UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(MARK ONE)

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

FOR THE QUARTERLY PERIOD ENDED ~~June~~September 30, 2011

¨	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: 1-32858

Complete Production Services, Inc.

(Exact name of registrant as specified in its charter)


Delaware		72-1503959
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

11700 Katy Freeway, Suite 300 Houston, Texas		77079
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (281) 372-2300

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 xþ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). ~~Yes x No ¨~~

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer xþ Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨

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

Number of shares of the common stock, par value $0.01 per share, of the registrant outstanding as of ~~July~~November 283, 2011: 79,~~287~~283,~~231~~178.

INDEX TO FINANCIAL STATEMENTS

Complete Production Services, Inc.

		Page
~~PART I—FINANCIAL INFORMATION~~	PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010		3
	Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010		3
	Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income for the Quarters and Six Months Ended June 30, 2011 and 2010		4
	Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended September 30, 2011 and 2010		4
	Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2011		5
	Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2011		5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010		6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010		6
	Notes to Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		2527
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		3840
Item 4.	Controls and Procedures.		3941
~~PART II—OTHER INFORMATION~~	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings.		3942
Item 1A.	Risk Factors.		4042
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		4043
Item 3.	Defaults Upon Senior Securities.		4044
Item 5.	Other Information.		4044
Item 6.	Exhibits.		4144
	Signatures		42

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Balance Sheets

~~June~~September 30, 2011 (unaudited) and December 31, 2010

	2011			2010
	(In thousands, except share data)
	(In thousands, except
	share data)
ASSETS
Current assets:
Cash and cash equivalents	$	~~170~~208,~~554~~281		$	~~126~~119,~~681~~135
Accounts receivable, net		~~393~~435,~~935~~595			~~345~~341,~~648~~984
Inventory, net		3836,~~590~~286			3328,~~536~~389
Prepaid expenses		3233,~~981~~378			18,~~700~~357
Income tax receivable		2322,~~640~~724			23,462
Current deferred tax assets		215,~~835~~462			2,499
Other current assets		57—			1,384
Total current assets		662,592			551,910
Current assets of discontinued operations		—			16,700
Property, plant and equipment, net		1,001,810			956,028
Total current assets		751,726			551,910
Intangible assets, net of accumulated amortization of $24,019 and $21,293, respectively		11,087			9,209
Property, plant and equipment, net		1,073,825			950,932
Deferred financing costs, net of accumulated amortization of $10,737 and $9,316, respectively		10,841			9,694
Intangible assets, net of accumulated amortization of $25,180 and $21,293, respectively		9,802			9,209
Goodwill		254,996			250,533
Deferred financing costs, net of accumulated amortization of $11,242 and $9,316, respectively		10,246			9,694
Goodwill		252,137			247,675
Restricted cash		17,000			17,000
Other long-term assets		76,~~339~~226			65,~~202~~259
Total assets	$	1,965,665		$	1,800,576
Long-term assets of discontinued operations		—			8,897
Total assets	$	2,120,962		$	1,800,576
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	70104,~~809~~262		$	7574,~~099~~502
Accrued liabilities		4851,~~620~~878			4442,~~291~~047
Accrued payroll and payroll burdens		3036,~~540~~113			26,568
Accrued interest		215,~~458~~668			2,446
Income taxes payable		12,~~106~~200			—
Total current liabilities		153,533			148,404
Current liabilities of discontinued operations		—			2,841
Total current liabilities		210,121			148,404
Long-term debt		650,000			650,000
Deferred income taxes		~~234~~275,~~451~~784			190,~~422~~389
Other long-term liabilities		64,~~150~~512			5,916
Total liabilities		1,044,134			994,742
Long-term liabilities of discontinued operations		—			33
Total liabilities		1,140,417			994,742
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 77,891,409 (2010 — 76,443,926) issued		778			764
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 78,012,457 (2010 — 76,443,926) issued		780			764
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding		—			—
Additional paid-in capital		~~684~~688,~~174~~709			657,993
Retained earnings		~~219~~278,~~604~~790			126,165
Treasury stock, 370,662 (2010 — 167,643) shares at cost		(7,346	)		(1,765	)
Treasury stock, 372,341 (2010 — 167,643) shares at cost		(7,408	)		(1,765	)
Accumulated other comprehensive income		2419,~~321~~674			22,677
Total stockholders’ equity		~~921~~980,~~531~~545			805,834
Total liabilities and stockholders’ equity	$	12,~~965~~120,~~665~~962		$	1,800,576

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statements of Operations

Quarters and ~~Six~~Nine Months Ended ~~June~~September 30, 2011 and 2010 (unaudited)

	Quarter EndedJune 30,						Six Months EndedJune 30,
	Quarter EndedSeptember 30,						Nine Months EndedSeptember 30,
	2011			2010			2011			2010
	(In thousands, except per share data)
Revenue:
Revenues	$	590,289		$	410,270		$	1,623,707		$	1,064,489
Service	$	544,103		$	350,905		$	1,031,342		$	652,297
Service expenses		379,192			257,776			1,042,269			690,023
Product		7,864			9,340			15,842			17,652
Selling, general and administrative expenses		53,830			41,448			152,453			125,128
		551,967			360,245			1,047,184			669,949
Depreciation and amortization		48,695			44,563			146,832			134,798
Service expenses		346,645			223,564			661,167			430,384
Income from continuing operations before interest and taxes		108,572			66,483			282,153			114,540
Product expenses		5,335			7,323			11,288			13,447
Interest expense		12,917			14,151			40,709			43,653
Selling, general and administrative expenses		50,380			44,017			99,731			84,869
Interest income		(180	)		(73	)		(407	)		(249	)
Depreciation and amortization		49,465			45,472			98,613			90,791
Income from continuing operations before taxes		95,835			52,405			241,851			71,136
Income before interest and taxes		100,142			39,869			176,385			50,458
Taxes		36,513			20,814			91,420			28,609
Interest expense		13,681			14,760			27,824			29,501
Income from continuing operations		59,322			31,591			150,431			42,527
Interest income		(132	)		(95	)		(227	)		(143	)
Income (loss) from discontinued operations (net of tax expense of $707, $242, $1,149 and $638, respectively)		(136	)		1,439			2,194			3,412
Income before taxes		86,593			25,204			148,788			21,100
Net income	$	59,186		$	33,030		$	152,625		$	45,939
Taxes		32,088			9,533			55,349			8,191
Earnings (loss) per share information:
Net income	$	54,505		$	15,671		$	93,439		$	12,909
Continuing operations	$	0.76		$	0.41		$	1.94		$	0.56
Earnings per share information:
Discontinued operations		(0.00	)		0.02			0.03			0.04
Basic earnings per share	$	0.7076		$	0.2143		$	1.2197		$	0.1760
Diluted earnings per share	$	0.69		$	0.20		$	1.18		$	0.17
Continuing operations	$	0.75		$	0.41		$	1.90		$	0.55
Discontinued operations		(0.01	)		0.01			0.03			0.04
Diluted earnings per share	$	0.74		$	0.42		$	1.93		$	0.59
Weighted average shares:
Basic		7778,~~777~~004			76,~~036~~130			77,~~362~~578			75,~~869~~957
Diluted		79,~~187~~445			77,~~318~~792			7879,~~895~~080			77,~~194~~395

Consolidated Statements of Comprehensive Income

Quarters and ~~Six~~Nine Months Ended ~~June~~September 30, 2011 and 2010

(unaudited)

	Quarter EndedJune 30,						Six Months EndedJune 30,
	Quarter EndedSeptember 30,						Nine Months EndedSeptember 30,
	2011			2010			2011			2010
	(In thousands)						~~(In thousands)~~
Net income	$	5459,~~505~~186		$	1533,~~671~~030		$	93152,~~439~~625		$	1245,~~909~~939
Change in cumulative translation adjustment		(~~213~~4,647	)		(1,~~543~~309	)		1(3,~~644~~003	)		591,368
Comprehensive income	$	54,~~292~~539		$	1434,~~128~~339		$	95149,~~083~~622		$	1247,~~968~~307

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statement of Stockholders’ Equity

~~Six~~Nine Months Ended ~~June~~September 30, 2011 (unaudited)

	Numberof Shares			CommonStock			AdditionalPaid-inCapital			RetainedEarnings		TreasuryStock			AccumulatedOtherComprehensiveIncome			Total
	(In thousands, except share data)
Balance at December 31, 2010		76,443,926		$	764		$	657,993		$	126,165	$	(1,765	)	$	22,677		$	805,834
Net income		—			—			—			93152,~~439~~625		—			—			93152,~~439~~625
Cumulative translation adjustment		—			—			—			—		—			1(3,~~644~~003	)		1(3,~~644~~003	)
Issuance of common stock:
Exercise of stock options		~~891~~929,~~052~~852			89			15,~~079~~943			—		—			—			15,~~087~~952
Expense related to employee stock options		—			—			1,~~156~~734			—		—			—			1,~~156~~734
Excess tax benefit from share-based compensation		—			—			4,~~765~~990			—		—			—			4,~~765~~990
Purchase of treasury shares		(~~203~~204,~~019~~698	)		(2	)		2			—		(5,~~581~~643	)		—			(5,~~581~~643	)
Vested restricted stock		~~759~~843,~~450~~377			89			(89	)		—		—			—			—
Amortization of non-vested restricted stock		—			—			58,~~187~~056			—		—			—			58,~~187~~056
Balance at June 30, 2011		77,891,409		$	778		$	684,174		$	219,604	$	(7,346	)	$	24,321		$	921,531
Balance at September 30, 2011		78,012,457		$	780		$	688,709		$	278,790	$	(7,408	)	$	19,674		$	980,545

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statements of Cash Flows

~~Six~~Nine Months Ended ~~June~~September 30, 2011 and 2010 (unaudited)

	Six Months EndedJune 30,
	Nine Months EndedSeptember 30,
	2011			2010
	(In thousands)
Cash provided by:
Operating activities:
Net income	$	93152,~~439~~625		$	1245,~~909~~939
Items not affecting cash:
Depreciation and amortization		98147,~~613~~308			90135,~~791~~596
Deferred income taxes		4372,~~693~~441			47,~~106~~575
Excess tax benefit from share-based compensation		(4,~~765~~990	)		(~~273~~612	)
Non-cash compensation expense		69,~~343~~790			58,~~655~~571
Gain on non-monetary asset exchange		—			(458	)
Provision for bad debt expense		~~473~~844			~~1,177~~(158	)
Provision for write-off of note receivable		—			1,926
(Gain) loss on retirement of assets		~~806~~1,667			(9294	)
Other		1,229			1,524
Loss on discontinued operations		136			—
Other		1,756			2,288
Changes in operating assets and liabilities:
Accounts receivable		(4890,~~350~~532	)		(82110,~~463~~494	)
Inventory		(58,~~135~~509	)		5,~~334~~606
Prepaid expense and other current assets		(713,~~662~~108	)		42(2,~~611~~935	)
Accounts payable		820,~~564~~625			1517,~~404~~480
Accrued liabilities and other		3,240			6,364
Income taxes		5,833			50,410
Net cash provided by operating activities		190,488			104,515
Accrued liabilities and other		30,817			10,130
Net cash provided by operating activities		326,703			170,770
Investing activities:
Additions to property, plant and equipment		(~~149~~259,~~072~~925	)		(4189,~~894~~855	)
Acquisitions		(15,576	)		(121,~~365~~332	)
Proceeds from disposal of capital assets		3,285			3,117
Proceeds from the sale of disposal group		19,300			—
Other		191			—
Proceeds from disposal of capital assets		6,333			4,436
Net cash used in investing activities		(161,172	)		(40,142	)
Other		169			—
Net cash used in investing activities		(249,699	)		(106,751	)
Financing activities:
Repayments of long-term debt		—			(64141	)
Repayment of notes payable		—			(1,069	)
Proceeds from issuances of common stock		15,~~087~~952			23,~~263~~106
Purchase of treasury shares		(5,~~581~~643	)		(1,~~410~~418	)
Excess tax benefit from share-based compensation		4,765			273
Deferred financing fees		(2,477	)		—
Net cash provided by (used in) financing activities		14,271			(7	)
Excess tax benefit from share-based compensation		4,990			612
Effect of exchange rate changes on cash		286			(78	)
Net cash provided by financing activities		12,822			1,090
Change in cash and cash equivalents		43,873			64,288
Effect of exchange rate changes on cash		(680	)		126
Cash and cash equivalents, beginning of period		126,681			77,360
Change in cash and cash equivalents		89,146			65,235
Cash and cash equivalents, end of period	$	170,554		$	141,648
Cash and cash equivalents, beginning of period		119,135			71,770
Cash and cash equivalents, end of period	$	208,281		$	137,005
Supplemental cash flow information:
Cash paid for interest, net of interest capitalized	$	2625,~~541~~825		$	28,~~243~~489
Cash paid (refund received) for income taxes	$	610,~~235~~616		$	(4229,~~734~~033	)
Significant non-cash investing activities:
Non-cash capital expenditures	$	928,~~678~~665		$	—

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Notes to Consolidated Financial Statements

(Unaudited, in thousands, except share and per share data)

1.	General:

(a) Nature of operations:

Complete Production Services, Inc. is a provider of specialized services and products focused on developing hydrocarbon reserves, reducing operating costs and enhancing production for oil and gas companies. Complete Production Services, Inc. focuses its operations on basins within North America and manages its operations from regional field service facilities located throughout the U.S. Rocky Mountain region, Texas, Oklahoma, Louisiana, Arkansas, Pennsylvania, western Canada and Mexico. We also had operations in Southeast Asia.

References to “Complete,” the “Company,” “we,” “our” and similar phrases used throughout this Quarterly Report on Form 10-Q relate collectively to Complete Production Services, Inc. and its consolidated affiliates.

On April 21, 2006, our common stock began trading on the New York Stock Exchange under the symbol “CPX”.

(b) Basis of presentation:

The unaudited interim consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of the financial position of Complete as of ~~June~~September 30, 2011 and the statements of operations and the statements of comprehensive income for the quarters and ~~six~~nine-month periods ended ~~June~~September 30, 2011 and 2010, as well as the statement of stockholders’ equity for the ~~six~~ nine months ended ~~June~~September 30, 2011 and the statements of cash flows for the ~~six~~nine months ended ~~June~~September 30, 2011 and 2010. Certain information and disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission on February 18, 2011. We believe that these financial statements contain all adjustments necessary so that they are not misleading.

In preparing financial statements, we make informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. We review our estimates on an on-going basis, including those related to impairment of long-lived assets and goodwill, contingencies and income taxes. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.

The results of operations for interim periods are not necessarily indicative of the results of operations that could be expected for the full year.

(c) Discontinued operations:

On July 6, 2011, we sold our Southeast Asian products business, through which we provided oilfield equipment sales, rentals and refurbishment services, to MTQ Corporation Limited (“MTQ”), a Singapore firm which provides engineering services to oilfield and industrial equipment users and manufacturers. WeProceeds ~~received proceeds~~ from the sale of this business ~~totaling~~totaled $1921,~~300~~913, of which is$2,613 ~~subject~~represented tocash ~~further adjustment based~~ on ~~the~~hand ~~net tangible~~at ~~assets~~July 6, of2011 ~~the~~which ~~business~~was transferred onto ~~June~~us ~~30,~~in October 2011. Wepursuant ~~have~~to ~~not~~the ~~yet~~final ~~finalized~~settlement. ~~the~~We ~~gain~~recorded ora loss on ~~this~~the ~~transaction,~~sale ~~but~~of wethis ~~expect~~business ~~that~~of ~~such~~$136 aas ~~gain~~of orSeptember 30, ~~loss~~2011. ~~will~~See ~~not~~Note ~~have~~10, a“Discontinued ~~significant impact on our financial statements~~operations.”

Although this sale occurred subsequent to June 30, 2011, the following table presents the unaudited pro forma effect of the sale of this business on the presentation of revenue, income before taxes and net income for each of the periods presented in the accompanying statements of operations. No pro forma effect of the gain or loss on the sale of this business is included in the following table.

	As Reported		Disposal Group		Pro Forma
Quarter ended June 30, 2011
Revenue	$	551,967	$	7,735	$	544,232
Income before taxes	$	86,593	$	1,722	$	84,871
Net income	$	54,505	$	1,415	$	53,090
Quarter ended June 30, 2010
Revenue	$	360,245	$	8,389	$	351,856
Income before taxes	$	25,204	$	997	$	24,207
Net income	$	15,671	$	849	$	14,822
Six months ended June 30, 2011
Revenue	$	1,047,184	$	13,766	$	1,033,418
Income before taxes	$	148,788	$	2,772	$	146,016
Net income	$	93,439	$	2,330	$	91,109
Six months ended June 30, 2010
Revenue	$	669,949	$	15,731	$	654,218
Income before taxes	$	21,100	$	2,369	$	18,731
Net income	$	12,909	$	1,973	$	10,936

The following table presents the unaudited pro forma balance sheet presentation for each of the applicable periods presented, assuming the assets and liabilities associated with the Southeast Asian products business were reclassified as held for sale at June 30, 2011 and December 31, 2010.

As of June 30, 2011	As Reported		Disposal Group			Pro Forma
Current assets:
Accounts receivable	$	393,935	$	(6,805	)	$	387,130
Inventory, net	$	38,590	$	(5,264	)	$	33,326
Prepaid expenses	$	32,981	$	(455	)	$	32,526
Current assets held for sale		—	$	12,524		$	12,524
Long-term assets:
Property, plant and equipment, net	$	1,001,810	$	(4,963	)	$	996,847
Goodwill	$	254,996	$	(2,858	)	$	252,138
Other long-term assets	$	7,339	$	(941	)	$	6,398
Long-term assets held for sale		—	$	8,762		$	8,762
Current liabilities:
Accounts payable	$	70,809	$	(2,774	)	$	68,035
Accrued liabilities	$	81,618	$	(781	)	$	80,837
Income taxes payable	$	1,106	$	(431	)	$	675
Current liabilities held for sale		—	$	3,986		$	3,986
Long-term liabilities:
Deferred income taxes	$	234,451	$	(42	)	$	234,409
Long-term liabilities held for sale		—	$	42		$	42
As of December 31, 2010	As Reported		Disposal Group			Pro Forma
Current assets:
Accounts receivable	$	345,648	$	(3,664	)	$	341,984
Inventory, net	$	33,536	$	(5,147	)	$	28,389
Prepaid expenses	$	18,700	$	(343	)	$	18,357
Current assets held for sale		—	$	9,154		$	9,154
Long-term assets:
Property, plant and equipment, net	$	956,028	$	(5,096	)	$	950,932
Goodwill	$	250,533	$	(2,858	)	$	247,675
Other long-term assets	$	6,202	$	(943	)	$	5,259
Long-term assets held for sale		—	$	8,897		$	8,897
Current liabilities:
Accounts payable	$	75,099	$	(597	)	$	74,502
Accrued liabilities	$	73,305	$	(1,582	)	$	71,723
Current liabilities held for sale		—	$	2,179		$	2,179
Long-term liabilities:
Deferred income taxes	$	190,422	$	(33	)	$	190,389
Long-term liabilities held for sale		—	$	33		$	33

2.	Business acquisition:

On May 11, 2011, we completed the purchase of the hydraulic snubbing and production testing assets of a business with operations in the Marcellus, Eagle Ford and Barnett Shales. We paid a total of $15,576 in cash for these assets, which included goodwill of $4,433. The entire purchase price was allocated to the completion and production services business segment. We believe this acquisition will supplement our hydraulic snubbing and production testing service offerings in Pennsylvania and Texas. The following table summarizes our preliminary purchase price allocation for this acquisition as of ~~June~~September 30, 2011:


Net assets acquired:
Other current assets	$	725
Property, plant and equipment		5,868
Current liabilities		(10	)
Intangible assets		4,560
Goodwill		4,433

Net assets acquired	$	15,576

Consideration:
Cash, net of cash and cash equivalents acquired	$	15,576

The purchase price of this acquired business was negotiated as an arm’s length transaction with the seller. We use various valuation techniques, including an earnings multiple approach, to evaluate acquisition targets. We also consider precedent transactions which we have undertaken and similar transactions of others in our industry. ToWe determine the fair value of assets acquired, weincluding ~~generally retain third-party consultants to assist with the valuation of~~ identifiable intangible assets, and to evaluate property, plant and equipment acquired based upon, at minimum, the replacement cost of the assets, by applying valuation techniques and by obtaining other supporting documentation from third-party consultants.

This acquisition was not deemed to be significant to our overall results for the nine months ended September 30, 2011, therefore no pro forma disclosure of the impact of this acquisition has been provided.

3.	Accounts receivable:

	June 30,2011		December 31,2010
	September 30,2011		December 31,2010
Trade accounts receivable	$	~~319~~332,~~357~~169	$	~~253~~249,~~662~~998
Related party receivables		2638,~~063~~285		51,046
Unbilled revenue		5165,~~078~~257		42,747
Other receivables		13,~~217~~749		2,353
		397,715		349,808
		439,460		346,144
Allowance for doubtful accounts		3,~~780~~865		4,160
	$	~~393~~435,~~935~~595	$	~~345~~341,~~648~~984

Of the related party receivables at ~~June~~September 30, 2011 and December 31, 2010, $2537,~~405~~722 and $50,048, respectively, related to amounts due from a company for which one of our directors has an ownership interest and serves as chief executive officer and chairman of the board.

4.	Inventory:

	June 30,2011		December 31,2010
	September 30,2011		December 31,2010
Finished goods	$	1915,~~985~~565	$	1813,~~644~~497
Manufacturing parts, materials and other		1820,~~441~~167		16,063
Work in process		1,~~302~~663		1,282
		39,728		35,989
		37,395		30,842
Inventory reserves		1,~~138~~109		2,453
	$	3836,~~590~~286	$	3328,~~536~~389

5.	Property, plant and equipment:

June 30, 2011	Cost		AccumulatedDepreciation		Net Book Value
	Cost		AccumulatedDepreciation		Net BookValue
Land	$	10,423	$	—	$	10,423
September 30, 2011
Buildings		34,388		5,115		29,273
Land	$	11,357	$	—	$	11,357
Field equipment		1,528,134		723,295		804,839
Buildings		36,310		5,385		30,925
Vehicles		124,475		64,437		60,038
Field equipment		1,575,633		748,501		827,132
Office furniture and computers		20,268		13,054		7,214
Vehicles		126,227		67,577		58,650
Leasehold improvements		25,885		7,446		18,439
Office furniture and computers		21,995		13,603		8,392
Construction in progress		71,584		—		71,584
Leasehold improvements		22,749		7,609		15,140
	$	1,815,157	$	813,347	$	1,001,810
Construction in progress		122,229		—		122,229
December 31, 2010	Cost		AccumulatedDepreciation		Net Book Value
	$	1,916,500	$	842,675	$	1,073,825
Land	$	8,475	$	—	$	8,475
Buildings		32,083		4,456		27,627
Field equipment		1,442,664		643,582		799,082
Vehicles		128,381		58,110		70,271
Office furniture and computers		18,259		11,970		6,289
Leasehold improvements		26,644		6,258		20,386
Construction in progress		23,898		—		23,898
	$	1,680,404	$	724,376	$	956,028

Construction in progress at June 30, 2011 and December 31, 2010 primarily included progress payments to vendors for equipment to be delivered in future periods and component parts to be used in the final assembly of operating equipment, which in all cases were not yet placed into service at the time. For the quarter and six months ended June 30, 2011, we recorded capitalized interest of $771 and $1,056, respectively, related to assets that we are constructing for internal use and amounts paid to vendors under progress payments for assets that are being constructed on our behalf.


	Cost		Accumulated Depreciation		Net Book Value
December 31, 2010
Land	$	8,475	$	—	$	8,475
Buildings		32,083		4,456		27,627
Field equipment		1,437,343		639,282		798,061
Vehicles		128,098		57,930		70,168
Office furniture and computers		17,938		11,712		6,226
Leasehold improvements		22,503		6,007		16,496
Construction in progress		23,879		—		23,879

	$	1,670,319	$	719,387	$	950,932

InConstruction ~~conjunction~~in ~~with~~progress ~~our~~at ~~impairment~~September 30, ~~testing~~2011 ofand ~~long-term assets at~~ December 31, 2010, weprimarily ~~noted approximately~~included ~~$5,814~~progress ofpayments ~~salvage value assigned~~ to ~~various~~vendors ~~coiled~~for ~~tubing~~equipment ~~and~~to ~~wireline~~be ~~assets~~delivered atin ~~one~~future ofperiods ~~our~~and ~~operating~~component ~~divisions.~~parts ~~Although~~to webe ~~evaluated~~used ~~these~~in ~~assets and~~ the ~~assets~~final assembly of ~~the~~operating ~~overall~~equipment, ~~reporting~~which ~~unit~~in ~~for~~all ~~recoverability~~cases ~~and~~were ~~noted~~not noyet ~~significant~~placed ~~impairment based~~into onservice anat ~~undiscounted cash flow projection, we believe that~~ the ~~salvage value assigned to these assets is no longer appropriate~~time. ~~These~~Significant assets ~~were~~included ~~acquired~~in construction ~~several~~in ~~years~~progress ~~ago~~at September 30, ~~and~~2011 weincluded ~~believe~~a ~~the~~Marcellus ~~estimate~~Frac ~~for salvage value used at that time was appropriate. However~~fleet, ~~increasingly,~~two ~~our~~drilling ~~business~~rigs isand ~~focusing on larger-diameter~~ coiled tubing ~~units~~assets. ~~and~~For ~~more~~the ~~technologically-advanced~~quarter ~~equipment.~~and Asnine ~~such,~~months ~~effective~~ended ~~January~~September 130, 2011, we ~~changed~~recorded ~~our~~capitalized ~~estimate~~interest of ~~salvage~~$922 ~~value to zero~~ and ~~are~~$1,978, ~~depreciating these assets over their remaining useful lives~~respectively, ~~which~~related ~~we determined~~ to beassets anthat ~~average~~we ofare ~~1.3~~constructing ~~years.~~for ~~This~~internal ~~change~~use ~~in estimate has been applied prospectively~~ and isamounts ~~expected~~paid to ~~increase~~vendors ~~our~~under ~~depreciation~~progress ~~expense~~payments ~~over~~for ~~the~~assets ~~next~~that ~~five~~are ~~years~~being ~~as follows:~~constructed ~~2011—$4,867;~~on ~~2012—$789;~~our ~~2013—$134 and 2014—$24~~behalf.

In August 2011, we sold a water evaporation facility located in Wyoming. The net book value of this asset totaled $1,174. Proceeds received from the sale totaled $620, resulting in a loss of $554 on the transaction.

In conjunction with our impairment testing of long-term assets at December 31, 2010, we noted approximately $5,814 of salvage value assigned to various coiled tubing and wireline assets at one of our operating divisions. Although we evaluated these assets and the assets of the overall reporting unit for recoverability and noted no significant impairment based on an undiscounted cash flow projection, we believe that the salvage value assigned to these assets was no longer appropriate. These assets were acquired several years ago, and we believe the estimate for salvage value used at that time was appropriate. However, increasingly, our business is focusing on larger-diameter coiled tubing units and more technologically-advanced equipment. As such, effective January 1, 2011, we changed our estimate of salvage value to zero and are depreciating these assets over their remaining useful lives, which we determined to be an average of 1.3 years. This change in estimate has been applied prospectively and is expected to increase our depreciation expense over the next five years as follows: 2011—$4,867; 2012—$789; 2013—$134 and 2014—$24.

6.	Notes payable:

We entered into a note arrangement to finance certain of our annual insurance premiums for the policy term from May 1, 2009 to April 2010. Our accounting policy has been to record a prepaid asset associated with certain of these policies which is amortized over the term and which takes into account actual premium payments and deposits made to date, to record an accrued liability for premiums which are contractually committed for the policy term and to make monthly premium payments in accordance with our premium commitments and monthly note payments for amounts financed. For the ~~six~~nine months ended ~~June~~September 30, 2010, we paid $1,069 under this note payable arrangement. Effective May 1, 2011 and 2010, we renewed our annual insurance premiums for the ~~preceding~~respective twelve-month terms, but chose to prepay our premiums for certain insurance coverages ~~which~~rather ~~had~~than ~~been~~finance ~~financed~~such premiums as in prior renewals.

109

7.	Long-term debt:

The following table summarizes long-term debt as of ~~June~~September 30, 2011 and December 31, 2010:

	2011		2010
U.S. revolving credit facility (a)	$	—	$	—
Revolving credit facility (a)	$	—	$	—
Canadian revolving credit facility (a)		—		—
8.0% senior notes (b)		650,000		650,000
	$	650,000	$	650,000

(a)

Prior to June 13, 2011, we maintained a senior secured facility (the “Amended Credit Agreement”) with Wells Fargo Bank, National Association, as U.S. Administrative Agent, HSBC Bank Canada, as Canadian Administrative Agent, and certain other financial institutions which was structured as an asset-based facility subject to borrowing base restrictions. In connection with the facility, Wells Fargo Capital Finance, LLC (formerly known as Wells Fargo Foothill, LLC) served as U.S. Administrative Agent and also served as U.S. Issuing Lender and U.S. Swingline Lender. The Amended Credit Agreement provided for a U.S. revolving credit facility of up to $225,000 that was to mature in December 2011 and a Canadian revolving credit facility of up to $15,000 (with Integrated Production Services Ltd., one of our wholly-owned subsidiaries, as the borrower thereof (“Canadian Borrower”)) that was to mature in December 2011. The Amended Credit Agreement included a provision for a “commitment increase”, as defined therein, which permitted us to effect up to two separate increases in the aggregate commitments under the Amended Credit Agreement by designating one or more existing lenders or other banks or financial institutions, subject to the bank’s sole discretion as to participation, to provide additional aggregate financing up to $75,000, with each committed increase equal to at least $25,000 in the U.S., or $5,000 in Canada, and in accordance with other provisions as stipulated in the Amended Credit Agreement. Certain portions of the credit facilities were available to be borrowed in U.S. dollars, Canadian dollars and other currencies approved by the lenders.

Subject to certain limitations set forth in the Amended Credit Agreement, we had the ability to elect how interest under the Amended Credit Agreement would be computed. Interest under the Amended Credit Agreement could be determined by reference to (1) the London Inter-bank Offered Rate, or LIBOR, plus an applicable margin between 3.75% and 4.25% per annum (with the applicable margin depending upon our Excess Availability Amount, as defined in the Amended Credit Agreement) or (2) the Base Rate (which means the higher of the Prime Rate, Federal Funds Rate plus 0.50%, 3 month LIBOR plus 1.00% and 3.50%), plus the applicable margin, as described above. If an event of default existed or continued under the Amended Credit Agreement, advances would bear interest as described above with an applicable margin rate of 4.25% plus 2.00%. Interest was payable monthly.

We incurred unused commitment fees under the Amended Credit Agreement ranging from 0.50% to 1.00% based on the average daily balance of amounts outstanding.

Letters of credit outstanding under the Amended Credit Agreement incurred fees equal to the applicable margin, as described above. If an event of default existed or continued, such fee would have been equal to the applicable margin plus 2.00%.

Under the Amended Credit Agreement, the only financial covenant to which we were subject was a “Fixed Charge Coverage Ratio” covenant, which must have exceeded 1.10 to 1.00. This covenant became effective only if our Excess Availability Amount, as defined under the Amended Credit Agreement, plus certain qualified cash and cash equivalents is less than $50,000.

For a further description of the terms of our Amended Credit Agreement, including the provisions to calculate our U.S. and Canadian borrowing base, financial covenants requirements and events of default, see our Annual Report on Form 10-K for the year ended December 31, 2010.

~~New~~10 ~~Credit Agreement, effective June 13, 2011:~~

On June 13, 2011, we entered into a Third Amended and Restated Credit Agreement among us, a

subsidiary of the Company that is designated as a borrower under the Canadian facility, if any (the “Canadian Borrower”), the lenders party thereto, Wells Fargo Bank, National Association, as the U.S. administrative agent, U.S. issuing lender and U.S. swingline lender, and the other persons from time to time party thereto (the “New Credit Agreement”), ~~which~~effective amends and restates the Second Amended and Restated Credit Agreement, dated as of December 6, 2006 (the “Second Amended and Restated Credit Agreement”), as amended by the First Amendment to Second Amended and Restated Credit Agreement, dated as of June 29, 2007 (the “First Amendment”), the Second Amendment to Credit Agreement and Omnibus Amendment to Security Documents, dated as of October 9, 2007 (the “Second Amendment”), and the Third Amendment to Credit Agreement, Omnibus Amendment to Credit Documents and Assignment, dated as of October 13, ~~2009~~2011: (the “Third Amendment,”) and collectively with the Second Amended and Restated Credit Agreement, the First Amendment and the Second Amendment, the Amended Credit Agreement. Defined terms not otherwise described herein shall have the meanings given to them in the New Credit Agreement.

On June 13, 2011, we entered into a Third Amended and Restated Credit Agreement among us, a subsidiary of the Company that is designated as a borrower under the Canadian facility, if any (the “Canadian Borrower”), the lenders party thereto, Wells Fargo Bank, National Association, as the U.S. administrative agent, U.S. issuing lender and U.S. swingline lender, and the other persons from time to time party thereto (the “New Credit Agreement”), which amends and restates the Amended Credit Agreement. Defined terms not otherwise described herein shall have the meanings given to them in the New Credit Agreement.

The New Credit Agreement modifies the Amended Credit Agreement by, among other things:

•

changing the structure of the credit facility from an asset-based facility to a cash flow facility;

•

substituting Wells Fargo Bank, National Association, for Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), as U.S. administrative agent, and appointing Wells Fargo Bank, National Association, as U.S. issuing lender and U.S. swingline lender; and

• increasing our U.S. revolving credit facility from $225,000 to $300,000 and terminating the existing Canadian revolving credit facility (subject to our option to convert and reallocate any portion of the U.S. revolving credit facility then held by HSBC Bank USA, N.A., into a Canadian revolving credit facility upon satisfaction of certain conditions, including obtaining the consent of HSBC Bank USA, N.A., to such conversion and reallocation).

Subject to certain limitations set forth in the New Credit Agreement, we have the option to determine how interest is computed by reference to either (i) the London Inter-bank Offered Rate, or LIBOR, plus an applicable margin between 2.25% and 3.00% based on the Total Debt Leverage Ratio (as defined in the New Credit Agreement), or (ii) the “Base Rate” (which means the higher of the Prime Rate, Federal Funds Rate plus 0.50%, or the daily one-month LIBOR plus 1.00%), plus an applicable margin between 1.25% and 2.00% based on the Total Debt Leverage Ratio (as defined in the New Credit Agreement). Advances under the Canadian revolving credit facility, if any, will bear interest as described in the New Credit Agreement. If an event of default exists or continues under the New Credit Agreement, advances may bear interest at the rates described above, plus 2.00%. Interest is payable in arrears on a quarterly basis ~~beginning on June 30, 2011~~.

Additionally, the New Credit Agreement, among other things:

•

permits us to effect up to two separate increases in the aggregate commitments under the credit facility, of at least $50,000 per commitment increase, and of up to $150,000 in the aggregate;

•

requires us to comply with a “Total Debt Leverage Ratio” covenant, which prohibits us from permitting the Total Debt Leverage Ratio (as defined in the New Credit Agreement), at the end of each fiscal quarter, to be greater than 4.00 to 1.00;

•

requires us to comply with a “Senior Debt Leverage Ratio” covenant, which prohibits us from permitting the Senior Debt Leverage Ratio (as defined in the New Credit Agreement), at the end of each fiscal quarter, to be greater than 2.50 to 1.00 and

•11 requires us to comply with a “Consolidated Interest Coverage Ratio” covenant, which prohibits us from permitting the ratio of, as of the last day of each fiscal quarter, (i) the consolidated EBITDA of Complete and its consolidated Restricted Subsidiaries (as

• requires us to comply with a “Consolidated Interest Coverage Ratio” covenant, which prohibits us from permitting the ratio of, as of the last day of each fiscal quarter, (i) the consolidated EBITDA of Complete and its consolidated Restricted Subsidiaries (as defined in the New Credit Agreement), calculated for the four fiscal quarters then ended, to (ii) the consolidated interest expense of Complete and its consolidated Restricted Subsidiaries for the four fiscal quarters then ended, to be less than 2.75 to 1.00.

We were in compliance with these debt covenant requirements as of ~~June~~ September 30, 2011.

The term of the credit facilities provided for under the New Credit Agreement will continue until the earlier of (i) June 13, 2016 or (ii) the earlier termination in whole of the U.S. lending commitments (or Canadian lending commitments, if any) as further described in the New Credit Agreement. Events of default under the New Credit Agreement remain substantially the same as under the Amended Credit Agreement.

The obligations under the U.S. portion of the New Credit Agreement are secured by first priority security interests on substantially all of the assets (other than certain excluded assets) of Complete and any Domestic Restricted Subsidiary (as defined in the New Credit Agreement), whether now owned or hereafter acquired including, without limitation: (i) all equity interests issued by any domestic subsidiary, (ii) 100% of equity interests issued by first tier foreign subsidiaries but, in any event, no more than 66% of the outstanding voting securities issued by any first tier foreign subsidiary, and (iii) the Existing Mortgaged Properties (as defined in the New Credit Agreement). Additionally, all of the obligations under the U.S. portion of the New Credit Agreement will be guaranteed by Complete and each existing and subsequently acquired or formed Domestic Restricted Subsidiary. The obligations under the Canadian portion of the New Credit Agreement, if any, will be secured by substantially all of the assets (other than certain excluded assets) of Complete and any Restricted Subsidiary (other than our Mexican subsidiary), as further described in the New Credit Agreement. Additionally, all of the obligations under the Canadian portion of the New Credit Agreement, if any, will be guaranteed by Complete as well as certain of our subsidiaries. Subject to certain limitations, we will have the right to designate certain newly acquired and existing subsidiaries as unrestricted subsidiaries under the New Credit Agreement, and the assets of such unrestricted subsidiaries will not serve as security for either the U.S. portion or the Canadian portion, if any, of the New Credit Agreement.

There were no borrowings outstanding under the New Credit Agreement as of ~~June~~September 30, 2011. There were letters of credit outstanding under the U.S. revolving portion of the facility totaling $22,278, which reduced the available borrowing capacity as of ~~June~~ September 30, 2011. We incurred fees related to our letters of credit as of ~~June~~September 30, 2011 at 1.6750% per annum. For the ~~six~~ nine months ended ~~June~~September 30, 2011, fees related to our letters of credit were calculated using a 360-day provision, at 3.75% per annum prior to the amendment on June 13, 2011, and ranged from 1.50% per annum to 1.66% thereafter resulting in a weighted average interest rate of 3 2.5514 % per annum for the ~~six~~nine-month period ended ~~June~~ September 30, 2011. Our available borrowing capacity under the revolving credit facility at ~~June~~September 30, 2011 was $277,722.

We will incur unused commitment fees under the New Credit Agreement ranging from 0.375% to 0.50% based on the average daily balance of amounts outstanding. The unused commitment fees were calculated at 0.50375% as of ~~June~~September 30, 2011. For the ~~six~~nine months ended ~~June~~September 30, 2011, the weighted average interest rate associated with unused commitments was 0.9657% per annum.

We recorded deferred financing fees associated with the New Credit Agreement ~~in June 2011~~ totaling $2,~~567~~477. These fees will be amortized to expense, along with the remaining balance of deferred financing fees associated with the prior amendments to this facility, over the term of the facility which matures in June 2016.

(b) On December 6, 2006, we issued 8.0% senior notes with a face value of $650,000 through a private placement of debt. These notes mature in 10 years, on December 15, 2016, and require semi-annual interest payments, paid in arrears and calculated based on an annual rate of 8.0%, on June 15 and December 15, of each year, which commenced on June 15, 2007. There was no discount or premium associated with the issuance of these notes. The senior notes are guaranteed by all of our current domestic subsidiaries. The senior notes have covenants which, among other things: (1) limit the amount of additional indebtedness we can incur; (2) limit restricted payments such as a dividend; (3) limit our ability to incur liens or encumbrances; (4) limit our ability to purchase, transfer or dispose of significant assets; (5) limit our ability to purchase or redeem stock or subordinated debt; (6) limit our ability to enter into transactions with affiliates; (7) limit our ability to merge with or into other companies or transfer all or substantially all of our assets; and (8) limit our ability to enter into sale and leaseback transactions. We have the option to redeem all

1312

discount or premium associated with the issuance of these notes. The senior notes are guaranteed by all of our current domestic subsidiaries. The senior notes have covenants which, among other things: (1) limit the amount of additional indebtedness we can incur; (2) limit restricted payments such as a dividend; (3) limit our ability to incur liens or encumbrances; (4) limit our ability to purchase, transfer or dispose of significant assets; (5) limit our ability to purchase or redeem stock or subordinated debt; (6) limit our ability to enter into transactions with affiliates; (7) limit our ability to merge with or into other companies or transfer all or substantially all of our assets; and (8) limit our ability to enter into sale and leaseback transactions. We have the option to redeem all or part of these notes on or after December 15, 2011. Additionally, we may redeem some or all of the notes prior to December 15, 2011 at a price equal to 100% of the principal amount of the notes plus a make-whole premium.

Pursuant to a registration rights agreement with the holders of our 8.0% senior notes, on June 1, 2007, we filed a registration statement on Form S-4 with the SEC which enabled these holders to exchange their notes for publicly registered notes with substantially identical terms. These holders exchanged 100% of the notes for publicly traded notes on July 25, 2007. On August 28, 2007, we entered into a supplement to the indenture governing the 8.0% senior notes, whereby additional domestic subsidiaries became guarantors under the indenture. Effective April 1, 2009, we entered into a second supplement to this indenture whereby additional domestic subsidiaries became guarantors under the indenture.

8.	Stockholders’ equity:

(a) Stock-based Compensation—Stock Options:

We maintain option plans under which we grant stock-based compensation to employees, officers and directors to purchase our common stock. The exercise price of each option is based on the fair value of the company’s stock at the date of grant. Options may be exercised over a five or ten-year period and generally a third of the options vest on each of the first three anniversaries from the grant date. Upon exercise of stock options, we issue our common stock.

We calculate stock compensation expense for our stock-based compensation awards by measuring the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, with limited exceptions, by using an option pricing model to determine fair value. A further description can be found in our Annual Report on Form 10-K as of December 31, 2010.

On January 31, 2011, the Compensation Committee of our Board of Directors approved the annual grant of stock options and non-vested restricted stock to certain employees, officers and directors. Pursuant to this authorization, we issued 428,960 shares of non-vested restricted stock at a grant price of $27.94. We expect to recognize compensation expense associated with this grant of non-vested restricted stock totaling $11,982 ratably over the three-year vesting period. We granted an additional 23,500 shares of non-vested restricted stock in May 2011 and expect to recognize compensation expense associated with these grants totaling $718 ratably over the three-year vesting period. In addition, we granted 231,300 stock options to purchase shares of our common stock at an exercise price of $27.94. These stock options vest ratably over a three-year period. We will recognize compensation expense associated with these stock option grants over the vesting period. The fair value of the stock options granted during the ~~six~~nine months ended ~~June~~September 30, 2011 was determined by applying a Black-Scholes option pricing model based on the following assumptions:

Assumptions:		~~Six~~Nine Months ~~EndedJune~~EndedSeptember 30,2011
Risk-free rate		0.96% to 1.92%
Expected term (in years)		3.7 to 5.1
Volatility		54.1%
Calculated fair value per option		$11.32 to $13.53

We calculated the expected volatility of our common stock based on our historical volatility, adjusted for certain qualitative factors, over the expected term of the options. This volatility factor was used to ~~compute~~calculate the ~~calculation of the~~ fair market value of stock option grants made during the ~~six~~nine months ended ~~June~~September 30, 2011.

We13 projected a rate of stock option forfeitures based upon historical experience and management assumptions related to the expected term of the options. After adjusting for these forfeitures, we expect to recognize expense totaling $2,782 over the vesting period of these 2011 stock option grants. For the quarter and six months ended June 30, 2011, we have recognized expense related to these stock option grants totaling $232 and $386, respectively, which represents a reduction of net income before taxes. The impact on net income for the quarter and six months ended June 30, 2011 was a decrease of $146 and $243,

We projected a rate of stock option forfeitures based upon historical experience and management assumptions related to the expected term of the options. After adjusting for these forfeitures, we expect to recognize expense totaling $2,782 over the vesting period of these 2011 stock option grants. For the quarter and nine months ended September 30, 2011, we have recognized expense related to these stock option grants totaling $232 and $618, respectively, which represents a reduction of net income before taxes. The impact on net income for the quarter and nine months ended September 30, 2011 was a decrease of $144 and $384, respectively, with no impact on diluted earnings per share as reported. The unrecognized compensation costs related to the non-vested portion of these awards was $2,~~396~~164 as of ~~June~~ September 30, 2011 and will be recognized over the applicable remaining vesting periods.

For the quarters ended ~~June~~ September 30, 2011 and 2010, we recognized compensation expense associated with all stock option awards totaling $~~591~~578 and $~~593~~488, respectively, resulting in a decrease in net income of $~~372~~360 and $~~363~~298, respectively. The impact of this compensation expense on earnings per share was a $0.01 reduction in diluted earnings per share for each of the quarters ended ~~June~~September 30, 2011 and 2010. For the ~~six~~nine months ended ~~June~~September 30, 2011 and 2010, we recognized compensation expense associated with all stock option awards totaling $1,~~156~~734 and $1,~~343~~831, respectively, resulting in a decrease in net income of $~~726~~1,079 and $~~821~~1,118, respectively. This resulted in a $0.0102 ~~impact~~reduction onin earnings per share for ~~the~~each ~~six~~of ~~months~~the nine-month periods ended ~~June~~September 30, 2011 and 2010~~, respectively~~. Total unrecognized compensation expense associated with outstanding stock option awards at ~~June~~September 30, 2011 was $43,~~080~~503 or $2,~~563~~179, net of tax.

The following tables provide a roll forward of stock options from December 31, 2010 to ~~June~~September 30, 2011 and a summary of ~~stock~~ stock options outstanding by exercise price range at ~~June~~September 30, 2011:

	Options Outstanding
	Number			WeightedAverageExercisePrice
Balance at December 31, 2010		3,141,580		$	12.68
Granted		231,300		$	27.94
Exercised		(~~891~~929,~~052~~852	)	$	1617.9316
Cancelled		—		$	—
Balance at June 30, 2011		2,481,828		$	12.57
Balance at September 30, 2011		2,443,028		$	12.42

	Options Outstanding								~~Options Exercisable~~		Options Exercisable
Range of Exercise Price	Outstanding ~~atJune~~atSeptember 30,2011		WeightedAverageRemainingLife (months)		~~WeightedAverageExercisePrice~~		WeightedAverageExercisePrice		~~Exercisable atJune 30,2011~~		Exercisable atSeptember 30,2011		~~WeightedAverageRemainingLife (months)~~	~~WeightedAverageExercisePrice~~WeightedAverageRemainingLife (months)		WeightedAverageExercisePrice
$5.00		60,000	23	20	$	~~5.00~~	$	5.00		~~60,000~~		60,000	23	$	~~5.00~~20	$	5.00
$6.41 – $8.16		1,251,~~934~~134	69	66	$	~~6.55~~	$	6.55		~~954,457~~		953,657	63	$	~~6.59~~60	$	6.59
$11.66 – $12.53		483,964	99		$	12.47				143,765			90	$	12.32
$11.66 - $12.53		483,964		96			$	12.47				143,765			87	$	12.32
$15.90		61,900	79	76	$	~~15.90~~	$	15.90		~~61,900~~		61,900	67	$	~~15.90~~64	$	15.90
$17.67 – $19.87		~~155~~137,863	67	64	$	~~19.75~~	$	19.73		~~155,863~~		137,863	67	$	~~19.75~~64	$	19.73
$23.27 – $24.00		~~140~~122,367	58	55	$	~~23.98~~	$	23.97		~~140,367~~		122,367	58	$	~~23.98~~55	$	23.97
$26.26 – $27.94		276,300	~~108~~	105	$	~~27.68~~	$	27.68		~~45,000~~		45,000	71	$	~~26.35~~68	$	26.35
$29.88		40,000	83	80	$	~~29.88~~	$	29.88		~~40,000~~		40,000	83	$	~~29.88~~80	$	29.88
$34.19		119,500	84	81	$	~~34.19~~	$	34.19		~~7,667~~		9,500	84	$	~~34.19~~81	$	34.19
		2,481,828	78		$	12.57				1,609,019			65	$	11.46
		2,443,028		75			$	12.42				1,574,052			62	$	11.25

The total intrinsic value of stock options exercised during the quarter and ~~six~~nine months ended ~~June~~September 30, 2011 was $~~6,625~~865 and $15,~~087~~952, respectively. The total intrinsic value of all in-the-money vested outstanding stock options at ~~June~~September 30, 2011 was $3513,~~249~~644. Assuming all stock options outstanding at ~~June~~September 30, 2011 were vested, the total intrinsic value of all in-the-money outstanding stock options would have been $5119,~~991~~513.

(b) Non-vested Restricted Stock:

We present the amortization of non-vested restricted stock as an increase in additional paid-in capital. At ~~June~~ September 30, 2011, amounts not yet recognized related to non-vested restricted stock totaled $1714,~~114~~106, which represented the unamortized expense associated with awards of non-vested stock granted to ~~employees, officers and directors under our compensation plans,~~ including $12,669 related to grants during the six months ended June 30, 2011. We recognized compensation expense associated with non-vested restricted stock totaling $2,621 and $2,428 for the quarters ended June 30, 2011 and 2010, respectively, and $5,187 and $4,312 for the six months ended June 30, 2011 and 2010, respectively.

1514

~~The~~ employees, ~~following~~officers ~~table~~and ~~summarizes~~directors under our compensation plans, including $12,531 related to grants during the ~~change~~nine inmonths ended September 30, 2011. We recognized compensation expense associated with non-vested restricted stock ~~from December~~totaling $2,869 and $2,428 for the quarters ended September 3130, 2011 and 2010, torespectively, ~~June~~and $8,056 and $6,740 for the nine months ended September 30, 2011: and 2010, respectively.

	Non-vestedRestricted Stock
	Number			WeightedAverageGrant Price
Balance at December 31, 2010		1,672,854		$	11.12
Granted		452,460		$	28.08
Vested		(759,450	)	$	10.45
Forfeited		(6,716	)	$	15.37
Balance at June 30, 2011		1,359,148		$	17.12

The following table summarizes the change in non-vested restricted stock from December 31, 2010 to September 30, 2011:


	Non-vested Restricted Stock
	Number			Weighted Average Grant Price
Balance at December 31, 2010		1,672,854		$	11.12
Granted		452,460		$	28.08
Vested		(843,377	)	$	10.79
Forfeited		(11,216	)	$	21.49

Balance at September 30, 2011		1,270,721		$	17.29

(c) Treasury Shares:

In accordance with the provisions of the 2008 Incentive Award Plan, as amended, holders of non-vested restricted stock were given the option to either remit to us the required withholding taxes associated with the vesting of restricted stock, or to authorize us to purchase shares equivalent to the cost of the withholding tax and to remit the withholding taxes on behalf of the holder. Pursuant to this provision, we purchased the following shares of our common stock during the ~~six~~nine months ended ~~June~~September 30, 2011:

Period	SharesPurchased		Average PricePaid per Share		ExtendedAmount
January 1 – 31, 2011		199,510	$	27.45	$	5,476
February 1 – 28, 2011		—		—		—
March 1 – 31, 2011		1,374	$	28.22		39
April 1 – 30, 2011		426	$	29.72		13
May 1 – 31, 2011		1,065	$	30.80		33
June 1 – 30, 2011		644	$	30.90		20
		203,019			$	5,581
July 1 – 31, 2011		1,326	$	37.11		49
August 1 – 31, 2011		353	$	37.33		13
September 1 - 30, 2011		—		—		—
		204,698			$	5,643

9. Earnings per share:

We compute basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common share includes the weighted average of additional shares associated with the incremental effect of dilutive employee stock options and non-vested restricted stock, as determined using the treasury stock method prescribed by the Financial Accounting Standards Board (“FASB”) guidance on earnings per share. The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share for the quarters and ~~six~~nine months ended ~~June~~September 30, 2011 and 2010:

Quarter Ended June 30,

Six Months Ended June 30,

Quarter EndedSeptember 30,

Nine Months EndedSeptember 30,

2011

2010

2011

2010

(In thousands)

Weighted average basic common shares outstanding

7778,~~777~~004

76,~~036~~130

77,~~362~~578

75,~~869~~957

Effect of dilutive securities:

Employee stock options

~~1,033~~998

~~553~~751

1,~~080~~052

~~565~~628

Non-vested restricted stock

~~377~~443

~~729~~911

~~453~~450

~~760~~810

Weighted average diluted common and potential common shares outstanding

79,~~187~~445

77,~~318~~792

7879,~~895~~080

77,~~194~~395

We15 excluded the impact of anti-dilutive potential common shares from the calculation of diluted weighted average shares for the quarter and six months ended June 30, 2011 and 2010. If these potential common shares were included in the calculation, the impact would have been a decrease in diluted weighted average shares outstanding of 33,491 shares and 342,931 shares for the quarters ended June 30, 2011 and 2010, respectively, and 35,458 shares and 364,171 shares for the six months ended June 30, 2011 and 2010, respectively.

We excluded the impact of anti-dilutive potential common shares from the calculation of diluted weighted average shares for the quarter and nine months ended September 30, 2011 and 2010. If these potential common shares were included in the calculation, the impact would have been a decrease in diluted weighted average shares outstanding of 34,563 shares and 47,870 shares for the quarters ended September 30, 2011 and 2010, respectively, and 35,156 shares and 257,781 shares for the nine months ended September 30, 2011 and 2010, respectively.

10.

Discontinued operations:

Although this sale did not represent a material disposition of assets relative to our total assets as presented in the accompanying balance sheets, the Southeast Asia products business did represent a significant portion of the assets and operations which were attributable to our product sales business segment for the periods presented, and therefore, we accounted for it as discontinued operations. We revised our financial statements and reclassified the assets and liabilities of the Southeast Asia products business as discontinued operations as of the date of each balance sheet presented and removed the results of operations of the Southeast Asia products business from net income from continuing operations, and presented these separately as income from discontinued operations, net of tax, for each of the accompanying statements of operations.

Additionally, because our Southeast Asian products business represented over 85% of the Product Sales segment revenue, we have restructured our reportable segments to better reflect our current operations. Our remaining product sales business has been combined with our Drilling Services segment. A reconciliation of the original presentation of our reportable segments for the quarter and nine months ended September 30, 2010 to the current reportable segments is presented below in Note 11, “Segment information.”

The following table summarizes the operating results for this disposal group for the quarters and nine-month periods ended September 30, 2011 and 2010:


	Pro Forma Results
	Quarter Ended September 30,					Nine Months Ended September 30,
	2011			2010		2011		2010
Revenue	$	—		$	8,339	$	13,766	$	24,069
Income before taxes	$	571		$	1,681	$	3,343	$	4,050
Taxes	$	707		$	242	$	1,149	$	638
Net income (loss)	$	(136	)	$	1,439	$	2,194	$	3,412

Earnings per share information:
Basic	$	(0.00	)	$	0.02	$	0.03	$	0.04

Diluted	$	(0.01	)	$	0.01	$	0.03	$	0.04

The following table presents the assets and liabilities of this disposal group as of July 6, 2011 and December 31, 2010.


	July 6, 2011		December 31, 2010
Current assets:
Cash	$	2,613	$	7,546
Accounts receivable	$	6,805	$	3,664
Inventory, net	$	5,264	$	5,147
Prepaid expenses	$	455	$	343

Current assets of discontinued operations	$	15,137	$	16,700


Long-term assets:
Property, plant and equipment, net	$	4,963	$	5,096

10. Segment information:


Goodwill	$	2,858	$	2,858
Other long-term assets	$	941	$	943

Long-term assets of discontinued operations	$	8,762	$	8,897


Current liabilities
Accounts payable	$	2,774	$	597
Accrued liabilities	$	781	$	2,244
Income taxes payable	$	431	$	—

Current liabilities of discontinued operations	$	3,986	$	2,841


Long-term liabilities of discontinued operations:
Deferred income taxes	$	42	$	33

We ~~report~~have ~~segment~~included ~~information~~cash ~~based~~held onby ~~how our management organizes~~ the ~~operating~~disposal ~~segments~~group to make operational decisions and to assess financial performance. We evaluate performance and allocate resources based on net income (loss) from continuing operations before net interest expense, taxes, depreciation and amortization, non-controlling interest and impairment loss (“Adjusted EBITDA”). The calculation of Adjusted EBITDA should not be viewed as a ~~substitute~~component ~~for~~of ~~calculations~~current ~~under~~assets ~~U.S. GAAP,~~of ~~in particular net income. Adjusted EBITDA is included in this Quarterly Report on Form 10-Q~~discontinued ~~because~~operations ~~our~~for ~~management~~the ~~considers~~accompanying itbalance ansheet ~~important~~at ~~supplemental measure of our performance and believes that it is frequently used by securities analysts~~December 31, ~~investors and other interested parties in the evaluation of companies in our industry~~2010, ~~some~~rather ~~of which~~than ~~present~~including ~~EBITDA~~this ~~when~~amount ~~reporting their results. We regularly evaluate our performance~~ as ~~compared~~cash ~~to other companies in our industry that have different financing~~ and ~~capital~~cash ~~structures~~equivalents ~~and/or~~of ~~tax~~the ~~rates~~consolidated byentity ~~using~~at ~~Adjusted EBITDA. In addition~~December 31, ~~we use Adjusted EBITDA in evaluating acquisition targets~~2010. ~~Management~~For ~~also~~cash ~~believes~~flow ~~that~~statement ~~Adjusted EBITDA is a useful tool for measuring our ability to meet our future debt service~~presentation, ~~capital~~the ~~expenditures~~sources and ~~working capital requirements, and Adjusted~~uses ~~EBITDA~~of iscash ~~commonly used by us and our investors to measure our ability to service indebtedness. Adjusted EBITDA is not a substitute~~ for ~~the~~this ~~U.S.~~disposal ~~GAAP~~group ~~measures~~are ofpresented ~~earnings~~as oroperating, ~~cash~~investing ~~flow~~ and isfinancing ~~not necessarily a measure of our ability to fund our~~ cash ~~needs.~~ ~~It should be noted that companies calculate EBITDA (including Adjusted EBITDA) differently and~~flows, ~~therefore, EBITDA has material limitations~~ as ~~a performance measure because it excludes interest expense~~applicable, ~~taxes,~~combined ~~depreciation~~with ~~and~~such ~~amortization. Adjusted~~cash ~~EBITDA~~flows calculated by us may not be comparable to the EBITDA (or Adjusted EBITDA) calculation of another company and also differs from the calculation of EBITDA under our credit facilities (see Note 7, Long-term debt, for acontinuing ~~description of the calculation of EBITDA under our existing credit facility~~operations, as ~~amended).~~permitted ~~See the table below for a reconciliation of Adjusted EBITDA to operating income (loss)~~ by ~~segment~~US GAAP.

~~We have three reportable operating segments: completion and production services (“C&PS”), drilling services and product sales~~11. ~~The~~Segment accounting policies of our reporting segments are the same as those used to prepare our consolidated financial statements as of June 30, 2011. Inter-segment transactions are accounted for on a cost recovery basis. information:

	C&PS		DrillingServices		ProductSales		Corporate			Total
Quarter Ended June 30, 2011
Revenue from external customers	$	491,881	$	52,222	$	7,864	$	—		$	551,967
Inter-segment revenues	$	25	$	2	$	4,012	$	(4,039	)	$	—
Adjusted EBITDA, as defined	$	144,931	$	13,888	$	1,863	$	(11,075	)	$	149,607
Depreciation and amortization	$	43,585	$	4,790	$	486	$	604		$	49,465
Operating income (loss)	$	101,346	$	9,098	$	1,377	$	(11,679	)	$	100,142
Capital expenditures	$	86,535	$	1,696	$	176	$	76		$	88,483
Quarter Ended June 30, 2010
Revenue from external customers	$	310,460	$	40,445	$	9,340	$	—		$	360,245
Inter-segment revenues	$	165	$	152	$	784	$	(1,101	)	$	—
Adjusted EBITDA, as defined	$	84,748	$	8,663	$	1,250	$	(9,320	)	$	85,341
Depreciation and amortization	$	39,770	$	4,644	$	561	$	497		$	45,472
Operating income (loss)	$	44,978	$	4,019	$	689	$	(9,817	)	$	39,869
Capital expenditures	$	25,296	$	4,526	$	18	$	711		$	30,551
As of June 30, 2011
Segment assets	$	1,558,878	$	166,436	$	35,579	$	204,772		$	1,965,665
Six Months Ended June 30, 2011
Revenue from external customers	$	928,968	$	102,374	$	15,842	$	—		$	1,047,184
Inter-segment revenues	$	30	$	2	$	6,489	$	(6,521	)	$	—
Adjusted EBITDA, as defined	$	266,445	$	26,376	$	3,077	$	(20,900	)	$	274,998
Depreciation and amortization	$	86,842	$	9,539	$	1,028	$	1,204		$	98,613
Operating income (loss)	$	179,603	$	16,837	$	2,049	$	(22,104	)	$	176,385
Capital expenditures(1)	$	134,736	$	3,242	$	288	$	467		$	138,733
Six Months Ended June 30, 2010
Revenue from external customers	$	576,748	$	75,549	$	17,652	$	—		$	669,949
Inter-segment revenues	$	193	$	301	$	1,390	$	(1,884	)	$	—
Adjusted EBITDA, as defined	$	142,504	$	14,082	$	2,812	$	(18,149	)	$	141,249
Depreciation and amortization	$	79,563	$	9,102	$	1,137	$	989		$	90,791
Operating income (loss)	$	62,941	$	4,980	$	1,675	$	(19,138	)	$	50,458
Capital expenditures	$	33,715	$	7,364	$	104	$	711		$	41,894
As of December 31, 2010
Segment assets	$	1,488,755	$	170,944	$	35,015	$	105,862		$	1,800,576

We report segment information based on how our management organizes the operating segments to make operational decisions and to assess financial performance. We evaluate performance and allocate resources based on net income (loss) from continuing operations before net interest expense, taxes, depreciation and amortization, non-controlling interest and impairment loss (“Adjusted EBITDA”). The calculation of Adjusted EBITDA should not be viewed as a substitute for calculations under U.S. GAAP, in particular net income. Adjusted EBITDA is included in this Quarterly Report on Form 10-Q because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using Adjusted EBITDA. In addition, we use Adjusted EBITDA in evaluating acquisition targets. Management also believes that Adjusted EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and Adjusted EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. Adjusted EBITDA is not a substitute for the U.S. GAAP measures of earnings or cash flow and is not necessarily a measure of our ability to fund our cash needs. It should be noted that companies calculate EBITDA (including Adjusted EBITDA) differently and, therefore, EBITDA has material limitations as a performance measure because it excludes interest expense, taxes, depreciation and amortization. Adjusted EBITDA calculated by us may not be comparable to the EBITDA (or Adjusted EBITDA) calculation of another company and also differs from the calculation of EBITDA under our credit facilities (see Note 7, “Long-term debt,” for a description of the calculation of EBITDA under our existing credit facility, as amended). See the table below for a reconciliation of Adjusted EBITDA to operating income (loss) by segment.

(Prior to July 1), ~~For~~2011, ~~the~~we ~~six~~had ~~months~~three ~~ended~~reportable ~~June~~operating 30segments: completion and production services (“C&PS”), drilling services and product sales. During July 2011, ~~capital~~as ~~expenditures~~a result of ~~$138,733~~the ~~represents~~sale ~~actual~~of ~~cash~~our ~~invested~~Southeast ofAsian ~~$149~~business,~~072,~~ ~~less~~we ~~amounts~~restructured ~~accrued~~our ~~but~~reportable ~~not~~segments ~~paid~~to atbetter ~~December~~reflect ~~31,~~our ~~2010~~current ofoperations. ~~$20,017,~~Our ~~plus~~Southeast ~~amounts~~Asian ~~accrued~~business ~~but~~is ~~not~~accounted ~~paid~~for atas discontinued ~~June~~operations ~~30,~~and ~~2011~~we ofhave ~~$9,678~~combined the remaining product sales business with our drilling services segment.

The accounting policies of our reporting segments are the same as those used to prepare our consolidated financial statements as of September 30, 2011. Inter-segment transactions are accounted for on a cost recovery basis.

We do not allocate net interest expense or tax expense to the operating segments. The following table reconciles operating income as reported above to net income for the quarters and six months ended June 30, 2011 and 2010:


	C&PS		Drilling Services		Corporate			Total
Quarter Ended September 30, 2011
Revenue from external customers	$	535,625	$	54,664	$	—		$	590,289
Inter-segment revenues	$	1	$	7,474	$	(7,475	)	$	—
Adjusted EBITDA, as defined	$	154,249	$	14,388	$	(11,370	)	$	157,267
Depreciation and amortization	$	43,147	$	4,972	$	576		$	48,695

Operating income (loss)	$	111,102	$	9,416	$	(11,946	)	$	108,572
Capital expenditures(1)	$	109,960	$	19,792	$	88		$	129,840

Quarter Ended September 30, 2010
Revenue from external customers	$	361,457	$	48,813	$	—		$	410,270
Inter-segment revenues	$	33	$	2,666	$	(2,699	)	$	—
Adjusted EBITDA, as defined	$	108,104	$	12,685	$	(9,743	)	$	111,046
Depreciation and amortization	$	39,078	$	4,970	$	515		$	44,563

Operating income (loss)	$	69,026	$	7,715	$	(10,258	)	$	66,483
Capital expenditures	$	46,479	$	1,072	$	410		$	47,961

As of September 30, 2011
Segment assets	$	1,681,007	$	199,623	$	240,332		$	2,120,962

Nine Months Ended September 30, 2011
Revenue from external customers	$	1,464,593	$	159,114	$	—		$	1,623,707
Inter-segment revenues	$	31	$	13,863	$	(13,894	)	$	—
Adjusted EBITDA, as defined	$	420,694	$	40,561	$	(32,270	)	$	428,985
Depreciation and amortization	$	129,988	$	15,063	$	1,781		$	146,832

Operating income (loss)	$	290,706	$	25,498	$	(34,051	)	$	282,153
Capital expenditures(2)	$	244,696	$	23,322	$	555		$	268,573

Nine Months Ended September 30, 2010
Revenue from external customers	$	938,205	$	126,284	$	—		$	1,064,489
Inter-segment revenues	$	225	$	4,147	$	(4,372	)	$	—
Adjusted EBITDA, as defined	$	250,609	$	26,622	$	(27,893	)	$	249,338
Depreciation and amortization	$	118,641	$	14,653	$	1,504		$	134,798

Operating income (loss)	$	131,968	$	11,969	$	(29,397	)	$	114,540
Capital expenditures	$	80,194	$	8,436	$	1,225		$	89,855

As of December 31, 2010
Segment assets	$	1,485,897	$	183,220	$	131,459		$	1,800,576

	Quarters Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Segment operating income	$	100,142		$	39,869		$	176,385		$	50,458
Interest expense		13,681			14,760			27,824			29,501
Interest income		(132	)		(95	)		(227	)		(143	)
Income taxes		32,088			9,533			55,349			8,191
Net income	$	54,505		$	15,671		$	93,439		$	12,909

(1)	For the quarter ended September 30, 2011, capital expenditures of $129,840 represents actual cash invested of $110,853, less amounts accrued but not paid at June 30, 2011 of $9,678, plus amounts accrued but not paid at September 30, 2011 of $28,665.

~~The~~(2) ~~following~~For ~~table~~the ~~summarizes~~nine ~~the~~months ~~change~~ended inSeptember ~~the~~30, ~~carrying~~2011, ~~amount~~capital expenditures of ~~goodwill~~$268,573 byrepresents ~~segment~~actual ~~for~~cash ~~the~~invested ~~six months~~of ~~ended~~$259,925, ~~June~~ less amounts accrued but not paid at December 31, 2010 of $20,017, plus amounts accrued but not paid at September 30, 2011: of $28,665.

	C&PS		DrillingServices		ProductSales		Total
Balance at December 31, 2010	$	242,569	$	5,563	$	2,401	$	250,533
Acquisition (a) and other		4,463		—		—		4,463
Balance at June 30, 2011	$	247,032	$	5,563	$	2,401	$	254,996

The following table reconciles the original presentation of the three operating segments to the current presentation for the quarter and nine months ended September 30, 2010 and the year ended December 31, 2010.

(a) For a description of our business acquisition as of June 30, 2011, see Note 2, “Business acquisition.”


Quarter Ended September 30, 2010	Original Presentation		Discontinued Operations			Reclassification			Current Presentation
*Drilling services:*
Revenue from external customers	$	48,600	$	—		$	213		$	48,813

Adjusted EBITDA, as defined	$	12,936	$	—		$	(251	)	$	12,685
Depreciation and amortization		4,673		—			297			4,970

Operating income	$	8,263	$	—		$	(548	)	$	7,715

Capital expenditures	$	1,036	$	—		$	36		$	1,072

*Product Sales:*
Revenue from external customers	$	8,552	$	(8,339	)	$	(213	)	$	—

Adjusted EBITDA, as defined	$	1,689	$	(1,940	)	$	251		$	—
Depreciation and amortization		539		(242	)		(297	)		—

Operating income	$	1,150	$	(1,698	)	$	548		$	—

Capital expenditures	$	116	$	(80	)	$	(36	)	$	—

*Corporate:*
Capital expenditures	$	330	$	—		$	80		$	410

11. Financial instruments:

The financial instruments recognized in the balance sheet consist of cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities, long-term debt and senior notes. The fair value of all financial instruments approximates their carrying amounts due to their current maturities or market rates of interest, except the senior notes which were issued in December 2006 with a fixed 8% coupon rate. At June 30, 2011, the fair value of these notes was $637,800 based on the published closing price.

A significant portion of our trade accounts receivable is from companies in the oil and gas industry, and as such, we are exposed to normal industry credit risks. We evaluate the credit-worthiness of our major new and existing customers based on their financial condition and generally do not require collateral. For the six months ended June 30, 2011, we had two customers who provided 18.5% and 9.3% of our total revenue.

12. Legal matters and contingencies:



Nine Months Ended September 30, 2010
*Drilling services:*
Revenue from external customers	$	124,149	$	—		$	2,135		$	126,284

Adjusted EBITDA, as defined	$	27,018	$	—		$	(396	)	$	26,622
Depreciation and amortization		13,775		—			878			14,653

Operating income	$	13,243	$	—		$	(1,274	)	$	11,969

Capital expenditures	$	8,400	$	—		$	36		$	8,436

*Product Sales:*

Revenue from external customers	$	26,204	$	(24,069	)	$	(2,135	)	$	—

Adjusted EBITDA, as defined	$	4,501	$	(4,897	)	$	396		$	—
Depreciation and amortization		1,676		(798	)		(878	)		—

Operating income	$	2,825	$	(4,099	)	$	1,274		$	—

Capital expenditures	$	220	$	(184	)	$	(36	)	$	—

*Corporate:*
Capital expenditures	$	1,041	$	—		$	184		$	1,225

Reconciliation of segment assets as of December 31, 2010
C&PS(1)	$	1,488,755	$	—		$	(2,858	)	$	1,485,897
Drilling services	$	170,944	$	—		$	12,276		$	183,220
Product sales	$	35,015	$	(25,597	)	$	(9,418	)	$	—
Corporate	$	105,862	$	25,597		$	—		$	131,459

Segment assets	$	1,800,576	$	—		$	—		$	1,800,576

(1)

The $2,858 represents goodwill associated with Southeast Asia.

We do not allocate net interest expense or tax expense to the operating segments. The following table reconciles operating income as reported above to net income from continuing operations for the quarters and nine months ended September 30, 2011 and 2010:


	Quarters Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Segment operating income	$	108,572		$	66,483		$	282,153		$	114,540
Interest expense		12,917			14,151			40,709			43,653
Interest income		(180	)		(73	)		(407	)		(249	)
Income taxes		36,513			20,814			91,420			28,609

Net income from continuing operations	$	59,322		$	31,591		$	150,431		$	42,527

The following table summarizes the change in the carrying amount of goodwill by segment for the nine months ended September 30, 2011:


	C&PS		Drilling Services		Product Sales			Total
Balance at December 31, 2010	$	244,138	$	3,537	$	2,858		$	250,533
Less: goodwill associated with discontinued operations		—		—		(2,858	)		(2,858	)

Adjusted balance at December 31, 2010		244,138		3,537		—			247,675
Acquisition (a) and other		4,462		—		—			4,462

Balance at September 30, 2011	$	248,600	$	3,537	$	—		$	252,137

(a)

For a description of our business acquisition as of September 30, 2011, see Note 2, “Business acquisition.”

12.

Financial instruments:

The financial instruments recognized in the balance sheet consist of cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities, long-term debt and senior notes. The fair value of all financial instruments approximates their carrying amounts due to their current maturities or market rates of interest, except the senior notes which were issued in December 2006 with a fixed 8% coupon rate. At September 30, 2011, the fair value of these notes was $650,000 based on the published closing price.

A significant portion of our trade accounts receivable is from companies in the oil and gas industry, and as such, we are exposed to normal industry credit risks. We evaluate the credit-worthiness of our major new and existing customers based on their financial condition and generally do not require collateral. For the quarter and nine months ended September 30, 2011, we had two customers who provided approximately 18% and 8% of our total revenue.

13.

Legal matters and contingencies:

In the normal course of our business, we are a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including warranty and product liability claims and occasional claims by individuals alleging exposure to hazardous materials, on the job injuries and fatalities as a result of our products or operations. Many of the claims filed against us relate to motor vehicle accidents which can result in the loss of life or serious bodily injury. Some of these claims relate to matters occurring prior to our acquisition of businesses. In certain cases, we are entitled to indemnification from the sellers of such businesses.

Although we cannot know or predict with certainty the outcome of any claim or proceeding or the effect such outcomes may have on us, we believe that any liability resulting from the resolution of any of these matters, individually, ~~and~~or in the aggregate, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on our financial position, results of operations or liquidity.

We have historically incurred additional insurance premiums related to a cost-sharing provision of our general liability insurance policy, and we cannot be certain that we will not incur additional costs until either existing claims become further developed or until the limitation periods expire for each respective policy year. Any such additional premiums should not have a material adverse effect on our financial position, results of operations or liquidity.

~~13.~~See ~~Guarantor~~Note ~~and~~16, ~~Non-Guarantor~~“Subsequent events,” ~~Condensed~~for ~~Consolidating~~disclosure ~~Financial~~of ~~Statements:~~two lawsuits that were filed against us after September 30, 2011.

~~The~~14. ~~following~~Guarantor ~~tables~~and ~~present the financial data required pursuant to SEC Regulation S~~Non-XGuarantor ~~Rule~~Condensed ~~3-10(f),~~Consolidating ~~which~~Financial ~~includes~~Statements: (1) unaudited condensed consolidating balance sheets as of June 30, 2011 and December 31, 2010; (2) unaudited condensed consolidating statements of operations for the quarters and six months ended June 30, 2011 and 2010 and (3) unaudited condensed consolidating statements of cash flows for the six months ended June 30, 2011 and 2010.

The following tables present the financial data required pursuant to SEC Regulation S-X Rule 3-10(f), which includes: (1) unaudited condensed consolidating balance sheets as of September 30, 2011 and December 31, 2010; (2) unaudited condensed consolidating statements of operations for the quarters and nine months ended September 30, 2011 and 2010 and (3) unaudited condensed consolidating statements of cash flows for the nine months ended September 30, 2011 and 2010.

Condensed Consolidating Balance Sheet

~~June~~September 30, 2011

	Parent		GuarantorSubsidiaries		Non-guarantorSubsidiaries			Eliminations/Reclassifications			Consolidated
Current assets
Cash and cash equivalents	$	~~162~~177,~~248~~411	$	42,~~697~~777	$	2742,~~424~~927		$	(2314,~~815~~834	)	$	~~170~~208,~~554~~281
Accounts receivable, net		~~239~~238		~~348~~390,~~988~~433		44,~~708~~924			—			~~393~~435,~~935~~595
Inventory, net		—		2529,~~925~~060		127,~~665~~226			—			3836,~~590~~286
Prepaid expenses		87,~~864~~885		1621,~~802~~573		73,~~315~~920			—			3233,~~981~~378
Income tax receivable		2322,~~641~~723		—		(1	)		—			2322,~~640~~724
Current deferred tax assets		215,~~835~~462		—		—			—			215,~~835~~462
Other current assets		—		57		—			—			57
Total current assets		223,719		443,843		98,998			(14,834	)		751,726
Total current assets		197,827		396,469		92,111			(23,815	)		662,592
Property, plant and equipment, net		4,166		1,024,307		45,352			—			1,073,825
Property, plant and equipment, net		4,491		947,362		49,957			—			1,001,810
Investment in consolidated subsidiaries		1,125,091		122,003		—			(1,247,094	)		—
Investment in consolidated subsidiaries		1,057,702		122,559		—			(1,180,261	)		—
Inter-company receivable		568,641		—		(80	)		(568,561	)		—
Inter-company receivable		521,866		—		—			(521,866	)		—
Goodwill		15,531		236,606		—			—			252,137
Goodwill		15,531		236,607		2,858			—			254,996
Other long-term assets, net		31,569		10,886		819			—			43,274
Other long-term assets, net		32,186		12,030		2,051			—			46,267
Total assets	$	1,829,603	$	1,715,027	$	146,977		$	(1,725,942	)	$	1,965,665
Current liabilities
Accounts payable	$	399	$	82,020	$	12,205		$	(23,815	)	$	70,809
Accrued liabilities		22,275		19,885		6,460			—			48,620
Accrued payroll and payroll burdens		1,140		26,898		2,502			—			30,540
Accrued interest		2,452		—		6			—			2,458
Income taxes payable		—		—		1,106			—			1,106
Total current liabilities		26,266		128,803		22,279			(23,815	)		153,533
Long-term debt		650,000		—		—			—			650,000
Inter-company payable		—		519,660		2,206			(521,866	)		—
Deferred income taxes		230,733		3,798		(80	)		—			234,451
Other long-term liabilities		1,073		5,064		13			—			6,150
Total liabilities		908,072		657,325		24,418			(545,681	)		1,044,134
Stockholders’ equity
Total stockholders’ equity		921,531		1,057,702		122,559			(1,180,261	)		921,531
Total liabilities and stockholders’ equity	$	1,829,603	$	1,715,027	$	146,977		$	(1,725,942	)	$	1,965,665

1920


Total assets	$	1,968,717	$	1,837,645	$	145,089		$	(1,830,489	)	$	2,120,962

Current liabilities
Accounts payable	$	22,436	$	88,404	$	8,256		$	(14,834	)	$	104,262
Accrued liabilities		23,274		19,206		9,398			—			51,878
Accrued payroll and payroll burdens		3,193		30,809		2,111			—			36,113
Accrued interest		15,661		—		7			—			15,668
Income taxes payable		—		—		2,200			—			2,200

Total current liabilities		64,564		138,419		21,972			(14,834	)		210,121
Long-term debt		650,000		—		—			—			650,000
Inter-company payable		—		566,882		1,679			(568,561	)		—
Deferred income taxes		272,557		3,803		(576	)		—			275,784
Other long-term liabilities		1,051		3,450		11			—			4,512

Total liabilities		988,172		712,554		23,086			(583,395	)		1,140,417
Stockholders’ equity
Total stockholders’ equity		980,545		1,125,091		122,003			(1,247,094	)		980,545

Total liabilities and stockholders’ equity	$	1,968,717	$	1,837,645	$	145,089		$	(1,830,489	)	$	2,120,962

Condensed Consolidating Balance Sheet

December 31, 2010

	Parent			GuarantorSubsidiaries		Non-guarantorSubsidiaries			Eliminations/Reclassifications			Consolidated
Current assets
Cash and cash equivalents	$	111,834		$	569	$	3123,~~046~~500		$	(16,768	)	$	~~126~~119,~~681~~135
Accounts receivable, net		696			313,936		3127,~~016~~352			—			~~345~~341,~~648~~984
Inventory, net		—			21,935		116,~~601~~454			—			3328,~~536~~389
Prepaid expenses		6,388			10,980		~~1,332~~989			—			18,~~700~~357
Income tax receivable		10,164			13,298		—			—			23,462
Current deferred tax assets		2,499			—		—			—			2,499
Other current assets		882			502		—			—			1,384
Current assets of discontinued operations		—			—		16,700			—			16,700
Total current assets		132,463			361,220		74,995			(16,768	)		551,910
Property, plant and equipment, net		4,730			898,013		5348,~~285~~189			—			~~956~~950,~~028~~932
Investment in consolidated subsidiaries		930,631			115,449		—			(1,046,080	)		—
Inter-company receivable		554,482			—		445			(554,927	)		—
Goodwill		15,531			232,144		~~2,858~~—			—			~~250~~247,~~533~~675
Other long-term assets, net		29,966			10,161		1,~~978~~035			—			4241,~~105~~162
Long-term assets of discontinued operations		—			—		8,897			—			8,897
Total assets	$	1,667,803		$	1,616,987	$	133,561		$	(1,617,775	)	$	1,800,576
Current liabilities
Accounts payable	$	376		$	82,952	$	87,~~539~~942		$	(16,768	)	$	7574,~~099~~502
Accrued liabilities		18,269			21,355		42,~~667~~423			—			4442,~~291~~047
Accrued payroll and payroll burdens		4,353			19,325		2,890			—			26,568
Accrued interest		2,439			1		6			—			2,446
Income taxes payable		(1,043	)		—		1,043			—			—
Current liabilities of discontinued operations		—			—		2,841			—			2,841
Total current liabilities		24,394			123,633		17,145			(16,768	)		148,404
Long-term debt		650,000			—		—			—			650,000
Inter-company payable		—			553,907		1,020			(554,927	)		—
Deferred income taxes		186,693			3,794		(6598	)		—			190,~~422~~389
Other long-term liabilities		882			5,022		12			—			5,916
Long-term liabilities of discontinued operations		—			—		33			—			33
Total liabilities		861,969			686,356		18,112			(571,695	)		994,742
Stockholders’ equity
Total stockholders’ equity		805,834			930,631		115,449			(1,046,080	)		805,834
Total liabilities and stockholders’ equity	$	1,667,803		$	1,616,987	$	133,561		$	(1,617,775	)	$	1,800,576

~~Condensed~~21 ~~Consolidated Statement of Operations~~

Quarter Ended June 30, 2011

	Parent			GuarantorSubsidiaries			Non-guarantorSubsidiaries			Eliminations/Reclassifications			Consolidated
Revenue:
Service	$	—		$	510,935		$	34,818		$	(1,650	)	$	544,103
Product		—			129			7,735			—			7,864
		—			511,064			42,553			(1,650	)		551,967
Service expenses		—			320,934			27,361			(1,650	)		346,645
Product expenses		—			(307	)		5,642			—			5,335
Selling, general and administrative expenses		11,074			36,358			2,948			—			50,380
Depreciation and amortization		429			46,038			2,998			—			49,465
Income (loss) before interest and taxes		(11,503	)		108,041			3,604			—			100,142
Interest expense		14,154			365			40			(878	)		13,681
Interest income		(953	)		(2	)		(55	)		878			(132	)
Equity in earnings of consolidated affiliates		(71,596	)		(3,276	)		—			74,872			—
Income (loss) before taxes		46,892			110,954			3,619			(74,872	)		86,593
Taxes		(7,613	)		39,358			343			—			32,088
Net income (loss)	$	54,505		$	71,596		$	3,276		$	(74,872	)	$	54,505

Condensed Consolidated Statement of Operations

Quarter Ended ~~June~~September 30, ~~2010~~2011

	Parent			GuarantorSubsidiaries			Non-guarantorSubsidiaries			Eliminations/Reclassifications			Consolidated
Revenue:
Revenues	$	—		$	545,547		$	45,856		$	(1,114	)	$	590,289
Service	$	—		$	324,310		$	28,326		$	(1,731	)	$	350,905
Service expenses		—			345,915			34,391			(1,114	)		379,192
Product		—			951			8,389			—			9,340
Selling, general and administrative expenses		11,370			37,801			4,659			—			53,830
		—			325,261			36,715			(1,731	)		360,245
Depreciation and amortization		396			45,652			2,647			—			48,695
Service expenses		—			202,968			22,327			(1,731	)		223,564
Income (loss) from continuing operations before interest and taxes		(11,766	)		116,179			4,159			—			108,572
Product expenses		—			822			6,501			—			7,323
Interest expense		12,243			1,429			12			(767	)		12,917
Selling, general and administrative expenses		9,320			29,465			5,232			—			44,017
Interest income		(850	)		(4	)		(93	)		767			(180	)
Depreciation and amortization		334			41,910			3,228			—			45,472
Equity in earnings of consolidated affiliates		(72,036	)		(4,429	)		—			76,465			—
Income (loss) before interest and taxes		(9,654	)		50,096			(573	)		—			39,869
Income (loss) from continuing operations before taxes		48,877			119,183			4,240			(76,465	)		95,835
Interest expense		14,733			1,731			18			(1,722	)		14,760
Taxes		(10,308	)		44,816			2,005			—			36,513
Interest income		(1,832	)		(1	)		16			1,722			(95	)
Income (loss) from continuing operations	$	59,185		$	74,367		$	2,235		$	(76,465	)	$	59,322
Equity in earnings of consolidated affiliates		(28,001	)		845			—			27,156			—
Loss from discontinued operations		—			—			(136	)		—			(136	)
Income (loss) before taxes		5,446			47,521			(607	)		(27,156	)		25,204
Net income (loss)	$	59,185		$	74,367		$	2,099		$	(76,465	)	$	59,186
Taxes		(10,225	)		19,520			238			—			9,533
Net income (loss)	$	15,671		$	28,001		$	(845	)	$	(27,156	)	$	15,671

Condensed Consolidated Statement of Operations

~~Six~~Quarter ~~Months~~ Ended ~~June~~September 30, ~~2011~~2010

	Parent			GuarantorSubsidiaries			Non-guarantorSubsidiaries			Eliminations/Reclassifications			Consolidated
Revenue:
Revenues	$	—		$	381,194		$	30,808		$	(1,732	)	$	410,270
Service	$	—		$	961,296		$	73,308		$	(3,262	)	$	1,031,342
Service expenses		—			235,497			24,011			(1,732	)		257,776
Product		—			2,076			13,766			—			15,842
Selling, general and administrative expenses		9,743			29,492			2,213			—			41,448
		—			963,372			87,074			(3,262	)		1,047,184
Depreciation and amortization		345			41,570			2,648			—			44,563
Service expenses		—			608,493			55,936			(3,262	)		661,167
Income (loss) from continuing operations before interest and taxes		(10,088	)		74,635			1,936			—			66,483
Product expenses		—			1,523			9,765			—			11,288
Interest expense		14,478			1,188			17			(1,532	)		14,151
Selling, general and administrative expenses		20,900			72,869			5,962			—			99,731
Interest income		(1,580	)		(1	)		(24	)		1,532			(73	)
Depreciation and amortization		858			91,495			6,260			—			98,613
Equity in earnings of consolidated affiliates		(49,101	)		(2,864	)		—			51,965			—
Income (loss) before interest and taxes		(21,758	)		188,992			9,151			—			176,385
Income (loss) from continuing operations before taxes		26,115			76,312			1,943			(51,965	)		52,405
Interest expense		28,602			1,240			80			(2,098	)		27,824
Taxes		(6,915	)		27,211			518			—			20,814
Interest income		(2,232	)		(2	)		(91	)		2,098			(227	)
Income (loss) from continuing operations	$	33,030		$	49,101		$	1,425		$	(51,965	)	$	31,591
Equity in earnings of consolidated affiliates		(125,427	)		(7,468	)		—			132,895			—
Income from discontinued operations		—			—			1,439			—			1,439
Income (loss) before taxes		77,299			195,222			9,162			(132,895	)		148,788
Net income (loss)	$	33,030		$	49,101		$	2,864		$	(51,965	)	$	33,030
Taxes		(16,140	)		69,795			1,694			—			55,349
Net income (loss)	$	93,439		$	125,427		$	7,468		$	(132,895	)	$	93,439

Condensed Consolidated Statement of Operations

~~Six~~Nine Months Ended ~~June~~September 30, ~~2010~~2011

	Parent			GuarantorSubsidiaries			Non-guarantorSubsidiaries			Eliminations/Reclassifications			Consolidated
Revenue:
Revenues	$	—		$	1,508,919		$	119,164		$	(4,376	)	$	1,623,707
Service	$	—		$	592,404		$	63,355		$	(3,462	)	$	652,297
Service expenses		—			955,931			90,714			(4,376	)		1,042,269
Product		—			1,926			15,726			—			17,652
Selling, general and administrative expenses		32,270			110,670			9,513			—			152,453
		—			594,330			79,081			(3,462	)		669,949
Depreciation and amortization		1,254			137,147			8,431			—			146,832
Service expenses		—			385,995			47,851			(3,462	)		430,384
Income (loss) from continuing operations before interest and taxes		(33,524	)		305,171			10,506			—			282,153
Product expenses		—			1,532			11,915			—			13,447
Interest expense		40,844			2,670			60			(2,865	)		40,709
Selling, general and administrative expenses		18,150			58,902			7,817			—			84,869
Interest income		(3,082	)		(6	)		(184	)		2,865			(407	)
Depreciation and amortization		666			83,616			6,509			—			90,791
Equity in earnings of consolidated affiliates		(197,463	)		(9,567	)		—			207,030			—
Income (loss) before interest and taxes		(18,816	)		64,285			4,989			—			50,458
Income (loss) from continuing operations before taxes		126,177			312,074			10,630			(207,030	)		241,851
Interest expense		29,445			3,439			32			(3,415	)		29,501
Taxes		(26,448	)		114,611			3,257			—			91,420
Interest income		(3,562	)		(4	)		8			3,415			(143	)
Income (loss) from continuing operations	$	152,625		$	197,463		$	7,373		$	(207,030	)	$	150,431
Equity in earnings of consolidated affiliates		(41,355	)		(5,084	)		—			46,439			—
Income from discontinued operations		—			—			2,194			—			2,194
Income (loss) before taxes		(3,344	)		65,934			4,949			(46,439	)		21,100
Net income (loss)	$	152,625		$	197,463		$	9,567		$	(207,030	)	$	152,625
Taxes		(16,253	)		24,579			(135	)		—			8,191
Net income (loss)	$	12,909		$	41,355		$	5,084		$	(46,439	)	$	12,909

2122

Condensed Consolidated Statement of Operations

Nine Months Ended September 30, 2010


	Parent			Guarantor Subsidiaries			Non- guarantor Subsidiaries			Eliminations/ Reclassifications			Consolidated
Revenues	$	—		$	975,524		$	94,159		$	(5,194	)	$	1,064,489

Service expenses		—			623,025			72,192			(5,194	)		690,023
Selling, general and administrative expenses		27,893			88,393			8,842			—			125,128
Depreciation and amortization		1,011			125,186			8,601			—			134,798

Income (loss) from continuing operations before interest and taxes		(28,904	)		138,920			4,524			—			114,540
Interest expense		43,923			4,627			50			(4,947	)		43,653
Interest income		(5,142	)		(5	)		(49	)		4,947			(249	)
Equity in earnings of consolidated affiliates		(90,456	)		(7,948	)		—			98,404			—

Income (loss) from continuing operations before taxes		22,771			142,246			4,523			(98,404	)		71,136
Taxes		(23,168	)		51,790			(13	)		—			28,609

Income (loss) from continuing operations	$	45,939		$	90,456		$	4,536		$	(98,404	)	$	42,527
Income from discontinued operations		—			—			3,412			—			3,412

Net income (loss)	$	45,939		$	90,456		$	7,948		$	(98,404	)	$	45,939

Condensed Consolidated Statement of Cash Flows

~~Six~~Nine Months Ended ~~June~~September 30, 2011

	Parent			GuarantorSubsidiaries			Non-guarantorSubsidiaries			Eliminations/Reclassifications			Consolidated
Cash provided by:
Net income (loss)	$	93152,~~439~~625		$	~~125~~197,~~427~~463		$	79,~~468~~567		$	(~~132~~207,~~895~~030	)	$	93152,~~439~~625
Items not affecting cash:
Equity in earnings of consolidated affiliates		(~~125~~197,~~427~~463	)		(79,~~468~~567	)		—			~~132~~207,~~895~~030			—
Depreciation and amortization		~~858~~1,254			91137,~~495~~147			68,~~260~~907			—			98147,~~613~~308
Other		26,~~787~~556			4575,~~081~~074			~~(89~~14	)		—			4781,~~779~~644
Changes in operating assets and liabilities		32103,~~146~~877			(58147,~~966~~727	)		(1512,~~476~~958	)		(71,~~047~~934	)		(4954,~~343~~874	)
Net cash provided by (used in) operating activities		3,803			195,569			(1,837	)		(7,047	)		190,488
Net cash provided by operating activities		66,849			252,390			5,530			1,934			326,703
Investing activities:
Additions to property, plant and equipment		(~~467~~104	)		(~~144~~253,~~726~~671	)		(36,~~879~~150	)		—			(~~149~~259,~~072~~925	)
Inter-company receipts		32(14,~~616~~159	)		—			~~445~~525			~~(33~~13,~~061~~634	)		—
Acquisitions		—			(15,576	)		—			—			(15,576	)
Proceeds from the disposal of capital assets		—			3,108			177			—			3,285
Proceeds from the sale of disposal group		—			—			19,300			—			19,300
Other		191			—			—			—			191
Proceeds from the disposal of capital assets		—			6,090			243			—			6,333
Net cash provided by (used for) investing activities		32,340			(157,194	)		(3,257	)		(33,061	)		(161,172	)
Other		169			—			—			—			169
Net cash provided by (used for) investing activities		(14,094	)		(263,157	)		13,918			13,634			(249,699	)
Financing activities:
Inter-company borrowings		—			~~(34~~12,~~247~~975	)		~~1,186~~659			33(13,~~061~~634	)		—
Proceeds from issuances of common stock		15,~~087~~952			—			—			—			15,~~087~~952
Purchase of treasury shares		(5,~~581~~643	)		—			—			—			(5,~~581~~643	)
Other		42,~~765~~513			—			—			—			42,~~765~~513
Net cash provided by (used in) financing activities		1412,~~271~~822			~~(34~~12,~~247~~975	)		~~1,186~~659			33(13,~~061~~634	)		1412,~~271~~822
Effect of exchange rate changes on cash		—			—			~~286~~(680	)		—			~~286~~(680	)
Change in cash and cash equivalents		5065,~~414~~577			42,~~128~~208			(319,~~622~~427	)		(71,~~047~~934	)		4389,~~873~~146
Cash and cash equivalents, beginning of period		111,834			569			3123,~~046~~500			(16,768	)		~~126~~119,~~681~~135
Cash and cash equivalents, end of period	$	~~162~~177,~~248~~411		$	42,~~697~~777		$	2742,~~424~~927		$	(2314,~~815~~834	)	$	~~170~~208,~~554~~281

~~Condensed~~23 ~~Consolidated Statement of Cash Flows~~

Six Months Ended June 30, 2010

	Parent			GuarantorSubsidiaries			Non-guarantorSubsidiaries			Eliminations/Reclassifications			Consolidated
Cash provided by:
Net income (loss)	$	12,909		$	41,355		$	5,084		$	(46,439	)	$	12,909
Items not affecting cash:
Equity in earnings of consolidated affiliates		(41,355	)		(5,084	)		—			46,439			—
Depreciation and amortization		666			83,616			6,509			—			90,791
Other		8,832			5,196			(463	)		—			13,565
Changes in operating assets and liabilities		44,921			(52,801	)		(2,976	)		(1,894	)		(12,750	)
Net cash provided by (used in) operating activities		25,973			72,282			8,154			(1,894	)		104,515
Investing activities:
Additions to property, plant and equipment		(711	)		(39,825	)		(1,358	)		—			(41,894	)
Inter-company receipts		38,796			—			—			(38,796	)		—
Acquisitions		—			(1,365	)		—			—			(1,365	)
Proceeds from the disposal of capital assets		—			3,024			93			—			3,117
Net cash provided by (used for) investing activities		38,085			(38,166	)		(1,265	)		(38,796	)		(40,142	)
Financing activities:
Repayments of long-term debt		—			(62	)		(2	)		—			(64	)
Repayments of notes payable		(1,069	)		—			—			—			(1,069	)
Inter-company borrowings		—			(33,750	)		(5,046	)		38,796			—
Proceeds from issuances of common stock		2,263			—			—			—			2,263
Purchase of treasury shares		(1,410	)		—			—			—			(1,410	)
Other		273			—			—			—			273
Net cash provided by (used in) financing activities		57			(33,812	)		(5,048	)		38,796			(7	)
Effect of exchange rate changes on cash		—			—			(78	)		—			(78	)
Change in cash and cash equivalents		64,115			304			1,763			(1,894	)		64,288
Cash and cash equivalents, beginning of period		64,871			519			17,001			(5,031	)		77,360
Cash and cash equivalents, end of period	$	128,986		$	823		$	18,764		$	(6,925	)	$	141,648

~~14.~~Condensed ~~Recent~~Consolidated ~~accounting~~Statement ~~pronouncements~~of ~~and~~Cash ~~authoritative~~Flows ~~literature:~~

Nine Months Ended September 30, 2010


	Parent			Guarantor Subsidiaries			Non- guarantor Subsidiaries			Eliminations/ Reclassifications			Consolidated
Cash provided by:
Net income (loss)	$	45,939		$	90,456		$	7,948		$	(98,404	)	$	45,939
Items not affecting cash:
Equity in earnings of consolidated affiliates		(90,456	)		(7,948	)		—			98,404			—
Depreciation and amortization		1,011			125,186			9,399			—			135,596
Other		12,173			7,316			(451	)		—			19,038
Changes in operating assets and liabilities		50,829			(68,475	)		(5,912	)		(6,245	)		(29,803	)

Net cash provided by (used in) operating activities		19,496			146,535			10,984			(6,245	)		170,770

Investing activities:
Additions to property, plant and equipment		(1,041	)		(85,682	)		(3,132	)		—			(89,855	)
Inter-company receipts		48,273			—			—			(48,273	)		—
Acquisitions		—			(21,332	)		—			—			(21,332	)
Proceeds from the disposal of capital assets		—			4,311			125			—			4,436

Net cash provided by (used for) investing activities		47,232			(102,703	)		(3,007	)		(48,273	)		(106,751	)

Financing activities:
Repayments of long-term debt		—			(139	)		(2	)		—			(141	)
Repayments of notes payable		(1,069	)		—			—			—			(1,069	)
Inter-company borrowings		—			(43,243	)		(4,388	)		47,631			—
Proceeds from issuances of common stock		3,106			—			—			—			3,106
Purchase of treasury shares		(1,418	)		—			—			—			(1,418	)
Other		612			—			—			—			612

Net cash provided by (used in) financing activities		1,231			(43,382	)		(4,390	)		47,631			1,090
Effect of exchange rate changes on cash		—			—			126			—			126

Change in cash and cash equivalents		67,959			450			3,713			(6,887	)		65,235
Cash and cash equivalents, beginning of period		64,871			519			11,411			(5,031	)		71,770

Cash and cash equivalents, end of period	$	132,830		$	969		$	15,124		$	(11,918	)	$	137,005

15.

Recent accounting pronouncements and authoritative literature:

On March 30, 2010, the President of the United States signed the Health Care and Education Reconciliation Act of 2010, which is a reconciliation bill that amends the Patient Protection and Affordable Care Act that was signed by the President on March 23, 2010. Certain provisions of this law became effective during 2010. We have reviewed our health insurance plan provisions with third-party consultants and continue to evaluate our position relative to the changes in the law. We do not believe that the provisions which have taken effect will have a significant impact on the operation of our existing health insurance plan. However, future provisions under the law which become effective in subsequent periods may impact our health insurance plan and our overall financial position. We are evaluating these provisions as they become effective and continue to seek guidance from the FASB and SEC related to the implications of this new legislation on accounting and disclosure requirements. We expect that this legislation will have an impact on our financial position, results of operations and cash flows, but we cannot determine the extent of the impact at this time.

In24 December 2010, the FASB provided additional guidance related to business combinations to require each public entity that presents comparative financial statements to disclose the revenue and earnings of the combined entity as if the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. In addition, this amendment expands the supplemental pro forma disclosures related to such a business combination to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This guidance should be applied prospectively for business combinations for which the acquisition date is on or after January 1, 2011, for calendar-year reporting entities. We adopted this standard on January 1, 2011 with no material impact on our financial position, results of operations or cash flows.

In December 2010, the FASB issued additional guidance related to accounting for intangible assets and goodwill. The amendments in this update modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance and examples, which require that goodwill of a reporting unit be tested for impairment between annual test dates if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This update is effective for public entities with fiscal years beginning after December 15, 2010 and interim periods within those years. We adopted this standard effective January 1, 2011. We do not expect this guidance to have a material effect on our financial position, results of operations or cash flows.

In December 2010, the FASB provided additional guidance related to business combinations to require each public entity that presents comparative financial statements to disclose the revenue and earnings of the combined entity as if the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. In addition, this amendment expands the supplemental pro forma disclosures related to such a business combination to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This guidance should be applied prospectively for business combinations for which the acquisition date is on or after January 1, 2011, for calendar-year reporting entities. We adopted this standard on January 1, 2011 with no material impact on our financial position, results of operations or cash flows.

In December 2010, the FASB issued additional guidance related to accounting for intangible assets and goodwill. The amendments in this update modify Step One of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step Two of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance and examples, which require that goodwill of a reporting unit be tested for impairment between annual test dates if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This update is effective for public entities with fiscal years beginning after December 15, 2010 and interim periods within those years. We adopted this standard effective January 1, 2011. We do not expect this guidance to have a material effect on our financial position, results of operations or cash flows.

In May 2011, the FASB issued guidance pertaining to fair value measurement that included a common definition of fair value and information to assist reporting entities to measure and disclose fair value with regards to U.S. GAAP and International Financial Reporting Standards (“IFRS”) convergence issues. This guidance becomes effective for interim and annual periods beginning on or after December 15, 2011, with early adoption prohibited. We are currently evaluating the impact that this accounting guidance may have on our consolidated financial position, results of operations and cash flows.

In June 2011, the FASB issued guidance pertaining to the presentation of comprehensive income. This guidance, which is effective retrospectively for interim and annual periods beginning on or after December 15, 2011 with early adoption permitted, requires the presentation of total comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. We do not expect the adoption of this guidance to have a material impact on our consolidated financial position, results of operations and cash flows.

15In September 2011, the FASB issued an update to existing guidance on the assessment of goodwill impairment. ~~Subsequent~~This update simplifies the assessment of goodwill for impairment by allowing companies to consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two-step impairment test required under the existing standards. This guidance also clarifies the examples of events: or circumstances that would be considered in a goodwill impairment evaluation. We have elected to early adopt this update to be effective for the fiscal year beginning January 1, 2011. The adoption of this update did not have a material impact on our condensed consolidated financial statements.

On July 6, 2011, we sold our Southeast Asian products business, through which we provided oilfield equipment sales, rentals and refurbishment services, to MTQ Corporation Limited (“MTQ”), a Singapore firm which provides engineering services to oilfield and industrial equipment users and manufacturers16. We ~~received~~Subsequent proceeds from the sale of this business totaling $19,300, which is subject to further adjustment based on the net tangible assets of the business on June 30, 2011. We have not yet finalized the gain or loss on this transaction, but we expect that such a gain or loss will not have a significant impact on our financial statements. For a tabular presentation of the operating results of this business for the three and six months ended June 30, 2011 and 2010 and the pro forma impact of this business on consolidated earnings during these periods, as well as the pro forma balance sheet presentation of this business as held for sale if such transaction had occurred as of June 30, 2011 and December 31, 2010, see Note 1, “General—Discontinued operations.” events:

24On October 9, 2011, we became party to a merger agreement between Superior Energy Services, Inc. (“SPN”), a Delaware corporation, SPN Fairway Acquisition, Inc., a newly formed Delaware corporation which is an indirect wholly-owned subsidiary of SPN, and us. Pursuant to this agreement, each share of our common stock issued and outstanding immediately prior to the effective date of the merger will be converted automatically into the right to receive 0.945 shares of common stock, par value $0.001 per share, of SPN and $7.00 in cash. Pursuant to the agreement, we will merge with and into SPN Fairway Acquisition, Inc., which will be the surviving corporation and an indirect wholly-owned subsidiary of SPN. The completion of the merger is expected as early as December 2011, subject to

approvals of SPN’s and our stockholders. On November 2, 2011, the Federal Trade Commission informed both us and SPN that the Hart-Scott Rodino Antitrust Act waiting period was terminated effective November 2, 2011. For terms of the agreement, including circumstances under which the merger agreement can be terminated and the ramifications of such a termination, as well as other terms and conditions, refer to the agreement and plan of merger filed as Exhibit 2.1 to our Current Report on Form 8-K with the Securities and Exchange Commission on October 11, 2011.

On October 14, 2011 and October 26, 2011, putative class action complaints captioned Hetherington v. Winkler, et al., C.A. No. 6935-VCP (“Hetherington Complaint”), and Walsh v. Winkler, et al., C.A. No. 6984-VCP (“Walsh Complaint”), respectively, were filed in the Court of Chancery of the State of Delaware on behalf of an alleged class of Complete stockholders. On November 1, 2011, a putative class action complaint captioned City of Monroe Employees’ Retirement System v. Complete Production Services, Inc. et al., 2011-66385 (“City of Monroe Complaint”) was filed in the District Court of Harris County, Texas, on behalf of an alleged class of Complete Stockholders. The complaints name as defendants all members of our board of directors, our company, SPN and SPN Fairway Acquisition, Inc. The plaintiffs allege that the defendants breached their fiduciary duties to our stockholders in connection with the proposed merger, or aided and abetted the other defendants’ breaches of their fiduciary duties. The complaints allege that the proposed merger between us and SPN involves an unfair price, an inadequate sales process and unreasonable deal protection devices. The Hetherington Complaint claims that defendants agreed to the transaction to benefit SPN and that neither our company, nor our board of directors, have adequately explained the reason for the proposed merger. The Walsh Complaint claims that defendants acted for their personal interests rather than the interests of our stockholders. The City of Monroe complaint claims that defendants engaged in self-dealing and failed to seek maximum value for stockholders. All three complaints seek injunctive relief including to enjoin the merger, rescissory damages in the event the merger is completed, and an award of attorneys’ and other fees and costs, in addition to other relief. We and our board of directors believe that the plaintiffs’ allegations lack merit and intend to contest them vigorously.

On October 25, 2011, we purchased all the issued and outstanding equity interests of Rising Star Services, L.P., a company based in Odessa, Texas which provides hydraulic fracturing, cementing and acidizing services throughout the Permian Basin. Total consideration paid at closing was $77,817, net of cash acquired and subject to a final working capital adjustment. The agreement includes additional contingent consideration up to $6,500, which, if earned, would be payable within two years of the transaction date. We are currently evaluating the preliminary purchase price allocation associated with this transaction, but expect to record goodwill of approximately $37,500 in October 2011, all of which would be allocated to our completion and production services business segment. We believe that this acquisition expands our geographic reach into the Permian Basin and enhances our pressure pumping service offerings.

On October 31, 2011, we acquired substantially all of the assets of two fluid handling businesses based in northern Wyoming, for a total of $16,522 in cash. We are currently evaluating the preliminary purchase price allocation associated with this transaction, but expect to record goodwill of approximately $8,500 in October 2011, all of which would be allocated to our completion and production services business segment. We believe that this acquisition expands our fluid handling position and supplements our trucking business in the northern Niobrara Basin.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements and information in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about us and the oil and gas industry. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. These forward-looking statements involve risks and uncertainties that may be outside of our control and could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: market prices for oil and gas, the level of oil and gas drilling, economic and competitive conditions, capital expenditures, regulatory changes and other uncertainties. Other factors that could cause our actual results to differ from our projected results are described in: (1) Part II, “Item 1A. Risk Factors” and elsewhere in this report, (2) our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, (3) our reports and registration statements filed from time to time with the SEC and (4) other announcements we make from time to time. In light of these risks, uncertainties and assumptions, the forward-looking events discussed below may not occur. Unless otherwise required by law, we undertake no obligation to update publicly any forward-looking statements, even if new information becomes available or other events occur in the future.

The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” “expect” and similar expressions are intended to identify forward-looking statements. All statements other than statements of current or historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements.

Reference to “Complete,” the “Company,” “we,” “our” and similar phrases used throughout this Quarterly Report on Form 10-Q relate collectively to Complete Production Services, Inc. and its consolidated subsidiaries.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes as of ~~June~~September 30, 2011 and for the quarters and ~~six~~nine months ended ~~June~~September 30, 2011 and 2010, included elsewhere herein.

Overview

We are a leading provider of specialized services and products focused on helping oil and gas companies develop hydrocarbon reserves, reduce operating costs and enhance production. We focus on basins within North America that we believe have attractive long-term potential for growth, and we deliver targeted, value-added services and products required by our customers within each specific basin. We believe our range of services and products positions us to meet the many needs of our customers at the wellsite, from drilling and completion through production and eventual abandonment. We manage our operations from regional field service facilities located throughout the U.S. Rocky Mountain region, Texas, Oklahoma, Louisiana, Arkansas, Pennsylvania, western Canada, ~~Mexico~~ and ~~Southeast Asia~~Mexico.

We ~~operate~~previously operated in three business segments:, Completion and Production services, Drilling Services, and Product sales. In July 2011, we sold our Southeast Asian products business which represented over 85% of the Product Sales segment revenue. Therefore, we have restructured our reportable segments to better reflect our current operations. We are accounting for our Southeast Asian business as discontinued operations. The remainder of the Product sales business has been combined into our Drilling Services segment.

Completion and Production Services. Through our completion and production services segment, we establish, maintain and enhance the flow of oil and gas throughout the life of a well. This segment is divided into the following primary service lines:

•

Intervention Services. Well intervention requires the use of specialized equipment to perform an array of wellbore services. Our fleet of intervention service equipment includes coiled tubing units, pressure pumping units, nitrogen units, well service rigs, snubbing units and a variety of support equipment. Our intervention services provide customers with innovative solutions to increase production of oil and gas.

2527

•

Downhole and Wellsite Services. Our downhole and wellsite services include electric-line, slickline, production optimization, production testing, rental and fishing services.

•

Fluid Handling. We provide a variety of services to help our customers obtain, move, store and dispose of fluids that are involved in the development and production of their reservoirs. Through our fleet of specialized trucks, frac tanks and other assets, we provide fluid transportation, heating, pumping and disposal services for our customers.

Drilling Services. Through our drilling services segment, we provide services and equipment that initiate or stimulate oil and gas production by providing land drilling and specialized rig logistics services. We also provide repair work and fabrication services for our customers at a business located in Gainesville, Texas.

Product Sales. We provide oilfield service equipment and refurbishment of used equipment through our Southeast Asian business, and we provide repair work and fabrication services for our customers at a business located in Gainesville, Texas.

Substantially all service and rental revenue we earn is based upon a charge for a period of time (an hour, a day, a week) for the actual period of time the service or rental is provided to our customer or on a fixed per-stage-completed fee. Product sales are recorded when the actual sale occurs and title or ownership passes to the customer.

General

The primary factors influencing demand for our services and products are the level of drilling and workover activity of our customers and the complexity of such activity, which in turn, depends on current and anticipated future oil and gas prices, production depletion rates and the resultant levels of cash flows generated and allocated by our customers to their drilling and workover budgets. As a result, demand for our services and products is cyclical, substantially depends on activity levels in the North American oil and gas industry and is highly sensitive to current and expected oil and natural gas prices.

We consider the drilling and well service rig counts to be an indication of spending by our customers in the oil and gas industry for exploration and development of new and existing hydrocarbon reserves. These spending levels are a primary driver of our business, and we believe that our customers tend to invest more in these activities when oil and gas prices are at higher levels, are increasing, or are expected to increase. The following tables summarize average North American drilling and well service rig activity, as measured by Baker Hughes Incorporated (“BHI”) and the Cameron International Corporation/Guiberson /AESC Service Rig Count for “Active Rigs”:

AVERAGE RIG COUNTS

QuarterEnded6/30/11

QuarterEnded6/30/10

Six MonthsEnded6/30/11

Six MonthsEnded6/30/10

QuarterEnded9/30/11

QuarterEnded9/30/10

Nine MonthsEnded9/30/11

Nine MonthsEnded9/30/10

BHI Rotary Rig Count:

U.S. Land

1,~~795~~911

1,~~464~~601

1,~~745~~805

1,~~385~~459

U.S. Offshore

3134

4218

2830

4335

Total U.S.

1,~~826~~945

1,~~506~~619

1,~~773~~835

1,~~428~~494

Canada

~~187~~441

~~163~~360

~~379~~401

~~310~~327

Total North America

2,~~013~~386

1,~~669~~979

2,~~152~~236

1,~~738~~821

Source:

BHI (www.BakerHughes.com)

QuarterEnded6/30/11

QuarterEnded6/30/10

Six MonthsEnded6/30/11

Six MonthsEnded6/30/10

QuarterEnded9/30/11

QuarterEnded9/30/10

Nine MonthsEnded9/30/11

NineMonthsEnded9/30/10

Cameron International Corporation/Guiberson/AESC Well Service Rig Count (Active Rigs):

United States

2,~~056~~122

1,~~830~~890

2,~~034~~064

1,~~780~~816

Canada

~~671~~731

~~399~~553

~~693~~705

~~442~~479

Total North America

2,~~727~~853

2,~~229~~443

2,~~727~~769

2,~~222~~295

Source:

Cameron International Corporation/Guiberson/AESC Well Service Rig Count for “Active Rigs.”

Outlook

Oilfield market conditions improved throughout 2010 and through the first ~~six~~nine months of 2011 due to higher oil prices, which are encouraging increased investments in oil plays and in gas fields that have meaningful natural gas liquids content. ~~Although~~At ~~improving~~current ~~modestly~~commodity ~~in recent months~~prices, ~~the~~overall ~~price~~activity oflevels ~~natural gas~~are inanticipated ~~North~~to ~~America~~increase ~~has~~near-term. ~~remained~~Oil ~~subdued~~and asnatural agas ~~result~~liquid offocused ~~above~~activity ~~average~~is ~~storage~~expected ~~levels~~to ~~caused~~continue ~~primarily by~~ increasing ~~gas~~in ~~production~~the ~~from~~service intensive unconventional resource plays. ~~Activity~~while indry ~~oil~~natural ~~and~~gas ~~liquid-rich~~directed ~~basins~~activity is expected to ~~increase and activity in dry gas basins should~~ remain ~~steady~~subdued ~~through the remainder of the year~~ as ~~customers work through~~ a ~~backlog~~result of ~~wells~~ample ~~caused by service capacity shortages and a requirement to complete wells to retain acreage~~supplies.

We believe our customers will continue to rely upon service providers with local knowledge and a proven ability to effectively execute complex services on more service intensive, longer-lateral horizontal wells, particularly in oil and liquid-rich basins where our customers are shifting a greater portion of their activities. Our business has transitioned from a predominantly gas-oriented business, to a majority oil and liquids-oriented business. We believe we are well positioned in high-growth basins and that our core services, which include pressure pumping, coiled tubing, well servicing and fluid handling, will continue to directly benefit from an increasing level of service intensity.

Our long-term growth strategy has ~~not~~been ~~changed. We intend~~ to add like-kind equipment, ~~and~~ expand our service offerings through internal capital investment and accelerate our growth by acquiring complementary businesses which expand our service offerings in a current operating area or extend our geographical footprint into targeted basins. Furthermore, we ~~will~~ continue to evaluate our existing service and product offerings and seek to dispose of businesses which are deemed to be non-core services, when market conditions and the terms for such transactions are deemed favorable. For 2011, we expect to spend ~~between~~approximately $~~375~~425 ~~and $400~~ million for capital investment and we continue to seek strategic acquisitions.

~~Critical~~On ~~Accounting~~October 9, ~~Policies~~2011, we became party to a merger agreement between Superior Energy Services, Inc. (“SPN”), a Delaware corporation, SPN Fairway Acquisition, Inc., a newly formed Delaware corporation which is an indirect wholly-owned subsidiary of SPN, and ~~Estimates~~us. Pursuant to this agreement, each share of our common stock issued and outstanding immediately prior to the effective date of the merger will be converted automatically into the right to receive 0.945 shares of common stock, par value $0.001 per share, of SPN and $7.00 in cash. Pursuant to the agreement, we will merge with and into SPN Fairway Acquisition, Inc., which will be the surviving corporation and an indirect wholly-owned subsidiary of SPN. The completion of the merger is expected as early as December 2011, subject to approvals of SPN’s and our stockholders. On November 2, 2011, the Federal Trade Commission informed both us and SPN that the Hart-Scott Rodino Antitrust Act waiting period was terminated effective November 2, 2011. For terms of the agreement, including circumstances under which the merger agreement can be terminated and the ramifications of such a termination, as well as other terms and conditions, refer to the agreement and plan of merger filed as Exhibit 2.1 to our Current Report on Form 8-K with the Securities and Exchange Commission on October 11, 2011.

~~The~~Acquisitions preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires the use of estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, and provide a basis for making judgments about the carrying value of assets and liabilities that are not readily available through open market quotes. Estimates and assumptions are reviewed periodically, and actual results may differ from those estimates under different assumptions or conditions. We must use our judgment related to uncertainties in order to make these estimates and assumptions.

For a description of our critical accounting policies and estimates as well as certain sensitivity disclosures related to those estimates, see our Annual Report on Form 10-K for the year ended December 31, 2010. Our critical accounting policies and estimates have not changed materially during the six months ended June 30, 2011.

Recent Transactions

On May 11, 2011, we completed the purchase of the hydraulic snubbing and production testing assets of a business with operations in the Marcellus, Eagle Ford and Barnett Shales. We paid a total of $15.6 million in cash for these assets, which included goodwill of $4.4 million. The entire purchase price was allocated to the completion and production services business segment. We believe this acquisition will supplement our hydraulic snubbing and production testing service offerings in Pennsylvania and Texas.

27On October 25, 2011, we purchased all the issued and outstanding equity interests of Rising Star Services, L.P., a company based in Odessa, Texas which provides hydraulic fracturing, cementing and acidizing services throughout the Permian Basin. Total consideration paid at closing was $77.8 million, net of cash acquired and subject to a final working capital adjustment. The agreement includes additional contingent consideration up to $6.5 million, which, if earned, would be payable within two years of the transaction date. We are currently evaluating the preliminary purchase price allocation associated with this transaction, but expect to record goodwill of approximately $37.5 million in October 2011, all of which would be allocated to our completion and production services business segment. We believe that this acquisition expands our geographic reach into the Permian Basin and enhances our pressure pumping service offerings.

On October 31, 2011, we acquired substantially all of the assets of two fluid handling businesses based in northern Wyoming, for a total of $16.5 million in cash. We are currently evaluating the preliminary purchase price allocation associated with this transaction, but expect to record goodwill of approximately $8.5 million in October 2011, all of which would be allocated to our completion and production services business segment. We believe that this acquisition expands our fluid handling position and supplements our trucking business in the northern Niobrara Basin.

OnDiscontinued ~~July 6,~~Operations 2011, we sold our Southeast Asian products business, through which we provided oilfield equipment sales, rentals and refurbishment services, to MTQ Corporation Limited (“MTQ”), a Singapore firm which provides engineering services to oilfield and industrial equipment users and manufacturers. We received proceeds from the sale of this business totaling $19.3 million, which is subject to further adjustment based on the net tangible assets of the business on June 30, 2011. We have not yet finalized the gain or loss on this transaction, but we expect that such a gain or loss will not have a significant impact on our financial statements for the third quarter of 2011.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires the use of estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, and provide a basis for making judgments about the carrying value of assets and liabilities that are not readily available through open market quotes. Estimates and assumptions are reviewed periodically, and actual results may differ from those estimates under different assumptions or conditions. We must use our judgment related to uncertainties in order to make these estimates and assumptions.

As mentioned above, in July 2011, we sold our Southeast Asian products business and are accounting for this disposal group as discontinued operations. The remainder of the Product Sales business has been combined into our Drilling Services segment. A reconciliation of the original presentation of our reportable segments for the quarter and nine months ended September 30, 2010 to the current reportable segments is presented in Note 11, “Segment information,” in our notes to consolidated financial statements included elsewhere in this Form 10-Q.

Results of Operations

	QuarterEnded6/30/11			QuarterEnded6/30/10			Change2011/2010			PercentChange2011/2010
	QuarterEnded9/30/11			QuarterEnded9/30/10			Change2011/2010			PercentChange2011/2010
	(unaudited, in thousands)
Revenue:
Completion and production services	$	~~491~~535,~~881~~625		$	~~310~~361,~~460~~457		$	~~181~~174,~~421~~168			5848	%
Drilling services		5254,~~222~~664			4048,~~445~~813			115,~~777~~851			2912	%
Product sales		7,864			9,340			(1,476	)		(16	%)
Total	$	590,289		$	410,270		$	180,019			44	%
Total	$	551,967		$	360,245		$	191,722			53	%
Adjusted EBITDA:
Completion and production services	$	~~144~~154,~~931~~249		$	84108,~~748~~104		$	6046,~~183~~145			7143	%
Drilling services		1314,~~888~~388			812,~~663~~685			51,~~225~~703			6013	%
Product sales		1,863			1,250			613			49	%
Corporate		(11,370	)		(9,743	)		(1,627	)		17	%
Corporate		(11,075	)		(9,320	)		(1,755	)		19	%
Total	$	157,267		$	111,046		$	46,221			42	%
Total	$	149,607		$	85,341		$	64,266			75	%
	Six MonthsEnded6/30/11			Six MonthsEnded6/30/10			Change2011/2010			PercentChange2011/2010
	(unaudited, in thousands)
Revenue:
Completion and production services	$	928,968		$	576,748		$	352,220			61	%
Drilling services		102,374			75,549			26,825			36	%
Product sales		15,842			17,652			(1,810	)		(10	%)
Total	$	1,047,184		$	669,949		$	377,235			56	%
Adjusted EBITDA:
Completion and production services	$	266,445		$	142,504		$	123,941			87	%
Drilling services		26,376			14,082			12,294			87	%
Product sales		3,077			2,812			265			9	%
Corporate		(20,900	)		(18,149	)		(2,751	)		15	%
Total	$	274,998		$	141,249		$	133,749			95	%

“Corporate” includes amounts related to corporate personnel costs, other general expenses and stock-based compensation charges.


	Nine Months Ended 9/30/11		Nine Months Ended 9/30/10		Change 2011/ 2010		Percent Change 2011/ 2010
	(unaudited, in thousands)
Revenue:
Completion and production services	$	1,464,593	$	938,205	$	526,388		56	%
Drilling services		159,114		126,284		32,830		26	%

Total	$	1,623,707	$	1,064,489	$	559,218		53	%

“Adjusted EBITDA” consists of net income (loss) from continuing operations before net interest expense, taxes, depreciation and amortization, non-controlling interest and impairment loss. Adjusted EBITDA is a non-GAAP measure of performance. We use Adjusted EBITDA as the primary internal management measure for evaluating performance and allocating additional resources. The following table reconciles Adjusted EBITDA for the quarters and six months ended June 30, 2011 and 2010 to the most comparable U.S. GAAP measure, operating income (loss). The calculation of Adjusted EBITDA is different from the calculation of “EBITDA,” as defined and used in our credit facilities. For a discussion of the calculation of “EBITDA” as defined under our existing credit facilities, see Note 7, “Long-term debt” included in the notes to consolidated financial statements included elsewhere in this Quarterly Report.


Adjusted EBITDA:
Completion and production services	$	420,694		$	250,609		$	170,085		68	%
Drilling services		40,561			26,622			13,939		52	%
Corporate		(32,270	)		(27,893	)		(4,377	)	16	%

Total	$	428,985		$	249,338		$	179,647		72	%

“Corporate”

includes amounts related to corporate personnel costs, other general expenses and stock-based compensation charges.

“Adjusted EBITDA” consists of net income (loss) from continuing operations before net interest expense, taxes, depreciation and amortization, non-controlling interest and impairment loss. Adjusted EBITDA is a non-GAAP measure of performance. We use Adjusted EBITDA as the primary internal management measure for evaluating performance and allocating additional resources. The following table reconciles Adjusted EBITDA for the quarters and nine months ended September 30, 2011 and 2010 to the most comparable U.S. GAAP measure, operating income (loss). The calculation of Adjusted EBITDA is different from the calculation of “EBITDA,” as defined and used in our credit facilities. For a discussion of the calculation of “EBITDA” as defined under our existing credit facilities, see Note 7, “Long-term debt” included in the notes to consolidated financial statements included elsewhere in this Quarterly Report.

Reconciliation of Adjusted EBITDA to Most Comparable U.S. GAAP Measure—Operating Income (Loss)

CompletionandProductionServices

DrillingServices

~~ProductSales~~Corporate

~~Corporate~~Total

~~Total~~

(unaudited, in thousands)

Quarter Ended June 30, 2011

Quarter Ended September 30, 2011

Adjusted EBITDA, as defined

~~144~~154,~~931~~249

1314,~~888~~388

1(11,~~863~~370

)

~~(11~~157,~~075~~267

)

~~149,607~~

Depreciation and amortization

43,~~585~~147

4,~~790~~972

~~486~~576

~~604~~48,695

~~49,465~~

Operating income (loss)

~~101~~111,~~346~~102

9,~~098~~416

1(11,~~377~~946

)

~~(11~~108,~~679~~572

)

~~100,142~~

Quarter Ended June 30, 2010

Quarter Ended September 30, 2010

Adjusted EBITDA, as defined

84108,~~748~~104

812,~~663~~685

1(9,~~250~~743

)

(9111,~~320~~046

)

~~85,341~~

Depreciation and amortization

39,~~770~~078

4,~~644~~970

~~561~~515

~~497~~44,563

~~45,472~~

Operating income (loss)

4469,~~978~~026

47,~~019~~715

~~689~~(10,258

)

(966,~~817~~483

)

~~39,869~~

Six Months Ended June 30, 2011

Nine Months Ended September 30, 2011

Adjusted EBITDA, as defined

~~266~~420,~~445~~694

2640,~~376~~561

3(32,~~077~~270

)

~~(20~~428,~~900~~985

)

~~274,998~~

Depreciation and amortization

86129,~~842~~988

915,~~539~~063

1,~~028~~781

1146,~~204~~832

~~98,613~~

Operating income (loss)

~~179~~290,~~603~~706

1625,~~837~~498

2(34,~~049~~051

)

~~(22~~282,~~104~~153

)

~~176,385~~

Six Months Ended June 30, 2010

Nine Months Ended September 30, 2010

Adjusted EBITDA, as defined

~~142~~250,~~504~~609

1426,~~082~~622

2(27,~~812~~893

)

~~(18~~249,~~149~~338

)

~~141,249~~

Depreciation and amortization

79118,~~563~~641

914,~~102~~653

1,~~137~~504

~~989~~134,798

~~90,791~~

Operating income (loss)

62131,~~941~~968

411,~~980~~969

1(29,~~675~~397

)

~~(19~~114,~~138~~540

)

~~50,458~~

We do not allocate net interest expense or tax expense to our operating segments. The following table reconciles operating income as reported above to net income from continuing operations for the quarters and ~~six~~nine months ended ~~June~~September 30, 2011 and 2010:

	Quarters Ended June 30,						Six Months Ended June 30,
	Quarters Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Segment operating income	$	~~100~~108,~~142~~572		$	3966,~~869~~483		$	~~176~~282,~~385~~153		$	50114,~~458~~540
Interest expense		1312,~~681~~917			14,~~760~~151			2740,~~824~~709			2943,~~501~~653
Interest income		(~~132~~180	)		(9573	)		(~~227~~407	)		(~~143~~249	)
Income taxes		3236,~~088~~513			920,~~533~~814			5591,~~349~~420			828,~~191~~609
Net income	$	54,505		$	15,671		$	93,439		$	12,909
Net income from continuing operations	$	59,322		$	31,591		$	150,431		$	42,527

Below is a discussion of our operating results by segment for these periods.

~~Quarter~~31 ~~Ended June 30, 2011 Compared to the Quarter Ended June 30, 2010 (Unaudited)~~

Revenue

Revenue for the quarter ended June 30, 2011 increased by $191.7 million, or 53%, to $552.0 million from $360.2 million for the same period in 2010. The changes by segment were as follows:

• Completion and Production Services. Segment revenue increased $181.4 million, or 58%, for the quarter primarily due to an increase in activity levels in the oil and gas industry. We experienced favorable year-over-year improvements for most of our business lines, especially our pressure pumping, coiled tubing and fluid handling businesses as higher demand for our services, resulted in better utilization and pricing of our existing equipment. We invested in additional operating equipment, including pressure pumping frac fleets, coiled tubing units and fluid handling assets, which we placed into service during the past twelve months. We completed several small acquisitions in 2010 and one acquisition in May 2011, which also contributed to the revenue growth for this segment.

• Drilling Services. Segment revenue increased $11.8 million, or 29%, during the quarter primarily due to increased activity levels in the industry and improved utilization and pricing for our rig relocation and contract drilling businesses.

•Quarter ~~Product~~Ended ~~Sales. Segment revenue decreased $1.5 million~~September 30, or2011 ~~16%,~~Compared ~~for~~to the ~~quarter~~Quarter ~~due~~Ended ~~to lower third-party sales at our fabrication and repair business in Texas as well as a decrease in our Southeast Asian operations~~September 30, ~~for~~2010 ~~which revenues can fluctuate between periods due to the project-specific nature of this business.~~(Unaudited)

~~Service~~Revenue ~~and Product Expenses~~

~~Service~~Revenue ~~and~~for ~~product expenses include labor costs associated with~~ the ~~execution~~quarter ~~and~~ended ~~support of our services~~September 30, ~~materials~~2011 ~~used in the performance of those services and other costs directly related to the support and maintenance of equipment. These expenses~~ increased by $~~121~~180.10 million, or 5244%, to $~~352~~590.03 million ~~for the quarter ended June 30, 2011~~ from $~~230~~410.93 million for the ~~quarter~~same ~~ended~~period ~~June 30,~~in 2010. The ~~following~~changes ~~table~~by ~~summarizes~~segment ~~service and~~were ~~product expenses~~ as ~~a percentage of revenues for the quarters ended June 30, 2011 and 2010~~follows:

~~Service~~• Completion and ~~Product Expenses~~Production Services. Segment revenue increased $174.2 million, or 48%, for the quarter primarily due to an increase in activity levels in the oil and gas industry. We experienced favorable year-over-year improvements for most of our business lines, especially our pressure pumping, coiled tubing and fluid handling businesses as ahigher ~~Percentage~~demand for our services, resulted in better utilization and pricing of ~~Revenue~~our existing equipment. We invested in additional operating equipment, including pressure pumping frac fleets, coiled tubing units and fluid handling assets, which we placed into service during the past twelve months. We completed several small acquisitions in 2010 and one acquisition in May 2011, which also contributed to the revenue growth for this segment.

	Quarter Ended
Segment:	6/30/11			6/30/10			Change
Completion and production services		63	%		63	%		—
Drilling services		67	%		68	%		(1	%)
Product sales		68	%		78	%		(10	%)
Total		64	%		64	%		—

•

Drilling Services. Segment revenue increased $5.9 million, or 12%, during the quarter primarily due to increased activity levels in the oil and gas industry and improved utilization and pricing for our rig relocation and contract drilling businesses.

~~Total service and product expenses as a percentage of overall revenue remained consistent when comparing the quarter ended June 30, 2011 to the same period in 2010.~~ Service ~~and~~Expenses product expenses as a percentage of revenue for the products segments decreased favorably when comparing the quarter ended June 30, 2011 to the same period in 2010, due primarily to a favorable sales mix in 2011 associated with our Southeast Asian business.

Service expenses include labor costs associated with the execution and support of our services, materials used in the performance of those services and other costs directly related to the support and maintenance of equipment. These expenses increased $121.4 million, or 47%, to $379.2 million for the quarter ended September 30, 2011 from $257.8 million for the quarter ended September 30, 2010. The following table summarizes service expenses as a percentage of revenues for the quarters ended September 30, 2011 and 2010:


Service Expenses as a Percentage of Revenue
	Quarter Ended
Segment:	9/30/11			9/30/10			Change
Completion and production services		64	%		62	%		2	%
Drilling services		67	%		69	%		(2	%)
Total		64	%		63	%		1	%

Total service expenses as a percentage of overall revenue increased slightly when comparing the quarter ended September 30, 2011 to the same period in 2010, as improvements in asset utilization and pricing were offset by higher labor and fuel costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include salaries and other related expenses for our selling, administrative, finance, information technology and human resource functions. Selling, general and administrative expenses increased $612.4 million, or 1430%, for the quarter ended ~~June~~September 30, 2011 to $5053.48 million from $4441.04 million during the quarter ended ~~June~~September 30, 2010. This increase was primarily related to higher payroll related costs resulting from increased headcount, ~~merit increases that were awarded during the quarter ended June 30, 2011,~~ higher incentive ~~compensation~~ compensation costs based ~~upon~~on ~~earnings~~favorable operating results and the reinstatement of matching contributions to our 401(k) and deferred compensation plans., ~~Partially~~as ~~offsetting~~well ~~this~~as ~~increase~~a inforeign ~~payroll~~exchange ~~costs~~loss ~~was~~due ato ~~decrease~~the indevaluation ~~bad~~of ~~debt~~the ~~expense~~Mexican asPeso ~~well~~against asthe aU.S. dollar ~~decrease~~and inhigher ~~losses~~outside onservice costs relating to the ~~disposition~~ ofimpending ~~assets~~merger inand ~~the~~other matters. The quarter ended ~~June~~ September 30, ~~2011~~2010 ~~compared~~also tobenefited from the ~~same~~recovery ~~period~~of inbad ~~2010~~debt. As a percentage of revenues, selling, general and administrative expense was 9% and 1210% for the quarters ended ~~June~~September 30, 2011 and 2010, respectively.

Depreciation and Amortization

Depreciation and amortization expense increased $4.01 million, or 9%, to $4948.57 million for the quarter ended ~~June~~September 30, 2011 from $4544.56 million for the quarter ended ~~June~~September 30, 2010. The increase in depreciation and amortization expense was primarily related to capital investment in equipment which was placed into service during the twelve-month period from ~~July~~ October 2010 through ~~June~~September 2011. Inas ~~addition,~~well weas ~~acquired~~additional ~~several small businesses in 2010 which contributed a full-quarter of~~ depreciation and amortization expense ~~for~~associated ~~the~~with ~~quarter~~equipment ~~ended~~and ~~June~~identifiable ~~30,~~intangible ~~2011~~assets ~~but~~associated ~~had~~with notwo ~~impact~~acquisitions ~~for~~during the ~~same~~fourth ~~period~~quarter inof 2010, and weone ~~acquired a small business~~ in May 2011 ~~which contributed depreciation expense, as well as amortization expense associated with certain intangible assets acquired~~. As a percentage of revenue, depreciation and amortization expense decreased to 98% from 1311% for the ~~quarter~~quarters ended ~~June~~ September 30, 2011 ~~compared~~and ~~to the same period in~~ 2010, respectively.

Interest expense

Interest expense decreased 79%, or $1.13 million, to $1312.7 9 million for the quarter ended ~~June~~September 2011 compared to $14.82 million for the quarter ended ~~June~~September 30, 2010. The overall decrease in interest expense was largely due to ~~higher~~lower ~~capitalized~~fees ~~interest~~ associated with ~~construction~~an amendment to our revolving credit facilities in ~~progress~~June 2011, as well as ~~lower~~an ~~fees~~increase in capitalized interest associated with anconstruction ~~amendment~~in toprogress, ~~our~~which ~~revolving~~increased ~~credit~~significantly ~~facilities~~in 2011 as we increased our investments in ~~June~~capital ~~2011~~equipment.

Taxes

We recorded a provision of $3236.15 million for the quarter ended ~~June~~September 30, 2011 at an effective rate of approximately 3738% and a provision of $920.58 million for the quarter ended ~~June~~September 30, 2010 at an effective rate of approximately 3840%. The ~~increase~~lower intax rate for the ~~tax~~nine ~~provision~~months ended September 30, 2011 was ~~consistent~~due ~~with~~to ana ~~increase~~greater inbenefit ~~pre-tax~~from ~~income~~the ~~for~~domestic production activities deduction relative to 2010, as well as the ~~respective~~mix ~~periods~~of earnings amongst the various tax jurisdictions in which we operate.

~~Six~~Discontinued ~~Months~~operations ~~Ended June 30, 2011 Compared to the Six Months Ended June 30, 2010 (Unaudited)~~

We recorded a loss of $0.1 million during the quarter ended September 30, 2011 associated with the sale of our Southeast Asian products business in July 2011. Net income earned from this disposal group during the same period in 2010 was $1.4 million.

Nine Months Ended September 30, 2011 Compared to the Nine Months Ended September 30, 2010 (Unaudited)

Revenue

Revenue for the ~~six~~nine months ended ~~June~~September 30, 2011 increased by $~~377~~559.32 million, or 5653%, to $1,~~047~~623.27 million from $~~669~~1,064.95 million for the same period in 2010. The changes by segment were as follows:

• Completion and Production Services. Segment revenue increased $~~352~~526.24 million, or 6156%, for the ~~six~~nine months ended ~~June~~September 30, 2011 compared to the same period in 2010 primarily due to an increase in activity levels in the oil and gas industry. We experienced favorable year-over-year improvements for most of our business lines, especially our pressure pumping, coiled tubing and fluid handling businesses as higher demand for our services resulted in better utilization and pricing of our existing equipment. We invested in equipment, including pressure pumping frac fleets, coiled tubing units and fluid handling assets, which we placed into service during the past twelve months. In addition, we acquired several small businesses during 2010 and one business in May 2011 which contributed to our revenue growth in this segment.

• Drilling Services. Segment revenue increased $2632.8 million, or 3626%, for the ~~six~~nine months ended ~~June~~September 30, 2011 compared to the same period in 2010, primarily due to increased activity levels in the oil and gas industry and improved utilization and pricing in our rig logistics and contract drilling businesses.

•33 Product Sales. Segment revenue decreased $1.8 million, or 10%, for the six months ended June 30, 2011 compared to the same period in 2010, primarily due to a decline in sales at our Southeast Asian facility, and the mix of products sold during the period compared to the same period in 2010.

Service and Product Expenses

Service and product expenses include labor costs associated with the execution and support of our services, materials used in the performance of those services and other costs directly related to the support and maintenance of equipment. These expenses increased $228.7 million, or 52%, to $672.5 million for the six months ended June 30, 2011 from $443.8 million for the same period in 2010. The following table summarizes service and product expenses as a percentage of revenues for the six months ended June 30, 2011 and 2010:

Service and Product Expenses as a Percentage of Revenue

	Six Months Ended
	6/30/11			6/30/10			Change
Segment:
Completion and production services		64	%		65	%		(1	%)
Drilling services		68	%		72	%		(4	%)
Product sales		71	%		76	%		(5	%)
Total		64	%		66	%		(2	%)

Service and product expenses as a percentage of revenue decreased slightly for the six months ended June 30, 2011 compared to the same period in 2010. Margins by business segment were primarily impacted by utilization and pricing.

~~• Completion and Production Services.~~ Service ~~and~~Expenses product expenses as a percentage of revenue for this business segment decreased slightly when comparing the six months ended June 30, 2011 to the same period in 2010 primarily due to an increase in overall oilfield activity, improved pricing and service mix, with an increase in sales for historically higher-margin offerings, partially offset by some increases in labor, fuel and repair costs.

•Service ~~Drilling~~expenses ~~Services.~~include ~~Service~~labor costs associated with the execution and ~~product~~support ~~expenses~~of asour aservices, ~~percentage~~materials used in the performance of ~~revenue~~those services ~~for~~and ~~this~~other ~~business~~costs ~~segment~~directly ~~decreased~~related to the support and maintenance of equipment. These expenses increased $352.3 million, or 51%, to $1,042.3 million for the ~~six~~nine months ended ~~June~~ September 30, 2011 ~~compared~~from to$690.0 million for the same period in 2010. ~~primarily~~The ~~due~~following totable ~~increased~~summarizes ~~asset~~service ~~utilization~~expenses as a percentage of revenues for the nine months ended September 30, 2011 and ~~improved~~2010: ~~pricing.~~

• Product Sales. Service and product expenses as a percentage of revenue for the products segment decreased for the six months ended June 30, 2011 compared to the same period in 2010, primarily due to a favorable product mix for our Southeast Asian business when comparing the same periods.


Service Expenses as a Percentage of Revenue
	Nine Months Ended
Segment:	9/30/11			9/30/10			Change
Completion and production services		64	%		64	%		—
Drilling services		68	%		71	%		(3	%)
Total		64	%		65	%		(1	%)

Service expenses as a percentage of revenue decreased slightly for the nine months ended September 30, 2011 compared to the same period in 2010, as improvements in asset utilization and pricing were partially offset by higher labor and fuel costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $1427.84 million, or 1822% to $99152.75 million, for the ~~six~~nine months ended ~~June~~September 30, 2011 compared to $84125.91 million for the same period in 2010. This increase was primarily related to higher payroll related costs resulting from increases in headcount, merit increases which were awarded during the second quarter of 2011, an increase in incentive compensation based on higher earnings and the reinstatement of matching contributions to our 401(k) and deferred compensation plans. ~~Partially~~We ~~offsetting~~also ~~this~~experienced ~~increase~~higher insurance costs in ~~payroll~~2011, as well as increased outside service costs ~~was~~relating ato ~~decrease~~the inimpending ~~bad~~merger ~~debt~~and ~~expense~~other ~~due~~matters, toan ~~recoveries~~increase in ~~2011~~bad debt expense and aan ~~decrease~~increase in losses on the disposition of assets ~~in 2011 compared to the same period in 2010~~. As a percentage of revenues, selling, general and administrative expense was 109% and 1312% for the ~~six~~nine months ended ~~June~~September 30, 2011 and 2010, respectively.

Depreciation and Amortization

Depreciation and amortization expense increased $712.80 million, or 9%, to $98146.68 million for the ~~six~~nine months ended ~~June~~September 30, 2011 from $90134.8 million for the ~~six~~nine months ended ~~June~~September 30, 2010. The increase in depreciation and amortization expense was primarily related to capital investment in equipment which was placed into service during the twelve-month period from ~~July~~October 2010 through ~~June~~September 2011. In addition, we acquired several small businesses in 2010 which contributed a full ~~six~~nine months of depreciation and amortization expense for the ~~six~~nine months ended ~~June~~September 30, 2011 but had ~~little~~a less significant impact for the same period in 2010, and we acquired a small business in May 2011 which contributed depreciation expense as well as amortization expense associated with intangible assets ~~in 2011~~. As a percentage of revenue, depreciation and amortization expense decreased to 9% from 1413% for the ~~six~~nine months ended ~~June~~September 30, 2011 ~~compared~~ toand ~~the same period in~~ 2010, respectively.

Interest Expense

Interest expense decreased 67%, or $13.70 million, to $2740.87 million for the ~~six~~nine months ended ~~June~~September 2011 compared to $2943.57 million for the same period in 2010. The overall decrease in interest expense was ~~largely~~primarily due to ~~higher~~lower ~~capitalized~~fees ~~interest~~ associated with ~~construction~~an amendment to our revolving credit facilities in ~~progress~~June 2011, as well as ~~lower~~an ~~fees~~increase in capitalized interest associated with anconstruction ~~amendment~~in progress, which increased significantly in 2011 compared to 2010 ~~our~~as ~~revolving~~we ~~credit~~increased ~~facilities~~our investments in ~~June~~capital ~~2011~~equipment.

Taxes

We recorded a tax provision of $5591.34 million for the ~~six~~nine months ended ~~June~~September 30, 2011 at an effective rate of approximately 3738% and a tax provision of $828.26 million for the ~~six~~nine months ended ~~June~~September 30, 2010 at an effective rate of approximately 3940%. The lower effective rate for the ~~six~~nine months ended ~~June~~September 30, 2011 was due to a greater benefit received in 2011 from the domestic production activities deduction relative to 2010, as well as the mix of earnings amongst the various tax jurisdictions in which we operate.

Discontinued operations

On July 6, 2011, we sold our Southeast Asian products business. During the nine months ended September 30, 2011, we recorded net income of $2.2 million associated with this business, which included a loss on the disposal of $0.1 million. Net income earned from this disposal group during the same period in 2010 was $3.4 million.

Liquidity and Capital Resources

As of ~~June~~September 30, 2011, we had working capital, net of cash, of $~~338~~333.53 million and cash and cash equivalents of $~~170~~208.63 million, compared to working capital, net of cash, of $~~276~~284.84 million and cash and cash equivalents of $~~126~~119.71 million at December 31, 2010, excluding cash associated with discontinued operations. Our working capital, net of cash, increased at ~~June~~September 30, 2011 compared to December 31, 2010 ~~largely~~primarily due to an increase in trade receivables, partially offset by an increase in payables, reflecting an overall increase in oilfield activity levels.

We anticipate that cash generated from operations and our current cash balance will be sufficient to fund the majority of our cash requirements for the next twelve months, however borrowings under our amended revolving credit facility, future debt offerings and/or future public equity offerings may also be used to fund future acquisitions or to satisfy our other liquidity needs. We believe that funds from these sources will be sufficient to meet both our short-term working capital requirements and our long-term capital requirements. If our plans or assumptions change, or are inaccurate, or if we make further acquisitions, we may have to raise additional capital. Our ability to fund planned capital expenditures and to make acquisitions will depend upon our future operating performance, and more broadly, on the availability of equity and debt financing, which will be affected by prevailing economic conditions in our industry, and general financial, business and other factors, some of which are beyond our control. In addition, new debt obtained could include service requirements based on higher interest paid and shorter maturities and could impose a significant burden on our results of operations and financial condition. The issuance of additional equity securities could result in significant dilution to stockholders.

The following table summarizes cash flows by type for the periods indicated (in thousands):

	Six Months EndedJune 30,
	Nine Months EndedSeptember 30,
	2011			2010
Cash flows provided by (used in):
Operating activities	$	~~190~~326,~~488~~703		$	~~104~~170,~~515~~770
Investing activities		(~~161~~249,~~172~~699	)		(40106,~~142~~751	)
Financing activities		1412,~~271~~822			(71,090	)

Net cash provided by operating activities increased $86155.09 million for the ~~six~~nine months ended ~~June~~ September 30, 2011, compared to the same period in 2010. This increase in operating cash flows in 2011 reflects an increase in cash receipts associated with increased sales as demand for our services and products increased during the period. In addition, we entered into several long-term contracts to provide pressure pumping services and deployed significant assets. We believe our long-term take-or-pay contracts will provide a relatively stable cash flow.

Net cash used in investing activities increased by $~~121~~142.09 million for the ~~six~~nine months ended ~~June~~September 30, 2011 compared to the same ~~period~~ period in 2010. This increase primarily resulted from ana significant increase in investment in capital expenditures, including aseveral frac ~~fleet~~fleets and coiled tubing units placed into service in ~~January~~ 2011, and ~~several~~investment ~~coiled~~in ~~tubing~~drilling ~~units~~rigs, ~~placed~~primarily ~~into service~~ during the ~~second~~third quarter of 2011. ~~In addition,~~These weexpenditures ~~acquired~~were aoffset ~~small~~by ~~business~~the inproceeds ~~May~~of ~~2011 for~~ $1519.63 million from the sale of our Southeast Asian business in July 2011.

~~Net~~35 cash provided by financing activities increased $14.3 million for the six months ended June 30, 2011 compared to the same period in 2010. The primary source of funds was proceeds from the issuance of common stock associated with the exercise of employee stock options, partially offset by the purchase of treasury shares in settlement of tax liabilities associated with stock-based compensation. In addition, we paid $1.1 million to settle a note payable associated with the financing of insurance premiums during the six months ended June 30, 2010.

Net cash provided by financing activities increased $11.7 million for the nine months ended September 30, 2011, compared to the same period in 2010. The primary source of funds was proceeds from the issuance of common stock associated with the exercise of employee stock options, partially offset by the purchase of treasury shares in settlement of tax liabilities associated with stock-based compensation. We also paid financing fees of $2.5 million in 2011 in conjunction with the amendment of our credit facility. In addition, we paid $1.1 million to settle a note payable associated with the financing of insurance premiums during the nine months ended September 30, 2010.

We believe that our cash balance, operating cash flows and borrowing capacity will be sufficient to fund our operations for the next twelve months.

Dividends

We did not pay dividends on our $0.01 par value common stock during the ~~six~~nine months ended ~~June~~September 30, 2011 or during the years ended December 31, 2010, 2009 and 2008. We do not intend to pay dividends in the foreseeable future, but rather plan to build our cash balance near-term and reinvest such funds in our business. ~~Furthermore,~~Our ~~our~~ credit facility contains restrictive debt covenants which ~~preclude~~limit usour ~~from~~ability ~~paying~~to ~~future~~pay dividends on our common stock.

Description of Our Indebtedness

Senior Notes.

On December 6, 2006, we issued 8.0% senior notes with a face value of $650.0 million through a private placement of debt. These notes mature in 10 years, on December 15, 2016, and require semi-annual interest payments, paid in arrears and calculated based on an annual rate of 8.0%, on June 15 and December 15, of each year, which commenced on June 15, 2007. There was no discount or premium associated with the issuance of these notes. The senior notes are guaranteed by all of our current domestic subsidiaries. The senior notes have covenants which, among other things: (1) limit the amount of additional indebtedness we can incur; (2) limit restricted payments such as a dividend; (3) limit our ability to incur liens or encumbrances; (4) limit our ability to purchase, transfer or dispose of significant assets; (5) limit our ability to purchase or redeem stock or subordinated debt; (6) limit our ability to enter into transactions with affiliates; (7) limit our ability to merge with or into other companies or transfer all or substantially all of our assets; and (8) limit our ability to enter into sale and leaseback transactions. We have the option to redeem all or part of these notes on or after December 15, 2011. Additionally, we may redeem some or all of the notes prior to December 15, 2011 at a price equal to 100% of the principal amount of the notes plus a make-whole premium.

Credit Facility.

Prior to June 13, 2011, we maintained a senior secured facility (the “Amended Credit Agreement”) with Wells Fargo Bank, National Association, as U.S. Administrative Agent, HSBC Bank Canada, as Canadian Administrative Agent, and certain other financial institutions which was structured as an asset-based facility subject to borrowing base restrictions. In connection with the facility, Wells Fargo Capital Finance, LLC (formerly known as Wells Fargo Foothill, LLC) served as U.S. Administrative Agent and also served as U.S. Issuing Lender and U.S. Swingline Lender. The Amended Credit Agreement provided for a U.S. revolving credit facility of up to $225.0 million that was to mature in December 2011 and a Canadian revolving credit facility of up to $15.0 million (with Integrated Production Services Ltd., one of our wholly-owned subsidiaries, as the borrower thereof (“Canadian Borrower”)) that was to mature in December 2011. The Amended Credit Agreement included a provision for a “commitment increase”, as defined therein, which permitted us to effect up to two separate increases in the aggregate commitments under the Amended Credit Agreement by designating one or more existing lenders or other banks or financial institutions, subject to the bank’s sole discretion as to participation, to provide additional aggregate financing up to $75.0 million, with each committed increase equal to at least $25.0 million in the U.S., or $5.0 million in Canada, and in accordance with other provisions as stipulated in the Amended Credit Agreement. Certain portions of the credit facilities were available to be borrowed in U.S. dollars, Canadian dollars and other currencies approved by the lenders.

U.S., or $5.0 million in Canada, and in accordance with other provisions as stipulated in the Amended Credit Agreement. Certain portions of the credit facilities were available to be borrowed in U.S. dollars, Canadian dollars and other currencies approved by the lenders.

We incurred unused commitment fees under the Amended Credit Agreement ranging from 0.50% to 1.00% based on the average daily balance of amounts outstanding.

New Credit Agreement, effective June 13, 2011:

On June 13, 2011, we entered into a Third Amended and Restated Credit Agreement among us, a ~~certain~~ subsidiary of the Company that is designated as a borrower under the Canadian facility, if any (the “Canadian Borrower”), the lenders party thereto, Wells Fargo Bank, National Association, as the U.S. administrative agent, U.S. issuing lender and U.S. swingline lender, and the other persons from time to time party thereto (the “New Credit Agreement”), which amends and restates the ~~Second~~ Amended ~~and Restated~~ Credit ~~Agreement, dated as of December 6, 2006 (the~~ ~~“Second Amended and Restated Credit~~ Agreement”), as amended by the First Amendment to Second Amended and Restated Credit Agreement, dated as of June 29, 2007 (the “First Amendment”), the Second Amendment to Credit Agreement and Omnibus Amendment to Security Documents, dated as of October 9, 2007 (the “Second Amendment”), and the Third Amendment to Credit Agreement, Omnibus Amendment to Credit Documents and Assignment, dated as of October 13, 2009 (the “Third Amendment,”) and collectively with the Second Amended and Restated Credit Agreement, the First Amendment and the Second Amendment, the Amended Credit Agreement. Defined terms not otherwise described herein shall have the meanings given to them in the New Credit Agreement.

The New Credit Agreement modifies the Amended Credit Agreement by, among other things:

•

changing the structure of the credit facility from an asset-based facility to a cash flow facility;

•

increasing our U.S. revolving credit facility from $225.0 million to $300.0 million and terminating the existing Canadian revolving credit facility (subject to our option to convert and reallocate any portion of the U.S. revolving credit facility then held by HSBC Bank USA, N.A., into a Canadian revolving credit facility upon satisfaction of certain conditions, including obtaining the consent of HSBC Bank USA, N.A., to such conversion and reallocation).

~~Subject~~37 to certain limitations set forth in the New Credit Agreement, we have the option to determine how interest is computed by reference to either (i) the London Inter-bank Offered Rate, or LIBOR, plus an applicable margin between 2.25% and 3.00% based on the Total Debt Leverage Ratio (as defined in the New Credit Agreement), or (ii) the “Base Rate” (which means the higher of the Prime Rate, Federal Funds Rate plus 0.50%, or the daily one-month LIBOR plus 1.00%), plus an applicable margin between 1.25% and 2.00% based on the Total Debt Leverage Ratio (as defined in the New Credit Agreement). Advances under the Canadian revolving credit facility, if any, will bear interest as described in the New Credit Agreement. If an event of default exists or continues under the New Credit Agreement, advances may bear interest at the rates described above, plus 2.00%. Interest is payable on a quarterly basis beginning on June 30, 2011.

Additionally, the New Credit Agreement, among other things:

•

permits us to effect up to two separate increases in the aggregate commitments under the credit facility, of at least $50.0 million per commitment increase, and of up to $150.0 million in the aggregate;

•

requires us to comply with a “Consolidated Interest Coverage Ratio” covenant, which prohibits us from permitting the ratio of, as of the last day of each fiscal quarter, (i) the consolidated EBITDA of Complete and its consolidated Restricted Subsidiaries (as defined in the New Credit Agreement), calculated for the four fiscal quarters then ended, to (ii) the consolidated interest expense of Complete and its consolidated Restricted Subsidiaries for the four fiscal quarters then ended, to be less than 2.75 to 1.00.

We were in compliance with these debt covenant requirements as of ~~June~~ September 30, 2011.

~~There~~38 were no borrowings outstanding under the New Credit Agreement as of June 30, 2011. There were letters of credit outstanding under the U.S. revolving portion of the facility totaling $22.3 million, which reduced the available borrowing capacity as of June 30, 2011. We incurred fees related to our letters of credit as of June 30, 2011 at 1.67% per annum. For the six months ended June 30, 2011, fees related to our letters of credit were calculated using a 360-day provision, at 3.75% per annum prior to the amendment on June 13, 2011, resulting in a weighted average interest rate of 3.55% per annum for the six-month period ended June 30, 2011. Our available borrowing capacity under the revolving credit facility at June 30, 2011 was $277.7 million.

We will incur unused commitment fees under the New Credit Agreement ranging from 0.375% to 0.50% based on the average daily balance of amounts outstanding. The unused commitment fees were calculated at 0.50% as of June 30, 2011. For the six months ended June 30, 2011, the weighted average interest rate associated with unused commitments was 0.96% per annum.

WeThere ~~recorded~~were ~~deferred~~no ~~financing~~borrowings ~~fees~~outstanding ~~associated~~under ~~with~~ the New Credit Agreement inas ~~June~~of ~~2011~~September 30, 2011. There were letters of credit outstanding under the U.S. revolving portion of the facility totaling $222.63 million, which reduced the available borrowing capacity as of September 30, 2011. ~~These~~We incurred fees ~~will~~related beto ~~amortized~~our toletters ~~expense~~of credit as of September 30, ~~along~~2011 ~~with~~at 1.50% per annum. For the ~~remaining~~nine ~~balance~~months ofended ~~deferred~~September 30, ~~financing~~2011, fees ~~associated~~related ~~with~~to ~~the~~our letters of credit were calculated using a 360-day provision, at 3.75% per annum prior ~~amendments~~to the amendment on June 13, 2011, and ranged from 1.50% to ~~this~~1.66% per ~~facility~~annum thereafter, ~~over~~resulting ~~the~~in ~~term~~a weighted average interest rate of 2.14% per annum for the nine-month period ended September 30, 2011. Our available borrowing capacity under the revolving credit facility ~~which~~at ~~matures~~September 30, in2011 ~~June~~was ~~2016~~$277.7 million.

We will incur unused commitment fees under the New Credit Agreement ranging from 0.375% to 0.50% based on the average daily balance of amounts outstanding. The unused commitment fees were calculated at 0.375% as of September 30, 2011. For the nine months ended September 30, 2011, the weighted average interest rate associated with unused commitments was 0.57% per annum.

We recorded deferred financing fees associated with the New Credit Agreement in the quarter ended September 2011 totaling $2.5 million. These fees will be amortized to expense, along with the remaining balance of deferred financing fees associated with the prior amendments to this facility, over the term of the facility which matures in June 2016.

Outstanding Debt and Commitments

Our contractual commitments at ~~June~~September 30, 2011 are substantially the same as those at December 31, 2010. However, we have entered into agreements to purchase certain equipment for use in our business during the remainder of 2011 which totaled in excess of $83124.02 million at ~~June~~September 30, 2011, compared to $45.4 million at December 31, 2010. The manufacture of this equipment requires lead-time and we generally are committed to accept this equipment at the time of delivery, unless arrangements have been made to cancel delivery in accordance with the purchase agreement terms. We believe that our cash on hand, available borrowing capacity under our credit facilities and our operating cash flows should be sufficient to fund our firm purchase commitments.

We expect to continue to acquire complementary companies and evaluate potential acquisition targets. We may use cash from operations, proceeds from future debt or equity offerings and borrowings under our amended revolving credit facility for this purpose. However, our ability to acquire such businesses could be impacted by the impending merger with SPN.

Recent Accounting Pronouncements and Authoritative Guidance

In December 2010, the FASB ~~issued~~provided additional guidance related to ~~accounting~~business ~~for~~combinations ~~intangible~~to ~~assets~~require ~~and~~each ~~goodwill.~~public ~~The~~entity ~~amendments~~that inpresents comparative ~~this~~financial ~~update~~statements ~~modify~~to ~~Step~~disclose ~~1 of~~ the ~~goodwill~~revenue ~~impairment~~and ~~test~~earnings ~~for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2~~ of the ~~goodwill~~combined ~~impairment~~entity ~~test~~as if itthe isbusiness ~~more~~combination ~~likely than not~~ that aoccurred ~~goodwill~~during ~~impairment~~the ~~exists.~~current Inyear ~~determining~~had ~~whether~~occurred itas isof more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the ~~existing~~beginning ~~guidance and examples, which require that goodwill~~ of athe ~~reporting~~comparable ~~unit~~prior ~~be tested for impairment between~~ annual ~~test dates if an event occurs or circumstances change that would more likely than not reduce the fair value of a~~ reporting ~~unit~~period ~~below its carrying amount~~only. ~~This~~ ~~update~~In ~~is effective for public entities with fiscal years beginning after December 15~~addition, ~~2010 and interim periods within those years. We adopted~~ this ~~standard~~amendment onexpands ~~January 1,~~the ~~2011. We do not expect this standard to have a material impact on our financial position, results of operations or cash flows.~~

3739

supplemental pro forma disclosures related to such a business combination to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. This guidance should be applied prospectively for business combinations for which the acquisition date is on or after January 1, 2011, for calendar-year reporting entities. We adopted this standard on January 1, 2011 with no material impact on our financial position, results of operations or cash flows.

In September 2011, the FASB issued an update to existing guidance on the assessment of goodwill impairment. This update simplifies the assessment of goodwill for impairment by allowing companies to consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two-step impairment test required under the existing standards. This guidance also clarifies the examples of events or circumstances that would be considered in a goodwill impairment evaluation. We have elected to early adopt this update to be effective for the fiscal year beginning January 1, 2011. The adoption of this update did not have a material impact on our condensed consolidated financial statements.

Off Balance Sheet Arrangements

We have entered into operating lease arrangements for our light vehicle fleet, certain of our specialized equipment and for our office and field operating locations in the normal course of business. The terms of the facility leases range from monthly to ten years. The terms of the light vehicle leases range from three to four years. The terms of the specialized equipment leases range from monthly to seven years.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

The demand, pricing and terms for oil and gas services provided by us are largely dependent upon the level of activity for the U.S. and Canadian oil and gas industry. Industry conditions are influenced by numerous factors over which we have no control, including, but not limited to: the supply of and demand for oil and gas; the level of prices, and expectations about future prices, of oil and gas; the cost of exploring for, developing, producing and delivering oil and gas; the expected rates of declining current production; the discovery rates of new oil and gas reserves; available pipeline and other transportation capacity; weather conditions; domestic and worldwide economic conditions; political instability in oil-producing countries; technical advances affecting energy consumption; the price and availability of alternative fuels; the ability of oil and gas producers to raise equity capital and debt financing; and merger and divestiture activity among oil and gas producers.

~~The~~40 level of activity in the U.S. and Canadian oil and gas exploration and production industry is volatile. No assurance can be given that our expectations of trends in oil and gas production activities will reflect actual future activity levels or that demand for our services will be consistent with the general activity level of the industry. Any prolonged substantial reduction in oil and gas prices would likely affect oil and gas exploration and development efforts and therefore affect demand for our services. A material decline in oil and gas prices or U.S. and Canadian activity levels could have a material adverse effect on our business, financial condition, results of operations and cash flows.

For the six months ended June 30, 2011, approximately 4% of our revenues and approximately 4% of our total assets were denominated in Canadian dollars, our functional currency in Canada. As a result, a material decrease in the value of the Canadian dollar relative to the U.S. dollar may negatively impact our revenues, cash flows and net income. Each one percentage point change in the value of the Canadian dollar would have impacted our revenues for the six months ended June 30, 2011 by approximately $0.2 million. We do not currently use hedges or forward contracts to offset this risk.

Our Mexican operation uses the U.S. dollar as its functional currency, and as a result, all transactions and translation gains and losses are recorded currently in the statement of operations. The balance sheet amounts are translated into U.S. dollars at the exchange rate at the end of the month and the income statement amounts are translated at the average exchange rate for the month. We estimate that a hypothetical one percentage point change in the value of the Mexican peso relative to the U.S. dollar would have impacted our revenues for the six months ended June 30, 2011 by approximately $0.3 million. Currently, we conduct a portion of our business in Mexico in the local currency, the Mexican peso.

the discovery rates of new oil and gas reserves; available pipeline and other transportation capacity; weather conditions; domestic and worldwide economic conditions; political instability in oil-producing countries; technical advances affecting energy consumption; the price and availability of alternative fuels; the ability of oil and gas producers to raise equity capital and debt financing; and merger and divestiture activity among oil and gas producers.

The level of activity in the U.S. and Canadian oil and gas exploration and production industry is volatile. No assurance can be given that our expectations of trends in oil and gas production activities will reflect actual future activity levels or that demand for our services will be consistent with the general activity level of the industry. Any prolonged substantial reduction in oil and gas prices would likely affect oil and gas exploration and development efforts and therefore affect demand for our services. A material decline in oil and gas prices or U.S. and Canadian activity levels could have a material adverse effect on our business, financial condition, results of operations and cash flows.

For the nine months ended September 30, 2011, approximately 4% of our revenues and approximately 4% of our total assets were denominated in Canadian dollars, our functional currency in Canada. As a result, a material decrease in the value of the Canadian dollar relative to the U.S. dollar may negatively impact our revenues, cash flows and net income. Each one percentage point change in the value of the Canadian dollar would have impacted our revenues for the nine months ended September 30, 2011 by approximately $0.6 million. We do not currently use hedges or forward contracts to offset this risk.

Our Mexican operation uses the U.S. dollar as its functional currency, and as a result, all transactions and translation gains and losses are recorded currently in the statement of operations. The balance sheet amounts are translated into U.S. dollars at the exchange rate at the end of the month and the income statement amounts are translated at the average exchange rate for the month. We estimate that a hypothetical one percentage point change in the value of the Mexican peso relative to the U.S. dollar would have impacted our revenues for the nine months ended September 30, 2011 by approximately $0.6 million. Currently, we conduct a portion of our business in Mexico in the local currency, the Mexican peso.

Item 4.

Controls and Procedures.

Our management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as such terms are 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. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of ~~June~~September 30, 2011 at the reasonable assurance level.

In 2010, our management approved a plan to implement new accounting software which ~~will~~replaced ~~replace~~ our existing accounting systems at several of our operating divisions in a phased approach. Two divisions converted during the fourth quarter of 2010 and two other divisions converted in 2011. In addition, we implemented a new chart of accounts which iswas ~~being~~ adopted as these divisions ~~convert~~converted to the new software. Although we believe the new software~~, once~~ ~~implemented,~~ will enhance our internal controls over financial reporting and we believe that we have taken the necessary steps to maintain appropriate internal control over financial reporting during and after this period of system change, we ~~will~~ continuously monitor controls through and around the system to provide reasonable assurance that our controls are effective ~~during and after each step of this implementation process~~.

There have been no changes in our internal control over financial reporting during the quarter ended ~~June~~September 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings.

InOn October ~~the~~14, ~~normal course~~2011 ofand ~~our~~October ~~business~~26, we2011, ~~are~~putative aclass ~~party~~action tocomplaints ~~various~~captioned ~~pending~~Hetherington orv. ~~threatened~~Winkler, ~~claims~~et al., ~~lawsuits~~C.A. ~~and~~No. 6935-VCP ~~administrative~~(“Hetherington ~~proceedings~~Complaint”), ~~seeking~~and ~~damages~~Walsh orv. ~~other~~Winkler, ~~remedies~~et ~~concerning~~al., ~~our~~C.A. ~~commercial~~No. 6984-VCP ~~operations~~(“Walsh Complaint”), ~~products~~respectively, ~~employees~~were ~~and~~filed ~~other~~in ~~matters~~the Court of Chancery of the State of Delaware on behalf of an alleged class of Complete stockholders. On November 1, ~~including~~2011, ~~warranty~~a putative class action complaint captioned City of Monroe Employees’ ~~and~~Retirement ~~product~~System ~~liability~~v. ~~claims~~Complete ~~and~~Production ~~occasional~~Services, ~~claims~~Inc. byet ~~individuals~~al., ~~alleging~~2011-66385 ~~exposure~~(“City toof ~~hazardous~~Monroe ~~materials~~Complaint”) was filed in the District Court of Harris County, Texas, on ~~the~~behalf ~~job~~of ~~injuries~~an ~~and~~alleged ~~fatalities~~class of Complete Stockholders. The complaints name as defendants aall ~~result~~members of our ~~products~~board orof ~~operations~~directors, our company, Superior Energy Services, Inc. ~~Many~~(“SPN”) ofand SPN Fairway Acquisition, Inc. The plaintiffs allege that the ~~claims~~defendants ~~filed~~breached ~~against~~their usfiduciary ~~relate~~duties to ~~motor~~our ~~vehicle~~stockholders in ~~accidents~~connection ~~which~~with ~~can~~the ~~result~~proposed inmerger, or aided and abetted the ~~loss~~other defendants’ breaches of ~~life~~their orfiduciary ~~serious~~duties. The ~~bodily~~complaints ~~injury~~allege that the proposed merger between us and SPN involves an unfair price, an inadequate sales process and unreasonable deal protection devices. ~~Some~~The ofHetherington ~~these~~Complaint claims ~~relate~~that defendants agreed to ~~matters~~the transaction to benefit SPN and that neither our company, ~~individually~~nor our board of directors, orhave inadequately explained the ~~aggregate,~~reason ~~occurring~~for ~~prior~~the toproposed merger. The Walsh Complaint claims that defendants acted for their personal interests rather than the interests of our ~~acquisition~~stockholders. The City of ~~businesses~~Monroe complaint claims that defendants engaged in self-dealing and failed to seek maximum value for stockholders. InAll ~~certain~~three ~~cases~~complaints seek injunctive relief including to enjoin the merger, werescissory ~~are~~damages ~~entitled~~in the event the merger is completed, and an award of attorneys’ and other fees and costs, in addition to other relief. We and our ~~indemnification~~board ~~from~~of directors believe that the ~~sellers~~plaintiffs’ ofallegations ~~such~~lack ~~businesses~~merit and intend to contest them vigorously.

~~Although~~In the normal course of our business, we ~~cannot~~are ~~know~~a party to various pending or ~~predict~~threatened ~~with~~claims, ~~certainty~~lawsuits ~~the~~and ~~outcome~~administrative ofproceedings ~~any claim~~seeking damages or ~~proceeding~~other orremedies ~~the~~concerning ~~effect~~our ~~such~~commercial ~~outcomes~~operations, ~~may~~products, ~~have~~employees onand usother matters, weincluding warranty ~~believe~~and ~~that~~product ~~any~~ liability ~~resulting~~claims ~~from~~and occasional claims by individuals alleging exposure to hazardous materials, on the ~~resolution~~job injuries and fatalities as a result of ~~any~~our products or operations. Many of ~~these~~the ~~matters,~~claims filed against us relate to ~~the~~motor vehicle ~~extent~~accidents ~~not~~which ~~otherwise~~can ~~provided~~result ~~for~~in the loss of life or ~~covered~~serious bybodily ~~insurance,~~injury. ~~will~~Some ~~not~~of ~~have~~these aclaims ~~material~~relate ~~adverse effect~~to onmatters occurring prior to our ~~financial~~acquisition ~~position~~of businesses. In certain cases, ~~results~~we ofare ~~operations~~entitled orto ~~liquidity~~indemnification from the sellers of such businesses.

Although we cannot know or predict with certainty the outcome of any claim or proceeding or the effect such outcomes may have on us, we believe that any liability resulting from the resolution of any of these matters, individually, or in the aggregate, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on our financial position, results of operations or liquidity.

Item 1A.

Risk Factors.

Our business faces many risks. Any of the risks discussed elsewhere in this Quarterly Report on Form 10-Q or our other SEC filings, could have a material impact on our business, financial position or results of operations. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. For a detailed discussion of the risk factors that should be understood by any investor contemplating investment in our stock, please refer to the section entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010. There has been no material change to the risk factors as set forth in our Annual Report on Form 10-K for the year ended December 31, 2010, except for the following:

Our pending merger with SPN may not be completed and may result in significant disruptions to our business.

On October 9, 2011, we entered into a definitive agreement with SPN under which we will merge with a wholly-owned subsidiary of SPN and our outstanding common shares will be cancelled in exchange for 0.945 shares of Superior common stock and $7.00 in cash. The transaction is subject to approval of our and SPN’s stockholders and clearance by the relevant antitrust authorities, as well as other conditions described in the merger agreement. These conditions might not be satisfied and the proposed merger might not be completed. In the event that the proposed merger is not completed:

•

Our relationships with our employees, customers and business partners may be adversely affected or disrupted as a result of uncertainties with regard to our business and prospects;

•

We may be required to pay a termination fee of up to $70 million to SPN in specific circumstances if the merger agreement is terminated;

•

We will still be required to pay significant transaction costs related to the proposed merger, such as legal, financial advisor, accounting, and other fees; and

•

The market price of shares of our common stock may decline to the extent that the current market price of those shares reflects a market assumption that the proposed merger will be completed.

In response to the announcement of the merger, customers may delay or defer purchasing decisions. Any delay or deferral of purchasing decisions by customers could negatively affect our business and results of operations. Similarly, regardless of whether the merger is completed or not, our current and prospective employees may experience uncertainty about their future role with SPN until SPN’s strategies with regard to us are announced or executed. This may adversely affect our ability to attract and retain key management and employees. During the pendency of the merger, our management’s attention from our day-to-day business may be diverted as they focus on completing the merger.

Any of these events could adversely affect our business, cash flows, and operating results.

We may be subject to future changes in the law regarding the regulation of hydraulic fracturing. Any changes in laws or government regulations could increase our costs of doing business.

~~Bills~~Our ~~have~~hydraulic ~~been~~fracturing ~~introduced at the federal~~ and ~~state~~fluid ~~level~~handling ~~that~~operations are ~~would~~subject ~~require~~to ~~regulation~~a range of ~~hydraulic~~applicable ~~fracturing~~federal, ~~operations~~state and ~~the~~local ~~reporting~~laws, ~~and~~including ~~public~~those ~~disclosure~~discussed ofunder ~~chemicals used in~~ the ~~hydraulic~~heading ~~fracturing~~“Environmental ~~process.~~Matters” Onin ~~March~~Item 1 ~~15,~~of ~~2011,~~our ~~companion~~Annual ~~bills~~Report inon ~~the~~Form ~~United~~10-K ~~States~~as ~~Senate~~of ~~(S.~~December ~~587)~~31, ~~and~~2010. ~~the~~Our ~~House~~hydraulic offracturing and ~~Representatives~~fluid ~~(H.R. 1084)~~handling ~~were~~operations ~~introduced~~are ~~that~~designed ~~would~~and ~~subject~~operated ~~hydraulic fracturing~~ to ~~regulation~~minimize ~~under~~ the ~~federal~~risk, ~~Safe~~if ~~Drinking~~any, ~~Water~~of ~~Act~~subsurface ~~and~~migration ~~require~~of ~~disclosure~~hydraulic offracturing ~~the~~fluids ~~chemicals~~and ~~used~~spillage inor ~~the~~mishandling of hydraulic fracturing ~~process.~~fluids, ~~Currently~~however, ~~unless~~a ~~the fracturing~~proven ~~fluid~~case ~~used~~of insubsurface ~~the~~migration of hydraulic fracturing ~~process~~fluids ~~contains~~or ~~diesel,~~a ~~hydraulic~~case ~~fracturing~~of ~~operations~~spillage ~~are~~or ~~exempt~~mishandling ~~from~~of ~~regulation~~hydraulic ~~under~~fracturing ~~the~~fluids ~~federal~~during ~~Safe~~these ~~Drinking~~activities ~~Water~~could ~~Act.~~potentially ~~Neither~~subject ~~S. 587~~us ~~nor~~to ~~H.R. 1084~~civil isand/or ~~currently~~criminal ~~scheduled~~liability ~~for consideration~~and by the ~~Senate~~possibility orof ~~the~~substantial ~~House~~costs, ~~and~~including itenvironmental remediation, isdepending ~~not~~on ~~clear whether~~ the ~~112th~~circumstances ~~Congress~~of ~~will~~the ~~act~~underground onmigration, ~~either bill. Compliance~~spillage, or mishandling, the ~~consequences~~nature ofand ~~any~~scope ~~failure~~of tothe ~~comply~~underground bymigration, usspillage, ~~could~~or ~~have~~mishandling, aand ~~material~~the ~~adverse~~applicable ~~effect~~laws ~~on our business, financial condition~~ and ~~operational results~~regulations.

~~Several~~The ~~states,~~practice ~~including~~of ~~Wyoming,~~hydraulically ~~Pennsylvania,~~fracturing ~~Texas,~~formations ~~New~~to ~~York,~~stimulate ~~California,~~the ~~West Virginia,~~production ~~Maryland,~~of ~~New~~natural ~~Jersey,~~gas and ~~the~~oil ~~Delaware~~has ~~River~~come ~~Basin~~under ~~Commission~~increased (ascrutiny, and ~~federal-state~~this ~~entity~~increased ~~comprised~~scrutiny ofhas ~~agencies~~included ~~from~~allegations ~~Delaware,~~of ~~New~~subsurface ~~Jersey,~~migration ~~New~~of ~~York,~~fracturing fluids and ~~Pennsylvania~~the spillage of fracturing fluids. Importantly, ~~and~~however, the ~~United~~vast ~~States~~majority ~~Army~~of ~~Corps~~those ofcases ~~Engineers)~~have been unsubstantiated, ~~have~~and ~~passed~~to our knowledge, orfew, ~~are~~if ~~considering~~any, ~~legislation~~documented orcases ~~regulations~~of ~~similar~~contamination exist. If proven to ~~the~~have ~~federal~~happened, ~~legislation~~however, ~~described~~an ~~above~~incident orof ~~are~~contamination ~~taking~~could ~~action~~lead to ~~restrict~~civil/criminal ~~hydraulic~~liability ~~fracturing~~and inthe ~~certain~~possibility ~~jurisdictions~~of ~~and~~substantial ~~require~~costs, ~~disclosure~~including environmental remediation, depending on the nature of ~~chemicals~~any ~~used~~proven indamages ~~hydraulic~~and ~~fracturing~~the applicable laws and regulations.

On42 February 18, 2010, the Energy and Commerce Committee of the United States House of Representatives requested that we and other companies provide information concerning the chemicals used in hydraulic fracturing. Subsequently, we received follow-up requests from the Committee for additional information and documentation.

WeTable haveof worked with the Committee’s staff to provide information concerning such chemicals while at the same time acting to protect our proprietary interests and to fulfill our contractually imposed confidentiality obligations to certain customers. Contents

Also, the Environmental Protection Agency (“EPA”) is reviewing the scope of its existing regulatory authority and evaluating whether and how it can regulate hydraulic fracturing. The EPA recently requested additional information from us and several other service companies concerning hydraulic fracturing. In addition, in March 2010, the EPA announced its intention to conduct a comprehensive research study, ordered by Congress, on the potential adverse impacts that hydraulic fracturing may have on water quality and public health. As part of this study, the EPA is conducting public hearings across the country. EPA released a draft study plan on February 7, 2011, and EPA expects to release initial results from its study by the end of 2012, with a final report in 2014. Even if legislation regarding hydraulic fracturing is not adopted, the EPA study, depending on its results, could spur further initiatives to regulate hydraulic fracturing under the Safe Drinking Water Act or otherwise. The EPA has announced that the energy extraction sector is one of the sectors designated for increased enforcement over the next three to five years.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

In accordance with the provisions of the 2008 Incentive Award Plan, as amended, holders of unvested restricted stock were given the option to either remit to us the required withholding taxes associated with the vesting of restricted stock, or to authorize us to purchase shares equivalent to the cost of the withholding tax and to remit the withholding taxes on behalf of the holder. Such purchases for the quarter ended ~~June~~September 30, 2011 are summarized in the following table:

Period

(a)~~Total~~ ~~Numberof~~TotalNumberof SharesPurchased

(b)AveragePricePaid perShare

(bc)~~AveragePricePaid~~ ~~perShare~~Totalnumber ofSharesPurchasedas Part ofPubliclyAnnouncedPlans orPrograms

(d)MaximumNumber (orApproximateDollarValue) ofsharesthat MayYet BePurchasedUnder thePlans orPrograms

~~(c)Totalnumber ofSharesPurchasedas Part ofPubliclyAnnouncedPlans orPrograms~~

~~(d)MaximumNumber (orApproximateDollarValue) ofsharesthat MayYet BePurchasedUnder thePlans orPrograms~~

April 1 – 30, 2011

426

29.72

July 1 – 31, 2011

1,326

$37.11

May 1 – 31, 2011

1,065

30.80

August 1 – 31, 2011

353

$37.33

June 1 – 30, 2011

644

30.90

September 1 – 30, 2011

—

* We do not have a publicly announced stock repurchase program. We had 1,~~359~~207,~~148~~721 shares of non-vested restricted stock outstanding at ~~June~~ September 30, 2011. The holders of these shares have the option to either remit taxes due related to the vesting of these shares or to authorize us to purchase the shares at the current market value in a sufficient amount to settle the related tax withholding. The amount purchased will depend on the market value at the time and whether or not the holders choose to surrender shares in settlement of the related tax withholding.

Item 3.

Defaults Upon Senior Securities.

None.

Item 5.

Other Information.

None.

Item 6.

Exhibits.

The exhibits listed in the accompanying Exhibit Index are incorporated by reference into this Item 6.

4144

SIGNATURE

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

	COMPLETE PRODUCTION SERVICES, INC.
August 1, 2011	By: /s/ Jose A. Bayardo
November 4, 2011	By:	/s/ Jose A. Bayardo
Date	~~Jose A. Bayardo~~	Jose A. Bayardo
	Sr. Vice President and Chief Financial Officer
		Sr. Vice President and
	(Duly Authorized Officer and Principal Financial Officer)
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

4245

EXHIBIT INDEX

Exhibit No.	~~Exhibit Title~~			Exhibit Title
10.1	—		Third Amended and Restated Credit Agreement dated June 13, 2011, among Complete Production Services, Inc. as U.S. Borrower, Certain Designated Subsidiary of U.S. Borrower as Canadian Borrower, Wells Fargo Bank, National Association as U.S. Administrative Agent, U.S. Issuing Lender and U.S. Swingline Lender, Certain Designated Financial Institution serving as Canadian Administrative Agent, Canadian Issuing Lender and Canadian Swingline Lender, and certain Lenders (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on June 15, 2011)
31.1*		—		Certification of Chief Executive Officer Pursuant to Rule 13a – 14(a) and Rule 15a – 14(a) of the Securities and Exchange Act of 1934, as Amended
31.1*	—		Certification of Chief Executive Officer Pursuant to Rule 13a – 14(a) and Rule 15a – 14(a) of the Securities and Exchange Act of 1934, as Amended
31.2*		—		Certification of Chief Financial Officer Pursuant to Rule 13a – 14(a) and Rule 15a – 14(a) of the Securities and Exchange Act of 1934, as Amended
31.2*	—		Certification of Chief Financial Officer Pursuant to Rule 13a – 14(a) and Rule 15a – 14(a) of the Securities and Exchange Act of 1934, as Amended
32.1**		—		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1**	—		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		—		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	—		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*		—		Complete Production Services, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets at September 30, 2011 and December 31, 2010, (ii) the Consolidated Statements of Operations for the three and nine months ended September 30, 2011, and September 30, 2010, (iii) the Consolidated Stockholders’ Equity for the nine months ended September 30, 2011, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2011, and September 30, 2010, and (v) the Notes to Consolidated Financial Statements (tagged as blocks of text).
101*	—		Complete Production Services, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets at June 30, 2011 and December 31, 2010, (ii) the Consolidated Statements of Operations for the three and six months ended June 30, 2011, and June 30, 2010, (iii) the Consolidated Stockholders’ Equity for the six months ended June 30, 2011, (iv) the Consolidated Statements of Cash Flows for the six months ended June 30, 2011, and June 30, 2010, and (v) the Notes to Consolidated Financial Statements.

*	Filed herewith.

**	Furnished and not “filed” herewith for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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WeTable haveof worked with the Committee’s staff to provide information concerning such chemicals while at the same time acting to protect our proprietary interests and to fulfill our contractually imposed confidentiality obligations to certain customers. Contents

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Filing Compare · Superior Energy Services-North America Services, Inc