Company Quick10K Filing
Pioneer Energy Services
Price0.26 EPS-1
Shares79 P/E-0
MCap21 P/FCF2
Net Debt447 EBIT-32
TEV468 TEV/EBIT-15
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-06-29
10-K 2019-12-31 Filed 2020-03-06
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-07-31
10-Q 2019-03-31 Filed 2019-05-02
10-K 2018-12-31 Filed 2019-02-19
10-Q 2018-09-30 Filed 2018-10-30
10-Q 2018-06-30 Filed 2018-07-31
10-Q 2018-03-31 Filed 2018-05-02
10-K 2017-12-31 Filed 2018-02-16
10-Q 2017-09-30 Filed 2017-11-02
10-Q 2017-06-30 Filed 2017-08-01
10-Q 2017-03-31 Filed 2017-05-02
10-K 2016-12-31 Filed 2017-02-17
10-Q 2016-09-30 Filed 2016-11-01
10-Q 2016-06-30 Filed 2016-07-28
10-Q 2016-03-31 Filed 2016-04-29
10-K 2015-12-31 Filed 2016-02-17
10-Q 2015-10-29 Filed 2015-10-29
10-Q 2015-06-30 Filed 2015-07-30
10-Q 2015-03-31 Filed 2015-04-30
10-K 2014-12-31 Filed 2015-02-17
10-Q 2014-09-30 Filed 2014-10-28
10-Q 2014-06-30 Filed 2014-07-31
10-Q 2014-03-31 Filed 2014-04-29
10-K 2013-12-31 Filed 2014-02-13
10-Q 2013-09-30 Filed 2013-10-30
10-Q 2013-06-30 Filed 2013-07-30
10-Q 2013-03-31 Filed 2013-04-30
10-K 2012-12-31 Filed 2013-02-13
10-Q 2012-09-30 Filed 2012-11-01
10-Q 2012-06-30 Filed 2012-08-07
10-Q 2012-03-31 Filed 2012-05-08
10-K 2011-12-31 Filed 2012-02-21
10-Q 2011-09-30 Filed 2011-11-03
10-Q 2011-06-30 Filed 2011-08-04
10-Q 2011-03-31 Filed 2011-05-05
10-K 2010-12-31 Filed 2011-02-17
10-Q 2010-09-30 Filed 2010-11-04
10-Q 2010-06-30 Filed 2010-08-05
10-Q 2010-03-31 Filed 2010-05-06
10-K 2009-12-31 Filed 2010-02-16
8-K 2020-07-17 Officers, Regulation FD, Exhibits
8-K 2020-05-29
8-K 2020-05-15
8-K 2020-05-11
8-K 2020-04-27
8-K 2020-04-01
8-K 2020-02-28
8-K 2019-10-31
8-K 2019-09-10
8-K 2019-08-14
8-K 2019-07-31
8-K 2019-07-02
8-K 2019-06-11
8-K 2019-05-16
8-K 2019-05-02
8-K 2019-02-27
8-K 2019-02-19
8-K 2019-01-09
8-K 2018-12-21
8-K 2018-12-05
8-K 2018-11-27
8-K 2018-11-19
8-K 2018-09-26
8-K 2018-08-28
8-K 2018-06-12
8-K 2018-05-22
8-K 2018-05-17
8-K 2018-05-15
8-K 2018-05-02
8-K 2018-03-27
8-K 2018-03-01
8-K 2018-02-16
8-K 2018-01-17

PES 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-4.2 exhibit42-descriptionofnew.htm
EX-4.3 exhibit43descriptionofolds.htm
EX-31.1 exhibit311-q12020.htm
EX-31.2 exhibit312-q12020.htm
EX-32.1 exhibit321-q12020.htm
EX-32.2 exhibit322-q12020.htm

Pioneer Energy Services Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
1.51.20.90.60.30.02012201420172020
Assets, Equity
0.30.20.10.1-0.0-0.12012201420172020
Rev, G Profit, Net Income
0.10.10.0-0.0-0.1-0.12012201420172020
Ops, Inv, Fin

10-Q 1 form10-qxq12020.htm 10-Q Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
______________________________________________ 
FORM 10-Q
______________________________________________ 
(Mark one)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-8182
PIONEER ENERGY SERVICES CORP.
(Exact name of registrant as specified in its charter)
____________________________________________ 
DELAWARE
 
74-2088619
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. Employer
Identification Number)
 
 
 
1250 N.E. Loop 410, Suite 1000
San Antonio, Texas
 
78209
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (855) 884-0575
Securities registered pursuant to Section 12(b) of the Act
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x  No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
x
Smaller reporting company
x
 
Emerging Growth Company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No x
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes  x    No  ¨
As of June 15, 2020, there were 1,048,185 shares of common stock, par value $0.001 per share, of the registrant outstanding.
 



EXPLANATORY NOTE

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

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

the Company converted from a Texas corporation to a Delaware corporation;
all the outstanding common stock was canceled, and holders thereof received an aggregate of 5.75% of the proforma common equity (subject to dilution from the convertible notes and new management incentive plan), at a conversion rate of 0.0006849838 new shares for each old share;
the $300 million principal amount of the Company’s Senior Notes due 2022 was canceled in exchange for 94.25% of the proforma common equity (subject to dilution from the convertible notes and new management incentive plan);
the amounts outstanding under the Company’s debtor-in-possession credit facility were repaid and the existing term loan was repaid with proceeds from the issuance of the senior secured notes and convertible notes referenced below;
the Company entered into a $75 million senior secured asset-based revolving credit agreement;
the Company issued $78,125,000 of its floating rate senior secured notes due 2025; and
the Company issued $129,771,000 aggregate principal amount of its 5% convertible senior unsecured pay-in-kind notes due 2025, which are convertible into 75 shares of Common Stock per $1,000 principal amount of the convertible notes, subject to customary anti-dilution adjustments, which notes have the right to vote together with the common stock on an “as-converted” basis on all matters to be voted on by the Company’s stockholders.




TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 




PART I. FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES (DEBTOR IN POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEETS
 
March 31,
2020
 
December 31,
2019
 
(unaudited)
 
(audited)
 
(in thousands, except share data)
ASSETS
 
Current assets:
 
 
 
Cash and cash equivalents
$
15,457

 
$
24,619

Restricted cash
998

 
998

Receivables:
 
 
 
Trade, net of allowance for doubtful accounts
64,836

 
79,135

Unbilled receivables
12,015

 
12,590

Insurance recoveries
22,379

 
22,873

Other receivables
3,693

 
8,928

Inventory
21,619

 
22,453

Assets held for sale
1,825

 
3,447

Prepaid expenses and other current assets
8,129

 
7,869

Total current assets
150,951

 
182,912

Property and equipment, at cost
1,083,512

 
1,119,546

Less accumulated depreciation
643,558

 
648,376

Net property and equipment
439,954

 
471,170

Deferred income taxes
9,264

 
11,540

Operating lease assets
7,972

 
7,264

Other noncurrent assets
7,593

 
1,068

Total assets
$
615,734

 
$
673,954

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
28,774

 
$
32,551

Deferred revenues
997

 
1,339

Commitment premium
9,584

 

Debtor in possession financing
4,000

 

Accrued expenses:
 
 
 
Employee compensation and related costs
10,300

 
13,781

Insurance claims and settlements
22,239

 
22,873

Insurance premiums and deductibles
5,831

 
5,940

Interest
107

 
5,452

Other
11,196

 
9,645

Total current liabilities
93,028

 
91,581

Long-term debt, less unamortized discount and debt issuance costs
170,921

 
467,699

Noncurrent operating lease liabilities
6,434

 
5,700

Deferred income taxes
3,256

 
4,417

Other noncurrent liabilities
383

 
481

Total liabilities not subject to compromise
274,022

 
569,878

Commitments and contingencies (Note 12)
 
 
 
Liabilities subject to compromise
306,419

 

Stockholders’ equity:
 
 
 
Preferred stock, 10,000,000 shares authorized; none issued and outstanding

 

Common stock $.10 par value; 200,000,000 shares authorized; 79,579,571 and 79,202,216 shares outstanding at March 31, 2020 and December 31, 2019, respectively
8,062

 
8,008

Additional paid-in capital
553,484

 
553,210

Treasury stock, at cost; 1,041,565 and 877,047 shares at March 31, 2020 and December 31, 2019, respectively
(5,097
)
 
(5,090
)
Accumulated deficit
(521,156
)
 
(452,052
)
Total stockholders’ equity
35,293

 
104,076

Total liabilities and stockholders’ equity
$
615,734

 
$
673,954


See accompanying notes to condensed consolidated financial statements.
4



PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES (DEBTOR IN POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
Three months ended March 31,
 
2020
 
2019
 
(in thousands, except per share data)
 
 
 
 
Revenues
$
114,322

 
$
146,568

 
 
 
 
Costs and expenses:
 
 
 
Operating costs
92,022

 
108,585

Depreciation
21,984

 
22,653

General and administrative
14,655

 
19,758

Pre-petition restructuring charges
17,074

 

Impairment
17,853

 
1,046

Bad debt expense, net
727

 
62

Gain on dispositions of property and equipment, net
(717
)
 
(1,075
)
Total costs and expenses
163,598

 
151,029

Loss from operations
(49,276
)
 
(4,461
)
 
 
 
 
Other income (expense):
 
 
 
Interest expense, net of interest capitalized
(8,651
)
 
(9,885
)
Reorganization items
(6,663
)
 

Other income (expense), net
(5,545
)
 
684

Total other expense, net
(20,859
)
 
(9,201
)
 
 
 
 
Loss before income taxes
(70,135
)
 
(13,662
)
Income tax (expense) benefit
1,031

 
(1,453
)
Net loss
$
(69,104
)
 
$
(15,115
)
 
 
 
 
Loss per common share - Basic
$
(0.88
)
 
$
(0.19
)
 
 
 
 
Loss per common share - Diluted
$
(0.88
)
 
$
(0.19
)
 
 
 
 
Weighted average number of shares outstanding—Basic
78,753

 
78,311

 
 
 
 
Weighted average number of shares outstanding—Diluted
78,753

 
78,311















See accompanying notes to condensed consolidated financial statements.
5



PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES (DEBTOR IN POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited)

 
As of and for the three months ended March 31, 2020
 
Shares
 
Amount
 
Additional Paid In Capital
 
Accumulated
Deficit
 
Total Stockholders’ Equity
Common
 
Treasury
Common
 
Treasury
 
(in thousands)
Balance as of December 31, 2019
80,079

 
(877
)
 
$
8,008

 
$
(5,090
)
 
$
553,210

 
$
(452,052
)
 
$
104,076

Net loss

 

 

 

 

 
(69,104
)
 
(69,104
)
Purchase of treasury stock

 
(165
)
 

 
(7
)
 

 

 
(7
)
Issuance of restricted stock
542

 

 
54

 

 
(54
)
 

 

Stock-based compensation expense

 

 

 

 
328

 

 
328

Balance as of March 31, 2020
80,621

 
(1,042
)
 
$
8,062

 
$
(5,097
)
 
$
553,484

 
$
(521,156
)
 
$
35,293




 
As of and for the three months ended March 31, 2019
 
Shares
 
Amount
 
Additional Paid In Capital
 
Accumulated
Deficit
 
Total Stockholders’ Equity
Common
 
Treasury
Common
 
Treasury
 
(in thousands)
Balance as of December 31, 2018
79,004

 
(790
)
 
$
7,900

 
$
(4,965
)
 
$
550,548

 
$
(388,425
)
 
$
165,058

Net loss

 

 

 

 

 
(15,115
)
 
(15,115
)
Purchase of treasury stock

 
(84
)
 

 
(120
)
 

 

 
(120
)
Cumulative-effect adjustment due to adoption of ASC Topic 842

 

 

 

 

 
277

 
277

Issuance of restricted stock
326

 

 
33

 

 
(33
)
 

 

Stock-based compensation expense

 

 

 

 
867

 

 
867

Balance as of March 31, 2019
79,330

 
(874
)
 
$
7,933

 
$
(5,085
)
 
$
551,382

 
$
(403,263
)
 
$
150,967



See accompanying notes to condensed consolidated financial statements.
6



PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES (DEBTOR IN POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
Three months ended March 31,
 
2020
 
2019
 
(in thousands)
Cash flows from operating activities:
 
 
 
Net loss
$
(69,104
)
 
$
(15,115
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation
21,984

 
22,653

Allowance for doubtful accounts, net of recoveries
727

 
62

Gain on dispositions of property and equipment, net
(717
)
 
(1,075
)
Reorganization items
988

 

Stock-based compensation expense
328

 
867

Phantom stock compensation expense
(3
)
 
848

Amortization of debt issuance costs and discount
1,219

 
763

Impairment
17,853

 
1,046

Deferred income taxes
1,115

 
1,156

Change in other noncurrent assets
690

 
699

Change in other noncurrent liabilities
(562
)
 
(20
)
Changes in current assets and liabilities:
 
 
 
Receivables
14,234

 
(17,488
)
Inventory
834

 
(1,293
)
Prepaid expenses and other current assets
(1,253
)
 
(178
)
Accounts payable
(4,114
)
 
2,339

Deferred revenues
(342
)
 
(64
)
Commitment premium
9,584

 

Accrued expenses
1,148

 
(5,990
)
Net cash used in operating activities
(5,391
)
 
(10,790
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(7,503
)
 
(16,844
)
Proceeds from sale of property and equipment
727

 
1,043

Net cash used in investing activities
(6,776
)
 
(15,801
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from DIP Facility
4,000

 

DIP Facility issuance costs
(988
)
 

Purchase of treasury stock
(7
)
 
(120
)
Net cash provided by (used in) financing activities
3,005

 
(120
)
 
 
 
 
Net decrease in cash, cash equivalents and restricted cash
(9,162
)
 
(26,711
)
Beginning cash, cash equivalents and restricted cash
25,617

 
54,564

Ending cash, cash equivalents and restricted cash
$
16,455

 
$
27,853

 
 
 
 
Supplementary disclosure:
 
 
 
Interest paid
$
4,306

 
$
13,887

Income tax paid
$
623

 
$
1,013

Reorganization items paid
$
2,322

 

Noncash investing and financing activity:
 
 
 
Change in capital expenditure accruals
$
358

 
$
1,531



See accompanying notes to condensed consolidated financial statements.
7



PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES (DEBTOR IN POSSESSION)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.    Organization and Summary of Significant Accounting Policies
Business
Pioneer Energy Services Corp. provides land-based drilling services and production services to a diverse group of oil and gas exploration and production companies in the United States and internationally in Colombia.
Our drilling services business segments provide contract land drilling services through three domestic divisions which are located in the Marcellus/Utica, Permian Basin and Eagle Ford, and Bakken regions, and internationally in Colombia. We provide a comprehensive service offering which includes the drilling rig, crews, supplies, and most of the ancillary equipment needed to operate our drilling rigs. Our fleet is 100% pad-capable and offers the latest advancements in pad drilling. The following table summarizes our current rig fleet count and composition for each drilling services business segment:
 
Multi-well, Pad-capable
 
AC rigs
 
SCR rigs
 
Total
Domestic drilling
17

 

 
17
International drilling

 
8

 
8
 
 
 
 
 
25
Our production services business segments provide a range of services to producers primarily in Texas and the Mid-Continent and Rocky Mountain regions, as well as in North Dakota, Louisiana and Mississippi. As of March 31, 2020, the fleet counts for each of our production services business segments were as follows:
 
550 HP
 
600 HP
 
Total
Well servicing rigs, by horsepower (HP) rating
111
 
12
 
123
 
 
 
 
 
 
 
 
 
 
 
Total
Wireline services units
 
93
Coiled tubing services units
 
9
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Pioneer Energy Services Corp. and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of our management, all adjustments (consisting of normal, recurring accruals) necessary for a fair presentation have been included. We suggest that you read these unaudited condensed consolidated financial statements together with the consolidated financial statements and the related notes included in our annual report on Form 10-K for the year ended December 31, 2019.
Chapter 11 Cases — On March 1, 2020 (the “Petition Date”), Pioneer and certain of our domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). On May 11, 2020, the Bankruptcy Court confirmed the plan of reorganization that was filed with the Bankruptcy Court on March 2, 2020, and on May 29, 2020 (the “Effective Date”), the conditions to effectiveness of the plan were satisfied and we emerged from Chapter 11. See Note 2, Chapter 11 Cases and Subsequent Events, for more information.
Use of Estimates In preparing the accompanying unaudited condensed consolidated financial statements, we make various estimates and assumptions that affect the amounts of assets and liabilities we report as of the dates of the balance sheets and income and expenses we report for the periods shown in the income statements and statements of cash flows. Our actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to our estimates of certain variable revenues and amortization periods of certain deferred



8



revenues and costs associated with drilling daywork contacts, our estimates of projected cash flows and fair values for impairment evaluations, our estimate of the valuation allowance for deferred tax assets, and our estimate of the liability relating to the self-insurance portion of our health and workers’ compensation insurance.
Subsequent Events In preparing the accompanying unaudited condensed consolidated financial statements, we have reviewed events that have occurred after March 31, 2020, through the filing of this Form 10-Q, for inclusion as necessary. See Note 2, Chapter 11 Cases and Subsequent Events, for more information.
Recently Issued Accounting Standards
Changes to accounting principles generally accepted in the United States of America (“U.S. GAAP”) are established by the Financial Accounting Standards Board (FASB) in the form of Accounting Standards Updates (ASUs) to the FASB Accounting Standards Codification (ASC). We consider the applicability and impact of all ASUs and we have determined that there are currently no new or recently adopted ASUs which we believe will have a material impact on our consolidated financial position and results of operations.
Additional Detail of Account Balances
Cash and Cash Equivalents — We had no cash equivalents at March 31, 2020. Cash equivalents at December 31, 2019 were $8.9 million, consisting of investments in highly-liquid money-market mutual funds.
Other Receivables Our other receivables primarily consist of recoverable taxes related to our international operations, as well as vendor rebates and net income tax receivables.
Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets include items such as insurance, rent deposits, software subscriptions, and other fees, including professional fee deposits associated with the Chapter 11 Cases. We routinely expense these items in the normal course of business over the periods that we benefit from these expenses. Prepaid expenses and other current assets also include deferred mobilization costs for short-term drilling contracts and demobilization revenues recognized on drilling contracts expiring in the near term.
Other Noncurrent Assets Other noncurrent assets consist of prepaid taxes in Colombia which are creditable against future income taxes, deferred mobilization costs on long-term drilling contracts, cash deposits related to the deductibles on our workers’ compensation insurance policies, the noncurrent portion of prepaid insurance premiums, and deferred compensation plan investments.
Other Accrued Expenses Our other accrued expenses include accruals for items such as sales taxes, property taxes, withholding tax liabilities related to our international operations, and professional and other fees, including those associated with the Chapter 11 Cases. We routinely expense these items in the normal course of business over the periods these expenses benefit. Our other accrued expenses also includes the current portion of the lease liability associated with our long-term operating leases.
Other Noncurrent Liabilities Our other noncurrent liabilities consist of the noncurrent portion of deferred mobilization revenues and liabilities associated with our long-term compensation plans.
2.    Chapter 11 Cases and Subsequent Events
Reorganization and Chapter 11 Proceedings
In an effort to achieve liquidity that would be sufficient to meet all of our commitments, we took a number of actions, including minimizing capital expenditures and reducing recurring expenses. However, we believed that even after taking these actions, we would not have sufficient liquidity to satisfy all of our future financial obligations, comply with our debt covenants, and execute our business plan. As a result, we filed a petition for reorganization under Chapter 11 of the Bankruptcy Code on March 1, 2020.
On March 1, 2020 (the “Petition Date”), Pioneer Energy Services Corp. (“Pioneer”) and its affiliates Pioneer Coiled Tubing Services, LLC, Pioneer Drilling Services, Ltd., Pioneer Fishing & Rental Services, LLC, Pioneer Global Holdings, Inc., Pioneer Production Services, Inc., Pioneer Services Holdings, LLC, Pioneer Well Services, LLC, Pioneer Wireline Services Holdings, Inc., Pioneer Wireline Services, LLC (collectively with Pioneer, the “Pioneer RSA Parties”) filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under title 11 of the United States Code (the “Bankruptcy Code”)



9



in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Chapter 11 proceedings were being jointly administered under the caption In re Pioneer Energy Services Corp. et al (the “Chapter 11 Cases”).
In connection with the Bankruptcy Petitions, the Pioneer RSA Parties entered into a restructuring support agreement (the “RSA”) with holders of approximately 99% in aggregate principal amount of our outstanding Term Loan (the “Consenting Term Lenders”) and holders of approximately 75% in aggregate principal amount of our Senior Notes (the “Consenting Noteholders” and together with the Consenting Term Lenders, the “Consenting Creditors”). Pursuant to the RSA, the Consenting Creditors and the Pioneer RSA Parties made certain customary commitments to each other, including the Consenting Noteholders committing to vote for, and the Consenting Creditors committing to support, the restructuring transactions (the “Restructuring”) to be effectuated through a plan of reorganization that incorporates the economic terms included in the RSA (the “Plan”). The Pioneer RSA Parties filed the Plan with the Bankruptcy Court on March 2, 2020.
After commencement of the Chapter 11 Cases, we continued to operate our businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.
On May 11, 2020, the Bankruptcy Court entered an order, Docket No. 331 (the “Confirmation Order”) confirming the Plan. On May 29, 2020 (the “Effective Date”) the conditions to effectiveness of the Plan were satisfied and we emerged from Chapter 11.
The commencement of the Chapter 11 Cases constituted an event of default that accelerated our obligations under our Senior Notes, the Prepetition ABL Facility, and Term Loan. Under the Bankruptcy Code, holders of our Senior Notes and the lenders under our Term Loan and the Prepetition ABL Facility were stayed from taking any action against us as a result of this event of default. On the Effective Date, all applicable agreements governing the obligations under the Term Loan, Senior Notes and Prepetition ABL Facility were terminated. The Term Loan and Prepetition ABL Facility were paid in full and all outstanding obligations under the Senior Notes were canceled in exchange for 94.25% of the proforma common equity (subject to the dilution from the Convertible Notes and new management incentive plan).
On the Effective Date, we entered into a $75 million senior secured asset-based revolving credit agreement (the “ABL Credit Facility”), and issued $129.8 million of aggregate principal amount of 5% convertible senior unsecured pay-in-kind notes due 2025 (the “Convertible Notes”) and $78.1 million of aggregate principal amount of floating rate senior secured notes due 2025 (the “Senior Secured Notes”).
Also on the Effective Date, by operation of the Plan, all agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company, including the existing common stock, issued and outstanding immediately prior to the Effective Date, and any rights of any holder in respect thereof, were deemed canceled, discharged and of no force or effect. Pursuant to the Plan, we issued a total of 1,049,804 shares of our new common stock, with approximately 94.25% of such new common stock being issued to holders of the Senior Notes outstanding immediately prior to the Effective Date. Holders of the existing common stock received an aggregate of 5.75% of the proforma common equity (subject to the dilution from the Convertible Notes and new management incentive plan), at a conversion rate of 0.0006849838 new shares for each existing share.
As part of the transactions undertaken pursuant to the Plan, we converted from a Texas corporation to a Delaware corporation, filed the Certificate of Incorporation of the Company with the office of the Secretary of State of the State of Delaware and adopted Amended and Restated Bylaws of the Company.
Backstop Commitment Agreement
Prior to filing the Plan, we entered into a separate backstop commitment agreement with the Consenting Noteholders and certain members of our senior management (the “Backstop Commitment Agreement”), pursuant to which the Consenting Noteholders and certain members of our senior management committed to backstop approximately $118 million and $1.8 million, respectively, of new convertible bonds to be issued in a rights offering. As consideration for this commitment, we committed to make an aggregate payment of $9.4 million and $0.1 million to the Consenting Noteholders and certain members of our senior management, respectively, in the form of additional new convertible bonds, or in cash if the Backstop Commitment Agreement was terminated under certain circumstances as forth therein. As a result, we incurred a liability and expense at the time we entered into the Backstop Commitment Agreement for the aggregate amount of $9.6 million (the “Commitment Premium”) which was recognized in our condensed consolidated financial statements as of and for the



10



three months ended March 31, 2020. The Commitment Premium was settled in conjunction with our emergence from Chapter 11 and the issuance of the Convertible Notes.
Debtor-in-Possession Financing
On February 28, 2020, we received commitments pursuant to the Commitment Letter from PNC Bank, N.A. for a $75 million asset-based revolving loan debtor-in-possession financing facility (the “DIP Facility”) and a $75 million asset-based revolving exit financing facility. On March 3, 2020, with the approval of the Bankruptcy Court, we entered into the DIP Facility and used the proceeds thereunder to refinance all outstanding letters of credit under the Prepetition ABL Facility in connection with the termination of the Prepetition ABL Facility and to pay fees and expenses in connection with the Chapter 11 proceedings and transaction and professional fees related thereto.
The DIP Facility provided financing with a 5-month maturity, bearing interest at a rate of LIBOR plus 200 basis points per annum, and contained customary covenants and events of default.
As of March 31, 2020, we had $4.0 million outstanding under our DIP Facility. The DIP Facility was terminated upon our emergence from the Chapter 11 Cases on May 29, 2020.
Post-Emergence Debt Instruments
ABL Credit FacilityOn the Effective Date, pursuant to the terms of the Plan, we entered into a senior secured asset-based revolving credit agreement in an aggregate amount of $75 million (the “ABL Credit Facility”) among us and our domestic subsidiaries as borrowers (the “Borrowers”), the lenders party thereto and PNC Bank, National Association as administrative agent. Among other things, proceeds of loans under the ABL Credit Facility may be used to pay fees and expenses associated with the ABL Credit Facility and finance ongoing working capital and general corporate needs.
The maturity date of loans made under the ABL Credit Facility is the earliest of 90 days prior to maturity of the Senior Secured Notes or the Convertible Notes (both of which are described further below) and May 29, 2025. Borrowings under the ABL Credit Facility will bear interest at a rate of (i) the LIBOR rate, with a LIBOR rate floor of 0%, plus an applicable margin in the range of 175 to 225 basis points per annum, or (ii) the base rate plus an applicable margin in the range of 75 to 125 basis points per annum, in both cases based on the average excess availability, as defined in the ABL Credit Facility.
The ABL Credit Facility s guaranteed by the Borrowers and is secured by a first lien on the Borrowers’ accounts receivable and inventory, and the cash proceeds thereof, and a second lien on substantially all of the other assets and properties of the Borrowers.
The ABL Credit Facility limits our annual capital expenditures to 125% of the budget set forth in the projections for any fiscal year and provides that if our availability falls below $11.25 million (15% of the maximum revolver amount), we will be required to comply with a fixed charge coverage ratio of 1.0 to 1.0, all of which is defined in the ABL Credit Facility. As of May 31, 2020, we had no borrowings and approximately $7.1 million in outstanding letters of credit under the ABL Credit Facility and subject to the availability requirements in the ABL Credit Facility, based on eligible accounts receivable and inventory balances at May 31, 2020, availability under the ABL Credit Facility was $20.3 million, which our access to would be limited by our requirement to maintain 15% available or comply with a fixed charge coverage ratio, as described above.
Convertible Notes Indenture and Convertible Notes due 2025 — We entered into an indenture, dated as of the Effective Date, among the Company and Wilmington Trust, N.A., as trustee (the “Convertible Notes Indenture”), and issued $129.8 million aggregate principal amount of convertible senior unsecured pay-in-kind notes due 2025 thereunder (the “Convertible Notes”).
The Convertible Notes are general unsecured obligations which will mature on November 15, 2025, unless earlier accelerated, redeemed, converted or repurchased, and bear interest at a fixed rate of 5% per annum, which will be payable semi-annually in-kind in the form of an increase to the principal amount. The Convertible Notes are convertible at the option of the holders at any time into shares of our common stock and will convert mandatorily into our common stock at maturity; provided, however, that if the value of our common stock otherwise deliverable in connection with a mandatory conversion of a Convertible Note on the maturity date would be less than the principal amount of such Convertible Note plus accrued and unpaid interest, then the Convertible Note will instead convert into an amount of cash equal to the principal amount thereof



11



plus accrued and unpaid interest. The initial conversion rate is 75 shares of common stock per $1,000 principal amount of the Convertible Notes. The conversion rate is subject to customary anti-dilution adjustments.
If we undergo a “fundamental change” as defined in the Convertible Notes Indenture, subject to certain conditions, holders may require us to repurchase all or any portion of their Convertible Notes for cash at an amount equal to 100% of the principal amount of the Convertible Notes to be repurchased plus any accrued and unpaid interest. In the case of certain fundamental change events that constitute merger events (as defined in the Convertible Notes Indenture), we have a superseding right to cause the mandatory conversion of all or part of the Convertible Notes into a number of shares of common stock, per $1,000 principal amount of Convertible Notes, equal to the then-current conversion rate or the cash value of such number of shares of common stock (but not less than the principal amount).
Holders of Convertible Notes are entitled to vote on all matters on which holders of our common stock generally are entitled to vote (or, if any, to take action by written consent of the holders of our common stock), voting together as a single class together with the shares of our common stock and not as a separate class, on an as-converted basis, at any annual or special meeting of holders of our common stock and each holder is entitled to such number of votes as such holder would receive on an as-converted basis on the record date for such vote.
The Convertible Notes Indenture contains customary events of default and covenants that limit our ability and the ability of certain of our subsidiaries to incur, assume or guarantee additional indebtedness and create liens and enter into mergers or consolidations.
Senior Secured Notes Indenture and Senior Secured Notes due 2025 — We entered into an indenture, dated as of the Effective Date, among the Company, the subsidiary guarantors party thereto and Wilmington Trust, N.A., as trustee (the “Senior Secured Notes Indenture”), and issued $78.1 million aggregate principal amount of floating rate senior secured notes due 2025 (the “Senior Secured Notes”) thereunder. The Senior Secured Notes are guaranteed on a senior secured basis by our existing subsidiaries that also guarantee our obligations under the ABL Credit Facility (the “Guarantors”) on a full and unconditional basis and are secured by a second lien on the accounts receivable and inventory and a first lien on substantially all of the other assets and properties (including the cash proceeds thereof) of the Company and the Guarantors.
The Senior Secured Notes will mature on May 15, 2025 and interest will accrue at the rate of LIBOR plus 9.5% per annum, with a LIBOR rate floor of 1.5%, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2020. With respect to any interest payment due on or prior to May 29, 2021, 50% of the interest will be payable in cash and 50% of the interest will be paid in-kind in the form of an increase to the principal amount; however, a majority in interest of the holders of the Senior Secured Notes may elect to have 100% of the interest due on or prior to May 29, 2021 payable in-kind. For all interest periods commencing on or after May 15, 2024, the interest rate for the Senior Secured Notes will be a rate equal to LIBOR plus 10.5%, with a LIBOR rate floor of 1.5%.
We may redeem all or part of the Senior Secured Notes on or after June 1, 2021 at redemption prices (expressed as percentages of the principal amount) equal to (i) 104% for the twelve-month period beginning on June 1, 2021; (ii) 102% for the twelve-month period beginning on June 1, 2022; (iii) 101% for the twelve-month period beginning on June 1, 2023 and (iii) 100% for the twelve-month period beginning June 1, 2024 and at any time thereafter, plus accrued and unpaid interest at the redemption date. Notwithstanding the foregoing, if a change of control (as defined in the Senior Secured Notes Indenture) occurs prior to June 1, 2022, we may elect to purchase all remaining outstanding Senior Secured Notes not tendered to us as described below at a redemption price equal to 103% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the applicable redemption date. If a change of control (as defined in the Senior Secured Notes Indenture) occurs, holders of the Senior Secured Notes will have the right to require us to repurchase all or any part of their Senior Secured Notes at a purchase price equal to 101% of the aggregate principal amount of the Senior Secured Notes repurchased, plus accrued and unpaid interest, if any, to the repurchase date.
The Senior Secured Notes Indenture contains a minimum asset coverage ratio of 1.5 to 1.0 as of any June 30 or December 31. The Senior Secured Notes Indenture provides for certain customary events of default and contains covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to incur, assume or guarantee additional indebtedness; pay dividends or distributions on capital stock or redeem or repurchase capital stock; make investments; repay junior debt; sell stock of its subsidiaries; transfer or sell assets; enter into sale and lease back transactions; create liens; enter into transactions with affiliates; and enter into mergers or consolidations.



12



Chapter 11 Accounting
The accompanying unaudited condensed consolidated financial statements contemplate our continuation as a going concern and have been prepared in accordance with FASB ASC Topic 852, Reorganizations.
Pre-petition restructuring charges All expenses and losses incurred prior to the Petition Date which were related to the Chapter 11 proceedings are presented as pre-petition restructuring charges in our condensed consolidated statements of operations, including $9.6 million of expense incurred for the Commitment Premium pursuant to the Backstop Commitment Agreement.
Reorganization itemsAny expenses, gains, and losses incurred subsequent to and as a direct result of the Chapter 11 proceedings are presented as reorganization items in our condensed consolidated statements of operations. Reorganization items consisted of the following for the three months ended March 31, 2020 (amounts in thousands):
Legal and professional fees
$
6,150

DIP facility costs
513

 
$
6,663

Liabilities subject to compromise — Pre-petition unsecured and under-secured obligations that may be impacted by the Chapter 11 Cases have been classified as liabilities subject to compromise on our condensed consolidated balance sheet. As of March 31, 2020, liabilities subject to compromise consisted of the following (amounts in thousands):
Senior Notes
$
300,000

Unamortized debt issuance costs on Senior Notes
(2,003
)
Accrued interest on Senior Notes
8,422

 
$
306,419

Contractual interest expense on our Senior Notes totaled $4.6 million for the three months ended March 31, 2020, which is in excess of the $3.1 million included in interest expense on our condensed consolidated statement of operations because we discontinued accruing interest on the Petition Date in accordance with the terms of the Plan and ASC Topic 852. See Note 6, Debt and DIP Financing for more information.
Fresh Start Accounting — We expect to adopt the fresh start accounting rules upon emergence from Chapter 11, in which case our assets and liabilities will be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on our consolidated balance sheets.



13



Debtor Financial Statements
Following are the consolidated financial statements of the entities included in the Chapter 11 Cases:
PIONEER ENERGY SERVICES CORP. DEBTOR ENTITIES (DEBTOR IN POSSESSION)
CONDENSED COMBINED BALANCE SHEET
(unaudited)
 
March 31, 2020
 
(in thousands)
ASSETS
 
Current assets:
 
Cash and cash equivalents
$
7,938

Restricted cash
998

Receivables, net of allowance
84,674

Intercompany receivables, net
32,599

Inventory
9,530

Assets held for sale
1,825

Prepaid expenses and other current assets
7,127

Total current assets
144,691

Net property and equipment
412,711

Investment in subsidiaries
549,536

Deferred income taxes
38,948

Operating lease assets
7,441

Other noncurrent assets
1,754

Total assets
$
1,155,081

 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
 
Accounts payable
$
23,166

Deferred revenues
428

Commitment premium
9,584

Debtor in possession financing
4,000

Accrued expenses
48,480

Total current liabilities
85,658

Long-term debt, less unamortized discount and debt issuance costs
170,921

Noncurrent operating lease liabilities
6,058

Deferred income taxes
42,204

Other noncurrent liabilities
383

Total liabilities not subject to compromise
305,224

Liabilities subject to compromise
306,419

Stockholders’ equity
543,438

Total liabilities and stockholders’ equity
$
1,155,081




14



PIONEER ENERGY SERVICES CORP. DEBTOR ENTITIES (DEBTOR IN POSSESSION)
CONDENSED COMBINED STATEMENT OF OPERATIONS
(unaudited)
 
Three months ended March 31, 2020
 
(in thousands)
 
 
Revenues
$
99,867

 
 
Costs and expenses:
 
Operating costs
79,885

Depreciation
20,683

General and administrative
14,155

Pre-petition restructuring charges
17,074

Impairment
17,853

Bad debt expense, net
727

Gain on dispositions of property and equipment, net
(717
)
Intercompany leasing
(1,215
)
Total costs and expenses
148,445

Loss from operations
(48,578
)
 
 
Other income (expense):
 
Equity in losses of subsidiaries
(31,726
)
Interest expense, net of interest capitalized
(8,668
)
Reorganization items
(6,663
)
Other income (expense), net
197

Total other expense, net
(46,860
)
 
 
Loss before income taxes
(95,438
)
Income tax (expense) benefit
1,116

Net loss
$
(94,322
)
PIONEER ENERGY SERVICES CORP. DEBTOR ENTITIES (DEBTOR IN POSSESSION)
CONDENSED COMBINED STATEMENT OF CASH FLOWS
(unaudited)
 
Three months ended March 31, 2020
 
(in thousands)
 
 
Cash flows from operating activities
$
(4,277
)
 
 
Cash flows from investing activities:
 
Purchases of property and equipment
(6,180
)
Proceeds from sale of property and equipment
876

 
(5,304
)
 
 
Cash flows from financing activities:
 
Proceeds from DIP Facility
4,000

DIP Facility issuance costs
(988
)
Purchase of treasury stock
(7
)
Intercompany contributions
53

 
3,058

 
 
Net decrease in cash, cash equivalents and restricted cash
(6,523
)
Beginning cash, cash equivalents and restricted cash
15,459

Ending cash, cash equivalents and restricted cash
$
8,936

Other Subsequent Events
In April 2020, we closed our coiled tubing operations and idled all our coiled tubing equipment, which were subsequently placed as held for sale.



15



3.    Revenue from Contracts with Customers
Our production services business segments earn revenues for well servicing, wireline services and coiled tubing services pursuant to master services agreements based on purchase orders or other contractual arrangements with the client. Production services jobs are generally short-term (ranging in duration from several hours to less than 30 days) and are charged at current market rates for the labor, equipment and materials necessary to complete the job. Production services jobs are varied in nature but typically represent a single performance obligation, either for a particular job, a series of distinct jobs, or a period of time during which we stand ready to provide services as our client needs them. Revenue is recognized for these services over time, as the services are performed.
Our drilling services business segments earn revenues by drilling oil and gas wells for our clients under daywork contracts. Daywork contracts are comprehensive agreements under which we provide a comprehensive service offering, including the drilling rig, crew, supplies, and most of the ancillary equipment necessary to operate the rig. Contract modifications that extend the term of a dayrate contract are generally accounted for prospectively as a separate dayrate contract. We account for our services provided under daywork contracts as a single performance obligation comprised of a series of distinct time increments which are satisfied over time. Accordingly, dayrate revenues are recognized in the period during which the services are performed.
With most drilling contracts, we also receive payments contractually designated for the mobilization and demobilization of drilling rigs and other equipment to and from the client’s drill site. Revenues associated with the mobilization and demobilization of our drilling rigs to and from the client’s drill site do not relate to a distinct good or service and are recognized ratably over the related contract term.
The amount of demobilization revenue that we ultimately collect is dependent upon the specific contractual terms, most of which include provisions for reduced (or no) payment for demobilization when, among other things, the contract is renewed or extended with the same client, or when the rig is subsequently contracted with another client prior to the termination of the current contract. Since revenues associated with demobilization activity are typically variable, at each period end, they are estimated at the most likely amount, and constrained when the likelihood of a significant reversal is probable. Any change in the expected amount of demobilization revenue is accounted for with the net cumulative impact of the change in estimate recognized in the period during which the revenue estimate is revised.
The upfront costs that we incur to mobilize the drilling rig to our client’s initial drilling site are capitalized and recognized ratably over the term of the related contract, including any contracted renewal or extension periods, which is our estimate of the period during which we expect to benefit from the cost of mobilizing the rig. Costs associated with the final demobilization at the end of the contract term are expensed when incurred, when the demobilization activity is performed.
We also act as a principal for certain reimbursable services and auxiliary equipment provided by us to our clients, for which we incur costs and earn revenues, many of which are variable, or dependent upon the activity that is actually performed each day under the related contract. Accordingly, reimbursements that we receive for out-of-pocket expenses are recorded as revenues and the out-of-pocket expenses for which they relate are recorded as operating costs during the period to which they relate within the series of distinct time increments.
All of our revenues are recognized net of sales taxes, when applicable.
Contract Asset and Liability Balances and Contract Cost Assets
Contract asset and contract liability balances relate to demobilization and mobilization revenues, respectively. Demobilization revenue that we expect to receive is recognized ratably over the related contract term, but invoiced upon completion of the demobilization activity. Mobilization revenue, which is typically collected upon the completion of the initial mobilization activity, is deferred and recognized ratably over the related contract term. Contract asset and liability balances are netted at the contract level, with the net current and noncurrent portions separately classified in our condensed consolidated balance sheets, and the resulting contract liabilities are referred to herein as “deferred revenues.” When demobilization revenues are recognized prior to the activity being performed, they are not yet billable, and the resulting contract assets are included in our other current assets in our unaudited condensed consolidated financial statements.
Contract cost assets represent the costs associated with the initial mobilization required in order to fulfill the contract, which are deferred and recognized ratably over the period during which we expect to benefit from the mobilization, or the period during which we expect to satisfy the performance obligations of the related contract. Contract cost assets are presented as either current or noncurrent, according to the duration of the original contract to which it relates, and referred to herein as “deferred costs.”



16



Our current and noncurrent deferred revenues, contract assets and deferred costs as of March 31, 2020 and December 31, 2019 were as follows (amounts in thousands):
 
March 31, 2020
 
December 31, 2019
Current deferred revenues
$
997

 
$
1,339

Current deferred costs
591

 
1,071

Current contract assets
795

 

 
 
 
 
Noncurrent deferred revenues
$

 
$
57

Noncurrent deferred costs
142

 
267

The changes in contract balances during the three months ended March 31, 2020 are primarily related to the amortization of deferred revenues and costs during the period, partially offset by increases related to two rigs deployed under new contracts in 2020, and an increase in demobilization revenues recognized on contracts that are expected to expire or be terminated in the near term. Amortization of deferred revenues and costs during the three months ended March 31, 2020 and 2019 were as follows (amounts in thousands):
 
Three months ended March 31,
 
2020
 
2019
Amortization of deferred revenues
$
1,613

 
$
954

Amortization of deferred costs
1,263

 
986

In late March 2020, rather than terminating their contracts with us, several of our clients elected to temporarily stack the rigs and place them on an extended standby for a reduced revenue rate and the option to reactivate the rig through the remainder of the contract term.
4.    Property and Equipment
Capital Expenditures — Our capital expenditure additions were $7.9 million and $18.4 million, including the impact of accruals for capital additions, during the three months ended March 31, 2020 and 2019, respectively. Capital additions during the three months ended March 31, 2020 primarily related to routine expenditures to maintain our fleets, while capital additions during the corresponding period also included the completion of construction on our 17th AC drilling rig which we deployed in March 2019, and various vehicle and ancillary equipment purchases and upgrades.
Gain/Loss on Disposition of Property — We recognized net gains of $0.7 million and $1.1 million during the three months ended March 31, 2020 and 2019, respectively, on the disposition or sale of various property and equipment, including drill pipe and collars and certain older and/or underutilized equipment.
Assets Held for Sale — We have various equipment designated as held for sale with values of $1.8 million and $3.4 million in aggregate as of March 31, 2020 and December 31, 2019, respectively, primarily consisting of real estate property for two wireline locations closed during 2019 that were sold in 2020, and the remaining equipment from two SCR drilling rigs which were dismantled for spare parts.
During the three months ended March 31, 2020 and 2019, we recognized impairment charges of $1.5 million and $1.0 million, respectively, to reduce the carrying values of assets which were classified as held for sale, to their estimated fair values, based on expected sales prices which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures.
Impairments In accordance with ASC Topic 360, Property, Plant and Equipment, we monitor all indicators of potential impairments. We evaluate for potential impairment of long-lived assets when indicators of impairment are present, which may include, among other things, significant adverse changes in industry trends (including revenue rates, utilization rates, oil and natural gas market prices, and industry rig counts). In performing an impairment evaluation, we estimate the future undiscounted net cash flows from the use and eventual disposition of the assets grouped at the lowest level that independent cash flows can be identified. We perform an impairment evaluation and estimate future undiscounted cash flows for each of our asset groups separately, which are our domestic drilling services, international drilling services, well servicing, wireline services and coiled tubing services segments. If the sum of the estimated future undiscounted net cash flows is less than the carrying amount of the asset group, then we determine the fair value of the asset group, and the amount of an impairment charge would be measured as the difference between the carrying amount and the fair value of the assets.



17



Due to the significant decline in industry conditions, commodity prices, and projected utilization of equipment, as well as the COVID-19 pandemic’s impact on our industry, our projected cash flows declined during the first quarter of 2020, and we performed recoverability testing on all our reporting units. As a result of this analysis, we incurred impairment charges of $16.4 million to reduce the carrying values of our coiled tubing assets to their estimated fair values. For all our other reporting units, excluding coiled tubing, we determined that the sum of the estimated future undiscounted net cash flows were in excess of the carrying amounts and that no impairment existed for these reporting units at March 31, 2020.
The assumptions we use in the evaluation for impairment are inherently uncertain and require management judgment. Although we believe the assumptions and estimates used in our impairment analysis are reasonable, different assumptions and estimates could materially impact the analysis and resulting conclusions. The most significant inputs used in our impairment analysis include the projected utilization and pricing of our services, as well as the estimated proceeds upon any future sale or disposal of the assets, all of which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures. If commodity prices decrease or remain at current levels for an extended period of time, or if the demand for any of our services decreases below what we are currently projecting, our estimated cash flows may decrease and our estimates of the fair value of certain assets may decrease as well. If any of the foregoing were to occur, we could incur impairment charges on the related assets.
5.     Leases
As a drilling and production services provider, we provide the drilling rigs and production services equipment which are necessary to fulfill our performance obligations and which are considered leases under ASU No. 2016-02, Leases, (together with its amendments, herein referred to as “ASC Topic 842”). However, ASU No. 2018-11, Leases: Targeted Improvements, allows lessors to (i) combine the lease and non-lease components of revenues when the revenue recognition pattern is the same and when the lease component, when accounted for separately, would be considered an operating lease, and (ii) account for the combined lease and non-lease components under ASC Topic 606, Revenue from Contracts with Customers, when the non-lease component is the predominant element of the combined component. We elected to apply this expedient and therefore recognize our revenues (both lease and service components) under ASC Topic 606, and present them as one revenue stream in our unaudited condensed consolidated statements of operations.
As a lessee, we lease our corporate office headquarters in San Antonio, Texas, and we conduct our business operations through 19 other regional offices located throughout the United States and internationally in Colombia. These operating locations typically include regional offices, storage and maintenance yards and employee housing sufficient to support our operations in the area. We lease most of these properties under non-cancelable term and month-to-month operating leases, many of which contain renewal options that can extend the lease term from three months to five years and some of which contain escalation clauses. We also lease various items of supplemental equipment, typically under cancelable short-term and very short term (less than 30 days) leases. Due to the nature of our business, any option to renew these short-term leases, and the options to extend certain of our long-term real estate leases, are generally not considered reasonably certain to be exercised. Therefore, the periods covered by such optional periods are not included in the determination of the term of the lease, and the lease payments during these periods are similarly excluded from the calculation of operating lease asset and lease liability balances.
The following table summarizes our lease expense recognized, excluding variable lease costs (amounts in thousands):
 
Three months ended March 31,
 
2020
 
2019
Long-term operating lease expense
$
662

 
$
842

Short-term operating lease expense
3,526

 
3,403




18



The following table summarizes the amount and timing of our obligations associated with our long-term operating leases (amounts in thousands):
 
March 31, 2020
 
December 31, 2019
Within 1 year
$
2,413

 
$
2,496

In the second year
1,966

 
1,933

In the third year
1,592

 
1,447

In the fourth year
1,259

 
1,117

In the fifth year
1,176

 
912

Thereafter
1,079

 
811

Total undiscounted lease obligations
$
9,485

 
$
8,716

Impact of discounting
(967
)
 
(818
)
Discounted value of operating lease obligations
$
8,518

 
7,898

 
 
 
 
Current operating lease liabilities
$
2,084

 
2,198

Noncurrent operating lease liabilities
6,434

 
5,700

 
$
8,518

 
7,898

During the three months ended March 31, 2020, leased assets obtained in exchange for new operating lease liabilities totaled approximately $1.7 million.
6.     Debt and DIP Financing
The commencement of the Chapter 11 Cases constituted an event of default that accelerated our obligations under our Senior Notes, the Prepetition ABL Facility, and Term Loan. Under the Bankruptcy Code, holders of our Senior Notes and the lenders under our Term Loan and the Prepetition ABL Facility were stayed from taking any action against us as a result of this event of default.
On the Effective Date, all applicable agreements governing the obligations under the Term Loan, Senior Notes and Prepetition ABL Facility were terminated. The Term Loan and Prepetition ABL Facility were paid in full and all outstanding obligations under the Senior Notes were canceled in exchange for 94.25% of the proforma common equity. For additional information concerning our bankruptcy proceedings under Chapter 11, see Note 2, Chapter 11 Cases and Subsequent Events.
As of March 31, 2020, our outstanding debt obligations were as follows:
 
March 31, 2020
Debtor in possession financing
$
4,000

 
 
Term Loan
$
175,000

Less unamortized discount on Term Loan
(1,656
)
Less unamortized debt issuance costs on Term Loan
(2,423
)
Long-term debt, less unamortized discount and debt issuance costs
$
170,921

 
 
Senior Notes
$
300,000

Unamortized debt issuance costs on Senior Notes
(2,003
)
Accrued interest on Senior Notes
8,422

Liabilities subject to compromise
$
306,419

Debtor-in-Possession Financing
On February 28, 2020, we received commitments pursuant to the Commitment Letter from PNC Bank, N.A. for a $75 million asset-based revolving loan debtor-in-possession financing facility and a $75 million asset-based revolving exit financing facility. On March 3, 2020, with the approval of the Bankruptcy Court, we entered into the DIP Facility and used the proceeds thereunder to refinance all outstanding letters of credit under the Prepetition ABL Facility in connection with the termination of the Prepetition ABL Facility and to pay fees and expenses in connection with the Chapter 11 proceedings and transaction and professional fees related thereto.



19



The DIP Facility provided financing with a 5-month maturity, bearing interest at a rate of LIBOR plus 200 basis points per annum, and contained customary covenants and events of default. The DIP Facility was terminated upon our emergence from the Chapter 11 Cases on May 29, 2020. Upon emergence from the Chapter 11 Cases, we entered into a new ABL Credit Facility, as described in more detail in Note 2, Chapter 11 Cases and Subsequent Events.
Senior Secured Term Loan - Not Subject to Compromise
Our senior secured term loan (the “Term Loan”) entered into in 2017 provided for one drawing in the amount of $175 million, net of a 2% original issue discount. Proceeds from the issuance of the Term Loan were used to repay the entire outstanding balance under our previous credit facility, plus fees and accrued and unpaid interest, as well as the fees and expenses associated with entering into the Term Loan and Prepetition ABL Facility. The remainder of the proceeds were used for other general corporate purposes.
Interest on the principal amount accrued at the LIBOR rate or the base rate as defined in the agreement, at our option, plus an applicable margin of 7.75% and 6.75%, respectively. The Term Loan was set to mature on November 8, 2022, or earlier, subject to certain circumstances as described in the agreement.
Our obligations under the Term Loan were guaranteed by our wholly-owned domestic subsidiaries, and secured by substantially all of our domestic assets, in each case, subject to certain exceptions and permitted liens.
Prepetition Asset-based Lending Facility
At the same time as we entered into the Term Loan in 2017, we also entered into a senior secured revolving asset-based credit facility (the “Prepetition ABL Facility”) which provided for borrowings in the aggregate principal amount of up to $75 million, subject to a borrowing base and including a $30 million sub-limit for letters of credit.
As of March 31, 2020, we had no borrowings outstanding under the Prepetition ABL Facility. As a part of the Chapter 11 process, the Prepetition ABL Facility was terminated at the Petition Date and all remaining unamortized debt issuance costs were written off in March 2020.
Senior Notes - Subject to Compromise
In 2014, we issued $300 million of unregistered senior notes at face value, with a coupon interest rate of 6.125% that were due in 2022 (the “Senior Notes”). The Senior Notes were set to mature on March 15, 2022 with interest due semi-annually in arrears on March 15 and September 15 of each year.
In accordance with a registration rights agreement with the holders of our Senior Notes, we filed an exchange offer registration statement on Form S-4 with the Securities and Exchange Commission that became effective on October 2, 2014. The exchange offer registration statement enabled the holders of our Senior Notes to exchange their senior notes for publicly registered notes with substantially identical terms. References to the “Senior Notes” herein include the senior notes issued in the exchange offer.
The Senior Notes were fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by certain of our existing domestic subsidiaries and by certain of our future domestic subsidiaries. (See Note 13, Guarantor/Non-Guarantor Condensed Consolidating Financial Statements.)
As a result of the Chapter 11 Cases, the Senior Notes ceased accruing interest as of the Petition Date, in accordance with the Plan.
7.
Valuation Allowances on Deferred Tax Assets and Tax Legislation Developments
Our deferred tax assets related to net operating losses, which are available to reduce future taxable income, consist of the following (amounts in thousands):
 
March 31, 2020
 
December 31, 2019
Domestic net operating loss carryforward
$
110,167

 
$
102,827

Foreign net operating loss carryforward
5,826

 
8,007




20



We provide a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. As result, as of March 31, 2020 and December 31, 2019, we had valuation allowances of $68.5 million and $59.8 million that offset a portion of our domestic net deferred tax assets.
The majority of our domestic net operating losses will begin to expire in 2030, while losses generated after 2017 are carried forward indefinitely but are limited in usage to 80% of taxable income beginning in 2021. The majority of our foreign net operating losses are carried forward indefinitely, but losses generated after 2016 are carried forward for 12 years and will begin to expire in 2029. Upon our emergence from Chapter 11 on May 29, 2020, we underwent an ownership change, as defined in the U.S. Internal Revenue Code, which we expect will result in future annual limitations on the usage of our domestic net operating losses.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act contains numerous corporate income tax provisions, some of which impact our calculation of income taxes, including providing for the carryback of certain net operating losses, modifications to the net interest deduction limitations, refundable payroll tax credits, and deferment of employer social security payments. However, the provisions did not have a material impact on our financial statements for the three months ended March 31, 2020.
8.     Fair Value of Financial Instruments
The FASB’s Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures, defines fair value and provides a hierarchal framework associated with the level of subjectivity used in measuring assets and liabilities at fair value. Our financial instruments consist primarily of cash and cash equivalents, trade and other receivables, trade payables, phantom stock unit awards, borrowings under the DIP Facility and long-term debt.
The carrying value of cash and cash equivalents, trade and other receivables, trade payables and borrowings under the DIP Facility are considered to be representative of their respective fair values due to the short-term nature of these instruments. The phantom stock unit awards are classified as liability awards and are carried at fair value in accordance with ASC Topic 718, Compensation—Stock Compensation.
Our Senior Notes are publicly registered and traded securities with observable market prices, which are defined by ASC Topic 820 as Level 2 inputs. However, as a result of the Chapter 11 Cases, there was minimal trading of our Senior Notes subsequent to the Petition Date. On the Effective Date, the Term Loan was repaid in full and all outstanding obligations under the Senior Notes were canceled in exchange for 94.25% of the proforma common equity.
9.     Earnings (Loss) Per Common Share
The following table presents a reconciliation of the numerators and denominators of the basic earnings per share and diluted earnings per share computations (amounts in thousands, except per share data):
 
Three months ended March 31,
 
2020
 
2019
Numerator (both basic and diluted):
 
 
 
Net loss
$
(69,104
)
 
$
(15,115
)
Denominator:
 
 
 
Weighted-average shares (denominator for basic earnings (loss) per share)
78,753

 
78,311

Dilutive effect of outstanding stock options, restricted stock and restricted stock unit awards

 

Denominator for diluted earnings (loss) per share
78,753

 
78,311

Loss per common share - Basic
$
(0.88
)
 
$
(0.19
)
Loss per common share - Diluted
$
(0.88
)
 
$
(0.19
)
Potentially dilutive securities excluded as anti-dilutive
4,794

 
4,189




21



10.    Stock-Based Compensation Plans
As of March 31, 2020, we had outstanding stock option and restricted stock awards with vesting based on time of service conditions; restricted stock unit awards with vesting based on time of service conditions, and in certain cases, subject to performance and market conditions; and phantom stock unit awards with vesting based on time of service, performance and market conditions, which are classified as liability awards under ASC Topic 718, Compensation—Stock Compensation since we granted these awards with the expectation to settle them in cash once vested. However, we temporarily discontinued the grants of any new equity-based incentive awards until after our emergence from the Chapter 11 Cases.
The following table summarizes the stock-based compensation expense recognized, by award type, and the compensation expense (benefit) recognized for phantom stock unit awards during the three months ended March 31, 2020 and 2019 (amounts in thousands):
 
Three months ended March 31,
 
2020
 
2019
Stock option awards
$
9

 
$
51

Restricted stock awards
133

 
114

Restricted stock unit awards
186

 
702

 
$
328

 
$
867

Phantom stock unit awards
$
(3
)
 
$
848

Upon our emergence from the Chapter 11 Cases in May 2020, all unvested equity-based incentive compensation awards vested in full, and settled in shares of our new post-emergence common stock.
Pursuant to the terms of the Plan, we adopted the Pioneer Energy Services Corp. 2020 Employee Incentive Plan (the “Employee Incentive Plan”) providing for the issuance from time to time, as approved by the Company’s new board of directors, of equity and equity-based awards with respect to the Common Stock in the aggregate and on a fully-diluted basis, of up to 1,198,074 shares of Common Stock, representing approximately 114% of the shares of Common Stock issued on the Effective Date, but representing 10% of the shares of Common Stock issued on the Effective Date on a fully-diluted basis. The shares of Common Stock issued under the Employee Incentive Plan in the future will dilute all of the shares of Common Stock issued on the Effective Date and all shares of Common Stock issued upon conversion of the Convertible Notes equally.
11.    Segment Information
We have five operating segments, comprised of two drilling services business segments (domestic and international drilling) and three production services business segments (well servicing, wireline services and coiled tubing services), which reflects the basis used by management in making decisions regarding our business for resource allocation and performance assessment, as required by ASC Topic 280, Segment Reporting.
Our domestic and international drilling services segments provide contract land drilling services to a diverse group of exploration and production companies through our three drilling divisions in the US and internationally in Colombia. We provide a comprehensive service offering which includes the drilling rig, crews, supplies, and most of the ancillary equipment needed to operate our drilling rigs.
Our well servicing, wireline services and coiled tubing services segments provide a range of production services to producers primarily in Texas and the Mid-Continent and Rocky Mountain regions, as well as in North Dakota, Louisiana and Mississippi.
The following tables set forth certain financial information for each of our segments and corporate (amounts in thousands):
 
As of and for the three months ended March 31,
 
2020
 
2019
Revenues:
 
 
 
Domestic drilling
$
35,891

 
$
38,009

International drilling
14,455

 
21,643

Drilling services
50,346

 
59,652




22



 
As of and for the three months ended March 31,
 
2020
 
2019
Well servicing
25,616

 
26,254

Wireline services
33,133

 
45,874

Coiled tubing services
5,227

 
14,788

Production services
63,976

 
86,916

Consolidated revenues
$
114,322

 
$
146,568

 
 
 
 
Operating costs:
 
 
 
Domestic drilling
$
23,865

 
$
22,469

International drilling
12,138

 
16,485

Drilling services
36,003

 
38,954

Well servicing
20,951

 
18,896

Wireline services
28,284

 
39,347

Coiled tubing services
6,784

 
11,388

Production services
56,019

 
69,631

Consolidated operating costs
$
92,022

 
$
108,585

 
 
 
 
Gross margin:
 
 
 
Domestic drilling
$
12,026

 
$
15,540

International drilling
2,317

 
5,158

Drilling services
14,343

 
20,698

Well servicing
4,665

 
7,358

Wireline services
4,849

 
6,527

Coiled tubing services
(1,557
)
 
3,400

Production services
7,957

 
17,285

Consolidated gross margin
$
22,300

 
$
37,983

 
 
 
 
Identifiable Assets:
 
 
 
Domestic drilling (1)
$
336,260

 
$
377,239

International drilling (1) (2)
51,443

 
44,565

Drilling services
387,703

 
421,804

Well servicing
107,747

 
121,861

Wireline services
66,712

 
96,297

Coiled tubing services
11,373

 
40,810

Production services
185,832

 
258,968

Corporate
42,199

 
56,319

Consolidated identifiable assets
$
615,734

 
$
737,091

 
 
 
 
Depreciation:
 
 
 
Domestic drilling
$
10,905

 
$
10,545

International drilling
1,301

 
1,343

Drilling services
12,206

 
11,888

Well servicing
4,781

 
4,882

Wireline services
3,077

 
4,075

Coiled tubing services
1,693

 
1,528

Production services
9,551

 
10,485

Corporate
227

 
280

Consolidated depreciation
$
21,984

 
$
22,653

 
 
 
 
 
 
 
 



23



 
As of and for the three months ended March 31,
 
2020
 
2019
Capital Expenditures:
 
 
 
Domestic drilling
$
3,241

 
$
8,242

International drilling
1,167

 
1,758

Drilling services
4,408

 
10,000

Well servicing
1,717

 
3,895

Wireline services
1,572

 
2,835

Coiled tubing services
163

 
1,524

Production services
3,452

 
8,254

Corporate
1

 
121

Consolidated capital expenditures
$
7,861

 
$
18,375

(1)
Identifiable assets for our drilling segments include the impact of a $32.9 million and $42.5 million intercompany balance, as of March 31, 2020 and 2019, respectively, between our domestic drilling segment (intercompany receivable) and our international drilling segment (intercompany payable).
(2)
Identifiable assets for our international drilling segment include five drilling rigs that are owned by our Colombia subsidiary and three drilling rigs that are owned by one of our domestic subsidiaries and leased to our Colombia subsidiary.
The following table reconciles the consolidated gross margin of our segments reported above to loss from operations as reported on the condensed consolidated statements of operations (amounts in thousands):
 
Three months ended March 31,
 
2020
 
2019
Consolidated gross margin
$
22,300

 
$
37,983

Depreciation
(21,984
)
 
(22,653
)
General and administrative
(14,655
)
 
(19,758
)
Pre-petition restructuring charges
(17,074
)
 

Impairment
(17,853
)
 
(1,046
)
Bad debt (expense) recovery, net
(727
)
 
(62
)
Gain on dispositions of property and equipment, net
717

 
1,075

Loss from operations
$
(49,276
)
 
$
(4,461
)
In April 2020, we closed our coiled tubing operations and idled all our coiled tubing equipment, which were subsequently placed as held for sale.
12.    Commitments and Contingencies
In connection with our operations in Colombia, our foreign subsidiaries routinely obtain bonds for bidding on drilling contracts, performing under drilling contracts, and remitting customs and importation duties. Based on historical experience and information currently available, we believe the likelihood of demand for payment under these bonds and guarantees is remote.
We are currently undergoing sales and use tax audits for multi-year periods. As of March 31, 2020 and December 31, 2019, our accrued liability was $2.1 million and $2.0 million, respectively, based on our estimate of the sales and use tax obligations that are expected to result from these audits. Due to the inherent uncertainty of the audit process, we believe that it is reasonably possible that we may incur additional tax assessments with respect to one or more of the audits in excess of the amount accrued. We believe that such an outcome would not have a material adverse effect on our results of operations or financial position. Because certain of these audits are in a preliminary stage, an estimate of the possible loss or range of loss from an adverse result in all or substantially all of these cases cannot reasonably be made.



24



Due to the nature of our business, we are, from time to time, involved in litigation or subject to disputes or claims related to our business activities, including workers’ compensation claims and employment-related disputes. Legal costs relating to these matters are expensed as incurred. In the opinion of our management, none of the pending litigation, disputes or claims against us will have a material adverse effect on our financial condition, results of operations or cash flow from operations.
Backstop Commitment Agreement
Prior to filing the Plan, we entered into a separate backstop commitment agreement with the Consenting Noteholders and certain members of our senior management (the “Backstop Commitment Agreement”), pursuant to which the Consenting Noteholders and certain members of our senior management committed to backstop approximately $118 million and $1.8 million, respectively, of new convertible bonds to be issued in a rights offering. As consideration for this commitment, we committed to make an aggregate payment of $9.4 million and $0.1 million to the Consenting Noteholders and certain members of our senior management, respectively, in the form of additional new convertible bonds, or in cash if the Backstop Commitment Agreement was terminated under certain circumstances as forth therein. As a result, we incurred a liability and expense at the time we entered into the Backstop Commitment Agreement for the aggregate amount of $9.6 million (the “Commitment Premium”) which was recognized in our condensed consolidated financial statements as of and for the three months ended March 31, 2020. The Commitment Premium was settled in conjunction with our emergence from Chapter 11 and the issuance of the Convertible Notes. For additional information concerning our bankruptcy proceedings under Chapter 11, see Note 2, Chapter 11 Cases and Subsequent Events.
13.    Guarantor/Non-Guarantor Condensed Consolidating Financial Statements
Our Senior Notes were fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all existing 100% owned domestic subsidiaries, except for Pioneer Services Holdings, LLC. The subsidiaries that generally operate our non-U.S. business concentrated in Colombia did not guarantee our Senior Notes. The non-guarantor subsidiaries did not have any payment obligations under the Senior Notes, the guarantees or the Indenture.
In the event of a bankruptcy, liquidation or reorganization of any non-guarantor subsidiary, such non-guarantor subsidiary would be obligated to pay the holders of its debt and other liabilities, including its trade creditors, before it would be able to distribute any of its assets to us. As of March 31, 2020, there were no restrictions on the ability of subsidiary guarantors to transfer funds to the parent company. The Senior Notes, the guarantees, and the Indenture were terminated on the Effective Date pursuant to the Plan.
As a result of the guarantee arrangements, we are presenting the following condensed consolidating balance sheets, statements of operations and statements of cash flows of the issuer, the guarantor subsidiaries and the non-guarantor subsidiaries.



25



PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES (DEBTOR IN POSSESSION)
CONDENSED CONSOLIDATING BALANCE SHEETS
(unaudited, in thousands)
 
March 31, 2020
 
Parent
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
7,937

 
$

 
$
7,520

 
$

 
$
15,457

Restricted cash
998

 

 

 

 
998

Receivables, net of allowance
157

 
84,517

 
18,420

 
(171
)
 
102,923

Intercompany receivable (payable)
(26,931
)
 
59,530

 
(32,599
)
 

 

Inventory

 
9,530

 
12,089

 

 
21,619

Assets held for sale

 
1,825

 

 

 
1,825

Prepaid expenses and other current assets
2,452

 
4,675

 
1,002

 

 
8,129

Total current assets
(15,387
)
 
160,077

 
6,432

 
(171
)
 
150,951

Net property and equipment
2,144

 
410,567

 
27,243

 

 
439,954

Investment in subsidiaries
508,145

 
41,392

 

 
(549,537
)
 

Deferred income taxes
38,948

 

 
9,264

 
(38,948
)
 
9,264

Operating lease assets
2,911

 
4,530

 
531

 

 
7,972

Other noncurrent assets
1,295

 
459

 
5,839

 

 
7,593

Total assets
$
538,056

 
$
617,025

 
$
49,309

 
$
(588,656
)
 
$
615,734

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
2,373

 
$
20,793

 
$
5,608

 
$

 
$
28,774

Deferred revenues

 
428

 
569

 

 
997

Commitment premium
9,584

 

 

 

 
9,584

Debtor in possession financing
4,000

 

 

 

 
4,000

Accrued expenses
6,738

 
41,742

 
1,364

 
(171
)
 
49,673

Total current liabilities
22,695

 
62,963

 
7,541

 
(171
)
 
93,028

Long-term debt, less unamortized discount and debt issuance costs
170,921

 

 

 

 
170,921

Noncurrent operating lease liabilities
2,583

 
3,475

 
376

 

 
6,434

Deferred income taxes

 
42,204

 

 
(38,948
)
 
3,256

Other noncurrent liabilities
145

 
238

 

 

 
383

Total liabilities not subject to compromise
196,344

 
108,880

 
7,917

 
(39,119
)
 
274,022

Liabilities subject to compromise
306,419

 

 

 

 
306,419

Total stockholders’ equity
35,293

 
508,145

 
41,392

 
(549,537
)
 
35,293

Total liabilities and stockholders’ equity
$
538,056

 
$
617,025

 
$
49,309

 
$
(588,656
)
 
$
615,734

 
 
 
 
 
 
 
 
 
 
 
December 31, 2019
 
Parent
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
14,461

 
$

 
$
10,158

 
$

 
$
24,619

Restricted cash
998

 

 

 

 
998

Receivables, net of allowance
107

 
92,394

 
30,908

 
117

 
123,526

Intercompany receivable (payable)
(28,664
)
 
64,485

 
(35,821
)
 

 

Inventory

 
10,325

 
12,128

 

 
22,453

Assets held for sale

 
3,447

 

 

 
3,447

Prepaid expenses and other current assets
2,849

 
4,122

 
898

 

 
7,869

Total current assets
(10,249
)
 
174,773

 
18,271

 
117

 
182,912

Net property and equipment
2,374

 
441,567

 
27,229

 

 
471,170

Investment in subsidiaries
547,123

 
47,953

 

 
(595,076
)
 

Deferred income taxes
44,224

 

 
11,540

 
(44,224
)
 
11,540

Operating lease assets
3,114

 
3,581

 
569

 

 
7,264

Other noncurrent assets
506

 
562

 

 

 
1,068

Total assets
$
587,092

 
$
668,436

 
$
57,609

 
$
(639,183
)
 
$
673,954

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
1,811

 
$
24,436