UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

______________________________________________

FORM 10-Q

______________________________________________

(Mark one)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2019~~2020



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-8182

PIONEER ENERGY SERVICES CORP.

(Exact name of registrant as specified in its charter)

____________________________________________



~~TEXAS~~DELAWARE		74-2088619
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

1250 N.E. Loop 410, Suite 1000 San Antonio, Texas		78209
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code: (855) 884-0575



Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
~~Common Stock~~	~~PES~~	~~New York Stock Exchange~~

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 x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x No o

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



Large accelerated filer	o	Accelerated filer	x
			o
Non-accelerated filer	ox	Smaller reporting company	ox

Emerging Growth Company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨

As of ~~April~~June 15, ~~2019,~~2020, there were ~~78,466,260~~1,048,185 shares of common stock, par value ~~$0.10~~$0.001 per share, of the registrant outstanding.

EXPLANATORY NOTE

As previously disclosed in the Current Report on Form 8-K filed by Pioneer Energy Services Corp. (the “Company”) on March 2, 2020, the Company commenced a voluntary restructuring under Chapter 11 of the U.S. Bankruptcy Code on March 1, 2020. The Company has had to devote a significant amount of time, resources and administrative support to simultaneously support managing the Company and managing its restructuring, while also monitoring how these ongoing processes may affect the disclosures to be included in this Form 10-Q and other reports; all of which were made more difficult due to the coronavirus (“COVID-19”) pandemic and disruptions associated with the COVID-19 pandemic. The Company was unable to file this Form 10-Q by the original deadline due to the outbreak of, and local, state and federal governmental responses to, the COVID-19 pandemic. Office closures limited access to the Company’s facilities by the Company’s financial reporting and accounting staff, as well as other advisors involved in the preparation of this Form 10-Q, led to communications and similar delays among such persons, and impacted our ability to fulfill required preparation and review processes and procedures with respect to this Form 10-Q, thus additional time was required to complete this Form 10-Q. As previously disclosed in the Current Report on Form 8-K filed by the Company on May 15, 2020, the Company announced that it was delaying the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 for the foregoing reasons in reliance on an order (Release No. 34-88465) issued by the Securities and Exchange Commission that provides conditional relief to public companies that are unable to timely comply with a filing deadline due to circumstances related to the COVID-19 pandemic.

As previously disclosed in the Current Report on Form 8-K filed by the Company on June 2, 2020, the Company announced that it had emerged from Chapter 11 (the “Emergence 8-K”). As more fully described in the Emergence 8-K, pursuant to the Chapter 11 plan of reorganization approved by the Bankruptcy Court, on May 29, 2020, among other things:

the Company converted from a Texas corporation to a Delaware corporation;

all the outstanding common stock was canceled, and holders thereof received an aggregate of 5.75% of the proforma common equity (subject to dilution from the convertible notes and new management incentive plan), at a conversion rate of 0.0006849838 new shares for each old share;

the $300 million principal amount of the Company’s Senior Notes due 2022 was canceled in exchange for 94.25% of the proforma common equity (subject to dilution from the convertible notes and new management incentive plan);

the amounts outstanding under the Company’s debtor-in-possession credit facility were repaid and the existing term loan was repaid with proceeds from the issuance of the senior secured notes and convertible notes referenced below;

the Company entered into a $75 millionsenior secured asset-based revolving credit agreement;

the Company issued $78,125,000 of its floating rate senior secured notes due 2025; and

the Company issued $129,771,000 aggregate principal amount of its 5% convertible senior unsecured pay-in-kind notes due 2025, which are convertible into 75 shares of Common Stock per $1,000 principal amount of the convertible notes, subject to customary anti-dilution adjustments, which notes have the right to vote together with the common stock on an “as-converted” basis on all matters to be voted on by the Company’s stockholders.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES (DEBTOR IN POSSESSION)

CONDENSED CONSOLIDATED BALANCE SHEETS


	March 31, 2019			December 31, 2018			March 31, 2020			December 31, 2019
	(unaudited)			(audited)			(unaudited)			(audited)
	(in thousands, except share data)						(in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	26,855		$	53,566		$	15,457		$	24,619
Restricted cash	998			998			998			998
Receivables:
Trade, net of allowance for doubtful accounts	90,816			76,924			64,836			79,135
Unbilled receivables	27,535			24,822			12,015			12,590
Insurance recoveries	23,427			23,656			22,379			22,873
Other receivables	6,307			5,479			3,693			8,928
Inventory	20,229			18,898			21,619			22,453
Assets held for sale	4,794			3,582			1,825			3,447
Prepaid expenses and other current assets	7,307			7,109			8,129			7,869
Total current assets	208,268			215,034			150,951			182,912
Property and equipment, at cost	1,125,170			1,118,215			1,083,512			1,119,546
Less accumulated depreciation	607,403			593,357			643,558			648,376
Net property and equipment	517,767			524,858			439,954			471,170
Deferred income taxes							9,264			11,540
Operating lease assets	9,423			—			7,972			7,264
Other noncurrent assets	1,633			1,658			7,593			1,068
Total assets	$	737,091		$	741,550		$	615,734		$	673,954

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	38,163		$	34,134		$	28,774		$	32,551
Deferred revenues	1,659			1,722			997			1,339
Commitment premium							9,584			—
Debtor in possession financing							4,000			—
Accrued expenses:
Payroll and related employee costs	24,699			24,598
Employee compensation and related costs							10,300			13,781
Insurance claims and settlements	22,819			23,593			22,239			22,873
Insurance premiums and deductibles	5,543			5,482			5,831			5,940
Interest	1,460			6,148			107			5,452
Other	10,233			9,091			11,196			9,645
Total current liabilities	104,576			104,768			93,028			91,581
Long-term debt, less unamortized discount and debt issuance costs	465,315			464,552			170,921			467,699
Noncurrent operating lease liabilities	6,929			—			6,434			5,700
Deferred income taxes	4,844			3,688			3,256			4,417
Other noncurrent liabilities	4,460			3,484			383			481
Total liabilities	586,124			576,492
Commitments and contingencies (Note 11)
Shareholders’ equity:
Total liabilities not subject to compromise							274,022			569,878
Commitments and contingencies (Note 12)
Liabilities subject to compromise							306,419			—
Stockholders’ equity:
Preferred stock, 10,000,000 shares authorized; none issued and outstanding	—			—			—			—
Common stock $.10 par value; 200,000,000 shares authorized; 78,456,260 and 78,214,550 shares outstanding at March 31, 2019 and December 31, 2018, respectively	7,933			7,900
Common stock $.10 par value; 200,000,000 shares authorized; 79,579,571 and 79,202,216 shares outstanding at March 31, 2020 and December 31, 2019, respectively							8,062			8,008
Additional paid-in capital	551,382			550,548			553,484			553,210
Treasury stock, at cost; 874,391 and 789,532 shares at March 31, 2019 and December 31, 2018, respectively	(5,085		)	(4,965		)
Treasury stock, at cost; 1,041,565 and 877,047 shares at March 31, 2020 and December 31, 2019, respectively							(5,097		)	(5,090		)
Accumulated deficit	(403,263		)	(388,425		)	(521,156		)	(452,052		)
Total shareholders’ equity	150,967			165,058
Total liabilities and shareholders’ equity	$	737,091		$	741,550
Total stockholders’ equity							35,293			104,076
Total liabilities and stockholders’ equity							$	615,734		$	673,954

~~Wireline Services~~. Oil and gas exploration and production companies require wireline services to better understand the reservoirs they are drilling or producing, and use logging services to accurately characterize reservoir rocks and fluids. To complete a cased-hole well, the production casing must be perforated to establish a flow path between the reservoir and the wellbore. We use our fleet of wireline units to provide these important logging and perforating services in addition to a range of other mechanical services that are needed in order to place equipment in or retrieve equipment or debris from the wellbore, install bridge plugs and control pressure. ~~As of March 31, 2019, we have a fleet of 93 wireline units, which are deployed through 12 operating locations in the Gulf Coast, Mid-Continent and Rocky Mountain states.~~


◦	Well Servicing. Our fleet consists of 111 rigs with 550 horsepower and 12 rigs with 600 horsepower which are deployed through 6 operating locations concentrated in Texas, as well as in North Dakota and Mississippi.

◦

Wireline Services. Our fleet of 93 wireline units, including nine units that offer greaseless electric wireline used to reach further depths in longer laterals and two greaseless, EcoQuiet^TM units designed to reduce noise when operating in proximity to urban areas, is deployed through 7 operating locations concentrated in Texas and the Rocky Mountain and Mid-Continent regions, as well as in Louisiana and North Dakota.

~~Coiled Tubing Services.~~ Coiled tubing is another important element of the well servicing industry that allows operators to continue production during service operations on a well under pressure without shutting in the well, thereby reducing the risk of formation damage. Coiled tubing services involve the use of a continuous flexible metal pipe which is spooled on a large reel and inserted into the wellbore to perform a variety of oil and natural gas well applications, such as wellbore clean-outs, nitrogen jet lifts, through-tubing fishing, formation stimulation utilizing acid, chemical treatments and fracturing. Coiled tubing is also used for a number of horizontal well applications, such as milling temporary plugs between frac stages. As of March 31, 2019, we have a current fleet of nine coiled tubing units, the majority of which offer larger diameter coil (larger than two inches), deployed through two operating locations that provide services in Texas, Wyoming and surrounding areas.


◦	Coiled Tubing Services. Our fleet consists of 4 small-diameter and 5 large-diameter (larger than two inches) units, which were deployed through 2 operating locations providing services in Texas, Wyoming and surrounding areas. In April 2020, we closed our coiled tubing operations and idled all our coiled tubing equipment, which were subsequently placed as held for sale.

Pioneer Energy Services Corp. was incorporated under the laws of the State of Texas in 1979 as the successor to a business that had been operating since 1968. Since then, we have significantly expanded and transformed our business through acquisitions and organic growth. Upon emergence from Chapter 11 in May 2020, we converted from a Texas corporation to a Delaware corporation.

Our business is comprised of two business lines — Drilling Services and Production Services. We report our Drilling Services business as two reportable segments: (i) Domestic Drilling and (ii) International Drilling. We report our Production Services business as three reportable segments: (i) Well Servicing, (ii) Wireline Services, and (iii) Coiled Tubing Services. Financial information about our operating segments is included in Note ~~10,~~11, Segment Information, of the Notes to Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Pioneer Energy Services Corp.’s corporate office is located at 1250 N.E. Loop 410, Suite 1000, San Antonio, Texas 78209. Our phone number is (855) 884-0575 and our website address is www.pioneeres.com. We make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (SEC). Information on our website is not incorporated into this report or otherwise made part of this report.

Market Conditions ~~in Our Industry~~and Outlook

Industry Overview — Demand for oilfield services offered by our industry is a function of our clients’ willingness and ability to make operating expenditures and capital expenditures to explore for, develop and produce hydrocarbons, which is primarily driven by current and expected oil and natural gas prices.

Our business is influenced substantially by exploration and production companies’ spending that is generally categorized as either a capital expenditure or an operating expenditure. Capital expenditures for the drilling and completion of exploratory and development wells in proven areas are more directly influenced by current and expected oil and natural gas prices and generally reflect the volatility of commodity prices. In contrast, operating expenditures for the maintenance of existing wells, for which a range of production services are required in order to maintain production, are relatively more stable and predictable.

Drilling and production services have historically trended similarly in response to fluctuations in commodity prices. However, because exploration and production companies often adjust their budgets for exploration and development drilling first in response to a change in commodity prices, the demand for drilling services is generally impacted first and to a greater extent than the demand for production services which is more dependent on ongoing expenditures that are necessary to maintain production. Additionally, within the range of production services businesses, those that derive more revenue from ~~production related~~production-related activity, as opposed to completion of new wells, tend to be less affected by fluctuations in commodity prices and temporary reductions in industry activity.

However, in a severe downturn that is prolonged, both operating and capital expenditures are significantly reduced, and the demand for all our service offerings is significantly impacted. After a prolonged downturn among the production services, the demand for ~~completion-oriented~~workover services generally improves first, followed by the demand for completion-oriented services as exploration and production companies begin to complete wells that were previously drilled but not completed during the downturn, and to complete newly drilled wells as the demand for drilling services improves during recovery.

From time to time, temporary regional slowdowns or constraints occur in our industry due to a variety of factors, including, among others, infrastructure or takeaway capacity limitations, labor shortages, increased regulatory or environmental pressures, or an influx of competitors in a particular region. Any of these factors can influence the profitability of operations in the affected region. However, term contract coverage for our drilling services business and the mobility of all our equipment between regions reduces our exposure to the impact of regional constraints and fluctuations in demand.

Technological advancements and trends in our industry also affect the demand for certain types of equipment, and can affect the overall demand for the services our industry provides. Enhanced directional and horizontal drilling techniques have allowed exploration and production operators to drill increasingly longer lateral wellbores which enable higher hydrocarbon production per well, and reduce the overall number of wells needed to achieve the desired production. This trend toward longer lateral wellbores also increases demand for the more specialized equipment, such as high-spec drilling rigs, higher horsepower well servicing rigs equipped with taller masts, larger diameter coiled tubing units, and other higher power ancillary equipment, which is needed in order to drill, complete and provide services to the full length of the wellbore. Our domestic drilling and production services fleets are highly capable and designed for operation in today’s long lateral, pad-oriented environment.

For additional information concerning the potential effects of volatility in oil and gas prices and other industry trends, see Item 1A – “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019, filed with the SEC on March 6, 2020, as amended by Form 10-K/A filed with the SEC on April 28, 2020.

Market Conditions and Outlook — ~~Our industry experienced~~Since January 2020, the COVID-19 pandemic and fear of further spread of the coronavirus have caused disruptions in international economies and international financial and oil markets, including a ~~severe down cycle from late 2014 through 2016, during which WTI~~significant decline in the price of oil. The economic downturn caused by the COVID-19 pandemic has weakened demand for oil, and after OPEC and a group of other oil-producing nations led by Russia failed on March 6, 2020 to agree on oil production cuts, Saudi Arabia announced that it would cut oil prices ~~dipped below $30 per barrel~~and increase production. In April 2020, OPEC and other oil-producing nations, including Russia, came to an agreement to cut limited amounts of production in ~~early 2016. A modest recovery~~May and June 2020. The market competition between OPEC and non-OPEC countries and the impact of the COVID-19 pandemic simultaneously increased oil supply and decreased global demand for oil. These extreme supply and demand dynamics caused significant crude oil price declines, negatively impacting our industry’s oil producers who responded with significant cuts in their recent and projected spending. We cannot predict whether or when the current imbalance in supply and demand will correct, and when and to what extent crude oil production activities will return to normalized levels.

Additionally, because our business depends on the level of spending by our clients, we are also affected by our clients’ ability to access the capital markets. After several consecutive years without significant improvement in commodity prices, began in the latter half of 2016 with WTI oil prices steadily increasing from just under $50 per barrel at the end of June 2016 to approximately $60 per barrel at the end of 2017. In 2018, WTI oil prices continued to increasemany exploration and production companies have limited their spending to a ~~high~~level which can be supported by net operating cash flows alone, as access to the capital markets through debt or equity financings has become more challenging in our industry. This challenge has increased recently due to the major stock market and bond market indices experiencing substantial declines, with such declines intensifying, and elevated levels of ~~$75 per barrel~~volatility, in ~~October, but then decreased to $45 per barrel at the end of 2018. The average WTI oil price in the first quarter of 2019 increased to approximately $55 per barrel.~~2020.

The trends in spot prices of WTI crude oil and Henry Hub natural gas, and the resulting trends in domestic land rig counts (per Baker Hughes) and domestic well servicing rig counts (per Guiberson/Association of Energy Service Companies) ~~over the last three years~~from March 2019 through March 2020 are illustrated in the graphs below.

The trends in commodity pricing and domestic rig counts ~~over the last 12 months~~from January through May 2020 are ~~illustrated~~illustrated below:

The recent commodity price environment and global oversupply of oil has resulted in an oversupply of equipment in our industry, declining rig counts and dayrates, and substantially reduced activity for all our service offerings. Oil and gas exploration and production companies have reduced their previously planned capital spending programs for 2020, thereby reducing demand for our services. In March 2020, many operators began to curtail operations and several of our clients terminated their drilling contracts with us in April and May 2020.

AsAt the end of March 31, ~~2019, 24~~2020, 15 of our 25 drilling rigs ~~are~~were earning revenues, 2011 of which ~~are~~were under term contracts, ~~which if not canceled or renewed prior to~~and 3 more were under contract but with suspended operations. By the end of ~~their terms, will expire as follows:~~

Spot Market Contracts Term Contract Expiration by Period
Total Term Contracts Within
6 Months 6 Months
to 1 Year 1 Year to
18 Months 18 Months
to 2 Years 2 to 4 Years
Domestic rigs 3
14
6
6
—
1
1
International rigs 1
6
2
1
2
1
—
4
20
8
7
2
2
1

Our international drilling contracts are cancelable by our clients without penalty, although the contracts require 15 to 30 days notice and payment for demobilization services. We are actively marketing our idle rig in Colombia, and we also continue to evaluate the possibility of selling some or allMay 2020, 10 of our ~~assets~~drilling rigs were earning revenues, 3 of which were earning but not working, with an aggregate average term remaining of approximately 10 months. Utilization of our production services fleets also dropped significantly in ~~Colombia.~~

~~During the quarter ended March 31, 2019, our well servicing rig hours increased by 7%, while the number of wireline jobs completed~~response to recent market conditions, and ~~revenue days for~~in April 2020, we closed our coiled tubing ~~services were consistent, as compared to the fourth quarter of 2018. However, average revenue rates for~~operations and idled all our coiled tubing equipment, which were subsequently placed as held for sale.

While the current industry conditions impacted our results for only the latter portion of the first quarter of 2020, we have experienced and wireline services provided during this same period increased by 15% and 6% (on a per job and per day basis, respectively), while average revenues per hour for our well servicing decreased slightly by 2%. The increase in coiled tubing revenues is primarily attributable to an increaseare projecting continued declines in the ~~proportion of work performed by~~near term. We are currently focusing our large-diameter coiled tubing units, which generally earn higher revenue rates as compared to smaller diameter coiled tubing units, while the increases in wireline and well servicing revenues were primarily due to an increase in completion activity.

The level of exploration and production activity within a region can fluctuate due to a variety of factors which may directly or indirectly impact our operations in the region. Despite the recovery of demand experienced in onshore markets, offshore activity remained depressed, and as a result, we exited the offshore wireline and coiled tubing market in the second quarter of 2018. In the Permian Basin, limited takeaway capacity has led to price discountsefforts on crude oil that could continue to impact activity and near-term growth in the region; however, eight of our nine drilling rigs currently operating in this region are under term contracts, which helps to reduce our exposure to the impact of pricing fluctuations in this region. In Colorado, Senate Bill 19-181 was enacted in April, which gives the state’s oil and gas conservation commissionreducing costs and the ~~state’s local governments more authority over oil~~realignment of certain businesses, while maintaining essential functions and ~~gas operations, and which could lead to newly imposed regulations that may impede our clients’ ability to operate in~~readiness for when the region, and similarly reduce demand for the services that we provide in this region. At the end of March 2019, we were operating eleven wireline units and five well servicing rigs in Colorado, which we believe can be redeployed to other markets should future regulations negatively impact demand.

~~Although we expect a highly competitive environment to continue in all the areas in which we operate, we~~market improves. We believe our high-quality equipment, ~~and~~ services, and ~~our~~ excellent safety record position us well to ~~compete.~~compete when our industry recovers.

2834

Liquidity and Capital Resources

~~Sources of Capital Resources~~

~~Our principal sources of liquidity currently consist of:~~

~~total cash and cash equivalents ($27.9 million as of March 31, 2019);~~

~~cash generated from operations;~~

~~proceeds from sales of assets; and~~

~~the availability under our asset-based lending facility ($58.7 million as of March 31, 2019).~~Liquidity Overview

Our asset-based lending facility (the “ABL Facility”) provides for a senior secured revolving asset-based credit facility, with sub-limits for letters of credit, of up to a current aggregate commitment amount of $75 million, subject to availability under a borrowing base generally comprised of a percentage of our accounts receivable and inventory. The ABL Facility is generally set to mature 90 days prior to the maturitycompletion of the ~~Term Loan, subject to certain circumstances, including the future repayment, extinguishment or refinancing of our Term Loan and/or Senior Notes prior to their respective maturity dates.~~

We have not drawn upon our ABL Facility to date. As of March 31, 2019, we had $9.7 million in committed letters of credit, which, after borrowing base limitations, resulted in borrowing availability of $58.7 million. Borrowings available under the ABL Facility are available for general corporate purposes, and there are no limitations on our ability to access the borrowing capacity provided there is no default and compliance with the covenants under the ABL Facility is maintained. Additional information regarding these covenants is provided in the ~~Debt Compliance Requirements~~ ~~section below.~~

~~In the future, we may also consider equity and/or debt offerings, as appropriate, to meet our liquidity needs. On May 22, 2018, we filed a registration statement that permits~~Chapter 11 Cases has allowed us to sell equity or debt in one or more offerings up to a total dollar amount of $300 million. As of March 31, 2019, the entire $300 million under the shelf registration statement is available for equity or debt offerings, subject to the limitations imposed bysignificantly de-leverage our ~~Term Loan, ABL Facility~~balance sheet, reduce overall indebtedness and ~~Senior Notes.~~

reduce our future cash interest obligations. We currently expect that cash and cash equivalents, cash generated from operations, proceeds from sales of assets, and available ~~borrowings~~funds under our current ABL Credit Facility are adequate to cover our liquidity requirements for at least the next 12 months. However, our ability to maintain sufficient liquidity and compliance with our debt instruments over the next 12 months is dependent upon the level of demand for our products and services, the level of spending by our clients, our ability to collect our receivables and access borrowings under our current ABL Credit Facility, the supply and demand for oil, oil and gas prices, general economic and market conditions and other factors which are beyond our control.

Our ability to grow, make capital expenditures and service our debt depends primarily upon the level of demand for our products and services, the level of spending by our clients, our ability to collect our receivables and access borrowings under our current ABL Credit Facility, the supply and demand for oil, and oil and gas prices. The market competition between OPEC and non-OPEC countries and the impact of the COVID-19 pandemic has caused significant crude oil price declines, negatively impacting our industry’s oil producers who responded with significant cuts in their recent and projected spending. A continued decrease in the demand for oil, combined with current depressed oil prices, has affected and could continue to negatively affect the amount of cash we generate and have available for capital expenditures and debt service. The decrease in demand for our products and services has resulted in decreased availability under our ABL Credit Facility, which at May 31, 2020 was $20.3 million.

In addition, as a result of current market conditions, certain of our clients are facing financial pressures and liquidity issues. There can be no assurance that one or more of our clients will not delay or default on payments owed to us or file for bankruptcy protection, in which case we may be unable to collect all, or any portion, of the accounts receivable owed to us by such clients. Delays or defaults in payments of accounts receivable owed to us may also adversely affect our borrowing base and our ability to borrow under our ABL Credit Facility.

Sources of Capital Resources

Our principal sources of liquidity currently consist of:

cash and cash equivalents;

cash generated from operations; and

the availability under our current ABL Credit Facility.

In the future, we may also consider equity and/or debt offerings, as appropriate, to meet our liquidity needs. However, our ability to access the capital markets by issuing debt or equity securities will be dependent on market conditions, our financial condition, and other factors beyond our control. Additionally, the current ABL Credit Facility and the indentures for our Convertible Notes and Senior Secured Notes contain covenants that limit our ability to incur additional indebtedness, the incurrence of which would also first require the approval of two of our principal stockholders.

Debtor-in-Possession Financing — On March 3, 2020, with the approval of the Bankruptcy Court, we entered into the DIP Facility and used the proceeds thereunder to refinance all outstanding letters of credit under the Prepetition ABL Facility in connection with the termination of the Prepetition ABL Facility and to pay fees and expenses in connection with the Chapter 11 proceedings and transaction and professional fees related thereto. Upon emergence from Chapter 11 on May 29, 2020, the DIP Facility was paid in full and terminated, and we entered into a new ABL Credit Facility, as described below. For a description of our Prepetition ABL Facility and the DIP Facility, see Note 6, Debt and DIP Financing,of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 Financial Statements.

ABL Credit Facility — On the Effective Date, pursuant to the terms of the Plan, we entered into a senior secured asset-based revolving credit agreement in an aggregate amount of $75 million among us and our domestic subsidiaries as borrowers (the “Borrowers”), the lenders party thereto and PNC Bank, National Association as administrative agent. Among other things, proceeds of loans under the ABL Credit Facility may be used to pay fees and expenses associated with the ABL Credit Facility and finance ongoing working capital and general corporate needs.

The maturity date of loans made under the ABL Credit Facility is the earliest of 90 days prior to maturity of the Senior Secured Notes or the Convertible Notes (both of which are described below in the section entitled Debt Instruments and

Compliance Requirements) and May 29, 2025. Borrowings under the ABL Credit Facility will bear interest at a rate of (i) the LIBOR rate, with a LIBOR rate floor of 0%, plus an applicable margin in the range of 175 to 225 basis points per annum, or (ii) the base rate plus an applicable margin in the range of 75 to 125 basis points per annum, in both cases based on the average excess availability, as defined in the ABL Credit Facility.

The ABL Credit Facility is guaranteed by the Borrowers and is secured by a first lien on the Borrowers’ accounts receivable and inventory, and the cash proceeds thereof, and a second lien on substantially all of the other assets and properties of the Borrowers. The ABL Credit Facility limits our annual capital expenditures to 125% of the budget set forth in the projections for any fiscal year and provides that if our availability falls below $11.25 million (15% of the maximum revolver amount), we will be required to comply with a fixed charge coverage ratio of 1.0 to 1.0, all of which is defined in the ABL Credit Facility. If compliance with the fixed charge coverage ratio were required as of the date hereof, we do not expect, based on our current performance, that we would be in compliance with such ratio, which would constitute a default under the ABL Credit Facility and cause cross-defaults of our other debt instruments.

As of May 31, 2020, we had no borrowings and approximately $7.1 million in outstanding letters of credit under the ABL Credit Facility and subject to the availability requirements in the ABL Credit Facility, based on eligible accounts receivable and inventory balances at May 31, 2020, availability under the ABL Credit Facility was $20.3 million, which our access to would be limited by our requirement to maintain 15% available or comply with a fixed charge coverage ratio, as described above.

Uses of Capital Resources

Our principal liquidity requirements are currently for:

working capital needs;

~~debt service;~~capital expenditures; and

debt service.

Our working capital ~~expenditures.~~

~~Our operations have historically generated cash flows sufficient~~needs typically fluctuate in relation to ~~meet our requirements for debt service~~activity and ~~normal capital expenditures. However,~~pricing. Following a sustained period of low activity, our working capital ~~requirements~~needs generally increase ~~during periods when rig construction projects~~as we invest in reactivating previously idle equipment and in purchases of inventory and supplies for expected increasing activity. Our capital requirements to maintain our equipment also fluctuate in relation to activity, and increase following a period of sustained low activity. Our capital requirements are ~~in progress or~~also increased during periods of expansion, ~~in our production services business,~~ at which times we have been more likely to access capital through equity or debt financing. ~~Additionally, our working capital needs may increase in periods of increasing activity following a sustained period of low activity.~~ During periods of sustained low activity and pricing, when our cash flow from operations are negatively impacted, we may also access additional capital through the use of available funds under ~~our~~the ABL Credit Facility.

Working Capital — Our working capital ~~was $103.7 million at March 31, 2019, compared to $110.3 million at December 31, 2018. Our~~and current ratio, which we calculate by dividing current assets by current liabilities, was ~~2.0 at~~as follows as of March 31, ~~2019, as compared to 2.1 at~~2020 and December 31, ~~2018. The changes in the components of our working capital were as follows~~2019 (amounts in ~~thousands), and as described below:~~thousands, except current ratio):

March 31,
2019 December 31,
2018 Change
Cash and cash equivalents $ 26,855
$ 53,566
$ (26,711 )
Restricted cash 998
998
—
Receivables:
Trade, net of allowance for doubtful accounts 90,816
76,924
13,892
Unbilled receivables 27,535
24,822
2,713
Insurance recoveries 23,427
23,656
(229 )
Other receivables 6,307
5,479
828
Inventory 20,229
18,898
1,331
Assets held for sale 4,794
3,582
1,212
Prepaid expenses and other current assets 7,307
7,109
198
Current assets 208,268
215,034
(6,766 )
Accounts payable 38,163
34,134
4,029
Deferred revenues 1,659
1,722
(63 )
Accrued expenses:
Payroll and related employee costs 24,699
24,598
101
Insurance claims and settlements 22,819
23,593
(774 )
Insurance premiums and deductibles 5,543
5,482
61
Interest 1,460
6,148
(4,688 )
Other 10,233
9,091
1,142
Current liabilities 104,576
104,768
(192 )
Working capital $ 103,692
$ 110,266
$ (6,574 )



	March 31, 2020		December 31, 2019		Change
Current assets	$	150,951	$	182,912	$	(31,961	)
Current liabilities	93,028		91,581		1,447
Working capital	$	57,923	$	91,331	$	(33,408	)
Current ratio	1.6		2.0		(0.4		)

~~Cash~~Our current assets decreased by $32.0 million during 2020, primarily related to a $14.9 million decrease in total trade and ~~cash equivalents~~— ~~The change~~unbilled receivables, a $9.2 million decrease in cash and cash equivalents, ~~during 2019 is primarily due to $16.8~~and a $5.2 million ~~of cash used for the purchase of property and equipment as well as $10.8 million of cash used~~decrease in ~~operating activities, offset slightly by $1.0 million of proceeds from the sale of property and equipment.~~

other receivables.

~~Trade and unbilled receivables~~—The net ~~increase~~decrease in our total trade and unbilled receivables during ~~2019~~2020 is primarily due to ~~lengthened collection cycles in our domestic segments,~~ the ~~timing of the billing and collection cycles for long-term drilling contracts in Colombia, and the 4% increase~~12% decrease in our revenues during the quarter ended March 31, ~~2019,~~2020, as compared to the quarter ended December 31, ~~2018.~~2019. Our domestic trade receivables generally turn over within 60 days, and our Colombian trade receivables generally turn over within 120 days.

~~Inventory —~~ The ~~increase~~decrease in ~~inventory~~cash and cash equivalents during ~~2019~~2020 is primarily due to ~~an increase~~$7.5 million of cash used for the purchase of property and equipment and $5.4 million of cash used in ~~inventory~~operating activities, offset in part by $4.0 million of proceeds from the issuance of our DIP facility.

The decrease in other receivables during 2020 is primarily due to the decrease in recoverable taxes for our international operations as credits were applied during 2020 to reduce import taxes payable.

Our current liabilities increased by $1.4 million during 2020, primarily related to the $9.6 million Commitment Premium liability incurred pursuant to the Backstop Commitment Agreement entered into in February 2020 and ~~purchases~~$4.0 million of ~~supplies and job materials for~~borrowings under our ~~wireline operations.~~

~~Assets held for sale~~— As of March 31, 2019 and December 31, 2018, our condensed consolidated balance sheet reflects assets held for sale of $4.8 million and $3.6 million, respectively, which includes the fair value of one domestic SCR drilling rig and related spare equipment and three coiled tubing units. Additionally, our March 31, 2019 assets held for sale also includes the fair value of a building for one closed wireline location, 12 wireline units and spare coiled tubing equipment which were designated as held for sale in the first quarter of 2019. ForDIP Facility. (For additional information concerning our bankruptcy proceedings under Chapter 11, see Note 4,2, ~~Property~~Chapter 11 Cases and ~~Equipment~~Subsequent Events,of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 Financial Statements~~, of this Quarterly Report on Form 10-Q.~~

~~Accounts payable —~~ ~~Our~~.) These increases more than offset a $5.3 million decrease in accrued interest expense as well as decreases in accounts payable ~~generally turn over within 90 days.~~ and accrued employee compensation, as described further below.

Our accrued interest decreased during 2020 because the Senior Notes stopped accruing interest as of March 1, 2020, in accordance with the terms of the Plan.

The ~~increase~~$3.8 million decrease in accounts payable during ~~2019~~2020 is primarily due to ~~lengthened payment cycles,~~ the ~~4% increase~~7% decrease in our operating costs for the quarter ended March 31, ~~2019~~2020 as compared to the quarter ended December 31, ~~2018, and a $1.5 million increase in our accruals for capital expenditures.~~

~~Accrued payroll and related employee costs —~~ ~~The change in accrued payroll and related employee costs during~~ 2019 ~~primarily resulted from an increase in accrued costs due to~~as well as the timing of ~~pay periods~~payments at each period-end.

The decrease in accrued employee compensation and related costs during 2020 resulted from a decrease in ~~annual~~accrued cash incentive compensation associated with the $3.5 million payment of ~~2018 annual~~fourth quarter 2019 bonuses, which ~~were fully accrued at December 31, 2018 and~~ were paid in the first quarter of ~~2019.~~

~~Accrued interest~~— ~~The decrease in accrued interest expense during 2019 is primarily due to~~2020, and the ~~payment of interest on our Senior Notes which is due semi-annually on March 15 and September 15.~~

~~Other accrued expenses~~— ~~The increase in other accrued expenses during 2019 is primarily due to the recognition of $2.5 million of current operating lease liabilities upon our adoption of ASU No. 2016-02,~~ ~~Leases, and its related amendments, as of January 1, 2019. For additional information about adoption of this standard, see Note 1,~~ ~~Organization and Summary of Significant Accounting Policies~~ ~~and Note 3,~~ ~~Leases, of the Notes to Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1,~~ ~~Financial Statements, of this~~ ~~Quarterly Report on Form 10-Q. The increase is partially offset, however, by a decrease in property and sales tax accruals due to the timing of payments.~~

~~Debt and Other Contractual Obligations —~~ ~~The following table includes information about the amount and timing~~suspension of our ~~contractual obligations at March 31, 2019 (amounts are undiscounted and in thousands):~~

Payments Due by Period
Contractual Obligations Total Within 1 Year 2 to 3 Years 4 to 5 Years Beyond 5 Years
Debt $ 475,000
$ —
$ 475,000
$ —
$ —
Interest on debt 104,213
36,225
67,988
—
—
Purchase commitments 9,679
9,679
—
—
—
Operating leases 10,542
2,878
3,806
2,362
1,496
Incentive compensation 23,630
8,370
11,824
3,436
—
$ 623,064
$ 57,152
$ 558,618
$ 5,798
$ 1,496

~~Debt —~~ Debt obligations at March 31, 2019 consist of $300 million of principal amount outstanding under our Senior Notes which mature on March 15, 2022 and $175 million of principal amount outstanding under our Term Loan which is expected to mature December 14, 2021. As of March 31, 2019, we had no debt outstanding under our ABL Facility.

~~Interest on debt~~— Interest payment obligations on our Senior Notes are calculated based on the coupon interest rate of 6.125% due semi-annually in arrears on March 15 and September 15 of each year until maturity on March 15, 2022. Interest payment obligations on our Term Loan were estimated based on (1) the 10.2% interest rate that was in effect at March 31, 2019, and (2) the principal balance of $175 million at March 31, 2019, and assuming repayment of the outstanding balance occurs at December 14, 2021.

~~Purchase commitments —~~ Purchase commitments generally relate to capital projects for the repair, upgrade and maintenance of our equipment, the construction or purchase of new equipment, and purchase orders for various job and inventory supplies. At March 31, 2019, our purchase commitments primarily pertain to $3.6 million of service equipment for our coiled tubing operations and $2.7 million of inventory and job supplies for our coiled tubing operations. Other purchase commitments include drilling equipment on order as well as various refurbishments and upgrades to our drilling and production services fleets.

~~Operating leases —~~ ~~Our operating lease obligations relate to long-term lease agreements for office space, operating facilities, field personnel housing, and office equipment.~~

~~Incentive compensation —~~ ~~Incentive compensation is payable to our employees, generally contingent upon their continued employment through the date of each respective award’s payout. A portion of our long-term~~ incentive compensation is performance-based and therefore the final amount will be determined based on our actual performance relative to a pre-determined peer group over the performance period. In April 2019, we determined that 175% of the target number of phantom stock unit awards granted during 2016 were earned based on the Company’s achievement of the performance measures, as compared to the predefined peer group, which resulted in an aggregate cash payment of $3.5 million to settle these awards, and which is includedplan beginning in the ~~table above as an obligation due within one year.~~

~~Debt Compliance Requirements —~~ ~~The following is a summary~~first quarter of ~~our debt compliance requirements including covenants, restrictions and guarantees, all of which are described in more detail in Note 6,~~ ~~Debt, and Note 12,~~ ~~Guarantor/Non-Guarantor~~

~~Condensed Consolidating Financial Statements, of the Notes to Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1,~~ ~~Financial Statements, of this Quarterly Report on Form 10-Q.~~

The Term Loan contains a financial covenant requiring the ratio of (i) the net orderly liquidation value of our fixed assets (based on appraisals obtained as required by our lenders), on a consolidated basis, in which the lenders under the Term Loan maintain a first priority security interest, plus proceeds of asset dispositions not required to be used to effect a prepayment of the Term Loan to (ii) the outstanding principal amount of the Term Loan, to be at least equal to 1.50 to 1.00 as of any June 30 or December 31 of any calendar year through maturity. As of December 31, 2018, the asset coverage ratio, as calculated under the Term Loan, was 2.36 to 1.00.

The Term Loan contains customary mandatory prepayments from the proceeds of certain transactions including certain asset dispositions and debt issuances, and has additional customary restrictions that limit our ability to enter into various transactions. In addition, the Term Loan contains customary events of default, upon the occurrence and during the continuation of any of which the applicable margin would increase by 2% per year. Our obligations under the Term Loan are guaranteed by our wholly-owned domestic subsidiaries, and are secured by substantially all of our domestic assets, in each case, subject to certain exceptions and permitted liens.

The ABL Facility also contains customary restrictive covenants which, subject to certain exceptions, limit, among other things, our ability to enter into certain transactions. Additionally, if our availability under the ABL Facility is less than 15% of the maximum amount (or $11.25 million), we are required to maintain a minimum fixed charge coverage ratio, as defined in the ABL Facility, of at least 1.00 to 1.00, measured on a trailing 12 month basis.

Our obligations under the ABL Facility are guaranteed by us and our domestic subsidiaries, subject to certain exceptions, and are secured by (i) a first-priority perfected security interest in all inventory and cash, and (ii) a second-priority perfected security in substantially all of our tangible and intangible assets, in each case, subject to certain exceptions and permitted liens.

The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by certain of our existing domestic subsidiaries and by certain of our future domestic subsidiaries. The subsidiaries that generally operate our non-U.S. business concentrated in Colombia do not guarantee our Senior Notes. Our Senior Notes are not subject to any sinking fund requirements. The Indenture governing our Senior Notes contains additional restrictive covenants that limit our ability to enter into various transactions.

~~As of March 31, 2019, we were in compliance with all covenants required by our Term Loan, ABL Facility and Senior Notes.~~2020.

Capital Expenditures — During the three months ended March 31, ~~2019,~~2020, we spent ~~$16.8~~$7.5 million on purchases of property and equipment and placed into service property and equipment of ~~$18.4~~$7.9 million. Currently, we expect to spend ~~approximately $55~~a total of $15 million to ~~$60~~$17 million on capital expenditures during ~~2019, which includes~~ ~~approximately $7 million~~for final payments on the construction of the new-build drilling rig that began operations in the first quarter, and previous commitments on high-pressure pump packages for coiled tubing completion operations.

2020. Actual capital expenditures may vary depending on the climate of our industry and any resulting increase or decrease in activity levels, the timing of commitments and payments, availability of capital resources, and the level of ~~rig build and other expansion~~investment opportunities that meet our strategic and return on capital employed criteria. We expect to fund the remaining capital expenditures in ~~2019~~2020 from operating cash flow in excess of our working capital requirements, although ~~proceeds from sales of assets, remaining proceeds from our Term Loan issuance, and~~ available borrowings under our ABL Credit Facility are also available, if necessary.

Debt Instruments and Compliance Requirements— As of March 1, 2020, we were in default under our Term Loan, Prepetition ABL Facility, and Senior Notes. Filing the Chapter 11 Cases accelerated our Term Loan, Prepetition ABL Facility, and Senior Notes obligations. Additionally, events of default under the credit agreements governing our Term Loan and Prepetition ABL Facility and the indenture governing our Senior Notes occurred, including as a result of cross-defaults between such credit agreements and indenture. However, any efforts to enforce such payment obligations were automatically stayed under the provisions of the Bankruptcy Code. On the Effective Date, all applicable agreements governing the obligations under the Term Loan, Senior Notes and Prepetition ABL Facility were terminated. The Term Loan and Prepetition ABL Facility were paid in full and all outstanding obligations under the Senior Notes were canceled in exchange for 94.25% of the proforma common equity (subject to the dilution from the Convertible Notes and new management incentive plan).

On the Effective Date, we entered into a $75 million senior secured asset-based revolving credit agreement (the “ABL Credit Facility”), and issued $129.8 million of aggregate principal amount of 5% convertible senior unsecured pay-in-kind notes due 2025 (the “Convertible Notes”) and $78.1 million of aggregate principal amount of floating rate senior secured notes due 2025 (the “Senior Secured Notes”). The proceeds from the issuance of the Convertible Notes and the Senior Secured Notes were used to repay the outstanding Term Loan.

The following is a summary of our debt instruments and compliance requirements including covenants, restrictions and guarantees, as it relates to our Convertible Notes and Senior Secured Notes, and a summary of our ABL Credit Facility is included in the above section entitled ABL Credit Facility.As of May 31, 2020, we were in compliance with all covenants required by our debt instruments. However, our ability to maintain compliance with our debt instruments is dependent upon the level of demand for our products and services, the level of spending by our clients, the supply and demand for oil, oil and gas prices, general economic and market conditions and other factors which are beyond our control.

Convertible Notes Indenture and Convertible Notes due 2025. We entered into an indenture, dated as of the Effective Date, among the Company and Wilmington Trust, N.A., as trustee (the “Convertible Notes Indenture”), and issued $129.8 million aggregate principal amount of convertible senior unsecured pay-in-kind notes due 2025 thereunder.

The Convertible Notes are general unsecured obligations which will mature on November 15, 2025, unless earlier accelerated, redeemed, converted or repurchased, and bear interest at a fixed rate of 5% per annum, which will be payable semi-annually in-kind in the form of an increase to the principal amount.

The Convertible Notes are convertible at the option of the holders at any time into shares of our common stock and will convert mandatorily into our common stock at maturity; provided, however, that if the value of our common stock otherwise deliverable in connection with a mandatory conversion of a Convertible Note on the maturity date would be less than the principal amount of such Convertible Note plus accrued and unpaid interest, then the Convertible Note will instead convert into an amount of cash equal to the principal amount thereof plus accrued and unpaid interest. The initial conversion rate is 75 shares of common stock per $1,000 principal amount of the Convertible Notes. The conversion rate is subject to customary anti-dilution adjustments.

If we undergo a “fundamental change” as defined in the Convertible Notes Indenture, subject to certain conditions, holders may require us to repurchase all or any portion of their Convertible Notes for cash at an amount equal to 100% of the principal amount of the Convertible Notes to be repurchased plus any accrued and unpaid interest. In the case of certain fundamental change events that constitute merger events (as defined in the Convertible Notes Indenture), we have a superseding right to cause the mandatory conversion of all or part of the Convertible Notes into a number of shares of common stock, per $1,000 principal amount of Convertible Notes, equal to the then-current conversion rate or the cash value of such number of shares of common stock (but not less than the principal amount).

Holders of Convertible Notes are entitled to vote on all matters on which holders of our common stock generally are entitled to vote (or, if any, to take action by written consent of the holders of our common stock), voting together as a single class together with the shares of our common stock and not as a separate class, on an as-converted basis, at any annual or special meeting of holders of our common stock and each holder is entitled to such number of votes as such holder would receive on an as-converted basis on the record date for such vote.

The Convertible Notes Indenture contains covenants that limit our ability and the ability of certain of our subsidiaries to incur, assume or guarantee additional indebtedness and create liens and enter into mergers or consolidations.

The Convertible Notes Indenture contains customary events of default. In the case of an event of default arising from certain events of bankruptcy, insolvency or other similar law, with respect to us or any of our significant subsidiaries, all outstanding Convertible Notes will become due and payable immediately without further action or notice. If any other event of default occurs and is continuing, then the trustee or the holders of at least 25% in aggregate principal amount of the Convertible Notes then outstanding may declare the Convertible Notes due and payable immediately.

The Convertible Notes Indenture provides, subject to certain exceptions, that for so long as our common stock is registered under the Securities Exchange Act of 1934 (the “Exchange Act”), a beneficial owner of the Convertible Notes is not entitled to receive shares of our common stock upon an optional conversion of any Convertible Notes during any period of time in which the aggregate number of shares of our common stock that may be acquired by such beneficial owner upon conversion of Convertible Notes shall, when added to the aggregate number of shares of our common stock deemed beneficially owned, directly or indirectly, by such beneficial owner and each person subject to aggregation of our common stock with such beneficial owner under Section 13 or Section 16 of the Exchange Act at such time, exceed 9.99% of the total issued and outstanding shares of our common stock. Certain of the holders of Convertible Notes opted out of this provision at the Effective Date.

Senior Secured Notes Indenture and Senior Secured Notes due 2025. We entered into an indenture, dated as of the Effective Date, among the Company, the subsidiary guarantors party thereto and Wilmington Trust, N.A., as trustee (the “Senior Secured Notes Indenture”), and issued $78.1 million aggregate principal amount of floating rate senior secured notes due 2025 thereunder. The Senior Secured Notes are guaranteed on a senior secured basis by our existing subsidiaries that also guarantee our obligations under the ABL Credit Facility (the “Guarantors”) on a full and unconditional basis and are secured by a second lien on the accounts receivable and inventory and a first lien on substantially all of the other assets and properties (including the cash proceeds thereof) of the Company and the Guarantors.

The Senior Secured Notes will mature on May 15, 2025 and interest will accrue at the rate of LIBOR plus 9.5% per annum, with a LIBOR rate floor of 1.5%, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2020. With respect to any interest payment due on or prior to May 29, 2021, 50% of the interest will be payable in cash and 50% of the interest will be paid in-kind in the form of an increase to the principal amount; however, a majority in interest of the holders of the Senior Secured Notes may elect to have 100% of the interest due on or prior to May 29, 2021 payable in-kind. For all interest periods commencing on or after May 15, 2024, the interest rate for the Senior Secured Notes will be a rate equal to LIBOR plus 10.5%, with a LIBOR rate floor of 1.5%.

We may redeem all or part of the Senior Secured Notes on or after June 1, 2021 at redemption prices (expressed as percentages of the principal amount) equal to (i) 104% for the twelve-month period beginning on June 1, 2021; (ii) 102% for the twelve-month period beginning on June 1, 2022; (iii) 101% for the twelve-month period beginning on June 1, 2023 and (iii) 100% for the twelve-month period beginning June 1, 2024 and at any time thereafter, plus accrued and unpaid interest at the redemption date. Notwithstanding the foregoing, if a change of control (as defined in the Senior Secured Notes Indenture) occurs prior to June 1, 2022, we may elect to purchase all remaining outstanding Senior Secured Notes not tendered to us as described below at a redemption price equal to 103% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the applicable redemption date. If a change of control (as defined in the Senior Secured Notes Indenture) occurs, holders of the Senior Secured Notes will have the right to require us to repurchase all or any part of their Senior Secured Notes at a purchase price equal to 101% of the aggregate principal amount of the Senior Secured Notes repurchased, plus accrued and unpaid interest, if any, to the repurchase date.

The Senior Secured Notes Indenture contains covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to incur, assume or guarantee additional indebtedness; pay dividends or distributions on capital stock or redeem or repurchase capital stock; make investments; repay junior debt; sell stock of our subsidiaries; transfer or sell assets; enter into sale and lease back transactions; create liens; enter into transactions with affiliates; and enter into mergers or consolidations. The Senior Secured Notes Indenture contains a minimum asset coverage ratio of 1.5 to 1.0 as of any June 30 or December 31. The Senior Secured Notes Indenture also provides for certain customary events of default, including, among others, nonpayment of principal or interest, breach of covenants, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, failure of a security document to create an effective security interest in collateral, bankruptcy and insolvency events, and cross acceleration, which would permit the principal, premium, if any, interest and other monetary obligations on all the then outstanding Senior Secured Notes to be declared due and payable immediately.

Results of Operations

~~Statements of Operations Analysis~~

The following table provides certain information about our operations, including details of each of our business segments’ revenues, operating costs and gross margin, and the percentage of the consolidated amount of each which is attributable to each business segment, for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (amounts in thousands, except percentages):


	Three months ended March 31,										Three months ended March 31,
	2019					2018					2020					2019
Revenues:
Domestic drilling	$	38,009		26	%	$	35,926		25	%	$	35,891		31	%	$	38,009		26	%
International drilling	21,643			15	%	17,611			12	%	14,455			13	%	21,643			15	%
Drilling services	59,652			41	%	53,537			37	%	50,346			44	%	59,652			41	%
Well servicing	26,254			18	%	21,114			15	%	25,616			22	%	26,254			18	%
Wireline services	45,874			31	%	56,601			39	%	33,133			29	%	45,874			31	%
Coiled tubing services	14,788			10	%	13,226			9	%	5,227			5	%	14,788			10	%
Production services	86,916			59	%	90,941			63	%	63,976			56	%	86,916			59	%
Consolidated revenues	$	146,568		100	%	$	144,478		100	%	$	114,322		100	%	$	146,568		100	%

Operating costs:
Domestic drilling	$	22,469		21	%	$	20,898		20	%	$	23,865		26	%	$	22,469		21	%
International drilling	16,485			15	%	12,961			13	%	12,138			13	%	16,485			15	%
Drilling services	38,954			36	%	33,859			33	%	36,003			39	%	38,954			36	%
Well servicing	18,896			17	%	15,570			15	%	20,951			23	%	18,896			17	%
Wireline services	39,347			36	%	42,486			41	%	28,284			31	%	39,347			36	%
Coiled tubing services	11,388			11	%	10,851			11	%	6,784			7	%	11,388			11	%
Production services	69,631			64	%	68,907			67	%	56,019			61	%	69,631			64	%
Consolidated operating costs	$	108,585		100	%	$	102,766		100	%	$	92,022		100	%	$	108,585		100	%

Gross margin:
Domestic drilling	$	15,540		41	%	$	15,028		36	%	$	12,026		54	%	$	15,540		41	%
International drilling	5,158			14	%	4,650			11	%	2,317			10	%	5,158			14	%
Drilling services	20,698			55	%	19,678			47	%	14,343			64	%	20,698			55	%
Well servicing	7,358			19	%	5,544			13	%	4,665			21	%	7,358			19	%
Wireline services	6,527			17	%	14,115			34	%	4,849			22	%	6,527			17	%
Coiled tubing services	3,400			9	%	2,375			6	%	(1,557		)	(7	)%	3,400			9	%
Production services	17,285			45	%	22,034			53	%	7,957			36	%	17,285			45	%
Consolidated gross margin	$	37,983		100	%	$	41,712		100	%	$	22,300		100	%	$	37,983		100	%

Consolidated:
Net loss	$	(15,115	)			$	(11,139	)			$	(69,104	)			$	(15,115	)
Adjusted EBITDA ⁽¹⁾	$	19,922				$	23,409				$	2,090				$	19,922

(1) Adjusted EBITDA represents income (loss) before interest expense, income tax (expense) benefit, depreciation and amortization, pre-petition restructuring charges, impairment, reorganization items, and any loss on extinguishment of debt. Adjusted EBITDA is a non-GAAP measure that our management uses to facilitate period-to-period comparisons of our core operating performance and to evaluate our long-term financial performance against that of our peers. We believe that this measure is useful to investors and analysts in allowing for greater transparency of our core operating performance and makes it easier to compare our results with those of other companies within our industry. Adjusted EBITDA should not be considered (a) in isolation of, or as a substitute for, net income (loss), (b) as an indication of cash flows from operating activities or (c) as a measure of liquidity. In addition, Adjusted EBITDA does not represent funds available for discretionary use. Adjusted EBITDA may not be comparable to other similarly titled measures reported by other companies.

3340

A reconciliation of net loss, as reported, to Adjusted EBITDA, and to consolidated gross margin, are set forth in the following table:


	Three months ended March 31,						Three months ended March 31,
	2019			2018			2020			2019
	(amounts in thousands)						(amounts in thousands)
Net loss	$	(15,115	)	$	(11,139	)	$	(69,104	)	$	(15,115	)
Depreciation	22,653			23,747			21,984			22,653
Pre-petition restructuring charges							17,074			—
Impairment	1,046			—			17,853			1,046
Reorganization items							6,663			—
Interest expense	9,885			9,513			8,651			9,885
Income tax expense	1,453			1,288
Income tax expense (benefit)							(1,031		)	1,453
Adjusted EBITDA	19,922			23,409			2,090			19,922
General and administrative	19,758			19,194			14,655			19,758
Bad debt expense (recovery), net	62			(52		)
Bad debt expense, net of recovery							727			62
Gain on dispositions of property and equipment, net	(1,075		)	(335		)	(717		)	(1,075		)
Other income	(684		)	(504		)
Other expense (income)							5,545			(684		)
Consolidated gross margin	$	37,983		$	41,712		$	22,300		$	37,983



		Page
	PART I
Item 1.	Financial Statements and Supplementary Data	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flow	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45
Item 4.	Controls and Procedures	45

	PART II
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	50


	Three months ended March 31,						Three months ended March 31,
	2019			2018			2020			2019
	(in thousands)						(in thousands)
Cash flows from operating activities:
Net loss	$	(15,115	)	$	(11,139	)	$	(69,104	)	$	(15,115	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	22,653			23,747			21,984			22,653
Allowance for doubtful accounts, net of recoveries	62			(52		)	727			62
Gain on dispositions of property and equipment, net	(1,075		)	(335		)	(717		)	(1,075		)
Reorganization items							988			—
Stock-based compensation expense	867			1,259			328			867
Phantom stock compensation expense	848			430			(3		)	848
Amortization of debt issuance costs and discount	763			707			1,219			763
Impairment	1,046			—			17,853			1,046
Deferred income taxes	1,156			911			1,115			1,156
Change in other noncurrent assets	699			(463		)	690			699
Change in other noncurrent liabilities	(20		)	1,414			(562		)	(20		)
Changes in current assets and liabilities:
Receivables	(17,488		)	(3,296		)	14,234			(17,488		)
Inventory	(1,293		)	(2,042		)	834			(1,293		)
Prepaid expenses and other current assets	(178		)	882			(1,253		)	(178		)
Accounts payable	2,339			51			(4,114		)	2,339
Deferred revenues	(64		)	(108		)	(342		)	(64		)
Commitment premium							9,584			—
Accrued expenses	(5,990		)	(6,908		)	1,148			(5,990		)
Net cash provided by (used in) operating activities	(10,790		)	5,058
Net cash used in operating activities							(5,391		)	(10,790		)

Cash flows from investing activities:
Purchases of property and equipment	(16,844		)	(11,657		)	(7,503		)	(16,844		)
Proceeds from sale of property and equipment	1,043			1,283			727			1,043
Proceeds from insurance recoveries	—			523
Net cash used in investing activities	(15,801		)	(9,851		)	(6,776		)	(15,801		)

Cash flows from financing activities:
Debt issuance costs	—			(33		)
Proceeds from DIP Facility							4,000			—
DIP Facility issuance costs							(988		)	—
Purchase of treasury stock	(120		)	(96		)	(7		)	(120		)
Net cash used in financing activities	(120		)	(129		)
Net cash provided by (used in) financing activities							3,005			(120		)

Net decrease in cash, cash equivalents and restricted cash	(26,711		)	(4,922		)	(9,162		)	(26,711		)
Beginning cash, cash equivalents and restricted cash	54,564			75,648			25,617			54,564
Ending cash, cash equivalents and restricted cash	$	27,853		$	70,726		$	16,455		$	27,853

Supplementary disclosure:
Interest paid	$	13,887		$	13,515		$	4,306		$	13,887
Income tax paid	$	1,013		$	658		$	623		$	1,013
Reorganization items paid							$	2,322		—
Noncash investing and financing activity:
Change in capital expenditure accruals	$	1,531		$	2,931		$	358		$	1,531


	550 HP	600 HP	Total	550 HP	600 HP	Total
Well servicing rigs, by horsepower (HP) rating	113	12	125	111	12	123

			Total			Total
Wireline services units	Wireline services units		93	Wireline services units		93
Coiled tubing services units	Coiled tubing services units		9	Coiled tubing services units		9



Legal and professional fees	$	6,150
DIP facility costs	513
	$	6,663



Senior Notes	$	300,000
Unamortized debt issuance costs on Senior Notes	(2,003		)
Accrued interest on Senior Notes	8,422
	$	306,419


	As of and for the three months ended March 31, 2019																	As of and for the three months ended March 31, 2020
	Shares			Amount					Additional Paid In Capital			Accumulated Deficit			Total Shareholders’ Equity			Shares			Amount					Additional Paid In Capital			Accumulated Deficit			Total Stockholders’ Equity
	Common	Treasury		Common		Treasury			Additional Paid In Capital			Accumulated Deficit			Total Shareholders’ Equity			Common	Treasury		Common		Treasury			Additional Paid In Capital			Accumulated Deficit			Total Stockholders’ Equity
	(in thousands)																	(in thousands)
Balance as of December 31, 2018	79,005	(790	)	$	7,900	$	(4,965	)	$	550,548		$	(388,425	)	$	165,058
Balance as of December 31, 2019																		80,079	(877	)	$	8,008	$	(5,090	)	$	553,210		$	(452,052	)	$	104,076
Net loss	—	—		—		—			—			(15,115		)	(15,115		)	—	—		—		—			—			(69,104		)	(69,104		)
Purchase of treasury stock	—	(84	)	—		(120		)	—			—			(120		)	—	(165	)	—		(7		)	—			—			(7		)
Cumulative-effect adjustment due to adoption of ASC Topic 842	—	—		—		—			—			277			277
Issuance of restricted stock	326	—		33		—			(33		)	—			—			542	—		54		—			(54		)	—			—
Stock-based compensation expense	—	—		—		—			867			—			867			—	—		—		—			328			—			328
Balance as of March 31, 2019	79,331	(874	)	$	7,933	$	(5,085	)	$	551,382		$	(403,263	)	$	150,967
Balance as of March 31, 2020																		80,621	(1,042	)	$	8,062	$	(5,097	)	$	553,484		$	(521,156	)	$	35,293



	Multi-well, Pad-capable
	AC rigs	SCR rigs	Total
Domestic drilling	17	—	17
International drilling	—	8	8
			25



	March 31, 2020
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	7,938
Restricted cash	998
Receivables, net of allowance	84,674
Intercompany receivables, net	32,599
Inventory	9,530
Assets held for sale	1,825
Prepaid expenses and other current assets	7,127
Total current assets	144,691
Net property and equipment	412,711
Investment in subsidiaries	549,536
Deferred income taxes	38,948
Operating lease assets	7,441
Other noncurrent assets	1,754
Total assets	$	1,155,081

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	23,166
Deferred revenues	428
Commitment premium	9,584
Debtor in possession financing	4,000
Accrued expenses	48,480
Total current liabilities	85,658
Long-term debt, less unamortized discount and debt issuance costs	170,921
Noncurrent operating lease liabilities	6,058
Deferred income taxes	42,204
Other noncurrent liabilities	383
Total liabilities not subject to compromise	305,224
Liabilities subject to compromise	306,419
Stockholders’ equity	543,438
Total liabilities and stockholders’ equity	$	1,155,081



	Three months ended March 31, 2020
	(in thousands)

Revenues	$	99,867

Costs and expenses:
Operating costs	79,885
Depreciation	20,683
General and administrative	14,155
Pre-petition restructuring charges	17,074
Impairment	17,853
Bad debt expense, net	727
Gain on dispositions of property and equipment, net	(717		)
Intercompany leasing	(1,215		)
Total costs and expenses	148,445
Loss from operations	(48,578		)

Other income (expense):
Equity in losses of subsidiaries	(31,726		)
Interest expense, net of interest capitalized	(8,668		)
Reorganization items	(6,663		)
Other income (expense), net	197
Total other expense, net	(46,860		)

Loss before income taxes	(95,438		)
Income tax (expense) benefit	1,116
Net loss	$	(94,322	)



	Three months ended March 31, 2020
	(in thousands)

Cash flows from operating activities	$	(4,277	)

Cash flows from investing activities:
Purchases of property and equipment	(6,180		)
Proceeds from sale of property and equipment	876
	(5,304		)

Cash flows from financing activities:
Proceeds from DIP Facility	4,000
DIP Facility issuance costs	(988		)
Purchase of treasury stock	(7		)
Intercompany contributions	53
	3,058

Net decrease in cash, cash equivalents and restricted cash	(6,523		)
Beginning cash, cash equivalents and restricted cash	15,459
Ending cash, cash equivalents and restricted cash	$	8,936


	March 31, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Current deferred revenues	$	1,659	$	1,722	$	997	$	1,339
Current deferred costs	1,621		1,543		591		1,071
Current contract assets					795		—

Noncurrent deferred revenues	$	428	$	437	$	—	$	57
Noncurrent deferred costs	676		679		142		267



	~~March 31, 2019~~
~~Weighted-average remaining lease term (in years)~~	~~4.9~~
~~Weighted-average discount rate~~	~~4.5~~	%



	March 31, 2019			December 31, 2018
Senior secured term loan	$	175,000		$	175,000
Senior notes	300,000			300,000
	475,000			475,000
Less unamortized discount (based on imputed interest rate of 10.46%)	(2,475		)	(2,668		)
Less unamortized debt issuance costs	(7,210		)	(7,780		)
	$	465,315		$	464,552


7.	~~Fair Value of Financial Instruments~~Valuation Allowances on Deferred Tax Assets and Tax Legislation Developments



	March 31, 2020		December 31, 2019
Domestic net operating loss carryforward	$	110,167	$	102,827
Foreign net operating loss carryforward	5,826		8,007


8.	~~Earnings (Loss) Per Common Share~~


9.	~~Stock-Based Compensation Plans~~


~~10.~~	11. Segment Information



		March 31, 2019				December 31, 2018
	Hierarchy Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior notes	2	$	297,198	$	187,500	$	296,988	$	186,750
Senior secured term loan	3	168,117		$	175,875	167,564		175,875
		$	465,315	$	363,375	$	464,552	$	362,625


(1)	Identifiable assets for our drilling segments include the impact of a ~~$42.5~~$32.9 million and ~~$31.5~~$42.5 million intercompany balance, as of March 31, ~~2019~~2020 and ~~2018~~2019, respectively, between our domestic drilling segment (intercompany receivable) and our international drilling segment (intercompany payable).


(2)	Identifiable assets for our international drilling segment include five drilling rigs that are owned by our Colombia subsidiary and three drilling rigs that are owned by one of our domestic subsidiaries and leased to our Colombia subsidiary.


~~12.~~	13. Guarantor/Non-Guarantor Condensed Consolidating Financial Statements


	March 31, 2019													March 31, 2020
	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated		Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	24,400		$	—	$	2,455		$	—		$	26,855	$	7,937		$	—	$	7,520		$	—		$	15,457
Restricted cash	998			—		—			—			998		998			—		—			—			998
Receivables, net of allowance	380			108,312		39,959			(566		)	148,085		157			84,517		18,420			(171		)	102,923
Intercompany receivable (payable)	(27,942		)	70,231		(42,289		)	—			—		(26,931		)	59,530		(32,599		)	—			—
Inventory	—			10,606		9,623			—			20,229		—			9,530		12,089			—			21,619
Assets held for sale	—			4,794		—			—			4,794		—			1,825		—			—			1,825
Prepaid expenses and other current assets	1,524			4,218		1,565			—			7,307		2,452			4,675		1,002			—			8,129
Total current assets	(640		)	198,161		11,313			(566		)	208,268		(15,387		)	160,077		6,432			(171		)	150,951
Net property and equipment	1,863			487,415		28,489			—			517,767		2,144			410,567		27,243			—			439,954
Investment in subsidiaries	584,449			27,789		—			(612,238		)	—		508,145			41,392		—			(549,537		)	—
Deferred income taxes	42,659			—		—			(42,659		)	—		38,948			—		9,264			(38,948		)	9,264
Operating lease assets	3,470			5,273		680			—			9,423		2,911			4,530		531			—			7,972
Other noncurrent assets	622			523		488			—			1,633		1,295			459		5,839			—			7,593
Total assets	$	632,423		$	719,161	$	40,970		$	(655,463	)	$	737,091	$	538,056		$	617,025	$	49,309		$	(588,656	)	$	615,734
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,089		$	31,188	$	5,886		$	—		$	38,163	$	2,373		$	20,793	$	5,608		$	—		$	28,774
Deferred revenues	—			443		1,216			—			1,659		—			428		569			—			997
Commitment premium														9,584			—		—			—			9,584
Debtor in possession financing														4,000			—		—			—			4,000
Accrued expenses	9,678			50,451		5,191			(566		)	64,754		6,738			41,742		1,364			(171		)	49,673
Total current liabilities	10,767			82,082		12,293			(566		)	104,576		22,695			62,963		7,541			(171		)	93,028
Long-term debt, less unamortized discount and debt issuance costs	465,315			—		—			—			465,315		170,921			—		—			—			170,921
Noncurrent operating lease liabilities	3,076			3,322		531			—			6,929		2,583			3,475		376			—			6,434
Deferred income taxes	—			47,503		—			(42,659		)	4,844		—			42,204		—			(38,948		)	3,256
Other noncurrent liabilities	2,298			1,805		357			—			4,460		145			238		—			—			383
Total liabilities	481,456			134,712		13,181			(43,225		)	586,124
Total shareholders’ equity	150,967			584,449		27,789			(612,238		)	150,967
Total liabilities and shareholders’ equity	$	632,423		$	719,161	$	40,970		$	(655,463	)	$	737,091
Total liabilities not subject to compromise														196,344			108,880		7,917			(39,119		)	274,022
Liabilities subject to compromise														306,419			—		—			—			306,419
Total stockholders’ equity														35,293			508,145		41,392			(549,537		)	35,293
Total liabilities and stockholders’ equity														$	538,056		$	617,025	$	49,309		$	(588,656	)	$	615,734

	December 31, 2018													December 31, 2019
	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated		Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	50,350		$	—	$	3,216		$	—		$	53,566	$	14,461		$	—	$	10,158		$	—		$	24,619
Restricted cash	998			—		—			—			998		998			—		—			—			998
Receivables, net of allowance	436			95,030		35,219			196			130,881		107			92,394		30,908			117			123,526
Intercompany receivable (payable)	(27,245		)	67,098		(39,853		)	—			—		(28,664		)	64,485		(35,821		)	—			—
Inventory	—			9,945		8,953			—			18,898		—			10,325		12,128			—			22,453
Assets held for sale	—			3,582		—			—			3,582		—			3,447		—			—			3,447
Prepaid expenses and other current assets	1,743			3,197		2,169			—			7,109		2,849			4,122		898			—			7,869
Total current assets	26,282			178,852		9,704			196			215,034		(10,249		)	174,773		18,271			117			182,912
Net property and equipment	2,022			494,376		28,460			—			524,858		2,374			441,567		27,229			—			471,170
Investment in subsidiaries	574,695			25,370		—			(600,065		)	—		547,123			47,953		—			(595,076		)	—
Deferred income taxes	42,585			—		—			(42,585		)	—		44,224			—		11,540			(44,224		)	11,540
Operating lease assets														3,114			3,581		569			—			7,264
Other noncurrent assets	596			511		551			—			1,658		506			562		—			—			1,068
Total assets	$	646,180		$	699,109	$	38,715		$	(642,454	)	$	741,550	$	587,092		$	668,436	$	57,609		$	(639,183	)	$	673,954
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,093		$	26,795	$	6,246		$	—		$	34,134	$	1,811		$	24,436	$	6,304		$	—		$	32,551
Deferred revenues	—			95		1,627			—			1,722		—			513		826			—			1,339
Accrued expenses	14,020			49,640		5,056			196			68,912		10,570			44,893		2,111			117			57,691
Total current liabilities	15,113			76,530		12,929			196			104,768		12,381			69,842		9,241			117			91,581
Long-term debt, less unamortized discount and debt issuance costs	464,552			—		—			—			464,552		467,699			—		—			—			467,699
Noncurrent operating lease liabilities														2,749			2,536		415			—			5,700
Deferred income taxes	—			46,273		—			(42,585		)	3,688		—			48,641		—			(44,224		)	4,417
Other noncurrent liabilities	1,457			1,611		416			—			3,484		187			294		—			—			481
Total liabilities	481,122			124,414		13,345			(42,389		)	576,492		483,016			121,313		9,656			(44,107		)	569,878
Total shareholders’ equity	165,058			574,695		25,370			(600,065		)	165,058
Total liabilities and shareholders’ equity	$	646,180		$	699,109	$	38,715		$	(642,454	)	$	741,550
Total stockholders’ equity														104,076			547,123		47,953			(595,076		)	104,076
Total liabilities and stockholders’ equity														$	587,092		$	668,436	$	57,609		$	(639,183	)	$	673,954



	Three months ended March 31, 2019
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	124,925		$	21,643		$	—		$	146,568
Costs and expenses:
Operating costs	—			92,102			16,483			—			108,585
Depreciation	280			21,030			1,343			—			22,653
General and administrative	7,996			11,446			451			(135		)	19,758
Bad debt expense (recovery), net	—			62			—			—			62
Gain on dispositions of property and equipment, net	—			(984		)	(91		)	—			(1,075		)
Impairment	—			1,046			—			—			1,046
Intercompany leasing	—			(1,215		)	1,215			—			—
Total costs and expenses	8,276			123,487			19,401			(135		)	151,029
Income (loss) from operations	(8,276		)	1,438			2,242			135			(4,461		)
Other income (expense):
Equity in earnings of subsidiaries	2,768			2,464			—			(5,232		)	—
Interest expense, net of interest capitalized	(9,874		)	(14		)	3			—			(9,885		)
Other	206			266			347			(135		)	684
Total other income (expense)	(6,900		)	2,716			350			(5,367		)	(9,201		)
Income (loss) before income taxes	(15,176		)	4,154			2,592			(5,232		)	(13,662		)
Income tax (expense) benefit ¹	61			(1,386		)	(128		)	—			(1,453		)
Net income (loss)	$	(15,115	)	$	2,768		$	2,464		$	(5,232	)	$	(15,115	)

	Three months ended March 31, 2018
	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	126,867		$	17,611		$	—		$	144,478
Costs and expenses:
Operating costs	—			89,809			12,957			—			102,766
Depreciation	291			22,009			1,447			—			23,747
General and administrative	6,238			12,539			522			(105		)	19,194
Bad debt expense (recovery), net	—			(52		)	—			—			(52		)
Gain on dispositions of property and equipment, net	—			(321		)	(14		)	—			(335		)
Intercompany leasing	—			(1,215		)	1,215			—			—
Total costs and expenses	6,529			122,769			16,127			(105		)	145,320
Income (loss) from operations	(6,529		)	4,098			1,484			105			(842		)
Other income (expense):
Equity in earnings of subsidiaries	4,549			1,653			—			(6,202		)	—
Interest expense, net of interest capitalized	(9,516		)	—			3			—			(9,513		)
Other	2			219			388			(105		)	504
Total other income (expense)	(4,965		)	1,872			391			(6,307		)	(9,009		)
Income (loss) before income taxes	(11,494		)	5,970			1,875			(6,202		)	(9,851		)
Income tax (expense) benefit ¹	355			(1,421		)	(222		)	—			(1,288		)
Net income (loss)	$	(11,139	)	$	4,549		$	1,653		$	(6,202	)	$	(11,139	)

¹ The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.



		Rig Count
Domestic drilling:
Marcellus/Utica		65
Permian Basin and Eagle Ford		910
Bakken		2
International drilling		8
		25



	Spot Market Contracts		Term Contract Expiration by Period
	Spot Market Contracts	Total Term Contracts	Within 6 Months	6 Months to 1 Year	1 Year to 18 Months	18 Months to 2 Years	2 to 4 Years
Domestic rigs	3	14	6	6	—	1	1
International rigs	1	6	2	1	2	1	—
	4	20	8	7	2	2	1



	Payments Due by Period
Contractual Obligations	Total		Within 1 Year		2 to 3 Years		4 to 5 Years		Beyond 5 Years
Debt	$	475,000	$	—	$	475,000	$	—	$	—
Interest on debt	104,213		36,225		67,988		—		—
Purchase commitments	9,679		9,679		—		—		—
Operating leases	10,542		2,878		3,806		2,362		1,496
Incentive compensation	23,630		8,370		11,824		3,436		—
	$	623,064	$	57,152	$	558,618	$	5,798	$	1,496


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 - January 31	84,266	$	1.42	—	—	164,518	$	0.04	—	—
February 1 - February 28	593	$	1.50	—	—
February 1 - February 29						—	—		—	—
March 1 - March 31	—	$	—	—	—	—	—		—	—
Total	84,859	$	1.42	—	—	164,518	$	0.04	—	—


(1)	The shares indicated consist of shares of our common stock tendered by employees to the Company during the three months ended March 31, ~~2019,~~2020, to satisfy the employees’ tax withholding obligations in connection with the vesting of share-based compensation awards, which we repurchased based on the fair market value on the date the relevant transaction occurred.


(2)	The calculation of the average price paid per share does not give effect to any fees, commissions or other costs associated with the repurchase of such shares.



Exhibit Number		Description

2.1*	-	Order of the Bankruptcy Court, dated May 11, 2020, confirming Pioneer’s Joint Prepackaged Plan of Reorganization under the Bankruptcy Code, together with such Joint Prepackaged Plan of Reorganization (Form 8-K dated May 11, 2020 (File No. 1-8182, Exhibit 2.1)).

3.1*	-	~~Restated Articles~~Certificate of Incorporation of Pioneer Energy Services Corp. (Form 8-K dated May ~~22, 2017~~29, 2020 (File No. 1-8182, Exhibit 3.1)).

3.2*	-	Amended and Restated Bylaws of Pioneer Energy Services Corp. (Form 8-K dated ~~July 30, 2012~~May 29, 2020 (File No. 1-8182, Exhibit 3.2)).

4.1*	-	~~Form of Certificate representing~~Specimen Common Stock Certificate (New Common Stock) (Form 8-A/A dated June 5, 2020 (File No. 1-8182, Exhibit 4.4)).

4.2**	-	Description of ~~Pioneer Energy Services Corp.~~Securities (New Common Stock).

4.3**	-	Description of Securities (Old Common Stock).

4.4*	-	Convertible Notes Indenture, dated May 29, 2020 (Form ~~10-Q~~8-K dated ~~August 7, 2012~~May 29, 2020 (File No. 1-8182, Exhibit 4.1)).

4.24.5	-	~~Indenture, dated March 18, 2014, by and among Pioneer Energy Services Corp., the subsidiaries named as guarantors therein and Wells Fargo Bank, National Association, as trustee~~Convertible Notes (Form 8-K dated ~~March 18, 2014~~May 29, 2020 (File No. 1-8182, Exhibit ~~4.1)~~4.2)).

4.34.6	-	~~Registration Rights Agreement,~~Senior Secured Notes Indenture, dated ~~March 18, 2014, by and among Pioneer Energy Services Corp., the subsidiaries named as guarantors therein and the initial purchasers party thereto~~May 29, 2020 (Form 8-K dated ~~March 18, 2014~~May 29, 2020 (File No. 1-8182, Exhibit 4.3)).

4.7*	-	Senior Secured Notes (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 4.4)).

10.1*	-	ABL Credit Agreement, dated May 29, 2020 (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 10.1)).

~~10.1*+~~10.2	-	Intercreditor Agreement, dated May 29, 2020 (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 10.2)).

10.3*	-	Registration Rights Agreement, dated May 29, 2020 (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 10.3)).

10.4*	-	Pioneer Energy Services Corp. ~~2007~~2020 Employee Incentive Plan ~~Form of Time-Based Phantom Stock Unit Award Agreement~~(Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 10.4)).

10.5*	-	Pioneer Energy Services Corp. Key Executive Severance Plan (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 10.5)).

31.1**	-	Certification by Wm. Stacy Locke, President and Chief Executive Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.

31.2**	-	Certification by Lorne E. Phillips, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.

32.1#	-	Certification by Wm. Stacy Locke, President and Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2#	-	Certification by Lorne E. Phillips, Executive Vice President and Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101**101.INS	-	~~The following financial statements from Pioneer Energy Services Corp.’s Form 10-Q for the quarter ended March 31, 2019, formatted in~~ XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Shareholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.Instance Document

101.SCH	-	XBRL Taxonomy Schema Document

101.CAL	-	XBRL Calculation Linkbase Document

101.LAB	-	XBRL Label Linkbase Document

101.PRE	-	XBRL Presentation Linkbase Document



101.DEF	-	XBRL Definition Linkbase Document

*	Incorporated by reference to the filing indicated.
**	Filed herewith.
#	Furnished herewith.
+	~~Management contract or compensatory plan or arrangement.~~