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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-Q

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

For the quarterly period ended ~~September~~March 3031, ~~2020~~2021

☐ 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 001-32693

____________________________________________________________________________________________________

BASIC ENERGY SERVICES, INC.

(Exact name of registrant as specified in its charter)

____________________________________________________________________________________________________


Delaware			54-2091194
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

801 Cherry Street, Suite 2100, Fort Worth, Texas			76102
(Address of principal executive offices)			(Zip code)

(817) 334-4100

(Registrant’s telephone number, including area code)

______________________________________________________________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	BASX*	The OTCQX Best Market*

* Until December 2, 2019, Basic Energy Services, Inc.’s common stock traded on the New York Stock Exchange under the symbol “BAS”. On December 3, 2019, Basic Energy Service, Inc.’s common stock began trading on the OTCQX® Best Market tier of the OTC Markets Group Inc. Deregistration under Section 12(b) of the Act became effective on March 16, 2020.

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 ☒

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~~ Yes☒No☐

There were 24,899,932 shares of the registrant’s common stock outstanding as of ~~November 2~~May 14, ~~2020~~2021.

BASIC ENERGY SERVICES, INC.

Index to Form 10-Q

Part I. FINANCIAL INFORMATION			1
Item 1. Financial Statements			1
Item 1. Financial Statements (Unaudited)			1
Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019			1
Condensed Consolidated Statements of Operations (Unaudited)			1
Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019 (Unaudited)			2
Condensed Consolidated Balance Sheets (Unaudited)			2
Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2020 and 2019 (Unaudited)			3
Condensed Consolidated Statements of Cash Flows (Unaudited)			3
Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (Unaudited)			4
Condensed Consolidated Statements of Stockholders’ Deficit (Unaudited)			4
Notes to the Unaudited Consolidated Financial Statements			5
Notes to Unaudited Condensed Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2614
Management’s Overview			26
Item 3. Quantitative and Qualitative Disclosures About Market Risk			20
Segment Overview			27
Item 4. Controls and Procedures			21
Operating Cost Overview			29
Part II. OTHER INFORMATION			21
Critical Accounting Policies and Estimates			29
Item 1. Legal Proceedings			21
Results of Operations			29
Item 1A. Risk Factors			21
Liquidity and Capital Resources			32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			21
Other Matters			34
Item 5. Other Information			21
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 6. Exhibits			22
Item 4. Controls and Procedures			34
Signatures			24
Part II. OTHER INFORMATION			35
Item 1. Legal Proceedings			35
Item 1A. Risk Factors			35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			38
Item 5. Other Information			38
Item 6. Exhibits			39
Signatures			41

CAUTIONARY STATEMENT

REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are subject to risks and uncertainties. These statements may relate to, but are not limited to, information or assumptions about us, our capital and other expenditures, dividends, financing plans, capital structure, cash flows, pending legal or regulatory proceedings and claims, future economic performance, operating income, costs savings and management's plans, strategies, goals and objectives for future operations and goals. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things, the risk factors discussed in this quarterly report, and in our most recent Annual Report on Form 10-K and other factors, most of which are beyond our control.

The words “believe,” “estimate,” “expect,” “anticipate,” “project,” “intend,” “plan,” “seek,” “could,” “should,” “may,” “potential” and similar expressions are intended to identify forward-looking statements. All statements other than statements of current or historical fact contained in this quarterly report are forward-looking statements. Although we believe that the forward-looking statements contained in this quarterly report are based upon reasonable assumptions, the forward-looking events and circumstances discussed in this quarterly report may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

Important factors that may affect our expectations, estimates or projections include:

•our dependency on domestic oil and natural gas industry spending;

•local and global impacts of the COVID-19 pandemic;

•the sustained decline in, or substantial volatility of, oil and natural gas prices, and any related changes in expenditures by our customers;

•our ~~ability~~access to ~~successfully~~current ~~execute,~~or ~~manage~~future ~~and~~financing ~~integrate acquisitions~~arrangements, including ability to raise funds in the ~~recent~~capital ~~acquisition~~market ofor ~~C&J~~from ~~Well~~other ~~Services,~~financing ~~Inc.~~sources;

•substantial doubt about our ability to continue as a going concern, including our ability to reduce operating, administrative, and capital expenditures;

•our ability to satisfy our liquidity needs, including our ability to generate sufficient liquidity or cash flow or to obtain sufficient financing to fund our operations or otherwise meet our obligations as they come due in the future;

•~~local~~our ~~and~~dependence ~~global~~on ~~impacts~~collections offrom ~~the~~our ~~COVID-19~~customers ~~pandemic~~to provide our operating cash flows;

•negative impacts of the delisting of our common stock from the New York Stock Exchange;

•competition within our industry;

•energy efficiency and technology trends;

•potential future asset impairments;

•our ability to fund our capital expenditure requirements;

•our borrowing capacity, covenant compliance under instruments governing any of our existing or future indebtedness and cash flows;

•a potential future downgrade of our credit rating;

•operating hazards, including cyber-security and other risks incidental to our services;

•environmental and other governmental regulations;

•our ability to successfully execute, manage and integrate acquisitions;

•the impact of Ascribe's voting control of the Company;

•our dependency on several significant customers;

•the effects of future acquisitions or dispositions on our business;

•uncertainties about our ability to successfully execute our business and financial plans and strategies;

•our access to current or future financing arrangements, including ability to raise funds in the capital market or from other financing sources;

•changes in customer requirements in markets or industries we serve;

•availability and cost of equipment;

•our ability to maintain acceptable pricing for our services;

•our ability to reduce administrative and capital expenses;

•general economic and market conditions;

•operating hazards and other risks incidental to our services;

•energy efficiency and technology trends;

•our ability to replace or add workers at economic rates;

•~~our~~the ~~borrowing~~impact ~~capacity, covenant compliance under instruments governing any~~ of ~~our~~regulations ~~existing~~over orclimate ~~future~~change, ~~indebtedness~~hydraulic fracturing, and ~~cash~~other ~~flows;~~environmental ~~and~~regulations;

•~~environmental~~changes in regulatory, geopolitical, social, economic, tax or monetary policies and other ~~governmental~~factors ~~regulations.~~resulting from the transition to the Biden administration and Democratic control of Congress;

•the limitations on net operating loss carryforwards following the March 2020 ownership change;

•negative impacts of the delisting of our common stock from the New York Stock Exchange; and

•other risks associated with the current trading price and potential dilution of our common stock.

Our forward-looking statements speak only as of the date of this quarterly report. Unless otherwise required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

Basic Energy Services, Inc.

Condensed Consolidated ~~Balance~~Statements ~~Sheets~~ of Operations

(~~in thousands, except share and per share data~~Unaudited)

	September 30, 2020				December 31, 2019
			Three Months Ended March 31,
ASSETS	(Unaudited)
(dollars in thousands, except per share amounts)			2021				2020
Current assets:
Revenues			$	94,347			$	128,403
Cash and cash equivalents	$	6,806			$	36,217
Costs of services, excluding depreciation and amortization			77,171				102,175
Restricted cash	7,430				—
Selling, general and administrative			18,054				26,232
Trade accounts receivable, net of allowances of $4,755 and $2,208, at September 30, 2020, and December 31, 2019, respectively	69,920				99,626
Depreciation and amortization			10,797				14,765
Inventories, net	8,997				20,262
Impairments and other charges			7,258				99,694
Prepaid expenses	11,403				6,407
Acquisition related costs			—				11,684
Assets held for sale	10,918				55,149
Gain on disposal of assets			(1,993)				(37)
Other current assets	2,717				2,727
Total operating expenses			111,287				254,513
Total current assets	118,191				220,388
Operating loss			(16,940)				(126,110)
Property and equipment, net	236,539				297,113
Interest expense, net			(12,024)				(10,557)
Operating lease right of use assets	10,584				14,540
Loss on derivative			(4,798)				(3,552)
Deferred debt costs, net of amortization	1,045				2,198
Loss from continuing operations before income taxes			(33,762)				(140,219)
Goodwill	8,320				—
Income tax benefit			(287)				(3,790)
Intangible assets, net of amortization	6,301				2,603
Loss from continuing operations			(33,475)				(136,429)
Other assets	15,725				13,632
Loss from discontinued operations			(3,797)				(8,452)
Total assets	$	396,705			$	550,474
Net loss			$	(37,272)			$	(144,881)
LIABILITIES AND STOCKHOLDERS' EQUITY
Loss from continuing operations per share, basic and diluted			$	(1.35)			$	(5.48)
Current liabilities:
Loss from discontinued operations per share, basic and diluted			$	(0.15)			$	(0.34)
Accounts payable	$	63,954			$	58,022
Net loss per share, basic and diluted			$	(1.50)			$	(5.82)
Accrued expenses	65,178				41,962
Current portion of long-term debt	7,609				18,738
Derivative liability	5,797				—
Accrued short-term insurance reserves	17,860				15,002
Operating lease right-of-use liabilities, current portion	2,125				4,906
Liabilities associated with assets held for sale	869				5,248
Other current liabilities	6,716				4,306
Total current liabilities	170,108				148,184
Long-term debt, net of discounts and deferred financing costs of $23,412 and $8,795, at September 30, 2020, and December 31, 2019, respectively	304,050				308,365
Accrued long-term insurance reserves	26,685				20,204
Deferred compensation	7,063				10,838
Operating lease right-of-use liabilities, long-term portion	9,046				9,634
Asset retirement obligations	10,871				9,044
Deferred tax liability	666				—
Other long-term liabilities	2,281				3,082
Total liabilities	530,770				509,351
Series A Participating Preferred Stock; $0.01 par value; 5,000,000 authorized and 118,805 and zero shares outstanding at September 30, 2020, and December 31, 2019, respectively	22,000				—
Stockholders' equity (deficit):
Common stock; $0.01 par value; 198,805,000 and 80,000,000 shares authorized at September 30, 2020, and December 31, 2019, respectively; 27,912,059 and 27,912,059 shares issued and 24,899,932 and 24,904,485 shares outstanding at September 30, 2020, and December 31, 2019, respectively	279				279
Additional paid-in capital	493,717				472,594
Retained deficit	(644,727)				(423,169)
Treasury stock, at cost, 3,012,127 and 3,007,574 shares at September 30, 2020, and December 31, 2019, respectively	(5,334)				(8,581)
Total stockholders' equity (deficit)	(156,065)				41,123
Total liabilities and stockholders' equity (deficit)	$	396,705			$	550,474

See accompanying notes to unaudited condensed consolidated financial statements.

Basic Energy Services, Inc.

Condensed Consolidated ~~Statements~~Balance ~~of Operations~~Sheets

(Unaudited)

(in thousands, except per share amounts)


(dollars in thousands, except share data)	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	4,889	$	1,902
Restricted cash	15,513		8,083
Trade accounts receivable, net of allowance of $1,805 and $3,053, respectively	53,846		60,351


Inventories	8,546		8,716
Assets held for sale	7,344		4,383
Prepaid expenses and other current assets	11,925		12,010

Total current assets	102,063		95,445
Property and equipment, net of accumulated depreciation of $179,801 and $172,296, respectively	197,766		210,563
Operating lease right-of-use assets	8,896		9,614
Intangible assets, net of accumulated amortization of $1,222 and $1,099, respectively	6,055		6,178



Other assets, net	16,319		27,273
Total assets	$	331,099	$	349,073
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	68,463	$	64,944
Accrued expenses	67,327		55,264
Current portion of insurance reserves	24,181		22,587

Current portion of finance lease liabilities	6,839		7,520

Current portion of operating lease liabilities	1,800		1,936
Other current liabilities	2,058		8,371
Total current liabilities	170,668		160,622
Long-term debt, net	327,572		317,763
Insurance reserves	19,478		19,636
Asset retirement obligations	10,157		9,697
Operating lease liabilities	8,195		8,488
Other long-term liabilities	12,881		13,499


Total liabilities	548,951		529,705
Series A Participating Preferred Stock; $0.01 par value; 5,000,000 authorized and 118,805 outstanding	22,000		22,000
Stockholders' deficit:
Common stock; $0.01 par value; 198,805,000 shares authorized; 27,912,059 shares issued and 24,899,932 shares outstanding	279		279
Additional paid-in capital	493,819		493,767
Retained deficit	(728,616)		(691,344)
Treasury stock, at cost, 3,012,127 shares	(5,334)		(5,334)
Total stockholders' deficit	(239,852)		(202,632)
Total liabilities and stockholders' deficit	$	331,099	$	349,073

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues:
Well Servicing	$	53,211	$	57,439	$	158,670	$	177,941
Water Logistics	30,705		48,451		108,340		155,083
Completion & Remedial Services	11,484		38,273		46,430		112,304
Total revenues	95,400		144,163		313,440		445,328
Expenses:
Well Servicing	44,766		48,111		134,968		143,081
Water Logistics	28,506		34,783		87,207		107,611
Completion & Remedial Services	11,503		25,685		42,331		78,070
General and administrative, including stock-based compensation of $68 and $1,165 in the three months ended September 30, 2020 and 2019, respectively, and $1,482 and $7,767 in the nine months ended September 30, 2020 and 2019, respectively	25,451		28,529		90,958		90,471
Impairments	1,830		—		101,458		—
Depreciation and amortization	12,976		17,819		40,593		51,297
(Gain) loss on disposal of assets	(5,190)		738		(5,700)		2,014
Total expenses	119,842		155,665		491,815		472,544
Operating loss	(24,442)		(11,502)		(178,375)		(27,216)
Other income (expense):
Interest expense	(11,683)		(11,584)		(35,077)		(32,556)
Interest income	—		113		63		472
Gain on derivative	6,966		—		3,916		—
Other income	46		212		107		558
Loss from continuing operations before income taxes	(29,113)		(22,761)		(209,366)		(58,742)
Income tax (expense) benefit	(40)		(2,016)		4,058		(137)
Loss from continuing operations	(29,153)		(24,777)		(205,308)		(58,879)
Loss from discontinued operations	(2,926)		(14,100)		(16,250)		(35,251)
Net loss	$	(32,079)	$	(38,877)	$	(221,558)	$	(94,130)
Net loss from continuing operations per share, basic and diluted	$	(1.17)	$	(0.97)	$	(8.23)	$	(2.22)
Net loss from discontinued operations per share, basic and diluted	$	(0.12)	$	(0.55)	$	(0.65)	$	(1.33)
Net loss per share of common stock, basic and diluted	$	(1.29)	$	(1.52)	$	(8.88)	$	(3.55)

See accompanying notes to unaudited condensed consolidated financial statements.

See accompanying notes to unaudited consolidated financial statements.

Basic Energy Services, Inc.

Condensed Consolidated Statements of ~~Stockholders’~~Cash ~~Equity (Deficit)~~Flows

(~~in thousands, except share data~~Unaudited)

	Common Stock				Additional			Treasury				Total
	Three Months Ended March 31,
	Issued		Common			Paid-In			Treasury	Treasury		Retained		Stockholders'
(in thousands)	2021		2020
	Shares		Stock			Capital			Shares	Stock		Deficit		Equity (Deficit)
Cash flows from operating activities:
Balance - December 31, 2019	27,912,059		$	279		$	472,594		3,007,574	$	(8,581)	$	(423,169)	$	41,123
Net loss	$	(37,272)	$	(144,881)
Issuances of restricted stock	—		—			—			—	—		—		—
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Amortization of equity-classified share-based compensation	—		—			1,336			—	—		—		1,336
Depreciation and amortization	10,797		14,765
Treasury stock, net	—		—			(3,263)			(72,879)	3,256		—		(7)
Goodwill and other long-lived asset impairments	7,277		97,115
Capital contribution	—		—			22,904			—	—		—		22,904
Loss on derivative	4,798		3,552
Net loss	—		—			—			—	—		(144,881)		(144,881)
Inventory write-downs	—		4,846
Balance - March 31, 2020 (unaudited)	27,912,059		$	279		$	493,571		2,934,695	$	(5,325)	$	(568,050)	$	(79,525)
Accretion of asset retirement obligations	468		467
Issuances of restricted stock	—		—			—			—	—		—		—
Provision for expected credit losses, net of recoveries	(576)		1,567
Amortization of equity-classified share-based compensation	—		—			78			—	—		—		78
Amortization of debt discounts and debt issuance costs	2,273		1,108
Treasury stock, net	—		—			—			38,664	(9)		—		(9)
Stock-based compensation	52		1,336
Net loss	—		—			—			—	—		(44,598)		(44,598)
Loss (gain) on disposal of assets	(2,544)		2,619
Balance - June 30, 2020 (unaudited)	27,912,059		$	279		$	493,649		2,973,359	$	(5,333)	$	(612,648)	$	(124,053)
Deferred income taxes	(262)		(3,674)
Issuances of restricted stock	—		—			—			—	—		—		—
Changes in operating assets and liabilities, net of acquisitions:
Amortization of equity-classified share-based compensation	—		—			68			—	—		—		68
Accounts receivable	7,081		17,473
Treasury stock, net	—		—			—			38,768	(1)		—		(1)
Inventories	170		700
Net loss	—		—			—			—	—		(32,079)		(32,079)
Prepaid expenses and other assets	166		(1,800)
Balance - September 30, 2020 (unaudited)	27,912,059		$	279		$	493,717		3,012,127	$	(5,334)	$	(644,727)	$	(156,065)
Accounts payable	3,432		(5,839)
	Common Stock				Additional			Treasury				Total
Accrued expenses	12,277		9,702
	Issued		Common			Paid-In			Treasury	Treasury		Retained		Stockholders'
Other liabilities	(464)		(1,770)
	Shares		Stock			Capital			Shares	Stock		Deficit		Equity
Net cash provided by (used in) operating activities	7,673		(2,714)
Balance - December 31, 2018	26,990,034		$	270		$	464,264		242,322	$	(3,835)	$	(241,271)	$	219,428
Cash flows from investing activities:
Issuances of restricted stock	277,865		3			(3)			—	—		—		—
Capital expenditures	(331)		(5,595)
Amortization of equity-classified share-based compensation	—		—			3,275			—	—		—		3,275
Proceeds from sale of assets	5,460		40,274
Treasury stock, net	—		—			(163)			68,227	(180)		—		(343)
Payments to acquire business, net of cash acquired	—		(59,350)
Net loss	—		—			—			—	—		(27,476)		(27,476)
Net cash provided by (used in) investing activities	5,129		(24,671)
Balance - March 31, 2019 (unaudited)	27,267,899		$	273		$	467,373		310,549	$	(4,015)	$	(268,747)	$	194,884
Cash flows from financing activities:
Issuances of restricted stock	644,160		6			(6)			—	—		—		—
Proceeds from issuance of long-term debt	—		23,000
Amortization of equity-classified share-based compensation	—		—			3,329			—	—		—		3,329
Repayments of long-term debt	(2,385)		(8,999)
Treasury stock, net	—		—			—			596,194	(1,340)		—		(1,340)
Repurchases of common stock	—		(6)
Net loss	—		—			—			—	—		(27,777)		(27,777)
Payments of debt issuance costs	—		(225)
Balance - June 30, 2019 (unaudited)	27,912,059		$	279		$	470,696		906,743	$	(5,355)	$	(296,524)	$	169,096
Other financing activities	—		(1,525)
Issuances of restricted stock	—		—			—			—	—		—		—
Net cash provided by (used in) financing activities	(2,385)		12,245
Amortization of equity-classified share-based compensation	—		—			1,165			—	—		—		1,165
Net increase (decrease) in cash, cash equivalents and restricted cash	10,417		(15,140)
Treasury stock, net	—		—			(213)			2,058,631	(3,226)		—		(3,439)
Cash, cash equivalents and restricted cash - beginning of period	9,985		36,217
Net loss	—		—			—			—	—		(38,877)		(38,877)
Cash, cash equivalents and restricted cash - end of period	$	20,402	$	21,077
Balance - September 30, 2019 (unaudited)	27,912,059		$	279		$	471,648		2,965,374	$	(8,581)	$	(335,401)	$	127,945
Supplemental cash flow information and non-cash investing and financing activities:
Interest paid	$	1,570	$	1,229
Income taxes paid, net of refunds	(5)		(119)
Fair value of long-term debt issued to settle derivative obligation	9,500		—
Operating lease liabilities incurred from obtaining right-of-use assets	719		1,007
Finance lease liabilities incurred from obtaining right-of-use assets	—		498
Capital expenditures included in accounts payable	(87)		(1,594)
Issuance of Series A Participating Preferred Stock	—		22,000
Recognition of derivative liability	—		9,713

See accompanying notes to unaudited condensed consolidated financial statements.

Basic Energy Services, Inc.

Condensed Consolidated Statements of ~~Cash~~Stockholders’ ~~Flows~~Deficit

(Unaudited)

(in thousands)


	Common Stock			Additional Paid-in Capital			Treasury		Retained Deficit			Total Stockholders' Deficit
(in thousands)	Shares	Amount						Shares			Amount
Balance at December 31, 2020	27,912	$	279		$	493,767		3,012	$	(5,334)		$	(691,344)	$	(202,632)

Amortization of stock-based compensation	—	—			52			—	—			—		52


Net loss	—	—			—			—	—			(37,272)		(37,272)
Balance at March 31, 2021	27,912	$	279		$	493,819		3,012	$	(5,334)		$	(728,616)	$	(239,852)













	Common Stock			Additional Paid-in Capital			Treasury		Retained Deficit			Total Stockholders' Deficit
	Shares	Amount						Shares			Amount
Balance at December 31, 2019	27,912	$	279		$	472,594		3,008	$	(8,581)		$	(423,169)	$	41,123

Amortization of stock-based compensation	—	—			1,336			—	—			—		1,336
Purchase of treasury stock	—	—			(3,263)			(73)	3,256			—		(7)
Acquisition related capital contribution	—	—			22,904			—	—			—		22,904
Net loss	—	—			—			—	—			(144,881)		(144,881)
Balance at March 31, 2020	27,912	$	279		$	493,571		2,935	$	(5,325)		$	(568,050)	$	(79,525)

	Nine Months Ended September 30,
	2020		2019
Cash flows from operating activities:
Net loss	$	(221,558)	$	(94,130)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Depreciation and amortization	40,593		85,668
Asset impairment	98,943		—
Inventory and other write-downs	4,846		7,080
(Gain) on derivative	(3,916)		—
Accretion on asset retirement obligation	1,445		607
Change in allowance for doubtful accounts	2,547		711
Amortization of deferred financing costs	2,794		1,745
Amortization of debt discount	3,837		789
Non-cash compensation	1,216		8,237
(Gain) / Loss on disposal of assets	(2,868)		2,634
Deferred income taxes	(3,946)		—
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	65,844		20,401
Inventories	4,077		4,546
Prepaid expenses and other current assets	(3,212)		2,404
Other assets	895		(8)
Accounts payable	(3,160)		(31,617)
Income tax receivable	—		1,574
Other liabilities	(1,955)		131
Accrued expenses	13,800		17,740
Net cash provided by operating activities	222		28,512
Cash flows from investing activities:
Purchase of property and equipment	(6,872)		(46,263)
Proceeds from sale of assets	51,412		7,122
Payments for other long-term assets	(1,144)		(411)
Payments for businesses, net of cash acquired	(59,350)		—
Net cash used in investing activities	(15,954)		(39,552)
Cash flows from financing activities:
Proceeds from debt	38,000		—
Repayments of debt	(42,407)		(23,209)
Change in treasury stock including restricted stock issuances	(15)		(5,122)
Deferred loan costs and other financing activities	(1,827)		(469)
Net cash (used in) financing activities	(6,249)		(28,800)
Net decrease in cash, cash equivalents and restricted cash	(21,981)		(39,840)
Cash, cash equivalents and restricted cash - beginning of period	36,217		90,300
Cash, cash equivalents and restricted cash - end of period	$	14,236	$	50,460
Noncash investing and financing activity:
Capital leases and notes issued for equipment	$	498	$	7,943
Change in accrued property and equipment	88		310
Issuance of Series A Participating Preferred Stock	22,000		—
Issuance of derivative liability	9,713		—
Change in asset retirement obligations	$	8	$	6,420

See accompanying notes to unaudited condensed consolidated financial statements.

See accompanying notes to unaudited consolidated financial statements.

BASIC ENERGY SERVICES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

~~September~~1. ~~30,~~Basis ~~2020 (unaudited)~~ of Presentation and Current Environment

1.Description ~~Basis~~ of ~~Presentation and Nature of Operations~~Business

Basic Energy Services, Inc. and subsidiaries (“Basic”, the “Company”, “we”, “us” or “our”) provides wellsite services essential to maintaining production from the oil and gas wells within its operating areas. The Company's operations are managed regionally and are concentrated in major United States onshore oil-producing regions located in Texas, California, New Mexico, Oklahoma, Arkansas, Louisiana, Wyoming, North Dakota, Colorado, and Montana. Our operations are focused in prolific basins that have historically exhibited strong drilling and production economics in recent years as well as natural gas-focused shale plays characterized by prolific reserves. Specifically, the Company has a significant presence in the Permian Basin, Bakken, Los Angeles and San Joaquin Basins, Eagle Ford, Haynesville and Powder River Basin.

Basis of Presentation

~~The~~These ~~accompanying~~ unaudited condensed consolidated financial statements ~~of Basic Energy Services, Inc. and subsidiaries (“Basic” or the “Company”)~~ have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) ~~for~~and ~~interim~~pursuant ~~financial~~to ~~reporting.~~the ~~Accordingly,~~rules ~~they~~and doregulations ~~not include all~~ of the ~~information~~U.S. Securities and ~~notes~~Exchange ~~required~~Commission by(“SEC”) ~~accounting principles generally accepted in the United States~~ for ~~complete~~interim financial ~~statements~~reporting. ~~Certain~~Accordingly, certain information ~~relating to the Company's organization~~ and ~~footnote~~ disclosures normally included in our annual financial statements ~~prepared in accordance with GAAP~~ have been condensed or omitted ~~in this Quarterly Report on Form 10-Q in accordance with GAAP and financial statement requirements promulgated by the U~~.S. ~~Securities~~Therefore, ~~and~~these ~~Exchange~~unaudited ~~Commission~~condensed ~~(“SEC”). The notes to the~~ consolidated financial statements ~~(unaudited)~~ should be read in conjunction with ~~the~~our ~~notes~~audited ~~to the~~ consolidated financial statements ~~contained~~included in ~~the~~our ~~Company’s~~ Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020. ~~In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair presentation have been made in the accompanying unaudited financial statements.~~

~~Nature~~In the opinion of ~~Operations~~ management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature considered necessary for a fair presentation of the results of operations, financial position and cash flows of the Company and its subsidiaries for the periods presented and are not indicative of the results that may be expected for a full year. The Company's financial statements have been prepared on a consolidated basis and all intercompany accounts and transactions have been eliminated.

~~The~~Current ~~Company provides a wide range of wellsite services to oil and natural gas drilling and producing companies~~Environment, ~~including~~Liquidity ~~Well Servicing, Water Logistics~~ and ~~Completion~~Going & Remedial Services. These services are primarily provided by the Company's fleet of equipment. The Company’s operations are concentrated in major United States onshore oil and natural gas producing regions located in Texas, California, New Mexico, Oklahoma, Arkansas, Kansas, Louisiana, Wyoming, North Dakota and Colorado. The Company's scope of operations was expanded effective beginning March 9, 2020, with the acquisition of C&J Well Services, Inc. See Note 3. Acquisition, for further discussion.Concern

~~Principles~~Demand for services offered by our industry is a function of ~~Consolidation~~our customers’ willingness and ability to make operating and capital expenditures to explore for, develop and produce hydrocarbons in the United States. Our customers’ expenditures are affected by both current and expected levels of commodity prices. Industry conditions during 2021 continue to be influenced by factors that impacted the supply and demand of the global oil markets in 2020, primarily the outbreak of the novel coronavirus ("COVID-19") and the resulting lower demand for oil. The increased price of West Texas Intermediate oil ("WTI") in the first quarter of 2021 increased our customers' activity levels; however, we continue to maintain discipline to only offer our services into the market at profitable job margins, which we began to realize in the second half of the first quarter. This trend has continued into the second quarter. Our first quarter results were also negatively impacted by the severe winter storm that affected our Texas operating locations in February 2021.

~~The~~As ~~accompanying~~a ~~consolidated~~result ~~financial~~of ~~statements~~weak ~~include~~energy ~~the~~sector ~~accounts~~conditions ofthat began in 2020 and the ~~Company's~~resulting ~~subsidiaries,~~lower demand for ~~which~~our ~~the~~services, ~~Company~~our ~~holds~~customer apricing, ~~majority~~our ~~voting~~operating ~~interest.~~results, ~~All~~our ~~intercompany~~working ~~transactions~~capital and ~~balances~~our operating cash flows have been ~~eliminated~~negatively impacted. During the last half of 2020, we had difficulty paying for our contractual obligations as they came due, and we continue to have this difficulty in 2021.

Management has taken several steps to generate additional liquidity, including reducing operating and administrative costs, employee headcount reductions, closing operating locations, implementing employee furloughs, other cost reduction measures, and the suspension of growth capital expenditures. The decline in customers’ demand for our services has had a material adverse impact on the financial condition of the Company, resulting in recurring losses from operations, a net capital deficiency, and liquidity constraints that raise substantial doubt about the Company's ability to continue as a going concern within one year after the May 17, 2021 issuance date of these financial statements. Other ~~Reclassifications~~steps that we may or are implementing to attempt to alleviate this substantial doubt include additional sales of non-strategic assets, obtaining waivers of debt covenant requirements from our lenders, restructuring or refinancing our debt agreements, or obtaining equity financing. In addition, we had a significant contractual obligation to pay cash or issue additional 10.75% senior secured notes due 2023 (the "Senior Notes") to our largest shareholder, Ascribe III Investments LLC ("Ascribe"), resulting from our acquisition of CJWS. On March 31, 2021, the Company negotiated a settlement of this obligation with Ascribe in exchange for issuing additional Senior Notes to Ascribe with an aggregate par value of $47.5 million.

~~Certain~~On ~~reclassifications~~April ~~have~~15, ~~been~~2021, ~~made~~the toCompany ~~prior~~announced ~~period~~it ~~amounts~~elected to ~~conform~~utilize to the ~~current~~30-day grace period ~~presentation.~~under Athe ~~majority~~terms of the reclassifications were related to discontinued operations. These reclassifications do not impact net loss and do not reflect a material change to the information previously presented in our consolidated financial statements. See Note 4. Discontinued Operations for further discussion on amounts included in loss from discontinued operations.

Estimates, Risks and Uncertainties

Preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management uses historical and other pertinent information to determine these estimates. Actual results could differ from those estimates. Areas where critical accounting estimates are made by management include impairments of long-lived assets, certain financial instruments, acquisition purchase price allocation, litigation, and self-insured risk reserves. For further discussion of impairments of long-lived assets, see Note 14. Impairments.

Inventories

For rental and fishing tools, inventories consisting mainly of grapples and controls are stated at lower of cost or net realizable value. Other inventories, consisting mainly of manufacturing raw materials, rig components, repair parts, drilling and completion materials and gravel, are held for use in the operations of the Company and are stated at lower of cost or net realizable value, with cost being determined on the first-in, first-out method.

In addition to comparing the carrying amount of inventory to its market value, the Company also makes a comparison between volume of inventory and demand for the ultimate production into which inventory will be

~~converted~~indenture ~~and~~governing ~~increases~~its ~~reserves~~Senior ~~for~~Notes ~~excess~~with ~~and~~respect ~~obsolete~~to ~~inventory~~a $16.3 million ~~For~~interest ~~further~~payment ~~discussion~~(the on"Senior ~~impairments~~Notes ofInterest ~~inventory~~Payment") ~~see~~due ~~Note~~that 14day. ~~Impairments.~~The Company believed it was in the best interests of all stakeholders to use the grace period to continue its ongoing discussions with its debtholders regarding strategic alternatives to improve the Company’s long-term capital structure.

~~Assets~~The ~~Held~~Company ~~for~~also ~~Sale~~announced it had entered into a Forbearance Agreement (the "ABL Forbearance Agreement") on April 14, 2021 with a majority of the lenders under its revolving credit facility who agreed to forbear from exercising remedies in respect of certain events of default thereunder, including the failure to pay interest on the Senior Notes, until April 28, 2021 (subject to certain early termination events) (the "ABL Forbearance Period").

~~Assets~~On ~~are~~April ~~classified~~28, as2021, ~~held~~the ~~for~~Company ~~sale~~entered ~~when,~~into ~~among~~the ~~other~~Limited ~~factors,~~Consent ~~they~~and ~~are~~First ~~identified~~Amendment ~~and~~to ~~marketed~~the ~~for~~ABL ~~sale~~Forbearance inAgreement ~~their~~(the ~~present~~“ABL ~~condition,~~Forbearance ~~management~~Amendment”) iswith ~~committed~~a tomajority ~~their~~of ~~disposal,~~its ~~and~~lenders ~~the~~under ~~sale~~its ofrevolving ~~the~~credit ~~asset~~facility iswho ~~probable~~agreed ~~within~~to ~~one~~extend ~~year.~~the ~~During~~ABL ~~2020~~Forbearance Period to May 15, ~~the~~2021 ~~Company~~and ~~classified~~consent to ~~assets~~the ~~held~~incurrence ~~for~~of ~~sale~~the ~~$3.9~~New ~~million~~Term ofLoan ~~certain~~Facility ~~rig~~(as ~~construction~~defined ~~assets~~below), ~~associated~~if ~~with~~the ~~our~~Company ~~Taylor~~completed ~~manufacturing~~certain ~~facility~~asset sales, amended the ~~majority~~indenture ofgoverning ~~which~~its ~~are~~Senior ~~expected~~Notes to beallow ~~sold~~for in the ~~fourth~~incurrence ~~quarter~~ of ~~2020.~~the ~~Also~~New ~~included~~Term inLoan ~~assets~~Facility ~~classified~~and, asobtained ~~held~~a forbearance for ~~sale~~certain ~~were~~of ~~certain~~its ~~property~~other indebtedness, ~~plant~~as ~~and~~applicable. ~~equipment~~The ~~assets~~Company ofsatisfied ~~our~~these ~~pressure~~conditions ~~pumping~~and ~~operations~~on ~~and~~May ~~contract~~3, ~~drilling~~2021, ~~operations~~the ~~that~~Company ~~were~~entered ~~classified~~into asa ~~discontinued~~Super ~~operations~~Priority ~~beginning~~Credit inAgreement ~~late~~(the ~~2019.~~“Super ~~For~~Priority ~~further~~Credit ~~discussion~~Agreement”), onamong the ~~pressure~~Company, ~~pumping~~as borrower, the lenders party thereto and ~~contract~~Cantor ~~drilling~~Fitzgerald ~~assets~~Securities, ~~see~~as ~~Note~~administrative 4.agent ~~Discontinued~~and ~~Operations.~~collateral agent.

~~COVID-19~~The Super Priority Credit Agreement provides for a super priority loan facility consisting of term loans in a principal amount of $10.0 million (the “New Term Loan Facility”). The proceeds of the New Term Loan Facility will be used for working capital and ~~Commodity~~other ~~Price~~general ~~Collapse~~corporate ~~Impact~~purposes and the payment of fees and expenses in connection with the New Term Loan Facility and the other agreements entered into in connection with the New Term Loan Facility. The New Term Loan Facility originally matured on ~~Company~~May ~~Liquidity~~15, 2021; ~~Going~~provided ~~Concern~~that such date could be extended for up to thirty days with the prior written consent of lenders holding 66 2/3% of the aggregate outstanding amount of the term loans. At the Company’s election, loans outstanding under the New Term Loan Facility accrue interest at an annualized interest rate of either a base rate plus 10.00% or LIBOR plus 11.00%. The Company may prepay the New Term Loan Facility at any time if the Company simultaneously prepays the aggregate outstanding principal amount of its Senior Notes and Senior Secured Promissory Note, plus accrued and unpaid interest. On May 10, 2021, the Lenders under the New Term Loan Facility extended the maturity date of the facility to May 23, 2021 and corresponding adjustments to certain interim milestones therein.

~~Beginning~~On inMay ~~March~~3, ~~2020~~2021, ~~as a result of multiple significant factors impacting supply and demand in~~ the ~~global~~Company ~~oil~~ and ~~natural~~Ascribe ~~gas~~entered ~~markets,~~into ~~including~~ a ~~global~~consent ~~outbreak~~letter ~~of coronavirus~~ (~~“COVID-19”), and actions by members of~~ the ~~Organization~~“Ascribe ofConsent ~~the Petroleum Exporting Countries (“OPEC~~Letter”) ~~and~~pursuant ~~other~~to ~~foreign~~which ~~countries,~~Ascribe ~~including~~agreed ~~Russia,~~to ~~the~~forbear ~~posted~~from ~~price~~exercising ~~for~~any ~~West~~rights ~~Texas~~or ~~Intermediate~~remedies ~~oil~~they ~~declined~~may ~~sharply.~~have ~~Oil~~in ~~demand~~respect ~~has~~of ~~significantly~~the ~~deteriorated~~Company's ~~through~~failure ~~the~~to ~~first~~pay ~~nine~~interest ~~months~~on ofthe ~~2020~~notes ~~compared~~described totherein ~~prior~~from. On ~~year~~May ~~periods~~14, ~~in part~~2021, asthe aCompany ~~result~~entered ofinto ~~outbreak~~an ofamendment ~~COVID-19 and corresponding preventative measures taken~~ to ~~mitigate~~ the ~~spread~~Ascribe ofConsent ~~the~~Letter ~~virus.~~to ~~The~~extend ~~initial decline in demand coincided with~~ the ~~announcement~~forbearance ofperiod ~~price reductions and possible production increases by members of OPEC and other oil exporting nations. Although OPEC and other oil exporting nations ultimately agreed~~ to ~~cut~~May ~~production~~23, ~~and commodity prices improved during the third quarter of 2020, the downward pressure on commodity prices has remained and could continue in the foreseeable future~~2021.

~~Oil~~On ~~and~~May ~~natural~~14, ~~gas~~2021, ~~commodity~~the ~~prices~~Company ~~are~~entered ~~expected~~into the (i) Second Amendment to ~~continue~~the ABL Forbearance Agreement with a majority of its lenders under its revolving credit facility who agreed to beextend ~~volatile.~~the ~~Despite~~ABL ~~improvements~~Forbearance Period to May 23, 2021 and to make corresponding adjustments to certain interim milestones therein, and (ii) the Forbearance Agreement with the requisite number of lenders under the New Term Loan Facility who agreed to forbear from exercising remedies in ~~early~~respect ~~third~~of ~~quarter~~certain events of ~~2020~~default thereunder, including the ~~collapse~~failure into pay interest on the ~~demand~~Senior ~~for~~Notes ~~oil~~following ~~caused~~the byexpiration of the ~~unprecedented~~applicable ~~global~~grace ~~health~~period, until May 23, 2021 (subject to certain early termination events). In addition, on May 14, 2021, the holders of approximately $316.4 million in aggregate principal amount, or 91.06%, of the $347.5 million issued and ~~economic~~outstanding ~~crisis~~Senior Notes, ~~coupled~~subject ~~with~~to ~~oil~~certain ~~oversupply~~conditions precedent and continuing conditions, ~~has~~agreed ~~had~~that aduring ~~material~~the ~~adverse~~Forbearance ~~impact~~Period ending on ~~the~~May ~~demand~~23, ~~for~~2021 ~~our~~(subject ~~services~~to certain early termination events) they would not enforce, or otherwise take any action to direct enforcement of, any of the rights and remedies available to the ~~prices~~Holders, wethe ~~can~~Trustee ~~charge~~of the Collateral Agent, under the Indenture for ~~our~~the ~~services~~Senior Notes, or otherwise, including, without limitation, any action to accelerate the Senior Notes with respect to the Senior Notes Interest Payment.

~~The~~We ~~decline~~are in ~~our~~continuing ~~customers’~~discussions ~~demand~~with ~~for~~the ~~our~~holders ~~services has also had a material adverse impact on our financial condition, results~~ of ~~operations and cash flows during~~ the ~~first~~Company’s ~~nine~~Senior ~~months~~Notes ~~of 2020. Demand for our products~~ and ~~services~~other ~~will~~indebtedness ~~further~~regarding ~~decline~~strategic ifalternatives ~~our~~including ~~customers~~financings, ~~further revise their capital budgets downward and adjust their operations in response to lower oil prices. We cannot predict the duration or effects of these current conditions~~refinancings, ~~but if the price of oil further declines or remains at current levels for a lengthy period~~amendments, ~~our business~~waivers, ~~financial condition~~forbearances, ~~results~~asset ~~of operations~~sales, ~~cash~~debt ~~flows~~issuances, and ~~prospects~~exchanges ~~will~~of ~~continue~~debt, toa becombination ~~materially and adversely affected. The impact~~ of ~~these~~the ~~conditions~~foregoing, onor ~~our~~other ~~estimates~~ out-of-court ~~future~~or ~~operating cash flows resulted~~ in ~~additional impairments of long~~-~~lived~~court ~~and~~bankruptcy ~~intangible~~restructurings ~~assets as~~ of ~~March~~our ~~31,~~debt ~~2020.~~and ~~For~~other ~~further~~transactions ~~discussion~~to ofaddress ~~impairments~~our ofcapital ~~long-lived assets, see Note 14~~structure. ~~Impairments.~~

~~Based~~If onthe ~~our~~Company ~~current~~is ~~operating~~unable ~~and~~to ~~commodity~~effectuate ~~price~~a ~~forecasts~~successful ~~and~~debt ~~capital structure~~restructuring, wethe ~~believe~~Company expects that ifit ~~certain~~will ~~financial~~continue ~~ratios or cash dominion covenants were~~ to ~~come~~experience ~~into~~adverse ~~effect~~pressures ~~under~~on ~~our~~its ~~debt~~relationships ~~instruments, we will have difficulty complying~~ with ~~certain~~counterparties ofwho ~~such~~are ~~obligations.~~critical ~~Certain~~to ~~covenants~~its business, ~~such~~its asability ~~consolidated~~to ~~fixed~~access ~~charge coverage ratio and cash dominion provisions in~~ the ~~revolving~~capital ~~credit~~markets, ~~facility~~its ~~(the~~ability ~~"ABL~~to ~~Facility")~~execute ~~spring~~on ~~into~~its ~~effect~~operational ~~under~~and ~~certain~~strategic ~~triggers~~goals ~~defined~~and inits ~~the ABL Credit Agreement~~business, ~~as amended~~prospects, ~~for~~results soof ~~long~~operations asand ~~such~~liquidity ~~applicable trigger period is in effect~~generally. ~~Additionally,~~There ~~certain~~can ~~triggers~~be inno ~~the~~assurance ~~ABL Facility increase certain financial and borrowing base reporting requirements for so long~~ as ~~such applicable trigger period is in effect. Failure~~ to ~~comply,~~when ~~for~~or ~~example~~whether, ~~with~~or aon ~~“springing”~~what ~~consolidated~~terms ~~fixed charge coverage ratio requirement under~~ the ~~ABL~~Company ~~Facility~~will ~~would~~implement ~~result~~any inaction anas ~~event~~a ~~of default under the ABL Facility, which would~~ result ~~in a cross-default under the Senior Notes. If an event~~ of ~~default~~these ~~were~~strategic ~~to occur~~initiatives, ~~our~~whether ~~lenders could, in addition to other remedies such as charging default interest, accelerate~~ the ~~maturity~~implementation of ~~the~~one ~~outstanding~~or ~~indebtedness, making it immediately due and payable, and we may not have sufficient liquidity to repay those amounts.~~

We had $16.3 million of Availability, as defined under the ABL Facility, subject to borrowing restrictions that are in place as of September 30, 2020. To maintain compliance with certain of the minimum availability covenant requirements, in early July 2020 we repaid the $2.6 million amount of borrowings that was previously outstanding as of June 30, 2020, and during the third quarter of 2020, we advanced $7.4 million, net, of our available cash balance to the Administrative Agent to maintain compliance with the minimum availability covenant requirements. Also beginning during the third quarter of 2020, we are currently subject to increased financial and borrowing base information reporting. The amount of net advances of our available cash balance to the Administrative Agent as of September 30, 2020 is reflected as restricted cash in the accompanying consolidating balance sheet. As of

~~November 2,~~more ~~2020~~such actions will be successful, whether the ~~amount~~Company ofwill ~~cumulative~~be ~~net~~able ~~advances~~to effect a refinancing of ~~our~~its ~~available~~Senior ~~cash~~Notes ~~balance~~or the effects the failure to take action may have on the ~~Administrative~~Company’s ~~Agent~~business, ~~has~~its ~~been~~ability ~~reduced~~to achieve its operational and strategic goals or its ability to ~~$3.4~~finance ~~million~~its business or refinance or restructure its indebtedness. A failure to address the Company’s level of corporate leverage in the near-term will have a material adverse effect on the Company’s business, prospects, results of operations, liquidity and financial condition, and its ability to service its corporate debt as it becomes due.

Management has ~~taken~~prepared ~~several~~these ~~steps~~condensed toconsolidated ~~generate~~financial ~~additional~~statements ~~liquidity,~~in ~~including~~accordance ~~through~~with ~~reducing~~U.S. ~~operating~~generally ~~and~~accepted ~~administrative~~accounting ~~costs~~principles ~~through~~applicable ~~employee~~to ~~headcount~~a ~~reductions~~going concern, ~~closing~~which ~~operating~~contemplates ~~locations,~~that ~~employee~~assets ~~furloughs~~will be realized and ~~other~~liabilities ~~cost~~will ~~reduction~~be ~~measures,~~discharged ~~and~~in the ~~suspension~~normal course of ~~growth~~business ~~capital~~as ~~expenditures~~they inbecome ~~our~~due. ~~continuing~~These ~~business~~condensed ~~operations~~consolidated ~~with~~financial statements do not reflect the ~~goal~~adjustments to the carrying values of ~~preserving~~assets ~~margins~~and liabilities and ~~improving~~the ~~working~~reported ~~capital.~~revenues ~~Management~~and ~~may~~expenses ~~implement~~and ~~further~~balance ~~similar~~sheet ~~cost~~classifications that would be necessary if the Company was unable to realize its assets and ~~capital~~settle ~~expenditure~~its ~~reductions,~~liabilities as ~~necessary~~a going concern in the normal course of operations. Such adjustments could be material and adverse to the financial results of the Company.

Due to the uncertainty of future oil and natural gas prices and the effects the outbreak of COVID-19 will have on our future results of operations, operating cash flows and financial condition, there is substantial doubt as to the ability of the Company to continue as a going concern. Additional steps management would implement to alleviate this substantial doubt would include additional sales of non-strategic assets, obtaining waivers of debt covenant requirements from our lenders, restructuring or refinancing our debt agreements, or obtaining equity financing. There can be no assurances that, if required, the Company would be able to successfully sell assets, obtain waivers, restructure its indebtedness, or complete any strategic transactions in the current environment. On October 15, 2020, the Company entered into a Second Lien Delayed Draw Promissory Note in favor of Ascribe Investments III LLC, a Delaware limited liability company (“Ascribe”), in an aggregate principal amount equal to $15,000,000. An Initial Advance (as defined in the Second Lien Delayed Draw Promissory Note) in an amount of $7,500,000 was drawn on October 15, 2020. For further discussion of the Second Lien Delayed Draw Promissory Note, see Note 7. Long-Term Debt and Interest Expense.Reclassifications

~~Management~~Certain ~~has~~reclassifications ~~prepared~~have ~~these~~been ~~consolidated~~made ~~financial~~to ~~statements~~prior inperiod ~~accordance~~amounts ~~with~~to ~~U.S.~~conform ~~generally accepted accounting principles applicable~~ to ~~a going concern, which contemplates that assets will be realized and liabilities will be discharged in~~ the ~~normal~~current ~~course~~period ~~of business as they become due~~presentation. These ~~consolidated~~reclassifications ~~financial statements~~ do not ~~reflect~~impact ~~the~~net ~~adjustments~~loss ~~to the carrying values of assets~~ and ~~liabilities~~do ~~and~~not ~~the~~reflect ~~reported~~a ~~revenues~~material ~~and~~change ~~expenses~~to ~~and balance sheet classifications that would be necessary if~~ the ~~Company~~information ~~was~~previously ~~unable~~presented ~~to realize its assets and settle its liabilities as a going concern~~ in ~~the~~our ~~normal~~condensed ~~course~~consolidated ~~of operations. Such adjustments could be material and adverse to the~~ financial ~~results of the Company~~statements.

Standards Adopted in 2021

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” ("ASU 2019-12"). ASU 2019-12 intends to simplify various aspects related to accounting for income taxes and removes certain exceptions to the general principles in the standard. Additionally, the ASU clarifies and amends existing guidance to improve consistent application of its requirements. The amendments of ASU 2019-12 were adopted as of January 1, 2021, and the impact of the adoption was not material.

Standards Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)” ("ASU 2020-04"), which provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020, through December 31, 2022. We are currently evaluating the impacts of the provisions of ASU 2020-04 on our consolidated financial statements.

2. Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the ~~unaudited~~ condensed consolidated balance sheets that sum to the ~~total of the same~~ amounts shown in the ~~unaudited~~condensed consolidated statements of cash flows ~~(in thousands)~~:

	September 30,
(in thousands)			March 31, 2021				December 31, 2020
	2020				2019
Cash and cash equivalents			$	4,889			$	1,902
Cash and cash equivalents	$	6,806			$	50,460
Restricted cash			15,513				8,083
Restricted cash	7,430				—
Total cash, cash equivalents and restricted cash			$	20,402			$	9,985
Total cash, cash equivalents and restricted cash	$	14,236			$	50,460

The Company’s restricted cash atconsisted ~~September 30, 2020 consists~~ of net advances made to the ~~Administrative~~administrative ~~Agent~~agent under our ~~ABL~~asset-based ~~Credit~~revolving ~~Facility~~credit facility. See Note 74. ~~Long-Term~~Indebtedness ~~Debt~~and Borrowing Facility, for further discussion of the ~~ABL~~credit ~~Credit Facility~~facility. The Company’s restricted cash is ~~included~~classified inas current assets asin ofthe ~~September~~condensed ~~30,~~consolidated ~~2020~~balance sheets.

3. ~~Acquisition~~Discontinued Operations

OnDuring ~~March 9, 2020,~~ the ~~Company~~third ~~entered~~and ~~into~~fourth aquarters ~~Purchase~~of ~~Agreement~~2019, (the ~~“Purchase~~Company's ~~Agreement”)~~management ~~with~~decided ~~Ascribe,~~to ~~NexTier~~divest ~~Holding~~all ~~Co.,~~of aits ~~Delaware~~contract ~~corporation~~drilling ~~(“Seller”)~~rigs, and ~~C&J Well Services, Inc.,~~ a ~~Delaware~~majority ~~corporation, and wholly owned subsidiary~~ of ~~Seller~~pressure ~~(“CJWS”),~~pumping ~~whereby~~equipment ~~the Company acquired all of the issued~~ and ~~outstanding~~related ~~shares~~ancillary ofequipment. ~~capital~~The ~~stock~~majority of ~~CJWS,~~the ~~such~~real ~~that~~estate ~~CJWS~~and ~~became~~equipment awas ~~wholly-owned~~sold ~~subsidiary~~during oflate ~~the~~2019 ~~Company.~~and ~~CJWS is~~ the ~~third~~first ~~largest~~quarter ~~rig~~of ~~servicing~~2020, ~~provider~~with in the ~~U.S.~~remaining, ~~with~~primarily areal ~~leading~~estate ~~footprint~~assets inclassified ~~California~~as ~~and~~assets aheld ~~strong~~for ~~customer base~~sale. ~~Following~~The ~~the acquisition of CJWS, the~~ Company ~~has~~is ~~expanded~~pursuing ~~its~~additional ~~footprint~~transactions into divest the ~~Permian,~~remainder ~~California~~of ~~and~~these ~~other~~non-strategic ~~key~~assets ~~oil~~during ~~basins~~2021.

~~Pursuant~~The tooperating ~~the~~results ~~Purchase~~of ~~Agreement, among other things, (i) Seller transferred and delivered to~~ the ~~Company~~pressure ~~and~~pumping ~~the~~operations ~~Company purchased~~ and ~~acquired~~contract ~~from~~drilling ~~Seller~~operations, ~~all~~which ofwere ~~the~~historically ~~issued~~included and outstanding shares of capital stock of CJWS held by Seller (the "Stock Purchase"); (ii) as a portion of the consideration for the Stock Purchase, Ascribe, on behalf of the Company, conveyed to Seller certain 10.75% senior secured notes due October 2023 (the "Senior Notes") issued by the Company to Ascribe in ~~an aggregate par value amount equal to $34.4 million (~~the ~~"Ascribe~~Completions ~~Senior~~& ~~Notes");~~Remedial Services and ~~(iii)~~Other ~~Ascribe~~Services ~~entered into an Exchange Agreement~~segments, ~~dated~~have ~~March~~been 9,reclassified ~~2020, with the Company (the~~

~~"Exchange~~as ~~Agreement")~~discontinued ~~pursuant~~operations toin ~~which, among other things, Ascribe exchanged~~ the ~~Ascribe~~Condensed ~~Senior~~Consolidated ~~Notes~~Statement ~~for (a) 118,805 shares~~ of ~~newly~~Operations ~~issued preferred stock, designated as "Series A Participating Preferred Stock," par value $0.01 per share, of the Company (the "Series A Preferred Stock") and, (b) an amount in cash~~ for ~~accrued interest on~~ the ~~Ascribe~~three ~~Senior~~month ~~Notes~~periods ~~approximately~~ended ~~equal~~March ~~to $1.5 million (the "Exchange Transaction" and~~31, ~~together~~2021 ~~with the Stock Purchase~~ and ~~the other transactions contemplated by the Purchase Agreement~~2020, ~~the~~and ~~"CJWS~~are ~~Transaction").~~detailed ~~For~~in ~~further discussion of~~ the ~~Series~~table Abelow: ~~Preferred Stock, see Note 10. Series A Participating Preferred Stock.~~

Pursuant to the Purchase Agreement, at closing Seller received consideration in the aggregate amount of $95.7 million comprised of (a) cash consideration equal to $59.4 million (subject to customary reductions for indebtedness and transaction expenses, as well as post-closing working capital adjustments) and (b) the Ascribe Senior Notes transferred to Seller by Ascribe (on behalf of the Company) as described above. In connection with the CJWS Transaction, pursuant to the Purchase Agreement, Ascribe has certain contingent obligations to the Seller to make Seller whole on the par value of the Ascribe Senior Notes as of the earlier of the first anniversary of the closing of the Stock Purchase, a bankruptcy of the Company, or a change of control of the Company (the "Make-Whole Payment"). Considering this contingent Make-Whole Payment by Ascribe to the Seller, the fair value of the Ascribe Senior Notes issued to the Seller on March 9, 2020, was $36.3 million. If Ascribe is required to pay the Make-Whole Payment to Seller pursuant to the Purchase Agreement, the Company will be required to reimburse to Ascribe the amount of such Make-Whole Payment (such amount, the "Make-Whole Reimbursement Amount") either (i) in cash (a) to the extent the Company has available cash (as determined by an independent committee of the Company's board of directors) and (b) subject to satisfaction of certain "Payment Conditions" set forth in the ABL Credit Agreement (as defined below) or (ii) if the Company is unable to pay the full Make-Whole Reimbursement Amount in cash pursuant to clause "(i)" of this paragraph, in additional Senior Notes as permitted under the Indenture. In consideration of providing the Make-Whole Payment to Seller, the Company paid Ascribe $1 million in cash at the closing of the CJWS Transaction. The Company's obligation to Ascribe associated with the Make-Whole Reimbursement Amount is reflected as a derivative instrument in accordance with Accounting Standards Codification ("ASC") No. 815 "Derivatives and Hedging" ("ASC 815") with an initial fair value of approximately $9.7 million based on a risk-adjusted market differential between the fair value of the Ascribe Senior Notes and their $34.4 million par value as of the March 9, 2020, closing date. Changes in fair value of the Make-Whole Reimbursement Amount each period are "marked to market" and charged or credited to Gain (Loss) on Derivative in the accompanying consolidated statements of operations. The fair value of the Make-Whole Reimbursement Amount liability as of September 30, 2020, is approximately $5.8 million and results in $3.9 million of derivative gain during the nine months ended September 30, 2020. The Make-Whole Reimbursement Amount liability is classified as a derivative liability, a current liability in the accompanying balance sheet.


	Three Months Ended March 31,
(in thousands)	2021		2020





Revenues	$	—	$	95

Costs of services	1,393		1,520
Selling, general and administrative	113		1,938

Asset impairment	2,842		2,333
Loss (gain) on disposal of assets	(551)		2,656
Total operating expenses	3,797		8,447

Operating loss	(3,797)		(8,352)

Interest expense	—		(100)


Loss from discontinued operations	$	(3,797)	$	(8,452)

OfInterest ~~the~~expense ~~cash~~in ~~consideration~~discontinued ~~paid~~operations is related to ~~the~~interest ~~Seller,~~expense ~~$15 million~~on ~~was~~finance ~~funded~~lease ~~from~~assets athat ~~Senior~~operated ~~Secured~~in ~~Promissory~~the ~~Note~~discontinued toCompletions ~~Ascribe~~& Remedial Services and Other Services segments. ~~For~~Impairment aexpense ~~further~~was ~~discussion~~recorded ofduring the ~~Exchange~~three ~~Agreement~~month ~~and~~periods ~~the~~ended ~~Senior~~March ~~Secured~~31, ~~Promissory~~2021 ~~Note~~and 2020, ~~see~~associated ~~Note~~with 7.certain ~~Long~~non-~~Term~~strategic ~~Debt~~assets ~~and~~with ~~Interest~~carrying ~~Expense~~values that were in excess of current estimated selling price.

~~The~~During ~~CJWS~~2020 ~~Transaction~~and ~~was~~2021, ~~considered~~a ansubstantial ~~acquisition~~majority of ~~a business in accordance with ASC 805 "Business Combinations" and~~ the ~~Company~~assets ~~applied~~related ~~the~~to ~~acquisition~~these ~~method~~discontinued ofoperations, ~~accounting~~were disposed. The ~~Company's~~remaining ~~preliminary~~assets ~~allocation~~and ofliabilities ~~the~~related ~~purchase price, including preliminary working capital adjustments,~~ to the ~~estimated~~divested ~~fair~~operations ~~value~~are ofincluded in the ~~CJWS~~consolidated ~~net~~balance ~~assets~~sheets is as follows ~~(in thousands)~~:

	March 9, 2020
(in thousands)	March 31, 2021		December 31, 2020
Current assets	$	42,050
Assets held for sale
Property and equipment	63,418
Property and equipment, net	$	3,194	$	1,523
Operating lease right of use asset	734
Total assets held for sale	$	3,194	$	1,523
Other assets	1,859
Other long term assets
Intangible asset	4,000
Real estate held for sale	$	—	$	4,802
Goodwill	18,885
Liabilities related to assets held for sale
Total assets acquired	130,946
Operating lease liabilities	$	422	$	508
Current liabilities	24,742
Total liabilities related to assets held for sale	$	422	$	508
Long-term liabilities	12,051
Total liabilities assumed	36,793
Net assets acquired	$	94,153

~~The~~Consolidated ~~allocation~~statements of ~~the~~cash ~~purchase~~flow ~~price~~information torelated ~~CJWS's net tangible assets and liabilities and identifiable intangible assets as of March 9, 2020, is preliminary and subject~~ to ~~revisions~~these todiscontinued ~~the~~operations ~~fair~~are ~~value~~detailed ~~calculations~~in ~~for~~ the ~~identifiable~~table below:


	Three Months Ended March 31,
(in thousands)	2021		2020
Cash Flows from Discontinued Operations
Net cash provided (used) by operating activities	$	(1,506)	$	(3,467)
Net cash provided by investing activities	$	—	$	39,021

Proceeds from the sale of assets related to discontinued operations totaled $39.0 million for the first quarter of 2020.

4. Indebtedness and Borrowing Facility

Long-term debt consisted of the following:


(in thousands)	March 31, 2021		December 31, 2020
10.75% Senior Notes due 2023	$	347,500	$	300,000
Senior Secured Promissory Note	15,000		15,000
Second Lien Delayed Draw Promissory Note	15,000		15,000
Finance lease liabilities	14,601		16,986
Total principal amount	392,101		346,986
Less unamortized discount and debt issuance costs	(57,690)		(21,703)
Total debt	334,411		325,283
Less current portion of finance leases	(6,839)		(7,520)
Total long-term debt	$	327,572	$	317,763

~~assets~~Issuance ~~and liabilities. The final purchase price allocation could differ from the preliminary allocation noted in the summary above. The preliminary allocation~~ of ~~purchase~~Senior ~~price~~Notes ~~includes approximately $18.9 million allocated~~ to ~~nondeductible~~Settle goodwill recorded to our well servicing and water logistics segments based on relative fair values of these acquired lines of business. The acquired property and equipment is stated at fair value, and depreciation on the acquired property and equipment is computed using the straightMake-~~line~~Whole ~~method~~Reimbursement ~~over the estimated useful lives of each asset. We depreciate our assets over the following depreciable lives:~~

Buildings			20 to 30 years
Machinery and equipment			3 to 15 years
Automobiles and trucks			3 to 7 years

On March 31, 2021, the Company negotiated a settlement of the contractual make-whole obligation to its controlling shareholder in exchange for issuing additional Senior Notes to this shareholder with an aggregate par value of $47.5 million. The Company's make-whole obligation related to the acquisition of CJWS was accounted for as a derivative instrument until this settlement. The Senior Notes were issued at a fair value of $9.5 million based on the market pricing of our Senior Notes on March 31, 2021, and resulted in a discount of $38.0 million on these Senior Notes that will be accreted over the remaining term of the notes through 2023. We recorded a corresponding loss of $4.8 million on this derivative instrument for the first quarter of 2021.

~~The~~For ~~acquired~~further ~~intangible~~discussion ~~assets~~of ~~represent approximately $4 million for~~ the ~~CJWS~~Senior ~~trade~~Notes, ~~name~~including ~~that~~events isoccurring ~~stated~~subsequent atto ~~estimated~~March ~~fair~~31, ~~value~~2021, ~~and~~see isNote ~~amortized~~1. on"Basis aof ~~straight-line~~Presentation ~~basis~~and ~~over~~Current ~~the estimated useful life of 15 years~~Environment."

~~For~~ABL ~~the~~Credit nine month period ended September 30, 2020, our revenues and pretax earnings included $112.0 million and $10.4 million (excluding the impact of asset impairments of $35.2 million), respectively, associated with the CJWS acquired operations after the closing on March 9, 2020. In addition, CJWS Transaction-related costs of approximately $9 million were incurred during the nine month period ended September 30, 2020, consisting of external legal and consulting fees and due diligence costs. These costs have been recognized in general and administrative expense in the consolidated statements of operations.Facility

~~The~~On ~~pro~~October ~~forma~~2, ~~information~~2018, ~~presented below has been prepared to give effect to~~ the ~~CJWS~~Company ~~Transaction~~entered asinto ifan itasset-based ~~had~~lending ~~occurred~~credit atagreement ~~the~~that ~~beginning~~expires ofon ~~the~~October ~~periods~~2, ~~presented~~2023. The ~~pro~~credit ~~forma~~agreement ~~information~~will ~~includes~~expire ~~the impact from the allocation of the acquisition purchase price~~ on ~~depreciation~~July ~~and~~3, ~~amortization~~2023, ~~and~~if the ~~impact~~Senior onNotes ~~interest~~have ~~expense~~not ~~associated~~been ~~with~~redeemed ~~acquisition~~by ~~financing.~~that ~~It also excludes the impact of the CJWS Transaction acquisition costs charged to earnings during the 2020 period~~time. The ~~pro~~credit ~~forma~~agreement ~~information~~included isa ~~presented~~revolving ~~for~~credit ~~illustration~~facility ~~purposes only and is based on estimates and assumptions~~ (the ~~Company~~“ABL ~~deemed~~Credit ~~appropriate.~~Facility”) ~~The~~with ~~following~~a ~~pro~~maximum ~~forma~~aggregate ~~information~~principal isamount ~~not necessarily indicative~~ of ~~the~~$75.0 million results that would have been achieved if the CJWS Transaction had occurred in the past, and should not be relied upon as an indication of the operating results that the Company would have achieved if the transaction had occurred at ~~the~~December ~~beginning of the periods presented~~31, and our operating results, or the future results that we will achieve, may be different from those reflected in the pro forma information below (in thousands, except per share and average share outstanding information)2020.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues	$	95,400	$	242,500	$	371,245	$	606,334
Loss from continuing operations	(29,153)		(28,178)		$	(190,381)	$	(57,788)
Net loss from continuing operations per
Net loss from continuing operations per share, basic and diluted	$	(1.17)	$	(1.10)	$	(7.64)	$	(2.18)
Weighted average shares outstanding, basic and diluted	24,927,369		25,606,264		24,932,900		26,551,592

The amount of borrowings available under the ABL Credit Facility are limited to a borrowing base capacity, which is based on eligible accounts receivable and eligible pledged cash, which the Company can advance to the administrative agent as necessary. The ABL Credit Facility includes a sublimit for letters of credit of up to $50.0 million.

4Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to an applicable rate, plus, at the Company’s option, either a base rate or a LIBOR rate. ~~Discontinued~~The ~~Operations~~applicable rate in a fiscal quarter is determined by the average daily availability as a percentage of the borrowing base during the previous fiscal quarter.

~~During~~If the ~~third~~availability ~~and~~under ~~fourth quarters of 2019,~~ the ~~Company's~~ABL ~~management~~Credit ~~decided~~Facility tofalls ~~divest~~below ~~all~~$9.4 million, ofthen ~~its~~certain ~~contract~~covenants ~~drilling~~including ~~rigs, and~~ a ~~majority~~consolidated offixed ~~pressure~~charge ~~pumping~~coverage ~~equipment~~ratio and ~~related~~cash ~~ancillary~~dominion ~~equipment,~~provisions ~~respectively,~~will ~~assets~~spring ~~having~~into aeffect. ~~combined~~To ~~net~~avoid ~~book~~triggering ~~value~~certain of ~~$91.8 million. The majority of~~ the ~~real~~consolidated ~~estate~~fixed ~~and~~charge ~~equipment~~coverage ~~was~~ratios ~~sold during late 2019~~ and ~~the~~cash ~~first~~dominion ~~half~~covenants ofwhich ~~2020,~~spring ~~with~~into ~~the~~effect ~~remaining~~under ~~pumping~~certain ~~and~~minimum ~~related~~availability ~~assets~~covenant ~~classified~~requirements asdefined ~~Assets~~in ~~Held for Sale on our Consolidated Balance Sheet. The Company is pursuing additional transactions to divest~~ the ~~remainder~~ABL ofCredit ~~these non-strategic assets later during 2020~~Facility, ~~however~~we ~~the~~had ~~Company recorded an impairment on the remaining assets of~~ $215.3 5 million ~~at March 31, 2020. A complete summary~~ of our ~~discontinued~~available ~~operations~~cash isbalance ~~included~~advanced into ~~Note~~the 2.administrative ~~Discontinued~~agent ~~Operations~~as of ~~the~~March ~~Financial~~31, ~~Statements and Supplementary Data in our most recent Annual Report on Form 10-K~~2021.

~~The~~As ~~operating~~of ~~results~~March of31, 2021, the ~~pressure~~Company ~~pumping~~had ~~operations~~no borrowings and ~~contract~~$35.6 million ~~drilling~~of ~~operations,~~letters ~~which~~of ~~were~~credit ~~historically~~outstanding ~~included~~under in the ~~Completions~~ABL &Credit ~~Remedial~~Facility. ~~Services~~As ~~and~~of ~~Other~~March ~~Services segments~~31, ~~respectively~~2021, ~~have~~we ~~been~~had ~~reclassified~~$11.2 million ~~as discontinued operations in the Consolidated Statement~~ of ~~Operations~~availability ~~for~~under the ~~three~~ABL ~~and~~Credit ~~nine~~Facility, ~~month~~but ~~periods~~we ~~ended~~are ~~September~~restricted ~~30,~~from ~~2020~~borrowing ~~and~~this ~~2019,~~amount ~~and~~because ~~are~~of ~~detailed~~restrictions inregarding the ~~table~~minimum ~~below~~availability ~~(in~~covenant ~~thousands):~~noted above.

The ABL Credit Facility has a covenant whereby the Company would be in default if the report of its independent registered public accounting firm on the Company’s annual financial statements included a going concern qualification or like exemption. On March 31, 2021, the Company obtained a waiver under the ABL Credit Facility with respect to any such default arising with respect to the 2020 audited financial statements and also agreed to reduce the maximum aggregate principal amount of the ABL Credit Facility from $75.0 million to $60.0 million. As a result, the Company was in compliance with the covenants under the ABL Credit Agreement at March 31, 2021.

For further discussion of the ABL Credit Facility, including events occurring subsequent to March 31, 2021, see Note 1. "Basis of Presentation and Current Environment."

The Company was also in compliance with the debt covenants under its other debt agreements as of March 31, 2021.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues	$	—	$	34,202	$	120	$	120,086
Direct expenses	2,304		29,886		4,714		104,710
General and administrative	400		3,605		6,567		11,994
Depreciation and amortization	—		14,576		—		37,586
Impairment expense	—		—		2,330		—
Loss (gain) on disposal of assets	24		99		2,833		620
Total expenses	2,728		48,166		16,444		154,910
Operating loss	(2,728)		(13,964)		(16,324)		(34,824)
Other income (expense):
Interest expense	(201)		(146)		(64)		(448)
Other income	3		10		138		21
Loss from discontinued operations	$	(2,926)	$	(14,100)	$	(16,250)	$	(35,251)

5. Revenues

~~Interest~~The ~~expense~~following intable ~~discontinued~~sets ~~operations~~forth is related to interest expense on finance lease assets that operated in the discontinued Completions & Remedial Services and Other Services segments. Impairment expense was recorded during the three month period ended March 31, 2020, associated with certain ~~non-strategic~~financial ~~assets~~information with ~~carrying~~respect ~~values~~to ~~that~~the ~~were~~Company’s indisaggregation ~~excess~~ of ~~current~~revenues ~~estimated~~by ~~selling~~geographic ~~price.~~location ~~General~~ and ~~administrative expense consisted primarily of bad debt expense recorded on customer receivables from discontinued operations.~~segment:

During the nine month period ended September 30, 2020, a portion of the assets identified as of December 31, 2019, were disposed. Remaining assets and liabilities related to the divested operations are included in the consolidated balance sheets and consist as follows (in thousands):


	Reportable Segments

(in thousands)	Well Servicing		Water Logistics		Completion & Remedial Services		Total
Three Months Ended March 31, 2021


Central U.S.	$	24,742	$	17,276	$	7,732	$	49,750
Western U.S.	30,114		11,299		4,203		45,616
Eliminations	(49)		(761)		(209)		(1,019)
Total	$	54,807	$	27,814	$	11,726	$	94,347

	September 30, 2020				December 31, 2019
(in thousands)			Well Servicing		Water Logistics		Completion & Remedial Services		Total		Discontinued Operations
Assets-held-for-sale
Three Months Ended March 31, 2020
Inventories	$	—			$	2,069
Central U.S.			$	40,019	$	38,416	$	13,183	$	91,618	$	95
Right of use assets	860				1,659
Western U.S.			19,662		8,206		13,595		41,463		—
Property, plant and equipment, net	7,582				50,496
Eliminations			(1,540)		(2,241)		(897)		(4,678)		—
Total assets-held-for-sale-future-use	$	8,442			$	54,224
Total			$	58,141	$	44,381	$	25,881	$	128,403	$	95
Liabilities related to Assets-held-for-sale
Right of use liabilities	$	869			$	1,659
Capital leases	—				3,589
Total Liabilities related to Assets-held-for-sale discontinued operations	$	869			$	5,248

~~Applicable~~The ~~Consolidated~~Company ~~Statements~~had of$4.6 million ~~Cash~~and ~~Flow~~$2.1 million ~~information~~of ~~related~~contract toassets ~~the~~and ~~discontinued~~no ~~operations~~contract ~~for~~liabilities ~~the~~at ~~nine~~March ~~months~~31, ~~ended~~2021 ~~September~~and 30December 31, 2020, ~~and 2019 are detailed in the table below (in thousands):~~respectively.

	Nine Months Ended September 30,
	2020		2019
Cash Flows from Discontinued Operations
Net cash provided (used) by operating activities	$	(11,087)	$	2,955
Net cash provided (used) in investing activities	$	41,106	$	(7,950)

6. Impairments and Other Charges

~~Cash capital expenditures and finance lease additions related to discontinued operations were $9.7 million and $1.5 million, respectively, for the nine months ended September 30, 2019.~~ The ~~Company~~following ~~did~~table ~~not~~summarizes ~~have~~our ~~any~~impairments ~~cash or lease additions related to discontinued operations for the nine months ended September 30, 2020. Proceeds from sale of assets related to discontinued operations totaled $41.1 million~~ and ~~$1.7~~other ~~million for the nine months ended September 30, 2020 and 2019, respectively.~~charges:


	Three Months Ended March 31, 2021
(in thousands)	2021		2020
Long lived asset impairments	$	4,435	$	84,217
Transaction costs	2,589		—
Field restructuring	234		66
Goodwill impairments	—		10,565
Inventory write-downs	—		4,846







	$	7,258	$	99,694

Long-lived asset impairments - In the first quarter of 2021, we incurred $4.4 million of impairments for certain real estate held for sale, which was subsequently sold in May 2021. In March 2020, the reduction in demand for our services resulted in a long-lived asset impairment of $84.2 million related to property and equipment in our Well Servicing segment.

Transaction costs - In connection with liability management, we incurred $2.6 million of legal and professional consulting costs during the first quarter of 2021.

Field restructuring costs - In the first quarter of 2021, we incurred $0.2 million of costs associated with yard closures in connection with our field restructuring initiative. We incurred $0.1 million in the first quarter of 2020 related to yard closures.

Goodwill impairments - On March 31, 2020, due to the reduction in demand for our services, we determined that the fair value of the Well Servicing reporting unit was less than its carrying value, which resulted in a goodwill impairment of $10.6 million for this reporting unit.

Inventory write-downs - In connection with the downturn in our business in the first quarter of 2020, we recorded a $4.8 million write-down of certain parts inventory in our Well Servicing segment.

7. Income Taxes

The Company provides a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. Based on this

5.evaluation, ~~Property~~as of March 31, 2021, a valuation allowance continues to be recorded on the net deferred tax assets for all federal and ~~Equipment~~state tax jurisdictions.

~~The~~8. ~~following~~Commitments ~~table summarizes the components of property~~ and ~~equipment (in thousands):~~ Contingencies

	September 30, 2020		December 31, 2019
Land	$	22,825	$	15,682
Buildings and improvements	39,778		30,902
Well service units and equipment	58,783		130,318
Disposal facilities	88,727		87,763
Fluid services equipment	76,112		79,024
Rental equipment	47,443		60,886
Pumping equipment	34,752		47,083
Light vehicles	15,744		26,630
Fracturing/test tanks	6,110		6,153
Brine and fresh water stations	5,343		4,340
Other	3,873		3,948
Software	922		896
Property and equipment, gross	400,412		493,625
Less accumulated depreciation and amortization	(163,873)		(196,512)
Property and equipment, net	$	236,539	$	297,113

Litigation

~~The~~FASB ASC 450 - "Contingencies" (“ASC 450”) governs the Company’s isdisclosure ~~obligated~~and ~~under~~recognition ~~various~~of ~~finance~~loss ~~leases~~contingencies, ~~for~~including ~~certain~~pending ~~vehicles~~claims, lawsuits, disputes with third parties, investigations and ~~equipment~~other actions that ~~expire~~are atincurred ~~various~~in ~~dates~~the ~~during~~operation of our business. ASC 450 uses the ~~next~~following ~~five~~defined ~~years.~~terms ~~The~~to ~~table~~describe ~~below~~the ~~summarizes~~likelihood of a future loss: probable – the ~~gross~~future ~~amount~~event or events are likely to occur, remote – the chance of ~~property~~the future event or events is slight, and ~~equipment~~reasonably possible – the chance of the future event or events occurring is more than remote but less than likely. ASC 450 also contains certain requirements with respect to how we accrue for and ~~related~~disclose ~~accumulated~~information ~~amortization~~concerning ~~recorded~~our ~~under~~loss ~~finance~~contingencies. ~~leases~~We accrue for a loss contingency when we conclude that the likelihood of a loss is probable and ~~included~~the ~~above~~amount (of the loss can be reasonably estimated. When the reasonable estimate of the loss is within a range of amounts, and no amount in ~~thousands):~~the range constitutes a better estimate than any other amount, we accrue for the amount at the low end of the range. We adjust our accruals from time to time as we receive additional information, but the loss we incur may be significantly greater than or less than the amount we have accrued. We disclose loss contingencies if there is at least a reasonable possibility that a material loss has been incurred. No accrual or disclosure is required for losses that are remote.

	September 30, 2020		December 31, 2019
Fluid services equipment	$	32,065	$	34,499
Pumping equipment	10,662		16,576
Light vehicles	8,967		19,563
Rental equipment	878		1,130
Well service units and equipment	193		—
Property and equipment under finance lease, cost	52,765		71,768
Less accumulated amortization	(21,699)		(27,727)
Property and equipment under finance lease, net	$	31,066	$	44,041

Arlisa Ann Carr, Individually and as Representative of the Estate of Dexture Carr, Deceased v. Dewan Tyrel Mosley and C&J Well Services, Inc.: On or around October 2, 2018, Arlisa Carr filed a lawsuit against CJWS in the 115th District Court of Upshur County, Texas (Cause No.630-18), which alleged, among other things, that CJWS was negligent with respect to an automobile accident in March 2018. MS. Carr was seeking monetary relief of more than $1 million. CJWS denied these allegations and the case was set for trial in May 2021. Immediately before the commencement of the trial we settled this matter for $2.5 million, which resulted in a $1.4 million charge to earnings in the first quarter of 2021.

~~During~~We ~~the~~believe ~~nine~~that ~~month~~costs ~~period~~associated ~~ended~~with ~~September~~other ~~30,~~litigation ~~2020~~matters, ~~and~~individually ~~due~~or ~~to significant factors impacting supply and demand~~ in the ~~global oil and natural gas markets~~aggregate, ~~the~~will ~~Company~~not ~~assessed~~have ~~certain~~a ofmaterial ~~its~~adverse ~~Property~~effect ~~and~~on ~~Equipment~~our ~~assets~~consolidated ~~for~~financial ~~impairment~~statements. ~~For further discussion, see Note 14. Impairments.~~

6.Sales ~~Goodwill~~ and ~~Intangible~~Use ~~Assets~~Tax Audits

InThe ~~connection~~Company ~~with~~is ~~the~~subject ~~March~~to 9,sales ~~2020~~and ~~acquisition~~use oftax ~~CJWS,~~audits ~~the~~as ~~Company~~a ~~recorded~~normal ~~goodwill~~course of ~~$18~~its business.~~9 million,~~ ~~which~~The ~~was~~Company ~~initially~~is ~~allocated~~currently subject to ~~its~~sales ~~Well~~and ~~Servicing~~use ~~and~~tax ~~Water~~audits ~~Logistics~~conducted ~~reporting~~by ~~units~~the ~~based~~Texas onState ~~their~~Comptroller’s ~~respective~~office ~~fair~~for ~~values~~audit periods from 2010 through 2016. ~~Activity~~Based ~~during~~on the ~~period~~Company's ~~ended~~analysis, ~~September~~the ~~30,~~potential ~~2020,~~liability associated with ~~goodwill~~these byaudits, ~~reporting~~including ~~units~~costs isto asbe ~~follows~~incurred (in ~~thousands):~~defending and settling these audits, range from $6.0 million up to $31.0 million. This range could potentially change in future periods as the appeal process progresses.

	Well Servicing		Water Logistics		Completion & Remedial		Total
Balance as of December 31, 2019	$	—	$	—	$	—	$	—
Additions to goodwill	10,565		8,320		—		18,885
Goodwill impairments	(10,565)		—		—		(10,565)
Balance as of September 30, 2020	$	—	$	8,320	$	—	$	8,320

9. Net Loss Per Share

The following table sets forth the computation of basic and diluted loss per share:


	Three Months Ended March 31,
(in thousands, except share and per share data)	2021		2020


Numerator (both basic and diluted):
Loss from continuing operations	$	(33,475)	$	(136,429)
Loss from discontinued operations, net of tax	(3,797)		(8,452)
Net loss available to common stockholders	$	(37,272)	$	(144,881)
Denominator:
Weighted-average shares used for basic and diluted earnings per share (a)	24,900		24,914

Loss from continuing operations per share, basic and diluted:	$	(1.35)	$	(5.48)
Loss from discontinued operations per share, basic and diluted:	(0.15)		(0.34)
Net loss per share, basic and diluted:	$	(1.50)	$	(5.82)

(a) The Company has issued potentially dilutive instruments. However, the Company did not include these instruments in its calculation of diluted loss per share, because to include them would be anti-dilutive.

The ~~Company~~following ~~had~~table ~~trade~~sets ~~names~~forth ofweighted ~~$7.2 million~~average ~~and~~shares ~~$3.2 million~~outstanding as of ~~September~~potentially ~~30,~~dilutive 2020, and December 31, 2019, respectively. In connection with the CJWS Transaction, the Company recorded intangible assets for CJWS trade name and goodwill. Trade names have a 15-year life and are tested for impairment when triggering events are identified. instruments:

During the nine month period ended September 30, 2020, and due to significant factors impacting supply and demand in the global oil and natural gas markets, the Company assessed certain of its intangible assets and goodwill for impairment. For further discussion, see Note 14. Impairments.


	Three Months Ended March 31,
(in thousands)	2021	2020

Series A Preferred stock	118,805	28,722
Warrants	2,067	2,067
Unvested restricted stock units	159	420
Stock options	194	227
Total	121,225	31,436

~~The~~10. ~~Company’s~~Fair ~~intangible~~Value ~~assets subject to amortization were as follows (in thousands):~~Measurements

	September 30, 2020		December 31, 2019
Trade names	$	7,230	$	3,230
Other intangible assets	48		48
Intangible assets	7,278		3,278
Less accumulated amortization	(977)		(675)
Intangible assets subject to amortization, net	$	6,301	$	2,603

Nonrecurring Fair Value Measurements

~~Amortization~~Certain ~~expense~~assets ofand ~~intangible~~liabilities ~~assets~~are ~~for~~not ~~the~~measured ~~three~~at ~~and~~fair ~~nine~~value ~~months~~on ~~ended~~an ~~September~~ongoing 30basis, ~~2020~~but ~~and~~are ~~2019,~~subject ~~was~~to asfair ~~follows~~value (measurements only in ~~thousands):~~certain circumstances. For further discussion of these measurements, see Note 6. "Impairments and Other Charges." and Note 4. " Indebtedness and Borrowing Facility.”

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Intangible asset amortization expense	$	123	$	59	$	302	$	178

The following table summarizes our fair value measurements made on a nonrecurring basis as of various dates during 2021. Please note that these amounts represent the carrying amounts and fair values at the time of each measurement.

7. Long-Term Debt and Interest Expense


(in thousands)	Date of Measurement	Hierarchy Level	Carrying Amount		Fair Value
Real estate held for sale	March 31, 2021	3	$	12,107	$	4,830
Senior Notes	March 31, 2021	2	$	9,500	$	9,500

~~Long-term~~The ~~debt~~fair ~~consisted~~value of the ~~following~~real (estate was based on a purchase and sale agreement entered into in ~~thousands):~~ April 2021. The fair value of the Senior Notes was based on their trading price as of March 31, 2021.

	September 30, 2020		December 31, 2019
10.75% Senior Notes due 2023	$	300,000	$	300,000
Senior Secured Promissory Note	15,000		—
Finance leases and other notes	20,071		35,898
Unamortized discounts and deferred financing costs	(23,412)		(8,795)
Total long-term debt	311,659		327,103
Less current portion	7,609		18,738
Total non-current portion of long-term debt	$	304,050	$	308,365

Fair Values of Financial Instruments

The ~~Company~~fair ~~was~~values inof ~~compliance~~cash ~~with~~and ~~the~~cash ~~debt~~equivalents, ~~covenants~~accounts ~~under~~receivable, ~~its~~accounts ~~existing~~payable, ~~debt~~and ~~agreements~~other ascurrent ofliabilities ~~September~~approximate ~~30,~~their ~~2020~~carrying amounts due to the short maturities of these instruments.

~~Debt~~ ~~Discounts~~The following is a summary of the carrying amounts and ~~Issuance~~estimated ~~Costs~~fair values of the Company's long-term debt and make-whole derivative instrument:

The following discounts and issuance costs on debt represent the unamortized discount to fair value of the Senior Notes, the Senior Secured Promissory Note, and the unamortized debt issuance costs on Senior Notes (in thousands). For discussion of the change in unamortized discount on Senior Notes, see discussion below.


		March 31, 2021				December 31, 2020
(in thousands, except hierarchy level)	Hierarchy Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Fair Value of Debt
10.75% Senior Notes due 2023	2	$	299,813	$	69,500	$	289,359	$	44,992
Senior Secured Promissory Note	3	$	9,776	$	2,715	$	9,184	$	2,103
Second Lien Delayed Draw Promissory Note	3	$	15,000	$	15,000	$	15,000	$	15,000
Fair Value of Derivative Instrument
Make-Whole	3	$	—	$	—	$	4,847	$	4,847

	September 30, 2020		December 31, 2019
Unamortized discount on Senior Notes	$	11,616	$	2,156
Unamortized discount on Senior Secured Promissory Note	6,496		—
Unamortized deferred debt issuance costs	5,300		6,639
Total unamortized discounts and deferred financing costs	$	23,412	$	8,795

The fair values of the Senior Notes are based on their trading and bid/ask prices. The fair values of the Senior Secured Promissory Note as of March 31, 2021 are estimated considering its security as compared to the Senior Notes as well as the difference between the stated interest rate of this promissory note and market rates. The fair values of the Second Lien Promissory Note approximate its carrying amounts after considering the sufficiency of its security. The underlying of the make-whole derivative instrument was the fair value of our Senior Notes. Therefore, the fair value of this derivative was based on the trading price of our Senior Notes.

~~Interest~~11. ~~Expense~~Business Segment Information

The Company’s ~~interest~~reportable ~~expense~~business ~~for~~segments ~~the~~are ~~three~~Well Servicing, Water Logistics, and ~~nine~~Completion ~~months~~& ~~ended~~Remedial ~~September~~Services. 30Costs related to other business activities, ~~2020~~primarily ~~and~~corporate ~~2019~~headquarters functions, ~~consisted~~are ofdisclosed separately from the ~~following~~three ~~(in~~operating ~~thousands):~~segments as "Corporate and Other." Corporate expenses include general corporate expenses associated with managing all reportable operating segments. Corporate assets consist principally of working capital and debt financing costs.

The Company evaluates segment performance on revenue less cost of services. Products are transferred between segments and geographical areas on a basis intended to reflect as nearly as possible the market value of

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Cash payments for interest	$	1,187	$	1,435	$	19,858	$	21,863
Change in accrued interest	8,250		9,236		8,446		8,050
Amortization of discounts	1,656		265		3,837		789
Amortization of deferred debt costs	543		590		2,794		1,745
Commitment and other fees paid	5		12		27		36
Other	42		46		115		73
Interest expense - continuing operations	$	11,683	$	11,584	$	35,077	$	32,556

the products. The following table sets forth certain financial information with respect to the Company’s reportable segments:

Senior Secured Notes


(in thousands)	Well Servicing		Water Logistics		Completion & Remedial Services		Corporate and Other		Continuing Operations Total		Discontinued Operations
Three Months Ended March 31, 2021
Revenues	$	54,807	$	27,814	$	11,726	$	—	$	94,347	$	—
Costs of services	44,124		24,287		8,760		—		77,171		1,393
Segment profits	10,683		3,527		2,966		—		17,176		(1,393)
Depreciation and amortization	1,973		5,327		2,422		1,075		10,797		—
Capital expenditures	—		197		134		—		331		—
Total assets	$	37,708	$	97,041	$	53,591	$	139,565	$	327,905	$	3,194
Three Months Ended March 31, 2020
Revenues	$	58,141	$	44,381	$	25,881	$	—	$	128,403	$	95
Costs of services	48,434		33,105		20,636		—		102,175		1,520
Segment profits	9,707		11,276		5,245		—		26,228		(1,425)
Depreciation and amortization	2,455		6,681		4,070		1,559		14,765		—
Capital expenditures	2,070		2,770		729		26		5,595		—
Total assets	$	47,032	$	134,893	$	80,290	$	219,159	$	481,374	$	10,346

OnThe ~~October~~following 2,table ~~2018,~~reconciles the ~~Company~~segment ~~issued~~profits ~~$300~~reported ~~million~~above ~~aggregate~~to ~~principal amount of 10.75% senior secured notes due October 2023 (~~the ~~“Senior~~loss ~~Notes”) in an offering exempt~~ from ~~registration~~continuing ~~under~~operations ~~the~~before ~~Securities~~income ~~Act.~~taxes ~~The~~as ~~Senior~~reported ~~Notes~~in ~~were issued at a price of 99.042% of par to yield 11%. The Senior Notes are secured by a first-priority lien on substantially all of~~ the ~~assets~~condensed ofconsolidated ~~the~~statements ~~Company and the subsidiary guarantors other than accounts receivable, inventory and certain related assets. Net proceeds from the offering~~ of approximately $290 million were used to repay the Company’s existing indebtedness under the Amended and Restated Term Loan Agreement, to repay the Company’s outstanding borrowings under its previous credit facility (the "Prior ABL Facility"), and for general corporate purposes.operations:

Indenture


	Three Months Ended March 31,
(in thousands)	2021		2020
Segment profits	$	17,176	$	26,228
Selling, general and administrative	(18,054)		(26,232)
Depreciation and amortization	(10,797)		(14,765)
Gain on disposal of assets	1,993		37
Impairments and other charges	(7,258)		(99,694)
Acquisition related costs	—		(11,684)
Interest expense, net	(12,024)		(10,557)
Loss on derivative	(4,798)		(3,552)


Loss from continuing operations before income taxes	$	(33,762)	$	(140,219)

The Company’s Senior Notes were issued under and are governed by an indenture, dated as of October 2, 2018 (the “Indenture”), by and among the Company, the guarantors named therein (the “Guarantors”), and UMB Bank, N12.A. asSubsequent Trustee and Collateral Agent (the “Trustee”). The Senior Notes are jointly and severally, fully and unconditionally guaranteed (the “Guarantees”) on a senior secured basis by the Guarantors and are secured by first priority liens on substantially all of the Company’s and the Guarantors’ assets, other than accounts receivable, inventory and certain related assets.Events

~~The~~In ~~Indenture~~April ~~contains~~2021, ~~covenants~~we ~~that~~entered ~~limit~~into a purchase and sale agreement for the ~~ability~~sale of certain non-core assets for a purchase price of $6.6 million, not including the ~~Company~~assumption ~~and~~of certain ~~subsidiaries~~capital leases and an earn-out payment of up to: $1.0 million payable one year after closing. The closing date is expected to occur during the second quarter of 2021.

~~•incur~~In ~~additional~~May ~~indebtedness~~2021, orthe ~~issue~~Company ~~preferred~~completed ~~stock;~~a sale-leaseback transaction related to certain real property in California. The purchase price for the property consisted of $10.5 million, subject to a holdback of approximately $2.6 million for certain improvements to be constructed at the property. We entered into a simultaneous lease of the property for an initial term of three years.

•pay dividends or make other distributions to its stockholders;

•repurchase or redeem capital stock or subordinated indebtedness and certain refinancings thereof;

•make certain investments;

•incur liens;

•enter into certain types of transactions with affiliates;

•limit dividends or other payments by restricted subsidiaries to the Company; and

•sell assets or consolidate or merge with or into other companies.

These limitations are subject to a number of important qualifications and exceptions. Upon an Event of Default (as defined in the Indenture), the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding Senior Notes may declare the entire principal, premium, if any, and accrued and unpaid interest, if any, on all the Senior Notes to be due and payable immediately.

At any time on or prior to October 15, 2020, the Company may redeem up to 35% of the aggregate principal amount of the Senior Notes at a redemption price equal to 110.8% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, with an amount of cash not greater than the net proceeds from certain equity offerings. At any time prior to October 15, 2020, the Company may redeem the Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Senior Notes plus a “make-whole” premium plus accrued and unpaid interest, if any, to the redemption date. The Company may also redeem all or a part of the Senior Notes at any time on or after October 15, 2020, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to the redemption date.

The Company may redeem all, but not less than all, of the Senior Notes in connection with a company sale transaction, at a redemption price of 105.4% of principal for a company sale that occurs on or after April 15, 2019, and on or before October 15, 2019, or 108.1% of principal amount for a company sale that occurs after October 15, 2019, and before October 15, 2020, in each case plus accrued and unpaid interest, if any, to the redemption date. If the Company experiences a change of control, the Company may be required to offer to purchase the Senior Notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the purchase date.

~~The~~ITEM 2. ~~Senior Notes and the Guarantees rank equally in right of payment with all of the Company~~MANAGEMENT’sS ~~and~~DISCUSSION ~~the~~AND ~~Guarantors’~~ANALYSIS ~~existing~~OF ~~and~~FINANCIAL ~~future~~CONDITION ~~unsubordinated~~AND ~~indebtedness,~~RESULTS ~~effectively~~OF senior to all of the Company’s and the Guarantors’ existing and future indebtedness to the extent of the value of the collateral securing the Senior Notes but junior to other indebtedness that is secured by liens on assets other than collateral for the Senior Notes to the extent of the value of such assets, and senior to all of the Company’s and the Guarantors’ future subordinated indebtedness.OPERATIONS

~~Pursuant~~Management's todiscussion aand ~~collateral~~analysis ~~rights~~("MD&A") ~~agreement,~~of ~~the~~our ~~Senior~~financial ~~Notes~~condition and ~~Guarantees~~results ~~are~~of ~~secured~~operations byshould ~~first~~be ~~priority~~read ~~liens,~~in ~~subject~~conjunction towith ~~limited~~our ~~exceptions~~condensed consolidated financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q, as well as with our Annual Report on ~~the~~Form ~~collateral~~10-K ~~securing~~for the ~~Senior~~year ~~Notes~~ended December 31, ~~consisting~~2020. ofIn ~~substantially~~addition ~~all~~to ofhistorical consolidated financial information, the ~~property~~following ~~and~~discussion ~~assets~~contains ~~now~~forward-looking ~~owned~~statements that reflect our plans, estimates, or ~~hereafter~~beliefs. ~~acquired~~Actual byresults ~~the~~could ~~Company~~differ ~~and~~materially from those discussed in the ~~Guarantors,~~forward-looking ~~except~~statements. ~~for~~Unless ~~certain~~otherwise ~~excluded~~specified, ~~property~~all ~~described~~comparisons inmade are to the ~~Indenture~~corresponding period of 2020.

AsManagement’s discussed in Note 3. Acquisition, pursuant to the Purchase Agreement and as a portion of the consideration for the Stock Purchase, Ascribe, on behalf of the Company, conveyed to Seller Senior Notes with an aggregate par amount equal to $34.4 million (the "Ascribe Senior Notes") and Ascribe entered into an Exchange Agreement dated March 9, 2020, with the Company pursuant to which, among other things, Ascribe exchanged the Ascribe Senior Notes for (a) 118,805 shares of Series A Preferred Stock and (b) an amount in cash for accrued interest on the Ascribe Senior Notes approximately equal to $1.5 million, representing the accrued (but unpaid) interest, from and including the most recent date to which interest had been paid pursuant to the terms of the Senior Notes but excluding the date of the closing of the CJWS Transaction, on the aggregate principal amount of the Ascribe Senior Notes. Pursuant to the Exchange Agreement, the Company issued a Senior Secured Promissory Note on March 9, 2020, in favor of Ascribe in an aggregate principal amount equal to $15 million. See discussion of the Senior Secured Promissory Note below. For further discussion of the Series A Preferred Stock, see Note 10. Series A Participating Preferred Stock.Overview

If ~~Ascribe~~Basic isEnergy ~~required~~Services, toInc. ~~pay~~and ~~the~~subsidiaries ~~Make-Whole~~(“Basic”, ~~Payment~~the to“Company”, ~~Seller~~“we”, ~~described~~“us” inor ~~Note~~“our”) 3.provides ~~Acquisitions,~~wellsite ~~pursuant~~services essential to ~~the~~maintaining ~~Purchase~~production ~~Agreement,~~from the ~~Company~~oil ~~will~~and begas ~~required~~wells towithin ~~reimburse~~its tooperating ~~Ascribe~~areas. ~~the~~The ~~amount~~Company's ofoperations ~~such~~are ~~Make-Whole~~managed ~~Payment~~regionally ~~(such~~and ~~amount,~~are ~~the~~concentrated ~~"Make-Whole~~in ~~Reimbursement~~major ~~Amount")~~United ~~either~~States ~~(i)~~onshore inoil-producing ~~cash~~regions ~~(a)~~located toin ~~the~~Texas, ~~extent~~California, ~~the~~New ~~Company~~Mexico, ~~has~~Oklahoma, ~~available~~Arkansas, ~~cash~~Louisiana, ~~(as~~Wyoming, ~~determined~~North byDakota, anColorado, ~~independent~~and ~~committee~~Montana. ofOur ~~the~~operations ~~Company's~~are ~~board~~focused ofin ~~directors)~~prolific ~~and~~basins ~~(b)~~that ~~subject~~have tohistorically ~~satisfaction~~exhibited ofstrong ~~certain~~drilling ~~"Payment~~and ~~Conditions"~~production ~~set~~economics ~~forth~~ in ~~the~~recent ~~ABL~~years ~~Credit~~as ~~Agreement~~well (as ~~defined~~natural ~~below)~~gas-focused orshale ~~(ii)~~plays ifcharacterized by prolific reserves. Specifically, the Company ishas ~~unable~~a tosignificant ~~pay~~presence in the ~~full~~Permian ~~Make-Whole~~Basin, ~~Reimbursement~~Bakken, ~~Amount~~Los inAngeles ~~cash~~and ~~pursuant~~San toJoaquin ~~clause~~Basins, ~~"(i)"~~Eagle Ford, Haynesville and Powder River Basin. Our results of ~~this~~operations ~~paragraph,~~include inthe ~~additional~~results ~~Senior~~of ~~Notes~~C&J asWell ~~permitted~~Services, ~~under~~Inc. ("CJWS") since the ~~Indenture~~acquisition on March 9, 2020.

~~The~~ ~~conveyance~~Summary ofFinancial the $34.4 million in Ascribe Senior Notes to Seller by Ascribe, along with other aspects of the Exchange Agreement and Purchase Agreement considered in the aggregate, was deemed for accounting purposes to be an effective extinguishment of the existing Ascribe Senior Notes pursuant to ASC 470-50 "Debt - Modifications and Extinguishments" ("ASC 470-50") and a reissuance of a new issue of Ascribe Senior Notes as of March 9, 2020. The new issue of Ascribe Senior Notes was recorded at its estimated fair value based on the bond market pricing discount of 37% at March 9, 2020, resulting in a net carrying value at time of reissuance of $21.6 million, net of discount. This discount is amortized over the remaining term of the Ascribe Senior Notes through 2023. The deemed reissuance of Ascribe Senior Notes, along with the issuance of the Senior Secured Promissory Note and the Series A Preferred Stock, each also recorded at their estimated fair values, resulted in a net debt extinguishment gain of $22.9 million, net of transaction fees paid to Ascribe. As Ascribe was a beneficial owner of the Company prior to the acquisition, the net extinguishment gain was accounted for as a capital contribution as an adjustment within Additional Paid-In Capital as part of Stockholders' Equity.Results

~~ABL~~•Total ~~Facility~~revenue for the first quarter of 2021 was $94.3 million, which represented a decrease of $34.1 million from the first quarter of 2020.

On•Net ~~October~~loss 2, 2018, the Company terminated the Prior ABL Facility and Amended and Restated Term Loan Agreement and entered into an ABL Credit Agreement (the “Initial ABL Credit Agreement”) among the Company, as borrower (in such capacity, the “Borrower”) and the lenders from ~~time~~continuing tooperations ~~time~~for ~~party thereto (collectively,~~ the ~~“ABL~~first ~~Lenders”).~~quarter ~~Pursuant~~2021 towas ~~the Initial ABL Credit Agreement, the ABL Lenders extended to the Borrower a revolving credit facility in the initial maximum aggregate principal amount of~~ $~~150~~33.5 million ~~(reduced to $75 million pursuant to the subsequent amendments described below)~~, ~~subject~~compared to ~~borrowing base capacity (the “ABL Facility”)~~$136.4 ~~The Initial ABL Facility includes a sublimit for letters of credit of up to $50~~ million in the ~~aggregate,~~first ~~and~~quarter ~~for borrowings on same-day notice under swingline loans subject to a sublimit~~ of ~~the lesser of (a) $15 million (reduced to $7~~2020.5 million pursuant to the subsequent amendments described below) and (b) the aggregate commitments of the ABL Lenders. The Initial ABL Facility also provides capacity for base rate protective advances up to $10 million at the discretion of the Administrative Agent and provisions relating to overadvances.

~~The~~•Adjusted ~~Initial~~EBITDA(1) ~~ABL~~for ~~Credit Agreement was amended pursuant to a Limited Consent and First Amendment to ABL Credit Agreement (~~the ~~"First~~first ~~Amendment"),~~quarter ~~dated~~of as2021 ofwas ~~March~~$0.6 9million, ~~2020, in connection with the CJWS Transaction and~~ which, ~~among~~represented ~~other~~a ~~things,~~decrease ~~reduced~~from ~~aggregate~~adjusted ~~commitments~~EBITDA ~~from~~of $~~150 million~~1.3 ~~to $120~~ million, ~~and~~in ~~expanded~~ the ~~definition~~first quarter of ~~the~~2020. ~~borrowing~~See ~~base~~later toin ~~also~~this ~~include~~MD&A ~~eligible~~for ~~pledged~~our ~~cash~~reconciliation ~~which~~of ~~can~~net beloss ~~advanced~~ to ~~the~~adjusted EBITDA.

(1)Adjusted EBITDA is not a measure determined in accordance with GAAP. See "Supplemental Non-GAAP Financial Measure - Adjusted EBITDA" below for further explanation and reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Current Environment, Liquidity, and Going Concern

Demand for services offered by our industry is a function of our customers’ willingness and ability to make operating and capital expenditures to explore for, develop and produce hydrocarbons in the United States. Our customers’ expenditures are affected by both current and expected levels of commodity prices. Industry conditions during 2021 continue to be influenced by factors that impacted the supply and demand of the global oil markets in 2020, primarily the outbreak of the novel coronavirus ("COVID-19") and the resulting lower demand for oil. The increased price of West Texas Intermediate oil ("WTI") in the first quarter of 2021 increased our customers' activity levels; however, we continue to maintain discipline to only offer our services into the market at profitable job margins, which we began to realize in the second half of the first quarter. This trend has continued into the second quarter. Our first quarter results were also negatively impacted by the severe winter storm that affected our Texas operating locations in February 2021.

As a result of weak energy sector conditions that began in 2020 and the resulting lower demand for our services, our customer pricing, our operating results, our working capital and our operating cash flows have been negatively impacted. During the last half of 2020, we had difficulty paying for our contractual obligations as they came due, and we continue to have this difficulty in 2021.

~~Administrative~~a ~~Agent~~significant ascontractual ~~necessary.~~obligation ~~The Initial ABL Credit Agreement was further amended pursuant~~ to apay ~~Second~~cash ~~Amendment~~or toissue ~~ABL~~additional ~~Credit~~10.75% ~~Agreement~~senior ~~dated~~secured asnotes ofdue ~~June~~2023 ~~15, 2020~~ (the "~~Second~~Senior ~~Amendment~~Notes"), ~~which,~~to ~~among~~our ~~other~~largest ~~things~~shareholder, ~~(i)~~Ascribe ~~further~~III ~~reduced~~Investments ~~aggregate~~LLC ~~commitments from $120 million to $75 million,~~ (ii"Ascribe"), ~~made~~resulting ~~proportionate~~from ~~downward~~our ~~adjustments~~acquisition ~~to certain~~ of ~~the~~CJWS. ~~Availability~~On ~~(as~~March ~~defined~~31, ~~in the ABL Credit Agreement) thresholds that can trigger certain springing covenants such as consolidated fixed charge coverage ratio and cash dominion provisions~~2021, ~~and (iii) included additional requirements for~~ the Company, ~~such~~negotiated asa ~~prepayment~~settlement ~~requirements~~of ~~for~~this ~~cash~~obligation ~~accumulation~~with ~~over~~Ascribe ~~a specified threshold, an increase~~ in ~~the~~exchange ~~applicable~~for ~~rates~~issuing onadditional ~~outstanding~~Senior ~~borrowings,~~Notes asto ~~well~~Ascribe ~~as provisions precluding defensive Initial ABL Credit Agreement drawdowns. In connection~~ with ~~the~~an ~~reductions in the~~ aggregate ~~commitment~~par ~~effected~~value ~~by the First Amendment and Second Amendment, certain deferred financing cost assets~~ of $147.15 million ~~were charged to interest expense during the nine months ended September 30, 2020~~. On October 15, 2020, the Initial ABL Credit Agreement was further amended pursuant to a Third Amendment to ABL Credit Agreement (the "Third Amendment"), pursuant to which, among other things, the issuance of the Second Lien Promissory Note (see discussion below) and the grant of the liens in connection therewith were permitted. The Initial ABL Credit Agreement, as amended by the First Amendment, the Second Amendment, and the Third Amendment, and as may be further amended, restated, supplemented, or otherwise modified to date, is hereafter defined as the "ABL Credit Agreement."

~~Borrowings~~On ~~under~~April ~~the~~15, ~~ABL~~2021, ~~Facility~~the ~~bear~~Company ~~interest~~announced atit aelected ~~rate~~to ~~per~~utilize ~~annum~~the ~~equal~~30-day tograce anperiod ~~applicable~~under ~~rate,~~the ~~plus,~~terms atof ~~Borrower’s~~the ~~option,~~indenture ~~either~~governing ~~(a)~~its aSenior ~~base~~Notes ~~rate~~with orrespect ~~(b)~~to a ~~LIBOR rate~~$16.3 million ~~The~~interest ~~applicable~~payment ~~rate is fixed from~~ (the ~~Second~~"Senior ~~Amendment~~Notes ~~effective~~Interest ~~date~~Payment") todue ~~July~~that ~~1, 2020~~day. ~~Following~~The ~~July~~Company 1,believed ~~2020,~~it ~~the~~was ~~applicable~~in ~~rate is determined by reference to~~ the ~~average~~best ~~daily~~interests ~~availability as a percentage~~ of ~~the~~all ~~borrowing~~stakeholders ~~base~~to ~~during~~use the ~~fiscal~~grace ~~quarter~~period ~~immediately~~to ~~preceding~~continue ~~such~~its ~~applicable~~ongoing ~~quarter.~~discussions ~~The~~with ~~applicable~~its ~~rate~~debtholders ~~was~~regarding ~~increased~~strategic asalternatives ~~set~~to ~~forth~~improve in the ~~Second~~Company’s ~~Amendment~~long-term capital structure.

~~Principal~~The ~~amounts~~Company ~~outstanding~~also ~~under~~announced ~~the~~it ABL Facility will be due and payable in full on the maturity date, October 2, 2023, which is five years from the closing of the facility; provided that if the Senior Notes have not been redeemed by July 3, 2023, then the maturity date shall be July 3, 2023. We had ~~$16.3~~entered ~~million~~into ofa ~~Availability,~~Forbearance asAgreement ~~defined under~~ (the "ABL ~~Facility,~~Forbearance ~~and~~Agreement") ~~subject~~on toApril ~~borrowing restrictions that are in place as of September 30~~14, ~~2020.~~2021 Towith ~~avoid~~a ~~triggering~~majority ~~certain~~ of the ~~consolidated~~lenders ~~fixed charge coverage ratios and cash dominion covenants which spring into effect~~ under ~~certain~~its ~~minimum~~revolving ~~availability~~credit ~~covenant~~facility ~~requirements~~who ~~defined~~agreed into ~~the~~forbear ~~ABL~~from ~~Credit~~exercising ~~Agreement,~~remedies ~~as amended, as of June 30, 2020,~~ in ~~early~~respect ~~July 2020 we repaid the $2.6 million amount~~ of ~~borrowings~~certain ~~that~~events ~~was previously outstanding, and during the third quarter~~ of ~~2020,~~default ~~we advanced $7.4 million~~thereunder, ~~net,~~including ~~of our available cash balance to~~ the ~~Administrative~~failure ~~Agent. Also beginning during the third quarter of 2020, we are currently subject~~ to ~~increased~~pay ~~financial~~interest ~~and~~on ~~borrowing base information reporting. The amount of net advances of our available cash balance to~~ the ~~Administrative~~Senior ~~Agent as of September 30~~Notes, ~~2020~~until isApril ~~reflected as restricted cash in the accompanying consolidating balance sheet. As of November 2~~28, ~~2020,~~2021 ~~the~~(subject ~~amount~~to ofcertain ~~cumulative~~early ~~net~~termination ~~advances~~events) ~~of our available cash balance to~~ (the ~~Administrative~~"ABL ~~Agent~~Forbearance ~~has been reduced to $3~~Period").~~4 million.~~

~~Substantially~~On ~~all~~April of28, 2021, the ~~domestic~~Company ~~subsidiaries~~entered ofinto the ~~Company~~Limited ~~guarantee~~Consent ~~the~~and ~~borrowings~~First ~~under~~Amendment to the ABL ~~Facility,~~Forbearance ~~and~~Agreement ~~Borrower guarantees~~ (the ~~payment~~“ABL ~~and~~Forbearance ~~performance~~Amendment”) bywith ~~each~~a ~~specified~~majority ~~loan party~~ of its ~~obligations~~lenders under its ~~guaranty~~revolving ~~with~~credit ~~respect~~facility who agreed to ~~swap~~extend ~~obligations.~~the ~~All~~ABL ~~obligations~~Forbearance ~~under~~Period ~~the~~to ~~ABL~~May ~~Facility~~15, 2021 and consent to the ~~related~~incurrence ~~guarantees~~of ~~are~~the ~~secured~~New byTerm aLoan ~~perfected~~Facility ~~first-priority~~(as ~~security~~defined ~~interest~~below), inif ~~substantially~~the ~~all~~Company ~~accounts~~completed ~~receivable,~~certain ~~inventory~~asset sales, amended the indenture governing its Senior Notes to allow for the incurrence of the New Term Loan Facility and, obtained a forbearance for certain of its other ~~assets~~indebtedness, ~~not~~as ~~including~~applicable. ~~equity~~The ~~interests.~~Company Assatisfied ofthese ~~September~~conditions 30and on May 3, ~~2020~~2021, the Company ~~had~~entered ~~$35.6 million~~into ofa ~~letters~~Super ofPriority ~~credit~~Credit ~~outstanding~~Agreement ~~under~~(the “Super Priority Credit Agreement”), among the ~~ABL~~Company, ~~Facility~~as borrower, the lenders party thereto and Cantor Fitzgerald Securities, as administrative agent and collateral agent.

The Super Priority Credit Agreement provides for a super priority loan facility consisting of term loans in a principal amount of $10.0 million (the “New Term Loan Facility”). The proceeds of the New Term Loan Facility will be used for working capital and other general corporate purposes and the payment of fees and expenses in connection with the New Term Loan Facility and the other agreements entered into in connection with the New Term Loan Facility. The New Term Loan Facility originally matured on May 15, 2021; provided that such date could be extended for up to thirty days with the prior written consent of lenders holding 66 2/3% of the aggregate outstanding amount of the term loans. At the Company’s election, loans outstanding under the New Term Loan Facility accrue interest at an annualized interest rate of either a base rate plus 10.00% or LIBOR plus 11.00%. The Company may prepay the New Term Loan Facility at any time if the Company simultaneously prepays the aggregate outstanding principal amount of its Senior Notes and Senior Secured Promissory Note, plus accrued and unpaid interest. On May 10, 2021, the Lenders under the New Term Loan Facility extended the maturity date of the facility to May 23, 2021 and corresponding adjustments to certain interim milestones therein.

~~Pursuant~~ On toMay ~~the~~3, ~~Exchange Agreement~~2021, the Company ~~issued~~and ~~a Senior Secured Promissory Note on March 9, 2020, in favor of~~ Ascribe inentered aninto ~~aggregate~~a ~~principal~~consent ~~amount~~letter ~~equal to $15 million~~ (the ~~"Senior~~“Ascribe ~~Secured~~Consent ~~Promissory Note"~~Letter”). ~~Interest~~pursuant onto ~~the~~which ~~Senior~~Ascribe ~~Secured~~agreed ~~Promissory~~to ~~Note~~forbear isfrom ~~payable~~exercising ~~monthly,~~any atrights anor ~~initial~~remedies ~~interest~~they ~~rate~~may ofhave ~~10%~~in ~~per~~respect ~~annum, increasing by an additional 2% per annum beginning on January 1, 2021, and on January 1~~ of ~~each succeeding year thereafter until~~ the ~~Senior Secured Promissory Note matures on October 15, 2023. The Senior Secured Promissory Note is secured by a lien upon certain of the~~ Company's ~~existing~~failure ~~and~~to ~~after-acquired~~pay ~~property,~~interest ~~which~~on ~~are also secured by~~ the ~~Company's~~notes ~~existing~~described ~~Senior~~therein ~~Secured Notes~~from. On AsMay ~~a part of the Exchange Agreement and pursuant to ASC 470-50~~14, ~~the Senior Secured Promissory Note was recorded at its estimated fair value~~2021, ~~resulting in a net carrying value, net of discount, of $7 million at time of issuance. This discount is amortized using~~ the ~~effective~~Company ~~interest~~entered ~~method~~into ~~over~~an ~~the~~amendment ~~remaining~~to ~~term of~~ the ~~Senior~~Ascribe ~~Secured~~Consent ~~Promissory~~Letter ~~Note. The proceeds of the Senior Secured Promissory Note were used~~ to ~~finance~~extend ~~a portion of~~ the ~~purchase~~forbearance ~~price~~period ~~consideration paid in connection with the Stock Purchase. Such proceeds were net of approximately $0.5 million of associated fees related~~ to ~~the~~May ~~issuance of the Senior Secured Promissory Note~~23, ~~which were considered in the determination of the $22~~2021.~~9 million net extinguishment gain discussed above.~~

On May 14, 2021, the Company entered into the (i) Second Amendment to the ABL Forbearance Agreement with a majority of its lenders under its revolving credit facility who agreed to extend the ABL Forbearance Period to May 23, 2021 and to make corresponding adjustments to certain interim milestones therein, and (ii) the Forbearance Agreement with the requisite number of lenders under the New Term Loan Facility who agreed to forbear from exercising remedies in respect of certain events of default thereunder, including the failure to pay interest on the Senior Notes following the expiration of the applicable grace period, until May 23, 2021 (subject to certain early termination events). In addition, on May 14, 2021, the holders of approximately $316.4 million in aggregate principal amount, or 91.06%, of the $347.5 million issued and outstanding Senior Notes, subject to certain conditions precedent and continuing conditions, agreed that during the Forbearance Period ending on May 23, 2021 (subject to certain early termination events) they would not enforce, or otherwise take any action to direct enforcement of, any of the rights and remedies available to the Holders, the Trustee of the Collateral Agent, under the Indenture for the Senior Notes, or otherwise, including, without limitation, any action to accelerate the Senior Notes with respect to the Senior Notes Interest Payment.

We are in continuing discussions with the holders of the Company’s Senior Notes and other indebtedness regarding strategic alternatives including financings, refinancings, amendments, waivers, forbearances, asset sales, debt issuances, and exchanges of debt, a combination of the foregoing, or other out-of-court or in-court bankruptcy restructurings of our debt and other transactions to address our capital structure.

~~Second~~If ~~Lien~~the ~~Delayed~~Company ~~Draw~~is ~~Promissory~~unable ~~Note~~to effectuate a successful debt restructuring, the Company expects that it will continue to experience adverse pressures on its relationships with counterparties who are critical to its business, its ability to access the capital markets, its ability to execute on its operational and ~~Security~~strategic ~~Agreement~~goals and its business, prospects, results of operations and liquidity generally. There can be no assurance as to when or whether, or on what terms the Company will implement any action as a result of these strategic initiatives, whether the implementation of one or more such actions will be successful, whether the Company will be able to effect a refinancing of its Senior Notes or the effects the failure to take action may have on the Company’s business, its ability to achieve its operational and strategic goals or its ability to finance its business or refinance or restructure its indebtedness. A failure to address the Company’s level of corporate leverage in the near-term will have a material adverse effect on the Company’s business, prospects, results of operations, liquidity and financial condition, and its ability to service its corporate debt as it becomes due.

OnResults ~~October 15, 2020, the Company entered into that certain Second Lien Delayed Draw Promissory Note, in favor~~ of Ascribe, in an aggregate principal amount equal to $15,000,000 (the “Second Lien Promissory Note”). An Initial Advance (as defined in the Second Lien Promissory Note) in an amount of $7,500,000 was drawn on October 15, 2020. The Second Lien Promissory Note is secured by a second lien upon certain of the Company’s existing and after-acquired property pursuant to that certain Second Lien Security Agreement, dated as of October 15, 2020, by and among the Company and certain subsidiaries of the Company in favor of Ascribe, as secured party (the “Security Agreement”), which collateral also secures the Company’s ABL Credit Agreement on a first lien basis. Interest shall be calculated on the outstanding principal amount thereof from the date each advance is made at a rate per annum equal to 9.75%, calculated monthly and payable in cash in arrears on the first day of each January, April, July, and October. The proceeds of the Second Lien Promissory Note will be used for general corporate and working capital purposes.Operations

~~8. Fair Value Measurements~~Revenues

~~The~~Consolidated ~~following~~revenues isdecreased aby ~~summary~~27% ofto ~~the~~$94.3 ~~carrying~~million ~~amounts,~~in ~~net~~the first quarter of ~~discounts~~2021 from $128.4 million in 2020, ~~and~~despite ~~estimated~~reflecting ~~fair~~the ~~values~~full quarter impact of the ~~Company's~~CJWS ~~Senior~~acquisition. ~~Notes~~This decrease, ~~Senior~~particularly ~~Secured~~in ~~Promissory~~our ~~Note,~~Water Logistics and ~~the~~Completion ~~Make-Whole~~& ~~Reimbursement~~Remedial ~~Amount~~Services assegments, ofwas ~~September~~primarily ~~30,~~due ~~2020~~to decreased demand for our services, and ~~December~~was ~~31,~~further ~~2019~~impacted (by the February 2021 severe winter storm in ~~thousands,~~Texas. ~~except~~Our ~~hierarchy~~reportable ~~level)~~segment revenues consisted of the following:

				September 30, 2020							December 31, 2019
		Three Months Ended March 31,
	Hierarchy Level			Carrying Amount			Fair Value				Carrying Amount			Fair Value
		2021							2020
Fair Value of Debt
(dollars in thousands)		Revenues				% of Total Revenues			Revenues				% of Total Revenues
10.75% Senior Notes due 2023	1			$	288,384		$	60,847			$	297,844		$	213,246
Well Servicing		$	54,807			58%			$	58,141			45%
Senior Secured Promissory Note	3			$	8,504		$	2,962			$	—		$	—
Water Logistics		27,814				30%			44,381				35%
Fair Value of Derivative Instrument
Completion & Remedial Services		11,726				12%			25,881				20%
Make-Whole Reimbursement Amount	3			$	5,797		$	5,797			$	—		$	—
Revenues from continuing operations		$	94,347			100%			$	128,403			100%

~~The~~Well ~~fair~~Servicing ~~value~~Segment: ofThe ~~the~~following ~~Senior~~table ~~Secured~~includes ~~Promissory~~certain ~~Note~~operating asstatistics ofrelated ~~September 30, 2020, was calculated in accordance with ASC 820 "Fair Value Measurements" considering its subordination as~~ to ~~security~~our toWell ~~the~~Servicing ~~Senior~~segment ~~Secured~~for ~~Notes as well as~~ the ~~difference~~first ~~between~~quarter ~~the stated interest rate~~ of ~~the~~2021 ~~Senior Secured Promissory Note~~ and ~~market~~2020, ~~rates~~respectively.

As a result of the CJWS Transaction, the Company has a Make-Whole Reimbursement derivative in place, which is classified as a short-term derivative financial instrument on our consolidated balance sheet. Changes in the fair value of derivative instruments subsequent to the initial measurement are recorded as Gain (Loss) on Derivative in the accompanying consolidated statement of operations. The estimated fair value of the Company’s derivative liability is determined at discrete points in time derived from the fair value of our Senior Notes, which resulted in the Company classifying the derivative liability as Level 3. The Company recorded a gain of $3.9 million as a result of the change in fair value of the Make-Whole Reimbursement derivative in the nine month period ended September 30, 2020.


Well Servicing	Weighted Average Number of Rigs	Rig hours	Rig Utilization Rate	Revenue Per Rig Hour	Segment Profits %

2021	514	127,700	35%	$429	19%





2020	396	139,100	49%	$397	17%

~~The~~Well ~~carrying~~Servicing ~~amounts~~revenues decreased by 6% to $54.8 million in the first quarter of ~~cash~~2021 ~~and~~from ~~cash~~$58.1 ~~equivalents,~~million ~~accounts~~in ~~receivable~~2020. Rig hours decreased by 8%, ~~accounts~~due ~~payable~~to decreased customer activity levels in 2021 and ~~other~~the ~~accrued~~February ~~liabilities~~2021 ~~approximate~~severe ~~fair~~winter ~~value~~storm ~~due~~in toTexas. These decreases were partially offset by the ~~short~~full ~~maturities~~quarter impact in 2021 of ~~these~~the ~~instruments~~CJWS acquisition. ~~The~~Revenue ~~Company~~per ~~did~~rig ~~not~~hour ~~have~~increased ~~any~~8% ~~additional~~in ~~assets~~the orfirst ~~liabilities~~quarter ~~that~~of ~~were~~2021 ~~measured~~due atto ~~fair~~the ~~value~~full onquarter aimpact ~~recurring~~of ~~basis~~the asCJWS acquisition. Our weighted average number of ~~September~~rigs ~~30,~~increased ~~2020,~~in or2021 ~~December~~due ~~31,~~to ~~2019~~the full quarter impact in 2021 of the CJWS acquisition.

~~During~~Water ~~the~~Logistics ~~nine~~Segment: ~~month~~The ~~period~~following ~~ended~~table ~~September~~includes ~~30, 2020, our Well Servicing segment recorded~~ certain ~~impairments~~operating statistics related to ~~the~~our ~~expected~~Water ~~decreased~~Logistics ~~operating~~segment ~~cash~~for ~~flows~~the asfirst aquarter ~~result~~ of ~~the~~2021 ~~impact of low crude oil prices~~ and ~~the corresponding decrease in customer demand for our services as of that date. For further discussion of these impairments~~2020, ~~see Note 14~~respectively. ~~Impairments.~~

9. Commitments and Contingencies


Water Logistics	Pipeline Volumes (in bbls)	Trucking Volumes (in bbls)	Weighted Average Number of Fluid Service Trucks	Truck Hours	Segment Profits %
2021	3,395,000	3,133,000	1,170	252,500	13%





2020	3,620,000	5,825,000	908	374,300	25%

~~Environmental~~Water Logistics revenue decreased by 37% to $27.8 million in the first quarter of 2021 from $44.4 million in 2020. Our trucking volumes decreased 46% in the first quarter of 2021 due to decreased customer activity levels in 2021 and the February 2021 severe winter storm in Texas. These decreases were partially offset by the full quarter impact in 2021 of the CJWS acquisition. Our pipeline disposal volumes decreased 6% in the first quarter of 2021 due to decreased customer activity levels in 2021. Our weighted average number of water logistics trucks increased in 2021 due to the full quarter impact in 2021 of the CJWS acquisition.

The Company is subject to various federal, state and local environmental laws and regulations that establish standards and requirements for protection of the environment. The Company cannot predict the future impact of such standards and requirements, which are subject to change and can have retroactive effectiveness. The Company continues to monitor the status of these laws and regulations.

Currently, the Company has not been fined, cited or notified of any environmental violations that would have a material adverse effect upon its financial position, liquidity or capital resources. However, management recognizes that by the very nature of its business, material costs could be incurred in the near term to maintain compliance. The amount of such future expenditures is not determinable due to several factors, including the unknown magnitude of

~~possible~~Completion ~~regulation~~& orRemedial ~~liabilities,~~Segment: ~~the~~Completion ~~unknown~~& ~~timing~~Remedial ~~and~~Services ~~extent~~revenues ofdecreased by ~~the~~55% ~~corrective~~to ~~actions~~$11.7 ~~which~~million ~~may~~in ~~be required,~~ the ~~determination~~first quarter of ~~the~~2021 ~~Company’s~~from ~~liability~~$25.9 million in ~~proportion~~2020 due to ~~other~~decreased ~~responsible~~customer ~~parties~~drilling and completion activity levels in 2021 and the ~~extent~~February to2021 ~~which~~severe ~~such~~winter ~~expenditures~~storm ~~are~~in ~~recoverable~~Texas. ~~from~~These ~~insurance~~decreases orwere ~~indemnification~~partially offset by the full quarter impact in 2021 of the CJWS acquisition.

~~Litigation~~Costs of Services

~~From~~Consolidated ~~time~~costs toof ~~time~~services, ~~the~~decreased ~~Company~~by is24% ~~a party~~ to ~~litigation~~$77.2 ormillion ~~other~~during ~~legal proceedings that~~ the ~~Company~~first ~~considers~~quarter ~~to be a part~~ of ~~the~~2021 ~~ordinary~~from ~~course of business~~$102.2 ~~The~~million ~~Company is not currently involved~~ in any legal proceedings that it considers probable or reasonably possible, individually or in the aggregate, to result in a material adverse effect on its financial condition, results of operations or liquidity2020.

~~State~~Well ~~Tax~~Servicing Segment: Costs of services for the Well Servicing segment decreased by 9% to $44.1 million in the first quarter of 2021 from $48.4 million in 2020, due to reduced activity levels and employee headcount. These decreases were partially offset by the full quarter impact in 2021 of the CJWS acquisition. Segment profits as a percentage of segment revenues increased to 19% in the first quarter of 2021 from 17% in 2020 due to our cost saving initiatives and the full quarter impact of the CJWS acquisition.

InWater ~~2014,~~Logistics ~~the~~Segment: ~~Company~~Costs ~~was~~of ~~notified~~services ~~by the Texas State Comptroller’s office that a sales and use tax audit~~ for the ~~period~~Water ~~from~~Logistics ~~2010~~segment ~~through~~decreased ~~2013~~by ~~would~~27% beto ~~conducted~~$24.3 Amillion ~~preliminary report was issued~~ in the ~~second~~first quarter of ~~2018~~2021 ~~for~~from ~~this~~$33.1 ~~audit,~~million ~~and~~in ~~the~~2020 ~~Company~~due ~~will~~to ~~appeal~~reduced ~~the~~activity ~~preliminary~~levels ~~report~~and ~~through~~employee ~~the redetermination process~~headcount. ~~Based~~Segment ~~upon~~profits ~~the~~as ~~Company's~~a ~~analysis,~~percentage ~~the~~of ~~potential~~segment ~~liability~~revenues ~~associated~~decreased ~~with~~to ~~this~~13% ~~audit, including costs incurred~~ in ~~defending~~the ~~and~~first ~~settling~~quarter ~~this~~of ~~audit,~~2021 ~~ranges~~ from $625% ~~million~~in to2020 ~~$24~~due ~~million.~~to ~~This~~decreased ~~range~~pricing ~~could~~for ~~potentially~~our ~~change~~services in ~~future~~2021 ~~periods as the appeal~~ and ~~redetermination~~severe ~~process~~weather ~~progresses.~~in ~~Net of good faith payments made by~~ the ~~Company,~~first ~~the~~quarter ~~Company~~of ~~currently~~2021 ~~has~~leading ~~recorded~~to a ~~$3.4~~decline ~~million~~in ~~liability~~disposal ~~which~~volumes. isAdditionally, ~~included~~the assegment ~~accrued~~profits ~~expenses~~for onthis ~~our~~segment ~~consolidated~~in ~~balance sheets. Interest expense associated with~~ the ~~taxes~~first ~~for~~quarter ~~the~~of ~~nine~~2021 ~~months~~were ~~ended~~negatively ~~September~~impacted ~~30,~~by ~~2020,~~a of $01.24 million, ischarge ~~included~~to inearnings ~~approximately~~related ~~$2.1~~to ~~million~~the settlement of ~~accrued~~an ~~interest~~automobile oninsurance ~~the liability~~claim.

OnCompletion ~~August~~& ~~15,~~Remedial ~~2019,~~Segment: ~~the~~Costs ~~Company~~of ~~was~~services ~~notified~~for by the ~~Oklahoma~~Completion ~~Tax~~& ~~Commission~~Remedial ~~(the~~Services ~~"OTC")~~segment ~~that~~decreased ~~the~~by ~~tax~~58% ~~court had issued findings, conclusions, and recommendations in an on-going tax case related~~ to ~~tax years 2006 through 2008~~$8.8 ~~Based~~million onin the ~~ruling~~first ~~and~~quarter ~~the advice~~ of ~~our~~2021 ~~Oklahoma~~from ~~tax~~$20.6 ~~counsel,~~million ~~the~~in ~~Company~~2020 ~~decided~~due to ~~negotiate~~reduced aactivity ~~settlement~~levels ~~with~~and ~~the~~employee ~~OTC~~headcount. ~~The~~Segment ~~Company's~~profits ~~analysis~~as isa ~~that~~percentage ~~the~~of ~~potential~~segment ~~liability~~revenues ~~associated~~increased ~~with~~to ~~the~~25% ~~settlement~~in ~~may~~the ~~range~~first ~~from~~quarter ~~$2.3~~of ~~million~~2021 tofrom ~~$3.5~~20% ~~million.~~in ~~The~~2020 ~~Company~~due ~~recorded~~to ~~$2.5~~our ~~million~~cost ofsaving ~~income~~initiatives ~~tax~~ and ~~interest~~increased ~~payable,~~mix ~~which~~of ishigher ~~included~~margin aswork ~~accrued~~in ~~expenses~~the onfirst ~~our~~quarter ~~consolidated~~of ~~balance sheets~~2021.

~~Self-Insured~~Selling, ~~Risk~~General ~~Accruals~~and Administrative

~~The~~Consolidated ~~Company is self-insured up to retention limits as it relates to workers’ compensation~~selling, general ~~liability claims,~~ and ~~medical~~administrative ~~and~~expenses ~~dental~~decreased ~~coverage~~by ~~of its employees~~$8.1 ~~The~~million ~~amount~~or of31% ~~these~~to ~~accruals as of September 30, 2020, includes~~ $718.5 1 million ofin ~~workers'~~the ~~compensation~~first ~~related~~quarter ~~impact~~ of ~~the~~2021 ~~March~~from 9,$26.2 ~~2020,~~million ~~acquisition~~in ~~of CJWS~~2020. ~~The~~This ~~Company~~decrease ~~generally~~was ~~maintains~~due noto ~~physical~~lower ~~property~~employee ~~damage~~headcount ~~coverage~~and ~~on its rig fleet, with~~ the ~~exception~~effect of ~~certain~~our ofcost ~~its~~reduction ~~24-hour~~initiatives ~~workover~~that ~~rigs,~~began ~~newly~~in ~~manufactured rigs and pumping services equipment~~2020. ~~The~~Stock-based ~~Company has deductibles per occurrence for workers’~~ compensation, ~~general~~expense ~~liability~~was ~~claims, and medical and dental coverage of~~ $~~2 million, $1 million, and $~~0.~~4 million, respectively. The Company has a $~~1 million ~~deductible per occurrence for automobile liability. The Company maintains accruals~~ in the ~~accompanying~~first ~~consolidated~~quarter ~~balance~~of ~~sheets~~2021 ~~related~~compared to ~~self-insurance~~$1.3 ~~retentions~~million ~~based~~in ~~upon third-party data and claims history~~2020.

~~10.~~Depreciation ~~Series~~and AAmortization ~~Participating Preferred Stock~~

InConsolidated ~~connection~~depreciation ~~with the CJWS Transaction~~ and ~~pursuant~~amortization todecreased ~~the~~by ~~Exchange~~$4.0 ~~Agreement~~million, asor ~~partial consideration for the Exchange Transaction~~27%, onto ~~March~~$10.8 9,million ~~2020,~~in the ~~Company~~first ~~issued~~quarter ~~to Ascribe 118,805 shares~~ of ~~newly~~2021 ~~issued~~from ~~preferred~~$14.8 ~~stock,~~million ~~designated~~in as2020. ~~"Series~~This Adecrease ~~Participating~~was ~~Preferred~~due ~~Stock,"~~to ~~par~~impairments ~~value~~of ~~0.01~~long-lived ~~per~~assets ~~share,~~in of2020 ~~the~~and ~~Company~~decreased ~~(the~~capital ~~"Series~~spending Ain ~~Preferred Stock")~~2021. ~~The~~Capital ~~Series~~expenditures ~~A Preferred Stock was issued~~ in ~~exchange for~~ the ~~Ascribe~~first ~~Senior~~quarter ~~Notes~~of ~~having~~2021 awere ~~par value of~~ $340.43 million. ~~The~~compared ~~Series~~to A$5.6 ~~Preferred~~million ~~Stock~~in ~~constituted~~2020. ~~83%~~We ofalso ~~the~~acquired ~~equity interest in the Company~~$0.5 ~~Upon~~million ~~consummation~~ of ~~the~~finance ~~Exchange~~leases ~~Transaction,~~in the ~~Company's~~first ~~public~~quarter ~~stockholders owned approximately 14.94%~~ of ~~the~~2020 ~~equity~~compared ~~interests~~to zero in ~~the Company, and Ascribe held approximately 85~~2021.~~06%.~~

~~Each~~Impairments share of Series A Preferred Stock is entitled to (i) dividends in an amount per share equal to 1,000 times the per share amount of each dividend declared on the Company's common stock; (ii) 1,000 votes on all matters submitted to a vote of the holders of the Company's common stock; and ~~(iii)~~Other ~~upon~~Charges any liquidation, dissolution or winding up of the Company, an amount equal to 1,000 times the per share amount to be distributed to each share of the Company's common stock. Each share of Series A Preferred Stock is convertible at the option of the Company or the holder into 1,000 shares of Company common stock.

OnThe ~~May~~following 6,table ~~2020,~~summarizes ~~the~~our ~~Company's~~impairments ~~stockholders,~~ and ~~the~~other holders of common stock voting separately, approved the proposal to increase the number of authorized shares of common stock by 118,805,000, to allow for the conversion of Series A Preferred Stock shares to common shares.charges:

As a result of Ascribe's effective controlling equity interest in the Company, and in accordance with ASC No. 480 "Distinguishing Liabilities from Equity" ("ASC 480"), the Series A Preferred Stock is classified outside of permanent


	Three Months Ended March 31, 2021
(in thousands)	2021		2020
Long lived asset impairments	$	4,435	$	84,217
Transaction costs	2,589		—
Field restructuring	234		66
Goodwill impairments	—		10,565
Inventory write-downs	—		4,846







	$	7,258	$	99,694

Transaction costs - In connection with liability management, we incurred $2.6 million of legal and professional consulting costs during the first quarter of 2021.

Field restructuring costs - In the first quarter of 2021, we incurred $0.2 million of costs associated with yard

~~equity~~closures in ~~the~~connection ~~Company's~~with ~~balance~~our ~~sheet~~field asrestructuring ~~of September 30, 2020~~initiative. ~~The~~We ~~Series~~incurred ~~A Preferred Stock was recorded at the fair value, approximately~~ $22 0.1 million asin ~~of March 9, 2020, based on~~ the ~~trading~~first ~~price~~quarter of ~~the~~2020 ~~Company~~related ~~common~~to ~~shares,~~yard ~~plus a control premium~~closures.

11Goodwill impairments - On March 31, 2020, due to the reduction in demand for our services, we determined that the fair value of the Well Servicing reporting unit was less than its carrying value, which resulted in a goodwill impairment of $10.6 million ~~Stockholders'~~for ~~Equity~~this ~~(Deficit)~~reporting unit.

OnInventory ~~May~~write-downs 6,- ~~2020,~~In connection with the ~~Company's~~downturn ~~stockholders~~in ~~voted~~our tobusiness ~~amend~~in the ~~Company's~~first ~~Second~~quarter ~~Amended and Restated Certificate~~ of ~~Incorporation to~~2020, ~~among~~we ~~other~~recorded ~~items,~~a ~~increase~~$4.8 million ~~the~~write-down ~~number~~ of ~~authorized~~certain ~~shares~~parts ofinventory ~~common~~in ~~stock~~our ~~from~~Well ~~80,000,000~~Servicing ~~shares to 198,805,000 shares~~segment.

~~12.~~Acquisition ~~Incentive~~Related ~~Plan~~Costs

~~During~~Acquisition ~~the~~related ~~three~~costs ~~month~~in ~~period~~the ~~ended~~first ~~September~~quarter ~~30,~~of 2020 ~~and~~was ~~2019,~~$11.7 ~~compensation~~million ~~expenses~~due ~~related~~ to ~~share-based~~legal ~~arrangements~~and ~~under~~professional ~~the~~costs ~~Management~~associated ~~Incentive~~with ~~Plan (~~the ~~"MIP")~~CJWS ~~and~~acquisition ~~Long~~as ~~Term~~well ~~Incentive~~as ~~Plan~~severance ~~("LTIP"),~~costs ~~including~~paid ~~restricted~~to ~~stock,~~CJWS ~~restricted~~employees ~~stock~~pursuant ~~units~~to ~~and~~the ~~stock~~purchase ~~option awards, were approximately $0~~agreement.~~1 million and $1.2 million, respectively.~~

~~During~~(Gain) ~~the~~Loss ~~nine~~on ~~month~~Disposal ~~period~~of ended September 30, 2020 and 2019, compensation expenses related to share-based arrangements under the MIP and the LTIP, including restricted stock, restricted stock units and stock option awards, were approximately $1.5 million and $7.8 million, respectively. Assets

~~The~~In ~~Company~~the ~~did~~first ~~not~~quarter ~~recognize~~of a2021, ~~tax~~we ~~benefit~~received ~~for~~proceeds ~~compensation~~of ~~expense~~$5.5 ~~recognized~~million ~~during~~from the ~~three~~sale of non-strategic property and ~~nine~~equipment ~~month~~used ~~periods~~in ~~ended~~our ~~September~~continuing ~~30,~~operations and recognized a $2.0 million net gain on the sale of these assets. In the first quarter of 2020, we received proceeds of $1.3 million from the sale of non-strategic property and ~~2019~~equipment used in our continuing operations and recognized a small net gain on the sale of these assets.

AtLoss ~~September~~on 30, 2020, there was $0.3 million unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the MIP. That cost is expected to be recognized over a weighted average period of 1.6 years.Derivative

13On March 31, 2021, the Company negotiated a settlement of a contractual make-whole obligation to its controlling shareholder in exchange for issuing additional Senior Notes to this shareholder with an aggregate par value of $47.5 ~~Revenues~~million. The Company's make-whole obligation was related to the acquisition of CJWS and ~~Customer~~was ~~Receivables~~accounted for as a derivative instrument until this settlement. The Senior Notes were issued at a fair value of $9.5 million based on the market pricing of our Senior Notes on March 31, 2021. The difference between the fair value of the Senior Notes and the fair value of the derivative instrument resulted in a $4.8 million loss on this derivative instrument for the first quarter of 2021.

~~The~~Interest ~~Company's revenues are generated by services~~Expense, which are rendered as provided by its customers on their sites. As a decentralized organization, contracts for the Company's services are negotiated on a regional level and are on a per job basis, with jobs being completed in a short period of time, usually one day or up to a week. Revenue is recognized as performance obligations have been completed on a daily basis either as accounts receivable or Work-in-Process ("WIP"), when all of the proper approvals are obtained.net

AThe ~~small percentage of the~~ Company'’s ~~jobs~~interest ~~may~~expense ~~require~~consisted ~~performance obligations which extend over a longer period~~ of ~~time and are not invoiced until all performance obligations in~~ the ~~contract~~following: are complete, such as plugging a well, fishing services, and pad site preparation jobs. Because these jobs are performed on the customer's job site, and the Company is contractually entitled to bill for its services performed to date, revenues for these service lines are recognized on a daily basis as services are performed and recorded as Contract Assets rather than as WIP or accounts receivable. Contract Assets are typically invoiced within 30 to 60 days of recognizing revenue.

As of September 30, 2020, accounts receivable related to products and services, net of associated allowance for credit losses, were $69.9 million compared to $99.6 million at December 31, 2019. At September 30, 2020, the Company had $1.2 million of contract assets and no contract liabilities on its consolidated balance sheet compared to $1.0 million of contract assets and $0.9 million of contract liabilities on its consolidated balance sheet at December 31, 2019. Contract assets are included in Trade Accounts Receivables, and contract liabilities are included in Other Current Liabilities on our consolidated balances sheets.


	Three Months Ended March 31,
(in thousands)	2021		2020

Cash payments for interest	$	1,570	$	1,229
Change in accrued interest	8,096		8,220

Amortization of debt discounts and issuance costs	2,273		1,108

Interest income	—		(62)

Other	85		62
Interest expense, net	$	12,024	$	10,557

~~For~~Consolidated ~~accounts~~net ~~receivable~~interest ~~related~~expense increased to $12.0 ~~products~~million ~~and~~in ~~services,~~ the first ~~Company~~quarter ~~estimates its expected credit losses by reviewing and monitoring updated customer credit scores and risk ratings provided by third party and internal resources, considering the future impact~~ of ~~the~~2021 ~~current~~from ~~business and industry environment, and reviewing the historical loss experience by type of customer~~$10.6 ~~During~~million the nine month period ended September 30, 2020, the Company considered the impact of the sharp decline and current levels of the West Texas Intermediate oil price on the credit quality of its customers and included this impact in ~~its allowance for credit losses as of September 30,~~ 2020. InThe ~~addition,~~increase ~~the Company included~~ in ~~its~~net ~~allowance~~interest ~~for~~expense ~~credit~~in ~~losses~~2021 ~~the~~was ~~impact~~primarily ofdue ~~the~~to ~~approximately~~increased ~~$39.5 million~~accretion of ~~accounts~~debt ~~receivable~~discounts ~~from~~and ~~the~~interest ~~acquisition~~expense ofassociated ~~CJWS~~with asdebt ofissued ~~the~~during ~~March 9,~~ 2020~~, closing date~~. ~~The~~

Income Tax Benefit

Income tax benefit in the first quarter of 2021, was $0.3 million compared to $3.8 million in 2020. In the first quarter of 2020, the income tax benefit related to deferred tax liabilities acquired with the acquisition of CJWS which provided a source of future taxable income and allowed the Company to recognize a tax benefit on a portion of the Company's deferred tax assets.

The effective tax rates for the first quarters of 2021 and 2020, were 0.9% and 2.7%, respectively. The Company provides a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. As of March 31, 2021, a valuation allowance continues to be recorded on the net deferred tax assets for all federal and state tax jurisdictions.

Discontinued Operations

In 2019, we decided to divest of substantially all of our contract drilling rigs, pressure pumping equipment and related ancillary equipment. Substantially all the assets were divested in 2020 and the Company is in the process of selling the remainder of these assets. For further discussion of financial results for discontinued operations, see

~~following~~Note ~~table~~3, ~~presents~~"Discontinued ~~activity~~Operations" in the ~~allowance~~notes ~~for~~to ~~credit~~our ~~losses~~condensed (consolidated financial statements included in ~~thousands):~~this Quarterly Report on Form 10-Q.

	Nine Months Ended September 30, 2020
Balance as of December 31, 2019	$	2,208
Provision for expected credit losses, net of writeoffs and recoveries	2,547
Initial allowance for expected credit losses on purchased customer receivables	—
Balance as of September 30, 2020	$	4,755

Supplemental Non-GAAP Financial Measures - Adjusted EBITDA

~~The~~Adjusted ~~Company~~EBITDA ~~does~~should not ~~have~~be ~~any~~considered ~~long-term~~in ~~service~~isolation ~~contracts,~~or ~~nor~~as ~~does~~a itsubstitute ~~have~~for ~~revenue~~operating ~~expected~~income, tonet beincome ~~recognized~~or inloss, ~~any~~cash ~~future~~flows ~~year~~provided ~~related~~by tooperating, ~~remaining~~investing ~~performance~~and ~~obligations~~financing activities, or ~~contracts~~other ~~with~~income ~~variable~~or ~~consideration~~cash ~~related~~flow tostatement ~~undelivered~~data ~~performance~~prepared ~~obligations~~in accordance with GAAP. However, the Company believes Adjusted EBITDA is a useful supplemental financial measure used by management and directors and by external users of its financial statements, such as investors, to assess:

• The ~~following~~financial ~~table~~performance ~~sets~~of ~~forth~~its ~~certain~~assets ~~financial~~without ~~information~~regard ~~with respect~~ to ~~the~~financing ~~Company’s~~methods, ~~disaggregation~~capital ofstructure ~~revenues~~or byhistorical ~~geographic~~cost ~~location and type (in thousands):~~basis;

	Reportable Segments
	Well Servicing		Water Logistics		Completion & Remedial Services		Discontinued Operations		Total
Three Months Ended September 30, 2020
Primary Geographical Markets
Central	$	22,602	$	20,381	$	6,407	$	—	$	49,390
Western	30,966		11,316		5,709		—		47,991
Corporate (Intercompany)	(357)		(992)		(632)		—		(1,981)
Total	$	53,211	$	30,705	$	11,484	$	—	$	95,400
Major Products or Service Line
Well Servicing	34,841		—		—		—		34,841
Plugging	14,138		—		—		—		14,138
Transport/Vacuum	—		20,496		—		—		20,496
Production and Disposal Facilities	—		4,945		—		—		4,945
Hot Oiler	—		1,738		—		—		1,738
RAFT	—		—		9,235		—		9,235
Coiled Tubing	—		—		1,056		—		1,056
Snubbing	—		—		82		—		82
Taylor Industries - Manufacturing	3		—		—		—		3
Other	4,229		3,526		1,111		—		8,866
Total	$	53,211	$	30,705	$	11,484	$	—	$	95,400

• The ability of its assets to generate cash sufficient to pay interest on its indebtedness; and

19• Its operating performance and return on invested capital as compared to those of other companies in the oilfield services industry.

	Well Servicing		Water Logistics		Completion & Remedial Services		Discontinued Operations		Total
Three Months Ended September 30, 2019
Primary Geographical Markets
Central	47,020		45,755		19,736		33,666		146,177
Western	11,385		5,395		19,045		1,017		36,842
Corporate (Intercompany)	(966)		(2,699)		(508)		(481)		(4,654)
Total	$	57,439	$	48,451	$	38,273	$	34,202	$	178,365
Major Products or Service Line
Well Servicing	48,738		—		—		—		48,738
Plugging	7,527		—		—		—		7,527
Transport/Vacuum	—		27,969		—		—		27,969
Production and Disposal Facilities	—		8,768		—		—		8,768
Hot Oiler	—		4,583		—		—		4,583
RAFT	—		—		18,385		—		18,385
Coiled Tubing	—		—		15,279		—		15,279
Snubbing	—		—		1,483		—		1,483
Taylor Industries - Manufacturing	731		—		—		—		731
Discontinued Operations	—		—		—		34,202		34,202
Other	443		7,131		3,126		—		10,700
Total	$	57,439	$	48,451	$	38,273	$	34,202	$	178,365

Adjusted EBITDA has limitations as an analytical tool and should not be considered an alternative to net income or loss, operating income or loss, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income or loss and operating income or loss, and these measures may vary among other companies.

	Well Servicing		Water Logistics		Completion & Remedial Services		Discontinued Operations		Total
Nine Months Ended September 30, 2020
Primary Geographical Markets
Central	81,567		79,218		23,530		—		184,315
Western	79,246		33,650		25,034		120		138,050
Corporate (Intercompany)	(2,143)		(4,528)		(2,134)		—		(8,805)
Total	$	158,670	$	108,340	$	46,430	$	120	$	313,560
Major Products or Service Line
Well Servicing	107,939		—		—		—		107,939
Plugging	35,505		—		—		—		35,505
Transport/Vacuum	—		71,921		—		—		71,921
Production and Disposal Facilities	—		16,694		—		—		16,694
Hot Oiler	—		7,650		—		—		7,650
RAFT	—		—		30,438		—		30,438
Coiled Tubing	—		—		11,477		—		11,477
Snubbing	—		—		840		—		840
Taylor Industries - Manufacturing	3,697		—		—		—		3,697
Discontinued Operations	—		—		—		120		120
Other	11,529		12,075		3,675		—		27,279
Total	$	158,670	$	108,340	$	46,430	$	120	$	313,560

The following table presents a reconciliation of net income or loss from continuing operations to Adjusted EBITDA:


	Quarter ended March 31,
(in thousands)	2021		2020
Net loss from continuing operations	$	(33,475)	$	(136,429)
Income tax benefit	(287)		(3,790)
Interest expense, net	12,024		10,557
Depreciation and amortization	10,797		14,765
Gain on disposal of assets	(1,993)		(37)
Loss on derivative	4,798		3,552
Long lived asset impairments	4,435		84,217
Acquisition related costs	—		11,684
Transaction costs	2,589		—
Significant insurance claim	1,380		—
Field restructuring	234		66
Goodwill impairments	—		10,565

Stock-based compensation	52		1,336

Inventory write-downs	—		4,846


Adjusted EBITDA	$	554	$	1,332

	Well Servicing		Water Logistics		Completion & Remedial Services		Discontinued Operations		Total
Nine Months Ended September 30, 2019
Primary Geographical Markets
Central	153,337		145,619		60,030		119,245		478,231
Western	35,458		17,465		55,446		3,089		111,458
Corporate (Intercompany)	(10,854)		(8,001)		(3,172)		(2,248)		(24,275)
Total	$	177,941	$	155,083	$	112,304	$	120,086	$	565,414
Major Products or Service Line
Well Servicing	144,276		—		—		—		144,276
Plugging	21,288		—		—		—		21,288
Transport/Vacuum	—		87,771		—		—		87,771
Production and Disposal Facilities	—		26,506		—		—		26,506
Hot Oiler	—		16,534		—		—		16,534
RAFT	—		—		56,780		—		56,780
Coiled Tubing	—		—		44,115		—		44,115
Snubbing	—		—		3,960		—		3,960
Taylor Industries - Manufacturing	10,934		—		—		—		10,934
Discontinued Operations	—		—		—		120,086		120,086
Other	1,443		24,272		7,449		—		33,164
Total	$	177,941	$	155,083	$	112,304	$	120,086	$	565,414

14. Impairments

In connection with the preparation of the financial statements, we recorded the following impairment charges (in thousands):

	Nine Months Ended September 30, 2020
Goodwill	$	10,565
Well Servicing inventory	4,846
Well Servicing units and equipment	86,047
Total	$	101,458

Impairment of Goodwill

Goodwill recorded in connection with the March 9, 2020, acquisition of CJWS totaled $18.9 million and was recorded as part of our Well Servicing and Water Logistics reporting units. Beginning in March 2020, we experienced a reduction in demand for our services due to the significantly decreased price of crude oil as a result of multiple significant factors impacting supply and demand in the global oil and natural gas markets, including a global outbreak of the COVID-19 virus and the announced price reductions and possible production increases by members of OPEC and other oil exporting nations. For further discussion of these factors that occurred subsequent to our March 9, 2020 acquisition of CJWS, see Note 1. Basis of Presentation and Nature of Operations - COVID-19 and Commodity Price Collapse Impact on Liquidity; Going Concern. As a result, as of March 31, 2020, we updated our internal long-term outlook for each of these reporting units, and determined that the current decreased energy industry outlook was an indicator requiring further analysis for impairment of goodwill and that it was more likely than not that the fair value of certain reporting units were less than their carrying value. Therefore, we performed an interim goodwill impairment test.

As part of the first step of goodwill impairment testing, we updated our assessment of future cash flows, using historical data supplemented by current and anticipated market conditions and applying expected long-term growth rates, discount rates, and terminal values that we considered reasonable for each reporting unit. We calculated a present value of the cash flows to arrive at an estimate of fair value using a combination of the income approach and the market approach. The income approach estimates the fair value by discounting each reporting unit's estimated future cash flows using an estimate of the discount rate, or expected return, that a marketplace participant would have required as of the valuation date. The market approach includes the use of comparative multiples to corroborate the discounted cash flow approach. The market approach involves significant judgement in the selection of the appropriate peer group companies and valuation multiples. Based on these key assumptions,

we determined that the fair value of the Well Servicing reporting unit was less than its carrying values indicating an impairment of the $10.6 million of goodwill recorded for this reporting unit. As its expected long-term cash flows associated with services performed for producing wells was not as significantly impacted by the current market conditions, the fair value of the Water Logistics reporting unit significantly exceeded its carrying value and therefore resulted in no impairment. The amount of impairment is calculated based on the difference between the fair value and carrying value in accordance with ASC 350 "Intangibles - Goodwill and Other" and including the impact of Accounting Standards Update 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment."

Impairments of Other Assets

In addition, the March 2020 reduction in demand for our services for each of our businesses was an indicator that certain long-lived tangible and identified intangible assets may be impaired. Recoverability testing performed at the total segment asset group level (the lowest level of discrete and identifiable cash flows) as of March 31, 2020, using a probability weighted estimate of undiscounted future cash flows using expected long-term growth rates indicated that for our Well Servicing and Completion & Remedial Services segments, certain long-lived assets, within the overall reporting unit, were not recoverable. For these segments, estimated fair values using an income approach were calculated by discounting each segment's probability weighted estimated future cash flows using an estimate of the discount rate and terminal values. The estimated fair value of Well Servicing segment assets was determined to be below their carrying value and as a result, as of September 30, 2020, we recorded impairments of property and equipment assets totaling $86.0 million and impairments of component parts inventory assets totaling $4.8 million associated with our Well Servicing segment. The difference between the carrying value of the asset group and its indicated fair value was recorded as an impairment. The estimated fair value of our Completion & Remedial Services segment exceeded its carrying value, resulting in no impairment of this segment. A recoverability analysis was also performed on the long-lived assets of the Water & Logistics segment along with identified intangible assets, and we concluded that the carrying value for these assets were recoverable from estimated future cash flows.

15. Income Taxes

The deferred tax liabilities acquired with the acquisition of CJWS provided a source of future taxable income which allowed the Company to recognize a tax benefit on a portion of the long-lived asset impairment recorded during the three months ended March 31, 2020, as well as the Company's other deferred tax assets, and is the primary driver of the tax benefit for the nine months ended September 30, 2020. During the same period of 2019, we filed an amended 2007 federal tax return to claim an income tax refund from the carry-back and recovery of workers’ compensation expenses that were components of our Net Operating Losses ("NOLs") generated over the past 10 years.

The issuance of the Series A Preferred Stock as part of the acquisition of CJWS resulted in an ownership change pursuant to Internal Revenue Code Section 382 on March 9, 2020. The Section 382 limitation impacts the Company's ability to utilize certain pre-acquisition tax attributes, including NOLs. The projected impact of the ownership change is to reduce the Company's available Federal NOLs from $900.7 million as of December 31, 2019 to an estimated $367 million as of September 30, 2020, which begin to expire in 2032. The Company also has $336.8 million ($19.7 million net deferred tax asset) of NOLs for state income tax purposes, which begin to expire in 2020. Federal NOLs generated after 2017 are carried forward indefinitely but usage is limited to 80% of taxable income, while NOLs generated prior to 2018 continue to be carried forward for 20 years and have no limitation on utilization. The annual utilization limits for state income tax purposes vary on a state-by-state basis.

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 of September 30, 2020, a valuation allowance of $138.4 million was recorded against deferred tax assets for all jurisdictions that are not expected to be realized.

16. Loss Per Share

The following table sets forth the computation of unaudited basic and diluted loss per share for the three and nine months ended September 30, 2020 and 2019 (in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Unaudited)				(Unaudited)
Numerator (both basic and diluted):
Loss from continuing operations	$	(29,153)	$	(24,777)	$	(205,308)	$	(58,879)
Loss from discontinued operations, net of tax	(2,926)		(14,100)		(16,250)		(35,251)
Net loss available to common stockholders	$	(32,079)	$	(38,877)	$	(221,558)	$	(94,130)
Denominator:
Denominator for basic and diluted earnings per share	24,927,369		25,606,264		24,932,900		26,551,592
Basic and diluted loss per common share from continuing operations:	$	(1.17)	$	(0.97)	$	(8.23)	$	(2.22)
Basic and diluted loss per common share from discontinued operations:	$	(0.12)	$	(0.55)	$	(0.65)	$	(1.33)
Basic and diluted loss per common share available to stockholders:	$	(1.29)	$	(1.52)	$	(8.88)	$	(3.55)

The Company has issued potentially dilutive instruments such as the Series A Preferred Stock, unvested restricted stock and common stock options. However, the Company did not include these instruments in its calculation of diluted per share information, because to include them would be anti-dilutive due to the net loss incurred during the periods presented.

The following table sets forth weighted average shares outstanding of potentially dilutive instruments for the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
	(Unaudited)		(Unaudited)
Stock options	194,264	511,558	194,264	511,558
Series A Preferred stock	118,805,000	—	88,886,953	—
Warrants	2,066,576	2,066,576	2,066,576	2,066,576
Weighted average unvested restricted stock	187,537	631,742	289,758	326,054
Total	121,253,377	3,209,876	91,437,551	2,904,188

17. Business Segment Information

The Company’s reportable business segments are Well Servicing, Water Logistics, and Completion & Remedial Services. These segments have been selected based on changes in management’s resource allocation and performance assessment in making decisions regarding the Company. Prior to December 2019, the Company operated an Other Services segment, which was comprised of contract drilling services and manufacturing and rig servicing. Contract drilling was discontinued as a service in the third quarter of 2019, and manufacturing rig servicing was realigned with Well Servicing. Our Pumping Services Division, which was included in the Completion & Remedial Services segment was discontinued in the fourth quarter of 2019. Costs related to other business activities, primarily corporate headquarters functions, are disclosed separately from the three operating segments as "Corporate and Other." The Company evaluates segment performance on earnings before interest expense and income taxes. Products are transferred between segments and geographic areas on a basis intended to reflect as nearly as possible the market value of the products. Prior period segment information has been retrospectively revised to reflect the Company's current segmentation.

The following table sets forth certain financial information with respect to the Company’s reportable segments for the three and nine months ended September 30, 2020 and 2019 (in thousands):

	Well Servicing		Water Logistics		Completion & Remedial Services		Corporate and Other		Continuing Operations Total		Discontinued Operations
Three Months Ended September 30, 2020
Operating revenues	$	53,211	$	30,705	$	11,484	$	—	$	95,400	$	—
Direct operating costs	(44,766)		(28,506)		(11,503)		—		(84,775)		(2,304)
Segment profits	8,445		2,199		(19)		—		10,625		(2,304)
Depreciation and amortization	2,302		6,190		2,988		1,496		12,976		—
Capital expenditures	403		363		193		—		959		—
Three Months Ended September 30, 2019
Operating revenues	$	57,439	$	48,451	$	38,273	$	—	$	144,163	$	34,202
Direct operating costs	(48,111)		(34,783)		(25,685)		—		(108,579)		(29,886)
Segment profits	9,328		13,668		12,588		—		35,584		4,316
Depreciation and amortization	3,425		4,747		8,507		1,140		17,819		11,360
Capital expenditures	1,622		7,306		1,013		181		10,122		1,479

	Well Servicing		Water Logistics		Completion & Remedial Services		Corporate and Other		Continuing Operations Total		Discontinued Operations
Nine Months Ended September 30, 2020
Operating revenues	$	158,670	$	108,340	$	46,430	$	—	$	313,440	$	120
Direct operating costs	(134,968)		(87,207)		(42,331)		—		(264,506)		(4,714)
Segment profits	23,702		21,133		4,099		—		48,934		(4,594)
Depreciation and amortization	7,200		19,365		9,349		4,679		40,593		—
Capital expenditures	2,257		3,824		1,200		(3)		7,278		—
Identifiable assets	$	44,717	$	122,555	$	62,292	$	158,699	$	388,263	$	8,442
Nine Months Ended September 30, 2019
Operating revenues	$	177,941	$	155,083	$	112,304	$	—	$	445,328	$	120,086
Direct operating costs	(143,081)		(107,611)		(78,070)		—		(328,762)		(104,710)
Segment profits	34,860		47,472		34,234		—		116,566		15,376
Depreciation and amortization	9,858		13,667		24,489		3,283		51,297		34,370
Capital expenditures	13,166		22,357		6,541		626		42,690		11,206
Identifiable assets	$	82,819	$	115,693	$	104,939	$	257,959	$	561,410	$	106,219

The following table reconciles the segment profits reported above to the operating loss as reported in the consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Segment profits	$	10,625	$	35,584	$	48,934	$	116,566
General and administrative expenses	(25,451)		(28,529)		(90,958)		(90,471)
Depreciation and amortization	(12,976)		(17,819)		(40,593)		(51,297)
Gain (loss) on disposal of assets	5,190		(738)		5,700		(2,014)
Asset impairment	(1,830)		—		(101,458)		—
Operating loss	$	(24,442)	$	(11,502)	$	(178,375)	$	(27,216)

18. Recent Accounting Pronouncements

Standards Adopted in 2020.

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, "Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, utilizing an expected loss methodology in place of the previously used incurred loss methodology. ASU 2016-13 will result in the more timely recognition of losses on financial instruments not accounted for at fair value through net income. The provisions require credit impairments to be measured over the contractual life of an asset and developed with consideration for past events, current conditions, and forecasts of future economic information. In addition, the ASU requires credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. The amendments in this ASU broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The new standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company early adopted this standard on January 1, 2020, using the prospective transition method, and the standard did not have a material impact on our consolidated financial statements upon its adoption.

In August 2018, the FASB issued ASU 2018-15 "Intangibles — Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract" ("ASU 2018-15"). ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. We adopted ASU 2018-15 on its January 1, 2020, effective date, using the prospective transition method, and this standard did not have a material impact on our consolidated financial statements.

Standards Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” ("ASU 2019-12"). ASU 2019-12 intends to simplify various aspects related to accounting for income taxes and removes certain exceptions to the general principles in the standard. Additionally, the ASU clarifies and amends existing guidance to improve consistent application of its requirements. The amendments of ASU 2019-12 are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Overview

We provide a wide range of wellsite services to oil and natural gas drilling and producing companies, including Well Servicing, Water Logistics and Completion & Remedial Services. The Company's scope of operations was expanded effective beginning March 9, 2020, with the acquisition of C&J Well Services, Inc. ("CJWS").

Beginning in March 2020, as a result of multiple significant factors impacting supply and demand in the global oil and natural gas markets, including a global outbreak of coronavirus (“COVID-19”), and actions by members of the Organization of the Petroleum Exporting Countries (“OPEC”) and other foreign countries, including Russia, the posted price for West Texas Intermediate oil declined sharply. Oil demand has significantly deteriorated, in part, as a result of the outbreak of COVID-19 and corresponding preventative measures taken to mitigate the spread of the virus. This decline in demand coincided with the announcement of price reductions and possible production increases by members of OPEC and other oil exporting nations. Although OPEC and other oil exporting nations ultimately agreed to cut production, the downward pressure on commodity prices has remained and could continue in the foreseeable future.

The COVID-19 pandemic and oil and natural gas market volatility have resulted in a significant decrease in oil prices and significant disruption and uncertainty in the oil and natural gas market. Oil and natural gas commodity prices are expected to continue to be volatile. The collapse in the demand for oil caused by this unprecedented global health and economic crisis, coupled with oil oversupply, has had a material adverse impact on the demand for our services and the prices we can charge for our services.

The decline in our customers’ demand for our services has also had a material adverse impact on our financial condition, results of operations and cash flows during the first nine months of 2020. Demand for our products and services will continue to be affected if our customers continue to revise their capital budgets downward and adjust their operations in response to lower oil prices. We cannot predict the duration or effects of this decrease, but if the price of oil further declines or remains depressed for a lengthy period, our business, financial condition, results of operations, cash flows, and prospects will continue to be materially and adversely affected. The impact of these conditions on our estimates of future operating cash flows resulted in significant impairments of long-lived and intangible assets as of March 31, 2020.

Management has taken steps to generate additional liquidity, including through reducing operating and administrative costs and capital expenditures in our continuing business operations with the goal of preserving margins and improving working capital and may implement further cost and capital expenditure reductions, as necessary.

As a result of the CJWS acquisition, our weighted average number of fluid service trucks increased to 1,336 in the third quarter of 2020 from 795 in the third quarter of 2019. Our weighted average number of Well Servicing rigs increased from 307 in the third quarter of 2019 to 539 in the third quarter of 2020. Our consolidated financial results and operational data for the nine months ended September 30, 2020, includes the impact of the acquisition of CJWS for the portion of the period following the closing of the transaction.

Our operating revenues from each of our segments, and their relative percentages of our total revenues, consisted of the following for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Revenues:
Well Servicing	$	53,211	56%	$	57,439	40%	$	158,670	50%	$	177,941	40%
Water Logistics	30,705		32%	48,451		34%	108,340		35%	155,083		35%
Completion & Remedial Services	11,484		12%	38,273		26%	46,430		15%	112,304		25%
Revenues from continuing operations	$	95,400	100%	$	144,163	100%	$	313,440	100%	$	445,328	100%
Revenues from continuing operations	$	95,400	100%	$	144,163	81%	$	313,440	100%	$	445,328	79%
Revenues from discontinued operations	—		—%	34,202		19%	120		—%	120,086		21%
Total Revenues	$	95,400	100%	$	178,365	100%	$	313,560	100%	$	565,414	100%

A significant decrease in the price of oil occurred in March 2020 and, despite modest improvement during the second and third quarters of 2020, has continued to be below 2019 levels through September 2020. Many of our customers are under pressure to reduce production and have cut their capital programs for the remainder of 2020.

We believe that the most important performance measures for our business segments are as follows:

•Well Servicing — rig hours, rig utilization rate, revenue per rig hour, profits per rig hour and segment profits as a percent of revenues;

•Water Logistics — trucking hours, segment revenue, pipeline volumes, trucking volumes and segment profits as a percent of revenues; and

•Completion & Remedial Services — segment profits as a percent of revenues.

Segment profits are computed as segment operating revenues less direct operating costs excluding depreciation and impairments. These measurements provide important information to us about the activity and profitability of our lines of business. For a detailed analysis of these indicators for the Company, see “Segment Overview” below.

Selected Acquisitions and Divestitures

On March 9, 2020, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with Ascribe Investments III LLC, a Delaware limited liability company (“Ascribe”), NexTier Holding Co., a Delaware corporation (“Seller”) and CJWS, a wholly owned subsidiary of Seller, which expanded the Company's scope of operations. For further discussion, see Note 3. Acquisition in the notes to the consolidated financial statements included in this quarterly report.

Segment Overview

Well Servicing

During the first nine months of 2020, our Well Servicing segment represented 56% of our revenues. Revenue in our Well Servicing segment is derived from maintenance, workover, completion and plugging and abandonment services. We provide maintenance-related services as part of the normal, periodic upkeep of producing oil and natural gas wells. Maintenance-related services represent a relatively consistent component of our business. Workover and completion services generate more revenue per hour than maintenance work due to the use of auxiliary equipment, but demand for workover and completion services fluctuates more with the overall activity level in the industry.

We typically charge our Well Servicing rig customers for services on an hourly basis at rates that are determined by the type of service and equipment required, market conditions in the region in which the rig operates, the ancillary equipment provided on the rig and the necessary personnel. We measure the activity level of our Well Servicing rigs on a weekly basis by calculating a rig utilization rate based on a 55-hour workweek per rig.

The following is an analysis of the Well Servicing segment for each of the quarters in 2019 and the full year ended December 31, 2019, and the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020. This table does not include revenues and profits associated with rig manufacturing operations:

	Weighted Average Number of Rigs	Rig hours	Rig Utilization Rate	Revenue Per Rig Hour	Profits per Rig hour	Segment Profits %
2019:
First Quarter	310	165,000	74%	$336	$73	22%
Second Quarter	308	155,200	70%	$353	$78	22%
Third Quarter	307	149,000	68%	$381	$90	24%
Fourth Quarter	306	126,200	58%	$369	$53	14%
Full Year	308	595,400	68%	$359	$74	21%
2020:
First Quarter	396	139,100	49%	$397	$51	13%
Second Quarter	576	91,900	22%	$490	$81	17%
Third Quarter	539	120,400	31%	$441	$61	16%

Rig utilization was 31% in the third quarter of 2020, up from 22% in the second quarter of 2020. The increased utilization rate in the third quarter of 2020 resulted from an increase in customer demand and activity, primarily for our 24-hour rig packages. Our segment profit percentage decreased marginally to 16% for the third quarter of 2020 compared to 17% in the second quarter of 2020.

Water Logistics

During the first nine months of 2020, our Water Logistics segment represented approximately 32% of our revenues. Revenues in our Water Logistics segment are earned from the sale, transportation, storage and disposal of fluids used in the drilling, production and maintenance of oil and natural gas wells. Revenues also include water treatment, wellsite construction and maintenance services. The Water Logistics segment has a base level of business consisting of transporting and disposing of saltwater produced as a by-product of the production of oil and natural gas. These services are necessary for our customers and have a stable demand but typically produce lower relative segment profits than other parts of our Water Logistics segment. Water Logistics for completion and workover projects typically require fresh or brine water for making drilling mud, circulating fluids or fracturing fluids used during a job, and all of these fluids require storage tanks and hauling and disposal. Because we can provide a full complement of fluid sales, trucking, storage and disposal required on most drilling and workover projects, the add-on services associated with drilling and workover activity enable us to generate higher segment profits. The higher segment profits are due to the relatively small incremental labor costs associated with providing these services in addition to our base Water Logistics operations. We typically price fluid services by the job, by the hour or by the quantities sold, disposed of or hauled.

The following is an analysis of our Water Logistics operations for each of the quarters in 2019, the full year ended December 31, 2019, and the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020 (dollars in thousands):

	Pipeline Volumes (in bbls)	Trucking Volumes (in bbls)	Weighted Average Number of Fluid Service Trucks	Truck Hours	Revenue	Segment Profits %
2019:
First Quarter	3,050,000	6,620,000	818	424,100	$55,601	33%
Second Quarter	3,174,000	6,778,000	814	403,200	$51,031	30%
Third Quarter	3,807,000	6,956,000	795	382,500	$48,451	28%
Fourth Quarter	4,132,000	6,785,000	767	360,300	$44,733	25%
Full Year	14,163,000	27,139,000	799	1,570,100	$199,816	29%
2020:
First Quarter	3,620,000	5,825,000	908	374,300	$44,381	25%
Second Quarter	3,275,000	4,077,000	1,416	301,500	$33,254	23%
Third Quarter	3,575,000	4,191,000	1,336	278,300	$30,705	7%

Revenue for the Water Logistics segment decreased to $30.7 million in the third quarter of 2020, including the impact from the acquisition of CJWS, compared to $33.3 million in the second quarter of 2020, as a result of decreased levels of demand for our services. Segment profit percentage decreased to 7% in the third quarter of 2020 from 23% in the second quarter of 2020, and includes the impact of $2.4 million of non-recurring charges.

Completion & Remedial Services

During the first nine months of 2020, our Completion & Remedial Services segment represented approximately 12% of our revenues. Revenues from our Completion & Remedial Services segment are derived from a variety of services designed to complete and stimulate oil and natural gas production or place cement slurry within the wellbores. Our Completion & Remedial Services segment includes rental and fishing tool operations, coiled tubing services, nitrogen services and snubbing.

In this segment, we derive our revenues on a project-by-project basis in a competitive bidding process. Our bids are based on the amount and type of equipment and personnel required, with the materials consumed billed separately.

The following is an analysis of our Completion & Remedial Services segment for each of the quarters in 2019, the full year ended December 31, 2019, and the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020 (dollars in thousands):

	RAFT Stores	Coiled Tubing HHP	Revenues	Segment Profits %
2019:
First Quarter	13	25,250	$35,605	30%
Second Quarter	13	25,250	$38,426	29%
Third Quarter	13	25,300	$38,273	33%
Fourth Quarter	13	25,300	$28,164	27%
Full Year	13	25,300	$140,468	30%
2020:
First Quarter	23	25,300	$25,881	18%
Second Quarter	23	25,300	$9,065	(6)%
Third Quarter	23	25,300	$11,484	—%

The increase in Completion & Remedial Services revenue to $11.5 million in the third quarter of 2020 from $9.1 million in the second quarter of 2020 resulted from increases in our RAFT and coiled tubing lines of business. Segment profits as a percentage of revenue increased to 0% in the third quarter of 2020 from a segment loss of 6% in the second quarter of 2020.

Operating Cost Overview

Our operating costs are comprised primarily of labor costs, including workers’ compensation and health insurance, repair and maintenance, fuel and insurance. Management has taken steps to generate additional liquidity, including through reducing operating costs in our continuing business operations with the goal of preserving margins and may implement further cost reductions, as necessary. A majority of our employees are paid on an hourly basis. We also employ personnel to supervise our activities, sell our services and perform maintenance on our fleet. These costs are not directly tied to our level of business activity. Repair and maintenance is performed by our crews, company maintenance personnel and outside service providers. Insurance is generally a fixed cost regardless of utilization and can vary depending on the number of rigs, trucks and other equipment in our fleet, as well as employee payroll, and our safety record. Compensation for administrative personnel in local operating yards and our corporate office is accounted for as general and administrative expenses.

Critical Accounting Policies and Estimates

Our unaudited consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of our significant accounting policies is included in Note 3. Summary of Significant Accounting Policies of the Financial Statements and Supplementary Data in our most recent Annual Report on Form 10-K.

Acquisition Purchase Price Allocations - We account for acquisitions of businesses using the acquisition method of accounting in accordance with ASC 805, which requires the allocation of the purchase price consideration based on the fair values of the assets and liabilities acquired. We estimate the fair values of the assets and liabilities acquired using accepted valuation methods, and, in many cases, such estimates are based on our judgments as to the future operating cash flows expected to be generated from the acquired assets throughout their estimated useful lives. Following the March 9, 2020 acquisition of CJWS, we have accounted for the various assets (including intangible assets) and liabilities acquired and issued as consideration based on our estimate of their fair values. Goodwill represents the excess of acquisition purchase price consideration over the estimated fair values of the net assets acquired. Our estimates and judgments of the fair value of acquired businesses could prove to be inexact, and the use of inaccurate fair value estimates could result in the improper allocation of the acquisition purchase price consideration to acquired assets and liabilities, which could result in asset impairments, the recording of previously unrecorded liabilities, and other financial statement adjustments. The difficulty in estimating the fair values of acquired assets and liabilities is increased during periods of economic uncertainty.

Results of Operations

The following is a comparison of our results of continuing operations for the three and nine months ended September 30, 2020, compared to the three and nine months ended September 30, 2019. For additional segment-related information and trends, please read “Segment Overview” above.

Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Revenues. Revenues from continuing operations decreased by $48.8 million to $95.4 million during the three months ended September 30, 2020, from $144.2 million during the same period in 2019, despite the impact of $46.9 million of revenues added from CJWS. This decrease was primarily due to decreased activity, particularly by our Water Logistics and Completion & Remedial Services segments' customers, as exploration and production companies are significantly reducing their capital expenditure activity due to current low oil commodity pricing.

Well Servicing revenues decreased by 7% to $53.2 million during the three months ended September 30, 2020, compared to $57.4 million during the same period in 2019. The overall decrease included the addition of $32.7 million of revenues contributed by the acquisition of CJWS, and was driven by a decrease in customer demand. Our weighted average number of active Well Servicing rigs increased to 539 during the three months ended September 30, 2020, compared to 307 during the same period of 2019. Utilization decreased to 31% in the three months ended September 30, 2020, compared to 68% in the comparable period of 2019 due to declines in production related activity. Revenue per rig hour in the three months ended September 30, 2020 was $441, increasing from $381 in the comparable period of 2019, due to the impact of the higher per rig rate from CJWS California operations.

Water Logistics revenues decreased by 37% to $30.7 million during the three months ended September 30, 2020, including a $9.3 million increase resulting from the acquisition of CJWS, compared to $48.5 million in the same period in 2019, mainly due to decreases in trucking activity. Pipeline water volumes decreased to 3.6 million barrels or 46% of total disposal volumes during the three months ended September 30, 2020, compared to 3.8 million barrels or 35% of total disposal volumes during the three months ended September 30, 2019. Our weighted average number of fluid service trucks increased to 1,336 during the three months ended September 30, 2020, compared to 795 in the same period in 2019.

Completion & Remedial Services revenues decreased by 70% to $11.5 million during the three months ended September 30, 2020 compared to $38.3 million in the same period in 2019. The overall decrease in revenue between these periods was despite $5.0 million in revenues from the CJWS acquisition. The decrease was due to decreased activity in our rental and fishing tool and coiled tubing lines of business.

Direct Operating Expenses. Direct operating expenses, which primarily consist of labor, including workers’ compensation and health insurance, repair and maintenance, fuel and insurance, decreased to $84.8 million during the three months ended September 30, 2020, from $108.6 million in the same period in 2019, primarily due to decreases in activity and corresponding decreases in employee headcount and wages to adapt to current activity levels. Such decrease included $35.1 million of additional operating expenses following the acquisition of CJWS.

Direct operating expenses for the Well Servicing segment decreased by 7% to $44.8 million during the three months ended September 30, 2020, compared to $48.1 million for the same period in 2019, with CJWS adding $24.6 million, reflecting the offsetting reductions in operating expenses due to decreased demand. Segment profits decreased to 16% of revenues during the three months ended September 30, 2020, from 24% for the same period in 2019, due to decreased competitive pricing pressures and $0.3 million of severance payments.

Direct operating expenses for the Water Logistics segment decreased by 18% to $28.5 million during the three months ended September 30, 2020, compared to $34.8 million for the same period in 2019, despite an increase of $7.5 million following the acquisition of CJWS. Segment profits were 7% of revenues during the three months ended September 30, 2020, compared to 28% for the same period in 2019, due to the reduced pipeline volumes and the impact of $2.4 million of non-recurring charges.

Direct operating expenses for the Completion & Remedial Services segment decreased by 55% to $11.5 million during the three months ended September 30, 2020, compared to $25.7 million for the same period in 2019, and included $3.0 million increase from the acquisition of CJWS. Segment profit was 0% of revenues during the three months ended September 30, 2020, compared to segment profits of 33% for the same period in 2019, due to higher personnel cost relative to revenue levels, competitive pricing pressures and due to customers delaying work.

General and Administrative Expenses. General and administrative expenses decreased to $25.5 million during the three months ended September 30, 2020, from $28.5 million for the same period in 2019. General and administrative expenses added following the acquisition of CJWS totaled $5.9 million, which offset administrative cost reductions. Stock-based compensation expense was $0.1 million and $1.2 million during the three months ended September 30, 2020 and 2019, respectively.

Depreciation and Amortization Expenses. Depreciation and amortization expenses were $13.0 million during the three months ended September 30, 2020, compared to $17.8 million for the same period in 2019. The decrease is mainly related to the reduced asset base due to impairments and reduced capital spending during the three months ended September 30, 2020.

Impairments. In September 2020, we determined that the fair value of the certain held for sale manufacturing assets was less than its carrying values indicating an impairment. As a result, we recorded impairments totaling $1.8 million associated with our Well Servicing segment.

Interest Expense. Interest expense increased to $11.7 million during the three months ended September 30, 2020 from $11.6 million for the same period in 2019. Interest expense consisted primarily of interest on our Senior Notes, promissory notes, finance leases, and amortization of our debt discounts and deferred financing costs.

Income Tax Expense. Income tax expense during the three months ended September 30, 2020, was $40 thousand compared to an income tax expense of $2.0 million for the same period in 2019. Our effective tax rates on continuing operations during the three month periods ended September 30, 2020 and 2019 were approximately 0.1% and 8.9%, respectively.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Revenues. Revenues from continuing operations decreased by $131.9 million to $313.4 million during the nine months ended September 30, 2020, from $445.3 million during the same period in 2019, despite the impact of $112.0 million of revenues added from CJWS following the March 9, 2020 closing of the CJWS acquisition. This decrease was primarily due to decreased activity, particularly by our Water Logistics and Completion & Remedial Services segments' customers, as exploration and production companies are significantly reducing their capital expenditure activity due to current low oil commodity pricing.

Well Servicing revenues decreased by 11% to $158.7 million during the nine months ended September 30, 2020, compared to $177.9 million during the same period in 2019. The overall decrease included the addition of $73.9 million of revenues contributed by the acquisition of CJWS, and was driven by a decreases in customer demand. Our weighted average number of active Well Servicing rigs increased to 504 during the nine months ended September 30, 2020, compared to 308 during the same period of 2019. Utilization decreased to 33% in the nine months ended September 30, 2020, compared to 71% in the comparable period of 2019 due to declines in production related activity. Revenue per rig hour in the nine months ended September 30, 2020 was $436, increasing from $357 in the comparable period of 2019, due to the impact of the higher per rig rate from CJWS California operations.

Water Logistics revenues decreased by 30% to $108.3 million during the nine months ended September 30, 2020, including a $26.4 million increase resulting from the acquisition of CJWS, compared to $155.1 million in the same period in 2019, mainly due to decreases in trucking activity. Pipeline water volumes increased to 10.5 million barrels or 43% of total disposal volumes during the nine months ended September 30, 2020, compared to 10.0 million barrels or 33% of total disposal volumes during the nine months ended September 30, 2019. Our weighted average number of fluid service trucks increased to 1,162 during the nine months ended September 30, 2020, compared to 809 in the same period in 2019.

Completion & Remedial Services revenues decreased by 59% to $46.4 million during the nine months ended September 30, 2020 compared to $112.3 million in the same period in 2019. The overall decrease in revenue between these periods was despite $11.7 million in revenues from the CJWS acquisition. The decrease was due to decreased activity in our rental and fishing tool and coiled tubing lines of business.

Direct Operating Expenses. Direct operating expenses, which primarily consist of labor, including workers’ compensation and health insurance, repair and maintenance, fuel and insurance, decreased to $264.5 million during the nine months ended September 30, 2020, from $328.8 million in the same period in 2019, primarily due to decreases in activity and corresponding decreases in employee headcount and wages to adapt to current activity levels. Such decrease included $86.5 million of additional operating expenses following the acquisition of CJWS.

Direct operating expenses for the Well Servicing segment decreased by 6% to $135.0 million during the nine months ended September 30, 2020, compared to $143.1 million for the same period in 2019, with CJWS adding $59.4 million, reflecting the offsetting reductions in operating expenses due to decreased demand. Segment profits decreased to 15% of revenues during the nine months ended September 30, 2020, from 22% for the same period in 2019, due to decreased activity levels and $4.3 million of severance payments.

Direct operating expenses for the Water Logistics segment decreased by 19% to $87.2 million during the nine months ended September 30, 2020, compared to $107.6 million for the same period in 2019, despite an increase of $19.3 million following the acquisition of CJWS. Segment profits were 20% of revenues during the nine months ended September 30, 2020, compared to 31% for the same period in 2019, due to the decrease in demand.

Direct operating expenses for the Completion & Remedial Services segment decreased by 46% to $42.3 million during the nine months ended September 30, 2020, compared to $78.1 million for the same period in 2019, and included the $7.8 million increase from the acquisition of CJWS. Segment profits were 9% of revenues during the

nine months ended September 30, 2020, compared to 30% for the same period in 2019, due to the decreased activity levels and $0.9 million in severance payments.

General and Administrative Expenses. General and administrative expenses increased by 1% to $91.0 million during the nine months ended September 30, 2020, from $90.5 million for the same period in 2019. This increase was due to $15.1 million of increased general and administrative expenses added following the acquisition of CJWS, and $10.6 million of legal and professional acquisition transaction related expenses, and $2.5 million of bankruptcy related bad debt expense during the current year, which offset administrative cost reductions. Stock-based compensation expense was $1.5 million and $7.8 million during the nine months ended September 30, 2020 and 2019, respectively. During the nine months ended September 30, 2019, one-time costs included charges related to consulting fees of $0.9 million for reclamation of tax refund for the 2007 tax year.

Depreciation and Amortization Expenses. Depreciation and amortization expenses were $40.6 million during the nine months ended September 30, 2020, compared to $51.3 million for the same period in 2019. The decrease is mainly related to impairments and reduced capital spending during the nine months ended September 30, 2020.

Impairments of Goodwill and Other Long-Lived Assets. Beginning in March 2020, we experienced a reduction in demand for our services due to the decreased price of crude oil as a result of multiple significant factors impacting supply and demand in the global oil and natural gas markets. Goodwill recorded in connection with the March 9, 2020, acquisition of CJWS totaled $18.9 million and was recorded as part of our Well Servicing and Water Logistics reporting units. As of March 31, 2020, due to the reduction in demand for our services, we determined that the fair value of the Well Servicing reporting unit was less than its carrying values, indicating an impairment of $10.6 million of goodwill recorded for this reporting unit. Related to these market conditions through the year, we recorded impairments of certain tangible long-lived assets totaling $86.0 million and impairments of certain parts inventory totaling $4.8 million associated with our Well Servicing segment, as we determined that the carrying value of certain long-lived assets within the overall asset group for this segment were not recoverable. The Company also recorded $2.3 million in impairments related to asset held for sale which are part of discontinued operations.

Interest Expense. Interest expense increased to $35.1 million during the nine months ended September 30, 2020 from $32.6 million for the nine months ended September 30, 2019. Interest expense consisted primarily of interest on our Senior Notes, promissory notes, finance leases, and amortization of our debt discounts and deferred financing costs, and included a $1.1 million write off of deferred financing cost assets following amendments to the ABL Facility.

Income Tax Benefit. Income tax benefit during the nine months ended September 30, 2020 was $4.1 million, compared to an income tax benefit of $0.1 million for the same period in 2019. The tax benefit during the nine months ended September 30, 2020 was generated from the impact of long-lived asset impairments recorded during the period and the composition of deferred tax liabilities acquired as part of the March 9, 2020, acquisition of CJWS. During the same period of 2019, we filed an amended 2007 federal tax return under section 172(f) of the Internal Revenue Code of 1986, as amended, which allowed us to claim a refund of $1.9 million of 2007 taxes. Our effective tax rates on continuing operations during the nine month periods ended September 30, 2020 and 2019, were approximately 1.9% and 0.2%, respectively.

Liquidity and Capital Resources

~~Our~~Historically, ~~current~~our primary capital resources ~~are~~have ~~cash~~been ~~flow from~~ our ~~operations,~~cash ~~availability under our revolving credit facility (the "ABL Facility"), the ability to enter into finance leases, the ability to incur additional secured indebtedness,~~ and ~~available~~ cash ~~on hand of $6.8 million at September 30~~equivalents, ~~2020.~~cash Weflows ~~had~~from ~~$16.3~~our ~~million of Availability~~operations, asavailability ~~defined~~ under ~~the~~our ABL Facility, subject to borrowing restrictions that are in place as of September 30, 2020. To avoid triggering certain of the consolidated fixed charge coverage ratios and cash dominion covenants which spring into effect under certain minimum availability covenant requirements defined in the ABL Credit ~~Agreement~~Facility, asadditional ~~amended,~~secured ~~as of June 30~~indebtedness, ~~2020,~~proceeds infrom ~~early July 2020 we repaid~~ the ~~$2.6~~sale ~~million amount~~ of ~~borrowings~~non-strategic ~~that was previously outstanding~~assets, and ~~during~~ the ~~third~~ability ~~quarter of 2020, we advanced $7.4 million, net, of our available cash balance~~ to ~~the~~enter ~~Administrative~~into ~~Agent.~~finance ~~Also beginning during the third quarter of 2020, we are currently subject to increased financial and borrowing base information reporting~~leases. AsAt ofMarch ~~November 2~~31, ~~2020~~2021, ~~the~~our ~~amount~~sources of ~~cumulative~~liquidity ~~net~~included ~~advances of~~ our ~~available~~ cash ~~balance~~and tocash ~~the~~equivalents ~~Administrative~~of ~~Agent has been reduced to~~ $3.4 ~~million~~.9 ~~We have utilized~~million, ~~and~~the ~~expect~~potential tosale ~~utilize~~of inadditional ~~the~~non-strategic ~~future~~assets, ~~bank~~ and ~~finance~~potential ~~lease~~additional ~~financing.~~secured On June 15, 2020, the Company entered into the Second Amendment to the ABL Credit Agreement, pursuant to which, among other things, the Company reduced the Aggregate Commitments (as defined in the Credit Agreement) from $120 million to $75 millionindebtedness.

OnAs ~~October~~of 15March 31, ~~2020~~2021, the Company ~~entered~~had ~~into~~no ~~that~~borrowings ~~certain~~and ~~Second~~$35.6 ~~Lien~~million ~~Delayed~~of ~~Draw~~letters ~~Promissory~~of ~~Note,~~credit inoutstanding ~~favor~~under the ABL Credit Facility. As of ~~Ascribe~~March 31, in2021, anwe ~~aggregate~~had ~~principal~~$11.2 million ~~amount~~of ~~equal~~availability under the ABL Credit Facility, but we are subject to ~~$15~~borrowing restrictions. For further discussion of our ABL Credit Facility,~~000~~ see Note 4,~~000~~ ("Indebtedness and Borrowing Facility" in the ~~“Second~~notes ~~Lien~~to ~~Promissory~~our ~~Note”).~~condensed Anconsolidated financial statements included in this Quarterly Report on Form 10-Q.

32In April 2021, we entered into a purchase and sale agreement for the sale of certain non-core assets for a purchase price of $6.6 million, not including the assumption of certain capital leases and an earn-out payment of up to $1.0 million payable one year after closing. The closing date is expected to occur during the second quarter of 2021. In May 2021, we completed a sale-leaseback transaction related to certain real property in California. The

Initial Advance (as defined in the Second Lien Promissory Note) in an amount of $7,500,000 was drawn on October 15, 2020. The Second Lien Promissory Note is secured by a second lien upon certain of the Company’s existing and after-acquired property pursuant to that certain Second Lien Security Agreement, dated as of October 15, 2020, by and among the Company and certain subsidiaries of the Company in favor of Ascribe, as secured party (the “Security Agreement”), which collateral also secures the Company’s ABL Credit Agreement on a first lien basis. The proceeds of the Second Lien Promissory Note will be used for general corporate and working capital purposes.19

~~See~~purchase ~~Note~~price ~~7. Long-Term Debt and Interest Expense~~ for athe ~~description~~property ofconsisted ~~our long-term debt and balances outstanding as~~ of ~~September 30, 2020 and December 31, 2019~~$10.5 ~~As of November 2~~million, ~~2020,~~subject ~~there were no amounts drawn on the ABL facility. Based on our Senior Notes obligations, we expect~~ to ~~incur~~a ~~interest~~holdback ~~payments~~ of approximately $162.16 million ~~every~~for ~~six~~certain ~~months,~~improvements ~~with the next such payment scheduled~~ to be ~~due~~constructed ~~April~~at ~~2021. In addition, we incur interest payments on~~ the ~~Senior Secured Promissory Note of $125,000 each month~~property. ~~Interest~~We onentered ~~the~~into ~~amounts outstanding under the Delayed Draw Promissory Note shall be calculated at~~ a ~~rate~~simultaneous ~~per~~lease ~~annum equal to 9.75%, and payable on the first day~~ of ~~each January, April, July, and October. Classified as a derivative liability, a current liability in~~ the ~~accompanying~~property ~~balance~~for ~~sheet,~~an ~~our~~initial ~~Make-Whole~~term ~~Reimbursement Amount liability had a fair value~~ of ~~approximately~~three $5years.~~8 million as of September 30, 2020.~~

AsSee aNote ~~result~~1. of"Basis ~~weak energy sector conditions and lower demand for our products and services, our operational results, working capital and cash flows have been negatively impacted during the first nine months~~ of ~~2020.~~Presentation ~~Based on our current operating~~ and ~~commodity~~Current ~~price~~Environment" ~~forecasts and capital structure, we believe that if certain financial ratios or covenants were~~ to ~~come~~the ~~into~~condensed ~~effect under our debt instruments, we will have difficulty complying with certain of such obligations. Certain covenants, such as~~ consolidated fixed charge coverage ratio and cash dominion provisions in the ABL Facility spring into effect under certain triggers defined in the ABL Credit Agreement for so long as such applicable trigger period is in effect. Additionally, certain triggers in the ABL Facility increase certain financial ~~and~~statements ~~borrowing~~included ~~base reporting requirements for so long as such applicable trigger period is~~ in ~~effect.~~this ~~Failure~~quarterly toreport ~~comply,~~ for ~~example,~~further ~~with~~discussion ~~a “springing” consolidated fixed charge coverage ratio requirement under the ABL Facility would result in an event~~ of ~~default under~~ the ~~ABL~~Company's ~~Facility,~~efforts ~~which would result in a cross-default under the Senior Notes. If an event of default were~~ to ~~occur,~~improve ~~our~~its lenders could, in addition to other remedies such as charging default interest, accelerate the maturity of the outstanding indebtedness, making it immediately due and payable, and we may not have sufficient liquidity ~~to repay those amounts. As of September 30, 2020, there were no existing events of default under,~~ and welong-term ~~are~~capital ~~in compliance with, all of our debt instruments~~structure.

Management has taken several steps to generate additional liquidity, including through reducing operating and administrative costs through employee headcount reductions, closing operating locations, employee furloughs and other cost reduction measures, and the suspension of growth capital expenditures in our continuing business operations with the goal of preserving margins and improving working capital. Management has made plans for further similar cost and capital expenditure reductions, as necessary.

As market conditions warrant and subject to our contractual restrictions, liquidity position and other factors, we may from time to time access the capital markets or seek to recapitalize, refinance or otherwise restructure our capital structure. We may accomplish this through open market or privately negotiated transactions, which may include, among other things, repurchases of our common stock or outstanding debt, debt-for-debt or debt-for-equity exchanges, refinancings, private or public equity or debt raises and rights offerings. Many of these alternatives may require the consent of current lenders, stockholders or noteholders, and there is no assurance that we will be able to execute any of these alternatives on acceptable terms or at all. The amounts involved in any such transaction, individually or in the aggregate, may be material. Recent adverse changes in the capital markets could make it difficult to obtain additional capital or obtain it at attractive rates. If we are unable to maintain or obtain access to capital, we could experience a reduction of liquidity and this may result in difficulty funding our operations, repaying our short-term borrowings, and paying interest on long-term debt and other obligations.

Cash Flow Summary

~~Cash provided~~The byStatement ~~operating~~of ~~activities~~Cash ~~was $0.2~~Flows ~~million~~ for the ~~nine~~periods ~~months~~presented ~~ended~~includes ~~September~~cash ~~30,~~flows ~~2020,~~from ~~compared~~continuing toand ~~$28.5~~discontinued ~~million during the same period in 2019~~operations. ~~Operating cash flow in the first nine months of 2020~~

33Cash Flows from Operating Activities

~~decreased~~Net cash provided by operating activities was $7.7 million in the first quarter of 2021, compared to ~~the~~net ~~same~~cash ~~period~~used in ~~2019~~operating activities of $2.7 million in 2020. The $10.4 million increase was primarily due to ~~lower~~improved ~~cash~~working ~~operating~~capital ~~margins~~management in ~~the~~2021 ~~current~~and ~~environment.~~transaction costs incurred during 2020 associated with our acquisition of CJWS.

Cash ~~used in~~ ~~investing~~Flows ~~activities~~from ~~was $16.0 million for the nine months ended September 30, 2020, compared to cash used in investing activities of $39.6 million during the same period in 2019.~~ Investing cash flow in the first nine months of 2020 decreased compared to the same period in 2019 due to lower capital expenditures and higher proceeds from the sales of non-strategic assets offset by acquisitions. Activities

~~Cash~~ Net cash provided by ~~financing~~investing activities ~~was $6.2~~in ~~million for~~ the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September~~2021 ~~30,~~was ~~2020,~~$5.1 million compared to net cash used in ~~financing~~investing activities of $2824.87 million in 2020. This change was partially due to a $5.3 million ~~during~~decrease ~~the~~in ~~same~~capital ~~period~~expenditures in ~~2019~~ 2021. ~~Financing~~Our cash ~~flows~~provided by investing activities in ~~the~~2021 ~~first~~was ~~nine~~due ~~months~~to proceeds from the sale of ~~2020~~non-strategic ~~increased~~assets. ~~compared~~Our tocash ~~the~~used ~~same~~in ~~period~~investing activities in ~~2019~~2020 ~~primarily~~was due to ~~proceeds~~cash ofpaid ~~$15~~to ~~million~~purchase ~~from~~CJWS, ~~the~~which ~~Senior~~was ~~Secured~~partially ~~Promissory~~offset ~~Note~~by ~~issued~~proceeds infrom ~~connection~~the ~~with~~sale ~~the~~of ~~CJWS~~assets ~~Transaction~~related to our discontinued operations.

~~Our~~Cash ~~liquidity,~~Flows ~~including our ability to meet our ongoing operational obligations, is dependent upon, among other things, our ability to maintain adequate cash on hand and generate cash flow~~ from ~~operations.~~Financing Maintaining adequate liquidity depends upon industry conditions and financial, competitive, and other factors beyond our control. In the event that cash on hand and cash flow from operations is not sufficient to meet our liquidity needs, we may have limited or no access to additional financing to operate or expand our business.Activities

~~Capital~~Net ~~Expenditures~~cash used in financing activities was $2.4 million during the first quarter of 2021, compared to net cash provided by financing activities of $12.2 million in 2020. This change was partially due to a $6.6 million decrease in payments on our finance leases in 2021. Our cash provided by financing activities in 2020 was primarily due to net proceeds of $22.8 million received from the issuance of the Senior Secured Promissory Note and borrowings from the ABL Credit Facility.

Cash capital expenditures during the first nine months of 2020 were $6.9 million, compared to $46.3 million in the same period of 2019. We added $0.5 million of leased assets through our finance lease program and other financing arrangements during the first nine months of 2020 compared to $7.9 million of leased asset additions in the same period in 2019. Proceeds from sales of non-strategic assets totaled $51.4 million during the period, more than offsetting capital expenditures during the first nine months of 2020. The Company continues to seek to sell remaining non-strategic assets in future periods.Requirements

WeContractual ~~currently~~Commitments ~~have~~and ~~planned~~Obligations: ~~capital~~On ~~expenditures~~March ~~for~~31, 2021, the ~~full~~Company ~~year~~negotiated ~~2020~~a settlement of ~~approximately~~a contractual make-whole obligation to its controlling shareholder in exchange for issuing additional Senior Notes to this shareholder with an aggregate par value of $1147.5 million,. ~~including~~As ~~finance~~of ~~leases~~March of31, ~~less~~2021, ~~than~~there $1were ~~million.~~no Weother dosignificant ~~not~~changes ~~budget~~to ~~acquisitions~~our incontractual obligations outside the ~~normal~~ordinary course of business since December 31, 2020. Please refer to our annual report on Form 10-K for the year ended December 31, 2020, for additional information regarding our contractual obligations. See Note 1. "Basis of Presentation and weCurrent ~~regularly~~Environment" ~~engage~~to the condensed consolidated financial statements included in ~~discussions~~this ~~related~~quarterly report for a discussion of the Company's efforts subsequent to ~~potential~~March ~~acquisitions~~31, ~~related~~2021, to ~~the~~improve ~~oilfield~~its ~~services~~liquidity ~~industry~~and long-term capital structure, which have included additional contractual obligations.

Capital Expenditures: The nature of our capital expenditures consists of a base level of investment required to support our current operations and amounts related to growth and company initiatives. Our capital expenditures for 2021 represented the amount necessary to support our current operations. We estimate capital expenditures in 2021 will range from $10 million to $20 million, which will be used to support our operations.

Other Matters

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Recent Accounting Pronouncements

~~Our~~See ~~consideration~~Note of1. ~~recent~~"Basis ~~accounting~~of ~~pronouncements~~Presentation isand ~~included~~Current inEnvironment" ~~Note 18. Recent Accounting Pronouncements~~ to the condensed consolidated financial statements included in this quarterly report.

Impact of Inflation on Operations

Inflation in the United States has been relatively low in recent years and did not have a material impact on our results of operations for the nine months ended September 30, 2020, or the year ended December 31, 2019. Although the impact of inflation has been insignificant in recent years, it is still a factor in the U.S. economy, and we tend to experience inflationary pressure on the cost of our equipment, materials and supplies during periods of increasing oil and natural gas prices and increasing activity in our areas of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

AsNot ~~a “smaller reporting company”, we are not required to provide this information~~applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2021, at the reasonable assurance level.

decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2020, at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

AsDuring ~~discussed~~the ~~above~~most inrecent ~~this~~fiscal ~~Quarterly Report on Form 10-Q~~quarter, onthere ~~March~~have 9,been ~~2020,~~no wechanges ~~acquired~~in ~~all of the issued and outstanding shares of capital stock of CJWS. We are currently integrating CJWS into~~ our internal control over financial reporting ~~processes.~~(as Indefined ~~executing~~in ~~this~~Rule ~~integration,~~13a-15(f) weunder ~~are~~the ~~analyzing,~~Exchange ~~evaluating,~~Act) ~~and~~that ~~where~~have ~~necessary~~materially affected, ~~making~~or ~~changes~~are inreasonably ~~control~~likely ~~and procedures related~~ to ~~the~~materially ~~CJWS business~~affect, ~~which~~our weinternal ~~expect~~control toover ~~complete~~financial ~~within one year after the date of acquisition~~reporting. ~~Total~~We ~~assets~~may ofmake ~~CJWS~~changes ~~represented~~in ~~approximately 21% of~~ our ~~consolidated~~internal ~~total~~control ~~assets~~procedures asfrom oftime ~~September~~to ~~30,~~time ~~2020,~~in ~~and CJWS revenues following~~ the ~~March 9, 2020 acquisition date represented approximately 36% of our consolidated revenues for the nine month period ended September 30, 2020~~future.

Other than the changes described above, during the most recent fiscal quarter, there have been no changes, including the impact of COVID-19, in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We may make changes in our internal control procedures from time to time in the future.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~From~~For ~~time to time, we are~~ a ~~party~~description ~~to litigation or other legal proceedings that we consider to be a part~~ of ~~the~~our ~~ordinary course of business. We are not currently involved in any~~ legal proceedings ~~that we consider probable or reasonably possible~~, ~~individually~~see ~~or in the aggregate, to result in a material adverse effect on our financial condition, results of operations or liquidity. The information regarding litigation and environmental matters described in~~ Note 98. “Commitments and Contingencies” ofto the ~~notes~~condensed ~~to our unaudited~~ consolidated financial statements included in this ~~Quarterly~~quarterly ~~Report~~report, onwhich ~~Form 10-Q~~ is incorporated ~~herein~~ by reference herein.

ITEM 1A. RISK FACTORS

During the quarter ended ~~September~~March 3031, ~~2020~~2021, there have been no material changes in our risk factors disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2019, our Quarterly Reports on Form 10-Q for the quarters ended March 31,~~ 2020 ~~and June 30, 2020, and our Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 15, 2020, other than the following:~~.

The ongoing spread of COVID-19 and recent developments in the global oil and gas markets have and will continue to adversely affect our business and financial condition.

The impacts of COVID-19 and the significant drop in commodity prices have had an unprecedented impact on the global economy and our business. We expect that our business will continue to be adversely affected by the COVID-19 pandemic and lower commodity prices for an indeterminate amount of time. The responses of governmental authorities and companies to reduce the spread of COVID-19 have significantly reduced global economic activity. Various containment measures, including large-scale travel bans, border closures, quarantines, shelter-in-place orders and business and government shutdowns, have resulted in the slowing of economic growth and a reduced demand for oil and natural gas and the disruption of global manufacturing supply chains.

In addition, recent actions by Saudi Arabia and Russia have caused a worldwide oversupply in oil and natural gas. After OPEC and a group of oil producing nations led by Russia failed in March 2020 to agree on oil production cuts, Saudi Arabia announced that it would cut oil prices and increase production, leading to a sharp further decline in oil and natural gas prices. While OPEC, Russia and other oil producing countries reached an agreement in April 2020 to reduce production levels, and U.S. production has declined, oil prices remain low on account of an oversupply of oil and natural gas, with a simultaneous decrease in demand as a result of the impact of COVID-19 on the global economy.

As our customers, commodity markets and the U.S. and global economies have been negatively impacted by the these factors, we may continue to experience lower demand for our services. Demand for our services will continue to decline as our customers revise their capital budgets downward and adjust their operations in response to lower oil prices. Further, we have seen, and expect to see, an increasing number of energy companies filing for bankruptcy. Our collection of receivables could be materially delayed and/or impaired if any of our customers file for bankruptcy protection.

Oil and natural gas prices are expected to continue to be volatile as a result of the ongoing COVID-19 outbreak, and as changes in oil and natural gas inventories, industry demand and economic performance are reported. We cannot predict when or whether prices will improve and stabilize or how long the pandemic will last or the time it will take for economic activity to return to prior levels.

We also may be exposed to liabilities resulting from operational delays due to supply chain disruption and closure or limitations imposed on our facilities and work force by the various containment measures. Our ability to perform services could also be impaired and we could be exposed to liabilities resulting from interruption in our ability to perform due to limited manpower and travel restrictions. These potential operational and service delays resulting from the COVID-19 pandemic could result in contractual or other legal claims from our customers. At this time, it is not possible to quantify these risks, but the combination of these factors could have a material impact on our financial results.

Should COVID-19 continue to spread globally or within the U.S., and should the suggested and mandated social quarantining and work from home orders continue, our business, financial condition and results of operations could be materially and adversely impacted. The decline in commodity prices and demand for our services could lead to additional material impairments of our goodwill and other long-lived assets. It is impossible to predict the severity and longevity of the impact of COVID-19 on the general economy and the oil and gas industry. These risks have had and could have a material adverse impact on our financial position, results of operations and cash flows. Basic will continue to monitor the developments relating to COVID-19 and the volatility in oil prices closely, and will follow health and safety guidelines as they evolve.

The combination of the COVID-19 pandemic and the related significant decline in global oil and gas prices have significantly impacted the Company’s ability to access the capital markets or obtain financing.

The COVID-19 pandemic and decline in the price of oil and natural gas described above has increased volatility and caused negative pressure in the capital and credit markets. As a result, we may not have access in the current environment to the capital markets or financing on terms we would find favorable, if at all.

There is substantial doubt about the Company’s ability to continue as a going concern and this could, among other things, materially and adversely impact our ability to obtain capital financing and the value of our common stock.

Due to the uncertainty of future oil and natural gas prices and the effects the outbreak of COVID-19 will have on our future results of operations, operating cash flows and financial condition, there is substantial doubt as to the ability of the Company to continue as a going concern. Management has taken several steps to generate additional liquidity, including through reducing operating and administrative costs through employee headcount reductions, closing operating locations, employee furloughs and other cost reduction measures, and the suspension of growth capital expenditures in our continuing business operations with the goal of preserving margins and improving working capital. However, there can be no assurance that these steps will be sufficient to mitigate the impact of the COVID-19 pandemic until energy commodity prices recover to levels that can sustain our ongoing business and enable us to meet our financial covenants and day-to-day obligations in the long term.

Management may seek to implement further cost and capital expenditure reductions, as necessary. These additional steps may include sales of non-strategic assets, obtaining waivers of debt covenant requirements from our lenders, restructuring or refinancing our debt agreements, or obtaining equity financing. Even if the Company is able to achieve some or all of the foregoing actions, there can be no assurances that the Company would be able to successfully sell assets, obtain waivers, restructure its indebtedness, or complete any strategic transactions in amounts sufficient to alleviate the substantial doubt regarding the Company's ability to continue as a going concern. In addition, there can be no assurance that the Company will be able to have access to the capital markets or be able to otherwise refinance or restructure its existing indebtedness on commercially acceptable terms, or at all.

If we cannot continue as a going concern, our stockholders would likely lose most or all of their investment in us and holders of our indebtedness may also suffer material losses on their investments. Reports raising substantial doubt as to a company’s ability to continue as a going concern are generally viewed unfavorably by analysts and investors and could have a material adverse effect on the Company’s business, financial position, results of operations and liquidity.

Global oil and natural gas prices may not return to pre-COVID-19 levels for several months or years, if ever.

There can be no assurance that demand for oil and natural gas will return to pre-COVID-19 levels or, if it does, that it will return to those levels at any time in the foreseeable future. In addition, even if that demand increases, the significant amount of oil currently in storage, combined with the stated oil price strategy of Saudi Arabia and Russia,

could result in the continuation of low commodity prices and low demand for our services for a significant period of time. The continuation of the current price environment for a sustained period would have a significant negative impact on the Company and its operations.

In connection with the CJWS Transaction, we may be obligated to make a Make-Whole Payment to Ascribe which, if made in cash, could materially and adversely affect our liquidity and, if made in Senior Notes, would increase our indebtedness.

In connection with the CJWS Transaction, pursuant to the Purchase Agreement, Ascribe has certain contingent obligations to the Seller to make Seller whole on the par value of the Ascribe Senior Notes as of the earlier of the first anniversary of the closing of the Stock Purchase, a bankruptcy of us, or a change of control of us. If Ascribe is required to pay the Make-Whole Payment to Seller pursuant to the Purchase Agreement, we will be required to reimburse to Ascribe the amount of such Make-Whole Payment, either (i) in cash (a) to the extent we have available cash (as determined by an independent committee of our board of directors) and (b) subject to satisfaction of certain “Payment Conditions” set forth in the ABL Credit Agreement or (ii) if we are unable to pay the full Make-Whole Reimbursement Amount in cash pursuant to clause “(i)” above, in additional Senior Notes valued at the average closing price for the Senior Notes for the 10 business days preceding the date such Make-Whole Obligation arises. If we make a Make Whole Payment in cash, we could experience a material and adverse reduction in liquidity and may have difficulty funding our operations, repayment of short-term borrowings, payments of interest and other obligations. In addition, we may not have sufficient funds, or be permitted under the terms of the ABL Credit Agreement, to make a Make-Whole Payment in cash. In such event, we will be required to issue additional Senior Notes to Ascribe equal to the Make-Whole Reimbursement Amount. Such issuance will increase our indebtedness under the Senior Notes, and this increase could be material. While the amount of additional Senior Notes that could be required to be issued cannot be determined at this time, based on current market prices for the Senior Notes as of September 30, 2020, we estimate that if the Make-Whole Reimbursement Amount were currently required to be paid, it would be approximately $27.0 million. If we were not able to pay the Make-Whole Reimbursement Amount in cash, at current market prices, the amount of Senior Notes that would be required to be issued would significantly exceed the amount permitted under the terms of the Indenture pursuant to which the Senior Notes were issued. See “Our indebtedness could restrict our operations and make us more vulnerable to adverse economic conditions” under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019. If we are unable to satisfy our obligations in respect of the Make-Whole Reimbursement Amount, we would have to renegotiate our agreement with Ascribe in respect of the Make-Whole Reimbursement Amount or we would be in breach of our agreements with Ascribe.

Our ability to generate cash is substantially dependent upon the performance by customers and contract counterparties, and any material nonpayment or nonperformance by our customers or contractual counterparties could have a materially adverse effect on our financial condition and results of operations.

As a result of the disruptions caused by the COVID-19 pandemic and the volatility in the energy markets, we believe we are exposed to heightened credit and performance risk of our customers and contractual counterparties. Some of our customers and contractual counterparties may be highly leveraged and subject to their own operating and regulatory risks, which increases the risk that they may default on their obligations to us. Furthermore, we may be faced with general downward pricing pressure from customers requesting discounts or other pricing concessions and as our competitors compete for fewer jobs. Our ability to generate cash is substantially dependent upon the performance by customers. Any material nonpayment or nonperformance by our customers or our contractual counterparties could have a materially adverse effect on our financial condition and results of operations.

If oil and natural gas prices remain volatile, or if oil or natural gas prices remain low or decline further, the demand for our services could be adversely affected.

The demand for our services is primarily determined by current and anticipated oil and natural gas prices and the related general production spending and level of drilling activity in the areas in which we have operations. Volatility or weakness in oil or natural gas prices (or the perception that oil or natural gas prices will decrease) affects the spending patterns of our customers and may result in the drilling of fewer new wells or lower production spending on existing wells. This, in turn, could result in lower demand for our services and may cause lower rates and lower utilization of our well service equipment. If oil or natural gas prices continue to remain low or decline further, or if there is a reduction in drilling activities, the demand for our services and our results of operations could be materially and adversely affected.

Prices for oil and natural gas historically have been extremely volatile and are expected to continue to be volatile. The Cushing WTI Spot Oil Price averaged $64.94 and $56.98 per barrel (“bbl”) in 2018 and 2019, respectively. The Cushing WTI oil prices have declined from over $107 per bbl in June 2014 to $40.05 per bbl on

September 30, 2020. The Henry Hub Natural Gas Spot Price averaged $3.17 and $2.57 per Mcf for 2018 and 2019, respectively.

On March 9, 2020, as a result of multiple significant factors impacting supply and demand in the global oil and natural gas markets, including the announced price reductions and possible production increases by members of OPEC and other oil exporting nations, the posted price for West Texas Intermediate oil declined sharply and has remained at depressed levels compared to the prior year. Oil and natural gas commodity prices are expected to continue to be volatile. We cannot predict the duration or effects of this sudden decrease, but if the prices of oil and natural gas continues to decline or remain depressed for a lengthy period, our business, financial condition, results of operations, cash flows, and prospects may be materially and adversely affected.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

~~The~~Neither ~~following~~we, ~~table~~nor ~~summarizes~~any ~~stock~~affiliated ~~repurchases~~purchaser, ~~for~~purchased ~~the~~any ~~three~~of ~~months~~our ~~ended~~equity ~~September~~securities ~~30,~~during ~~2020~~the ~~(in~~quarter ~~thousands~~ended ~~except~~March ~~share~~31, ~~and per share data):~~2021.

	Issuer Purchases of Equity Securities
Period:	Total Number of Shares Purchased (1)	Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Program (2)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (2)
July 1 - July 31	2,639	$	0.23	—	$	—
August 1 - August 31	—	—		—	—
September 1 - September 30	—	—		—	—
Total	2,639	$	0.23	—	$	—

(1) “Total Number of Shares Purchased” were repurchased from various employees to provide such employees the cash amounts necessary to pay certain tax liabilities associated with the vesting of restricted shares and restricted stock units owned by them. The shares were repurchased on various dates based on the closing price per share on the date of repurchase.

(2) On May 31, 2019, we announced that our Board of Directors had authorized the repurchase of up to $5 million of the Company's outstanding shares of common stock from time to time in open market or private transactions, at the Company’s discretion. This authorization was terminated effective May 18, 2020.

ITEM 5. OTHER INFORMATION

Not applicable

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ITEM 6. EXHIBITS

Exhibit
No.						Description
2.1						Purchase Agreement, dated as of March 9, 2020, by and among the Company, Ascribe III Investments LLC, NexTier holding Co. and C&J Well Services, Inc. (Incorporated by reference to Exhibit 2.3 to the Company’s Annual Report on Form 10-K (SEC File No. 001-32693) filed on March 13, 2020).
2.1*						Purchase Agreement, dated as of March 9, 2020, by and among the Company, Ascribe III Investments LLC, Basic Energy Services, Inc., NexTier holding Co. and C&J Well Services, Inc. (Incorporated by reference to Exhibit 2.3 to the Company’s Annual Report on Form 10-K (SEC File No. 001-32693) filed on March 13, 2020).
3.1						Second Amended and Restated Certificate of Incorporation of Basic Energy Services, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A12B (SEC File No. 001-32693) filed on December 23, 2016).
3.1*						Second Amended and Restated Certificate of Incorporation of Basic Energy Services, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A12B (SEC File No. 001-32693) filed on December 23, 2016).
3.2						Certificate of Amendment to the Company’s Second Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on May 12, 2020).
3.2*						Second Amended and Restated Bylaws of Basic Energy Services, Inc. (Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-A12B (SEC File No. 001-32693) filed on December 23, 2016).
3.3						Second Amended and Restated Bylaws of Basic Energy Services, Inc. (Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-A12B (SEC File No. 001-32693) filed on December 23, 2016).
3.3*						Certificate of Designations (Incorporated by reference to Exhibit 3.1 to Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on March 11, 2020).
3.4						Certificate of Designations (Incorporated by reference to Exhibit 3.1 to Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on March 11, 2020).
4.1*						Specimen Stock Certificate representing Common Stock of the Company (Incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form 8-A12B (SEC File No. 001-32693), filed on December 23, 2016).
4.1						Specimen Stock Certificate representing Common Stock of the Company (Incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form 8-A12B (SEC File No. 001-32693), filed on December 23, 2016).
4.2*						Warrant Agreement between Basic, as issuer, and American Stock Transfer & Trust Company, LLC, as warrant agent, dated as of December 23, 2016. (Incorporated by reference to Exhibit 4.1 to Form 8-A12G (SEC File No. 001-32693) filed on December 23, 2016).
4.2						Warrant Agreement between Basic, as issuer, and American Stock Transfer & Trust Company, LLC, as warrant agent, dated as of December 23, 2016. (Incorporated by reference to Exhibit 4.1 to Form 8-A12G (SEC File No. 001-32693) filed on December 23, 2016).
4.3*						Registration Rights Agreement, dated as of December 23, 2016, between Basic and certain stockholders (Incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement on Form 8-A12B (SEC File No. 001-32693) filed on December 23, 2016).
4.3						Registration Rights Agreement, dated as of December 23, 2016, between Basic and certain stockholders (Incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement on Form 8-A12B (SEC File No. 001-32693) filed on December 23, 2016).
4.4*						Indenture, dated as of October 2, 2018, by and among Basic Energy Services, Inc., the subsidiary guarantors party thereto and UMB Bank, N.A., as trustee and collateral agent (Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on October 9, 2018).
4.4						Indenture, dated as of October 2, 2018, by and among Basic Energy Services, Inc., the subsidiary guarantors party thereto and UMB Bank, N.A., as trustee and collateral agent (Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on October 9, 2018).
4.5*						Form of 10.75% Senior Secured Note due 2023 (included as Exhibit A in Exhibit 4.4).
4.5						Form of 10.75% Senior Secured Note due 2023 (included as Exhibit A in Exhibit 4.4).
4.6*						First Supplemental Indenture, dated as of August 22, 2019, by and among Agua Libre Midstream LLC, Agua Libre Holdco LLC, Agua Libre Asset Co LLC, Basic Energy Services, Inc., the subsidiary guarantors party thereto and UMB Bank, N.A., as trustee and collateral agent (Incorporated by reference to Exhibit 4.6 to the Company’s Quarterly Report on Form 10-Q (SEC File No. 001-32693) filed on November 1, 2019).
4.6						First Supplemental Indenture, dated as of August 22, 2019, by and among Agua Libre Midstream LLC, Agua Libre Holdco LLC, Agua Libre Asset Co LLC, Basic Energy Services, Inc., the subsidiary guarantors party thereto and UMB Bank, N.A., as trustee and collateral agent (Incorporated by reference to Exhibit 4.6 to the Company’s Quarterly Report on Form 10-Q (SEC File No. 001-32693) filed on November 1, 2019).
4.7*						Second Supplemental Indenture, dated as of April 1, 2020, by and among C&J Well Services, Inc., KVS Transportation, Inc, Indigo Injection #3, LLC, Basic Energy Services, Inc., the subsidiary guarantors party thereto and UMB Bank, N.A., as trustee and collateral agent (Incorporated by reference to Exhibit 4.7 to the Company’s Quarterly Report on Form 10-Q (SEC File No. 001-32693) filed on August 7, 2020).
4.7						Second Supplemental Indenture, dated as of April 1, 2020, by and among C&J Well Services, Inc., KVS Transportation, Inc, Indigo Injection #3, LLC, Basic Energy Services, Inc., the subsidiary guarantors party thereto and UMB Bank, N.A., as trustee and collateral agent (Incorporated by reference to Exhibit 4.7 to the Company’s Quarterly Report on Form 10-Q (SEC File No. 001-32693) filed on August 7, 2020).
4.8*						Third Supplemental Indenture, dated as of May 3, 2021 by and among Basic Energy Services, Inc., the guarantors party thereto and UMB Bank, N.A. as trustee and collateral agent (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on May 4, 2021).
10.1†						Separation and Release Agreement, dated September 28, 2020, by and between the Company and David S. Schorlemer (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on September 30, 2020).
10.1*						Super Priority Credit Agreement, dated as of May 3, 2021, by and among Basic Energy Services, Inc., the lenders party thereto, and Cantor Fitzgerald Securities, as administrative agent and collateral agent (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on May 4, 2021).
10.2†*						Key Employee Retention Bonus Plan, dated September 30, 2020 (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on October 6, 2020).
10.2*						Limited Consent and First Amendment to the Forbearance Agreement, dated as of April 28, 2021 by and among Basic Energy Services, certain of the Company’s subsidiaries, Bank of America, N.A. as administrative agent and the Credit Agreement Forbearing Parties (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on May 4, 2021).
10.3*						~~Second~~Consent ~~Lien Delayed Draw Promissory Note~~Letter, dated ~~October~~as 15of May 3, ~~2020~~2021, by and ~~between~~among ~~the~~Basic ~~Company~~Energy Services, Inc. and Ascribe III Investments LLC (Incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on ~~October~~May 214, ~~2020~~2021).
10.4*						~~Second~~Employment ~~Lien~~Agreement ~~Security~~of ~~Agreement~~Adam Hurley, ~~dated~~effective as of ~~October~~July 1519, ~~2020~~2018, by and ~~among~~amended ~~the~~as ~~Company, certain subsidiaries~~ of ~~the~~January ~~Company~~1, ~~party~~2019 ~~thereto~~ and ~~Ascribe~~as ~~III~~of ~~Investments~~April ~~LLC (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on October 21~~27, ~~2020)~~2021.
10.5						Third Amendment to ABL Credit Agreement, dated October 15, 2020, by and among the Company, the subsidiaries of the Company party thereto, the financial institutions party to the amendment constituting the Required Lenders, and Bank of America, N.A., as administrative agent for the Lenders (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (SEC File No. 001-32693) filed on October 21, 2020).
10.5#						Forbearance Agreement, dated as of May 14, 2021, by and among Basic Energy Services, Inc., the subsidiary guarantors party thereto and the Supporting Holders.
10.6#						Forbearance Agreement, dated as of May 14, 2021, by and among Basic Energy Services, Inc., the subsidiary guarantors party thereto, the lenders party thereto and Cantor Fitzgerald Securities, as administrative agent and collateral agent.
10.7#						Second Amendment to the Forbearance Agreement, dated as of May 14, 2021, by and among Basic Energy Services, Inc., the subsidiary guarantors party thereto and Bank of America, N.A. as administrative agent.
10.8#						Amendment to Consent Letter, dated as of May 14, 2021, by and among Basic Energy Services, Inc. and Ascribe III Investments LLC.
31.1#						Certification by Chief Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Certification by Chief Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act.
31.2#						Certification by Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act.
32.1##						Certification of Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2##						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.CAL#						Inline XBRL Calculation Linkbase Document
101.DEF#						Inline XBRL Definition Linkbase Document

3922

32.2##						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.CAL#						XBRL Calculation Linkbase Document
101.DEF#						XBRL Definition Linkbase Document
101.INS#						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.LAB#						~~Inline~~ XBRL Labels Linkbase Document
101.PRE#						~~Inline~~ XBRL Presentation Linkbase Document
101.SCH#						~~Inline~~ XBRL Schema Document
104 #						Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101).

*~~Exhibits~~Incorporated ~~and~~by ~~schedules omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted exhibit or schedule will be furnished supplementally to the SEC upon request.~~reference

#Filed with this report

##Furnished with this report

†Management contract or compensatory plan or arrangement

4023

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BASIC ENERGY SERVICES, INC. By: /s/ Keith L. Schilling Name: Keith L. Schilling Title: President, Chief Executive Officer and Director (Principal Executive Officer) By: /s/ Adam L. Hurley Name: Adam L. Hurley Title: Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer ~~and Principal Accounting Officer~~)

Date: ~~November~~May 217, ~~2020~~2021

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