BASIC ENERGY SERVICES, INC. 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 beginningMarch 9, 2020 , with the acquisition ofC&J Well Services, Inc. ("CJWS"), which is expected to significantly increase revenues and operating cash flows in future periods. Beginning inMarch 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"), the posted price forWest 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 ofOrganization of the Petroleum Exporting Countries ("OPEC") and other oil exporting nations. AlthoughOPEC 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. 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 quarter. Demand for our products and services will continue to decline as our customers revise their capital budgets downward and adjust their operations in response to lower oil prices. We cannot predict the duration or effects of this sudden decrease, but if the price of oil continues to decline or remain 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 ofMarch 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 has made plans for further cost and capital expenditure reductions, as necessary. Our weighted average number of fluid service trucks increased to 908 in the first quarter of 2020 from 818 in the first quarter of 2019. Our weighted average number of Well Servicing rigs increased from 310 in the first quarter of 2019 to 396 in the first quarter of 2020. Our consolidated financial results and operational data for the quarter endedMarch 31, 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 months endedMarch 31, 2020 and 2019 (dollars in thousands): Three Months Ended March 31, 2020 2019 Revenues: Well Servicing$ 58,141 45%$ 61,984 40% Water Logistics 44,381 35% 55,601 36% Completion & Remedial Services 25,881 20% 35,605 23% Revenues from continuing operations$ 128,403 100%$ 153,190 100% Revenues from continuing operations$ 128,403 100%$ 153,190 78% Revenues from discontinued operations 95 -% 44,013 22% Total Revenues$ 128,498 100%$ 197,203 100%
During 2019 and through the first quarter of 2020, oil prices have remained
depressed and a significant further decrease in prices occurred during
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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 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
C&J Well Services, Inc. , a Delaware corporation, and wholly owned subsidiary of
Seller ("CJWS"). For further discussion, see Note 2. Acquisition.
Segment Overview
Well Servicing
During the first three months of 2020, our Well Servicing segment represented
45% 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 quarter
ended March 31, 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%
Rig utilization was 49% in the first quarter of 2020, down from 58% in the
fourth quarter of 2019. The decreased utilization rate in the first quarter of
2020 resulted from a decrease in customer demand and activity, primarily for our
24-hour rig packages. Our segment profit percentage decreased to 13% for the
first quarter of 2020 compared to 14% in the fourth quarter of 2019.
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Water Logistics
During the first three months of 2020, our Water Logistics segment represented
approximately 35% 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. Revenues from our wellsite construction services are derived
primarily from preparing and maintaining access roads and well locations,
installing small diameter gathering lines and pipelines, constructing
foundations to support drilling rigs and providing maintenance services for oil
and natural gas facilities. Revenue from water treatment services results from
the treatment and reselling of produced water and flowback to customers for the
purposes of reusing as fracturing water. 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 quarter ended
March 31, 2020 (dollars in thousands):
Weighted
Average Number
Pipeline Volumes (in Trucking Volumes (in of Fluid
bbls) bbls) 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%
Revenue for the Water Logistics segment decreased to $44.4 million in the first
quarter of 2020, including the impact from the acquisition of CJWS, compared to
$44.7 million in the fourth quarter of 2019, as a result of decreased levels of
trucking utilization. Segment profit percentage remained constant at 25% in the
first quarter of 2020 and the fourth quarter of 2019.
Completion & Remedial Services
During the first three months of 2020, our Completion & Remedial Services
segment represented approximately 20% 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.
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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
quarter ended March 31, 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%
The decrease in Completion & Remedial Services revenue to $25.9 million in the
first quarter of 2020 from $28.2 million in the fourth quarter of 2019 resulted
from declines in our RAFT and coiled tubing lines of business. Segment profits
as a percentage of revenue decreased to 18% in the first quarter of 2020 from
27% in the fourth quarter of 2019 as a result of the declines in oil prices and
competitive pricing pressures.
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 has made plans for 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 months ended March 31, 2020 , compared to the three months ended March 31,
2019 . For additional segment-related information and trends, please read
"Segment Overview" above.
Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019
Revenues. Revenues from continuing operations decreased by $24.8 million
to $128.4 million during the three months ended March 31, 2020 ,
from $153.2 million during the same period in 2019, despite the impact of $18.4
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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 6% to $58.1 million during the three months
ended March 31, 2020 , compared to $62.0 million during the same period in 2019.
The overall decrease, included the addition of $11.4 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 396 during the three months ended March 31, 2020 , compared to 310
during the same period of 2019. Utilization decreased to 49% in the three months
ended March 31, 2020 , compared to 74% in the comparable period of 2019 due to
declines in production related activity. Revenue per rig hour in the three
months ended March 31, 2020 , was $397 , increasing from $336 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 20% to $44.4 million during the three
months ended March 31, 2020 , including a $4.4 million increase resulting from
the acquisition of CJWS, compared to $55.6 million in the same period in 2019,
mainly due to decreases in trucking activity. Pipeline water volumes increased
to 3.6 million barrels or 38% of total disposal volumes during the three months
ended March 31, 2020 , compared to 3.1 million barrels or 32% of total disposal
volumes during the three months ended March 31, 2019 . Our weighted average
number of fluid service trucks increased to 908 during the three months ended
March 31, 2020 , compared to 818 in the same period in 2019.
Completion & Remedial Services revenues decreased by 27% to $25.9 million during
the three months ended March 31, 2020 compared to $35.6 million in the same
period in 2019. The overall decrease in revenue between these periods was
despite $2.6 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 $105.1 million during the three
months ended March 31, 2020 , from $111.1 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
$15.8 million of additional operating expenses following the acquisition of
CJWS.
Direct operating expenses for the Well Servicing segment increased by 4%
to $50.8 million during the three months ended March 31, 2020 , compared to $48.8
million for the same period in 2019, with CJWS adding $10.8 million , reflecting
the offsetting reductions in operating expenses due to decreased demand. Segment
profits decreased to 13% of revenues during the three months ended March 31,
2020 , from 22% for the same period in 2019, due to decreased activity levels and
$2.4 million of severance payments.
Direct operating expenses for the Water Logistics segment decreased by 11% to
$33.1 million during the three months ended March 31, 2020 , compared to $37.3
million for the same period in 2019, despite an increase of $3.0 million
following the acquisition of CJWS. Segment profits were 25% of revenues during
the three months ended March 31, 2020 , compared to 33% for the same period in
2019, due to the decrease in demand.
Direct operating expenses for the Completion & Remedial Services segment
decreased by 15% to $21.2 million during the three months ended March 31, 2020 ,
compared to $25.0 million for the same period in 2019, and included the $2.0
million increase from the acquisition of CJWS. Segment profits were 18% of
revenues during the three months ended March 31, 2020 , compared to 30% for the
same period in 2019, due to the decreased activity levels and $0.5 million in
severance payments.
General and Administrative Expenses. General and administrative expenses
increased by 10% to $35.1 million during the three months ended March 31, 2020 ,
from $31.8 million for the same period in 2019. This increase was due to $1.3
million of increased general and administrative expenses added following the
acquisition of CJWS, and $9.2 million of legal and professional acquisition
transaction related expenses which offset administrative cost reductions.
Stock-based compensation expense was $1.3 million and $3.3 million during the
three months ended March 31, 2020 and 2019, respectively. During the three
months ended March 31, 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 $14.8 million during the three months ended March 31, 2020 , compared
to $16.2 million for the same period in 2019. The decrease is mainly related to
reduced capital spending during the three months ended March 31, 2020 .
Impairments of Goodwill and Other Long-Lived Assets. Beginning in March 2020 , we
have experienced a reduction in demand for our services due to the decreased
price of crude oil as a result of multiple significant factors
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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
$18.8 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 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. Based on these
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. Related to these
market conditions at March 31, 2020 , we recorded impairments of certain tangible
long-lived assets totaling $84.2 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 remained consistent at $10.6 million during
the three months ended March 31, 2020 and 2019, respectively. Interest expense
consisted primarily of interest on our Senior Notes, finance leases, and
amortization of our debt discounts and deferred financing costs.
Income Tax Benefit. Income tax benefit during the three months ended March 31,
2020 , was $3.8 million compared to an income tax benefit of $1.9 million for the
same period in 2019. The tax benefit during the three months ended March 31,
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. The net effect of this transaction was a tax benefit and
a reduction of our NOLs of $1.8 million in the first quarter of 2019, offset by
write-offs of unrecoverable Oklahoma state income taxes receivable of $0.8
million , and accrual for state income taxes payable of $1.2 million . Our
respective effective tax rates on continuing operations during the three month
periods ended March 31, 2020 and 2019, were approximately 2.7% and 11.1%,
respectively.
Liquidity and Capital Resources
Our current primary capital resources are cash flow from our operations,
availability under our revolving credit facility (the "ABL Facility"), the
ability to enter into finance leases, the ability to incur additional secured
indebtedness, and a cash balance of $21.1 million at March 31, 2020 . We had
$39.7 million of available borrowing capacity under the ABL Facility at March
31, 2020 . We have utilized, and expect to utilize in the future, bank and
finance lease financing and sales of non-strategic assets to obtain capital
resources. 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 million . Availability under the amended agreement as of May 31,
2020 was $9.4 million .
As a result of 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 early 2020. Based on our current operating and
commodity price forecasts and capital structure, we believe that if certain
financial ratios or covenants were to come into 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 borrowing base reporting requirements for so long
as such applicable trigger period is in effect. Failure to comply, for example,
with a "springing" consolidated fixed charge coverage ratio requirement under
the ABL Facility would result in an event of default under the ABL Facility,
which would result in a cross-default under the Senior Notes. If an event of
default were to occur, our 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.
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.
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
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this substantial doubt would 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. 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.
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.
Share Repurchase Program
On May 31, 2019 , we announced that the Board authorized a share repurchase plan
whereby we may repurchase up to $5 million of our outstanding shares of common
stock beginning on June 4, 2019 , for a period of 12 months. Prior to the plan's
termination, we were authorized to repurchase our common stock from time to time
in open market purchases or in private transactions in accordance with
applicable federal securities laws. The total remaining share authorization as
of March 31, 2020 , was $0.2 million . As permitted under the plan, authorization
was terminated by the Board on May 18, 2020 .
Net Cash Provided by or Used by Operating Activities
Cash used by operating activities was $2.3 million for the three months ended
March 31, 2020 , compared to cash provided by operating activities of $1.8
million during the same period in 2019. Operating cash flow in the first three
months of 2020 decreased compared to the same period in 2019 due to lower
working capital levels. Cash provided by operating activities is expected to
increase in future periods following the acquisition of CJWS effective March 9,
2020 .
Our liquidity, 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. 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 access to additional financing to operate or expand our business.
Capital Expenditures
Cash capital expenditures during the first three months of 2020 were
$5.6 million , compared to $18.9 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 three months of 2020 compared to
$6.1 million of leased asset additions in the same period in 2019. Proceeds from
sales of non-strategic assets totaled $40.3 million during the period, more than
offsetting capital expenditures during the first three months of 2020. The
Company continues to seek to sell remaining non-strategic assets in future
periods.
We currently have planned capital expenditures for the full year of 2020 of
approximately $14 million , including finance leases of less than $1 million . We
do not budget acquisitions in the normal course of business, and we regularly
engage in discussions related to potential acquisitions related to the oilfield
services industry.
Contractual Obligations
Outside of the normal course of our business, as of March 31, 2020 , there have
been no material changes to our contractual obligations reported in our Annual
Report on Form 10-K for the year ended December 31, 2019 .
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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 consideration of recent accounting pronouncements is included in Note 17. Recent Accounting Pronouncements to the consolidated financial statements included in this quarterly report. Impact of Inflation on Operations Inflation inthe United States has been relatively low in recent years and did not have a material impact on our results of operations for the three months endedMarch 31, 2020 , or the year endedDecember 31, 2019 . Although the impact of inflation has been insignificant in recent years, it is still a factor in theU.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.
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