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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 September 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 001-37988
NexTier Oilfield Solutions Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware38-4016639
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
3990 Rogerdale Rd.HoustonTexas77042
(Address of Principal Executive Offices)(Zip Code)
(713325-6000
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange On Which Registered
Common Stock, $0.01, par valueNEXNew 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 October 21, 2022, the registrant had 245,529,851 shares of common stock outstanding.
Auditor Name: KPMG LLP Auditor Location: Houston, Texas Auditor Firm ID: 185



TABLE OF CONTENTS
PART I.
FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.




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. As used in this Quarterly Report on Form 10-Q, capacity in the hydraulic fracturing business refers to the total number of hydraulic horsepower, regardless of whether such hydraulic horsepower is active and deployed, active and not deployed or inactive. 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. Our forward-looking statements are generally accompanied by words such as "may," "will," "should," "expect," "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, 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:
the continued impact of the COVID-19 pandemic (including as a result of the emergence of new variants and strains of the virus, such as Delta and Omicron) and the evolving response thereto by governments, private businesses or others to contain the spread of the virus and its variants or to treat its impact;
changing regional, national or global economic conditions, including rising inflation and supply chain issues;
the ongoing impact of geopolitical conflicts;
our business strategy;
our plans, objectives, expectations and intentions;
the competitive nature of the industry in which we conduct our business, including pricing pressures;
our future operating results;
crude oil and natural gas demand, production growth, and commodity prices;
demand for services in our industry;
the impact of pipeline and storage capacity constraints;
the impact of adverse weather conditions;
the effects of government regulation;
changes in tax laws;
legal proceedings, liability claims and effect of external investigations;
the effect of a loss of, or the financial distress of, one or more customers;
our ability to obtain or renew customer contracts;
the effect of a loss of, or interruption in operations of, one or more key suppliers;
our ability to maintain the right level of commitments under our supply agreements;
the market price and availability of materials or equipment;
the impact of new technology;
our ability to employ a sufficient number of skilled and qualified workers;
our ability to obtain permits, approvals and authorizations from governmental and third parties;
planned acquisitions, divestitures and future capital expenditures;
our ability to maintain secure and effective information technology systems;
3


our ability to maintain an effective system of internal controls over financial reporting;
our ability to service our debt obligations;
financial strategy, liquidity or capital required for our ongoing operations and acquisitions, and our ability to raise additional capital;
the market volatility of our stock;
our ability or intention to pay dividends or to effectuate repurchases of our common stock;
the impact of ownership by Cerberus (through Keane Investor); and
the impact of our corporate governance structure.
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 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, 2021 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, expect 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.
While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data 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, 2021 and in our subsequent filings with the SEC.
PART I
Item 1. Financial Statements
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands, except par value)
September 30,
2022
December 31,
2021
(Unaudited)(Audited)
Assets
Current assets:
Cash and cash equivalents
$250,207 $110,695 
Trade and other accounts receivable, net
479,669 301,740 
Inventories, net
60,008 38,094 
Assets held for sale
 1,555 
Prepaid and other current assets
53,533 55,625 
Total current assets
843,417 507,709 
Operating lease right-of-use assets
17,487 21,767 
Finance lease right-of-use assets
45,262 41,537 
Property and equipment (net of accumulated depreciation of $984,324 and $951,170)
636,951 620,865 
Goodwill
192,780 192,780 
Intangible assets (net of accumulated amortization of $78,920 and $62,678)
53,117 64,961 
Other noncurrent assets
13,310 7,962 
Total assets
$1,802,324 $1,457,581 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$288,293 $190,963 
Accrued expenses
287,980 213,923 
Customer contract liabilities
23,538 23,729 
Current maturities of long-term operating lease liabilities
5,324 7,452 
Current maturities of long-term finance lease liabilities
18,261 11,906 
Current maturities of long-term debt
13,849 13,384 
Other current liabilities
11,277 10,346 
Total current liabilities
648,522 471,703 
Long-term operating lease liabilities, less current maturities
12,823 20,446 
Long-term finance lease liabilities, less current maturities
17,335 26,873 
Long-term debt, net of unamortized deferred financing costs and unamortized debt discount, less current maturities 350,986 361,501 
Other noncurrent liabilities
9,732 30,041 
Total noncurrent liabilities
390,876 438,861 
Total liabilities
1,039,398 910,564 
Stockholders' equity
Common stock, par value $0.01 per share (authorized 500,000 shares, issued and outstanding 245,519 and 242,019 shares, respectively)
2,455 2,420 
Paid-in capital in excess of par value
1,113,380 1,094,020 
Retained deficit
(359,180)(541,164)
Accumulated other comprehensive loss6,271 (8,259)
Total stockholders' equity
762,926 547,017 
Total liabilities and stockholders' equity
$1,802,324 $1,457,581 

See accompanying notes to unaudited condensed consolidated financial statements.
5


NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Amounts in thousands, except for per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Revenue$896,010 $393,164 $2,373,965 $913,711 
Operating costs and expenses:
Cost of services(1)
682,683 344,637 1,857,205 831,674 
Depreciation and amortization56,542 44,861 170,499 131,400 
Selling, general and administrative expenses37,415 37,453 109,129 74,256 
Merger and integration27,521 4,752 60,435 4,930 
Gain on disposal of assets(10,471)(1,133)(12,160)(7,742)
Total operating costs and expenses
793,690 430,570 2,185,108 1,034,518 
Operating income (loss)102,320 (37,406)188,857 (120,807)
Other income (expense):
Other income, net11,124 585 17,955 9,113 
Interest expense, net(7,150)(6,701)(21,868)(16,633)
Total other income (expense)3,974 (6,116)(3,913)(7,520)
Income (loss) before income taxes106,294 (43,522)184,944 (128,327)
Income tax expense(1,560)(472)(2,960)(1,950)
Net Income (loss)104,734 (43,994)181,984 (130,277)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments1,037 531 1,290 433 
Hedging activities4,421 (46)11,598 785 
Total comprehensive income (loss)$110,192 $(43,509)$194,872 $(129,059)
Net income (loss) per share:
Basic net income (loss) per share$0.43 $(0.20)$0.75 $(0.60)
Diluted net income (loss) per share$0.42 $(0.20)$0.73 $(0.60)
Weighted-average shares outstanding: basic244,686224,481 243,980218,499 
Weighted-average shares outstanding: diluted250,821224,481 249,864218,499 
(1) Cost of services during the three and nine months ended September 30, 2022 excludes depreciation and amortization of $52.1 million and $157.3 million, respectively. Cost of services during the three and nine months ended September 30, 2021 excludes depreciation and amortization of $40.5 million and $118.1 million, respectively.
See accompanying notes to unaudited condensed consolidated financial statements.
6


NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Amounts in thousands)
(Unaudited)

Common stockPaid-in capital in excess of par valueRetained deficit Accumulated other comprehensive income (loss)Total
Balance as of December 31, 2021$2,420 $1,094,020 $(541,164)$(8,259)$547,017 
Stock-based compensation19 7,796 — — 7,815 
Shares repurchased and retired related to stock-based compensation— (3,953)— — (3,953)
Other comprehensive income— — — 6,014 6,014 
Net income— — 8,792 — 8,792 
Balance as of March 31, 2022$2,439 $1,097,863 $(532,372)$(2,245)$565,685 
Stock-based compensation7 7,540 — — 7,547 
Shares repurchased and retired related to stock-based compensation(4)(397)— — (401)
Other comprehensive income— — — 2,794 2,794 
Net income— — 68,458 — 68,458 
Balance as of June 30, 2022$2,442 $1,105,006 $(463,914)$549 $644,083 
Stock-based compensation8 7,111 — — 7,119 
Shares repurchased and retired related to stock-based compensation— (2,939)— — (2,939)
Equity issued in connection with CIG Acquisition5 4,202 — — 4,207 
Other comprehensive income— — — 5,722 5,722 
Net income— — 104,734 — 104,734 
Balance as of September 30, 2022$2,455 $1,113,380 $(359,180)$6,271 $762,926 




7


NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Amounts in thousands)
(Unaudited)
Common stockPaid-in capital in excess of par valueRetained deficitAccumulated other comprehensive income (loss)Total
Balance as of December 31, 2020$2,144 $989,995 $(421,741)$(13,110)$557,288 
Stock-based compensation10 5,193 — — 5,203 
Shares repurchased and retired related to stock-based compensation(1)(1,009)— — (1,010)
Other comprehensive income— — — 2,349 2,349 
Net loss— — (54,502)— (54,502)
Balance as of March 31, 2021$2,153 $994,179 $(476,243)$(10,761)$509,328 
Stock-based compensation5 4,884 — — 4,889 
Shares repurchased and retired related to stock repurchase program(1)(435)— — (436)
Other comprehensive loss— — — (267)(267)
Net loss— — (31,781)— (31,781)
Balance as of June 30, 2021$2,157 $998,628 $(508,024)$(11,028)$481,733 
Stock-based compensation4 7,346 — — 7,350 
Shares repurchased and retired related to stock repurchase program(1)(419)— — (420)
Equity issued in connection with Alamo Acquisition260 82,063 — — 82,323 
Other comprehensive loss— — — 1,179 1,179 
Net loss— — (43,994)— (43,994)
Balance as of September 30, 2021$2,420 $1,087,618 $(552,018)$(9,849)$528,171 
See accompanying notes to unaudited condensed consolidated financial statements.
8



NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
Nine Months Ended
September 30,
20222021
Cash flows from operating activities:
Net income (loss)$181,984 $(130,277)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization170,499 131,400 
Amortization of deferred financing fees1,634 1,528 
Gain on disposal of assets(12,160)(7,742)
Unrealized gain on derivative recognized in other comprehensive loss 785 
(Gain) loss on financial instrument and derivatives, net(6,299)4,142 
Stock-based compensation24,862 17,442 
Gain on insurance proceeds recognized in other income(11,044)(10,409)
Changes in operating assets and liabilities:
Increase in trade and other accounts receivable, net(177,955)(92,184)
Increase in inventories(26,523)(9,046)
Decrease (increase) in prepaid and other current assets27,625 (10,138)
Decrease in other assets8,945 14,203 
Increase in accounts payable77,964 59,072 
Increase in accrued expenses76,600 42,951 
Decrease in customer contract liabilities(192)(3,468)
Decrease in other liabilities(25,619)(27,579)
Net cash provided by (used in) operating activities310,321 (19,320)
Cash flows from investing activities:
Purchase of property and equipment(136,770)(132,057)
Advances of deposit on equipment(5,884)(543)
Implementation of software(2,986)(2,532)
Proceeds from disposal of assets36,098 24,470 
Assets and business acquisition (26,694)(95,082)
Payment of consideration liability (6,671)
Proceeds from settlement of WSS Notes and make-whole derivative 34,350 
Proceeds from insurance recoveries845 22,947 
Net cash used in investing activities(135,391)(155,118)
Cash flows from financing activities:
Proceeds from asset-based revolver and equipment loan 39,428 
Payments on the term loan facility and asset based revolver(10,977)(2,625)
Payments on finance leases(10,056)(1,146)
Payment of debt issuance costs(110)(251)
Payments for financing liabilities(5,799) 
Payments for contingent consideration(2,473) 
Shares repurchased and retired related to stock-based compensation(7,293)(1,866)
Net cash provided (used) in financing activities(36,708)33,540 
Non-cash effect of foreign translation adjustments1,290 433 
Net increase (decrease) in cash, cash equivalents139,512 (140,465)
Cash and cash equivalents, beginning110,695 275,990 
Cash and cash equivalents, ending$250,207 $135,525 
9



NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest expense, net$19,434 $16,469 
Income taxes1,260  
Non-cash investing and financing activities:
Change in accrued capital expenditures $(19,404)$(19,763)
Non-cash additions to finance right-of-use assets7,115 35,813 
Non-cash additions to finance lease liabilities, including current maturities(6,874)(35,813)
Non-cash additions to operating right-of-use assets5,100 3,352 
Non-cash additions to operating lease liabilities, including current maturities$(5,016)$(512)
500,000 shares of NexTier common stock issued for asset acquisition
$(4,207)$ 
26,000,000 shares of NexTier common stock issued in exchange for Alamo ownership
 (82,323)
Total contingent consideration (45,944)
Non contingent consideration$ $(7,370)

See accompanying notes to unaudited condensed consolidated financial statements.

10


NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements

(1)    Basis of Presentation and Nature of Operations
The accompanying unaudited condensed consolidated financial statements were prepared using United States Generally Accepted Accounting Principles ("GAAP") and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by GAAP for annual financial statements and should be read together with the Company's Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 23, 2022.
The Company’s accounting policies are in accordance with GAAP. The preparation of financial statements in conformity with these accounting principles requires the Company to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (ii) the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from the Company’s estimates. Significant items subject to such estimates and assumptions include the useful lives of property and equipment and intangible assets; inventory reserves; acquisition accounting; contingent liabilities; and the valuation of property and equipment, intangible assets, equity issued as consideration in an acquisition, income taxes, stock-based incentive plan awards and derivatives.
Management believes the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company's financial position as of September 30, 2022 and the results of its operations and cash flows for the three and nine months ended September 30, 2022 and 2021. Such adjustments are of a normal recurring nature. All intercompany transactions and balances have been eliminated.
On August 31, 2021, the Company completed its acquisition (the “Alamo Acquisition”) of Alamo. Merger and integration related costs were recognized separately from the acquisition of assets and assumptions of liabilities in the Alamo Acquisition. Merger costs consist of legal and professional fees and pre-merger notification fees. Integration costs consist of expenses incurred to integrate Alamo’s operations, aligning accounting processes and procedures, integrating its enterprise resource planning system with those of the Company, and any earnout payments. All of these costs are recorded within merger and integration costs on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). For additional detailed information regarding the Alamo Acquisition, see Note (3) Acquisitions.
The consolidated financial statements prior to August 31, 2021 reflect only the historical results of the Company prior to the completion of the Alamo Acquisition. The financial statements have been prepared using the acquisition method of accounting under existing GAAP, which requires that one of the two companies in the Alamo Acquisition be designated as the acquirer for accounting purposes. The Company and Alamo determined that the Company was the accounting acquirer. Accordingly, consideration given by the Company to complete the Alamo Acquisition was allocated to the underlying tangible and intangible assets and liabilities acquired based on their estimated fair values as of the date of completion of the Alamo Acquisition, with any excess purchase price allocated to goodwill.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
(2)    Summary of Significant Accounting Policies
(a) Business Combinations and Asset Acquisitions
Business combinations are accounted for using the acquisition method of accounting in accordance with the Accounting Standards Codification (“ASC”) 805, “Business Combinations”, as amended by Accounting Standards Update (“ASU”) 2017-01, “Business Combinations (Topic 805), Clarifying the Definition of a Business.” The purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Fair values of the acquired assets and liabilities are measured in accordance with the guidance of ASC 820, using discounted cash flows and other applicable valuation techniques. Every reporting period, the Company reassess the value of any contingent consideration assumed as part of a business acquisition. Any acquisition-related costs incurred by the Company are expensed as incurred. Any excess purchase price over the fair value of the net identifiable assets acquired is recorded as goodwill if the definition of a business is met. Operating results of an acquired business are included in the Company’s results of operations from the date of acquisition.
Asset acquisitions are measured based on their cost to the Company, including transaction costs. Asset acquisition costs, or the consideration transferred by the Company, are assumed to be equal to the fair value of the net assets acquired. If the consideration transferred is cash, measurement is based on the amount of cash the Company paid to the seller, as well as transaction costs incurred. Consideration given in the form of non-monetary assets, liabilities incurred or equity interests issued is measured based on either the cost to the Company or the fair value of the assets or net assets acquired, whichever is more clearly evident. The cost of an asset acquisition is allocated to the assets acquired based on their estimated relative fair values. Goodwill is not recognized in an asset acquisition.
(b) Revenue Recognition
The majority of the Company’s performance obligations are satisfied over time. The Company has determined this best represents the transfer of value from its services to the customer as performance by the Company helps to enhance a customer controlled asset (e.g., unplugging a well, enabling a well to produce oil or natural gas). Measurement of the satisfaction of the performance obligation is measured using the output method, which is typically evidenced by a field ticket. A field ticket includes items such as services performed, consumables used, and man hours incurred to complete the job for the customer. Each field ticket is used to invoice customers. Payment terms for invoices issued are in accordance with a master services agreement with each customer, which typically require payment within 30 to 60 days of the invoice issuance.
A portion of the Company’s contracts contain variable consideration. However, this variable consideration is typically unknown at the time of contract inception and is not known until the job is complete, at which time the variability is resolved. Examples of variable consideration include the number of hours that will be incurred and the amount of consumables (such as chemicals and proppants) that will be used to complete a job.
Remaining Performance Obligations
The Company invoices its customers for the services provided at contractual rates multiplied by the applicable unit of measurement, including volume of consumables used and hours incurred. In accordance with ASC 606, the Company has elected the “Right to Invoice” practical expedient for all contracts, which allows the Company to invoice its customers in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date. With this election, the Company is not required to disclose information about the variable consideration related to its remaining performance obligations. The Company has also elected the practical expedient to expense immediately mobilization costs, as the amortization period would always be less than one year. The Company has identified one contract with a remaining term of more than one year, for which the Company had approximately $21.3 million of unsatisfied performance obligations as of September 30, 2022, which will be recognized as services are performed over the remaining contractual terms.
The Company’s obligations for refunds as well as the warranties and related obligations stated in its contracts with its customers are standard to the industry and are related to the correction of any defectiveness in the execution of its performance obligations.
Contract Balances
In line with industry practice, the Company bills its customers for its services in arrears, typically when the stage or well is completed or at month-end. The majority of the Company’s jobs are completed in less than 30 days. Furthermore, it is currently not standard practice for the Company to execute contracts with prepayment features. As of September 30, 2022, the majority of the
12


NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
Company’s customer contract liability balance is related to the post close service agreement as a result of the Alamo Acquisition. Payment terms after invoicing are typically 30 to 60 days.
The Company does not have any significant contract costs to obtain or fulfill contracts with customers; as such, no amounts are recognized on the consolidated balance sheet. Taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from revenues in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.
The following is a description of the Company’s core service lines separated by reportable segments from which the Company generates its revenue. For additional detailed information regarding reportable segments, see Note (14) Business Segments.
Revenue from the Company’s (i) Completion Services and (ii) Well Construction and Intervention (“WC&I”) segments are recognized as follows:
Completion Services
The Company provides hydraulic fracturing, wireline and pumpdown services pursuant to contractual arrangements, such as term contracts and pricing agreements. In late 2020, the Company began evolving its completion service offerings to develop an integrated natural gas treatment and delivery solution. In 2021, the Company launched its new Power Solutions business, which focuses on gas sourcing, compression, transport, decompression, treatment and related services for its fracturing operations. Revenue from these services are earned as services are rendered, which is generally on a per stage or fixed monthly rate. All revenue is recognized when a contract with a customer exists, the performance obligations under the contract have been satisfied over time, the amount to which the Company has the right to invoice has been determined and collectability of amounts subject to invoice is probable. Contract fulfillment costs, such as mobilization costs and shipping and handling costs, are expensed as incurred and are recorded in cost of services in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). To the extent fulfillment costs are considered separate performance obligations that are billable to the customer, the amounts billed are recorded as revenue in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
Once a stage has been completed or products and services have been provided, a field ticket is created that includes charges for the services performed and the chemicals, proppant and compressed natural gas consumed during the course of service. The field ticket may also include charges for the mobilization of the equipment to the location, any additional equipment used on the job and other miscellaneous items. The field ticket represents the amounts to which the Company has the right to invoice and to recognize as revenue.
WC&I
The Company provides cementing services pursuant to contractual arrangements, such as term contracts, or on a spot market basis. Revenue is recognized upon the completion of each performance obligation, which for cementing services, represents the portion of the well cemented: surface casing, intermediate casing or production liner. The performance obligations are satisfied over time. Jobs for these services are typically short term in nature, with most jobs completed in a day. Once the well has been cemented, a field ticket is created that includes charges for the services performed and the consumables used during the course of service. The field ticket represents the amounts to which the Company has the right to invoice and to recognize as revenue.
On August 1, 2022, the Company sold its coiled tubing assets to Gladiator Energy LLC ("Gladiator") for a cash purchase price of $21.6 million, which resulted in a gain on sale of assets of $11.6 million. Prior to the sale, the Company provided a range of coiled tubing services used for fracturing plug drill-out during completion operations and for well workover and maintenance, primarily on a spot market basis. Jobs for these services were typically short-term in nature, lasting anywhere from a few hours to multiple days. Revenue was recognized upon completion of each day’s work based upon a completed field ticket. The field ticket included charges for the services performed and the consumables used during the course of service. The field ticket may have also included charges for the mobilization and set-up of equipment, the personnel on the job, any additional equipment used on the job, and other miscellaneous consumables. The Company typically would charge the customer for the services performed and resources provided on an hourly basis at agreed-upon spot market rates or pursuant to pricing agreements.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
Disaggregation of Revenue
Revenue activities during the three and nine months ended September 30, 2022 and 2021 were as follows:
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
(Thousands of Dollars)(Thousands of Dollars)
Completion ServicesWC&ITotalCompletion ServicesWC&ITotal
Geography
Northeast$110,246 $8,505 $118,751 $310,123 $20,391 $330,514 
Central165,505  165,505 438,596  438,596 
West Texas514,316 28,250 542,566 1,391,379 88,353 1,479,732 
West64,961 1,504 66,465 113,984 3,801 117,785 
International2,723  2,723 7,338  7,338 
$857,751 $38,259 $896,010 $2,261,420 $112,545 $2,373,965 

Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
(Thousands of Dollars)(Thousands of Dollars)
Completion ServicesWC&ITotalCompletion ServicesWC&ITotal
Geography
Northeast$64,140 $4,859 $68,999 $177,448 $16,978 $194,426 
Central72,861  72,861 162,410  162,410 
West Texas168,176 20,902 189,078 407,643 49,511 457,154 
West50,511 1,336 51,847 60,794 3,335 64,129 
International10,379  10,379 35,592  35,592 
$366,067 $27,097 $393,164 $843,887 $69,824 $913,711 
(c) Long-Lived Assets with Definite Lives
Property and equipment, inclusive of equipment under finance lease, are generally stated at cost.
Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from 13 months to 40 years. Management determines the estimate of the useful lives and salvage values of property and equipment on expected utilization, technological change and effectiveness of its maintenance programs. Depreciation methods, useful lives and residual values are reviewed annually or as needed based on activities related to specific assets. When components of an item of property and equipment are identifiable and have different useful lives, they are accounted for separately as major components of property and equipment.
Gains and losses on disposal of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized net within operating costs and expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
Major classifications of property and equipment and their respective useful lives are as follows:
Land
Indefinite life
Building and leasehold improvements
13 months – 40 years
Machinery and equipment
13 months – 25 years
Office furniture, fixtures and equipment
3 years – 5 years
Leasehold improvements are assigned a useful life equal to the term of the related lease, or its expected period of use. Depreciation methods, useful lives and residual values are reviewed annually.
During the third quarter of 2022, one of the Company’s hydraulic frac fleets operating in the Permian Basin was involved in an accidental fire, which resulted in a loss of fracturing equipment; no parties were injured as a result of this incident. As of September 30, 2022, the Company recognized a $15.3 million receivable related to insurance proceeds in other current assets for replacement costs of the damaged equipment, which offsets the $4.3 million loss recognized on the damaged equipment and costs to remove the equipment. The resulting gain of $11.0 million was recognized in other income (expense), net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
Amortization on definite-lived intangible assets is calculated using the straight-line method over the estimated useful lives of the assets, which range from 2 to 15 years. The majority of the Company's definite lived intangible assets include customer contracts and technology.
Property and equipment and definite-lived intangible assets (“Long-lived Assets”) are evaluated annually or upon the occurrence of events or changes in circumstances, referred to as triggering events, that may indicate the carrying value of a Long-lived Asset may not be recoverable. An impairment loss is recorded in the period in which it is determined that the carrying amount of a Long-lived Asset is not recoverable. The determination of recoverability is made based upon the estimated undiscounted future net cash flows of assets grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups of assets with such cash flows to be realized over the estimated remaining useful life of the primary asset within the asset group. The Company determined the lowest level of identifiable cash flows that are independent of other asset groups to be primarily at the service line level. Following the sale of the Company's coiled tubing assets to Gladiator, the Company's asset groups consist of fracturing services, wireline and cementing. Estimates of undiscounted future net cash flows of assets groups are projected based on estimates of projected revenue growth, unit count, utilization, pricing, gross profit rates, SG&A rates, working capital fluctuations and capital expenditures. Forecasted cash flows take into account known market conditions as of the assessment date, and management’s anticipated business outlook. A terminal period is used to reflect an estimate of stable, perpetual growth. If the estimated undiscounted future net cash flows for a given asset group is less than the carrying amount of the asset groups, an impairment loss is determined by comparing the estimated fair value with the carrying value of the related asset groups. The impairment loss is then allocated across the asset group's major classifications.
The Company did not recognize any impairment charges related to the Company’s long-lived assets for the three and nine months ended September 30, 2022 or 2021.
(d) Leases
In accordance with ASU 2016-02, the Company considers any contract that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration to be a lease. The Company determines whether the contract into which it has entered is a lease at the lease commencement date. Rental arrangements with term lengths of one month or less are expensed as incurred, but not recognized as qualifying leases.
For lessees, leases can be classified as finance leases or operating leases, while for lessors, leases can be classified as sales-type leases, direct financing leases or operating leases. As lessee, all leases, with the exception of short-term leases, are capitalized on the balance sheet by recording a lease liability, which represents the Company's obligation to make lease payments arising from the lease and a right-of-use ("ROU") asset, which represents the Company's right to use the underlying asset being leased.
For leases in which the Company is the lessee, the Company uses a collateralized incremental borrowing rate to calculate the lease liability, as for most leases, the implicit rate in the lease is unknown. The collateralized incremental borrowing rate is based on a yield curve over various term lengths that approximates the borrowing rate the Company would receive if it collateralized its lease arrangements with all of its assets. For leases in which the Company is the lessor, the Company uses the rate implicit in the lease.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
For finance leases, the Company amortizes the ROU asset on a straight-line basis over the earlier of the useful life of the ROU asset or the end of the lease term and records this amortization in depreciation and amortization expense on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). For finance leases where the Company has determined it is reasonably certain to exercise a purchase option to acquire the underlying asset, the lessee amortizes the ROU asset to the later of the end of the underlying asset’s useful life or lease term and records this amortization in depreciation and amortization expense on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The Company adjusts the lease liability to reflect lease payments made during the period and interest incurred on the lease liability using the effective interest method. The incurred interest expense is recorded in interest expense on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). For operating leases, the Company recognizes one single lease cost, comprised of the lease payments and amortization of any associated initial direct costs, within rent expense on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Variable lease costs not included in the determination of the lease liability at the commencement of a lease are recognized in the period when the specified target that triggers the variable lease payments becomes probable.

In accordance with ASC 842, the Company has made the following elections for its lease accounting:
all short-term leases with term lengths of 12 months or less will not be capitalized; the underlying class of assets to which the Company has applied this expedient is primarily its apartment leases;
for non-revenue contracts containing both lease and non-lease components, both components will be combined and accounted for as one lease component and accounted for under ASC 842; and
for revenue contracts containing both lease and non-lease components, both components will be combined and accounted for as one component and accounted for under ASC 606.
(e) Derivative Instruments and Hedging Activities
The Company utilizes interest rate derivatives to manage interest rate risk associated with its floating-rate borrowings. The Company recognizes all derivative instruments as either assets or liabilities on the consolidated balance sheets at their respective fair values. For derivatives designated in hedging relationships, changes in the fair value are either offset through earnings against the change in fair value of the hedged item attributable to the risk being hedged or recognized in accumulated other comprehensive income (loss) until the hedged item affects earnings.

The Company only enters into derivative contracts that it intends to designate as hedges for the variability of cash flows to be received or paid related to a recognized asset or liability (i.e. cash flow hedge). For all hedging relationships, the Company formally documents the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged and how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions. For derivative instruments that are designated and qualify as part of a cash flow hedging relationship, the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
The Company discontinues hedge accounting prospectively, when it determines that the derivative is no longer highly effective in offsetting cash flows attributable to the hedged risk, the derivative expires or is sold, terminated, or exercised, the originally forecasted transaction is no longer probable of occurring or if management decides to remove the designation of the cash flow hedge. The net derivative instrument gain or loss related to a discontinued cash flow hedge shall continue to be reported in accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the originally hedged transaction affects earnings, unless it is probable that the forecasted transaction will not occur by the end of the originally specified time period. When it is probable that the originally forecasted transaction will not occur by the end of the originally specified time period, the Company recognizes immediately, in earnings, any gains and losses related to the hedging relationship that were recognized in accumulated other comprehensive income (loss). In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company continues to carry the derivative at its fair value on the consolidated balance sheets and recognizes any subsequent changes in the derivative’s fair value in earnings.
In addition, we evaluate the terms of our operating agreements and other contracts, if any, to determine whether they contain embedded components that are required to be bifurcated and accounted for separately as derivative financial instruments.
For additional detailed information regarding derivatives, see Note (7) Derivatives.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
(f) Stock-based compensation
The Company recognizes compensation expense for restricted stock awards ("RSAs"), restricted stock units to be settled in common stock (“RSUs”), performance-based RSU awards (“PSUs”), non-qualified stock options (“stock options”), and performance unit awards (“PUs”) based on the fair value of the awards at the date of grant. The fair value of RSAs and RSUs is determined based on the number of shares or RSUs granted and the closing price of the Company’s common stock on the date of grant. The fair value of stock options is determined by applying the Black-Scholes model to the grant-date market value of the underlying common shares of the Company. The fair value of PSUs and PUs with market conditions are determined using a Monte Carlo simulation method. The Company has elected to recognize forfeiture credits for these awards as they are incurred, as this method best reflects actual stock-based compensation expense. Compensation expense from time-based RSAs, RSUs, PSUs, PUs, and stock options is amortized on a straight-line basis over the requisite service period, which is generally the vesting period.
The PUs are settled in cash and therefore are recorded as liability-classified awards. The PUs are remeasured at fair value every reporting period and the Company recognizes compensation cost for the changes in fair value pro-rated for the portion of the requisite service period rendered.
Tax deductions on the stock-based compensation awards are not realized until the awards are vested or exercised. The Company recognizes deferred tax assets for stock-based compensation awards that will result in future deductions on its income tax returns, based on the amount of tax deduction for stock-based compensation recognized at the statutory tax rate in the jurisdiction in which the Company will receive a tax deduction. If the tax deduction for a stock-based award is greater than the cumulative GAAP compensation expense for that award upon realization of a tax deduction, an excess tax benefit will be recognized and recorded as a favorable impact on the effective tax rate. If the tax deduction for an award is less than the cumulative GAAP compensation expense for that award upon realization of the tax deduction, a tax shortfall will be recognized and recorded as an unfavorable impact on the effective tax rate. Any excess tax benefits or shortfalls will be recorded as discrete, adjustments in the period in which they occur. The cash flows resulting from any excess tax benefit will be classified as financing cash flows in the Condensed Consolidated Statements of Cash Flows.
The Company provides its employees with the option to settle income tax obligations arising from the vesting of their restricted or deferred stock-based compensation awards by withholding shares equal to such income tax obligations. Shares acquired from employees in connection with the settlement of the employees’ income tax obligations are accounted for as treasury shares that are subsequently retired. RSAs, RSUs, and PSUs are not considered issued and outstanding for purposes of earnings per share calculations until vested.
For additional information, see Note (9) Stock-Based Compensation.
(3) Acquisitions
(a) Alamo Acquisition
On August 31, 2021 (the “Alamo Acquisition Date”), the Company completed the Alamo Acquisition in accordance with the terms of the Purchase Agreement, dated as of August 4, 2021 (the “Purchase Agreement”), by and among the Company, NexTier Completion Solutions Inc., Alamo Frac Holdings, LLC, Alamo and the “owner group” identified therein. The Company acquired 100% of Alamo.
The Alamo Acquisition was completed for cash consideration of $100.0 million, equity consideration of 26 million shares of the Company’s common stock valued at $82.3 million, post-closing services valued at $30.0 million, an estimated $15.9 million of contingent consideration, $7.4 million of non-contingent consideration, and a net working capital settlement of $0.5 million that was finalized in the fourth quarter of 2021 and was paid to the Company in the first quarter of 2022. The contingent consideration includes a Tier II upgrade payment and earnout payments, which are contingent upon the achievement of certain performance targets, as described in the Purchase Agreement.
The Company accounted for the Alamo Acquisition using the acquisition method of accounting. The aggregate purchase price noted above was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition. The measurements of some assets acquired and liabilities assumed, such as intangible assets and the earnout were based on inputs that are not observable in the market and thus represent Level 3 inputs. The fair value of acquired property and equipment were based on both available market data and a cost approach.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
The following table summarizes the fair value of the consideration transferred in the Alamo Acquisition and the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed at the Alamo Acquisition Date:
Total Purchase Consideration
(Thousands of Dollars)
Preliminary Purchase Price AllocationAdjustmentsFinal Purchase Price Allocation
Cash consideration(1)
$100,000 $— $100,000 
Equity consideration82,323 — 82,323 
Post close services30,000 — 30,000 
Contingent consideration15,944 — 15,944 
Non contingent consideration7,370 — 7,370 
Net working capital adjustment (482)(482)
Total purchase consideration$235,637 $(482)$235,155 
Cash
$7,419 $— $7,419 
Trade and accounts receivable
50,619 — 50,619 
Inventories
1,726 — 1,726 
Prepaid and other current assets
19,654 — 19,654 
 Assets held for sale3,282 — 3,282 
Property and equipment
114,705 (816)113,889 
Intangible assets
27,113 — 27,113 
Finance lease right-of-use assets35,813 (468)35,345 
Other noncurrent assets
1,676 — 1,676 
Total identifiable assets acquired
262,007 (1,284)260,723 
Accounts payable
39,101 — 39,101 
Accrued expenses
38,000 — 38,000 
Current maturities of long-term finance lease liabilities10,125 — 10,125 
Long-term finance lease liabilities25,688 (468)25,220 
Non-current liabilities
971 — 971 
Total liabilities assumed
113,885 (468)113,417 
Goodwill
87,515 334 87,849 
Total purchase consideration$235,637 $(482)$235,155 
(1) Includes $32.3 million of payments for indebtedness on behalf of Alamo.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
The following combined pro forma information assumes the Alamo Acquisition occurred on January 1, 2020. The pro forma information presented below is for illustrative purposes only and does not reflect future events that occurred after September 30, 2021 or any operating efficiencies or inefficiencies that resulted from the Alamo Acquisition. The information is not necessarily indicative of results that would have been achieved had the Company controlled Alamo during the period presented. Pro forma adjustments related to the elimination of historical interest expense for debt paid off as part of the Alamo Acquisition were $0.4 million and $2.7 million during the three and nine months ended September 30, 2021, respectively.
(unaudited, amounts in Thousands of Dollars)
Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
Revenue $454,113 $1,124,136 
Net loss(44,392)(116,291)
Net loss per share (basic)$(0.18)$(0.48)
Net loss per share (diluted)$(0.18)$(0.48)
(b) Asset Acquisition from Continental Intermodal Group LP
On August 3, 2022 the Company entered into and closed a definitive agreement to purchase substantially all assets (and assume certain lease liabilities) of the sand hauling, wellsite storage and last mile logistics businesses of Continental Intermodal Group LP (“CIG”) and its subsidiaries (the “CIG Acquisition”) from CIG, Continental Intermodal Group – Trucking, LLC (“Trucking”) and CIG Logistics LLC (together with Trucking and CIG, “CIG Sellers”).
The CIG Acquisition was completed for a purchase price of $31.3 million. At the time of close, the Company paid a total of $32.1 million, which included: (i) approximately $27.9 million in cash paid at closing to the CIG Sellers plus (ii) 500,000 shares of common stock. The $32.1 million transferred to CIG at the time of close included a deposit of $0.8 million for a transition services agreement for costs of services to be provided during the transition period. Accordingly, the purchase price of $31.3 million does not include the deposit of $0.8 million. The Company accounted for this acquisition as an asset acquisition pursuant to ASC 805. The purchase price of the acquisition was allocated amongst the acquired assets as the fair value of the acquired machinery and equipment assets represented substantially all of the fair value of the gross assets acquired. Additionally, the Company established a right of use asset and an operating lease liability of $0.9 million for the assumed lease liability.
(4)    Inventories, net
Inventories, net, consisted of the following as of September 30, 2022 and December 31, 2021:
(Thousands of Dollars)
September 30,
2022
December 31,
2021
Sand, including freight$18,183