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)
