NEXTIER OILFIELD SOLUTIONS INC. - Quarter Report: 2023 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number 001-37988

NexTier Oilfield Solutions Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware			38-4016639
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

3990 Rogerdale Rd.	Houston	Texas	77042
(Address of Principal Executive Offices)			(Zip Code)

(713) 325-6000

(Registrant's Telephone Number, Including Area Code)


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
Common Stock, $0.01, par value	NEX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller Reporting Company	☐

		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 24, 2023, the registrant had 228,552,549 shares of common stock outstanding.

Auditor Name: KPMG LLP Auditor Location: Houston, Texas Auditor Firm ID: 185

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION	5

Item 1.	Financial Statements	5

	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Operations and Comprehensive Income	7
	Condensed Consolidated Statements of Changes in Stockholders' Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to the Unaudited Condensed Consolidated Financial Statements	11

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION	37

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3.	Defaults Upon Senior Securities	39

Item 4.	Mine Safety Disclosures	39

Item 5.	Other Information	39

Item 6.	Exhibits	40

	Signatures	41

REFERENCES WITHIN THIS QUARTERLY REPORT

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to (i) the terms "Company," "NexTier," "we," "us" and "our" refer to NexTier Oilfield Solutions Inc. and its consolidated subsidiaries; (ii) the term "Keane Group" refers to Keane Group Holdings, LLC and its consolidated subsidiaries; (iii) the term "Keane Investor" refers to Keane Investor Holdings LLC; (iv) the term "Cerberus" refers to Cerberus Capital Management, L.P. and its controlled affiliates and investment funds; and (v) the term "Alamo" refers to Alamo Pressure Pumping, LLC and its consolidated subsidiaries. While the equipment and amount of hydraulic horsepower required for a customer project varies, we calculate our total number of fleets, as used in this Quarterly Report on Form 10-Q, by dividing our total hydraulic horsepower by approximately 63,000 hydraulic horsepower.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future operating results and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. Statements of assumptions underlying or relating to our forward-looking statements are also forward-looking statements. Our forward-looking statements are generally accompanied by words such as "may," "should," "expect," "will," "believe," "plan," "anticipate," "could," "intend," "target," "goal," "project," "contemplate," "estimate," "predict," "potential," "outlook," "reflect," "forecast," "future," or "continue," or the negative of these terms or other similar expressions. Any forward-looking statements contained in this Quarterly Report on Form 10-Q speak only as of the date on which we make them and are based upon our historical performance and on current plans, assumptions, estimates and expectations. Except as required by law, we have no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about and risks regarding the following:

•Our business strategy, plans, objectives, expectations and intentions;

•Our future operating results;

•Dependence on capital spending and well completion by the onshore oil and natural gas industry and demand for services in our industry;

•Crude oil and natural gas commodity prices and the volatility of these prices;

•Changing regional, national or global economic conditions, including oil and gas supply and demand and the impact of geopolitical conditions on those prices;

•The impact of adverse weather conditions;

•The competitive nature of the industry in which we conduct our business, including pricing pressures;

•The impact of pipeline and storage capacity constraints;

•The effects of government regulation, including regulations of hydraulic fracturing, regulations aimed at combating climate change, and the operating hazards of our business;

•The effect of a loss of, or the financial distress of, one or more customers and our ability to obtain or renew customer contracts;

•The effect of a loss of, or interruption in operations of, one or more key suppliers or materials, and the market price and availability of materials or equipment;

•Our ability to maintain the right level of commitments under our supply agreements;

•The impact of new technology on our business;

•Legal proceedings, liability claims and effect of external investigations;

•Our ability to obtain or renew permits, approvals and authorizations from governmental and third parties and to comply with applicable health, safety, and environmental regulations;

•Acquisitions, divestitures and future capital expenditures and the impact of those transactions and the related integration on our business;

•Environmental, social, and governance (“ESG”) matters, including investor and public perception of our industry;

•Our ability to employ a sufficient number of skilled and qualified workers, including our executive officers;

•Our ability to service our debt obligations and access capital;

•The market volatility of our stock;

•The impact of ownership by Cerberus (through Keane Investor);

•The impact of our stock buyback program;

•The impact of our corporate governance structure;

•Our ability to maintain effective information technology systems and the impact of cybersecurity incidents on our business;

•The impact of inflation on our business; and

•Risks related to our merger with Patterson-UTI Energy, Inc. ("Patterson-UTI").

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations, assumptions and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section entitled Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2022 and in our subsequent filings with the Securities and Exchange Commission (the "SEC"). Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, circumstances, plans, intentions or expectations reflected in any forward-looking statements will be achieved or occur. Actual results, events or circumstances could differ materially from those described in such forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make, except as specifically set forth herein. We undertake no obligation to revise or update any forward-looking statements for any reasons, except as required by law.

This Quarterly Report on Form 10-Q includes market and industry data and certain other statistical information based on third-party sources including independent industry publications, government publications and other published independent sources. Although we believe these third-party sources are reliable as of their respective dates, we have not independently verified the accuracy or completeness of this information. Some data is also based on our own good faith estimates, which are supported by our management's knowledge of and experience in the markets and businesses in which we operate.

Market, industry or similar data presented herein, involves risks and uncertainties and is subject to change based on various factors, including those discussed above and in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022 and in our subsequent filings with the SEC.

PART I

Item 1. Financial Statements

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands, except par value)


	June 30, 2023		December 31, 2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	310,166	$	218,476
Trade and other accounts receivable, net	443,741		397,197
Inventories, net	73,415		66,395

Prepaid and other current assets	49,571		43,947
Total current assets	876,893		726,015
Operating lease right-of-use assets	29,178		18,659
Finance lease right-of-use assets	93,565		43,714
Property and equipment (net of accumulated depreciation of $1,034,693 and $1,002,684)	796,197		679,513
Goodwill	192,780		192,780
Intangible assets (net of accumulated amortization of $90,873 and $82,043)	48,373		50,586
Deferred income taxes	112,926		—
Other noncurrent assets	13,654		15,901
Total assets	$	2,163,566	$	1,727,168

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable	$	347,589	$	202,936
Accrued expenses	191,053		281,715
Customer contract liabilities	19,377		19,377
Current maturities of long-term operating lease liabilities	9,930		6,083
Current maturities of long-term finance lease liabilities	52,605		19,855
Current maturities of long-term debt	14,176		14,004
Other current liabilities	5,446		9,368
Total current liabilities	640,176		553,338
Long-term operating lease liabilities, less current maturities	17,856		13,267
Long-term finance lease liabilities, less current maturities	21,479		11,925
Long-term debt, net of unamortized deferred financing costs and unamortized debt discount, less current maturities	340,327		347,425
Other noncurrent liabilities	14,477		11,294
Total noncurrent liabilities	394,139		383,911
Total liabilities	1,034,315		937,249


Stockholders' equity

Common stock, par value $0.01 per share (authorized 500,000 shares, issued and outstanding 228,549 and 233,995 shares, respectively)	2,285		2,340
Paid-in capital in excess of par value	942,563		1,007,492
Retained earnings (deficit)	177,862		(226,195)
Accumulated other comprehensive income	6,541		6,282
Total stockholders' equity	1,129,251		789,919
Total liabilities and stockholders' equity	$	2,163,566	$	1,727,168

See accompanying notes to unaudited condensed consolidated financial statements.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Income

(Amounts in thousands, except for per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue	$	945,091	$	842,912	$	1,880,763	$	1,477,955
Operating costs and expenses:
Cost of services(1)	676,299		649,866		1,350,243		1,174,522
Depreciation and amortization	63,502		58,794		122,147		113,957
Selling, general and administrative expenses	39,699		35,855		79,380		71,714
Merger and integration	5,275		23,682		5,436		32,914
Loss (gain) on disposal of assets	5,772		(866)		9,542		(1,689)
Total operating costs and expenses	790,547		767,331		1,566,748		1,391,418
Operating income	154,544		75,581		314,015		86,537
Other income (expense):
Other income, net	2,927		1,461		2,647		6,831
Interest expense, net	(7,307)		(7,344)		(13,505)		(14,718)
Total other income (expense)	(4,380)		(5,883)		(10,858)		(7,887)
Income before income taxes	150,164		69,698		303,157		78,650
Income tax benefit (expense)	(100)		(1,240)		100,900		(1,400)
Net income	150,064		68,458		404,057		77,250
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(318)		538		(322)		253
Hedging activities	2,624		1,565		2,066		7,177
Total comprehensive income	$	152,370	$	70,561	$	405,801	$	84,680

Net income per share:
Basic net income per share	$	0.66	$	0.28	$	1.75	$	0.32
Diluted net income per share	$	0.64	$	0.27	$	1.72	$	0.31

Weighted-average shares outstanding: basic	229,033		243,969		231,084		243,621
Weighted-average shares outstanding: diluted	233,222		250,775		235,202		249,462

(1) Cost of services during the three and six months ended June 30, 2023 excludes depreciation of $60.3 million and $115.9 million, respectively. Cost of services during the three and six months ended June 30, 2022 excludes depreciation of $54.3 million and $105.2 million, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Amounts in thousands)

(Unaudited)


	Common stock		Paid-in capital in excess of par value		Retained earnings (deficit)		Accumulated other comprehensive income		Total
Balance as of December 31, 2022	$	2,340	$	1,007,492	$	(226,195)	$	6,282	$	789,919

Stock-based compensation	35		8,818		—		—		8,853
Shares repurchased and retired related to stock-based compensation	(11)		(9,971)		—		—		(9,982)
Shares repurchased and retired related to stock repurchase program	(59)		(53,388)		—		—		(53,447)
Other comprehensive loss	—		—		—		(1,220)		(1,220)
Net income	—		—		253,993		—		253,993
Balance as of March 31, 2023	2,305		952,951		27,798		5,062		988,116
Stock-based compensation	7		8,219		—		—		8,226
Shares repurchased and retired related to stock-based compensation	(4)		(276)		—		—		(280)
Shares repurchased and retired related to stock repurchase program	(23)		(17,834)		—		—		(17,857)
Excise tax on share repurchases	—		(497)		—		—		(497)
Other comprehensive income	—		—		—		1,479		1,479
Net income	—		—		150,064		—		150,064
Balance as of June 30, 2023	$	2,285	$	942,563	$	177,862	$	6,541	$	1,129,251


	Common stock		Paid-in capital in excess of par value		Retained deficit		Accumulated other comprehensive income (loss)		Total
Balance as of December 31, 2021	$	2,420	$	1,094,020	$	(541,164)	$	(8,259)	$	547,017

Stock-based compensation	19		7,796		—		—		7,815
Shares repurchased and retired related to stock-based compensation	—		(3,953)		—		—		(3,953)
Other comprehensive income	—		—		—		6,014		6,014
Net income	—		—		8,792		—		8,792
Balance as of March 31, 2022	2,439		1,097,863		(532,372)		(2,245)		565,685
Stock-based compensation	7		7,540		—		—		7,547
Shares repurchased and retired related to stock-based compensation	(4)		(397)		—		—		(401)
Other comprehensive income	—		—		—		2,794		2,794
Net income	—		—		68,458		—		68,458
Balance as of June 30, 2022	$	2,442	$	1,105,006	$	(463,914)	$	549	$	644,083

See accompanying notes to unaudited condensed consolidated financial statements.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net income	$	404,057	$	77,250
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization	122,147		113,957
Amortization of deferred financing fees	1,110		1,076

Loss (gain) on disposal of assets	9,542		(1,689)






Payments for contingent consideration	(37,324)		(2,500)
Gain on financial instrument and derivatives, net	(1,485)		(6,302)
Stock-based compensation	19,831		16,995
Gain on insurance proceeds recognized in other income	(1,133)		—


Deferred income tax benefit	(112,926)		—
Changes in operating assets and liabilities:
Increase in trade and other accounts receivable, net	(46,520)		(154,898)


Increase in inventories	(13,745)		(19,780)
Decrease in prepaid and other current assets	1,659		18,559
Decrease in other assets	5,813		7,113
Increase in accounts payable	105,123		51,940
(Decrease) increase in accrued expenses	(50,532)		69,998
Decrease in customer contract liabilities	—		(2,192)
Decrease in other liabilities	(6,410)		(23,027)
Net cash provided by operating activities	399,207		146,500
Cash flows from investing activities:


Purchase of property and equipment	(181,427)		(81,290)
Advances of deposit on equipment	(13,965)		(3,416)
Implementation of software	(5,349)		(1,991)
Proceeds from disposal of assets	5,280		9,223
Assets and business acquisition	—		482





Proceeds from insurance recoveries	104		20

Net cash used in investing activities	(195,357)		(76,972)
Cash flows from financing activities:



Payments on the term loan facility and asset based revolver	(7,638)		(7,259)
Payments on finance leases	(14,535)		(6,621)
Payment of debt issuance costs	—		(110)


Shares repurchased and retired related to share repurchase program	(72,849)		—

Payments for financing liabilities	(3,473)		(3,996)
Payments for contingent consideration	(3,081)		—
Shares repurchased and retired related to stock-based compensation	(10,262)		(4,354)


Net cash used in financing activities	(111,838)		(22,340)
Non-cash effect of foreign translation adjustments	(322)		253
Net increase in cash, cash equivalents and restricted cash	91,690		47,441
Cash and cash equivalents, beginning	218,476		110,695
Cash and cash equivalents, ending	$	310,166	$	158,136

Supplemental disclosure of cash flow information:

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)


Cash paid during the period for:
Interest expense, net	$	12,270	$	13,366
Income taxes	$	14,114	$	710
Non-cash investing and financing activities:
Change in accrued capital expenditures	$	(39,937)	$	(17,318)

Non-cash additions to finance right-of-use assets	56,923		6,222
Non-cash additions to finance lease liabilities, including current maturities	(57,117)		(6,020)
Non-cash additions to operating right-of-use assets	16,032		2,886
Non-cash additions to operating lease liabilities, including current maturities	$	(14,401)	$	(2,848)

See accompanying notes to unaudited condensed consolidated financial statements.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

(1) Basis of Presentation and Nature of Operations

The accompanying unaudited condensed consolidated financial statements were prepared using United States Generally Accepted Accounting Principles ("GAAP") and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by GAAP for annual financial statements and should be read together with the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023.

Management believes the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company's financial position as of June 30, 2023 and the results of its operations and cash flows for the three and six months ended June 30, 2023 and 2022. Such adjustments are of a normal recurring nature. All intercompany transactions and balances have been eliminated.

(2) Summary of Significant Accounting Policies

Please refer to Note (2) Summary of Significant Accounting Policies of the Company’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2022 for the discussion on the Company's significant accounting policies.

(3) Acquisitions

(a) Alamo Acquisition

On August 31, 2021 (the “Alamo Acquisition Date”), the Company completed its acquisition of Alamo in accordance with the terms of the Purchase Agreement, dated as of August 4, 2021 (the “Purchase Agreement”), by and among the Company, NexTier Completion Solutions Inc., Alamo Frac Holdings, LLC, Alamo and the “owner group” identified therein (the "Alamo Acquisition"). The Company acquired 100% of Alamo.

The Alamo Acquisition was completed for cash consideration of $100.0 million, equity consideration of 26 million shares of the Company’s common stock valued at $82.3 million, post-closing services valued at $30.0 million, an estimated $15.9 million of contingent consideration, $7.4 million of non-contingent consideration, and a net working capital settlement of $0.5 million that was finalized in the fourth quarter of 2021 and was paid to the Company in the first quarter of 2022. The contingent consideration includes a Tier II upgrade payment and earnout payments, which were contingent upon the achievement of certain performance targets, as described in the Purchase Agreement. The earnout period ended in the fourth quarter of 2022, the performance targets were achieved, and the Company agreed with Alamo Frac Holdings, LLC and the group to cumulative earnout payments of $73.8 million, which were fully paid as of June 30, 2023.

Merger and integration related costs were recognized separately from the acquisition of assets and assumptions of liabilities in the Alamo Acquisition. Merger costs consist of legal and professional fees and pre-merger notification fees. Integration costs consist of expenses incurred to integrate Alamo’s operations, aligning accounting processes and procedures, integrating its enterprise resource planning system with those of the Company, and any earnout payments. All of these costs are recorded within merger and integration costs on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income.

For additional information regarding the Alamo Acquisition, refer to Note (3) Acquisitions of the Company’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2022.

(b) Asset Acquisition from Continental Intermodal Group LP

On August 3, 2022 the Company entered into and closed a definitive agreement to purchase substantially all assets (and assume certain lease liabilities) of the sand hauling, wellsite storage and last mile logistics businesses of Continental Intermodal Group LP (“CIG”) and its subsidiaries (the “CIG Acquisition”) from CIG, Continental Intermodal Group – Trucking, LLC (“Trucking”) and CIG Logistics LLC (together with Trucking and CIG, “CIG Sellers”).

The CIG Acquisition was completed for a purchase price of $31.3 million. At the time of close, the Company paid a total of $32.1 million, which included: (i) approximately $27.9 million in cash paid at closing to the CIG Sellers plus (ii) 500,000 shares of common stock. The $32.1 million transferred to CIG at the time of close included a deposit of $0.8 million for a transition services agreement for costs of services to be provided during the transition period. Accordingly, the purchase price of $31.3 million does not include the deposit of $0.8 million. The Company accounted for this acquisition as an asset acquisition pursuant to ASC 805. The purchase price of the acquisition was allocated amongst the acquired assets as the fair value of the acquired machinery and equipment

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

assets represented substantially all of the fair value of the gross assets acquired. Additionally, the Company established a right of use asset and an operating lease liability of $0.9 million for the assumed lease liability.

On June 14, 2023, NexTier Oilfield Solutions Inc. entered into an Agreement and Plan of Merger (the "Merger Agreement") with Patterson-UTI Energy, Inc. ("Patterson-UTI"), Pecos Merger Sub Inc. ("Merger Sub Inc.") a wholly owned subsidiary of Patterson-UTI, and Pecos Second Merger Sub LLC ("Merger Sub LLC") a wholly owned subsidiary of Patterson-UTI providing that, among other things and subject to the terms and conditions of the Merger Agreement, at the Effective Time (as defined in the Merger Agreement):

•Merger Sub Inc. will merge with and into NexTier, with NexTier continuing as the surviving entity (the “Surviving Corporation”) (the “First Company Merger”) and immediately following the First Company Merger, the Surviving Corporation will merge with and into Merger Sub LLC, with Merger Sub LLC continuing as the surviving entity (the “Second Company Merger” and, together with the First Company Merger, the “Mergers”);

•Each share of common stock, par value $0.01 per share, of NexTier (“NexTier Common Stock”) then issued and outstanding immediately prior to the Effective Time (including each NexTier restricted stock award) will be converted into the right to receive 0.7520 shares of common stock, par value $0.01 per share, of Patterson-UTI (“Patterson-UTI Common Stock”);

•Each share NexTier Common Stock held in treasury by NexTier or owned directly or indirectly by Patterson-UTI, Merger Sub Inc. or Merger Sub LLC will be automatically cancelled and will cease to exist, and no consideration will be issued therefor; and

•Upon consummation of the Mergers and the other transactions contemplated by the Merger Agreement (the “Transactions”), NexTier will be a wholly owned subsidiary of Patterson-UTI.

The consummation of the Merger Agreement is subject to the satisfaction or waiver of certain conditions, including, among others:

•The adoption of the Merger Agreement by holders of at least a majority of the outstanding shares of NexTier Common Stock;

•the approval of the Share Issuance by the holders of shares of Patterson-UTI Common Stock representing a majority of votes cast on the Share Issuance; and

•The expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act").

NexTier has agreed to operate its business in the ordinary course during the period between the execution of the Merger Agreement and the Effective Time, subject to specific exceptions set forth in the Merger Agreement, and have agreed to certain other customary restrictions on operations, as set forth in the Merger Agreement.

(4) Inventories, net

Inventories, net, consisted of the following as of June 30, 2023 and December 31, 2022:


	(Thousands of Dollars)
	June 30, 2023		December 31, 2022
Sand, including freight	$	12,773	$	15,901
Chemicals and consumables	6,481		6,854
Materials and supplies	54,161		43,640

Total inventory, net	$	73,415	$	66,395

Inventories are reported net of obsolescence reserves of $3.5 million and $3.4 million as of June 30, 2023 and December 31, 2022, respectively. The Company released $0.2 million of its obsolescence reserve and recognized $0.1 million of obsolescence expense, during the three and six months ended June 30, 2023, respectively.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

(5) Long-Term Debt

Long-term debt at June 30, 2023 and December 31, 2022 consisted of the following:


	(Thousands of Dollars)
	June 30, 2023		December 31, 2022
2018 Term Loan Facility	$	332,500	$	334,250
2021 Equipment Loan	24,589		30,342
Other long-term debt	138		273
Less: Unamortized debt discount and debt issuance costs	(2,724)		(3,436)
Total debt, net of unamortized debt discount and debt issuance costs	354,503		361,429
Less: Current portion	(14,176)		(14,004)
Long-term debt, net of unamortized debt discount and debt issuance costs	$	340,327	$	347,425

Below is a summary of the Company’s credit facilities outstanding as of June 30, 2023:


	(Thousands of Dollars)
	2021 Equipment Loan			2019 ABL Facility		2018 Term Loan Facility
Original facility size	$	46,500		$	450,000	$	350,000
Outstanding balance	$	24,589		$	—	$	332,500
Letters of credit issued	$	—		$	19,650	$	—
Available borrowing base commitment	n/a			$	411,300	n/a
Interest Rate(1)	5.25		%	SOFR or base rate plus applicable margin		SOFR or base rate plus applicable margin
Maturity Date	June 1, 2025			October 31, 2024		May 25, 2025

(1) Secured Overnight Financing Rate (“SOFR”) is subject to a 1.00% floor.

In accordance with Reference Rate Reform (Topic 848) as described further in Note (16) New Accounting Pronouncements herein, on June 8, 2023 the Company amended both the 2019 ABL Facility and 2018 Term Loan Facility agreements to replace the use of the London Interbank Offered Rate ("LIBOR") with the Secured Overnight Financing Rate ("SOFR") in the calculation of each facility's respective interest rate plus an applicable margin.

Maturities of the 2018 Term Loan Facility, 2021 Equipment Loan (each as defined herein), and Other long-term debt for the next five years are presented below:


(Thousands of Dollars)
Year-end December 31,
2023	$	7,791
2024	15,790
2025	333,646
2026	—
2027	—
	$	357,227

For additional information regarding the terms of the Company's credit facilities, see Note (8) Long-Term Debt to the Company’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2022.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

(6) Significant Risks and Uncertainties

The Company operates in two reportable segments: Completion Services and WC&I, with significant concentration in the Completion Services segment. During the three months ended June 30, 2023 and 2022, sales to Completion Services customers represented 96% and 95% of the Company's consolidated revenue, respectively. During the six months ended June 30, 2023 and 2022, sales to Completion Services customers represented 96% and 95% of the Company's consolidated revenue, respectively.

The Company depends on its customers' willingness to make operating and capital expenditures to explore for, develop and produce oil and natural gas onshore in the U.S. This activity is driven by many factors, including current and expected crude oil and natural gas prices.

From the end of the fourth quarter of 2019 through mid-August 2020, the U.S. active rig count decreased by 70%, from 805 to 244 rigs before recovering to 351 rigs by the end of 2020. In 2021, the U.S. active rig count recovery continued, increasing 67% from 351 rigs at the end of 2020 to 586 rigs by the end of 2021. The activity growth since the end of 2021 continued to improve through the first quarter of 2023, closing at 755 active rigs. However, active rig count has since decreased slightly through the second quarter of 2023, closing at 674 active rigs as of June 30, 2023, though still up 15% from the end of 2021.

Significant customers are those that individually account for 10% or more of the Company's consolidated revenue or total accounts receivable. For the three months ended June 30, 2023, the Company had one customer in the completions services segment that individually represented 12%, or $111.2 million, of the Company's consolidated revenue. For the three months ended June 30, 2022, there were no customers considered significant. For the six months ended June 30, 2023 and 2022, the Company had one significant customer in the Completions Services segment that individually represented 10% or $183.6 million and 10% or $142.1 million of the Company's consolidated revenue, respectively.

For the three and six months ended June 30, 2023 and 2022, there were no suppliers that individually represented more than 5% of the Company's overall purchases.

(7) Derivatives

The Company uses an interest-rate-related derivative instrument to manage its variability of cash flows associated with changes in interest rates on its variable-rate debt.

On June 8, 2023, the Company entered into Amendment No. 1 (the “TL Amendment”) to the Term Loan Agreement (the "TL Agreement"), dated May 25, 2018, by and among the Company, as parent guarantor, Keane Group Holdings LLC, as lead borrower, certain other subsidiaries of the Company as additional borrowers and guarantor parties thereto, the lender parties thereto and Barclays Bank PLC, as administrative agent and collateral agent. The TL Agreement governs the 2018 Term Loan Facility as otherwise described herein. The TL Amendment to the TL Agreement provides, among other things, for replacement of LIBOR with the term SOFR (as defined in the TL Amendment), plus a credit spread adjustment of 11.48 basis points as the reference rate for purposes of calculating interest under the TL Agreement and updates certain other provisions of the TL Agreement to reflect the transition from LIBOR to term SOFR. The TL Agreement had an initial aggregate principal amount of $350.0 million and, as made effective by the TL Amendment, has a variable interest rate based on SOFR, subject to a 1.0% floor. In June 2023, the Company terminated its existing interest rate swap executed June 22, 2018, and executed a new interest rate swap effective through March 31, 2025, to hedge its expected variable cash flows indexed to SOFR. The new interest rate swap is indexed to 1-month SOFR subject to a 1% floor to match the amended TL Agreement. The termination of the pre-existing interest swap and execution of a new interest rate swap qualifies as a contract modification within the scope of ASC 848, Reference Rate Reform, as the updated terms exclusively pertain to the reference rate. The Company is applying the following optional expedients as provided by ASC 848: (i) option to not de-designate a hedging relationship due to a change in a critical term, and (ii) option to apply certain expedients for the application of subsequent assessment methods for cash flow hedges.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

The following tables present the fair value of the Company's derivative instrument on a gross and net basis as of the periods shown below:


	(Thousands of Dollars)
	Derivative designated as hedging instruments		Derivative not designated as hedging instruments		Gross Amounts of Recognized Assets and Liabilities		Gross Amounts Offset in the Balance Sheet(1)		Net Amounts Presented in the Balance Sheet(2)
As of June 30, 2023:
Other current asset	$	4,665	$	—	$	4,665	$	—	$	4,665
Other noncurrent asset	2,247		—		2,247		—		2,247

As of December 31, 2022:



Other current asset	3,870		—		3,870		—		3,870
Other noncurrent asset	$	2,816	$	—	$	2,816	$	—	$	2,816

(1) Agreements are in place that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements.

(2) There are no amounts subject to an enforceable master netting arrangement that are not netted in these amounts. There are no amounts of related financial collateral received or pledged.

The following table presents gains and losses for the Company's interest rate derivative designated as cash flow hedges (in thousands of dollars):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022		Location
Amount of gain (loss) recognized in total other comprehensive income on derivative	$	2,624	$	1,565	$	2,066	$	7,177	OCI
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into earnings	$	827	$	(691)	$	1,485	$	(1,378)	Interest Expense

The gain (loss) recognized in other comprehensive income for the derivative instrument is presented within hedging activities in the Condensed Consolidated Statements of Operations and Comprehensive Income.

There were no gains or losses recognized in earnings as a result of excluding amounts from the assessment of hedge effectiveness. Based on recorded values as of June 30, 2023, $4.0 million of net gains will be reclassified from accumulated other comprehensive income into earnings within the next 12 months.

See Note (8) Fair Value Measurements and Financial Information for discussion on fair value measurements related to the Company's derivative instrument.

(8) Fair Value Measurements and Financial Information

The Company discloses the required fair values of financial instruments in its assets and liabilities under the hierarchy guidelines, in accordance with GAAP. As of June 30, 2023, the Company's financial instruments consisted of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, derivative instruments, and long-term debt. As of June 30, 2023 and December 31, 2022, the carrying values of the Company's financial instruments, included in its Condensed Consolidated Balance Sheets, approximated or equaled their fair values.

Recurring Fair Value Measurement

As of June 30, 2023 and December 31, 2022, the Company had one financial instrument measured at fair value on a recurring basis, which is its interest rate derivative (see Note (7) Derivatives above). During the year ended December 31, 2022, the Company also measured the fair value of the earnout payments originating from the Alamo Acquisition on a recurring basis. The earnout period ended in the fourth quarter of 2022, the performance targets were achieved, and the Company has agreed with Alamo Frac Holdings, LLC and the owner group to cumulative earnout payments of $73.8 million, which were fully paid as of June 30, 2023.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

Additionally, during the year ended December 31, 2022, the Company held an equity security investment composed primarily of common equity shares and warrants in a publicly traded company, in addition to an immaterial balance related to contingent value rights ("CVRs"). As of December 31, 2022, the Company sold all of its common equity shares and warrants and its investment in the CVRs has matured and no longer holds any value.

The financial instruments are presented in the Condensed Consolidated Balance Sheets as follows: the interest rate derivative is presented within other current assets and other noncurrent assets, the earnout payments are presented within accrued expenses, and the equity security investment was presented within other current assets.

The fair market value of the derivative financial instrument reflected on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 was determined using industry-standard models that consider various assumptions, including current market and contractual rates for the underlying instrument, time value, implied volatilities, nonperformance risk, as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace through the full term of the instrument and can be supported by observable data.

The fair value of the earnout payments was measured at the end of each reporting period through the end of the earnout period, which occurred in the fourth quarter of 2022. Gains and losses recognized in relation to the change in fair value of the earnout payments were recognized within merger and integration in the Condensed Consolidated Statements of Operations and Comprehensive Income. See Note (3) Acquisitions for further discussion.

The fair value of the equity security investment was measured at the end of each reporting period. Gains and losses recognized in relation to the change in fair value of the equity security investment were recognized within other income (expense), net in the Condensed Consolidated Statements of Operations and Comprehensive Income.

The following tables present the placement in the fair value hierarchy of assets and liabilities that were measured at fair value on a recurring basis at June 30, 2023 and December 31, 2022 (in thousands of dollars):


			Fair value measurements at reporting date using
	June 30, 2023		Level 1		Level 2		Level 3
Assets:

Interest rate derivative	$	6,912	$	—	$	6,912	$	—


			Fair value measurements at reporting date using
	December 31, 2022		Level 1		Level 2		Level 3
Assets:
Interest rate derivative	$	6,686	$	—	$	6,686	$	—

Credit Risk

The Company's financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents, the derivative contract and trade receivables.

The Company's cash balances on deposit with financial institutions totaled $310.2 million and $218.5 million as of June 30, 2023 and December 31, 2022, respectively, which exceeded Federal Deposit Insurance Corporation insured limits. The Company regularly monitors these institutions' financial condition.

The credit risk from the derivative contract derives from the potential failure of the counterparty to perform under the terms of the derivative contract. The Company minimizes counterparty credit risk in the derivative instrument by entering into the transaction with a high-quality counterparty, whose Standard & Poor's credit rating is higher than BBB. The derivative instrument entered into by the Company does not contain credit-risk-related contingent features.

The majority of the Company's trade receivables have payment terms of 30 to 60 days. Significant customers are those that individually account for 10% or more of the Company's consolidated revenue or total accounts receivable. As of June 30, 2023, there were two customers considered significant each representing 12% or $42.0 million and $40.2 million, respectively, of the Company's total trade receivables. As of December 31, 2022, trade receivables from two customers individually represented 11% and 10% or $30.9 million and $29.8 million, respectively, of the Company’s total accounts receivable.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

The Company mitigates the associated credit risk by performing credit evaluations and monitoring the payment patterns of its customers. The Company has a process in place to collect substantially all receivables within 30 to 60 days of aging. As of June 30, 2023 and December 31, 2022, the Company had $1.2 million and $1.4 million in allowance for credit losses, respectively.

During the three and six months ended June 30, 2023, the Company did not recognize any bad debt expense.

(9) Stock-Based Compensation

As of June 30, 2023, the Company has five types of stock-based compensation outstanding under its Equity Award Plans: (i) restricted stock awards issued to independent directors, (ii) restricted stock units issued to executive officers and key management employees, (iii) non-qualified stock options issued to executive officers, (iv) performance-based restricted stock awards issued to executive officers and key management employees, (v) and cash-settled performance unit awards issued to executive officers and key management employees.

The following table summarizes stock-based compensation costs for the three and six months ended June 30, 2023 and 2022 (in thousands of dollars):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Liability-classified awards
Cash-settled awards	$	1,610	$	972	$	2,752	$	1,633
Equity-classified awards
Restricted stock awards	336		317		639		628
Restricted stock time-based unit awards	5,524		5,029		11,737		10,420

Restricted stock performance-based unit awards	2,366		2,201		4,703		4,314
Stock-based compensation cost	9,836		8,519		19,831		16,995
Tax Benefit(1)	(257)		(1,220)		(1,749)		(2,559)
Stock-based compensation cost, net of tax	$	9,579	$	7,299	$	18,082	$	14,436

(1) Any tax benefit for stock-based compensation during the six months ended June 30, 2023 will be offset by the change in valuation allowance. The Company was in a valuation allowance position during the six months ended June 30, 2023.

For additional information regarding stock-based compensation, refer to Note (12) Stock-Based Compensation of the Company’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2022.

10) Stockholders’ Equity

(a) Vesting of Stock Awards

During the three and six months ended June 30, 2023, 377,418 and 2,779,891 shares were issued, net of share settlements for payment of payroll taxes, upon the vesting of stock-based compensation awards. Shares withheld during the period were immediately retired by the Company.

(b) Share Repurchase Program

On October 25, 2022, the Company announced the board of directors approved a new share repurchase program for up to $250.0 million through December 31, 2023. The share repurchase program may be executed from time to time in open market transactions, through block trades, in privately negotiated transactions, through derivative transactions, through 10b5-1 plans, or by other means. The amount, timing and terms of any share repurchases will be determined based on prevailing market conditions and other factors, including applicable black-out periods. The share repurchase program does not obligate NexTier to purchase any shares of common stock during any period and the program may be modified or suspended at any time at NexTier’s discretion.

During the three and six months ended June 30, 2023, the Company repurchased 2,323,896 and 8,225,834 shares of its common stock for $17.9 million and $71.3 million at an average price of $7.68 and $8.67, respectively. As of June 30, 2023, the Company has settled a total of 19,697,425 share repurchases since the announcement of the program for $184.2 million at an average

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

price of $9.35. Given the pending merger agreement with Patterson-UTI, the Company has suspended the share repurchase plan. The combined company remains committed to return 50% of its free cash flow to shareholders on an annual basis.

The Company accounts for the purchase price of repurchased common shares in excess of par value as a reduction of additional paid-in capital, and will continue to do so until additional paid-in capital is reduced to zero. Thereafter, any excess purchase price will be recorded as a reduction to retained earnings.

As enacted by the Inflation Reduction Act of 2022 ("IRA"), the Company accrued stock repurchase excise tax of $0.5 million for the three and six months ended June 30, 2023.

(11) Earnings per Share

Basic income per share is based on the weighted average number of common shares outstanding during the period. Diluted income per share includes additional common shares that would have been outstanding if potential common shares with a dilutive effect, such as stock awards from the Equity Awards Plan, had been issued. Anti-dilutive securities represent potentially dilutive securities which are excluded from the computation of diluted income per share as their impact would be anti-dilutive.

A reconciliation of the numerators and denominators used for the basic and diluted net income per share computations is as follows (in thousands of dollars):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net income	$	150,064	$	68,458	$	404,057	$	77,250

Denominator:
Basic weighted-average common shares outstanding	229,033		243,969		231,084		243,621
Dilutive effect of restricted stock awards granted to Board of Directors	83		195		76		180
Dilutive effect of time-based restricted stock awards granted under the Equity Plan	2,565		5,223		2,546		4,628
Dilutive effect of performance-based restricted stock awards granted under the Equity Plan	1,541		1,388		1,496		1,033

Diluted weighted-average common shares outstanding	233,222		250,775		235,202		249,462

(12) Income Taxes

During the three and six months ended June 30, 2023, the Company recognized an income tax benefit of approximately $5.5 million and $112.9 million, respectively, due to partial releases of the valuation allowance on our deferred tax assets. These releases were primarily due to entering into a three-year cumulative pre-tax book income position and reflects our increased expectation to utilize these deferred tax assets going forward based on improved operating results and market conditions. Income tax expense for the three and six months ended June 30, 2023 prior to the release of the valuation allowance of $5.5 million and $112.9 million, respectively, was $5.6 million and $12.0 million, respectively, which resulted in net income tax expense of $0.1 million and net income tax benefit of $100.9 million, respectively.

For additional information regarding income taxes, refer to Note (17) Income Taxes of the Company’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2022.

(13) Commitments and Contingencies

As of June 30, 2023 and December 31, 2022, the Company had $16.2 million and $4.9 million of deposits on equipment, respectively. Outstanding purchase commitments on equipment were $142.6 million and $225.5 million, as of June 30, 2023 and December 31, 2022, respectively.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

As of June 30, 2023, the Company had a letter of credit of $19.7 million under the 2019 ABL Facility (as defined herein).

Aggregate minimum commitments under long-term raw material supply contracts for the next five years as of June 30, 2023 are listed below:


	(Thousands of Dollars)
2023	$	21,439
2024	18,464
2025	3,960
2026	—
2027	—
	$	43,863

Litigation

From time to time, the Company is subject to legal and administrative proceedings, settlements, investigations, claims and actions, as is typical of the industry. These claims include, but are not limited to, contract claims, environmental claims, employment related claims, claims alleging injury or claims related to operational issues and motor vehicle accidents. The Company's assessment of the likely outcome of litigation matters is based on its judgment of a number of factors, including experience with similar matters, past history, precedents, relevant financial information and other evidence and facts specific to the matter. In accordance with GAAP, the Company accrues for contingencies where the occurrence of a material loss is probable and can be reasonably estimated, based on the Company's best estimate of the expected liability and the Company may record an offsetting receivable to the extent such liability is recoverable from insurance. The Company may increase or decrease its legal accruals in the future, on a matter-by-matter basis, to account for developments in such matters. Notwithstanding the uncertainty as to the final outcome and based upon the information currently available to it, the Company does not currently believe these matters in aggregate will have a material adverse effect on its financial position, results of operations or liquidity.

Environmental

The Company is subject to various federal, state and local environmental laws and regulations that establish standards and requirements for protection of the environment. The Company cannot predict the future impact of such standards and requirements, which are subject to change and can have retroactive effectiveness. The Company continues to monitor the status of these laws and regulations. Currently, the Company has not been fined, cited or notified of any environmental violations that would have a material adverse effect upon its financial position, liquidity or capital resources. However, management does recognize that by the very nature of the Company's business, material costs could be incurred in the near term to maintain compliance. The amount of such future expenditures is not determinable due to several factors, including the unknown magnitude of possible regulation or liabilities, the unknown timing and extent of the corrective actions which may be required, the determination of the Company's liability in proportion to other responsible parties and the extent to which such expenditures are recoverable from insurance or through indemnification.

Regulatory Audits

The Company is subject to routine audits by taxing authorities. As of June 30, 2023, the Company had recorded estimates of potential assessments, the majority of which is related to an estimate of $14.8 million of potential assessment and exposures for all taxing jurisdictions related to the Alamo Acquisition. As of June 30, 2023, the Company also has an offsetting indemnification receivable of $14.8 million from the Owner Group, recorded pursuant to the Purchase Agreement, in Prepaid and other current assets in the Condensed Consolidated Balance Sheet. Both the estimated liability and indemnification receivable were recorded in the purchase price allocation at the time of the Alamo Acquisition in 2021. During the year ended December 31, 2022, the Company obtained additional information that resulted in a reduction of the Company's accrual and offsetting indemnification receivable related to this audit by $2.9 million. There were no material changes to the accrual and the offsetting indemnification receivable during the quarter ended June 30, 2023.

(14) Related Party Transactions

Cerberus Operations and Advisory Company, Cerberus Capital Management, L.P., and Cerberus Technology Solutions LLC, affiliates of the Company's principal equity holder, provide certain consulting services to the Company. The Company paid less than $0.1 million and $0.2 million during the three months ended June 30, 2023 and 2022, respectively, for these services. The Company paid less than $0.1 million and $0.4 million during the six months ended June 30, 2023 and 2022, respectively, for these services.

As part of the Purchase Agreement, the Company agreed to provide certain post-closing services to Alamo Frac Holdings, LLC valued at $30.0 million in the aggregate. During the three and six months ended June 30, 2023, the Company did not provide any services to Alamo Frac Holdings, LLC as part of the Purchase Agreement. The Company has a remaining customer contract liability related to these services of $19.4 million as of June 30, 2023.

(15) Business Segments

In accordance with ASC 280, "Segment Reporting", the Company routinely evaluates whether its separate segments have changed. This determination is made based on the following factors: (i) the Company’s chief operating decision maker (“CODM”) is currently managing each operating segment as a separate business and evaluating the performance of each segment and making resource allocation decisions distinctly and expects to do so for the foreseeable future, and (ii) discrete financial information for each operating segment is available.

The following is a description of each reportable segment:

Completion Services

The Company’s Completion Services segment consists of the following businesses and service lines: (i) fracturing services; (ii) wireline and pumping services; and (iii) completion support services, which includes our Power Solutions natural gas fueling business, our proppant last mile logistics and storage business, and our research and technology department.

Well Construction and Intervention Services

Following the sale of the Company's coiled tubing assets, the Company’s WC&I Services segment consists of cementing services.

On August 1, 2022, the Company sold its coiled tubing assets to Gladiator for a cash purchase price of $21.6 million, which resulted in a gain on sale of assets of $11.6 million. The divestiture of non-core assets is consistent with the Company’s strategy to repurpose capital towards the highest return projects that fit the Company’s strategy around wellsite integration, while also strengthening liquidity.

The following tables present financial information with respect to the Company’s segments. Corporate and Other represents costs not directly associated with a segment, such as interest expense, income taxes and corporate overhead. Corporate assets include cash, deferred financing costs, derivatives and entity-level machinery equipment.


	(Thousands of Dollars)
	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operations by business segment





Adjusted gross profit:
Completion Services(1)	$	260,080	$	184,730	$	512,715	$	291,064
WC&I(1)	8,712		8,316		17,805		12,369
Total adjusted gross profit	$	268,792	$	193,046	$	530,520	$	303,433

(1) Adjusted gross profit at the segment level is not considered to be a non-GAAP financial measure as it is the Company's segment measure of profitability and is required to be disclosed under GAAP pursuant to ASC 280. Adjusted gross profit is defined as revenue less cost of services excluding depreciation and amortization, further adjusted to eliminate items in cost of services that management does not consider in assessing ongoing performance.

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements


	(Thousands of Dollars)
	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
	Completion Services		WC&I		Total		Completion Services		WC&I		Total
Revenue	$	905,518	$	39,573	$	945,091	$	1,801,082	$	79,681	$	1,880,763
Cost of Services	645,438		30,861		676,299		1,288,367		61,876		1,350,243
Gross profit excluding depreciation and amortization	260,080		8,712		268,792		512,715		17,805		530,520
Management adjustments associated with cost of services	—		—		—		—		—		—
Adjusted gross profit	$	260,080	$	8,712	$	268,792	$	512,715	$	17,805	$	530,520


	(Thousands of Dollars)
	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
	Completion Services		WC&I		Total		Completion Services		WC&I		Total
Revenue	$	801,049	$	41,863	$	842,912	$	1,403,669	$	74,286	$	1,477,955
Cost of Services	616,319		33,547		649,866		1,112,605		61,917		1,174,522
Gross profit excluding depreciation and amortization	184,730		8,316		193,046		291,064		12,369		303,433
Management adjustments associated with cost of services	—		—		—		—		—		—
Adjusted gross profit	$	184,730	$	8,316	$	193,046	$	291,064	$	12,369	$	303,433


	(Thousands of Dollars)
	June 30, 2023		December 31, 2022
Total assets by segment:
Completion Services	$	1,629,596	$	1,404,557
WC&I	40,394		38,150
Corporate and Other	493,576		284,461
Total assets	$	2,163,566	$	1,727,168
Goodwill by segment:
Completion Services	$	192,780	$	192,780
WC&I	—		—
Corporate and Other	—		—
Total goodwill	$	192,780	$	192,780

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

Disaggregation of Revenue

Revenue activities during the three and six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
	(Thousands of Dollars)						(Thousands of Dollars)
	Completion Services		WC&I		Total		Completion Services		WC&I		Total
Geography
Northeast	$	143,117	$	8,299	$	151,416	$	306,578	$	16,326	$	322,904
Central	174,587		—		174,587		365,595		—		365,595
West Texas	507,510		29,088		536,598		987,734		59,665		1,047,399
West	78,569		2,186		80,755		137,334		3,690		141,024
International	1,735		—		1,735		3,841		—		3,841
	$	905,518	$	39,573	$	945,091	$	1,801,082	$	79,681	$	1,880,763


	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
	(Thousands of Dollars)						(Thousands of Dollars)
	Completion Services		WC&I		Total		Completion Services		WC&I		Total
Geography
Northeast	$	110,319	$	6,376	$	116,695	$	199,877	$	11,886	$	211,763
Central	159,995		—		159,995		273,091		—		273,091
West Texas	496,916		34,025		530,941		877,063		60,103		937,166
West	30,399		1,462		31,861		49,023		2,297		51,320
International	3,420		—		3,420		4,615		—		4,615
	$	801,049	$	41,863	$	842,912	$	1,403,669	$	74,286	$	1,477,955

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

(16) New Accounting Pronouncements

(a) Recently Adopted Accounting Standards

In July 2021, the Financial Accounting Standards Board ("FASB") issued ASU 2021-05 "Leases (Topic 842) Lessors—Certain Leases with Variable Lease Payments" ("ASU 2021-05"). ASU 2021-05 allows a lessor to classify and account for a lease with variable lease payments that doesn't depend on an index or rate as an operating lease if both: a) The lease would have been classified as a sales-type lease or a direct-financing lease in accordance with the lease classification guidance in Topic 842; and b) The lessor would’ve otherwise recognized a day-one loss. This standard was effective for fiscal years beginning after December 15, 2021. The Company adopted this standard on January 1, 2022, and there was no material impact on the financial statements.

In August 2020, the FASB issued ASU 2020-06 “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)” (“ASU 2020-06”). ASU 2020-06 simplifies the guidance on the issuer's accounting for convertible debt instruments and convertible preferred stock. The Company adopted this standard on January 1, 2022, and there was no material impact on the financial statements.

In October 2021, the FASB issued ASU 2021-08 “Business Combinations (Topic 805) Accounting for Contract Assets and Contact Liabilities from Contracts with Customers” ("ASU 2021-08"). ASU 2021-08 requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The Company adopted this standard on January 1, 2023, and there was no material impact on the financial statements.

In December 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-06 “Reference Rate Reform (Topic 848) - Deferral of the Sunset Date of Topic 848". ASU 2022-06 provides optional expedients that permit an entity to not apply otherwise applicable US GAAP to contracts or transactions that are modified or otherwise affected due to reference rate reform. The ASU defers the sunset date of ASC 848 from December 31, 2022, which was previously addressed in ASU 2020-04 and ASU 2021-01, to December 31, 2024. Entities that apply ASC 848 can continue to do so until December 31, 2024. The Company adopted this standard during the second quarter of 2023, and there was no material impact on the financial statements.

(b) Recently Issued Accounting Standards

There are no recently issued Accounting Standards that have not been adopted that are expected to impact the Company.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related condensed footnotes included within Part I, "Item 1. Financial Statements" in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December 31, 2022. For additional information related to forward looking statements, please see “Cautionary Statement Regarding Forward-Looking Statements and Information,” which immediately follows the table of contents of this Quarterly Report on Form 10-Q.

ORGANIZATIONAL OVERVIEW

NexTier Oilfield Solutions Inc. is a predominately U.S. land oilfield service company, with a diverse set of well completion and production services across a variety of active and demanding basins. The Company is organized into two reportable segments:

•Completion Services, which consists of the following business lines: (i) hydraulic fracturing services; (ii) wireline and pumping services; and (iii) completion support services, which includes our Power Solutions natural gas fueling business, our proppant last mile logistics and storage business, and our research and technology department.

•Well Construction and Intervention Services ("WC&I"), which consists of cementing services.

Merger with Patterson-UTI

•Upon consummation of the Mergers and the other transactions contemplated by the Merger Agreement (the “Transactions”), NexTier will be a wholly owned subsidiary of Patterson-UTI.

The consummation of the Merger Agreement is subject to the satisfaction or waiver of certain conditions, including, among others:

•The adoption of the Merger Agreement by holders of at least a majority of the outstanding shares of NexTier Common Stock;

•the approval of the Share Issuance by the holders of shares of Patterson-UTI Common Stock representing a majority of votes cast on the Share Issuance; and

•The expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act").

NexTier has agreed to operate its business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the proposed Merger, subject to specific exceptions set forth in the Merger Agreement, and have agreed to certain other customary restrictions on operations, as set forth in the Merger Agreement.

OPERATIONAL OVERVIEW

Market Trends and Influences

We provide our services in several of the most active basins in the United States, including the Permian, the Marcellus Shale/Utica, the Eagle Ford, Mid-Continental, Haynesville, and the Bakken/Rockies. The high density of our operations in the basins in which we are most active provides us the opportunity to leverage our fixed costs and to quickly respond with what we believe are highly efficient, integrated solutions that are best suited to address customer requirements.

Activity within our business segments is significantly impacted by spending on upstream exploration, development and production programs by our customers. Thus, our financial performance is affected by rig and well counts in North America, as well as oil and natural gas prices, which are discussed in more detail below. Also influencing our activity is the status of the global

economy, which impacts oil and natural gas demand. Some of the more significant determinants of current and future spending levels of our customers are oil and natural gas prices, global oil supply and demand, supply chain disruptions, the world economy, rising interest rates, the availability of credit, government regulation, and global stability, which together drive worldwide drilling activity.

According to the weekly Baker Hughes Incorporated rig count information, total North America rig count during the second quarter of 2023 averaged 719 rigs, reflecting a decrease of approximately 5% as compared to the first quarter 2023 average of 760 rigs. North America rig count exited the second quarter of 2023 at 674 rigs, which was down 81 rigs and 11% from the start of the quarter. WTI prices entered the second quarter of 2023 at $75.68 and exited the quarter 7% lower at $70.66. Henry Hub Natural gas prices were up 18% from $2.10 on March 31, 2023 to $2.48 on June 30, 2023.

In the second quarter of 2023, we continued to see disciplined oil production from both OPEC+ and U.S. shale operators; in October 2022 OPEC+ indicated it would reduce oil production, with an additional production cut planned to start in the second quarter of 2023. The Russian invasion of Ukraine continues to increase uncertainty of global supply given the supply of crude oil and natural gas that is exported from Russia, although so far production from Russia has remained relatively resilient.

Specific to U.S. onshore completions, there has been some attrition through consolidation and other events that have made some progress in realigning frac supply with demand. We believe frac equipment was undersupplied in 2022 and remained so at the beginning of 2023. However, given the reduction in the industry rig count that was seen throughout the second quarter, we expect frac activity is likely to decline in the second half of 2023. Additionally, we expect the average pump hours at each of our fleets will fall from the very efficient levels that we saw in the second quarter of 2023. Still, even with the expected decline in activity, we anticipate utilization of U.S. land completion equipment will remain high relative to historical averages. Contributing to the tightness, horsepower intensity for each fleet continues to grow as our industry adopts more complex completion techniques; as horsepower demand returns, we believe existing supply will be fully utilized across fewer fleets.

We are constantly assessing our approach to ensure that our team and our equipment meets the evolving demands of our customers. Customers are increasingly looking for ways to lower their carbon footprint by lower emissions associated with their drilling and completion activity. We have invested to upgrade more than half of our fleet to be able to operate using natural gas as a primary fuel source. These dual fuel fleets can be powered using both diesel and natural gas as a fuel source. In addition to lowering emissions, at current diesel and natural gas prices, using natural gas can lower the cost to operate a dual fuel fleet relative to a conventional diesel fleet. In addition, we have now deployed our first electric fleet.

Utilization Tendencies

Historically, our utilization levels have been highly correlated to U.S. onshore spending by our customers, which is heavily driven by the price of oil and natural gas. Generally, as capital spending by our customers increases, drilling, completion and production activity also increases, resulting in increased demand for our services, and therefore more days or hours worked (as the case may be). Conversely, when drilling, completion and production activity levels decline due to lower spending by our customers, we generally provide fewer services, which results in fewer days or hours worked (as the case may be).

Given the volatile and cyclical nature of activity drivers in the U.S. onshore oilfield services industry, coupled with the varying prices we are able to charge for our services and the cost of providing those services, among other factors, operating margins can fluctuate widely depending on supply and demand at a given point in the cycle. Additionally, during periods of decreased spending by our customers and/or high competition, we may be required to discount our rates or provide other pricing concessions to remain competitive and support deployed equipment utilization, which negatively impacts our revenue and operating margins. During periods of pricing weakness for our services, we may not be able to reduce our costs accordingly, and our ability to achieve any cost reductions from our suppliers typically lags behind the decline in pricing for our services, which could further adversely affect our results. Furthermore, when demand for our services increases following a period of low demand, our ability to capitalize on such increased demand may be delayed while we reengage and redeploy equipment and crews that have been idled during a downturn. The mix of customers that we are working for, as well as limited periods of exposure to the spot market, also impacts our deployed equipment utilization. Some smaller operators may not have sufficient programs to support continuous operations or dedicated fleets.

Strategic Direction

We believe that there is competitive value in providing integrated solutions that align the incentives of operators and service providers. We are pursuing opportunities to leverage our investment in our digital program as well as diesel substitution reduction technologies (such as dual fuel and electric fleet capabilities), to provide a service strategy targeted at achieving emissions reductions, both for us and our customers. NexTier's best-in-class digital platform has been applied to the NexTier operating fleets. In 2021, we launched our natural gas treatment and delivery (Power Solutions), including natural gas sourcing,

compression, transport, decompression, and treatment services, that will power NexTier’s fleet with field gas or compressed natural gas. This service solution seeks to address wellsites where there is not a reliable nearby natural gas supply, and thus, the full benefit and value of dual fuel or other lower emissions technologies may not otherwise be fully realized. This integrated strategy is designed to provide our customers with a streamlined approach to driving more sustainable, cost effective operations at the wellsite. Given the positive market response, we have continued to invest and grow the Power Solutions footprint. Our acquisition of assets from CIG in 2022 is in line with our commitment to significantly expand our last mile logistics capabilities.

We believe our integrated approach and proven capabilities enable us to deliver cost-effective solutions for increasingly complex and technically demanding well completion requirements, which include longer lateral segments, higher pressure rates and proppant intensity and multiple fracturing stages in challenging high-pressure formations. In addition, our technical team and our innovation centers, provide us with the ability to supplement our service offerings with engineered solutions specifically tailored to address customers’ completion requirements and unique challenges.

We believe that the safety, quality and efficiency of our service execution and our alignment with customers who recognize the value that we provide are central to our efforts to support utilization and grow our business.

RESULTS OF OPERATIONS IN 2023 COMPARED TO 2022

Three Months Ended June 30, 2023 Compared with Three Months Ended June 30, 2022

The following is a comparison of our results of operations for the three months ended June 30, 2023 compared to the three months ended June 30, 2022.


	Three Months Ended June 30,
(Thousands of Dollars)					As a % of Revenue				Variance
Description	2023		2022		2023		2022		$		%
Completion Services	$	905,518	$	801,049	96	%	95	%	$	104,469	13	%
WC&I	39,573		41,863		4	%	5	%	(2,290)		(5	%)

Revenue	945,091		842,912		100	%	100	%	102,179		12	%
Completion Services	645,438		616,319		68	%	73	%	29,119		5	%
WC&I	30,861		33,547		3	%	4	%	(2,686)		(8	%)

Costs of services	676,299		649,866		72	%	77	%	26,433		4	%
Depreciation and amortization	63,502		58,794		7	%	7	%	4,708		8	%
Selling, general and administrative expenses	39,699		35,855		4	%	4	%	3,844		11	%
Merger and integration	5,275		23,682		1	%	3	%	(18,407)		(78	%)
Loss (gain) on disposal of assets	5,772		(866)		1	%	0	%	6,638		(767	%)

Operating income	154,544		75,581		16	%	9	%	78,963		104	%
Other income, net	2,927		1,461		0	%	0	%	1,466		100	%
Interest expense	(7,307)		(7,344)		(1	%)	(1	%)	37		(1	%)
Total other income (expense)	(4,380)		(5,883)		0	%	(1	%)	1,503		(26	%)
Income tax expense	(100)		(1,240)		0	%	0	%	1,140		(92	%)
Net income	$	150,064	$	68,458	16	%	8	%	$	81,606	119	%

Revenue: Total revenue is comprised of revenue from our Completion Services and WC&I segments. Revenue during the three months ended June 30, 2023 increased by $102.2 million, or 12%, to $945.1 million from $842.9 million during the three months ended June 30, 2022. This change in revenue by reportable segment is discussed below.

Completion Services: Revenue for Completion Services during the three months ended June 30, 2023 increased by $104.5 million, or 13%, to $905.5 million from $801.0 million during the three months ended June 30, 2022. The segment revenue increase is primarily attributable to additional well-site integration, including our Power Solutions natural gas fueling services, and increases in wireline and pumping services. Despite lower commodity prices, customer activity increased slightly across all basins, and we realized strong pricing recovery in all service lines.

Well Construction and Intervention Services: WC&I segment revenue decreased $2.3 million, or 5%, to $39.6 million during the three months ended June 30, 2023 from $41.9 million during the three months ended June 30, 2022. The decrease in revenue is primarily due to the sale of the coil tubing service line in the third quarter of 2022.

Cost of Services: Cost of services during the three months ended June 30, 2023 increased by $26.4 million, or 4%, to $676.3 million from $649.9 million during the three months ended June 30, 2022. The increase is primarily due to increased activity and utilization, as explained under the "Revenue" caption and its related segment sub-captions above. Pricing improvements coupled with operational efficiencies and process improvements to permanently drive costs out of the organization more than offset the impact of cost inflation, and led to overall costs increasing at a lower rate than revenue increased.

Equipment Utilization: Depreciation and amortization expense increased $4.7 million, or 8%, to $63.5 million during the three months ended June 30, 2023 from $58.8 million during the three months ended June 30, 2022. The increase is primarily driven by the increase in capital expenditures and finance lease right-of-use assets throughout the second half of 2022 and through the first half of 2023. The change in loss (gain) on disposal of assets was $6.6 million, or 767%, to a loss of $5.8 million during the three

months ended June 30, 2023 from a gain of $0.9 million during three months ended June 30, 2022. The change was driven by a few early engine failures in the first half of 2023 compared to the sale of old equipment in the first half of 2022 at a gain.

Selling, general and administrative expense: Selling, general and administrative expense, which represents costs associated with managing and supporting our operations, increased by $3.8 million, or 11%, to $39.7 million during three months ended June 30, 2023 compared to $35.9 million during the three months ended June 30, 2022. The increase was primarily driven by the increase in stock-based compensation.

Merger and integration expense: Merger and integration expense decreased by $18.4 million or 78%, to $5.3 million during the three months ended June 30, 2023 from $23.7 million during the three months ended June 30, 2022. The decrease in merger and integration expense is related to the finalization of the Alamo Acquisition earnout, which was triggered by Alamo achieving certain EBITDA targets pursuant to the Purchase Agreement, partially offset by costs associated with the Patterson Merger. The earnout performance period for the Alamo Acquisition earnout was finalized on December 31, 2022.

Effective tax rate: Our effective tax rate on continuing operations for the three months ended June 30, 2023 was 0.0% for $0.1 million of recorded net income tax expense. During the three months ended June 30, 2023, we recognized an income tax benefit of approximately $5.5 million due to the partial release of a valuation allowance on our deferred tax assets. This release was primarily due to entering into a three-year cumulative pre-tax book income position and reflects our increased expectation to utilize these deferred tax assets going forward based on improved operating results and market conditions. The normalized effective tax rate, excluding the release of the valuation allowance for the three months ended June 30, 2023, was 3.7%. The difference between the normalize effective tax rate and the U.S. federal statutory rate is due to permanent book-to-tax differences, state income taxes and change in valuation allowance related to current year activities.

RESULTS OF OPERATIONS IN 2023 COMPARED TO 2022

Six Months Ended June 30, 2023 Compared with Six Months Ended June 30, 2022

The following is a comparison of our results of operations for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.


	Six Months Ended June 30,
(Thousands of Dollars)					As a % of Revenue				Variance
Description	2023		2022		2023		2022		$		%
Completion Services	$	1,801,082	$	1,403,669	96	%	95	%	$	397,413	28	%
WC&I	79,681		74,286		4	%	5	%	5,395		7	%

Revenue	1,880,763		1,477,955		100	%	100	%	402,808		27	%
Completion Services	1,288,367		1,112,605		69	%	75	%	175,762		16	%
WC&I	61,876		61,917		3	%	4	%	(41)		0	%

Costs of services	1,350,243		1,174,522		72	%	79	%	175,721		15	%
Depreciation and amortization	122,147		113,957		6	%	8	%	8,190		7	%
Selling, general and administrative expenses	79,380		71,714		4	%	5	%	7,666		11	%
Merger and integration	5,436		32,914		0	%	2	%	(27,478)		(83	%)
Loss (gain) on disposal of assets	9,542		(1,689)		1	%	0	%	11,231		(665	%)

Operating income	314,015		86,537		17	%	6	%	227,478		263	%
Other income, net	2,647		6,831		0	%	0	%	(4,184)		(61	%)
Interest expense	(13,505)		(14,718)		(1	%)	(1	%)	1,213		(8	%)
Total other income (expense)	(10,858)		(7,887)		(1	%)	(1	%)	(2,971)		38	%
Income tax benefit (expense)	100,900		(1,400)		5	%	0	%	102,300		(7,307	%)
Net income	$	404,057	$	77,250	21	%	5	%	$	326,807	423	%

Revenue: Total revenue is comprised of revenue from our Completion Services and WC&I segments. Revenue during the six months ended June 30, 2023 increased by $402.8 million, or 27%, to $1.9 billion from $1.5 billion during the six months ended June 30, 2022. This change in revenue by reportable segment is discussed below.

Completion Services: Revenue for Completion Services during the six months ended June 30, 2023 increased by $397.4 million, or 28%, to $1.8 billion from $1.4 billion during the six months ended June 30, 2022. The segment revenue increase is primarily attributable to additional well-site integration, including our Power Solutions natural gas fueling services, and increases in wireline and pumping services. Despite lower commodity prices, customer activity increased across all basins, and we realized strong pricing recovery in all service lines.

Well Construction and Intervention Services: WC&I segment revenue increased $5.4 million, or 7%, to $79.7 million during the six months ended June 30, 2023 from $74.3 million during the six months ended June 30, 2022. The increase in revenue is primarily due to higher customer activity, improved pricing, and increased utilization in our cementing resulting from improved market conditions, offset by the reduction due to the sale of the coil tubing service line in the third quarter of 2022.

Cost of Services: Cost of services during the six months ended June 30, 2023 increased by $175.7 million, or 15%, to $1.4 billion from $1.2 billion during the six months ended June 30, 2022. The increase is primarily due to increased activity and utilization, as explained under the "Revenue" caption and its related segment sub-captions above. Pricing improvements coupled with operational efficiencies and process improvements to permanently drive costs out of the organization more than offset the impact of cost inflation, and led to overall costs increasing at a lower rate than revenue increased.

Equipment Utilization: Depreciation and amortization expense increased $8.2 million, or 7%, to $122.1 million during the six months ended June 30, 2023 from $114.0 million, during the six months ended June 30, 2022. The increase in depreciation and amortization is primarily driven by the increase in capital expenditures and finance lease right-of-use assets throughout the second half

of 2022 and through the first half of 2023. The change in loss (gain) on disposal of assets was $11.2 million, or 665%, to a loss of $9.5 million during the six months ended June 30, 2023 from a $1.7 million gain during the six months ended June 30, 2022. The change was driven by a few early engine failures in the first half of 2023 compared to the sale of old equipment in the first half of 2022 at a gain.

Selling, general and administrative expense: Selling, general and administrative expense, which represents costs associated with managing and supporting our operations, increased by $7.7 million, or 11%, to $79.4 million during the six months ended June 30, 2023 from $71.7 million during the six months ended June 30, 2022. This increase was primarily driven by the increase in stock-based compensation.

Merger and integration expense: Merger and integration expense decreased by $27.5 million, or 83%, to $5.4 million during the six months ended June 30, 2023 from $32.9 million during the six months ended June 30, 2022. The decrease in merger and integration expense is primarily related to the finalization of the Alamo Acquisition earnout, which was triggered by Alamo achieving certain EBITDA targets pursuant to the Purchase Agreement, partially offset by costs associated with the Patterson Merger. The earnout performance period for the Alamo Acquisition earnout was finalized on December 31, 2022.

Effective tax rate: Our effective tax rate on continuing operations for the six months ended June 30, 2023 was (33.3%) for $100.9 million of recorded income tax benefit. During six months ended June 30, 2023, we recognized an income tax benefit of approximately $112.9 million due to the release of a valuation allowance on our deferred tax assets. This release was primarily due to entering into a three-year cumulative pre-tax book income position in the first quarter of 2023 and reflects our increased expectation to utilize these deferred tax assets going forward based on improved operating results and market conditions. The normalized effective tax rate, excluding the release of the valuation allowance for the six months ended June 30, 2023, was 4.0%. The difference between the normalized effective tax rate and the U.S. federal statutory rate is due to permanent book-to-tax differences, state income taxes and change in valuation allowance related to current year activities.

MATERIAL CHANGES TO OUR CONSOLIDATED BALANCE SHEET

The following table presents the major indicators of our financial condition and liquidity.


	(Thousands of Dollars)
	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	310,166	$	218,476
Total current assets, excluding cash and cash equivalents	566,727		507,539
Total current liabilities, excluding current maturities of long-term debt and leases	563,465		513,396
Current maturities of long-term debt	14,176		14,004
Long-term debt, net of deferred financing costs and debt discount, less current maturities	$	340,327	$	347,425

Cash and cash equivalents was $310.2 million as of June 30, 2023, an increase of $91.7 million, or 42%, compared to $218.5 million as of December 31, 2022. The increase in cash and cash equivalents was due to continued profitability and strong cash collections, partially offset by cash flows used in capital expenditures, payments on our debt obligations, payment of the Alamo Earnout, finance leases, and our share repurchase program.

Total current assets, excluding cash and cash equivalents was $566.7 million as of June 30, 2023, an increase of $59.2 million, or 12%, compared to $507.5 million as of December 31, 2022. Total current liabilities, excluding current maturities of long-term debt and leases was $563.5 million as of June 30, 2023, an increase of $50.1 million, or 10%, compared to $513.4 million as of December 31, 2022. The increase in total current assets, excluding cash and cash equivalents, was due to increased trade and other accounts receivable, net while the increase in total current liabilities, excluding current maturities of long-term debt and leases, was due to an increase in accounts payable, partially offset by a decrease in accrued expenses.

Long-term debt, net of deferred financing costs and debt discount, less current maturities was $340.3 million as of June 30, 2023, a decrease of $7.1 million, or 2%, as compared to $347.4 million as of December 31, 2022. The decrease in long-term debt, net of deferred financing costs and debt discount, less current maturities was primarily driven by the principal payments made throughout the period.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity represents a company's ability to adjust its future cash flows to meet its needs and opportunities, both expected and unexpected.


	(Thousands of Dollars)
	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	310,166	$	218,476
Debt, net of unamortized deferred financing costs and unamortized debt discount	$	354,503	$	361,429


	(Thousands of Dollars)
	Six Months Ended June 30,
	2023		2022
Net cash provided by operating activities	$	399,207	$	146,500
Net cash used in investing activities	(195,357)		(76,972)
Net cash used in financing activities	$	(111,838)	$	(22,340)

Significant sources and uses of cash during the six months ended June 30, 2023

Sources of cash:

•Operating activities:

–Net cash provided by operating activities during the six months ended June 30, 2023 was $399.2 million. This was primarily driven by improved profitability with strong working capital management, pricing improvements, coupled with operational efficiencies and process improvements to permanently drive costs out of the organization more than offset the impact of cost inflation and led to overall costs increasing at a lower rate than revenue increased.

Uses of cash:

•Investing activities:

–Net cash used in investing activities during the six months ended June 30, 2023 was $195.4 million. The activity consists primarily of purchases of property and equipment of $181.4 million, advances of deposit on equipment of $14.0 million, and implementation of software of $5.3 million, offset by proceeds from disposal of assets of $5.3 million.

•Financing activities:

–Net cash used in financing activities during the six months ended June 30, 2023 was $111.8 million. The activity consists primarily of the repurchase and retirement of shares related to share repurchase program of $72.8 million, payments made related to repayment of the 2018 Term Loan Facility and the Equipment Loan of $7.6 million, repayment of our finance leases of $14.5 million, repayment of our financing liabilities of $3.5 million, repurchase and retirement of shares related to stock-based compensation of $10.3 million, and payments made for contingent consideration related to the Alamo Acquisition of $3.1 million.

Significant sources and uses of cash during the six months ended June 30, 2022

Sources of cash:

•Operating activities:

–Net cash provided by operating activities during the six months ended June 30, 2022 was $146.5 million. This was primarily driven by improved market conditions and higher global commodity prices, which drove increased customer activity across all basins, as well as realized strong pricing recovery in all services lines. Pricing

improvements, coupled with operational efficiencies and process improvements to permanently drive costs out of the organization more than offset the impact of cost inflation, and led to overall costs increasing at a lower rate than revenue increased.

Uses of cash:

•Investing activities:

–Net cash used in investing activities during the six months ended June 30, 2022 was $77.0 million. The activity consists primarily of purchases of property and equipment of $81.3 million, advances of deposit on equipment of $3.4 million, and implementation of software of $2.0 million, offset by proceeds from disposal of assets of $9.2 million.

•Financing activities:

–Net cash used in financing activities during the six months ended June 30, 2022 was $22.3 million. The activity consists primarily of payments made related to repayment of the 2018 Term Loan Facility and the Equipment Loan of $7.3 million, repayment of our finance leases of $6.6 million, repayment of our financing liabilities was $4.0 million, repurchase and retirement of shares related to stock-based compensation of $4.4 million.

Future sources and use of cash

Our primary sources of liquidity have historically included, and we have funded our capital expenditures with, cash flows from operations, proceeds from public offerings of our common stock and borrowings under debt facilities. Our ability to generate future cash flows is subject to a number of variables, many of which are outside of our control, including the drilling, completion and production activity by our customers, which is highly dependent on oil and gas prices. See the information under the caption “Market Trends and Influences” above for additional discussion of certain factors that impact our results and the market challenges within our industry.

For the third quarter of 2023, we anticipate capital expenditures of approximately $85 million, which is a decrease from the second quarter of 2023. We expect to reduce capital expenditures further in the fourth quarter of 2023. Debt service for the year ended December 31, 2023 is projected to be $73.6 million, of which $35.0 million is related to finance leases, excluding buyout payments. We anticipate our debt service will be funded by cash flows from operations.

Given our pending merger agreement with Patterson-UTI, we have suspended our share repurchase plan.

Other factors affecting liquidity

Financial position in current market. As of June 30, 2023, we had $310.2 million of cash and a total of $411.3 million available under our 2019 ABL Facility. We currently believe that our cash on hand, cash flow generated from operations and availability under our 2019 ABL Facility will provide sufficient liquidity to cover our estimated short-term (i.e., the next 12 months) and long-term (i.e., beyond the next 12 months) funding needs, including for capital expenditures, debt service, and working capital investments.

Guarantee agreements. In the normal course of business, we have agreements with financial institutions as part of our 2019 ABL Facility under which $19.7 million of letters of credit were outstanding as of June 30, 2023.

Customer receivables. In line with industry practice, we bill our customers for our services in arrears and are, therefore, subject to our customers delaying or failing to pay our invoices. The majority of our trade receivables have payment terms of 30 to 60 days. If our customers delay paying or fail to pay us a significant amount of our outstanding receivables, it could have an adverse effect on our liquidity, consolidated results of operations and consolidated financial condition.

Purchase Commitments. In the normal course of business, we enter into various contractual obligations that impact or could impact our liquidity. The Company has a number of purchase commitments that primarily relate to our agreements with vendors for sand purchases, other commodities/services and deposits on equipment. The purchase commitments to these vendors include obligations to purchase a minimum amount of product/services; provided that, if the minimum purchase requirement is not met, the shortfall at the end of the applicable period is settled in cash or, in some cases, carried forward to the next period. We also have a variety of operating lease obligations related to our real estate, rail cars, and light duty vehicles. See Part II, "Item 1A. Risk Factors." for additional information on the risks related to these purchase commitments.

Long-Term Debt Arrangements

2019 ABL Facility

We and certain of our subsidiaries as additional borrowers and guarantors, are parties to the 2019 ABL Facility that matures on October 31, 2024. This facility provides for, among other things, a $450.0 million revolving credit facility (with a $100.0 million sub-facility for letters of credit), subject to a borrowing base in accordance with the terms agreed between us and the lenders. As of June 30, 2023, we had no outstanding principal amounts under the 2019 ABL Facility. The 2019 ABL Facility contains various affirmative and negative covenants (in each case, subject to customary exceptions as set forth in the definitive documentation for the ABL Facility), and we were in compliance with those covenants as of June 30, 2023.

2018 Term Loan Facility

On May 25, 2018, we and certain of our subsidiaries as guarantors entered into the 2018 Term Loan Facility with each lender from time to time party thereto and Barclays Bank PLC, as administrative agent and collateral agent. The proceeds of the 2018 Term Loan Facility were used to refinance the Company's then-existing term loan facility and to repay related fees and expenses, with the excess proceeds to fund general corporate purposes. The 2018 Term Loan Facility contains various affirmative and negative covenants (in each case, subject to customary exceptions as set forth in the definitive documentation for the 2018 Term Loan Facility), and we were in compliance with those covenants as of June 30, 2023.

Equipment Loan

On August 20, 2021, the Company entered into the Master Loan and Security Agreement (the “Master Agreement”) with Caterpillar Financial Services Corporation. The Master Agreement provides the backdrop for the Company to enter into secured equipment financing term loans from time to time in an aggregate amount of up to $46.5 million (the “Equipment Loans”). The Equipment Loans may be drawn in multiple tranches, with each loan evidenced by a separate promissory note. The Master Agreement and the term notes contain customary affirmative and negative covenants, including limitations on further encumbrance of the collateral subject to the applicable loans under the Master Agreement. As of June 30, 2023, the Company was in compliance with all covenants.

Critical Accounting Estimates

The preparation of our unaudited condensed consolidated financial statements and related notes to the unaudited condensed consolidated financial statements included within Part I, "Item 1. Financial Statements" requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. We base these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.

A critical accounting estimate is one that requires a high level of subjective judgment by management and has a material impact to our financial condition or results of operations. This discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included within Part I, "Item 1. Financial Statements" of this Quarterly Report on Form 10-Q, as well as our consolidated and combined financial statements and related notes included in Part II, "Item 8. Financial Statements and Supplementary Data" and Part II, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2022.

New Accounting Pronouncements

For discussion on the potential impact of new accounting pronouncements issued but not yet adopted, see Note (16) New Accounting Pronouncements of Part I, "Item 1. Financial Statements."

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Interest Rate Risk. As of June 30, 2023, we had variable-rate debt outstanding, the exposure to which we manage with our interest-rate-related derivative instrument. We held no derivative instruments that increased our exposure to market risks for foreign currency rates, commodity prices or other market price risks. We are exposed to changes in interest rates on our floating rate borrowings under our 2019 ABL Facility and 2018 Term Loan Facility. As of June 30, 2023, we had $332.5 million aggregate principal amount outstanding under the 2018 Term Loan Facility. The impact of a 1.0% increase in interest rates under the terms of the 2018 Term Loan Facility would have an $0.8 million and $1.7 million impact on interest expense for the three and six months ended June 30, 2023, respectively.

Commodity Price Risk. Our material and fuel purchases expose us to commodity price risk. Our material costs primarily include the cost of inventory consumed while performing our stimulation services such as proppant and chemicals. Our fuel costs consist primarily of diesel fuel used by our various trucks and other motorized equipment. The prices for fuel and the raw materials in our inventory are volatile and are impacted by changes in supply and demand, as well as market uncertainty and regional shortages. Depending on market conditions, we have generally been able to pass along price increases to our customers; however, we may be unable to do so in the future. We generally do not engage in commodity price hedging activities. However, we have purchase commitments with certain vendors to purchase a majority of the proppant used in our operations. Some of these agreements are take-or-pay agreements with minimum purchase obligations. As a result of future decreases in the market price of proppants, we could be required to purchase goods and pay prices in excess of market prices at the time of purchase. For further quantitative disclosure about our market risk related to our variable-rate debt, interest-rate-related derivative instrument and purchase commitments, see Part I, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Credit Risk. Financial instruments that potentially subject us to concentrations of credit risk are trade receivables. We extend credit to customers and other parties in the normal course of business. We have established various procedures to manage our credit exposure, including credit evaluations and maintaining an allowance for doubtful accounts. For certain additional information regarding credit risk related to derivative instruments we hold, see Note (7) Derivatives of Part I, "Item 1. Financial Statements".

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during the quarter ended June 30, 2023 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings

The information in response to this item is incorporated herein by reference from Note (13) Commitments and Contingencies of Part I, “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Annual Report”), which could materially affect our business, financial condition or future results. Except as set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Risks Relating to the Pending Mergers with Patterson-UTI

The Mergers are subject to approval of our stockholders as well as the satisfaction of other closing conditions, including government consents and approvals, some or all of which may not be satisfied or completed within the expected timeframe, if at all.

Completion of the Mergers is subject to a number of closing conditions, including obtaining the approval of our stockholders and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. We can provide no assurance that all required consents and approvals will be obtained or that all closing conditions will otherwise be satisfied (or waived, if applicable), and, even if all required consents and approvals can be obtained and all closing conditions are satisfied (or waived, if applicable), we can provide no assurance as to the terms, conditions and timing of such consents and approvals or the timing of the completion of the Mergers. Many of the conditions to completion of the Mergers are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, if applicable). Any adverse consequence of the pending Mergers could be exacerbated by any delays in completion of the Mergers or termination of the Merger Agreement.

Each party’s obligation to consummate the Mergers is also subject to the accuracy of the representations and warranties of the other party (subject to certain exceptions) and performance by each party of its respective obligations under the Merger Agreement. Although Patterson-UTI and NexTier have agreed in the Merger Agreement to use reasonable best efforts, subject to certain limitations, to complete the Mergers as promptly as reasonably practicable, these and other conditions to the completion of the Mergers may fail to be satisfied. Furthermore, the requirements for obtaining the required clearances and approvals could delay the completion of the Mergers for a significant period of time or prevent them from occurring. There can be no assurance that all required regulatory approvals will be obtained or obtained prior to the termination date As a result, we cannot assure you that the Mergers will be completed, even if our stockholders approve the Mergers, or that, if completed, it will be exactly on the terms set forth in the Merger Agreement or within the expected time frame.

If the Mergers do not qualify as a reorganization, there may be adverse tax consequences.

The Mergers are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and Patterson-UTI and NexTier intend to report the Mergers consistent with such qualification. It is a condition to our obligation to complete the Mergers that we receive an opinion from our counsel, or Patterson-UTI’s counsel, dated as of the closing date, to the effect that the integrated mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. If the IRS or a court determines that the Mergers, taken together, should not be treated as a “reorganization” within the meaning of Section 368(a) of the Code, a U.S. holder of our common stock would generally recognize taxable gain or loss upon the exchange of NexTier common stock for Patterson-UTI common stock pursuant to the Mergers.

We will be subject to various uncertainties while the Mergers are pending that may cause disruption and may make it more difficult to maintain relationships with employees, customers and other third-party business partners.

Our efforts to complete the Mergers could cause substantial disruptions in, and create uncertainty surrounding, our business, which may materially adversely affect our results of operation and our business. Uncertainty as to whether the Mergers will be completed may affect our ability to recruit prospective employees or to retain and motivate existing employees. Employee retention may be particularly challenging while the Mergers are pending because employees may experience uncertainty about their roles following the Mergers. A substantial amount of our management’s and employees’ attention is being directed toward the completion of the Mergers and thus is being diverted from our day-to-day operations. Uncertainty as to our future could adversely affect our

business and our relationship with customers and potential customers. For example, customers, suppliers and other third parties may defer decisions concerning working with us, or seek to change existing business relationships with us. Changes to or termination of existing business relationships could adversely affect our revenue, earnings and financial condition, as well as the market price of our common stock. The adverse effects of the pendency of the Mergers could be exacerbated by any delays in completion of the Mergers or termination of the Merger Agreement.

While the Merger Agreement is in effect, we are subject to restrictions on our business activities.

While the Merger Agreement is in effect, we are subject to restrictions on our business activities, generally requiring us to conduct our business in the ordinary course, consistent with past practice, in all material respects, and subjecting us to a variety of specified limitations absent Patterson-UTI prior consent. These restrictions could prevent us from pursuing strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively or on a timely basis to competitive pressures and industry developments, and may as a result materially and adversely affect our business, financial condition and operations.

In certain instances, the Merger Agreement requires us to pay a termination fee to Patterson-UTI, which could affect the decisions of a third party considering making an alternative acquisition proposal.

Under the terms of the Merger Agreement, we may be required to pay Patterson-UTI a termination fee of $60.9 million under specified conditions, including in the event the Merger Agreement is terminated due to a recommendation change by our board of directors or under certain circumstances where a proposal for an alternative transaction has been made to us and, within 9 months following termination, we enter into a definitive agreement providing for an alternative transaction or consummate an alternative transaction. This payment could affect the structure, pricing and terms proposed by a third party seeking to acquire or merge with us and could discourage a third party from making a competing acquisition proposal, including a proposal that would be more favorable to our stockholders than the Mergers.

We have incurred, and will continue to incur, direct and indirect costs as a result of the Mergers.

We have incurred, and will continue to incur, significant costs and expenses, including regulatory costs, fees for professional services and other transaction costs in connection with the Mergers, for which we will have received little or no benefit if the Mergers are not completed. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses. Many of these fees and costs will be payable by us even if the Mergers are not completed and may relate to activities that we would not have undertaken other than to complete the Mergers.

Litigation challenging the Merger Agreement may prevent the Mergers from being consummated within the expected timeframe or at all.

Lawsuits may be filed against us, our board of directors or other parties to the Merger Agreement, challenging the Mergers or making other claims in connection therewith. Such lawsuits may be brought by our purported stockholders and may seek, among other things, to enjoin consummation of the Mergers. One of the conditions to the consummation of the Mergers is the absence of any order or law that has the effect of enjoining or otherwise prohibiting the completion of the Mergers. As such, if the plaintiffs in such potential lawsuits are successful in obtaining an injunction prohibiting the defendants from completing the Mergers on the agreed upon terms, then such injunction may prevent the Mergers from becoming effective, or from becoming effective within the expected timeframe.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities

None.

(b) Use of Proceeds

None.


Issuer Purchases of Equity Securities
Settlement Period	(a) Total Number of Shares Purchased(1),(2)	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2).(3)	(d) Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(2)
April 1, 2023 through April 30, 2023	1,087	$	8.15	—	$	83,643,454
May 1, 2023 through May 31, 2023	2,325,905	7.68		2,323,896	65,785,934
June 1, 2023 through June 30, 2023	798	8.82		—	65,785,934
Total	2,327,790	$	7.69	2,323,896	$	65,785,934

(1) Includes 3,894 shares that were withheld by us in the second quarter of 2023 at the average price per share of $8.31 to satisfy tax withholding obligations of employees that arose upon the vesting of restricted shares. The value of such shares is based on the closing price of our common shares on the vesting date.

(2) On October 25, 2022, the Company announced the board of directors approved a new share repurchase program for up to $250.0 million through December 31, 2023. The share repurchase program may be executed from time to time in open market transactions, through block trades, in privately negotiated transactions, through derivative transactions, through 10b5-1 plans, or by other means. The amount, timing and terms of any share repurchases will be determined based on prevailing market conditions and other factors, including applicable black-out periods. The share repurchase program does not obligate NexTier to purchase any shares of common stock during any period and the program may be modified or suspended at any time at NexTier’s discretion. This table includes only cash repurchases of shares as of June 30, 2023. The Company expects to fund the repurchases by using cash on hand cash flow to be generated through December 31, 2023.

(3) Reflects the number of settled, purchased shares.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended June 30, 2023, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

The documents listed in the Exhibit Index of this Quarterly Report on Form 10-Q are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).



Exhibit Number						Exhibit Description

2.1						Agreement and Plan of Merger, dated as of June 14, 2023, by and among Patterson-UTI Energy, Inc., Pecos Merger Sub Inc., Pecos Second Merger Sub LLC and NexTier Oilfield Solutions, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on June 15, 2023).
3.1						Amended and Restated Bylaws, dated April 18, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on April 24, 2023).
10.1						Amendment No. 1, dated June 8, 2023, to the Term Loan Agreement, dated as of May 25, 2018, by and among NexTier Oilfield Solutions Inc. (f/k/a Keane Group, Inc.), as parent guarantor, Keane Group Holdings LLC, as lead borrower, certain other subsidiaries of the Company as additional borrowers and guarantor parties thereto, the lender parties thereto and Barclays Bank PLC, as administrative and collateral agent (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on June 14, 2023).
10.2						Amendment No. 1, dated June 8, 2023, to the Second Amended and Restated Asset-Based Revolving Credit Agreement, dated as of October 31, 2019, among NexTier Oilfield Solutions Inc. (f/k/a Keane Group, Inc.), as parent guarantor, Keane Group Holdings LLC, as lead borrower, certain other subsidiaries of the Company as additional borrowers and guarantor parties thereto, the lender parties thereto and Bank of America, N.A., as administrative and collateral agent (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on June 14, 2023).
10.3						NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan, as amended (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed on June 14, 2023).
31.1*						Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*						XBRL Instance Document - The Instance Document does not appear in the Interactive Data Files because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						XBRL Taxonomy Extension Schema Document.
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

* Filed herewith.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on July 26, 2023.


			NexTier Oilfield Solutions Inc. (Registrant)

			By:			/s/ Dipo Iluyomade
						Dipo Iluyomade
						Chief Accounting Officer and Duly Authorized Officer