Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2019 | |
Document And Entity Information | |
Entity Registrant Name | National Energy Services Reunited Corp. |
Entity Central Index Key | 0001698514 |
Document Type | 6-K |
Document Period End Date | Sep. 30, 2019 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Period Focus | Q3 |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 43,082 | $ 24,892 |
Accounts receivable, net | 107,370 | 62,636 |
Unbilled revenue | 95,750 | 95,145 |
Service inventories, net | 72,341 | 58,151 |
Prepaid assets | 11,083 | 6,937 |
Retention withholdings | 29,689 | 22,011 |
Other receivables | 10,842 | 16,695 |
Other current assets | 10,062 | 13,178 |
Total current assets | 380,219 | 299,645 |
Non-current assets | ||
Property, plant and equipment, net | 383,485 | 328,727 |
Intangible assets, net | 126,548 | 138,052 |
Goodwill | 574,764 | 570,540 |
Other assets | 2,801 | 6,345 |
Total assets | 1,467,817 | 1,343,309 |
Liabilities | ||
Accounts payable | 65,108 | 66,264 |
Accrued expenses | 72,266 | 38,986 |
Current installments of long-term debt | 7,500 | 45,093 |
Short-term borrowings | 28,261 | 31,817 |
Income taxes payable | 5,015 | 10,991 |
Other taxes payable | 4,545 | 5,806 |
Other current liabilities | 4,672 | 24,123 |
Total current liabilities | 187,367 | 223,080 |
Long-term debt | 337,885 | 225,172 |
Deferred tax liabilities | 29,322 | 30,756 |
Pension benefit liabilities | 14,682 | 13,828 |
Other liabilities | 17,409 | 19,482 |
Total liabilities | 586,665 | 512,318 |
Commitments and contingencies (Note 13) | ||
Equity | ||
Preferred shares, no par value; unlimited shares authorized; none issued and outstanding at September 30, 2019 and December 31, 2018, respectively | ||
Common stock, no par value; unlimited shares authorized; 87,147,089 and 85,562,769 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 801,545 | 801,545 |
Additional paid in capital | 15,641 | 1,034 |
Retained earnings | 63,937 | 28,297 |
Accumulated other comprehensive income | 29 | 48 |
Total shareholders' equity | 881,152 | 830,924 |
Non-controlling interests | 67 | |
Total equity | 881,152 | 830,991 |
Total liabilities and equity | $ 1,467,817 | $ 1,343,309 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Statement of Financial Position [Abstract] | ||
Preferred stock, no par value | ||
Preferred stock, authorized unlimited | Unlimited | Unlimited |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, no par value | ||
Common stock, authorized unlimited | Unlimited | Unlimited |
Common stock, issued | 87,147,089 | 85,562,769 |
Common stock, outstanding | 87,147,089 | 85,562,769 |
Condensed Consolidated Interim
Condensed Consolidated Interim Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | |
Net income / (loss) | $ 10,608 | $ 16,157 | $ 12,190 | $ 35,138 | |
Successor [Member] | |||||
Revenues | 161,606 | 145,580 | 190,566 | 473,209 | |
Cost of services | (121,326) | (102,349) | (139,404) | (352,716) | |
Gross profit | 40,280 | 43,231 | 51,162 | 120,493 | |
Selling, general and administrative expense | (16,485) | (13,759) | (22,779) | (46,592) | |
Amortization | (4,033) | (3,577) | (5,116) | (12,036) | |
Operating income | 19,762 | 25,895 | 23,267 | 61,865 | |
Interest expense, net | (5,011) | (6,199) | (8,099) | (14,691) | |
Other income / (expense), net | (130) | 450 | (18) | (629) | |
Income before income tax | 14,621 | 20,146 | 15,150 | 46,545 | |
Income tax expense | (3,511) | (3,989) | (2,960) | (10,905) | |
Net income / (loss) | 11,110 | 16,157 | 12,190 | 35,640 | |
Net income / (loss) attributable to non-controlling interests | 47 | (172) | |||
Net income attributable to shareholders | $ 11,110 | $ 16,110 | $ 12,362 | $ 35,640 | |
Weighted average shares outstanding: | |||||
Basic | 87,024,655 | 85,562,769 | 85,562,769 | 86,938,883 | |
Diluted | 87,024,655 | 85,912,715 | 85,840,312 | 86,938,883 | |
Net earnings per share: | |||||
Basic | $ 0.13 | $ 0.19 | $ 0.14 | $ 0.4 | |
Diluted | $ 0.13 | $ 0.19 | $ 0.14 | $ 0.4 | |
Predecessor [Member] | NPS Holdings Limited [Member] | |||||
Revenues | $ 137,027 | ||||
Cost of services | (104,242) | ||||
Gross profit | 32,785 | ||||
Selling, general and administrative expense | (19,969) | ||||
Amortization | (10) | ||||
Operating income | 12,806 | ||||
Interest expense, net | (4,090) | ||||
Other income / (expense), net | 362 | ||||
Income before income tax | 9,078 | ||||
Income tax expense | (2,342) | ||||
Net income / (loss) | 6,736 | ||||
Net income / (loss) attributable to non-controlling interests | (881) | ||||
Net income attributable to shareholders | $ 7,617 | ||||
Weighted average shares outstanding: | |||||
Basic | 348,524,566 | ||||
Diluted | 370,000,000 | ||||
Net earnings per share: | |||||
Basic | $ 0.02 | ||||
Diluted | $ 0.02 |
Condensed Consolidated Interi_2
Condensed Consolidated Interim Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | |
Net income | $ 10,608 | $ 16,157 | $ 12,190 | $ 35,138 | |
Successor [Member] | |||||
Net income | 11,110 | 16,157 | 12,190 | 35,640 | |
Other comprehensive income, net of tax | |||||
Foreign currency translation adjustments | (19) | ||||
Total Comprehensive Income, net of tax | 10,608 | 16,157 | 12,190 | 35,119 | |
Comprehensive loss attributable to non-controlling interest | |||||
Comprehensive income attributable to shareholder interest | $ 10,608 | $ 16,157 | $ 12,190 | $ 35,119 | |
Predecessor [Member] | NPS Holdings Limited [Member] | |||||
Net income | $ 6,736 | ||||
Other comprehensive income, net of tax | |||||
Foreign currency translation adjustments | (16) | ||||
Total Comprehensive Income, net of tax | 6,720 | ||||
Comprehensive loss attributable to non-controlling interest | |||||
Comprehensive income attributable to shareholder interest | $ 6,720 |
Condensed Consolidated Interi_3
Condensed Consolidated Interim Statements Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member]Predecessor [Member]NPS Holdings Limited [Member] | Common Stock [Member]Successor [Member] | Redeemable Convertible Shares [Member]Predecessor [Member]NPS Holdings Limited [Member] | Additional Paid-In Capital [Member]Predecessor [Member]NPS Holdings Limited [Member] | Additional Paid-In Capital [Member]Successor [Member] | Accumulated Other Comprehensive Income (Loss) [Member]Predecessor [Member]NPS Holdings Limited [Member] | Accumulated Other Comprehensive Income (Loss) [Member]Successor [Member] | Retained Earnings (Accumulated Deficit) [Member]Predecessor [Member]NPS Holdings Limited [Member] | Retained Earnings (Accumulated Deficit) [Member]Successor [Member] | Total Shareholders' Equity [Member]Predecessor [Member] | Non-controlling Interests [Member]Predecessor [Member]NPS Holdings Limited [Member] | Non-controlling Interests [Member]Successor [Member] | Total Shareholders' Equity [Member]Predecessor [Member]NPS Holdings Limited [Member] | Total Shareholders' Equity [Member]Predecessor [Member] | Total Shareholders' Equity [Member]Successor [Member] | Predecessor [Member]NPS Holdings Limited [Member] | Successor [Member] | Total |
Balance at beginning at Dec. 31, 2017 | $ 342,250 | $ 27,750 | $ 3,345 | $ (436) | $ 18,480 | $ (1,960) | $ 391,389 | $ 389,429 | ||||||||||
Balance at beginning, shares at Dec. 31, 2017 | 342,250,000 | 27,750,000 | ||||||||||||||||
Foreign currency translation adjustments | (16) | $ (16) | (16) | $ (16) | ||||||||||||||
Conversion of redeemable shares | $ 6,275 | $ (6,275) | ||||||||||||||||
Conversion of redeemable shares, shares | 6,274,566 | (6,274,566) | ||||||||||||||||
Dividends paid | (48,210) | (48,210) | (48,210) | |||||||||||||||
Amount of provision for Zakat | (766) | (766) | (766) | |||||||||||||||
Net income (loss) | 7,617 | $ 6,736 | (881) | 7,617 | $ 6,736 | |||||||||||||
Balance at end at Jun. 06, 2018 | $ 348,525 | $ 56,602 | $ 21,475 | 3,345 | (452) | (22,879) | $ (4,611) | (2,841) | 350,014 | 347,173 | $ 51,991 | $ 51,991 | ||||||
Balance at end, shares at Jun. 06, 2018 | 348,524,566 | 11,730,425 | 21,475,434 | |||||||||||||||
Shares issued to acquire NPS, shares | 70,557,580 | |||||||||||||||||
Shares issued for IPO underwriting fees, shares | 16,867,265 | |||||||||||||||||
Balance at end at Jun. 30, 2018 | $ 348,525 | $ 801,546 | $ 21,475 | 3,345 | (435) | (24,294) | (7,362) | (2,300) | (2,165) | 348,616 | 346,316 | 794,184 | 792,019 | |||||
Balance at end, shares at Jun. 30, 2018 | 348,524,566 | 85,562,769 | 21,475,434 | |||||||||||||||
Balance at beginning at Jun. 06, 2018 | $ 348,525 | $ 56,602 | $ 21,475 | 3,345 | (452) | (22,879) | (4,611) | (2,841) | 350,014 | 347,173 | 51,991 | 51,991 | ||||||
Balance at beginning, shares at Jun. 06, 2018 | 348,524,566 | 11,730,425 | 21,475,434 | |||||||||||||||
Foreign currency translation adjustments | ||||||||||||||||||
Reclassification of shares previously subject to redemption | $ 165,188 | 165,188 | 165,188 | |||||||||||||||
Reclassification of shares previously subject to redemption, shares | 16,921,700 | |||||||||||||||||
Redeemed shares | $ (19,379) | (19,379) | (19,379) | |||||||||||||||
Redeemed shares, shares | (1,916,511) | |||||||||||||||||
Shares issued to acquire NPS | $ 255,537 | 255,537 | 255,537 | |||||||||||||||
Shares issued to acquire NPS, shares | 25,077,277 | |||||||||||||||||
Shares issued to acquire GES | $ 288,848 | 288,848 | 288,848 | |||||||||||||||
Shares issued to acquire GES, shares | 28,346,229 | |||||||||||||||||
Shares issued to related party for loan fee and transaction costs | $ 2,719 | 2,719 | 2,719 | |||||||||||||||
Shares issued to related party for loan fee and transaction costs, shares | 266,809 | |||||||||||||||||
Shares issued to Backstop Investor | $ 48,294 | 48,294 | 48,294 | |||||||||||||||
Shares issued to Backstop Investor, shares | 4,829,375 | |||||||||||||||||
Shares issued for IPO underwriting fees | $ 3,737 | 3,737 | 3,737 | |||||||||||||||
Shares issued for IPO underwriting fees, shares | 307,465 | |||||||||||||||||
Shares issued through Restricted Stock Units | 331 | 331 | 331 | |||||||||||||||
Business combination non-controlling interest | (951) | (951) | ||||||||||||||||
Non-controlling interest | 3,042 | 3,043 | ||||||||||||||||
Acquisition of non-controlling interest during the period | 994 | (994) | 994 | |||||||||||||||
Other | ||||||||||||||||||
Net income (loss) | 12,362 | (172) | 12,362 | 12,190 | 12,190 | |||||||||||||
Balance at end at Sep. 30, 2018 | $ 801,546 | 331 | 8,745 | 925 | 810,622 | 811,547 | ||||||||||||
Balance at end, shares at Sep. 30, 2018 | 85,562,769 | |||||||||||||||||
Balance at beginning at Jun. 30, 2018 | $ 348,525 | $ 801,546 | $ 21,475 | $ 3,345 | $ (435) | $ (24,294) | (7,362) | $ (2,300) | (2,165) | $ 348,616 | $ 346,316 | 794,184 | 792,019 | |||||
Balance at beginning, shares at Jun. 30, 2018 | 348,524,566 | 85,562,769 | 21,475,434 | |||||||||||||||
Foreign currency translation adjustments | ||||||||||||||||||
Reclassification of shares previously subject to redemption | ||||||||||||||||||
Reclassification of shares previously subject to redemption, shares | ||||||||||||||||||
Redeemed shares | ||||||||||||||||||
Redeemed shares, shares | ||||||||||||||||||
Shares issued to acquire NPS | ||||||||||||||||||
Shares issued to acquire NPS, shares | ||||||||||||||||||
Shares issued to acquire GES | ||||||||||||||||||
Shares issued to acquire GES, shares | ||||||||||||||||||
Shares issued to related party for loan fee and transaction costs | ||||||||||||||||||
Shares issued to related party for loan fee and transaction costs, shares | ||||||||||||||||||
Shares issued to Backstop Investor | ||||||||||||||||||
Shares issued to Backstop Investor, shares | ||||||||||||||||||
Shares issued for IPO underwriting fees | ||||||||||||||||||
Shares issued for IPO underwriting fees, shares | ||||||||||||||||||
Shares issued through Restricted Stock Units | 331 | 331 | 331 | |||||||||||||||
Business combination non-controlling interest | ||||||||||||||||||
Non-controlling interest | 3,042 | 3,042 | ||||||||||||||||
Acquisition of non-controlling interest during the period | ||||||||||||||||||
Other | (3) | 1 | (3) | (2) | ||||||||||||||
Other, shares | ||||||||||||||||||
Net income (loss) | 16,110 | 47 | 16,110 | 16,157 | 16,157 | |||||||||||||
Balance at end at Sep. 30, 2018 | $ 801,546 | 331 | 8,745 | 925 | 810,622 | 811,547 | ||||||||||||
Balance at end, shares at Sep. 30, 2018 | 85,562,769 | |||||||||||||||||
Balance at beginning at Dec. 31, 2018 | $ 801,546 | 1,034 | $ 48 | 28,297 | 67 | 830,924 | 830,991 | |||||||||||
Balance at beginning, shares at Dec. 31, 2018 | 85,562,769 | |||||||||||||||||
Foreign currency translation adjustments | (19) | |||||||||||||||||
Acquisition of non-controlling interest during the period | 67 | (67) | 67 | |||||||||||||||
Stock-based Compensation | 4,057 | 4,057 | 4,057 | |||||||||||||||
Vesting of restricted share units, shares | 250,310 | |||||||||||||||||
Other | 3 | (19) | (16) | (16) | ||||||||||||||
Other, shares | 33,796 | |||||||||||||||||
NPS equity earn-out | 10,480 | 10,480 | 10,480 | |||||||||||||||
NPS equity earn-out, shares | 1,300,214 | |||||||||||||||||
Net income (loss) | 35,138 | 35,138 | 35,640 | 35,138 | ||||||||||||||
Balance at end at Sep. 30, 2019 | $ 801,545 | 15,641 | 29 | 63,435 | 880,650 | 881,152 | ||||||||||||
Balance at end, shares at Sep. 30, 2019 | 87,147,089 | |||||||||||||||||
Balance at beginning at Jun. 30, 2019 | $ 801,545 | 13,698 | 29 | 52,827 | 868,099 | 868,099 | ||||||||||||
Balance at beginning, shares at Jun. 30, 2019 | 86,896,779 | |||||||||||||||||
Foreign currency translation adjustments | ||||||||||||||||||
Stock-based Compensation | 1,944 | 1,944 | 1,944 | |||||||||||||||
Vesting of restricted share units, shares | 250,310 | |||||||||||||||||
Other | (1) | (1) | (1) | |||||||||||||||
Other, shares | ||||||||||||||||||
Net income (loss) | 10,608 | 10,608 | $ 11,110 | 10,608 | ||||||||||||||
Balance at end at Sep. 30, 2019 | $ 801,545 | $ 15,641 | $ 29 | $ 63,435 | $ 880,650 | $ 881,152 | ||||||||||||
Balance at end, shares at Sep. 30, 2019 | 87,147,089 |
Condensed Consolidated Interi_4
Condensed Consolidated Interim Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 4 Months Ended | 5 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | |
Cash flows from operating activities: | |||
Net income / (loss) | $ 12,190 | $ 35,138 | |
Successor [Member] | |||
Cash flows from operating activities: | |||
Net income / (loss) | 12,190 | 35,640 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 24,155 | 59,728 | |
Shares issued for transaction costs | 2,175 | ||
Stock-based compensation | 4,057 | ||
(Gain) on disposal of assets | (684) | (399) | |
Non-cash interest expense | 8,001 | 1,361 | |
Deferred tax expense (benefit) | 948 | (1,733) | |
Allowance for doubtful receivables | 629 | 920 | |
Provision for obsolete service inventories | 932 | ||
Other operating activities, net | 603 | (100) | |
Changes in operating assets and liabilities: | |||
(Increase) decrease in accounts receivable | 10,178 | (46,523) | |
(Increase) in inventories | (2,297) | (15,123) | |
(Increase) in prepaid expenses | (2,943) | (3,825) | |
(Increase) in other current assets | (21,866) | (5,537) | |
(Increase) decrease in other long-term assets and liabilities | 312 | 5,403 | |
Increase (decrease) in accounts payable and accrued expenses | (14,629) | 23,971 | |
Increase (decrease) in other current liabilities | (2,341) | (13,482) | |
Net cash provided by operating activities | 14,431 | 45,290 | |
Cash flows from investing activities: | |||
Capital expenditures | (16,169) | (90,164) | |
Proceeds from disposal of assets | 4,432 | 1,125 | |
Proceeds from the Company's Trust account | 231,782 | ||
Acquisition of business, net of cash acquired | (285,081) | ||
Other investing activities | 330 | (932) | |
Net cash used in investing activities | (64,706) | (89,971) | |
Cash flows from financing activities: | |||
Proceeds from long-term debt | 100,000 | 365,000 | |
Repayments of long-term debt | (285,048) | ||
Net change in overdraft facilities | (7,050) | ||
Proceeds from short-term borrowings | 39,941 | ||
Proceeds from short-term borrowings | (44,250) | ||
Proceeds from issuance of shares | 48,294 | ||
Redemption of ordinary shares | (19,380) | ||
Payment of deferred underwriting fees | (5,333) | ||
Dividend paid | |||
Other financing activities, net | (5,792) | (5,703) | |
Net cash provided by (used in) financing activities | 117,789 | 62,890 | |
Effect of exchange rate changes on cash | (19) | ||
Net increase (decrease) in cash | 67,514 | 18,190 | |
Cash and cash equivalents, beginning of period | 46 | 24,892 | |
Cash and cash equivalents, end of period | 67,560 | $ 46 | 43,082 |
Supplemental disclosure of cash flow information (also refer Note 3): | |||
Interest paid | 3,724 | 13,396 | |
Income taxes paid | 3,129 | $ 16,583 | |
Predecessor [Member] | NPS Holdings Limited [Member] | |||
Cash flows from operating activities: | |||
Net income / (loss) | 6,736 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 17,284 | ||
Stock-based compensation | |||
(Gain) on disposal of assets | |||
Non-cash interest expense | 3,350 | ||
Deferred tax expense (benefit) | |||
Allowance for doubtful receivables | 2,402 | ||
Provision for obsolete service inventories | |||
Other operating activities, net | 1,442 | ||
Changes in operating assets and liabilities: | |||
(Increase) decrease in accounts receivable | (15) | ||
(Increase) in inventories | (2,080) | ||
(Increase) in prepaid expenses | (759) | ||
(Increase) in other current assets | (16,257) | ||
(Increase) decrease in other long-term assets and liabilities | (544) | ||
Increase (decrease) in accounts payable and accrued expenses | 7,335 | ||
Increase (decrease) in other current liabilities | 1,932 | ||
Net cash provided by operating activities | 20,826 | ||
Cash flows from investing activities: | |||
Capital expenditures | (9,861) | ||
Proceeds from disposal of assets | |||
Proceeds from the Company's Trust account | |||
Acquisition of business, net of cash acquired | (1,098) | ||
Other investing activities | 3,043 | ||
Net cash used in investing activities | (7,916) | ||
Cash flows from financing activities: | |||
Proceeds from long-term debt | 47,063 | ||
Repayments of long-term debt | |||
Net change in overdraft facilities | |||
Proceeds from short-term borrowings | |||
Proceeds from short-term borrowings | |||
Proceeds from issuance of shares | |||
Redemption of ordinary shares | |||
Payment of deferred underwriting fees | (164) | ||
Dividend paid | (48,210) | ||
Other financing activities, net | (4,429) | ||
Net cash provided by (used in) financing activities | (5,740) | ||
Effect of exchange rate changes on cash | (16) | ||
Net increase (decrease) in cash | 7,154 | ||
Cash and cash equivalents, beginning of period | $ 31,656 | 24,502 | |
Cash and cash equivalents, end of period | 31,656 | ||
Supplemental disclosure of cash flow information (also refer Note 3): | |||
Interest paid | 3,636 | ||
Income taxes paid | $ 345 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Description of Business | National Energy Services Reunited Corp. (“NESR,” the “Company,” “we,” “our,” “us” or similar terms) is a British Virgin Islands corporation headquartered in Houston, Texas. The Company, through its wholly-owned subsidiaries, NPS Holdings Limited (“NPS”) and Gulf Energy S.A.O.C. (“GES” and, together with NPS, the “Subsidiaries”) is a regional provider of services to the oil and gas industry in the Middle East and North Africa (“MENA”) and Asia Pacific regions. NESR was incorporated in the British Virgin Islands as a special purpose acquisition company on January 23, 2017 for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, or contractual control arrangement with, purchasing all or substantially all of the assets of, or engaging in any other similar business combination with one or more businesses or entities. On May 17, 2017, NESR sold 21,000,000 units, each consisting of one ordinary share and one warrant, in its initial public offering, generating gross proceeds of $210 million. Simultaneously with the closing of its initial public offering, NESR consummated the sale of 11,850,000 warrants (the “Private Warrants”) at a price of $0.50 per warrant in a private placement to its sponsor, NESR Holdings Ltd. (“NESR Holdings”), generating gross proceeds of $5.9 million. On May 30, 2017, in connection with the underwriters’ election to partially exercise their over-allotment option, NESR consummated the sale of an additional 1,921,700 units at $10.00 per unit and the sale of an additional 768,680 Private Warrants at $0.50 per warrant, generating total gross proceeds of $19.6 million. An aggregate amount of $229.2 million from the net proceeds of the sale of the units in the initial public offering and the Private Warrants was placed in a trust account (“Trust Account”) until the earlier of: (i) the consummation of a business combination or (ii) the distribution of the trust account. On June 6, 2018 (the “Closing Date”), NESR acquired all of the issued and outstanding equity interests of NPS and GES (the “Business Combination”). Subsequently, the proceeds held in the Trust Account aggregating $231.8 million (including interest) were released. Both NPS and GES are regional providers of services to the oil and gas industry in the MENA and Asia Pacific regions. Revenues are primarily derived from services provided during the drilling, completion and production phases of an oil or natural gas well. NPS operates in 12 countries with the majority of its revenues derived from operations in Saudi Arabia, Algeria, Qatar, UAE and Iraq. GES provides drilling equipment for rental and related services, well engineering services and directional drilling services imports, and sells oilfield equipment and renders specialized services to oil companies in Oman, Saudi Arabia, Algeria and Kuwait. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Basis of Presentation | The accompanying condensed consolidated interim financial statements of the Company have been prepared in accordance with U.S. GAAP for interim financial reporting purposes. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated interim financial statements should be read in conjunction with the Company’s Annual Report on Form 20-F for the year ended December 31, 2018 and Reports on Form 6-K for the quarterly periods ended March 31, 2019 and June 30, 2019. The Business Combination was accounted for under Accounting Standards Codification (“ASC”) Topic 805, Business Combination. Pursuant to ASC 805, NESR was determined to be the accounting acquirer based on evaluation of the facts and circumstances including: ● The transfer of cash by NESR; ● NESR’s executive management comprise the C-Suite of the combined company; ● NESR’s right to designate members of the board; and ● NESR initiated the Business Combination. As a result of the Business Combination, NPS and GES were acquirees and NPS was determined to be the accounting “Predecessor”. NPS was determined to be the accounting “Predecessor” as the Company expects to use the NPS platform to grow the business as it operates throughout the Middle East and Africa whereas GES is concentrated in Oman. Further, the market size of countries where NPS is operating is much larger than that of GES and the valuation and price paid for NPS was higher than that of GES. The Company’s financial statement presentation distinguishes a Predecessor for periods prior to the Closing Date. NESR is the “Successor” for periods after the Closing Date, which includes the consolidated financial results of both NPS and GES. The transactions were accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting for both NPS and GES that is based on the fair value of assets acquired and liabilities assumed. See Note 4, Business Combination, for further discussion on the Business Combination. As a result of the application of the acquisition method of accounting as of the Closing Date, the financial statements for the predecessor periods and for the successor period are presented on a different basis of accounting and are, therefore, not comparable. The historical information of NESR prior to the Business Combination has not been reflected in the Company’s financial statements prior to June 7, 2018, as it was not deemed the Predecessor. Statement of operations activity of NESR, being nominal in nature, prior to the closing of the Business Combination were recorded in the opening retained earnings as of June 7, 2018 and not presented separately. In the accompanying condensed consolidated interim financial statements, the successor periods are from June 7, 2018 to September 30, 2018 (“2018 Successor Period”), July 1, 2018 to September 30, 2018 (“2018 Successor Quarter”), January 1, 2019 to September 30, 2019 (“2019 Successor Period”), and July 1, 2019 to September 30, 2019 (“2019 Successor Quarter”) and the predecessor period is from January 1, 2018 to June 6, 2018 (“2018 Predecessor Period”). Emerging growth company The Company is an “emerging growth company,” as defined in Section 2(a) of the U.S. Securities Act of 1933 as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make a comparison of the Company’s condensed consolidated interim financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of estimates The preparation of condensed consolidated interim financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated interim financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include estimates made towards purchase price allocation for the acquisition of NPS and GES, allowance for doubtful accounts, impairment of property, plant and equipment, goodwill and intangible assets, estimated useful life of property plant and equipment and intangible assets, provision for inventories obsolescence, recoverability of unbilled revenue, provision for liabilities pertaining to unrecognized tax benefits, recoverability of deferred taxes and contingencies and actuarial assumptions in employee benefit plans. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated interim financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Summary of Significant Accounting Policies | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Supplemental cash flow information Non-cash transactions were as follows for the 2019 Period: ● Purchases of property, plant, and equipment in accounts payable at September 30, 2019 of $28.3 million, respectively, are not included under “Capital expenditures” within the condensed consolidated statement of cash flows. Recently issued accounting standards not yet adopted On August 28, 2018 the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) No 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to The Disclosure Requirements for Defined Benefit Plans.” ASU No. 2018-14 amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The update is effective for the Company for fiscal years ending after December 15, 2021. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. On August 28, 2018 the FASB issued ASU No 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” ASU No. 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820. The amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements.” ASU 2018-09 makes changes to clarify the Accounting Standards Codification, corrects unintended application of guidance, and makes minor improvements to the Accounting Standards Codification that are not expected to have a significant effect on current accounting practice. The amendments are effective for the Company for fiscal years beginning after December 15, 2019 and for interim periods in fiscal years beginning after December 15, 2020. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” ASU 2018-07 expands the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04 “Simplifying the Test for Goodwill.” The update amends Accounting Standard Codification No. 350 Intangibles - Goodwill and Other, provides guidance that simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step in today’s two-step impairment test under accounting topic 350. The amendments in this update will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2021. The Company does not expect the adoption of this standard to have an impact on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments”. The new standard amends the impairment model for trade receivables, net investments in leases, debt securities, loans and certain other instruments to utilize an expected loss methodology in place of the currently used incurred loss methodology. This pronouncement is effective for annual periods beginning after December 15, 2020, including interim periods within those annual periods. The Company is currently evaluating the provisions of the pronouncement and assessing the impact, if any, on its consolidated financial statements and related disclosures. In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases,” a new standard on accounting for leases. This update increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. At its July 17, 2019, Board meeting, the FASB tentatively deferred the effective date for the Company’s consolidated financial statements by one year to as of and for the year ending December 31, 2021 and for interim periods beginning in 2022. The FASB plans to issue a proposed ASU to incorporate this decision. The Company is currently evaluating the provisions of the pronouncement and assessing the impact, if any, on its consolidated financial statements and related disclosures. On August 6, 2018 the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” This ASU is intended to reduce costs and ease implementation of the lease standard for financial statement preparers. ASU 2018-11 provides a new transition method and a practical expedient for separating components of a contract. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Additionally, the amendments in ASU 2018-11 provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606). At its July 17, 2019, Board meeting, the FASB tentatively deferred the effective date for the Company’s consolidated financial statements by one year to as of and for the year ended December 31, 2021 and for interim periods beginning in 2022. The FASB plans to issue a proposed ASU to incorporate this decision. The Company is currently evaluating the provisions of the pronouncement and assessing the impact, if any, on its consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which outlines a single comprehensive model for entities to use in accounting for revenue. ASU 2014-09 supersedes the revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. ASU 2014-09 sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers,” which deferred the effective date of ASU 2014-09 for all entities by one year and is effective for the Company’s consolidated financial statements as of and for the year ending December 31, 2019 and for interim periods beginning in 2020. The Company is currently analyzing the provisions of the pronouncement, assessing the impact of the new standard on revenue contracts, and evaluating prospective disclosures as compared to other industry participants. The Company expects to substantially complete its evaluation and document its conclusions during the fourth quarter of fiscal 2019. The Company anticipates utilizing the modified retrospective approach for adopting the new standard. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Business Combination | 4. BUSINESS COMBINATION On June 6, 2018, NESR consummated the Business Combination and related financing transactions, acquiring all of the issued and outstanding equity interests of NPS and GES. Accounting treatment The Business Combination is accounted for under ASC 805. Pursuant to ASC 805, NESR has been determined to be the accounting acquirer. Refer to Note 2, Basis of Presentation, for more information. NPS and GES both constitute businesses, with inputs, processes, and outputs. Accordingly, the acquisition of NPS and GES both constitute the acquisition of a business for purposes of ASC 805 and due to the change in control of each of NPS and GES was accounted for using the acquisition method. NESR recorded the fair value of assets acquired and liabilities assumed from NPS and GES. The following table summarizes the final allocation of the purchase price (in thousands): Allocation of consideration NPS GES (In thousands) Cash and cash equivalents $ 31,656 $ 5,206 Accounts receivable 55,392 18,013 Unbilled revenue 41,378 45,343 Inventories 33,652 31,092 Current assets 19,463 8,719 Property, plant and equipment 216,094 91,444 Intangible assets 94,000 53,000 Deferred tax assets - 554 Other assets 7,457 1,254 Total identifiable assets acquired 499,092 254,625 Accounts payable 26,457 31,113 Accrued expenses 28,685 25,388 Current portion of loans and borrowings - 16,368 Short-term borrowings 55,836 9,000 Current liabilities 3,665 15,449 Loans and borrowings 149,399 25,098 Deferred tax liabilities 24,098 8,053 Other liabilities 22,363 9,910 Non-controlling interest (2,841 ) 837 Net identifiable liabilities acquired 307,662 141,216 Total fair value of net assets acquired 191,328 113,409 Goodwill 399,325 175,439 Total gross consideration $ 590,755 $ 288,848 In the 2019 Successor Period, the Company updated its valuation of certain identifiable assets and liabilities. These measurement period changes resulted in an increase of $3.2 million to goodwill in the 2019 Successor Period as compared to the amounts recorded as of December 31, 2018. For NPS, current liabilities increased by $3.2 million in the 2019 Successor Period due to income tax return-to-accrual adjustments that resulted from the filing of the 2018 income tax returns. For GES, other liabilities increased by $1.1 million due to an additional provision for uncertain tax positions. The impact of these adjustments on the 2019 Successor Period was not material to the condensed consolidated interim financial statements. Intangible assets were identified that met either the separability criterion or the contractual-legal criterion described in ASC 805. The final allocation to intangible assets is as follows (in thousands): Intangible assets Fair Value NPS GES Total Useful Life (In thousands) Customer contracts $ 77,000 $ 44,500 $ 121,500 10 years Trademarks and trade names 17,000 8,500 25,500 8 years Total intangible assets $ 94,000 $ 53,000 $ 147,000 Goodwill $574.8 million has been allocated to goodwill as of September 30, 2019. Goodwill represents the excess of the gross consideration transferred over the fair value of the underlying net tangible and identifiable definite-lived intangible assets acquired. The goodwill is not amortizable for tax purposes. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill. Intangible assets not recognized apart from goodwill consist primarily of the strong market positions and the assembled workforces at the Subsidiaries. In accordance with FASB ASC Topic 350, “ Goodwill and Other Intangible Assets Unaudited pro forma information The following table summarizes the supplemental consolidated results of the Company on an unaudited pro forma basis, as if the Business Combination had been consummated on January 1, 2017 for the Predecessor Period ended June 6, 2018 (in thousands): Period from Revenues $ 394,495 Net income 8,971 These pro forma results were based on estimates and assumptions, which the Company believes are reasonable. They are not the results that would have been realized had the Company been a combined company during the periods presented and are not necessarily indicative of consolidated results of operations in future periods. The pro forma results include adjustments primarily related to purchase accounting adjustments. Acquisition costs and other non-recurring charges incurred in connection with the Business Combination are included in the earliest period presented. |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Accounts Receivable | The following table summarizes the accounts receivable of the Company as of the period end dates set forth below (in thousands): September 30, 2019 December 31, 2018 Trade receivables $ 108,394 $ 63,329 Less: allowance for doubtful accounts (1,025 ) (693 ) Total $ 107,370 $ 62,636 Trade receivables relate to the sale of services, for which credit is extended based on our evaluation of the customer’s credit-worthiness. The gross contractual amounts of trade receivables at September 30, 2019 and December 31, 2018 were $113.2 million and $69.1 million, respectively. Movement in the allowance for doubtful accounts is as follows (in thousands): Period from January 1, 2019 to September 30, 2019 Period from June 7, 2018 to September 30, 2018 Period from January 1, 2018 to June 6, 2018 Successor (NESR) Predecessor (NPS) Allowance for doubtful accounts at beginning of period $ (693 ) - $ (4,106 ) Add: additional allowance for the year (920 ) - (2,402 ) Less: write-off of doubtful accounts 588 - - Allowance for doubtful accounts at end of period $ (1,025 ) - $ (6,508 ) Period from July 1, 2019 to September 30, 2019 Period from July 1, 2018 to September 30, 2018 Successor (NESR) Allowance for doubtful accounts at beginning of period $ (450 ) $ - Add: additional allowance for the year (444 ) - Less: write-off of doubtful accounts (131 ) - Allowance for doubtful accounts at end of period $ (1,025 ) $ - |
Service Inventories
Service Inventories | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Service Inventories | 6. SERVICE INVENTORIES The following table summarizes the service inventories of the Company as of the period end dates set forth below (in thousands): September 30, December 31, Spare parts $ 36,118 $ 29,928 Chemicals 16,420 14,803 Raw materials 3,452 200 Consumables 18,438 14,375 Total 74,428 59,306 Less: allowance for obsolete and slow-moving inventories (2,087 ) (1,155 ) Total $ 72,341 $ 58,151 |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Property, Plant and Equipment | 7. PROPERTY, PLANT, & EQUIPMENT Property, plant and equipment, net of accumulated depreciation, of the Company consists of the following as of the period end dates set forth below (in thousands): Estimated Useful Lives (in years) September 30, December 31, Buildings and leasehold improvements 5 to 25 $ 24,635 $ 21,572 Drilling rigs, plant and equipment 3 to 15 370,227 278,249 Furniture and fixtures 5 1,194 1,348 Office equipment and tools 3 to 6 34,392 31,568 Vehicles and cranes 5 to 8 6,130 4,179 Less: Accumulated depreciation (79,848 ) (32,522 ) Land 5,104 5,104 Capital work in progress 21,651 19,229 Total $ 383,485 $ 328,727 The Company recorded depreciation expense of $47.7 million, $17.2 million, $19.0 million, $14.2 million and $9.3 million, in the 2019 Successor Period, 2019 Successor Quarter, 2018 Successor Period, 2018 Successor Quarter, and 2018 Predecessor Period, respectively, in the Condensed Consolidated Statement of Operations. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Goodwill and Intangible Assets | 8. GOODWILL AND INTANGIBLE ASSETS Goodwill Changes in the carrying amount of goodwill of the Company between December 31, 2018 and September 30, 2019 are as follows (in thousands): Production Services Drilling and Evaluation Services Goodwill Balance as of December 31, 2018 $ 416,494 154,046 570,540 Measurement period adjustments 3,152 1,072 4,224 Balance as of September 30, 2019 $ 419,646 155,118 574,764 Intangible assets subject to amortization, net The following is the weighted average amortization period for intangible assets of the Company subject to amortization (in years): Amortization Customer contracts 10 Trademarks and trade names 8 Total intangible assets 9.6 The details of our intangible assets subject to amortization are set forth below (in thousands): September 30, 2019 December 31, 2018 Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Customer contracts $ 121,500 $ (16,202 ) $ 105,298 $ 121,500 $ (7,088 ) $ 114,412 Trademarks and trade names 25,500 (4,250 ) 21,250 25,500 (1,860 ) 23,640 Total intangible assets $ 147,000 $ (20,452 ) $ 126,548 $ 147,000 $ (8,948 ) $ 138,052 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Debt | 9. DEBT Short-term debt The Company’s short-term debt obligations consist of the following (in thousands): September 30, December 31, Modified Hana Loan $ - $ 10,000 Other short-term borrowings 28,261 21,817 Short-term debt, excluding current installments of long-term debt $ 28,261 $ 31,817 Short-term borrowings primarily consist of financings for capital equipment purchases. Hana Loan and Modified Hana Loan agreements In connection with the Business Combination, on June 5, 2018, NESR entered into a loan agreement with Hana Investments pursuant to which NESR borrowed $50.0 million on an unsecured basis (the “Hana Loan”). The Hana Loan had a scheduled maturity date of December 17, 2018 and was interest bearing, accruing interest at the greater of (i) an amount equal to $4.0 million or prorated if the loan was prepaid; and (ii) at a rate per annum equal to one-month Intercontinental Exchange LIBOR, adjusted monthly on the first day of each calendar month, plus a margin of 2.25% payable on maturity or prepaid. The interest was payable in NESR ordinary shares or cash at the election of the lender. The loan was subject to an origination fee of $0.6 million payable in NESR ordinary shares at $11.244 per share, which resulted in the issuance of 53,362 shares at closing of the Business Combination. During 2018, the Company paid $44 million for both principal and interest in cash on the Hana Loan and entered into an extension (the “Modified Hana Loan”) for the balance of the loan which was fully repaid with cash during January 2019. The terms and conditions contained in the Hana Loan remained unchanged in the Modified Hana Loan. Long-term debt The Company’s long-term debt obligations consist of the following (in thousands): September 30, December 31, Secured Term Loan $ 300,000 $ - Secured Revolving Credit Facility 50,000 Murabaha credit facility - 150,000 APICORP bilateral term facility - 46,875 SABB bilateral term facility - 43,333 Term loan Ahli Bank - 2,382 NBO loan $60,000 - 23,333 NBO loan $20,000 - 4,899 Less: unamortized debt issuance costs (4,615 ) (557 ) Total loans and borrowings 345,385 270,265 Less: current portion of long-term debt (7,500 ) (45,093 ) Long-term debt, net unamortized debt issuance costs and excluding current installments $ 337,885 $ 225,172 Secured Facilities Agreement On May 5, 2019, the Company entered into a $450.0 million term loan, revolving credit, and working capital facilities agreement (the “Secured Facilities Agreement”) with Arab Petroleum Investments Corporation (“APICORP”) – Bahrain Banking Branch, HSBC Bank Middle East Limited (“HSBC”), Mashreqbank PSC and Saudi British Bank acting as initial mandated lead arrangers and bookrunners, Mashreqbank PSC acting as global agent, APICORP and Mashreqbank PSC acting as security agents, NPS Bahrain for Oil & Gas Wells Services WLL, and its Kuwait branch, Gulf Energy SAOC and National Petroleum Technology Company as borrowers, and HSBC, Mashreqbank PSC, APICORP and Saudi British Bank, as the “Lenders.” Upon consummation of this transaction, the Company settled its existing debt obligations with the exception of a $30.4 million working capital facility with HSBC, described below, used for the issuance of letters of guarantee and letters of credit. On May 23, 2019 and June 20, 2019, the Company entered into $35.0 million and $40.0 million Incremental Facilities Agreements, respectively, increasing the size of the Secured Facilities Agreement to $485.0 million and $525.0 million, respectively. The $525.0 million Secured Facilities Agreement consists of a $300.0 million term loan due 2025 (the “Term Loan” or “Secured Term Loan”), a $65.0 million Revolving Credit Facility (“RCF” or “Secured Revolving Credit Facility”) due 2023, and a $160.0 million working capital facility. Borrowings under the Term Loan and RCF incur interest at the rate of three-month LIBOR plus 2.4% to 2.7% per annum, varying based on the Company’s Net Debt / EBITDA ratio. As of September 30, 2019, this results in an interest rate of 4.6%. The Company has drawn $300 million of the Term Loan and $50 million of the RCF as of September 30, 2019. The RCF was obtained for general corporate and working capital purposes including capital expenditure related requirements and acquisitions (including transaction related expenses). The RCF requires the payment of a commitment fee each quarter. The commitment fee is computed at the rate of 0.60% per annum based on the average daily amount by which the borrowing base exceeds the outstanding borrowings during each quarter. Under the terms of the RCF, the final settlement is due by May 6, 2023. The Company is required to repay the amount of any principal balance outstanding together with any unpaid accumulated interest at three-month LIBOR plus 2.4% to 2.7% per annum, varying based on the Company’s Net Debt / EBITDA ratio. The Company is permitted to make any prepayment under this RCF in multiples of $5.0 million during this 4-year period up to May 6, 2023. Any unutilized balances from the RCF can be drawn down again during the 4-year tenure at the same terms. The Secured Facilities Agreement also includes a working capital facility of $160.0 million for issuance of letters of guarantee and letters of credit and refinancing letters of credit over a period of one year, which carries an interest rate equal to three-month U.S. Dollar LIBOR for the applicable interest period, plus a margin of 1.00% to 1.25% per annum. As of September 30, 2019, the Company had utilized $130.7 million under this working capital facility and the balance of $29.3 million was available to the Company. The Company has also retained legacy bilateral working capital facilities from HSBC totaling $30.4 million in Qatar ($16.4 million), in UAE ($13.9 million) and Kuwait ($0.1 million). As of September 30, 2019, the Company had utilized $27.5 million under this working capital facility and the balance of $2.9 million was available to the Company. Amounts utilized entails that Company has utilized both the facilities by issuing letters of credit to its vendors under both working capital facilities but it still remains off balance sheet until drawn. Once the Company draws the letter of credit to settle any vendor dues, it is classified as short-term borrowings until repaid. The Secured Facilities Agreement includes covenants that specify maximum leverage (Net Debt / EBITDA) up to 3.50, minimum debt service coverage ratio (Cash Flow / Debt Service) of at least 1.25, and interest coverage (EBITDA / Interest) of at least 4.00. The Company is in compliance with all financial covenants as of September 30, 2019. Other debt information Scheduled principal payments of long-term debt for periods subsequent to September 30, 2019 are as follows (in thousands): 2019 $ - 2020 15,000 2021 37,500 2022 45,000 2023 95,000 2024 45,000 Thereafter 112,500 Total $ 350,000 |
Fair Value Accounting
Fair Value Accounting | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Fair Value Accounting | The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, unbilled revenue, accounts payable, loans and borrowings and an embedded derivative. The fair value of the Company’s financial instruments approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature. The fair value of the Company’s long-term borrowings also approximates the carrying amounts as these loans are carrying interest at the market rate. |
Employee Benefits
Employee Benefits | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Employee Benefits | 11. EMPLOYEE BENEFITS Defined benefit plan The Company provides defined benefit plan of severance pay to the eligible employees. The severance pay plan provides for a lump sum payment to employees on separation (retirement, resignation, death while in employment or on termination of employment) of an amount based upon the employees last drawn salary and length of service, subject to the completion of minimum service period (1-2 years) and taking into account the provisions of local applicable law or as per employee contract. The Company records annual amounts relating to these long-term employee benefits based on calculations that incorporate various actuarial and other assumptions, including discount rates, mortality, assumed rates of return, compensation increases and turnover rates. The Company reviews its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is appropriate to do so. The effect of modifications to those assumptions is recorded in the Condensed Consolidated Statement of Operations. The Company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience and market conditions. The net periodic costs are recognized as employees render the services necessary to earn these benefits. The Components of net period benefit cost were as follows (in thousands): Period from September 30, 2019 Period from June 7, 2018 to September 30, 2018 Period from June 6, 2018 Successor (NESR) Predecessor (NPS) Service Cost $ 2,255 $ 1,153 $ 866 Interest Cost 551 208 168 Other 77 70 375 Net Cost $ 2,883 $ 1,431 $ 1,409 Period from September 30, 2019 Period from September 30, 2018 Successor (NESR) Service Cost $ 815 $ 964 Interest Cost 375 178 Other 22 81 Net Cost $ 1,212 $ 1,223 The Company made contributions to its defined benefit plan of $1.6 million, $0.5 million, $0.9 million, $0.7 million and $0.7 million, in the 2019 Successor Period, 2019 Successor Quarter, 2018 Successor Period, 2018 Successor Quarter, and 2018 Predecessor Period, respectively, in the Condensed Consolidated Statement of Operations. The scheme of the Company is unfunded. Defined contribution plan The Company also provides a defined contribution retirement plan and occupational hazard insurance for Omani employees. Contributions to a defined contribution retirement plan and occupational hazard insurance for Omani employees in accordance with the Omani Social Insurances Law are recognized as an expense in the Condensed Consolidated Statement of Operations as incurred. Total contributions were $2.4 million, $0.8 million, $0.8 million and $0.5 million, for the 2019 Successor Period, 2019 Successor Quarter, 2018 Successor Period, and 2018 Successor Quarter, respectively, in the Condensed Consolidated Statement of Operations. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Share-Based Compensation | 12. SHARE-BASED COMPENSATION On May 18, 2018, the NESR shareholders approved the NESR 2018 Long Term Incentive Plan (the “LTIP”), effective upon the closing of the Business Combination. The board of directors previously approved the LTIP on February 9, 2018, including the performance criteria upon which performance goals may be based. A total of 5,000,000 ordinary shares are reserved for issuance under the LTIP. Grants to members of our Board of Directors are time-based and vest ratably over a 1-year period. Grants to our employees are time-based and vest ratably over a 3-year period. The purpose of the LTIP is to enhance NESR’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions to NESR by providing these individuals with equity ownership opportunities. The Company intends to use share-based awards to reward long-term performance of the executive officers. The Company believes that providing a meaningful portion of the total compensation package in the form of share-based awards will align the incentives of its executive officers with the interests of its shareholders and serve to motivate and retain the individual executive officers. The following table sets forth the LTIP activity for the periods indicated: Number of Weighted Average Grant Date Fair Value per Share Unvested at December 31, 2018 (NESR - Successor) 725,200 $ 10.94 Granted 1,184,000 $ 9.86 Vested (250,310 ) $ 10.32 Forfeited (106,000 ) $ 10.87 Unvested at September 30, 2019 (NESR - Successor) 1,552,890 $ 10.22 Number of Weighted Average Grant Date Fair Value per Share Unvested at June 30, 2019 (NESR - Successor) 1,600,200 $ 10.59 Granted 214,000 $ 7.60 Vested (250,310 ) $ 10.32 Forfeited (11,000 ) $ 10.36 Unvested at September 30, 2019 (NESR - Successor) 1,552,890 $ 10.22 At September 30, 2019, the Company had unrecognized compensation expense of $13.4 million related to unvested LTIP to be recognized on a straight-line basis over a weighted average remaining period of 2.26 years. Stock-based compensation has been recorded in the Condensed Consolidated Statement of Operations as follows for the periods presented: Cost of services Selling, general and administrative expense Total 2019 Successor Period $ 1,813,635 $ 2,243,336 $ 4,056,971 2019 Successor Quarter 757,779 1,187,479 1,945,258 2018 Successor Period 165,591 165,592 331,183 2018 Successor Quarter 165,591 165,592 331,183 There is no income tax impact of the stock-based compensation recorded by the Company. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Commitments and Contingencies | Capital expenditure commitments The Company was committed to incur capital expenditures of $15.7 million at September 30, 2019. These commitments are expected to be settled during 2019 and 2020. Operating lease commitments Future minimum lease commitments under non-cancellable operating leases with initial or remaining terms of one year or more at September 30, 2019, are payable as follows (in thousands): 2019 $ 6,262 2020 24,814 2021 19,224 2022 3,508 2023 2,791 2024 2,792 Thereafter 4,425 Total $ 63,816 The Company recorded rental expense of $80.9 million, $24.5 million, $31.2 million, $25.2 million, and $19.5 million, in the 2019 Successor Period, 2019 Successor Quarter, 2018 Successor Period, 2018 Successor Quarter, and 2018 Predecessor Period, respectively, in the Condensed Consolidated Statement of Operations. Other commitments The Company has outstanding letters of credit amounting to $28.2 million and $10.3 million as of September 30, 2019 and December 31, 2018, respectively. In the normal course of business with customers, vendors and others, we have entered into off-balance sheet arrangements, such as surety bonds for performance, and other bank issued guarantees, including cash margin guarantees, which totaled $110.5 million and $41.4 million as of September 30, 2019 and December 31, 2018, respectively. A liability is accrued when a loss is both probable and can be reasonably estimated. None of the off-balance sheet arrangements either has, or is likely to have, a material effect on our condensed consolidated interim financial statements. As of September 30, 2019, and December 31, 2018, the Company had a liability of $6.7 million and $6.7 million, respectively, on the consolidated balance sheet included in the line item “Other liabilities” reflecting various liabilities associated with the 2014 acquisition of NPS Bahrain. Registration rights The Company is a party to various registration rights agreements with holders of its securities. These registration rights agreements provide certain holders with demand and “piggyback” registration rights, and holders have other rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The registration rights are subject to various limitations. The Company generally bears the expenses incurred in connection with the filing of any such registration statements. On July 16, 2018, the Company filed a registration statement on Form F-3 pursuant to certain registration rights agreements, which was declared effective on August 22, 2018. On February 22, 2019, the Company filed another registration statement on Form F-3 pursuant to certain registration rights agreements, which was declared effective on March 4, 2019. Legal proceedings The Company is involved in certain legal proceedings which arise in the ordinary course of business and the outcomes of which are currently subject to uncertainties and therefore the probability of a loss, if any, being sustained and an estimate of the amount of any loss are difficult to ascertain. Consequently, it is not possible to make a reasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of these disputes. The Company is contesting these claims/disputes and the Company’s management currently believes that provision against these potential claims is not required as the ultimate outcome of these disputes would not have a material impact on the Company’s business, financial condition or results of operations. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Equity | 14. EQUITY The Company is authorized to issue an unlimited number of ordinary shares, no par value, and preferred shares, no par value. The Company’s ordinary shares are entitled to one vote for each share. As of September 30, 2019, there were 87,147,089 ordinary shares outstanding, 22,921,700 public warrants and 12,618,680 private warrants. Each warrant entitles the registered holder to purchase one-half of one ordinary share at a price of $5.75 per half share at any time commencing on July 6, 2018 (30 days after the completion of the Business Combination). The warrants must be exercised for whole ordinary shares. The warrants expire on June 6, 2023 (five years after the completion of the Business Combination). The private warrants are identical to the public warrants except that such warrants are exercisable for cash (even if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not effective) or on a cashless basis, at the holder’s option, and will not be redeemable so long as they are still held by the initial purchasers or their affiliates. No public warrants are exercisable for cash unless there is an effective and current registration statement covering the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary shares. The Company is authorized to issue an unlimited number of preferred shares divided into five classes with designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors. As of September 30, 2019, there were no preferred shares issued or outstanding. At the Closing Date, there were 11,730,425 ordinary shares outstanding that were not subject to possible redemption and 16,921,700 ordinary shares that were subject to possible redemption as a result of the Business Combination that were recorded outside of permanent equity as a liability on NESR’s consolidated balance sheet. On the Closing Date, the 16,921,700 ordinary shares were reclassed to permanent equity at the fair value of $165.2 million (redemption value of $10.11 per share less $0.35 underwriting fee per share or $9.76 per share). Of the ordinary shares reclassed, 1,916,511 ordinary shares were redeemed for $19.4 million ($10.11 per share). In connection with the completion of the Business Combination, $3.7 million in NESR ordinary shares (307,465) was issued for underwriting fees. Pursuant to the NPS Stock Purchase Agreement dated November 12, 2017, Hana Investments exchanged its portion of the acquired NPS shares, totaling 83,660,878 shares, for 13,340,448 NESR ordinary shares, including accrued interest, at the time that NESR completed the Business Combination. At closing of the Business Combination, NESR purchased the remaining outstanding NPS shares with $292.8 million in cash and 11,318,828 NESR ordinary shares, subject to certain adjustments. Also, on the Closing Date, the Company paid interest totaling $4.7 million in stock (418,001 ordinary shares) to Hana Investments. As discussed in Note 9, Debt, on June 5, 2018, in connection with the Business Combination, NESR entered into the Hana Loan with Hana Investments pursuant to which NESR borrowed $50.0 million on an unsecured basis. The loan was subject to an origination fee of $0.6 million payable in NESR ordinary shares at $11.244 per share, which resulted in the issuance of 53,362 shares at closing of the Business Combination. In connection with the Business Combination, on June 5, 2018, the Company entered into a Relationship Agreement with Hana Investments (the “Olayan Relationship Agreement”), to set out certain rights to which Hana Investments will be entitled as a shareholder of the Company and certain obligations of the Company and NESR Holdings. The Company reimbursed Hana Investments for transaction fees and expenses in the amount of $2.1 million through the issuance of NESR ordinary shares at a conversion rate of $11.244 per share (213,447 ordinary shares) at closing of the Business Combination. On June 6, 2018, NESR acquired 88% of the outstanding shares of GES from certain owners of GES in exchange for the issuance of 25,309,848 NESR ordinary shares, and NESR Holdings acquired the remaining 12% of the outstanding shares of GES for a total cash purchase price of $29.3 million as discussed in Note 4, Business Combination. NESR Holdings organized financing of the acquisition through certain loan contracts and assigned the GES shares which it acquired to NESR, and NESR assumed the obligation to satisfy the loan contracts. NESR elected to issue NESR ordinary shares to satisfy the loan contracts and issued a total of 3,036,381 NESR ordinary shares in settlement of the loan contracts and accrued interest. In connection with the Business Combination, on April 27, 2018, the Company entered into the Forward Purchase Agreement with MEA Energy Investment Company 2 Ltd. (the “Backstop Investor”), pursuant to which the Company agreed to sell up to $150 million of the Company’s ordinary shares to the Backstop Investor or its designees and commonly controlled affiliates. On the Closing Date, the Company drew down $48,293,763 under the primary placement of the Forward Purchase Agreement and issued 4,829,375 ordinary shares to the Backstop Investor. In February 2019, pursuant to the NPS Stock Purchase Agreement, the Company issued to the NPS selling shareholders 1,300,214 NESR ordinary shares to satisfy its obligation in connection with the NPS Equity Stock Earn-Out, a contingent consideration obligation arising from its acquisition of NPS in 2018 and based on the 2018 EBITDA (earnings before income taxes, depreciation and amortization) of NESR satisfying scheduled financial thresholds. As of year-end 2018, the Company presented its $10.5 million obligation under the terms of the NPS Equity Stock Earn-Out arrangement as part of Other current liabilities. It was reclassified to Additional paid in capital in the first quarter of 2019 when the shares were issued. |
Income Per Share
Income Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Income Per Share | Basic income per common share was computed using the two-class method by dividing basic net income attributable to common shareholders by the weighted-average number of common shares outstanding. Diluted income per common share was computed using the two-class method by dividing diluted net income attributable to common shareholders by the weighted-average number of common shares outstanding plus dilutive common equivalent shares. Dilutive common equivalent shares include all in-the-money outstanding contracts to issue common shares as if they were exercised or converted. 2019 Successor Period and 2019 Successor Quarter The following tables provide a reconciliation of the data used in the calculation of basic and diluted ordinary shares outstanding for the period (in thousands except shares and per share amounts). Date Transaction Detail Change in Period from December 31, 2018 Beginning Balance 85,562,769 January 9, 2019 Other 33,796 32,806 February 19, 2019 NPS equity stock earn-out 1,300,214 1,300,214 August 14, 2019 Restricted stock vesting 250,310 43,094 September 30, 2019 Ending Balance 86,938,883 Date Transaction Detail Change in Period from Outstanding June 30, 2019 Beginning Balance 86,896,779 August 14, 2019 Restricted stock vesting 250,310 127,876 September 30, 2019 Ending Balance 87,024,655 Period from January 1, 2019 to Period from July 1, 2019 to September 30, 2019 September 30, 2019 Shares for Use in Allocation Shares for Use in Allocation to Participating Earnings to Participating Earnings Weighted average ordinary shares outstanding $ 86,938,883 $ 87,024,655 Non-vested, participating restricted shares 1,382,896 1,571,126 Shares for use in allocation of participating earnings $ 88,321,779 $ 88,595,781 Basic earnings per share (EPS): Period from September 30, 2019 Period from July 1 to September 30, 2019 Net income $ 35,138 $ 10,608 Less dividends to: - - Ordinary Shares - - Non-vested participating shares - - Undistributed Successor Period Earnings $ 35,138 $ 10,608 Allocation of earnings to Ordinary Shares $ 34,588 $ 10,420 Allocation of earnings to Nonvested Shares 550 188 Ordinary Shares Ordinary Shares Distributed Earnings $ - $ - Undistributed Earnings 0.40 0.12 Total $ 0.40 $ 0.12 Diluted earnings per share (EPS): Period from January 1 to Period from July 1 to Ordinary shares Undistributed & distributed earnings to ordinary shareholders Ordinary shares EPS Undistributed & distributed earnings to ordinary shareholders Ordinary shares EPS As reported — basic $ 34,588 88,321,779 $ 0.40 $ 10,420 88,595,781 $ 0.12 Add-back: Undistributed earnings allocated to nonvested shareholders 550 188 12,618,680 Private Warrants $5.75 per half share (anti-dilutive) - - 22,921,700 Public Warrants $5.75 per half share (anti-dilutive) - - Less: Undistributed earnings reallocated to nonvested shareholders (550 ) (188 ) Diluted EPS — Ordinary shares $ 34,588 88,321,779 $ 0.40 $ 10,420 88,595,781 $ 0.12 Warrants that could be converted into as many as 17,770,190 ordinary shares are excluded from diluted EPS as they are anti-dilutive. 2018 Successor Period and 2018 Successor Quarter The following table provides a reconciliation of the data used in the calculation of basic and diluted common shares outstanding for the periods as tabulated below: Basic EPS: Date Transaction Detail Change in Total Shares Outstanding 12/31/2017 Beginning balance 11,730,425 6/6/2018 Shares issued to Backstop Investor 4,829,375 16,559,800 6/6/2018 Shares issued for IPO underwriting fees 307,465 16,867,265 6/6/2018 Shares issued to NPS/GES 53,690,315 70,557,580 6/6/2018 Reclassification of shares previously subject to redemption less redeemed shares 15,005,189 85,562,769 6/30/2018 Ending balance 85,562,769 Diluted EPS: Weighted avg units outstanding 85,562,769 Dilutive common shares 277,543 Weighted avg dilutive units outstanding 85,840,312 The following table sets forth the calculation of basic and diluted earnings per common share for the periods presented: Period from Period from July 1 to June 6 to September 30, 2018 September 30, 2018 Weighted average basic common shares outstanding 85,562,769 85,562,769 Dilutive potential common shares from grant of restricted stock units 349,946 277,543 Weighted average dilutive common shares outstanding 85,912,715 85,840,312 Basic: Net Income 16,110,000 12,362,000 Less: Earnings allocated to participating securities - - Net income available to basic common shares 16,110,000 12,362,000 Basic earnings per common share 0.19 0.14 Diluted: Net Income 16,110,000 12,362,000 Less: Earnings allocated to participating securities - - Net income available to diluted common shares 16,110,000 12,362,000 Diluted earnings per common share 0.19 0.14 2018 Predecessor Period The following table sets forth the calculation of basic and diluted earnings per common share for the periods presented (in thousands except shares and per share amounts): 2018 Period from January 1 to June 6, 2018 Weighted average basic common shares outstanding 348,524,566 Dilutive potential common shares 21,475,434 Weighted average dilutive common shares outstanding 370,000,000 Basic: Net Income 6,736 Less: Earnings allocated to participating securities 192 Net income available to basic common shares 6,928 Basic earnings per common share 0.02 Diluted: Net Income 6,736 Less: Earnings allocated to participating securities 181 Net income available to diluted common shares 6,917 Diluted earnings per common share 0.02 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Income Taxes | 16. INCOME TAXES NESR is a holding company incorporated in the British Virgin Islands which imposes a zero percent statutory corporate income tax rate on income generated outside of the British Virgin Islands. The Subsidiaries operate in multiple tax jurisdictions throughout the MENA and Asia Pacific regions. NPS is based in the Emirate of Dubai in the UAE where no federal taxation exists and operates in 12 countries, where statutory tax rates generally vary from 0% to 35%. GES is based in the Sultanate of Oman, which has a 15% statutory corporate income tax rate, and also operates in Saudi Arabia, Algeria and Kuwait. The Company’s effective tax rate was 24.5%, 27.4%, 19.5%, 19.8% and 25.7%, in the 2019 Successor Period, 2019 Successor Quarter, 2018 Successor Period, 2018 Successor Quarter, and 2018 Predecessor Period, respectively, in the Condensed Consolidated Statement of Operations. The tax rates for the successor periods have varied from 19.5% to 27.4%, with differences primarily attributable to revenue mix by country between periods and the impact of revisions to the forecasted estimated annual effective tax rate used to determine interim period income tax provisions. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Related Party Transactions | Mubadarah Investment LLC (“Mubadarah”) GES leases office space in a building it owns in Muscat, Oman to Mubadarah along with other Mubadarah group entities (collectively, the “Mubadarah group entities”). GES charges rental income to the Mubadarah group entities for the occupation of the office space, based on usage. Rental income charged by GES to the Mubadarah group entities amounted to $168,000, $49,000, $57,000 and $43,000 in the 2019 Successor Period, 2019 Successor Quarter, 2018 Successor Period, and 2018 Successor Quarter, respectively, in the Condensed Consolidated Statement of Operations. The outstanding balance of receivables from Mubadarah was $1.3 million at September 30, 2019. Mubadarah is owned by Hilal Al Busaidy and Yasser Al Barami, and, collectively with Mubadarah, they own 19.7% of the Company. Prime Business Solutions LLC (“PBS”) PBS is 100% owned by Mubadarah Business Solutions LLC and is involved in the development and maintenance of Enterprise Resource Planning (“ERP”) systems. PBS has developed and implemented the GEARS (ERP) system for GES and is currently engaged to maintain it. GES has paid any maintenance fees to PBS totaling $209,000, $209,000, $0, and $0 in the 2019 Successor Period, 2019 Successor Quarter, 2018 Successor Period, and 2018 Successor Quarter, respectively. Key Management and Founders Hilal Al Busaidy and Yasser Al Barami are both founding shareholders of GES. Certain shares owned by them were converted into NESR ordinary shares as part of the Business Combination. |
Reportable Segments
Reportable Segments | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Reportable Segments | 18. REPORTABLE SEGMENTS Operating segments are components of an enterprise where separate financial information is available that are evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company reports segment information based on the “management” approach and its CODM is its Chief Executive Officer. The Company’s services are similar to one another in that they consist of oilfield services and related offerings, whose customers are oil and gas companies. The results of operations of the service offerings are regularly reviewed by the CODM for the Company for the purposes of determining resource and asset allocation and assessing performance. The Company has determined that it has two reportable segments, Production Services and Drilling and Evaluation Services. Management evaluates the operating results of its reportable segments primarily based on revenue and segment EBITDA. The Company defines EBITDA as net income adjusted for interest expense, depreciation and amortization, and income tax benefit or expense. Segment EBITDA does not include general corporate expenses as these expenses are not allocated to the Company’s reportable segments and not reported to the Company’s CODM. Segment EBITDA is not a measure of financial performance under U.S. GAAP and should not be considered an alternative to net income, the most directly comparable U.S. GAAP measure or any other measure of financial performance presented in accordance with U.S. GAAP. Our calculation of Segment EBITDA may not be comparable to that reported by other companies. The Company believes that the presentation of Segment EBITDA enables the Company and its shareholders to better assess each segment’s operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider this non-U.S. GAAP measure in the context of the Company’s U.S. GAAP results. Production Services that are offered depend on the well life cycle in which the services may fall. They include, but are not limited to, the following types of service offerings: coil tubing, stimulation and pumping, nitrogen services, completions, pipelines, cementing, laboratory services and filtration services. Drilling and Evaluation Services generates its revenue from the following service offerings: drilling and workover rigs, rig services, drilling services and rentals, fishing and remedials, directional drilling, turbines drilling, drilling fluids, wireline logging services, slickline services and well testing services. The Company’s operations and activities are located within certain geographies, primarily the MENA region and the Asia Pacific region, which includes Malaysia, Indonesia and India. In accordance with FASB ASC 280 - Segment Reporting, information on revenues and long-lived assets of the operations of the Company are disclosed below (in thousands): Revenue from operations Successor (NESR) Predecessor (NPS) Period from Period from Period from Period from Period from January 1, July 1, June 7, July 1, January 1, Reportable Segment: Production Services $ 284,631 $ 97,160 $ 117,268 $ 88,666 $ 112,295 Drilling and Evaluation Services 188,578 64,446 73,298 56,914 24,732 Total revenue $ 473,209 $ 161,606 $ 190,566 $ 145,580 $ 137,027 Long-lived assets September 30, 2019 December 31, 2018 Reportable Segment: Production Services $ 268,244 $ 219,278 Drilling and Evaluation Services 126,105 98,163 Unallocated (10,864 ) 11,286 Total $ 383,485 $ 328,727 Segment EBITDA Successor (NESR) Predecessor (NPS) Period from Period from Period from Period from Period from January 1, July 1, June 7, July 1, January 1, Reportable Segment: Production Services 98,007 32,581 41,952 33,180 36,836 Drilling and Evaluation Services 40,869 15,239 18,905 17,630 3,267 Unallocated Costs (13,855 ) (4,992 ) (13,453 ) (6,770 ) (9,651 ) Total Segment EBITDA $ 125,021 $ 42,828 $ 47,404 $ 44,040 $ 30,452 The following table presents a reconciliation of consolidated net income, which is the most comparable financial measure under U.S. GAAP, to Total Segment EBITDA: Successor (NESR) Predecessor (NPS) Period from Period from Period from Period from Period from January 1, Net Income $ 35,138 $ 10,608 $ 12,190 $ 16,157 $ 6,736 Add: Income taxes 11,407 4,013 2,960 3,989 2,342 Interest expense, net 14,691 5,011 8,099 6,199 4,090 Depreciation and amortization 63,785 23,196 24,155 17,695 17,284 Total Segment EBITDA $ 125,021 $ 42,828 $ 47,404 $ 44,040 $ 30,452 Revenue by geographic area Successor (NESR) Predecessor (NPS) Period from Period from Period from Period from Period from January 1, July 1, June 7, July 1, January 1, 2018 to MENA $ 465,856 $ 158,229 $ 188,488 $ 143,914 $ 134,479 Rest of world 7,353 3,377 2,078 1,666 2,548 Total revenue $ 473,209 $ 161,606 $ 190,566 $ 145,580 $ 137,027 Long-lived assets by geographic area September 30, 2019 December 31, 2018 Geographic Area: MENA $ 374,911 $ 319,552 Rest of world 8,574 9,175 Total $ 383,485 $ 328,727 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Subsequent Events | The Company evaluated subsequent events and transactions that occur after the balance sheet date up to the date that the condensed consolidated interim financial statements are issued. Other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed consolidated interim financial statements. [UPDATE] |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) - Successor [Member] | 9 Months Ended |
Sep. 30, 2019 | |
Supplemental Cash Flow Information | Supplemental cash flow information Non-cash transactions were as follows for the 2019 Period: ● Purchases of property, plant, and equipment in accounts payable at September 30, 2019 of $28.3 million, respectively, are not included under “Capital expenditures” within the condensed consolidated statement of cash flows. |
Recently Issued Accounting Standards Not Yet Adopted | Recently issued accounting standards not yet adopted On August 28, 2018 the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) No 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to The Disclosure Requirements for Defined Benefit Plans.” ASU No. 2018-14 amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The update is effective for the Company for fiscal years ending after December 15, 2021. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. On August 28, 2018 the FASB issued ASU No 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” ASU No. 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820. The amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements.” ASU 2018-09 makes changes to clarify the Accounting Standards Codification, corrects unintended application of guidance, and makes minor improvements to the Accounting Standards Codification that are not expected to have a significant effect on current accounting practice. The amendments are effective for the Company for fiscal years beginning after December 15, 2019 and for interim periods in fiscal years beginning after December 15, 2020. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” ASU 2018-07 expands the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04 “Simplifying the Test for Goodwill.” The update amends Accounting Standard Codification No. 350 Intangibles - Goodwill and Other, provides guidance that simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step in today’s two-step impairment test under accounting topic 350. The amendments in this update will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2021. The Company does not expect the adoption of this standard to have an impact on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments”. The new standard amends the impairment model for trade receivables, net investments in leases, debt securities, loans and certain other instruments to utilize an expected loss methodology in place of the currently used incurred loss methodology. This pronouncement is effective for annual periods beginning after December 15, 2020, including interim periods within those annual periods. The Company is currently evaluating the provisions of the pronouncement and assessing the impact, if any, on its consolidated financial statements and related disclosures. In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases,” a new standard on accounting for leases. This update increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. At its July 17, 2019, Board meeting, the FASB tentatively deferred the effective date for the Company’s consolidated financial statements by one year to as of and for the year ending December 31, 2021 and for interim periods beginning in 2022. The FASB plans to issue a proposed ASU to incorporate this decision. The Company is currently evaluating the provisions of the pronouncement and assessing the impact, if any, on its consolidated financial statements and related disclosures. On August 6, 2018 the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” This ASU is intended to reduce costs and ease implementation of the lease standard for financial statement preparers. ASU 2018-11 provides a new transition method and a practical expedient for separating components of a contract. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Additionally, the amendments in ASU 2018-11 provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606). At its July 17, 2019, Board meeting, the FASB tentatively deferred the effective date for the Company’s consolidated financial statements by one year to as of and for the year ended December 31, 2021 and for interim periods beginning in 2022. The FASB plans to issue a proposed ASU to incorporate this decision. The Company is currently evaluating the provisions of the pronouncement and assessing the impact, if any, on its consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which outlines a single comprehensive model for entities to use in accounting for revenue. ASU 2014-09 supersedes the revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. ASU 2014-09 sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers,” which deferred the effective date of ASU 2014-09 for all entities by one year and is effective for the Company’s consolidated financial statements as of and for the year ending December 31, 2019 and for interim periods beginning in 2020. The Company is currently analyzing the provisions of the pronouncement, assessing the impact of the new standard on revenue contracts, and evaluating prospective disclosures as compared to other industry participants. The Company expects to substantially complete its evaluation and document its conclusions during the fourth quarter of fiscal 2019. The Company anticipates utilizing the modified retrospective approach for adopting the new standard. |
Business Combination (Tables)
Business Combination (Tables) - Successor [Member] | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of Purchase Price Allocation | The following table summarizes the final allocation of the purchase price (in thousands): Allocation of consideration NPS GES (In thousands) Cash and cash equivalents $ 31,656 $ 5,206 Accounts receivable 55,392 18,013 Unbilled revenue 41,378 45,343 Inventories 33,652 31,092 Current assets 19,463 8,719 Property, plant and equipment 216,094 91,444 Intangible assets 94,000 53,000 Deferred tax assets - 554 Other assets 7,457 1,254 Total identifiable assets acquired 499,092 254,625 Accounts payable 26,457 31,113 Accrued expenses 28,685 25,388 Current portion of loans and borrowings - 16,368 Short-term borrowings 55,836 9,000 Current liabilities 3,665 15,449 Loans and borrowings 149,399 25,098 Deferred tax liabilities 24,098 8,053 Other liabilities 22,363 9,910 Non-controlling interest (2,841 ) 837 Net identifiable liabilities acquired 307,662 141,216 Total fair value of net assets acquired 191,328 113,409 Goodwill 399,325 175,439 Total gross consideration $ 590,755 $ 288,848 |
Schedule of Preliminary Allocation to Intangible Assets | Intangible assets were identified that met either the separability criterion or the contractual-legal criterion described in ASC 805. The final allocation to intangible assets is as follows (in thousands): Intangible assets Fair Value NPS GES Total Useful Life (In thousands) Customer contracts $ 77,000 $ 44,500 $ 121,500 10 years Trademarks and trade names 17,000 8,500 25,500 8 years Total intangible assets $ 94,000 $ 53,000 $ 147,000 |
Schedule of Proforma Information of Operations | The following table summarizes the supplemental consolidated results of the Company on an unaudited pro forma basis, as if the Business Combination had been consummated on January 1, 2017 for the Predecessor Period ended June 6, 2018 (in thousands): Period from Revenues 394,495 Net income 8,971 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) - Successor [Member] | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of Accounts Receivable | The following table summarizes the accounts receivable of the Company as of the period end dates set forth below (in thousands): September 30, 2019 December 31, 2018 Trade receivables $ 108,394 $ 63,329 Less: allowance for doubtful accounts (1,025 ) (693 ) Total $ 107,370 $ 62,636 |
Schedule of Allowance for Doubtful Accounts | Period from January 1, 2019 to September 30, 2019 Period from June 7, 2018 to September 30, 2018 Period from January 1, 2018 to June 6, 2018 Successor (NESR) Predecessor (NPS) Allowance for doubtful accounts at beginning of period $ (693 ) - $ (4,106 ) Add: additional allowance for the year (920 ) - (2,402 ) Less: write-off of doubtful accounts 588 - - Allowance for doubtful accounts at end of period $ (1,025 ) - $ (6,508 ) Period from July 1, 2019 to September 30, 2019 Period from July 1, 2018 to September 30, 2018 Successor (NESR) Allowance for doubtful accounts at beginning of period $ (450 ) $ - Add: additional allowance for the year (444 ) - Less: write-off of doubtful accounts (131 ) - Allowance for doubtful accounts at end of period $ (1,025 ) $ - |
Service Inventories (Tables)
Service Inventories (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Schedule of Service Inventories | The following table summarizes the service inventories of the Company as of the period end dates set forth below (in thousands): September 30, December 31, Spare parts $ 36,118 $ 29,928 Chemicals 16,420 14,803 Raw materials 3,452 200 Consumables 18,438 14,375 Total 74,428 59,306 Less: allowance for obsolete and slow-moving inventories (2,087 ) (1,155 ) Total $ 72,341 $ 58,151 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment, net of accumulated depreciation, of the Company consists of the following as of the period end dates set forth below (in thousands): Estimated Useful Lives (in years) September 30, December 31, Buildings and leasehold improvements 5 to 25 $ 24,635 $ 21,572 Drilling rigs, plant and equipment 3 to 15 370,227 278,249 Furniture and fixtures 5 1,194 1,348 Office equipment and tools 3 to 6 34,392 31,568 Vehicles and cranes 5 to 8 6,130 4,179 Less: Accumulated depreciation (79,848 ) (32,522 ) Land 5,104 5,104 Capital work in progress 21,651 19,229 Total $ 383,485 $ 328,727 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) - Successor [Member] | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill of the Company between December 31, 2018 and September 30, 2019 are as follows (in thousands): Production Services Drilling and Evaluation Services Goodwill Balance as of December 31, 2018 $ 416,494 154,046 570,540 Measurement period adjustments 3,152 1,072 4,224 Balance as of September 30, 2019 $ 419,646 155,118 574,764 |
Schedule of Intangible Assets Subject to Amortization | The following is the weighted average amortization period for intangible assets of the Company subject to amortization (in years): Amortization Customer contracts 10 Trademarks and trade names 8 Total intangible assets 9.6 The details of our intangible assets subject to amortization are set forth below (in thousands): September 30, 2019 December 31, 2018 Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Customer contracts $ 121,500 $ (16,202 ) $ 105,298 $ 121,500 $ (7,088 ) $ 114,412 Trademarks and trade names 25,500 (4,250 ) 21,250 25,500 (1,860 ) 23,640 Total intangible assets $ 147,000 $ (20,452 ) $ 126,548 $ 147,000 $ (8,948 ) $ 138,052 |
Debt (Tables)
Debt (Tables) - Successor [Member] | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of Short Term Debt Obligations | The Company’s short-term debt obligations consist of the following (in thousands): September 30, December 31, Modified Hana Loan $ - $ 10,000 Other short-term borrowings 28,261 21,817 Short-term debt, excluding current installments of long-term debt $ 28,261 $ 31,817 |
Schedule of Long Term Debt Obligations | The Company’s long-term debt obligations consist of the following (in thousands): September 30, December 31, Secured Term Loan $ 300,000 $ - Secured Revolving Credit Facility 50,000 Murabaha credit facility - 150,000 APICORP bilateral term facility - 46,875 SABB bilateral term facility - 43,333 Term loan Ahli Bank - 2,382 NBO loan $60,000 - 23,333 NBO loan $20,000 - 4,899 Less: unamortized debt issuance costs (4,615 ) (557 ) Total loans and borrowings 345,385 270,265 Less: current portion of long-term debt (7,500 ) (45,093 ) Long-term debt, net unamortized debt issuance costs and excluding current installments $ 337,885 $ 225,172 |
Scheduled Principal Payments of Long Term Debt | Scheduled principal payments of long-term debt for periods subsequent to September 30, 2019 are as follows (in thousands): 2019 $ - 2020 15,000 2021 37,500 2022 45,000 2023 95,000 2024 45,000 Thereafter 112,500 Total $ 350,000 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Schedule of Components of Net Periodic Benefit Cost | The Components of net period benefit cost were as follows (in thousands): Period from September 30, 2019 Period from June 7, 2018 to September 30, 2018 Period from June 6, 2018 Successor (NESR) Predecessor (NPS) Service Cost $ 2,255 $ 1,153 $ 866 Interest Cost 551 208 168 Other 77 70 375 Net Cost $ 2,883 $ 1,431 $ 1,409 Period from September 30, 2019 Period from September 30, 2018 Successor (NESR) Service Cost $ 815 $ 964 Interest Cost 375 178 Other 22 81 Net Cost $ 1,212 $ 1,223 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) - Successor [Member] | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of Unvested Restricted Stock | The following table sets forth the LTIP activity for the periods indicated: Number of Weighted Average Grant Date Fair Value per Share Unvested at December 31, 2018 (NESR - Successor) 725,200 $ 10.94 Granted 1,184,000 $ 9.86 Vested (250,310 ) $ 10.32 Forfeited (106,000 ) $ 10.87 Unvested at September 30, 2019 (NESR - Successor) 1,552,890 $ 10.22 Number of Weighted Average Grant Date Fair Value per Share Unvested at June 30, 2019 (NESR - Successor) 1,600,200 $ 10.59 Granted 214,000 $ 7.60 Vested (250,310 ) $ 10.32 Forfeited (11,000 ) $ 10.36 Unvested at September 30, 2019 (NESR - Successor) 1,552,890 $ 10.22 |
Schedule of Stock-based Compensation | Stock-based compensation has been recorded in the Condensed Consolidated Statement of Operations as follows for the periods presented: Cost of services Selling, general and administrative expense Total 2019 Successor Period $ 1,813,635 $ 2,243,336 $ 4,056,971 2019 Successor Quarter 757,779 1,187,479 1,945,258 2018 Successor Period 165,591 165,592 331,183 2018 Successor Quarter 165,591 165,592 331,183 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Successor [Member] | |
Schedule of Future Minimum Lease Payments Under Non-cancelable Operating Leases | Future minimum lease commitments under non-cancellable operating leases with initial or remaining terms of one year or more at September 30, 2019, are payable as follows (in thousands): 2019 $ 6,262 2020 24,814 2021 19,224 2022 3,508 2023 2,791 2024 2,792 Thereafter 4,425 Total $ 63,816 |
Income Per Share (Tables)
Income Per Share (Tables) - Successor [Member] | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of a Reconciliation of Basic and Diluted Common Shares Outstanding | 2019 Successor Period and 2019 Successor Quarter The following tables provide a reconciliation of the data used in the calculation of basic and diluted ordinary shares outstanding for the period (in thousands except shares and per share amounts). Date Transaction Detail Change in Period from December 31, 2018 Beginning Balance 85,562,769 January 9, 2019 Other 33,796 32,806 February 19, 2019 NPS equity stock earn-out 1,300,214 1,300,214 August 14, 2019 Restricted stock vesting 250,310 43,094 September 30, 2019 Ending Balance 86,938,883 Date Transaction Detail Change in Period from Outstanding June 30, 2019 Beginning Balance 86,896,779 August 14, 2019 Restricted stock vesting 250,310 127,876 September 30, 2019 Ending Balance 87,024,655 Period from January 1, 2019 to Period from July 1, 2019 to September 30, 2019 September 30, 2019 Shares for Use in Allocation Shares for Use in Allocation to Participating Earnings to Participating Earnings Weighted average ordinary shares outstanding $ 86,938,883 $ 87,024,655 Non-vested, participating restricted shares 1,382,896 1,571,126 Shares for use in allocation of participating earnings $ 88,321,779 $ 88,595,781 2018 Successor Period and 2018 Successor Quarter The following table provides a reconciliation of the data used in the calculation of basic and diluted common shares outstanding for the periods as tabulated below: Basic EPS: Date Transaction Detail Change in Total Shares Outstanding 12/31/2017 Beginning balance 11,730,425 6/6/2018 Shares issued to Backstop Investor 4,829,375 16,559,800 6/6/2018 Shares issued for IPO underwriting fees 307,465 16,867,265 6/6/2018 Shares issued to NPS/GES 53,690,315 70,557,580 6/6/2018 Reclassification of shares previously subject to redemption less redeemed shares 15,005,189 85,562,769 6/30/2018 Ending balance 85,562,769 Diluted EPS: Weighted avg units outstanding 85,562,769 Dilutive common shares 277,543 Weighted avg dilutive units outstanding 85,840,312 |
Schedule of Basic and Diluted Earnings Per Common Share | Basic earnings per share (EPS): Period from September 30, 2019 Period from July 1 to September 30, 2019 Net income $ 35,138 $ 10,608 Less dividends to: - - Ordinary Shares - - Non-vested participating shares - - Undistributed Successor Period Earnings $ 35,138 $ 10,608 Allocation of earnings to Ordinary Shares $ 34,588 $ 10,420 Allocation of earnings to Nonvested Shares 550 188 Ordinary Shares Ordinary Shares Distributed Earnings $ - $ - Undistributed Earnings 0.40 0.12 Total $ 0.40 $ 0.12 Diluted earnings per share (EPS): Period from January 1 to Period from July 1 to Ordinary shares Undistributed & distributed earnings to ordinary shareholders Ordinary shares EPS Undistributed & distributed earnings to ordinary shareholders Ordinary shares EPS As reported — basic $ 34,588 88,321,779 $ 0.40 $ 10,420 88,595,781 $ 0.12 Add-back: Undistributed earnings allocated to nonvested shareholders 550 188 12,618,680 Private Warrants $5.75 per half share (anti-dilutive) - - 22,921,700 Public Warrants $5.75 per half share (anti-dilutive) - - Less: Undistributed earnings reallocated to nonvested shareholders (550 ) (188 ) Diluted EPS — Ordinary shares $ 34,588 88,321,779 $ 0.40 $ 10,420 88,595,781 $ 0.12 The following table sets forth the calculation of basic and diluted earnings per common share for the periods presented: Period from Period from July 1 to June 6 to September 30, 2018 September 30, 2018 Weighted average basic common shares outstanding 85,562,769 85,562,769 Dilutive potential common shares from grant of restricted stock units 349,946 277,543 Weighted average dilutive common shares outstanding 85,912,715 85,840,312 Basic: Net Income 16,110,000 12,362,000 Less: Earnings allocated to participating securities - - Net income available to basic common shares 16,110,000 12,362,000 Basic earnings per common share 0.19 0.14 Diluted: Net Income 16,110,000 12,362,000 Less: Earnings allocated to participating securities - - Net income available to diluted common shares 16,110,000 12,362,000 Diluted earnings per common share 0.19 0.14 2018 Predecessor Period The following table sets forth the calculation of basic and diluted earnings per common share for the periods presented (in thousands except shares and per share amounts): 2018 Period from January 1 to June 6, 2018 Weighted average basic common shares outstanding 348,524,566 Dilutive potential common shares 21,475,434 Weighted average dilutive common shares outstanding 370,000,000 Basic: Net Income 6,736 Less: Earnings allocated to participating securities 192 Net income available to basic common shares 6,928 Basic earnings per common share 0.02 Diluted: Net Income 6,736 Less: Earnings allocated to participating securities 181 Net income available to diluted common shares 6,917 Diluted earnings per common share 0.02 |
Reportable Segments (Tables)
Reportable Segments (Tables) - Successor [Member] | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of Segment Reporting, Information On Revenues and Long-lived Assets | Revenue from operations Successor (NESR) Predecessor (NPS) Period from Period from Period from Period from Period from January 1, July 1, June 7, July 1, January 1, Reportable Segment: Production Services $ 284,631 $ 97,160 $ 117,268 $ 88,666 $ 112,295 Drilling and Evaluation Services 188,578 64,446 73,298 56,914 24,732 Total revenue $ 473,209 $ 161,606 $ 190,566 $ 145,580 $ 137,027 Long-lived assets September 30, 2019 December 31, 2018 Reportable Segment: Production Services $ 268,244 $ 219,278 Drilling and Evaluation Services 126,105 98,163 Unallocated (10,864 ) 11,286 Total $ 383,485 $ 328,727 Segment EBITDA Successor (NESR) Predecessor (NPS) Period from Period from Period from Period from Period from January 1, July 1, June 7, July 1, January 1, Reportable Segment: Production Services 98,007 32,581 41,952 33,180 36,836 Drilling and Evaluation Services 40,869 15,239 18,905 17,630 3,267 Unallocated Costs (13,855 ) (4,992 ) (13,453 ) (6,770 ) (9,651 ) Total Segment EBITDA $ 125,021 $ 42,828 $ 47,404 $ 44,040 $ 30,452 The following table presents a reconciliation of consolidated net income, which is the most comparable financial measure under U.S. GAAP, to Total Segment EBITDA: Successor (NESR) Predecessor (NPS) Period from Period from Period from Period from Period from January 1, Net Income $ 35,138 $ 10,608 $ 12,190 $ 16,157 $ 6,736 Add: Income taxes 11,407 4,013 2,960 3,989 2,342 Interest expense, net 14,691 5,011 8,099 6,199 4,090 Depreciation and amortization 63,785 23,196 24,155 17,695 17,284 Total Segment EBITDA $ 125,021 $ 42,828 $ 47,404 $ 44,040 $ 30,452 |
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas | Revenue by geographic area Successor (NESR) Predecessor (NPS) Period from Period from Period from Period from Period from January 1, July 1, June 7, July 1, January 1, 2018 to MENA $ 465,856 $ 158,229 $ 188,488 $ 143,914 $ 134,479 Rest of world 7,353 3,377 2,078 1,666 2,548 Total revenue $ 473,209 $ 161,606 $ 190,566 $ 145,580 $ 137,027 Long-lived assets by geographic area September 30, 2019 December 31, 2018 Geographic Area: MENA $ 374,911 $ 319,552 Rest of world 8,574 9,175 Total $ 383,485 $ 328,727 |
Description of Business (Detail
Description of Business (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jun. 06, 2018 | May 30, 2017 | May 17, 2017 |
Total proceeds held in the trust account | $ 231,800 | ||
Initial Public Offering [Member] | |||
Number of shares sold in transaction | 21,000,000 | ||
Proceeds from issuance initial public offering | $ 210,000 | ||
Private Placement [Member] | Warrant [Member] | |||
Number of warrant issued | 11,850,000 | ||
Warrant price per share | $ 0.50 | ||
Proceeds from warrant issuance | $ 5,900 | ||
Over-Allotment Option [Member] | |||
Total proceeds held in the trust account | $ 229,200 | ||
Over-Allotment Option [Member] | Warrant [Member] | |||
Number of shares sold in transaction | 1,921,700 | ||
Number of warrant issued | 768,680 | ||
Warrant price per share | $ 0.50 | ||
Unit price | $ 10 | ||
Total proceeds from exercise of over-allotment option | $ 19,600 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Successor [Member] | Accounts Payable [Member] | |
Purchases of property, plant, and equipment | $ 28,300 |
Business Combination (Details N
Business Combination (Details Narrative) - Successor [Member] $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Increase in goodwill | $ 3,200 |
Increase in current liabilities due to income tax return accrual | 3,200 |
Other liabilities increased amount | 1,100 |
Amount allocated to goodwill | $ 574,800 |
Business Combination - Schedule
Business Combination - Schedule of Purchase Price Allocation (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Goodwill | $ 574,764 | $ 570,540 |
NPS Holdings Limited [Member] | ||
Cash and cash equivalents | 31,656 | |
Accounts receivable | 55,392 | |
Unbilled revenue | 41,378 | |
Inventories | 33,652 | |
Current assets | 19,463 | |
Property, plant and equipment | 216,094 | |
Intangible assets | 94,000 | |
Deferred tax assets | ||
Other assets | 7,457 | |
Total identifiable assets acquired | 499,092 | |
Accounts payable | 26,457 | |
Accrued expenses | 28,685 | |
Current portion of loans and borrowings | ||
Short-term borrowings | 55,836 | |
Current liabilities | 3,665 | |
Loans and borrowings | 149,399 | |
Deferred tax liabilities | 24,098 | |
Other liabilities | 22,363 | |
Non-controlling interest | (2,841) | |
Net identifiable liabilities acquired | 307,662 | |
Total fair value of net assets acquired | 191,328 | |
Goodwill | 399,325 | |
Total gross consideration | 590,755 | |
Gulf Energy S.A.O.C [Member] | ||
Cash and cash equivalents | 5,206 | |
Accounts receivable | 18,013 | |
Unbilled revenue | 45,343 | |
Inventories | 31,092 | |
Current assets | 8,719 | |
Property, plant and equipment | 91,444 | |
Intangible assets | 53,000 | |
Deferred tax assets | 554 | |
Other assets | 1,254 | |
Total identifiable assets acquired | 254,625 | |
Accounts payable | 31,113 | |
Accrued expenses | 25,388 | |
Current portion of loans and borrowings | 16,368 | |
Short-term borrowings | 9,000 | |
Current liabilities | 15,449 | |
Loans and borrowings | 25,098 | |
Deferred tax liabilities | 8,053 | |
Other liabilities | 9,910 | |
Non-controlling interest | 837 | |
Net identifiable liabilities acquired | 141,216 | |
Total fair value of net assets acquired | 113,409 | |
Goodwill | 175,439 | |
Total gross consideration | $ 288,848 |
Business Combination - Schedu_2
Business Combination - Schedule of Preliminary Allocation to Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Total intangible assets | $ 147,000 | $ 147,000 |
Total intangible assets, term | 9 years 7 months 6 days | |
NPS Holdings Limited [Member] | ||
Total intangible assets | $ 94,000 | |
Gulf Energy S.A.O.C [Member] | ||
Total intangible assets | 53,000 | |
Customer Contracts [Member] | ||
Total intangible assets | $ 121,500 | 121,500 |
Total intangible assets, term | 10 years | |
Customer Contracts [Member] | NPS Holdings Limited [Member] | ||
Total intangible assets | $ 77,000 | |
Customer Contracts [Member] | Gulf Energy S.A.O.C [Member] | ||
Total intangible assets | 44,500 | |
Trademarks and Trade Names [Member] | ||
Total intangible assets | $ 25,500 | $ 25,500 |
Total intangible assets, term | 8 years | |
Trademarks and Trade Names [Member] | NPS Holdings Limited [Member] | ||
Total intangible assets | $ 17,000 | |
Trademarks and Trade Names [Member] | Gulf Energy S.A.O.C [Member] | ||
Total intangible assets | $ 8,500 |
Business Combination - Schedu_3
Business Combination - Schedule of Proforma Information of Operations (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Business Combinations [Abstract] | |
Revenues | $ 394,495 |
Net income | $ 8,971 |
Accounts Receivable (Details Na
Accounts Receivable (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Receivables [Abstract] | ||
Allowance for doubtful accounts receivable | $ 113,200 | $ 69,100 |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Less: allowance for doubtful accounts | $ (1,025) | $ (693) |
Total | 107,370 | 62,636 |
Trade Receivables [Member] | ||
Accounts receivables, gross | $ 108,394 | $ 63,329 |
Accounts Receivable - Schedul_2
Accounts Receivable - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | |
Allowance for doubtful accounts at beginning of period | $ (693) | ||||
Allowance for doubtful accounts at end of period | $ (1,025) | (1,025) | |||
Successor [Member] | |||||
Allowance for doubtful accounts at beginning of period | (450) | (693) | |||
Add: additional allowance for the year | (444) | (920) | |||
Less: write-off of doubtful accounts | (131) | 588 | |||
Allowance for doubtful accounts at end of period | $ (1,025) | $ (1,025) | |||
Predecessor [Member] | NPS Holdings Limited [Member] | |||||
Allowance for doubtful accounts at beginning of period | $ (6,508) | (4,106) | |||
Add: additional allowance for the year | (2,402) | ||||
Less: write-off of doubtful accounts | |||||
Allowance for doubtful accounts at end of period | $ (6,508) |
Service Inventories - Schedule
Service Inventories - Schedule of Service Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Service inventories, gross | $ 74,428 | $ 59,306 |
Less: allowance for obsolete and slow moving service inventories | (2,087) | (1,155) |
Service inventories, net | 72,341 | 58,151 |
Spare Parts [Member] | ||
Service inventories, gross | 36,118 | 29,928 |
Chemicals [Member] | ||
Service inventories, gross | 16,420 | 14,803 |
Raw Materials [Member] | ||
Service inventories, gross | 3,452 | 200 |
Consumables [Member] | ||
Service inventories, gross | $ 18,438 | $ 14,375 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Successor [Member] | |||||
Depreciation expense | $ 17,200 | $ 14,200 | $ 47,700 | $ 19,000 | |
Predecessor [Member] | |||||
Depreciation expense | $ 9,300 |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Less: Accumulated depreciation | $ (79,848) | $ (32,522) |
Land | 5,104 | 5,104 |
Capital work in progress | 21,651 | 19,229 |
Property, plant and equipment net | 383,485 | 328,727 |
Buildings and Leasehold Improvements [Member] | ||
Property, plant and equipment gross | $ 24,635 | 21,572 |
Buildings and Leasehold Improvements [Member] | Minimum [Member] | ||
Property and equipment estimated useful lives | 5 years | |
Buildings and Leasehold Improvements [Member] | Maximum [Member] | ||
Property and equipment estimated useful lives | 25 years | |
Drilling Rigs, Plant and Equipment [Member] | ||
Property, plant and equipment gross | $ 370,227 | 278,249 |
Drilling Rigs, Plant and Equipment [Member] | Minimum [Member] | ||
Property and equipment estimated useful lives | 3 years | |
Drilling Rigs, Plant and Equipment [Member] | Maximum [Member] | ||
Property and equipment estimated useful lives | 15 years | |
Furniture and Fixtures [Member] | ||
Property and equipment estimated useful lives | 5 years | |
Property, plant and equipment gross | $ 1,194 | 1,348 |
Office Equipment and Tools [Member] | ||
Property, plant and equipment gross | $ 34,392 | 31,568 |
Office Equipment and Tools [Member] | Minimum [Member] | ||
Property and equipment estimated useful lives | 3 years | |
Office Equipment and Tools [Member] | Maximum [Member] | ||
Property and equipment estimated useful lives | 6 years | |
Vehicles and Cranes [Member] | ||
Property, plant and equipment gross | $ 6,130 | $ 4,179 |
Vehicles and Cranes [Member] | Minimum [Member] | ||
Property and equipment estimated useful lives | 5 years | |
Vehicles and Cranes [Member] | Maximum [Member] | ||
Property and equipment estimated useful lives | 8 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Balance as of December 31, 2018 | $ 570,540 |
Measurement period adjustments | 4,224 |
Balance as of September 30, 2019 | 574,764 |
Production Services [Member] | |
Balance as of December 31, 2018 | 416,494 |
Measurement period adjustments | 3,152 |
Balance as of September 30, 2019 | 419,646 |
Drilling and Evaluation Services [Member] | |
Balance as of December 31, 2018 | 154,046 |
Measurement period adjustments | 1,072 |
Balance as of September 30, 2019 | $ 155,118 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Total intangible assets, term | 9 years 7 months 6 days | |
Intangible assets, gross carrying amount | $ 147,000 | $ 147,000 |
Intangible assets, accumulated amortization | (20,452) | (8,948) |
Intangible assets, net carrying amount | $ 126,548 | 138,052 |
Customer Contracts [Member] | ||
Total intangible assets, term | 10 years | |
Intangible assets, gross carrying amount | $ 121,500 | 121,500 |
Intangible assets, accumulated amortization | (16,202) | (7,088) |
Intangible assets, net carrying amount | $ 105,298 | 114,412 |
Trademarks and Trade Names [Member] | ||
Total intangible assets, term | 8 years | |
Intangible assets, gross carrying amount | $ 25,500 | 25,500 |
Intangible assets, accumulated amortization | (4,250) | (1,860) |
Intangible assets, net carrying amount | $ 21,250 | $ 23,640 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ in Thousands | Jun. 20, 2019 | Jun. 05, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | May 23, 2019 | May 05, 2019 |
Line of credit | $ 300,000 | |||||
Interest rate | 4.60% | |||||
Withdrawn term loan | $ 50,000 | |||||
LIBOR Plus [Member] | Minimum [Member] | ||||||
Interest rate | 2.40% | |||||
LIBOR Plus [Member] | Maximum [Member] | ||||||
Interest rate | 2.70% | |||||
Term Loan [Member] | ||||||
Term of agreement | 2025 | |||||
Revolving Credit Facility [Member] | ||||||
Debt maturity date | May 6, 2023 | |||||
Term of agreement | 2023 | |||||
Line of credit | $ 65,000 | |||||
Prepayment of borrowings | $ 5,000 | |||||
Commitment fee percentage | 0.60% | |||||
Prepayment under revolving credit facility, description | The Company is permitted to make any prepayment under this RCF in multiples of $5.0 million during this 4-year period up to May 6, 2023 | |||||
Hana Loan Agreement [Member] | ||||||
Principal amount borrowed | $ 50,000 | |||||
Debt maturity date | Dec. 17, 2018 | |||||
Debt description | The Hana Loan had a scheduled maturity date of December 17, 2018 and was interest bearing, accruing interest at the greater of (i) an amount equal to $4.0 million or prorated if the loan was prepaid; and (ii) at a rate per annum equal to one-month Intercontinental Exchange LIBOR, adjusted monthly on the first day of each calendar month, plus a margin of 2.25% payable on maturity or prepaid. The interest was payable in NESR ordinary shares or cash at the election of the lender. | |||||
Origination fee | $ 600 | |||||
Ordinary shares | 11.244 | |||||
Number of shares issued in business combination | 53,362 | |||||
Modified Hana Loan [Member] | ||||||
Debt periodic payment | $ 44,000 | |||||
Secured Facilities Agreement [Member] | ||||||
Term loan and revolving facilities | $ 525,000 | $ 485,000 | $ 450,000 | |||
Working capital facility | 160,000 | $ 30,400 | ||||
Term loan amount | 300,000 | |||||
Service coverage ratio, description | The Secured Facilities Agreement includes covenants that specify maximum leverage (Net Debt / EBITDA) up to 3.50, minimum debt service coverage ratio (Cash Flow / Debt Service) of at least 1.25, and interest coverage (EBITDA / Interest) of at least 4.00. The Company is in compliance with all financial covenants as of September 30, 2019. | |||||
Secured Facilities Agreement [Member] | HSBC Bank Middle East Limited [Member] | ||||||
Working capital facility | 30,400 | $ 27,500 | ||||
Utilized working capital facility | 2,900 | |||||
Secured Facilities Agreement [Member] | HSBC Bank Middle East Limited [Member] | Qatar [Member] | ||||||
Working capital facility | 16,400 | |||||
Secured Facilities Agreement [Member] | HSBC Bank Middle East Limited [Member] | UAE [Member] | ||||||
Working capital facility | 13,900 | |||||
Secured Facilities Agreement [Member] | HSBC Bank Middle East Limited [Member] | Kuwait [Member] | ||||||
Working capital facility | 100 | |||||
Secured Facilities Agreement [Member] | Lenders [Member] | ||||||
Working capital facility | 130,700 | |||||
Utilized working capital facility | $ 29,300 | |||||
Line of credit, description | Letters of guarantee and letters of credit and refinancing letters of credit over a period of one year, which carries an interest rate equal to three-month U.S. Dollar LIBOR for the applicable interest period, plus a margin of 1.00% to 1.25% per annum. | |||||
Incremental Facilities Agreement [Member] | ||||||
Term loan and revolving facilities | $ 40,000 | $ 35,000 |
Debt - Schedule of Short Term D
Debt - Schedule of Short Term Debt Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Other short-term borrowings | $ 28,261 | $ 21,817 |
Short-term debt, excluding current installments of long-term debt | 28,261 | 31,817 |
Modified Hana Loan [Member] | ||
Short term loan amount | $ 10,000 |
Debt - Schedule of Long Term De
Debt - Schedule of Long Term Debt Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Less: unamortized debt issuance costs | $ (4,615) | $ (557) |
Total loans and borrowings | 345,385 | 270,265 |
Less: current portion of long term debt | (7,500) | (45,093) |
Long-term debt, net unamortized debt issuance costs and excluding current installments | 337,885 | 225,172 |
Secured Term Loan [Member] | ||
Total loans and borrowings | 300,000 | |
Secured Revolving Credit Facility [Member] | ||
Total loans and borrowings | 50,000 | |
Murabaha Credit Facility [Member] | ||
Total loans and borrowings | 150,000 | |
APICORP Bilateral Term Facility [Member] | ||
Total loans and borrowings | 46,875 | |
SABB Bilateral Term Facility [Member] | ||
Total loans and borrowings | 43,333 | |
Term Loan Ahli Bank [Member] | ||
Total loans and borrowings | 2,382 | |
National Bank of Oman [Member] | ||
Total loans and borrowings | 23,333 | |
National Bank of Oman [Member] | ||
Total loans and borrowings | $ 4,899 |
Debt - Schedule of Long Term _2
Debt - Schedule of Long Term Debt Obligations (Details) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Line of credit | $ 300,000 | |
National Bank of Oman [Member] | ||
Line of credit | $ 60 | |
National Bank of Oman [Member] | ||
Line of credit | $ 20 |
Debt - Scheduled Principal Paym
Debt - Scheduled Principal Payments of Long Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
2019 | ||
2020 | 15,000 | |
2021 | 37,500 | |
2022 | 45,000 | |
2023 | 95,000 | |
2024 | 45,000 | |
Thereafter | 112,500 | |
Total | $ 345,385 | $ 270,265 |
Employee Benefits (Details Narr
Employee Benefits (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Successor [Member] | |||||
Contributions to defined benefit plans | $ 500 | $ 700 | $ 1,600 | $ 900 | |
Total contributions | $ 800 | $ 500 | $ 2,400 | $ 800 | |
Predecessor [Member] | |||||
Contributions to defined benefit plans | $ 700 |
Employee Benefits - Schedule of
Employee Benefits - Schedule of Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | |
Successor [Member] | |||||
Service Cost | $ 815 | $ 964 | $ 1,153 | $ 2,255 | |
Interest Cost | 375 | 178 | 208 | 551 | |
Other | 22 | 81 | 70 | 77 | |
Total net periodic benefit cost | $ 1,212 | $ 1,223 | $ 1,431 | $ 2,883 | |
Predecessor [Member] | NPS Holdings Limited [Member] | |||||
Service Cost | $ 866 | ||||
Interest Cost | 168 | ||||
Other | 375 | ||||
Total net periodic benefit cost | $ 1,409 |
Share-Based Compensation (Detai
Share-Based Compensation (Details Narrative) - 2018 Long Term Incentive Plan [Member] - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | May 18, 2018 | |
Ordinary shares reserved for issuance | 5,000,000 | |
Unrecognized compensation expense | $ 13,400 | |
Weighted average remaining period | 2 years 3 months 4 days |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Unvested Restricted Stock (Details) - Successor [Member] - Restricted Stock Units (RSUs) [Member] - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Number of Restricted Shares, Unvested, Beginning Balance | 1,600,200 | 725,200 |
Number of Restricted Shares, Granted | 214,000 | 1,184,000 |
Number of Restricted Shares, Vested | (250,310) | (250,310) |
Number of Restricted Shares, Forfeited | (11,000) | (106,000) |
Number of Restricted Shares, Unvested, Ending Balance | 1,552,890 | 1,552,890 |
Weighted Average Grant Date Fair Value per Share, Unvested, Beginning Balance | $ 10.59 | $ 10.94 |
Weighted Average Grant Date Fair Value per Share, Granted | 7.60 | 9.86 |
Weighted Average Grant Date Fair Value per Share, Vested | 10.32 | 10.32 |
Weighted Average Grant Date Fair Value per Share, Forfeited | 10.36 | 10.87 |
Weighted Average Grant Date Fair Value per Share, Unvested, Ending Balance | $ 10.22 | $ 10.22 |
Share-Based Compensation - Sc_2
Share-Based Compensation - Schedule of Stock-based Compensation (Details) - Successor [Member] - USD ($) | 3 Months Ended | 4 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2019 | |
Stock-based compensation | $ 1,945,258 | $ 331,183 | $ 331,183 | $ 4,056,971 |
Cost of Services [Member] | ||||
Stock-based compensation | 757,779 | 165,591 | 165,591 | 1,813,635 |
Selling, General and Administrative Services [Member] | ||||
Stock-based compensation | $ 1,187,479 | $ 165,592 | $ 165,592 | $ 2,243,336 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | |
Capital expenditure commitments | $ 15,700 | |||||
Letters of credit outstanding amount | $ 28,200 | 28,200 | $ 10,300 | |||
Surety bonds and other bank issued guarantees | 110,500 | 110,500 | 41,400 | |||
Liability | 586,665 | 586,665 | 512,318 | |||
Other Liabilities [Member] | ||||||
Liability | 6,700 | 6,700 | $ 6,700 | |||
Successor [Member] | ||||||
Rental expense | $ 24,500 | $ 25,200 | $ 31,200 | $ 80,900 | ||
Predecessor [Member] | NPS Holdings Limited [Member] | ||||||
Rental expense | $ 19,500 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Lease Payments Under Non-cancelable Operating Leases (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 6,262 |
2020 | 24,814 |
2021 | 19,224 |
2022 | 3,508 |
2023 | 2,791 |
2024 | 2,792 |
Thereafter | 4,425 |
Total | $ 63,816 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | Jun. 06, 2018 | Jun. 06, 2018 | Jun. 05, 2018 | Apr. 27, 2018 | Nov. 12, 2017 | Feb. 28, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2019 | Dec. 31, 2018 |
Ordinary shares outstanding | 11,730,425 | 11,730,425 | 87,147,089 | 85,562,769 | ||||||
Ordinary share price per shares | $ 9.76 | $ 9.76 | ||||||||
Preferred shares issued | ||||||||||
Preferred shares outstanding | ||||||||||
Shares previously subject to redemption, shares | 16,921,700 | |||||||||
Reclassification of shares previously subject to redemption | $ 165,200,000 | $ 165,188,000 | ||||||||
Redemption value price per shares | $ 10.11 | 10.11 | ||||||||
Underwriting fee per share | $ 0.35 | $ 0.35 | ||||||||
Redeemed shares, shares | 1,916,511 | |||||||||
Redeemed shares value | $ 19,400,000 | (19,379,000) | ||||||||
Ordinary shares issued for underwriting fees, value | $ 3,700,000 | $ 3,737,000 | ||||||||
Ordinary shares issued for underwriting fees, shares | 307,465 | |||||||||
Acquired percentage of shares outstanding | 12.00% | 12.00% | ||||||||
Obligation amount | $ 10,500,000 | |||||||||
GES Transaction [Member] | ||||||||||
Business acquisition exchange shares | 25,309,848 | |||||||||
Business acquisition payments | $ 29,300,000 | |||||||||
Business combination, ordinary shares | 3,036,381 | |||||||||
Acquired percentage of shares outstanding | 88.00% | 88.00% | ||||||||
Stock Purchase Agreement [Member] | ||||||||||
Business combination, ordinary shares | 418,001 | |||||||||
Business combination, consideration transferred | $ 4,700,000 | |||||||||
Stock Purchase Agreement [Member] | NPS Holdings Limited [Member] | ||||||||||
Number of ordinary shares issuance | 1,300,214 | |||||||||
Stock Purchase Agreement [Member] | NPS Holdings Limited [Member] | First Closing [Member] | ||||||||||
Business acquisition exchange shares | 83,660,878 | |||||||||
Stock Purchase Agreement [Member] | NPS Holdings Limited [Member] | Second Closing [Member] | ||||||||||
Business combination, ordinary shares | 11,318,828 | |||||||||
Stock Purchase Agreement [Member] | Hana Investments [Member] | ||||||||||
Number of ordinary shares issuance | 13,340,448 | |||||||||
Business acquisition payments | $ 292,800,000 | |||||||||
Hana Loan Agreement [Member] | ||||||||||
Ordinary share price per shares | $ 11.244 | |||||||||
Business combination, ordinary shares | 53,362 | |||||||||
Principal amount borrowed | $ 50,000,000 | |||||||||
Origination fee | $ 600,000 | |||||||||
Relationship Agreement [Member] | Hana Investments [Member] | ||||||||||
Ordinary share price per shares | $ 11.244 | |||||||||
Business combination, ordinary shares | 213,447 | |||||||||
Business combination, consideration transferred | $ 2,100,000 | |||||||||
Forward Purchase Agreement [Member] | Backstop Investor [Member] | ||||||||||
Business acquisition payments | $ 48,293,763 | |||||||||
Business combination, ordinary shares | 4,829,375 | |||||||||
Number of ordinary shares of sale | $ 150,000,000 | |||||||||
Public Warrants [Member] | ||||||||||
Warrants | 22,921,700 | |||||||||
Ordinary share price per shares | $ 5.75 | |||||||||
Warrants expire date | Jun. 6, 2023 | |||||||||
Warrants term | 5 years | |||||||||
Private Warrants [Member] | ||||||||||
Warrants | 12,618,680 | |||||||||
Ordinary share price per shares | $ 5.75 | |||||||||
Warrants expire date | Jun. 6, 2023 | |||||||||
Warrants term | 5 years |
Income Per Share (Details Narra
Income Per Share (Details Narrative) | 9 Months Ended |
Sep. 30, 2019shares | |
Successor [Member] | Private Warrants [Member] | |
Antidilutive securities excluded from computation of earnings per share amount | 17,770,190 |
Income Per Share - Schedule of
Income Per Share - Schedule of a Reconciliation of Basic and Diluted Common Shares Outstanding (Details) - shares | Jun. 06, 2018 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2019 |
Total shares outstanding, shares issued for IPO underwriting fees | 307,465 | |||||
Successor [Member] | ||||||
Change in shares, shares issued to backstop investor | 4,829,375 | |||||
Change in shares, shares issued for IPO underwriting fees | 307,465 | |||||
Change in shares, shares issued to NPS/GES | 53,690,315 | |||||
Reclassification of shares previously subject to redemption, net of shares redeemed | 15,005,189 | |||||
Total shares outstanding, beginning balance | 11,730,425 | 85,562,769 | 11,730,425 | 85,562,769 | ||
Total shares outstanding, shares issued to backstop investor | 16,559,800 | |||||
Total shares outstanding, shares issued for IPO underwriting fees | 16,867,265 | |||||
Total shares outstanding, shares issued to NPS/GES | 70,557,580 | |||||
Total shares outstanding, reclassification of shares previously subject to redemption less redeemed shares | 85,562,769 | |||||
Total shares outstanding, Ending balance | 11,730,425 | 85,562,769 | 86,938,883 | 86,938,883 | ||
Weighted average ordinary shares outstanding | 85,562,769 | 87,024,655 | 85,562,769 | 85,562,769 | 86,938,883 | |
Non-vested, participating restricted shares | 1,382,896 | |||||
Shares for use in allocation of participating earnings | 88,321,779 | |||||
Dilutive common shares | 277,543 | |||||
Weighted average dilutive common shares outstanding | 85,840,312 | 87,024,655 | 85,912,715 | 85,840,312 | 86,938,883 | |
Successor [Member] | January, 09, 2019 [Member] | ||||||
Change in shares Other | 33,796 | |||||
Weighted average ordinary shares outstanding, Other | 32,806 | |||||
Successor [Member] | February 19, 2019 [Member] | ||||||
Change in shares, NPS equity stock earn-out | 1,300,214 | |||||
Weighted average ordinary shares outstanding, NPS equity stock earn-out | 1,300,214 | |||||
Successor [Member] | August 14, 2019 [Member] | ||||||
Change in shares, Restricted stock vesting | 250,310 | |||||
Weighted average ordinary shares outstanding, Restricted stock vesting | 43,094 | |||||
Successor [Member] | ||||||
Total shares outstanding, beginning balance | 86,896,779 | |||||
Total shares outstanding, Ending balance | 87,024,655 | 87,024,655 | ||||
Weighted average ordinary shares outstanding | 87,024,655 | |||||
Non-vested, participating restricted shares | 1,571,126 | |||||
Shares for use in allocation of participating earnings | 88,595,781 | |||||
Successor [Member] | August 14, 2019 [Member] | ||||||
Change in shares, Restricted stock vesting | 250,310 | |||||
Weighted average ordinary shares outstanding, Restricted stock vesting | 127,876 |
Income Per Share - Schedule o_2
Income Per Share - Schedule of Basic and Diluted Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | |
Net income | $ 10,608 | $ 16,157 | $ 12,190 | $ 35,138 | ||
Successor [Member] | ||||||
Net income | 11,110 | $ 16,157 | $ 12,190 | 35,640 | ||
Ordinary Shares | ||||||
Non-vested participating shares | ||||||
Undistributed Successor Period Earnings | 10,608 | 35,138 | ||||
Allocation of Undistributed Earnings to Ordinary Shares | 10,420 | 34,588 | ||||
Allocation of Undistributed Earnings to Nonvested Shares | $ 188 | $ 550 | ||||
Ordinary Shares, Distributed Earnings | ||||||
Ordinary Shares, Undistributed Earnings | 0.12 | 0.40 | ||||
Ordinary Shares, Total | $ 0.13 | $ 0.19 | $ 0.14 | $ 0.4 | ||
Undistributed & distributed earnings to ordinary shareholders, As reported - basic | $ 10,420 | $ 34,588 | ||||
Add-back : Undistributed & distributed earnings to ordinary shareholders, Undistributed earnings allocated to nonvested shareholders | 188 | 550 | ||||
Add-back : Undistributed & distributed earnings to ordinary shareholders, 12,618,680 Private Warrants @ $5.75 per half share (anti-dilutive) | ||||||
Add-back : Undistributed & distributed earnings to ordinary shareholders, 22,921,700 Public Warrants @ $5.75 per half share (anti-dilutive) | ||||||
Less : Undistributed & distributed earnings to ordinary shareholders, Undistributed earnings reallocated to nonvested shareholders | (188) | (550) | ||||
Diluted EPS - Ordinary shares | $ 10,420 | $ 34,588 | ||||
Add-back : Ordinary shares, As reported - basic | 85,562,769 | 87,024,655 | 85,562,769 | 85,562,769 | 86,938,883 | |
Add-back : Ordinary shares, Undistributed earnings allocated to nonvested shareholders | ||||||
Add-back : Ordinary shares, 12,618,680 Private Warrants @ $5.75 per half share (anti-dilutive) | ||||||
Add-back : Ordinary shares, 22,921,700 Public Warrants @ $5.75 per half share (anti-dilutive) | ||||||
Diluted EPS - Ordinary shares | 85,840,312 | 87,024,655 | 85,912,715 | 85,840,312 | 86,938,883 | |
Diluted EPS- Ordinary shares | $ 0.13 | $ 0.19 | $ 0.14 | $ 0.4 | ||
Weighted average ordinary shares outstanding | 85,562,769 | 87,024,655 | 85,562,769 | 85,562,769 | 86,938,883 | |
Dilutive potential common shares from grant of restricted stock units | 349,946 | 277,543 | ||||
Weighted average dilutive common shares outstanding | 85,840,312 | 87,024,655 | 85,912,715 | 85,840,312 | 86,938,883 | |
Basic: Less: Earnings allocated to participating securities | ||||||
Basic: Net income available to basic common shares | $ 16,110 | $ 12,362 | ||||
Basic: Basic earnings per common share | $ 0.13 | $ 0.19 | $ 0.14 | $ 0.4 | ||
Diluted : Less: Earnings allocated to participating securities | ||||||
Diluted : Net income available to diluted common shares | $ 16,110 | $ 12,362 | ||||
Diluted : Diluted earnings per common share | $ 0.13 | $ 0.19 | $ 0.14 | $ 0.4 | ||
Predecessor [Member] | NPS Holdings Limited [Member] | ||||||
Net income | $ 6,736 | |||||
Ordinary Shares, Total | $ 0.02 | |||||
Add-back : Ordinary shares, As reported - basic | 348,524,566 | |||||
Diluted EPS - Ordinary shares | 370,000,000 | |||||
Diluted EPS- Ordinary shares | $ 0.02 | |||||
Weighted average ordinary shares outstanding | 348,524,566 | |||||
Dilutive potential common shares from grant of restricted stock units | 21,475,434 | |||||
Weighted average dilutive common shares outstanding | 370,000,000 | |||||
Basic: Less: Earnings allocated to participating securities | $ 192 | |||||
Basic: Net income available to basic common shares | $ 6,928 | |||||
Basic: Basic earnings per common share | $ 0.02 | |||||
Diluted : Less: Earnings allocated to participating securities | $ 181 | |||||
Diluted : Net income available to diluted common shares | $ 6,917 | |||||
Diluted : Diluted earnings per common share | $ 0.02 |
Income Per Share - Schedule o_3
Income Per Share - Schedule of Basic and Diluted Earnings Per Common Share (Details) (Parenthetical) | Sep. 30, 2019$ / sharesshares |
Private Warrants [Member] | |
Number of warrants | 12,618,680 |
Public Warrants [Member] | |
Number of warrants | 22,921,700 |
Successor [Member] | Private Warrants [Member] | |
Number of warrants | 12,618,680 |
Warrants, price per share | $ / shares | $ 5.75 |
Successor [Member] | Public Warrants [Member] | |
Number of warrants | 22,921,700 |
Warrants, price per share | $ / shares | $ 5.75 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | |
Successor [Member] | |||||
Income tax description | The Subsidiaries operate in multiple tax jurisdictions throughout the MENA and Asia Pacific regions. NPS is based in the Emirate of Dubai in the UAE where no federal taxation exists and operates in 12 countries, where statutory tax rates generally vary from 0% to 35%. GES is based in the Sultanate of Oman, which has a 15% statutory corporate income tax rate, and also operates in Saudi Arabia, Algeria and Kuwait. | ||||
Effective tax rate | 27.40% | 19.80% | 19.50% | 24.50% | |
Successor [Member] | Minimum [Member] | |||||
Effective tax rate | 19.50% | ||||
Successor [Member] | Maximum [Member] | |||||
Effective tax rate | 27.40% | ||||
Successor [Member] | Oman [Member] | |||||
Foreign tax rate | 15.00% | ||||
Predecessor [Member] | |||||
Effective tax rate | 25.70% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 4 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2019 | Jun. 06, 2018 | |
Percentage of ownership | 12.00% | ||||
Successor [Member] | |||||
Rental income to be paid on leases | $ 24,500,000 | $ 25,200,000 | $ 31,200,000 | $ 80,900,000 | |
Successor [Member] | Prime Business Solutions LLC [Member] | |||||
Maintenance fees | 209,000 | 0 | 0 | 209,000 | |
Mubadarah Group Entities [Member] | Successor [Member] | |||||
Rental income to be paid on leases | 49,000 | $ 43,000 | $ 57,000 | 168,000 | |
Due from related party | $ 1,300,000 | $ 1,300,000 | |||
Percentage of ownership | 19.70% | 19.70% | |||
Business Solutions LLC [Member] | Successor [Member] | Prime Business Solutions LLC [Member] | |||||
Percentage of ownership | 100.00% | 100.00% |
Reportable Segments (Details Na
Reportable Segments (Details Narrative) | 9 Months Ended |
Sep. 30, 2019Segment | |
Successor [Member] | |
Number of reportable segments | 2 |
Reportable Segments - Schedule
Reportable Segments - Schedule of Segment Reporting, Information On Revenues and Long-lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | |
Long-lived asset, Total | $ 383,485 | $ 383,485 | $ 328,727 | |||
Production Services [Member] | ||||||
Long-lived asset, Total | 268,244 | 268,244 | 219,278 | |||
Drilling and Evaluation Services [Member] | ||||||
Long-lived asset, Total | 126,105 | 126,105 | 98,163 | |||
Unallocated [Member] | ||||||
Long-lived asset, Total | (10,864) | (10,864) | $ 11,286 | |||
Successor [Member] | ||||||
Revenue from operations, Total | 161,606 | $ 145,580 | $ 190,566 | 473,209 | ||
Segment EBITDA | 42,828 | 44,040 | 47,404 | 125,021 | ||
Net Income | 11,110 | 16,110 | 12,362 | 35,640 | ||
Income taxes | 3,511 | 3,989 | 2,960 | 10,905 | ||
Interest expense, net | 5,011 | 6,199 | 8,099 | 14,691 | ||
Depreciation and amortization | 23,196 | 17,695 | 24,155 | 63,785 | ||
Successor [Member] | Production Services [Member] | ||||||
Revenue from operations, Total | 97,160 | 88,666 | 117,268 | 284,631 | ||
Segment EBITDA | 32,581 | 33,180 | 41,952 | 98,007 | ||
Successor [Member] | Drilling and Evaluation Services [Member] | ||||||
Revenue from operations, Total | 64,446 | 56,914 | 73,298 | 188,578 | ||
Segment EBITDA | 15,239 | 17,630 | 18,905 | 40,869 | ||
Successor [Member] | Unallocated Costs [Member] | ||||||
Segment EBITDA | $ (4,992) | $ (6,770) | $ (13,453) | $ (13,855) | ||
Predecessor [Member] | NPS Holdings Limited [Member] | ||||||
Revenue from operations, Total | $ 137,027 | |||||
Segment EBITDA | 30,452 | |||||
Net Income | 7,617 | |||||
Income taxes | 2,342 | |||||
Interest expense, net | 4,090 | |||||
Depreciation and amortization | 17,284 | |||||
Predecessor [Member] | Production Services [Member] | NPS Holdings Limited [Member] | ||||||
Revenue from operations, Total | 112,295 | |||||
Segment EBITDA | 36,836 | |||||
Predecessor [Member] | Drilling and Evaluation Services [Member] | NPS Holdings Limited [Member] | ||||||
Revenue from operations, Total | 24,732 | |||||
Segment EBITDA | 3,267 | |||||
Predecessor [Member] | Unallocated Costs [Member] | NPS Holdings Limited [Member] | ||||||
Segment EBITDA | $ (9,651) |
Reportable Segments - Schedul_2
Reportable Segments - Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2018 | Jun. 06, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | |
Long-lived asset, Total | $ 383,485 | $ 383,485 | $ 328,727 | |||
MENA [Member] | ||||||
Long-lived asset, Total | 374,911 | 374,911 | 319,552 | |||
Rest of World [Member] | ||||||
Long-lived asset, Total | 8,574 | 8,574 | $ 9,175 | |||
Successor [Member] | ||||||
Revenue from operations, Total | 161,606 | $ 145,580 | $ 190,566 | 473,209 | ||
Successor [Member] | MENA [Member] | ||||||
Revenue from operations, Total | 158,229 | 143,914 | 188,488 | 465,856 | ||
Successor [Member] | Rest of World [Member] | ||||||
Revenue from operations, Total | $ 3,377 | $ 1,666 | $ 2,078 | $ 7,353 | ||
Predecessor [Member] | NPS Holdings Limited [Member] | ||||||
Revenue from operations, Total | $ 137,027 | |||||
Predecessor [Member] | MENA [Member] | NPS Holdings Limited [Member] | ||||||
Revenue from operations, Total | 134,479 | |||||
Predecessor [Member] | Rest of World [Member] | NPS Holdings Limited [Member] | ||||||
Revenue from operations, Total | $ 2,548 |