Pioneer Energy Services : Quarterly report which provides a continuing view of a company's financial position

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549 ______________________________________________

FORM 10-Q

______________________________________________

(Mark one)

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

  For the quarterly period ended March 31, 2020 or

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

Commission File Number: 1-8182

PIONEER ENERGY SERVICES CORP.

(Exact name of registrant as specified in its charter) ____________________________________________

DELAWARE	74-2088619
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification Number)
1250 N.E. Loop 410, Suite 1000
San Antonio, Texas	78209
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: [phone]

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

Title of each class

Trading Symbol(s) Name of each exchange on which registered

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

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

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

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
Emerging Growth Company	o

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

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ☐

As of June 15, 2020, there were 1,048,185 shares of common stock, par value $0.001 per share, of the registrant outstanding.

EXPLANATORY NOTE

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

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

• • the Company converted from a Texas corporation to a Delaware corporation;

• • all the outstanding common stock was canceled, and holders thereof received an aggregate of 5.75% of the proforma common equity (subject to dilution from the convertible notes and new management incentive plan), at a conversion rate of 0.0006849838 new shares for each old share;

• • the $300 million principal amount of the Company's Senior Notes due 2022 was canceled in exchange for 94.25% of the proforma common equity (subject to dilution from the convertible notes and new management incentive plan);

• • the amounts outstanding under the Company's debtor-in-possession credit facility were repaid and the existing term loan was repaid with proceeds from the issuance of the senior secured notes and convertible notes referenced below;

• • the Company entered into a $75 million senior secured asset-based revolving credit agreement;

• • the Company issued $78,125,000 of its floating rate senior secured notes due 2025; and

• • the Company issued $129,771,000 aggregate principal amount of its 5% convertible senior unsecured pay-in-kind notes due 2025, which are convertible into 75 shares of Common Stock per $1,000 principal amount of the convertible notes, subject to customary anti-dilution adjustments, which notes have the right to vote together with the common stock on an "as-converted" basis on all matters to be voted on by the Company's stockholders.

TABLE OF CONTENTS

Page

PART I

Item 1.	Financial Statements and Supplementary Data	4
Condensed Consolidated Balance Sheets	4
Condensed Consolidated Statements of Operations	5
Condensed Consolidated Statements of Stockholders' Equity	6
Condensed Consolidated Statements of Cash Flow	7
Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45
Item 4.	Controls and Procedures	45
Item 1.	46
Item 1A.	46
Item 2.	48
Item 3.	48
Item 4.	49
Item 5.	49
Item 6.	50

PART II

Legal Proceedings Risk Factors

Unregistered Sales of Equity Securities and Use of Proceeds Defaults Upon Senior Securities

Mine Safety Disclosures

Other Information Exhibits

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES (DEBTOR IN POSSESSION)

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

Current assets:

Cash and cash equivalents Restricted cash Receivables:

Trade, net of allowance for doubtful accounts Unbilled receivables

Insurance recoveries Other receivables

Inventory

Assets held for sale

Prepaid expenses and other current assets Total current assets

Property and equipment, at cost

Less accumulated depreciation

Net property and equipment Deferred income taxes Operating lease assets Other noncurrent assets

$

64,836 79,135

12,01512,590

22,379 22,873

3,6938,928

21,619 22,453

1,8253,447

8,129 7,869

150,9511,083,512 643,558

439,954 471,170

9,26411,540

7,972 7,264

7,5931,068

Total assets

March 31,	December 31,
2020	2019
(unaudited)	(audited)

(in thousands, except share data)

15,457$ 24,619

998 998

$

615,734

182,9121,119,546 648,376

$

673,954

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable Deferred revenues Commitment premium Debtor in possession financing Accrued expenses:

Employee compensation and related costs Insurance claims and settlements Insurance premiums and deductibles Interest

Other

Total current liabilities

Long-term debt, less unamortized discount and debt issuance costs Noncurrent operating lease liabilities

Deferred income taxes

Other noncurrent liabilities

Total liabilities not subject to compromise Commitments and contingencies (Note 12) Liabilities subject to compromise Stockholders' equity:

Preferred stock, 10,000,000 shares authorized; none issued and outstanding

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

Additional paid-in capital

Treasury stock, at cost; 1,041,565 and 877,047 shares at March 31, 2020 and December 31, 2019, respectively Accumulated deficit

Total stockholders' equity

Total liabilities and stockholders' equity

$

28,774

9971,339

9,584 4,000

10,30013,781

22,239 22,873

5,8315,940

107 5,452

11,1969,645

$ 32,551

- -

93,028 91,581

170,921467,699

6,434 5,700

3,2564,417

383 274,022

481 569,878

306,419

-

-

-

8,062 8,008

553,484553,210

(5,097) (5,090)

(521,156)(452,052)

35,293

104,076

See accompanying notes to condensed consolidated financial statements.

4

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES (DEBTOR IN POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)Three months ended March 31,2020

2019

Revenues

$

114,322

$

146,568

Costs and expenses:

Operating costs Depreciation

General and administrative Pre-petition restructuring charges Impairment

Bad debt expense, net

Gain on dispositions of property and equipment, net

Total costs and expenses

Loss from operations

Other income (expense):

Interest expense, net of interest capitalized Reorganization items

Other income (expense), net

Total other expense, net

92,022108,585

21,984 22,653

14,65519,758

17,074

17,853

727

(717)

163,598

-

1,046

62

(1,075)

151,029

(49,276)(4,461)

(8,651) (9,885)

(6,663)(5,545)

-684

(20,859)(9,201)

Loss before income taxes Income tax (expense) benefit Net loss

Loss per common share - Basic

Loss per common share - Diluted

Weighted average number of shares outstanding-Basic

Weighted average number of shares outstanding-Diluted

$ $ $

78,75378,311

78,75378,311

See accompanying notes to condensed consolidated financial statements.

5

(70,135)(13,662)

1,031 (1,453)

(69,104)$ (15,115)

(0.88)$ (0.19)

(0.88)$ (0.19)