SEGMENT INFORMATION

Our operating segments are U.S. and International. We also have a “Functional Support” segment associated with managing each of our reportable operating segments. Our domestic rig services, fluid management services, fishing and rental services, and coiled tubing services are aggregated within our U.S. reportable segment. Our international rig services business and our Canadian technology development group are aggregated within our International reportable segment. We evaluate the performance of our operating segments based on revenue and income measures. All inter-segment sales pricing is based on current market conditions. The following is a description of the segments:

U.S. Segment

Rig-Based Services

Our rig-based services include the completion of newly drilled wells, workover and recompletion of existing oil and natural gas wells, well maintenance, and the plugging and abandonment of wells at the end of their useful lives. We also provide specialty drilling services to oil and natural gas producers with certain of our larger rigs that are capable of providing conventional and horizontal drilling services. Our rigs encompass various sizes and capabilities, allowing us to service all types of wells with depths up to 20,000 feet. Many of our rigs are outfitted with our proprietary KeyView® technology, which captures and reports well site operating data and provides safety control systems. We believe that this technology allows our customers and our crews to better monitor well site operations, improves efficiency and safety, and adds value to the services that we offer.

The completion and recompletion services provided by our rigs prepare wells for production, whether newly drilled, or recently extended through a workover operation. The completion process may involve selectively perforating the well casing to access production zones, stimulating and testing these zones, and installing tubular and downhole equipment. We typically provide a well service rig and may also provide other equipment to assist in the completion process. Completion services vary by well and our work may take a few days to several weeks to perform, depending on the nature of the completion.

The workover services that we provide are designed to enhance the production of existing wells and generally are more complex and time consuming than normal maintenance services. Workover services can include deepening or extending wellbores into new formations by drilling horizontal or lateral wellbores, sealing off depleted production zones and accessing previously bypassed production zones, converting former production wells into injection wells for enhanced recovery operations and conducting major subsurface repairs due to equipment failures. Workover services may last from a few days to several weeks, depending on the complexity of the workover.

Maintenance services provided with our rig fleet are generally required throughout the life cycle of an oil or natural gas well. Examples of these maintenance services include routine mechanical repairs to the pumps, tubing and other equipment, removing debris and formation material from wellbores, and pulling rods and other downhole equipment from wellbores to identify and resolve production problems. Maintenance services are generally less complicated than completion and workover related services and require less time to perform.

Our rig fleet is also used in the process of permanently shutting-in oil or natural gas wells that are at the end of their productive lives. These plugging and abandonment services generally require auxiliary equipment in addition to a well servicing rig. The demand for plugging and abandonment services is not significantly impacted by the demand for oil and natural gas because well operators are required by state regulations to plug wells that are no longer productive.

Fluid Management Services

We provide transportation and well-site storage services for various fluids utilized in connection with drilling, completions, workover and maintenance activities. We also provide disposal services for fluids produced subsequent to well completion. These fluids are removed from the well site and transported for disposal in saltwater disposal wells owned by us or a third party. In addition, we operate a fleet of hot oilers capable of pumping heated fluids used to clear soluble restrictions in a wellbore. Demand and pricing for these services generally correspond to demand for our well service rigs.

Coiled Tubing Services

Coiled tubing services involve the use of a continuous metal pipe spooled onto a large reel which is then deployed into oil and natural gas wells to perform various applications, such as wellbore clean-outs, nitrogen jet lifts, through-tubing fishing, and formation stimulations utilizing acid and chemical treatments. Coiled tubing is also used for a number of horizontal well applications such as milling temporary isolation plugs that separate frac zones, and various other pre- and post-hydraulic fracturing well preparation services.

Fishing and Rental Services

We offer a full line of services and rental equipment designed for use in providing both onshore and offshore drilling and workover services. Fishing services involve recovering lost or stuck equipment in the wellbore utilizing a broad array of “fishing tools.” Our rental tool inventory consists of drill pipe, tubulars, handling tools (including our patented Hydra-Walk^® pipe-handling units and services), pressure-control equipment, pumps, power swivels, reversing units, foam air units, frac stack equipment used to support hydraulic fracturing operations and the associated flowback of frac fluids, proppants, oil and natural gas. We also provide well testing services.

Demand for our fishing and rental services is closely related to capital spending by oil and natural gas producers, which is generally a function of oil and natural gas prices.

International Segment

Our International segment includes operations in Mexico, Colombia, Ecuador, the Middle East and Russia. We provide rig-based services such as the maintenance, workover, recompletion of existing oil wells, completion of newly-drilled wells and plugging and abandonment of wells at the end of their useful lives in each of our international markets. In addition, we have a technology development and control systems business based in Canada.

In addition, in Mexico we provide drilling, coiled tubing, wireline, project management and consulting services. Our work in Mexico also requires us to provide third party services that vary in scope by project.

In the Middle East, we operate in the Kingdom of Bahrain and Oman. On August 5, 2013, we agreed to the dissolution of AlMansoori Key Energy Services, LLC, a joint venture formed under the laws of Abu Dhabi, UAE, and the acquisition of the underlying business for $5.1 million. See “Note 3. Acquisition of Noncontrolling Interests” for further discussion.

Our Russian operations provide drilling, workover, and reservoir engineering services. On April 9, 2013, we completed the acquisition of the 50% noncontrolling interest in Geostream, a limited liability company incorporated in the Russian Federation, for $14.6 million. We now own 100% of Geostream. See “Note 3. Acquisition of Noncontrolling Interests” for further discussion.

Our technology development and control systems business based in Canada is focused on the development of hardware and software related to oilfield service equipment controls, data acquisition and digital information flow.

Functional Support Segment

Our Functional Support segment includes unallocated overhead costs associated with administrative support for our U.S. and International reporting segments.

Financial Summary

The following tables set forth our unaudited segment information as of and for the three and six months ended June 30, 2014 and 2013 (in thousands):



As of and for the three months ended June 30, 2014
	U.S.			International			Functional Support(2)			Reconciling Eliminations			Total
Revenues from external customers	$	324,515		$	26,080		$	—		$	—		$	350,595
Intersegment revenues	199			2,547			543			(3,289		)	—
Depreciation and amortization	40,941			7,795			3,448			—			52,184
Goodwill and tradenames impairment	—			28,687			—			—			28,687
Other operating expenses	259,434			26,444			34,886			—			320,764
Operating income (loss)	24,140			(36,846		)	(38,334		)	—			(51,040		)
Interest expense, net of amounts capitalized	(1		)	26			13,401			—			13,426
Income (loss) before income taxes	25,292			(35,289		)	(51,736		)	—			(61,733		)
Long-lived assets(1)	1,629,912			269,153			268,796			(162,746		)	2,005,115
Total assets	2,871,428			436,067			(346,182		)	(503,707		)	2,457,606
Capital expenditures, excluding acquisitions	36,346			1,796			2,762			—			40,904



As of and for the three months ended June 30, 2013
	U.S.			International			Functional Support(2)			Reconciling Eliminations			Total
Revenues from external customers	$	361,698		$	49,692		$	—		$	—		$	411,390
Intersegment revenues	(139		)	2,676			23			(2,560		)	—
Depreciation and amortization	47,484			7,463			3,261			—			58,208
Other operating expenses	259,121			53,235			32,482			—			344,838
Operating income (loss)	55,093			(11,006		)	(35,743		)	—			8,344
Interest expense, net of amounts capitalized	—			15			13,969			—			13,984
Income (loss) before income taxes	55,210			(11,762		)	(49,518		)	—			(6,070		)
Long-lived assets(1)	1,671,666			333,096			292,818			(185,010		)	2,112,570
Total assets	2,654,754			556,325			23,035			(501,677		)	2,732,437
Capital expenditures, excluding acquisitions	26,659			2,196			6,578			—			35,433



As of and for the six months ended June 30, 2014
	U.S.			International			Functional Support(2)			Reconciling Eliminations			Total
Revenues from external customers	$	648,559		$	58,177		$	—		$	—		$	706,736
Intersegment revenues	434			4,768			1,085			(6,287		)	—
Depreciation and amortization	81,644			15,699			5,936			—			103,279
Goodwill and tradenames impairment	—			28,687			—			—			28,687
Other operating expenses	507,118			61,128			63,686			—			631,932
Operating income (loss)	59,797			(47,337		)	(69,622		)	—			(57,162		)
Interest expense, net of amounts capitalized	(1		)	28			26,953			—			26,980
Income (loss) before income taxes	61,714			(47,237		)	(95,817		)	—			(81,340		)
Long-lived assets(1)	1,629,912			269,153			268,796			(162,746		)	2,005,115
Total assets	2,871,428			436,067			(346,182		)	(503,707		)	2,457,606
Capital expenditures, excluding acquisitions	60,306			3,670			5,453			—			69,429



As of and for the six months ended June 30, 2013
	U.S.		International		Functional Support(2)			Reconciling Eliminations			Total
Revenues from external customers	$	707,770	$	132,069	$	—		$	—		$	839,839
Intersegment revenues	8,462		4,195		147			(12,804		)	—
Depreciation and amortization	92,274		13,963		6,164			—			112,401
Other operating expenses	522,128		117,238		67,899			—			707,265
Operating income (loss)	93,368		868		(74,063		)	—			20,173
Interest expense, net of amounts capitalized	1		64		27,723			—			27,788
Income (loss) before income taxes	93,419		1,294		(101,535		)	—			(6,822		)
Long-lived assets(1)	1,671,666		333,096		292,818			(185,010		)	2,112,570
Total assets	2,654,754		556,325		23,035			(501,677		)	2,732,437
Capital expenditures, excluding acquisitions	49,969		13,163		9,445			—			72,577


(1)	Long lived assets include fixed assets, goodwill, intangibles and other assets.


(2)	Functional Support is geographically located in the United States.