Quarterly report pursuant to Section 13 or 15(d)

Acquisitions (Tables)

v3.10.0.1
Acquisitions (Tables)
6 Months Ended
Jun. 30, 2018
Business Combinations [Abstract]  
Schedule of recognized identified assets acquired and liabilities assumed
The following table summarizes the fair value of WTL as of May 31, 2018 (in thousands):
 
 
WTL
Property, plant and equipment
 
$
2,960

Identifiable intangible assets - customer relationships(a)
 
930

Identifiable intangible assets - trade name(a)
 
650

Goodwill(b)
 
1,567

Total assets acquired
 
$
6,107

a.
Identifiable intangible assets were measured using a combination of income approaches. Trade names were valued using a "Relief-from-Royalty" method. Non-contractual customer relationships were valued using a "Multi-period excess earnings" method. Identifiable intangible assets will be amortized over 10-20 years.
b.
Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill recorded in connection with the acquisition is attributable to the assembled workforce and future profitability expected to arise from the acquired entity.

The following table summarizes the fair value of Higher Power as of April 21, 2017 (in thousands):
 
 
Higher Power
Property, plant and equipment
 
$
1,744

Identifiable intangible assets - customer relationships
 
1,613

Goodwill (a)
 
643

Total assets acquired
 
$
4,000

a.
Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill recorded in connection with the acquisition is attributable to the assembled workforce and future profitability expected to arise from the acquired entity.
The following table summarizes the fair value of the Chieftain Acquisition as of May 26, 2017 (in thousands):
 
 
Total
Property, plant and equipment (a)
 
$
23,373

Sand reserves (b)
 
20,910

Total assets acquired
 
$
44,283

 
 
 
Asset retirement obligation
 
1,732

Total liabilities assumed
 
$
1,732

Total allocation of purchase price
 
$
42,551

Bargain purchase price (c,d)
 
(6,231
)
Total purchase price
 
$
36,320

a.
Property, plant and equipment fair value measurements were prepared by utilizing a combined fair market value and cost approach. The market approach relies on comparability of assets using market data information. The cost approach places emphasis on the physical components and characteristics of the asset. It places reliance on estimated replacement cost, depreciation and economic obsolescence.
b.
The fair value of the sand reserves was determined based on the excess cash flow method, a form of the income approach. The method provides a value based on the estimated remaining life of sand reserves, projected financial information and industry projections.
c.
Amount reflected in unaudited condensed consolidated statements of comprehensive income (loss) reflected net of income taxes of $2.2 million.
d.
The fair value of the business was determined based on the excess cash flow method, a form of the income approach.
See Summary of acquired assets and liabilities below

 
 
SR Energy
Cementing
 
Total
 
 
(in thousands)
Cash and cash equivalents
 
$
1,611

$
1,060

 
$
2,671

Accounts receivable, net
 
3,913

495

 
4,408

Receivables from related parties
 
3,684

1,418

 
5,102

Inventories
 

306

 
306

Prepaid expenses
 
35

32

 
67

Property, plant and equipment(a)
 
13,061

7,459

 
20,520

Identifiable intangible assets - customer relationships(b)
 

1,140

 
1,140

Identifiable intangible assets - trade names(b)
 
550

270

 
820

Goodwill(c)
 
3,929

6,264

 
10,193

Other assets
 
7


 
7

Total assets acquired
 
$
26,790

$
18,444

 
$
45,234

 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
5,890

$
2,063

 
$
7,953

Long-term debt (d)
 
5,074

2,000

 
7,074

Deferred tax liability
 
3,039

1,406

 
4,445

Total liabilities assumed
 
$
14,003

$
5,469

 
$
19,472

Net assets acquired
 
$
12,787

$
12,975

 
$
25,762

a.
Property, plant and equipment fair value measurements were prepared by utilizing a combined fair market value and cost approach. The market approach relies on comparability of assets using market data information. The cost approach places emphasis on the physical components and characteristics of the asset. It places reliance on estimated replacement cost, depreciation and economic obsolescence.
b.
Identifiable intangible assets were measured using a combination of income approaches. Trade names were valued using a "Relief-from-Royalty" method. Non-contractual customer relationships were valued using a "Multi-period excess earnings" method. Identifiable intangible assets will be amortized over 5-10 years.
c.
Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill recorded in connection with the acquisition is attributable to the assembled workforces and future profitability expected to arise from the acquired entities.
d.
Long-term debt assumed was paid off subsequent to the acquisitions.
The following table summarizes the fair value of 5 Star as of July 1, 2017 (in thousands):
 
 
5 Star
Accounts receivable
 
$
2,440

Property, plant and equipment
 
1,863

Identifiable intangible assets - trade names (a)
 
300

Goodwill (b)
 
248

Total assets acquired
 
$
4,851

 
 
 
Long-term debt and other liabilities
 
$
2,413

Total liabilities assumed
 
$
2,413

Net assets acquired
 
$
2,438

a.
Identifiable intangible assets were measured using a combination of income approaches. Trade names were valued using a "Relief-from-Royalty" method. Identifiable intangible assets will be amortized over 10 years.
b.
Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill recorded in connection with the acquisition is attributable to the assembled workforce and future profitability expected to arise from the acquired entity.
The following table summarizes the fair value of RTS as of June 15, 2018 (in thousands):
 
 
RTS
Inventory
 
$
180

Property, plant and equipment
 
7,787

Goodwill(a)
 
133

Total assets acquired
 
$
8,100

a.
Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill recorded in connection with the acquisition is attributable to the assembled workforce and future profitability expected to arise from the acquired entity.
Business acquisition, pro forma information
From the acquisition date through June 30, 2018, RTS provided the following activity (in thousands):
 
 
2018
Revenues
 
$
630

Net income(a)
 
7

a.    Includes depreciation expense of $0.1 million.

The following table presents unaudited pro forma information as if the acquisition of RTS had occurred as of January 1, 2017 (in thousands):
 
Six Months Ended
 
June 30, 2018
 
June 30, 2017
Revenues
$
10,160

 
$
8,326

Net income (loss)
(848
)
 
653

From the acquisition date through June 30, 2018, WTL provided the following activity (in thousands):
 
 
2018
Revenues
 
$
595

Net income(a)
 
5

a.    Includes depreciation and amortization expense of $0.1 million.

The following table presents unaudited pro forma information as if the acquisition of WTL had occurred as of January 1, 2017 (in thousands):
 
Six Months Ended
 
June 30, 2018
 
June 30, 2017
Revenues
$
3,354

 
$
1,553

Net income
90

 
62

From the acquisition date through June 30, 2018, the Chieftain Assets provided the following activity (in thousands):
 
 
2018
 
2017
Revenues(a)
 
$
35,128

 
$
22,847

Net income(b)
 
10,694

 
5,520

a.Includes intercompany revenues of $9.6 million and $12.3 million, respectively, for 2018 and 2017
b.Includes depreciation, depletion, amortization and accretion of $2.3 million and $2.8 million, respectively, for 2018 and 2017
The following table presents unaudited pro forma information as if the acquisition of the Chieftain Assets had occurred as of January 1, 2017 (in thousands):
 
Six Months Ended June 30, 2017
Revenues
$
1,312

Net loss
(72
)
From the acquisition date through June 30, 2018, Higher Power provided the following activity (in thousands):
 
 
2018
 
2017
Revenues(a)
 
$
122,734

 
$
39,571

Net income (b)
 
16,205

 
5,127

a.Includes intercompany revenues of $111.4 million and $27.4 million, respectively for 2018 and 2017.
b.Includes depreciation and amortization expense of $2.3 million and $2.0 million, respectively, for 2018 and 2017.
The following table presents unaudited pro forma information as if the acquisition of Higher Power had occurred as of January 1, 2017 (in thousands):
 
Six Months Ended June 30, 2017
Revenues
$
4,481

Net loss
(411
)
From the acquisition date through June 30, 2018, 5 Star provided the following activity (in thousands):
 
 
2018
 
2017
Revenues(a)
 
$
86,720

 
$
25,216

Net income (b)
 
12,903

 
4,191

a.Includes intercompany revenues of $77.5 million and $16.0 million, respectively, for 2018 and 2017.
b.Includes depreciation and amortization expense of $1.0 million and $0.8 million, respectively, for 2018 and 2017.
The following table presents unaudited pro forma information as if the acquisition of 5 Star had occurred as of January 1, 2017 (in thousands):
 
Six Months Ended June 30, 2017
Revenues
$
6,332

Net loss
(282
)
From the acquisition date through June 30, 2018, SR Energy and Cementing provided the following activity (in thousands):
 
2018
 
2017
 
SR Energy
Cementing
 
SR Energy
Cementing
Revenues(a)
$
16,034

$
5,131

 
$
11,572

$
7,500

Net loss(b)
(1,586
)
(806
)
 
(1,626
)
(1,963
)
a.
Includes intercompany revenues of $1.6 million and $0.6 million for SR Energy in 2018 and 2017.
b.
Includes depreciation and amortization expense of $2.8 million and $1.0 million, respectively, for SR Energy and Cementing in 2018 and $3.4 million and $4.1 million, respectively, for SR Energy and Cementing in 2017.
The following table presents unaudited pro forma information as if the acquisition of SR Energy and Cementing had occurred on January 1, 2017 (in thousands):
 
Six Months Ended June 30, 2017
Revenues
$
18,333

Net loss
(1,612
)


Schedule of business acquisitions by acquisition, consideration transferred
The following tables summarize the fair values of Cementing and SR Energy as of June 5, 2017 (in thousands):
Consideration attributable to Cementing (a)
 
$
12,975

Consideration attributable to SR Energy (a)
 
12,787

Total consideration transferred
 
$
25,762

a.    See Summary of acquired assets and liabilities below