Filed pursuant to Rule 424B3

Registration No. 333-138132

 

       

100 Rosecrest Lane

Columbus, Mississippi 39701

(662) 329-1047

 

November 3, 2006

 

 

Dear Stockholder:

 

You are cordially invited to attend a special meeting of the stockholders of Warrior Energy Services Corporation to be held on December 12, 2006, at 10:00 a.m., local time. The special meeting will be held at Columbus Country Club, 2331 Military Road, Columbus, Mississippi 39705.

 

As described in the enclosed proxy statement/prospectus, at the special meeting, you will be asked to consider and vote upon a proposal to adopt an Agreement and Plan of Merger that Warrior entered into on September 22, 2006 with Superior Energy Services, Inc. and SPN Acquisition Sub, Inc., a wholly-owned subsidiary of Superior. If holders of record of a majority of our outstanding common stock as of October 31, 2006 vote to adopt the merger agreement, and the other conditions in the merger agreement are satisfied or waived, Warrior will be merged with and into SPN Acquisition Sub, Inc., with SPN Acquisition Sub, Inc. continuing as the surviving corporation in the merger. Immediately after completion of the merger, SPN Acquisition Sub, Inc. will change its name to Warrior Energy Services Corporation and will continue Warrior’s business and operations. SPN Acquisition Sub, Inc. is a corporation that was incorporated solely to facilitate the merger.

 

As further described in this proxy statement/prospectus, in the merger, each Warrior stockholder will receive $14.50 in cash and 0.452 shares of Superior common stock, plus cash for any fractional shares, in exchange for each outstanding share of Warrior common stock.

 

Superior common stock is listed on the New York Stock Exchange under the trading symbol “SPN.” On November 2, 2006, the closing sale price of Superior common stock was $31.20. Based on that closing price, the value of the per share consideration to be received by Warrior stockholders would be $28.60.

 

Warrior’s board of directors has unanimously determined that the merger is advisable and in the best interests of Warrior and its stockholders and recommends that you vote FOR adoption of the merger agreement.

 

Your vote is very important, regardless of the number of shares you own. Warrior cannot complete the merger unless the merger agreement is adopted by the affirmative vote of the holders of a majority of the outstanding shares of Warrior’s common stock. Because the affirmative vote required to adopt the merger agreement is based upon the total number of outstanding shares of Warrior common stock, the failure to submit a proxy card or to vote in person, or the abstention from voting by a stockholder, will have the same effect as a vote against adoption of the merger agreement.

 

The accompanying notice of special meeting, proxy statement/prospectus and proxy card explain the proposed merger and provide specific information concerning the special meeting. Please read these materials carefully. In particular, please read “Risk Factors” beginning on page 14.

 

Sincerely,

 

William L. Jenkins

Chairman of the Board,

President and Chief Executive Officer

 

Columbus, Mississippi

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger described in this proxy statement/prospectus or passed upon the accuracy or adequacy of this document. Any representation to the contrary is a criminal offense.          

 

 

This proxy statement/prospectus is dated November 3, 2006, and is first being mailed to Warrior stockholders beginning on or about November 7, 2006.

WARRIOR ENERGY SERVICES CORPORATION

100 Rosecrest Lane

Columbus, Mississippi 39701

(662) 329-1047

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held December 12, 2006

 

November 3, 2006

 

Dear Stockholder:

You are cordially invited to attend a special meeting of stockholders of Warrior Energy Services Corporation, a Delaware corporation, which will be held at Columbus Country Club, 2331 Military Road, Columbus, Mississippi 39705, on December 12, 2006, at 10:00 a.m. local time.

We are holding this meeting and you will be asked:

The merger proposal is more fully described in the accompanying proxy statement/prospectus, which you should read carefully in its entirety before voting.

Stockholders of record as of the close of business on October 31, 2006 (the “record date”) are entitled to notice of and to vote at the special meeting and any adjournment or postponement of the special meeting. A list of stockholders eligible to vote at the meeting will be available for review during Warrior’s regular business hours at our headquarters, located at 100 Rosecrest Lane, Columbus, Mississippi, for 10 days prior to the meeting. A majority of the shares of Warrior common stock outstanding on the record date must be voted in favor of the merger proposal in order for the merger to be completed. Therefore, your vote is very important. Your failure to vote your shares will have the same effect as voting against the merger proposal.

YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF WARRIOR AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” ADOPTION OF THE MERGER AGREEMENT.

Stockholders of Warrior may vote their shares of common stock by attending the special meeting and voting their shares in person, or by completing the enclosed proxy card, signing and dating it and mailing it in the enclosed postage-paid envelope to Warrior in a timely manner. If you hold your shares in an account with a broker or bank, you must instruct the broker or bank on how to vote your shares. If you vote by proxy, your proxy will be voted in accordance with the instructions you indicate on the proxy card, unless you revoke your proxy prior to the vote. The proxy also grants authority to the persons designated in the proxy to vote in accordance with their own judgment if an unscheduled matter is properly brought before the meeting. If a written proxy card is signed by a stockholder of Warrior and returned without instructions, the shares represented by the proxy will be voted FOR the adoption of the merger agreement and any adjournment or postponement of the special meeting to solicit additional proxies.

In connection with the proposed merger, you may exercise dissenters’ rights as provided in the Delaware General Corporation Law. If you meet all the requirements of this law, and follow all of its required procedures, you may receive cash in the amount equal to the fair value, as determined by mutual agreement between you and SPN Acquisition Sub, Inc., or if there is no agreement, by appraisal of your shares of Warrior common stock as of the day before the merger. The procedure for exercising your dissenters’ rights is summarized under the heading “Appraisal and Dissenters’ Rights” in the attached document.

 

By order of the Board of Directors,

 

Ron Whitter

Secretary

 

Columbus, Mississippi

 

ADDITIONAL INFORMATION

 

This proxy statement/prospectus incorporates by reference important business and financial information about Superior and Warrior from documents that are not included in or delivered with this proxy statement/prospectus. For a more detailed description of the information incorporated by reference into this proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information” on page 86 of this proxy statement/prospectus.

 

You can obtain any of the documents incorporated by reference into this proxy statement/prospectus from Superior through the “SEC Filings” link located on the investor relations page of its website at www.superiorenergy.com, from Warrior through the “SEC Filings” link located on the investor relations page of its website at www.warriorenergyservices.com or from the Securities and Exchange Commission (the “SEC”), through the SEC’s website at www.sec.gov. Documents incorporated by reference are also available from Superior or Warrior without charge, excluding any exhibits to those documents, unless the exhibit is specifically incorporated by reference as an exhibit in this proxy statement/prospectus. See “Where You Can Find More Information” on page 86 of this proxy statement/prospectus. You may request a copy of such documents by contacting Superior at:

 

Superior Energy Services, Inc.

1105 Peters Road

Harvey, Louisiana 70058

Attn: Greg Rosenstein, Investor Relations

Telephone: (504) 362-4321

 

You may obtain copies of information relating to Warrior, without charge, by contacting Warrior at:

 

Warrior Energy Services Corporation

2 Northpoint Drive, Suite 900

Houston, Texas 77060

Attn: Rob McNally, Executive Vice President

Telephone: (832) 775-0016

 

We are not incorporating the contents of the websites of the SEC, Superior, Warrior or any other person into this document. We are only providing the information about how you can obtain certain documents that are specifically incorporated by reference into this proxy statement/prospectus at these websites for your convenience.

 

In order for you to receive timely delivery of the documents in advance of the Warrior special meeting, Superior or Warrior should receive your request no later than December 5, 2006.

 

IMPORTANT NOTICE

 

Whether or not you plan to attend the special meeting in person, you are urged to read the attached document carefully and then sign, date and return the accompanying proxy card in the enclosed postage-prepaid envelope. If you later desire to revoke your proxy for any reason, you may do so in the manner set forth in the attached document.

 

If you have questions, you may contact Warrior’s proxy solicitor, Georgeson, Inc., toll-free at 866-695-6076.

 

TABLE OF CONTENTS

 

 

The following are some questions that you, as a stockholder of Warrior, may have regarding the merger and the other matters being considered at the special meeting of Warrior’s stockholders and brief answers to those questions. Warrior urges you to read carefully the remainder of this proxy statement/prospectus because the information in this section may not provide all the information that might be important to you with respect to the merger agreement, the merger and the other matters being considered at the special meeting of stockholders. Additional important information is also contained in the annexes to, and the documents incorporated by reference in, this proxy statement/prospectus.

 

Frequently Used Terms

 

Superior and Warrior have generally avoided the use of technical defined terms in this proxy statement/prospectus but a few frequently used terms may be helpful for you to have in mind at the outset. We refer to:

 

 

 

 

 

SUMMARY

	•	the adoption of the merger agreement by holders of at least a majority of the outstanding shares of Warrior common stock;
	•	the receipt of required regulatory approvals, including expiration or termination of any waiting periods, under the HSR Act;
	•	the absence of any legal restraints or prohibitions preventing the completion of the merger;
	•	the shares of Superior common stock issuable in the merger shall have been approved for listing on the NYSE;
	•	the registration statement of which this proxy statement/prospectus is a part shall have been declared effective, no stop order suspending the effectiveness of the registration statement shall have been issued and no proceedings to suspend such effectiveness shall have been instituted or threatened by the SEC;

	•	the representations and warranties of each party contained in the merger agreement that are qualified by materiality or material adverse effect shall be true and correct as of the effective time, and those representations and warranties that are not so qualified shall be true and correct in all material respects;
	•	the absence of any material adverse change (as defined in the merger agreement) with respect to either Superior or Warrior;
	•	the absence of Warrior stockholders exercising their appraisal and dissenters rights with respect to greater than 10% of the outstanding shares of Warrior common stock;
	•	each party’s performance in all material respects of its obligations under the merger agreement; and
	•	receipt by Superior and Warrior of an opinion of Jones, Walker, Waechter, Poitevent, Carrère & Denègre, L.L.P. to the effect that if the merger is consummated in accordance with the terms of the merger agreement, the merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

	•	by mutual written consent of Superior and Warrior, or by mutual action of their boards of directors;
	•	by either Superior or Warrior, if:

	•	adoption of the merger agreement by the Warrior stockholders is not obtained upon a vote duly held;

	•	the parties fail to consummate the merger on or before March 1, 2007, unless the failure to consummate the merger is the result of a material breach of the merger agreement by the party seeking the termination;
	•	any governmental entity has issued a final and nonappealable order, decree or ruling or has taken any other final and nonappealable action that restrains, enjoins or prohibits the merger; or
	•	either the chief executive officer or the chief financial officer of Warrior or Superior, respectively, has failed to provide the necessary certifications required under the Sarbanes-Oxley Act of 2002.

	•	by Warrior, if:

	•	prior to approval by Warrior’s stockholders of the merger agreement, the Warrior board of directors:

	•	receives an acquisition proposal that, in the exercise of its fiduciary obligations, it determines to be a superior proposal (as defined in the merger agreement);
	•	notifies Superior that it has received a superior proposal and the material terms and conditions of the superior proposal and the identity of the party making the superior proposal;
	•	within three days of that notice, Superior does not agree to amend the terms of the merger agreement in a manner no less favorable than the terms of the superior proposal; and
	•	Warrior has paid to Superior a termination fee of $11.5 million;

	•	Superior or Merger Sub breaches any of their representations or warranties or fails to perform in any material respect any of their covenants, agreements or obligations under the merger agreement and, in either case, the breach or failure would result in a condition to closing not being satisfied and Superior and Merger Sub cannot or has not cured the breach or failure in all material respects within 30 days following receipt of written notice of such breach;

	•	by Superior, if:

	•	Warrior breaches any of its representations or warranties or fails to perform in any material respect any of its covenants, agreements or obligations under the merger agreement and, in either case, the breach or failure would result in a condition to closing not being satisfied and Warrior cannot or has not cured the breach or failure in all material respects within 30 days following receipt of written notice of such breach;
	•	the Warrior board of directors withdraws or modifies its recommendation or approval or adoption of the merger or has publicly announced its intention to do so;
	•	the Warrior board of directors recommends to the Warrior stockholders or publicly announces its intention to recommend an agreement with respect to another acquisition proposal;
	•	a tender or exchange offer for at least 20% of the voting power of Warrior’s common stock is commenced and Warrior’s board of directors does not recommend to the Warrior stockholders rejection of the tender or exchange offer; or
	•	Warrior has materially breached any of its obligations under the non-solicitation provision of the merger agreement.

														Six Months
		Fiscal Year Ended December 31,												Ended June 30,
		2003				2004				2005				2005				2006
														(Unaudited)
		(In thousands, except share data)
Statement of Operations Data:
Revenues		$	500,625			$	564,339			$	735,334			$	363,247			$	484,228
Income from operations			67,343				76,289				125,603				77,919				130,399
Net Income		$	30,514			$	35,852			$	67,859			$	42,263			$	70,895
Basic earnings per share		$	0.41			$	0.48			$	0.87			$	0.55			$	0.89
Diluted earnings per share		$	0.41			$	0.47			$	0.85			$	0.53			$	0.87
Statement of Cash Flow Data:
Cash flows from operating activities		$	100,240			$	91,331			$	158,379			$	79,658			$	122,685
Cash flows used in investing activities			(56,160	)			(109,162	)			(96,935	)			(47,280	)			(153,011	)
Cash flows from (used in) financing activities			(27,766	)			13,325				(21,588	)			522				91,252
Cash flows from investing activities data:
Acquisitions of businesses and oil and gas properties, net of cash acquired		$	(14,298	)		$	(35,037	)		$	(2,749	)		$	(5,273	)		$	(56,453	)
Cash contributed to equity-method investment			—				—				—				—				(30,441	)
Payments for capital expenditures			(50,175	)			(74,125	)			(125,166	)			(60,112	)			(82,048	)
Balance Sheet Data (as of end of period):
Cash and cash equivalents		$	19,794			$	15,281			$	54,457			$	47,877			$	115,846
Property, plant and equipment — net			427,360				515,151				534,962				510,756				608,548
Total assets			832,863				1,003,913				1,097,250				1,047,212				1,316,483
Long-term debt, including current maturities			269,726				256,716				217,406				250,811				312,504
Total stockholder’s equity			368,129				433,879				524,374				476,514				606,198

														Six Months Ended
		Year Ended December 31,												June 30,
		2003				2004				2005				2005				2006
														(Unaudited)
Statement of Operations Data:
Revenues		$	45,757			$	53,687			$	73,667			$	34,157			$	59,814
Income from continuing operations			1,386				4,630				15,344				6,561				14,584
Depreciation and amortization			4,653				5,179				5,208				2,563				5,469
Net income (loss) per share — basic			(4.43	)			(1.41	)			5.75				3.49				1.30
Net income (loss) per share — diluted			(4.43	)			(1.41	)			4.41				3.49				0.98
Statement of Cash Flow Data:
Cash provided by operating activities		$	10,593			$	3,562			$	17,483			$	6,385			$	9,522
Cash provided by (used in) investing activities			(3,367	)			4,210				(61,517	)			(5,467	)			(25,132	)
Cash provided by (used in) financing activities			(4,955	)			(9,785	)			42,087				(1,692	)			17,510
Balance Sheet Data (as of end of the period):
Current assets		$	16,035			$	15,665			$	23,106			$	18,707			$	36,115
Total assets			41,401				30,109				101,634				35,008				132,193
Current liabilities			64,439				8,789				16,944				8,317				30,137
Total liabilities			64,905				55,318				117,205				55,856				65,590
Stockholders’ equity (accumulated deficit)			(23,504	)			(23,209	)			(15,571	)			(20,849	)			62,603

		Six Months
		Ended				Year Ended
		June 30,				December 31,
		2006				2005
		(In thousands, except per share data)
Statement of Operations data:
Total revenues		$	544,042			$	837,654
Net income			89,562				101,633
Earnings per commons share:
Basic		$	1.05			$	1.22
Diluted		$	1.04			$	1.20

		As of
		June 30, 2006
Balance Sheet data:
Total assets		$	1,689,315
Long-term debt (including current maturities of long-term debt)			512,504
Shareholders’ equity			739,975

		Six Months Ended				Year Ended
		June 30,				December 31,
		2006				2005
Superior historical
Net income per share — basic		$	0.89			$	0.87
Net income per share — diluted		$	0.87			$	0.85
Book value at end of period — diluted		$	7.47			$	6.58
Superior pro forma consolidated
Net income per share — basic		$	1.05			$	1.22
Net income per share — diluted		$	1.04			$	1.20
Book value at end of period — diluted		$	8.56			$	7.74
Warrior historical
Net income per share — basic		$	1.30			$	5.75
Net income per share — diluted		$	0.98			$	4.41
Book value at end of period — diluted		$	7.66			$	(5.89	)
Pro forma consolidated Warrior equivalent(1)
Net income per share — basic		$	0.48			$	0.55
Net income per share — diluted		$	0.47			$	0.54
Book value at end of period — diluted		$	3.87			$	3.50

(1)	Does not reflect the $14.50 cash component of the merger consideration.

		2004
		High				Low
First quarter		$	10.95			$	8.98
Second quarter		$	11.30			$	8.65
Third quarter		$	12.93			$	9.98
Fourth quarter		$	15.73			$	11.95

		2005
		High				Low
First quarter		$	19.75			$	14.58
Second quarter		$	18.46			$	13.71
Third quarter		$	24.10			$	17.64
Fourth quarter		$	23.98			$	17.33

		2006
		High				Low
First quarter		$	27.61			$	21.30
Second quarter		$	35.87			$	26.21
Third quarter		$	35.75			$	21.44

		2004
		High				Low
First quarter		$	4.10			$	2.50
Second quarter		$	4.00			$	0.50
Third quarter		$	2.50			$	1.00
Fourth quarter		$	2.40			$	1.00

		2005
		High				Low
First quarter		$	2.70			$	1.50
Second quarter		$	6.10			$	1.20
Third quarter		$	9.00			$	4.50
Fourth quarter		$	12.00			$	6.70

		2006
		High				Low
First quarter		$	21.00			$	10.35
Second quarter		$	32.20			$	20.60
Third quarter		$	25.89			$	13.90

		Superior				Warrior
		Common Stock				Common Stock
September 22, 2006		$	26.18			$	14.34
November 2, 2006		$	31.20			$	28.31

 

In addition to the other information included in this proxy statement/prospectus, including the matters addressed in “Cautionary Statement Concerning Forward-Looking Statements” on page 26, you should carefully consider the following risks before deciding whether to vote for adoption of the merger agreement. In addition, you should read and consider the risks associated with the business of Superior because these risks will also affect the combined company.

 

Risk Factors Relating to the Merger

 

The exchange ratio will not be adjusted in the event the value of Superior common stock declines before the merger is completed. As a result, the value of the shares of Superior common stock at the time that Warrior stockholders receive them could be less than the value of those shares today.

 

In the merger, Warrior stockholders will be entitled to receive a combination of 0.452 shares of Superior common stock and $14.50 in cash for each share of Warrior common stock owned. The merger agreement does not provide for any adjustment of the exchange ratio for the portion of the merger consideration to be paid in Superior common stock as a result of any change in the market price of shares of Superior common stock between the date of this proxy statement/prospectus and the date that you receive shares of Superior common stock in exchange for your shares of Warrior common stock. The market price of Superior common stock will likely be different, and may be lower, on the date you receive your shares of Superior common stock than the market price of shares of Superior common stock as of the date of this proxy statement/prospectus. During the 12-month period ended on November 2, 2006, the most recent practical date prior to the mailing of this proxy statement/prospectus, Superior common stock traded in a range from a low of $19.82 to a high of $35.87 and ended that period at $31.20. See “Comparative Historical and Pro Forma Per Share Data” beginning on page 11 for more detailed share price information. Differences in Superior’s stock price may be the result of changes in the business, operations or prospects of Superior, market reactions to the proposed merger, commodity prices, general market and economic conditions or other factors. If the market price of Superior common stock declines after you vote, you may receive less value than you expected when you voted. Neither Superior nor Warrior is permitted under the merger agreement to terminate the merger agreement or resolicit the vote of Warrior stockholders because of changes in the market prices of their respective common stock.

 

The merger is subject to certain conditions to closing that, if not satisfied or waived, will result in the merger not being completed.

 

The merger is subject to customary conditions to closing, as set forth in the merger agreement. The conditions to the merger include, among others, the receipt of required approvals from Warrior’s stockholders. If any of the conditions to the merger are not satisfied or, if waiver is permissible, not waived, the merger will not be completed. In addition, under circumstances specified in the merger agreement, Superior or Warrior may terminate the merger agreement. As a result, we cannot assure you that we will complete the merger. See “The Merger Agreement — Conditions Precedent” beginning on page 54 for a discussion of the conditions to the completion of the merger. If the merger is not completed, Warrior may lose some or all of the intended benefits of the merger and its stock price may decline, harming your investment.

 

Certain directors and executive officers of Warrior have interests and arrangements that are different from, or in addition to, those of Warrior’s stockholders and that may influence or have influenced their decision to support or approve the merger.

 

When considering the recommendation of Warrior’s board of directors with respect to the merger, holders of Warrior common stock should be aware that certain of Warrior’s directors and executive officers have interests in the merger that are different from, or in addition to, their interests as Warrior stockholders and the interests of Warrior stockholders generally. These interests include, among other things, the following:

 

 

 

As a result, these directors and executive officers may be more likely to support and to vote to approve the merger than if they did not have these interests. Holders of Warrior common stock should consider whether these interests may have influenced these directors and officers to support or recommend adoption of the merger agreement. As of the close of business on the record date for the Warrior special meeting, these directors and executive officers were entitled to vote approximately 0.8% of the shares of Warrior common stock outstanding on that date. These and additional interests of certain directors and executive officers of Warrior are more fully described in the sections entitled “The Merger — Interests of Warrior’s Directors and Executive Officers in the Merger” beginning on page 42 of this proxy statement/prospectus.

 

Superior may face difficulties in achieving the expected benefits of the merger.

 

Superior and Warrior currently operate as separate companies. The combined company may not be able to achieve fully the strategic and financial objectives Superior hopes to achieve in the merger, including the merger being accretive to earnings and cash flow. The success of the merger will depend on a number of factors, including the combined company’s ability to compete effectively in the markets in which each company currently operates, expand operations, maintain existing relationships with current customers and retain and attract qualified management and personnel.

 

Our actual financial position and results of operations may differ significantly and adversely from the pro forma amounts included in this proxy statement/prospectus.

 

The unaudited pro forma operating data contained in this proxy statement/prospectus is not necessarily indicative of the results that actually would have been achieved had the proposed merger been consummated on January 1, 2005 or June 30, 2006, or that may be achieved in the future. We can provide no assurances as to how the operations and assets of both companies would have been operated if they had been combined, or how they will be operated in the future, which, together with other factors, could have a significant effect on the results of operations and financial position of the combined company.

 

Warrior will be subject to business uncertainties and contractual restrictions while the merger is pending.

 

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Warrior and potentially on Superior. These uncertainties may impair Warrior’s ability to attract, retain and motivate key personnel until the merger is consummated, and could cause customers and others that deal with Warrior to defer decisions concerning Warrior, or to seek to change existing business relationships with Warrior. Employee retention may be challenging during the pendency of the merger, as employees may have uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty of integration, Superior’s business following the merger could be harmed. In addition, the merger agreement restricts Warrior from making certain acquisitions and taking other specified actions until the merger occurs. These restrictions may prevent Warrior from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement — Covenants and Agreements” beginning on page 50 for a description of the restrictive covenants applicable to Warrior.

 

The merger agreement limits Warrior’s ability to pursue alternatives to the merger.

 

The merger agreement contains provisions that could adversely impact competing proposals to acquire Warrior. These provisions include the prohibition on Warrior generally from soliciting any acquisition proposal

or offer for a competing transaction and the requirement that Warrior pay to Superior $11.5 million, if the merger agreement is terminated in specified circumstances in connection with an alternative transaction. In addition, even if the board of directors of Warrior determines that a competing proposal to acquire Warrior is superior, Warrior may not exercise its right to terminate the merger agreement unless it notifies Superior of its intention to do so and gives Superior at least three business days to propose revisions to the terms of the merger agreement. See “The Merger Agreement — Covenants and Agreements” beginning on page 50 and “The Merger Agreement — Termination” beginning on page 55.

 

Superior required Warrior to agree to these provisions as a condition to Superior’s willingness to enter into the merger agreement. These provisions, however, might discourage a third party that might have an interest in acquiring all or a significant part of Warrior from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher value than the current proposed merger consideration. Furthermore, the termination fee may result in a potential competing acquiror proposing to pay a lower per share price to acquire Warrior than it might otherwise have proposed to pay.

 

Failure to complete the merger could negatively impact the stock price and the future business and financial results of Warrior.

 

Although Warrior has agreed that its board of directors will, subject to fiduciary exceptions, recommend that its stockholders approve and adopt the merger agreement, there is no assurance that the merger agreement and the merger will be approved, and there is no assurance that the other conditions to the completion of the merger will be satisfied. If the merger is not completed, Warrior will be subject to several risks, including the following:

 

 

If the merger is not completed, these risks may materialize and may have a material adverse effect on Warrior’s business, financial results, financial condition and stock price.

 

The price of Superior common stock may be affected by factors different from those affecting the price of Warrior common stock.

 

Holders of Warrior common stock will receive Superior common stock in the merger. Superior’s business is different in many ways from that of Warrior (including Superior’s significant presence in the Gulf of Mexico, its ownership of offshore oil and gas properties and its greater exposure to international projects), and Superior’s results of operations, as well as the price of Superior’s common stock, may be affected by factors different from those affecting Warrior’s results of operations and the price of Warrior common stock. The price of Superior common stock may fluctuate significantly following the merger, including fluctuation due to

factors over which Superior has no control. For a discussion of Superior’s business and certain factors to consider in connection with its business, including risk factors associated with its business, see “Risk Factors — Risk Factors Relating to Superior’s Business Following the Merger,” and “Information About Superior.” For a discussion of Warrior’s business and certain factors to consider in connection with its business, including risk factors associated with its business, see Warrior’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, which is incorporated by reference into this proxy statement/prospectus. See also the other documents incorporated by reference into this proxy statement/prospectus under the caption “Where You Can Find More Information” beginning on page 86 of this proxy statement/prospectus.

 

Superior will have higher levels of indebtedness following the merger than either Superior or Warrior had before the merger.

 

You should consider that, following the merger, Superior will have higher levels of debt and interest expense than Superior and Warrior, together, had immediately prior to the merger. As of December 31, 2005, after giving effect to the merger and other currently contemplated related financings, the combined company and its subsidiaries are expected to have approximately $513 million of indebtedness outstanding. See “Superior Unaudited Pro Forma Condensed Consolidated Financial Information” on page 64 of this proxy statement/prospectus. The significant level of combined indebtedness after the merger may have an effect on the combined company’s future operations, including:

 

 

See “The Merger — Financing of the Merger” on page 42 of this proxy statement/prospectus.

 

The opinion obtained by Warrior from its financial advisor does not reflect changes in circumstances between signing the merger agreement and the completion of the merger.

 

Simmons & Company International, Warrior’s financial advisor, delivered a “fairness opinion” to the Warrior board of directors. The opinion states that, as of September 22, 2006, the consideration to be received by Warrior stockholders as set forth in the merger agreement was fair to Warrior stockholders from a financial point of view. The opinion does not reflect changes that may occur or may have occurred after September 22, 2006, including changes to the operations and prospects of Warrior or Superior, changes in general market and economic conditions or other factors. Any such changes, or other factors on which the opinion is based, may significantly alter the value of Warrior or Superior or the prices of shares of Warrior common stock or Superior common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. For a description of the opinion that Warrior received from its financial advisor, see “The Merger — Opinion of Warrior’s Financial Advisor” beginning on page 35. For a description of the other factors considered by Warrior’s board of directors in determining to approve the merger, see “The Merger — Warrior’s Reasons for the Merger” beginning on page 33 and “The Merger — Recommendation of the Warrior Board of Directors” beginning on page 35.

The shares of Superior common stock to be received by Warrior stockholders as a result of the merger will have different rights from the shares of Warrior common stock.

 

Warrior stockholders will become Superior stockholders, and their rights as stockholders will be governed by the certificate of incorporation and bylaws of Superior and Delaware corporate law. The rights associated with Warrior common stock are different from the rights associated with Superior common stock. See the section of this proxy statement/prospectus titled “Comparison of Stockholder Rights and Corporate Governance Matters” beginning on page 73 for a discussion of the different rights associated with Superior common stock.

 

Warrior stockholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management.

 

After the merger’s completion, Warrior stockholders will own a significantly smaller percentage of Superior than they currently own of Warrior. Following completion of the merger, Warrior stockholders will own approximately 6% of Superior’s outstanding common stock. Consequently, Warrior stockholders will have less influence over the management and policies of Superior than they currently have over the management and policies of Warrior.

 

The merger may be completed even though Superior or Warrior suffers a material adverse change.

 

In general, either party may refuse to complete the merger if the other party suffers a material adverse change between September 22, 2006, the date of the signing of the merger agreement, and the closing of the merger. However, certain types of changes would not prevent the merger from going forward, even if the change would have a material adverse effect on Superior or Warrior, including the following:

 

 

In addition, the parties could elect to complete the merger even if one or both parties suffers a material adverse change.

 

Risk Factors Relating to Superior’s Business Following the Merger

 

Superior is subject to the cyclical nature of the oil and gas industry.

 

Superior’s business depends primarily on the level of activity by the oil and gas companies in the Gulf of Mexico and along the Gulf Coast. This level of activity has traditionally been volatile as a result of fluctuations in oil and gas prices and their uncertainty in the future. The purchases of the products and services Superior provides are, to a substantial extent, deferrable in the event oil and gas companies reduce capital expenditures. Therefore, the willingness of Superior customers to make expenditures is critical to Superior’s operations. The levels of such capital expenditures are influenced by:

 

 

 

Although activity levels in the production and development sectors of the oil and gas industry are less immediately affected by changing prices and as a result, less volatile than the exploration sector, producers generally react to declining oil and gas prices by reducing expenditures. This has in the past adversely affected and may in the future, adversely affect Superior’s business. Superior is unable to predict future oil and gas prices or the level of oil and gas industry activity. A prolonged low level of activity in the oil and gas industry will adversely affect the demand for our products and services and Superior’s financial condition, results of operations and cash flows.

 

Superior’s industry is highly competitive.

 

Superior competes in highly competitive areas of the oilfield services industry. The products and services of each of Superior’s principal industry segments are sold in highly competitive markets, and Superior’s revenues and earnings may be affected by the following factors:

 

 

Superior competes with the oil and gas industry’s largest integrated and independent oilfield service providers. Superior believes that the principal competitive factors in the market areas that it serves are price, product and service quality, availability and technical proficiency.

 

Superior’s operations may be adversely affected if Superior’s current competitors or new market entrants introduce new products or services with better features, performance, prices or other characteristics than its products and services. Further, additional liftboat capacity in the Gulf of Mexico would increase competition for that service. Competitive pressures or other factors also may result in significant price competition that could have a material adverse effect on Superior’s results of operations and financial condition. Finally, competition among oilfield service and equipment providers is also affected by each provider’s reputation for safety and quality. Although Superior believes that its reputation for safety and quality service is good, Superior cannot guarantee that it will be able to maintain its competitive position.

 

Superior may not be able to acquire oil and gas properties to increase its asset utilization.

 

Superior’s strategy to increase its asset utilization by performing work on its own properties depends on Superior’s ability to find, acquire, manage and decommission mature Gulf of Mexico oil and gas properties. Factors that may hinder Superior’s ability to acquire these properties include competition, prevailing oil and natural gas prices and the number of properties for sale. Another factor that could hinder Superior’s ability to acquire oil and gas properties is its ability to assume additional decommissioning liabilities without posting bonds or providing other financial security to the U.S. Department of Interior, Minerals Management Service, or MMS, or the sellers of these properties, the cost of which may render Superior’s proposal unattractive to Superior or the sellers. In certain instances, the sellers of these properties may have continuing obligations to Superior that are unsecured, and although Superior believes these arrangements represent minimal credit risk, Superior cannot guarantee that any seller will not become a credit risk in the future. If Superior is unable to find and acquire properties meeting its criteria on acceptable terms to it, Superior will not be able to increase the utilization of its assets and services by performing work on its own properties during seasonal downtime and when Superior has available equipment not being utilized by its traditional customer base. Superior cannot guarantee that it will be able to locate and acquire such properties.

Estimates of Superior’s oil and gas reserves and potential liabilities relating to its oil and gas properties may be incorrect.

 

Superior acquires mature oil and gas properties in the Gulf of Mexico on an “as is” basis and assumes all plugging, abandonment, restoration and environmental liability with limited remedies for breaches of representations and warranties. In addition, Superior acquires these properties without obtaining bonds, other than as required by MMS, to secure the plugging and abandonment obligations. Acquisitions of these properties require an assessment of a number of factors beyond Superior’s control, including estimates of recoverable reserves, future oil and gas prices, operating costs and potential environmental and plugging and abandonment liabilities. These assessments are complex and inherently imprecise and, with respect to estimates of oil and gas reserves, require significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic data for each reservoir. In addition, since these properties are typically older and near the end of their economic lives, Superior’s facilities and operations may be more susceptible to hurricane damage, equipment failure or mechanical problems. In connection with these assessments, Superior performs due diligence reviews that it believes are generally consistent with industry practices. However, Superior’s reviews may not reveal all existing or potential problems. In addition, Superior’s reviews may not permit it to become sufficiently familiar with the properties to fully assess their deficiencies and capabilities. Superior may not always discover structural, subsurface, environmental or other problems that may exist or arise.

 

Actual future production, cash flows, development expenditures, operating and abandonment expenses and quantities of recoverable oil and gas reserves may vary substantially from those estimated by Superior and any significant variance in these assumptions could materially affect the estimated quantity and value of Superior’s proved reserves. Therefore, the risk is that Superior may overestimate the value of economically recoverable reserves and/or underestimate the cost of plugging wells and abandoning production facilities. If costs of abandonment are materially greater or actual reserves are materially lower than Superior’s estimates, they could have an adverse effect on earnings.

 

Superior is susceptible to adverse weather conditions in the Gulf of Mexico.

 

Certain areas in and near the Gulf of Mexico experience hurricanes and other extreme weather conditions on a relatively frequent basis. Substantially all of Superior’s facilities and assets offshore and along the Gulf of Mexico, including the structures and pipelines on its offshore oil and gas properties, are susceptible to damage and/or total loss by these storms. Damage caused by high winds and turbulent seas could potentially cause Superior to curtail both service and production operations for significant periods of time until damage can be assessed and repaired. Moreover, even if Superior does not experience direct damage from any of these storms, Superior may experience disruptions in its operations because customers may curtail their development activities due to damage to their platforms, pipelines and other related facilities.

 

Due to the losses as a consequence of the hurricanes that occurred in the Gulf of Mexico in 2005 and 2004, Superior may not be able to obtain future insurance coverage comparable with that of prior years, thus putting it at a greater risk of loss due to severe weather conditions. Superior is also likely to experience increased cost for available insurance coverage which will likely impose higher deductibles and limit maximum aggregate recoveries for certain perils such as hurricane related windstorm damage or loss. Any significant uninsured losses could have a material adverse effect on Superior’s financial position, results of operations and cash flows.

 

Superior depends on key personnel.

 

Superior’s success depends to a great degree on the abilities of its key management personnel, particularly its chief executive and operating officers and other high-ranking executives. The loss of the services of one or more of these key employees could adversely affect Superior.

Superior might be unable to employ a sufficient number of skilled workers.

 

The delivery of Superior’s products and services requires personnel with specialized skills and experience. As a result, Superior’s ability to remain productive and profitable will depend upon its ability to employ and retain skilled workers. In addition, Superior’s ability to expand its operations depends in part on its ability to increase the size of its skilled labor force. The demand for skilled workers in the Gulf Coast region is high, and the supply is limited. In addition, although Superior’s employees are not covered by a collective bargaining agreement, the marine services industry has been targeted by maritime labor unions in an effort to organize Gulf of Mexico employees. A significant increase in the wages paid by competing employers or the unionization of Superior’s Gulf of Mexico employees could result in a reduction of its skilled labor force, increases in the wage rates that Superior must pay or both. If either of these events were to occur, Superior’s capacity and profitability could be diminished and its growth potential could be impaired.

 

Superior depends on significant customers.

 

Superior derives a significant amount of its revenue from a small number of major and independent oil and gas companies. In 2005, Shell accounted for approximately ten percent of Superior’s total revenue. Superior did not have a single customer account for more than ten percent of its total revenue in 2004, and in 2003, sales to a single customer accounted for approximately 11% of its total revenue. Superior’s inability to continue to perform services for a number of its large existing customers, if not offset by sales to new or other existing customers could have a material adverse effect on Superior’s business and operations.

 

The dangers inherent in Superior’s operations and the limits on insurance coverage could expose Superior to potentially significant liability costs and materially interfere with the performance of its operations.

 

Superior’s operations are subject to numerous operating risks inherent in the oil and gas industry that could result in substantial losses. These risks include:

 

 

Superior’s liftboats are also subject to operating risks such as catastrophic marine disaster, adverse weather conditions, collisions and navigation errors.

 

The occurrence of these risks could result in substantial losses due to personal injury, loss of life, damage to or destruction of wells, production facilities or other property or equipment, or damages to the environment. In addition, certain of Superior’s employees who perform services on offshore platforms and marine vessels are covered by provisions of the Jones Act, the Death on the High Seas Act and general maritime law. These laws make the liability limits established by federal and state workers’ compensation laws inapplicable to these employees and instead permit them or their representatives to pursue actions against Superior for damages for job-related injuries. In such actions, there is generally no limitation on Superior’s potential liability.

 

Any litigation arising from a catastrophic occurrence involving Superior’s services, equipment or oil and gas production operations could result in large claims for damages. The frequency and severity of such incidents affect Superior’s operating costs, insurability and relationships with customers, employees and regulators. Any increase in the frequency or severity of such incidents, or the general level of compensation awards with respect to such incidents, could affect Superior’s ability to obtain projects from oil and gas

companies or insurance. Superior maintains several types of insurance to cover liabilities arising from its services, including onshore and offshore non-marine operations, as well as marine vessel operations. These policies include primary and excess umbrella liability policies with limits of $50 million per occurrence, including sudden and accidental pollution incidents. Superior also maintains property insurance on its physical assets, including marine vessels, and operating equipment. Successful claims for which Superior is not fully insured may adversely affect Superior’s working capital and profitability.

 

For Superior’s oil and gas operations, Superior maintains control of well, operators extra expense and pollution liability coverage, to include its liabilities under the federal Oil Pollution Act of 1990, or OPA. Limits maintained for these operations are $50 million per occurrence for well control incidents unrelated to windstorm, and $75 million in the aggregate for windstorm related events. The liability limit is $50 million per occurrence for non-well control events. Superior also maintains property insurance on its physical assets, including offshore production facilities, pipelines and operating equipment. As a result of the losses caused by recent hurricanes in the Gulf of Mexico, Superior experienced very substantial increases in its costs of insurance, as well as increased deductibles and self-insured retentions. Any significant uninsured losses could have a material adverse effect on Superior’s financial position, results of operations and cash flows.

 

The cost of many of the types of insurance coverage maintained by Superior has increased significantly during recent years and resulted in the retention of additional risk by Superior, primarily through higher insurance deductibles. Very few insurance underwriters offer certain types of insurance coverage maintained by Superior, and there can be no assurance that any particular type of insurance coverage will continue to be available in the future, that Superior will not accept retention of additional risk through higher insurance deductibles or otherwise, or that Superior will be able to purchase its desired level of insurance coverage at commercially feasible rates. Further, due to the losses as a result of hurricanes that occurred in the Gulf of Mexico in 2005 and 2004, Superior was not able to obtain insurance coverage comparable with that of prior years, thus putting Superior at a greater risk of loss due to severe weather conditions. In addition, Superior is experiencing increased costs for available insurance coverage which also impose higher deductibles and limit maximum aggregate recoveries for certain perils such as hurricane related windstorm damage or loss. As a result, Superior has been forced to modify its risk management program in response to changes in the insurance market, including increased risk retention. Any significant uninsured losses could have a material adverse effect on Superior’s financial position, results of operations and cash flows.

 

The occurrence of any of these risks could also subject Superior to clean-up obligations, regulatory investigation, penalties or suspension of operations. Further, Superior’s operations may be materially curtailed, delayed or canceled as a result of numerous factors, including:

 

 

Oil and gas prices are volatile, and low prices could have a material adverse impact on Superior’s business.

 

Superior’s revenues, profitability and future growth and the carrying value of its oil and gas properties depend substantially on the prices Superior realizes for its production. Superior’s realized prices also affect the amount of cash flow available for capital expenditures and Superior’s ability to borrow and raise additional capital.

 

Historically, the markets for oil and gas have been volatile, and they are likely to continue to be volatile in the future. Among the factors that can cause this volatility are:

 

 

 

It is impossible to predict oil and gas price movements with certainty. Lower oil and gas prices may not only decrease Superior’s revenues on a per unit basis but also may reduce the amount of oil and gas that it can produce economically. A substantial or extended decline in oil or gas prices may materially and adversely affect Superior’s future business, financial condition, results of operations, liquidity and ability to finance planned capital expenditures. Further, oil prices and gas prices do not necessarily move together.

 

Superior’s oil and gas revenues are subject to commodity price risk.

 

Superior is subject to market risk exposure in the pricing applicable to its oil and gas production. Considering the historical and continued volatility and uncertainty of prices received for oil and gas production, Superior has and may continue to enter into hedging arrangements to reduce its exposure to decreases in the prices of natural gas and oil.

 

Hedging arrangements expose Superior to risk of significant financial loss in some circumstances, including circumstances where:

 

 

Superior cannot assure you that the hedging transactions it enters into will adequately protect it from declines in the prices of natural gas and oil. In addition, Superior’s hedging arrangements will limit the benefit it would receive from increases in the prices for natural gas and oil.

 

Factors beyond Superior’s control affect its ability to market oil and gas.

 

The availability of markets and the volatility of product prices are beyond Superior’s control and represent a significant risk. The marketability of Superior’s production depends upon the availability and capacity of gas gathering systems, pipelines and processing facilities. The unavailability or lack of capacity of these systems and facilities could result in the shut-in of producing wells or the delay or discontinuance of development plans for properties. Superior’s ability to market oil and gas also depends on other factors beyond its control, including:

 

 

 

If these factors were to change dramatically, Superior’s ability to market oil and gas could be adversely affected.

 

Superior is vulnerable to the potential difficulties associated with rapid expansion.

 

Superior has grown rapidly over the last several years through internal growth and acquisitions of other companies. Superior believes that its future success depends on its ability to manage the rapid growth that Superior has experienced and the demands from increased responsibility on its management personnel. The following factors could present difficulties to Superior:

 

 

If Superior does not manage these potential difficulties successfully, its operating results could be adversely affected.

 

Superior’s inability to control the inherent risks of acquiring businesses could adversely affect its operations.

 

Acquisitions have been and Superior believes will continue to be a key element of its business strategy. Superior cannot assure you that it will be able to identify and acquire acceptable acquisition candidates on terms favorable to it in the future. Superior may be required to incur substantial indebtedness to finance future acquisitions. Such additional indebtedness service requirements may impose a significant burden on Superior’s results of operations and financial condition. Superior cannot assure you that it will be able to successfully consolidate the operations and assets of any acquired business with its own business. Acquisitions may not perform as expected when the acquisition was made and may be dilutive to Superior’s overall operating results. In addition, Superior’s management may not be able to effectively manage its increased size or operate a new line of business.

 

The nature of Superior’s industry subjects it to compliance with regulatory and environmental laws.

 

Superior’s business is significantly affected by a wide range of local, state and federal statutes, rules, orders and regulations relating to the oil and gas industry in general, and more specifically with respect to the environment, health and safety, waste management and the manufacture, storage, handling and transportation of hazardous wastes. The failure to comply with these rules and regulations can result in the revocation of permits, corrective action orders, administrative or civil penalties and criminal prosecution. Further, laws and regulations in this area are complex and change frequently. Changes in laws or regulations, or their enforcement, could subject Superior to materials costs.

 

Superior’s oil and gas operations are conducted on federal leases that are administered by MMS and are required to comply with the regulations and orders promulgated by MMS under the Outer Continental Shelf Lands Act. MMS regulations also establish construction requirements for production facilities located on federal offshore leases and govern the plugging and abandonment of wells and the removal of production facilities from these leases. Under limited circumstances, MMS could require Superior to suspend or terminate its operations on a federal lease. MMS also establishes the basis for royalty payments due under federal oil and natural gas leases through regulations issued under applicable statutory authority.

 

Superior’s oil and gas operations are also subject to certain requirements under OPA. Under OPA and its implementing regulations, “responsible parties,” including owners and operators of certain vessels and offshore facilities, are strictly liable for damages resulting from spills of oil and other related substances in United States waters, subject to certain limitations. OPA also requires a responsible party to submit proof of its financial ability to cover environmental cleanup and restoration costs that could be incurred in connection with an oil spill. Further, OPA imposes other requirements, such as the preparation of oil spill response plans. In

the event of a substantial oil spill originating from one of Superior’s facilities, Superior could be required to expend potentially significant amounts of capital which could have a material adverse effect on its future operations and financial results.

 

Superior has compliance costs and potential environmental liabilities with respect to its offshore and onshore operations, including its environmental cleaning services. Certain environmental laws provide for joint and several liabilities for remediation of spills and releases of hazardous substances. These environmental statutes may impose liability without regard to negligence or fault. In addition, Superior may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances. Superior believes that its present operations substantially comply with applicable federal and state pollution control and environmental protection laws and regulations. Superior also believes that compliance with such laws has not had a material adverse effect on its operations. However, Superior is unable to predict whether environmental laws and regulations will have a material adverse effect on its future operations and financial results. Sanctions for noncompliance may include revocation of permits, corrective action orders, administrative or civil penalties and criminal prosecution.

 

Federal, state and local statutes and regulations require permits for drilling operations, drilling bonds and plugging and abandonment and reports concerning operations. Federal and state laws that also require owners of non-producing wells to plug the well and remove all exposed piping and rigging before the well is permanently abandoned significantly affect the demand for Superior’s plug and abandonment services. A decrease in the level of enforcement of such laws and regulations in the future would adversely affect the demand for Superior’s services and products. In addition, demand for Superior’s services is affected by changing taxes, price controls and other laws and regulations relating to the oil and gas industry generally. The adoption of laws and regulations curtailing exploration and development drilling for oil and gas in its areas of operations for economic, environmental or other policy reasons could also adversely affect Superior’s operations by limiting demand for its services.

 

The regulatory burden on Superior’s business increases its costs and, consequently, affects its profitability. Superior is unable to predict the level of enforcement of existing laws and regulations, how such laws and regulations may be interpreted by enforcement agencies or court rulings, or whether additional laws and regulations will be adopted.

 

Superior is also unable to predict the effect that any such events may have on it, its business, or its financial condition.

 

A terrorist attack or armed conflict could harm Superior’s business.

 

Terrorist activities, anti-terrorist efforts and other armed conflict involving the United States may adversely affect the United States and global economies and could prevent Superior from meeting its financial and other obligations. If any of these events occur, the resulting political instability and societal disruption could reduce overall demand for oil and natural gas, potentially putting downward pressure on demand for Superior’s services and causing a reduction in its revenues. Oil and gas related facilities could be direct targets of terrorist attacks, and Superior’s operations could be adversely impacted if infrastructure integral to customers’ operations is destroyed or damaged. Costs for insurance and other security may increase as a result of these threats, and some insurance coverage may become more difficult to obtain, if available at all.

 

Superior will be subject to additional political, economic, and other uncertainties as it expands its international operations.

 

A key element of Superior’s business strategy is to continue its international expansion into international oil and gas producing areas such as Mexico, Trinidad, Venezuela, West Africa, the Middle East, the Far East, Australia, Eastern Canada and the North Sea. Superior’s international operations are subject to a number of risks inherent in any business operating in foreign countries, including, but not limited to:

 

 

 

Superior’s operations have not yet been affected to any significant extent by such conditions or events, but as Superior’s international operations expand, the exposure to these risks will increase. Superior could, at any one time, have a significant amount of its revenues generated by operating activity in a particular country. Therefore, its results of operations could be susceptible to adverse events beyond its control that could occur in the particular country in which Superior is conducting such operations. Superior anticipates that its contracts to provide services internationally will generally provide for payment in U.S. dollars and that Superior will not make significant investments in foreign facilities. To the extent Superior makes investments in foreign facilities or receive revenues in currencies other than U.S. dollars, the value of Superior’s assets and its income could be adversely affected by fluctuations in the value of local currencies.

 

Additionally, Superior’s competitiveness in international market areas may be adversely affected by regulations, including, but not limited to, regulations requiring:

 

 

Superior cannot predict what types of the above events may occur.

 

This proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus contain or may contain “forward looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Each of Superior and Warrior has based these forward-looking statements on their respective current expectations about future events. Further, statements that include the words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or “pursue,” or the negative of these words or other words or expressions of similar meaning may identify forward-looking statements. These forward-looking statements are found at various places throughout this proxy statement/prospectus and the other documents incorporated by reference. These forward-looking statements, including, without limitation, those relating to future actions, new projects, strategies, future performance, the outcome of contingencies such as legal proceedings and future financial results, in each case relating to Superior or Warrior, respectively, wherever they occur in this proxy statement/prospectus or the other documents incorporated by reference herein, are necessarily estimates reflecting the judgment of the respective management of Superior and Warrior and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in this proxy statement/prospectus under “Risk Factors” and elsewhere and those incorporated by reference into this proxy statement/prospectus. In addition to the risk factors identified elsewhere, important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation:

 

 

 

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement/prospectus or, in the case of documents incorporated by reference, as of the date of those documents. Neither Superior nor Warrior undertakes any obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events, except as required by law.

 

General

 

This document is being furnished to stockholders of Warrior in connection with the solicitation of proxies by the board of directors of Warrior to adopt the merger agreement.

 

Date, Time and Place

 

The special meeting of the stockholders of Warrior is scheduled to be held at Columbus Country Club, 2331 Military Road, Columbus, Mississippi 39705, on December 12, 2006, at 10:00 a.m. local time.

 

Purpose of the Warrior Special Meeting

 

At the special meeting, stockholders of Warrior will be asked to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of September 22, 2006, by and among Superior Energy Services, Inc., SPN Acquisition Sub, Inc. and Warrior Energy Services Corporation, pursuant to which Warrior will merge with and into SPN Acquisition Sub, Inc., with SPN Acquisition Sub, Inc. as the surviving corporation. A copy of the merger agreement is attached to this document as Annex A.  

 

Record Date; Voting Rights; Quorum; Required Vote

 

Only holders of record of Warrior common stock at the close of business on October 31, 2006, the record date for the special meeting, are entitled to receive notice of and to vote at the special meeting or at any adjournment or postponement of the special meeting. On the record date, 11,237,944 shares of Warrior common stock were issued and outstanding and were held by approximately 82 holders of record.

 

At the special meeting, stockholders of Warrior will be entitled to one vote for each share of Warrior common stock owned of record on the record date. The holders of a majority of the Warrior common stock must be present, either in person or by proxy, to constitute a quorum at the meeting.

 

The affirmative vote of a majority of the outstanding shares of Warrior common stock is required for the adoption of the merger agreement.

 

Stock Ownership by Directors and Executive Officers

 

On the record date, the directors and executive officers of Warrior owned an aggregate of 86,275 outstanding shares of common stock of Warrior entitled to vote at the special meeting, which is less than 1% of the shares then outstanding. These directors and executive officers have indicated that they intend to vote their shares in favor of the proposal to adopt the merger agreement.

Voting and Revocation of Proxies

 

Stockholders of Warrior may vote their shares of common stock by attending the special meeting and voting their shares in person, or by completing the enclosed proxy card, signing and dating it and mailing it in the enclosed postage-paid envelope to Warrior in a timely manner. If you hold your shares in an account with a broker or bank, you must instruct the broker or bank on how to vote your shares. If you vote by proxy, your proxy will be voted in accordance with the instructions you indicate on the proxy card, unless you revoke your proxy prior to the vote. The proxy also grants authority to the persons designated in the proxy to vote in accordance with their own judgment if an unscheduled matter is properly brought before the meeting. If a written proxy card is signed by a stockholder of Warrior and returned without instructions, the shares represented by the proxy will be voted FOR the adoption of the merger agreement and any adjournment or postponement of the special meeting to solicit additional proxies.

 

WARRIOR’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ADOPTION OF THE MERGER AGREEMENT.

 

Do not forward your stock certificates with your proxy card. If the merger is completed, a separate letter of transmittal will be mailed to you, which will enable you to receive the merger consideration.

 

A proxy solicited by the Warrior board of directors may be revoked at any time before it is voted at the special meeting by:

 

 

Attendance at the meeting will not, by itself, revoke your proxy.

 

The Secretary of Warrior will be in attendance at the special meeting and, prior thereto, can be reached at the following address:

 

Warrior Energy Services Corporation

2 Northpoint Drive, Suite 900

Houston, Texas 77060

Attention: Ron Whitter, Secretary

Phone No.: (832) 775-0016

 

Election inspectors appointed for the special meeting will tabulate the votes cast by proxy or in person at the special meeting. The election inspectors will determine whether a quorum is present. The election inspectors will treat abstentions and “broker non-votes” as shares that are present and entitled to vote for purposes of determining a quorum if (1) proxies are marked as abstentions, (2) Warrior stockholders appear in person but abstain from voting, or (3) a broker indicates on the proxy that it does not have discretionary authority regarding certain shares.

 

Because the affirmative vote required to adopt the merger agreement is based upon the total number of outstanding shares of Warrior common stock, the failure to submit a proxy card or a voting instruction card or to vote in person, or the abstention from voting by a stockholder, will have the same effect as a vote against adoption of the merger agreement.

 

No other business is expected to be transacted at the special meeting.

Warrior Shares Held in Street Name

 

Warrior stockholders who hold their shares in “street name,” meaning in the name of a bank, broker or other record holder, must either direct the record holder of their shares how to vote their shares or obtain a proxy from the record holder to vote at the special meeting.

 

Banks, brokers or other record holders holding shares of Warrior common stock as nominees will not have discretionary authority to vote those shares in the absence of instructions from the beneficial owners of those shares, so the failure to provide voting instructions to your broker will also have the same effect as a vote against the merger.

 

Solicitation of Proxies; Expenses

 

This proxy solicitation is made by the Warrior board of directors. Warrior and Superior have agreed to equally share expenses incurred in printing and mailing this proxy statement and prospectus. Proxies will be solicited through the mail. Additionally, directors, officers and regular employees of Warrior and its subsidiaries intend to solicit proxies personally or by telephone or other means of communication. These directors, officers and employees will not be additionally compensated. Warrior and Superior will reimburse banks, brokers and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding the proxy materials to beneficial owners. Warrior has also engaged Georgeson, Inc. to assist it in connection with the solicitation of proxies and will pay Georgeson, Inc., a fee of approximately $8,500 for its services and reimburse its reasonable out-of-pocket expenses.

 

The following is a description of the material aspects of the merger. While we believe that the following description covers the material terms of the merger, the description may not contain all of the information that is important to you. Superior and Warrior encourage you to read carefully this entire proxy statement/prospectus, including the merger agreement attached to this proxy statement/prospectus as Annex A, for a more complete understanding of the merger.

 

General

 

The boards of directors of Superior and Warrior have unanimously approved the merger agreement providing for the merger of Warrior into Merger Sub. Merger Sub, a wholly owned subsidiary of Superior, will be the surviving entity in the merger, and upon completion of the merger, the separate corporate existence of Warrior will terminate. We expect to complete the merger late in the fourth quarter of 2006.

 

Background of the Merger

 

From June 1997 through January 2000, Warrior completed a series of private financings with St. James Capital Partners, L.P. and SJMB, L.P. (the “St. James Partnerships”), related individuals and family entities and other unaffiliated investors. These transactions resulted in the beneficial ownership by St. James Partnerships, and related individuals and family entities of warrants to purchase shares of Warrior common stock and convertible subordinated notes representing a substantial majority of the fully diluted shares of Warrior common stock.

 

In early 2000, Warrior began pursuing a transaction that would allow the St. James Partnerships to dispose of their interests in Warrior. In 2000, Warrior retained a financial advisor to advise Warrior with respect to a potential sale of the company. Warrior received several indications, but did not enter into a letter of intent or definitive agreement with any party at that time. In November 2001, another financial advisor was retained to advise Warrior in connection with any proposed business combination, including a sale of Warrior. Beginning in April 2003, Warrior and its financial advisor conducted a broad marketing process to identify and engage potential buyers. In September 2003, November 2004 and April 2005, Warrior entered into letters of intent to sell the company with three separate private equity firms. Negotiations with these firms did not lead to a definitive agreement, and the letters of intent were terminated. In addition to these three private

equity firms, Mr. William L. Jenkins, Warrior’s Chairman of the Board, President and Chief Executive Officer, and Warrior’s financial advisor had discussions and gave presentations to other entities regarding a potential business combination. Over 40 of these other entities, one of which was Superior, entered into a confidentiality agreement with Warrior, but none of these activities led to a letter of intent to acquire Warrior. During this process, Warrior gained additional insight as to the potential terms under which a business combination might be achieved.

 

In October 2005, Warrior commenced a recapitalization process to eliminate the overhang of its derivative securities and thereby provide a simplified and clearer capital structure and greater financial, operational and administrative flexibility. This process resulted in the exchange by Warrior of a portion of its outstanding warrants for shares of its common stock and agreements with the St. James Partnerships and certain other entities pursuant to which the St. James Partnerships and those entities agreed to convert their convertible subordinated notes and accrued interest into shares of Warrior common stock and agreed to sell to Warrior at the closing of an underwritten public offering those shares, their remaining warrants and any other shares of Warrior common stock they held. On April 24, 2006, Warrior completed an underwritten public offering of shares of its common stock. At the closing of the offering, Warrior applied the net proceeds it received to the repayment of debt and the repurchase of the equity securities described above. In connection with the offering, directors affiliated with the St. James Partnerships resigned, and three independent directors joined the board.

 

Representatives of Superior and Warrior first began having discussions regarding a potential business combination in July 2006. On July 14, 2006, Sam Hardy, Vice President of Warrior, met with Mr. Kenneth L. Blanchard, President and Chief Operating Officer of Superior, at Superior’s request. They discussed the business philosophy of the two management teams and explored whether or not a potential combination could be beneficial to both companies.

 

On July 28, 2006, several members of Superior’s management team, including Mr. Terence E. Hall, Superior’s Chairman of the Board and Chief Executive Officer, met with Mr. Jenkins and Mr. Hardy in New Orleans, Louisiana, to discuss Superior’s interest in a potential business combination with Warrior. At that meeting, Mr. Hall advised Mr. Jenkins of Superior’s interest in acquiring Warrior. During these discussions, Mr. Jenkins indicated that Warrior was committed to and confident in its strategic plan and was not for sale, but he would present any proposal from Superior to Warrior’s board for its consideration. On July 31, 2006, Warrior and Superior entered into a confidentiality and standstill agreement. Shortly after the parties entered into that agreement, Warrior delivered to Superior management financial and operational projections for 2006 through 2008.

 

To advance Superior’s understanding of Warrior’s business, on August 15, 2006, at the request of Warrior, representatives of Simmons & Company International (“Simmons”) met with Superior representatives in Houston and provided an overview of Warrior and a preliminary combination analysis, showing the potential financial impact to Superior of an acquisition of Warrior under a range of valuation and financing alternatives.

 

In August 2006, Superior and representatives from Johnson Rice & Company, LLC (“Johnson Rice”), entered into discussions whereby Johnson Rice would act as Superior’s financial advisors regarding a potential combination with Warrior.

 

On August 28, 2006, at a regularly scheduled board meeting, Mr. Robert J. McNally, Warrior’s Executive Vice President of Operations and Finance, reported to Warrior’s board of directors concerning the discussions with Superior. At that meeting, the Warrior board of directors established the independent committee, comprised of directors who were not officers or employees of Warrior, as an oversight committee to consider, and make a recommendation to the board of directors concerning, any business combination with Superior. The board also authorized management to engage in further exploratory discussions with Superior. Mr. Jenkins informed the board of directors that Warrior intended to retain Simmons as financial advisor to Warrior in connection with Superior’s proposal. Subsequently, Warrior executed an engagement letter with Simmons, dated as of September 1, 2006, to act as its financial advisor in connection with evaluating a possible transaction with Superior.

Later in the day on August 28, 2006, senior executives of Superior and Warrior and their financial advisors met to review Warrior’s financial projections and discuss operational and business issues.

 

On August 31, 2006, Mr. Hall sent a letter to Mr. Jenkins. In the letter, Mr. Hall proposed a transaction in which Warrior stockholders would receive a combination of cash and Superior common stock having a value of $29 per share, with cash consideration of 40% to 60% of the purchase price. The letter also indicated that the proposal was subject to completion of satisfactory due diligence, the negotiation and execution of a mutually satisfactory merger agreement and customary closing conditions, but no financing contingencies were identified. Prior to sending the letter, Mr. Hall contacted Simmons to notify them of the principal terms of the proposed transaction, including the premium to the current market price of Warrior common stock of approximately 50% and other valuation parameters.

 

On September 1, 2006, the board of directors of Warrior met to review the proposed transaction. Simmons presented an analysis of the proposal. The Warrior board instructed Simmons to make a counter proposal to Superior at $30 per share. Later that day, Simmons contacted Mr. Hall and delivered the counter proposal. Mr. Hall later that evening indicated to representatives of Simmons that Superior was not prepared to increase its proposed transaction price.

 

On September 2, 2006, the board of directors of Warrior met to again review the proposed transaction. The board authorized management to advance due diligence activities and to commence negotiation of definitive documents based on a $29.00 per share transaction price, with cash consideration representing 50% of the purchase price.

 

On September 8, 2006, representatives of Warrior and Superior and their financial advisors met to conduct due diligence regarding Superior, including a review of financial projections and operations of Superior’s major business segments. Also on that date, Superior and its legal representatives received due diligence materials from Warrior in response to their initial due diligence request and commenced Superior’s legal due diligence.

 

On September 12, 2006, Mr. Hall contacted representatives of Simmons to discuss the decline in both parties’ stock prices. Simmons subsequently contacted Mr. Jenkins to discuss possible mechanisms to determine the amount of stock consideration to be received by Warrior stockholders in the transaction.

 

On September 12, 2006, the Warrior board met to discuss the status of the transaction. Management provided an update on the status of the due diligence review by both companies and indicated that due diligence was substantially complete and no significant issues had been identified. The board discussed the decline in both parties’ stock price since September 2, 2006 and discussed possible mechanisms to determine the amount of stock consideration to be received by Warrior stockholders in the transaction, as well as other issues, including the breakup fee.

 

Later in the day on September 12, 2006, Mr. Hall and Mr. McNally discussed the proposed transaction terms in light of the significant decrease in both Warrior and Superior stock prices since September 1, 2006. Messrs. Hall and McNally agreed to progress a transaction on the basis of consideration consisting of $14.50 cash and 0.452 shares of Superior common stock, which totaled $29.00 per share based on the closing price of the Superior common stock on September 1, 2006, subject to negotiation of a mutually satisfactory definitive merger agreement.

 

On September 13, 2006, the Superior board met to discuss the transaction and Johnson Rice gave a presentation and analysis of the proposed business combination with Warrior.

 

On September 14, 2006, Superior distributed a draft merger agreement prepared by Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., Superior’s outside counsel, to Warrior and its outside counsel, Rosen, Cook, Sledge, Davis, Shattuck & Oldshue, P.A., William S. Clarke, P.A. and Baker Botts L.L.P. Warrior’s outside counsel consulted with Warrior management and advisors regarding the draft merger agreement proposed by Superior. On September 15, 2006, counsel to Warrior sent comments on the merger agreement to Superior’s counsel and advisors.

From September 16, 2006 through September 19, 2006, Mr. Hall, Mr. Robert S. Taylor, Superior’s Executive Vice President and Chief Financial Officer, and Messrs. Jenkins and McNally, together with their respective legal advisors, discussed several times via telephonic conference the terms of the merger agreement. These negotiations covered various aspects of the transaction, including, among other things, the representations and warranties made by the parties, the restrictions on the conduct of Warrior’s business, the conditions to completion of the merger, treatment of employee stock options and other derivative securities, the details of the “no shop” clause and provisions regarding termination, including the amount, triggers and payment of the termination fee. In addition, the parties discussed the possibility of amending employment agreements with certain executives of Warrior to modify the non-competition covenants in the agreements.

 

During this process, the Warrior board of directors, and, in particular, the independent committee, were kept apprised of the developments and negotiations with Superior through various telephone conversations.

 

On September 20, 2006, the Warrior board met to discuss the status of negotiations on the merger agreement. Counsel to Warrior and management summarized the terms of the merger agreement and the issues being discussed by the parties. A representative of Baker Botts advised the Warrior board of directors of their legal duties in connection with considering the proposed transaction. A representative of Simmons then reviewed with the Warrior board of directors Simmons’ financial analyses with respect to the proposed transaction. Each of Simmons and management also discussed with the Warrior board of directors other strategic options available to Warrior. The board then instructed counsel and management regarding its position on the merger agreement issues. Counsel to Warrior then discussed these issues with counsel to Superior.

 

On September 21, 2006, the Superior board of directors held a special meeting at which they approved the terms of the merger and authorized management to finalize the merger agreement and any other required documents. Negotiations on the terms of the merger agreement continued. That same day, the Warrior board met and management of and counsel to Warrior provided an update regarding the transaction.

 

On Friday, September 22, 2006, final negotiations on various open issues occurred and final changes to the merger agreement and related documents were made.

 

During the evening of September 22, 2006, the Warrior board of directors held a special meeting to consider the Superior proposal with certain members of management and counsel to Warrior and representatives of Simmons were present. The Warrior board of directors was advised of events relating to the transaction since the board meeting on September 21, 2006. A representative of Baker Botts again advised the Warrior board of directors of their legal duties in connection with considering the proposed transaction. A representative of Simmons then provided a summary and update to the Warrior board of directors of Simmons’s financial analyses with respect to the proposed transaction. Following this presentation, Simmons rendered its oral opinion to the board of directors of Warrior, which was subsequently confirmed in writing, to the effect that, as of September 22, 2006, the consideration to be received by the holders of shares of Warrior common stock pursuant to the merger agreement was fair from a financial point of view to such holders. The independent committee unanimously recommended approval of the transaction to the board of directors based on the terms and conditions of the draft merger agreement. After extensive discussion and deliberation and based on the factors described below, the Warrior board of directors unanimously determined that the merger agreement, the merger and the transactions contemplated thereby were fair to and in the best interests of Warrior and its stockholders, approved and declared advisable the merger agreement and resolved to recommend that the Warrior stockholders vote to adopt the merger agreement.

 

Following the approval of the Warrior board, Superior and Warrior executed the merger agreement in the evening of September 22, 2006. Before the opening of trading on the next business day, September 25, 2006, the parties publicly announced the execution of the merger agreement.

 

Warrior did not solicit any alternative proposal to Superior’s proposal in light of, among other things, the attractiveness of Superior’s proposal, the potential for business disruption and the fact that, under the circumstances and conditions described more fully under “The Merger Agreement — No Solicitation,” “The Merger Agreement — Termination,” and “The Merger Agreement — Fees and Expenses,” Warrior can furnish

information to and conduct negotiations with a third party in connection with certain acquisition proposals that are reasonably likely to lead to a superior proposal.

 

Warrior’s Reasons for the Merger

 

The Warrior board of directors, at a special meeting held on September 22, 2006, determined that the merger and the merger agreement are advisable, fair to and in the best interests of Warrior and its stockholders.

 

In the course of evaluating the merger, the board consulted with management, as well as its legal and financial advisors, and considered a number of factors, including the following:

 

 

 

 

 

 

 

 

 

The Warrior board of directors also considered potential risks associated with the merger in connection with its evaluation of the proposed transaction, including:

 

 

 

In view of the variety of factors and the quality and amount of information considered as well as the complexity of these matters, the board did not find it practicable to, and did not attempt to, make specific assessments of, quantify, rank or otherwise assign relative weights to the specific factors and risks considered in reaching its determination. The Warrior board conducted an overall analysis of the factors and risks described above and considered the factors and risks overall to be favorable to, and to support, its determination. The board did not undertake to make any specific determination as to whether any particular factor or risk, or any aspect of any particular factor or risk, was favorable or unfavorable to its ultimate determination. Individual members of the board may have given different weight to different factors and risks.

 

Recommendation of the Warrior Board of Directors

 

After careful consideration, the board of directors of Warrior has determined that the proposed merger as described in the merger agreement is advisable and in the best interests of Warrior and its stockholders.

 

FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS OF WARRIOR HAS UNANIMOUSLY ADOPTED THE MERGER AGREEMENT AND DETERMINED IT TO BE IN THE BEST INTERESTS OF WARRIOR AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT WARRIOR’S STOCKHOLDERS VOTE FOR ADOPTION OF THE MERGER AGREEMENT.

 

Opinion of Warrior’s Financial Advisor

 

Simmons has acted as financial advisor to Warrior with respect to evaluating a merger with Superior. The Warrior board of directors instructed Simmons, in its role as financial advisor, to evaluate the fairness, from a financial point of view, of the merger consideration to be received by Warrior stockholders pursuant to the merger agreement.

 

On September 22, 2006, Simmons delivered its oral opinion to the board of directors to the effect that, as of such date and based upon and subject to factors and assumptions set forth in its opinion, which were discussed in greater detail with the board of directors, the merger consideration to be received by the Warrior stockholders pursuant to the transaction in accordance with the merger agreement was fair to the Warrior stockholders from a financial point of view. Simmons subsequently confirmed its opinion in writing by a letter dated September 22, 2006.

THE FULL TEXT OF THE SIMMONS FAIRNESS OPINION, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX B TO THIS PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED INTO THIS DOCUMENT BY REFERENCE. THE SUMMARY OF THE SIMMONS FAIRNESS OPINION SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE SIMMONS FAIRNESS OPINION. STOCKHOLDERS OF WARRIOR ARE URGED TO READ THE SIMMONS FAIRNESS OPINION IN ITS ENTIRETY. IN ARRIVING AT ITS OPINION, SIMMONS DID NOT ASCRIBE A SPECIFIC VALUE TO WARRIOR, BUT RATHER MADE ITS DETERMINATION AS TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE MERGER CONSIDERATION TO BE RECEIVED BY WARRIOR STOCKHOLDERS IN THE TRANSACTION ON THE BASIS OF THE FINANCIAL AND COMPARATIVE ANALYSES DESCRIBED BELOW. SIMMONS’ OPINION IS FOR THE USE AND BENEFIT OF THE WARRIOR BOARD OF DIRECTORS AND WAS RENDERED TO THE BOARD OF DIRECTORS IN CONNECTION WITH ITS CONSIDERATION OF THE MERGER. THE OPINION DOES NOT ADDRESS THE MERITS OF THE UNDERLYING DECISION OF WARRIOR TO ENGAGE IN THE TRANSACTION CONTEMPLATED BY THE MERGER AGREEMENT. MOREOVER, IT DOES NOT CONSTITUTE A RECOMMENDATION BY SIMMONS TO ANY WARRIOR STOCKHOLDER AS TO HOW THE STOCKHOLDER SHOULD VOTE ON THE MERGER AGREEMENT.

 

In connection with the Simmons Fairness Opinion, Simmons reviewed, among other things:

 

 

In addition, Simmons made such other analyses and examinations as Simmons deemed appropriate or necessary and met with certain officers and employees of Warrior and Superior to discuss the foregoing, as well as other matters believed to be relevant to the inquiry.

 

Simmons has not independently verified any of the foregoing information and has relied on it being complete and accurate in all material respects. With respect to the financial forecasts, Simmons has assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of Warrior’s and Superior’s management as to the future financial performance of Warrior and Superior, respectively. In addition, Simmons has not made an independent evaluation or appraisal of the assets of Warrior or Superior, nor has Simmons been furnished with any such appraisals. Simmons has not performed any tax analysis nor has Simmons been furnished with any such analysis. Accordingly, Simmons has not evaluated any potential tax consequences related to the merger including, without limitation, any potential tax consequences to the stockholders of Warrior. Simmons was not requested to, and did not, solicit third party indications of interest in acquiring all or any part of Warrior.

 

In preparing its fairness opinion for the board of directors, Simmons performed a variety of financial and comparative analyses, including those described below. The summary of the analyses performed by Simmons, as set forth below, does not purport to be a complete description of the analyses underlying the opinion. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to partial or summary description. No company or transaction used in such analyses as a comparison is identical to Warrior, Superior, or the transactions contemplated by the merger agreement, nor is an evaluation of the results of such analyses entirely mathematical; rather, it involves complex considerations and judgments concerning financial and operational characteristics and other factors that could affect the public trading or other values of the companies or transactions being analyzed. The estimates contained in such analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by such analyses. In addition, analyses relating to the value of the business or securities do not purport to be appraisals or to reflect the prices at which businesses, companies or securities actually may be sold. Accordingly, such analyses and estimates are subject inherently to substantial uncertainty.

 

In arriving at the fairness opinion, Simmons made qualitative judgments as to the significance and relevance of each analysis and factor considered by it. Accordingly, Simmons believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors, without considering all analyses and factors, could create an incomplete view of the processes underlying such analyses and the fairness opinion. In its analyses, Simmons made numerous assumptions with respect to general business, economic, market and financial conditions, as well as other matters, many of which are beyond the control of Warrior and Superior and involve the application of complex methodologies and experienced and educated judgment.

 

The analyses were prepared solely as part of Simmons’ analysis of the fairness, from a financial point of view, to Warrior and Warrior’s stockholders of the merger consideration in the proposed merger.

 

Simmons’ opinion and financial analyses were only one of the many factors considered by Warrior and Warrior’s board of directors in their evaluation of the merger and the related transactions and should not be viewed as determinative of the views of Warrior’s management or Warrior’s board of directors with respect to the merger and the related transactions and the merger consideration.

 

The following is a summary of certain of the financial analyses used by Simmons in connection with providing its written opinion to Warrior’s board of directors on September 22, 2006. The data and analysis summarized herein is from Simmons’ presentation to the Warrior board of directors on September 20, 2006, which primarily utilized data from market closing prices as of September 19, 2006. Simmons monitored market conditions and updated certain analyses, as appropriate, from September 20, 2006 to September 22, 2006 as part of providing its written opinion to Warrior’s board of directors as of September 22, 2006. For purposes of its analysis, Simmons defined EBITDA as net income plus income taxes, interest expense (less

interest income), depreciation, depletion and amortization and other non cash items and defined EBITDAX as net income plus income taxes, interest expense (less interest income), depreciation, depletion and amortization, exploration expenses and other non cash items. TTM stands for the trailing twelve month period.

 

Superior Valuation Analysis

 

Simmons’ valuation of Superior was based upon an assessment of Superior as an independent, free standing enterprise without the benefit of any cost savings or operating synergies that may result from the merger. In determining its valuation of Superior, Simmons considered (1) comparable company analysis for energy service companies and (2) comparable company and transaction analysis for Gulf of Mexico E&P companies.

 

 

With respect to each company’s public valuation multiple, Simmons examined the share price, enterprise value, equity value, ratio of enterprise value to projected 2006 and 2007 EBITDA and ratio of equity value to projected 2006 and 2007 net income and cash flow. With respect to each company’s projected growth rates, Simmons examined the EBITDA, net income and cash flows.

 

 

For each company, Simmons evaluated the current stock price, equity market value, enterprise value, oil and gas enterprise value, certain operating data, the ratio of equity value to projected 2006 and 2007 discounted cash flow, the ratio of enterprise value to projected 2006 and 2007 EBITDAX and the ratio of oil and gas enterprise value to each of (i) proved reserves, (ii) SEC PV-10 pre-tax value, (iii) SEC PV-10 after-tax value, (iv) 2006 daily production and (v) 2007 projected daily production. In addition, Simmons reviewed publicly available information to compare certain mergers and acquisitions announced since April 4, 2005 involving E&P companies or assets located primarily in the continental shelf of the Gulf of Mexico. Simmons reviewed reserve and production multiples for these transactions.

 

Superior Valuation Conclusion

 

Considering each of the foregoing analyses, among other things, and adjusted to reflect certain recent transactions, including Superior’s recent minority equity investment in Coldren Resources, the analysis suggested a Superior common stock price range of $27.19 to $33.29 per share. This reference value range of Superior was based on an assessment of the company as an independent, free-standing enterprise without the benefit of cost savings, if any, or operating synergies that may result from the merger.

Transaction Value Analysis

 

 

 

 

With respect to each company’s public valuation multiples, Simmons examined the share price, enterprise value, equity value, ratio of enterprise value to projected 2006 and 2007 EBITDA and ratio of equity value to projected 2006 and 2007 net income and cash flow and determined that the mean ratio of enterprise value to projected 2006 EBITDA was 6.8x, the mean ratio of enterprise value to projected 2007 EBITDA was 5.4x, the mean ratio of equity value to projected 2006 net income was 12.2x, the mean ratio of equity value to projected 2007 net income was 9.6x, the mean ratio of equity value to projected 2006 cash flow was 8.4x and the mean ratio of equity value to projected 2007 cash flow was 6.8x. Simmons also examined the ratios for Warrior implied by the merger’s transaction value and determined that the ratio of enterprise value to projected 2006 EBITDA was 7.6x, the ratio of enterprise value to projected 2007 EBITDA was 4.2x, the ratio of equity value to projected 2006 net income was 16.7x, the ratio of equity value to projected 2007 net income was 9.6x, the ratio of equity value to projected 2006 cash flow was 10.0x and the ratio of equity value to projected 2007 cash flow was 5.3x.

With respect to each company’s projected growth rates from 2006 to 2007, Simmons examined the EBITDA, net income and cash flows and determined that the mean projected EBITDA growth rate was 25.5%, the mean projected net income growth rate was 27.2% and the mean projected cash flow growth rate was 23.4%. Simmons also compared these growth rates to the projected EBITDA growth rates for Superior and Warrior of 25.3% and 81.0%, the projected net income growth rates for Superior and Warrior of 41.2% and 73.0% and the projected cash flow growth rates for Superior and Warrior of 28.7% and 88.3%.

 

 

The projections underlying the discounted cash flow analysis were provided to Simmons by Warrior’s management. In performing the discounted cash flow analysis, Simmons considered a range of cases with respect to the operating and financial projections in which, among other things, projected revenue growth rates, expected margins, capital expenditures, working capital and depreciation were varied. Simmons did not include any future acquisitions in performing the discounted cash flow analysis.

 

The discounted cash flow analysis implied a value of the Warrior common stock under a downside case ranging from $9.17 to $14.62, under a base case ranging from $24.40 to $37.03 and under an upside case ranging from $37.43 to $56.31.

 

 

The table below shows the implied Warrior stock prices indicated by the analysis.

 

 

 

Simmons is an internationally recognized investment banking firm specializing in the energy industry and is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions. Warrior selected Simmons as its financial advisor in connection with the merger because of Simmons’ experience and expertise. In the ordinary course of its business, Simmons actively trades the debt and equity securities of both Warrior and Superior for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.

 

Simmons has previously rendered certain financial advisory and investment banking services to Warrior, for which it received customary compensation, including acting as an underwriter and financial advisor in Warrior’s public equity offering in April 2006.

 

Pursuant to the terms of the engagement of Simmons, Warrior has agreed to pay Simmons for its financial advisory services in connection with the transactions contemplated by the merger agreement a transaction fee equal to 1.0% of total transaction value upon the consummation of the merger. In the event that the merger has not been consummated by January 15, 2007, Warrior has agreed to pay Simmons a fee of $675,000, with such fee credited to the transaction fee due on consummation of the merger. In addition, Warrior has agreed to reimburse Simmons for its reasonable out-of-pocket expenses, including the fees and expenses of its legal counsel, incurred in connection with the engagement and to indemnify Simmons against certain liabilities that may arise out of the engagement.

 

Robert J. McNally has been Warrior’s Executive Vice President of Operations and Finance and a Director since January 2006. From July 2000 through the end of 2005, Mr. McNally was an Associate and then Vice President of Simmons in its corporate finance department, primarily providing investment banking and corporate finance advisory services to oilfield service companies. As an employee of Simmons, Mr. McNally served as Warrior’s primary financial advisor from 2001 through 2005.

 

Superior’s Reasons for the Merger

 

The Superior Board of Directors has approved the merger agreement and believes that acquiring Warrior helps achieve Superior’s objective of expanding its operations onshore in attractive U.S. market areas.

 

Superior believes that the merger joins two well managed companies, providing strategic and financial benefits to its stockholders. The benefits include:

 

 

Regulatory Approvals

 

The merger is subject to review by the Antitrust Division of the U.S. Department of Justice (the “DOJ”) and the U.S. Federal Trade Commission (the “FTC”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The HSR Act, and the rules promulgated under it by the FTC, prevent transactions, such as the merger, from being completed until required information and materials are furnished to the DOJ and the FTC and certain waiting periods are terminated or expire. On October 13, 2006, Superior and Warrior, respectively, submitted the pre-merger notification filings with the DOJ and the FTC. On October 25, 2006, the parties received notice that they had been granted early termination of the waiting period.

 

The DOJ, the FTC and others may also challenge the merger on antitrust grounds either before or after expiration or termination of the waiting period. Accordingly, at any time before or after the completion of the

merger, the DOJ, the FTC or another regulatory agency could take action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger or permitting completion subject to regulatory concessions or conditions. We cannot assure you that a challenge to the merger will not be made or that, if a challenge is made, it will not prevail.

 

Financing of the Merger

 

Superior has entered into a commitment letter with JP Morgan Securities Inc. and JPMorgan Chase Bank, N.A. (collectively, “JP Morgan”), whereby JP Morgan will act as the sole bookrunner and lead arranger, to provide for a $200.0 million Tranche B credit facility. The credit facility will provide substantially all of the funds necessary to pay the cash portion of the merger consideration and to refinance Warrior’s existing long-term debt. Superior will provide the remaining funds needed for the merger and Warrior’s debt refinancing from Superior’s cash and cash equivalents. The seven year term facility will be available in a single drawing on the closing date and will be repaid in annual installments equal to 1% of the term loan for each of the first six years with the balance due on the seventh anniversary of the closing date. JP Morgan intends to syndicate the credit facility and Superior has agreed to assist JP Morgan in the completion of the syndication.

 

Interests of Warrior’s Directors and Executive Officers in the Merger

 

In considering the recommendation of the Warrior board of directors with respect to the merger agreement, Warrior stockholders should be aware that certain Warrior directors and executive officers have interests in the merger that are different from, or in addition to, the interests of Warrior stockholders generally. Warrior’s board of directors was aware of these interests and took them into account at the time they approved the merger agreement and recommended that Warrior’s stockholders vote in favor of adopting the merger agreement.

 

Employment Agreements and Change of Control Payments

 

Warrior is party to an employment agreement with Mr. William L. Jenkins, its President and Chief Executive Officer. As a result of the merger, which constitutes a change of control under the employment agreement, Mr. Jenkins is entitled to receive from Warrior a bonus of $500,000.

 

Warrior has entered into a new employment agreement with Mr. Jenkins that will be effective and replace Mr. Jenkins’ current employment agreement upon effectiveness of the merger. Under the agreement, Mr. Jenkins will serve as President and Chief Executive Officer of Warrior for three years from the effectiveness of the merger. Pursuant to the agreement, Mr. Jenkins is eligible to receive (1) an annual base salary of $375,000, (2) an annual long-term incentive award consisting of 50% performance share units and 50% restricted stock with a total value of up to 100% of his base salary, (3) an annual cash bonus in an amount equal to between 25% and 100% of his base salary, depending on the percentage of Target EBIT achieved in the prior fiscal year, and (4) for each of 2008 and 2009, an additional cash bonus up to $250,000 equal to $5,184 for every $1 million of EBIT in excess of $48 million. Mr. Jenkins is also entitled to the same benefits package as other employees. In addition, under the agreement, upon effectiveness of the merger, Mr. Jenkins is entitled to receive the bonus of $500,000 provided for in his current employment agreement. Mr. Jenkins agreed not to not divulge or use, during his employment and thereafter, any confidential information and, during his employment through the earlier of two years following termination of the agreement and three years after effectiveness of the merger, not to engage in activities in competition with Warrior.

 

Warrior is party to an employment agreement with Mr. Robert McNally, effective January 1, 2006, pursuant to which he serves as Warrior’s Executive Vice President and a Director for an initial term expiring December 31, 2008. Under the agreement, Mr. McNally receives a base salary of not less than $300,000 per year. If Warrior achieves, during any calendar quarter during the period of Mr. McNally’s employment, a ratio of EBITDA to sales of 20% or more, Mr. McNally is entitled to be paid a bonus for the quarter equal to 0.5% of Warrior’s EBITDA during the quarter with an initial annual limitation on such payment of $200,000, subject to increase of the annual limitation at the discretion of Warrior’s chief executive officer and Board of

Directors. As a result of the merger, which constitutes a change of control under the employment agreement, Mr. McNally’s employment and employment agreement will terminate, and he will be paid $1.5 million if the merger closes on or before December 31, 2006 or a sum equal to three times the compensation paid to him during the 12 months preceding the change of control if the merger closes after December 31, 2006.

 

Warrior is party to an employment agreement with Mr. Ron E. Whitter, pursuant to which he serves as Warrior’s Chief Financial Officer. Mr. Whitter’s compensation under the agreement as amended is $235,000 per year commencing January 1, 2006 and is reviewed annually. The employment agreement as amended expires on December 31, 2008. As a result of the merger, under the employment agreement, Warrior is required to either (i) cause Superior to assume Warrior’s rights and obligations under the agreement, or (ii) terminate the agreement and pay to Mr. Whitter an early termination fee equal to fifty (50%) percent of the compensation due to Mr. Whitter during the remainder of the term of the agreement.

 

Acceleration of Stock Options and Stock Awards

 

In connection with the merger, all of Warrior’s outstanding options granted to employees, executive officers and directors, whether vested or unvested, will be cancelled. Holders of Warrior options with an exercise price of $7.50 or less will be entitled to receive (1) $14.50 in cash plus (2) shares of Superior common stock with a value (based on the average closing price of Superior common stock over a 10-day period ending three trading days before closing) equal to the amount by which (a) the product of the average closing price of Superior common stock over the same 10-day period and 0.452, plus $14.50, less the exercise price exceeds (b) $14.50. Holders of Warrior options with an exercise price greater than $7.50 will be entitled to receive Superior common stock with a value (based on the average closing price of Superior common stock over a 10-day period ending three trading days before closing) equal to the product of the average closing price of Superior common stock over the same 10-day period and 0.452, plus $14.50, less the exercise price. Mr. McNally is the only holder of options with an exercise price greater than $7.50.

 

The following table sets forth, as of October 31, 2006, the number of shares of Warrior common stock subject to vested and unvested options held by Warrior’s named executive officers and directors and the estimated value of those stock options based on the merger consideration and the closing price of Superior common stock of $31.30 per share on October 31, 2006.

 

 

In addition, all of Warrior’s unvested restricted stock unit awards granted to employees, executive officers and directors, will be cancelled and will entitle the holder to receive 0.452 shares of Superior common stock and $14.50 in cash for each share of Warrior stock underlying the award. The following table sets forth, as of October 31, 2006, the awards held by Warrior’s named executive officers and directors and the estimated

value of those awards based on the merger consideration and the closing price of Superior common stock of $31.30 per share on October 31, 2006.

 

 

For a more complete description of the treatment of Warrior stock options and stock awards in the merger, see “The Merger Agreement — Treatment of Warrior Stock Options and Restricted Stock Units.”

 

Director Indemnification and Insurance

 

After the effective time of the merger, Superior will indemnify, defend and hold harmless each person who is currently or becomes prior to the effective time, a director of Warrior. This indemnification will generally include indemnification against all losses, claims, damages, costs, expenses (including attorneys’ fees), liabilities, judgments or amounts paid in an approved settlement arising out of or in connection with any action that are based in whole or in part on the fact that such person is or was a director of Warrior.

 

For six years after the effective time of the merger, the surviving company will maintain Warrior’s existing directors’ and officers’ liability insurance policy covering acts or omissions occurring prior to the effective time of the merger. The surviving company may, however, substitute Warrior’s policies with policies of substantially similar coverage and amounts containing terms no less advantageous to the former directors and officers of Warrior. The surviving company will not be required to pay aggregate premiums for this D&O insurance in excess of $1,000,000.

 

Beneficial Ownership of Warrior Common Stock

 

The following table sets forth certain information regarding the beneficial ownership of Warrior common stock as of October 31, 2006, by (1) each director and named executive officer individually, and (2) all directors and executive officers as a group. Unless otherwise indicated, each person has sole voting and dispositive power over the shares indicated as owned by such person.

 

 

 

 

Exemption from Section 16(b) of the Exchange Act

 

Warrior’s board of directors has designated as exempt from Section 16(b) of the Exchange Act dispositions of Warrior common stock in connection with the merger by its executive officers and directors.

 

Delisting and Deregistration of Warrior Common Stock

 

If the merger is completed, Warrior common stock will cease to be listed on the Nasdaq Global Market and will be deregistered under the Exchange Act.

 

Listing of Superior Common Stock

 

Application will be made to have the shares of Superior common stock to be issued in the merger approved for listing on the NYSE, where Superior common stock is currently traded under the symbol “SPN.” Superior has agreed in the merger agreement that it will use its commercially reasonable efforts to cause the Superior common stock issuable in the merger to be approved for listing on the NYSE prior to the effective time of the merger. Listing of the shares of Superior common stock is a condition to closing the merger.

 

Restrictions on Sales of Shares of Superior Common Stock Received in the Merger

 

The shares of Superior common stock to be issued in connection with the merger will be registered under the Securities Act of 1933, as amended, or the Securities Act, and will be freely transferable, except for shares of Superior common stock issued to any person who is deemed to be an “affiliate” of Warrior prior to the merger. Persons who may be deemed to be “affiliates” of Warrior prior to the merger include individuals or entities that control, are controlled by, or are under common control of Warrior prior to the merger, and may include officers and directors, as well as principal stockholders of Warrior prior to the merger. Affiliates of Warrior will be notified separately of their affiliate status.

 

Persons who may be deemed to be affiliates of Warrior prior to the merger may not sell any of the shares of Superior common stock received by them in connection with the merger except pursuant to:

 

 

Management and Operations Following the Merger

 

On September 22, 2006 each of William S. Jenkins, President and Chief Executive Officer of Warrior, and Samuel Hardy, Jr., an executive of Warrior, entered into employment agreements with Warrior regarding employment with Warrior upon effectiveness of the merger. Mr. Jenkins will be the President and Chief Executive Officer of the surviving company, and Mr. Hardy will serve as an executive of the surviving company. The employment agreements with the surviving company have substantially similar terms as those currently in effect for such officers of Superior and provide for total compensation equal to or greater than that currently received from Warrior. In addition, Messrs. Jenkins and Hardy have agreed not to compete with Superior or to solicit its employees for a period through the earlier of two years following the termination of the employment agreement and three years after the effectiveness of the merger. The employment agreements also provide for annual incentive cash bonuses based on the surviving company’s financial performance based on earnings before interest and income tax. In addition, Danny Thornton, Vice President of Warrior, entered into an amendment of employment agreement upon effectiveness of the merger. The amendment of employment agreement amends the term of employment to three years and also provides that Mr. Thornton will not compete with Superior or solicit employees for a period of two years following the termination of the employment agreement.

Accounting Treatment of the Merger

 

The merger will be accounted for as a business combination utilizing the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations.” Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their fair values. Superior management has made a preliminary allocation of the estimated purchase price based on preliminary estimates of fair values. Any excess of the purchase price over the fair value of net assets acquired will be accounted for as goodwill or intangibles.

 

In accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” goodwill will not be amortized but instead will be tested for impairment at least annually (more frequently if indicators of impairment are present).

 

The following is a summary of the material provisions of the merger agreement, a copy of which is attached as Annex A and is incorporated by reference in this proxy statement/prospectus. We encourage you to read the merger agreement carefully and in its entirety for a more complete understanding of the merger. The merger agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about Superior or Warrior. The representations, warranties and covenants contained in the merger agreement were made only for purposes of the merger agreement and as of specified dates, were solely for the benefit of the parties to the merger agreement, and may be subject to limitations agreed upon by the contracting parties, including complete waiver or qualified by confidential disclosures exchanged between the parties in connection with the execution of the merger agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the merger agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in Superior’s public disclosures.

 

Structure of the Merger

 

Upon the terms and subject to the conditions set forth in the merger agreement and in accordance with the DGCL, at the effective time of the merger, Warrior will merge with and into SPN Acquisition Sub, Inc., a wholly owned subsidiary of Superior, which we refer to as Merger Sub. Following the merger, the separate corporate existence of Warrior shall cease and Merger Sub will continue as the surviving corporation and a wholly owned subsidiary of Superior and shall succeed to and assume all the rights and obligations of Warrior in accordance with the DGCL. Merger Sub following the merger is referred to as the surviving corporation. Immediately after the completion of the merger, Merger Sub will change its name to Warrior Energy Services Corporation and continue Warrior’s business and operations.

 

Timing of Closing

 

The closing date of the merger will occur no later than the third business day after the date on which all conditions to the merger, other than those conditions that by their nature are to be satisfied at the closing, have been satisfied or waived, including approval of the merger by Warrior stockholders. The merger shall become effective upon the filing of a certificate of merger with the Secretary of State of Delaware or at such other time as Superior, Merger Sub and Warrior may agree and specify in the certificate of merger.

 

Superior and Warrior expect to complete the merger late in the fourth quarter of 2006. However, due to certain conditions, there can be no assurances as to how long after the Warrior special meeting the closing of the merger will take place.

 

Merger Consideration

 

At the effective time of the merger, each Warrior share issued and outstanding immediately prior to the effective time (other than any shares owned directly or indirectly by Warrior as treasury stock and those shares held by dissenting stockholders) will be converted into the right to receive a combination of $14.50 in cash, without interest, and 0.452 shares of Superior common stock. We refer to the aggregate amount of cash consideration and stock consideration to be received by Warrior stockholders pursuant to the merger agreement as the merger consideration.

 

Fractional Shares

 

No fractional shares of Superior common stock will be issued in the merger. Instead, Warrior stockholders will be entitled to receive cash, without interest, in an amount equal to the fraction of a share of Superior common stock the stockholder might otherwise be entitled to receive multiplied by the market value of a share of Superior common stock. The market value of a share of Superior common stock will be determined using the average closing sales price per share of Superior common stock on the New York Stock Exchange, as reported by Bloomberg Financial Markets or such other service as the parties may agree in writing, for the 10 consecutive trading days immediately preceding the third trading day before the date the merger closes.

 

Potential Adjustments to Merger Consideration

 

In the event that, before the effective time of the merger, the outstanding shares of Superior common stock change in number or class as a result of a stock dividend, subdivision, reclassification, recapitalization, stock split, combination, exchange of shares or similar transaction, the number of shares of Superior common stock included in the merger consideration and the value of the outstanding options to acquire Warrior stock will be appropriately and proportionately adjusted to reflect such event.

 

In the event that, before the effective time of the merger, Superior consummates a merger, consolidation, share exchange or other reorganization, or any transaction where the holders of Superior common stock receive or become entitled to receive securities, cash or other assets, or any combination thereof, each Warrior stockholder will be entitled to receive, at the effective time of the merger, in addition to the cash portion of the merger consideration, the amount of securities, cash or other assets the Warrior stockholder would have been entitled to receive or become entitled to receive had the effective time of the merger occurred immediately prior to the consummation of such transaction.

 

Treatment of Warrior Stock Options and Restricted Stock Units

 

Prior to the effective time of the merger, Warrior will cause all of its outstanding stock options to be vested. Immediately prior to the effective time of the merger, all of the Warrior stock options will be cancelled and converted to a right to receive consideration equal to the value of the options. Holders of Warrior options will generally receive (1) $14.50 in cash plus (2) shares of Superior common stock with a value (based on the average closing price of Superior common stock over a 10-day period ending three trading days before closing) equal to the amount by which (a) the product of the average closing price of Superior common stock over the same 10-day period and 0.452, plus $14.50, less the exercise price, exceeds (b) $14.50. However, holders of Warrior options with an exercise price greater than $7.50 will be entitled to receive Superior common stock with a value (based on the average closing price of Superior common stock over a 10-day period ending three trading days before closing) equal to the product of the average closing price of Superior common stock over the same 10-day period and 0.452, plus $14.50, less the exercise price.

 

Immediately prior to the effective time of the merger, all restrictions on outstanding Warrior restricted stock units will lapse and all Warrior shares issuable upon vesting of the restricted stock units will be issued.

 

Conversion of Shares

 

At the effective time of the merger, each outstanding share of Warrior common stock (other than shares owned directly or indirectly by Warrior as treasury stock and those shares held by dissenting stockholders) will automatically be canceled and retired, and will be converted into the right to receive the merger consideration. Shares of Warrior common stock owned directly or indirectly by Warrior as treasury stock will be cancelled in the merger without payment of any merger consideration.

As soon as practicable after the effective time of the merger, the surviving company will deposit with the exchange agent, for the benefit of the holders of Warrior common stock, an amount in cash and certificates representing shares of Superior common stock sufficient to effect the conversion of Warrior common stock and stock options into the merger consideration. Superior and Warrior have authorized American Stock Transfer & Trust Company to act as exchange agent for the merger.

 

Exchange Procedures

 

Promptly after the effective time of the merger, the exchange agent will send to each record holder of Warrior common stock a letter of transmittal for use in the exchange and instructions explaining how to surrender Warrior shares to the exchange agent. Holders of Warrior common stock who surrender their certificates to the exchange agent, together with a properly executed letter of transmittal, will be entitled to receive the appropriate merger consideration. Holders of unexchanged shares of Warrior common stock will not be entitled to receive any merger consideration or any dividends or other distributions payable by Superior after the closing until their shares are properly surrendered, at which time they will be entitled to receive dividends or distributions paid, if any, after the closing date without interest.

 

At the effective time of the merger, the stock transfer books of Warrior will be closed and no additional transfers of Warrior common stock will be made. If, after the effective time, valid Warrior stock certificates are presented to the surviving company, they will be cancelled and exchanged for the merger consideration.

 

Upon demand by Superior, the exchange agent will deliver to Superior any shares of Superior common stock to be issued in the merger, funds set aside by Superior to pay the cash consideration, cash in lieu of fractional shares or cash to pay dividends or other distributions on Superior shares to be issued in the merger that are not claimed by former Warrior stockholders within one year after the effective time of the merger. Thereafter, former Warrior stockholders may look only to Superior for payment of their claim for shares of Superior common stock, cash consideration, cash in lieu of fractional shares and dividends and distributions. None of Warrior, Superior, Merger Sub or the surviving company will be liable to any former Warrior stockholder for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

 

WARRIOR STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY CARD. WARRIOR STOCK CERTIFICATES SHOULD BE RETURNED WITH THE TRANSMITTAL LETTER AND ACCOMPANYING INSTRUCTIONS WHICH WILL BE PROVIDED TO WARRIOR STOCKHOLDERS FOLLOWING THE EFFECTIVE TIME OF THE MERGER.

 

Officers of the Surviving Company After the Merger

 

Under the merger agreement, the officers of Warrior immediately prior to the effective time of the merger will be the officers of the surviving company at and after the effective time of the merger, until the earlier of their resignation or removal or until their successors are duly elected and qualified.

 

Withholding Rights

 

Superior and the surviving company will be entitled to deduct and withhold from the consideration otherwise payable to any holder of Warrior common stock, stock options or restricted stock units pursuant to the merger agreement any amounts that may be required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code or any provision of federal, state or local tax law.

 

Representations and Warranties

 

The merger agreement contains general representations and warranties made by each party to the other regarding aspects of their respective businesses, financial condition and structure, as well as other facts pertinent to the merger.

Warrior made a number of representations and warranties to Superior and Merger Sub in the merger agreement, including, without limitation, those related to the following matters:

 

 

 

Superior and Merger Sub each made a number of representations and warranties to Warrior in the merger agreement, including, without limitation, those related to the following matters:

 

 

Many of the representations and warranties in the merger agreement are subject to materiality, material adverse effect and knowledge qualifications and, with the exception of the representations related to broker’s and finder’s fees, which survive the termination of the merger agreement, the representations and warranties do not survive the closing or termination of the merger agreement, but they form the basis of specified conditions to the obligations of Superior and Warrior to complete the merger.

 

Covenants and Agreements

 

Each of Superior, Merger Sub and Warrior has undertaken various covenants in the merger agreement. The following is a summary of certain of these covenants:

 

Operating Covenants — Warrior

 

Under the merger agreement, Warrior has agreed, until the earlier of the completion of the merger or termination of the merger agreement, except under certain circumstances or as consented to in writing by Superior, to do the following:

 

 

 

In addition, Warrior has agreed that, until the earlier of the completion or termination of the merger agreement, except as described above, it will not:

 

 

 

Operating Covenants — Superior and Merger Sub

 

Under the merger agreement, Superior and Merger Sub has each agreed that, until the earlier of the completion of the merger or termination of the merger agreement, except under certain circumstances or as consented to in writing by Warrior, it will not:

 

 

Preparation of Registration Statement

 

As promptly as reasonably practicable after the execution of the merger agreement, Superior and Warrior will prepare and file with the SEC a registration statement, of which this proxy statement/prospectus is a part, and they shall use their reasonable best efforts cause the registration to be declared effective under the Securities Act as promptly as practicable after filing it with the SEC.

 

Stockholder Meeting

 

As promptly as practicable after the registration statement becomes effective, Warrior will take all actions necessary to duly call, give notice of, convene and hold a special meeting of its stockholders for the purpose of the consideration of a proposal to adopt the merger agreement. Warrior’s board of directors will, subject to their fiduciary obligations, recommend that the stockholders vote in favor of adoption of the merger agreement, use reasonable efforts to solicit proxies in favor of such adoption and take all other action reasonably necessary to secure a vote of the stockholders in favor of the adoption of the merger agreement.

 

Comfort Letters

 

Superior and Warrior will use all reasonable efforts to cause their respective independent auditors to deliver to the other party comfort letters in connection with the registration statement and proxy statement/prospectus.

 

Access to Information

 

Each party will give to the other and its representatives reasonable access to its properties, books, contracts, commitments and records as is reasonably necessary to conduct inspections and assessments. Information furnished by one party to the other party or parties will be subject to the confidentiality agreement between Superior and Warrior.

Reasonable Efforts to Consummate the Merger

 

Superior, Warrior and Merger Sub will use their reasonable best efforts to take all actions, and will assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate the merger in the most expeditious manner possible. These actions include obtaining all necessary consents and approvals from governmental entities and third parties, defending any lawsuits or other legal proceedings challenging the merger agreement or the consummation of the merger, the execution and delivery of any additional instruments and obtaining arrangements for refinancing or obtaining new financing as may be required or reasonably necessary or appropriate. This also includes taking actions to effect the repurchase, exercise, termination or amendment to the reasonable satisfaction of Superior of Warrior’s outstanding warrants prior to the effective time of the merger.

 

Notification of Breaches

 

Each party will give prompt notice to the other party if any representation or warranty made by it in the merger agreement becomes untrue or inaccurate in any material respect, or if it has failed to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under the merger agreement.

 

HSR Matters

 

Superior, Merger Sub and Warrior will cooperate in good faith and take all actions reasonably necessary or appropriate to file with the Federal Trade Commission and the Department of Justice a premerger notification and report under the HSR Act as promptly as reasonably possible after the execution and deliver of the merger agreement. The parties will use reasonable best efforts to expeditiously and diligently prosecute to a favorable conclusion such filing and promptly respond to any request for information issued pursuant to the HSR Act. Each party also agrees to give the other parties prompt notice of any claim commenced or threatened by or before, or any communication from, any governmental entity with respect to the merger.

 

Indemnification and Insurance

 

After the effective time of the merger, Superior will indemnify, defend and hold harmless each person who is currently or becomes prior to the effective time, a director of Warrior. This indemnification will generally include indemnification against all losses, claims, damages, costs, expenses (including attorneys’ fees), liabilities, judgments or amounts paid in an approved settlement arising out of or in connection with any action that are based in whole or in part on the fact that such person is or was a director of Warrior.

 

For six years after the effective time of the merger, the surviving company will maintain Warrior’s existing directors’ and officers’ liability insurance policy covering acts or omissions occurring prior to the effective time of the merger. The surviving company may, however, substitute Warrior’s policies with policies of substantially similar coverage and amounts containing terms no less advantageous to the former directors and officers of Warrior. The surviving company will not be required to pay aggregate premiums for this D&O insurance in excess of $1,000,000.

 

Public Announcements

 

The parties will consult with each other before issuing any press release or otherwise making any public statements with respect to the transactions contemplated by the merger agreement. However, each party may respond to questions from its stockholders, respond to inquiries from financial analysts and media representatives in a manner consistent with past practice, and make disclosures required by applicable law or listing agreements with the NYSE or Nasdaq without prior consultation.

 

Agreement to Defend

 

The parties agree to cooperate and use their reasonable efforts to defend against any claim, action, suit, investigation or other proceeding by any governmental entity or other person or other legal administrative

proceeding that questions the validity or legality of the merger or seeks damages in connection with the merger.

 

Benefit Matters

 

Generally, Superior will credit Warrior employees for service accrued as of the effective time of the merger for purposes of eligibility, participation, vesting or benefit accrual (but not the accrual of benefits under a retirement plan) under any employee benefit plan, program or arrangement established or maintained by Superior or any of its subsidiaries.

 

To the extent that employees and their dependents enroll in any health plan sponsored by Superior or its subsidiaries, Superior will waive preexisting condition limitations and provide credit for any co-payments and deductibles paid by them under the corresponding benefit plans of Warrior during the portion of the respective plan year prior to the effective time of the merger.

 

Superior will take one or more of the following actions with respect to 401(k) accounts of Warrior employees who become employees of Superior and become eligible to participate in Superior’s 401(k) plan after the effective time of the merger: (a) establish an arrangement where the employees are provided with payroll withholding for purposes of repaying any loan that is outstanding under the Warrior 401(k) plan as of the effective time of the merger; (b) permit the employees to voluntarily transfer or roll over their accounts (including loans) from Warrior’s 401(k) plan to Superior’s 401(k) plan; or (c) cause Superior’s 401(k) plan to accept a direct trustee-to-trustee transfer of assets from the Warrior’s 401(k) plan into Superior’s 401(k) plan.

 

Affiliate Agreements

 

Warrior will identify in a letter to Superior all persons who are, as of the date of the merger agreement, “affiliates” of Warrior, as such term is used in Rule 145 under the Securities Act. Warrior will use its reasonable best efforts to cause each of its affiliates to deliver to Superior at least 10 days prior to the date of the Warrior stockholder meeting, a written agreement that restricts the affiliate’s ability to sell, transfer or otherwise dispose of any Superior shares issued to the affiliate in connection with the merger, subject to certain specified exceptions. Warrior will also use its commercially reasonable efforts to cause persons who later become affiliates to execute and deliver similar agreements to Superior at least five days prior to the date of the closing.

 

Tax Treatment

 

The parties will use all reasonable efforts to cause the merger to qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code.

 

Conditions Precedent

 

Conditions to Each Party’s Obligation to Effect the Merger

 

The obligations of Superior, Merger Sub and Warrior to complete the merger are subject to the satisfaction of following conditions:

 

 

 

Conditions to Obligations of Superior and Merger Sub

 

The obligations of Superior and Merger Sub to complete the merger are subject to the following conditions, any of which may be waived in whole or in part by Superior and Merger Sub:

 

 

Conditions to Obligation of Warrior

 

The obligation of Warrior to complete the merger is subject to the following conditions, any of which may be waived in whole or in part by Warrior:

 

 

Termination

 

Before the effective time of the merger, the merger agreement may be terminated:

 

 

 

 

 

 

 

 

 

 

If the merger agreement is validly terminated by Superior or Warrior, the agreement will become void without any further liability or obligation on the part of any party, or any director, officer, employee or stockholder thereof, other than specified provisions of the merger agreement, including, among others, those provisions relating to confidentiality and expenses and termination fees. However, any such termination will not limit or relieve a party’s liability or obligation for damages as a result of such party’s willful breach of any representation, warranty or covenant in the merger agreement and all rights and remedies of the non-breaching party will be preserved.

Amendment; Extension and Waiver

 

Superior, Merger Sub and Warrior may amend the merger agreement in writing at any time before the effective time of the merger. However, no amendment may be made that would require further approval by any Warrior stockholders without the further approval of the Warrior stockholders.

 

Superior, Merger Sub and Warrior may at any time before the effective time of the merger and to the extent legally allowed:

 

 

Takeover Defenses

 

Warrior will take any action that may be necessary or required to cause any anti-takeover provisions contained in the Warrior charter documents or afforded to Warrior by applicable law to become or remain inapplicable to the merger.

 

No Solicitation

 

Warrior has agreed that, except as specifically permitted in the merger agreement, it will not, and it will not authorize or permit its representatives to:

 

 

An “acquisition proposal” is any proposal, other than a proposal by Superior or any of its affiliates, relating to any of the following:

 

 

Warrior has agreed to notify Superior of the pendency of any negotiations respecting, or the receipt of, any acquisition proposal. Warrior has also agreed to immediately cease any existing solicitation, initiation, encouragement, activity, discussion or negotiation with any parties conducted by Warrior or its representatives with respect to any acquisition proposal existing on the date of the merger agreement.

 

However, the Warrior board of directors, acting in good faith, after consultation with outside legal counsel, upon written notice to Superior, before Warrior stockholder approval and only in response to an acquisition proposal received without initiation, encouragement, discussion or negotiation by Warrior or any Warrior representatives, may:

 

 

 

Warrior, except pursuant to the termination provision of the merger agreement, may not:

 

 

However, in the event the Warrior board of directors receives an acquisition proposal that it determines to be a superior proposal, the board may withdraw or modify its approval or recommendation of the merger agreement or the merger and may terminate the merger agreement, in each case at any time after midnight on the third business day following Superior’s receipt of written notice specifying the material terms and conditions of the superior proposal. Superior will have the right, prior to the expiration of the third business day following its receipt of notice to agree to amend the terms of the merger agreement such that they are no less favorable than the terms of the superior proposal.

 

The termination described above may only occur prior to the date of the Warrior stockholder meeting and following payment by Warrior to Superior of the termination fee in the amount of $11.5 million (discussed below).

 

A “superior proposal” is any bona fide acquisition proposal to acquire, directly or indirectly, for consideration consisting of cash, securities or a combination thereof, all or substantially all of the Warrior shares then outstanding or all or substantially all the assets of Warrior, which a majority of the disinterested members of the Warrior board of directors determines in good faith (after consultation with its outside legal counsel and financial advisors) is:

 

 

Fees and Expenses

 

All fees and expenses incurred in connection with the merger will be paid by the party incurring such fees or expenses, whether or not the merger is consummated. However, all fees and expenses incurred in connection with the filings and related matters under the HSR Act and the costs of printing and mailing the proxy statement / prospectus will be borne equally by Superior and Warrior.

 

Warrior will pay Superior a fee in immediately available funds of $11.5 million prior to or simultaneously with:

 

 

Subject to certain conditions in the merger agreement, if within 365 days after the date of the merger agreement any of the events described immediately below occurs and Superior terminates, Warrior will promptly pay to Superior (and no later than 1 business day after the first to occur of any of the events described below) the $11.5 million termination fee:

 

 

 

Under the DGCL, any Warrior stockholder who does not wish to accept the merger consideration has the right to dissent from the merger and to seek an appraisal of, and to be paid the fair value (exclusive of any element of value arising from the accomplishment or expectation of the merger) for his or her shares of Warrior common stock, so long as the stockholder complies with the provisions of Section 262 of the DGCL.

 

Holders of record of Warrior common stock who do not vote in favor of the merger agreement and who otherwise comply with the applicable statutory procedures summarized in this proxy statement/prospectus will be entitled to appraisal rights under Section 262 of the DGCL. A person having a beneficial interest in shares of Warrior common stock held of record in the name of another person, such as a broker or nominee, must act promptly to cause the record holder to follow the steps summarized below properly and in a timely manner to perfect appraisal rights.

 

THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW PERTAINING TO APPRAISAL RIGHTS UNDER THE DGCL AND IS QUALIFIED IN ITS ENTIRETY BY THE FULL TEXT OF SECTION 262 OF THE DGCL, WHICH IS REPRINTED IN ITS ENTIRETY AS ANNEX C. ALL REFERENCES IN SECTION 262 OF THE DGCL AND IN THIS SUMMARY TO A “STOCKHOLDER” OR “HOLDER” ARE TO THE RECORD HOLDER OF THE SHARES OF COMMON STOCK AS TO WHICH APPRAISAL RIGHTS ARE ASSERTED.

 

Under Section 262 of the DGCL, holders of shares of Warrior common stock who follow the procedures set forth in Section 262 of the DGCL will be entitled to have their Warrior common stock appraised by the Delaware Chancery Court and to receive payment in cash of the “fair value” of those Warrior shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with a fair rate of interest, if any, as determined by that court.

 

Under Section 262 of the DGCL, when a proposed merger is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, must notify each of its stockholders who was a stockholder on the record date for this meeting with respect to shares for which appraisal rights are available, that appraisal rights are so available, and must include in that required notice a copy of Section 262 of the DGCL.

 

This proxy statement/prospectus constitutes the required notice to the holders of those Warrior shares and the applicable statutory provisions of the DGCL are attached to this proxy statement/prospectus as Annex C.   Any Warrior stockholder who wishes to exercise his or her appraisal rights or who wishes to preserve his or her right to do so should review the following discussion and Annex C carefully, because failure to timely and properly comply with the procedures specified in Annex C will result in the loss of appraisal rights under the DGCL.

 

A holder of Warrior shares wishing to exercise his or her appraisal rights (a) must not vote in favor of the merger agreement and (b) must deliver to Warrior prior to the vote on the merger agreement at the Warrior special meeting, a written demand for appraisal of his or her Warrior shares. This written demand for appraisal must be in addition to and separate from any proxy or vote abstaining from or against the merger. This demand must reasonably inform Warrior of the identity of the stockholder and of the stockholder’s intent thereby to demand appraisal of his or her shares. A holder of Warrior common stock wishing to exercise his or her holder’s appraisal rights must be the record holder of these Warrior shares on the date the written

demand for appraisal is made and must continue to hold these Warrior shares until the consummation of the merger. Accordingly, a holder of Warrior common stock who is the record holder of Warrior common stock on the date the written demand for appraisal is made, but who thereafter transfers these Warrior shares prior to consummation of the merger, will lose any right to appraisal in respect of these Warrior shares.

 

Only a holder of record of Warrior common stock is entitled to assert appraisal rights for the Warrior shares registered in that holder’s name. A demand for appraisal should be executed by or on behalf of the holder of record, fully and correctly, as the holder’s name appears on the holder’s stock certificates. If the Warrior shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of the demand should be made in that capacity, and if the Warrior common stock is owned of record by more than one owner as in a joint tenancy or tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including one or more joint owners, may execute a demand for appraisal on behalf of a holder of record. The agent, however, must identify the record owner or owners and expressly disclose the fact that, in executing the demand, the agent is agent for the owner or owners. A record holder such as a broker who holds Warrior common stock as nominee for several beneficial owners may exercise appraisal rights with respect to the Warrior shares held for one or more beneficial owners while not exercising appraisal rights with respect to the Warrior common stock held for other beneficial owners. In this case, the written demand should set forth the number of Warrior shares as to which appraisal is sought. When no number of Warrior shares is expressly mentioned, the demand will be presumed to cover all Warrior common stock in brokerage accounts or other nominee forms, and those who wish to exercise appraisal rights under Section 262 of the DGCL are urged to consult with their brokers to determine the appropriate procedures for the making of a demand for appraisal by such a nominee.

 

ALL WRITTEN DEMANDS FOR APPRAISAL SHOULD BE SENT OR DELIVERED TO WARRIOR ENERGY SERVICES CORPORATION, 2 NORTHPOINT DRIVE, SUITE 900, HOUSTON, TEXAS 77060, ATTENTION: SECRETARY.