Press Releases
Press Releases
Press Releases


20 Aug 2018

HOUSTON, Aug. 20, 2018 (GLOBE NEWSWIRE) -- National Energy Services Reunited Corp. (“NESR”) (NASDAQ: NESR) (NASDAQ: NESRW), a national, industry-leading provider of integrated energy services in the Middle East and North Africa (“MENA”) region, today reported results for the second quarter ended June 30, 2018.

Operating and Financial Highlights

 Successfully completed the business combination with National Petroleum Services (“NPS”) and Gulf Energy Services (“GES”) on June 6, 2018.
 As described below, the reporting is in a Predecessor/Successor format whereby NPS standalone is the Predecessor for periods prior to the completion of the business combination transaction and NESR, including NPS and GES, is the Successor for post-transaction periods.
 Revenue growth particularly strong for Predecessor (NPS) in the second quarter of 2018, represented through sequential growth of 21% over the first quarter of 2018, 36% over the same period in 2017, and 38% for the year to date period ending June 30, 2018 as compared to prior year.
 Awarded new contracts worth $360 million in the second quarter of 2018.
 Year to date Successor and Predecessor period through June 30, 2018 reflects net income of $2.8 million as per U.S. GAAP, inclusive of intangible amortization and transaction costs, and Adjusted EBITDA (see reconciliation below) of $66 million for the combined entities.
 Integration activities are on track and are anticipated to yield significant incremental revenue synergies across all subsidiaries in the second half of 2018.

“We are excited to report earnings for the first time as a combined, fully operational oil and gas services company,” said Sherif Foda, Chairman of the Board and CEO of NESR. “We combined two exceptional service companies to form the first and only listed national services provider in the MENA region. I would like to thank our employees for all of their hard work during this transition and for their passion and support as we make NESR a world-class services company.”

Mr. Foda continued, “We are proud to be the largest regionally-focused OFS player, and we believe there are many opportunities to grow over the coming years due to a special set of competitive strengths. We are a comprehensive integrated service provider with unique exposure to the high-growth MENA region. Our customer base is strong and comprised of both national and international players. We have a track record of solid growth, both organically and through acquisitions and we have a motivated and proven management team that is committed to growing our business and creating shareholder value. Post combination, NESR has already signed new contracts moving us toward our vision for significant growth and presence in the region.”

Predecessor/Successor Accounting Treatment

The quarterly information included in the 6-K filed today includes accounting treatment for the combination designating the NPS subsidiary as Predecessor accounting entity and a combined Successor accounting entity beginning June 7th. The one month of successor company results totaled a loss of $4.0 million which was influenced by transaction costs triggered at the time of combination as well as monthly amortization associated with our customer intangible. These two items had an impact on net income of $8.8 million. The NPS predecessor accounting period includes net income of $6.7 million through May of 2018. Due to the unique accounting treatment involved, neither the NESR parent company nor the GES results of operations for April and May 2018 are reflected in the statement of operations.

Production Services Segment Results

Production Services contributed $76.6 million to consolidated revenue for the combined 2018 Successor second quarter period and 2018 Predecessor second quarter period, an increase of $18.1 million from $58.5 million for the 2017 Predecessor second quarter. This increase was due primarily to higher coiled tubing activity in Saudi, Qatar, Iraq, and the United Arab Emirates as well as the results of combined company activity in the Successor period. See “Business Combination Accounting and Presentation of Results of Operations” section below for additional information on current reporting conventions.

  Successor (NESR)  Predecessor (NPS) 
  2018  2018  2017 
  June 7, 2018 To
June 30, 2018
  April 1 To June 6  January 1 To June 6  April 1 To June 30  January 1 To June 30 
Revenue $28,602  $48,032  $112,295  $58,545  $105,329 
Segment EBITDA $8,770  $15,112  $36,836  $20,864  $37,211 

Drilling and Evaluation Services Segment Results

Drilling and Evaluation Services contributed $28.5 million to consolidated revenue for the combined 2018 Successor second quarter period and 2018 Predecessor second quarter period, an increase of $18.5 million from $10.0 million for the 2017 Predecessor second quarter. Apart from the impact of the GES acquisition, this increase was primarily driven by increased well testing in Saudi and Iraq, further enhanced by an increase in logging and well testing activity in Saudi Arabia.

  Successor (NESR)  Predecessor (NPS) 
  2018  2018  2017 
  June 7, 2018 To
June 30, 2018
  April 1 To June 6  January 1 To June 6  April 1 To June 30  January 1 To June 30 
Revenue $16,384  $12,153  $24,732  $10,044  $17,999 
Segment EBITDA $1,275  $1,217  $3,267  $1,602  $1,659 

Net Income and Consolidated Adjusted EBITDA Results

The company had Successor period net income for the month of June totaling a loss of $4.0 million including transaction costs as a result of the combination. Predecessor net income for the first five months of the year was $6.7 million and Predecessor net income was $1.3 million for the periods of April and May pre-business combination. Net income presented includes the effect of transaction and integration costs incurred during those periods. On a combined basis, the Company had adjusted EBITDA of $65.8 million for the 2018 year to date period compared to $62.9 million for the same 2017 period. Adjustments to EBITDA include transaction and integration costs of $23 million for the 2018 year to date period.

Balance Sheet

Cash and cash equivalents were $36.9 million as of June 30, 2018 (Successor), compared to $27.5 million as of December 31, 2017 (Predecessor). The Company had $305.7 million in debt as of June 30, 2018 including a $50 million convertible loan facility with an implied conversion price of 11.244 per share. During July, a refinancing of the bridge loan facility in place on June 30, 2018 was completed and also entered into a new facility for $50 million of which $25 million has been drawn to date and the remaining $25 million is available.

About National Energy Services Reunited Corp.

NESR is one of the largest oil and gas services providers in the MENA region. NESR began as a special purpose acquisition corporation, or SPAC, focused on investing in global oil & gas services space in May 2017. In November 2017, NESR announced the acquisition of two of the most prominent oilfield services companies in the MENA region: GES and NPS. These transactions and the formation of NESR as an operating entity were completed in June 2018.

Business Combination Accounting and Presentation of Results of Operations

As a result of the Business Combination, NESR was determined to be the accounting acquirer and NPS was determined to be the predecessor for SEC reporting purposes. Pursuant to Accounting Standard Codification (“ASC”) 805, Business Combinations (“ASC 805”), a preliminary assessment was made as of the acquisition-date fair value of the purchase consideration paid by NESR to effect the Business Combination was allocated to the assets acquired and the liabilities assumed based on their estimated fair values. As a result of the application of the acquisition method of accounting resulting from the Business Combination, the financial statements and certain footnote presentations separate our presentations into two distinct sets of reporting periods, the periods before the consummation of the transaction (“Predecessor Periods”) and the period after that date (“Successor Period”), to indicate the application of the different basis of accounting between the periods presented. The Predecessor Periods reflect the historical financial information of NPS prior to the Business Combination, while the Successor Period reflects our consolidated financial information, including the results of NPS and GES, after the Business Combination. The Successor Period is from June 7, 2018 to June 30, 2018 and the Predecessor Periods are from April 1, 2018 to June 6, 2018, for the three months ended June 30, 2017, January 1, 2018 to June 6, 2018 and for the six months ended June 30, 2017.


This communication includes certain statements that may constitute “forward-looking statements” for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include, among others, statements about the benefits and synergies of the recently completed business combination transaction. These forward-looking statements are based on information available as of the date of this communication, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing NESR’s views as of any subsequent date, and NESR does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. You should not place undue reliance on these forward-looking statements. As a result of a number of known and unknown risks and uncertainties, NESR’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include NESR’s ability to recognize the anticipated benefits of the transaction, which may be affected by, among other things, competition and the ability of NESR to grow and manage growth profitably following the transaction; changes in applicable laws or regulations; the possibility that NESR may be adversely affected by other economic, business, and/or competitive factors; and other risks and uncertainties indicated in NESR’s public filings with the Securities and Exchange Commission.

(In thousands, except share data)

  Successor (NESR)  Predecessor (NPS) 
  June 30, 2018  December 31, 2017 
Current assets        
Cash and cash equivalents  36,901   27,545 
Accounts receivable  86,764   58,174 
Unbilled revenue  94,195   24,167 
Inventories  63,503   32,313 
Other current assets  32,957   19,656 
Total current assets  314,320   161,855 
Property, plant and equipment  324,379   264,269 
Intangible assets  176,474   10 
Goodwill  475,663   182,053 
Other assets  10,021   11,385 
Total assets $1,300,857  $619,572 
Liabilities and equity        
Accounts payable  75,244   25,132 
Accrued expenses  62,922   23,324 
Current portion of loans and borrowings  16,368   - 
Short-term borrowings  118,411   8,773 
Other current liabilities  39,909   5,228 
Total current liabilities  312,854   62,457 
Loans and borrowings  170,890   147,024 
Other liabilities  25,095   20,662 
Total liabilities  508,839   230,143 
Successor preferred shares, no par value; unlimited shares authorized; none issued and outstanding  -   - 
Predecessor common stock, par value $1; 370,000,000 shares authorized; 342,250,000 shares issued and outstanding at December 31, 2017  -   342,250 
Successor common stock, no par value; unlimited shares authorized; 85,562,769 shares issued and outstanding at June 30, 2018  801,545   - 
Predecessor convertible redeemable shares  -   27,750 
Additional paid in capital  -   3,345 
Retained earnings (accumulated deficit)  (7,362)  18,480 
Accumulated other comprehensive (loss) income  -   (436)
Total shareholders’ equity  794,183   391,389 
Non-controlling interests  (2,165)  (1,960)
Total equity  792,018   389,429 
Total liabilities and equity $1,300,857  $619,572 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

(In thousands, except share data)

  Successor (NESR)  Predecessor (NPS) 
  2018  2018  2017 
  Period from
June 7 to
June 30, 2018
  Period from
April 1 to
June 6
  Period from
January 1 to
June 6
  Period from
April 1 to
June 30
  Period from
January 1 to
June 30
Revenues  44,986   60,185   137,027   68,589   123,328 
Cost of product and services  (37,055)  (46,070)  (104,242)  (50,418)  (92,171)
Gross profit  7,931   14,115   32,785   18,171   31,157 
Selling, general and administrative expense  (9,021)  (10,469)  (19,969)  (7,642)  (15,338)
Amortization  (1,536)  (10)  (10)  (73)  (146)
Operating income (loss)  (2,626)  3,636   12,806   10,456   15,673 
Interest expense, net  (1,900)  (1,265)  (4,090)  (1,700)  (3,273)
Other (expense) income, net  (468)  271   362   (297)  (188)
Income (loss) before income taxes  (4,994)  2,642   9,078   8,459   12,212 
Income taxes  1,029   (1,359)  (2,342)  (1,043)  (1,954)
Net income (loss)  (3,965)  1,283   6,736   7,416   10,258 
Net income (loss) attributable to non-controlling interests  (219)  (541)  (881)  (640)  (1,213)
Net income (loss) attributable to shareholders  (3,746)  1,824   7,617   8,056   11,471 
Weighted average shares outstanding                    
Basic  85,562,769   348,524,566   348,524,566   342,250,000   342,250,000 
Diluted  85,562,769   370,000,000   370,000,000   370,000,000   370,000,000 
Net earnings (loss) per share                    
Basic  (0.05)  0.00   0.02   0.02   0.03 
Diluted  (0.05)  0.00   0.02   0.02   0.03 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

(In thousands)

  Successor (NESR)  Predecessor (NPS) 
  2018  2018  2017 
  Period from
June 7 to
June 30, 2018
  Period from April 1 to June 6  Period from January 1 to June 6  Period from April 1 to June 30  Period from January 1 to June 30 
Net income (loss)  (3,965)  1,283   6,736   7,416   10,258 
Other comprehensive income (loss), net of taxes:                    
Foreign currency translation adjustments  -   (17)  (16)  (26)  (26)
Other comprehensive earnings (loss)  (3,965)  1,266   6,720   7,390   10,232 
Total comprehensive earnings (loss)  (3,965)  1,266   6,720   7,390   10,232 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

(In thousands, except share data)

Predecessor (NPS) Shares Outstanding  Common Stock  Redeemable Convertible Shares Outstanding  Redeemable Convertible Shares  Additional Paid In Capital  Accumulated Other Comprehensive Income (Loss)  Retained Earnings (Accumulated Deficit)  Total
Company Stockholders’ Equity
controlling Interests
  Total Stockholders’
Balance at January 1, 2018  342,250,000  $342,250   27,750,000  $27,750  $3,345  $(436) $18,480  $391,389  $(1,960) $389,429 
Net income (loss)                          7,617   7,617   (881)  6,736 
Foreign currency translation adjustments                      (16)      (16)      (16)
Conversion of redeemable shares  6,274,566   6,275   (6,274,566)  (6,275)               -        - 
Dividends paid                          (48,210)  (48,210)      (48,210)
Amount of provision for Zakat                          (766)  (766)      (766)
Balance at June 6, 2018  348,524,566  $348,525   21,475,434  $21,475  $3,345  $(452) $(22,879) $350,014  $(2,841) $347,173 

  Ordinary Shares  Redeemable Convertible Shares  Additional Paid In  Accumulated Other Comprehensive  Retained Earnings (Accumulated  Total Shareholders’  Non-
Successor (NESR) Shares  Amount  Outstanding  Capital  Income (Loss)  Deficit)  Equity  Interests  Equity 
Balance at June 7, 2018  11,730,425  $56,602              $(4,611) $51,991      $51,991 
Reclassification of shares previously subject to redemption  16,921,700   165,188                   165,188       165,188 
Redeemed shares  (1,916,511)  (19,380)                  (19,380)      (19,380)
Shares issued to acquire NPS  25,077,277   255,537                   255,537       255,537 
Shares issued to acquire GES  28,346,229   288,848                   288,848       288,848 
Shares issued to related party for loan fee and transaction costs  266,809   2,719                   2,719       2,719 
Shares issued to Backstop Investor  4,829,375   48,294                   48,294       48,294 
Shares issued for IPO underwriting fees  307,465   3,737                   3,737       3,737 
Non-controlling interest                  -           (951)  (951)
Acquisition of non-controlling interest during the period                      995   995   (995)  - 
Net Income (loss) through June 30, 2018                      (3,746)  (3,746)  (219)  (3,965)
Balance at June 30, 2018  85,562,769  $801,545  $-  $-  $-  $(7,362) $794,183  $(2,165) $792,018 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

(In thousands)

  Successor (NESR)  Predecessor
  Period from
June 7 to
June 30, 2018
  Period from January 1 to
June 6, 2018
  Period from January 1 to
June 30, 2017
Cash flows from operating activities:            
Net income (loss)  (3,965)  6,736   10,258 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:            
Depreciation and amortization  6,460   17,284   18,570 
Shares issued for transaction costs  2,175   -   - 
Gain (loss) on disposal of assets, net  (281)  -   (73)
Allowance for doubtful accounts  -   2,402   83 
Accrued interest  1,899   3,350   3,273 
Other, net  603   1,442   887 
Changes in operating assets and liabilities:            
(Increase) decrease in accounts receivable  801   (15)  (6,430)
(Increase) decrease in inventories  (35)  (2,080)  (3,268)
(Increase) decrease in prepaid expenses  462   (759)  (903)
(Increase) decrease in other current assets and unbilled revenue  (8,387)  (16,257)  3,590 
Increase) decrease in other long term assets  2,039   (544)  (6,875)
(Decrease) increase accounts payable and accrued liabilities  13,397   7,335   3,748 
Increase (decrease) in other current liabilities  (844)  1,932   1,397 
Net cash provided by operating activities  14,324   20,826   24,257 
Cash flows from investing activities:            
Proceeds from the Company’s Trust account  231,782   -   - 
Capital expenditures  (2,157)  (9,861)  (20,192)
Acquisition of business, net of cash acquired  (282,190)  (1,098)  (625)
Other investing activities  330   -   73 
Net cash used in investing activities  (52,235)  (10,959)  (20,744)
Cash flows from financing activities:            
Redemption of ordinary shares  (19,380)  -   - 
Proceeds from issuance of shares  48,294   -   - 
Proceeds from borrowings  -   47,063   - 
Payment of deferred underwriting fees  (5,333)  (164)  (2,885)
Proceeds from lines of credit and other debt  50,000   -   923 
Dividend paid  -   (48,210)  - 
Other financing activities, net  1,185   (4,429)  (1,240)
Net cash provided by (used in) financing activities  74,766   (5,740)  (3,202)
Effect of exchange rate changes on cash  -   (16)  (26)
Net increase in cash  36,855   4,111   285 
Cash, beginning of period  46   27,545   25,534 
Cash, end of period  36,901   31,656   25,819 
Supplemental disclosures of cash flow information            
Cash payments during the year:            
Interest  143   3,636   3,090 
Income taxes  3,061   345   482 

(In thousands)

The Company uses and presents certain key non-GAAP financial measures to evaluate its business and trends, measure performance, prepare financial projections and make strategic decisions. Included in this earnings release are discussions of earnings before interest, income tax and depreciation and amortization adjusted for certain non-recurring and non-core expenses (“Adjusted EBITDA”), as well a reconciliation of this non-GAAP measure to net income in accordance with U.S. GAAP.

The Company believes that the presentation of Adjusted EBITDA provides useful information to investors in assessing its financial performance and results of operations as the Company’s board of directors, management and investors use Adjusted EBITDA to compare the Company’s operating performance on a consistent basis across periods by removing the effects of changes in capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization and impairment), items that do not impact the ongoing operations (Business Combination transaction expenses and related integration costs) and items outside the control of its management team. Adjusted EBITDA should not be considered as an alternative to net income, the most directly comparable GAAP financial measure. Non-GAAP financial measures have important limitations as analytical tools because they exclude some but not all items that affect the most directly comparable GAAP financial measure. You should not consider non-GAAP measures in isolation or as a substitute for an analysis of the Company’s results as reported under U.S. GAAP.

  Successor (NESR)  Predecessor (NPS)  NESR and GES  Combined 
  June 7, 2018 to June 30, 2018  January 1 To June 6, 2018  January 1 To June 6, 2018  YTD January 1 To June 30, 2018 
Net Income (loss)  (3,965)  6,736   (2,191)  580 
Add:              - 
Income Taxes  (1,029)  2,342   1,363   2,676 
Interest Expense, net  1,900   4,090   1,106   7,096 
Depreciation and Amortization  6,460   17,284   8,791   32,535 
Transaction and Integration Costs  7,832   8,333   6,894   23,059 
Total Adjusted EBITDA  11,198   38,785   15,963   65,946 

Conference Call Information

NESR will host a conference call on Monday, August 20, 2018, to discuss the second quarter 2018 financial results. The call will begin at 8:00 AM Central Time (9:00 AM Eastern Time).

Investors, analysts and members of the media interested in listening to the call are encouraged to participate by dialing into the toll-free line at 1-888-204-4368 or the international line at 1-323-994-2082. A live, listen-only webcast will also be available in the investors section of To hear a replay of the call, please dial into the toll-free line at 1-844-512-2921 or the international line at 1-412-317-6671 and enter pin number 2303276.

For inquiries regarding NESR, please contact:

Dhiraj Dudeja
NESR Corp.


Joseph Caminiti or Steve Calk
Alpha IR Group

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Source: National Energy Services Reunited Corp.