Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 15, 2018 | Jun. 30, 2017 | |
Entity Registrant Name | Select Energy Services, Inc. | ||
Entity Central Index Key | 1,693,256 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 322.1 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Class A Common Stock | |||
Entity Common Stock, Shares Outstanding | 59,290,665 | ||
Class A-2 Common Stock | |||
Entity Common Stock, Shares Outstanding | 6,731,839 | ||
Class B Common Stock | |||
Entity Common Stock, Shares Outstanding | 40,331,989 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 2,774 | $ 40,041 |
Accounts receivable trade, net of allowance for doubtful accounts of $2,979 and $2,144, respectively | 373,633 | 75,892 |
Accounts receivable, related parties | 7,669 | 135 |
Inventories | 44,598 | 1,001 |
Prepaid expenses and other current assets | 17,842 | 7,586 |
Total current assets | 446,516 | 124,655 |
Property and equipment | 1,034,995 | 739,386 |
Accumulated depreciation | (560,886) | (490,519) |
Property and equipment, net | 474,109 | 248,867 |
Goodwill | 273,421 | 12,242 |
Other intangible assets, net | 156,066 | 11,586 |
Other assets | 6,256 | 7,716 |
Total assets | 1,356,368 | 405,066 |
Current liabilities | ||
Accounts payable | 52,579 | 10,796 |
Accounts payable and accrued expenses, related parties | 2,772 | 648 |
Accrued salaries and benefits | 21,324 | 2,511 |
Accrued insurance | 12,510 | 10,338 |
Sales tax payable | 12,931 | 66 |
Accrued expenses and other current liabilities | 81,112 | 22,025 |
Current portion of capital lease obligations | 1,965 | |
Total current liabilities | 185,193 | 46,384 |
Accrued lease obligations | 18,979 | 15,946 |
Other long term liabilities | 13,827 | 8,028 |
Long-term debt | 75,000 | |
Total liabilities | 292,999 | 70,358 |
Commitments and contingencies (Note 9) | ||
Additional paid-in capital | 673,141 | 113,175 |
Accumulated deficit | (17,859) | (1,043) |
Accumulated other comprehensive income | 302 | |
Total stockholders’ equity | 656,647 | 112,716 |
Noncontrolling interests | 406,722 | 221,992 |
Total equity | 1,063,369 | 334,708 |
Total liabilities and equity | 1,356,368 | 405,066 |
Class A Common Stock | ||
Current liabilities | ||
Common stock | 592 | 38 |
Total equity | 592 | 38 |
Class A-1 Common Stock | ||
Current liabilities | ||
Common stock | 161 | |
Total equity | 161 | |
Class A-2 Common Stock | ||
Current liabilities | ||
Common stock | 67 | |
Total equity | 67 | |
Class B Common Stock | ||
Current liabilities | ||
Common stock | 404 | 385 |
Total equity | $ 404 | $ 385 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Allowance for doubtful accounts | $ 2,979 | $ 2,144 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Class A Common Stock | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 350,000,000 | 250,000,000 |
Common Stock, Shares, Issued | 59,182,176 | 3,802,972 |
Common Stock, Shares, Outstanding | 59,182,176 | 3,802,972 |
Class A-1 Common Stock | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 0 | 40,000,000 |
Common Stock, Shares, Issued | 0 | 16,100,000 |
Common Stock, Shares, Outstanding | 0 | 16,100,000 |
Class A-2 Common Stock | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 40,000,000 | 0 |
Common Stock, Shares, Issued | 6,731,845 | 0 |
Common Stock, Shares, Outstanding | 6,731,845 | 0 |
Class B Common Stock | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 40,331,989 | 38,462,541 |
Common Stock, Shares, Outstanding | 40,331,989 | 38,462,541 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue | |||
Water solutions and related services | $ 546,043 | $ 241,455 | $ 427,496 |
Accommodations and rentals | 53,888 | 27,151 | 52,948 |
Wellsite completion and construction services | 50,974 | 33,793 | 55,133 |
Oilfield chemical product sales | 41,586 | ||
Total revenue | 692,491 | 302,399 | 535,577 |
Costs of revenue | |||
Water solutions and related services | 411,215 | 200,399 | 332,411 |
Accommodations and rentals | 41,885 | 22,019 | 37,957 |
Wellsite completion and construction services | 42,942 | 29,089 | 48,356 |
Oilfield chemical product sales | 37,024 | ||
Depreciation and amortization | 101,645 | 95,020 | 104,608 |
Total costs of revenue | 634,711 | 346,527 | 523,332 |
Gross profit (loss) | 57,780 | (44,128) | 12,245 |
Operating expenses | |||
Selling, general and administrative | 82,403 | 34,643 | 56,548 |
Depreciation and amortization | 1,804 | 2,087 | 3,104 |
Impairment of goodwill and other intangible assets | 138,666 | 21,366 | |
Impairment of property and equipment | 60,026 | ||
Lease abandonment costs | 3,572 | 19,423 | |
Total operating expenses | 87,779 | 254,845 | 81,018 |
Loss from operations | (29,999) | (298,973) | (68,773) |
Other income (expense) | |||
Interest expense, net | (6,629) | (16,128) | (13,689) |
Foreign currency gains, net | 281 | ||
Other income, net | 369 | 629 | 893 |
Loss before tax expense | (35,978) | (314,472) | (81,569) |
Tax benefit (expense) | 851 | 524 | (324) |
Net loss from continuing operations | (35,127) | (313,948) | (81,893) |
Net income from discontinued operations, net of tax | 21 | ||
Net loss | (35,127) | (313,948) | (81,872) |
Less: net loss attributable to noncontrolling interests | 18,311 | 6,424 | 981 |
Net loss attributable to Select Energy Services, Inc. | (16,816) | (1,043) | |
Predecessor | |||
Other income (expense) | |||
Net loss | (306,481) | (80,891) | |
Less: net loss attributable to noncontrolling interests | 306,481 | $ 80,891 | |
Class A Common Stock | |||
Other income (expense) | |||
Net loss attributable to Select Energy Services, Inc. | $ (12,560) | $ (199) | |
EARNINGS PER SHARE | |||
Weighted average shares outstanding: | 24,612,853 | 3,802,972 | |
Net loss per share attributable to common stockholders: | $ (0.51) | $ (0.05) | |
Class A-1 Common Stock | |||
Other income (expense) | |||
Net loss attributable to Select Energy Services, Inc. | $ (3,691) | $ (844) | |
EARNINGS PER SHARE | |||
Weighted average shares outstanding: | 7,233,973 | 16,100,000 | |
Net loss per share attributable to common stockholders: | $ (0.51) | $ (0.05) | |
Class A-2 Common Stock | |||
Other income (expense) | |||
Net loss attributable to Select Energy Services, Inc. | $ (565) | ||
EARNINGS PER SHARE | |||
Weighted average shares outstanding: | 1,106,605 | ||
Net loss per share attributable to common stockholders: | $ (0.51) | ||
Class B Common Stock | |||
EARNINGS PER SHARE | |||
Weighted average shares outstanding: | 38,768,156 | 38,462,541 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net loss | $ (35,127) | $ (313,948) | $ (81,872) |
Interest rate derivatives designated as cash flow hedges | |||
Unrealized holding loss arising during period | (106) | (277) | |
Net amount reclassified to earnings | 113 | 338 | |
Foreign currency translation adjustment, net of tax of $0 | 302 | ||
Net change in unrealized gain | 302 | 7 | 61 |
Comprehensive loss | (34,825) | (313,941) | (81,811) |
Less: comprehensive loss attributable to noncontrolling interests | 18,154 | 6,424 | 981 |
Comprehensive loss attributable to Select Energy Services, Inc. | $ (16,671) | (1,043) | |
Predecessor | |||
Net loss | (306,481) | (80,891) | |
Interest rate derivatives designated as cash flow hedges | |||
Less: comprehensive loss attributable to noncontrolling interests | $ 306,474 | $ 80,830 |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Class A Common Stock | Class A-1 Common Stock | Class A-2 Common Stock | Class B Common Stock | Total Stockholders’ Equity | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total |
Beginning balance (Predecessor) at Dec. 31, 2015 | $ 317,161 | |||||||||
Beginning balance at Dec. 31, 2015 | $ (7) | $ 10,621 | $ 327,775 | |||||||
Beginning balance (in shares) (Predecessor) at Dec. 31, 2015 | 38,398,649 | |||||||||
Member contributions | Predecessor | $ 23,519 | |||||||||
Member contributions | $ 23,519 | |||||||||
Member contributions (in shares) | Predecessor | 3,866,864 | |||||||||
Purchase of additional controlling interest | Predecessor | $ 707 | |||||||||
Purchase of additional controlling interest | (1,055) | (348) | ||||||||
Noncontrolling interest in subsidiary | 138 | 138 | ||||||||
Equity-based compensation | Predecessor | 317 | |||||||||
Equity-based compensation | 317 | |||||||||
Net loss prior to 144A Offering | Predecessor | (306,481) | |||||||||
Net loss prior to 144A Offering | (4,407) | (310,888) | ||||||||
Reorganization and 144A Offering | Predecessor | (35,223) | |||||||||
Reorganization and 144A Offering | $ 38 | $ 161 | $ 385 | $ 332,471 | $ 331,887 | $ 297,248 | ||||
Reorganization and 144A Offering (in shares) | Predecessor | (42,265,513) | |||||||||
Reorganization and 144A Offering (in shares) | 3,802,972 | 16,100,000 | 38,462,541 | |||||||
Initial allocation of noncontrolling interest of Select Energy Services, Inc. effective on date of 144A Offering | (218,712) | (218,712) | 218,712 | |||||||
Net loss subsequent to reorganization and 144A Offering | (1,043) | $ (1,043) | (2,017) | $ (3,060) | ||||||
Net loss | Predecessor | (306,481) | |||||||||
Net loss | (313,948) | |||||||||
Ending balance at Dec. 31, 2016 | $ 38 | $ 161 | $ 385 | 112,716 | 113,175 | (1,043) | 221,992 | 334,708 | ||
Ending balance (in shares) at Dec. 31, 2016 | 3,802,972 | 16,100,000 | 38,462,541 | |||||||
Fair value of interest rate swap | 7 | 7 | ||||||||
Balance prior to reorganization and 144A Offering transactions | Predecessor | 35,223 | |||||||||
Balance prior to reorganization and 144A Offering transactions | 5,297 | $ 40,520 | ||||||||
Balance prior to reorganization and 144A Offering transactions (in shares) | Predecessor | 42,265,513 | |||||||||
Balance subsequent to reorganization and 144A Offering transactions | $ 38 | $ 161 | $ 385 | 113,759 | 113,175 | 224,009 | $ 337,768 | |||
Balance subsequent to reorganization and 144A Offering transactions (in shares) | 3,802,972 | 16,100,000 | 38,462,541 | |||||||
Noncontrolling interest in subsidiary | (368) | (368) | ||||||||
Equity-based compensation | 4,346 | 4,346 | 3,345 | 7,691 | ||||||
Conversion of Class A-1 to Class A | $ 161 | $ (161) | ||||||||
Conversion of Class A-1 to Class A (in shares) | 16,100,000 | (16,100,000) | ||||||||
Exchange of shares of Class B common stock and SES Holdings, LLC common units for shares of Class A common stock | $ 25 | $ (25) | 16,298 | 16,298 | (16,298) | |||||
Exchange of shares of Class B common stock and SES Holdings, LLC common units for shares of Class A common stock (in shares) | 2,487,029 | (2,487,029) | ||||||||
Issuance of shares for acquisition | $ 6 | 5,001 | 4,995 | 4,879 | 9,880 | |||||
Issuance of shares for acquisition (in shares) | 560,277 | |||||||||
Issuance of shares for merger | $ 262 | $ 67 | $ 44 | 447,615 | 447,242 | 170,276 | 617,891 | |||
Issuance of shares for merger (in shares) | 26,246,115 | 6,731,845 | 4,356,477 | |||||||
Issuance of shares for initial public offering | $ 100 | 87,369 | 87,269 | 41,135 | 128,504 | |||||
Issuance of shares for initial public offering (in shares) | 10,005,000 | |||||||||
Treasury stock purchase | (184) | (184) | (113) | (297) | ||||||
Treasury stock purchase ( in shares) | (19,217) | |||||||||
Foreign currency translation adjustment | 302 | 302 | 185 | 487 | ||||||
Net loss | (16,816) | (16,816) | (18,311) | (35,127) | ||||||
Ending balance at Dec. 31, 2017 | $ 592 | $ 67 | $ 404 | $ 656,647 | $ 673,141 | $ (17,859) | $ 302 | $ 406,722 | $ 1,063,369 | |
Ending balance (in shares) at Dec. 31, 2017 | 59,182,176 | 6,731,845 | 40,331,989 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net loss | $ (35,127) | $ (313,948) | $ (81,872) |
Adjustments to reconcile net loss to net cash provided by operating activities | |||
Depreciation and amortization | 103,449 | 97,107 | 107,712 |
Gain on disposal of property and equipment | (2,726) | (97) | (760) |
Gain realized on previously held interest in Rockwater | (1,210) | ||
Bad debt expense | 1,542 | 2,385 | 3,179 |
Amortization of debt issuance costs | 4,031 | 3,435 | 576 |
Equity-based compensation | 7,691 | 317 | 692 |
Impairment of goodwill and other intangible assets | 138,666 | 21,366 | |
Impairment of property and equipment | 0 | 60,026 | |
Loss on the sale of business unit | 972 | ||
Other operating items, net | (353) | (1,619) | (2,340) |
Changes in operating assets and liabilities | |||
Accounts receivable | (100,485) | 1,290 | 140,426 |
Prepaid expenses and other assets | (2,177) | 1,224 | 3,112 |
Accounts payable and accrued liabilities | 22,466 | 16,345 | (41,064) |
Net cash (used in) provided by operating activities | (2,899) | 5,131 | 151,999 |
Cash flows from investing activities | |||
Acquisitions, net of cash received | (65,488) | ||
Proceeds received from investments | 830 | ||
Purchase of property, equipment, and intangible assets | (98,722) | (36,290) | (54,076) |
Proceeds received from sale of business unit | 400 | ||
Proceeds received from sale of property and equipment | 7,479 | 9,335 | 14,143 |
Net cash used in investing activities | (156,731) | (26,955) | (38,703) |
Cash flows from financing activities | |||
Proceeds from 144A Offering, net of underwriter fees and expenses | 297,248 | ||
Proceeds from revolving line of credit and issuance of long-term debt | 109,000 | 27,500 | 5,000 |
Payments on long-term debt | (111,000) | (298,000) | (107,000) |
Payment of debt issuance costs | (3,442) | (4,497) | (1,192) |
Proceeds from initial public offering | 140,070 | ||
Payments incurred for initial public offering | (11,566) | ||
Purchase of noncontrolling interests | (348) | ||
(Distributions to) proceeds from noncontrolling interests | (368) | 138 | 92 |
Purchase of treasury stock | (297) | ||
Member contributions (distributions) | 23,519 | (4,248) | |
Net cash provided by (used in) financing activities | 122,397 | 45,560 | (107,348) |
Effect of exchange rate changes on cash | (34) | 75 | |
Net (decrease) increase in cash and cash equivalents | (37,267) | 23,736 | 6,023 |
Cash and cash equivalents, beginning of period | 40,041 | 16,305 | 10,282 |
Cash and cash equivalents, end of period | 2,774 | 40,041 | 16,305 |
Supplemental cash flow disclosure: | |||
Cash paid for interest | 1,999 | 12,773 | 10,584 |
Cash (refunded) paid for taxes | (54) | (192) | 2,262 |
Supplemental disclosure of noncash investing activities: | |||
Capital expenditures included in accounts payable and accrued liabilities | $ 11,137 | $ 1,563 | $ 936 |
BUSINESS AND BASIS OF PRESENTAT
BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS AND BASIS OF PRESENTATION | |
BUSINESS AND BASIS OF PRESENTATION | NOTE 1—BUSINESS AND BASIS OF PRESENTATION Description of the business : Select Energy Services, Inc. (“Select Inc.” or “the Company”) was incorporated as a Delaware corporation on November 21, 2016. The Company is a holding company whose sole material asset consists of a membership interest in SES Holdings, LLC (“SES Holdings” or the “Predecessor”). Unless otherwise stated or the context otherwise indicates, all references to the “Company” or similar expressions for time periods prior to the reorganization and Select 144A Offering transactions (as defined below) refer to SES Holdings and its subsidiaries. For time periods subsequent to the reorganization and Select 144A Offering transactions, these terms refer to Select Energy Services and its subsidiaries. On November 1, 2017, the Company completed the transactions in which Select merged with Rockwater Energy Solutions, Inc. (“Rockwater”) and Rockwater LLC in a stock-for-stock transaction (the “Rockwater Merger”). See Note 3—Acquisitions for further discussion. Select Energy Services is an oilfield services company that provides total water solutions and chemical solutions to the U.S. conventional oil and natural gas industry. The Company provides complementary water-related services that support oil and gas well completion and production activities including containment, monitoring, treatment, flowback and well testing, hauling and water recycling and disposal. The Company also develops and manufactures a full suite of specialty chemicals used in well completions and production chemicals used to enhance performance over the life of a well. These services are necessary to establish and maintain production of oil and gas over the productive life of a well. The Company also operates a wellsite services group to complement its total water solutions and chemical solutions offering. These services include equipment rental, accommodations, crane and logistics services, wellsite and pipeline construction, field and well services, sand hauling and fluids logistic services. In addition, the Company provides water transfer, fluids hauling, containment and rental services in Canada. The Company conducts its wellsite services activities on a third‑party contractual basis unrelated to its water‑related services. Reorganization : On December 20, 2016, Select Energy Services completed a private placement (the “Select 144A Offering”) of 16,100,000 shares of Class A‑1 Common Stock, par value $0.01 per share (“Class A-1 Common Stock”) at an offering price of $20.00 per share. In conjunction with the Select 144A Offering, SES Holdings’ then existing Class A and Class B units were converted into a single class of common units (the “SES Holdings LLC Units”) and SES Holdings effected a 10.3583 for 1 unit split. In exchange for the contribution of all net proceeds from the Select 144A Offering to SES Holdings, SES Holdings issued 16,100,000 SES Holdings LLC Units to Select Inc., and Select Inc. became the sole managing member of SES Holdings. Select Inc. issued 38,462,541 shares of Class B Common Stock to the other member of SES Holdings, SES Legacy Holdings, LLC (“Legacy Owner Holdco”) or one share for each SES Holdings LLC Unit held by Legacy Owner Holdco. Select Inc. also acquired 3,802,972 SES Holdings LLC Units from certain legacy owners (the “Contributing Legacy Owners”) in exchange for the issuance of 3,802,972 shares of Class A Common Stock. In connection with the closing of the Select 144A Offering, Class A-1 Common Stock was converted into Class A Common Stock. Refer below for further discussion. Shareholders of Class A Common Stock, and Class B Common Stock vote together as a single class on all matters, subject to certain exceptions in the Company’s amended and restated certificate of incorporation. Holders of Class B Common Stock have voting rights only and are not entitled to an economic interest in Select Inc. based on their ownership of Class B Common Stock. The reorganization transactions were treated as a combination of entities under common control with assets and liabilities transferred at their carrying amounts in a manner similar to a pooling of interests. Initial Public Offering: On April 26, 2017, the Company completed its initial public offering (“IPO”) of 8,700,000 shares of Class A Common Stock at a price of $14.00 per share. On May 10, 2017, the underwriters of the IPO exercised their over-allotment option to purchase an additional 1,305,000 shares of Class A Common Stock at the IPO price of $14.00 per share. After deducting underwriting discounts and commissions and estimated offering expenses payable by it, the Company received $128.5 million of the aggregate net proceeds from the IPO (including the over-allotment option). The Company contributed all of the net proceeds received by it to SES Holdings in exchange for SES Holdings LLC Units. SES Holdings used the net proceeds in the following manner: (i) $34.0 million was used to repay borrowings incurred under the Company’s Previous Credit Facility (as defined and discussed in Note 8) to fund the cash portion of the purchase price of the GRR Acquisition, as defined below, (ii) $7.8 million was used for the cash settlement of outstanding phantom unit awards and (iii) the remaining net proceeds are intended to be used for general corporate purposes, including funding capital expenditures. Credit Agreement: Concurrent with the Rockwater Merger, the Company entered into a $300.0 million senior revolving credit facility. In addition, the obligations under the Previous Credit Facility (as defined and discussed in Note 8) were repaid in full and the Previous Credit Facility (as defined and discussed in Note 8) was terminated. See Note 8— Debt for further discussion . Exchange rights : Under the Eighth Amended and Restated Limited Liability Company Agreement of SES Holdings (the “SES Holdings LLC Agreement”), Legacy Owner Holdco and its permitted transferees have the right (an “Exchange Right”) to cause SES Holdings to acquire all or a portion of its SES Holdings LLC Units for, at SES Holdings’ election, (i) shares of Class A Common Stock at an exchange ratio of one share of Class A Common Stock for each SES Holdings LLC Unit exchanged, subject to conversion rate adjustments for stock splits, stock dividends, reclassification and other similar transactions or (ii) cash in an amount equal to the Cash Election Value (as defined within the SES Holdings LLC Agreement) of such Class A Common Stock. Alternatively, upon the exercise of any Exchange Right, Select Inc. has the right (the “Call Right”) to acquire the tendered SES Holdings LLC Units from the exchanging unitholder for, at its election, (i) the number of shares of Class A Common Stock the exchanging unitholder would have received under the Exchange Right or (ii) cash in an amount equal to the Cash Election Value of such Class A Common Stock. In connection with any exchange of SES Holdings LLC Units pursuant to an Exchange Right or Call Right, the corresponding number of shares of Class B Common Stock will be cancelled. Registration rights : In December 2016, in connection with the closing of the Select 144A Offering, Select Inc. entered into a registration rights agreement with FBR Capital Markets & Co. for the benefit of the investors in the Select 144A Offering. Under this registration rights agreement, the Company agreed, at its expense, to file with the SEC, in no event later than April 30, 2017, a shelf registration statement registering for resale the 16,100,000 shares of Class A Common Stock issuable upon conversion of the Class A‑1 Common Stock sold in the Select 144A Offering plus any additional shares of Class A‑1 Common Stock issued in respect thereof whether by stock dividend, stock distribution, stock split or otherwise, and to use commercially reasonable efforts to cause such registration statement to be declared effective by the SEC as soon as practicable but in any event within 60 days after the closing of the IPO. The Company filed this registration statement with the SEC on April 28, 2017 and this registration statement was declared effective by the SEC on June 13, 2017. Accordingly, each share of Class A‑1 Common Stock outstanding automatically converted into a share of Class A Common Stock on a one‑for‑one basis at that time. In addition, Legacy Owner Holdco has the right, under certain circumstances, to cause the Company to register the shares of Class A Common Stock obtained pursuant to the Exchange Right. Tax receivable agreements : In connection with the Company’s restructuring at the Select 144A Offering, Select Inc. entered into two tax receivable agreements (the “Tax Receivable Agreements”) with Legacy Owner Holdco and certain other affiliates of the then-holders of SES Holdings LLC Units (collectively, the “TRA Holders”). On July 18, 2017, the Company’s board of directors approved amendments to each of the Tax Receivable Agreements. See Note 13—Related Party Transactions for further discussion. Basis of presentation : The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC. The consolidated financial statements include the accounts of the Company and all of its majority‑owned or controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments which are of a normal recurring nature and considered necessary for a fair presentation of the Company’s financial statements have been included in these consolidated financial statements. The Company’s historical financial statements prior to the Select 144A Offering and reorganization transactions are prepared using SES Holdings’ historical basis in the assets and liabilities, and include all revenues, costs, assets and liabilities attributed to SES Holdings. For investments in subsidiaries that are not wholly owned, but where the Company exercises control, the equity held by the minority owners and their portion of net income or loss are reflected as noncontrolling interests. Investments in entities in which the Company exercises significant influence over operating and financial policies are accounted for using the equity method, and investments in entities for which the Company does not have significant control or influence are accounted for using the cost method. Discontinued operations : The Company considers a component of its business to be one that comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of its business. The operating results of a component of its business that either has been disposed of or is classified as held for sale are presented as discontinued operations when the operations and cash flows of the component have been or will be eliminated from its ongoing operations as a result of the disposal transaction and the Company will not have any significant continuing involvement in the operations of the disposed component. Segment reporting : The Company has three operating and reportable segments. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance. As a result of the Rockwater Merger, the Company reorganized its reporting structure and aligned its segments and underlying businesses to execute on the strategies of the combined company. The Company’s revised operating and reportable segments are Water Solutions, Oilfield Chemicals and Wellsite Services. Accordingly, prior period segment information has been retrospectively revised as of December 31, 2016 and for the years ended December 31, 2016 and 2015 . Corporate and other expenses that do not individually meet the criteria for segment reporting are reported separately as Corporate. Reclassifications : Certain reclassifications have been made to the Company’s prior period consolidated financial information in order to conform to the current year presentation. These presentation changes did not impact the Company’s consolidated net income, total assets, total liabilities or total stockholders’ equity. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SIGNIFICANT ACCOUNTING POLICIES Use of estimates : The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to recoverability of long‑lived assets and intangibles, useful lives used in depreciation and amortization, uncollectible accounts receivable, income taxes, self‑insurance liabilities, share‑based compensation and contingent liabilities. The Company bases its estimates on historical and other pertinent information that are believed to be reasonable under the circumstances. The accounting estimates used in the preparation of the consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Cash and cash equivalents : The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Accounts receivable and allowance for doubtful accounts : Accounts receivable are stated at the invoiced amount, or the earned but not yet invoiced amount, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on the review of several factors, including historical collection experience, current aging status of the customer accounts and financial condition of its customers. Accounts receivable are written off when a settlement is reached for an amount less than the outstanding historical balance or when the Company determines that it is probable the balance will not be collected. The change in allowance for doubtful accounts is as follows: For the year ended December 31, 2017 2016 2015 (in thousands) Balance at beginning of year $ 2,144 $ 2,351 $ 3,169 Provisions for bad debts, included in selling, general and administrative 1,542 2,385 3,179 Uncollectible receivables written off (707) (2,592) (3,997) Balance at end of year $ 2,979 $ 2,144 $ 2,351 Concentrations of credit and customer risk : Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The amounts held in financial institutions periodically exceed the federally insured limit. Management believes that the financial institutions are financially sound and the risk of loss is minimal. The Company minimizes its exposure to counterparty credit risk by performing credit evaluations and ongoing monitoring of the financial stability of its customers. There were no customers that accounted for more than 10.0% of the Company’s consolidated revenues for the years ended December 31, 2017 and 2016. During 2015, Anadarko Petroleum Corporation (“Anadarko”) accounted for 10.6% of the Company’s consolidated revenues; these revenues related to the Water Solutions and Wellsite Services segments. Inventories : The Company values its inventories at lower of cost or net realizable value. Inventory costs are determined under the weighted-average method. Inventory costs primarily consist of chemicals and materials available for resale and parts and consumables used in operations. Debt issuance costs : Debt issuance costs consist of costs directly associated with obtaining credit with financial institutions. These costs are recorded as a direct deduction from the carrying value of the associated debt liability and are generally amortized on a straight‑line basis over the life of the credit agreement, which approximates the effective‑interest method. During the year ended December 31, 2017, the Company expensed unamortized debt issuance costs of $2.9 million upon repayment and termination of the Previous Credit Facility (as defined and discussed in Note 8). In connection with the entry into the Credit Agreement, the Company incurred debt issuance cost of $3.4 million. Amortization expense for debt issuance costs was $4.0 million, $3.4 million and $3.2 million for the years ended December 31, 2017, 2016 and 2015, respectively, and is included in interest expense in the consolidated statements of operations. Property and equipment : Property and equipment are stated at cost less accumulated depreciation. Depreciation (and amortization of capital lease assets) is calculated on a straight line basis over the estimated useful life of each asset as noted below: Asset Classification Useful Life (years) Land Indefinite Buildings and leasehold improvements 30 or lease term Vehicles and equipment 4 - 7 Machinery and equipment 2 - 15 Computer equipment and software 3 - 4 Office furniture and equipment 7 Disposal wells 7 - 10 Helicopters 7 Depreciation expense related to the Company’s property and equipment, including amortization of property under capital leases was $92.6 million, $88.2 million and $98.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. Expenditures for additions to property and equipment and major replacements are capitalized when they significantly increase the functionality or extend the useful life of the asset. Gains and losses on dispositions, maintenance, repairs and minor replacements are included in the consolidated statements of operations as incurred. See Note 6—Property and Equipment for further discussion. Business Combination: The Company records business combinations using the acquisition method of accounting. Under the acquisition method of accounting, identifiable assets acquired and liabilities assumed are recorded at their acquisition date fair values. The excess of the purchase price over the estimated fair value is recorded as goodwill. Changes in the estimated fair values of net assets recorded for acquisitions prior to the finalization of more detailed analysis, but not to exceed one year from the date of acquisition, will adjust the amount of the purchase price allocable to goodwill. Measurement period adjustments are reflected in the period in which they occur. Goodwill and other intangible assets : Goodwill represents the excess of the purchase price of acquisitions over the fair value of the net assets acquired. Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets with finite useful lives are amortized either on a straight‑line basis over the asset’s estimated useful life or on a basis that reflects the pattern in which the economic benefits of the intangible assets are realized. Impairment of goodwill, long‑lived assets and intangible assets : Long‑lived assets, such as property and equipment and finite‑lived intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that its carrying value may not be recoverable. Recoverability is measured by a comparison of its carrying amount to the estimated undiscounted cash flows to be generated by those assets. If the undiscounted cash flows are less than the carrying amount, the Company records impairment losses for the excess of its carrying value over the estimated fair value. The development of future cash flows and the estimate of fair value represent its best estimates based on industry trends and reference to market transactions and are subject to variability. The Company considers the factors within the fair value analysis to be Level 3 inputs within the fair value hierarchy. Due to certain economic factors related to oil prices and rig counts, during 2015, an impairment loss of $1.3 million related to other intangible assets was recognized within impairment of intangible assets in the consolidated statements of operations. The impairment related to certain intangible assets within the Company’s Water Solutions segment. The Company determined that triggering events existed during 2016 resulting in an evaluation of the recoverability of the carrying value of certain property and equipment. As a result of this evaluation, the Company recorded impairment of property and equipment of $60.0 million related to the Company’s Water Solutions segment and impairment of other intangible assets of $0.1 million related to the Company’s Wellsite Services segment. As a result of this annual impairment test, the Company recorded no impairment of property and equipment during the year ended December 31, 2017. See Note 12—Fair Value Measurement for further discussion. The Company conducts its annual goodwill impairment tests in the fourth quarter of each year, and whenever impairment indicators arise, by examining relevant events and circumstances which could have a negative impact on its goodwill such as macroeconomic conditions, industry and market conditions, cost factors that have a negative effect on earnings and cash flows, overall financial performance, acquisitions and divestitures and other relevant entity-specific events. If a qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would be required to perform a quantitative impairment test for goodwill using a two-step approach. In the first step, the fair value of each reporting unit is determined and compared to the reporting unit’s carrying value, including goodwill. To determine the fair value of the reporting unit, the Company uses an income approach, which provides an estimated fair value based on the present value of expected future cash flows. The Company discounts the resulting future cash flows using weighted average cost of capital calculations based on the capital structures of publicly traded peer companies. The Company’s reporting units are based on its organizational and reporting structure. If the fair value of a reporting unit is less than its carrying value, the second step of the goodwill impairment test is performed to measure the amount of impairment, if any. In the second step, the fair value of the reporting unit is allocated to the assets and liabilities of the reporting unit as if it had been acquired in a business combination and the purchase price was equivalent to the fair value of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is referred to as the implied fair value of goodwill. If the implied fair value of goodwill at the reporting unit level is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of goodwill at the reporting unit is less than its carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, allocation of assets (including goodwill) and liabilities to reporting units and determining the fair value. The determination of reporting unit fair value relies upon certain estimates and assumptions that are complex and are affected by numerous factors, including the general economic environment and levels of exploration and production (“E&P”) activity of oil and gas companies, the Company’s financial performance and trends and the Company’s strategies and business plans, among others. Unanticipated changes, including immaterial revisions to these assumptions could result in a provision for impairment in a future period. Given the nature of these evaluations and their application to specific assets and time frames, it is not possible to reasonably quantify the impact of changes in these assumptions. Due to certain economic factors related to oil prices and rig counts during 2015, an impairment loss of $20.1 million related to goodwill was recognized in the consolidated statements of operations for the year ended December 31, 2015. The Company determined that additional triggering events were present during 2016 resulting in a goodwill impairment assessment of $138.5 million, primarily related to the Company’s Water Solutions segment. As a result of the Company’s annual impairment test, no impairment loss was recognized during the year ended December 31, 2017. See Note 7—Goodwill and Other Intangible Assets and Note 12—Fair Value Measurement for further discussion. Asset retirement obligations : The asset retirement obligation (“ARO”) liability reflects the present value of estimated costs of plugging, site reclamation and similar activities associated with the Company’s salt water disposal wells. The Company utilizes current retirement costs to estimate the expected cash outflows for retirement obligations. The Company also estimates the productive life of the disposal wells, a credit‑adjusted risk‑free discount rate and an inflation factor in order to determine the current present value of this obligation. The Company’s ARO liabilities are included in accrued expenses and other current liabilities and other long term liabilities during the years ended December 31, 2017 and 2016. The change in asset retirement obligations is as follows: For the year ended December 31, 2017 2016 (in thousands) Balance at beginning of year $ 1,668 $ 1,483 Accretion expense, included in depreciation and amortization expense 178 155 Change in estimate — 30 Balance at end of year $ 1,846 $ 1,668 Self‑insurance : The Company self‑insures, through deductibles and retentions, up to certain levels for losses related to general liability, workers’ compensation and employer’s liability and vehicle liability. The Company’s exposure (i.e. the retention or deductible) per occurrence is $1.0 million for general liability, $1.0 million for workers’ compensation and employer’s liability and $1.0 million for vehicle liability. Rockwater’s retentions and deductibles are $0.1 million for general liability, $0.8 million for workers’ compensation and $0.5 million for auto liability and all policies will be combined with the renewal of Select’s policies effective May 1, 2018. We also have an excess loss policy over these coverages with a limit of $100.0 million in the aggregate. Rockwater’s excess coverage has limits of $50.0 million. Management regularly reviews its estimates of reported and unreported claims and provide for losses through reserves. Prior to June 1, 2016, the Company was self‑insured for group medical claims subject to a deductible of $0.3 million for large claims. As of June 1, 2016, the Company is fully‑insured for group medical. In connection with the Rockwater Merger, the Company maintains a separate group medical program for certain employees where medical claims are subject to a deductible of $0.3 million for large claims. The Company is currently in negotiations for a single benefit plan that will be effective June 2018, that will consider multiple options. Employee benefit plans : The Company sponsors a defined contribution 401(k) Profit Sharing Plan (the “401(k) Plan”) for the benefit of substantially all employees of the Company. The 401(k) Plan allows eligible employees to make tax‑deferred contributions, not to exceed annual limits established by the Internal Revenue Service. Prior to December 4, 2015, the Company made matching contributions of 100% of employee contributions, up to 4% of compensation. These matching contributions were vested immediately. Effective December 4, 2015, the employer match was discontinued for all employees. The Company did not make any matching contributions for the year ended December 31, 2016. Effective July 1, 2017, the Company reinstated matching contributions of 100% of employee contributions, up to 4% of compensation with immediate vesting period for existing employees. Starting July 1, 2017, the vesting schedule for new hires is 25% for the first year, 50% for the second year, 75% for the third year and 100% for the fourth year. The Company’s contributions to the 401(k) Plan were $0.8 million and $1.9 million for the years ended December 31, 2017 and 2015, respectively. In connection with the Rockwater Merger the Company maintains a separate 401(k) Plan for U.S. employees (the “Rockwater 401(k) Plan”) and a Registered Retirement Savings Plans for Canadian employees for specified eligible Rockwater employees. The Company made employer contributions either at their discretion or as a matching percentage, as defined by the respective plan agreements. The Company made $0.1 million in employer contributions to the Rockwater 401(k) Plan for the year ended December 31, 2017. Revenue recognition : The Company recognizes revenue when it is realized or realizable and earned. Revenues are considered realized or realizable and earned when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable and (iv) collectability is reasonably assured. Services are typically priced on a throughput, day‑rate, hourly‑rate or per‑job basis depending on the type of services provided. The Company’s services are generally governed by a service agreement or other persuasive evidence of an arrangement that include fixed or determinable fees and do not generally include right of return provisions or other significant post‑delivery obligations. Collectability is reasonably assured based on the establishment of appropriate credit qualification prior to services being rendered. Revenue generated by each of the Company’s revenue streams are outlined as follows: Water Solutions and Related Services —The Company provides water‑related services to customers, including the sourcing and transfer of water, the containment of fluids, measuring and monitoring of water, the filtering and treatment of fluids, well testing and handling, transportation and recycling or disposal of fluids. Operating under Rockwater LLC, the Company also offers sand hauling and logistics services in the Rockies and Bakken regions as well as water transfer, containment and fluids hauling in Western Canada. Revenue from water solutions is primarily based on a per‑barrel price or other throughput metric as specified in the contract. The Company recognizes revenue from water solutions when services are performed. The Company’s agreements with its customers are often referred to as “price sheets” and sometimes provide pricing for multiple services. However, these agreements generally do not authorize the performance of specific services or provide for guaranteed throughput amounts. As customers are free to choose which services, if any, to use based on the Company’s price sheet, the Company prices its separate services on the basis of their standalone selling prices. Customer agreements generally do not provide for performance‑, cancellation‑, termination‑, or refund‑type provisions. Services based on price sheets with customers are generally performed under separately‑issued “work orders” or “field tickets” as services are requested. Of the Company’s Water Solutions service lines, only sourcing and transfer of water are consistently provided as part of the same arrangement. In these instances, revenue for both sourcing and transfer are recognized concurrently when delivered. Accommodations and Rentals —The Company provides workforce accommodations and surface rental equipment. Accommodation services include trailer housing and mobile home units for field personnel. Equipment rentals are related to the accommodations and include generators, sewer and water tanks and communication systems. Revenue from accommodations and equipment rental is typically recognized on a day-rate basis. Wellsite Completion and Construction Services —The Company provides crane and logistics services, wellsite and pipeline construction and field services. Revenue for heavy-equipment rental is typically recognized on a day-rate basis. Construction or field personnel revenue is based on hourly rates or on a per-job basis as services are performed. Oilfield Chemical Product Sales— The Company develops, manufactures and markets a full suite of chemicals utilized in hydraulic fracturing, stimulation, cementing and well completions, including polymers that create viscosity, crosslinkers, friction reducers, surfactants, buffers, breakers and other chemical technologies, to leading pressure pumping service companies in the United States. The Company also provides production chemicals solutions, which are applied to underperforming wells in order to enhance well performance and reduce production costs through the use of production treating chemicals, corrosion and scale monitoring, chemical inventory management, well failure analysis and lab services. Oilfield Chemicals products are generally sold under sales agreements based upon purchase orders or contracts with customers that do not include right of return provisions or other significant post‑delivery obligations. The Company’s products are produced in a standard manufacturing operation, even if produced to the customer’s specifications. The prices of products are fixed and determinable and are established in price lists or customer purchases orders. The Company recognizes revenue from product sales when title passes to the customer, the customer assumes risks and rewards of ownership, collectability is reasonably assured and delivery occurs as directed by the customer. Equity‑based compensation : The Company accounts for equity‑based awards by measuring the awards at the date of grant and recognizing the grant‑date fair value as an expense using either straight‑line or accelerated attribution, depending on the specific terms of the award agreements over the requisite service period, which is usually equivalent to the vesting period. The Company expenses awards with graded‑vesting service conditions on a straight‑line basis. The Company had liability awards that were contingent upon meeting certain equity returns and a liquidation event. These awards were settled in cash during the year ended December 31, 2017. See Note 10—Equity‑based Compensation for further discussion. Foreign currency: The Company’s functional currency is the U.S. dollar. The Company has Canadian subsidiaries that have designated the Canadian dollar as their functional currency. Assets and liabilities are translated at period-end exchange rates, while revenues and expenses are translated at average rates for the period. The Company follows a practice of settling its intercompany loans; accordingly, the related translation gains and losses are recognized within foreign currency gains (losses) on the accompanying consolidated statements of comprehensive income (loss). Translation adjustments for the asset and liability accounts are included as a separate component of accumulated other comprehensive loss in shareholders’ equity. During the year ended December 31, 2017, the Company incurred foreign currency translation gains of $0.3 million, due to a Canadian subsidiary acquired through Rockwater Merger. During the years ended December 31, 2016 and 2015, the Company did not record foreign currency translations gains or losses. Currency transaction gains and losses are recorded on a net basis in other income and expense, net, in the accompanying consolidated statements of operations. During the year ended December 31, 2017, the Company reported net foreign currency gains of $0.3 million. During the year ended December 31, 2016 and 2015, the Company did not record foreign currency transaction gains or losses. Derivatives and hedging : The Company accounts for certain interest rate swaps as cash flow hedges. Management formally assesses both at the hedge’s inception and on an ongoing basis that the derivative will be highly effective in offsetting changes in cash flows of the related hedged items. The fair values of the derivatives are recognized as either assets or liabilities in the consolidated balance sheets. The effective portions of the changes in fair values of the derivative contracts are initially recorded in accumulated other comprehensive income and reclassified into the statement of operations in the period in which earnings are impacted by the hedged items or in the period that the transaction no longer qualifies as a cash flow hedge. The ineffective portion of the gains or losses on the derivative contracts, if any, is recognized in the consolidated statement of operations as it is incurred. See Note 11—Derivative Financial Instruments for further discussion. Fair value measurements : The Company measures certain assets and liabilities pursuant to accounting guidance which establishes a three‑tier fair value hierarchy and prioritizes the inputs used in measuring fair value. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices or other market data for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3 inputs are unobservable inputs based upon its own judgment and assumptions used to measure assets and liabilities at fair value. See Note 12—Fair Value Measurement for further discussion. Income taxes : Select Inc. is subject to U.S. federal, foreign and state income taxes as a corporation. SES Holdings and its subsidiaries, with the exception of certain corporate subsidiaries, are treated as flow‑through entities for U.S. federal income tax purposes and as such, are generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to their taxable income is passed through to their members or partners. Accordingly, prior to the reorganization in connection with the Select 144A Offering, the Predecessor only recorded a provision for Texas franchise tax and U.S. federal and state provisions for certain corporate subsidiaries as the Predecessor’s taxable income or loss was includable in the income tax returns of the individual partners and members. However, for periods following the reorganization in connection with the Select 144A Offering, Select Inc. recognizes a tax liability on its allocable share of SES Holdings’ taxable income. The state of Texas includes in its tax system a franchise tax applicable to the Company and an accrual for franchise taxes is included in the financial statements when appropriate. The Company and its subsidiaries account for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled pursuant to the provisions of Accounting Standards Codification (“ASC”) 740, Income Taxes. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized. The determination of the provision for income taxes requires significant judgment, use of estimates and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes through the provision for income taxes. The Company recognizes interest and penalties relating to uncertain tax provisions as a component of tax expense. The Company identified no material uncertain tax positions as of December 31, 2017 and 2016. See Note 14—Income Taxes for further discussion. Discontinued operations: During the years ended December 31, 2017 and 2016, there were no activities or cash flows related to discontinued operations. During the year ended December 31, 2015, the Company completed the liquidation of certain Canadian subsidiaries disposed of during 2014. The results of operations related to discontinued operations consisted of other (income) expense, net in the amount of less than $0.1 million within the consolidated statement of operations for the year ended December 31, 2015. The cash flows from discontinued operations were as follows: Year Ended December 31, 2015 (in thousands) Net cash provided by operating activities $ 400 Net cash provided by investing activities 679 Net cash used in financing activities (1,678) Effect of exchange rate changes on cash 75 Net decrease in cash $ (524) Emerging Growth Company status: Under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company is an “emerging growth company,” or an “EGC,” which allows the Company to have an extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. The Company intends to take advantage of all of the reduced reporting requirements and exemptions, including the longer phase‑in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act until the Company is no longer an emerging growth company. The Company’s election to use the phase‑in periods permitted by this election may make it difficult to compare the Company’s financial statements to those of non‑emerging growth companies and other emerging growth companies that have opted out of the longer phase‑in periods under Section 107 of the JOBS Act and who will comply with new or revised financial accounting standards. If the Company was to subsequently elect to immediately comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act. Recent accounting pronouncements : In May 2014, the Financial Accounting Standards Board (the “FASB”) issued an accounting standards update (“ASU”) on a comprehensive new revenue recognition standard that will supersede ASC 605, Revenue Recognition. ASU 2014-09, Revenue from Contracts with Customers , creates a framework under which an entity will allocate the transaction price to separate performance obligations and recognize revenue when each performance obligation is satisfied. Under the new standard, entities will be required to use judgment and make estimates, including identifying performance obligations in a contract, estimating the amount of variable consideration to include in the transaction price, allocating the transaction price to each separate performance obligation and determining when an entity satisfies its performance obligations. The standard allows for either “full retrospective” adoption, meaning that the standard is applied to all of the periods presented with a cumulative catch‑up as of the earliest period presented, or “modified retrospective” adoption, meaning the standard is applied only to the most current period presented in the financial statements with a cumulative catch‑up as of the current period. In August 2015, the FASB decided to defer the original effective date by one year to be effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019 for emerging growth companies. In accordance with the JOBS Act the Company is afforded the extended transition period and are not required to adopt the ASU until January 1, 2019. The Company is currently evaluating whether the adoption of the ASU will have a material impact that on its consolidated financial statements and related disclosures, and internal controls over financial reporting and has not yet determined the method by which it will adopt the standard. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory , which provides that an entity that |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2017 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 3—ACQUISITIONS Business combinations Rockwater Merger On November 1, 2017, the Company completed the Rockwater Merger in which the Company combined with Rockwater. Rockwater is a provider of comprehensive water management solutions and oilfield chemicals to the oil and gas industry in the United States and Canada. The complementary nature of Rockwater’s business operations will create a leading pre-frac and water solutions company across all major U.S. unconventional basins. Total consideration was $620.2 million based on the closing price of the Company’s shares of Class A Common Stock on November 1, 2017. Consideration transferred consisted of shares of Class A Common Stock, shares of Class A-2 Common Stock, shares of Class B Common Stock, and SES Holdings LLC Units. Consideration transferred also included the Company’s previously held interest in Rockwater, which was acquired as consideration in a sale of assets by Select’s predecessor to Rockwater’s predecessor in 2008 prior to the contribution of those assets to Rockwater and the related conversion of the ownership interests received by Select’s predecessor to ownership interests in Rockwater in 2011, and the fair value of Rockwater’s replaced share-based payments attributed to pre-acquisition service. In addition, the Company’s pre-merger interest in Rockwater was cancelled pursuant to the merger agreement. The pre-merger interest in Rockwater was previously included in other assets in the consolidated balance sheet. It was remeasured to a fair value of $2.3 million, which resulted in a gain of $1.2 million recognized in the fourth quarter of 2017 in other income in the consolidated statement of operations. For the year ended December 31, 2017, the Company expensed $8.9 million of transaction-related costs which are included in selling, general and administrative within the consolidated statement of operations. The Rockwater Merger was accounted for as a business combination under the acquisition method of accounting. The preliminary allocation of the consideration transferred is based on management’s estimates, judgments and assumptions and are subject to change with the final valuation. This preliminary allocation is subject to being adjusted in the twelve-month period following the transaction date, reflecting significant new information that may be obtained in the future about facts and circumstances that existed as of the transaction date that, if known, would have affected the measurement of the amounts initially recognized. The final allocation of purchase consideration could include changes in the estimated fair value of working capital, property and equipment, intangible assets, other long-term assets, deferred tax liabilities and other long-term liabilities. Adjustments in the purchase price allocation may require a change in the amount allocated to goodwill during the period in which the adjustments are determined. When determining the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. The Company also engaged third-party valuation experts to assist in the purchase price allocation and the recorded valuation of property and equipment. The Company has received preliminary reports from these experts including estimates, judgments and assumptions for the valuation of the tangible and intangible assets acquired and liabilities assumed. These preliminary reports along with the analysis and expertise of management have formed the basis for the preliminary allocation. Detailed analysis and review of the assets acquired, including confirmation of the condition, existence and utility of the assets is currently ongoing. Management believes that the current information provides a reasonable basis for estimating fair values of assets acquired and liabilities assumed. These estimates, judgments and assumptions are subject to change and should be treated as preliminary values as there could be significant changes upon final valuation. Management currently believes that its valuation work and the work of its third party experts will be completed and a final purchase price allocation will be recorded by June 30, 2018. Included in the working capital figure in the table below is accounts receivable acquired with a fair value of $196.9 million, and a gross contractual amount of $199.1 million. The Company expects $2.2 million of the gross contractual amount to be uncollectible. Management estimated that total consideration paid exceeded the fair value of the net assets acquired and liabilities assumed by $247.2 million, which excess was recognized as goodwill. The goodwill recognized was primarily attributable to synergies driven by expanding into new geographies and service offerings, strengthening existing service lines, acquiring an established, trained workforce and expected cost reductions. Goodwill of $231.6 million and $15.6 million was allocated to the Company’s Water Solutions and Oilfield Chemicals segments, respectively. The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition: Preliminary purchase price allocation Amount Consideration transferred (in thousands) Class A Common Stock (25,914,260 shares) $ 423,957 Class A-2 Common Stock (6,731,845 shares) 110,133 Class B Common Stock (4,356,477 shares) and SES Holdings common units issued (4,356,477 units) 71,272 Fair value of previously held interest in Rockwater 2,310 Fair value of Rockwater share-based awards attributed to pre-acquisition service 12,529 Total consideration transferred 620,201 Less: identifiable assets acquired and liabilities assumed Working capital 146,883 Property and equipment 185,601 Intangible assets Customer relationships 89,007 Trademarks and patents 31,215 Non-compete agreements 3,810 Other long-term assets 62 Deferred tax liabilities (408) Long-term debt (80,555) Other long-term liabilities (2,650) Total identifiable net assets acquired 372,965 Goodwill 247,236 Fair value allocated to net assets acquired $ 620,201 Resource Water Acquisition On September 15, 2017, the Company completed its acquisition (the “Resource Water Acquisition”) of Resource Water Transfer Services, L.P. and certain other affiliated assets (collectively, “Resource Water”). Resource Water provides water transfer services to E&P operators in West Texas and East Texas. Resource Water’s assets include 24 miles of layflat hose as well as numerous pumps and ancillary equipment required to support water transfer operations. Resource Water has longstanding customer relationships across its operating regions which are viewed as strategic to the Company’s water solutions business. The total consideration for the Resource Water Acquisition was $9.0 million, with $6.6 million paid in cash and $2.4 million paid in shares of Class A Common Stock valued at $15.17 per share, subject to customary post‑closing adjustments. The Company funded the cash portion of the consideration for the Resource Water Acquisition with $6.6 million of cash on hand. For the year ended December 31, 2017, the Company expensed $0.1 million of related transaction-related costs, which are included in selling, general and administrative within the consolidated statement of operations. The Resource Water Acquisition was accounted for as a business combination under the acquisition method of accounting. The preliminary allocation of the consideration transferred was based on management’s estimates, judgments and assumptions. When determining the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. These estimates, judgments and assumptions are subject to change upon final valuation and should be treated as preliminary values. Working capital estimates are based on provisional amounts. Management estimated that total consideration paid exceeded the fair value of the net assets acquired by $1.9 million, which excess was recognized as goodwill. The goodwill recognized was attributable to Resource Water’s assembled workforce as well as synergies related to the Company’s comprehensive water solutions strategy. The goodwill was included in the assets of the Company’s Water Solutions segment. The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition: Preliminary purchase price allocation Amount Consideration transferred (in thousands) Cash paid (1) $ 6,586 Class A Common Stock (156,909 shares) 2,380 Total consideration transferred 8,966 Less: identifiable assets acquired and liabilities assumed Working capital (1) 1,189 Fixed assets 3,485 Customer relationship intangible assets (1) 1,933 Other intangible assets (1) 465 Total identifiable net assets acquired 7,072 Goodwill 1,894 Fair value allocated to net assets acquired $ 8,966 (1) The Company obtained additional information related to the working capital, customer relationship intangible assets and other intangible assets balances which led to a decrease of $0.2 million, an increase of less than $0.1 million and a decrease of less than $0.1 million, respectively. The cash paid was also reduced by $0.1 million when finalizing the purchase price. The combined impact of these changes resulted in a corresponding increase of less than $0.1 million in goodwill. GRR Acquisition On March 10, 2017, the Company completed its acquisition (the “GRR Acquisition”) of Gregory Rockhouse Ranch, Inc. and certain other affiliated entities and assets (collectively, the “GRR Entities”). The GRR Entities provide water and water‑related services to E&P companies in the Permian Basin and own and have rights to a vast array of fresh, brackish and effluent water sources with access to significant volumes of water annually and water transport infrastructure, including over 1,200 miles of temporary and permanent pipeline infrastructure and related storage facilities and pumps, all located in the northern Delaware Basin portion of the Permian Basin. The total consideration for the GRR Acquisition was $59.6 million, subject to customary post-closing adjustments, with $53.0 million paid in cash, $1.1 million in assumed tax liabilities to the sellers and $5.5 million paid in shares of Class A Common Stock valued at $20.00 per share. The Company funded the cash portion of the consideration for the GRR Acquisition with $19.0 million of cash on hand and $34.0 million of borrowings under the Company’s Previous Credit Facility (as defined and discussed in Note 8). For the year ended December 31, 2017, the Company expensed $1.0 million of transaction-related costs which are included in selling, general and administrative expenses within the consolidated statement of operations. The GRR Acquisition was accounted for as a business combination under the acquisition method of accounting. When determining the fair values of assets acquired and liabilities assumed, management made significant estimates, judgments and assumptions. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $12.0 million was recorded. The goodwill recognized was primarily attributable to synergies related to the Company’s comprehensive water solutions strategy that are expected to arise from the GRR Acquisition and was attributable to the Company’s Water Solutions segment. The assets acquired and liabilities assumed and the results of operations of the acquired business are included in the Company’s Water Solutions segment. The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition: Purchase price allocation Amount Consideration transferred (in thousands) Cash paid (1) $ 53,032 Class A Common Stock (274,998 shares) 5,500 Assumed liabilities (1) 1,106 Total consideration transferred 59,638 Less: identifiable assets acquired and liabilities assumed Working capital (1) 7,728 Fixed assets 13,225 Customer relationship intangible assets (1) 21,484 Other intangible assets (1) 5,152 Total identifiable net assets acquired 47,589 Goodwill 12,049 Fair value allocated to net assets acquired $ 59,638 (1) The Company obtained additional information related to its cash paid, working capital, customer relationship intangible asset, other intangible asset and assumed tax liabilities to the sellers’ balances which led to an increase of $1.7 million, $1.7 million, less than $0.1 million, less than $0.1 million and $1.1 million, respectively. The combined impact of these changes resulted in a corresponding increase of $1.0 million in goodwill. The Rockwater Merger contributed revenue and net income of $ 128.9 million and $ 4.1 million, respectively, to the results of the Company from the date of acquisition through December 31, 2017. Resource Water Acquisition contributed revenue and net income of $4.6 million and $1.4 million, respectively, to the results of the Company from the date of acquisition through December 31, 2017. The GRR Acquisition contributed revenue and net income of $35.2 million and $3.2 million, respectively, to the consolidated results of the Company from the date of acquisition through December 31, 2017. The following unaudited consolidated pro forma information is presented as if the Rockwater Merger, the GRR Acquisition and the Resource Water Acquisition had occurred on January 1, 2016: Pro Forma Year ended December 31, 2017 2016 (unaudited) (in thousands) Revenue $ 1,263,787 $ 698,778 Net loss (17,069) (375,133) Less: net loss attributable to noncontrolling interests (1) 6,815 153,970 Net loss attributable to Select Energy Services, Inc. (1) $ (10,254) $ (221,163) (1) The allocation of net loss attributable to noncontrolling interests and Select Inc. gives effect to the equity structure as of December 31, 2017 as though the Select 144A Offering, the IPO, the Rockwater Merger, the Resource Water Acquisition, the GRR Acquisition and other equity transactions occurred as of January 1, 2016. However, the calculation of pro forma net loss does not give effect to any other pro forma adjustments for the Select 144A Offering or the subsequent IPO. The unaudited pro forma amounts above have been calculated after applying the Company’s accounting policies and adjusting the Rockwater Merger, GRR Acquisition and Resource Water Acquisition results to reflect the increase to depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied from January 1, 2016 and other related pro forma adjustments. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the Rockwater Merger, the GRR Acquisition or the Resource Water Acquisition, and are presented for illustrative purposes only and are not necessarily indicative of results that would have been achieved if the Rockwater Merger, the GRR Acquisition and the Resource Water Acquisition had occurred as of January 1, 2016 or of future operating performance. Asset acquisitions On November 8, 2017 the Company completed the acquisition of fixed assets from Heritage Environmental Services, LLC (the “Solid Oak Flowback Acquisition”) for $4.9 million in cash, funded entirely with cash on hand. On June 21, 2017 the Company completed the acquisition of fixed assets from Tex-Star Water Services, LLC for $4.2 million in cash, funded entirely with cash on hand. On May 30, 2017 the Company completed the acquisition of automated manifold intellectual property and related assets from Data Automated Water Systems, LLC (the “DAWS Acquisition”) for $4.0 million. This acquisition was paid with $2.0 million of cash and 128,370 shares of Class A Common Stock valued at $2.0 million. The DAWS Acquisition resulted in fixed assets of $1.8 million, patents of $1.9 million and software of $0.3 million. |
EXIT AND DISPOSAL ACTIVITIES
EXIT AND DISPOSAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2017 | |
EXIT AND DISPOSAL ACTIVITIES | |
EXIT AND DISPOSAL ACTIVITIES | NOTE 4—EXIT AND DISPOSAL ACTIVITIES Due to a reduction in industry activity from 2014, the Company made the decision during the year ended December 31, 2016 to close 15 facilities and consolidate operations for the purpose of improving operating efficiencies. The Company recorded $ 3.6 million of charges related to exit and disposal activities and reclassified $ 0.2 million of deferred rent related to accrued lease obligations related to exited facilities during the year ended December 31, 2017. The Company had a remaining balance of $ 22.6 million, inclusive of a short‑term balance of $ 3.6 million in accrued expenses and other current liabilities, as of December 31, 2017 related to accrued lease obligations and terminations at exited facilities within its Water Solutions segment. The Company acquired abandoned lease obligations of $2.5 million as a result of the Rockwater Merger. As of December 31, 2017, the Company has completed its exit from underperforming facilities but will continue to make non‑cancelable lease payments for related facilities through the year ended 2027. The Company’s abandonment of these facilities is not a part of a formalized exit plan. The changes in the abandoned lease obligations for the years ended December 31, 2017 and 2016 are as follows: Acquired abandoned Provision during the Usage during the lease obligations Balance as of year ended year ended during the year ended Balance as of December 31, 2016 December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2017 (in thousands) Lease obligations and terminations $ 18,000 $ 3,572 $ 2,761 $ 2,539 $ 21,350 Reclassification of deferred rent 1,069 1,254 Total $ 19,069 $ 22,604 Acquired abandoned Provision during the Usage during the lease obligations Balance as of year ended year ended during the year ended Balance as of December 31, 2015 December 31, 2016 December 31, 2016 December 31, 2016 December 31, 2016 (in thousands) Lease obligations and terminations $ — $ 19,423 $ 1,423 $ — $ 18,000 Reclassification of deferred rent — 1,069 Total $ — $ 19,069 |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES | |
INVENTORY | NOTE 5—INVENTORIES Inventories, which are comprised of chemicals and materials available for resale and parts and consumables used in operations, are valued at the lower of cost and net realizable value, with cost determined under the weighted-average method. The significant components of inventory are as follows: As of December 31, 2017 2016 (in thousands) Raw materials $ 11,462 $ — Finished goods 29,674 1,001 Materials and supplies 3,462 — 44,598 1,001 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 6—PROPERTY AND EQUIPMENT Property and equipment consists of the following as of December 31, 2017 and 2016: As of December 31, 2017 2016 (in thousands) Land $ 15,286 $ 8,593 Buildings and leasehold improvements 99,222 83,352 Vehicles and equipment 70,537 24,114 Vehicles and equipment - capital lease 2,810 — Machinery and equipment 716,064 534,303 Machinery and equipment - capital lease 900 — Computer equipment and software 12,822 11,102 Office furniture and equipment 4,320 4,275 Disposal wells 67,805 67,566 Helicopters 497 497 Construction in progress 44,732 5,584 1,034,995 739,386 Less accumulated depreciation and impairment (560,886) (490,519) Total property and equipment, net $ 474,109 $ 248,867 Long‑lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As a result of declines in industry activity, the Company decided to shut‑in certain disposal wells and abandon certain machinery and equipment and facilities at underperforming yards. As a result of these decisions, the Company evaluated the recoverability of the carrying value of certain property and equipment. The Company utilized a variety of methods to determine if the impairment of the asset was necessary. These methods included the use of long‑term forecasts of the future revenues and costs related to the assets subject to review, estimated salvage value and appraisals. For shut‑in disposal wells, long‑term forecasts of the future revenue and costs related to the assets were utilized to determine the impairment. The Company impaired machinery and equipment to its estimated salvage value, while owned buildings and land related to certain abandoned facilities at underperforming yards were impaired to appraisal values. Leasehold improvements related to leased abandoned facilities were fully impaired to the extent the Company determined there was no future value. As a result of these assessments, in 2016 the Company recorded impairment of property and equipment of $60.0 million related to the Company’s Water Solutions segment. As a result of the annual impairment assessment, no impairment loss was recorded in 2017. As a result of the Rockwater Merger, the Company acquired various capital leases for certain vehicles, machinery and equipment that expire at various dates during the next five years. Depreciation of assets held under capital lease for the year ended December 31, 2017 was $0.2 million and is included in depreciation and amortization expense in the accompanying consolidated statements of operations. The Company had no capital lease obligations as of December 31, 2016. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
GOODWILL AND OTHER INTANGIBLE ASSETS. | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 7—GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill is evaluated for impairment on at least an annual basis, or more frequently if indicators of impairment exist. As a result of triggering events during 2015, the Company conducted its goodwill impairment test as of September 30, 2015 and recognized the impairment presented below. The Company determined that additional triggering events were present during the first half of 2016 resulting in an additional impairment assessment also as indicated below. The Company performed its annual goodwill impairment test in the fourth quarter of 2017. The annual impairment tests are based on Level 3 inputs. The changes in the carrying amounts of goodwill by reportable segment for the years ended December 31, 2017 and 2016 are as follows: Water Oilfield Wellsite Solutions Chemicals Services Total (in thousands) Balance as of December 31, 2015 $ 137,534 $ — $ 13,237 $ 150,771 Impairment (137,534) — (995) (138,529) Balance as of December 31, 2016 — — 12,242 12,242 Additions 245,542 15,637 — 261,179 Balance as of December 31, 2017 $ 245,542 $ 15,637 $ 12,242 $ 273,421 The components of other intangible assets as of December 31, 2017 and 2016 are as follows: As of December 31, 2017 As of December 31, 2016 Gross Accumulated Net Gross Accumulated Net Value Amortization Value Value Amortization Value (in thousands) (in thousands) Customer relationships $ 169,250 $ 57,836 $ 111,414 $ 56,826 $ 48,236 $ 8,590 Patents and trademarks 33,544 414 33,130 369 142 227 Other 14,704 3,182 11,522 5,122 2,353 2,769 Total other intangible assets $ 217,498 $ 61,432 $ 156,066 $ 62,317 $ 50,731 $ 11,586 Intangibles obtained through acquisitions are initially recorded at estimated fair value based on preliminary information that is subject to change until final valuations are obtained. Customer relationships and non‑compete agreements are being amortized over estimated useful lives ranging from five to thirteen years and two to five years, respectively. Other intangible assets primarily relate to certain water rights and patents that are amortized over estimated useful lives ranging from three to ten years. The Company had $5.3 million and $1.6 million in indefinite-lived water rights as of December 31, 2017 and 2016, respectively. The Company had $23.4 million in indefinite-lived trademarks as of December 31, 2017. No indefinite-lived trademarks were recorded as of December 31, 2016. Indefinite-lived water rights are included within the other component in the tables above. Indefinite-lived trademarks are included in the patents and trademarks component in the table above. As a result of the Rockwater Merger, the Company obtained customer relationships, patents and non-compete agreements that will be amortized over estimated useful lives of thirteen, ten and three years, respectively, with a weighted-average estimated useful life of 12.4 years. The Company also obtained trademarks totaling $23.4 million that have indefinite lives and will be evaluated periodically for impairment. See Note 3—Acquisitions for further discussion. Intangible assets obtained in the GRR Acquisition consisted of customer relationships and non-compete agreements that are being amortized over estimated useful lives of thirteen and five years, respectively, with a weighted-average estimated useful life of 12.5 years. As a result of the GRR Acquisition, the Company also obtained water rights totaling $3.7 million that have indefinite lives and will be evaluated periodically for impairment. Intangible assets obtained in the Resource Water Acquisition consisted of customer relationships and non-compete agreements that are being amortized over estimated useful lives of ten and three years, respectively, with a weighted-average estimated useful life of 8.6 years. See Note 3—Acquisitions for further discussion. The Company acquired patents of $1.9 million as part of the DAWS Acquisition, which are being amortized over the estimated useful lives of ten years. See Note 3—Acquisitions for further discussion. Amortization expense of $10.7 million, $8.7 million and $9.3 million was recorded for the years ended December 31, 2017, 2016 and 2015, respectively. Annual amortization of intangible assets for the next five years and beyond is as follows: Year Ending December 31, Amount (in thousands) 2018 $ 13,028 2019 11,587 2020 11,268 2021 10,111 2022 9,898 Thereafter 71,458 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2017 | |
DEBT | |
DEBT | NOTE 8—DEBT Credit facility and revolving line of credit Select LLC’s previous credit facility (the “Previous Credit Facility”), originally executed in May 2011, has been amended over time. Effective December 20, 2016, the Company amended its Previous Credit Facility to extend the maturity date from February 28, 2018 to February 28, 2020 and reduce the revolving line of credit to $100.0 million. On November 1, 2017, in connection with the Closing (defined below), Select LLC entered into the Credit Agreement (defined below), the obligations of SES Holdings and the Borrower under the Previous Credit Facility were repaid in full and the Previous Credit Facility was terminated. On November 1, 2017, in connection with the closing of the Rockwater Merger (the “Closing”), SES Holdings and Select LLC, a wholly owned subsidiary of SES Holdings (the “Borrower”), entered into a $300.0 million senior secured revolving credit facility (the “Credit Agreement”), by and among SES Holdings, as parent, Select LLC, as Borrower and certain of SES Holdings’ subsidiaries, as guarantors, each of the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent, issuing lender and swingline lender (the “Administrative Agent”). The Credit Agreement also has a sublimit of $40.0 million for letters of credit and a sublimit of $30.0 million for swingline loans. Subject to obtaining commitments from existing or new lenders, the Company has the option to increase the maximum amount under the Credit Agreement by $150.0 million during the first three years following the closing. The maturity date of the Credit Agreement is the earlier of (a) November 1, 2022, and (b) the earlier termination in whole of the Commitments pursuant to Section 2.1(b) or Article VII of the Credit Agreement. The Credit Agreement permits extensions of credit up to the lesser of $300.0 million and a borrowing base that is determined by calculating the amount equal to the sum of (i) 85% of the Eligible Billed Receivables (as defined in the Credit Agreement), plus (ii) 75% of Eligible Unbilled Receivables (as defined in the Credit Agreement), provided that this amount will not equal more than 35% of the borrowing base, plus (iii) the lesser of (A) the product of 70% multiplied by the value of Eligible Inventory (as defined in the Credit Agreement) at such time and (B) the product of 85% multiplied by the Net Recovery Percentage (as defined in the Credit Agreement) identified in the most recent Acceptable Appraisal of Inventory (as defined in the Credit Agreement), multiplied by the value of Eligible Inventory at such time, provided that this amount will not equal more than 30% of the borrowing base, minus (iv) the aggregate amount of Reserves (as defined in the Credit Agreement), if any, established by the Administrative Agent from time to time, including, if any, the amount of the Dilution Reserve (as defined in the Credit Agreement). The borrowing base is calculated on a monthly basis pursuant to a borrowing base certificate delivered by the Borrower to the Administrative Agent. Borrowings under the Credit Agreement bear interest, at Select LLC’s election, at either the (a) one-, two-, three- or six-month LIBOR (“Eurocurrency Rate”) or (b) the greatest of (i) the federal funds rate plus 0.5%, (ii) the one-month Eurocurrency Rate plus 1% and (iii) the Administrative Agent’s prime rate (the ”Base Rate”), in each case plus an applicable margin, and interest shall be payable monthly in arrears. The applicable margin for Eurocurrency Rate loans ranges from 1.50% to 2.00% and the applicable margin for Base Rate loans ranges from 0.50% to 1.00%, in each case, depending on Select LLC’s average excess availability under the Credit Agreement. The applicable margin for Eurocurrency Rate loans will be 1.75% and the applicable margin for Base Rate loans will be 0.75% until June 30, 2018. During the continuance of a bankruptcy event of default, automatically and during the continuance of any other default, upon the Administrative Agent’s or the required lenders’ election, all outstanding amounts under the Credit Agreement will bear interest at 2.00% plus the otherwise applicable interest rate. Level Average Excess Availability Base Rate Margin Eurocurrency Rate Margin I < 33% of the commitments II < 66.67% of the commitments and ≥ 33.33% of the commitments III ≥ 66.67% of the commitments Level Average Revolver Usage Unused Line Fee Percentage I ≥ 50% of the commitments II < 50% of the commitments The obligations under the Credit Agreement are guaranteed by SES Holdings and certain of the subsidiaries of SES Holdings and Select LLC and secured by a security interest in substantially all of the personal property assets of SES Holdings, Select LLC and their domestic subsidiaries. The Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and events of default. If an event of default occurs and is continuing, the lenders may declare all amounts outstanding under the Credit Agreement to be immediately due and payable. In addition, the Credit Agreement restricts SES Holdings’ and Select LLC’s ability to make distributions on, or redeem or repurchase, its equity interests, except for certain distributions, including distributions of cash so long as, both at the time of the distribution and after giving effect to the distribution, no default exists under the Credit Agreement and either (a) excess availability at all times during the preceding 30 consecutive days, on a pro forma basis and after giving effect to such distribution, is not less than the greater of (1) 25% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (2) $37.5 million or (b) if SES Holdings’ fixed charge coverage ratio is at least 1.0 to 1.0 on a pro forma basis, and excess availability at all times during the preceding 30 consecutive days, on a pro forma basis and after giving effect to such distribution, is not less than the greater of (1) 20% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (2) $30.0 million. Additionally, the Credit Agreement generally permits Select LLC to make distributions required under its existing Tax Receivable Agreements. The Credit Agreement also requires SES Holdings to maintain a fixed charge coverage ratio of at least 1.0 to 1.0 at any time availability under the Credit Agreement is less than the greater of (i) 10% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (ii) $15.0 million and continuing through and including the first day after such time that availability under the Credit Agreement has equaled or exceeded the greater of (i) 10% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (ii) $15.0 million for 60 consecutive calendar days. Certain lenders party to the Credit Agreement and their respective affiliates have from time to time performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for the Company and its affiliates in the ordinary course of business for which they have received and would receive customary compensation. In addition, in the ordinary course of their various business activities, such parties and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investments and securities activities may involve the Company’s securities and/or instruments. In addition, certain lenders party to the Previous Credit Facility are lenders under the Credit Agreement. The Company had $75.0 million outstanding under the revolving line of credit as of December 31, 2017 and no debt outstanding as of December 31, 2016. The weighted‑average interest rate of outstanding borrowings under the revolving line of credit was 3.319% as of December 31, 2017. The borrowing capacity under the revolving line of credit was reduced by outstanding letters of credit of $19.8 million and $16.3 million as of December 31, 2017 and 2016, respectively. The Company’s letters of credit have a variable interest rate between 1.50% and 2.00% based on the Company’s average excess availability as outlined above. The unused portion of the available borrowings under the Credit Agreement was $167.3 million at December 31, 2017. Debt issuance costs are amortized to interest expense over the life of the debt to which they pertain. In connection with the entry into the Credit Agreement, the Company incurred $3.4 million of debt issuance cost during the year ended December 31, 2017. In connection with amending its Previous Credit Facility, the Company incurred $4.5 million and $1.2 million of debt issuance costs during the years ended December 31, 2016 and 2015, respectively. The Company wrote off unamortized debt issuance cost related to its Previous Credit Facility of $2.9 million in connection with entry into the Credit Agreement. Total unamortized debt issuance costs as of December 31, 2017 and 2016 were $3.3 million and $3.9 million, respectively. As these debt issuance costs relate to a revolving line of credit, they are presented as a deferred charge within other assets on the consolidated balance sheet. The Company was in compliance with all debt covenants as of December 31, 2017. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 9—COMMITMENTS AND CONTINGENCIES Operating and capital leases The Company is party to non‑cancelable leases for operating locations, equipment and office space. The Company also has capital leases for trucks, trailers and equipment. Rent under the operating lease agreements is recognized ratably over the lease term. Total expenses incurred under these operating lease agreements for the years ended December 31, 2017, 2016 and 2015 was $19.2 million, $21.6 million and $39.2 million, respectively. In January 2016 the Company bought out vehicle operating leases at a total purchase price of $16.2 million. The Company has the following operating and capital lease commitments under non‑cancelable lease terms as of December 31, 2017: Year Ending December 31, Operating Leases (1) Capital Leases Total (in thousands) 2018 $ 24,527 $ 2,088 $ 26,615 2019 11,748 1,021 12,769 2020 10,321 144 10,465 2021 8,195 89 8,284 2022 7,569 — 7,569 Thereafter 30,824 — 30,824 Total minimum lease payments $ 93,184 3,342 $ 96,526 Less: imputed interest of 5.9% (158) Present value of net minimum capital lease payments 3,184 Less: current portion of capital lease obligations (1,965) Present value of long-term portion of capital lease obligations $ 1,219 (1) The Company’s operating lease commitments under non‑cancelable lease terms as of December 31, 2017 include $29.1 million of lease payments related to facilities that are included within the accrual for exit and disposal activities. Refer to Note 4—Exit and Disposal Activities for further discussion. Litigation The Company is subject to a number of lawsuits and claims arising out of the conduct of its business. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. Based on a consideration of all relevant facts and circumstances, including applicable insurance coverage, it is not expected that the ultimate outcome of any currently pending lawsuits or claims against the Company will have a material adverse effect on the consolidated financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these matters. Certain subsidiaries acquired in the Rockwater Merger are under investigation by the U.S Attorney's Office for the Middle District of Pennsylvania and the Environmental Protection Agency. It is alleged that certain employees at some of the facilities altered emissions controls systems on 4% of the vehicles in the fleet in violation of the Clean Air Act. The Company is cooperating with the relevant authorities to resolve the matter. At this time no administrative, civil or criminal changes have been brought against the Company and the Company cannot estimate the possible fines and penalties that may be levied against the Company. General Business Risk As discussed in Note 1, the substantial majority of the Company’s customers are in the oil and gas industry. The oil and gas industry is currently facing unique challenges due to the continued volatility and depressed state of oil and gas prices. |
EQUITY_BASED COMPENSATION
EQUITY‑BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
EQUITY BASED COMPENSATION | |
EQUITY‑BASED COMPENSATION | NOTE 10—EQUITY‑BASED COMPENSATION The SES Holdings 2011 Equity Incentive Plan, (“2011 Plan”) was approved by the Predecessor’s board of managers in April 2011. In conjunction with the Select 144A Offering, the Company adopted the Select Energy Services, Inc. 2016 Equity Incentive Plan (as amended from time to time, the “2016 Plan”) for employees, consultants and directors of the Company and its affiliates. Options that were outstanding under the 2011 Plan immediately prior to the Select 144A Offering were cancelled in exchange for new options granted under the 2016 Plan. On July 18, 2017, the Select Inc. board of directors approved the First Amendment to the 2016 Plan (the “Equity Plan Amendment”), which clarifies the treatment of substitute awards under the 2016 Plan (including substitute awards that may be granted in connection with the Rockwater Merger) and allows for the assumption by the Company of shares eligible under any pre-existing stockholder-approved plan of an entity acquired by the Company or its affiliate (including the Rockwater Energy Solutions Inc. Amended and Restated 2017 Long Term Incentive Plan (the “Rockwater Equity Plan”)), in each case subject to the listing rules of the stock exchange on which Class A Common Stock is listed. The effectiveness of the Equity Plan Amendment was subject to approval by the Company's stockholders and the consummation of the transactions contemplated by the merger agreement for the Rockwater Merger. The Company’s consenting stockholders, who hold a majority of the outstanding common stock of Select Inc., approved the Equity Plan Amendment on July 18, 2017. The Equity Plan Amendment became effective on November 1, 2017 upon the consummation of the Rockwater Merger. The maximum number of shares initially reserved for issuance under the 2016 Plan was 5,400,400 shares of Class A Common Stock, subject to adjustment in the event of recapitalization or reorganization, or related to forfeitures or the expiration of awards. Stock options are granted with terms not to exceed ten years. After giving effect to the Equity Plan Amendment, the maximum number of shares of Class A Common Stock reserved for issuance under the 2016 Plan is equal to (i) 5,400,400 shares plus (ii) 1,011,087 shares that became available on account of the assumption of the Rockwater Equity Plan, subject to adjustment in the event of recapitalization or reorganization, or related to forfeitures or the expiration of awards. The maximum number of shares described in the preceding sentence does not take into account 2,879,112 shares of Class A Common Stock related to substitute awards that were granted under the 2016 Plan following the conversion of outstanding equity awards originally granted under the Rockwater Equity Plan in accordance with the merger agreement. For additional information on such substitute awards, please see the “Rockwater Awards Replaced in the Merger” section below. Phantom unit awards granted under the 2011 Plan, upon vesting, entitled each participant with the right to receive an amount of cash based in part on the fair market value of a share of Class A Common Stock on the date of the IPO. Based on the fair market value of a share of Class A Common Stock of $14.00 on the date of the IPO, each participant received a cash payment equal to $5.53 for each phantom unit on May 5, 2017. Refer to “Phantom Unit Awards” for details related to the payments made in respect of outstanding phantom units in connection with the IPO. Stock option awards Stock options were granted with an exercise price equal to or greater than the fair market value of a share of Class A Common Stock as of the date of grant. The Company historically valued Class A Common Stock on a quarterly basis using a market approach that includes a comparison to publicly traded peer companies using earnings multiples based on their market values and a discount for lack of marketability. The fair value measurement relies on Level 3 inputs. The estimated fair value of its stock options is expensed over their vesting period, which is generally three years from the applicable date of grant. However, certain awards that were granted during the year ended December 31, 2016 in exchange for cancelled awards were immediately vested and fully exercisable on the date of grant because they were granted in exchange for the cancellation of outstanding options granted under the 2011 Plan that were fully vested and exercisable prior to such cancellation. The Company utilizes the Black‑Scholes model to determine fair value, which incorporates assumptions to value equity‑based awards. The risk‑free interest rate is based on the U.S. Treasury yield curve in effect for the expected term of the option at the time of grant. At the time of grant, there was no public market for the Company’s equity. Therefore, the Company considered the historic volatility of publicly traded peer companies when determining the volatility factor. The expected life of the options was based on a formula considering the vesting period and term of the options awarded, which is generally seven to ten years. The table below presents the assumptions used in determining the fair value of stock options granted during the years ended December 31, 2017 and 2016, respectively. The weighted‑average grant date fair value of stock options granted was $7.85 and $1.84 for the years ended December 31, 2017 and 2016, respectively. There were no stock options granted during the year ended December 31, 2015. For the year ended December 31, 2017 2016 Underlying equity $ 20.00 $ 6.08 Strike price $ 20.00 $ 14.33 - 20.61 Dividend yield (%) % % Risk free rate (%) 2.0 - 2.7 % 0.86 % Volatility (%) 46.6 - 46.8 % 63.0 % Expected term (years) 4.0 - 6.0 A summary of the Company’s stock option activity and related information as of and for the year ended December 31, 2017 is as follows: For the year ended December 31, 2017 Weighted-average Stock Options Exercise Price Beginning balance, outstanding 620,721 $ 16.50 Granted 455,126 20.00 Forfeited (113,411) 19.48 Ending balance, outstanding 962,436 $ 17.80 Ending balance, exercisable 412,542 $ 14.49 Aggregate intrinsic value for stock options is based on the difference between the exercise price of the stock options and the quoted closing Class A Common Stock price of $18.24 as of December 31, 2017. The aggregate intrinsic value of stock options outstanding at December 31, 2017 was $1.5 million, with a weighted-average remaining term of 3.4 years. As of December 31, 2017, the total number of in-the-money stock options exercisable was 412,542. The aggregate intrinsic value of stock options exercisable at December 31, 2017 was $1.5 million, with a weighted-average remaining term of 3.4 years. The Company recognized $1.9 million, $0.3 million and $0.7 million of compensation expense related to stock options during the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, there was $0.9 million of unrecognized equity-based compensation expense related to non-vested stock options. This cost is expected to be recognized over a weighted-average period of 1.5 years. Restricted stock units The value of the restricted stock units issued was established by the market price on the date of grant and is being recorded as compensation expense ratably over the vesting term which is generally one to three years from the applicable date of grant. The Company recognized compensation expense of $0.5 million for the year ended December 31, 2017 related to the restricted stock units. No compensation expense was recognized during the years ended December 31, 2016 and 2015 related to restricted stock units. As of December 31, 2017, there was $0.1 million of unrecognized compensation expense with a weighted-average remaining life of 1.4 years related to unvested restricted stock units. A summary of the Company’s restricted stock unit activity and related information for the year ended December 31, 2017 is as follows: For the year ended December 31, 2017 Weighted-average Restricted Stock Grant Date Fair Value Beginning balance — $ — Granted 41,117 19.91 Forfeited (10,757) 20.00 Ending balance 30,360 $ 19.88 Phantom unit awards The Company’s phantom unit awards were cash-settled awards that were contingent upon meeting certain equity returns and a liquidation event. The settlement amount was based on the fair market value of a share of Class A Common Stock on the date of completion of the IPO, which constituted a liquidation event with respect to such phantom unit awards. As a result of the cash-settlement feature of these awards, the Company considered these awards to be liability awards, which are measured at fair value at each reporting date and the pro rata vested portion of the award is recognized as a liability to the extent that the performance condition is deemed probable. On May 5, 2017, the Company settled its outstanding phantom unit awards for an aggregate amount equal to $7.8 million as a result of the completion of its IPO, which constituted a liquidity event with respect to such phantom unit awards. Based on the fair market value of a share of Class A Common Stock on the date of the IPO of $14.00, the cash payment with respect to each phantom unit was $5.53, before employer taxes. The Company recognized compensation expense of $7.8 million for the year ended December 31, 2017 related to the settlement of its phantom unit awards. No compensation expense was recognized in 2016 or 2015 due to the non-occurrence of the performance condition, which was not considered probable. As of December 31, 2017, all phantom units have been settled. Rockwater awards replaced in the merger Under the merger agreement, all outstanding Rockwater equity-based awards were replaced by the Company and converted into Select Inc.’s equivalent replacement awards. See “Rockwater Merger” at Note 3 – Acquisitions for further discussion. The portion of the replacement award that is attributable to pre-combination service by the employee in the amount of $12.5 million is included in the measure of consideration transferred to acquire Rockwater. The remaining fair value of the replacement awards will be recognized as equity-based compensation expense over the remaining vesting period. Total equity-based compensation expense recognized related to Rockwater’s equity-based awards that were replaced by the Company and converted into Select’s equivalent equity-based awards during the year ended December 31, 2017 was $5.2 million which is included in selling, general and administrative within the consolidated statement of operations. As of December 31, 2017, there was $6.6 million of unrecognized equity-based compensation expense related to restricted stock awards and non-vested stock options that were replaced as a result of the Rockwater Merger. This cost is expected to be recognized over a weighted-average period of 1.4 years. The total fair value of restricted stock awards that vested during the time from the Rockwater Merger through December 31, 2017 was $0.5 million. The Company estimated the fair value of the replacement stock options using the Company's common stock price and a Black-Scholes model to estimate the value attributable to the Rockwater equity-based awards converted into Select’s equivalent equity-based awards. The table below presents the assumptions used in determining each equity-based award’s fair value. Volatility was calculated using historical trends of the Company's common stock price. Assumptions Underlying equity $ 16.36 Strike price $ 5.68 - 34.41 Dividend yield (%) % Risk free rate (%) 1.1 - 2.2 % Volatility (%) 45.0 % Expected term (years) 0.0 - 8.4 A summary of the Company’s replacement stock option activity and related information as of and for the year ended December 31, 2017 is as follows: Weighted-average Stock Options Exercise Price Outstanding at November 1, 2017 2,547,258 $ 12.75 Forfeited (13,759) 18.70 Outstanding at December 31, 2017 2,533,499 $ 12.74 Exercisable at December 31, 2017 1,997,785 $ 12.71 The weighted‑average fair value of replacement stock options granted during the year ended December 31, 2017 was $7.47 . The aggregate intrinsic value of replacement stock options outstanding as of December 31, 2017 was $14.8 million, with a weighted-average remaining term of 5.2 years. As of December 31, 2017, the total number of in-the-money replacement stock options exercisable was 1,997,785. The aggregate intrinsic value of stock options exercisable as of December 31, 2017 was $11.0 million, with a weighted-average remaining term of 4.5 years. The replacement restricted stock awards as of and for the year ended December 31, 2017 are as follows: Weighted-average Restricted Stock Fair Value Non-vested at November 1, 2017 331,854 $ 16.36 Vested (32,053) 16.36 Non-vested at December 31, 2017 299,801 $ 16.36 |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2017 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | NOTE 11—DERIVATIVE FINANCIAL INSTRUMENTS The Company had variable rate debt outstanding which was subject to interest rate risk based on volatility in underlying interest rates. In April 2013, the Company entered into a pay fixed, receive variable interest rate swap, with an aggregate notional amount of $125.0 million, which the Company designated as a cash flow hedge. The derivative contract matured in April 2016. There was no activity during the year ended December 31, 2017. The change in value and amounts reclassified to interest expense during the years ended December 31, 2016 and 2015, were nominal. The fair value measurement of the interest rate swap agreement was based on Level 2 inputs. See Note 12—Fair Value Measurement for further discussion. The Company did not have any open derivative instruments as of the years ended December 31, 2017 and 2016. Changes in the fair values of the Company’s derivative instruments are presented on a net basis in the accompanying consolidated statements of operations. There was no activity for the year ended December 31, 2017. Changes in the fair value of the Company’s interest rate swap derivative instruments for the years ended December 31, 2016 and 2015 are as follows: For the year ended December 31, Derivatives designated as cash flow hedges 2016 2015 (in thousands) Beginning fair value of interest rate swap derivative instruments $ (7) $ (68) Amount of unrealized losses recognized in OCI (106) (277) Amount of gains reclassified from AOCI to earnings (effective portion) 113 338 Net change in fair value of interest rate swap derivative instruments 7 61 Ending fair value of interest rate swap derivative instruments $ — $ (7) |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 12 Months Ended |
Dec. 31, 2017 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | NOTE 12—FAIR VALUE MEASUREMENT The Company utilizes fair value measurements to measure assets and liabilities in a business combination or assess impairment of property and equipment, intangible assets and goodwill. Fair value is defined as the amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in an orderly transaction between market participants at the measurement date. Further, ASC 820, Fair Value Measurements, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and includes certain disclosure requirements. Fair value estimates are based on either (i) actual market data or (ii) assumptions that other market participants would use in pricing an asset or liability, including estimates of risk. ASC 820 establishes a three‑level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are defined as follows: Level 1 —Unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 —Quoted prices for similar assets or liabilities in non‑active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 —Inputs that are unobservable and significant to the fair value measurement (including the Company’s own assumptions in determining fair value). A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. There were no transfers into, or out of, the three levels of the fair value hierarchy for the years ended December 31, 2017, 2016 and 2015. Assets and liabilities measured at fair value on a recurring basis The Company estimated the fair value of derivative instruments using the market approach via a model that uses inputs that are observable in the market or can be derived from, or corroborated by, observable data. See Note 11—Derivatives Financial Instruments for further discussion. Assets and liabilities measured at fair value on a non‑recurring basis Nonfinancial assets and liabilities measured at fair value on a non‑recurring basis include certain nonfinancial assets and liabilities as may be acquired in a business combination and measurements of goodwill and intangible impairment. As there is no corroborating market activity to support the assumptions used, the Company has designated these measurements as Level 3. Long‑lived assets, such as property and equipment and finite‑lived intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that its carrying value may not be recoverable. The development of future cash flows and the estimate of fair value represent the Company’s best estimates based on industry trends and reference to market transactions and are subject to variability. The Company conducts its annual goodwill impairment test in the fourth quarter each year and whenever impairment indicators arise, by examining relevant events and circumstances which could have a negative impact on its goodwill such as macroeconomic conditions, industry and market conditions, cost factors that have a negative effect on earnings and cash flows, overall financial performance, acquisitions and divestitures, and other relevant entity-specific events. If a qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would be required to perform a quantitative impairment test for goodwill using a two-step approach. In the first step, the fair value of each reporting unit is determined and compared to the reporting unit’s carrying value, including goodwill. To determine the fair value of the reporting unit, the Company uses an income approach, which provides an estimated fair value based on the present value of expected future cash flows. The Company discounts the resulting future cash flows using weighted average cost of capital calculations based on the capital structures of publicly traded peer companies. The Company’s reporting units are based on its organizational and reporting structure. If the fair value of a reporting unit is less than its carrying value, the second step of the goodwill impairment test is performed to measure the amount of impairment, if any. In the second step, the fair value of the reporting unit is allocated to the assets and liabilities of the reporting unit as if it had been acquired in a business combination and the purchase price was equivalent to the fair value of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is referred to as the implied fair value of goodwill. If the implied fair value of goodwill at the reporting unit level is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of goodwill at the reporting unit is less than its carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, allocation of assets (including goodwill) and liabilities to reporting units and determining the fair value. The determination of reporting unit fair value relies upon certain estimates and assumptions that are complex and are affected by numerous factors, including the general economic environment and levels E&P activity of oil and gas companies, the Company’s financial performance and trends and the Company’s strategies and business plans, among others. The Company’s estimates of fair value have been determined at discrete points in time based on relevant information. These estimates involve uncertainty and cannot be determined with precision. There were no significant changes in valuation techniques or related inputs for the years ended December 31, 2017, 2016 and 2015. The following table presents information about the Company’s assets measured at fair value on a non‑recurring basis for the years ended December 31, 2016 and 2015. Fair Value Measurements Using Carrying Level 1 Level 2 Level 3 Value (1) Impairment (in thousands) Year Ended December 31, 2016 Goodwill $ — $ — $ — $ 138,529 $ 138,529 Intangible Assets — — — 137 137 Fixed Assets — — 23,188 83,214 60,026 Year Ended December 31, 2015 Goodwill $ — $ — $ — $ 20,136 $ 20,136 Intangible Assets — — — 1,230 1,230 (1) Amount represents carrying value at the date of assessment. Other fair value considerations The carrying values of the Company’s current financial instruments, which include cash and cash equivalents, accounts receivable trade and accounts payable, approximate their fair value at December 31, 2017 and 2016 due to the short‑term maturity of these instruments. The carrying value of debt as of December 31, 2017 approximates fair value due to variable market rates of interest. The Company had no outstanding debt as of December 31, 2016. The fair value of debt at December 31, 2017, which is a Level 3 measurement, as estimated based on the Company’s incremental borrowing rates for similar types of borrowing arrangements, when quoted market prices were not available. The estimated fair values of the Company’s financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange. The consideration transferred and the purchase price allocation of identified assets acquired and liabilities assumed related to the Rockwater Merger, GRR Acquisition and Resource Water Acquisition are based on the Company’s estimate of fair value utilizing Level 3 inputs at the date of acquisition. Refer to Note 3 – Acquisitions for further discussion. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 13—RELATED PARTY TRANSACTIONS The Company considers its related parties to be those stockholders who are beneficial owners of more than 5.0% of its common stock, executive officers, members of its board of directors or immediate family members of any of the foregoing persons. The Company has entered into a significant number of transactions with related parties. The Company’s board of directors regularly reviews these transactions; however, the Company’s results of operations may have been different if these transactions were conducted with non‑related parties. During the year ended December 31, 2017, sales to related parties were $9.0 million. Purchases from related party vendors were $10.4 million during the year ended December 31, 2017. These purchases comprised of $3.8 million relating to purchases of property and equipment, $0.3 million relating to inventory and consumables, $2.7 million relating to rent of certain equipment or other services used in operations and $3.6 million relating to management, consulting and other services. During the year ended December 31, 2016, sales to related parties were $1.2 million. Purchases from related party vendors were $4.3 million during the year ended December 31, 2016. These purchases comprised $1.0 million relating to purchases of property and equipment, $0.2 million relating to inventory and consumables, $1.1 million relating to rent of certain equipment or other services used in operations and $2.0 million relating to management, consulting and other services. During the year ended December 31, 2015, sales to related parties were $4.1 million. Purchases from related party vendors were $8.6 million during the year ended December 31, 2015. These purchases comprised $4.0 million relating to purchases of property and equipment, $0.9 million relating to inventory and consumables, $1.0 million relating to rent of certain equipment or other services used in operations and $2.7 million relating to management, consulting and other services. Tax receivable agreements In connection with the Select 144A Offering, the Company entered into the Tax Receivable with the TRA Holders. The first of the Tax Receivable Agreements, which the Company entered into with Legacy Owner Holdco and Crestview GP, generally provides for the payment by the Company to such TRA Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income and franchise tax that the Company actually realizes (computed using simplifying assumptions to address the impact of state and local taxes) or is deemed to realize in certain circumstances in periods after the Select 144A Offering as a result of, as applicable to each such TRA Holder, (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s SES Holdings LLC Units in connection with the Select 144A Offering or pursuant to the exercise of the Exchange Right or the Company’s Call Right and (ii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under such Tax Receivable Agreement. The second of the Tax Receivable Agreements, which the Company entered into with an affiliate of the Contributing Legacy Owners and Crestview GP, generally provides for the payment by the Company to such TRA Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income and franchise tax that the Company actually realizes (computed using simplifying assumptions to address the impact of state and local taxes) or is deemed to realize in certain circumstances in periods after the Select 144A Offering as a result of, as applicable to each such TRA Holder, (i) any net operating losses available to the Company as a result of certain reorganization transactions entered into in connection with the Select 144A Offering and (ii) imputed interest deemed to be paid by the Company as a result of any payments the Company makes under such Tax Receivable Agreement. On July 18, 2017, the Company’s board of directors approved amendments to each of the Tax Receivable Agreements revising the definition of a “change of control” for purposes of the Tax Receivable Agreements and acknowledging that the Merger would not result in such a change of control. See Note 14—Income Taxes for further discussion of amounts recorded in connection with the Select 144A Offering. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
INCOME TAXES | NOTE 14—INCOME TAXES Select Inc. is subject to U.S. federal, foreign and state income taxes as a corporation. SES Holdings and its subsidiaries, with the exception of certain corporate subsidiaries, are treated as flow‑through entities for U.S. federal income tax purposes and as such, are generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to their taxable income is passed through to their members or partners. Accordingly, prior to the reorganization in connection with the Select 144A Offering, the Predecessor only recorded a provision for Texas franchise tax and U.S. federal and state provisions for certain corporate subsidiaries as the Predecessor’s taxable income or loss was includable in the income tax returns of the individual partners and members. However, for periods following the reorganization in connection with the Select 144A Offering, Select Inc. recognizes a tax liability on its allocable share of SES Holdings’ taxable income. The Company’s effective tax rates for the twelve months ended December 31, 2017, 2016 and 2015 were 2.4%, 0.2% and (0.4)% respectively. The effective tax rates for the twelve months ended December 31, 2017 differ from the statutory rate of 35% due to net income allocated to noncontrolling interests, state income taxes, other permanent differences between book and tax accounting and valuation allowances. The Company recorded income tax expense (benefit) of $(0.9) million, $(0.5) and $0.3 million for the twelve months ended December 31, 2017, 2016 and 2015, respectively. The components of the federal and state income tax expense (benefit) are summarized as follows: For the year ended December 31, 2017 2016 2015 (in thousands) Current tax (benefit) expense Federal income tax $ (338) $ — $ 341 State and local income tax (77) 275 836 Foreign income tax — — — Total current (benefit) expense (415) 275 1,177 Deferred tax (benefit) expense Federal income tax (422) (841) (785) State and local income tax (14) 42 (68) Foreign income tax — — — Total deferred benefit (436) (799) (853) Total income tax (benefit) provision $ (851) $ (524) $ 324 Tax (benefit) expense attributable to controlling interests $ (405) $ (179) $ 324 Tax benefit attributable to noncontrolling interests (446) (345) — Total income tax (benefit) provision $ (851) $ (524) $ 324 A reconciliation of the Company’s provision for income taxes as reported and the amount computed by multiplying income before taxes, less noncontrolling interest, by the U.S. federal statutory rate of 35%: For the year ended December 31, 2017 2016 (in thousands) Provision calculated at federal statutory income tax rate: Loss before taxes $ (35,978) $ (314,472) Statutory rate 35 % 35 % Income tax benefit computed at statutory rate (12,592) (110,065) Less: noncontrolling interests 6,409 109,230 Income tax benefit attributable to controlling interests (6,183) (835) State and local income taxes, net of federal benefit (91) 317 Change in enacted tax rate 39,166 — Change in valuation allowance (33,297) 339 Income tax benefit attributable to controlling interests (405) (179) Income tax benefit attributable to noncontrolling interests (446) (345) Total income tax benefit $ (851) $ (524) For the year ended December 31, 2015, the calculation is not applicable as the Company was not subject to federal income taxes prior to the Select 144A Offering, with the exception of certain corporate subsidiaries. Deferred taxes result from the temporary differences between financial reporting carrying amounts and the tax basis of existing assets and liabilities. As of December 31, 2017 and 2016, the Company had net deferred tax liabilities of $0.6 million and $0.6 million, respectively, which are recorded in other long‑term liabilities on the consolidated balance sheets. The principal components of the deferred tax assets (liabilities) are summarized as follows: For the year ended December 31, 2017 2016 (in thousands) Deferred tax assets Outside basis difference in SES Holdings $ 37,931 $ 3,601 Net operating losses 35,243 3,999 Credits and other carryforwards 863 297 Property and equipment — 362 Intangible assets 1,218 — Stock compensation 2,557 — Other 1,340 — Total deferred tax assets before valuation allowance 79,152 8,259 Valuation allowance (75,886) (7,932) Total deferred tax assets 3,266 327 Deferred tax liabilities Property and equipment 3,286 — Intangible assets — 811 Other 549 113 Total deferred tax liabilities 3,835 924 Net deferred tax liabilities $ (569) $ (597) For the year ended December 31, 2017, the Company has recorded an increase in valuation allowance of $68.0 million against certain deferred tax assets, primarily driven by the Rockwater Merger and thus the creation of additional federal, state, and foreign net operating loss carryforwards as well as adjustments to the outside basis of the investment in SES Holdings. The Company has assessed the future potential to realize these deferred tax assets and has concluded it is more likely than not that these deferred tax assets will not be realized based on current economic conditions and expectations of the future. As a result, the Company has not recorded a liability for the effect of any associated Tax Receivable Agreement liabilities as the liability is based on the actual cash tax savings, which are not considered probable as of December 31, 2017. See Note 13—Related Party Transactions for further discussion of the Tax Receivable Agreements. The Tax Cuts and Jobs Act, which was enacted on December 22, 2017, reduced the corporate income tax rate effective January 1, 2018 from 35% to 21%. At December 31, 2017, the Company has not completed its accounting for the tax effects of enactment of the Tax Cuts and Jobs Act; however, it has made reasonable estimates of the effects on its existing deferred tax balances. The Company has remeasured certain deferred federal tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The Company also estimated the impact related to the one time transition tax with respect to certain subsidiaries acquired in the Rockwater Merger. The provisional amount recognized related to the remeasurement of the deferred federal tax balance under the provisions of SAB 118, was reduced due to an offsetting adjustment to the valuation allowance at December 31, 2017. The Company is still analyzing certain aspects of the Tax Cuts and Jobs Act, and refining its calculations, which could potentially affect the measurement of those balances or potentially give rise to new deferred tax amounts. The Company’s estimates may also be affected in the future as the Company gains a more thorough understanding of the Tax Cuts and Jobs Act, and how the individual states are implementing this new law. The Company has a U.S. federal net operating loss carryforward of $137.8 million which begin to expire in 2030; state net operating loss carryforwards of $101.7 million primarily in North Dakota, Pennsylvania, Oklahoma and Colorado which expire in various years, starting in 2020; and foreign loss carryforwards of $14.5 million, which begin to expire in 2035. The tax benefits of deferred tax assets are recorded as an asset to the extent that management assesses the utilization of such assets to be more likely than not. When the future utilization of some portion of deferred tax assets is determined not to be more likely than not, a valuation allowance is provided to reduce the recorded tax benefits from such assets. As of December 31, 2017, management’s assessment as to the realizability of certain deferred tax assets has resulted in the recording of a valuation allowance to reduce deferred tax assets to the amounts that are considered more likely than not to be realized. Management believes there will be sufficient future taxable income based on the reversal of temporary differences to enable utilization or sustainability of those deferred tax assets that do not have a valuation allowance recorded against them. Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement methodology for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As of December 31, 2017 and 2016 there was no material liability or expense for the periods then ended recorded for payments of interest and penalties associated with uncertain tax positions or material unrecognized tax positions and the Company’s unrecognized tax benefits were not material. Separate federal and state income tax returns are filed for Select Inc., SES Holdings and certain consolidated affiliates. The tax years 2014 through 2016 remain open to examination by the major taxing jurisdictions to which the Company is subject to income tax. Select Inc. and SES Holdings are not currently under any income tax audits. Rockwater Energy Solutions, Inc. is currently under federal audit for the tax years 2012-2015. |
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS | 12 Months Ended |
Dec. 31, 2017 | |
NONCONTROLLING INTERESTS. | |
NONCONTROLLING INTERESTS | NOTE 15—NONCONTROLLING INTERESTS The Company has ownership interests in multiple subsidiaries that are consolidated within the Company’s financial statements but are not wholly owned. During the years ended December 31, 2017, 2016 and 2015, the Company entered into transactions that impacted its ownership interest in certain of these subsidiaries while maintaining control over such subsidiaries. As a result of the Company’s change in ownership interest in these subsidiaries, the Company reduced its noncontrolling interests and recognized an increase in equity related to transactions with holders of noncontrolling interests. The Company reports a noncontrolling interest representing the common units of SES Holdings held by Legacy Owner Holdco. Changes in Select Inc.’s ownership interest in SES Holdings while it retains its controlling interest are accounted for as equity transactions. The following table summarizes the effects of changes in noncontrolling interests on equity for the years ended December 31, 2017, 2016 and 2015: For the year ended December 31, 2017 2016 2015 (in thousands) Net loss attributable to Select Energy Services, Inc. and its Predecessor $ (16,816) $ (307,524) $ (80,891) Transfers from noncontrolling interests: Decrease in additional paid-in capital as a result of the contribution of proceeds from the Select 144A Offering to SES Holdings, LLC in exchange for common units — (218,712) — Increase in contributed capital due to purchase of noncontrolling interest — 707 — Decrease in additional paid-in capital as a result of the contribution of net assets acquired to SES Holdings, LLC in exchange for common units (4,879) — — Decrease in additional paid-in capital as a result of the contribution of net assets from the Rockwater Merger to SES Holdings, LLC in exchange for common units (170,276) — — Decrease in additional paid-in capital as a result of the contribution of proceeds from the IPO to SES Holdings, LLC in exchange for common units (41,135) — — Increase in additional paid-in capital as a result of the repurchase of common units of SES Holdings, LLC 113 — — Change to equity from net loss attributable to Select Energy Services, Inc. and its Predecessor and transfers from noncontrolling interests $ (232,993) $ (525,529) $ (80,891) |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2017 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 16—EARNINGS PER SHARE Earnings per share are based on the amount of income allocated to the shareholders and the weighted‑average number of shares outstanding during the period for each class of common stock. The Company’s outstanding restricted stock and stock options are not included in the calculation of diluted weighted-average shares outstanding for the periods presented as the effect is antidilutive. Earnings related to periods prior to the reorganization and Select 144A Offering are attributable to the Predecessor. The following table presents the Company’s calculation of basic and diluted earnings per share for the years ended December 31, 2017, 2016 and 2015 (dollars in thousands, except share and per share amounts): For the year ended December 31, 2017 2016 2015 Net loss $ (35,127) $ (313,948) $ (81,872) Net loss attributable to Predecessor — 306,481 80,891 Net loss attributable to noncontrolling interests 18,311 6,424 981 Net loss attributable to Select Energy Services, Inc. $ (16,816) $ (1,043) $ — Allocation of net loss attributable to: Class A stockholders $ (12,560) $ (199) Class A-1 stockholders (3,691) (844) Class A-2 stockholders (565) — Class B stockholders — — $ (16,816) $ (1,043) Weighted average shares outstanding: Class A-Basic & Diluted 24,612,853 3,802,972 Class A-1-Basic & Diluted 7,233,973 16,100,000 Class A-2-Basic & Diluted 1,106,605 — Class B-Basic & Diluted 38,768,156 38,462,541 Net loss per share attributable to common stockholders: Class A-Basic & Diluted $ (0.51) $ (0.05) Class A-1-Basic & Diluted $ (0.51) $ (0.05) Class A-2-Basic & Diluted $ (0.51) $ — Class B-Basic & Diluted $ — $ — |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 17—SEGMENT INFORMATION Select Inc. is an oilfield services company that provides solutions to the North American onshore oil and natural gas industry. The Company’s services are offered through three operating segments. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s chief operating decision maker assesses performance and allocates resources on the basis of the three reportable segments. Corporate and other expenses that do not individually meet the criteria for segment reporting are reported separately as Corporate. Each operating segment reflects a reportable segment led by separate managers that report directly to the Company’s CODM. The Company’s CODM assesses performance and allocates resources on the basis of the following three reportable segments: Water Solutions —The Water Solutions segment provides water‑related services to customers that include major integrated oil companies and independent oil and natural gas producers. These services include: the sourcing of water; the transfer of the water to the wellsite through permanent pipeline infrastructure and temporary pipe; the containment of fluids off‑ and on‑location; measuring and monitoring of water; the filtering and treatment of fluids, well testing and handling of flowback and produced formation water; and the transportation and recycling or disposal of drilling, completion and production fluids. Oilfield Chemicals —The Oilfield Chemicals segment develops, manufactures and provides a full suite of chemicals utilized in hydraulic fracturing, stimulation, cementing and well completions, including polymer slurries, crosslinkers, friction reducers, buffers, breakers and other chemical technologies, to leading pressure pumping service companies in the United States. Wellsite Services —The Wellsite Completion and Construction Services segment provides oil and natural gas operators with a variety of services, including providing workforce accommodations and surface rental equipment, crane and logistics services, wellsite and pipeline construction and field services. These services are performed to establish, maintain and improve production throughout the productive life of an oil or gas well or to otherwise facilitate other services performed on a well. Financial information by segment for the years ended December 31, 2017, 2016 and 2015 is as follows: For the year ended December 31, 2017 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 528,997 $ 17,424 $ 82,056 $ 87,123 Oilfield chemicals 41,586 663 2,040 3,063 Wellsite services 123,964 (6,527) 17,550 18,091 Eliminations (2,056) — — — Income from operations 11,560 Corporate — (41,559) 1,803 — Interest expense, net — (6,629) — — Other income, net — 650 — — $ 692,491 $ (35,978) $ 103,449 $ 108,277 For the year ended December 31, 2016 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 241,766 $ (282,019) $ 81,051 $ 34,458 Oilfield chemicals — — — — Wellsite services 61,461 (15,038) 16,056 1,868 Eliminations (828) — — — Loss from operations (297,057) Corporate — (1,916) — — Interest expense, net — (16,128) — — Other income, net — 629 — — $ 302,399 $ (314,472) $ 97,107 $ 36,326 For the year ended December 31, 2015 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 427,592 $ (52,757) $ 89,271 $ 34,724 Oilfield chemicals — — — — Wellsite services 109,976 (3,489) 18,177 13,962 Eliminations (1,991) — — — Loss from operations (56,246) Corporate — (12,527) 264 — Interest expense, net — (13,689) — — Other income, net — 893 — — $ 535,577 $ (81,569) $ 107,712 $ 48,686 Total assets by segment as of December 31, 2017 and 2016 is as follows: As of December 31, 2017 2016 (in thousands) Water solutions $ 994,159 $ 324,171 Oilfield chemicals 186,333 — Wellsite services 151,272 68,868 Corporate 24,604 12,027 $ 1,356,368 $ 405,066 Revenue by groups of similar products and services are as follows: For the year ended December 31, 2017 2016 2015 (in thousands) Water sourcing and transfer (1) $ 371,352 $ 144,659 $ 230,354 Well testing and flowback 90,075 37,582 75,820 Fluid hauling and disposal 84,616 59,214 121,322 Oilfield chemicals (2) 41,586 — — Accommodations and rentals 53,888 27,151 52,948 Wellsite completion and construction services 50,974 33,793 55,133 $ 692,491 $ 302,399 $ 535,577 (1) Includes water sourcing, water transfer, containment, water monitoring and water treatment and recycling services. (2) Includes completion, production and specialty chemicals. The Company attributes revenue to the United States and Canada based on the location where services are performed or the destination of the products or equipment sold or rented. Long-lived assets consist of property and equipment and are attributed to the United States and Canada based on the physical location of the asset at the end of the period. The Company’s revenue attributed to the United States was $680.9 million or 98.3% of total revenue. The Company’s revenue attributed to Canada was $11.6 million or 1.7% of total revenue. The Company’s net long-lived assets attributed to the United States was $451.7 million or 95.3% of total net long-lived assets. The Company’s net long-lived assets attributed to Canada was $22.4 million or 4.7% of total net long-lived assets. |
QUARTERLY RESULTS OF OPERATIONS
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | 12 Months Ended |
Dec. 31, 2017 | |
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | NOTE 18—QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) 2017 First Second Third Fourth Quarter Quarter Quarter Quarter (in thousands) Revenue $ 99,925 $ 134,449 $ 153,880 $ 304,237 Gross profit (loss) (242) 12,254 19,509 26,259 Income (loss) from operations (12,508) (11,909) 2,457 (8,039) Net income (loss) (12,280) (10,490) 2,593 (14,950) Net income (loss) attributable to Select Energy Services, Inc. (4,172) (4,216) 1,224 (9,652) Net income (loss) per share attributable to common stockholders: Class A-Basic & Diluted $ (0.21) $ (0.16) $ 0.04 $ (0.18) Class A-1-Basic & Diluted $ (0.21) $ (0.16) $ — $ — Class A-2-Basic & Diluted $ — $ — $ — $ (0.18) Class B-Basic & Diluted $ — $ — $ — $ — 2016 First Second Third Fourth Quarter Quarter Quarter Quarter (in thousands) Revenue $ 78,839 $ 62,919 $ 73,907 $ 86,734 Gross loss (11,937) (17,299) (8,970) (5,922) Loss from operations (21,551) (224,822) (31,266) (21,334) Net loss (25,793) (228,238) (35,204) (24,713) Net loss attributable to Select Energy Services, Inc. (1) — — — (1,043) Net loss per share attributable to common stockholders (1) : Class A-Basic & Diluted $ — $ — $ — $ (0.05) Class A-1-Basic & Diluted $ — $ — $ — $ (0.05) Class B-Basic & Diluted $ — $ — $ — $ — (1) Earnings related to periods prior to the Select 144A Offering and the related reorganization are attributable to the Company’s predecessor. There is no income allocated to the Company and no earnings per share information prior to the reorganization related to the Select 144A Offering. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 19—SUBSEQUENT EVENTS On January 24, 2018, the Company pursuant to the Rockwater Registration Rights Agreement, filed with the SEC a shelf registration statement registering for resale 6,721,294 shares of Class A Common Stock into which the outstanding shares of Class A-2 Common Stock are convertible. At the effective time of the Rockwater Merger each share of Rockwater Class A-1 common stock, $0.01 par value per share, then outstanding was converted into the right to receive a number of shares of the Company’s Class A-2 Common Stock equal to the exchange ratio. Upon the effectiveness of the registration statement, each share of Class A-2 Common Stock will convert automatically into a share of Class A Common Stock on a one-for-one basis and no shares of Class A-2 Common Stock will be outstanding. |
SIGNIFICANT ACCOUNTING POLICI28
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Use of estimates | Use of estimates : The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to recoverability of long‑lived assets and intangibles, useful lives used in depreciation and amortization, uncollectible accounts receivable, income taxes, self‑insurance liabilities, share‑based compensation and contingent liabilities. The Company bases its estimates on historical and other pertinent information that are believed to be reasonable under the circumstances. The accounting estimates used in the preparation of the consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. |
Cash and cash equivalents | Cash and cash equivalents : The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts : Accounts receivable are stated at the invoiced amount, or the earned but not yet invoiced amount, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on the review of several factors, including historical collection experience, current aging status of the customer accounts and financial condition of its customers. Accounts receivable are written off when a settlement is reached for an amount less than the outstanding historical balance or when the Company determines that it is probable the balance will not be collected. The change in allowance for doubtful accounts is as follows: For the year ended December 31, 2017 2016 2015 (in thousands) Balance at beginning of year $ 2,144 $ 2,351 $ 3,169 Provisions for bad debts, included in selling, general and administrative 1,542 2,385 3,179 Uncollectible receivables written off (707) (2,592) (3,997) Balance at end of year $ 2,979 $ 2,144 $ 2,351 |
Concentrations of credit and customer risk | Concentrations of credit and customer risk : Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The amounts held in financial institutions periodically exceed the federally insured limit. Management believes that the financial institutions are financially sound and the risk of loss is minimal. The Company minimizes its exposure to counterparty credit risk by performing credit evaluations and ongoing monitoring of the financial stability of its customers. There were no customers that accounted for more than 10.0% of the Company’s consolidated revenues for the years ended December 31, 2017 and 2016. During 2015, Anadarko Petroleum Corporation (“Anadarko”) accounted for 10.6% of the Company’s consolidated revenues; these revenues related to the Water Solutions and Wellsite Services segments. |
Inventories | Inventories : The Company values its inventories at lower of cost or net realizable value. Inventory costs are determined under the weighted-average method. Inventory costs primarily consist of chemicals and materials available for resale and parts and consumables used in operations. |
Debt issuance costs | Debt issuance costs : Debt issuance costs consist of costs directly associated with obtaining credit with financial institutions. These costs are recorded as a direct deduction from the carrying value of the associated debt liability and are generally amortized on a straight‑line basis over the life of the credit agreement, which approximates the effective‑interest method. During the year ended December 31, 2017, the Company expensed unamortized debt issuance costs of $2.9 million upon repayment and termination of the Previous Credit Facility (as defined and discussed in Note 8). In connection with the entry into the Credit Agreement, the Company incurred debt issuance cost of $3.4 million. Amortization expense for debt issuance costs was $4.0 million, $3.4 million and $3.2 million for the years ended December 31, 2017, 2016 and 2015, respectively, and is included in interest expense in the consolidated statements of operations. |
Property and equipment | Property and equipment : Property and equipment are stated at cost less accumulated depreciation. Depreciation (and amortization of capital lease assets) is calculated on a straight line basis over the estimated useful life of each asset as noted below: Asset Classification Useful Life (years) Land Indefinite Buildings and leasehold improvements 30 or lease term Vehicles and equipment 4 - 7 Machinery and equipment 2 - 15 Computer equipment and software 3 - 4 Office furniture and equipment 7 Disposal wells 7 - 10 Helicopters 7 Depreciation expense related to the Company’s property and equipment, including amortization of property under capital leases was $92.6 million, $88.2 million and $98.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. Expenditures for additions to property and equipment and major replacements are capitalized when they significantly increase the functionality or extend the useful life of the asset. Gains and losses on dispositions, maintenance, repairs and minor replacements are included in the consolidated statements of operations as incurred. See Note 6—Property and Equipment for further discussion. |
Business combination | Business Combination: The Company records business combinations using the acquisition method of accounting. Under the acquisition method of accounting, identifiable assets acquired and liabilities assumed are recorded at their acquisition date fair values. The excess of the purchase price over the estimated fair value is recorded as goodwill. Changes in the estimated fair values of net assets recorded for acquisitions prior to the finalization of more detailed analysis, but not to exceed one year from the date of acquisition, will adjust the amount of the purchase price allocable to goodwill. Measurement period adjustments are reflected in the period in which they occur. |
Goodwill and other intangible assets | Goodwill and other intangible assets : Goodwill represents the excess of the purchase price of acquisitions over the fair value of the net assets acquired. Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets with finite useful lives are amortized either on a straight‑line basis over the asset’s estimated useful life or on a basis that reflects the pattern in which the economic benefits of the intangible assets are realized. |
Impairment of long‑lived and intangible assets | Impairment of goodwill, long‑lived assets and intangible assets : Long‑lived assets, such as property and equipment and finite‑lived intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that its carrying value may not be recoverable. Recoverability is measured by a comparison of its carrying amount to the estimated undiscounted cash flows to be generated by those assets. If the undiscounted cash flows are less than the carrying amount, the Company records impairment losses for the excess of its carrying value over the estimated fair value. The development of future cash flows and the estimate of fair value represent its best estimates based on industry trends and reference to market transactions and are subject to variability. The Company considers the factors within the fair value analysis to be Level 3 inputs within the fair value hierarchy. Due to certain economic factors related to oil prices and rig counts, during 2015, an impairment loss of $1.3 million related to other intangible assets was recognized within impairment of intangible assets in the consolidated statements of operations. The impairment related to certain intangible assets within the Company’s Water Solutions segment. The Company determined that triggering events existed during 2016 resulting in an evaluation of the recoverability of the carrying value of certain property and equipment. As a result of this evaluation, the Company recorded impairment of property and equipment of $60.0 million related to the Company’s Water Solutions segment and impairment of other intangible assets of $0.1 million related to the Company’s Wellsite Services segment. As a result of this annual impairment test, the Company recorded no impairment of property and equipment during the year ended December 31, 2017. See Note 12—Fair Value Measurement for further discussion. The Company conducts its annual goodwill impairment tests in the fourth quarter of each year, and whenever impairment indicators arise, by examining relevant events and circumstances which could have a negative impact on its goodwill such as macroeconomic conditions, industry and market conditions, cost factors that have a negative effect on earnings and cash flows, overall financial performance, acquisitions and divestitures and other relevant entity-specific events. If a qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would be required to perform a quantitative impairment test for goodwill using a two-step approach. In the first step, the fair value of each reporting unit is determined and compared to the reporting unit’s carrying value, including goodwill. To determine the fair value of the reporting unit, the Company uses an income approach, which provides an estimated fair value based on the present value of expected future cash flows. The Company discounts the resulting future cash flows using weighted average cost of capital calculations based on the capital structures of publicly traded peer companies. The Company’s reporting units are based on its organizational and reporting structure. If the fair value of a reporting unit is less than its carrying value, the second step of the goodwill impairment test is performed to measure the amount of impairment, if any. In the second step, the fair value of the reporting unit is allocated to the assets and liabilities of the reporting unit as if it had been acquired in a business combination and the purchase price was equivalent to the fair value of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is referred to as the implied fair value of goodwill. If the implied fair value of goodwill at the reporting unit level is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of goodwill at the reporting unit is less than its carrying value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, allocation of assets (including goodwill) and liabilities to reporting units and determining the fair value. The determination of reporting unit fair value relies upon certain estimates and assumptions that are complex and are affected by numerous factors, including the general economic environment and levels of exploration and production (“E&P”) activity of oil and gas companies, the Company’s financial performance and trends and the Company’s strategies and business plans, among others. Unanticipated changes, including immaterial revisions to these assumptions could result in a provision for impairment in a future period. Given the nature of these evaluations and their application to specific assets and time frames, it is not possible to reasonably quantify the impact of changes in these assumptions. Due to certain economic factors related to oil prices and rig counts during 2015, an impairment loss of $20.1 million related to goodwill was recognized in the consolidated statements of operations for the year ended December 31, 2015. The Company determined that additional triggering events were present during 2016 resulting in a goodwill impairment assessment of $138.5 million, primarily related to the Company’s Water Solutions segment. As a result of the Company’s annual impairment test, no impairment loss was recognized during the year ended December 31, 2017. See Note 7—Goodwill and Other Intangible Assets and Note 12—Fair Value Measurement for further discussion. |
Asset retirement obligations | Asset retirement obligations : The asset retirement obligation (“ARO”) liability reflects the present value of estimated costs of plugging, site reclamation and similar activities associated with the Company’s salt water disposal wells. The Company utilizes current retirement costs to estimate the expected cash outflows for retirement obligations. The Company also estimates the productive life of the disposal wells, a credit‑adjusted risk‑free discount rate and an inflation factor in order to determine the current present value of this obligation. The Company’s ARO liabilities are included in accrued expenses and other current liabilities and other long term liabilities during the years ended December 31, 2017 and 2016. The change in asset retirement obligations is as follows: For the year ended December 31, 2017 2016 (in thousands) Balance at beginning of year $ 1,668 $ 1,483 Accretion expense, included in depreciation and amortization expense 178 155 Change in estimate — 30 Balance at end of year $ 1,846 $ 1,668 |
Self‑insurance | Self‑insurance : The Company self‑insures, through deductibles and retentions, up to certain levels for losses related to general liability, workers’ compensation and employer’s liability and vehicle liability. The Company’s exposure (i.e. the retention or deductible) per occurrence is $1.0 million for general liability, $1.0 million for workers’ compensation and employer’s liability and $1.0 million for vehicle liability. Rockwater’s retentions and deductibles are $0.1 million for general liability, $0.8 million for workers’ compensation and $0.5 million for auto liability and all policies will be combined with the renewal of Select’s policies effective May 1, 2018. We also have an excess loss policy over these coverages with a limit of $100.0 million in the aggregate. Rockwater’s excess coverage has limits of $50.0 million. Management regularly reviews its estimates of reported and unreported claims and provide for losses through reserves. Prior to June 1, 2016, the Company was self‑insured for group medical claims subject to a deductible of $0.3 million for large claims. As of June 1, 2016, the Company is fully‑insured for group medical. In connection with the Rockwater Merger, the Company maintains a separate group medical program for certain employees where medical claims are subject to a deductible of $0.3 million for large claims. The Company is currently in negotiations for a single benefit plan that will be effective June 2018, that will consider multiple options. |
Employee benefit plans | Employee benefit plans : The Company sponsors a defined contribution 401(k) Profit Sharing Plan (the “401(k) Plan”) for the benefit of substantially all employees of the Company. The 401(k) Plan allows eligible employees to make tax‑deferred contributions, not to exceed annual limits established by the Internal Revenue Service. Prior to December 4, 2015, the Company made matching contributions of 100% of employee contributions, up to 4% of compensation. These matching contributions were vested immediately. Effective December 4, 2015, the employer match was discontinued for all employees. The Company did not make any matching contributions for the year ended December 31, 2016. Effective July 1, 2017, the Company reinstated matching contributions of 100% of employee contributions, up to 4% of compensation with immediate vesting period for existing employees. Starting July 1, 2017, the vesting schedule for new hires is 25% for the first year, 50% for the second year, 75% for the third year and 100% for the fourth year. The Company’s contributions to the 401(k) Plan were $0.8 million and $1.9 million for the years ended December 31, 2017 and 2015, respectively. In connection with the Rockwater Merger the Company maintains a separate 401(k) Plan for U.S. employees (the “Rockwater 401(k) Plan”) and a Registered Retirement Savings Plans for Canadian employees for specified eligible Rockwater employees. The Company made employer contributions either at their discretion or as a matching percentage, as defined by the respective plan agreements. The Company made $0.1 million in employer contributions to the Rockwater 401(k) Plan for the year ended December 31, 2017. |
Revenue recognition | Revenue recognition : The Company recognizes revenue when it is realized or realizable and earned. Revenues are considered realized or realizable and earned when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable and (iv) collectability is reasonably assured. Services are typically priced on a throughput, day‑rate, hourly‑rate or per‑job basis depending on the type of services provided. The Company’s services are generally governed by a service agreement or other persuasive evidence of an arrangement that include fixed or determinable fees and do not generally include right of return provisions or other significant post‑delivery obligations. Collectability is reasonably assured based on the establishment of appropriate credit qualification prior to services being rendered. Revenue generated by each of the Company’s revenue streams are outlined as follows: Water Solutions and Related Services —The Company provides water‑related services to customers, including the sourcing and transfer of water, the containment of fluids, measuring and monitoring of water, the filtering and treatment of fluids, well testing and handling, transportation and recycling or disposal of fluids. Operating under Rockwater LLC, the Company also offers sand hauling and logistics services in the Rockies and Bakken regions as well as water transfer, containment and fluids hauling in Western Canada. Revenue from water solutions is primarily based on a per‑barrel price or other throughput metric as specified in the contract. The Company recognizes revenue from water solutions when services are performed. The Company’s agreements with its customers are often referred to as “price sheets” and sometimes provide pricing for multiple services. However, these agreements generally do not authorize the performance of specific services or provide for guaranteed throughput amounts. As customers are free to choose which services, if any, to use based on the Company’s price sheet, the Company prices its separate services on the basis of their standalone selling prices. Customer agreements generally do not provide for performance‑, cancellation‑, termination‑, or refund‑type provisions. Services based on price sheets with customers are generally performed under separately‑issued “work orders” or “field tickets” as services are requested. Of the Company’s Water Solutions service lines, only sourcing and transfer of water are consistently provided as part of the same arrangement. In these instances, revenue for both sourcing and transfer are recognized concurrently when delivered. Accommodations and Rentals —The Company provides workforce accommodations and surface rental equipment. Accommodation services include trailer housing and mobile home units for field personnel. Equipment rentals are related to the accommodations and include generators, sewer and water tanks and communication systems. Revenue from accommodations and equipment rental is typically recognized on a day-rate basis. Wellsite Completion and Construction Services —The Company provides crane and logistics services, wellsite and pipeline construction and field services. Revenue for heavy-equipment rental is typically recognized on a day-rate basis. Construction or field personnel revenue is based on hourly rates or on a per-job basis as services are performed. Oilfield Chemical Product Sales— The Company develops, manufactures and markets a full suite of chemicals utilized in hydraulic fracturing, stimulation, cementing and well completions, including polymers that create viscosity, crosslinkers, friction reducers, surfactants, buffers, breakers and other chemical technologies, to leading pressure pumping service companies in the United States. The Company also provides production chemicals solutions, which are applied to underperforming wells in order to enhance well performance and reduce production costs through the use of production treating chemicals, corrosion and scale monitoring, chemical inventory management, well failure analysis and lab services. Oilfield Chemicals products are generally sold under sales agreements based upon purchase orders or contracts with customers that do not include right of return provisions or other significant post‑delivery obligations. The Company’s products are produced in a standard manufacturing operation, even if produced to the customer’s specifications. The prices of products are fixed and determinable and are established in price lists or customer purchases orders. The Company recognizes revenue from product sales when title passes to the customer, the customer assumes risks and rewards of ownership, collectability is reasonably assured and delivery occurs as directed by the customer. |
Equity‑based compensation | Equity‑based compensation : The Company accounts for equity‑based awards by measuring the awards at the date of grant and recognizing the grant‑date fair value as an expense using either straight‑line or accelerated attribution, depending on the specific terms of the award agreements over the requisite service period, which is usually equivalent to the vesting period. The Company expenses awards with graded‑vesting service conditions on a straight‑line basis. The Company had liability awards that were contingent upon meeting certain equity returns and a liquidation event. These awards were settled in cash during the year ended December 31, 2017. See Note 10—Equity‑based Compensation for further discussion. |
Foreign currency | Foreign currency: The Company’s functional currency is the U.S. dollar. The Company has Canadian subsidiaries that have designated the Canadian dollar as their functional currency. Assets and liabilities are translated at period-end exchange rates, while revenues and expenses are translated at average rates for the period. The Company follows a practice of settling its intercompany loans; accordingly, the related translation gains and losses are recognized within foreign currency gains (losses) on the accompanying consolidated statements of comprehensive income (loss). Translation adjustments for the asset and liability accounts are included as a separate component of accumulated other comprehensive loss in shareholders’ equity. During the year ended December 31, 2017, the Company incurred foreign currency translation gains of $0.3 million, due to a Canadian subsidiary acquired through Rockwater Merger. During the years ended December 31, 2016 and 2015, the Company did not record foreign currency translations gains or losses. Currency transaction gains and losses are recorded on a net basis in other income and expense, net, in the accompanying consolidated statements of operations. During the year ended December 31, 2017, the Company reported net foreign currency gains of $0.3 million. During the year ended December 31, 2016 and 2015, the Company did not record foreign currency transaction gains or losses. |
Derivatives and hedging | Derivatives and hedging : The Company accounts for certain interest rate swaps as cash flow hedges. Management formally assesses both at the hedge’s inception and on an ongoing basis that the derivative will be highly effective in offsetting changes in cash flows of the related hedged items. The fair values of the derivatives are recognized as either assets or liabilities in the consolidated balance sheets. The effective portions of the changes in fair values of the derivative contracts are initially recorded in accumulated other comprehensive income and reclassified into the statement of operations in the period in which earnings are impacted by the hedged items or in the period that the transaction no longer qualifies as a cash flow hedge. The ineffective portion of the gains or losses on the derivative contracts, if any, is recognized in the consolidated statement of operations as it is incurred. See Note 11—Derivative Financial Instruments for further discussion. |
Fair value measurements | Fair value measurements : The Company measures certain assets and liabilities pursuant to accounting guidance which establishes a three‑tier fair value hierarchy and prioritizes the inputs used in measuring fair value. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices or other market data for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3 inputs are unobservable inputs based upon its own judgment and assumptions used to measure assets and liabilities at fair value. See Note 12—Fair Value Measurement for further discussion. |
Income taxes | Income taxes : Select Inc. is subject to U.S. federal, foreign and state income taxes as a corporation. SES Holdings and its subsidiaries, with the exception of certain corporate subsidiaries, are treated as flow‑through entities for U.S. federal income tax purposes and as such, are generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to their taxable income is passed through to their members or partners. Accordingly, prior to the reorganization in connection with the Select 144A Offering, the Predecessor only recorded a provision for Texas franchise tax and U.S. federal and state provisions for certain corporate subsidiaries as the Predecessor’s taxable income or loss was includable in the income tax returns of the individual partners and members. However, for periods following the reorganization in connection with the Select 144A Offering, Select Inc. recognizes a tax liability on its allocable share of SES Holdings’ taxable income. The state of Texas includes in its tax system a franchise tax applicable to the Company and an accrual for franchise taxes is included in the financial statements when appropriate. The Company and its subsidiaries account for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled pursuant to the provisions of Accounting Standards Codification (“ASC”) 740, Income Taxes. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized. The determination of the provision for income taxes requires significant judgment, use of estimates and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes through the provision for income taxes. The Company recognizes interest and penalties relating to uncertain tax provisions as a component of tax expense. The Company identified no material uncertain tax positions as of December 31, 2017 and 2016. See Note 14—Income Taxes for further discussion. |
Discontinued operations | Discontinued operations: During the years ended December 31, 2017 and 2016, there were no activities or cash flows related to discontinued operations. During the year ended December 31, 2015, the Company completed the liquidation of certain Canadian subsidiaries disposed of during 2014. The results of operations related to discontinued operations consisted of other (income) expense, net in the amount of less than $0.1 million within the consolidated statement of operations for the year ended December 31, 2015. The cash flows from discontinued operations were as follows: Year Ended December 31, 2015 (in thousands) Net cash provided by operating activities $ 400 Net cash provided by investing activities 679 Net cash used in financing activities (1,678) Effect of exchange rate changes on cash 75 Net decrease in cash $ (524) |
Emerging Growth Company Status | Emerging Growth Company status: Under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company is an “emerging growth company,” or an “EGC,” which allows the Company to have an extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. The Company intends to take advantage of all of the reduced reporting requirements and exemptions, including the longer phase‑in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act until the Company is no longer an emerging growth company. The Company’s election to use the phase‑in periods permitted by this election may make it difficult to compare the Company’s financial statements to those of non‑emerging growth companies and other emerging growth companies that have opted out of the longer phase‑in periods under Section 107 of the JOBS Act and who will comply with new or revised financial accounting standards. If the Company was to subsequently elect to immediately comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act. |
Recent accounting pronouncements: | Recent accounting pronouncements : In May 2014, the Financial Accounting Standards Board (the “FASB”) issued an accounting standards update (“ASU”) on a comprehensive new revenue recognition standard that will supersede ASC 605, Revenue Recognition. ASU 2014-09, Revenue from Contracts with Customers , creates a framework under which an entity will allocate the transaction price to separate performance obligations and recognize revenue when each performance obligation is satisfied. Under the new standard, entities will be required to use judgment and make estimates, including identifying performance obligations in a contract, estimating the amount of variable consideration to include in the transaction price, allocating the transaction price to each separate performance obligation and determining when an entity satisfies its performance obligations. The standard allows for either “full retrospective” adoption, meaning that the standard is applied to all of the periods presented with a cumulative catch‑up as of the earliest period presented, or “modified retrospective” adoption, meaning the standard is applied only to the most current period presented in the financial statements with a cumulative catch‑up as of the current period. In August 2015, the FASB decided to defer the original effective date by one year to be effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019 for emerging growth companies. In accordance with the JOBS Act the Company is afforded the extended transition period and are not required to adopt the ASU until January 1, 2019. The Company is currently evaluating whether the adoption of the ASU will have a material impact that on its consolidated financial statements and related disclosures, and internal controls over financial reporting and has not yet determined the method by which it will adopt the standard. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory , which provides that an entity that measures inventory by using first-in, first-out or average cost should measure inventory at the lower of cost and net realizable value, rather than at the lower of cost or market. Net realizable value is the estimated selling prices of such inventory in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. As an EGC utilizing the extended transition period for new accounting pronouncements, the requirements in this update are effective during annual periods beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company prospectively adopted this guidance during the year ended December 31, 2017. The adoption of this update did not have a material impact on the Company's consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes , which amends existing guidance on income taxes to require the classification of all deferred tax assets and liabilities as noncurrent on the balance sheet. As an EGC utilizing the extended transition period for new accounting pronouncements, this pronouncement is effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018, and may be applied either prospectively or retrospectively. The Company adopted this guidance during the year ended December 31, 2017. As the Company’s deferred tax assets and liabilities are all noncurrent, the adoption did not result in a change to the consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases , which introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as well as the FASB’s new revenue recognition standard. However, the ASU eliminates the use of bright‑line tests in determining lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures to better enable users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. As an EGC utilizing the extended transition period for new accounting pronouncements, this pronouncement is effective for annual reporting periods beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, using a modified retrospective approach. Early adoption is permitted. The Company is currently evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which is intended to simplify several aspects of the accounting for share‑based payment award transactions. As an EGC utilizing the extended transition period for new accounting pronouncements, this pronouncement is effective for annual reporting periods beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. Certain amendments in this update should be applied prospectively, while other amendments in the update should be applied retrospectively, with earlier adoption permitted in any interim or annual period. If the Company adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes the interim period. If the Company were to elect to early adopt, then the Company must adopt all the amendments in the same period. The Company is currently evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which addresses the classification and presentation of eight specific cash flow issues that currently result in diverse practices. The amendments provide guidance in the presentation and classification of certain cash receipts and cash payments in the statement of cash flows including debt prepayment or debt extinguishment costs, settlement of zero‑coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate‑owned life insurance policies and distributions received from equity method investees. As an EGC utilizing the extended transition period for new accounting pronouncements, this pronouncement is effective for annual reporting periods beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The amendments in this ASU should be applied using a retrospective approach. The Company is currently evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-01 , Clarifying the Definition of a Business , with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. As an EGC utilizing the extended transition period for new accounting pronouncements, this pronouncement is effective for annual reporting periods beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. The amendments in this ASU should be applied prospectively. The Company is currently evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment . This pronouncement removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. As an EGC utilizing the extended transition period for new accounting pronouncements, this pronouncement is effective for annual reporting periods beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2019. The amendments in this ASU should be applied prospectively. The Company is currently evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting . This pronouncement provides guidance about which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting in ASC 718. As an EGC utilizing the extended transition period for new accounting pronouncements, this pronouncement is effective for annual reporting periods beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The pronouncement should be applied prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures. |
SIGNIFICANT ACCOUNTING POLICI29
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of change in allowance for doubtful accounts | The change in allowance for doubtful accounts is as follows: For the year ended December 31, 2017 2016 2015 (in thousands) Balance at beginning of year $ 2,144 $ 2,351 $ 3,169 Provisions for bad debts, included in selling, general and administrative 1,542 2,385 3,179 Uncollectible receivables written off (707) (2,592) (3,997) Balance at end of year $ 2,979 $ 2,144 $ 2,351 |
Schedule of estimated useful life of property and equipment | Asset Classification Useful Life (years) Land Indefinite Buildings and leasehold improvements 30 or lease term Vehicles and equipment 4 - 7 Machinery and equipment 2 - 15 Computer equipment and software 3 - 4 Office furniture and equipment 7 Disposal wells 7 - 10 Helicopters 7 |
Summary of change in asset retirement obligations | For the year ended December 31, 2017 2016 (in thousands) Balance at beginning of year $ 1,668 $ 1,483 Accretion expense, included in depreciation and amortization expense 178 155 Change in estimate — 30 Balance at end of year $ 1,846 $ 1,668 |
Summary of cash flows from discontinued operations | Year Ended December 31, 2015 (in thousands) Net cash provided by operating activities $ 400 Net cash provided by investing activities 679 Net cash used in financing activities (1,678) Effect of exchange rate changes on cash 75 Net decrease in cash $ (524) |
ACQUISITION (Tables)
ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Schedule of unaudited consolidated pro forma information | Pro Forma Year ended December 31, 2017 2016 (unaudited) (in thousands) Revenue $ 1,263,787 $ 698,778 Net loss (17,069) (375,133) Less: net loss attributable to noncontrolling interests (1) 6,815 153,970 Net loss attributable to Select Energy Services, Inc. (1) $ (10,254) $ (221,163) (1) The allocation of net loss attributable to noncontrolling interests and Select Inc. gives effect to the equity structure as of December 31, 2017 as though the Select 144A Offering, the IPO, the Rockwater Merger, the Resource Water Acquisition, the GRR Acquisition and other equity transactions occurred as of January 1, 2016. However, the calculation of pro forma net loss does not give effect to any other pro forma adjustments for the Select 144A Offering or the subsequent IPO. |
Rockwater Merger | |
Schedule Of consideration transferred and the estimated fair value of identified assets acquired and liabilities | Preliminary purchase price allocation Amount Consideration transferred (in thousands) Class A Common Stock (25,914,260 shares) $ 423,957 Class A-2 Common Stock (6,731,845 shares) 110,133 Class B Common Stock (4,356,477 shares) and SES Holdings common units issued (4,356,477 units) 71,272 Fair value of previously held interest in Rockwater 2,310 Fair value of Rockwater share-based awards attributed to pre-acquisition service 12,529 Total consideration transferred 620,201 Less: identifiable assets acquired and liabilities assumed Working capital 146,883 Property and equipment 185,601 Intangible assets Customer relationships 89,007 Trademarks and patents 31,215 Non-compete agreements 3,810 Other long-term assets 62 Deferred tax liabilities (408) Long-term debt (80,555) Other long-term liabilities (2,650) Total identifiable net assets acquired 372,965 Goodwill 247,236 Fair value allocated to net assets acquired $ 620,201 |
GRR Acquisition | |
Schedule Of consideration transferred and the estimated fair value of identified assets acquired and liabilities | Purchase price allocation Amount Consideration transferred (in thousands) Cash paid (1) $ 53,032 Class A Common Stock (274,998 shares) 5,500 Assumed liabilities (1) 1,106 Total consideration transferred 59,638 Less: identifiable assets acquired and liabilities assumed Working capital (1) 7,728 Fixed assets 13,225 Customer relationship intangible assets (1) 21,484 Other intangible assets (1) 5,152 Total identifiable net assets acquired 47,589 Goodwill 12,049 Fair value allocated to net assets acquired $ 59,638 (1) The Company obtained additional information related to its cash paid, working capital, customer relationship intangible asset, other intangible asset and assumed tax liabilities to the sellers’ balances which led to an increase of $1.7 million, $1.7 million, less than $0.1 million, less than $0.1 million and $1.1 million, respectively. The combined impact of these changes resulted in a corresponding increase of $1.0 million in goodwill. |
Resource Water Acquisition | |
Schedule Of consideration transferred and the estimated fair value of identified assets acquired and liabilities | Preliminary purchase price allocation Amount Consideration transferred (in thousands) Cash paid (1) $ 6,586 Class A Common Stock (156,909 shares) 2,380 Total consideration transferred 8,966 Less: identifiable assets acquired and liabilities assumed Working capital (1) 1,189 Fixed assets 3,485 Customer relationship intangible assets (1) 1,933 Other intangible assets (1) 465 Total identifiable net assets acquired 7,072 Goodwill 1,894 Fair value allocated to net assets acquired $ 8,966 |
EXIT AND DISPOSAL ACTIVITIES (T
EXIT AND DISPOSAL ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
EXIT AND DISPOSAL ACTIVITIES | |
Summary of exit and disposal activities | Acquired abandoned Provision during the Usage during the lease obligations Balance as of year ended year ended during the year ended Balance as of December 31, 2016 December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2017 (in thousands) Lease obligations and terminations $ 18,000 $ 3,572 $ 2,761 $ 2,539 $ 21,350 Reclassification of deferred rent 1,069 1,254 Total $ 19,069 $ 22,604 Acquired abandoned Provision during the Usage during the lease obligations Balance as of year ended year ended during the year ended Balance as of December 31, 2015 December 31, 2016 December 31, 2016 December 31, 2016 December 31, 2016 (in thousands) Lease obligations and terminations $ — $ 19,423 $ 1,423 $ — $ 18,000 Reclassification of deferred rent — 1,069 Total $ — $ 19,069 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES | |
Schedule of inventory | As of December 31, 2017 2016 (in thousands) Raw materials $ 11,462 $ — Finished goods 29,674 1,001 Materials and supplies 3,462 — 44,598 1,001 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | As of December 31, 2017 2016 (in thousands) Land $ 15,286 $ 8,593 Buildings and leasehold improvements 99,222 83,352 Vehicles and equipment 70,537 24,114 Vehicles and equipment - capital lease 2,810 — Machinery and equipment 716,064 534,303 Machinery and equipment - capital lease 900 — Computer equipment and software 12,822 11,102 Office furniture and equipment 4,320 4,275 Disposal wells 67,805 67,566 Helicopters 497 497 Construction in progress 44,732 5,584 1,034,995 739,386 Less accumulated depreciation and impairment (560,886) (490,519) Total property and equipment, net $ 474,109 $ 248,867 |
GOODWILL AND OTHER INTANGIBLE34
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
GOODWILL AND OTHER INTANGIBLE ASSETS. | |
Schedule of changes in the carrying amounts of goodwill by reportable segment | Water Oilfield Wellsite Solutions Chemicals Services Total (in thousands) Balance as of December 31, 2015 $ 137,534 $ — $ 13,237 $ 150,771 Impairment (137,534) — (995) (138,529) Balance as of December 31, 2016 — — 12,242 12,242 Additions 245,542 15,637 — 261,179 Balance as of December 31, 2017 $ 245,542 $ 15,637 $ 12,242 $ 273,421 |
Summary of components of other intangible assets | As of December 31, 2017 As of December 31, 2016 Gross Accumulated Net Gross Accumulated Net Value Amortization Value Value Amortization Value (in thousands) (in thousands) Customer relationships $ 169,250 $ 57,836 $ 111,414 $ 56,826 $ 48,236 $ 8,590 Patents and trademarks 33,544 414 33,130 369 142 227 Other 14,704 3,182 11,522 5,122 2,353 2,769 Total other intangible assets $ 217,498 $ 61,432 $ 156,066 $ 62,317 $ 50,731 $ 11,586 |
Summary of future estimated amortization expense for other intangible assets | Year Ending December 31, Amount (in thousands) 2018 $ 13,028 2019 11,587 2020 11,268 2021 10,111 2022 9,898 Thereafter 71,458 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
DEBT | |
Summary of Company’s leverage ratio | Level Average Excess Availability Base Rate Margin Eurocurrency Rate Margin I < 33% of the commitments II < 66.67% of the commitments and ≥ 33.33% of the commitments III ≥ 66.67% of the commitments |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES. | |
Summary of operating lease commitments | Year Ending December 31, Operating Leases (1) Capital Leases Total (in thousands) 2018 $ 24,527 $ 2,088 $ 26,615 2019 11,748 1,021 12,769 2020 10,321 144 10,465 2021 8,195 89 8,284 2022 7,569 — 7,569 Thereafter 30,824 — 30,824 Total minimum lease payments $ 93,184 3,342 $ 96,526 Less: imputed interest of 5.9% (158) Present value of net minimum capital lease payments 3,184 Less: current portion of capital lease obligations (1,965) Present value of long-term portion of capital lease obligations $ 1,219 (1) The Company’s operating lease commitments under non‑cancelable lease terms as of December 31, 2017 include $29.1 million of lease payments related to facilities that are included within the accrual for exit and disposal activities. Refer to Note 4—Exit and Disposal Activities for further discussion. |
EQUITY_BASED COMPENSATION (Tabl
EQUITY‑BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Schedule of assumptions used in determining the fair value of certain equity options | For the year ended December 31, 2017 2016 Underlying equity $ 20.00 $ 6.08 Strike price $ 20.00 $ 14.33 - 20.61 Dividend yield (%) % % Risk free rate (%) 2.0 - 2.7 % 0.86 % Volatility (%) 46.6 - 46.8 % 63.0 % Expected term (years) 4.0 - 6.0 |
Schedule of equity option activity and related information | For the year ended December 31, 2017 Weighted-average Stock Options Exercise Price Beginning balance, outstanding 620,721 $ 16.50 Granted 455,126 20.00 Forfeited (113,411) 19.48 Ending balance, outstanding 962,436 $ 17.80 Ending balance, exercisable 412,542 $ 14.49 |
Schedule of restricted stock activity | For the year ended December 31, 2017 Weighted-average Restricted Stock Grant Date Fair Value Beginning balance — $ — Granted 41,117 19.91 Forfeited (10,757) 20.00 Ending balance 30,360 $ 19.88 |
Equity options | |
Schedule of replacement stock option activity and related information | Weighted-average Stock Options Exercise Price Outstanding at November 1, 2017 2,547,258 $ 12.75 Forfeited (13,759) 18.70 Outstanding at December 31, 2017 2,533,499 $ 12.74 Exercisable at December 31, 2017 1,997,785 $ 12.71 |
Restricted Stock | |
Schedule of replacement stock option activity and related information | Weighted-average Restricted Stock Fair Value Non-vested at November 1, 2017 331,854 $ 16.36 Vested (32,053) 16.36 Non-vested at December 31, 2017 299,801 $ 16.36 |
Rockwater Merger | |
Schedule of assumptions used in determining the fair value of certain equity options | Assumptions Underlying equity $ 16.36 Strike price $ 5.68 - 34.41 Dividend yield (%) % Risk free rate (%) 1.1 - 2.2 % Volatility (%) 45.0 % Expected term (years) 0.0 - 8.4 |
DERIVATIVE FINANCIAL INSTRUME38
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Summary of changes in the fair value of the interest rate swap derivative instruments | For the year ended December 31, Derivatives designated as cash flow hedges 2016 2015 (in thousands) Beginning fair value of interest rate swap derivative instruments $ (7) $ (68) Amount of unrealized losses recognized in OCI (106) (277) Amount of gains reclassified from AOCI to earnings (effective portion) 113 338 Net change in fair value of interest rate swap derivative instruments 7 61 Ending fair value of interest rate swap derivative instruments $ — $ (7) |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FAIR VALUE MEASUREMENT | |
Summary of assets and liabilities measured at fair value on a non recurring basis | Fair Value Measurements Using Carrying Level 1 Level 2 Level 3 Value (1) Impairment (in thousands) Year Ended December 31, 2016 Goodwill $ — $ — $ — $ 138,529 $ 138,529 Intangible Assets — — — 137 137 Fixed Assets — — 23,188 83,214 60,026 Year Ended December 31, 2015 Goodwill $ — $ — $ — $ 20,136 $ 20,136 Intangible Assets — — — 1,230 1,230 (1) Amount represents carrying value at the date of assessment. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
Summary of components of the federal and state income tax expense (benefit) | For the year ended December 31, 2017 2016 2015 (in thousands) Current tax (benefit) expense Federal income tax $ (338) $ — $ 341 State and local income tax (77) 275 836 Foreign income tax — — — Total current (benefit) expense (415) 275 1,177 Deferred tax (benefit) expense Federal income tax (422) (841) (785) State and local income tax (14) 42 (68) Foreign income tax — — — Total deferred benefit (436) (799) (853) Total income tax (benefit) provision $ (851) $ (524) $ 324 Tax (benefit) expense attributable to controlling interests $ (405) $ (179) $ 324 Tax benefit attributable to noncontrolling interests (446) (345) — Total income tax (benefit) provision $ (851) $ (524) $ 324 |
Summary of reconciliation of the provision for income taxes | For the year ended December 31, 2017 2016 (in thousands) Provision calculated at federal statutory income tax rate: Loss before taxes $ (35,978) $ (314,472) Statutory rate 35 % 35 % Income tax benefit computed at statutory rate (12,592) (110,065) Less: noncontrolling interests 6,409 109,230 Income tax benefit attributable to controlling interests (6,183) (835) State and local income taxes, net of federal benefit (91) 317 Change in enacted tax rate 39,166 — Change in valuation allowance (33,297) 339 Income tax benefit attributable to controlling interests (405) (179) Income tax benefit attributable to noncontrolling interests (446) (345) Total income tax benefit $ (851) $ (524) |
Summary of principal components of the deferred tax assets (liabilities) | For the year ended December 31, 2017 2016 (in thousands) Deferred tax assets Outside basis difference in SES Holdings $ 37,931 $ 3,601 Net operating losses 35,243 3,999 Credits and other carryforwards 863 297 Property and equipment — 362 Intangible assets 1,218 — Stock compensation 2,557 — Other 1,340 — Total deferred tax assets before valuation allowance 79,152 8,259 Valuation allowance (75,886) (7,932) Total deferred tax assets 3,266 327 Deferred tax liabilities Property and equipment 3,286 — Intangible assets — 811 Other 549 113 Total deferred tax liabilities 3,835 924 Net deferred tax liabilities $ (569) $ (597) |
NONCONTROLLING INTERESTS (Table
NONCONTROLLING INTERESTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
NONCONTROLLING INTERESTS. | |
Summary of the effects of changes in noncontrolling interests | For the year ended December 31, 2017 2016 2015 (in thousands) Net loss attributable to Select Energy Services, Inc. and its Predecessor $ (16,816) $ (307,524) $ (80,891) Transfers from noncontrolling interests: Decrease in additional paid-in capital as a result of the contribution of proceeds from the Select 144A Offering to SES Holdings, LLC in exchange for common units — (218,712) — Increase in contributed capital due to purchase of noncontrolling interest — 707 — Decrease in additional paid-in capital as a result of the contribution of net assets acquired to SES Holdings, LLC in exchange for common units (4,879) — — Decrease in additional paid-in capital as a result of the contribution of net assets from the Rockwater Merger to SES Holdings, LLC in exchange for common units (170,276) — — Decrease in additional paid-in capital as a result of the contribution of proceeds from the IPO to SES Holdings, LLC in exchange for common units (41,135) — — Increase in additional paid-in capital as a result of the repurchase of common units of SES Holdings, LLC 113 — — Change to equity from net loss attributable to Select Energy Services, Inc. and its Predecessor and transfers from noncontrolling interests $ (232,993) $ (525,529) $ (80,891) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
EARNINGS PER SHARE | |
Summary of calculation of basic and diluted earnings per share | The following table presents the Company’s calculation of basic and diluted earnings per share for the years ended December 31, 2017, 2016 and 2015 (dollars in thousands, except share and per share amounts): For the year ended December 31, 2017 2016 2015 Net loss $ (35,127) $ (313,948) $ (81,872) Net loss attributable to Predecessor — 306,481 80,891 Net loss attributable to noncontrolling interests 18,311 6,424 981 Net loss attributable to Select Energy Services, Inc. $ (16,816) $ (1,043) $ — Allocation of net loss attributable to: Class A stockholders $ (12,560) $ (199) Class A-1 stockholders (3,691) (844) Class A-2 stockholders (565) — Class B stockholders — — $ (16,816) $ (1,043) Weighted average shares outstanding: Class A-Basic & Diluted 24,612,853 3,802,972 Class A-1-Basic & Diluted 7,233,973 16,100,000 Class A-2-Basic & Diluted 1,106,605 — Class B-Basic & Diluted 38,768,156 38,462,541 Net loss per share attributable to common stockholders: Class A-Basic & Diluted $ (0.51) $ (0.05) Class A-1-Basic & Diluted $ (0.51) $ (0.05) Class A-2-Basic & Diluted $ (0.51) $ — Class B-Basic & Diluted $ — $ — |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT INFORMATION | |
Summary of financial information by segment | For the year ended December 31, 2017 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 528,997 $ 17,424 $ 82,056 $ 87,123 Oilfield chemicals 41,586 663 2,040 3,063 Wellsite services 123,964 (6,527) 17,550 18,091 Eliminations (2,056) — — — Income from operations 11,560 Corporate — (41,559) 1,803 — Interest expense, net — (6,629) — — Other income, net — 650 — — $ 692,491 $ (35,978) $ 103,449 $ 108,277 For the year ended December 31, 2016 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 241,766 $ (282,019) $ 81,051 $ 34,458 Oilfield chemicals — — — — Wellsite services 61,461 (15,038) 16,056 1,868 Eliminations (828) — — — Loss from operations (297,057) Corporate — (1,916) — — Interest expense, net — (16,128) — — Other income, net — 629 — — $ 302,399 $ (314,472) $ 97,107 $ 36,326 For the year ended December 31, 2015 Income (loss) Depreciation and Capital Revenue before taxes Amortization Expenditures (in thousands) Water solutions $ 427,592 $ (52,757) $ 89,271 $ 34,724 Oilfield chemicals — — — — Wellsite services 109,976 (3,489) 18,177 13,962 Eliminations (1,991) — — — Loss from operations (56,246) Corporate — (12,527) 264 — Interest expense, net — (13,689) — — Other income, net — 893 — — $ 535,577 $ (81,569) $ 107,712 $ 48,686 Total assets by segment as of December 31, 2017 and 2016 is as follows: As of December 31, 2017 2016 (in thousands) Water solutions $ 994,159 $ 324,171 Oilfield chemicals 186,333 — Wellsite services 151,272 68,868 Corporate 24,604 12,027 $ 1,356,368 $ 405,066 |
Revenue from External Customers by Products and Services [Table Text Block] | For the year ended December 31, 2017 2016 2015 (in thousands) Water sourcing and transfer (1) $ 371,352 $ 144,659 $ 230,354 Well testing and flowback 90,075 37,582 75,820 Fluid hauling and disposal 84,616 59,214 121,322 Oilfield chemicals (2) 41,586 — — Accommodations and rentals 53,888 27,151 52,948 Wellsite completion and construction services 50,974 33,793 55,133 $ 692,491 $ 302,399 $ 535,577 (1) Includes water sourcing, water transfer, containment, water monitoring and water treatment and recycling services. (2) Includes completion, production and specialty chemicals. |
QUARTERLY RESULTS OF OPERATIO44
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | |
Schedule of quarterly results of operations | 2017 First Second Third Fourth Quarter Quarter Quarter Quarter (in thousands) Revenue $ 99,925 $ 134,449 $ 153,880 $ 304,237 Gross profit (loss) (242) 12,254 19,509 26,259 Income (loss) from operations (12,508) (11,909) 2,457 (8,039) Net income (loss) (12,280) (10,490) 2,593 (14,950) Net income (loss) attributable to Select Energy Services, Inc. (4,172) (4,216) 1,224 (9,652) Net income (loss) per share attributable to common stockholders: Class A-Basic & Diluted $ (0.21) $ (0.16) $ 0.04 $ (0.18) Class A-1-Basic & Diluted $ (0.21) $ (0.16) $ — $ — Class A-2-Basic & Diluted $ — $ — $ — $ (0.18) Class B-Basic & Diluted $ — $ — $ — $ — 2016 First Second Third Fourth Quarter Quarter Quarter Quarter (in thousands) Revenue $ 78,839 $ 62,919 $ 73,907 $ 86,734 Gross loss (11,937) (17,299) (8,970) (5,922) Loss from operations (21,551) (224,822) (31,266) (21,334) Net loss (25,793) (228,238) (35,204) (24,713) Net loss attributable to Select Energy Services, Inc. (1) — — — (1,043) Net loss per share attributable to common stockholders (1) : Class A-Basic & Diluted $ — $ — $ — $ (0.05) Class A-1-Basic & Diluted $ — $ — $ — $ (0.05) Class B-Basic & Diluted $ — $ — $ — $ — (1) Earnings related to periods prior to the Select 144A Offering and the related reorganization are attributable to the Company’s predecessor. There is no income allocated to the Company and no earnings per share information prior to the reorganization related to the Select 144A Offering. |
BUSINESS AND BASIS OF PRESENT45
BUSINESS AND BASIS OF PRESENTATION (Details) | May 10, 2017$ / sharesshares | May 05, 2017USD ($)$ / shares | Dec. 20, 2016USD ($)$ / sharesshares | Apr. 26, 2016$ / sharesshares | May 31, 2016USD ($) | Dec. 31, 2017USD ($)segment$ / sharesshares | Dec. 31, 2016USD ($)segment$ / sharesshares | Dec. 31, 2015USD ($) | Nov. 01, 2017USD ($) |
Share price | $ / shares | $ 20 | $ 6.08 | |||||||
Payments on long-term debt | $ | $ 111,000,000 | $ 298,000,000 | $ 107,000,000 | ||||||
Settlement of phantom units | $ | $ 7,800,000 | ||||||||
Number of tax receivable agreements | $ | $ 2 | ||||||||
Number of operating segments | segment | 3 | 3 | |||||||
Number of reportable segments | segment | 3 | 3 | |||||||
Revolving line of credit | |||||||||
Maximum borrowing capacity | $ | $ 300,000,000 | $ 300,000,000 | |||||||
Predecessor | |||||||||
Ratio | 10.3583 | ||||||||
Common units issued | 16,100,000 | ||||||||
Class A-1 Common Stock | |||||||||
Par value | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Common stock issued | 0 | 16,100,000 | |||||||
Class A-1 Common Stock | Private Placement | |||||||||
Shares issued | 16,100,000 | ||||||||
Share price | $ / shares | $ 20 | ||||||||
Class A Common Stock | |||||||||
Shares issued | 10,005,000 | ||||||||
Par value | $ / shares | $ 0.01 | $ 0.01 | |||||||
Common stock issued | 59,182,176 | 3,802,972 | |||||||
Class A Common Stock | IPO | |||||||||
Shares issued | 8,700,000 | ||||||||
Share price | $ / shares | $ 14 | $ 14 | |||||||
Net proceeds from the IPO | $ | $ 128,500,000 | ||||||||
Payments on long-term debt | $ | $ 34,000,000 | ||||||||
Class A Common Stock | Over-allotment option | |||||||||
Shares issued | 1,305,000 | ||||||||
Share price | $ / shares | $ 14 | ||||||||
Class B Common Stock | |||||||||
Par value | $ / shares | $ 0.01 | $ 0.01 | |||||||
Common stock issued | 40,331,989 | 38,462,541 | |||||||
Contributing Legacy Owners | Class A Common Stock | Predecessor | |||||||||
Common units issued | 3,802,972 | ||||||||
Common stock issued | 3,802,972 |
SIGNIFICANT ACCOUNTING POLICI46
SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)customer | Dec. 31, 2016USD ($)customer | Dec. 31, 2015USD ($) | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance at beginning of year | $ 2,144 | $ 2,351 | $ 3,169 |
Provisions for bad debts, included in selling, general and administrative | 1,542 | 2,385 | 3,179 |
Uncollectible receivables written off | (707) | (2,592) | (3,997) |
Balance at end of year | $ 2,979 | $ 2,144 | 2,351 |
Concentrations of credit and customer risk | |||
Number of customers accounting for more than 10% of consolidated revenues | customer | 0 | 0 | |
Debt issuance costs | |||
Unamortized Debt issuance Costs | $ 2,900 | ||
Agreement Debt Issuance Cost | 3,400 | ||
Amortization of debt issuance costs | $ 4,031 | $ 3,435 | $ 576 |
Customer Concentration Risk | |||
Concentrations of credit and customer risk | |||
Concentration Risk, Percentage | 10.60% |
SIGNIFICANT ACCOUNTING POLICI47
SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT | |||
Depreciation | $ 92,600 | $ 88,200 | $ 98,300 |
Goodwill and other intangible assets | |||
Goodwill and Intangible Asset Impairment | 138,666 | 21,366 | |
Impairment of property and equipment | 0 | 60,026 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||
Balance at beginning of year | 1,668 | 1,483 | |
Accretion expense, included in depreciation and amortization expense | 178 | 155 | |
Change in estimate | (30) | ||
Balance at the end of year | 1,846 | 1,668 | 1,483 |
Water Solutions | |||
Goodwill and other intangible assets | |||
Impairment of intangible assets | 1,300 | ||
Goodwill and Intangible Asset Impairment | $ 0 | 138,500 | $ 20,100 |
Impairment of property and equipment | 60,000 | ||
Wellsite Services | |||
Goodwill and other intangible assets | |||
Impairment of intangible assets | $ 100 | ||
Buildings and leasehold improvements | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 30 years | ||
Vehicles and equipment | Minimum | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 4 years | ||
Vehicles and equipment | Maximum | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 7 years | ||
Machinery and equipment | Minimum | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 2 years | ||
Machinery and equipment | Maximum | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 15 years | ||
Computer equipment and software | Minimum | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 3 years | ||
Computer equipment and software | Maximum | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 4 years | ||
Office furniture and equipment | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 7 years | ||
Disposal wells | Minimum | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 7 years | ||
Disposal wells | Maximum | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 10 years | ||
Helicopters | |||
PROPERTY AND EQUIPMENT | |||
Property, Plant and Equipment, Useful Life | 7 years |
SIGNIFICANT ACCOUNTING POLICI48
SIGNIFICANT ACCOUNTING POLICIES - Self Insurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Class of Stock [Line Items] | |||
Self insurance reserve towards deductible for general liability | $ 1,000 | ||
Self insurance reserve towards deductible for workers compensation and employers liability | 1,000 | ||
Self insurance reserve towards deductible for vehicle liability | 1,000 | ||
Excess loss policy limit | 100,000 | ||
Self insured group medical claim plan deductible | $ 300 | ||
Employee benefit plans | |||
Matching contribution as a percentage of employee contributions | 100.00% | ||
Matching contribution as a percentage of employee compensation | 4.00% | ||
Company 401k contribution | $ 800 | $ 1,900 | |
Foreign currency gains, net | 281 | ||
Other (income) expense | $ 369 | $ 629 | $ 893 |
Net Cash Provided by (Used in) Discontinued Operations [Abstract] | |||
Net cash provided by operating activities | 400 | ||
Net cash provided by investing activities | 679 | ||
Net cash used in financing activities | (1,678) | ||
Effect of exchange rate changes on cash | 75 | ||
Net decrease in cash | $ (524) | ||
First year | |||
Employee benefit plans | |||
Annual vesting matching contribution as a percentage of employee compensation | 25.00% | ||
Second year | |||
Employee benefit plans | |||
Annual vesting matching contribution as a percentage of employee compensation | 50.00% | ||
Third year | |||
Employee benefit plans | |||
Annual vesting matching contribution as a percentage of employee compensation | 75.00% | ||
Fourth year | |||
Employee benefit plans | |||
Annual vesting matching contribution as a percentage of employee compensation | 100.00% | ||
Rockwater Merger | |||
Class of Stock [Line Items] | |||
Self insurance reserve towards deductible for general liability | $ 100 | ||
Self insurance reserve towards deductible for workers compensation and employers liability | 800 | ||
Self insurance reserve towards deductible for vehicle liability | 500 | ||
Excess loss policy limit | 50,000 | ||
Employee benefit plans | |||
Company 401k contribution | 100 | ||
Foreign currency translation gains | $ 300 |
ACQUISITIONS - Rockwater Merger
ACQUISITIONS - Rockwater Merger (Details) - USD ($) $ in Thousands | Nov. 01, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Less: identified assets acquired and liabilities assumed | |||||
Goodwill | $ 273,421 | $ 273,421 | $ 12,242 | $ 150,771 | |
SES Holdings | |||||
Business Acquisition [Line Items] | |||||
Gain on remeasurement of investment | 1,200 | ||||
Transaction-related costs | 8,900 | ||||
Water Solutions | |||||
Less: identified assets acquired and liabilities assumed | |||||
Goodwill | 245,542 | 245,542 | $ 137,534 | ||
Oilfield Chemicals | |||||
Less: identified assets acquired and liabilities assumed | |||||
Goodwill | $ 15,637 | $ 15,637 | |||
Rockwater Merger | |||||
Business Acquisition [Line Items] | |||||
Fair value accounts receivable | $ 196,900 | ||||
Accounts receivable gross contractual amount | 199,100 | ||||
Uncollectible amount | 2,200 | ||||
Consideration transferred | |||||
Fair value of previously held interest in Rockwater | 2,310 | ||||
Fair value of Rockwater share-based awards attributed to pre-acquisition service | 12,529 | ||||
Total consideration transferred | 620,201 | ||||
Less: identified assets acquired and liabilities assumed | |||||
Working capital | 146,883 | ||||
Property and equipment | 185,601 | ||||
Other long-term assets | 62 | ||||
Deferred tax liabilities | (408) | ||||
Long-term debt | (80,555) | ||||
Other long-term liabilities | (2,650) | ||||
Total identifiable net assets acquired | 372,965 | ||||
Goodwill | 247,236 | ||||
Fair value allocated to net assets acquired | $ 620,201 | ||||
Rockwater Merger | SES Holdings | |||||
Less: identified assets acquired and liabilities assumed | |||||
Shares issued in Merger Agreement | 4,356,477 | ||||
Rockwater Merger | Customer relationships | |||||
Less: identified assets acquired and liabilities assumed | |||||
Intangible assets | $ 89,007 | ||||
Rockwater Merger | Trademarks and patents | |||||
Less: identified assets acquired and liabilities assumed | |||||
Intangible assets | 31,215 | ||||
Rockwater Merger | Noncompete agreements | |||||
Less: identified assets acquired and liabilities assumed | |||||
Intangible assets | 3,810 | ||||
Rockwater Merger | Water Solutions | |||||
Less: identified assets acquired and liabilities assumed | |||||
Goodwill | 231,600 | ||||
Rockwater Merger | Oilfield Chemicals | |||||
Less: identified assets acquired and liabilities assumed | |||||
Goodwill | 15,600 | ||||
Class A Common Stock | Rockwater Merger | |||||
Consideration transferred | |||||
Common stock issued | $ 423,957 | ||||
Less: identified assets acquired and liabilities assumed | |||||
Shares issued in Merger Agreement | 25,914,260 | ||||
Class A-2 Common Stock | Rockwater Merger | |||||
Consideration transferred | |||||
Common stock issued | $ 110,133 | ||||
Less: identified assets acquired and liabilities assumed | |||||
Shares issued in Merger Agreement | 6,731,845 | ||||
Class B Common Stock | Rockwater Merger | |||||
Consideration transferred | |||||
Common stock issued | $ 71,272 | ||||
Less: identified assets acquired and liabilities assumed | |||||
Shares issued in Merger Agreement | 4,356,777 |
ACQUISITIONS - Resource Water A
ACQUISITIONS - Resource Water Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 15, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
ACQUISITION | ||||
Goodwill | $ 273,421 | $ 12,242 | $ 150,771 | |
Resource Water Acquisition | ||||
ACQUISITION | ||||
Miles of layflat hose | 24 | |||
Total consideration paid | $ 8,966 | |||
Cash paid | 6,586 | |||
Class A Common Stock (274,998 shares) | $ 2,380 | |||
Class A Common stock issued, Share Price | $ 15.17 | |||
Cash on hand | $ 6,600 | |||
Transaction cost | 100 | |||
Goodwill | $ 1,894 |
ACQUISITIONS - Resource Water51
ACQUISITIONS - Resource Water Acquisition - Purchase price allocation (Details) - USD ($) $ in Thousands | Sep. 15, 2017 | Dec. 31, 2017 | Mar. 10, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Less: identified assets acquired and liabilities assumed | |||||
Goodwill | $ 273,421 | $ 12,242 | $ 150,771 | ||
Adjustment | |||||
Less: identified assets acquired and liabilities assumed | |||||
Goodwill | $ 1,000 | ||||
Resource Water Acquisition | |||||
Consideration transferred | |||||
Cash paid | $ 6,586 | ||||
Class A Common Stock (274,998 shares) | 2,380 | ||||
Total consideration transferred | 8,966 | ||||
Less: identified assets acquired and liabilities assumed | |||||
Working capital | 1,189 | ||||
Fixed assets | 3,485 | ||||
Total identifiable net assets acquired | 7,072 | ||||
Goodwill | 1,894 | ||||
Fair value allocated to net assets acquired | $ 8,966 | ||||
Resource Water Acquisition | Class A Common Stock | |||||
Less: identified assets acquired and liabilities assumed | |||||
Shares issued in Merger Agreement | 156,909 | ||||
Resource Water Acquisition | Adjustment | |||||
Consideration transferred | |||||
Cash paid | $ 100 | ||||
Less: identified assets acquired and liabilities assumed | |||||
Working capital | 200 | ||||
Resource Water Acquisition | Customer relationships | |||||
Less: identified assets acquired and liabilities assumed | |||||
Intangible assets | 1,933 | ||||
Resource Water Acquisition | Customer relationships | Adjustment | |||||
Less: identified assets acquired and liabilities assumed | |||||
Goodwill | 100 | ||||
Resource Water Acquisition | Customer relationships | Adjustment | Maximum | |||||
Less: identified assets acquired and liabilities assumed | |||||
Intangible assets | 100 | ||||
Resource Water Acquisition | Other | |||||
Less: identified assets acquired and liabilities assumed | |||||
Intangible assets | 465 | ||||
Resource Water Acquisition | Other | Adjustment | Maximum | |||||
Less: identified assets acquired and liabilities assumed | |||||
Intangible assets | $ 100 |
ACQUISITIONS - GRR Acquisition
ACQUISITIONS - GRR Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 10, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
ACQUISITION | ||||
Goodwill | $ 273,421 | $ 12,242 | $ 150,771 | |
GRR Acquisition | ||||
ACQUISITION | ||||
Miles of layflat hose | 1,200 | |||
Total consideration paid | $ 59,638 | |||
Cash paid | 53,032 | |||
Class A Common Stock (274,998 shares) | $ 5,500 | |||
Class A Common stock issued, Share Price | $ 20 | |||
Cash on hand | $ 19,000 | |||
Proceeds from credit facility | 34,000 | |||
Transaction cost | 1,000 | |||
Goodwill | $ 12,049 |
ACQUISITIONS - GRR Acquisitio53
ACQUISITIONS - GRR Acquisition - Purchase price allocation (Details) - USD ($) $ in Thousands | Mar. 10, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Less: identified assets acquired and liabilities assumed | ||||
Goodwill | $ 273,421 | $ 12,242 | $ 150,771 | |
Adjustment | ||||
Less: identified assets acquired and liabilities assumed | ||||
Goodwill | $ 1,000 | |||
GRR Acquisition | ||||
Consideration transferred | ||||
Cash paid | 53,032 | |||
Class A Common Stock (274,998 shares) | 5,500 | |||
Assumed liabilities | 1,106 | |||
Total consideration transferred | 59,638 | |||
Less: identified assets acquired and liabilities assumed | ||||
Working capital | 7,728 | |||
Fixed assets | 13,225 | |||
Total identifiable net assets acquired | 47,589 | |||
Goodwill | 12,049 | |||
Fair value allocated to net assets acquired | $ 59,638 | |||
GRR Acquisition | Class A Common Stock | ||||
Less: identified assets acquired and liabilities assumed | ||||
Shares issued in Merger Agreement | 274,998 | |||
GRR Acquisition | Adjustment | ||||
Consideration transferred | ||||
Cash paid | $ 1,700 | |||
Assumed liabilities | 1,100 | |||
Less: identified assets acquired and liabilities assumed | ||||
Working capital | 1,700 | |||
GRR Acquisition | Customer relationships | ||||
Less: identified assets acquired and liabilities assumed | ||||
Intangible assets | 21,484 | |||
GRR Acquisition | Customer relationships | Maximum | Adjustment | ||||
Less: identified assets acquired and liabilities assumed | ||||
Intangible assets | 100 | |||
GRR Acquisition | Other | ||||
Less: identified assets acquired and liabilities assumed | ||||
Intangible assets | 5,152 | |||
GRR Acquisition | Other | Maximum | Adjustment | ||||
Less: identified assets acquired and liabilities assumed | ||||
Intangible assets | $ 100 |
ACQUISITIONS - Proforma (Detail
ACQUISITIONS - Proforma (Details) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 4 Months Ended | 10 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
ACQUISITION | ||||||||||||||
Revenue | $ 304,237 | $ 153,880 | $ 134,449 | $ 99,925 | $ 86,734 | $ 73,907 | $ 62,919 | $ 78,839 | $ 692,491 | $ 302,399 | $ 535,577 | |||
Net income | $ (9,652) | $ 1,224 | $ (4,216) | $ (4,172) | $ (1,043) | (16,816) | (1,043) | |||||||
Pro forma information | ||||||||||||||
Revenue | 1,263,787 | 698,778 | ||||||||||||
Net loss | (17,069) | (375,133) | ||||||||||||
Less: net loss attributable to noncontrolling interests | 6,815 | 153,970 | ||||||||||||
Net loss attributable to Select Energy Services, Inc. | $ (10,254) | $ (221,163) | ||||||||||||
Rockwater Merger | ||||||||||||||
ACQUISITION | ||||||||||||||
Revenue | $ 128,900 | |||||||||||||
Net income | $ 4,100 | |||||||||||||
Resource Water Acquisition | ||||||||||||||
ACQUISITION | ||||||||||||||
Revenue | $ 4,600 | |||||||||||||
Net income | $ 1,400 | |||||||||||||
GRR Acquisition | ||||||||||||||
ACQUISITION | ||||||||||||||
Revenue | $ 35,200 | |||||||||||||
Net income | $ 3,200 |
ACQUISITIONS - Other Acquisitio
ACQUISITIONS - Other Acquisitions (Details) - USD ($) $ in Thousands | Nov. 08, 2017 | Jun. 21, 2017 | May 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
ACQUISITION | ||||||
Goodwill | $ 273,421 | $ 12,242 | $ 150,771 | |||
Solid Oak Flowback Acquisition | ||||||
ACQUISITION | ||||||
Cash paid | $ 4,900 | |||||
Data Automated Waters Systems, LLC | ||||||
ACQUISITION | ||||||
Total consideration paid | $ 4,000 | |||||
Cash paid | $ 2,000 | |||||
Class A common stock issued | 128,370 | |||||
Class A Common Stock (274,998 shares) | $ 2,000 | |||||
Fixed assets | 1,800 | |||||
Data Automated Waters Systems, LLC | Patents | ||||||
ACQUISITION | ||||||
Intangible assets | 1,900 | |||||
Data Automated Waters Systems, LLC | Software | ||||||
ACQUISITION | ||||||
Intangible assets | $ 300 | |||||
Tex-Star Water Services, LLC | ||||||
ACQUISITION | ||||||
Cash paid | $ 4,200 |
EXIT AND DISPOSAL ACTIVITIES (D
EXIT AND DISPOSAL ACTIVITIES (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)facility | Dec. 31, 2014facility | |
Exit and disposal activities | |||
Number of facilities closed | facility | 15 | 15 | |
Charges related to exit and disposal activities | $ 3,600 | ||
Amount reclassed to accrued lease obligations | 200 | ||
Accrued expenses and other current liabilities | 81,112 | $ 22,025 | |
Restructuring Reserve [Roll Forward] | |||
Restructuring Reserve, Beginning Balance | 19,069 | ||
Restructuring Reserve, Ending Balance | 22,604 | 19,069 | |
Accrued Liabilities | |||
Exit and disposal activities | |||
Accrued expenses and other current liabilities | 3,600 | ||
Lease obligations and terminations | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring Reserve, Beginning Balance | 18,000 | ||
Provision for Restructuring | 3,572 | 19,423 | |
Payments for Restructuring | 2,761 | 1,423 | |
Acquired abandoned lease obligations | 2,539 | ||
Restructuring Reserve, Ending Balance | 21,350 | 18,000 | |
Reclassifications of deferred rent | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring Reserve, Beginning Balance | 1,069 | ||
Restructuring Reserve, Ending Balance | $ 1,254 | $ 1,069 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Significant components of inventory | ||
Raw materials | $ 11,462 | |
Finished goods | 29,674 | $ 1,001 |
Materials and supplies | 3,462 | |
Inventory net | $ 44,598 | $ 1,001 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property and equipment | |||
Property and equipment, gross | $ 1,034,995 | $ 739,386 | |
Less accumulated depreciation and impairment | (560,886) | (490,519) | |
Total property and equipment, net | 474,109 | 248,867 | |
Impairment of property and equipment | 0 | 60,026 | |
Depreciation | 92,600 | 88,200 | $ 98,300 |
Capital lease obligations | |||
Property and equipment | |||
Depreciation | 200 | ||
Capital lease obligations | 0 | ||
Land | |||
Property and equipment | |||
Property and equipment, gross | 15,286 | 8,593 | |
Buildings and leasehold improvements | |||
Property and equipment | |||
Property and equipment, gross | 99,222 | 83,352 | |
Vehicles and equipment | |||
Property and equipment | |||
Property and equipment, gross | 70,537 | 24,114 | |
Vehicles and equipment | Capital lease obligations | |||
Property and equipment | |||
Property and equipment, gross | 2,810 | ||
Machinery and equipment | |||
Property and equipment | |||
Property and equipment, gross | 716,064 | 534,303 | |
Machinery and equipment | Capital lease obligations | |||
Property and equipment | |||
Property and equipment, gross | 900 | ||
Computer equipment and software | |||
Property and equipment | |||
Property and equipment, gross | 12,822 | 11,102 | |
Office furniture and equipment | |||
Property and equipment | |||
Property and equipment, gross | 4,320 | 4,275 | |
Disposal wells | |||
Property and equipment | |||
Property and equipment, gross | 67,805 | 67,566 | |
Helicopters | |||
Property and equipment | |||
Property and equipment, gross | 497 | 497 | |
Construction in progress | |||
Property and equipment | |||
Property and equipment, gross | $ 44,732 | 5,584 | |
Water Solutions | |||
Property and equipment | |||
Impairment of property and equipment | $ 60,000 |
GOODWILL AND OTHER INTANGIBLE59
GOODWILL AND OTHER INTANGIBLE ASSETS - GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill | ||
Balance at the beginning of the period | $ 12,242 | $ 150,771 |
Impairment | (138,529) | |
Additions | 261,179 | |
Balance at the end of the period | 273,421 | 12,242 |
Water Solutions | ||
Goodwill | ||
Balance at the beginning of the period | 137,534 | |
Impairment | (137,534) | |
Additions | 245,542 | |
Balance at the end of the period | 245,542 | |
Oilfield Chemicals | ||
Goodwill | ||
Additions | 15,637 | |
Balance at the end of the period | 15,637 | |
Accommodations and Rentals | ||
Goodwill | ||
Balance at the beginning of the period | 12,242 | 13,237 |
Impairment | (995) | |
Balance at the end of the period | $ 12,242 | $ 12,242 |
GOODWILL AND OTHER INTANGIBLE60
GOODWILL AND OTHER INTANGIBLE ASSETS - OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | May 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Other intangible assets | ||||
Gross Value | $ 217,498 | $ 62,317 | ||
Accumulated Amortization | 61,432 | 50,731 | ||
Net Value | 156,066 | 11,586 | ||
Amortization expense | $ 10,700 | 8,700 | $ 9,300 | |
Annual amortization of intangible assets | ||||
2,018 | 13,028 | |||
2,019 | 11,587 | |||
2,020 | 11,268 | |||
2,021 | 10,111 | |||
2,022 | 9,898 | |||
Thereafter | 71,458 | |||
Rockwater Merger | Weighted-average | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 12 years 4 months 24 days | |||
GRR Acquisition | Weighted-average | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 12 years 6 months | |||
Resource Water Acquisition | Weighted-average | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 8 years 7 months 6 days | |||
Water rights | ||||
Other intangible assets | ||||
Intangible assets | $ 5,300 | 1,600 | ||
Trademarks | ||||
Other intangible assets | ||||
Intangible assets | 23,400 | |||
Trademarks | Rockwater Merger | ||||
Other intangible assets | ||||
Intangible assets | 23,400 | |||
Customer relationships | ||||
Other intangible assets | ||||
Gross Value | 169,250 | 56,826 | ||
Accumulated Amortization | 57,836 | 48,236 | ||
Net Value | $ 111,414 | 8,590 | ||
Customer relationships | Minimum | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 5 years | |||
Customer relationships | Maximum | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 13 years | |||
Customer relationships | Rockwater Merger | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 13 years | |||
Customer relationships | GRR Acquisition | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 13 years | |||
Customer relationships | Resource Water Acquisition | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 10 years | |||
Trademarks and patents | ||||
Other intangible assets | ||||
Gross Value | $ 33,544 | 369 | ||
Accumulated Amortization | 414 | 142 | ||
Net Value | $ 33,130 | 227 | ||
Noncompete agreements | Minimum | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 2 years | |||
Noncompete agreements | Maximum | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 5 years | |||
Noncompete agreements | Rockwater Merger | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 3 years | |||
Noncompete agreements | GRR Acquisition | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 5 years | |||
Noncompete agreements | Resource Water Acquisition | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 3 years | |||
Other | ||||
Other intangible assets | ||||
Gross Value | $ 14,704 | 5,122 | ||
Accumulated Amortization | 3,182 | 2,353 | ||
Net Value | $ 11,522 | $ 2,769 | ||
Water rights | Minimum | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 3 years | |||
Water rights | Maximum | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 10 years | |||
Water rights | GRR Acquisition | ||||
Other intangible assets | ||||
Gross Value | $ 3,700 | |||
Patents | Minimum | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 3 years | |||
Patents | Maximum | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 10 years | |||
Patents | Rockwater Merger | ||||
Other intangible assets | ||||
Useful life of acquired intangible asset | 10 years | |||
Patents | Data Automated Waters Systems, LLC | ||||
Other intangible assets | ||||
Gross Value | $ 1,900 | |||
Useful life of acquired intangible asset | 10 years |
DEBT (Details)
DEBT (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Nov. 01, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 20, 2016 | Dec. 31, 2015 |
DEBT | ||||||
Unamortized Debt issuance Costs | $ 2.9 | |||||
Average excess availability, less than 33% of the commitments | Base Rate Advances | ||||||
DEBT | ||||||
Variable interest rate (as a percent) | 1.00% | |||||
Average excess availability, less than 33% of the commitments | LIBOR | ||||||
DEBT | ||||||
Variable interest rate (as a percent) | 2.00% | |||||
Average excess availability, less than 66.67% of the commitments and more than or equal to 33.33% of the commitments | Base Rate Advances | ||||||
DEBT | ||||||
Variable interest rate (as a percent) | 0.75% | |||||
Average excess availability, less than 66.67% of the commitments and more than or equal to 33.33% of the commitments | LIBOR | ||||||
DEBT | ||||||
Variable interest rate (as a percent) | 1.75% | |||||
Average excess availability, more than or equal to 66.67% of the commitments | Base Rate Advances | ||||||
DEBT | ||||||
Variable interest rate (as a percent) | 0.50% | |||||
Average excess availability, more than or equal to 66.67% of the commitments | LIBOR | ||||||
DEBT | ||||||
Variable interest rate (as a percent) | 1.50% | |||||
Average excess availability more than or equal to fifty percent | ||||||
DEBT | ||||||
Unused line fee (as a percent) | 0.25% | |||||
Average excess availability less than fifty percent | ||||||
DEBT | ||||||
Unused line fee (as a percent) | 0.375% | |||||
Letter of credit | ||||||
DEBT | ||||||
Amount outstanding | $ 75 | $ 0 | ||||
Debt issuance costs | 4.5 | $ 1.2 | ||||
Write off of unamortized debt issuance cost | 2.9 | |||||
Swingline loan | ||||||
DEBT | ||||||
Write off of unamortized debt issuance cost | $ 3.3 | 3.9 | ||||
Revolving line of credit | ||||||
DEBT | ||||||
Maximum borrowing capacity | $ 300 | $ 300 | ||||
Senior secured credit facility | ||||||
DEBT | ||||||
Additional borrowing capacity | $ 150 | |||||
Time frame for increasing borrowing capacity | 3 years | |||||
Percentage of borrowing base allowed | 35.00% | |||||
Margin (as a percent) | 2.00% | |||||
Weighted average interest rate (as a percent) | 3.319% | |||||
Reduction in borrowing capacity | $ 19.8 | $ 16.3 | ||||
Variable interest rate (as a percent) | 1.50% | 2.00% | ||||
Unused portion of available borrowing | $ 167.3 | |||||
Debt issuance costs | $ 3.4 | |||||
Senior secured credit facility | Minimum | ||||||
DEBT | ||||||
Percentage of borrowing base allowed | 30.00% | |||||
Senior secured credit facility | Base Rate Advances | Minimum | ||||||
DEBT | ||||||
Margin (as a percent) | 0.50% | |||||
Senior secured credit facility | Base Rate Advances | Maximum | ||||||
DEBT | ||||||
Margin (as a percent) | 1.00% | |||||
Senior secured credit facility | Base Rate Advances | Subsequent Event | ||||||
DEBT | ||||||
Margin (as a percent) | 0.75% | |||||
Senior secured credit facility | LIBOR | ||||||
DEBT | ||||||
Margin (as a percent) | 1.00% | |||||
Senior secured credit facility | LIBOR | Minimum | ||||||
DEBT | ||||||
Margin (as a percent) | 1.50% | |||||
Senior secured credit facility | LIBOR | Maximum | ||||||
DEBT | ||||||
Margin (as a percent) | 2.00% | |||||
Senior secured credit facility | LIBOR | Subsequent Event | ||||||
DEBT | ||||||
Margin (as a percent) | 1.75% | |||||
Senior secured credit facility | Federal Funds Rate | ||||||
DEBT | ||||||
Margin (as a percent) | 0.50% | |||||
Senior secured credit facility | Eligible billed receivables | ||||||
DEBT | ||||||
Borrowing base (as a percent) | 85.00% | |||||
Senior secured credit facility | Eligible unbilled receivables | ||||||
DEBT | ||||||
Borrowing base (as a percent) | 75.00% | |||||
Senior secured credit facility | Eligible inventory | ||||||
DEBT | ||||||
Borrowing base (as a percent) | 70.00% | |||||
Senior secured credit facility | Net recovery percentage | ||||||
DEBT | ||||||
Borrowing base (as a percent) | 85.00% | |||||
Senior secured credit facility | Criteria for distributions, scenario one | ||||||
DEBT | ||||||
Lookback period | 30 days | |||||
Percentage outstanding | 25.00% | |||||
Base amount | $ 37.5 | |||||
Senior secured credit facility | Criteria for distributions, scenario two | ||||||
DEBT | ||||||
Lookback period | 30 days | |||||
Percentage outstanding | 20.00% | |||||
Base amount | $ 30 | |||||
Fixed charge coverage ratio | 1.00% | |||||
Senior secured credit facility | Coverage Ratio Criteria | ||||||
DEBT | ||||||
Lookback period | 60 days | |||||
Percentage outstanding | 10.00% | |||||
Base amount | $ 15 | |||||
Fixed charge coverage ratio | 1.00% | |||||
Senior secured credit facility | Letter of credit | ||||||
DEBT | ||||||
Maximum borrowing capacity | $ 40 | |||||
Senior secured credit facility | Swingline loan | ||||||
DEBT | ||||||
Maximum borrowing capacity | $ 30 | |||||
Previous Credit Facility | ||||||
DEBT | ||||||
Maximum borrowing capacity | $ 100 |
COMMITMENTS AND CONTINGENCIES62
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||||
Total lease expenses | $ 19,200 | $ 21,600 | $ 39,200 | |
Vehicle operating lease buyout | $ 16,200 | |||
Operating lease commitments under non-cancelable leases | ||||
2,018 | 24,527 | |||
2,019 | 11,748 | |||
2,020 | 10,321 | |||
2,021 | 8,195 | |||
2,022 | 7,569 | |||
Thereafter | 30,824 | |||
Total minimum lease payments | 93,184 | |||
Capital leases | ||||
2,018 | 2,088 | |||
2,019 | 1,021 | |||
2,020 | 144 | |||
2,021 | 89 | |||
Total minimum lease payments | 3,342 | |||
Less: Interest | (158) | |||
Present value of net minimum capital lease payments | 3,184 | |||
Less: current portion of capital lease obligations | (1,965) | |||
Capital Leases, Future Minimum Payments, Present Value of Long Term Portion | 1,219 | |||
Operating Leases and Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
2,018 | 26,615 | |||
2,019 | 12,769 | |||
2,020 | 10,465 | |||
2,021 | 8,284 | |||
2,022 | 7,569 | |||
Thereafter | 30,824 | |||
Total minimum lease payments | $ 96,526 | |||
Percentage of vehicles in which certain employees at some of the facilities altered emissions controls systems | 4.00% | |||
Lease obligations and terminations | ||||
Operating lease commitments under non-cancelable leases | ||||
Total minimum lease payments | $ 29,100 |
EQUITY BASED COMPENSATION (Deta
EQUITY BASED COMPENSATION (Details) - $ / shares | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | May 10, 2017 | May 05, 2017 | Apr. 26, 2016 | |
EQUITY-BASED COMPENSATION | |||||
Vesting period | 3 years | ||||
Share Price | $ 20 | $ 6.08 | |||
Weighted average grant date fair value | $ 7.85 | $ 1.84 | |||
Minimum | |||||
EQUITY-BASED COMPENSATION | |||||
Equity options term | 7 years | ||||
Maximum | |||||
EQUITY-BASED COMPENSATION | |||||
Equity options term | 10 years | ||||
Class A Common Stock | Over-allotment option | |||||
EQUITY-BASED COMPENSATION | |||||
Share Price | $ 14 | ||||
Class A Common Stock | IPO | |||||
EQUITY-BASED COMPENSATION | |||||
Share Price | $ 14 | $ 14 | |||
2016 plan | Maximum | |||||
EQUITY-BASED COMPENSATION | |||||
Equity options term | 10 years | ||||
2016 plan | Class A Common Stock | |||||
EQUITY-BASED COMPENSATION | |||||
Maximum number of shares | 5,400,400 | ||||
Rockwater Equity Plan | Class A Common Stock | |||||
EQUITY-BASED COMPENSATION | |||||
Maximum number of shares | 1,011,087 | ||||
Phantom Equity Awards | |||||
EQUITY-BASED COMPENSATION | |||||
Cash payment (per phantom unit) | $ 5.53 | ||||
Substitute Awards | 2016 plan | Class A Common Stock | |||||
EQUITY-BASED COMPENSATION | |||||
Maximum number of shares | 2,879,112 |
EQUITY BASED COMPENSATION - Ass
EQUITY BASED COMPENSATION - Assumptions (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Assumptions for equity options granted: | ||
Underlying Equity | $ 20 | $ 6.08 |
Strike Price | $ 20 | |
Dividend Yield (%) | 0.00% | 0.00% |
Risk free rate(%) | 0.86% | |
Volatility (%) | 63.00% | |
Expected Term (Years) | 5 years | |
Minimum | ||
Assumptions for equity options granted: | ||
Strike Price | $ 14.33 | |
Risk free rate(%) | 2.00% | |
Volatility (%) | 46.60% | |
Expected Term (Years) | 4 years | |
Maximum | ||
Assumptions for equity options granted: | ||
Strike Price | $ 20.61 | |
Risk free rate(%) | 2.70% | |
Volatility (%) | 46.80% | |
Expected Term (Years) | 6 years |
EQUITY BASED COMPENSATION - Equ
EQUITY BASED COMPENSATION - Equity Options Changed During Period (Details) - Equity options | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Equity Options | |
Beginning balance (in shares) | shares | 620,721 |
Granted (in shares) | shares | 455,126 |
Forfeited | shares | (113,411) |
Ending balance (in shares) | shares | 962,436 |
Ending balance, exercisable | shares | 412,542 |
Weighted-average Exercise Price | |
Beginning balance (in dollars per share) | $ / shares | $ 16.50 |
Granted (in dollars per share) | $ / shares | 20 |
Forfeited (in dollars per share) | $ / shares | 19.48 |
Ending balance (in dollars per share) | $ / shares | 17.80 |
Ending balance, exercisable | $ / shares | $ 14.49 |
EQUITY BASED COMPENSATION - E66
EQUITY BASED COMPENSATION - Equity Options (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share Price | $ 20 | $ 6.08 | |
Equity options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share Price | $ 18.24 | ||
Aggregate intrinsic value | $ 1.5 | ||
Weighted average remaining term of outstanding stock options | 3 years 4 months 24 days | ||
Options exercisable | 412,542 | ||
Aggregate intrinsic value of exercisable options | $ 1.5 | ||
Weighted average remaining term of exercisable options | 3 years 4 months 24 days | ||
Compensation expense | $ 1.9 | $ 0.3 | $ 0.7 |
Unrecognized compensation expense | $ 0.9 | ||
Weighted-average period for recognition (in years) | 1 year 6 months | ||
Vested stock option activity | |||
Weighted average remaining term of outstanding stock options | 3 years 4 months 24 days |
EQUITY BASED COMPENSATION - Res
EQUITY BASED COMPENSATION - Restricted stock (Details3) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
EQUITY-BASED COMPENSATION | |||
Vesting period | 3 years | ||
Restricted stock | |||
Ending balance (in shares) | 299,801 | ||
Grant Date Fair Value | |||
Ending balance (in dollars per share) | $ 16.36 | ||
Restricted Stock | |||
EQUITY-BASED COMPENSATION | |||
Compensation expense | $ 0.5 | $ 0 | $ 0 |
Unrecognized compensation expense | $ 0.1 | ||
Weighted-average remaining life | 1 year 4 months 24 days | ||
Restricted stock | |||
Granted (in shares) | 41,117 | ||
Forfeited | (10,757) | ||
Ending balance (in shares) | 30,360 | ||
Grant Date Fair Value | |||
Granted (in dollars per share) | $ 19.91 | ||
Forfeited | 20 | ||
Ending balance (in dollars per share) | $ 19.88 | ||
Restricted Stock | Minimum | |||
EQUITY-BASED COMPENSATION | |||
Vesting period | 1 year | ||
Restricted Stock | Maximum | |||
EQUITY-BASED COMPENSATION | |||
Vesting period | 3 years |
EQUITY BASED COMPENSATION - Pha
EQUITY BASED COMPENSATION - Phantom Awards (Details4) - USD ($) $ / shares in Units, $ in Millions | May 05, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 31, 2017 |
EQUITY-BASED COMPENSATION | |||||
Settlement of phantom units | $ 7.8 | ||||
Share price | $ 20 | $ 6.08 | |||
Outstanding units | 299,801 | 331,854 | |||
Phantom Awards | |||||
EQUITY-BASED COMPENSATION | |||||
Settlement of phantom units | $ 7.8 | ||||
Share price | $ 14 | ||||
Cash payment amount per award | $ 5.53 | ||||
Compensation expense | $ 7.8 | $ 0 | $ 0 | ||
Outstanding units | 0 |
EQUITY BASED COMPENSATION - Roc
EQUITY BASED COMPENSATION - Rockwater awards (Details5) - USD ($) $ / shares in Units, $ in Thousands | Nov. 01, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assumptions for equity options granted: | |||||
Underlying Equity | $ 20 | $ 20 | $ 6.08 | ||
Strike Price | $ 20 | $ 20 | |||
Dividend Yield (%) | 0.00% | 0.00% | |||
Volatility (%) | 63.00% | ||||
Expected Term (Years) | 5 years | ||||
Minimum | |||||
Assumptions for equity options granted: | |||||
Strike Price | $ 14.33 | ||||
Volatility (%) | 46.60% | ||||
Expected Term (Years) | 4 years | ||||
Maximum | |||||
Assumptions for equity options granted: | |||||
Strike Price | $ 20.61 | ||||
Volatility (%) | 46.80% | ||||
Expected Term (Years) | 6 years | ||||
Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity-based compensation expense | $ 500 | $ 0 | $ 0 | ||
Unrecognized equity-based compensation expense | $ 100 | $ 100 | |||
Rockwater Merger | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Fair value of Rockwater share-based awards attributed to pre-acquisition service | $ 12,529 | ||||
Assumptions for equity options granted: | |||||
Underlying Equity | $ 16.36 | $ 16.36 | |||
Dividend Yield (%) | 0.00% | ||||
Risk free rate(%), minimum | 1.10% | ||||
Risk free rate(%), maximum | 2.20% | ||||
Volatility (%) | 45.00% | ||||
Rockwater Merger | Minimum | |||||
Assumptions for equity options granted: | |||||
Strike Price | 5.68 | $ 5.68 | |||
Expected Term (Years) | 0 years | ||||
Rockwater Merger | Maximum | |||||
Assumptions for equity options granted: | |||||
Strike Price | $ 34.41 | $ 34.41 | |||
Expected Term (Years) | 8 years 4 months 24 days | ||||
Rockwater Merger | Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized equity-based compensation expense | $ 6,600 | $ 6,600 | |||
Weighted-average period for recognition (in years) | 1 year 4 months 24 days | ||||
Total fair value of restricted stock awards and stock options that vested | $ 500 | ||||
Selling, general and administrative | Rockwater Merger | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity-based compensation expense | $ 5,200 |
EQUITY BASED COMPENSATION - R70
EQUITY BASED COMPENSATION - Rockwater awards (Details6) - Equity options - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2016 | |
Equity Options | |||
Begininning balance (in shares) | 962,436 | 620,721 | |
Forfeited | (113,411) | ||
Ending balance (in shares) | 962,436 | 620,721 | |
Ending balance, exercisable | 412,542 | ||
Weighted-average Exercise Price | |||
Beginning balance (in dollars per share) | $ 17.80 | $ 16.50 | |
Forfeited (in dollars per share) | 19.48 | ||
Ending balance (in dollars per share) | 17.80 | $ 16.50 | |
Ending balance, exercisable | $ 14.49 | ||
Aggregate intrinsic value | $ 1,500,000 | ||
Weighted average remaining term of outstanding stock options | 3 years 4 months 24 days | ||
Options exercisable | 412,542 | ||
Unrecognized compensation expense | $ 900,000 | ||
Weighted-average period for recognition (in years) | 1 year 6 months | ||
Vested units | |||
Weighted average remaining term of outstanding stock options | 3 years 4 months 24 days | ||
Rockwater Merger | |||
Equity Options | |||
Begininning balance (in shares) | 2,533,499 | 2,547,258 | |
Forfeited | (13,759) | ||
Ending balance (in shares) | 2,533,499 | 2,547,258 | |
Ending balance, exercisable | 1,997,785 | ||
Weighted-average Exercise Price | |||
Beginning balance (in dollars per share) | $ 12.74 | $ 12.75 | |
Forfeited (in dollars per share) | 18.70 | ||
Ending balance (in dollars per share) | $ 12.74 | $ 12.75 | |
Weighted-average fair value of replacement stock options granted | $ 7.47 | ||
Ending balance, exercisable | $ 12.71 | ||
Aggregate intrinsic value | $ 14,800,000 | ||
Weighted average remaining term of outstanding stock options | 5 years 2 months 12 days | ||
Options exercisable | 1,997,785 | ||
Unrecognized compensation expense | $ 11,000,000 | ||
Weighted-average period for recognition (in years) | 4 years 6 months | ||
Vested units | |||
Weighted average remaining term of outstanding stock options | 5 years 2 months 12 days |
EQUITY BASED COMPENSATION - R71
EQUITY BASED COMPENSATION - Rockwater awards (Details7) | 2 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Restricted stock | |
Beginning balance (in shares) | shares | 331,854 |
Vested | shares | (32,053) |
Ending balance (in shares) | shares | 299,801 |
Weighted average fair value | |
Beginning balance (in dollars per share) | $ / shares | $ 16.36 |
Vested (in dollars per share) | $ / shares | 16.36 |
Ending balance (in dollars per share) | $ / shares | $ 16.36 |
Restricted Stock | |
Restricted stock | |
Ending balance (in shares) | shares | 30,360 |
Weighted average fair value | |
Ending balance (in dollars per share) | $ / shares | $ 19.88 |
DERIVATIVE FINANCIAL INSTRUME72
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 30, 2013 | |
DERIVATIVE FINANCIAL INSTRUMENTS | ||||
Beginning fair value of interest rate swap derivative instruments | $ (7) | $ (68) | ||
Amount of unrealized losses recognized in OCI | (106) | (277) | ||
Amount of gains reclassified from AOCI to earnings (effective portion) | 113 | 338 | ||
Net change in fair value of interest rate swap derivative instruments | $ 302 | $ 7 | 61 | |
Ending fair value of interest rate swap derivative instruments | $ (7) | |||
Interest Rate Swap | Cash Flow Hedging | ||||
DERIVATIVE FINANCIAL INSTRUMENTS | ||||
Aggregate notional amount | $ 125,000 |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Transfers into Level3 | $ 0 | $ 0 | $ 0 |
Transfers out of Level3 | $ 0 | 0 | 0 |
Impairment of Goodwill | 138,529 | ||
Impairment of Fixed Assets | 60,026 | ||
Debt outstanding | 0 | ||
Nonrecurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Impairment of Goodwill | 138,529 | 20,136 | |
Impairment of Intangible Assets | 137 | 1,230 | |
Impairment of Fixed Assets | 60,026 | ||
Nonrecurring | Carrying value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Goodwill | 138,529 | 20,136 | |
Intangible Assets | 137 | $ 1,230 | |
Fixed Assets | 83,214 | ||
Level 3 | Nonrecurring | Fair value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fixed Assets | $ 23,188 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
RELATED PARTY TRANSACTIONS | |||
Sales to related parties | $ 9,000,000 | $ 1,200,000 | $ 4,100,000 |
Purchases from related party vendors | $ 10,400,000 | $ 4,300,000 | 8,600,000 |
Minimum | |||
RELATED PARTY TRANSACTIONS | |||
Beneficial ownership (as a percent) | 5.00% | 5.00% | |
Legacy Owner Holdco and Crestview GP | |||
RELATED PARTY TRANSACTIONS | |||
Percentage of net tax savings for payment to TRA Holders | $ 85 | ||
Contributing Legacy Owners | |||
RELATED PARTY TRANSACTIONS | |||
Percentage of net tax savings for payment to TRA Holders | 85 | ||
Property and equipment | |||
RELATED PARTY TRANSACTIONS | |||
Purchases from related party vendors | 3,800,000 | $ 1,000,000 | 4,000,000 |
Inventory and consumables | |||
RELATED PARTY TRANSACTIONS | |||
Purchases from related party vendors | 300,000 | 200,000 | 900,000 |
Rent of certain equipment or other services | |||
RELATED PARTY TRANSACTIONS | |||
Purchases from related party vendors | 2,700,000 | 1,100,000 | 1,000,000 |
Management, consulting and other services | |||
RELATED PARTY TRANSACTIONS | |||
Purchases from related party vendors | $ 3,600,000 | $ 2,000,000 | $ 2,700,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
INCOME TAXES | |||
Effective Income tax (as percent) | 2.40% | 0.20% | (0.40%) |
Statutory tax rate (as a percent) | 35.00% | 35.00% | |
Tax expense (benefit) | $ (851) | $ (524) | $ 324 |
Current tax (benefit) expense | |||
Federal income tax | (338) | 341 | |
State and local income tax | (77) | 275 | 836 |
Total current (benefit) expense | (415) | 275 | 1,177 |
Deferred tax (benefit) expense | |||
Federal income tax | (422) | (841) | (785) |
State and local income tax | (14) | 42 | (68) |
Total deferred benefit | (436) | (799) | (853) |
Total income tax (benefit) provision | (851) | (524) | 324 |
Tax (benefit) expense attributable to controlling interests | (405) | (179) | 324 |
Income tax benefit attributable to noncontrolling interests | (446) | (345) | |
Provision calculated at federal statutory income tax rate: | |||
Loss before taxes | $ (35,978) | $ (314,472) | (81,569) |
Statutory rate | 35.00% | 35.00% | |
Income tax benefit computed at statutory rate | $ (12,592) | $ (110,065) | |
Less: noncontrolling interests | 6,409 | 109,230 | |
Income tax benefit attributable to controlling interests | (6,183) | (835) | |
State and local income taxes, net of federal benefit | (91) | 317 | |
Change in enacted tax rate | 39,166 | ||
Change in valuation allowance | (33,297) | 339 | |
Income tax benefit attributable to controlling interests | (405) | (179) | 324 |
Income tax benefit attributable to noncontrolling interests | (446) | (345) | |
Total income tax (benefit) provision | $ (851) | $ (524) | $ 324 |
INCOME TAXES- Deferred tax asse
INCOME TAXES- Deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets | ||
Outside basis difference in SES Holdings | $ 37,931 | $ 3,601 |
Net operating losses | 35,243 | 3,999 |
Credits and other carryforwards | 863 | 297 |
Property and equipment | 362 | |
Intangible assets | 1,218 | |
Stock compensation | 2,557 | |
Other | 1,340 | |
Total deferred tax assets before valuation allowance | 79,152 | 8,259 |
Valuation allowance | (75,886) | (7,932) |
Total deferred tax assets | 3,266 | 327 |
Deferred tax liabilities | ||
Property and equipment | 3,286 | |
Intangible assets | 811 | |
Other | 549 | 113 |
Total deferred tax liabilities | 3,835 | 924 |
Net deferred tax (liabilities) | $ (569) | $ (597) |
INCOME TAXES- Valuation allowan
INCOME TAXES- Valuation allowance (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in valuation allowance | |||
Change during the year | $ 68 | ||
Statutory rate | 35.00% | 35.00% | |
Liability or expense | $ 0 | $ 0 | |
Forecast | |||
Change in valuation allowance | |||
Statutory rate | 21.00% | ||
Federal | |||
Change in valuation allowance | |||
Net operating loss carryforward | 137.8 | ||
State | |||
Change in valuation allowance | |||
Net operating loss carryforward | 101.7 | ||
Foreign | |||
Change in valuation allowance | |||
Net operating loss carryforward | $ 14.5 |
NONCONTROLLING INTERESTS (Detai
NONCONTROLLING INTERESTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Effects of changes in noncontrolling interests on equity | |||
Net loss attributable to Select Energy Services, Inc. and its Predecessor | $ (16,816) | $ (307,524) | $ (80,891) |
Transfers from noncontrolling interests: | |||
Decrease in additional paid-in capital as a result of the contribution of proceeds from the Select 144A Offering to SES Holdings, LLC in exchange for common units | (218,712) | ||
Increase in contributed capital due to purchase of noncontrolling interest | 707 | ||
Decrease in additional paid-in capital as a result of the contribution of net assets acquired to SES Holdings, LLC in exchange for common units | (4,879) | ||
Decrease in additional paid-in capital as a result of the contribution of net assets from the Rockwater Merger to SES Holdings, LLC in exchange for common units | (170,276) | ||
Decrease in additional paid-in capital as a result of the contribution of proceeds from the IPO to SES Holdings, LLC in exchange for common units | (41,135) | ||
Increase in additional paid-in capital as a result of the repurchase of common units of SES Holdings, LLC | (113) | ||
Change to equity from net loss attributable to Select Energy Services, Inc. and its Predecessor and transfers from noncontrollig interests | $ (232,993) | $ (525,529) | $ (80,891) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Calculation of basic and diluted earnings per share: | |||||||||||
Net loss | $ (14,950) | $ 2,593 | $ (10,490) | $ (12,280) | $ (24,713) | $ (35,204) | $ (228,238) | $ (25,793) | $ (35,127) | $ (313,948) | $ (81,872) |
Less: net loss attributable to noncontrolling interests | 18,311 | 6,424 | 981 | ||||||||
Net loss attributable to Select Energy Services, Inc. | $ (9,652) | $ 1,224 | $ (4,216) | $ (4,172) | $ (1,043) | (16,816) | (1,043) | ||||
Predecessor | |||||||||||
Calculation of basic and diluted earnings per share: | |||||||||||
Net loss | (306,481) | (80,891) | |||||||||
Less: net loss attributable to noncontrolling interests | 306,481 | $ 80,891 | |||||||||
Class A-1 Common Stock | |||||||||||
Calculation of basic and diluted earnings per share: | |||||||||||
Net loss attributable to Select Energy Services, Inc. | $ (3,691) | $ (844) | |||||||||
Weighted average shares outstanding, diluted | 7,233,973 | 16,100,000 | |||||||||
Net income (loss) per share attributable to common stockholders, diluted | $ (0.51) | $ (0.05) | |||||||||
Class A-2 Common Stock | |||||||||||
Calculation of basic and diluted earnings per share: | |||||||||||
Net loss attributable to Select Energy Services, Inc. | $ (565) | ||||||||||
Weighted average shares outstanding, diluted | 1,106,605 | ||||||||||
Net income (loss) per share attributable to common stockholders, diluted | $ (0.51) | ||||||||||
Class A Common Stock | |||||||||||
Calculation of basic and diluted earnings per share: | |||||||||||
Net loss attributable to Select Energy Services, Inc. | $ (12,560) | $ (199) | |||||||||
Weighted average shares outstanding, diluted | 24,612,853 | 3,802,972 | |||||||||
Net income (loss) per share attributable to common stockholders, diluted | $ (0.51) | $ (0.05) | |||||||||
Class B Common Stock | |||||||||||
Calculation of basic and diluted earnings per share: | |||||||||||
Weighted average shares outstanding, diluted | 38,768,156 | 38,462,541 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)segment | Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | |
SEGMENT INFORMATION | |||||||||||
Number of operating segments | segment | 3 | 3 | |||||||||
Number of reportable segments | segment | 3 | 3 | |||||||||
Assets | $ 1,356,368 | $ 405,066 | $ 1,356,368 | $ 405,066 | |||||||
Segment information | |||||||||||
Revenue | 304,237 | $ 153,880 | $ 134,449 | $ 99,925 | 86,734 | $ 73,907 | $ 62,919 | $ 78,839 | 692,491 | 302,399 | $ 535,577 |
Income (loss) before taxes | (35,978) | (314,472) | (81,569) | ||||||||
Depreciation and amortization | 103,449 | 97,107 | 107,712 | ||||||||
Capital Expenditures | 108,277 | 36,326 | 48,686 | ||||||||
Loss from operations | (8,039) | $ 2,457 | $ (11,909) | $ (12,508) | (21,334) | $ (31,266) | $ (224,822) | $ (21,551) | (29,999) | (298,973) | (68,773) |
Other income, net | 369 | 629 | 893 | ||||||||
Water Solutions | |||||||||||
SEGMENT INFORMATION | |||||||||||
Assets | 994,159 | 324,171 | 994,159 | 324,171 | |||||||
Segment information | |||||||||||
Revenue | 528,997 | 241,766 | 427,592 | ||||||||
Income (loss) before taxes | 17,424 | (282,019) | (52,757) | ||||||||
Depreciation and amortization | 82,056 | 81,051 | 89,271 | ||||||||
Capital Expenditures | 87,123 | 34,458 | 34,724 | ||||||||
Oilfield Chemicals | |||||||||||
SEGMENT INFORMATION | |||||||||||
Assets | 186,333 | 186,333 | |||||||||
Segment information | |||||||||||
Revenue | 41,586 | ||||||||||
Income (loss) before taxes | 663 | ||||||||||
Depreciation and amortization | 2,040 | ||||||||||
Capital Expenditures | 3,063 | ||||||||||
Wellsite Services | |||||||||||
SEGMENT INFORMATION | |||||||||||
Assets | 151,272 | 68,868 | 151,272 | 68,868 | |||||||
Segment information | |||||||||||
Revenue | 123,964 | 61,461 | 109,976 | ||||||||
Income (loss) before taxes | (6,527) | (15,038) | (3,489) | ||||||||
Depreciation and amortization | 17,550 | 16,056 | 18,177 | ||||||||
Capital Expenditures | 18,091 | 1,868 | 13,962 | ||||||||
Elimination | |||||||||||
Segment information | |||||||||||
Revenue | (2,056) | (828) | (1,991) | ||||||||
Corporate | |||||||||||
SEGMENT INFORMATION | |||||||||||
Assets | $ 24,604 | $ 12,027 | 24,604 | 12,027 | |||||||
Segment information | |||||||||||
Income (loss) before taxes | (41,559) | (1,916) | (12,527) | ||||||||
Depreciation and amortization | 1,803 | 264 | |||||||||
Material reconciling items | |||||||||||
Segment information | |||||||||||
Loss from operations | 11,560 | (297,057) | (56,246) | ||||||||
Interest expense, net | (6,629) | (16,128) | (13,689) | ||||||||
Other income, net | $ 650 | $ 629 | $ 893 |
SEGMENT INFORMATION (Details2)
SEGMENT INFORMATION (Details2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||||||||||
Water Solutions Revenue Net | $ 546,043 | $ 241,455 | $ 427,496 | ||||||||
Oilfield chemical product sales | 41,586 | ||||||||||
Accommodations And Rentals Revenue | 53,888 | 27,151 | 52,948 | ||||||||
Wellsite Completion And Construction Services Revenue | 50,974 | 33,793 | 55,133 | ||||||||
Revenue | $ 304,237 | $ 153,880 | $ 134,449 | $ 99,925 | $ 86,734 | $ 73,907 | $ 62,919 | $ 78,839 | 692,491 | 302,399 | 535,577 |
Water Solutions | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 528,997 | 241,766 | 427,592 | ||||||||
Water sourcing and transfer | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Water Solutions Revenue Net | 371,352 | 144,659 | 230,354 | ||||||||
Well testing and flowback | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Water Solutions Revenue Net | 90,075 | 37,582 | 75,820 | ||||||||
Fluid hauling and disposal | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Water Solutions Revenue Net | 84,616 | 59,214 | 121,322 | ||||||||
Oilfield Chemicals | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Oilfield chemical product sales | 41,586 | ||||||||||
Revenue | 41,586 | ||||||||||
Accommodations and Rentals | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Accommodations And Rentals Revenue | $ 53,888 | $ 27,151 | $ 52,948 |
SEGMENT INFORMATION (Details3)
SEGMENT INFORMATION (Details3) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Concentration Risk [Line Items] | |||||||||||
Revenue | $ 304,237 | $ 153,880 | $ 134,449 | $ 99,925 | $ 86,734 | $ 73,907 | $ 62,919 | $ 78,839 | $ 692,491 | $ 302,399 | $ 535,577 |
Geographic concentration risk | UNITED STATES | Revenue | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Revenue | $ 680,900 | ||||||||||
Concentration risk (as a percent) | 98.30% | ||||||||||
Geographic concentration risk | UNITED STATES | Long Lived Asset | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Long-lived assets | 451,700 | $ 451,700 | |||||||||
Concentration risk (as a percent) | 95.30% | ||||||||||
Geographic concentration risk | CANADA | Revenue | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Revenue | $ 11,600 | ||||||||||
Concentration risk (as a percent) | 1.70% | ||||||||||
Geographic concentration risk | CANADA | Long Lived Asset | |||||||||||
Concentration Risk [Line Items] | |||||||||||
Long-lived assets | $ 22,400 | $ 22,400 | |||||||||
Concentration risk (as a percent) | 4.70% |
QUARTERLY RESULTS OF OPERATIO83
QUARTERLY RESULTS OF OPERATIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Data [Abstract] | |||||||||||
Revenue | $ 304,237 | $ 153,880 | $ 134,449 | $ 99,925 | $ 86,734 | $ 73,907 | $ 62,919 | $ 78,839 | $ 692,491 | $ 302,399 | $ 535,577 |
Gross profit (loss) | 26,259 | 19,509 | 12,254 | (242) | (5,922) | (8,970) | (17,299) | (11,937) | 57,780 | (44,128) | 12,245 |
Income (loss) from operations | (8,039) | 2,457 | (11,909) | (12,508) | (21,334) | (31,266) | (224,822) | (21,551) | (29,999) | (298,973) | (68,773) |
Net income (loss) | (14,950) | 2,593 | (10,490) | (12,280) | (24,713) | $ (35,204) | $ (228,238) | $ (25,793) | (35,127) | (313,948) | $ (81,872) |
Net loss attributable to Select Energy Services, Inc. and its Predecessor | $ (9,652) | $ 1,224 | $ (4,216) | $ (4,172) | $ (1,043) | (16,816) | (1,043) | ||||
Class A Common Stock | |||||||||||
Quarterly Financial Data [Abstract] | |||||||||||
Net loss attributable to Select Energy Services, Inc. and its Predecessor | $ (12,560) | $ (199) | |||||||||
Net income (loss) per share attributable to common stockholders: | |||||||||||
Basic & Diluted | $ (0.18) | $ 0.04 | $ (0.16) | $ (0.21) | $ (0.05) | $ (0.51) | $ (0.05) | ||||
Class A-1 Common Stock | |||||||||||
Quarterly Financial Data [Abstract] | |||||||||||
Net loss attributable to Select Energy Services, Inc. and its Predecessor | $ (3,691) | $ (844) | |||||||||
Net income (loss) per share attributable to common stockholders: | |||||||||||
Basic & Diluted | $ (0.16) | $ (0.21) | $ (0.05) | $ (0.51) | $ (0.05) | ||||||
Class A-2 Common Stock | |||||||||||
Quarterly Financial Data [Abstract] | |||||||||||
Net loss attributable to Select Energy Services, Inc. and its Predecessor | $ (565) | ||||||||||
Net income (loss) per share attributable to common stockholders: | |||||||||||
Basic & Diluted | $ (0.18) | $ (0.51) |
SUBSEQUENT EVENTS - (Details)
SUBSEQUENT EVENTS - (Details) - $ / shares | Jan. 24, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 20, 2016 |
Class A Common Stock | ||||
Completion of the Merger | ||||
Par value | $ 0.01 | $ 0.01 | ||
Number of shares outstanding | 59,182,176 | 3,802,972 | ||
Class A-1 Common Stock | ||||
Completion of the Merger | ||||
Par value | $ 0.01 | $ 0.01 | $ 0.01 | |
Number of shares outstanding | 0 | 16,100,000 | ||
Class A-2 Common Stock | ||||
Completion of the Merger | ||||
Par value | $ 0.01 | $ 0.01 | ||
Number of shares outstanding | 6,731,845 | 0 | ||
Subsequent Event | Class A Common Stock | Rockwater | ||||
Completion of the Merger | ||||
Shares issued in Merger Agreement | 6,721,294 | |||
Subsequent Event | Class A-1 Common Stock | Rockwater | ||||
Completion of the Merger | ||||
Par value | $ 0.01 | |||
Subsequent Event | Class A-2 Common Stock | Rockwater | ||||
Completion of the Merger | ||||
Conversion rate per share | $ 1 | |||
Number of shares outstanding | 0 |