UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(MARK ONE)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                      TO                     .

Complete Production Services, Inc.

Delaware		72-1503959
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)
11700 Old Katy Road,
Suite 300
Houston, Texas		77079
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (281) 372-2300

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Act. (Check one):

Large accelerated filer o      Accelerated filer o      Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Number of shares of the Common Stock of the registrant outstanding as of May 1, 2007: 72,561,422

 

 

INDEX TO FINANCIAL STATEMENTS

Complete Production Services, Inc.

		PART I—FINANCIAL INFORMATION
				Page
Item 1.		Financial Statements.
		Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006			3
		Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2007 and 2006			4
		Consolidated Statement of Stockholders’ Equity for the Three Months Ended March 31, 2007			5
		Consolidated Statements of Cash Flows for the Three Months March 31, 2007 and 2006			6
		Notes to Consolidated Financial Statements			7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.			18
Item 3.		Quantitative and Qualitative Disclosures About Market Risk.			28
Item 4.		Controls and Procedures.			28
		PART II—OTHER INFORMATION
Item 1.		Legal Proceedings.			29
Item 1A.		Risk Factors.			29
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds.			29
Item 3.		Defaults Upon Senior Securities.			29
Item 4.		Submission of Matters to a Vote of Security Holders.			29
Item 5.		Other Information.			30
Item 6.		Exhibits.			30
		Signature			31
Form of Executive Agreement
Amendment to Employment Agreement
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Balance Sheets
March 31, 2007 (unaudited) and December 31, 2006

		2007				2006
		(In thousands, except
		share data)
ASSETS
Current assets:
Cash and cash equivalents		$	20,100			$	19,874
Trade accounts receivable, net			325,570				301,764
Inventory, net			61,363				43,930
Prepaid expenses			21,876				24,998
Other current assets			212				74
Total current assets			429,121				390,640
Property, plant and equipment, net			847,988				771,703
Intangible assets, net of accumulated amortization of $4,435 and $3,623, respectively			9,302				7,765
Deferred financing costs, net of accumulated amortization of $986 and $547, respectively			15,361				15,729
Goodwill			556,685				552,671
Other long-term assets			1,939				1,816
Total assets		$	1,860,396			$	1,740,324
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt		$	881			$	1,064
Accounts payable			88,545				71,370
Accrued liabilities			55,662				57,280
Accrued interest			17,717				4,085
Notes payable			5,131				17,087
Taxes payable			19,375				10,519
Total current liabilities			187,311				161,405
Long-term debt			786,170				750,577
Deferred income taxes			96,933				90,805
Minority interest			2,609				2,316
Total liabilities			1,073,023				1,005,103
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value per share, 200,000,000 shares authorized, 71,661,635 (2006 — 71,418,473) issued			717				714
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding			—				—
Additional paid-in capital			567,049				563,006
Retained earnings			203,321				155,971
Treasury stock, 35,570 shares at cost			(202	)			(202	)
Accumulated other comprehensive income			16,488				15,732
Total stockholders’ equity			787,373				735,221
Total liabilities and stockholders’ equity		$	1,860,396			$	1,740,324

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statements of Operations
Three Months Ended March 31, 2007 and 2006 (unaudited)

		Three Months Ended
		March 31,
		2007				2006
		(In thousands, except per
		share data)
Revenue:
Service		$	366,035			$	235,119
Product			41,032				27,227
			407,067				262,346
Service expenses			203,513				135,511
Product expenses			31,811				19,883
Selling, general and administrative expenses			50,570				36,446
Depreciation and amortization			28,970				15,607
Income from continuing operations before interest, taxes and minority interest			92,203				54,899
Interest expense			15,625				10,682
Interest income			(212	)			(7	)
Income from continuing operations before taxes and minority interest			76,790				44,224
Taxes			29,179				17,004
Income from continuing operations before minority interest			47,611				27,220
Minority interest			261				305
Income from continuing operations			47,350				26,915
Income from discontinued operations (net of tax expense of $413)			—				1,198
Net income		$	47,350			$	28,113
Earnings per share information:
Continuing operations		$	0.66			$	0.49
Discontinued operations		$	—			$	0.02
Basic earnings per share		$	0.66			$	0.51
Continuing operations		$	0.65			$	0.46
Discontinued operations		$	—			$	0.02
Diluted earnings per share		$	0.65			$	0.48
Weighted average shares:
Basic			71,503				55,601
Diluted			73,021				58,783

Consolidated Statements of Comprehensive Income
Three Months Ended March 31, 2007 and 2006 (unaudited)

		Three Months Ended
		March 31,
		2007				2006
		(In thousands)
Net income		$	47,350			$	28,113
Change in cumulative translation adjustment			756				(118	)
Comprehensive income		$	48,106			$	27,995

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statement of Stockholders’ Equity
Three Months Ended March 31, 2007 (unaudited)

																						Accumulated
										Additional												Other
		Number				Common				Paid-in				Retained				Treasury				Comprehensive
		of Shares				Stock				Capital				Earnings				Stock				Income				Total
		(In thousands, except share data)
Balance at December 31, 2006			71,418,473			$	714			$	563,006			$	155,971			$	(202	)		$	15,732			$	735,221
Net income			—				—				—				47,350				—				—				47,350
Cumulative translation adjustment			—				—				—				—				—				756				756
Issuance of common stock:
Exercise of stock options			221,374				3				978				—				—				—				981
Expense related to employee stock options			—				—				1,110				—				—				—				1,110
Excess tax benefit from share-based compensation			—				—				1,270				—				—				—				1,270
Vested restricted stock			21,788				—				—				—				—				—				—
Amortization of non-vested restricted stock			—				—				685				—				—				—				685
Balance at March 31, 2007			71,661,635			$	717			$	567,049			$	203,321			$	(202	)		$	16,488			$	787,373

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Consolidated Statements of Cash Flows
Three Months Ended March 31, 2007 and 2006 (unaudited)

		Three Months Ended
		March 31,
		2007				2006
		(In thousands)
Cash provided by (used in):
Operating activities:
Net income		$	47,350			$	28,113
Items not affecting cash:
Depreciation and amortization			28,970				15,727
Deferred income taxes			6,104				2,422
Minority interest			261				305
Excess tax benefit from share-based compensation			(1,270	)			(109	)
Non-cash compensation expense			1,795				699
Other			1,881				862
Changes in operating assets and liabilities:
Accounts receivable			(24,503	)			(30,426	)
Inventory			(17,323	)			(4,104	)
Prepaid expense and other current assets			3,020				2,005
Accounts payable			18,517				18,240
Accrued liabilities and other			20,389				(2,427	)
Net cash provided by operating activities			85,191				31,307
Investing activities:
Business acquisitions, net of cash acquired			(12,148	)			(18,410	)
Additions to property, plant and equipment			(99,902	)			(58,882	)
Proceeds from disposal of capital assets/other			1,608				1,944
Net cash used in investing activities			(110,442	)			(75,348	)
Financing activities:
Issuances of long-term debt			107,624				116,295
Repayments of long-term debt			(72,214	)			(63,977	)
Repayment of notes payable			(11,956	)			(7,691	)
Proceeds from issuances of common stock			981				69
Excess tax benefit from share-based compensation			1,270				109
Net cash provided by financing activities			25,705				44,805
Effect of exchange rate changes on cash			(228	)			(104	)
Change in cash and cash equivalents			226				660
Cash and cash equivalents, beginning of period			19,874				11,405
Cash and cash equivalents, end of period		$	20,100			$	12,065
Supplemental cash flow information:
Cash paid for interest, net of interest capitalized		$	1,264			$	10,360
Cash paid for taxes		$	13,455			$	5,484
Significant non-cash investing and financing activities:
Common stock issued for acquisitions		$	—			$	27,359
Debt acquired in acquisition		$	—			$	534

See accompanying notes to consolidated financial statements.

COMPLETE PRODUCTION SERVICES, INC.

Notes to Consolidated Financial Statements
(In thousands, except share and per share data)

1. General:

(a) Nature of operations:

     Complete Production Services, Inc. is a provider of specialized services and products focused on developing hydrocarbon reserves, reducing operating costs and enhancing production for oil and gas companies. Complete Production Services, Inc. focuses its operations on basins within North America and manages its operations from regional field service facilities located throughout the U.S. Rocky Mountain region, Texas, Oklahoma, Louisiana, Arkansas, Kansas, western Canada, Mexico and Southeast Asia.

     References to “Complete”, the “Company”, “we”, “our” and similar phrases are used throughout this Quarterly Report on Form 10-Q and relate collectively to Complete Production Services, Inc. and its consolidated affiliates.

     On September 12, 2005, we completed the combination (the “Combination”) of Complete Energy Services, Inc. (“CES”), Integrated Production Services, Inc. (“IPS”) and I.E. Miller Services, Inc. (“IEM”) pursuant to which the CES and IEM shareholders exchanged all of their common stock for common stock of IPS. The Combination was accounted for using the continuity of interests method of accounting, which yields results similar to the pooling of interest method. Subsequent to the Combination, IPS changed its name to Complete Production Services, Inc.

     On April 20, 2006, we entered into an underwriting agreement in connection with our initial public offering and became subject to the reporting requirements of the Securities Exchange Act of 1934. On April 21, 2006, our common stock began trading on the New York Stock Exchange under the symbol “CPX”. On April 26, 2006, we completed our initial public offering. See Note 8, Stockholders’ Equity.

(b) Basis of presentation:

     The unaudited interim consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of the financial position of Complete as of March 31, 2007 and the statements of operations and the statements of comprehensive income for the three months ended March 31, 2007 and 2006, as well as the statement of stockholders’ equity at March 31, 2007 and the statements of cash flows for the three months ended March 31, 2007 and 2006. Certain information and disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2006. We believe that these financial statements contain all adjustments necessary so that they are not misleading.

     In preparing financial statements, we make informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we review our estimates, including those related to impairment of long-lived assets and goodwill, contingencies and income taxes. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.

     The results of operations for interim periods are not necessarily indicative of the results of operations that could be expected for the full year. Certain reclassifications have been made to 2006 amounts in order to present these results on a comparable basis with amounts for 2007.

     On January 1, 2007, we began a self-insurance program to pay claims associated with health care benefits provided to certain of our employees in the United States. Pursuant to this program, we have purchased a stop-loss insurance policy from an insurance company. Our accounting policy for this self-insurance program is to accrue expense based upon the number of employees enrolled in the plan at pre-determined rates. As claims are processed and paid, we compare our claim history to our expected claims

in order to estimate incurred but not reported claims. If our estimate of claims incurred but not reported exceeds our current accrual, we record additional expense during the current period.

     In August 2006, our Board of Directors authorized and committed to a plan to sell certain manufacturing and production enhancement operations of a subsidiary located in Alberta, Canada, which includes certain assets located in south Texas. Accordingly, we have revised our statement of operations for the three months ended March 31, 2006 to classify these results as discontinued operations. See Note 10, Discontinued Operations.

2. Business combinations:

Acquisitions During the Three Months Ended March 31, 2007:

     During the first quarter of 2007, we acquired substantially all the assets of two oilfield service companies for $12,148 in cash, resulting in goodwill of $5,740. One such company is located in LaSalle, Colorado, and provides frac tank rentals and fresh water hauling to customers in the Wattenburg Field of the DJ Basin. The second company is located in Greeley, Colorado and provides fluid handling and fresh frac water heating services to customers in the Wattenburg Field of the DJ Basin. The goodwill associated with these acquisitions has been allocated entirely to the completion and production services business segment. These acquisitions will supplement our completion and production services business in the DJ Basin, and provide us with additional fluid handling capabilities in the Rocky Mountain Region.

     Results for each of these acquisitions were included in our accounts and results of operations since the date of acquisition. No pro forma disclosure was provided as these acquisitions were not significant to our consolidated operations for the three months ended March 31, 2007. The following table summarizes our preliminary purchase price allocations as of March 31, 2007, which are not yet finalized:

Net assets acquired:
Property, plant and equipment		$	6,095
Non-cash working capital			13
Intangible assets			300
Goodwill			5,740
Net assets acquired		$	12,148
Consideration:
Cash, net of cash and cash equivalents acquired		$	12,148

3. Accounts receivable:

		March 31,				December 31,
		2007				2006
		(unaudited)
Trade accounts receivable		$	283,143			$	260,733
Related party receivables			12,770				12,478
Unbilled revenue			28,806				27,096
Notes receivable			3				78
Other receivables			4,611				3,810
			329,333				304,195
Allowance for doubtful accounts			3,763				2,431
		$	325,570			$	301,764

4. Inventory:

		March 31,				December 31,
		2007				2006
		(unaudited)
Finished goods		$	49,816			$	38,877
Manufacturing parts, materials and other			13,360				6,772
			63,176				45,649
Inventory reserves			1,813				1,719
		$	61,363			$	43,930

5. Property, plant and equipment (unaudited):

						Accumulated
March 31, 2007		Cost				Depreciation				Net Book Value
Land		$	5,816			$	—			$	5,816
Building			7,373				898				6,475
Field equipment			820,399				152,593				667,806
Vehicles			60,720				15,680				45,040
Office furniture and computers			10,453				3,297				7,156
Leasehold improvements			13,383				2,028				11,355
Construction in progress			104,340				—				104,340
		$	1,022,484			$	174,496			$	847,988

						Accumulated
December 31, 2006		Cost				Depreciation				Net Book Value
Land		$	5,816			$	—			$	5,816
Building			7,140				840				6,300
Field equipment			746,314				128,553				617,761
Vehicles			60,505				14,152				46,353
Office furniture and computers			9,891				2,712				7,179
Leasehold improvements			12,895				1,164				11,731
Construction in progress			76,563				—				76,563
		$	919,124			$	147,421			$	771,703

     Construction in progress at March 31, 2007 and December 31, 2006 primarily included progress payments to vendors for equipment to be delivered in future periods and component parts to be used in final assembly of operating equipment, which in all cases were not yet placed into service at the time. For the three months ended March 31, 2007, we recorded capitalized interest of $427 related to assets that we are constructing for internal use and amounts paid to vendors under progress payments for assets that are being constructed on our behalf.

6. Notes payable:

     On January 5, 2006, we entered into a note agreement with our insurance broker to finance our annual insurance premiums for the policy year beginning December 1, 2005 through November 30, 2006. As of December 31, 2005, we recorded a note payable totaling $14,584 and an offsetting prepaid asset which included a broker’s fee of $600. We amortized the prepaid asset to expense over the policy term, and incurred finance charges totaling $268 as interest expense related to this arrangement during 2006. This policy was renewed for the policy term beginning December 1, 2006 through November 30, 2007, pursuant to which we recorded a note payable and an offsetting prepaid asset totaling $17,087 as of December 31, 2006, which includes a broker’s fee of approximately $600. Of this liability, $11,956 was paid during the three months ended March 31, 2007, and the remainder will be paid during the policy term.

7. Long-term debt:

     The following table summarizes long-term debt as of March 31, 2007 and December 31, 2006:

		2007				2006
U.S. revolving credit facility (a)		$	110,000			$	78,668
Canadian revolving credit facility (a)			22,060				17,575
8.0% senior notes (b)			650,000				650,000
Subordinated seller notes			3,450				3,450
Capital leases and other			1,541				1,948
			787,051				751,641
Less: current maturities of long-term debt and capital leases			881				1,064
		$	786,170			$	750,577

8. Stockholders’ equity (unaudited):

(a) Initial Public Offering:

     On April 26, 2006, we sold 13,000,000 shares of our common stock, $.01 par value per share, in our initial public offering. These shares were offered to the public at $24.00 per share, and we recorded proceeds of approximately $292,500 after underwriter fees. Our stock began trading on the New York Stock Exchange on April 21, 2006.

     The following table summarizes the pro forma impact of our initial public offering on earnings per share for the three months ended March 31, 2006, assuming the 13,000,000 shares had been issued on January 1, 2006. No pro forma adjustments have been made to net income as reported.

		Three Months
		Ended
		March 31, 2006
Net income as reported		$	28,113
Basic earnings per share, as reported:
Continuing operations		$	0.49
Discontinued operations		$	0.02
		$	0.51

		Three Months
		Ended
		March 31, 2006
Basic earnings per share, pro forma:
Continuing operations		$	0.39
Discontinued operations		$	0.02
		$	0.41
Diluted earnings per share, as reported:
Continuing operations		$	0.46
Discontinued operations		$	0.02
		$	0.48
Diluted earnings per share, pro forma:
Continuing operations		$	0.37
Discontinued operations		$	0.02
		$	0.39

(b) Stock-based Compensation—Stock Options:

     We maintain option plans under which stock-based compensation could be granted to employees, officers and directors. Stock option grants under these plans have an exercise price based on the fair value of our common stock on the date of grant. These stock options may be exercised over a five or ten-year period and generally a third of the options vest on each of the first three anniversaries from the grant date. Upon exercise of stock options, we issue our common stock.

     We adopted Statement of Financial Accounting Standards (“SFAS”) No. 123R on January 1, 2006. This pronouncement requires that we measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, with limited exceptions, by using an option pricing model to determine fair value. For employee stock options granted prior to September 30, 2005, the date of our initial filing with the Securities and Exchange Commission, we use the intrinsic value method prescribed by Accounting Principles Board (“APB”) No. 25, as required by SFAS No. 123R. Under this method, we do not recognize compensation cost for stock-based compensation grants that have an exercise price equal to the fair value of the stock on the date of grant. For employee stock options granted between October 1, 2005 and December 31, 2005, we applied the modified prospective transition method to record expense associated with these stock-based awards, as further described in our Annual Report on Form 10-K. For grants of stock-based compensation on or after January 1, 2006, we applied the prospective transition method under SFAS No. 123R, whereby we recognize expense associated with new awards of stock-based compensation ratably, as determined using a Black-Scholes pricing model, over the expected term of the award.

     On January 24, 2007, the Compensation Committee of our Board of Directors authorized the grant of 877,000 stock options and 56,800 shares of non-vested restricted shares, effective January 31, 2007, for issuance to our officers and key members of our management team. Of these stock options, we granted 867,700 options to purchase shares of our common stock during the three months ended March 31, 2007 at an exercise price ranging from $18.65 to $19.87, which represented the fair market value of the shares on the applicable date of grant. Each of these stock options vests over a three-year term at 33 1/3% per year. The fair value of these stock option grants was determined by applying a Black-Scholes option pricing model based on the following assumptions:

		Three Months
		Ended
		March 31,
		2007
Assumptions:
Risk-free rate		4.47% to 4.94%
Expected term (in years)			2.23 to 5.08
Volatility			31	%
Calculated fair value per option		$	4.21 to $7.25

     We completed our initial public offering in April 2006. Therefore, we did not have sufficient historical market data in order to determine the volatility of our common stock. In accordance with the provisions of SFAS No. 123R, we analyzed the market data of peer companies and calculated an average volatility factor based upon changes in the closing price of these companies’ common stock for a three-year period. This volatility factor was then applied as a variable to determine the fair value of our stock options granted during the three months ended March 31, 2007.

     We projected a rate of stock option forfeitures based upon historical experience and management assumptions related to the expected term of the options. After adjusting for these forfeitures, we expect to recognize expense totaling $4,682 over the vesting period of these 2007 stock option grants. For the three months ended March 31, 2007, we have recognized expense related to these stock option grants totaling $248, which represents a reduction of net income before taxes and minority interest. The impact on net income for the quarter ended March 31, 2007 was a reduction of $154, with no impact on diluted earnings per share as reported. The unrecognized compensation costs related to the non-vested portion of these awards was $4,434 as of March 31, 2007 and will be recognized over the applicable remaining vesting periods.

     For the three-month periods ended March 31, 2007 and 2006, we recognized compensation expense associated with all stock option awards totaling $1,110 and $77, respectively, resulting in a reduction of net income of $688 and $47, respectively, and a $0.01 reduction in diluted earnings per share for the three months ended March 31, 2007, with no impact on diluted earnings per share for the three months ended March 31, 2006. Total unrecognized compensation expense associated with outstanding stock option awards at March 31, 2007 was $9,835.

     The following tables provide a roll forward of stock options from December 31, 2006 to March 31, 2007 and a summary of stock options outstanding by exercise price range at March 31, 2007:

		Options Outstanding
						Weighted
						Average
						Exercise
		Number				Price
Balance at December 31, 2006			3,864,560			$	9.67
Granted			867,700			$	19.85
Exercised			(221,374	)		$	4.43
Cancelled			(41,858	)		$	18.26
Balance at March 31, 2007			4,469,028			$	11.83

		Options Outstanding												Options Exercisable
						Weighted				Weighted								Weighted				Weighted
		Outstanding at				Average				Average				Exercisable at				Average				Average
		March 31,				Remaining				Exercise				March 31,				Remaining				Exercise
Range of Exercise Price		2007				Life (months)				Price				2007				Life (months)				Price
$2.00 – $3.94			503,045				26			$	2.04				339,013				26			$	2.06
$4.48 – $4.80			891,958				27			$	4.68				635,396				24			$	4.64
$5.00			302,648				53			$	5.00				105,099				33			$	5.00
$6.69			630,175				96			$	6.69				192,366				95			$	6.69
$11.66			469,802				102			$	11.66				156,601				102			$	11.66
$17.60 – $19.87			871,700				118			$	19.84				—				—				—
$23.27 – $24.00			799,700				109			$	23.97				—				—				—
			4,469,028				79			$	11.83				1,428,475				43			$	5.10

The total intrinsic value of stock options exercised during the three months ended March 31, 2007 was $3,343. The total intrinsic value of all vested outstanding stock options at March 31, 2007 was $21,155.

(b) Non-vested Restricted Stock:

     We recognize compensation expense associated with grants of non-vested restricted stock which is determined based on the fair value of the shares on the date of grant, and recorded ratably over the applicable vesting period. At March 31, 2007, amounts not yet recognized related to non-vested stock totaled $4,714, which represented the unamortized expense associated with awards of non-vested stock granted to employees, officers and directors under our compensation plans, including $1,268 related to grants made during the three months ended March 31, 2007. We recognized compensation expense associated with non-vested restricted stock totaling $685 and $622 for the three-month periods ended March 31, 2007 and 2006, respectively.

     The following table summarizes the change in non-vested restricted stock from December 31, 2006 to March 31, 2007:

		Non-vested
		Restricted Stock
						Weighted
						Average
		Number				Grant Price
Balance at December 31, 2006			690,073			$	8.67
Granted			67,118			$	19.82
Vested			(21,788	)		$	7.80
Forfeited			(3,512	)		$	23.50
Balance at March 31, 2007			731,891			$	9.65

9. Earnings per share:

     We compute basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common share includes the weighted average of additional shares associated with the incremental effect of dilutive employee stock options, non-vested restricted stock and contingent shares, as determined using the treasury stock method prescribed by SFAS No. 128, “Earnings Per Share.” The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share for the three months ended March 31, 2007 and 2006:

		Three Months Ended
		March 31,
		2007				2006
		(unaudited, in thousands)
Weighted average basic common shares outstanding			71,503				55,601
Effect of dilutive securities:
Employee stock options			1,246				1,652
Non-vested restricted stock			272				293
Contingent shares (a)			—				1,237
Weighted average diluted common and potential common shares outstanding			73,021				58,783

     We excluded the impact of anti-dilutive potential common shares from the calculation of diluted weighted average shares for the three months ended March 31, 2007. If these potential common shares were included in the calculation, diluted weighted average shares outstanding for the three months ended March 31, 2007 would have been 72,666,714 shares, or a reduction of 354,541 shares. There were no anti-dilutive securities outstanding during the three months ended March 31, 2006.

10. Discontinued operations:

     In August 2006, our Board of Directors authorized and committed to a plan to sell certain manufacturing and production enhancement product operations of a subsidiary located in Alberta, Canada, which includes certain assets located in south Texas. We revised our financial statements, pursuant to SFAS No. 144, and removed the results of operations of the disposal group from net income from continuing operations, and presented these separately as income from discontinued operations, net of tax, in the accompanying statement of operations for the three months ended March 31, 2006. We completed the sale of this disposal group in October 2006.

     The following table summarizes the operating results for this disposal group for the three months ended March 31, 2006:

		Three Months
		Ended
		March 31, 2006
		(unaudited)
Revenue		$	13,390
Income before taxes and minority interest		$	1,611
Net income		$	1,198

11. Segment information:

     SFAS No. 131, “Disclosure About Segments of an Enterprise and Related Information,” establishes standards for the reporting of information about operating segments, products and services, geographic areas, and major customers. The method of determining what information to report is based on the way our management organizes the operating segments for making operational decisions and assessing financial performance. We evaluate performance and allocate resources based on net income (loss) from continuing operations before net interest expense, taxes, depreciation and amortization and minority interest (“EBITDA”). The calculation of EBITDA should not be viewed as a substitute for calculations under U.S. GAAP, in particular net income. EBITDA calculated by us may not be comparable to the EBITDA calculation of another company.

     We have three reportable operating segments: completion and production services (“C&PS”), drilling services and product sales. The accounting policies of our reporting segments are the same as those used to prepare our unaudited consolidated financial statements as of March 31, 2007. Inter-segment transactions are accounted for on a cost recovery basis.

						Drilling				Product
		C&PS				Services				Sales				Corporate				Total
Three Months Ended March 31, 2007
Revenue from external customers		$	307,639			$	58,396			$	41,032			$	—			$	407,067
Inter-segment revenues		$	71			$	349			$	11,133			$	(11,553	)		$	—
EBITDA, as defined		$	104,162			$	18,068			$	5,157			$	(6,214	)		$	121,173
Depreciation and amortization		$	24,284			$	3,635			$	678			$	373			$	28,970
Operating income (loss)		$	79,878			$	14,433			$	4,479			$	(6,587	)		$	92,203
Capital expenditures		$	88,350			$	7,272			$	4,041			$	239			$	99,902
As of March 31, 2007
Segment assets		$	1,494,859			$	235,212			$	108,652			$	21,673			$	1,860,396
Three Months Ended March 31, 2006
Revenue from external customers		$	192,021			$	44,030			$	26,295			$	—			$	262,346
Inter-segment revenues		$	9			$	436			$	7,466			$	(7,911	)		$	—
EBITDA, as defined		$	54,602			$	16,020			$	3,816			$	(3,932	)		$	70,506
Depreciation and amortization		$	12,834			$	2,018			$	383			$	372			$	15,607
Operating income (loss)		$	41,768			$	14,002			$	3,433			$	(4,304	)		$	54,899
Capital expenditures		$	39,603			$	12,716			$	4,194			$	2,369			$	58,882
As of December 31, 2006
Segment assets		$	1,369,906			$	245,806			$	96,537			$	28,075			$	1,740,324

     We do not allocate net interest expense, tax expense or minority interest to the operating segments. The following table reconciles operating income as reported above to net income from continuing operations for the three months ended March 31, 2007 and 2006:

		Three Months Ended
		March 31,
		2007				2006
Segment operating income		$	92,203			$	54,899
Interest expense			15,625				10,682
Interest income			(212	)			(7	)
Income taxes			29,179				17,004
Minority interest			261				305
Net income from continuing operations		$	47,350			$	26,915

     The product sales business segment results have been adjusted for discontinued operations. See Note 10, Discontinued Operations. The following table reconciles the product sales segment information as originally reported for the three months ended March 31, 2006, to the information revised for discontinued operations:

		Original				Discontinued				Revised
		Presentation				Operations				Presentation
Three Months Ended March 31, 2006
Revenue from external customers		$	39,685			$	13,390			$	26,295
EBITDA, as defined		$	5,547			$	1,731			$	3,816
Depreciation and amortization		$	503			$	120			$	383
Operating income		$	5,044			$	1,611			$	3,433

     Changes in the carrying amount of goodwill by segment for the three months ended March 31, 2007 are summarized below:

						Drilling				Product
		C&PS				Services				Sales				Total
Balance at December 31, 2006		$	505,763			$	34,876			$	12,032			$	552,671
Acquisitions			5,740				—				—				5,740
Contingency adjustment and other (a)			(2,109	)			—				—				(2,109	)
Foreign currency translation			383				—				—				383
Balance at March 31, 2007		$	509,777			$	34,876			$	12,032			$	556,685

12. Legal matters and contingencies:

     In the normal course of our business, we are party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including warranty and product liability claims and occasional claims by individuals alleging exposure to hazardous materials, on the job injuries and fatalities as a result of our products or operations. Many of the claims filed against us relate to motor vehicle accidents which can result in the loss of life or serious bodily injury. Some of these claims relate to matters occurring prior to our acquisition of businesses. In certain cases, we are entitled to indemnification from the sellers of the businesses.

     Although we cannot know the outcome of pending legal proceedings and the effect such outcomes may have on us, we believe that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on our financial position, results of operations or liquidity.

13. Adoption of FASB Interpretation No. 48:

     We adopted FASB Interpretation No. 48 entitled “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109,” referred to as “FIN 48,” as of January 1, 2007. FIN 48 clarifies the accounting for uncertain tax positions that may have been taken by an entity. Specifically, FIN 48 prescribes a more-likely-than-not recognition threshold to measure a tax position taken or expected to be taken in a tax return through a two-step process: (1) determining whether it is more likely than not that a tax position will be sustained upon examination by taxing authorities, after all appeals, based upon the technical merits of the position; and (2) measuring to determine the amount of benefit/expense to recognize in the financial statements, assuming taxing authorities have all relevant information concerning the issue. The tax position is measured at the largest amount of benefit/expense that is greater than 50 percent likely of being realized upon ultimate settlement. This pronouncement also specifies how to present a liability for unrecognized tax benefits in a classified balance sheet, but does not change the classification requirements for deferred taxes. Under FIN 48, if a tax position previously failed the more-likely-than-not recognition

threshold, it should be recognized in the first subsequent financial reporting period in which the threshold is met. Similarly, a position that no longer meets this recognition threshold, should no longer be recognized in the first financial reporting period that the threshold is no longer met.

     We performed an examination of our tax positions and calculated the cumulative amount of our estimated exposure by evaluating each issue to determine whether the impact exceeded the 50 percent threshold of being realized upon ultimate settlement with the taxing authorities. Based upon this examination, we determined that the aggregate exposure under FIN 48 did not have a material impact on our financial statements at January 1, 2007 or March 31, 2007. Therefore, we have not recorded an adjustment to our financial statements related to the adoption of FIN 48. We will continue to evaluate our tax positions in accordance with FIN 48, and recognize any future impact under FIN 48 as a charge to income in the applicable period in accordance with the standard. Our tax filings for tax years 2003 to 2006 remain open for examination by taxing authorities.

     Our accounting policy related to income tax penalties and interest assessments is to accrue for these costs and record a charge to selling, general and administrative expense during the period that we take an uncertain tax position through resolution with the taxing authorities or expiration of the applicable statute of limitations.

14. Recent accounting pronouncements and authoritative literature:

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” a pronouncement which provides additional guidance for using fair value to measure assets and liabilities, by providing a definition of fair value, stating that fair value should be based upon assumptions market participants would use to price an asset or liability, and establishing a hierarchy that prioritizes the information used to determine fair value, whereby quoted marked prices in active markets would be given highest priority with lowest priority given to data provided by the reporting entity based on unobservable facts. This standard requires disclosure of fair value measurements by level within this hierarchy. We adopted SFAS No. 157 on January 1, 2007 with no impact on our financial position, results of operations and cash flows.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115.” This pronouncement permits entities to use the fair value method to measure certain financial assets and liabilities by electing an irrevocable option to use the fair value method at specified election dates. After election of the option, subsequent changes in fair value would result in the recognition of unrealized gains or losses as period costs during the period the change occurred. SFAS No. 159 becomes effective as of the beginning of the first fiscal year that begins after November 15, 2007, with early adoption permitted. However, entities may not retroactively apply the provisions of SFAS No. 159 to fiscal years preceding the date of adoption. We are currently evaluating the impact that SFAS No. 159 may have on our financial position, results of operations or cash flows.

15. Subsequent events:

     On April 1, 2007, we acquired substantially all the assets of a fluid handling and disposal service company located in Borger, Texas, that provides services to customers in the Texas panhandle, for $13,784 in cash, resulting in goodwill of approximately $6,600. We will include the accounts of this company in the operations of our completion and production services business segment from the date of acquisition. We believe that this acquisition complements certain operations that we acquired in 2006 within the Texas panhandle area and broadens our ability to provide fluid handling and disposal services throughout the Mid-continent Region.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

     The following discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes as of March 31, 2007 and for the three month ended March 31, 2007 and 2006, included elsewhere herein. This discussion contains forward-looking statements based on our current expectations, assumptions, estimates and projections about us and the oil and gas industry. These forward-looking statements involve risks and uncertainties that may be outside of our control. Our actual results could differ materially from those indicated in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: market prices for oil and gas, the level of oil and gas drilling, economic and competitive conditions, capital expenditures, regulatory changes and other uncertainties, as well as those factors discussed in Item 1A of Part II of this quarterly report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed below may not occur. Except to the extent required by law, we undertake no obligation to update publicly any forward-looking statements, even if new information becomes available or other events occur in the future.

     References to “Complete”, the “Company”, “we”, “our” and similar phrases are used throughout this Quarterly Report on Form 10-Q and relate collectively to Complete Production Services, Inc. and its consolidated affiliates.

Overview

     We are a leading provider of specialized services and products focused on helping oil and gas companies develop hydrocarbon reserves, reduce operating costs and enhance production. We focus on basins within North America that we believe have attractive long-term potential for growth, and we deliver targeted, value-added services and products required by our customers within each specific basin. We believe our range of services and products positions us to meet the many needs of our customers at the wellsite, from drilling and completion through production and eventual abandonment. We manage our operations from regional field service facilities located throughout the U.S. Rocky Mountain region, Texas, Oklahoma, Louisiana, Arkansas, Kansas, western Canada, Mexico and Southeast Asia.

     We operate in three business segments:

     Completion and Production Services. Through our completion and production services segment, we establish, maintain and enhance the flow of oil and gas throughout the life of a well. This segment is divided into the following primary service lines:

	•		Intervention Services. Well intervention requires the use of specialized equipment to perform an array of wellbore services. Our fleet of intervention service equipment includes coiled tubing units, pressure pumping units, nitrogen units, well service rigs, snubbing units and a variety of support equipment. Our intervention services provide customers with innovative solutions to increase production of oil and gas. For example, in the Barnett Shale region of north Texas we operate advanced coiled tubing units that have electric-line conductors within the units’ coiled tubing string. These specially configured units can deploy perforating guns, logging tools and plugs, without a separate electric-line unit in high inclination and “horizontal” wells that are prevalent throughout that basin.
	•		Downhole and Wellsite Services. Our downhole and wellsite services include electric-line, slickline, production optimization, production testing, rental and fishing services. We also offer several proprietary services and products that we believe create significant value for our customers. Examples of these proprietary services and products include: (1) our Green Flowback system, which permits the flow of gas to our customers while performing drill-outs and flowback operations, increasing production, accelerating time to production and eliminating the need to flare gas, and (2) our patented plunger lift system that, when combined with our diagnostic and installation services, removes fluids from gas wells resulting in increased production and the extension of the life of the well.
	•		Fluid Handling. We provide a variety of services to help our customers obtain, move, store and dispose of fluids that are involved in the development and production of their reservoirs. Through

our fleet of specialized trucks, frac tanks and other assets, we provide fluid transportation, heating, pumping and disposal services for our customers.

     Drilling Services. Through our drilling services segment, we provide services and equipment that initiate or stimulate oil and gas production by providing land drilling, specialized rig logistics and site preparation throughout our service area. Our drilling rigs currently operate exclusively in and around the Barnett Shale region of north Texas.

     Product Sales. Through our product sales segment, we provide a variety of equipment used by oil and gas companies throughout the lifecycle of their wells. Our current product offering includes completion, flow control and artificial lift equipment as well as tubular goods. We sell products throughout North America primarily through our supply stores. We also sell products through agents in markets outside of North America.

     Substantially all service and rental revenue we earn is based upon a charge for a period of time (an hour, a day, a week) for the actual period of time the service or rental is provided to our customer. Product sales are recorded when the actual sale occurs and title or ownership passes to the customer.

General

     The primary factor influencing demand for our services and products is the level of drilling, completion and maintenance activity of our customers, which in turn, depends on current and anticipated future oil and gas prices, production depletion rates and the resultant levels of cash flows generated and allocated by our customers to their drilling, completion and maintenance budgets. As a result, demand for our services and products is cyclical, substantially depends on activity levels in the North American oil and gas industry and is highly sensitive to current and expected oil and natural gas prices.

     We believe there is a correlation between the number of active drilling rigs and the level of spending for exploration and development of new and existing hydrocarbon reserves by our customers in the oil and gas industry. These spending levels are a primary driver of our business, and we believe that our customers tend to invest more in these activities when oil and gas prices are at higher levels or are increasing. The average North American rotary rig count, as published by Baker Hughes Incorporated, is summarized in the following table for the quarters ended March 31, 2007 and 2006:

AVERAGE RIG COUNTS

		Quarter				Quarter
		Ended				Ended
		3/31/07				3/31/06
BHI Rotary Rig Count:
U.S. Land			1,651				1,440
U.S. Offshore			83				82
Total U.S			1,734				1,522
Canada			521				661
Total North America			2,255				2,183
BHI Workover Rig Count:
United States			1,485				1,512
Canada			751				808
Total U.S. and Canada			2,236				2,320

     We continue to evaluate demand for our services and are currently investing in equipment in order to place more equipment into service to meet customer demand.

Outlook

     Our growth strategy includes a focus on internal growth in our current basins by increasing the utilization of our equipment, adding additional like kind equipment and expanding service and product offerings. In addition, we seek to identify new basins in which to replicate this approach. We also augment our internal growth through strategic acquisitions.

     We use strategic acquisitions as an integral part of our growth strategy. We consider acquisitions that will add to our service offerings in a current operating area or that will expand our geographical footprint into a targeted basin. We invested $12.1 million to acquire two companies during the quarter ended March 31, 2007 and an additional $13.8 million to acquire another company in April 2007 (see “—Acquisitions”).

     During the quarters ended March 31, 2007 and 2006, we invested $99.9 million and $58.9 million, respectively, in equipment additions and other capital expenditures. We expect our quarterly capital expenditures to trend down throughout 2007. Our capital expenditures budget for 2007 is approximately $300.0 million. Our capital expenditures for the twelve months ended March 31, 2007 was $344.9 million, the majority of which related to growth capital. We expect to continue to benefit from equipment placed into service this quarter and during the past year, assuming that our utilization rates remain high. We expect future revenue and net income growth throughout 2007. However, our future results remain subject to the risks described in our Annual Report on Form 10-K for the year ended December 31, 2006.

     In August 2006, our Board of Directors authorized and committed to a plan to sell certain manufacturing and production enhancement product operations of a subsidiary located in Alberta, Canada, which includes certain assets located in south Texas. On October 31, 2006, we sold this disposal group to Paintearth Energy Services, Inc., an oilfield service company based in Calgary, Alberta, Canada. We accounted for this disposal as a discontinued operation. We decided to sell this business because it was ancillary to our primary operations and did not align directly with our strategic goals.

     Oil and gas commodity prices have declined from historical highs in 2006. This trend could be the result of a number of macro-economic factors, such as a perceived excess supply of natural gas, lower demand for oil and gas or the use of alternate fuels, market expectations of weather conditions and the utilization of heating fuels, the cyclical nature of the oil and gas industry and other general market conditions for the U.S. economy. Although we cannot determine the impact that lower commodity prices may have on our business or whether such a decline in commodity prices will be long-term, we believe that North American oilfield activity and the overall outlook for our business remains favorable from an activity and pricing perspective, especially in the basins in which we operate, which includes the Rocky Mountain region, Barnett Shale of north Texas, Anadarko basin in the Mid-continent region and Fayetteville Shale in Arkansas. Although we believe that a slow-down in activity levels has occurred and may continue in Canada, and to a lesser extent may occur in the U.S., we do not believe that such a slow-down will be long-lasting. Consistent with prior years, we expect our second quarter results for the completion and production services business to be impacted by seasonality in Canada as a result of inclement weather conditions, referred to as the Canadian “break-up.” The break-up makes it difficult for our customers to execute their operating plans, and, therefore, our utilization rates in Canada during the months of April and May tend to decline.

     With an increase in oilfield activity levels, we, and many of our competitors, have invested in new equipment, some of which requires long lead times to manufacture. As more of this equipment is placed into service, there could be excess capacity in the industry, which may negatively impact our utilization rates. We believe that much of the new equipment being placed into service is replacing aging equipment that is currently operating in the field. Our equipment fleet is relatively new, as we have substantially invested in new equipment over the past two years and expect to continue to invest in equipment to the extent that we expect demand to remain high in the basins in which we operate. We continue to monitor our equipment utilization and poll our customers to assess demand levels. As more equipment enters the marketplace, we believe our customers will increasingly rely upon service providers with local knowledge and expertise, which we believe we have and which constitutes a fundamental aspect of our strategic acquisition growth strategy.

Acquisitions

     During the first quarter of 2007, we acquired substantially all the assets of two oilfield service companies for approximately $12.1 million in cash, resulting in goodwill of approximately $5.7 million. One such company is located in LaSalle, Colorado, and provides frac tank rentals and fresh water hauling to customers in the Wattenburg Field of the DJ Basin. The second company is located in Greeley, Colorado, and provides fluid handling and fresh frac water heating services to customers in the Wattenburg Field of the DJ Basin. The goodwill associated with these acquisitions has been allocated entirely to the completion and production services business segment. These acquisitions will supplement our completion and production services business in the DJ Basin, and provide us with additional fluid handling capabilities in the Rocky Mountain Region.

     On April 1, 2007, we acquired substantially all the assets of a fluid handling and disposal service company located in Borger, Texas, that provides services to customers in the Texas panhandle, for approximately $13.8 million in cash, resulting in goodwill of approximately $6.6 million. We will include the accounts of this company in the operations of our completion and production services business segment from the date of acquisition. We believe that this acquisition complements certain operations that we acquired in 2006 within the Texas panhandle area and broadens our ability to provide fluid handling and disposal services throughout the Mid-continent Region.

     We account for these acquisitions using the purchase method of accounting, whereby the purchase price is allocated to the fair value of net assets acquired, including intangibles and property, plant and equipment at depreciated replacement costs, with the excess to goodwill. Results of operations related to each acquired company will be included in our consolidated operations and accounts as of the date of acquisition.

Critical Accounting Policies and Estimates

     The preparation of our consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, and provide a basis for making judgments about the carrying value of assets and liabilities that are not readily available through open market quotes. Estimates and assumptions are reviewed periodically, and actual results may differ from those estimates under different assumptions or conditions. We must use our judgment related to uncertainties in order to make these estimates and assumptions.

     For a description of our critical accounting policies and estimates as well as certain sensitivity disclosures related to those estimates, see our Annual Report on Form 10-K for the year ended December 31, 2006. Our critical accounting policies and estimates have not changed materially during the quarter ended March 31, 2007, except that we adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, which is discussed further below.

     We adopted FASB Interpretation No. 48 entitled “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109,” referred to as “FIN 48,” as of January 1, 2007. FIN 48 clarifies the accounting for uncertain tax positions that may have been taken by an entity. Specifically, FIN 48 prescribes a more-likely-than-not recognition threshold to measure a tax position taken or expected to be taken in a tax return through a two-step process: (1) determining whether it is more likely than not that a tax position will be sustained upon examination by taxing authorities, after all appeals, based upon the technical merits of the position; and (2) measuring to determine the amount of benefit/expense to recognize in the financial statements, assuming taxing authorities have all relevant information concerning the issue. The tax position is measured at the largest amount of benefit/expense that is greater than 50 percent likely of being realized upon ultimate settlement. This pronouncement also specifies how to present a liability for unrecognized tax benefits in a classified balance sheet, but does not change the classification requirements for deferred taxes. Under FIN 48, if a tax position previously failed the more-likely-than-not recognition threshold, it should be recognized in the first subsequent financial reporting period in which the threshold is met. Similarly, a position that no longer meets this recognition threshold, should no longer be recognized in the first financial reporting period that the threshold is no longer met.

     We performed an examination of our tax positions and calculated the cumulative amount of our estimated exposure by evaluating each issue to determine whether the impact exceeded the 50 percent threshold of being realized upon ultimate settlement with the taxing authorities. Based upon this examination, we determined that the aggregate exposure under FIN 48 did not have a material impact on our financial statements as of January 1, 2007 or March 31, 2007. Therefore, we have not recorded an adjustment to our financial statements related to the adoption of FIN 48. We will continue to evaluate our tax positions in accordance with FIN 48, and recognize any future impact under FIN 48 as a charge to income in the applicable period in accordance with the standard.

Results of Operations

														Percent
		Quarter				Quarter				Change				Change
		Ended				Ended				2007/				2007/
		3/31/07				3/31/06				2006				2006
		(unaudited, in thousands)
Revenue:
Completion and production services		$	307,639			$	192,021			$	115,618				60	%
Drilling services			58,396				44,030				14,366				33	%
Product sales			41,032				26,295				14,737				56	%
Total		$	407,067			$	262,346			$	144,721				55	%
EBITDA:
Completion and production services		$	104,162			$	54,602			$	49,560				91	%
Drilling services			18,068				16,020				2,048				13	%
Product sales			5,157				3,816				1,341				35	%
Corporate			(6,214	)			(3,932	)			(2,282	)			58	%
Total		$	121,173			$	70,506			$	50,667				72	%

     “EBITDA” consists of net income (loss) from continuing operations before net interest expense, taxes, depreciation and amortization and minority interest. EBITDA is a non-GAAP measure of performance. We use EBITDA as the primary internal management measure for evaluating performance and allocating additional resources. The following table reconciles EBITDA for the quarters ended March 31, 2007 and 2006 to the most comparable U.S. GAAP measure, operating income (loss).

Reconciliation of EBITDA to Most Comparable U.S. GAAP Measure—Operating Income (Loss)

		Completion
		and
		Production				Drilling				Product
		Services				Services				Sales				Corporate				Total
		(unaudited, in thousands)
Quarter Ended March 31, 2007
EBITDA, as defined		$	104,162			$	18,068			$	5,157			$	(6,214	)		$	121,173
Depreciation and amortization		$	24,284			$	3,635			$	678			$	373			$	28,970
Operating income (loss)		$	79,878			$	14,433			$	4,479			$	(6,587	)		$	92,203
Quarter Ended March 31, 2006
EBITDA, as defined		$	54,602			$	16,020			$	3,816			$	(3,932	)		$	70,506
Depreciation and amortization		$	12,834			$	2,018			$	383			$	372			$	15,607
Operating income (loss)		$	41,768			$	14,002			$	3,433			$	(4,304	)		$	54,899

     The following table reconciles segment information for the product sales business segment as originally reported for the quarter ended March 31, 2006, to the information revised for discontinued operations:

		Original				Discontinued				Revised
		Presentation				Operations				Presentation
		(unaudited, in thousands)
Three Months Ended March 31, 2006
Revenue from external customers		$	39,685			$	13,390			$	26,295
EBITDA, as defined		$	5,547			$	1,731			$	3,816
Depreciation and amortization		$	503			$	120			$	383
Operating income		$	5,044			$	1,611			$	3,433

     Below is a detailed discussion of our operating results by segment for these periods.

Quarter Ended March 31, 2007 Compared to the Quarter Ended March 31, 2006 (Unaudited)

     Revenue

     Revenue for the quarter ended March 31, 2007 increased by $144.7 million, or 55%, to $407.1 million from $262.3 million for the quarter ended March 31, 2006. This increase by segment was as follows:

	•		Completion and Production Services. Segment revenue increased $115.6 million, or 60%, for the quarter, primarily due to: (1) higher activity levels; (2) an increase in revenues earned as a result of additional capital investment in the coiled tubing, well servicing, rental and fluid-handling businesses in 2007, as well as the benefit of a full-quarter of operations for equipment placed into service throughout 2006; (3) a more favorable pricing environment for our services; (4) investment in acquisitions during the first quarter of 2007, each of which provided incremental revenues for 2007 compared to 2006; and (5) a series of acquisitions during the year ended December 31, 2006, primarily in third and fourth quarters, which contributed to the overall 2007 results.
	•		Drilling Services. Segment revenue increased $14.4 million, or 33%, for the quarter, primarily due to: (1) more favorable pricing; (2) capital investment in our Barnett Shale-focused drilling business throughout 2006 and, to a lesser extent, during the first quarter of 2007, as well as investment in drilling logistics equipment throughout our service area; and (3) an acquisition on August 1, 2006 through which we acquired three additional drilling rigs.
	•		Product Sales. Segment revenue increased $14.7 million, or 56%, for the quarter, primarily due to an increase in product sales in Southeast Asia and an increase in sales of tubular goods though our supply stores in 2007 compared to 2006.

     Service and Product Expenses

     Service and product expenses include labor costs associated with the execution and support of our services, materials used in the performance of those services and other costs directly related to the support and maintenance of equipment. These expenses increased $79.9 million, or 51%, to $235.3 million for the quarter ended March 31, 2007 from $155.4 million for the quarter ended March 31, 2006. The following table summarizes service and product expenses as a percentage of revenues for the quarters ended March 31, 2007 and 2006:

Service and Product Expenses as a Percentage of Revenue

		Quarter Ended
		3/31/07				3/31/06				Change
Segment:
Completion and production services			55	%			59	%			(4	)%
Drilling services			59	%			53	%			6	%
Product sales			78	%			73	%			5	%
Total			58	%			59	%			(1	)%

     The decline in service and product expenses as a percentage of revenue reflects improved margins as a result of: (1) a favorable mix of services and products, (2) improved pricing for our completion and production services, as more revenue was earned in 2007 from higher margin services in the United States,

(3) higher incremental margins earned on capital invested throughout 2006 and into 2007, as operating costs as a percentage of revenue remained relatively flat, and (4) continued strong demand for oil and gas services and products during the quarter ended March 31, 2007, offset partially by rising labor, fuel, insurance and equipment costs. We were able to obtain more favorable pricing for our completion and production services segment for these periods as a result of higher customer demand for these services. In addition, this segment benefited from the impact of acquired businesses in 2006 and into 2007. Margins associated with our drilling services segment declined during the quarter ended March 31, 2007 compared to the same period in 2006 due primarily to downtime associated with rig maintenance which lowered utilization, lag time incurred as a result of this maintenance before redeploying the equipment under contract, and, to a lesser extent, certain price reductions related to smaller projects. Margins associated with our product sales business segment declined for the first quarter of 2007 compared to the first quarter of 2006 due primarily to the mix of products sold.

     Selling, General and Administrative Expenses

     Selling, general and administrative expenses include salaries and other related expenses for our selling, administrative, finance, information technology and human resource functions. Selling, general and administrative expenses increased $14.1 million, or 39%, for the quarter ended March 31, 2007 to $50.6 million from $36.4 million during the quarter ended March 31, 2006. This increase in expense was due primarily to: (1) acquisitions during the twelve months ended March 31, 2007, which contributed additional costs related to headcount, property rental expense, insurance expense and other administrative costs; (2) increased incentive compensation accruals based on earnings; (3) higher consulting costs associated with information technology and Sarbanes-Oxley projects; (4) higher tax and legal consulting fees related to tax compliance issues and legal matters; and (5) incremental costs of approximately $1.1 million related to stock-based compensation expense. As a percentage of revenues, selling, general and administrative expense declined to 12% for the quarter ended March 31, 2007 compared to 14% for the quarter ended March 31, 2006.

     Depreciation and Amortization

     Depreciation and amortization expense increased $13.4 million, or 86%, to $29.0 million for the quarter ended March 31, 2007 from $15.6 million for the quarter ended March 31, 2006. The increase in depreciation and amortization expense was the result of placing into service much of the equipment that was purchased during the twelve months ended March 31, 2007, which totaled approximately $344.9 million. In addition, we recorded depreciation and amortization expense related to businesses acquired in 2006 and during the first quarter of 2007, which contributed depreciation expense for the quarter ended March 31, 2007 but may not be included in the results for the same period in 2006 due to the timing of the acquisition. As a percentage of revenue, depreciation and amortization expense increased to 7% for the quarter ended March 31, 2007 compared to 6% for the quarter ended March 31, 2006. This increase is directly attributable to the increase in equipment placed into service throughout 2006 and for the first quarter of 2007.

     Interest Expense

     Interest expense was $15.6 million and $10.7 million for the quarters ended March 31, 2007 and 2006, respectively. The increase in interest expense was attributable to an increase in the average amount of debt outstanding, including an increase in borrowings under our revolving credit facilities and the issuance of our 8.0% senior notes in December 2006. The weighted-average interest rate of borrowings outstanding at March 31, 2007 and 2006 was 7.74% and 7.27%, respectively. The increase in the borrowing rate was due primarily to a higher fixed interest rate on our senior notes issued in December 2006 compared to the average variable interest rate on our facilities outstanding during the quarter ended March 31, 2006.

     Taxes

     Tax expense is comprised of current income taxes and deferred income taxes. The current and deferred taxes added together provide an indication of an effective rate of income tax.

     Tax expense was 38.0% and 38.4% of pretax income for the quarters ended March 31, 2007 and 2006, respectively, with the change primarily attributable to the impact of the composition of earnings in various state and provincial tax jurisdictions.

     Discontinued Operations

     Discontinued operations represent the results of operations, net of tax, of certain manufacturing and production enhancement operations of a Canadian subsidiary, including related assets located in south Texas. This disposal group was sold on October 31, 2006.

Liquidity and Capital Resources

     Our primary liquidity needs are to fund capital expenditures, such as expanding our pressure pumping, coiled tubing, well servicing, wireline, fluid handling and production testing fleets; increasing and replacing rental tool and well service rigs; and funding general working capital needs. In addition, we need capital to fund strategic business acquisitions. Our primary sources of funds have historically been cash flow from operations, proceeds from borrowings under bank credit facilities and the issuance of debt and equity securities.

     On April 26, 2006, we sold 13,000,000 shares of our $.01 par value common stock in an initial public offering at an initial offering price to the public of $24.00 per share, which provided proceeds of approximately $292.5 million less underwriter’s fees. We used these funds to retire principal and interest outstanding under our U.S. revolving credit facility on April 28, 2006, to pay transaction costs and to acquire various businesses throughout 2006.

     We anticipate that we will rely on cash generated from operations, borrowings under our revolving credit facility, future debt offerings and/or future public equity offerings to satisfy our liquidity needs. We believe that funds from these sources should be sufficient to meet both our short-term working capital requirements and our long-term capital requirements. We believe that our operating cash flows and availability under our revolving credit facility will be sufficient to fund our operations for the next twelve months. Our ability to fund planned capital expenditures and to make acquisitions will depend upon our future operating performance, and more broadly, on the availability of equity and debt financing, which will be affected by prevailing economic conditions in our industry, and general financial, business and other factors, some of which are beyond our control.

     The following table summarizes cash flows by type for the periods indicated (in thousands):

		Three Months Ended
		March 31,
		2007				2006
Cash flows provided by (used in):
Operating activities		$	85,191			$	31,307
Investing activities			(110,442	)			(75,348	)
Financing activities			25,705				44,805

     Net cash provided by operating activities increased $53.9 million for the quarter ended March 31, 2007 compared to the quarter ended March 31, 2006. This increase was primarily due to an increase in gross receipts as a result of increased revenues. Our gross receipts increased throughout 2006 and into 2007 as demand for our services grew, resulting in more billable hours and more favorable billing rates, while we continued to expand our current business and enter new markets through acquisitions. We expect to continue to evaluate acquisition opportunities for the foreseeable future, and expect that new acquisitions will provide incremental operating cash flows.

     Net cash used in investing activities increased by $35.1 million for the quarter ended March 31, 2007 compared to the quarter ended March 31, 2006, reflecting an incremental increase in funds used for capital expenditures in 2007 of $41.0 million, partially offset by a decline in funds used for acquisitions of $6.3 million. Significant capital equipment expenditures during the first quarter of 2007 included investments in coiled tubing units, well service rigs and pressure pumping units.

     Net cash provided by financing activities decreased $19.1 million for the quarter ended March 31, 2007 compared to the quarter ended March 31, 2006. This decrease was primarily attributable to a decline in funds borrowed under our revolving credit facilities, as cash from operating activities was sufficient to fund a greater portion of our working capital needs for the first quarter of 2007 compared to the same period in 2006, and we also borrowed less to effect the acquisition of complementary businesses during the respective periods.

Dividends

     We do not intend to pay dividends in the foreseeable future, but rather plan to reinvest such funds in our business. Furthermore, our senior notes and revolving credit facilities, as amended on December 6, 2006, contain restrictive debt covenants which preclude us from paying future dividends on our common stock.

Description of Our Indebtedness

     On December 6, 2006, we issued 8.0% senior notes with a face value of $650.0 million through a private placement of debt. These notes mature in 10 years, on December 15, 2016, and require semi-annual interest payments, paid in arrears and calculated based on an annual rate of 8.0%, on June 15 and December 15 of each year, commencing on June 15, 2007. There was no discount or premium associated with the issuance of these notes. The senior notes are guaranteed, on a senior unsecured basis, by all of our current domestic subsidiaries. The senior notes have covenants which, among other things: (1) limit the amount of additional indebtedness we can incur; (2) limit restricted payments such as a dividend; (3) limit our ability to incur liens or encumbrances; (4) limit our ability to purchase, transfer or dispose of significant assets; (5) purchase or redeem stock or subordinated debt; (6) enter into transactions with affiliates; (7) merge with or into other companies or transfer all or substantially all our assets; and (8) limit our ability to enter into sale and leaseback transactions. We have the option to redeem all or part of these notes on or after December 15, 2011. We can redeem 35% of these notes on or before December 15, 2009 using the proceeds of certain equity offerings. Additionally, we may redeem some or all of the notes prior to December 15, 2011 at a price equal to 100% of the principal amount of the notes plus a make-whole premium.

     On December 6, 2006, we amended and restated our existing senior secured credit facility (the “Credit Agreement”) with Wells Fargo Bank, National Association, as U.S. Administrative Agent, and certain other financial institutions. The Credit Agreement provides for a $310.0 million U.S. revolving credit facility that will mature in 2011 and a $40.0 million Canadian revolving credit facility (with Integrated Production Services, Ltd., one of our wholly-owned subsidiaries, as the borrower thereof) that will mature in 2011. In addition, certain portions of the credit facilities are available to be borrowed in U.S. Dollars, Canadian Dollars, Pounds Sterling, Euros and other currencies approved by the lenders.

     Subject to certain limitations, we have the ability to elect how interest under the Credit Agreement will be computed. Interest under the Credit Agreement may be determined by reference to (1) the London Inter-bank Offered Rate, or LIBOR, plus an applicable margin between 0.75% and 1.75% per annum (with the applicable margin depending upon our ratio of total debt to EBITDA (as defined in the agreement)), or (2) the Base Rate (i.e., the higher of the Canadian bank’s prime rate or the CDOR rate plus 1.0%, in the case of Canadian loans or the greater of the prime rate and the federal funds rate plus 0.5%, in the case of U.S. loans), plus an applicable margin between 0.00% and 0.75% per annum. If an event of default exists under the Credit Agreement, advances will bear interest at the then-applicable rate plus 2%. Interest is payable quarterly for base rate loans and at the end of applicable interest periods for LIBOR loans, except that if the interest period for a LIBOR loan is six months, interest will be paid at the end of each three-month period.

     The Credit Agreement also contains various covenants that limit our and our subsidiaries’ ability to: (1) grant certain liens; (2) make certain loans and investments; (3) make capital expenditures; (4) make distributions; (5) make acquisitions; (6) enter into hedging transactions; (7) merge or consolidate; or (8) engage in certain asset dispositions. Additionally, the Credit Agreement limits our and our subsidiaries’ ability to incur additional indebtedness if: (1) we are not in pro forma compliance with all terms under the Credit Agreement, (2) certain covenants of the additional indebtedness are more onerous than the covenants set forth in the Credit Agreement, or (3) the additional indebtedness provides for amortization, mandatory prepayment or repurchases of senior unsecured or subordinated debt during the duration of the Credit Agreement with certain exceptions. The Credit Agreement also limits additional secured debt to 10% of our consolidated net worth (i.e., the excess of our assets over the sum of our liabilities plus the minority interests). The Credit Agreement contains covenants which, among other things, require us and our subsidiaries, on a consolidated basis, to maintain specified ratios or conditions as follows (with such ratios tested at the end of each fiscal quarter): (1) total debt to EBITDA, as defined in the Credit Agreement, of not more than 3.0 to 1.0; and (2) EBITDA, as defined, to total interest expense of not less than 3.0 to 1.0. We were in compliance with all debt covenants under the amended and restated Credit Agreement as of March 31, 2007.

     Under the Credit Agreement, we are permitted to prepay our borrowings.

     All of the obligations under the U.S. portion of the Credit Agreement are secured by first priority liens on substantially all of the assets of our U.S. subsidiaries as well as a pledge of approximately 66% of the stock of our first-tier foreign subsidiaries. Additionally, all of the obligations under the U.S. portion of the Credit Agreement are guaranteed by substantially all of our U.S. subsidiaries. All of the obligations under the Canadian portions of the Credit Agreement are secured by first priority liens on substantially all of the assets of our subsidiaries. Additionally, all of the obligations under the Canadian portions of the Credit Agreement are guaranteed by us as well as certain of our subsidiaries.

     If an event of default exists under the Credit Agreement, as defined, the lenders may accelerate the maturity of the obligations outstanding under the Credit Agreement and exercise other rights and remedies. While an event of default is continuing, advances will bear interest at the then-applicable rate plus 2%. For a description of an event of default, see our Credit Agreement which was filed with the Securities and Exchange Commission on December 8, 2006 as an exhibit to a Current Report on Form 8-K.

     Borrowings of $110.0 million and $22.1 million were outstanding under the U.S. and Canadian revolving credit facilities at March 31, 2007, respectively. The U.S. revolving credit facility bore interest at 6.57% at March 31, 2007, and the Canadian revolving credit facility bore interest at 6.0% at March 31, 2007. For the quarter ended March 31, 2007, the weighted average interest rate on borrowings under the amended Credit Agreement was approximately 6.47%. In addition, there were letters of credit outstanding which totaled $20.5 million under the U.S. revolving portion of the facility that reduced the available borrowing capacity at March 31, 2007, and we incurred fees of 1.25% of the total amount outstanding under these letter of credit arrangements. As of May 1, 2007, we had $155.8 million outstanding under our Credit Agreement.

Outstanding Debt and Commitments

     Our contractual commitments have not changed materially since December 31, 2006, except for additional borrowings under our U.S. revolving credit facility, primarily to fund capital expenditures.

     We have entered into agreements to purchase certain equipment for use in our business. The manufacture of this equipment requires lead-time and we generally are committed to accept this equipment at the time of delivery, unless arrangements have been made to cancel delivery in accordance with the purchase agreement terms. We have spent $99.9 million for equipment purchases and other capital expenditures during the quarter ended March 31, 2007, which does not include amounts paid in connection with acquisitions.

     We expect to continue to acquire complementary companies and evaluate potential acquisition targets. We may use cash from operations, proceeds from future debt or equity offerings and borrowings under our revolving credit facilities for this purpose.

Recent Accounting Pronouncements and Authoritative Guidance

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” a pronouncement which provides additional guidance for using fair value to measure assets and liabilities, by providing a definition of fair value, stating that fair value should be based upon assumptions market participants would use to price an asset or liability, and establishing a hierarchy that prioritizes the information used to determine fair value, whereby quoted marked prices in active markets would be given highest priority with lowest priority given to data provided by the reporting entity based on unobservable facts. This standard requires disclosure of fair value measurements by level within this hierarchy. We adopted SFAS No. 157 on January 1, 2007 with no impact on our financial position, results of operations and cash flows.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115.” This pronouncement permits entities to use the fair value method to measure certain financial assets and liabilities by electing an irrevocable option to use the fair value method at specified election dates. After election of the option, subsequent changes in fair value would result in the recognition of unrealized gains or losses as period

costs during the period the change occurred. SFAS No. 159 becomes effective as of the beginning of the first fiscal year that begins after November 15, 2007, with early adoption permitted. However, entities may not retroactively apply the provisions of SFAS No. 159 to fiscal years preceding the date of adoption. We are currently evaluating the impact that SFAS No. 159 may have on our financial position, results of operations and cash flows.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     The demand, pricing and terms for oil and gas services provided by us are largely dependent upon the level of activity for the U.S. and Canadian gas industry. Industry conditions are influenced by numerous factors over which we have no control, including, but not limited to: the supply of and demand for oil and gas; the level of prices, and expectations about future prices, of oil and gas; the cost of exploring for, developing, producing and delivering oil and gas; the expected rates of declining current production; the discovery rates of new oil and gas reserves; available pipeline and other transportation capacity; weather conditions; domestic and worldwide economic conditions; political instability in oil-producing countries; technical advances affecting energy consumption; the price and availability of alternative fuels; the ability of oil and gas producers to raise equity capital and debt financing; and merger and divestiture activity among oil and gas producers.

     The level of activity in the U.S. and Canadian oil and gas exploration and production industry is volatile. No assurance can be given that our expectations of trends in oil and gas production activities will reflect actual future activity levels or that demand for our services will be consistent with the general activity level of the industry. Any prolonged substantial reduction in oil and gas prices would likely affect oil and gas exploration and development efforts and therefore affect demand for our services. A material decline in oil and gas prices or U.S. and Canadian activity levels could have a material adverse effect on our business, financial condition, results of operations and cash flows.

     For the three months ended March 31, 2007, approximately 7% of our revenues and 7% of our total assets were denominated in Canadian dollars, our functional currency in Canada. As a result, a material decrease in the value of the Canadian dollar relative to the U.S. dollar may negatively impact our revenues, cash flows and net income. Each one percentage point change in the value of the Canadian dollar would have impacted our revenues for the quarter ended March 31, 2007 by approximately $0.3 million. We do not currently use hedges or forward contracts to offset this risk.

     Our Mexican operation uses the U.S. dollar as its functional currency, and as a result, all transactions and translation gains and losses are recorded currently in the financial statements. The balance sheet amounts are translated into U.S. dollars at the exchange rate at the end of the month and the income statement amounts are translated at the average exchange rate for the month. We estimate that a hypothetical one percentage point change in the value of the Mexican peso relative to the U.S. dollar would have impacted our revenues for the quarter ended March 31, 2007 by approximately $0.1 million. Currently, we conduct a portion of our business in Mexico in the local currency, the Mexican peso.

     Approximately 17% of our debt at March 31, 2007 is structured under floating rate terms and, as such, our interest expense is sensitive to fluctuations in the prime rates in the U.S. and Canada. Based on the debt structure in place as of March 31, 2007, a 100 basis point increase in interest rates relative to our floating rate obligations would increase interest expense by approximately $1.3 million per year and reduce operating cash flows by approximately $0.8 million, net of tax.

Item 4. Controls and Procedures.

     We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a — 15 under the Securities Exchange Act of 1934 as of the end of the period covered by this quarterly report. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of March 31, 2007, our disclosure controls and procedures were effective, in all material respects, with respect to the recording, processing, summarizing and reporting, within the time periods specified in the SEC’s rules and forms, for information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

     We have been taking steps to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 prior to its applicability to us. In that connection, we have made and expect to continue to make changes to our internal controls and control environment. Although these changes have improved and may continue to improve our internal controls and control environment, there were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

     In the normal course of our business, we are party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including warranty and product liability claims and occasional claims by individuals alleging exposure to hazardous materials, on the job injuries and fatalities as a result of our products or operations. Many of the claims filed against us relate to motor vehicle accidents which can result in the loss of life or serious bodily injury. Some of these claims relate to matters occurring prior to our acquisition of businesses. In certain cases, we are entitled to indemnification from the sellers of the businesses.

     Although we cannot know the outcome of pending legal proceedings and the effect such outcomes may have on us, we believe that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on our financial position, results of operations or liquidity.

Item 1A. Risk Factors.

     There have been no material changes to our risk factors disclosed in our Annual Report on Form 10-K as of December 31, 2006, except we have undertaken a self-insurance policy related to health insurance benefits for certain of our employees discussed more fully below.

     We are self-insured for certain health care benefits for our employees:

     On January 1, 2007, we began a self-insurance program to pay claims associated with the health care benefits provided to certain of our employees in the United States. Under this program, we continue to use the insurance company which provided our coverage in 2006 to administer the program, and we have purchased a stop-loss policy with this provider which will insure for individual claims which exceed a designated ceiling. Pursuant to this program, we accrue expense based upon expected claims, and make periodic claim payments to our administrator, which facilitates the payment of claims to the medical care providers. There is a risk that our actual claims incurred may exceed the projected claims, and we may incur more expense than expected for health insurance coverage. There is also a risk that we may not adequately accrue for claims that are incurred but not reported. Either of these events could have a material adverse effect on our financial position, results of operations or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

     The Compensation Committee of our Board of Directors approved base salary increases for our executive officers and certain members of senior management, effective April 1, 2007, as summarized in the table below:

				Base Salary				Base Salary
				Prior to				As of
Executive Officer		Title		April 1, 2007				April 1, 2007
Joseph C. Winkler		Chief Executive Officer		$	520,000			$	552,000
J. Michael Mayer		Senior Vice President and Chief Financial Officer		$	290,000			$	305,000
James F. Maroney, III		Vice President, Secretary and General Counsel		$	240,000			$	254,400
Kenneth L. Nibling		Vice President — Human Resources and Administration		$	225,000			$	238,500
Robert L. Weisgarber		Vice President — Accounting and Controller		$	185,000			$	195,000

Item 6. Exhibits.

EXHIBIT INDEX

		Exhibit
		No.				Exhibit Title
		10.1*		—		Form of Executive Agreement
		10.2*		—		Amendment to Employment Agreement dated March 21, 2007 between Complete Production Services, Inc. and Mr. Joseph C. Winkler
		31.1*		—		Certification of Chief Executive Officer Pursuant to Rule 13a – 14 of the Securities and Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
		31.2*		—		Certification of Chief Financial Officer Pursuant to Rule 13a – 14 of the Securities and Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
		32.1*		—		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
		32.2*		—		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002