|Superior Energy Services Announces Third Quarter 2008 Results|
Record Performance Despite Hurricane Interruptions
NEW ORLEANS, Oct. 30 /PRNewswire-FirstCall/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $99.9 million and diluted earnings per share of $1.22 on record revenue of $490.3 million, as compared with net income of $75.1 million, or $0.91 diluted earnings per share on revenue of $398.9 million for the third quarter of 2007. Diluted earnings per share and revenue increased 34% and 23%, respectively, as compared with the third quarter of 2007.
Excluding pre-tax non-cash, unrealized earnings of $19.2 million ($12.3 million after-tax) from hedging contracts impacting the Company's earnings from equity-method investments, adjusted net income for the third quarter of 2008 was $87.6 million, or $1.07 diluted earnings per share.
Factors impacting the quarter include the following:
For the nine months ended September 30, 2008, revenue was $1,389.3 million and net income was $275.9 million or $3.36 diluted earnings per share, as compared with revenues of $1,158.6 million and net income of $209.2 million or $2.53 diluted earnings per share for the nine months ended September 30, 2007.
Terence Hall, Chairman and CEO of Superior, stated, "Our diversification strategy continued to benefit us as we were able to record outstanding financial results despite significant business disruptions in the Gulf of Mexico because of hurricanes. From an operational standpoint, the first two months of the quarter were the best in Company history. In addition, strong activity levels continued in the domestic land and international market areas in September while our Gulf of Mexico businesses recovered.
"The Company is well positioned to manage through these volatile times as a result of our strong balance sheet, our focus on increasing geographic diversification, ongoing work from the wreck removal project, and anticipated new work for the well intervention and marine segments resulting from the recent hurricanes."
Well Intervention Group Segment
Third quarter revenue for the Well Intervention Group was a record $319.8 million, a 58% increase year-over-year and an 8% increase sequentially. Income from operations was $90.3 million, or 28% of segment revenue as compared with $47.6 million, or 23% of segment revenue, in the third quarter of 2007, and $78.2 million, or 26% of segment revenue, in the second quarter of 2008. Engineering and project management services increased over the second quarter of 2008 as a result of the wreck removal project. Other sequential revenue increases included coiled tubing in both the Gulf of Mexico and domestic land markets; hydraulic workover and snubbing in the Gulf of Mexico; and cased hole wireline and well control services in the domestic land market areas. These offset decreases in international revenue resulting primarily from the mobilization of the Company's derrick barge from the Asia Pacific market area to the Gulf of Mexico. Income from operations as a percentage of revenue ("operating margin") increased due to volume increases for several of our services.
Rental Tools Segment
Quarterly revenue for the Rental Tools Segment was $136.6 million, 15% higher year-over-year and 1% over the most recent quarter. Income from operations was $43.6 million, or 32% of segment revenue, as compared with $51.4 million, or 43% of segment revenue in the third quarter of 2007, and $47.5 million, or 35% of segment revenue in the second quarter of 2008. Income from operations in the third quarter of 2007 included a $7.5 million gain on sale of business. Sequentially, demand grew for accommodations and stabilization equipment in the Gulf of Mexico and domestic land market areas; drill pipe and specialty tubulars in international market areas; and connecting iron and handling tools in the Gulf of Mexico. This was partially offset by decreases in drill pipe rentals and on-site bolting services in the Gulf of Mexico due to hurricanes and a decrease in rentals of stabilization equipment in certain international market areas. The decrease in operating margin sequentially and year-over-year is due to business mix, highlighted by lower rentals of higher margin drill pipe and specialty tubulars in the Gulf of Mexico.
Superior's Marine Segment quarterly revenue was $33.9 million, a 29% increase year-over-year and a 30% increase from the most recent quarter. Income from operations was $6.5 million, or 19% of segment revenue, compared with $8.1 million, or 31% of segment revenue for the third quarter of 2007, and $1.4 million, or 6% of segment revenue in the second quarter of 2008. Average daily revenue in the third quarter was approximately $368,000, inclusive of subsistence revenue, as compared with $286,000 per day in both the third quarter of 2007 and the second quarter of 2008. Average fleet utilization was 81% as compared with 62% in the third quarter of 2007 and 57% in the second quarter of 2008. The operating margin significantly increased sequentially as a result of higher utilization.
Liftboat Average Dayrates and Utilization by Class Size Three Months Ended September 30, 2008 ($ actual) Class Liftboats Average Dayrate Utilization 145'-155' 11 $7,920 78.3% 160'-175' 8 10,640 81.3% 200' 5 15,857 90.9% 230'-245' 3 25,386 85.5% 250' 2 35,239 67.9%
The $23.2 million income from equity-method investments in the third quarter of 2008 includes $19.2 million, pre-tax, of the Company's share of non-cash unrealized earnings associated with mark-to-market changes in the value of outstanding hedging contracts put in place by SPN Resources, LLC. The mark-to-market changes were due to significant decreases in natural gas and oil prices, the volatility of which makes these changes unpredictable. Prior to the hurricanes, production at SPN Resources, net to the Company's interest, was approximately 2,200 boe per day and production at Beryl Oil & Gas, net to the Company's interest, was approximately 3,600 boe per day. Approximately 50% of production remains shut-in. Restoration of full production is expected by year end.
Conference Call Information
The Company will host a conference call at 11 a.m. Central Time on Friday, October 31, 2008. The call can be accessed from Superior's website at http://www.superiorenergy.com, or by telephone at 303-205-0033. For those who cannot listen to the live call, a telephonic replay will be available through Friday, November 7, 2008 and may be accessed by calling 303-590-3000 and using the pass code 11120954#. An archive of the webcast will be available after the call for a period of 60 days at 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.
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, 2008 and 2007 (in thousands, except earnings per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Oilfield service and rental revenues $490,282 $347,228 $1,334,256 $1,021,712 Oil and gas revenues - 51,696 55,072 136,889 Total revenues 490,282 398,924 1,389,328 1,158,601 Cost of oilfield services and rentals 236,610 159,683 649,839 465,085 Cost of oil and gas sales - 18,954 12,986 55,845 Total cost of services, rentals and sales 236,610 178,637 662,825 520,930 Depreciation, depletion, amortization and accretion 44,842 49,881 128,675 133,967 General and administrative expenses 68,379 57,150 204,411 161,833 Gain on sale of businesses - 7,483 40,946 7,483 Income from operations 140,451 120,739 434,363 349,354 Other income (expense): Interest expense, net (7,593) (7,402) (22,665) (22,635) Earnings (losses) from equity-method investments, net 23,167 1,395 19,359 (2,447) Income before income taxes 156,025 114,732 431,057 324,272 Income taxes 56,169 39,682 155,181 115,116 Net income $99,856 $75,050 $275,876 $209,156 Basic earnings per share $1.24 $0.92 $3.42 $2.58 Diluted earnings per share $1.22 $0.91 $3.36 $2.53 Weighted average common shares used in computing earnings per share: Basic 80,538 81,470 80,691 81,053 Diluted 81,845 82,793 82,041 82,521 SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2008 AND DECEMBER 31, 2007 (in thousands) 9/30/2008 12/31/2007 (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $128,169 $51,649 Accounts receivable, net 383,813 343,334 Current portion of notes receivable - 15,584 Prepaid expenses 19,888 19,641 Other current assets 110,403 40,797 Total current assets 642,273 471,005 Property, plant and equipment, net 1,055,310 1,086,408 Goodwill, net 483,266 484,594 Notes receivable - 16,732 Equity-method investments 108,153 56,961 Intangible and other long-term assets, net 133,880 141,549 Total assets $2,422,882 $2,257,249 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $78,394 $69,510 Accrued expenses 158,489 177,779 Income taxes payable 50,592 7,520 Current portion of decommissioning liabilities - 36,812 Current maturities of long-term debt 810 810 Total current liabilities 288,285 292,431 Deferred income taxes 198,584 163,338 Decommissioning liabilities - 88,158 Long-term debt 711,110 711,151 Other long-term liabilities 26,578 21,492 Total stockholders' equity 1,198,325 980,679 Total liabilities and stockholders' equity $2,422,882 $2,257,249 SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES Segment Highlights
Three months ended September 30, 2008, June 30, 2008 and September 30, 2007
(Unaudited) (in thousands) Three months ended, September 30, June 30, September 30, Revenue 2008 2008 2007 Well Intervention $319,798 $296,891 $202,807 Rental Tools 136,600 134,773 118,918 Marine 33,884 25,991 26,323 Oil and Gas - - 51,696 Less: Oil and Gas Eliminations (2) - - (820) Total Revenues $490,282 $457,655 $398,924 Three months ended, Gross Profit (1) September 30, June 30, September 30, 2008 2008 2007 Well Intervention $150,895 $135,410 $91,032 Rental Tools 90,178 93,438 83,776 Marine 12,599 6,710 12,737 Oil and Gas - - 32,742 Total Gross Profit $253,672 $235,558 $220,287 Three months ended, Income from Operations September 30, June 30, September 30, 2008 2008 2007 Well Intervention $90,349 $78,202 $47,613 Rental Tools (3) 43,628 47,531 51,446 Marine 6,474 1,445 8,148 Oil and Gas - 3,058 13,532 Total Income from Operations $140,451 $130,236 $120,739 (1) Gross profit is calculated by subtracting cost of services (exclusive of depreciation, depletion, amortization and accretion) from revenue for each of the Company's 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 September 30, 2007 includes a gain on sale of business of $7.5 million.
SOURCE Superior Energy Services, Inc.