Superior Energy Services Announces Third Quarter 2007 Results
Year-over-Year Earnings Growth Driven by Company's Diversification Strategy
HARVEY, La., Oct. 29 /PRNewswire-FirstCall/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $75.1 million and diluted earnings per share of $0.91 on revenue of $398.9 million, as compared to net income of $55.2 million, or $0.68 diluted earnings per share on revenue of $290.5 million for the third quarter of 2006.
The results include a non-recurring, after-tax gain of $4.8 million ($7.5 million pre-tax) from the sale of a business within the Rentals Tools segment that the Company does not consider to be core to its operations. The Company's effective income tax rate changed to 35.5% due to book and tax differences on the gain from the asset sale. The third quarter results reflect the cumulative income tax rate adjustment. Excluding the gain and applying the new effective income tax rate of 35.5%, adjusted net income was $69.2 million, or $0.84 diluted adjusted earnings per share.
Factors impacting the quarter as compared to the most recent quarter include the following:
- Numerous tropical systems in the Gulf of Mexico impacted results in the marine, well intervention and rental tools segments. The biggest impact from Gulf of Mexico, weather-related disruptions was to the Company's liftboat activity. Marine segment revenue decreased 25% as a result of significantly lower utilization.
- Approximately 54% of total revenue came from domestic land and international market areas. Increases in domestic land and international revenue more than offset a decrease in Gulf of Mexico revenue. Revenue from domestic land markets was approximately $137 million, a 13% increase over the second quarter of 2007, and revenue from international markets was approximately $78 million, a 2% increase over the most recent quarter. Gulf of Mexico revenue decreased 7% sequentially to approximately $183 million in the third quarter.
- Well Intervention revenue increased 6% from the second quarter of 2007 primarily due to increased well control activity as well as higher coiled tubing, electric line and fishing services activity.
- Revenue from the Rental Tools segment declined 4% from the second quarter, but was essentially unchanged when excluding the revenue contribution from the business that was sold in the third quarter.
- Oil and Gas revenue increased 7% from the second quarter of 2007 due to higher oil prices and increased oil and gas production.
Terence Hall, Chairman and CEO of Superior, stated, "We had a very solid quarter as we grew adjusted earnings per share by 24% over last year's third quarter. The impact of our geographic and product/service diversification was evident this quarter as numerous tropical weather systems disrupted Gulf of Mexico activity during the period and lower activity affected various competitors in several different market segments more than it did us. The third quarter represents the second consecutive quarter in the company's history that more than 50% of our revenues were derived from market areas outside the Gulf of Mexico. We remain committed to driving shareholder value by executing upon our integrated growth strategy and we intend to continue our geographic diversification strategy."
For the nine months ended September 30, 2007, revenue was $1,158.6 million and net income was $209.2 million or $2.53 diluted earnings per share, as compared to revenues of $774.7 million and net income of $126.1 million or $1.55 diluted earnings per share for the nine months ended September 30, 2006.
Well Intervention Group Segment
Third quarter revenue for the Well Intervention Group was a record $202.8 million, a 6% increase from the second quarter of 2007 and a 66% increase from the third quarter of 2006. Income from operations was $47.6 million, or 23% of segment revenue as compared to $42.1 million, or 22% of segment revenue, in the second quarter of 2007. The primary drivers for the sequential growth in revenue were increased well control activity both internationally and in the U.S. as well as increased domestic land revenue for coiled tubing and fishing services. Revenue from these activities more than offset Gulf of Mexico-based revenue decreases for some of the Company's production-related services. Gross profit and operating margins improved sequentially as a result of business mix.
Rental Tools Segment
Revenue for the Rental Tools Segment was $118.9 million, 4% lower than the second quarter of 2007 and 21% higher than the third quarter of 2006. Income from operations was a record $51.4 million, or 43% of segment revenue, up from $46.6 million, or 38% of segment revenue in the second quarter of 2007. Revenue increased in domestic land and international markets for drill pipe, stabilizers and specialty tubulars, which was offset by a decrease in drill pipe rentals in the Gulf of Mexico due to project delays.
Marine Segment
Superior's marine revenue was $26.3 million, a 25% decrease from the second quarter of 2007 and a 27% decrease from the third quarter of 2006. Income from operations was $8.1 million, or 31% of segment revenue, down from $15.2 million, or 43% of segment revenue in the second quarter of 2007. Average daily revenue in the third quarter was approximately $286,000, inclusive of subsistence revenue, as compared to $386,000 per day in the second quarter of 2007. Average fleet utilization was 62% as compared to 77% in the second quarter of 2007 and 78% in the third quarter of 2006.
Tropical weather systems in the Gulf of Mexico resulted in significant downtime for the Company's liftboat fleet. During the quarter, the liftboats incurred 198 idle days due to weather, as compared to 13 idle days from weather in the second quarter of 2007.
Liftboat activity has improved significantly in October with utilization at approximately 75% and average daily revenue exceeding $329,000 per day.
Liftboat Average Dayrates and Utilization by Class Size
Three Months Ended September 30, 2007
($ actual)
Average
Class Liftboats Dayrate Utilization
145'-155' 11 $9,681 55.4%
160'-175' 6 13,740 61.8%
200' 5 18,797 75.0%
230'-245' 3 28,186 67.8%
250' 2 34,539 56.0%
Oil and Gas Segment
Oil and gas revenue was $51.7 million, a 7% increase from second quarter 2007 levels and a 35% increase over the third quarter of 2006. Income from operations was $13.5 million, or 26% of segment revenue, up from $11.9 million, or 25% of segment revenue, in the second quarter of 2007. Third quarter production was approximately 899,000 barrels of oil equivalent (boe), or about 9,800 boe per day, up from approximately 875,000 boe, or 9,600 boe per day in the second quarter of 2007.
Conference Call Information
The Company will host a conference call at 10 a.m. Central Time on Tuesday, October 30, 2007. The call can be accessed from Superior's website at http://www.superiorenergy.com, or by telephone at 303-205-0066. For those who cannot listen to the live call, a telephonic replay will be available through Tuesday, November 6, 2007 and may be accessed by calling 303-590-3000 and using the pass code 11099200#. 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.
FOR FURTHER INFORMATION CONTACT:
Terence Hall, CEO; Robert Taylor, CFO;
Greg Rosenstein, VP of Investor Relations,
504-362-4321
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2007 and 2006
(in thousands, except earnings per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Oilfield service and rental
revenues $347,228 $252,309 $1,021,712 $687,441
Oil and gas revenues 51,696 38,208 136,889 87,304
Total revenues 398,924 290,517 1,158,601 774,745
Cost of oilfield services and
rentals 159,683 109,525 465,085 304,066
Cost of oil and gas sales 18,954 19,562 55,845 52,469
Total cost of services,
rentals and sales 178,637 129,087 520,930 356,535
Depreciation, depletion,
amortization and accretion 49,881 28,831 133,967 77,473
General and administrative
expenses 57,150 44,385 161,833 122,124
Gain on sale of business 7,483 - 7,483 -
Income from operations 120,739 88,214 349,354 218,613
Other income (expense):
Interest expense, net (8,197) (5,989) (24,938) (16,389)
Interest income 795 1,255 2,303 3,477
Loss on early extinguishment
of debt - - - (12,596)
Earnings (losses) from
equity-method investments 1,395 2,704 (2,447) 3,852
Income before income taxes 114,732 86,184 324,272 196,957
Income taxes 39,682 31,026 115,116 70,904
Net income $75,050 $55,158 $209,156 $126,053
Basic earnings per share $0.92 $0.69 $2.58 $1.58
Diluted earnings per share $0.91 $0.68 $2.53 $1.55
Weighted average common shares
used in computing earnings per
share:
Basic 81,470 79,824 81,053 79,754
Diluted 82,793 81,340 82,521 81,232
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2007 AND DECEMBER 31, 2006
(in thousands)
9/30/2007 12/31/2006
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $63,809 $38,970
Accounts receivable, net 346,081 303,800
Income taxes receivable - 2,630
Current portion of notes receivable 15,616 14,824
Prepaid insurance and other 58,348 59,563
Total current assets 483,854 419,787
Property, plant and equipment, net 1,032,764 804,228
Goodwill 475,068 444,687
Notes receivable 16,364 16,137
Equity-method investments 61,282 64,603
Intangible and other long-term
assets, net 131,754 125,036
Total assets $2,201,086 $1,874,478
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $72,817 $65,451
Accrued expenses 178,659 141,684
Income taxes payable 4,410 -
Current portion of decommissioning
liabilities 34,884 35,150
Current maturities of long-term
debt 810 810
Total current liabilities 291,580 243,095
Deferred income taxes 147,784 112,011
Decommissioning liabilities 88,791 87,046
Long-term debt 711,440 711,505
Other long-term liabilities 14,202 10,133
Total stockholders' equity 947,289 710,688
Total liabilities and
stockholders' equity $2,201,086 $1,874,478
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Segment Highlights
Three months ended September 30, 2007, June 30, 2007 and September 30, 2006
(Unaudited)
(in thousands)
Three months ended,
September 30, June 30, September 30,
Revenue 2007 2007 2006
Well Intervention $202,807 $190,542 $122,205
Rental tools 118,918 123,736 98,262
Marine 26,323 35,162 36,013
Oil and Gas 51,696 48,164 38,208
Less: Oil and Gas Eliminations (2) (820) (851) (4,171)
Total Revenues $398,924 $396,753 $290,517
Three months ended,
Gross Profit (1) September 30, June 30, September 30,
2007 2007 2006
Well Intervention $91,030 $81,093 $53,767
Rental tools 83,776 84,718 67,476
Marine 12,737 19,805 21,541
Oil and Gas 32,744 29,331 18,646
Total Gross Profit $220,287 $214,947 $161,430
Three months ended,
Income from Operations September 30, June 30, September 30,
2007 2007 2006
Well Intervention $47,611 $42,111 $28,828
Rental tools (3) 51,446 46,640 35,100
Marine 8,148 15,212 16,168
Oil and Gas 13,534 11,918 8,118
Total Income from Operations $120,739 $115,881 $88,214
(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.
(3) Income from operations in the Rental tools Segment includes the gain
on sale of business for the three months ended September 30, 2007.
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
(SPN)
