UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2010
 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
    
    (I.R.S. Employerincorporation or organization)
    
    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 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 MARCH 31, 2010
 TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    36Item 4. Controls and Procedures
    
    
    36PART II  OTHER INFORMATION
    
    
    37Item 1. Legal Proceedings
    
    
    37Item 1A. Risk Factors
    
    
    37Item 2. Unregistered Sale of Equity Securities
    
    
    37Item 6. Exhibits
    
    
    37
  ii




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##### 



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 December 31,
    
    
    March 31,2009
    
    
    2010(in thousands, except per share data)Current assets:Cash and cash equivalents
    
    $
    25
    
    
    $
    23Trade accounts receivable, net of allowance of $5,800 and $4,196, respectively
    
    
    69,492
    
    
    
    88,063Inventories
    
    
    24,991
    
    
    
    25,300Prepaid expenses and other current assets
    
    
    2,369
    
    
    
    2,090Advances on materials for future delivery
    
    
    3,717
    
    
    
    3,717Income taxes receivable
    
    
    36,044
    
    
    
    35,900Deferred income taxes
    
    
    4,203
    
    
    
    2,589Total current assets
    
    
    140,841
    
    
    
    157,682Property, plant and equipment, net
    
    
    409,552
    
    
    
    395,420Intangible assets, net of accumulated amortization of $5,244 and $5,787, respectively
    
    
    7,518
    
    
    
    6,976Other assets
    
    
    12,242
    
    
    
    11,643Total assets
    
    $
    570,153
    
    
    $
    571,721Current liabilities:Accounts and construction payable-trade
    
    $
    26,849
    
    
    $
    41,862Current portion of long-term obligations
    
    
    2,022
    
    
    
    1,364Advanced payments on servicing contracts
    
    
    87
    
    
    
    247Accrued wages and health benefits
    
    
    3,581
    
    
    
    2,885Accrued interest
    
    
    4,356
    
    
    
    4,432Other accrued liabilities
    
    
    5,033
    
    
    
    6,317Total current liabilities
    
    
    41,928
    
    
    
    57,107Long-term debt
    
    
    163,594
    
    
    
    164,407Deferred income taxes
    
    
    37,510
    
    
    
    31,371Long-term capital leases
    
    
    275
    
    
    
    634Asset retirement obligation
    
    
    415
    
    
    
    422Stockholders Equity:Preferred stock, non-voting, par $0.01 per share, 10,000,000 shares authorized
Series A 4% Convertible Preferred stock, non-voting, 75,000 shares issued at
December 31, 2009 (liquidation preference $75 million)
    
    
    1
    
    
    
    1Common stock, voting, par $0.01 per share, 70,000,000 shares authorized, 30,688,137
and 30,835,234 shares issued at December 31, 2009 and March 31, 2010
    
    
    305
    
    
    
    304Additional paid-in-capital
    
    
    301,103
    
    
    
    301,855Retained earnings
    
    
    25,022
    
    
    
    15,620Total stockholders equity
    
    
    326,431
    
    
    
    317,780Total liabilities and stockholders equity
    
    $
    570,153
    
    
    $
    571,721
  1




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months EndedMarch 31,2009
    
    
    2010(in thousands, except per share data)Revenue
    
    $
    122,281
    
    
    $
    123,340Cost of revenue
    
    
    125,320
    
    
    
    122,095Gross profit (loss)
    
    
    (3,039
    )
    
    
    1,245Selling, general and administrative
expenses
    
    
    16,055
    
    
    
    11,656Operating income (loss)
    
    
    (19,094
    )
    
    
    (10,411
    )Interest expense
    
    
    3,176
    
    
    
    2,902Other (expense) income, net
    
    
    (193
    )
    
    
    136Income (loss) before income taxes
    
    
    (22,463
    )
    
    
    (13,177
    )Income taxesCurrent
    
    
    (12,286
    )
    
    
    Deferred
    
    
    4,534
    
    
    
    (4,525
    )(7,752
    )
    
    
    (4,525
    )Net income (loss) before dividends on preferred
stock
    
    $
    (14,711
    )
    
    $
    (8,652
    )Dividends on preferred stock
    
    
    (750
    )
    
    
    (750
    )Net income (loss) available to common
stockholders
    
    $
    (15,461
    )
    
    $
    (9,402
    )Earnings (loss) per common share:Basic
    
    $
    (0.67
    )
    
    $
    (0.31
    )Fully diluted
    
    $
    (0.67
    )
    
    $
    (0.31
    )Weighted average shares outstanding  basic
    
    
    23,204,960
    
    
    
    30,186,377Weighted average shares outstanding  diluted
    
    
    26,204,960
    
    
    
    33,328,817
  2




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(Unaudited)
 Preferred
    
    
    Common
    
    
    Additional
    
    
    RetainedStock
    
    
    Stock
    
    
    Paid-in
    
    
    Earnings
    
    
    Total(in thousands)BALANCE, DECEMBER 31, 2008
    
    $
    1
    
    
    $
    236
    
    
    $
    229,741
    
    
    $
    107,637
    
    
    $
    337,615Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,711
    )
    
    
    (14,711
    )Issuance of restricted stock awards
    
    
    
    
    
    
    2
    
    
    
    184
    
    
    
    
    
    
    
    186Restricted stock retired/forfeited
    
    
    
    
    
    
    
    
    
    
    (85
    )
    
    
    
    
    
    
    (85
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    737
    
    
    
    
    
    
    
    737Preferred Stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (750
    )
    
    
    (750
    )BALANCE, MARCH 31, 2009
    
    $
    1
    
    
    $
    238
    
    
    $
    230,577
    
    
    $
    92,176
    
    
    $
    322,992BALANCE, DECEMBER 31, 2009
    
    $
    1
    
    
    $
    305
    
    
    $
    301,103
    
    
    $
    25,022
    
    
    $
    326,431Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,652
    )
    
    
    (8,652
    )Issuance of restricted stock awards
    
    
    
    
    
    
    2
    
    
    
    197
    
    
    
    
    
    
    
    199Restricted stock retired/forfeited
    
    
    
    
    
    
    (3
    )
    
    
    (310
    )
    
    
    
    
    
    
    (313
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    865
    
    
    
    
    
    
    
    865Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (750
    )
    
    
    (750
    )BALANCE, MARCH 31, 2010
    
    $
    1
    
    
    $
    304
    
    
    $
    301,855
    
    
    $
    15,620
    
    
    $
    317,780
  3




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three months ended March 31,2009
    
    
    2010(in thousands)Cash flows from operations:Net loss
    
    $
    (14,711
    )
    
    $
    (8,652
    )Adjustments
to reconcile net loss to net cash provided by (used in) operations:Deferred income taxes
    
    
    4,534
    
    
    
    (4,525
    )Depreciation, amortization and accretion
    
    
    17,485
    
    
    
    19,787Provision for bad debts
    
    
    537
    
    
    
    825Loss on disposal of equipment
    
    
    214
    
    
    
    88Stock based compensation
    
    
    737
    
    
    
    865Changes in assets and liabilities:Trade accounts receivable
    
    
    7,496
    
    
    
    (19,395
    )Advance on materials for future delivery
    
    
    599
    
    
    
    499Inventory
    
    
    984
    
    
    
    (309
    )Prepaid expenses and other assets
    
    
    596
    
    
    
    279Income tax receivable
    
    
    (12,285
    )
    
    
    144Accounts payable
    
    
    (13,299
    )
    
    
    13,806Advance payments on servicing contracts
    
    
    156
    
    
    
    160Accrued wages and health benefits
    
    
    187
    
    
    
    (696
    )Other accrued liabilities
    
    
    (82
    )
    
    
    1,360Net cash (used in) provided by operations
    
    
    (6,852
    )
    
    
    4,236Cash flows from investing:Expenditure for property, plant and equipment, net of construction
payables
    
    
    (9,356
    )
    
    
    (5,430
    )Acquisition of businesses, net of cash acquired
    
    
    (1,873
    )
    
    
    Proceeds (expenditures) for other assets
    
    
    169
    
    
    
    99Proceeds from sale of property, plant and equipment
    
    
    1,908
    
    
    
    1,443Net cash used in investing
    
    
    (9,152
    )
    
    
    (3,888
    )Cash flows from financing:Principal payments on long-term debt
    
    
    (53,214
    )
    
    
    (35,427
    )Proceeds from long-term borrowings
    
    
    71,019
    
    
    
    36,240Issuance/retirement of restricted stock, net
    
    
    101
    
    
    
    (114
    )Payment on capital lease obligations
    
    
    (290
    )
    
    
    (299
    )Payment of preferred dividends
    
    
    (750
    )
    
    
    (750
    )Net cash provided by (used in) financing
    
    
    16,866
    
    
    
    (350
    )Net increase (decrease) in cash and cash equivalents
    
    
    862
    
    
    
    (2
    )Cash and cash equivalents, beginning of period
    
    
    1,637
    
    
    
    25Cash and cash equivalents, end of period
    
    $
    2,499
    
    
    $
    23Supplemental disclosure of cash flow data:Interest paid
    
    $
    1,727
    
    
    $
    2,815Income taxes paid (received)
    
    
    (1
    )
    
    
    (144
    )
  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 and Cash Equivalents
  Trade Accounts Receivable
  5




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Assets Held For Sale
  Advances on Material for Future Delivery
  Property, Plant and Equipment
    Revenue Recognition
  Inventories
  6




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Insurance Expense
  Income Taxes
   Asset Retirement Obligations
  Fair Value of Financial Instruments
 Fair Value Measurements,
 7




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Level 1
    
    quoted prices in active markets for identical assets or liabilities;Level 2
    
    quoted prices in active markets for similar assets and liabilities and
inputs that are observable for the asset or liability; orLevel 3
    
    unobservable inputs for the asset or liability, such as discounted cash flow
models or valuations.
   Acquisitions
  Goodwill and Intangible Assets
    8




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   Valuation of Finite-Lived Intangible and Tangible Assets
   Concentration of Credit Risk
  Share Based Compensation
  Weighted Average Shares Outstanding
  9




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   Reclassification
  3. Business Combinations
    10




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  4. Property, Plant and Equipment
  December 31,
    
    
    March 31,2009
    
    
    2010(in thousands)Property, Plant and Equipment:Land
    
    $
    453
    
    
    $
    453Building and improvements
    
    
    19,647
    
    
    
    19,917Equipment and vehicles
    
    
    540,050
    
    
    
    544,830Disposal wells and equipment
    
    
    8,705
    
    
    
    8,705Construction in progress
    
    
    9,305
    
    
    
    8,739578,160
    
    
    
    582,644Accumulated depreciation
    
    
    (168,608
    )
    
    
    (187,224
    )Total property, plant and equipment, net
    
    $
    409,552
    
    
    $
    395,420
 5. Short and Long-term Obligations
 Debt
     11




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  December 31,
    
    
    March 31,2009
    
    
    2010Credit Facility with interest rates
at either LIBOR plus a spread of 4.0% or
the prime lending rate plus a spread of
2.0% due March 2013, collateralized by
cash, investment property, accounts
receivable, inventory, intangibles and
equipment
    
    $
    82,689
    
    
    $
    83,544Second Lien Notes due November 2013 with
an initial interest rate of 7.0% per
annum which increases 1% per annum on
the anniversary date of the indenture,
collateralized by a second priority lien
on Superiors assets secured by the
Credit Facility
    
    
    80,000
    
    
    
    80,000Mortgage 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
    
    
    995
    
    
    
    966Notes payable to sellers with nominal
interest rates due through December
2010, collateralized by specific
buildings and equipment
    
    
    36
    
    
    
    23163,720
    
    
    
    164,533Less  Payments due within one year
    
    
    126
    
    
    
    126Total
    
    $
    163,594
    
    
    $
    164,407
  Capital Lease Obligations
   Due in 1 year
    
    $
    1,312Due in 2 years
    
    
    676Total minimum payments
    
    
    1,988Less amounts representing interest
    
    
    116Total obligation under capital leases
    
    
    1,872Less current portion
    
    
    1,238Long-term portion
    
    $
    634
 6. Stockholders equity
 Common Stock
   12




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Preferred Stock
   Dividends
   Liquidation Preference
  Redemption
  Voting Rights
  13




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Conversion
  Stock Incentive Plan
    Percentage of Total Number of RestrictedShares as to Which Forfeiture RestrictionsNumber of Full Years
    
    LapseLess than 1 year
    
    
    0
    %1 year
    
    
    15
    %2 years
    
    
    30
    %3 years
    
    
    45
    %4 years
    
    
    60
    %5 years or more
    
    
    100
    %
  14




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Weighted AverageGrant Date FairNumber of shares
    
    
    Value Per ShareNonvested at December 31, 2008
    
    
    463,086
    
    
    $
    22.97Granted
    
    
    195,750
    
    
    
    8.94Vested
    
    
    (73,570
    )
    
    
    24.88Forfeited
    
    
    (67,995
    )
    
    
    17.69Retired
    
    
    (9,216
    )
    
    
    25.51Nonvested at December 31, 2009
    
    
    508,055
    
    
    
    17.95Granted
    
    
    198,650
    
    
    
    17.87Vested
    
    
    (75,773
    )
    
    
    17.68Forfeited
    
    
    (35,993
    )
    
    
    14.37Retired
    
    
    (15,561
    )
    
    
    17.69Nonvested at March 31, 2010
    
    
    579,378
    
    
    $
    18.19
  7. Income Taxes
   Three months ended March 31,2009
    
    
    2010Current:State and local
    
    $
    (800
    )
    
    $
    U.S. federal
    
    
    (11,486
    )
    
    
    Total current
    
    
    (12,286
    )
    
    
    Deferred:State and local
    
    
    115
    
    
    
    (481
    )U.S. federal
    
    
    4,419
    
    
    
    (4,044
    )Total deferred
    
    
    4,534
    
    
    
    (4,525
    )Provision (benefit)
for income tax expense
    
    $
    (7,752
    )
    
    $
    (4,525
    )
  December 31,
    
    
    March 31,2009
    
    
    2010(amounts in thousands)Deferred tax assets:Restricted stock
    
    $
    1,464
    
    
    $
    657Accrued expenses and other
    
    
    1,330
    
    
    
    1,244Net operating loss carry forward
    
    
    22,360
    
    
    
    29,159Allowance for doubtful accounts receivable
    
    
    2,227
    
    
    
    1,591Total deferred tax assets
    
    
    27,381
    
    
    
    32,651Deferred tax liabilities:Depreciation differences on property, plant and equipment
    
    
    (60,688
    )
    
    
    (61,433
    )Total deferred tax liabilities
    
    
    (60,688
    )
    
    
    (61,433
    )Net deferred taxes
    
    $
    (33,307
    )
    
    $
    (28,782
    )
 15




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Three months ended March 31,2009
    
    
    2010Federal statutory tax rate
    
    
    (35.0
    )%
    
    
    (35.0
    )%Impact of vesting of restricted stock
    
    
    3.0
    
    
    
    4.0State income taxes
    
    
    (2.0
    )
    
    
    (2.0
    )Other
    
    
    0.5
    
    
    
    (1.0
    )Effective income tax rate
    
    
    (34.5
    )%
    
    
    (34.0
    )%
  8. 401(k) Plan
  9. Related-Party Transactions
     16




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   10. Business Segment Information
     Three Months Ended March 31, 2010Technical
    
    
    FluidServices
    
    
    Logistics
    
    
    Corporate
    
    
    Total(in thousands)Net revenue
    
    $
    118,347
    
    
    $
    4,993
    
    
    $
    
    
    
    $
    123,340Depreciation,
amortization and
accretion
    
    $
    18,262
    
    
    $
    1,397
    
    
    $
    128
    
    
    $
    19,787Operating loss
    
    $
    (5,212
    )
    
    $
    (1,207
    )
    
    $
    (3,992
    )
    
    $
    (10,411
    )Capital expenditures
    
    $
    5,419
    
    
    $
    
    
    
    $
    11
    
    
    $
    5,430Segment assets as of
March 31, 2010
    
    $
    527,022
    
    
    $
    40,374
    
    
    $
    4,325
    
    
    $
    571,721
 Three Months Ended March 31, 2009Technical
    
    
    FluidServices
    
    
    Logistics
    
    
    Corporate
    
    
    Total(in thousands)Net revenue
    
    $
    113,260
    
    
    $
    9,021
    
    
    $
    
    
    
    $
    122,281Depreciation,
amortization and
accretion
    
    $
    15,919
    
    
    $
    1,433
    
    
    $
    133
    
    
    $
    17,485Operating income (loss)
    
    $
    (13,033
    )
    
    $
    (2,211
    )
    
    $
    (3,850
    )
    
    $
    (19,094
    )Capital expenditures
    
    $
    9,219
    
    
    $
    10
    
    
    $
    127
    
    
    $
    9,356Segment assets as of
March 31, 2009
    
    $
    585,344
    
    
    $
    56,035
    
    
    $
    10,783
    
    
    $
    652,162
 17




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Three Months Ended March 31,2009
    
    
    2010(in thousands)Segment operating
income (loss)
    
    $
    (19,094
    )
    
    $
    (10,411
    )Interest expense
    
    
    3,176
    
    
    
    2,902Other income (expense), net
    
    
    (193
    )
    
    
    136Income taxes (benefit)
    
    
    (7,752
    )
    
    
    (4,525
    )Net income (loss)
    
    $
    (14,711
    )
    
    $
    (8,652
    )
 11. Commitments and Contingencies
      12. Fair Value of Financial Instruments
    18




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##### 



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  13. Guarantees of Securities Registered
  14. Subsequent Events
  19




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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 sustained or continued decrease in domestic spending by the oil and natural gas
exploration and production industry;
    
    a continued decline in or substantial volatility of crude oil and natural gas commodity
prices;
    
    current weaknesses in the credit and capital markets and lack of credit availability;
    
    our inability to comply with the financial and other covenants in our debt agreements as
a result of reduced revenues and financial performance or our inability to raise sufficient
funds through assets sales or equity issuances;
    
    overcapacity and competition in our industry;
    
    unanticipated costs, delays and other difficulties in executing our long-term 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.
  20




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##### 



Overview
   Services Offered
  Three Months Ended March 31,2009
    
    
    2010Revenue:Technical pumping services
    
    $
    113,274
    
    
    
    92.6
    %
    
    $
    118,347
    
    
    
    96.0
    %Fluid Logistics
    
    
    9,007
    
    
    
    7.4
    
    
    
    4,993
    
    
    
    4.0Total revenue
    
    $
    122,281
    
    
    
    100.0
    %
    
    $
    123,340
    
    
    
    100.0
    %
  Technical Services
 Technical Pumping Services
  21




---



##### 



Completion, Production and Rental Tool Services
  Down-Hole Surveying Services
  Fluid Logistics Services
  How We Generate Our Revenue
   22




---



##### 



How We Evaluate Our Operations
  Operating Income per Operating Region
 ,
  Material and Labor Expenses as a Percentage of Revenue
  23




---



##### 



Selling, General and Administrative Expenses as a Percentage of Revenue
  Adjusted EBITDA
  
    
    it is widely used by investors in our industry to measure a companys operating
performance without regard to items such as interest expense, depreciation and
amortization, which can vary substantially from company to company depending upon
accounting methods and book value of assets, capital structure and the method by which the
assets were acquired; and
    
    it helps investors more meaningfully evaluate and compare the results of our operations
from period to period by removing the impact of our capital structure and asset base from
our operating results.Our management uses Adjusted 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 our credit
facility;
    
    in communications with lenders concerning our financial performance; and
    
    to evaluate the viability of potential acquisitions and overall rates of return.
  24




---



##### 



How We Manage Our Operations
  Service Crew Performance
  Equipment Maintenance Performance
  Customer Satisfaction
  Safety Performance
  Our Industry and Business Outlook
  25




---



##### 



Three Months Ended March 31,2009
    
    
    2010
    
    
    % ChangeAverage rig count (1)Crude Oil
    
    
    279
    
    
    
    416
    
    
    
    49.1
    %Natural gas
    
    
    1,053
    
    
    
    814
    
    
    
    (22.7
    )%Total U.S. land rigs
    
    
    1,332
    
    
    
    1,230
    
    
    
    (7.7
    )%Commodity prices (avg.):Crude Oil (West Texas Intermediate) ($/ bbl)
    
    $
    43.08
    
    
    $
    78.72
    
    
    
    82.7
    %Natural gas (Henry Hub) ($/mcf)
    
    
    4.56
    
    
    
    5.18
    
    
    
    13.6
    %
 
 (1)
    
    Estimate of activity as measured by Baker Hughes Inc. for average active U.S. land drilling
rigs for the 3 months ended March 31, 2009 and 2010. Our Long-term Growth Strategy
  26




---



##### 



Three Months Ended March 31,2009
    
    2010Region
    
    Revenue
    
    Percent of Revenue
    
    Revenue
    
    Percent of RevenueAppalachian
    
    $
    30,574
    
    
    
    25.0
    %
    
    $
    29,987
    
    
    
    24.3
    %Southeast
    
    
    21,403
    
    
    
    17.5
    
    
    
    22,387
    
    
    
    18.1Southwest
    
    
    36,312
    
    
    
    29.7
    
    
    
    30,459
    
    
    
    24.7Mid-Continent
    
    
    25,974
    
    
    
    21.2
    
    
    
    23,773
    
    
    
    19.3Rocky Mountain
    
    
    8,018
    
    
    
    6.6
    
    
    
    16,734
    
    
    
    13.6Total
    
    $
    122,281
    
    
    
    100.0
    %
    
    $
    123,340
    
    
    
    100.0
    %
   Our Results of Operations
  Results for the three months ended March 31, 2009 and 2010
  27




---



##### 



Three months ended March 31,2009
    
    
    2010Statement of Operations DataRevenue:Technical pumping services
    
    $
    103,075
    
    
    $
    109,975Down-hole surveying services
    
    
    6,402
    
    
    
    5,798Completion services
    
    
    3,797
    
    
    
    2,574Total Technical Services
    
    
    113,274
    
    
    
    118,347Fluid logistics
    
    
    9,007
    
    
    
    4,993Total revenue
    
    
    122,281
    
    
    
    123,340Expenses:Cost of revenue
    
    
    125,320
    
    
    
    122,095Selling, general and administrative
    
    
    16,055
    
    
    
    11,656Total expenses
    
    
    141,375
    
    
    
    133,751Operating income (loss)
    
    $
    (19,094
    )
    
    $
    (10,411
    )
 Revenue
  Three months ended March 31,Revenues by service type
    
    2009
    
    
    2010
    
    
    $ Change
    
    
    % ChangeStimulation
    
    $
    79,505
    
    
    $
    92,793
    
    
    $
    13,288
    
    
    
    16.7
    %Cementing
    
    
    16,595
    
    
    
    12,743
    
    
    
    (3,852
    )
    
    
    (23.2
    )Nitrogen
    
    
    6,975
    
    
    
    4,439
    
    
    
    (2,536
    )
    
    
    (36.4
    )Technical pumping services
    
    
    103,075
    
    
    
    109,975
    
    
    
    6,900
    
    
    
    6.7Down-hole surveying services
    
    
    6,402
    
    
    
    5,798
    
    
    
    (604
    )
    
    
    (9.4
    )Completion services
    
    
    3,797
    
    
    
    2,574
    
    
    
    (1,223
    )
    
    
    (32.2
    )Total Technical Services
    
    
    113,274
    
    
    
    118,347
    
    
    
    5,073
    
    
    
    4.5Fluid logistics
    
    
    9,007
    
    
    
    4,993
    
    
    
    (4,014
    )
    
    
    (44.6
    )Total revenue
    
    $
    122,281
    
    
    $
    123,340
    
    
    $
    1,059
    
    
    
    0.9
    %
  Three months ended March 31,Region
    
    2009
    
    
    2010
    
    
    $ Change
    
    
    % ChangeAppalachian
    
    $
    30,574
    
    
    $
    29,987
    
    
    $
    (587
    )
    
    
    (1.9
    )%Southeast
    
    
    21,403
    
    
    
    22,387
    
    
    
    984
    
    
    
    4.6Southwest
    
    
    36,312
    
    
    
    30,459
    
    
    
    (5,853
    )
    
    
    (16.1
    )Rocky Mountain
    
    
    8,018
    
    
    
    16,734
    
    
    
    8,716
    
    
    
    108.7Mid-Continent
    
    
    25,974
    
    
    
    23,773
    
    
    
    (2,201
    )
    
    
    (8.5
    )Total
    
    $
    122,281
    
    
    $
    123,340
    
    
    $
    1,059
    
    
    
    0.9
    %
  28




---



##### 



Cost of Revenue
  Selling, General and Administrative Expenses (SG&A)
  Operating Income Loss and Adjusted EBITDA
  Liquidity and Capital Resources
 General
   29




---



##### 



Financial Condition and Cash Flows
 Financial Condition
  Cash Flows from Operations
  Three Months Ended March 31,2009
    
    
    2010Net cash provided by operations
    
    $
    (6,852
    )
    
    $
    4,236Net cash used in investing
    
    
    (9,152
    )
    
    
    (3,888
    )Net cash provided by financing
    
    
    16,866
    
    
    
    (350
    )Change in cash and cash equivalents
    
    $
    862
    
    
    $
    (2
    )
  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
 30




---



##### 




    
    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.
   Off-Balance Sheet Arrangements
  Description of Our Indebtedness
  
    
    the sale of our fluid logistics services business is now a permitted asset sale;
    
    the total commitment under our credit facility was reduced to $100.0 million, which
amount will be further reduced by (i) an additional $25.0 million upon our receipt of a
federal income tax refund of $20 million or more and (ii) by an additional $25.0 million
upon the sale of our fluid logistics services business;
    
    the definition of borrowing base was amended to consist of 80% of eligible accounts
receivable plus 20% of the net book value of property, plant and equipment, until such time
as the total commitment under the credit facility is reduced to $50.0 million; thereafter
the borrowing base will consist solely of 80% of eligible accounts receivable; and
    
    the financial covenants in the credit agreement were revised to require that our
required minimum quarterly EBITDA must not be less than: $0, $0, $0 and $10 million for the
first, second, third and fourth quarters of 2010, respectively.
   31




---



##### 




    
    make capital expenditures in excess of $6.0 million per quarter through March 2011;
    
    incur additional debt or sell assets;
    
    make certain investments, loans and acquisitions;
    
    guarantee debt;
    
    grant liens;
    
    enter into transactions with affiliates; and
    
    engage in other lines of business.
  Critical Accounting Policies
   32




---



##### 



Revenue Recognition
   Inventories
  Income Taxes
   Property, Plant and Equipment
  33




---



##### 



Impairment of Long-Lived Assets
   
    
    changes in general economic conditions in regions in which we operate;
    
    the price of crude oil and natural gas;
    
    our ability to negotiate favorable sales arrangements; and
    
    competition from other service providers.
  Goodwill and Other Intangible Assets
    34




---



##### 



Contingent Liabilities
  Insurance Expenses
  Stock-Based Compensation
  Impact of Inflation
  35




---



##### 



Non-GAAP Accounting Measures
  Three Months EndedMarch 31,2009
    
    
    2010Reconciliation of Adjusted EBITDA to Net
Income (Loss):Net income (loss)
    
    $
    (14,711
    )
    
    $
    (8,652
    )Income tax expense (benefit)
    
    
    (7,752
    )
    
    
    (4,525
    )Interest expense
    
    
    3,176
    
    
    
    2,902Stock compensation expense
    
    
    737
    
    
    
    865Depreciation, amortization and accretion
    
    
    17,485
    
    
    
    19,787Adjusted EBITDA(1)
    
    $
    (1,065
    )
    
    $
    10,377
 
 (1)
    
    We define Adjusted EBITDA as net income (loss) before interest expense,
income tax expense, non-cash stock compensation expense, non-cash goodwill and intangible
impairment, depreciation, amortization and accretion expense 
 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
 36




---



##### 



Changes in Internal Control over Financial Reporting
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sale of Equity Securities.
  
 Item 6. Exhibits.
  37




---



##### 



SIGNATURES
  SUPERIOR WELL SERVICES, INC.
RegistrantDated: May 6, 2010
    By:
    /s/  Thomas W. StoelkThomas W. StoelkVice President and Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer) 38




---



##### 



INDEX TO EXHIBITS
OF
SUPERIOR WELL SERVICES, INC.
 (a) Exhibits
 3.1
    
    Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 to Form 8-K (SEC
File No. 000-51435) filed on August 3, 2005).3.2
    
    Amended and Restated Bylaws (incorporated by reference
to Exhibit 3.2 to Form 8-K (SEC File No. 000-51435) filed on
August 3, 2005).3.3
    
    Certificate of Designations for Series A 4% Convertible
Preferred Stock (incorporated by reference to Exhibit 3.1 to
Form 8-K filed on November 21, 2008).4.1
    
    Specimen Stock Certificate representing our common
stock (incorporated by reference to Exhibit 4.1 to
Registration Statement on Form S-1/A (Registration No.
333-124674) filed on June 24, 2005).4.2
    
    Registration Rights Agreement dated as of July 28, 2005
by and among the Superior Well Services, Inc. and the
stockholders signatory thereto (incorporated by reference to
Exhibit 10.1 to Form 8-K (SEC File No. 000-51435) filed on
August 3, 2005).4.3
    
    Form of Restricted Stock Agreement for Employees
without Employment Agreements (filed as Exhibit 4.1 to
Registration Statement on Form S-8 (Registration No.
333-130615) filed on December 22, 2005).4.4
    
    Form of Restricted Stock Agreement for Executives with
Employment Agreements (filed as Exhibit 4.2 to Registration
Statement on Form S-8 (Registration No. 333-130615) filed on
December 22, 2005).4.5
    
    Form of Restricted Stock Agreement for Non-Employee
Directors (filed as Exhibit 4.3 to Registration Statement on
Form S-8 (Registration No. 333-130615) filed on December 22,
2005).4.6*
    
    Superior Well Services, Inc. Amended and Restated
Incentive Compensation Plan, effective May 4, 2010.4.7
    
    Indenture, dated as of November 18, 2008, between
Superior Well Services, Inc. and its Subsidiaries and
Wilmington Trust FSB (as Trustee and Collateral Agent),
relating to the Second Lien Notes due 2013 (incorporated by
reference to Exhibit 4.1 to Form 8-K (SEC File No.
000-51435) filed on November 21, 2008).10.1
    
    Amended and Restated Employment Agreement between David
E. Wallace and Superior Well Services, Inc. dated September
15, 2008 (incorporated by reference to Exhibit 10.1 to Form
8-K (SEC File No. 000-51435) filed on September 18, 2008).10.2
    
    Amended and Restated Employment Agreement between Jacob
Linaberger and Superior Well Services, Inc. dated September
15, 2008 (incorporated by reference to Exhibit 10.2 to Form
8-K (SEC File No. 000-51435) filed on September 18, 2008).10.3
    
    Amended and Restated Employment Agreement between
Thomas W.Stoelk and Superior Well Services, Inc. dated
September 15, 2008 (incorporated by reference to Exhibit
10.4 to Form 8-K (SEC File No. 000-51435) filed on September
18, 2008).10.4
    
    Amended and Restated Employment Agreement between Rhys
R. Reese and Superior Well Services, Inc. dated September
15, 2008 (incorporated by reference to Exhibit 10.3 to Form
8-K (SEC File No. 000-51435) filed on September 18, 2008).10.5
    
    Indemnification Agreement between David E. Wallace and Superior Well Services, Inc., dated August 3, 2005
(incorporated by reference to Exhibit 10.7 to Form 8-K (SEC
File No. 000-51435) filed on August 3, 2005).




---



##### 



10.6
    
    Indemnification Agreement between Jacob B. Linaberger
and Superior Well Services, Inc., dated August 3, 2005
(incorporated by reference to Exhibit 10.8 to Form 8-K (SEC
File No. 000-51435) filed on August 3, 2005).10.7
    
    Indemnification Agreement between Thomas W .Stoelk and
Superior Well Services, Inc., dated August 3, 2005
(incorporated by reference to Exhibit 10.9 to Form 8-K (SEC
File No. 000-51435) filed on August 3, 2005).10.8
    
    Indemnification Agreement between Rhys R. Reese and
Superior Well Services, Inc., dated August 3, 2005
(incorporated by reference to Exhibit 10.10 to Form 8-K (SEC
File No. 000-51435) filed on August 3, 2005).10.9
    
    Indemnification Agreement between Mark A. Snyder and
Superior Well Services, Inc., dated August 3, 2005
(incorporated by reference to Exhibit 10.12 to Form 8-K (SEC
File No. 000-51435) filed on August 3, 2005).10.10
    
    Indemnification Agreement between David E. Snyder and
Superior Well Services, Inc., dated August 3, 2005
(incorporated by reference to Exhibit 10.13 to Form 8-K (SEC
File No. 000-51435) filed on August 3, 2005).10.11
    
    Indemnification Agreement between Charles C. Neal and
Superior Well Services, Inc., dated August 3, 2005
(incorporated by reference to Exhibit 10.14 to Form 8-K (SEC
File No. 000-51435) filed on August 3, 2005).10.12
    
    Indemnification Agreement between John A. Staley, IV
and Superior Well Services, Inc., dated August 3, 2005
(incorporated by reference to Exhibit 10.15 to Form 8-K (SEC
File No. 000-51435) filed on August 3, 2005).10.13
    
    Indemnification Agreement between Anthony J. Mendicino
and Superior Well Services, Inc. dated August 30, 2005
(incorporated by reference to Exhibit 10.16 to Superiors
Quarterly Report on Form 10-Q (SEC File No. 000-51435) filed
on September 1, 2005).10.14
    
    Employment Agreement between Daniel Arnold and Superior
Well Services, Inc., dated May 14, 2007 (incorporated by
reference to Exhibit 10.1 to Superiors Quarterly Report on
Form 10-Q (SEC File No. 000-51435) filed on August 8, 2007).10.15
    
    Indemnification Agreement between Daniel Arnold and
Superior Well Services, Inc. dated May 14, 2007
(incorporated by reference to Exhibit 10.2 to Superiors
Quarterly Report on Form 10-Q (SEC File No. 000-51435) filed
on August 8, 2007).10.16
    
    Employment Agreement between Michal J. Seyman and
Superior Well Services Inc. dated December 21, 2009
(incorporated by reference to Exhibit 10.1 to Form 8-K (SEC
File No. 000-51435) filed on December 24, 2009).10.17
    
    Non-Employee Director Compensation Summary
(incorporated by reference to Exhibit 10.30 to Annual Report
on Form 10-K filed on March 11, 2008).10.18
    
    Agreement dated October 2, 2007 between U.S. Silica and
Superior Well Services, Inc. (incorporated by reference to
Exhibit 10.30 to Annual Report on Form 10-K (SEC File No.
000-51435) filed on March 11, 2008).10.19
    
    Revolving Credit Agreement among Superior Well Services
Inc., Lenders Party, Citizens Bank of Pennsylvania (as
Administrative Agent) and RBS Securities Corporation dated
as of September 30, 2008 (incorporated by reference to
Exhibit 10.1 to Form 8-K (SEC File No. 000-51435) filed on
October 3, 2008).




---



##### 



10.20
    
    First Amendment to Credit Agreement by and among
Superior Well Services, Inc., the Lenders party thereto,
Citizens Bank of Pennsylvania, as Administrative Agent, and
RBS Securities, Inc., as Sole Lead Arranger (incorporated by
reference to Exhibit 10.1 to Form 8-K (SEC File No.
000-51435) filed on September 24, 2009).10.21
    
    Second Amendment to Credit Agreement by and among
Superior Well Services, Inc., the Lenders party thereto,
Citizens Bank of Pennsylvania, as Administrative Agent, and
RBS Securities, Inc., as Sole Lead Arranger (incorporated by
reference to Exhibit 10.1 to Form 8-K (SEC File No.
000-51435) filed on December 24, 2009).10.22
    
    Asset Purchase Agreement among Superior Well Services,
Inc., Superior Well Services, Ltd., Diamondback Holdings,
LLC and Diamondbacks Subsidiaries dated September 15, 2008
(incorporated by reference to Exhibit 10.1 to Form 8-K (SEC
File No. 000-51435) filed on September 18, 2008).10.23
    
    First Amendment to Asset Purchase Agreement entered
into by Superior Well Services, Inc. and Superior Well
Services, Ltd. and Diamondback Holdings, LLC and its
Subsidiaries on November 18, 2008 (incorporated by reference
to Exhibit 10.1 to Form 8-K (SEC File No. 000-51435) filed
on November 21, 2008).10.24
    
    Registration Rights Agreement dated November 18, 2008
among Superior Well Services, Inc., Designated Holders and
Diamondback Holdings, LLC (incorporated by reference to
Exhibit 10.2 to Form 8-K (SEC File No. 000-51435) filed on
November 21, 2008).10.25
    
    Sand Purchase Agreement dated October 10, 2008 among
Superior Well Services, Inc. and Preferred Rocks USS, Inc.
and U.S. Silica Company (incorporated by reference to
Exhibit 10.1 to Form 10-Q (SEC File No. 000-51435) filed on
November 4, 2008).10.26
    
    Amendment No. 1 to Sand Purchase Agreement among Superior
Well Services, Inc. and Preferred Rocks USS, Inc., dated
January 14, 2010.12.1
    
    Ratio of Earnings to Fixed Charges and Earnings to
Fixed Charges and Preference Securities Dividends21.1
    
    List of Subsidiaries23.1
    
    Consent of Independent Registered Public Accounting Firm24.1
    
    Power of Attorney (included on signature page hereto).31.1*
    
    Sarbanes-Oxley Section 302 certification of David E.
Wallace for Superior Well Services, Inc. for the March 31,
2010 Quarterly Report on Form 10-Q.31.2*
    
    Sarbanes-Oxley Section 302 certification of. Thomas
W.Stoelk for Superior Well Services, Inc. for the March 31,
2010 Quarterly Report on Form 10-Q.32.1**
    
    Sarbanes-Oxley Section 906 certification of David E.
Wallace for Superior Well Services, Inc. for the March 31,
2010 Quarterly Report on Form 10-Q.32.2**
    
    Sarbanes-Oxley Section 906 certification of Thomas
W.Stoelk for Superior Well Services, Inc. for the March 31,
2010 Quarterly Report on Form 10-Q.
 
 *
    
    Filed herewith.**
    
    Furnished herewith.
    
    Management contract or compensatory plan or arrangement.
    
    Portions of this exhibit were omitted pursuant to a request for confidential treatment. The
omitted portions were filed separately with the Securities and Exchange Commission.