HOUSTON, March 23, 2020 /PRNewswire/ -- NexTier Oilfield Solutions Inc. (NYSE: NEX) ("NexTier" or the "Company") today announced several immediate strategic actions being taken in response to current market conditions to prioritize financial strength and cash flow, including a significant reduction in its 2020 capital expenditures program and additional streamlining of its cost structure.
NexTier is taking actions to significantly reduce and refine its 2020 total capital expenditures, which it now expects to total between $100 million and $120 million, subject to market conditions, driven by strategic innovation investments and maintenance capital expenditures, and reflecting a reduction of more than 50% at the midpoint versus its previous outlook of $210 million. The Company continues to expect its 2020 capital expenditures to be weighted to the first half of 2020, driven by the delivery of certain strategic innovation investments, with second half of 2020 spending mainly driven by maintenance. NexTier is idling a portion of its previously active hydraulic fracturing fleet in-line with the developing market outlook while narrowing its innovation and technology investments to focus primarily on those projects that directly reduce capital expenditures or operating costs.
In addition, NexTier is further adjusting its organization to better align with market demand, including right-sizing of overhead costs, facility consolidation, and variable cost reductions in-line with activity declines. NexTier will continue to monitor market conditions and make further adjustments as necessary. These responsive cost reductions are incremental to the previously announced synergies resulting from the merger between Keane Group Inc. and C&J Energy Services, Inc., including $125 million of cost synergies, which remain on target to be achieved by the end of the second quarter of 2020, and $80 million of cash synergies, which remain on target to be achieved before year-end 2020.
NexTier maintains a strong balance sheet position, including no debt maturities through 2025. To further strengthen financial strength and flexibility, NexTier has proactively borrowed a portion of its revolving credit facility availability in recent days, resulting in cash of greater than $460 million and, in conjunction with the remaining availability under its revolving credit facility, current liquidity in excess of $550 million.
"We are acting decisively and swiftly to protect our financial strength and flexibility, while upholding our customer commitments of delivering leading service quality and safety performance," said Robert Drummond, President and Chief Executive Officer. "While our proven management system, business model of partnering with like-minded customers, and talented team drive differentiation versus peers, we are not immune to the unprecedented downturn currently facing the industry. In addition to our immediate response, we maintain additional flexibility to further flex our platform through further reductions in capex and cost structure, should market conditions dictate. We have a proven track-record of making difficult decisions swiftly to best position NexTier for the long-term. By prioritizing these responsive actions, I am confident NexTier will continue to distinguish itself as a leader in U.S. land well completions, while positioning us to take advantage of future market opportunities as conditions improve."
NexTier plans to provide a more comprehensive operational and financial update with the release of its first quarter 2020 results.
About NexTier Oilfield Solutions
Headquartered in Houston, Texas, NexTier is an industry-leading U.S. land oilfield service company, with a diverse set of well completion and production services across the most active and demanding basins. Our integrated solutions approach delivers efficiency today, and our ongoing commitment to innovation helps our customers better address what is coming next. NexTier is differentiated through four points of distinction, including safety performance, efficiency, partnership and innovation. At NexTier, we believe in living our core values from the basin to the boardroom, and helping customers win by safely unlocking affordable, reliable and plentiful sources of energy.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1993, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Where a forward-looking statement expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. The words "believe," "continue," "could," "expect," "anticipate," "intends," "estimate," "forecast," "project," "should," "may," "will," "would" or the negative thereof and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. Statements in this press release regarding the Company that are forward-looking, including projections and the Company's guidance and outlook information, are based on management's estimates, assumptions and projections, and are subject to significant uncertainties and other factors, many of which are beyond the Company's control. These factors and risks include, but are not limited to, (i) the competitive nature of the industry in which the Company conducts its business, including pricing pressures; (ii) the ability to meet rapid demand shifts; (iii) the impact of pipeline capacity constraints and adverse weather conditions in oil or gas producing regions; (iv) the ability to obtain or renew customer contracts and changes in customer requirements in the markets the Company serves; (v) the ability to identify, effect and integrate acquisitions, joint ventures or other transactions; (vi) the ability to protect and enforce intellectual property rights; (vii) the effect of environmental and other governmental regulations on the Company's operations; (viii) the effect of a loss of, or interruption in operations of, one or more key suppliers, including resulting from product defects, recalls or suspensions; (ix) the variability of crude oil and natural gas commodity prices, including as a result of OPEC or other foreign actions that impact worldwide oil prices; (x) the market price and availability of materials or equipment; (xi) the ability to obtain permits, approvals and authorizations from governmental and third parties; (xii) the Company's ability to employ a sufficient number of skilled and qualified workers to combat the operating hazards inherent in the Company's industry; (xiii) fluctuations in the market price of the Company's stock; (xiv) the level of, and obligations associated with, the Company's indebtedness; (xv) the duration, impact and severity of the novel coronavirus (COVID-19) outbreak; and (xvi) other risk factors and additional information. In addition, material risks that could cause actual results to differ from forward-looking statements include: the inherent uncertainty associated with financial or other projections; the prompt and effective integration of C&J's businesses into the Company and the ability to achieve the anticipated synergies and value-creation contemplated in connection with the merger and with value-creation contemplated in connection with other divestitures of assets. For a more detailed discussion of such risks and other factors, see the Company's filings with the Securities and Exchange Commission (the "SEC"), including under the heading "Risk Factors" in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 available on the SEC website or www.NexTierOFS.com. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates, to reflect events or circumstances after the date of this release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued "forward-looking statement" constitutes a reaffirmation of that statement.
Senior Vice President – Chief Financial Officer
Managing Director (ICR)
SOURCE NexTier Oilfield Solutions