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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)