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Superior Energy Services, Inc. Posts Fourth Quarter 2007 Results

HARVEY, La., Feb. 26 /PRNewswire-FirstCall/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $72.0 million and diluted earnings per share of $0.88 on revenues of $413.9 million, as compared to net income of $62.2 million and $0.76 diluted earnings per share on revenues of $319.1 million for the fourth quarter of 2006.

For the year ended December 31, 2007, net income was a record $281.1 million and $3.41 diluted earnings per share on record revenues of $1,572.5 million, as compared to net income of $188.2 million and $2.32 diluted earnings per share on revenues of $1,093.8 million for the year ended December 31, 2006.

Factors impacting the fourth quarter results as compared to the most recent quarter (third quarter of 2007) are as follows:

  • Rental Tools Segment revenue increased 16% from the third quarter of 2007 primarily due to increased rentals of accommodations, drill pipe and stabilization tools in domestic land and offshore market areas.
  • Marine Segment revenue increased 16% from the third quarter of 2007 as utilization increased to 70% from 62%.
  • Oil and Gas Segment revenue increased 8% from the third quarter of 2007 due to increased oil and gas prices.
  • Well Intervention Segment revenue decreased 6% from the third quarter of 2007 primarily due to a decrease in revenue from the derrick barge construction and charter contracts as the project nears completion and seasonal declines in production-related engineering and service activity in domestic land and offshore market areas.
  • Revenue from domestic land and international markets represented approximately 52% of total revenue during the quarter as compared to 54% in the third quarter of 2007.
  • General and administrative expenses increased $9.0 million, to $66.3 million over the third quarter of 2007, with the majority of the increase resulting from increased incentive compensation and insurance expense.
  • Income from operations decreased to $116.5 million from $120.7 million as a result of a $7.5 million gain on the sale of a non-core rental tools business in the third quarter of 2007. Excluding this gain, income from operations would have increased $3.2 million.
  • The Company's earnings from its equity investment in Beryl Oil and Gas (formerly Coldren Resources) was negatively impacted by $2.4 million, which reflects the Company's share of Beryl's non-cash charges related to a reduction in the value of its oil and gas reserves ($2.1 million ) and a charge for the early extinguishment of debt ($0.3 million).
  • The Company's effective annual income tax rate decreased from 35.5% to 35.0%, resulting in an effective tax rate for the fourth quarter of 33.5%.

Terence Hall, Chairman and CEO of Superior, commented, "Fourth quarter activity gradually improved during the first two months for many of our products and services before our typical seasonal softness impacted business in December, especially in the Gulf of Mexico and domestic land markets. However, due to our product/service mix and geographic diversification, we were able to absorb activity declines in certain regions. For instance, increased rentals of accommodation units as a result of a project award in the Rocky Mountain market area offset weather issues and other seasonal factors that impacted demand for services and rentals in other domestic land markets.

"Overall, the fourth quarter caps off a record year for the Company in terms of financial performance. During the year, we exceeded several internal operational and safety goals; attracted additional management talent that we believe will advance our diversification strategy; and we integrated the Warrior Energy Services acquisition. We believe all of these accomplishments further position the Company to create value in the years to come," concluded Hall.

Well Intervention Group Segment

Fourth quarter revenue for the Well Intervention Group was $190.7 million, a 6% decrease from the third quarter of 2007 and a 43% increase from the fourth quarter of 2006. Income from operations was $37.0 million, or 19% of segment revenue as compared to $47.6 million, or 23% of segment revenue, in the third quarter of 2007. Lower revenue from the derrick barge construction contract accounted for about 60% of the segment's revenue decrease. The remainder of the decrease was due to lower production-related activity for engineering and certain services in both domestic land and offshore market areas. The segment's gross profit margin increased sequentially due to business mix, but the sequential operating margin decreased as a result of higher depreciation and general and administrative expenses.

Rental Tools Segment

Revenue for the Rental Tools segment was $137.5 million, 16% higher than the third quarter of 2007 and a 27% increase from the fourth quarter of 2006. Income from operations was $46.4 million, or 34% of segment revenue, down from $51.4 million, or 43% of segment revenue in the third quarter of 2007. Higher revenue is due to increased accommodation rentals in the Rocky Mountains market area, increased drill pipe rentals in the Gulf of Mexico and North Sea, and increased rentals of stabilizers in Mexico and the United Kingdom. Gross profit and operating margins were lower sequentially due to a higher mix of accommodations revenue, increased costs for upgrades at the Company's stabilizer facilities, and a decrease in non-rental sales.

Marine Segment

Superior's marine revenue was $30.5 million, a 16% increase over the third quarter of 2007 and a 24% decrease from the fourth quarter of 2006. Income from operations was $8.2 million, or 27% of segment revenue, up from $8.1 million, or 31% of segment revenue in the third quarter of 2007. Average daily revenue in the fourth quarter was approximately $332,000, inclusive of subsistence revenue, as compared to $286,000 per day in the third quarter of 2007. Average fleet utilization was 70% as compared to 62% in the third quarter of 2007 and 80% in the fourth quarter of 2006.



           Liftboat Average Dayrates and Utilization by Class Size
                     Three Months Ended December 31, 2007
                                  ($ actual)

                                    Average
               Class    Liftboats   Dayrate   Utilization
             145'-155'     11       $9,328       58.5%
             160'-175'      6       12,036       74.3%
             200'           5       16,014       70.0%
             230'-245'      3       25,611       84.4%
             250'           2       38,032       94.0%



    Oil and Gas Segment

Oil and gas revenue was $55.8 million, an 8% increase over third quarter 2007 levels and a 38% increase over the fourth quarter of 2006. Income from operations was a record $24.9 million, or 45% of segment revenue, up from $13.5 million, or 26% of segment revenue, in the third quarter of 2007. A 13% increase in the average realized price over the third quarter of 2007 more than offset a 9% decrease in total oil and gas production. Fourth quarter production was approximately 821,000 barrels of oil equivalent (boe), or about 8,900 boe per day, down from approximately 899,000 boe, or 9,800 boe per day in the third quarter of 2007. Production at South Pass 60, the Company's largest producing field, was shut-in for part of the quarter due to equipment and facility upgrades.

This segment's gross profit and operating margins increased significantly on a sequential and year-over-year basis as a result of lower lease operating expenses, including insurance expense.

Conference Call Information

The Company will host a conference call at 10 a.m. Central Time on Wednesday, February 27, 2008. The call can be accessed from Superior's website at http://www.superiorenergy.com, or by telephone at 303-262-2190. For those who cannot listen to the live call, a telephonic replay will be available through Wednesday, March 5, 2008 and may be accessed by calling 303-590-3000 and using the pass code 11108134#. 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. is a leading provider of specialized oilfield services and equipment focused on serving the production-related needs of oil and gas companies primarily in the Gulf of Mexico and the drilling-related needs of oil and gas companies in the Gulf of Mexico and select international market areas. The Company uses its production-related assets to enhance, maintain and extend production and, at the end of an offshore property's economic life, plug and decommission wells. 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 Twelve Months Ended December 31, 2007 and 2006
              (in thousands, except earnings per share amounts)
                         (unaudited, except as noted)

                                    Three Months Ended   Twelve Months Ended
                                       December 31,         December 31,
                                      2007      2006       2007       2006
                                                                    (audited)
    Oilfield service and rental
     revenues                       $358,055  $278,698  $1,379,767   $966,139
    Oil and gas revenues              55,811    40,378     192,700    127,682
      Total revenues                 413,866   319,076   1,572,467  1,093,821

    Cost of oilfield services and
     rentals                         166,460   123,411     631,545    427,477
    Cost of oil and gas sales         10,735    17,559      66,580     70,028
      Total cost of services, rentals
       and sales                     177,195   140,970     698,125    497,505

    Depreciation, depletion,
     amortization and accretion       53,874    33,538     187,841    111,011
    General and administrative
     expenses                         66,313    46,292     228,146    168,416
    Gain on sale of business               -         -       7,483          -

    Income from operations           116,484    98,276     465,838    316,889

    Other income (expense):
      Interest expense, net           (8,319)   (6,561)    (33,257)   (22,950)
      Interest income                    548     1,135       2,851      4,612
      Loss on early extinguishment
       of debt                             -         -           -    (12,596)
      Earnings (losses) from
       equity-method investments, net   (493)    2,039      (2,940)     5,891

    Income before income taxes       108,220    94,889     432,492    291,846

    Income taxes                      36,256    32,701     151,372    103,605

    Net income                       $71,964   $62,188    $281,120   $188,241


    Basic earnings per share           $0.89     $0.78       $3.47      $2.36

    Diluted earnings per share         $0.88     $0.76       $3.41      $2.32

    Weighted average common shares
     used in computing earnings per
     share:
        Basic                         80,735    79,941      80,973     79,801
        Diluted                       81,998    81,460      82,389     81,289



               SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                   DECEMBER 31, 2007 AND DECEMBER 31, 2006
                                (in thousands)

                                                12/31/2007        12/31/2006
                                                (unaudited)        (audited)
    ASSETS

    Current assets:
      Cash and cash equivalents                    $51,649           $38,970
      Accounts receivable, net                     343,334           303,800
      Income taxes receivable                            -             2,630
      Current portion of notes receivable           15,584            14,824
      Prepaid expenses                              19,641            17,782
      Other assets                                  40,797            41,781

            Total current assets                   471,005           419,787

    Property, plant and equipment, net           1,086,408           804,228
    Goodwill, net                                  484,594           444,687
    Notes receivable                                16,732            16,137
    Equity-method investments                       56,961            64,603
    Intangible and other long-term
     assets, net                                   141,549           125,036

            Total assets                        $2,257,249        $1,874,478

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Accounts payable                             $69,510           $65,451
      Accrued expenses                             177,779           137,164
      Income taxes payable                           7,520                 -
      Current portion of decommissioning
       liabilities                                  36,812            35,150
      Current maturities of long-term debt             810               810

            Total current liabilities              292,431           238,575

    Deferred income taxes                          163,338           112,011
    Decommissioning liabilities                     88,158            87,046
    Long-term debt                                 711,151           711,505
    Other long-term liabilities                     21,492            14,653

    Total stockholders' equity                     980,679           710,688

            Total liabilities and
             stockholders' equity               $2,257,249        $1,874,478



               Superior Energy Services, Inc. and Subsidiaries
                              Segment Highlights
Three months ended December 31, 2007, September 30, 2007 and December 31, 2006
                                 (Unaudited)
                                (in thousands)

                                                 Three months ended,
                                       December 31, September 30, December 31,
    Revenue                                2007         2007          2006

    Well Intervention                     $190,735     $202,807    $133,157

    Rental tools                           137,456      118,918     108,526

    Marine                                  30,547       26,323      39,944

    Oil and Gas                             55,811       51,696      40,378

      Less: Oil and Gas Eliminations
       (2)                                    (683)        (820)     (2,929)

    Total Revenues                        $413,866     $398,924    $319,076

                                                 Three months ended,
    Gross Profit (1)                   December 31, September 30, December 31,
                                           2007         2007         2006

    Well Intervention                      $87,647      $91,032     $55,319

    Rental tools                            90,401       83,776      75,935

    Marine                                  13,547       12,737      24,033

    Oil and Gas                             45,076       32,742      22,819

    Total Gross Profit                    $236,671     $220,287    $178,106

                                                 Three months ended,
    Income from Operations             December 31, September 30, December 31,
                                           2007         2007          2006

    Well Intervention                      $36,964      $47,613     $28,692

    Rental tools (3)                        46,396       51,446      41,715

    Marine                                   8,192        8,148      19,244

    Oil and Gas                             24,932       13,532       8,625

    Total Income from Operations          $116,484     $120,739     $98,276


    (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 a
        $7.5 million 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)