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Superior Energy Services, Inc. Reports Fourth Quarter and Full Year 2009 Results
Fourth Quarter Core Earnings of $0.21 Per Diluted Share Before Charges and Project Cost Increases
NEW ORLEANS, Feb 24, 2010 /PRNewswire via COMTEX/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced a net loss of $114.6 million, or $1.46 per share on revenue of $264.6 million for the fourth quarter of 2009, as compared with net income of $83.3 million, or $1.06 per diluted share, on revenue of $491.8 million for the fourth quarter of 2008.

Excluding the previously announced special charges and the impact of the wreck removal project cost increases, for the fourth quarter of 2009, the Company had adjusted net income of $16.5 million, or $0.21 per diluted share, compared with net income of $88.5 million, or $1.13 per diluted share, for the fourth quarter of 2008.

For the year ended December 31, 2009, the Company's net loss was $102.3 million, or $1.31 per share on revenue of $1,449.3 million as compared with net income of $351.5 million, or $4.33 per diluted share on revenue of $1,881.1 million for the year ended December 31, 2008.

Excluding special charges taken during the year and the impact of the wreck removal project cost increases, for the year ended December 31, 2009, the Company had adjusted net income of $112.9 million, or $1.44 per diluted share, as compared with adjusted net income of $325.0 million, or $4.00 per diluted share for the year ended December 31, 2008.

Terence Hall, Chairman and CEO of Superior, stated, "During 2009, we generated positive core earnings in a very challenging market environment, had operating cash flow of $276 million, expanded into new international markets and further positioned the Company to participate in subsea markets worldwide. Looking ahead, we're excited about the additional opportunities we'll have as a result of the Hallin Marine and Bullwinkle Field acquisitions. We expect to build momentum throughout the year as seasonal factors in the Gulf of Mexico improve and activity increases."

Overview of Previously Announced Special Charges and Project Cost Increases in Fourth Quarter of 2009

The Company incurred a non-cash, pre-tax charge of $119.8 million, or $0.98 per share after tax, related to the impairment of domestic land well enhancement assets. The Company also incurred pre-tax charges of $15.9 million, or $0.13 per share after tax, in the aggregate for transaction-related expenses for the acquisition of Hallin Marine Subsea International plc, a write down of components from one of the Company's 265-ft. class liftboats and a reduction of the net realizable value of accounts receivable as a result of continuing economic uncertainties in Venezuela.

The Company increased the estimated total cost to complete the wreck removal project, which negatively impacted the Company's revenue and the associated pre-tax income by $68.7 million, or $0.56 per share after tax.

Two Segments Renamed

The Company has renamed two of its reporting segments to more accurately describe the markets and customers served by the businesses operating in each segment. The "Well Intervention Segment" will now be called the "Subsea and Well Enhancement Segment." The "Rental Tools Segment" will now be called the "Drilling Products and Services Segment."

Geographic Breakdown

For the fourth quarter of 2009, Gulf of Mexico revenue was approximately $104.5 million. Excluding the $68.7 million impact from cost adjustments to the wreck removal project, Gulf of Mexico revenue was $173.2 million, or 22% lower sequentially. Domestic land revenue was approximately $72.7 million, a sequential increase of 2%, and international revenue was approximately $87.4 million, a sequential decrease of 5%.

Subsea and Well Enhancement Segment

Fourth quarter revenue for the Subsea and Well Enhancement Segment was $145.8 million. Excluding the $68.7 million impact from cost adjustments to the wreck removal project, segment revenue was $214.5 million. Loss from operations was $176.6 million. Without the aforementioned charges that impacted this segment, income from operations would have been approximately $17.1 million as compared with $67.5 million in the fourth quarter of 2008 and $31.6 million in the third quarter of 2009. Sequentially, seasonal factors led to a decline in Gulf of Mexico activity across most product and service lines. In the domestic land market, revenue increased 2% sequentially due to increased demand for coiled tubing and cased hole wireline services. International revenue in this segment decreased 1% sequentially due to the suspension of an inspection, repair and maintenance project in Angola, which was partially offset by increased demand for well control services. As stated in the pre-earnings announcement, the Company estimates that the suspension of the Angola project reduced pre-tax income by approximately $4.0 million, or $0.03 per share after tax.

Drilling Products and Services Segment

Fourth quarter revenue for the Drilling Products and Services Segment was $97.6 million. Income from operations was $13.8 million, or 14% of segment revenue, as compared with $50.7 million, or 34% of segment revenue in the fourth quarter of 2008, and $17.9 million, or 18% of segment revenue in the third quarter of 2009. On a sequential basis, Gulf of Mexico revenue declined 4% due to decreased demand for specialty tubulars and accessories, while international revenue declined 5% due to decreased demand for accommodations. Revenue from domestic land markets increased 2% sequentially primarily as a result of increased rentals of accommodations and stabilization equipment.

Marine Segment

Marine Segment revenue was $21.2 million. Loss from operations was $2.9 million, as compared with income from operations of $13.1 million, or 35% of segment revenue in the fourth quarter of 2008, and compared with income from operations of $5.1 million, or 16% of segment revenue in the third quarter of 2009. As previously announced, the Company estimates that downtime associated with the removal of the Company's two 265-ft. class liftboats - the Superior Influence and the Superior Respect - from the fleet in early November following Hurricane Ida reduced pre-tax income by $4.0 million, or $0.03 per share after tax. The Company anticipates that the Superior Influence will return to service during the second quarter of 2010 and that the Superior Respect will return to service during the third quarter of 2010.

Average daily revenue in the fourth quarter of 2009 was approximately $230,000, inclusive of subsistence revenue, as compared with approximately $415,000 per day in the fourth quarter of 2008 and approximately $340,000 in the third quarter of 2009. Average fleet utilization in the fourth quarter of 2009 was 45% as compared with 76% in the fourth quarter of 2008 and 62% in the third quarter of 2009. The Company sold four of its 145-ft. class liftboats during the fourth quarter.



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

                                 Average
    Class           Liftboats    Dayrate     Utilization
    -----           ---------    -------     -----------
    145'-155'(1)        6         $4,782        17.1%
    160'-175'           8          7,834        41.4%
    200'                5         10,880        55.4%
    230'-245'           3         25,551        62.3%
    250'                2         32,337       100.0%
    265'(2)             2         36,786        89.0%

    (1) Dayrates and utilization for 10 liftboats through November 23, 2009,
        and six liftboats for remainder of the quarter.
    (2) Dayrates and utilization through early November, before both liftboats
        were temporarily removed from fleet.

Conference Call Information

The Company will host a conference call at 11 a.m. Central Time on Thursday, February 25, 2010. The call can be accessed from Superior's website at www.superiorenergy.com, or by telephone at 480-629-9690. For those who cannot listen to the live call, a telephonic replay will be available through Thursday, March 4, 2010 and may be accessed by calling 303-590-3030 and using the pass code 4218211#. 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 and Twelve Months Ended December 31, 2009 and 2008
                   (in thousands, except earnings per share amounts)
                                      (unaudited)

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

    Oilfield service and
     rental revenues            $264,575   $491,796  $1,449,300   $1,826,052
    Oil and gas revenues               -          -           -       55,072
                                     ---        ---         ---       ------
      Total revenues             264,575    491,796   1,449,300    1,881,124
                                 -------    -------   ---------    ---------

    Cost of oilfield
     services and rentals        188,627    235,469     824,034      885,308
    Cost of oil and gas sales          -          -           -       12,986
                                     ---        ---         ---       ------
      Total cost of services,
       rentals and sales
       (exclusive of items
       shown separately below)   188,627    235,469     824,034      898,294
                                 -------    -------     -------      -------

    Depreciation, depletion,
     amortization and
     accretion                    53,548     46,825     207,114      175,500
    General and
     administrative expenses      70,399     78,173     259,093      282,584
    Reduction in value of
     assets                      119,844          -     212,527            -
    Gain on sale of businesses     2,084          -       2,084       40,946
                                   -----        ---       -----       ------

    Income (loss) from
     operations                 (165,759)   131,329     (51,384)     565,692

    Other income (expense):
      Interest expense, net      (12,081)   (12,821)    (49,409)     (47,686)
      Earnings (losses) from
       equity-method
       investments, net           (1,269)     5,014     (22,600)      24,373
      Reduction in value of
       equity-method investment        -          -     (36,486)           -
                                     ---        ---     -------          ---

    Income (loss) before
     income taxes               (179,109)   123,522    (159,879)     542,379

    Income taxes                 (64,479)    40,237     (57,556)     190,904
                                 -------     ------     -------      -------

    Net income (loss)          $(114,630)   $83,285   $(102,323)    $351,475
                               =========    =======   =========     ========


    Basic earnings (loss)
     per share                    $(1.46)     $1.07      $(1.31)       $4.39
                                  ======      =====      ======        =====

    Diluted earnings (loss)
     per share                    $(1.46)     $1.06      $(1.31)       $4.33
                                  ======      =====      ======        =====

    Weighted average common
     shares used in computing
     earnings per share:
      Basic                       78,305     77,901      78,171       79,990
                                  ======     ======      ======       ======
      Diluted                     78,305     78,406      78,171       81,213
                                  ======     ======      ======       ======

    Note 1
    On January 1, 2009, we adopted the provisions of a new accounting standard
    which changed the accounting for the Company's 1.5% senior exchangeable
    notes.  The comparative Statements of Operations for the three and twelve
    months ended December 31, 2008 have been adjusted to comply with this
    standard on a retrospective basis.



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

                                                  12/31/2009     12/31/2008
                                                  ----------     ----------
                                                  (Unaudited)   As Adjusted
                                                                  (Note 1)
    ASSETS

    Current assets:
      Cash and cash equivalents                     $206,505        $44,853
      Accounts receivable, net                       337,151        360,357
      Income taxes receivable                         12,674              -
      Prepaid expenses                                20,209         18,041
      Other current assets                           287,024        208,739
                                                     -------        -------

        Total current assets                         863,563        631,990
                                                     -------        -------


    Property, plant and equipment, net             1,058,976      1,114,941
    Goodwill                                         482,480        477,860
    Equity-method investments                         60,677        122,308
    Intangible and other long-term assets, net        50,969        143,046
                                                      ------        -------

        Total assets                              $2,516,665     $2,490,145
                                                  ==========     ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Accounts payable                               $63,466        $87,207
      Accrued expenses                               133,602        152,536
      Income taxes payable                                 -         20,861
      Deferred income taxes                           30,501         36,830
      Current maturities of long-term debt               810            810
                                                         ---            ---

        Total current liabilities                    228,379        298,244
                                                     -------        -------


    Deferred income taxes                            209,053        246,824
    Long-term debt, net                              848,665        654,199
    Other long-term liabilities                       52,523         36,605

    Total stockholders' equity                     1,178,045      1,254,273
                                                   ---------      ---------

        Total liabilities and stockholders'
         equity                                   $2,516,665     $2,490,145
                                                  ==========     ==========

    Note 1
    On January 1, 2009, we adopted the provisions of a new  accounting
    standard 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 this standard on a retrospective
    basis.



                    Superior Energy Services, Inc. and Subsidiaries
                                   Segment Highlights
              Three months ended December 31, 2009, September 30, 2009 and
                                    December 31, 2008
                                        (Unaudited)
                                      (in thousands)

                                         Three months ended
                                         ------------------
    Revenue            December 31, 2009 September 30, 2009 December 31, 2008
                       ----------------- ------------------ -----------------

    Subsea and Well
     Enhancement            $145,822          $254,335          $304,417

    Drilling Products
     and Services             97,567           100,832           149,239

    Marine                    21,186            31,288            38,140
                              ------            ------            ------

    Total Revenues          $264,575          $386,455          $491,796
                            ========          ========          ========


    Gross Profit (1)   December 31, 2009  September 30, 2009 December 31, 2008
                       -----------------  ------------------ -----------------

    Subsea and Well
     Enhancement              $2,946           $94,098          $134,073

    Drilling Products
     and Services             65,314            64,621           102,533

    Marine                     7,688            12,062            19,721
                               -----            ------            ------

    Total Gross Profit       $75,948          $170,781          $256,327
                             =======          ========          ========


    Income (Loss) from
     Operations        December 31, 2009 September 30, 2009 December 31, 2008
                       ----------------- ------------------ -----------------

    Subsea and Well
     Enhancement (2)       $(176,585)          $31,563           $67,474

    Drilling Products
     and Services             13,771            17,940            50,709

    Marine                    (2,945)            5,133            13,146
                              ------             -----            ------

    Total Income
     (Loss) from
     Operations            $(165,759)          $54,636          $131,329
                           =========           =======          ========

    (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) Income from operations in the Subsea and Well Enhancement Segment for
        the three months ended December 31, 2009 includes a reduction in value
        of assets of $119.8 million, adjustments to the estimated total cost
        of the wreck removal project of $68.7 million and other special
        charges mentioned in the press release.



                              NON-GAAP RECONCILIATION
                                  ($ in thousands)

    We report our financial results in conformity with U.S. generally accepted
    accounting principles (GAAP). However, the Company provides non-GAAP
    adjusted net income and non-GAAP adjusted earnings per share because those
    items are customarily excluded by analysts in published estimates and
    management believes, for purposes of comparability to financial
    performance in other periods and to evaluate the Company's trends, that it
    is appropriate for these items to be excluded. Management uses adjusted
    net income and adjusted diluted earnings per share to evaluate the
    Company's operational trends and historical performance on a consistent
    basis. The adjusted amounts are not measures of financial performance
    under GAAP.

    A reconciliation of net income, the GAAP measure most directly comparable
    to non-GAAP adjusted earnings and non-GAAP adjusted earnings per share, is
    below.  In making any comparisons to other companies, investors need to be
    aware that the non-GAAP financial measures used by the Company may be
    calculated differently from, and therefore may not be directly comparable
    to, similarly titled measures used by other companies. Investors should
    pay close attention to the specific definition being used and to the
    reconciliation between such measures and the corresponding GAAP measures
    provided by each company under applicable SEC rules. Non-GAAP financial
    measures should be viewed in addition to, and not as an alternative for,
    or superior to, the Company's reported results prepared in accordance with
    GAAP.



                                                            Three Months Ended
                                                                December 31,
                                                            ------------------
                                                               2009     2008
                                                               ----     ----
    Net income (loss) as reported                          $(114,630) $83,285
    Pre-tax adjustments:
    --------------------
      Reduction in value of assets                           119,844        -
      Impact of adjustment to estimated total cost of
       wreck removal project                                  68,678        -
      Write-down of liftboat components                        6,446        -
      Expenses related to Hallin Marine acquisition            4,878        -
      Reduction in net realizable value of Venezuelan
       accounts receivable                                     4,565        -
      Losses from equity-method investment in Beryl Oil
       & Gas                                                       -   12,760
      Unrealized (earnings) losses from equity-method
       investment hedging contracts, excluding Beryl
       Oil & Gas                                               2,518  (15,411)
      Discretionary contribution in connection with the
       adoption of the SERP                                        -   10,000
      Other non-cash charges related to SPN Resources              -      333
      Gain on sale of liftboats                               (2,084)       -
                                                              ------      ---

    Total pre-tax adjustments                                204,845    7,682

    Income tax effect of adjustments                         (73,744)  (2,504)
                                                             -------   ------

    Non-GAAP adjusted net income                             $16,471  $88,463
                                                             =======  =======

    Non-GAAP adjusted diluted earnings per share               $0.21    $1.13
                                                               =====    =====

    Weighted average common shares used in computing
     diluted earnings per share                               78,305   78,406
                                                              ======   ======



                                                           Twelve Months Ended
                                                               December 31,
                                                           -------------------
                                                              2009      2008
                                                              ----      ----
    Net income (loss) as reported                         $(102,323) $351,475
    Pre-tax adjustments:
    --------------------
      Reduction in value of assets                          212,527         -
      Impact of adjustment to estimated total cost
       of wreck removal project                              43,425         -
      Reduction in value of equity-method investment
       in Beryl Oil & Gas                                    36,486         -
      Losses from equity-method investment in Beryl
       Oil & Gas                                             14,009     9,920
      Unrealized (earnings) losses from equity-method
       investment hedging contracts, excluding Beryl
       Oil & Gas                                             11,393   (14,920)
      Other non-cash charges related to SPN Resources         4,641       333
      Write-down of liftboat components                       6,446         -
      Expenses related to acquisitions and dispositions       4,878     4,517
      Reduction in net realizable value of Venezuelan
       accounts receivable                                    4,565         -
      Discretionary contribution in connection with
       the adoption of the SERP                                   -    10,000
      Cessation of depreciation and depletion related
       to assets held for sale                                    -    (9,745)
      Gain on sale of businesses                             (2,084)  (40,946)
                                                             ------   -------

    Total pre-tax adjustments                               336,286   (40,841)

    Income tax effect of adjustments                       (121,063)   14,376
                                                           --------    ------

    Non-GAAP adjusted net income                           $112,900  $325,010
                                                           ========  ========

    Non-GAAP adjusted diluted earnings per share              $1.44     $4.00
                                                              =====     =====

    Weighted average common shares used in computing
     diluted earnings per share                              78,171    81,213
                                                             ======    ======


SOURCE Superior Energy Services, Inc.