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Superior Energy Services, Inc. Reports Second Quarter 2011 Results
Record Quarterly Revenue Drives GAAP Earnings of $0.59 Per Diluted Share and Adjusted Earnings of $0.53 Per Diluted Share

NEW ORLEANS, July 27, 2011 /PRNewswire via COMTEX/ --

Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $48.1 million, or $0.59 per diluted share on record quarterly revenue of $510.8 million for the second quarter of 2011, and adjusted net income of $42.7 million, or $0.53 per diluted share, after excluding a pre-tax gain of $5.9 million from the sale of liftboats and $2.5 million in non-cash, unrealized pre-tax gains from hedging contracts at the Company's equity-method investments.

These results are compared with second quarter of 2010 net income of $24.1 million, or $0.30 per diluted share on quarterly revenue of $424.9 million, and adjusted net income of $34.6 million, or $0.43 per diluted share, after excluding pre-tax management transition expenses of $16.4 million.

For the six months ended June 30, 2011, the Company's net income was $63.6 million, or $0.79 per diluted share on revenue of $924.8 million, and adjusted net income was $57.9 million, or $0.71 per diluted share, after excluding a pre-tax gain of $8.6 million for the sale of liftboats and $0.4 million in non-cash, unrealized pre-tax gains from hedging contracts at the Company's equity-method investments.

For the six months ended June 30, 2010, the Company's net income was $45.6 million, or $0.57 per diluted share on revenue of $789.4 million, and adjusted net income was $56.1 million, or $0.71 per diluted share, after excluding pre-tax management transition expenses of $16.4 million.

David Dunlap, CEO of the Company, commented, "We delivered stronger-than-anticipated earnings and achieved record quarterly revenue due to several factors. The most notable were our continued growth in the highly active U.S. land market for intervention services and rental tools, and increased demand for our subsea inspection, repair and maintenance services in Southeast Asia. In addition, we benefitted from drilling activity in the deepwater Gulf of Mexico - the first notable activity in this market since the second quarter of last year.

"Our operating income as a percentage of revenue (operating margin) nearly doubled as compared with the first quarter of 2011 primarily due to profitability increases in the Subsea and Well Enhancement Segment driven by the growth in demand for well completion tools and services in the Gulf of Mexico and subsea inspection, repair and maintenance services in international markets. In addition, we experienced seasonal increases in demand for shallow water intervention and end-of-life services.

"Our U.S. land revenue increased 11% sequentially as compared with a 6% increase in the average number of drilling rigs working in the U.S. We experienced high utilization levels for our intervention services and high volumes for our drilling products and services. Internationally, our revenue increased 33% and we continued to lay the foundation for future growth by successfully expanding our product and service offering into new geographic markets."

2011 Earnings Guidance Update

The Company expects 2011 adjusted earnings per share - which is exclusive of gains and losses - to be in the range of $1.96 and $2.16. Prior earnings guidance was in the range of $1.62 and $2.02 per diluted share.

Mr. Dunlap commented, "The second quarter was important because we believe it is the launching point for our earnings growth during the remainder of 2011 and into 2012. We expect to be able to grow our earnings base as we put more assets into multiple markets, continue the execution of our international expansion strategy and provide products and services to the gradually improving deepwater Gulf of Mexico drilling market."

Geographic Breakdown

For the second quarter of 2011, Gulf of Mexico revenue was approximately $175 million, U.S. land revenue was approximately $198 million, and international revenue was approximately $138 million.

Subsea and Well Enhancement Segment

Second quarter revenue for the Subsea and Well Enhancement Segment was $336.0 million, as compared with $284.4 million in the second quarter of 2010 and $262.0 million in the first quarter of 2011, which represents an 18% year-over-year increase and a 28% sequential increase.

Gulf of Mexico revenue in this segment increased 32% sequentially to $111 million due to a strong surge in demand for completion tools and stimulation services, primarily related to the resumption of deepwater drilling and seasonal activity increases in the shallow water of the Gulf of Mexico. In addition, the segment benefitted from a seasonal uptick in demand for intervention services such as coiled tubing, wire line and snubbing services and end-of-life services such as plug and abandonment. U.S. land revenue in this segment increased 13% sequentially to $131 million due to increased demand for coiled tubing, pressure control products and remedial pumping services. International revenue increased 52% to $94 million due to increased activity for subsea inspection, repair and maintenance services, snubbing services and the successful completion of a two-well subsea plug and abandonment project in Indonesia.

Drilling Products and Services Segment

Second quarter revenue for the Drilling Products and Services Segment was $149.2 million, as compared with $121.3 million in the second quarter of 2010 - a 23% year-over-year improvement - and $128.3 million in the first quarter of 2011, or 16% higher sequentially.

The primary factor driving the higher sequential revenue was a 53% increase in Gulf of Mexico revenue to $39 million as a result of increased demand for premium drill pipe and stabilization equipment. This was due in part to the resumption of drilling rig activity in the deepwater market. U.S. land revenue increased 7% sequentially to $68 million as a result of increased rentals of accommodations, stabilization equipment, and accessories. International revenue increased 7% sequentially to $42 million due to increased rentals of premium drill pipe in Colombia and stabilization equipment in Brazil.

Marine Segment

Marine Segment revenue in the second quarter was $25.6 million, a 34% increase over the second quarter of 2010 and an 8% increase from first quarter of 2011. Average fleet utilization in the second quarter of 2011 was 70% as compared with 62% in the second quarter of 2010 and 57% in the first quarter of 2011. The Company sold four liftboats during the second quarter, including two from its 145-155 ft. class fleet, and one each from its 160-175 ft. class fleet and 200 ft. class feet. The Company now has 18 liftboats in its rental fleet.

Liftboat Average Day rates and Utilization by Class Size

Three Months Ended June 30, 2011

($ actual)

Class

Liftboats(1)

Average

Dayrate

Utilization

155'-175'

8

8,345

72.3%

200'

5

11,395

66.4%

230'-245'

3

18,529

68.5%

250'-265'

4

38,486

70.3%

(1) Reflects average number of liftboats working during the period

Conference Call Information

The Company will host a conference call at 10 a.m. Central Time on Thursday, July 28, 2011. The call can be accessed from Superior's website at www.superiorenergy.com, or by telephone at 480-629-9835. For those who cannot listen to the live call, a telephonic replay will be available through Thursday, August 4, 2011 and may be accessed by calling 303-590-3030 and using the pass code 4451411. An archive of the webcast will be available after the call for a period of 60 days at 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: David Dunlap, 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 Six Months Ended June 30, 2011 and 2010

(in thousands, except earnings per share amounts)

(unaudited)




Three Months Ended


Six Months Ended



June 30,


June 30,



2011


2010


2011


2010










Revenues


$ 510,806


$ 424,856


$ 924,787


$ 789,367










Cost of services (exclusive of items shown separately below)


271,370


229,916


505,215


428,968

Depreciation, depletion, amortization and accretion


63,314


54,299


122,677


105,347

General and administrative expenses


95,881


92,529


182,760


163,253

Gain on sale of businesses


5,884


-


8,558


-










Income from operations


86,125


48,112


122,693


91,799










Other income (expense):









Interest expense, net


(16,453)


(12,680)


(28,825)


(26,718)

Earnings from equity-method investments, net


5,499


2,170


5,526


6,155










Income before income taxes


75,171


37,602


99,394


71,236










Income taxes


27,062


13,537


35,782


25,645










Net income


$ 48,109


$ 24,065


$ 63,612


$ 45,591



















Basic earnings per share


$ 0.60


$ 0.31


$ 0.80


$ 0.58










Diluted earnings per share


$ 0.59


$ 0.30


$ 0.79


$ 0.57










Weighted average common shares used









in computing earnings per share:









Basic


79,744


78,716


79,385


78,625

Diluted


81,254


79,601


81,024


79,499

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2011 AND DECEMBER 31, 2010

(in thousands)








6/30/2011

12/31/2010


(Unaudited)

(Audited)




ASSETS






Current assets:



Cash and cash equivalents

$ 244,114

$ 50,727

Short-term investments

164,161

-

Accounts receivable, net

437,954

452,450

Prepaid expenses

38,862

25,828

Inventory and other current assets

220,410

235,047




Total current assets

1,105,501

764,052




Property, plant and equipment, net

1,394,918

1,313,150

Goodwill

589,761

588,000

Notes receivable

71,261

69,026

Equity-method investments

63,308

59,322

Intangible and other long-term assets, net

136,888

113,983




Total assets

$ 3,361,637

$ 2,907,533




LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:



Accounts payable

$ 109,167

$ 110,276

Accrued expenses

170,383

162,044

Income taxes payable

8,955

2,475

Deferred income taxes

24,027

29,353

Current portion of decommissioning liabilities

17,172

16,929

Current maturities of long-term debt

391,262

184,810




Total current liabilities

720,966

505,887




Deferred income taxes

228,191

223,936

Decommissioning liabilities

103,880

100,787

Long-term debt, net

810,184

681,635

Other long-term liabilities

121,800

114,737




Total stockholders' equity

1,376,616

1,280,551




Total liabilities and stockholders' equity

$ 3,361,637

$ 2,907,533

Superior Energy Services, Inc. and Subsidiaries

Segment Highlights

Three months ended June 30, 2011, March 31, 2011 and June 30, 2010

(Unaudited)

(in thousands)



Three months ended

Revenue


June 30, 2011


March 31, 2011


June 30, 2010








Subsea and Well Enhancement


$ 336,037


$ 262,045


$ 284,352








Drilling Products and Services


149,167


128,270


121,337








Marine


25,602


23,666


19,167















Total Revenues


$ 510,806


$ 413,981


$ 424,856











Gross Profit (1)


June 30, 2011


March 31, 2011


June 30, 2010








Subsea and Well Enhancement


$ 141,730


$ 91,377


$ 116,477








Drilling Products and Services


92,540


81,573


77,578








Marine


5,166


7,186


885








Total Gross Profit


$ 239,436


$ 180,136


$ 194,940











Income (Loss) from Operations


June 30, 2011 (2)


March 31, 2011 (3)


June 30, 2010 (4)








Subsea and Well Enhancement


$ 50,864


$ 10,979


$ 32,882








Drilling Products and Services


29,662


21,704


20,334








Marine


5,599


3,885


(5,104)








Total Income from Operations


$ 86,125


$ 36,568


$ 48,112








(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) Includes a gain on sale of liftboats of $5.9 million in the Marine Segment.


(3) Includes a gain on sale of liftboats of $2.7 million recorded in the Marine Segment.


(4) Includes management transition expenses of $16.4 million recorded in general and administrative expenses.


SOURCE Superior Energy Services, Inc.