Business Segments

3 Months Ended

Mar. 31, 2020

In accordance with Accounting Standard Codification (“ASC”) No. 280, Segment Reporting (“ASC 280”), the Company routinely evaluates whether its separate segments have changed. This determination is made based on the following factors: (1) the Company’s chief operating decision maker (“CODM”) is currently managing each operating segment as a separate business and evaluating the performance of each segment and making resource allocation decisions distinctly and expects to do so for the foreseeable future, and (2) discrete financial information for each operating segment is available.

In 2019, due to the transformative nature of the C&J Merger, the CODM changed the way in which the Company is managed, including the level at which to make performance evaluation and resource allocation decisions. Discrete financial information was created to provide the segment information necessary for the CODM to manage the Company under the revised operating segment structure. On March 9, 2020, the Company announced it had completed the divestiture of its Well Support Services segment. As a result of the changes to operating segments, the Company revised its reportable segments subsequent to the completion of the C&J Merger and Well Support Services segment divestiture. For the period from after the C&J merger and prior to the WSS divestiture, the Company’s revised reportable segments were: (i) Completion Services, (ii) Well Construction and Intervention (“WC&I”) and (iii) Well Support Services. Subsequent to the WSS divestiture, the Company's reportable segments were (i) Completion Services, and (ii) Well Construction and Intervention (“WC&I”) Services. This segment structure reflects the financial information and reports used by the Company’s management, specifically including its CODM, to make decisions regarding the Company’s business, including performance evaluation and resource allocation decisions. As a result of the revised reportable segment structure subsequent to the C&J merger, the Company has restated the corresponding items of segment information for all periods presented.

The following is a description of each reportable segment:

Completion Services

The Company’s Completion Services segment consists of the following businesses and service lines: (1) fracturing services; (2) wireline and pumpdown services; and (3) completion support services, which includes the Company's research and technology department.

Well Construction and Intervention Services

The Company’s WC&I Services segment consists of the following businesses and service lines: (1) cementing services and (2) coiled tubing services.

Well Support Services

The Company’s Well Support Services segment consisted of the following businesses and service lines: (1) rig services; (2) fluids management services; and (3) other specialty well site services. On March 9, 2020, the Company completed the divestiture of its Well Support Services segment for $93.7 million of total proceeds, including $59.4 million in cash, before transaction costs, escrowed amounts, and subject to customary working capital adjustments, for a net of $53.3 million received at close, and $34.4 million of par value Senior Secured Notes, with 10.75% coupon rate, ("WSS Notes") previously issued by Basic. This resulted in a preliminary gain on divestiture of $8.0 million, subject to change upon finalization of a potential net working capital adjustment. The gain is recorded within (Gain) Loss on Disposal of Assets on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Income per share for the three months ended March 31, 2020 attributable to the divested Well Support Services segment was less than zero.

The following tables present financial information with respect to the Company’s segments. Corporate and Other represents costs not directly associated with a segment, such as interest expense, income taxes and corporate overhead. Corporate assets include cash, deferred financing costs, derivatives and entity-level machinery equipment.



	(Thousands of Dollars)
		Three Months Ended March 31,
		2020			2019
Operations by business segment
Revenue:
Completion Services		$	512,871		$	411,975
WC&I		56,825			9,679
Well Support Services		57,929			—
Total revenue		$	627,625		$	421,654
Adjusted gross profit (loss):
Completion Services⁽¹⁾		$	97,876		$	85,305
WC&I⁽¹⁾		8,784			(1,297		)
Well Support Services⁽¹⁾		12,338			—
Total adjusted gross profit		$	118,998		$	84,008
Operating income (loss):
Completion Services		$	(13,102	)	$	17,967
WC&I		3,011			(2,170		)
Well Support Services		10,940			—
Corporate and Other		(66,702		)	(31,682		)
Total operating income (loss)		$	(65,853	)	$	(15,885	)
Depreciation and amortization:
Completion Services		$	75,540		$	66,747
WC&I		4,273			873
Well Support Services		1,527			—
Corporate and Other		4,481			3,856
Total depreciation and amortization		$	85,821		$	71,476
Net income (loss):
Completion Services		$	(13,102	)	$	17,967
WC&I		3,011			(2,170		)
Well Support Services		10,940			—
Corporate and Other		(72,605		)	(37,603		)
Total net income (loss)		$	(71,756	)	$	(21,806	)

⁽¹⁾

Adjusted gross profit (loss) at the segment level is not considered to be a non-GAAP financial measure as it is the Company's segment measure of profitability and is required to be disclosed under GAAP pursuant to ASC 280. Adjusted gross profit (loss) is defined as revenue less cost of services, further adjusted to eliminate items in cost of services that management does not consider in assessing ongoing performance.


⁽²⁾	Excludes expenditures for leasehold improvements and finance leases.



	Three Months Ended March 31, 2020
	Completion Services		WC&I		Well Support Services		Total
Revenue	$	512,871	$	56,825	57,929		$	627,625
Cost of Services	417,382		49,253		45,591		512,226
Gross profit excluding depreciation and amortization	95,489		7,572		12,338		115,399
Management adjustments associated with cost of services	2,387		1,212		—		3,599
Adjusted gross profit	$	97,876	$	8,784	$	12,338	$	118,998



	Three Months Ended March 31, 2019
	Completion Services		WC&I			Well Support Services		Total
Revenue	$	411,975	$	9,679		—		$	421,654
Cost of services	326,670		10,976			—		337,646
Gross profit excluding depreciation and amortization	85,305		(1,297		)	—		84,008
Management adjustments associated with cost of services	—		—			—		—
Adjusted gross profit	$	85,305	$	(1,297	)	$	—	$	84,008



	(Thousands of Dollars)
	March 31, 2020		December 31, 2019
Total assets by segment:
Completion Services	$	1,063,975	$	1,091,965
WC&I	106,347		106,493
Well Support Services	—		109,792
Corporate and Other	616,537		356,657
Total assets	$	1,786,859	$	1,664,907
Goodwill by segment:
Completion Services	$	104,198	$	136,425
WC&I	—		372
Well Support Services	—		661
Corporate and Other	—		—
Total goodwill	$	104,198	$	137,458