##### 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, 2008
 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
    
    20-2535684(State or other jurisdiction of 
incorporation or organization)
    
    (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
  Large accelerated filer
o

    

  Accelerated filer
þ

    

    Non-accelerated filer o

(Do not check if a smaller reporting company)

  

    Smaller reporting company
o
 o þ




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##### 



SUPERIOR WELL SERVICES, INC. QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2008
 TABLE OF CONTENTS
 PAGEPART I
    
    FINANCIAL INFORMATIONItem 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
    
    
    30Item 4.
    
    Controls and Procedures
    
    
    30PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    32Item 1A.
    
    Risk Factors
    
    
    32Item 4.
    
    Submission on Matters to a Vote of Security Holders
    
    
    32Item 6.
    
    Exhibits
    
    
    32EX-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 30,2007
    
    
    2008(in thousands, except per share data)Current Assets:Cash and cash equivalents
    
    $
    5,510
    
    
    $
    21Trade accounts receivable, net of
allowance of $1,629 and $1,928,
respectively
    
    
    54,002
    
    
    
    80,036Inventories
    
    
    9,933
    
    
    
    12,336Prepaid expenses and other current assets
    
    
    1,027
    
    
    
    960Income taxes receivable
    
    
    3,722
    
    
    
    1,936Deferred income taxes
    
    
    1,827
    
    
    
    1,780Total current assets
    
    
    76,021
    
    
    
    97,069Property, Plant and Equipment:Land
    
    
    420
    
    
    
    420Building and improvements
    
    
    4,776
    
    
    
    6,383Equipment and vehicles
    
    
    266,444
    
    
    
    316,695Construction in progress
    
    
    29,814
    
    
    
    24,487301,454
    
    
    
    347,985Accumulated depreciation
    
    
    (60,591
    )
    
    
    (77,587
    )Total property, plant and equipment, net
    
    
    240,863
    
    
    
    270,398Goodwill
    
    
    5,850
    
    
    
    5,850Intangible assets, net of accumulated
amortization of $1,815 and $2,321,
respectively
    
    
    3,242
    
    
    
    2,739Deferred income taxes
    
    
    366
    
    
    
    368Other assets
    
    
    745
    
    
    
    471Total assets
    
    $
    327,087
    
    
    $
    376,895Current Liabilities:Accounts payable-trade
    
    $
    31,497
    
    
    $
    35,072Current portion of long-term debt
    
    
    390
    
    
    
    157401(k) plan contribution and withholding
    
    
    1,615
    
    
    
    887Advance payments on servicing contracts
    
    
    70
    
    
    
    38Accrued wages and health benefits
    
    
    2,126
    
    
    
    2,955Other accrued liabilities
    
    
    1,931
    
    
    
    2,291Total current liabilities
    
    
    37,629
    
    
    
    41,400Long-term debt
    
    
    9,165
    
    
    
    36,338Deferred income taxes
    
    
    26,694
    
    
    
    32,427Stockholders Equity:Common stock, voting, par $.01 per
share, 70,000,000 shares authorized,
23,474,552 and 23,584,296 shares issued
at December 31, 2007 and June 30, 2008,
respectively
    
    
    234
    
    
    
    235Additional paid-in capital
    
    
    184,432
    
    
    
    185,569Retained earnings
    
    
    68,933
    
    
    
    80,926Total stockholders equity
    
    
    253,599
    
    
    
    266,730Total liabilities and stockholders equity
    
    $
    327,087
    
    
    $
    376,895
  1




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##### Table of Contents



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2008
    
    
    2007
    
    
    2008(in thousands, except per share data)Revenue
    
    $
    84,807
    
    
    $
    119,734
    
    
    $
    161,515
    
    
    $
    213,174Cost of revenue
    
    
    59,480
    
    
    
    92,435
    
    
    
    113,466
    
    
    
    171,212Gross profit
    
    
    25,327
    
    
    
    27,299
    
    
    
    48,049
    
    
    
    41,962Selling, general and administrative
expenses
    
    
    8,844
    
    
    
    10,682
    
    
    
    17,292
    
    
    
    20,226Operating income
    
    
    16,483
    
    
    
    16,617
    
    
    
    30,757
    
    
    
    21,736Interest expense
    
    
    47
    
    
    
    233
    
    
    
    106
    
    
    
    410Other income (expense), net
    
    
    209
    
    
    
    (40
    )
    
    
    767
    
    
    
    (383
    )Income before income taxes
    
    
    16,645
    
    
    
    16,344
    
    
    
    31,418
    
    
    
    20,943Income taxesCurrent
    
    
    4,792
    
    
    
    2,165
    
    
    
    8,936
    
    
    
    3,173Deferred
    
    
    1,693
    
    
    
    4,588
    
    
    
    3,314
    
    
    
    5,7776,485
    
    
    
    6,753
    
    
    
    12,250
    
    
    
    8,950Net income
    
    $
    10,160
    
    
    $
    9,591
    
    
    $
    19,168
    
    
    $
    11,993Earnings per common share:Basic and fully diluted
    
    $
    0.44
    
    
    $
    0.41
    
    
    $
    0.83
    
    
    $
    0.52Weighted average shares outstanding  basic
    
    
    23,102,046
    
    
    
    23,152,566
    
    
    
    23,097,262
    
    
    
    23,146,962Weighted average shares outstanding  diluted
    
    
    23,166,307
    
    
    
    23,269,440
    
    
    
    23,188,524
    
    
    
    23,273,029
  2




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (Unaudited)
 AdditionalCommon
    
    
    Paid-in
    
    
    RetainedStock
    
    
    Capital
    
    
    Earnings
    
    
    Total(in thousands)BALANCE, 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
    
    
    $
    234,154BALANCE, DECEMBER 31, 2007
    
    $
    234
    
    
    $
    184,432
    
    
    $
    68,933
    
    
    $
    253,599Net income
    
    
    
    
    
    
    
    
    
    
    11,993
    
    
    
    11,993Issuance of restricted stock awards
    
    
    1
    
    
    
    129
    
    
    
    
    
    
    
    130Restricted stock retired
    
    
    
    
    
    
    (227
    )
    
    
    
    
    
    
    (227
    )Share-based compensation
    
    
    
    
    
    
    1,235
    
    
    
    
    
    
    
    1,235BALANCE, JUNE 30, 2008
    
    $
    235
    
    
    $
    185,569
    
    
    $
    80,926
    
    
    $
    266,730
  3




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Six Months EndedJune 302007
    
    
    2008(in thousands)Cash flows from operations:Net income
    
    $
    19,168
    
    
    $
    11,993Adjustments to reconcile net income to net
cash provided by operations:Deferred income taxes
    
    
    3,314
    
    
    
    5,778Depreciation and amortization
    
    
    10,938
    
    
    
    18,110Loss on disposal of equipment
    
    
    213
    
    
    
    411Share-based compensation
    
    
    957
    
    
    
    1,235Changes in assets and liabilities:Trade accounts receivable
    
    
    (4,764
    )
    
    
    (26,034
    )Inventory
    
    
    (1,261
    )
    
    
    (2,403
    )Prepaid expenses and other assets
    
    
    453
    
    
    
    67Income taxes receivable
    
    
    
    
    
    
    1,786Accounts payable-trade
    
    
    (4,063
    )
    
    
    5,791Income taxes payable
    
    
    44
    
    
    
    401 (k) plan contribution and
withholding
    
    
    (1,207
    )
    
    
    (728
    )Advance payments on servicing
contracts
    
    
    (302
    )
    
    
    (32
    )Accrued wages and health benefits
    
    
    1,292
    
    
    
    829Other accrued liabilities
    
    
    108
    
    
    
    360Net cash provided by operations
    
    
    24,890
    
    
    
    17,163Cash flows from investing:Expenditure for property, plant and
equipment, net of construction payables
    
    
    (61,391
    )
    
    
    (50,644
    )Acquisition of businesses, net of cash
acquired
    
    
    (7,916
    )
    
    
    Purchase of short-term investments, net
    
    
    (11,777
    )
    
    
    Expenditures for other assets
    
    
    (401
    )
    
    
    271Proceeds from sale of property, plant and
equipment
    
    
    16
    
    
    
    878Net cash used in investing
    
    
    (81,469
    )
    
    
    (49,495
    )Cash flows from financing:Principal payments on long-term debt
    
    
    (11,681
    )
    
    
    (74,705
    )Proceeds from long-term borrowings
    
    
    11,383
    
    
    
    101,645Issuance/retirement of restricted stock, net
    
    
    125
    
    
    
    (97
    )Net cash (used in)/provided by financing
    
    
    (173
    )
    
    
    26,843Net decrease in cash and cash equivalents
    
    
    (56,752
    )
    
    
    (5,489
    )Cash and cash equivalents, beginning of period
    
    
    56,752
    
    
    
    5,510Cash and cash equivalents, end of period
    
    $
    
    
    
    $
    21Supplemental disclosure of cash flow data:Interest paid
    
    $
    145
    
    
    $
    423Income taxes paid
    
    
    8,893
    
    
    
    1,387
  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)
 Trade Accounts Receivable
  Property, Plant and Equipment
    Revenue Recognition
  Inventories
  Insurance Expense
  6




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




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##### Table of Contents



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Goodwill and Intangible Assets
  Concentration of Credit Risk
  Share Based Compensation
  Weighted average shares outstanding
   8




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Accounting Standards Not Yet Adopted
      9




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 3. Debt
    December 31,
    
    
    June 30,2007
    
    
    2008Revolving credit facility with interest
rates at LIBOR plus a spread of 1-1.25%
due October 2009, collateralized by
accounts receivable, inventory and
equipment
    
    $
    7,957
    
    
    $
    6,213Standby term loan with interest rates at
LIBOR plus a spread of 1-1.25% due August
2009, collateralized by cash, investment
property, accounts receivable, inventory,
intangibles and equipment
    
    
    
    
    
    
    29,000Mortgage notes payable to a bank with
interest at the banks prime lending rate
minus 1%, payable in monthly installments
of $8,622 plus interest through January
2021, collateralized by real property
    
    
    1,221
    
    
    
    1,165Note payable to sellers with an interest
rate of 7% due through September 2008,
collateralized by equipment
    
    
    233
    
    
    
    Notes payable to sellers with nominal
interest rates due through December 2010,
collateralized by specific buildings and
equipment
    
    
    144
    
    
    
    1179,555
    
    
    
    36,495Less  Payments due within one year
    
    
    390
    
    
    
    157Total
    
    $
    9,165
    
    
    $
    36,338
 10




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  4. Income taxes
   Period ended June 30, 2007
    
    
    Period ended June 30, 2008Three Months
    
    
    Six Months
    
    
    Three Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedCurrent:State and local
    
    $
    826
    
    
    $
    1,544
    
    
    $
    469
    
    
    $
    646U.S. federal
    
    
    3,966
    
    
    
    7,392
    
    
    
    1,697
    
    
    
    2,527Total current
    
    
    4,792
    
    
    
    8,936
    
    
    
    2,166
    
    
    
    3,173Deferred:State and local
    
    
    300
    
    
    
    587
    
    
    
    811
    
    
    
    1,022U.S. federal
    
    
    1,393
    
    
    
    2,727
    
    
    
    3,776
    
    
    
    4,755Total deferred
    
    
    1,693
    
    
    
    3,314
    
    
    
    4,587
    
    
    
    5,777Provision for income tax expense
    
    $
    6,485
    
    
    $
    12,250
    
    
    $
    6,753
    
    
    $
    8,950
  December 31,
    
    
    June 30,2007
    
    
    2008(amounts in thousands)Deferred tax assets:Restricted stock
    
    $
    1,014
    
    
    $
    713Accrued expenses and other
    
    
    544
    
    
    
    716Allowance for doubtful accounts receivable
    
    
    635
    
    
    
    719Total deferred tax assets
    
    
    2,193
    
    
    
    2,148Deferred tax liabilities:Depreciation differences on property, plant and equipment
    
    
    (26,694
    )
    
    
    (32,427
    )Total deferred tax liabilities
    
    
    (26,694
    )
    
    
    (32,427
    )Net deferred taxes
    
    $
    (24,501
    )
    
    $
    (30,279
    )
  Period ended June 30, 2007
    
    Period ended June 30, 2008Three months
    
    Six months
    
    Three months
    
    Six monthsended
    
    ended
    
    ended
    
    endedFederal statutory tax rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %Impact of vesting of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2State income taxes
    
    
    4
    
    
    
    4
    
    
    
    5
    
    
    
    5Other
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Effective income tax rate
    
    
    39
    %
    
    
    39
    %
    
    
    41
    %
    
    
    43
    %
 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
      8. Stock Incentive Plan
  12




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    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%
  WeightedAverage GrantNumber of
    
    
    Date Fair Valueshares
    
    
    Per ShareNonvested at December 31, 2006
    
    
    285,900
    
    
    $
    28.47Granted
    
    
    135,200
    
    
    
    23.05Vested
    
    
    (36,770
    )
    
    
    28.22Forfeited
    
    
    (5,450
    )
    
    
    25.54Retired
    
    
    (7,465
    )
    
    
    28.29Nonvested at December 31, 2007
    
    
    371,415
    
    
    
    26.57Granted
    
    
    129,900
    
    
    
    19.91Vested
    
    
    (48,898
    )
    
    
    26.96Forfeited
    
    
    (9,295
    )
    
    
    25.24Retired
    
    
    (10,861
    )
    
    
    27.36Nonvested at June 30, 2008
    
    
    432,261
    
    
    $
    24.53
 13




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##### Table of Contents



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




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##### Table of Contents



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;
    
    overcapacity and competition in our industry;
    
    unanticipated costs, delays and other difficulties in executing our growth strategy;
    
    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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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2008
    
    
    2007
    
    
    2008Technical pumping services
    
    $
    71,572
    
    
    
    84.4
    %
    
    $
    106,528
    
    
    
    89.0
    %
    
    $
    138,852
    
    
    
    86.0
    %
    
    $
    189,616
    
    
    
    89.0
    %Down-hole surveying services
    
    
    13,235
    
    
    
    15.6
    
    
    
    13,206
    
    
    
    11.0
    
    
    
    22,663
    
    
    
    14.0
    
    
    
    23,558
    
    
    
    11.0Total revenue
    
    $
    84,807
    
    
    
    100.0
    %
    
    $
    119,734
    
    
    
    100.0
    %
    
    $
    161,515
    
    
    
    100.0
    %
    
    $
    213,174
    
    
    
    100.0
    %
  Technical Pumping Services
  Down-Hole Surveying Services
  How We Generate Our Revenue
  16




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##### Table of Contents



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




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##### Table of Contents



Selling, General and Administrative Expenses as a Percentage of Revenue.
  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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##### Table of Contents



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




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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,Region
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008Appalachian
    
    $
    35,225
    
    
    
    41.5
    %
    
    $
    45,874
    
    
    
    38.3
    %
    
    $
    67,758
    
    
    
    42.0
    %
    
    $
    81,700
    
    
    
    38.3
    %Southeast
    
    
    16,741
    
    
    
    19.8
    
    
    
    22,422
    
    
    
    18.7
    
    
    
    29,867
    
    
    
    18.5
    
    
    
    39,561
    
    
    
    18.6Southwest
    
    
    9,474
    
    
    
    11.2
    
    
    
    14,832
    
    
    
    12.4
    
    
    
    17,947
    
    
    
    11.1
    
    
    
    28,928
    
    
    
    13.6Rocky Mountain
    
    
    9,353
    
    
    
    11.0
    
    
    
    14,378
    
    
    
    12.0
    
    
    
    17,773
    
    
    
    11.0
    
    
    
    23,223
    
    
    
    10.9Mid-Continent
    
    
    14,014
    
    
    
    16.5
    
    
    
    22,228
    
    
    
    18.6
    
    
    
    28,170
    
    
    
    17.4
    
    
    
    39,762
    
    
    
    18.6Total
    
    $
    84,807
    
    
    
    100.0
    %
    
    $
    119,734
    
    
    
    100.0
    %
    
    $
    161,515
    
    
    
    100.0
    %
    
    $
    213,174
    
    
    
    100.0
    %
   Our Results of Operations
  20




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Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2008
    
    
    2007
    
    
    2008Statement of Operations Data:Revenues:Technical pumping services
    
    $
    71,572
    
    
    
    84.4
    %
    
    $
    106,528
    
    
    
    89.0
    %
    
    $
    138,852
    
    
    
    86.0
    %
    
    $
    189,616
    
    
    
    89.0
    %Down-hole surveying services
    
    
    13,235
    
    
    
    15.6
    
    
    
    13,206
    
    
    
    11.0
    
    
    
    22,663
    
    
    
    14.0
    
    
    
    23,558
    
    
    
    11.0Total revenue
    
    
    84,807
    
    
    
    100.0
    
    
    
    119,734
    
    
    
    100.0
    
    
    
    161,515
    
    
    
    100.0
    
    
    
    213,174
    
    
    
    100.0Expenses:Cost of revenue
    
    
    59,480
    
    
    
    70.1
    
    
    
    92,435
    
    
    
    77.2
    
    
    
    113,466
    
    
    
    70.3
    
    
    
    171,212
    
    
    
    80.3Selling, general,
and
administrative
    
    
    8,844
    
    
    
    10.5
    
    
    
    10,682
    
    
    
    8.9
    
    
    
    17,292
    
    
    
    10.7
    
    
    
    20,226
    
    
    
    9.5Total expense
    
    
    68,324
    
    
    
    80.6
    
    
    
    103,117
    
    
    
    86.1
    
    
    
    130,758
    
    
    
    81.0
    
    
    
    191,438
    
    
    
    89.8Operating income
    
    $
    16,483
    
    
    
    19.4
    %
    
    $
    16,617
    
    
    
    13.9
    %
    
    $
    30,757
    
    
    
    19.0
    %
    
    $
    21,736
    
    
    
    10.2
    %
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 Revenue.
   21




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Cost of Revenue.
  Selling, General and Administrative Expenses (SG&A).
  Operating Income.
  22




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Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 Revenue.
    Cost of Revenue.
  23




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Selling, General and Administrative Expenses (SG&A).
  Operating Income.
  Liquidity and Capital Resources
  24




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##### Table of Contents



Financial Condition and Cash Flows
 Financial Condition.
   Cash flows from operations.
  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 or upgrade existing equipment to grow our business; and
    
    maintenance capital expenditures, which are capital expenditures made to extend the
useful life of partially or fully depreciated assets or to maintain the operational
capabilities of existing assets.
 25




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Off-Balance Sheet Arrangements
  Description of Our Indebtedness
     Accounting standards not yet adopted
  26




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Critical Accounting Policies
   27




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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.
  28




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##### Table of Contents



Goodwill and Other Intangible Assets
  Contingent Liabilities
  Insurance Expenses
  Share Based Compensation
  Impact of Inflation
  Non-GAAP Accounting Measures
 29




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2008
    
    
    2007
    
    
    2008Reconciliation of EBITDA to Net Income:Net income
    
    $
    10,160
    
    
    $
    9,591
    
    
    $
    19,168
    
    
    $
    11,993Income tax expense
    
    
    6,485
    
    
    
    6,753
    
    
    
    12,250
    
    
    
    8,950Interest expense
    
    
    47
    
    
    
    233
    
    
    
    106
    
    
    
    410Depreciation and amortization
    
    
    5,935
    
    
    
    9,464
    
    
    
    10,938
    
    
    
    18,110EBITDA
    
    $
    22,627
    
    
    $
    26,041
    
    
    $
    42,462
    
    
    $
    39,463
 
 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
 30




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Changes in Internal Control over Financial Reporting
 31




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  Our operations may incur substantial liabilities to comply with climate change legislation and
regulatory initiatives.
 Massachusetts, et al. v. EPA Massachusetts Massachusetts
 
 Item 4. Submission of Matters to a Vote of Security Holders.
   Number ofAffirmative
    
    
    
    
    
    NumberNames
    
    Votes
    
    Against
    
    WithheldCharles C. Neal
    
    
    18,917,218
    
    
    
    
    
    
    
    163,810David E. Wallace
    
    
    18,874,771
    
    
    
    
    
    
    
    206,257
   Number ofAffirmativeVotes
    
    Against
    
    Number WithheldRatification of appointment
of Schneider Downs & Co.,
Inc.
    
    
    19,009,477
    
    
    
    38,164
    
    
    
    33,386
  
 Item 6. Exhibits.
  32




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SIGNATURES
  SUPERIOR WELL SERVICES, INC.
   RegistrantDated:  August 7, 2008
    By:
    /s/  Thomas W. StoelkThomas W. StoelkVice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial 
Officer) 33




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INDEX TO EXHIBITS
 OF
 SUPERIOR WELL SERVICES, INC.
 (a) Exhibits
  31.1*
    
    Sarbanes-Oxley Section 302 certification of David E. Wallace for
Superior Well Services, Inc. for the June 30, 2008 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, 2008 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, 2008 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, 2008 Quarterly Report
on Form 10-Q.