10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________

FORM 10-Q

__________________________________

(Mark One)

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

For the quarterly period ended: June 30, 2019

or

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

For the transition period from                      to                     .

Commission File Number: 001-33816

_________________________________

__________________________________

Delaware	26-0287117
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

6720 N. Scottsdale Road, Suite 190, Scottsdale, AZ 85253

(602) 903-7802

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

__________________________________

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	NES	NYSE American

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   x

Indicate by check mark whether the registrant has filed all the documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan of confirmation by a court. Yes  x    No  ¨

The number of shares outstanding of the registrant’s common stock as of July 31, 2019 was 15,708,898.

TABLE OF CONTENTS

PART I —FINANCIAL INFORMATION		6
Item 1.	Condensed Consolidated Financial Statements	6
	Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018	6
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018	7
	Condensed Consolidated Statements of Shareholders’ Equity as of June 30, 2019 and 2018	8
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018	9
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
PART II – OTHER INFORMATION		42
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43

3

Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, or the “Securities Act,” and Section 21E of the United States Securities Exchange Act of 1934, as amended, or the “Exchange Act.” These statements relate to our expectations for future events and time periods. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including, but not limited to, statements regarding:

• future financial performance and growth targets or expectations;

• market and industry trends and developments, and

• the potential benefits of our completed and any future merger, acquisition, disposition, restructuring, and financing transactions.

You can identify these and other forward-looking statements by the use of words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “might,” “will,” “should,” “would,” “could,” “potential,” “future,” “continue,” “ongoing,” “forecast,” “project,” “target” or similar expressions, and variations or negatives of these words.

These forward-looking statements are based on information available to us as of the date of this Quarterly Report and our current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. Future performance cannot be ensured, and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include, among others:

• financial results that may be volatile and may not reflect historical trends due to, among other things, changes in commodity prices or general market conditions, acquisition and disposition activities, fluctuations in consumer trends, pricing pressures, transportation costs, changes in raw material or labor prices or rates related to our business and changing regulations or political developments in the markets in which we operate;

• risks associated with our indebtedness, including changes to interest rates, decreases in our borrowing availability, our ability to manage our liquidity needs and to comply with covenants under our credit facilities;

• the loss of one or more of our larger customers;

• difficulties in successfully executing our growth initiatives, including identifying and completing mergers, acquisitions and divestitures, successfully integrating merged or acquired business operations, and identifying and managing risks inherent in mergers, acquisitions and divestitures, as well as differences in the type and availability of consideration or financing for such mergers, acquisitions and divestitures;

• our ability to attract and retain key executives and qualified employees in key areas of our business;

• our ability to attract and retain a sufficient number of qualified truck drivers in light of industry-wide driver shortages and high-turnover;

• the availability of less favorable credit and payment terms due to changes in industry condition or our financial condition, which could constrain our liquidity and reduce availability under our revolving credit facility;

• higher than forecasted capital expenditures to maintain and repair our fleet of trucks, tanks, equipment and disposal wells;

• control of costs and expenses;

• changes in customer drilling, completion and production activities, operating methods and capital expenditure plans, including impacts due to low oil and/or natural gas prices or the economic or regulatory environment;

• risks associated with the limited trading volume of our common stock on the NYSE American Stock Exchange, including potential fluctuation in the trading prices of our common stock;

• risks and uncertainties associated with our completed restructuring process, including the outcome of a pending appeal of the order confirming the plan of reorganization;

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• risks associated with the reliance on third-party analysts, appraisers, engineers and other experts;

• present and possible future claims, litigation or enforcement actions or investigations;

• risks associated with changes in industry practices and operational technologies and the impact on our business;

• risks associated with the operation, construction, development and closure of salt water disposal wells, solids and liquids transportation assets, landfills and pipelines, including access to additional locations and rights-of-way, permitting and licensing, environmental remediation obligations, unscheduled delays or inefficiencies and reductions in volume due to micro- and macro-economic factors or the availability of less expensive alternatives;

• the effects of competition in the markets in which we operate, including the adverse impact of competitive product announcements or new entrants into our markets and transfers of resources by competitors into our markets;

• changes in economic conditions in the markets in which we operate or in the world generally, including as a result of political uncertainty;

• reduced demand for our services due to regulatory or other influences related to extraction methods such as hydraulic fracturing, shifts in production among shale areas in which we operate or into shale areas in which we do not currently have operations;

• the unknown future impact of changes in laws and regulation on waste management and disposal activities, including those impacting the delivery, storage, collection, transportation, and disposal of waste products, as well as the use or reuse of recycled or treated products or byproducts;

• risks involving developments in environmental or other governmental laws and regulations in the markets in which we operate and our ability to effectively respond to those developments including laws and regulations relating to oil and natural gas extraction businesses, particularly relating to water usage, and the disposal and transportation of liquid and solid wastes;

• natural disasters, such as hurricanes, earthquakes and floods, or acts of terrorism, or extreme weather conditions, that may impact our business locations, assets, including wells or pipelines, distribution channels, or which otherwise disrupt our or our customers’ operations or the markets we serve; and

• other risks identified in this Quarterly Report or referenced from time to time in our filings with the United States Securities and Exchange Commission.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this Quarterly Report. Except as required by law, we do not undertake any obligation to update or release any revisions to these forward-looking statements to reflect any events or circumstances, whether as a result of new information, future events, changes in assumptions or otherwise, after the date hereof.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	June 30,			December 31,
	2019			2018
Assets
Cash and cash equivalents	$	5,978		$	7,302
Restricted cash	1,875			656
Accounts receivable, net of allowance for doubtful accounts of $1.4 million and $1.6 million at June 30, 2019 and December 31, 2018, respectively	28,777			31,392
Inventories	3,213			3,358
Prepaid expenses and other receivables	3,011			2,435
Other current assets	518			1,582
Assets held for sale	4,504			2,782
Total current assets	47,876			49,507
Property, plant and equipment, net of accumulated depreciation of $83.2 million and $73.6 million at June 30, 2019 and December 31, 2018, respectively	203,354			215,640
Operating lease assets	3,612			—
Equity investments	38			41
Intangibles, net	882			1,112
Goodwill	29,518			29,518
Other assets	99			118
Total assets	$	285,379		$	295,936
Liabilities and Shareholders’ Equity
Accounts payable	$	7,052		$	9,061
Accrued and other current liabilities	14,144			16,670
Current portion of long-term debt	6,664			38,305
Current contingent consideration	500			500
Derivative warrant liability	6			34
Total current liabilities	28,366			64,570
Long-term debt	30,272			27,628
Noncurrent operating lease liabilities	1,653			—
Deferred income taxes	293			181
Other long-term liabilities	7,364			7,130
Total liabilities	67,948			99,509
Commitments and contingencies
Shareholders’ equity:
Common stock	157			122
Additional paid-in capital	337,018			303,463
Treasury stock	(402		)	—
Accumulated deficit	(119,342		)	(107,158		)
Total shareholders’ equity	217,431			196,427
Total liabilities and shareholders’ equity	$	285,379		$	295,936

The accompanying notes are an integral part of these statements.

6

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Revenue:
Service revenue	$	41,238		$	45,320		$	80,239		$	90,847
Rental revenue	4,002			3,628			7,628			7,770
Total revenue	45,240			48,948			87,867			98,617
Costs and expenses:
Direct operating expenses	34,517			39,069			67,074			80,696
General and administrative expenses	5,280			6,014			10,755			25,334
Depreciation and amortization	9,277			11,969			18,412			26,713
Impairment of long-lived assets	—			332			117			4,463
Other, net	(6		)	469			(6		)	1,068
Total costs and expenses	49,068			57,853			96,352			138,274
Operating loss	(3,828		)	(8,905		)	(8,485		)	(39,657		)
Interest expense, net	(1,297		)	(1,204		)	(2,718		)	(2,454		)
Other income, net	152			587			177			514
Reorganization items, net	13			(1,654		)	(210		)	(1,746		)
Loss before income taxes	(4,960		)	(11,176		)	(11,236		)	(43,343		)
Income tax expense	(46		)	—			(125		)	—
Net loss	$	(5,006	)	$	(11,176	)	$	(11,361	)	$	(43,343	)
Earnings per common share:
Net loss per basic common share	$	(0.32	)	$	(0.96	)	$	(0.73	)	$	(3.71	)
Net loss per diluted common share	$	(0.32	)	$	(0.96	)	$	(0.73	)	$	(3.71	)
Weighted average shares outstanding:
Basic	15,704			11,696			15,627			11,696
Diluted	15,704			11,696			15,627			11,696

The accompanying notes are an integral part of these statements.

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NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Common Stock			Additional Paid-In Capital			Treasury Stock					Accumulated Deficit			Total
	Shares	Amount					Shares		Amount
Balance at January 1, 2019	12,233	$	122	$	303,463		—		$	—		$	(107,158	)	$	196,427
Adjustment due to adoption of ASC 842, Leases	—	—		—			—		—			(823		)	(823		)
Issuance of common stock for Rights Offering	3,382	34		32,141			—		—			—			32,175
Issuance of common stock to employees	97	1		(1		)	—		—			—			—
Treasury stock acquired through surrender of shares for tax withholding	—	—		—			(34	)	(373		)	—			(373		)
Share-based compensation	—	—		852			—		—			—			852
Net loss	—	—		—			—		—			(6,355		)	(6,355		)
Balance at March 31, 2019	15,712	$	157	$	336,455		(34	)	$	(373	)	$	(114,336	)	$	221,903
Issuance of common stock to employees	34	$	—	—			—		—			—			—
Treasury stock acquired through surrender of shares for tax withholding	—	—		—			(3	)	(29		)	—			(29		)
Share-based compensation	—	—		563			—		—			—			563
Net loss	—	—		—			—		—			(5,006		)	(5,006		)
Balance at June 30, 2019	15,746	$	157	$	337,018		(37	)	$	(402	)	$	(119,342	)	$	217,431
Balance at January 1, 2018	11,696	$	117	$	290,751		—		$	—		$	(47,895	)	$	242,973
Share-based compensation	—	—		10,978			—		—			—			10,978
Net loss	—	—		—			—		—			(32,167		)	(32,167		)
Balance at March 31, 2018	11,696	$	117	$	301,729		—		—			$	(80,062	)	$	221,784
Stock-based compensation	—	—		416			—		—			$	—		$	416
Net loss	—	—		—			—		—			(11,176		)	(11,176		)
Balance at June 30, 2018	11,696	$	117	$	302,145		—		$	—		$	(91,238	)	$	211,024

8

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(11,361	)	$	(43,343	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	18,412			26,713
Amortization of debt issuance costs, net	247			—
Accrued interest added to debt principal	—			119
Stock-based compensation	1,415			11,394
Impairment of long-lived assets	117			4,463
Gain on sale of UGSI	—			(75		)
Gain on disposal of property, plant and equipment	(1,706		)	(254		)
Bad debt (recoveries) expense	(9		)	120
Change in fair value of derivative warrant liability	(28		)	(289		)
Deferred income taxes	112			—
Other, net	55			221
Changes in operating assets and liabilities:
Accounts receivable	2,724			(1,631		)
Prepaid expenses and other receivables	(576		)	(99		)
Accounts payable and accrued liabilities	(6,059		)	2,243
Other assets and liabilities, net	1,111			(54		)
Net cash provided by (used in) operating activities	4,454			(472		)
Cash flows from investing activities:
Proceeds from the sale of property, plant and equipment	4,525			17,649
Purchases of property, plant and equipment	(5,019		)	(7,103		)
Proceeds from the sale of UGSI	—			75
Net cash (used in) provided by investing activities	(494		)	10,621
Cash flows from financing activities:
Payments on First and Second Lien Term Loans	(2,514		)	(1,597		)
Proceeds from Revolving Facility	96,677			117,092
Payments on Revolving Facility	(96,677		)	(117,092		)
Payments on Bridge Term Loan	(31,382		)	—
Proceeds from the issuance of stock	31,057			—
Payments on finance leases and other financing activities	(1,226		)	(980		)
Net cash used in financing activities	(4,065		)	(2,577		)
Change in cash, cash equivalents and restricted cash	(105		)	7,572
Cash and cash equivalents, beginning of period	7,302			5,488
Restricted cash, beginning of period	656			1,296
Cash, cash equivalents and restricted cash, beginning of period	7,958			6,784
Cash and cash equivalents, end of period	5,978			12,808
Restricted cash, end of period	1,875			1,548
Cash, cash equivalents and restricted cash, end of period	$	7,853		$	14,356

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	Six Months Ended
	June 30,
	2019		2018
Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,218	$	1,967
Cash paid for taxes, net	138		207
Common stock issued to settle Bridge Term Loan	1,118		—

The accompanying notes are an integral part of these statements.

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NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - Basis of Presentation

The accompanying condensed consolidated financial statements of Nuverra Environmental Solutions, Inc. and its subsidiaries (collectively, “Nuverra,” the “Company,” “we,” “us,” or “our”) are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Our condensed consolidated balance sheet as of December 31, 2018, included herein, has been derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (or “GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, the condensed consolidated financial statements include the normal, recurring adjustments necessary for the fair statement of the results for the interim periods. These financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, contained in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 12, 2019 (the “2018 Annual Report on Form 10-K”).

All dollar and share amounts in the footnote tabular presentations are in thousands, except per share amounts and unless otherwise noted.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASC 842”), replacing the previous leasing standard Accounting Standards Codification 840, Leases (“ASC 840”), which requires an entity that is a lessee to recognize the assets and liabilities arising from leases with terms longer than 12 months on the balance sheet. Leases are to be classified as either operating or finance, with classification affecting the pattern of expense recognition in the statement of operations. The new standard was effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods.

We adopted this new lease standard on January 1, 2019 using a modified retrospective transition, with the cumulative-effect adjustment to the opening balance of accumulated deficit as of the effective date (the “effective date method”). Under the effective date method, financial results reported in periods prior to 2019 are unchanged. We also elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carryforward the historical lease classification. In addition, we have made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. We will continue to recognize those lease payments in the consolidated statement of operations on a straight-line basis over the lease term.

The adoption of the new lease standard resulted in the recognition of operating lease assets and operating lease liabilities of approximately $4.9 million, respectively, as of January 1, 2019. Additionally, as of January 1, 2019, we recorded an adjustment of $0.8 million to accumulated deficit as a result of the re-measurement of the present value of remaining lease payments for the finance leases previously recorded as capital leases. The finance lease assets and finance lease liabilities as of January 1, 2019 were $1.8 million, respectively. We believe the adoption of the new lease standard will not materially impact our results of operations, nor have a notable impact on our liquidity. See Note 3 for further information on our leases.

There have been no other material changes or developments in our significant accounting policies or evaluation of accounting estimates and underlying assumptions or methodologies from those disclosed in our 2018 Annual Report on Form 10-K.

Note 2 - Revenues

Revenues are generated upon the performance of contracted services under formal and informal contracts with customers. Revenues are recognized when the contracted services for our customers are completed in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Sales and usage-based taxes are excluded from revenues. Payment is due when the contracted services are completed in accordance with the payment terms established with each customer prior to providing any services. As such, there is no significant financing component for any of our revenues.

Some of our contracts with customers involve multiple performance obligations as we are providing more than one service under the same contract, such as water transfer services and disposal services. However, our core service offerings are capable of being distinct and also are distinct within the context of contracts with our customers. As such, these services represent separate performance obligations when included in a single contract. We have standalone pricing for all of our services which is

11

negotiated with each of our customers in advance of providing the service. The contract consideration is allocated to the individual performance obligations based upon the standalone selling price of each service, and no discount is offered for a bundled services offering.

Contract Assets

	Contract Asset
Balance at the beginning of the period (January 1, 2019)	$	—
Balance at the end of the period (June 30, 2019)	512
Increase/(decrease)	512

During the three months ended June 30, 2019, we recorded a contract asset as a result of a contract modification for disposal services. There were no contract assets reclassified to receivables during the three months endedJune 30, 2019. The contract asset is included in “Other current assets” on the condensed consolidated balance sheet as of June 30, 2019.

Disaggregated Revenues

The following tables present our revenues disaggregated by revenue source for each reportable segment for the three and six months ended June 30, 2019 and June 30, 2018:

	Three months ended June 30, 2019
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	18,448	$	7,296	$	2,726	$	—	$	28,470
Disposal Services	5,146		3,098		2,739		—		10,983
Other Revenue	1,471		255		59		—		1,785
Total Service Revenue	25,065		10,649		5,524		—		41,238
Rental Revenue	3,928		71		3		—		4,002
Total Revenue	$	28,993	$	10,720	$	5,527	$	—	$	45,240

	Three months ended June 30, 2018
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	21,967	$	8,230	$	5,014	$	—	$	35,211
Disposal Services	4,540		955		1,081		—		6,576
Other Revenue	3,120		362		51		—		3,533
Total Service Revenue	29,627		9,547		6,146		—		45,320
Rental Revenue	3,538		59		31		—		3,628
Total Revenue	$	33,165	$	9,606	$	6,177	$	—	$	48,948

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	Six months ended June 30, 2019
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	34,157	$	15,268	$	6,210	$	—	$	55,635
Disposal Services	9,217		6,597		5,145		—		20,959
Other Revenue	3,017		557		71		—		3,645
Total Service Revenue	46,391		22,422		11,426		—		80,239
Rental Revenue	7,479		138		11		—		7,628
Total Revenue	$	53,870	$	22,560	$	11,437	$	—	$	87,867

	Six months ended June 30, 2018
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	43,227	$	16,249	$	13,125	$	—	$	72,601
Disposal Services	8,152		1,732		2,317		—		12,201
Other Revenue	5,244		616		185		—		6,045
Total Service Revenue	56,623		18,597		15,627		—		90,847
Rental Revenue	7,312		122		336		—		7,770
Total Revenue	$	63,935	$	18,719	$	15,963	$	—	$	98,617

Water Transfer Services

The majority of our revenues are from the removal and disposal of flowback and produced salt water originating from oil and natural gas wells or the transportation of fresh water and salt water to customer sites for use in drilling and hydraulic fracturing activities by trucks or through lay flat temporary hose or permanent water transport pipelines. Water transfer rates for trucking are based upon either a fixed fee per barrel of disposal water or upon an hourly rate. Revenue is recognized once the water has been transferred, or over time, based upon the number of barrels transported or disposed of, or at the agreed upon hourly rate, depending upon the customer contract. Contracts for the use of our water disposal pipeline are priced at a fixed fee per disposal barrel transferred, with revenues recognized over time from when the water is injected into our pipeline until the transfer is complete. Water transfer services are all generally completed within 24 hours with no remaining performance obligation outstanding at the end of each month.

Disposal Services

Revenues for disposal services are generated through fees charged for disposal of oilfield wastes in our landfill and disposal of fluids in our disposal wells. Disposal rates are generally based on a fixed fee per barrel of produced water, or on a per ton basis for landfill disposal, with revenues recognized once the disposal has occurred. The performance obligation for disposal services is considered complete once the disposal occurs. Therefore, disposal services revenues are recognized at a point in time.

Other Revenue

Other revenue primarily includes revenues from the sale of fresh water, as well as the sale of “junk” or “slop” oil obtained through the skimming of disposal water. Revenue is recognized for fresh water sales and “junk” or “slop” oil sales at a point in time once the goods are transferred. Also included is revenue generated by oilfield labor services, also called “roustabout work,” provided by the Company. Revenue is recognized in other revenue for the oilfield labor services once the activity has been performed, or over time, based on the agreed upon hourly rate, depending upon the customer contract. Oilfield labor services are short-term in nature with hours tracked each day services are provided. As such, there are no remaining performance obligations outstanding at the end of each month.

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Other revenue also historically included small-scale construction or maintenance projects, however we exited that business during the three months ended June 30, 2018. Revenue for construction and maintenance projects, which generally spanned approximately two to three months, was recognized over time under the milestone method which is considered an output method. Since our construction contracts were short term in nature, the contractual milestone dates occurred close together over time such that there was no risk that we would not recognize revenue for goods or services transferred to the customer. All construction costs were expensed as incurred.

Rental Revenue

We generate rental revenue from the rental of various equipment used in wellsite services. Rental rates are based upon negotiated rates with our customers and revenue is recognized over the rental service period. Revenues from rental equipment are recognized under ASC 840 for the periods prior to January 1, 2019, and under ASC 842 for the periods after January 1, 2019. As the rental service period for our equipment is very short term in nature and does not include any sales-type or direct financing leases, nor any variable rental components, the adoption of ASC 842 in 2019 did not have a material impact upon our consolidated statement of operations.

Note 3 - Leases

We lease vehicles, transportation equipment, real estate and certain office equipment. We determine if an arrangement is a lease at inception. Operating and finance lease assets represent our right to use an underlying asset for the lease term, and operating and finance lease liabilities represent our obligation to make lease payments arising from the lease. Operating and finance lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term. Absent a documented borrowing rate from the lessor, we use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments.

Most of our leases have remaining lease terms of less than one year to 20 years, with one lease having a term of 99 years. Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis. Some of our vehicle leases include residual value guarantees. It is probable that we will owe approximately $2.2 million under the residual value guarantee, therefore this amount has been included in the measurement of the lease liability and leased asset.

The components of lease expense were as follows:

		Three Months Ended			Six Months Ended
Lease Cost	Classification	June 30, 2019			June 30, 2019
Operating lease cost (a)	General and administrative expenses	$	729		$	1,453
Finance lease cost:
Amortization of leased assets	Depreciation and amortization	679			1,225
Interest on lease liabilities	Interest expense, net	177			240
Variable lease cost	General and administrative expenses	1,055			2,121
Sublease income	Other income, net	(22		)	(73		)
Total net lease cost		$	2,618		$	4,966

(a) Includes short-term leases which represented $0.2 million and $0.4 million of the balance for the three and six months endedJune 30, 2019, respectively.

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Supplemental balance sheet, cash flow and other information related to leases was as follows (in thousands, except lease term and discount rate):

Leases	Classification	June 30, 2019
Assets:
Operating lease assets	Operating lease assets	$	3,612
Finance lease assets	Property, plant and equipment, net of accumulated depreciation (a)	7,166
Total leased assets		$	10,778
Liabilities:
Current
Operating lease liabilities	Accrued and other current liabilities	$	1,980
Finance lease liabilities	Current portion of long-term debt	2,040
Noncurrent
Operating lease liabilities	Noncurrent operating lease liabilities	1,653
Finance lease liabilities	Long-term debt	5,614
Total lease liabilities		$	11,287

(a) Finance lease assets are recorded net of accumulated amortization of $1.2 million as of June 30, 2019.

Lease Term and Discount Rate	June 30, 2019
Weighted-average remaining lease term (in years):
Operating leases	20.5
Finance leases	4.5
Weighted-average discount rate:
Operating leases	7.86	%
Finance leases	6.68	%

Supplemental Disclosure of Cash Flow Information and Other Information	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,453
Operating cash flows from finance leases	240
Financing cash flows from finance leases	824
Leased assets obtained in exchange for new operating lease liabilities	$	—
Leased assets obtained in exchange for new finance lease liabilities	6,674

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Maturities of lease liabilities were as follows:

	June 30, 2019
	Operating Leases (a)			Finance Leases (b)
2019	$	1,522		$	1,170
2020	1,530			1,980
2021	430			1,270
2022	290			1,270
2023	164			2,113
Thereafter	6,759			1,750
Total lease payments	10,695			9,553
Less amount representing executory costs (c)	(114		)	—
Net lease payments	10,581			9,553
Less amount representing interest	(6,948		)	(1,899		)
Present value of total lease liabilities	3,633			7,654
Less current lease liabilities	(1,980		)	(2,040		)
Long-term lease liabilities	$	1,653		$	5,614

(a) Operating lease payments include $0.0 million related to options to extend lease terms that are reasonably certain of being exercised.

(b) Finance lease payments include $0.0 million related to options to extend lease terms that are reasonably certain of being exercised.

(c) Represents executory costs for all leases. We included executory costs in lease payments under ASC 840, and have elected to continue to include executory costs for both leases that commenced before and after the effective date of ASC 842.

As of June 30, 2019, we have additional finance lease commitments that have not yet commenced of approximately $3.3 million for 20 water transfer trucks to be delivered in the third quarter of 2019 with lease terms of four years.

Disclosures related to periods prior to adoption of ASC 842

Lease expense under operating leases was approximately $1.2 million and $2.4 million during the three and six months endedJune 30, 2018. As of December 31, 2018, future minimum lease payments, by year and in the aggregate, under all noncancellable leases were as follows:

	December 31, 2018
	Operating Leases		Capital Leases
2019	$	2,415	$	1,287
2020	1,453		718
2021	431		—
2022	294		—
2023	164		—
Thereafter	6,755		—
Total lease payments	$	11,512	2,005
Less amount representing executory costs			(30		)
Net lease payments			1,975
Less amount representing interest			(90		)
Present value of net lease payments			$	1,885

Note 4 - Acquisition of Clearwater

On October 5, 2018, we completed the acquisition of Clearwater Three, LLC, Clearwater Five, LLC, and Clearwater Solutions, LLC (collectively, “Clearwater”) for an initial purchase price of $42.3 million, subject to customary working capital

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adjustments (the “Clearwater Acquisition”). Clearwater is a supplier of waste water disposal services used by the oil and gas industry in the Marcellus and Utica Shale areas. Clearwater has three salt water disposal wells in service, all of which are located in Ohio. This acquisition expands our service offerings in the Marcellus and Utica Shale areas in our Northeast division not only by providing additional disposal capacity, but also by providing synergies for trucking.

Consideration consisted of $42.3 million in cash which was funded primarily by a $32.5 million bridge loan (the “Bridge Term Loan”) that was repaid with proceeds from an offering to our shareholders to purchase shares of our common stock on a pro rata basis with an aggregate offering price of $32.5 million (the “Rights Offering”). The Bridge Term Loan was extended pursuant to the Bridge Term Loan Agreement, entered October 5, 2018 (the “Bridge Term Loan Credit Agreement”), with the lenders party thereto (the “Bridge Term Loan Lenders”) and Wilmington Savings Fund Society, FSB, as administrative agent (“Wilmington”). In addition, our credit agreement lenders provided us with an additional term loan under the First Lien Credit Agreement, entered August 7, 2017, by and among the lenders party thereto, ACF FinCo I, LP, as administrative agent, and the Company (the “Credit Agreement”) in the amount of $10.0 million which was used to finance a portion of the Clearwater Acquisition (the “First Lien Term Loan”). See Note 5 for further discussion on the Rights Offering.

During the three months ended March 31, 2019, we recorded an adjustment for the backstop fee for the Rights Offering (see Note 5) to additional paid-in-capital which was previously expensed and resulted in a credit of $0.3 million to general and administrative costs in the accompanying condensed consolidated statements of operations. Total adjusted transaction costs for the Clearwater Acquisition were $1.1 million, the majority of which were recorded during the year ended December 31, 2018.

Under the acquisition method of accounting, the total purchase price was allocated to the identifiable assets acquired and the liabilities assumed based on our preliminary valuation estimates of the fair values as of the acquisition date. The final working capital was agreed upon during the three months ended March 31, 2019, which resulted in no changes to the purchase price allocation. As such, we believe that the purchase price allocation is final.

The final allocation of the purchase price is summarized as follows:

Accounts receivable	$	1,897
Intangible assets	799
Property, plant and equipment	37,589
Goodwill	2,379
Accounts payable and accrued expenses	(372		)
Total	$	42,292

The purchase price allocation requires subjective estimates that, if incorrectly estimated, could be material to our condensed consolidated financial statements including the amount of depreciation and amortization expense. The fair value of the tangible assets, which are primarily comprised of the three salt water disposal wells, was estimated using the discounted cash flow method, a form of the income approach. This method estimates the fair value of the assets based upon the present value of the expected cash flows. Estimates that impact the measurement of the tangible assets using the discounted cash flow method are the discount rate and the timing and amount of cash flows. The intangible assets acquired, which primarily consists of the trade name, were valued using the relief from royalty method. The value of the trade name encompasses all items necessary to generate revenue utilizing the trade name. Estimates that impact the measurement of the intangible assets acquired are net sales projections, and the discount and royalty rates used. The entire goodwill balance resulting from the Clearwater Acquisition is expected to be deductible for tax purposes and is all related to the Northeast division. The estimated fair value of the assets acquired and the liabilities assumed represents a nonrecurring Level 3 fair value estimate.

Pro forma financial information is not presented as the revenues and earnings of the Clearwater Acquisition are not material to our consolidated statement of operations.

Note 5 - Equity

Rights Offering

In connection with the Clearwater Acquisition, we agreed, pursuant to our Bridge Term Loan Credit Agreement, to use our reasonable best efforts to effectuate and close a Rights Offering. In connection with the Rights Offering, we entered into a Backstop Commitment Letter on October 5, 2018 (the “Backstop Commitment Letter”) with certain backstop parties named therein (the “Backstop Parties”), pursuant to which the Backstop Parties agreed, subject to the terms and conditions in the Backstop Commitment Letter, to participate in the Rights Offering and agreed to acquire all unsubscribed shares remaining

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after stockholders exercised their over-subscription privilege. The Backstop Parties are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. In exchange for the commitments under the Backstop Commitment Letter, we paid to the Backstop Parties, in the aggregate, a nonrefundable cash payment equal to 1.0% of the full amount of the Rights Offering. This fee was recorded to additional paid-in-capital during the three months ended March 31, 2019.

Pursuant to the Backstop Commitment Letter, we were required to file a registration statement with the SEC within 20 days following October 5, 2018. This initial Registration Statement on Form S-1 was filed with the SEC on October 25, 2018, with amendments to the Form S-1 filed on December 4, 2018 and December 7, 2018. The Registration Statement on Form S-1 was declared effective by the SEC on Friday, December 7, 2018. The Rights Offering launched at the close of business on December 10, 2018 and terminated, as to unexercised rights, at 5:00 p.m. New York City time on December 28, 2018.

We sold an aggregate of 3,381,894 shares of common stock at a purchase price of $9.61 per share in the Rights Offering. On January 2, 2019, we received the aggregate cash proceeds from the Rights Offering of $31.4 million. Additionally, one of the Backstop Parties elected to satisfy the backstop commitment by converting $1.1 million of the Bridge Term Loan to common stock. The aggregate cash proceeds from the Rights Offering were used to repay the remaining $31.4 million balance of the Bridge Term Loan, satisfying the obligations under the Bridge Term Loan Credit Agreement. The shares of common stock subscribed for in the Rights Offering were distributed to applicable offering participants through our transfer agent or through the clearing systems of the Depository Trust Company, which commenced on January 2, 2019. Immediately after the issuance of the 3,381,894 shares for the Rights Offering which commenced on January 2, 2019, the Company had 15,614,981 common shares outstanding.

Other Equity Issuances

During the six months endedJune 30, 2019, we issued common stock for our share-based compensation program which is discussed further in Note 15.

Note 6 - Earnings Per Common Share

Net loss per basic and diluted common share have been computed using the weighted average number of shares of common stock outstanding during the period. For the three and six months endedJune 30, 2019 and June 30, 2018, no shares of common stock underlying stock options, restricted stock or warrants were included in the computation of diluted earnings per common share because the inclusion of such shares would be anti-dilutive based on the net losses reported for those periods.

The following table presents the calculation of basic and diluted net loss per common share, as well as the anti-dilutive stock-based awards that were excluded from the calculation of diluted loss per share for the periods presented:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Numerator: Net loss	$	(5,006	)	$	(11,176	)	$	(11,361	)	$	(43,343	)
Denominator:
Weighted average shares—basic	15,704			11,696			15,627			11,696
Common stock equivalents	—			—			—			—
Weighted average shares—diluted	15,704			11,696			15,627			11,696
Earnings per common share:
Net loss per basic common share	$	(0.32	)	$	(0.96	)	$	(0.73	)	$	(3.71	)
Net loss per diluted common share	$	(0.32	)	$	(0.96	)	$	(0.73	)	$	(3.71	)
Anti-dilutive stock-based awards excluded:	559			1,131			513			1,227

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Note 7 - Goodwill and Intangible Assets

Goodwill

There were no changes in the carrying value of goodwill during the six months endedJune 30, 2019. Of the $29.5 million reported as goodwill as of June 30, 2019, and December 31, 2018, respectively, $21.9 million relates to the Northeast division, $4.9 million relates to the Rocky Mountain division, and $2.7 million relates to the Southern division.

Intangible Assets

Intangible assets consist of the following:

	June 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net		Remaining Useful Life (Years)
Disposal permits	$	581	$	(232	)	$	349	5.2
Trade name	799		(266		)	533		1.5
Total intangible assets	$	1,380	$	(498	)	$	882	3.0

	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net		Remaining Useful Life (Years)
Disposal permits	$	581	$	(180	)	$	401	5.5
Trade name	799		(88		)	711		2.0
Total intangible assets	$	1,380	$	(268	)	$	1,112	3.2

The remaining weighted average useful lives shown are calculated based on the net book value and remaining amortization period of each respective intangible asset.

Note 8 - Assets Held for Sale and Impairment

During 2019, management approved plans to sell real property located in both the Northeast and Rocky Mountain divisions. As a result, we began to actively market these assets, which we expect to sell within one year. In accordance with applicable accounting guidance, the real property was recorded at the lower of net book value or fair value less costs to sell and reclassified to “Assets held for sale” on the condensed consolidated balance sheet during the six months ended June 30, 2019. As the fair value of the real property reclassified as held for sale in the Northeast division was lower than its net book value, we recorded an impairment charge of $0.1 million during the six months ended June 30, 2019 which is included in “Impairment of long-lived assets” on our condensed consolidated statements of operations.

During the three months ended March 31, 2018, management approved a plan to sell certain assets located in the Southern division as a result of exiting the Eagle Ford Shale area. See Note 13 for additional details on the exit of the Eagle Ford Shale area. In addition, during the three months ended March 31, 2018, management approved the sale of certain assets, primarily frac tanks, located in the Northeast division, that were expected to sell within one year. These assets qualified to be classified as assets held for sale and as a result were recorded at the lower of net book value or fair value less costs to sell, which resulted in a long-lived asset impairment charge of $4.1 million during the three months ended March 31, 2018. Of the $4.1 million recorded, $4.0 million related to the Southern division for the Eagle Ford exit and $0.1 million related to the Northeast division, and is included in “Impairment of long-lived assets” on our condensed consolidated statements of operations.

During the three months ended June 30, 2018, we recorded an impairment charge of $0.3 million for the Corporate division to “Impairment of long-lived assets” on our condensed consolidated statements of operations related to the sale of certain real property in Texas as the fair value was lower than net book value. The real property was approved to be sold as part of the Eagle Ford closure.

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Note 9 - Fair Value Measurements

Measurements

Fair value represents an exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 — Observable inputs such as quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

• Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Liabilities measured at fair value on a recurring basis and the fair value hierarchy of the valuation techniques we utilized to determine such fair value included significant unobservable inputs (Level 3) and were as follows:

	June 30, 2019		December 31, 2018
Derivative warrant liability	$	6	$	34

Derivative Warrant Liability

Upon emergence from chapter 11 on August 7, 2017 (the “Effective Date”), pursuant to the prepackaged plan of reorganization (the “Plan”), we issued to the holders of our pre-Effective Date9.875%Senior Notes due 2018 (the “2018 Notes”) and holders of certain claims relating to the rejection of executory contracts and unexpired leases118,137warrants with an exercise price of$39.82and a termexpiring seven years from the Effective Date. Each warrant is exercisable foroneshare of our common stock, par value$0.01. The warrants issued were determined to be derivative liabilities.

Our derivative warrant liability is adjusted to reflect the estimated fair value at each quarter end, with any decrease or increase in the estimated fair value recorded in “Other income, net” in the condensed consolidated statements of operations. We used Level 3 inputs for the valuation methodology of the derivative liabilities. The estimated fair values were computed using a Monte Carlo simulation model. The key inputs in determining our derivative warrant liability typically include our stock price, the volatility of our stock price, and the risk free interest rate. Future changes in these factors could have a significant impact on the computed fair value of the derivative warrant liability. As such, we expect future changes in the fair value of the warrants could vary significantly from quarter to quarter.

The following table provides a reconciliation of the beginning and ending balances of the “Derivative warrant liability” presented in the condensed consolidated balance sheet during the six months endedJune 30, 2019, and the year ended December 31, 2018.

	Six Months Ended			Year Ended
	June 30, 2019			December 31, 2018
Balance at beginning of period	$	34		$	477
Adjustments to estimated fair value	(28		)	(443		)
Balance at end of period	$	6		$	34

Other

Assets acquired and liabilities assumed in business combinations are also measured at fair value on a nonrecurring basis using Level 3 inputs. See Note 4 for further discussion on the measurement of the assets and liabilities acquired in the Clearwater Acquisition.

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Note 10 - Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following at June 30, 2019 and December 31, 2018:

	June 30, 2019		December 31, 2018
Accrued payroll and employee benefits	$	4,102	$	6,975
Accrued insurance	3,416		2,664
Accrued legal	91		733
Accrued taxes	1,036		2,229
Accrued interest	293		520
Accrued operating costs	2,833		3,424
Accrued other	393		125
Current operating lease liabilities	1,980		—
Total accrued and other current liabilities	$	14,144	$	16,670

Note 11 - Debt

Debt consisted of the following at June 30, 2019 and December 31, 2018:

			June 30, 2019							December 31, 2018
	Interest Rate	Maturity Date	Unamortized Debt Issuance Costs		Fair Value of Debt (e)		Carrying Value of Debt			Carrying Value of Debt
Revolving Facility (a)	7.68%	Feb. 2021	$	—	$	—	$	—		$	—
First Lien Term Loan (b)	9.68%	Feb. 2021	175		19,654		19,654			21,905
Second Lien Term Loan (b)	11.00%	Oct. 2021	—		9,803		9,803			10,066
Bridge Term Loan (c)	11.00%	Apr. 2019	—		—		—			32,500
Finance leases (d)	6.68%	Various	—		7,654		7,654			1,885
Total debt			$	175	$	37,111	37,111			66,356
Debt issuance costs presented with debt (f)							(175		)	(423		)
Total debt, net							36,936			65,933
Less: current portion of long-term debt							(6,664		)	(38,305		)
Long-term debt							$	30,272		$	27,628

_____________________

(a) The interest rate presented represents the interest rate as of June 30, 2019 on the $30.0 million revolving facility extended to the Company pursuant to the Credit Agreement (the “Revolving Facility”).

(b) Interest on the First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus 7.25%. Interest on the Second Lien Term Loan (as defined below) accrues at an annual rate equal to 11.0%, payable in cash, in arrears, on the first day of each month.

(c) The Bridge Term Loan Credit Agreement has an interest rate of 11.0% per annum, payable in cash, in arrears, on the first day of each month. The obligations under the Bridge Term Loan Credit Agreement were repaid in full on January 2, 2019.

(d) Our finance leases include finance lease arrangements related to fleet purchases and real property with a weighted-average annual interest rate of approximately 6.68%, which mature in varying installments between 2019 and 2029.

(e) Our Revolving Facility, First Lien Term Loan, Second Lien Term Loan, and finance leases bear interest at rates commensurate with market rates and therefore their respective carrying values approximate fair value.

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(f) The debt issuance costs resulted from an amendment to the First Lien Term Loan during the three months ended December 31, 2018, done in connection with the Clearwater Acquisition.

See below for a discussion of material changes and developments in our debt and its principal terms from those described in Note 13 to the consolidated financial statements in our 2018 Annual Report on Form 10-K.

Indebtedness

As of June 30, 2019, we had $37.1 million of indebtedness outstanding, consisting of $19.7 million under the First Lien Term Loan, $9.8 million under the second lien term loan facility (the “Second Lien Term Loan”) pursuant to the Second Lien Term Loan Agreement, dated August 7, 2017, by and among the lenders party thereto, Wilmington, and the Company (the “Second Lien Term Loan Agreement”), and $7.7 million of finance leases for vehicle financings and real property leases. Our Revolving Facility, First Lien Term Loan and Second Lien Term Loan contain certain affirmative and negative covenants, including a fixed charge coverage ratio covenant, as well as other terms and conditions that are customary for revolving credit facilities and term loans of this type. As of June 30, 2019, we were in compliance with all covenants.

Bridge Term Loan Credit Agreement

In connection with the Clearwater Acquisition on October 5, 2018, we entered into the Bridge Term Loan Credit Agreement. The Bridge Term Loan Lenders are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. Pursuant to the Bridge Term Loan Credit Agreement, the Bridge Term Loan Lenders provided the $32.5 million Bridge Term Loan, of which $22.5 million was used to finance the Clearwater Acquisition and the remaining $10.0 million was used to pay down certain amounts outstanding under the Second Lien Term Loan Agreement.

The Bridge Term Loan Credit Agreement required us to use our reasonable best efforts to effectuate and close the Rights Offering as soon as reasonably practicable following October 5, 2018. Upon the completion of the Rights Offering, we were required to prepay all outstanding amounts under the Bridge Term Loan Credit Agreement in cash in an amount equal to the net cash proceeds received from the Rights Offering. As discussed in Note 5, on January 2, 2019, we received the aggregate cash proceeds from the Rights Offering of $31.4 million. Additionally, one of the Backstop Parties elected to satisfy the backstop commitment by converting $1.1 million of the Bridge Term Loan to common stock. The aggregate cash proceeds from the Rights Offering were used to repay the remaining $31.4 million balance of the Bridge Term Loan, satisfying the obligations under the Bridge Term Loan Credit Agreement, and thereby terminating the Bridge Term Loan Credit Agreement.

Note 12 - Derivative Warrants

Upon emergence from chapter 11 on the Effective Date, pursuant to the Plan, we issued to the holders of the 2018 Notes and holders of certain claims relating to the rejection of executory contracts and unexpired leases warrants to purchase an aggregate of118,137shares of common stock, par value$0.01, at an exercise price of$39.82per share and with a termexpiring seven years from the Effective Date.

The following table shows the warrant activity for the six months endedJune 30, 2019 and June 30, 2018:

	Six Months Ended
	June 30,
	2019	2018
Outstanding at the beginning of the period	118	118
Issued	—	—
Exercised	—	—
Outstanding at the end of the period	118	118

Fair Value of Warrants

We account for warrants in accordance with the accounting guidance for derivatives, which sets forth a two-step model to be applied in determining whether a financial instrument is indexed to an entity’s own stock which would qualify such financial instruments for a scope exception. This scope exception specifies that a contract that would otherwise meet the definition of a derivative financial instrument would not be considered as such if the contract is both (i) indexed to the entity’s own stock and (ii) classified in the shareholders’ equity section of the entity’s balance sheet. We determined that warrants are ineligible for equity classification as the warrants are not indexed to our common stock and are recorded as derivative liabilities at fair value

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in the condensed consolidated balance sheets. The warrants are classified as a current liability in the condensed consolidated balance sheets as they could be exercised by the holders at any time.

As discussed previously in Note 9, the fair value of the derivative warrant liability is estimated using a Monte Carlo simulation model on the date of issue and is re-measured at each quarter end until expiration or exercise of the underlying warrants with the resulting fair value adjustment recorded in “Other (income) expense, net” in the condensed consolidated statements of operations.

The fair value of the derivative warrant liability as of June 30, 2019 and December 31, 2018 was estimated using the following model inputs:

	As of June 30,			As of December 31,
	2019			2018
Exercise price	$	39.82		$	39.82
Closing stock price	$	4.11		$	8.20
Risk free rate	1.75		%	2.51		%
Expected volatility	43.47		%	36.87		%

Note 13 - Restructuring and Exit Costs

Eagle Ford Shale Area

On March 1, 2018, the Board of Directors (the “Board”) determined it was in the best interests of the Company to cease our operations in the Eagle Ford Shale area in order to focus on other opportunities. The Board considered a number of factors in making this determination, including among other things, the historical and projected financial performance of our operations in the Eagle Ford Shale area, pricing for our services, capital requirements and projected returns on additional capital investment, competition, scope and scale of our operations, and recommendations from management. We substantially exited the Eagle Ford Shale area as of June 30, 2018. The total costs recognized in the restructuring during 2018 were approximately $1.1 million, and included severance and termination benefits, lease exit costs, and other exit costs related to the movement of vehicles, tanks and rental fleet.

There is no remaining liability for the Eagle Ford exit as of June 30, 2019. A rollforward of the liability from December 31, 2018 through June 30, 2019 is as follows:

	Lease Exit Costs
Balance accrued at beginning of period	$	19
Cash payments	(13		)
Adjustments to accrued balance	$	(6	)
Balance accrued at end of period	$	—

Mississippian Shale Area and Tuscaloosa Marine Shale Logistics Business

In March 2015, we initiated a plan to restructure our business in certain shale basins and reduce costs, including an exit from the Mississippian Shale area and the Tuscaloosa Marine Shale logistics business. Additionally, we closed certain yards within the Northeast and Southern divisions and transferred many of the related assets to our other operating locations. The total costs of the restructuring recognized in 2015 were approximately $7.1 million, and included severance and termination benefits, lease exit costs, other exits costs related to the movement of vehicles and rental fleet, and an asset impairment charge.

The remaining liability for the restructuring and exit costs incurred represents lease exit costs under non-cancellable operating leases and totaled approximately $8.0 thousand as of June 30, 2019, which is included in “Accrued and other current liabilities” in the condensed consolidated balance sheet. A rollforward of the liability from December 31, 2018 through June 30, 2019 is as

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follows:

	Lease Exit Costs
Balance accrued at beginning of period	$	33
Cash payments	(25		)
Balance accrued at end of period	$	8

Note 14 - Income Taxes

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019			2018		2019			2018
Current income tax expense	$	(4	)	$	—	$	(13	)	$	—
Deferred income tax expense	(42		)	—		(112		)	—
Total income tax expense	$	(46	)	$	—	$	(125	)	$	—

The effective income tax rate for the three and six months endedJune 30, 2019 was (0.9)% and (1.1)%, respectively, which differs from the federal statutory rate of 21.0%. The difference is primarily due to the increase in the valuation allowance on deferred tax assets resulting from current year losses.

We recorded no income tax expense during the three and six months endedJune 30, 2018. As a result, the effective income tax rate for the three and six months endedJune 30, 2018 was 0.0%, which differed from the federal statutory rate of 21.0%. The difference is primarily due to the increase in the valuation allowance on deferred tax assets resulting from current year losses.

We have significant deferred tax assets, consisting primarily of net operating losses, which have a limited life, generally expiring between the years 2032 and 2037, and capital losses, which begin to expire in 2020. We regularly assess the evidence available to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative losses incurred in recent years. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future taxable income.

In light of our continued ordinary losses, at June 30, 2019 we determined that our deferred tax liabilities were not sufficient to fully realize our deferred tax assets. Accordingly, a valuation allowance continues to be required against the portion of our deferred tax assets that is not offset by deferred tax liabilities. We expect our effective income tax rate to be near zero for the remainder of 2019.

Note 15 - Share-based Compensation

The Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the “Incentive Plan”) is intended to provide for the grant of equity-based awards to designated members of the Company’s management and employees. The maximum number of shares of the Company’s common stock that is available for the issuance of awards under the Incentive Plan is 1,772,058. As of June 30, 2019, approximately 720,000 shares were available for issuance under the Incentive Plan.

The 2018 Restricted Stock Plan for Directors (the “Director Plan”) provides for the grant of restricted stock to the non-employee directors of the Company. The Director Plan limits the shares that may be issued thereunder to 100,000 shares of common stock. As of June 30, 2019, approximately 75,000 shares were available for issuance under the Director Plan.

The total grants awarded under both the Incentive Plan and the Director Plan during the three and six months endedJune 30, 2019 and June 30, 2018 are presented in the table below:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019	2018	2019	2018
Stock option grants	—	—	—	—
Restricted stock grants (1)	23	6	142	1,331
Total grants in the period	23	6	142	1,331

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(1) Includes restricted stock awards, performance-based restricted stock units, and time-based restricted stock units granted under the Incentive Plan and the Director Plan.

The total share-based compensation expense, net of estimated forfeitures, included in “General and administrative expenses” in the accompanying condensed consolidated statements of operations for the three and six months endedJune 30, 2019 and June 30, 2018 was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Stock options	$	—	$	—	$	—	$	(788	)
Restricted stock (1)	563		416		1,415		12,182
Total expense	$	563	$	416	$	1,415	$	11,394

(1) Includes expense related to restricted stock awards, performance-based restricted stock units, and time-based restricted stock units granted under the Incentive Plan and the Director Plan.

Note 16 - Commitments and Contingencies

Environmental Liabilities

We are subject to the environmental protection and health and safety laws and related rules and regulations of the United States and of the individual states, municipalities and other local jurisdictions where we operate. Our operations are subject to rules and regulations promulgated by the Texas Railroad Commission, the Texas Commission on Environmental Quality, the Louisiana Department of Natural Resources, the Louisiana Department of Environmental Quality, the Ohio Department of Natural Resources, the Pennsylvania Department of Environmental Protection, the North Dakota Department of Health, the North Dakota Industrial Commission, Oil and Gas Division, the North Dakota State Water Commission, the Montana Department of Environmental Quality and the Montana Board of Oil and Gas, among others. These laws, rules and regulations address environmental, health and safety and related concerns, including water quality and employee safety. We have installed safety, monitoring and environmental protection equipment such as pressure sensors and relief valves, and have established reporting and responsibility protocols for environmental protection and reporting to such relevant local environmental protection departments as required by law.

We believe we are in material compliance with all applicable environmental protection laws and regulations in the United States and the states in which we operate. We believe that there are no unrecorded liabilities as of the periods reported herein in connection with our compliance with applicable environmental laws and regulations. The condensed consolidated balance sheet at June 30, 2019 and December 31, 2018 did not include any accruals for environmental matters.

Contingent Consideration for Ideal Settlement

On June 28, 2017, the Company and certain of its material subsidiaries (collectively with the Company, the “Nuverra Parties”) filed a motion with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking authorization to resolve unsecured claims related to the $8.5 million contingent consideration from the Ideal Oilfield Disposal LLC acquisition (the “Ideal Settlement”). On July 11, 2017, the Bankruptcy Court entered an order authorizing the Ideal Settlement. Pursuant to the approved settlement terms, the $8.5 million contingent claim was replaced with an obligation on the part of the applicable Nuverra Party to transfer $0.5 million to the counterparties to the Ideal Settlement upon emergence from chapter 11, and $0.5 million when the Ideal Settlement counterparties deliver the required permits and certificates necessary for the issuance of the second special waste disposal permit. The $0.5 million due upon emergence from chapter 11 was paid during the five months ended December 31, 2017. The remaining $0.5 million, due when the counterparties deliver the required permits and certificates necessary for the issuance of the second special waste disposal permit, has been classified as current and is reported in “Current contingent consideration” as of June 30, 2019, as these permits and certificates are expected to be received within one year.

State Sales and Use Tax Liabilities

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During the year ended December 31, 2017, the Pennsylvania Department of Revenue (or “DOR”) completed an audit of our sales and use tax compliance for the period January 1, 2012 through May 31, 2017. As a result of the audit, we were assessed by the DOR for additional state and local sales and use tax plus penalties and interest. During the years ended December 31, 2017 and 2018, we disputed various claims in the assessment made by the DOR through the appropriate boards of appeal and were able to obtain relief for many of the contested claims. However, in January of 2019, the final appeals board upheld an assessment of sales tax and interest that relates to one material position. We have appealed this decision to the Commonwealth of Pennsylvania as we continue to believe that the transactions involved are exempt from sales tax in Pennsylvania, and therefore we have not recorded an accrual as of June 30, 2019. If we lose this appeal, which could take several years to settle, we estimate that we would be required to pay between $1.0 million and $1.5 million to the DOR.

Note 17 - Legal Matters

Litigation

There are various lawsuits, claims, investigations and proceedings that have been brought or asserted against us, which arise in the ordinary course of business, including actions with respect to securities and shareholder class actions, personal injury, vehicular and industrial accidents, commercial contracts, legal and regulatory compliance, securities disclosure, labor and employment, and employee benefits and environmental matters, the more significant of which are summarized below. We record a provision for these matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any provisions are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information and events pertinent to a particular matter.

We believe that we have valid defenses with respect to legal matters pending against us. Based on our experience, we also believe that the damage amounts claimed in pending lawsuits are not necessarily a meaningful indicator of our potential liability. Litigation is inherently unpredictable, and it is possible that our results of operations or cash flow could be materially affected in any particular period by the resolution of one or more of the legal matters pending against us. We do not expect that the outcome of other current claims and legal actions not discussed below will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Chapter 11 Proceedings

On May 1, 2017, the Nuverra Parties filed voluntary petitions under chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court to pursue the Plan. On July 25, 2017, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan. The Plan became effective on the Effective Date, when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases, subject to certain conditions as set forth therein.

Confirmation Order Appeal

On July 26, 2017, David Hargreaves, an individual holder of 2018 Notes, appealed the Confirmation Order to the District Court of the District of Delaware (the “District Court”) and filed a motion for a stay pending appeal from the District Court.  Although the motion for a stay pending appeal was denied, the appeal remained pending and the District Court heard oral arguments in May 2018, and in August 2018 the District Court issued an order dismissing the appeal.  Hargreaves subsequently appealed the District Court’s decision to the United States Court of Appeals for the Third Circuit. The parties filed appellate briefs in December 2018 and January 2019, and as a result the appeal remains pending with the United States Court of Appeals for the Third Circuit.  The ultimate outcome of this appeal and its effects on the Confirmation Order are impossible to predict with certainty. No assurance can be given that the final disposition of this appeal will not affect the validity, enforceability or finality of the Confirmation Order.

Note 18 - Related Party and Affiliated Company Transactions

There have been no significant changes to the other related party transactions as described in Note 23 to the consolidated financial statements in our 2018 Annual Report on Form 10-K.

Note 19 - Segments

We evaluate business segment performance based on income (loss) before income taxes exclusive of corporate general and administrative costs and interest expense, which are not allocated to the segments. Our business is comprised of three operating divisions, which we consider to be operating and reportable segments of our operations: (1) the Northeast division comprising the Marcellus and Utica Shale areas, (2) the Southern division comprising the Haynesville Shale area and (3) the Rocky

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Mountain division comprising the Bakken Shale area. Corporate/Other includes certain corporate costs and certain other corporate assets.

Financial information for our reportable segments related to operations is presented below.

	Rocky Mountain			Northeast			Southern (b)			Corporate/ Other			Total
Three months ended June 30, 2019
Revenue	$	28,993		$	10,720		$	5,527		$	—		$	45,240
Direct operating expenses	22,354			8,607			3,556			—			34,517
General and administrative expenses	1,206			729			354			2,991			5,280
Depreciation and amortization	4,307			2,821			2,136			13			9,277
Operating income (loss)	1,126			(1,437		)	(513		)	(3,004		)	(3,828		)
Income (loss) before income taxes	1,041			(1,560		)	(576		)	(3,865		)	(4,960		)
Six months ended June 30, 2019
Revenue	53,870			22,560			11,437			—			87,867
Direct operating expenses	42,182			18,322			6,570			—			67,074
General and administrative expenses	2,252			1,575			753			6,175			10,755
Depreciation and amortization	8,606			5,485			4,296			25			18,412
Operating income (loss)	830			(2,939		)	(176		)	(6,200		)	(8,485		)
Income (loss) before income taxes	683			(3,155		)	(285		)	(8,479		)	(11,236		)
As of June 30, 2019
Total assets (a)	$	107,762		$	90,881		$	77,705		$	9,031		$	285,379
Total assets held for sale	2,876			850			—			778			4,504
Three months ended June 30, 2018
Revenue	33,165			9,606			6,177			—			48,948
Direct operating expenses	25,599			8,510			4,960			—			39,069
General and administrative expenses	1,882			518			251			3,363			6,014
Depreciation and amortization	5,923			3,283			2,750			13			11,969
Operating loss	(239		)	(2,705		)	(2,253		)	(3,708		)	(8,905		)
Loss before income taxes	(203		)	(2,780		)	(2,295		)	(5,898		)	(11,176		)
Six months ended June 30, 2018
Revenue	63,935			18,719			15,963			—			98,617
Direct operating expenses	51,945			16,324			12,427			—			80,696
General and administrative expenses	3,158			1,280			829			20,067			25,334
Depreciation and amortization	12,212			7,589			6,874			38			26,713
Operating loss	(3,380		)	(6,543		)	(9,297		)	(20,437		)	(39,657		)
Loss before income taxes	(3,405		)	(6,679		)	(9,406		)	(23,853		)	(43,343		)
As of December 31, 2018
Total assets (a)	113,767			88,501			84,318			9,350			295,936
Total assets held for sale	—			—			2,004			778			2,782

_____________________

(a) Total assets exclude intercompany receivables eliminated in consolidation.

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(b) The Southern division includes results for the Eagle Ford Shale area from January 1-June 30, 2018. We substantially exited the Eagle Ford Shale area as of June 30, 2018. See Note 13 for further discussion.

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

Special Note about Forward-Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements and related notes thereto. See “Forward-Looking Statements” on page 4 of this Quarterly Report on Form 10-Q (“Quarterly Report”) and “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 12, 2019 (the “2018 Annual Report on Form 10-K”) and in our other filings with the United States Securities and Exchange Commission (“SEC”) for a description of important factors that could cause actual results to differ from expected results.

Company Overview

Nuverra Environmental Solutions, Inc. and its subsidiaries (collectively, “Nuverra,” the “Company,” “we,” “us,” or “our”) are leading providers of water logistics and oilfield services to customers focused on the development and ongoing production of oil and natural gas from shale formations in the United States. Our business operations are organized into three geographically distinct divisions: the Rocky Mountain division, the Northeast division, and the Southern division. Within each division, we provide water transfer services, disposal services, and rental and other services associated with the drilling, completion, and ongoing production of shale oil and natural gas. These services and the related revenues are further described in Note 2 in the Notes to the Condensed Consolidated Financial Statements herein.

Rocky Mountain Division

The Rocky Mountain division is our Bakken Shale area business. The Bakken and underlying Three Forks shale formations are the two primary oil producing reservoirs currently being developed in this geographic region, which covers western North Dakota, eastern Montana, northwestern South Dakota and southern Saskatchewan. We have operations in various locations throughout North Dakota and Montana, including yards in Dickinson, Williston, Watford City, Tioga, Stanley, and Beach, North Dakota, as well as Sidney, Montana. Additionally, we operate a financial support office in Minot, North Dakota. As of June 30, 2019, we had 362 employees in the Rocky Mountain division.

Water Transfer Services

We manage a fleet of 189 trucks in the Rocky Mountain division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region. Additionally, our trucks collect and transport fresh water from water sources to operator locations for use in well completion activities.

In the Rocky Mountain division, we own an inventory of lay flat temporary hose as well as related pumps and associated equipment used to move fresh water from water sources to operator locations for use in completion activities. We employ specially trained field personnel to manage and operate this business. For customers who have secured their own source of fresh water, we provide and operate the lay flat temporary hose equipment to move the fresh water to the drilling and completion location. We may also use third-party sources of fresh water in order to provide the water to customers as a package that includes our water transfer service.

Disposal Services

We manage a network of 18 owned and leased salt water disposal wells with current capacity of approximately 78 thousand barrels of water per day, and permitted capacity of 83 thousand barrels of water per day. Our salt water disposal wells in the Rocky Mountain division are operated under the Landtech brand. Additionally, we operate a landfill facility near Watford City, North Dakota that handles the disposal of drill cuttings and other oilfield waste generated from drilling and completion activities in the region.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Rocky Mountain division. These assets include tanks, loaders, manlifts, light towers, winch trucks, and other miscellaneous equipment used in drilling and completion activities. In the Rocky Mountain division, we also provide oilfield labor services, also called “roustabout work,” where our employees move, set-up and maintain the rental equipment for customers, in addition to providing other oilfield labor services.

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Northeast Division

The Northeast division is comprised of the Marcellus and Utica Shale areas, both of which are predominantly natural gas producing basins. The Marcellus and Utica Shale areas are located in the northeastern United States, primarily in Pennsylvania, West Virginia, New York and Ohio. We have operations in various locations throughout Pennsylvania, West Virginia, and Ohio, including yards in Masontown, West Virginia, Somerset and Wellsboro, Pennsylvania, and Cadiz, Ohio. Additionally, we operate a corporate support office near Pittsburgh, Pennsylvania. As of June 30, 2019, we had 234 employees in the Northeast division.

Water Transfer Services

We manage a fleet of 204 trucks in the Northeast division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region, or to other customer locations for reuse in completing other wells. Additionally, our trucks collect and transport fresh water from water sources to operator locations for use in well completion activities.

Disposal Services

We manage a network of 15 owned and leased salt water disposal wells with current and permitted capacity of approximately 30 thousand barrels of water per day in the Northeast division. Our salt water disposal wells in the Northeast division are operated under the Nuverra, Heckmann, and Clearwater brands.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Northeast division. These assets include tanks and winch trucks used in drilling and completion activities.

Southern Division

The Southern division is comprised of the Haynesville Shale area, a predominantly natural gas producing basin, which is located across northwestern Louisiana and eastern Texas, and extends into southwestern Arkansas. We have operations in various locations throughout eastern Texas and northwestern Louisiana, including a yard in Frierson, Louisiana. Additionally, we operate a corporate support office in Spring, Texas. As of June 30, 2019, we had 73 employees in the Southern division.

Water Transfer Services

We manage a fleet of 30 trucks in the Southern division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region. Additionally, our trucks collect and transport fresh water to operator locations for use in well completion activities.

In the Southern division, we also own and operate a 60-mile underground twin pipeline network for the collection of produced water for transport to interconnected disposal wells and the delivery of fresh water from water sources to operator locations for use in well completion activities. The pipeline network can currently handle disposal volumes up to approximately 60 thousand barrels per day with 7 disposal wells attached to the pipeline and is scalable up to approximately 100 thousand barrels per day.

Disposal Services

We manage a network of 6 owned and leased salt water disposal wells that are not connected to our pipeline with current capacity of approximately 54 thousand barrels of water per day, and permitted capacity of approximately 100 thousand barrels of water per day, in the Southern division.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Southern division. These assets include tanks and winch trucks used in drilling and completion activities.

Trends Affecting Our Operating Results

Our results are affected by exploration and production spending trends in the shale basins in which we operate, in particular the level of drilling and completion activities (which impacts the amount of flowback water, drill cuttings and other oilfield waste products being managed) and active wells (which impacts the amount of produced water being managed). In general, drilling and completion activities in the oil and natural gas industry are affected by the current or anticipated market prices for those

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commodities. The average price per barrel of West Texas Intermediate Crude Oil was $59.88 as compared to $68.07 for the three months ended June 30, 2019 and 2018, respectively, while the average price of Henry Hub Natural Gas was $2.57 as compared to $2.85 for the three months ended June 30, 2019 and 2018, respectively. Furthermore, as shale basins mature and the concentration of wells within each basin’s geographic area increases, it becomes more economically viable for companies to invest in fixed infrastructure to sustain their development activities for the life of the play.  This often results in a transition from trucking as a primary water transportation solution in the early part of a basin lifecycle to fixed infrastructure, such as permanent water pipelines, that have a high initial capital cost but can be more efficient over the longer-term basin lifecycle.  In recent years, the industry has also experienced an increase in the use of lay flat temporary hose and more efficient coordination between exploration and production companies to share and reuse water.  Despite these challenges, trucking remains an economically competitive method of meeting the needs of our customers in many situations, including those where the primary customer requirements are fast response times, low initial capital cost and logistical flexibility. 

We are seeing several of these industry trends in the shale basins in which we operate. In the Rocky Mountain division there is a trend toward using lay flat temporary hose in lieu of trucking for delivery of fresh water used in drilling and completion activities. In many situations, the required quantities of water can be delivered to particular drilling and completion locations more efficiently with lay flat temporary hose than with trucks, and as a result there is increased competition for that service. Due to this trend, we continue to seek opportunities to expand our lay flat water delivery business in the Rocky Mountain division. Having adequate sources of consistently available fresh water, in the quantities needed to support customer completion activities with multi-well pads, is critical to obtaining and retaining customers. We have recently hired an employee dedicated to water sourcing as we continue to focus on seeking appropriate fresh water sources to support this aspect of our business, which may require additional capital investment. Additionally, we have noted that customers in the Northeast division are periodically electing to reuse water for drilling and completion activities rather than utilizing disposal, which results in lower or varying disposal volumes during periods when customers elect to redirect production water for use in well completion activities.

Other Factors Affecting Our Operating Results

Our results are also driven by a number of other factors, including (i) availability of our equipment, which we have built through acquisitions and capital expenditures, (ii) transportation costs, which are affected by fuel costs, (iii) utilization rates for our equipment, which are also affected by the level of our customers’ drilling and production activities, competition, and our ability to relocate our equipment to areas in which oil and natural gas exploration and production activities are growing, (iv) the availability of qualified employees (or alternatively, subcontractors) in the areas in which we operate, (v) labor costs, (vi) changes in governmental laws and regulations at the federal, state and local levels, (vii) seasonality and weather events, (viii) pricing and (ix) our health, safety and environmental performance record.

While we have agreements in place with certain of our customers to establish pricing for our services and various other terms and conditions, these agreements typically do not contain minimum volume commitments or otherwise require the customer to use us to provide covered services.  Accordingly, our customer agreements generally provide the customer the ability to change the relationship by either insourcing some or all services we have historically provided or by contracting with other service providers.  As a result, even with respect to customers with which we have an agreement to establish pricing, the revenue we ultimately receive from that customer, and the mix of revenue among lines of services provided, is unpredictable and subject to variation over time.

The results reported in the accompanying condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, contained in our 2018 Annual Report on Form 10-K.

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Results of Operations:

Three Months Ended June 30, 2019 Compared to the Three Months Ended June 30, 2018

The following table sets forth for each of the periods indicated our statements of operations data (dollars in thousands):  

	Three Months Ended
	June 30,						Increase (Decrease)
	2019			2018			2019 versus 2018
Service revenue	$	41,238		$	45,320		$	(4,082	)	(9.0	)%
Rental revenue	4,002			3,628			374			10.3	%
Total revenue	45,240			48,948			(3,708		)	(7.6	)%
Costs and expenses:
Direct operating expenses	34,517			39,069			(4,552		)	(11.7	)%
General and administrative expenses	5,280			6,014			(734		)	(12.2	)%
Depreciation and amortization	9,277			11,969			(2,692		)	(22.5	)%
Impairment of long-lived assets	—			332			(332		)	(100.0	)%
Other, net	(6		)	469			(475		)	(101.3	)%
Total costs and expenses	49,068			57,853			(8,785		)	(15.2	)%
Operating loss	(3,828		)	(8,905		)	(5,077		)	(57.0	)%
Interest expense, net	(1,297		)	(1,204		)	93			7.7	%
Other income, net	152			587			(435		)	74.1	%
Reorganization items, net	13			(1,654		)	(1,667		)	(100.8	)%
Loss before income taxes	(4,960		)	(11,176		)	(6,216		)	(55.6	)%
Income tax expense	(46		)	—			46			100.0	%
Net loss	$	(5,006	)	$	(11,176	)	$	(6,170	)	(55.2	)%

Service Revenue

Service revenue consists of fees charged to customers for water transfer services, disposal services and other service revenues associated with the drilling, completion, and ongoing production of shale oil and natural gas. On a consolidated basis, service revenue for the three months ended June 30, 2019 was $41.2 million, down $4.1 million, or 9.0%, from $45.3 million in the prior year period. Service revenue decline was driven primarily by decreases in water transfer services in all three divisions, partially offset by an increase in disposal services in all three divisions. As the primary causes of the decreases in water transfer services and increases in disposal services are different for all three divisions, see “Segment Operating Results” below for further discussion.

Rental Revenue

Rental revenue consists of fees charged to customers over the term of the rental for use of equipment owned by us, as well as other fees charged to customers for items such as delivery and pickup. Our rental business is primarily located in the Rocky Mountain division, however, we do have some rental equipment available in both the Northeast and Southern divisions as well. Rental revenue for the three months ended June 30, 2019 was $4.0 million, up $0.4 million, or 10.3%, from $3.6 million in the prior year period due to pricing increases implemented during the current year period.

Direct Operating Expenses

Direct operating expenses for the three months ended June 30, 2019 decreased $4.6 million to $34.5 million compared to the prior year period. The primary components of direct operating expenses are compensation costs, third-party hauling, fuel costs and repairs and maintenance costs. The decrease in direct operating expenses is primarily attributable to lower activity levels for water transfer services during the period. However, direct operating expenses improved to 76.3% of revenues from 79.8% in the prior year period as a result of favorable service mix due to performing more higher margin work and active cost reduction efforts during the past year. (See “Segment Operating Results” below for further details on each division.)

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General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2019 were $5.3 million, down $0.7 million, or 12.2%, from $6.0 million in the three months ended June 30, 2018 due primarily to lower compensation expenses as a result of a reduction in headcount due to a reorganization of our business in the Rocky Mountain division and the implementation of central dispatch.

Depreciation and Amortization

Depreciation and amortization for the three months ended June 30, 2019 was $9.3 million, down 22.5% as compared to $12.0 million in the prior year period. The decrease is primarily attributable to a lower depreciable asset base due to the sale of under-utilized or non-core assets. Asset sales have outpaced new capital expenditures over the last year.

Impairment of long-lived assets

During the three months ended June 30, 2018, we recorded an impairment charge of $0.3 million for the Corporate division related to the sale of certain real property in Texas as the fair value was lower than the net book value. The real property was approved to be sold as part of the Eagle Ford closure.

There were no impairment charges recorded during the three months ended June 30, 2019.

Other, net

On March 1, 2018, the Board of Directors (the “Board”) determined it was in the best interests of the Company to cease our operations in the Eagle Ford Shale area. In making this determination, the Board considered a number of factors, including among other things, the historical and projected financial performance of our operations in the Eagle Ford Shale area, pricing for our services, capital requirements and projected returns on additional capital investment, competition, scope and scale of our business operations, and recommendations from management. The total costs related to the exit recorded during the three months ended June 30, 2018 were $0.5 million. We substantially exited the Eagle Ford Shale area as of June 30, 2018.

During the three months ended June 30, 2019, we recorded a final adjustment to the accrued lease liabilities for the Eagle Ford exit as further payments were not required.

Interest Expense, net

Interest expense, net during the three months ended June 30, 2019 was $1.3 million, up $0.1 million or 7.7% from the prior year period. The higher interest expense is primarily due to additional finance leases recorded upon the adoption of ASU No. 2016-02, Leases (Topic 842) (“ASC 842”), as of January 1, 2019.

Other Income, net

During the three months ended June 30, 2019, we had other income, net of $0.2 million, compared to $0.6 million in the prior year period. The three months ended June 30, 2019 includes a $0.1 million gain associated with the change in the fair value of the derivative warrant liability, while the three months ended June 30, 2018 included a $0.5 million gain. We issued warrants with derivative features in connection with our chapter 11 filing in 2017. These instruments are accounted for as derivative liabilities with any decrease or increase in the estimated fair value recorded in “Other income, net.” See Note 9 and Note 12 in the Notes to the Condensed Consolidated Financial Statements for further details on the warrants.

Reorganization Items, net

Expenses, gains and losses directly associated with the chapter 11 proceedings are reported as “Reorganization items, net” in the condensed consolidated statements of operations for the three months ended June 30, 2019 and June 30, 2018. These fees are primarily comprised of professional, legal and insurance fees, and other continuing fees related to our 2017 chapter 11 filing.

Income Taxes

The income tax expense for the three months ended June 30, 2019 was $46.0 thousand. No income tax expense was recorded during the three months ended June 30, 2018. The primary item impacting income taxes for the three months ended June 30, 2019 was the valuation allowance against our deferred tax assets. See Note 14 in the Notes to the Condensed Consolidated Financial Statements herein for additional information.

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Segment Operating Results: Three Months Ended June 30, 2019 and 2018

The following table shows operating results for each of our segments for the three months ended June 30, 2019 and 2018:

	Rocky Mountain			Northeast			Southern			Corp/Other			Total
Three months ended June 30, 2019
Revenue	$	28,993		$	10,720		$	5,527		$	—		$	45,240
Direct operating expenses	22,354			8,607			3,556			—			34,517
Operating income (loss)	1,126			(1,437		)	(513		)	(3,004		)	(3,828		)
Three months ended June 30, 2018
Revenue	33,165			$	9,606		$	6,177		$	—		$	48,948
Direct operating expenses	25,599			8,510			4,960			—			39,069
Operating loss	(239		)	(2,705		)	(2,253		)	(3,708		)	(8,905		)

Rocky Mountain

Revenues for the Rocky Mountain division decreased during the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 due primarily to a decrease in water transfer services, partially offset by an increase in disposal services. The decrease in water transfer services related to lower trucking volumes for completion projects. Additionally, as noted in the “Trends Affecting Our Operating Results” section, more customers are moving toward using lay flat temporary hose in lieu of trucking for delivery of fresh water used in drilling and completion activities and there is increased competition for this service in 2019. As a result, we saw a $2.5 million decrease in water transfer service revenues from lay flat temporary hose during the three months ended June 30, 2019. Disposal volumes in both our salt water disposal wells and our landfill increased by an average of 10,200 barrels per day (or 27.4%) and 5,475 tons (or 10.2%), respectively, during the current year period.

For the Rocky Mountain division, direct operating costs decreased during the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 due primarily due to lower activity levels for water transfer services, but remained flat as a percentage of revenue when compared to the prior year period. The Rocky Mountain division had $1.1 million in operating income during the current year period, as opposed to a $0.2 million loss in the prior year period, due primarily to $1.6 million in lower depreciation and amortization expense, as well as a $0.7 million decrease in general and administrative expenses as a result of lower compensation expenses related to headcount reductions as we continue to streamline and centralize our business processes, including the implementation of centralized dispatch.

Northeast

Revenues for the Northeast division increased during the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 due to higher disposal volumes as a result of the additional wells associated with the acquisition of Clearwater Three, LLC, Clearwater Five, LLC, and Clearwater Solutions, LLC (the “Clearwater Acquisition”) in the fourth quarter of 2018, which accounted for $2.0 million of service revenues for the three months ended June 30, 2019. This was partially offset by lower activity levels for water transfer services due to the industry trend previously noted toward the reuse of water in the Northeast. The Northeast region regularly alternates between periods where production water is reused in well completion activities and periods where disposal in salt water disposal wells is used once the completion activity subsides. The reuse of production water in customer completion activities during the three months ended June 30, 2019 negatively impacted our activity levels for both water transfer and disposal services. Our legacy disposal wells decreased by an average of 2,045 barrels per day (or 41.5%) during the current year period as a result of decreased activity levels, as well as efficiencies gained from re-routing to the geographically favorable Clearwater wells.

For the Northeast division, direct operating costs increased during the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 due to the higher disposal volumes. Direct operating costs improved as a percentage of revenue to 80.3% in the current year as compared to 88.6% in the prior year period, and operating loss improved by $1.3 million over the prior year period due primarily to $0.5 million in lower depreciation and amortization expense and lower bad debt expense.

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Southern

Revenues for the Southern division decreased during the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 due primarily to lower activity levels for water transfer services, including our permanent disposal water pipeline, partially offset by higher disposal volumes in our wells not connected to the pipeline. The lower activity levels for water transfer services is due to a decrease in volumes from two key customers in the division. We have replaced some of the lost volume from these customers with new customers and increased volumes through our truck disposal terminal connected to the pipeline. Volumes received in our disposal wells not connected to our pipeline increased by an average of 7,020 barrels per day (28.1%) during the current year period.

Direct operating costs decreased during the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 as a result of the lower water transfer activity levels. Direct operating costs as a percentage of revenue improved to 64.3% in the current year as compared to 80.3% in the prior year period, and operating loss improved by $1.7 million over the prior year period due to $0.5 million incurred during the three months ended June 30, 2018 in connection with the Eagle Ford exit, as well as $0.6 million in lower depreciation and amortization expense in the current year period.

Corporate/Other

The costs associated with the Corporate/Other division are primarily general and administrative costs. The Corporate general and administrative costs for the three months ended June 30, 2019 were lower than those reported for the three months ended June 30, 2018 due primarily to $0.3 million in lower compensation costs. Operating loss for the Corporate division improved by $0.7 million due to the aforementioned compensation cost reduction and $0.3 million in non-recurring impairment charges in the prior year period.

Six Months EndedJune 30, 2019 Compared to the Six Months EndedJune 30, 2018

The following table sets forth for each of the periods indicated our statements of operations data (dollars in thousands):

	Six Months Ended
	June 30,						Increase (Decrease)
	2019			2018			2019 versus 2018
Service revenue	$	80,239		$	90,847		$	(10,608	)	(11.7	)%
Rental revenue	7,628			7,770			(142		)	(1.8	)%
Total revenue	87,867			98,617			(10,750		)	(10.9	)%
Costs and expenses:
Direct operating expenses	67,074			80,696			(13,622		)	(16.9	)%
General and administrative expenses	10,755			25,334			(14,579		)	(57.5	)%
Depreciation and amortization	18,412			26,713			(8,301		)	(31.1	)%
Impairment of long-lived assets	117			4,463			(4,346		)	(97.4	)%
Other, net	(6		)	1,068			(1,074		)	(100.6	)%
Total costs and expenses	96,352			138,274			(41,922		)	(30.3	)%
Operating loss	(8,485		)	(39,657		)	(31,172		)	(78.6	)%
Interest expense, net	(2,718		)	(2,454		)	264			10.8	%
Other income, net	177			514			(337		)	(65.6	)%
Reorganization items, net	(210		)	(1,746		)	(1,536		)	(88.0	)%
Loss before income taxes	(11,236		)	(43,343		)	(32,107		)	(74.1	)%
Income tax expense	(125		)	—			125			100.0	%
Net loss	$	(11,361	)	$	(43,343	)	$	(31,982	)	(73.8	)%

Service Revenue

On a consolidated basis, service revenue for the six months endedJune 30, 2019 was $80.2 million, down $10.6 million, or 11.7%, from $90.8 million in the prior year period. The decrease in service revenues is primarily due to decreases in water transfer services in all three divisions, partially offset by increases in disposal services in all three divisions. Additionally, $1.8

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million in revenues associated with the Eagle Ford Shale area were included in service revenues in the prior year but did not reoccur in the current year due to management’s decision to exit the Eagle Ford Shale area as of March 1, 2018. As the primary causes of the decreases in water transfer services and increases in disposal services are different for all three divisions, see “Segment Operating Results” below for further discussion.

Rental Revenue

Rental revenue for the six months endedJune 30, 2019 was $7.6 million, down $0.1 million as compared to the prior year period. The prior year period included $0.3 million of rental revenues for the Eagle Ford Shale area that did not reoccur in the current year due to management’s decision to exit the Eagle Ford Shale area as of March 1, 2018. When removing the impact of the Eagle Ford exit, rental revenues increased by $0.2 million during the six months endedJune 30, 2019, primarily as a result of pricing increases implemented in the Rocky Mountain division.

Direct Operating Expenses

Direct operating expenses for the six months endedJune 30, 2019 were $67.1 million, compared to $80.7 million in the prior year period. The decrease in direct operating expenses is primarily attributable to lower activity levels for water transfer services during the period. However, direct operating expenses improved to 76.3% of revenues from 81.8% in the prior year period as a result of favorable service mix due to more higher margin work and active cost reduction efforts during the past year. (See “Segment Operating Results” below for further details on each division.)

General and Administrative Expenses

General and administrative expenses for the six months endedJune 30, 2019 amounted to $10.8 million, down $14.6 million from $25.3 million in the prior year period. The decrease was primarily due to lower compensation costs as general and administrative expenses for the six months endedJune 30, 2018 included $13.5 million in compensation costs related to the departure of our former Chief Executive Officer.

Depreciation and Amortization

Depreciation and amortization for the six months endedJune 30, 2019 was $18.4 million, down approximately $8.3 million from $26.7 million in the prior year period. The decrease is primarily attributable to a lower depreciable asset base due to the sale of under-utilized or non-core assets. Asset sales have outpaced new capital expenditures over the last year.

Impairment of long-lived assets

During 2019, management approved plans to sell real property located both in the Northeast and Rocky Mountain divisions. The real property qualified to be classified as held for sale and as a result was recorded at the lower of net book value or fair value less costs to sell, which resulted in a long-lived asset impairment charge of $0.1 million for the real property in the Northeast division during the six months ended June 30, 2019.

During the three months ended March 31, 2018, management approved a plan to sell certain assets located in the Southern division as a result of exiting the Eagle Ford Shale area. In addition, during the three months ended March 31, 2018, management approved the sale of certain assets located in the Northeast division. We recorded an impairment charge of $4.1 million for these assets during the three months ended March 31, 2018. Of the $4.1 million recorded, $4.0 million related to the Southern division and $0.1 million related to the Northeast division.

During the three months ended June 30, 2018, we recorded an impairment charge of $0.3 million for the Corporate division related to the sale of certain real property in Texas as the fair value was lower than the net book value. The real property was approved to be sold as part of the Eagle Ford closure.

Other, net

On March 1, 2018, the Board determined it was in the best interests of the Company to cease our operations in the Eagle Ford Shale area. In making this determination, the Board considered a number of factors, including among other things, the historical and projected financial performance of our operations in the Eagle Ford Shale area, pricing for our services, capital requirements and projected returns on additional capital investment, competition, scope and scale of our business operations, and recommendations from management. We substantially exited the Eagle Ford Shale area as of June 30, 2018. The total costs related to the exit recorded during the six months endedJune 30, 2018 were $1.1 million.

During the six months ended June 30, 2019, we recorded a final adjustment to the accrued lease liabilities for the Eagle Ford exit as further payments were not required.

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Interest Expense, net

Interest expense, net during the six months endedJune 30, 2019 was $2.7 million, or $0.3 million higher than the $2.5 million in the prior year period. The higher interest expense is primarily due to additional finance leases recorded upon the adoption of ASC 842 as of January 1, 2019.

Other Income, net

Other income, net was $0.2 million for the six months endedJune 30, 2019, compared to $0.5 million in the prior year period. The difference is primarily attributable to the $28.0 thousand gain associated with the change in the fair value of the derivative warrant liability during the six months endedJune 30, 2019, compared to a $0.3 million gain during the six months endedJune 30, 2018. See Note 9 and Note 12 in the Notes to the Condensed Consolidated Financial Statements for further details on the warrants.

Reorganization Items, net

Expenses directly associated with the 2017 chapter 11 proceedings are reported as “Reorganization items, net” in the condensed consolidated statements of operations for the six months ended June 30, 2019 and June 30, 2018. These fees are primarily comprised of professional, legal and insurance fees, and other continuing fees related to our 2017 chapter 11 filing. Included in Reorganization items, net for the six months ended June 30, 2018 was $1.3 million in chapter 11 fees paid to the United States Trustee for the District of Delaware.

Income Taxes

The income tax expense for the six months endedJune 30, 2019 was $0.1 million, while we did not record any income tax benefit or expense for the six months endedJune 30, 2018. The primary item impacting income taxes for the six months endedJune 30, 2019 was the valuation allowance against our deferred tax assets. See Note 14 in the Notes to the Condensed Consolidated Financial Statements herein for additional information.

Segment Operating Results: Six Months EndedJune 30, 2019 and 2018

The following table shows operating results for each of our segments for the six months endedJune 30, 2019 and 2018:

	Rocky Mountain			Northeast			Southern			Corp/Other			Total
Six months ended June 30, 2019
Revenue	$	53,870		$	22,560		$	11,437		$	—		$	87,867
Direct operating expenses	42,182			18,322			6,570			—			67,074
Operating income/(loss)	830			(2,939		)	(176		)	(6,200		)	(8,485		)
Six months ended June 30, 2018
Revenue	$	63,935		$	18,719		$	15,963		$	—		$	98,617
Direct operating expenses	51,945			16,324			12,427			—			80,696
Operating loss	(3,380		)	(6,543		)	(9,297		)	(20,437		)	(39,657		)

Rocky Mountain

Revenues for the Rocky Mountain division decreased during the six months endedJune 30, 2019 as compared to the six months endedJune 30, 2018 due primarily to a decrease in water transfer services, partially offset by an increase in disposal services. The decrease in water transfer services related to lower trucking volumes for completion projects. Additionally, as noted in the “Trends Affecting Our Operating Results” section, more customers are moving toward using lay flat temporary hose in lieu of trucking for delivery of fresh water used in drilling and completion activities and there is increased competition for this service in 2019. As a result, we saw a $2.4 million decrease in water transfer service revenues from lay flat temporary hose during the six months ended June 30, 2019. Disposal volumes in both our salt water disposal wells and our landfill increased by an average of 23,900 barrels per day (or 35.8%) and 12,225 tons (or 12.9%), respectively, during the current year period.

For the Rocky Mountain division, direct operating costs decreased during the six months endedJune 30, 2019 as compared to the six months endedJune 30, 2018 due primarily to decreased water transfer activity. Direct operating costs improved as a percentage of revenue to 78.3% in the current year as compared to 81.2% in the prior year period. The Rocky Mountain division had $0.8 million in operating income during the current year period, as opposed to a $3.4 million loss in the prior year

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period, due primarily to $3.6 million in lower depreciation and amortization expense, as well as a $0.9 million decrease in general and administrative expenses as a result of lower compensation expenses related to headcount reductions as we continue to streamline and centralize our business processes.

Northeast

Revenues for the Northeast division increased during the six months endedJune 30, 2019 as compared to the six months endedJune 30, 2018 due to higher disposal volumes as a result of the additional wells associated with the Clearwater Acquisition in the fourth quarter of 2018, which accounted for $4.4 million of service revenues for the six months ended June 30, 2019. This was partially offset by lower activity levels for water transfer services due to the industry trend previously noted toward the reuse of water in the Northeast. The Northeast region regularly alternates between periods where production water is reused in well completion activities and periods where disposal in salt water disposal wells is used once the completion activity subsides. The reuse of production water in customer completion activities during the six months ended June 30, 2019 negatively impacted our activity levels for both water transfer and disposal services. Our legacy disposal wells decreased by an average of 1,595 barrels per day (or 17.8%) during the current year period as a result of decreased activity levels, as well as efficiencies gained from re-routing to the geographically favorable Clearwater wells.

For the Northeast division, direct operating costs increased during the six months endedJune 30, 2019 as compared to the six months endedJune 30, 2018 due to the higher disposal volumes. Direct operating costs improved as a percentage of revenue to 81.2% in the current year as compared to 87.2% in the prior year period, and operating loss improved by $3.6 million over the prior year period due primarily to $2.1 million in lower depreciation and amortization expense.

Southern

Revenues for the Southern division decreased during the six months endedJune 30, 2019 as compared to the six months endedJune 30, 2018 due primarily to lower activity levels for water transfer services, including our permanent disposal water pipeline, partially offset by higher disposal volumes in our wells not connected to the pipeline. The lower activity levels for water transfer services is due to a decrease in volumes from two key customers in the division. We have replaced some of the lost volume from these customers with new customers and increased volumes through our truck disposal terminal connected to the pipeline. Volumes received in our disposal wells not connected to our pipeline increased by an average of 7,990 barrels per day (or 14.2%) during the current year period.

In the Southern division, direct operating costs decreased during the six months endedJune 30, 2019 as compared to the six months endedJune 30, 2018 due to the lower activity levels for water transfer services. Direct operating costs as a percentage of revenue improved to 57.4% in the current year as compared to 77.8% in the prior year period due to the increase in higher margin disposal services in the current year period. Operating loss improved by $9.1 million over the prior year period due to $5.1 million in restructuring and impairment charges during the six months ended June 30, 2018 in connection with the Eagle Ford exit, as well as $2.6 million in lower depreciation and amortization expense in the current year period.

Corporate/Other

The costs associated with the Corporate/Other division are primarily general and administrative costs. The Corporate general and administrative costs for the six months endedJune 30, 2019 were lower than those reported for the six months endedJune 30, 2018 due primarily to $13.5 million in compensation costs related to the departure of our former Chief Executive Officer in the first quarter of 2018. Operating loss for the Corporate division improved by $14.2 million due to the aforementioned compensation cost reduction and $0.3 million in non-recurring impairment charges in the prior year period.

Liquidity and Capital Resources

Cash Flows and Liquidity

Our consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. Net cash provided by operating activities was $4.5 million for six months endedJune 30, 2019. Total liquidity as of June 30, 2019, consisting of cash and available borrowings, was $22.6 million. Our sources of cash for 2019 have included cash generated by our operations, asset sales, proceeds from the offering to our shareholders to purchase shares of our common stock on a pro rata basis with an aggregate offering price of $32.5 million (the “Rights Offering”) and borrowings from our Revolving Facility (as defined herein). Based on our current sources of cash, we believe we have adequate liquidity to meet our current and future needs.

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Our Second Lien Term Loan Agreement (as defined herein) contains delayed draw term loans in the aggregate amount of approximately $5.7 million, which expire on August 7, 2019. These term loans have never been drawn. At the expiration of these delayed draw term loans, available borrowing will be reduced by approximately $5.7 million. We believe we will continue to have adequate liquidity following the expiration of the delayed draw term loans under the Second Lien Term Loan Agreement.

The following table summarizes our sources and uses of cash for the six months endedJune 30, 2019 and June 30, 2018 (in thousands):

	Six Months Ended
	June 30,
Net cash (used in) provided by:	2019			2018
Operating activities	$	4,454		$	(472	)
Investing activities	(494		)	10,621
Financing activities	(4,065		)	(2,577		)
Net change in cash, cash equivalents and restricted cash	$	(105	)	$	7,572

Operating Activities

Net cash provided by operating activities was $4.5 million for the six months endedJune 30, 2019. The net loss, after adjustments for non-cash items, provided cash of $7.3 million, compared to the use of $0.9 million in the corresponding 2018 period. Changes in operating assets and liabilities used $2.8 million in cash primarily due to decreases in accounts payable and accrued liabilities. The non-cash items and other adjustments included $18.4 million of depreciation and amortization, stock-based compensation expense of $1.4 million, long-lived asset impairment charges of $0.1 million, offset by a $1.7 million gain on the sale of assets.

Net cash used in operating activities was $0.5 million for the six months endedJune 30, 2018. The net loss, after adjustments for non-cash items, used cash of $0.9 million. Changes in operating assets and liabilities provided $0.5 million in cash primarily due to an increase in accounts payable and other accrued expenses, offset by an increase in accounts receivable. The non-cash items and other adjustments included $26.7 million of depreciation and amortization, stock-based compensation expense of $11.4 million, long-lived asset impairment charges of $4.5 million, offset by a $0.3 million gain resulting from the change in the fair value of the derivative warrant liability and a $0.3 million gain on the sale of assets.

Investing Activities

Net cash used in investing activities was $0.5 million for the six months endedJune 30, 2019 and primarily consisted of $5.0 million of purchases of property, plant and equipment, offset by $4.5 million of proceeds from the sale of property, plant and equipment. Asset sales were primarily comprised of under-utilized or non-core assets, while asset purchases included investments in our disposal capacity and our fleet for water transfer services.

Net cash provided by investing activities was $10.6 million for the six months endedJune 30, 2018 which consisted primarily of $17.6 million of proceeds from the sale of property, plant and equipment, offset by $7.1 million of purchases of property, plant and equipment.

Financing Activities

Net cash used in financing activities was $4.1 million for the six months endedJune 30, 2019 and was primarily comprised of $31.4 million in cash payments for the Bridge Term Loan (as defined herein), $2.5 million of payments on the First Lien Term Loan (as defined herein) and Second Lien Term Loan (as defined herein) and $1.2 million of payments on finance leases and other financing activities, offset by $31.1 million of proceeds received from the issuance of stock for the completed Rights Offering.

Net cash used in financing activities was $2.6 million for the six months endedJune 30, 2018 and consisted of $1.6 million of payments on the First Lien Term Loan and Second Lien Term Loan and $1.0 million of payments on finance leases and other financing activities.

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Capital Expenditures

Our capital expenditure program is subject to market conditions, including customer activity levels, commodity prices, industry capacity and specific customer needs. Within the past year, we have reinvested more heavily in our service lines and growth projects, including the purchase of new water transfer trucks, new water transfer equipment, as well as expenditures to extend the useful life and productivity on our existing fleet of trucks, equipment and disposal wells. Cash required for capital expenditures for the six months endedJune 30, 2019 totaled $5.0 million compared to $7.1 million for the six months endedJune 30, 2018. These capital expenditures were offset by proceeds received from the sale of under-utilized or non-core assets of $4.5 million and $17.6 million in the six months endedJune 30, 2019 and 2018, respectively.

Historically, a portion of our transportation-related capital requirements were financed through capital leases which are now called finance leases under ASC 842. (See Note 1 and Note 3 in the Notes to the Condensed Consolidated Financial Statements herein for more information on the adoption of ASC 842 as of January 1, 2019.) We had $6.7 million of equipment additions under finance leases during the six months endedJune 30, 2019. We did not enter into any new finance leases during the six months endedJune 30, 2018.

We continue to focus on improving the utilization of our existing assets and optimizing the allocation of resources in the various shale areas in which we operate. Our planned capital expenditures for the remainder of 2019 could be financed through cash flow from operations, borrowings under the Revolving Facility and Second Lien Term Loan, finance leases, other financing structures, or a combination of the foregoing.

Indebtedness

As of June 30, 2019, we had $37.1 million of indebtedness outstanding, consisting of $19.7 million under the first lien term loan (the “First Lien Term Loan”) granted under the First Lien Credit Agreement, entered August 7, 2017, by and among the lenders party thereto, ACF FinCo I, LP, as administrative agent, and the Company (the “Credit Agreement”), $9.8 million under the second lien term loan facility (the “Second Lien Term Loan”) pursuant to the Second Lien Term Loan Agreement, dated August 7, 2017, by and among the lenders party thereto, and Wilmington Savings Fund Society, FSB, as administrative agent (“Wilmington”), and the Company (the “Second Lien Term Loan Agreement”), and $7.7 million of finance leases. Our revolving facility extended to the Company pursuant to the Credit Agreement (the “Revolving Facility”), First Lien Term Loan and Second Lien Term Loan contain certain affirmative and negative covenants, including a fixed charge coverage ratio covenant, as well as other terms and conditions that are customary for revolving credit facilities and term loans of this type. As of June 30, 2019, we were in compliance with all covenants.

Bridge Term Loan Credit Agreement and Rights Offering

In connection with the Clearwater Acquisition, on October 5, 2018, we entered into a Bridge Term Loan Credit Agreement (the “Bridge Term Loan Credit Agreement”) with the lenders party thereto (the “Bridge Term Loan Lenders”) and Wilmington, as administrative agent. The Bridge Term Loan Lenders are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. Pursuant to the Bridge Term Loan Credit Agreement, the Bridge Term Loan Lenders provided a term loan to us in the aggregate amount of $32.5 million (the “Bridge Term Loan”), of which $22.5 million was used to finance the Clearwater Acquisition and the remaining $10.0 million was used to pay down certain amounts outstanding under the Second Lien Term Loan Agreement.

The Bridge Term Loan Credit Agreement required us to use our reasonable best efforts to effectuate and close the Rights Offering as soon as reasonably practicable following October 5, 2018. Upon the completion of the Rights Offering, we were required to prepay all outstanding amounts under the Bridge Term Loan Credit Agreement in cash in an amount equal to the net cash proceeds received from the Rights Offering. As discussed in Note 5 in the Notes to the Condensed Consolidated Financial Statements, on January 2, 2019, we received the aggregate cash proceeds from the Rights Offering of $31.4 million. Additionally, one of the Backstop Parties elected to satisfy the backstop commitment by converting $1.1 million of the Bridge Term Loan to common stock. The aggregate cash proceeds from the Rights Offering were used to repay the remaining $31.4 million balance of the Bridge Term Loan, satisfying the obligations under the Bridge Term Loan Credit Agreement, and thereby terminating the Bridge Term Loan Credit Agreement.

We sold an aggregate of 3,381,894 shares of common stock at a purchase price of $9.61 per share in the Rights Offering. The shares of common stock subscribed for in the Rights Offering were distributed to applicable offering participants through our transfer agent or through the clearing systems of the Depository Trust Company, which commenced on January 2, 2019. Immediately after the issuance of the 3,381,894 shares for the Rights Offering which commenced on January 2, 2019, the Company had 15,614,981 common shares outstanding.

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See Note 5 and Note 11 in the Notes to the Condensed Consolidated Financial Statements herein for additional information on the Rights Offering and our indebtedness.

Off Balance Sheet Arrangements

As of June 30, 2019, we did not have any off-balance-sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Contractual Obligations

Our contractual obligations at June 30, 2019 did not change materially from those disclosed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations” of our 2018 Annual Report on Form 10-K.

Critical Accounting Policies

There have been no significant changes to our Critical Accounting Policies in the six months endedJune 30, 2019 from those disclosed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2018 Annual Report on Form 10-K.

Item  3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in our quantitative and qualitative disclosures about market risk from those disclosed in “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our 2018 Annual Report on Form 10-K.

Item 4.    Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report, we performed an evaluation, under the supervision and with the participation of our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at that time to provide reasonable assurance that the information required to be disclosed in our reports filed with the SEC under the Exchange Act, are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and are accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2019 that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item  1. Legal Proceedings

See “Legal Matters” in Note 17 of the Notes to the Condensed Consolidated Financial Statements for a description of our material legal proceedings.

Item  1A. Risk Factors

In addition to the information set forth in this Quarterly Report, you should carefully consider the risk factors discussed in Part I, Item 1A. Risk Factors of our 2018 Annual Report on Form 10-K.

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

During the three months ended June 30, 2019, we repurchased an aggregate of 3,324 shares of our common stock. The repurchases were to satisfy tax withholding obligations that arose upon vesting of restricted stock units to certain of our employees.

Set forth below is a summary of the share repurchases, by period, during the three months ended June 30, 2019:

Period	Total Number of Shares Purchased	Average Price Paid Per Share (1)
April 1, 2019 to April 30, 2019	3,324	$	8.82
May 1, 2019 to May 31, 2019	—	—
June 1, 2019 to June 30, 2019	—	—
Total shares repurchased and total average price per share	3,324	$	8.82

(1) The price paid per share with respect to the tax withholding repurchases was determined using the closing prices on the applicable vesting date, as quoted on the NYSE American.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item  5. Other Information

None.

42

Item 6. Exhibits

The exhibits listed on the “Exhibit Index” set forth below are filed or furnished with this Quarterly Report on Form 10-Q or incorporated by reference as set forth therein.

Exhibit Number	Description
31.1*	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

_______________

* Filed herewith.

43

SIGNATURES

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

Date:	August 6, 2019
/s/ Charles K. Thompson
Name:	Charles K. Thompson
Title:	Chief Executive Officer
	(Principal Executive Officer)
/s/ Stacy W. Hilgendorf
Name:	Stacy W. Hilgendorf
Title:	Vice President and Chief Financial Officer
	(Principal Financial Officer & Principal Accounting Officer)

44

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Charles K. Thompson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2019 of Nuverra Environmental Solutions, Inc.

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

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

4. As the registrant's certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Date: August 6, 2019

By:	/s/ Charles K. Thompson
Name:	Charles K. Thompson
Title:	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stacy W. Hilgendorf, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2019 of Nuverra Environmental Solutions, Inc.

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

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

4. As the registrant's certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Date: August 6, 2019

By:	/s/ Stacy W. Hilgendorf
Name:	Stacy W. Hilgendorf
Title:	Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the report of Nuverra Environmental Solutions, Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2019 (the “Report”) as filed with the Securities and Exchange Commission on the date hereof, I, Charles K. Thompson, the Chief Executive Officer of the Company, and I, Stacy W. Hilgendorf, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 as amended; and

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

Date: August 6, 2019

By:	/s/ Charles K. Thompson	By:	/s/ Stacy W. Hilgendorf
Name:	Charles K. Thompson	Name:	Stacy W. Hilgendorf
Title:	Chief Executive Officer (Principal Executive Officer)	Title:	Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

This certification accompanies this report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or otherwise subject to liability pursuant to that section. The certification shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

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

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Jul. 31, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Registrant Name	Nuverra Environmental Solutions, Inc.
Entity Central Index Key	0001403853
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		15,708,898

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 5,978	$ 7,302
Restricted cash	1,875	656
Accounts receivable, net of allowance for doubtful accounts of $1.4 million and $1.6 million at June 30, 2019 and December 31, 2018, respectively	28,777	31,392
Inventories	3,213	3,358
Prepaid expenses and other receivables	3,011	2,435
Other current assets	518	1,582
Assets held for sale	4,504	2,782
Total current assets	47,876	49,507
Property, plant and equipment, net of accumulated depreciation of $83.2 million and $73.6 million at June 30, 2019 and December 31, 2018, respectively	203,354	215,640
Operating lease assets	3,612	0
Equity investments	38	41
Intangibles, net	882	1,112
Goodwill	29,518	29,518
Other assets	99	118
Total assets	285,379	295,936
Liabilities and Shareholders’ Equity
Accounts payable	7,052	9,061
Accrued and other current liabilities	14,144	16,670
Current portion of long-term debt	6,664	38,305
Current contingent consideration	500	500
Derivative warrant liability	6	34
Total current liabilities	28,366	64,570
Long-term debt	30,272	27,628
Noncurrent operating lease liabilities	1,653	0
Deferred income taxes	293	181
Other long-term liabilities	7,364	7,130
Total liabilities	67,948	99,509
Commitments and contingencies
Shareholders’ equity:
Common stock	157	122
Additional paid-in capital	337,018	303,463
Treasury stock	(402)	0
Accumulated deficit	(119,342)	(107,158)
Total shareholders’ equity	217,431	196,427
Total liabilities and shareholders’ equity	$ 285,379	$ 295,936

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 1.4	$ 1.6
Property, plant and equipment, accumulated depreciation	$ 83.2	$ 73.6

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue:
Service revenue	$ 41,238	$ 45,320	$ 80,239	$ 90,847
Rental revenue	4,002	3,628	7,628	7,770
Total revenue	45,240	48,948	87,867	98,617
Costs and expenses:
Direct operating expenses	34,517	39,069	67,074	80,696
General and administrative expenses	5,280	6,014	10,755	25,334
Depreciation and amortization	9,277	11,969	18,412	26,713
Impairment of long-lived assets	0	332	117	4,463
Other, net	(6)	469	(6)	1,068
Total costs and expenses	49,068	57,853	96,352	138,274
Operating loss	(3,828)	(8,905)	(8,485)	(39,657)
Interest expense, net	(1,297)	(1,204)	(2,718)	(2,454)
Other income, net	152	587	177	514
Reorganization items, net	13	(1,654)	(210)	(1,746)
Loss before income taxes	(4,960)	(11,176)	(11,236)	(43,343)
Income tax expense	(46)	0	(125)	0
Net loss	$ (5,006)	$ (11,176)	$ (11,361)	$ (43,343)
Earnings per common share:
Net loss per basic common share (usd per share)	$ (0.32)	$ (0.96)	$ (0.73)	$ (3.71)
Net loss per diluted common share (usd per share)	$ (0.32)	$ (0.96)	$ (0.73)	$ (3.71)
Weighted average shares outstanding:
Basic (in shares)	15,704	11,696	15,627	11,696
Diluted (in shares)	15,704	11,696	15,627	11,696

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Cash flows from operating activities:
Net loss				$ (11,361)	$ (43,343)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization				18,412	26,713
Amortization of debt issuance costs, net				247	0
Accrued interest added to debt principal				0	119
Stock-based compensation	$ 563	$ 416		1,415	11,394
Impairment of long-lived assets	0	332	$ 4,100	117	4,463
Gain on sale of UGSI				0	(75)
Gain on disposal of property, plant and equipment				(1,706)	(254)
Bad debt (recoveries) expense				(9)	120
Change in fair value of derivative warrant liability				(28)	(289)	$ (443)
Deferred income taxes	42	0		112	0
Other, net				55	221
Changes in operating assets and liabilities:
Accounts receivable				2,724	(1,631)
Prepaid expenses and other receivables				(576)	(99)
Accounts payable and accrued liabilities				(6,059)	2,243
Other assets and liabilities, net				1,111	(54)
Net cash provided by (used in) operating activities				4,454	(472)
Cash flows from investing activities:
Proceeds from the sale of property, plant and equipment				4,525	17,649
Purchases of property, plant and equipment				(5,019)	(7,103)
Proceeds from the sale of UGSI				0	75
Net cash (used in) provided by investing activities				(494)	10,621
Cash flows from financing activities:
Payments on First and Second Lien Term Loans				(2,514)	(1,597)
Proceeds from Revolving Facility				96,677	117,092
Payments on Revolving Facility				(96,677)	(117,092)
Payments on Bridge Term Loan				(31,382)	0
Proceeds from the issuance of stock				31,057	0
Payments on finance leases and other financing activities				(1,226)	(980)
Net cash used in financing activities				(4,065)	(2,577)
Change in cash, cash equivalents and restricted cash				(105)	7,572
Cash and cash equivalents, beginning of period			5,488	7,302	5,488	5,488
Restricted cash, beginning of period			1,296	656	1,296	1,296
Cash, cash equivalents and restricted cash, beginning of period			$ 6,784	7,958	6,784	6,784
Cash and cash equivalents, end of period	5,978	12,808		5,978	12,808	7,302
Restricted cash, end of period	1,875	1,548		1,875	1,548	656
Cash, cash equivalents and restricted cash, end of period	$ 7,853	$ 14,356		7,853	14,356	$ 7,958
Supplemental disclosure of cash flow information:
Cash paid for interest				2,218	1,967
Cash paid for taxes, net				138	207
Common stock issued to settle Bridge Term Loan				$ 1,118	$ 0

XML

Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Deficit
Beginning balance at Dec. 31, 2017	$ 242,973	$ 117	$ 290,751	$ 0	$ (47,895)
Beginning balance (in shares) at Dec. 31, 2017		11,696		0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation	10,978		10,978
Net loss	(32,167)				(32,167)
Ending balance at Mar. 31, 2018	221,784	$ 117	301,729	$ 0	(80,062)
Ending balance (in shares) at Mar. 31, 2018		11,696		0
Beginning balance at Dec. 31, 2017	242,973	$ 117	290,751	$ 0	(47,895)
Beginning balance (in shares) at Dec. 31, 2017		11,696		0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(43,343)
Ending balance at Jun. 30, 2018	211,024	$ 117	302,145	$ 0	(91,238)
Ending balance (in shares) at Jun. 30, 2018		11,696		0
Beginning balance at Dec. 31, 2017	242,973	$ 117	290,751	$ 0	(47,895)
Beginning balance (in shares) at Dec. 31, 2017		11,696		0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(43,343)
Ending balance at Dec. 31, 2018	196,427	$ 122	303,463	$ 0	(107,158)
Ending balance (in shares) at Dec. 31, 2018		12,233		0
Beginning balance at Mar. 31, 2018	221,784	$ 117	301,729	$ 0	(80,062)
Beginning balance (in shares) at Mar. 31, 2018		11,696		0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation	416		416
Net loss	(11,176)				(11,176)
Ending balance at Jun. 30, 2018	211,024	$ 117	302,145	$ 0	(91,238)
Ending balance (in shares) at Jun. 30, 2018		11,696		0
Beginning balance at Dec. 31, 2018	196,427	$ 122	303,463	$ 0	(107,158)
Beginning balance (in shares) at Dec. 31, 2018		12,233		0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for Rights Offering	32,175	$ 34	32,141
Issuance of common stock for Rights Offering (in shares)		3,382
Issuance of common stock to employees		$ 1	(1)
Issuance of common stock to employees (in shares)		97
Treasury stock acquired through surrender of shares for tax withholding	(373)			$ (373)
Treasury stock acquired through surrender of shares for tax withholding (in shares)				(34)
Share-based compensation	852		852
Net loss	(6,355)				(6,355)
Ending balance at Mar. 31, 2019	221,903	$ 157	336,455	$ (373)	(114,336)
Ending balance (in shares) at Mar. 31, 2019		15,712		34
Beginning balance at Dec. 31, 2018	196,427	$ 122	303,463	$ 0	(107,158)
Beginning balance (in shares) at Dec. 31, 2018		12,233		0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(11,361)
Ending balance at Jun. 30, 2019	217,431	$ 157	337,018	$ (402)	(119,342)
Ending balance (in shares) at Jun. 30, 2019		15,746		37
Beginning balance at Mar. 31, 2019	221,903	$ 157	336,455	$ (373)	(114,336)
Beginning balance (in shares) at Mar. 31, 2019		15,712		34
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock to employees (in shares)		34
Treasury stock acquired through surrender of shares for tax withholding	(29)			$ 29
Treasury stock acquired through surrender of shares for tax withholding (in shares)				3
Share-based compensation	563		563
Net loss	(5,006)				(5,006)
Ending balance at Jun. 30, 2019	$ 217,431	$ 157	$ 337,018	$ (402)	$ (119,342)
Ending balance (in shares) at Jun. 30, 2019		15,746		37

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements of Nuverra Environmental Solutions, Inc. and its subsidiaries (collectively, “Nuverra,” the “Company,” “we,” “us,” or “our”) are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Our condensed consolidated balance sheet as of December 31, 2018, included herein, has been derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (or “GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, the condensed consolidated financial statements include the normal, recurring adjustments necessary for the fair statement of the results for the interim periods. These financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, contained in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 12, 2019 (the “2018 Annual Report on Form 10-K”).

All dollar and share amounts in the footnote tabular presentations are in thousands, except per share amounts and unless otherwise noted.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASC 842”), replacing the previous leasing standard Accounting Standards Codification 840, Leases (“ASC 840”), which requires an entity that is a lessee to recognize the assets and liabilities arising from leases with terms longer than 12 months on the balance sheet. Leases are to be classified as either operating or finance, with classification affecting the pattern of expense recognition in the statement of operations. The new standard was effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods.

We adopted this new lease standard on January 1, 2019 using a modified retrospective transition, with the cumulative-effect adjustment to the opening balance of accumulated deficit as of the effective date (the “effective date method”). Under the effective date method, financial results reported in periods prior to 2019 are unchanged. We also elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carryforward the historical lease classification. In addition, we have made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. We will continue to recognize those lease payments in the consolidated statement of operations on a straight-line basis over the lease term.

The adoption of the new lease standard resulted in the recognition of operating lease assets and operating lease liabilities of approximately $4.9 million, respectively, as of January 1, 2019. Additionally, as of January 1, 2019, we recorded an adjustment of $0.8 million to accumulated deficit as a result of the re-measurement of the present value of remaining lease payments for the finance leases previously recorded as capital leases. The finance lease assets and finance lease liabilities as of January 1, 2019 were $1.8 million, respectively. We believe the adoption of the new lease standard will not materially impact our results of operations, nor have a notable impact on our liquidity. See Note 3 for further information on our leases.

There have been no other material changes or developments in our significant accounting policies or evaluation of accounting estimates and underlying assumptions or methodologies from those disclosed in our 2018 Annual Report on Form 10-K.

XML

Revenues

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

Revenues are generated upon the performance of contracted services under formal and informal contracts with customers. Revenues are recognized when the contracted services for our customers are completed in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Sales and usage-based taxes are excluded from revenues. Payment is due when the contracted services are completed in accordance with the payment terms established with each customer prior to providing any services. As such, there is no significant financing component for any of our revenues.

Some of our contracts with customers involve multiple performance obligations as we are providing more than one service under the same contract, such as water transfer services and disposal services. However, our core service offerings are capable of being distinct and also are distinct within the context of contracts with our customers. As such, these services represent separate performance obligations when included in a single contract. We have standalone pricing for all of our services which is negotiated with each of our customers in advance of providing the service. The contract consideration is allocated to the individual performance obligations based upon the standalone selling price of each service, and no discount is offered for a bundled services offering.

Contract Assets

	Contract Asset
Balance at the beginning of the period (January 1, 2019)	$	—
Balance at the end of the period (June 30, 2019)	512
Increase/(decrease)	512

During the three months ended June 30, 2019, we recorded a contract asset as a result of a contract modification for disposal services. There were no contract assets reclassified to receivables during the three months endedJune 30, 2019. The contract asset is included in “Other current assets” on the condensed consolidated balance sheet as of June 30, 2019.

Disaggregated Revenues

The following tables present our revenues disaggregated by revenue source for each reportable segment for the three and six months ended June 30, 2019 and June 30, 2018:

	Three months ended June 30, 2019
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	18,448	$	7,296	$	2,726	$	—	$	28,470
Disposal Services	5,146		3,098		2,739		—		10,983
Other Revenue	1,471		255		59		—		1,785
Total Service Revenue	25,065		10,649		5,524		—		41,238
Rental Revenue	3,928		71		3		—		4,002
Total Revenue	$	28,993	$	10,720	$	5,527	$	—	$	45,240

	Three months ended June 30, 2018
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	21,967	$	8,230	$	5,014	$	—	$	35,211
Disposal Services	4,540		955		1,081		—		6,576
Other Revenue	3,120		362		51		—		3,533
Total Service Revenue	29,627		9,547		6,146		—		45,320
Rental Revenue	3,538		59		31		—		3,628
Total Revenue	$	33,165	$	9,606	$	6,177	$	—	$	48,948

	Six months ended June 30, 2019
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	34,157	$	15,268	$	6,210	$	—	$	55,635
Disposal Services	9,217		6,597		5,145		—		20,959
Other Revenue	3,017		557		71		—		3,645
Total Service Revenue	46,391		22,422		11,426		—		80,239
Rental Revenue	7,479		138		11		—		7,628
Total Revenue	$	53,870	$	22,560	$	11,437	$	—	$	87,867

	Six months ended June 30, 2018
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	43,227	$	16,249	$	13,125	$	—	$	72,601
Disposal Services	8,152		1,732		2,317		—		12,201
Other Revenue	5,244		616		185		—		6,045
Total Service Revenue	56,623		18,597		15,627		—		90,847
Rental Revenue	7,312		122		336		—		7,770
Total Revenue	$	63,935	$	18,719	$	15,963	$	—	$	98,617

Water Transfer Services

The majority of our revenues are from the removal and disposal of flowback and produced salt water originating from oil and natural gas wells or the transportation of fresh water and salt water to customer sites for use in drilling and hydraulic fracturing activities by trucks or through lay flat temporary hose or permanent water transport pipelines. Water transfer rates for trucking are based upon either a fixed fee per barrel of disposal water or upon an hourly rate. Revenue is recognized once the water has been transferred, or over time, based upon the number of barrels transported or disposed of, or at the agreed upon hourly rate, depending upon the customer contract. Contracts for the use of our water disposal pipeline are priced at a fixed fee per disposal barrel transferred, with revenues recognized over time from when the water is injected into our pipeline until the transfer is complete. Water transfer services are all generally completed within 24 hours with no remaining performance obligation outstanding at the end of each month.

Disposal Services

Revenues for disposal services are generated through fees charged for disposal of oilfield wastes in our landfill and disposal of fluids in our disposal wells. Disposal rates are generally based on a fixed fee per barrel of produced water, or on a per ton basis for landfill disposal, with revenues recognized once the disposal has occurred. The performance obligation for disposal services is considered complete once the disposal occurs. Therefore, disposal services revenues are recognized at a point in time.

Other Revenue

Other revenue primarily includes revenues from the sale of fresh water, as well as the sale of “junk” or “slop” oil obtained through the skimming of disposal water. Revenue is recognized for fresh water sales and “junk” or “slop” oil sales at a point in time once the goods are transferred. Also included is revenue generated by oilfield labor services, also called “roustabout work,” provided by the Company. Revenue is recognized in other revenue for the oilfield labor services once the activity has been performed, or over time, based on the agreed upon hourly rate, depending upon the customer contract. Oilfield labor services are short-term in nature with hours tracked each day services are provided. As such, there are no remaining performance obligations outstanding at the end of each month.

Other revenue also historically included small-scale construction or maintenance projects, however we exited that business during the three months ended June 30, 2018. Revenue for construction and maintenance projects, which generally spanned approximately two to three months, was recognized over time under the milestone method which is considered an output method. Since our construction contracts were short term in nature, the contractual milestone dates occurred close together over time such that there was no risk that we would not recognize revenue for goods or services transferred to the customer. All construction costs were expensed as incurred.

Rental Revenue

We generate rental revenue from the rental of various equipment used in wellsite services. Rental rates are based upon negotiated rates with our customers and revenue is recognized over the rental service period. Revenues from rental equipment are recognized under ASC 840 for the periods prior to January 1, 2019, and under ASC 842 for the periods after January 1, 2019. As the rental service period for our equipment is very short term in nature and does not include any sales-type or direct financing leases, nor any variable rental components, the adoption of ASC 842 in 2019 did not have a material impact upon our consolidated statement of operations.

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Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Leases

We lease vehicles, transportation equipment, real estate and certain office equipment. We determine if an arrangement is a lease at inception. Operating and finance lease assets represent our right to use an underlying asset for the lease term, and operating and finance lease liabilities represent our obligation to make lease payments arising from the lease. Operating and finance lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term. Absent a documented borrowing rate from the lessor, we use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments.

Most of our leases have remaining lease terms of less than one year to 20 years, with one lease having a term of 99 years. Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis. Some of our vehicle leases include residual value guarantees. It is probable that we will owe approximately $2.2 million under the residual value guarantee, therefore this amount has been included in the measurement of the lease liability and leased asset.

The components of lease expense were as follows:

		Three Months Ended			Six Months Ended
Lease Cost	Classification	June 30, 2019			June 30, 2019
Operating lease cost (a)	General and administrative expenses	$	729		$	1,453
Finance lease cost:
Amortization of leased assets	Depreciation and amortization	679			1,225
Interest on lease liabilities	Interest expense, net	177			240
Variable lease cost	General and administrative expenses	1,055			2,121
Sublease income	Other income, net	(22		)	(73		)
Total net lease cost		$	2,618		$	4,966

(a) Includes short-term leases which represented $0.2 million and $0.4 million of the balance for the three and six months endedJune 30, 2019, respectively.

Supplemental balance sheet, cash flow and other information related to leases was as follows (in thousands, except lease term and discount rate):

Leases	Classification	June 30, 2019
Assets:
Operating lease assets	Operating lease assets	$	3,612
Finance lease assets	Property, plant and equipment, net of accumulated depreciation (a)	7,166
Total leased assets		$	10,778
Liabilities:
Current
Operating lease liabilities	Accrued and other current liabilities	$	1,980
Finance lease liabilities	Current portion of long-term debt	2,040
Noncurrent
Operating lease liabilities	Noncurrent operating lease liabilities	1,653
Finance lease liabilities	Long-term debt	5,614
Total lease liabilities		$	11,287

(a) Finance lease assets are recorded net of accumulated amortization of $1.2 million as of June 30, 2019.

Lease Term and Discount Rate	June 30, 2019
Weighted-average remaining lease term (in years):
Operating leases	20.5
Finance leases	4.5
Weighted-average discount rate:
Operating leases	7.86	%
Finance leases	6.68	%

Supplemental Disclosure of Cash Flow Information and Other Information	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,453
Operating cash flows from finance leases	240
Financing cash flows from finance leases	824
Leased assets obtained in exchange for new operating lease liabilities	$	—
Leased assets obtained in exchange for new finance lease liabilities	6,674

Maturities of lease liabilities were as follows:

	June 30, 2019
	Operating Leases (a)			Finance Leases (b)
2019	$	1,522		$	1,170
2020	1,530			1,980
2021	430			1,270
2022	290			1,270
2023	164			2,113
Thereafter	6,759			1,750
Total lease payments	10,695			9,553
Less amount representing executory costs (c)	(114		)	—
Net lease payments	10,581			9,553
Less amount representing interest	(6,948		)	(1,899		)
Present value of total lease liabilities	3,633			7,654
Less current lease liabilities	(1,980		)	(2,040		)
Long-term lease liabilities	$	1,653		$	5,614

(a) Operating lease payments include $0.0 million related to options to extend lease terms that are reasonably certain of being exercised.

(b) Finance lease payments include $0.0 million related to options to extend lease terms that are reasonably certain of being exercised.

(c) Represents executory costs for all leases. We included executory costs in lease payments under ASC 840, and have elected to continue to include executory costs for both leases that commenced before and after the effective date of ASC 842.

As of June 30, 2019, we have additional finance lease commitments that have not yet commenced of approximately $3.3 million for 20 water transfer trucks to be delivered in the third quarter of 2019 with lease terms of four years.

Disclosures related to periods prior to adoption of ASC 842

Lease expense under operating leases was approximately $1.2 million and $2.4 million during the three and six months endedJune 30, 2018. As of December 31, 2018, future minimum lease payments, by year and in the aggregate, under all noncancellable leases were as follows:

	December 31, 2018
	Operating Leases		Capital Leases
2019	$	2,415	$	1,287
2020	1,453		718
2021	431		—
2022	294		—
2023	164		—
Thereafter	6,755		—
Total lease payments	$	11,512	2,005
Less amount representing executory costs			(30		)
Net lease payments			1,975
Less amount representing interest			(90		)
Present value of net lease payments			$	1,885

Leases

Leases

We lease vehicles, transportation equipment, real estate and certain office equipment. We determine if an arrangement is a lease at inception. Operating and finance lease assets represent our right to use an underlying asset for the lease term, and operating and finance lease liabilities represent our obligation to make lease payments arising from the lease. Operating and finance lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term. Absent a documented borrowing rate from the lessor, we use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments.

Most of our leases have remaining lease terms of less than one year to 20 years, with one lease having a term of 99 years. Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis. Some of our vehicle leases include residual value guarantees. It is probable that we will owe approximately $2.2 million under the residual value guarantee, therefore this amount has been included in the measurement of the lease liability and leased asset.

The components of lease expense were as follows:

		Three Months Ended			Six Months Ended
Lease Cost	Classification	June 30, 2019			June 30, 2019
Operating lease cost (a)	General and administrative expenses	$	729		$	1,453
Finance lease cost:
Amortization of leased assets	Depreciation and amortization	679			1,225
Interest on lease liabilities	Interest expense, net	177			240
Variable lease cost	General and administrative expenses	1,055			2,121
Sublease income	Other income, net	(22		)	(73		)
Total net lease cost		$	2,618		$	4,966

(a) Includes short-term leases which represented $0.2 million and $0.4 million of the balance for the three and six months endedJune 30, 2019, respectively.

Supplemental balance sheet, cash flow and other information related to leases was as follows (in thousands, except lease term and discount rate):

Leases	Classification	June 30, 2019
Assets:
Operating lease assets	Operating lease assets	$	3,612
Finance lease assets	Property, plant and equipment, net of accumulated depreciation (a)	7,166
Total leased assets		$	10,778
Liabilities:
Current
Operating lease liabilities	Accrued and other current liabilities	$	1,980
Finance lease liabilities	Current portion of long-term debt	2,040
Noncurrent
Operating lease liabilities	Noncurrent operating lease liabilities	1,653
Finance lease liabilities	Long-term debt	5,614
Total lease liabilities		$	11,287

(a) Finance lease assets are recorded net of accumulated amortization of $1.2 million as of June 30, 2019.

Lease Term and Discount Rate	June 30, 2019
Weighted-average remaining lease term (in years):
Operating leases	20.5
Finance leases	4.5
Weighted-average discount rate:
Operating leases	7.86	%
Finance leases	6.68	%

Supplemental Disclosure of Cash Flow Information and Other Information	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,453
Operating cash flows from finance leases	240
Financing cash flows from finance leases	824
Leased assets obtained in exchange for new operating lease liabilities	$	—
Leased assets obtained in exchange for new finance lease liabilities	6,674

Maturities of lease liabilities were as follows:

	June 30, 2019
	Operating Leases (a)			Finance Leases (b)
2019	$	1,522		$	1,170
2020	1,530			1,980
2021	430			1,270
2022	290			1,270
2023	164			2,113
Thereafter	6,759			1,750
Total lease payments	10,695			9,553
Less amount representing executory costs (c)	(114		)	—
Net lease payments	10,581			9,553
Less amount representing interest	(6,948		)	(1,899		)
Present value of total lease liabilities	3,633			7,654
Less current lease liabilities	(1,980		)	(2,040		)
Long-term lease liabilities	$	1,653		$	5,614

(a) Operating lease payments include $0.0 million related to options to extend lease terms that are reasonably certain of being exercised.

(b) Finance lease payments include $0.0 million related to options to extend lease terms that are reasonably certain of being exercised.

(c) Represents executory costs for all leases. We included executory costs in lease payments under ASC 840, and have elected to continue to include executory costs for both leases that commenced before and after the effective date of ASC 842.

As of June 30, 2019, we have additional finance lease commitments that have not yet commenced of approximately $3.3 million for 20 water transfer trucks to be delivered in the third quarter of 2019 with lease terms of four years.

Disclosures related to periods prior to adoption of ASC 842

Lease expense under operating leases was approximately $1.2 million and $2.4 million during the three and six months endedJune 30, 2018. As of December 31, 2018, future minimum lease payments, by year and in the aggregate, under all noncancellable leases were as follows:

	December 31, 2018
	Operating Leases		Capital Leases
2019	$	2,415	$	1,287
2020	1,453		718
2021	431		—
2022	294		—
2023	164		—
Thereafter	6,755		—
Total lease payments	$	11,512	2,005
Less amount representing executory costs			(30		)
Net lease payments			1,975
Less amount representing interest			(90		)
Present value of net lease payments			$	1,885

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Acquisition of Clearwater

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Acquisition of Clearwater

Acquisition of Clearwater

On October 5, 2018, we completed the acquisition of Clearwater Three, LLC, Clearwater Five, LLC, and Clearwater Solutions, LLC (collectively, “Clearwater”) for an initial purchase price of $42.3 million, subject to customary working capital adjustments (the “Clearwater Acquisition”). Clearwater is a supplier of waste water disposal services used by the oil and gas industry in the Marcellus and Utica Shale areas. Clearwater has three salt water disposal wells in service, all of which are located in Ohio. This acquisition expands our service offerings in the Marcellus and Utica Shale areas in our Northeast division not only by providing additional disposal capacity, but also by providing synergies for trucking.

Consideration consisted of $42.3 million in cash which was funded primarily by a $32.5 million bridge loan (the “Bridge Term Loan”) that was repaid with proceeds from an offering to our shareholders to purchase shares of our common stock on a pro rata basis with an aggregate offering price of $32.5 million (the “Rights Offering”). The Bridge Term Loan was extended pursuant to the Bridge Term Loan Agreement, entered October 5, 2018 (the “Bridge Term Loan Credit Agreement”), with the lenders party thereto (the “Bridge Term Loan Lenders”) and Wilmington Savings Fund Society, FSB, as administrative agent (“Wilmington”). In addition, our credit agreement lenders provided us with an additional term loan under the First Lien Credit Agreement, entered August 7, 2017, by and among the lenders party thereto, ACF FinCo I, LP, as administrative agent, and the Company (the “Credit Agreement”) in the amount of $10.0 million which was used to finance a portion of the Clearwater Acquisition (the “First Lien Term Loan”). See Note 5 for further discussion on the Rights Offering.

During the three months ended March 31, 2019, we recorded an adjustment for the backstop fee for the Rights Offering (see Note 5) to additional paid-in-capital which was previously expensed and resulted in a credit of $0.3 million to general and administrative costs in the accompanying condensed consolidated statements of operations. Total adjusted transaction costs for the Clearwater Acquisition were $1.1 million, the majority of which were recorded during the year ended December 31, 2018.

Under the acquisition method of accounting, the total purchase price was allocated to the identifiable assets acquired and the liabilities assumed based on our preliminary valuation estimates of the fair values as of the acquisition date. The final working capital was agreed upon during the three months ended March 31, 2019, which resulted in no changes to the purchase price allocation. As such, we believe that the purchase price allocation is final.

The final allocation of the purchase price is summarized as follows:

Accounts receivable	$	1,897
Intangible assets	799
Property, plant and equipment	37,589
Goodwill	2,379
Accounts payable and accrued expenses	(372		)
Total	$	42,292

The purchase price allocation requires subjective estimates that, if incorrectly estimated, could be material to our condensed consolidated financial statements including the amount of depreciation and amortization expense. The fair value of the tangible assets, which are primarily comprised of the three salt water disposal wells, was estimated using the discounted cash flow method, a form of the income approach. This method estimates the fair value of the assets based upon the present value of the expected cash flows. Estimates that impact the measurement of the tangible assets using the discounted cash flow method are the discount rate and the timing and amount of cash flows. The intangible assets acquired, which primarily consists of the trade name, were valued using the relief from royalty method. The value of the trade name encompasses all items necessary to generate revenue utilizing the trade name. Estimates that impact the measurement of the intangible assets acquired are net sales projections, and the discount and royalty rates used. The entire goodwill balance resulting from the Clearwater Acquisition is expected to be deductible for tax purposes and is all related to the Northeast division. The estimated fair value of the assets acquired and the liabilities assumed represents a nonrecurring Level 3 fair value estimate.

Pro forma financial information is not presented as the revenues and earnings of the Clearwater Acquisition are not material to our consolidated statement of operations.

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Equity

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Equity

Equity

Rights Offering

In connection with the Clearwater Acquisition, we agreed, pursuant to our Bridge Term Loan Credit Agreement, to use our reasonable best efforts to effectuate and close a Rights Offering. In connection with the Rights Offering, we entered into a Backstop Commitment Letter on October 5, 2018 (the “Backstop Commitment Letter”) with certain backstop parties named therein (the “Backstop Parties”), pursuant to which the Backstop Parties agreed, subject to the terms and conditions in the Backstop Commitment Letter, to participate in the Rights Offering and agreed to acquire all unsubscribed shares remaining after stockholders exercised their over-subscription privilege. The Backstop Parties are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. In exchange for the commitments under the Backstop Commitment Letter, we paid to the Backstop Parties, in the aggregate, a nonrefundable cash payment equal to 1.0% of the full amount of the Rights Offering. This fee was recorded to additional paid-in-capital during the three months ended March 31, 2019.

Pursuant to the Backstop Commitment Letter, we were required to file a registration statement with the SEC within 20 days following October 5, 2018. This initial Registration Statement on Form S-1 was filed with the SEC on October 25, 2018, with amendments to the Form S-1 filed on December 4, 2018 and December 7, 2018. The Registration Statement on Form S-1 was declared effective by the SEC on Friday, December 7, 2018. The Rights Offering launched at the close of business on December 10, 2018 and terminated, as to unexercised rights, at 5:00 p.m. New York City time on December 28, 2018.

We sold an aggregate of 3,381,894 shares of common stock at a purchase price of $9.61 per share in the Rights Offering. On January 2, 2019, we received the aggregate cash proceeds from the Rights Offering of $31.4 million. Additionally, one of the Backstop Parties elected to satisfy the backstop commitment by converting $1.1 million of the Bridge Term Loan to common stock. The aggregate cash proceeds from the Rights Offering were used to repay the remaining $31.4 million balance of the Bridge Term Loan, satisfying the obligations under the Bridge Term Loan Credit Agreement. The shares of common stock subscribed for in the Rights Offering were distributed to applicable offering participants through our transfer agent or through the clearing systems of the Depository Trust Company, which commenced on January 2, 2019. Immediately after the issuance of the 3,381,894 shares for the Rights Offering which commenced on January 2, 2019, the Company had 15,614,981 common shares outstanding.

Other Equity Issuances

During the six months endedJune 30, 2019, we issued common stock for our share-based compensation program which is discussed further in Note 15.

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share

Net loss per basic and diluted common share have been computed using the weighted average number of shares of common stock outstanding during the period. For the three and six months endedJune 30, 2019 and June 30, 2018, no shares of common stock underlying stock options, restricted stock or warrants were included in the computation of diluted earnings per common share because the inclusion of such shares would be anti-dilutive based on the net losses reported for those periods.

The following table presents the calculation of basic and diluted net loss per common share, as well as the anti-dilutive stock-based awards that were excluded from the calculation of diluted loss per share for the periods presented:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Numerator: Net loss	$	(5,006	)	$	(11,176	)	$	(11,361	)	$	(43,343	)
Denominator:
Weighted average shares—basic	15,704			11,696			15,627			11,696
Common stock equivalents	—			—			—			—
Weighted average shares—diluted	15,704			11,696			15,627			11,696
Earnings per common share:
Net loss per basic common share	$	(0.32	)	$	(0.96	)	$	(0.73	)	$	(3.71	)
Net loss per diluted common share	$	(0.32	)	$	(0.96	)	$	(0.73	)	$	(3.71	)
Anti-dilutive stock-based awards excluded:	559			1,131			513			1,227

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill

There were no changes in the carrying value of goodwill during the six months endedJune 30, 2019. Of the $29.5 million reported as goodwill as of June 30, 2019, and December 31, 2018, respectively, $21.9 million relates to the Northeast division, $4.9 million relates to the Rocky Mountain division, and $2.7 million relates to the Southern division.

Intangible Assets

Intangible assets consist of the following:

	June 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net		Remaining Useful Life (Years)
Disposal permits	$	581	$	(232	)	$	349	5.2
Trade name	799		(266		)	533		1.5
Total intangible assets	$	1,380	$	(498	)	$	882	3.0

	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net		Remaining Useful Life (Years)
Disposal permits	$	581	$	(180	)	$	401	5.5
Trade name	799		(88		)	711		2.0
Total intangible assets	$	1,380	$	(268	)	$	1,112	3.2

The remaining weighted average useful lives shown are calculated based on the net book value and remaining amortization period of each respective intangible asset.

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Assets Held for Sale and Impairment

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Assets Held for Sale and Impairment

Assets Held for Sale and Impairment

During 2019, management approved plans to sell real property located in both the Northeast and Rocky Mountain divisions. As a result, we began to actively market these assets, which we expect to sell within one year. In accordance with applicable accounting guidance, the real property was recorded at the lower of net book value or fair value less costs to sell and reclassified to “Assets held for sale” on the condensed consolidated balance sheet during the six months ended June 30, 2019. As the fair value of the real property reclassified as held for sale in the Northeast division was lower than its net book value, we recorded an impairment charge of $0.1 million during the six months ended June 30, 2019 which is included in “Impairment of long-lived assets” on our condensed consolidated statements of operations.

During the three months ended March 31, 2018, management approved a plan to sell certain assets located in the Southern division as a result of exiting the Eagle Ford Shale area. See Note 13 for additional details on the exit of the Eagle Ford Shale area. In addition, during the three months ended March 31, 2018, management approved the sale of certain assets, primarily frac tanks, located in the Northeast division, that were expected to sell within one year. These assets qualified to be classified as assets held for sale and as a result were recorded at the lower of net book value or fair value less costs to sell, which resulted in a long-lived asset impairment charge of $4.1 million during the three months ended March 31, 2018. Of the $4.1 million recorded, $4.0 million related to the Southern division for the Eagle Ford exit and $0.1 million related to the Northeast division, and is included in “Impairment of long-lived assets” on our condensed consolidated statements of operations.

During the three months ended June 30, 2018, we recorded an impairment charge of $0.3 million for the Corporate division to “Impairment of long-lived assets” on our condensed consolidated statements of operations related to the sale of certain real property in Texas as the fair value was lower than net book value. The real property was approved to be sold as part of the Eagle Ford closure.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Measurements

Fair value represents an exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 — Observable inputs such as quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

• Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Liabilities measured at fair value on a recurring basis and the fair value hierarchy of the valuation techniques we utilized to determine such fair value included significant unobservable inputs (Level 3) and were as follows:

	June 30, 2019		December 31, 2018
Derivative warrant liability	$	6	$	34

Derivative Warrant Liability

Upon emergence from chapter 11 on August 7, 2017 (the “Effective Date”), pursuant to the prepackaged plan of reorganization (the “Plan”), we issued to the holders of our pre-Effective Date9.875%Senior Notes due 2018 (the “2018 Notes”) and holders of certain claims relating to the rejection of executory contracts and unexpired leases118,137warrants with an exercise price of$39.82and a termexpiring seven years from the Effective Date. Each warrant is exercisable foroneshare of our common stock, par value$0.01. The warrants issued were determined to be derivative liabilities.

Our derivative warrant liability is adjusted to reflect the estimated fair value at each quarter end, with any decrease or increase in the estimated fair value recorded in “Other income, net” in the condensed consolidated statements of operations. We used Level 3 inputs for the valuation methodology of the derivative liabilities. The estimated fair values were computed using a Monte Carlo simulation model. The key inputs in determining our derivative warrant liability typically include our stock price, the volatility of our stock price, and the risk free interest rate. Future changes in these factors could have a significant impact on the computed fair value of the derivative warrant liability. As such, we expect future changes in the fair value of the warrants could vary significantly from quarter to quarter.

The following table provides a reconciliation of the beginning and ending balances of the “Derivative warrant liability” presented in the condensed consolidated balance sheet during the six months endedJune 30, 2019, and the year ended December 31, 2018.

	Six Months Ended			Year Ended
	June 30, 2019			December 31, 2018
Balance at beginning of period	$	34		$	477
Adjustments to estimated fair value	(28		)	(443		)
Balance at end of period	$	6		$	34

Other

Assets acquired and liabilities assumed in business combinations are also measured at fair value on a nonrecurring basis using Level 3 inputs. See Note 4 for further discussion on the measurement of the assets and liabilities acquired in the Clearwater Acquisition.

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Accrued and Other Current Liabilities

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Accrued and Other Current Liabilities

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following at June 30, 2019 and December 31, 2018:

	June 30, 2019		December 31, 2018
Accrued payroll and employee benefits	$	4,102	$	6,975
Accrued insurance	3,416		2,664
Accrued legal	91		733
Accrued taxes	1,036		2,229
Accrued interest	293		520
Accrued operating costs	2,833		3,424
Accrued other	393		125
Current operating lease liabilities	1,980		—
Total accrued and other current liabilities	$	14,144	$	16,670

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Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Debt

Debt

Debt consisted of the following at June 30, 2019 and December 31, 2018:

			June 30, 2019							December 31, 2018
	Interest Rate	Maturity Date	Unamortized Debt Issuance Costs		Fair Value of Debt (e)		Carrying Value of Debt			Carrying Value of Debt
Revolving Facility (a)	7.68%	Feb. 2021	$	—	$	—	$	—		$	—
First Lien Term Loan (b)	9.68%	Feb. 2021	175		19,654		19,654			21,905
Second Lien Term Loan (b)	11.00%	Oct. 2021	—		9,803		9,803			10,066
Bridge Term Loan (c)	11.00%	Apr. 2019	—		—		—			32,500
Finance leases (d)	6.68%	Various	—		7,654		7,654			1,885
Total debt			$	175	$	37,111	37,111			66,356
Debt issuance costs presented with debt (f)							(175		)	(423		)
Total debt, net							36,936			65,933
Less: current portion of long-term debt							(6,664		)	(38,305		)
Long-term debt							$	30,272		$	27,628

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(a) The interest rate presented represents the interest rate as of June 30, 2019 on the $30.0 million revolving facility extended to the Company pursuant to the Credit Agreement (the “Revolving Facility”).

(b) Interest on the First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus 7.25%. Interest on the Second Lien Term Loan (as defined below) accrues at an annual rate equal to 11.0%, payable in cash, in arrears, on the first day of each month.

(c) The Bridge Term Loan Credit Agreement has an interest rate of 11.0% per annum, payable in cash, in arrears, on the first day of each month. The obligations under the Bridge Term Loan Credit Agreement were repaid in full on January 2, 2019.

(d) Our finance leases include finance lease arrangements related to fleet purchases and real property with a weighted-average annual interest rate of approximately 6.68%, which mature in varying installments between 2019 and 2029.

(e) Our Revolving Facility, First Lien Term Loan, Second Lien Term Loan, and finance leases bear interest at rates commensurate with market rates and therefore their respective carrying values approximate fair value.

(f) The debt issuance costs resulted from an amendment to the First Lien Term Loan during the three months ended December 31, 2018, done in connection with the Clearwater Acquisition.

See below for a discussion of material changes and developments in our debt and its principal terms from those described in Note 13 to the consolidated financial statements in our 2018 Annual Report on Form 10-K.

Indebtedness

As of June 30, 2019, we had $37.1 million of indebtedness outstanding, consisting of $19.7 million under the First Lien Term Loan, $9.8 million under the second lien term loan facility (the “Second Lien Term Loan”) pursuant to the Second Lien Term Loan Agreement, dated August 7, 2017, by and among the lenders party thereto, Wilmington, and the Company (the “Second Lien Term Loan Agreement”), and $7.7 million of finance leases for vehicle financings and real property leases. Our Revolving Facility, First Lien Term Loan and Second Lien Term Loan contain certain affirmative and negative covenants, including a fixed charge coverage ratio covenant, as well as other terms and conditions that are customary for revolving credit facilities and term loans of this type. As of June 30, 2019, we were in compliance with all covenants.

Bridge Term Loan Credit Agreement

In connection with the Clearwater Acquisition on October 5, 2018, we entered into the Bridge Term Loan Credit Agreement. The Bridge Term Loan Lenders are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. Pursuant to the Bridge Term Loan Credit Agreement, the Bridge Term Loan Lenders provided the $32.5 million Bridge Term Loan, of which $22.5 million was used to finance the Clearwater Acquisition and the remaining $10.0 million was used to pay down certain amounts outstanding under the Second Lien Term Loan Agreement.

The Bridge Term Loan Credit Agreement required us to use our reasonable best efforts to effectuate and close the Rights Offering as soon as reasonably practicable following October 5, 2018. Upon the completion of the Rights Offering, we were required to prepay all outstanding amounts under the Bridge Term Loan Credit Agreement in cash in an amount equal to the net cash proceeds received from the Rights Offering. As discussed in Note 5, on January 2, 2019, we received the aggregate cash proceeds from the Rights Offering of $31.4 million. Additionally, one of the Backstop Parties elected to satisfy the backstop commitment by converting $1.1 million of the Bridge Term Loan to common stock. The aggregate cash proceeds from the Rights Offering were used to repay the remaining $31.4 million balance of the Bridge Term Loan, satisfying the obligations under the Bridge Term Loan Credit Agreement, and thereby terminating the Bridge Term Loan Credit Agreement.

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Derivative Warrants

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Derivative Warrants

Derivative Warrants

Upon emergence from chapter 11 on the Effective Date, pursuant to the Plan, we issued to the holders of the 2018 Notes and holders of certain claims relating to the rejection of executory contracts and unexpired leases warrants to purchase an aggregate of118,137shares of common stock, par value$0.01, at an exercise price of$39.82per share and with a termexpiring seven years from the Effective Date.

The following table shows the warrant activity for the six months endedJune 30, 2019 and June 30, 2018:

	Six Months Ended
	June 30,
	2019	2018
Outstanding at the beginning of the period	118	118
Issued	—	—
Exercised	—	—
Outstanding at the end of the period	118	118

Fair Value of Warrants

We account for warrants in accordance with the accounting guidance for derivatives, which sets forth a two-step model to be applied in determining whether a financial instrument is indexed to an entity’s own stock which would qualify such financial instruments for a scope exception. This scope exception specifies that a contract that would otherwise meet the definition of a derivative financial instrument would not be considered as such if the contract is both (i) indexed to the entity’s own stock and (ii) classified in the shareholders’ equity section of the entity’s balance sheet. We determined that warrants are ineligible for equity classification as the warrants are not indexed to our common stock and are recorded as derivative liabilities at fair value in the condensed consolidated balance sheets. The warrants are classified as a current liability in the condensed consolidated balance sheets as they could be exercised by the holders at any time.

As discussed previously in Note 9, the fair value of the derivative warrant liability is estimated using a Monte Carlo simulation model on the date of issue and is re-measured at each quarter end until expiration or exercise of the underlying warrants with the resulting fair value adjustment recorded in “Other (income) expense, net” in the condensed consolidated statements of operations.

The fair value of the derivative warrant liability as of June 30, 2019 and December 31, 2018 was estimated using the following model inputs:

	As of June 30,			As of December 31,
	2019			2018
Exercise price	$	39.82		$	39.82
Closing stock price	$	4.11		$	8.20
Risk free rate	1.75		%	2.51		%
Expected volatility	43.47		%	36.87		%

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Restructuring and Exit Costs

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

Restructuring and Exit Costs

Restructuring and Exit Costs

Eagle Ford Shale Area

On March 1, 2018, the Board of Directors (the “Board”) determined it was in the best interests of the Company to cease our operations in the Eagle Ford Shale area in order to focus on other opportunities. The Board considered a number of factors in making this determination, including among other things, the historical and projected financial performance of our operations in the Eagle Ford Shale area, pricing for our services, capital requirements and projected returns on additional capital investment, competition, scope and scale of our operations, and recommendations from management. We substantially exited the Eagle Ford Shale area as of June 30, 2018. The total costs recognized in the restructuring during 2018 were approximately $1.1 million, and included severance and termination benefits, lease exit costs, and other exit costs related to the movement of vehicles, tanks and rental fleet.

There is no remaining liability for the Eagle Ford exit as of June 30, 2019. A rollforward of the liability from December 31, 2018 through June 30, 2019 is as follows:

	Lease Exit Costs
Balance accrued at beginning of period	$	19
Cash payments	(13		)
Adjustments to accrued balance	$	(6	)
Balance accrued at end of period	$	—

Mississippian Shale Area and Tuscaloosa Marine Shale Logistics Business

In March 2015, we initiated a plan to restructure our business in certain shale basins and reduce costs, including an exit from the Mississippian Shale area and the Tuscaloosa Marine Shale logistics business. Additionally, we closed certain yards within the Northeast and Southern divisions and transferred many of the related assets to our other operating locations. The total costs of the restructuring recognized in 2015 were approximately $7.1 million, and included severance and termination benefits, lease exit costs, other exits costs related to the movement of vehicles and rental fleet, and an asset impairment charge.

The remaining liability for the restructuring and exit costs incurred represents lease exit costs under non-cancellable operating leases and totaled approximately $8.0 thousand as of June 30, 2019, which is included in “Accrued and other current liabilities” in the condensed consolidated balance sheet. A rollforward of the liability from December 31, 2018 through June 30, 2019 is as follows:

	Lease Exit Costs
Balance accrued at beginning of period	$	33
Cash payments	(25		)
Balance accrued at end of period	$	8

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Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019			2018		2019			2018
Current income tax expense	$	(4	)	$	—	$	(13	)	$	—
Deferred income tax expense	(42		)	—		(112		)	—
Total income tax expense	$	(46	)	$	—	$	(125	)	$	—

The effective income tax rate for the three and six months endedJune 30, 2019 was (0.9)% and (1.1)%, respectively, which differs from the federal statutory rate of 21.0%. The difference is primarily due to the increase in the valuation allowance on deferred tax assets resulting from current year losses.

We recorded no income tax expense during the three and six months endedJune 30, 2018. As a result, the effective income tax rate for the three and six months endedJune 30, 2018 was 0.0%, which differed from the federal statutory rate of 21.0%. The difference is primarily due to the increase in the valuation allowance on deferred tax assets resulting from current year losses.

We have significant deferred tax assets, consisting primarily of net operating losses, which have a limited life, generally expiring between the years 2032 and 2037, and capital losses, which begin to expire in 2020. We regularly assess the evidence available to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative losses incurred in recent years. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future taxable income.

In light of our continued ordinary losses, at June 30, 2019 we determined that our deferred tax liabilities were not sufficient to fully realize our deferred tax assets. Accordingly, a valuation allowance continues to be required against the portion of our deferred tax assets that is not offset by deferred tax liabilities. We expect our effective income tax rate to be near zero for the remainder of 2019.

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Share-based Compensation

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Share-based Compensation

Share-based Compensation

The Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the “Incentive Plan”) is intended to provide for the grant of equity-based awards to designated members of the Company’s management and employees. The maximum number of shares of the Company’s common stock that is available for the issuance of awards under the Incentive Plan is 1,772,058. As of June 30, 2019, approximately 720,000 shares were available for issuance under the Incentive Plan.

The 2018 Restricted Stock Plan for Directors (the “Director Plan”) provides for the grant of restricted stock to the non-employee directors of the Company. The Director Plan limits the shares that may be issued thereunder to 100,000 shares of common stock. As of June 30, 2019, approximately 75,000 shares were available for issuance under the Director Plan.

The total grants awarded under both the Incentive Plan and the Director Plan during the three and six months endedJune 30, 2019 and June 30, 2018 are presented in the table below:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019	2018	2019	2018
Stock option grants	—	—	—	—
Restricted stock grants (1)	23	6	142	1,331
Total grants in the period	23	6	142	1,331

(1) Includes restricted stock awards, performance-based restricted stock units, and time-based restricted stock units granted under the Incentive Plan and the Director Plan.

The total share-based compensation expense, net of estimated forfeitures, included in “General and administrative expenses” in the accompanying condensed consolidated statements of operations for the three and six months endedJune 30, 2019 and June 30, 2018 was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Stock options	$	—	$	—	$	—	$	(788	)
Restricted stock (1)	563		416		1,415		12,182
Total expense	$	563	$	416	$	1,415	$	11,394

(1) Includes expense related to restricted stock awards, performance-based restricted stock units, and time-based restricted stock units granted under the Incentive Plan and the Director Plan.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Environmental Liabilities

We are subject to the environmental protection and health and safety laws and related rules and regulations of the United States and of the individual states, municipalities and other local jurisdictions where we operate. Our operations are subject to rules and regulations promulgated by the Texas Railroad Commission, the Texas Commission on Environmental Quality, the Louisiana Department of Natural Resources, the Louisiana Department of Environmental Quality, the Ohio Department of Natural Resources, the Pennsylvania Department of Environmental Protection, the North Dakota Department of Health, the North Dakota Industrial Commission, Oil and Gas Division, the North Dakota State Water Commission, the Montana Department of Environmental Quality and the Montana Board of Oil and Gas, among others. These laws, rules and regulations address environmental, health and safety and related concerns, including water quality and employee safety. We have installed safety, monitoring and environmental protection equipment such as pressure sensors and relief valves, and have established reporting and responsibility protocols for environmental protection and reporting to such relevant local environmental protection departments as required by law.

We believe we are in material compliance with all applicable environmental protection laws and regulations in the United States and the states in which we operate. We believe that there are no unrecorded liabilities as of the periods reported herein in connection with our compliance with applicable environmental laws and regulations. The condensed consolidated balance sheet at June 30, 2019 and December 31, 2018 did not include any accruals for environmental matters.

Contingent Consideration for Ideal Settlement

On June 28, 2017, the Company and certain of its material subsidiaries (collectively with the Company, the “Nuverra Parties”) filed a motion with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking authorization to resolve unsecured claims related to the $8.5 million contingent consideration from the Ideal Oilfield Disposal LLC acquisition (the “Ideal Settlement”). On July 11, 2017, the Bankruptcy Court entered an order authorizing the Ideal Settlement. Pursuant to the approved settlement terms, the $8.5 million contingent claim was replaced with an obligation on the part of the applicable Nuverra Party to transfer $0.5 million to the counterparties to the Ideal Settlement upon emergence from chapter 11, and $0.5 million when the Ideal Settlement counterparties deliver the required permits and certificates necessary for the issuance of the second special waste disposal permit. The $0.5 million due upon emergence from chapter 11 was paid during the five months ended December 31, 2017. The remaining $0.5 million, due when the counterparties deliver the required permits and certificates necessary for the issuance of the second special waste disposal permit, has been classified as current and is reported in “Current contingent consideration” as of June 30, 2019, as these permits and certificates are expected to be received within one year.

State Sales and Use Tax Liabilities

During the year ended December 31, 2017, the Pennsylvania Department of Revenue (or “DOR”) completed an audit of our sales and use tax compliance for the period January 1, 2012 through May 31, 2017. As a result of the audit, we were assessed by the DOR for additional state and local sales and use tax plus penalties and interest. During the years ended December 31, 2017 and 2018, we disputed various claims in the assessment made by the DOR through the appropriate boards of appeal and were able to obtain relief for many of the contested claims. However, in January of 2019, the final appeals board upheld an assessment of sales tax and interest that relates to one material position. We have appealed this decision to the Commonwealth of Pennsylvania as we continue to believe that the transactions involved are exempt from sales tax in Pennsylvania, and therefore we have not recorded an accrual as of June 30, 2019. If we lose this appeal, which could take several years to settle, we estimate that we would be required to pay between $1.0 million and $1.5 million to the DOR.

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Legal Matters

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Legal Matters

Legal Matters

Litigation

There are various lawsuits, claims, investigations and proceedings that have been brought or asserted against us, which arise in the ordinary course of business, including actions with respect to securities and shareholder class actions, personal injury, vehicular and industrial accidents, commercial contracts, legal and regulatory compliance, securities disclosure, labor and employment, and employee benefits and environmental matters, the more significant of which are summarized below. We record a provision for these matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any provisions are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information and events pertinent to a particular matter.

We believe that we have valid defenses with respect to legal matters pending against us. Based on our experience, we also believe that the damage amounts claimed in pending lawsuits are not necessarily a meaningful indicator of our potential liability. Litigation is inherently unpredictable, and it is possible that our results of operations or cash flow could be materially affected in any particular period by the resolution of one or more of the legal matters pending against us. We do not expect that the outcome of other current claims and legal actions not discussed below will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Chapter 11 Proceedings

On May 1, 2017, the Nuverra Parties filed voluntary petitions under chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court to pursue the Plan. On July 25, 2017, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan. The Plan became effective on the Effective Date, when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases, subject to certain conditions as set forth therein.

Confirmation Order Appeal

On July 26, 2017, David Hargreaves, an individual holder of 2018 Notes, appealed the Confirmation Order to the District Court of the District of Delaware (the “District Court”) and filed a motion for a stay pending appeal from the District Court.  Although the motion for a stay pending appeal was denied, the appeal remained pending and the District Court heard oral arguments in May 2018, and in August 2018 the District Court issued an order dismissing the appeal.  Hargreaves subsequently appealed the District Court’s decision to the United States Court of Appeals for the Third Circuit. The parties filed appellate briefs in December 2018 and January 2019, and as a result the appeal remains pending with the United States Court of Appeals for the Third Circuit.  The ultimate outcome of this appeal and its effects on the Confirmation Order are impossible to predict with certainty. No assurance can be given that the final disposition of this appeal will not affect the validity, enforceability or finality of the Confirmation Order.

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Related Party and Affiliated Company Transactions

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Related Party and Affiliated Company Transactions

Related Party and Affiliated Company Transactions

There have been no significant changes to the other related party transactions as described in Note 23 to the consolidated financial statements in our 2018 Annual Report on Form 10-K.

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Segments

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segments

Segments

We evaluate business segment performance based on income (loss) before income taxes exclusive of corporate general and administrative costs and interest expense, which are not allocated to the segments. Our business is comprised of three operating divisions, which we consider to be operating and reportable segments of our operations: (1) the Northeast division comprising the Marcellus and Utica Shale areas, (2) the Southern division comprising the Haynesville Shale area and (3) the Rocky Mountain division comprising the Bakken Shale area. Corporate/Other includes certain corporate costs and certain other corporate assets.

Financial information for our reportable segments related to operations is presented below.

	Rocky Mountain			Northeast			Southern (b)			Corporate/ Other			Total
Three months ended June 30, 2019
Revenue	$	28,993		$	10,720		$	5,527		$	—		$	45,240
Direct operating expenses	22,354			8,607			3,556			—			34,517
General and administrative expenses	1,206			729			354			2,991			5,280
Depreciation and amortization	4,307			2,821			2,136			13			9,277
Operating income (loss)	1,126			(1,437		)	(513		)	(3,004		)	(3,828		)
Income (loss) before income taxes	1,041			(1,560		)	(576		)	(3,865		)	(4,960		)
Six months ended June 30, 2019
Revenue	53,870			22,560			11,437			—			87,867
Direct operating expenses	42,182			18,322			6,570			—			67,074
General and administrative expenses	2,252			1,575			753			6,175			10,755
Depreciation and amortization	8,606			5,485			4,296			25			18,412
Operating income (loss)	830			(2,939		)	(176		)	(6,200		)	(8,485		)
Income (loss) before income taxes	683			(3,155		)	(285		)	(8,479		)	(11,236		)
As of June 30, 2019
Total assets (a)	$	107,762		$	90,881		$	77,705		$	9,031		$	285,379
Total assets held for sale	2,876			850			—			778			4,504
Three months ended June 30, 2018
Revenue	33,165			9,606			6,177			—			48,948
Direct operating expenses	25,599			8,510			4,960			—			39,069
General and administrative expenses	1,882			518			251			3,363			6,014
Depreciation and amortization	5,923			3,283			2,750			13			11,969
Operating loss	(239		)	(2,705		)	(2,253		)	(3,708		)	(8,905		)
Loss before income taxes	(203		)	(2,780		)	(2,295		)	(5,898		)	(11,176		)
Six months ended June 30, 2018
Revenue	63,935			18,719			15,963			—			98,617
Direct operating expenses	51,945			16,324			12,427			—			80,696
General and administrative expenses	3,158			1,280			829			20,067			25,334
Depreciation and amortization	12,212			7,589			6,874			38			26,713
Operating loss	(3,380		)	(6,543		)	(9,297		)	(20,437		)	(39,657		)
Loss before income taxes	(3,405		)	(6,679		)	(9,406		)	(23,853		)	(43,343		)
As of December 31, 2018
Total assets (a)	113,767			88,501			84,318			9,350			295,936
Total assets held for sale	—			—			2,004			778			2,782

_____________________

(a) Total assets exclude intercompany receivables eliminated in consolidation.

(b) The Southern division includes results for the Eagle Ford Shale area from January 1-June 30, 2018. We substantially exited the Eagle Ford Shale area as of June 30, 2018. See Note 13 for further discussion.

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Basis of Presentation Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements of Nuverra Environmental Solutions, Inc. and its subsidiaries (collectively, “Nuverra,” the “Company,” “we,” “us,” or “our”) are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Our condensed consolidated balance sheet as of December 31, 2018, included herein, has been derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (or “GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, the condensed consolidated financial statements include the normal, recurring adjustments necessary for the fair statement of the results for the interim periods. These financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, contained in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 12, 2019 (the “2018 Annual Report on Form 10-K”).

All dollar and share amounts in the footnote tabular presentations are in thousands, except per share amounts and unless otherwise noted.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASC 842”), replacing the previous leasing standard Accounting Standards Codification 840, Leases (“ASC 840”), which requires an entity that is a lessee to recognize the assets and liabilities arising from leases with terms longer than 12 months on the balance sheet. Leases are to be classified as either operating or finance, with classification affecting the pattern of expense recognition in the statement of operations. The new standard was effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods.

We adopted this new lease standard on January 1, 2019 using a modified retrospective transition, with the cumulative-effect adjustment to the opening balance of accumulated deficit as of the effective date (the “effective date method”). Under the effective date method, financial results reported in periods prior to 2019 are unchanged. We also elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carryforward the historical lease classification. In addition, we have made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. We will continue to recognize those lease payments in the consolidated statement of operations on a straight-line basis over the lease term.

The adoption of the new lease standard resulted in the recognition of operating lease assets and operating lease liabilities of approximately $4.9 million, respectively, as of January 1, 2019. Additionally, as of January 1, 2019, we recorded an adjustment of $0.8 million to accumulated deficit as a result of the re-measurement of the present value of remaining lease payments for the finance leases previously recorded as capital leases. The finance lease assets and finance lease liabilities as of January 1, 2019 were $1.8 million, respectively. We believe the adoption of the new lease standard will not materially impact our results of operations, nor have a notable impact on our liquidity. See Note 3 for further information on our leases.

There have been no other material changes or developments in our significant accounting policies or evaluation of accounting estimates and underlying assumptions or methodologies from those disclosed in our 2018 Annual Report on Form 10-K.

Revenue Recognition

Water Transfer Services

The majority of our revenues are from the removal and disposal of flowback and produced salt water originating from oil and natural gas wells or the transportation of fresh water and salt water to customer sites for use in drilling and hydraulic fracturing activities by trucks or through lay flat temporary hose or permanent water transport pipelines. Water transfer rates for trucking are based upon either a fixed fee per barrel of disposal water or upon an hourly rate. Revenue is recognized once the water has been transferred, or over time, based upon the number of barrels transported or disposed of, or at the agreed upon hourly rate, depending upon the customer contract. Contracts for the use of our water disposal pipeline are priced at a fixed fee per disposal barrel transferred, with revenues recognized over time from when the water is injected into our pipeline until the transfer is complete. Water transfer services are all generally completed within 24 hours with no remaining performance obligation outstanding at the end of each month.

Disposal Services

Revenues for disposal services are generated through fees charged for disposal of oilfield wastes in our landfill and disposal of fluids in our disposal wells. Disposal rates are generally based on a fixed fee per barrel of produced water, or on a per ton basis for landfill disposal, with revenues recognized once the disposal has occurred. The performance obligation for disposal services is considered complete once the disposal occurs. Therefore, disposal services revenues are recognized at a point in time.

Other Revenue

Other revenue primarily includes revenues from the sale of fresh water, as well as the sale of “junk” or “slop” oil obtained through the skimming of disposal water. Revenue is recognized for fresh water sales and “junk” or “slop” oil sales at a point in time once the goods are transferred. Also included is revenue generated by oilfield labor services, also called “roustabout work,” provided by the Company. Revenue is recognized in other revenue for the oilfield labor services once the activity has been performed, or over time, based on the agreed upon hourly rate, depending upon the customer contract. Oilfield labor services are short-term in nature with hours tracked each day services are provided. As such, there are no remaining performance obligations outstanding at the end of each month.

Other revenue also historically included small-scale construction or maintenance projects, however we exited that business during the three months ended June 30, 2018. Revenue for construction and maintenance projects, which generally spanned approximately two to three months, was recognized over time under the milestone method which is considered an output method. Since our construction contracts were short term in nature, the contractual milestone dates occurred close together over time such that there was no risk that we would not recognize revenue for goods or services transferred to the customer. All construction costs were expensed as incurred.

Rental Revenue

We generate rental revenue from the rental of various equipment used in wellsite services. Rental rates are based upon negotiated rates with our customers and revenue is recognized over the rental service period. Revenues from rental equipment are recognized under ASC 840 for the periods prior to January 1, 2019, and under ASC 842 for the periods after January 1, 2019. As the rental service period for our equipment is very short term in nature and does not include any sales-type or direct financing leases, nor any variable rental components, the adoption of ASC 842 in 2019 did not have a material impact upon our consolidated statement of operations.

Revenues are generated upon the performance of contracted services under formal and informal contracts with customers. Revenues are recognized when the contracted services for our customers are completed in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Sales and usage-based taxes are excluded from revenues. Payment is due when the contracted services are completed in accordance with the payment terms established with each customer prior to providing any services. As such, there is no significant financing component for any of our revenues.

Some of our contracts with customers involve multiple performance obligations as we are providing more than one service under the same contract, such as water transfer services and disposal services. However, our core service offerings are capable of being distinct and also are distinct within the context of contracts with our customers. As such, these services represent separate performance obligations when included in a single contract. We have standalone pricing for all of our services which is negotiated with each of our customers in advance of providing the service. The contract consideration is allocated to the individual performance obligations based upon the standalone selling price of each service, and no discount is offered for a bundled services offering.

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Revenues (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Schedule of Contract Assets

	Contract Asset
Balance at the beginning of the period (January 1, 2019)	$	—
Balance at the end of the period (June 30, 2019)	512
Increase/(decrease)	512

Schedule of Revenues Disaggregated by Revenue Source

The following tables present our revenues disaggregated by revenue source for each reportable segment for the three and six months ended June 30, 2019 and June 30, 2018:

	Three months ended June 30, 2019
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	18,448	$	7,296	$	2,726	$	—	$	28,470
Disposal Services	5,146		3,098		2,739		—		10,983
Other Revenue	1,471		255		59		—		1,785
Total Service Revenue	25,065		10,649		5,524		—		41,238
Rental Revenue	3,928		71		3		—		4,002
Total Revenue	$	28,993	$	10,720	$	5,527	$	—	$	45,240

	Three months ended June 30, 2018
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	21,967	$	8,230	$	5,014	$	—	$	35,211
Disposal Services	4,540		955		1,081		—		6,576
Other Revenue	3,120		362		51		—		3,533
Total Service Revenue	29,627		9,547		6,146		—		45,320
Rental Revenue	3,538		59		31		—		3,628
Total Revenue	$	33,165	$	9,606	$	6,177	$	—	$	48,948

	Six months ended June 30, 2019
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	34,157	$	15,268	$	6,210	$	—	$	55,635
Disposal Services	9,217		6,597		5,145		—		20,959
Other Revenue	3,017		557		71		—		3,645
Total Service Revenue	46,391		22,422		11,426		—		80,239
Rental Revenue	7,479		138		11		—		7,628
Total Revenue	$	53,870	$	22,560	$	11,437	$	—	$	87,867

	Six months ended June 30, 2018
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	43,227	$	16,249	$	13,125	$	—	$	72,601
Disposal Services	8,152		1,732		2,317		—		12,201
Other Revenue	5,244		616		185		—		6,045
Total Service Revenue	56,623		18,597		15,627		—		90,847
Rental Revenue	7,312		122		336		—		7,770
Total Revenue	$	63,935	$	18,719	$	15,963	$	—	$	98,617

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Components of Lease Expense

The components of lease expense were as follows:

		Three Months Ended			Six Months Ended
Lease Cost	Classification	June 30, 2019			June 30, 2019
Operating lease cost (a)	General and administrative expenses	$	729		$	1,453
Finance lease cost:
Amortization of leased assets	Depreciation and amortization	679			1,225
Interest on lease liabilities	Interest expense, net	177			240
Variable lease cost	General and administrative expenses	1,055			2,121
Sublease income	Other income, net	(22		)	(73		)
Total net lease cost		$	2,618		$	4,966

(a) Includes short-term leases which represented $0.2 million and $0.4 million of the balance for the three and six months endedJune 30, 2019, respectively.

Schedule of Assets and Liabilities, Lease Term and Discount Rate and Supplemental Disclosure

Supplemental balance sheet, cash flow and other information related to leases was as follows (in thousands, except lease term and discount rate):

Leases	Classification	June 30, 2019
Assets:
Operating lease assets	Operating lease assets	$	3,612
Finance lease assets	Property, plant and equipment, net of accumulated depreciation (a)	7,166
Total leased assets		$	10,778
Liabilities:
Current
Operating lease liabilities	Accrued and other current liabilities	$	1,980
Finance lease liabilities	Current portion of long-term debt	2,040
Noncurrent
Operating lease liabilities	Noncurrent operating lease liabilities	1,653
Finance lease liabilities	Long-term debt	5,614
Total lease liabilities		$	11,287

(a) Finance lease assets are recorded net of accumulated amortization of $1.2 million as of June 30, 2019.

Lease Term and Discount Rate	June 30, 2019
Weighted-average remaining lease term (in years):
Operating leases	20.5
Finance leases	4.5
Weighted-average discount rate:
Operating leases	7.86	%
Finance leases	6.68	%

Supplemental Disclosure of Cash Flow Information and Other Information	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,453
Operating cash flows from finance leases	240
Financing cash flows from finance leases	824
Leased assets obtained in exchange for new operating lease liabilities	$	—
Leased assets obtained in exchange for new finance lease liabilities	6,674

Schedule of Maturities of Operating Lease Liabilities

Maturities of lease liabilities were as follows:

	June 30, 2019
	Operating Leases (a)			Finance Leases (b)
2019	$	1,522		$	1,170
2020	1,530			1,980
2021	430			1,270
2022	290			1,270
2023	164			2,113
Thereafter	6,759			1,750
Total lease payments	10,695			9,553
Less amount representing executory costs (c)	(114		)	—
Net lease payments	10,581			9,553
Less amount representing interest	(6,948		)	(1,899		)
Present value of total lease liabilities	3,633			7,654
Less current lease liabilities	(1,980		)	(2,040		)
Long-term lease liabilities	$	1,653		$	5,614

(a) Operating lease payments include $0.0 million related to options to extend lease terms that are reasonably certain of being exercised.

(b) Finance lease payments include $0.0 million related to options to extend lease terms that are reasonably certain of being exercised.

(c) Represents executory costs for all leases. We included executory costs in lease payments under ASC 840, and have elected to continue to include executory costs for both leases that commenced before and after the effective date of ASC 842.

Schedule of Maturities of Finance Lease Liabilities

Maturities of lease liabilities were as follows:

	June 30, 2019
	Operating Leases (a)			Finance Leases (b)
2019	$	1,522		$	1,170
2020	1,530			1,980
2021	430			1,270
2022	290			1,270
2023	164			2,113
Thereafter	6,759			1,750
Total lease payments	10,695			9,553
Less amount representing executory costs (c)	(114		)	—
Net lease payments	10,581			9,553
Less amount representing interest	(6,948		)	(1,899		)
Present value of total lease liabilities	3,633			7,654
Less current lease liabilities	(1,980		)	(2,040		)
Long-term lease liabilities	$	1,653		$	5,614

(a) Operating lease payments include $0.0 million related to options to extend lease terms that are reasonably certain of being exercised.

(b) Finance lease payments include $0.0 million related to options to extend lease terms that are reasonably certain of being exercised.

(c) Represents executory costs for all leases. We included executory costs in lease payments under ASC 840, and have elected to continue to include executory costs for both leases that commenced before and after the effective date of ASC 842.

Schedule of Future Minimum Operating Lease Payments

As of December 31, 2018, future minimum lease payments, by year and in the aggregate, under all noncancellable leases were as follows:

	December 31, 2018
	Operating Leases		Capital Leases
2019	$	2,415	$	1,287
2020	1,453		718
2021	431		—
2022	294		—
2023	164		—
Thereafter	6,755		—
Total lease payments	$	11,512	2,005
Less amount representing executory costs			(30		)
Net lease payments			1,975
Less amount representing interest			(90		)
Present value of net lease payments			$	1,885

Schedule of Future Minimum Capital Lease Payments

As of December 31, 2018, future minimum lease payments, by year and in the aggregate, under all noncancellable leases were as follows:

	December 31, 2018
	Operating Leases		Capital Leases
2019	$	2,415	$	1,287
2020	1,453		718
2021	431		—
2022	294		—
2023	164		—
Thereafter	6,755		—
Total lease payments	$	11,512	2,005
Less amount representing executory costs			(30		)
Net lease payments			1,975
Less amount representing interest			(90		)
Present value of net lease payments			$	1,885

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Acquisition of Clearwater (Tables)

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Preliminary Allocation of Purchase Price

The final allocation of the purchase price is summarized as follows:

Accounts receivable	$	1,897
Intangible assets	799
Property, plant and equipment	37,589
Goodwill	2,379
Accounts payable and accrued expenses	(372		)
Total	$	42,292

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table presents the calculation of basic and diluted net loss per common share, as well as the anti-dilutive stock-based awards that were excluded from the calculation of diluted loss per share for the periods presented:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Numerator: Net loss	$	(5,006	)	$	(11,176	)	$	(11,361	)	$	(43,343	)
Denominator:
Weighted average shares—basic	15,704			11,696			15,627			11,696
Common stock equivalents	—			—			—			—
Weighted average shares—diluted	15,704			11,696			15,627			11,696
Earnings per common share:
Net loss per basic common share	$	(0.32	)	$	(0.96	)	$	(0.73	)	$	(3.71	)
Net loss per diluted common share	$	(0.32	)	$	(0.96	)	$	(0.73	)	$	(3.71	)
Anti-dilutive stock-based awards excluded:	559			1,131			513			1,227

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets consist of the following:

	June 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net		Remaining Useful Life (Years)
Disposal permits	$	581	$	(232	)	$	349	5.2
Trade name	799		(266		)	533		1.5
Total intangible assets	$	1,380	$	(498	)	$	882	3.0

	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net		Remaining Useful Life (Years)
Disposal permits	$	581	$	(180	)	$	401	5.5
Trade name	799		(88		)	711		2.0
Total intangible assets	$	1,380	$	(268	)	$	1,112	3.2

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on a Recurring Basis and Fair Value Hierarchy of the Valuation Techniques

Liabilities measured at fair value on a recurring basis and the fair value hierarchy of the valuation techniques we utilized to determine such fair value included significant unobservable inputs (Level 3) and were as follows:

	June 30, 2019		December 31, 2018
Derivative warrant liability	$	6	$	34

Schedule of Stockholders' Equity Note, Warrants or Rights

The following table provides a reconciliation of the beginning and ending balances of the “Derivative warrant liability” presented in the condensed consolidated balance sheet during the six months endedJune 30, 2019, and the year ended December 31, 2018.

	Six Months Ended			Year Ended
	June 30, 2019			December 31, 2018
Balance at beginning of period	$	34		$	477
Adjustments to estimated fair value	(28		)	(443		)
Balance at end of period	$	6		$	34

The following table shows the warrant activity for the six months endedJune 30, 2019 and June 30, 2018:

	Six Months Ended
	June 30,
	2019	2018
Outstanding at the beginning of the period	118	118
Issued	—	—
Exercised	—	—
Outstanding at the end of the period	118	118

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Accrued and Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued and other current liabilities consisted of the following at June 30, 2019 and December 31, 2018:

	June 30, 2019		December 31, 2018
Accrued payroll and employee benefits	$	4,102	$	6,975
Accrued insurance	3,416		2,664
Accrued legal	91		733
Accrued taxes	1,036		2,229
Accrued interest	293		520
Accrued operating costs	2,833		3,424
Accrued other	393		125
Current operating lease liabilities	1,980		—
Total accrued and other current liabilities	$	14,144	$	16,670

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Debt (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Debt

Debt consisted of the following at June 30, 2019 and December 31, 2018:

			June 30, 2019							December 31, 2018
	Interest Rate	Maturity Date	Unamortized Debt Issuance Costs		Fair Value of Debt (e)		Carrying Value of Debt			Carrying Value of Debt
Revolving Facility (a)	7.68%	Feb. 2021	$	—	$	—	$	—		$	—
First Lien Term Loan (b)	9.68%	Feb. 2021	175		19,654		19,654			21,905
Second Lien Term Loan (b)	11.00%	Oct. 2021	—		9,803		9,803			10,066
Bridge Term Loan (c)	11.00%	Apr. 2019	—		—		—			32,500
Finance leases (d)	6.68%	Various	—		7,654		7,654			1,885
Total debt			$	175	$	37,111	37,111			66,356
Debt issuance costs presented with debt (f)							(175		)	(423		)
Total debt, net							36,936			65,933
Less: current portion of long-term debt							(6,664		)	(38,305		)
Long-term debt							$	30,272		$	27,628

_____________________

(a) The interest rate presented represents the interest rate as of June 30, 2019 on the $30.0 million revolving facility extended to the Company pursuant to the Credit Agreement (the “Revolving Facility”).

(b) Interest on the First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus 7.25%. Interest on the Second Lien Term Loan (as defined below) accrues at an annual rate equal to 11.0%, payable in cash, in arrears, on the first day of each month.

(c) The Bridge Term Loan Credit Agreement has an interest rate of 11.0% per annum, payable in cash, in arrears, on the first day of each month. The obligations under the Bridge Term Loan Credit Agreement were repaid in full on January 2, 2019.

(d) Our finance leases include finance lease arrangements related to fleet purchases and real property with a weighted-average annual interest rate of approximately 6.68%, which mature in varying installments between 2019 and 2029.

(e) Our Revolving Facility, First Lien Term Loan, Second Lien Term Loan, and finance leases bear interest at rates commensurate with market rates and therefore their respective carrying values approximate fair value.

(f) The debt issuance costs resulted from an amendment to the First Lien Term Loan during the three months ended December 31, 2018, done in connection with the Clearwater Acquisition.

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Derivative Warrants (Tables)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Schedule of Stockholders' Equity Note, Warrants or Rights

The following table provides a reconciliation of the beginning and ending balances of the “Derivative warrant liability” presented in the condensed consolidated balance sheet during the six months endedJune 30, 2019, and the year ended December 31, 2018.

	Six Months Ended			Year Ended
	June 30, 2019			December 31, 2018
Balance at beginning of period	$	34		$	477
Adjustments to estimated fair value	(28		)	(443		)
Balance at end of period	$	6		$	34

The following table shows the warrant activity for the six months endedJune 30, 2019 and June 30, 2018:

	Six Months Ended
	June 30,
	2019	2018
Outstanding at the beginning of the period	118	118
Issued	—	—
Exercised	—	—
Outstanding at the end of the period	118	118

Schedule of Assumptions Used

The fair value of the derivative warrant liability as of June 30, 2019 and December 31, 2018 was estimated using the following model inputs:

	As of June 30,			As of December 31,
	2019			2018
Exercise price	$	39.82		$	39.82
Closing stock price	$	4.11		$	8.20
Risk free rate	1.75		%	2.51		%
Expected volatility	43.47		%	36.87		%

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Restructuring and Exit Costs (Tables)

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs

A rollforward of the liability from December 31, 2018 through June 30, 2019 is as follows:

	Lease Exit Costs
Balance accrued at beginning of period	$	33
Cash payments	(25		)
Balance accrued at end of period	$	8

A rollforward of the liability from December 31, 2018 through June 30, 2019 is as follows:

	Lease Exit Costs
Balance accrued at beginning of period	$	19
Cash payments	(13		)
Adjustments to accrued balance	$	(6	)
Balance accrued at end of period	$	—

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Components of income tax expense (benefit)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019			2018		2019			2018
Current income tax expense	$	(4	)	$	—	$	(13	)	$	—
Deferred income tax expense	(42		)	—		(112		)	—
Total income tax expense	$	(46	)	$	—	$	(125	)	$	—

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Share-based Compensation (Tables)

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award

The total grants awarded under both the Incentive Plan and the Director Plan during the three and six months endedJune 30, 2019 and June 30, 2018 are presented in the table below:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019	2018	2019	2018
Stock option grants	—	—	—	—
Restricted stock grants (1)	23	6	142	1,331
Total grants in the period	23	6	142	1,331

(1) Includes restricted stock awards, performance-based restricted stock units, and time-based restricted stock units granted under the Incentive Plan and the Director Plan.

The total share-based compensation expense, net of estimated forfeitures, included in “General and administrative expenses” in the accompanying condensed consolidated statements of operations for the three and six months endedJune 30, 2019 and June 30, 2018 was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Stock options	$	—	$	—	$	—	$	(788	)
Restricted stock (1)	563		416		1,415		12,182
Total expense	$	563	$	416	$	1,415	$	11,394

(1) Includes expense related to restricted stock awards, performance-based restricted stock units, and time-based restricted stock units granted under the Incentive Plan and the Director Plan.

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Segments (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Financial Information for Reportable Segments

Financial information for our reportable segments related to operations is presented below.

	Rocky Mountain			Northeast			Southern (b)			Corporate/ Other			Total
Three months ended June 30, 2019
Revenue	$	28,993		$	10,720		$	5,527		$	—		$	45,240
Direct operating expenses	22,354			8,607			3,556			—			34,517
General and administrative expenses	1,206			729			354			2,991			5,280
Depreciation and amortization	4,307			2,821			2,136			13			9,277
Operating income (loss)	1,126			(1,437		)	(513		)	(3,004		)	(3,828		)
Income (loss) before income taxes	1,041			(1,560		)	(576		)	(3,865		)	(4,960		)
Six months ended June 30, 2019
Revenue	53,870			22,560			11,437			—			87,867
Direct operating expenses	42,182			18,322			6,570			—			67,074
General and administrative expenses	2,252			1,575			753			6,175			10,755
Depreciation and amortization	8,606			5,485			4,296			25			18,412
Operating income (loss)	830			(2,939		)	(176		)	(6,200		)	(8,485		)
Income (loss) before income taxes	683			(3,155		)	(285		)	(8,479		)	(11,236		)
As of June 30, 2019
Total assets (a)	$	107,762		$	90,881		$	77,705		$	9,031		$	285,379
Total assets held for sale	2,876			850			—			778			4,504
Three months ended June 30, 2018
Revenue	33,165			9,606			6,177			—			48,948
Direct operating expenses	25,599			8,510			4,960			—			39,069
General and administrative expenses	1,882			518			251			3,363			6,014
Depreciation and amortization	5,923			3,283			2,750			13			11,969
Operating loss	(239		)	(2,705		)	(2,253		)	(3,708		)	(8,905		)
Loss before income taxes	(203		)	(2,780		)	(2,295		)	(5,898		)	(11,176		)
Six months ended June 30, 2018
Revenue	63,935			18,719			15,963			—			98,617
Direct operating expenses	51,945			16,324			12,427			—			80,696
General and administrative expenses	3,158			1,280			829			20,067			25,334
Depreciation and amortization	12,212			7,589			6,874			38			26,713
Operating loss	(3,380		)	(6,543		)	(9,297		)	(20,437		)	(39,657		)
Loss before income taxes	(3,405		)	(6,679		)	(9,406		)	(23,853		)	(43,343		)
As of December 31, 2018
Total assets (a)	113,767			88,501			84,318			9,350			295,936
Total assets held for sale	—			—			2,004			778			2,782

_____________________

(a) Total assets exclude intercompany receivables eliminated in consolidation.

(b) The Southern division includes results for the Eagle Ford Shale area from January 1-June 30, 2018. We substantially exited the Eagle Ford Shale area as of June 30, 2018. See Note 13 for further discussion.

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Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Operating lease assets	$ 3,612		$ 0
Operating lease liabilities	3,633
Adjustment due to adoption of ASC 842, Leases		$ 823
Finance lease assets	7,166
Finance lease liabilities	$ 7,654
Accumulated Deficit
Lessee, Lease, Description [Line Items]
Adjustment due to adoption of ASC 842, Leases		823
Accounting Standards Update 2016-02
Lessee, Lease, Description [Line Items]
Operating lease assets		4,900
Operating lease liabilities		4,900
Finance lease assets		1,800
Finance lease liabilities		1,800
Accounting Standards Update 2016-02 | Accumulated Deficit
Lessee, Lease, Description [Line Items]
Adjustment due to adoption of ASC 842, Leases		$ 800

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Revenues - Schedule of Contract Assets (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Balance at the beginning of the period (January 1, 2019)	$ 512,000	$ 512,000	$ 0
Balance at the end of the period (June 30, 2019)	512,000	512,000	$ 0
Increase/(decrease)		$ 512,000
Contract assets reclassified to receivables	$ 0

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Revenues - Schedule of Revenues Disaggregated by Revenue Source (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Service revenue	$ 41,238	$ 45,320	$ 80,239	$ 90,847
Rental revenue	4,002	3,628	7,628	7,770
Total revenue	45,240	48,948	$ 87,867	98,617
Minimum
Disaggregation of Revenue [Line Items]
Revenue from construction and maintenance projects period (in months)			2 months
Maximum
Disaggregation of Revenue [Line Items]
Revenue from construction and maintenance projects period (in months)			3 months
Corporate/ Other
Disaggregation of Revenue [Line Items]
Service revenue	0	0	$ 0	0
Rental revenue	0	0	0	0
Total revenue	0	0	0	0
Water Transfer Services
Disaggregation of Revenue [Line Items]
Service revenue	28,470	35,211	55,635	72,601
Water Transfer Services | Corporate/ Other
Disaggregation of Revenue [Line Items]
Service revenue	0	0	0	0
Disposal Services
Disaggregation of Revenue [Line Items]
Service revenue	10,983	6,576	20,959	12,201
Disposal Services | Corporate/ Other
Disaggregation of Revenue [Line Items]
Service revenue	0	0	0	0
Other Revenue
Disaggregation of Revenue [Line Items]
Service revenue	1,785	3,533	3,645	6,045
Other Revenue | Corporate/ Other
Disaggregation of Revenue [Line Items]
Service revenue	0	0	0	0
Rocky Mountain | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	25,065	29,627	46,391	56,623
Rental revenue	3,928	3,538	7,479	7,312
Total revenue	28,993	33,165	53,870	63,935
Rocky Mountain | Water Transfer Services | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	18,448	21,967	34,157	43,227
Rocky Mountain | Disposal Services | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	5,146	4,540	9,217	8,152
Rocky Mountain | Other Revenue | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	1,471	3,120	3,017	5,244
Northeast | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	10,649	9,547	22,422	18,597
Rental revenue	71	59	138	122
Total revenue	10,720	9,606	22,560	18,719
Northeast | Water Transfer Services | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	7,296	8,230	15,268	16,249
Northeast | Disposal Services | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	3,098	955	6,597	1,732
Northeast | Other Revenue | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	255	362	557	616
Southern | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	5,524	6,146	11,426	15,627
Rental revenue	3	31	11	336
Total revenue	5,527	6,177	11,437	15,963
Southern | Water Transfer Services | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	2,726	5,014	6,210	13,125
Southern | Disposal Services | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	2,739	1,081	5,145	2,317
Southern | Other Revenue | Operating Segments
Disaggregation of Revenue [Line Items]
Service revenue	$ 59	$ 51	$ 71	$ 185

XML

Leases - Narrative (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) truck	Jun. 30, 2018 USD ($)
Lessee, Lease, Description [Line Items]
Remaining lease terms		99 years
Residual value guarantee		$ 2.2
Lease not yet commenced, amount		$ 3.3
Number of water transfer trucks | truck		20
Lease not yet commenced, term		4 years
Lease expense under operating leases	$ 1.2		$ 2.4
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms		1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms		20 years

XML

Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Leases [Abstract]
Operating lease cost	$ 729	$ 1,453
Finance lease cost:
Amortization of leased assets	679	1,225
Interest on lease liabilities	177	240
Variable lease cost	1,055	2,121
Sublease income	(22)	(73)
Total net lease cost	2,618	4,966
Short-term lease cost	$ 200	$ 400

XML

Leases - Schedule of Supplemental Balance Sheet, Cash Flow and Other Information (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Leases [Abstract]
Operating lease assets	$ 3,612	$ 0
Finance lease assets	7,166
Total leased assets	10,778
Operating lease liabilities	1,980	0
Finance lease liabilities	2,040
Operating lease liabilities	1,653	$ 0
Finance lease liabilities	5,614
Total lease liabilities	11,287
Accumulated amortization, finance lease assets	$ 1,200

XML

Leases - Schedule of Weighted Average Remaining Lease Term and Discount Rate (Details)	Jun. 30, 2019
Weighted-average remaining lease term (in years):
Weighted-average remaining lease term (in years), Operating leases	20 years 6 months
Weighted-average remaining lease term (in years), Finance leases	4 years 6 months
Weighted-average discount rate:
Weighted-average discount rate, Operating leases	7.86%
Weighted-average discount rate, Finance leases	6.68%

XML

Leases - Supplemental Disclosure of Cash Flow Information and Other Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 1,453
Operating cash flows from finance leases	240
Financing cash flows from finance leases	824
Leased assets obtained in exchange for new operating lease liabilities	0
Leased assets obtained in exchange for new finance lease liabilities	$ 6,674

XML

Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Operating Leases
2019	$ 1,522
2020	1,530
2021	430
2022	290
2023	164
Thereafter	6,759
Total lease payments	10,695
Less amount representing executory costs	(114)
Net lease payments	10,581
Less amount representing interest	(6,948)
Present value of total lease liabilities	3,633
Less current lease liabilities	(1,980)	$ 0
Noncurrent operating lease liabilities	1,653	$ 0
Finance Leases
2019	1,170
2020	1,980
2021	1,270
2022	1,270
2023	2,113
Thereafter	1,750
Total lease payments	9,553
Less amount representing executory costs	0
Net lease payments	9,553
Less amount representing interest	(1,899)
Present value of total lease liabilities	7,654
Less current lease liabilities	(2,040)
Long-term lease liabilities	5,614
Operating lease payments	0
Finance lease payments	$ 0

XML

Leases - Schedule of Future Minimum Operating and Capital Lease Payments (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Operating Leases
2019	$ 2,415
2020	1,453
2021	431
2022	294
2023	164
Thereafter	6,755
Total lease payments	11,512
Capital Lease Obligations [Abstract]
2019	1,287
2020	718
2021	0
2022	0
2023	0
Thereafter	0
Total lease payments	2,005
Less amount representing executory costs	(30)
Net lease payments	1,975
Less amount representing interest	(90)
Present value of net lease payments	$ 1,885

XML

Acquisition of Clearwater - Narrative (Details) $ in Millions		3 Months Ended	12 Months Ended
	Oct. 05, 2018 USD ($) well	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Business Acquisition [Line Items]
Rights offering, aggregate offering price	$ 32.5
Term Loan | Ares | Line of Credit
Business Acquisition [Line Items]
Additional term loan from credit agreement	10.0
Clearwater
Business Acquisition [Line Items]
Consideration	$ 42.3
Number of salt water disposal wells in service | well	3
Bridge loan	$ 32.5
Transaction costs		$ 0.3	$ 1.1

XML

Acquisition of Clearwater - Preliminary Allocation of Purchase Price (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Oct. 05, 2018
Business Acquisition [Line Items]
Goodwill	$ 29,518	$ 29,518
Clearwater
Business Acquisition [Line Items]
Accounts receivable			$ 1,897
Intangible assets			799
Property, plant and equipment			37,589
Goodwill			2,379
Accounts payable and accrued expenses			(372)
Total			$ 42,292

XML

Equity - Narrative (Details) $ / shares in Units, $ in Thousands			3 Months Ended	6 Months Ended
	Jan. 02, 2019 USD ($) $ / shares shares	Oct. 05, 2018 day	Mar. 31, 2019 shares	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)
Class of Stock [Line Items]
Percentage of nonrefundable cash payments		1.00%
Required period for registration statement (in days) | day		20
Proceeds from the issuance of stock				$ 31,057	$ 0
Payments on bridge term loan				$ 31,382	$ 0
Shares outstanding of Successor Company (in shares) | shares	15,614,981
Bridge Term Loan
Class of Stock [Line Items]
Conversion of loan to common stock	$ 1,100
Payments on bridge term loan	$ 31,400
Common Stock
Class of Stock [Line Items]
Issuance of common stock for rights offering (in shares) | shares			3,382,000
Rights Offering | Common Stock
Class of Stock [Line Items]
Aggregate shares sold (in shares) | shares	3,381,894
Purchase price (usd per share) | $ / shares	$ 9.61
Proceeds from the issuance of stock	$ 31,400
Issuance of common stock for rights offering (in shares) | shares	3,381,894
Two Largest Shareholders
Class of Stock [Line Items]
Percentage of stock held by largest shareholders		90.00%

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Earnings Per Common Share - Narrative (Details) - shares	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Earnings Per Share [Abstract]
Common stock equivalents (in shares)	0	0	0	0	0

XML

Earnings Per Common Share - Schedule of Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Numerator:
Numerator: Net loss	$ (5,006)	$ (6,355)	$ (11,176)	$ (32,167)	$ (11,361)	$ (43,343)	$ (43,343)
Denominator:
Weighted average shares—basic (in shares)	15,704,000		11,696,000		15,627,000	11,696,000	11,696,000
Common stock equivalents (in shares)	0		0		0	0	0
Weighted average shares—diluted (in shares)	15,704,000		11,696,000		15,627,000	11,696,000	11,696,000
Earnings per common share:
Net loss per basic common share (usd per share)	$ (0.32)		$ (0.96)		$ (0.73)	$ (3.71)	$ (3.71)
Net loss per diluted common share (usd per share)	$ (0.32)		$ (0.96)		$ (0.73)	$ (3.71)	$ (3.71)
Antidilutive stock-based awards excluded (in shares)	559,000		1,131,000		513,000		1,227,000

XML

Goodwill and Intangible Assets (Detail) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Changes in carrying value of goodwill	$ 0
Goodwill	29,518,000	$ 29,518,000
Gross Carrying Amount	1,380,000	1,380,000
Accumulated Amortization	(498,000)	(268,000)
Net	$ 882,000	$ 1,112,000
Remaining Useful Life (Years)	3 years	3 years 2 months
Disposal permits
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 581,000	$ 581,000
Accumulated Amortization	(232,000)	(180,000)
Net	$ 349,000	$ 401,000
Remaining Useful Life (Years)	5 years 2 months	5 years 6 months
Trade name
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 799,000	$ 799,000
Accumulated Amortization	(266,000)	(88,000)
Net	$ 533,000	$ 711,000
Remaining Useful Life (Years)	1 year 6 months	2 years
Northeast
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 21,900,000	$ 21,900,000
Rocky Mountain
Finite-Lived Intangible Assets [Line Items]
Goodwill	4,900,000	4,900,000
Southern
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 2,700,000	$ 2,700,000

XML

Assets Held for Sale and Impairment - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Goodwill [Line Items]
Impairment of assets to be disposed of	$ 0	$ 332	$ 4,100	$ 117	$ 4,463
Southern
Goodwill [Line Items]
Impairment of assets to be disposed of			4,000
Northeast
Goodwill [Line Items]
Impairment of assets to be disposed of			$ 100

XML

Fair Value Measurements - Measured on a Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
Liabilities:
Derivative warrant liability	$ 6	$ 34	$ 477

XML

Fair Value Measurements - Derivative Warrant Liability (Details) $ / shares in Units, $ in Thousands		6 Months Ended		12 Months Ended
	Aug. 07, 2017 warrant $ / shares shares	Jun. 30, 2019 USD ($) $ / shares	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($) $ / shares
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Plan of reorganization, number of warrants Issued | warrant	118,137
Exercise price of warrants (in USD per warrant) | $ / shares	$ 39.82	$ 39.82		$ 39.82
Expiration term (in years)	7 years
Par value of successor common stock (USD per share) | $ / shares	$ 0.01
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning of period		$ 34	$ 477	$ 477
Adjustments to estimated fair value		(28)	$ (289)	(443)
Balance at end of period		$ 6		$ 34
Common Stock
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant exercisable for common stock | shares	1
2018 Notes
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Interest Rate	9.875%

XML

Accrued and Other Current Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Accrued payroll and employee benefits	$ 4,102	$ 6,975
Accrued insurance	3,416	2,664
Accrued legal	91	733
Accrued taxes	1,036	2,229
Accrued interest	293	520
Accrued operating costs	2,833	3,424
Accrued other	393	125
Current operating lease liabilities	1,980	0
Total accrued and other current liabilities	$ 14,144	$ 16,670

XML

Debt - Schedule of Debt (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Unamortized Debt Issuance Costs	$ 175,000
Fair Value of Debt	37,111,000
Carrying Value of Debt	37,111,000	$ 66,356,000
Debt issuance costs presented with debt	(175,000)	(423,000)
Total debt, net	36,936,000	65,933,000
Less: current portion of long-term debt	(6,664,000)	(38,305,000)
Long-term debt	30,272,000	27,628,000
ACF FinCo I, LP | Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Maximum amount from credit agreement	$ 30,000,000.0
Successor Revolving Facility
Debt Instrument [Line Items]
Interest Rate	7.68%
Unamortized Debt Issuance Costs	$ 0
Fair Value of Debt	0
Carrying Value of Debt	$ 0	0
First Lien Term Loan
Debt Instrument [Line Items]
Interest Rate	9.68%
Unamortized Debt Issuance Costs	$ 175,000
Fair Value of Debt	19,654,000
Carrying Value of Debt	$ 19,654,000	21,905,000
First Lien Term Loan | LIBOR
Debt Instrument [Line Items]
Variable interest rate	7.25%
Second Lien Term Loan
Debt Instrument [Line Items]
Interest Rate	11.00%
Unamortized Debt Issuance Costs	$ 0
Fair Value of Debt	9,803,000
Carrying Value of Debt	$ 9,803,000	10,066,000
Bridge Term Loan
Debt Instrument [Line Items]
Interest Rate	11.00%
Unamortized Debt Issuance Costs	$ 0
Fair Value of Debt	0
Carrying Value of Debt	0	32,500,000
Vehicle Financings
Debt Instrument [Line Items]
Unamortized Debt Issuance Costs	0
Fair Value of Debt	7,654,000
Carrying Value of Debt	$ 7,654,000	$ 1,885,000
Weighted-average annual interest rate	6.68%

XML

Debt - Additional Information (Details) - USD ($) $ in Thousands			6 Months Ended
	Jan. 02, 2019	Oct. 05, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Debt Instrument [Line Items]
Carrying Value of Debt			$ 37,111		$ 66,356
Rights offering, aggregate offering price		$ 32,500
Payments on bridge term loan			31,382	$ 0
Rights Offering | Common Stock
Debt Instrument [Line Items]
Rights offering, aggregate offering price	$ 31,400
Two Largest Shareholders
Debt Instrument [Line Items]
Percentage of stock held by largest shareholders		90.00%
First Lien Term Loan
Debt Instrument [Line Items]
Carrying Value of Debt			19,654		21,905
Second Lien Term Loan
Debt Instrument [Line Items]
Carrying Value of Debt			9,803		10,066
Vehicle Financings
Debt Instrument [Line Items]
Carrying Value of Debt			7,654		1,885
Vehicle Financings | Appalachian Water Services
Debt Instrument [Line Items]
Carrying Value of Debt			7,700
Bridge Term Loan
Debt Instrument [Line Items]
Carrying Value of Debt			$ 0		$ 32,500
Bridge loan		$ 32,500
Conversion of loan to common stock	1,100
Payments on bridge term loan	$ 31,400
Bridge Term Loan Credit Agreement - Portion Used to Fund Acquisition
Debt Instrument [Line Items]
Bridge loan		22,500
Bridge Term Loan Credit Agreement - Portion Used To Pay Down Second Lien Term Loan
Debt Instrument [Line Items]
Repayments of debt		$ 10,000

XML

Derivative Warrants - Additional Information (Details)	Aug. 07, 2017 warrant $ / shares	Jun. 30, 2019 $ / shares	Dec. 31, 2018 $ / shares
Equity [Abstract]
Plan of reorganization, number of warrants Issued | warrant	118,137
Par value of successor common stock (USD per share)	$ 0.01
Exercise price of warrants (in USD per warrant)	$ 39.82	$ 39.82	$ 39.82
Expiration term (in years)	7 years

XML

Derivative Warrants - Warrants Outstanding Reconciliation (Details) - Warrant - USD ($) shares in Thousands, $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Increase (Decrease) in Temporary Equity [Roll Forward]
Outstanding at the beginning of the period (in shares)	118	118
Issued (in shares)	$ 0	$ 0
Exercised (in shares)	$ 0	$ 0
Outstanding at the end of the period (in shares)	118	118

XML

Derivative Warrants - Schedule of Assumptions Used (Details)	Jun. 30, 2019 $ / shares	Dec. 31, 2018 $ / shares	Aug. 07, 2017 $ / shares
Class of Warrant or Right [Line Items]
Exercise price of warrants (in USD per warrant)	$ 39.82	$ 39.82	$ 39.82
Closing stock price (in USD per share)	$ 4.11	$ 8.20
Risk free rate
Class of Warrant or Right [Line Items]
Measurement input	0.0175	0.0251
Expected volatility
Class of Warrant or Right [Line Items]
Measurement input	0.4347	0.3687

XML

Restructuring and Exit Costs - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2015
Restructuring Cost and Reserve [Line Items]
Restructuring and exit-related costs	$ (6,000)	$ 469,000	$ (6,000)	$ 1,068,000
Eagle Ford Shale Area
Restructuring Cost and Reserve [Line Items]
Restructuring and exit-related costs					$ 1,100,000
Mississippian Shale Area and Tuscaloosa Marine Shale Logistics Business
Restructuring Cost and Reserve [Line Items]
Restructuring and exit-related costs						$ 7,100,000
Mississippian Shale Area and Tuscaloosa Marine Shale Logistics Business | Accrued Liabilities
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	$ 8,000		$ 8,000

XML

Restructuring and Exit Costs - Liability Rollforward (Details) - Eagle Ford Shale Area - Lease Exit Costs $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Restructuring Reserve [Roll Forward]
Balance accrued at beginning of period	$ 19
Cash payments	(13)
Adjustments to accrued balance	(6)
Balance accrued at end of period	$ 0

XML

Restructuring and Exit Costs - Restructuring Reserve (Details) - Mississippian Shale Area and Tuscaloosa Marine Shale Logistics Business - Facility Closing $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Restructuring Reserve [Roll Forward]
Balance accrued at beginning of period	$ 33
Cash payments	(25)
Balance accrued at end of period	$ 8

XML

Income Taxes - Components of Income Tax (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Current income tax expense	$ (4)	$ 0	$ (13)	$ 0
Deferred income tax expense	(42)	0	(112)	0
Total income tax expense	$ (46)	$ 0	$ (125)	$ 0

XML

Income Taxes - Narrative (Detail)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2019
Income Tax Contingency [Line Items]
Effective income tax benefit rate	(0.90%)	(0.00%)	(1.10%)	(0.00%)
Scenario, Forecast
Income Tax Contingency [Line Items]
Effective income tax benefit rate					0.00%

XML

Share-based Compensation - Additional Information (Details) - shares	Jun. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares of common stock available for issuance of awards (in shares)	75,000	100,000
2017 Long Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares of common stock available for issuance of awards (in shares)	720,000		1,772,058

XML

Share-based Compensation (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total grants	23	6	142	1,331
Stock-based compensation	$ 563	$ 416	$ 1,415	$ 11,394
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option grants	0	0	0	0
Stock-based compensation	$ 0	$ 0	$ 0	$ (788)
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock and stock unit grants	23	6	142	1,331
Stock-based compensation	$ 563	$ 416	$ 1,415	$ 12,182

XML

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions		5 Months Ended	6 Months Ended
	Jul. 11, 2017	Dec. 31, 2017	Jun. 30, 2019	Jun. 28, 2017
Minimum
Loss Contingencies [Line Items]
Income tax accrual not recorded			$ 1.0
Maximum
Loss Contingencies [Line Items]
Income tax accrual not recorded			1.5
Chapter 11 Bankruptcy
Loss Contingencies [Line Items]
Long-term contingent consideration				$ 8.5
Amount to be transferred upon emergence from Chapter 11	$ 0.5	$ 0.5
Amount to be transferred when required permits are delivered	$ 0.5		$ 0.5

XML

Segments - Additional Information (Detail)	Jun. 30, 2019 operating_division
Segment Reporting [Abstract]
Number of operating divisions	3

XML

Segments - Financial Information for Reportable Segments (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Segment Reporting Information [Line Items]
Revenue	$ 45,240	$ 48,948	$ 87,867	$ 98,617
Direct operating expenses	34,517	39,069	67,074	80,696
General and administrative expenses	5,280	6,014	10,755	25,334
Depreciation and amortization	9,277	11,969	18,412	26,713
Operating income (loss)	(3,828)	(8,905)	(8,485)	(39,657)
Income (loss) before income taxes	(4,960)	(11,176)	(11,236)	(43,343)
Total assets	285,379		285,379		$ 295,936
Total assets held for sale	4,504		4,504		2,782
Operating Segments | Rocky Mountain
Segment Reporting Information [Line Items]
Revenue	28,993	33,165	53,870	63,935
Direct operating expenses	22,354	25,599	42,182	51,945
General and administrative expenses	1,206	1,882	2,252	3,158
Depreciation and amortization	4,307	5,923	8,606	12,212
Operating income (loss)	1,126	(239)	830	(3,380)
Income (loss) before income taxes	1,041	(203)	683	(3,405)
Total assets	107,762		107,762		113,767
Total assets held for sale	2,876		2,876		0
Operating Segments | Northeast
Segment Reporting Information [Line Items]
Revenue	10,720	9,606	22,560	18,719
Direct operating expenses	8,607	8,510	18,322	16,324
General and administrative expenses	729	518	1,575	1,280
Depreciation and amortization	2,821	3,283	5,485	7,589
Operating income (loss)	(1,437)	(2,705)	(2,939)	(6,543)
Income (loss) before income taxes	(1,560)	(2,780)	(3,155)	(6,679)
Total assets	90,881		90,881		88,501
Total assets held for sale	850		850		0
Operating Segments | Southern
Segment Reporting Information [Line Items]
Revenue	5,527	6,177	11,437	15,963
Direct operating expenses	3,556	4,960	6,570	12,427
General and administrative expenses	354	251	753	829
Depreciation and amortization	2,136	2,750	4,296	6,874
Operating income (loss)	(513)	(2,253)	(176)	(9,297)
Income (loss) before income taxes	(576)	(2,295)	(285)	(9,406)
Total assets	77,705		77,705		84,318
Total assets held for sale	0		0		2,004
Corporate/ Other
Segment Reporting Information [Line Items]
Revenue	0	0	0	0
Direct operating expenses	0	0	0	0
General and administrative expenses	2,991	3,363	6,175	20,067
Depreciation and amortization	13	13	25	38
Operating income (loss)	(3,004)	(3,708)	(6,200)	(20,437)
Income (loss) before income taxes	(3,865)	$ (5,898)	(8,479)	$ (23,853)
Total assets	9,031		9,031		9,350
Total assets held for sale	$ 778		$ 778		$ 778