| Schedule of recognized identified assets acquired and liabilities assumed |
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 in consolidated statements of comprehensive (loss) income 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. |
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 ARS and the Brim Equipment Assets as of December 21, 2018 (in thousands):
|
|
|
|
|
|
|
|
|
|
ARS |
|
Brim Equipment Assets |
Accounts receivable |
$ |
146 |
|
|
$ |
— |
|
Property, plant and equipment |
1,702 |
|
|
1,990 |
|
Identifiable intangible assets - trade name(a)
|
120 |
|
|
— |
|
Goodwill(b)
|
694 |
|
|
2,243 |
|
Other non-current assets |
5 |
|
|
— |
|
Total assets acquired |
$ |
2,667 |
|
|
$ |
4,233 |
|
|
|
a. |
Trade name was valued using a “Relief-from-Royalty” method and will be amortized over 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 assembled workforces 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 assembled workforces 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 |
|
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. Non-contractual customer relationships were valued using a “Multi-period excess earnings” 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 assembled workforces and future profitability expected to arise from the acquired entity. |
|
| Business acquisition, pro forma information |
From the acquisition date through December 31, 2019, ARS and the Brim Equipment Assets provided the following activity (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
ARS |
|
Brim Equipment Assets |
Revenues |
$ |
2,153 |
|
|
$ |
— |
|
|
$ |
2,616 |
|
|
$ |
— |
|
Net loss(a)
|
(546 |
) |
|
(25 |
) |
|
(1,056 |
) |
|
— |
|
a. Includes depreciation expense of $0.3 million and $0.02 million, respectively, for ARS for 2019 and 2018 and $0.4 million for the Brim Equipment Assets for 2019.
The following table presents unaudited pro forma information as if the ARS and the Brim Equipment Assets acquisitions had occurred as of January 1, 2017 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
Years Ended December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
ARS |
|
Brim Equipment Assets |
Revenues |
$ |
3,055 |
|
|
$ |
2,641 |
|
|
$ |
4,478 |
|
|
$ |
1,448 |
|
Net income (loss) |
207 |
|
|
(39 |
) |
|
2,410 |
|
|
459 |
|
From its acquisition date through December 31, 2019, Higher Power has provided the following activity (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
2018 |
|
2017 |
Revenues(a)
|
$ |
93,379 |
|
|
$ |
220,281 |
|
|
$ |
39,571 |
|
Net (loss) income (b)
|
(33,195 |
) |
|
(5,868 |
) |
|
5,127 |
|
a.Includes intercompany revenues of $26.5 million, $191.2 million and $27.4 million, respectively, for 2019, 2018 and 2017.
b.Includes depreciation and amortization of $10.5 million, $7.1 million and $2.0 million, respectively, for 2019, 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):
|
|
|
|
|
|
|
|
Year Ended |
|
|
December 31, 2017 |
Revenues |
|
$ |
42,343 |
|
Net income |
|
5,004 |
|
From the acquisition date through December 31, 2019, WTL provided the following activity (in thousands):
|
|
|
|
|
|
|
|
|
|
2019 |
|
2018 |
Revenues |
$ |
8,413 |
|
|
$ |
7,511 |
|
Net loss(a)
|
(2,719 |
) |
|
(149 |
) |
a. Includes depreciation and amortization expense of $2.2 million and $1.0 million, respectively, for 2019 and 2018.
The following table presents unaudited pro forma information as if the acquisition of WTL had occurred as of January 1, 2017 (in thousands):
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
2018 |
|
2017 |
Revenues |
$ |
10,270 |
|
|
$ |
4,229 |
|
Net (loss) income |
(64 |
) |
|
165 |
|
From its acquisition date through December 31, 2019, 5 Star has provided the following activity (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
2018 |
|
2017 |
Revenues(a)
|
$ |
55,205 |
|
|
$ |
143,302 |
|
|
$ |
25,216 |
|
Net (loss) income (b)
|
(17,281 |
) |
|
4,149 |
|
|
4,191 |
|
a.Includes intercompany revenues of $7.6 million, $112.6 million and $16.0 million, respectively, for 2019, 2018 and 2017.
b.Includes depreciation and amortization expense of $6.1 million, $3.5 million and $0.8 million, respectively, for 2019, 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):
|
|
|
|
|
|
|
|
Year Ended |
|
|
December 31, 2017 |
Revenues |
|
$ |
31,548 |
|
Net income |
|
3,910 |
|
From the acquisition date through December 31, 2019, RTS provided the following activity (in thousands):
|
|
|
|
|
|
|
|
|
|
2019 |
|
2018 |
Revenues |
$ |
2,456 |
|
|
$ |
6,682 |
|
Net loss(a)
|
(6,458 |
) |
|
(3,210 |
) |
The following table presents unaudited pro forma information as if the acquisition of RTS had occurred as of January 1, 2017 (in thousands):
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
2018 |
|
2017 |
Revenues |
$ |
16,212 |
|
|
$ |
20,877 |
|
Net (loss) income |
(4,066 |
) |
|
1,141 |
|
Since the acquisition date, the Chieftain Assets have provided the following activity (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
2018 |
|
2017 |
Revenues(a)
|
$ |
27,617 |
|
|
$ |
52,628 |
|
|
$ |
22,847 |
|
Net (loss) income(b)
|
(3,513 |
) |
|
8,379 |
|
|
5,520 |
|
a.Includes intercompany revenues of $3.7 million, $14.8 million and $12.3 million, respectively, for 2019, 2018 and 2017.
b.Includes depreciation and amortization of $5.0 million, $4.9 million and $2.8 million, respectively, for 2019, 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):
|
|
|
|
|
|
|
|
Year Ended |
|
|
December 31, 2017 |
Revenues |
|
$ |
22,847 |
|
Net income |
|
5,655 |
|
Since the acquisition date, the businesses acquired have provided the following activity (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
2018 |
|
2017 |
|
SR Energy |
Cementing |
|
SR Energy |
Cementing |
|
SR Energy |
Cementing |
Revenues(a)
|
$ |
36,600 |
|
$ |
618 |
|
|
$ |
29,287 |
|
$ |
6,426 |
|
|
$ |
11,572 |
|
$ |
7,500 |
|
Net loss(b, c)
|
(3,975 |
) |
(2,449 |
) |
|
(2,539 |
) |
(5,869 |
) |
|
(1,626 |
) |
(1,963 |
) |
|
|
a. |
Includes intercompany revenues of $2.3 million, $3.0 million and $0.6 million, respectively, for SR Energy for 2019, 2018 and 2017 and $0.6 million, $0.3 million and a nominal amount, respectively, for Cementing for 2019, 2018 and 2017.
|
|
|
b. |
Includes depreciation and amortization of $4.9 million, $5.4 million and $3.4 million, respectively, for SR Energy for 2019, 2018 and 2017 and $0.8 million, $1.5 million and $4.1 million, respectively, for Cementing for 2019, 2018 and 2017.
|
|
|
c. |
Includes non-cash impairment expense of $3.9 million for SR Energy in 2019 and $3.1 million and $4.4 million, respectively, for Cementing in 2019 and 2018.
|
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):
|
|
|
|
|
|
|
|
Year Ended |
|
|
December 31, 2017 |
Revenues |
|
$ |
35,142 |
|
Net loss |
|
(4,066 |
) |
|
| Summary of consideration transferred |
At the acquisition date, the components of the consideration transferred were as follows (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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 assembled workforces and future profitability based on the synergies expected to arise from the acquired entities. |
|
|
d. |
Long-term debt assumed was paid off subsequent to the acquisition. |
|