##### 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 March 31, 2009
 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
    
    Smaller reporting
company o(Do not check if
a smaller reporting company)
 o þ




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##### 



SUPERIOR WELL SERVICES, INC. QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2009

TABLE OF CONTENTS
 PAGEPART I FINANCIAL INFORMATIONItem 1. Financial Statements- Unaudited Consolidated Balance Sheets
    
    
    1- Unaudited Consolidated Statements of Operations
    
    
    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
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 4. Controls and Procedures
    
    
    37PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    39Item 1A. Risk Factors
    
    
    39Item 6. Exhibits
    
    
    39EX-10.1EX-10.2EX-10.3EX-10.4EX-10.5EX-10.6EX-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,
    
    
    March 31,2008
    
    
    2009(in thousands, except per share data)Current Assets:Cash and cash equivalents
    
    $
    1,637
    
    
    $
    2,499Trade accounts receivable, net of allowance of $2,755 and
$3,347, respectively
    
    
    104,549
    
    
    
    96,516Inventories
    
    
    27,781
    
    
    
    26,797Prepaid expenses and other current assets
    
    
    3,860
    
    
    
    3,264Assets held for sale
    
    
    1,440
    
    
    
    Advances on materials for future delivery
    
    
    3,732
    
    
    
    3,732Income taxes receivable
    
    
    1,934
    
    
    
    14,219Deferred income taxes
    
    
    3,746
    
    
    
    3,587Total current assets
    
    
    148,679
    
    
    
    150,614Property, plant and equipment, net
    
    
    453,990
    
    
    
    445,006Goodwill
    
    
    31,726
    
    
    
    33,113Intangible assets, net of accumulated amortization of $2,953 and $3,535, respectively
    
    
    10,120
    
    
    
    9,537Deferred income taxes
    
    
    530
    
    
    
    1,475Other assets
    
    
    13,185
    
    
    
    12,417Total assets
    
    $
    658,230
    
    
    $
    652,162Current Liabilities:Accounts and construction payable-trade
    
    $
    43,330
    
    
    $
    28,836Current portion of long-term obligations
    
    
    1,291
    
    
    
    1,972Advance payments on servicing contracts
    
    
    405
    
    
    
    561Accrued wages and health benefits
    
    
    5,481
    
    
    
    5,668Other accrued liabilities
    
    
    10,370
    
    
    
    10,288Total current liabilities
    
    
    60,877
    
    
    
    47,325Long-term debt
    
    
    208,042
    
    
    
    225,847Deferred income taxes
    
    
    49,082
    
    
    
    54,403Long-term capital leases
    
    
    2,171
    
    
    
    1,200Asset retirement obligation
    
    
    443
    
    
    
    395Stockholders Equity:Preferred stock, non-voting, par $0.01 per share, 10,000,000 shares authorizedSeries A 4% Convertible Preferred stock, non-voting, 75,000 shares issued at
December 31, 2008 (liquidation preference $75 million)
    
    
    1
    
    
    
    1Common stock, voting, par $.01 per share, 70,000,000 shares authorized,
23,620,578 and 23,794,198 shares issued at December 31, 2008 and March 31, 2009,
respectively
    
    
    236
    
    
    
    238Additional paid-in capital
    
    
    229,741
    
    
    
    230,577Retained earnings
    
    
    107,637
    
    
    
    92,176Total stockholders equity
    
    
    337,615
    
    
    
    322,992Total liabilities and stockholders equity
    
    $
    658,230
    
    
    $
    652,162
  1




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2009(in thousands, except per share data)Revenue
    
    $
    93,441
    
    
    $
    122,281Cost of revenue
    
    
    78,778
    
    
    
    125,320Gross profit (loss)
    
    
    14,663
    
    
    
    (3,039
    )Selling, general and administrative
expenses
    
    
    9,544
    
    
    
    16,055Operating income (loss)
    
    
    5,119
    
    
    
    (19,094
    )Interest expense
    
    
    177
    
    
    
    3,176Other expense, net
    
    
    (343
    )
    
    
    (193
    )Income (loss) before income taxes
    
    
    4,599
    
    
    
    (22,463
    )Income taxesCurrent
    
    
    1,007
    
    
    
    (12,286
    )Deferred
    
    
    1,189
    
    
    
    4,5342,196
    
    
    
    (7,752
    )Net income (loss) before dividends on preferred stock
    
    $
    2,403
    
    
    $
    (14,711
    )Dividends on preferred stock
    
    
    
    
    
    
    (750
    )Net income (loss) available to common stockholders
    
    $
    2,403
    
    
    $
    (15,461
    )Earnings (loss) per common share:Basic
    
    $
    0.10
    
    
    $
    (0.67
    )Fully diluted
    
    $
    0.10
    
    
    $
    (0.67
    )Weighted average shares outstanding  basic
    
    
    23,141,358
    
    
    
    23,204,960Weighted average shares outstanding  diluted
    
    
    23,226,002
    
    
    
    26,204,960
  2




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (Unaudited)
 Superior Well Services, Inc.AdditionalPreferred
    
    
    Common
    
    
    Paid-in
    
    
    RetainedStock
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Total(in thousands)BALANCE, DECEMBER 31, 2007
    
    $
    
    
    
    $
    234
    
    
    $
    184,432
    
    
    $
    68,933
    
    
    $
    253,599Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,403
    
    
    
    2,403Issuance of restricted stock awards
    
    
    
    
    
    
    1
    
    
    
    124
    
    
    
    
    
    
    
    125Restricted stock retired/forfeited
    
    
    
    
    
    
    
    
    
    
    (221
    )
    
    
    
    
    
    
    (221
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    615
    
    
    
    
    
    
    
    615BALANCE, MARCH 31, 2008
    
    $
    
    
    
    $
    235
    
    
    $
    184,950
    
    
    $
    71,336
    
    
    $
    256,521BALANCE, 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
    
    
    $
    322,992
  3




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2009(in thousands)Cash flows from operations:Net income (loss)
    
    $
    2,403
    
    
    $
    (14,711
    )Adjustments to reconcile net income to net cash
provided by (used in) operations:Deferred income taxes
    
    
    1,189
    
    
    
    4,534Depreciation, amortization, and accretion
    
    
    8,646
    
    
    
    17,485Loss on disposal of equipment
    
    
    340
    
    
    
    214Stock-based compensation
    
    
    615
    
    
    
    737Changes in assets and liabilities:Trade accounts receivable
    
    
    (3,289
    )
    
    
    8,033Advance on materials for future delivery
    
    
    
    
    
    
    599Inventory
    
    
    (2,355
    )
    
    
    984Prepaid expenses and other assets
    
    
    27
    
    
    
    596Income tax receivable
    
    
    893
    
    
    
    (12,285
    )Accounts payable
    
    
    (6,438
    )
    
    
    (13,299
    )Advance payments on servicing contracts
    
    
    698
    
    
    
    156Accrued wages and health benefits
    
    
    481
    
    
    
    187Other accrued liabilities
    
    
    260
    
    
    
    (82
    )Net cash provided by (used in) operations
    
    
    3,470
    
    
    
    (6,851
    )Cash flows from investing:Expenditure for property, plant and
equipment, net of construction payables
    
    
    (27,652
    )
    
    
    (9,356
    )Acquisition of businesses, net of cash acquired
    
    
    
    
    
    
    (1,873
    )Proceeds (expenditures) for other assets
    
    
    208
    
    
    
    169Proceeds from sale of property, plant and equipment
    
    
    617
    
    
    
    1,908Net cash used in investing
    
    
    (26,827
    )
    
    
    (9,152
    )Cash flows from financing:Principal payments on long-term debt
    
    
    (33,157
    )
    
    
    (53,214
    )Proceeds from long-term borrowings
    
    
    51,902
    
    
    
    71,019Issuance/retirement of restricted stock, net
    
    
    (96
    )
    
    
    101Payment on capital lease obligations
    
    
    
    
    
    
    (290
    )Payment of preferred dividends
    
    
    
    
    
    
    (750
    )Net cash provided by financing
    
    
    18,649
    
    
    
    16,865Net (decrease) increase in cash and cash equivalents
    
    
    (4,708
    )
    
    
    862Cash and cash equivalents, beginning of period
    
    
    5,510
    
    
    
    1,637Cash and cash equivalents, end of period
    
    $
    802
    
    
    $
    2,499Supplemental disclosure of cash flow data:Interest paid
    
    $
    144
    
    
    $
    1,727Income taxes paid (received)
    
    
    115
    
    
    
    (1
    )
  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
  Assets held for sale
  Advances on Material for Future Delivery
  Property, Plant and Equipment
    Revenue Recognition
  6




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Inventories
  Insurance Expense
  Income Taxes
 Accounting for Income Taxes .
 Accounting for Uncertainty in Income Taxes, an interpretation of FASB
Statement No. 109 Definition of Settlement in FASB Interpretation No. 48
  7




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Asset Retirement Obligations
  Fair Value of Financial Instruments
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an amendment of FASB Statement No. 115
 Fair Value Measurements,
  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
  8




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Goodwill and Intangible Assets
 Goodwill and Other Intangible Assets
  Concentration of Credit Risk
  Share Based Compensation
 Share-Based Payment
 Weighted average shares outstanding
   9




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   Accounting Standards Not Yet Adopted
     10




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 3. Business Combinations
  Acquisitions During the Year ended December 31, 2008:
   11




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 4. Property, Plant and Equipment
  December 31,
    
    
    March 31,2008
    
    
    2009(in thousands)Property, Plant and Equipment:Land
    
    $
    453
    
    
    $
    453Building and improvements
    
    
    16,621
    
    
    
    16,488Equipment and vehicles
    
    
    500,101
    
    
    
    508,675Disposal wells and equipment
    
    
    8,764
    
    
    
    8,705Construction in progress
    
    
    28,065
    
    
    
    27,140554,004
    
    
    
    561,461Accumulated depreciation
    
    
    (100,014
    )
    
    
    (116,455
    )Total property, plant and equipment, net
    
    $
    453,990
    
    
    $
    445,006
 5. Short and Long-term Obligations
    12




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   December 31,
    
    
    March 31,2008
    
    
    2009Syndicated credit facility with
interest rates at either LIBOR plus a
spread of 1.5-2.5% or the prime
lending rate plus a spread of 0-0.25%
due March 2013, collateralized by
cash, investment property, accounts
receivable, inventory, intangibles
and equipment
    
    $
    127,000
    
    
    $
    144,847Second 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 Syndicated 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
    
    
    1,109
    
    
    
    1,081Notes payable to sellers with nominal
interest rates due through December
2010, collateralized by specific
buildings and equipment
    
    
    90
    
    
    
    76208,199
    
    
    
    226,004Less  Payments due within one year
    
    
    157
    
    
    
    157Total
    
    $
    208,042
    
    
    $
    225,847
  Capital Lease Obligations
  13




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  Due in 1 year
    
    $
    2,034Due in 2 years
    
    
    1,002Due in 3 years
    
    
    235Total minimum payments
    
    
    3,271Less amounts representing interest
    
    
    256Total obligation under capital leases
    
    
    3,015Less current portion
    
    
    1,815Long-term portion
    
    $
    1,200
 6. Stockholders equity
 Common Stock
     Preferred Stock
   Dividends
  14




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   Liquidation Preference
  Redemption
  Voting Rights
  Conversion
  Stock Incentive Plan
   15




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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, 2007
    
    
    371,415
    
    
    $
    
    26.57Granted
    
    
    176,400
    
    
    
    
    16.98Vested
    
    
    (50,479
    )
    
    
    
    26.92Forfeited
    
    
    (22,870
    )
    
    
    
    24.26Retired
    
    
    (11,380
    )
    
    
    
    27.28Nonvested at December 31, 2008
    
    
    463,086
    
    
    $
    
    22.97Granted
    
    
    186,250
    
    
    
    
    9.11Vested
    
    
    (66,146
    )
    
    
    
    25.22Forfeited
    
    
    (4,150
    )
    
    
    
    24.14Retired
    
    
    (8,480
    )
    
    
    
    25.93Nonvested at March 31, 2009
    
    
    570,560
    
    
    $
    
    18.14
  16




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 7. Income taxes
   Three months ended March 31,2008
    
    
    2009(amounts in thousands)Current:State and local
    
    $
    177
    
    
    $
    (800
    )U.S. federal
    
    
    830
    
    
    
    (11,486
    )Total current
    
    
    1,007
    
    
    
    (12,286
    )Deferred:State and local
    
    
    211
    
    
    
    115U.S. federal
    
    
    978
    
    
    
    4,419Total deferred
    
    
    1,189
    
    
    
    4,534Provision (benefit) for income tax expense
    
    $
    2,196
    
    
    $
    (7,752
    )
  December 31,
    
    
    March 31,2008
    
    
    2009(amounts in thousands)Deferred tax assets:Restricted stock
    
    $
    1,233
    
    
    $
    606Accrued expenses and other
    
    
    1,516
    
    
    
    1,845Alternative minimum tax
    
    
    505
    
    
    
    505Allowance for doubtful accounts receivable
    
    
    1,022
    
    
    
    1,234State operating loss carryforward
    
    
    
    
    
    
    872Total deferred tax assets
    
    
    4,276
    
    
    
    5,062Deferred tax liabilities:Depreciation differences on property, plant and equipment
    
    
    (49,082
    )
    
    
    (54,403
    )Total deferred tax liabilities
    
    
    (49,082
    )
    
    
    (54,403
    )Net deferred taxes
    
    $
    (44,806
    )
    
    $
    (49,341
    )
  Three months ended March 31,2008
    
    
    2009Federal statutory tax rate
    
    
    35
    %
    
    
    35
    %Impact of vesting of restricted stock
    
    
    7
    
    
    
    3State income taxes
    
    
    5
    
    
    
    2Other
    
    
    1
    
    
    
    .5Effective income tax rate
    
    
    48
    %
    
    
    34.5
    %
 17




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 8. 401(k) Plan
  9. Related-Party Transactions
     10. Commitments and Contingencies
     18




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
  11. Business segment information
  Three months ended March 31, 2009Technical
    
    FluidServices
    
    Logistics
    
    Corporate
    
    Total(in thousands)Net revenue
    
    $
    113,260
    
    
    $
    9,021
    
    
    $
    
    
    
    $
    122,281Depreciation and
amortization
    
    $
    15,919
    
    
    $
    1,433
    
    
    $
    133
    
    
    $
    17,485Operating loss
    
    $
    (13,033
    )
    
    $
    (2,211
    )
    
    $
    (3,850
    )
    
    $
    (19,094
    )Capital expenditures
    
    $
    9,219
    
    
    $
    10
    
    
    $
    127
    
    
    $
    9,356As of March 31, 2009
segment assets
    
    $
    585,344
    
    
    $
    56,035
    
    
    $
    10,783
    
    
    $
    652,162
  Three monthsended March 31,2009(in thousands)Segment operating loss
    
    $
    (19,094
    )Interest expense
    
    
    3,176Other expense
    
    
    193Income taxes
    
    
    (7,752
    )Net loss
    
    $
    (14,711
    )
 12. Fair Value of Financial Instruments
  19




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   13. Guarantees of Securities Registered
  20




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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;
    
    current weaknesses in the credit and capital markets and lack of credit
availability;
    
    overcapacity and competition in our industry;
    
    unanticipated costs, delays and other difficulties in executing our growth strategy,
including difficulties associated with the integration of our Diamondback acquisition;
    
    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.
  21




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Overview
   Services Offered
  Three Months Ended March 31,2008
    
    
    2009Revenue:Technical pumping services
    
    $
    93,441
    
    
    
    100.0
    %
    
    $
    113,274
    
    
    
    92.6
    %Fluid Logistics
    
    
    
    
    
    
    
    
    
    
    9,007
    
    
    
    7.4Total revenue
    
    $
    93,441
    
    
    
    100.0
    %
    
    $
    122,281
    
    
    
    100.0
    %
  Technical Services
 Technical Pumping Services
  22




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Completion, Production and Rental Tool Services
  Down-Hole Surveying Services
  Fluid Logistics Services
  How We Generate Our Revenue
   23




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How We Evaluate Our Operations
  Operating Income per Operating Region .
   Material and Labor Expenses as a Percentage of Revenue.
    24




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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.
  25




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Customer Satisfaction.
  Safety Performance.
  Our Industry and Overview
   Business Outlook
  26




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##### Table of Contents



Our Growth Strategy
   Three Months Ended March 31,2008
    
    2009Percent of
    
    
    
    
    
    Percent ofRegion
    
    Revenue
    
    Revenue
    
    Revenue
    
    RevenueAppalachian
    
    $
    35,826
    
    
    
    38.3
    %
    
    $
    30,574
    
    
    
    25.0
    %Southeast
    
    
    17,139
    
    
    
    18.3
    
    
    
    21,403
    
    
    
    17.5Southwest
    
    
    14,097
    
    
    
    15.1
    
    
    
    36,312
    
    
    
    29.7Mid-Continent
    
    
    17,534
    
    
    
    18.8
    
    
    
    25,974
    
    
    
    21.2Rocky Mountain
    
    
    8,845
    
    
    
    9.5
    
    
    
    8,018
    
    
    
    6.6Total
    
    $
    93,441
    
    
    
    100.0
    %
    
    $
    122,281
    
    
    
    100.0
    %
   27




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##### Table of Contents



Our Results of Operations
   March 31,2008
    
    2009
    
    % ChangeRig count 1Crude Oil
    
    
    350
    
    
    
    217
    
    
    
    (38.0
    )%Natural gas
    
    
    1,447
    
    
    
    810
    
    
    
    (44.0
    )Total U.S. land rigs
    
    
    1,797
    
    
    
    1,027
    
    
    
    (42.8
    )%
 Three Months Ended March 31,2008
    
    2009
    
    % ChangeCommodity prices (avg.):Crude Oil (West Texas Intermediate)
    
    $
    97.90
    
    
    $
    43.08
    
    
    
    (56.0
    )%Natural gas (Henry Hub)
    
    
    8.61
    
    
    
    4.56
    
    
    
    (47.0
    )%
  
 1
    
    Estimate of activity as measured by Baker Hughes Inc.
for average active U.S. land drilling rigs as of March 28, 2008 and March 27,
2009. 28




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##### Table of Contents



Results for the three months ended March 31, 2008 and 2009
  Three Months EndedMarch 31,2008
    
    
    2009Statement of Operations Data:Revenues:Technical pumping services
    
    $
    83,088
    
    
    $
    103,075Down-hole surveying services
    
    
    10,353
    
    
    
    6,402Completion services
    
    
    
    
    
    
    3,797Total Technical Services
    
    
    93,441
    
    
    
    113,274Fluid Logistics
    
    
    
    
    
    
    9,007Total revenue
    
    
    93,441
    
    
    
    122,281Expenses:Cost of revenue
    
    
    78,778
    
    
    
    125,320Selling, general, and administrative
    
    
    9,544
    
    
    
    16,055Total expense
    
    
    88,322
    
    
    
    141,375Operating income (loss)
    
    $
    5,119
    
    
    $
    (19,094
    )
 Revenue
  Three Months Ended March 31,$
    
    
    %2008
    
    
    2009
    
    
    change
    
    
    changeRevenues by service type:Stimulation
    
    $
    55,267
    
    
    $
    79,505
    
    
    $
    24,238
    
    
    
    43.9
    %Cementing
    
    
    21,476
    
    
    
    16,595
    
    
    
    (4,881
    )
    
    
    (22.7
    )Nitrogen
    
    
    6,345
    
    
    
    6,975
    
    
    
    630
    
    
    
    9.9Technical pumping services
    
    
    83,088
    
    
    
    103,075
    
    
    
    19,957
    
    
    
    24.0Down-hole surveying services
    
    
    10,353
    
    
    
    6,402
    
    
    
    (3,951
    )
    
    
    (38.2
    )Completion services
    
    
    
    
    
    
    3,797
    
    
    
    3,797
    
    
    
    100.0Total technical services
    
    
    93,441
    
    
    
    113,274
    
    
    
    19,803
    
    
    
    21.2Fluid logistics
    
    
    
    
    
    
    9,007
    
    
    
    9,007
    
    
    
    100.0Total revenue
    
    $
    93,441
    
    
    $
    122,281
    
    
    $
    28,840
    
    
    
    30.9
    %
  Three Months Ended March 31,$
    
    
    %2008
    
    
    2009

 
    
    change
    
    
    changeRegion:Appalachian
    
    $
    35,826
    
    
    $
    30,574
    
    
    $
    (5,252
    )
    
    
    (14.7
    )%Southeast
    
    
    17,139
    
    
    
    21,403
    
    
    
    4,264
    
    
    
    24.9Southwest
    
    
    14,097
    
    
    
    36,312
    
    
    
    22,215
    
    
    
    157.6Mid-Continent
    
    
    17,534
    
    
    
    25,974
    
    
    
    8,440
    
    
    
    48.1Rocky Mountain
    
    
    8,845
    
    
    
    8,018
    
    
    
    (827
    )
    
    
    (9.3
    )Total
    
    $
    93,441
    
    
    $
    122,281
    
    
    $
    28,840
    
    
    
    30.9
    %
 29




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##### Table of Contents



Cost of Revenue
  Selling, General and Administrative Expenses (SG&A)
  Operating Income/ Loss
  30




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Liquidity and Capital Resources
    Financial Condition and Cash Flows
 Financial Condition .
  Cash flows from operations .
  31




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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 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.
   Off-Balance Sheet Arrangements
  Description of Our Indebtedness
  32




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##### Table of Contents




    
    incur additional debt or sell assets;
    
    make certain investments, loans and acquisitions;
    
    guarantee debt;
    
    grant liens;
    
    enter into transactions with affiliates;
    
    engage in other lines of business; and
    
    pay dividends and distributions.
   Accounting standards not yet adopted
  33




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Critical Accounting Policies
   Revenue Recognition
   34




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##### Table of Contents



Property, Plant and Equipment
  Impairment of Long-Lived Assets
 Accounting for the Impairment or Disposal 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.
  Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets
 35




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Contingent Liabilities
  Insurance Expenses
  Stock-Based Compensation
 Share-Based Payment
 Impact of Inflation
  36




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Non-GAAP Accounting Measures
  Three Months EndedMarch 31,2008
    
    
    2009Reconciliation of EBITDA to Net Income:Net income (loss)
    
    $
    2,403
    
    
    $
    (14,711
    )Income tax expense
    
    
    2,196
    
    
    
    (7,752
    )Interest expense
    
    
    177
    
    
    
    3,176Stock compensation expense
    
    
    615
    
    
    
    737Depreciation, amortization and accretion
    
    
    8,646
    
    
    
    17,485EBITDA
    
    $
    14,037
    
    
    $
    (1,065
    )
 
 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
  37




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Changes in Internal Control over Financial Reporting
 38




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  Reduced cash flows from operations could result in a default under our Credit Agreement and the
Indenture for our Second Lien Notes.
   
 Item 6. Exhibits.
  39




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##### Table of Contents



SIGNATURES
  SUPERIOR WELL SERVICES, INC.
     RegistrantDated:  May 11, 2009
    By:
    /s/  Thomas W. StoelkThomas W. StoelkVice President and Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer) 40




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##### Table of Contents



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 filed on August 3, 2005).3.2
    
    Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K 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 Company and the
stockholders signatory thereto (incorporated by reference to Exhibit 10.1 to Form 8-K filed
on August 3, 2005).4.3
    
    Form of Restricted Stock Agreement for Employees without Employment Agreements (filed as
Exhibit 4.1 to the Companys 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 the Companys 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 the
Companys Registration Statement on Form S-8(Registration No. 333-130615) filed on December
22, 2005).4.6
    
    2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q filed on September 1, 2005).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 due 2013 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on
November 21, 2008).10.1 *
    
    Letter Agreement between David E. Wallace and Superior Well Services Inc. dated April 17,
2009.10.2 *
    
    Letter Agreement between Jacob Linaberger and Superior Well Services Inc. dated April 17,
2009.10.3 *
    
    Letter Agreement between Rhys R. Reese and Superior Well Services Inc. dated April 17, 2009.10.4 *
    
    Letter Agreement between Thomas W. Stoelk and Superior Well Services Inc. dated April 17,
2009.10.5 *
    
    Letter Agreement between Daniel Arnold and Superior Well Services Inc. dated April 17, 2009.10.6 *
    
    Letter Agreement between Arty Straehla and Superior Well Services Inc. dated April 17, 2009.31.1*
    
    Sarbanes-Oxley Section 302 certification of David E. Wallace for Superior Well Services,
Inc. for the March 31, 2009 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, 2009 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, 2009 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, 2009 Quarterly Report on Form 10-Q.
 
 
    
    Management contract or compensatory plan or arrangement.