Nine Energy Service - Chapter 11 Case Summary

Nine Energy Service has filed for Chapter 11 bankruptcy to address an overleveraged capital structure amid depressed commodity prices and declining rig counts, pursuing a prepackaged debt-for-equity restructuring backed by a $125 million DIP facility from existing lenders.

Business Description

Headquartered in Houston, TX, Nine Energy Service, Inc. ("Nine Energy Service"), along with its Debtor and non-Debtor affiliates (collectively, "Nine" or the "Company"), is a publicly traded oilfield services ("OFS") provider listed on the NYSE (Symbol: NINE). The Company specializes in designing and deploying downhole solutions and technology used to prepare horizontal, multistage wells for production across North America and international markets.

The Company employs an asset-light business model to provide comprehensive completion solutions, partnering with exploration and production ("E&P") customers to maximize production levels and operating efficiencies.
Nine operates through four primary business segments: Completion Tools, Cementing, Coiled Tubing, and Wireline.

As of the Petition Date, Nine employed approximately 1,100 full-time individuals and engaged approximately 30 independent contractors. The Company maintains an operational reach extending across all major onshore basins in the United States and Canada, supported by a research and development ("R&D") facility in Norway.

Corporate History

The Company was formed in 2013 through the merger of three energy service companies owned by SCF Partners, L.P.: Northern States Completions, Integrated Production Services (Canada), and CDK Perforating (US). Following its formation, Nine pursued an aggressive growth strategy through targeted acquisitions to expand its service portfolio and geographic footprint.

Expansion and IPO

Between 2013 and 2017, the Company expanded into pressure control, cementing, and wireline services through the acquisitions of Peak Pressure Control, Crest Pumping Technologies, Dak-Tana Wireline, and G8 Oil Tool.
In 2017, Nine merged with Beckman Production Services, Inc., expanding operations into the coiled tubing segment, though it later divested certain Beckman-related production solution segments in 2019.
In January 2018, Nine Energy Service launched its initial public offering (IPO), raising approximately $169.5 million in net proceeds to repay existing financing and fund further expansion.

Strategic Acquisitions

Frac Technology AS (Oct. 2018): Acquired to enhance the Company's technology portfolio, adding the proprietary BreakThru Casing Flotation Device.
Magnum Oil Tools (Oct. 2018): The Company acquired Magnum Oil Tools International, LTD ("Magnum") to augment its completion tools segment. This acquisition unlocked a suite of proprietary downhole consumables, including frac plugs and disk subs.

Operations Overview

Nine operates through four interrelated business segments designed to meet specialized needs during the well completion phase. The Company also maintains significant R&D capabilities, including a facility in Norway and four laboratory facilities capable of designing and testing cement additives.

Cementing

The Cementing segment is the Company's largest line of business, generating approximately $213 million (37% of total revenue) for the twelve months ending September 2025.
Operations focus on sophisticated cement mixtures, or "slurries," used to seal metal casing in place.
From January 2018 to September 2025, the Company completed approximately 29,000 cementing jobs.

Completion Tools

Accounting for approximately 24% of total revenue, this segment supplies proprietary tools such as composite, hybrid, and dissolvable frac plugs, liner hangers, and fracture isolation packers.
Management estimates that in 2024, Nine held approximately 15-25% of the domestic plug market share.

Wireline

Generating approximately 21% of revenue, the Wireline segment utilizes wire-controlled devices to deploy technology into the wellbore, primarily for plug-and-perf completions involving perforating guns.

Coiled Tubing

This segment accounted for approximately 18% of revenue. It utilizes continuous steel piping for well interventions, including milling and retrieving obstructions.
Nine's "extended reach" units can service horizontal wells with depths exceeding 27,000 feet. From January 2018 to December 2024, the Company deployed more than 218 million feet of coiled tubing with a success rate of over 99%.

Prepetition Obligations

As of the Petition Date, the Debtors reported approximately $388.0 million in total funded debt obligations. The Company’s prepetition capital structure includes the following:

Prepetition ABL Facility

Outstanding Amount: Approximately $68.5 million.
Agent: White Oak Commercial Finance, LLC.
Terms: The facility provided up to $125 million in asset-based revolving credit loans, subject to borrowing base calculations. It bears interest at SOFR + 4.00% to 4.50% and matures in November 2027.
Collateral: Secured by a first-priority interest in ABL Priority Collateral (e.g., accounts, inventory) and a second-priority interest in Notes Priority Collateral.

Senior Secured Notes

Outstanding Amount: Approximately $319.5 million (including accrued interest).
Issuer: Nine Energy Service, Inc.
Terms: $300 million aggregate principal amount of 13.000% Senior Secured Notes due 2028. Interest is payable in cash semiannually.
Collateral: Secured by a first-priority interest in Notes Priority Collateral (e.g., intellectual property, equity interests in subsidiaries) and a second-priority interest in ABL Priority Collateral.

Letters of Credit

The Company maintains three letters of credit totaling approximately $2.7 million, including:
- A letter of credit securing the Company's fuel card program with WEX, Inc.
- Two letters of credit related to ongoing litigation, including one securing a $775,000 supersedeas bond regarding a patent infringement judgment.

Events Leading to Bankruptcy

Macroeconomic Headwinds and Industry Consolidation

The Company faced persistent challenges stemming from the volatility of the oil and gas industry. Oil and gas market activity levels decreased by 50% during the COVID-19 period. In 2024, natural gas prices fell by over 60% compared to 2022, and oil prices declined toward the end of the year. Simultaneously, E&P customers reduced drilling programs, with the rig count in the Haynesville basin dropping 30% between 2023 and 2024. Customer consolidation further limited the number of available mandates, while inflation and tariffs increased the cost of critical raw materials.

Overleveraged Capital Structure

Nine's financial flexibility was constrained by debt incurred to finance the 2018 Magnum Acquisition. The Company was forced to refinance its 8.75% unsecured 2023 Notes with the 13.000% Senior Secured Notes, resulting in high annualized interest expenses that consumed available liquidity and prevented reinvestment in the business. The Company’s leverage profile and near-term maturities closed off opportunities for organic growth or strategic M&A.

Listing Compliance and Restructuring Negotiations

Reflecting these financial pressures, Nine Energy Service received notices from the NYSE in October 2024 and April 2025 regarding non-compliance with listing standards due to low market capitalization and share price. Facing an interest payment on February 1, 2026, and unable to refinance out-of-court, the Company engaged advisors to pursue a comprehensive restructuring.

Restructuring Support Agreement (RSA): The Company entered into an RSA with holders of more than 70% of the Senior Secured Notes and the Prepetition ABL Lenders.
Chapter 11 Strategy: The Debtors filed a prepackaged Chapter 11 plan to equitize the Senior Secured Notes and deleverage the balance sheet.
DIP Financing: To fund the case, the Company secured a $125 million DIP facility from its Prepetition ABL Lenders, which includes a roll-up of prepetition ABL obligations.