HOUSTON, March 23, 2020 / — NexTier Oilfield Solutions Inc. (NEX) 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.