10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

______________________________________________ 

FORM 10-Q

______________________________________________ 

(Mark one)

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

For the quarterly period ended September 30, 2020

or

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

Commission File Number: 1-8182

PIONEER ENERGY SERVICES CORP.

(Exact name of registrant as specified in its charter)

____________________________________________ 

Delaware	74-2088619
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
1250 N.E. Loop 410, Suite 1000 San Antonio, Texas	78209
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code: (855) 884-0575

Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading Symbol(s)	Name of each exchange on which registered

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

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

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

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	☒
		Emerging growth company	☐

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

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

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

As of November 6, 2020, there were 1,138,185 shares of common stock, par value $0.001 per share, of the registrant outstanding.

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Financial Statements and Supplementary Data	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flow	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	56
Item 4.	Controls and Procedures	56
	PART II
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60

PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	Successor		Predecessor
	September 30, 2020		December 31, 2019
	(unaudited)		(audited)
ASSETS
Cash and cash equivalents	$	28,081	$	24,619
Restricted cash	4,021		998
Receivables:
Trade, net of allowance for doubtful accounts	24,908		79,135
Unbilled receivables	5,846		12,590
Insurance recoveries	21,609		22,873
Other receivables	3,990		8,928
Inventory	13,297		22,453
Assets held for sale	4,295		3,447
Prepaid expenses and other current assets	4,341		7,869
Total current assets	110,388		182,912
Property and equipment, at cost	191,376		1,119,546
Less accumulated depreciation	18,979		648,376
Net property and equipment	172,397		471,170
Intangible assets, net of accumulated amortization	9,058		—
Deferred income taxes	10,433		11,540
Operating lease assets	4,664		7,264
Other noncurrent assets	12,162		1,068
Total assets	$	319,102	$	673,954
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	15,445	$	32,551
Current portion of long-term debt	2,199		—
Deferred revenues	715		1,339
Accrued expenses:
Employee compensation and related costs	7,062		13,781
Insurance claims and settlements	21,608		22,873
Insurance premiums and deductibles	4,787		5,940
Interest	3,387		5,452
Other	3,759		9,645
Total current liabilities	58,962		91,581
Long-term debt, less unamortized discount and debt issuance costs	143,017		467,699
Noncurrent operating lease liabilities	3,838		5,700
Deferred income taxes	903		4,417
Other noncurrent liabilities	2,337		481
Total liabilities	209,057		569,878
Commitments and contingencies (Note 13)
Stockholders’ equity:
Predecessor common stock $0.10 par value; 200,000,000 shares authorized; 79,202,216 shares outstanding at December 31, 2019	—		8,008
Successor common stock, $0.001 par value; 25,000,000 shares authorized; 1,138,185 shares outstanding at September 30, 2020	1		—
Additional paid-in capital	139,931		553,210
Predecessor treasury stock, at cost; 877,047 shares at December 31, 2019	—		(5,090)
Accumulated deficit	(29,887)		(452,052)
Total stockholders’ equity	110,045		104,076
Total liabilities and stockholders’ equity	$	319,102	$	673,954

See accompanying notes to condensed consolidated financial statements.

3

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Revenues	$	38,998	$	146,398
Costs and expenses:
Operating costs	28,893		108,059
Depreciation and amortization	14,699		22,924
General and administrative	11,626		30,485
Bad debt expense (recovery), net	(315)		196
Loss (gain) on dispositions of property and equipment, net	(3,829)		17
Total costs and expenses	51,074		161,681
Loss from operations	(12,076)		(15,283)
Other income (expense):
Interest expense, net of interest capitalized	(6,253)		(10,013)
Reorganization items, net	(2,522)		—
Other income (expense), net	(848)		(588)
Total other expense, net	(9,623)		(10,601)
Loss before income taxes	(21,699)		(25,884)
Income tax (expense) benefit	1,629		(132)
Net loss	$	(20,070)	$	(26,016)
Loss per common share - Basic	$	(17.94)	$	(0.33)
Loss per common share - Diluted	$	(17.94)	$	(0.33)
Weighted average number of shares outstanding—Basic	1,119		78,473
Weighted average number of shares outstanding—Diluted	1,119		78,473

See accompanying notes to condensed consolidated financial statements.

4

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Revenues	$	50,161	$	142,370	$	445,809
Costs and expenses:
Operating costs	37,636		114,047		332,614
Depreciation and amortization	19,935		35,647		68,428
General and administrative	15,839		22,047		68,271
Pre-petition restructuring charges	—		16,822		—
Impairment	388		17,853		1,378
Bad debt expense (recovery), net	(598)		1,209		(90)
Loss (gain) on dispositions of property and equipment, net	(4,289)		(989)		(2,184)
Total costs and expenses	68,911		206,636		468,417
Loss from operations	(18,750)		(64,266)		(22,608)
Other income (expense):
Interest expense, net of interest capitalized	(8,468)		(12,294)		(30,003)
Reorganization items, net	(3,666)		(21,903)		—
Loss on extinguishment of debt	—		(4,215)		—
Other income (expense), net	(1,078)		(3,333)		445
Total other expense, net	(13,212)		(41,745)		(29,558)
Loss before income taxes	(31,962)		(106,011)		(52,166)
Income tax (expense) benefit	2,075		1,786		(1,909)
Net loss	$	(29,887)	$	(104,225)	$	(54,075)
Loss per common share - Basic	$	(27.15)	$	(1.32)	$	(0.69)
Loss per common share - Diluted	$	(27.15)	$	(1.32)	$	(0.69)
Weighted average number of shares outstanding—Basic	1,101		78,968		78,405
Weighted average number of shares outstanding—Diluted	1,101		78,968		78,405

See accompanying notes to condensed consolidated financial statements.

5

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands)

	Shares		Amount				Additional Paid In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Common	Treasury	Common		Treasury
Balance as of December 31, 2019 (Predecessor)	80,079	(877)	$	8,008	$	(5,090)	$	553,210	$	(452,052)	$	104,076
Net loss	—	—	—		—		—		(69,104)		(69,104)
Purchase of treasury stock	—	(165)	—		(7)		—		—		(7)
Equity awards vested or exercised	542	—	54		—		(54)		—		—
Stock-based compensation expense	—	—	—		—		328		—		328
Balance as of March 31, 2020 (Predecessor)	80,621	(1,042)	$	8,062	$	(5,097)	$	553,484	$	(521,156)	$	35,293
Net loss	—	—	—		—		—		(35,121)		(35,121)
Purchase of treasury stock	—	(100)	—		(1)		—		—		(1)
Equity awards vested or exercised	363	—	36		—		(36)		—		—
Equity awards vested in connection with the Plan	7,946	—	795		—		(795)		—		—
Stock-based compensation expense	—	—	—		—		978		—		978
Balance as of May 31, 2020 (Predecessor)	88,930	(1,142)	$	8,893	$	(5,098)	$	553,631	$	(556,277)	$	1,149
Cancellation of Predecessor equity	(88,930)	1,142	(8,893)		5,098		(553,631)		556,277		(1,149)
Balance as of May 31, 2020 (Predecessor)	—	—	$	—	$	—	$	—	$	—	$	—
Balance as of June 1, 2020 (Successor)	—	—	$	—	$	—	$	—	$	—	$	—
Issuance of Successor common stock	1,050	(1)	1		—		18,083		—		18,084
Equity component of Convertible Notes, net of offering costs	—	—	—		—		120,875		—		120,875
Net loss	—	—	—		—		—		(9,817)		(9,817)
Balance as of June 30, 2020 (Successor)	1,050	(1)	$	1	$	—	$	138,958	$	(9,817)	$	129,142
Net loss	—	—	—		—		—		(20,070)		(20,070)
Equity awards vested	90	—	—		—		—		—		—
Stock-based compensation expense	—	—	—		—		973		—		973
Balance as of September 30, 2020 (Successor)	1,140	(1)	$	1	$	—	$	139,931	$	(29,887)	$	110,045

See accompanying notes to condensed consolidated financial statements.

6

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands)

	Shares		Amount				Additional Paid In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Common	Treasury	Common		Treasury
Balance as of December 31, 2018 (Predecessor)	79,004	(790)	$	7,900	$	(4,965)	$	550,548	$	(388,425)	$	165,058
Net loss	—	—	—		—		—		(15,115)		(15,115)
Purchase of treasury stock	—	(84)	—		(120)		—		—		(120)
Cumulative-effect adjustment due to adoption of ASC Topic 842	—	—	—		—		—		277		277
Equity awards vested or exercised	326	—	33		—		(33)		—		—
Stock-based compensation expense	—	—	—		—		867		—		867
Balance as of March 31, 2019 (Predecessor)	79,330	(874)	$	7,933	$	(5,085)	$	551,382	$	(403,263)	$	150,967
Net loss	—	—	—		—		—		(12,944)		(12,944)
Purchase of treasury stock	—	(3)	—		(5)		—		—		(5)
Equity awards vested or exercised	667	—	67		—		(67)		—		—
Stock-based compensation expense	—	—	—		—		327		—		327
Balance as of June 30, 2019 (Predecessor)	79,997	(877)	$	8,000	$	(5,090)	$	551,642	$	(416,207)	$	138,345
Net loss	—	—	—		—		—		(26,016)		(26,016)
Equity awards vested or exercised	81	—	8		—		(8)		—		—
Stock-based compensation expense	—	—	—		—		819		—		819
Balance as of September 30, 2019 (Predecessor)	80,078	(877)	$	8,008	$	(5,090)	$	552,453	$	(442,223)	$	113,148

See accompanying notes to condensed consolidated financial statements.

7

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Cash flows from operating activities:
Net loss	$	(29,887)	$	(104,225)	$	(54,075)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	19,935		35,647		68,428
Allowance for doubtful accounts, net of recoveries	(598)		1,209		(90)
Write-off of obsolete inventory	—		—		502
Gain on dispositions of property and equipment, net	(4,289)		(989)		(2,184)
Reorganization items, net	—		18,713		—
Stock-based compensation expense	973		552		2,013
Phantom stock compensation expense	—		—		(99)
Amortization of debt issuance costs and discount	3,194		1,084		2,335
Interest paid in-kind	907		—		—
Loss on extinguishment of debt	—		4,215		—
Impairment	388		17,853		1,378
Deferred income taxes	(1,861)		(546)		1,020
Change in other noncurrent assets	(722)		(800)		3,125
Change in other noncurrent liabilities	83		1,524		(4,163)
Changes in current assets and liabilities:
Receivables	15,647		44,041		(2,126)
Inventory	(2)		1,441		(3,652)
Prepaid expenses and other current assets	1,528		1,121		30
Accounts payable	175		(15,174)		2,346
Deferred revenues	594		(1,219)		(106)
Accrued expenses	(6,802)		(6,692)		(6,044)
Net cash provided by (used in) operating activities	(737)		(2,245)		8,638
Cash flows from investing activities:
Purchases of property and equipment	(2,384)		(10,848)		(40,543)
Proceeds from sale of property and equipment	8,303		1,665		4,778
Proceeds from insurance recoveries	155		22		641
Net cash provided by (used in) investing activities	6,074		(9,161)		(35,124)
Cash flows from financing activities:
Debt repayments	—		(175,000)		—
Proceeds from debt issuance	—		195,187		—
Proceeds from DIP Facility	—		4,000		—
Repayment of DIP Facility	—		(4,000)		—
Payments of debt issuance costs	—		(7,625)		—
Purchase of treasury stock	—		(8)		(125)
Net cash provided by (used in) financing activities	—		12,554		(125)
Net increase (decrease) in cash, cash equivalents and restricted cash	5,337		1,148		(26,611)
Beginning cash, cash equivalents and restricted cash	26,765		25,617		54,564
Ending cash, cash equivalents and restricted cash	$	32,102	$	26,765	$	27,953
Supplementary disclosure:
Interest paid	$	1,010	$	8,105	$	32,773
Income tax paid	$	809	$	893	$	3,103
Reorganization items paid	$	13,678	$	14,947	—
Noncash investing and financing activity:
Change in capital expenditure accruals	$	(141)	$	(1,924)	$	(4,267)

See accompanying notes to condensed consolidated financial statements.

8

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    Organization and Summary of Significant Accounting Policies

Business

Pioneer Energy Services Corp. provides land-based drilling services and production services to a diverse group of oil and gas exploration and production companies in the United States and internationally in Colombia.

Our drilling services business segments provide contract land drilling services through three domestic divisions which are located in the Marcellus/Utica, Permian Basin and Eagle Ford, and Bakken regions, and internationally in Colombia. We provide a comprehensive service offering which includes the drilling rig, crews, supplies, and most of the ancillary equipment needed to operate our drilling rigs. Our fleet is 100% pad-capable and offers the latest advancements in pad drilling. The following table summarizes our current rig fleet count and composition for each drilling services business segment:

	Multi-well, Pad-capable
	AC rigs	SCR rigs	Total
Domestic drilling	17	—	17
International drilling	—	8	8
			25

Our production services business segments provide a range of services to producers primarily in Texas, North Dakota, the Rocky Mountain region, and Louisiana. As of September 30, 2020, the fleet counts for each of our production services business segments were as follows:

	550 HP	600 HP	Total
Well servicing rigs, by horsepower (HP) rating	111	12	123
Wireline services units			78

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Pioneer Energy Services Corp. and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of our management, all adjustments (consisting of normal, recurring accruals) necessary for a fair presentation have been included. We suggest that you read these unaudited condensed consolidated financial statements together with the consolidated financial statements and the related notes included in our annual report on Form 10-K for the year ended December 31, 2019, as amended. As described below, as a result of the application of fresh start accounting and the effects of the implementation of our Plan of Reorganization (as defined below), the consolidated financial statements after the Effective Date (as defined below) are not comparable with the consolidated financial statements on or before that date. See Note 3, Fresh Start Accounting, for additional information.

Chapter 11 Cases — On March 1, 2020 (the “Petition Date”), Pioneer and certain of our domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). On May 11, 2020, the Bankruptcy Court confirmed the plan of reorganization (the “Plan”) that was filed with the Bankruptcy Court on March 2, 2020, and on May 29, 2020 (the “Effective Date”), the conditions to effectiveness of the plan were satisfied and we emerged from Chapter 11. See Note 2, Emergence from Voluntary Reorganization under Chapter 11, for more information.

The accompanying condensed consolidated financial statements have been prepared as if we are a going concern and in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 852, Reorganizations (ASC Topic 852). Upon emergence from bankruptcy, we adopted fresh start accounting in accordance

9

with ASC Topic 852 and became a new entity for financial reporting purposes. As a result, the condensed consolidated financial statements after the Effective Date are not comparable with the consolidated financial statements on or before that date as indicated by the “black line” division in the financial statements and footnote tables, which emphasizes the lack of comparability between amounts presented. References to “Successor” relate to our financial position and results of operations after the Effective Date. References to “Predecessor” refer to our financial position and results of operations on or before the Effective Date.

We evaluated the events between May 29, 2020 and May 31, 2020 and concluded that the use of an accounting convenience date of May 31, 2020 (the “Fresh Start Reporting Date”) would not have a material impact on our condensed consolidated financial statements. As such, the application of fresh start accounting was reflected in our condensed consolidated balance sheet as of May 31, 2020 and related fresh start accounting adjustments were included in our condensed consolidated statement of operations for the five months ended May 31, 2020. See Note 3, Fresh Start Accounting, for additional information.

Use of Estimates — In preparing the accompanying unaudited condensed consolidated financial statements, we make various estimates and assumptions that affect the amounts of assets and liabilities we report as of the dates of the balance sheets and income and expenses we report for the periods shown in the income statements and statements of cash flows. Our actual results could differ significantly from those estimates. Material estimates affecting our financial results, including those that are particularly susceptible to significant changes in the near term, relate to our application of fresh start accounting, our estimates of certain variable revenues and amortization periods of certain deferred revenues and costs associated with drilling daywork contracts, our estimates of projected cash flows and fair values for impairment evaluations, our estimate of the valuation allowance for deferred tax assets, and our estimate of the liability relating to the self-insurance portion of our health and workers’ compensation insurance. For information about our use of estimates relating to fresh start accounting, see Note 3, Fresh Start Accounting.

Subsequent Events — In preparing the accompanying unaudited condensed consolidated financial statements, we have reviewed events that have occurred after September 30, 2020, through the filing of this Form 10-Q, for inclusion as necessary.

Recently Issued Accounting Standards

Changes to accounting principles generally accepted in the United States of America (“U.S. GAAP”) are established by the FASB in the form of Accounting Standards Updates (ASUs) to the FASB ASC. We consider the applicability and impact of all ASUs. Other than the ASU listed below, we have determined that there are currently no new or recently adopted ASUs which we believe will have a material impact on our consolidated financial position and results of operations.

•Convertible Instruments and Contracts in an Entity’s Own Equity. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and preferred stock. Additionally, this ASU improves the consistency of EPS calculations by requiring entities to apply one method, the if-converted method, to all convertible instruments in diluted earnings-per-share calculations. As a smaller reporting company, this ASU will be effective for us on January 1, 2024, however, early adoption is permitted on January 1, 2021. We are currently evaluating the effect that the ASU will have on our consolidated financial statements.

Additional Detail of Account Balances

Cash and Cash Equivalents — We had no cash equivalents at September 30, 2020. Cash equivalents at December 31, 2019 were $8.9 million, consisting of investments in highly-liquid money-market mutual funds.

Restricted Cash — Our restricted cash balance at September 30, 2020 reflects the professional fees escrow balance which will be released in accordance with the Plan, as well as $2.2 million of proceeds from asset sales which were used to fund the redemption of Senior Secured Notes tendered in October 2020, as described further in Note 7, Debt. Our restricted cash balance at December 31, 2019 reflects the portion of net proceeds from the issuance of our senior secured term loan held in a restricted account until the completion of certain administrative tasks related to providing access rights to certain of our real property, a condition which is still in effect under the terms of our post-emergence debt instruments.

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Other Receivables — Our other receivables primarily consist of recoverable taxes related to our international operations, as well as refundable payroll tax credit receivables associated with the CARES Act, vendor rebates and net income tax receivables.

Prepaid Expenses and Other Current Assets — Prepaid expenses and other current assets include items such as insurance, rent deposits, software subscriptions, and other fees. We routinely expense these items in the normal course of business over the periods that we benefit from these expenses. Prepaid expenses and other current assets also include deferred mobilization costs for short-term drilling contracts and demobilization revenues recognized on drilling contracts expiring in the near term.

Other Noncurrent Assets — Other noncurrent assets primarily consist of prepaid taxes in Colombia which are creditable against future income taxes, as well as deferred mobilization costs on long-term drilling contracts, cash deposits related to the deductibles on our workers’ compensation insurance policies, the noncurrent portion of prepaid insurance premiums, unamortized debt issuance costs associated with our ABL Credit Facility, and deferred compensation plan investments.

Other Accrued Expenses — Our other accrued expenses include accruals for items such as sales taxes, property taxes and withholding tax liabilities related to our international operations and accruals for professional fees, including those associated with fresh start accounting. We routinely expense these items in the normal course of business over the periods these expenses benefit. Our other accrued expenses also includes the current portion of the lease liability associated with our long-term operating leases.

Other Noncurrent Liabilities — Our other noncurrent liabilities primarily relate to the noncurrent portion of payroll taxes deferred in connection with the CARES Act, as well as noncurrent deferred compensation and the noncurrent portion of deferred mobilization revenues.

2.    Emergence from Voluntary Reorganization under Chapter 11

Reorganization and Chapter 11 Proceedings

On March 1, 2020 (the “Petition Date”), Pioneer Energy Services Corp. (“Pioneer”) and its affiliates Pioneer Coiled Tubing Services, LLC, Pioneer Drilling Services, Ltd., Pioneer Fishing & Rental Services, LLC, Pioneer Global Holdings, Inc., Pioneer Production Services, Inc., Pioneer Services Holdings, LLC, Pioneer Well Services, LLC, Pioneer Wireline Services Holdings, Inc., Pioneer Wireline Services, LLC (collectively with Pioneer, the “Pioneer RSA Parties”) filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Chapter 11 proceedings were being jointly administered under the caption In re Pioneer Energy Services Corp. et al (the “Chapter 11 Cases”).

In connection with the Bankruptcy Petitions, the Pioneer RSA Parties entered into a restructuring support agreement (the “RSA”) with holders of approximately 99% in aggregate principal amount of our outstanding Term Loan (the “Consenting Term Lenders”) and holders of approximately 75% in aggregate principal amount of our Prepetition Senior Notes (the “Consenting Noteholders” and together with the Consenting Term Lenders, the “Consenting Creditors”). Pursuant to the RSA, the Consenting Creditors and the Pioneer RSA Parties made certain customary commitments to each other, including the Consenting Noteholders committing to vote for, and the Consenting Creditors committing to support, the restructuring transactions (the “Restructuring”) to be effectuated through a plan of reorganization that incorporates the economic terms included in the RSA (the “Plan”). The Pioneer RSA Parties filed the Plan with the Bankruptcy Court on March 2, 2020.

After commencement of the Chapter 11 Cases, we continued to operate our businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

On May 11, 2020, the Bankruptcy Court entered an order, Docket No. 331 (the “Confirmation Order”) confirming the Plan. On May 29, 2020 (the “Effective Date”) the conditions to effectiveness of the Plan were satisfied, and we emerged from Chapter 11.

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The commencement of the Chapter 11 Cases constituted an event of default that accelerated our obligations under our Prepetition Senior Notes, the Prepetition ABL Facility, and Term Loan. Under the Bankruptcy Code, holders of our Prepetition Senior Notes and the lenders under our Term Loan and the Prepetition ABL Facility were stayed from taking any action against us as a result of this event of default. On the Effective Date, all applicable agreements governing the obligations under the Term Loan, Prepetition Senior Notes and Prepetition ABL Facility were terminated. The Term Loan and Prepetition ABL Facility were paid in full and all outstanding obligations under the Prepetition Senior Notes were canceled in exchange for 94.25% of the pro forma common equity (subject to the dilution from the Convertible Notes and new management incentive plan).

On the Effective Date, we entered into a $75 million senior secured asset-based revolving credit agreement which was later amended and reduced to $40 million in August 2020 (the “ABL Credit Facility”), and issued $129.8 million of aggregate principal amount of 5% convertible senior unsecured pay-in-kind notes due 2025 (the “Convertible Notes”) and $78.1 million of aggregate principal amount of floating rate senior secured notes due 2025 (the “Senior Secured Notes”), all of which are further described in Note 7, Debt.

Also on the Effective Date, by operation of the Plan, all agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company, including the existing common stock, issued and outstanding immediately prior to the Effective Date, and any rights of any holder in respect thereof, were deemed canceled, discharged and of no force or effect. Pursuant to the Plan, we issued a total of 1,049,804 shares of our new common stock, with approximately 94.25% of such new common stock being issued to holders of the Prepetition Senior Notes outstanding immediately prior to the Effective Date. Holders of the existing common stock received an aggregate of 5.75% of the proforma common equity (subject to the dilution from the Convertible Notes and new management incentive plan), at a conversion rate of 0.0006849838 new shares for each existing share.

As part of the transactions undertaken pursuant to the Plan, we converted from a Texas corporation to a Delaware corporation, filed the Certificate of Incorporation of the Company with the office of the Secretary of State of the State of Delaware, and adopted Amended and Restated Bylaws of the Company.

Backstop Commitment Agreement

Prior to filing the Plan, we entered into a separate backstop commitment agreement with the Consenting Noteholders and certain members of our senior management (the “Backstop Commitment Agreement”), pursuant to which the Consenting Noteholders and certain members of our senior management committed to backstop approximately $118 million and $1.8 million, respectively, of new convertible bonds to be issued in a rights offering. As consideration for this commitment, we committed to make an aggregate payment of $9.4 million and $0.1 million to the Consenting Noteholders and certain members of our senior management, respectively, in the form of additional new convertible bonds, or in cash if the Backstop Commitment Agreement was terminated under certain circumstances as forth therein. As a result, we incurred a liability and expense at the time we entered into the Backstop Commitment Agreement for the aggregate amount of $9.6 million (the “Commitment Premium”) which was recognized in our Predecessor condensed consolidated financial statements as of and for the three months ended March 31, 2020. The Commitment Premium was settled in conjunction with our emergence from Chapter 11 and the issuance of the Convertible Notes.

Debtor-in-Possession Financing

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

The DIP Facility provided financing with a 5-month maturity, bearing interest at a rate of LIBOR plus 200 basis points per annum, and contained customary covenants and events of default. The DIP Facility was terminated upon our emergence from the Chapter 11 Cases on May 29, 2020.

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Chapter 11 Accounting

Pre-petition restructuring charges — All expenses and losses incurred prior to the Petition Date which were related to the Chapter 11 proceedings are presented as pre-petition restructuring charges in our Predecessor condensed consolidated statements of operations, including $9.6 million of expense incurred for the Commitment Premium pursuant to the Backstop Commitment Agreement.

Reorganization items, net — Any expenses, gains, and losses incurred subsequent to and as a direct result of the Chapter 11 proceedings are presented as reorganization items in our condensed consolidated statements of operations. Reorganization items consisted of the following (amounts in thousands):

	Successor				Predecessor
	Three Months Ended September 30, 2020		Four Months Ended September 30, 2020		Five Months Ended May 31, 2020
Gain on settlement of liabilities subject to compromise	$	—	$	—	$	(291,378)
Fresh start valuation adjustments	—		—		284,392
Legal and professional fees	2,522		3,263		26,038
Unamortized debt costs on liabilities subject to compromise	—		—		2,003
Accelerated stock-based compensation	—		—		713
Loss (gain) on rejected leases	—		403		(378)
DIP facility costs	—		—		513
	$	2,522	$	3,666	$	21,903

Contractual interest expense on our Prepetition Senior Notes totaled $7.6 million for the five months ended May 31, 2020, which is in excess of the $3.1 million included in interest expense on our Predecessor condensed consolidated statements of operations because we discontinued accruing interest on the Petition Date in accordance with the terms of the Plan and ASC Topic 852.

3.    Fresh Start Accounting

Fresh Start Accounting

In connection with our emergence from bankruptcy and in accordance with ASC Topic 852, we qualified for and adopted fresh start accounting on the Effective Date. We were required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company, and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims.

In accordance with ASC Topic 852, with the application of fresh start accounting, we allocated the reorganization value to our individual assets and liabilities (except for deferred income taxes) based on their estimated fair values in conformity with ASC Topic 805, Business Combinations. The amount of deferred taxes was determined in accordance with ASC Topic 740, Income Taxes. The Effective Date fair values of our assets and liabilities differed materially from their recorded values as reflected on the historical balance sheets.

Reorganization Value

The reorganization value represents the fair value of the Successor Company’s total assets before considering liabilities and is intended to approximate the amount a willing buyer would pay for the Company’s assets immediately after restructuring. The reorganization value was derived from the enterprise value, which represents the estimated fair value of an entity’s long-term debt and equity. As set forth in the Plan, the enterprise value of the Successor Company was estimated to be in the range of $275 million to $335 million with a midpoint of $305 million. However, the third-party valuation advisor engaged to assist in determining the enterprise value subsequently revised this range to $249 million to $303 million, with a midpoint of $276 million, which was filed with the Bankruptcy Court in order to update the initial assumptions for current information. Based on the estimates and assumptions discussed below, we estimated the enterprise value to be the midpoint of the range of estimated enterprise value of $276 million.

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The following table reconciles the enterprise value to the estimated fair value of our Successor Common Stock as of the Fresh Start Reporting Date (dollars in thousands, except per share data):

Enterprise value	$	276,000
Plus: cash and cash equivalents	10,592
Less: fair value of debt	(145,420)
Total implied equity (prior to debt issuance costs on equity component on Convertible Notes)	141,172
Less: equity portion of Convertible Notes	(123,088)
Fair value of Successor stockholders’ equity	$	18,084
Shares issued upon emergence	1,049,804
Per share value	$	17.23

The following table reconciles enterprise value to the reorganization value of our Successor’s assets to be allocated to our individual assets as of the Fresh Start Reporting Date (amounts in thousands):

Enterprise value	$	276,000
Plus: cash and cash equivalents	10,592
Plus: current liabilities	65,799
Plus: non-current liabilities excluding long-term debt	6,626
Less: debt issuance costs on Successor debt	(6,394)
Reorganization value of Successor assets	$	352,623

With the assistance of our financial advisors, we determined the enterprise and corresponding equity value of the Successor using various valuation methods, including (i) discounted cash flow analysis, (ii) comparable company analysis and (iii) precedent transaction analysis. The use of each approach provides corroboration for the other approaches.

In order to estimate the enterprise value using the discounted cash flow (DCF) analysis approach, management’s estimated future cash flow projections through 2024, plus a terminal value calculated assuming a perpetuity growth rate and applying a multiple to the terminal year’s projected earnings before interest, tax, depreciation and amortization (EBITDA), were discounted to an assumed present value using our estimated weighted average cost of capital (WACC), which represents the internal rate of return (IRR).

The comparable company analysis provides an estimate of the company’s value relative to other publicly traded companies with similar operating and financial characteristics, by which a range of EBITDA multiples of the comparable companies was then applied to management’s projected EBITDA to derive an estimated enterprise value.

Precedent transaction analysis provides an estimate of enterprise value based on recent sale transactions of similar companies, by deriving the implied EBITDA multiple of those transactions, based on sales prices, which was then applied to management’s projected EBITDA.

Certain inputs and assumptions used to estimate the enterprise value are considered significant unobservable inputs which are classified as Level 3 inputs under ASC Topic 820, Fair Value Measurements and Disclosures, including management’s estimated future cash flow projections. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the enterprise value and equity value projections, are inherently subject to significant uncertainties beyond our control, and accordingly, our actual results could vary materially.

Valuation Process

The fair values of our principal assets (including inventory, drilling and production services equipment, land and buildings, and intangible assets), and our liabilities were estimated with the assistance of third-party valuation advisors. The cost, income and market approaches were utilized in estimating these fair values. As more than one approach was used in our valuation analysis, the various approaches were reconciled to determine a final value conclusion. Further, economic obsolescence was considered in determining the fair value of our inventory and property and equipment. The fair value was allocated to our individual assets and liabilities as follows:

Inventory — Inventory valued consisted of spare parts and consumables that support our international, coiled tubing and wireline operations. The fair value of the international spare parts and coiled tubing inventory was determined using the

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indirect method of the cost approach, with adjustments for economic obsolescence. For wireline inventory, the cost basis was adjusted to account for the changes in cost between the acquisition date and the valuation date.

Property and Equipment — Property and equipment valued consisted of leasehold improvements, machinery and equipment, transportation equipment, office furniture, fixtures and equipment, computers and software, construction-in-progress and assets held for sale. The fair value of our property and equipment was estimated using the cost approach and market approach, while the income approach was considered in the context of the economic obsolescence analysis which was applied to certain assets. As a part of the valuation process, the third-party advisors performed site inspections and utilized internal data to identify and value assets.

Land and Buildings — Land and buildings valued consisted of four facilities and the underlying land, for which the fair value was estimated using the cost approach and sales comparison (market) approach, with adjustments for economic obsolescence to certain assets.

Intangible Assets — Intangible assets valued consisted of trademark and tradename, for which the fair value was estimated using the relief-from-royalty income approach. As a part of the valuation process, the third-party advisors considered overall revenue and cash flow projections and guidance on long-term growth rates. Additionally, above or below market leases and contracts and relationships were examined and determined to have no fair value. The value of our intangible assets will be amortized using the straight-line method over the economic useful life, which we estimated to be ten years.

Senior Secured Notes — The fair value of the Senior Secured Notes was estimated by applying a stochastic interest rate model implemented within a binomial lattice framework that considers the call provisions associated with the notes and captures the decision of prepaying the notes or holding to maturity by evaluating the optimal decision at each time step constructed within the lattice model.

Convertible Notes — The fair value of the Convertible Notes was estimated by applying a binomial lattice model and a recovery rate adjustment model, which provides a quantitative method for estimating the yield for a debt or debt-like security based on an observed market yield for a security of a different seniority. Certain inputs and assumptions used to derive the fair value of the Convertible Notes are considered significant unobservable inputs which are classified as Level 3 inputs under ASC Topic 820, Fair Value Measurements and Disclosures, including the company’s stock price, the volatility and the market yield related to the Convertible Notes.

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Consolidated Balance Sheet

The adjustments set forth in the following consolidated balance sheet as of May 31, 2020 reflect the effects of the transactions contemplated by the Plan and executed on the fresh start reporting date (reflected in the column entitled “Reorganization Adjustments”), and fair value and other required accounting adjustments resulting from the adoption of Fresh Start Accounting (reflected in the column entitled “Fresh Start Accounting Adjustments”).

	As of May 31, 2020
(in thousands)	Predecessor		Reorganization Adjustments			Fresh Start Accounting Adjustments			Successor
ASSETS
Cash and cash equivalents	$	21,253	$	(10,661)	(1)	$	—		$	10,592
Restricted cash	4,452		11,721		(2)	—			16,173
Receivables:
Trade, net of allowance for doubtful accounts	33,537		—			—			33,537
Unbilled receivables	9,163		—			—			9,163
Insurance recoveries	23,636		—			—			23,636
Other receivables	5,256		1,000		(3)	—			6,256
Inventory	21,012		—			(6,883)		(18)	14,129
Assets held for sale	1,825		—			29		(19)	1,854
Prepaid expenses and other current assets	4,817		—			952		(20)	5,769
Total current assets	124,951		2,060			(5,902)			121,109
Property and equipment, at cost	1,082,704		—			(886,733)		(21)	195,971
Less accumulated depreciation	655,512		—			(655,512)		(21)	—
Net property and equipment	427,192		—			(231,221)			195,971
Intangible assets, net of accumulated amortization	—		—			9,370		(22)	9,370
Deferred income taxes	10,897		—			(2,157)		(23)	8,740
Operating lease assets	5,234		—			—			5,234
Other noncurrent assets	13,247		(5,023)		(4)	3,975		(24)	12,199
Total assets	$	581,521	$	(2,963)		$	(225,935)		$	352,623
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	24,601	$	(9,478)	(5)	$	—		$	15,123
Deferred revenues	121		—			—			121
Commitment premium	9,584		(9,584)		(6)	—			—
Debtor in possession financing	4,000		(4,000)		(7)	—			—
Accrued expenses:
Employee compensation and related costs	4,970		—			—			4,970
Insurance claims and settlements	23,517		—			—			23,517
Insurance premiums and deductibles	5,269		—			—			5,269
Interest	3,775		(3,731)		(8)	—			44
Other	12,436		4,329		(9)	(10)			16,755
Total current liabilities	88,273		(22,464)			(10)			65,799
Long-term debt, less unamortized discount and debt issuance costs	175,000		(53,831)		(10)	20,070		(25)	141,239
Noncurrent operating lease liabilities	4,189		—			—			4,189
Deferred income taxes	4,296		—			(3,225)		(26)	1,071
Other noncurrent liabilities	1,366		—			—			1,366
Total liabilities not subject to compromise	273,124		(76,295)			16,835			213,664
Liabilities subject to compromise	308,422		(308,422)		(11)	—			—
Stockholders’ equity:
Predecessor common stock	8,893		(8,893)		(12)	—			—
Successor common stock	—		1		(13)	—			1
Predecessor additional paid-in capital	553,631		(553,631)		(14)	—			—
Successor additional paid-in capital	—		98,413		(15)	40,545		(27)	138,958
Predecessor treasury stock, at cost	(5,098)		5,098		(16)	—			—
Accumulated deficit	(557,451)		840,766		(17)	(283,315)		(28)	—
Total stockholders’ equity	(25)		381,754			(242,770)			138,959
Total liabilities and stockholders’ equity	$	581,521	$	(2,963)		$	(225,935)		$	352,623

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(1)Represents the following net change in cash and cash equivalents:

Cash proceeds from Convertible Notes	$	120,187
Cash proceeds from Senior Secured Notes	75,000
Payment to fund claims reserve	(950)
Payment to escrow remaining professional fees	(10,771)
Payment of professional fees	(9,468)
Payment in full to extinguish DIP Facility	(4,000)
Payment of accrued interest on DIP Facility	(55)
Payment of DIP Facility fees	(177)
Payment in full to extinguish Prepetition Term Loan	(175,000)
Payment of accrued interest on Prepetition Term Loan	(3,677)
Payment of prepayment penalty on Prepetition Term Loan	(1,750)
	$	(10,661)

(2)Represents the following net change in restricted cash:

Payment to fund rejected leases claims reserve	$	950
Payment to escrow remaining professional fees	10,771
	$	11,721

(3)Represents recognition of a receivable for a portion of the proceeds from the issuance of the Senior Secured Notes which was received in June 2020.

(4)Represents the reclassification of previously paid debt issuance costs from deferred assets to offset the carrying amount of long-term debt.

(5)Represents the payment of professional fees which were incurred prior to emergence.

(6)Represents the settlement of the Backstop Commitment Premium upon issuance of the Convertible Notes.

(7)Represents the payment to extinguish the DIP Facility.

(8)Represents the payment of accrued interest on the Prepetition Term Loan and DIP Facility.

(9)Represents the increase in accrued expenses for fees which were incurred upon our emergence from Chapter 11.

(10)Represents the following changes in long-term debt, less unamortized discount and debt issuance costs:

Payment in full to extinguish Prepetition Term Loan	$	(175,000)
Issuance of Senior Secured Notes at Par	78,125
Recognition of debt issue costs on Senior Secured Notes	(2,913)
Recognition of liability component of Convertible Notes issuance	47,225
Recognition of debt issuance costs on liability component of Convertible Notes	(1,268)
	$	(53,831)

Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

(11)Represents the settlement of liabilities subject to compromise in accordance with the Plan, for which the resulting gain is as follows:

Prepetition Senior Notes	$	300,000
Accrued interest on Prepetition Senior Notes	8,422
Liabilities subject to compromise	308,422
Cash paid by holders of Prepetition Senior Notes	118,013
Issuance of equity to Prepetition Senior Notes creditors	(17,044)
Notes Received by Prepetition Senior Note holders	(118,013)
	$	291,378

(12)Represents the cancellation of Predecessor common stock.

(13)Represents the issuance of Successor common stock to prior equity holders and to settle the Prepetition Senior Notes.

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(14)Represents the cancellation of Predecessor additional paid-in capital.

(15)The changes in Successor additional paid-in capital were as follows:

Recognition of equity component of Convertible Notes	$	82,546
Issuance of Successor common stock to Prepetition Senior Notes creditors and prior equity holders	18,083
Recognition of debt issuance costs of Convertible Notes equity component	(2,216)
	$	98,413

Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

(16)Represents the cancellation of Predecessor treasury stock.

(17)Represents the cumulative impact to Predecessor retained earnings of the reorganization adjustments described above.

(18)Represents the fair value adjustment to inventory, as described further in the previous section under the heading “Valuation Process”.

(19)Represents the fair value adjustment to assets held for sale, as described further in the previous section under the heading “Valuation Process”.

(20)Represents deferred compensation associated with the excess of fair value over the par value of Convertible Notes purchased by senior management, which is compensation to the Successor and therefore was expensed in June 2020.

(21)Represents the following fair value adjustments to property and equipment:

	Predecessor Historical Value		Fair Value Adjustment		Successor Fair Value
Drilling rigs and equipment	$	1,010,612	$	(832,294)	$	178,318
Vehicles	41,283		(28,561)		12,722
Building and improvements	16,619		(13,742)		2,877
Office equipment	12,231		(11,743)		488
Land	1,959		(393)		1,566
	$	1,082,704	$	(886,733)	$	195,971
Less: Accumulated Depreciation	(655,512)		655,512		—
	$	427,192	$	(231,221)	$	195,971

(22)Represents the fair value adjustment to recognize the trademark and tradename of Pioneer Energy Services Corp. as an intangible, as described further in the above section under the heading “Valuation Process”.

(23)Represents the recognition of the noncurrent deferred tax asset as a result of the cumulative tax impact of the fresh start adjustments herein.

(24)Represents a prepaid tax asset established as part of the fresh start accounting adjustments.

(25)Represents the following fair value adjustments to long-term debt less unamortized discount and debt issuance costs:

Fair value adjustment to the liability component of the Convertible Notes	$	23,195
Discount on Senior Secured Notes	(3,125)
	$	20,070

Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

(26)Represents the derecognition of the deferred tax liability as a result of the cumulative tax impact of the fresh start adjustments herein.

(27)Represents the fair value adjustment to the equity component of the Convertible Notes.

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(28)Represents the cumulative impact of the fresh start accounting adjustments discussed above and the elimination of Predecessor accumulated earnings.

4.    Revenue from Contracts with Customers

Our production services business segments earn revenues for well servicing and wireline services pursuant to master services agreements based on purchase orders or other contractual arrangements with the client. Production services jobs are generally short-term (ranging in duration from several hours to less than 30 days) and are charged at current market rates for the labor, equipment and materials necessary to complete the job. Production services jobs are varied in nature but typically represent a single performance obligation, either for a particular job, a series of distinct jobs, or a period of time during which we stand ready to provide services as our client needs them. Revenue is recognized for these services over time, as the services are performed.

Our drilling services business segments earn revenues by drilling oil and gas wells for our clients under daywork contracts. Daywork contracts are comprehensive agreements under which we provide a comprehensive service offering, including the drilling rig, crew, supplies, and most of the ancillary equipment necessary to operate the rig. Contract modifications that extend the term of a dayrate contract are generally accounted for prospectively as a separate dayrate contract. We account for our services provided under daywork contracts as a single performance obligation comprised of a series of distinct time increments which are satisfied over time. Accordingly, dayrate revenues are recognized in the period during which the services are performed.

With most drilling contracts, we also receive payments contractually designated for the mobilization and demobilization of drilling rigs and other equipment to and from the client’s drill site. Revenues associated with the mobilization and demobilization of our drilling rigs to and from the client’s drill site do not relate to a distinct good or service and are recognized ratably over the related contract term.

The amount of demobilization revenue that we ultimately collect is dependent upon the specific contractual terms, most of which include provisions for reduced (or no) payment for demobilization when, among other things, the contract is renewed or extended with the same client, or when the rig is subsequently contracted with another client prior to the termination of the current contract. Since revenues associated with demobilization activity are typically variable, at each period end, they are estimated at the most likely amount, and constrained when the likelihood of a significant reversal is probable. Any change in the expected amount of demobilization revenue is accounted for with the net cumulative impact of the change in estimate recognized in the period during which the revenue estimate is revised.

The upfront costs that we incur to mobilize the drilling rig to our client’s initial drilling site are capitalized and recognized ratably over the term of the related contract, including any contracted renewal or extension periods, which is our estimate of the period during which we expect to benefit from the cost of mobilizing the rig. Costs associated with the final demobilization at the end of the contract term are expensed when incurred, when the demobilization activity is performed.

Contract Asset and Liability Balances and Contract Cost Assets

Contract asset and contract liability balances relate to demobilization and mobilization revenues, respectively. Demobilization revenue that we expect to receive is recognized ratably over the related contract term, but invoiced upon completion of the demobilization activity. Mobilization revenue, which is typically collected upon the completion of the initial mobilization activity, is deferred and recognized ratably over the related contract term. Contract asset and liability balances are netted at the contract level, with the net current and noncurrent portions separately classified in our condensed consolidated balance sheets, and the resulting contract liabilities are referred to herein as “deferred revenues.” When demobilization revenues are recognized prior to the activity being performed, they are not yet billable, and the resulting contract assets are included in our other current assets in our unaudited condensed consolidated financial statements.

Contract cost assets represent the costs associated with the initial mobilization required in order to fulfill the contract, which are deferred and recognized ratably over the period during which we expect to benefit from the mobilization, or the period during which we expect to satisfy the performance obligations of the related contract. Contract cost assets are presented as either current or noncurrent, according to the duration of the original contract to which it relates, and referred to herein as “deferred costs.”

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Our current and noncurrent deferred revenues, contract assets and deferred costs as of September 30, 2020 and December 31, 2019 were as follows (amounts in thousands):

	Successor		Predecessor
	September 30, 2020		December 31, 2019
Current deferred revenues	$	715	$	1,339
Current deferred costs	592		1,071
Noncurrent deferred revenues	$	—	$	57
Noncurrent deferred costs	24		267

The changes in contract balances during 2020 are primarily related to the amortization of deferred revenues and costs, partially offset by increases related to four rigs deployed under new contracts in 2020. Amortization of deferred revenues and costs were as follows (amounts in thousands):

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Amortization of deferred revenues	$	288	$	2,705	$	3,453
Amortization of deferred costs	205		1,876		3,389

Beginning in late March 2020, rather than terminating their contracts with us, certain of our clients elected to temporarily stack three of our rigs, placing them on an extended standby for a reduced revenue rate and the option to reactivate the rigs through the remainder of the contract term. In May 2020, one of our domestic clients elected to early terminate their contract with us and make an upfront early termination payment based on a per day rate for the respective remaining contract term, resulting in $1.6 million of revenues recognized in the Predecessor period.

5.    Property and Equipment

Capital Expenditures — Capital additions during 2020 primarily related to routine expenditures that are necessary to maintain our fleets, while capital additions during 2019 also included the completion of construction on our 17th AC drilling rig which we deployed in March 2019, and various vehicle and ancillary equipment purchases and upgrades.

Assets Held for Sale — In April 2020, we closed our coiled tubing services business and placed all of our coiled tubing services assets as held for sale at June 30, 2020, which represents $3.8 million of our total assets held for sale at September 30, 2020. We have various other equipment designated as held for sale which is carried at fair value. When the net carrying value of an asset designated as held for sale exceeds its estimated fair value, which we estimate based on expected sales prices, which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures, we recognize the difference as an impairment charge.

Impairments — In accordance with ASC Topic 360, Property, Plant and Equipment, we monitor all indicators of potential impairments. We evaluate for potential impairment of long-lived assets when indicators of impairment are present, which may include, among other things, significant adverse changes in industry trends (including revenue rates, utilization rates, oil and natural gas market prices, and industry rig counts). In performing an impairment evaluation, we estimate the future undiscounted net cash flows from the use and eventual disposition of the assets grouped at the lowest level that independent cash flows can be identified. We perform an impairment evaluation and estimate future undiscounted cash flows for each of our asset groups separately, which are our domestic drilling services, international drilling services, well servicing and wireline services segments, and, prior to being placed as held for sale, our coiled tubing services segment. If the sum of the estimated future undiscounted net cash flows is less than the carrying amount of the asset group, then we determine the fair value of the asset group, and the amount of an impairment charge would be measured as the difference between the carrying amount and the fair value of the assets.

Due to the significant decline in industry conditions, commodity prices, and projected utilization of equipment, as well as the COVID-19 pandemic’s impact on our industry, our projected cash flows declined during the first quarter of 2020, and we performed recoverability testing on all our reporting units. As a result of this analysis, we incurred impairment charges of $16.4 million to reduce the carrying values of our coiled tubing assets to their estimated fair values during the three months ended March 31, 2020. For all our other reporting units, excluding coiled tubing, we determined that the sum of the estimated future undiscounted net cash flows were in excess of the carrying amounts and that no impairment

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existed for these reporting units at March 31, 2020. We continued to monitor potential indicators of impairment through September 30, 2020 and concluded that none of our reporting units are currently at risk of impairment.

The assumptions we use in the evaluation for impairment are inherently uncertain and require management judgment. Although we believe the assumptions and estimates used in our impairment analysis are reasonable, different assumptions and estimates could materially impact the analysis and resulting conclusions. The most significant inputs used in our impairment analysis include the projected utilization and pricing of our services, as well as the estimated proceeds upon any future sale or disposal of the assets, all of which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures. If commodity prices decrease or remain at current levels for an extended period of time, or if the demand for any of our services decreases below what we are currently projecting, our estimated cash flows may decrease and our estimates of the fair value of certain assets may decrease as well. If any of the foregoing were to occur, we could incur impairment charges on the related assets.

6.     Leases

As a drilling and production services provider, we provide the drilling rigs and production services equipment which are necessary to fulfill our performance obligations and which are considered leases under ASU No. 2016-02, Leases, (together with its amendments, herein referred to as “ASC Topic 842”). However, ASU No. 2018-11, Leases: Targeted Improvements, allows lessors to (i) combine the lease and non-lease components of revenues when the revenue recognition pattern is the same and when the lease component, when accounted for separately, would be considered an operating lease, and (ii) account for the combined lease and non-lease components under ASC Topic 606, Revenue from Contracts with Customers, when the non-lease component is the predominant element of the combined component. We elected to apply this expedient and therefore recognize our revenues (both lease and service components) under ASC Topic 606, and present them as one revenue stream in our unaudited condensed consolidated statements of operations.

As a lessee, we lease our corporate office headquarters in San Antonio, Texas, and we conduct our business operations through 15 other regional offices located throughout the United States and internationally in Colombia. These operating locations typically include regional offices, storage and maintenance yards and employee housing sufficient to support our operations in the area. We lease most of these properties under non-cancelable term and month-to-month operating leases, many of which contain renewal options that can extend the lease term from one year to five years and some of which contain escalation clauses. We also lease various items of supplemental equipment, typically under cancelable short-term and very short term (less than 30 days) leases. Due to the nature of our business, any option to renew these short-term leases, and the options to extend certain of our long-term real estate leases, are generally not considered reasonably certain to be exercised. Therefore, the periods covered by such optional periods are not included in the determination of the term of the lease, and the lease payments during these periods are similarly excluded from the calculation of operating lease asset and lease liability balances.

The following table summarizes our lease expense recognized, excluding variable lease costs (amounts in thousands):

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Long-term operating lease expense	$	517	$	1,080	$	2,943
Short-term operating lease expense	1,705		4,456		11,490

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The following table summarizes the amount and timing of our obligations associated with our long-term operating leases (amounts in thousands):

	Successor		Predecessor
	September 30, 2020		December 31, 2019
Within 1 year	$	1,118	$	2,496
In the second year	994		1,933
In the third year	957		1,447
In the fourth year	869		1,117
In the fifth year	890		912
Thereafter	522		811
Total undiscounted lease obligations	$	5,350	$	8,716
Impact of discounting	(584)		(818)
Discounted value of operating lease obligations	$	4,766	$	7,898
Current operating lease liabilities	$	928	$	2,198
Noncurrent operating lease liabilities	3,838		5,700
	$	4,766	$	7,898

During 2020, leased assets obtained in exchange for new operating lease liabilities totaled approximately $2.1 million.

7.     Debt

The commencement of the Chapter 11 Cases constituted an event of default that accelerated our obligations under our Prepetition Senior Notes, the Prepetition ABL Facility, and Term Loan. Under the Bankruptcy Code, holders of our Prepetition Senior Notes and the lenders under our Term Loan and the Prepetition ABL Facility were stayed from taking any action against us as a result of this event of default.

On the Effective Date, all applicable agreements governing the obligations under the Term Loan, Prepetition Senior Notes and Prepetition ABL Facility were terminated. The Term Loan and Prepetition ABL Facility were paid in full and all outstanding obligations under the Prepetition Senior Notes were canceled in exchange for 94.25% of the pro forma common equity. For additional information concerning our bankruptcy proceedings under Chapter 11, see Note 2, Emergence from Voluntary Reorganization under Chapter 11.

As of September 30, 2020, the principal amount of our outstanding debt obligations were as follows (amounts in thousands):

	Successor
	September 30, 2020
Convertible Notes	129,771
Senior Secured Notes, including in-kind interest	79,032

Due to the application of fresh start accounting, our debt obligations were recognized at fair value on our condensed consolidated balance sheet at the Fresh Start Reporting Date, as described further in Note 3, Fresh Start Accounting. Additionally, a portion of the fair value of our Convertible Notes is classified as equity, as described further below.

ABL Credit Facility

On the Effective Date, pursuant to the terms of the Plan, we entered into a senior secured asset-based revolving credit agreement in an aggregate amount of $75 million (the “ABL Credit Facility”) among us and our domestic subsidiaries as borrowers (the “Borrowers”), the lenders party thereto and PNC Bank, National Association as administrative agent, and on August 7, 2020, we entered into a First Amendment to the ABL Credit Facility (together, herein referred to as the “ABL Credit Facility”) which, among other things, reduced the maximum amount of the revolving credit agreement to $40 million.

Among other things, proceeds of loans under the ABL Credit Facility may be used to pay fees and expenses associated with the ABL Credit Facility and finance ongoing working capital and general corporate needs.

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The maturity date of loans made under the ABL Credit Facility is the earliest of 90 days prior to maturity of the Senior Secured Notes or the Convertible Notes (both of which are described further below) and May 29, 2025. Borrowings under the ABL Credit Facility will bear interest at a rate of (i) the LIBOR rate (subject to a floor of 0%) plus an applicable margin of 375 basis points per annum or (ii) the base rate plus an applicable margin of 275 basis points per annum.

The ABL Credit Facility is guaranteed by the Borrowers and is secured by a first lien on the Borrowers’ accounts receivable and inventory, and the cash proceeds thereof, and a second lien on substantially all of the other assets and properties of the Borrowers.

The ABL Credit Facility limits our annual capital expenditures to 125% of the budget set forth in the projections for any fiscal year and provides that if our availability plus pledged cash of up to $3 million falls below $6 million (15% of the maximum revolver amount), we will be required to comply with a fixed charge coverage ratio of 1.0 to 1.0, all of which is defined in the ABL Credit Facility. As of September 30, 2020, we had no borrowings and approximately $8.8 million in outstanding letters of credit under the ABL Credit Facility and subject to the availability requirements in the ABL Credit Facility, based on eligible accounts receivable and inventory balances at September 30, 2020, availability under the ABL Credit Facility was $10.7 million, which our access to would be limited by (i) our requirement to maintain 15% available or comply with a fixed charge coverage ratio, as described above and (ii) the requirement to maintain availability of at least $4.0 million, which may include up to $2.0 million of pledged cash.

Convertible Notes

We entered into an indenture, dated as of the Effective Date, among the Company and Wilmington Trust, N.A., as trustee (the “Convertible Notes Indenture”), and issued $129.8 million aggregate principal amount of convertible senior unsecured pay-in-kind notes due 2025 thereunder (the “Convertible Notes”). We received net issuance proceeds of $120.2 million, which was net of the $9.6 million Backstop Commitment Premium.

The Convertible Notes are general unsecured obligations which will mature on November 15, 2025, unless earlier accelerated, redeemed, converted or repurchased, and bear interest at a fixed rate of 5% per annum, which will be payable semi-annually on May 15 and November 15 in-kind in the form of an increase to the principal amount. The Convertible Notes are convertible at the option of the holders at any time into shares of our common stock and will convert mandatorily into our common stock at maturity; provided, however, that if the value of our common stock otherwise deliverable in connection with a mandatory conversion of a Convertible Note on the maturity date would be less than the principal amount of such Convertible Note plus accrued and unpaid interest, then the Convertible Note will instead convert into an amount of cash equal to the principal amount thereof plus accrued and unpaid interest. The initial conversion rate is 75 shares of common stock per $1,000 principal amount of the Convertible Notes, which in aggregate represents 9,732,825 shares of common stock and an initial conversion price of $13.33 per share. The conversion rate is subject to customary anti-dilution adjustments.

If we undergo a “fundamental change” as defined in the Convertible Notes Indenture, subject to certain conditions, holders may require us to repurchase all or any portion of their Convertible Notes for cash at an amount equal to 100% of the principal amount of the Convertible Notes to be repurchased plus any accrued and unpaid interest. In the case of certain fundamental change events that constitute merger events (as defined in the Convertible Notes Indenture), we have a superseding right to cause the mandatory conversion of all or part of the Convertible Notes into a number of shares of common stock, per $1,000 principal amount of Convertible Notes, equal to the then-current conversion rate or the cash value of such number of shares of common stock (but not less than the principal amount).

Holders of Convertible Notes are entitled to vote on all matters on which holders of our common stock generally are entitled to vote (or, if any, to take action by written consent of the holders of our common stock), voting together as a single class together with the shares of our common stock and not as a separate class, on an as-converted basis, at any annual or special meeting of holders of our common stock and each holder is entitled to such number of votes as such holder would receive on an as-converted basis on the record date for such vote.

The Convertible Notes Indenture contains customary events of default and covenants that limit our ability and the ability of certain of our subsidiaries to incur, assume or guarantee additional indebtedness and create liens and enter into mergers or consolidations.

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Because the Convertible Notes contain an embedded conversion option whereby they, or a portion of them, may be settled in cash, we have separately accounted for the liability and equity components of the Convertible Notes in accordance with the accounting requirements for convertible debt instruments set forth in ASC Topic 470-20, Debt with Conversion and Other Options. The initial fair value of the Convertible Notes was estimated in accordance with the application of Fresh Start Accounting, as described further in Note 3, Fresh Start Accounting. In order to allocate the initial fair value, we first calculated the value of the liability component by estimating the fair value for the debt instrument as if it did not contain a conversion feature. The amount by which the initial fair value of the Convertible Notes exceeded the estimated fair value of the liability component represented the estimated fair value of the equity component. We also allocated the debt issuance costs incurred to the liability and equity components, for which the portion attributable to the equity component is netted with the respective equity component in additional paid-in capital.

The below table summarizes the allocation of issuance proceeds, fair value and debt issuance costs to the liability and equity components of the Convertible Notes at the Fresh Start Reporting Date (in thousands):

	Successor
	Liability Component		Equity Component		Total
Issuance proceeds, net of Backstop Commitment Premium	$	43,738	$	76,449	$	120,187
Face value	47,225		82,546		129,771
Issuance discount	23,195		40,542		63,737
Fair value	$	70,420	$	123,088	$	193,508
Debt issuance costs	(1,268)		(2,216)		(3,484)
Net carrying value at Fresh Start Reporting Date	$	69,152	$	120,872	$	190,024

Senior Secured Notes

We entered into an indenture, dated as of the Effective Date, among the Company, the subsidiary guarantors party thereto and Wilmington Trust, N.A., as trustee (the “Senior Secured Notes Indenture”), and issued $78.1 million aggregate principal amount of floating rate senior secured notes due 2025 (the “Senior Secured Notes”) thereunder. The Senior Secured Notes are guaranteed on a senior secured basis by our existing subsidiaries that also guarantee our obligations under the ABL Credit Facility (the “Guarantors”) on a full and unconditional basis and are secured by a second lien on the accounts receivable and inventory and a first lien on substantially all of the other assets and properties (including the cash proceeds thereof) of the Company and the Guarantors. We received net issuance proceeds of $75 million, which was net of the original issue discount of $3.1 million.

The Senior Secured Notes will mature on May 15, 2025 and interest will accrue at the rate of LIBOR plus 9.5% per annum, with a LIBOR rate floor of 1.5%, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2020. With respect to any interest payment due on or prior to May 29, 2021, 50% of the interest will be payable in cash and 50% of the interest will be paid in-kind in the form of an increase to the principal amount; however, a majority in interest of the holders of the Senior Secured Notes may elect to have 100% of the interest due on or prior to May 29, 2021 payable in-kind. For all interest periods commencing on or after May 15, 2024, the interest rate for the Senior Secured Notes will be a rate equal to LIBOR plus 10.50%, with a LIBOR rate floor of 1.5%.

We may redeem all or part of the Senior Secured Notes on or after June 1, 2021 at redemption prices (expressed as percentages of the principal amount) equal to (i) 104% for the twelve-month period beginning on June 1, 2021; (ii) 102% for the twelve-month period beginning on June 1, 2022; (iii) 101% for the twelve-month period beginning on June 1, 2023 and (iv) 100% for the twelve-month period beginning June 1, 2024 and at any time thereafter, plus accrued and unpaid interest at the redemption date. Notwithstanding the foregoing, if a change of control (as defined in the Senior Secured Notes Indenture) occurs prior to June 1, 2022, we may elect to purchase all remaining outstanding Senior Secured Notes not tendered to us as described below at a redemption price equal to 103% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the applicable redemption date. If a change of control (as defined in the Senior Secured Notes Indenture) occurs, holders of the Senior Secured Notes will have the right to require us to repurchase all or any part of their Senior Secured Notes at a purchase price equal to 101% of the aggregate principal amount of the Senior Secured Notes repurchased, plus accrued and unpaid interest, if any, to the repurchase date.

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The Senior Secured Notes Indenture contains a minimum asset coverage ratio of 1.5 to 1.0 as of any June 30 or December 31, beginning December 31, 2020. The Senior Secured Notes Indenture provides for certain customary events of default and contains covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to incur, assume or guarantee additional indebtedness; pay dividends or distributions on capital stock or redeem or repurchase capital stock; make investments; repay junior debt; sell stock of our subsidiaries; transfer or sell assets; enter into sale and lease back transactions; create liens; enter into transactions with affiliates; and enter into mergers or consolidations.

Having completed qualifying asset sales in the aggregate of $7.2 million by the end of September 2020, we commenced and completed an offer to purchase $2.2 million in aggregate principal amount of the Senior Secured Notes in October 2020 in accordance with the Senior Secured Notes Indenture, at a purchase price equal to 100% of the principal amount, plus accrued and unpaid interest through, but not including, the purchase date. As a result, the $2.2 million of Senior Secured Notes is presented as a current liability in our unaudited condensed consolidated balance sheet as of September 30, 2020. The purchase was funded through cash on hand, which is classified as “restricted cash” as of September 30, 2020.

Debt Issuance Costs and Discount

Costs incurred in connection with the issuance of our Convertible Notes (which were allocated to the liability component, as described above) and Senior Secured Notes, as well as the issuance discounts, were capitalized and are being amortized using the effective interest method over the term of the related debt instrument. Costs incurred in connection with our ABL Credit Facility were capitalized and are being amortized using the straight-line method over the expected term of the agreement. Our unamortized debt issuance costs and discounts are presented below (amounts in thousands):

	Successor
	September 30, 2020
Unamortized discount on Convertible Notes (based on imputed interest rate of 20.9%)	$	56,660
Unamortized discount on Senior Secured Notes (based on imputed interest rate of 13.2%)	2,958
Unamortized debt issuance costs	3,969

8.     Taxes

As described in Note 2, Emergence from Voluntary Reorganization under Chapter 11, in accordance with the Plan, our Prepetition Senior Notes were exchanged for shares of our new common stock. Absent an exception, a debtor recognizes cancellation of debt income (CODI) upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The Internal Revenue Code (IRC) provides that a debtor in a Chapter 11 bankruptcy case may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness. As a result of the market value of equity upon emergence from Chapter 11 bankruptcy proceedings, the estimated amount of CODI for federal income tax purposes is approximately $217 million, which will reduce the value of our net operating losses by an equal amount. The actual reduction in tax attributes does not occur until the first day of our tax year subsequent to the date of emergence, or January 1, 2021. The reduction of net operating losses is expected to be fully offset by a corresponding decrease in valuation allowance.

Upon our emergence from Chapter 11, we underwent an ownership change, as defined in the IRC, which we expect will result in future annual limitations on the usage of our remaining domestic net operating losses. The majority of our remaining domestic net operating losses will begin to expire in 2030, while losses generated after 2017 are carried forward indefinitely but are limited in usage to 80% of taxable income beginning in 2021. The majority of our foreign net operating losses are carried forward indefinitely, but losses generated after 2016 are carried forward for 12 years and will begin to expire in 2029.

We provide a valuation allowance when it is more likely than not that some portion of our deferred tax assets will not be realized. We evaluated the impact of the reorganization, including the change in control, resulting from our bankruptcy emergence and determined it is more likely than not that we will not fully realize future income tax benefits related to our domestic net deferred tax assets based on the annual limitations discussed above, historical results, and expected market conditions known on the date of measurement.

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On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act contains numerous corporate income tax provisions, some of which impact our calculation of income taxes, including providing for the carryback of certain net operating losses, modifications to the net interest deduction limitations, refundable payroll tax credits, and deferment of employer social security payments. However, the provisions did not have a material impact on our Predecessor or Successor financial statements.

9.     Fair Value of Financial Instruments

The FASB’s Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures, defines fair value and provides a hierarchical framework associated with the level of subjectivity used in measuring assets and liabilities at fair value. Currently, our financial instruments consist primarily of cash and cash equivalents, trade and other receivables, trade payables and long-term debt. The carrying value of cash and cash equivalents, trade and other receivables, and trade payables are considered to be representative of their respective fair values due to the short-term nature of these instruments. As a result of the application of fresh start accounting, we estimate that the carrying value of our long-term debt approximates fair value.

10.     Earnings (Loss) Per Common Share

Basic earnings (loss) per share (EPS) is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period.

Diluted EPS is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable from stock-based compensation awards and the Convertible Notes. Potentially dilutive common shares from outstanding stock-based compensation awards are determined using the average share price for each period under the treasury stock method. Potentially dilutive shares from the Convertible Notes are determined using the if-converted method, whereby the Convertible Notes are assumed to be converted and included in the denominator of the EPS calculation and the interest expense, net of tax, recorded in connection with the Convertible Notes is added back to net income (loss).

The following presents a reconciliation of the numerators and denominators of the basic and diluted EPS computations (amounts in thousands, except per share data):

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Numerator:
Net loss (numerator for basic EPS)	$	(20,070)	$	(26,016)
Interest expense on Convertible Notes, net of tax	—		—
Numerator for diluted EPS, if-converted method	(20,070)		(26,016)
Denominator:
Weighted-average shares (denominator for basic EPS)	1,119		78,473
Potentially dilutive shares issuable from Convertible Notes, if-converted method	—		—
Potentially dilutive shares issuable from outstanding stock-based compensation awards, treasury stock method	—		—
Denominator for diluted EPS	1,119		78,473
Loss per common share - Basic	$	(17.94)	$	(0.33)
Loss per common share - Diluted	$	(17.94)	$	(0.33)
Potentially dilutive securities excluded as anti-dilutive	9,733		5,577

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	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Numerator:
Net loss (numerator for basic EPS)	$	(29,887)	$	(104,225)	$	(54,075)
Interest expense on Convertible Notes, net of tax	—		—		—
Numerator for diluted EPS, if-converted method	(29,887)		(104,225)		(54,075)
Denominator:
Weighted-average shares (denominator for basic EPS)	1,101		78,968		78,405
Potentially dilutive shares issuable from Convertible Notes, if-converted method	—		—		—
Potentially dilutive shares issuable from outstanding stock-based compensation awards, treasury stock method	—		—		—
Denominator for diluted EPS	1,101		78,968		78,405
Loss per common share - Basic	$	(27.15)	$	(1.32)	$	(0.69)
Loss per common share - Diluted	$	(27.15)	$	(1.32)	$	(0.69)
Potentially dilutive securities excluded as anti-dilutive	9,733		4,517		4,962

11.    Stock-Based Compensation Plans

Prior to the Effective Date, we had various outstanding stock option, restricted stock, and restricted stock unit awards, as well as phantom stock unit awards which were classified as liability awards under ASC Topic 718, Compensation—Stock Compensation. Upon our emergence from the Chapter 11 Cases in May 2020, all unvested equity-based incentive compensation awards vested in full and settled in shares of our new post-emergence common stock.

Pursuant to the terms of the Plan, we adopted the Pioneer Energy Services Corp. 2020 Employee Incentive Plan (the “Employee Incentive Plan”) providing for the issuance from time to time, as approved by our new board of directors, of equity and equity-based awards with respect to the Common Stock in the aggregate and on a fully-diluted basis, of up to 1,198,074 shares of Common Stock, representing approximately 114% of the shares of Common Stock issued on the Effective Date, but representing 10% of the shares of Common Stock issued on the Effective Date on a fully-diluted basis. The shares of Common Stock issued under the Employee Incentive Plan in the future will dilute all of the shares of Common Stock issued on the Effective Date and all shares of Common Stock issued upon conversion of the Convertible Notes equally.

In July 2020, we issued 90,000 shares of restricted stock to our former Chief Executive Officer in connection with his resignation.

12.    Segment Information

As of September 30, 2020, we have four operating segments, comprised of two drilling services business segments (domestic and international drilling) and two production services business segments (well servicing and wireline services), which reflects the basis used by management in making decisions regarding our business for resource allocation and performance assessment, as required by ASC Topic 280, Segment Reporting. In April 2020, we closed our coiled tubing services business and placed all of our coiled tubing services assets as held for sale at June 30, 2020. Historical financial information for our coiled tubing services business, which had previously been presented as a separate operating segment, continues to be presented in the following tables as a component of continuing operations.

Our domestic and international drilling services segments provide contract land drilling services to a diverse group of exploration and production companies through our three drilling divisions in the US and internationally in Colombia. We provide a comprehensive service offering which includes the drilling rig, crews, supplies, and most of the ancillary equipment needed to operate our drilling rigs.

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Our well servicing and wireline services segments provide a range of production services to producers primarily in Texas, North Dakota, the Rocky Mountain region, and Louisiana. Our former coiled tubing services segment also provided various production services primarily in Texas, Wyoming, and surrounding areas.

The following tables set forth certain financial information for each of our segments and corporate (amounts in thousands):

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Revenues:
Domestic drilling	$	17,567	$	38,168
International drilling	4,061		21,617
Drilling services	21,628		59,785
Well servicing	12,871		30,293
Wireline services	4,499		43,874
Coiled tubing services	—		12,446
Production services	17,370		86,613
Consolidated revenues	$	38,998	$	146,398
Operating costs:
Domestic drilling	$	9,706	$	21,931
International drilling	3,449		15,844
Drilling services	13,155		37,775
Well servicing	10,577		21,414
Wireline services	4,938		38,349
Coiled tubing services	223		10,521
Production services	15,738		70,284
Consolidated operating costs	$	28,893	$	108,059
Gross margin:
Domestic drilling	$	7,861	$	16,237
International drilling	612		5,773
Drilling services	8,473		22,010
Well servicing	2,294		8,879
Wireline services	(439)		5,525
Coiled tubing services	(223)		1,925
Production services	1,632		16,329
Consolidated gross margin	$	10,105	$	38,339
Identifiable Assets:
Domestic drilling (1)	$	144,433	$	354,534
International drilling (1) (2)	43,033		47,320
Drilling services	187,466		401,854
Well servicing	47,207		118,686
Wireline services	21,174		80,054
Coiled tubing services	4,062		34,339
Production services	72,443		233,079
Corporate	59,193		54,760
Consolidated identifiable assets	$	319,102	$	689,693

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	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Depreciation and amortization:
Domestic drilling	$	6,195	$	10,864
International drilling	3,242		1,512
Drilling services	9,437		12,376
Well servicing	3,539		5,132
Wireline services	1,620		3,537
Coiled tubing services	—		1,660
Production services	5,159		10,329
Corporate	103		219
Consolidated depreciation	$	14,699	$	22,924
Capital Expenditures:
Domestic drilling	$	1,006	$	2,777
International drilling	167		1,162
Drilling services	1,173		3,939
Well servicing	313		2,146
Wireline services	45		775
Coiled tubing services	—		1,756
Production services	358		4,677
Corporate	—		44
Consolidated capital expenditures	$	1,531	$	8,660

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Revenues:
Domestic drilling	$	23,433	$	53,341	$	115,829
International drilling	4,889		15,928		68,682
Drilling services	28,322		69,269		184,511
Well servicing	16,627		31,947		86,053
Wireline services	5,212		35,543		137,134
Coiled tubing services	—		5,611		38,111
Production services	21,839		73,101		261,298
Consolidated revenues	$	50,161	$	142,370	$	445,809
Operating costs:
Domestic drilling	$	13,352	$	33,101	$	69,098
International drilling	4,512		13,676		50,884
Drilling services	17,864		46,777		119,982
Well servicing	13,387		26,877		61,348
Wireline services	6,023		31,836		119,500
Coiled tubing services	362		8,557		31,784
Production services	19,772		67,270		212,632
Consolidated operating costs	$	37,636	$	114,047	$	332,614

29

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Gross margin:
Domestic drilling	$	10,081	$	20,240	$	46,731
International drilling	377		2,252		17,798
Drilling services	10,458		22,492		64,529
Well servicing	3,240		5,070		24,705
Wireline services	(811)		3,707		17,634
Coiled tubing services	(362)		(2,946)		6,327
Production services	2,067		5,831		48,666
Consolidated gross margin	$	12,525	$	28,323	$	113,195
Identifiable Assets:
Domestic drilling (1)	$	144,433	$	158,283	$	354,534
International drilling (1) (2)	43,033		49,611		47,320
Drilling services	187,466		207,894		401,854
Well servicing	47,207		49,388		118,686
Wireline services	21,174		23,948		80,054
Coiled tubing services	4,062		6,336		34,339
Production services	72,443		79,672		233,079
Corporate	59,193		65,057		54,760
Consolidated identifiable assets	$	319,102	$	352,623	$	689,693
Depreciation and amortization:
Domestic drilling	$	8,207	$	18,058	$	32,297
International drilling	4,318		2,144		4,228
Drilling services	12,525		20,202		36,525
Well servicing	4,800		7,820		14,956
Wireline services	2,383		5,088		11,519
Coiled tubing services	—		2,164		4,719
Production services	7,183		15,072		31,194
Corporate	227		373		709
Consolidated depreciation	$	19,935	$	35,647	$	68,428
Capital Expenditures:
Domestic drilling	$	1,490	$	3,862	$	14,344
International drilling	305		1,273		3,444
Drilling services	1,795		5,135		17,788
Well servicing	343		1,918		8,182
Wireline services	105		1,684		5,198
Coiled tubing services	—		166		4,567
Production services	448		3,768		17,947
Corporate	—		21		541
Consolidated capital expenditures	$	2,243	$	8,924	$	36,276

(1)    Identifiable assets for our drilling segments include the impact of a $28.3 million and $37.5 million intercompany balance, as of September 30, 2020 and 2019, respectively, between our domestic drilling segment (intercompany receivable) and our international drilling segment (intercompany payable).

(2)    Identifiable assets for our international drilling segment include five drilling rigs that are owned by our Colombia subsidiary and three drilling rigs that are owned by one of our domestic subsidiaries and leased to our Colombia subsidiary.

30

The following is a reconciliation of consolidated gross margin of our segments reported above to loss from operations as reported on the condensed consolidated statements of operations (amounts in thousands):

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Consolidated gross margin	$	10,105	$	38,339
Depreciation and amortization	(14,699)		(22,924)
General and administrative	(11,626)		(30,485)
Bad debt (expense) recovery, net	315		(196)
Gain on dispositions of property and equipment, net	3,829		(17)
Loss from operations	$	(12,076)	$	(15,283)

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Consolidated gross margin	$	12,525	$	28,323	$	113,195
Depreciation and amortization	(19,935)		(35,647)		(68,428)
General and administrative	(15,839)		(22,047)		(68,271)
Pre-petition restructuring charges	—		(16,822)		—
Impairment	(388)		(17,853)		(1,378)
Bad debt (expense) recovery, net	598		(1,209)		90
Gain on dispositions of property and equipment, net	4,289		989		2,184
Loss from operations	$	(18,750)	$	(64,266)	$	(22,608)

13.    Commitments and Contingencies

In connection with our operations in Colombia, our foreign subsidiaries routinely obtain bonds for bidding on drilling contracts, performing under drilling contracts, and remitting customs and importation duties. Based on historical experience and information currently available, we believe the likelihood of demand for payment under these bonds and guarantees is remote.

We are currently undergoing sales and use tax audits for multi-year periods. As of September 30, 2020 and December 31, 2019, our accrued liability was $0.8 million and $2.0 million, respectively, based on our estimate of the sales and use tax obligations that are expected to result from these audits. Due to the inherent uncertainty of the audit process, we believe that it is reasonably possible that we may incur additional tax assessments with respect to one or more of the audits in excess of the amount accrued. We believe that such an outcome would not have a material adverse effect on our results of operations or financial position. Because certain of these audits are in a preliminary stage, an estimate of the possible loss or range of loss from an adverse result in all or substantially all of these cases cannot reasonably be made.

Due to the nature of our business, we are, from time to time, involved in litigation or subject to disputes or claims related to our business activities, including workers’ compensation claims and employment-related disputes. Legal costs relating to these matters are expensed as incurred. In the opinion of our management, none of the pending litigation, disputes or claims against us will have a material adverse effect on our financial condition, results of operations or cash flow from operations.

14.    Guarantor/Non-Guarantor Condensed Consolidating Financial Statements

Our Prepetition Senior Notes were fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all existing 100% owned domestic subsidiaries, except for Pioneer Services Holdings, LLC. The Prepetition Senior Notes, the guarantees, and the Prepetition Senior Notes Indenture were terminated on the Effective Date pursuant to the Plan. See Note 2, Emergence from Voluntary Reorganization under Chapter 11, for more information.

Our Senior Secured Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by all existing 100% owned domestic subsidiaries, except for Pioneer Services Holdings, LLC.

31

The subsidiaries that generally operate our non-U.S. business concentrated in Colombia do not guarantee our Senior Secured Notes and did not guarantee our Prepetition Senior Notes. The non-guarantor subsidiaries do not have any payment obligations under the Senior Secured Notes, the guarantees or the Senior Secured Notes Indenture.

In the event of a bankruptcy, liquidation or reorganization of any non-guarantor subsidiary, such non-guarantor subsidiary would be obligated to pay the holders of its debt and other liabilities, including its trade creditors, before it would be able to distribute any of its assets to us. As of September 30, 2020, there were no restrictions on the ability of subsidiary guarantors to transfer funds to the parent company.

As a result of the guarantee arrangements, we are presenting the following Predecessor and Successor condensed consolidating balance sheets, statements of operations and statements of cash flows of the issuer, the guarantor subsidiaries, and the non-guarantor subsidiaries.

32

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(unaudited, in thousands)

	Successor
	September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	22,616	$	—	$	5,465	$	—	$	28,081
Restricted cash	4,021		—		—		—		4,021
Receivables, net of allowance	1,110		46,252		8,991		—		56,353
Intercompany receivable (payable)	(3,131)		31,141		(28,010)		—		—
Inventory	—		5,636		7,661		—		13,297
Assets held for sale	—		4,295		—		—		4,295
Prepaid expenses and other current assets	2,365		1,319		657		—		4,341
Total current assets	26,981		88,643		(5,236)		—		110,388
Net property and equipment	402		149,982		22,013		—		172,397
Investment in subsidiaries	235,479		33,817		—		(269,296)		—
Intangible assets, net of accumulated amortization	1,902		7,156		—		—		9,058
Deferred income taxes	—		—		10,433		—		10,433
Operating lease assets	2,687		1,977		—		—		4,664
Other noncurrent assets	2,212		52		9,898		—		12,162
Total assets	$	269,663	$	281,627	$	37,108	$	(269,296)	$	319,102
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,725	$	8,608	$	2,112	$	—	$	15,445
Current portion of long-term debt	2,199		—		—		—		2,199
Deferred revenues	—		205		510		—		715
Accrued expenses	6,915		33,019		669		—		40,603
Total current liabilities	13,839		41,832		3,291		—		58,962
Long-term debt, less unamortized discount and debt issuance costs	143,017		—		—		—		143,017
Noncurrent operating lease liabilities	2,349		1,489		—		—		3,838
Deferred income taxes	171		732		—		—		903
Other noncurrent liabilities	242		2,095		—		—		2,337
Total liabilities	159,618		46,148		3,291		—		209,057
Total stockholders’ equity	110,045		235,479		33,817		(269,296)		110,045
Total liabilities and stockholders’ equity	$	269,663	$	281,627	$	37,108	$	(269,296)	$	319,102
	Predecessor
	December 31, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	14,461	$	—	$	10,158	$	—	$	24,619
Restricted cash	998		—		—		—		998
Receivables, net of allowance	107		92,394		30,908		117		123,526
Intercompany receivable (payable)	(28,664)		64,485		(35,821)		—		—
Inventory	—		10,325		12,128		—		22,453
Assets held for sale	—		3,447		—		—		3,447
Prepaid expenses and other current assets	2,849		4,122		898		—		7,869
Total current assets	(10,249)		174,773		18,271		117		182,912
Net property and equipment	2,374		441,567		27,229		—		471,170
Investment in subsidiaries	547,123		47,953		—		(595,076)		—
Deferred income taxes	44,224		—		11,540		(44,224)		11,540
Operating lease assets	3,114		3,581		569		—		7,264
Other noncurrent assets	506		562		—		—		1,068
Total assets	$	587,092	$	668,436	$	57,609	$	(639,183)	$	673,954
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,811	$	24,436	$	6,304	$	—	$	32,551
Deferred revenues	—		513		826		—		1,339
Accrued expenses	10,570		44,893		2,111		117		57,691
Total current liabilities	12,381		69,842		9,241		117		91,581
Long-term debt, less unamortized discount and debt issuance costs	467,699		—		—		—		467,699
Noncurrent operating lease liabilities	2,749		2,536		415		—		5,700
Deferred income taxes	—		48,641		—		(44,224)		4,417
Other noncurrent liabilities	187		294		—		—		481
Total liabilities not subject to compromise	483,016		121,313		9,656		(44,107)		569,878
Total stockholders’ equity	104,076		547,123		47,953		(595,076)		104,076
Total liabilities and stockholders’ equity	$	587,092	$	668,436	$	57,609	$	(639,183)	$	673,954

33

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(unaudited, in thousands)

	Successor
	Three Months Ended September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	34,937	$	4,061	$	—	$	38,998
Costs and expenses:
Operating costs	—		25,443		3,450		—		28,893
Depreciation and amortization	103		11,354		3,242		—		14,699
General and administrative	7,672		3,711		438		(195)		11,626
Intercompany leasing	—		(1,215)		1,215		—		—
Bad debt expense (recovery), net	—		(315)		—		—		(315)
Loss (gain) on dispositions of property and equipment, net	(14)		(3,822)		7		—		(3,829)
Total costs and expenses	7,761		35,156		8,352		(195)		51,074
Income (loss) from operations	(7,761)		(219)		(4,291)		195		(12,076)
Other income (expense):
Equity in earnings of subsidiaries	(3,589)		(3,639)		—		7,228		—
Interest expense	(6,261)		—		8		—		(6,253)
Reorganization items, net	(2,522)		—		—		—		(2,522)
Other income	18		272		(943)		(195)		(848)
Total other income (expense), net	(12,354)		(3,367)		(935)		7,033		(9,623)
Income (loss) before income taxes	(20,115)		(3,586)		(5,226)		7,228		(21,699)
Income tax (expense) benefit 1	45		(3)		1,587		—		1,629
Net income (loss)	$	(20,070)	$	(3,589)	$	(3,639)	$	7,228	$	(20,070)
	Predecessor
	Three months ended September 30, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	124,781	$	21,617	$	—	$	146,398
Costs and expenses:
Operating costs	—		92,216		15,843		—		108,059
Depreciation and amortization	219		21,193		1,512		—		22,924
General and administrative	15,979		13,640		1,001		(135)		30,485
Intercompany leasing	—		(1,215)		1,215		—		—
Bad debt expense, net of recovery	—		196		—		—		196
Loss (gain) on dispositions of property and equipment, net	—		28		(11)		—		17
Total costs and expenses	16,198		126,058		19,560		(135)		161,681
Income (loss) from operations	(16,198)		(1,277)		2,057		135		(15,283)
Other income (expense):
Equity in earnings of subsidiaries	(640)		1,164		—		(524)		—
Interest expense	(10,020)		3		4		—		(10,013)
Other income (expense)	86		236		(775)		(135)		(588)
Total other income (expense), net	(10,574)		1,403		(771)		(659)		(10,601)
Income (loss) before income taxes	(26,772)		126		1,286		(524)		(25,884)
Income tax (expense) benefit 1	756		(766)		(122)		—		(132)
Net income (loss)	$	(26,016)	$	(640)	$	1,164	$	(524)	$	(26,016)
1 The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.

34

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(unaudited, in thousands)

	Successor
	Four Months Ended September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	45,272	$	4,889	$	—	$	50,161
Costs and expenses:
Operating costs	—		33,123		4,513		—		37,636
Depreciation and amortization	227		15,390		4,318		—		19,935
General and administrative	10,101		5,414		584		(260)		15,839
Intercompany leasing	—		(1,620)		1,620		—		—
Impairment	—		388		—		—		388
Bad debt recovery, net of expense	—		(598)		—		—		(598)
Loss (gain) on dispositions of property and equipment, net	(14)		(4,282)		7		—		(4,289)
Total costs and expenses	10,314		47,815		11,042		(260)		68,911
Loss from operations	(10,314)		(2,543)		(6,153)		260		(18,750)
Other income (expense):
Equity in earnings of subsidiaries	(7,901)		(5,295)		—		13,196		—
Interest expense	(8,478)		—		10		—		(8,468)
Reorganization items, net	(3,263)		(403)		—		—		(3,666)
Other income (expense)	24		361		(1,203)		(260)		(1,078)
Total other expense, net	(19,618)		(5,337)		(1,193)		12,936		(13,212)
Loss before income taxes	(29,932)		(7,880)		(7,346)		13,196		(31,962)
Income tax (expense) benefit 1	45		(21)		2,051		—		2,075
Net income (loss)	$	(29,887)	$	(7,901)	$	(5,295)	$	13,196	$	(29,887)
	Predecessor
	Five Months Ended May 31, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	126,442	$	15,928	$	—	$	142,370
Costs and expenses:
Operating costs	—		100,372		13,675		—		114,047
Depreciation and amortization	374		33,129		2,144		—		35,647
General and administrative	8,865		12,489		918		(225)		22,047
Pre-petition restructuring charges	16,822		—		—		—		16,822
Intercompany leasing	—		(2,025)		2,025		—		—
Impairment	—		17,853		—		—		17,853
Bad debt expense, net of recovery	—		1,209		—		—		1,209
Loss (gain) on dispositions of property and equipment, net	3		(992)		—		—		(989)
Total costs and expenses	26,064		162,035		18,762		(225)		206,636
Loss from operations	(26,064)		(35,593)		(2,834)		225		(64,266)
Other income (expense):
Equity in earnings of subsidiaries	(227,497)		(8,594)		—		236,091		—
Interest expense	(12,315)		—		21		—		(12,294)
Reorganization items, net	210,346		(231,420)		(829)		—		(21,903)
Loss on extinguishment of debt	(4,215)		—		—		—		(4,215)
Other income (expense)	(4)		394		(3,498)		(225)		(3,333)
Total other expense, net	(33,685)		(239,620)		(4,306)		235,866		(41,745)
Loss before income taxes	(59,749)		(275,213)		(7,140)		236,091		(106,011)
Income tax (expense) benefit 1	(44,476)		47,716		(1,454)		—		1,786
Net income (loss)	$	(104,225)	$	(227,497)	$	(8,594)	$	236,091	$	(104,225)

35

	Predecessor
	Nine months ended September 30, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	377,127	$	68,682	$	—	$	445,809
Costs and expenses:
Operating costs	—		281,735		50,879		—		332,614
Depreciation and amortization	709		63,491		4,228		—		68,428
General and administrative	30,882		35,665		2,129		(405)		68,271
Intercompany leasing	—		(3,645)		3,645		—		—
Impairment	—		1,378		—		—		1,378
Bad debt recovery, net of expense	—		(90)		—		—		(90)
Gain on dispositions of property and equipment, net	—		(2,077)		(107)		—		(2,184)
Total costs and expenses	31,591		376,457		60,774		(405)		468,417
Income (loss) from operations	(31,591)		670		7,908		405		(22,608)
Other income (expense):
Equity in earnings of subsidiaries	5,433		7,059		—		(12,492)		—
Interest expense	(29,953)		(12)		(38)		—		(30,003)
Other income (expense)	383		903		(436)		(405)		445
Total other income (expense), net	(24,137)		7,950		(474)		(12,897)		(29,558)
Income (loss) before income taxes	(55,728)		8,620		7,434		(12,492)		(52,166)
Income tax (expense) benefit 1	1,653		(3,187)		(375)		—		(1,909)
Net income (loss)	$	(54,075)	$	5,433	$	7,059	$	(12,492)	$	(54,075)
1 The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.

36

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Successor
	Four Months Ended September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities	$	(16,592)	$	20,169	$	(4,314)	$	—	$	(737)
Cash flows from investing activities:
Purchases of property and equipment	(13)		(1,991)		(380)		—		(2,384)
Proceeds from sale of property and equipment	18		8,271		14		—		8,303
Proceeds from insurance recoveries	—		155		—		—		155
	5		6,435		(366)		—		6,074
Cash flows from financing activities:
Intercompany contributions/distributions	26,617		(26,604)		(13)		—		—
	26,617		(26,604)		(13)		—		—
Net decrease in cash, cash equivalents and restricted cash	10,030		—		(4,693)		—		5,337
Beginning cash, cash equivalents and restricted cash	16,607		—		10,158		—		26,765
Ending cash, cash equivalents and restricted cash	$	26,637	$	—	$	5,465	$	—	$	32,102
	Predecessor
	Five Months Ended May 31, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities	$	(127,760)	$	132,354	$	(6,839)	$	—	$	(2,245)
Cash flows from investing activities:
Purchases of property and equipment	(569)		(8,755)		(1,524)		—		(10,848)
Proceeds from sale of property and equipment	—		1,819		—		(154)		1,665
Proceeds from insurance recoveries	—		22		—		—		22
	(569)		(6,914)		(1,524)		(154)		(9,161)
Cash flows from financing activities:
Debt repayments	(175,000)		—		—		—		(175,000)
Proceeds from debt issuance	195,187		—		—		—		195,187
Proceeds from DIP Facility	4,000		—		—		—		4,000
Repayment of DIP Facility	(4,000)		—		—		—		(4,000)
Payments of debt issuance costs	(7,625)		—		—		—		(7,625)
Purchase of treasury stock	(8)		—		—		—		(8)
Intercompany contributions/distributions	116,923		(125,440)		8,363		154		—
	129,477		(125,440)		8,363		154		12,554
Net decrease in cash, cash equivalents and restricted cash	1,148		—		—		—		1,148
Beginning cash, cash equivalents and restricted cash	15,459		—		10,158		—		25,617
Ending cash, cash equivalents and restricted cash	$	16,607	$	—	$	10,158	$	—	$	26,765
	Predecessor
	Nine months ended September 30, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities	$	(38,177)	$	41,854	$	4,961	$	—	$	8,638
Cash flows from investing activities:
Purchases of property and equipment	(637)		(36,644)		(3,262)		—		(40,543)
Proceeds from sale of property and equipment	—		4,688		90		—		4,778
Proceeds from insurance recoveries	—		641		—		—		641
	(637)		(31,315)		(3,172)		—		(35,124)
Cash flows from financing activities:
Purchase of treasury stock	(125)		—		—		—		(125)
Intercompany contributions/distributions	10,784		(10,539)		(245)		—		—
	10,659		(10,539)		(245)		—		(125)
Net increase (decrease) in cash, cash equivalents and restricted cash	(28,155)		—		1,544		—		(26,611)
Beginning cash, cash equivalents and restricted cash	51,348		—		3,216		—		54,564
Ending cash, cash equivalents and restricted cash	$	23,193	$	—	$	4,760	$	—	$	27,953

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

Statements we make in the following discussion that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements made in good faith that are subject to risks, uncertainties and assumptions. These forward-looking statements are based on our current beliefs, intentions, and expectations and are not guarantees or indicators of future performance. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including risks and uncertainties relating to the effects of our bankruptcy on our business and relationships, the concentration of our equity ownership following bankruptcy, the application of fresh start accounting, the effect of the coronavirus (COVID-19) pandemic on our industry, general economic and business conditions and industry trends, levels and volatility of oil and gas prices, the continued demand for drilling services or production services in the geographic areas where we operate, the highly competitive nature of our business, technological advancements and trends in our industry and improvements in our competitors' equipment, the loss of one or more of our major clients or a decrease in their demand for our services, operating hazards inherent in our operations, the supply of marketable equipment within the industry, the continued availability of new components for our fleets, the continued availability of qualified personnel, the political, economic, regulatory and other uncertainties encountered by our operations, and changes in, or our failure or inability to comply with, governmental regulations, including those relating to the environment, the occurrence of cybersecurity incidents, the success or failure of future dispositions or acquisitions, future compliance with our debt agreements, and the impact of not having our common stock listed on a national securities exchange. We have discussed many of these factors in more detail elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2019, as amended by Form 10-K/A for the year ended December 31, 2019, and our Quarterly Reports for the quarterly periods ended March 31, 2020 and June 30, 2020, including under the headings “Risk Factors” in Item 1A and “Special Note Regarding Forward-Looking Statements” in the Introductory Note to Part I. These factors are not necessarily all the important factors that could affect us. Other unpredictable or unknown factors could also have material adverse effects on actual results of matters that are the subject of our forward-looking statements. All forward-looking statements speak only as of the date on which they are made and we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. We advise our stockholders that they should (1) recognize that important factors not referred to above could affect the accuracy of our forward-looking statements and (2) use caution and common sense when considering our forward-looking statements.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto and with our Annual Report on Form 10-K for the year ended December 31, 2019, as amended by Form 10-K/A for the year ended December 31, 2019.

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Recent Developments

Reorganization and Emergence from Chapter 11

On March 1, 2020, we filed a petition for reorganization under Chapter 11 of the Bankruptcy Code. On May 11, 2020, the Bankruptcy Court confirmed the Plan and on May 29, 2020, the conditions to effectiveness of the Plan were satisfied and the Pioneer RSA Parties emerged from Chapter 11. Our completion of the Chapter 11 Cases has allowed us to significantly reduce our level of indebtedness and our future cash interest obligations.

On the Effective Date, all applicable agreements governing the obligations under the Term Loan, Prepetition Senior Notes and Prepetition ABL Facility were terminated. The Term Loan and Prepetition ABL Facility were paid in full and all outstanding obligations under the Prepetition Senior Notes were canceled in exchange for 94.25% of the pro forma common equity. On the Effective Date, we entered into a $75 million senior secured asset-based revolving credit agreement which was later amended and reduced to $40 million in August 2020 (the “ABL Credit Facility”), and issued $129.8 million of aggregate principal amount of 5% convertible senior unsecured pay-in-kind notes due 2025 (the “Convertible Notes”) and $78.1 million of aggregate principal amount of floating rate senior secured notes due 2025 (the “Senior Secured Notes”), the proceeds of which were used to repay our outstanding Term Loan and certain related fees, all of which are described in more detail in the Liquidity and Capital Resources section below, under the headings entitled ABL Credit Facility and Debt Instruments and Compliance Requirements.

Also on the Effective Date, by operation of the Plan, all agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company, including the existing common stock, issued and outstanding immediately prior to the Effective Date, and any rights of any holder in respect thereof, were deemed canceled, discharged and of no force or effect. Pursuant to the Plan, we issued a total of 1,049,804 shares of our new common stock, with approximately 94.25% of such new common stock being issued to holders of the Prepetition Senior Notes outstanding immediately prior to the Effective Date. Holders of the existing common stock received an aggregate of 5.75% of the proforma common equity (subject to the dilution from the Convertible Notes and new management incentive plan), at a conversion rate of 0.0006849838 new shares for each existing share.

As part of the transactions undertaken pursuant to the Plan, we converted from a Texas corporation to a Delaware corporation, filed the Certificate of Incorporation of the Company with the office of the Secretary of State of the State of Delaware, and adopted Amended and Restated Bylaws of the Company.

Shares of our common stock were delisted from the OTC Pink Marketplace. We anticipate the trading of our new common stock on the OTC market to commence again in the near future.

For additional information concerning our bankruptcy proceedings under Chapter 11, see Note 2, Emergence from Voluntary Reorganization under Chapter 11, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 Financial Statements.

Fresh Start Accounting — The financial statements included herein have been prepared as if we are a going concern and in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 852, Reorganizations (ASC Topic 852). In connection with our emergence from bankruptcy and in accordance with ASC Topic 852, we qualified for and adopted fresh start accounting on the Effective Date. We were required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company, and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims.

We evaluated the events between May 29, 2020 and May 31, 2020 and concluded that the use of an accounting convenience date of May 31, 2020 (the “Fresh Start Reporting Date”) would not have a material impact on our condensed consolidated financial statements. As such, the application of fresh start accounting was reflected in our condensed consolidated balance sheet as of May 31, 2020 and related fresh start accounting adjustments were included in our condensed consolidated statement of operations for the five months ended May 31, 2020.

In accordance with ASC Topic 852, with the application of fresh start accounting, we allocated the reorganization value to our individual assets and liabilities (except for deferred income taxes) based on their estimated fair values in conformity with ASC Topic 805, Business Combinations. The amount of deferred taxes was determined in accordance with ASC Topic 740, Income Taxes. The Effective Date fair values of our assets and liabilities differed materially from

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their recorded values as reflected on the historical balance sheets. For additional information about the application of fresh start accounting, see Note 3, Fresh Start Accounting, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 Financial Statements.

As a result of the application of fresh start accounting and the effects of the implementation of the Plan, our condensed consolidated financial statements after the Effective Date are not comparable with the consolidated financial statements on or before that date as indicated by the “black line” division in the financial statements and footnote tables, which emphasizes the lack of comparability between amounts presented. References to “Successor” relate to our financial position and results of operations after the Effective Date. References to “Predecessor” refer to our financial position and results of operations on or before the Effective Date.

Industry Impacts

Measures taken by federal, state and local governments, both globally and domestically, to reduce the rate of spread of COVID-19 have resulted in a decrease in general economic activity and a corresponding decrease in global and domestic energy demand, which has negatively impacted oil and gas prices, which in turn has reduced demand for, and the pricing of, products and services provided to the oil and gas industry, including the products and services which we provide. In addition, actions by OPEC and a group of other oil-producing nations led by Russia have negatively impacted crude oil prices. These events pushed crude oil storage near capacity and drove prices down significantly, as described further in the below section entitled “Market Conditions and Outlook”. To the extent these conditions continue to exist in future periods, our clients’ willingness and ability to explore for, develop and produce hydrocarbons will be adversely affected, which will reduce demand for our products and services and adversely affect our results of operations and liquidity.

We have worked to respond to the recent and current market conditions in a number of ways, including:

•Safety Measures. We have taken proactive steps in our field operations and corporate offices to protect the health and safety of our employees and contractors, including temperature screenings at field job sites, remote working for our office employees, and we implemented procedures for hygiene and distancing at all our locations.

•Reduced Capital Spending. We significantly reduced our initial 2020 capital expenditure budget. Currently, we expect to spend a total of $15 million to $17 million on capital expenditures during 2020; our original budget contemplated capital expenditures of approximately $40 million. During the three months ended September 30, 2020, we limited our capital expenditure spending to $1.5 million.

•Closure of Under-performing Operations. In April 2020, we closed our coiled tubing operations and idled all our coiled tubing equipment, which were subsequently placed as held for sale. We have also closed or consolidated 9 operating locations within our wireline and well servicing operations and exited 13 long-term leases during 2020 as well as various other short-term leases that support our business, and renegotiated or otherwise downsized other leased locations in order to reduce overhead and improve profitability.

•Cost-Cutting Measures. Throughout 2020, we have implemented various cost-cutting measures including, among other things, (i) a 60% reduction in our total headcount, (ii) the suspension of our Employee Incentive Plan and determining that no bonuses would be payable thereunder, (iii) a reduction in the base salaries of each of our executive officers by 24% to 35%, (iv) certain hourly, salary and incentive compensation reductions for administrative and operations personnel throughout the company, (v) a 20% reduction in the cash compensation of each of our non-employee directors effective until June 30, 2021 (or such other date as determined by the Board) and (vi) the elimination of certain employee benefits, including matching 401(k) contributions.

•Liquidating Non-strategic Assets. We have received $10.0 million of proceeds from sales of various assets since the beginning of 2020 and have an additional $4.3 million designated as held for sale at September 30, 2020.

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Company Overview

Pioneer Energy Services Corp. provides land-based drilling services and production services to a diverse group of oil and gas exploration and production companies in the United States and internationally in Colombia. Drilling services and production services are fundamental to establishing and maintaining the flow of oil and natural gas throughout the productive life of a well.

•Drilling Services — Our current drilling rig fleet is 100% pad-capable and offers the latest advancements in pad drilling, with 17 AC rigs in the US and 8 SCR rigs in Colombia. We provide a comprehensive service offering which includes the drilling rig, crews, supplies, and most of the ancillary equipment needed to operate our drilling rigs, which are deployed through our division offices in the following regions:

	Rig Count
Domestic drilling:
Marcellus/Utica	5
Permian Basin and Eagle Ford	10
Bakken	2
International drilling	8
	25

•Production Services — Our production services business segments provide a range of services to producers primarily in Texas, North Dakota, the Rocky Mountain region, and Louisiana.

◦Well Servicing. Our fleet consists of 111 rigs with 550 horsepower and 12 rigs with 600 horsepower which are deployed through 5 operating locations in Texas and North Dakota.

◦Wireline Services. Our fleet of 78 wireline units, including nine units that offer greaseless electric wireline used to reach further depths in longer laterals and two greaseless, EcoQuietTM units designed to reduce noise when operating in proximity to urban areas, is deployed through 6 operating locations in Texas, the Rocky Mountain region, Louisiana and North Dakota.

Pioneer Energy Services Corp. was incorporated under the laws of the State of Texas in 1979 as the successor to a business that had been operating since 1968. Since then, we have significantly expanded and transformed our business through acquisitions and organic growth. Upon emergence from Chapter 11 in May 2020, we converted from a Texas corporation to a Delaware corporation.

Our current business is comprised of two business lines — Drilling Services (consisting of Domestic Drilling and International Drilling reportable segments) and Production Services (consisting of Well Servicing and Wireline Services reportable segments). In April 2020, we closed our coiled tubing operations and idled all our coiled tubing equipment, which were subsequently placed as held for sale as of June 30, 2020. Financial information about our operating segments is included in Note 12, Segment Information, of the Notes to Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Pioneer Energy Services Corp.’s corporate office is located at 1250 N.E. Loop 410, Suite 1000, San Antonio, Texas 78209. Our phone number is (855) 884-0575 and our website address is www.pioneeres.com. We make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (SEC). Information on our website is not incorporated into this report or otherwise made part of this report.

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Market Conditions and Outlook

Industry Overview — Demand for oilfield services offered by our industry is a function of our clients’ willingness and ability to make operating expenditures and capital expenditures to explore for, develop and produce hydrocarbons, which is primarily driven by current and expected oil and natural gas prices.

Our business is influenced substantially by exploration and production companies’ spending that is generally categorized as either a capital expenditure or an operating expenditure. Capital expenditures for the drilling and completion of exploratory and development wells in proven areas are more directly influenced by current and expected oil and natural gas prices. In contrast, operating expenditures for the maintenance of existing wells, for which a range of production services are required in order to maintain production, are relatively more stable and predictable.

Drilling and production services have historically trended similarly in response to fluctuations in commodity prices. However, because exploration and production companies often adjust their budgets for exploration and development drilling first in response to a change in commodity prices, the demand for drilling services is generally impacted first and to a greater extent than the demand for production services which is more dependent on ongoing expenditures that are necessary to maintain production. Additionally, within the range of production services businesses, those that derive more revenue from production-related activity, as opposed to completion of new wells, tend to be less affected by fluctuations in commodity prices and temporary reductions in industry activity.

However, in a severe downturn that is prolonged, both operating and capital expenditures are significantly reduced, and the demand for all our service offerings is significantly impacted. After a prolonged downturn among the production services, the demand for workover services generally improves first, followed by the demand for completion-oriented services as exploration and production companies begin to complete wells that were previously drilled but not completed during the downturn, and to complete newly drilled wells as the demand for drilling services improves during recovery.

For additional information concerning the potential effects of volatility in oil and gas prices and other industry trends, see Item 1A – “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 6, 2020, as amended by Form 10-K/A filed with the SEC on April 28, 2020.

Market Conditions and Outlook — Since January 2020, the COVID-19 pandemic and oil and natural gas market volatility have resulted in a significant decrease in oil prices and significant disruption and uncertainty in the oil and natural gas market. Beginning in March 2020, the decline in demand due to the COVID-19 pandemic coincided with the announcement of price reductions and possible production increases by members of OPEC and other oil exporting nations, including Russia. Although OPEC and other oil exporting nations ultimately agreed to cut production, the downward pressure on commodity prices has remained and could continue in the foreseeable future. These extreme supply and demand dynamics caused significant crude oil price declines, negatively impacting our industry’s oil producers who responded with significant cuts in their recent and projected spending.

Additionally, because our business depends on the level of spending by our clients, we are also affected by our clients’ ability to access the capital markets. After several consecutive years without significant improvement in commodity prices, many exploration and production companies have limited their spending to a level which can be supported by net operating cash flows alone, as access to the capital markets through debt or equity financings has become more challenging in our industry. This challenge has increased recently due to the major stock market and bond market indices experiencing elevated levels of volatility in 2020.

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The trends in spot prices of WTI crude oil and Henry Hub natural gas, and the resulting trends in domestic land rig counts (per Baker Hughes) and domestic well servicing rig counts (per Guiberson/Association of Energy Service Companies) from January 2019 through September 2020 are illustrated in the graphs below.

The commodity price environment and global oversupply of oil during 2020 has resulted in an oversupply of equipment in our industry, declining rig counts and dayrates, and substantially reduced activity for all our service offerings. Oil and gas exploration and production companies reduced their previously planned capital spending programs for 2020, thereby reducing demand for our services. In March 2020, many operators began to curtail operations and several of our clients terminated their drilling contracts with us in April and May 2020.

At the end of September 30, 2020, 12 of our 25 drilling rigs were earning revenues, 9 of which were under term contracts with an aggregate average term remaining of approximately 7 months, and 3 more were under contract but with suspended or pending operations. Additionally, 2 of the domestic rigs currently under spot contracts are each contracted to begin 1-year term contracts at the beginning of 2021. Utilization of our production services fleets also dropped significantly in response to recent market conditions, and in April 2020, we closed our coiled tubing operations and idled all our coiled tubing equipment, which were subsequently placed as held for sale.

We cannot predict whether or when the current imbalance in supply and demand will correct, and when and to what extent crude oil production activities will return to normalized levels. While rig counts and gas prices have continued to increase through October 2020, oil and natural gas commodity prices are expected to continue to be volatile, and demand for our products and services will continue to be affected if our clients continue to revise their capital budgets downward and adjust their operations in response to lower oil prices.

We are currently focusing our efforts on reducing costs and the realignment of certain businesses, while maintaining essential functions and readiness for the moderately improving market conditions which we expect for the remainder of 2020 and into the first part of 2021. We believe our high-quality equipment, services, and excellent safety record position us well to compete as our industry recovers.

Liquidity and Capital Resources

Liquidity Overview

Our completion of the Chapter 11 Cases has allowed us to significantly reduce our level of indebtedness and our future cash interest obligations. We currently expect that cash and cash equivalents, cash generated from operations, and available funds under the ABL Credit Facility are adequate to cover our liquidity requirements for at least the next 12 months. However, our ability to maintain sufficient liquidity and compliance with our debt instruments over the next 12 months, grow, make capital expenditures, and service our debt depends primarily upon (i) the level of demand for, and pricing of, our products and services; (ii) the level of spending by our clients; (iii) our ability to collect our receivables and access borrowings under the ABL Credit Facility; (iv) the supply and demand for oil and gas; (v) oil and gas prices; (vi) general economic and market conditions; and (vii) and other factors that are beyond our control.

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The market competition between OPEC and non-OPEC countries and the impact of the COVID-19 pandemic has caused significant crude oil price declines, negatively impacting our industry’s oil producers who responded with significant cuts in their recent and projected spending. A continued decrease in the demand for oil, combined with current depressed oil prices, has affected and could continue to negatively affect the amount of cash we generate and have available for working capital requirements, capital expenditures, and debt service.

Our availability under the ABL Credit Facility at September 30, 2020 was $10.7 million, which our access to would be limited by (i) our requirement to maintain 15% available or comply with a fixed charge coverage ratio and (ii) the requirement to maintain availability of at least $4 million, which may include up to $2 million of pledged cash. In addition, as a result of current market conditions, certain of our clients are facing financial pressures and liquidity issues. There can be no assurance that one or more of our clients will not delay or default on payments owed to us or file for bankruptcy protection, in which case we may be unable to collect all, or any portion, of the accounts receivable owed to us by such clients. Delays or defaults in payments of accounts receivable owed to us may also adversely affect our borrowing base and our ability to borrow under our ABL Credit Facility.

Sources of Capital Resources

Our principal sources of liquidity currently consist of:

•total cash and cash equivalents, including restricted cash ($32.1 million as of September 30, 2020);

•cash generated from operations; and

•the availability under the ABL Credit Facility ($10.7 million as of September 30, 2020, as discussed below).

In the future, we may also consider equity and/or debt offerings, as appropriate, to meet our liquidity needs. However, our ability to access the capital markets by issuing debt or equity securities will be dependent on market conditions, our financial condition, and other factors beyond our control. Additionally, the ABL Credit Facility and the indentures for our Convertible Notes and Senior Secured Notes contain covenants that limit our ability to incur additional indebtedness, the incurrence of which would also first require the approval of two of our principal stockholders.

ABL Credit Facility — On the Effective Date, pursuant to the terms of the Plan, we entered into a senior secured asset-based revolving credit agreement in an aggregate amount of $75 million among us and our domestic subsidiaries as borrowers (the “Borrowers”), the lenders party thereto and PNC Bank, National Association as administrative agent. On August 7, 2020, we entered into a First Amendment to the ABL Credit Facility (together, herein referred to as the “ABL Credit Facility”) which, among other things, reduced the maximum amount of the revolving credit agreement to $40 million.

Among other things, proceeds of loans under the ABL Credit Facility may be used to pay fees and expenses associated with the ABL Credit Facility and finance ongoing working capital and general corporate needs.

The maturity date of loans made under the ABL Credit Facility is the earliest of 90 days prior to maturity of the Senior Secured Notes or the Convertible Notes (both of which are described below in the section entitled Debt Instruments and Compliance Requirements) and May 29, 2025. Borrowings under the ABL Credit Facility will bear interest at a rate of (i) the LIBOR rate (subject to a floor of 0%) plus an applicable margin of 375 basis points per annum or (ii) the base rate plus an applicable margin of 275 basis points per annum.

The ABL Credit Facility is guaranteed by the Borrowers and is secured by a first lien on the Borrowers’ accounts receivable and inventory, and the cash proceeds thereof, and a second lien on substantially all of the other assets and properties of the Borrowers. The ABL Credit Facility limits our annual capital expenditures to 125% of the budget set forth in the projections for any fiscal year and provides that if our availability plus pledged cash of up to $3 million falls below $6 million (15% of the maximum revolver amount), we will be required to comply with a fixed charge coverage ratio of 1.0 to 1.0, all of which is defined in the ABL Credit Facility. 

As of September 30, 2020, we had no borrowings and approximately $8.8 million in outstanding letters of credit under the ABL Credit Facility and subject to the availability requirements in the ABL Credit Facility, based on eligible accounts receivable and inventory balances at September 30, 2020, availability under the ABL Credit Facility was $10.7 million, which our access to would be limited by (i) our requirement to maintain 15% available or comply with a fixed charge coverage ratio, as described above, and (ii) the requirement to maintain availability of at least $4 million, which may include up to $2 million of pledged cash.

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Uses of Capital Resources

Our principal liquidity requirements are currently for:

•working capital needs;

•capital expenditures; and

•debt service.

Our working capital needs typically fluctuate in relation to activity and pricing. Following a sustained period of low activity, our working capital needs generally increase as we invest in reactivating previously idle equipment and in purchases of inventory and supplies for expected increasing activity. Our capital requirements to maintain our equipment also fluctuate in relation to activity, and increase following a period of sustained low activity. Our capital requirements are also increased during periods of expansion, at which times we have been more likely to access capital through equity or debt financing. During periods of sustained low activity and pricing, when our cash flow from operations are negatively impacted, we may also access additional capital through the use of available funds under the ABL Credit Facility.

Working Capital — Our working capital and current ratio, which we calculate by dividing current assets by current liabilities, were as follows as of September 30, 2020 and December 31, 2019 (amounts in thousands, except current ratio):

	September 30, 2020		December 31, 2019		Change
Current assets	$	110,388	$	182,912	$	(72,524)
Current liabilities	58,962		91,581		(32,619)
Working capital	$	51,426	$	91,331	$	(39,905)
Current ratio	1.9		2.0		(0.1)

The decrease in our working capital during 2020 is primarily due to a decrease of $61.0 million, or 66%, in our total trade and unbilled receivables, despite a decrease of $17.1 million, or 53%, in our accounts payable and a $6.7 million decrease in accrued employee costs, all of which are primarily a result of the significant decline in demand for our service offerings which resulted in decreased revenue and related costs.

Total cash, including cash equivalents and restricted cash, increased by $6.5 million, primarily due to $12.6 million of cash provided by the refinancing of our debt obligations upon emergence from Chapter 11, which was partially offset by a net investment of $3.1 million in capital expenditures as well as $3.0 million of net cash used in operating activities.

Other decreases in our current assets during 2020 included a $9.2 million decrease in inventory primarily due to the revaluation of assets upon our adoption of fresh start accounting, a $4.9 million decrease in other receivables primarily due to an income tax refund in 2020 related to our international operations, and a $3.5 million decrease in prepaid and other current assets partially due to the usage of professional fee retainers associated with our bankruptcy proceedings as well as the amortization of prepaid insurance premiums which are generally paid annually in October.

Other decreases in our current liabilities during 2020 include a $5.9 million decrease in other accrued expenses primarily related to lower accrued taxes associated with our well servicing and international drilling operations, reduced legal and other professional fee accruals associated with our bankruptcy proceedings and reduced current lease liabilities associated with leases that were exited during 2020, as well as a $2.1 million decrease in accrued interest expense primarily because the Prepetition Senior Notes stopped accruing interest as of March 1, 2020 in accordance with the terms of the Plan. These decreases were partially offset by a $1.8 million increase in accrued severance costs during 2020.

Capital Expenditures — Currently, we expect to spend a total of $15 million to $17 million on capital expenditures during 2020, primarily for routine expenditures which are necessary to maintain our fleets. As of September 30, 2020, we have spent $13.2 million of this expected annual total. Anticipated remaining capital expenditures may vary depending on the climate of our industry and any resulting increase or decrease in activity levels, the timing of commitments and payments, availability of capital resources, and the level of investment opportunities that meet our strategic and return on capital employed criteria. We expect to fund the remaining capital expenditures in 2020 from cash

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and operating cash flow in excess of our working capital requirements, although available borrowings under our ABL Credit Facility are also available, if necessary.

Debt Instruments and Compliance Requirements — On the Effective Date, we entered into a $75 million senior secured asset-based revolving credit agreement which was later amended and reduced to $40 million in August 2020 (the “ABL Credit Facility”), and issued $129.8 million of aggregate principal amount of 5% convertible senior unsecured pay-in-kind notes due 2025 (the “Convertible Notes”) and $78.1 million of aggregate principal amount of floating rate senior secured notes due 2025 (the “Senior Secured Notes”). The proceeds from the issuance of the Convertible Notes and the Senior Secured Notes were used to repay the outstanding Term Loan.

The following is a summary of our debt instruments and compliance requirements including covenants, restrictions and guarantees, as it relates to our Convertible Notes and Senior Secured Notes, and a summary of our ABL Credit Facility is included in the above section entitled ABL Credit Facility. As of September 30, 2020, we were in compliance with all covenants required by our debt instruments. However, our ability to maintain compliance with our debt instruments is dependent upon the level of demand for our products and services, the level of spending by our clients, the supply and demand for oil, oil and gas prices, general economic and market conditions and other factors which are beyond our control.

Convertible Notes Indenture and Convertible Notes due 2025. We entered into an indenture, dated as of the Effective Date, among the Company and Wilmington Trust, N.A., as trustee (the “Convertible Notes Indenture”), and issued $129.8 million aggregate principal amount of convertible senior unsecured pay-in-kind notes due 2025 thereunder.

The Convertible Notes are general unsecured obligations which will mature on November 15, 2025, unless earlier accelerated, redeemed, converted or repurchased, and bear interest at a fixed rate of 5% per annum, which will be payable semi-annually in-kind in the form of an increase to the principal amount.

The Convertible Notes are convertible at the option of the holders at any time into shares of our common stock and will convert mandatorily into our common stock at maturity; provided, however, that if the value of our common stock otherwise deliverable in connection with a mandatory conversion of a Convertible Note on the maturity date would be less than the principal amount of such Convertible Note plus accrued and unpaid interest, then the Convertible Note will instead convert into an amount of cash equal to the principal amount thereof plus accrued and unpaid interest. The initial conversion rate is 75 shares of common stock per $1,000 principal amount of the Convertible Notes, which in aggregate represents 9,732,825 shares of common stock and an initial conversion price of $13.33 per share. The conversion rate is subject to customary anti-dilution adjustments.

If we undergo a “fundamental change” as defined in the Convertible Notes Indenture, subject to certain conditions, holders may require us to repurchase all or any portion of their Convertible Notes for cash at an amount equal to 100% of the principal amount of the Convertible Notes to be repurchased plus any accrued and unpaid interest. In the case of certain fundamental change events that constitute merger events (as defined in the Convertible Notes Indenture), we have a superseding right to cause the mandatory conversion of all or part of the Convertible Notes into a number of shares of common stock, per $1,000 principal amount of Convertible Notes, equal to the then-current conversion rate or the cash value of such number of shares of common stock (but not less than the principal amount).

Holders of Convertible Notes are entitled to vote on all matters on which holders of our common stock generally are entitled to vote (or, if any, to take action by written consent of the holders of our common stock), voting together as a single class together with the shares of our common stock and not as a separate class, on an as-converted basis, at any annual or special meeting of holders of our common stock and each holder is entitled to such number of votes as such holder would receive on an as-converted basis on the record date for such vote.

The Convertible Notes Indenture contains covenants that limit our ability and the ability of certain of our subsidiaries to incur, assume or guarantee additional indebtedness and create liens and enter into mergers or consolidations.

The Convertible Notes Indenture contains customary events of default. In the case of an event of default arising from certain events of bankruptcy, insolvency or other similar law, with respect to us or any of our significant subsidiaries, all outstanding Convertible Notes will become due and payable immediately without further action or notice. If any other event of default occurs and is continuing, then the trustee or the holders of at least 25% in aggregate principal amount of the Convertible Notes then outstanding may declare the Convertible Notes due and payable immediately.

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The Convertible Notes Indenture provides, subject to certain exceptions, that for so long as our common stock is registered under the Securities Exchange Act of 1934 (the “Exchange Act”), a beneficial owner of the Convertible Notes is not entitled to receive shares of our common stock upon an optional conversion of any Convertible Notes during any period of time in which the aggregate number of shares of our common stock that may be acquired by such beneficial owner upon conversion of Convertible Notes shall, when added to the aggregate number of shares of our common stock deemed beneficially owned, directly or indirectly, by such beneficial owner and each person subject to aggregation of our common stock with such beneficial owner under Section 13 or Section 16 of the Exchange Act at such time, exceed 9.99% of the total issued and outstanding shares of our common stock. Certain of the holders of Convertible Notes opted out of this provision at the Effective Date.

Senior Secured Notes Indenture and Senior Secured Notes due 2025. We entered into an indenture, dated as of the Effective Date, among the Company, the subsidiary guarantors party thereto and Wilmington Trust, N.A., as trustee (the “Senior Secured Notes Indenture”), and issued $78.1 million aggregate principal amount of floating rate senior secured notes due 2025 thereunder. The Senior Secured Notes are guaranteed on a senior secured basis by our existing subsidiaries that also guarantee our obligations under the ABL Credit Facility (the “Guarantors”) on a full and unconditional basis and are secured by a second lien on the accounts receivable and inventory and a first lien on substantially all of the other assets and properties (including the cash proceeds thereof) of the Company and the Guarantors.

The Senior Secured Notes will mature on May 15, 2025 and interest will accrue at the rate of LIBOR plus 9.5% per annum, with a LIBOR rate floor of 1.5%, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2020. With respect to any interest payment due on or prior to May 29, 2021, 50% of the interest will be payable in cash and 50% of the interest will be paid in-kind in the form of an increase to the principal amount; however, a majority in interest of the holders of the Senior Secured Notes may elect to have 100% of the interest due on or prior to May 29, 2021 payable in-kind. For all interest periods commencing on or after May 15, 2024, the interest rate for the Senior Secured Notes will be a rate equal to LIBOR plus 10.5%, with a LIBOR rate floor of 1.5%.

We may redeem all or part of the Senior Secured Notes on or after June 1, 2021 at redemption prices (expressed as percentages of the principal amount) equal to (i) 104% for the twelve-month period beginning on June 1, 2021; (ii) 102% for the twelve-month period beginning on June 1, 2022; (iii) 101% for the twelve-month period beginning on June 1, 2023 and (iv) 100% for the twelve-month period beginning June 1, 2024 and at any time thereafter, plus accrued and unpaid interest at the redemption date. Notwithstanding the foregoing, if a change of control (as defined in the Senior Secured Notes Indenture) occurs prior to June 1, 2022, we may elect to purchase all remaining outstanding Senior Secured Notes not tendered to us as described below at a redemption price equal to 103% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the applicable redemption date. If a change of control (as defined in the Senior Secured Notes Indenture) occurs, holders of the Senior Secured Notes will have the right to require us to repurchase all or any part of their Senior Secured Notes at a purchase price equal to 101% of the aggregate principal amount of the Senior Secured Notes repurchased, plus accrued and unpaid interest, if any, to the repurchase date.

The Senior Secured Notes Indenture contains covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to incur, assume or guarantee additional indebtedness; pay dividends or distributions on capital stock or redeem or repurchase capital stock; make investments; repay junior debt; sell stock of our subsidiaries; transfer or sell assets; enter into sale and lease back transactions; create liens; enter into transactions with affiliates; and enter into mergers or consolidations. The Senior Secured Notes Indenture contains a minimum asset coverage ratio of 1.5 to 1.0 as of any June 30 or December 31, beginning December 31, 2020.

The Senior Secured Notes Indenture also provides for certain customary events of default, including, among others, nonpayment of principal or interest, breach of covenants, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, failure of a security document to create an effective security interest in collateral, bankruptcy and insolvency events, and cross acceleration, which would permit the principal, premium, if any, interest and other monetary obligations on all the then outstanding Senior Secured Notes to be declared due and payable immediately.

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Pursuant to the Senior Secured Notes Indenture, we commenced an offer to purchase $2.2 million in aggregate principal amount of the Senior Secured Notes in October 2020, at a purchase price equal to 100% of the principal amount of the Senior Secured Notes purchased, plus accrued and unpaid interest through, but not including, the purchase date. As of October 22, 2020, the aggregate principal amount of Senior Secured Notes outstanding is $76.8 million.

Results of Operations

As a result of our emergence from Chapter 11 on May 29, 2020, our financial results for the periods prior to the Fresh Start Reporting date of May 31, 2020 are referred to as those of the “Predecessor,” and our financial results for the periods subsequent to May 31, 2020 are referred to as those of the “Successor.”

Although the Successor period(s) and the Predecessor period(s) are distinct reporting periods, we have combined the Successor and Predecessor period results during the nine months ended September 30, 2020 in order to provide some comparability of such information to the corresponding Predecessor period ended September 30, 2019. While this combined presentation is not presented according to generally accepted accounting principles in the United States of America (GAAP) and no comparable GAAP measures are presented, management believes that providing this financial information is the most relevant and useful method for making comparisons to the corresponding Predecessor period as reviewing the Successor period results in isolation would not be useful in identifying trends in or reaching conclusions regarding our overall operating performance.

The following table provides certain information about our operations, including details of each of our business segments’ revenues, operating costs and gross margin for the periods indicated (amounts in thousands).

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Revenues:
Domestic drilling	$	17,567	$	38,168
International drilling	4,061		21,617
Drilling services	21,628		59,785
Well servicing	12,871		30,293
Wireline services	4,499		43,874
Coiled tubing services	—		12,446
Production services	17,370		86,613
Consolidated revenues	$	38,998	$	146,398
Operating costs:
Domestic drilling	$	9,706	$	21,931
International drilling	3,449		15,844
Drilling services	13,155		37,775
Well servicing	10,577		21,414
Wireline services	4,938		38,349
Coiled tubing services	223		10,521
Production services	15,738		70,284
Consolidated operating costs	$	28,893	$	108,059

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	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Gross margin:
Domestic drilling	$	7,861	$	16,237
International drilling	612		5,773
Drilling services	8,473		22,010
Well servicing	2,294		8,879
Wireline services	(439)		5,525
Coiled tubing services	(223)		1,925
Production services	1,632		16,329
Consolidated gross margin	$	10,105	$	38,339
Consolidated:
Net loss	$	(20,070)	$	(26,016)
Adjusted EBITDA (1)	$	1,775	$	7,053

	Successor		Predecessor		Combined (Non-GAAP)		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Revenues:
Domestic drilling	$	23,433	$	53,341	$	76,774	$	115,829
International drilling	4,889		15,928		20,817		68,682
Drilling services	28,322		69,269		97,591		184,511
Well servicing	16,627		31,947		48,574		86,053
Wireline services	5,212		35,543		40,755		137,134
Coiled tubing services	—		5,611		5,611		38,111
Production services	21,839		73,101		94,940		261,298
Consolidated revenues	$	50,161	$	142,370	$	192,531	$	445,809
Operating costs:
Domestic drilling	$	13,352	$	33,101	$	46,453	$	69,098
International drilling	4,512		13,676		18,188		50,884
Drilling services	17,864		46,777		64,641		119,982
Well servicing	13,387		26,877		40,264		61,348
Wireline services	6,023		31,836		37,859		119,500
Coiled tubing services	362		8,557		8,919		31,784
Production services	19,772		67,270		87,042		212,632
Consolidated operating costs	$	37,636	$	114,047	$	151,683	$	332,614
Gross margin:
Domestic drilling	$	10,081	$	20,240	$	30,321	$	46,731
International drilling	377		2,252		2,629		17,798
Drilling services	10,458		22,492		32,950		64,529
Well servicing	3,240		5,070		8,310		24,705
Wireline services	(811)		3,707		2,896		17,634
Coiled tubing services	(362)		(2,946)		(3,308)		6,327
Production services	2,067		5,831		7,898		48,666
Consolidated gross margin	$	12,525	$	28,323	$	40,848	$	113,195
Consolidated:
Net loss	$	(29,887)	$	(104,225)	$	(134,112)	$	(54,075)
Adjusted EBITDA (1)	$	495	$	2,723	$	3,218	$	47,643

(1)    Adjusted EBITDA represents income (loss) before interest expense, income tax (expense) benefit, depreciation and amortization, pre-petition restructuring charges, impairment, reorganization items, and loss on extinguishment of

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debt. Adjusted EBITDA is a non-GAAP measure that our management uses to facilitate period-to-period comparisons of our core operating performance and to evaluate our long-term financial performance against that of our peers. We believe that this measure is useful to investors and analysts in allowing for greater transparency of our core operating performance and makes it easier to compare our results with those of other companies within our industry. Adjusted EBITDA should not be considered (a) in isolation of, or as a substitute for, net income (loss), (b) as an indication of cash flows from operating activities or (c) as a measure of liquidity. In addition, Adjusted EBITDA does not represent funds available for discretionary use. Adjusted EBITDA may not be comparable to other similarly titled measures reported by other companies.

A reconciliation of net loss, as reported, to Adjusted EBITDA, and to consolidated gross margin, are set forth in the following table (amounts in thousands):

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Net loss	$	(20,070)	$	(26,016)
Depreciation and amortization	14,699		22,924
Reorganization items, net	2,522		—
Interest expense	6,253		10,013
Income tax expense (benefit)	(1,629)		132
Adjusted EBITDA	1,775		7,053
General and administrative	11,626		30,485
Bad debt recovery (expense), net	(315)		196
Loss (gain) on dispositions of property and equipment, net	(3,829)		17
Other expense (income)	848		588
Consolidated gross margin	$	10,105	$	38,339

	Successor		Predecessor		Combined (Non-GAAP)		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Net loss	$	(29,887)	$	(104,225)	$	(134,112)	$	(54,075)
Depreciation and amortization	19,935		35,647		55,582		68,428
Pre-petition restructuring charges	—		16,822		16,822		—
Impairment	388		17,853		18,241		1,378
Reorganization items, net	3,666		21,903		25,569		—
Interest expense	8,468		12,294		20,762		30,003
Loss on extinguishment of debt	—		4,215		4,215		—
Income tax expense (benefit)	(2,075)		(1,786)		(3,861)		1,909
Adjusted EBITDA	495		2,723		3,218		47,643
General and administrative	15,839		22,047		37,886		68,271
Bad debt recovery (expense), net	(598)		1,209		611		(90)
Loss (gain) on dispositions of property and equipment, net	(4,289)		(989)		(5,278)		(2,184)
Other expense (income)	1,078		3,333		4,411		(445)
Consolidated gross margin	$	12,525	$	28,323	$	40,848	$	113,195

Consolidated gross margin — We experienced a significant decline in demand for all our service offerings as a result of the economic downturn caused by the COVID-19 pandemic and adverse global oil production and pricing decisions made by OPEC and non-OPEC countries, as described in more detail in the section above entitled, “Market Conditions and Outlook.” Our consolidated gross margin decreased by $28.2 million, or 74%, for the three months ended September 30, 2020, and decreased by $72.3 million, or 64%, for the nine months ended September 30, 2020, as compared to the corresponding periods in 2019. Our production services offerings, which are heavily completion-oriented businesses, were most significantly impacted by the decline in demand, with a combined gross margin decrease of 84% for the nine months ended September 30, 2020 as compared to the corresponding period in 2019. While our drilling services business were also significantly impacted, and experienced a combined 49% gross margin decrease

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during this same period, the impact was mitigated by the longer-term nature of the operations, which are typically supported by term contracts.

•Drilling Services — Our drilling services revenues decreased by 64% and 47% for the three and nine months ended September 30, 2020, respectively, as compared to the corresponding periods in 2019, while operating costs decreased by 65% and 46%, respectively. The following table provides operating statistics for each of our drilling services segments:

	Successor			Predecessor
	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019
Domestic drilling:
Average number of drilling rigs	17			17
Utilization rate	53		%	88		%
Revenue days	835			1,383
Average revenues per day	$	21,038		$	27,598
Average operating costs per day	11,624			15,858
Average margin per day	$	9,414		$	11,740
International drilling:
Average number of drilling rigs	8			8
Utilization rate	22		%	71		%
Revenue days	162			521
Average revenues per day	$	25,068		$	41,491
Average operating costs per day	21,290			30,411
Average margin per day	$	3,778		$	11,080

	Successor			Predecessor			Combined (Non-GAAP)			Predecessor
	Four Months Ended September 30, 2020			Five Months Ended May 31, 2020			Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
Domestic drilling:
Average number of drilling rigs	17			17			17			17
Utilization rate	53		%	81		%	69		%	94		%
Revenue days	1,105			2,100			3,205			4,279
Average revenues per day	$	21,206		$	25,400		$	23,954		$	27,069
Average operating costs per day	12,083			15,762			14,494			16,148
Average margin per day	$	9,123		$	9,638		$	9,460		$	10,921
International drilling:
Average number of drilling rigs	8			8			8			8
Utilization rate	19		%	28		%	24		%	79		%
Revenue days	187			335			522			1,724
Average revenues per day	$	26,144		$	47,546		$	39,879		$	39,839
Average operating costs per day	24,128			40,824			34,843			29,515
Average margin per day	$	2,016		$	6,722		$	5,036		$	10,324

Our domestic drilling average margin per day decreased by 20% and 13% for the three and nine months ended September 30, 2020, respectively, as compared to the corresponding periods in 2019, as revenue days decreased by 40% and 25%, respectively. Average revenues per day declined during 2020 as dayrates for contracts that were renewed and renegotiated in late 2019 were reduced. Additionally, average revenues and margin per day for the three and nine months ended September 30, 2019 benefited from $2.2 million and $1.0 million, respectively, of additional revenue associated with the early termination of two of our domestic drilling contracts in 2019, which is net of $1.6 million of early termination revenue recognized in May 2020. These decreases were offset in part by the benefit of rigs placed on standby in 2020. Beginning in late March 2020, rather than terminating their contracts with us, certain of our clients elected to temporarily stack three of our rigs, placing them on an extended standby for a

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reduced revenue rate and the option to reactivate the rigs through the remainder of the contract term. Although these drilling rigs earn lower standby rates as compared to daywork rates, operating costs incurred are minimal, which reduces operating costs per day and benefits overall margin per day.

Our international drilling average margin per day decreased by 66% and 51% for the three and nine months ended September 30, 2020, respectively, as compared to the corresponding periods in 2019, primarily driven by the 69% and 70% reduction in revenue days during these respective periods as certain customers terminated or suspended drilling contracts in response to the decline in industry conditions. These contract terminations and suspensions in 2020 also resulted in an increase in rig demobilization activity, for which revenues and costs are higher than daywork activity, and for which there are no associated revenue days. Average revenue per day during the three months ended September 30, 2019 also benefited from $1.4 million of revenues associated with the demobilization of three rigs during the third quarter of 2019. The decline in utilization combined with the increase in rig standby and demobilization costs in 2020 and higher demobilization revenue in 2019 all contributed to the decreases in average margin per day.

•Production Services — Our revenues from production services decreased 80% and 64% for the three and nine months ended September 30, 2020, respectively, as compared to the corresponding periods in 2019, while operating costs decreased 78% and 59%, respectively. The following table provides operating statistics for each of our production services segments:

	Successor			Predecessor
	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019
Well servicing:
Average number of rigs	123			125
Utilization rate	30		%	59		%
Rig hours	25,926			52,210
Average revenue per hour	$	496		$	580
Wireline services:
Average number of units	80			94
Number of stages	563			6,732
Coiled tubing services:
Average number of units	—			9
Revenue days	—			339
Average revenue per day	$	—		$	36,714

	Successor			Predecessor			Combined (Non-GAAP)			Predecessor
	Four Months Ended September 30, 2020			Five Months Ended May 31, 2020			Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
Well servicing:
Average number of rigs	123			123			123			125
Utilization rate	29		%	40		%	35		%	58		%
Rig hours	33,691			56,797			90,488			151,169
Average revenue per hour	$	494		$	562		$	537		$	569
Wireline services:
Average number of units	83			93			89			98
Number of stages	655			6,510			7,165			20,941
Coiled tubing services:
Average number of units	2			9			6			9
Revenue days	—			226			226			997
Average revenue per day	$	—		$	24,827		$	24,827		$	38,226

Our well servicing rig hours decreased by 50% and 40% for the three and nine months ended September 30, 2020, respectively, as compared to the corresponding periods in 2019, while average revenues per hour decreased by 14% and 6%, respectively. Although overall activity declined beginning in March 2020, especially for completion

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services, average revenues per hour remained relatively stable until June 2020 in regions where pricing was slower to respond to economic conditions.

Our wireline services business segment experienced decreases of 92% and 40% in the number of perforating stages performed and revenue per stage, respectively, for the three months ended September 30, 2020, and decreases of 66% and 15% in the number of perforating stages performed and revenue per stage, respectively, for the nine months ended September 30, 2020, as compared to the corresponding periods in 2019. Already decreasing demand for completion-related services worsened with the sharp decline in industry conditions beginning in late February, and resulted in our decision to close several underperforming operating locations in 2020.

In April 2020, we closed our coiled tubing operations and idled all our coiled tubing equipment, which were subsequently placed as held for sale. This closure, combined with the decline in demand for our coiled tubing services prior to April 2020, resulted in the 77% decrease in revenue days and the 35% decrease in average revenue per day for the nine months ended September 30, 2020 as compared to the corresponding period in 2019.

Depreciation and amortization expense — Our depreciation expense decreased by $8.2 million, or 36%, and $12.8 million, or 19%, for the three and nine months ended September 30, 2020, respectively, as compared to the corresponding periods in 2019, primarily as a result of the application of fresh start accounting which resulted in reductions to the values of our long-lived assets as of May 31, 2020 as well as the designation of all our coiled tubing assets as held-for-sale at June 30, 2020. The overall decrease in depreciation expense was partially offset by an increase due to the deployment of our 17th domestic AC drilling rig in March 2019 and an increase for the amortization of intangibles which were established in connection with fresh start accounting at May 31, 2020.

Pre-petition restructuring charges — All expenses and losses incurred prior to the Petition Date which were related to the Chapter 11 proceedings are presented as pre-petition restructuring charges in our Predecessor condensed consolidated statements of operations, including $9.6 million of expense incurred for the Commitment Premium pursuant to the Backstop Commitment Agreement. For more detail, see Note 2, Emergence from Voluntary Reorganization under Chapter 11, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Impairment — Due to the significant decline in industry conditions, commodity prices, and projected utilization of equipment, as well as the COVID-19 pandemic’s impact on our industry, our projected cash flows declined during the first quarter of 2020, and we performed recoverability testing on all our reporting units. As a result of this analysis, we incurred impairment charges of $16.4 million and $1.9 million during 2020 to reduce the carrying values of our coiled tubing assets and certain held-for-sale assets, respectively, to their estimated fair values. For more detail, see Note 5, Property and Equipment, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Reorganization items, net — Any expenses, gains, and losses incurred subsequent to and as a direct result of the Chapter 11 proceedings are presented as reorganization items in our condensed consolidated statements of operations. For more detail, see Note 2, Emergence from Voluntary Reorganization under Chapter 11, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Interest expense — Our interest expense decreased by $9.2 million for the nine months ended September 30, 2020 as compared to the corresponding period in 2019, primarily because the Prepetition Senior Notes stopped accruing interest as of March 1, 2020, in accordance with the terms of the Plan, and because our total outstanding debt was significantly reduced upon our emergence from Chapter 11. The overall decreases were slightly offset by an increase in amortization of debt discounts and issuance costs, which increased the total effective interest rate during the period.

Income tax expense (benefit) — Our effective tax rates differ from the applicable U.S. statutory rates primarily due to the impact of valuation allowances, as well as the impact of state taxes, other permanent differences, and the mix of profit and loss between federal, state and international taxing jurisdictions with different tax rates. For more information, see Note 8, Taxes, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

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General and administrative expense — Our general and administrative expense decreased by $30.4 million, or 45%, for the nine months ended September 30, 2020 as compared to the corresponding period in 2019, of which $22.2 million is attributable to reduced employee costs in connection with the decline in operational activity, including a $16.7 million decrease in incentive compensation primarily associated with the one-time retention and incentive compensation awards granted in the third quarter of 2019 as well as the termination of our previous annual and long-term cash incentive awards in 2019 and the suspension of incentive awards in early 2020. This overall decrease in general and administrative expense was partially offset by $3.6 million of severance costs for certain executives whose employment was terminated during the third quarter of 2020.

Loss (gain) on dispositions of property and equipment, net — During the nine months ended September 30, 2020 and the corresponding period in 2019, we recognized net gains of $5.3 million and $2.2 million, respectively, on the disposition or sale of various property and equipment, including coiled tubing equipment, drill pipe and collars and certain older and/or underutilized equipment.

Other expense (income) — The decrease in our other expense for the nine months ended September 30, 2020 is primarily related to $4.8 million of net foreign currency losses recognized for our Colombian operations, as compared to $0.5 million of net foreign currency losses during the corresponding period in 2019.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Actual results could differ from those estimates. Except for the application of fresh start accounting, there were no significant changes to our critical accounting policies since the date of our annual report on Form 10-K for the year ended December 31, 2019, as amended.

Accounting estimates — Material estimates affecting our financial results, including those that are particularly susceptible to significant changes in the near term, relate to our application of fresh start accounting, our estimates of certain variable revenues and amortization periods of certain deferred revenues and costs associated with drilling daywork contracts, our estimates of projected cash flows and fair values for impairment evaluations, our estimate of the valuation allowance for deferred tax assets, and our estimate of the liability relating to the self-insurance portion of our health and workers’ compensation insurance.

•Fresh Start Accounting. In connection with our emergence from bankruptcy and in accordance with ASC Topic 852, we qualified for and adopted fresh start accounting on the Effective Date. We were required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company, and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims.

In accordance with ASC Topic 852, with the application of fresh start accounting, we allocated the reorganization value to our individual assets and liabilities (except for deferred income taxes) based on their estimated fair values in conformity with ASC Topic 805, Business Combinations. The amount of deferred taxes was determined in accordance with ASC Topic 740, Income Taxes. The Effective Date fair values of our assets and liabilities differed materially from their recorded values as reflected on the historical balance sheets.

Fresh start accounting involved a comprehensive valuation process in which we determined the fair value of all our assets and liabilities on the Effective Date. For more information, see Note 3, Fresh Start Accounting, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

•Revenues. In accordance with ASC Topic 606, Revenue from Contracts with Customers, we estimate certain variable revenues associated with the demobilization of our drilling rigs under daywork drilling contracts. We also make estimates of the applicable amortization periods for deferred mobilization costs, and for mobilization revenues related to cancelable term contracts which represent a material right to our clients. These estimates and assumptions are described in more detail in Note 4, Revenue from Contracts with Customers. In order to make these estimates, management considers all the facts and circumstances pertaining to each particular contract, our past experience and knowledge of current market conditions. For more information, see Note 4, Revenue from Contracts with

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Customers, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

•Impairment Evaluation. In accordance with ASC Topic 360, Property, Plant and Equipment, we monitor all indicators of potential impairments. Due to the significant decline in industry conditions, commodity prices, and projected utilization of equipment, as well as the COVID-19 pandemic’s impact on our industry, our projected cash flows declined during the first quarter of 2020, and we performed recoverability testing on all our reporting units. As a result of this analysis, we incurred impairment charges of $16.4 million to reduce the carrying values of our coiled tubing assets to their estimated fair values during the three months ended March 31, 2020. For all our other reporting units, excluding coiled tubing, we determined that the sum of the estimated future undiscounted net cash flows were in excess of the carrying amounts and that no impairment existed for these reporting units at March 31, 2020. We continued to monitor potential indicators of impairment through September 30, 2020 and concluded that none of our reporting units are currently at risk of impairment.

The assumptions we use in the evaluation for impairment are inherently uncertain and require management judgment. Although we believe the assumptions and estimates used in our impairment analysis are reasonable, different assumptions and estimates could materially impact the analysis and resulting conclusions. The most significant inputs used in our impairment analysis include the projected utilization and pricing of our services, as well as the estimated proceeds upon any future sale or disposal of the assets, all of which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures. If commodity prices decrease or remain at current levels for an extended period of time, or if the demand for any of our services decreases below what we are currently projecting, our estimated cash flows may decrease and our estimates of the fair value of certain assets may decrease as well. If any of the foregoing were to occur, we could incur impairment charges on the related assets. For more information, see Note 5, Property and Equipment, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

•Deferred Tax Assets. We provide a valuation allowance when it is more likely than not that some portion of our deferred tax assets will not be realized. We evaluated the impact of the reorganization, including the change in control, resulting from our bankruptcy emergence and determined it is more likely than not that we will not fully realize future income tax benefits related to our domestic net deferred tax assets based on the annual limitations that impact us, historical results, and expected market conditions. For more information, see Note 8, Taxes, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

•Insurance Claim Liabilities. We use a combination of self-insurance and third-party insurance for various types of coverage. We have stop-loss coverage of $225,000 per covered individual per year under our health insurance and deductibles of $500,000 and $250,000 per occurrence under our workers’ compensation and auto liability insurance, respectively. We have a $500,000 self-insured retention and an additional aggregate deductible of $500,000 under our general liability insurance as well as an annual aggregate deductible of $1,000,000 on the first layer of excess coverage. At September 30, 2020, our accrued insurance premiums and deductibles include approximately $0.7 million of accruals for costs incurred under the self-insurance portion of our health insurance and approximately $2.7 million of accruals for costs associated with our workers’ compensation insurance. We accrue for these costs as claims are incurred using an actuarial calculation that is based on industry and our company’s historical claim development data, and we accrue the cost of administrative services associated with claims processing.

Recently Issued Accounting Standards

For information about recently issued accounting standards, see Note 1, Organization and Summary of Significant Accounting Policies, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

55

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.    CONTROLS AND PROCEDURES

In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of management, including our Interim Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Interim Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2020, to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to our management, including our Interim Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In the ordinary course of business, we may make changes to our systems and processes to improve controls and increase efficiency, and make changes to our internal controls over financial reporting in order to ensure that we maintain an effective internal control environment.

During the second quarter of 2020, upon our emergence from Chapter 11, we established controls over the application of fresh start accounting. There has been no change in our internal control over financial reporting that occurred during the three months ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

56

PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

From time to time, we are involved in routine litigation or subject to disputes or claims arising out of our business activities, including workers’ compensation claims and employment-related disputes. In the opinion of our management, none of the pending litigation, disputes or claims against us will have a material adverse effect on our financial condition, results of operations or cash flows. For information on Legal Proceedings, see Note 13, Commitments and Contingencies, of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1 Financial Statements, of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

In addition to the risk factors described below and the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Item 1A – “Risk Factors” in our Form 10-K for the year ended December 31, 2019, as amended by Form 10-K/A for the year ended December 31, 2019, which could materially affect our business, financial condition or future results.

Risks Relating to the Restructuring

•We recently emerged from bankruptcy, which may adversely affect our business and relationships.

As a result of our bankruptcy filing and recent emergence:

•key suppliers, vendors or other contract counterparties may terminate their relationships with us or require additional financial assurances or enhanced performance from us;

•our ability to renew existing contracts and compete for new business may be adversely affected;

•our ability to attract, motivate and/or retain key executives and employees may be adversely affected;

•our competitors may take business away from us, and our ability to attract and retain customers may be negatively impacted;

•our employees may be distracted from performance of their duties or more easily attracted to other employment opportunities; and

•we may have difficulty obtaining the capital we need to run and grow our business.

The occurrence of one or more of these events could have a material adverse effect on our operations, financial condition and reputation.

•Upon our emergence from Chapter 11, the composition of our stockholder base and concentration of equity ownership changed significantly.

As a result of the concentration of our equity ownership, the future strategy and plans of the Company may differ materially from those in the past. Upon our emergence from Chapter 11, twelve stockholder groups beneficially own approximately 95% (the “Significant Stockholders”) of our issued and outstanding common stock and, therefore, have significant control on the outcome of matters submitted to a vote of stockholders, including, but not limited to, electing directors and approving corporate transactions. In addition, our incurrence of additional indebtedness requires the consent of each of our current stockholders that, together with their affiliates and related funds, owns more than 17.5% of our outstanding common stock on a fully-diluted basis, and the consent of one particular stockholder is required for us to issue additional equity as long as such stockholder, together with its affiliates and related funds, owns more than 12.5% of our outstanding common stock on a fully-diluted basis. As a result, our future strategy and plans may differ materially from those of the past. Circumstances may occur in which the interests of the Significant Stockholders could be in conflict with the interests of other stockholders, and the Significant Stockholders 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 Stockholders would act in the best interests of other stockholders or that any conflicts of interest would be resolved in a manner favorable to our other stockholders.

57

•Upon our emergence from Chapter 11, the composition of our board of directors changed significantly.

Pursuant to the Plan, the composition of our board of directors (the “Board”) changed significantly. Upon emergence, our Board consisted of five directors, only one of whom, our former Chief Executive Officer, Wm. Stacy Locke, had served on the Board prior to our emergence from Chapter 11. In July 2020, Wm. Stacy Locke resigned his officer and director positions, at which time Matthew S. Porter, a member of the Board, was also appointed to serve as Interim Chief Executive Officer. Our Board currently consists of four members.

The new directors have different backgrounds, experiences and perspectives from those individuals who previously served on our Board and, thus, may have different views on the issues that will determine our future. There is no guarantee that our new Board will pursue, or will pursue in the same manner, our current strategic plans. As a result, the future strategy and our plans may differ materially from those of the past.

•Certain 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.

Upon emergence from bankruptcy, we adopted fresh start accounting in accordance with ASC Topic 852 and became a new entity for financial reporting purposes. As a result, we revalued our assets and liabilities based on our estimate of our enterprise value and the fair value of each of our assets and liabilities. These estimates, projections and enterprise valuation were prepared solely for the purpose of the bankruptcy proceedings and should not be relied upon by investors for any other purpose. At the time they were prepared, the determination of these values reflected numerous estimates and assumptions, and the fair values recorded based on these estimates may not be fully realized in periods subsequent to our emergence from bankruptcy.

The condensed consolidated financial statements after the Effective Date are not comparable with the consolidated financial statements on or before that date as indicated by the “black line” division in the financial statements and footnote tables, which emphasizes the lack of comparability between amounts presented. This will make it difficult for stockholders to assess our performance in relation to prior periods. Please see Note 2, Emergence from Voluntary Reorganization under Chapter 11, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 Financial Statements for further information.

Risks Relating 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.

Our shares of common stock are not currently listed on the OTC Market Place or on any other stock exchange. We anticipate the trading of our new common stock on the OTC market to commence again in the near future.

We cannot assure you that an active public market for our common stock will develop or, if it develops, that it will be sustained. In the absence of an active public trading market, it may be difficult to liquidate your investment in our common stock.

In the event our common stock commences trading, the trading price of our common stock 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 factors 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;

•conversion of our Convertible Notes;

•limited trading volume of our common stock; and

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

58

•In the event our common stock commences trading, the trading price of our common stock may not accurately reflect the value of our business.

Upon our emergence from Chapter 11, ownership of our common stock is highly concentrated, and there are a limited number of shares available for trading on any public market. As a result, any future reported trading prices for our common stock at any given time may not accurately reflect the underlying economic value of our business at that time. Any future reported trading prices could be higher or lower than the price a stockholder 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 in the future to create a liquid trading market that accurately reflects the underlying economic value of our business.

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

On July 17, 2020, we entered into a separation agreement with our former Chief Executive Officer, pursuant to which we issued him a restricted stock award of 90,000 shares of Common Stock under the Pioneer Energy Services Corp. 2020 Employee Incentive Plan. The shares were issued in reliance on the exemption set forth in Section 4(a)(2) of the Securities Act. We did not repurchase any common shares during the quarter ended September 30, 2020.

Upon emergence from Chapter 11 on May 29, 2020 and the effectiveness of the Plan, all previously issued and outstanding equity interests were canceled and we issued a total of 1,049,804 shares of common stock, with approximately 94.25% of such new common stock being issued to the holders of existing Prepetition Senior Notes and the remaining 5.75% being issued to the holders of existing common stock prior to the Effective Date. Upon the effectiveness of the Plan, we also issued $129.8 million aggregate principal amount of Convertible Notes, which are convertible into 75 shares of common stock per $1,000 principal amount of the Convertible Notes and which on the Effective Date were convertible into approximately 9,732,825 shares of common stock.

The shares of common stock described above were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 1145 of Chapter 11 of Title 11 of the United States Code (which generally exempts from such registration requirements the issuance of securities under a plan of reorganization). The Convertible Notes described above were exempt from registration under the Securities Act pursuant to Section 4(a)(2) thereof and Regulation D promulgated thereunder.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.    OTHER INFORMATION

None.

59

ITEM 6.    EXHIBITS

The following exhibits are filed as part of this report:

Exhibit Number		Description
3.1*	-	Certificate of Incorporation of Pioneer Energy Services Corp. (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 3.1)).
3.2*	-	Amended and Restated Bylaws of Pioneer Energy Services Corp. (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 3.2)).
4.1*	-	Specimen Common Stock Certificate (New Common Stock) (Form 8-A/A dated June 5, 2020 (File No. 1-8182, Exhibit 4.4)).
4.2*	-	Convertible Notes Indenture, dated May 29, 2020 (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 4.1)).
4.3*	-	Convertible Notes (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 4.2)).
4.4*	-	Senior Secured Notes Indenture, dated May 29, 2020 (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 4.3)).
4.5*	-	Senior Secured Notes (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 4.4)).
4.6*	-	Registration Rights Agreement, dated May 29, 2020 (Form 8-K dated May 29, 2020 (File No. 1-8182, Exhibit 10.3)).
10.1*	-	First Amendment to ABL Credit Agreement, dated as of August 7, 2020, by and among Pioneer Energy Services Corp., certain of its subsidiaries party thereto, the several lenders party thereto, and PNC Bank, National Association, as administrative agent (Form 8-K dated August 7, 2020 (File No. 1-8182, Exhibit 10.1)).
10.2*+	-	Consulting Agreement, dated as of July 17, 2020, by and between Pioneer Energy Services Corp. and Matthew S. Porter (Form 8-K dated July 22, 2020 (File No. 1-8182, Exhibit 10.1)).
10.3*+	-	Separation Agreement and Release, dated as of July 17, 2020, by and between Pioneer Energy Services Corp. and Wm. Stacy Locke (Form 8-K dated July 22, 2020 (File No. 1-8182, Exhibit 10.2)).
10.4*+	-	Extension of Consulting Agreement, dated as of October 14, 2020, by and between Pioneer Energy Services Corp. and Matthew S. Porter (Form 8-K dated October 14, 2020 (File No. 1-8182. Exhibit 10.1)).
31.1**	-	Certification by Matthew S. Porter, Interim Chief Executive Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
31.2**	-	Certification by Lorne E. Phillips, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
32.1#	-	Certification by Matthew S. Porter, Interim Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2#	-	Certification by Lorne E. Phillips, Executive Vice President and Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

60

Exhibit Number		Description
101.INS	-	Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH	-	Inline XBRL Taxonomy Extension Schema Document
101.CAL	-	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	-	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	-	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	-	Inline XBRL Taxonomy Extension Definition Linkbase Document
104	-	Cover Page Interactive Data File (embedded within the Inline XBRL document)
*	Incorporated by reference to the filing indicated.
**	Filed herewith.
#	Furnished herewith.
+	Management contract or compensatory plan or arrangement.

61

SIGNATURES

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

PIONEER ENERGY SERVICES CORP.

/s/ Lorne E. Phillips

Lorne E. Phillips

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Duly Authorized Officer)

Dated: November 13, 2020

62

EX-31.1

Document

EX-31.2

Exhibit 31.2

I, Lorne E. Phillips, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Pioneer Energy Services Corp.;

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(s) 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; and

5.The registrant’s other certifying officer(s) 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.

November 13, 2020

/s/ Lorne E. Phillips

Lorne E. Phillips

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Officer’s Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

(18 U.S.C 1350)

In connection with the Quarterly Report on Form 10-Q of Pioneer Energy Services Corp., a Texas corporation, (the “Company”) for the quarter ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Matthew S. Porter, Interim Chief Executive Officer, hereby certifies, pursuant to 18 U.S.C. Section 1350, that, to the best of his knowledge:

(1) The Report is in full compliance with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	November 13, 2020	/s/ Matthew S. Porter
		Matthew S. Porter
		Interim Chief Executive Officer

EX-32.2

Exhibit 32.2

Officer’s Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

(18 U.S.C 1350)

In connection with the Quarterly Report on Form 10-Q of Pioneer Energy Services Corp., a Texas corporation, (the “Company”) for the quarter ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Lorne E. Phillips, Executive Vice President and Chief Financial Officer, hereby certifies, pursuant to 18 U.S.C. Section 1350, that, to the best of his knowledge:

(1) The Report is in full compliance with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	November 13, 2020	/s/ Lorne E. Phillips
		Lorne E. Phillips
		Executive Vice President and Chief Financial Officer

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 06, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	1-8182
Entity Registrant Name	PIONEER ENERGY SERVICES CORP.
Entity Incorporation State	DE
Entity Tax Identification Number	74-2088619
Entity Address, Address Line One	1250 N.E. Loop 410, Suite 1000
Entity Address, City or Town	San Antonio
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78209
City Area Code	855
Local Phone Number	884-0575
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		1,138,185
Entity Central Index Key	0000320575
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 28,081	$ 24,619
Restricted cash	4,021	998
Receivables:
Trade, net of allowance for doubtful accounts	24,908	79,135
Unbilled receivables	5,846	12,590
Insurance recoveries	21,609	22,873
Other receivables	3,990	8,928
Inventory	13,297	22,453
Assets held for sale	4,295	3,447
Prepaid expenses and other current assets	4,341	7,869
Total current assets	110,388	182,912
Property and equipment, at cost	191,376	1,119,546
Less accumulated depreciation	18,979	648,376
Net property and equipment	172,397	471,170
Intangible assets, net of accumulated amortization	9,058	0
Deferred income taxes	10,433	11,540
Operating lease assets	4,664	7,264
Other noncurrent assets	12,162	1,068
Total assets	319,102	673,954
Current liabilities:
Accounts payable	15,445	32,551
Current portion of long-term debt	2,199	0
Deferred revenues	715	1,339
Accrued expenses:
Employee compensation and related costs	7,062	13,781
Insurance claims and settlements	21,608	22,873
Insurance premiums and deductibles	4,787	5,940
Interest	3,387	5,452
Other	3,759	9,645
Total current liabilities	58,962	91,581
Long-term debt, less unamortized discount and debt issuance costs	143,017	467,699
Noncurrent operating lease liabilities	3,838	5,700
Deferred income taxes	903	4,417
Other noncurrent liabilities	2,337	481
Total liabilities	209,057	569,878
Shareholders' equity:
Predecessor common stock $.10 par value; 200,000,000 shares authorized; 79,202,216 shares outstanding at December 31, 2019	0	8,008
Successor common stock, $0.001 par value; 25,000,000 shares authorized; 1,138,185 shares outstanding at September 30, 2020	1	0
Additional paid-in capital	139,931	553,210
Predecessor treasury stock, at cost; 877,047 shares at December 31, 2019	0	(5,090)
Accumulated deficit	(29,887)	(452,052)
Total shareholders' equity	110,045	104,076
Total liabilities and stockholders' equity	$ 319,102	$ 673,954

XML

Consolidated Balance Sheet (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.10
Common stock, shares authorized	25,000,000	200,000,000
Common stock, shares outstanding	1,138,185
Predecessor Common Stock, shares outstanding		79,202,216
Treasury stock, shares		877,047

XML

Condensed Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		4 Months Ended	5 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Revenues:
Revenues	$ 38,998	$ 146,398	$ 50,161	$ 142,370	$ 445,809
Costs and expenses:
Operating costs	28,893	108,059	37,636	114,047	332,614
Depreciation and amortization	14,699	22,924	19,935	35,647	68,428
General and administrative	11,626	30,485	15,839	22,047	68,271
Pre-petition restructuring charges			0	16,822	0
Impairment			388	17,853	1,378
Bad debt expense (recovery), net	(315)	196	(598)	1,209	(90)
Gain on dispositions of property and equipment, net	(3,829)	17	(4,289)	(989)	(2,184)
Total costs and expenses	51,074	161,681	68,911	206,636	468,417
Loss from operations	(12,076)	(15,283)	(18,750)	(64,266)	(22,608)
Other income (expense):
Interest expense, net of interest capitalized	(6,253)	(10,013)	(8,468)	(12,294)	(30,003)
Reorganization Items, net	(2,522)	0	(3,666)	(21,903)	0
Loss on extinguishment of debt			0	(4,215)	0
Other income (expense), net	(848)	(588)	(1,078)	(3,333)	445
Total other expense, net	(9,623)	(10,601)	(13,212)	(41,745)	(29,558)
Loss before income taxes	(21,699)	(25,884)	(31,962)	(106,011)	(52,166)
Income tax (expense) benefit	1,629	(132)	2,075	1,786	(1,909)
Net income (loss)	$ (20,070)	$ (26,016)	$ (29,887)	$ (104,225)	$ (54,075)
Loss per common share - Basic	$ (17.94)	$ (0.33)	$ (27.15)	$ (1.32)	$ (0.69)
Loss per common share - Diluted	$ (17.94)	$ (0.33)	$ (27.15)	$ (1.32)	$ (0.69)
Weighted average number of shares outstanding - Basic	1,119	78,473	1,101	78,968	78,405
Weighted average number of shares outstanding - Diluted	1,119	78,473	1,101	78,968	78,405

XML

Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Treasury [Member]	Additional Paid In Capital [Member]	Retained Earnings [Member]
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Treasury Stock, Shares			(790,000)
Common stock, shares, outstanding at Dec. 31, 2018		79,004,000
Beginning Balance, value at Dec. 31, 2018	$ 165,058	$ 7,900	$ (4,965)	$ 550,548	$ (388,425)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Net income (loss)	(15,115)				(15,115)
Purchase of treasury stock, shares			(84,000)
Purchase of treasury stock, value	(120)		$ (120)
Equity awards vested or exercised, shares		326,000
Equity awards vested or exercised, value		$ 33		(33)
Stock-based compensation expense	867			867
Common stock, shares, outstanding at Mar. 31, 2019		79,330,000
Ending Balance, value at Mar. 31, 2019	150,967	$ 7,933	(5,085)	551,382	(403,263)
Common stock, shares, outstanding at Dec. 31, 2018		79,004,000
Beginning Balance, value at Dec. 31, 2018	165,058	$ 7,900	(4,965)	550,548	(388,425)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Net income (loss)	(54,075)
Common stock, shares, outstanding at Sep. 30, 2019		80,078,000
Ending Balance, value at Sep. 30, 2019	113,148	$ 8,008	$ (5,090)	552,453	(442,223)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Treasury Stock, Shares			(874,000)
Cumulative-effect adjustment due to adoption of ASC Topic 842 | Accounting Standards Update 2016-02 [Member]	277				277
Common stock, shares, outstanding at Mar. 31, 2019		79,330,000
Beginning Balance, value at Mar. 31, 2019	150,967	$ 7,933	$ (5,085)	551,382	(403,263)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Net income (loss)	(12,944)				(12,944)
Purchase of treasury stock, shares			(3,000)
Purchase of treasury stock, value	(5)		$ (5)
Equity awards vested or exercised, shares		667,000
Equity awards vested or exercised, value		$ 67		(67)
Stock-based compensation expense	327			327
Common stock, shares, outstanding at Jun. 30, 2019		79,997,000
Ending Balance, value at Jun. 30, 2019	138,345	$ 8,000	$ (5,090)	551,642	(416,207)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Treasury Stock, Shares			(877,000)
Net income (loss)	(26,016)				(26,016)
Equity awards vested or exercised, shares		81,000
Equity awards vested or exercised, value		$ 8		(8)
Stock-based compensation expense	819			819
Common stock, shares, outstanding at Sep. 30, 2019		80,078,000
Ending Balance, value at Sep. 30, 2019	113,148	$ 8,008	$ (5,090)	552,453	(442,223)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Treasury Stock, Shares			(877,000)
Treasury Stock, Shares			(877,000)
Common stock, shares, outstanding at Dec. 31, 2019		80,079,000
Beginning Balance, value at Dec. 31, 2019	104,076	$ 8,008	$ (5,090)	553,210	(452,052)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Net income (loss)	(69,104)				(69,104)
Purchase of treasury stock, shares			(165,000)
Purchase of treasury stock, value	(7)		$ (7)
Equity awards vested or exercised, shares		542,000
Equity awards vested or exercised, value		$ 54		(54)
Stock-based compensation expense	328			328
Common stock, shares, outstanding at Mar. 31, 2020		80,621,000
Ending Balance, value at Mar. 31, 2020	35,293	$ 8,062	(5,097)	553,484	(521,156)
Common stock, shares, outstanding at Dec. 31, 2019		80,079,000
Beginning Balance, value at Dec. 31, 2019	104,076	$ 8,008	(5,090)	553,210	(452,052)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Net income (loss)	(104,225)
Common stock, shares, outstanding at May. 31, 2020		0
Ending Balance, value at May. 31, 2020	0	$ 0	$ 0	0	0
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Treasury Stock, Shares			(1,042,000)
Common stock, shares, outstanding at Mar. 31, 2020		80,621,000
Beginning Balance, value at Mar. 31, 2020	35,293	$ 8,062	$ (5,097)	553,484	(521,156)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Net income (loss)	(35,121)				(35,121)
Purchase of treasury stock, shares			(100,000)
Purchase of treasury stock, value	(1)		$ (1)
Equity awards vested or exercised, shares		363,000
Equity awards vested or exercised, value		$ 36		(36)
Equity awards vested in connection with the Plan, shares		7,946,000
Equity awards vested in connection with the Plan, value		$ 795		(795)
Stock-based compensation expense	978			978
Common stock, shares, outstanding at May. 31, 2020		0
Ending Balance, value at May. 31, 2020	0	$ 0	$ 0	0	0
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Treasury Stock, Shares			0
Issuance of Successor common stock to Prepetition Senior notes creditors and prior equity holders				18,083
Net income (loss)	(9,817)				(9,817)
Purchase of treasury stock, shares			(1,000)
Common stock, shares, outstanding at Jun. 30, 2020		1,050,000
Ending Balance, value at Jun. 30, 2020	129,142	$ 1	$ 0	138,958	(9,817)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Stock Issued During Period, Shares, New Issues		1,050,000
Stock Issued During Period, Value, New Issues	18,084	$ 1
Equity component of Convertible Notes, net of offering costs	120,875			120,875
Common stock, shares, outstanding at May. 31, 2020		0
Beginning Balance, value at May. 31, 2020	0	$ 0	0	0	0
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Net income (loss)	$ (29,887)
Common stock, shares, outstanding at Sep. 30, 2020	1,138,185	1,140,000
Ending Balance, value at Sep. 30, 2020	$ 110,045	$ 1	$ 0	139,931	(29,887)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Treasury Stock, Shares			(1,000)
Common stock, shares, outstanding at Jun. 30, 2020		1,050,000
Beginning Balance, value at Jun. 30, 2020	129,142	$ 1	$ 0	138,958	(9,817)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Net income (loss)	(20,070)				(20,070)
Equity awards vested or exercised, shares		90,000
Stock-based compensation expense	$ 973			973
Common stock, shares, outstanding at Sep. 30, 2020	1,138,185	1,140,000
Ending Balance, value at Sep. 30, 2020	$ 110,045	$ 1	$ 0	$ 139,931	$ (29,887)
Increase (Decrease) in Shareholders' Equity [Roll Forward]
Treasury Stock, Shares			(1,000)

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	4 Months Ended	5 Months Ended	9 Months Ended
	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net income (loss)	$ (29,887)	$ (104,225)	$ (54,075)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	19,935	35,647	68,428
Allowance for doubtful accounts, net of recoveries	(598)	1,209	(90)
Write-off of obsolete inventory	0	0	502
Gain on dispositions of property and equipment, net	(4,289)	(989)	(2,184)
Reorganization items, net	0	18,713	0
Stock-based compensation expense	973	552	2,013
Phantom stock compensation expense	0	0	(99)
Amortization of debt issuance costs and discount	3,194	1,084	2,335
Interest paid in-kind	907	0	0
Loss on extinguishment of debt	0	4,215	0
Impairment	388	17,853	1,378
Deferred income taxes	(1,861)	(546)	1,020
Change in other noncurrent assets	(722)	(800)	3,125
Change in other noncurrent liabilities	83	1,524	(4,163)
Changes in current assets and liabilities:
Receivables	15,647	44,041	(2,126)
Inventory	(2)	1,441	(3,652)
Prepaid expenses and other current assets	1,528	1,121	30
Accounts payable	175	(15,174)	2,346
Deferred revenues	594	(1,219)	(106)
Accrued expenses	(6,802)	(6,692)	(6,044)
Net cash provided by (used in) operating activities	(737)	(2,245)	8,638
Cash flows from investing activities:
Purchases of property and equipment	(2,384)	(10,848)	(40,543)
Proceeds from sale of property and equipment	8,303	1,665	4,778
Proceeds from insurance recoveries	155	22	641
Net cash provided by (used in) investing activities	6,074	(9,161)	(35,124)
Cash flows from financing activities:
Debt repayments	0	(175,000)	0
Proceeds from debt issuance	0	195,187	0
Proceeds from DIP Facility	0	4,000	0
Repayment of DIP Facility	0	(4,000)	0
Payments of debt issuance costs	0	(7,625)	0
Purchase of treasury stock	0	(8)	(125)
Net cash provided by (used in) financing activities	0	12,554	(125)
Net increase (decrease) in cash, cash equivalents and restricted cash	5,337	1,148	(26,611)
Beginning cash, cash equivalents, and restricted cash	26,765	25,617	54,564
Ending cash, cash equivalents, and restricted cash	32,102	26,765	27,953
Supplementary disclosure:
Interest Paid	1,010	8,105	32,773
Income tax paid	809	893	3,103
Reorganization items paid	13,678	14,947	0
Change in capital expenditure accruals	$ (141)	$ (1,924)	$ (4,267)

XML

Stock-Based Compensation Plans

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation Plans

Stock-Based Compensation Plans

Prior to the Effective Date, we had various outstanding stock option, restricted stock, and restricted stock unit awards, as well as phantom stock unit awards which were classified as liability awards under ASC Topic 718, Compensation—Stock Compensation. Upon our emergence from the Chapter 11 Cases in May 2020, all unvested equity-based incentive compensation awards vested in full and settled in shares of our new post-emergence common stock.

Pursuant to the terms of the Plan, we adopted the Pioneer Energy Services Corp. 2020 Employee Incentive Plan (the “Employee Incentive Plan”) providing for the issuance from time to time, as approved by our new board of directors, of equity and equity-based awards with respect to the Common Stock in the aggregate and on a fully-diluted basis, of up to 1,198,074 shares of Common Stock, representing approximately 114% of the shares of Common Stock issued on the Effective Date, but representing 10% of the shares of Common Stock issued on the Effective Date on a fully-diluted basis. The shares of Common Stock issued under the Employee Incentive Plan in the future will dilute all of the shares of Common Stock issued on the Effective Date and all shares of Common Stock issued upon conversion of the Convertible Notes equally.

In July 2020, we issued 90,000 shares of restricted stock to our former Chief Executive Officer in connection with his resignation.

XML

Guarantor/Non Guarantor Condensed Consolidating Financial Statements

9 Months Ended

Sep. 30, 2020

Guarantor Non-Guarantor Condensed Consolidated Financial Statements

Guarantor/Non Guarantor Condensed Consolidated Financial Statements

Guarantor/Non-Guarantor Condensed Consolidating Financial Statements

Our Prepetition Senior Notes were fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all existing 100% owned domestic subsidiaries, except for Pioneer Services Holdings, LLC. The Prepetition Senior Notes, the guarantees, and the Prepetition Senior Notes Indenture were terminated on the Effective Date pursuant to the Plan. See Note 2, Emergence from Voluntary Reorganization under Chapter 11, for more information.

Our Senior Secured Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by all existing 100% owned domestic subsidiaries, except for Pioneer Services Holdings, LLC.

The subsidiaries that generally operate our non-U.S. business concentrated in Colombia do not guarantee our Senior Secured Notes and did not guarantee our Prepetition Senior Notes. The non-guarantor subsidiaries do not have any payment obligations under the Senior Secured Notes, the guarantees or the Senior Secured Notes Indenture.

In the event of a bankruptcy, liquidation or reorganization of any non-guarantor subsidiary, such non-guarantor subsidiary would be obligated to pay the holders of its debt and other liabilities, including its trade creditors, before it would be able to distribute any of its assets to us. As of September 30, 2020, there were no restrictions on the ability of subsidiary guarantors to transfer funds to the parent company.

As a result of the guarantee arrangements, we are presenting the following Predecessor and Successor condensed consolidating balance sheets, statements of operations and statements of cash flows of the issuer, the guarantor subsidiaries, and the non-guarantor subsidiaries.

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(unaudited, in thousands)

	Successor
	September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	22,616	$	—	$	5,465	$	—	$	28,081
Restricted cash	4,021		—		—		—		4,021
Receivables, net of allowance	1,110		46,252		8,991		—		56,353
Intercompany receivable (payable)	(3,131)		31,141		(28,010)		—		—
Inventory	—		5,636		7,661		—		13,297
Assets held for sale	—		4,295		—		—		4,295
Prepaid expenses and other current assets	2,365		1,319		657		—		4,341
Total current assets	26,981		88,643		(5,236)		—		110,388
Net property and equipment	402		149,982		22,013		—		172,397
Investment in subsidiaries	235,479		33,817		—		(269,296)		—
Intangible assets, net of accumulated amortization	1,902		7,156		—		—		9,058
Deferred income taxes	—		—		10,433		—		10,433
Operating lease assets	2,687		1,977		—		—		4,664
Other noncurrent assets	2,212		52		9,898		—		12,162
Total assets	$	269,663	$	281,627	$	37,108	$	(269,296)	$	319,102
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,725	$	8,608	$	2,112	$	—	$	15,445
Current portion of long-term debt	2,199		—		—		—		2,199
Deferred revenues	—		205		510		—		715
Accrued expenses	6,915		33,019		669		—		40,603
Total current liabilities	13,839		41,832		3,291		—		58,962
Long-term debt, less unamortized discount and debt issuance costs	143,017		—		—		—		143,017
Noncurrent operating lease liabilities	2,349		1,489		—		—		3,838
Deferred income taxes	171		732		—		—		903
Other noncurrent liabilities	242		2,095		—		—		2,337
Total liabilities	159,618		46,148		3,291		—		209,057
Total stockholders’ equity	110,045		235,479		33,817		(269,296)		110,045
Total liabilities and stockholders’ equity	$	269,663	$	281,627	$	37,108	$	(269,296)	$	319,102
	Predecessor
	December 31, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	14,461	$	—	$	10,158	$	—	$	24,619
Restricted cash	998		—		—		—		998
Receivables, net of allowance	107		92,394		30,908		117		123,526
Intercompany receivable (payable)	(28,664)		64,485		(35,821)		—		—
Inventory	—		10,325		12,128		—		22,453
Assets held for sale	—		3,447		—		—		3,447
Prepaid expenses and other current assets	2,849		4,122		898		—		7,869
Total current assets	(10,249)		174,773		18,271		117		182,912
Net property and equipment	2,374		441,567		27,229		—		471,170
Investment in subsidiaries	547,123		47,953		—		(595,076)		—
Deferred income taxes	44,224		—		11,540		(44,224)		11,540
Operating lease assets	3,114		3,581		569		—		7,264
Other noncurrent assets	506		562		—		—		1,068
Total assets	$	587,092	$	668,436	$	57,609	$	(639,183)	$	673,954
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,811	$	24,436	$	6,304	$	—	$	32,551
Deferred revenues	—		513		826		—		1,339
Accrued expenses	10,570		44,893		2,111		117		57,691
Total current liabilities	12,381		69,842		9,241		117		91,581
Long-term debt, less unamortized discount and debt issuance costs	467,699		—		—		—		467,699
Noncurrent operating lease liabilities	2,749		2,536		415		—		5,700
Deferred income taxes	—		48,641		—		(44,224)		4,417
Other noncurrent liabilities	187		294		—		—		481
Total liabilities not subject to compromise	483,016		121,313		9,656		(44,107)		569,878
Total stockholders’ equity	104,076		547,123		47,953		(595,076)		104,076
Total liabilities and stockholders’ equity	$	587,092	$	668,436	$	57,609	$	(639,183)	$	673,954

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(unaudited, in thousands)

	Successor
	Three Months Ended September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	34,937	$	4,061	$	—	$	38,998
Costs and expenses:
Operating costs	—		25,443		3,450		—		28,893
Depreciation and amortization	103		11,354		3,242		—		14,699
General and administrative	7,672		3,711		438		(195)		11,626
Intercompany leasing	—		(1,215)		1,215		—		—
Bad debt expense (recovery), net	—		(315)		—		—		(315)
Loss (gain) on dispositions of property and equipment, net	(14)		(3,822)		7		—		(3,829)
Total costs and expenses	7,761		35,156		8,352		(195)		51,074
Income (loss) from operations	(7,761)		(219)		(4,291)		195		(12,076)
Other income (expense):
Equity in earnings of subsidiaries	(3,589)		(3,639)		—		7,228		—
Interest expense	(6,261)		—		8		—		(6,253)
Reorganization items, net	(2,522)		—		—		—		(2,522)
Other income	18		272		(943)		(195)		(848)
Total other income (expense), net	(12,354)		(3,367)		(935)		7,033		(9,623)
Income (loss) before income taxes	(20,115)		(3,586)		(5,226)		7,228		(21,699)
Income tax (expense) benefit 1	45		(3)		1,587		—		1,629
Net income (loss)	$	(20,070)	$	(3,589)	$	(3,639)	$	7,228	$	(20,070)
	Predecessor
	Three months ended September 30, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	124,781	$	21,617	$	—	$	146,398
Costs and expenses:
Operating costs	—		92,216		15,843		—		108,059
Depreciation and amortization	219		21,193		1,512		—		22,924
General and administrative	15,979		13,640		1,001		(135)		30,485
Intercompany leasing	—		(1,215)		1,215		—		—
Bad debt expense, net of recovery	—		196		—		—		196
Loss (gain) on dispositions of property and equipment, net	—		28		(11)		—		17
Total costs and expenses	16,198		126,058		19,560		(135)		161,681
Income (loss) from operations	(16,198)		(1,277)		2,057		135		(15,283)
Other income (expense):
Equity in earnings of subsidiaries	(640)		1,164		—		(524)		—
Interest expense	(10,020)		3		4		—		(10,013)
Other income (expense)	86		236		(775)		(135)		(588)
Total other income (expense), net	(10,574)		1,403		(771)		(659)		(10,601)
Income (loss) before income taxes	(26,772)		126		1,286		(524)		(25,884)
Income tax (expense) benefit 1	756		(766)		(122)		—		(132)
Net income (loss)	$	(26,016)	$	(640)	$	1,164	$	(524)	$	(26,016)
1 The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(unaudited, in thousands)

	Successor
	Four Months Ended September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	45,272	$	4,889	$	—	$	50,161
Costs and expenses:
Operating costs	—		33,123		4,513		—		37,636
Depreciation and amortization	227		15,390		4,318		—		19,935
General and administrative	10,101		5,414		584		(260)		15,839
Intercompany leasing	—		(1,620)		1,620		—		—
Impairment	—		388		—		—		388
Bad debt recovery, net of expense	—		(598)		—		—		(598)
Loss (gain) on dispositions of property and equipment, net	(14)		(4,282)		7		—		(4,289)
Total costs and expenses	10,314		47,815		11,042		(260)		68,911
Loss from operations	(10,314)		(2,543)		(6,153)		260		(18,750)
Other income (expense):
Equity in earnings of subsidiaries	(7,901)		(5,295)		—		13,196		—
Interest expense	(8,478)		—		10		—		(8,468)
Reorganization items, net	(3,263)		(403)		—		—		(3,666)
Other income (expense)	24		361		(1,203)		(260)		(1,078)
Total other expense, net	(19,618)		(5,337)		(1,193)		12,936		(13,212)
Loss before income taxes	(29,932)		(7,880)		(7,346)		13,196		(31,962)
Income tax (expense) benefit 1	45		(21)		2,051		—		2,075
Net income (loss)	$	(29,887)	$	(7,901)	$	(5,295)	$	13,196	$	(29,887)
	Predecessor
	Five Months Ended May 31, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	126,442	$	15,928	$	—	$	142,370
Costs and expenses:
Operating costs	—		100,372		13,675		—		114,047
Depreciation and amortization	374		33,129		2,144		—		35,647
General and administrative	8,865		12,489		918		(225)		22,047
Pre-petition restructuring charges	16,822		—		—		—		16,822
Intercompany leasing	—		(2,025)		2,025		—		—
Impairment	—		17,853		—		—		17,853
Bad debt expense, net of recovery	—		1,209		—		—		1,209
Loss (gain) on dispositions of property and equipment, net	3		(992)		—		—		(989)
Total costs and expenses	26,064		162,035		18,762		(225)		206,636
Loss from operations	(26,064)		(35,593)		(2,834)		225		(64,266)
Other income (expense):
Equity in earnings of subsidiaries	(227,497)		(8,594)		—		236,091		—
Interest expense	(12,315)		—		21		—		(12,294)
Reorganization items, net	210,346		(231,420)		(829)		—		(21,903)
Loss on extinguishment of debt	(4,215)		—		—		—		(4,215)
Other income (expense)	(4)		394		(3,498)		(225)		(3,333)
Total other expense, net	(33,685)		(239,620)		(4,306)		235,866		(41,745)
Loss before income taxes	(59,749)		(275,213)		(7,140)		236,091		(106,011)
Income tax (expense) benefit 1	(44,476)		47,716		(1,454)		—		1,786
Net income (loss)	$	(104,225)	$	(227,497)	$	(8,594)	$	236,091	$	(104,225)

	Predecessor
	Nine months ended September 30, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	377,127	$	68,682	$	—	$	445,809
Costs and expenses:
Operating costs	—		281,735		50,879		—		332,614
Depreciation and amortization	709		63,491		4,228		—		68,428
General and administrative	30,882		35,665		2,129		(405)		68,271
Intercompany leasing	—		(3,645)		3,645		—		—
Impairment	—		1,378		—		—		1,378
Bad debt recovery, net of expense	—		(90)		—		—		(90)
Gain on dispositions of property and equipment, net	—		(2,077)		(107)		—		(2,184)
Total costs and expenses	31,591		376,457		60,774		(405)		468,417
Income (loss) from operations	(31,591)		670		7,908		405		(22,608)
Other income (expense):
Equity in earnings of subsidiaries	5,433		7,059		—		(12,492)		—
Interest expense	(29,953)		(12)		(38)		—		(30,003)
Other income (expense)	383		903		(436)		(405)		445
Total other income (expense), net	(24,137)		7,950		(474)		(12,897)		(29,558)
Income (loss) before income taxes	(55,728)		8,620		7,434		(12,492)		(52,166)
Income tax (expense) benefit 1	1,653		(3,187)		(375)		—		(1,909)
Net income (loss)	$	(54,075)	$	5,433	$	7,059	$	(12,492)	$	(54,075)
1 The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Successor
	Four Months Ended September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities	$	(16,592)	$	20,169	$	(4,314)	$	—	$	(737)
Cash flows from investing activities:
Purchases of property and equipment	(13)		(1,991)		(380)		—		(2,384)
Proceeds from sale of property and equipment	18		8,271		14		—		8,303
Proceeds from insurance recoveries	—		155		—		—		155
	5		6,435		(366)		—		6,074
Cash flows from financing activities:
Intercompany contributions/distributions	26,617		(26,604)		(13)		—		—
	26,617		(26,604)		(13)		—		—
Net decrease in cash, cash equivalents and restricted cash	10,030		—		(4,693)		—		5,337
Beginning cash, cash equivalents and restricted cash	16,607		—		10,158		—		26,765
Ending cash, cash equivalents and restricted cash	$	26,637	$	—	$	5,465	$	—	$	32,102
	Predecessor
	Five Months Ended May 31, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities	$	(127,760)	$	132,354	$	(6,839)	$	—	$	(2,245)
Cash flows from investing activities:
Purchases of property and equipment	(569)		(8,755)		(1,524)		—		(10,848)
Proceeds from sale of property and equipment	—		1,819		—		(154)		1,665
Proceeds from insurance recoveries	—		22		—		—		22
	(569)		(6,914)		(1,524)		(154)		(9,161)
Cash flows from financing activities:
Debt repayments	(175,000)		—		—		—		(175,000)
Proceeds from debt issuance	195,187		—		—		—		195,187
Proceeds from DIP Facility	4,000		—		—		—		4,000
Repayment of DIP Facility	(4,000)		—		—		—		(4,000)
Payments of debt issuance costs	(7,625)		—		—		—		(7,625)
Purchase of treasury stock	(8)		—		—		—		(8)
Intercompany contributions/distributions	116,923		(125,440)		8,363		154		—
	129,477		(125,440)		8,363		154		12,554
Net decrease in cash, cash equivalents and restricted cash	1,148		—		—		—		1,148
Beginning cash, cash equivalents and restricted cash	15,459		—		10,158		—		25,617
Ending cash, cash equivalents and restricted cash	$	16,607	$	—	$	10,158	$	—	$	26,765
	Predecessor
	Nine months ended September 30, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities	$	(38,177)	$	41,854	$	4,961	$	—	$	8,638
Cash flows from investing activities:
Purchases of property and equipment	(637)		(36,644)		(3,262)		—		(40,543)
Proceeds from sale of property and equipment	—		4,688		90		—		4,778
Proceeds from insurance recoveries	—		641		—		—		641
	(637)		(31,315)		(3,172)		—		(35,124)
Cash flows from financing activities:
Purchase of treasury stock	(125)		—		—		—		(125)
Intercompany contributions/distributions	10,784		(10,539)		(245)		—		—
	10,659		(10,539)		(245)		—		(125)
Net increase (decrease) in cash, cash equivalents and restricted cash	(28,155)		—		1,544		—		(26,611)
Beginning cash, cash equivalents and restricted cash	51,348		—		3,216		—		54,564
Ending cash, cash equivalents and restricted cash	$	23,193	$	—	$	4,760	$	—	$	27,953

XML

Guarantor/Non Guarantor Condensed Consolidating Financial Statements (Tables)

9 Months Ended

Sep. 30, 2020

Guarantor Non Guarantor Condensed Consolidated Financial Statements [Abstract]

Condensed Consolidating Balance Sheets

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(unaudited, in thousands)

	Successor
	September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	22,616	$	—	$	5,465	$	—	$	28,081
Restricted cash	4,021		—		—		—		4,021
Receivables, net of allowance	1,110		46,252		8,991		—		56,353
Intercompany receivable (payable)	(3,131)		31,141		(28,010)		—		—
Inventory	—		5,636		7,661		—		13,297
Assets held for sale	—		4,295		—		—		4,295
Prepaid expenses and other current assets	2,365		1,319		657		—		4,341
Total current assets	26,981		88,643		(5,236)		—		110,388
Net property and equipment	402		149,982		22,013		—		172,397
Investment in subsidiaries	235,479		33,817		—		(269,296)		—
Intangible assets, net of accumulated amortization	1,902		7,156		—		—		9,058
Deferred income taxes	—		—		10,433		—		10,433
Operating lease assets	2,687		1,977		—		—		4,664
Other noncurrent assets	2,212		52		9,898		—		12,162
Total assets	$	269,663	$	281,627	$	37,108	$	(269,296)	$	319,102
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,725	$	8,608	$	2,112	$	—	$	15,445
Current portion of long-term debt	2,199		—		—		—		2,199
Deferred revenues	—		205		510		—		715
Accrued expenses	6,915		33,019		669		—		40,603
Total current liabilities	13,839		41,832		3,291		—		58,962
Long-term debt, less unamortized discount and debt issuance costs	143,017		—		—		—		143,017
Noncurrent operating lease liabilities	2,349		1,489		—		—		3,838
Deferred income taxes	171		732		—		—		903
Other noncurrent liabilities	242		2,095		—		—		2,337
Total liabilities	159,618		46,148		3,291		—		209,057
Total stockholders’ equity	110,045		235,479		33,817		(269,296)		110,045
Total liabilities and stockholders’ equity	$	269,663	$	281,627	$	37,108	$	(269,296)	$	319,102
	Predecessor
	December 31, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	14,461	$	—	$	10,158	$	—	$	24,619
Restricted cash	998		—		—		—		998
Receivables, net of allowance	107		92,394		30,908		117		123,526
Intercompany receivable (payable)	(28,664)		64,485		(35,821)		—		—
Inventory	—		10,325		12,128		—		22,453
Assets held for sale	—		3,447		—		—		3,447
Prepaid expenses and other current assets	2,849		4,122		898		—		7,869
Total current assets	(10,249)		174,773		18,271		117		182,912
Net property and equipment	2,374		441,567		27,229		—		471,170
Investment in subsidiaries	547,123		47,953		—		(595,076)		—
Deferred income taxes	44,224		—		11,540		(44,224)		11,540
Operating lease assets	3,114		3,581		569		—		7,264
Other noncurrent assets	506		562		—		—		1,068
Total assets	$	587,092	$	668,436	$	57,609	$	(639,183)	$	673,954
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,811	$	24,436	$	6,304	$	—	$	32,551
Deferred revenues	—		513		826		—		1,339
Accrued expenses	10,570		44,893		2,111		117		57,691
Total current liabilities	12,381		69,842		9,241		117		91,581
Long-term debt, less unamortized discount and debt issuance costs	467,699		—		—		—		467,699
Noncurrent operating lease liabilities	2,749		2,536		415		—		5,700
Deferred income taxes	—		48,641		—		(44,224)		4,417
Other noncurrent liabilities	187		294		—		—		481
Total liabilities not subject to compromise	483,016		121,313		9,656		(44,107)		569,878
Total stockholders’ equity	104,076		547,123		47,953		(595,076)		104,076
Total liabilities and stockholders’ equity	$	587,092	$	668,436	$	57,609	$	(639,183)	$	673,954

Condensed Consolidating Statements of Operations

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(unaudited, in thousands)

	Successor
	Three Months Ended September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	34,937	$	4,061	$	—	$	38,998
Costs and expenses:
Operating costs	—		25,443		3,450		—		28,893
Depreciation and amortization	103		11,354		3,242		—		14,699
General and administrative	7,672		3,711		438		(195)		11,626
Intercompany leasing	—		(1,215)		1,215		—		—
Bad debt expense (recovery), net	—		(315)		—		—		(315)
Loss (gain) on dispositions of property and equipment, net	(14)		(3,822)		7		—		(3,829)
Total costs and expenses	7,761		35,156		8,352		(195)		51,074
Income (loss) from operations	(7,761)		(219)		(4,291)		195		(12,076)
Other income (expense):
Equity in earnings of subsidiaries	(3,589)		(3,639)		—		7,228		—
Interest expense	(6,261)		—		8		—		(6,253)
Reorganization items, net	(2,522)		—		—		—		(2,522)
Other income	18		272		(943)		(195)		(848)
Total other income (expense), net	(12,354)		(3,367)		(935)		7,033		(9,623)
Income (loss) before income taxes	(20,115)		(3,586)		(5,226)		7,228		(21,699)
Income tax (expense) benefit 1	45		(3)		1,587		—		1,629
Net income (loss)	$	(20,070)	$	(3,589)	$	(3,639)	$	7,228	$	(20,070)
	Predecessor
	Three months ended September 30, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	124,781	$	21,617	$	—	$	146,398
Costs and expenses:
Operating costs	—		92,216		15,843		—		108,059
Depreciation and amortization	219		21,193		1,512		—		22,924
General and administrative	15,979		13,640		1,001		(135)		30,485
Intercompany leasing	—		(1,215)		1,215		—		—
Bad debt expense, net of recovery	—		196		—		—		196
Loss (gain) on dispositions of property and equipment, net	—		28		(11)		—		17
Total costs and expenses	16,198		126,058		19,560		(135)		161,681
Income (loss) from operations	(16,198)		(1,277)		2,057		135		(15,283)
Other income (expense):
Equity in earnings of subsidiaries	(640)		1,164		—		(524)		—
Interest expense	(10,020)		3		4		—		(10,013)
Other income (expense)	86		236		(775)		(135)		(588)
Total other income (expense), net	(10,574)		1,403		(771)		(659)		(10,601)
Income (loss) before income taxes	(26,772)		126		1,286		(524)		(25,884)
Income tax (expense) benefit 1	756		(766)		(122)		—		(132)
Net income (loss)	$	(26,016)	$	(640)	$	1,164	$	(524)	$	(26,016)
1 The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(unaudited, in thousands)

	Successor
	Four Months Ended September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	45,272	$	4,889	$	—	$	50,161
Costs and expenses:
Operating costs	—		33,123		4,513		—		37,636
Depreciation and amortization	227		15,390		4,318		—		19,935
General and administrative	10,101		5,414		584		(260)		15,839
Intercompany leasing	—		(1,620)		1,620		—		—
Impairment	—		388		—		—		388
Bad debt recovery, net of expense	—		(598)		—		—		(598)
Loss (gain) on dispositions of property and equipment, net	(14)		(4,282)		7		—		(4,289)
Total costs and expenses	10,314		47,815		11,042		(260)		68,911
Loss from operations	(10,314)		(2,543)		(6,153)		260		(18,750)
Other income (expense):
Equity in earnings of subsidiaries	(7,901)		(5,295)		—		13,196		—
Interest expense	(8,478)		—		10		—		(8,468)
Reorganization items, net	(3,263)		(403)		—		—		(3,666)
Other income (expense)	24		361		(1,203)		(260)		(1,078)
Total other expense, net	(19,618)		(5,337)		(1,193)		12,936		(13,212)
Loss before income taxes	(29,932)		(7,880)		(7,346)		13,196		(31,962)
Income tax (expense) benefit 1	45		(21)		2,051		—		2,075
Net income (loss)	$	(29,887)	$	(7,901)	$	(5,295)	$	13,196	$	(29,887)
	Predecessor
	Five Months Ended May 31, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	126,442	$	15,928	$	—	$	142,370
Costs and expenses:
Operating costs	—		100,372		13,675		—		114,047
Depreciation and amortization	374		33,129		2,144		—		35,647
General and administrative	8,865		12,489		918		(225)		22,047
Pre-petition restructuring charges	16,822		—		—		—		16,822
Intercompany leasing	—		(2,025)		2,025		—		—
Impairment	—		17,853		—		—		17,853
Bad debt expense, net of recovery	—		1,209		—		—		1,209
Loss (gain) on dispositions of property and equipment, net	3		(992)		—		—		(989)
Total costs and expenses	26,064		162,035		18,762		(225)		206,636
Loss from operations	(26,064)		(35,593)		(2,834)		225		(64,266)
Other income (expense):
Equity in earnings of subsidiaries	(227,497)		(8,594)		—		236,091		—
Interest expense	(12,315)		—		21		—		(12,294)
Reorganization items, net	210,346		(231,420)		(829)		—		(21,903)
Loss on extinguishment of debt	(4,215)		—		—		—		(4,215)
Other income (expense)	(4)		394		(3,498)		(225)		(3,333)
Total other expense, net	(33,685)		(239,620)		(4,306)		235,866		(41,745)
Loss before income taxes	(59,749)		(275,213)		(7,140)		236,091		(106,011)
Income tax (expense) benefit 1	(44,476)		47,716		(1,454)		—		1,786
Net income (loss)	$	(104,225)	$	(227,497)	$	(8,594)	$	236,091	$	(104,225)

	Predecessor
	Nine months ended September 30, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—	$	377,127	$	68,682	$	—	$	445,809
Costs and expenses:
Operating costs	—		281,735		50,879		—		332,614
Depreciation and amortization	709		63,491		4,228		—		68,428
General and administrative	30,882		35,665		2,129		(405)		68,271
Intercompany leasing	—		(3,645)		3,645		—		—
Impairment	—		1,378		—		—		1,378
Bad debt recovery, net of expense	—		(90)		—		—		(90)
Gain on dispositions of property and equipment, net	—		(2,077)		(107)		—		(2,184)
Total costs and expenses	31,591		376,457		60,774		(405)		468,417
Income (loss) from operations	(31,591)		670		7,908		405		(22,608)
Other income (expense):
Equity in earnings of subsidiaries	5,433		7,059		—		(12,492)		—
Interest expense	(29,953)		(12)		(38)		—		(30,003)
Other income (expense)	383		903		(436)		(405)		445
Total other income (expense), net	(24,137)		7,950		(474)		(12,897)		(29,558)
Income (loss) before income taxes	(55,728)		8,620		7,434		(12,492)		(52,166)
Income tax (expense) benefit 1	1,653		(3,187)		(375)		—		(1,909)
Net income (loss)	$	(54,075)	$	5,433	$	7,059	$	(12,492)	$	(54,075)
1 The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.

Condensed Consolidating Statements of Cash Flows

PIONEER ENERGY SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Successor
	Four Months Ended September 30, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities	$	(16,592)	$	20,169	$	(4,314)	$	—	$	(737)
Cash flows from investing activities:
Purchases of property and equipment	(13)		(1,991)		(380)		—		(2,384)
Proceeds from sale of property and equipment	18		8,271		14		—		8,303
Proceeds from insurance recoveries	—		155		—		—		155
	5		6,435		(366)		—		6,074
Cash flows from financing activities:
Intercompany contributions/distributions	26,617		(26,604)		(13)		—		—
	26,617		(26,604)		(13)		—		—
Net decrease in cash, cash equivalents and restricted cash	10,030		—		(4,693)		—		5,337
Beginning cash, cash equivalents and restricted cash	16,607		—		10,158		—		26,765
Ending cash, cash equivalents and restricted cash	$	26,637	$	—	$	5,465	$	—	$	32,102
	Predecessor
	Five Months Ended May 31, 2020
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities	$	(127,760)	$	132,354	$	(6,839)	$	—	$	(2,245)
Cash flows from investing activities:
Purchases of property and equipment	(569)		(8,755)		(1,524)		—		(10,848)
Proceeds from sale of property and equipment	—		1,819		—		(154)		1,665
Proceeds from insurance recoveries	—		22		—		—		22
	(569)		(6,914)		(1,524)		(154)		(9,161)
Cash flows from financing activities:
Debt repayments	(175,000)		—		—		—		(175,000)
Proceeds from debt issuance	195,187		—		—		—		195,187
Proceeds from DIP Facility	4,000		—		—		—		4,000
Repayment of DIP Facility	(4,000)		—		—		—		(4,000)
Payments of debt issuance costs	(7,625)		—		—		—		(7,625)
Purchase of treasury stock	(8)		—		—		—		(8)
Intercompany contributions/distributions	116,923		(125,440)		8,363		154		—
	129,477		(125,440)		8,363		154		12,554
Net decrease in cash, cash equivalents and restricted cash	1,148		—		—		—		1,148
Beginning cash, cash equivalents and restricted cash	15,459		—		10,158		—		25,617
Ending cash, cash equivalents and restricted cash	$	16,607	$	—	$	10,158	$	—	$	26,765
	Predecessor
	Nine months ended September 30, 2019
	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash flows from operating activities	$	(38,177)	$	41,854	$	4,961	$	—	$	8,638
Cash flows from investing activities:
Purchases of property and equipment	(637)		(36,644)		(3,262)		—		(40,543)
Proceeds from sale of property and equipment	—		4,688		90		—		4,778
Proceeds from insurance recoveries	—		641		—		—		641
	(637)		(31,315)		(3,172)		—		(35,124)
Cash flows from financing activities:
Purchase of treasury stock	(125)		—		—		—		(125)
Intercompany contributions/distributions	10,784		(10,539)		(245)		—		—
	10,659		(10,539)		(245)		—		(125)
Net increase (decrease) in cash, cash equivalents and restricted cash	(28,155)		—		1,544		—		(26,611)
Beginning cash, cash equivalents and restricted cash	51,348		—		3,216		—		54,564
Ending cash, cash equivalents and restricted cash	$	23,193	$	—	$	4,760	$	—	$	27,953

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Guarantor/Non Guarantor Condensed Consolidating Financial Statements Narrative (Details) - Senior Notes [Member]	May 29, 2020	Mar. 18, 2014
Prepetition Senior Notes [Member]
Debt Instrument Domestic Subsidiaries That Secure Debt Obligations, Ownership Percentage		100.00%
Senior Notes [Member]
Debt Instrument Domestic Subsidiaries That Secure Debt Obligations, Ownership Percentage	100.00%

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Guarantor/Non Guarantor Condensed Consolidating Financial Statements (Balance Sheet)) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 28,081	$ 24,619
Restricted cash	4,021	998
Receivables, net of allowance	56,353	123,526
Intercompany receivable (payable)	0	0
Inventory	13,297	22,453
Assets held for sale	4,295	3,447
Prepaid expenses and other current assets	4,341	7,869
Total current assets	110,388	182,912
Net property and equipment	172,397	471,170
Investments in subsidiaries	0	0
Intangible assets, net of accumulated amortization	9,058	0
Deferred income taxes	10,433	11,540
Operating lease assets	4,664	7,264
Other noncurrent assets	12,162	1,068
Total assets	319,102	673,954
Current liabilities:
Accounts payable	15,445	32,551
Current portion of long-term debt	2,199	0
Deferred revenues	715	1,339
Accrued expenses	40,603	57,691
Total current liabilities	58,962	91,581
Long-term debt, less unamortized discount and debt issuance costs	143,017	467,699
Noncurrent operating lease liabilities	3,838	5,700
Deferred income taxes	903	4,417
Other noncurrent liabilities	2,337	481
Total liabilities	209,057	569,878
Total shareholders' equity	110,045	104,076
Total liabilities and stockholders' equity	319,102	673,954
Eliminations [Member]
Current assets:
Cash and cash equivalents	0	0
Restricted cash	0	0
Receivables, net of allowance	0	117
Intercompany receivable (payable)	0	0
Inventory	0	0
Assets held for sale	0	0
Prepaid expenses and other current assets	0	0
Total current assets	0	117
Net property and equipment	0	0
Investments in subsidiaries	(269,296)	(595,076)
Intangible assets, net of accumulated amortization	0
Deferred income taxes	0	(44,224)
Operating lease assets	0	0
Other noncurrent assets	0	0
Total assets	(269,296)	(639,183)
Current liabilities:
Accounts payable	0	0
Current portion of long-term debt	0
Deferred revenues	0	0
Accrued expenses	0	117
Total current liabilities	0	117
Long-term debt, less unamortized discount and debt issuance costs	0	0
Noncurrent operating lease liabilities	0	0
Deferred income taxes	0	(44,224)
Other noncurrent liabilities	0	0
Total liabilities	0	(44,107)
Total shareholders' equity	(269,296)	(595,076)
Total liabilities and stockholders' equity	(269,296)	(639,183)
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	0	0
Restricted cash	0	0
Receivables, net of allowance	46,252	92,394
Intercompany receivable (payable)	31,141	64,485
Inventory	5,636	10,325
Assets held for sale	4,295	3,447
Prepaid expenses and other current assets	1,319	4,122
Total current assets	88,643	174,773
Net property and equipment	149,982	441,567
Investments in subsidiaries	33,817	47,953
Intangible assets, net of accumulated amortization	7,156
Deferred income taxes	0	0
Operating lease assets	1,977	3,581
Other noncurrent assets	52	562
Total assets	281,627	668,436
Current liabilities:
Accounts payable	8,608	24,436
Current portion of long-term debt	0
Deferred revenues	205	513
Accrued expenses	33,019	44,893
Total current liabilities	41,832	69,842
Long-term debt, less unamortized discount and debt issuance costs	0	0
Noncurrent operating lease liabilities	1,489	2,536
Deferred income taxes	732	48,641
Other noncurrent liabilities	2,095	294
Total liabilities	46,148	121,313
Total shareholders' equity	235,479	547,123
Total liabilities and stockholders' equity	281,627	668,436
Non-Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	5,465	10,158
Restricted cash	0	0
Receivables, net of allowance	8,991	30,908
Intercompany receivable (payable)	(28,010)	(35,821)
Inventory	7,661	12,128
Assets held for sale	0	0
Prepaid expenses and other current assets	657	898
Total current assets	(5,236)	18,271
Net property and equipment	22,013	27,229
Investments in subsidiaries	0	0
Intangible assets, net of accumulated amortization	0
Deferred income taxes	10,433	11,540
Operating lease assets	0	569
Other noncurrent assets	9,898	0
Total assets	37,108	57,609
Current liabilities:
Accounts payable	2,112	6,304
Current portion of long-term debt	0
Deferred revenues	510	826
Accrued expenses	669	2,111
Total current liabilities	3,291	9,241
Long-term debt, less unamortized discount and debt issuance costs	0	0
Noncurrent operating lease liabilities	0	415
Deferred income taxes	0	0
Other noncurrent liabilities	0	0
Total liabilities	3,291	9,656
Total shareholders' equity	33,817	47,953
Total liabilities and stockholders' equity	37,108	57,609
Parent [Member]
Current assets:
Cash and cash equivalents	22,616	14,461
Restricted cash	4,021	998
Receivables, net of allowance	1,110	107
Intercompany receivable (payable)	(3,131)	(28,664)
Inventory	0	0
Assets held for sale	0	0
Prepaid expenses and other current assets	2,365	2,849
Total current assets	26,981	(10,249)
Net property and equipment	402	2,374
Investments in subsidiaries	235,479	547,123
Intangible assets, net of accumulated amortization	1,902
Deferred income taxes	0	44,224
Operating lease assets	2,687	3,114
Other noncurrent assets	2,212	506
Total assets	269,663	587,092
Current liabilities:
Accounts payable	4,725	1,811
Current portion of long-term debt	2,199
Deferred revenues	0	0
Accrued expenses	6,915	10,570
Total current liabilities	13,839	12,381
Long-term debt, less unamortized discount and debt issuance costs	143,017	467,699
Noncurrent operating lease liabilities	2,349	2,749
Deferred income taxes	171	0
Other noncurrent liabilities	242	187
Total liabilities	159,618	483,016
Total shareholders' equity	110,045	104,076
Total liabilities and stockholders' equity	$ 269,663	$ 587,092

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Guarantor/Non Guarantor Condensed Consolidating Financial Statements (Statements of Operations) (Details) - USD ($) $ in Thousands	3 Months Ended		4 Months Ended	5 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Condensed Financial Statements, Captions [Line Items]
Revenues	$ 38,998	$ 146,398	$ 50,161	$ 142,370	$ 445,809
Costs and expenses:
Operating costs	28,893	108,059	37,636	114,047	332,614
Depreciation and amortization	14,699	22,924	19,935	35,647	68,428
General and administrative	11,626	30,485	15,839	22,047	68,271
Pre-petition restructuring charges			0	16,822	0
Intercompany leasing	0	0	0	0	0
Impairment			388	17,853	1,378
Bad debt expense (recovery), net	(315)	196	(598)	1,209	(90)
Loss (gain) on dispositions of property and equipment, net	(3,829)	17	(4,289)	(989)	(2,184)
Total costs and expenses	51,074	161,681	68,911	206,636	468,417
Income (loss) from operations	(12,076)	(15,283)	(18,750)	(64,266)	(22,608)
Other income (expense):
Equity in earnings of subsidiaries	0	0	0	0	0
Interest expense	(6,253)	(10,013)	(8,468)	(12,294)	(30,003)
Reorganization Items, net	(2,522)	0	(3,666)	(21,903)	0
Loss on extinguishment of debt			0	4,215	0
Other income (expense), net	(848)	(588)	(1,078)	(3,333)	445
Total other income (expense), net	(9,623)	(10,601)	(13,212)	(41,745)	(29,558)
Income (loss) before income taxes	(21,699)	(25,884)	(31,962)	(106,011)	(52,166)
Income tax (expense) benefit	1,629	(132)	2,075	1,786	(1,909)
Net income (loss)	(20,070)	(26,016)	(29,887)	(104,225)	(54,075)
Eliminations [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	0	0	0	0	0
Costs and expenses:
Operating costs	0	0	0	0	0
Depreciation and amortization	0	0	0	0	0
General and administrative	(195)	(135)	(260)	(225)	(405)
Pre-petition restructuring charges				0
Intercompany leasing	0	0	0	0	0
Impairment			0	0	0
Bad debt expense (recovery), net	0	0	0	0	0
Loss (gain) on dispositions of property and equipment, net	0	0	0	0	0
Total costs and expenses	(195)	(135)	(260)	(225)	(405)
Income (loss) from operations	195	135	260	225	405
Other income (expense):
Equity in earnings of subsidiaries	7,228	(524)	13,196	236,091	(12,492)
Interest expense	0	0	0	0	0
Reorganization Items, net	0		0	0
Loss on extinguishment of debt				0
Other income (expense), net	(195)	(135)	(260)	(225)	(405)
Total other income (expense), net	7,033	(659)	12,936	235,866	(12,897)
Income (loss) before income taxes	7,228	(524)	13,196	236,091	(12,492)
Income tax (expense) benefit	0	0	0	0	0
Net income (loss)	7,228	(524)	13,196	236,091	(12,492)
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	34,937	124,781	45,272	126,442	377,127
Costs and expenses:
Operating costs	25,443	92,216	33,123	100,372	281,735
Depreciation and amortization	11,354	21,193	15,390	33,129	63,491
General and administrative	3,711	13,640	5,414	12,489	35,665
Pre-petition restructuring charges				0
Intercompany leasing	(1,215)	(1,215)	(1,620)	(2,025)	(3,645)
Impairment			388	17,853	1,378
Bad debt expense (recovery), net	(315)	196	(598)	1,209	(90)
Loss (gain) on dispositions of property and equipment, net	(3,822)	28	(4,282)	(992)	(2,077)
Total costs and expenses	35,156	126,058	47,815	162,035	376,457
Income (loss) from operations	(219)	(1,277)	(2,543)	(35,593)	670
Other income (expense):
Equity in earnings of subsidiaries	(3,639)	1,164	(5,295)	(8,594)	7,059
Interest expense	0	3	0	0	(12)
Reorganization Items, net	0		(403)	(231,420)
Loss on extinguishment of debt				0
Other income (expense), net	272	236	361	394	903
Total other income (expense), net	(3,367)	1,403	(5,337)	(239,620)	7,950
Income (loss) before income taxes	(3,586)	126	(7,880)	(275,213)	8,620
Income tax (expense) benefit	(3)	(766)	(21)	47,716	(3,187)
Net income (loss)	(3,589)	(640)	(7,901)	(227,497)	5,433
Non-Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	4,061	21,617	4,889	15,928	68,682
Costs and expenses:
Operating costs	3,450	15,843	4,513	13,675	50,879
Depreciation and amortization	3,242	1,512	4,318	2,144	4,228
General and administrative	438	1,001	584	918	2,129
Pre-petition restructuring charges				0
Intercompany leasing	1,215	1,215	1,620	2,025	3,645
Impairment			0	0	0
Bad debt expense (recovery), net	0	0	0	0	0
Loss (gain) on dispositions of property and equipment, net	7	(11)	7	0	(107)
Total costs and expenses	8,352	19,560	11,042	18,762	60,774
Income (loss) from operations	(4,291)	2,057	(6,153)	(2,834)	7,908
Other income (expense):
Equity in earnings of subsidiaries	0	0	0	0	0
Interest expense	8	4	10	21	(38)
Reorganization Items, net	0		0	(829)
Loss on extinguishment of debt				0
Other income (expense), net	(943)	(775)	(1,203)	(3,498)	(436)
Total other income (expense), net	(935)	(771)	(1,193)	(4,306)	(474)
Income (loss) before income taxes	(5,226)	1,286	(7,346)	(7,140)	7,434
Income tax (expense) benefit	1,587	(122)	2,051	(1,454)	(375)
Net income (loss)	(3,639)	1,164	(5,295)	(8,594)	7,059
Parent [Member]
Condensed Financial Statements, Captions [Line Items]
Revenues	0	0	0	0	0
Costs and expenses:
Operating costs	0	0	0	0	0
Depreciation and amortization	103	219	227	374	709
General and administrative	7,672	15,979	10,101	8,865	30,882
Pre-petition restructuring charges				16,822
Intercompany leasing	0	0	0	0	0
Impairment			0	0	0
Bad debt expense (recovery), net	0	0	0	0	0
Loss (gain) on dispositions of property and equipment, net	(14)	0	(14)	3	0
Total costs and expenses	7,761	16,198	10,314	26,064	31,591
Income (loss) from operations	(7,761)	(16,198)	(10,314)	(26,064)	(31,591)
Other income (expense):
Equity in earnings of subsidiaries	(3,589)	(640)	(7,901)	(227,497)	5,433
Interest expense	(6,261)	(10,020)	(8,478)	(12,315)	(29,953)
Reorganization Items, net	(2,522)		(3,263)	210,346
Loss on extinguishment of debt				4,215
Other income (expense), net	18	86	24	(4)	383
Total other income (expense), net	(12,354)	(10,574)	(19,618)	(33,685)	(24,137)
Income (loss) before income taxes	(20,115)	(26,772)	(29,932)	(59,749)	(55,728)
Income tax (expense) benefit	45	756	45	(44,476)	1,653
Net income (loss)	$ (20,070)	$ (26,016)	$ (29,887)	$ (104,225)	$ (54,075)

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Guarantor/Non Guarantor Condensed Consolidating Financial Statements (Cash Flows)) (Details) - USD ($) $ in Thousands	4 Months Ended	5 Months Ended	9 Months Ended
	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Condensed Financial Statements, Captions [Line Items]
Cash flows from operating activities	$ (737)	$ (2,245)	$ 8,638
Cash flows from investing activities:
Purchases of property and equipment	(2,384)	(10,848)	(40,543)
Proceeds from sale of property and equipment	8,303	1,665	4,778
Proceeds from insurance recoveries	155	22	641
Net cash provided by (used in) investing activities	6,074	(9,161)	(35,124)
Cash flows from financing activities:
Debt repayments	0	(175,000)	0
Proceeds from debt issuance	0	195,187	0
Proceeds from DIP Facility	0	4,000	0
Repayment of DIP Facility	0	(4,000)	0
Payments of debt issuance costs	0	(7,625)	0
Purchase of treasury stock	0	(8)	(125)
Intercompany contributions/distributions	0	0	0
Net cash provided by (used in) financing activities	0	12,554	(125)
Net increase (decrease) in cash, cash equivalents and restricted cash	5,337	1,148	(26,611)
Beginning cash, cash equivalents, and restricted cash	26,765	25,617	54,564
Ending cash, cash equivalents, and restricted cash	32,102	26,765	27,953
Eliminations [Member]
Condensed Financial Statements, Captions [Line Items]
Cash flows from operating activities	0	0	0
Cash flows from investing activities:
Purchases of property and equipment	0	0	0
Proceeds from sale of property and equipment	0	(154)	0
Proceeds from insurance recoveries	0	0	0
Net cash provided by (used in) investing activities	0	(154)	0
Cash flows from financing activities:
Debt repayments		0
Proceeds from debt issuance		0
Proceeds from DIP Facility		0
Repayment of DIP Facility		0
Payments of debt issuance costs		0
Purchase of treasury stock		0	0
Intercompany contributions/distributions	0	154	0
Net cash provided by (used in) financing activities	0	154	0
Net increase (decrease) in cash, cash equivalents and restricted cash	0	0	0
Beginning cash, cash equivalents, and restricted cash	0	0	0
Ending cash, cash equivalents, and restricted cash	0	0	0
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Cash flows from operating activities	20,169	132,354	41,854
Cash flows from investing activities:
Purchases of property and equipment	(1,991)	(8,755)	(36,644)
Proceeds from sale of property and equipment	8,271	1,819	4,688
Proceeds from insurance recoveries	155	22	641
Net cash provided by (used in) investing activities	6,435	(6,914)	(31,315)
Cash flows from financing activities:
Debt repayments		0
Proceeds from debt issuance		0
Proceeds from DIP Facility		0
Repayment of DIP Facility		0
Payments of debt issuance costs		0
Purchase of treasury stock		0	0
Intercompany contributions/distributions	(26,604)	(125,440)	(10,539)
Net cash provided by (used in) financing activities	(26,604)	(125,440)	(10,539)
Net increase (decrease) in cash, cash equivalents and restricted cash	0	0	0
Beginning cash, cash equivalents, and restricted cash	0	0	0
Ending cash, cash equivalents, and restricted cash	0	0	0
Non-Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Cash flows from operating activities	(4,314)	(6,839)	4,961
Cash flows from investing activities:
Purchases of property and equipment	(380)	(1,524)	(3,262)
Proceeds from sale of property and equipment	14	0	90
Proceeds from insurance recoveries	0	0	0
Net cash provided by (used in) investing activities	(366)	(1,524)	(3,172)
Cash flows from financing activities:
Debt repayments		0
Proceeds from debt issuance		0
Proceeds from DIP Facility		0
Repayment of DIP Facility		0
Payments of debt issuance costs		0
Purchase of treasury stock		0	0
Intercompany contributions/distributions	(13)	8,363	(245)
Net cash provided by (used in) financing activities	(13)	8,363	(245)
Net increase (decrease) in cash, cash equivalents and restricted cash	(4,693)	0	1,544
Beginning cash, cash equivalents, and restricted cash	10,158	10,158	3,216
Ending cash, cash equivalents, and restricted cash	5,465	10,158	4,760
Parent [Member]
Condensed Financial Statements, Captions [Line Items]
Cash flows from operating activities	(16,592)	(127,760)	(38,177)
Cash flows from investing activities:
Purchases of property and equipment	(13)	(569)	(637)
Proceeds from sale of property and equipment	18	0	0
Proceeds from insurance recoveries	0	0	0
Net cash provided by (used in) investing activities	5	(569)	(637)
Cash flows from financing activities:
Debt repayments		(175,000)
Proceeds from debt issuance		195,187
Proceeds from DIP Facility		4,000
Repayment of DIP Facility		(4,000)
Payments of debt issuance costs		(7,625)
Purchase of treasury stock		(8)	(125)
Intercompany contributions/distributions	26,617	116,923	10,784
Net cash provided by (used in) financing activities	26,617	129,477	10,659
Net increase (decrease) in cash, cash equivalents and restricted cash	10,030	1,148	(28,155)
Beginning cash, cash equivalents, and restricted cash	16,607	15,459	51,348
Ending cash, cash equivalents, and restricted cash	$ 26,637	$ 16,607	$ 23,193

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Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Summary of Significant Accounting Policies

Organization and Summary of Significant Accounting Policies

Business

Pioneer Energy Services Corp. provides land-based drilling services and production services to a diverse group of oil and gas exploration and production companies in the United States and internationally in Colombia.

Our drilling services business segments provide contract land drilling services through three domestic divisions which are located in the Marcellus/Utica, Permian Basin and Eagle Ford, and Bakken regions, and internationally in Colombia. We provide a comprehensive service offering which includes the drilling rig, crews, supplies, and most of the ancillary equipment needed to operate our drilling rigs. Our fleet is 100% pad-capable and offers the latest advancements in pad drilling. The following table summarizes our current rig fleet count and composition for each drilling services business segment:

	Multi-well, Pad-capable
	AC rigs	SCR rigs	Total
Domestic drilling	17	—	17
International drilling	—	8	8
			25

Our production services business segments provide a range of services to producers primarily in Texas, North Dakota, the Rocky Mountain region, and Louisiana. As of September 30, 2020, the fleet counts for each of our production services business segments were as follows:

	550 HP	600 HP	Total
Well servicing rigs, by horsepower (HP) rating	111	12	123
Wireline services units			78

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Pioneer Energy Services Corp. and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of our management, all adjustments (consisting of normal, recurring accruals) necessary for a fair presentation have been included. We suggest that you read these unaudited condensed consolidated financial statements together with the consolidated financial statements and the related notes included in our annual report on Form 10-K for the year ended December 31, 2019, as amended. As described below, as a result of the application of fresh start accounting and the effects of the implementation of our Plan of Reorganization (as defined below), the consolidated financial statements after the Effective Date (as defined below) are not comparable with the consolidated financial statements on or before that date. See Note 3, Fresh Start Accounting, for additional information.

Chapter 11 Cases — On March 1, 2020 (the “Petition Date”), Pioneer and certain of our domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). On May 11, 2020, the Bankruptcy Court confirmed the plan of reorganization (the “Plan”) that was filed with the Bankruptcy Court on March 2, 2020, and on May 29, 2020 (the “Effective Date”), the conditions to effectiveness of the plan were satisfied and we emerged from Chapter 11. See Note 2, Emergence from Voluntary Reorganization under Chapter 11, for more information.

The accompanying condensed consolidated financial statements have been prepared as if we are a going concern and in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 852, Reorganizations (ASC Topic 852). Upon emergence from bankruptcy, we adopted fresh start accounting in accordance

with ASC Topic 852 and became a new entity for financial reporting purposes. As a result, the condensed consolidated financial statements after the Effective Date are not comparable with the consolidated financial statements on or before that date as indicated by the “black line” division in the financial statements and footnote tables, which emphasizes the lack of comparability between amounts presented. References to “Successor” relate to our financial position and results of operations after the Effective Date. References to “Predecessor” refer to our financial position and results of operations on or before the Effective Date.

We evaluated the events between May 29, 2020 and May 31, 2020 and concluded that the use of an accounting convenience date of May 31, 2020 (the “Fresh Start Reporting Date”) would not have a material impact on our condensed consolidated financial statements. As such, the application of fresh start accounting was reflected in our condensed consolidated balance sheet as of May 31, 2020 and related fresh start accounting adjustments were included in our condensed consolidated statement of operations for the five months ended May 31, 2020. See Note 3, Fresh Start Accounting, for additional information.

Use of Estimates — In preparing the accompanying unaudited condensed consolidated financial statements, we make various estimates and assumptions that affect the amounts of assets and liabilities we report as of the dates of the balance sheets and income and expenses we report for the periods shown in the income statements and statements of cash flows. Our actual results could differ significantly from those estimates. Material estimates affecting our financial results, including those that are particularly susceptible to significant changes in the near term, relate to our application of fresh start accounting, our estimates of certain variable revenues and amortization periods of certain deferred revenues and costs associated with drilling daywork contracts, our estimates of projected cash flows and fair values for impairment evaluations, our estimate of the valuation allowance for deferred tax assets, and our estimate of the liability relating to the self-insurance portion of our health and workers’ compensation insurance. For information about our use of estimates relating to fresh start accounting, see Note 3, Fresh Start Accounting.

Subsequent Events — In preparing the accompanying unaudited condensed consolidated financial statements, we have reviewed events that have occurred after September 30, 2020, through the filing of this Form 10-Q, for inclusion as necessary.

Recently Issued Accounting Standards

Changes to accounting principles generally accepted in the United States of America (“U.S. GAAP”) are established by the FASB in the form of Accounting Standards Updates (ASUs) to the FASB ASC. We consider the applicability and impact of all ASUs. Other than the ASU listed below, we have determined that there are currently no new or recently adopted ASUs which we believe will have a material impact on our consolidated financial position and results of operations.

•Convertible Instruments and Contracts in an Entity’s Own Equity. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and preferred stock. Additionally, this ASU improves the consistency of EPS calculations by requiring entities to apply one method, the if-converted method, to all convertible instruments in diluted earnings-per-share calculations. As a smaller reporting company, this ASU will be effective for us on January 1, 2024, however, early adoption is permitted on January 1, 2021. We are currently evaluating the effect that the ASU will have on our consolidated financial statements.

Additional Detail of Account Balances

Cash and Cash Equivalents — We had no cash equivalents at September 30, 2020. Cash equivalents at December 31, 2019 were $8.9 million, consisting of investments in highly-liquid money-market mutual funds.

Restricted Cash — Our restricted cash balance at September 30, 2020 reflects the professional fees escrow balance which will be released in accordance with the Plan, as well as $2.2 million of proceeds from asset sales which were used to fund the redemption of Senior Secured Notes tendered in October 2020, as described further in Note 7, Debt. Our restricted cash balance at December 31, 2019 reflects the portion of net proceeds from the issuance of our senior secured term loan held in a restricted account until the completion of certain administrative tasks related to providing access rights to certain of our real property, a condition which is still in effect under the terms of our post-emergence debt instruments.

Other Receivables — Our other receivables primarily consist of recoverable taxes related to our international operations, as well as refundable payroll tax credit receivables associated with the CARES Act, vendor rebates and net income tax receivables.

Prepaid Expenses and Other Current Assets — Prepaid expenses and other current assets include items such as insurance, rent deposits, software subscriptions, and other fees. We routinely expense these items in the normal course of business over the periods that we benefit from these expenses. Prepaid expenses and other current assets also include deferred mobilization costs for short-term drilling contracts and demobilization revenues recognized on drilling contracts expiring in the near term.

Other Noncurrent Assets — Other noncurrent assets primarily consist of prepaid taxes in Colombia which are creditable against future income taxes, as well as deferred mobilization costs on long-term drilling contracts, cash deposits related to the deductibles on our workers’ compensation insurance policies, the noncurrent portion of prepaid insurance premiums, unamortized debt issuance costs associated with our ABL Credit Facility, and deferred compensation plan investments.

Other Accrued Expenses — Our other accrued expenses include accruals for items such as sales taxes, property taxes and withholding tax liabilities related to our international operations and accruals for professional fees, including those associated with fresh start accounting. We routinely expense these items in the normal course of business over the periods these expenses benefit. Our other accrued expenses also includes the current portion of the lease liability associated with our long-term operating leases.

Other Noncurrent Liabilities — Our other noncurrent liabilities primarily relate to the noncurrent portion of payroll taxes deferred in connection with the CARES Act, as well as noncurrent deferred compensation and the noncurrent portion of deferred mobilization revenues.

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting (Notes)

9 Months Ended

Sep. 30, 2020

Reorganizations [Abstract]

Reorganization under Chapter 11 of US Bankruptcy Code Disclosure [Text Block]

Emergence from Voluntary Reorganization under Chapter 11

Reorganization and Chapter 11 Proceedings

On March 1, 2020 (the “Petition Date”), Pioneer Energy Services Corp. (“Pioneer”) and its affiliates Pioneer Coiled Tubing Services, LLC, Pioneer Drilling Services, Ltd., Pioneer Fishing & Rental Services, LLC, Pioneer Global Holdings, Inc., Pioneer Production Services, Inc., Pioneer Services Holdings, LLC, Pioneer Well Services, LLC, Pioneer Wireline Services Holdings, Inc., Pioneer Wireline Services, LLC (collectively with Pioneer, the “Pioneer RSA Parties”) filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Chapter 11 proceedings were being jointly administered under the caption In re Pioneer Energy Services Corp. et al (the “Chapter 11 Cases”).

In connection with the Bankruptcy Petitions, the Pioneer RSA Parties entered into a restructuring support agreement (the “RSA”) with holders of approximately 99% in aggregate principal amount of our outstanding Term Loan (the “Consenting Term Lenders”) and holders of approximately 75% in aggregate principal amount of our Prepetition Senior Notes (the “Consenting Noteholders” and together with the Consenting Term Lenders, the “Consenting Creditors”). Pursuant to the RSA, the Consenting Creditors and the Pioneer RSA Parties made certain customary commitments to each other, including the Consenting Noteholders committing to vote for, and the Consenting Creditors committing to support, the restructuring transactions (the “Restructuring”) to be effectuated through a plan of reorganization that incorporates the economic terms included in the RSA (the “Plan”). The Pioneer RSA Parties filed the Plan with the Bankruptcy Court on March 2, 2020.

After commencement of the Chapter 11 Cases, we continued to operate our businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

On May 11, 2020, the Bankruptcy Court entered an order, Docket No. 331 (the “Confirmation Order”) confirming the Plan. On May 29, 2020 (the “Effective Date”) the conditions to effectiveness of the Plan were satisfied, and we emerged from Chapter 11.

The commencement of the Chapter 11 Cases constituted an event of default that accelerated our obligations under our Prepetition Senior Notes, the Prepetition ABL Facility, and Term Loan. Under the Bankruptcy Code, holders of our Prepetition Senior Notes and the lenders under our Term Loan and the Prepetition ABL Facility were stayed from taking any action against us as a result of this event of default. On the Effective Date, all applicable agreements governing the obligations under the Term Loan, Prepetition Senior Notes and Prepetition ABL Facility were terminated. The Term Loan and Prepetition ABL Facility were paid in full and all outstanding obligations under the Prepetition Senior Notes were canceled in exchange for 94.25% of the pro forma common equity (subject to the dilution from the Convertible Notes and new management incentive plan).

On the Effective Date, we entered into a $75 million senior secured asset-based revolving credit agreement which was later amended and reduced to $40 million in August 2020 (the “ABL Credit Facility”), and issued $129.8 million of aggregate principal amount of 5% convertible senior unsecured pay-in-kind notes due 2025 (the “Convertible Notes”) and $78.1 million of aggregate principal amount of floating rate senior secured notes due 2025 (the “Senior Secured Notes”), all of which are further described in Note 7, Debt.

Also on the Effective Date, by operation of the Plan, all agreements, instruments, and other documents evidencing, relating to or connected with any equity interests of the Company, including the existing common stock, issued and outstanding immediately prior to the Effective Date, and any rights of any holder in respect thereof, were deemed canceled, discharged and of no force or effect. Pursuant to the Plan, we issued a total of 1,049,804 shares of our new common stock, with approximately 94.25% of such new common stock being issued to holders of the Prepetition Senior Notes outstanding immediately prior to the Effective Date. Holders of the existing common stock received an aggregate of 5.75% of the proforma common equity (subject to the dilution from the Convertible Notes and new management incentive plan), at a conversion rate of 0.0006849838 new shares for each existing share.

As part of the transactions undertaken pursuant to the Plan, we converted from a Texas corporation to a Delaware corporation, filed the Certificate of Incorporation of the Company with the office of the Secretary of State of the State of Delaware, and adopted Amended and Restated Bylaws of the Company.

Backstop Commitment Agreement

Prior to filing the Plan, we entered into a separate backstop commitment agreement with the Consenting Noteholders and certain members of our senior management (the “Backstop Commitment Agreement”), pursuant to which the Consenting Noteholders and certain members of our senior management committed to backstop approximately $118 million and $1.8 million, respectively, of new convertible bonds to be issued in a rights offering. As consideration for this commitment, we committed to make an aggregate payment of $9.4 million and $0.1 million to the Consenting Noteholders and certain members of our senior management, respectively, in the form of additional new convertible bonds, or in cash if the Backstop Commitment Agreement was terminated under certain circumstances as forth therein. As a result, we incurred a liability and expense at the time we entered into the Backstop Commitment Agreement for the aggregate amount of $9.6 million (the “Commitment Premium”) which was recognized in our Predecessor condensed consolidated financial statements as of and for the three months ended March 31, 2020. The Commitment Premium was settled in conjunction with our emergence from Chapter 11 and the issuance of the Convertible Notes.

Debtor-in-Possession Financing

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

The DIP Facility provided financing with a 5-month maturity, bearing interest at a rate of LIBOR plus 200 basis points per annum, and contained customary covenants and events of default. The DIP Facility was terminated upon our emergence from the Chapter 11 Cases on May 29, 2020.

Chapter 11 Accounting

Pre-petition restructuring charges — All expenses and losses incurred prior to the Petition Date which were related to the Chapter 11 proceedings are presented as pre-petition restructuring charges in our Predecessor condensed consolidated statements of operations, including $9.6 million of expense incurred for the Commitment Premium pursuant to the Backstop Commitment Agreement.

Reorganization items, net — Any expenses, gains, and losses incurred subsequent to and as a direct result of the Chapter 11 proceedings are presented as reorganization items in our condensed consolidated statements of operations. Reorganization items consisted of the following (amounts in thousands):

	Successor				Predecessor
	Three Months Ended September 30, 2020		Four Months Ended September 30, 2020		Five Months Ended May 31, 2020
Gain on settlement of liabilities subject to compromise	$	—	$	—	$	(291,378)
Fresh start valuation adjustments	—		—		284,392
Legal and professional fees	2,522		3,263		26,038
Unamortized debt costs on liabilities subject to compromise	—		—		2,003
Accelerated stock-based compensation	—		—		713
Loss (gain) on rejected leases	—		403		(378)
DIP facility costs	—		—		513
	$	2,522	$	3,666	$	21,903

Contractual interest expense on our Prepetition Senior Notes totaled $7.6 million for the five months ended May 31, 2020, which is in excess of the $3.1 million included in interest expense on our Predecessor condensed consolidated statements of operations because we discontinued accruing interest on the Petition Date in accordance with the terms of the Plan and ASC Topic 852.Fresh Start Accounting

Fresh Start Accounting

In connection with our emergence from bankruptcy and in accordance with ASC Topic 852, we qualified for and adopted fresh start accounting on the Effective Date. We were required to adopt fresh start accounting because (i) the holders of existing voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company, and (ii) the reorganization value of our assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims.

In accordance with ASC Topic 852, with the application of fresh start accounting, we allocated the reorganization value to our individual assets and liabilities (except for deferred income taxes) based on their estimated fair values in conformity with ASC Topic 805, Business Combinations. The amount of deferred taxes was determined in accordance with ASC Topic 740, Income Taxes. The Effective Date fair values of our assets and liabilities differed materially from their recorded values as reflected on the historical balance sheets.

Reorganization Value

The reorganization value represents the fair value of the Successor Company’s total assets before considering liabilities and is intended to approximate the amount a willing buyer would pay for the Company’s assets immediately after restructuring. The reorganization value was derived from the enterprise value, which represents the estimated fair value of an entity’s long-term debt and equity. As set forth in the Plan, the enterprise value of the Successor Company was estimated to be in the range of $275 million to $335 million with a midpoint of $305 million. However, the third-party valuation advisor engaged to assist in determining the enterprise value subsequently revised this range to $249 million to $303 million, with a midpoint of $276 million, which was filed with the Bankruptcy Court in order to update the initial assumptions for current information. Based on the estimates and assumptions discussed below, we estimated the enterprise value to be the midpoint of the range of estimated enterprise value of $276 million.

The following table reconciles the enterprise value to the estimated fair value of our Successor Common Stock as of the Fresh Start Reporting Date (dollars in thousands, except per share data):

Enterprise value	$	276,000
Plus: cash and cash equivalents	10,592
Less: fair value of debt	(145,420)
Total implied equity (prior to debt issuance costs on equity component on Convertible Notes)	141,172
Less: equity portion of Convertible Notes	(123,088)
Fair value of Successor stockholders’ equity	$	18,084
Shares issued upon emergence	1,049,804
Per share value	$	17.23

The following table reconciles enterprise value to the reorganization value of our Successor’s assets to be allocated to our individual assets as of the Fresh Start Reporting Date (amounts in thousands):

Enterprise value	$	276,000
Plus: cash and cash equivalents	10,592
Plus: current liabilities	65,799
Plus: non-current liabilities excluding long-term debt	6,626
Less: debt issuance costs on Successor debt	(6,394)
Reorganization value of Successor assets	$	352,623

With the assistance of our financial advisors, we determined the enterprise and corresponding equity value of the Successor using various valuation methods, including (i) discounted cash flow analysis, (ii) comparable company analysis and (iii) precedent transaction analysis. The use of each approach provides corroboration for the other approaches.

In order to estimate the enterprise value using the discounted cash flow (DCF) analysis approach, management’s estimated future cash flow projections through 2024, plus a terminal value calculated assuming a perpetuity growth rate and applying a multiple to the terminal year’s projected earnings before interest, tax, depreciation and amortization (EBITDA), were discounted to an assumed present value using our estimated weighted average cost of capital (WACC), which represents the internal rate of return (IRR).

The comparable company analysis provides an estimate of the company’s value relative to other publicly traded companies with similar operating and financial characteristics, by which a range of EBITDA multiples of the comparable companies was then applied to management’s projected EBITDA to derive an estimated enterprise value.

Precedent transaction analysis provides an estimate of enterprise value based on recent sale transactions of similar companies, by deriving the implied EBITDA multiple of those transactions, based on sales prices, which was then applied to management’s projected EBITDA.

Certain inputs and assumptions used to estimate the enterprise value are considered significant unobservable inputs which are classified as Level 3 inputs under ASC Topic 820, Fair Value Measurements and Disclosures, including management’s estimated future cash flow projections. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the enterprise value and equity value projections, are inherently subject to significant uncertainties beyond our control, and accordingly, our actual results could vary materially.

Valuation Process

The fair values of our principal assets (including inventory, drilling and production services equipment, land and buildings, and intangible assets), and our liabilities were estimated with the assistance of third-party valuation advisors. The cost, income and market approaches were utilized in estimating these fair values. As more than one approach was used in our valuation analysis, the various approaches were reconciled to determine a final value conclusion. Further, economic obsolescence was considered in determining the fair value of our inventory and property and equipment. The fair value was allocated to our individual assets and liabilities as follows:

Inventory — Inventory valued consisted of spare parts and consumables that support our international, coiled tubing and wireline operations. The fair value of the international spare parts and coiled tubing inventory was determined using the

indirect method of the cost approach, with adjustments for economic obsolescence. For wireline inventory, the cost basis was adjusted to account for the changes in cost between the acquisition date and the valuation date.

Property and Equipment — Property and equipment valued consisted of leasehold improvements, machinery and equipment, transportation equipment, office furniture, fixtures and equipment, computers and software, construction-in-progress and assets held for sale. The fair value of our property and equipment was estimated using the cost approach and market approach, while the income approach was considered in the context of the economic obsolescence analysis which was applied to certain assets. As a part of the valuation process, the third-party advisors performed site inspections and utilized internal data to identify and value assets.

Land and Buildings — Land and buildings valued consisted of four facilities and the underlying land, for which the fair value was estimated using the cost approach and sales comparison (market) approach, with adjustments for economic obsolescence to certain assets.

Intangible Assets — Intangible assets valued consisted of trademark and tradename, for which the fair value was estimated using the relief-from-royalty income approach. As a part of the valuation process, the third-party advisors considered overall revenue and cash flow projections and guidance on long-term growth rates. Additionally, above or below market leases and contracts and relationships were examined and determined to have no fair value. The value of our intangible assets will be amortized using the straight-line method over the economic useful life, which we estimated to be ten years.

Senior Secured Notes — The fair value of the Senior Secured Notes was estimated by applying a stochastic interest rate model implemented within a binomial lattice framework that considers the call provisions associated with the notes and captures the decision of prepaying the notes or holding to maturity by evaluating the optimal decision at each time step constructed within the lattice model.

Convertible Notes — The fair value of the Convertible Notes was estimated by applying a binomial lattice model and a recovery rate adjustment model, which provides a quantitative method for estimating the yield for a debt or debt-like security based on an observed market yield for a security of a different seniority. Certain inputs and assumptions used to derive the fair value of the Convertible Notes are considered significant unobservable inputs which are classified as Level 3 inputs under ASC Topic 820, Fair Value Measurements and Disclosures, including the company’s stock price, the volatility and the market yield related to the Convertible Notes.

Consolidated Balance Sheet

The adjustments set forth in the following consolidated balance sheet as of May 31, 2020 reflect the effects of the transactions contemplated by the Plan and executed on the fresh start reporting date (reflected in the column entitled “Reorganization Adjustments”), and fair value and other required accounting adjustments resulting from the adoption of Fresh Start Accounting (reflected in the column entitled “Fresh Start Accounting Adjustments”).

	As of May 31, 2020
(in thousands)	Predecessor		Reorganization Adjustments			Fresh Start Accounting Adjustments			Successor
ASSETS
Cash and cash equivalents	$	21,253	$	(10,661)	(1)	$	—		$	10,592
Restricted cash	4,452		11,721		(2)	—			16,173
Receivables:
Trade, net of allowance for doubtful accounts	33,537		—			—			33,537
Unbilled receivables	9,163		—			—			9,163
Insurance recoveries	23,636		—			—			23,636
Other receivables	5,256		1,000		(3)	—			6,256
Inventory	21,012		—			(6,883)		(18)	14,129
Assets held for sale	1,825		—			29		(19)	1,854
Prepaid expenses and other current assets	4,817		—			952		(20)	5,769
Total current assets	124,951		2,060			(5,902)			121,109
Property and equipment, at cost	1,082,704		—			(886,733)		(21)	195,971
Less accumulated depreciation	655,512		—			(655,512)		(21)	—
Net property and equipment	427,192		—			(231,221)			195,971
Intangible assets, net of accumulated amortization	—		—			9,370		(22)	9,370
Deferred income taxes	10,897		—			(2,157)		(23)	8,740
Operating lease assets	5,234		—			—			5,234
Other noncurrent assets	13,247		(5,023)		(4)	3,975		(24)	12,199
Total assets	$	581,521	$	(2,963)		$	(225,935)		$	352,623
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	24,601	$	(9,478)	(5)	$	—		$	15,123
Deferred revenues	121		—			—			121
Commitment premium	9,584		(9,584)		(6)	—			—
Debtor in possession financing	4,000		(4,000)		(7)	—			—
Accrued expenses:
Employee compensation and related costs	4,970		—			—			4,970
Insurance claims and settlements	23,517		—			—			23,517
Insurance premiums and deductibles	5,269		—			—			5,269
Interest	3,775		(3,731)		(8)	—			44
Other	12,436		4,329		(9)	(10)			16,755
Total current liabilities	88,273		(22,464)			(10)			65,799
Long-term debt, less unamortized discount and debt issuance costs	175,000		(53,831)		(10)	20,070		(25)	141,239
Noncurrent operating lease liabilities	4,189		—			—			4,189
Deferred income taxes	4,296		—			(3,225)		(26)	1,071
Other noncurrent liabilities	1,366		—			—			1,366
Total liabilities not subject to compromise	273,124		(76,295)			16,835			213,664
Liabilities subject to compromise	308,422		(308,422)		(11)	—			—
Stockholders’ equity:
Predecessor common stock	8,893		(8,893)		(12)	—			—
Successor common stock	—		1		(13)	—			1
Predecessor additional paid-in capital	553,631		(553,631)		(14)	—			—
Successor additional paid-in capital	—		98,413		(15)	40,545		(27)	138,958
Predecessor treasury stock, at cost	(5,098)		5,098		(16)	—			—
Accumulated deficit	(557,451)		840,766		(17)	(283,315)		(28)	—
Total stockholders’ equity	(25)		381,754			(242,770)			138,959
Total liabilities and stockholders’ equity	$	581,521	$	(2,963)		$	(225,935)		$	352,623

(1)Represents the following net change in cash and cash equivalents:

Cash proceeds from Convertible Notes	$	120,187
Cash proceeds from Senior Secured Notes	75,000
Payment to fund claims reserve	(950)
Payment to escrow remaining professional fees	(10,771)
Payment of professional fees	(9,468)
Payment in full to extinguish DIP Facility	(4,000)
Payment of accrued interest on DIP Facility	(55)
Payment of DIP Facility fees	(177)
Payment in full to extinguish Prepetition Term Loan	(175,000)
Payment of accrued interest on Prepetition Term Loan	(3,677)
Payment of prepayment penalty on Prepetition Term Loan	(1,750)
	$	(10,661)

(2)Represents the following net change in restricted cash:

Payment to fund rejected leases claims reserve	$	950
Payment to escrow remaining professional fees	10,771
	$	11,721

(3)Represents recognition of a receivable for a portion of the proceeds from the issuance of the Senior Secured Notes which was received in June 2020.

(4)Represents the reclassification of previously paid debt issuance costs from deferred assets to offset the carrying amount of long-term debt.

(5)Represents the payment of professional fees which were incurred prior to emergence.

(6)Represents the settlement of the Backstop Commitment Premium upon issuance of the Convertible Notes.

(7)Represents the payment to extinguish the DIP Facility.

(8)Represents the payment of accrued interest on the Prepetition Term Loan and DIP Facility.

(9)Represents the increase in accrued expenses for fees which were incurred upon our emergence from Chapter 11.

(10)Represents the following changes in long-term debt, less unamortized discount and debt issuance costs:

Payment in full to extinguish Prepetition Term Loan	$	(175,000)
Issuance of Senior Secured Notes at Par	78,125
Recognition of debt issue costs on Senior Secured Notes	(2,913)
Recognition of liability component of Convertible Notes issuance	47,225
Recognition of debt issuance costs on liability component of Convertible Notes	(1,268)
	$	(53,831)

Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

(11)Represents the settlement of liabilities subject to compromise in accordance with the Plan, for which the resulting gain is as follows:

Prepetition Senior Notes	$	300,000
Accrued interest on Prepetition Senior Notes	8,422
Liabilities subject to compromise	308,422
Cash paid by holders of Prepetition Senior Notes	118,013
Issuance of equity to Prepetition Senior Notes creditors	(17,044)
Notes Received by Prepetition Senior Note holders	(118,013)
	$	291,378

(12)Represents the cancellation of Predecessor common stock.

(13)Represents the issuance of Successor common stock to prior equity holders and to settle the Prepetition Senior Notes.

(14)Represents the cancellation of Predecessor additional paid-in capital.

(15)The changes in Successor additional paid-in capital were as follows:

Recognition of equity component of Convertible Notes	$	82,546
Issuance of Successor common stock to Prepetition Senior Notes creditors and prior equity holders	18,083
Recognition of debt issuance costs of Convertible Notes equity component	(2,216)
	$	98,413

Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

(16)Represents the cancellation of Predecessor treasury stock.

(17)Represents the cumulative impact to Predecessor retained earnings of the reorganization adjustments described above.

(18)Represents the fair value adjustment to inventory, as described further in the previous section under the heading “Valuation Process”.

(19)Represents the fair value adjustment to assets held for sale, as described further in the previous section under the heading “Valuation Process”.

(20)Represents deferred compensation associated with the excess of fair value over the par value of Convertible Notes purchased by senior management, which is compensation to the Successor and therefore was expensed in June 2020.

(21)Represents the following fair value adjustments to property and equipment:

	Predecessor Historical Value		Fair Value Adjustment		Successor Fair Value
Drilling rigs and equipment	$	1,010,612	$	(832,294)	$	178,318
Vehicles	41,283		(28,561)		12,722
Building and improvements	16,619		(13,742)		2,877
Office equipment	12,231		(11,743)		488
Land	1,959		(393)		1,566
	$	1,082,704	$	(886,733)	$	195,971
Less: Accumulated Depreciation	(655,512)		655,512		—
	$	427,192	$	(231,221)	$	195,971

(22)Represents the fair value adjustment to recognize the trademark and tradename of Pioneer Energy Services Corp. as an intangible, as described further in the above section under the heading “Valuation Process”.

(23)Represents the recognition of the noncurrent deferred tax asset as a result of the cumulative tax impact of the fresh start adjustments herein.

(24)Represents a prepaid tax asset established as part of the fresh start accounting adjustments.

(25)Represents the following fair value adjustments to long-term debt less unamortized discount and debt issuance costs:

Fair value adjustment to the liability component of the Convertible Notes	$	23,195
Discount on Senior Secured Notes	(3,125)
	$	20,070

Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

(26)Represents the derecognition of the deferred tax liability as a result of the cumulative tax impact of the fresh start adjustments herein.

(27)Represents the fair value adjustment to the equity component of the Convertible Notes.

(28)Represents the cumulative impact of the fresh start accounting adjustments discussed above and the elimination of Predecessor accumulated earnings.

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Revenue from Contracts with Customers (Notes)

9 Months Ended

Sep. 30, 2020

Revenue from Contracts with Customers [Abstract]

Revenue from Contract with Customer [Text Block]

Revenue from Contracts with Customers

Our production services business segments earn revenues for well servicing and wireline services pursuant to master services agreements based on purchase orders or other contractual arrangements with the client. Production services jobs are generally short-term (ranging in duration from several hours to less than 30 days) and are charged at current market rates for the labor, equipment and materials necessary to complete the job. Production services jobs are varied in nature but typically represent a single performance obligation, either for a particular job, a series of distinct jobs, or a period of time during which we stand ready to provide services as our client needs them. Revenue is recognized for these services over time, as the services are performed.

Our drilling services business segments earn revenues by drilling oil and gas wells for our clients under daywork contracts. Daywork contracts are comprehensive agreements under which we provide a comprehensive service offering, including the drilling rig, crew, supplies, and most of the ancillary equipment necessary to operate the rig. Contract modifications that extend the term of a dayrate contract are generally accounted for prospectively as a separate dayrate contract. We account for our services provided under daywork contracts as a single performance obligation comprised of a series of distinct time increments which are satisfied over time. Accordingly, dayrate revenues are recognized in the period during which the services are performed.

With most drilling contracts, we also receive payments contractually designated for the mobilization and demobilization of drilling rigs and other equipment to and from the client’s drill site. Revenues associated with the mobilization and demobilization of our drilling rigs to and from the client’s drill site do not relate to a distinct good or service and are recognized ratably over the related contract term.

The amount of demobilization revenue that we ultimately collect is dependent upon the specific contractual terms, most of which include provisions for reduced (or no) payment for demobilization when, among other things, the contract is renewed or extended with the same client, or when the rig is subsequently contracted with another client prior to the termination of the current contract. Since revenues associated with demobilization activity are typically variable, at each period end, they are estimated at the most likely amount, and constrained when the likelihood of a significant reversal is probable. Any change in the expected amount of demobilization revenue is accounted for with the net cumulative impact of the change in estimate recognized in the period during which the revenue estimate is revised.

The upfront costs that we incur to mobilize the drilling rig to our client’s initial drilling site are capitalized and recognized ratably over the term of the related contract, including any contracted renewal or extension periods, which is our estimate of the period during which we expect to benefit from the cost of mobilizing the rig. Costs associated with the final demobilization at the end of the contract term are expensed when incurred, when the demobilization activity is performed.

Contract Asset and Liability Balances and Contract Cost Assets

Contract asset and contract liability balances relate to demobilization and mobilization revenues, respectively. Demobilization revenue that we expect to receive is recognized ratably over the related contract term, but invoiced upon completion of the demobilization activity. Mobilization revenue, which is typically collected upon the completion of the initial mobilization activity, is deferred and recognized ratably over the related contract term. Contract asset and liability balances are netted at the contract level, with the net current and noncurrent portions separately classified in our condensed consolidated balance sheets, and the resulting contract liabilities are referred to herein as “deferred revenues.” When demobilization revenues are recognized prior to the activity being performed, they are not yet billable, and the resulting contract assets are included in our other current assets in our unaudited condensed consolidated financial statements.

Contract cost assets represent the costs associated with the initial mobilization required in order to fulfill the contract, which are deferred and recognized ratably over the period during which we expect to benefit from the mobilization, or the period during which we expect to satisfy the performance obligations of the related contract. Contract cost assets are presented as either current or noncurrent, according to the duration of the original contract to which it relates, and referred to herein as “deferred costs.”

Our current and noncurrent deferred revenues, contract assets and deferred costs as of September 30, 2020 and December 31, 2019 were as follows (amounts in thousands):

	Successor		Predecessor
	September 30, 2020		December 31, 2019
Current deferred revenues	$	715	$	1,339
Current deferred costs	592		1,071
Noncurrent deferred revenues	$	—	$	57
Noncurrent deferred costs	24		267

The changes in contract balances during 2020 are primarily related to the amortization of deferred revenues and costs, partially offset by increases related to four rigs deployed under new contracts in 2020. Amortization of deferred revenues and costs were as follows (amounts in thousands):

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Amortization of deferred revenues	$	288	$	2,705	$	3,453
Amortization of deferred costs	205		1,876		3,389

Beginning in late March 2020, rather than terminating their contracts with us, certain of our clients elected to temporarily stack three of our rigs, placing them on an extended standby for a reduced revenue rate and the option to reactivate the rigs through the remainder of the contract term. In May 2020, one of our domestic clients elected to early terminate their contract with us and make an upfront early termination payment based on a per day rate for the respective remaining contract term, resulting in $1.6 million of revenues recognized in the Predecessor period.

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Property and Equipment

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Property and Equipment

Capital Expenditures — Capital additions during 2020 primarily related to routine expenditures that are necessary to maintain our fleets, while capital additions during 2019 also included the completion of construction on our 17th AC drilling rig which we deployed in March 2019, and various vehicle and ancillary equipment purchases and upgrades.

Assets Held for Sale — In April 2020, we closed our coiled tubing services business and placed all of our coiled tubing services assets as held for sale at June 30, 2020, which represents $3.8 million of our total assets held for sale at September 30, 2020. We have various other equipment designated as held for sale which is carried at fair value. When the net carrying value of an asset designated as held for sale exceeds its estimated fair value, which we estimate based on expected sales prices, which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures, we recognize the difference as an impairment charge.

Impairments — In accordance with ASC Topic 360, Property, Plant and Equipment, we monitor all indicators of potential impairments. We evaluate for potential impairment of long-lived assets when indicators of impairment are present, which may include, among other things, significant adverse changes in industry trends (including revenue rates, utilization rates, oil and natural gas market prices, and industry rig counts). In performing an impairment evaluation, we estimate the future undiscounted net cash flows from the use and eventual disposition of the assets grouped at the lowest level that independent cash flows can be identified. We perform an impairment evaluation and estimate future undiscounted cash flows for each of our asset groups separately, which are our domestic drilling services, international drilling services, well servicing and wireline services segments, and, prior to being placed as held for sale, our coiled tubing services segment. If the sum of the estimated future undiscounted net cash flows is less than the carrying amount of the asset group, then we determine the fair value of the asset group, and the amount of an impairment charge would be measured as the difference between the carrying amount and the fair value of the assets.

Due to the significant decline in industry conditions, commodity prices, and projected utilization of equipment, as well as the COVID-19 pandemic’s impact on our industry, our projected cash flows declined during the first quarter of 2020, and we performed recoverability testing on all our reporting units. As a result of this analysis, we incurred impairment charges of $16.4 million to reduce the carrying values of our coiled tubing assets to their estimated fair values during the three months ended March 31, 2020. For all our other reporting units, excluding coiled tubing, we determined that the sum of the estimated future undiscounted net cash flows were in excess of the carrying amounts and that no impairment

existed for these reporting units at March 31, 2020. We continued to monitor potential indicators of impairment through September 30, 2020 and concluded that none of our reporting units are currently at risk of impairment. The assumptions we use in the evaluation for impairment are inherently uncertain and require management judgment. Although we believe the assumptions and estimates used in our impairment analysis are reasonable, different assumptions and estimates could materially impact the analysis and resulting conclusions. The most significant inputs used in our impairment analysis include the projected utilization and pricing of our services, as well as the estimated proceeds upon any future sale or disposal of the assets, all of which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures. If commodity prices decrease or remain at current levels for an extended period of time, or if the demand for any of our services decreases below what we are currently projecting, our estimated cash flows may decrease and our estimates of the fair value of certain assets may decrease as well. If any of the foregoing were to occur, we could incur impairment charges on the related assets.

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Leases

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Lessee, Operating Leases [Text Block]

Leases

As a drilling and production services provider, we provide the drilling rigs and production services equipment which are necessary to fulfill our performance obligations and which are considered leases under ASU No. 2016-02, Leases, (together with its amendments, herein referred to as “ASC Topic 842”). However, ASU No. 2018-11, Leases: Targeted Improvements, allows lessors to (i) combine the lease and non-lease components of revenues when the revenue recognition pattern is the same and when the lease component, when accounted for separately, would be considered an operating lease, and (ii) account for the combined lease and non-lease components under ASC Topic 606, Revenue from Contracts with Customers, when the non-lease component is the predominant element of the combined component. We elected to apply this expedient and therefore recognize our revenues (both lease and service components) under ASC Topic 606, and present them as one revenue stream in our unaudited condensed consolidated statements of operations.

As a lessee, we lease our corporate office headquarters in San Antonio, Texas, and we conduct our business operations through 15 other regional offices located throughout the United States and internationally in Colombia. These operating locations typically include regional offices, storage and maintenance yards and employee housing sufficient to support our operations in the area. We lease most of these properties under non-cancelable term and month-to-month operating leases, many of which contain renewal options that can extend the lease term from one year to five years and some of which contain escalation clauses. We also lease various items of supplemental equipment, typically under cancelable short-term and very short term (less than 30 days) leases. Due to the nature of our business, any option to renew these short-term leases, and the options to extend certain of our long-term real estate leases, are generally not considered reasonably certain to be exercised. Therefore, the periods covered by such optional periods are not included in the determination of the term of the lease, and the lease payments during these periods are similarly excluded from the calculation of operating lease asset and lease liability balances.

The following table summarizes our lease expense recognized, excluding variable lease costs (amounts in thousands):

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Long-term operating lease expense	$	517	$	1,080	$	2,943
Short-term operating lease expense	1,705		4,456		11,490

The following table summarizes the amount and timing of our obligations associated with our long-term operating leases (amounts in thousands):

	Successor		Predecessor
	September 30, 2020		December 31, 2019
Within 1 year	$	1,118	$	2,496
In the second year	994		1,933
In the third year	957		1,447
In the fourth year	869		1,117
In the fifth year	890		912
Thereafter	522		811
Total undiscounted lease obligations	$	5,350	$	8,716
Impact of discounting	(584)		(818)
Discounted value of operating lease obligations	$	4,766	$	7,898
Current operating lease liabilities	$	928	$	2,198
Noncurrent operating lease liabilities	3,838		5,700
	$	4,766	$	7,898

During 2020, leased assets obtained in exchange for new operating lease liabilities totaled approximately $2.1 million.

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Debt

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Long-term Debt

Debt

The commencement of the Chapter 11 Cases constituted an event of default that accelerated our obligations under our Prepetition Senior Notes, the Prepetition ABL Facility, and Term Loan. Under the Bankruptcy Code, holders of our Prepetition Senior Notes and the lenders under our Term Loan and the Prepetition ABL Facility were stayed from taking any action against us as a result of this event of default.

On the Effective Date, all applicable agreements governing the obligations under the Term Loan, Prepetition Senior Notes and Prepetition ABL Facility were terminated. The Term Loan and Prepetition ABL Facility were paid in full and all outstanding obligations under the Prepetition Senior Notes were canceled in exchange for 94.25% of the pro forma common equity. For additional information concerning our bankruptcy proceedings under Chapter 11, see Note 2, Emergence from Voluntary Reorganization under Chapter 11.

As of September 30, 2020, the principal amount of our outstanding debt obligations were as follows (amounts in thousands):

	Successor
	September 30, 2020
Convertible Notes	129,771
Senior Secured Notes, including in-kind interest	79,032

Due to the application of fresh start accounting, our debt obligations were recognized at fair value on our condensed consolidated balance sheet at the Fresh Start Reporting Date, as described further in Note 3, Fresh Start Accounting. Additionally, a portion of the fair value of our Convertible Notes is classified as equity, as described further below.

ABL Credit Facility

On the Effective Date, pursuant to the terms of the Plan, we entered into a senior secured asset-based revolving credit agreement in an aggregate amount of $75 million (the “ABL Credit Facility”) among us and our domestic subsidiaries as borrowers (the “Borrowers”), the lenders party thereto and PNC Bank, National Association as administrative agent, and on August 7, 2020, we entered into a First Amendment to the ABL Credit Facility (together, herein referred to as the “ABL Credit Facility”) which, among other things, reduced the maximum amount of the revolving credit agreement to $40 million.

Among other things, proceeds of loans under the ABL Credit Facility may be used to pay fees and expenses associated with the ABL Credit Facility and finance ongoing working capital and general corporate needs.

The maturity date of loans made under the ABL Credit Facility is the earliest of 90 days prior to maturity of the Senior Secured Notes or the Convertible Notes (both of which are described further below) and May 29, 2025. Borrowings under the ABL Credit Facility will bear interest at a rate of (i) the LIBOR rate (subject to a floor of 0%) plus an applicable margin of 375 basis points per annum or (ii) the base rate plus an applicable margin of 275 basis points per annum.

The ABL Credit Facility is guaranteed by the Borrowers and is secured by a first lien on the Borrowers’ accounts receivable and inventory, and the cash proceeds thereof, and a second lien on substantially all of the other assets and properties of the Borrowers.

The ABL Credit Facility limits our annual capital expenditures to 125% of the budget set forth in the projections for any fiscal year and provides that if our availability plus pledged cash of up to $3 million falls below $6 million (15% of the maximum revolver amount), we will be required to comply with a fixed charge coverage ratio of 1.0 to 1.0, all of which is defined in the ABL Credit Facility. As of September 30, 2020, we had no borrowings and approximately $8.8 million in outstanding letters of credit under the ABL Credit Facility and subject to the availability requirements in the ABL Credit Facility, based on eligible accounts receivable and inventory balances at September 30, 2020, availability under the ABL Credit Facility was $10.7 million, which our access to would be limited by (i) our requirement to maintain 15% available or comply with a fixed charge coverage ratio, as described above and (ii) the requirement to maintain availability of at least $4.0 million, which may include up to $2.0 million of pledged cash.

Convertible Notes

We entered into an indenture, dated as of the Effective Date, among the Company and Wilmington Trust, N.A., as trustee (the “Convertible Notes Indenture”), and issued $129.8 million aggregate principal amount of convertible senior unsecured pay-in-kind notes due 2025 thereunder (the “Convertible Notes”). We received net issuance proceeds of $120.2 million, which was net of the $9.6 million Backstop Commitment Premium.

The Convertible Notes are general unsecured obligations which will mature on November 15, 2025, unless earlier accelerated, redeemed, converted or repurchased, and bear interest at a fixed rate of 5% per annum, which will be payable semi-annually on May 15 and November 15 in-kind in the form of an increase to the principal amount. The Convertible Notes are convertible at the option of the holders at any time into shares of our common stock and will convert mandatorily into our common stock at maturity; provided, however, that if the value of our common stock otherwise deliverable in connection with a mandatory conversion of a Convertible Note on the maturity date would be less than the principal amount of such Convertible Note plus accrued and unpaid interest, then the Convertible Note will instead convert into an amount of cash equal to the principal amount thereof plus accrued and unpaid interest. The initial conversion rate is 75 shares of common stock per $1,000 principal amount of the Convertible Notes, which in aggregate represents 9,732,825 shares of common stock and an initial conversion price of $13.33 per share. The conversion rate is subject to customary anti-dilution adjustments.

If we undergo a “fundamental change” as defined in the Convertible Notes Indenture, subject to certain conditions, holders may require us to repurchase all or any portion of their Convertible Notes for cash at an amount equal to 100% of the principal amount of the Convertible Notes to be repurchased plus any accrued and unpaid interest. In the case of certain fundamental change events that constitute merger events (as defined in the Convertible Notes Indenture), we have a superseding right to cause the mandatory conversion of all or part of the Convertible Notes into a number of shares of common stock, per $1,000 principal amount of Convertible Notes, equal to the then-current conversion rate or the cash value of such number of shares of common stock (but not less than the principal amount).

Holders of Convertible Notes are entitled to vote on all matters on which holders of our common stock generally are entitled to vote (or, if any, to take action by written consent of the holders of our common stock), voting together as a single class together with the shares of our common stock and not as a separate class, on an as-converted basis, at any annual or special meeting of holders of our common stock and each holder is entitled to such number of votes as such holder would receive on an as-converted basis on the record date for such vote.

The Convertible Notes Indenture contains customary events of default and covenants that limit our ability and the ability of certain of our subsidiaries to incur, assume or guarantee additional indebtedness and create liens and enter into mergers or consolidations.

Because the Convertible Notes contain an embedded conversion option whereby they, or a portion of them, may be settled in cash, we have separately accounted for the liability and equity components of the Convertible Notes in accordance with the accounting requirements for convertible debt instruments set forth in ASC Topic 470-20, Debt with Conversion and Other Options. The initial fair value of the Convertible Notes was estimated in accordance with the application of Fresh Start Accounting, as described further in Note 3, Fresh Start Accounting. In order to allocate the initial fair value, we first calculated the value of the liability component by estimating the fair value for the debt instrument as if it did not contain a conversion feature. The amount by which the initial fair value of the Convertible Notes exceeded the estimated fair value of the liability component represented the estimated fair value of the equity component. We also allocated the debt issuance costs incurred to the liability and equity components, for which the portion attributable to the equity component is netted with the respective equity component in additional paid-in capital.

The below table summarizes the allocation of issuance proceeds, fair value and debt issuance costs to the liability and equity components of the Convertible Notes at the Fresh Start Reporting Date (in thousands):

	Successor
	Liability Component		Equity Component		Total
Issuance proceeds, net of Backstop Commitment Premium	$	43,738	$	76,449	$	120,187
Face value	47,225		82,546		129,771
Issuance discount	23,195		40,542		63,737
Fair value	$	70,420	$	123,088	$	193,508
Debt issuance costs	(1,268)		(2,216)		(3,484)
Net carrying value at Fresh Start Reporting Date	$	69,152	$	120,872	$	190,024

Senior Secured Notes

We entered into an indenture, dated as of the Effective Date, among the Company, the subsidiary guarantors party thereto and Wilmington Trust, N.A., as trustee (the “Senior Secured Notes Indenture”), and issued $78.1 million aggregate principal amount of floating rate senior secured notes due 2025 (the “Senior Secured Notes”) thereunder. The Senior Secured Notes are guaranteed on a senior secured basis by our existing subsidiaries that also guarantee our obligations under the ABL Credit Facility (the “Guarantors”) on a full and unconditional basis and are secured by a second lien on the accounts receivable and inventory and a first lien on substantially all of the other assets and properties (including the cash proceeds thereof) of the Company and the Guarantors. We received net issuance proceeds of $75 million, which was net of the original issue discount of $3.1 million.

The Senior Secured Notes will mature on May 15, 2025 and interest will accrue at the rate of LIBOR plus 9.5% per annum, with a LIBOR rate floor of 1.5%, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2020. With respect to any interest payment due on or prior to May 29, 2021, 50% of the interest will be payable in cash and 50% of the interest will be paid in-kind in the form of an increase to the principal amount; however, a majority in interest of the holders of the Senior Secured Notes may elect to have 100% of the interest due on or prior to May 29, 2021 payable in-kind. For all interest periods commencing on or after May 15, 2024, the interest rate for the Senior Secured Notes will be a rate equal to LIBOR plus 10.50%, with a LIBOR rate floor of 1.5%.

We may redeem all or part of the Senior Secured Notes on or after June 1, 2021 at redemption prices (expressed as percentages of the principal amount) equal to (i) 104% for the twelve-month period beginning on June 1, 2021; (ii) 102% for the twelve-month period beginning on June 1, 2022; (iii) 101% for the twelve-month period beginning on June 1, 2023 and (iv) 100% for the twelve-month period beginning June 1, 2024 and at any time thereafter, plus accrued and unpaid interest at the redemption date. Notwithstanding the foregoing, if a change of control (as defined in the Senior Secured Notes Indenture) occurs prior to June 1, 2022, we may elect to purchase all remaining outstanding Senior Secured Notes not tendered to us as described below at a redemption price equal to 103% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the applicable redemption date. If a change of control (as defined in the Senior Secured Notes Indenture) occurs, holders of the Senior Secured Notes will have the right to require us to repurchase all or any part of their Senior Secured Notes at a purchase price equal to 101% of the aggregate principal amount of the Senior Secured Notes repurchased, plus accrued and unpaid interest, if any, to the repurchase date.

The Senior Secured Notes Indenture contains a minimum asset coverage ratio of 1.5 to 1.0 as of any June 30 or December 31, beginning December 31, 2020. The Senior Secured Notes Indenture provides for certain customary events of default and contains covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to incur, assume or guarantee additional indebtedness; pay dividends or distributions on capital stock or redeem or repurchase capital stock; make investments; repay junior debt; sell stock of our subsidiaries; transfer or sell assets; enter into sale and lease back transactions; create liens; enter into transactions with affiliates; and enter into mergers or consolidations.

Having completed qualifying asset sales in the aggregate of $7.2 million by the end of September 2020, we commenced and completed an offer to purchase $2.2 million in aggregate principal amount of the Senior Secured Notes in October 2020 in accordance with the Senior Secured Notes Indenture, at a purchase price equal to 100% of the principal amount, plus accrued and unpaid interest through, but not including, the purchase date. As a result, the $2.2 million of Senior Secured Notes is presented as a current liability in our unaudited condensed consolidated balance sheet as of September 30, 2020. The purchase was funded through cash on hand, which is classified as “restricted cash” as of September 30, 2020.

Debt Issuance Costs and Discount

Costs incurred in connection with the issuance of our Convertible Notes (which were allocated to the liability component, as described above) and Senior Secured Notes, as well as the issuance discounts, were capitalized and are being amortized using the effective interest method over the term of the related debt instrument. Costs incurred in connection with our ABL Credit Facility were capitalized and are being amortized using the straight-line method over the expected term of the agreement. Our unamortized debt issuance costs and discounts are presented below (amounts in thousands):

	Successor
	September 30, 2020
Unamortized discount on Convertible Notes (based on imputed interest rate of 20.9%)	$	56,660
Unamortized discount on Senior Secured Notes (based on imputed interest rate of 13.2%)	2,958
Unamortized debt issuance costs	3,969

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Taxes (Notes)

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Valuation Allowances on Deferred Tax Assets [Text Block]

Taxes

As described in Note 2, Emergence from Voluntary Reorganization under Chapter 11, in accordance with the Plan, our Prepetition Senior Notes were exchanged for shares of our new common stock. Absent an exception, a debtor recognizes cancellation of debt income (CODI) upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The Internal Revenue Code (IRC) provides that a debtor in a Chapter 11 bankruptcy case may exclude CODI from taxable income but must reduce certain of its tax attributes by the amount of CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness. As a result of the market value of equity upon emergence from Chapter 11 bankruptcy proceedings, the estimated amount of CODI for federal income tax purposes is approximately $217 million, which will reduce the value of our net operating losses by an equal amount. The actual reduction in tax attributes does not occur until the first day of our tax year subsequent to the date of emergence, or January 1, 2021. The reduction of net operating losses is expected to be fully offset by a corresponding decrease in valuation allowance.

Upon our emergence from Chapter 11, we underwent an ownership change, as defined in the IRC, which we expect will result in future annual limitations on the usage of our remaining domestic net operating losses. The majority of our remaining domestic net operating losses will begin to expire in 2030, while losses generated after 2017 are carried forward indefinitely but are limited in usage to 80% of taxable income beginning in 2021. The majority of our foreign net operating losses are carried forward indefinitely, but losses generated after 2016 are carried forward for 12 years and will begin to expire in 2029.

We provide a valuation allowance when it is more likely than not that some portion of our deferred tax assets will not be realized. We evaluated the impact of the reorganization, including the change in control, resulting from our bankruptcy emergence and determined it is more likely than not that we will not fully realize future income tax benefits related to our domestic net deferred tax assets based on the annual limitations discussed above, historical results, and expected market conditions known on the date of measurement.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act contains numerous corporate income tax provisions, some of which impact our calculation of income taxes, including providing for the carryback of certain net operating losses, modifications to the net interest deduction limitations, refundable payroll tax credits, and deferment of employer social security payments. However, the provisions did not have a material impact on our Predecessor or Successor financial statements.

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Fair Value of Financial Instruments	9 Months Ended
	Sep. 30, 2020
Fair Value Disclosures [Abstract]
Fair Value of Financial Instruments	Fair Value of Financial InstrumentsThe FASB’s Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures, defines fair value and provides a hierarchical framework associated with the level of subjectivity used in measuring assets and liabilities at fair value. Currently, our financial instruments consist primarily of cash and cash equivalents, trade and other receivables, trade payables and long-term debt. The carrying value of cash and cash equivalents, trade and other receivables, and trade payables are considered to be representative of their respective fair values due to the short-term nature of these instruments. As a result of the application of fresh start accounting, we estimate that the carrying value of our long-term debt approximates fair value.

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Earnings (Loss) Per Common Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Earnings (loss) Per Common Share

Earnings (Loss) Per Common Share

Basic earnings (loss) per share (EPS) is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period.

Diluted EPS is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable from stock-based compensation awards and the Convertible Notes. Potentially dilutive common shares from outstanding stock-based compensation awards are determined using the average share price for each period under the treasury stock method. Potentially dilutive shares from the Convertible Notes are determined using the if-converted method, whereby the Convertible Notes are assumed to be converted and included in the denominator of the EPS calculation and the interest expense, net of tax, recorded in connection with the Convertible Notes is added back to net income (loss).

The following presents a reconciliation of the numerators and denominators of the basic and diluted EPS computations (amounts in thousands, except per share data):

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Numerator:
Net loss (numerator for basic EPS)	$	(20,070)	$	(26,016)
Interest expense on Convertible Notes, net of tax	—		—
Numerator for diluted EPS, if-converted method	(20,070)		(26,016)
Denominator:
Weighted-average shares (denominator for basic EPS)	1,119		78,473
Potentially dilutive shares issuable from Convertible Notes, if-converted method	—		—
Potentially dilutive shares issuable from outstanding stock-based compensation awards, treasury stock method	—		—
Denominator for diluted EPS	1,119		78,473
Loss per common share - Basic	$	(17.94)	$	(0.33)
Loss per common share - Diluted	$	(17.94)	$	(0.33)
Potentially dilutive securities excluded as anti-dilutive	9,733		5,577

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Numerator:
Net loss (numerator for basic EPS)	$	(29,887)	$	(104,225)	$	(54,075)
Interest expense on Convertible Notes, net of tax	—		—		—
Numerator for diluted EPS, if-converted method	(29,887)		(104,225)		(54,075)
Denominator:
Weighted-average shares (denominator for basic EPS)	1,101		78,968		78,405
Potentially dilutive shares issuable from Convertible Notes, if-converted method	—		—		—
Potentially dilutive shares issuable from outstanding stock-based compensation awards, treasury stock method	—		—		—
Denominator for diluted EPS	1,101		78,968		78,405
Loss per common share - Basic	$	(27.15)	$	(1.32)	$	(0.69)
Loss per common share - Diluted	$	(27.15)	$	(1.32)	$	(0.69)
Potentially dilutive securities excluded as anti-dilutive	9,733		4,517		4,962

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Segment Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Information

Segment Information

As of September 30, 2020, we have four operating segments, comprised of two drilling services business segments (domestic and international drilling) and two production services business segments (well servicing and wireline services), which reflects the basis used by management in making decisions regarding our business for resource allocation and performance assessment, as required by ASC Topic 280, Segment Reporting. In April 2020, we closed our coiled tubing services business and placed all of our coiled tubing services assets as held for sale at June 30, 2020. Historical financial information for our coiled tubing services business, which had previously been presented as a separate operating segment, continues to be presented in the following tables as a component of continuing operations.

Our domestic and international drilling services segments provide contract land drilling services to a diverse group of exploration and production companies through our three drilling divisions in the US and internationally in Colombia. We provide a comprehensive service offering which includes the drilling rig, crews, supplies, and most of the ancillary equipment needed to operate our drilling rigs.

Our well servicing and wireline services segments provide a range of production services to producers primarily in Texas, North Dakota, the Rocky Mountain region, and Louisiana. Our former coiled tubing services segment also provided various production services primarily in Texas, Wyoming, and surrounding areas.

The following tables set forth certain financial information for each of our segments and corporate (amounts in thousands):

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Revenues:
Domestic drilling	$	17,567	$	38,168
International drilling	4,061		21,617
Drilling services	21,628		59,785
Well servicing	12,871		30,293
Wireline services	4,499		43,874
Coiled tubing services	—		12,446
Production services	17,370		86,613
Consolidated revenues	$	38,998	$	146,398
Operating costs:
Domestic drilling	$	9,706	$	21,931
International drilling	3,449		15,844
Drilling services	13,155		37,775
Well servicing	10,577		21,414
Wireline services	4,938		38,349
Coiled tubing services	223		10,521
Production services	15,738		70,284
Consolidated operating costs	$	28,893	$	108,059
Gross margin:
Domestic drilling	$	7,861	$	16,237
International drilling	612		5,773
Drilling services	8,473		22,010
Well servicing	2,294		8,879
Wireline services	(439)		5,525
Coiled tubing services	(223)		1,925
Production services	1,632		16,329
Consolidated gross margin	$	10,105	$	38,339
Identifiable Assets:
Domestic drilling (1)	$	144,433	$	354,534
International drilling (1) (2)	43,033		47,320
Drilling services	187,466		401,854
Well servicing	47,207		118,686
Wireline services	21,174		80,054
Coiled tubing services	4,062		34,339
Production services	72,443		233,079
Corporate	59,193		54,760
Consolidated identifiable assets	$	319,102	$	689,693

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Depreciation and amortization:
Domestic drilling	$	6,195	$	10,864
International drilling	3,242		1,512
Drilling services	9,437		12,376
Well servicing	3,539		5,132
Wireline services	1,620		3,537
Coiled tubing services	—		1,660
Production services	5,159		10,329
Corporate	103		219
Consolidated depreciation	$	14,699	$	22,924
Capital Expenditures:
Domestic drilling	$	1,006	$	2,777
International drilling	167		1,162
Drilling services	1,173		3,939
Well servicing	313		2,146
Wireline services	45		775
Coiled tubing services	—		1,756
Production services	358		4,677
Corporate	—		44
Consolidated capital expenditures	$	1,531	$	8,660

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Revenues:
Domestic drilling	$	23,433	$	53,341	$	115,829
International drilling	4,889		15,928		68,682
Drilling services	28,322		69,269		184,511
Well servicing	16,627		31,947		86,053
Wireline services	5,212		35,543		137,134
Coiled tubing services	—		5,611		38,111
Production services	21,839		73,101		261,298
Consolidated revenues	$	50,161	$	142,370	$	445,809
Operating costs:
Domestic drilling	$	13,352	$	33,101	$	69,098
International drilling	4,512		13,676		50,884
Drilling services	17,864		46,777		119,982
Well servicing	13,387		26,877		61,348
Wireline services	6,023		31,836		119,500
Coiled tubing services	362		8,557		31,784
Production services	19,772		67,270		212,632
Consolidated operating costs	$	37,636	$	114,047	$	332,614

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Gross margin:
Domestic drilling	$	10,081	$	20,240	$	46,731
International drilling	377		2,252		17,798
Drilling services	10,458		22,492		64,529
Well servicing	3,240		5,070		24,705
Wireline services	(811)		3,707		17,634
Coiled tubing services	(362)		(2,946)		6,327
Production services	2,067		5,831		48,666
Consolidated gross margin	$	12,525	$	28,323	$	113,195
Identifiable Assets:
Domestic drilling (1)	$	144,433	$	158,283	$	354,534
International drilling (1) (2)	43,033		49,611		47,320
Drilling services	187,466		207,894		401,854
Well servicing	47,207		49,388		118,686
Wireline services	21,174		23,948		80,054
Coiled tubing services	4,062		6,336		34,339
Production services	72,443		79,672		233,079
Corporate	59,193		65,057		54,760
Consolidated identifiable assets	$	319,102	$	352,623	$	689,693
Depreciation and amortization:
Domestic drilling	$	8,207	$	18,058	$	32,297
International drilling	4,318		2,144		4,228
Drilling services	12,525		20,202		36,525
Well servicing	4,800		7,820		14,956
Wireline services	2,383		5,088		11,519
Coiled tubing services	—		2,164		4,719
Production services	7,183		15,072		31,194
Corporate	227		373		709
Consolidated depreciation	$	19,935	$	35,647	$	68,428
Capital Expenditures:
Domestic drilling	$	1,490	$	3,862	$	14,344
International drilling	305		1,273		3,444
Drilling services	1,795		5,135		17,788
Well servicing	343		1,918		8,182
Wireline services	105		1,684		5,198
Coiled tubing services	—		166		4,567
Production services	448		3,768		17,947
Corporate	—		21		541
Consolidated capital expenditures	$	2,243	$	8,924	$	36,276

(1)    Identifiable assets for our drilling segments include the impact of a $28.3 million and $37.5 million intercompany balance, as of September 30, 2020 and 2019, respectively, between our domestic drilling segment (intercompany receivable) and our international drilling segment (intercompany payable).

(2)    Identifiable assets for our international drilling segment include five drilling rigs that are owned by our Colombia subsidiary and three drilling rigs that are owned by one of our domestic subsidiaries and leased to our Colombia subsidiary.

The following is a reconciliation of consolidated gross margin of our segments reported above to loss from operations as reported on the condensed consolidated statements of operations (amounts in thousands):

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Consolidated gross margin	$	10,105	$	38,339
Depreciation and amortization	(14,699)		(22,924)
General and administrative	(11,626)		(30,485)
Bad debt (expense) recovery, net	315		(196)
Gain on dispositions of property and equipment, net	3,829		(17)
Loss from operations	$	(12,076)	$	(15,283)

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Consolidated gross margin	$	12,525	$	28,323	$	113,195
Depreciation and amortization	(19,935)		(35,647)		(68,428)
General and administrative	(15,839)		(22,047)		(68,271)
Pre-petition restructuring charges	—		(16,822)		—
Impairment	(388)		(17,853)		(1,378)
Bad debt (expense) recovery, net	598		(1,209)		90
Gain on dispositions of property and equipment, net	4,289		989		2,184
Loss from operations	$	(18,750)	$	(64,266)	$	(22,608)

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

Commitments and Contingencies

In connection with our operations in Colombia, our foreign subsidiaries routinely obtain bonds for bidding on drilling contracts, performing under drilling contracts, and remitting customs and importation duties. Based on historical experience and information currently available, we believe the likelihood of demand for payment under these bonds and guarantees is remote.

We are currently undergoing sales and use tax audits for multi-year periods. As of September 30, 2020 and December 31, 2019, our accrued liability was $0.8 million and $2.0 million, respectively, based on our estimate of the sales and use tax obligations that are expected to result from these audits. Due to the inherent uncertainty of the audit process, we believe that it is reasonably possible that we may incur additional tax assessments with respect to one or more of the audits in excess of the amount accrued. We believe that such an outcome would not have a material adverse effect on our results of operations or financial position. Because certain of these audits are in a preliminary stage, an estimate of the possible loss or range of loss from an adverse result in all or substantially all of these cases cannot reasonably be made.

Due to the nature of our business, we are, from time to time, involved in litigation or subject to disputes or claims related to our business activities, including workers’ compensation claims and employment-related disputes. Legal costs relating to these matters are expensed as incurred. In the opinion of our management, none of the pending litigation, disputes or claims against us will have a material adverse effect on our financial condition, results of operations or cash flow from operations.

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Organization and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Pioneer Energy Services Corp. and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of our management, all adjustments (consisting of normal, recurring accruals) necessary for a fair presentation have been included. We suggest that you read these unaudited condensed consolidated financial statements together with the consolidated financial statements and the related notes included in our annual report on Form 10-K for the year ended December 31, 2019, as amended. As described below, as a result of the application of fresh start accounting and the effects of the implementation of our Plan of Reorganization (as defined below), the consolidated financial statements after the Effective Date (as defined below) are not comparable with the consolidated financial statements on or before that date. See Note 3, Fresh Start Accounting, for additional information.

Fresh Start Accounting

Chapter 11 Cases — On March 1, 2020 (the “Petition Date”), Pioneer and certain of our domestic subsidiaries (collectively, the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions”) for reorganization under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). On May 11, 2020, the Bankruptcy Court confirmed the plan of reorganization (the “Plan”) that was filed with the Bankruptcy Court on March 2, 2020, and on May 29, 2020 (the “Effective Date”), the conditions to effectiveness of the plan were satisfied and we emerged from Chapter 11. See Note 2, Emergence from Voluntary Reorganization under Chapter 11, for more information.

The accompanying condensed consolidated financial statements have been prepared as if we are a going concern and in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 852, Reorganizations (ASC Topic 852). Upon emergence from bankruptcy, we adopted fresh start accounting in accordance

with ASC Topic 852 and became a new entity for financial reporting purposes. As a result, the condensed consolidated financial statements after the Effective Date are not comparable with the consolidated financial statements on or before that date as indicated by the “black line” division in the financial statements and footnote tables, which emphasizes the lack of comparability between amounts presented. References to “Successor” relate to our financial position and results of operations after the Effective Date. References to “Predecessor” refer to our financial position and results of operations on or before the Effective Date.

We evaluated the events between May 29, 2020 and May 31, 2020 and concluded that the use of an accounting convenience date of May 31, 2020 (the “Fresh Start Reporting Date”) would not have a material impact on our condensed consolidated financial statements. As such, the application of fresh start accounting was reflected in our condensed consolidated balance sheet as of May 31, 2020 and related fresh start accounting adjustments were included in our condensed consolidated statement of operations for the five months ended May 31, 2020. See Note 3, Fresh Start Accounting, for additional information.

Use of Estimates

Use of Estimates — In preparing the accompanying unaudited condensed consolidated financial statements, we make various estimates and assumptions that affect the amounts of assets and liabilities we report as of the dates of the balance sheets and income and expenses we report for the periods shown in the income statements and statements of cash flows. Our actual results could differ significantly from those estimates. Material estimates affecting our financial results, including those that are particularly susceptible to significant changes in the near term, relate to our application of fresh start accounting, our estimates of certain variable revenues and amortization periods of certain deferred revenues and costs associated with drilling daywork contracts, our estimates of projected cash flows and fair values for impairment evaluations, our estimate of the valuation allowance for deferred tax assets, and our estimate of the liability relating to the self-insurance portion of our health and workers’ compensation insurance. For information about our use of estimates relating to fresh start accounting, see Note 3, Fresh Start Accounting.

Subsequent Events

Subsequent Events — In preparing the accompanying unaudited condensed consolidated financial statements, we have reviewed events that have occurred after September 30, 2020, through the filing of this Form 10-Q, for inclusion as necessary.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Changes to accounting principles generally accepted in the United States of America (“U.S. GAAP”) are established by the FASB in the form of Accounting Standards Updates (ASUs) to the FASB ASC. We consider the applicability and impact of all ASUs. Other than the ASU listed below, we have determined that there are currently no new or recently adopted ASUs which we believe will have a material impact on our consolidated financial position and results of operations.

•Convertible Instruments and Contracts in an Entity’s Own Equity. In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and preferred stock. Additionally, this ASU improves the consistency of EPS calculations by requiring entities to apply one method, the if-converted method, to all convertible instruments in diluted earnings-per-share calculations. As a smaller reporting company, this ASU will be effective for us on January 1, 2024, however, early adoption is permitted on January 1, 2021. We are currently evaluating the effect that the ASU will have on our consolidated financial statements.

Cash Equivalents and Restricted Cash

Cash and Cash Equivalents — We had no cash equivalents at September 30, 2020. Cash equivalents at December 31, 2019 were $8.9 million, consisting of investments in highly-liquid money-market mutual funds.

Restricted Cash — Our restricted cash balance at September 30, 2020 reflects the professional fees escrow balance which will be released in accordance with the Plan, as well as $2.2 million of proceeds from asset sales which were used to fund the redemption of Senior Secured Notes tendered in October 2020, as described further in Note 7, Debt. Our restricted cash balance at December 31, 2019 reflects the portion of net proceeds from the issuance of our senior secured term loan held in a restricted account until the completion of certain administrative tasks related to providing access rights to certain of our real property, a condition which is still in effect under the terms of our post-emergence debt instruments.

Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets — Prepaid expenses and other current assets include items such as insurance, rent deposits, software subscriptions, and other fees. We routinely expense these items in the normal course of business over the periods that we benefit from these expenses. Prepaid expenses and other current assets also include deferred mobilization costs for short-term drilling contracts and demobilization revenues recognized on drilling contracts expiring in the near term.

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Revenue from Contracts with Customers (Policies)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Policy Text Block]

Revenue from Contracts with Customers

Our production services business segments earn revenues for well servicing and wireline services pursuant to master services agreements based on purchase orders or other contractual arrangements with the client. Production services jobs are generally short-term (ranging in duration from several hours to less than 30 days) and are charged at current market rates for the labor, equipment and materials necessary to complete the job. Production services jobs are varied in nature but typically represent a single performance obligation, either for a particular job, a series of distinct jobs, or a period of time during which we stand ready to provide services as our client needs them. Revenue is recognized for these services over time, as the services are performed.

Our drilling services business segments earn revenues by drilling oil and gas wells for our clients under daywork contracts. Daywork contracts are comprehensive agreements under which we provide a comprehensive service offering, including the drilling rig, crew, supplies, and most of the ancillary equipment necessary to operate the rig. Contract modifications that extend the term of a dayrate contract are generally accounted for prospectively as a separate dayrate contract. We account for our services provided under daywork contracts as a single performance obligation comprised of a series of distinct time increments which are satisfied over time. Accordingly, dayrate revenues are recognized in the period during which the services are performed.

With most drilling contracts, we also receive payments contractually designated for the mobilization and demobilization of drilling rigs and other equipment to and from the client’s drill site. Revenues associated with the mobilization and demobilization of our drilling rigs to and from the client’s drill site do not relate to a distinct good or service and are recognized ratably over the related contract term.

The amount of demobilization revenue that we ultimately collect is dependent upon the specific contractual terms, most of which include provisions for reduced (or no) payment for demobilization when, among other things, the contract is renewed or extended with the same client, or when the rig is subsequently contracted with another client prior to the termination of the current contract. Since revenues associated with demobilization activity are typically variable, at each period end, they are estimated at the most likely amount, and constrained when the likelihood of a significant reversal is probable. Any change in the expected amount of demobilization revenue is accounted for with the net cumulative impact of the change in estimate recognized in the period during which the revenue estimate is revised.

The upfront costs that we incur to mobilize the drilling rig to our client’s initial drilling site are capitalized and recognized ratably over the term of the related contract, including any contracted renewal or extension periods, which is our estimate of the period during which we expect to benefit from the cost of mobilizing the rig. Costs associated with the final demobilization at the end of the contract term are expensed when incurred, when the demobilization activity is performed.

Contract Asset and Liability Balances and Contract Cost Assets

Contract asset and contract liability balances relate to demobilization and mobilization revenues, respectively. Demobilization revenue that we expect to receive is recognized ratably over the related contract term, but invoiced upon completion of the demobilization activity. Mobilization revenue, which is typically collected upon the completion of the initial mobilization activity, is deferred and recognized ratably over the related contract term. Contract asset and liability balances are netted at the contract level, with the net current and noncurrent portions separately classified in our condensed consolidated balance sheets, and the resulting contract liabilities are referred to herein as “deferred revenues.” When demobilization revenues are recognized prior to the activity being performed, they are not yet billable, and the resulting contract assets are included in our other current assets in our unaudited condensed consolidated financial statements.

Contract cost assets represent the costs associated with the initial mobilization required in order to fulfill the contract, which are deferred and recognized ratably over the period during which we expect to benefit from the mobilization, or the period during which we expect to satisfy the performance obligations of the related contract. Contract cost assets are presented as either current or noncurrent, according to the duration of the original contract to which it relates, and referred to herein as “deferred costs.”

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Property and Equipment (Impairments) (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Property, Plant and Equipment, Impairment [Policy Text Block]

Impairments — In accordance with ASC Topic 360, Property, Plant and Equipment, we monitor all indicators of potential impairments. We evaluate for potential impairment of long-lived assets when indicators of impairment are present, which may include, among other things, significant adverse changes in industry trends (including revenue rates, utilization rates, oil and natural gas market prices, and industry rig counts). In performing an impairment evaluation, we estimate the future undiscounted net cash flows from the use and eventual disposition of the assets grouped at the lowest level that independent cash flows can be identified. We perform an impairment evaluation and estimate future undiscounted cash flows for each of our asset groups separately, which are our domestic drilling services, international drilling services, well servicing and wireline services segments, and, prior to being placed as held for sale, our coiled tubing services segment. If the sum of the estimated future undiscounted net cash flows is less than the carrying amount of the asset group, then we determine the fair value of the asset group, and the amount of an impairment charge would be measured as the difference between the carrying amount and the fair value of the assets.

Due to the significant decline in industry conditions, commodity prices, and projected utilization of equipment, as well as the COVID-19 pandemic’s impact on our industry, our projected cash flows declined during the first quarter of 2020, and we performed recoverability testing on all our reporting units. As a result of this analysis, we incurred impairment charges of $16.4 million to reduce the carrying values of our coiled tubing assets to their estimated fair values during the three months ended March 31, 2020. For all our other reporting units, excluding coiled tubing, we determined that the sum of the estimated future undiscounted net cash flows were in excess of the carrying amounts and that no impairment

existed for these reporting units at March 31, 2020. We continued to monitor potential indicators of impairment through September 30, 2020 and concluded that none of our reporting units are currently at risk of impairment. The assumptions we use in the evaluation for impairment are inherently uncertain and require management judgment. Although we believe the assumptions and estimates used in our impairment analysis are reasonable, different assumptions and estimates could materially impact the analysis and resulting conclusions. The most significant inputs used in our impairment analysis include the projected utilization and pricing of our services, as well as the estimated proceeds upon any future sale or disposal of the assets, all of which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures. If commodity prices decrease or remain at current levels for an extended period of time, or if the demand for any of our services decreases below what we are currently projecting, our estimated cash flows may decrease and our estimates of the fair value of certain assets may decrease as well. If any of the foregoing were to occur, we could incur impairment charges on the related assets.

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Leases (Leases) (Policies)	9 Months Ended
	Sep. 30, 2020
Leases [Abstract]
Lessor, Operating Leases [Text Block]	As a drilling and production services provider, we provide the drilling rigs and production services equipment which are necessary to fulfill our performance obligations and which are considered leases under ASU No. 2016-02, Leases, (together with its amendments, herein referred to as “ASC Topic 842”). However, ASU No. 2018-11, Leases: Targeted Improvements, allows lessors to (i) combine the lease and non-lease components of revenues when the revenue recognition pattern is the same and when the lease component, when accounted for separately, would be considered an operating lease, and (ii) account for the combined lease and non-lease components under ASC Topic 606, Revenue from Contracts with Customers, when the non-lease component is the predominant element of the combined component. We elected to apply this expedient and therefore recognize our revenues (both lease and service components) under ASC Topic 606, and present them as one revenue stream in our unaudited condensed consolidated statements of operations.

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Organization and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Drilling Long-Lived Assets, by Type

The following table summarizes our current rig fleet count and composition for each drilling services business segment:

	Multi-well, Pad-capable
	AC rigs	SCR rigs	Total
Domestic drilling	17	—	17
International drilling	—	8	8
			25

Schedule of Production Services Long-Lived Assets, by Type

As of September 30, 2020, the fleet counts for each of our production services business segments were as follows:

	550 HP	600 HP	Total
Well servicing rigs, by horsepower (HP) rating	111	12	123
Wireline services units			78

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting (Tables)

9 Months Ended

Sep. 30, 2020

Emergence from Voluntary Reorganization under Chapter 11 [Abstract]

Schedule of Reorganization Items [Table Text Block]

Reorganization items consisted of the following (amounts in thousands):

	Successor				Predecessor
	Three Months Ended September 30, 2020		Four Months Ended September 30, 2020		Five Months Ended May 31, 2020
Gain on settlement of liabilities subject to compromise	$	—	$	—	$	(291,378)
Fresh start valuation adjustments	—		—		284,392
Legal and professional fees	2,522		3,263		26,038
Unamortized debt costs on liabilities subject to compromise	—		—		2,003
Accelerated stock-based compensation	—		—		713
Loss (gain) on rejected leases	—		403		(378)
DIP facility costs	—		—		513
	$	2,522	$	3,666	$	21,903

Schedule of Enterprise Value to Estimated Fair Value of Successor Common Stock [Table Text Block]

The following table reconciles the enterprise value to the estimated fair value of our Successor Common Stock as of the Fresh Start Reporting Date (dollars in thousands, except per share data):

Enterprise value	$	276,000
Plus: cash and cash equivalents	10,592
Less: fair value of debt	(145,420)
Total implied equity (prior to debt issuance costs on equity component on Convertible Notes)	141,172
Less: equity portion of Convertible Notes	(123,088)
Fair value of Successor stockholders’ equity	$	18,084
Shares issued upon emergence	1,049,804
Per share value	$	17.23

Reconciliation of Enterprise Value to the Reorganization Value of Successor's Assets to be Allocated [Table Text Block]

The following table reconciles enterprise value to the reorganization value of our Successor’s assets to be allocated to our individual assets as of the Fresh Start Reporting Date (amounts in thousands):

Enterprise value	$	276,000
Plus: cash and cash equivalents	10,592
Plus: current liabilities	65,799
Plus: non-current liabilities excluding long-term debt	6,626
Less: debt issuance costs on Successor debt	(6,394)
Reorganization value of Successor assets	$	352,623

Schedule of Fresh-Start Adjustments [Table Text Block]

The adjustments set forth in the following consolidated balance sheet as of May 31, 2020 reflect the effects of the transactions contemplated by the Plan and executed on the fresh start reporting date (reflected in the column entitled “Reorganization Adjustments”), and fair value and other required accounting adjustments resulting from the adoption of Fresh Start Accounting (reflected in the column entitled “Fresh Start Accounting Adjustments”).

	As of May 31, 2020
(in thousands)	Predecessor		Reorganization Adjustments			Fresh Start Accounting Adjustments			Successor
ASSETS
Cash and cash equivalents	$	21,253	$	(10,661)	(1)	$	—		$	10,592
Restricted cash	4,452		11,721		(2)	—			16,173
Receivables:
Trade, net of allowance for doubtful accounts	33,537		—			—			33,537
Unbilled receivables	9,163		—			—			9,163
Insurance recoveries	23,636		—			—			23,636
Other receivables	5,256		1,000		(3)	—			6,256
Inventory	21,012		—			(6,883)		(18)	14,129
Assets held for sale	1,825		—			29		(19)	1,854
Prepaid expenses and other current assets	4,817		—			952		(20)	5,769
Total current assets	124,951		2,060			(5,902)			121,109
Property and equipment, at cost	1,082,704		—			(886,733)		(21)	195,971
Less accumulated depreciation	655,512		—			(655,512)		(21)	—
Net property and equipment	427,192		—			(231,221)			195,971
Intangible assets, net of accumulated amortization	—		—			9,370		(22)	9,370
Deferred income taxes	10,897		—			(2,157)		(23)	8,740
Operating lease assets	5,234		—			—			5,234
Other noncurrent assets	13,247		(5,023)		(4)	3,975		(24)	12,199
Total assets	$	581,521	$	(2,963)		$	(225,935)		$	352,623
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	24,601	$	(9,478)	(5)	$	—		$	15,123
Deferred revenues	121		—			—			121
Commitment premium	9,584		(9,584)		(6)	—			—
Debtor in possession financing	4,000		(4,000)		(7)	—			—
Accrued expenses:
Employee compensation and related costs	4,970		—			—			4,970
Insurance claims and settlements	23,517		—			—			23,517
Insurance premiums and deductibles	5,269		—			—			5,269
Interest	3,775		(3,731)		(8)	—			44
Other	12,436		4,329		(9)	(10)			16,755
Total current liabilities	88,273		(22,464)			(10)			65,799
Long-term debt, less unamortized discount and debt issuance costs	175,000		(53,831)		(10)	20,070		(25)	141,239
Noncurrent operating lease liabilities	4,189		—			—			4,189
Deferred income taxes	4,296		—			(3,225)		(26)	1,071
Other noncurrent liabilities	1,366		—			—			1,366
Total liabilities not subject to compromise	273,124		(76,295)			16,835			213,664
Liabilities subject to compromise	308,422		(308,422)		(11)	—			—
Stockholders’ equity:
Predecessor common stock	8,893		(8,893)		(12)	—			—
Successor common stock	—		1		(13)	—			1
Predecessor additional paid-in capital	553,631		(553,631)		(14)	—			—
Successor additional paid-in capital	—		98,413		(15)	40,545		(27)	138,958
Predecessor treasury stock, at cost	(5,098)		5,098		(16)	—			—
Accumulated deficit	(557,451)		840,766		(17)	(283,315)		(28)	—
Total stockholders’ equity	(25)		381,754			(242,770)			138,959
Total liabilities and stockholders’ equity	$	581,521	$	(2,963)		$	(225,935)		$	352,623

(1)Represents the following net change in cash and cash equivalents:

Cash proceeds from Convertible Notes	$	120,187
Cash proceeds from Senior Secured Notes	75,000
Payment to fund claims reserve	(950)
Payment to escrow remaining professional fees	(10,771)
Payment of professional fees	(9,468)
Payment in full to extinguish DIP Facility	(4,000)
Payment of accrued interest on DIP Facility	(55)
Payment of DIP Facility fees	(177)
Payment in full to extinguish Prepetition Term Loan	(175,000)
Payment of accrued interest on Prepetition Term Loan	(3,677)
Payment of prepayment penalty on Prepetition Term Loan	(1,750)
	$	(10,661)

(2)Represents the following net change in restricted cash:

Payment to fund rejected leases claims reserve	$	950
Payment to escrow remaining professional fees	10,771
	$	11,721

(3)Represents recognition of a receivable for a portion of the proceeds from the issuance of the Senior Secured Notes which was received in June 2020.

(4)Represents the reclassification of previously paid debt issuance costs from deferred assets to offset the carrying amount of long-term debt.

(5)Represents the payment of professional fees which were incurred prior to emergence.

(6)Represents the settlement of the Backstop Commitment Premium upon issuance of the Convertible Notes.

(7)Represents the payment to extinguish the DIP Facility.

(8)Represents the payment of accrued interest on the Prepetition Term Loan and DIP Facility.

(9)Represents the increase in accrued expenses for fees which were incurred upon our emergence from Chapter 11.

(10)Represents the following changes in long-term debt, less unamortized discount and debt issuance costs:

Payment in full to extinguish Prepetition Term Loan	$	(175,000)
Issuance of Senior Secured Notes at Par	78,125
Recognition of debt issue costs on Senior Secured Notes	(2,913)
Recognition of liability component of Convertible Notes issuance	47,225
Recognition of debt issuance costs on liability component of Convertible Notes	(1,268)
	$	(53,831)

Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

(11)Represents the settlement of liabilities subject to compromise in accordance with the Plan, for which the resulting gain is as follows:

Prepetition Senior Notes	$	300,000
Accrued interest on Prepetition Senior Notes	8,422
Liabilities subject to compromise	308,422
Cash paid by holders of Prepetition Senior Notes	118,013
Issuance of equity to Prepetition Senior Notes creditors	(17,044)
Notes Received by Prepetition Senior Note holders	(118,013)
	$	291,378

(12)Represents the cancellation of Predecessor common stock.

(13)Represents the issuance of Successor common stock to prior equity holders and to settle the Prepetition Senior Notes.

(14)Represents the cancellation of Predecessor additional paid-in capital.

(15)The changes in Successor additional paid-in capital were as follows:

Recognition of equity component of Convertible Notes	$	82,546
Issuance of Successor common stock to Prepetition Senior Notes creditors and prior equity holders	18,083
Recognition of debt issuance costs of Convertible Notes equity component	(2,216)
	$	98,413

Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

(16)Represents the cancellation of Predecessor treasury stock.

(17)Represents the cumulative impact to Predecessor retained earnings of the reorganization adjustments described above.

(18)Represents the fair value adjustment to inventory, as described further in the previous section under the heading “Valuation Process”.

(19)Represents the fair value adjustment to assets held for sale, as described further in the previous section under the heading “Valuation Process”.

(20)Represents deferred compensation associated with the excess of fair value over the par value of Convertible Notes purchased by senior management, which is compensation to the Successor and therefore was expensed in June 2020.

(21)Represents the following fair value adjustments to property and equipment:

	Predecessor Historical Value		Fair Value Adjustment		Successor Fair Value
Drilling rigs and equipment	$	1,010,612	$	(832,294)	$	178,318
Vehicles	41,283		(28,561)		12,722
Building and improvements	16,619		(13,742)		2,877
Office equipment	12,231		(11,743)		488
Land	1,959		(393)		1,566
	$	1,082,704	$	(886,733)	$	195,971
Less: Accumulated Depreciation	(655,512)		655,512		—
	$	427,192	$	(231,221)	$	195,971

(22)Represents the fair value adjustment to recognize the trademark and tradename of Pioneer Energy Services Corp. as an intangible, as described further in the above section under the heading “Valuation Process”.

(23)Represents the recognition of the noncurrent deferred tax asset as a result of the cumulative tax impact of the fresh start adjustments herein.

(24)Represents a prepaid tax asset established as part of the fresh start accounting adjustments.

(25)Represents the following fair value adjustments to long-term debt less unamortized discount and debt issuance costs:

Fair value adjustment to the liability component of the Convertible Notes	$	23,195
Discount on Senior Secured Notes	(3,125)
	$	20,070

Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

(26)Represents the derecognition of the deferred tax liability as a result of the cumulative tax impact of the fresh start adjustments herein.

(27)Represents the fair value adjustment to the equity component of the Convertible Notes.

(28)Represents the cumulative impact of the fresh start accounting adjustments discussed above and the elimination of Predecessor accumulated earnings.

^[1]

[1] Represents the cancellation of Predecessor common stock.

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Revenue from Contracts with Customers (Tables)

9 Months Ended

Sep. 30, 2020

Revenue from Contracts with Customer [Abstract]

Schedule of Deferred Revenues and Costs [Table Text Block]

Our current and noncurrent deferred revenues, contract assets and deferred costs as of September 30, 2020 and December 31, 2019 were as follows (amounts in thousands):

	Successor		Predecessor
	September 30, 2020		December 31, 2019
Current deferred revenues	$	715	$	1,339
Current deferred costs	592		1,071
Noncurrent deferred revenues	$	—	$	57
Noncurrent deferred costs	24		267

Schedule of Amortization of Deferred Revenue and Costs [Table Text Block]

Amortization of deferred revenues and costs were as follows (amounts in thousands):

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Amortization of deferred revenues	$	288	$	2,705	$	3,453
Amortization of deferred costs	205		1,876		3,389

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Leases (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Lease, Cost [Table Text Block]

The following table summarizes our lease expense recognized, excluding variable lease costs (amounts in thousands):

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Long-term operating lease expense	$	517	$	1,080	$	2,943
Short-term operating lease expense	1,705		4,456		11,490

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

The following table summarizes the amount and timing of our obligations associated with our long-term operating leases (amounts in thousands):

	Successor		Predecessor
	September 30, 2020		December 31, 2019
Within 1 year	$	1,118	$	2,496
In the second year	994		1,933
In the third year	957		1,447
In the fourth year	869		1,117
In the fifth year	890		912
Thereafter	522		811
Total undiscounted lease obligations	$	5,350	$	8,716
Impact of discounting	(584)		(818)
Discounted value of operating lease obligations	$	4,766	$	7,898
Current operating lease liabilities	$	928	$	2,198
Noncurrent operating lease liabilities	3,838		5,700
	$	4,766	$	7,898

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Debt (Tables)

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

As of September 30, 2020, the principal amount of our outstanding debt obligations were as follows (amounts in thousands):

	Successor
	September 30, 2020
Convertible Notes	129,771
Senior Secured Notes, including in-kind interest	79,032

Convertible Debt [Table Text Block]

The below table summarizes the allocation of issuance proceeds, fair value and debt issuance costs to the liability and equity components of the Convertible Notes at the Fresh Start Reporting Date (in thousands):

	Successor
	Liability Component		Equity Component		Total
Issuance proceeds, net of Backstop Commitment Premium	$	43,738	$	76,449	$	120,187
Face value	47,225		82,546		129,771
Issuance discount	23,195		40,542		63,737
Fair value	$	70,420	$	123,088	$	193,508
Debt issuance costs	(1,268)		(2,216)		(3,484)
Net carrying value at Fresh Start Reporting Date	$	69,152	$	120,872	$	190,024

Schedule of Unamortized Debt Issuance Costs and Discounts [Table Text Block]

Our unamortized debt issuance costs and discounts are presented below (amounts in thousands):

	Successor
	September 30, 2020
Unamortized discount on Convertible Notes (based on imputed interest rate of 20.9%)	$	56,660
Unamortized discount on Senior Secured Notes (based on imputed interest rate of 13.2%)	2,958
Unamortized debt issuance costs	3,969

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Earnings (Loss) Per Common Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following presents a reconciliation of the numerators and denominators of the basic and diluted EPS computations (amounts in thousands, except per share data):

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Numerator:
Net loss (numerator for basic EPS)	$	(20,070)	$	(26,016)
Interest expense on Convertible Notes, net of tax	—		—
Numerator for diluted EPS, if-converted method	(20,070)		(26,016)
Denominator:
Weighted-average shares (denominator for basic EPS)	1,119		78,473
Potentially dilutive shares issuable from Convertible Notes, if-converted method	—		—
Potentially dilutive shares issuable from outstanding stock-based compensation awards, treasury stock method	—		—
Denominator for diluted EPS	1,119		78,473
Loss per common share - Basic	$	(17.94)	$	(0.33)
Loss per common share - Diluted	$	(17.94)	$	(0.33)
Potentially dilutive securities excluded as anti-dilutive	9,733		5,577

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Numerator:
Net loss (numerator for basic EPS)	$	(29,887)	$	(104,225)	$	(54,075)
Interest expense on Convertible Notes, net of tax	—		—		—
Numerator for diluted EPS, if-converted method	(29,887)		(104,225)		(54,075)
Denominator:
Weighted-average shares (denominator for basic EPS)	1,101		78,968		78,405
Potentially dilutive shares issuable from Convertible Notes, if-converted method	—		—		—
Potentially dilutive shares issuable from outstanding stock-based compensation awards, treasury stock method	—		—		—
Denominator for diluted EPS	1,101		78,968		78,405
Loss per common share - Basic	$	(27.15)	$	(1.32)	$	(0.69)
Loss per common share - Diluted	$	(27.15)	$	(1.32)	$	(0.69)
Potentially dilutive securities excluded as anti-dilutive	9,733		4,517		4,962

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following tables set forth certain financial information for each of our segments and corporate (amounts in thousands):

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Revenues:
Domestic drilling	$	17,567	$	38,168
International drilling	4,061		21,617
Drilling services	21,628		59,785
Well servicing	12,871		30,293
Wireline services	4,499		43,874
Coiled tubing services	—		12,446
Production services	17,370		86,613
Consolidated revenues	$	38,998	$	146,398
Operating costs:
Domestic drilling	$	9,706	$	21,931
International drilling	3,449		15,844
Drilling services	13,155		37,775
Well servicing	10,577		21,414
Wireline services	4,938		38,349
Coiled tubing services	223		10,521
Production services	15,738		70,284
Consolidated operating costs	$	28,893	$	108,059
Gross margin:
Domestic drilling	$	7,861	$	16,237
International drilling	612		5,773
Drilling services	8,473		22,010
Well servicing	2,294		8,879
Wireline services	(439)		5,525
Coiled tubing services	(223)		1,925
Production services	1,632		16,329
Consolidated gross margin	$	10,105	$	38,339
Identifiable Assets:
Domestic drilling (1)	$	144,433	$	354,534
International drilling (1) (2)	43,033		47,320
Drilling services	187,466		401,854
Well servicing	47,207		118,686
Wireline services	21,174		80,054
Coiled tubing services	4,062		34,339
Production services	72,443		233,079
Corporate	59,193		54,760
Consolidated identifiable assets	$	319,102	$	689,693

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Depreciation and amortization:
Domestic drilling	$	6,195	$	10,864
International drilling	3,242		1,512
Drilling services	9,437		12,376
Well servicing	3,539		5,132
Wireline services	1,620		3,537
Coiled tubing services	—		1,660
Production services	5,159		10,329
Corporate	103		219
Consolidated depreciation	$	14,699	$	22,924
Capital Expenditures:
Domestic drilling	$	1,006	$	2,777
International drilling	167		1,162
Drilling services	1,173		3,939
Well servicing	313		2,146
Wireline services	45		775
Coiled tubing services	—		1,756
Production services	358		4,677
Corporate	—		44
Consolidated capital expenditures	$	1,531	$	8,660

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Revenues:
Domestic drilling	$	23,433	$	53,341	$	115,829
International drilling	4,889		15,928		68,682
Drilling services	28,322		69,269		184,511
Well servicing	16,627		31,947		86,053
Wireline services	5,212		35,543		137,134
Coiled tubing services	—		5,611		38,111
Production services	21,839		73,101		261,298
Consolidated revenues	$	50,161	$	142,370	$	445,809
Operating costs:
Domestic drilling	$	13,352	$	33,101	$	69,098
International drilling	4,512		13,676		50,884
Drilling services	17,864		46,777		119,982
Well servicing	13,387		26,877		61,348
Wireline services	6,023		31,836		119,500
Coiled tubing services	362		8,557		31,784
Production services	19,772		67,270		212,632
Consolidated operating costs	$	37,636	$	114,047	$	332,614

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Gross margin:
Domestic drilling	$	10,081	$	20,240	$	46,731
International drilling	377		2,252		17,798
Drilling services	10,458		22,492		64,529
Well servicing	3,240		5,070		24,705
Wireline services	(811)		3,707		17,634
Coiled tubing services	(362)		(2,946)		6,327
Production services	2,067		5,831		48,666
Consolidated gross margin	$	12,525	$	28,323	$	113,195
Identifiable Assets:
Domestic drilling (1)	$	144,433	$	158,283	$	354,534
International drilling (1) (2)	43,033		49,611		47,320
Drilling services	187,466		207,894		401,854
Well servicing	47,207		49,388		118,686
Wireline services	21,174		23,948		80,054
Coiled tubing services	4,062		6,336		34,339
Production services	72,443		79,672		233,079
Corporate	59,193		65,057		54,760
Consolidated identifiable assets	$	319,102	$	352,623	$	689,693
Depreciation and amortization:
Domestic drilling	$	8,207	$	18,058	$	32,297
International drilling	4,318		2,144		4,228
Drilling services	12,525		20,202		36,525
Well servicing	4,800		7,820		14,956
Wireline services	2,383		5,088		11,519
Coiled tubing services	—		2,164		4,719
Production services	7,183		15,072		31,194
Corporate	227		373		709
Consolidated depreciation	$	19,935	$	35,647	$	68,428
Capital Expenditures:
Domestic drilling	$	1,490	$	3,862	$	14,344
International drilling	305		1,273		3,444
Drilling services	1,795		5,135		17,788
Well servicing	343		1,918		8,182
Wireline services	105		1,684		5,198
Coiled tubing services	—		166		4,567
Production services	448		3,768		17,947
Corporate	—		21		541
Consolidated capital expenditures	$	2,243	$	8,924	$	36,276

(1)    Identifiable assets for our drilling segments include the impact of a $28.3 million and $37.5 million intercompany balance, as of September 30, 2020 and 2019, respectively, between our domestic drilling segment (intercompany receivable) and our international drilling segment (intercompany payable).

(2)    Identifiable assets for our international drilling segment include five drilling rigs that are owned by our Colombia subsidiary and three drilling rigs that are owned by one of our domestic subsidiaries and leased to our Colombia subsidiary.

Reconciliation of Operating Profit (Loss) from Segments to Consolidated Gross Margin

The following is a reconciliation of consolidated gross margin of our segments reported above to loss from operations as reported on the condensed consolidated statements of operations (amounts in thousands):

	Successor		Predecessor
	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019
Consolidated gross margin	$	10,105	$	38,339
Depreciation and amortization	(14,699)		(22,924)
General and administrative	(11,626)		(30,485)
Bad debt (expense) recovery, net	315		(196)
Gain on dispositions of property and equipment, net	3,829		(17)
Loss from operations	$	(12,076)	$	(15,283)

	Successor		Predecessor
	Four Months Ended September 30, 2020		Five Months Ended May 31, 2020		Nine Months Ended September 30, 2019
Consolidated gross margin	$	12,525	$	28,323	$	113,195
Depreciation and amortization	(19,935)		(35,647)		(68,428)
General and administrative	(15,839)		(22,047)		(68,271)
Pre-petition restructuring charges	—		(16,822)		—
Impairment	(388)		(17,853)		(1,378)
Bad debt (expense) recovery, net	598		(1,209)		90
Gain on dispositions of property and equipment, net	4,289		989		2,184
Loss from operations	$	(18,750)	$	(64,266)	$	(22,608)

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Organization and Summary of Significant Accounting Policies (Narrative) (Details)	Sep. 30, 2020 USD ($) wireline_tubing_units drilling_rigs well_service_rigs	Dec. 31, 2019 USD ($)
Cash and Cash Equivalents
Cash Equivalents, at Carrying Value | $	$ 0	$ 8,900,000
Restricted Cash from Proceeds of Qualifying Sales of Property & Equipment | $	2,200,000
Restricted cash | $	$ 4,021,000	$ 998,000
Drilling Services [Member]
Business - Drilling
Drilling Rigs	25
Drilling Services [Member] | Pad-Capable [Member]
Business - Drilling
Percentage of Drilling Fleet	100.00%
Well Servicing [Member] | 550 Horsepower [Member]
Business - Production Services
Well Servicing Rigs | well_service_rigs	111
Well Servicing [Member] | 600 Horsepower [Member]
Business - Production Services
Well Servicing Rigs | well_service_rigs	12
Well Servicing [Member] | Production Services [Member]
Business - Production Services
Well Servicing Rigs | well_service_rigs	123
Wireline Services [Member] | Production Services [Member]
Business - Production Services
Wireline Units | wireline_tubing_units	78
Domestic Drilling [Member] | Drilling Services [Member] | United States [Member]
Business - Drilling
Drilling Divisions	3
Drilling Rigs	17
Domestic Drilling [Member] | Drilling Services [Member] | United States [Member] | AC [Member]
Business - Drilling
Drilling Rigs	17
Domestic Drilling [Member] | Drilling Services [Member] | United States [Member] | SCR Drilling Rigs [Member]
Business - Drilling
Drilling Rigs	0
International Drilling [Member] | Drilling Services [Member] | Colombia [Member]
Business - Drilling
Drilling Rigs	8
International Drilling [Member] | Drilling Services [Member] | Colombia [Member] | AC [Member]
Business - Drilling
Drilling Rigs	0
International Drilling [Member] | Drilling Services [Member] | Colombia [Member] | SCR Drilling Rigs [Member]
Business - Drilling
Drilling Rigs	8

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Organization and Summary of Significant Accounting Policies (Drilling Services Business) (Details) - Drilling Services [Member]	Sep. 30, 2020 drilling_rigs
Accounting Policies [Line Items]
Drilling Rigs	25
Pad-Capable [Member]
Accounting Policies [Line Items]
Percentage of Drilling Fleet	100.00%
United States [Member] | Domestic Drilling [Member]
Accounting Policies [Line Items]
Drilling Divisions	3
Drilling Rigs	17
United States [Member] | AC [Member] | Domestic Drilling [Member]
Accounting Policies [Line Items]
Drilling Rigs	17
United States [Member] | SCR Drilling Rigs [Member] | Domestic Drilling [Member]
Accounting Policies [Line Items]
Drilling Rigs	0
Colombia [Member] | International Drilling [Member]
Accounting Policies [Line Items]
Drilling Rigs	8
Colombia [Member] | AC [Member] | International Drilling [Member]
Accounting Policies [Line Items]
Drilling Rigs	0
Colombia [Member] | SCR Drilling Rigs [Member] | International Drilling [Member]
Accounting Policies [Line Items]
Drilling Rigs	8

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Organization and Summary of Significant Accounting Policies (Production Services Business) (Details)	Sep. 30, 2020 wireline_tubing_units well_service_rigs
Well Servicing [Member] | Production Services [Member]
Accounting Policies [Line Items]
Well Servicing Rigs	123
Well Servicing [Member] | 550 Horsepower [Member]
Accounting Policies [Line Items]
Well Servicing Rigs	111
Well Servicing [Member] | 600 Horsepower [Member]
Accounting Policies [Line Items]
Well Servicing Rigs	12
Wireline Services [Member] | Production Services [Member]
Accounting Policies [Line Items]
Wireline Units | wireline_tubing_units	78

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting (Details)				3 Months Ended	4 Months Ended	5 Months Ended	9 Months Ended
	May 31, 2020 USD ($) $ / shares shares	May 29, 2020 USD ($) shares	Feb. 28, 2020 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)	May 31, 2020 USD ($) shares	Sep. 30, 2019 USD ($)	Aug. 07, 2020 USD ($)	Mar. 01, 2020
Debt Instrument [Line Items]
Percent of ordinary shares exchanged for cancelled notes		94.25%
Percent of ordinary shares issued to common holders		5.75%
Common Stock, Issued, Conversion Ratio		0.0006849838
Pre-petition restructuring charges					$ 0	$ 16,822,000	$ 0
Fair value of Successor stockholders' equity	$ 18,084,000					$ 18,084,000
Postconfirmation Common Stock Per Share Value | $ / shares	$ 17.23
Convertible Debt [Member]
Debt Instrument [Line Items]
Rights offering commitment amount		$ 9,600,000		$ 9,600,000
Debt Instrument, Face Amount		$ 129,771,000			129,771,000
Debt Instrument, Interest Rate, Stated Percentage		5.00%
Debt Instrument, Convertible, Number of Equity Instruments | shares		9,732,825
Debt Instrument, Required Repurchase Due to Change in Control, Redemption Price, Percentage		100.00%
Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount		$ 78,100,000			79,032,000
Debt Instrument, Required Repurchase Due to Change in Control, Redemption Price, Percentage		101.00%
Debt Instrument, Issuer's Optional Repurchase Due to Change in Control Prior to June 1, 2022, Redemption Price, Percentage		103.00%
Common Stock [Member]
Debt Instrument [Line Items]
Common Stock, Shares, Issued | shares	1,049,804	1,049,804				1,049,804
Restructuring Support Agreement [Member] | Term Loan [Member]
Debt Instrument [Line Items]
Holders percentage under settlement agreement									99.00%
Restructuring Support Agreement [Member] | Prepetition Senior Notes [Member]
Debt Instrument [Line Items]
Holders percentage under settlement agreement									75.00%
Backstop Commitment Agreement [Member]
Debt Instrument [Line Items]
Pre-petition restructuring charges				$ 9,600,000
Revolving Credit Facility [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Line of credit facility, proceeds from borrowings					0
Letters of Credit Outstanding, Amount					8,800,000
Line of Credit Facility, Remaining Borrowing Capacity					$ 10,700,000
Debtor-in-Possession Facility [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Debtor-in-Possession Financing, Amount Arranged			$ 75,000,000
Debtor-in-Possession Financing, Term			5 months
London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		3.75%
London Interbank Offered Rate (LIBOR) [Member] | Debtor-in-Possession Facility [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Debtor-in-Possession Financing, Basis Spread on Borrowings Outstanding			200
Base Rate [Member] | Revolving Credit Facility [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		2.75%
Minimum [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Covenant Compliance, Asset Coverage Ratio, Required Minimum		1.5
Minimum [Member] | Revolving Credit Facility [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Debt Instrument, Covenant Compliance, Fixed Charge Coverage Ratio, Required Minimum		1.0
Line of Credit, Minimum Availability (as % of Maximum) to Require Additional Fixed Charge Coverage Ratio Compliance		15.00%
Line of Credit, Minimum Availability to Require Additional Fixed Charge Coverage Ratio Compliance		$ 6,000,000
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Debt instrument, reference rate, minimum		0.00%
Maximum [Member] | Revolving Credit Facility [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 75,000,000						$ 40,000,000
Debt Instrument, Covenant Compliance, Capital Expenditure Limitation, Percentage of Annual Budget		125.00%
Maximum [Member] | Post-emergence revolving asset-based lending facility [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 75,000,000
Prepetition Senior Notes [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Accrued interest on Prepetition Senior Notes						$ 7,600,000
Interest Expense on Prepetition Liabilities Recognized in Statement of Operations						$ 3,100,000
Due on or prior to May 29, 2021 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Portion of Interest due in Cash, Percentage		50.00%
Debt Instrument, Portion of Interest due In-Kind, Percentage		50.00%
Debt Instrument, Portion of Interest due in-Kind at Majority Noteholder's Election, Percentage		100.00%
Commencing up to May 15, 2024 [Member] | London Interbank Offered Rate (LIBOR) [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		9.50%
Commencing up to May 15, 2024 [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument, reference rate, minimum		1.50%
Commencing on or after May 15, 2024 [Member] | London Interbank Offered Rate (LIBOR) [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		10.50%
Commencing on or after May 15, 2024 [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument, reference rate, minimum		1.50%
Consenting Noteholders [Member]
Debt Instrument [Line Items]
Rights offering commitment amount			118,000,000
Commitment premium			9,400,000
Senior Management [Member]
Debt Instrument [Line Items]
Rights offering commitment amount			1,800,000
Commitment premium			$ 100,000

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Schedule of Reorganization Items (Details) - USD ($) $ in Thousands		3 Months Ended		4 Months Ended	5 Months Ended	9 Months Ended
	May 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Debt Instrument [Line Items]
Debtor Reorganization Items, Gain (Loss) on Settlement of Other Claims, Net		$ 0		$ 0	$ 291,378
Fresh start valuation adjustments		0		0	284,392
Legal and professional fees	$ 9,468	2,522		3,263	26,038
Write-off of unamortized debt issuance costs on pre-petition asset-based lending facility		0		0	2,003
Accelerated stock-based compensation		0		0	713
Loss (gain) on rejected leases		0		403	(378)
Payment of accrued interest on DIP Facility	$ (177)	0		0	513
Reorganization Items, net		$ 2,522	$ 0	$ 3,666	$ 21,903	$ 0

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Fresh Start Accounting (Details) $ in Thousands	May 31, 2020 USD ($)
Minimum [Member]
Fresh-Start Adjustment [Line Items]
Enterprise Value, Original Estimate	$ 275,000
Enterprise Value, Revised Estimate	249,000
Maximum [Member]
Fresh-Start Adjustment [Line Items]
Enterprise Value, Original Estimate	335,000
Enterprise Value, Revised Estimate	303,000
Median [Member]
Fresh-Start Adjustment [Line Items]
Enterprise Value, Original Estimate	305,000
Enterprise Value, Revised Estimate	$ 276,000

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Reconciliation of Enterprise Value to Estimated Fair Vale of Successor Company (Details) - USD ($) $ / shares in Units, $ in Thousands	May 31, 2020	May 30, 2020	May 29, 2020
Debt Instrument [Line Items]
Plus: Cash and cash equivalents	$ 10,592	$ 21,253
Less: fair value of debt	(145,420)
Total implied equity	141,172
Postconfirmation, Stockholders' Equity	$ 18,084
Postconfirmation Common Stock Per Share Value	$ 17.23
Convertible Debt [Member]
Debt Instrument [Line Items]
Less: equity portion of Convertible Notes			$ (193,508)
Common Stock [Member]
Debt Instrument [Line Items]
Shares issued upon emergence	1,049,804		1,049,804
Median [Member]
Debt Instrument [Line Items]
Enterprise Value	$ 276,000
Equity Component [Member] | Convertible Debt [Member]
Debt Instrument [Line Items]
Less: equity portion of Convertible Notes	$ (123,088)		$ (123,088)

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Reconciliation of Enterprise Value to the Reorganization Value of Successor's Assets to be Allocated (Details) - USD ($) $ in Thousands	May 31, 2020	May 30, 2020
Fresh-Start Adjustment [Line Items]
Plus: Cash and cash equivalents	$ 10,592	$ 21,253
Plus: current liabilities	65,799	$ 88,273
Plus: non-current liabilities excluding long-term debt	6,626
Less: debt issuance costs on Successor debt	(6,394)
Reorganization value of Successor assets	352,623
Median [Member]
Fresh-Start Adjustment [Line Items]
Enterprise Value	$ 276,000

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Schedule of Fresh-Start Adjustments (Details) - USD ($) $ in Thousands		May 31, 2020	May 30, 2020
Current assets:
Cash and cash equivalents		$ 10,592	$ 21,253
Restricted cash		16,173	4,452
Receivables
Trade, net of allowance for doubtful accounts		33,537	33,537
Unbilled receivables		9,163	9,163
Insurance recoveries		23,636	23,636
Other receivables		6,256	5,256
Inventory		14,129	21,012
Assets held for sale		1,854	1,825
Prepaid expenses and other current assets		5,769	4,817
Total current assets		121,109	124,951
Property and equipment, at cost		195,971	1,082,704
Less accumulated depreciation		0	655,512
Net property and equipment		195,971	427,192
Intangible assets, net of accumulated amortization		9,370	0
Deferred income taxes		8,740	10,897
Operating lease assets		5,234	5,234
Other noncurrent assets		12,199	13,247
Total assets		352,623	581,521
Current liabilities:
Accounts payable		15,123	24,601
Deferred revenues		121	121
Commitment Premium		0	9,584
Debtor in possession financing		0	4,000
Accrued expenses:
Employee compensation and related costs		4,970	4,970
Insurance claims and settlements		23,517	23,517
Insurance premiums and deductibles		5,269	5,269
Interest		44	3,775
Other		16,755	12,436
Total current liabilities		65,799	88,273
Long-term debt, less unamortized discount and debt issuance costs		141,239	175,000
Noncurrent operating lease liabilities		4,189	4,189
Deferred income taxes		1,071	4,296
Other noncurrent liabilities		1,366	1,366
Total liabilities not subject to compromise		213,664	273,124
Liabilities subject to compromise		0	308,422
Shareholders' equity:
Predecessor common stock		0	8,893
Successor common stock		1	0
Predecessor additional paid-in capital		0	553,631
Successor additional paid-in capital		138,958	0
Predecessor treasury stock		0	(5,098)
Accumulated deficit		0	(557,451)
Total stockholders' equity		138,959	(25)
Total liabilities and stockholders' equity		$ 352,623	581,521
Reorganization Adjustments [Member]
Current assets:
Cash and cash equivalents	[1]		(10,661)
Restricted cash	[2]		11,721
Receivables
Trade, net of allowance for doubtful accounts			0
Unbilled receivables			0
Insurance recoveries			0
Other receivables	[3]		1,000
Inventory			0
Assets held for sale			0
Prepaid expenses and other current assets			0
Total current assets			2,060
Property and equipment, at cost			0
Less accumulated depreciation			0
Net property and equipment			0
Intangible assets, net of accumulated amortization			0
Deferred income taxes			0
Operating lease assets			0
Other noncurrent assets	[4]		(5,023)
Total assets			(2,963)
Current liabilities:
Accounts payable	[5]		(9,478)
Deferred revenues			0
Commitment Premium	[6]		(9,584)
Debtor in possession financing	[7]		(4,000)
Accrued expenses:
Employee compensation and related costs			0
Insurance claims and settlements			0
Insurance premiums and deductibles			0
Interest	[8]		(3,731)
Other	[9]		4,329
Total current liabilities			(22,464)
Long-term debt, less unamortized discount and debt issuance costs	[10]		(53,831)
Noncurrent operating lease liabilities			0
Deferred income taxes			0
Other noncurrent liabilities			0
Total liabilities not subject to compromise			(76,295)
Liabilities subject to compromise	[11]		(308,422)
Shareholders' equity:
Predecessor common stock	[12]		(8,893)
Successor common stock	[13]		1
Predecessor additional paid-in capital	[14]		(553,631)
Successor additional paid-in capital	[15]		98,413
Predecessor treasury stock	[16]		5,098
Accumulated deficit	[17]		840,766
Total stockholders' equity			381,754
Total liabilities and stockholders' equity			(2,963)
Fresh Start Accounting Adjustments [Member]
Current assets:
Cash and cash equivalents			0
Restricted cash			0
Receivables
Trade, net of allowance for doubtful accounts			0
Unbilled receivables			0
Insurance recoveries			0
Other receivables			0
Inventory	[18]		(6,883)
Assets held for sale	[19]		29
Prepaid expenses and other current assets	[20]		952
Total current assets			(5,902)
Property and equipment, at cost	[21]		(886,733)
Less accumulated depreciation	[21]		(655,512)
Net property and equipment			(231,221)
Intangible assets, net of accumulated amortization	[22]		9,370
Deferred income taxes	[23]		(2,157)
Operating lease assets			0
Other noncurrent assets	[24]		3,975
Total assets			(225,935)
Current liabilities:
Accounts payable			0
Deferred revenues			0
Commitment Premium			0
Debtor in possession financing			0
Accrued expenses:
Employee compensation and related costs			0
Insurance claims and settlements			0
Insurance premiums and deductibles			0
Interest			0
Other			(10)
Total current liabilities			(10)
Long-term debt, less unamortized discount and debt issuance costs	[25]		20,070
Noncurrent operating lease liabilities			0
Deferred income taxes	[26]		(3,225)
Other noncurrent liabilities			0
Total liabilities not subject to compromise			16,835
Liabilities subject to compromise			0
Shareholders' equity:
Predecessor common stock			0
Successor common stock			0
Predecessor additional paid-in capital			0
Successor additional paid-in capital	[27]		40,545
Predecessor treasury stock			0
Accumulated deficit	[28]		(283,315)
Total stockholders' equity			(242,770)
Total liabilities and stockholders' equity			$ (225,935)

[1] Represents the following net change in cash and cash equivalents: Cash proceeds from Convertible Notes$120,187 Cash proceeds from Senior Secured Notes75,000 Payment to fund claims reserve(950)Payment to escrow remaining professional fees(10,771)Payment of professional fees(9,468)Payment in full to extinguish DIP Facility(4,000)Payment of accrued interest on DIP Facility(55)Payment of DIP Facility fees(177)Payment in full to extinguish Prepetition Term Loan(175,000)Payment of accrued interest on Prepetition Term Loan(3,677)Payment of prepayment penalty on Prepetition Term Loan(1,750)$(10,661)

[2] Represents the following net change in restricted cash: Payment to fund rejected leases claims reserve$950 Payment to escrow remaining professional fees10,771 $11,721 

[3] Represents recognition of a receivable for a portion of the proceeds from the issuance of the Senior Secured Notes which was received in June 2020.

[4] Represents the reclassification of previously paid debt issuance costs from deferred assets to offset the carrying amount of long-term debt.

[5] Represents the payment of professional fees which were incurred prior to emergence.

[6] Represents the settlement of the Backstop Commitment Premium upon issuance of the Convertible Notes.

[7] Represents the payment to extinguish the DIP Facility.

[8] Represents the payment of accrued interest on the Prepetition Term Loan and DIP Facility.

[9] Represents the increase in accrued expenses for fees which were incurred upon our emergence from Chapter 11.

[10] Represents the following changes in long-term debt, less unamortized discount and debt issuance costs: Payment in full to extinguish Prepetition Term Loan$(175,000)Issuance of Senior Secured Notes at Par78,125 Recognition of debt issue costs on Senior Secured Notes(2,913)Recognition of liability component of Convertible Notes issuance47,225 Recognition of debt issuance costs on liability component of Convertible Notes(1,268)$(53,831) Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

[11] Represents the settlement of liabilities subject to compromise in accordance with the Plan, for which the resulting gain is as follows: Prepetition Senior Notes$300,000 Accrued interest on Prepetition Senior Notes8,422 Liabilities subject to compromise308,422 Cash paid by holders of Prepetition Senior Notes118,013 Issuance of equity to Prepetition Senior Notes creditors(17,044)Notes Received by Prepetition Senior Note holders(118,013)$291,378 

[12] Represents the cancellation of Predecessor common stock.

[13] Represents the issuance of Successor common stock to prior equity holders and to settle the Prepetition Senior Notes.

[14] Represents the cancellation of Predecessor additional paid-in capital.

[15] The changes in Successor additional paid-in capital were as follows: Recognition of equity component of Convertible Notes$82,546 Issuance of Successor common stock to Prepetition Senior Notes creditors and prior equity holders18,083 Recognition of debt issuance costs of Convertible Notes equity component(2,216)$98,413  Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

[16] Represents the cancellation of Predecessor treasury stock.

[17] Represents the cumulative impact to Predecessor retained earnings of the reorganization adjustments described above.

[18] Represents the fair value adjustment to inventory, as described further in the previous section under the heading “Valuation Process”.

[19] Represents the fair value adjustment to assets held for sale, as described further in the previous section under the heading “Valuation Process”.

[20] Represents deferred compensation associated with the excess of fair value over the par value of Convertible Notes purchased by senior management, which is compensation to the Successor and therefore was expensed in June 2020.

[21] Represents the following fair value adjustments to property and equipment: Predecessor
Historical ValueFair Value
AdjustmentSuccessor
Fair ValueDrilling rigs and equipment$1,010,612 $(832,294)$178,318 Vehicles41,283 (28,561)12,722 Building and improvements16,619 (13,742)2,877 Office equipment12,231 (11,743)488 Land1,959 (393)1,566 $1,082,704 $(886,733)$195,971 Less: Accumulated Depreciation(655,512)655,512 — $427,192 $(231,221)$195,971 

[22] Represents the fair value adjustment to recognize the trademark and tradename of Pioneer Energy Services Corp. as an intangible, as described further in the above section under the heading “Valuation Process”.

[23] Represents the recognition of the noncurrent deferred tax asset as a result of the cumulative tax impact of the fresh start adjustments herein.

[24] Represents a prepaid tax asset established as part of the fresh start accounting adjustments.

[25] Represents the following fair value adjustments to long-term debt less unamortized discount and debt issuance costs: Fair value adjustment to the liability component of the Convertible Notes$23,195 Discount on Senior Secured Notes(3,125)$20,070  Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

[26] Represents the derecognition of the deferred tax liability as a result of the cumulative tax impact of the fresh start adjustments herein.

[27] Represents the fair value adjustment to the equity component of the Convertible Notes.

[28] Represents the cumulative impact of the fresh start accounting adjustments discussed above and the elimination of Predecessor accumulated earnings.

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Reorganization Adjustments - Sources and Uses of Cash (Details) - USD ($) $ in Thousands		3 Months Ended	4 Months Ended	5 Months Ended
	May 30, 2020	Sep. 30, 2020	Sep. 30, 2020	May 31, 2020
Reorganization Adjustments - Sources and Uses of Cash [Abstract]
Cash Proceeds from Convertible Notes	$ 120,187
Cash Proceeds from Senior Secured Notes	75,000
Payment to fund claims reserve	(950)
Payment to escrow remaining professional fees	(10,771)
Payment of legal and professional fees	(9,468)	$ (2,522)	$ (3,263)	$ (26,038)
Payment in full to extinguish DIP facility	(4,000)
Payment of accrued interest on DIP Facility	(55)
Payment of DIP Facility fees	(177)	$ 0	$ 0	$ 513
Payment in full to extinguish PrePetition Term Loan	(175,000)
Payment of accrued interest on PrePetition Term Loan	(3,677)
Payment of prepayment premium on PrePetition Term Loan	(1,750)
Net change in cash and cash equivalents, net	$ (10,661)

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Reorganization Adjustments - Change in Restricted Cash (Details) $ in Thousands	May 30, 2020 USD ($)
Fresh-Start Adjustment [Line Items]
Payment to fund rejected leases claims reserve	$ 950
Payment to escrow remaining professional fees	10,771
Net change in restricted cash, net	$ 11,721

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Reorganization Adjustments - Changes in Long-Term Debt, Net (Details) $ in Thousands	May 30, 2020 USD ($)
Fresh-Start Adjustment [Line Items]
Payment in full to extinguish PrePetition Term Loan	$ (175,000)
Issuance of Senior Secured Notes	78,125
Recognition of debt issue costs on Senior Secured Notes	(2,913)
Net change in Long Term Debt, net	(53,831)
Convertible Debt [Member] | Liability Component [Member]
Fresh-Start Adjustment [Line Items]
recognition of liability component of Convertible Notes issuance	47,225
Recognition of debt issuance costs on liability component of Convertible Notes	$ (1,268)

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Reorganization Adjustments - Liabilities Subject to Compromise (Details) $ in Thousands	May 30, 2020 USD ($)
Fresh-Start Adjustment [Line Items]
Cash paid by Holders of Prepetition Senior Notes	$ 118,013
Issuance of equity to Prepetition Senior Notes creditors	(17,044)
Notes Received by Prepetition Senior Note holders	(118,013)
Settlement of liabilities subject to compromise, net	291,378
Reorganization Adjustments [Member]
Fresh-Start Adjustment [Line Items]
Prepetition Senior Notes	(308,422)
Prepetition Senior Notes [Member] | Reorganization Adjustments [Member]
Fresh-Start Adjustment [Line Items]
Liabilities Subject to Compromise, Debt	300,000
Accrued interest on Prepetition Senior Notes	$ 8,422

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Reorganization Adjustments - Successor Additional Paid-in Capital (Details) - USD ($) $ in Thousands		May 30, 2020	May 31, 2020
Fresh-Start Adjustment [Line Items]
Increase (decrease) Additional Paid in Capital, Successor		$ 0	$ 138,958
Reorganization Adjustments [Member]
Fresh-Start Adjustment [Line Items]
Increase (decrease) Additional Paid in Capital, Successor	[1]	98,413
Convertible Debt [Member] | Equity Component [Member]
Fresh-Start Adjustment [Line Items]
Recogniation of equity component of Convertible Notes		82,546
Recognition of debt issuance costs of Convertible Notes equity component		$ (2,216)

[1] The changes in Successor additional paid-in capital were as follows: Recognition of equity component of Convertible Notes$82,546 Issuance of Successor common stock to Prepetition Senior Notes creditors and prior equity holders18,083 Recognition of debt issuance costs of Convertible Notes equity component(2,216)$98,413  Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Fresh Start Accounting Adjustments - Fair Value Adjustment - Property and Equipment (Details) - USD ($) $ in Thousands		May 31, 2020	May 30, 2020
Fresh-Start Adjustment [Line Items]
Drilling and equipment		$ 178,318	$ 1,010,612
Vehicles		12,722	41,283
Buildings and improvements		2,877
Office equipment		488	12,231
Land		1,566	1,959
Property and equipment, at cost		195,971	1,082,704
Less accumulated depreciation		0	(655,512)
Net property and equipment		$ 195,971	427,192
Fresh Start Accounting Adjustments [Member]
Fresh-Start Adjustment [Line Items]
Drilling and equipment			(832,294)
Vehicles			(28,561)
Buildings and improvements			(13,742)
Office equipment			(11,743)
Land			(393)
Property and equipment, at cost	[1]		(886,733)
Less accumulated depreciation	[1]		655,512
Net property and equipment			(231,221)
Building and improvements
Fresh-Start Adjustment [Line Items]
Buildings and improvements			$ 16,619

[1] Represents the following fair value adjustments to property and equipment: Predecessor
Historical ValueFair Value
AdjustmentSuccessor
Fair ValueDrilling rigs and equipment$1,010,612 $(832,294)$178,318 Vehicles41,283 (28,561)12,722 Building and improvements16,619 (13,742)2,877 Office equipment12,231 (11,743)488 Land1,959 (393)1,566 $1,082,704 $(886,733)$195,971 Less: Accumulated Depreciation(655,512)655,512 — $427,192 $(231,221)$195,971 

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Emergence from Voluntary Reorganization under Chapter 11 / Fresh Start Accounting Fresh Start Accounting Adjustments - Fair Value Adjustment - Long Term Debt (Details) - USD ($) $ in Thousands		May 30, 2020	May 31, 2020
Fresh-Start Adjustment [Line Items]
Discount on Senior Secured Notes		$ (3,125)
Fresh-Start Adjustment, Increase (Decrease), Long-term Debt		175,000	$ 141,239
Fresh Start Accounting Adjustments [Member]
Fresh-Start Adjustment [Line Items]
Fresh-Start Adjustment, Increase (Decrease), Long-term Debt	[1]	20,070
Liability Component [Member] | Convertible Debt [Member]
Fresh-Start Adjustment [Line Items]
Fair value adjustment to the liability component of the Convertible Notes		$ 23,195

[1] Represents the following fair value adjustments to long-term debt less unamortized discount and debt issuance costs: Fair value adjustment to the liability component of the Convertible Notes$23,195 Discount on Senior Secured Notes(3,125)$20,070  Due to the Convertible Notes’ embedded conversion option, the liability and equity components were reported separately, as described further in Note 7, Debt.

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Revenue from Contracts with Customers (Details) $ in Millions	5 Months Ended	9 Months Ended
	May 31, 2020 USD ($) drilling_rigs	Sep. 30, 2020 drilling_rigs
Drilling Services [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Drilling Rigs		25
Drilling Services [Member] | Deployed under new contract during current period [Member] | Daywork Drilling Contract [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Drilling Rigs		4
Drilling Services [Member] | Domestic Drilling [Member] | Earning But Not Working [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Gain (Loss) on Contract Termination | $	$ 1.6
Drilling Services [Member] | Domestic Drilling [Member] | Earning But Not Working [Member] | Currently Under Drilling Contract [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Drilling Rigs		3
Drilling Services [Member] | Domestic Drilling [Member] | Earning But Not Working [Member] | Not Under Drilling Contract [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Drilling Rigs	1
Drilling Services [Member] | International Drilling [Member] | Colombia [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Drilling Rigs		8
Short-term Contract with Customer [Member] | Maximum [Member] | Production Services [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Typical Revenue Contract Duration		30 days

XML

Revenue from Contracts with Customers Deferred Revenues and Costs (Details) - Drilling Services [Member] - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Deferred Revenues and Costs, Classified
Current deferred revenues	$ 715	$ 1,339
Current deferred costs	592	1,071
Noncurrent deferred revenues	0	57
Noncurrent deferred costs	$ 24	$ 267

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Revenue from Contracts with Customers Amortization of Deferred Revenues and Costs (Details) - Drilling Services [Member] - USD ($) $ in Thousands	4 Months Ended	5 Months Ended	9 Months Ended
	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Deferred Revenue Arrangement [Line Items]
Amortization of deferred revenues	$ 288	$ 2,705	$ 3,453
Amortization of deferred costs	$ 205	$ 1,876	$ 3,389

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Property and Equipment (Details) $ in Thousands	3 Months Ended			4 Months Ended	5 Months Ended	9 Months Ended
	Sep. 30, 2020 USD ($) wireline_tubing_units drilling_rigs	Mar. 31, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) wireline_tubing_units drilling_rigs	May 31, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Property, Plant and Equipment [Line Items]
Assets held for sale	$ 4,295			$ 4,295			$ 3,447
Asset Impairment Charges				388	$ 17,853	$ 1,378
Capital Expenditures	1,531		$ 8,660	2,243	8,924	36,276
Gain (Loss) on Disposition of Property Plant Equipment	3,829		(17)	4,289	989	2,184
Production Services [Member]
Property, Plant and Equipment [Line Items]
Capital Expenditures	358		4,677	448	3,768	17,947
Production Services [Member] | Wireline Services [Member]
Property, Plant and Equipment [Line Items]
Capital Expenditures	$ 45		775	$ 105	1,684	5,198
Wireline Units | wireline_tubing_units	78			78
Production Services [Member] | Coiled Tubing Services [Member]
Property, Plant and Equipment [Line Items]
Assets held for sale	$ 3,800			$ 3,800
Asset Impairment Charges		$ 16,400
Capital Expenditures	0		1,756	0	166	4,567
Drilling Services [Member]
Property, Plant and Equipment [Line Items]
Capital Expenditures	$ 1,173		3,939	$ 1,795	5,135	17,788
Drilling Rigs | drilling_rigs	25			25
Drilling Services [Member] | Domestic Drilling [Member]
Property, Plant and Equipment [Line Items]
Capital Expenditures	$ 1,006		2,777	$ 1,490	3,862	14,344
Drilling Services [Member] | International Drilling [Member]
Property, Plant and Equipment [Line Items]
Capital Expenditures	$ 167		$ 1,162	$ 305	$ 1,273	$ 3,444

XML

Leases (Details) $ in Millions	9 Months Ended
	Sep. 30, 2020 USD ($)
Lessee, Lease, Description [Line Items]
Regional Offices	15
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	$ 2.1
Minimum [Member]
Lessee, Lease, Description [Line Items]
Operating Lease Renewal Term Options	1 year
Maximum [Member]
Lessee, Lease, Description [Line Items]
Operating Lease Renewal Term Options	5 years

XML

Leases Lease Cost (Details) - USD ($) $ in Thousands	4 Months Ended	5 Months Ended	9 Months Ended
	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Lease, Cost [Abstract]
Long-term operating lease expense	$ 517	$ 1,080	$ 2,943
Short-term operating lease expense	$ 1,705	$ 4,456	$ 11,490

XML

Leases Operating Lease Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Operating Lease Liability Maturities Under ASC 842 [Abstract]
Within 1 year	$ 1,118	$ 2,496
In the second year	994	1,933
In the third year	957	1,447
In the fourth year	869	1,117
In the fifth year	890	912
Thereafter	522	811
Total undiscounted lease obligations	5,350	8,716
Impact of discounting	(584)	(818)
Discounted value of operating lease obligations	4,766	7,898
Current operating lease liabilities	928	2,198
Noncurrent operating lease liabilities	$ 3,838	$ 5,700

XML

Debt (Schedule of Long-term Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	May 29, 2020
Convertible Debt [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 129,771	$ 129,771
Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount	$ 79,032	$ 78,100

XML

Debt (Schedule of Convertible Debt) (Details) - USD ($) $ in Thousands		4 Months Ended	5 Months Ended	9 Months Ended
	May 29, 2020	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Debt Instrument [Line Items]
Issuance proceeds, net of Backstop Commitment Premium		$ 0	$ 195,187	$ 0
Convertible Debt [Member]
Debt Instrument [Line Items]
Issuance proceeds, net of Backstop Commitment Premium	$ 120,187
Face Amount	129,771	$ 129,771
Issuer discount	63,737
Fair value	193,508
Debt issuance costs	(3,484)
Net carrying value at Fresh Start Reporting Date	190,024
Liability Component [Member] | Convertible Debt [Member]
Debt Instrument [Line Items]
Issuance proceeds, net of Backstop Commitment Premium	43,738
Face Amount	47,225
Issuer discount	23,195
Fair value	70,420
Debt issuance costs	(1,268)
Net carrying value at Fresh Start Reporting Date	69,152
Equity Component [Member] | Convertible Debt [Member]
Debt Instrument [Line Items]
Issuance proceeds, net of Backstop Commitment Premium	76,449
Face Amount	82,546
Issuer discount	40,542
Fair value	123,088		$ 123,088
Debt issuance costs	(2,216)
Net carrying value at Fresh Start Reporting Date	$ 120,872

XML

Debt (Schedule of Unamortized Debt Issuance Costs and Discount) (Details) - USD ($)	Sep. 30, 2020	May 29, 2020
Schedule of Unamortized Debt Issuance Costs and Discount [Line Items]
Unamortized Debt Issuance Costs	$ 3,969,000
Convertible Debt [Member]
Schedule of Unamortized Debt Issuance Costs and Discount [Line Items]
Debt Instrument, Interest Rate, Effective Percentage		20.90%
Unamortized discount	56,660,000
Senior Notes [Member]
Schedule of Unamortized Debt Issuance Costs and Discount [Line Items]
Debt Instrument, Interest Rate, Effective Percentage		13.20%
Unamortized discount	$ 2,958,000

XML

Debt (Details)		1 Months Ended	3 Months Ended	4 Months Ended	5 Months Ended	9 Months Ended
	May 29, 2020 USD ($) shares $ / shares	Oct. 31, 2020 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)	May 31, 2020 USD ($)	Sep. 30, 2019 USD ($)	Aug. 07, 2020 USD ($)	Dec. 31, 2019 USD ($)
Convertible Notes Payable [Abstract]
Proceeds from debt issuance				$ 0	$ 195,187,000	$ 0
Prepetition Asset-based Lending Facility [Abstract]
Percent of ordinary shares exchanged for cancelled notes	94.25%
Long-term debt, less unamortized discount and debt issuance costs				143,017,000				$ 467,699,000
Current portion of long-term debt				2,199,000				$ 0
Proceeds from Qualifying Sales of Property and Equipment				7,200,000
Convertible Debt [Member]
Convertible Notes Payable [Abstract]
Debt Instrument, Face Amount	$ 129,771,000			129,771,000
Proceeds from debt issuance	120,187,000
Rights offering commitment amount	$ 9,600,000		$ 9,600,000
Debt Instrument, Interest Rate, Stated Percentage	5.00%
Debt Instrument, Convertible, Conversion Ratio	75
Debt Instrument, Convertible, Number of Equity Instruments | shares	9,732,825
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 13.33
Debt Instrument, Required Repurchase Due to Change in Control, Redemption Price, Percentage	100.00%
Senior Secured Notes [Abstract]
Debt Instrument, Face Amount	$ 129,771,000			129,771,000
Debt Instrument, Original Issue Discount	$ (63,737,000)
Debt Instrument, Required Repurchase Due to Change in Control, Redemption Price, Percentage	100.00%
Prepetition Asset-based Lending Facility [Abstract]
Debt Instrument, Unamortized Discount				(56,660,000)
Line of Credit [Member] | Revolving Credit Facility [Member]
ABL Credit Facility [Abstract]
Line of credit facility, outstanding borrowings				0
Letters of Credit Outstanding, Amount				8,800,000
Line of Credit Facility, Remaining Borrowing Capacity				10,700,000
Line of Credit [Member] | Maximum [Member] | Revolving Credit Facility [Member]
ABL Credit Facility [Abstract]
Maximum borrowing capacity	$ 75,000,000						$ 40,000,000
Debt Instrument, Covenant Compliance, Capital Expenditure Limitation, Percentage of Annual Budget	125.00%
Line of Credit, Maximum Amount of Pledged Cash included in Minimum Availability to Require Additional Fixed Charge Coverage Ratio Compliance	$ 3,000,000
Line of credit, Maximum Amount of Pledged Cash included in Minimum Line Availability	2,000,000.0
Line of Credit [Member] | Minimum [Member] | Revolving Credit Facility [Member]
ABL Credit Facility [Abstract]
Line of Credit, Minimum Availability to Require Additional Fixed Charge Coverage Ratio Compliance	$ 6,000,000
Line of Credit, Minimum Availability (as % of Maximum) to Require Additional Fixed Charge Coverage Ratio Compliance	15.00%
Debt Instrument, Covenant Compliance, Fixed Charge Coverage Ratio, Required Minimum	1.0
Line of Credit, Minimum Availability Requirement	$ 4,000,000.0
Line of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member]
ABL Credit Facility [Abstract]
Debt Instrument, Basis Spread on Variable Rate	3.75%
Senior Secured Notes [Abstract]
Debt Instrument, Basis Spread on Variable Rate	3.75%
Line of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | Revolving Credit Facility [Member]
ABL Credit Facility [Abstract]
Debt instrument, reference rate, minimum	0.00%
Senior Secured Notes [Abstract]
Debt instrument, reference rate, minimum	0.00%
Line of Credit [Member] | Base Rate [Member] | Revolving Credit Facility [Member]
ABL Credit Facility [Abstract]
Debt Instrument, Basis Spread on Variable Rate	2.75%
Senior Secured Notes [Abstract]
Debt Instrument, Basis Spread on Variable Rate	2.75%
Senior Notes [Member]
Convertible Notes Payable [Abstract]
Debt Instrument, Face Amount	$ 78,100,000			79,032,000
Debt Instrument, Required Repurchase Due to Change in Control, Redemption Price, Percentage	101.00%
Senior Secured Notes [Abstract]
Debt Instrument, Face Amount	$ 78,100,000			79,032,000
Proceeds from Issuance of Debt	75,000,000
Debt Instrument, Original Issue Discount	$ 3,100,000
Debt Instrument, Issuer's Optional Repurchase Due to Change in Control Prior to June 1, 2022, Redemption Price, Percentage	103.00%
Debt Instrument, Required Repurchase Due to Change in Control, Redemption Price, Percentage	101.00%
Prepetition Asset-based Lending Facility [Abstract]
Debt Instrument, Unamortized Discount				$ (2,958,000)
Senior Notes [Member] | Minimum [Member]
Senior Secured Notes [Abstract]
Debt Instrument, Covenant Compliance, Asset Coverage Ratio, Required Minimum	1.5
Subsequent Event [Member] | Senior Notes [Member]
Prepetition Asset-based Lending Facility [Abstract]
Debt Instrument, Offer to Purchase		$ 2,200,000
Commencing up to May 15, 2024 [Member] | Senior Notes [Member] | London Interbank Offered Rate (LIBOR) [Member]
ABL Credit Facility [Abstract]
Debt Instrument, Basis Spread on Variable Rate	9.50%
Senior Secured Notes [Abstract]
Debt Instrument, Basis Spread on Variable Rate	9.50%
Commencing up to May 15, 2024 [Member] | Senior Notes [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
ABL Credit Facility [Abstract]
Debt instrument, reference rate, minimum	1.50%
Senior Secured Notes [Abstract]
Debt instrument, reference rate, minimum	1.50%
Due on or prior to May 29, 2021 [Member] | Senior Notes [Member]
Senior Secured Notes [Abstract]
Debt Instrument, Portion of Interest due in Cash, Percentage	50.00%
Debt Instrument, Portion of Interest due In-Kind, Percentage	50.00%
Debt Instrument, Portion of Interest due in-Kind at Majority Noteholder's Election, Percentage	100.00%
Commencing on or after May 15, 2024 [Member] | Senior Notes [Member] | London Interbank Offered Rate (LIBOR) [Member]
ABL Credit Facility [Abstract]
Debt Instrument, Basis Spread on Variable Rate	10.50%
Senior Secured Notes [Abstract]
Debt Instrument, Basis Spread on Variable Rate	10.50%
Commencing on or after May 15, 2024 [Member] | Senior Notes [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
ABL Credit Facility [Abstract]
Debt instrument, reference rate, minimum	1.50%
Senior Secured Notes [Abstract]
Debt instrument, reference rate, minimum	1.50%
Debt Instrument, Redemption, twelve-month period beginning June 1, 2021 [Member] | Senior Notes [Member]
Senior Secured Notes [Abstract]
Debt Instrument, Redemption Price, Percentage	104.00%
Debt Instrument, Redemption, twelve-month period beginning June 1, 2022 [Member] | Senior Notes [Member]
Senior Secured Notes [Abstract]
Debt Instrument, Redemption Price, Percentage	102.00%
Debt Instrument, Redemption, twelve-month period beginning June 1, 2023 [Member] | Senior Notes [Member]
Senior Secured Notes [Abstract]
Debt Instrument, Redemption Price, Percentage	101.00%
Debt Instrument, Redemption, twelve-month period beginning June 1, 2024 [Member] | Senior Notes [Member]
Senior Secured Notes [Abstract]
Debt Instrument, Redemption Price, Percentage	100.00%

XML

Taxes (Details) - USD ($) $ in Millions		9 Months Ended
	May 31, 2020	Sep. 30, 2020
Operating Loss Carryforwards [Line Items]
Debtor Reorganization Items, Cancellation of Debt Income	$ 217
Loss Generated Through 2016 [Member] | Foreign Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards, Statutory Carryforward Period		12 years
Loss Generated After 2017 [Member] | Domestic Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Net Operating Loss Limit of Taxable Income, Tax Reform Act, Provisions in Effect		80.00%

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Earnings (Loss) Per Common Share (Reconciliation of Earnings (loss) Per Common Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	1 Months Ended	2 Months Ended	3 Months Ended					4 Months Ended	5 Months Ended	9 Months Ended
	Jun. 30, 2020	May 31, 2020	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Numerator:
Net loss (numerator for basic EPS)	$ (9,817)	$ (35,121)	$ (20,070)	$ (69,104)	$ (26,016)	$ (12,944)	$ (15,115)	$ (29,887)	$ (104,225)	$ (54,075)
Interest on Convertible Notes, net of tax			0		0			0	0	0
Numerator for diluted EPS, if-converted method			$ (20,070)		$ (26,016)			$ (29,887)	$ (104,225)	$ (54,075)
Denominator:
Weighted-average shares (denominator for basic EPS)			1,119		78,473			1,101	78,968	78,405
Potentially dilutive shares issuable from Convertible Notes, if-converted method			0		0			0	0	0
Potentially dilutive shares issuable from outstanding stock-based compensation awards, treasury stock method			0		0			0	0	0
Denominator for diluted EPS			1,119		78,473			1,101	78,968	78,405
Loss per common share - Basic			$ (17.94)		$ (0.33)			$ (27.15)	$ (1.32)	$ (0.69)
Loss per common share - Diluted			$ (17.94)		$ (0.33)			$ (27.15)	$ (1.32)	$ (0.69)
Potentially dilutive securities excluded as anti-dilutive			9,733		5,577			9,733	4,517	4,962

XML

Stock-Based Compensation Plans (Narrative) (Details) - USD ($) $ in Thousands			4 Months Ended	5 Months Ended	9 Months Ended
	Jul. 31, 2020	May 29, 2020	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares Available for Grant		1,198,074
Share-based Compensation Arrangement by Share-based Payment Award, Shares Available for Grant as a Percentage of Shares Issued at Effective Date, Percentage		114.00%
Share-based Compensation Arrangement by Share-based Payment Award, Shares Available for Grant as a Percentage of Shares Fully Diluted, Percentage		10.00%
Phantom stock compensation expense			$ 0	$ 0	$ (99)
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted	90,000

XML

Segment Information (Narrative) (Details)	9 Months Ended
	Sep. 30, 2020 segments
Segment Reporting Information [Line Items]
Number of Operating Segments	4
Drilling Services [Member]
Segment Reporting Information [Line Items]
Number of Operating Segments	2
Drilling Services [Member] | United States [Member] | Domestic Drilling [Member]
Segment Reporting Information [Line Items]
Drilling Divisions	3
Production Services [Member]
Segment Reporting Information [Line Items]
Number of Operating Segments	2

XML

Segment Information (Schedule of Segment Reporting Information) (Details) $ in Thousands		3 Months Ended				4 Months Ended		5 Months Ended	9 Months Ended
		Sep. 30, 2020 USD ($) drilling_rigs		Sep. 30, 2019 USD ($) drilling_rigs		Sep. 30, 2020 USD ($) drilling_rigs		May 31, 2020 USD ($)	Sep. 30, 2019 USD ($) drilling_rigs		Dec. 31, 2019 USD ($)
Segment Reporting Information [Line Items]
Revenues		$ 38,998		$ 146,398		$ 50,161		$ 142,370	$ 445,809
Operating costs		28,893		108,059		37,636		114,047	332,614
Segment/Consolidated Margin		10,105		38,339		12,525		28,323	113,195
Identifiable assets		319,102		689,693		319,102		352,623	689,693		$ 673,954
Depreciation and amortization		14,699		22,924		19,935		35,647	68,428
Capital Expenditures		1,531		8,660		2,243		8,924	36,276
Intercompany receivable (payable)		0				0					$ 0
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Identifiable assets		59,193		54,760		59,193		65,057	54,760
Depreciation and amortization		103		219		227		373	709
Capital Expenditures		0		44		0		21	541
Drilling Services [Member]
Segment Reporting Information [Line Items]
Revenues		21,628		59,785		28,322		69,269	184,511
Operating costs		13,155		37,775		17,864		46,777	119,982
Segment/Consolidated Margin		8,473		22,010		10,458		22,492	64,529
Identifiable assets		187,466		401,854		187,466		207,894	401,854
Depreciation and amortization		9,437		12,376		12,525		20,202	36,525
Capital Expenditures		$ 1,173		3,939		$ 1,795		5,135	17,788
Drilling Rigs | drilling_rigs		25				25
Drilling Services [Member] | Domestic Drilling [Member]
Segment Reporting Information [Line Items]
Revenues		$ 17,567		38,168		$ 23,433		53,341	115,829
Operating costs		9,706		21,931		13,352		33,101	69,098
Segment/Consolidated Margin		7,861		16,237		10,081		20,240	46,731
Identifiable assets		144,433	[1]	354,534	[1]	144,433	[1]	158,283	354,534	[1]
Depreciation and amortization		6,195		10,864		8,207		18,058	32,297
Capital Expenditures		1,006		2,777		1,490		3,862	14,344
Intercompany receivable (payable)		28,300		37,500		28,300			37,500
Drilling Services [Member] | International Drilling [Member]
Segment Reporting Information [Line Items]
Revenues		4,061		21,617		4,889		15,928	68,682
Operating costs		3,449		15,844		4,512		13,676	50,884
Segment/Consolidated Margin		612		5,773		377		2,252	17,798
Identifiable assets	[2]	43,033	[1]	47,320	[1]	43,033	[1]	49,611	47,320	[1]
Depreciation and amortization		3,242		1,512		4,318		2,144	4,228
Capital Expenditures		167		1,162		305		1,273	3,444
Intercompany receivable (payable)		$ 28,300		$ 37,500		$ 28,300			$ 37,500
Drilling Services [Member] | Drilling Rigs | International Drilling [Member]
Segment Reporting Information [Line Items]
Drilling Rigs | drilling_rigs		5		5		5			5
Drilling Services [Member] | Assets Leased From Others [Member] | International Drilling [Member]
Segment Reporting Information [Line Items]
Drilling Rigs | drilling_rigs		3		3		3			3
Production Services [Member]
Segment Reporting Information [Line Items]
Revenues		$ 17,370		$ 86,613		$ 21,839		73,101	$ 261,298
Operating costs		15,738		70,284		19,772		67,270	212,632
Segment/Consolidated Margin		1,632		16,329		2,067		5,831	48,666
Identifiable assets		72,443		233,079		72,443		79,672	233,079
Depreciation and amortization		5,159		10,329		7,183		15,072	31,194
Capital Expenditures		358		4,677		448		3,768	17,947
Production Services [Member] | Well Servicing [Member]
Segment Reporting Information [Line Items]
Revenues		12,871		30,293		16,627		31,947	86,053
Operating costs		10,577		21,414		13,387		26,877	61,348
Segment/Consolidated Margin		2,294		8,879		3,240		5,070	24,705
Identifiable assets		47,207		118,686		47,207		49,388	118,686
Depreciation and amortization		3,539		5,132		4,800		7,820	14,956
Capital Expenditures		313		2,146		343		1,918	8,182
Production Services [Member] | Wireline Services [Member]
Segment Reporting Information [Line Items]
Revenues		4,499		43,874		5,212		35,543	137,134
Operating costs		4,938		38,349		6,023		31,836	119,500
Segment/Consolidated Margin		(439)		5,525		(811)		3,707	17,634
Identifiable assets		21,174		80,054		21,174		23,948	80,054
Depreciation and amortization		1,620		3,537		2,383		5,088	11,519
Capital Expenditures		45		775		105		1,684	5,198
Production Services [Member] | Coiled Tubing Services [Member]
Segment Reporting Information [Line Items]
Revenues		0		12,446		0		5,611	38,111
Operating costs		223		10,521		362		8,557	31,784
Segment/Consolidated Margin		(223)		1,925		(362)		(2,946)	6,327
Identifiable assets		4,062		34,339		4,062		6,336	34,339
Depreciation and amortization		0		1,660		0		2,164	4,719
Capital Expenditures		$ 0		$ 1,756		$ 0		$ 166	$ 4,567

[1] Identifiable assets for our drilling segments include the impact of a $28.3 million and $37.5 million intercompany balance, as of September 30, 2020 and 2019, respectively, between our domestic drilling segment (intercompany receivable) and our international drilling segment (intercompany payable).

[2] Identifiable assets for our international drilling segment include five drilling rigs that are owned by our Colombia subsidiary and three drilling rigs that are owned by one of our domestic subsidiaries and leased to our Colombia subsidiary.

XML

Segment Information (Reconciliation of Revenue from Segments to Consolidated) (Details) - USD ($) $ in Thousands	3 Months Ended		4 Months Ended	5 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	May 31, 2020	Sep. 30, 2019
Segment Reporting [Abstract]
Consolidated Gross Margin	$ 10,105	$ 38,339	$ 12,525	$ 28,323	$ 113,195
Depreciation and amortization	(14,699)	(22,924)	(19,935)	(35,647)	(68,428)
General and administrative	(11,626)	(30,485)	(15,839)	(22,047)	(68,271)
Pre-petition restructuring charges			0	(16,822)	0
Impairment			(388)	(17,853)	(1,378)
Bad debt (expense) recovery, net	315	(196)	598	(1,209)	90
Gain on dispositions of property and equipment, net	(3,829)	17	(4,289)	(989)	(2,184)
Loss from operations	$ (12,076)	$ (15,283)	$ (18,750)	$ (64,266)	$ (22,608)

XML

Commitments and Contingencies (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Sales and Use Tax [Member]
Commitments and Contingencies [Line Items]
Loss Contingency Accrual	$ 0.8	$ 2.0

XML

Label	Element	Value
Temporary Equity, Elimination as Part of Reorganization	us-gaap_TemporaryEquityEliminationAsPartofReorganization	$ 1,149,000
Retained Earnings [Member]
Temporary Equity, Elimination as Part of Reorganization	us-gaap_TemporaryEquityEliminationAsPartofReorganization	(556,277,000)
Stockholders' Equity Attributable to Parent	us-gaap_StockholdersEquity	$ (556,277,000)
Treasury Stock [Member]
Stockholders Equity Shares Elimination as Part of Reorganization	pes_StockholdersEquitySharesEliminationasPartofReorganization	(1,142,000)
Temporary Equity, Elimination as Part of Reorganization	us-gaap_TemporaryEquityEliminationAsPartofReorganization	$ (5,098,000)
Treasury Stock, Common, Shares	us-gaap_TreasuryStockCommonShares	1,142,000
Stockholders' Equity Attributable to Parent	us-gaap_StockholdersEquity	$ (5,098,000)
Common Stock [Member]
Stockholders Equity Shares Elimination as Part of Reorganization	pes_StockholdersEquitySharesEliminationasPartofReorganization	(88,930,000)
Temporary Equity, Elimination as Part of Reorganization	us-gaap_TemporaryEquityEliminationAsPartofReorganization	$ 8,893,000
Stockholders' Equity Attributable to Parent	us-gaap_StockholdersEquity	$ 8,893,000
Common Stock, Shares, Outstanding	us-gaap_CommonStockSharesOutstanding	88,930,000
Additional Paid-in Capital [Member]
Temporary Equity, Elimination as Part of Reorganization	us-gaap_TemporaryEquityEliminationAsPartofReorganization	$ 553,631,000
Stockholders' Equity Attributable to Parent	us-gaap_StockholdersEquity	$ 553,631,000