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)
