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Superior Energy Services Announces First Quarter 2008 Results

HARVEY, La., May 1 /PRNewswire-FirstCall/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $102.1 million and diluted earnings per share of $1.24 on revenues of $441.4 million, as compared to net income of $64.0 million, or $0.78 diluted earnings per share on revenues of $362.9 million for the first quarter of 2007.

The results include non-recurring gains and expenses primarily associated with the sale of 75% of the Company's interest in SPN Resources, which closed on March 14, 2008. These include a $37.9 million pre-tax gain on sale of businesses, $4.5 million in additional general and administrative expenses and a $9.8 million decrease in depreciation and depletion due to assets being held for sale. Excluding these non-recurring items, adjusted net income was $74.5 million, or $0.91 diluted earnings per share.

Operating factors impacting the quarter as compared to the most recent quarter (fourth quarter 2007) include the following:

  • Well Intervention revenue increased 23% due to increases in coiled tubing and hydraulic workover / snubbing services as well as commencing work on the previously announced $750 million wreck removal contract.
  • Rental Tools revenue decreased 5% largely due to decreased revenue resulting from a sale of accommodations in connection with a large-scale camp project that was substantially completed last quarter.
  • Marine revenues decreased 24% due to lower utilization and dayrates as a result of seasonal factors and poor weather in the Gulf of Mexico.
  • Oil and Gas revenues decreased 1% due to the SPN Resources sale. Equity income of $4.0 million in the first quarter of 2008 reflects the Company's remaining interest in SPN Resources as of March 14, 2008 in addition to the Company's ongoing 40% interest in Beryl Oil and Gas.
  • Revenue from domestic land and international market areas was approximately $215 million as compared to approximately $214 million in the fourth quarter of 2007.

Terence Hall, Chairman and CEO of Superior, stated, "Overall, our first quarter operating performance was stronger than the most recent quarter and better than our previous guidance. Several of our business units performed better than anticipated and more than offset seasonal weakness elsewhere. As we discussed on our most recent quarterly conference call, we anticipated seasonal weakness in the shallow water Gulf of Mexico for liftboats. Clearly, we are pleased that we continued our track record of consistently growing earnings from operations. Our ability to do this in a choppy market environment is a major benefit of our business mix."

Well Intervention Group Segment

First quarter revenue for the Well Intervention Group was $234.1 million, a 23% increase from the fourth quarter of 2007 and a 32% increase from the first quarter of 2007. Income from operations was $50.8 million, or 22% of segment revenue as compared to $37.0 million, or 19% of segment revenue, in the fourth quarter of 2007. Coiled tubing activity increased in domestic land market areas and hydraulic workover and snubbing activity increased in Latin America and the Middle East. Project management services increased as the Company commenced field operations associated with the previously announced wreck removal project. The gross profit margin decreased slightly due to lower high pressure well work and fewer well control projects. However, the segment operating margin increased as operating expenses were essentially unchanged.

Rental Tools Segment

Revenue for the Rental Tools Segment was $130.3 million, 5% lower than the fourth quarter of 2007 and 12% higher than the first quarter of 2007. Income from operations was $45.8 million, or 35% of segment revenue, down from $46.4 million, or 34% of segment revenue in the fourth quarter of 2007. Most of the sequential revenue decrease is due to the substantial completion in the last quarter of the sale of accommodations for a large-scale project. Demand increased for rentals of stabilizers worldwide, drill pipe in the Gulf of Mexico, and accommodations in the Asia-Pacific region. These were offset by a decrease in drill pipe rentals in the North Sea and a decrease in production-related rental tools in the shallow water Gulf of Mexico. Operating margins increased sequentially as a higher percentage of revenue was generated from drilling-related rental tools such as stabilizers, drill pipe and specialty tubulars.

Marine Segment

Superior's Marine revenue was $23.1 million, a 24% decrease from the fourth quarter of 2007 and a 36% decrease from the first quarter of 2007. Income from operations was $2.6 million, or 11% of segment revenue, down from $8.2 million, or 27% of segment revenue in the fourth quarter of 2007. Average daily revenue in the first quarter was approximately $254,000, inclusive of subsistence revenue, as compared to $332,000 per day in the fourth quarter of 2007. The lower daily revenue was due to lower utilization primarily as a result of seasonal factors in the Gulf of Mexico, including a higher than normal amount of idle days due to poor weather conditions. The biggest utilization changes occurred in the smaller liftboat classes (145-ft. to 175-ft. class liftboats).

    The Company took delivery of a 175-ft. class liftboat during the first
quarter.



           Liftboat Average Dayrates and Utilization by Class Size
                      Three Months Ended March 31, 2008
                                  ($ actual)

                                   Average
      Class         Liftboats      Dayrate       Utilization
    145'-155'           11          $8,266          36.5%
    160'-175'            7          12,051          50.7%
    200'                 5          15,629          56.5%
    230'-245'            3          25,302          48.7%
    250'                 2          32,901          94.0%

Oil and Gas Segment

Oil and gas revenue was $55.1 million, a 1% decrease from fourth quarter 2007 levels and a 49% increase over the first quarter of 2007. Income from operations, excluding non-recurring gains and expenses related to the sale of 75% of SPN Resources, was $25.2 million, or 46% of segment revenue, up from $24.9 million, or 45% of segment revenue, in the fourth quarter of 2007. The financial performance of this segment for the first quarter of 2008 reflects 2 1/2 months of SPN Resources' results as 75% of interest in the business was sold on March 14, 2008.

Conference Call Information

The Company will host a conference call at 10 a.m. Central Time on Friday, May 2, 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 Friday, May 9, 2008 and may be accessed by calling 303-590-3000 and using the pass code 11112708#. 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 and production needs of oil and gas companies worldwide through its brand name rental tools and its integrated well intervention services and tools, supported by an engineering staff who plan and design solutions for customers. Offshore projects are delivered by the Company's fleet of modern marine assets.

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.



                 SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                   Three Months Ended March 31, 2008 and 2007
                (in thousands, except earnings per share amounts)
                                   (unaudited)

                                                       Three Months Ended
                                                           March 31,
                                                    2008              2007

    Oilfield service and rental revenues          $386,319          $325,895
    Oil and gas revenues                            55,072            37,029
      Total revenues                               441,391           362,924

    Cost of oilfield services and rentals          191,132           142,429
    Cost of oil and gas sales                       12,986            18,058
      Total cost of services, rentals and
       sales                                       204,118           160,487

    Depreciation, depletion, amortization
     and accretion                                  41,879            38,844
    General and administrative expenses             69,606            50,859
    Gain on sale of business                        37,888                 -

    Income from operations                         163,676           112,734

    Other income (expense):
      Interest expense, net                         (8,116)           (7,699)
      Earnings (losses) from equity-method
       investments, net                              3,957            (5,006)

    Income before income taxes                     159,517           100,029

    Income taxes                                    57,426            36,010

    Net income                                    $102,091           $64,019


    Basic earnings per share                         $1.26             $0.79

    Diluted earnings per share                       $1.24             $0.78

    Weighted average common shares used
      in computing earnings per share:
        Basic                                       80,776            80,632
        Diluted                                     82,086            82,156



                 SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2008 AND DECEMBER 31, 2007
                                 (in thousands)

                                                 3/31/2008         12/31/2007
                                                (unaudited)        (audited)

    ASSETS

    Current assets:
      Cash and cash equivalents                   $231,841           $51,649
      Accounts receivable, net                     326,224           343,334
      Current portion of notes receivable                -            15,584
      Prepaid expenses                              22,967            19,641
      Other current assets                          33,143            40,797

            Total current assets                   614,175           471,005

    Property, plant and equipment, net             924,218         1,086,408
    Goodwill, net                                  485,010           484,594
    Notes receivable                                     -            16,732
    Equity-method investments                       99,185            56,961
    Intangible and other long-term
     assets, net                                   141,192           141,549

            Total assets                        $2,263,780        $2,257,249

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Accounts payable                             $67,282           $69,510
      Accrued expenses                             171,695           177,779
      Income taxes payable                          60,194             7,520
      Current portion of decommissioning
       liabilities                                       -            36,812
      Current maturities of long-term
       debt                                            810               810

            Total current liabilities              299,981           292,431

    Deferred income taxes                          151,983           163,338
    Decommissioning liabilities                          -            88,158
    Long-term debt                                 711,271           711,151
    Other long-term liabilities                     24,422            21,492

    Total stockholders' equity                   1,076,123           980,679

            Total liabilities and
             stockholders' equity               $2,263,780        $2,257,249



               Superior Energy Services, Inc. and Subsidiaries
                              Segment Highlights
   Three months ended March 31, 2008, December 31, 2007 and March 31, 2007
                                 (Unaudited)
                                (in thousands)

                                                 Three months ended,
                                            March 31,  December 31, March 31,
    Revenue                                   2008        2007        2007
    Well Intervention                       $234,115    $190,735    $176,931
    Rental Tools                             130,327     137,456     116,180
    Marine                                    23,089      30,547      35,866
    Oil and Gas                               55,072      55,811      37,029
      Less: Oil and Gas Eliminations (2)      (1,212)       (683)     (3,082)
    Total Revenues                          $441,391    $413,866    $362,924


                                                 Three months ended,
                                            March 31,  December 31, March 31,
    Gross Profit (1)                          2008        2007        2007
    Well Intervention                       $101,716     $87,647     $81,425
    Rental Tools                              86,227      90,401      80,664
    Marine                                     7,244      13,547      21,377
    Oil and Gas                               42,086      45,076      18,971
    Total Gross Profit                      $237,273    $236,671    $202,437


                                                 Three months ended,
                                            March 31,  December 31, March 31,
    Income from Operations                    2008        2007        2007
    Well Intervention                        $50,778     $36,964     $46,066
    Rental Tools (3)                          45,757      46,396      45,076
    Marine                                     2,578       8,192      16,461
    Oil and Gas (4)                           64,563      24,932       5,131
    Total Income from Operations            $163,676    $116,484    $112,734

    (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 for the three
        months ended March 31, 2008 includes a gain on sale of business of
        $3.3 million.
    (4) Income from operations in the Oil and Gas Segment for the three months
        ended March 31, 2008 includes a gain on sale of business of
        $34.1 million, non-recurring incremental general and administrative
        expenses of $4.5 million, and a reduction of depreciation, depletion,
        and amortization of $9.7 million related to assets held for sale.



     FOR FURTHER INFORMATION CONTACT:
     Terence Hall, CEO; Robert Taylor, CFO;
     Greg Rosenstein, VP of Investor Relations,
     504-362-4321

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)