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 nine months ended September 30, 2014 and 2013 (in thousands):



As of and for the three months ended September 30, 2014
	U.S.			International			Functional Support(2)			Reconciling Eliminations			Total
Revenues from external customers	$	339,848		$	25,950		$	—		$	—		$	365,798
Intersegment revenues	(396		)	2,343			361			(2,308		)	—
Depreciation and amortization	40,357			7,689			2,878			—			50,924
Impairment expense	60,792			—			—			—			60,792
Other operating expenses	266,103			27,517			43,716			—			337,336
Operating loss	(27,404		)	(9,256		)	(46,594		)	—			(83,254		)
Interest expense, net of amounts capitalized	—			1			13,416			—			13,417
Income (loss) before income taxes	(27,047		)	(10,274		)	(59,698		)	—			(97,019		)
Long-lived assets(1)	1,551,120			260,706			274,946			(162,491		)	1,924,281
Total assets	2,924,255			415,678			(430,217		)	(503,070		)	2,406,646
Capital expenditures, excluding acquisitions	36,156			831			1,704			—			38,691



As of and for the three months ended September 30, 2013
	U.S.		International			Functional Support(2)			Reconciling Eliminations			Total
Revenues from external customers	$	345,115	$	44,558		$	—		$	—		$	389,673
Intersegment revenues	272		1,788			1,439			(3,499		)	—
Depreciation and amortization	45,551		8,440			2,971			—			56,962
Other operating expenses	247,567		43,430			29,965			—			320,962
Operating income (loss)	51,997		(7,312		)	(32,936		)	—			11,749
Interest expense, net of amounts capitalized	—		—			13,814			—			13,814
Income (loss) before income taxes	52,042		(7,336		)	(46,686		)	—			(1,980		)
Long-lived assets(1)	1,646,396		327,328			302,825			(193,919		)	2,082,630
Total assets	2,740,094		525,472			(72,943		)	(508,576		)	2,684,047
Capital expenditures, excluding acquisitions	29,443		2,290			6,711			—			38,444



As of and for the nine months ended September 30, 2014
	U.S.			International			Functional Support(2)			Reconciling Eliminations			Total
Revenues from external customers	$	988,407		$	84,127		$	—		$	—		$	1,072,534
Intersegment revenues	38			7,111			1,446			(8,595		)	—
Depreciation and amortization	122,001			23,388			8,814			—			154,203
Impairment expense	60,792			28,687			—			—			89,479
Other operating expenses	773,221			88,645			107,402			—			969,268
Operating income (loss)	32,393			(56,593		)	(116,216		)	—			(140,416		)
Interest expense, net of amounts capitalized	(1		)	29			40,369			—			40,397
Income (loss) before income taxes	34,667			(57,511		)	(155,515		)	—			(178,359		)
Long-lived assets(1)	1,551,120			260,706			274,946			(162,491		)	1,924,281
Total assets	2,924,255			415,678			(430,217		)	(503,070		)	2,406,646
Capital expenditures, excluding acquisitions	96,462			4,501			7,157			—			108,120



As of and for the nine months ended September 30, 2013
	U.S.		International			Functional Support(2)			Reconciling Eliminations			Total
Revenues from external customers	$	1,052,885	$	176,627		$	—		$	—		$	1,229,512
Intersegment revenues	8,734		5,983			1,586			(16,303		)	—
Depreciation and amortization	137,825		22,403			9,135			—			169,363
Other operating expenses	769,695		160,668			97,864			—			1,028,227
Operating income (loss)	145,365		(6,444		)	(106,999		)	—			31,922
Interest expense, net of amounts capitalized	1		64			41,537			—			41,602
Income (loss) before income taxes	145,461		(6,042		)	(148,221		)	—			(8,802		)
Long-lived assets(1)	1,646,396		327,328			302,825			(193,919		)	2,082,630
Total assets	2,740,094		525,472			(72,943		)	(508,576		)	2,684,047
Capital expenditures, excluding acquisitions	79,412		15,453			16,156			—			111,021


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


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