|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:
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.
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.