nex-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2023


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

For the transition period from _____ to _____

Commission File Number 001-37988

NexTier Oilfield Solutions Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware			38-4016639
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

3990 Rogerdale Rd.	Houston	Texas	77042
(Address of Principal Executive Offices)			(Zip Code)

(713) 325-6000

(Registrant's Telephone Number, Including Area Code)


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
Common Stock, $0.01, par value	NEX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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


Large Accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller Reporting Company	☐

		Emerging Growth Company	☐

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

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

As of July 24, 2023, the registrant had 228,552,549 shares of common stock outstanding.

Auditor Name: KPMG LLP Auditor Location: Houston, Texas Auditor Firm ID: 185

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION	5

Item 1.	Financial Statements	5

	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Operations and Comprehensive Income	7
	Condensed Consolidated Statements of Changes in Stockholders' Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to the Unaudited Condensed Consolidated Financial Statements	11

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION	37

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3.	Defaults Upon Senior Securities	39

Item 4.	Mine Safety Disclosures	39

Item 5.	Other Information	39

Item 6.	Exhibits	40

	Signatures	41

REFERENCES WITHIN THIS QUARTERLY REPORT

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to (i) the terms "Company," "NexTier," "we," "us" and "our" refer to NexTier Oilfield Solutions Inc. and its consolidated subsidiaries; (ii) the term "Keane Group" refers to Keane Group Holdings, LLC and its consolidated subsidiaries; (iii) the term "Keane Investor" refers to Keane Investor Holdings LLC; (iv) the term "Cerberus" refers to Cerberus Capital Management, L.P. and its controlled affiliates and investment funds; and (v) the term "Alamo" refers to Alamo Pressure Pumping, LLC and its consolidated subsidiaries. While the equipment and amount of hydraulic horsepower required for a customer project varies, we calculate our total number of fleets, as used in this Quarterly Report on Form 10-Q, by dividing our total hydraulic horsepower by approximately 63,000 hydraulic horsepower.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future operating results and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. Statements of assumptions underlying or relating to our forward-looking statements are also forward-looking statements. Our forward-looking statements are generally accompanied by words such as "may," "should," "expect," "will," "believe," "plan," "anticipate," "could," "intend," "target," "goal," "project," "contemplate," "estimate," "predict," "potential," "outlook," "reflect," "forecast," "future," or "continue," or the negative of these terms or other similar expressions. Any forward-looking statements contained in this Quarterly Report on Form 10-Q speak only as of the date on which we make them and are based upon our historical performance and on current plans, assumptions, estimates and expectations. Except as required by law, we have no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about and risks regarding the following:

•Our business strategy, plans, objectives, expectations and intentions;

•Our future operating results;

•Dependence on capital spending and well completion by the onshore oil and natural gas industry and demand for services in our industry;

•Crude oil and natural gas commodity prices and the volatility of these prices;

•Changing regional, national or global economic conditions, including oil and gas supply and demand and the impact of geopolitical conditions on those prices;

•The impact of adverse weather conditions;

•The competitive nature of the industry in which we conduct our business, including pricing pressures;

•The impact of pipeline and storage capacity constraints;

•The effects of government regulation, including regulations of hydraulic fracturing, regulations aimed at combating climate change, and the operating hazards of our business;

•The effect of a loss of, or the financial distress of, one or more customers and our ability to obtain or renew customer contracts;

•The effect of a loss of, or interruption in operations of, one or more key suppliers or materials, and the market price and availability of materials or equipment;

•Our ability to maintain the right level of commitments under our supply agreements;

•The impact of new technology on our business;

•Legal proceedings, liability claims and effect of external investigations;

•Our ability to obtain or renew permits, approvals and authorizations from governmental and third parties and to comply with applicable health, safety, and environmental regulations;

•Acquisitions, divestitures and future capital expenditures and the impact of those transactions and the related integration on our business;

•Environmental, social, and governance (“ESG”) matters, including investor and public perception of our industry;

•Our ability to employ a sufficient number of skilled and qualified workers, including our executive officers;

•Our ability to service our debt obligations and access capital;

•The market volatility of our stock;

•The impact of ownership by Cerberus (through Keane Investor);

•The impact of our stock buyback program;

•The impact of our corporate governance structure;

•Our ability to maintain effective information technology systems and the impact of cybersecurity incidents on our business;

•The impact of inflation on our business; and

•Risks related to our merger with Patterson-UTI Energy, Inc. ("Patterson-UTI").

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations, assumptions and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section entitled Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2022 and in our subsequent filings with the Securities and Exchange Commission (the "SEC"). Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, circumstances, plans, intentions or expectations reflected in any forward-looking statements will be achieved or occur. Actual results, events or circumstances could differ materially from those described in such forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make, except as specifically set forth herein. We undertake no obligation to revise or update any forward-looking statements for any reasons, except as required by law.

This Quarterly Report on Form 10-Q includes market and industry data and certain other statistical information based on third-party sources including independent industry publications, government publications and other published independent sources. Although we believe these third-party sources are reliable as of their respective dates, we have not independently verified the accuracy or completeness of this information. Some data is also based on our own good faith estimates, which are supported by our management's knowledge of and experience in the markets and businesses in which we operate.

Market, industry or similar data presented herein, involves risks and uncertainties and is subject to change based on various factors, including those discussed above and in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022 and in our subsequent filings with the SEC.

PART I

Item 1. Financial Statements

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands, except par value)


	June 30, 2023		December 31, 2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	310,166	$	218,476
Trade and other accounts receivable, net	443,741		397,197
Inventories, net	73,415		66,395

Prepaid and other current assets	49,571		43,947
Total current assets	876,893		726,015
Operating lease right-of-use assets	29,178		18,659
Finance lease right-of-use assets	93,565		43,714
Property and equipment (net of accumulated depreciation of $1,034,693 and $1,002,684)	796,197		679,513
Goodwill	192,780		192,780
Intangible assets (net of accumulated amortization of $90,873 and $82,043)	48,373		50,586
Deferred income taxes	112,926		—
Other noncurrent assets	13,654		15,901
Total assets	$	2,163,566	$	1,727,168

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable	$	347,589	$	202,936
Accrued expenses	191,053		281,715
Customer contract liabilities	19,377		19,377
Current maturities of long-term operating lease liabilities	9,930		6,083
Current maturities of long-term finance lease liabilities	52,605		19,855
Current maturities of long-term debt	14,176		14,004
Other current liabilities	5,446		9,368
Total current liabilities	640,176		553,338
Long-term operating lease liabilities, less current maturities	17,856		13,267
Long-term finance lease liabilities, less current maturities	21,479		11,925
Long-term debt, net of unamortized deferred financing costs and unamortized debt discount, less current maturities	340,327		347,425
Other noncurrent liabilities	14,477		11,294
Total noncurrent liabilities	394,139		383,911
Total liabilities	1,034,315		937,249


Stockholders' equity

Common stock, par value $0.01 per share (authorized 500,000 shares, issued and outstanding 228,549 and 233,995 shares, respectively)	2,285		2,340
Paid-in capital in excess of par value	942,563		1,007,492
Retained earnings (deficit)	177,862		(226,195)
Accumulated other comprehensive income	6,541		6,282
Total stockholders' equity	1,129,251		789,919
Total liabilities and stockholders' equity	$	2,163,566	$	1,727,168

See accompanying notes to unaudited condensed consolidated financial statements.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Income

(Amounts in thousands, except for per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue	$	945,091	$	842,912	$	1,880,763	$	1,477,955
Operating costs and expenses:
Cost of services(1)	676,299		649,866		1,350,243		1,174,522
Depreciation and amortization	63,502		58,794		122,147		113,957
Selling, general and administrative expenses	39,699		35,855		79,380		71,714
Merger and integration	5,275		23,682		5,436		32,914
Loss (gain) on disposal of assets	5,772		(866)		9,542		(1,689)
Total operating costs and expenses	790,547		767,331		1,566,748		1,391,418
Operating income	154,544		75,581		314,015		86,537
Other income (expense):
Other income, net

SEC Form 10-Q filed by NexTier Oilfield Solutions Inc.