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Superior Energy Services, Inc. Announces First Quarter 2009 Results

NEW ORLEANS, April 28 /PRNewswire-FirstCall/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $56.8 million and diluted earnings per share of $0.72 on revenue of $437.1 million for the first quarter of 2009, as compared with net income of $99.5 million, or $1.21 diluted earnings per share on revenue of $441.4 million for the first quarter of 2008. Results for the first quarter of 2008 included revenue of $55.1 million and $0.51 in diluted earnings per share attributable to the operations of SPN Resources and the gain associated with the sale of 75% of the Company's interest in that entity in March 2008.

Factors impacting the first quarter include the following:

  • Well Intervention Segment revenue of $288.1 million increased 23% over the first quarter of 2008 ("year-over-year") and decreased 5% as compared with the fourth quarter of 2008 ("sequential"). The sequential decrease was due to lower demand for production-related services, primarily in domestic land market areas.
  • Rental Tools Segment revenue was $125.9 million, a 3% decrease year-over-year and 16% decrease sequentially, primarily due to decreased rentals of accommodations and stabilization equipment.
  • Marine Segment revenue of $23.1 million was unchanged year-over-year and decreased 39% sequentially. The sequential decrease is primarily due to lower utilization.
  • Earnings from equity-method investments of $2.3 million include unrealized earnings of $3.2 million from hedging contracts.
  • The Company's interest expense includes a non-cash component of $4.4 million and $4.1 million for the first quarter of 2009 and first quarter of 2008, respectively. In January 2009, the Company adopted Financial Accounting Standards Board Staff Position APB 14-1 which changed the accounting for the Company's 1.5% senior exchangeable notes.
  • Gulf of Mexico revenue was approximately $261 million, revenue from domestic land market areas was approximately $103 million and international revenue was approximately $73 million, as compared with fourth quarter 2008 revenue of approximately $270 million from the Gulf of Mexico, $141 million from domestic land market areas and $81 million from the international market areas.

Terence Hall, Chairman and CEO of Superior, commented, "While year-over-year revenues were virtually unchanged, sequential declines were due to the combination of the rapid and significant decrease in activity in domestic markets and typical seasonal factors in the Gulf of Mexico. While we do not have the visibility to predict the duration or depth of the current industry down cycle, we believe our diversified business mix and production-oriented focus on well intervention services should continue to lessen the impact associated with the overall decline in drilling and other industry activity as it did in the first quarter."

Well Intervention Segment

First quarter revenue for the Well Intervention Segment was $288.1 million, a 23% increase year-over-year and a 5% decrease sequentially. Income from operations was $61.7 million, or 21% of segment revenue as compared with $50.8 million, or 22% of segment revenue, in the first quarter of 2008, and $67.5 million, or 22% of segment revenue, in the fourth quarter of 2008. The domestic land markets experienced the largest activity declines, with services such as coiled tubing, cased hole wireline and well control services showing the biggest decreases in utilization and pricing. In the Gulf of Mexico, activity declines in hydraulic workover, snubbing and cased hole wireline were more than offset by increased activity for marine engineering and project management services in the shallow water Gulf of Mexico related to the ongoing platform removal project.

Rental Tools Segment

Quarterly revenue for the Rental Tools Segment was $125.9 million, 3% lower year-over-year and 16% lower sequentially. Income from operations was $35.3 million, or 28% of segment revenue, as compared with $45.8 million, or 35% of segment revenue in the first quarter of 2008, and $50.7 million, or 34% of segment revenue in the fourth quarter of 2008. Sequentially, demand decreased for accommodations and stabilization equipment in the domestic land markets. International rentals decreased primarily due to lower demand for drill pipe in the North Sea and Latin America.

Marine Segment

Marine Segment revenue was $23.1 million, unchanged year-over-year and a 39% decrease sequentially. Income from operations was $2.8 million, or 12% of segment revenue, up from $2.6 million, or 11% of segment revenue in the first quarter of 2008, and down from $13.1 million, or 34% of segment revenue in the fourth quarter of 2008. Average daily revenue in the first quarter was approximately $257,000, inclusive of subsistence revenue, as compared with approximately $254,000 per day in the first quarter of 2008 and approximately $415,000 in the fourth quarter of 2008. Average fleet utilization was 48% as compared with 49% in the first quarter of 2008 and 76% in the fourth quarter of 2008. Income from operations as a percentage of revenue significantly decreased from the fourth quarter of 2008 as a result of lower dayrates and lower utilization across most liftboat classes due to seasonal factors. In addition, the 230-ft. class Superior Champion was idle for the entire quarter due to mandatory U.S. Coast Guard inspections and major upgrades.

During the second quarter, the 245-ft. class Superior Gale will perform an 80-day project in the Bay of Campeche, marking the first time in Company history that one of the Company's liftboats will work in Mexican waters.


            Liftboat Average Dayrates and Utilization by Class Size
                        Three Months Ended March 31, 2009
                                   ($ actual)

                                          Average
                        Class   Liftboats Dayrate Utilization
                        -----   --------- ------- -----------
                    145'-155'         10  $8,468        36.1%
                    160'-175'          8  10,931        48.8%
                    200'               5  17,396        54.9%
                    230'-245'          3  27,531        47.0%
                    250'               2  38,090        88.9%

Equity-Method Investments

The $2.3 million in earnings from equity-method investments in the first quarter of 2009 includes $3.2 million of the Company's share of non-cash unrealized earnings associated with mark-to-market changes in the value of outstanding hedging contracts. The mark-to-market changes were due to changes in natural gas and oil prices, the volatility of which makes these changes unpredictable. First quarter production was approximately 4,500 barrels of oil equivalent ("boe") per day, net to the Company's interest, as compared with fourth quarter production of approximately 3,200 boe per day, net to the Company's interest.

Conference Call Information

The Company will host a conference call at 10 a.m. Central Time on Wednesday, April 29, 2009. The call can be accessed from Superior's website at www.superiorenergy.com, or by telephone at 303-205-0066. For those who cannot listen to the live call, a telephonic replay will be available through Wednesday, May 6, 2009 and may be accessed by calling 303-590-3000 and using the pass code 11129312#. 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-related 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 uncertainty of macroeconomic and business conditions worldwide, as well as the global credit markets; 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) 587-7374



              SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
                   Consolidated Statements of Operations
                 Three Months Ended March 31, 2009 and 2008
             (in thousands, except earnings per share amounts)
                                (unaudited)

                                                   Three Months Ended
                                                       March 31,
                                                       ---------
                                                     2009         2008
                                                     ----         ----
                                                           As Adjusted
                                                             (Note 1)

    Oilfield service and rental revenues         $437,109     $386,319
    Oil and gas revenues                                -       55,072
                                                      ---       ------
      Total revenues                              437,109      441,391
                                                  -------      -------

    Cost of oilfield services and rentals         222,465      191,132
    Cost of oil and gas sales                           -       12,986
      Total cost of services, rentals and sales   222,465      204,118
                                                  -------      -------

    Depreciation, depletion, amortization and
     accretion                                     49,868       41,879
    General and administrative expenses            64,986       69,606
    Gain on sale of businesses                          -       37,888
                                                      ---       ------

    Income from operations                         99,790      163,676

    Other income (expense):
      Interest expense, net                       (12,420)     (12,138)
      Interest income                                  51          905
      Other expense                                  (919)        (950)
      Earnings from equity-method investments,
       net                                          2,256        3,957

    Income before income taxes                     88,758      155,450

    Income taxes                                   31,953       55,921
                                                   ------       ------

    Net income                                    $56,805      $99,529
                                                  =======      =======


    Basic earnings per share                        $0.73        $1.23
                                                    =====        =====

    Diluted earnings per share                      $0.72        $1.21
                                                    =====        =====

    Weighted average common shares used
      in computing earnings per share:
        Basic                                      78,032       80,776
                                                   ======       ======
        Diluted                                    78,428       82,086
                                                   ======       ======


    Note 1
    On January 1, 2009, we adopted Financial Accounting Standards
    Board Staff Position APB 14-1 which changed the accounting
    for the Company's 1.5% senior exchangeable notes.  The
    comparative Statement of Operations for the months ended March
    31, 2008 has been adjusted to comply with FSP APB 14-1 on a
    retrospective basis.



              SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                   MARCH 31, 2009 AND DECEMBER 31, 2008
                              (in thousands)

                                                3/31/2009   12/31/2008
                                               (unaudited)  (audited)
                                               -----------  ---------
                                                           As Adjusted
                                                             (Note 1)
    ASSETS

    Current assets:
      Cash and cash equivalents                   $110,374     $44,853
      Accounts receivable, net                     353,429     360,357
      Income taxes receivable                        3,092           -
      Prepaid expenses                              30,912      18,041
      Other current assets                         293,286     223,598
                                                   -------     -------

            Total current assets                   791,093     646,849
                                                   -------     -------

    Property, plant and equipment, net           1,144,486   1,114,941
    Goodwill, net                                  477,189     477,860
    Equity-method investments                      119,400     122,308
    Intangible and other long-term assets, net     127,150     128,187

            Total assets                        $2,659,318  $2,490,145
                                                ==========  ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Accounts payable                             $59,586     $87,207
      Accrued expenses                             146,437     152,536
      Income taxes payable                               -      20,861
      Deferred income taxes                         67,815      36,830
      Current maturities of long-term debt             810         810
                                                       ---         ---

            Total current liabilities              274,648     298,244
                                                   -------     -------

    Deferred income taxes                          241,969     246,824
    Long-term debt, net                            792,204     654,199
    Other long-term liabilities                     36,968      36,605

    Total stockholders' equity                   1,313,529   1,254,273
                                                 ---------   ---------

            Total liabilities and stockholders'
             equity                             $2,659,318  $2,490,145
                                                ==========  ==========


    Note 1
    On January 1, 2009, we adopted Financial Accounting Standards
    Board Staff Position APB 14-1 which changed the accounting for the
    Company's 1.5% senior exchangeable notes.  The comparative Balance
    Sheet as of December 31, 2008 has been adjusted to comply with FSP
    APB 14-1 on a retrospective basis.



                   Superior Energy Services, Inc. and Subsidiaries
                                Segment Highlights
            Three months ended March 31, 2009, December 31, 2008
                               and March 31, 2008
                                    (Unaudited)
                                  (in thousands)

                                                Three months ended,
                               ----------------------------------------------
    Revenue                     March 31,         December 31,      March 31,
                                  2009                2008            2008
                               ----------------------------------------------

    Well Intervention            $288,057            $304,417       $234,115

    Rental Tools                  125,944             149,239        130,327

    Marine                         23,108              38,140         23,089

    Oil and Gas                         -                   -         55,072

      Less: Oil and Gas
       Eliminations (2)                 -                   -         (1,212)
                                      ---                 ---         ------

    Total Revenues               $437,109            $491,796       $441,391
                                 ========            ========       ========

                                                Three months ended,
                               ----------------------------------------------
    Gross Profit (1)            March 31,         December 31,      March 31,
                                  2009                2008            2008
                               ----------------------------------------------

    Well Intervention            $122,568            $134,073       $101,716

    Rental Tools                   83,908             102,533         86,227

    Marine                          8,168              19,721          7,244

    Oil and Gas                         -                   -         42,086
                                      ---                 ---         ------

    Total Gross Profit           $214,644            $256,327       $237,273
                                 ========            ========       ========

                                                Three months ended,
                               ----------------------------------------------
    Income from Operations      March 31,         December 31,      March 31,
                                  2009                2008            2008
                               ----------------------------------------------

    Well Intervention             $61,700             $67,474        $50,778

    Rental Tools                   35,309              50,709         45,757

    Marine                          2,781              13,146          2,578

    Oil and Gas                         -                   -         64,563
                                      ---                 ---         ------

    Total Income from
     Operations                   $99,790            $131,329       $163,676
                                  =======            ========       ========

    (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.






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.,
+1-504-587-7374
Web Site: http://www.superiorenergy.com
(SPN)