10-K: Nine Energy Service Files Chapter 11, Common Stock Worthless

Nine Energy Service, Inc. has filed for Chapter 11 bankruptcy, leading to the cancellation of existing common stock and a financial restructuring.

Summary

• Nine Energy Service, Inc. and its domestic and Canadian subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code on February 1, 2026, to implement a prepackaged reorganization plan.
• The restructuring plan contemplates the cancellation of all existing common stock for no consideration, with 100% of new common equity interests to be issued to holders of the 13.000% Senior Secured Notes due 2028.
• The company secured a senior secured super-priority asset-based debtor-in-possession (DIP) credit facility of up to $125.0 million, which will convert into an Exit ABL Facility of up to $135.0 million upon the plan's effective date.
• The Bankruptcy Court confirmed the plan on March 4, 2026, with the effective date anticipated for March 5, 2026.
• For the year ended December 31, 2025, revenues increased by 1% to $561.9 million from $554.1 million in 2024.
• Net loss increased by 25% to $51.3 million in 2025, compared to $41.1 million in 2024.
• Adjusted EBITDA decreased by 7% to $49.4 million in 2025, down from $53.2 million in 2024.
• Adjusted Return on Invested Capital (ROIC) improved to 4.4% in 2025 from 3.7% in 2024, despite the net loss.
• The company's common stock was delisted from the NYSE on February 2, 2026, and began trading on the Pink Limited Market under the symbol NINEQ on February 3, 2026.
• As of December 31, 2025, the company had $18.4 million in cash and cash equivalents and $21.0 million in availability under the Prepetition ABL Facility, totaling $39.4 million in liquidity.
• The company incurred $4.5 million in retention payments and $2.7 million in professional fees in 2025 related to the Chapter 11 Cases.
• Capital expenditures for maintenance were $10.7 million in 2025, compared to $10.4 million in 2024.

Sentiment

Score: 1

Explanation: StockSavvy.ai views this filing as extremely negative for existing common shareholders due to the imminent cancellation of their shares for no consideration, coupled with the company's bankruptcy and delisting from the NYSE.

Positives

• Revenue increased by 1% to $561.9 million in 2025, driven by a 6% increase in cementing revenue and a 4% increase in wireline revenue.
• Cementing job count increased by 8% and completed wireline stages increased by 23% in 2025.
• Adjusted Return on Invested Capital (ROIC) improved to 4.4% in 2025 from 3.7% in 2024.
• The company successfully obtained interim approval for a $125.0 million DIP ABL Facility and expects it to convert into a $135.0 million Exit ABL Facility, providing post-bankruptcy financing.
• The prepackaged Chapter 11 plan was confirmed by the Bankruptcy Court, indicating a structured path to reorganization.

Negatives

• Existing common stock will be canceled for no consideration, resulting in a complete loss for current shareholders.
• Net loss increased by 25% to $51.3 million in 2025, compared to $41.1 million in 2024.
• Adjusted EBITDA decreased by 7% to $49.4 million in 2025.
• Coiled tubing revenue decreased by 6% and tools revenue decreased by 1% in 2025.
• Cost of revenues increased by 2% to $467.4 million in 2025, driven by higher material, vehicle, insurance, and maintenance costs.
• General and administrative expenses increased by $8.4 million in 2025, primarily due to $4.5 million in retention payments and $2.7 million in professional fees related to the Chapter 11 Cases.
• Non-operating expenses increased by $4.0 million to $53.8 million in 2025, partly due to increased amortization of deferred financing costs and a write-off of $1.5 million in deferred financing costs.
• The company's common stock was delisted from the NYSE and now trades on the Pink Limited Market, indicating a significant loss of market access and investor confidence.
• Substantial doubt exists about the company's ability to continue as a going concern for one year from the date of the annual report due to bankruptcy proceedings and financial condition.
• The company has incurred significant professional fees and costs in connection with the Chapter 11 Cases.

Risks

• Trading in the company's securities is highly speculative, and holders of common stock are expected to experience a significant or complete loss, as the Plan contemplates cancellation for no consideration.
• Uncertainties inherent in the bankruptcy process, including the ability to consummate the Plan, potential termination of the Restructuring Support Agreement, and increased legal and professional fees.
• A lengthy bankruptcy proceeding could disrupt business, impair reorganization terms, and make it difficult to retain key employees.
• The business is cyclical and highly dependent on capital spending and well completions by the onshore oil and natural gas industry, which is volatile and influenced by commodity prices.
• Inflation, particularly in labor and material costs, may adversely affect financial position and operating results, potentially offsetting price increases for products and services.
• Inability to attract and retain key employees, technical personnel, and other skilled workers could negatively impact business.
• Inability to maintain existing prices or implement price increases due to intense competition in the completion services market, especially for dissolvable plug products.
• Substantial debt obligations post-emergence from bankruptcy could have adverse consequences, and restrictive covenants in debt agreements could limit growth and activities.
• Competition from larger companies with greater financial and technical resources, and better name recognition.
• Operational hazards inherent in the oilfield services industry, such as equipment defects, accidents, explosions, and loss of well control, leading to potential liabilities and reputational damage.
• Inability to accurately predict customer demand or short-notice order cancellations could lead to excess or obsolete inventory, or insufficient inventory resulting in lost revenue and market share.
• Dependence on customers in a single industry (oil and natural gas E&P), with the top five customers accounting for 24% of 2025 revenues, poses a risk of significant revenue loss if key customers are lost or experience financial distress.
• Exposure to credit risk of customers, particularly those concentrated in the volatile domestic and Canadian E&P industry.
• Potential claims for personal injury, property damage, or other litigation, including wage and hour-related lawsuits, which may not be fully covered by insurance.
• Subject to stringent federal, state, and local environmental, health, and safety laws and regulations, with potential for penalties, damages, or remediation costs, and increased costs from regulatory changes.
• Risks related to the use and protection of proprietary technology, including potential infringement by competitors and limitations of intellectual property rights.
• Challenges in implementing new technologies and services to meet evolving customer demands and competitive pressures.
• Cybersecurity risks could lead to loss or damage of intellectual property, business data, operational interruptions, or increased costs.
• Future financial condition could be adversely impacted by asset impairment charges if demand decreases or market conditions change.
• Increased scrutiny of sustainability matters (ESG) could damage reputation, increase compliance costs, and affect access to capital.
• Increased attention to climate change and conservation measures may reduce oil and natural gas demand, and activism against the industry could lead to operational delays and litigation.
• Seasonal and adverse weather conditions (winter, spring thaw, heavy rains) negatively affect demand and operational efficiency, particularly in the northeastern U.S., North Dakota, Rocky Mountains, and western Canada.
• Certain product lines depend on a limited number of third-party suppliers, posing risks of supply disruptions or price increases.
• Tariffs and other trade measures could adversely affect costs of raw materials and disrupt supply chains.
• Oilfield anti-indemnity provisions in many states may restrict or prohibit indemnification, increasing liability exposure.
• Delays or restrictions in obtaining permits or authorizations for operations could impair business.
• Existing or future laws and regulations related to GHGs and climate change could negatively impact business by reducing demand for oil and natural gas or increasing compliance costs.
• Studies correlating earthquakes with oil and natural gas activities could lead to increased regulatory burdens.
• Subject to complex U.S. and foreign anti-corruption, export controls, and economic sanctions laws, with potential for penalties and reputational harm from non-compliance.
• Changes in transportation regulations (e.g., fuel emissions, hours of service) may increase operating costs.
• The company has operated at a loss in the past and future profitability is not assured.
• Terrorist attacks or armed conflicts could harm business by reducing demand, disrupting supplies, or increasing security costs.
• A portion of revenue from international sales exposes the company to risks of political, social, and economic instability, export controls, and currency fluctuations.
• Provisions in the company's charter and bylaws could delay, discourage, or prevent a takeover attempt, potentially affecting common stock market price.
• The company's charter designates the Court of Chancery of the State of Delaware as the sole forum for certain actions, potentially limiting stockholders' ability to choose a favorable judicial forum.

Future Outlook

The macro-outlook is uncertain, especially with recent geopolitical events. U.S. activity levels are anticipated to be relatively flat compared to 2025 exit levels. First quarter 2026 revenue and earnings are expected to be down compared to the fourth quarter of 2025 due to operational inefficiencies, weather, frac delays, and restructuring costs. The long-term outlook on natural gas demand remains positive, mostly due to potential increased demand from power generation related to artificial intelligence.

Management Comments

• Management believes our success is a product of our culture, driven by an intense focus on performance and wellsite execution, and commitment to forward-leaning technologies.
• Management believes there is substantial doubt about our ability to continue as a going concern, contingent upon successfully implementing the Plan and generating sufficient liquidity.

Industry Context

StockSavvy.ai notes that Nine Energy Service operates in a highly cyclical and competitive oilfield services industry, heavily influenced by volatile oil and natural gas prices. The company's reliance on unconventional resource development in North American basins exposes it to specific regional and commodity risks. The broader industry faces increasing scrutiny on ESG matters, climate change regulations, and potential shifts in energy demand, which could impact the long-term viability of fossil fuel-dependent services. The company's bankruptcy filing and delisting reflect the significant financial pressures and market uncertainties prevalent in this sector, particularly for smaller players competing with integrated giants like Halliburton and Schlumberger.

Comparison to Industry Standards

• The company's on-time rate of approximately 89% for cementing jobs from 2018-2025 and wireline success rate of over 99% from 2018-2025 indicate strong operational execution in core services, comparable to industry best practices for efficiency and reliability.
• The company's focus on larger-diameter coiled tubing units (2 3/8 and 2 5/8) and extended reach capabilities (27,000+ feet total measured depth, 12,500+ feet lateral length) keeps pace with the industry's most challenging downhole environments, positioning it competitively against peers like Patterson-UTI Energy and KLX Energy Services Holdings in complex well completions.
• The development and deployment of dissolvable frac plugs, which reduce cycle times, equipment needs, and carbon emissions, align with broader industry trends towards more efficient and environmentally conscious completion technologies, differentiating it from traditional service providers.

Management Changes

Corporate Governance

Legal Proceedings

• The company and its domestic and Canadian subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code on February 1, 2026, for financial restructuring.
• The Bankruptcy Court entered an order confirming the Plan on March 4, 2026.
• A patent infringement lawsuit regarding the BreakThru Casing Flotation Device resulted in an adverse judgment on January 18, 2022, with an appeal pending. A $2.4 million letter of credit has been posted for the judgment amount and accrued royalties.
• The company is subject to various claims, lawsuits, and administrative proceedings related to personal injury, workers' compensation, and contractual matters, with accruals of $0.4 million as of December 31, 2025.

Related Party Transactions

• The company leases office space, yard facilities, and equipment, and purchases building maintenance and repair services from entities owned by David Crombie (Chief Operating Officer). Total expenses were $0.9 million in 2025 and $1.0 million in 2024.
• The company purchased $3.7 million in products and services in 2025 (vs. $3.0 million in 2024) from an entity in which Mr. Crombie is a limited partner.
• Ann G. Fox (President and CEO, Director) is a director of Devon Energy Corporation. The company generated revenue from Devon of $2.3 million in 2025 (vs. $4.5 million in 2024).
• One of the company's directors serves as the Chief Operating Officer of Crescent Energy Company. The company generated revenue from Crescent of $7.4 million in 2025 (vs. $4.3 million in 2024).

Stakeholder Impact

• **Shareholders (Existing Common Stock)**: Will experience a complete loss on their investment as existing common stock will be canceled for no consideration.
• **2028 Senior Secured Noteholders**: Will receive 100% of the new common equity interests in the reorganized company, converting their debt into equity.
• **Prepetition ABL Lenders**: Will provide the DIP ABL Facility, which will convert into the Exit ABL Facility, maintaining their secured lender position in the reorganized company.
• **Employees**: May face increased levels of attrition due to distraction and uncertainty from the Chapter 11 Cases. Retention payments of $4.5 million were made in 2025. A Management Incentive Plan will be adopted post-Effective Date to incentivize employees, directors, and consultants.
• **Customers**: The company aims to maintain ordinary course operations during Chapter 11 and uphold commitments. However, public perception of continued viability may affect new and existing customer relationships.
• **Vendors/Suppliers**: The company aims to uphold commitments during restructuring. Ability to maintain normal credit terms with vendors may be impaired due to concerns about liquidity.

Next Steps

• The company anticipates emerging from Chapter 11 Cases on March 5, 2026, following the Bankruptcy Court's confirmation of the Plan.
• The DIP ABL Facility is expected to convert into the Exit ABL Facility on the Plan Effective Date or as soon as reasonably practicable thereafter.
• The New Board will be established, and New Organizational Documents will be adopted on the Effective Date.
• The New Board will adopt a Management Incentive Plan, reserving up to 10.00% of fully-diluted New Equity Interests for grants to employees, directors, consultants, and service providers.
• Reorganized Nine Energy's New Equity Interests are expected to be publicly traded on the NYSE Main Board or NYSE American Exchange or on the Nasdaq Global Select Market, Nasdaq Global Market, or Nasdaq Capital Market.

Key Dates

Recommendation

The filing explicitly states that the Plan contemplates the cancellation of all shares of common stock for no consideration, and holders of existing securities could experience a significant or complete loss. The company's common stock has already been delisted from the NYSE and now trades on the Pink Limited Market. For any current holder of Nine Energy Service, Inc. common stock, the value is effectively zero, making a 'strong sell' recommendation appropriate to acknowledge the complete loss of investment.

Keywords

Oilfield Services, Chapter 11 Bankruptcy, Restructuring, SEC Filing, 10-K, Completion Services, Unconventional Wells, Oil & Gas, DIP Financing, Exit ABL Facility, Senior Secured Notes, Common Stock Cancellation, Energy Industry, Financial Performance, Risk Factors, Corporate Governance, Environmental Regulations, Hydraulic Fracturing, ESG, Cybersecurity