##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form l0-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
 Commission File Number: 000-51435
 SUPERIOR WELL SERVICES, INC.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    20-2535684(I.R.S. Employer
Identification No.)
 1380 Rt. 286 East, Suite #121
Indiana, Pennsylvania 15701
 (Address of principal executive offices)
 (Zip Code)
 (724) 465-8904
 (Registrants telephone number, including area code)
 þ o
  o þ o
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##### Table of Contents



SUPERIOR WELL SERVICES, INC. QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007
 TABLE OF CONTENTS
  
 PART I
    
    FINANCIAL INFORMATION
    
    PAGEItem 1.
    
    Financial Statements-     Unaudited Consolidated Balance Sheets
    
    
    1-     Unaudited Consolidated Statements of Income
    
    
    2-     Unaudited Consolidated Statements of Changes in Stockholders Equity
    
    
    3-     Unaudited Consolidated Statements of Cash Flows
    
    
    4-     Notes to Unaudited Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4.
    
    Controls and Procedures
    
    
    28PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    29Item 1A.
    
    Risk Factors
    
    
    29Item 4.
    
    Submission on Matters to a Vote of Security Holders
    
    
    29Item 6.
    
    Exhibits
    
    
    29EX-10.1EX-10.2EX-10.3EX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 December 31,
    
    
    June 30,2006
    
    
    2007(in thousands, except per share data)Current Assets:Cash and cash equivalents
    
    $
    56,752
    
    
    $
    Short-term investments
    
    
    
    
    
    
    11,777Trade accounts receivable, net of
allowance of $772 and $1,122,
respectively
    
    
    47,325
    
    
    
    52,089Inventories
    
    
    6,951
    
    
    
    8,212Prepaid expenses
    
    
    908
    
    
    
    455Deferred income taxes
    
    
    507
    
    
    
    1,011Total current assets
    
    
    112,443
    
    
    
    73,544Property, Plant and Equipment:Land
    
    
    420
    
    
    
    420Building and improvements
    
    
    3,323
    
    
    
    3,770Equipment and vehicles
    
    
    149,195
    
    
    
    205,730Construction in progress
    
    
    24,922
    
    
    
    31,370177,860
    
    
    
    241,290Accumulated depreciation
    
    
    (36,436
    )
    
    
    (46,878
    )Total property, plant and equipment, net
    
    
    141,424
    
    
    
    194,412Goodwill
    
    
    2,850
    
    
    
    4,850Intangible assets, net of accumulated
amortization of $1,010 and $1,377,
respectively
    
    
    1,416
    
    
    
    2,665Deferred income taxes
    
    
    585
    
    
    
    267Other assets
    
    
    316
    
    
    
    717Total assets
    
    $
    259,034
    
    
    $
    276,455Current Liabilities:Accounts payable-trade
    
    $
    21,565
    
    
    $
    15,599Income taxes payable
    
    
    542
    
    
    
    586Current portion of long-term debt
    
    
    382
    
    
    
    390401(k) plan contribution and withholding
    
    
    1,982
    
    
    
    775Advance payments on servicing contracts
    
    
    803
    
    
    
    501Accrued wages and health benefits
    
    
    1,462
    
    
    
    2,754Other accrued liabilities
    
    
    1,664
    
    
    
    1,772Total current liabilities
    
    
    28,400
    
    
    
    22,377Long-term debt
    
    
    1,597
    
    
    
    1,291Deferred income taxes
    
    
    15,133
    
    
    
    18,633Stockholders Equity:Common stock, voting, par $.01 per
share, 70,000,000 shares authorized,
23,352,567 and 23,471,011 shares issued
at December 31, 2006 and June 30, 2007,
respectively
    
    
    234
    
    
    
    235Additional paid-in capital
    
    
    182,492
    
    
    
    183,573Retained earnings
    
    
    31,178
    
    
    
    50,346Total stockholders equity
    
    
    213,904
    
    
    
    234,154Total liabilities and stockholders equity
    
    $
    259,034
    
    
    $
    276,455
  1




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007(in thousands, except per share data)Revenue
    
    $
    54,589
    
    
    $
    84,807
    
    
    $
    102,276
    
    
    $
    161,515Cost of revenue
    
    
    37,704
    
    
    
    59,480
    
    
    
    69,440
    
    
    
    113,466Gross profit
    
    
    16,885
    
    
    
    25,327
    
    
    
    32,836
    
    
    
    48,049Selling, general and administrative
expenses
    
    
    6,153
    
    
    
    8,844
    
    
    
    11,679
    
    
    
    17,292Operating income
    
    
    10,732
    
    
    
    16,483
    
    
    
    21,157
    
    
    
    30,757Interest expense
    
    
    49
    
    
    
    47
    
    
    
    87
    
    
    
    106Other income, net
    
    
    50
    
    
    
    209
    
    
    
    191
    
    
    
    767Income before income taxes
    
    
    10,733
    
    
    
    16,645
    
    
    
    21,261
    
    
    
    31,418Income taxesCurrent
    
    
    3,755
    
    
    
    4,792
    
    
    
    7,585
    
    
    
    8,936Deferred
    
    
    547
    
    
    
    1,693
    
    
    
    889
    
    
    
    3,3144,302
    
    
    
    6,485
    
    
    
    8,474
    
    
    
    12,250Net income
    
    $
    6,431
    
    
    $
    10,160
    
    
    $
    12,787
    
    
    $
    19,168Earnings per common share:Basic and fully diluted
    
    $
    0.33
    
    
    $
    0.44
    
    
    $
    0.66
    
    
    $
    0.83Weighted average shares outstanding  basic
    
    
    19,655,567
    
    
    
    23,102,046
    
    
    
    19,522,315
    
    
    
    23,097,262Weighted average shares outstanding  diluted
    
    
    19,655,567
    
    
    
    23,166,307
    
    
    
    19,522,315
    
    
    
    23,188,524
  2




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(Unaudited)
 Superior Well Services, Inc.Additional
    
    
    RetainedCommon
    
    
    Paid-in
    
    
    EarningsStock
    
    
    Capital
    
    
    (Deficit)
    
    
    Total(in thousands)BALANCE, DECEMBER 31, 2005
    
    $
    194
    
    
    $
    91,944
    
    
    $
    (745
    )
    
    $
    91,393Net income
    
    
    
    
    
    
    
    
    
    
    12,787
    
    
    
    12,787Issuance of restricted stock awards
    
    
    3
    
    
    
    276
    
    
    
    
    
    
    
    279Share-based compensation
    
    
    
    
    
    
    873
    
    
    
    
    
    
    
    873BALANCE, JUNE 30, 2006
    
    $
    197
    
    
    $
    93,093
    
    
    $
    12,042
    
    
    $
    105,332BALANCE, DECEMBER 31, 2006
    
    $
    234
    
    
    $
    182,492
    
    
    $
    31,178
    
    
    $
    213,904Net income
    
    
    
    
    
    
    
    
    
    
    19,168
    
    
    
    19,168Issuance of restricted stock awards
    
    
    1
    
    
    
    124
    
    
    
    
    
    
    
    125Share-based compensation
    
    
    
    
    
    
    957
    
    
    
    
    
    
    
    957BALANCE, JUNE 30, 2007
    
    $
    235
    
    
    $
    183,573
    
    
    $
    50,346
    
    
    $
    234,154
  3




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months EndedJune 302006
    
    
    2007(in thousands)Cash flows from operations:Net income
    
    $
    12,787
    
    
    $
    19,168Adjustments to reconcile net income to net
cash provided by operations:Deferred income taxes
    
    
    889
    
    
    
    3,314Depreciation and amortization
    
    
    6,189
    
    
    
    10,938Loss on disposal of equipment
    
    
    
    
    
    
    213Share-based compensation
    
    
    873
    
    
    
    957Changes in assets and liabilities:Trade accounts receivable
    
    
    (9,000
    )
    
    
    (4,764
    )Inventory
    
    
    (289
    )
    
    
    (1,261
    )Prepaid expenses and other assets
    
    
    401
    
    
    
    453Accounts payable-trade
    
    
    1,183
    
    
    
    (4,063
    )Income taxes payable
    
    
    1,515
    
    
    
    44401 (k) plan contribution and
withholding
    
    
    22
    
    
    
    (1,207
    )Advance payments on servicing
contracts
    
    
    281
    
    
    
    (302
    )Accrued wages and health benefits
    
    
    1,036
    
    
    
    1,292Other accrued liabilities
    
    
    529
    
    
    
    108Net cash provided by operations
    
    
    16,416
    
    
    
    24,890Cash flows from investing:Expenditure for property, plant and
equipment, net of construction payables
    
    
    (26,585
    )
    
    
    (61,391
    )Acquisition of businesses, net of cash
acquired
    
    
    (720
    )
    
    
    (7,916
    )Purchase of short-term investments, net
    
    
    
    
    
    
    (11,777
    )Expenditures for other assets
    
    
    11
    
    
    
    (401
    )Proceeds from sale of property, plant and
equipment
    
    
    
    
    
    
    16Net cash used in investing
    
    
    (27,294
    )
    
    
    (81,469
    )Cash flows from financing:Principal payments on long-term debt
    
    
    (3,590
    )
    
    
    (11,681
    )Proceeds from long-term borrowings
    
    
    3,500
    
    
    
    11,383Issuance of restricted stock awards
    
    
    279
    
    
    
    125Net cash provided by/(used in)
financing
    
    
    189
    
    
    
    (173
    )Net decrease in cash and cash equivalents
    
    
    (10,689
    )
    
    
    (56,752
    )Cash and cash equivalents, beginning of period
    
    
    10,765
    
    
    
    56,752Cash and cash equivalents, end of period
    
    $
    76
    
    
    $
    Supplemental disclosure of cash flow data:Interest paid
    
    $
    32
    
    
    $
    145Income taxes paid
    
    
    6,070
    
    
    
    8,893Equipment acquired through seller financed debt
    
    
    450
    
    
    
    
  4




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 1. Organization
     2. Summary of Significant Accounting Policies
 Basis of Presentation
  Estimates and Assumptions
  Cash, Cash Equivalents and Short-term Investments
  5




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    Government-sponsored enterprise
    
    $
    7,000Corporate obligations
    
    
    4,777Total held-to-maturity securities
    
    $
    11,777
 Trade Accounts Receivable
  Property, Plant and Equipment
    6




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Revenue Recognition
  Inventories
  Medical Expense
  Income Taxes
 Accounting for Income Taxes.
  Fair Value of Financial Instruments
   7




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Acquisitions
    Goodwill and Intangible Assets
  Concentration of Credit Risk
  8




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Share Based Compensation
  Weighted average shares outstanding
   Reclassification
  Recently Issued Guidance
   9




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  3. Debt
    December 31,
    
    
    June 30,2006
    
    
    2007Notes payable due through December
2010, collateralized by specific
buildings and equipment
    
    $
    198
    
    
    $
    171Mortgage notes payable to a bank with
interest at the banks prime lending
rate minus 1%, payable in monthly
installments of $7,111 plus interest
through January 2019, collateralized
by real property
    
    
    1,331
    
    
    
    1,277Note payable to sellers with an
interest rate of 7% due through
September 2008, collateralized by
equipment
    
    
    450
    
    
    
    2331,979
    
    
    
    1,681Less  Payments due within one year
    
    
    382
    
    
    
    390Total
    
    $
    1,597
    
    
    $
    1,291
  4. Income taxes
  10




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Period ended June 30, 2006
    
    
    Period ended June 30, 2007Three Months
    
    
    Six Months
    
    
    Three Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedCurrent:State and local
    
    $
    667
    
    
    $
    1,382
    
    
    $
    826
    
    
    $
    1,544U.S. federal
    
    
    3,088
    
    
    
    6,203
    
    
    
    3,966
    
    
    
    7,392Total current
    
    
    3,755
    
    
    
    7,585
    
    
    
    4,792
    
    
    
    8,936Deferred:State and local
    
    
    96
    
    
    
    157
    
    
    
    300
    
    
    
    587U.S. federal
    
    
    451
    
    
    
    732
    
    
    
    1,393
    
    
    
    2,727Total deferred
    
    
    547
    
    
    
    889
    
    
    
    1,693
    
    
    
    3,314Provision for income tax expense
    
    $
    4,302
    
    
    $
    8,474
    
    
    $
    6,485
    
    
    $
    12,250
  December 31,
    
    
    June 30,2006
    
    
    2007(amounts in thousands)Deferred tax assets:Restricted stock
    
    $
    589
    
    
    $
    618Accrued expenses and other
    
    
    207
    
    
    
    225Allowance for doubtful accounts receivable
    
    
    296
    
    
    
    435Total deferred tax assets
    
    
    1,092
    
    
    
    1,278Deferred tax liabilities:Depreciation differences on property, plant and equipment
    
    
    (15,133
    )
    
    
    (18,633
    )Total deferred tax liabilities
    
    
    (15,133
    )
    
    
    (18,633
    )Net deferred taxes
    
    $
    (14,041
    )
    
    $
    (17,355
    )
  Period ended June 30, 2006
    
    
    Period ended June 30, 2007Three months
    
    
    Six months
    
    
    Three months
    
    
    Six monthsended
    
    
    ended
    
    
    ended
    
    
    endedIncome before income taxes
    
    $
    10,733
    
    
    $
    21,261
    
    
    $
    16,645
    
    
    $
    31,418Statutory U.S. income tax rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %Tax expense using statutory
U.S. income tax rate
    
    
    3,757
    
    
    
    7,441
    
    
    
    5,826
    
    
    
    10,996State income taxes
    
    
    496
    
    
    
    1,000
    
    
    
    732
    
    
    
    1,385Other
    
    
    49
    
    
    
    33
    
    
    
    (73
    )
    
    
    (131
    )Income tax expense
    
    $
    4,302
    
    
    $
    8,474
    
    
    $
    6,485
    
    
    $
    12,250Effective income tax rate
    
    
    40
    %
    
    
    40
    %
    
    
    39
    %
    
    
    39
    %
  11




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    5. 401(k) Plan
  6. Related-Party Transactions
   7. Commitments and Contingencies
    12




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  8. Stock Incentive Plan
    Percentage of Total NumberOf Restricted Shares as to WhichNumber of Full Years
    
    Forfeiture Restrictions LapseLess than 1 year
    
    0%1 year
    
    15%2 years
    
    30%3 years
    
    45%4 years
    
    60%5 years or more
    
    100%
  Weighted AverageNumber of
    
    Grant Date Fairshares
    
    Value Per ShareNonvested at December 31, 2005
    
    
    
    
    
    $
    Granted
    
    
    290,900
    
    
    
    28.48Vested
    
    
    
    
    
    
    Forfeited
    
    
    (5,000
    )
    
    
    28.56Nonvested at December 31, 2006
    
    
    285,900
    
    
    
    28.47Granted
    
    
    125,200
    
    
    
    22.89Vested
    
    
    (35,379
    )
    
    
    28.47Forfeited
    
    
    (6,756
    )
    
    
    Nonvested at June 30, 2007
    
    
    368,965
    
    
    $
    26.60
 13




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  14




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 The following discussion and analysis should be read in conjunction with the consolidated
financial statements and notes thereto included elsewhere in this report. This discussion contains
forward-looking statements that reflect managements current views with respect to future events
and financial performance. Our actual results may differ materially form those anticipated in
these forward-looking statements or as a result of certain factors such as those set forth below
under Cautionary Statement Regarding Forward-Looking Statements.
 Cautionary Statement Regarding Forward-Looking Statements
  
    
    a decrease in domestic spending by the oil and natural gas exploration and production industry;
    
    a decline in or substantial volatility of crude oil and natural gas commodity prices;
    
    the loss of one or more significant customers;
    
    the loss of or interruption in operations of one or more key suppliers;
    
    the incurrence of significant costs and liabilities in the future resulting from our
failure to comply with new or existing environmental regulations or an accidental
release of hazardous substances into the environment; and
    
    other financial, operational and legal risks and uncertainties detailed from time to
time in our Securities and Exchange Commission (SEC) filings.
  Overview
  15




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Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Technical pumping services
    
    $
    49,008
    
    
    
    89.8
    %
    
    $
    71,572
    
    
    
    84.4
    %
    
    $
    92,027
    
    
    
    90.0
    %
    
    $
    138,852
    
    
    
    86.0
    %Down-hole surveying services
    
    
    5,581
    
    
    
    10.2
    
    
    
    13,235
    
    
    
    15.6
    
    
    
    10,249
    
    
    
    10.0
    
    
    
    22,663
    
    
    
    14.0Total revenue
    
    $
    54,589
    
    
    
    100.0
    %
    
    $
    84,807
    
    
    
    100.0
    %
    
    $
    102,276
    
    
    
    100.0
    %
    
    $
    161,515
    
    
    
    100.0
    %
  Technical Pumping Services
  Down-Hole Surveying Services
  How We Generate Our Revenue
   16




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How We Evaluate Our Operations
  Operating Income per Operating Region.
    Material and Labor Expenses as a Percentage of Revenue.
    Selling, General and Administrative Expenses as a Percentage of Revenue.
  17




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EBITDA.
  
    
    as a measure of operating performance because it assists us in comparing our
performance on a consistent basis, since it removes the impact of our capital structure
and asset base from our operating results;
    
    as a measure for planning and forecasting overall expectations and for evaluating
actual results against such expectations;
    
    to assess compliance with financial ratios and covenants included in credit facilities;
    
    in communications with lenders concerning our financial performance; and
    
    to evaluate the viability of potential acquisitions and overall rates of return.
  How We Manage Our Operations
  Service Crew Performance.
  Equipment Maintenance Performance.
  18




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Customer Satisfaction.
  Safety Performance.
  Our Industry
   Our Growth Strategy
  19




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Three Months Ended June 30,
    
    
    Six Months Ended June 30,Region
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007Appalachian
    
    $
    28,035
    
    
    
    51.4
    %
    
    $
    35,225
    
    
    
    41.5
    %
    
    $
    52,555
    
    
    
    51.4
    %
    
    $
    67,758
    
    
    
    42.0
    %Southeast
    
    
    13,814
    
    
    
    25.3
    
    
    
    16,741
    
    
    
    19.8
    
    
    
    26,203
    
    
    
    25.6
    
    
    
    29,867
    
    
    
    18.5Southwest
    
    
    
    
    
    
    
    
    
    
    9,474
    
    
    
    11.2
    
    
    
    
    
    
    
    
    
    
    
    17,947
    
    
    
    11.1Rocky Mountain
    
    
    2,833
    
    
    
    5.2
    
    
    
    9,353
    
    
    
    11.0
    
    
    
    3,947
    
    
    
    3.9
    
    
    
    17,773
    
    
    
    11.0Mid-Continent
    
    
    9,907
    
    
    
    18.1
    
    
    
    14,014
    
    
    
    16.5
    
    
    
    19,571
    
    
    
    19.1
    
    
    
    28,170
    
    
    
    17.4Total
    
    $
    54,589
    
    
    
    100.0
    %
    
    $
    84,807
    
    
    
    100.0
    %
    
    $
    102,276
    
    
    
    100.0
    %
    
    $
    161,515
    
    
    
    100.0
    %
   Our Results of Operations
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Statement of Operations Data:Revenues:Technical pumping services
    
    $
    49,008
    
    
    $
    71,572
    
    
    $
    92,027
    
    
    $
    138,852Down-hole surveying services
    
    
    5,581
    
    
    
    13,235
    
    
    
    10,249
    
    
    
    22,663Total revenues
    
    
    54,589
    
    
    
    84,807
    
    
    
    102,276
    
    
    
    161,515Expenses:Cost of revenue
    
    
    37,704
    
    
    
    59,480
    
    
    
    69,440
    
    
    
    113,466Selling, general and administrative
    
    
    6,153
    
    
    
    8,844
    
    
    
    11,679
    
    
    
    17,292Total expense
    
    
    43,857
    
    
    
    68,424
    
    
    
    81,119
    
    
    
    130,758Operating income
    
    $
    10,732
    
    
    $
    16,483
    
    
    $
    21,157
    
    
    $
    30,757
 20




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##### Table of Contents



Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
 Revenue.
  Cost of Revenue.
  Selling, General and Administrative Expenses (SG&A).
  Operating Income.
  21




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##### Table of Contents



Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
 Revenue.
  Cost of Revenue.
  Selling, General and Administrative Expenses (SG&A).
  22




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##### Table of Contents



Operating Income.
  Liquidity and Capital Resources
  Financial Condition and Cash Flows
 Financial Condition.
  Cash flows from operations.
  23




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##### Table of Contents



Cash flows used in investing activities.
  Cash flows from financing activities.
  Capital Requirements
  
    
    expansion capital expenditures, such as those to acquire additional equipment and
other assets to grow our business; and
    
    maintenance or upgrade capital expenditures, which are capital expenditures made to
extend the useful life of partially or fully depreciated assets or to upgrade the
operational capabilities of existing assets.
   Off-Balance Sheet Arrangements
  24




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##### Table of Contents



Description of Our Indebtedness
     Recent Accounting Pronouncements
   Critical Accounting Policies
   25




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##### Table of Contents



Revenue Recognition
   Property, Plant and Equipment
  Impairment of Long-Lived Assets
   
    
    changes in general economic conditions in regions in which our services are located;
    
    the price of natural gas and crude oil;
    
    our ability to negotiate favorable sales arrangements; and
    
    our competition from other service providers.
  26




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##### Table of Contents



Goodwill and Other Intangible Assets
  Contingent Liabilities
  Medical Expenses
  Share Based Compensation
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Reconciliation of EBITDA to Net Income:Net income (1)
    
    $
    6,431
    
    
    $
    10,160
    
    
    $
    12,787
    
    
    $
    19,168Income tax expense
    
    
    4,302
    
    
    
    6,485
    
    
    
    8,474
    
    
    
    12,250Interest expense
    
    
    49
    
    
    
    47
    
    
    
    87
    
    
    
    106Depreciation and amortization
    
    
    3,196
    
    
    
    5,935
    
    
    
    6,189
    
    
    
    10.938EBITDA
    
    $
    13,978
    
    
    $
    22,627
    
    
    $
    27,537
    
    
    $
    42,462
 27




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk.
  Interest Rate Risk.
 Concentration of Credit Risk.
 Commodity Price Risk.
 
 Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
 Changes in Internal Control over Financial Reporting
 28




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
   Number ofAffirmative
    
    
    
    NumberNames
    
    Votes
    
    Against
    
    WithheldJohn A. Staley, IV
    
    
    20,265,894
    
    
    
    
    
    205,586David E. Snyder
    
    
    19,460,836
    
    
    
    
    
    1,010,644Edward J. DiPaolo
    
    
    19,440,725
    
    
    
    
    
    1,030,755
   Number ofAffirmative
    
    
    
    
    
    NumberVotes
    
    Against
    
    WithheldRatification of
appointment of
Schneider Downs &
Co., Inc.
    
    
    20,455,183
    
    
    
    8,403
    
    
    
    7,893
  
 Item 6. Exhibits.
  29




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##### Table of Contents



SIGNATURES
  SUPERIOR WELL SERVICES, INC.
RegistrantDated:  August 8, 2007
    By:

/s/
Thomas W. StoelkThomas W. StoelkVice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer) 30




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##### Table of Contents



INDEX TO EXHIBITS
OF
SUPERIOR WELL SERVICES, INC.
 (a) Exhibits
  10.1*
    
    Employment Agreement between Daniel
Arnold and Superior Well Services, Inc., dated May 14, 2007.10.2*
    
    Indemnification Agreement between
Daniel Arnold and Superior Well Services, Inc. dated May 14, 2007.10.3*
    
    Third Amendment to Credit Agreement, dated May 15, 2007.31.1*
    
    Sarbanes-Oxley Section 302 certification of David E. Wallace for Superior Well Services, Inc. for
the June 30, 2007 Quarterly Report on Form 10-Q.31.2*
    
    Sarbanes-Oxley Section 302 certification of Thomas W. Stoelk for Superior Well Services, Inc. for
the June 30, 2007 Quarterly Report on Form 10-Q.32.1*
    
    Sarbanes-Oxley Section 906 certification of David E. Wallace for Superior Well Services, Inc. for
the June 30, 2007 Quarterly Report on Form 10-Q.32.2*
    
    Sarbanes-Oxley Section 906 certification of Thomas W. Stoelk for Superior Well Services, Inc. for
the June 30, 2007 Quarterly Report on Form 10-Q.
 
 
    
    Denotes a management contract or compensatory plan or arrangement.