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Superior Energy Services, Inc. Reports Second Quarter 2012 Results
Non-GAAP Adjusted Earnings from Continuing Operations of $0.83 Per Diluted Share

HOUSTON, July 30, 2012 /PRNewswire/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced net income from continuing operations of $142.8 million, or $0.90 per diluted share, and net income of $141.9 million, or $0.89 per diluted share, on revenue of $1,243.3 million for the second quarter of 2012.

Non-GAAP adjusted earnings from continuing operations was $131.6 million, or $0.83 per diluted share, and excludes a $17.9 million pre-tax gain on sale of an equity-method investment.

These results are compared with net income from continuing operations of $41.4 million, or $0.51 per diluted share, and net income of $48.1 million, or $0.59 per diluted share, on revenue of $479.9 million for the second quarter of 2011. Non-GAAP adjusted earnings from continuing operations was $39.8 million, or $0.49 per diluted share, for the second quarter of 2011.

For the six months ended June 30, 2012, the Company's net income from continuing operations was $213.0 million, or $1.49 per diluted share, and net income was $195.8 million, or $1.37 per diluted share, on revenue of $2,210.2 million. Non-GAAP adjusted earnings from continuing operations was $222.2 million, or $1.55 per diluted share.

For the six months ended June 30, 2011, the Company's net income from continuing operations was $51.3 million, or $0.63 per diluted share, and net income was $63.6 million, or $0.79 per diluted share, on revenue of $864.9 million. Non-GAAP adjusted earnings from continuing operations was $ 51.0 million, or $0.63 per diluted share.

David Dunlap, CEO of Superior, commented, "The solid operating results, which include the first full quarter contribution from the products and services of legacy Complete Production Services, reflect the strength of our diversified business model in the face of  weaker activity levels in U.S. dry gas basins and a flattening U.S. land rig count environment.

"Growth in Gulf of Mexico and international revenue more than offset the flat demand we experienced in the U.S. land market areas relative to the first quarter of the year.  Our Gulf of Mexico activity benefitted from a 20% sequential increase in revenue from the Drilling Products and Services segment as deepwater drilling rebounded to post-Macondo highs.  Meanwhile, international results were boosted by a 15% sequential increase in Subsea and Well Enhancement revenue driven primarily by multiple well control projects.

"In the U.S., we maximized our opportunities while navigating through shrinking demand in dry gas basins and mounting uncertainty in oil and liquids basins. For most of the quarter we were able to maintain margins across several product lines that were at or near first quarter levels.

"Our income from continuing operations as a percentage of revenue (operating margin) during the period was essentially unchanged from the first quarter of 2012 – excluding first quarter acquisition-related expenses and hedging activity."

Geographic Breakdown

For the second quarter of 2012, U.S. land revenue was approximately $883.0 million, Gulf of Mexico revenue was approximately $170.8 million and international revenue was approximately $189.5 million.

Subsea and Well Enhancement Segment

Second quarter 2012 revenue in the Subsea and Well Enhancement Segment was $1,045.2 million.

U.S. land revenue was $793.5 million which represents a 44% sequential increase due to a full quarter contribution from legacy Complete products and services relative to the first quarter of 2012. Gulf of Mexico revenue increased 8% sequentially to approximately $109.9 million primarily due to an increase in well control, shallow water plug and abandonment and decommissioning services. International revenue increased 15% sequentially to approximately $141.8 million primarily due to increased demand for well control services.

Drilling Products and Services Segment

Second quarter 2012 revenue for the Drilling Products and Services Segment was $198.2 million, as compared with $149.2 million in the second quarter of 2011, or a 33% year-over-year improvement, and $189.4 million in the first quarter of 2012, or a sequential 5% improvement.

U.S. land revenue decreased 2% to $89.5 million as increased rentals of premium drill pipe and bottom hole assemblies partially offset decreased rentals of accommodations. Gulf of Mexico revenue increased 20% sequentially to approximately $60.9 million due to increased rentals of bottom hole assemblies, premium drill pipe, accommodations and other surface tools. International revenue was essentially unchanged sequentially at approximately $47.8 million.

2012 Earnings Guidance Update

The Company has lowered its guidance on its 2012 non-GAAP adjusted earnings from continuing operations to a range of between $2.75 and $3.05 per diluted share

Mr. Dunlap commented, "Although we remain confident in the long-term outlook for the oil and resource driven prospects in the U.S. land market, continued low natural gas prices, a lower realized crude oil price and significant reductions in NGL prices are impacting our customers' cash flows, leading to reduced spending in the second half of 2012. We do not see this reduction driving a precipitous drop in activity, but we expect lower utilization in our services businesses and pricing pressure in many of the oil and liquids basins as competitors continue to relocate capacity to these markets from the dry gas basins.

"The Gulf of Mexico should continue to grow from the strong base of activity realized in the first half of 2012 as deepwater activity progresses at a faster pace than we originally anticipated for the year. We expect international activity in the countries that we have targeted for expansion to continue to advance at a steady pace."

Conference Call Information

The Company will host a conference call at 10 a.m. Central Time on Tuesday, July 31, 2012.  The call can be accessed from Superior's website at www.superiorenergy.com, or by telephone at 480-629-9692.  For those who cannot listen to the live call, a telephonic replay will be available through Tuesday, August 15, 2012 and may be accessed by calling 303-590-3030 and using the pass code 4549044.  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, completion and production-related needs of oil and gas companies worldwide through its brand name drilling products and its integrated completion and well intervention services and tools, supported by an engineering staff who plan and design solutions for customers.

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 the Company or any other person that the projected outcomes can or will be achieved.  Any forward-looking statement made in this press release is based only on information currently available to the Company and speaks only as of the date on which it is made.  The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

FOR FURTHER INFORMATION CONTACT:
David Dunlap, President and CEO, (281) 999-0047;
Robert Taylor, CFO or Greg Rosenstein, EVP, (504) 587-7374


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Six Months Ended June 30, 2012 and 2011

(in thousands, except earnings per share amounts)

(unaudited)




Three Months Ended


Six Months Ended



June 30,


June 30,



2012


2011 *


2012


2011 *










Revenues


$   1,243,319


$      479,893


$    2,210,156


$     864,890










Cost of services (exclusive of items shown separately below)


711,284


250,667


1,258,051


467,689

Depreciation, depletion, amortization and accretion


135,516


60,020


238,112


115,844

General and administrative expenses


157,519


93,815


333,540


178,430










Income from continuing operations


239,000


75,391


380,453


102,927










Other income (expense):









  Interest expense, net


(30,177)


(16,263)


(59,983)


(28,415)

  Earnings (losses) from equity-method investments, net


-


5,499


(287)


5,526

  Gain on sale of equity-method investment


17,880


-


17,880


-










Income from continuing operations before income taxes


226,703


64,627


338,063


80,038










Income taxes


83,880


23,252


125,083


28,786










Net income from continuing operations


142,823


41,375


212,980


51,252










Income (loss) from discontinued operations, net of income tax


(970)


6,734


(17,207)


12,360










Net income


$      141,853


$        48,109


$       195,773


$       63,612



















Basic earnings per share:









Net income from continuing operations


$            0.91


$            0.52


$             1.51


$           0.65

Income (loss) from discontinued operations


(0.01)


0.08


(0.12)


0.15

Net income


$            0.90


$            0.60


$             1.39


$           0.80










Diluted earnings per share:









Net income from continuing operations


$            0.90


$            0.51


$             1.49


$           0.63

Income (loss) from discontinued operations


(0.01)


0.08


(0.12)


0.16

Net income


$            0.89


$            0.59


$             1.37


$           0.79










Weighted average common shares used









  in computing earnings per share:









    Basic


157,017


79,744


141,282


79,385

    Diluted


158,632


81,254


143,092


81,024



















* As adjusted for discontinued operations














 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2012 AND DECEMBER 31, 2011

(in thousands)









6/30/2012


12/31/2011



(Unaudited)


(Audited)






ASSETS










Current assets:





  Cash and cash equivalents


$      132,170


$       80,274

  Accounts receivable, net


1,065,030


540,602

  Prepaid expenses


86,734


34,037

  Inventory and other current assets


286,788


228,309






        Total current assets


1,570,722


883,222






Property, plant and equipment, net 


2,922,793


1,507,368

Goodwill


2,503,401


581,379

Notes receivable


43,432


73,568

Available-for-sale securities


47,113


-

Equity-method investments


-


72,472

Intangible and other long-term assets, net


505,489


930,136






        Total assets


$   7,592,950


$  4,048,145






LIABILITIES AND STOCKHOLDERS' EQUITY










Current liabilities:





  Accounts payable


$      270,390


$     178,645

  Accrued expenses


290,809


197,574

  Income taxes payable 


118,163


717

  Deferred income taxes


3,907


831

  Current portion of decommissioning liabilities


-


14,956

  Current maturities of long-term debt


20,000


810

        Total current liabilities


703,269


393,533






Deferred income taxes 


680,268


297,458

Decommissioning liabilities


89,911


108,220

Long-term debt, net


1,973,669


1,685,087

Other long-term liabilities


106,086


110,248






Total stockholders' equity


4,039,747


1,453,599






        Total liabilities and stockholders' equity


$   7,592,950


$  4,048,145







SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
SEGMENT HIGHLIGHTS
THREE MONTHS ENDED JUNE 30, 2012, MARCH 31, 2012 AND JUNE 30, 2011(1)
(Unaudited)
(in thousands)






Three months ended,

Revenue


June 30, 2012


March 31, 2012


June 30, 2011








Subsea and Well Enhancement


$ 1,045,169


$ 777,480


$ 330,726








Drilling Products and Services


198,150


189,357


149,167















Total Revenues


$ 1,243,319


$ 966,837


$ 479,893















Gross Profit (2)


June 30, 2012


March 31, 2012


June 30, 2011








Subsea and Well Enhancement


$ 400,370


$ 293,279


$ 136,686








Drilling Products and Services


131,665


126,791


92,540








Total Gross Profit


$ 532,035


$ 420,070


$ 229,226















Income from Continuing Operations


June 30, 2012


March 31, 2012 (3)


June 30, 2011








Subsea and Well Enhancement


$ 179,692


$ 84,224


$ 46,008








Drilling Products and Services


59,308


57,229


29,383








Total Income from Operations


$ 239,000


$ 141,453


$ 75,391















(1)

Adjusted for discontinued operations.



(2)

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.



(3)

Includes $29.0 million of transaction-related expenses recorded in general and administrative expenses of the Subsea and Well Enhancement Segment.

 

NON-GAAP RECONCILIATION

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 certain 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.

Reconciliation of Net Income from Continuing Operations 

to Non-GAAP Adjusted Net Income from Continuing Operations and Earnings per Share

For the three months ended June 30, 2012 and 2011

(in thousands, except earnings per share amounts)








 Three months ended 



 June 30, 



2012


2011

Net income from continuing operations as reported


$       142,823


$         41,375

Pre-tax adjustments:





Gain on sale of equity-method investments


(17,880)


-

Equity-method investments' hedging activities


-


(2,500)






Total pre-tax adjustments


(17,880)


(2,500)






Income tax effect of adjustments


6,616


900






Non-GAAP adjusted net income from continuing operations


$       131,559


$         39,775






Non-GAAP adjusted diluted earnings per share


$             0.83


$             0.49






Weighted average common shares used in computing





diluted earnings per share


158,632


81,254











Reconciliation of Net Income from Continuing Operations 

to Non-GAAP Adjusted Net Income from Continuing Operations and Earnings per Share

For the six months ended June 30, 2012 and 2011

(in thousands, except earnings per share amounts)








 Six months ended 



 June 30, 



2012


2011

Net income from continuing operations as reported


$       212,980


$         51,252

Pre-tax adjustments:





Gain on sale of equity-method investments


(17,880)


-

Cost related to acquisitions, primarily Complete Production Services

29,334


-

Equity-method investments' hedging activities


3,139


(445)






Total pre-tax adjustments


14,593


(445)






Income tax effect of adjustments


(5,399)


160






Non-GAAP adjusted net income from continuing operations


$       222,174


$         50,967






Non-GAAP adjusted diluted earnings per share


$             1.55


$             0.63






Weighted average common shares used in computing





diluted earnings per share


143,092


81,024






 

SOURCE Superior Energy Services, Inc.