224,358
$ 225,523
$ 101,030
$ 105,055
$ 189,908
$ 208,843
$ 515,296
$ 539,421

Percentage of total revenue by type -
Products — % — % 97 % 98 % 75 % 78 % 47 % 49 %
Services 100 % 100 % 3 % 2 % 25 % 22 % 53 % 51 %



	Well Site Services				Downhole Technologies				Offshore/Manufactured Products				Total
	2020		2019		2020		2019		2020		2019		2020		2019
Three months ended March 31
Major revenue categories -
Project-driven products	$	—	$	—	$	—	$	—	$	36,788	$	27,245	$	36,788	$	27,245
Short-cycle:
Completion products and services	82,926		100,642		41,065		54,290		13,649		24,274		137,640		179,206
Drilling services	4,531		7,750		—		—		—		—		4,531		7,750
Other products	—		—		—		—		8,420		7,739		8,420		7,739
Total short-cycle	87,457		108,392		41,065		54,290		22,069		32,013		150,591		194,695
Other products and services	—		—		—		—		32,315		28,671		32,315		28,671
	$	87,457	$	108,392	$	41,065	$	54,290	$	91,172	$	87,929	$	219,694	$	250,611

Revenues from products and services transferred to customers over time accounted for approximately ~~67% and 68%~~66% of consolidated revenues for both the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 and ~~2018, respectively.~~2019. The balance of revenues for the respective periods relates to products and services transferred to customers at a point in time. As of ~~June 30, 2019,~~March 31, 2020, the Company had ~~$142~~$161 million of remaining backlog related to contracts with an original expected duration of greater than one year. Approximately ~~26%~~51% of this remaining backlog is expected to be recognized as revenue over the remaining ~~six~~nine months of ~~2019,~~2020, with an additional ~~64%~~30% in ~~2020~~2021 and the balance thereafter.


13.	Commitments and Contingencies

The impact of the recent COVID-19 pandemic and related economic, business and market disruptions is evolving rapidly and its future effects are uncertain. The most direct and immediate impact that the Company expects from the COVID-19 pandemic is decreased demand for its products and services due to lower activity levels by its customers resulting from the precipitous decline in crude oil prices. The overall impact of the pandemic and oil price collapse on the Company and its customers will depend on many factors, many of which are beyond management's control and knowledge. In response to public health concerns related to COVID-19, many federal, state, local and other authorities around the world have imposed mandatory regulations directing individuals to stay at home and limiting their ability to travel domestically or internationally. In certain cases, when travel is permitted, a multi-week quarantine period is required before an individual can work in the area. Additionally, rules and regulations regarding employer responsibilities continue to be promulgated. Facility closures, quarantines, travel restrictions, and possible future workforce shortages may, among numerous other impacts, result in delays by the Company in fulfilling its existing contractual obligations to its customers, which could result in adverse financial consequences. Additionally, the Company procures a variety of raw materials and component products, including steel, in the manufacture of our products from companies which may be impacted similar challenges. The Company continues to monitor the effect of COVID-19 on its employees, customers, critical suppliers and other stakeholders. The ultimate magnitude and duration of the COVID-19 pandemic, resulting governmental restrictions placing limitations on the mobility and ability to work of the worldwide population, and the related impact on crude oil prices and the U.S. and global economy and capital markets is uncertain.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)


~~14.~~	~~Commitments and Contingencies~~

Following the Company's acquisition of GEODynamics in January 2018, the Company determined that certain steel products historically imported by GEODynamics from China for use in its manufacturing process may potentially be subject to anti-dumping and countervailing duties based on recent clarifications/decisions rendered by the U.S. Department of Commerce and the U.S. Court of International Trade. Following these findings, the Company commenced an internal review of this matter and ceased further purchases of these potentially affected Chinese products. As part of the Company's internal review, the Company engaged trade counsel and decided to voluntarily disclose this matter to U.S. Customs and Border Protection in September 2018. In connection with the acquisition of GEODynamics, ~~Acquisition,~~ the seller agreed to indemnify and hold the Company harmless against certain claims related to matters such as this, and the Company has provided notice to and asserted an indemnification ~~claim~~claims against the seller. Additionally, the Company is able to set-off payments due under the $25.0 million promissory note (see Note 6, "Long-term Debt") issued to the seller of GEODynamics in respect of indemnification claims. Such note was scheduled to mature on July 12, 2019, but, because the Company has provided notice to and asserted an indemnification ~~claim,~~claims, the maturity date of the note is extended until the resolution of such claim. The Company expects that the amount ultimately paid in respect of such note ~~may~~will be reduced as a result of ~~this~~these indemnification ~~claim.~~claims.

Additionally, in the ordinary course of conducting its business, the Company becomes involved in litigation and other claims from private party actions, as well as judicial and administrative proceedings involving governmental authorities at the federal, state and local levels.

The Company is a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of the Company's products or operations. Some of these claims relate to matters occurring prior to the acquisition of businesses, ~~(including GEODynamics and Falcon),~~ and some relate to businesses the Company has sold. In certain cases, the Company is entitled to indemnification from the sellers of businesses and, in other cases, the Company has indemnified the buyers of businesses. Although the Company can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on the Company, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by indemnity or insurance, will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.


~~15.~~14.	Related Party Transactions

GEODynamics historically leased certain land and facilities from an equity holder and employee of the Company, following its acquisition of GEODynamics. In connection with the acquisition of GEODynamics, the Company assumed these leases. The Company exercised its option to purchase the most significant facilities and associated land for approximately $5.4 million in September 2018. Rent expense related to leases with this employee for the three and six months ended June 30, 2019 totaled $44 thousand and $69 thousand, respectively. Rent expense related to leases with this employee for the three months ended ~~June 30, 2018~~March 31, 2020 and ~~the period from January 12, 2018 through June 30, 2018~~2019 totaled ~~$142~~$44 thousand and ~~$220~~$25 thousand, respectively.

Additionally, ~~in 2019~~ GEODynamics ~~purchased~~purchases products from and ~~sold~~sells products to a company in which this employee is an investor. ~~Purchases from this company were $0.4 million and $0.8 million for the three and six months ended June 30, 2019, respectively.~~ Sales to this company by GEODynamics were ~~$0.6~~$1.8 million and $7 thousand for ~~both~~ the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, respectively. Purchases from this company were $410 thousand for the three months ended March 31, 2019.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and other statements we make contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of ~~1934 (the "Exchange Act").~~1934. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of important ~~factors.~~factors, including incorrect or changed assumptions. For a discussion of known material factors that could affect our results, please refer to "Part I, Item 1. Business," "Part I, Item 1A. Risk Factors," "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk" included in our ~~2018~~2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission ~~(the "Commission")~~ on February ~~19, 2019~~21, 2020 as well as "Part ~~II,~~II. Item 1A. Risk Factors" included in this Quarterly Report on Form 10-Q.

You can typically identify "forward-looking statements" by the use of forward-looking words such as "may," "will," "could," "project," "believe," "anticipate," "expect," "estimate," "potential," "plan," "forecast," "proposed," "should," "seek," and other similar words. Such statements may relate to our future financial position, budgets, capital expenditures, projected costs, plans and objectives of management for future operations and possible future strategic transactions. ~~Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that~~Actual results frequently differ from assumed facts ~~or bases almost always vary from actual results. The~~and such differences ~~between assumed facts or bases and actual results~~ can be material, depending upon the circumstances.

~~In any~~While we believe we are providing forward-looking ~~statement where we express an expectation or belief as to future results, such expectation or belief is~~statements expressed in good faith and ~~believed to have~~on a reasonable ~~basis. However,~~basis, there can be no assurance that ~~the statement of expectation or belief~~actual results will ~~result or be achieved or accomplished.~~not differ from such forward-looking statements. The following are important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, our Company:

public health crises, such as the coronavirus outbreak at the beginning of 2020, which has negatively impacted the price of crude oil and the global economy;

the level of supply of and demand for oil and natural gas;

fluctuations in the current and future prices of oil and natural gas;

the cyclical nature of the oil and natural gas industry;

the level of exploration, drilling and completion activity;

the financial health of our customers;

political, economic and litigation efforts to restrict or eliminate certain oil and natural gas exploration, development and production activities due to concerns over the ~~impact on certain major U.S. areas in which we operate~~threat of ~~pipeline take away capacity constraints;~~climate change;

the availability of and access to attractive oil and natural gas field prospects by our customers, which may be affected by governmental actions or actions of other parties which may restrict drilling and completion activities;

the level of offshore oil and natural gas developmental activities;

general global economic conditions;

the ability of the Organization of Petroleum Exporting Countries ("OPEC") to set and maintain production levels and pricing;

global weather conditions and natural disasters;

changes in tax laws and regulations;

the impact of tariffs and duties on imported raw materials and exported finished goods;

impact of environmental matters, including future regulatory efforts to adopt environmental or climate change regulations ~~which~~that may result in increased operating costs or reduced commodity demand globally;

our ability to timely obtain critical permits for constructing or operating our facilities and find and retain skilled personnel;

negative outcome of litigation, threatened litigation or government proceedings;

our ability to develop new competitive technologies and products;

fluctuations in currency exchange rates;

physical, digital, cyber, internal and external security breaches;

the availability and cost of ~~capital;~~capital, including our ability to complete the amendment to our Revolving Credit Facility;

our ability to protect our intellectual property rights;

our ability to complete the integration of acquired businesses and achieve the expected accretion in earnings; and

the other factors identified in "Part I, Item 1A. Risk Factors" in our ~~2018~~2019 Annual Report on Form 10-K and "Part II, Item 1A. Risk Factors" included in this Quarterly Report on Form ~~10-Q.~~10‑Q.

Should one or more of these risks or uncertainties materialize, or should the assumptions on which our forward-looking statements are based prove incorrect or change, actual results may differ materially from those expected, estimated or projected. In addition, the factors identified above may not necessarily be all of the important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by us, or on our behalf. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no responsibility to publicly release the result of any revision of our forward-looking statements after the date they are made.

In addition, in certain places in this Quarterly Report on Form 10-Q, we refer to information and reports published by third parties that purport to describe trends or developments in the energy industry. ~~The Company does~~We do so for the convenience of our stockholders and in an effort to provide information available in the market that will assist ~~the Company's~~our investors ~~to have a~~in better understanding of the market environment in which ~~the Company operates.~~we operate. However, ~~the Company~~we specifically ~~disclaims~~disclaim any responsibility for the accuracy and completeness of such information and ~~undertakes~~undertake no obligation to update such information.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read together with our condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10‑Q and our consolidated financial statements and notes to those statements included in our ~~2018~~2019 Annual Report on Form 10‑K in order to understand factors, such as business ~~acquisitions~~combinations, charges and credits and financing transactions, which may impact ~~comparability.~~comparability from period to period.

We provide a broad range of products and services to the oil and gas industry through our Well Site Services, Downhole Technologies and Offshore/Manufactured Products business segments. Demand for our products and services is cyclical and substantially dependent upon activity levels in the oil and gas industry, particularly our customers' willingness to invest capital in the exploration for and development of crude oil and natural gas reserves. Our customers' capital spending programs are generally based on their cash flows and their outlook for near-term and long-term commodity prices, economic growth, commodity demand and estimates of resource production. As a result, demand for our products and services is sensitive to future expectations with respect to crude oil and natural gas prices.

Our consolidated results of operations include contributions from the GEODynamics and Falcon acquisitions completed in the first quarter of 2018 (discussed below). Our reported results of operations reflect the impact of current industry trends and customer spending activities with investments recently weighted toward U.S. shale play regions. However, in 2019, we are beginning to see a general improvement in the level of planned investments in deepwater markets globally.

Recent Developments

In ~~addition~~March of 2020, the spot price of West Texas Intermediate ("WTI") crude oil declined over 50% in response to ~~capital spending, we have invested~~reductions in ~~acquisitions~~global demand due to the Coronavirus Disease 2019 ("COVID-19") pandemic and announcements by Saudi Arabia and Russia of ~~businesses complementary~~plans to ~~our growth strategy. Our acquisition strategy has allowed us to leverage our existing~~increase crude oil production. Following this unprecedented collapse in crude oil prices, the spot price of Brent and ~~acquired products~~WTI crude oil closed at $15 and ~~services into new geographic locations and has expanded~~$21 per barrel, respectively, on March 31, 2020. Since the breadth of our technology and product offerings while allowing us to leverage our cost structure. We have made strategic and complementary acquisitions in each of our business segments in recent years.

On December 12, 2017 we entered into an agreement to acquire GEODynamics, Inc. ("GEODynamics"), which provides oil and gas perforation systems and downhole tools in support of completion, intervention, wireline and well abandonment operations. On January 12, 2018, we closed the acquisition of GEODynamics for total consideration of $615 million (the "GEODynamics Acquisition"), consisting of (i) $295 million in cash (net of cash acquired), (ii) 8.66 million shares of our common stock and (iii) an unsecured $25 million promissory note.

In connection with the GEODynamics Acquisition, we completed several financing transactions to extend the maturity of our debt while providing us with the flexibility to repay outstanding borrowings under our revolving credit facility (the "Revolving Credit Facility") with anticipated future cash flows from operations.

On January 30, 2018, we sold $200.0 million aggregate principal amount of our 1.50% convertible senior notes due 2023 (the "Notes") through a private placement to qualified institutional buyers. We received net proceeds from the offeringend of the Notes of approximately $194 million, after deducting issuance costs. We used the net proceeds from the sale of the Notes to repay a portion of the borrowings outstanding under our Revolving Credit Facility, substantially all of which were drawn to fund the cash portion of the purchase price paid for GEODynamics.

Concurrently with the Notes offering, we amended our Revolving Credit Facility, to extend the maturity date to January 2022, permit the issuance of the Notes and provide for up to $350.0 million in borrowing capacity.

On February 28, 2018, we acquired Falcon Flowback Services, LLC ("Falcon"), a full service provider of flowback and well testing services for the separation and recovery of fluids, solid debris and proppant used during hydraulic fracturing operations. Falcon provides additional scale and diversity to our Completion Services well testing operations in key shale plays in the United States. The acquisition price was $84.2 million, net of cash acquired. The Falcon acquisition was funded with borrowings under our Revolving Credit Facility.

~~See Note 3, "Business Acquisitions, Goodwill and Other Intangible Assets" and Note 6, "Long-term Debt" to the unaudited condensed consolidated financial statements included in~~fiscal quarter covered by this Quarterly Report on Form ~~10‑Q for further discussion of these recent developments.~~

~~Macroeconomic Environment~~

The macroeconomic environment for the energy sector has been volatile in recent years. Significant downward crude oil price volatility began early in the fourth quarter of 2014 and continued into 2016. In response to weakening10-Q, crude oil prices have declined further to record low levels. The ultimate magnitude and duration of the ~~Organization~~COVID-19 pandemic, resulting governmental restrictions placing limitations on the mobility and ability to work of ~~Petroleum Exporting Countries ("OPEC"), along with Russia, agreed to reduce crude oil production in late 2016 in an effort to re-balance supply~~the worldwide population, and ~~demand. Crude oil prices began to improve in~~ the ~~second half of 2017, which carried into 2018. During 2018,~~related impact on crude oil prices ~~rose~~and the U.S. and global economy and capital markets is uncertain. While it is difficult for management to assess or predict with precision the broad future effect of this pandemic on the global economy, the energy industry or the Company, management expects that it will materially adversely affect demand for the Company's products and services during the remainder of 2020.

Demand for most of our products and services depends substantially on the level of capital expenditures by the oil and natural gas industry. This decline in oil prices is expected to result in further near-term reductions to most of our customers' drilling, completion and production activities and their related spending on products and services, particularly in the U.S. shale play regions. These conditions may also result in a material adverse impact on certain customers' liquidity and financial position, leading to further spending reductions, delays in the collection of amounts owed and in certain instances, non-payments of amounts owed.

Following these March 2020 events, we immediately implemented additional cost reduction initiatives. We also assessed the carrying value of goodwill and other assets based on the current industry outlook regarding overall demand for and pricing of our products and services. As a result of these events, actions and assessments, we recorded the following charges during the first quarter of 2020:

non-cash goodwill impairment charges totaling $406.1 million to reduce the carrying value of goodwill;

non-cash impairment charge of $5.2 million within the Drilling Services business to decrease the carrying value of the business's fixed assets to their ~~highest levels since~~estimated realizable value;

non-cash impairment charges of $25.2 million to reduce the ~~beginning~~carrying value of inventory to its net realizable value; and

employee severance and facility closure costs of $0.7 million.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law. In accordance with the recently established rules and procedures under the CARES Act, we have filed carryback claims regarding U.S. net operating losses generated in 2018 and we plan to file carryback claims regarding U.S. net operating losses generated in 2019 during the second quarter of 2020. Prior to the enactment of the ~~downturn, improving our customers' cash flow and potentially driving them~~CARES Act, such losses could only be carried forward. We expect to ~~invest additional capital~~receive refunds related to ~~increase their production. Additionally, advancements~~these carryback claims of approximately $41.2 million in technologies and improved operating efficiencies have allowed the U.S. exploration and production industry to lower the breakeven price of oil and gas production. During 2017 and 2018, rising crude oil prices rapidly translated into increased U.S. land oriented drilling and completion activity in areas of concentration such as the Permian Basin, which led to record high domestic production. The U.S. Energy Information Administration estimates that U.S. crude oil production averaged 11.0 million barrels per day in 2018, up approximately 17% from the 2017 average, reaching its highest level and experiencing the largest volume growth on record. However, during the fourth quarter of 2018, crude oil prices declined approximately 40%, due in part to higher than expected supply growth from the United States, Russia and Saudi Arabia, as well as concerns over the possible slowing of global demand growth. 2020.

In response to the ~~precipitous decline~~anticipated material declines in ~~crude oil prices, OPEC and Russia agreed~~revenue expected over the balance of 2020, management has taken, among others, the following actions to reduce ~~production~~our expenditures to protect the health of our company:

reduction in planned capital expenditures for 2020 by approximately 70% from the 2019 level;

reductions in U.S. personnel levels of approximately 23% between December 31, 2019 and April 28, 2020; and

elimination of the ~~Canadian government mandated~~vast majority of annual short-term incentives and a ~~production shut‑in in December of 2018. In July 2019, OPEC and Russia agreed to extend these production cuts through March 2020.~~

~~After declining materially~~significant reduction in the ~~fourth~~value of previously-granted long-term incentive awards.

As discussed in more detail under "– Revolving Credit Facility," we expect to amend our existing revolving credit facility, converting it from a cash flow-based to an asset-based revolving credit facility (the "Amended Facility"), during the second quarter of ~~2018,~~ 2020. While the amount of the borrowing base has not been finalized, we expect the size of the Amended Facility to range from $175 million to $200 million.

Brent and West Texas Intermediate ("WTI") crude oil prices ~~closed at $51~~averaged $50 and $45 per barrel ~~respectively, on December 31, 2018. Subsequent to year-end 2018, Brent and WTI crude oil prices increased to $68 and $58 per barrel, respectively, as of June 30, 2019. Additionally, during~~in the first quarter of ~~2019, the pricing differential for WTI crude oil between Cushing, Oklahoma~~2020 – down 20% and ~~Midland, Texas was effectively eliminated due~~17%, respectively, compared to ~~improvements in pipeline takeaway capacity from the Permian Basin, providing operators~~average prices in the region with increased cash flows. While the commodity price environment has improved in 2019 relative to late 2018, crude oil price volatility continues to have a moderating impact on our customers' operating results and capital spending plans, particularly those operating in the U.S. shale play regions. The average U.S. rig count for the secondfirst quarter of ~~2019 decreased 8% compared to the fourth quarter 2018 average.~~

Current and expected future pricing for WTI crude will continue to influence our customers' spending in U.S. shale play developments as our customers strive for financial discipline and spending levels that are within their capital budgets and generated cash flow ranges. Expectations for the longer-term price for Brent crude oil will continue to influence our customers' spending related to global offshore drilling and development and, thus, a significant portion of the activity of our Offshore/Manufactured Products segment.

There remains a degree of risk that prices could remain highly volatile due to increases in global inventory levels, increasing domestic crude oil production, trade tensions with China and Mexico, sanctions or potential waivers on Iranian production and tensions with Iran, civil unrest in Libya and Venezuela, increasing price differentials between markets, slowing growth rates in China and other global regions, use of alternative fuels, improved vehicle fuel efficiency, a more sustained movement to electric vehicles and/or the potential for ongoing supply/demand imbalances. Conversely, if the global supply of crude oil were to decrease due to a prolonged reduction in capital investment by our customers or if government instability in a major oil-producing nation develops, and energy demand were to continue to increase, a sustained recovery in2019. Recent WTI and Brent crude oil prices could occur. In any event, crude oil price improvements will depend upon the balance of global supply and demand, with a corresponding continued reduction in global inventories.

Customer spending in the natural gas shale plays has been limited due to natural gas production from prolific basins in the Northeastern United States and from associated gas produced from the drilling and completion of unconventional oil wells in North America.

~~Recent WTI,~~ Brent crude oil and natural gas pricing trends are as follows:


		Average Price⁽¹⁾ for quarter ended								Average Price⁽¹⁾ for year ended December 31			Average Price⁽¹⁾ for quarter ended								Average Price⁽¹⁾ for year ended December 31
Year		March 31		June 30		September 30		December 31		Average Price⁽¹⁾ for year ended December 31			March 31		June 30		September 30		December 31		Average Price⁽¹⁾ for year ended December 31
WTI Crude (per bbl)	WTI Crude (per bbl)											WTI Crude (per bbl)
2020													$	45.34
2019		$	54.82	$	59.88								$	54.82	$	59.88	$	56.34	$	56.82	$	56.98
2018	⁽²⁾	$	62.91	$	68.07	$	69.70	$	59.97	$	65.25		$	62.91	$	68.07	$	69.70	$	59.97	$	65.25
2017		$	51.62	$	48.13	$	48.18	$	55.27	$	50.80
Brent Crude (per bbl)	Brent Crude (per bbl)											Brent Crude (per bbl)
2020													$	50.27
2019		$	63.10	$	69.01								$	63.10	$	69.01	$	61.95	$	63.17	$	64.26
2018	⁽²⁾	$	66.86	$	74.53	$	75.08	$	68.76	$	71.32		$	66.86	$	74.53	$	75.08	$	68.76	$	71.32
2017		$	53.59	$	49.55	$	52.10	$	61.40	$	54.12
Henry Hub Natural Gas (per mmBtu)	Henry Hub Natural Gas (per mmBtu)											Henry Hub Natural Gas (per mmBtu)
2020													$	1.91
2019		$	2.92	$	2.57								$	2.92	$	2.57	$	2.38	$	2.40	$	2.56
2018		$	3.08	$	2.85	$	2.93	$	3.77	$	3.15		$	3.08	$	2.85	$	2.93	$	3.77	$	3.15
2017		$	3.02	$	3.08	$	2.95	$	2.90	$	2.99

________________


(1)	Source: U.S. Energy Information ~~Administration. As of July 22, 2019, WTI crude oil, Brent crude oil and natural gas traded at approximately $55.87 per barrel, $61.96 per barrel and $2.33 per mmBtu, respectively.~~

~~(2)~~

Reflecting the impact of pipeline takeaway capacity constraints from the Permian Basin, the average price per barrel for WTI (Midland, Texas) crude oil for the first, second, third and fourth quarters of 2018 was approximately 1%, 12%, 21% and 11%, respectively, below the average WTI crude oil quarterly benchmark prices referenced, which are based on the spot price of WTI at Cushing, Oklahoma. Brent crude oil average quarterly prices for the first, second, third and fourth quarters of 2018 were 7%, 24%, 36% and 28%, respectively above the corresponding WTI (Midland, Texas) crude oil quarterly average prices. During the first quarter of 2019, the differential between WTI crude oil pricing and WTI (Midland, Texas) crude oil pricing was effectively eliminated due to reductions in pipeline takeaway capacity constraints from the Permian Basin.Administration (spot prices).

On April 24, 2020, Brent and WTI crude oil spot prices both closed at $16 per barrel – down 68% and 65%, respectively, from the first quarter 2020 average prices. Additionally, as presented in more detail below, the U.S. drilling rig count reported on April 24, 2020 was 465 rigs, 41% below the first quarter 2020 average.

Overview

Our Well Site Services segment provides completion services and, to a much lesser extent land drilling services, in the United States (including the Gulf of Mexico) and the rest of the ~~world and, to a lesser extent, land drilling services in the United States.~~world. U.S. drilling and completion activity and, in turn, our Well Site Services results, are sensitive to near-term fluctuations in commodity prices, particularly WTI crude oil prices, given the short-term, call-out nature of its operations.

Within this segment, our Completion Services business ~~(which includes the Falcon operations we acquired in February 2018)~~ supplies equipment and service personnel utilized in the completion and initial production of new and recompleted wells. Activity for the Completion Services business is dependent primarily upon the level and complexity of drilling, completion, and workover activity in the areas of operations mentioned above. Well intensity and complexity has increased with the continuing transition to multi-well pads, the drilling of longer lateral wells and increased downhole pressures, along with the increased number of frac stages completed in horizontal wells. Similarly, demand for our Drilling Services operations iswas historically driven by activity in our primary land drilling markets of the Permian Basin in West Texas and the U.S. Rocky Mountain area. During the third quarter of 2019, we made the strategic decision to reduce the scope of our Drilling Services business (adjusting from 34 rigs to 9 rigs) due to the ongoing weakness in customer demand for vertical drilling rigs in the U.S. land market. The operations now focus on serving operators in the U.S. Rocky Mountain region.

Our Downhole Technologies segment is comprised of the GEODynamics, Inc. ("GEODynamics") business we acquired in January 2018. GEODynamics was founded in 2004 as a researcher, developer and manufacturer of consumable engineered products used in completion applications. This segment provides oil and gas perforation systems, downhole tools and services in support of completion, intervention, wireline and well abandonment operations. This segment designs, manufactures and markets its consumable engineered products to oilfield service as well as exploration and production companies. Product and service offerings for this segment include innovations in perforation technology through patented and proprietary systems combined with advanced modeling and analysis tools. This expertise has led to the optimization of perforation hole size, depth, and quality of tunnels, which are key factors for maximizing the effectiveness of hydraulic fracturing. Additional offerings include proprietary toe valve and frac plug products, which are focused on zonal isolation for hydraulic fracturing of horizontal wells, and a broad range of consumable products, such as setting tools and bridge plugs, that are used in completion, intervention and decommissioning applications. Demand drivers for the Downhole Technologies segment include continued trends toward longer lateral lengths, increased frac stages and more perforation clusters to target increased unconventional well ~~productivity.~~productivity, which requires ongoing technological and product developments.

Demand for our Well Site Services and Downhole Technologies segments' businesses is highly correlated to changes in the total number of wells drilled in the United States, total footage drilled, the number of drilled wells that are completed and, to a lesser degree, changes in the drilling rig count. The following table sets forth a summary of the ~~average~~ U.S. drilling rig count, as measured by Baker Hughes, as of and for the periods indicated.


	Three Months Ended June 30,		Six Months Ended June 30,		As of April 24, 2020	Three Months Ended March 31,
	2019	2018	2019	2018	As of April 24, 2020	2020	2019
Average U.S. drilling rig count
U.S. drilling rig count
Land – Oil	783	827	807	797	361	650	831
Land – Natural gas and other	180	191	185	189	87	113	190
Offshore	27	21	24	17	17	22	22
Total	989	1,039	1,016	1,003	465	785	1,043

Over recent years, our industry experienced ~~increased~~an increase in customer spending inon crude oil and liquids-rich exploration and development activities in U.S. shale plays utilizing horizontal drilling and completion techniques. As of ~~June 30, 2019,~~March 31, 2020, oil-directed drilling accounted for ~~82%~~86% of the total U.S. rig count – with the balance largely natural gas related. Following the significant decline in crude oil prices in the fourth quarter of 2018, coupled with customers reducing spending to be within their cash flows, the U.S. rig count declined steadily during 2019 and exited the year at 805 rigs – 278 rigs, or 26%, below the level reported at the end of 2018. The rig count declined further in the first quarter of 2020, with the average U.S. rig count for the three months ended ~~June 30, 2019 decreased~~March 31, 2020 decreasing by 50258 rigs, or 5%25%, compared to the average for the three months ended ~~June 30, 2018.~~

~~Many of our exploration and production customers defer well completions due to a number of factors, including normal operational delays, cost management, current~~March 31, 2019. With the unprecedented decline in crude oil prices in March and ~~national gas prices,~~April of 2020 and ~~problem wells. These deferred completions are referred to in~~ the ~~industry as drilled but uncompleted wells (or "DUCs"). Given our Well Site Services and Downhole Technologies segments' exposure~~continued uncertainties related to the ~~level of completion activity, an increase in~~COVID-19 pandemic, industry analysts are projecting that the ~~number of DUCs will have a short-term negative impact on our results of operations relative to the~~U.S. rig count ~~trends but over~~could decline rapidly to an average of approximately 200 rigs or fewer operating during the ~~longer-term should have a positive impact on the segments' results as the wells are completed.~~third and fourth quarters of 2020.

Our Offshore/Manufactured Products segment provides technology-driven, highly-engineered products and services for offshore oil and natural gas production systems and facilities, as well as certain products and services to the offshore and land-based drilling and completion markets. This segment is particularly influenced by global deepwater drilling and production spending, which are primarily driven by our customers' longer-term commodity demand forecasts and outlook for crude oil and natural gas prices. Approximately ~~60%~~40% of Offshore/Manufactured Products ~~sales~~revenues in ~~2016~~the first quarter of 2020 were driven by our customers' capital

spending for offshore production systems and subsea pipelines, repairs and, to a lesser extent, upgrades of existing offshore drilling rigs and construction of new offshore drilling rigs and vessels (referred to herein as "project-driven products"). ~~For the first half of 2019, these activities only represent approximately 35% of the segment's revenue. This segment is particularly influenced by global~~

~~deepwater drilling and production spending, which are driven largely by our customers' longer-term commodity demand forecasts and outlook for crude oil and natural gas prices.~~ Deepwater oil and gas development projects typically involve significant capital investments and multi-year development plans. Such projects are generally undertaken by larger exploration, field development and production companies (primarily international oil companies ("IOCs") and state-run national oil companies ("NOCs")) using relatively conservative crude oil and natural gas pricing assumptions. Given the ~~longer~~long lead times associated with field development, we believe some of these deepwater projects, once approved for development, are ~~therefore~~generally less susceptible to short-term fluctuations in the price of crude oil and natural gas. However, the decline in crude oil prices that began in 2014 and continued into 2016, coupled with the relatively uncertain outlook around shorter-term and possibly longer-term pricing improvements, caused exploration and production companies to reduce their capital expenditures in regards to these deepwater projects since they are expensive to drill and complete, have long lead times to first production and may be considered uneconomical relative to the risk involved. Customers have focused in recent years on improving the economics of major deepwater projects at lower commodity breakeven prices by re-bidding projects, identifying advancements in technology, and reducing overall project costs through equipment standardization. ~~As a result, our bookings declined, leading to substantially reduced backlog in 2018, and lower levels of project-driven revenue in 2018 and the first half of 2019 relative to prior years.~~

Our Offshore/Manufactured Products segment revenues and operating income declined at a slower pace during 2015 and 2016 than our Well Site Services segment given the high levels of backlog that existed at the beginning of 2015. Bidding and quoting activity, along with orders from customers, for deepwater projects improved in 2019 from 2018 levels. However, with reduced market visibility given the significant decline in crude oil prices in the first quarter of 2020 and reduced customer spending, we expect that the segment's 2020 bookings will be lower than the levels achieved in 2019.

Backlog reported by our Offshore/Manufactured Products segment continued after 2014, albeit at a substantially slower pace. Reflecting the impact of customer (both IOCs and NOCs) delays and deferrals in approving major, capital intensive projects in light of the prolonged low commodity price environment, backlog in our Offshore/Manufactured Products segment decreased from $599totaled $267 million at ~~June 30, 2014 to $179 million at~~March 31, 2020, a decrease of 4% from December 31, ~~2018. However, deepwater project award potential appears to be improving despite the recent commodity price volatility. During the first six months~~2019 and an increase of ~~2019, backlog increased $104~~14% from March 31, 2019. First quarter 2020 bookings totaled $87 million, ~~totaling $283 million at June 30, 2019 – the highest level recorded since the second quarter~~yielding a book-to-bill ratio of 2016. The segment received three notable orders during the first six months of 2019 for production facility content destined for South America and Southeast Asia, as well as connector products destined for the Middle East.1.0x. The following table sets forth ~~reported~~ backlog ~~for our Offshore/Manufactured Products segment~~ as of the dates indicated (in millions).


	Backlog as of								Backlog as of
Year	March 31		June 30		September 30		December 31		March 31		June 30		September 30		December 31
2020									$	267
2019	$	234	$	283					$	234	$	283	$	293	$	280
2018	$	157	$	165	$	175	$	179	$	157	$	165	$	175	$	179
2017	$	204	$	202	$	198	$	168
2016	$	306	$	268	$	203	$	199

Reduced demand for our products and services, coupled with a reduction in the prices we charge our customers for our services, has adversely affected our results of operations, cash flows and financial ~~position since the second half of 2014.~~position. If the current pricing environment for crude oil does not ~~continue to~~ improve, or declines ~~again,~~further, our customers may be required to further reduce their capital expenditures, causing additional declines in the demand for, and prices of, our products and services, which would adversely affect our results of operations, cash flows and financial position.

We use a variety of domestically produced and imported raw materials and component products, including steel, in manufacturing our products. The United States ~~recently~~has imposed tariffs on a variety of imported products, including steel and aluminum. In response to the U.S. tariffs on steel and aluminum, the European Union and several other countries, including Canada and China, have threatened and/or imposed retaliatory tariffs. The effect of these ~~new~~ tariffs and the application and interpretation of existing trade agreements and customs, anti-dumping and countervailing duty regulations continue to evolve, and we continue to monitor these matters. If we encounter difficulty in procuring these raw materials and component products, or if the prices we have to pay for these products increase as a result of customs, anti-dumping and countervailing duty regulations or otherwise, and we are unable to pass corresponding cost increases on to our customers, our financial position and results of operations could be adversely affected. Furthermore, uncertainty with respect to potential costs in the drilling and completion of oil and gas wells ~~or regarding the expected impact of such tariffs on the demand for and the price of crude oil,~~ could cause our customers to delay or cancel planned projects which, if this occurred, would adversely affect our financial position, cash flows and results of operations. See Note ~~14,~~13, "Commitments and Contingencies."

Other factors that can affect our business and financial results include but are not limited to the general global economic environment, competitive pricing pressures, public health crises, regulatory changes and changes in tax laws in the United States and international markets. We continue to monitor the global economy, the prices of and demand for crude oil and natural gas, and the resultant impact on the capital spending plans and operations of our customers in order to plan and manage our business.

Selected Financial Data

Unaudited Consolidated Results of Operations Data

The following summarizes our unaudited consolidated results of operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands, except per share amounts):


	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended March 31,
	2019			2018			Variance			2019			2018			Variance			2020			2019			Variance
Revenues
Products	$	124,965		$	136,182		$	(11,217	)	$	241,293		$	265,008		$	(23,715	)	$	102,980		$	116,328		$	(13,348	)
Services	139,720			149,663			(9,943		)	274,003			274,413			(410		)	116,714			134,283			(17,569		)
	264,685			285,845			(21,160		)	515,296			539,421			(24,125		)	219,694			250,611			(30,917		)
Costs and expenses:
Product costs	95,289			95,324			(35		)	184,557			188,300			(3,743		)	89,746			89,268			478
Service costs	112,823			118,079			(5,256		)	223,433			214,993			8,440			107,856			110,610			(2,754		)
Cost of revenues (exclusive of depreciation and amortization expense presented below)(1)	208,112			213,403			(5,291		)	407,990			403,293			4,697			197,602			199,878			(2,276		)
Selling, general and administrative expenses	31,484			35,919			(4,435		)	61,592			70,114			(8,522		)	26,124			30,108			(3,984		)
Depreciation and amortization expense	31,883			30,922			961			63,434			60,112			3,322			26,409			31,551			(5,142		)
Other operating income, net	(399		)	(3,099		)	2,700			(485		)	(1,884		)	1,399
Impairments of goodwill⁽²⁾																			406,056			—			406,056
Impairment of fixed assets⁽³⁾																			5,198			—			5,198
Other operating (income) expense, net																			107			(86		)	193
	271,080			277,145			(6,065		)	532,531			531,635			896			661,496			261,451			400,045
Operating income (loss)	(6,395		)	8,700			(15,095		)	(17,235		)	7,786			(25,021		)
Interest expense	(4,658		)	(4,913		)	255			(9,455		)	(9,446		)	(9		)
Interest income	41			123			(82		)	86			202			(116		)
Operating loss																			(441,802		)	(10,840		)	(430,962		)
Interest expense, net																			(3,504		)	(4,752		)	1,248
Other income	1,009			571			438			1,676			1,218			458			774			667			107
Income (loss) before income taxes	(10,003		)	4,481			(14,484		)	(24,928		)	(240		)	(24,688		)
Income tax benefit (provision)	263			(1,739		)	2,002			540			(510		)	1,050
Net income (loss)	$	(9,740	)	$	2,742		$	(12,482	)	$	(24,388	)	$	(750	)	$	(23,638	)
Loss before income taxes																			(444,532		)	(14,925		)	(429,607		)
Income tax benefit⁽⁴⁾																			39,491			277			39,214
Net loss																			$	(405,041	)	$	(14,648	)	$	(390,393	)

Net income (loss) per share:
Net loss per share:																			Net loss per share:
Basic	$	(0.16	)	$	0.05					$	(0.41	)	$	(0.01	)				$	(6.79	)	$	(0.25	)
Diluted	(0.16		)	0.05						(0.41		)	(0.01		)				(6.79		)	(0.25		)

Weighted average number of common shares outstanding:
Basic	59,406			59,005						59,332			58,396						59,654			59,258
Diluted	59,406			59,005						59,332			58,396						59,654			59,258

________________


(1)	Cost of revenues (exclusive of depreciation and amortization expense) includes inventory impairment charges of $25.2 million ($12.0 million in product costs and $13.2 million in service costs) recognized in the first quarter 2020.


(2)	During the first quarter of 2020, we recognized non-cash goodwill impairment charges totaling $406.1 million to reduce the carrying value of our reporting units to their estimated fair value.


(3)	During the first quarter of 2020, our Drilling Services business recognized a non-cash impairment charge of $5.2 million to decrease the carrying value of the business' fixed assets to their estimated realizable value.


(4)	During the first quarter of 2020, we recognized a discrete tax benefit of $14.8 million related to U.S. net operating loss carrybacks under provision of the CARES Act.

See Note 3, "Asset Impairments and Other Charges," Note 4, "Details of Selected Balance Sheet Accounts" and Note 11, "Income Taxes," to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10‑Q for further discussion of charges and benefits recognized in the first quarter of 2020.

Unaudited Operating Segment Financial Data

We manage and measure our business performance in three distinct operating segments: Well Site Services, Downhole Technologies and Offshore/Manufactured Products. Supplemental unaudited financial information by business segment for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ is summarized below (dollars in thousands):


	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended March 31,
	2019			2018			Variance			2019			2018			Variance			2020			2019			Variance
Revenues
Well Site Services -
Completion Services	$	103,320		$	108,368		$	(5,048	)	$	203,962		$	191,208		$	12,754		$	82,926		$	100,642		$	(17,716	)
Drilling Services	12,646			16,756			(4,110		)	20,396			34,315			(13,919		)	4,531			7,750			(3,219		)
Total Well Site Services	115,966			125,124			(9,158		)	224,358			225,523			(1,165		)	87,457			108,392			(20,935		)
Downhole Technologies	46,740			59,274			(12,534		)	101,030			105,055			(4,025		)	41,065			54,290			(13,225		)
Offshore/Manufactured Products	101,979			101,447			532			189,908			208,843			(18,935		)	91,172			87,929			3,243
Total	$	264,685		$	285,845		$	(21,160	)	$	515,296		$	539,421		$	(24,125	)	$	219,694		$	250,611		$	(30,917	)

Operating income (loss)
Well Site Services -
Completion Services(1)	$	(507	)	$	1,204		$	(1,711	)	$	(4,001	)	$	(3,267	)	$	(734	)	$	(139,603	)	$	(3,494	)	$	(136,109	)
Drilling Services(2)	(2,601		)	(2,957		)	356			(7,160		)	(5,268		)	(1,892		)	(5,351		)	(4,559		)	(792		)
Total Well Site Services	(3,108		)	(1,753		)	(1,355		)	(11,161		)	(8,535		)	(2,626		)	(144,954		)	(8,053		)	(136,901		)
Downhole Technologies(3)	(1,462		)	11,600			(13,062		)	2,592			19,654			(17,062		)	(192,691		)	4,054			(196,745		)
Offshore/Manufactured Products(4)	9,809			12,664			(2,855		)	15,068			25,116			(10,048		)	(95,496		)	5,259			(100,755		)
Corporate	(11,634		)	(13,811		)	2,177			(23,734		)	(28,449		)	4,715			(8,661		)	(12,100		)	3,439
Total	$	(6,395	)	$	8,700		$	(15,095	)	$	(17,235	)	$	7,786		$	(25,021	)	$	(441,802	)	$	(10,840	)	$	(430,962	)

________________


(1)	Operating loss in the first quarter of 2020 includes an inventory impairment charge of $9.0 million and a non-cash goodwill impairment charge of $127.1 million to reduce the carrying value of the Completion Services reporting unit to its estimated fair value.


(2)	Operating loss in the first quarter of 2020 includes a non-cash fixed asset impairment charge of $5.2 million to reduce the carrying value of the Drilling Services business's fixed assets to their estimated realizable value.


(3)	Operating loss in the first quarter of 2020 includes non-cash goodwill impairment charge of $192.5 million to reduce the carrying value of the Downhole Technologies segment to its estimated fair value.


(4)	Operating loss in the first quarter of 2020 includes an inventory impairment charge of $16.2 million and a non-cash goodwill impairment charge of $86.5 million to reduce the carrying value of the Offshore/Manufactured Products reporting unit to its estimated fair value.

See Note 3, "Asset Impairments and Other Charges" and Note 4, "Details of Selected Balance Sheet Accounts," to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10‑Q for further discussion of charges recognized in the first quarter of 2020.

Operating income (loss) as a percentage of revenues⁽¹⁾
Well Site Services -
Completion Services — % 1 % (2 )% (2 )%
Drilling Services (21 )% (18 )% (35 )% (15 )%
Total Well Site Services (3 )% (1 )% (5 )% (4 )%
Downhole Technologies (3 )% 20 % 3 % 19 %
Offshore/Manufactured Products 10 % 12 % 8 % 12 %
Total (2 )% 3 % (3 )% 1 %

~~(1) Operating margin is defined as operating income (loss) divided by revenues.~~

Three Months Ended ~~June 30, 2019~~March 31, 2020 Compared to Three Months Ended ~~June 30, 2018~~March 31, 2019

Consolidated Operating Results

We reported a net loss for the three months ended ~~June 30, 2019~~March 31, 2020 of ~~$9.7~~$405.0 million, or ~~$0.16~~$6.79 per ~~diluted share, which~~share. The reported first quarter loss included ~~$1.3~~non-cash impairment charges totaling $436.5 million ($~~1.0~~411.1 million after-tax, or ~~$0.02~~$6.89 per ~~diluted~~share) related to write-downs of goodwill, inventories and fixed assets and $0.7 million ($0.5 million after-tax, or $0.01 per share) of severance and downsizing ~~costs.~~costs as well as a discrete tax benefit of $14.8 million, or $0.25 per share, associated with the carryback of tax losses allowed under the CARES Act. These results compare to a net ~~income~~loss for the three months ended ~~June 30, 2018~~March 31, 2019 of ~~$2.7~~$14.6 million, or ~~$0.05~~$0.25 per ~~diluted share.~~share, which included $1.0 million ($0.8 million after-tax, or $0.01 per share) of severance costs.

Our ~~consolidated results of operations include the GEODynamics (Downhole Technologies segment) and Falcon acquisitions completed in the~~reported first quarter ~~of 2018. Our reported~~ results of operations reflect the impact of ~~current~~ industry trends and customer spending activities with investments ~~recently~~ weighted toward U.S. shale play ~~regions. However, in 2019, we are beginning to see a~~regions and recent general ~~improvement~~improvements in the level of ~~planned~~ investments in deepwater markets globally. However, in March of 2020, in response to reductions in global demand due to the COVID-19 pandemic and announcements by Saudi Arabia and Russia of plans to increase crude oil production, the spot price of WTI crude oil declined over 50%. This decline in crude oil prices began to have a negative impact on U.S. land-based customer drilling and completion activity, particularly in the U.S. shale play regions, late in the first quarter of 2020.

We expect customer-driven activity to decline significantly in the United States over the balance of 2020 and into 2021. If the current pricing environment for crude oil does not improve, or declines further, our customers may be required to further reduce their planned capital expenditures, causing additional declines in the demand for, and prices of, our products and services, which would further adversely affect our results of operations, cash flows and financial position.

Revenues. Consolidated total revenues in the ~~second~~first quarter of ~~2019~~2020 decreased ~~$21.2~~$30.9 million, or 7%12%, from the ~~second~~first quarter of ~~2018.~~ 2019.

Consolidated product revenues in the ~~second~~first quarter of 2020 decreased $13.3 million, or 11%, from the first quarter of 2019, ~~decreased $11.2 million, or 8%, from the second quarter of 2018,~~ driven ~~primarily~~ by lower U.S. land-based customer activity as well as the impact of competitive pricing pressures for conventional perforating and intervention products in our Downhole Technologies segment, partially offset by higher project-driven product demand in our Offshore/Manufactured Products segment. Consolidated service revenues in the ~~second~~first quarter of 2020 decreased $17.6 million, or 13%, from the first quarter of 2019 ~~decreased $9.9 million, or 7%, from the second quarter of 2018~~ due ~~primarily~~ to reduced customer spending in the U.S. shale play regions. As can be derived from the following table, ~~75%~~69% of our consolidated revenues in the ~~second~~first quarter of ~~2019~~2020 were derived from sales of our short-cycle product and service offerings, which compares to 78% in the same period last year.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands):


	Well Site Services				Downhole Technologies				Offshore/ Manufactured Products				Total				Well Site Services				Downhole Technologies				Offshore/ Manufactured Products				Total
Three months ended June 30	2019		2018		2019		2018		2019		2018		2019		2018
Three months ended March 31																	2020		2019		2020		2019		2020		2019		2020		2019
Major revenue categories -
Project-driven products	$	—	$	—	$	—	$	—	$	38,517	$	35,225	$	38,517	$	35,225	$	—	$	—	$	—	$	—	$	36,788	$	27,245	$	36,788	$	27,245
Short-cycle:
Completion products and services	103,320		108,368		46,740		59,274		29,265		29,783		179,325		197,425		82,926		100,642		41,065		54,290		13,649		24,274		137,640		179,206
Drilling services	12,646		16,756		—		—		—		—		12,646		16,756		4,531		7,750		—		—		—		—		4,531		7,750
Other products	—		—		—		—		5,746		7,565		5,746		7,565		—		—		—		—		8,420		7,739		8,420		7,739
Total short-cycle	115,966		125,124		46,740		59,274		35,011		37,348		197,717		221,746		87,457		108,392		41,065		54,290		22,069		32,013		150,591		194,695
Other products and services	—		—		—		—		28,451		28,874		28,451		28,874		—		—		—		—		32,315		28,671		32,315		28,671
	$	115,966	$	125,124	$	46,740	$	59,274	$	101,979	$	101,447	$	264,685	$	285,845	$	87,457	$	108,392	$	41,065	$	54,290	$	91,172	$	87,929	$	219,694	$	250,611


Percentage of total revenue by type -
Products	—	%	—	%	98	%	98	%	78	%	77	%	47	%	48	%	—	%	—	%	92	%	96	%	72	%	73	%	47	%	46	%
Services	100	%	100	%	2	%	2	%	22	%	23	%	53	%	52	%	100	%	100	%	8	%	4	%	28	%	27	%	53	%	54	%

Cost of Revenues (exclusive of Depreciation and Amortization Expense). Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased ~~$5.3~~$2.3 million, or 2%1%, in the ~~second~~first quarter of ~~2019~~2020 compared to the ~~second~~first quarter of ~~2018.~~ 2019. Cost of revenues in the first quarter of 2020 includes provisions totaling $25.2 million for excess and obsolete inventory – driven by the expected duration of the unprecedented market downturn in March of 2020. Excluding these provisions, consolidated cost of revenues decreased $27.5 million, or 14%, from the prior-year period.

Consolidated product costs in the ~~second~~first quarter of 2020 increased $0.5 million, or 1%, from the first quarter of 2019 ~~were consistent with~~due to a provision of $12.0 million for excess and obsolete inventory in the ~~level reported for the second quarter of 2018 while~~current period. Excluding this charge, consolidated product ~~revenues~~costs decreased 8% from the prior-year period. The year over-over-year decrease was influenced by our Downhole Technologies segment, which experienced an unfavorable shift in product mix, incurred higher product costs and recorded $1.4$11.5 million, ~~of inventory write-offs due to product design changes during the three months ended June 30, 2019.~~or 13%. Consolidated service costs, which includes provisions for excess and obsolete inventories of $13.2 million in the ~~second~~first quarter of ~~2019~~2020, decreased ~~$5.3~~$2.8 million, or 4%2%, from the ~~second~~first quarter of ~~2018, with the impact of~~2019. Excluding these incremental inventory reserves, consolidated service costs declined $16.0 million, or 14%, due primarily to lower activity levels ~~partially offset by incremental costs~~ in ~~our Downhole Technologies segment associated with an expansion of field support operations.~~U.S. shale play regions.

Selling, General and Administrative Expense. Selling, general and administrative expense decreased ~~$4.4~~$4.0 million, or ~~12%~~13%, in the ~~second~~first quarter of 2020 from the first quarter of 2019 ~~from the second quarter of 2018,~~ due primarily to ~~lower stock-based~~a reduction in short- and ~~annual~~long-term incentive ~~plan~~ compensation ~~expense~~costs associated with the anticipated decline in U.S. customer activity levels over the ~~second quarter~~balance of ~~2019 and $1.5 million of nonrecurring patent defense costs recorded during the second quarter of 2018.~~2020.

Depreciation and Amortization Expense. Depreciation and amortization expense ~~increased $1.0~~decreased $5.1 million, or 3%16%, in the ~~second~~first quarter of ~~2019~~2020 compared to the prior-year quarter, driven primarily by our decision to exit drilling operations in West Texas in the latter part of 2019 and reduced capital investments in ~~property and equipment over the past twelve months.~~our Completion Services business in recent years. Note ~~13,~~12, "Segments and Related Information," presents depreciation and amortization expense by segment.

Impairment of Goodwill. During the first quarter of 2020, our Completion Services, Downhole Technologies and Offshore/Manufactured Products operations recognized non-cash goodwill impairment charges of $127.1 million, $192.5 million and $86.5 million, respectively, arising from, among other factors, the significant decline in our stock price and that of our peers and reduced growth rate expectations given weak energy market conditions resulting from the demand destruction caused by the global response to the COVID-19 pandemic. In addition, the estimated returns required by market participants increased materially in our March 31, 2020 assessment from our most recent assessment as of December 1, 2019.

Impairment of Fixed Assets. During the first quarter of 2020, our Drilling Services business recorded a non-cash impairment charge of $5.2 million to reduce the carrying value of the unit's fixed assets to their estimated realizable value following the significant decline in crude oil prices in March of 2020.

Other Operating (Income) Expense, Net. Other operating ~~income~~(income) expense was ~~$0.4~~relatively consistent between periods, with expense of $0.1 million in the ~~second~~first quarter of ~~2019. This compares to other operating~~2020 and income of ~~$3.1~~$0.1 million in the ~~second~~first quarter of ~~2018, which included a $3.6 million gain recognized upon settlement of a Hurricane Harvey flood insurance claim within our Offshore/Manufactured Products segment.~~2019.

Operating Income (Loss). Our consolidated operating loss was ~~$6.4~~$441.8 million in the ~~second~~first quarter of ~~2019,~~2020, which included ~~$1.3~~the impact $436.5 million of non-cash asset impairment charges and $0.7 million of severance and downsizing charges. This compares to a consolidated operating ~~income~~loss of ~~$8.7~~$10.8 million in the ~~second~~first quarter of ~~2018,~~2019, which included the ~~$3.6~~impact of $1.0 million ~~insurance settlement gain and $1.5 million of patent defense costs discussed previously.~~in severance charges.

Interest Expense, Net. Net interest expense was ~~$4.6~~$3.5 million in the ~~second~~first quarter of ~~2019,~~2020, which ~~is comparable~~compares to net interest expense of $4.8 million in the same period of ~~2018.~~2019. Interest expense, which includes amortization of debt discount and deferred financing costs, as a percentage of total debt outstanding was approximately 6% in both the ~~second~~first quarter of ~~2019~~2020 and ~~2018.~~2019. Our contractual cash interest expense as a percentage of total debt outstanding was substantially lower – averaging approximately 3% in both the three months ended March 31, 2020 and 2019.

Income Tax. The income tax benefit for the three months ended ~~June 30, 2019~~March 31, 2020 was calculated using a discrete approach. This methodology was used because minor changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. For the three months ended ~~June 30, 2019,~~March 31, 2020, our income tax benefit was ~~$0.3~~$39.5 million ~~or 2.6%~~on a pre-tax loss of ~~pre-tax losses.~~$444.5 million, which included non-cash goodwill charges (approximately $313.1 million) and other expenses that are not deductible for income tax purposes. The impact of these non-deductible expenses was partially offset by a $14.8 million discrete tax benefit related to the carryback of U.S. net operating losses under the CARES Act. This compares to an income tax ~~provision~~benefit of ~~$1.7~~$0.3 million ~~or 38.8%~~on a pre-tax loss of ~~pre-tax income,~~$14.9 million, which also included certain non-deductible expenses, for the three months ended ~~June 30, 2018. The change~~March 31, 2019.

On March 27, 2020, the CARES Act was signed into law. In accordance with the recently established rules and procedures under the CARES Act, we have filed carryback claims regarding U.S. net operating losses generated in ~~effective tax rate for~~2018 and plan to file carryback claims regarding U.S. net operating losses generated in 2019 during the second quarter of ~~2019 was primarily attributable~~2020. Prior to ~~certain non-deductible expenses.~~the enactment of the CARES Act, such losses could only be carried forward. We expect to receive refunds related to these carryback claims of approximately $41.2 million in 2020, which are classified in income taxes receivable in the consolidated balance sheet as of March 31, 2020.

Other Comprehensive Income (Loss). Reported comprehensive loss is the sum of reported net ~~income (loss)~~loss and other comprehensive income (loss). Other comprehensive loss was ~~$2.3~~$14.8 million in the ~~second~~first quarter of ~~2019~~2020 compared to ~~other comprehensive loss~~income of ~~$13.7~~$2.5 million in the ~~second~~first quarter of ~~2018~~2019 due to fluctuations in foreign currency exchange rates compared to the U.S. dollar for certain of the international operations of our reportable segments. For the three months ended June 30, 2019 and 2018, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil. During the second quarter of 2019, the exchange rate for the British pound weakened while the Brazilian real strengthened compared to the U.S. dollar. This compares to the second quarter of 2018, when the exchange rate for both the British pound and the Brazilian real weakened compared to the U.S. dollar.

~~Segment Operating Results~~

~~Well Site Services~~

~~Revenues.~~ Our Well Site Services segment revenues decreased $9.2 million, or 7%, in the second quarter of 2019 compared to the prior-year quarter. Completion Services revenue decreased $5.0 million, or 5%, reflecting the impact of a decline in U.S. land-based customer completion and production activity following the material decline in commodity prices in the fourth quarter of 2018. Our Drilling Services revenues decreased $4.1 million, or 25%, in the second quarter of 2019 from the second quarter of 2018 due to lower rig utilization.

~~Operating Loss.~~ Our Well Site Services segment operating loss increased $1.4 million in the second quarter of 2019 from the prior-year quarter due to a significant reduction in demand for Drilling Services. Well Site Services segment revenues and cost of services for the second quarter of 2019 decreased 7% and 8%, respectively, from the prior-year quarter, with other costs and expenses remaining relatively flat. Our Completion Services operating loss in the second quarter of 2019 was $0.5 million, compared to operating income of $1.2 million in the prior year quarter, reflecting the impact of lower service activity. Our Drilling Services operating loss decreased $0.4 million in the second quarter of 2019 from the second quarter of 2018 due primarily to lower depreciation expense resulting from certain assets becoming fully depreciated over the past twelve months.

~~Downhole Technologies~~

~~Revenues.~~ Our Downhole Technologies segment revenues decreased $12.5 million, or 21%, in the second quarter of 2019 from the prior-year quarter reflecting a decline in U.S. land-based customer completion activity, a shift in sales mix and competitive pricing pressures for certain of its conventional perforating products.

~~Operating Income.~~ Our Downhole Technologies segment operating income declined $13.1 million, or 113%, in the second quarter of 2019 from the prior-year period due primarily to the decline in revenues coupled with higher product costs, expansion of field support operations and $1.4 million of inventory write-offs due to product design changes. Prior-year results included $1.5 million in patent defense costs incurred in the second quarter of 2018.

~~Offshore/Manufactured Products~~

~~Revenues.~~ Our Offshore/Manufactured Products segment revenues increased $0.5 million, or 1%, in the second quarter of 2019 compared to the second quarter of 2018 with the impact of higher project-driven product demand partially offset by lower customer demand for short-cycle products and reduced service activity.

~~Operating Income.~~ Our Offshore/Manufactured Products segment operating income decreased $2.9 million, or 23%, in the second quarter of 2019 compared to the second quarter of 2018 due to the 2018 quarter including a non-recurring gain of $3.6 million for a Hurricane Harvey flood insurance claim. Excluding this prior-year gain, operating income increased $0.7 million, or 8%.

~~Backlog.~~ Bidding and quoting activity, along with orders from customers, for our Offshore/Manufactured Products segment continued to improve during the second quarter of 2019 with deepwater project awards increasing after several years of reduced award activity. Backlog in our Offshore/Manufactured Products segment increased $49 million from $234 million at March 31, 2019 to total $283 million as of June 30, 2019 – the highest level recorded since the second quarter of 2016. Orders totaled $163 million in the second quarter of 2019 resulting in a book to bill ratio of 1.6x.

~~Corporate~~

~~Expenses decreased $2.2 million, or 16%, in the second quarter of 2019 from the prior-year period due primarily to lower stock-based~~2020 and ~~annual incentive plan compensation expenses.~~

~~Six Months Ended June 30,~~ 2019, ~~Compared to Six Months Ended June 30, 2018~~

~~Consolidated Operating Results~~

We reported a net loss for the six months ended June 30, 2019 of $24.4 million, or $0.41 per diluted share, which included $2.3 million ($1.8 million after-tax, or $0.03 per diluted share) of severance and downsizing costs. These results compare to a net loss for the six months ended June 30, 2018 of $0.8 million, or $0.01 per diluted share, which included $2.6 million ($2.0 million after, tax, or $0.03 per diluted share) of transaction-related expense, $2.4 million ($1.9 million after-tax, or $0.03 per diluted share) of charges related to legal fees incurred for patent defense, $0.8 million ($0.6 million after-tax, or $0.01 per diluted share) of severance and downsizing expense and $0.7 million in reserves ($0.6 million after-tax, or $0.01 per diluted share) for prior years' Fair Labor Standards Act ("FLSA") claim settlements.

Our consolidated results of operations include the GEODynamics (Downhole Technologies segment) and Falcon acquisitions completed in the first quarter of 2018. Our reported results of operations reflect the impact of current industry trends and customer spending activities with investments recently weighted toward U.S. shale play regions. However, in 2019, we are beginning to see a general improvement in the level of planned investments in deepwater markets globally.

~~Revenues.~~ Consolidated total revenues in the first six months of 2019 decreased $24.1 million, or 4%, from the first six months of 2018. Consolidated product revenues in the first six months of 2019 decreased $23.7 million, or 9%, from the first six months of 2018, due primarily to lower U.S. land-based customer activity, reduced project-driven sales within our Offshore/Manufactured Products segment and the impact of competitive pricing pressures for conventional perforating products in our Downhole Technologies segment. Consolidated service revenues in the first six months of 2019 was comparable to the first six months of 2018, with the impact of two additional months of revenue generated by the Falcon operations (acquired February 28, 2018) in the 2019 period, substantially offset by the impact of lower customer spending in the U.S. shale play regions in the Well Site Services segment. As can be derived from the following table, 76% of our consolidated revenues in the first six months of 2019 were derived from sales of our short-cycle product and service offerings, which compares to 76% in the same period in 2018.

~~The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the six months ended June 30, 2019 and 2018 (in thousands):~~

Well Site Services Downhole Technologies Offshore/ Manufactured Products Total
Six months ended June 30 2019 2018 2019 2018 2019 2018 2019 2018
Major revenue categories -
Project-driven products $ —
$ —
$ —
$ —
$ 65,762
$ 76,024
$ 65,762
$ 76,024
Short-cycle:
Completion products and services 203,962
191,208
101,030
105,055
53,540
62,755
358,532
359,018
Drilling services 20,396
34,315
—
—
—
—
20,396
34,315
Other products —
—
—
—
13,484
15,011
13,484
15,011
Total short-cycle 224,358
225,523
101,030
105,055
67,024
77,766
392,412
408,344
Other products and services —
—
—
—
57,122
55,053
57,122
55,053
$ 224,358
$ 225,523
$ 101,030
$ 105,055
$ 189,908
$ 208,843
$ 515,296
$ 539,421

Percentage of total revenue by type -
Products — % — % 97 % 98 % 75 % 78 % 47 % 49 %
Services 100 % 100 % 3 % 2 % 25 % 22 % 53 % 51 %

~~Cost of Revenues (exclusive of Depreciation and Amortization Expense).~~ Our consolidated cost of revenues (exclusive of depreciation and amortization expense) increased $4.7 million, or 1%, in the first six months of 2019 compared to the first six months of 2018. Consolidated product costs in the first six months of 2019 decreased $3.7 million, or 2%, from the first six months of 2018 as a result of a decline in product sales, partially offset by higher costs within the Downhole Technologies segment. The Downhole Technologies segment experienced an unfavorable shift in product mix, incurred higher product costs and recorded $1.4 million of inventory write-offs due to product design changes during the six months ended June 30, 2019. Consolidated service costs in the first six months of 2019 increased $8.4 million, or 4%, from the first six months of 2018, due primarily to the inclusion of the Falcon operations for a full quarter in 2019 versus a single month in the prior-year period and incremental costs in our Downhole Technologies segment associated with an expansion of field support operations, partially offset by a reduction in variable costs in our Drilling Services business.

~~Selling, General and Administrative Expense.~~ Selling, general and administrative expense decreased $8.5 million, or 12%, in the first six months of 2019 from the first six months of 2018. The first six months of 2018 included $2.4 million of patent defense costs, a $1.8 million provision for bad debt related to a customer bankruptcy filing and $0.9 million of transaction-related costs. Excluding these items from the first six months of 2018, selling, general and administrative expense declined $3.4 million, or 5%, due primarily to a year-over-year reduction in stock-based and annual incentive plan compensation expense.

~~Depreciation and Amortization Expense.~~ Depreciation and amortization expense increased $3.3 million, or 6%, in the first six months of 2019 compared to the prior-year period reflecting the impact of the GEODynamics and Falcon operations acquired in the first quarter of 2018, which was partially offset by the effect of certain assets becoming fully depreciated. Note 13, "Segments and Related Information," presents depreciation and amortization expense by segment.

~~Other Operating (Income) Expense, Net.~~ Other operating income was $0.5 million in the first six months of 2019. This compares to other operating income of $1.9 million in the first six months of 2018, which included a $3.6 million gain recognized upon settlement of a Hurricane Harvey flood insurance claim, partially offset by $1.7 million in transaction-related expenses.

~~Operating Income (Loss).~~ Our consolidated operating loss was $17.2 million in the first six months of 2019, which included $2.3 million of severance and downsizing charges. This compares to a consolidated operating income of $7.8 million in the first six months of 2018, which included the $3.6 million insurance settlement gain discussed previously, offset by $3.1 million of costs associated with patent defense and settlement of FLSA claims and $3.4 million of transaction-related, severance and downsizing charges.

~~Interest Expense, Net.~~ Net interest expense was $9.4 million in the first six months of 2019, which is comparable to net interest expense of $9.2 million in the same period of 2018. Interest expense as a percentage of total debt outstanding was approximately 6% in both the first six months of 2019 and 2018.

~~Income Tax.~~ The income tax benefit for the six months ended June 30, 2019 was calculated using a discrete approach. This methodology was used because minor changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. For the six months ended June 30, 2019, our income tax benefit was $0.5 million, or 2.2% of pre-tax losses. This compares to an income tax provision of $0.5 million, or 213% of pre-tax losses, for the six months ended June 30, 2018. The change in effective tax rate for the first half of 2019 was primarily attributable to certain non-deductible expenses.

~~Other ComprehensiveIncome (Loss).~~ Reported comprehensive loss is the sum of reported net income (loss) and other comprehensive income (loss). Other comprehensive income was $0.1 million in the first six months of 2019 compared to other comprehensive loss of $8.7 million in the first six months of 2018 due to fluctuations in foreign currency exchange rates compared to the U.S. dollar for certain of the international operations of our reportable segments. For the six months ended June 30, 2018, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to the United Kingdom and Brazil. During the first ~~six months~~quarter of ~~2018,~~2020, the exchange rates for both the British pound and the Brazilian real weakened compared to the U.S. dollar, while during the first quarter of 2019, the exchange rate for the British pound ~~and the Brazilian real~~strengthened compared to the U.S. ~~dollar weakened.~~dollar.

Segment Operating Results

Well Site Services

Revenues. Our Well Site Services segment revenues decreased ~~$1.2~~$20.9 million, or 1%19%, in the first ~~six months~~quarter of ~~2019~~2020 compared to the prior-year ~~period.~~quarter. Completion Services revenue ~~increased $12.8~~decreased $17.7 million, or 7%18%, ~~reflecting two additional months of revenue generated by the acquired Falcon operations (acquired February 28, 2018) in the 2019 period, partially offset~~driven by the impact of a decline in U.S. land-based customer completion and production activity ~~following~~due to lower commodity prices. Our Drilling Services revenues decreased $3.2 million, or 42%, in the ~~material decline~~first quarter of 2020 from the first quarter of 2019 due to our exit of drilling operations in ~~commodity prices~~the West Texas region in the fourth quarter of 2018. Our Drilling Services revenues decreased $13.9 million, or 41%, to $20.4 million in the first half of 2019 from the same period in 2018 due to customers temporarily suspending their drilling operations in response to the material decline in commodity prices in the fourth quarter of 2018.2019.

Operating Loss. Our Well Site Services segment operating loss increased ~~$2.6~~$136.9 million in the first ~~six months~~quarter of ~~2019~~2020 from the prior-year period due primarily to non-cash impairment charges of $127.1 million related togoodwill and $9.0 million related to inventory recorded in Completion Services and a ~~reduction~~$5.2 million non-cashfixed asset impairment charge recorded in ~~demand for~~ Drilling Services. ~~Well Site Services segment cost of services for the first half of 2019 increased 1% from the prior-year period, with other costs and expenses remaining relatively flat.~~ Our Completion Services operating loss in the first ~~half~~quarter of ~~2019 increased $0.7~~2020, after excluding the goodwill and inventory impairment charges, was $3.6 million, ~~or 22%, from~~compared to an operating loss of $3.5 million in the prior-year ~~period,~~quarter, with the impact of ~~higher~~lower revenues offset by ~~an unfavorable shift~~a $2.0 million reduction in ~~service offering mix. Results in~~depreciation expense and continued costs reduction measures. Excluding the first half of 2018 included a $1.8 million provision for bad debt related to a customer bankruptcy filing and $0.7 million in charges associated with additional reserves established for prior-year FLSA claims. Ourfixed asset impairment charge, our Drilling Services operating loss ~~increased $1.9~~decreased $4.4 million in the first ~~half~~quarter of 2020 from the first quarter of 2019 ~~from the same period in 2018~~($3.1 million of which was due to ~~the impact of~~ a ~~47%~~ reduction in ~~rig utilization.~~depreciation expense) following our exit of drilling operations in the West Texas region in the fourth quarter of 2019.

Downhole Technologies

Revenues. Our Downhole Technologies segment revenues decreased ~~$4.0~~$13.2 million, or 4%24%, in the first ~~six months~~quarter of ~~2019~~2020 from the prior-year period due ~~primarily~~ to a decline in U.S. land-based customer completion activity and a market shift intoward sales ~~mix and competitive pricing pressures for certain~~ of ~~its conventional~~integrated perforating ~~products.~~gun systems, which the segment did not commercialize until late 2019.

Operating Income. ~~Our~~During the first quarter of 2020, our Downhole Technologies segment recorded a non-cash goodwill impairment charge of $192.5 million. Excluding this charge, operating income declined ~~$17.1~~$4.2 million ~~or 87%,~~ in the first ~~six months~~quarter of ~~2019~~2020 from the prior-year period due primarily to the decline in revenues coupled with an expansion of field support operations, higher product costs and $1.4 million of inventory write-offs due to product design changes. Prior-year results included $2.4 million in patent defense costs incurred after our acquisition of GEODynamics.revenues.

Offshore/Manufactured Products

Revenues. Our Offshore/Manufactured Products segment revenues ~~declined $18.9~~increased $3.2 million, or 9%4%, in the first ~~six months~~quarter of ~~2019~~2020 compared to the ~~prior-year period~~first quarter of 2019 due primarily to an increase in project-driven product sales, partially offset by a reduction in sales of our shorter-cycle products (elastomer and valve products). Reported revenues in the first quarter of 2020 were tempered bydelays in project-driven sales arising from global disruptions in the segment's operations and in various parts of its supply chain due to ~~decreased sales of project-driven and short-cycle products.~~the COVID-19 pandemic.

Operating Income. ~~Our~~During the first quarter, our Offshore/Manufactured segment recorded non-cash impairment charges of $86.5 million related to goodwill and $16.2 million related to inventory. Excluding these charges, our Offshore/Manufactured Products segment operating income ~~decreased $10.0~~increased $2.0 million ~~or 40%,~~ in the first ~~six months~~quarter of ~~2019~~2020 compared to the ~~same period in 2018,~~first quarter of 2019 due to the ~~2018 period including a non-recurring gain of $3.6 million from an insurance settlement discussed above. Excluding this gain~~year-over-year increases in ~~the prior-year period, operating income decreased $6.5 million, or 30%, due to the significant decline in revenue.~~revenues.

Backlog. Bidding and quoting activity, along with orders from customers, for our Offshore/Manufactured Products segment improved during the first six months of 2019 with deepwater project awards increasing after several years of reduced award activity. Backlog in our Offshore/Manufactured Products segment ~~increased $104 million from $179 million at December 31, 2018 to total $283~~totaled $267 million as of ~~June 30,~~March 31, 2020, a decrease of 4% from December 31, 2019 ~~– the highest level recorded since the second~~and an increase of 14% from March 31, 2019. First quarter ~~of 2016. Orders~~2020 bookings totaled ~~$297~~$87 million, ~~in the first half of 2019 resulting in~~yielding a ~~book to bill~~book-to-bill ratio of ~~1.6x.~~1.0x.

Corporate

Expenses decreased ~~$4.7~~$3.4 million, or ~~17%~~28%, in the first ~~six months~~quarter of ~~2019~~2020 from the prior-year period ~~which included transaction related expenses~~due to reductions in required short- and long-term incentive accruals driven by the unanticipated sharp decline in crude oil prices in March and the resulting outlook for the Company for the remainder of ~~$2.3 million. The balance of the year-over-year decrease is attributable to lower stock-based and annual incentive plan compensation expenses.~~2020.

Liquidity, Capital Resources and Other Matters

Our primary liquidity needs are to fund operating and capital expenditures which, in the past, have included expanding and upgrading our Offshore/Manufactured Products and Downhole Technologies manufacturing facilities and equipment, replacing and increasing Completion Services assets, funding new product development, and general working capital needs. In addition, capital has been used to repay debt, fund strategic business acquisitions and fund our share repurchase program. Our primary sources of funds have been cash flow from operations, proceeds from borrowings under our credit facilities and capital markets transactions.

The crude oil and natural gas industry is highly cyclical which may result in declines in the demand for, and prices of, our products and services, the inability or failure of our customers to meet their obligations to us or a sustained decline in our market capitalization. These and other potentially adverse market conditions could require us to incur additional asset impairment charges, record additional deferred tax valuation allowances and/or further write down the value of our goodwill and ~~other intangible~~long-lived assets, and may otherwise adversely impact our results of operations, our cash flows and our financial position. See Note 3, ~~"Business Acquisitions, Goodwill~~"Asset Impairments and Other ~~Intangible Assets,~~Charges," and Note 4, "Details of Selected Balance Sheet Accounts," for further information.

Operating Activities

Cash flows from operations totaling ~~$66.0~~$5.4 million were generated during the first ~~six months~~quarter of ~~2019~~2020 compared to ~~$46.9~~$34.3 million generated during the same period of ~~2018.~~2019. During the first ~~half~~quarter of 2019, $19.1 million was provided by net working capital decreases, primarily due to a reduction in accounts receivable and an increase in accounts payable. These working capital benefits were partially offset by a reduction in accrued liabilities and an increase in prepaid expenses. During the first six months of 2018, $29.02020, $14.7 million was used to fund net working capital increases, primarily due to an increase in inventories and a reduction in accrued liabilities. During the first quarter of 2019, $13.3 million was provided by net working capital decreases, driven primarily by ~~increases~~a reduction in accounts receivable, ~~and reductions~~partially offset by a decrease in ~~accounts payable and~~ accrued liabilities.

Investing Activities

Cash used in investing activities during the first ~~half~~quarter of ~~2019~~2020 totaled ~~$30.9~~$2.0 million, compared to ~~$417.7~~$17.9 million used in investing activities during the first ~~half~~quarter of ~~2018, when we invested net cash of $379.7 million for the acquisitions of GEODynamics and Falcon.~~

On January 12, 2018, we acquired GEODynamics for a purchase price consisting of (i) $295.4 million in cash (net of cash acquired), which we funded from borrowings under our Revolving Credit Facility, (ii) 8.66 million shares of our common stock and (iii) an unsecured $25 million promissory note.

~~On February 28, 2018, we acquired Falcon for cash consideration of $84.2 million (net of cash acquired), which we funded from borrowings under our Revolving Credit Facility.~~2019.

Capital expenditures totaled ~~$31.6~~$5.9 million and ~~$38.3~~$17.9 million during the first ~~half~~quarter of ~~2019~~2020 and ~~2018,~~2019, respectively.

WeBased on current industry conditions, we now expect to spend a total of ~~$60~~$15 million to ~~$65~~$20 million in capital expenditures during ~~2019~~2020 to replace and upgrade our Completion Services equipment, to ~~expand and~~ maintain Downhole Technologies' ~~facilities~~ and ~~equipment, to upgrade and maintain our~~ Offshore/Manufactured ~~Products~~Products' facilities and equipment and to fund various other capital spending projects. Whether planned expenditures will actually be spent in ~~2019~~2020 depends on industry conditions, project approvals and schedules, vendor delivery timing, free cash flow generation and careful monitoring of our levels of liquidity. We plan to fund these capital expenditures with available cash, internally generated funds and, if necessary, borrowings under our Revolving Credit Facility. The foregoing capital expenditure expectations do not include any funds that might be spent on future strategic acquisitions, which the Company could pursue depending on the economic environment in our industry and the availability of transactions at prices deemed attractive to the Company.Facility, as defined below.

Financing Activities

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, net cash of ~~$41.6~~$12.4 million was provided by financing activities, including $19.8 million of net borrowings under our Revolving Credit Facility, as defined below, partially offset by our repurchase of $5.7 million in principal amount of our 1.50% convertible senior notes for $4.7 million. This compares to $20.4 million of cash used in financing activities ~~including $37.0~~during the three months ended March 31, 2019, primarily as a result of $15.9 million ofin net repayments under our Revolving Credit Facility. ~~This compares to $346.3~~

As of March 31, 2020, we had cash and cash equivalents totaling $24.3 million.

As of March 31, 2020, we had principal outstanding of $71.7 million of cash provided by financing activities during the six months ended June 30, 2018, primarily as a result of our issuance of $200.0 million in 1.50% convertible senior notes and $157.9 million in net borrowings under our Revolving Credit Facility ~~used to fund acquisitions.~~

~~At June 30, 2019, we had~~and $164.4 million under our Notes. Our reported interest expense, which appropriately includes amortization of debt discount and deferred financing costs of $1.7 million, is substantially above our contractual cash ~~totaling $12.4~~interest expense – reflective primarily of the Notes which provide for a cash interest payment of 1.5% per annum. For the first quarter of 2020, our contractual interest expense was $1.8 million, or approximately 3% of the ~~majority~~average principal balance of ~~which was held by our international subsidiaries.~~debt outstanding.

We believe that cash on hand and cash flow from operations ~~and available borrowings under our Revolving Credit Facility~~ will be sufficient to meet our liquidity needs in the coming twelve months. If our plans or assumptions change, or are inaccurate, ~~or if we make further acquisitions,~~ we may need to raise additional capital. Acquisitions have been, and our management believes acquisitions will continue to be, a key element of our business strategy. The timing, size or success of any acquisition effort and the associated potential capital commitments are unpredictable and uncertain. We may seek to fund all or part of any such efforts with proceeds from debt and/or equity issuances. Our ability to obtain capital for additional projects to implement our growth strategy over the longer term will depend upon our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing. Capital availability will be affected by prevailing conditions in our industry, the global economy, the global financial markets and other factors, many of which are beyond our control. In addition, such additional debt service requirements could be based on higher interest rates and shorter maturities and could impose a significant burden on our results of operations and financial condition, and any issuance of additional equity securities could result in significant dilution to stockholders.

Revolving Credit Facility. Our ~~Revolving~~senior secured revolving credit facility, as amended (the "Revolving Credit ~~Facility~~Facility") is governed by a credit agreement dated as of January 30, 2018, as amended, (the "Credit Agreement") by and among the Company, ~~the Lenders party thereto,~~ Wells Fargo

Bank, N.A., as administrative agent for the lenders party thereto and collateral agent for the secured parties thereunder, and the lenders and other financial institutions from time to time party thereto. Our Revolving Credit Facility provides for up to $350 million in lender commitments ~~with an option~~and is scheduled to ~~increase the maximum borrowings to $500 million subject to additional lender commitments and matures~~mature on January 30, 2022. Under our Revolving Credit Facility, $50 million is available for the issuance of letters of credit. See Note 6, "Long-term Debt," for further information regarding the terms of the Credit Agreement.

As of ~~June 30, 2019,~~March 31, 2020, we had ~~$99.2~~$71.7 million of borrowings outstanding under the Credit Agreement and ~~$16.1~~$19.1 million of outstanding letters of credit, leaving ~~$96.0~~$107.6 million available to be drawn. The total amount available to be drawn was less than the lender commitments as of ~~June 30, 2019,~~March 31, 2020, due to limits imposed by maintenance covenants in the Credit Agreement.

As of ~~June 30, 2019,~~March 31, 2020, we were in compliance with our debt covenants under the Revolving Credit Facility.

We are working with our bank group regarding an amendment to the Revolving Credit Facility. The amendment entails converting our existing cash flow-based revolving credit facility into an asset-based revolving credit facility (the "Amended Facility"). We have made significant progress to date with our bank group and currently expect to ~~continue~~complete the amendment process in the second quarter of 2020. The Amended Facility is expected to be subject to a borrowing base, with availability based upon the amount of our accounts receivable and inventory with advance rates dependent upon several factors, including the age and geographic location of the assets. While the amount of the borrowing base has not been finalized, we expect the size of the Amended Facility to range from $175 million to $200 million. While we believe we will be able to complete the amendment process within the time frame estimated and on the general terms described above, the amendment process remains subject to the completion of final documentation and credit approval by the bank group and, accordingly, we cannot be certain that we will be able to complete the amendment process within the time frame or on the terms currently expected.

If we are not successful in ~~compliance~~amending the Revolving Credit Facility, our borrowings would be governed by the existing Credit Agreement, which contains financial covenants and restrictions as further described above. Based on our forecasts, we anticipate that we could fail to comply with the total net leverage ratio covenant in the third quarter of 2020 as a result of projected declines in consolidated EBITDA resulting from current industry conditions caused by the global response to the COVID‑19 pandemic and the resulting collapse in oil prices. However, we believe that we will have sufficient liquidity over the next twelve ~~months.~~months to fund its liabilities as they become due. Key elements affecting our liquidity position included the following as of March 31, 2020:



Cash and cash equivalents	$	24,308
Working capital, net of cash and current debt and lease obligations	$	348,055
Revolving Credit Facility borrowings outstanding	$	71,700

If we do not complete the amendment process and subsequently are not in compliance with the total net leverage ratio covenant under the Revolving Credit Facility, we believe that we will have sufficient cash on hand, together with cash flow from operations (after investments in capital expenditures), to repay the borrowings outstanding under the Revolving Credit Facility or that we could seek to obtain an amendment or waiver from our lenders in order to avoid a default.

1.50% Convertible Senior Notes. On January 30, 2018, we issued $200 million aggregate principal amount of the Notes pursuant to an indenture, dated as of January 30, 2018 (the "Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee. ~~Net proceeds from~~

The Indenture contains certain events of default, including certain defaults by the ~~Notes, after deducting issuance costs, were approximately $194.0~~Company with respect to other indebtedness of at least $40.0 million.

During the first quarter of 2020, we repurchased $5.7 million ~~which we used to repay a portion~~in principal amount of the outstanding ~~borrowings under our Revolving Credit Facility.~~Notes for $4.7 million, which approximated the net carrying value. Since December 31, 2018, we have repurchased $13.5 million in principal amount of the outstanding notes for $11.5 million.

The initial carrying amount of the Notes recorded in the consolidated balance sheet ~~as of January 30, 2018~~ was less than the $200 million in principal amount of the Notes, in accordance with applicable accounting principles, reflective of the estimated fair value of a similar debt instrument that does not have a conversion feature. We recorded the value of the conversion feature as a debt discount, which is amortized as interest expense over the term of the Notes, with a similar amount allocated to additional paid-in capital. As a result of this amortization, the interest expense we recognize related to the Notes for accounting purposes is based on an effective interest rate of approximately 6%, which is greater than the cash interest payments we are obligated to pay on the Notes. ~~Interest~~Reported interest expense associated with the Notes for both the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ was ~~$5.1~~$2.5 million, ~~and $4.1 million, respectively,~~ while the related contractual cash interest expense totaled ~~$1.5~~$0.7 million and ~~$1.3~~$0.8 million, respectively. See Note 6, "Long-term Debt," for further information regarding the Notes. As of ~~June 30, 2019,~~March 31, 2020, none of the conditions allowing holders of the Notes to convert, or requiring us to repurchase the Notes, had been met.

Promissory Note. In connection with the GEODynamics Acquisition, we issued a $25.0 million promissory note that bears interest at 2.5% per annum and was scheduled to mature on July 12, 2019. Payments due under the promissory note are subject to set-off, in full or in part, against certain indemnification claims related to matters occurring prior to our acquisition of GEODynamics. As more fully described in Note ~~14,~~13, "Commitments and Contingencies," the Company has provided notice to and asserted an indemnification claim against the seller of GEODynamics. As a result, the maturity date of the note is extended until the resolution of the indemnity claim. The Company expects that the amount ultimately paid in respect of such note ~~may~~will be reduced as a result of this indemnification claim.

Our total debt represented ~~17.3%~~25% of our combined total debt and stockholders' equity at ~~June 30, 2019 compared to 18.7%~~March 31, 2020, an increase from 17% at December 31, ~~2018.~~2019 due primarily to the non-cash asset impairment charges recorded in the first quarter of 2020.

Stock Repurchase Program. We maintain a share repurchase program which was extended to July 29, 2020 by our Board of Directors. During the first ~~six~~three months of ~~2019,~~2020, we ~~repurchased approximately 51 thousand~~did not repurchase any shares of our common stock under the ~~program at a total cost of $757 thousand.~~program. The amount remaining under our share repurchase authorization as of ~~June 30, 2019~~March 31, 2020 was $119.8 million. Subject to applicable securities laws, any purchases will be at such times and in such amounts as the Company deems appropriate.

Off-Balance Sheet Arrangements

As of March 31, 2020, we had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Tariffs

We use a variety of domestically produced and imported raw materials and component products, including steel, in the manufacture of our products. In 2018, the United States imposed tariffs on a variety of imported products, including steel and aluminum. In response to the U.S. tariffs on steel and aluminum, the European Union and several other countries, including Canada and China, have threatened and/or imposed retaliatory tariffs. The effect of these new tariffs and the application and interpretation of existing trade agreements and customs, anti-dumping and countervailing duty regulations continues to evolve, and we continue to monitor these matters. If we encounter difficulty in procuring these raw materials and component products, or if the prices we have to pay for these products increase further as a result of customs, anti-dumping and countervailing duty regulations or otherwise and we are unable to pass corresponding cost increases on to our customers, our financial position and results of operations could be adversely affected. Furthermore, uncertainty with respect to potential costs in the drilling and completion of oil and gas wells could cause customers to delay or cancel planned projects which, if this occurred, would adversely affect our financial position and results of operations. See Note 13, "Commitments and Contingencies" to the Consolidated Financial Statements included in this Quarterly Report on Form 10‑Q for additional discussion.

Critical Accounting Policies

For a discussion of the critical accounting policies and estimates that we use in the preparation of our condensed consolidated financial statements, see "Part II Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our ~~2018~~2019 Annual Report on Form 10‑K. These estimates require significant judgments, assumptions and estimates. We have discussed the development, selection, and disclosure of these critical accounting policies and estimates with the audit committee of our Board of Directors. ~~There~~Except as discussed in Note 3, "Asset Impairments and Other Charges," there have been no material changes to the judgments, assumptions, and estimates upon which our critical accounting estimates are based. ~~See Note 2, "Recent Accounting Pronouncements," for a discussion of recent accounting pronouncements, including our adoption of the new lease accounting standard effective January 1, 2019.~~

~~Off-Balance Sheet Arrangements~~

~~As of June 30, 2019, we had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.~~

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk refers to the potential losses arising from changes in interest rates, foreign currency fluctuations and exchange rates, equity prices, and commodity prices, including the correlation among these factors and their volatility.

Our principal market risks are our exposure to changes in interest rates and foreign currency exchange rates. We enter into derivative instruments only to the extent considered necessary to meet risk management objectives and do not use derivative contracts for speculative purposes.

Interest Rate Risk

We have a revolving credit facility that is subject to the risk of higher interest charges associated with increases in interest rates. As of ~~June 30, 2019,~~March 31, 2020, we had floating-rate obligations totaling ~~$99.2~~$71.7 million drawn under our Revolving Credit Facility. These floating-rate obligations expose us to the risk of increased interest expense in the event of increases in short-term interest rates. If the floating interest rates increased by 1% from ~~June 30, 2019~~March 31, 2020 levels, our consolidated interest expense would increase by a total of approximately ~~$1.0~~$0.7 million annually.

Foreign Currency Exchange Rate Risk

Our operations are conducted in various countries around the world and we receive revenue from these operations in a number of different currencies. As such, our earnings are subject to movements in foreign currency exchange rates when transactions are denominated in (i) currencies other than the U.S. dollar, which is our functional currency, or (ii) the functional currency of our subsidiaries, which is not necessarily the U.S. dollar. In order to mitigate the effects of foreign currency exchange rate risks in areas outside of the United States (primarily in our Offshore/Manufactured Products segment), we generally pay a portion of our expenses in local currencies and a substantial portion of our contracts provide for collections from customers in U.S. dollars. During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, our reported foreign currency exchange ~~gains~~losses were ~~$0.3~~$0.1 million and are included in "Other operating expense, net" in the condensed consolidated statements of operations.

Our accumulated other comprehensive loss, reported as a component of stockholders' equity, ~~decreased slightly~~increased $14.8 million from ~~$71.4~~$67.7 million at December 31, ~~2018~~2019 to ~~$71.3~~$82.5 million at ~~June 30, 2019,~~March 31, 2020, due to changes in currency exchange rates. Accumulated other comprehensive loss is primarily related to fluctuations in the currency exchange rates compared to the U.S. dollar which are used to translate certain of the international operations of our reportable segments.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) of the Exchange Act. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our 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 Commission. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~June 30, 2019~~March 31, 2020 at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company's internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended ~~June 30, 2019,~~March 31, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II -- OTHER INFORMATION

ITEM 1. Legal Proceedings

The information with respect to this Item 1 is set forth under Note ~~14,~~13, "Commitments and Contingencies."

ITEM 1A. Risk Factors

"Part I, Item 1A. Risk Factors" of our ~~2018~~2019 Annual Report on Form 10‑K includes a detailed discussion of our risk factors. The risks described in this Quarterly Report on Form 10‑Q and our ~~2018~~2019 Annual Report on Form 10‑K are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may materially adversely affect our business, financial conditions or future results. ~~There~~Except as described below, there have been no material changes to our risk factors as set forth in our ~~2018~~2019 Annual Report on Form 10‑K.

Recent declines in crude oil prices to record low levels as a result of the Coronavirus Disease 2019 ("COVID-19") outbreak and a significantly oversupplied crude oil market have negatively impacted, and are expected to continue to negatively impact, demand for our products and services resulting in a material negative impact on our results of operations, financial position and liquidity.

The outbreak of COVID-19 in the United States and globally, together with government and private sector responsive actions, have, and are expected to continue to, adversely affect both the price of and demand for crude oil and the continuity of our business operations. It is currently impossible to predict the effect and ultimate impact of the COVID-19 pandemic as the situation is rapidly evolving. In March 2020, the President of the United States declared the COVID-19 pandemic a national emergency, invoking powers under the Stafford Act, the legislation that directs federal emergency disaster response. A significant majority of states as well as local jurisdictions have imposed, and others in the future may impose, "shelter-in-place" orders, quarantines, executive orders and similar government orders and restrictions for their residents to control the spread of COVID-19. Such orders or restrictions, and the perception that such orders or restrictions could occur, have resulted in business closures, work stoppages, slowdowns and delays, work-from-home policies, travel restrictions and cancellation of events, among other effects.

While the U.S. Department of Homeland Security and various local orders have identified the energy industry as critical to the U.S. infrastructure, generally allowing certain of our and our customers' operations to continue, our operations, and those of our customers, have been and will likely continue to be disrupted in various ways. For example, in an effort to minimize the spread of illness, we and our customers have implemented various worksite restrictions in order to minimize contact among personnel, and have also required employees to quarantine who have become ill or experienced COVID-19-related symptoms. Travel restrictions and flight cancellations have also slowed personnel travel and equipment delivery to certain customer locations. In addition, the COVID-19 outbreak poses a risk of disruptions to our supply chain if a supplier were to experience production or delivery constraints due to the effects of COVID-19. Disruptions of this type and others could continue and increase for the foreseeable future. For example, in many of our customers' offshore drilling projects, personnel reside in close quarters on an offshore rig or platform for lengthy periods of time. Cases of COVID-19 in these environments have occurred and a widespread outbreak of COVID-19 on a rig or platform could result in a cessation of operations which would further depress demand for our products and services. Finally, although our manufacturing and service facilities in the United States generally remain open and operational as of the date of filing of this Quarterly Report on Form 10‑Q, certain of our international facilities have been required to temporarily close due to government mandates. Additional governmental mandates or the illness or absence of a substantial number of employees could require that we temporarily close additional facilities, or may prohibit or significantly restrict us, our customers and third party providers upon whom we and they rely from remaining operational.

In addition, we have implemented work-from-home policies for certain employees. The effects of shelter-in-place orders and our work-from-home policies may negatively impact productivity and disrupt our business, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

Contemporaneously with the widespread outbreak of COVID-19 in the United States, Saudi Arabia announced a material increase in crude oil production in response to a dispute with Russia over crude oil production levels, resulting in global oil markets being significantly oversupplied, particularly in light of the reduced demand resulting from the COVID-19 pandemic. As a result, the spot price of West Texas Intermediate crude oil declined precipitously beginning in the middle of March, closing at $21 per barrel on March 31, 2020. In response, a number of our exploration and production company customers announced significant reductions in capital spending for drilling, completion, production and other projects on which our products and services would be used. These reductions in spending and activity levels have negatively impacted, and we expect they will continue to negatively impact, demand for our products and services, the prices we can charge for those products and services and, as a result, our results of operations, liquidity and financial condition. Although the Organization of the Petroleum Exporting Countries, its members and other state-controlled oil companies agreed to reduce production, supply continues to exceed demand and crude oil prices have continued to fall following March 31, 2020.

The effect of the COVID-19 pandemic has also resulted in significant disruption of global financial markets. For companies like ours in the energy industry, this disruption has been exacerbated by the global crude oil supply and demand imbalance and resulting decline in crude oil prices, and has significantly impacted the value of our common stock and which may reduce our ability to access capital in the bank and capital markets, which could in the future negatively affect our liquidity. In addition, a recession or long-term market correction, resulting from the COVID-19 pandemic could in the future further materially impact the value of our common stock, impact our access to capital and affect our business in the near and long-term.

The COVID-19 pandemic continues to rapidly evolve. The extent to which COVID-19 and depressed crude oil prices impacts our results, financial position and liquidity will depend on future developments, which are highly uncertain and cannot be predicted.

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

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Period
Total Number of Shares Purchased⁽¹⁾

Average Price Paid per Share⁽¹⁾
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs⁽²⁾
April 1 through April 30, 2019 383
$ 17.72
—
$ 119,788,435
May 1 through May 31, 2019 233
17.45
—
119,788,435
June 1 through June 30, 2019 72
16.40
—
119,788,435
Total 688
$ 17.49
—



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs⁽²⁾
January 1 through January 31, 2020	49,550	$	15.87	—	$	119,788,435
February 1 through February 29, 2020	173,563	10.82		—	119,788,435
March 1 through March 31, 2020	115	5.93		—	119,788,435
Total	223,228	$	11.94	—


(1)	All ~~of the 688~~ shares purchased during the three-month period ended ~~June 30, 2019~~March 31, 2020 were acquired from employees in connection with the settlement of income tax and related benefit withholding obligations arising from vesting in restricted stock grants. These shares were not part of a publicly announced program to purchase common stock.


(2)	~~On July 29, 2015, the Company's Board of Directors approved~~We maintain a ~~new~~ share repurchase program providing for the repurchase of up to $150 million of the Company's common stock, which, following extensions, was scheduled to expire on July 29, 2019. On July 24, 2019, our Board of Directors extended the share repurchase program for one year to July 29, 2020.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

ITEM 6. Exhibits



Exhibit No.		Description

3.1	—	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2000, as filed with the Commission on March 30, 2001 (File No. 001-16337)).

3.2	—	Fourth Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, as filed with the Commission on May 8, 2019 (File No. 001-16337)).

3.3	—	Certificate of Designations of Special Preferred Voting Stock of Oil States International, Inc. (incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2000, as filed with the Commission on March 30, 2001 (File No. 001-16337)).

10.1*	—	~~Form of Non-Employee Director Restricted Stock Agreement under the Company's 2018 Equity Participation Plan.~~

10.2*	—	~~Form of Performance Award Agreement under the Company's 2018 Equity Participation Plan.~~Annual Incentive Compensation Plan, dated January 1, 2020.

31.1*	—	Certification of Chief Executive Officer of Oil States International, Inc. pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

31.2*	—	Certification of Chief Financial Officer of Oil States International, Inc. pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

32.1**	—	Certification of Chief Executive Officer of Oil States International, Inc. pursuant to Rules 13a-14(b) or 15d-14(b) under the Securities Exchange Act of 1934, as amended.

32.2**	—	Certification of Chief Financial Officer of Oil States International, Inc. pursuant to Rules 13a-14(b) or 15d-14(b) under the Securities Exchange Act of 1934, as amended.

101.INS*	—	XBRL Instance Document

101.SCH*	—	XBRL Taxonomy Extension Schema Document

101.CAL*	—	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	—	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	—	XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	—	XBRL Taxonomy Extension Presentation Linkbase Document

---------

* Filed herewith.

** Furnished herewith.

SIGNATURES

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



			OIL STATES INTERNATIONAL, INC.


Date:	~~July 29, 2019~~April 30, 2020	By	/s/ LLOYD A. HAJDIK
			Lloyd A. Hajdik
			Executive Vice President, Chief Financial Officer and
			Treasurer (Duly Authorized Officer and Principal Financial Officer)

4238



Six Months Ended June 30, 2019	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders' Equity
Balance, December 31, 2018	$	718	$	1,097,758	$	1,029,518		$	(71,397	)	$	(616,829	)	$	1,439,768
Net loss	—		—		(24,388		)	—			—			(24,388		)
Currency translation adjustments (excluding intercompany advances)	—		—		—			(393		)	—			(393		)
Currency translation adjustments on intercompany advances	—		—		—			530			—			530
Stock-based compensation expense:
Restricted stock	8		8,529		—			—			—			8,537
Stock options	—		53		—			—			—			53
Stock repurchases	—		—		—			—			(757		)	(757		)
Surrender of stock to settle taxes on restricted stock awards	—		—		—			—			(3,622		)	(3,622		)
Balance, June 30, 2019	$	726	$	1,106,340	$	1,005,130		$	(71,260	)	$	(621,208	)	$	1,419,728



Three Months Ended June 30, 2018	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders' Equity
Balance, March 31, 2018	$	717	$	1,080,216	$	1,045,131	$	(53,459	)	$	(616,590	)	$	1,456,015
Net income	—		—		2,742		—			—			2,742
Currency translation adjustments (excluding intercompany advances)	—		—		—		(11,242		)	—			(11,242		)
Currency translation adjustments on intercompany advances	—		—		—		(2,491		)	—			(2,491		)
Stock-based compensation expense:
Restricted stock	1		5,617		—		—			—			5,618
Stock options	—		94		—		—			—			94
Issuance of common stock in connection with GEODynamics acquisition	—		—		—		—			—			—
Issuance of 1.50% convertible senior notes, net of income taxes of $7,744	—		—		—		—			—			—
Surrender of stock to settle taxes on restricted stock awards	—		—		—		—			(83		)	(83		)
Balance, June 30, 2018	$	718	$	1,085,927	$	1,047,873	$	(67,192	)	$	(616,673	)	$	1,450,653



	Six Months Ended June 30, 2018
Revenue	$	566,045
Net income	$	1,750
Diluted net income per share	$	0.03
Diluted weighted average common shares outstanding	58,922



	June 30, 2019						December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	168,266	$	38,729	$	129,537	$	167,811	$	33,247	$	134,564
Patents/Technology/Know-how	85,423		27,268		58,155		84,903		23,418		61,485
Noncompete agreements	17,100		8,418		8,682		18,705		7,544		11,161
Tradenames and other	53,708		7,196		46,512		53,708		5,617		48,091
	$	324,497	$	81,611	$	242,886	$	325,127	$	69,826	$	255,301



	Estimated Useful Life (years)			June 30, 2019			December 31, 2018
Property, plant and equipment, net:
Land				$	37,758		$	37,545
Buildings and leasehold improvements	2	–	40	259,981			259,834
Machinery and equipment	1	–	28	493,121			483,629
Completion Services equipment	2	–	10	505,427			492,183
Office furniture and equipment	3	–	10	45,013			43,654
Vehicles	2	–	10	114,729			122,982
Construction in progress				23,337			29,451
Total property, plant and equipment				1,479,366			1,469,278
Accumulated depreciation				(959,042		)	(928,851		)
				$	520,324		$	540,427



	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease expense components:
Leases with initial term of greater than 12 months	$	2,897	$	5,858
Leases with initial term of 12 months or less	1,413		2,766
	$	4,310	$	8,624

Operating lease assets obtained in exchange for operating lease liabilities:
Upon adoption of standard (January 1, 2019)			$	47,721
Subsequent to adoption			5,332
Non-cash operating lease amounts			$	53,053



	Operating Leases
2019 (less six months ended June 30)	$	5,654
2020	10,125
2021	8,282
2022	6,176
2023	5,192
After 2023	22,861
Total lease payments	58,290
Less: Imputed interest	(10,025		)
Present value of operating lease liabilities	48,265
Less: Current portion	(8,997		)
Total long-term operating lease liabilities	$	39,268
Weighted-average remaining lease term (years)	7.7
Weighted-average discount rate	5.0		%