Superior Energy Services Posts Record Second Quarter 2007 Results
Diluted EPS Increases 77% from the Second Quarter of 2006 as 50% of Revenue Derived from Non-Gulf of Mexico Markets
HARVEY, La., July 30 /PRNewswire-FirstCall/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced record net income of $70.1 million and diluted earnings per share of $0.85 on revenues of $396.8 million, as compared to net income of $38.7 million, or $0.48 diluted earnings per share on revenues of $261.8 million for the second quarter of 2006. The results also compare favorably to the first quarter of 2007, in which net income was $64.0 million and diluted earnings per share was $0.78, on revenues of $362.9 million.
Factors impacting the quarter as compared to the most recent quarter include the following:
* Well Intervention revenues increased 8% from the first quarter of 2007
primarily due to increased hydraulic workover and snubbing activity as
well as higher coiled tubing, mechanical wireline and electric line
revenues.
* Rental Tool revenues increased 7% from the first quarter of 2007,
largely due to increased rentals of stabilizers, drill collars and
on-site accommodations.
* Marine revenues decreased 2% from the first quarter of 2007 due to
lower utilization for some of the Company's larger liftboats as a
result of increased shipyard days.
* Oil and Gas revenues increased 30% from the first quarter of 2007 due
mainly to higher oil and gas production.
* Revenues from non-Gulf of Mexico market areas were approximately
$199 million, or 50% of total revenue, as compared to approximately
$175 million, or 48% of total revenue in the first quarter of 2007 and
approximately $100 million, or 38% of total revenue in the second
quarter of 2006.
Terence Hall, Chairman and CEO of Superior, stated, "The diversity of our products and services combined with our expanding geographical exposure continue to be the drivers for our strong earnings growth these past several quarters. While activity increased in all of our geographic markets, the second quarter represents the first time in company history that at least 50% of our revenues were derived from market areas outside the Gulf of Mexico. Our operating units are committed to driving shareholder value by executing upon this integrated growth strategy."
For the six months ended June 30, 2007, revenues were $759.7 million and net income was $134.1 million or $1.63 diluted earnings per share, as compared to revenues of $484.2 million and net income of $70.9 million or $0.87 diluted earnings per share for the six months ended June 30, 2006.
Well Intervention Group Segment
Second quarter revenues for the Well Intervention Group were a record $190.5 million, an 8% increase from the first quarter of 2007 and a 71% increase from the second quarter of 2006. Income from operations was $42.1 million, or 22% of segment revenue as compared to $46.1 million, or 26% of segment revenue, in the first quarter of 2007. The primary drivers for the sequential growth in revenues were higher international activity for hydraulic workover and snubbing services and increased domestic land activity for coiled tubing, mechanical wireline and electric line services. Gross profit and operating margins sequentially were adversely impacted by changes in business mix due to the completion of certain well control and engineering projects.
Rental Tools Segment
Revenues for the Rental Tools Segment were a record $123.7 million, 7% higher than the first quarter of 2007 and 43% higher than the second quarter of 2006. Income from operations was $46.6 million, or 38% of segment revenue, up from $45.1 million, or 39% of segment revenue in the first quarter of 2007. Demand increased for rentals of stabilizers, drill collars, connecting iron and on-site accommodations. The operating margin was slightly lower due to business mix.
Marine Segment
Superior's marine revenues were $35.2 million, a 2% decrease from the first quarter of 2007 and a 4% increase from the second quarter of 2006. Income from operations was $15.2 million, or 43% of segment revenue, down from $16.5 million, or 46% of segment revenue in the first quarter of 2007. Average daily revenue in the second quarter was approximately $386,000, inclusive of subsistence revenue, as compared to $399,000 per day in the first quarter of 2007. Average fleet utilization was 77% as compared to 74% in the first quarter of 2007 and 83% in the second quarter of 2006. However, utilization for the 245-ft. class and 250-ft. class liftboats was lower due to additional shipyard days for inspections and maintenance.
Liftboat Average Dayrates and Utilization by Class Size
Three Months Ended June 30, 2007
($ actual)
Average
Class Liftboats Dayrate Utilization
145'-155' 11 $10,469 74.3%
160'-175' 6 14,482 70.5%
200' 5 20,166 91.7%
230'-245' 3 27,589 85.0%
250' 2 39,463 64.8%
Oil and Gas Segment
Oil and gas revenues were $48.2 million, a 30% increase from first quarter 2007 levels and a 43% increase over the second quarter of 2006. Income from operations was $11.9 million, or 25% of segment revenue, up from $5.1 million, or 14% of segment revenue, in the first quarter of 2007. Second quarter production was approximately 875,000 barrels of oil equivalent (boe), or about 9,600 boe per day, up from approximately 711,000 boe, or 7,900 boe per day in the first quarter of 2007. Production increased during the quarter due to a successful sidetrack drilling operation.
Conference Call Information
The Company will host a conference call at 10 a.m. Central Time on Tuesday, July 31, 2007. The call can be accessed from Superior's website at http://www.superiorenergy.com, or by telephone at 303-262-2175. For those who cannot listen to the live call, a telephonic replay will be available through Tuesday, August 7, 2007 and may be accessed by calling 303-590-3000 and using the pass code 11093868#. An archive of the webcast will be available after the call for a period of 60 days on http://www.superiorenergy.com.
Superior Energy Services, Inc. serves the drilling-related needs of oil and gas companies primarily through its rental tools segment and the production-related needs of oil and gas companies through its well intervention, rental tools and marine segments. The Company uses its production-related assets to enhance, maintain and extend existing production and, at the end of a property's economic life, plug and abandon wells and decommission platforms and structures. Superior also owns and operates mature oil and gas properties in the Gulf of Mexico.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which involve known and unknown risks, uncertainties and other factors. Among the factors that could cause actual results to differ materially are: volatility of the oil and gas industry, including the level of exploration, production and development activity; risks associated with the Company's rapid growth; changes in competitive factors and other material factors that are described from time to time in the Company's filings with the Securities and Exchange Commission. Actual events, circumstances, effects and results may be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Consequently, the forward-looking statements contained herein should not be regarded as representations by Superior or any other person that the projected outcomes can or will be achieved.
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Six Months Ended June 30, 2007 and 2006
(in thousands, except earnings per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Oilfield service and rental
revenues $348,589 $228,134 $674,484 $435,132
Oil and gas revenues 48,164 33,625 85,193 49,096
Total revenues 396,753 261,759 759,677 484,228
Cost of oilfield services and
rentals 162,973 101,286 305,402 194,541
Cost of oil and gas sales 18,833 18,702 36,891 32,907
Total cost of services,
rentals and sales 181,806 119,988 342,293 227,448
Depreciation, depletion,
amortization and accretion 45,242 25,727 84,086 48,642
General and administrative
expenses 53,824 40,088 104,683 77,739
Income from operations 115,881 75,956 228,615 130,399
Other income (expense):
Interest expense, net (8,463) (5,556) (16,741) (10,400)
Interest income 929 1,559 1,508 2,222
Loss on early extinguishment of
debt - (12,596) - (12,596)
Earnings (losses) from equity-
method investments 1,164 1,148 (3,842) 1,148
Income before income taxes 109,511 60,511 209,540 110,773
Income taxes 39,424 21,784 75,434 39,878
Net income $70,087 $38,727 $134,106 $70,895
Basic earnings per share $0.86 $0.49 $1.66 $0.89
Diluted earnings per share $0.85 $0.48 $1.63 $0.87
Weighted average common shares
used in computing earnings per
share:
Basic 81,047 79,798 80,841 79,719
Diluted 82,562 81,324 82,379 81,177
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2007 AND DECEMBER 31, 2006
(in thousands)
6/30/2007 12/31/2006
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $36,529 $38,970
Accounts receivable, net 346,200 303,800
Income taxes receivable - 2,630
Current portion of notes receivable 15,254 14,824
Prepaid insurance and other 47,139 59,563
Total current assets 445,122 419,787
Property, plant and equipment, net 958,915 804,228
Goodwill 482,798 444,687
Notes receivable 16,259 16,137
Equity-method investments 60,241 64,603
Intangible and other long-term
assets, net 134,683 125,036
Total assets $2,098,018 $1,874,478
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $75,456 $65,451
Accrued expenses 139,902 141,684
Income taxes payable 8,857 -
Current portion of decommissioning
liabilities 36,504 35,150
Current maturities of long-term
debt 810 810
Total current liabilities 261,529 243,095
Deferred income taxes 122,311 112,011
Decommissioning liabilities 86,787 87,046
Long-term debt 746,324 711,505
Other long-term liabilities 13,989 10,133
Total stockholders' equity 867,078 710,688
Total liabilities and
stockholders' equity $2,098,018 $1,874,478
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
SEGMENT HIGHLIGHTS
THREE MONTHS ENDED JUNE 30, 2007, MARCH 31, 2007 AND JUNE 30, 2006
(Unaudited)
(in thousands)
Three months ended,
June 30, March 31, June 30,
Revenue 2007 2007 2006
Well Intervention $190,542 $176,931 $111,675
Rental tools 123,736 116,180 86,593
Marine 35,162 35,866 33,951
Oil and Gas 48,164 37,029 33,625
Less: Oil and Gas Eliminations (2) (851) (3,082) (4,085)
Total Revenues $396,753 $362,924 $261,759
Three months ended,
Gross Profit (1) June 30, March 31, June 30,
2007 2007 2006
Well Intervention $81,093 $81,424 $48,320
Rental tools 84,718 80,664 58,370
Marine 19,805 21,377 20,158
Oil and Gas 29,331 18,972 14,923
Total Gross Profit $214,947 $202,437 $141,771
(1) Gross profit is calculated by subtracting cost of services from
revenue for each of the Company's four segments.
(2) Oil and gas eliminations represent products and services from the
company's segments provided to the Oil and Gas Segment.
FOR FURTHER INFORMATION CONTACT:
Terence Hall, CEO; Robert Taylor, CFO;
Greg Rosenstein, VP of Investor Relations,
504-362-4321
SOURCE Superior Energy Services, Inc.
/CONTACT: Terence Hall, CEO, or Robert Taylor, CFO, or Greg Rosenstein,
VP of Investor Relations, all of Superior Energy Services, Inc.,
+1-504-362-4321
/Web site: http://www.superiorenergy.com /
