Acquisition of Cretic Energy Services, LLC

12 Months Ended

Dec. 31, 2019

Acquisition of Cretic Energy Services, LLC

On November 16, 2018, the Company acquired 100% of the outstanding units of Cretic Energy Services, LLC (Cretic). The acquisition of Cretic was accounted for as a business combination using the acquisition method of accounting. The aggregate purchase price was $69.1 million in cash (including $2.2 million cash acquired).

The purchase price paid in the acquisition has been allocated to record the acquired assets and assumed liabilities based on their fair value. When determining the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, as of the time of the Cretic acquisition, goodwill of $19.7 million was recorded. The goodwill recorded was primarily attributable to synergies related to the Company’s coiled tubing business strategy that were expected to arise from the Cretic acquisition and was attributable to the Company’s coiled tubing segment. As discussed in Note 6, the Company recognizing a goodwill impairment charge of $19.2 million for the year ended December 31, 2019.

Proforma Results from the Cretic Acquisition (unaudited)

The Cretic acquisition contributed revenue and net loss of $5.9 million and $(1.1) million, respectively, to the results of the Company from the date of acquisition through December 31, 2018. The following unaudited consolidated pro forma information is presented as if the Cretic acquisition had occurred on January 1, 2018 (in thousands):



	Pro Forma
	Year ended
	December 31, 2018
Revenue	$	241,220

Net loss	$	(36,048	)

The unaudited pro forma amounts above have been calculated after applying the Company’s accounting policies and adjusting the Cretic acquisition results to reflect the increase to interest expense and depreciation and amortization that would have been charged assuming the fair value adjustments to property and equipment and intangible assets had been applied from January 1, 2018 and other related pro forma adjustments. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the Cretic acquisition, and are presented for illustrative purposes only and are not necessarily indicative of results that would have been achieved if the Cretic acquisition had occurred as of January 1, 2018 or of future operating performance.