##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form l0-Q
 (Mark
One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
 Commission File Number: 000-51435
 SUPERIOR WELL SERVICES, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    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 þ o
  o þ




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##### 



SUPERIOR WELL SERVICES, INC. QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007
 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
    
    
    28Item 4.
    
    Controls and Procedures
    
    
    28PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    30Item 1A.
    
    Risk Factors
    
    
    30Item 6.
    
    Exhibits
    
    
    30EX-31.1EX-31.2EX-32.1EX-32.2
  i




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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,
    
    
    September 30,2006
    
    
    2007(in thousands, except per share data)Current Assets:Cash and cash equivalents
    
    $
    56,752
    
    
    $
    1,093Trade accounts receivable, net of
allowance of $772 and $1,354,
respectively
    
    
    47,325
    
    
    
    61,382Inventories
    
    
    6,951
    
    
    
    9,061Prepaid expenses
    
    
    908
    
    
    
    1,116Deferred income taxes
    
    
    507
    
    
    
    1,314Total current assets
    
    
    112,443
    
    
    
    73,966Property, Plant and Equipment:Land
    
    
    420
    
    
    
    420Building and improvements
    
    
    3,323
    
    
    
    4,317Equipment and vehicles
    
    
    149,195
    
    
    
    241,012Construction in progress
    
    
    24,922
    
    
    
    25,952177,860
    
    
    
    271,701Accumulated depreciation
    
    
    (36,436
    )
    
    
    (53,245
    )Total property, plant and equipment, net
    
    
    141,424
    
    
    
    218,456Goodwill
    
    
    2,850
    
    
    
    4,850Intangible assets, net of accumulated
amortization of $1,010 and $1,579,
respectively
    
    
    1,416
    
    
    
    2,467Deferred income taxes
    
    
    585
    
    
    
    316Other assets
    
    
    316
    
    
    
    712Total assets
    
    $
    259,034
    
    
    $
    300,767Current Liabilities:Accounts payable-trade
    
    $
    21,565
    
    
    $
    23,734Income taxes payable
    
    
    542
    
    
    
    490Current portion of long-term debt
    
    
    382
    
    
    
    390401(k) plan contribution and withholding
    
    
    1,982
    
    
    
    1,195Advance payments on servicing contracts
    
    
    803
    
    
    
    193Accrued wages and health benefits
    
    
    1,462
    
    
    
    3,554Other accrued liabilities
    
    
    1,664
    
    
    
    2,292Total current liabilities
    
    
    28,400
    
    
    
    31,848Long-term debt
    
    
    1,597
    
    
    
    1,245Deferred income taxes
    
    
    15,133
    
    
    
    21,545Stockholders Equity:Common stock, voting, par $.01 per
share, 70,000,000 shares authorized,
23,352,567 and 23,478,560 shares issued
at December 31, 2006 and September 30,
2007, respectively
    
    
    234
    
    
    
    235Additional paid-in capital
    
    
    182,492
    
    
    
    183,918Retained earnings
    
    
    31,178
    
    
    
    61,976Total stockholders equity
    
    
    213,904
    
    
    
    246,129Total liabilities and stockholders equity
    
    $
    259,034
    
    
    $
    300,767
  1




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##### Table of Contents



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007(in thousands, except per share data)Revenue
    
    $
    67,205
    
    
    $
    94,317
    
    
    $
    169,481
    
    
    $
    255,832Cost of revenue
    
    
    45,152
    
    
    
    66,112
    
    
    
    114,592
    
    
    
    179,578Gross profit
    
    
    22,053
    
    
    
    28,205
    
    
    
    54,889
    
    
    
    76,254Selling, general and administrative
expenses
    
    
    6,813
    
    
    
    9,330
    
    
    
    18,492
    
    
    
    26,622Operating income
    
    
    15,240
    
    
    
    18,875
    
    
    
    36,397
    
    
    
    49,632Interest expense
    
    
    77
    
    
    
    71
    
    
    
    164
    
    
    
    177Other income, net
    
    
    1
    
    
    
    33
    
    
    
    192
    
    
    
    800Income before income taxes
    
    
    15,164
    
    
    
    18,837
    
    
    
    36,425
    
    
    
    50,255Income taxesCurrent
    
    
    4,683
    
    
    
    4,647
    
    
    
    12,268
    
    
    
    13,583Deferred
    
    
    1,119
    
    
    
    2,560
    
    
    
    2,008
    
    
    
    5,8745,802
    
    
    
    7,207
    
    
    
    14,276
    
    
    
    19,457Net income
    
    $
    9,362
    
    
    $
    11,630
    
    
    $
    22,149
    
    
    $
    30,798Earnings per common share:Basic and fully diluted
    
    $
    0.48
    
    
    $
    0.50
    
    
    $
    1.14
    
    
    $
    1.33Weighted average shares outstanding  basic
    
    
    19,376,667
    
    
    
    23,102,291
    
    
    
    19,376,667
    
    
    
    23,098,945Weighted average shares outstanding  diluted
    
    
    19,376,667
    
    
    
    23,142,350
    
    
    
    19,376,667
    
    
    
    23,194,945
  2




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (Unaudited)
 Superior Well Services, Inc.Additional
    
    
    RetainedCommon
    
    
    Paid-in
    
    
    EarningsStock
    
    
    Capital
    
    
    (Deficit)
    
    
    Total(in thousands)BALANCE, DECEMBER 31, 2005
    
    $
    194
    
    
    $
    91,944
    
    
    $
    (745
    )
    
    $
    91,393Net income
    
    
    
    
    
    
    
    
    
    
    22,149
    
    
    
    22,149Issuance of restricted
stock awards
    
    
    3
    
    
    
    286
    
    
    
    
    
    
    
    289Share-based compensation
    
    
    
    
    
    
    1,305
    
    
    
    
    
    
    
    1,305BALANCE, SEPTEMBER 30, 2006
    
    $
    197
    
    
    $
    93,535
    
    
    $
    21,404
    
    
    $
    115,136BALANCE, DECEMBER 31, 2006
    
    $
    234
    
    
    $
    182,492
    
    
    $
    31,178
    
    
    $
    213,904Net income
    
    
    
    
    
    
    
    
    
    
    30,798
    
    
    
    30,798Issuance of restricted
stock awards
    
    
    1
    
    
    
    133
    
    
    
    
    
    
    
    134Restricted stock
forfeitures
    
    
    
    
    
    
    (157
    )
    
    
    
    
    
    
    (157
    )Share-based compensation
    
    
    
    
    
    
    1,450
    
    
    
    
    
    
    
    1,450BALANCE, SEPTEMBER 30,
2007
    
    $
    235
    
    
    $
    183,918
    
    
    $
    61,976
    
    
    $
    246,129
  3




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##### Table of Contents



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Nine Months EndedSeptember 302006
    
    
    2007(in thousands)Cash flows from operations:Net income
    
    $
    22,149
    
    
    $
    30,798Adjustments to reconcile net income to net
cash provided by operations:Deferred income taxes
    
    
    2,007
    
    
    
    5,874Depreciation and amortization
    
    
    9,922
    
    
    
    17,628Loss on disposal of equipment
    
    
    30
    
    
    
    264Share-based compensation
    
    
    1,305
    
    
    
    1,450Changes in assets and liabilities:Trade accounts receivable
    
    
    (17,842
    )
    
    
    (14,057
    )Inventory
    
    
    (1,235
    )
    
    
    (2,110
    )Prepaid expenses and other assets
    
    
    (285
    )
    
    
    (208
    )Accounts payable-trade
    
    
    10,654
    
    
    
    (647
    )Income taxes payable
    
    
    208
    
    
    
    (52
    )401 (k) plan contribution and
withholding
    
    
    310
    
    
    
    (787
    )Advance payments on servicing
contracts
    
    
    881
    
    
    
    (610
    )Accrued wages and health benefits
    
    
    2,400
    
    
    
    2,092Other accrued liabilities
    
    
    1,122
    
    
    
    628Net cash provided by operations
    
    
    31,626
    
    
    
    40,263Cash flows from investing:Expenditure for property, plant and
equipment, net of construction payables
    
    
    (51,141
    )
    
    
    (87,262
    )Acquisition of businesses, net of cash
acquired
    
    
    
    
    
    
    (7,921
    )Purchase of short-term investments
    
    
    
    
    
    
    (18,967
    )Proceeds from sales of short-term
investments
    
    
    
    
    
    
    18,967Expenditures for other assets
    
    
    
    
    
    
    (396
    )Proceeds from sale of property, plant and
equipment
    
    
    
    
    
    
    24Net cash used in investing
    
    
    (51,141
    )
    
    
    (95,555
    )Cash flows from financing:Principal payments on long-term debt
    
    
    (4,648
    )
    
    
    (32,459
    )Proceeds from long-term borrowings
    
    
    13,216
    
    
    
    32,115Issuance/forfeitures of restricted stock, net
    
    
    289
    
    
    
    (23
    )Net cash provided by/(used in) financing
    
    
    8,857
    
    
    
    (367
    )Net decrease in cash and cash equivalents
    
    
    (10,658
    )
    
    
    (55,659
    )Cash and cash equivalents, beginning of period
    
    
    10,765
    
    
    
    56,752Cash and cash equivalents, end of period
    
    $
    107
    
    
    $
    1,093Supplemental disclosure of cash flow data:Interest paid
    
    $
    132
    
    
    $
    193Income taxes paid
    
    
    11,575
    
    
    
    13,635Equipment acquired through seller financed debt
    
    
    450
    
    
    
    
  4




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




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   Trade Accounts Receivable
  Property, Plant and Equipment
    Revenue Recognition
  6




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##### Table of Contents



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




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




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##### Table of Contents



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Weighted average shares outstanding
   Recently Issued Guidance
   3.
    
    Debt
  9




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   December 31,
    
    
    September 30,2006
    
    
    2007Notes payable due through December 2010,
collateralized by specific buildings and
equipment
    
    $
    198
    
    
    $
    153Mortgage notes payable to a bank with
interest at the banks prime lending rate
minus 1%, payable in monthly installments
of $7,111 plus interest through January
2019, collateralized by real property
    
    
    1,331
    
    
    
    1,249Note payable to sellers with an interest
rate of 7% due through September 2008,
collateralized by equipment
    
    
    450
    
    
    
    2331,979
    
    
    
    1,635Less  Payments due within one year
    
    
    382
    
    
    
    390Total
    
    $
    1,597
    
    
    $
    1,245
  4.
    
    Income taxes
   Period ended September 30, 2006
    
    
    Period ended September 30, 2007Three Months
    
    
    Nine Months
    
    
    Three Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedCurrent:State and local
    
    $
    576
    
    
    $
    1,958
    
    
    $
    571
    
    
    $
    2,115U.S. federal
    
    
    4,107
    
    
    
    10,310
    
    
    
    4,076
    
    
    
    11,468Total current
    
    
    4,683
    
    
    
    12,268
    
    
    
    4,647
    
    
    
    13,583Deferred:State and local
    
    
    199
    
    
    
    356
    
    
    
    453
    
    
    
    1,040U.S. federal
    
    
    920
    
    
    
    1,652
    
    
    
    2,107
    
    
    
    4,834Total deferred
    
    
    1,119
    
    
    
    2,008
    
    
    
    2,560
    
    
    
    5,874Provision for income tax expense
    
    $
    5,802
    
    
    $
    14,276
    
    
    $
    7,207
    
    
    $
    19,457
  10




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SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 December 31,
    
    
    September 30,2006
    
    
    2007(amounts in thousands)Deferred tax assets:Restricted stock
    
    $
    589
    
    
    $
    813Accrued expenses and other
    
    
    207
    
    
    
    291Allowance for doubtful accounts receivable
    
    
    296
    
    
    
    526Total deferred tax assets
    
    
    1,092
    
    
    
    1,630Deferred tax liabilities:Depreciation differences on property, plant and equipment
    
    
    (15,133
    )
    
    
    (21,545
    )Total deferred tax liabilities
    
    
    (15,133
    )
    
    
    (21,545
    )Net deferred taxes
    
    $
    (14,041
    )
    
    $
    (19,915
    )
  Period ended September 30, 2006
    
    
    Period ended September 30, 2007Three months
    
    
    Nine months
    
    
    Three months
    
    
    Nine monthsended
    
    
    ended
    
    
    ended
    
    
    EndedIncome before income taxes
    
    $
    15,164
    
    
    $
    36,425
    
    
    $
    18,837
    
    
    $
    50,255Statutory U.S. income tax rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %Tax expense
using statutory U.S.
    
    
    5,307
    
    
    
    12,749
    
    
    
    6,593
    
    
    
    17,589Income tax rateState income taxes
    
    
    504
    
    
    
    1,504
    
    
    
    666
    
    
    
    2,051Other
    
    
    (9
    )
    
    
    23
    
    
    
    (52
    )
    
    
    (183
    )Income tax expense
    
    $
    5,802
    
    
    $
    14,276
    
    
    $
    7,207
    
    
    $
    19,457Effective income tax rate
    
    
    38
    %
    
    
    39
    %
    
    
    38
    %
    
    
    39
    %
    5.
    
    401(k)Plan
  11




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




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##### Table of Contents



SUPERIOR WELL SERVICES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 8.
    
    Stock Incentive Plan
    Percentage of Total NumberOf Restricted Shares as to WhichNumber of Full Years
    
    Forfeiture Restrictions LapseLess than 1 year
    
    
    0
    %1 year
    
    
    15
    %2 years
    
    
    30
    %3 years
    
    
    45
    %4 years
    
    
    60
    %5 years or more
    
    
    100
    %
  WeightedAverage GrantNumber of
    
    
    Date Fair Valueshares
    
    
    Per ShareNonvested at December 31, 2005
    
    
    
    
    
    $
    Granted
    
    
    290,900
    
    
    
    28.48Vested
    
    
    
    
    
    
    Forfeited
    
    
    (5,000
    )
    
    
    28.56Nonvested at December 31, 2006
    
    
    285,900
    
    
    
    28.47Granted
    
    
    133,200
    
    
    
    23.06Vested
    
    
    (35,879
    )
    
    
    28.47Forfeited
    
    
    (7,006
    )
    
    
    22.42Nonvested at September 30, 2007
    
    
    376,215
    
    
    $
    26.75
 13




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##### Table of Contents



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




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




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##### Table of Contents



Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Technical pumping services
    
    $
    60,436
    
    
    
    89.9
    %
    
    $
    81,368
    
    
    
    86.3
    %
    
    $
    152,463
    
    
    
    90.0
    %
    
    $
    220,222
    
    
    
    86.1
    %Down-hole surveying services
    
    
    6,769
    
    
    
    10.1
    
    
    
    12,949
    
    
    
    13.7
    
    
    
    17,018
    
    
    
    10.0
    
    
    
    35,610
    
    
    
    13.9Total revenue
    
    $
    67,205
    
    
    
    100.0
    %
    
    $
    94,317
    
    
    
    100.0
    %
    
    $
    169,481
    
    
    
    100.0
    %
    
    $
    255,832
    
    
    
    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.
    Selling, General and Administrative Expenses as a Percentage of Revenue.
  17




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##### Table of Contents



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 September 30,
    
    
    Nine Months Ended September 30,Region
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007Appalachian
    
    $
    31,620
    
    
    
    47.0
    %
    
    $
    45,507
    
    
    
    48.3
    %
    
    $
    84,167
    
    
    
    49.7
    %
    
    $
    113,261
    
    
    
    44.3
    %Southeast
    
    
    16,530
    
    
    
    24.6
    
    
    
    19,345
    
    
    
    20.5
    
    
    
    42,745
    
    
    
    25.2
    
    
    
    49,211
    
    
    
    19.2Southwest
    
    
    1,608
    
    
    
    2.4
    
    
    
    9,241
    
    
    
    9.8
    
    
    
    1,608
    
    
    
    0.9
    
    
    
    27,187
    
    
    
    10.6Rocky Mountain
    
    
    5,700
    
    
    
    8.5
    
    
    
    6,737
    
    
    
    7.1
    
    
    
    9,647
    
    
    
    5.7
    
    
    
    24,517
    
    
    
    9.6Mid-Continent
    
    
    11,747
    
    
    
    17.5
    
    
    
    13,487
    
    
    
    14.3
    
    
    
    31,314
    
    
    
    18.5
    
    
    
    41,656
    
    
    
    16.3Total
    
    $
    67,205
    
    
    
    100.0
    %
    
    $
    94,317
    
    
    
    100.0
    %
    
    $
    169,481
    
    
    
    100.0
    %
    
    $
    255,832
    
    
    
    100.0
    %
   Our Results of Operations
   Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Statement of Operations Data:Revenues:Technical pumping services
    
    $
    60,436
    
    
    $
    81,368
    
    
    $
    152,463
    
    
    $
    220,222Down-hole surveying services
    
    
    6,769
    
    
    
    12,949
    
    
    
    17,018
    
    
    
    35,610Total revenues
    
    
    67,205
    
    
    
    94,317
    
    
    
    169,481
    
    
    
    255,832Expenses:Cost of revenue
    
    
    45,152
    
    
    
    66,112
    
    
    
    114,592
    
    
    
    179,578Selling, general and administrative
    
    
    6,813
    
    
    
    9,330
    
    
    
    18,492
    
    
    
    26,622Total expense
    
    
    51,965
    
    
    
    75,442
    
    
    
    133,084
    
    
    
    206,200Operating income
    
    $
    15,240
    
    
    $
    18,875
    
    
    $
    36,397
    
    
    $
    49,632
 20




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##### Table of Contents



Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006
 Revenue.
    Selling, General and Administrative Expenses (SG&A).
  21




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Operating Income.
  Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006
 Revenue.
  Cost of Revenue.
  22




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##### Table of Contents



Selling, General and Administrative Expenses (SG&A).
  Operating Income.
  Liquidity and Capital Resources
  Financial Condition and Cash Flows
 Financial Condition.
  23




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##### Table of Contents



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 to grow our business; and
    
    maintenance or upgrade capital expenditures, which are capital expenditures made to
extend the useful life of partially or fully depreciated assets or to upgrade the
operational capabilities of existing assets.
  24




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##### Table of Contents



Off-Balance Sheet Arrangements
  Description of Our Indebtedness
     Recent Accounting Pronouncements
   25




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Critical Accounting Policies
   Revenue Recognition
   Property, Plant and Equipment
  Impairment of Long-Lived Assets
   26




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##### Table of Contents




    
    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
  Contingent Liabilities
  Medical Expenses
  Share Based Compensation
  27




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Reconciliation of EBITDA to Net Income:Net income (1)
    
    $
    9,362
    
    
    $
    11,630
    
    
    $
    22,149
    
    
    $
    30,798Income tax expense
    
    
    5,802
    
    
    
    7,207
    
    
    
    14,276
    
    
    
    19,457Interest expense
    
    
    77
    
    
    
    71
    
    
    
    164
    
    
    
    177Depreciation and amortization
    
    
    3,733
    
    
    
    6,690
    
    
    
    9,922
    
    
    
    17,628EBITDA
    
    $
    18,974
    
    
    $
    25,598
    
    
    $
    46,511
    
    
    $
    68,060
 
 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
 28




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##### Table of Contents



Changes in Internal Control over Financial Reporting
 29




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 6. Exhibits.
  30




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SIGNATURES
  SUPERIOR WELL SERVICES, INC.
RegistrantDated:  November 6, 2007
    By:
    /s/ Thomas W. StoelkThomas W. StoelkVice President and Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer) 31




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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 September 30, 2007 Quarterly
Report on Form 10-Q.31.2*
    
    Sarbanes-Oxley Section 302 certification of Thomas W. Stoelk for
Superior Well Services, Inc. for the September 30, 2007 Quarterly
Report on Form 10-Q.32.1*
    
    Sarbanes-Oxley Section 906 certification of David E. Wallace for
Superior Well Services, Inc. for the September 30, 2007 Quarterly
Report on Form 10-Q.32.2*
    
    Sarbanes-Oxley Section 906 certification of Thomas W. Stoelk for
Superior Well Services, Inc. for the September 30, 2007 Quarterly
Report on Form 10-Q.
 32