10-K 1 spn-20161231x10k.htm 10-K spn-20161231 10K FY_Taxonomy2016

      

   UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549







Form 10-K

(Mark One)



 

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



For the fiscal year ended December 31, 2016

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 No. 001-34037







SUPERIOR ENERGY SERVICES, INC.

(Exact name of registrant as specified in its charter)





 

 

Delaware

 

75-2379388

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

1001 Louisiana Street, Suite 2900

 

 

Houston, TX

 

77002

Address of principal executive offices)

 

(Zip Code)



Registrant’s telephone number, including area code: (713) 654-2200



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



 

 

Title of each class:

 

Name of each exchange on which registered:

Common Stock, $.001 Par Value

 

New York Stock Exchange



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

None



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes     No  



Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes     No 



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     No  



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes     No  



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 



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





 

 

Large accelerated filer   

 

Accelerated filer                            

Non-accelerated filer     

(do not check if smaller reporting company)

Smaller reporting company           





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



At June 30, 2016, the aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant was $2.81 billion.  At February 17,  2017 there were 152,831,316 shares of the registrant’s common stock outstanding. 







DOCUMENTS INCORPORATED BY REFERENCE

Certain information called for by Items 10, 11, 12, 13 and 14 of Part III is incorporated by reference from the registrant’s definitive proxy statement to be filed pursuant to Regulation 14A.







 

 

 


 



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Annual Report on Form 10-K for

the Fiscal Year Ended December 31, 2016

TABLE OF CONTENTS



 

 

 

 

 



 

 

Page

PART I

 

 



 

 

 



Item 1

Business

4



 

Executive Officers of Registrant

7



Item 1A                 

Risk Factors

8



Item 1B

Unresolved Staff Comments

16



Item 2

Properties

16



Item 3

Legal Proceedings

16



Item 4

Mine Safety Disclosures

16



 

 

 

PART II

 

 



 

 

 



Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

17



Item 6

Selected Financial Data

20



Item 7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21



Item 7A

Quantitative and Qualitative Disclosures about Market Risk

29



Item 8

Financial Statements and Supplementary Data

31



Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

61



Item 9A

Controls and Procedures

61



Item 9B

Other Information

63



 

 

 

PART III

 

 



 

 

 



Item 10

Directors, Executive Officers and Corporate Governance

63



Item 11

Executive Compensation

63



Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

63



Item 13

Certain Relationships and Related Transactions, and Director Independence

63



Item 14

Principal Accounting Fees and Services

63



 

 

 

PART IV

 

 



 

 

 



Item 15

Exhibits, Financial Statement Schedules

63

 





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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K and other documents filed by us with the Securities and Exchange Commission (SEC) contain, and future oral or written statements or press releases by us and our management may contain, forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks” and “estimates,” variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words.  All statements other than statements of historical fact included in this Annual Report on Form 10-K or such other materials regarding our financial position, financial performance, liquidity, strategic alternatives, market outlook, future capital needs, capital allocation plans, business strategies and other plans and objectives of our management for future operations and activities are forward-looking statements.  These statements are based on certain assumptions and analyses made by our management in light of its experience and prevailing circumstances on the date such statements are made.  Such forward-looking statements, and the assumptions on which they are based, are inherently speculative and are subject to a number of risks and uncertainties that could cause our actual results to differ materially from such statements.  Such uncertainties include, but are not limited to: the cyclicality and volatility of the oil and gas industry, including changes in prevailing oil and gas prices or expectations about future prices; operating hazards, including the significant possibility of accidents resulting in personal injury or death, property damage or environmental damage for which we may have limited or no insurance coverage or indemnification rights; the effect of regulatory programs (including worker health and safety laws) and environmental matters on our operations or prospects, including the risk that future changes in the regulation of hydraulic fracturing could reduce or eliminate demand for our pressure pumping services, or that future changes in climate change legislation could result in increased operating costs or reduced commodity demand globally; counterparty risks associated with reliance on key suppliers; risks associated with the uncertainty of macroeconomic and business conditions worldwide; changes in competitive and technological factors affecting our operations; credit risk associated with our customer base; the potential inability to retain key employees and skilled workers; challenges with estimating our oil and natural gas reserves and potential liabilities related to our oil and natural gas property;  risks inherent in acquiring businesses; risks associated with cyber-attacks; risks associated with business growth during an industry recovery outpacing the capabilities of our infrastructure and workforce; political, legal, economic and other risks and uncertainties associated with our international operations; potential changes in tax laws, adverse positions taken by tax authorities or tax audits impacting our operating results; risks associated with our outstanding debt obligations and the potential effect of limiting our future growth and operations our continued access to credit markets on favorable terms; and the impact that unfavorable or unusual weather conditions could have on our operations.  These risks and other uncertainties related to our business are described in detail below in Part I, Item 1A of this Annual Report on Form 10-K.  Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct.  Investors are cautioned that many of the assumptions on which our forward-looking statements are based are likely to change after such statements are made, including for example the market prices of oil and gas and regulations affecting oil and gas operations, which we cannot control or anticipate.  Further, we may make changes to our business strategies and plans (including our capital spending and capital allocation plans) at any time and without notice, based on any changes in the above-listed factors, our assumptions or otherwise, any of which could or will affect our results.  For all these reasons, actual events and results may differ materially from those anticipated, estimated, projected or implied by us in our forward-looking statements.  We undertake no obligation to update any of our forward-looking statements for any reason and, notwithstanding any changes in our assumptions, changes in our business plans, our actual experience, or other changes.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.





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PART I

Item 1. Business

General



We provide a wide variety of services and products to the energy industry.  We serve major, national and independent oil and natural gas exploration and production companies around the world and we offer products and services with respect to the various phases of a well’s economic life cycle.  We report our operating results in four business segments: Drilling Products and Services; Onshore Completion and Workover Services; Production Services; and Technical Solutions.  Given our long-term strategy of geographic expansion, we also provide supplemental segment revenue information in three geographic areas:  U.S. land; Gulf of Mexico; and International.



For information about our operating segments and financial information by operating segment and geographic area, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7 of this Annual Report on Form 10-K and note 8 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. 



Products and Services



We offer a wide variety of specialized oilfield services and equipment generally categorized by their typical use during the economic life of a well.  A description of the products and services offered by each of our four segments is as follows:



·

Drilling Products and Services – Includes downhole drilling tools and surface rentals.



§

Downhole drilling tools – Includes rentals of tubulars, such as primary drill pipe strings, landing strings, completion tubulars and associated accessories, and manufacturing and rentals of bottom hole tools, including stabilizers, non-magnetic drill collars and hole openers.



§

Surface rentals – Includes rentals of temporary onshore and offshore accommodation modules and accessories.



·

Onshore Completion and Workover Services – Includes pressure pumping, fluid handling and workover and maintenance services.



§

Pressure pumping – Includes hydraulic fracturing and high pressure pumping services used to complete and stimulate production in new oil and gas wells.



§

Fluid management – Includes services used to obtain, move, store and dispose of fluids that are involved in the exploration, development and production of oil and gas, including specialized trucks, fracturing tanks and other assets that transport, heat, pump and dispose of fluids.



§

Workover services – Includes a variety of well completion, workover and maintenance services, including installations, completions, sidetracking of wells and support for perforating operations.



·

Production Services – Includes intervention services.



§

Intervention services – Includes services to enhance, maintain and extend oil and gas production during the life of the well, including coiled tubing, cased hole and mechanical wireline, hydraulic workover and snubbing, production testing and optimization, and remedial pumping services (cementing and stimulation services).



·

Technical Solutions – Includes products and services that generally address customer-specific needs with their applications, which typically require specialized engineering, manufacturing or project planning expertise.   Most operations requiring our technical solutions are generally in offshore environments during the completion, production and decommissioning phase of an oil and gas well.  These products and services primarily include well containment systems, completion tools and services and end-of-life services. 



§

Well containment systems – Resolves well control and pressure control problems through firefighting, engineering and well control training.



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§

Completion tools and services – Provides products and services used during the completion phase of an offshore well to control sand and maximize oil and gas production, including sand control systems, well screens and filters, and surface-controlled sub surface safety valves.



§

End-of-life services – Provides offshore well decommissioning services, including plugging and abandoning wells at the end of their economic life and dismantling and removing associated infrastructure.



The Technical Solutions segment also includes revenues from oil and gas production related to our 51% ownership interest in the Bullwinkle platform and related assets. 



Customers



Our customers are the major and independent oil and gas companies that are active in the geographic areas in which we operate.    Anadarko Petroleum Corporation (Anadarko) accounted for approximately 11% of our revenues in 2016, primarily within the Onshore Completion and Workover Services segment.  There were no customers that exceeded 10% of our total revenues in 2015 and 2014Our inability to continue to perform services for a number of our large existing customers, if not offset by sales to new or other existing customers, could have a material adverse effect on our business and operations.



Competition



We provide products and services worldwide in highly competitive markets, with competitors comprised of both small and large companies.  Our revenues and earnings can be affected by several factors, including changes in competition, fluctuations in drilling and completion activity, perceptions of future prices of oil and gas, government regulation, disruptions caused by weather and general economic conditions.  We believe that the principal competitive factors are price, performance, product and service quality, safety, response time and breadth of products and services.



We believe our primary competitors include Weatherford International, Ltd., Baker Hughes Incorporated, Halliburton Company and Schlumberger N.V.  We also compete with various other regional and local providers within each of our     geographic markets for products and services.



Potential Liabilities and Insurance



Our operations involve a high degree of operational risk and expose us to significant liabilities.  An accident involving our services or equipment, or the failure of a product sold by us, could result in personal injury, loss of life, and damage to property, equipment or the environment.  Litigation arising from a catastrophic occurrence, such as fire, explosion, well blowout or vessel loss, may result in substantial claims for damages. 



As is customary in our industry, our contracts generally provide that we will indemnify and hold harmless our customers from any claims arising from personal injury or death of our employees, damage to or loss of our equipment, and pollution emanating from our equipment and services.  Similarly, our customers generally agree to indemnify and hold us harmless from any claims arising from personal injury or death of their employees, damage to or loss of their equipment, and pollution caused from their equipment or the well reservoir (including uncontained oil flow from a reservoir).  Nonetheless, our indemnification arrangements may not protect us in every case.



We maintain a liability insurance program that covers against certain operating hazards, including product liability, property damage and personal injury claims, as well as certain limited environmental pollution claims for damage to a third party or its property arising out of contact with pollution for which we are liable, but well control costs are not covered by this program.  These policies include primary and excess umbrella liability policies with limits of $350 million per occurrence, including sudden and accidental pollution incidents.  All of the insurance policies purchased by us contain specific terms, conditions, limitations and exclusions and are subject to either deductibles or self-insured retention amounts for which we are responsible.  There can be no assurance that the nature and amount of insurance we maintain will be sufficient to fully protect us against all liabilities related to our business.



Government Regulation



Our business is significantly affected by Federal, State and local laws and other regulations.  These laws and regulations relate to, among other things:



·

worker safety standards;



·

the protection of the environment;



5

 


 

·

the handling and transportation of hazardous materials; and



·

the mobilization of our equipment to, and operations conducted at, our work sites.



Numerous permits are required for the conduct of our business and operation of our various facilities and equipment, including our underground injection wells, marine vessels, trucks and other heavy equipment.  These permits can be revoked, modified or renewed by issuing authorities based on factors both within and outside our control.



We cannot predict the level of enforcement of existing laws and regulations or how such laws and regulations may be interpreted by enforcement agencies or court rulings in the future.  We also cannot predict whether additional laws and regulations will be adopted, including changes in regulatory oversight, increase of federal, state or local taxes, increase of inspection costs, or the effect such changes may have on us, our businesses or our financial condition.



Environmental Matters



Our operations, and those of our customers, are subject to extensive laws, regulations and treaties relating to air and water quality, generation, storage and handling of hazardous materials, and emission and discharge of materials into the environment.  We believe we are in substantial compliance with all regulations affecting our business.  Historically, our expenditures in furtherance of our compliance with these laws, regulations and treaties have not been material, and we do not expect the cost of compliance to be material in the future.



Raw Materials



We purchase various raw materials and component parts in connection with delivering our products and services.  These materials are generally, but not always, available from multiple sources and may be subject to price volatility.  While we generally do not experience significant long-term shortages of these materials, we have from time to time experienced temporary shortages of particular raw materials.  We are always seeking ways to ensure the availability of resources, as well as manage costs of raw materials.



Seasonality



Seasonal weather and severe weather conditions can temporarily impair our operations and reduce demand for our products and services.  Examples of seasonal events that negatively affect our operations include high seas associated with cold fronts during the winter months and hurricanes during the summer months in the Gulf of Mexico, and severe cold during winter months in the U.S. land market area. 



Employees



At December 31, 2016, we had approximately 6,400 employees.  Approximately 10% of our employees are subject to union contracts, all of which are in international locations.  We believe that we have good relationships with our employees.



Facilities



Our principal executive offices are located at 1001 Louisiana Street, Suite 2900, Houston, Texas, 77002.  We own or lease a large number of facilities in the various areas in which we operate throughout the world.



Intellectual Property



We seek patent and trademark protections throughout the world for our technology when we deem it prudent, and we aggressively pursue protection of these rights.  We believe our patents and trademarks are adequate for the conduct of our business, and that no single patent or trademark is critical to our business.  In addition, we rely to a great extent on the technical expertise and know-how of our personnel to maintain our competitive position.



Other Information



We have our principal executive offices at 1001 Louisiana Street, Suite 2900, Houston, Texas 77002.  Our telephone number is (713) 654-2200.  We also have a website at http://www.superiorenergy.com.  Copies of the annual, quarterly and current reports we file with the SEC, and any amendments to those reports, are available on our website free of charge soon after such reports are filed with or furnished to the SEC.  The information posted on our website is not incorporated into this Annual Report on Form 10-K.  Alternatively, you may access these reports at the SEC’s website at http://www.sec.gov/.



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We have a Code of Conduct (Our Shared Core Values at Work), which applies to all of our directors, officers and employees.  This Code of Conduct is publicly available on the Corporate Governance page in the About Us section of our website at http://www.superiorenergy.com.  Any waivers granted to directors or executive officers and any material amendment to our Code of Conduct will be posted promptly on our website and/or disclosed in a current report on Form 8-K.



Investors should be aware that while we do, at various times, communicate with securities analysts, it is against our policy to disclose to them selectively any material non-public information or other confidential information.  Accordingly, investors should not assume that we agree with any statement or report issued by an analyst with respect to our past or projected performance.  To the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.



Executive Officers of Registrant



The following table indicates the names and ages of the executive officers, including all offices and positions held by each in the past five years:





 



 



 



 

Name and Age

Offices Held and Term of Office

David D. Dunlap

(Age 55)

 

President and Chief Executive Officer, since February 2011

Robert S. Taylor

(Age 62)

Executive Vice President,  Chief Financial Officer and Treasurer, since September 2004

 

 

A. Patrick Bernard

(Age 59)

Executive Vice President, since April 2016

Senior Executive Vice President, from July 2006 to March 2016

 

 

Brian K. Moore

(Age 60)

Executive Vice President of Corporate Services, since April 2016

Senior Executive Vice President of North America Services, from February 2012 to March 2016



President and Chief Operating Officer of Complete Production Services, Inc. (Complete), from 2007 to February 2012

Westervelt T. Ballard, Jr.

(Age 45)

Executive Vice President, since April 2016

Executive Vice President of International Services, from February 2012 to March 2016

Vice President of Corporate Development, from 2007 to February 2012

 

William B. Masters

(Age 59)

Executive Vice President and General Counsel, since March 2008

 

 



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Item 1A. Risk Factors



The following information should be read in conjunction with management’s discussion and analysis of financial condition and results of operations contained in Part II, Item 7 and the consolidated financial statements and related notes contained in Part II, Item 8 of this Annual Report on Form 10-K, as well as in conjunction with the matters contained under the caption “Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K.



The following discussion of “risk factors” identifies the most significant risks or uncertainties that could (i) materially and adversely affect our business, financial condition, results of operations, liquidity or prospects, as well as the market value of our securities, or (ii) cause our actual results to differ materially from our anticipated results or other expectations.  These risks are not the only risks that we face.  Our business operations could also be affected by additional factors that apply to all companies operating in the U.S. and globally, as well as other risks that are not presently known to us or that we currently consider to be immaterial to our operations.  These risks include:

Our business depends on conditions in the oil and gas industry, especially oil and natural gas prices and capital expenditures by oil and gas companies.

Our business depends on the level of oil and natural gas exploration, development and production activity by oil and gas companies worldwide.  The level of exploration, development and production activity is directly affected by trends in oil and natural gas prices, which historically have been volatile and difficult to predict.  Oil and natural gas prices are subject to large fluctuations in response to relatively minor changes in supply and demand, economic growth trends, market uncertainty and a variety of other factors beyond our control.  Lower oil and natural gas prices generally lead to decreased spending by our customers.  While higher oil and natural gas prices generally lead to increased spending by our customers, sustained high energy prices can also be an impediment to economic growth and can therefore negatively impact spending by our customers.  Our customers may also take into account the volatility of energy prices and other risk factors by requiring higher returns for individual projects if there is higher perceived risk.  Any of these factors could significantly affect the demand for oil and natural gas, which could affect the level of capital spending by our customers and in turn could have a material effect on our results of operations.

The availability of quality drilling prospects, exploration success, relative production costs, expectations about future oil and natural gas demand and prices, the stage of reservoir development, the availability of financing, and political and regulatory environments are also expected to affect levels of exploration, development, and production activity, which would impact the demand for our services.  Any prolonged reduction of oil and natural gas prices, as well as anticipated declines, could also result in lower levels of exploration, development, and production activity.

The demand for our services may be affected by numerous factors, including the following:

·

the cost of exploring for, producing and delivering oil and natural gas;

·

demand for energy, which is affected by worldwide economic activity, population growth and market expectations regarding future trends;

·

the ability of Organization of Petroleum Exporting Countries (OPEC) and other key oil-producing countries to set and maintain production levels for oil;

·

the level of excess production capacity;

·

the discovery rate of new oil and natural gas reserves;

·

domestic and global political and economic uncertainty, socio-political unrest and instability, terrorism or hostilities;

·

weather conditions and changes in weather patterns, including summer and winter temperatures that impact demand;

·

the availability, proximity and capacity of transportation facilities;

·

oil refining capacity and shifts in end-customer preferences toward fuel efficiency;

·

the level and effect of trading in commodity future markets, including trading by commodity price speculators and others;

·

demand for and availability of alternative, competing sources of energy;

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·

the extent to which taxes, tax credits, environmental regulations, auctions of mineral rights, drilling permits, drilling concessions, drilling moratoriums or other governmental regulations, actions or policies affect the production, cost of production, price or availability of petroleum products and alternative energy sources; and

·

technological advances affecting energy exploration, production and consumption.



The oil and gas industry has historically experienced periodic downturns, which have been characterized by significantly reduced demand for oilfield services and downward pressure on the prices we charge.  Moreover, weakness in the oil and gas industry may adversely impact the financial position of our customers, which in turn could cause them to fail to pay amounts owed to us in a timely manner or at all.  Any of these events could have a material adverse effect on our business, results of operations, financial condition and prospects.

We have outstanding debt obligations that could limit our ability to fund future growth and operations and increase our exposure to risk during adverse economic conditions.

At December 31, 2016, we had $1.3 billion in outstanding debt obligations.  Many factors, including factors beyond our control, may affect our ability to make payments on our outstanding indebtedness.  These factors include those discussed elsewhere in these Risk Factors and those listed in the “Forward-Looking Statements” section included in this Annual Report on Form 10-K.

Our existing debt and associated commitments could have important adverse consequences.  For example, these commitments could:

·

make it more difficult for us to satisfy our contractual obligations;

·

increase our vulnerability to general adverse economic and industry conditions;

·

limit our ability to fund future working capital, capital expenditures, acquisitions or other corporate requirements;

·

limit our flexibility in planning for, or reacting to, changes in our business and our industry;

·

place us at a disadvantage compared to our competitors that have less debt or less restrictive covenants in such debt; and

·

limit our ability to refinance our debt in the future or borrow additional funds.

There are operating hazards inherent in the oil and gas industry that could expose us to substantial liabilities.

Our operations are subject to hazards inherent in the oil and gas industry that may lead to property damage, personal injury, death or the discharge of hazardous materials into the environment.  Many of these events are outside of our control.  Typically, we provide products and services at a well site where our personnel and equipment are located together with personnel and equipment of our customer and other service providers.  From time to time, personnel are injured or equipment or property is damaged or destroyed as a result of accidents, failed equipment, faulty products or services, failure of safety measures, uncontained formation pressures or other dangers inherent in oil and natural gas exploration, development and production.  Any of these events can be the result of human error or purely accidental, and it may be difficult or impossible to definitively determine the ultimate cause of the event or whose personnel or equipment contributed thereto.  All of these risks expose us to a wide range of significant health, safety and environmental risks and potentially substantial litigation claims for damages.  With increasing frequency, our products and services are deployed in more challenging exploration, development and production locations.  From time to time, customers and third parties may seek to hold us accountable for damages and costs incurred as a result of an accident, including pollution, even under circumstances where we believe we did not cause or contribute to the accident.  Our insurance policies are subject to exclusions, limitations and other conditions, and may not protect us against liability for some types of events, including events involving a well blowout, or against losses from business interruption.  Moreover, we may not be able to maintain insurance at levels of risk coverage or policy limits that we deem adequate or on terms that we deem commercially reasonable.  Any damages or losses that are not covered by insurance, or are in excess of policy limits or subject to substantial deductibles or retentions, could adversely affect our financial condition, results of operations and cash flows. 

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We may not be fully indemnified against losses incurred due to catastrophic events.

As is customary in our industry, our contracts generally provide that we will indemnify and hold harmless our customers from any claims arising from personal injury or death of our employees, damage to or loss of our equipment, and pollution emanating from our equipment and services.  Similarly, our customers generally agree to indemnify and hold us harmless from any claims arising from personal injury or death of their employees, damage to or loss of their equipment, and pollution caused from their equipment or the well reservoir (including uncontained oil flow from a reservoir).  Our indemnification arrangements may not protect us in every case.  For example, from time to time we may enter into contracts with less favorable indemnities or perform work without a contract that protects us.  In addition, our indemnification rights may not fully protect us if we cannot prove that we are entitled to be indemnified or if the customer is bankrupt or insolvent, does not maintain adequate insurance or otherwise does not possess sufficient resources to indemnify us.  In addition, our indemnification rights may be held unenforceable in some jurisdictions.

Our customers’ changing views on risk allocation could cause us to accept greater risk to win new business or could result in us losing business if we are not prepared to take such risks.  To the extent that we accept such additional risk, and insure against it, our insurance premiums could rise.

From time to time, we are subject to various claims, litigation and other proceedings that could ultimately be resolved against us, requiring material future cash payments or charges, which could impair our financial condition or results of operations.

The size, nature and complexity of our business make us susceptible to various claims, both in litigation and binding arbitration proceedings.  We may in the future become subject to various claims, which, if not resolved within amounts we have accrued, could have a material adverse effect on our financial position, results of operations or cash flows.  Similarly, any claims, even if fully indemnified or insured, could negatively impact our reputation among our customers and the public, and make it more difficult for us to compete effectively or obtain adequate insurance in the future.

The credit risks of our customer base could result in losses.

Many of our customers are oil and gas companies that are facing liquidity constraints in light of the current commodity price environment.  These customers impact our overall exposure to credit risk as they are also affected by prolonged changes in economic and industry conditions.  If a significant number of our customers experience a prolonged business decline or disruptions, we may incur increased exposure to credit risk and bad debts.

Increased regulation of or limiting or banning hydraulic fracturing could reduce or eliminate demand for our pressure pumping services.

Our customers rely on hydraulic fracturing in conducting exploration and production operations.  Hydraulic fracturing is typically regulated by state oil and gas commissions and similar agencies.  However, the practice of hydraulically fracturing formations to stimulate the production of natural gas and oil remains under increased scrutiny from federal, state and local governmental authorities.  Various federal legislative and regulatory initiatives have been undertaken which could result in additional requirements or restrictions being imposed on hydraulic fracturing operations.  Federal agencies, including the Environmental Protection Agency (EPA) and Bureau of Land Management (BLM), have asserted regulatory authority over certain aspects of hydraulic fracturing within their specific jurisdiction.  For example, the EPA has issued an Advance Notice of Proposed Rulemaking to collect data on chemicals used in hydraulic fracturing operations under Section 8 of the Toxic Substances Control Act, and has enacted, and recently proposed additional New Source Performance Standards for certain aspects of the hydraulic fracturing process.  The U.S. Department of Interior has issued regulations that impose requirements on hydraulic fracturing operations within federal and tribal lands, including the requirement to disclose chemicals used in the fracturing process as well as certain prior approvals to conduct hydraulic fracturing.  Implementation of this rule is subject to ongoing litigation.  And from time to time, Congress has considered legislative measures to regulate hydraulic fracturing, including the imposition of chemical disclosure and permitting requirements.

At the state level, several states have adopted or are considering legal requirements that could impose more stringent permitting, disclosure, and well construction requirements on hydraulic fracturing activities.  Local governments may also seek to adopt ordinances within their jurisdictions regulating the time, place and manner of, or prohibiting the performance of, drilling activities in general or hydraulic fracturing activities in particular.

The adoption of additional legislation or regulation could impose further requirements or limitations, such as restrictions on the use of certain chemicals or prohibitions on hydraulic fracturing in certain areas, which could impact our and our customers operations, and demand for our services.

10

 


 

Adverse and unusual weather conditions may affect our operations.

Our operations may be materially affected by severe weather conditions in areas where we operate.  Severe weather, such as hurricanes, high winds and seas, blizzards and extreme temperatures may cause evacuation of personnel, curtailment of services and suspension of operations, inability to deliver materials to jobsites in accordance with contract schedules, loss of or damage to equipment and facilities and reduced productivity.  In addition, variations from normal weather patterns can have a significant impact on demand for oil and natural gas, thereby reducing demand for our services and equipment.

Necessary capital financing may not be available at economic rates or at all.

Turmoil in the credit and financial markets could adversely affect financial institutions, inhibit lending and limit our access to funding through borrowings under our credit facility or newly created facilities in the public or private capital markets on terms we believe to be reasonable.  Prevailing market conditions could be adversely affected by the ongoing disruptions in domestic or overseas sovereign or corporate debt markets, low commodity prices or other factors impacting our business, contractions or limited growth in the economy or other similar adverse economic developments in the U.S. or abroad.  Instability in the global financial markets has from time to time resulted in periodic volatility in the capital markets.  This volatility could limit our access to the credit markets, leading to higher borrowing costs or, in some cases, the inability to obtain financing on terms that are acceptable to us, or at all.  Any such failure to obtain additional financing could jeopardize our ability to repay, refinance or reduce our debt obligations, or to meet our other financial commitments.

Our inability to retain key employees and skilled workers could adversely affect our operations.

Our performance could be adversely affected if we are unable to retain certain key employees and skilled technical personnel.  Our ability to continue to expand the scope of our services and products depends in part on our ability to increase the size of our skilled labor force.  The loss of the services of one or more of our key employees or the inability to employ or retain skilled technical personnel could adversely affect our operating results.  In the past, the demand for skilled personnel has been high and the supply limited.  We have experienced increases in labor costs in recent years and may continue to do so in the future. 

Our international operations and revenue are affected by political, economic and other uncertainties worldwide.

In 2016, we conducted business in more than 50 countries, and we intend to expand our international operations. 

Our international operations are subject to varying degrees of regulation in each of the foreign jurisdictions in which we provide services. Local laws and regulations, and their interpretation and enforcement, differ significantly among those jurisdictions, and can change significantly over time.  Future regulatory, judicial and legislative changes or interpretations may have a material adverse effect on our ability to deliver services within various foreign jurisdictions.

In addition to these international regulatory risks, our international operations are subject to a number of other risks inherent in any business operating in foreign countries, including, but not limited to, the following:

·

political, social and economic instability;

·

potential expropriation, seizure or nationalization of assets;

·

inflation;

·

deprivation of contract rights;

·

increased operating costs;

·

inability to collect receivables and longer receipt of payment cycles;

·

civil unrest and protests, strikes, acts of terrorism, war or other armed conflict;

·

import-export quotas or restrictions, including tariffs and the risk of fines or penalties assessed for violations;

·

confiscatory taxation or other adverse tax policies;

·

currency exchange controls;

11

 


 

·

currency exchange rate fluctuations, devaluations and conversion restrictions;

·

potential submission of disputes to the jurisdiction of a foreign court or arbitration panel;

·

pandemics or epidemics that disrupt our ability to transport personnel or equipment;

·

embargoes or other restrictive governmental actions that could limit our ability to operate in foreign countries;

·

additional U.S. and other regulation of non-domestic operations, including regulation under the Foreign Corrupt Practices Act (the FCPA) as well as other anti-corruption laws;

·

restrictions on the repatriation of funds;

·

limitations in the availability, amount or terms of insurance coverage;

·

the risk that our international customers may have reduced access to credit because of higher interest rates, reduced bank lending or a deterioration in our customers’ or their lenders’ financial condition;

·

the burden of complying with multiple and potentially conflicting laws and regulations;

·

the imposition of unanticipated or increased environmental and safety regulations or other forms of public or governmental regulation that increase our operating expenses;

·

complications associated with installing, operating and repairing equipment in remote locations;

·

the geographic, time zone, language and cultural differences among personnel in different areas of the world; and

·

challenges in staffing and managing international operations.

These and the other risks outlined above could cause us to curtail or terminate operations, result in the loss of personnel or assets, disrupt financial and commercial markets and generate greater political and economic instability in some of the geographic areas in which we operate.  International areas where we operate that have significant risk include the Middle East, Angola, Colombia, Indonesia and Nigeria.

Laws, regulations or practices in foreign countries could materially restrict our operations or expose us to additional risks.

In many countries around the world where we do business, all or a significant portion of the decision making regarding procuring our services and products is controlled by state-owned oil companies.  State-owned oil companies or prevailing laws may (i) require us to meet local content or hiring requirements or other local standards, (ii) restrict with whom we can contract or (iii) otherwise limit the scope of operations that we can legally or practically conduct.  Our inability or failure to meet these requirements, standards or restrictions may adversely impact our operations in those countries.  In addition, our ability to work with state-owned oil companies is subject to our ability to negotiate and agree upon acceptable contract terms, and to enforce those terms.  In addition, many state-owned oil companies may require integrated contracts or turnkey contracts that could require us to provide services outside our core businesses. Providing services on an integrated or turnkey basis generally requires us to assume additional risks.

Moreover, in order to effectively compete in certain foreign jurisdictions, it is frequently necessary or required to establish joint ventures or strategic alliances with local contractors, partners or agents.  In certain instances, these local contractors, partners or agents may have interests that are not always aligned with ours.  Reliance on local contractors, partners or agents could expose us to the risk of being unable to control the scope or quality of our overseas services or products, or being held liable under the FCPA, or other anti-corruption laws for actions taken by our strategic or local contractors, partners or agents even though these contractors, partners or agents may not themselves be subject to the FCPA or other applicable anti-corruption laws.  Any determination that we have violated the FCPA or other anti-corruption laws could have a material adverse effect on our business, results of operations, reputation or prospects.

Changes in tax laws or tax rates, adverse positions taken by taxing authorities and tax audits could impact our operating results.

We are subject to the jurisdiction of a significant number of domestic and foreign taxing authorities.  Changes in tax laws or tax rates, the resolution of tax assessments or audits by various tax authorities could impact our operating results.  In addition, we may periodically restructure our legal entity organization.  If taxing authorities were to disagree with our tax positions in connection with any such restructurings, our effective income tax rate could be impacted.  The final determination of our income tax liabilities involves the interpretation of local tax laws, tax treaties and related authorities in each taxing jurisdiction, as well as the significant use of estimates

12

 


 

and assumptions regarding future operations and results and the timing of income and expenses.  We may be audited and receive tax assessments from taxing authorities that may result in assessment of additional taxes that are ultimately resolved with the authorities or through the courts.  We believe these assessments may occasionally be based on erroneous and even arbitrary interpretations of local tax law.  Resolution of any tax matter involves uncertainties and there are no assurances that the outcomes will be favorable.

We are subject to environmental, and worker health and safety laws and regulations which could reduce our business opportunities and revenue, and increase our costs and liabilities.

Our business is significantly affected by a wide range of environmental and worker health and safety laws and regulations in the areas in which we operate, including increasingly rigorous environmental laws and regulations governing air emissions, water discharges and waste management.  Generally, these laws and regulations have become more stringent and have sought to impose greater liability on a larger number of potentially responsible parties.  The Macondo well explosion in 2010 resulted in additional regulation of our offshore operations, and similar onshore or offshore accidents in the future could result in additional increases in regulation.  Failure to comply with these laws and regulations may result in a variety of administrative, civil and criminal enforcement measures, including assessment of monetary penalties, imposition of remedial requirements and issuance of injunctions as to future compliance.

Environmental laws and regulations may provide for “strict liability” for remediation costs, damages to natural resources or threats to public health and safety as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior owners or operators or other third parties.  Strict liability can render a party liable for damages without regard to negligence or fault on the part of the party.  Some environmental laws provide for joint and several strict liability for remediation of spills and releases of hazardous substances.  For example, our well service and fluids businesses routinely involve the handling of significant amounts of waste materials, some of which are classified as hazardous substances.  We also store, transport and use radioactive and explosive materials in certain of our operations.  In addition, many of our current and former facilities are, or have been, used for industrial purposes.  Accordingly, we could become subject to material liabilities relating to the containment and disposal of hazardous substances, oilfield waste and other waste materials, the use of radioactive materials, the use of underground injection wells, and to claims alleging personal injury or property damage as the result of exposures to, or releases of, hazardous substances.  In addition, stricter enforcement of existing laws and regulations, new domestic or foreign laws and regulations, the discovery of previously unknown contamination or the imposition of new or increased requirements could require us to incur costs or become the basis of new or increased liabilities that could reduce our earnings and our cash available for operations.

In addition, we and our customers may need to apply for or amend facility permits or licenses from time to time with respect to storm water or wastewater discharges, waste handling, or air emissions relating to manufacturing activities or equipment operations, which subjects us and our customers to new or revised permitting conditions that may be onerous or costly to comply with.

Climate change legislation or regulations restricting emissions of greenhouse gases (GHGs) could result in increased operating costs and reduced demand for the oil and natural gas our customers produce.

In response to findings that greenhouse gas emissions present an endangerment to public health and the environment, the EPA has moved forward with the adoption and implementation of regulations that would restrict emissions of GHGs under existing provisions of the Clean Air Act (CAA).  EPA rules regulate GHG emissions by, for example, requiring a reduction in emissions from certain large stationary sources, and imposing new and proposed limits on emissions of methane and volatile organic compounds from certain oil and natural gas operations and equipment.  The EPA also requires the annual reporting of GHG emissions from certain oil and gas facilities. Congress has considered, and several states have adopted rules that seek to control or reduce emissions of GHGs from a wide range of sources.

At this stage, we cannot predict the impact of these or other initiatives on our or our customers operations, nor can we predict whether, or which of, other currently pending greenhouse gas emission proposals will be adopted, or what other actions may be taken by domestic or international regulatory bodies.  The potential passage of climate change regulation may curtail production and demand for fossil fuels such as oil and gas in areas of the world where our customers operate and thus adversely affect future demand for our products and services, which may in turn adversely affect future results of operations.

If we are not able to design, develop, and produce commercially competitive products and to implement commercially competitive services in a timely manner in response to changes in the market, customer requirements, competitive pressures, and technology trends, our business and results of operations could be materially and adversely affected.

The market for oilfield services in which we operate is highly competitive and includes numerous small companies capable of competing effectively in our markets on a local basis, as well as several large companies that possess substantially greater financial resources than we do.  Contracts are traditionally awarded on the basis of competitive bids or direct negotiations with customers.

The market for our services and products is characterized by continual technological developments to provide better and more reliable performance and services.  If we are not able to design, develop, and produce commercially competitive products and to implement

13

 


 

commercially competitive services in a timely manner in response to changes in the market, customer requirements, competitive pressures, and technology trends, our business and consolidated results of operations could be materially and adversely affected. Likewise, if our proprietary technologies, equipment, facilities, or work processes become obsolete, we may no longer be competitive, and our business and results of operations could be materially and adversely affected.  In addition, we may be disadvantaged competitively and financially by a significant movement of exploration and production operations to areas of the world in which we are not currently active.

We are affected by global economic factors and political events.

Our financial results depend on demand for our services and products in the U.S. and the international markets in which we operate. Declining economic conditions, or negative perceptions about economic conditions, could result in a substantial decrease in demand for our services and products.  World political events could also result in further U.S. military actions, terrorist attacks and related unrest.  Military action by the U.S. or other nations could escalate and further acts of terrorism may occur in the U.S. or elsewhere.  Such acts of terrorism could lead to, among other things, a loss of our investment in the country, impairment of the safety of our employees, extortion or kidnapping, and impairment of our ability to conduct our operations.  Such developments have caused instability in the world’s financial and insurance markets in the past, and many experts believe that a confluence of worldwide factors could result in a prolonged period of economic uncertainty and slow growth in the future.  In addition, any of these developments could lead to increased volatility in prices for oil and gas and could affect the markets for our products and services.  Insurance premiums could also increase and coverages may be unavailable.

Uncertain economic conditions and instability make it particularly difficult for us to forecast demand trends.  The timing and extent of any changes to currently prevailing market conditions is uncertain and may affect demand for many of our services and products. Consequently, we may not be able to accurately predict future economic conditions or the effect of such conditions on demand for our services and products and our results of operations or financial condition.

We may not realize the anticipated benefits of acquisitions or divestitures.

We continually seek opportunities to increase efficiency and value through various transactions, including purchases or sales of assets or businesses.   These transactions are intended to result in the offering of new services or products, the entry into new markets, the generation of income or cash, the creation of efficiencies or the reduction of risk.  Whether we realize the anticipated benefits from an acquisition or any other transactions depends, in part, upon our ability to timely and efficiently integrate the operations of the acquired business, the performance of the underlying product and service portfolio, and the management team and other personnel of the acquired operations.  Accordingly, our financial results could be adversely affected from unanticipated performance issues, legacy liabilities, transaction-related charges, amortization of expenses related to intangibles, charges for impairment of long-term assets, credit guarantees, partner performance and indemnifications.  In addition, the financing of any future acquisition completed by us could adversely impact our capital structure or increase our leverage.  While we believe that we have established appropriate and adequate procedures and processes to mitigate these risks, there is no assurance that these transactions will be successful.  We also may make strategic divestitures from time to time.  These transactions may result in continued financial involvement in the divested businesses, such as guarantees or other financial arrangements, following the transaction.  Nonperformance by those divested businesses could affect our future financial results through additional payment obligations, higher costs or asset write-downs.  Except as required by law or applicable securities exchange listing standards, we do not expect to ask our shareholders to vote on any proposed acquisition or divestiture.  Moreover, we generally do not announce our acquisitions or divestitures until we have entered into a preliminary or definitive agreement.

Our operations may be subject to cyber attacks that could have an adverse effect on our business operations.

Like most companies, we rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, to manage or support a variety of our business operations, and to maintain various records, which may include information regarding our customers, employees or other third parties.  We make significant efforts to maintain the security and integrity of these types of information and systems (and maintain contingency plans in the event of security breaches or system disruptions).  We cannot provide assurance that our security efforts and measures will prevent unauthorized access to our systems, loss or destruction of data, account takeovers, or other forms of cyber-attacks or similar events, whether caused by mechanical failures, human error, fraud, malice, sabotage or otherwise.  The frequency, scope and sophistication of cyber-attacks continue to grow, which increases the possibility that our security measures will be unable to prevent our systems’ improper functioning or the improper disclosure of proprietary information.  Any failure of our information or communications systems, whether caused by attacks, mechanical failures, natural disasters or otherwise, could interrupt our operations, damage our reputation, or subject us to claims, any of which could materially adversely affect us.

14

 


 

We depend on particular suppliers and are vulnerable to product shortages and price increases.

Some of the materials that we use are obtained from a limited group of suppliers.  Our reliance on these suppliers involves several risks, including price increases, inferior quality and a potential inability to obtain an adequate supply in a timely manner.  We do not have long-term contracts with most of these sources, and the partial or complete loss of certain of these sources could have a negative impact on our results of operations and could damage our customer relationships.  Further, a significant increase in the price of one or more of these materials could have a negative impact on our results of operations.

Estimates of our oil and natural gas reserves and potential liabilities relating to our oil and natural gas property may be incorrect.

Actual future production, cash flows, development expenditures, operating and abandonment expenses and quantities of recoverable oil and natural gas reserves may vary substantially from those estimated by us and any significant variance in these assumptions could materially affect the estimated quantity and value of our proved reserves.  Therefore, the risk exists we may overestimate the value of economically recoverable reserves or underestimate the cost of plugging wells and abandoning production facilities.  If costs of abandonment are materially greater or actual reserves are materially lower than our estimates, this could have an adverse effect on our financial condition, results of operations and cash flows.

Potential changes of Bureau of Ocean Energy Management security and bonding requirements for offshore platforms could impact our operating cash flows and results of operations.

Federal oil and natural gas leases contain standard terms and require compliance with detailed Bureau of Safety and Environmental Enforcement (BSEE) and Bureau of Ocean Energy Management (BOEM) regulations and orders issued pursuant to various federal laws, including the Outer Continental Shelf Lands Act.  In 2016 BOEM undertook a review of its historical policies and procedures for determining a lessee’s ability to decommission platforms on the Outer Continental Shelf and whether lessees should furnish additional security, and in July 2016, BOEM issued a new Notice to Lessees requiring additional security for decommissioning activities.  In January 2017, BOEM extended the implementation timeline for properties with co-lessees by an additional six months, and in February 2017 announced that, during this six months period, BOEM would continue to review implementation issues and continue industry engagement to gather additional information on the financial assurance program. We cannot predict whether these laws and regulations may change in the future, particularly in connection with the transition of presidential administrations. 

During the second half of 2016, BSEE increased its estimates of many offshore operator’s decommissioning costs, including the decommissioning costs at our sole federal offshore oil and gas property, Bullwinkle. Our subsidiary owns a 51% non-operating interest in Bullwinkle.  In October 2016, BOEM sent an initial proposal letter to the operator of Bullwinkle, proposing an increase in the supplemental bonding requirement for the property’s sole fixed platform that was 8x to 10x higher than the revised supplemental bonding requirement requested for any other deep-water fixed platform in the U.S. Gulf of Mexico.  Both the operator and our subsidiary have submitted formal dispute notices, asserting that the estimates in the October 2016 proposal letter may be based on erroneous or arbitrary estimates of the potential decommissioning costs, and requesting in-person meetings to discuss the estimate.  We have asked that BSEE and BOEM reduce the estimate to an amount that more closely approximates actual decommissioning costs, consistent with estimates identified by BSEE and BOEM for similar deep-water platforms. BSEE and BOEM have not yet responded to our dispute notice. If BOEM ultimately issues a formal order and we are unable to obtain the additional required bonds or assurances, BOEM may suspend or cancel operations at the Bullwinkle Platform or otherwise impose monetary penalties. Any of these actions could have a material effect on our financial condition, operating cash flows and liquidity.

Business growth could outpace the capabilities of our infrastructure and workforce.

We cannot be certain that our infrastructure and workforce will be adequate to support our operations as we expand in the future.  Future growth also could impose significant additional demands on our resources, resulting in additional responsibilities of our senior management, including the need to recruit and integrate new senior level managers, executives and operating personnel.  We cannot be certain that we will be able to recruit and retain such additional personnel.  Moreover, we may need to expend significant time and money in the future to integrate and unify our systems and infrastructure.  To the extent that we are unable to manage our growth effectively, or are unable to attract and retain additional qualified personnel, we may not be able to expand our operations or execute our business plan.

The price of our common stock may be volatile.

Some of the factors that could affect the price of our common stock are quarterly increases or decreases in revenue or earnings, changes in revenue or earnings estimates by the investment community and speculation in the press or investment community about our financial condition or results of operations.  General market conditions and U.S. or international economic factors and political events unrelated to our performance may also affect our stock price.  For these reasons, investors should not rely on recent trends in the price of our common stock to predict the future price of our common stock or our financial results.

15

 


 

Item 1B. Unresolved Staff Comments



None.



Item 2. Properties

Information on properties is contained in Part I, Item 1 of this Annual Report on Form 10-K.



Item 3. Legal Proceedings

From time to time, we are involved in various legal actions incidental to our business.   The outcome of these proceedings is not predictable.  However, based on current circumstances, we do not believe that the ultimate resolution of these proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on our financial position, results of operations or cash flows.



Item 4. Mine Safety Disclosures



Not Applicable.

16

 


 

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Common Stock and Dividend Information



Our common stock trades on the New York Stock Exchange under the symbol “SPN.”  The following table sets forth the high and low sales prices per share of common stock as reported for each fiscal quarter during the periods indicated.





 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Common Stock Prices

 

Dividends Declared Per Common Share



 

High

 

 

Low

 

 

 

2015

 

 

 

 

 

 

 

 

 



First Quarter

$

22.98

 

$

16.89

 

$

0.08



Second Quarter

 

26.95

 

 

20.31

 

 

0.08



Third Quarter

 

21.10

 

 

12.35

 

 

0.08



Fourth Quarter

 

17.19

 

 

12.35

 

 

0.08



 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

 

 



First Quarter

$

14.09

 

$

8.25

 

$

0.08



Second Quarter

 

19.83

 

 

12.34

 

 

 -



Third Quarter

 

19.16

 

 

13.78

 

 

 -



Fourth Quarter

 

19.39

 

 

13.67

 

 

 -



At February 17, 2017, there were 152,831,316 shares of our common stock outstanding, which were held by 127 record holders.



Dividend Information



On March 31, 2016, our Board of Directors announced that, following a recommendation of the Company's management team, it approved the elimination of the Company's quarterly dividend.  In addition, our credit agreement restricts the payment of dividends. 



Equity Compensation Plan Information



Information required by this item with respect to compensation plans under which our equity securities are authorized for issuance is incorporated by reference from Part III, Item 12 of this Annual Report Form 10-K, which will be contained in our definitive proxy statement to be filed pursuant to Regulation 14A and is incorporated herein by reference.



17

 


 

Issuer Purchases of Equity Securities



The following table provides information about shares of our common stock repurchased and retired during each month for the three months ended December 31, 2016:



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

Period

 

(a)
Total Number
of Shares
Purchased (1)

 

(b)
Average Price Paid per Share

 

(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)

 

(d)
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan or Programs (2)

October 1 - 31, 2016

 

476 

 

$

18.77 

 

 -

 

$

500,000,000 

November 1 - 30, 2016

 

 -

 

$

 -

 

 -

 

$

500,000,000 

December 1 - 31, 2016

 

 -

 

$

 -

 

 -

 

$

500,000,000 

Total

 

476 

 

$

18.77 

 

 -

 

$

500,000,000 



 

 

 

 

 

 

 

 

 

 



(1) Through our stock incentive plans, 476 shares were delivered to us by our employees to satisfy their tax withholding requirements upon vesting of long-term incentive awards.  

(2)  On December 11, 2014, we announced that our Board of Directors authorized a share repurchase program of up to $500 million of our common stock, which expired on December 31, 2016. 

Performance Graph



The following performance graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into such filing. 



The following graph compares the yearly percentage change in cumulative total stockholder return on our common stock for five years ended December 31, 2016 with the cumulative total return on the S&P 500 Stock Index and our Self-Determined Peer Group, as described below, for the same period.  The information in the graph is based on the assumption of a $100 investment on January 1, 2012  at closing prices on December 31, 2011.  

18

 


 

The comparisons in the graph are required by the SEC and are not intended to be a forecast or indicative of possible future performance of our common stock.



Picture 2







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

2012

 

2013

 

2014

 

2015

 

2016

Superior Energy Services, Inc.

 

$

73 

 

 

94 

 

 

72 

 

 

49 

 

 

62 

S&P 500 Index

 

$

116 

 

 

153 

 

 

174 

 

 

176 

 

 

197 

Peer Group

 

$

103 

 

 

94 

 

 

126 

 

 

97 

 

 

64 



NOTES:

·

The lines represent monthly index levels derived from compounded daily returns that reflect the reinvestment of all dividends.

·

The indexes are reweighted daily, using the market capitalization on the previous trading day.

·

If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used.

·

The index level for all securities was set to $100.00 on December 31, 2011.



Our Self-Determined Peer Group consists of 15 companies whose average stockholder return levels comprise part of the performance criteria established by the Compensation Committee of our Board of Directors under our long-term incentive compensation program:  Baker Hughes Incorporated, Basic Energy Services, Inc., FMC Technologies, Inc., Halliburton Company, Helix Energy Solutions Group, Inc., Helmerich & Payne Inc., Key Energy Services, Inc., Nabors Industries Ltd., National Oilwell Varco, Inc., Oceaneering International, Inc., Oil States International, Inc., Patterson-UTI Energy Inc., RPC, Inc., Schlumberger N.V. and Weatherford International, Ltd. 



19

 


 

Item 6. Selected Financial Data



The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto, which are in this Annual Report on Form 10-K.







 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 



 



2016

 

2015

 

2014

 

2013

 

2012



(in thousands, except per share data)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

1,450,047 

 

$

2,774,565 

 

$

4,556,622 

 

$

4,350,057 

 

$

4,293,276 

Income (loss) from operations

 

(1,030,209)

 

 

(1,952,989)

 

 

546,604 

 

 

214,170 

 

 

710,373 

Net income (loss) from continuing operations

 

(833,340)

 

 

(1,807,763)

 

 

280,790 

 

 

45,485 

 

 

383,917 

Loss from discontinued operations, net of tax

 

(53,559)

 

 

(46,955)

 

 

(22,973)

 

 

(156,903)

 

 

(17,982)

Net income (loss)

 

(886,899)

 

 

(1,854,718)

 

 

257,817 

 

 

(111,418)

 

 

365,935 

Net income (loss) from continuing operations per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

(5.50)

 

 

(12.02)

 

 

1.81 

 

 

0.29 

 

 

2.57 

Diluted

 

(5.50)

 

 

(12.02)

 

 

1.79 

 

 

0.28 

 

 

2.54 

Net loss from discontinued operations per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

(0.35)

 

 

(0.31)

 

 

(0.15)

 

 

(0.99)

 

 

(0.12)

Diluted

 

(0.35)

 

 

(0.31)

 

 

(0.14)

 

 

(0.97)

 

 

(0.12)

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

(5.85)

 

 

(12.33)

 

 

1.66 

 

 

(0.70)

 

 

2.45 

Diluted

 

(5.85)

 

 

(12.33)

 

 

1.65 

 

 

(0.69)

 

 

2.42 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

0.08 

 

 

0.32 

 

 

0.24 

 

 

0.08 

 

 

 -



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

3,470,255 

 

 

4,914,244 

 

 

7,317,782 

 

 

7,366,943 

 

 

7,723,885 

Long-term debt, net

 

1,284,600 

 

 

1,588,263 

 

 

1,600,373 

 

 

1,610,956 

 

 

1,769,619 

Decommissioning liabilities, less current portion

 

101,513 

 

 

98,890 

 

 

88,000 

 

 

56,197 

 

 

93,053 

Stockholders' equity

 

1,303,920 

 

 

2,210,812 

 

 

4,079,738 

 

 

4,131,444 

 

 

4,231,079 



·

For 2016 and 2015, net loss from continuing operations included $500.4 million and $1,738.9 million, respectively of reduction in value of assets.

·

For 2013, net income from continuing operations included $300.1 million of reduction in value of assets.

·

For 2012, net income from continuing operations included operating results from our acquisition of Complete in February 2012.













20

 


 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements and applicable notes to our consolidated financial statements and other information included elsewhere in this Annual Report on Form 10-K, including risk factors disclosed in Part I, Item 1A.  The following information contains forward-looking statements, which are subject to risks and uncertainties.  Should one or more of these risks or uncertainties materialize, our actual results may differ from those expressed or implied by the forward-looking statements.  See “Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K.



Executive Summary



General



We provide a wide variety of services and products to the energy industry.  We serve major, national and independent oil and natural gas exploration and production companies around the world and we offer products and services with respect to the various phases of a well’s economic life cycle.  We report our operating results in four business segments: Drilling Products and Services; Onshore Completion and Workover Services; Production Services; and Technical Solutions.  Given our long-term strategy of geographic expansion, we also provide supplemental segment revenue information in three geographic areas:  U.S. land; Gulf of Mexico; and International.



Financial Results



The beginning of 2016 was marked by oil prices at $26 per barrel, further deepening the impact of the downturn in the oil and gas industry, which began during the fourth quarter of 2014.  During 2016, we generated $1,450.0 million of revenue which represents a 48% decrease from $2,774.6 million of revenue generated in 2015.  The decrease in revenue was due to lower rig counts, lower pricing and customer budget constraints.  Low oil and natural gas prices made 2016 an extremely challenging year due to significant reductions in activity and widespread pricing pressure.  In order to mitigate the unfavorable market environment during 2016, we continued to implement company-wide cost reduction initiatives.  We took steps to further reduce our cost structure, integrate product and service lines and reorganize businesses.  In 2016, we reduced our workforce by over 20% and reduced our general and administrative expenses by 32% as compared to 2015 levels. 

   

During 2016, we incurred a net loss of $886.9 million, or a $5.85 loss per share.  Included in the results for 2016 were pre-tax charges of $500.4 million related to the reduction in value of assets, $20.8 million for inventory write-downs and $39.2 million, primarily for severance and facility closures. 



After nearly two years of decline in the oil and gas industry, oil and gas prices began to stabilize in the third quarter of 2016 and we experienced an increase in revenue in the fourth quarter.  During the second half of 2016, many of our customers, primarily in the U.S. land market, gradually increased their activity levels.  We began to reactivate idle equipment in the third quarter of 2016 and continued such reactivation in the fourth quarter.  As we move into 2017, we will continue refining our business and adjusting our cost structure to respond to market conditions.  Additionally, we believe our businesses have competitive advantages to respond quickly when the market ultimately recovers.



Industry Trends



The oil and gas industry is both cyclical and seasonal.  The level of spending by oil and gas companies is highly influenced by current and expected demand and future prices of oil and natural gas.  Changes in spending result in an increased or decreased demand for our services and products.  Rig count is an indicator of the level of spending by oil and gas companies.  Our financial performance is significantly affected by the rig count in the U.S. land and offshore market areas as well as oil and natural gas prices and worldwide rig count, which are summarized in the table below.



21

 


 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 



 

2016

 

2015

 

2016 to 2015 Change

 

2014

 

2015 to 2014 Change

Worldwide Rig Count (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.:

 

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

 

486 

 

 

943 

 

-48%

 

 

1,804 

 

-48%

Offshore

 

 

23 

 

 

35 

 

-34%

 

 

57 

 

-39%

International (2)

 

 

955 

 

 

1,167 

 

-18%

 

 

1,337 

 

-13%

Commodity Prices (average)

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude Oil (West Texas Intermediate)

 

$

43.29 

 

$

48.66 

 

-11%

 

$

93.17 

 

-48%

Natural Gas (Henry Hub)

 

$

2.52 

 

$

2.62 

 

-4%

 

$

4.37 

 

-40%



(1) Estimate of drilling activity as measured by average active drilling rigs based on Baker Hughes Incorporated rig count information.



(2) Excludes Canadian rig count.



At December 31, 2016, the worldwide rig count was 1,772 rigs, which represented a 10% decrease from the end of 2015 and a 20% increase from the lowest level during 2016.



Overview of our business segments



We attribute revenue to major geographic regions based on the location where services are performed or the destination of the rental or sale of products.  The following table compares our revenues generated from major geographic regions (in thousands). 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 



 

Revenue



 

2016

 

%

 

2015

 

%

 

Change

U.S. Land

 

$

717,748 

 

49% 

 

$

1,536,893 

 

55% 

 

$

(819,145)

Gulf of Mexico

 

 

362,765 

 

25% 

 

 

648,178 

 

23% 

 

 

(285,413)

International

 

 

369,534 

 

25% 

 

 

589,494 

 

21% 

 

 

(219,960)

Total

 

$

1,450,047 

 

100% 

 

$

2,774,565 

 

100% 

 

$

(1,324,518)



The Drilling Products and Services segment is capital intensive with higher operating margins relative to our other segments as a result of relatively low operating expenses.  The largest fixed cost is depreciation as there is little labor associated with our drilling products and services businesses.  In 2016, 22% of segment revenue was derived from U.S. land market area (down from 30% in 2015), while 41% of segment revenue was from the Gulf of Mexico market area (up from 40% in 2015) and 37% of segment revenue was from international market areas (up from 30% in 2015).  Premium drill pipe accounted for more than 60% of this segment’s revenue in 2016, while bottom hole assemblies and accommodations each accounted for approximately 20% of this segment’s revenue in 2016.



The Onshore Completion and Workover Services segment consists primarily of services used in the completion and workover of oil and gas wells on land.  These services include pressure pumping, well service rigs and fluid management services.  All of this segment’s revenue is derived in the U.S. land market areas.  Demand for these services in the U.S. land market can change quickly and is highly dependent on the number of oil and natural gas wells drilled and completed.  Given the cyclical nature of these drilling and completion activities in the U.S. land market, coupled with the high labor intensity of these services, operating margins can fluctuate widely depending on supply and demand at a given point in the cycle.  Pressure pumping is the largest service offering in this segment, representing more than 40% of this segment’s revenue in 2016.  Fluid management represented approximately 30% of this segment’s revenue in 2016, while well service rigs accounted for more than 25% of this segment’s revenue in 2016.



The Production Services segment consists of intervention services primarily used to maintain and extend oil and gas production during the life of a producing well.  These services are labor intensive and margins fluctuate based on how much capital our customers allocate towards enhancing existing oil and gas production from mature wells.  In 2016, 25% of segment revenue was derived from the U.S. land market area (down from 48% in 2015), while 24% of segment revenue was from the Gulf of Mexico market area (up from 13% in 2015) and 51% of this segment’s revenue was from international market areas (up from 39% in 2015).  Hydraulic workover and snubbing is the largest service offering in this segment, accounting for approximately 26% of this segment’s revenue in 2016.  Coiled tubing represented approximately 20% of this segment’s revenue in 2016, while electric wireline accounted for nearly 15% of this segment’s revenue in 2016.



The Technical Solutions segment consists of products and services that address customer-specific needs and include offerings such as completion tools and services, end-of-life services, and the production and sale of oil and gas.  Given the project-specific nature

22

 


 

associated with several of the service offerings in this segment and the seasonality associated with Gulf of Mexico activity, revenue and operating margins in this segment can have significant variations from quarter to quarter.  In 2016, revenue derived from the U.S. land market area was 15% of segment revenue (up from 12% in 2015), while 55% of segment revenue was from the Gulf of Mexico market area (down from 65% in 2015) and 30% of segment revenue was from international market areas (up from 23% in 2015).  Well control services and subsea intervention services accounted for approximately 49% of this segment’s revenue in 2016, while completion tools and products represented more than 30% of this segment’s revenue in 2016.



Comparison of the Results of Operations for the Years Ended December 31, 2016 and 2015



For 2016, our revenue was $1,450.0 million, a decrease of $1,324.6 million or 48%, as compared to 2015.  Our performance in 2016 was severely impacted by the significant decrease in land-based activity, particularly in the U.S. land market, where the average rig count decreased 48% as compared to 2015.  Supply overcapacity in the U.S.land market remained high for most of 2016, resulting in pricing pressure across all of our services.  Net loss from continuing operations was $833.3 million, or a $5.50 loss per share.  Net loss was $886.9 million, or a $5.85 loss per share.  Included in the results for 2016 were pre-tax charges of $500.4 million related to the reduction in value of assets, $20.8 million for inventory write-down and $39.2 million, primarily, for severance and facility closures.  For 2015, our revenue was $2,774.6 million, resulting in a loss from continuing operations of $1,807.8 million, or $12.02 loss per share.  Net loss was $1,854.7 million, or $12.33 loss per share.  Included in the results for 2015 were pre-tax charges of $1,738.9 million related to the reduction in value of assets and $46.8 million expense for severance and facility closures.       



The following table compares our operating results for 2016 and 2015 (in thousands).  Cost of services and rentals excludes depreciation, depletion, amortization and accretion for each of our business segments.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

Cost of Services and Rentals



2016

 

2015

 

Change

 

%

 

2016

 

%

 

2015

 

%

 

Change



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Drilling Products and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Services

$

293,543 

 

$

547,530 

 

$

(253,987)

 

-46%

 

$

136,719 

 

47% 

 

$

178,629 

 

33% 

 

$

(41,910)

Onshore Completion and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Workover Services

 

523,965 

 

 

934,274 

 

 

(410,309)

 

-44%

 

 

515,784 

 

98% 

 

 

773,119 

 

83% 

 

 

(257,335)

Production Services

 

348,363 

 

 

795,215 

 

 

(446,852)

 

-56%

 

 

276,223 

 

79% 

 

 

612,578 

 

77% 

 

 

(336,355)

Technical Solutions

 

284,176 

 

 

497,546 

 

 

(213,370)

 

-43%

 

 

194,548 

 

68% 

 

 

301,486 

 

61% 

 

 

(106,938)

Total

$

1,450,047 

 

$

2,774,565 

 

$

(1,324,518)

 

-48%

 

$

1,123,274 

 

77% 

 

$

1,865,812 

 

67% 

 

$

(742,538)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



The following provides a discussion of our results on a business segment basis:



Drilling Products and Services Segment



Revenue for our Drilling Products and Services segment decreased 46% to $293.5 million for 2016, as compared to $547.5 million for 2015.  The continued decline in revenue in this segment is due to lower rig count, lower pricing and customer budget constraints.   Cost of services and rentals as a percentage of revenue increased to 47% of segment revenue in 2016, as compared to 33% in 2015, primarily due to a decrease in revenue.  Revenue from our Gulf of Mexico market area decreased 45%, revenue generated in our U.S. land market area decreased 60% and revenue from our international market areas decreased 35%.  The continued decline in revenue in these market areas is primarily attributable to decreases in revenues from rentals of premium drill pipe, bottom hole assemblies and accommodation units, as demand for these rental products decreased along with the worldwide rig count.  In addition, during 2016, we recorded $48.9 million in reduction in value of assets as compared to $40.2 million recorded during 2015.



Onshore Completion and Workover Services Segment



Revenue for our Onshore Completion and Workover Services segment decreased 44% to $523.9 million for 2016, as compared to $934.3 million in 2015.  All of this segment’s revenue is derived from the U.S. land market area, in which rig count was down 48%.  Cost of services and rentals as a percentage of revenue increased to 98% of segment revenue in 2016, as compared to 83% in 2015, primarily due to a decrease in revenue.  The decrease in revenue is primarily due to a continued decline in activity and pricing pressure for our services, primarily in our pressure pumping and fluid management businesses.  These services were impacted negatively by reduced customer spending and activity as well as continued pricing pressure in North America during 2016.  In addition, during 2016, we recorded $190.8 million in reduction in value of assets as compared to $780.2 million recorded during 2015. 

23

 


 

Production Services Segment



Revenue for our Production Services segment decreased 56% to $348.4 million for 2016, as compared to $795.2 million in 2015.  The continued decline in revenue in this segment is due to low rig count, lower pricing and customer budget constraints.   Cost of services and rentals as a percentage of revenue increased to 79% of segment revenue in 2016, as compared to 77% in 2015.  Revenue derived from the Gulf of Mexico market area decreased 41%primarily due to a decrease in electric line activity.  Revenue from the U.S. land market area decreased 77%, primarily due to decreased activity in coiled tubing, electric line and slickline services.  Revenue from international market areas decreased 43% primarily due to decreased activity from hydraulic workover and snubbing, electric line and coiled tubing services.  In addition, during 2016, we recorded $235.1 million in reduction in value of assets as compared to $790.5 million recorded during 2015.



Technical Solutions Segment



Revenue for our Technical Solutions segment decreased 43% to $284.2 million for 2016 as compared to $497.6 million in 2015   Cost of services and rentals as percentage of revenue increased to 68% in 2016, as compared to 61% in 2015.  Revenue derived from the Gulf of Mexico market area decreased 51%, primarily due to a decrease in demand for well control services and completion tools and products.  In addition, the decrease in revenue was also attributable to the discontinuation of our marine technical services business due to the termination of the contract with its customer.    Revenue from the U.S. land market area decreased 31% and revenue from international market areas decreased 26% primarily due to a continued decline in demand for completion tools and products.  In addition, during 2016, we recorded $25.6 million in reduction in value of assets and $19.1 million inventory write-down charge as compared to $124.9 million reduction in value of long-lived assets recorded during 2015.



Depreciation, Depletion, Amortization and Accretion



Depreciation, depletion, amortization and accretion decreased to $510.0 million during 2016 from $612.1 million in 2015.  Depreciation and amortization expense decreased for our Drilling Products and Services segment by $25.9 million, or 14%; for our Onshore Completion and Workover Services segment by $16.2 million, or 7%; for our Production Services segment by $41.6 million, or 31%; and for our Technical Solutions segment by $18.4 million, or 30%.  The decrease in depreciation, depletion, amortization and accretion is primarily due to lower asset values as a result of the impairments recorded during 2016 and 2015, certain assets being fully depreciated and significantly reduced capital expenditures.



General and Administrative Expenses



General and administrative expenses decreased to $346.6 million during 2016 from $510.7 million in 2015.  The decrease is primarily attributable to significant cost reduction initiatives implemented during 2016.  These cost reduction initiatives resulted in significantly lower expenses for salaries and wages and other employee-related expenses and insurance and infrastructure-related expenses.



Reduction in Value of Assets



Reduction in value of assets in 2016 was $500.4 million as compared to $1,738.9 million in 2015.  The reduction in value of assets recorded during 2016 included $190.5 million related to the Production Services segment goodwill impairment and $140.0 million related to the Onshore Completion and Workover Services segment goodwill impairment.  In addition, the reduction in value of assets expense included $169.9 million related to reduction in value and retirements of long-lived assets across all of our operating segments.  The reduction in value of assets recorded during 2015 included $740.0 million related to the Onshore Completion and Workover Services segment goodwill impairment, $586.7 million related to the Production Services segment goodwill impairment and $412.2 million related to reduction in value and retirements of long-lived assets across all of our operating segments.  See note 3 to our consolidated financial statements for further discussion of the reduction in value of assets.



Other Income/Expense



Other income for 2016 was $22.6 million as compared to $9.5 million of expense for 2015.  The increase in other income is primarily attributable to foreign currency translations.



Income Taxes



Our effective income tax rate for 2016 was a 24.3% tax benefit compared to a 12.2% tax benefit for 2015.  The change in the effective income tax rate was primarily due to the reduction in value of goodwill which is non-deductible for income tax purposes.  See note 7 to our consolidated financial statements.

 

24

 


 

Discontinued Operations



Loss from discontinued operations, net of tax, was $53.6 million for 2016 as compared to $47.0 million for 2015.  Loss from discontinued operations for 2016 included $33.0 million reduction in value of marine vessels.  Loss from discontinued operations for 2015 included $34.6 million reduction in value of the marine vessels and equipment. 



Comparison of the Results of Operations for the Years Ended December 31, 2015 and 2014



For 2015, our revenue was $2,774.6 million a decrease of $1,782.0 million or 39%, as compared to 2014.  The decline is largely attributable to a 33% decline in the worldwide rig count which has led to widespread pricing pressure.  Net loss from continuing operations was $1,807.8 million, or $12.02 loss per share.  Net loss was $1,854.7 million, or $12.33 loss per share.  Included in the results for 2015 were pre-tax charges of $1,738.9 million related to the reduction in value of assets and $46.8 million expense for severance and facility closures.  For December 2014, our revenue was $4,556.6 million, resulting in income from continuing operations of $280.8 million, or $1.79 per diluted share.  Net income was $257.8 million, or $1.65 per diluted share.         



The following table compares our operating results for 2015 and 2014 (in thousands).  Cost of services and rentals excludes depreciation, depletion, amortization and accretion for each of our business segments.





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

Cost of Services and Rentals



2015

 

2014

 

Change

 

%

 

2015

 

%

 

2014

 

%

 

Change



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Drilling Products and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Services

$

547,530 

 

$

852,499 

 

$

(304,969)

 

-36%

 

$

178,629 

 

33% 

 

$

255,613 

 

30% 

 

$

(76,984)

Onshore Completion and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Workover Services

 

934,274 

 

 

1,732,833 

 

 

(798,559)

 

-46%

 

 

773,119 

 

83% 

 

 

1,205,443 

 

70% 

 

 

(432,324)

Production Services

 

795,215 

 

 

1,402,815 

 

 

(607,600)

 

-43%

 

 

612,578 

 

77% 

 

 

967,440 

 

69% 

 

 

(354,862)

Technical Solutions

 

497,546 

 

 

568,475 

 

 

(70,929)

 

-12%

 

 

301,486 

 

61% 

 

 

306,337 

 

54% 

 

 

(4,851)

Total

$

2,774,565 

 

$

4,556,622 

 

$

(1,782,057)

 

-39%

 

$

1,865,812 

 

67% 

 

$

2,734,833 

 

60% 

 

$

(869,021)



The following provides a discussion of our results on a business segment basis:



Drilling Products and Services Segment



Revenue for our Drilling Products and Services segment decreased 36% to $547.5 million for 2015, as compared to $852.5 million in 2014.  The decline in revenue in this segment is due to low rig count, lower pricing and customer budget constraints.    Cost of services and rentals as a percentage of revenue increased to 33% of segment revenue in 2015, as compared to 30% in 2014, primarily due to a decrease in revenue.  Revenue from our Gulf of Mexico market area decreased 31%, revenue generated in our U.S. land market area decreased 49% and revenue from our international market areas decreased 23%.  The decline in revenue in these market areas is primarily attributable to decreases in revenues from rentals of premium drill pipe, bottom hole assemblies and accommodation units, as demand for these rental products decreased along with the worldwide rig count.  In addition, the decrease in income from operations for this segment was impacted by a $40.2 million reduction in value of assets and a $1.1 million expense for severance.



Onshore Completion and Workover Services Segment



Revenue for our Onshore Completion and Workover Services segment decreased 46% to $934.3 million for 2015, as compared to $1,732.8 million in 2014.  All of this segment’s revenue is derived from the U.S. land market area, in which rig count was down 48%. Cost of services and rentals as a percentage of revenue increased to 83% of segment revenue in 2015, as compared to 70% in 2014, primarily due to a significant decrease in revenue.  The decrease in revenue is primarily due to a decline in activity and pricing for our services, primarily in our pressure pumping and fluid management businesses.  These services were impacted negatively by reduced customer spending and activity as well as continued pricing pressure in North America during 2015.  In addition, the loss from operations for 2015 was impacted by a $740.0 million reduction in value of goodwill, a $43.3 million reduction in value of long-lived assets and a $22.5 million expense for severance and facility closures.



25

 


 

Production Services Segment



Revenue for our Production Services segment decreased by 43% to $795.2 million for 2015, as compared to $1,402.8 million in 2014. The decline in revenue in this segment is due to low rig count, lower pricing and customer budget constraints.  Cost of services and rentals as a percentage of revenue increased to 77% of segment revenue in 2015, as compared to 69% in 2014, primarily due to a decrease in revenue.  Revenue derived from the Gulf of Mexico market area decreased 41%, primarily due to a decrease in electric line activity and hydraulic workover and snubbing.  Revenue from the U.S. land market area decreased 56%, primarily due to decreased activity in coiled tubing and well services.  Revenue from international market areas decreased 14%, primarily due to decreased activity from coiled tubing services.  In addition, the loss from operations for 2015 for this segment was impacted by a $586.7 million reduction in value of goodwill, a $149.2 million reduction in value of long-lived assets, a $15.2 million expense relating to the retirements of long-lived assets, a $39.4 million loss on sale of a business and a $16.3 million expense for severance and facility closures.



Technical Solutions Segment



Revenue for our Technical Solutions segment decreased 12% to $497.6 million for 2015, as compared to $568.5 million in 2014.  The decline in revenue in this segment is due to low rig count, lower pricing and customer budget constraints.  Cost of services and rentals as percentage of revenue increased to 61% of segment revenue in 2015, as compared to 54% in 2014, primarily due to a decrease in revenue.  Revenue derived from the Gulf of Mexico market area decreased 1%, primarily due to decrease in our oil and gas activities and well control services.  These decreases were offset by an increase in revenue from our marine technical services business as a result of a one-time contract termination fee received in 2015.  Revenue from the U.S. land market area decreased 45% and revenue from international market areas decreased 13%, primarily due to a decrease in demand for completion tools and products.   In addition, the loss from operations for 2015 for this segment was impacted by a $124.9 million reduction in value of long-lived assets and a $6.9 million expense for severance and facility closures.

 

Depreciation, Depletion, Amortization and Accretion



Depreciation, depletion, amortization and accretion decreased to $612.1 million during 2015 from $650.8 million in 2014.  Depreciation and amortization expense decreased for our Production Services segment by $34.4 million, or 20%; for our Onshore Completion and Workover Services segment by $7.8 million, or 3%, and for our Technical Solutions segment by $3.9 million, or 6%, as a result of certain assets being fully depreciated and reductions in value of long-lived assets recorded during 2015.  Depreciation and amortization expense for our Drilling Products and Services segment increased by $7.4 million, or 4%, primarily due to capital expenditures. 



General and Administrative Expenses



General and administrative expenses decreased to $510.7 million during 2015 from $624.4 million in 2014.  The decrease is primarily attributable to lower levels of employee and infrastructure-related expenses as a result of our cost reduction programs.



Reduction in Value of Assets



During 2015, we recorded $1,738.9 million reduction in value of assets.  The reduction in value of assets included $740.0 million and $586.7 million related to the Onshore Completion and Workover Services and the Production Services segments’ goodwill impairment, respectively.  In addition, the reduction in value of assets included $412.2 million related to the reduction in long-lived assets across all of our operating segments.   See note 3 to our consolidated financial statements for further discussion of the reduction in value of assets.



Income Taxes



Our effective income tax rate for 2015 was a 12.2% tax benefit compared to a 36.5% tax expense for 2014.  The decrease in the effective income tax rate was primarily due to the reduction in value of goodwill which is non-deductible for income tax purposes.  See note 7 to our consolidated financial statements.

 

Discontinued Operations



Discontinued operations include operating results for both our subsea construction business and our conventional decommissioning business.  Losses from discontinued operations, net of tax, were $47.0 million during 2015, as compared to $23.0 million during 2014. The increase in the loss from discontinued operations is primarily due to the $34.6 million reduction in value of the marine vessels and equipment recorded during 2015. 



Liquidity and Capital Resources



During 2016, we generated net cash from operating activities of $61.3 million as compared to $632.6 million in 2015.  The decrease in net cash from operating activities is largely attributable to a decline in revenues.  Our primary liquidity needs are for working capital

26

 


 

and capital expenditures.  Our primary sources of liquidity are cash flows from operations and available borrowings under our credit facility.  We had cash and cash equivalents of $187.6 million December 31, 2016 as compared to $564.0 million at December 31, 2015.  During 2016, we made payments totaling $325.0 million on our revolving credit facility and currently have no outstanding debt balance under the facility.  At December 31, 2016, $57.3 million of our cash balance was held outside the United States.  Cash balances held in foreign jurisdictions could be repatriated to the United States; however, they would be subject to federal income taxes, less applicable foreign tax credits.  We have not provided U.S. income tax expense on earnings of our foreign subsidiaries because we expect to reinvest the undistributed earnings indefinitely. 



We spent $80.5 million of cash on capital expenditures during 2016.  Approximately $35.5 million was used to expand and maintain our Drilling Products and Services segment’s equipment inventory, and approximately $20.2 million, $20.9 million and $3.9 million was spent to expand and maintain the asset bases of our Onshore Completion and Workover Services, Production Services and Technical Solutions segments, respectively.



During the first quarter of 2016, we paid $12.1 million of dividends to stockholders.  We subsequently announced that the Company had eliminated the dividend program. 



At December 31, 2016, we had $37.1 million of letters of credit outstanding under our revolving credit facility.  In February 2017, we amended our credit facility.  The amendment, among other things, reduced the size of the credit facility from $400.0 million to $300.0 million (with a $100.0 million accordion feature) and amended the financial covenants, in part to suspend the interest coverage ratio until the third quarter of 2017.  Borrowings under the credit facility bear interest at LIBOR plus margins that depend on our credit rating.  Indebtedness under the credit facility is secured by substantially all of our assets, including the pledge of the stock of our principal domestic subsidiaries. The credit facility contains customary events of default and requires that we satisfy various financial covenants.  The credit facility also limits our ability to pay dividends or make distributions, make acquisitions, create liens or incur additional indebtedness.  At December 31, 2016, we were in compliance with all such covenants.



We have outstanding $500 million of 6 3/8% unsecured senior notes due 2019.  The indenture governing the 6 3/8% senior notes requires semi-annual interest payments on May 1 and November 1 of each year through the maturity date of May 1, 2019.  The indenture contains customary events of default and requires that we satisfy various covenants.    At December 31, 2016, we were in compliance with all such covenants.



We also have outstanding $800 million of 7 1/8% unsecured senior notes due 2021.  The indenture governing the 7 1/8% senior notes requires semi-annual interest payments on June 15 and December 15 of each year through the maturity date of December 15, 2021.  The indenture contains customary events of default and requires that we satisfy various covenants.  At December 31, 2016, we were in compliance with all such covenants.



The following table summarizes our contractual cash obligations and commercial commitments at December 31, 2016 (in thousands):

   



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual Obligations

 

Total

 

< 1 Year

 

1 - 3 Years

 

3 - 5 Years

 

More Than 5 Years

Long-term debt, including estimated interest
    payments

 

$

1,664,688 

 

$

88,875 

 

$

661,813 

 

$

914,000 

 

$

 -

Decommissioning liabilities, undiscounted

 

 

202,524 

 

 

20,453 

 

 

19,967 

 

 

2,113 

 

 

159,991 

Operating leases

 

 

129,006 

 

 

42,732 

 

 

44,257 

 

 

22,602 

 

 

19,415 

Other long-term liabilities

 

 

170,921 

 

 

 -

 

 

88,955 

 

 

20,989 

 

 

60,977 

Total

 

$

2,167,139 

 

$

152,060 

 

$

814,992 

 

$

959,704 

 

$

240,383 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



The table above reflects only contractual obligations at December 31, 2016 and excludes, among other things, (i) commitments made thereafter, (ii) options to purchase assets, (iii) contingent liabilities, (iv) capital expenditures that we plan, but are not committed, to make and (v) open purchase orders.



Critical Accounting Policies and Estimates



The accounting policies described below are considered critical in obtaining an understanding of our consolidated financial statements because their application requires significant estimates and judgments by management in preparing our consolidated financial statements.  Management’s estimates and judgments are inherently uncertain and may differ significantly from actual results achieved.  Management considers an accounting estimate to be critical if the following conditions apply:



·

the estimate requires significant assumptions; and

·

changes in estimate could have a material effect on our consolidated results of operations or financial condition; or

·

if different estimates that could have been selected had been used, there could be a material effect on our consolidated results of operations or financial condition.

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It is management’s view that the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate.  However, actual results can differ significantly from those estimates under different assumptions and conditions.  The sections below contain information about our most critical accounting estimates. 



Long-Lived Assets.  We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable.  We record impairment losses on long-lived assets used in operations when the fair value of those assets is less than their respective carrying amount.  Fair value is measured, in part, by the estimated cash flows to be generated by those assets.   Our cash flow estimates are based upon, among other things, historical results adjusted to reflect our best estimate of future market rates, utilization levels and operating performance.  Our estimates of cash flows may differ from actual cash flows due to, among other things, changes in economic conditions or changes in an asset’s operating performance.  Assets are generally grouped by subsidiary or division for the impairment testing, which represent the lowest level of identifiable cash flows.  Impairment testing for these long-lived assets is based on the consolidated entity.  Assets to be disposed of are reported at the lower of the carrying amount or fair value less estimated costs to sell.  Our estimate of fair value represents our best estimate based on industry trends and reference to market transactions and is subject to variability.  The oil and gas industry is cyclical and our estimates of the period over which future cash flows will be generated, as well as the predictability of these cash flows, can have a significant impact on the carrying value of these assets and, in periods of prolonged down cycles, may result in impairment charges.  During 2016, we recorded $169.9 million in expense in connection with the reduction in value of our long-lived assets across all of our operating segments.  See note 3 to our consolidated financial statements for further information about these impairments. 



Goodwill.  In assessing the recoverability of goodwill, we make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets.  We test goodwill for impairment in accordance with authoritative guidance related to goodwill and other intangibles, which requires that goodwill, as well as other intangible assets with indefinite lives, not be amortized but instead be tested annually for impairment or when changes in circumstances indicate that the carrying value may not be recoverable.  Our annual testing of goodwill is based on carrying value and our estimate of fair value as of October 1.  We estimate the fair value of each of our reporting units (which are consistent with our business segments) using various cash flow and earnings projections discounted at a rate estimated to approximate the reporting units’ weighted average cost of capital.  We then compare these fair value estimates to the carrying value of our reporting units.  If the fair value of the reporting unit exceeds the carrying amount, no impairment loss is recognized.  If the estimated fair value of the reporting unit is below the carrying value, then a second step must be performed to determine the goodwill impairment, if any.  In this second step, the estimated fair value is used as the purchase price in a hypothetical acquisition of the reporting unit.  The hypothetical purchase price is allocated to the reporting unit’s assets and liabilities, with the residual amount representing an implied fair value of the goodwill.  The carrying amount of the goodwill is then compared to the implied fair value of the goodwill for each reporting unit and is written down to the implied fair value amount, if lower.  We use all available information to estimate fair values of the reporting units, including discounted cash flows.  We engage third-party appraisal firms to assist in fair value determination of property, plant and equipment, intangible assets and any other significant assets or liabilities when appropriate.  Our estimates of the fair value of these reporting units represent our best estimates based on industry trends and reference to market transactions.  A significant amount of judgment is involved in performing these evaluations since the results are based on estimated future events.  During 2016, we recorded a reduction in value of goodwill of $330.5 million, of which $140.0 million related to impairment of the goodwill in our Onshore Completion and Workover Services segment and $190.5 million related to the impairment of goodwill in our Production Services segment.  See note 3 to our consolidated financial statements for further information about these impairments.



Income Taxes.  We use the asset and liability method of accounting for income taxes.  This method takes into account the differences between financial statement treatment and tax treatment of certain transactions.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Our deferred tax calculation requires us to make certain estimates about our future operations.  Changes in state, federal and foreign tax laws, as well as changes in our financial condition or the carrying value of existing assets and liabilities, could affect these estimates.  The effect of a change in tax rates is recognized as income or expense in the period that the rate is enacted.



Allowance for Doubtful Accounts.  We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of some of our customers to make required payments.  These estimated allowances are periodically reviewed on a case by case basis, analyzing the customer’s payment history and information regarding the customer’s creditworthiness known to us.  In addition, we record a reserve based on the size and age of all receivable balances against those balances that do not have specific reserves.  If the financial condition of our customers deteriorates, resulting in their inability to make payments, additional allowances may be required.



Revenue Recognition.  Our products and services are generally sold based upon purchase orders or contracts with customers that include fixed or determinable prices.  We recognize revenue when services or equipment are provided and collectability is reasonably assured.  We contract for a majority of our services on a day rate basis.  We rent products on a day rate basis, and revenue from the sale of equipment is recognized when the title to the equipment has transferred to the customer. 



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Self-Insurance.  We self-insure, through deductibles and retentions, up to certain levels for losses under our insurance programs.  We have elected to retain more risk by increasing our self-insurance levels.  We accrue for these liabilities based on estimates of the ultimate cost of claims incurred as of the balance sheet date.  We regularly review our estimates of reported and unreported claims and provide for losses through reserves.  We obtain actuarial reviews to evaluate the reasonableness of internal estimates for losses related to workers’ compensation, auto liability and group medical on an annual basis.  Our financial results could be impacted if litigation trends, claims settlement patterns and future inflation rates are different from our estimates.  



Off-Balance Sheet Arrangements



At December 31, 2016, we had no off-balance sheet arrangements.



Hedging Activities



At December 31, 2016, we had three interest rate swap agreements for notional amounts of $100 million each related to our 7 1/8% senior notes maturing in December 2021, whereby we were entitled to receive semi-annual interest payments at a fixed rate of 7 1/8% per annum and were obligated to make semi-annual interest payments at variable rates.   The variable interest rates, which were adjusted every 90 days, were based on LIBOR plus a fixed margin and were scheduled to terminate on December 15, 2021.  Subsequent to year-end, in January 2017, we sold these interest rate swaps to the counterparties for $0.8 million.



Recently Adopted and Issued Accounting Guidance



See Part II, Item 8, “Financial Statements and Supplementary Data – Note 1 – Summary of Significant Accounting Policies – Recently Issued Accounting Guidance.”



Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks associated with foreign currency fluctuations and changes in interest rates.  A discussion of our market risk exposure in financial instruments follows.



Foreign Currency Exchange Rate Risk



Because we operate in a number of countries throughout the world, we conduct a portion of our business in currencies other than the U.S. dollar.  The functional currency for our international operations, other than certain operations in the United Kingdom and Europe, is the U.S. dollar, but a portion of the revenues from our international operations is paid in foreign currencies.  The effects of foreign currency fluctuations are partly mitigated because local expenses of such international operations are also generally denominated in the same currency.  We continually monitor the currency exchange risks associated with all contracts not denominated in the U.S. dollar. 



Assets and liabilities of certain subsidiaries in the United Kingdom and Europe are translated at end of period exchange rates, while income and expenses are translated at average rates for the period.  Translation gains and losses are reported as the foreign currency translation component of accumulated other comprehensive loss in stockholders’ equity. 



We do not hold derivatives for trading purposes or use derivatives with complex features.  When we believe prudent, we enter into forward foreign exchange contracts to hedge the impact of foreign currency fluctuations.  We do not enter into forward foreign exchange contracts for trading purposes.  At December 31, 2016, we had no outstanding foreign currency forward contracts.



Interest Rate Risk



At December 31, 2016, our debt was comprised of the following (in thousands):





 

 

 

 

 

 



 

 

 

 

 

 



 

Fixed
Rate Debt

 

Variable
Rate Debt

6 3/8 % Senior Notes due 2019

 

$

500,000 

 

$

 -

7 1/8% Senior Notes due 2021

 

 

500,000 

 

 

300,000 

Total Debt

 

$

1,000,000 

 

$

300,000 



 

 

 

 

 

 



Variable debt of $300 million represents the portion of the $800 million aggregate principal amount of our 7 1/8% senior notes subject to the fixed-to-variable interest rate swap agreements.   Based on the amount of this debt outstanding at December 31, 2016, a 10% increase in the variable interest rate would increase our interest expense for the year ended December 31, 2016 by $1.7 million, while a 10% decrease would decrease our interest expense by $1.7 million.



29

 


 

Commodity Price Risk



Our revenues, profitability and future rate of growth significantly depend upon the market prices of oil and natural gas.  Lower prices may also reduce the amount of oil and gas that can economically be produced.  For additional information on the impact of changes in commodities prices on our business and prospects, see Item 1A to this Annual Report on Form 10-K.

30

 


 



Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm



The Board of Directors and Stockholders

Superior Energy Services, Inc.:



We have audited the accompanying consolidated balance sheets of Superior Energy Services, Inc. and subsidiaries as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2016.  In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule II, Valuation and Qualifying Accounts.  These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Superior Energy Services, Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.   Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.    

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Superior Energy Services, Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 23, 2017 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.



KPMG LLP





Houston, Texas

February 23, 2017





31

 


 









 

 

 

 

 



 

 

 

 

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2016 and 2015

(in thousands, except share data)





2016

 

2015



 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

187,591 

 

$

564,017 

Accounts receivable, net of allowance for doubtful accounts of $29,740 and

 

 

 

 

 

   $28,242 at December 31, 2016 and 2015, respectively

 

297,164 

 

 

428,514 

Income taxes receivable

 

101,578 

 

 

 -

Prepaid expenses

 

37,288 

 

 

42,298 

Inventory and other current assets

 

130,772 

 

 

165,062 

Assets held for sale

 

27,158 

 

 

95,234 

Total current assets

 

781,551 

 

 

1,295,125 



 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation and depletion

 

1,605,365 

 

 

2,123,291 

Goodwill

 

803,917 

 

 

1,140,101 

Notes receivable

 

56,650 

 

 

52,382 

Intangible and other long-term assets, net of accumulated amortization

 

222,772 

 

 

303,345 

Total assets

$

3,470,255 

 

$

4,914,244 



 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

94,831 

 

$

114,475 

Accrued expenses

 

218,192 

 

 

271,246 

Income taxes payable

 

694 

 

 

9,185 

Current portion of decommissioning liabilities

 

22,164 

 

 

19,052 

Current maturities of long-term debt

 

 -

 

 

29,957 

Liabilities held for sale

 

8,653 

 

 

4,661 

Total current liabilities

 

344,534 

 

 

448,576 



 

 

 

 

 

Deferred income taxes

 

243,611 

 

 

383,069 

Decommissioning liabilities

 

101,513 

 

 

98,890 

Long-term debt, net

 

1,284,600 

 

 

1,588,263 

Other long-term liabilities

 

192,077 

 

 

184,634 



 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock of $0.01 par value.  Authorized - 5,000,000 shares; none issued

 

 -

 

 

 -

Common stock of $0.001 par value

 

 

 

 

 

Authorized-250,000,000, Issued and Outstanding - 151,861,661 at December 31, 2016
Authorized-250,000,000, Issued and Outstanding - 150,861,500 at December 31, 2015

 

152 

 

 

151 

Additional paid in capital

 

2,691,553 

 

 

2,664,517 

Accumulated other comprehensive loss, net

 

(80,248)

 

 

(45,694)

Retained deficit

 

(1,307,537)

 

 

(408,162)

Total stockholders’ equity

 

1,303,920 

 

 

2,210,812 

Total liabilities and stockholders’ equity

$

3,470,255 

 

$

4,914,244