10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-K

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(Mark One)

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

For the fiscal year ended: December 31, 2019

Or

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

For the transition period from             to             

Commission File Number: 001-33816

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(A Delaware Corporation)

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I.R.S. Employer Identification No. 26-0287117

6720 N. Scottsdale Road, Suite 190, Scottsdale, AZ 85253

Telephone: (602) 903-7802

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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, $0.01 par value	NES	NYSE American

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

None

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  ý

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  ý    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  ý    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. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	ý
		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 Act).    Yes  ¨    No  ý

As of June 28, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $6.9 million based on the closing sale price of $4.11 on such date as reported on the NYSE American exchange. Shares held by executive officers, directors and persons owning directly or indirectly more than 10% of the outstanding common stock have been excluded from the preceding number because such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for any other purposes.

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

The number of shares outstanding of the registrant’s common stock as of February 29, 2020 was 15,761,082.

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Documents Incorporated by Reference

Part III of this Annual Report on Form 10-K incorporates by reference information from the Definitive Proxy Statement for the registrant’s 2020 Annual Meeting of Stockholders or a Form 10-K/A to be filed with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year ended December 31, 2019.

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TABLE OF CONTENTS

Cautionary Note for Forward-Looking Statements		3
	PART I	5
Item 1.	Business	5
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	26
Item 2.	Properties	26
Item 3.	Legal Proceedings	26
Item 4.	Mine Safety Disclosures	26
	PART II	27
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	27
Item 6.	Selected Financial Data	28
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	47
Item 8.	Financial Statements and Supplementary Data	48
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	48
Item 9A.	Controls and Procedures	48
Item 9B.	Other Information	49
	PART III	50
Item 10.	Directors, Executive Officers and Corporate Governance	50
Item 11.	Executive Compensation	50
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	50
Item 13.	Certain Relationships and Related Transactions, and Director Independence	50
Item 14.	Principal Accounting Fees and Services	50
	PART IV	51
Item 15.	Exhibits, Financial Statement Schedules	51
Item 16.	Form 10-K Summary	54

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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

In addition to historical information, this Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, or the “Securities Act,” and Section 21E of the United States Securities Exchange Act of 1934, as amended, or the “Exchange Act.” These statements relate to our expectations for future events and time periods. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including, but not limited to, statements regarding:

• future financial performance and growth targets or expectations;

• market and industry trends and developments; and

• the potential benefits of our completed and any future merger, acquisition, disposition, restructuring, and financing transactions.

You can identify these and other forward-looking statements by the use of words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “might,” “will,” “should,” “would,” “could,” “potential,” “future,” “continue,” “ongoing,” “forecast,” “project,” “target” or similar expressions, and variations or negatives of these words.

These forward-looking statements are based on information available to us as of the date of this Annual Report and our current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. Future performance cannot be ensured, and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include, among others:

• financial results that may be volatile and may not reflect historical trends due to, among other things, changes in commodity prices or general market conditions, acquisition and disposition activities, fluctuations in consumer trends, pricing pressures, transportation costs, changes in raw material or labor prices or rates related to our business and changing regulations or political developments in the markets in which we operate;

• risks associated with our indebtedness, including changes to interest rates, decreases in our borrowing availability, our ability to manage our liquidity needs and to comply with covenants under our credit facilities;

• the loss of one or more of our larger customers;

• difficulties in successfully executing our growth initiatives, including identifying and completing acquisitions and divestitures, successfully integrating acquired business operations, and identifying and managing risks inherent in acquisitions and divestitures, as well as differences in the type and availability of consideration or financing for such acquisitions and divestitures;

• our ability to attract and retain key executives and qualified employees in strategic areas of our business;

• our ability to attract and retain a sufficient number of qualified truck drivers in light of industry-wide driver shortages and high-turnover;

• the availability of less favorable credit and payment terms due to changes in industry condition or our financial condition, which could constrain our liquidity and reduce availability under our revolving credit facility;

• higher than forecasted capital expenditures to maintain and repair our fleet of trucks, tanks, equipment and disposal wells;

• control of costs and expenses;

• changes in customer drilling, completion and production activities, operating methods and capital expenditure plans, including impacts due to low oil and/or natural gas prices or the economic or regulatory environment;

• risks associated with the limited trading volume of our common stock on the NYSE American Stock Exchange, including potential fluctuation in the trading prices of our common stock;

• the effects of our completed restructuring on the Company and the interest of various constituents;

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• risks and uncertainties associated with our completed restructuring process, including the outcome of a pending appeal of the order confirming the plan of reorganization;

• risks associated with the reliance on third-party analyst and expert market projections and data for the markets in which we operate;

• present and possible future claims, litigation or enforcement actions or investigations;

• risks associated with changes in industry practices and operational technologies and the impact on our business;

• risks associated with the operation, construction, development and closure of saltwater disposal wells, solids and liquids transportation assets, landfills and pipelines, including access to additional locations and rights-of-way, permitting and licensing, environmental remediation obligations, unscheduled delays or inefficiencies and reductions in volume due to micro- and macro-economic factors or the availability of less expensive alternatives;

• the effects of competition in the markets in which we operate, including the adverse impact of competitive product announcements or new entrants into our markets and transfers of resources by competitors into our markets;

• changes in economic conditions in the markets in which we operate or in the world generally, including as a result of political uncertainty;

• reduced demand for our services due to regulatory or other influences related to extraction methods such as hydraulic fracturing, shifts in production among shale areas in which we operate or into shale areas in which we do not currently have operations;

• the unknown future impact of changes in laws and regulation on waste management and disposal activities, including those impacting the delivery, storage, collection, transportation, and disposal of waste products, as well as the use or reuse of recycled or treated products or byproducts;

• risks involving developments in environmental or other governmental laws and regulations in the markets in which we operate and our ability to effectively respond to those developments including laws and regulations relating to oil and natural gas extraction businesses, particularly relating to water usage, and the disposal and transportation of liquid and solid wastes;

• natural disasters, such as hurricanes, earthquakes and floods, pandemics or acts of terrorism, or extreme weather conditions, that may impact our business locations, assets, including wells or pipelines, distribution channels, or which otherwise disrupt our or our customers’ operations or the markets we serve; and

• other risks identified in this Annual Report or referenced from time to time in our filings with the United States Securities and Exchange Commission.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this Annual Report. Except as required by law, we do not undertake any obligation to update or release any revisions to these forward-looking statements to reflect any events or circumstances, whether as a result of new information, future events, changes in assumptions or otherwise, after the date hereof.

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NUVERRA ENVIRONMENTAL SOLUTIONS, INC.

PART I

Item 1. Business

Headquartered in Scottsdale, Arizona, Nuverra Environmental Solutions, Inc. was incorporated in Delaware on May 29, 2007 as “Heckmann Corporation.” On May 16, 2013, we changed our name to Nuverra Environmental Solutions, Inc. When used in this Annual Report, the terms “Nuverra,” the “Company,” “we,” “our,” and “us” refer to Nuverra Environmental Solutions, Inc. and its consolidated subsidiaries, unless otherwise specified.

Overview and Operations

Nuverra provides water logistics and oilfield services to customers focused on the development and ongoing production of oil and natural gas from shale formations in the United States. Our business operations are organized into three geographically distinct divisions: the Rocky Mountain division, the Northeast division, and the Southern division. Within each division, we provide water transfer services, disposal services, and rental and other services associated with the drilling, completion, and ongoing production of shale oil and natural gas.

Rocky Mountain Division

The Rocky Mountain division is our Bakken Shale area business. The Bakken and underlying Three Forks shale formations are the two primary oil producing reservoirs currently being developed in this geographic region, which covers western North Dakota, eastern Montana, northwestern South Dakota and southern Saskatchewan. According to the Assumptions to the Annual Energy Outlook 2020: Oil and Gas Supply Module report issued in January of 2020 by the United States Energy Information Administration with data as of January 1, 2018 (the “EIA 2020 Report”), the Bakken and Three Forks shale formations contain an estimated 16.9 billion barrels of technically recoverable oil reserves and 12.0 trillion cubic feet (or “Tcf”) of technically recoverable natural gas. The EIA 2020 Report notes that estimates of technically recoverable resources are highly uncertain, with early estimates tending to vary and shift significantly over time as new geological information is gained through drilling, or as long-term productivity is clarified or improved through technology and better management practices.

We have operations in various locations throughout North Dakota and Montana, including yards in Dickinson, Williston, Watford City, Tioga, Stanley, and Beach, North Dakota, as well as Sidney, Montana. Additionally, we operate a financial support office in Minot, North Dakota. As of December 31, 2019, we had 353 employees in the Rocky Mountain division.

Water Transfer Services

We manage a fleet of 204 trucks in the Rocky Mountain division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region. Additionally, our trucks collect and transport fresh water from water sources to operator locations for use in well completion activities.

In the Rocky Mountain division, we own an inventory of lay flat temporary hose as well as related pumps and associated equipment used to move fresh water from water sources to operator locations for use in completion activities. We employ specially trained field personnel to manage and operate this business. For customers who have secured their own source of fresh water, we provide and operate the lay flat temporary hose equipment to move the fresh water to the drilling and completion location. We may also use third-party sources of fresh water in order to provide the water to customers as a package that includes our water transfer service.

Disposal Services

We manage a network of 20 owned and leased salt water disposal wells with current capacity of approximately 82 thousand barrels of water per day, and permitted capacity of 103 thousand barrels of water per day. Our salt water disposal wells in the Rocky Mountain division are operated under the Landtech brand. Additionally, we operate a landfill facility near Watford City, North Dakota that handles the disposal of drill cuttings and other oilfield waste generated from drilling and completion activities in the region. The landfill is located on a 50-acre site with current permitted capacity of more than 1.7 million cubic yards of airspace. We believe that permitted capacity at this site could be expanded up to a total of 5.8 million cubic yards in the future.

Rental and Other Services

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We maintain and lease rental equipment to oil and gas operators and others within the Rocky Mountain division. These assets include tanks, loaders, manlifts, light towers, winch trucks, and other miscellaneous equipment used in drilling and completion activities. In the Rocky Mountain division, we also provide oilfield labor services, also called “roustabout work,” where our employees move, set-up and maintain the rental equipment for customers, in addition to providing other oilfield labor services.

Northeast Division

The Northeast division is comprised of the Marcellus and Utica Shale areas, both of which are predominantly natural gas producing basins. The Marcellus and Utica Shale areas are located in the northeastern United States, primarily in Pennsylvania, West Virginia, New York and Ohio. According to the EIA 2020 Report, the Marcellus shale area is the largest natural gas field in North America with approximately 310.6 Tcf of technically recoverable natural gas and 1.3 billion barrels of technically recoverable oil reserves, while the Utica shale area is estimated to have approximately 249.0 Tcf of technically recoverable natural gas and 1.1 billion barrels of technically recoverable oil reserves.

We have operations in various locations throughout Pennsylvania, West Virginia, and Ohio, including yards in Masontown, West Virginia, Somerset and Wellsboro, Pennsylvania, and Cadiz, Ohio. Additionally, we operate a corporate support office near Pittsburgh, Pennsylvania. As of December 31, 2019, we had 236 employees in the Northeast division.

Water Transfer Services

We manage a fleet of 201 trucks in the Northeast division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region, or to other customer locations for reuse in completing other wells. Additionally, our trucks collect and transport fresh water from water sources to operator locations for use in well completion activities.

Disposal Services

We manage a network of 14 owned and leased salt water disposal wells with current and permitted capacity of approximately 32 thousand barrels of water per day in the Northeast division. Our salt water disposal wells in the Northeast division are operated under the Nuverra, Heckmann, and Clearwater brands.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Northeast division. These assets include tanks and winch trucks used in drilling and completion activities.

Southern Division

The Southern division is comprised of the Haynesville Shale area, a predominantly natural gas producing basin, which is located across northwestern Louisiana and eastern Texas, and extends into southwestern Arkansas. The Haynesville shale area is the fourth largest natural gas-producing basin in North America, with an estimated 174.2 Tcf of technically recoverable natural gas according to the EIA 2020 Report.

We have operations in various locations throughout eastern Texas and northwestern Louisiana, including a yard in Frierson, Louisiana. Additionally, we operate a corporate support office in Spring, Texas. As of December 31, 2019, we had 71 employees in the Southern division.

Water Transfer Services

We manage a fleet of 34 trucks in the Southern division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region. Additionally, our trucks collect and transport fresh water to operator locations for use in well completion activities.

In the Southern division, we also own and operate a 60-mile underground twin pipeline network for the collection of produced water for transport to interconnected disposal wells and the delivery of fresh water from water sources to operator locations for use in well completion activities. The pipeline network can currently handle disposal volumes up to approximately 71 thousand barrels per day with 7 disposal wells attached to the pipeline and is scalable up to approximately 100 thousand barrels per day.

Disposal Services

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We manage a network of 7 owned and leased salt water disposal wells that are not connected to our pipeline with current capacity of approximately 48 thousand barrels of water per day, and permitted capacity of approximately 100 thousand barrels of water per day.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Southern division. These assets include tanks and winch trucks used in drilling and completion activities.

Business Strategy

Nuverra strives to be a leader in the oilfield services sector by providing value to our customers through an integrated service offering of water management solutions. Our strategy is focused on: (1) reinvesting in our core business in order to drive organic growth and provide a stable revenue stream, (2) maximizing our asset base to capitalize on favorable industry trends, (3) providing high quality, safe and reliable service to our customers, (4) hiring, training and retaining the best employees and (5) applying technology to optimize and streamline transaction processing.

We try to focus on the produced water sub-sector across our geographies as produced water is generated with or without drilling rig activity. While prices fluctuate throughout each industry cycle, produced water volumes typically increase or remain relatively stable. Spears & Associates, an industry market share research firm, estimates in their January 2020 report entitled, “The US Oilfield Water Management Services Market” (the “Report”) that produced water volumes for disposal are projected to increase at a 2% compounded annual growth rate over the 2019 to 2025 timeframe.

Through our network of assets strategically located in the Rocky Mountain, Northeast and Southern regions, we have built a strong reputation in the industry by providing our customers with excellent service quality over many years. Nonetheless, we maintain rigorous focus on the key buying factors that determine whether our customer will use our services, such as: commitment to health, safety and environment (“HS&E”); service quality including regulatory compliance; price; capacity and proximity; and technology. We continue to evolve our service offerings to address the critical value drivers while adapting to the changing water management industry. The current trend of integrated gathering and disposal systems is driving increased use of water pipelines, although not all geographic regions are able to utilize pipelines in a cost effective manner due to terrain and other limiting factors. Our saltwater disposal wells (or “SWDs”) and pipeline are an integral part of our produced water business that provide core assets we can leverage to provide incremental offerings on existing disposal and water midstream projects. We are also evaluating additional service line growth opportunities. As we continue to refine our portfolio and footprint, we may consider opportunistic asset sales to provide additional capital to fund our growth investments.

Market Overview

Nuverra operates in the large and fragmented market for water management. Spears & Associates estimates in their Report that the 2019 market size in the United States (or “U.S.”) for oilfield water management will be approximately $23.2 billion. The primary services in Spears & Associates’ market estimate include water disposal, water hauling, water treatment, water acquisition, water storage, water flowback, and water transfer services. Nuverra provides the majority of these services, but does not have a presence in all U.S. geographic markets. Therefore, management believes there is significant opportunity for market share gains as the Company expands its resources. Spears & Associates’ projects in their Report that the U.S. oilfield water hauling market will be approximately $6.6 billion in 2020 and is projected to reach $8.0 billion in 2025 for a compounded annual growth rate of 4% over the 2019 to 2025 timeframe.

From a geographic perspective, Nuverra remains focused on being the premier service provider in our core areas of the Bakken, Marcellus, Utica, and Haynesville basins. We continue to evaluate growth opportunities in other areas. However, we do not plan to enter a market unless we believe we can generate attractive profitability and returns on invested capital. While some basins offer significant levels of activity, attractive economics for certain service providers are not assured given the amount of competition in those basins.

A significant part of the Company’s service offering involves trucking operations. Nuverra’s fleet of approximately 440 trucks positions the Company among the top 100 Private Carriers according to Transport Topics’ 2019 Top 100 Private Carriers. The Company is experiencing the same driver shortage challenge that most U.S. trucking companies are facing. Drivers decreased by 3% during 2019 despite efforts to increase truck driver recruitment and retention during the year. Hiring and retaining qualified drivers continues to be a top initiative for 2020.

In general, drilling and completion activities in the oil and natural gas industry are affected by the market prices (or anticipated prices) for those commodities. However, there is no guarantee that oil and natural gas prices will remain stable or increase, drilling and completion activities in basins will remain stable or increase, or we will continue to see demand for our services.

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Oil and natural gas prices remain volatile and another prolonged downturn in oil and natural gas prices, or a decrease in completion activities could materially and adversely affect our financial condition, results of operations and cash flows in the future.

Customers

Our customers include major domestic and international oil and natural gas companies, foreign national oil and natural gas companies and independent oil and natural gas production companies. For the year ended December 31, 2019, our three largest customers represented 31% of our total consolidated revenues. The loss of any one of these three customers could have a material adverse effect on the Company.

Competition

Our competition includes small regional service providers, as well as larger companies with operations throughout the continental United States and internationally. Some of our competitors are Select Energy Services, Inc., Key Energy Services, Inc., Basic Energy Services, Inc., C&J Energy Services, Inc., Superior Energy Services, Inc., Clean Harbors, Inc., TETRA Technologies, Inc., MBI Energy Services, Inc., Stallion Oilfield Services, LLC, Waste Connections, Inc., Pinnergy, Ltd., McKenzie Energy Partners, LLC, and Buckhorn Energy Services, LLC.

Health, Safety & Environment

We are committed to excellence in HS&E in our operations, which we believe is a critical characteristic of our business. Our customers in the unconventional shale basins require us to meet high standards on HS&E matters. As a result, we believe that being a leading environmental solutions company with a national presence and a dedicated focus on environmental solutions is a competitive advantage relative to smaller, regional companies, as well as companies that provide certain environmental services as ancillary offerings.

Seasonality

Certain of our business divisions are impacted by seasonal factors. Generally, our business is negatively impacted during the winter months due to inclement weather, fewer daylight hours and holidays. During periods of heavy snow, ice or rain, we may be unable to move our trucks and equipment between locations, thereby reducing our ability to provide services and generate revenue. In addition, these conditions may impact our customers’ operations, and, as our customers’ drilling and/or hydraulic fracturing activities are curtailed, our services may also be reduced.

Intellectual Property

We operate under numerous trade names and own several trademarks, the most important of which are “Nuverra,” “HWR,” “Power Fuels,” and “Heckmann Water Resources.”

Operating Risks

Our operations are subject to hazards inherent in our industry, including accidents and fires that could cause personal injury or loss of life, damage to or destruction of property, equipment and the environment, suspension of operations and litigation, as described in Note 20 of the Notes to the Consolidated Financial Statements herein, associated with these hazards. Because our business involves the transportation of environmentally regulated materials, we may also experience traffic accidents or pipeline breaks that may result in spills, property damage and personal injury. We have implemented a comprehensive HS&E program designed to minimize accidents in the workplace, enhance our safety programs, maintain environmental compliance and improve the efficiency of our operations.

Governmental Regulation, Including Environmental Regulation and Climate Change

Our operations are subject to stringent United States federal, state and local laws and regulations concerning the discharge of materials into the environment or otherwise relating to health and safety or the protection of the environment. Additional laws and regulations, or changes in the interpretations of existing laws and regulations, that affect our business and operations may be adopted, which may in turn impact our financial condition. The following is a summary of the more significant existing HS&E laws and regulations to which our operations are subject.

Hazardous Substances and Waste

The United States Comprehensive Environmental Response, Compensation, and Liability Act, as amended (“CERCLA” or the “Superfund” law), and comparable state laws impose liability without regard to fault or the legality of the original conduct on

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certain defined persons, including current and prior owners or operators of a site where a release of hazardous substances occurred and entities that disposed or arranged for the disposal of the hazardous substances found at the site. Under CERCLA, these “responsible persons” may be liable for the costs of cleaning up the hazardous substances, for damages to natural resources and for the costs of certain health studies.

In the course of our operations, we occasionally generate materials that are considered “hazardous substances” and, as a result, may incur CERCLA liability for cleanup costs. Also, claims may be filed for personal injury and property damage allegedly caused by the release of hazardous substances or other pollutants. We also generate solid wastes that are subject to the requirements of the United States Resource Conservation and Recovery Act, as amended, or “RCRA,” and comparable state statutes.

Although we use operating and disposal practices that are standard in the industry, hydrocarbons or other wastes may have been released at properties owned or leased by us now or in the past, or at other locations where these hydrocarbons and wastes were taken for disposal. Under CERCLA, RCRA and analogous state laws, we could be required to clean up contaminated property (including contaminated groundwater), or to perform remedial activities to prevent future contamination.

Air Emissions

The Clean Air Act, as amended, or “CAA,” and similar state laws and regulations restrict the emission of air pollutants and also impose various monitoring and reporting requirements. These laws and regulations may require us to obtain approvals or permits for construction, modification or operation of certain projects or facilities and may require use of emission controls.

Global Warming and Climate Change

While we do not believe our operations raise climate change issues different from those generally raised by the commercial use of fossil fuels, legislation or regulatory programs that restrict greenhouse gas emissions in areas where we conduct business or that would require reducing emissions from our truck fleet could increase our costs. From another perspective, a carbon constrained environment would likely reward hydrocarbons produced from low cost areas.

Water Discharges

We operate facilities that are subject to requirements of the United States Clean Water Act, as amended, or “CWA,” and analogous state laws for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters. Among other things, these laws impose restrictions and controls on the discharge of pollutants, including into navigable waters as well as the protection of drinking water sources. Spill prevention, control and counter-measure requirements under the CWA require implementation of measures to help prevent the contamination of navigable waters in the event of a hydrocarbon spill. Other requirements for the prevention of spills are established under the United States Oil Pollution Act of 1990, as amended, or “OPA”, which amended the CWA and applies to owners and operators of vessels, including barges, offshore platforms and certain onshore facilities. Under OPA, regulated parties are strictly liable for oil spills and must establish and maintain evidence of financial responsibility sufficient to cover liabilities related to an oil spill for which such parties could be statutorily responsible.

State Environmental Regulations

Our operations involve the storage, handling, transport and disposal of bulk waste materials, some of which contain oil, contaminants and other regulated substances. Various environmental laws and regulations require prevention, and where necessary, cleanup of spills and leaks of such materials and some of our operations must obtain permits that limit the discharge of materials. Failure to comply with such environmental requirements or permits may result in fines and penalties, remediation orders and revocation of permits. In Texas, we are subject to rules and regulations promulgated by the Texas Railroad Commission (the “RRC”) and the Texas Commission on Environmental Quality, including those designed to protect the environment and monitor compliance with water quality. In Louisiana, we are subject to rules and regulations promulgated by the Louisiana Department of Environmental Quality and the Louisiana Department of Natural Resources as to environmental and water quality issues, and the Louisiana Public Service Commission as to allocation of intrastate routes and territories for waste water transportation. In Pennsylvania, we are subject to the rules and regulations of the Pennsylvania Department of Environmental Protection and the Pennsylvania Public Service Commission. In Ohio, we are subject to the rules and regulations of the Ohio Department of Natural Resources and the Ohio Environmental Protection Agency. In North Dakota, we are subject to the rules and regulations of the North Dakota Department of Health, the North Dakota Industrial Commission, Oil and Gas Division, and the North Dakota State Water Commission. In Montana, we are subject to the rules and regulations of the Montana Department of Environmental Quality and the Montana Board of Oil and Gas.

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Occupational Safety and Health Act

We are subject to the requirements of the United States Occupational Safety and Health Act, as amended, or “OSHA,” and comparable state laws that regulate the protection of employee health and safety. OSHA’s hazard communication standard requires that information about hazardous materials used or produced in our operations be maintained and provided to employees, state and local government authorities and citizens.

Saltwater Disposal Wells

We operate saltwater disposal wells that are subject to the CWA, the Safe Drinking Water Act, or “SDWA,” and state and local laws and regulations, including those established by the Underground Injection Control (“UIC”) Program of the United States Environmental Protection Agency, or “EPA,” which establishes minimum requirements for permitting, testing, monitoring, record keeping and reporting of injection well activities. Our saltwater disposal wells are located in Louisiana, Montana, North Dakota, Ohio and Texas. Regulations in many states require us to obtain a permit to operate each of our saltwater disposal wells in those states. These regulatory agencies have the general authority to suspend or modify one or more of these permits if continued operation of one of our saltwater wells is likely to result in pollution of freshwater, tremors or earthquakes, substantial violation of permit conditions or applicable rules, or leaks to the environment. Any leakage from the subsurface portions of the saltwater wells could cause degradation of fresh groundwater resources, potentially resulting in cancellation of operations of a well, issuance of fines and penalties from governmental agencies, incurrence of expenditures for remediation of the affected resource and claims by third parties for property damages and personal injuries.

Transportation Regulations

We conduct interstate motor carrier (trucking) operations that are subject to federal regulation by the Federal Motor Carrier Safety Administration, or “FMCSA,” a unit within the United States Department of Transportation, or “USDOT.” The FMCSA publishes and enforces comprehensive trucking safety regulations, including rules on commercial driver licensing, controlled substance testing, medical and other qualifications for drivers, equipment maintenance, and drivers’ hours of service, referred to as “HOS.” The agency also performs certain functions relating to such matters as motor carrier registration (licensing), insurance, and extension of credit to motor carriers’ customers. Another unit within USDOT publishes and enforces regulations regarding the transportation of hazardous materials, or “hazmat.” The waste water and other water flows we transport by truck are generally not regulated as hazmat at this time.

Our intrastate trucking operations are also subject to various states environmental and waste water transportation regulations discussed under “Environmental Regulations” above. Federal law also allows states to impose insurance and safety requirements on motor carriers conducting intrastate business within their borders, and to collect a variety of taxes and fees on an apportioned basis reflecting miles actually operated within each state.

HOS regulations establish the maximum number of hours that a commercial truck driver may work and are intended to reduce the risk of fatigue and fatigue-related crashes and harm to driver health. Due to the specialized nature of our operations in the oil and gas industry, we qualify for an exception in the federal HOS rules (i.e., the “Oilfield Exemption”). Drivers of most property-carrying commercial motor vehicles have to take at least 34 hours off duty in order to reset their accumulated hours under the 60/70-hour rule, but drivers of property-carrying commercial motor vehicles that are used exclusively to support oil and gas activities can restart with just 24 hours off under the Oilfield Exemption. However, there are other HOS regulations that affect our operations, including the 11-Hour Driving Limit, 14-Hour On Duty Limit, 30-Minute Rest Break, 60/70-Hour Limit On Duty in 7/8 consecutive days. Compliance with these rules directly impacts our operating costs.

Employees

As of December 31, 2019, we had approximately 700 full time employees, of whom 265 were executive, managerial, sales, general, administrative, and accounting staff, and 435 were truck drivers, service providers and field workers. We have not experienced, and do not expect, any work stoppages, and believe that we maintain a satisfactory working relationship with our employees.

Emergence from Chapter 11 Reorganization

On May 1, 2017, the Company and certain of its material subsidiaries (collectively with the Company, the “Nuverra Parties”) filed voluntary petitions under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to pursue prepackaged plans of reorganization (together, and as amended, the “Plan”). On July 25, 2017, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan. The Plan became effective on August 7, 2017 (the “Effective Date”), when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order

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closing the chapter 11 cases, subject to certain conditions as set forth therein. See Note 25 on “Emergence from Chapter 11 Reorganization” of the Notes to Consolidated Financial Statements herein for additional details.

Upon emergence, we elected to apply fresh start accounting effective July 31, 2017, to coincide with the timing of our normal accounting period close. Refer to Note 26 on “Fresh Start Accounting” of the Notes to Consolidated Financial Statements herein for additional information on the selection of this date. As a result of the application of fresh start accounting, as well as the effects of the implementation of the Plan, a new entity for financial reporting purposes was created, and as such, the condensed consolidated financial statements on or after August 1, 2017, are not comparable with the condensed consolidated financial statements prior to that date.

References to “Successor” or “Successor Company” refer to the financial position and results of operations of the reorganized Company subsequent to July 31, 2017. References to “Predecessor” or “Predecessor Company” refer to the financial position and results of operations of the Company on and prior to July 31, 2017.

Available Information

Information that we file with or furnish to the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to or exhibits included in these reports, are available free of charge on our website at www.nuverra.com soon after such reports are filed with or furnished to the SEC. From time to time, we also post announcements, updates, events, investor information and presentations on our website in addition to copies of all recent press releases. Our reports, including any exhibits included in such reports, that are filed with or furnished to the SEC are also available on the SEC’s website at www.sec.gov.

Neither the contents of our website nor that maintained by the SEC are incorporated into or otherwise a part of this filing. Further, references to the URLs for these websites are intended to be inactive textual references only.

Item 1A. Risk Factors

This section describes material risks to our businesses that currently are known to us. You should carefully consider the risks described below. If any of the risks and uncertainties described in the cautionary factors described below actually occur, our business, financial condition and results of operations could be materially and adversely affected. The risks and factors listed below, however, are not exhaustive. Other sections of this Annual Report on Form 10-K include additional factors that could materially and adversely impact our business, financial condition and results of operations. Moreover, we operate in a rapidly changing environment. Other known risks that we currently believe to be immaterial could become material in the future. We also are subject to legal and regulatory changes. New factors emerge from time to time and it is not possible to predict the impact of all these factors on our business, financial condition or results of operations.

Risks Related to Our Company

Our business depends on spending by our customers in the oil and natural gas industry in the United States, and this spending and our business has been, and may in the future be, adversely affected by industry and financial market conditions that are beyond our control. Continued and prolonged reductions in oil and natural gas prices and in the overall level of exploration and development may adversely affect demand and pricing for our services.

We depend on our customers’ willingness to make operating and capital expenditures to explore, develop and produce oil and natural gas in the United States. These expenditures are generally dependent on current oil and natural gas prices and the industry’s view of future oil and natural gas prices, including the industry’s view of future economic growth and the resulting impact on demand for oil and natural gas. A continued and prolonged reduction in the overall level of exploration and development activities, whether resulting from changes in oil and natural gas prices or otherwise, could materially and adversely affect us by negatively impacting utilization, demand for our services and pricing.

Industry conditions are influenced by numerous factors over which we have no control, including:

• the domestic and worldwide price and supply of gas, natural gas liquids and oil, including the natural gas inventories and oil reserves of the United States;

• changes in the level of consumer demand;

• the price and availability of alternative fuels;

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• weather conditions;

• the availability, proximity and capacity of pipelines, other transportation facilities and processing facilities;

• the level and effect of trading in commodity futures markets, including by commodity price speculators and others;

• the nature and extent of domestic and foreign governmental regulations and taxes;

• actions of the members of the Organization of the Petroleum Exporting Countries or “OPEC,” relating to oil price and production controls;

• the level of excess production and projected rates of production growth;

• geo-political instability or armed conflict in oil and natural gas producing regions; and

• overall domestic and global economic and market conditions.

A substantial and extended decline in oil and natural gas prices could result in significant reductions in our customers’ operating and capital expenditures, which could have a material adverse effect on our financial condition, results of operations and cash flows. Any extended decline could result in diminished demand for oilfield services and downward pressure on the prices customers are willing to pay for services such as ours. There is no guarantee that oil and natural gas prices will remain stable or increase, drilling and completion activities in basins will remain stable or increase, or we will see an increase in the demand for our services.

We may not be able to successfully execute our growth initiatives, including through future acquisitions and divestitures, and we may not be able to effectively integrate the businesses we do acquire and identify and manage risks inherent in such acquisitions.

Our business strategy includes growth through the acquisitions of other businesses and may include divestitures of non-core businesses or assets. As disclosed in our Form 8-K filed with the SEC on October 5, 2018, in October 2018 we acquired Clearwater Three, LLC, Clearwater Five, LLC, and Clearwater Solutions, LLC (collectively, “Clearwater”), a leading operator of SWDs in the Marcellus and Utica shale areas, which more than doubled our SWD capacity in the region. We may not, however, be able to continue to identify attractive acquisition opportunities or successfully acquire identified targets. In addition, we may not be successful in integrating our current or future acquisitions into our existing operations, which may result in unforeseen operational difficulties or diminished financial performance or require a disproportionate amount of our management’s attention. Even if we are successful in integrating our current or future acquisitions into our existing operations, we may not derive the benefits, such as operational or administrative synergies, that we expected from such acquisitions, which may result in the investment of our capital resources without realizing the expected returns on such investment. Furthermore, competition for acquisition opportunities may increase our cost of making further acquisitions or cause us to refrain from making additional acquisitions. We also may be limited in our ability to incur additional indebtedness under our credit agreements in connection with or to fund future acquisitions.

Whether we realize the anticipated benefits from an acquisition depends, in part, upon our ability to integrate the operations of the acquired business, the quality and performance of the operating assets of the acquired business, the performance of the underlying product and service portfolio, and the performance of the management team and other personnel of the acquired operations. Accordingly, our financial results could be adversely affected by unanticipated performance issues, legacy liabilities, transaction-related charges, amortization of expenses related to intangibles, charges for impairment of long-term assets, indemnifications and other unforeseen events or circumstances. While we believe that we have established appropriate and adequate procedures and processes to mitigate these risks, there is no assurance that these transactions will be successful.

We may not recognize the anticipated benefits of completed dispositions or other divestitures we may pursue in the future. We may evaluate potential divestiture opportunities with respect to portions of our business from time to time that support our growth initiatives, and may determine to proceed with a divestiture opportunity if and when we believe such opportunity is consistent with our business strategy and we would be able to realize value to our stockholders in so doing. If we do not realize the expected strategic, economic or other benefits of any divestiture transaction, it could adversely affect our financial condition and results of operation.

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Our operating margins and profitability may be negatively impacted by changes in fuel and energy costs. In addition, due to certain fixed costs, our operating margins and earnings may be sensitive to changes in revenues.

Our business is dependent on availability of fuel for operating our fleet of trucks. Changes and volatility in the price of crude oil can adversely impact the prices for these products and therefore affect our operating results. The price and supply of fuel is unpredictable and fluctuates based on events beyond our control, including geopolitical developments, supply and demand for oil and natural gas, actions by OPEC and other oil and natural gas producers, war and unrest in oil producing countries, regional production patterns, and environmental concerns.

Furthermore, our facilities, fleet and personnel subject us to fixed costs, which make our margins and earnings sensitive to changes in revenues. In periods of declining demand, we may be unable to cut costs at a rate sufficient to offset revenue declines, which may put us at a competitive disadvantage to firms with lower or more flexible cost structures, and may result in reduced operating margins and/or higher operating losses. These effects could have a material adverse effect on our financial condition, results of operations and cash flows.

Future charges due to possible impairments of assets may have a material adverse effect on our results of operations and stock price.

As discussed more fully in Note 8 of the Notes to the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations Impairment of Long-Lived Assets and Impairment of Goodwill” included in Item 7 herein, during the year ended December 31, 2019 we recorded a goodwill impairment charge of $29.5 million leaving no remaining goodwill on the consolidated balance sheet. Additionally, we recorded total impairment charges of $0.8 million, $4.8 million and $4.9 million for long-lived assets classified as held for sale during the years ended December 31, 2019, 2018, and 2017 respectively, which were included in “Impairment of long-lived assets” in the consolidated statements of operations. If there is further deterioration in our business operations or prospects, our stock price, the broader economy or our industry, including further declines in oil and natural gas prices, the value of our long-lived assets, or those we may acquire in the future, could decrease significantly and result in additional impairment and financial statement write-offs.

The testing of long-lived assets for impairment requires us to make significant estimates about our future performance and cash flows, as well as other assumptions. These estimates can be affected by numerous factors, including changes in the composition of our reporting units; changes in economic, industry or market conditions; changes in business operations; changes in competition; or potential changes in the share price of our common stock and market capitalization. Changes in these factors, or differences in our actual performance compared with estimates of our future performance, could affect the fair value of long-lived assets, which may result in further impairment charges. We perform the assessment of potential impairment at least annually, or more often if events and circumstances require.

Should the value of our long-lived assets become impaired, we would incur additional charges which could have a material adverse effect on our consolidated results of operations and could result in us incurring additional net operating losses in future periods. We cannot accurately predict the amount or timing of any impairment of assets. Any future determination requiring the write-off of a significant portion of long-lived assets, although not requiring any additional cash outlay, could have a material adverse effect on our results of operations and stock price.

Significant capital expenditures are required to conduct our business, and our failure or inability to make sufficient capital investments could significantly harm our business prospects.

The development of our business and services, excluding acquisition activities, requires capital expenditures. During the year ended December 31, 2019, we made gross cash capital expenditures of approximately $8.2 million, which included the purchase of new trucks as well as expenditures to extend the useful life and productivity on our fleet of trucks, tanks, equipment and disposal wells. We continue to focus on finding ways to improve the utilization of our existing assets and optimizing the allocation of resources in the various shale areas in which we operate. Our capital expenditure program is subject to market conditions, including customer activity levels, commodity prices, industry capacity and specific customer needs. In addition to capital expenditures required to maintain our current level of business activity, we may incur capital expenditures to support future growth of our business.

We expect our capital spending levels in 2020 to decrease. Prolonged reductions or delays in capital expenditures could delay or diminish future cash flows and adversely affect our business and results of operations. Our planned capital expenditures for 2020 are expected to be financed through cash flow from operations, finance leases, borrowings under our credit facility and term loan facilities, or a combination of the foregoing. Future cash flows from operations are subject to a number of risks and variables, such as the level of drilling activity and oil and natural gas production of our customers, prices of natural gas and oil, and the other risk factors discussed herein. Our ability to obtain capital from other sources, such as the capital markets, is

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dependent upon many of those same factors as well as the orderly functioning of credit and capital markets. To the extent we fail to have adequate funds, we could be required to further reduce or defer our capital spending, or pursue other funding alternatives which may not be as economically attractive to us, which in turn could have a materially adverse effect on our financial condition, results of operations and cash flows.

The compensation we offer our drivers is subject to market conditions, and we may find it necessary to increase driver compensation and/or modify the benefits provided to our employees in future periods.

Maintaining a staff of qualified truck drivers is critical to the success of our operations. We and other companies in the oil and natural gas industry suffer from a high turnover rate of drivers. The high turnover rate requires us to continually recruit a substantial number of drivers in order to operate existing equipment. If we are unable to continue to attract and retain a sufficient number of qualified drivers, we could be forced to, among other things, increase driver compensation and/or modify our benefit packages, or operate with fewer trucks and face difficulty meeting customer demands, any of which could adversely affect our growth and profitability. Additionally, in anticipation of or in response to geographical and market-related fluctuations in the demand for our services, we strategically relocate our equipment and personnel from one area to another, which may result in operating inefficiencies, increased labor, fuel and other operating costs and could adversely affect our growth and profitability. As a result, our driver and employee training and orientation costs could be negatively impacted. We also utilize the services of independent contractor truck drivers to supplement our trucking capacity in certain shale areas on an as-needed basis. There can be no assurance that we will be able to enter into these types of arrangements on favorable terms, or that there will be sufficient qualified independent contractors available to meet our needs, which could have a material adverse effect on our financial condition, results of operations and cash flows.

We depend on certain key customers for a significant portion of our revenues. The loss of any of these key customers or the loss of any contracted volumes could result in a decline in our business.

We rely on a limited number of customers for a significant portion of our revenues. Our three largest customers represented 31% of our total consolidated revenues for the year ended December 31, 2019 and in total equaled 32% of our consolidated accounts receivable at December 31, 2019. The loss of all, or even a portion, of the revenues from these customers, as a result of competition, market conditions or otherwise, could have a material adverse effect on our business, results of operations, financial condition, and cash flows. A reduction in exploration, development and production activities by key customers due to the current declines in oil and natural gas prices, or otherwise, could have a material adverse effect on our financial condition, results of operations and cash flows.

Customer payment delays of outstanding receivables could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.

We often provide credit to our customers for our services, and are therefore subject to our customers delaying or failing to pay outstanding invoices. In weak economic environments, customers’ delays and failures to pay often increase due to, among other reasons, a reduction in our customers’ cash flow from operations and their access to credit markets. If our customers delay or fail to pay a significant amount of outstanding receivables, it could reduce our availability under our revolving credit facility or otherwise have a material adverse effect on our liquidity, financial condition, results of operations and cash flows.

We may be unable to achieve or maintain pricing to our customers at a level sufficient to cover our costs, which would negatively impact our profitability.

We may be unable to charge prices to our customers that are sufficient to cover our costs. Our pricing is subject to highly competitive market conditions, and we may be unable to increase or maintain pricing as market conditions change. Likewise, customers may seek pricing declines more precipitously than our ability to reduce costs. In certain cases, we have entered into fixed price agreements with our customers, which may further limit our ability to raise the prices we charge our customers at a rate sufficient to offset any increases in our costs. Additionally, some customers’ obligations under their agreements with us may be permanently or temporarily reduced upon the occurrence of certain events, some of which are beyond our control, including force majeure events. Force majeure events may include (but are not limited to) events such as revolutions, wars, acts of enemies, embargoes, import or export restrictions, strikes, lockouts, fires, storms, floods, acts of God, explosions, mechanical or physical failures of our equipment or facilities of our customers. If the amounts we are able to charge customers are insufficient to cover our costs, or if any customer suspends, terminates or curtails its business relationship with us, the effects could have a material adverse impact on our financial condition, results of operations and cash flows.

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The litigation environment in which we operate poses a significant risk to our businesses.

We are occasionally involved in the ordinary course of business in a number of lawsuits involving employment, commercial, and environmental issues, other claims for injuries and damages, and various shareholder and class action litigation, among other matters. We may experience negative outcomes in such lawsuits in the future. Any such negative outcomes could have a material adverse effect on our business, liquidity, financial condition and results of operations. We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of judgment. Actual outcomes or losses may differ materially from such assessments and estimates. The settlement or resolution of such claims or proceedings may have a material adverse effect on our results of operations. In addition, judges and juries in certain jurisdictions in which we conduct business have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage and other tort cases. We use appropriate means to contest litigation threatened or filed against us, but the litigation environment in these areas poses a significant business risk to us and could cause a significant diversion of management’s time and resources, which could have a material adverse effect on our financial condition, results of operations and cash flows.

The hazards and risks associated with the transport, storage, and handling, and disposal of our customers’ waste (such as fires, spills, explosions and accidents) may expose us to personal injury claims, property damage claims and/or products liability claims from our employees, customers or third parties. As protection against such claims and operating hazards, we maintain insurance coverage against some, but not all, potential losses. However, we may sustain losses for uninsurable or uninsured risks, or in amounts in excess of existing insurance coverage. As more fully described in Note 20 of the Notes to Consolidated Financial Statements herein, due to the unpredictable nature of personal injury litigation, it is not possible to predict the ultimate outcome of these claims and lawsuits, and we may be held liable for significant personal injury or damage to property or third parties, or other losses, that are not fully covered by our insurance, which could have a material adverse effect on our financial condition, results of operations and cash flows.

We operate in competitive markets, and there can be no certainty that we will maintain our current customers or attract new customers or that our operating margins will not be impacted by competition.

The industries in which our business operates are highly competitive. We compete with numerous local and regional companies of varying sizes and financial resources. Competition intensified during the most recent downturn, and could further intensify in the future. Furthermore, numerous well-established companies are focusing significant resources on providing similar services to those that we provide that will compete with our services. We cannot assure you that we will be able to effectively compete with these other companies or that competitive pressures, including possible downward pressure on the prices we charge for our products and services, will not arise. In addition, any declines in oil and natural gas prices may result in competitors moving resources from higher-cost exploration and production areas to relatively lower-cost exploration and production areas where we are located thereby increasing supply and putting further downward pressure on the prices we can charge for our products and services, including our rental business. In the event that we cannot effectively compete on a continuing basis, or competitive pressures arise, such inability to compete or competitive pressures could have a material adverse effect on our financial condition, results of operations and cash flows.

Changes to trade regulation, quotas, duties or tariffs, caused by the changing U.S. and geopolitical environments or otherwise, may increase our costs or otherwise adversely affect our business.

The implementation by governmental bodies of tariffs or trade quotas, or changes to certain inter-governmental trade agreements, could, among other things, increase the costs of fuel or equipment used in our business, or negatively impact our customers’ business in a manner that reduces demand for our services.  To the extent we incur fuel price increases, we may not be able to recover such increases through pricing increases or fuel price surcharges, which could have an adverse affect on our business.

Market projections and data are forward-looking in nature.

Our strategy is based in part on our own market projections and on third-party analyst, industry observer, and expert reports and market projections, which are forward-looking in nature and are inherently subject to numerous risks and uncertainties. This Annual Report contains forward-looking market projections based on studies and reports produced by third-party market analysts and experts. The predictions by us or such third-party market analysts or experts are subject to numerous factors that could change or emerge in the future, and any market data we rely upon, whether from third parties or otherwise, may be

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inaccurate or based on flawed assumptions at the time such predictions were made. The inaccuracy of any such market projections and/or market data could adversely affect our operating results and financial condition, and we urge you to carefully consider the validity and limitations of any such market data or projections we include in this Annual Report and in any of our other filings with the SEC.

Any interruption in our services due to pipeline ruptures or spills or necessary maintenance could impair our financial performance and negatively affect our brand.

Our water transport pipelines are susceptible to ruptures and spills, particularly during start up and initial operation, and require ongoing inspection and maintenance. We may experience difficulties in maintaining the operation of our pipelines, which may cause downtime and delays. We also may be required to periodically shut down all or part of our pipelines for regulatory compliance and inspection purposes. Any interruption in our services due to pipeline breakdowns or necessary maintenance, inspection or regulatory compliance could reduce revenues and earnings and result in remediation costs. While we have business interruption insurance coverage for our pipeline which would help mitigate lost revenues and remediation costs should a rupture, spill or other shut-down occur, there can be no assurances as to how much lost revenue or remediation costs our business interruption insurance would cover, if any. Transportation interruptions at our pipelines, even if only temporary, could severely harm our business and reputation, and could have a material adverse effect on our financial condition, results of operations and cash flows.

Our operations are subject to risks inherent in the oil and natural gas industry, some of which are beyond our control. These risks may not be fully covered under our insurance policies.

Our business is subject to risks, many of which are beyond our control. We are self-insured for many of these risks, and our insurance policies may not be adequate to cover all insured losses that we might incur in our operations.

Our operations are subject to operational hazards, including accidents or equipment failures that can cause pollution and other damage to the environment, injuries to persons or property, and interruptions in business operations. Pursuant to applicable law, we may be required to remediate the environmental impact of any such accidents or incidents, which may include costs related to site investigation and soil, groundwater and surface water cleanup. In addition, hazards inherent in the oil and natural gas industry, such as, but not limited to, accidents, blowouts, fires, explosions, pollution and other damage to the environment, and hydrocarbon spills may delay or halt operations at locations we service. These conditions can cause:

• personal injury or loss of life;

• liabilities from pipeline breaks and accidents by our fleet of trucks and other equipment;

• fires and explosions;

• damage to or destruction of property, equipment and the environment;

• losses from the suspension of our or other parties’ business operations; and

• lightning strikes to our saltwater disposal wells and oilfield equipment.

The occurrence of a significant event or a series of events that together are significant, or adverse claims in excess of the insurance coverage that we maintain or that are not covered by insurance, could have a material adverse effect on our financial condition, results of operations and cash flows. Litigation arising from a catastrophic occurrence at a location where our equipment and services are being used may result in our being named as a defendant in lawsuits asserting large claims.

We self-insure against a significant portion of these liabilities. For losses in excess of our self-insurance limits, we maintain insurance from unaffiliated commercial carriers. However, our insurance may not be adequate to cover all losses or liabilities that we might incur in our operations. We maintain insurance coverage that we believe to be customary in the industry against these hazards. We may not be able to maintain adequate insurance in the future at rates we consider reasonable. In addition, insurance may not be available to cover any or all of the risks to which we are subject, or, even if available, the coverage provided by such insurance may be inadequate, or insurance premiums or other costs could make such insurance prohibitively expensive. It is also possible that, when we renew our insurance coverages, our premiums and deductibles will be higher, and certain insurance coverage either will be unavailable or considerably more expensive, than it has been in the past. In addition, our insurance is subject to coverage limits, and some policies exclude coverage for damages resulting from environmental contamination. In addition, because we are self-insured for certain liabilities, the accrual of reserves for potential losses could cause our operating results to fluctuate significantly, and the ultimate incurrence of any of these liabilities could have a material negative impact on our financial condition.

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Improvements in or new discoveries of alternative energy technologies or our customers’ operating methodologies could have a material adverse effect on our financial condition and results of operations.

Because our business depends on the level of activity in the oil and natural gas industry, any improvement in or new discoveries of alternative energy technologies (such as wind, solar, geothermal, fuel cells and biofuels) that increase the use of alternative forms of energy and reduce the demand for oil and natural gas could have a material adverse effect on our financial condition, results of operations and cash flows. In addition, technological changes in our customers’ operating methods could decrease the need for management of water and other wellsite environmental services or otherwise affect demand for our services.

Seasonal weather conditions and natural disasters could severely disrupt normal operations and harm our business.

Areas in which we operate are adversely affected by seasonal weather conditions, primarily in the winter and spring. During periods of heavy snow, ice or rain, our customers may curtail their operations or we may be unable to move our trucks between locations or provide other services, thereby reducing demand for, or our ability to provide services and generate revenues. For example, many municipalities impose weight restrictions on the roads that lead to our customers’ job sites in the spring due to the muddy conditions caused by spring thaws, limiting our access and our ability to provide service in these areas. In addition, the regions in which we operate have in the past been, and may in the future be, affected by natural disasters such as hurricanes, windstorms, floods and tornadoes. In certain areas, our business may be dependent on our customers’ ability to access sufficient water supplies to support their hydraulic fracturing operations. To the extent severe drought conditions or other factors prevent our customers from accessing adequate water supplies, our business could be negatively impacted. Future natural disasters or inclement weather conditions could severely disrupt the normal operation of our business, or our customers’ business, and have a material adverse effect on our financial condition, results of operations and cash flows.

We may be adversely affected by natural disasters, pandemics (including the recent coronavirus outbreak) and other catastrophic events, and by man-made problems such as terrorism, that could disrupt our business operations or reduce customer demand for our services.

Natural disasters, adverse weather conditions, floods, pandemics (including the recent coronavirus outbreak), acts of terrorism and other catastrophic or geo-political events may cause damage or disruption to our operations, international commerce, and the global economy, or could result in market disruption or reduced customer demand for our services, any of which could have an adverse effect on our business, operating results, and financial condition.

The ongoing coronavirus outbreak emanating from China at the beginning of 2020 has impacted various businesses throughout the world, including travel restrictions and the extended shutdown of certain businesses in impacted geographic regions. If the coronavirus outbreak situation should worsen, we may experience disruptions to customer demand for our services, to commodities markets generally, to the availability of fuel, equipment and other materials, to our workforce, or to our business relationships with subcontractors and other third-parties. Any such disruptions could increase our costs or otherwise have a material adverse impact on our business operations, operating results and financial condition.

Our financial and operating performance may be affected by the inability to renew landfill operating permits, obtain new landfills and expand existing ones.

We currently own one landfill and our ability to meet our financial and operating objectives may depend, in part, on our ability to acquire, lease, or renew landfill operating permits, expand existing landfills and develop new landfill sites. It has become increasingly difficult and expensive to obtain required permits and approvals to build, operate and expand solid waste management facilities, including landfills. Operating permits for landfills in states where we operate must generally be renewed every five to ten years, although some permits are required to be renewed more frequently. These operating permits often must be renewed several times during the permitted life of a landfill. The permit and approval process is often time consuming, requires numerous hearings and compliance with zoning, environmental and other requirements, is frequently challenged by special interest and other groups, and may result in the denial of a permit or renewal, the award of a permit or renewal for a shorter duration than we believed was otherwise required by law, or burdensome terms and conditions being imposed on our operations. We may not be able to obtain new landfill sites or expand the permitted capacity of our landfills when necessary. In addition, we may be unable to make the contingent consideration payment required upon the issuance of a second special waste disposal permit to expand the current landfill. Any of these circumstances could have a material adverse effect on our financial condition, results of operations and cash flows.

Our ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments may be limited.

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Our ability to utilize our net operating loss carryforwards to offset future taxable income and to reduce federal and state income tax liabilities is subject to certain requirements, limitations and restrictions, including Internal Revenue Code Section 382 which under certain circumstances may substantially limit our ability to offset future tax liabilities with federal net operating loss carryforwards.

Future changes in ownership could eliminate or limit our use of net operating loss carryforwards.

Pursuant to United States Internal Revenue Code Section 382, if we undergo an ownership change, the net operating loss carryforward limitations would impose an annual limit on the amount of the taxable income that may be offset by our net operating losses generated prior to the ownership change. We have determined that an ownership change occurred on April 15, 2016 as a result of the debt restructuring that occurred during fiscal 2016. In addition, another ownership change occurred on August 7, 2017 as a result of the chapter 11 reorganization described further in Note 25. The limitation under Section 382 may result in federal net operating loss carryforwards expiring unused. Subject to the impact of those rules as a result of past or future restructuring transactions, we may be unable to use all or a significant portion of our net operating loss carryforwards to offset future taxable income.

We are self-insured against many potential liabilities, and our reserves may not be sufficient to cover future claims.

We maintain high deductible or self-insured retention insurance policies for certain exposures including automobile, workers’ compensation and certain employee group health insurance plans. We carry policies for certain types of claims to provide excess coverage beyond the underlying policies and per incident deductibles or self-insured retentions. Because many claims against us do not exceed the deductibles under our insurance policies, we are effectively self-insured for a substantial portion of our claims. Our insurance accruals are based on claims filed and estimates of claims incurred but not reported. The insurance accruals are influenced by our past claims experience factors, which have a limited history, and by published industry development factors. The estimates inherent in these accruals are determined using actuarial methods that are widely used and accepted in the insurance industry. If our insurance claims increase or if costs exceed our estimates of insurance liabilities, we could experience a decline in profitability and liquidity, which would adversely affect our business, financial condition or results of operations. In addition, should there be a loss or adverse judgment or other decision in an area for which we are self-insured, then our business, financial condition, results of operations and liquidity may be adversely affected.

We evaluate our insurance accruals, and the underlying assumptions, regularly throughout the year and make adjustments as needed. While we believe that the recorded amounts are reasonable, there can be no assurance that changes to our estimates will not occur due to limitations inherent in the estimation process. Changes in our assumptions and estimates could have a material adverse effect on our financial condition, results of operations and cash flows.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our customers, suppliers and business partners, and personally identifiable information of our customers and employees, in our data centers and on our networks. The secure processing, storage, maintenance and transmission of this information is critical to our operations and business strategy. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt our operations and the services we provide to customers, and damage our reputation, and cause a loss of confidence in our products and services, which could adversely affect our business, operating margins, revenues and competitive position. These effects could have a material adverse effect on our financial condition, results of operations and cash flows.

A failure in our operational systems, or those of third parties, may adversely affect our business.

Our business is dependent upon our operational and technological systems to process a large amount of data. If any of our financial, operational, or other data processing systems fail or have other significant shortcomings, our financial results could be adversely affected. Our financial results could also be adversely affected if an employee causes our operational systems to fail, either as a result of inadvertent error or by deliberately tampering with or manipulating our operational systems. In addition, dependence upon automated systems may further increase the risk that operational system flaws, employee tampering or manipulation of those systems could result in losses that are difficult to detect. We are heavily reliant on technology for communications, financial reporting, treasury management and many other important aspects of our business. Any failure in our operational systems could have a material adverse impact on our business. Third-party systems on which we rely could also

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suffer operational failures. Any of these occurrences could disrupt our business, including the ability to close our financial ledgers and report the results of our operations publicly on a timely basis or otherwise have a material adverse effect on our financial condition, results of operations and cash flows.

Risks Related to Our Indebtedness

The amount of our debt and the covenants in the agreements governing our debt could negatively impact our business operations, financial condition, results of operations, and business prospects.

Although we reduced the amount of our debt by approximately $500 million as a result of the reorganization in 2017, as of December 31, 2019, we had approximately $36.5 million of total debt. Our level of indebtedness, onerous and restrictive collateral blocks on revolver capacity, and the covenants contained in the agreements governing our debt, could have important consequences for our operations, including:

• making it more difficult for us to satisfy our obligations under the agreements governing our indebtedness and increasing the risk that we may default on our debt obligations;

• requiring us to dedicate a substantial portion of our cash flow from operations to required payments on indebtedness, thereby reducing the availability of cash flow for working capital, capital expenditures and other general business activities;

• limiting our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes and other activities;

• limiting management’s flexibility in operating our business;

• limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• diminishing our ability to successfully withstand a downturn in our business or the economy generally;

• placing us at a competitive disadvantage against less leveraged competitors; and

• making us vulnerable to increases in interest rates, because our debt has variable interest rates.

Each of our debt instruments contain certain negative covenants that impose specific restrictions on us. These restrictions include, among others, our ability to incur additional debt; operationally prepay, redeem, or purchase any indebtedness; pay dividends or make other distributions, make other restricted payments and investments; create liens; enter into certain merger, consolidation, reorganization, or recapitalization transactions; merge consolidate, or transfer or dispose of substantially all of our assets; and enter into certain types of transactions with affiliates. In addition, there are a number of affirmative covenants with which we must comply. A breach of any of these negative or affirmative covenants could result in a default under our indebtedness. If we default, our lenders will no longer be obligated to extend credit to us, and they could declare all amounts of outstanding debt, together with accrued interest, to be immediately due and payable. The results of such actions would have a significant impact on our results of operations, financial position, and cash flows. We likely would not have sufficient liquidity to repay all of our outstanding indebtedness.

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Despite existing debt levels, we may still be able to incur substantially more debt, which would increase the risks associated with our indebtedness.

Even with our existing debt levels, we and our subsidiaries may be able to incur substantial amounts of additional debt in the future, some or all of which may be secured. As of December 31, 2019, we had no borrowings under our revolving credit facility. Although the terms of our credit facilities limit our ability to incur additional debt, these terms do not and will not prohibit us from incurring substantial amounts of additional debt for specific purposes or under certain circumstances, some or all of which may be secured. In addition, our lenders may consent to the incurrence of additional debt. As disclosed in our Form 8-K filed with the SEC on October 5, 2018, in October 2018 we incurred additional debt from our existing lenders in conjunction with our acquisition of Clearwater. We may incur additional debt in connection with future acquisitions. If new debt is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face could intensify and could further exacerbate the risks associated with our indebtedness.

Our ability to meet our obligations under our indebtedness depends in part on our earnings and cash flows and those of our subsidiaries and on our ability and the ability of our subsidiaries to pay dividends or advance or repay funds to us.

We conduct all of our operations through our subsidiaries. Consequently, our ability to service our debt is dependent, in large part, upon the earnings from the businesses conducted by our subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts to us, whether by dividends, loans, advances or other payments. The ability of our subsidiaries to pay dividends and make other payments to us depends on their earnings, capital requirements and general financial conditions and is restricted by, among other things, applicable corporate and other laws and regulations as well as, in the future, agreements to which our subsidiaries may be a party.

Our borrowings under our revolving credit facility and first lien term loan facility expose us to interest rate risk.

Our earnings are exposed to interest rate risk associated with borrowings under our revolving credit facility and first lien term loan facility. Our revolving credit facility and first lien term loan facility carry a floating interest rate; therefore, as interest rates increase, so will our interest costs, which may have a material adverse effect on our financial condition, results of operations and cash flows. In 2018, the United States Federal Reserve raised interest rates four times, however, rates were then subsequently lowered three times during 2019.

Risks Related to Our Restructuring

Upon our emergence from chapter 11, the composition of our shareholder base and concentration of equity ownership changed significantly. As a result, the future strategy and plans of the Company may differ materially from those of the past.

Due to a severe industry downturn beginning in late 2014, on May 1, 2017, the Nuverra Parties filed voluntary petitions under chapter 11 of the Bankruptcy Code in the Bankruptcy Court to pursue the Plan. On July 25, 2017, the Bankruptcy Court entered the Confirmation Order. The Plan became effective on the Effective Date, when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases, subject to certain conditions as set forth therein.

Upon our emergence from chapter 11, two shareholder groups beneficially own approximately 90% (the “Significant Shareholders”) of our issued and outstanding common stock and, therefore, have significant control on the outcome of matters submitted to a vote of shareholders, including, but not limited to, electing directors and approving corporate transactions. As a result, the future strategy and plans of the Company may differ materially from those of the past. Circumstances may occur in which the interests of the Significant Shareholders could be in conflict with the interests of other shareholders, and the Significant Shareholders would have substantial influence to cause us to take actions that align with their interests. Should conflicts arise, we can provide no assurance that the Significant Shareholders would act in the best interests of other shareholders or that any conflicts of interest would be resolved in a manner favorable to our other shareholders.

The effects of the pending appeal of the Confirmation Order are difficult to predict.

On July 26, 2017, David Hargreaves, an individual holder of our pre-Effective Date 9.875% Senior Notes due 2018 (the “2018 Notes”), appealed the Confirmation Order to the District Court of the District of Delaware (the “District Court”) and filed a motion for a stay pending appeal from the District Court. Although the motion for a stay pending appeal was denied, the appeal remained pending and the District Court heard oral arguments on May 14, 2018. On August 21, 2018 the District Court issued an order dismissing the appeal. Hargreaves subsequently appealed the District Court’s decision to the United States Court of

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Appeals for the Third Circuit. The parties filed appellate briefs in December 2018 and January 2019, and as a result the appeal remains pending with the United States Court of Appeals for the Third Circuit. The ultimate outcome of this appeal and its effects on the Confirmation Order are impossible to predict with certainty. No assurance can be given that the final disposition of this appeal will not affect the validity, enforceability or finality of the Confirmation Order.

Information contained in our historical financial statements will not be comparable to the information contained in our financial statements after the application of fresh start accounting.

This Annual Report on Form 10-K reflects the consummation of the Plan and the adoption of fresh start accounting. As a result, our financial statements from and after the Effective Date will not be comparable to our financial statements for prior periods. This will make it difficult for shareholders to assess our performance in relation to prior periods. Please see Note 26 on “Fresh Start Accounting” in the Notes to Consolidated Financial Statements for further information.

There is no guarantee that the warrants issued by us in accordance with the Plan will become in the money, and unexercised warrants may expire worthless.

As long as our stock price is below $39.82 per share, the warrants will have limited economic value, and they may expire worthless. Additionally, no warrant holder has, by virtue of holding or having a beneficial interest in the warrants, the right to vote, consent, receive any cash dividends, allotments or rights or other distributions paid, allotted or distributed or distributable to the holders of common stock, or to exercise any rights whatsoever as a stockholder unless, until, and only to the extent such warrant holder becomes a holder of record of shares of common stock issued upon settlement of warrants.

Risk Factors Related To Our Common Stock

We cannot assure you that an active trading market for our common stock will develop or be maintained, and the market price of our common stock may be volatile, which could cause the value of your investment to decline.

We cannot assure you that an active public market for our common stock will develop or, if it develops, be sustained. We currently have a limited trading volume of our common stock. In the absence of an active public trading market, it may be difficult to liquidate your investment in our common stock. The trading price of our common stock on the NYSE American may fluctuate significantly. Numerous factors, including many over which we have no control, may have a significant impact on the market price of our common stock. These risks include, among other things:

• our operating and financial performance and prospects;

• our ability to repay our debt;

• investor perceptions of us and the industry and markets in which we operate;

• future sales, or the availability for sale, of equity or equity-related securities;

• changes in earnings estimates or buy/sell recommendations by analysts;

• limited trading volume of our common stock; and

• general financial, domestic, economic and other market conditions.

The trading price of our common stock may not reflect accurately the value of our business.

As a result of our completed restructuring, ownership of our common stock is highly concentrated, and there are a limited number of shares available for trading on the NYSE American or any other public market. As a result, reported trading prices for our common stock at any given time may not reflect accurately the underlying economic value of our business at that time. Reported trading prices could be higher or lower than the price a shareholder would be able to receive in a sale transaction, and there can be no assurance that there will be sufficient public trading in our common stock to create a liquid trading market that accurately reflects the underlying economic value of our business.

The resale of shares of our common stock, including shares issuable upon exercise of our warrants, may adversely affect the market price of our common stock.

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At the time of our emergence from bankruptcy, we granted registration rights to certain stockholders. The shares of our outstanding common stock held by these stockholders were registered pursuant to a registration statement filed pursuant to the Securities Act and declared effective by the SEC on May 3, 2018. In addition, on January 3, 2019, an additional 3,220,330 shares were issued to these stockholders pursuant to a rights offering. The shares held by these stockholders constitute approximately 90% of our outstanding common stock as of February 29, 2020, all of which may be sold in the public markets.

Furthermore, as of February 29, 2020, there were 118,137 warrants outstanding, which were issued to the holders of our pre-Effective Date 2018 Notes and holders of certain claims relating to the rejection of executory contracts and unexpired leases. The exercise price of the warrants is $39.82. To the extent such warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to the holders of our common stock and increase the number of shares eligible for resale in the public market.

The sale of a significant number of shares of our common stock, including shares issuable upon exercise of our warrants, or substantial trading in our common stock or the perception in the market that substantial trading in our common stock will occur, may adversely affect the market price of our common stock.

Our stock price may be volatile, which could result in substantial losses for investors in our securities.

The stock markets have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. The market price of our common stock may also fluctuate significantly in response to the following factors, some of which are beyond our control:

• variations in our quarterly operating results and changes in our liquidity position;

• changes in securities analysts’ estimates of our financial performance;

• inaccurate or negative comments about us on social networking websites or other media channels;

• changes in market valuations of similar companies;

• announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital commitments, new products or product enhancements, as well as our or our competitors’ success or failure in successfully executing such matters;

• announcements by us of strategic plans to restructure our indebtedness or of a bankruptcy filing;

• changes in the price of oil and natural gas;

• loss of a major customer or failure to complete significant transactions; and

• additions or departures of key personnel.

If securities analysts do not publish research or reports about our business or if they downgrade our stock, the price of our stock could decline.

The trading market for our shares of common stock could rely in part on the research and reporting that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrades our stock, the price of our stock could decline. If one or more of these analysts ceases coverage of our company, we could lose visibility in the market, which in turn could cause our stock price to decline.

Future sales by us or our existing shareholders could depress the market price of our common stock.

If we or our existing shareholders sell a large number of shares of our common stock, the market price of our common stock could decline significantly. Further, even the perception in the public market that we or our existing shareholders might sell shares of common stock could depress the market price of the common stock.

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We may issue a substantial number of shares of our common stock in the future and shareholders may be adversely affected by the issuance of those shares.

We may raise additional capital by issuing shares of common stock, or other securities convertible into common stock, which will increase the number of shares of common stock outstanding and may result in substantial dilution in the equity interest of our current shareholders and may adversely affect the market price of our common stock. On January 3, 2019, 3,381,894 shares were issued to stockholders pursuant to a rights offering. We had 15,761,082 shares outstanding as of February 29, 2020. The issuance, and the resale or potential resale, of shares of our common stock could adversely affect the market price of our common stock and could be dilutive to our shareholders.

We currently do not intend to pay any dividends on our common stock.

We currently do not intend to pay any dividends on our common stock, and restrictions and covenants in our debt agreements may prohibit us from paying dividends now or in the future. While we may declare dividends at some point in the future, subject to compliance with such restrictions and covenants, we cannot assure you that you will ever receive cash dividends as a result of ownership of our common stock and any gains from investment in our common stock may only come from increases in the market price of our common stock, if any.

Certain of our charter and bylaw provisions and Delaware law, as well as the substantial ownership of our common stock by a small number of shareholders, could subject us to anti-takeover effects or could have a material negative impact on our business.

Provisions of our certificate of incorporation and bylaws, each as amended and restated, and Delaware law may discourage, delay or prevent a merger or acquisition that shareholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. In addition, these provisions may frustrate or prevent any attempts by our shareholders to replace or remove our management and board of directors. These provisions include:

• authorizing the issuance of “blank check” preferred stock without any need for action by shareholders;

• establishing a classified board of directors, so that only approximately one-third of our directors are elected each year;

• providing our board of directors with the ability to set the number of directors and to fill vacancies on the board of directors occurring between shareholder meetings;

• providing that directors may only be removed for “cause” and only by the affirmative vote of the holders of at least a majority in voting power of our issued and outstanding capital stock; and

• limiting the ability of our shareholders to call special meetings.

We are also subject to provisions of the Delaware corporation law that, in general, prohibit any business combination with a beneficial owner of 15% or more of our common stock for three years following the date the beneficial owner acquired at least 15% of our stock, unless various conditions are met, such as approval of the transaction by our board of directors. Together, these charter and statutory provisions could make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock.

The existence of the foregoing provisions and anti-takeover measures, as well as the significant percentage of common stock beneficially owned by our Significant Shareholders, could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our Company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

Risks Related to Environmental and Other Governmental Regulation

We are subject to United States federal, state and local laws and regulations relating to health, safety, transportation, and protection of natural resources and the environment. Under these laws and regulations, we may become liable for significant penalties, damages or costs of remediation. Any changes in laws and regulations could increase our costs of doing business.

Our operations, and those of our customers, are subject to United States federal, state and local laws and regulations relating to health, safety, transportation and protection of natural resources and the environment and worker safety, including those relating

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to waste management and transportation and disposal of produced water and other materials. For example, we are subject to environmental regulation relating to disposal into injection wells, which can pose some risks of environmental liability, as well as liability for property damage and personal injuries. In addition, federal, state and local laws and regulations could increase costs to our customers and possibly decrease demand for our services. For example, many of our customers have intrastate pipeline operations that are subject to regulation by various agencies of the states in which they are located. If new laws and/or regulations that further regulate intrastate pipelines are adopted in response to equipment failures, spills, negative environmental effects, or public sentiment, our customers may face increased costs of compliance, and thus reduce demand for our services.

Our business involves the use, handling, storage, and contracting for recycling or disposal of environmentally sensitive materials. Accordingly, we are subject to health and environmental regulations established by federal, state, and local authorities. We also are subject to laws, ordinances, and regulations governing the investigation and remediation of contamination at facilities we operate or to which we send hazardous or toxic substances or wastes for recycling or disposal. In particular, CERCLA imposes strict joint and several liability on owners and operators of facilities at, from, or to which a release of hazardous substances has occurred; on parties that generated hazardous substances that were released at such facilities; and on parties that transported or arranged for the transportation of hazardous substances to such facilities. A majority of states have adopted comparable statutes. Under CERCLA or a similar state statute, we could be held liable for all investigative and remedial costs associated with addressing such contamination. Claims alleging personal injury or property damage also could be brought against us based on alleged exposure to hazardous substances resulting from our operations.

Failure to comply with these laws and regulations could result in the assessment of significant administrative, civil or criminal penalties, imposition of cleanup and site restoration costs and liens, revocation of permits, and orders to limit or cease certain operations. Additionally, future events, such as the discovery of currently unknown matters, spills caused by future pipeline ruptures, changes in existing environmental laws and regulations or their interpretation, and more vigorous enforcement policies by regulatory agencies, may give rise to expenditures or liabilities, which could impair our operations and could have a material adverse effect on our financial condition, results of operations and cash flows.

Although we believe that we are in substantial compliance with all applicable laws and regulations, legal requirements change frequently and are subject to interpretation. New laws, regulations and changing interpretations by regulatory authorities, together with uncertainty regarding adequate testing and sampling procedures, new pollution control technology and cost benefit analysis based on market conditions are all factors that may increase our future capital expenditures to comply with environmental requirements. Accordingly, we are unable to predict the ultimate cost of future compliance with these requirements or their effect on our operations.

Increased regulation of hydraulic fracturing, including regulation of the quantities, sources and methods of water use and disposal, could result in reduction in drilling and completing new oil and natural gas wells or minimize water use or disposal, which could adversely impact the demand for our services.

Demand for our services depends, in large part, on the level of exploration and production of oil and natural gas and the oil and natural gas industry’s willingness to purchase our services. Most of our customer base uses hydraulic fracturing to drill new oil and natural gas wells. Hydraulic fracturing is used to release hydrocarbons, particularly natural gas, from certain geological formations. The process involves the injection of water (typically mixed with significant quantities of sand and small quantities of chemical additives) under pressure into the formation to fracture the surrounding rock and stimulate movement of hydrocarbons through the formation. The process is typically regulated by state oil and natural gas commissions and since 2005 has been exempt from federal regulation under the SDWA, except when the fracturing fluids or propping agents contain diesel fuels.

The EPA has been reviewing the potential environmental impacts of hydraulic fracturing activities. On February 11, 2014, the EPA released a revised UIC program permitting guidance for wells that use diesel fuels during hydraulic fracturing activities to clarify how companies can comply with a 2005 federal law that exempts hydraulic fracturing operations from the UIC permit requirement, except where diesel fuel is used as a fracturing fluid. On July 16, 2015, the EPA’s Inspector General (IG) issued a report entitled “Enhanced EPA Oversight and Action Can Further Protect Water Resources From the Potential Impacts of Hydraulic Fracturing” stating that the EPA should enhance its oversight of permit issuance for hydraulic fracturing by state and develop a plan for responding to concerns about chemicals used in hydraulic fracturing. On May 19, 2014, the EPA issued an Advance Notice of Proposed Rulemaking announcing its intention to develop a rule under the Toxic Substances Control Act (“TSCA”) to require disclosure of chemicals used in hydraulic fracturing. While the EPA’s regulatory agenda previously estimated that the EPA would issue a proposed TSCA rule in June 2018, the agency withdrew the action in March 2018. The EPA’s regulatory agenda stated, however, that the withdrawal does not preclude the EPA from developing a similar action in the future. On October 15, 2012, new EPA regulations under the CAA went into effect that require reductions in certain criteria and hazardous air pollutant emissions from hydraulic fracturing wells. In May 2016, the EPA issued new CAA regulations to

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reduce methane emissions from oil and gas operations, including hydraulic fracturing, although in September 2018 the EPA proposed revisions to limit certain provisions of the regulations.

On June 13, 2016, the EPA finalized regulations under the CWA to prohibit wastewater discharges from hydraulic fracturing and other natural gas production to municipal sewage plants (called publicly owned treatment works (“POTWs”)). The regulations went into effect on August 29, 2016 for most facilities, but the EPA extended the compliance date to August 29, 2019 for facilities that had been lawfully discharging extraction wastewater to POTWs prior to June 28, 2016. In December 2016, the EPA issued a final report entitled “Hydraulic Fracturing for Oil and Gas: Impacts from the Hydraulic Fracturing Water Cycle on Drinking Water Resources in the United States” that concluded that hydraulic fracturing can impact drinking water resources under some circumstances, but stated that the national frequency of impacts on drinking water could not be estimated due to significant data gaps and uncertainties in the available data. In March 2015, the Department of the Interior (“DOI”) issued regulations imposing stringent requirements on hydraulic fracturing wells constructed on federal lands, but DOI rescinded the regulations in December 2017. Legislation was introduced during the last Congress to provide for federal regulation of hydraulic fracturing, including, requiring disclosure of chemicals used in the fracturing process and potentially repealing the SWDA exemption. Similar legislation may be proposed in the future. If adopted, such legislation would add another level of regulation and permitting at the federal level for wells using hydraulic fracturing. Laws and regulations restricting hydraulic fracturing have been adopted or are being considered in several states, including certain states in which we operate. In November 2017, the Delaware River Basin Commission issued proposed regulations that would ban “high volume hydraulic fracturing” in certain areas of Pennsylvania, New York, New Jersey and Delaware. Those regulations may be finalized this year. Some local governments have also sought to restrict drilling.

Some regulators have adopted or are considering additional requirements for hydraulic fracturing related to seismic activities. For example, in April 2014, the Ohio Department of Natural Resources issued new guidelines that require companies to install seismic monitors for any horizontal drilling within 3 miles of a known fault or area of seismic activity greater than 2.0 magnitude and allow regulators to halt drilling in the event of an earthquake greater than 1.0 magnitude. In Texas, the RRC amended its existing oil and natural gas disposal well regulations to require applicants for new disposal wells to conduct seismic activity searches utilizing the U.S. Geological Survey to assess whether the RRC should impose limits on existing wells, including a temporary injection ban. Arkansas has prohibited waste-water injection in certain areas of the state due to concerns that hydraulic fracturing may be related to increased earthquake activity. Such laws and regulations could delay or curtail production of oil and natural gas by our customers, and thus reduce demand for our services.

Future United States federal, state or local laws or regulations could significantly restrict, or increase costs associated with hydraulic fracturing and make it more difficult or costly for producers to conduct hydraulic fracturing operations, which could result in a decline in exploration and production. New laws and regulations, and new enforcement policies by regulatory agencies, could also expressly restrict the quantities, sources and methods of water use and disposal in hydraulic fracturing and otherwise increase our costs and our customers’ cost of compliance, which could minimize water use and disposal needs even if other limits on drilling and completing new wells were not imposed. Any decline in exploration and production or any restrictions on water use and disposal could result in a decline in demand for our services and have a material adverse effect on our business, financial condition, results of operations and cash flows.

Delays or restrictions in obtaining permits by our customers for their operations or by us for our operations could impair our business.

In most states, our customers are required to obtain permits from one or more governmental agencies in order to perform drilling and completion activities and we may be required to procure permits for construction and operation of our disposal wells and pipelines. Such permits are typically required by state agencies, but they can be required by federal and local governmental agencies as well. The requirements for such permits vary, but with all governmental permitting processes, there is a degree of uncertainty as to whether a permit will be granted, the time it will take for a permit to be issued, and the conditions that may be imposed by the permit. Delays or restrictions in obtaining saltwater disposal well permits could adversely impact our growth, which is dependent in part on new disposal capacity.

Our customers have been affected by moratoriums that have been imposed on the issuance of permits for drilling and completion activities in certain jurisdictions. For example, in December 2014, the State of New York announced a ban on hydraulic fracturing in the state. A moratorium has been in place within the Delaware River Basin pending finalization of regulations by the Delaware River Basin Commission that would permanently ban high volume hydraulic fracturing in the Basin. Other states, including California, Texas, Arkansas, Pennsylvania, Wyoming and Colorado, have enacted laws and regulations applicable to our business activities, including disclosure of information regarding the substances used in hydraulic fracturing. On January 9, 2014, the EPA issued a revised CWA permit requiring oil and natural gas companies using hydraulic fracturing off the coast of California to disclose the chemicals they discharge into the ocean. Some drilling and completion activities by our customers may take place on federal land, requiring leases from the federal government to conduct such

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drilling and completion activities. In some cases, federal agencies have canceled oil and natural gas leases on federal lands. Consequently, our operations in certain areas of the country may be interrupted or suspended for varying lengths of time, causing a loss of revenue and potentially having a materially adverse effect on our financial condition, results of operations and cash flows.

We are subject to the trucking safety regulations, which are likely to be amended, and made stricter, as part of the initiative known as Compliance, Safety, Accountability, or “CSA.” If our current USDOT safety rating of “Satisfactory” is downgraded in connection with this initiative, our business and results of our operations may be adversely affected.

As part of the CSA initiative, the FMCSA is continuously revising its safety rating methodology and implementation of the same. These revisions will likely link safety ratings more closely to roadside inspection and driver violation data gathered and analyzed from month to month under the FMCSA’s new Safety Measurement System, or “SMS” and may place increased scrutiny on carriers transporting significant quantities of hazardous material. This linkage could result in greater variability in safety ratings than the current system. Preliminary studies by transportation consulting firms indicate that “Satisfactory” ratings (or any equivalent under a new SMS-based system) may become more difficult to achieve and maintain under such a system. If our operations lose their current “Satisfactory” rating, which is the highest and best rating under this initiative, we may lose some of our customer contracts that require such a rating, adversely affecting our financial condition, results of operations and cash flows.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We lease our corporate headquarters in Scottsdale, Arizona and we own or lease numerous facilities including administrative offices, sales offices, truck yards, maintenance and warehouse facilities, and a landfill facility in seven other states. We also own or lease 48 saltwater disposal wells in Louisiana, Montana, North Dakota, Ohio and Texas as of December 31, 2019. We believe that we have satisfactory title to the properties owned and used in our businesses, subject to liens for taxes not yet payable, liens incident to minor encumbrances, liens for credit arrangements (including liens under our credit facility) and easements and restrictions that do not materially detract from the value of these properties, our interests in these properties, or the use of these properties in our businesses.

We believe all properties that we currently occupy are suitable for their intended uses. We believe that we have sufficient facilities to conduct our operations. However, we continue to evaluate the purchase or lease of additional properties or the consolidation of our properties, as our business requires.

Item 3. Legal Proceedings

We are party to legal proceedings and potential claims arising in the ordinary course of our business, including, but not limited to, claims related to employment matters, contractual disputes, personal injuries and property damage. In addition, various legal actions, claims and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against us and our subsidiaries. See “Legal Matters” section in Note 20 of the Notes to the Consolidated Financial Statements herein for a description of our legal proceedings.

Item 4. Mine Safety Disclosures

None.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is listed on the NYSE American under the symbol “NES” and has been trading on the NYSE American since October 12, 2017. Prior to the commencement of our voluntarily chapter 11 proceedings, our pre-Effective Date common stock was trading on the OTCQB U.S. Market (the “OTCQB”) beginning on January 20, 2016 under the symbol “NESC.”

As an issuer may not be listed on the OTCQB if it is subject to bankruptcy or reorganization proceedings, upon filing the Plan with the Bankruptcy Court, our pre-Effective Date common stock was removed from the OTCQB and began trading on the OTC Pink Open Market (the “OTC Pink”) under the symbol “NESCQ” beginning on May 2, 2017. As a result of the cancellation of the pre-Effective Date common stock pursuant to the Plan, the Company ceased trading on the OTC Pink on the Effective Date. From the Effective Date until our listing on the NYSE American on October 12, 2017, there was no active public trading market for our common stock.

Holders

As of February 29, 2020, there were three shareholders of record of our common stock. The majority of the shares are held by CEDE & CO., a nominee of The Depository Trust Company. This number of record holders does not include beneficial holders whose shares are held in “street name,” meaning that the shares are held for their accounts by brokers or other nominees.  In these instances, the brokers or other nominees are included in the number of record holders, but the underlying beneficial holders of the common stock held in “street name” are not.

Dividends

We have not paid any dividends on our common stock to date, and we currently do not intend to pay dividends in the future. The payment of dividends in the future will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion of our board of directors (the “Board”) and will be subject to other limitations as may be contained in our agreements governing our indebtedness. It is the present intention of the Board to retain all earnings, if any, for use in our business operations and, accordingly, the Board does not anticipate declaring any dividends in the foreseeable future.

Unregistered Sales of Equity Securities

There were no unregistered sales of our equity securities during the fiscal year ended December 31, 2019.

Repurchases of Equity Securities

During the three months ended December 31, 2019, there were no repurchases of our common stock.

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Item 6. Selected Financial Data

The following table presents selected consolidated financial information and other operational data for our business. You should read the following information in conjunction with Item 7 of this Annual Report on Form 10-K entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

Statement of Operations Data

	Successor									Predecessor
	Years Ended December 31,						Five Months Ended December 31,			Seven Months Ended July 31,			Years Ended December 31,
	2019			2018			2017			2017			2016			2015
($ in thousands except per share data)
Total revenue	$	168,238		$	197,474		$	80,188		$	95,883		$	152,176		$	356,699
Operating loss	(50,102		)	(52,300		)	(40,959		)	(36,660		)	(117,338		)	(144,839		)
(Loss) income from continuing operations (1)(2)(3)(4)	(54,937		)	(59,263		)	(47,895		)	168,611			(167,621		)	(195,167		)
(Loss) income from discontinued operations, net of income taxes (5)	—			—			—			—			(1,235		)	(287		)
Net (loss) income	(54,937		)	(59,263		)	(47,895		)	168,611			(168,856		)	(195,454		)
Weighted average shares outstanding:
Basic	15,676			11,829			11,696			150,940			90,979			27,681
Diluted	15,676			11,829			11,696			174,304			90,979			27,681
Earnings per common share:
Basic (loss) income from continuing operations	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	1.12		$	(1.84	)	$	(7.05	)
Basic loss from discontinued operations	—			—			—			—			(0.01		)	(0.01		)
Net (loss) income per basic common share	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	1.12		$	(1.85	)	$	(7.06	)
Diluted (loss) income from continuing operations	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	0.97		$	(1.84	)	$	(7.05	)
Diluted loss from discontinued operations	—			—			—			—			(0.01		)	(0.01		)
Net (loss) income per diluted common share	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	0.97		$	(1.85	)	$	(7.06	)

(1) Loss from continuing operations for the year ended December 31, 2019 included goodwill impairment charges of $29.5 million. See Note 8 in the Notes to the Consolidated Financial Statements herein for further information.

(2) Income from continuing operations for the seven months ended July 31, 2017 included $223.5 million of “Reorganization items, net,” which included the $194.8 million net gain on debt discharge as a result the chapter 11 filing and fresh start accounting. See Note 26 in the Notes to the Consolidated Financial Statements herein for further information.

(3) Loss from continuing operations for the year ended December 31, 2016 included long-lived asset impairment charges of $42.2 million.

(4) Loss from continuing operations for the year ended December 31, 2015 included a goodwill impairment charge of $104.7 million.

(5) Relates to the sale of Thermo Fluids Inc. (“TFI”). The disposition of TFI with was completed on April 11, 2015. The final post-closing working capital reconciliation was completed during the year ended December 31, 2016.

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Balance Sheet Data

	Successor						Predecessor
	As of December 31,						As of December 31,
	2019		2018		2017		2016			2015
($ in thousands)
Consolidated balance sheet data:
Cash and cash equivalents	$	4,788	$	7,302	$	5,488	$	994		$	39,309
Total current assets	41,539		49,507		53,423		33,478			94,481
Property, plant and equipment, net	190,817		215,640		229,874		294,179			406,188
Goodwill (1)	—		29,518		27,139		—			—
Total assets (1)	236,099		295,936		311,322		342,604			522,619
Current portion of long-term debt (2)	6,430		38,305		5,525		465,835			499,709
Current liabilities	22,127		64,570		28,387		492,967			545,087
Long-term debt (2)	30,005		27,628		33,524		5,956			11,758
Total liabilities (2)	61,667		99,509		68,349		511,670			560,890
Total shareholders’ equity (deficit)	174,432		196,427		242,973		(169,066		)	(38,271		)

(1) When we reviewed goodwill for impairment as of October 1, 2019, we determined that it was more likely than not that the fair value of the reporting units were less than their carrying value. As a result, we completed the goodwill impairment test and determined that the fair value of all three reporting units was less than the carrying amount, resulting in a goodwill impairment charge of $29.5 million during the year ended December 31, 2019. See Note 8 in the Notes to the Consolidated Financial Statements herein for further details on the goodwill impairment during 2019.

The goodwill balance as of December 31, 2018 is the result of an acquisition made during 2018 and the fresh start accounting upon emergence from chapter 11 in 2017. See Note 6 and Note 26 in the Notes to the Consolidated Financial Statements herein for further information.

Previously, goodwill was reduced to zero in 2015 as a result of a goodwill impairment charge of $104.7 million.

(2) The current portion of long-term debt as of December 31, 2018 included $32.5 million for a bridge term loan which was used to fund an acquisition made during 2018. On January 2, 2019, we received aggregate gross proceeds of $32.5 million from a rights offering and repaid the bridge term loan in full. See Note 12 and Note 15 in the Notes to the Consolidated Financial Statements herein for further information.

The decrease in the current portion of long-term debt, long-term debt and total liabilities as of December 31, 2017 is a result of approximately $470.0 million in debt obligations being settled as part of the reorganization adjustments under fresh start accounting upon emergence from chapter 11. See Note 25 and Note 26 in the Notes to the Consolidated Financial Statements herein for further information.

For the years ended December 31, 2016 and December 31, 2015, the carrying value of the Predecessor Company’s asset-based lending facility, 2018 Notes and Predecessor Company’s 12.5%/10.0% Senior Secured Second Lien Notes due 2021 (the “2021 Notes”) were presented as current as a result of either breaching or the probability of breaching one of the financial covenants.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements, and the Notes and Schedules related thereto, which are included in this Annual Report.

Company Overview

Nuverra provides water logistics and oilfield services to customers focused on the development and ongoing production of oil and natural gas from shale formations in the United States. Our business operations are organized into three geographically distinct divisions: the Rocky Mountain division, the Northeast division, and the Southern division. Within each division, we provide water transfer services, disposal services, and rental and other services associated with the drilling, completion, and ongoing production of shale oil and natural gas.

Rocky Mountain Division

The Rocky Mountain division is our Bakken Shale area business. We have operations in various locations throughout North Dakota and Montana, including yards in Dickinson, Williston, Watford City, Tioga, Stanley, and Beach, North Dakota, as well as Sidney, Montana. Additionally, we operate a financial support office in Minot, North Dakota. As of December 31, 2019, we had 353 employees in the Rocky Mountain division.

Water Transfer Services

We manage a fleet of 204 trucks in the Rocky Mountain division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region. Additionally, our trucks collect and transport fresh water from water sources to operator locations for use in well completion activities.

In the Rocky Mountain division, we own an inventory of lay flat temporary hose as well as related pumps and associated equipment used to move fresh water from water sources to operator locations for use in completion activities. We employ specially trained field personnel to manage and operate this business. For customers who have secured their own source of fresh water, we provide and operate the lay flat temporary hose equipment to move the fresh water to the drilling and completion location. We may also use third-party sources of fresh water in order to provide the water to customers as a package that includes our water transfer service.

Disposal Services

We manage a network of 20 owned and leased salt water disposal wells with current capacity of approximately 82 thousand barrels of water per day, and permitted capacity of 103 thousand barrels of water per day. Our salt water disposal wells in the Rocky Mountain division are operated under the Landtech brand. Additionally, we operate a landfill facility near Watford City, North Dakota that handles the disposal of drill cuttings and other oilfield waste generated from drilling and completion activities in the region.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Rocky Mountain division. These assets include tanks, loaders, manlifts, light towers, winch trucks, and other miscellaneous equipment used in drilling and completion activities. In the Rocky Mountain division, we also provide oilfield labor services, also called “roustabout work,” where our employees move, set-up and maintain the rental equipment for customers, in addition to providing other oilfield labor services.

Northeast Division

The Northeast division is comprised of the Marcellus and Utica Shale areas, both of which are predominantly natural gas producing basins. The Marcellus and Utica Shale areas are located in the northeastern United States, primarily in Pennsylvania, West Virginia, New York and Ohio. We have operations in various locations throughout Pennsylvania, West Virginia, and Ohio, including yards in Masontown, West Virginia, Somerset and Wellsboro, Pennsylvania, and Cadiz, Ohio. Additionally, we operate a corporate support office near Pittsburgh, Pennsylvania. As of December 31, 2019, we had 236 employees in the Northeast division.

Water Transfer Services

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We manage a fleet of 201 trucks in the Northeast division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region, or to other customer locations for reuse in completing other wells. Additionally, our trucks collect and transport fresh water from water sources to operator locations for use in well completion activities.

Disposal Services

We manage a network of 14 owned and leased salt water disposal wells with current and permitted capacity of approximately 32 thousand barrels of water per day in the Northeast division. Our salt water disposal wells in the Northeast division are operated under the Nuverra, Heckmann, and Clearwater brands.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Northeast division. These assets include tanks and winch trucks used in drilling and completion activities.

Southern Division

The Southern division is comprised of the Haynesville Shale area, a predominantly natural gas producing basin, which is located across northwestern Louisiana and eastern Texas, and extends into southwestern Arkansas. We have operations in various locations throughout eastern Texas and northwestern Louisiana, including a yard in Frierson, Louisiana. Additionally, we operate a corporate support office in Spring, Texas. As of December 31, 2019, we had 71 employees in the Southern division.

Water Transfer Services

We manage a fleet of 34 trucks in the Southern division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region. Additionally, our trucks collect and transport fresh water to operator locations for use in well completion activities.

In the Southern division, we also own and operate a 60-mile underground twin pipeline network for the collection of produced water for transport to interconnected disposal wells and the delivery of fresh water from water sources to operator locations for use in well completion activities. The pipeline network can currently handle disposal volumes up to approximately 71 thousand barrels per day with 7 disposal wells attached to the pipeline and is scalable up to approximately 100 thousand barrels per day.

Disposal Services

We manage a network of 7 owned and leased salt water disposal wells that are not connected to our pipeline with current capacity of approximately 48 thousand barrels of water per day, and permitted capacity of approximately 100 thousand barrels of water per day, in the Southern division.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Southern division. These assets include tanks and winch trucks used in drilling and completion activities.

Acquisitions

On October 5, 2018, we completed the acquisition of Clearwater Three, LLC, Clearwater Five, LLC, and Clearwater Solutions, LLC (collectively, “Clearwater”) for an initial purchase price of $42.3 million, subject to customary working capital adjustments (the “Clearwater Acquisition”). Clearwater is a supplier of waste water disposal services used by the oil and gas industry in the Marcellus and Utica shale areas. Clearwater has three salt water disposal wells in service, all of which are located in Ohio. This acquisition expanded our service offerings in the Marcellus and Utica shale areas in our Northeast division. Refer to Note 6 in the Notes to Consolidated Financial Statements for additional information.

Emergence from Chapter 11 Reorganization

In order to address our liquidity issues due to the prolonged depression in oil and natural gas prices, on May 1, 2017, the Company and certain of its material subsidiaries (collectively with the Company, the “Nuverra Parties”) filed voluntary petitions under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to pursue prepackaged plans of reorganization (together, and as

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amended, the “Plan”). On July 25, 2017, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan. The Plan became effective on August 7, 2017 (the “Effective Date”), when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases subject to certain conditions as set forth therein.

Upon emergence, we elected to apply fresh start accounting effective July 31, 2017, to coincide with the timing of our normal accounting period close. Refer to Note 26 on “Fresh Start Accounting” in the Notes to the Consolidated Financial Statements for additional information on the selection of this date. As a result of the application of fresh start accounting, as well as the effects of the implementation of the Plan, a new entity for financial reporting purposes was created, and as such, the condensed consolidated financial statements on or after August 1, 2017, are not comparable with the condensed consolidated financial statements prior to that date.

References to “Successor” or “Successor Company” refer to the financial position and results of operations of the reorganized Company subsequent to July 31, 2017. References to “Predecessor” or “Predecessor Company” refer to the financial position and results of operations of the Company on and prior to July 31, 2017.

Trends Affecting Our Operating Results

Our results are affected by capital expenditures made by the exploration and production operators in the shale basins in which we operate. These capital expenditures determine the level of drilling and completion activity which determines the amount and volume of produced water, water for fracking, flowback water, drill cuttings and rental equipment requirements that determine the demand for our services. The primary drivers of these expenditures are current or anticipated prices of crude oil and natural gas. Prices declined throughout 2019. Crude prices as measured by the average price per barrel of West Texas Intermediate averaged $56.98 in 2019 compared to $65.23 in 2018. Natural gas prices as measured by the Henry Hub Natural Gas index averaged $2.56 in 2019 compared to $3.15 in 2018. Prices have continued to decline in 2020 and the same crude index was $44.76 on February 28, 2020 and natural gas prices were $1.93 on February 25, 2020.

A second important trend has been the focus of Wall Street and investors in the energy sector to encourage exploration and production operators to spend as a function of the cash flow they generate. Historically, as a result of accommodating debt and equity markets, exploration and production companies have been able to spend in excess of the cash flow generated by the business. This current trend has brought increased capital discipline to exploration and production companies who are careful to make more selective capital allocation decisions. It is expected that this trend, in addition to the lower commodity prices, will force exploration and production companies to spend approximately 15% less in 2020 than they spent in 2019.

A third trend we have observed is the increase in infrastructure to handle produced water. Many believe the economics of fixed infrastructure are more attractive than using trucks. As a result, we have seen a number of independent water midstream businesses emerge and grow as well as a number of exploration and production operators developing their own infrastructure. These businesses are direct competitors to our trucking operations. This phenomenon is most noticeable in the Bakken and Haynesville regions. We have not seen this trend in the Northeast. We are making concerted efforts to connect our salt water disposal network to pipeline infrastructure.

We have seen the growth of lay flat hose as a means of getting freshwater to drilling sites where terrain and water sources make temporary pipeline more cost effective than trucking freshwater. The lay flat hose is an above-ground temporary source of water that in certain locations is more economical to exploration and production operators than the trucking of fresh water to completion locations. We have seen new entrants in the business creating significant pricing pressure. An important part of this business is access to fresh water sources. We do not have the same access to fresh water sources as some of our competitors and have thus been disadvantaged in many of the bids we participated in throughout 2019. We have hired a dedicated employee to focus on improving access to fresh water sources.

Lastly, we have seen an increase in reuse and water sharing in the Northeast. Some of our customers are using produced and flowback water for fracking as they have determined it is more economical to transport produced water to sites than it is to dispose of the water. Operators are also sharing water with other operators to avoid disposal. This work still requires trucking services, but is generally shorter haul work done at an hourly rate which negatively impacts our revenues.

Other Factors Affecting Our Operating Results

Our results are also driven by a number of other factors, including (i) availability of our equipment, which we have built through acquisitions and capital expenditures, (ii) transportation costs, which are affected by fuel costs, (iii) utilization rates for our equipment, which are also affected by the level of our customers’ drilling and production activities, competition, and our ability to relocate our equipment to areas in which oil and natural gas exploration and production activities are growing, (iv) the

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availability of qualified employees (or alternatively, subcontractors) in the areas in which we operate, (v) labor costs, (vi) changes in governmental laws and regulations at the federal, state and local levels, (vii) seasonality and weather events, (viii) pricing and (ix) our health, safety and environmental performance record.

While we have agreements in place with certain of our customers to establish pricing for our services and various other terms and conditions, these agreements typically do not contain minimum volume commitments or otherwise require the customer to use us.  Accordingly, our customer agreements generally provide the customer the ability to change the relationship by either in-sourcing some or all services we have historically provided or by contracting with other service providers.  As a result, even with respect to customers with which we have an agreement to establish pricing, the revenue we ultimately receive from that customer, and the mix of revenue among lines of services provided, is unpredictable and subject to variation over time.

Results of Operations: Year EndedDecember 31, 2019 Compared to the Year EndedDecember 31, 2018

The following table sets forth for each of the periods indicated our statements of operations data (dollars in thousands):

	Successor
	Year Ended December 31,						Increase (Decrease)
	2019			2018			2019 vs 2018
Revenue:
Service revenue	$	152,541		$	181,793		$	(29,252	)	(16.1	)%
Rental revenue	15,697			15,681			16			0.1	%
Total revenue	168,238			197,474			(29,236		)	(14.8	)%
Costs and expenses:
Direct operating expenses	131,019			158,896			(27,877		)	(17.5	)%
General and administrative expenses	20,864			38,510			(17,646		)	(45.8	)%
Depreciation and amortization	36,183			46,434			(10,251		)	(22.1	)%
Impairment of long-lived assets	766			4,815			(4,049		)	(84.1	)%
Impairment of goodwill	29,518			—			29,518			—
Other, net	(10		)	1,119			(1,129		)	(100.9	)%
Total costs and expenses	218,340			249,774			(31,434		)	(12.6	)%
Operating loss	(50,102		)	(52,300		)	2,198			(4.2	)%
Interest expense, net	(5,227		)	(5,973		)	746			(12.5	)%
Other income, net	502			896			(394		)	(44.0	)%
Reorganization items, net	(200		)	(1,679		)	1,479			(88.1	)%
Loss before income taxes	(55,027		)	(59,056		)	4,029			(6.8	)%
Income tax benefit (expense)	90			(207		)	297			(143.5	)%
Net loss	$	(54,937	)	$	(59,263	)	$	4,326		(7.3	)%

Service Revenue

Service revenue consists of fees charged to customers for water transfer services, disposal services and other service revenues associated with the drilling, completion, and ongoing production of shale oil and natural gas. On a consolidated basis, service revenue for the year ended December 31, 2019 was $152.5 million, down $29.3 million, or 16.1%, from $181.8 million for the year ended December 31, 2018. The largest contributors to the decline in service revenues were Rocky Mountain third party trucking activity and lay flat hose projects, slower trucking activity in the Northeast due to customers moving to reuse of produced water and overall activity declines and, in the South, the loss of a large customer that historically consumed a material percentage of the capacity on our Haynesville pipeline. These declines were partially offset by an increase in disposal revenues in all three divisions. Additionally, $1.8 million in revenues associated with the Eagle Ford Shale area were included in service revenues in the prior year but did not reoccur in the current year due to management’s decision to exit the Eagle Ford Shale area as of March 1, 2018. As the primary causes of the decreases in water transfer services and increases in disposal services are different for all three divisions, see “Segment Operating Results” below for further discussion.

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Rental Revenue

Rental revenue consists of fees charged to customers for use of equipment owned by us, as well as other fees charged to customers for services, such as delivery and pickup of equipment. Our rental business is primarily located in the Rocky Mountain division, however, we do have some rental equipment available in both the Northeast and Southern divisions. Rental revenue for the year ended December 31, 2019 was $15.7 million, up $16.0 thousand, or 0.1%, from the year ended December 31, 2018. The prior year period included $0.3 million of rental revenues for the Eagle Ford Shale area that did not reoccur in the current year due to management’s decision to exit the Eagle Ford Shale area as of March 1, 2018. When removing the impact of the Eagle Ford exit, rental revenues increased by $0.3 million primarily as a result of pricing increases implemented in the Rocky Mountain division.

Direct Operating Expenses

Direct operating expenses for the year ended December 31, 2019 were $131.0 million, compared to $158.9 million for the year ended December 31, 2018, a decrease of 17.5%. While the decrease in direct operating expenses is primarily attributable to lower activity levels for water transfer services during the period, direct operating expenses improved to 77.9% of revenues from 80.5% in the prior year period as a result of favorable service mix due to more higher margin work, a reduction in outsourced trucking and active cost reduction efforts during the past year. (See “Segment Operating Results” below for further details on each division.)

General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2019 were $20.9 million, down $17.6 million from $38.5 million for the year ended December 31, 2018. The decrease in general and administrative expenses is primarily attributable to higher compensation costs in the prior year, including $15.3 million related to the departures of our former Chief Executive Officer and Chief Financial Officer. Additionally, general and administrative expenses in 2018 included $1.3 million in transaction fees for the acquisition of Clearwater.

Depreciation and Amortization

Depreciation and amortization for the year ended December 31, 2019 was $36.2 million, down $10.3 million from $46.4 million for the year ended December 31, 2018. The decrease is primarily attributable to a lower depreciable asset base due to the sale of under-utilized or non-core assets, assets becoming fully depreciated and assets being classified as held for sale with the resulting cessation of depreciation.

Impairment of Long-Lived Assets

During the year ended December 31, 2019, management approved plans to sell real property located in the Northeast and Rocky Mountain divisions. The real property qualified to be classified as held for sale and as a result was recorded at the lower of net book value or fair value less costs to sell, which resulted in long-lived asset impairment charges of $0.8 million, of which $0.6 million related to the Northeast division and $0.1 million related to the Rocky Mountain division.

During the year ended December 31, 2018, management approved plans to sell certain assets located in the Southern division as a result of exiting the Eagle Ford shale area. In addition, management approved the sale of certain assets, primarily frac tanks, located in the Northeast division, that were also expected to sell within one year. These assets qualified to be classified as assets held for sale and as the fair value of the assets was lower than the net book value, we recorded an impairment charge of $4.8 million, of which $4.4 million related to the Southern division for the Eagle Ford exit, $0.3 million related to the Corporate division for the sale of certain real property in Texas approved to be sold as part of the Eagle Ford exit, and $0.1 million related to the Northeast division.

See also Note 8 in the Notes to the Consolidated Financial Statements herein for further discussion.

Impairment of Goodwill

When we reviewed goodwill for impairment as of October 1, 2019, we determined that it was more likely than not that the fair value of the reporting units were less than their carrying value. As a result, we completed the goodwill impairment test and determined that the fair value of all three reporting units was less than the carrying amount, resulting in a goodwill impairment charge of $29.5 million during the year ended December 31, 2019, which is a full impairment of all existing goodwill. Of the $29.5 million recorded for goodwill impairment during 2019, $21.9 million related to the Northeast division, $4.9 million related to the Rocky Mountain division, and $2.7 million related to the Southern division. The majority of the goodwill associated with this impairment was established based on valuation work completed at the time of the Company’s emergence

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from bankruptcy. During 2019, enterprise valuations in the energy sector materially decreased resulting in a lower estimated valuation of the Company and the impairment charge. See Note 8 in the Notes to the Consolidated Financial Statements herein for further details on the goodwill impairment during 2019.

Other, net

On March 1, 2018, the Board of Directors (the “Board”) determined it was in the best interest of the Company to cease our operations in the Eagle Ford shale area. In making this determination, the Board considered a number of factors, including among other things, the historical and projected financial performance of our operations in the Eagle Ford shale area, pricing for our services, capital requirements and projected returns on additional capital investment, competition, scope and scale of our business operations, and recommendations from management. We substantially exited the Eagle Ford shale area as of June 30, 2018. The total costs related to the exit recorded during the year ended December 31, 2018 were $1.1 million.

During the year ended December 31, 2019, we recorded final adjustments to the accrued lease liabilities for the both the Eagle Ford exit and the Mississippian exit in 2015 as further payments were not required.

Interest Expense, net

Interest expense, net during the year ended December 31, 2019 was $5.2 million compared to $6.0 million for the year ended December 31, 2018. The lower interest expense is primarily due to repayment of the Successor Bridge Term Loan (as defined below) in January of 2019 and continued principal payments on the Successor First and Second Lien Term Loans (as defined below), offset by additional finance leases recorded upon the adoption of ASU No. 2016-02, Leases (Topic 842) (“ASC 842”) as of January 1, 2019 and as a result of our heavy duty truck replacement project.

Other Income, net

Other income, net was $0.5 million for the year ended December 31, 2019 compared to $0.9 million for the year ended December 31, 2018. The decrease is primarily attributable to a $34.0 thousand gain associated with the change in the fair value of the derivative warrant liability during the year ended December 31, 2019, compared to a $0.4 million gain during the year ended December 31, 2018. We issued warrants with derivative features upon our emergence from chapter 11 during 2017. These instruments are accounted for as derivative liabilities with any decrease or increase in the estimated fair value recorded in “Other income, net.” See Note 13 and Note 14 in the Notes to the Consolidated Financial Statements for further details on the warrants.

Reorganization Items, net

Expenses, gains and losses directly associated with the chapter 11 proceedings are reported as “Reorganization items, net” in the consolidated statements of operations for the years ended December 31, 2019 and 2018. These fees are primarily comprised of professional, legal and insurance fees, and other continuing fees related to our 2017 chapter 11 filing. Included in Reorganization items, net for the year ended December 31, 2018 was $1.3 million in chapter 11 fees paid to the United States Trustee for the District of Delaware. See Note 26 in the Notes to the Consolidated Financial Statements herein for further details.

Income Taxes

The income tax benefit for the year ended December 31, 2019 was $0.1 million (a 0.2% effective rate) compared to expense of $0.2 million (a (0.4%) effective rate) in the prior year. The effective tax rate in 2019 is primarily the result of the change in the deferred tax liability attributable to long-lived assets. See Note 18 in the Notes to the Consolidated Financial Statements herein for additional information on income taxes.

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Segment Operating Results: Years Ended December 31, 2019 and 2018

The following table shows operating results for each of our segments for the years ended December 31, 2019 and 2018 (in thousands):

	Rocky Mountain			Northeast			Southern			Corp/Other			Total
Year ended December 31, 2019
Revenue	$	103,552		$	44,001		$	20,685		$	—		$	168,238
Direct operating expenses	81,529			35,836			13,654			—			131,019
Operating loss	(5,022		)	(27,977		)	(5,208		)	(11,895		)	(50,102		)
Year ended December 31, 2018
Revenue	$	127,758		$	43,564		$	26,152		$	—		$	197,474
Direct operating expenses	101,855			37,660			19,381			—			158,896
Operating loss	(2,782		)	(9,059		)	(11,396		)	(29,063		)	(52,300		)

Rocky Mountain

Revenues for the Rocky Mountain division decreased during the year ended December 31, 2019 as compared to the year ended December 31, 2018 due primarily to a $14.3 million decrease in overall water transfer revenues largely stemming from lower trucking volumes outsourced to third parties and an $8.0 million reduction in water transfer revenues from lay flat temporary hose projects. The decrease in trucking volumes outsourced to third parties was due to less fresh water and flowback hauling from well completion projects in the geographical areas that we serve. In addition, some of this third party work was replaced by operators using lay flat hose. The decrease in water transfer service revenues from lay flat temporary hose during 2019 was due to increased overall competition for this service and more specifically from competitors that had better access to water sources. Disposal volumes in our salt water disposal wells increased by an average of 8,379 barrels per day (or 21.7%) and revenue increased proportionally. Disposal volumes at our landfill decreased by 12,260 tons (or 6.1%) due to fewer rigs operating near our landfill, coupled with pricing pressures from competing landfills rendering our facility less attractive to customers relative to the competition. Rental revenues increased by 2.1% in the current year period due to pricing increases implemented during the current year.

For the Rocky Mountain division, direct operating costs decreased during the year ended December 31, 2019 as compared to the year ended December 31, 2018 due primarily to decreased water transfer activity. Direct operating costs improved as a percentage of revenue to 78.7% in the current year as compared to 79.7% in the prior year period. The Rocky Mountain division had a $5.0 million operating loss during the current year period, as opposed to a $2.8 million loss in the prior year period, due primarily to the aforementioned factors as well as a $4.9 million goodwill impairment charge.

Northeast

Revenues for the Northeast division increased slightly during the year ended December 31, 2019 as compared to the year ended December 31, 2018. During 2019, natural gas prices, as measured by the Henry Hub Natural Gas index decreased 36% from $3.25 in 2018 to $2.09 in 2019, contributing to a 30% rig count reduction as of December 2019 in the Northeast operating area from 74 in 2018 to 52 in 2019. Also, as a result of pricing declines, customers sought to reduce costs and turned to the reuse of production water in completion activities leading to a reduction in both price and activity for our water transfer services. During 2019, we experienced a shift of approximately 50% of our transportation revenue from disposal wells to reuse. Water reuse inherently reduces trucking activity due to shorter hauling distances as water is being transported between well sites rather than to disposal wells and partially negates our considerable competitive advantage of having higher barrel capacity trailers hauling to better positioned disposal wells. As a result, overall billable trucking hours declined 9% and revenue decreased from $33.9 million to $29.6 million on a year-over-year basis. However, the Clearwater Acquisition presented a transportation cost savings due to its proximity to customers and generated saltwater disposal revenues sufficient to offset the declines in trucking.

For the Northeast division, direct operating costs decreased during the year ended December 31, 2019 as compared to the year ended December 31, 2018 primarily due to proportionally higher disposal volumes which generate lower costs on a dollar of revenue as compared to our trucking operations. Direct operating costs improved as a percentage of revenue to 81.4% in the

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current year as compared to 86.4% in the prior year period due to the increase in higher margin disposal services. Operating loss was $18.9 million higher in the current year due mainly to total impairment charges of $22.5 million for goodwill and long-lived assets held for sale, partially offset by $1.4 million in lower depreciation and amortization expense.

Southern

Revenues for the Southern division decreased during the year ended December 31, 2019 as compared to the year ended December 31, 2018 due to three primary factors: a $2.1 million decrease in revenue due to management’s decision to exit the Eagle Ford shale area in 2018, a $1.9 million decrease in pipeline revenue and a $1.1 million decline in trucking revenue. In the Southern division, despite the overall decline in revenue due to pricing pressures, the volume of water transported by our pipeline increased in 2019 driven by a number of new customers acquired to replace the loss of a sizable customer’s pipeline volumes. The volumes from this particular customer largely ceased in May 2019. Disposal revenue was effectively flat with pricing decreases negating the slight increase in volumes. Trucking total billed hours were down approximately 24% in 2019 and revenue decreased $1.1 million due to overall lower customer activity in the region. During 2019, natural gas prices, as measured by the Henry Hub Natural Gas index, decreased 36% from $3.25 in 2018 to $2.09 in 2019, leading to a rig count reduction of 15% in the Southern operating area from 62 in 2018 to 53 in 2019.

In the Southern division, direct operating costs decreased during the year ended December 31, 2019 as compared to the year ended December 31, 2018 with direct operating costs as a percentage of revenue improving to 66.0% in the current year as compared to 74.1% in the prior year period due to an increase in higher margin disposal services relative to trucking services. Operating loss improved by $6.2 million over the prior year period due to $5.5 million in restructuring and impairment charges during the year ended December 31, 2018 in connection with the Eagle Ford exit, while goodwill impairment charges were $2.7 million during the current year. Additionally, there was $3.0 million in lower depreciation and amortization expense in the current year period.

Corporate/Other

The costs associated with the Corporate/Other division are primarily general and administrative costs. The Corporate general and administrative costs for the year ended December 31, 2019 were $16.8 million lower than those reported for the year ended December 31, 2018 due primarily to $15.3 million in compensation costs related to the departure of our former Chief Executive Officer and Chief Financial Officer during 2018. Operating loss for the Corporate division improved by $17.2 million due to the aforementioned compensation cost reduction and $0.3 million in non-recurring impairment charges in the prior year period.

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Results of Operations: Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017

The following table sets forth for each of the periods indicated our statements of operations data (dollars in thousands):

	Successor						Predecessor
	Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,			Increase (Decrease)
	2018			2017			2017			2018 vs 2017 (Combined)
Revenue:
Service revenue	$	181,793		$	72,395		$	86,564		$	22,834		14.4	%
Rental revenue	15,681			7,793			9,319			(1,431		)	(8.4	)%
Total revenue	197,474			80,188			95,883			21,403			12.2	%
Costs and expenses:
Direct operating expenses	158,896			67,077			81,010			10,809			7.3	%
General and administrative expenses	38,510			10,615			22,552			5,343			16.1	%
Depreciation and amortization	46,434			38,551			28,981			(21,098		)	(31.2	)%
Impairment of long-lived assets	4,815			4,904			—			(89		)	(1.8	)%
Other, net	1,119			—			—			1,119			—
Total costs and expenses	249,774			121,147			132,543			(3,916		)	(1.5	)%
Operating loss	(52,300		)	(40,959		)	(36,660		)	25,319			32.6	%
Interest expense, net	(5,973		)	(2,187		)	(22,792		)	19,006			76.1	%
Other income, net	896			411			4,247			(3,762		)	(80.8	)%
Reorganization items, net	(1,679		)	(5,507		)	223,494			(219,666		)	(100.8	)%
(Loss) income from before income taxes	(59,056		)	(48,242		)	168,289			(179,103		)	(149.2	)%
Income tax (expense) benefit	(207		)	347			322			(876		)	(130.9	)%
Net (loss) income	$	(59,263	)	$	(47,895	)	$	168,611		$	(179,979	)	(149.1	)%

Service Revenue

Service revenue for the year ended December 31, 2018 was $181.8 million, up $22.8 million, or 14.4%, from $159.0 million for the year ended December 31, 2017. Service revenue growth was driven primarily by increased customer demand for our disposal services in all divisions as average operating drilling rigs increased 16% over the prior year in the basins we serve. Additionally, we saw improvements in activity levels for water transfer services in the Rocky Mountain and Northeast divisions, offset by a decrease in activity levels for water transfer services, including our permanent disposal water pipeline, in the Southern division. Pricing increases in all divisions also contributed to the increase in service revenue during 2018. Due to management’s decision to exit the Eagle Ford shale area as of March 1, 2018, only $1.8 million in revenues associated with the Eagle Ford shale area were included in service revenues for the year ended December 31, 2018, while $8.8 million was included in service revenue during the prior year.

Rental Revenue

Rental revenue for the year ended December 31, 2018 was $15.7 million, down $1.4 million, or 8.4%, from $17.1 million for the year ended December 31, 2017. However, the prior year included $1.7 million of rental revenues from the Eagle Ford shale area, while the year ended December 31, 2018 only included $0.3 million of rental revenues due to management’s decision to exit the Eagle Ford shale area as of March 1, 2018.

Direct Operating Expenses

Direct operating expenses for the year ended December 31, 2018 were $158.9 million, compared to $148.1 million for the year ended December 31, 2017, an increase of 7.3%. The increase in direct operating expenses was primarily a result of higher revenues resulting from increased demand for our services. Direct operating expenses improved to 80.5% of revenues from 84.1% in 2017 as a result of fixed cost leverage and pricing increases, which was partially offset by the increased usage of higher cost third party drivers to satisfy increased customer demand, particularly in the Rocky Mountain division.

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General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2018 were $38.5 million, up $5.3 million from $33.2 million for the year ended December 31, 2017. The increase in general and administrative expenses was primarily attributable to higher compensation costs, including $15.3 million related to the 2018 departure of our former Chief Executive Officer and Chief Financial Officer, offset by decreases in legal and professional fees. Additionally, general and administrative expenses in 2018 included $1.3 million in transaction fees for the acquisition of Clearwater. General and administrative expense for the year ended December 31, 2017 included $8.8 million in legal and professional fees for our chapter 11 filing that were incurred prior to the May 1, 2017 filing date. The legal and professional fees for our chapter 11 filing incurred after the May 1, 2017 filing date have been included in “Reorganization items, net” for the year ended December 31, 2017.

Depreciation and Amortization

Depreciation and amortization for the year ended December 31, 2018 was $46.4 million, down $21.1 million from $67.5 million for the year ended December 31, 2017. The decrease was primarily the result of higher depreciation recorded during the year ended December 31, 2017 as a result of a higher depreciable asset base with shorter useful lives due to the new fair values applied by fresh start accounting upon emergence from chapter 11. This primarily impacted depreciation expense for the first six months after the application of fresh start accounting as of July 31, 2017.

Impairment of Long-Lived Assets

During the year ended December 31, 2018, management approved plans to sell certain assets located in the Southern division as a result of exiting the Eagle Ford shale area. In addition, management approved the sale of certain assets, primarily frac tanks, located in the Northeast division, that were also expected to sell within one year. These assets qualified to be classified as assets held for sale and as the fair value of the assets was lower than the net book value, we recorded an impairment charge of $4.8 million, of which $4.4 million related to the Southern division for the Eagle Ford exit, $0.3 million related to the Corporate division for the sale of certain real property in Texas approved to be sold as part of the Eagle Ford exit, and $0.1 million related to the Northeast division.

During the year ended December 31, 2017, management approved plans to sell certain assets located in both the Rocky Mountain and Southern divisions, including trucks and tanks. These assets qualified to be classified as assets held for sale and as a result the assets were recorded at the lower of net book value or fair value less costs to sell. This resulted in a long-lived asset impairment charge of $4.9 million for the year ended December 31, 2017.

See also Note 8 in the Notes to the Consolidated Financial Statements herein for further discussion.

Other, net

On March 1, 2018, the Board determined it was in the best interest of the Company to cease our operations in the Eagle Ford shale area. In making this determination, the Board considered a number of factors, including among other things, the historical and projected financial performance of our operations in the Eagle Ford shale area, pricing for our services, capital requirements and projected returns on additional capital investment, competition, scope and scale of our business operations, and recommendations from management. We substantially exited the Eagle Ford shale area as of June 30, 2018. The total costs related to the exit recorded during the year ended December 31, 2018 were $1.1 million.

Interest Expense, net

Interest expense, net during the year ended December 31, 2018 was $6.0 million compared to $25.0 million for the year ended December 31, 2017. The decrease was primarily due to the reduction in our outstanding debt balance during 2017 as a result of the consummation of the Plan. Our average debt balance during the year ended December 31, 2018 was $52.5 million, compared to an average debt balance of $255.4 million during the year ended December 31, 2017.

Other Income, net

Other income, net was $0.9 million for the year ended December 31, 2018 compared to $4.7 million for the year ended December 31, 2017. The decrease is primarily attributable to a $0.4 million gain associated with the change in the fair value of the derivative warrant liability during the year ended December 31, 2018, compared to a $4.3 million gain during the year ended December 31, 2017. We issued warrants with derivative features upon our emergence from chapter 11 during 2017, and in connection with our debt restructuring during 2016. These instruments were accounted for as derivative liabilities with any decrease or increase in the estimated fair value recorded in “Other income, net.” See Note 13 and Note 14 in the Notes to the Consolidated Financial Statements for further details on the warrants.

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Reorganization Items, net

Expenses, gains and losses directly associated with the chapter 11 proceedings were reported as “Reorganization items, net” in the consolidated statements of operations for the years ended December 31, 2018 and 2017, which includes the net gain on debt discharge, professional and insurance fees, debtor in possession credit agreement financing costs, retention payments, and other chapter 11 related items. Included in Reorganization items, net for the year ended December 31, 2018 was $1.3 million in chapter 11 fees paid to the US Trustee. See Note 26 in the Notes to the Consolidated Financial Statements herein for further details.

Income Taxes

The income tax expense for the year ended December 31, 2018 was $0.2 million (a (0.4%) effective rate) compared to a benefit of $0.7 million (a (0.6%) effective rate) in the prior year. The effective tax rate in 2018 was primarily the result of the change in the deferred tax liability attributable to long-lived assets. See Note 18 in the Notes to the Consolidated Financial Statements herein for additional information on income taxes.

Segment Operating Results: Years Ended December 31, 2018 and 2017

The following table shows operating results for each of our segments for the years ended December 31, 2018 and 2017 (in thousands):

	Rocky Mountain			Northeast			Southern			Corp/Other			Total
Year ended December 31, 2018 (1)
Revenue	$	127,758		$	43,564		$	26,152		$	—		$	197,474
Direct operating expenses	101,855			37,660			19,381			—			158,896
Operating loss	(2,782		)	(9,059		)	(11,396		)	(29,063		)	(52,300		)
Year ended December 31, 2017 (2)
Revenue	$	103,033		$	37,985		$	35,053		$	—		$	176,071
Direct operating expenses	87,073			35,953			25,061			—			148,087
Operating loss	(29,295		)	(17,209		)	(10,579		)	(20,536		)	(77,619		)

(1) Successor period.

(2) Represents the combined results from the five months ended December 31, 2017 (Successor) and the seven months ended July 31, 2017 (Predecessor).

Rocky Mountain

Revenues for the Rocky Mountain division increased during the year ended December 31, 2018 as compared to the year ended December 31, 2017 due primarily to increased activity for water transfer and disposal services. Specifically, water transfer service volumes increased due to increasing the driver force by 7% to service more active operating rigs in the Rocky Mountain division during the year ended December 31, 2018 as compared to the prior year. Revenue improvement also came from the purchase and deployment of additional temporary water transport pipelines in early 2018. Further, volumes at the landfill and the disposal wells also increased over the prior year. For the Rocky Mountain division, direct operating costs improved as a percentage of revenue from 84.5% in 2017 to 79.7% in 2018 as a result of fixed cost leverage and pricing increases.

Northeast

Revenues for the Northeast division increased during the year ended December 31, 2018 as compared to the year ended December 31, 2017 due to a 19% increase in truck drivers to service higher activity levels for water transfer and disposal services. Additionally, the acquisition of Clearwater in the fourth quarter of 2018 and pricing increases for disposal services also contributed to the increase in revenues. For the Northeast division, direct operating costs improved to 86.4% as a percentage of revenues in 2018 as compared to 94.7% in 2017 due to fixed cost leverage and pricing increases.

Southern

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Revenues for the Southern division decreased during the year ended December 31, 2018 as compared to the year ended December 31, 2017 due primarily to management’s decision to exit the Eagle Ford shale area as of March 1, 2018. As a result, only $2.1 million in revenues associated with the Eagle Ford shale area were included for the year ended December 31, 2018, while $10.5 million was included during the prior year. Additionally, activity levels for water transfer services, including our permanent disposal water pipeline, were down in the Southern division during the year ended December 31, 2018. In the Southern division, direct operating costs decreased during the year ended December 31, 2018 as compared to the year ended December 31, 2017 primarily due to the exit of the Eagle Ford shale area and lower activity levels on our permanent disposal water pipeline.

Corporate/Other

The Corporate general and administrative costs for the year ended December 31, 2018 were higher than those reported for the year ended December 31, 2017 due primarily to higher compensation costs related to the departure of our former Chief Executive Officer in the first quarter of 2018 and our former Chief Financial Officer in the fourth quarter of 2018.

Liquidity and Capital Resources

Cash Flows and Liquidity

Our consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. Our primary sources of capital for 2019 included cash generated by our operations and asset sales, the Successor First Lien Term Loan, the Successor Second Lien Term Loan, the Successor Revolving Facility (as defined below), and the proceeds received on January 2, 2019 from our 2018 Rights Offering (as defined below). During the years ended December 31, 2019 and December 31, 2018, cash provided by operating activities was $6.5 million and $9.4 million, respectively, and losses from continuing operations were $54.9 million and $59.3 million, respectively. As of December 31, 2019, our total indebtedness was $36.5 million and total liquidity was $17.5 million, consisting of $11.7 million of cash and available borrowings under the Successor Revolving Facility and $5.7 million available as a delayed draw under the Successor Second Lien Term Loan.

The maturity date of our Successor Revolving Facility and Successor First Lien Term Loan is February 7, 2021, at which time outstanding borrowings under the Successor Revolving Facility and approximately $15.0 million of the Successor First Lien Term Loan will be due and payable. As of December 31, 2019, no borrowings were outstanding under the Successor Revolving Facility. The lenders have no obligation to provide additional loans or extend credit, and we anticipate that cash flows from operations will not be sufficient to repay these obligations at maturity.

In order to address our liquidity requirements, we initiated discussions to extend the scheduled maturity dates for both the Successor Revolving Facility and Successor First Lien Term Loan, and we executed a commitment letter with the lenders to extend the scheduled maturity dates to March 2022. We expect to finalize the extension during the first half of 2020 for both the Successor Revolving Facility and Successor First Lien Term Loan. However, absent the extension, we believe we will have sufficient liquidity to pay obligations as they come due for a period of time twelve months from the date these financial statements were issued.

The following table summarizes our sources and uses of cash, cash equivalents and restricted cash for the years ended December 31, 2019 and 2018, five months ended December 31, 2017, and seven months ended July 31, 2017 (in thousands):

	Successor									Predecessor
	Year Ended December 31,			Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,
Net cash provided by (used in):	2019			2018			2017			2017
Operating activities	$	6,519		$	9,449		$	(6,461	)	$	(18,949	)
Investing activities	(1,264		)	(35,318		)	1,879			(66		)
Financing activities	(7,503		)	27,043			(3,632		)	31,599
Change in cash, cash equivalents and restricted cash	$	(2,248	)	$	1,174		$	(8,214	)	$	12,584

Operating Activities

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Net cash provided by operating activities was $6.5 million for the year ended December 31, 2019. The net loss, after adjustments for non-cash items, provided cash and restricted cash of $12.1 million in 2019 as compared to $3.9 million in 2018, as described below. Changes in operating assets and liabilities used $5.6 million primarily due to a decrease in accounts payable and accrued and other current liabilities. The non-cash items and other adjustments included $36.2 million of depreciation and amortization expense, goodwill impairment charges of $29.5 million, stock-based compensation expense of $2.0 million, and long-lived asset impairment charges of $0.8 million, partially offset by a $2.0 million accounting gain on the sale of assets.

Net cash provided by operating activities was $9.4 million for the year ended December 31, 2018. The net loss, after adjustments for non-cash items, provided cash and restricted cash of $3.9 million. Changes in operating assets and liabilities provided $5.6 million primarily due to an increase in accounts payable and accrued liabilities, as well as a decrease in prepaid expenses and other receivables. The non-cash items and other adjustments included $46.4 million of depreciation and amortization expense, stock-based compensation expense of $12.7 million, $4.8 million for impairment of long-lived assets, and a $0.3 million change in deferred income taxes, offset by a $0.9 million gain on the disposal of property, plant and equipment, a $0.4 million gain resulting from the change in the fair value of the derivative warrant liability, and bad debt recoveries of $0.3 million.

Net cash used in operating activities was $25.4 million for the year ended December 31, 2017. The net income, after adjustments for non-cash items, used cash and restricted cash of $15.6 million. Changes in operating assets and liabilities used $9.8 million primarily due to an increase in accounts receivable as a result of higher activity levels and billings in the current year, offset by lower accrued liabilities. The non-cash items and other adjustments included the non-cash reorganization items of $218.6 million arising primarily from the gain on debt discharge due to the consummation of the Plan, a $4.3 million gain resulting from the change in the fair value of the derivative warrant liability, and a $0.6 million change in deferred income taxes, all offset by $67.5 million of depreciation and amortization expense, $11.9 million in accrued interest added to debt principal, a $5.4 million loss on the disposal of property, plant and equipment, $4.9 million in impairment of long-lived assets, amortization of debt issuance costs of $2.1 million, stock-based compensation of $1.1 million, and bad debt expense of $0.9 million.

Investing Activities

Net cash used in investing activities was $1.3 million for the year ended December 31, 2019, and primarily consisted of $8.2 million for purchases of property, plant and equipment, offset by $7.0 million of proceeds from the sale of property, plant and equipment. Asset sales were primarily comprised of under-utilized or non-core assets, while asset purchases included investments in our disposal capacity and our trucks for water transfer and disposal services.

Net cash used in investing activities was $35.3 million for the year ended December 31, 2018, and consisted primarily of $42.3 million in cash paid for the acquisition of Clearwater (which is discussed further in Note 6 in the Notes to the Consolidated Financial Statements herein), $12.2 million for purchases of property, plant and equipment, offset by $19.1 million of proceeds from the sale of property, plant and equipment.

Net cash provided by investing activities was $1.8 million for the year ended December 31, 2017, which primarily consisted of $7.1 million of proceeds from the sale of property, plant and equipment, offset by $5.4 million of purchases of property, plant and equipment.

Financing Activities

Net cash used in financing activities was $7.5 million for the year ended December 31, 2019 and was primarily comprised of $31.4 million in cash payments for the Successor bridge term loan, $4.9 million of payments on the Successor first and second lien term loans, $2.2 million of payments on finance leases and other financing activities, offset by $31.1 million of proceeds received from the issuance of stock for the completed Rights Offering.

Net cash provided by financing activities was $27.0 million for the year ended December 31, 2018, and consisted of $32.5 million in proceeds from the Successor bridge term loan, $10.0 million in additional proceeds under the Successor first lien term loan, offset primarily by payments of $13.4 million on the Successor first and second lien term loans and $1.9 million in payments under capital leases and other financing activities. The Successor bridge term loan proceeds were primarily related to the acquisition of Clearwater and were repaid on January 2, 2019 from the proceeds raised in the Rights Offering.

Net cash provided by financing activities was $28.0 million for the year ended December 31, 2017, and was primarily comprised of $36.1 million of proceeds from the Successor first and second lien term loans, $15.7 million in proceeds from the Predecessor term loan, $6.9 million in proceeds from the debtor in possession term loan, offset by $23.2 million in net

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repayments on our Predecessor asset-based lending facility and $5.2 million in payments under capital leases and other financing activities.

Capital Expenditures

Our capital expenditure program is subject to market conditions, including customer activity levels, commodity prices, industry capacity and specific customer needs. Within the past year, we have continued to invest in our service lines, including the purchase of new trucks as well as expenditures to extend the useful life and productivity of our existing fleet of trucks, equipment and disposal wells. Cash required for capital expenditures for the year endedDecember 31, 2019 totaled $8.2 million compared to $12.2 million for the year endedDecember 31, 2018. These capital expenditures were offset by proceeds received from the sale of under-utilized or non-core assets of $7.0 million and $19.1 million in the year endedDecember 31, 2019 and 2018, respectively.

Historically, a portion of our transportation-related capital requirements were financed through capital leases which are now called finance leases under ASC 842. (See Note 2 and Note 5 in the Notes to the Condensed Consolidated Financial Statements herein for more information on the adoption of ASC 842 as of January 1, 2019.) We had $9.5 million of equipment additions under finance leases during the year endedDecember 31, 2019. We did not enter into any new finance leases during the year endedDecember 31, 2018.

We continue to focus on improving the utilization of our existing assets and optimizing the allocation of resources in the various shale basins in which we operate. Our capital expenditures program is subject to market conditions, including customer activity levels, commodity prices, industry capacity and specific customer needs. Our planned capital expenditures for 2020 are expected to be financed through cash flow from operations, financing leases, borrowings under our Successor credit facility and term loan facilities, or a combination of the foregoing.

Indebtedness

As of December 31, 2019, we had $36.5 million of indebtedness outstanding, consisting of $18.0 million under the Successor First Lien Term Loan, $9.0 million under the Successor Second Lien Term Loan, $0.7 million under the Vehicle Term Loan (as defined below) and $8.8 million of finance leases for vehicle financings and real property leases. Our Successor Revolving Facility, Successor First Lien Term Loan and Successor Second Lien Term Loan contain certain affirmative and negative covenants, including a fixed charge coverage ratio covenant, as well as other terms and conditions that are customary for revolving credit facilities and term loans of this type. As of December 31, 2019, we were in compliance with all covenants.

Vehicle Term Loan

On December 27, 2019, we entered into a Direct Loan Security Agreement (the “Vehicle Term Loan”) with PACCAR Financial Corp as the Secured Party. The Vehicle Term Loan was to refinance 38 trucks that were previously recorded as finance leases with balloon payments that would have been due in January of 2020. The Vehicle Term Loan matures on December 27, 2021, when the entire unpaid principal balance and interest, plus any other accrued charges, shall become due and payable. The Vehicle Term Loan shall be repaid in installments of $31,879 beginning on January 27, 2020 and on the same day of each month thereafter, with interest accruing at an annual rate of 5.27%.

Bridge Term Loan Credit Agreement and Rights Offering

In connection with the Clearwater Acquisition, on October 5, 2018, we entered into a Bridge Term Loan Credit Agreement (the “Bridge Term Loan Credit Agreement”) with the lenders party thereto (the “Bridge Term Loan Lenders”) and Wilmington Savings Fund Society, FSB, as administrative agent (“Wilmington”). The Bridge Term Loan Lenders were our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. Pursuant to the Bridge Term Loan Credit Agreement, the Bridge Term Loan Lenders provided a term loan to us in the aggregate amount of $32.5 million (the “Successor Bridge Term Loan”), of which $22.5 million was used to finance the Clearwater Acquisition and the remaining $10.0 million was used to pay down certain amounts outstanding under the Second Lien Term Loan Agreement (as defined below). The Bridge Term Loan Credit Agreement matured on April 5, 2019 and had an interest rate of 11.0% per annum, payable in cash, in arrears, on the first day of each month.

The Bridge Term Loan Credit Agreement required us to use our reasonable best efforts to effectuate and close an offering to our shareholders to purchase shares of our common stock on a pro rata basis with an aggregate offering price of $32.5 million (the “Rights Offering”) as soon as reasonably practicable following October 5, 2018. Upon the completion of the rights offering, we were required to prepay all outstanding amounts under the Bridge Term Loan Credit Agreement in cash in an amount equal to

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the net cash proceeds received from the rights offering. As discussed in Note 15 in the Notes to the Consolidated Financial Statements herein, on January 2, 2019, we received the aggregate gross proceeds from the rights offering of $31.4 million. Additionally, one of the backstop parties to the Rights Offering elected to satisfy the backstop commitment by converting $1.1 million of the Successor Bridge Term Loan to common stock. The aggregate cash proceeds from the rights offering were used to repay the remaining $31.4 million balance of the Successor Bridge Term Loan, satisfying the obligations under the Bridge Term Loan Credit Agreement, and thereby terminating the Bridge Term Loan Credit Agreement.

First Lien Credit Agreements

On the Effective Date, pursuant to the Plan, the Company entered into a new $45.0 million First Lien Credit Agreement (the “Credit Agreement”) by and among the lenders party thereto (the “Credit Agreement Lenders”), ACF FinCo I, LP, as administrative agent (the “Credit Agreement Agent”), and the Company. Pursuant to the Credit Agreement, the Credit Agreement Lenders agreed to extend to the Company a $30.0 million senior secured revolving credit facility (the “Successor Revolving Facility”) and a $15.0 million senior secured term loan facility (the “Successor First Lien Term Loan”) (i) to repay obligations outstanding under the Predecessor Revolving Facility and debtor in possession asset based lending facility, (ii) to make certain payments as provided in the Plan, (iii) to pay costs and expenses incurred in connection with the Plan, and (iv) for working capital, transaction expenses, and other general corporate purposes. The Credit Agreement also contains an accordion feature that provides for an increase in availability of up to an additional $20.0 million, subject to the satisfaction of certain terms and conditions contained in the Credit Agreement.

The Successor Revolving Facility and the Successor First Lien Term Loan mature on February 7, 2021, at which time the Company must repay the outstanding principal amount of the Successor Revolving Facility and the Successor First Lien Term Loan, together with interest accrued and unpaid thereon. The Successor Revolving Facility may be repaid and, subject to the terms and conditions of the Credit Agreement, reborrowed at any time during the term of the Credit Agreement. The principal amount of the Successor First Lien Term Loan amortizes in installments of $297.6 thousand paid on the first day of each calendar month through maturity. Interest on the Successor Revolving Facility accrues at an annual rate equal to the LIBOR Rate (as defined in the Credit Agreement) plus 5.25%, and interest on the Successor First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus 7.25%; however, if there is an Event of Default (as defined in the Credit Agreement), the Credit Agreement Agent, in its sole discretion, may increase the applicable interest rate at a per annum rate equal to three percentage points above the annual rate otherwise applicable thereunder.

Second Lien Term Loan Credit Agreement

On the Effective Date, pursuant to the Plan, the Company also entered into the Second Lien Term Loan Agreement (the “Second Lien Term Loan Agreement”) by and among the lenders party thereto (the “Second Lien Term Loan Lenders”), Wilmington as administrative agent (the “Second Lien Term Loan Agent”), and the Company. Pursuant to the Second Lien Term Loan Agreement, the Second Lien Term Loan Lenders agreed to extend to the Company a $26.8 million second lien term loan facility (the “Successor Second Lien Term Loan”), of which $21.1 million was advanced on the Effective Date and up to an additional $5.7 million (“Delayed Draw Term Loan”) is available at the request of the Company after the closing date subject to the satisfaction of certain terms and conditions specified in the Second Lien Term Loan Agreement. The Second Lien Term Loan Lenders extended the Successor Second Lien Term Loan, among other things, (i) to repay obligations outstanding under the Predecessor Revolving Facility and debtor in possession asset based revolving facility, (ii) to make certain payments as provided in the Plan, (iii) to pay costs and expenses incurred in connection with the Plan, and (iv) for working capital, transaction expenses and other general corporate purposes.

The Successor Second Lien Term Loan matures on October 7, 2021, at which time the Company must repay all outstanding obligations under the Successor Second Lien Term Loan. Payments on the principal amount of the Successor Second Lien Term Loan are made quarterly on the first day of each fiscal quarter through maturity, with such amount to be proportionally increased as the result of the incurrence of a Delayed Draw Term Loan. Amortization payments for this facility amounted to $0.3 million per quarter in 2019. Interest on the Successor Second Lien Term Loan accrues at an annual rate equal to 11.0%, payable in cash, in arrears, on the first day of each month. However, upon the occurrence and during the continuation of an Event of Default (as defined in the Second Lien Term Loan Agreement) due to a voluntary or involuntary bankruptcy filing, automatically, or any other Event of Default, at the election of the Second Lien Term Loan Agent, the Successor Second Lien Term Loan and all obligations thereunder shall bear interest at an annual rate equal to three percentage points above the annual rate otherwise applicable thereunder.

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Off Balance Sheet Arrangements

As of December 31, 2019, we did not have any material off-balance-sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results, however, may materially differ from our calculated estimates.

We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements and changes in these judgments and estimates may impact future results of operations and financial condition. For additional discussion of our accounting policies see Note 3 in the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

Allowance for Doubtful Accounts

Accounts receivable are recognized and carried at the original invoice amount less an allowance for doubtful accounts. We provide an allowance for doubtful accounts to reflect the expected uncollectibility of trade receivables for both billed and unbilled receivables on our service and rental revenues. We perform ongoing credit evaluations of prospective and existing customers and adjust credit limits based upon payment history and the customer’s current credit worthiness, as determined by a review of their current credit information. In addition, we continuously monitor collections and payments from customers and maintain a provision for estimated credit losses based upon historical experience and any specific customer collection issues that have been identified. Inherent in the assessment of the allowance for doubtful accounts are certain judgments and estimates including, among others, the customer’s willingness or ability to pay, our compliance with customer invoicing requirements, the effect of general economic conditions and the ongoing relationship with the customer. Additionally, if the financial condition of a specific customer or our general customer base were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Accounts receivable are presented net of allowances for doubtful accounts of approximately $1.3 million, $1.6 million, and $1.9 million at December 31, 2019, 2018 and 2017, respectively.

Impairment of Goodwill

Our goodwill is tested for impairment annually at October 1st and more frequently if events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the impairment test is unnecessary. In the event a determination is made that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the goodwill impairment test must be performed. The first step of the test, used to identify potential impairment, compares the estimated fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, since we have adopted ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment, an impairment charge is recorded based on the excess of a reporting unit’s carrying amount over its fair value.

When we reviewed goodwill for impairment as of October 1, 2019, we determined that it was more likely than not that the fair value of the reporting units were less than their carrying value. As a result, we completed the goodwill impairment test and determined that the fair value of all three reporting units was less than the carrying amount, resulting in a goodwill impairment charge of $29.5 million during the year ended December 31, 2019. See Note 8 for further details on the goodwill impairment during 2019.

Impairment of Long-Lived Assets and Intangible Assets with Finite Useful Lives

We review long-lived assets including intangible assets with finite useful lives for impairment whenever events or changes in circumstances indicate the carrying value of a long-lived asset (or asset group) may not be recoverable. If an impairment indicator is present, we evaluate recoverability by comparing the estimated future cash flows of the asset group, on an undiscounted basis, to their carrying values. The asset group represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the undiscounted cash flows exceed the carrying value, no impairment is present. If the undiscounted cash flows are less than the carrying value, the impairment is

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measured as the difference between the carrying value and the fair value of the long-lived asset (or asset group). Our determination that an event or change in circumstance has occurred potentially indicating the carrying amount of an asset (or asset group) may not be recoverable generally includes but is not limited to one or more of the following: (1) a deterioration in an asset’s financial performance compared to historical results, (2) a shortfall in an asset’s financial performance compared to forecasted results, (3) changes affecting the utility and estimated future demands for the asset, (4) a significant decrease in the market price of an asset, (5) a current expectation that a long-lived asset will be sold or disposed of significantly before the end of its previously estimated useful life, (6) a significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition, and (7) declining operations and severe changes in projected cash flows.

We recorded total impairment charges of $0.8 million for long-lived assets classified as held for sale during the year ended December 31, 2019, which was included in “Impairment of long-lived assets” in the consolidated statement of operations. During the years ended December 31, 2018 and 2017, we recorded total impairment charges of $4.8 million and $4.9 million, respectively, for long-lived assets classified as held for sale. We could recognize future impairments to the extent adverse events or changes in circumstances result in conditions in which long-lived assets are not recoverable. See Note 8 in the Notes to the Consolidated Financial Statements for additional information on our impairment charges.

Income Taxes and Valuation of Deferred Tax Assets

We are subject to federal income taxes and state income taxes in those jurisdictions in which we operate. We exercise judgment with regard to income taxes in interpreting whether expenses are deductible in accordance with federal income tax and state income tax codes, estimating annual effective federal and state income tax rates and assessing whether deferred tax assets are, more likely than not, expected to be realized. The accuracy of these judgments impacts the amount of income tax expense we recognize each period.

With regard to the valuation of deferred tax assets, we record valuation allowances to reduce net deferred tax assets to the amount considered more likely than not to be realized. All available evidence is considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. See Note 18 to our Consolidated Financial Statements herein for further information regarding the valuation of our deferred tax assets and the impact of new legislation.

Future realization of the tax benefit of an existing deductible temporary difference or carryforward ultimately depends on the existence of sufficient taxable income of the appropriate character (for example ordinary income or capital gain) within the carryback or carryforward periods available under the tax law. We have had significant pretax losses in recent years. Accordingly, we do not have income in carryback years. These cumulative losses also present significant negative evidence about the likelihood of income in carryforward periods.    

Future reversals of existing taxable temporary differences are another source of taxable income that is used in this analysis. As a result, deferred tax liabilities in excess of deferred tax assets generally will provide support for recognition of deferred tax assets. However, most of our deferred tax assets are associated with net operating loss (“NOL”) carryforwards, many of which statutorily expire after a specified number of years; therefore, we compare the estimated timing of these taxable timing difference reversals with the scheduled expiration of our NOL carryforwards, considering any limitations on use of NOL carryforwards, and record a valuation allowance against deferred tax assets for which realization is not more likely than not. In addition, as a result of limitations on the use of our NOLs due to prior ownership changes, we have reduced our deferred tax asset and corresponding valuation allowance by the NOLs that will likely expire unused.

As a matter of law, we are subject to examination by federal and state taxing authorities. We have estimated and provided for income taxes in accordance with settlements reached with the Internal Revenue Service in prior audits. Although we believe that the amounts reflected in our tax returns substantially comply with the applicable federal and state tax regulations, both the IRS and the various state taxing authorities can take positions contrary to our position based on their interpretation of the law. A tax position that is challenged by a taxing authority could result in an adjustment to our income tax liabilities and related tax provision.

We measure and record tax contingency accruals in accordance with GAAP which prescribes a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a return. Only positions meeting the “more likely than not” recognition threshold at the effective date may be recognized or continue to be recognized. A tax position is measured at the largest amount that is greater than 50% likely of being realized upon ultimate settlement.

Revenue Recognition

On January 1, 2018, we adopted the guidance in ASC 606, including all related amendments, and applied the new revenue standard to all contracts using the modified retrospective method. The impact of the new revenue standard was not material and

46

there was no adjustment required to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under ASC 605, or the accounting guidance in effect for those periods.

Revenues are generated upon the performance of contracted services under formal and informal contracts with customers. Revenues are recognized when the contracted services for our customers are completed in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Sales and usage-based taxes are excluded from revenues. Payment is due when the contracted services are completed in accordance with the payment terms established with each customer prior to providing any services. As such, there is no significant financing component for any of our revenues.

Some of our contracts with customers involve multiple performance obligations as we are providing more than one service under the same contract, such as water transfer services and disposal services. However, our core service offerings are capable of being distinct and also are distinct within the context of contracts with our customers. As such, these services represent separate performance obligations when included in a single contract. We have standalone pricing for all of our services which is negotiated with each of our customers in advance of providing the service. The contract consideration is allocated to the individual performance obligations based upon the standalone selling price of each service, and no discount is offered for a bundled services offering.

Environmental and Legal Contingencies

We have established liabilities for environmental and legal contingencies. We record a loss contingency for these matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In determining the liability, we consider a number of factors including, but not limited to, the jurisdiction of the claim, related claims, insurance coverage when insurance covers the type of claim and our historic outcomes in similar matters, if applicable. We are primarily self-insured against physical damage to our property, equipment and vehicles due to large deductibles or self-insurance. We are also self-insured for certain potential liabilities for third-party vehicular claims. A significant amount of judgment and the use of estimates are required to quantify our ultimate exposure in these matters, and the actual outcome could differ significantly from estimated amounts. The determination of liabilities for these contingencies is reviewed periodically to ensure that we have accrued the proper level of expense. The liability balances are adjusted to account for changes in circumstances for ongoing issues, including the effect of any applicable insurance coverage for these matters. While we believe that the amount accrued is adequate, future changes in circumstances, or in our assumptions or estimates, could impact these determinations or have a negative impact on our reported financial results.

We record obligations to retire tangible, long-lived assets on our balance sheet as liabilities, which are recorded at a discount when we incur the liability. A certain amount of judgment is involved in estimating the future cash flows of such obligations, as well as the timing of these cash flows. If our assumptions and estimates on the amount or timing of the future cash flows change, it could potentially have a negative impact on our earnings.

Recently Issued Accounting Pronouncements

See the “Recently Issued Accounting Pronouncements” section of Note 3 on Significant Accounting Policies in the Notes to the Consolidated Financial Statements herein for a complete description of recent accounting standards which may be applicable to our operations. The significant accounting standards that have been adopted during the year ended December 31, 2019 are described in Note 2 on Basis of Presentation in the Notes to the Consolidated Financial Statements herein.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Inflation

Inflationary factors, such as increases in our cost structure, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of sales revenue if the selling prices of our products do not increase with these increased costs.

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Commodity Risk

We are subject to market risk exposures arising from declines in oil and natural gas drilling activity in unconventional areas, which is primarily a function of the market price for oil and natural gas. Various factors beyond our control affect the market prices for oil and natural gas, including but not limited to the level of consumer demand, governmental regulation, the price and availability of alternative fuels, political instability in foreign markets, weather-related factors and the overall economic environment. Market prices for oil and natural gas historically have been volatile and unpredictable, and we expect this volatility to continue in the future. Prolonged declines in the market price of oil and/or natural gas could contribute to declines in drilling activity and accordingly would reduce demand for our services. We attempt to manage this risk by strategically aligning our assets with those areas where we believe demand is highest and market conditions for our services are most favorable. If there is further deterioration in our business operations or prospects, our stock price, the broader economy or our industry, including further declines in oil and natural gas prices, the value of our long-lived assets, or those we may acquire in the future, could decrease significantly and result in additional impairment and financial statement write-offs which could have a material adverse effect on our financial condition, results of operations and cash flows.

Interest Rates

As of December 31, 2019, no borrowings were outstanding under the Successor Revolving Facility, while the outstanding principal balance on the Successor First Lien Term Loan was $18.0 million. Interest on the Successor Revolving Facility accrues at an annual rate equal to the LIBOR Rate (as defined in the Credit Agreement) plus 5.25%, and interest on the Successor First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus 7.25%. The weighted average interest rate for the year ended December 31, 2019 was 7.5% for the Successor Revolving Facility and 9.5% for the Successor First Lien Term Loan. We have assessed our exposure to changes in interest rates on variable rate debt by analyzing the sensitivity to our earnings assuming various changes in market interest rates. Assuming a hypothetical increase of 1% to the interest rates on the average outstanding balance of our variable rate debt portfolio during the year ended December 31, 2019, our net interest expense for year ended December 31, 2019 would have increased by an estimated $0.5 million.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary data required by Regulation S-X are included in Item 15. “Exhibits, Financial Statement Schedules” contained in Part IV, Item 15 of this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of our disclosure controls and procedures was performed under the supervision of, and with the participation of, management, including our Chief Executive Officer and Interim Chief Financial Officer, as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of

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the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019. In making its assessment of internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2019.

Due to our aggregate market value of the voting and non-voting common equity held by non-affiliates falling below $75.0 million as of June 30, 2019, and our corresponding status as a smaller reporting company, our independent registered public accounting firm, Moss Adams LLP, was not required to issue an audit report on the effectiveness of our internal control over financial reporting for the year ended December 31, 2019.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended December 31, 2019 that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item will be contained in, and is incorporated by reference to, the Definitive Proxy Statement for our 2020 Annual Meeting of Stockholders or a Form 10-K/A which, in either case, we will file with the Securities and Exchange Commission within 120 days after our fiscal year ended December 31, 2019.

Item 11. Executive Compensation

The information required by this item will be contained in, and is incorporated by reference to, the Definitive Proxy Statement for our 2020 Annual Meeting of Stockholders or a Form 10-K/A which, in either case, we will file with the Securities and Exchange Commission within 120 days after our fiscal year ended December 31, 2019.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item will be contained in, and is incorporated by reference to, the Definitive Proxy Statement for our 2020 Annual Meeting of Stockholders or a Form 10-K/A which, in either case, we will file with the Securities and Exchange Commission within 120 days after our fiscal year ended December 31, 2019.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item will be contained in, and is incorporated by reference to, the Definitive Proxy Statement for our 2020 Annual Meeting of Stockholders or a Form 10-K/A which, in either case, we will file with the Securities and Exchange Commission within 120 days after our fiscal year ended December 31, 2019.

Item 14. Principal Accounting Fees and Services

The information required by this item will be contained in, and is incorporated by reference to, the Definitive Proxy Statement for our 2020 Annual Meeting of Stockholders or a Form 10-K/A which, in either case, we will file with the Securities and Exchange Commission within 120 days after our fiscal year ended December 31, 2019.

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PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10-K:

1. Audited Consolidated Financial Statements:

	Page
Report of Independent Registered Public Accounting Firm	57
Consolidated Balance Sheets at December 31, 2019 (Successor) and 2018 (Successor)	58
Consolidated Statements of Operations for the Years Ended December 31, 2019 and 2018 (Successor), Five Months Ended December 31, 2017 (Successor), and Seven Months Ended July 31, 2017 (Predecessor)	59
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2019 and 2018 (Successor), Period Ended December 31, 2017 (Successor), and Period Ended July 31, 2017 (Predecessor)	60
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019 and 2018 (Successor), Five Months Ended December 31, 2017 (Successor), and Seven Months Ended July 31, 2017 (Predecessor)	61
Notes to Consolidated Financial Statements	63

2. Financial Statement Schedules: All financial statement schedules have been omitted since they are not required, not applicable, or the information is otherwise included in the audited consolidated financial statements.

(b) The exhibits listed on the “Exhibit Index” set forth below are filed with this Annual Report on Form 10-K or incorporated by reference as set forth therein.

Exhibit Number	Description
2.1	Debtors’ Amended Prepackaged Plans of Reorganization, dated June 23, 2017 (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 23, 2017).
2.2	Findings of Fact, Conclusions of Law, and Order Approving the Debtors’ Prepackaged Plans of Reorganization, dated July 25, 2017 (incorporated herein by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 23, 2017).
3.1	Second Amended and Restated Certificate of Incorporation of Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A filed with the SEC on August 8, 2017).
3.2	Third Amended and Restated Bylaws of Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-A filed with the SEC on August 8, 2017).
4.1	Specimen Global Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 8-A filed with the SEC on August 8, 2017).
4.2	Registration Rights Agreement, dated as of August 7, 2017, by and among Nuverra Environmental Solutions, Inc. and the holders party thereto (incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form 8-A filed with the SEC on August 8, 2017).
4.3	Specimen Warrant Certificate (incorporated herein by reference to Exhibit 4.3 to the Company’s Registration Statement on Form 8-A filed with the SEC on August 8, 2017).
4.4	Warrant Agreement, dated as of August 7, 2017, between Nuverra Environmental Solutions, Inc. and American Stock Transfer & Trust Company, LLC (incorporated herein by reference to Exhibit 4.4 to the Company’s Registration Statement on Form 8-A filed with the SEC on August 8, 2017).

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Exhibit Number		Description
4.5		Description of Registrant’s Securities (incorporated herein by reference to the Company’s Registration Statement on Form 8-A filed with the SEC on August 8, 2017).
10.1	†	Amended and Restated Employment Agreement, dated August 7, 2017, between Joseph M. Crabb and Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2017).
10.2		First Lien Credit Agreement, dated as of August 7, 2017, by and among ACF FinCo I, LP, the lenders party thereto, and Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2017).
10.2	A	First Lien Guaranty and Security Agreement, dated as of August 7, 2017, by and among Nuverra Environmental Solutions, Inc., the other grantors party thereto, and ACF FinCo I, LP (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2017).
10.2	B	First Lien Trademark Security Agreement, dated as of August 7, 2017, by and among Nuverra Environmental Solutions, Inc., the other grantors party thereto, and the Credit Agreement Agent (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2017).
10.3		Second Lien Term Loan Credit Agreement, dated as of August 7, 2017, by and among Wilmington Savings Fund Society, FSB, the lenders party thereto, and Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2017).
10.3	A	Second Lien Guaranty and Security Agreement, dated as of August 7, 2017, by and among Nuverra Environmental Solutions, Inc., the other grantors party thereto, and Wilmington Savings Fund Society, FSB (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2017).
10.3	B	Second Lien Trademark Security Agreement, dated as of August 7, 2017, by and among Nuverra Environmental Solutions, Inc., the other grantors party thereto, and Wilmington Savings Fund Society, FSB (incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2017).
10.4		Subordination and Intercreditor Agreement, dated as of August 7, 2017, by and among ACF FinCo I, LP and Wilmington Savings Fund Society, FSB (incorporated herein by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2017).
10.5		Intercompany Subordination Agreement, dated as of August 7, 2017, by and among Nuverra Environmental Solutions, Inc. and the other obligors named therein (incorporated herein by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2017).
10.6	†	Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Nuverra’s Current Report on Form 8-K filed with the SEC on February 23, 2018).
10.7	†	Form of Notice of Grant of Performance Restricted Stock Units and Award Agreement (incorporated herein by reference to Exhibit 10.2 to Nuverra’s Current Report on Form 8-K filed with the SEC on February 23, 2018).
10.8	†	Form of Notice of Grant of Time-Based Restricted Stock Units and Award Agreement (incorporated herein by reference to Exhibit 10.3 to Nuverra’s Current Report on Form 8-K filed with the SEC on February 23, 2018).
10.9	†	CEO Notice of Grant of Performance Restricted Stock Units and Award Agreement (incorporated herein by reference to Exhibit 10.4 to Nuverra’s Current Report on Form 8-K filed with the SEC on February 23, 2018).
10.10	†	CEO Notice of Grant of Time-Based Restricted Stock Units and Award Agreement (incorporated herein by reference to Exhibit 10.5 to Nuverra’s Current Report on Form 8-K filed with the SEC on February 23, 2018).
10.11	†	2018 Restricted Stock Plan for Directors (incorporated herein by reference to Exhibit 10.7 to Nuverra’s Current Report on Form 8-K filed with the SEC on February 23, 2018).

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Exhibit Number			Description
10.12	†		Form of Restricted Stock Grant Agreement (incorporated herein by reference to Exhibit 10.8 to Nuverra’s Current Report on Form 8-K filed with the SEC on February 23, 2018).
10.13	†		Employment Agreement dated June 18, 2018, between Nuverra Environmental Solutions, Inc. and Robert Fox (incorporated by reference to Exhibit 10.1 to Nuverra’s Current Report on Form 8-K filed with the SEC on June 21, 2018).
10.14			Equity Purchase Agreement, dated October 5, 2018, by and among the David Niederst Irrevocable Trust, Stillwater Seven, LLC and Nuverra Ohio Disposal LLC (incorporated by reference to Exhibit 10.1 to Nuverra’s Current Report on Form 8-K filed with the SEC on October 11, 2018).
10.15			First Amendment to Credit Agreement, dated October 5, 2018, by and among ACF FinCo I LP, the lenders thereto, the Company, and the other loan parties thereto (incorporated by reference to Exhibit 10.5 to Nuverra’s Current Report on Form 8-K filed with the SEC on October 11, 2018).
10.16			Joinder to First Lien Guaranty and Security Agreement, dated October 5, 2018, by and among the Company, the grantors party thereto, and ACF FinCo I LP (incorporated by reference to Exhibit 10.6 to Nuverra’s Current Report on Form 8-K filed with the SEC on October 11, 2018).
10.17			First Amendment to Credit Agreement, dated October 5, 2018, by and among Wilmington Savings Fund Society, FSB, the lenders party thereto, and the Company (incorporated by reference to Exhibit 10.7 to Nuverra’s Current Report on Form 8-K filed with the SEC on October 11, 2018).
10.18			Second Lien Guaranty and Security Agreement Joinder, dated October 5, 2018, by and among the Company, the other grantors party thereto, and Wilmington Savings Fund Society, FSB (incorporated by reference to Exhibit 10.8 to Nuverra’s Current Report on Form 8-K filed with the SEC on October 11, 2018).
10.19			First Amendment to Intercreditor Agreement, dated October 5, 2018, by and among ACF FinCo I LP, Wilmington Savings Fund Society, FSB, and the Company (incorporated by reference to Exhibit 10.9 to Nuverra’s Current Report on Form 8-K filed with the SEC on October 11, 2018).
10.20			Joinder to Intercompany Subordination Agreement, dated October 5, 2018, by and among the obligors party thereto, ACF FinCo I LP, and Wilmington Savings Fund Society, FSB (incorporated by reference to Exhibit 10.10 to Nuverra’s Current Report on Form 8-K filed with the SEC on October 11, 2018).
10.21	†		Employment Agreement, dated November 19, 2018, between the Company and Charles K. Thompson (incorporated by reference to Exhibit 10.1 to Nuverra’s Current Report on Form 8-K filed with the SEC on November 21, 2018).
21.1	*		Subsidiaries of Nuverra Environmental Solutions, Inc.
23.1	*		Consent of Moss Adams LLP
24.1	*		Power of Attorney of Officers and Directors of the Company (set forth on the signature pages of this Form 10-K).
31.1	*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	*		Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1			Separation Agreement and Mutual Release, dated as of March 2, 2018, between Mark D. Johnsrud and Nuverra Environmental Solutions, Inc. (incorporated herein by reference to Exhibit 99.1 to Nuverra’s Current Report on Form 8-K filed with the SEC on March 5, 2018).
101.INS		*	XBRL Instance Document
101.SCH		*	XBRL Taxonomy Extension Schema Document

53

Exhibit Number		Description
101.CAL	*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*	XBRL Taxonomy Extension Definition Linkbase Document
101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase Document
*		Filed herewith
†		Compensatory plan, contract or arrangement in which directors or executive officers may participate

Item 16. Form 10-K Summary

None.

54

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Scottsdale, State of Arizona, on March 10, 2020.

Nuverra Environmental Solutions, Inc.
By:	/s/    CHARLES K. THOMPSON
Name:	Charles K. Thompson
Title:	Chairman of the Board, Chief Executive Officer and Interim Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Charles K. Thompson as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/    CHARLES K. THOMPSON	Chairman of the Board, Chief Executive Officer, Interim Chief Financial Officer and Director (Principal Executive Officer and Principal Financial Officer)	March 10, 2020
Charles K. Thompson
/s/  KIM PROCTOR	Corporate Controller (Principal Accounting Officer)	March 10, 2020
Kim Proctor
/s/    JOHN B. GRIGGS	Director	March 10, 2020
John B. Griggs
/s/    MICHAEL Y. MCGOVERN	Director	March 10, 2020
Michael Y. McGovern
/s/    LAWRENCE A. FIRST	Director	March 10, 2020
Lawrence A. First

55

INDEX TO FINANCIAL STATEMENTS

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

The following financial statements of the Company and its subsidiaries required to be included in Item 15(a)(1) of Form 10-K are listed below:

	Page
Audited Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm	57
Consolidated Balance Sheets at December 31, 2019 (Successor) and 2018 (Successor)	58
Consolidated Statements of Operations for the Years Ended December 31, 2019 and 2018 (Successor), Five Months Ended December 31, 2017 (Successor), and Seven Months Ended July 31, 2017 (Predecessor)	59
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2019 and 2018 (Successor), Period Ended December 31, 2017 (Successor), and Period Ended July 31, 2017 (Predecessor)	60
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019 and 2018 (Successor), Five Months Ended December 31, 2017 (Successor), and Seven Months Ended July 31, 2017 (Predecessor)	61
Notes to Consolidated Financial Statements	63

Supplementary Financial Data:

The supplementary financial data of the Registrant and its subsidiaries required to be included in Item 15(a)(2) of Form 10-K have been omitted as not applicable or because the required information is included in the Consolidated Financial Statements or in the notes thereto.

56

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors

Nuverra Environmental Solutions, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Nuverra Environmental Solutions, Inc. and subsidiaries (the “Company”) as of December 31, 2019 and 2018 (Successor), the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for the years ended December 31, 2019 and 2018 (Successor), the period from August 1, 2017 through December 31, 2017 (Successor), and the period from January 1, 2017 through July 31, 2017 (Predecessor), and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2019 and 2018 (Successor) and the consolidated results of its operations, and its cash flows for the years ended December 31, 2019 and 2018 (Successor), the period from August 1, 2017 through December 31, 2017 (Successor), and the period from January 1, 2017 through July 31, 2017 (Predecessor), in conformity with accounting principles generally accepted in the United States of America.

Basis of Presentation

As discussed in Note 2 to the consolidated financial statements, on July 25, 2017, the United States Bankruptcy Court for the District of Delaware entered an order confirming the plan for reorganization, which became effective on August 7, 2017. Accordingly, the accompanying consolidated financial statements have been prepared in conformity with Accounting Standards Codification Topic 852, Reorganizations, for the Successor as a new entity with assets, liabilities, and a capital structure having carrying amounts not comparable with prior periods (Predecessor) as described in Note 2.

Change in Accounting Principle

As disclosed in Note 2 to the consolidated financial statements, in 2019 the Company changed its method of accounting for leases due to the adoption of Accounting Standards Codification (“ASC”) Topic No. 842, and as disclosed in Note 3, in 2018 the Company changed its method of accounting for revenue recognition due to the adoption of ASC Topic No. 606.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws, and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Moss Adams LLP

Scottsdale, Arizona

March 10, 2020

We have served as the Company’s auditor since 2017.

57

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

	Successor
	December 31,			December 31,
	2019			2018
Assets
Cash and cash equivalents	$	4,788		$	7,302
Restricted cash	922			656
Accounts receivable, net	26,493			31,392
Inventories	3,177			3,358
Prepaid expenses and other receivables	3,264			2,435
Other current assets	231			1,582
Assets held for sale	2,664			2,782
Total current assets	41,539			49,507
Property, plant and equipment, net	190,817			215,640
Operating lease assets	2,886			—
Equity investments	39			41
Intangibles, net	640			1,112
Goodwill	—			29,518
Other assets	178			118
Total assets	$	236,099		$	295,936
Liabilities and Shareholders’ Equity
Accounts payable	$	5,633		$	9,061
Accrued and other current liabilities	10,064			16,704
Current portion of long-term debt	6,430			38,305
Current contingent consideration	—			500
Total current liabilities	22,127			64,570
Long-term debt	30,005			27,628
Noncurrent operating lease liabilities	1,457			—
Deferred income taxes	91			181
Long-term contingent consideration	500			—
Other long-term liabilities	7,487			7,130
Total liabilities	61,667			99,509
Commitments and contingencies
Preferred stock $0.01 par value (1,000 shares authorized, no shares issued and outstanding at December 31, 2019 and 2018)	—			—
Common stock, $0.01 par value (75,000 shares authorized, 15,781 shares issued and 15,735 outstanding at December 31, 2019, and 12,233 issued and outstanding at December 31, 2018)	158			122
Additional paid-in capital	337,628			303,463
Treasury stock, at cost (46 shares at December 31, 2019)	(436		)	—
Accumulated deficit	(162,918		)	(107,158		)
Total shareholders’ equity	174,432			196,427
Total liabilities and shareholders’ equity	$	236,099		$	295,936

The accompanying notes are an integral part of these statements.

58

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	Successor									Predecessor
	Year Ended December 31,			Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Revenue:
Service revenue	$	152,541		$	181,793		$	72,395		$	86,564
Rental revenue	15,697			15,681			7,793			9,319
Total revenue	168,238			197,474			80,188			95,883
Costs and expenses:
Direct operating expenses	131,019			158,896			67,077			81,010
General and administrative expenses	20,864			38,510			10,615			22,552
Depreciation and amortization	36,183			46,434			38,551			28,981
Impairment of long-lived assets	766			4,815			4,904			—
Impairment of goodwill	29,518			—			—			—
Other, net	(10		)	1,119			—			—
Total costs and expenses	218,340			249,774			121,147			132,543
Operating loss	(50,102		)	(52,300		)	(40,959		)	(36,660		)
Interest expense, net	(5,227		)	(5,973		)	(2,187		)	(22,792		)
Other income, net	502			896			411			4,247
Reorganization items, net	(200		)	(1,679		)	(5,507		)	223,494
(Loss) income before income taxes	(55,027		)	(59,056		)	(48,242		)	168,289
Income tax benefit (expense)	90			(207		)	347			322
Net (loss) income	$	(54,937	)	$	(59,263	)	$	(47,895	)	$	168,611
Earnings per common share:
Net (loss) income per basic common share	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	1.12
Net (loss) income per diluted common share	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	0.97
Weighted average shares outstanding:
Basic	15,676			11,829			11,696			150,940
Diluted	15,676			11,829			11,696			174,304

The accompanying notes are an integral part of these statements.

59

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

	Total			Common Stock					Additional Paid-In Capital			Treasury Stock					Accumulated Deficit
				Shares		Amount						Shares		Amount
Balance at December 31, 2016 (Predecessor)	$	(169,066	)	152,433		$	152		$	1,407,867		(1,514	)	$	(19,807	)	$	(1,557,278	)
Stock-based compensation	457			—		—			457			—		—			—
Issuance of common stock to employees (par value $0.001)	—			32		—			—			—		—			—
Issuance of common stock for warrants exercised (par value $0.001)	—			15		—			—			—		—			—
Treasury stock acquired through surrender of shares for tax withholding	(2		)	—		—			—			(12	)	(2		)	—
Net income	168,611			—		—			—			—		—			168,611
Balance at July 31, 2017 (Predecessor)	—			152,480		152			1,408,324			(1,526	)	(19,809		)	(1,388,667		)
Implementation of Plan and Application of Fresh Start Accounting:
Cancellation of Predecessor Equity	—			(152,480	)	(152		)	(1,408,324		)	1,526		19,809			1,388,667
Issuance of Successor common stock and warrants (par value $0.01)	290,191			11,696		117			290,074			—		—			—
Balance at August 1, 2017 (Successor)	290,191			11,696		117			290,074			—		—			—
Stock-based compensation	677			—		—			677			—		—			—
Net loss	(47,895		)	—		—			—			—		—			(47,895		)
Balance at December 31, 2017 (Successor)	242,973			11,696		117			290,751			—		—			(47,895		)
Stock-based compensation	12,717			—		—			12,717			—		—			—
Issuance of common stock to employees (par value $0.01)	—			537		5			(5		)	—		—			—
Net loss	(59,263		)	—		—			—			—		—			(59,263		)
Balance at December 31, 2018 (Successor)	196,427			12,233		122			303,463			—		—			(107,158		)
Adjustment due to adoption of ASC 842, Leases	(823		)	—		—			—			—		—			(823		)
Stock-based compensation	2,026			—		—			2,026			—		—			—
Issuance of common stock for Rights Offering (par value $0.01)	32,175			3,382		34			32,141			—		—			—
Issuance of common stock to employees (par value $0.01)	—			166		2			(2		)	—		—			—
Treasury stock acquired through surrender of shares for tax withholding	(436		)	—		—			—			(46	)	(436		)	—
Net loss	(54,937		)	—		—			—			—		—			(54,937		)
Balance at December 31, 2019 (Successor)	$	174,432		15,781		$	158		$	337,628		(46	)	$	(436	)	$	(162,918	)

The accompanying notes are an integral part of these consolidated financial statements.

60

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Successor									Predecessor
	Year Ended December 31,			Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Cash flows from operating activities:
Net (loss) income	$	(54,937	)	$	(59,263	)	$	(47,895	)	$	168,611
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization	36,183			46,434			38,551			28,981
Amortization of debt issuance costs, net	328			186			—			2,135
Accrued interest added to debt principal	—			119			473			11,474
Stock-based compensation	2,026			12,717			677			457
Impairment of long-lived assets	766			4,815			4,904			—
Impairment of goodwill	29,518			—			—			—
Gain on sale of UGSI	—			(75		)	(76		)	—
(Gain) loss on disposal of property, plant and equipment	(1,967		)	(895		)	5,695			(258		)
Bad debt (recoveries) expense	(22		)	(328		)	91			788
Change in fair value of derivative warrant liability	(34		)	(443		)	(239		)	(4,025		)
Deferred income taxes	(90		)	265			(242		)	(337		)
Other, net	340			355			4,503			(11,295		)
Reorganization items, non-cash	—			—			—			(218,600		)
Changes in operating assets and liabilities:
Accounts receivable	4,921			1,798			(3,521		)	(4,528		)
Prepaid expenses and other receivables	(729		)	800			(312		)	472
Accounts payable and accrued liabilities	(11,014		)	3,634			(5,034		)	3,682
Other assets and liabilities, net	1,230			(670		)	(4,036		)	3,494
Net cash provided by (used in) operating activities	6,519			9,449			(6,461		)	(18,949		)
Cash flows from investing activities:
Proceeds from the sale of property, plant and equipment	6,979			19,140			4,034			3,083
Purchases of property, plant and equipment	(8,243		)	(12,241		)	(2,231		)	(3,149		)
Proceeds from the sale of UGSI	—			75			76			—
Cash paid for acquisitions, net of cash acquired	—			(42,292		)	—			—
Net cash (used in) provided by investing activities	(1,264		)	(35,318		)	1,879			(66		)

61

	Successor									Predecessor
	Year Ended December 31,			Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Cash flows from financing activities:
Proceeds from Predecessor revolving credit facility	—			—			—			106,785
Payments on Predecessor revolving credit facility	—			—			—			(129,964		)
Proceeds from Predecessor term loan	—			—			—			15,700
Proceeds from debtor in possession term loan	—			—			—			6,875
Proceeds from Successor First and Second Lien Term Loans	—			10,000			—			36,053
Payments on Successor First and Second Lien Term Loans	(4,949		)	(13,434		)	(1,241		)	—
Proceeds from Successor revolving facility	184,912			226,371			79,464			—
Payments on Successor revolving facility	(184,912		)	(226,371		)	(79,464		)	—
Proceeds from Successor Bridge Term Loan	—			32,500			—			—
Payments on Successor Bridge Term Loan	(31,382		)	—			—			—
Payments for debt issuance costs	—			(167		)	—			(1,053		)
Issuance of stock	31,057			—			—			—
Payments on finance leases and other financing activities	(2,229		)	(1,856		)	(2,391		)	(2,797		)
Net cash (used in) provided by financing activities	(7,503		)	27,043			(3,632		)	31,599
Change in cash, cash equivalents and restricted cash	(2,248		)	1,174			(8,214		)	12,584
Cash and cash equivalents, beginning of period	7,302			5,488			7,193			994
Restricted cash, beginning of period	656			1,296			7,805			1,420
Cash, cash equivalents and restricted cash, beginning of period	7,958			6,784			14,998			2,414
Cash and cash equivalents, end of period	4,788			7,302			5,488			7,193
Restricted cash, end of period	922			656			1,296			7,805
Cash, cash equivalents and restricted cash, end of period	$	5,710		$	7,958		$	6,784		$	14,998
Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,259		$	4,540		$	1,003		$	1,912
Cash paid (refunded) for taxes, net	236			668			(324		)	193
Property, plant and equipment purchases in accounts payable	467			786			754			218
Common stock issued to settle Successor Bridge Term Loan	1,118			—			—			—
Conversion of accrued interest on principal debt balance	—			119			473			11,474
Deferred financing costs financed through principal debt balance	—			—			—			1,570
Deferred financing costs in accounts payable and accrued liabilities	—			441			—			—

The accompanying notes are an integral part of these statements.

62

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organization and Nature of Business Operations

Nuverra Environmental Solutions, Inc., a Delaware corporation, together with its subsidiaries (collectively, “Nuverra,” the “Company,” “we,” “us,” or “our”) provides water logistics and oilfield services to customers focused on the development and ongoing production of oil and natural gas from shale formations in the United States. Our business operations are organized into three geographically distinct divisions: the Rocky Mountain division, the Northeast division, and the Southern division. Within each division, we provide water transfer services, disposal services, and rental and other services associated with the drilling, completion, and ongoing production of shale oil and natural gas. These services and the related revenues are further described in Note 4.

Rocky Mountain Division

The Rocky Mountain division is our Bakken Shale area business. We have operations in various locations throughout North Dakota and Montana, including yards in Dickinson, Williston, Watford City, Tioga, Stanley, and Beach, North Dakota, as well as Sidney, Montana. Additionally, we operate a financial support office in Minot, North Dakota.

Water Transfer Services

We manage a fleet of trucks in the Rocky Mountain division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region. Additionally, our trucks collect and transport fresh water from water sources to operator locations for use in well completion activities.

In the Rocky Mountain division, we own an inventory of lay flat temporary hose as well as related pumps and associated equipment used to move fresh water from water sources to operator locations for use in completion activities. We employ specially trained field personnel to manage and operate this business. For customers who have secured their own source of fresh water, we provide and operate the lay flat temporary hose equipment to move the fresh water to the drilling and completion location. We may also use third-party sources of fresh water in order to provide the water to customers as a package that includes our water transfer service.

Disposal Services

We manage a network of owned and leased salt water disposal wells. Our salt water disposal wells in the Rocky Mountain division are operated under the Landtech brand. Additionally, we operate a landfill facility near Watford City, North Dakota that handles the disposal of drill cuttings and other oilfield waste generated from drilling and completion activities in the region.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Rocky Mountain division. These assets include tanks, loaders, manlifts, light towers, winch trucks, and other miscellaneous equipment used in drilling and completion activities. In the Rocky Mountain division, we also provide oilfield labor services, also called “roustabout work,” where our employees move, set-up and maintain the rental equipment for customers, in addition to providing other oilfield labor services.

Northeast Division

The Northeast division is comprised of the Marcellus and Utica Shale areas, both of which are predominantly natural gas producing basins. The Marcellus and Utica Shale areas are located in the northeastern United States, primarily in Pennsylvania, West Virginia, New York and Ohio. We have operations in various locations throughout Pennsylvania, West Virginia, and Ohio, including yards in Masontown, West Virginia, Somerset and Wellsboro, Pennsylvania, and Cadiz, Ohio. Additionally, we operate a corporate support office near Pittsburgh, Pennsylvania.

Water Transfer Services

We manage a fleet of trucks in the Northeast division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region, or to other customer locations for reuse in completing other wells. Additionally, our trucks collect and transport fresh water from water sources to operator locations for use in well completion activities.

Disposal Services

63

We manage a network of owned and leased salt water disposal wells. Our salt water disposal wells in the Northeast division are operated under the Nuverra, Heckmann, and Clearwater brands.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Northeast division. These assets include tanks and winch trucks used in drilling and completion activities.

Southern Division

The Southern division is comprised of the Haynesville Shale area, a predominantly natural gas producing basin, which is located across northwestern Louisiana and eastern Texas, and extends into southwestern Arkansas. We have operations in various locations throughout eastern Texas and northwestern Louisiana, including a yard in Frierson, Louisiana. Additionally, we operate a corporate support office in Spring, Texas.

Water Transfer Services

We manage a fleet of trucks in the Southern division that collect and transport flowback water from drilling and completion activities, and produced water from ongoing well production activities, to either our own or third party disposal wells throughout the region. Additionally, our trucks collect and transport fresh water to operator locations for use in well completion activities.

In the Southern division, we also own and operate an underground twin pipeline network for the collection of produced water for transport to interconnected disposal wells and the delivery of fresh water from water sources to operator locations for use in well completion activities.

Disposal Services

We manage a network of owned and leased salt water disposal wells that are not connected to our pipeline in the Southern division.

Rental and Other Services

We maintain and lease rental equipment to oil and gas operators and others within the Southern division. These assets include tanks and winch trucks used in drilling and completion activities.

Note 2 - Basis of Presentation

The accompanying audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In our opinion, the consolidated financial statements include the normal, recurring adjustments necessary for a fair statement of the information required to be set forth herein.

All dollar and share amounts in the footnote tabular presentations are in thousands, except per share amounts and unless otherwise noted.

Unless stated otherwise, any reference to balance sheet, income statement, statement of operations and cash flow items in these accompanying audited consolidated financial statements refers to results from continuing operations. We have not included a statement of comprehensive income as there were no transactions to report in the 2019, 2018, or 2017 periods presented.

Principles of Consolidation

Our consolidated financial statements include the accounts of Nuverra and our subsidiaries. All intercompany accounts, transactions and profits are eliminated in consolidation.

On May 1, 2017, the Company and certain of its material subsidiaries (collectively with the Company, the “Nuverra Parties”) filed voluntary petitions under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to pursue prepackaged plans of reorganization (together, and as amended, the “Plan”). On July 25, 2017, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan. The Plan became effective on August 7, 2017 (the “Effective Date”), when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases, subject to certain conditions as set forth therein. See Note 25 on “Emergence from Chapter 11 Reorganization” for additional details.

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Upon emergence, we elected to apply fresh start accounting effective July 31, 2017, to coincide with the timing of our normal accounting period close. Refer to Note 26 on “Fresh Start Accounting” for additional information on the selection of this date. As a result of the application of fresh start accounting, as well as the effects of the implementation of the Plan, a new entity for financial reporting purposes was created, and as such, the consolidated financial statements on or after August 1, 2017, are not comparable with the consolidated financial statements prior to that date.

References to “Successor” or “Successor Company” refer to the financial position and results of operations of the reorganized Company subsequent to July 31, 2017. References to “Predecessor” or “Predecessor Company” refer to the financial position and results of operations of the Company on and prior to July 31, 2017.

Reclassifications

Due to the decreased fair value of the derivative warrant liability, we have elected to present this item in the “Accrued and other current liabilities” line and eliminate the previously disclosed “Derivative warrant liability” line item on the consolidated balance sheets. As of December 31, 2019 and December 31, 2018, $354 and $34 thousand are included in “Accrued and other current liabilities” for our derivative warrant liability. See Note 11 for the items that comprise the “Accrued and other current liabilities” line on the consolidated balance sheets. See Note 13 and Note 14 for more information on the derivative warrant liability.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) (“ASC 842”), replacing the previous leasing standard Accounting Standards Codification 840, Leases (“ASC 840”), which requires an entity that is a lessee to recognize the assets and liabilities arising from leases with terms longer than 12 months on the balance sheet. Leases are to be classified as either operating or finance, with classification affecting the pattern of expense recognition in the statement of operations. The new standard was effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods.

We adopted this new lease standard on January 1, 2019 using a modified retrospective transition, with the cumulative-effect adjustment to the opening balance of accumulated deficit as of the effective date (the “effective date method”). Under the effective date method, financial results reported in periods prior to 2019 are unchanged. We also elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carryforward the historical lease classification. In addition, we have made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. We will continue to recognize those lease payments in the consolidated statement of operations on a straight-line basis over the lease term.

The adoption of the new lease standard resulted in the recognition of operating lease assets and operating lease liabilities of approximately $4.9 million, respectively, as of January 1, 2019. Additionally, as of January 1, 2019, we recorded an adjustment of $0.8 million to accumulated deficit as a result of the re-measurement of the present value of remaining lease payments for the finance leases previously recorded as capital leases. The finance lease assets and finance lease liabilities as of January 1, 2019 were $1.8 million, respectively. We believe the adoption of the new lease standard will not materially impact our results of operations, nor have a notable impact on our liquidity. See Note 5 for further information on our leases.

Note 3 - Significant Accounting Policies

Use of Estimates

Our consolidated financial statements have been prepared in conformity with GAAP. The preparation of the financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared using the most current and best available information, however actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. These investments are carried at cost, which approximates market value.  

Restricted Cash

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On the Effective Date, we entered into a new $45.0 million First Lien Credit Agreement (the “Credit Agreement”) by and among the lenders party thereto (the “Credit Agreement Lenders”), ACF FinCo I, LP, as administrative agent (the “Credit Agreement Agent”), and the Company. Pursuant to the Credit Agreement, the Credit Agreement Lenders agreed to extend to the Company a $30.0 million senior secured revolving credit facility (the “Successor Revolving Facility”) and a $15.0 million senior secured term loan facility (the “Successor First Lien Term Loan”). As our collections on our accounts receivable serve as collateral on the Successor Revolving Facility, all amounts collected are initially recorded to “Restricted cash” on the consolidated balance sheet as these funds are not available for operations until our Credit Agreement Lenders release the funds to us approximately one day later. As such, we expect our restricted cash balance to be anywhere between $0.2 million and $2.0 million at any given time depending upon recent collections. We had a restricted cash balance of $0.9 million and $0.7 million as of December 31, 2019 and December 31, 2018, respectively.

Accounts Receivable

Accounts receivable are recognized and carried at original billed and unbilled amounts less allowances for estimated uncollectible amounts and estimates for potential credits. Inherent in the assessment of these allowances are certain judgments and estimates including, among others, the customer’s willingness or ability to pay, our compliance with customer invoicing requirements, the effect of general economic conditions and the ongoing relationship with the customer. Accounts with outstanding balances longer than the payment terms are considered past due. We write off trade receivables when we determine that they have become uncollectible. Bad debt expense is reflected as a component of “General and administrative expenses” in the consolidated statements of operations.

Unbilled accounts receivable result from revenue earned for services rendered where customer billing is still in progress at the balance sheet date. Such amounts totaled approximately $10.5 million at December 31, 2019.

The following table summarizes activity in the allowance for doubtful accounts:

	Successor									Predecessor
	Year Ended December 31,			Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Balance at beginning of period	$	1,590		$	1,921		$	1,970		$	1,664
Bad debt (recoveries) expense	(22		)	(328		)	91			788
Write-offs, net	(303		)	(3		)	(140		)	(482		)
Balance at end of period	$	1,265		$	1,590		$	1,921		$	1,970

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amounts of our accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments.

Our derivative warrant liability is adjusted to reflect the estimated fair value at each quarter end, with any decrease or increase in the estimated fair value recorded in “Other income, net” in the consolidated statements of operations. We used Level 3 inputs for the valuation methodology of the derivative liabilities. See Note 13 and Note 14 for disclosures on the fair value of our derivative warrants.

The fair value of our Successor Revolving Facility, Successor First Lien Term Loan, Successor Second Lien Term Loan (as defined in Note 12), and other debt obligations including a vehicle term loan and finance leases secured by various properties and equipment, bears interest at rates commensurate with market rates and therefore their respective carrying values approximate fair value. See Note 12 for disclosures on the fair value of our debt instruments at December 31, 2019.

Property, Plant and Equipment

Property and equipment is recorded at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the related assets ranging from three to thirty-nine years. Our landfill is depreciated using the units-of-consumption method based on estimated remaining airspace. Leasehold improvements are depreciated over the life of the lease or the life of

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the asset, whichever is shorter. The range of useful lives for the components of property, plant and equipment are as follows:

Buildings	15-39 years
Building and land improvements	5-20 years
Pipelines	10-30 years
Disposal wells	3-10 years
Machinery and equipment	3-15 years
Equipment under capital leases	4-6 years
Motor vehicles and trailers	3-10 years
Rental equipment	5-10 years
Office equipment	3-7 years

Expenditures for betterments that increase productivity and/or extend the useful life of an asset are capitalized. Maintenance and repair costs are charged to expense as incurred. Upon disposal, the related cost and accumulated depreciation of the assets are removed from their respective accounts, and any gains or losses are included in “Direct operating expenses” in the consolidated statements of operations. Depreciation expense was $35.7 million, $46.2 million, and $66.3 million for the years ended December 31, 2019, 2018 and 2017, respectively, and is characterized as a component of “Depreciation and amortization” in the consolidated statements of operations.

Debt Issuance Costs

We capitalize costs associated with the issuance of debt and amortize them as additional interest expense over the lives of the respective debt instrument on a straight-line basis, which approximates the effective interest method. Debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The unamortized balance of debt issuance costs presented in “Long-term debt” was $0.1 million and $0.4 million at December 31, 2019 and 2018, respectively.

Deferred initial up-front commitment fees paid by a borrower to a lender represent the benefit of being able to access capital over the contractual term, and therefore, meet the definition of an asset. There were no debt issuance costs that met the definition of an asset as of December 31, 2019 and 2018.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets of businesses acquired. The carrying values of goodwill at December 31, 2019 and 2018 were $0.0 million and $29.5 million, respectively (Note 9).

Our goodwill is tested for impairment annually at October 1st and more frequently if events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the impairment test is unnecessary. In the event a determination is made that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the goodwill impairment test must be performed. The first step of the test, used to identify potential impairment, compares the estimated fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, since we have adopted ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment (or “ASU No. 2017-04”), an impairment charge is recorded based on the excess of a reporting unit’s carrying amount over its fair value.

When we reviewed goodwill for impairment as of October 1, 2019, due to indicators of potential impairment, we determined that it was more likely than not that the fair value of our reporting units were less than their carrying value. As a result, we completed the goodwill impairment test and determined that the fair value of all three reporting units was less than the carrying amount, resulting in a goodwill impairment charge of $29.5 million during the year ended December 31, 2019. See Note 8 for further details on the goodwill impairment during 2019.

Impairment of Long-Lived Assets and Intangible Assets with Finite Useful Lives

Long-lived assets, such as property, plant and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be

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recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of such assets to the sum of the estimated undiscounted future cash flows expected to be generated by the assets. Cash flow estimates are based upon, among other things, historical results adjusted to reflect the best estimate of future market rates, utilization levels, and operating performance. Estimates of cash flows may differ from actual cash flows due to various factors, including changes in economic conditions or changes in an asset’s operating performance. Long-lived assets are grouped at the basin level for purposes of assessing their recoverability as we concluded that the basin level is the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities. For assets that do not pass the recoverability test, the asset group’s fair value is compared to the carrying amount.  If the asset group’s fair value is less than the carrying amount, impairment losses are recorded for the amount by which the carrying amount of such assets exceeds the fair value.

We also record impairment charges for assets that are held for sale. In accordance with applicable accounting guidance, assets that are held for sale are recorded at the lower of net book value or fair value less costs to sell. These assets are reclassified to a separate line on the consolidate balance sheet called “Assets held for sale.” Upon reclassification we cease to recognize depreciation expense on the assets. If the fair value of the assets reclassified as held for sale is lower than the net book value, we record the appropriate impairment charge to write the asset down to fair value.

We recorded total impairment charges of $0.8 million, $4.8 million and $4.9 million for long-lived assets classified as held for sale, which was included in “Impairment of long-lived assets” in the consolidated statements of operations (Note 8), during the years ended December 31, 2019, 2018 and 2017, respectively.

Asset Retirement Obligations

We record the fair value of estimated asset retirement obligations associated with tangible long-lived assets in the period incurred. Retirement obligations associated with long-lived assets are those for which there is an obligation for closures and/or site remediation at the end of the assets’ useful lives. These obligations are initially estimated based on discounted cash flow estimates and are accreted to full value over time through charges to interest expense (Note 19). In addition, asset retirement costs are capitalized as part of the related asset’s carrying value and are depreciated on a straight line basis for disposal wells and using a units-of-consumption basis for landfill costs over the assets’ respective useful lives.

Revenue Recognition

Revenues are generated upon the performance of contracted services under formal and informal contracts with direct customers. Taxes assessed on sales transactions are presented on a net basis and are not included in revenue. On January 1, 2018, we adopted the guidance in ASC 606 and all the related amendments and applied the new revenue standard to all contracts using the modified retrospective method. The impact of the new revenue standard was not material and there was no adjustment required to the opening balance of retained earnings. We expect the impact of the adoption of the new revenue standard to be immaterial to our net income on an ongoing basis.

Prior to January 1, 2018, we recognized revenues in accordance with Accounting Standards Codification 605 (ASC 605, Revenue Recognition) and Staff Accounting Bulletin No 104, where all of the following criteria must be met for revenues to be recognized: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed and determinable and collectability is reasonably assured.

See Note 4 for a detailed discussion on our revenue recognition under ASC 606.

Concentration of Customer Risk

Three of our customers comprised 31%, 30% and 27% of our consolidated revenues for the years ended December 31, 2019, 2018 and 2017, respectively, and 32%, 36% and 27% of our consolidated accounts receivable at December 31, 2019, 2018 and 2017, respectively.

We depend on our customers’ willingness to make operating and capital expenditures to explore, develop and produce oil and natural gas in the United States. These expenditures are generally dependent on current oil and natural gas prices and the industry’s view of future oil and natural gas prices, including the industry’s view of future economic growth and the resulting impact on demand for oil and natural gas. Any decline in oil and natural gas prices could result in reductions in our customers’ operating and capital expenditures. Declines in these expenditures could result in project modifications, delays or cancellations, general business disruptions, delays in, or nonpayment of, amounts owed to us, increased exposure to credit risk and bad debts, and a general reduction in demand for our services. These effects could have a material adverse effect on our financial condition, results of operations and cash flows.

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Direct Operating Expenses

Direct operating expenses consists primarily of wages and benefits for employees or subcontractors performing operational activities, fuel expense associated with transportation and logistics activities, and costs to repair and maintain transportation and rental equipment and disposal wells.

Income Taxes

Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases including temporary differences related to assets acquired in business combinations. Deferred tax assets are also recognized for net operating loss, capital loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for those deferred tax assets for which realization of the related benefits is not more likely than not.

We measure and record tax contingency accruals in accordance with GAAP which prescribes a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a return. Only positions meeting the “more likely than not” recognition threshold may be recognized or continue to be recognized. A tax position is measured at the largest amount that is greater than 50 percent likely of being realized upon ultimate settlement. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. See Note 18 for further details on our income taxes.

Share-Based Compensation

Share-based compensation for all share-based payment awards granted is based on the grant-date fair value. Generally, awards of stock options granted to employees vest in equal increments over a three-year service period from the date of grant and awards of restricted stock awards or units vest over a one, two or three year service period from the date of grant. The grant date fair value of the award is recognized to expense on a straight-line basis over the requisite service period. As of December 31, 2019, there was approximately $1.3 million of unrecognized compensation cost, net of estimated forfeitures, for unvested restricted stock awards and restricted stock units, which are expected to vest over a weighted average period of approximately 1.1 years. See Note 17 for additional information.

Advertising

Advertising costs are expensed as incurred. Advertising expense was approximately $0.3 million, $0.4 million and $0.4 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). Due to the issuance of ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), and the fact that we are a smaller reporting company, the new standard is effective for reporting periods beginning after December 15, 2022. The standard replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The standard requires a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We plan to adopt the new credit loss standard effective January 1, 2023. We do not expect the new credit loss standard to have a material effect on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. The standard removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard will be effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We plan to adopt this new ASU effective January 1, 2021. We are currently evaluating the impact the adoption of the new tax standard will have on our consolidated financial statements.

Note 4 - Revenue

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On January 1, 2018, we adopted the guidance in ASC 606, including all related amendments, and applied the new revenue standard to all contracts using the modified retrospective method. The impact of the new revenue standard was not material and there was no adjustment required to the opening balance of retained earnings. 2017 has not been restated and continues to be reported under ASC 605, the accounting guidance in effect for that period.

Revenues are generated upon the performance of contracted services under formal and informal contracts with customers. Revenues are recognized when the contracted services for our customers are completed in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Sales and usage-based taxes are excluded from revenues. Payment is due when the contracted services are completed in accordance with the payment terms established with each customer prior to providing any services. As such, there is no significant financing component for any of our revenues.

Some of our contracts with customers involve multiple performance obligations as we are providing more than one service under the same contract, such as water transfer services and disposal services. However, our core service offerings are capable of being distinct and also are distinct within the context of contracts with our customers. As such, these services represent separate performance obligations when included in a single contract. We have standalone pricing for all of our services which is negotiated with each of our customers in advance of providing the service. The contract consideration is allocated to the individual performance obligations based upon the standalone selling price of each service, and no discount is offered for a bundled services offering.

Contract Assets

	Contract Asset
Balance at the beginning of the period (January 1, 2019)	$	—
Balance at the end of the period (December 31, 2019)	231
Increase/(decrease)	$	231

During the three months ended June 30, 2019, we recorded a contract asset as a result of a contract modification for disposal services. Contract assets of $353.7 thousand were reclassified to trade receivables, which are being collected in due course, during the year ended December 31, 2019. The contract asset is included in “Other current assets” on the consolidated balance sheets as of December 31, 2019.

Disaggregated Revenues

The following tables present our revenues disaggregated by revenue source for each reportable segment for the years ended December 31, 2019 and 2018, five months ended December 31, 2017, and seven months ended July 31, 2017:

	Successor
	For the Year Ended December 31, 2019
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	64,265	$	29,944	$	10,275	$	—	$	104,484
Disposal Services	17,778		12,491		10,150		—		40,419
Other Revenue	6,126		1,279		233		—		7,638
Total Service Revenue	88,169		43,714		20,658		—		152,541
Rental Revenue	15,383		287		27		—		15,697
Total Revenue	$	103,552	$	44,001	$	20,685	$	—	$	168,238

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	Successor
	For the Year Ended December 31, 2018
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	84,312	$	35,134	$	19,777	$	—	$	139,223
Disposal Services	17,660		6,409		5,636		—		29,705
Other Revenue	10,718		1,776		371		—		12,865
Total Service Revenue	112,690		43,319		25,784		—		181,793
Rental Revenue	15,068		245		368		—		15,681
Total Revenue	$	127,758	$	43,564	$	26,152	$	—	$	197,474

	Successor
	For the Five Months Ended December 31, 2017
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	30,901	$	14,475	$	13,432	$	—	$	58,808
Disposal Services	5,777		975		1,859		—		8,611
Other Revenue	2,926		1,699		351		—		4,976
Total Service Revenue	39,604		17,149		15,642		—		72,395
Rental Revenue	6,883		85		825		—		7,793
Total Revenue	$	46,487	$	17,234	$	16,467	$	—	$	80,188

	Predecessor
	For the Seven Months Ended July 31, 2017
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	38,844	$	17,118	$	15,764	$	—	$	71,726
Disposal Services	6,506		1,284		1,522		—		9,312
Other Revenue	2,975		2,240		311		—		5,526
Total Service Revenue	48,325		20,642		17,597		—		86,564
Rental Revenue	8,221		109		989		—		9,319
Total Revenue	$	56,546	$	20,751	$	18,586	$	—	$	95,883

Water Transfer Services

The majority of our revenues are from the removal and disposal of flowback and produced water originating from oil and natural gas wells or the transportation of fresh water and produced water to customer sites for use in drilling and hydraulic fracturing activities by trucks or through temporary or permanent water transport pipelines. Water transfer rates for trucking are based upon either a fixed fee per barrel of disposal water or upon an hourly rate. Revenue is recognized once the water has been transferred, or over time, based upon the number of barrels transported or disposed of, or at the agreed upon hourly rate, depending upon the customer contract. Contracts for the use of our disposal water pipeline are priced at a fixed fee per disposal

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barrel transferred, with revenues recognized over time from when the water is injected into our pipeline until the transfer is complete. Water transfer services are all generally completed within 24 hours with no remaining performance obligation outstanding at the end of each month.

Disposal Services

Revenues for disposal services are generated through fees charged for disposal of oilfield wastes in our landfill and disposal of fluids in our disposal wells. Disposal rates are generally based on a fixed fee per barrel of disposal water, or on a per ton basis for landfill disposal, with revenues recognized once the disposal has occurred. The performance obligation for disposal services is considered complete once the disposal occurs. Therefore, disposal services revenues are recognized at a point in time.

Other Revenue

Other revenue primarily includes revenues from the sale of “junk” or “slop” oil obtained through the skimming of disposal water. Under the new revenue standard, revenue is recognized for “junk” or “slop” oil at a point in time once the goods are transferred.

Other revenue also historically included small-scale construction or maintenance projects, however we exited that business during the three months ended June 30, 2018. Under the new revenue standard, revenue for construction and maintenance projects, which generally spanned approximately two to three months, was recognized over time under the milestone method which is considered an output method. Since our construction contracts were short term in nature, the contractual milestone dates occurred close together over time such that there was no risk that we would not recognize revenue for goods or services transferred to the customer. All construction costs were expensed as incurred.

Rental Revenue

We generate rental revenue from the rental of various equipment used in wellsite services. Rental rates are based upon negotiated rates with our customers and revenue is recognized over the rental service period. Revenues from rental equipment are not within the scope of the new revenue standard, but rather are recognized under ASC 840, Leases. As of January 1, 2019, the Company is recognizing the revenues from rental equipment under ASC 842, Leases,as a lessor. As the rental service period for our equipment is very short term in nature and does not include any sales-type or direct financing leases, nor any variable rental components, the adoption of ASC 842 in 2019 did not have a material impact upon our consolidated statement of operations.

Practical Expedients

The new revenue standard requires the transaction price to exclude amounts collected on behalf of third parties. However, the new revenue standard also provides a practical expedient to allow entities to make an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority. Upon implementing the new revenue standard we adopted this practical expedient and have excluded sales and usage-based taxes from the transaction price, rather than making a jurisdiction-by-jurisdiction assessment.

Note 5 - Leases

We lease vehicles, transportation equipment, real estate and certain office equipment. We determine if an arrangement is a lease at inception. Operating and finance lease assets represent our right to use an underlying asset for the lease term, and operating and finance lease liabilities represent our obligation to make lease payments arising from the lease. Operating and finance lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term. Absent a documented borrowing rate from the lessor, we use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments.

Most of our leases have remaining lease terms of less than one year to 20 years, with one lease having a term of 99 years. Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis. Some of our vehicle leases include residual value guarantees. It is probable that we will owe approximately

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$2.5 million under the residual value guarantee, therefore this amount has been included in the measurement of the lease liability and leased asset.

The components of lease expense were as follows:

Lease Cost	Classification	Year Ended December 31, 2019
Operating lease cost (a)	General and administrative expenses	$	3,034
Finance lease cost:
Amortization of leased assets	Depreciation and amortization	2,797
Interest on lease liabilities	Interest expense, net	538
Variable lease cost	General and administrative expenses	4,184
Sublease income	Other income, net	(90		)
Total net lease cost		$	10,463

(a) Includes short-term leases which represented $0.8 million of the balance for the year ended December 31, 2019.

Supplemental balance sheet, cash flow and other information related to leases was as follows (in thousands, except lease term and discount rate):

Leases	Classification	As of December 31, 2019
Assets:
Operating lease assets	Operating lease assets	$	2,886
Finance lease assets	Property, plant and equipment, net of accumulated depreciation (a)	8,202
Total lease assets		$	11,088
Liabilities:
Current
Operating lease liabilities	Accrued and other current liabilities	$	1,442
Finance lease liabilities	Current portion of long-term debt	1,443
Noncurrent
Operating lease liabilities	Noncurrent operating lease liabilities	1,457
Finance lease liabilities	Long-term debt	7,341
Total lease liabilities		$	11,683

(a) Finance lease assets are recorded net of accumulated amortization of $1.7 million as of December 31, 2019.

Lease Term and Discount Rate	As of December 31, 2019
Weighted-average remaining lease term (in years):
Operating leases	25.1
Finance leases	4.3
Weighted-average discount rate:
Operating leases	8.51	%
Finance leases	6.77	%

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Supplemental Disclosure of Cash Flow Information and Other Information	Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,034
Operating cash flows from finance leases	538
Financing cash flows from finance leases	1,793
Leased assets obtained in exchange for new operating lease liabilities	$	196
Leased assets obtained in exchange for new finance lease liabilities	9,469

Maturities of lease liabilities were as follows:

	As of December 31, 2019
	Operating Leases (a)			Finance Leases (b)
2020	$	1,557		$	2,007
2021	466			1,812
2022	325			1,812
2023	200			3,425
2024	189			344
Thereafter	6,669			1,405
Total lease payments	9,406			10,805
Less amount representing executory costs (c)	(45		)	—
Net lease payments	9,361			10,805
Less amount representing interest	(6,462		)	(2,021		)
Present value of total lease liabilities	2,899			8,784
Less current lease liabilities	(1,442		)	(1,443		)
Long-term lease liabilities	$	1,457		$	7,341

(a) Operating lease payments does not include any options to extend lease terms that are reasonably certain of being exercised.

(b) Finance lease payments include $1.7 million related to options to extend lease terms that are reasonably certain of being exercised.

(c) Represents executory costs for all leases. We included executory costs in lease payments under ASC 840, and have elected to continue to include executory costs for both leases that commenced before and after the effective date of ASC 842.

Disclosures related to periods prior to adoption of ASC 842

Lease expense under operating leases was approximately $4.6 million during the year ended December 31, 2018, and $5.0 million for the combined Predecessor and Successor periods during the year ended December 31, 2017.

As of December 31, 2018, future minimum lease payments, by year and in the aggregate, under all noncancellable leases were as follows:

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	As of December 31, 2018
	Operating Leases		Capital Leases
2019	$	2,415	$	1,287
2020	1,453		718
2021	431		—
2022	294		—
2023	164		—
Thereafter	6,755		—
Total lease payments	$	11,512	2,005
Less amount representing executory costs			(30		)
Net lease payments			1,975
Less amount representing interest			(90		)
Present value of net lease payments			$	1,885

Note 6 - Acquisition of Clearwater

On October 5, 2018, we completed the acquisition of Clearwater Three, LLC, Clearwater Five, LLC, and Clearwater Solutions, LLC (collectively, “Clearwater”) for an initial purchase price of $42.3 million, subject to customary working capital adjustments (the “Clearwater Acquisition”). Clearwater is a supplier of waste water disposal services used by the oil and gas industry in the Marcellus and Utica shale areas. Clearwater has three salt water disposal wells in service, all of which are located in Ohio. This acquisition expanded our service offerings in the Marcellus and Utica shale areas in our Northeast division not only by providing additional disposal capacity, but also by providing synergies for trucking.

Consideration consisted of $42.3 million in cash which was funded primarily by a $32.5 million bridge loan (the “Successor Bridge Term Loan”) that was repaid during 2019 with proceeds from an offering to our shareholders to purchase shares of our common stock on a pro rata basis with an aggregate offering price of $32.5 million (the “Rights Offering”). The Successor Bridge Term Loan was extended pursuant to the Bridge Term Loan Agreement, entered October 5, 2018 (the “Bridge Term Loan Credit Agreement”), with the lenders party thereto (the “Bridge Term Loan Lenders”) and Wilmington Savings Fund Society, FSB, as administrative agent (“Wilmington”). In addition, our Credit Agreement Lenders provided us with $10.0 million in additional proceeds under the Successor First Lien Term Loan which was used to finance a portion of the Clearwater Acquisition. See Note 15 on Equity for further details on the Rights Offering.

During 2019, we recorded an adjustment for the backstop fee for the Rights Offering (see Note 15) to additional paid-in-capital which was previously expensed and resulted in a credit of $0.3 million to general and administrative costs in the accompanying condensed consolidated statements of operations. Total adjusted transaction costs for the Clearwater Acquisition were $1.1 million, the majority of which were recorded during the year ended December 31, 2018. The results of operations for the Clearwater Acquisition were not material to our consolidated statement of operations for the year ended December 31, 2018.

Under the acquisition method of accounting, the total purchase price was allocated to the identifiable assets acquired and the liabilities assumed based on our preliminary valuation estimates of the fair values as of the acquisition date. The final working capital was agreed upon during the three months ended March 31, 2019, which resulted in no changes to the purchase price allocation. As such, we believe that the purchase price allocation is final.

The final allocation of the purchase price is summarized as follows:

Accounts receivable	$	1,897
Intangible assets	799
Property, plant and equipment	37,589
Goodwill	2,379
Accounts payable and accrued expenses	(372		)
Total	$	42,292

The purchase price allocation requires subjective estimates that, if incorrectly estimated, could be material to our consolidated financial statements including the amount of depreciation and amortization expense. The fair value of the tangible assets, which are primarily comprised of the three salt water disposal wells, was estimated using the discounted cash flow method, a

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form of the income approach. This method estimates the fair value of the assets based upon the present value of the expected cash flows. Estimates that impact the measurement of the tangible assets using the discounted cash flow method are the discount rate and the timing and amount of cash flows. The intangible assets acquired, which primarily consists of the trade name, were valued using the relief from royalty method. The value of the trade name encompasses all items necessary to generate revenue utilizing the trade name. Estimates that impact the measurement of the intangible assets acquired are net sales projections, and the discount and royalty rates used. See Note 9 on “Goodwill and Intangible Assets” for further information on the intangible assets acquired. The entire goodwill balance is expected to be deductible for tax purposes and is all related to the Northeast division. The estimated fair value of the assets acquired and liabilities assumed represents a nonrecurring Level 3 fair value estimate.

Pro forma financial information is not presented as both the fiscal 2018 and 2017 revenues and earnings of the Clearwater Acquisition were not material to our consolidated statements of operations.

Note 7 - Property, Plant and Equipment, net

Property, plant and equipment consists of the following:

	Successor
	December 31,			December 31,
	2019			2018
Land	$	8,454		$	9,643
Buildings	26,401			28,146
Building, leasehold and land improvements	8,022			9,064
Pipelines	67,249			67,234
Disposal wells	76,518			75,402
Landfill	5,587			5,587
Machinery and equipment	20,430			19,389
Equipment under finance leases	9,932			8,554
Motor vehicles and trailers	39,679			36,670
Rental equipment	20,605			21,155
Office equipment	3,930			3,073
	286,807			283,917
Less accumulated depreciation	(98,003		)	(73,647		)
Construction in process	2,013			5,370
Property, plant and equipment, net	$	190,817		$	215,640

We recorded depreciation expense of $35.7 million and $46.2 million for the years ended December 31, 2019 and 2018, respectively. Depreciation expense for the seven months ended July 31, 2017 was $27.8 million, and $38.5 million for the five months ended December 31, 2017. See Note 8 for discussion on impairment charges recorded for long-lived assets during the years ended December 31, 2019 and 2018, and five months ended December 31, 2017.

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Note 8 - Assets Held for Sale and Impairment of Long-Lived Assets and Goodwill

Impairment charges recorded for the years ended December 31, 2019 and 2018, and five months ended December 31, 2017 by reportable segment were as follows:

	Northeast		Southern		Rocky Mountain		Corp/Other		Total
Year Ended December 31, 2019 - Successor
Impairment of property, plant and equipment, net	$	646	$	—	$	120	$	—	$	766
Impairment of goodwill	21,861		2,735		4,922		—		29,518
Total	$	22,507	$	2,735	$	5,042	$	—	$	30,284
Year Ended December 31, 2018 - Successor
Impairment of property, plant and equipment, net	$	69	$	4,414	$	—	$	332	$	4,815
Total	$	69	$	4,414	$	—	$	332	$	4,815
Five Months Ended December 31, 2017 - Successor
Impairment of property, plant and equipment, net	$	—	$	238	$	4,666	$	—	$	4,904
Total	$	—	$	238	$	4,666	$	—	$	4,904

The fair values of each of the reporting units as well as the related assets and liabilities utilized to determine the impairment were measured using Level 3 inputs as described in Note 13.

Assets Held for Sale

During 2019, management approved plans to sell real property located in the Northeast and Rocky Mountain divisions. As a result, we began to actively market these assets, which we expect to sell within one year. In accordance with applicable accounting guidance, the real property was recorded at the lower of net book value or fair value less costs to sell and reclassified to “Assets held for sale” on the consolidated balance sheet during year ended December 31, 2019. Upon reclassification we ceased to recognize depreciation expense on the assets. As the fair value of the real property reclassified as held for sale in the Rocky Mountain and Northeast divisions was lower than its net book value, we recorded impairment charges of $0.8 million during the year ended December 31, 2019, which is included in “Impairment of long-lived assets” on our consolidated statements of operations. Of the impairment charges recorded during the year ended December 31, 2019, $0.7 million related to the Northeast division and $0.1 million related to the Rocky Mountain division.

During the year ended December 31, 2018, management approved plans to sell certain assets located in the Southern division as a result of exiting the Eagle Ford shale area. As a result, we began to actively market these assets, which we expected to sell within one year. See Note 10 for additional details on the exit of the Eagle Ford shale area. In addition, management approved the sale of certain assets, primarily frac tanks, located in the Northeast division, that were expected to sell within one year. As the fair value of these assets reclassified as held for sale was lower than the net book value, we recorded an impairment charge of $4.8 million, of which $4.4 million related to the Southern division for the Eagle Ford exit, $0.3 million related to the Corporate division for the sale of certain real property in Texas approved to be sold as part of the Eagle Ford exit, and $0.1 million related to the Northeast division. The $4.8 million is included in “Impairment of long-lived assets” on our consolidated statements of operations.

During the five months ended December 31, 2017, management approved plans to sell certain underutilized assets, primarily trucks and tanks, located in the Rocky Mountain and Southern divisions. As the fair value of the assets was lower than its net book value, an impairment charge, an impairment charge of $4.9 million was recognized during the five months ended December 31, 2017, and is included in “Impairment of long-lived assets” on our consolidated statement of operations. Of the $4.9 million recorded during five months ended December 31, 2017, $4.7 million related to the Rocky Mountain division and $0.2 million related to the Southern division.

Impairment of Long-Lived Assets

Long-lived assets, such as property, plant and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. There were no indicators of impairment for our long-lived assets during the years ended December 31, 2019, 2018 or 2017.

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Impairment of Goodwill

As of October 1, 2019, and prior to the annual goodwill impairment test, our goodwill balance by reportable operating segment was $21.9 million for the Northeast division, $4.9 million for the Rocky Mountain division, and $2.7 million for the Southern division. The goodwill balance is primarily due to the application of fresh start accounting upon emergence from chapter 11, which is further discussed in Note 26, with $27.1 million recorded as a result of fresh start accounting adjustments and $2.4 million recorded as a result of the acquisition of Clearwater in 2018 (as previously discussed in Note 6).

Upon completing the qualitative analysis, due to a decline in demand and pricing for our services and a decline in the market price of our common stock, we determined that potential indicators of impairment existed during 2019. Therefore, at October 1, 2019, we performed Step One of the goodwill impairment test for all three reporting units. To measure the fair value of the three reporting units, we used a combination of the discounted cash flow method and the guideline public company method. Based upon the results of the first step of the goodwill impairment test, we concluded that the fair value of all three reporting units was less than the carrying value of each reporting unit. Due to the adoption of ASU No. 2017-04, if the carrying amount of a reporting unit exceeds its fair value an impairment charge is recorded based on the excess of a reporting unit’s carrying amount over its fair value. The difference in the carrying value over the fair value for all divisions exceeded the existing goodwill balance recorded for each reporting unit. As a result, during the three months ended December 31, 2019, we recorded total goodwill impairment charges of $29.5 million, of which $21.9 million related to the Northeast division, $4.9 million for the Rocky Mountain division, and $2.7 million for the Southern division. This impairment charge is shown as “Impairment of goodwill” in the consolidated statement of operations.

Note 9 - Goodwill and Intangible Assets

Goodwill

The changes in the carrying value of goodwill for the years ended December 31, 2019 and 2018 are as follows:

	Successor
	December 31, 2019			December 31, 2018
Balance at beginning of period	$	29,518		$	27,139
Additions to goodwill for acquisitions	—			2,379
Impairment of goodwill	(29,518		)	—
Balance at end of period	$	—		$	29,518

As previously discussed in Note 8, we recorded goodwill impairment charges of $29.5 million for the Northeast, Rocky Mountain and Southern divisions during the year ended December 31, 2019. As of December 31, 2019, the goodwill balance was $0.0 million. Our goodwill balance by reportable operating segment as of December 31, 2018 was $21.9 million for the Northeast division, $4.9 million for the Rocky Mountain division, and $2.7 million for the Southern division.

Intangible Assets

The following table provides the gross carrying value, accumulated amortization, and remaining useful life for intangible assets subject to amortization as of December 31, 2019 and 2018:

	Successor
	December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Remaining Useful Life (Years)
Disposal permits	$	554	$	(269	)	$	285	5.0
Trade name	799		(444		)	355		1.0
Total intangible assets	$	1,353	$	(713	)	$	640	2.8

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	Successor
	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Remaining Useful Life (Years)
Disposal permits	$	581	$	(180	)	$	401	5.5
Trade name	799		(88		)	711		2.0
Total intangible assets	$	1,380	$	(268	)	$	1,112	3.2

The gross carrying value of the disposal permits decreased by $27.0 thousand during the year ended December 31, 2019 due to the sale of disposal permits in the Northeast and Southern divisions. The disposal permits are related to the Rocky Mountain, Northeast and Southern divisions. The trade name is from the acquisition of Clearwater in the Northeast division in 2018 (as previously discussed in Note 6). The remaining weighted average useful lives shown are calculated based on the net book value and remaining amortization period of each respective intangible asset.

Amortization expense, which is calculated using either the straight-line method or an accelerated method based upon estimated future cash flows, was $0.5 million and $0.2 million for the years ended December 31, 2019 and 2018, respectively, $1.2 million for the seven months ended July 31, 2017, and $0.0 million for the five months ended December 31, 2017.

As of December 31, 2019 future amortization expense of intangible assets is estimated to be:

2020	$	441
2021	54
2022	49
2023	33
2024	22
Thereafter	41
Total	$	640

Note 10 - Restructuring and Exit Costs

Eagle Ford Shale Area

On March 1, 2018, the Board of Directors (the “Board”) determined it was in the best interests of the Company to cease our operations in the Eagle Ford shale area in order to focus on other opportunities. The Board considered a number of factors in making this determination, including among other things, the historical and projected financial performance of our operations in the Eagle Ford shale area, pricing for our services, capital requirements and projected returns on additional capital investment, competition, scope and scale of our operations, and recommendations from management. We substantially exited the Eagle Ford shale area as of June 30, 2018.

The total costs of the exit recorded during the year ended December 31, 2018 were $1.1 million, and included severance and termination benefits, lease exit costs, and other exit costs related to the movement of vehicles, tanks and rental fleet. All costs related to the Southern operating segment and are reflected in “Other, net” in the consolidated statements of operations.

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There is no remaining liability for the Eagle Ford exit as of December 31, 2019. A rollforward of the liability from December 31, 2018 through December 31, 2019 is as follows:

	Lease Exit Costs
Balance accrued at beginning of period - Successor	$	19
Cash payments	(13		)
Adjustments to accrued balance	(6		)
Balance accrued at end of period - Successor	$	—

Mississippian Shale Area and Tuscaloosa Marine Shale Logistics Business

In March 2015, we initiated a plan to restructure our business in certain shale basins and reduce costs, including an exit from the MidCon shale area and the Tuscaloosa Marine shale logistics business. Additionally, we closed certain yards within the Northeast and Southern divisions and transferred the related assets to our other operating locations, primarily in the Eagle Ford shale basin. The total costs of the restructuring recognized in 2015 were approximately $7.1 million, and included severance and termination benefits, lease exit costs, other exit costs related to the movement of vehicles and rental fleet, and an asset impairment charge.

There is no remaining liability for the restructuring and exit costs as of December 31, 2019. A rollforward of the liability from December 31, 2018 through December 31, 2019 is as follows:

	Lease Exit Costs
Balance accrued at beginning of period - Successor	$	33
Cash payments	(29		)
Adjustments to accrued balance	(4		)
Balance accrued at end of period - Successor	$	—

Note 11 - Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following at December 31, 2019 and December 31, 2018:

	Successor
	December 31,		December 31,
	2019		2018
Accrued payroll and employee benefits	$	1,837	$	6,975
Accrued insurance	2,569		2,664
Accrued legal	295		733
Accrued taxes	695		2,229
Accrued interest	179		520
Accrued operating costs	2,653		3,424
Accrued other	394		125
Derivative warrant liability	—		34
Current operating lease liabilities	1,442		—
Total accrued and other current liabilities	$	10,064	$	16,704

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Note 12 - Debt

Debt consisted of the following at December 31, 2019 and December 31, 2018:

			Successor
			December 31, 2019					December 31, 2018
	Interest Rate	Maturity Date	Unamortized Debt Issuance Costs (g)		Carrying Value of Debt (i)			Carrying Value of Debt (i)
Successor Revolving Facility (a)	6.95%	Feb. 2021	$	—	$	—		$	—
Successor First Lien Term Loan (b)	8.95%	Feb. 2021	95		18,008			21,905
Successor Second Lien Term Loan (c)	11.00%	Oct. 2021	—		9,013			10,066
Successor Bridge Term Loan (d)	11.00%	Apr. 2019	—		—			32,500
Vehicle Term Loan (e)	5.27%	Dec. 2021	—		725			—
Finance leases (f)	6.77%	Various	—		8,784			1,885
Total debt			$	95	36,530			66,356
Debt issuance costs presented with debt (g)					(95		)	(423		)
Total debt, net					36,435			65,933
Less: current portion of long-term debt (h)					(6,430		)	(38,305		)
Long-term debt					$	30,005		$	27,628

_____________________

(a) The interest rate presented represents the interest rate on the $30.0 million Successor Revolving Facility at December 31, 2019.

(b) Interest on the Successor First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus 7.25%.

(c) Interest on the Successor Second Lien Term Loan accrues at an annual rate equal to 11.0%, payable in cash, in arrears, on the first day of each month.

(d) The Bridge Term Loan Credit Agreement had an interest rate of 11.0% per annum, payable in cash, in arrears, on the first day of each month. The obligations under the Bridge Term Loan Credit Agreement were repaid in full on January 2, 2019.

(e) Interest on the Vehicle Term Loan accrues at an annual rate of 5.27%.

(f) Our finance leases include finance lease arrangements related to fleet purchases and real property with a weighted-average annual interest rate of approximately 6.77%, which mature in varying installments between 2019 and 2029.

(g) The debt issuance costs as of December 31, 2019 and 2018 resulted from the amendment to the Successor First Lien Term Loan and the issuance of the Successor Bridge Term Loan, both done in connection with the acquisition of Clearwater (which was previously discussed in Note 6).

(h) The principal payments due within one year for the Successor First Lien Term Loan, Successor Second Lien Term Loan, Vehicle Term Loan and finance leases are included in current portion of long-term debt as of December 31, 2019.

(i) Our Successor Revolving Facility, Successor First Lien Term Loan, Successor Second Lien Term Loan, Vehicle Term Loan and finance leases bear interest at rates commensurate with market rates and therefore their respective carrying values approximate fair value.

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The required principal payments and estimated interest payments for all borrowings for each of the five years following the Successor balance sheet date are as follows:

	Principal		Interest (a)
2020	$	6,430	$	3,524
2021	24,096		1,277
2022	1,425		387
2023	3,211		214
2024	217		127
Thereafter	1,151		256
Total	$	36,530	$	5,785

(a) Estimated interest on debt for all periods presented is calculated using interest rates available as of December 31, 2019 and includes fees for the unused portion of our Successor Revolving Facility.

Indebtedness

As of December 31, 2019, we had $36.5 million of indebtedness outstanding, consisting of $18.0 million under the Successor First Lien Term Loan, $9.0 million under the Successor Second Lien Term Loan, $0.7 million under the Vehicle Term Loan (defined below) and $8.8 million of finance leases for vehicle financings and real property leases. Our Successor Revolving Facility, Successor First Lien Term Loan and Successor Second Lien Term Loan contain certain affirmative and negative covenants, including a fixed charge coverage ratio covenant, as well as other terms and conditions that are customary for revolving credit facilities and term loans of this type. As of December 31, 2019, we were in compliance with all covenants.

Vehicle Term Loan

On December 27, 2019, we entered into a Direct Loan Security Agreement (the “Vehicle Term Loan”) with PACCAR Financial Corp as the Secured Party. The Vehicle Term Loan was to refinance 38 trucks that were previously recorded as finance leases with balloon payments that would have been due in January of 2020. The Vehicle Term Loan matures on December 27, 2021, when the entire unpaid principal balance and interest, plus any other accrued charges, shall become due and payable. The Vehicle Term Loan shall be repaid in installments of $31,879 beginning on January 27, 2020 and on the same day of each month thereafter, with interest accruing at an annual rate of 5.27%.

Bridge Term Loan Credit Agreement

In connection with the Clearwater Acquisition, on October 5, 2018, we entered into the Bridge Term Loan Credit Agreement with the Bridge Term Loan Lenders and Wilmington, as administrative agent. The Bridge Term Loan Lenders are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. Pursuant to the Bridge Term Loan Credit Agreement, the Bridge Term Loan Lenders provided the Successor Bridge Term Loan to us in the aggregate amount of $32.5 million, of which $22.5 million was used to finance the Clearwater Acquisition and the remaining $10.0 million was used to pay down certain amounts outstanding under the Second Lien Term Loan Agreement (as defined below). The Bridge Term Loan Credit Agreement matured on April 5, 2019 and had an interest rate of 11.0% per annum, payable in cash, in arrears, on the first day of each month.

The Bridge Term Loan Credit Agreement required us to use our reasonable best efforts to effectuate and close the Rights Offering as soon as reasonably practicable following October 5, 2018. Upon the completion of the Rights Offering, we were required to prepay all outstanding amounts under the Bridge Term Loan Credit Agreement in cash in an amount equal to the net cash proceeds received from the Rights Offering. As discussed in Note 15, on January 2, 2019, we received the aggregate gross proceeds from the Rights Offering of $31.4 million. Additionally, one of the Backstop Parties (as defined below) elected to satisfy the backstop commitment by converting $1.1 million of the Successor Bridge Term Loan to common stock. The aggregate cash proceeds from the Rights Offering were used to repay the remaining $31.4 million balance of the Successor Bridge Term Loan, satisfying the obligations under the Bridge Term Loan Credit Agreement, and thereby terminating the Bridge Term Loan Credit Agreement.

First Lien Credit Agreements

On the Effective Date, pursuant to the Plan, the Company entered into the Credit Agreement. Pursuant to the Credit Agreement, the Credit Agreement Lenders agreed to extend to the Company the Successor Revolving Facility and the Successor First Lien

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Term Loan (i) to repay obligations outstanding under the Amended and Restated Credit Agreement, as amended through the Predecessor Revolving Facility and debtor in possession asset based lending facility, (ii) to make certain payments as provided in the Plan, (iii) to pay costs and expenses incurred in connection with the Plan, and (iv) for working capital, transaction expenses, and other general corporate purposes. The Credit Agreement also contains an accordion feature that provides for an increase in availability of up to an additional $20.0 million, subject to the satisfaction of certain terms and conditions contained in the Credit Agreement.

The Successor Revolving Facility and the Successor First Lien Term Loan mature on February 7, 2021, at which time the Company must repay the outstanding principal amount of the Successor Revolving Facility and the Successor First Lien Term Loan, together with interest accrued and unpaid thereon. The Successor Revolving Facility may be repaid and, subject to the terms and conditions of the Credit Agreement, reborrowed at any time during the term of the Credit Agreement. Upon execution of the First Amendment to the Credit Agreement on October 5, 2018, the principal amount of the Successor First Lien Term Loan shall be repaid in installments of $297.6 thousand on November 1, 2018 and on the first day of each calendar month thereafter prior to maturity. Interest on the Successor Revolving Facility accrues at an annual rate equal to the LIBOR Rate (as defined in the Credit Agreement) plus 5.25%, and interest on the Successor First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus 7.25%; however, if there is an Event of Default (as defined in the Credit Agreement), the Credit Agreement Agent, in its sole discretion, may increase the applicable interest rate at a per annum rate equal to three percentage points above the annual rate otherwise applicable thereunder.

Maturity Date Extension

The Company initiated discussions with the lenders to extend the scheduled maturity dates for both the Successor Revolving Facility and Successor First Lien Term Loan, and the Company executed a commitment letter with the lenders to extend the scheduled maturity dates to March 2022. The Company expects to finalize the extension during the first half of 2020. However, absent the extension, the Company believes it will have sufficient liquidity to pay obligations as they come due for a period of time twelve months from the date these financial statements were issued.

Second Lien Term Loan Credit Agreement

On the Effective Date, pursuant to the Plan, the Company also entered into the Second Lien Term Loan Agreement (the “Second Lien Term Loan Agreement”) by and among the lenders party thereto (the “Second Lien Term Loan Lenders”), Wilmington as administrative agent (the “Second Lien Term Loan Agent”), and the Company. Pursuant to the Second Lien Term Loan Agreement, the Second Lien Term Loan Lenders agreed to extend to the Company a $26.8 million second lien term loan facility (the “Successor Second Lien Term Loan”), of which $21.1 million was advanced on the Effective Date and up to an additional $5.7 million (“Delayed Draw Term Loan”) is available at the request of the Company after the closing date subject to the satisfaction of certain terms and conditions specified in the Second Lien Term Loan Agreement. The Second Lien Term Loan Lenders extended the Successor Second Lien Term Loan, among other things, (i) to repay obligations outstanding under the Predecessor Revolving Facility and debtor in possession asset based revolving facility, (ii) to make certain payments as provided in the Plan, (iii) to pay costs and expenses incurred in connection with the Plan, and (iv) for working capital, transaction expenses and other general corporate purposes.

The Successor Second Lien Term Loan matures on October 7, 2021, at which time the Company must repay all outstanding obligations under the Successor Second Lien Term Loan. The principal amount of the Successor Second Lien Term Loan shall be repaid on the first day of each fiscal quarter prior to maturity, with such amount to be proportionally increased as the result of the incurrence of a Delayed Draw Term Loan. Interest on the Successor Second Lien Term Loan accrues at an annual rate equal to 11.0%, payable in cash, in arrears, on the first day of each month. However, upon the occurrence and during the continuation of an Event of Default (as defined in the Second Lien Term Loan Agreement) due to a voluntary or involuntary bankruptcy filing, automatically, or any other Event of Default, at the election of the Second Lien Term Loan Agent, the Successor Second Lien Term Loan and all obligations thereunder shall bear interest at an annual rate equal to three percentage points above the annual rate otherwise applicable thereunder.

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Note 13 - Fair Value Measurements

Measurements

Fair value represents an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 — Observable inputs such as quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

• Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and December 31, 2018 and the fair value hierarchy of the valuation techniques we utilized to determine such fair value included significant unobservable inputs (Level 3) and were as follows:

	Successor
	December 31,		December 31,
	2019		2018
Derivative warrant liability (a)	$	—	$	34

(a) The fair value of our derivative warrant liability was $354 as of December 31, 2019.

During fiscal 2017, the contingent consideration of $0.5 million related to the Ideal Settlement was fixed upon emergence from bankruptcy, and is no longer measured for fair value since that date. See Note 19 for additional information.

Derivative Warrant Liability

Our derivative warrant liability is adjusted to reflect the estimated fair value at each quarter end, with any decrease or increase in the estimated fair value recorded in “Other income, net” in the consolidated statements of operations. We used Level 3 inputs for the valuation methodology of the derivative liabilities. The estimated fair values were computed using a Monte Carlo simulation model. The key inputs in determining our derivative warrant liability included our stock price, the volatility of our stock price or the volatility of our peer group, and the risk free interest rate. Future changes in these factors could have a significant impact on the computed fair value of the derivative warrant liability. As such, we expect future changes in the fair value of the warrants could vary significantly from quarter to quarter.

Upon emergence from chapter 11 on the Effective Date, all warrants outstanding under the Predecessor Company were canceled under the Plan. Additionally, on the Effective Date, pursuant to the Plan, we issued to the holders of the pre-Effective Date9.875%Senior Notes due 2018 (the “2018 Notes”) and holders of certain claims relating to the rejection of executory contracts and unexpired leases,118,137warrants with an exercise price of$39.82and a termexpiring seven years from the Effective Date. Each warrant is exercisable foroneshare of our common stock, par value$0.01. The warrants issued under the Successor Company were also determined to be derivative liabilities (SeeNote 14).

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The following table provides a reconciliation of the beginning and ending balances of the derivative warrant liability which is included in “Accrued and other current liabilities” in the consolidated balance sheets as of December 31, 2019 and December 31, 2018.

	Successor
	December 31,			December 31,
	2019			2018
Balance at beginning of period	$	34		$	477
Issuance of warrants	—			—
Exercise of warrants	—			—
Adjustments to estimated fair value	(34		)	(443		)
Balance at end of period	$	—		$	34

Other

Assets acquired and liabilities assumed in business combinations are also measured at fair value on a nonrecurring basis using Level 3 inputs. See Note 6 for further discussion on the measurement of the assets and liabilities acquired in the acquisition of Clearwater.

In addition to our assets and liabilities that are measured at fair value on a recurring basis, we are required by GAAP to measure certain assets and liabilities at fair value on a nonrecurring basis after initial recognition. Generally, assets, liabilities and reporting units are measured at fair value on a nonrecurring basis as a result of impairment reviews and any resulting impairment charge. In connection with our impairment of goodwill and long-lived assets described in Note 8, the fair value of our reporting units or asset groups is determined primarily using the cost and market approaches (Level 3).

Note 14 - Derivative Warrants

Predecessor Warrants

During the year ended December 31, 2016, we issued 26.4 million warrants comprised of 17.5 million warrants for the exchange of 2018 Notes for new 12.5%/10.0% Senior Secured Second Lien Notes due 2021 (the “2021 Notes”), 0.1 million warrants for the exchange of 2018 Notes for common stock, and 8.8 million warrants to the lenders under the Predecessor Term Loan. All warrants were issued with an exercise price of $0.01 and had a term of ten years.

Upon emergence from chapter 11 on the Effective Date, all warrants outstanding under the Predecessor Company were canceled under the Plan. The following table shows the Predecessor warrant activity for the seven months ended July 31, 2017:

	Predecessor
	Seven Months Ended July 31,
	2017
Outstanding at the beginning of period	25,283
Issued	—
Exercised	(16	)
Canceled due to emergence from chapter 11	(25,267	)
Outstanding at the end of the period	—

Successor Warrants

Pursuant to the Plan, on the Effective Date, we issued to the holders of the 2018 Notes, and holders of certain claims relating to the rejection of executory contracts and unexpired leases,118,137warrants with an exercise price of$39.82and a termexpiring seven years from the Effective Date. Each warrant is exercisable foroneshare of our common stock, par value$0.01.

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The following table shows the Successor warrant activity for the years ended December 31, 2019, December 31, 2018 and five months ended December 31, 2017:

	Successor
	Year Ended December 31,	Year Ended December 31,	Five Months Ended December 31,
	2019	2018	2017
Outstanding at the beginning of the period	118	118	—
Issued	—	—	118
Exercised	—	—	—
Outstanding at the end of the period	118	118	118

Fair Value of Warrants

We accounted for warrants in accordance with the accounting guidance for derivatives, which sets forth a two-step model to be applied in determining whether a financial instrument is indexed to an entity’s own stock which would qualify such financial instruments for a scope exception. This scope exception specifies that a contract that would otherwise meet the definition of a derivative financial instrument would not be considered as such if the contract is both (i) indexed to the entity’s own stock and (ii) classified in the shareholders’ equity section of the entity’s balance sheet. We determined that the Predecessor warrants were ineligible for equity classification due to the anti-dilution provisions in the contract, and the Successor warrants were ineligible for equity classification as the warrants are not indexed to our common stock. As such, the warrants were recorded as derivative liabilities at fair value on the consolidated balance sheet. The warrants are included in “Accrued and other current liabilities” on the consolidated balance sheet and are classified as a current liability as they could be exercised by the holders at any time.

As discussed previously in Note 13, the fair value of the derivative warrant liability was estimated using a Monte Carlo simulation model on the date of issue and is re-measured at each quarter end until expiration or exercise of the underlying warrants with the resulting fair value adjustment recorded in “Other income, net” in the consolidated statement of operations.

The fair value of the derivative warrant liability was estimated using the following model inputs:

	Successor
	Period Ended			Period Ended			Period Ended			At Issuance
	December 31, 2019			December 31, 2018			December 31, 2017			August 7, 2017
Exercise price	$	39.82		$	39.82		$	39.82		$	39.82
Closing stock price (a)	$	2.90		$	8.20		$	18.18		$	22.28
Risk free rate	1.66		%	2.51		%	2.29		%	2.07		%
Expected volatility	39.18		%	36.87		%	40.59		%	39.39		%

(a) As the Company’s post-Effective Date common stock did not begin trading on the NYSE American Stock Exchange until October 12, 2017, the closing stock price used to estimate the fair value of the derivative warrant liability on August 7, 2017 was the implied price per share assuming an enterprise value of $302.5 million before fresh start accounting adjustments.

Note 15 - Equity

Equity Issuances in 2019 - Successor

During the year ended December 31, 2019, we issued common stock for our share-based compensation program which is discussed further in Note 17.

Rights Offering in 2018 - Successor

As previously disclosed, we agreed, pursuant to the Bridge Term Loan Credit Agreement, to use our reasonable best efforts to effectuate and close the Rights Offering as soon as reasonably practicable following October 5, 2018, whereby we would

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dividend to our holders of common stock subscription rights to purchase shares of our common stock on a pro rata basis with an aggregate offering price of $32.5 million. Holders who subscribed for all of their basic subscription rights also could elect to subscribe for additional shares pursuant to an over-subscription privilege.

In connection with the Rights Offering, we entered into a Backstop Commitment Letter on October 5, 2018 (the “Backstop Commitment Letter”) with certain backstop parties named therein (the “Backstop Parties”), pursuant to which the Backstop Parties agreed, subject to the terms and conditions in the Backstop Commitment Letter, to participate in the Rights Offering and agreed to acquire all unsubscribed shares remaining after stockholders exercised their over-subscription privilege. The Backstop Parties are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. In exchange for the commitments under the Backstop Commitment Letter, we paid to the Backstop Parties, in the aggregate, a nonrefundable cash payment equal to 1.0% of the full amount of the Rights Offering.

Pursuant to the Backstop Commitment Letter, we were required to file a registration statement with the SEC within 20 days following October 5, 2018. This initial Registration Statement on Form S-1 was filed with the SEC on October 25, 2018, with amendments to the Form S-1 filed on December 4, 2018 and December 7, 2018. The Registration Statement on Form S-1 respecting the Rights Offering was declared effective by the SEC on Friday, December 7, 2018. The Rights Offering launched at the close of business on December 10, 2018 and terminated, as to unexercised rights, at 5:00 p.m. New York City time on December 28, 2018.

We sold an aggregate of 3,381,894 shares of common stock at a purchase price of $9.61 per share in the Rights Offering. On January 2, 2019, we received the aggregate gross proceeds from the Rights Offering of $32.5 million and repaid in full the obligations under the Bridge Term Loan Credit Agreement. The shares of common stock subscribed for in the Rights Offering were distributed to applicable offering participants through our transfer agent or through the clearing systems of the Depository Trust Company, which commenced on January 2, 2019. Immediately after the issuance of the 3,381,894 shares for the Rights Offering which commenced on January 2, 2019, the Company had 15,614,981 common shares outstanding.

Equity Issuances in 2018 - Successor

During the year ended December 31, 2018, we issued common stock for our share-based compensation program which is discussed further in Note 17.

Equity Issuances in 2017 - Successor

On the Effective Date, we filed the Second Amended and Restated Certificate of Incorporation of the Company with the office of the Secretary of State of the State of Delaware and adopted the Third Amended and Restated Bylaws of the Company. The Second Amended and Restated Certificate of Incorporation provides that we are authorized to issue a total of 76.0 million shares of capital stock, of which 1.0 million shares shall be preferred stock, par value $0.01, and 75.0 million shares shall be common stock, par value of $0.01, of the reorganized Company.

As previously discussed in Note 25, upon emergence from chapter 11, the following shares of common stock of the reorganized Company were issued:

• 7,900,000 shares of common stock of the reorganized Company to the holders of the Predecessor Company’s 2021 Notes;

• 100,000 shares of common stock of the reorganized Company to the Affected Classes (as defined in the Plan); and

• 3,695,580 shares of common stock of the reorganized Company to holders of Supporting Noteholder Term Loan Claims (as defined in the Plan) and to the Credit Agreement Lenders for the Exit Financing Commitment Fee (as defined in the Plan).

Additionally, pursuant to the Plan, on the Effective Date, we issued to the holders of the 2018 Notes, and holders of certain claims relating to the rejection of executory contracts and unexpired leases,118,137warrants with an exercise price of$39.82and a termexpiring seven years from the Effective Date. Each warrant is exercisable foroneshare of our common stock, par value$0.01. There werenowarrant exercises during the five months ended December 31, 2017.

Equity Issuances in 2017 - Predecessor

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During the seven months ended July 31, 2017, we issued common stock for our share-based compensation program, which is discussed further in Note 17. Additionally, common stock was issued as a result of certain debtholders exercising the warrants received in connection with the debt restructuring during the year ended December 31, 2016.

On the Effective Date, pursuant to the Plan, (i) all shares of the Company’s pre-Effective Date common stock and all other previously issued and outstanding equity interests in the Company, and any rights of any holder in respect thereof, were canceled and discharged and (ii) all agreements, instruments, and other documents evidencing, relating to or connected with the Company’s pre-Effective Date common stock and all other previously issued and outstanding equity interests of the Company, and any rights of any holder in respect thereof, were canceled and discharged and of no further force or effect.

Note 16 - Earnings Per Share

Net loss per basic and diluted common share have been computed using the weighted average number of shares of common stock outstanding during the period.

For the years ended December 31, 2019 and 2018, and five months ended December 31, 2017, no shares of common stock underlying stock options, restricted stock, or warrants were included in the computation of diluted earnings per share (“EPS”) because the inclusion of such shares would be anti-dilutive based on the net losses reported for those periods.

The following table presents the calculation of basic and diluted net (loss) income per common share, as well as the potentially dilutive stock-based awards that were excluded from the calculation of diluted loss per share for the periods presented:

	Successor									Predecessor
	Year Ended December 31,			Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Numerator:
Net (loss) income	$	(54,937	)	$	(59,263	)	$	(47,895	)	$	168,611
Denominator:
Weighted average shares—basic	15,676			11,829			11,696			150,940
Common stock equivalents	—			—			—			23,364
Weighted average shares—diluted	15,676			11,829			11,696			174,304
Earnings per common share:
Net (loss) income per basic common share	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	1.12
Net (loss) income per diluted common share	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	0.97
Antidilutive stock-based awards excluded	490			951			827			593

Note 17 - Share-based Compensation

Successor Share-based Compensation

Pursuant to the requirements of the Plan, on February 22, 2018, the Board approved the Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the “Incentive Plan”). The Incentive Plan is intended to provide for the grant of equity-based awards to designated members of the Company’s management and employees. Pursuant to the terms of the Plan, the Incentive Plan became effective on the Effective Date. The maximum number of shares of the Company’s common stock that is available for the issuance of awards under the Incentive Plan is 1,772,058.

Further, the Compensation Committee on February 22, 2018 adopted the 2018 Restricted Stock Plan for Directors (the “Director Plan”), which was ratified by the Company’s shareholders at the Company’s 2018 Annual Meeting. The Director Plan provides for the grant of restricted stock to the non-employee directors of the Company. The Director Plan limits the shares that may be issued thereunder to 100,000 shares of common stock.

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Share-based Compensation Expense

The total share-based compensation expense, net of estimated forfeitures, included in “General and administrative expenses” in the accompanying consolidated statements of operations for the years ended December 31, 2019 and 2018, and the five months ended December 31, 2017 was as follows:

	Successor
	Year Ended December 31,		Year Ended December 31,			Five Months Ended December 31,
	2019		2018			2017
Stock options	$	—	$	(788	)	$	677
Restricted stock (a)	2,026		13,505			—
Total expense	$	2,026	$	12,717		$	677

(a) Includes restricted stock awards, performance-based restricted stock units, and time-based restricted stock units granted under the Incentive Plan and the Director Plan.

There was no income tax expense or benefit related to share-based compensation recognized in the consolidated statement of operations for the years ended December 31, 2019 and 2018, and the five months ended December 31, 2017. At December 31, 2019, the total unrecognized share-based compensation expense, net of estimated forfeitures, was $1.3 million and is expected to be recognized over a weighted average period of 1.1 years.

We measure the cost of employee services received in exchange for awards of stock options based on the fair value of those awards at the date of grant. The fair value of stock options on the date of grant is amortized to compensation expense on a straight-line basis over the requisite service period. The exercise price for stock options is equal to the market price of our common stock on the date of grant. The maximum contractual term of stock options is 10 years. We estimate the fair value of stock options using a Black-Scholes option-pricing model.

We measure the cost of employee services received in exchange for awards of restricted stock or restricted stock units based on the market value of our common shares at the date of grant. The fair value of the restricted stock or restricted stock units is amortized on a straight-line basis over the requisite service period. Certain restricted stock units are subject to a performance condition established at the date of grant. Actual results against the performance condition are measured at the end of the performance period, which typically coincides with the vesting period. For these awards with performance conditions, the fair value of the restricted stock units is amortized on a straight-line basis over the requisite service period based upon the fair market value on the date of grant, adjusted for the anticipated or actual achievement against the established performance condition.

There were no stock option grants during the years ended December 31, 2019 and 2018. The assumptions used to estimate the fair value of stock options granted during the five months ended December 31, 2017 were as follows:

	Successor
	Five Months Ended December 31,
	2017
Volatility	45.6		%
Expected term (years)	10.0
Risk free interest rate	2.3		%
Expected dividend yield	—		%
Weighted average fair value	$	10.02

The expected term of stock options represents the period of time that the stock options granted are expected to be outstanding taking into consideration the contractual term of the options and termination history and option exercise behaviors of our employees. The expected volatility is based on the leverage-adjusted peer volatility methodology. The risk-free interest rate represents the U.S. Treasury bill rate for the expected term of the related stock options. The dividend yield represents our anticipated cash dividend over the expected term of the stock options.

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Stock Options

Awards of stock options generally vest in equal increments over a three-year service period from the date of grant. A summary of stock option activity during the years ended December 31, 2019 and 2018, and the five months ended December 31, 2017 is presented below:

	Successor
Options	Shares Outstanding		Shares Exercisable	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
August 1, 2017	—			$	—	—	$	—
Granted	709			$	39.17
Exercised	—
Forfeited, canceled, or expired	—
December 31, 2017	709			$	39.17	9.6	$	—
Exercisable at December 31, 2017			—	$	—	0.0	$	—
Granted	—
Exercised	—
Forfeited, canceled, or expired	—
December 31, 2018	709			$	39.17	0.2	$	—
Exercisable at December 31, 2018			709	$	39.17	0.2	$	—
Granted	—
Exercised	—
Forfeited, canceled, or expired	(709	)		$	39.17
December 31, 2019	—			$	—	0.0	$	—
Exercisable at December 31, 2019			—	$	—	0.0	$	—

Restricted Stock Units and Restricted Stock

Shares of restricted stock and restricted stock units awards generally vest over a one, two or three year service period from the date of grant. Certain restricted stock units are subject to a performance condition established at the date of grant. Actual results against the performance condition are measured at the end of the performance period, which typically coincides with the vesting period.

A summary of restricted stock activity during years ended December 31, 2019 and 2018 is presented below:

	Successor
Restricted Stock Units and Restricted Stock	Shares		Weighted-Average Grant-Date Fair Value
Non-vested at December 31, 2017	—		$	—
Granted	1,541		$	19.88
Vested	(628	)	$	21.34
Forfeited or canceled	(606	)	$	22.43
Non-vested at December 31, 2018	307		$	11.86
Granted	142		$	10.53
Vested	(116	)	$	13.51
Forfeited or canceled	(50	)	$	14.42
Non-vested at December 31, 2019	283		$	10.06

The total fair value of the shares vested during the years ended December 31, 2019 and 2018, was approximately $1.6 million and $13.4 million, respectively.

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Predecessor Share-based Compensation

Prior to the Effective Date, we granted stock options, stock appreciation rights, restricted common stock and restricted stock units, performance shares and units, other share-based awards and cash-based awards to our employees, directors, consultants and advisors pursuant to the Nuverra Environmental Solutions, Inc. 2009 Equity Incentive Plan (as amended, the “2009 Plan”). As further discussed in Note 25, on the Effective Date pursuant to the Plan, all of the pre-Effective Date share-based compensation awards issued and outstanding under the 2009 Plan were canceled.

Share-based Compensation Expense

The share-based compensation expense for the Predecessor awards was calculated in the same manner as our Successor awards. The total share-based compensation expense, net of forfeitures, included in “General and administrative expenses” recognized in the consolidated statements of operations was as follows:

	Predecessor
	Seven Months Ended July 31,
	2017
Stock options	$	109
Restricted stock	348
Total share-based compensation expense	$	457

There was no income tax expense or benefit related to share-based compensation recognized in the consolidated statement of operations for the seven months ended July 31, 2017.

Stock Options

Awards of stock options generally vest in equal increments over a three-year service period from the date of grant. A summary of stock option activity during the seven months ended July, 31, 2017 is presented below:

	Predecessor
Options	Shares Outstanding		Shares Exercisable	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
December 31, 2016	367			$	13.55	7.2	$	—
Granted	—			$	—
Exercised	—			$	—
Forfeited, canceled, or expired	(367	)		$	13.55
July 31, 2017	—			$	—	0.0	$	—
Exercisable at July 31, 2017			—	$	—	0.0	$	—

Restricted Stock and Restricted Stock Units

Shares of restricted stock awards and restricted stock units generally vested over a two or three year service period from the date of grant. Certain restricted stock units were subject to performance conditions established at the date of grant. Actual results against the performance condition were measured at the end of the performance period, which typically coincided with the vesting period.

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A summary of restricted stock activity during the seven months ended July 31, 2017 is presented below:

	Predecessor
Restricted Stock and Restricted Stock Units	Shares		Weighted-Average Grant-Date Fair Value
Non-vested at December 31, 2016	249		$	3.24
Granted	—		$	—
Vested	(32	)	$	14.81
Forfeited or canceled	(217	)	$	1.54
Non-vested at July 31, 2017	—		$	—

The total fair value of the shares vested during the seven months ended July 31, 2017 was approximately $0.5 million

Note 18 - Income Taxes

The following table shows the components of the income tax (benefit) expense for the periods indicated:

	Successor								Predecessor
	Year Ended December 31,			Year Ended December 31,		Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018		2017			2017
Current income tax expense (benefit):
Federal	$	—		$	—	$	(251	)	$	—
State	57			55		146			15
Total Current	57			55		(105		)	15
Deferred income tax expense (benefit):
Federal	(56		)	34		(186		)	(51		)
State	(91		)	118		(56		)	(286		)
Total Deferred	(147		)	152		(242		)	(337		)
Total income tax (benefit) expense	$	(90	)	$	207	$	(347	)	$	(322	)

A reconciliation of the income tax benefit (expense) and the amount computed by applying the statutory federal income tax rate of 21% or 35% to loss from continuing operations before income taxes is as follows:

	Successor						Predecessor
	Year Ended December 31,		Year Ended December 31,		Five Months Ended December 31,		Seven Months Ended July 31,
	2019		2018		2017		2017
U.S. federal income tax benefit at statutory rate	21.0	%	21.0	%	35.0	%	35.0	%
State and local income taxes, net of federal benefit	4.4	%	3.1	%	1.5	%	0.8	%
Compensation	(0.5	)%	(5.9	)%	(0.5	)%	0.1	%
Impact of fresh start accounting adjustments	—	%	—	%	—	%	3.3	%
Impairment of goodwill	(2.0	)%	—	%	—	%	—	%
Tax Act revaluation of deferred tax balances	—	%	—	%	69.9	%	—	%
Fixed asset adjustments	—	%	(2.6	)%	—	%	—	%
Change in valuation allowance	(27.0	)%	(11.1	)%	(105.5	)%	(40.3	)%
Other	4.3	%	(4.9	)%	0.3	%	0.9	%
Benefit (expense) for income taxes	0.2	%	(0.4	)%	0.7	%	(0.2	)%

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Significant components of our deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows:

	Successor
	December 31,			December 31,
	2019			2018
Deferred tax assets:
Reserves	$	300		$	391
Deferred financing costs	49			137
Net operating losses	69,446			58,928
Federal credit carryover	56			113
Stock-based compensation	284			1,882
Intangible asset and goodwill	9,200			5,937
Capital loss carry forward	48,050			47,615
Other	2,976			3,172
Total	130,361			118,175
Less: Valuation allowance	(108,882		)	(95,347		)
Total deferred tax assets	21,479			22,828
Deferred tax liabilities:
Fixed assets	(20,990		)	(22,644		)
Other	(580		)	(365		)
Total deferred tax liabilities	(21,570		)	(23,009		)
Net deferred tax (liability) asset	$	(91	)	$	(181	)

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax reform legislation (the “Tax Act”). This legislation makes significant changes in U.S. tax law including a reduction in the corporate statutory income tax rates from 35% to 21%, changes to net operating loss carryforwards and carrybacks, and a repeal of the corporate alternative minimum tax. As a result of the enacted law, we were required to revalue deferred tax assets and liabilities as of December 22, 2017 using the new statutory rate and have reflected this revaluation in our effective tax rate reconciliation. The Tax Act’s impact in 2017 reduced the value of our net deferred tax asset balance by $50.8 million at December 31, 2017. As we are subject to a valuation allowance, there was no material impact to our tax provision in 2017, 2018 or 2019. The other provisions of the Tax Act did not have a material impact on the 2017, 2018, or 2019 consolidated financial statements.

As of December 31, 2019, we had net operating loss (“NOL”) carryforwards for federal income tax purposes of approximately $248.8 million, the majority of which expire in 2032 through 2037, state NOL carryforwards of approximately $312.6 million, which generally expire in 2020 through 2039, federal alternative minimum tax credits of $0.1 million, which do not expire and will be refunded over a three year period ending in 2021, and capital loss carryforwards of approximately $204.4 million, which begin to expire in 2020. Pursuant to United States Internal Revenue Code Section 382, if we undergo an ownership change, the NOL carryforward limitations would impose an annual limit on the amount of the taxable income that may be offset by our NOLs generated prior to the ownership change. We have determined that an ownership change occurred on August 7, 2017 as a result of the chapter 11 reorganization described further in Note 25. The limitation under Section 382 may result in federal NOLs expiring unused. Subject to the impact of those rules as a result of past or future restructuring transactions, we may be unable to use all or a significant portion of our NOLs to offset future taxable income.

As required by GAAP, we assess the recoverability of our deferred tax assets on a regular basis and record a valuation allowance for any such assets where recoverability is determined to be not more likely than not. As a result of our continued losses, we determined that our deferred tax liabilities were not sufficient to fully realize our deferred tax assets prior to the expiration of our NOLs, and accordingly, a valuation allowance continues to be required to be recorded against our deferred tax assets. We have recorded an increase of approximately $13.5 million to our valuation allowance during the year ended December 31, 2019. The increase in the valuation allowance during 2019 primarily relates to the increase in the deferred tax liability related to net operating losses due to current year activity. We recorded an increase of approximately $6.6 million to our valuation allowance during the year ended December 31, 2018 primarily due to the decrease in the deferred tax liability related to fixed assets due to current year activity.

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A reconciliation of our valuation allowance on deferred tax assets for the years ended December 31, 2019 and 2018 is as follows:

	Successor
	Year Ended December 31,		Year Ended December 31,
	2019		2018
Balance at beginning of period	$	95,347	$	88,766
Additions to valuation allowance	13,535		6,581
Valuation allowance release, net	—		—
Balance at end of period	$	108,882	$	95,347

As of December 31, 2019 and 2018 we did not have any unrecognized tax benefits as the previous unrecognized tax benefits lapsed due to the statute of limitations.

We recognize potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. We did not have any accrued interest and penalties as of December 31, 2019 and 2018. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

We are subject to the following significant taxing jurisdictions: U.S. federal, Pennsylvania, Louisiana, North Dakota, Ohio, Texas, West Virginia, and Arizona. We have had NOLs in various years for federal purposes and for many states. The statute of limitations for a particular tax year for examination by the Internal Revenue Service is generally three years subsequent to the filing of the associated tax return. However, the Internal Revenue Service can adjust NOL carryovers up to three years subsequent to the last year in which the loss carryover is finally used. Accordingly, there are multiple years open to examination. The statute of limitations is generally three to four years for many of the states where we operate, however many states can also adjust NOL carryovers up to three to four years subsequent to the last year in which the loss carryover is finally used. The Company is currently not under income tax examination in any tax jurisdictions.

Note 19 - Commitments and Contingencies

Environmental Liabilities

We are subject to the environmental protection and health and safety laws and related rules and regulations of the United States and of the individual states, municipalities and other local jurisdictions where we operate. Our continuing operations are subject to rules and regulations promulgated by the Texas Railroad Commission, the Texas Commission on Environmental Quality, the Louisiana Department of Natural Resources, the Louisiana Department of Environmental Quality, the Ohio Department of Natural Resources, the Pennsylvania Department of Environmental Protection, the North Dakota Department of Health, the North Dakota Industrial Commission, Oil and Gas Division, the North Dakota State Water Commission, the Montana Department of Environmental Quality and the Montana Board of Oil and Gas, among others. These laws, rules and regulations address environmental, health and safety and related concerns, including water quality and employee safety. We have installed safety, monitoring and environmental protection equipment such as pressure sensors and relief valves, and have established reporting and responsibility protocols for environmental protection and reporting to such relevant local environmental protection departments as required by law.

We believe we are in material compliance with all applicable environmental protection laws and regulations in the United States and the states in which we operate. We believe that there are no unrecorded liabilities in connection with our compliance with environmental laws and regulations. We did not have any accruals related to environmental matters as of December 31, 2019 and December 31, 2018.

Contingent Consideration for Ideal Settlement

On June 28, 2017, the Company and certain of its material subsidiaries (collectively with the Company, the “Nuverra Parties”) filed a motion with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking authorization to resolve unsecured claims related to the $8.5 million contingent consideration from the Ideal Oilfield Disposal LLC acquisition (the “Ideal Settlement”). On July 11, 2017, the Bankruptcy Court entered an order authorizing the Ideal Settlement. Pursuant to the approved settlement terms, the $8.5 million contingent claim was replaced with an obligation on the part of the applicable Nuverra Party to transfer $0.5 million to the counterparties to the Ideal Settlement upon emergence from chapter 11, and $0.5 million when the Ideal Settlement counterparties deliver the required permits and certificates necessary for

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the issuance of the second special waste disposal permit. The $0.5 million due upon emergence from chapter 11 was paid during the five months ended December 31, 2017. The remaining $0.5 million, due when the counterparties deliver the required permits and certificates necessary for the issuance of the second special waste disposal permit, has been classified as noncurrent and is reported in “Long-term contingent consideration” as of December 31, 2019, as these permits and certificates are not expected to be received within one year.

State Sales and Use Tax Liabilities

During the year ended December 31, 2017, the Pennsylvania Department of Revenue (or “DOR”) completed an audit of our sales and use tax compliance for the period January 1, 2012 through May 31, 2017. As a result of the audit, we were assessed by the DOR for additional state and local sales and use tax plus penalties and interest. During the years ended December 31, 2017 and 2018, we disputed various claims in the assessment made by the DOR through the appropriate boards of appeal and were able to obtain relief for many of the contested claims. However, in January of 2019, the final appeals board upheld an assessment of sales tax and interest that relates to one material position. We have appealed this decision to the Commonwealth of Pennsylvania as we continue to believe that the transactions involved are exempt from sales tax in Pennsylvania, and therefore we have not recorded an accrual as of December 31, 2019. If we lose this appeal, which could take several years to settle, we estimate that we would be required to pay between $1.0 million and $1.5 million to the DOR.

Asset Retirement Obligations

At December 31, 2019 and 2018, we had approximately $7.5 million and $7.1 million, respectively, of asset retirement obligations related to our disposal wells and landfill which are recorded in “Other long-term liabilities” in the accompanying consolidated balance sheets.

The following table provides a reconciliation of the beginning and ending balances of our asset retirement obligations as of December 31, 2019 and 2018:

	Successor
	December 31,			December 31,
	2019			2018
Balance at beginning of period	$	7,128		$	6,435
Asset retirement obligations acquired	130			104
Asset retirement obligations settled	(427		)	—
Changes in estimate	—			10
Accretion expense	780			679
Cash payments	(125		)	(100		)
Balance at end of period	$	7,486		$	7,128

Surety Bonds and Letters of Credit

At December 31, 2019 and 2018, we had surety bonds outstanding of approximately $6.4 million and $13.5 million, respectively, primarily to support financial assurance obligations related to our landfill and disposal wells. Additionally, at December 31, 2019 and 2018, we had outstanding irrevocable letters of credit totaling $3.2 million and $3.1 million, respectively, to support various agreements, leases and insurance policies.

Note 20 - Legal Matters

There are various lawsuits, claims, investigations and proceedings that have been brought or asserted against us, which arise in the ordinary course of business, including actions with respect to securities and shareholder class actions, personal injury, vehicular and industrial accidents, commercial contracts, legal and regulatory compliance, securities disclosure, labor and employment, and employee benefits and environmental matters, the more significant of which are summarized below. We record a provision for these matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any provisions are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information and events pertinent to a particular matter.

We are subject to various legal proceedings and claims incidental to or arising in the ordinary course of our business. Based on information currently known to our management, we do not expect the outcome in any of these known legal proceedings, individually or collectively, to have a material adverse effect on our consolidated financial condition, results of operations or

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cash flows. Litigation is inherently unpredictable, however, and it is possible that our financial condition, results of operations or cash flow could be materially affected in any particular period by the resolution of one or more of the legal matters pending against us.

Chapter 11 Proceedings

On May 1, 2017, the Nuverra Parties filed voluntary petitions under chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court to pursue the Plan. On July 25, 2017, the Bankruptcy Court entered the Confirmation Order confirming the Plan. The Plan became effective on the Effective Date, when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases, subject to certain conditions as set forth therein.

AWS Arbitration Demand and Note Payable Settlement

On April 28, 2015, our former partner in Appalachian Water Services, LLC (“AWS”) issued to us a Demand for Arbitration pursuant to the terms of the AWS operating agreement, relating to alleged breaches by us of certain of our obligations under the operating agreement. We entered into a settlement of this matter with our former partner in June 2015 whereby we purchased the remaining interest in AWS for $4.0 million in cash and a $7.4 million note payable (or the “AWS Note”) with principal and interest due in equal quarterly installments through April 2019. Pursuant to the terms of the AWS Note, if we failed to meet the payment terms of the obligation, or if we became insolvent or declared bankruptcy, all remaining outstanding balances on the AWS Note would become immediately due and payable. As we failed to meet the payment terms of the obligation and filed the chapter 11 cases, all outstanding balances on the AWS Note became immediately due and payable.

Pursuant to Section 362 of the Bankruptcy Code, the filing of the chapter 11 cases automatically stayed most actions against the Nuverra Parties, including actions to collect indebtedness incurred prior to the filing of the Plan or to exercise control over the Nuverra Parties’ property. Subject to certain exceptions under the Bankruptcy Code, the filing of the chapter 11 cases also automatically stayed the continuation of most legal proceedings or the filing of other actions against or on behalf of the Nuverra Parties or their property to recover on, collect or secure a claim arising prior to the filing of the cases or to exercise control over property of the Nuverra Parties’ bankruptcy estates. As a result, the filing of the chapter 11 cases with the Bankruptcy Court automatically stayed any potential action to collect the outstanding balance on the AWS Note.

On July 17, 2017, the Nuverra Parties filed a motion with the Bankruptcy Court seeking authorization to resolve unsecured claims related to the AWS Note. Pursuant to the proposed settlement terms, the Nuverra Parties agreed to transfer to the holders of the AWS Note, their water treatment facility in the Marcellus shale area, including all assets related to the operations of the water treatment facility in “as-is, where-is” condition, together with $75,000 for reimbursement of certain costs and deferred maintenance. In exchange for the water treatment facility and the $75,000 payment, the holders of the AWS Note agreed to release their claims related to the AWS Note and enter into with certain of the Nuverra Parties a lease of five acres of land that can be used by the Nuverra Parties to operate a truck depot.

On July 21, 2017, the Bankruptcy Court entered an order authorizing the AWS Note payable settlement. The settlement, including the transfer of the water treatment facility, was completed during the fourth quarter of 2017.

Confirmation Order Appeal

On July 26, 2017, David Hargreaves, an individual holder of 2018 Notes, appealed the Confirmation Order to the District Court of the District of Delaware (the “District Court”) and filed a motion for a stay pending appeal from the District Court.  Although the motion for a stay pending appeal was denied, the appeal remained pending and the District Court heard oral arguments in May 2018, and in August 2018 the District Court issued an order dismissing the appeal.  Hargreaves subsequently appealed the District Court’s decision to the United States Court of Appeals for the Third Circuit. The parties filed appellate briefs in December 2018 and January 2019, and as a result the appeal remains pending with the United States Court of Appeals for the Third Circuit.  The ultimate outcome of this appeal and its effects on the Confirmation Order are impossible to predict with certainty. No assurance can be given that the final disposition of this appeal will not affect the validity, enforceability or finality of the Confirmation Order. Further discussion on the emergence from chapter 11 is discussed in Note 25.

Note 21 - Employee Benefit Plans

Effective September 1, 2013, we established a defined contribution 401(k) plan (the “401(k) Plan”) that is subject to the provisions of the Employee Retirement Income Security Act of 1974. The 401(k) Plan covers substantially all employees who have met certain eligibility requirements except those employees working less than 25 hours per week. Employees may participate in the 401(k) Plan on the first day of the first month following 60 days of employment.

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On April 1, 2017, we instituted a cash match equal to 100% of each participant’s annual contribution up to 3% of each participant’s annual compensation and 50% of each participant’s annual contribution up to an additional 2% of each participant’s annual compensation. The cash matching contributions to the Plan were $1.7 million, $1.6 million and $1.2 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Note 22 - Related Party and Affiliated Company Transactions

Related Party Transactions

For the year ended December 31 2019, we did not have any related party transactions.

Bridge Term Loan Agreement

In connection with the Clearwater Acquisition, on October 5, 2018, we entered into a Bridge Term Loan Credit Agreement with Bridge Term Loan Lenders and Wilmington. The Bridge Term Loan Lenders are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. Pursuant to the Bridge Term Loan Credit Agreement, the Bridge Term Loan Lenders provided a term loan to us in the aggregate amount of $32.5 million. As of December 31, 2018, $32.5 million was outstanding on the Bridge Term Loan. The obligations under the Bridge Term Loan Credit Agreement were repaid in full on January 2, 2019. See Note 12 for additional discussion of the Bridge Term Loan Agreement.

Cost Method Investment - Underground Solutions, Inc.

During 2009, we acquired an approximate 7% investment in Underground Solutions, Inc. (“UGSI”) a supplier of water infrastructure pipeline products, whose chief executive officer, Andrew D. Seidel, was a member of our board of directors. Our interest in UGSI was accounted for as a cost method investment.

On February 18, 2016, Aegion Corporation (or “Aegion”) announced the completion of the acquisition of UGSI, whereby Aegion paid approximately $85.0 million to acquire UGSI. Our total proceeds as a result of the acquisition were approximately $5.2 million. In April of 2016, we received proceeds of $5.0 million, which exceeded our cost basis of approximately $3.2 million. As such during the three months ended June 30, 2016, we recognized a net gain on the sale of approximately $1.7 million, including approximately $0.1 million in costs incurred by us in the closing. During the three months ended September 30, 2016, the two months ended September 30, 2017, and three months ended March 31, 2018, we received additional proceeds of $53.0 thousand, $76.0 thousand, and $75.0 thousand, respectively, due to adjustments to the final closing working capital statement.

Note 23 - Segments

We evaluate business segment performance based on income (loss) before income taxes exclusive of corporate general and administrative costs and interest expense, which are not allocated to the segments. Our business is divided into three operating divisions, which we consider to be operating and reportable segments of our continuing operations: (1) the Northeast division comprising the Marcellus and Utica shale areas, (2) the Southern division comprising the Haynesville shale area and (3) the Rocky Mountain division comprising the Bakken shale area. Corporate/Other includes certain corporate costs and losses from discontinued operations, as well as assets held for sale and certain other corporate assets.

Financial information for our reportable segments related to continuing operations is presented below.

	Northeast			Southern (b)			Rocky Mountain			Corporate/ Other			Total
Year Ended December 31, 2019 - Successor
Revenue	$	44,001		$	20,685		$	103,552		$	—		$	168,238
Direct operating expenses	35,836			13,654			81,529			—			131,019
General and administrative expenses	2,880			1,104			5,021			11,859			20,864
Depreciation and amortization	10,755			8,410			16,982			36			36,183
Operating loss	(27,977		)	(5,208		)	(5,022		)	(11,895		)	(50,102		)
Loss before income taxes	(28,212		)	(5,428		)	(5,479		)	(15,908		)	(55,027		)
Total assets (a)	64,023			70,841			93,504			7,731			236,099
Total assets held for sale	135			—			1,751			778			2,664
Year Ended December 31, 2018 - Successor

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	Northeast			Southern (b)			Rocky Mountain			Corporate/ Other			Total
Revenue	$	43,564		$	26,152		$	127,758		$	—		$	197,474
Direct operating expenses	37,660			19,381			101,855			—			158,896
General and administrative expenses	2,746			1,237			5,859			28,668			38,510
Depreciation and amortization	12,148			11,397			22,826			63			46,434
Operating loss	(9,059		)	(11,396		)	(2,782		)	(29,063		)	(52,300		)
Loss before income taxes	(9,370		)	(11,576		)	(2,781		)	(35,329		)	(59,056		)
Total assets (a)	88,501			84,318			113,767			9,350			295,936
Total assets held for sale	—			2,004			—			778			2,782
Five Months Ended December 31, 2017 - Successor
Revenue	$	17,234		$	16,467		$	46,487		$	—		$	80,188
Direct operating expenses	14,836			12,005			40,236			—			67,077
General and administrative expenses	1,156			1,574			2,640			5,245			10,615
Depreciation and amortization	10,816			9,533			18,108			94			38,551
Operating loss	(9,574		)	(6,883		)	(19,163		)	(5,339		)	(40,959		)
Loss before income taxes	(9,819		)	(7,106		)	(20,219		)	(11,098		)	(48,242		)
Seven Months Ended July 31, 2017 - Predecessor
Revenue	$	20,751		$	18,586		$	56,546		$	—		$	95,883
Direct operating expenses	21,117			13,056			46,837			—			81,010
General and administrative expenses	1,917			1,684			3,877			15,074			22,552
Depreciation and amortization	5,352			7,542			15,964			123			28,981
Operating loss	(7,635		)	(3,696		)	(10,132		)	(15,197		)	(36,660		)
Income (loss) before income taxes	20,194			18,650			(14,854		)	144,299			168,289

_____________________

(a) Total assets exclude intercompany receivables eliminated in consolidation.

(b) The Southern division includes results for the Eagle Ford Shale area through June 30, 2018. We substantially exited the Eagle Ford Shale area as of June 30, 2018. See Note 10 for further discussion.

Note 24 - Selected Quarterly Financial Data (Unaudited)

Summarized quarterly financial information for 2019 and 2018 is as follows:

	Successor
	Three Months Ended
2019	March 31,			June 30,			September 30,			December 31,
Revenue	$	42,627		$	45,240		$	43,098		$	37,273
Operating loss	(4,657		)	(3,828		)	(5,017		)	(36,600		)
Net loss	(6,355		)	(5,006		)	(6,052		)	(37,524		)
Earnings per common share:
Net loss per basic common share	$	(0.41	)	$	(0.32	)	$	(0.39	)	$	(2.39	)
Net loss per diluted common share	(0.41		)	(0.32		)	(0.39		)	(2.39		)

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	Successor
	Three Months Ended
2018	March 31,			June 30,			September 30,			December 31,
Revenue	$	49,669		$	48,948		$	49,656		$	49,201
Operating loss	(30,752		)	(8,905		)	(6,113		)	(6,530		)
Net loss	(32,167		)	(11,176		)	(7,117		)	(8,803		)
Earnings per common share:
Net loss per basic common share	$	(2.75	)	$	(0.96	)	$	(0.61	)	$	(0.72	)
Net loss per diluted common share	(2.75		)	(0.96		)	(0.61		)	(0.72		)

Note 25 - Emergence from Chapter 11 Reorganization

On May 1, 2017, the Nuverra Parties filed voluntary petitions under chapter 11 of the Bankruptcy Code in the Bankruptcy Court to pursue the Plan. On July 25, 2017, the Bankruptcy Court entered the Confirmation Order confirming the Plan. The Nuverra Parties emerged from the bankruptcy proceedings on the Effective Date when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases, subject to certain conditions as set forth therein.

On the Effective Date, the Company:

• Adopted a Second Amended and Restated Certificate of Incorporation and Third Amended and Restated Bylaws of the Company;

• Appointed three new members to the Company’s Board to replace the directors of the Company who were deemed to have resigned on the Effective Date;

• Entered into the Credit Agreement, pursuant to which the Credit Agreement Lenders agreed to extend the Successor Revolving Facility and the Successor First Lien Term Loan;

• Entered into the Second Lien Term Loan Agreement, pursuant to which the Second Lien Term Loan Lenders extended the Company the Successor Second Lien Term Loan;

• Issued 7,900,000 shares of common stock of the reorganized Company to the holders of the Predecessor Company’s 2021 Notes;

• Issued 100,000 shares of common stock of the reorganized Company to the Affected Classes (as defined in the Plan);

• Issued 3,695,580 shares of common stock of the reorganized Company to holders of Supporting Noteholder Term Loan Claims (as defined in the Plan) and to the Credit Agreement Lenders for the Exit Financing Commitment Fee (as defined in the Plan);

• Issued 118,137 warrants to purchase common stock of the reorganized Company, with an exercise price of $39.82 per share and an exercise term expiring seven years from the Effective Date;

• Entered into a Registration Rights Agreement with certain holders of the reorganized Company’s common stock party thereto;

• Entered into a Warrant Agreement with American Stock Transfer & Trust Company LLC, the Company’s transfer agent;

• Paid in full in cash all administrative expense claims, priority tax claims, priority claims, and debtor in possession revolving credit facility claims;

• Paid all undisputed, non-contingent customer, vendor, or other obligations not specifically compromised under the Plan; and

• Assumed Mark D. Johnsrud’s, the Company’s former Chairman and Chief Executive Officer, Second Amended and Restated Employment Agreement, dated April 28, 2017 and entered into an Amended and Restated Employment Agreement with Joseph M. Crabb, the Company’s Executive Vice President and Chief Legal Officer.

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On the Effective Date, all of the following agreements, and all outstanding interests and obligations thereunder, were terminated:

• Amended and Restated Credit Agreement, as amended through the Fourteenth Amendment thereto, dated as of February 3, 2014, by and among Wells Fargo Bank, National Association (“Wells Fargo”), the lenders named therein, and the Company (the “Predecessor Revolving Facility”);

• Term Loan Credit Agreement, as amended through the Ninth Amendment thereto, dated as of April 15, 2016, by and among Wilmington, the lenders named therein, and the Company (the “Predecessor Term Loan”);

• Indenture governing the Company’s 2018 Notes, dated April 10, 2012, among the Company, its subsidiaries, and The Bank of New York Mellon, N.A.;

• Indenture governing the 2021 Notes, dated April 15, 2016, among the Company, Wilmington, and the guarantors party thereto;

• Debtor-in-Possession Credit Agreement, dated as of April 30, 2017 and effective as of May 3, 2017, by and among the Company, the lenders party thereto, Wells Fargo, and other agents party thereto; and

• Debtor-in-Possession Term Loan Credit Agreement, dated as of April 30, 2017, by and among the Company, the lenders party thereto, and Wilmington.

In addition, on the Effective Date, pursuant to the Plan, (i) all shares of the Company’s pre-Effective Date common stock and all other previously issued and outstanding equity interests in the Company, and any rights of any holder in respect thereof, were canceled and discharged and (ii) all agreements, instruments, and other documents evidencing, relating to or connected with the Company’s pre-Effective Date common stock and all other previously issued and outstanding equity interests of the Company, and any rights of any holder in respect thereof, were canceled and discharged and of no further force or effect.

As a result of the cancellation of the Company’s pre-Effective Date common stock on the Effective Date, the Company’s pre-Effective Date common stock ceased trading on the OTC Pink Marketplace under the symbol “NESCQ.” On October 12, 2017, the Company’s post-Effective Date common stock was listed and began trading on the NYSE American Stock Exchange under the symbol “NES.” See Risk Factors Related to our Common Stock” on page 21 of this Annual Report.

The foregoing is a summary of the substantive provisions of the Plan and the transactions related to and contemplated thereunder and is not intended to be a complete description of, or a substitute for, a full and complete reading of the Plan and the other documents referred to above.

Note 26 - Fresh Start Accounting

In connection with our emergence from chapter 11 on the Effective Date, we applied the provisions of fresh start accounting, pursuant to FASB ASC 852, Reorganizations (“ASC 852”), to our consolidated financial statements. We qualified for fresh start accounting as (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the emerging entity and (ii) the reorganization value of our assets immediately prior to confirmation was less than the post-petition liabilities and allowed claims. ASC 852 requires that fresh start accounting be applied when the Bankruptcy Court enters the Confirmation Order confirming the Plan, or as of a later date when all material conditions precedent to the effectiveness of the Plan are resolved, which for us was August 7, 2017. We elected to apply fresh start accounting effective July 31, 2017, to coincide with the timing of our normal accounting period close. We evaluated the events between July 31, 2017 and August 7, 2017 and concluded that the use of an accounting convenience date of July 31, 2017 did not have a material impact on our results of operations or financial position.

The implementation of the Plan and the application of fresh start accounting materially changed the carrying amounts and classifications reported in our condensed consolidated financial statements and resulted in a new entity for financial reporting purposes. As a result, the financial statements after July 31, 2017 are not comparable with the financial statements on and prior to July 31, 2017.

Fresh start accounting reflects the value of the Successor Company as determined in the confirmed Plan. Under fresh start accounting, asset values are remeasured and allocated based on their respective fair values in conformity with the purchase method of accounting for business combinations in FASB ASC 805,Business Combinations. Liabilities existing as of the Effective Date, other than deferred taxes, were recorded at the present value of amounts expected to be paid using appropriate risk adjusted interest rates. Deferred taxes were determined in conformity with applicable accounting standards. Predecessor accumulated depreciation, accumulated amortization, and accumulated deficit were eliminated.Reorganization value represents the fair value of the Successor Company’s assets before considering liabilities. The excess reorganization value over the fair value of identified tangible and intangible assets is reported as goodwill.

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Reorganization Value

Under ASC 852, the Successor Company must determine a value to be assigned to the equity of the emerging company as of the date of adoption of fresh start accounting. To facilitate this calculation, we estimated the enterprise value of the Successor Company by relying equally on a discounted cash flow (or “DCF”) analysis under the income approach and the guideline public company method under the market approach. Enterprise value represents the fair value of an entity’s interest-bearing debt and stockholders’ equity.

To estimate enterprise value utilizing the DCF method, we established an estimate of future cash flows for the period ranging from 2017 to 2023 and discounted the estimated future cash flows to present value. The expected cash flows for the period 2017 to 2021 were based on the financial projections and assumptions utilized in the disclosure statement. The expected cash flows for the period 2022 to 2023 were derived from earnings forecasts and assumptions regarding growth and margin projections, as applicable. A terminal value was included based on the cash flow of the final year of the forecast period.

The discount rate of 11.3% was estimated based on an after-tax weighted average cost of capital (or “WACC”) reflecting the rate of return that would be expected by a market participant. The WACC also takes into consideration a company specific risk premium reflecting the risk associated with the overall uncertainty of the financial projections used to estimate future cash flows.

The guideline public company analysis identified a group of comparable companies that have operating and financial characteristics comparable in certain respects to us, including comparable lines of business, business risks and market presence. Under this methodology, certain financial multiples and ratios that measure financial performance and value are calculated for each selected company and then compared to the implied multiples from the DCF analysis.We considered enterprise value as a multiple of each selected company for which there was publicly available earnings before interest, taxes, depreciation and amortization (or “EBITDA”).

In the disclosure statement associated with the Plan, which was confirmed by the Bankruptcy Court, we estimated a range of enterprise values between $270.0 million and $335.0 million, with a midpoint of $302.5 million. We deemed it appropriate to use the midpoint between the low end and high end of the range to determine the final enterprise value of $302.5 million utilized for fresh start accounting.

The estimated enterprise value and the equity value are highly dependent on the achievement of the future financial results contemplated in the projections that were set forth in the Plan. The estimates and assumptions made in the valuation are inherently subject to significant uncertainties. The primary assumptions for which there is a reasonable possibility of occurrence of a variation that would have significantly affected the reorganization value include the assumptions regarding revenue growth, operating expenses, the amount and timing of capital expenditures and the discount rate utilized.

The following table reconciles the enterprise value to the estimated fair value of the Successor common stock, par value of $0.01 per share, as of the Effective Date:

Enterprise value	$	302,500
Plus: Cash and cash equivalents and restricted cash	14,998
Plus: Non-operating assets	14,400
Fair value of invested capital	331,898
Less: Fair value of First and Second Lien Term Loans	(36,053		)
Less: Fair value of capital leases	(5,654		)
Shareholders’ equity of Successor Company	$	290,191
Shares outstanding of Successor Company	11,696
Implied per share value	$	24.81

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The following table reconciles the enterprise value to the estimated reorganization value as of the Effective Date:

Enterprise value	$	302,500
Plus: Cash and cash equivalents and restricted cash	14,998
Plus: Other non-operating assets	14,400
Fair value of invested capital	331,898
Plus: Current liabilities, excluding current portion of long-term debt	32,011
Plus: Non-current liabilities, excluding long-term debt	6,441
Reorganization value of Successor Assets	$	370,350

Warrants

Pursuant to the Plan, on the Effective Date, we issued to the holders of the 2018 Notes and holders of certain claims relating to the rejection of executory contracts and unexpired leases118,137warrants with an exercise price of$39.82and a termexpiring seven years from the Effective Date. Each warrant is exercisable foroneshare of our common stock, par value$0.01.

The warrants were recorded as derivative liabilities on the “Derivative warrant liability” line in the condensed consolidated balance sheet. At issuance the warrants were recorded at fair value, which wascomputed using a Monte Carlo simulation model (Level 3), and are re-measured at each quarter end until expiration or exercise with the resulting fair value adjustment recorded in “Other income, net” in the consolidated statement of operations. Future changes in these factors could have a significant impact on the computed fair value of the derivative warrant liability. As such, we expect future changes in the fair value of the warrants could vary significantly from quarter to quarter. The warrants were also previously discussed in Note 13 and Note 14.

Personal Property

To estimate the fair value of personal property, such as machinery and equipment, we utilized a combination of the cost and market approaches. For assets valued via the cost approach, we applied trend indices from published sources to estimate reproduction cost if the asset was new. We then assigned valuation lives specific to each category of asset based on industry sources and our experience to assess physical and functional depreciation. For the assets valued via the market approach, such as trucks and tanks, we researched market values from published sources and reviewed comparable sales data and sales offers received to estimate fair value.

Real Property

The real property consists of land, buildings,and disposal wells. Real property was valued considering the three generally accepted approaches to value: cost, sales comparison and income capitalization. Due to the special-use nature of most of the real property, we relied on the cost and sales comparison approaches. To estimate the replacement cost if the real property was new and determine the economic life of the improvements, we utilized data provided by a valuation service. Depreciation estimates of the improvements were based on information obtained during physical inspections, discussions with building engineers, and general observations of the improvements’ condition. Land was valued as if it were vacant and available through application of the sales comparison approach. For commercial office properties that have leasing potential, we also utilized the income approach to estimate the values. Comparable rents and listing properties were researched an analyzed and adjusted to estimate market rents with the values derived from direct capitalization analysis.

Intangible Assets

The intangible assets were valued with a combination of the income and cost approach. In order to estimate the fair value of the customer relationships, we determined that the excess earnings method under the income approach was appropriate since the inherent value of this intangible asset lies in its ability to generate current and future income, as well as the fact that identifiable revenue streams could be estimated. We utilized the cost approach to value the other intangibles such the assembled workforce and disposal well permits.

102

Consolidated Statement of Financial Position

The following fresh start condensed consolidated balance sheet presents the implementation of the Plan and adoption of fresh start accounting as of July 31, 2017. The “Reorganization Adjustments” have been recorded within the consolidated balance sheet to reflect the effects of the Plan, including discharge of liabilities subject to compromise. The “Fresh Start Adjustments” reflect the estimated fair value adjustments as a result of the adoption of fresh start accounting.

	Predecessor			Reorganization				Fresh Start				Successor
	Company			Adjustments				Adjustments				Company
Assets
Cash	$	2,728		$	4,465		A	$	—			$	7,193
Restricted cash	8,011			(206		)	B	—				7,805
Accounts receivable, net	27,535			—				—				27,535
Inventories	3,935			—				—				3,935
Prepaid expenses and other receivables	3,200			282			C	—				3,482
Other current assets	924			(500		)	C	—				424
Assets held for sale	631			3,913			D	—				4,544
Total current assets	46,964			7,954				—				54,918
Property, plant and equipment, net	265,097			(8,678		)	D	30,869			P	287,288
Equity investments	59			—				—				59
Intangibles, net	13,093			(763		)	D	(11,723		)	Q	607
Goodwill	—			—				27,139			R	27,139
Other assets	339			—				—				339
Total assets	$	325,552		$	(1,487	)		$	46,285			$	370,350
Liabilities and Shareholders’ Equity (Deficit)
Accounts payable	$	6,331		$	1,967		E	$	—			$	8,298
Accrued and other current liabilities	30,549			(12,168		)	F	(298		)	S	18,083
Current contingent consideration	—			1,000			G	—				1,000
Current portion of long-term debt	41,007			(37,665		)	H	—				3,342
Derivative warrant liability	—			717			I	—				717
Other current liabilities	—			3,913			J	—				3,913
Total current liabilities	77,887			(42,236		)		(298		)		35,353
Deferred income taxes	472			—				(314		)	T	158
Long-term debt	2,312			35,000			K	1,053			K	38,365
Long-term contingent consideration	—			—				—				—
Other long-term liabilities	3,694			(461		)	L	3,050			U	6,283
Liabilities subject to compromise	480,595			(480,595		)	M	—				—
Total liabilities	564,960			(488,292		)		3,491				80,159
Commitments and contingencies
Shareholders’ deficit:
Common stock (Successor)	—			117			N	—				117
Additional paid-in-capital (Successor)	—			290,074			N	—				290,074
Common stock (Predecessor)	152			—				(152		)	V	—
Additional paid-in capital (Predecessor)	1,408,324			—				(1,408,324		)	V	—
Treasury stock (Predecessor)	(19,809		)	—				19,809			V	—
(Accumulated deficit) retained earnings	(1,628,075		)	196,614			O	1,431,461			W	—
Total shareholders’ equity (deficit)	(239,408		)	486,805				42,794				290,191
Total liabilities and shareholders’ equity (deficit)	$	325,552		$	(1,487	)		$	46,285			$	370,350

103

Reorganization Adjustments

A. Reflects the cash receipts (payments) from implementation of the Plan:

Receipt of Successor First Lien Term Loan and Successor Second Lien Term Loan Proceeds	$	35,000
Payment of debtor in possession revolving facility, including accrued interest and fees	(30,461		)
Payment of debtor in possession term loan interest	(90		)
Cash payment in association with settlement of the 2018 Notes	(350		)
Release of restricted cash to unrestricted cash	206
Refund of professional fees	160
Net Cash Receipts	$	4,465

B. Reflects the release of restricted cash to unrestricted cash.

C. Reflects the reclassification of a rental security deposit to prepaid rent (or “Prepaid expenses and other receivables”) from

“Other current assets” in connection with settlement of lease claims. Also included in “Other current assets” is the settlement for the lease rejection damages, see below:

Reclassification of a rental security deposit to prepaid rent	$	(282	)
Settlement for the lease rejection damages	(218		)
Adjustment to Other current assets	$	(500	)

D. As part of the Plan and settlement of claims, the $7.4 million note payable (or “the AWS Note”) that arose in connection with AWS, was settled in the fourth quarter of fiscal 2017 in exchange for the membership interests in AWS, return of the water treatment facility in the Marcellus shale area, including all assets related to the operations of the water treatment facility in “as-is, where-is” condition, together with $75,000 for reimbursement of certain costs and deferred maintenance. The adjustments reflect the reclassification of property, plant and equipment exchanged for the release of claims related to the AWS Note from “Property, plant and equipment, net” to “Assets held for sale,” as well as the write-off of intangibles associated with AWS.

Elimination of property, plant and equipment related to AWS settlement	$	(8,678	)
Elimination of intangible assets related to AWS settlement	(763		)
Recognition of assets held for sale on the AWS settlement	3,913
Accrual of cash payment in connection with the AWS settlement (See F)	(75		)
Loss on settlement of the AWS note payable	$	(5,603	)

E. The reorganization adjustment to “Accounts payable” represents the reinstatement of the pre-petition accounts payable that was previously classified as “Liabilities subject to compromise.”

F. The reorganization adjustment to “Accrued and other current liabilities” are noted in the table below.

Accrual of the $75,000 related to the AWS settlement	$	75
Write-off of short-term deferred rent related to the Scottsdale Headquarters lease	(330		)
Write-off of accrued interest related to the 2018 and 2021 Notes	(11,650		)
Decrease in accrued interest for DIP Facilities due to cash payment	(263		)
Net decrease in Accrued and other current liabilities	$	(12,168	)

G. Reflects the contingent consideration due for the Ideal Settlement. Of the remaining $1.0 million balance due, $0.5 million was paid in August 2017 subsequent to the Effective Date and the other $0.5 million is payable upon delivery of the required permits.

H. Reflects the payment or conversion to equity of the Predecessor Revolving Facility and debtor in possession credit facilities in connection with emergence on the Effective Date.

104

I. Reflects the recognition of the derivative warrant liability for the warrants issued in connection with the Plan. Note 13 and Note 14 includes additional discussion on the warrants and the assumptions used to calculate the fair value.

J. Reflects the reclassification of the AWS debt prior to the surrender of the AWS assets classified as “Assets held for sale” pursuant to the Plan.

K. Represents the new Successor First Lien Term Loan and Successor Second Lien Term Loan at fair value, net of debt issuance costs:

Successor First Lien Term Loan at fair value	$	15,000
Successor Second Lien Term Loan at fair value	21,053
Debt issuance costs associated with the Successor Second Lien Term Loan	(1,053		)
Fair Value of the Successor First Lien Term Loan and Successor Second Lien Term Loan, net of debt issuance costs	$	35,000

L. Reflects the write-off of long-term deferred rent associated with the Scottsdale headquarters lease which was rejected and settled as part of the chapter 11 filing.

M. Liabilities subject to compromise were settled as follows in accordance with the Plan:

Outstanding principal amount of 2018 Notes, net of discounts/premiums and debt issuance costs	$	(40,020	)
Outstanding principal amount of 2021 Notes, net of discounts/premiums and debt issuance costs	(347,658		)
Outstanding principal amount of Term Loan, net of discounts/premiums and debt issuance costs	(78,264		)
Outstanding principal amount on the AWS note payable	(3,913		)
Ideal original contingent consideration	(8,500		)
Pre-petition accounts payable	(1,967		)
Derivative warrant liability	(273		)
Balance of Liabilities subject to compromise	$	(480,595	)
Reinstatement of pre-petition accounts payable	$	1,967
Reinstatement of a portion of the Ideal contingent consideration pursuant to the settlement agreement	1,000
Reinstatement of the AWS note payable pursuant to the settlement agreement	3,913
Payment to the 2018 Noteholders pursuant to the Plan	350
Write-off of accrued interest related to the 2018 and 2021 Notes	(11,650		)
Record the issuance of Successor common equity	290,191
Recoveries pursuant to the Plan	$	285,771
Net gain on debt discharge	$	(194,824	)

N. Distribution of 11,695,580 Successor shares of common stock at a par value of $0.01 per share:

Record issuance of shares of Successor common stock at par value of $0.01 per share	$	117
Record additional paid-in capital from the issuance of Successor common stock	290,074
Fair value of Successor common equity	$	290,191

105

O. Reflects the cumulative impact of the reorganization adjustments on “(Accumulated deficit) retained earnings” discussed above:

Net gain on debt discharge	$	194,824
Loss on settlement of the AWS note payable	(5,603		)
Write-off of a portion of the Ideal contingent consideration due to settlement	7,500
Settlement of the lease rejection claim associated with the Scottsdale headquarters lease	(218		)
Write-off of the deferred rent associated with the Scottsdale headquarters lease	790
Issuance of warrants to the 2018 Noteholders and other parties pursuant to the Plan	(717		)
Refund of professional fees	160
Professional fees related to the reorganization under the Plan	(122		)
Net retained earnings impact resulting from implementation of the Plan	$	196,614

Fresh Start Adjustments

P. Reflects the increase in net book value of property, plant and equipment to estimated fair value. The following table summarizes the components of property, plant and equipment, net as of July 31, 2017 of the Predecessor Company and the Successor Company:

	Successor		Predecessor
Land	$	10,779	$	11,495
Buildings	29,349		27,145
Building, leasehold and land improvements	8,690		10,724
Pipelines	66,962		58,533
Disposal wells	41,195		20,872
Landfill	4,500		20,539
Machinery and equipment	16,724		20,169
Equipment under finance leases	10,045		6,499
Motor vehicles and trailers	55,333		34,069
Rental equipment	36,748		46,300
Office equipment	3,046		1,954
Construction in process	3,917		6,798
Property, plant and equipment, net	$	287,288	$	265,097

Q. Reflects the reduction in net book value of intangible assets to estimated fair value.

R. The adjustment represents the reorganization value of assets in excess of amounts allocated to identified tangible and intangible assets as follows:

Reorganization value of Successor assets	$	370,350
Less: Fair value of Successor assets (excluding goodwill)	343,211
Reorganization value of Successor assets in excess of fair value - Successor goodwill	$	27,139

The Successor goodwill by segment is $4.9 million for the Rocky Mountain division, $19.5 million for the Northeast division, and $2.7 million for the Southern division. Upon emergence, we have determined that our goodwill will be tested for impairment annually at October 1st and more frequently if events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. There were no indicators of goodwill impairment at October 1, 2017.

S. Reflects an adjustment to Accrued and other current liabilities to adjust the environmental liabilities to estimated fair value.

T. Reflects the impact of the reorganization and fresh start adjustments on deferred taxes.

106

U. Reflects the adjustment to increase the net book value of asset retirement obligations to estimated fair value.

V. Reflects the cancellation of Predecessor equity to (Accumulated deficit) retained earnings.

W. Reflects the cumulative impact of the fresh start accounting adjustments discussed above on (Accumulated deficit) retained earnings as follows:

Property, plant and equipment fair value adjustment	$	30,869
Intangible assets fair value adjustment	(11,723		)
Reorganization value in excess of amounts allocable to identified assets - Successor goodwill	27,139
Asset retirement obligation fair value adjustment	(3,050		)
Environmental liability fair value adjustment	298
Recording the fair value of debt issuance costs for the new Successor First Lien Term Loan and Successor Second Lien Term Loan	(1,053		)
Adjustment to deferred income taxes	314
Change in assets and liabilities resulting from fresh start adjustments	$	42,794
Elimination of Predecessor common stock to (accumulated deficit) retained earnings	$	152
Elimination of Predecessor additional paid-in capital to (accumulated deficit) retained earnings	1,408,324
Elimination of Predecessor treasury stock to (accumulated deficit) retained earnings	(19,809		)
Net impact of fresh start adjustments on (accumulated deficit) retained earnings	$	1,431,461

Reorganization Items, net

Reorganization items, net represents liabilities settled, net of amounts incurred subsequent to the chapter 11 filing as a direct result of the Plan and are classified as “Reorganization items, net” in our consolidated statement of operations. The following table summarizes reorganization items, net for the years ended December 31, 2019 and 2018, five months ended December 31, 2017, and the seven months ended July 31, 2017:

	Successor									Predecessor
	Year Ended December 31,						Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Net gain on debt discharge	$	—		$	—		$	—		$	194,824
Change in assets and liabilities resulting from fresh start adjustments	—			—			—			42,794
Settlement of the AWS note payable	—			—			—			(5,603		)
Fair value of warrants issued to the 2018 Noteholders and other parties pursuant to the Plan	—			—			—			(717		)
Professional and insurance fees	(200		)	(246		)	(7,306		)	(9,090		)
DIP credit agreement financing costs	—			—			3,962			(5,702		)
Retention bonus payments	—			—			(2,158		)	(806		)
Other costs (a)	—			(1,433		)	(5		)	7,794
Reorganization items, net	$	(200	)	$	(1,679	)	$	(5,507	)	$	223,494

(a) Includes approximately $1.3 million in chapter 11 fees paid to the US Trustee during the year ended December 31, 2018.

Note 27 - Subsidiary Guarantors

The 2018 Notes and the 2021 Notes of the Predecessor Company were registered securities. As a result of these registered securities, we are required to present the following condensed consolidating financial information for the Predecessor periods pursuant to Rule 3-10 of SEC Regulation S-X, Financial Statements of Guarantors and Issuers of Guaranteed Securities

107

Registered or Being Registered. Our Successor Revolving Facility, Successor First Lien Term Loan, and Successor Second Lien Term Loan are not registered securities. Therefore, the presentation of condensed consolidating financial information is not required for the Successor periods.

The following tables present consolidating financial information for Nuverra Environmental Solutions, Inc. (“Parent”) and its 100% wholly-owned subsidiaries (the “Guarantor Subsidiaries”) for the seven months ended July 31, 2017.

CONSOLIDATING STATEMENTS OF OPERATIONS

SEVEN MONTHS ENDED JULY 31, 2017

	Predecessor
	Parent			Guarantor Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	95,883		$	—		$	95,883
Costs and expenses:
Direct operating expenses	—			81,010			—			81,010
General and administrative expenses	15,074			7,478			—			22,552
Depreciation and amortization	123			28,858			—			28,981
Total costs and expenses	15,197			117,346			—			132,543
Operating loss	(15,197		)	(21,463		)	—			(36,660		)
Interest expense, net	(22,333		)	(459		)	—			(22,792		)
Other income, net	4,125			136			—			4,261
Income (loss) from equity investments	101,462			(14		)	(101,462		)	(14		)
Reorganization items, net	177,704			45,790			—			223,494
Income (loss) before income taxes	245,761			23,990			(101,462		)	168,289
Income tax (expense) benefit	(77,150		)	77,472			—			322
Net income (loss)	$	168,611		$	101,462		$	(101,462	)	$	168,611

108

CONSOLIDATING STATEMENT OF CASH FLOWS

SEVEN MONTHS ENDED JULY 31, 2017

	Predecessor
	Parent			Guarantor Subsidiaries			Consolidated
Cash flows from operating activities:
Net cash used in operating activities	$	(18,672	)	$	(277	)	$	(18,949	)
Cash flows from investing activities:
Proceeds from the sale of property and equipment	—			3,083			3,083
Purchase of property, plant and equipment	—			(3,149		)	(3,149		)
Net cash used in investing activities	—			(66		)	(66		)
Cash flows from financing activities:
Proceeds from Predecessor revolving credit facility	106,785			—			106,785
Payments on Predecessor revolving credit facility	(129,964		)	—			(129,964		)
Proceeds from Predecessor term loan	15,700			—			15,700
Proceeds from debtor in possession term loan	6,875			—			6,875
Proceeds from Successor First and Second Lien Term Loans	36,053			—			36,053
Payments for debt issuance costs	(1,053		)	—			(1,053		)
Payments on finance leases and other financing activities	—			(2,797		)	(2,797		)
Net cash provided by (used in) financing activities	34,396			(2,797		)	31,599
Net increase (decrease) in cash	15,724			(3,140		)	12,584
Cash and restricted cash - beginning of year	1,388			1,026			2,414
Cash and restricted cash - end of year	$	17,112		$	(2,114	)	$	14,998

109

EX-21.1

Exhibit 21.1

Schedule of Significant Subsidiaries

Name of Organization	State/Jurisdiction of Incorporation
Badlands Power Fuels, LLC	Delaware
Nuverra Rocky Mountain Pipeline, LLC	Delaware
Nuverra Total Solutions, LLC	Delaware
Nuverra Ohio Disposal, LLC	Delaware
NES Water Solutions, LLC	Delaware
HEK Water Solutions, LLC	Delaware
Badlands Power Fuels, LLC	North Dakota
Landtech Enterprises, L.L.C.	North Dakota
Badlands Leasing, LLC	North Dakota
Ideal Oilfield Disposal, LLC	North Dakota
1960 Well Services, LLC	Ohio
Clearwater Three, LLC	Ohio
Clearwater Five, LLC	Ohio
Clearwater Solutions, LLC	Ohio
Heckmann Water Resources Corporation	Texas
Heckmann Water Resources (CVR), Inc.	Texas
Heckmann Woods Cross, LLC	Utah

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 333-225463 and 333-225466 and Form S-1 No. 333-223738) of our report dated March 10, 2020, relating to the consolidated financial statements of Nuverra Environmental Solutions, Inc. and subsidiaries (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the emergence from bankruptcy), appearing in this Annual Report (Form 10-K) for the year ended December 31, 2019.

/s/ Moss Adams LLP

Scottsdale, Arizona

March 10, 2020

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Charles K. Thompson, certify that:

1. I have reviewed this report on Form 10-K of Nuverra Environmental Solutions, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 10, 2020

By:	/s/ Charles K. Thompson
Name:	Charles K. Thompson
Title:	Chief Executive Officer and Interim Chief Financial Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Charles K. Thompson, certify that:

1. I have reviewed this report on Form 10-K of Nuverra Environmental Solutions, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 10, 2020

By:	/s/ Charles K. Thompson
Name:	Charles K. Thompson
Title:	Chief Executive Officer and Interim Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the report of Nuverra Environmental Solutions, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof, I, the undersigned, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1) The report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 as amended; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 10, 2020

By:	/s/ Charles K. Thompson
Name:	Charles K. Thompson
Title:	Chief Executive Officer and Interim Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

This certification accompanies this report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or otherwise subject to liability pursuant to that section. The certification shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

A signed original of this written statement required by Section 906 has been provided to the Secretary of the Company and will be retained by the Office of General Counsel of the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Use of Estimates

Our consolidated financial statements have been prepared in conformity with GAAP. The preparation of the financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared using the most current and best available information, however actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. These investments are carried at cost, which approximates market value.  

Restricted Cash

On the Effective Date, we entered into a new $45.0 million First Lien Credit Agreement (the “Credit Agreement”) by and among the lenders party thereto (the “Credit Agreement Lenders”), ACF FinCo I, LP, as administrative agent (the “Credit Agreement Agent”), and the Company. Pursuant to the Credit Agreement, the Credit Agreement Lenders agreed to extend to the Company a $30.0 million senior secured revolving credit facility (the “Successor Revolving Facility”) and a $15.0 million senior secured term loan facility (the “Successor First Lien Term Loan”). As our collections on our accounts receivable serve as collateral on the Successor Revolving Facility, all amounts collected are initially recorded to “Restricted cash” on the consolidated balance sheet as these funds are not available for operations until our Credit Agreement Lenders release the funds to us approximately one day later. As such, we expect our restricted cash balance to be anywhere between $0.2 million and $2.0 million at any given time depending upon recent collections. We had a restricted cash balance of $0.9 million and $0.7 million as of December 31, 2019 and December 31, 2018, respectively.

Accounts Receivable

Accounts receivable are recognized and carried at original billed and unbilled amounts less allowances for estimated uncollectible amounts and estimates for potential credits. Inherent in the assessment of these allowances are certain judgments and estimates including, among others, the customer’s willingness or ability to pay, our compliance with customer invoicing requirements, the effect of general economic conditions and the ongoing relationship with the customer. Accounts with outstanding balances longer than the payment terms are considered past due. We write off trade receivables when we determine that they have become uncollectible. Bad debt expense is reflected as a component of “General and administrative expenses” in the consolidated statements of operations.

Unbilled accounts receivable result from revenue earned for services rendered where customer billing is still in progress at the balance sheet date. Such amounts totaled approximately $10.5 million at December 31, 2019.

The following table summarizes activity in the allowance for doubtful accounts:

	Successor									Predecessor
	Year Ended December 31,			Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Balance at beginning of period	$	1,590		$	1,921		$	1,970		$	1,664
Bad debt (recoveries) expense	(22		)	(328		)	91			788
Write-offs, net	(303		)	(3		)	(140		)	(482		)
Balance at end of period	$	1,265		$	1,590		$	1,921		$	1,970

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amounts of our accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments.

Our derivative warrant liability is adjusted to reflect the estimated fair value at each quarter end, with any decrease or increase in the estimated fair value recorded in “Other income, net” in the consolidated statements of operations. We used Level 3 inputs for the valuation methodology of the derivative liabilities. See Note 13 and Note 14 for disclosures on the fair value of our derivative warrants.

The fair value of our Successor Revolving Facility, Successor First Lien Term Loan, Successor Second Lien Term Loan (as defined in Note 12), and other debt obligations including a vehicle term loan and finance leases secured by various properties and equipment, bears interest at rates commensurate with market rates and therefore their respective carrying values approximate fair value. See Note 12 for disclosures on the fair value of our debt instruments at December 31, 2019.

Property, Plant and Equipment

Property and equipment is recorded at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the related assets ranging from three to thirty-nine years. Our landfill is depreciated using the units-of-consumption method based on estimated remaining airspace. Leasehold improvements are depreciated over the life of the lease or the life of the asset, whichever is shorter. The range of useful lives for the components of property, plant and equipment are as follows:

Buildings	15-39 years
Building and land improvements	5-20 years
Pipelines	10-30 years
Disposal wells	3-10 years
Machinery and equipment	3-15 years
Equipment under capital leases	4-6 years
Motor vehicles and trailers	3-10 years
Rental equipment	5-10 years
Office equipment	3-7 years

Expenditures for betterments that increase productivity and/or extend the useful life of an asset are capitalized. Maintenance and repair costs are charged to expense as incurred. Upon disposal, the related cost and accumulated depreciation of the assets are removed from their respective accounts, and any gains or losses are included in “Direct operating expenses” in the consolidated statements of operations. Depreciation expense was $35.7 million, $46.2 million, and $66.3 million for the years ended December 31, 2019, 2018 and 2017, respectively, and is characterized as a component of “Depreciation and amortization” in the consolidated statements of operations.

Debt Issuance Costs

We capitalize costs associated with the issuance of debt and amortize them as additional interest expense over the lives of the respective debt instrument on a straight-line basis, which approximates the effective interest method. Debt issuance costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The unamortized balance of debt issuance costs presented in “Long-term debt” was $0.1 million and $0.4 million at December 31, 2019 and 2018, respectively.

Deferred initial up-front commitment fees paid by a borrower to a lender represent the benefit of being able to access capital over the contractual term, and therefore, meet the definition of an asset. There were no debt issuance costs that met the definition of an asset as of December 31, 2019 and 2018.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets of businesses acquired. The carrying values of goodwill at December 31, 2019 and 2018 were $0.0 million and $29.5 million, respectively (Note 9).

Our goodwill is tested for impairment annually at October 1st and more frequently if events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the impairment test is unnecessary. In the event a determination is made that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the goodwill impairment test must be performed. The first step of the test, used to identify potential impairment, compares the estimated fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, since we have adopted ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment (or “ASU No. 2017-04”), an impairment charge is recorded based on the excess of a reporting unit’s carrying amount over its fair value.

When we reviewed goodwill for impairment as of October 1, 2019, due to indicators of potential impairment, we determined that it was more likely than not that the fair value of our reporting units were less than their carrying value. As a result, we completed the goodwill impairment test and determined that the fair value of all three reporting units was less than the carrying amount, resulting in a goodwill impairment charge of $29.5 million during the year ended December 31, 2019. See Note 8 for further details on the goodwill impairment during 2019.

Impairment of Long-Lived Assets and Intangible Assets with Finite Useful Lives

Long-lived assets, such as property, plant and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of such assets to the sum of the estimated undiscounted future cash flows expected to be generated by the assets. Cash flow estimates are based upon, among other things, historical results adjusted to reflect the best estimate of future market rates, utilization levels, and operating performance. Estimates of cash flows may differ from actual cash flows due to various factors, including changes in economic conditions or changes in an asset’s operating performance. Long-lived assets are grouped at the basin level for purposes of assessing their recoverability as we concluded that the basin level is the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities. For assets that do not pass the recoverability test, the asset group’s fair value is compared to the carrying amount.  If the asset group’s fair value is less than the carrying amount, impairment losses are recorded for the amount by which the carrying amount of such assets exceeds the fair value.

We also record impairment charges for assets that are held for sale. In accordance with applicable accounting guidance, assets that are held for sale are recorded at the lower of net book value or fair value less costs to sell. These assets are reclassified to a separate line on the consolidate balance sheet called “Assets held for sale.” Upon reclassification we cease to recognize depreciation expense on the assets. If the fair value of the assets reclassified as held for sale is lower than the net book value, we record the appropriate impairment charge to write the asset down to fair value.

We recorded total impairment charges of $0.8 million, $4.8 million and $4.9 million for long-lived assets classified as held for sale, which was included in “Impairment of long-lived assets” in the consolidated statements of operations (Note 8), during the years ended December 31, 2019, 2018 and 2017, respectively.

Asset Retirement Obligations

We record the fair value of estimated asset retirement obligations associated with tangible long-lived assets in the period incurred. Retirement obligations associated with long-lived assets are those for which there is an obligation for closures and/or site remediation at the end of the assets’ useful lives. These obligations are initially estimated based on discounted cash flow estimates and are accreted to full value over time through charges to interest expense (Note 19). In addition, asset retirement costs are capitalized as part of the related asset’s carrying value and are depreciated on a straight line basis for disposal wells and using a units-of-consumption basis for landfill costs over the assets’ respective useful lives.

Revenue Recognition

Revenues are generated upon the performance of contracted services under formal and informal contracts with direct customers. Taxes assessed on sales transactions are presented on a net basis and are not included in revenue. On January 1, 2018, we adopted the guidance in ASC 606 and all the related amendments and applied the new revenue standard to all contracts using the modified retrospective method. The impact of the new revenue standard was not material and there was no adjustment required to the opening balance of retained earnings. We expect the impact of the adoption of the new revenue standard to be immaterial to our net income on an ongoing basis.

Prior to January 1, 2018, we recognized revenues in accordance with Accounting Standards Codification 605 (ASC 605, Revenue Recognition) and Staff Accounting Bulletin No 104, where all of the following criteria must be met for revenues to be recognized: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed and determinable and collectability is reasonably assured.

See Note 4 for a detailed discussion on our revenue recognition under ASC 606.

Concentration of Customer Risk

Three of our customers comprised 31%, 30% and 27% of our consolidated revenues for the years ended December 31, 2019, 2018 and 2017, respectively, and 32%, 36% and 27% of our consolidated accounts receivable at December 31, 2019, 2018 and 2017, respectively.

We depend on our customers’ willingness to make operating and capital expenditures to explore, develop and produce oil and natural gas in the United States. These expenditures are generally dependent on current oil and natural gas prices and the industry’s view of future oil and natural gas prices, including the industry’s view of future economic growth and the resulting impact on demand for oil and natural gas. Any decline in oil and natural gas prices could result in reductions in our customers’ operating and capital expenditures. Declines in these expenditures could result in project modifications, delays or cancellations, general business disruptions, delays in, or nonpayment of, amounts owed to us, increased exposure to credit risk and bad debts, and a general reduction in demand for our services. These effects could have a material adverse effect on our financial condition, results of operations and cash flows.

Direct Operating Expenses

Direct operating expenses consists primarily of wages and benefits for employees or subcontractors performing operational activities, fuel expense associated with transportation and logistics activities, and costs to repair and maintain transportation and rental equipment and disposal wells.

Income Taxes

Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases including temporary differences related to assets acquired in business combinations. Deferred tax assets are also recognized for net operating loss, capital loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for those deferred tax assets for which realization of the related benefits is not more likely than not.

We measure and record tax contingency accruals in accordance with GAAP which prescribes a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a return. Only positions meeting the “more likely than not” recognition threshold may be recognized or continue to be recognized. A tax position is measured at the largest amount that is greater than 50 percent likely of being realized upon ultimate settlement. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. See Note 18 for further details on our income taxes.

Share-Based Compensation

Share-based compensation for all share-based payment awards granted is based on the grant-date fair value. Generally, awards of stock options granted to employees vest in equal increments over a three-year service period from the date of grant and awards of restricted stock awards or units vest over a one, two or three year service period from the date of grant. The grant date fair value of the award is recognized to expense on a straight-line basis over the requisite service period. As of December 31, 2019, there was approximately $1.3 million of unrecognized compensation cost, net of estimated forfeitures, for unvested restricted stock awards and restricted stock units, which are expected to vest over a weighted average period of approximately 1.1 years. See Note 17 for additional information.

Advertising

Advertising costs are expensed as incurred. Advertising expense was approximately $0.3 million, $0.4 million and $0.4 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). Due to the issuance of ASU No. 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), and the fact that we are a smaller reporting company, the new standard is effective for reporting periods beginning after December 15, 2022. The standard replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The standard requires a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We plan to adopt the new credit loss standard effective January 1, 2023. We do not expect the new credit loss standard to have a material effect on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. The standard removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard will be effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We plan to adopt this new ASU effective January 1, 2021. We are currently evaluating the impact the adoption of the new tax standard will have on our consolidated financial statements.

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Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
Reserves	$ 300	$ 391
Deferred financing costs	49	137
Net operating losses	69,446	58,928
Federal credit carryover	56	113
Stock-based compensation	284	1,882
Intangible asset and goodwill	9,200	5,937
Capital loss carry forward	48,050	47,615
Other	2,976	3,172
Total	130,361	118,175
Less: Valuation allowance	(108,882)	(95,347)	$ (88,766)
Total deferred tax assets	21,479	22,828
Deferred tax liabilities:
Fixed assets	(20,990)	(22,644)
Other	(580)	(365)
Total deferred tax liabilities	(21,570)	(23,009)
Net deferred tax (liability)	$ (91)	$ (181)

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Property, Plant and Equipment, net

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, net

Property, Plant and Equipment, net

Property, plant and equipment consists of the following:

	Successor
	December 31,			December 31,
	2019			2018
Land	$	8,454		$	9,643
Buildings	26,401			28,146
Building, leasehold and land improvements	8,022			9,064
Pipelines	67,249			67,234
Disposal wells	76,518			75,402
Landfill	5,587			5,587
Machinery and equipment	20,430			19,389
Equipment under finance leases	9,932			8,554
Motor vehicles and trailers	39,679			36,670
Rental equipment	20,605			21,155
Office equipment	3,930			3,073
	286,807			283,917
Less accumulated depreciation	(98,003		)	(73,647		)
Construction in process	2,013			5,370
Property, plant and equipment, net	$	190,817		$	215,640

We recorded depreciation expense of $35.7 million and $46.2 million for the years ended December 31, 2019 and 2018, respectively. Depreciation expense for the seven months ended July 31, 2017 was $27.8 million, and $38.5 million for the five months ended December 31, 2017. See Note 8 for discussion on impairment charges recorded for long-lived assets during the years ended December 31, 2019 and 2018, and five months ended December 31, 2017.

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Commitments and Contingencies - Asset Retirement Obligations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
Balance at beginning of period	$ 7,128	$ 6,435
Asset retirement obligations acquired	130	104
Asset retirement obligations settled	(427)	0
Changes in estimate	0	10
Accretion expense	780	679
Cash payments	(125)	(100)
Balance at end of period	$ 7,486	$ 7,128

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Accrued and Other Current Liabilities

12 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

Accrued and Other Current Liabilities

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following at December 31, 2019 and December 31, 2018:

	Successor
	December 31,		December 31,
	2019		2018
Accrued payroll and employee benefits	$	1,837	$	6,975
Accrued insurance	2,569		2,664
Accrued legal	295		733
Accrued taxes	695		2,229
Accrued interest	179		520
Accrued operating costs	2,653		3,424
Accrued other	394		125
Derivative warrant liability	—		34
Current operating lease liabilities	1,442		—
Total accrued and other current liabilities	$	10,064	$	16,704

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Revenue (Tables)

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Schedule of Contract Assets

Contract Assets

	Contract Asset
Balance at the beginning of the period (January 1, 2019)	$	—
Balance at the end of the period (December 31, 2019)	231
Increase/(decrease)	$	231

Schedule of Revenues Disaggregated by Revenue Source

The following tables present our revenues disaggregated by revenue source for each reportable segment for the years ended December 31, 2019 and 2018, five months ended December 31, 2017, and seven months ended July 31, 2017:

	Successor
	For the Year Ended December 31, 2019
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	64,265	$	29,944	$	10,275	$	—	$	104,484
Disposal Services	17,778		12,491		10,150		—		40,419
Other Revenue	6,126		1,279		233		—		7,638
Total Service Revenue	88,169		43,714		20,658		—		152,541
Rental Revenue	15,383		287		27		—		15,697
Total Revenue	$	103,552	$	44,001	$	20,685	$	—	$	168,238

	Successor
	For the Year Ended December 31, 2018
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	84,312	$	35,134	$	19,777	$	—	$	139,223
Disposal Services	17,660		6,409		5,636		—		29,705
Other Revenue	10,718		1,776		371		—		12,865
Total Service Revenue	112,690		43,319		25,784		—		181,793
Rental Revenue	15,068		245		368		—		15,681
Total Revenue	$	127,758	$	43,564	$	26,152	$	—	$	197,474

	Successor
	For the Five Months Ended December 31, 2017
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	30,901	$	14,475	$	13,432	$	—	$	58,808
Disposal Services	5,777		975		1,859		—		8,611
Other Revenue	2,926		1,699		351		—		4,976
Total Service Revenue	39,604		17,149		15,642		—		72,395
Rental Revenue	6,883		85		825		—		7,793
Total Revenue	$	46,487	$	17,234	$	16,467	$	—	$	80,188

	Predecessor
	For the Seven Months Ended July 31, 2017
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	38,844	$	17,118	$	15,764	$	—	$	71,726
Disposal Services	6,506		1,284		1,522		—		9,312
Other Revenue	2,975		2,240		311		—		5,526
Total Service Revenue	48,325		20,642		17,597		—		86,564
Rental Revenue	8,221		109		989		—		9,319
Total Revenue	$	56,546	$	20,751	$	18,586	$	—	$	95,883

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Fresh Start Accounting - Cumulative Impact of Reorganization Adjustments (Details) $ in Thousands	Jul. 31, 2017 USD ($)
Net gain on debt discharge
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	$ 194,824
Loss on settlement of the AWS note payable
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	(5,603)
Write-off of a portion of the Ideal contingent consideration due to settlement
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	7,500
Settlement of the lease rejection claim associated with the Scottsdale headquarters lease
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	(218)
Write-off of the deferred rent associated with the Scottsdale headquarters lease
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	790
Issuance of warrants to the 2018 Noteholders and other parties pursuant to the Plan
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	(717)
Refund of professional fees
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	160
Professional fees related to the reorganization under the Plan
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	(122)
Net decrease in Accrued and other current liabilities
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	$ 196,614

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Fresh Start Accounting

12 Months Ended

Dec. 31, 2019

Reorganizations [Abstract]

Fresh Start Accounting

Emergence from Chapter 11 Reorganization

On May 1, 2017, the Nuverra Parties filed voluntary petitions under chapter 11 of the Bankruptcy Code in the Bankruptcy Court to pursue the Plan. On July 25, 2017, the Bankruptcy Court entered the Confirmation Order confirming the Plan. The Nuverra Parties emerged from the bankruptcy proceedings on the Effective Date when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases, subject to certain conditions as set forth therein.

On the Effective Date, the Company:

• Adopted a Second Amended and Restated Certificate of Incorporation and Third Amended and Restated Bylaws of the Company;

• Appointed three new members to the Company’s Board to replace the directors of the Company who were deemed to have resigned on the Effective Date;

• Entered into the Credit Agreement, pursuant to which the Credit Agreement Lenders agreed to extend the Successor Revolving Facility and the Successor First Lien Term Loan;

• Entered into the Second Lien Term Loan Agreement, pursuant to which the Second Lien Term Loan Lenders extended the Company the Successor Second Lien Term Loan;

• Issued 7,900,000 shares of common stock of the reorganized Company to the holders of the Predecessor Company’s 2021 Notes;

• Issued 100,000 shares of common stock of the reorganized Company to the Affected Classes (as defined in the Plan);

• Issued 3,695,580 shares of common stock of the reorganized Company to holders of Supporting Noteholder Term Loan Claims (as defined in the Plan) and to the Credit Agreement Lenders for the Exit Financing Commitment Fee (as defined in the Plan);

• Issued 118,137 warrants to purchase common stock of the reorganized Company, with an exercise price of $39.82 per share and an exercise term expiring seven years from the Effective Date;

• Entered into a Registration Rights Agreement with certain holders of the reorganized Company’s common stock party thereto;

• Entered into a Warrant Agreement with American Stock Transfer & Trust Company LLC, the Company’s transfer agent;

• Paid in full in cash all administrative expense claims, priority tax claims, priority claims, and debtor in possession revolving credit facility claims;

• Paid all undisputed, non-contingent customer, vendor, or other obligations not specifically compromised under the Plan; and

• Assumed Mark D. Johnsrud’s, the Company’s former Chairman and Chief Executive Officer, Second Amended and Restated Employment Agreement, dated April 28, 2017 and entered into an Amended and Restated Employment Agreement with Joseph M. Crabb, the Company’s Executive Vice President and Chief Legal Officer.

On the Effective Date, all of the following agreements, and all outstanding interests and obligations thereunder, were terminated:

• Amended and Restated Credit Agreement, as amended through the Fourteenth Amendment thereto, dated as of February 3, 2014, by and among Wells Fargo Bank, National Association (“Wells Fargo”), the lenders named therein, and the Company (the “Predecessor Revolving Facility”);

• Term Loan Credit Agreement, as amended through the Ninth Amendment thereto, dated as of April 15, 2016, by and among Wilmington, the lenders named therein, and the Company (the “Predecessor Term Loan”);

• Indenture governing the Company’s 2018 Notes, dated April 10, 2012, among the Company, its subsidiaries, and The Bank of New York Mellon, N.A.;

• Indenture governing the 2021 Notes, dated April 15, 2016, among the Company, Wilmington, and the guarantors party thereto;

• Debtor-in-Possession Credit Agreement, dated as of April 30, 2017 and effective as of May 3, 2017, by and among the Company, the lenders party thereto, Wells Fargo, and other agents party thereto; and

• Debtor-in-Possession Term Loan Credit Agreement, dated as of April 30, 2017, by and among the Company, the lenders party thereto, and Wilmington.

In addition, on the Effective Date, pursuant to the Plan, (i) all shares of the Company’s pre-Effective Date common stock and all other previously issued and outstanding equity interests in the Company, and any rights of any holder in respect thereof, were canceled and discharged and (ii) all agreements, instruments, and other documents evidencing, relating to or connected with the Company’s pre-Effective Date common stock and all other previously issued and outstanding equity interests of the Company, and any rights of any holder in respect thereof, were canceled and discharged and of no further force or effect.

As a result of the cancellation of the Company’s pre-Effective Date common stock on the Effective Date, the Company’s pre-Effective Date common stock ceased trading on the OTC Pink Marketplace under the symbol “NESCQ.” On October 12, 2017, the Company’s post-Effective Date common stock was listed and began trading on the NYSE American Stock Exchange under the symbol “NES.” See Risk Factors Related to our Common Stock” on page 21 of this Annual Report.

The foregoing is a summary of the substantive provisions of the Plan and the transactions related to and contemplated thereunder and is not intended to be a complete description of, or a substitute for, a full and complete reading of the Plan and the other documents referred to above.

Fresh Start Accounting

In connection with our emergence from chapter 11 on the Effective Date, we applied the provisions of fresh start accounting, pursuant to FASB ASC 852, Reorganizations (“ASC 852”), to our consolidated financial statements. We qualified for fresh start accounting as (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the emerging entity and (ii) the reorganization value of our assets immediately prior to confirmation was less than the post-petition liabilities and allowed claims. ASC 852 requires that fresh start accounting be applied when the Bankruptcy Court enters the Confirmation Order confirming the Plan, or as of a later date when all material conditions precedent to the effectiveness of the Plan are resolved, which for us was August 7, 2017. We elected to apply fresh start accounting effective July 31, 2017, to coincide with the timing of our normal accounting period close. We evaluated the events between July 31, 2017 and August 7, 2017 and concluded that the use of an accounting convenience date of July 31, 2017 did not have a material impact on our results of operations or financial position.

The implementation of the Plan and the application of fresh start accounting materially changed the carrying amounts and classifications reported in our condensed consolidated financial statements and resulted in a new entity for financial reporting purposes. As a result, the financial statements after July 31, 2017 are not comparable with the financial statements on and prior to July 31, 2017.

Fresh start accounting reflects the value of the Successor Company as determined in the confirmed Plan. Under fresh start accounting, asset values are remeasured and allocated based on their respective fair values in conformity with the purchase method of accounting for business combinations in FASB ASC 805,Business Combinations. Liabilities existing as of the Effective Date, other than deferred taxes, were recorded at the present value of amounts expected to be paid using appropriate risk adjusted interest rates. Deferred taxes were determined in conformity with applicable accounting standards. Predecessor accumulated depreciation, accumulated amortization, and accumulated deficit were eliminated.Reorganization value represents the fair value of the Successor Company’s assets before considering liabilities. The excess reorganization value over the fair value of identified tangible and intangible assets is reported as goodwill.

Reorganization Value

Under ASC 852, the Successor Company must determine a value to be assigned to the equity of the emerging company as of the date of adoption of fresh start accounting. To facilitate this calculation, we estimated the enterprise value of the Successor Company by relying equally on a discounted cash flow (or “DCF”) analysis under the income approach and the guideline public company method under the market approach. Enterprise value represents the fair value of an entity’s interest-bearing debt and stockholders’ equity.

To estimate enterprise value utilizing the DCF method, we established an estimate of future cash flows for the period ranging from 2017 to 2023 and discounted the estimated future cash flows to present value. The expected cash flows for the period 2017 to 2021 were based on the financial projections and assumptions utilized in the disclosure statement. The expected cash flows for the period 2022 to 2023 were derived from earnings forecasts and assumptions regarding growth and margin projections, as applicable. A terminal value was included based on the cash flow of the final year of the forecast period.

The discount rate of 11.3% was estimated based on an after-tax weighted average cost of capital (or “WACC”) reflecting the rate of return that would be expected by a market participant. The WACC also takes into consideration a company specific risk premium reflecting the risk associated with the overall uncertainty of the financial projections used to estimate future cash flows.

The guideline public company analysis identified a group of comparable companies that have operating and financial characteristics comparable in certain respects to us, including comparable lines of business, business risks and market presence. Under this methodology, certain financial multiples and ratios that measure financial performance and value are calculated for each selected company and then compared to the implied multiples from the DCF analysis.We considered enterprise value as a multiple of each selected company for which there was publicly available earnings before interest, taxes, depreciation and amortization (or “EBITDA”).

In the disclosure statement associated with the Plan, which was confirmed by the Bankruptcy Court, we estimated a range of enterprise values between $270.0 million and $335.0 million, with a midpoint of $302.5 million. We deemed it appropriate to use the midpoint between the low end and high end of the range to determine the final enterprise value of $302.5 million utilized for fresh start accounting.

The estimated enterprise value and the equity value are highly dependent on the achievement of the future financial results contemplated in the projections that were set forth in the Plan. The estimates and assumptions made in the valuation are inherently subject to significant uncertainties. The primary assumptions for which there is a reasonable possibility of occurrence of a variation that would have significantly affected the reorganization value include the assumptions regarding revenue growth, operating expenses, the amount and timing of capital expenditures and the discount rate utilized.

The following table reconciles the enterprise value to the estimated fair value of the Successor common stock, par value of $0.01 per share, as of the Effective Date:

Enterprise value	$	302,500
Plus: Cash and cash equivalents and restricted cash	14,998
Plus: Non-operating assets	14,400
Fair value of invested capital	331,898
Less: Fair value of First and Second Lien Term Loans	(36,053		)
Less: Fair value of capital leases	(5,654		)
Shareholders’ equity of Successor Company	$	290,191
Shares outstanding of Successor Company	11,696
Implied per share value	$	24.81

The following table reconciles the enterprise value to the estimated reorganization value as of the Effective Date:

Enterprise value	$	302,500
Plus: Cash and cash equivalents and restricted cash	14,998
Plus: Other non-operating assets	14,400
Fair value of invested capital	331,898
Plus: Current liabilities, excluding current portion of long-term debt	32,011
Plus: Non-current liabilities, excluding long-term debt	6,441
Reorganization value of Successor Assets	$	370,350

Warrants

Pursuant to the Plan, on the Effective Date, we issued to the holders of the 2018 Notes and holders of certain claims relating to the rejection of executory contracts and unexpired leases118,137warrants with an exercise price of$39.82and a termexpiring seven years from the Effective Date. Each warrant is exercisable foroneshare of our common stock, par value$0.01.

The warrants were recorded as derivative liabilities on the “Derivative warrant liability” line in the condensed consolidated balance sheet. At issuance the warrants were recorded at fair value, which wascomputed using a Monte Carlo simulation model (Level 3), and are re-measured at each quarter end until expiration or exercise with the resulting fair value adjustment recorded in “Other income, net” in the consolidated statement of operations. Future changes in these factors could have a significant impact on the computed fair value of the derivative warrant liability. As such, we expect future changes in the fair value of the warrants could vary significantly from quarter to quarter. The warrants were also previously discussed in Note 13 and Note 14.

Personal Property

To estimate the fair value of personal property, such as machinery and equipment, we utilized a combination of the cost and market approaches. For assets valued via the cost approach, we applied trend indices from published sources to estimate reproduction cost if the asset was new. We then assigned valuation lives specific to each category of asset based on industry sources and our experience to assess physical and functional depreciation. For the assets valued via the market approach, such as trucks and tanks, we researched market values from published sources and reviewed comparable sales data and sales offers received to estimate fair value.

Real Property

The real property consists of land, buildings,and disposal wells. Real property was valued considering the three generally accepted approaches to value: cost, sales comparison and income capitalization. Due to the special-use nature of most of the real property, we relied on the cost and sales comparison approaches. To estimate the replacement cost if the real property was new and determine the economic life of the improvements, we utilized data provided by a valuation service. Depreciation estimates of the improvements were based on information obtained during physical inspections, discussions with building engineers, and general observations of the improvements’ condition. Land was valued as if it were vacant and available through application of the sales comparison approach. For commercial office properties that have leasing potential, we also utilized the income approach to estimate the values. Comparable rents and listing properties were researched an analyzed and adjusted to estimate market rents with the values derived from direct capitalization analysis.

Intangible Assets

The intangible assets were valued with a combination of the income and cost approach. In order to estimate the fair value of the customer relationships, we determined that the excess earnings method under the income approach was appropriate since the inherent value of this intangible asset lies in its ability to generate current and future income, as well as the fact that identifiable revenue streams could be estimated. We utilized the cost approach to value the other intangibles such the assembled workforce and disposal well permits.

Consolidated Statement of Financial Position

The following fresh start condensed consolidated balance sheet presents the implementation of the Plan and adoption of fresh start accounting as of July 31, 2017. The “Reorganization Adjustments” have been recorded within the consolidated balance sheet to reflect the effects of the Plan, including discharge of liabilities subject to compromise. The “Fresh Start Adjustments” reflect the estimated fair value adjustments as a result of the adoption of fresh start accounting.

	Predecessor			Reorganization				Fresh Start				Successor
	Company			Adjustments				Adjustments				Company
Assets
Cash	$	2,728		$	4,465		A	$	—			$	7,193
Restricted cash	8,011			(206		)	B	—				7,805
Accounts receivable, net	27,535			—				—				27,535
Inventories	3,935			—				—				3,935
Prepaid expenses and other receivables	3,200			282			C	—				3,482
Other current assets	924			(500		)	C	—				424
Assets held for sale	631			3,913			D	—				4,544
Total current assets	46,964			7,954				—				54,918
Property, plant and equipment, net	265,097			(8,678		)	D	30,869			P	287,288
Equity investments	59			—				—				59
Intangibles, net	13,093			(763		)	D	(11,723		)	Q	607
Goodwill	—			—				27,139			R	27,139
Other assets	339			—				—				339
Total assets	$	325,552		$	(1,487	)		$	46,285			$	370,350
Liabilities and Shareholders’ Equity (Deficit)
Accounts payable	$	6,331		$	1,967		E	$	—			$	8,298
Accrued and other current liabilities	30,549			(12,168		)	F	(298		)	S	18,083
Current contingent consideration	—			1,000			G	—				1,000
Current portion of long-term debt	41,007			(37,665		)	H	—				3,342
Derivative warrant liability	—			717			I	—				717
Other current liabilities	—			3,913			J	—				3,913
Total current liabilities	77,887			(42,236		)		(298		)		35,353
Deferred income taxes	472			—				(314		)	T	158
Long-term debt	2,312			35,000			K	1,053			K	38,365
Long-term contingent consideration	—			—				—				—
Other long-term liabilities	3,694			(461		)	L	3,050			U	6,283
Liabilities subject to compromise	480,595			(480,595		)	M	—				—
Total liabilities	564,960			(488,292		)		3,491				80,159
Commitments and contingencies
Shareholders’ deficit:
Common stock (Successor)	—			117			N	—				117
Additional paid-in-capital (Successor)	—			290,074			N	—				290,074
Common stock (Predecessor)	152			—				(152		)	V	—
Additional paid-in capital (Predecessor)	1,408,324			—				(1,408,324		)	V	—
Treasury stock (Predecessor)	(19,809		)	—				19,809			V	—
(Accumulated deficit) retained earnings	(1,628,075		)	196,614			O	1,431,461			W	—
Total shareholders’ equity (deficit)	(239,408		)	486,805				42,794				290,191
Total liabilities and shareholders’ equity (deficit)	$	325,552		$	(1,487	)		$	46,285			$	370,350

Reorganization Adjustments

A. Reflects the cash receipts (payments) from implementation of the Plan:

Receipt of Successor First Lien Term Loan and Successor Second Lien Term Loan Proceeds	$	35,000
Payment of debtor in possession revolving facility, including accrued interest and fees	(30,461		)
Payment of debtor in possession term loan interest	(90		)
Cash payment in association with settlement of the 2018 Notes	(350		)
Release of restricted cash to unrestricted cash	206
Refund of professional fees	160
Net Cash Receipts	$	4,465

B. Reflects the release of restricted cash to unrestricted cash.

C. Reflects the reclassification of a rental security deposit to prepaid rent (or “Prepaid expenses and other receivables”) from

“Other current assets” in connection with settlement of lease claims. Also included in “Other current assets” is the settlement for the lease rejection damages, see below:

Reclassification of a rental security deposit to prepaid rent	$	(282	)
Settlement for the lease rejection damages	(218		)
Adjustment to Other current assets	$	(500	)

D. As part of the Plan and settlement of claims, the $7.4 million note payable (or “the AWS Note”) that arose in connection with AWS, was settled in the fourth quarter of fiscal 2017 in exchange for the membership interests in AWS, return of the water treatment facility in the Marcellus shale area, including all assets related to the operations of the water treatment facility in “as-is, where-is” condition, together with $75,000 for reimbursement of certain costs and deferred maintenance. The adjustments reflect the reclassification of property, plant and equipment exchanged for the release of claims related to the AWS Note from “Property, plant and equipment, net” to “Assets held for sale,” as well as the write-off of intangibles associated with AWS.

Elimination of property, plant and equipment related to AWS settlement	$	(8,678	)
Elimination of intangible assets related to AWS settlement	(763		)
Recognition of assets held for sale on the AWS settlement	3,913
Accrual of cash payment in connection with the AWS settlement (See F)	(75		)
Loss on settlement of the AWS note payable	$	(5,603	)

E. The reorganization adjustment to “Accounts payable” represents the reinstatement of the pre-petition accounts payable that was previously classified as “Liabilities subject to compromise.”

F. The reorganization adjustment to “Accrued and other current liabilities” are noted in the table below.

Accrual of the $75,000 related to the AWS settlement	$	75
Write-off of short-term deferred rent related to the Scottsdale Headquarters lease	(330		)
Write-off of accrued interest related to the 2018 and 2021 Notes	(11,650		)
Decrease in accrued interest for DIP Facilities due to cash payment	(263		)
Net decrease in Accrued and other current liabilities	$	(12,168	)

G. Reflects the contingent consideration due for the Ideal Settlement. Of the remaining $1.0 million balance due, $0.5 million was paid in August 2017 subsequent to the Effective Date and the other $0.5 million is payable upon delivery of the required permits.

H. Reflects the payment or conversion to equity of the Predecessor Revolving Facility and debtor in possession credit facilities in connection with emergence on the Effective Date.

I. Reflects the recognition of the derivative warrant liability for the warrants issued in connection with the Plan. Note 13 and Note 14 includes additional discussion on the warrants and the assumptions used to calculate the fair value.

J. Reflects the reclassification of the AWS debt prior to the surrender of the AWS assets classified as “Assets held for sale” pursuant to the Plan.

K. Represents the new Successor First Lien Term Loan and Successor Second Lien Term Loan at fair value, net of debt issuance costs:

Successor First Lien Term Loan at fair value	$	15,000
Successor Second Lien Term Loan at fair value	21,053
Debt issuance costs associated with the Successor Second Lien Term Loan	(1,053		)
Fair Value of the Successor First Lien Term Loan and Successor Second Lien Term Loan, net of debt issuance costs	$	35,000

L. Reflects the write-off of long-term deferred rent associated with the Scottsdale headquarters lease which was rejected and settled as part of the chapter 11 filing.

M. Liabilities subject to compromise were settled as follows in accordance with the Plan:

Outstanding principal amount of 2018 Notes, net of discounts/premiums and debt issuance costs	$	(40,020	)
Outstanding principal amount of 2021 Notes, net of discounts/premiums and debt issuance costs	(347,658		)
Outstanding principal amount of Term Loan, net of discounts/premiums and debt issuance costs	(78,264		)
Outstanding principal amount on the AWS note payable	(3,913		)
Ideal original contingent consideration	(8,500		)
Pre-petition accounts payable	(1,967		)
Derivative warrant liability	(273		)
Balance of Liabilities subject to compromise	$	(480,595	)
Reinstatement of pre-petition accounts payable	$	1,967
Reinstatement of a portion of the Ideal contingent consideration pursuant to the settlement agreement	1,000
Reinstatement of the AWS note payable pursuant to the settlement agreement	3,913
Payment to the 2018 Noteholders pursuant to the Plan	350
Write-off of accrued interest related to the 2018 and 2021 Notes	(11,650		)
Record the issuance of Successor common equity	290,191
Recoveries pursuant to the Plan	$	285,771
Net gain on debt discharge	$	(194,824	)

N. Distribution of 11,695,580 Successor shares of common stock at a par value of $0.01 per share:

Record issuance of shares of Successor common stock at par value of $0.01 per share	$	117
Record additional paid-in capital from the issuance of Successor common stock	290,074
Fair value of Successor common equity	$	290,191

O. Reflects the cumulative impact of the reorganization adjustments on “(Accumulated deficit) retained earnings” discussed above:

Net gain on debt discharge	$	194,824
Loss on settlement of the AWS note payable	(5,603		)
Write-off of a portion of the Ideal contingent consideration due to settlement	7,500
Settlement of the lease rejection claim associated with the Scottsdale headquarters lease	(218		)
Write-off of the deferred rent associated with the Scottsdale headquarters lease	790
Issuance of warrants to the 2018 Noteholders and other parties pursuant to the Plan	(717		)
Refund of professional fees	160
Professional fees related to the reorganization under the Plan	(122		)
Net retained earnings impact resulting from implementation of the Plan	$	196,614

Fresh Start Adjustments

P. Reflects the increase in net book value of property, plant and equipment to estimated fair value. The following table summarizes the components of property, plant and equipment, net as of July 31, 2017 of the Predecessor Company and the Successor Company:

	Successor		Predecessor
Land	$	10,779	$	11,495
Buildings	29,349		27,145
Building, leasehold and land improvements	8,690		10,724
Pipelines	66,962		58,533
Disposal wells	41,195		20,872
Landfill	4,500		20,539
Machinery and equipment	16,724		20,169
Equipment under finance leases	10,045		6,499
Motor vehicles and trailers	55,333		34,069
Rental equipment	36,748		46,300
Office equipment	3,046		1,954
Construction in process	3,917		6,798
Property, plant and equipment, net	$	287,288	$	265,097

Q. Reflects the reduction in net book value of intangible assets to estimated fair value.

R. The adjustment represents the reorganization value of assets in excess of amounts allocated to identified tangible and intangible assets as follows:

Reorganization value of Successor assets	$	370,350
Less: Fair value of Successor assets (excluding goodwill)	343,211
Reorganization value of Successor assets in excess of fair value - Successor goodwill	$	27,139

The Successor goodwill by segment is $4.9 million for the Rocky Mountain division, $19.5 million for the Northeast division, and $2.7 million for the Southern division. Upon emergence, we have determined that our goodwill will be tested for impairment annually at October 1st and more frequently if events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. There were no indicators of goodwill impairment at October 1, 2017.

S. Reflects an adjustment to Accrued and other current liabilities to adjust the environmental liabilities to estimated fair value.

T. Reflects the impact of the reorganization and fresh start adjustments on deferred taxes.

U. Reflects the adjustment to increase the net book value of asset retirement obligations to estimated fair value.

V. Reflects the cancellation of Predecessor equity to (Accumulated deficit) retained earnings.

W. Reflects the cumulative impact of the fresh start accounting adjustments discussed above on (Accumulated deficit) retained earnings as follows:

Property, plant and equipment fair value adjustment	$	30,869
Intangible assets fair value adjustment	(11,723		)
Reorganization value in excess of amounts allocable to identified assets - Successor goodwill	27,139
Asset retirement obligation fair value adjustment	(3,050		)
Environmental liability fair value adjustment	298
Recording the fair value of debt issuance costs for the new Successor First Lien Term Loan and Successor Second Lien Term Loan	(1,053		)
Adjustment to deferred income taxes	314
Change in assets and liabilities resulting from fresh start adjustments	$	42,794
Elimination of Predecessor common stock to (accumulated deficit) retained earnings	$	152
Elimination of Predecessor additional paid-in capital to (accumulated deficit) retained earnings	1,408,324
Elimination of Predecessor treasury stock to (accumulated deficit) retained earnings	(19,809		)
Net impact of fresh start adjustments on (accumulated deficit) retained earnings	$	1,431,461

Reorganization Items, net

Reorganization items, net represents liabilities settled, net of amounts incurred subsequent to the chapter 11 filing as a direct result of the Plan and are classified as “Reorganization items, net” in our consolidated statement of operations. The following table summarizes reorganization items, net for the years ended December 31, 2019 and 2018, five months ended December 31, 2017, and the seven months ended July 31, 2017:

	Successor									Predecessor
	Year Ended December 31,						Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Net gain on debt discharge	$	—		$	—		$	—		$	194,824
Change in assets and liabilities resulting from fresh start adjustments	—			—			—			42,794
Settlement of the AWS note payable	—			—			—			(5,603		)
Fair value of warrants issued to the 2018 Noteholders and other parties pursuant to the Plan	—			—			—			(717		)
Professional and insurance fees	(200		)	(246		)	(7,306		)	(9,090		)
DIP credit agreement financing costs	—			—			3,962			(5,702		)
Retention bonus payments	—			—			(2,158		)	(806		)
Other costs (a)	—			(1,433		)	(5		)	7,794
Reorganization items, net	$	(200	)	$	(1,679	)	$	(5,507	)	$	223,494

(a) Includes approximately $1.3 million in chapter 11 fees paid to the US Trustee during the year ended December 31, 2018.

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Fresh Start Accounting - Additional Information - Contingent Consideration (Details) - USD ($) $ in Thousands		1 Months Ended
	Jul. 31, 2017	Aug. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Reorganizations [Abstract]
Long-term contingent consideration	$ 1,000		$ 500	$ 0
Payment for contingent consideration		$ 500
Amount to be transferred when required permits are delivered	$ 500

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Fresh Start Accounting - Schedule of Reorganization Items (Details) - USD ($) $ in Thousands		5 Months Ended	7 Months Ended	12 Months Ended
	Jul. 31, 2017	Dec. 31, 2017	Jul. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Reorganizations [Abstract]
Net gain on debt discharge		$ 0	$ 194,824	$ 0	$ 0
Change in assets and liabilities resulting from fresh start adjustments		0	42,794	0	0
Settlement of the AWS note payable	$ (5,603)	0	(5,603)	0	0
Fair value of warrants issued to the 2018 Noteholders and other parties pursuant to the Plan		0	(717)	0	0
Professional and insurance fees		(7,306)	(9,090)	(200)	(246)
DIP credit agreement financing costs		3,962	(5,702)	0	0
Retention bonus payments		(2,158)	(806)	0	0
Other costs		(5)	7,794	0	(1,433)
Reorganization items, net		$ (5,507)	$ 223,494	$ (200)	(1,679)
Chapter 11 fees paid to US Trustee					$ 1,300

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Segments (Tables)

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Financial Information for Reportable Segments

Financial information for our reportable segments related to continuing operations is presented below.

	Northeast			Southern (b)			Rocky Mountain			Corporate/ Other			Total
Year Ended December 31, 2019 - Successor
Revenue	$	44,001		$	20,685		$	103,552		$	—		$	168,238
Direct operating expenses	35,836			13,654			81,529			—			131,019
General and administrative expenses	2,880			1,104			5,021			11,859			20,864
Depreciation and amortization	10,755			8,410			16,982			36			36,183
Operating loss	(27,977		)	(5,208		)	(5,022		)	(11,895		)	(50,102		)
Loss before income taxes	(28,212		)	(5,428		)	(5,479		)	(15,908		)	(55,027		)
Total assets (a)	64,023			70,841			93,504			7,731			236,099
Total assets held for sale	135			—			1,751			778			2,664
Year Ended December 31, 2018 - Successor

	Northeast			Southern (b)			Rocky Mountain			Corporate/ Other			Total
Revenue	$	43,564		$	26,152		$	127,758		$	—		$	197,474
Direct operating expenses	37,660			19,381			101,855			—			158,896
General and administrative expenses	2,746			1,237			5,859			28,668			38,510
Depreciation and amortization	12,148			11,397			22,826			63			46,434
Operating loss	(9,059		)	(11,396		)	(2,782		)	(29,063		)	(52,300		)
Loss before income taxes	(9,370		)	(11,576		)	(2,781		)	(35,329		)	(59,056		)
Total assets (a)	88,501			84,318			113,767			9,350			295,936
Total assets held for sale	—			2,004			—			778			2,782
Five Months Ended December 31, 2017 - Successor
Revenue	$	17,234		$	16,467		$	46,487		$	—		$	80,188
Direct operating expenses	14,836			12,005			40,236			—			67,077
General and administrative expenses	1,156			1,574			2,640			5,245			10,615
Depreciation and amortization	10,816			9,533			18,108			94			38,551
Operating loss	(9,574		)	(6,883		)	(19,163		)	(5,339		)	(40,959		)
Loss before income taxes	(9,819		)	(7,106		)	(20,219		)	(11,098		)	(48,242		)
Seven Months Ended July 31, 2017 - Predecessor
Revenue	$	20,751		$	18,586		$	56,546		$	—		$	95,883
Direct operating expenses	21,117			13,056			46,837			—			81,010
General and administrative expenses	1,917			1,684			3,877			15,074			22,552
Depreciation and amortization	5,352			7,542			15,964			123			28,981
Operating loss	(7,635		)	(3,696		)	(10,132		)	(15,197		)	(36,660		)
Income (loss) before income taxes	20,194			18,650			(14,854		)	144,299			168,289

_____________________

(a) Total assets exclude intercompany receivables eliminated in consolidation.

(b) The Southern division includes results for the Eagle Ford Shale area through June 30, 2018. We substantially exited the Eagle Ford Shale area as of June 30, 2018. See Note 10 for further discussion.

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Organization and Nature of Business Operations - Narrative (Details)	Dec. 31, 2019 operating_division
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating divisions	3

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Goodwill and Intangible Assets - Estimated Amortization Expense (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
2020	$ 441
2021	54
2022	49
2023	33
2024	22
Thereafter	41
Net Book Value	$ 640	$ 1,112

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Fair Value Measurements - Additional Information (Detail) $ / shares in Units, $ in Millions			12 Months Ended
	Jul. 31, 2017 USD ($) warrant $ / shares shares	Jul. 11, 2017 USD ($)	Dec. 31, 2019 USD ($) $ / shares	Dec. 31, 2017 USD ($) warrant $ / shares	Dec. 31, 2018 $ / shares	Aug. 07, 2017 $ / shares	Dec. 31, 2016 $ / shares	Dec. 31, 2015 $ / shares
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amount to be transferred when required permits are delivered | $	$ 0.5
Plan of reorganization, number of warrants issued | warrant	118,137			0
Exercise price of warrants (in usd per warrant) | $ / shares	$ 39.82		$ 39.82	$ 39.82	$ 39.82	$ 39.82
Expiration term (in years)	7 years
Par value of successor common stock (usd per share) | $ / shares	$ 0.01		$ 0.01		$ 0.01		$ 0.001	$ 0.001
Common Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of common stock shares exercisable for each warrant | shares	1
2018 Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest Rate	9.875%
Chapter 11 Bankruptcy
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amount to be transferred when required permits are delivered | $		$ 0.5	$ 0.5	$ 0.5

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Debt - Principal Repayments (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Principal
2020	$ 6,430
2021	24,096
2022	1,425
2023	3,211
2024	217
Thereafter	1,151
Total	36,530	$ 66,356
Interest
2020	3,524
2021	1,277
2022	387
2023	214
2024	127
Thereafter	256
Total	$ 5,785

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Assets Held for Sale and Impairment of Long-Lived Assets and Goodwill - Additional Information (Detail) $ in Thousands		3 Months Ended	5 Months Ended	7 Months Ended	12 Months Ended
	Oct. 01, 2019 unit	Dec. 31, 2019 USD ($)	Dec. 31, 2017 USD ($)	Jul. 31, 2017 USD ($)	Dec. 31, 2019 USD ($) unit	Dec. 31, 2018 USD ($)	Oct. 05, 2018 USD ($)
Goodwill [Line Items]
Impairment of assets to be disposed of			$ 4,904	$ 0	$ 766	$ 4,815
Goodwill		$ 0	27,139		0	29,518
Impairment of goodwill		29,500	0	$ 0	$ 29,518	0
Number of reporting units | unit	3				3
Clearwater
Goodwill [Line Items]
Goodwill							$ 2,379
Impairment of goodwill						2,400
Fresh Start Adjustments
Goodwill [Line Items]
Impairment of goodwill					$ 27,100
Corp/Other
Goodwill [Line Items]
Impairment of assets to be disposed of						300
Impairment of goodwill					0
Northeast
Goodwill [Line Items]
Impairment of assets to be disposed of					700	100
Goodwill						21,900
Impairment of goodwill		21,900
Rocky Mountain
Goodwill [Line Items]
Impairment of assets to be disposed of			4,700		$ 100
Goodwill						4,900
Impairment of goodwill		4,900
Southern
Goodwill [Line Items]
Impairment of assets to be disposed of			$ 200			4,400
Goodwill						$ 2,700
Impairment of goodwill		$ 2,700

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Acquisition of Clearwater - Preliminary Allocation of Purchase Price (Detail) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Oct. 05, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Goodwill	$ 0	$ 29,518		$ 27,139
Clearwater
Business Acquisition [Line Items]
Accounts receivable			$ 1,897
Intangible assets			799
Property, plant and equipment			37,589
Goodwill			2,379
Accounts payable and accrued expenses			(372)
Total			$ 42,292

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Restructuring and Exit Costs - Liability Rollforward (Details) - Eagle Ford Shale Area - Lease Exit Costs $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	$ 19
Cash payments	(13)
Adjustments to accrued balance	(6)
Restructuring reserve, ending balance	$ 0

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Derivative Warrants (Tables)

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Schedule of Stockholders' Equity Note, Warrants or Rights

The following table provides a reconciliation of the beginning and ending balances of the derivative warrant liability which is included in “Accrued and other current liabilities” in the consolidated balance sheets as of December 31, 2019 and December 31, 2018.

	Successor
	December 31,			December 31,
	2019			2018
Balance at beginning of period	$	34		$	477
Issuance of warrants	—			—
Exercise of warrants	—			—
Adjustments to estimated fair value	(34		)	(443		)
Balance at end of period	$	—		$	34

The following table shows the Predecessor warrant activity for the seven months ended July 31, 2017:

	Predecessor
	Seven Months Ended July 31,
	2017
Outstanding at the beginning of period	25,283
Issued	—
Exercised	(16	)
Canceled due to emergence from chapter 11	(25,267	)
Outstanding at the end of the period	—

The following table shows the Successor warrant activity for the years ended December 31, 2019, December 31, 2018 and five months ended December 31, 2017:

	Successor
	Year Ended December 31,	Year Ended December 31,	Five Months Ended December 31,
	2019	2018	2017
Outstanding at the beginning of the period	118	118	—
Issued	—	—	118
Exercised	—	—	—
Outstanding at the end of the period	118	118	118

Schedule of Assumptions Used

The fair value of the derivative warrant liability was estimated using the following model inputs:

	Successor
	Period Ended			Period Ended			Period Ended			At Issuance
	December 31, 2019			December 31, 2018			December 31, 2017			August 7, 2017
Exercise price	$	39.82		$	39.82		$	39.82		$	39.82
Closing stock price (a)	$	2.90		$	8.20		$	18.18		$	22.28
Risk free rate	1.66		%	2.51		%	2.29		%	2.07		%
Expected volatility	39.18		%	36.87		%	40.59		%	39.39		%

(a) As the Company’s post-Effective Date common stock did not begin trading on the NYSE American Stock Exchange until October 12, 2017, the closing stock price used to estimate the fair value of the derivative warrant liability on August 7, 2017 was the implied price per share assuming an enterprise value of $302.5 million before fresh start accounting adjustments.

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Restructuring and Exit Costs (Tables)

12 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs

A rollforward of the liability from December 31, 2018 through December 31, 2019 is as follows:

	Lease Exit Costs
Balance accrued at beginning of period - Successor	$	19
Cash payments	(13		)
Adjustments to accrued balance	(6		)
Balance accrued at end of period - Successor	$	—

A rollforward of the liability from December 31, 2018 through December 31, 2019 is as follows:

	Lease Exit Costs
Balance accrued at beginning of period - Successor	$	33
Cash payments	(29		)
Adjustments to accrued balance	(4		)
Balance accrued at end of period - Successor	$	—

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Derivative Warrants (Details) - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Aug. 07, 2017	Jul. 31, 2017
Derivative [Line Items]
Exercise price of warrants (in usd per warrant)		$ 39.82	$ 39.82	$ 39.82	$ 39.82	$ 39.82
Warrant
Derivative [Line Items]
Warrants issued during period (shares)	26,400,000
Exercise price of warrants (in usd per warrant)	$ 0.01
Class of warrant or right, term	10 years
Common Stock
Derivative [Line Items]
Number of common stock shares exercisable for each warrant						1
2018 Notes
Derivative [Line Items]
Interest Rate						9.875%
2018 Notes | Warrant
Derivative [Line Items]
Warrants issued during period (shares)	17,500,000
2021 Notes | Senior Notes | Maximum
Derivative [Line Items]
Interest Rate	12.50%
2021 Notes | Senior Notes | Minimum
Derivative [Line Items]
Interest Rate	10.00%
Term Loan | Warrant
Derivative [Line Items]
Warrants issued during period (shares)	8,800,000
Common Class A | Warrant
Derivative [Line Items]
Warrants issued during period (shares)	100,000

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Significant Accounting Policies - Depreciation Computed Using Estimated Useful Lives (Detail)	12 Months Ended
	Dec. 31, 2019
Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	39 years
Buildings | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	15 years
Buildings | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	39 years
Building and land improvements | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years
Building and land improvements | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	20 years
Pipelines | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	10 years
Pipelines | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	30 years
Disposal wells | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Disposal wells | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	10 years
Machinery and equipment | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Machinery and equipment | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	15 years
Equipment under capital leases | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	4 years
Equipment under capital leases | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	6 years
Motor vehicles and trailers | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Motor vehicles and trailers | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	10 years
Rental equipment | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	5 years
Rental equipment | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	10 years
Office equipment | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Office equipment | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life	7 years

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 4,788	$ 7,302
Restricted cash	922	656
Accounts receivable, net	26,493	31,392
Inventories	3,177	3,358
Prepaid expenses and other receivables	3,264	2,435
Other current assets	231	1,582
Assets held for sale	2,664	2,782
Total current assets	41,539	49,507
Property, plant and equipment, net	190,817
Property, plant and equipment, net		215,640
Operating lease assets	2,886
Equity investments	39	41
Intangibles, net	640	1,112
Goodwill	0	29,518
Other assets	178	118
Total assets	236,099	295,936
Liabilities and Shareholders’ Equity
Accounts payable	5,633	9,061
Accrued and other current liabilities	10,064	16,704
Current portion of long-term debt	6,430	38,305
Current contingent consideration	0	500
Total current liabilities	22,127	64,570
Long-term debt	30,005	27,628
Noncurrent operating lease liabilities	1,457	0
Deferred income taxes	91	181
Long-term contingent consideration	500	0
Other long-term liabilities	7,487	7,130
Total liabilities	61,667	99,509
Commitments and contingencies
Preferred stock $0.01 par value (1,000 shares authorized, no shares issued and outstanding at December 31, 2019 and 2018)	0	0
Common stock, $0.01 par value (75,000 shares authorized, 15,781 shares issued and 15,735 outstanding at December 31, 2019, and 12,233 issued and outstanding at December 31, 2018)	158	122
Additional paid-in capital	337,628	303,463
Treasury stock, at cost (46 shares at December 31, 2019)	(436)	0
Accumulated deficit	(162,918)	(107,158)
Total shareholders’ equity	174,432	196,427
Total liabilities and shareholders’ equity	$ 236,099	$ 295,936

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Leases - Components of Lease Expense (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Leases [Abstract]
Operating lease cost	$ 3,034
Finance lease cost:
Amortization of leased assets	2,797
Interest on lease liabilities	538
Variable lease cost	4,184
Sublease income	(90)
Total net lease cost	10,463
Short-term lease cost	$ 800

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Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018	Jul. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Statement of Stockholders' Equity [Abstract]
Common stock, par value (usd per share)	$ 0.01	$ 0.01	$ 0.01	$ 0.001	$ 0.001

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Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								5 Months Ended		7 Months Ended	12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2017	Jul. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Numerator:
Net (loss) income	$ (37,524)	$ (6,052)	$ (5,006)	$ (6,355)	$ (8,803)	$ (7,117)	$ (11,176)	$ (32,167)	$ (47,895)	$ (47,895)	$ 168,611	$ (54,937)	$ (59,263)
Denominator:
Weighted average shares - basic (in shares)									11,696,000		150,940,000	15,676,000	11,829,000
Common stock equivalents (in shares)									0		23,364,000	0	0
Weighted average shares-diluted (in shares)									11,696,000		174,304,000	15,676,000	11,829,000
Earnings per common share:
Net (loss) income per basic common share (usd per share)	$ (2.39)	$ (0.39)	$ (0.32)	$ (0.41)	$ (0.72)	$ (0.61)	$ (0.96)	$ (2.75)	$ (4.09)		$ 1.12	$ (3.50)	$ (5.01)
Net (loss) income per diluted common share (usd per share)	$ (2.39)	$ (0.39)	$ (0.32)	$ (0.41)	$ (0.72)	$ (0.61)	$ (0.96)	$ (2.75)	$ (4.09)		$ 0.97	$ (3.50)	$ (5.01)
Antidilutive stock-based awards excluded (in shares)									827,000		593,000	490,000	951,000

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Share-based Compensation - Stock Option Activity (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	5 Months Ended	7 Months Ended	12 Months Ended
	Dec. 31, 2017	Jul. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Shares Outstanding and Exercisable
Options outstanding, beginning balance (in shares)	0	367	709	709	367
Granted (in shares)	709	0	0	0
Exercised (in shares)	0	0	0	0
Forfeited, canceled, or expired (in shares)	0	(367)	(709)	0
Options outstanding, beginning balance (in shares)	709	0	0	709	709	367
Exercisable, ending balance (in shares)	0	0	0	709	0
Weighted-Average Exercise Price
Options outstanding, beginning balance (in dollars per share)	$ 0.00	$ 13.55	$ 39.17	$ 39.17	$ 13.55
Granted (in dollars per share)	39.17	0.00
Exercised (in dollars per share)		0.00
Forfeited, canceled, or expired (in dollars per share)		13.55	39.17
Options outstanding, ending balance (in dollars per share)	39.17	0.00	0.00	39.17	39.17	$ 13.55
Exercisable, ending balance (in dollars per share)	$ 0.00	$ 0.00	$ 0.00	$ 39.17	$ 0.00
Additional Disclosures
Stock option maximum contractual term		0 years	0 years	2 months 6 days	9 years 7 months 6 days	7 years 2 months 6 days
Stock option, exercisable, contractual term		0 years	0 years	2 months 6 days	0 years
Stock option intrinsic value	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
Stock option, exercisable, intrinsic value	$ 0	$ 0	$ 0	$ 0	$ 0

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Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Operating Leases
2020	$ 1,557
2021	466
2022	325
2023	200
2024	189
Thereafter	6,669
Total lease payments	9,406
Less amount representing executory costs	(45)
Net lease payments	9,361
Less amount representing interest	(6,462)
Present value of total lease liabilities	2,899
Less current lease liabilities	(1,442)
Long-term lease liabilities	1,457	$ 0
Finance Leases
2020	2,007
2021	1,812
2022	1,812
2023	3,425
2024	344
Thereafter	1,405
Total lease payments	10,805
Less amount representing executory costs	0
Net lease payments	10,805
Less amount representing interest	(2,021)
Present value of total lease liabilities	8,784
Less current lease liabilities	(1,443)
Long-term lease liabilities	7,341
Finance lease payments	$ 1,700

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Fresh Start Accounting - Schedule of Net Cash Receipts (Payments) Recorded from Implementation of the Plan (Details) $ in Thousands	Jul. 31, 2017 USD ($)
Receipt of Successor First Lien Term Loan and Successor Second Lien Term Loan Proceeds
Fresh-Start Adjustment [Line Items]
Cash receipts (payments)	$ 35,000
Payment of debtor in possession revolving facility, including accrued interest and fees
Fresh-Start Adjustment [Line Items]
Cash receipts (payments)	(30,461)
Payment of debtor in possession term loan interest
Fresh-Start Adjustment [Line Items]
Cash receipts (payments)	(90)
Cash payment in association with settlement of the 2018 Notes
Fresh-Start Adjustment [Line Items]
Cash receipts (payments)	(350)
Release of restricted cash to unrestricted cash
Fresh-Start Adjustment [Line Items]
Cash receipts (payments)	206
Refund of professional fees
Fresh-Start Adjustment [Line Items]
Cash receipts (payments)	160
Net decrease in Accrued and other current liabilities
Fresh-Start Adjustment [Line Items]
Cash receipts (payments)	$ 4,465

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Fresh Start Accounting - Narrative (Details) $ / shares in Units, $ in Thousands	Jul. 31, 2017 USD ($) warrant $ / shares shares	Dec. 31, 2019 $ / shares	Dec. 31, 2018 $ / shares	Dec. 31, 2017 warrant $ / shares	Aug. 07, 2017 USD ($) $ / shares	Dec. 31, 2016 $ / shares	Dec. 31, 2015 $ / shares
Fresh-Start Adjustment [Line Items]
Percentage of voting shares upon emergence (less than)	50.00%
Weighted average cost of capital	11.30%
Enterprise value	$ 302,500				$ 302,500
Plan of reorganization, number of warrants issued | warrant	118,137			0
Exercise price of warrants (in usd per warrant) | $ / shares	$ 39.82	$ 39.82	$ 39.82	$ 39.82	$ 39.82
Expiration term (in years)	7 years
Common stock, par value (usd per share) | $ / shares	$ 0.01	$ 0.01	$ 0.01			$ 0.001	$ 0.001
Minimum
Fresh-Start Adjustment [Line Items]
Enterprise value	$ 270,000
Maximum
Fresh-Start Adjustment [Line Items]
Enterprise value	$ 335,000
Common Stock
Fresh-Start Adjustment [Line Items]
Number of common stock shares exercisable for each warrant | shares	1

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Subsidiary Guarantors - Additional Information (Detail)	7 Months Ended
	Jul. 31, 2017
Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Subsidiary ownership percentage	100.00%

XML

Equity

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Equity

Equity

Equity Issuances in 2019 - Successor

During the year ended December 31, 2019, we issued common stock for our share-based compensation program which is discussed further in Note 17.

Rights Offering in 2018 - Successor

As previously disclosed, we agreed, pursuant to the Bridge Term Loan Credit Agreement, to use our reasonable best efforts to effectuate and close the Rights Offering as soon as reasonably practicable following October 5, 2018, whereby we would dividend to our holders of common stock subscription rights to purchase shares of our common stock on a pro rata basis with an aggregate offering price of $32.5 million. Holders who subscribed for all of their basic subscription rights also could elect to subscribe for additional shares pursuant to an over-subscription privilege.

In connection with the Rights Offering, we entered into a Backstop Commitment Letter on October 5, 2018 (the “Backstop Commitment Letter”) with certain backstop parties named therein (the “Backstop Parties”), pursuant to which the Backstop Parties agreed, subject to the terms and conditions in the Backstop Commitment Letter, to participate in the Rights Offering and agreed to acquire all unsubscribed shares remaining after stockholders exercised their over-subscription privilege. The Backstop Parties are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. In exchange for the commitments under the Backstop Commitment Letter, we paid to the Backstop Parties, in the aggregate, a nonrefundable cash payment equal to 1.0% of the full amount of the Rights Offering.

Pursuant to the Backstop Commitment Letter, we were required to file a registration statement with the SEC within 20 days following October 5, 2018. This initial Registration Statement on Form S-1 was filed with the SEC on October 25, 2018, with amendments to the Form S-1 filed on December 4, 2018 and December 7, 2018. The Registration Statement on Form S-1 respecting the Rights Offering was declared effective by the SEC on Friday, December 7, 2018. The Rights Offering launched at the close of business on December 10, 2018 and terminated, as to unexercised rights, at 5:00 p.m. New York City time on December 28, 2018.

We sold an aggregate of 3,381,894 shares of common stock at a purchase price of $9.61 per share in the Rights Offering. On January 2, 2019, we received the aggregate gross proceeds from the Rights Offering of $32.5 million and repaid in full the obligations under the Bridge Term Loan Credit Agreement. The shares of common stock subscribed for in the Rights Offering were distributed to applicable offering participants through our transfer agent or through the clearing systems of the Depository Trust Company, which commenced on January 2, 2019. Immediately after the issuance of the 3,381,894 shares for the Rights Offering which commenced on January 2, 2019, the Company had 15,614,981 common shares outstanding.

Equity Issuances in 2018 - Successor

During the year ended December 31, 2018, we issued common stock for our share-based compensation program which is discussed further in Note 17.

Equity Issuances in 2017 - Successor

On the Effective Date, we filed the Second Amended and Restated Certificate of Incorporation of the Company with the office of the Secretary of State of the State of Delaware and adopted the Third Amended and Restated Bylaws of the Company. The Second Amended and Restated Certificate of Incorporation provides that we are authorized to issue a total of 76.0 million shares of capital stock, of which 1.0 million shares shall be preferred stock, par value $0.01, and 75.0 million shares shall be common stock, par value of $0.01, of the reorganized Company.

As previously discussed in Note 25, upon emergence from chapter 11, the following shares of common stock of the reorganized Company were issued:

• 7,900,000 shares of common stock of the reorganized Company to the holders of the Predecessor Company’s 2021 Notes;

• 100,000 shares of common stock of the reorganized Company to the Affected Classes (as defined in the Plan); and

• 3,695,580 shares of common stock of the reorganized Company to holders of Supporting Noteholder Term Loan Claims (as defined in the Plan) and to the Credit Agreement Lenders for the Exit Financing Commitment Fee (as defined in the Plan).

Additionally, pursuant to the Plan, on the Effective Date, we issued to the holders of the 2018 Notes, and holders of certain claims relating to the rejection of executory contracts and unexpired leases,118,137warrants with an exercise price of$39.82and a termexpiring seven years from the Effective Date. Each warrant is exercisable foroneshare of our common stock, par value$0.01. There werenowarrant exercises during the five months ended December 31, 2017.

Equity Issuances in 2017 - Predecessor

During the seven months ended July 31, 2017, we issued common stock for our share-based compensation program, which is discussed further in Note 17. Additionally, common stock was issued as a result of certain debtholders exercising the warrants received in connection with the debt restructuring during the year ended December 31, 2016.

On the Effective Date, pursuant to the Plan, (i) all shares of the Company’s pre-Effective Date common stock and all other previously issued and outstanding equity interests in the Company, and any rights of any holder in respect thereof, were canceled and discharged and (ii) all agreements, instruments, and other documents evidencing, relating to or connected with the Company’s pre-Effective Date common stock and all other previously issued and outstanding equity interests of the Company, and any rights of any holder in respect thereof, were canceled and discharged and of no further force or effect.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Environmental Liabilities

We are subject to the environmental protection and health and safety laws and related rules and regulations of the United States and of the individual states, municipalities and other local jurisdictions where we operate. Our continuing operations are subject to rules and regulations promulgated by the Texas Railroad Commission, the Texas Commission on Environmental Quality, the Louisiana Department of Natural Resources, the Louisiana Department of Environmental Quality, the Ohio Department of Natural Resources, the Pennsylvania Department of Environmental Protection, the North Dakota Department of Health, the North Dakota Industrial Commission, Oil and Gas Division, the North Dakota State Water Commission, the Montana Department of Environmental Quality and the Montana Board of Oil and Gas, among others. These laws, rules and regulations address environmental, health and safety and related concerns, including water quality and employee safety. We have installed safety, monitoring and environmental protection equipment such as pressure sensors and relief valves, and have established reporting and responsibility protocols for environmental protection and reporting to such relevant local environmental protection departments as required by law.

We believe we are in material compliance with all applicable environmental protection laws and regulations in the United States and the states in which we operate. We believe that there are no unrecorded liabilities in connection with our compliance with environmental laws and regulations. We did not have any accruals related to environmental matters as of December 31, 2019 and December 31, 2018.

Contingent Consideration for Ideal Settlement

On June 28, 2017, the Company and certain of its material subsidiaries (collectively with the Company, the “Nuverra Parties”) filed a motion with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking authorization to resolve unsecured claims related to the $8.5 million contingent consideration from the Ideal Oilfield Disposal LLC acquisition (the “Ideal Settlement”). On July 11, 2017, the Bankruptcy Court entered an order authorizing the Ideal Settlement. Pursuant to the approved settlement terms, the $8.5 million contingent claim was replaced with an obligation on the part of the applicable Nuverra Party to transfer $0.5 million to the counterparties to the Ideal Settlement upon emergence from chapter 11, and $0.5 million when the Ideal Settlement counterparties deliver the required permits and certificates necessary for the issuance of the second special waste disposal permit. The $0.5 million due upon emergence from chapter 11 was paid during the five months ended December 31, 2017. The remaining $0.5 million, due when the counterparties deliver the required permits and certificates necessary for the issuance of the second special waste disposal permit, has been classified as noncurrent and is reported in “Long-term contingent consideration” as of December 31, 2019, as these permits and certificates are not expected to be received within one year.

State Sales and Use Tax Liabilities

During the year ended December 31, 2017, the Pennsylvania Department of Revenue (or “DOR”) completed an audit of our sales and use tax compliance for the period January 1, 2012 through May 31, 2017. As a result of the audit, we were assessed by the DOR for additional state and local sales and use tax plus penalties and interest. During the years ended December 31, 2017 and 2018, we disputed various claims in the assessment made by the DOR through the appropriate boards of appeal and were able to obtain relief for many of the contested claims. However, in January of 2019, the final appeals board upheld an assessment of sales tax and interest that relates to one material position. We have appealed this decision to the Commonwealth of Pennsylvania as we continue to believe that the transactions involved are exempt from sales tax in Pennsylvania, and therefore we have not recorded an accrual as of December 31, 2019. If we lose this appeal, which could take several years to settle, we estimate that we would be required to pay between $1.0 million and $1.5 million to the DOR.

Asset Retirement Obligations

At December 31, 2019 and 2018, we had approximately $7.5 million and $7.1 million, respectively, of asset retirement obligations related to our disposal wells and landfill which are recorded in “Other long-term liabilities” in the accompanying consolidated balance sheets.

The following table provides a reconciliation of the beginning and ending balances of our asset retirement obligations as of December 31, 2019 and 2018:

	Successor
	December 31,			December 31,
	2019			2018
Balance at beginning of period	$	7,128		$	6,435
Asset retirement obligations acquired	130			104
Asset retirement obligations settled	(427		)	—
Changes in estimate	—			10
Accretion expense	780			679
Cash payments	(125		)	(100		)
Balance at end of period	$	7,486		$	7,128

Surety Bonds and Letters of Credit

At December 31, 2019 and 2018, we had surety bonds outstanding of approximately $6.4 million and $13.5 million, respectively, primarily to support financial assurance obligations related to our landfill and disposal wells. Additionally, at December 31, 2019 and 2018, we had outstanding irrevocable letters of credit totaling $3.2 million and $3.1 million, respectively, to support various agreements, leases and insurance policies.

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on a Recurring Basis and Fair Value Hierarchy of the Valuation Techniques

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and December 31, 2018 and the fair value hierarchy of the valuation techniques we utilized to determine such fair value included significant unobservable inputs (Level 3) and were as follows:

	Successor
	December 31,		December 31,
	2019		2018
Derivative warrant liability (a)	$	—	$	34

(a) The fair value of our derivative warrant liability was $354 as of December 31, 2019.

Schedule of Stockholders' Equity Note, Warrants or Rights

The following table provides a reconciliation of the beginning and ending balances of the derivative warrant liability which is included in “Accrued and other current liabilities” in the consolidated balance sheets as of December 31, 2019 and December 31, 2018.

	Successor
	December 31,			December 31,
	2019			2018
Balance at beginning of period	$	34		$	477
Issuance of warrants	—			—
Exercise of warrants	—			—
Adjustments to estimated fair value	(34		)	(443		)
Balance at end of period	$	—		$	34

The following table shows the Predecessor warrant activity for the seven months ended July 31, 2017:

	Predecessor
	Seven Months Ended July 31,
	2017
Outstanding at the beginning of period	25,283
Issued	—
Exercised	(16	)
Canceled due to emergence from chapter 11	(25,267	)
Outstanding at the end of the period	—

The following table shows the Successor warrant activity for the years ended December 31, 2019, December 31, 2018 and five months ended December 31, 2017:

	Successor
	Year Ended December 31,	Year Ended December 31,	Five Months Ended December 31,
	2019	2018	2017
Outstanding at the beginning of the period	118	118	—
Issued	—	—	118
Exercised	—	—	—
Outstanding at the end of the period	118	118	118

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Value of Goodwill

The changes in the carrying value of goodwill for the years ended December 31, 2019 and 2018 are as follows:

	Successor
	December 31, 2019			December 31, 2018
Balance at beginning of period	$	29,518		$	27,139
Additions to goodwill for acquisitions	—			2,379
Impairment of goodwill	(29,518		)	—
Balance at end of period	$	—		$	29,518

Intangible Assets

The following table provides the gross carrying value, accumulated amortization, and remaining useful life for intangible assets subject to amortization as of December 31, 2019 and 2018:

	Successor
	December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Remaining Useful Life (Years)
Disposal permits	$	554	$	(269	)	$	285	5.0
Trade name	799		(444		)	355		1.0
Total intangible assets	$	1,353	$	(713	)	$	640	2.8

	Successor
	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Remaining Useful Life (Years)
Disposal permits	$	581	$	(180	)	$	401	5.5
Trade name	799		(88		)	711		2.0
Total intangible assets	$	1,380	$	(268	)	$	1,112	3.2

Future Amortization Expense

As of December 31, 2019 future amortization expense of intangible assets is estimated to be:

2020	$	441
2021	54
2022	49
2023	33
2024	22
Thereafter	41
Total	$	640

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Share-based Compensation - Non-Vested Shares of Restricted Stock and RSUs (Detail) - Restricted stock - $ / shares shares in Thousands	7 Months Ended	12 Months Ended
	Jul. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Number of shares, beginning balance (in shares)	249	307	0
Granted (in shares)	0	142	1,541
Vested (in shares)	(32)	(116)	(628)
Forfeited (in shares)	(217)	(50)	(606)
Number of shares, ending balance (in shares)	0	283	307
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted average grant date fair value (in dollars per share)	$ 3.24	$ 11.86	$ 0.00
Granted (in dollars per share)	0.00	10.53	19.88
Vested (in dollars per share)	14.81	13.51	21.34
Forfeited (in dollars per share)	1.54	14.42	22.43
Weighted average grant date fair value (in dollars per share)	$ 0.00	$ 10.06	$ 11.86

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Leases - Schedule of Future Minimum Operating and Capital Lease Payments (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Operating Leases
2019	$ 2,415
2020	1,453
2021	431
2022	294
2023	164
Thereafter	6,755
Total lease payments	11,512
Capital Leases
2019	1,287
2020	718
2021	0
2022	0
2023	0
Thereafter	0
Total lease payments	2,005
Less amount representing executory costs	(30)
Net lease payments	1,975
Less amount representing interest	(90)
Present value of net lease payments	$ 1,885

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Derivative Warrants - Warrants Outstanding Reconciliation (Details) shares in Thousands		5 Months Ended	7 Months Ended	12 Months Ended
	Jul. 31, 2017 warrant $ / shares shares	Dec. 31, 2017 warrant $ / shares shares	Jul. 31, 2017 warrant $ / shares shares	Dec. 31, 2019 $ / shares shares	Dec. 31, 2018 $ / shares shares	Aug. 07, 2017 $ / shares	Dec. 31, 2016 $ / shares	Dec. 31, 2015 $ / shares
Number of Warrants
Plan of reorganization, number of warrants issued | warrant	118,137	0	118,137
Exercise price of warrants (in usd per warrant) | $ / shares	$ 39.82	$ 39.82	$ 39.82	$ 39.82	$ 39.82	$ 39.82
Expiration term (in years)	7 years
Par value of successor common stock (usd per share) | $ / shares	$ 0.01		$ 0.01	$ 0.01	$ 0.01		$ 0.001	$ 0.001
Warrant
Number of Warrants
Outstanding at the beginning of period (warrants)		0	25,283	118	118
Issued (warrants)		118	0	0	0
Exercised (warrants)		0	(16)	0	0
Canceled due to emergence from chapter 11 (warrants)			(25,267)
Outstanding at the end of the period (warrants)	0	118	0	118	118
Exercise price of warrants (in usd per warrant) | $ / shares							$ 0.01

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Revenue - Schedule of Contract Assets (Details)	12 Months Ended
	Dec. 31, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Balance at the beginning of the period (January 1, 2019)	$ 0
Balance at the end of the period (December 31, 2019)	231,000
Increase/(decrease)	231,000
Contract assets reclassified to receivables	$ 353,700

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000.0	1,000,000.0
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	75,000,000	75,000,000
Common stock, shares issued (in shares)	15,781,000	12,233,000
Common stock, shares outstanding (in shares)	15,735,000	12,233,000
Treasury Stock (in shares)	46,000

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Leases - Schedule of Supplemental Balance Sheet, Cash Flow and Other Information (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Assets, Noncurrent [Abstract]
Operating lease assets	$ 2,886
Finance lease assets	8,202
Total lease assets	11,088
Current
Operating lease liabilities	1,442
Finance lease liabilities	1,443
Noncurrent
Operating lease liabilities	1,457	$ 0
Finance lease liabilities	7,341
Total lease liabilities	11,683
Accumulated amortization, finance lease assets	$ 1,700

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Consolidated Statements of Cash Flows - USD ($) shares in Thousands, $ in Thousands	5 Months Ended	7 Months Ended	12 Months Ended
	Dec. 31, 2017	Jul. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net (loss) income	$ (47,895)	$ 168,611	$ (54,937)	$ (59,263)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization	38,551	28,981	36,183	46,434
Amortization of debt issuance costs, net	0	2,135	328	186
Accrued interest added to debt principal	473	11,474	0	119
Stock-based compensation	677	457	2,026	12,717
Impairment of long-lived assets	4,904	0	766	4,815
Impairment of goodwill	0	0	29,518	0
Gain on sale of UGSI	(76)	0	0	(75)
(Gain) loss on disposal of property, plant and equipment	5,695	(258)	(1,967)	(895)
Bad debt (recoveries) expense	91	788	(22)	(328)
Adjustments to estimated fair value	(239)	(4,025)	(34)	(443)
Deferred income taxes	(242)	(337)	(90)	265
Other, net	4,503	(11,295)	340	355
Reorganization items, non-cash	0	(218,600)	0	0
Changes in operating assets and liabilities:
Accounts receivable	(3,521)	(4,528)	4,921	1,798
Prepaid expenses and other receivables	(312)	472	(729)	800
Accounts payable and accrued liabilities	(5,034)	3,682	(11,014)	3,634
Other assets and liabilities, net	(4,036)	3,494	1,230	(670)
Net cash provided by (used in) operating activities	(6,461)	(18,949)	6,519	9,449
Cash flows from investing activities:
Proceeds from the sale of property, plant and equipment	4,034	3,083	6,979	19,140
Purchases of property, plant and equipment	(2,231)	(3,149)	(8,243)	(12,241)
Proceeds from the sale of UGSI	76	0	0	75
Cash paid for acquisitions, net of cash acquired	0	0	0	(42,292)
Net cash (used in) provided by investing activities	1,879	(66)	(1,264)	(35,318)
Cash flows from financing activities:
Proceeds from Predecessor revolving credit facility	0	106,785	0	0
Payments on Predecessor revolving credit facility	0	(129,964)	0	0
Proceeds from Predecessor term loan	0	15,700	0	0
Proceeds from debtor in possession term loan	0	6,875	0	0
Proceeds from Successor First and Second Lien Term Loans	0	36,053	0	10,000
Payments on Successor First and Second Lien Term Loans	(1,241)	0	(4,949)	(13,434)
Proceeds from Successor revolving facility	79,464	0	184,912	226,371
Payments on Successor revolving facility	(79,464)	0	(184,912)	(226,371)
Proceeds from Successor Bridge Term Loan	0	0	0	32,500
Payments on Successor Bridge Term Loan	0	0	(31,382)	0
Payments for debt issuance costs	0	(1,053)	0	(167)
Issuance of stock	0	0	31,057	0
Payments on finance leases and other financing activities	(2,391)	(2,797)	(2,229)	(1,856)
Net cash (used in) provided by financing activities	(3,632)	31,599	(7,503)	27,043
Net increase (decrease) in cash	(8,214)	12,584	(2,248)	1,174
Cash and cash equivalents, beginning of period	7,193	994	7,302	5,488
Restricted cash, beginning of period	7,805	1,420	656	1,296
Cash, cash equivalents and restricted cash, beginning of period	14,998	2,414	7,958	6,784
Cash and cash equivalents, end of period	5,488	7,193	4,788	7,302
Restricted cash, end of period	1,296	7,805	922	656
Cash, cash equivalents and restricted cash, end of period	6,784	14,998	5,710	7,958
Supplemental disclosure of cash flow information:
Cash paid for interest	1,003	1,912	4,259	4,540
Cash paid (refunded) for taxes, net	(324)	193	236	668
Property, plant and equipment purchases in accounts payable	$ 754	$ 218	$ 467	$ 786
Common stock issued to settle Successor Bridge Term Loan	0	0	1,118	0
Deferred financing costs financed through principal debt balance	$ 0	$ 1,570	$ 0	$ 0
Deferred financing costs in accounts payable and accrued liabilities	0	0	0	441
Conversion of accrued interest on principal debt balance
Supplemental disclosure of cash flow information:
Conversion of accrued interest on principal debt balance	$ 473	$ 11,474	$ 0	$ 119

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Share-based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	5 Months Ended	7 Months Ended	12 Months Ended
	Dec. 31, 2017	Jul. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Feb. 22, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share)	$ 39.17	$ 0.00
Maximum number of shares of common stock available for issuance of awards (in shares)							100,000
Income tax (expense) benefit			$ 1.3
Unrecognized compensation expense expected recognition period			1 year 1 month
Stock option maximum contractual term		0 years	0 years	2 months 6 days	9 years 7 months 6 days	7 years 2 months 6 days
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of shares vested during period		$ 0.5	$ 1.6	$ 13.4
Vested (in shares)		32,000	116,000	628,000
Granted (in shares)		0	142,000	1,541,000
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock vesting period			3 years
Stock options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option maximum contractual term			10 years
Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares of common stock available for issuance of awards (in shares)							1,772,058
Share-based Compensation Award, Tranche One | Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock vesting period			1 year
Share-based Compensation Award, Tranche Two | Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock vesting period			2 years
Share-based Compensation Award, Tranche Three | Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock vesting period			3 years

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Fresh Start Accounting - Consolidated Statement of Financial Position (Details) $ in Thousands	Jul. 31, 2017 USD ($)
Assets
Preconfirmation, Cash and cash equivalents	$ 2,728
Preconfirmation, Restricted cash	8,011
Preconfirmation, Accounts receivable, net	27,535
Preconfirmation, Inventories	3,935
Preconfirmation, Prepaid expenses and other receivables	3,200
Preconfirmation, Other current assets	924
Preconfirmation, Assets held for sale	631
Preconfirmation, Total current assets	46,964
Preconfirmation, Property, plant and equipment, net	265,097
Preconfirmation, Equity investments	59
Preconfirmation, Intangibles, net	13,093
Preconfirmation, Goodwill	0
Preconfirmation, Other assets	339
Preconfirmation, Total assets	325,552
Liabilities
Preconfirmation, Accounts payable	6,331
Preconfirmation, Accrued liabilities	30,549
Preconfirmation, Current contingent consideration	0
Preconfirmation, Current portion of long-term debt	41,007
Preconfirmation, Derivative warrant liability	0
Preconfirmation, Other current liabilities	0
Preconfirmation, Total current liabilities	77,887
Preconfirmation, Deferred income taxes	472
Preconfirmation, Long-term debt	2,312
Preconfirmation, Long-term contingent consideration	0
Preconfirmation, Other long-term liabilities	3,694
Preconfirmation, Liabilities subject to compromise	480,595
Preconfirmation, Total liabilities	564,960
Shareholders’ deficit:
Preconfirmation, Common stock (Predecessor)	152
Preconfirmation, Additional paid-in capital (Predecessor)	1,408,324
Preconfirmation, Treasury stock (Predecessor)	(19,809)
Preconfirmation, (Accumulated deficit) retained earnings	(1,628,075)
Preconfirmation, Total shareholders' equity (deficit)	(239,408)
Preconfirmation, Total liabilities and shareholder's equity	325,552
Postconfirmation, Assets [Abstract]
Postconfirmation, Cash and cash equivalents	7,193
Postconfirmation, Restricted cash	7,805
Postconfirmation, Accounts receivable, net	27,535
Postconfirmation, Inventories	3,935
Postconfirmation, Prepaid expenses and other receivables	3,482
Postconfirmation, Other current assets	424
Postconfirmation, Assets held for sale	4,544
Postconfirmation, Total current assets	54,918
Postconfirmation, Property, plant and equipment, net	287,288
Postconfirmation, Equity investments	59
Postconfirmation, Intangibles, net	607
Postconfirmation, Goodwill	27,139
Postconfirmation, Other assets	339
Postconfirmation, Total assets	370,350
Liabilities
Postconfirmation, Accounts payable	8,298
Postconfirmation, Accrued liabilities	18,083
Postconfirmation, Current contingent consideration	1,000
Postconfirmation, Current portion of long-term debt	3,342
Postconfirmation, Derivative warrant liability	717
Postconfirmation, Other current liabilities	3,913
Postconfirmation, Total current liabilities	35,353
Postconfirmation, Deferred income taxes	158
Postconfirmation, Long-term debt	38,365
Postconfirmation, Long-term contingent consideration	0
Postconfirmation, Other long-term liabilities	6,283
Postconfirmation, Liabilities subject to compromise	0
Postconfirmation, Total liabilities	80,159
Shareholders’ deficit:
Postconfirmation, Common stock (Successor)	117
Postconfirmation, Additional paid-in capital (Successor)	290,074
Postconfirmation, (Accumulated deficit) retained earnings	0
Fair value of Successor common equity	290,191
Postconfirmation, Total liabilities and shareholders' equity	370,350
Net decrease in Accrued and other current liabilities
Assets
Fresh-Start Adjustment, Increase (Decrease), Cash and cash equivalents	4,465
Fresh-Start Adjustment, Increase (Decrease), Restricted cash	(206)
Fresh-Start Adjustment, Increase (Decrease), Accounts receivable, Net	0
Fresh-Start Adjustment, Increase (Decrease), Inventories	0
Fresh-Start Adjustment, Increase (Decrease), Prepaid expenses and other receivables	282
Fresh-Start Adjustment, Increase (Decrease), Other current assets	(500)
Recognition of assets held for sale on the AWS settlement	3,913
Fresh-Start Adjustment, Increase (Decrease), Total current assets	7,954
Fresh-Start Adjustment, Increase (Decrease), Property, plant and equipment, net	(8,678)
Fresh-Start Adjustment, Increase (Decrease), Equity investments	0
Fresh-Start Adjustment, Increase (Decrease), Intangibles, net	(763)
Fresh-Start Adjustment, Increase (Decrease), Goodwill	0
Fresh-Start Adjustment, Increase (Decrease), Other assets	0
Fresh-Start Adjustment, Increase (Decrease), Total assets	(1,487)
Liabilities
Fresh-Start Adjustment, Increase (Decrease), Accounts payable	1,967
Fresh-Start Adjustment, Increase (Decrease), Accrued liabilities	(12,168)
Fresh-Start Adjustment, Increase (Decrease), Current contingent consideration	1,000
Fresh-Start Adjustment, Increase (Decrease), Current portion of long-term debt	(37,665)
Fresh-Start Adjustment, Increase (Decrease), Derivative warrant liability	717
Fresh-Start Adjustment, Increase (Decrease), Other current liabilities	3,913
Fresh-Start Adjustment, Increase (Decrease), Total current liabilities	(42,236)
Fresh-Start Adjustment, Increase (Decrease), Deferred income taxes	0
Fresh-Start Adjustment, Increase (Decrease), Long-term debt	35,000
Fresh-Start Adjustment, Increase (Decrease), Long-term contingent consideration	0
Fresh-Start Adjustment, Increase (Decrease), Other long-term liabilities	(461)
Fresh-Start Adjustment, Increase (Decrease), Liabilities subject to compromise	(480,595)
Fresh-Start Adjustment, Increase (Decrease), Total liabilities	(488,292)
Shareholders’ deficit:
Fresh-Start Adjustment, Increase (Decrease), Common stock (Successor)	117
Fresh-Start Adjustment, Increase (Decrease), Additional paid-in-capital (Successor)	290,074
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	196,614
Fresh-Start Adjustment, Increase (Decrease), Total shareholders' equity (deficit)	486,805
Fresh-Start Adjustment, Increase (Decrease), Total liabilities and shareholders' equity	(1,487)
Fresh Start Adjustments
Assets
Fresh-Start Adjustment, Increase (Decrease), Cash and cash equivalents	0
Fresh-Start Adjustment, Increase (Decrease), Restricted cash	0
Fresh-Start Adjustment, Increase (Decrease), Accounts receivable, Net	0
Fresh-Start Adjustment, Increase (Decrease), Inventories	0
Fresh-Start Adjustment, Increase (Decrease), Prepaid expenses and other receivables	0
Fresh-Start Adjustment, Increase (Decrease), Other current assets	0
Recognition of assets held for sale on the AWS settlement	0
Fresh-Start Adjustment, Increase (Decrease), Total current assets	0
Fresh-Start Adjustment, Increase (Decrease), Property, plant and equipment, net	30,869
Fresh-Start Adjustment, Increase (Decrease), Equity investments	0
Fresh-Start Adjustment, Increase (Decrease), Intangibles, net	(11,723)
Fresh-Start Adjustment, Increase (Decrease), Goodwill	27,139
Fresh-Start Adjustment, Increase (Decrease), Other assets	0
Fresh-Start Adjustment, Increase (Decrease), Total assets	46,285
Liabilities
Fresh-Start Adjustment, Increase (Decrease), Accounts payable	0
Fresh-Start Adjustment, Increase (Decrease), Accrued liabilities	(298)
Fresh-Start Adjustment, Increase (Decrease), Current contingent consideration	0
Fresh-Start Adjustment, Increase (Decrease), Current portion of long-term debt	0
Fresh-Start Adjustment, Increase (Decrease), Derivative warrant liability	0
Fresh-Start Adjustment, Increase (Decrease), Other current liabilities	0
Fresh-Start Adjustment, Increase (Decrease), Total current liabilities	(298)
Fresh-Start Adjustment, Increase (Decrease), Deferred income taxes	(314)
Fresh-Start Adjustment, Increase (Decrease), Long-term debt	1,053
Fresh-Start Adjustment, Increase (Decrease), Long-term contingent consideration	0
Fresh-Start Adjustment, Increase (Decrease), Other long-term liabilities	3,050
Fresh-Start Adjustment, Increase (Decrease), Liabilities subject to compromise	0
Fresh-Start Adjustment, Increase (Decrease), Total liabilities	3,491
Shareholders’ deficit:
Fresh-Start Adjustment, Increase (Decrease), Common stock (Successor)	(152)
Fresh-Start Adjustment, Increase (Decrease), Additional paid-in-capital (Successor)	(1,408,324)
Fresh-Start Adjustment, Increase (Decrease), Treasury stock (Predecessor)	19,809
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	1,431,461
Fresh-Start Adjustment, Increase (Decrease), Total shareholders' equity (deficit)	42,794
Fresh-Start Adjustment, Increase (Decrease), Total liabilities and shareholders' equity	$ 46,285

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Emergence from Chapter 11 Reorganization - Narrative (Details)	Jul. 31, 2017 warrant member $ / shares shares	Dec. 31, 2019 $ / shares	Dec. 31, 2018 $ / shares	Dec. 31, 2017 warrant $ / shares	Aug. 07, 2017 $ / shares
Restructuring Cost and Reserve [Line Items]
New members appointed to board of directors | member	3
Successor shares distributed (in shares)	11,695,580
Plan of reorganization, number of warrants issued | warrant	118,137			0
Exercise price of warrants (in usd per warrant) | $ / shares	$ 39.82	$ 39.82	$ 39.82	$ 39.82	$ 39.82
Expiration term (in years)	7 years
2018 Notes
Restructuring Cost and Reserve [Line Items]
Interest Rate	9.875%
2021 Noteholders
Restructuring Cost and Reserve [Line Items]
Successor shares distributed (in shares)	7,900,000
Affected Classes
Restructuring Cost and Reserve [Line Items]
Successor shares distributed (in shares)	100,000
Supporting Noteholder Term Loan Claims
Restructuring Cost and Reserve [Line Items]
Successor shares distributed (in shares)	3,695,580
DIP Second Term Loan | Line of Credit
Restructuring Cost and Reserve [Line Items]
Interest Rate	11.00%

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Subsidiary Guarantors - Condensed Consolidating Statement of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended								5 Months Ended		7 Months Ended	12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2017	Jul. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Condensed Income Statements, Captions [Line Items]
Revenue	$ 37,273	$ 43,098	$ 45,240	$ 42,627	$ 49,201	$ 49,656	$ 48,948	$ 49,669	$ 80,188		$ 95,883	$ 168,238	$ 197,474
Costs and expenses:
Direct operating expenses									67,077		81,010	131,019	158,896
General and administrative expenses									10,615		22,552	20,864	38,510
Depreciation and amortization									38,551		28,981	36,183	46,434
Total costs and expenses									121,147		132,543	218,340	249,774
Operating loss	(36,600)	(5,017)	(3,828)	(4,657)	(6,530)	(6,113)	(8,905)	(30,752)	(40,959)		(36,660)	(50,102)	(52,300)
Interest expense, net									(2,187)		(22,792)	(5,227)	(5,973)
Other income, net											4,261
Income (loss) from equity investments											(14)
Reorganization items, net									(5,507)		223,494	(200)	(1,679)
(Loss) income before income taxes									(48,242)		168,289	(55,027)	(59,056)
Income tax benefit (expense)									347		322	90	(207)
Net (loss) income	$ (37,524)	$ (6,052)	$ (5,006)	$ (6,355)	$ (8,803)	$ (7,117)	$ (11,176)	$ (32,167)	$ (47,895)	$ (47,895)	168,611	$ (54,937)	$ (59,263)
Reportable Legal Entities | Parent
Condensed Income Statements, Captions [Line Items]
Revenue											0
Costs and expenses:
Direct operating expenses											0
General and administrative expenses											15,074
Depreciation and amortization											123
Total costs and expenses											15,197
Operating loss											(15,197)
Interest expense, net											(22,333)
Other income, net											4,125
Income (loss) from equity investments											101,462
Reorganization items, net											177,704
(Loss) income before income taxes											245,761
Income tax benefit (expense)											(77,150)
Net (loss) income											168,611
Reportable Legal Entities | Guarantor Subsidiaries
Condensed Income Statements, Captions [Line Items]
Revenue											95,883
Costs and expenses:
Direct operating expenses											81,010
General and administrative expenses											7,478
Depreciation and amortization											28,858
Total costs and expenses											117,346
Operating loss											(21,463)
Interest expense, net											(459)
Other income, net											136
Income (loss) from equity investments											(14)
Reorganization items, net											45,790
(Loss) income before income taxes											23,990
Income tax benefit (expense)											77,472
Net (loss) income											101,462
Eliminations
Condensed Income Statements, Captions [Line Items]
Revenue											0
Costs and expenses:
Direct operating expenses											0
General and administrative expenses											0
Depreciation and amortization											0
Total costs and expenses											0
Operating loss											0
Interest expense, net											0
Other income, net											0
Income (loss) from equity investments											(101,462)
Reorganization items, net											0
(Loss) income before income taxes											(101,462)
Income tax benefit (expense)											0
Net (loss) income											$ (101,462)

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Earnings Per Share

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Net loss per basic and diluted common share have been computed using the weighted average number of shares of common stock outstanding during the period.

For the years ended December 31, 2019 and 2018, and five months ended December 31, 2017, no shares of common stock underlying stock options, restricted stock, or warrants were included in the computation of diluted earnings per share (“EPS”) because the inclusion of such shares would be anti-dilutive based on the net losses reported for those periods.

The following table presents the calculation of basic and diluted net (loss) income per common share, as well as the potentially dilutive stock-based awards that were excluded from the calculation of diluted loss per share for the periods presented:

	Successor									Predecessor
	Year Ended December 31,			Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Numerator:
Net (loss) income	$	(54,937	)	$	(59,263	)	$	(47,895	)	$	168,611
Denominator:
Weighted average shares—basic	15,676			11,829			11,696			150,940
Common stock equivalents	—			—			—			23,364
Weighted average shares—diluted	15,676			11,829			11,696			174,304
Earnings per common share:
Net (loss) income per basic common share	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	1.12
Net (loss) income per diluted common share	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	0.97
Antidilutive stock-based awards excluded	490			951			827			593

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Legal Matters

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Legal Matters

Legal Matters

There are various lawsuits, claims, investigations and proceedings that have been brought or asserted against us, which arise in the ordinary course of business, including actions with respect to securities and shareholder class actions, personal injury, vehicular and industrial accidents, commercial contracts, legal and regulatory compliance, securities disclosure, labor and employment, and employee benefits and environmental matters, the more significant of which are summarized below. We record a provision for these matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any provisions are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information and events pertinent to a particular matter.

We are subject to various legal proceedings and claims incidental to or arising in the ordinary course of our business. Based on information currently known to our management, we do not expect the outcome in any of these known legal proceedings, individually or collectively, to have a material adverse effect on our consolidated financial condition, results of operations or cash flows. Litigation is inherently unpredictable, however, and it is possible that our financial condition, results of operations or cash flow could be materially affected in any particular period by the resolution of one or more of the legal matters pending against us.

Chapter 11 Proceedings

On May 1, 2017, the Nuverra Parties filed voluntary petitions under chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court to pursue the Plan. On July 25, 2017, the Bankruptcy Court entered the Confirmation Order confirming the Plan. The Plan became effective on the Effective Date, when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases, subject to certain conditions as set forth therein.

AWS Arbitration Demand and Note Payable Settlement

On April 28, 2015, our former partner in Appalachian Water Services, LLC (“AWS”) issued to us a Demand for Arbitration pursuant to the terms of the AWS operating agreement, relating to alleged breaches by us of certain of our obligations under the operating agreement. We entered into a settlement of this matter with our former partner in June 2015 whereby we purchased the remaining interest in AWS for $4.0 million in cash and a $7.4 million note payable (or the “AWS Note”) with principal and interest due in equal quarterly installments through April 2019. Pursuant to the terms of the AWS Note, if we failed to meet the payment terms of the obligation, or if we became insolvent or declared bankruptcy, all remaining outstanding balances on the AWS Note would become immediately due and payable. As we failed to meet the payment terms of the obligation and filed the chapter 11 cases, all outstanding balances on the AWS Note became immediately due and payable.

Pursuant to Section 362 of the Bankruptcy Code, the filing of the chapter 11 cases automatically stayed most actions against the Nuverra Parties, including actions to collect indebtedness incurred prior to the filing of the Plan or to exercise control over the Nuverra Parties’ property. Subject to certain exceptions under the Bankruptcy Code, the filing of the chapter 11 cases also automatically stayed the continuation of most legal proceedings or the filing of other actions against or on behalf of the Nuverra Parties or their property to recover on, collect or secure a claim arising prior to the filing of the cases or to exercise control over property of the Nuverra Parties’ bankruptcy estates. As a result, the filing of the chapter 11 cases with the Bankruptcy Court automatically stayed any potential action to collect the outstanding balance on the AWS Note.

On July 17, 2017, the Nuverra Parties filed a motion with the Bankruptcy Court seeking authorization to resolve unsecured claims related to the AWS Note. Pursuant to the proposed settlement terms, the Nuverra Parties agreed to transfer to the holders of the AWS Note, their water treatment facility in the Marcellus shale area, including all assets related to the operations of the water treatment facility in “as-is, where-is” condition, together with $75,000 for reimbursement of certain costs and deferred maintenance. In exchange for the water treatment facility and the $75,000 payment, the holders of the AWS Note agreed to release their claims related to the AWS Note and enter into with certain of the Nuverra Parties a lease of five acres of land that can be used by the Nuverra Parties to operate a truck depot.

On July 21, 2017, the Bankruptcy Court entered an order authorizing the AWS Note payable settlement. The settlement, including the transfer of the water treatment facility, was completed during the fourth quarter of 2017.

Confirmation Order Appeal

On July 26, 2017, David Hargreaves, an individual holder of 2018 Notes, appealed the Confirmation Order to the District Court of the District of Delaware (the “District Court”) and filed a motion for a stay pending appeal from the District Court.  Although the motion for a stay pending appeal was denied, the appeal remained pending and the District Court heard oral arguments in May 2018, and in August 2018 the District Court issued an order dismissing the appeal.  Hargreaves subsequently appealed the District Court’s decision to the United States Court of Appeals for the Third Circuit. The parties filed appellate briefs in December 2018 and January 2019, and as a result the appeal remains pending with the United States Court of Appeals for the Third Circuit.  The ultimate outcome of this appeal and its effects on the Confirmation Order are impossible to predict with certainty. No assurance can be given that the final disposition of this appeal will not affect the validity, enforceability or finality of the Confirmation Order. Further discussion on the emergence from chapter 11 is discussed in Note 25.

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Debt

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Debt

Debt

Debt consisted of the following at December 31, 2019 and December 31, 2018:

			Successor
			December 31, 2019					December 31, 2018
	Interest Rate	Maturity Date	Unamortized Debt Issuance Costs (g)		Carrying Value of Debt (i)			Carrying Value of Debt (i)
Successor Revolving Facility (a)	6.95%	Feb. 2021	$	—	$	—		$	—
Successor First Lien Term Loan (b)	8.95%	Feb. 2021	95		18,008			21,905
Successor Second Lien Term Loan (c)	11.00%	Oct. 2021	—		9,013			10,066
Successor Bridge Term Loan (d)	11.00%	Apr. 2019	—		—			32,500
Vehicle Term Loan (e)	5.27%	Dec. 2021	—		725			—
Finance leases (f)	6.77%	Various	—		8,784			1,885
Total debt			$	95	36,530			66,356
Debt issuance costs presented with debt (g)					(95		)	(423		)
Total debt, net					36,435			65,933
Less: current portion of long-term debt (h)					(6,430		)	(38,305		)
Long-term debt					$	30,005		$	27,628

_____________________

(a) The interest rate presented represents the interest rate on the $30.0 million Successor Revolving Facility at December 31, 2019.

(b) Interest on the Successor First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus 7.25%.

(c) Interest on the Successor Second Lien Term Loan accrues at an annual rate equal to 11.0%, payable in cash, in arrears, on the first day of each month.

(d) The Bridge Term Loan Credit Agreement had an interest rate of 11.0% per annum, payable in cash, in arrears, on the first day of each month. The obligations under the Bridge Term Loan Credit Agreement were repaid in full on January 2, 2019.

(e) Interest on the Vehicle Term Loan accrues at an annual rate of 5.27%.

(f) Our finance leases include finance lease arrangements related to fleet purchases and real property with a weighted-average annual interest rate of approximately 6.77%, which mature in varying installments between 2019 and 2029.

(g) The debt issuance costs as of December 31, 2019 and 2018 resulted from the amendment to the Successor First Lien Term Loan and the issuance of the Successor Bridge Term Loan, both done in connection with the acquisition of Clearwater (which was previously discussed in Note 6).

(h) The principal payments due within one year for the Successor First Lien Term Loan, Successor Second Lien Term Loan, Vehicle Term Loan and finance leases are included in current portion of long-term debt as of December 31, 2019.

(i) Our Successor Revolving Facility, Successor First Lien Term Loan, Successor Second Lien Term Loan, Vehicle Term Loan and finance leases bear interest at rates commensurate with market rates and therefore their respective carrying values approximate fair value.

The required principal payments and estimated interest payments for all borrowings for each of the five years following the Successor balance sheet date are as follows:

	Principal		Interest (a)
2020	$	6,430	$	3,524
2021	24,096		1,277
2022	1,425		387
2023	3,211		214
2024	217		127
Thereafter	1,151		256
Total	$	36,530	$	5,785

(a) Estimated interest on debt for all periods presented is calculated using interest rates available as of December 31, 2019 and includes fees for the unused portion of our Successor Revolving Facility.

Indebtedness

As of December 31, 2019, we had $36.5 million of indebtedness outstanding, consisting of $18.0 million under the Successor First Lien Term Loan, $9.0 million under the Successor Second Lien Term Loan, $0.7 million under the Vehicle Term Loan (defined below) and $8.8 million of finance leases for vehicle financings and real property leases. Our Successor Revolving Facility, Successor First Lien Term Loan and Successor Second Lien Term Loan contain certain affirmative and negative covenants, including a fixed charge coverage ratio covenant, as well as other terms and conditions that are customary for revolving credit facilities and term loans of this type. As of December 31, 2019, we were in compliance with all covenants.

Vehicle Term Loan

On December 27, 2019, we entered into a Direct Loan Security Agreement (the “Vehicle Term Loan”) with PACCAR Financial Corp as the Secured Party. The Vehicle Term Loan was to refinance 38 trucks that were previously recorded as finance leases with balloon payments that would have been due in January of 2020. The Vehicle Term Loan matures on December 27, 2021, when the entire unpaid principal balance and interest, plus any other accrued charges, shall become due and payable. The Vehicle Term Loan shall be repaid in installments of $31,879 beginning on January 27, 2020 and on the same day of each month thereafter, with interest accruing at an annual rate of 5.27%.

Bridge Term Loan Credit Agreement

In connection with the Clearwater Acquisition, on October 5, 2018, we entered into the Bridge Term Loan Credit Agreement with the Bridge Term Loan Lenders and Wilmington, as administrative agent. The Bridge Term Loan Lenders are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. Pursuant to the Bridge Term Loan Credit Agreement, the Bridge Term Loan Lenders provided the Successor Bridge Term Loan to us in the aggregate amount of $32.5 million, of which $22.5 million was used to finance the Clearwater Acquisition and the remaining $10.0 million was used to pay down certain amounts outstanding under the Second Lien Term Loan Agreement (as defined below). The Bridge Term Loan Credit Agreement matured on April 5, 2019 and had an interest rate of 11.0% per annum, payable in cash, in arrears, on the first day of each month.

The Bridge Term Loan Credit Agreement required us to use our reasonable best efforts to effectuate and close the Rights Offering as soon as reasonably practicable following October 5, 2018. Upon the completion of the Rights Offering, we were required to prepay all outstanding amounts under the Bridge Term Loan Credit Agreement in cash in an amount equal to the net cash proceeds received from the Rights Offering. As discussed in Note 15, on January 2, 2019, we received the aggregate gross proceeds from the Rights Offering of $31.4 million. Additionally, one of the Backstop Parties (as defined below) elected to satisfy the backstop commitment by converting $1.1 million of the Successor Bridge Term Loan to common stock. The aggregate cash proceeds from the Rights Offering were used to repay the remaining $31.4 million balance of the Successor Bridge Term Loan, satisfying the obligations under the Bridge Term Loan Credit Agreement, and thereby terminating the Bridge Term Loan Credit Agreement.

First Lien Credit Agreements

On the Effective Date, pursuant to the Plan, the Company entered into the Credit Agreement. Pursuant to the Credit Agreement, the Credit Agreement Lenders agreed to extend to the Company the Successor Revolving Facility and the Successor First Lien Term Loan (i) to repay obligations outstanding under the Amended and Restated Credit Agreement, as amended through the Predecessor Revolving Facility and debtor in possession asset based lending facility, (ii) to make certain payments as provided in the Plan, (iii) to pay costs and expenses incurred in connection with the Plan, and (iv) for working capital, transaction expenses, and other general corporate purposes. The Credit Agreement also contains an accordion feature that provides for an increase in availability of up to an additional $20.0 million, subject to the satisfaction of certain terms and conditions contained in the Credit Agreement.

The Successor Revolving Facility and the Successor First Lien Term Loan mature on February 7, 2021, at which time the Company must repay the outstanding principal amount of the Successor Revolving Facility and the Successor First Lien Term Loan, together with interest accrued and unpaid thereon. The Successor Revolving Facility may be repaid and, subject to the terms and conditions of the Credit Agreement, reborrowed at any time during the term of the Credit Agreement. Upon execution of the First Amendment to the Credit Agreement on October 5, 2018, the principal amount of the Successor First Lien Term Loan shall be repaid in installments of $297.6 thousand on November 1, 2018 and on the first day of each calendar month thereafter prior to maturity. Interest on the Successor Revolving Facility accrues at an annual rate equal to the LIBOR Rate (as defined in the Credit Agreement) plus 5.25%, and interest on the Successor First Lien Term Loan accrues at an annual rate equal to the LIBOR Rate plus 7.25%; however, if there is an Event of Default (as defined in the Credit Agreement), the Credit Agreement Agent, in its sole discretion, may increase the applicable interest rate at a per annum rate equal to three percentage points above the annual rate otherwise applicable thereunder.

Maturity Date Extension

The Company initiated discussions with the lenders to extend the scheduled maturity dates for both the Successor Revolving Facility and Successor First Lien Term Loan, and the Company executed a commitment letter with the lenders to extend the scheduled maturity dates to March 2022. The Company expects to finalize the extension during the first half of 2020. However, absent the extension, the Company believes it will have sufficient liquidity to pay obligations as they come due for a period of time twelve months from the date these financial statements were issued.

Second Lien Term Loan Credit Agreement

On the Effective Date, pursuant to the Plan, the Company also entered into the Second Lien Term Loan Agreement (the “Second Lien Term Loan Agreement”) by and among the lenders party thereto (the “Second Lien Term Loan Lenders”), Wilmington as administrative agent (the “Second Lien Term Loan Agent”), and the Company. Pursuant to the Second Lien Term Loan Agreement, the Second Lien Term Loan Lenders agreed to extend to the Company a $26.8 million second lien term loan facility (the “Successor Second Lien Term Loan”), of which $21.1 million was advanced on the Effective Date and up to an additional $5.7 million (“Delayed Draw Term Loan”) is available at the request of the Company after the closing date subject to the satisfaction of certain terms and conditions specified in the Second Lien Term Loan Agreement. The Second Lien Term Loan Lenders extended the Successor Second Lien Term Loan, among other things, (i) to repay obligations outstanding under the Predecessor Revolving Facility and debtor in possession asset based revolving facility, (ii) to make certain payments as provided in the Plan, (iii) to pay costs and expenses incurred in connection with the Plan, and (iv) for working capital, transaction expenses and other general corporate purposes.

The Successor Second Lien Term Loan matures on October 7, 2021, at which time the Company must repay all outstanding obligations under the Successor Second Lien Term Loan. The principal amount of the Successor Second Lien Term Loan shall be repaid on the first day of each fiscal quarter prior to maturity, with such amount to be proportionally increased as the result of the incurrence of a Delayed Draw Term Loan. Interest on the Successor Second Lien Term Loan accrues at an annual rate equal to 11.0%, payable in cash, in arrears, on the first day of each month. However, upon the occurrence and during the continuation of an Event of Default (as defined in the Second Lien Term Loan Agreement) due to a voluntary or involuntary bankruptcy filing, automatically, or any other Event of Default, at the election of the Second Lien Term Loan Agent, the Successor Second Lien Term Loan and all obligations thereunder shall bear interest at an annual rate equal to three percentage points above the annual rate otherwise applicable thereunder.

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Revenue

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

On January 1, 2018, we adopted the guidance in ASC 606, including all related amendments, and applied the new revenue standard to all contracts using the modified retrospective method. The impact of the new revenue standard was not material and there was no adjustment required to the opening balance of retained earnings. 2017 has not been restated and continues to be reported under ASC 605, the accounting guidance in effect for that period.

Revenues are generated upon the performance of contracted services under formal and informal contracts with customers. Revenues are recognized when the contracted services for our customers are completed in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Sales and usage-based taxes are excluded from revenues. Payment is due when the contracted services are completed in accordance with the payment terms established with each customer prior to providing any services. As such, there is no significant financing component for any of our revenues.

Some of our contracts with customers involve multiple performance obligations as we are providing more than one service under the same contract, such as water transfer services and disposal services. However, our core service offerings are capable of being distinct and also are distinct within the context of contracts with our customers. As such, these services represent separate performance obligations when included in a single contract. We have standalone pricing for all of our services which is negotiated with each of our customers in advance of providing the service. The contract consideration is allocated to the individual performance obligations based upon the standalone selling price of each service, and no discount is offered for a bundled services offering.

Contract Assets

	Contract Asset
Balance at the beginning of the period (January 1, 2019)	$	—
Balance at the end of the period (December 31, 2019)	231
Increase/(decrease)	$	231

During the three months ended June 30, 2019, we recorded a contract asset as a result of a contract modification for disposal services. Contract assets of $353.7 thousand were reclassified to trade receivables, which are being collected in due course, during the year ended December 31, 2019. The contract asset is included in “Other current assets” on the consolidated balance sheets as of December 31, 2019.

Disaggregated Revenues

The following tables present our revenues disaggregated by revenue source for each reportable segment for the years ended December 31, 2019 and 2018, five months ended December 31, 2017, and seven months ended July 31, 2017:

	Successor
	For the Year Ended December 31, 2019
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	64,265	$	29,944	$	10,275	$	—	$	104,484
Disposal Services	17,778		12,491		10,150		—		40,419
Other Revenue	6,126		1,279		233		—		7,638
Total Service Revenue	88,169		43,714		20,658		—		152,541
Rental Revenue	15,383		287		27		—		15,697
Total Revenue	$	103,552	$	44,001	$	20,685	$	—	$	168,238

	Successor
	For the Year Ended December 31, 2018
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	84,312	$	35,134	$	19,777	$	—	$	139,223
Disposal Services	17,660		6,409		5,636		—		29,705
Other Revenue	10,718		1,776		371		—		12,865
Total Service Revenue	112,690		43,319		25,784		—		181,793
Rental Revenue	15,068		245		368		—		15,681
Total Revenue	$	127,758	$	43,564	$	26,152	$	—	$	197,474

	Successor
	For the Five Months Ended December 31, 2017
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	30,901	$	14,475	$	13,432	$	—	$	58,808
Disposal Services	5,777		975		1,859		—		8,611
Other Revenue	2,926		1,699		351		—		4,976
Total Service Revenue	39,604		17,149		15,642		—		72,395
Rental Revenue	6,883		85		825		—		7,793
Total Revenue	$	46,487	$	17,234	$	16,467	$	—	$	80,188

	Predecessor
	For the Seven Months Ended July 31, 2017
	Rocky Mountain		Northeast		Southern		Corp/Other		Total
Water Transfer Services	$	38,844	$	17,118	$	15,764	$	—	$	71,726
Disposal Services	6,506		1,284		1,522		—		9,312
Other Revenue	2,975		2,240		311		—		5,526
Total Service Revenue	48,325		20,642		17,597		—		86,564
Rental Revenue	8,221		109		989		—		9,319
Total Revenue	$	56,546	$	20,751	$	18,586	$	—	$	95,883

Water Transfer Services

The majority of our revenues are from the removal and disposal of flowback and produced water originating from oil and natural gas wells or the transportation of fresh water and produced water to customer sites for use in drilling and hydraulic fracturing activities by trucks or through temporary or permanent water transport pipelines. Water transfer rates for trucking are based upon either a fixed fee per barrel of disposal water or upon an hourly rate. Revenue is recognized once the water has been transferred, or over time, based upon the number of barrels transported or disposed of, or at the agreed upon hourly rate, depending upon the customer contract. Contracts for the use of our disposal water pipeline are priced at a fixed fee per disposal barrel transferred, with revenues recognized over time from when the water is injected into our pipeline until the transfer is complete. Water transfer services are all generally completed within 24 hours with no remaining performance obligation outstanding at the end of each month.

Disposal Services

Revenues for disposal services are generated through fees charged for disposal of oilfield wastes in our landfill and disposal of fluids in our disposal wells. Disposal rates are generally based on a fixed fee per barrel of disposal water, or on a per ton basis for landfill disposal, with revenues recognized once the disposal has occurred. The performance obligation for disposal services is considered complete once the disposal occurs. Therefore, disposal services revenues are recognized at a point in time.

Other Revenue

Other revenue primarily includes revenues from the sale of “junk” or “slop” oil obtained through the skimming of disposal water. Under the new revenue standard, revenue is recognized for “junk” or “slop” oil at a point in time once the goods are transferred.

Other revenue also historically included small-scale construction or maintenance projects, however we exited that business during the three months ended June 30, 2018. Under the new revenue standard, revenue for construction and maintenance projects, which generally spanned approximately two to three months, was recognized over time under the milestone method which is considered an output method. Since our construction contracts were short term in nature, the contractual milestone dates occurred close together over time such that there was no risk that we would not recognize revenue for goods or services transferred to the customer. All construction costs were expensed as incurred.

Rental Revenue

We generate rental revenue from the rental of various equipment used in wellsite services. Rental rates are based upon negotiated rates with our customers and revenue is recognized over the rental service period. Revenues from rental equipment are not within the scope of the new revenue standard, but rather are recognized under ASC 840, Leases. As of January 1, 2019, the Company is recognizing the revenues from rental equipment under ASC 842, Leases,as a lessor. As the rental service period for our equipment is very short term in nature and does not include any sales-type or direct financing leases, nor any variable rental components, the adoption of ASC 842 in 2019 did not have a material impact upon our consolidated statement of operations.

Practical Expedients

The new revenue standard requires the transaction price to exclude amounts collected on behalf of third parties. However, the new revenue standard also provides a practical expedient to allow entities to make an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority. Upon implementing the new revenue standard we adopted this practical expedient and have excluded sales and usage-based taxes from the transaction price, rather than making a jurisdiction-by-jurisdiction assessment.

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Income Taxes - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating Loss Carryforwards [Line Items]
Impact of TCJA on net deferred tax asset balance			$ 50,800,000
Net operating losses	$ 69,446,000	$ 58,928,000
Federal credit carryover, no expiration	100,000
Capital loss carry forward	48,050,000	47,615,000
Additions to valuation allowance	13,535,000	6,581,000
Unrecognized tax benefits	0	0
Income tax penalties and interest accrued	0	$ 0
Expires in 2032 Through 2037
Operating Loss Carryforwards [Line Items]
Net operating losses	248,800,000
Expires in 2020 Through 2039
Operating Loss Carryforwards [Line Items]
Net operating losses	312,600,000
Expires in 2021
Operating Loss Carryforwards [Line Items]
Capital loss carry forward	$ 204,400,000
Minimum
Operating Loss Carryforwards [Line Items]
Income tax examination, statute of limitations period	3 years
Maximum
Operating Loss Carryforwards [Line Items]
Income tax examination, statute of limitations period	4 years

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Assets Held for Sale and Impairment of Long-Lived Assets and Goodwill

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Assets Held for Sale and Impairment of Long-Lived Assets and Goodwill

Assets Held for Sale and Impairment of Long-Lived Assets and Goodwill

Impairment charges recorded for the years ended December 31, 2019 and 2018, and five months ended December 31, 2017 by reportable segment were as follows:

	Northeast		Southern		Rocky Mountain		Corp/Other		Total
Year Ended December 31, 2019 - Successor
Impairment of property, plant and equipment, net	$	646	$	—	$	120	$	—	$	766
Impairment of goodwill	21,861		2,735		4,922		—		29,518
Total	$	22,507	$	2,735	$	5,042	$	—	$	30,284
Year Ended December 31, 2018 - Successor
Impairment of property, plant and equipment, net	$	69	$	4,414	$	—	$	332	$	4,815
Total	$	69	$	4,414	$	—	$	332	$	4,815
Five Months Ended December 31, 2017 - Successor
Impairment of property, plant and equipment, net	$	—	$	238	$	4,666	$	—	$	4,904
Total	$	—	$	238	$	4,666	$	—	$	4,904

The fair values of each of the reporting units as well as the related assets and liabilities utilized to determine the impairment were measured using Level 3 inputs as described in Note 13.

Assets Held for Sale

During 2019, management approved plans to sell real property located in the Northeast and Rocky Mountain divisions. As a result, we began to actively market these assets, which we expect to sell within one year. In accordance with applicable accounting guidance, the real property was recorded at the lower of net book value or fair value less costs to sell and reclassified to “Assets held for sale” on the consolidated balance sheet during year ended December 31, 2019. Upon reclassification we ceased to recognize depreciation expense on the assets. As the fair value of the real property reclassified as held for sale in the Rocky Mountain and Northeast divisions was lower than its net book value, we recorded impairment charges of $0.8 million during the year ended December 31, 2019, which is included in “Impairment of long-lived assets” on our consolidated statements of operations. Of the impairment charges recorded during the year ended December 31, 2019, $0.7 million related to the Northeast division and $0.1 million related to the Rocky Mountain division.

During the year ended December 31, 2018, management approved plans to sell certain assets located in the Southern division as a result of exiting the Eagle Ford shale area. As a result, we began to actively market these assets, which we expected to sell within one year. See Note 10 for additional details on the exit of the Eagle Ford shale area. In addition, management approved the sale of certain assets, primarily frac tanks, located in the Northeast division, that were expected to sell within one year. As the fair value of these assets reclassified as held for sale was lower than the net book value, we recorded an impairment charge of $4.8 million, of which $4.4 million related to the Southern division for the Eagle Ford exit, $0.3 million related to the Corporate division for the sale of certain real property in Texas approved to be sold as part of the Eagle Ford exit, and $0.1 million related to the Northeast division. The $4.8 million is included in “Impairment of long-lived assets” on our consolidated statements of operations.

During the five months ended December 31, 2017, management approved plans to sell certain underutilized assets, primarily trucks and tanks, located in the Rocky Mountain and Southern divisions. As the fair value of the assets was lower than its net book value, an impairment charge, an impairment charge of $4.9 million was recognized during the five months ended December 31, 2017, and is included in “Impairment of long-lived assets” on our consolidated statement of operations. Of the $4.9 million recorded during five months ended December 31, 2017, $4.7 million related to the Rocky Mountain division and $0.2 million related to the Southern division.

Impairment of Long-Lived Assets

Long-lived assets, such as property, plant and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. There were no indicators of impairment for our long-lived assets during the years ended December 31, 2019, 2018 or 2017.

Impairment of Goodwill

As of October 1, 2019, and prior to the annual goodwill impairment test, our goodwill balance by reportable operating segment was $21.9 million for the Northeast division, $4.9 million for the Rocky Mountain division, and $2.7 million for the Southern division. The goodwill balance is primarily due to the application of fresh start accounting upon emergence from chapter 11, which is further discussed in Note 26, with $27.1 million recorded as a result of fresh start accounting adjustments and $2.4 million recorded as a result of the acquisition of Clearwater in 2018 (as previously discussed in Note 6).

Upon completing the qualitative analysis, due to a decline in demand and pricing for our services and a decline in the market price of our common stock, we determined that potential indicators of impairment existed during 2019. Therefore, at October 1, 2019, we performed Step One of the goodwill impairment test for all three reporting units. To measure the fair value of the three reporting units, we used a combination of the discounted cash flow method and the guideline public company method. Based upon the results of the first step of the goodwill impairment test, we concluded that the fair value of all three reporting units was less than the carrying value of each reporting unit. Due to the adoption of ASU No. 2017-04, if the carrying amount of a reporting unit exceeds its fair value an impairment charge is recorded based on the excess of a reporting unit’s carrying amount over its fair value. The difference in the carrying value over the fair value for all divisions exceeded the existing goodwill balance recorded for each reporting unit. As a result, during the three months ended December 31, 2019, we recorded total goodwill impairment charges of $29.5 million, of which $21.9 million related to the Northeast division, $4.9 million for the Rocky Mountain division, and $2.7 million for the Southern division. This impairment charge is shown as “Impairment of goodwill” in the consolidated statement of operations.

XML

Legal Matters (Details)		1 Months Ended
	Jul. 17, 2017 USD ($) a	Jun. 30, 2015 USD ($)	Dec. 31, 2017 USD ($)
Notes Payable
Loss Contingencies [Line Items]
Reimbursement of certain costs and deferred maintenance	$ 75,000
Acres of land | a	5
Appalachian Water Services
Loss Contingencies [Line Items]
Business acquisition, cash consideration		$ 4,000,000
Considerations, note payable		$ 7,400,000	$ 7,400,000

XML

Fresh Start Accounting - Cumulative Impact of Fresh Start Accounting Adjustments (Details) $ in Thousands	Jul. 31, 2017 USD ($)
Revaluation of Assets
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), Property, plant and equipment, net	$ 30,869
Fresh-Start Adjustment, Increase (Decrease), Intangibles, net	(11,723)
Fresh-Start Adjustment, Increase (Decrease), Goodwill	27,139
Fresh-Start Adjustment, Increase (Decrease), Deferred Income Tax Assets, Noncurrent	314
Fresh-Start Adjustment, Increase (Decrease), Total assets	42,794
Revaluation of Liabilities
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), Asset Retirement Obligation	(3,050)
Fresh-Start Adjustment, Increase (Decrease), Environmental Liability	298
Fresh-Start Adjustment, Increase (Decrease), Debt Issuance Costs	(1,053)
Exchange of Stock for Stock
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), Common stock (Successor)	152
Fresh-Start Adjustment, Increase (Decrease), Additional paid-in-capital (Successor)	1,408,324
Fresh-Start Adjustment, Increase (Decrease), Treasury stock (Predecessor)	(19,809)
Fresh Start Adjustments
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), Property, plant and equipment, net	30,869
Fresh-Start Adjustment, Increase (Decrease), Goodwill	27,139
Fresh-Start Adjustment, Increase (Decrease), Total assets	46,285
Fresh-Start Adjustment, Increase (Decrease), Common stock (Successor)	(152)
Fresh-Start Adjustment, Increase (Decrease), Additional paid-in-capital (Successor)	(1,408,324)
Fresh-Start Adjustment, Increase (Decrease), Treasury stock (Predecessor)	(19,809)
Fresh-Start Adjustment, Increase (Decrease), (Accumulated deficit) retained earnings	$ 1,431,461

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Allowance for Doubtful Accounts

The following table summarizes activity in the allowance for doubtful accounts:

	Successor									Predecessor
	Year Ended December 31,			Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Balance at beginning of period	$	1,590		$	1,921		$	1,970		$	1,664
Bad debt (recoveries) expense	(22		)	(328		)	91			788
Write-offs, net	(303		)	(3		)	(140		)	(482		)
Balance at end of period	$	1,265		$	1,590		$	1,921		$	1,970

Depreciation Computed Using Estimated Useful Lives

The range of useful lives for the components of property, plant and equipment are as follows:

Buildings	15-39 years
Building and land improvements	5-20 years
Pipelines	10-30 years
Disposal wells	3-10 years
Machinery and equipment	3-15 years
Equipment under capital leases	4-6 years
Motor vehicles and trailers	3-10 years
Rental equipment	5-10 years
Office equipment	3-7 years

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Fresh Start Accounting - Adjustments to Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Jul. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2016	Dec. 31, 2015
Fresh-Start Adjustment [Line Items]
Successor shares distributed (in shares)	11,695,580
Par value of successor common stock (usd per share)	$ 0.01	$ 0.01	$ 0.01	$ 0.001	$ 0.001
Fair value of Successor common equity	$ 290,191
Common Stock
Fresh-Start Adjustment [Line Items]
Successor shares distributed (in shares)		3,382,000
Fresh-Start Adjustment, Increase (Decrease), Common stock (Successor)	117
Fresh-Start Adjustment, Increase (Decrease), Additional paid-in-capital (Successor)	290,074
Fair value of Successor common equity	$ 290,191

XML

Emergence from Chapter 11 Reorganization

12 Months Ended

Dec. 31, 2019

Reorganizations [Abstract]

Emergence from Chapter 11 Reorganization

Emergence from Chapter 11 Reorganization

On May 1, 2017, the Nuverra Parties filed voluntary petitions under chapter 11 of the Bankruptcy Code in the Bankruptcy Court to pursue the Plan. On July 25, 2017, the Bankruptcy Court entered the Confirmation Order confirming the Plan. The Nuverra Parties emerged from the bankruptcy proceedings on the Effective Date when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases, subject to certain conditions as set forth therein.

On the Effective Date, the Company:

• Adopted a Second Amended and Restated Certificate of Incorporation and Third Amended and Restated Bylaws of the Company;

• Appointed three new members to the Company’s Board to replace the directors of the Company who were deemed to have resigned on the Effective Date;

• Entered into the Credit Agreement, pursuant to which the Credit Agreement Lenders agreed to extend the Successor Revolving Facility and the Successor First Lien Term Loan;

• Entered into the Second Lien Term Loan Agreement, pursuant to which the Second Lien Term Loan Lenders extended the Company the Successor Second Lien Term Loan;

• Issued 7,900,000 shares of common stock of the reorganized Company to the holders of the Predecessor Company’s 2021 Notes;

• Issued 100,000 shares of common stock of the reorganized Company to the Affected Classes (as defined in the Plan);

• Issued 3,695,580 shares of common stock of the reorganized Company to holders of Supporting Noteholder Term Loan Claims (as defined in the Plan) and to the Credit Agreement Lenders for the Exit Financing Commitment Fee (as defined in the Plan);

• Issued 118,137 warrants to purchase common stock of the reorganized Company, with an exercise price of $39.82 per share and an exercise term expiring seven years from the Effective Date;

• Entered into a Registration Rights Agreement with certain holders of the reorganized Company’s common stock party thereto;

• Entered into a Warrant Agreement with American Stock Transfer & Trust Company LLC, the Company’s transfer agent;

• Paid in full in cash all administrative expense claims, priority tax claims, priority claims, and debtor in possession revolving credit facility claims;

• Paid all undisputed, non-contingent customer, vendor, or other obligations not specifically compromised under the Plan; and

• Assumed Mark D. Johnsrud’s, the Company’s former Chairman and Chief Executive Officer, Second Amended and Restated Employment Agreement, dated April 28, 2017 and entered into an Amended and Restated Employment Agreement with Joseph M. Crabb, the Company’s Executive Vice President and Chief Legal Officer.

On the Effective Date, all of the following agreements, and all outstanding interests and obligations thereunder, were terminated:

• Amended and Restated Credit Agreement, as amended through the Fourteenth Amendment thereto, dated as of February 3, 2014, by and among Wells Fargo Bank, National Association (“Wells Fargo”), the lenders named therein, and the Company (the “Predecessor Revolving Facility”);

• Term Loan Credit Agreement, as amended through the Ninth Amendment thereto, dated as of April 15, 2016, by and among Wilmington, the lenders named therein, and the Company (the “Predecessor Term Loan”);

• Indenture governing the Company’s 2018 Notes, dated April 10, 2012, among the Company, its subsidiaries, and The Bank of New York Mellon, N.A.;

• Indenture governing the 2021 Notes, dated April 15, 2016, among the Company, Wilmington, and the guarantors party thereto;

• Debtor-in-Possession Credit Agreement, dated as of April 30, 2017 and effective as of May 3, 2017, by and among the Company, the lenders party thereto, Wells Fargo, and other agents party thereto; and

• Debtor-in-Possession Term Loan Credit Agreement, dated as of April 30, 2017, by and among the Company, the lenders party thereto, and Wilmington.

In addition, on the Effective Date, pursuant to the Plan, (i) all shares of the Company’s pre-Effective Date common stock and all other previously issued and outstanding equity interests in the Company, and any rights of any holder in respect thereof, were canceled and discharged and (ii) all agreements, instruments, and other documents evidencing, relating to or connected with the Company’s pre-Effective Date common stock and all other previously issued and outstanding equity interests of the Company, and any rights of any holder in respect thereof, were canceled and discharged and of no further force or effect.

As a result of the cancellation of the Company’s pre-Effective Date common stock on the Effective Date, the Company’s pre-Effective Date common stock ceased trading on the OTC Pink Marketplace under the symbol “NESCQ.” On October 12, 2017, the Company’s post-Effective Date common stock was listed and began trading on the NYSE American Stock Exchange under the symbol “NES.” See Risk Factors Related to our Common Stock” on page 21 of this Annual Report.

The foregoing is a summary of the substantive provisions of the Plan and the transactions related to and contemplated thereunder and is not intended to be a complete description of, or a substitute for, a full and complete reading of the Plan and the other documents referred to above.

Fresh Start Accounting

In connection with our emergence from chapter 11 on the Effective Date, we applied the provisions of fresh start accounting, pursuant to FASB ASC 852, Reorganizations (“ASC 852”), to our consolidated financial statements. We qualified for fresh start accounting as (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the emerging entity and (ii) the reorganization value of our assets immediately prior to confirmation was less than the post-petition liabilities and allowed claims. ASC 852 requires that fresh start accounting be applied when the Bankruptcy Court enters the Confirmation Order confirming the Plan, or as of a later date when all material conditions precedent to the effectiveness of the Plan are resolved, which for us was August 7, 2017. We elected to apply fresh start accounting effective July 31, 2017, to coincide with the timing of our normal accounting period close. We evaluated the events between July 31, 2017 and August 7, 2017 and concluded that the use of an accounting convenience date of July 31, 2017 did not have a material impact on our results of operations or financial position.

The implementation of the Plan and the application of fresh start accounting materially changed the carrying amounts and classifications reported in our condensed consolidated financial statements and resulted in a new entity for financial reporting purposes. As a result, the financial statements after July 31, 2017 are not comparable with the financial statements on and prior to July 31, 2017.

Fresh start accounting reflects the value of the Successor Company as determined in the confirmed Plan. Under fresh start accounting, asset values are remeasured and allocated based on their respective fair values in conformity with the purchase method of accounting for business combinations in FASB ASC 805,Business Combinations. Liabilities existing as of the Effective Date, other than deferred taxes, were recorded at the present value of amounts expected to be paid using appropriate risk adjusted interest rates. Deferred taxes were determined in conformity with applicable accounting standards. Predecessor accumulated depreciation, accumulated amortization, and accumulated deficit were eliminated.Reorganization value represents the fair value of the Successor Company’s assets before considering liabilities. The excess reorganization value over the fair value of identified tangible and intangible assets is reported as goodwill.

Reorganization Value

Under ASC 852, the Successor Company must determine a value to be assigned to the equity of the emerging company as of the date of adoption of fresh start accounting. To facilitate this calculation, we estimated the enterprise value of the Successor Company by relying equally on a discounted cash flow (or “DCF”) analysis under the income approach and the guideline public company method under the market approach. Enterprise value represents the fair value of an entity’s interest-bearing debt and stockholders’ equity.

To estimate enterprise value utilizing the DCF method, we established an estimate of future cash flows for the period ranging from 2017 to 2023 and discounted the estimated future cash flows to present value. The expected cash flows for the period 2017 to 2021 were based on the financial projections and assumptions utilized in the disclosure statement. The expected cash flows for the period 2022 to 2023 were derived from earnings forecasts and assumptions regarding growth and margin projections, as applicable. A terminal value was included based on the cash flow of the final year of the forecast period.

The discount rate of 11.3% was estimated based on an after-tax weighted average cost of capital (or “WACC”) reflecting the rate of return that would be expected by a market participant. The WACC also takes into consideration a company specific risk premium reflecting the risk associated with the overall uncertainty of the financial projections used to estimate future cash flows.

The guideline public company analysis identified a group of comparable companies that have operating and financial characteristics comparable in certain respects to us, including comparable lines of business, business risks and market presence. Under this methodology, certain financial multiples and ratios that measure financial performance and value are calculated for each selected company and then compared to the implied multiples from the DCF analysis.We considered enterprise value as a multiple of each selected company for which there was publicly available earnings before interest, taxes, depreciation and amortization (or “EBITDA”).

In the disclosure statement associated with the Plan, which was confirmed by the Bankruptcy Court, we estimated a range of enterprise values between $270.0 million and $335.0 million, with a midpoint of $302.5 million. We deemed it appropriate to use the midpoint between the low end and high end of the range to determine the final enterprise value of $302.5 million utilized for fresh start accounting.

The estimated enterprise value and the equity value are highly dependent on the achievement of the future financial results contemplated in the projections that were set forth in the Plan. The estimates and assumptions made in the valuation are inherently subject to significant uncertainties. The primary assumptions for which there is a reasonable possibility of occurrence of a variation that would have significantly affected the reorganization value include the assumptions regarding revenue growth, operating expenses, the amount and timing of capital expenditures and the discount rate utilized.

The following table reconciles the enterprise value to the estimated fair value of the Successor common stock, par value of $0.01 per share, as of the Effective Date:

Enterprise value	$	302,500
Plus: Cash and cash equivalents and restricted cash	14,998
Plus: Non-operating assets	14,400
Fair value of invested capital	331,898
Less: Fair value of First and Second Lien Term Loans	(36,053		)
Less: Fair value of capital leases	(5,654		)
Shareholders’ equity of Successor Company	$	290,191
Shares outstanding of Successor Company	11,696
Implied per share value	$	24.81

The following table reconciles the enterprise value to the estimated reorganization value as of the Effective Date:

Enterprise value	$	302,500
Plus: Cash and cash equivalents and restricted cash	14,998
Plus: Other non-operating assets	14,400
Fair value of invested capital	331,898
Plus: Current liabilities, excluding current portion of long-term debt	32,011
Plus: Non-current liabilities, excluding long-term debt	6,441
Reorganization value of Successor Assets	$	370,350

Warrants

Pursuant to the Plan, on the Effective Date, we issued to the holders of the 2018 Notes and holders of certain claims relating to the rejection of executory contracts and unexpired leases118,137warrants with an exercise price of$39.82and a termexpiring seven years from the Effective Date. Each warrant is exercisable foroneshare of our common stock, par value$0.01.

The warrants were recorded as derivative liabilities on the “Derivative warrant liability” line in the condensed consolidated balance sheet. At issuance the warrants were recorded at fair value, which wascomputed using a Monte Carlo simulation model (Level 3), and are re-measured at each quarter end until expiration or exercise with the resulting fair value adjustment recorded in “Other income, net” in the consolidated statement of operations. Future changes in these factors could have a significant impact on the computed fair value of the derivative warrant liability. As such, we expect future changes in the fair value of the warrants could vary significantly from quarter to quarter. The warrants were also previously discussed in Note 13 and Note 14.

Personal Property

To estimate the fair value of personal property, such as machinery and equipment, we utilized a combination of the cost and market approaches. For assets valued via the cost approach, we applied trend indices from published sources to estimate reproduction cost if the asset was new. We then assigned valuation lives specific to each category of asset based on industry sources and our experience to assess physical and functional depreciation. For the assets valued via the market approach, such as trucks and tanks, we researched market values from published sources and reviewed comparable sales data and sales offers received to estimate fair value.

Real Property

The real property consists of land, buildings,and disposal wells. Real property was valued considering the three generally accepted approaches to value: cost, sales comparison and income capitalization. Due to the special-use nature of most of the real property, we relied on the cost and sales comparison approaches. To estimate the replacement cost if the real property was new and determine the economic life of the improvements, we utilized data provided by a valuation service. Depreciation estimates of the improvements were based on information obtained during physical inspections, discussions with building engineers, and general observations of the improvements’ condition. Land was valued as if it were vacant and available through application of the sales comparison approach. For commercial office properties that have leasing potential, we also utilized the income approach to estimate the values. Comparable rents and listing properties were researched an analyzed and adjusted to estimate market rents with the values derived from direct capitalization analysis.

Intangible Assets

The intangible assets were valued with a combination of the income and cost approach. In order to estimate the fair value of the customer relationships, we determined that the excess earnings method under the income approach was appropriate since the inherent value of this intangible asset lies in its ability to generate current and future income, as well as the fact that identifiable revenue streams could be estimated. We utilized the cost approach to value the other intangibles such the assembled workforce and disposal well permits.

Consolidated Statement of Financial Position

The following fresh start condensed consolidated balance sheet presents the implementation of the Plan and adoption of fresh start accounting as of July 31, 2017. The “Reorganization Adjustments” have been recorded within the consolidated balance sheet to reflect the effects of the Plan, including discharge of liabilities subject to compromise. The “Fresh Start Adjustments” reflect the estimated fair value adjustments as a result of the adoption of fresh start accounting.

	Predecessor			Reorganization				Fresh Start				Successor
	Company			Adjustments				Adjustments				Company
Assets
Cash	$	2,728		$	4,465		A	$	—			$	7,193
Restricted cash	8,011			(206		)	B	—				7,805
Accounts receivable, net	27,535			—				—				27,535
Inventories	3,935			—				—				3,935
Prepaid expenses and other receivables	3,200			282			C	—				3,482
Other current assets	924			(500		)	C	—				424
Assets held for sale	631			3,913			D	—				4,544
Total current assets	46,964			7,954				—				54,918
Property, plant and equipment, net	265,097			(8,678		)	D	30,869			P	287,288
Equity investments	59			—				—				59
Intangibles, net	13,093			(763		)	D	(11,723		)	Q	607
Goodwill	—			—				27,139			R	27,139
Other assets	339			—				—				339
Total assets	$	325,552		$	(1,487	)		$	46,285			$	370,350
Liabilities and Shareholders’ Equity (Deficit)
Accounts payable	$	6,331		$	1,967		E	$	—			$	8,298
Accrued and other current liabilities	30,549			(12,168		)	F	(298		)	S	18,083
Current contingent consideration	—			1,000			G	—				1,000
Current portion of long-term debt	41,007			(37,665		)	H	—				3,342
Derivative warrant liability	—			717			I	—				717
Other current liabilities	—			3,913			J	—				3,913
Total current liabilities	77,887			(42,236		)		(298		)		35,353
Deferred income taxes	472			—				(314		)	T	158
Long-term debt	2,312			35,000			K	1,053			K	38,365
Long-term contingent consideration	—			—				—				—
Other long-term liabilities	3,694			(461		)	L	3,050			U	6,283
Liabilities subject to compromise	480,595			(480,595		)	M	—				—
Total liabilities	564,960			(488,292		)		3,491				80,159
Commitments and contingencies
Shareholders’ deficit:
Common stock (Successor)	—			117			N	—				117
Additional paid-in-capital (Successor)	—			290,074			N	—				290,074
Common stock (Predecessor)	152			—				(152		)	V	—
Additional paid-in capital (Predecessor)	1,408,324			—				(1,408,324		)	V	—
Treasury stock (Predecessor)	(19,809		)	—				19,809			V	—
(Accumulated deficit) retained earnings	(1,628,075		)	196,614			O	1,431,461			W	—
Total shareholders’ equity (deficit)	(239,408		)	486,805				42,794				290,191
Total liabilities and shareholders’ equity (deficit)	$	325,552		$	(1,487	)		$	46,285			$	370,350

Reorganization Adjustments

A. Reflects the cash receipts (payments) from implementation of the Plan:

Receipt of Successor First Lien Term Loan and Successor Second Lien Term Loan Proceeds	$	35,000
Payment of debtor in possession revolving facility, including accrued interest and fees	(30,461		)
Payment of debtor in possession term loan interest	(90		)
Cash payment in association with settlement of the 2018 Notes	(350		)
Release of restricted cash to unrestricted cash	206
Refund of professional fees	160
Net Cash Receipts	$	4,465

B. Reflects the release of restricted cash to unrestricted cash.

C. Reflects the reclassification of a rental security deposit to prepaid rent (or “Prepaid expenses and other receivables”) from

“Other current assets” in connection with settlement of lease claims. Also included in “Other current assets” is the settlement for the lease rejection damages, see below:

Reclassification of a rental security deposit to prepaid rent	$	(282	)
Settlement for the lease rejection damages	(218		)
Adjustment to Other current assets	$	(500	)

D. As part of the Plan and settlement of claims, the $7.4 million note payable (or “the AWS Note”) that arose in connection with AWS, was settled in the fourth quarter of fiscal 2017 in exchange for the membership interests in AWS, return of the water treatment facility in the Marcellus shale area, including all assets related to the operations of the water treatment facility in “as-is, where-is” condition, together with $75,000 for reimbursement of certain costs and deferred maintenance. The adjustments reflect the reclassification of property, plant and equipment exchanged for the release of claims related to the AWS Note from “Property, plant and equipment, net” to “Assets held for sale,” as well as the write-off of intangibles associated with AWS.

Elimination of property, plant and equipment related to AWS settlement	$	(8,678	)
Elimination of intangible assets related to AWS settlement	(763		)
Recognition of assets held for sale on the AWS settlement	3,913
Accrual of cash payment in connection with the AWS settlement (See F)	(75		)
Loss on settlement of the AWS note payable	$	(5,603	)

E. The reorganization adjustment to “Accounts payable” represents the reinstatement of the pre-petition accounts payable that was previously classified as “Liabilities subject to compromise.”

F. The reorganization adjustment to “Accrued and other current liabilities” are noted in the table below.

Accrual of the $75,000 related to the AWS settlement	$	75
Write-off of short-term deferred rent related to the Scottsdale Headquarters lease	(330		)
Write-off of accrued interest related to the 2018 and 2021 Notes	(11,650		)
Decrease in accrued interest for DIP Facilities due to cash payment	(263		)
Net decrease in Accrued and other current liabilities	$	(12,168	)

G. Reflects the contingent consideration due for the Ideal Settlement. Of the remaining $1.0 million balance due, $0.5 million was paid in August 2017 subsequent to the Effective Date and the other $0.5 million is payable upon delivery of the required permits.

H. Reflects the payment or conversion to equity of the Predecessor Revolving Facility and debtor in possession credit facilities in connection with emergence on the Effective Date.

I. Reflects the recognition of the derivative warrant liability for the warrants issued in connection with the Plan. Note 13 and Note 14 includes additional discussion on the warrants and the assumptions used to calculate the fair value.

J. Reflects the reclassification of the AWS debt prior to the surrender of the AWS assets classified as “Assets held for sale” pursuant to the Plan.

K. Represents the new Successor First Lien Term Loan and Successor Second Lien Term Loan at fair value, net of debt issuance costs:

Successor First Lien Term Loan at fair value	$	15,000
Successor Second Lien Term Loan at fair value	21,053
Debt issuance costs associated with the Successor Second Lien Term Loan	(1,053		)
Fair Value of the Successor First Lien Term Loan and Successor Second Lien Term Loan, net of debt issuance costs	$	35,000

L. Reflects the write-off of long-term deferred rent associated with the Scottsdale headquarters lease which was rejected and settled as part of the chapter 11 filing.

M. Liabilities subject to compromise were settled as follows in accordance with the Plan:

Outstanding principal amount of 2018 Notes, net of discounts/premiums and debt issuance costs	$	(40,020	)
Outstanding principal amount of 2021 Notes, net of discounts/premiums and debt issuance costs	(347,658		)
Outstanding principal amount of Term Loan, net of discounts/premiums and debt issuance costs	(78,264		)
Outstanding principal amount on the AWS note payable	(3,913		)
Ideal original contingent consideration	(8,500		)
Pre-petition accounts payable	(1,967		)
Derivative warrant liability	(273		)
Balance of Liabilities subject to compromise	$	(480,595	)
Reinstatement of pre-petition accounts payable	$	1,967
Reinstatement of a portion of the Ideal contingent consideration pursuant to the settlement agreement	1,000
Reinstatement of the AWS note payable pursuant to the settlement agreement	3,913
Payment to the 2018 Noteholders pursuant to the Plan	350
Write-off of accrued interest related to the 2018 and 2021 Notes	(11,650		)
Record the issuance of Successor common equity	290,191
Recoveries pursuant to the Plan	$	285,771
Net gain on debt discharge	$	(194,824	)

N. Distribution of 11,695,580 Successor shares of common stock at a par value of $0.01 per share:

Record issuance of shares of Successor common stock at par value of $0.01 per share	$	117
Record additional paid-in capital from the issuance of Successor common stock	290,074
Fair value of Successor common equity	$	290,191

O. Reflects the cumulative impact of the reorganization adjustments on “(Accumulated deficit) retained earnings” discussed above:

Net gain on debt discharge	$	194,824
Loss on settlement of the AWS note payable	(5,603		)
Write-off of a portion of the Ideal contingent consideration due to settlement	7,500
Settlement of the lease rejection claim associated with the Scottsdale headquarters lease	(218		)
Write-off of the deferred rent associated with the Scottsdale headquarters lease	790
Issuance of warrants to the 2018 Noteholders and other parties pursuant to the Plan	(717		)
Refund of professional fees	160
Professional fees related to the reorganization under the Plan	(122		)
Net retained earnings impact resulting from implementation of the Plan	$	196,614

Fresh Start Adjustments

P. Reflects the increase in net book value of property, plant and equipment to estimated fair value. The following table summarizes the components of property, plant and equipment, net as of July 31, 2017 of the Predecessor Company and the Successor Company:

	Successor		Predecessor
Land	$	10,779	$	11,495
Buildings	29,349		27,145
Building, leasehold and land improvements	8,690		10,724
Pipelines	66,962		58,533
Disposal wells	41,195		20,872
Landfill	4,500		20,539
Machinery and equipment	16,724		20,169
Equipment under finance leases	10,045		6,499
Motor vehicles and trailers	55,333		34,069
Rental equipment	36,748		46,300
Office equipment	3,046		1,954
Construction in process	3,917		6,798
Property, plant and equipment, net	$	287,288	$	265,097

Q. Reflects the reduction in net book value of intangible assets to estimated fair value.

R. The adjustment represents the reorganization value of assets in excess of amounts allocated to identified tangible and intangible assets as follows:

Reorganization value of Successor assets	$	370,350
Less: Fair value of Successor assets (excluding goodwill)	343,211
Reorganization value of Successor assets in excess of fair value - Successor goodwill	$	27,139

The Successor goodwill by segment is $4.9 million for the Rocky Mountain division, $19.5 million for the Northeast division, and $2.7 million for the Southern division. Upon emergence, we have determined that our goodwill will be tested for impairment annually at October 1st and more frequently if events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. There were no indicators of goodwill impairment at October 1, 2017.

S. Reflects an adjustment to Accrued and other current liabilities to adjust the environmental liabilities to estimated fair value.

T. Reflects the impact of the reorganization and fresh start adjustments on deferred taxes.

U. Reflects the adjustment to increase the net book value of asset retirement obligations to estimated fair value.

V. Reflects the cancellation of Predecessor equity to (Accumulated deficit) retained earnings.

W. Reflects the cumulative impact of the fresh start accounting adjustments discussed above on (Accumulated deficit) retained earnings as follows:

Property, plant and equipment fair value adjustment	$	30,869
Intangible assets fair value adjustment	(11,723		)
Reorganization value in excess of amounts allocable to identified assets - Successor goodwill	27,139
Asset retirement obligation fair value adjustment	(3,050		)
Environmental liability fair value adjustment	298
Recording the fair value of debt issuance costs for the new Successor First Lien Term Loan and Successor Second Lien Term Loan	(1,053		)
Adjustment to deferred income taxes	314
Change in assets and liabilities resulting from fresh start adjustments	$	42,794
Elimination of Predecessor common stock to (accumulated deficit) retained earnings	$	152
Elimination of Predecessor additional paid-in capital to (accumulated deficit) retained earnings	1,408,324
Elimination of Predecessor treasury stock to (accumulated deficit) retained earnings	(19,809		)
Net impact of fresh start adjustments on (accumulated deficit) retained earnings	$	1,431,461

Reorganization Items, net

Reorganization items, net represents liabilities settled, net of amounts incurred subsequent to the chapter 11 filing as a direct result of the Plan and are classified as “Reorganization items, net” in our consolidated statement of operations. The following table summarizes reorganization items, net for the years ended December 31, 2019 and 2018, five months ended December 31, 2017, and the seven months ended July 31, 2017:

	Successor									Predecessor
	Year Ended December 31,						Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Net gain on debt discharge	$	—		$	—		$	—		$	194,824
Change in assets and liabilities resulting from fresh start adjustments	—			—			—			42,794
Settlement of the AWS note payable	—			—			—			(5,603		)
Fair value of warrants issued to the 2018 Noteholders and other parties pursuant to the Plan	—			—			—			(717		)
Professional and insurance fees	(200		)	(246		)	(7,306		)	(9,090		)
DIP credit agreement financing costs	—			—			3,962			(5,702		)
Retention bonus payments	—			—			(2,158		)	(806		)
Other costs (a)	—			(1,433		)	(5		)	7,794
Reorganization items, net	$	(200	)	$	(1,679	)	$	(5,507	)	$	223,494

(a) Includes approximately $1.3 million in chapter 11 fees paid to the US Trustee during the year ended December 31, 2018.

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Fresh Start Accounting - Schedule of Reorganization Adjustment to Accrued Liabilities (Details) - USD ($)	Jul. 17, 2017	Jul. 31, 2017
Notes Payable
Fresh-Start Adjustment [Line Items]
Reimbursement of certain costs and deferred maintenance	$ 75,000
Accrual of the $75,000 related to the AWS settlement
Fresh-Start Adjustment [Line Items]
Reorganization adjustment to accrued liabilities		$ 75,000
Write-off of short-term deferred rent related to the Scottsdale Headquarters lease
Fresh-Start Adjustment [Line Items]
Reorganization adjustment to accrued liabilities		(330,000)
Write-off of accrued interest related to the 2018 and 2021 Notes
Fresh-Start Adjustment [Line Items]
Reorganization adjustment to accrued liabilities		(11,650,000)
Decrease in accrued interest for DIP Facilities due to cash payment
Fresh-Start Adjustment [Line Items]
Reorganization adjustment to accrued liabilities		(263,000)
Net decrease in Accrued and other current liabilities
Fresh-Start Adjustment [Line Items]
Reorganization adjustment to accrued liabilities		$ (12,168,000)

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Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Results of Operations

Summarized quarterly financial information for 2019 and 2018 is as follows:

	Successor
	Three Months Ended
2019	March 31,			June 30,			September 30,			December 31,
Revenue	$	42,627		$	45,240		$	43,098		$	37,273
Operating loss	(4,657		)	(3,828		)	(5,017		)	(36,600		)
Net loss	(6,355		)	(5,006		)	(6,052		)	(37,524		)
Earnings per common share:
Net loss per basic common share	$	(0.41	)	$	(0.32	)	$	(0.39	)	$	(2.39	)
Net loss per diluted common share	(0.41		)	(0.32		)	(0.39		)	(2.39		)

	Successor
	Three Months Ended
2018	March 31,			June 30,			September 30,			December 31,
Revenue	$	49,669		$	48,948		$	49,656		$	49,201
Operating loss	(30,752		)	(8,905		)	(6,113		)	(6,530		)
Net loss	(32,167		)	(11,176		)	(7,117		)	(8,803		)
Earnings per common share:
Net loss per basic common share	$	(2.75	)	$	(0.96	)	$	(0.61	)	$	(0.72	)
Net loss per diluted common share	(2.75		)	(0.96		)	(0.61		)	(0.72		)

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Basis of Presentation - Narrative (Details) - USD ($)	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Derivative warrant liability	$ 354		$ 34,000
Operating lease liabilities	2,899,000
Adjustment due to adoption of ASC 842, Leases		$ (823,000)
Finance lease assets	$ 8,202,000
Accumulated Deficit
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Adjustment due to adoption of ASC 842, Leases		(823,000)
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease liabilities		4,900,000
Finance lease assets		1,800,000
Accounting Standards Update 2016-02 | Accumulated Deficit
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Adjustment due to adoption of ASC 842, Leases		$ (800,000)

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Debt - Schedule of Debt (Detail) - USD ($)	Dec. 31, 2019	Dec. 27, 2019	Dec. 31, 2018	Oct. 05, 2018	Jul. 31, 2017
Debt Instrument [Line Items]
Unamortized debt issuance expense	$ 95,000
Carrying value of debt	36,530,000		$ 66,356,000
Unamortized deferred financing costs	(95,000)		(423,000)
Total debt, net	36,435,000		65,933,000
Less: current portion of long-term debt	(6,430,000)		(38,305,000)
Long-term debt	30,005,000		27,628,000
Revolving credit facility | Line of Credit | ACF FinCo I, LP
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 30,000,000.0				$ 30,000,000.0
Successor Revolving Facility
Debt Instrument [Line Items]
Interest Rate	6.95%
Unamortized debt issuance expense	$ 0
Carrying value of debt	$ 0		0
Successor First Lien Term Loan
Debt Instrument [Line Items]
Interest Rate	8.95%
Unamortized debt issuance expense	$ 95,000
Carrying value of debt	$ 18,008,000		21,905,000
Successor Second Lien Term Loan
Debt Instrument [Line Items]
Interest Rate	11.00%
Unamortized debt issuance expense	$ 0
Carrying value of debt	$ 9,013,000		10,066,000
Successor Bridge Term Loan
Debt Instrument [Line Items]
Interest Rate	11.00%			11.00%
Unamortized debt issuance expense	$ 0
Carrying value of debt	$ 0		32,500,000
Vehicle Term loan
Debt Instrument [Line Items]
Interest Rate	5.27%	5.27%
Unamortized debt issuance expense	$ 0
Carrying value of debt	725,000		0
Finance leases
Debt Instrument [Line Items]
Unamortized debt issuance expense	0
Carrying value of debt	$ 8,784,000		$ 1,885,000
Weighted average interest rate	6.77%

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Assets Held for Sale and Impairment of Long-Lived Assets and Goodwill - Schedule of Impairment by Reportable Segment (Details) - USD ($) $ in Thousands	3 Months Ended	5 Months Ended	7 Months Ended	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2017	Jul. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of property, plant and equipment, net		$ 4,904		$ 766	$ 4,815
Impairment of goodwill	$ 29,500	0	$ 0	29,518	0
Total		4,904		30,284	4,815
Corp/Other
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of property, plant and equipment, net		0		0	332
Impairment of goodwill				0
Total		0		0	332
Northeast
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of goodwill	21,900
Northeast | Operating Segments
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of property, plant and equipment, net		0		646	69
Impairment of goodwill				21,861
Total		0		22,507	69
Southern
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of goodwill	2,700
Southern | Operating Segments
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of property, plant and equipment, net		238		0	4,414
Impairment of goodwill				2,735
Total		238		2,735	4,414
Rocky Mountain
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of goodwill	$ 4,900
Rocky Mountain | Operating Segments
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment of property, plant and equipment, net		4,666		120	0
Impairment of goodwill				4,922
Total		$ 4,666		$ 5,042	$ 0

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Acquisition of Clearwater - Narrative (Detail) $ in Millions			3 Months Ended	12 Months Ended
	Jan. 02, 2019 USD ($)	Oct. 05, 2018 USD ($) well	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Business Acquisition [Line Items]
Proceeds from issuance or sale of equity	$ 31.4	$ 32.5		$ 32.5
Term Loan | Ares | Line of Credit
Business Acquisition [Line Items]
Additional term loan from credit agreement		10.0
Clearwater
Business Acquisition [Line Items]
Consideration		$ 42.3
Number of salt water disposal wells in service | well		3
Bridge loan		$ 32.5
Transaction costs			$ 0.3		$ 1.1

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Restructuring and Exit Costs - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2015
Eagle Ford Shale Area
Restructuring Cost and Reserve [Line Items]
Restructuring and exit-related costs	$ 1.1
Mississippian Shale Area and Tuscaloosa Marine Shale Logistics Business
Restructuring Cost and Reserve [Line Items]
Restructuring and exit-related costs		$ 7.1

XML

Goodwill and Intangible Assets - Intangible Assets Schedule (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,353	$ 1,380
Accumulated Amortization	(713)	(268)
Net Book Value	$ 640	$ 1,112
Remaining Useful Life (Years)	2 years 9 months 24 days	3 years 2 months
Disposal permits
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 554	$ 581
Accumulated Amortization	(269)	(180)
Net Book Value	$ 285	$ 401
Remaining Useful Life (Years)	5 years	5 years 6 months
Trade name
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 799	$ 799
Accumulated Amortization	(444)	(88)
Net Book Value	$ 355	$ 711
Remaining Useful Life (Years)	1 year	2 years

XML

Fair Value Measurements - Reconciliation of Derivative Warrant Liability (Details) - USD ($)	5 Months Ended	7 Months Ended	12 Months Ended
	Dec. 31, 2017	Jul. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Derivative warrant liability			$ 354	$ 34,000
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning of period			34,000	477,000
Issuance of warrants			0	0
Exercise of warrants			0	0
Adjustments to estimated fair value	$ (239,000)	$ (4,025,000)	(34,000)	(443,000)
Balance at end of period	$ 477,000		$ 0	$ 34,000

XML

Basis of Presentation

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In our opinion, the consolidated financial statements include the normal, recurring adjustments necessary for a fair statement of the information required to be set forth herein.

All dollar and share amounts in the footnote tabular presentations are in thousands, except per share amounts and unless otherwise noted.

Unless stated otherwise, any reference to balance sheet, income statement, statement of operations and cash flow items in these accompanying audited consolidated financial statements refers to results from continuing operations. We have not included a statement of comprehensive income as there were no transactions to report in the 2019, 2018, or 2017 periods presented.

Principles of Consolidation

Our consolidated financial statements include the accounts of Nuverra and our subsidiaries. All intercompany accounts, transactions and profits are eliminated in consolidation.

On May 1, 2017, the Company and certain of its material subsidiaries (collectively with the Company, the “Nuverra Parties”) filed voluntary petitions under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to pursue prepackaged plans of reorganization (together, and as amended, the “Plan”). On July 25, 2017, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Plan. The Plan became effective on August 7, 2017 (the “Effective Date”), when all remaining conditions to the effectiveness of the Plan were satisfied or waived. On June 22, 2018, the Bankruptcy Court issued a final decree and order closing the chapter 11 cases, subject to certain conditions as set forth therein. See Note 25 on “Emergence from Chapter 11 Reorganization” for additional details.

Upon emergence, we elected to apply fresh start accounting effective July 31, 2017, to coincide with the timing of our normal accounting period close. Refer to Note 26 on “Fresh Start Accounting” for additional information on the selection of this date. As a result of the application of fresh start accounting, as well as the effects of the implementation of the Plan, a new entity for financial reporting purposes was created, and as such, the consolidated financial statements on or after August 1, 2017, are not comparable with the consolidated financial statements prior to that date.

References to “Successor” or “Successor Company” refer to the financial position and results of operations of the reorganized Company subsequent to July 31, 2017. References to “Predecessor” or “Predecessor Company” refer to the financial position and results of operations of the Company on and prior to July 31, 2017.

Reclassifications

Due to the decreased fair value of the derivative warrant liability, we have elected to present this item in the “Accrued and other current liabilities” line and eliminate the previously disclosed “Derivative warrant liability” line item on the consolidated balance sheets. As of December 31, 2019 and December 31, 2018, $354 and $34 thousand are included in “Accrued and other current liabilities” for our derivative warrant liability. See Note 11 for the items that comprise the “Accrued and other current liabilities” line on the consolidated balance sheets. See Note 13 and Note 14 for more information on the derivative warrant liability.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) (“ASC 842”), replacing the previous leasing standard Accounting Standards Codification 840, Leases (“ASC 840”), which requires an entity that is a lessee to recognize the assets and liabilities arising from leases with terms longer than 12 months on the balance sheet. Leases are to be classified as either operating or finance, with classification affecting the pattern of expense recognition in the statement of operations. The new standard was effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods.

We adopted this new lease standard on January 1, 2019 using a modified retrospective transition, with the cumulative-effect adjustment to the opening balance of accumulated deficit as of the effective date (the “effective date method”). Under the effective date method, financial results reported in periods prior to 2019 are unchanged. We also elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carryforward the historical lease classification. In addition, we have made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. We will continue to recognize those lease payments in the consolidated statement of operations on a straight-line basis over the lease term.

The adoption of the new lease standard resulted in the recognition of operating lease assets and operating lease liabilities of approximately $4.9 million, respectively, as of January 1, 2019. Additionally, as of January 1, 2019, we recorded an adjustment of $0.8 million to accumulated deficit as a result of the re-measurement of the present value of remaining lease payments for the finance leases previously recorded as capital leases. The finance lease assets and finance lease liabilities as of January 1, 2019 were $1.8 million, respectively. We believe the adoption of the new lease standard will not materially impact our results of operations, nor have a notable impact on our liquidity. See Note 5 for further information on our leases.

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Equity (Details) $ / shares in Units, $ in Thousands				5 Months Ended	7 Months Ended	12 Months Ended
	Jan. 02, 2019 USD ($) $ / shares shares	Oct. 05, 2018 USD ($) day	Jul. 31, 2017 warrant $ / shares shares	Dec. 31, 2017 USD ($) warrant $ / shares	Jul. 31, 2017 USD ($) warrant $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Aug. 07, 2017 $ / shares	Dec. 31, 2016 $ / shares	Dec. 31, 2015 $ / shares
Class of Stock [Line Items]
Rights offering, aggregate offering price | $	$ 31,400	$ 32,500				$ 32,500
Percentage of nonrefundable cash payments		1.00%
Required period for registration statement (in days) | day		20
Gross proceeds from Rights Offering | $				$ 0	$ 0	$ 31,057	$ 0
Issuance of common stock for rights offering (in shares)			11,695,580
Common stock, shares outstanding (in shares)	15,614,981		11,696,000		11,696,000	15,735,000	12,233,000
Capital stock, shares authorized (in shares)			76,000,000.0		76,000,000.0
Preferred stock, shares authorized (in shares)			1,000,000.0		1,000,000.0	1,000,000.0	1,000,000.0
Preferred stock, par value (usd per share) | $ / shares			$ 0.01		$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)			75,000,000.0		75,000,000.0	75,000,000	75,000,000
Common stock, par value (usd per share) | $ / shares			$ 0.01		$ 0.01	$ 0.01	$ 0.01		$ 0.001	$ 0.001
Plan of reorganization, number of warrants issued | warrant			118,137	0	118,137
Exercise price of warrants (in usd per warrant) | $ / shares			$ 39.82	$ 39.82	$ 39.82	$ 39.82	$ 39.82	$ 39.82
Expiration term (in years)			7 years
Common Stock
Class of Stock [Line Items]
Issuance of common stock for rights offering (in shares)						3,382,000
Number of common stock shares exercisable for each warrant			1		1
Rights Offering | Common Stock
Class of Stock [Line Items]
Aggregate shares sold (in shares)	3,381,894
Purchase price (usd per share) | $ / shares	$ 9.61
Gross proceeds from Rights Offering | $	$ 32,500
Issuance of common stock for rights offering (in shares)	3,381,894
Two Largest Shareholders
Class of Stock [Line Items]
Percentage of stock held by largest shareholders		90.00%
2021 Noteholders
Class of Stock [Line Items]
Issuance of common stock for rights offering (in shares)			7,900,000
Affected Classes
Class of Stock [Line Items]
Issuance of common stock for rights offering (in shares)			100,000
Supporting Noteholder Term Loan Claims
Class of Stock [Line Items]
Issuance of common stock for rights offering (in shares)			3,695,580

XML

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Feb. 29, 2020	Jun. 28, 2019
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Registrant Name	Nuverra Environmental Solutions, Inc.
Entity Central Index Key	0001403853
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		15,761,082
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 6.9

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Leases - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Lessee, Lease, Description [Line Items]
Remaining lease terms	99 years
Residual value guarantee	$ 2.5
Lease expense under operating leases		$ 4.6	$ 5.0
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms	1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms	20 years

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Issuance of Successor common stock and warrants	Common Stock	Common Stock Cancellation of Predecessor Equity	Common Stock Issuance of Successor common stock and warrants	Additional Paid-In Capital	Additional Paid-In Capital Cancellation of Predecessor Equity	Additional Paid-In Capital Issuance of Successor common stock and warrants	Treasury Stock	Treasury Stock Cancellation of Predecessor Equity	Accumulated Deficit	Accumulated Deficit Cancellation of Predecessor Equity
Beginning Balance at Dec. 31, 2016	$ (169,066)		$ 152			$ 1,407,867			$ (19,807)		$ (1,557,278)
Beginning Balance (in shares) at Dec. 31, 2016			(152,433)						(1,514)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	457					457
Issuance of common stock to employees (in shares)			32
Issuance of common stock for warrants exercised (in shares)			15
Treasury stock acquired through surrender of shares for tax withholding	(2)								$ (2)
Treasury stock acquired through surrender of shares for tax withholding (in shares)									(12)
Net income (loss)	168,611										168,611
Ending Balance at Jul. 31, 2017	0		$ 152			1,408,324			$ (19,809)		(1,388,667)
Ending Balance (in shares) at Jul. 31, 2017			(152,480)	152,480	(11,696)				(1,526)	(1,526)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cancellation of Predecessor Equity/Issuance of Successor common stock and warrants		$ 290,191		$ (152)	$ 117		$ (1,408,324)	$ 290,074		$ 19,809		$ 1,388,667
Net income (loss)	(47,895)
Ending Balance at Dec. 31, 2017	242,973		$ 117			290,751			$ 0		(47,895)
Ending Balance (in shares) at Dec. 31, 2017			(11,696)						0
Beginning Balance at Aug. 01, 2017	290,191		$ 117			290,074			$ 0		0
Beginning Balance (in shares) at Aug. 01, 2017			(11,696)						0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	677					677
Net income (loss)	(47,895)										(47,895)
Ending Balance at Dec. 31, 2017	242,973		$ 117			290,751			$ 0		(47,895)
Ending Balance (in shares) at Dec. 31, 2017			(11,696)						0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	12,717					12,717
Issuance of common stock to employees (par value $0.001)			$ 5			(5)
Issuance of common stock to employees (in shares)			537
Net income (loss)	(59,263)										(59,263)
Ending Balance at Dec. 31, 2018	196,427		$ 122			303,463			$ 0		(107,158)
Ending Balance (in shares) at Dec. 31, 2018			(12,233)						0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cancellation of Predecessor Equity/Issuance of Successor common stock and warrants	196,427
Stock-based compensation	2,026					2,026
Issuance of common stock for rights offering (in shares)			3,382
Stock Issued During Period, Value, New Issues	32,175		$ 34			32,141
Issuance of common stock to employees (par value $0.001)			$ 2			(2)
Issuance of common stock to employees (in shares)			166
Treasury stock acquired through surrender of shares for tax withholding	(436)								$ (436)
Treasury stock acquired through surrender of shares for tax withholding (in shares)									(46)
Net income (loss)	(54,937)										(54,937)
Ending Balance at Dec. 31, 2019	174,432		$ 158			$ 337,628			$ (436)		$ (162,918)
Ending Balance (in shares) at Dec. 31, 2019			(15,781)						(46)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cancellation of Predecessor Equity/Issuance of Successor common stock and warrants	$ 174,432

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Leases - Supplemental Disclosure of Cash Flow Information and Other Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 3,034
Operating cash flows from finance leases	538
Financing cash flows from finance leases	1,793
Leased assets obtained in exchange for new operating lease liabilities	196
Leased assets obtained in exchange for new finance lease liabilities	$ 9,469

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Share-based Compensation - Assumptions of Stock Awards Granted (Detail)	5 Months Ended
	Dec. 31, 2017 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Volatility	45.60%
Expected term (years)	10 years
Risk free interest rate	2.30%
Expected dividend yield	0.00%
Weighted average fair value (in dollars per share)	$ 10.02

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Net Loss Per Common Share

The following table presents the calculation of basic and diluted net (loss) income per common share, as well as the potentially dilutive stock-based awards that were excluded from the calculation of diluted loss per share for the periods presented:

	Successor									Predecessor
	Year Ended December 31,			Year Ended December 31,			Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018			2017			2017
Numerator:
Net (loss) income	$	(54,937	)	$	(59,263	)	$	(47,895	)	$	168,611
Denominator:
Weighted average shares—basic	15,676			11,829			11,696			150,940
Common stock equivalents	—			—			—			23,364
Weighted average shares—diluted	15,676			11,829			11,696			174,304
Earnings per common share:
Net (loss) income per basic common share	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	1.12
Net (loss) income per diluted common share	$	(3.50	)	$	(5.01	)	$	(4.09	)	$	0.97
Antidilutive stock-based awards excluded	490			951			827			593

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Accrued and Other Current Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following at December 31, 2019 and December 31, 2018:

	Successor
	December 31,		December 31,
	2019		2018
Accrued payroll and employee benefits	$	1,837	$	6,975
Accrued insurance	2,569		2,664
Accrued legal	295		733
Accrued taxes	695		2,229
Accrued interest	179		520
Accrued operating costs	2,653		3,424
Accrued other	394		125
Derivative warrant liability	—		34
Current operating lease liabilities	1,442		—
Total accrued and other current liabilities	$	10,064	$	16,704

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Property, Plant and Equipment, net (Tables)

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment consists of the following:

	Successor
	December 31,			December 31,
	2019			2018
Land	$	8,454		$	9,643
Buildings	26,401			28,146
Building, leasehold and land improvements	8,022			9,064
Pipelines	67,249			67,234
Disposal wells	76,518			75,402
Landfill	5,587			5,587
Machinery and equipment	20,430			19,389
Equipment under finance leases	9,932			8,554
Motor vehicles and trailers	39,679			36,670
Rental equipment	20,605			21,155
Office equipment	3,930			3,073
	286,807			283,917
Less accumulated depreciation	(98,003		)	(73,647		)
Construction in process	2,013			5,370
Property, plant and equipment, net	$	190,817		$	215,640

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Derivative Warrants

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Derivative Warrants

Derivative Warrants

Predecessor Warrants

During the year ended December 31, 2016, we issued 26.4 million warrants comprised of 17.5 million warrants for the exchange of 2018 Notes for new 12.5%/10.0% Senior Secured Second Lien Notes due 2021 (the “2021 Notes”), 0.1 million warrants for the exchange of 2018 Notes for common stock, and 8.8 million warrants to the lenders under the Predecessor Term Loan. All warrants were issued with an exercise price of $0.01 and had a term of ten years.

Upon emergence from chapter 11 on the Effective Date, all warrants outstanding under the Predecessor Company were canceled under the Plan. The following table shows the Predecessor warrant activity for the seven months ended July 31, 2017:

	Predecessor
	Seven Months Ended July 31,
	2017
Outstanding at the beginning of period	25,283
Issued	—
Exercised	(16	)
Canceled due to emergence from chapter 11	(25,267	)
Outstanding at the end of the period	—

Successor Warrants

Pursuant to the Plan, on the Effective Date, we issued to the holders of the 2018 Notes, and holders of certain claims relating to the rejection of executory contracts and unexpired leases,118,137warrants with an exercise price of$39.82and a termexpiring seven years from the Effective Date. Each warrant is exercisable foroneshare of our common stock, par value$0.01.

The following table shows the Successor warrant activity for the years ended December 31, 2019, December 31, 2018 and five months ended December 31, 2017:

	Successor
	Year Ended December 31,	Year Ended December 31,	Five Months Ended December 31,
	2019	2018	2017
Outstanding at the beginning of the period	118	118	—
Issued	—	—	118
Exercised	—	—	—
Outstanding at the end of the period	118	118	118

Fair Value of Warrants

We accounted for warrants in accordance with the accounting guidance for derivatives, which sets forth a two-step model to be applied in determining whether a financial instrument is indexed to an entity’s own stock which would qualify such financial instruments for a scope exception. This scope exception specifies that a contract that would otherwise meet the definition of a derivative financial instrument would not be considered as such if the contract is both (i) indexed to the entity’s own stock and (ii) classified in the shareholders’ equity section of the entity’s balance sheet. We determined that the Predecessor warrants were ineligible for equity classification due to the anti-dilution provisions in the contract, and the Successor warrants were ineligible for equity classification as the warrants are not indexed to our common stock. As such, the warrants were recorded as derivative liabilities at fair value on the consolidated balance sheet. The warrants are included in “Accrued and other current liabilities” on the consolidated balance sheet and are classified as a current liability as they could be exercised by the holders at any time.

As discussed previously in Note 13, the fair value of the derivative warrant liability was estimated using a Monte Carlo simulation model on the date of issue and is re-measured at each quarter end until expiration or exercise of the underlying warrants with the resulting fair value adjustment recorded in “Other income, net” in the consolidated statement of operations.

The fair value of the derivative warrant liability was estimated using the following model inputs:

	Successor
	Period Ended			Period Ended			Period Ended			At Issuance
	December 31, 2019			December 31, 2018			December 31, 2017			August 7, 2017
Exercise price	$	39.82		$	39.82		$	39.82		$	39.82
Closing stock price (a)	$	2.90		$	8.20		$	18.18		$	22.28
Risk free rate	1.66		%	2.51		%	2.29		%	2.07		%
Expected volatility	39.18		%	36.87		%	40.59		%	39.39		%

(a) As the Company’s post-Effective Date common stock did not begin trading on the NYSE American Stock Exchange until October 12, 2017, the closing stock price used to estimate the fair value of the derivative warrant liability on August 7, 2017 was the implied price per share assuming an enterprise value of $302.5 million before fresh start accounting adjustments.

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Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table shows the components of the income tax (benefit) expense for the periods indicated:

	Successor								Predecessor
	Year Ended December 31,			Year Ended December 31,		Five Months Ended December 31,			Seven Months Ended July 31,
	2019			2018		2017			2017
Current income tax expense (benefit):
Federal	$	—		$	—	$	(251	)	$	—
State	57			55		146			15
Total Current	57			55		(105		)	15
Deferred income tax expense (benefit):
Federal	(56		)	34		(186		)	(51		)
State	(91		)	118		(56		)	(286		)
Total Deferred	(147		)	152		(242		)	(337		)
Total income tax (benefit) expense	$	(90	)	$	207	$	(347	)	$	(322	)

A reconciliation of the income tax benefit (expense) and the amount computed by applying the statutory federal income tax rate of 21% or 35% to loss from continuing operations before income taxes is as follows:

	Successor						Predecessor
	Year Ended December 31,		Year Ended December 31,		Five Months Ended December 31,		Seven Months Ended July 31,
	2019		2018		2017		2017
U.S. federal income tax benefit at statutory rate	21.0	%	21.0	%	35.0	%	35.0	%
State and local income taxes, net of federal benefit	4.4	%	3.1	%	1.5	%	0.8	%
Compensation	(0.5	)%	(5.9	)%	(0.5	)%	0.1	%
Impact of fresh start accounting adjustments	—	%	—	%	—	%	3.3	%
Impairment of goodwill	(2.0	)%	—	%	—	%	—	%
Tax Act revaluation of deferred tax balances	—	%	—	%	69.9	%	—	%
Fixed asset adjustments	—	%	(2.6	)%	—	%	—	%
Change in valuation allowance	(27.0	)%	(11.1	)%	(105.5	)%	(40.3	)%
Other	4.3	%	(4.9	)%	0.3	%	0.9	%
Benefit (expense) for income taxes	0.2	%	(0.4	)%	0.7	%	(0.2	)%

Significant components of our deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows:

	Successor
	December 31,			December 31,
	2019			2018
Deferred tax assets:
Reserves	$	300		$	391
Deferred financing costs	49			137
Net operating losses	69,446			58,928
Federal credit carryover	56			113
Stock-based compensation	284			1,882
Intangible asset and goodwill	9,200			5,937
Capital loss carry forward	48,050			47,615
Other	2,976			3,172
Total	130,361			118,175
Less: Valuation allowance	(108,882		)	(95,347		)
Total deferred tax assets	21,479			22,828
Deferred tax liabilities:
Fixed assets	(20,990		)	(22,644		)
Other	(580		)	(365		)
Total deferred tax liabilities	(21,570		)	(23,009		)
Net deferred tax (liability) asset	$	(91	)	$	(181	)

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax reform legislation (the “Tax Act”). This legislation makes significant changes in U.S. tax law including a reduction in the corporate statutory income tax rates from 35% to 21%, changes to net operating loss carryforwards and carrybacks, and a repeal of the corporate alternative minimum tax. As a result of the enacted law, we were required to revalue deferred tax assets and liabilities as of December 22, 2017 using the new statutory rate and have reflected this revaluation in our effective tax rate reconciliation. The Tax Act’s impact in 2017 reduced the value of our net deferred tax asset balance by $50.8 million at December 31, 2017. As we are subject to a valuation allowance, there was no material impact to our tax provision in 2017, 2018 or 2019. The other provisions of the Tax Act did not have a material impact on the 2017, 2018, or 2019 consolidated financial statements.

As of December 31, 2019, we had net operating loss (“NOL”) carryforwards for federal income tax purposes of approximately $248.8 million, the majority of which expire in 2032 through 2037, state NOL carryforwards of approximately $312.6 million, which generally expire in 2020 through 2039, federal alternative minimum tax credits of $0.1 million, which do not expire and will be refunded over a three year period ending in 2021, and capital loss carryforwards of approximately $204.4 million, which begin to expire in 2020. Pursuant to United States Internal Revenue Code Section 382, if we undergo an ownership change, the NOL carryforward limitations would impose an annual limit on the amount of the taxable income that may be offset by our NOLs generated prior to the ownership change. We have determined that an ownership change occurred on August 7, 2017 as a result of the chapter 11 reorganization described further in Note 25. The limitation under Section 382 may result in federal NOLs expiring unused. Subject to the impact of those rules as a result of past or future restructuring transactions, we may be unable to use all or a significant portion of our NOLs to offset future taxable income.

As required by GAAP, we assess the recoverability of our deferred tax assets on a regular basis and record a valuation allowance for any such assets where recoverability is determined to be not more likely than not. As a result of our continued losses, we determined that our deferred tax liabilities were not sufficient to fully realize our deferred tax assets prior to the expiration of our NOLs, and accordingly, a valuation allowance continues to be required to be recorded against our deferred tax assets. We have recorded an increase of approximately $13.5 million to our valuation allowance during the year ended December 31, 2019. The increase in the valuation allowance during 2019 primarily relates to the increase in the deferred tax liability related to net operating losses due to current year activity. We recorded an increase of approximately $6.6 million to our valuation allowance during the year ended December 31, 2018 primarily due to the decrease in the deferred tax liability related to fixed assets due to current year activity.

A reconciliation of our valuation allowance on deferred tax assets for the years ended December 31, 2019 and 2018 is as follows:

	Successor
	Year Ended December 31,		Year Ended December 31,
	2019		2018
Balance at beginning of period	$	95,347	$	88,766
Additions to valuation allowance	13,535		6,581
Valuation allowance release, net	—		—
Balance at end of period	$	108,882	$	95,347

As of December 31, 2019 and 2018 we did not have any unrecognized tax benefits as the previous unrecognized tax benefits lapsed due to the statute of limitations.

We recognize potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. We did not have any accrued interest and penalties as of December 31, 2019 and 2018. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

We are subject to the following significant taxing jurisdictions: U.S. federal, Pennsylvania, Louisiana, North Dakota, Ohio, Texas, West Virginia, and Arizona. We have had NOLs in various years for federal purposes and for many states. The statute of limitations for a particular tax year for examination by the Internal Revenue Service is generally three years subsequent to the filing of the associated tax return. However, the Internal Revenue Service can adjust NOL carryovers up to three years subsequent to the last year in which the loss carryover is finally used. Accordingly, there are multiple years open to examination. The statute of limitations is generally three to four years for many of the states where we operate, however many states can also adjust NOL carryovers up to three to four years subsequent to the last year in which the loss carryover is finally used. The Company is currently not under income tax examination in any tax jurisdictions.

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Related Party and Affiliated Company Transactions

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

Related Party and Affiliated Company Transactions

Related Party and Affiliated Company Transactions

Related Party Transactions

For the year ended December 31 2019, we did not have any related party transactions.

Bridge Term Loan Agreement

In connection with the Clearwater Acquisition, on October 5, 2018, we entered into a Bridge Term Loan Credit Agreement with Bridge Term Loan Lenders and Wilmington. The Bridge Term Loan Lenders are our two largest shareholders that, in the aggregate, hold approximately 90% of our stock. Pursuant to the Bridge Term Loan Credit Agreement, the Bridge Term Loan Lenders provided a term loan to us in the aggregate amount of $32.5 million. As of December 31, 2018, $32.5 million was outstanding on the Bridge Term Loan. The obligations under the Bridge Term Loan Credit Agreement were repaid in full on January 2, 2019. See Note 12 for additional discussion of the Bridge Term Loan Agreement.

Cost Method Investment - Underground Solutions, Inc.

During 2009, we acquired an approximate 7% investment in Underground Solutions, Inc. (“UGSI”) a supplier of water infrastructure pipeline products, whose chief executive officer, Andrew D. Seidel, was a member of our board of directors. Our interest in UGSI was accounted for as a cost method investment.

On February 18, 2016, Aegion Corporation (or “Aegion”) announced the completion of the acquisition of UGSI, whereby Aegion paid approximately $85.0 million to acquire UGSI. Our total proceeds as a result of the acquisition were approximately $5.2 million. In April of 2016, we received proceeds of $5.0 million, which exceeded our cost basis of approximately $3.2 million. As such during the three months ended June 30, 2016, we recognized a net gain on the sale of approximately $1.7 million, including approximately $0.1 million in costs incurred by us in the closing. During the three months ended September 30, 2016, the two months ended September 30, 2017, and three months ended March 31, 2018, we received additional proceeds of $53.0 thousand, $76.0 thousand, and $75.0 thousand, respectively, due to adjustments to the final closing working capital statement.