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Superior Energy Services Announces Third Quarter 2014 Results

HOUSTON, Oct. 29, 2014 /PRNewswire/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced net income from continuing operations of $85.7 million, or $0.55 per diluted share, and net income of $79.9 million, or $0.51 per diluted share, on revenue of $1,209.0 million for the third quarter of 2014.

These results compare with the third quarter of 2013 net income from continuing operations of $67.5 million, or $0.42 per diluted share, and net income of $69.8 million, or $0.43 per diluted share, on revenue of $1,096.4 million.

David Dunlap, President and CEO of the Company, commented, "We had another great quarter of performance at Superior Energy Services.  Our U.S. land revenue continues to grow as we experienced higher demand across most of our product lines, with hydraulic fracturing leading the way.  We expect the fracturing business to have more expansion opportunities in the U.S. land market as we continue to activate idle equipment in the coming quarters. 

"We have frequently mentioned the operating leverage that is available in our U.S. land business. The increased horizontal completions demand that we have experienced the past two quarters has provided us the opportunity to demonstrate how operating leverage translates into higher earnings. 

"Although the majority of our earnings improvement in the past two quarters has been driven by higher demand in the United States, our international growth is also producing impressive gains. We have been very deliberate in choosing specific countries to grow our business and have avoided the turbulence that is impacting many other oilfield service companies.

"We are continuing to introduce product lines into established operating areas through equipment transfers, focused capital expenditures and targeted acquisitions.  We believe these actions support the steady and reliable growth that we have delivered, and intend to continue to deliver in our international business."

During the third quarter of 2014, the Company repurchased and retired approximately 2.0 million shares of its common stock for a total purchase price of $69.1 million. Year to date through September 30, 2014, the Company has repurchased and retired approximately 5.9 million shares for a total purchase price of $185.6 million.

Third Quarter 2014 Geographic Breakdown

U.S. land revenue was $814.1 million, as compared with $718.2 million in the third quarter of 2013 and $721.3 million in the second quarter of 2014. Gulf of Mexico revenue was $210.8 million, as compared with $214.5 million in the third quarter of 2013 and $211.7 million in the second quarter of 2014. International revenue was $184.1 million, as compared with $163.7 million in the third quarter of 2013 and $174.6 million in the second quarter of 2014.

Drilling Products and Services Segment

Drilling Products and Services segment revenue was $239.2 million, an 11% increase from third quarter 2013 revenue of $215.5 million and a 6% increase from second quarter 2014 revenue of $226.0 million.

The primary factor driving the higher sequential revenue in this segment was a 24% increase in international revenue to $63.7 million due to increased rentals of premium drill pipe and accommodations.  U.S. land revenue increased 5% sequentially to $85.9 million due to increased rentals of bottom hole assemblies and accommodations.  Gulf of Mexico revenue decreased 3% sequentially to $89.6 million due to decreased specialty rentals.

Onshore Completion and Workover Services Segment

Onshore Completion and Workover Services segment revenue was $470.8 million, an 18% increase from third quarter 2013 revenue of $398.0 million, and an 18% increase from second quarter 2014 revenue of $398.1 million. Practically all of the revenue in this segment is generated from U.S. land market areas.

On a sequential basis, the revenue increase was driven by higher demand for pressure pumping services.

Production Services Segment

Production Services segment revenue was $348.8 million, a 3% decrease from third quarter 2013 revenue of $359.7 million and a 1% increase from second quarter 2014 revenue of $343.9 million.

U.S. land revenue increased 5% sequentially to $225.0 million, primarily due to increased activity for coiled tubing and wireline. International revenue decreased 5% sequentially to $86.6 million primarily due to lower demand for snubbing services and pressure control tools. Gulf of Mexico revenue decreased 3% sequentially to $37.2 million primarily due to decreased coiled tubing activity.

Technical Solutions Segment

Technical Solutions segment revenue was $150.2 million, a 22% increase from third quarter 2013 revenue of $123.2 million and an 8% increase from second quarter 2014 revenue of $139.6 million.

Gulf of Mexico revenue increased 4% sequentially to $84.0 million due to an increase in well control services, which was offset by a decline in demand for completion tools and services. U.S. land revenue increased 20% sequentially to $32.4 million primarily related to increases in well control services and completion tools and products.  International revenue increased 5% sequentially to $33.8 million as a result of an increase in well service activity.

Conference Call Information

The Company will host a conference call at 11 a.m. Eastern Time on Thursday, October 30, 2014.  The call can be accessed from the Company's website at www.superiorenergy.com, or by telephone at 719-457-1035.  For those who cannot listen to the live call, a telephonic replay will be available through November 13, 2014 and may be accessed by calling 719-457-0820 and using the pass code 2102356#. 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, 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.

The press release contains forward-looking statements which involved risks and uncertainties.  Generally, the words "expects," "anticipates," "targets," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words.  Such forward-looking statements are subject to uncertainties that could cause actual results to differ materially from such statements. Such uncertainties include, but are not limited to: risks inherent in acquiring businesses; the effect of regulatory programs and environmental matters on the Company's performance, including the risk that future changes in the regulation of hydraulic fracturing could reduce or eliminate demand for the Company's pressure pumping services; risks associated with business growth outpacing the capabilities of the Company's infrastructure and workforce; risks associated with the uncertainty of macroeconomic and business conditions worldwide; the cyclical nature and volatility of the oil and gas industry, including the level of exploration, production and development activity and the volatility of oil and gas prices; changes in competitive factors affecting the Company's operations; political, economic and other risks and uncertainties associated with international operations; the impact that unfavorable or unusual weather conditions could have on the Company's operations; the potential shortage of skilled workers; the Company's dependence on certain customers; the risks inherent in long-term fixed-price contracts; and, operating hazards, including the significant possibility of accidents resulting in personal injury or death, property damage or environmental damage. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, the Company can give no assurance that such expectations will prove to be correct. Investors are cautioned that many of the assumptions on which the Company's forward-looking statements are based are likely to change after the forward-looking statements are made, including for example the market prices of oil and natural gas and regulations affecting oil and gas operations, which the Company cannot control or anticipate. Further, the Company may make changes to its business plans that could or will affect the Company's results. The Company undertakes no obligation to update any of its forward-looking statements and it does not intend to update its forward-looking statements more frequently than quarterly, notwithstanding any changes in the assumptions, changes in the Company's business plans, its actual experience, or other changes.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Three and Nine Months Ended September 30, 2014 and 2013

(in thousands, except earnings per share amounts)

(unaudited)




Three Months Ended


Nine Months Ended



September 30,


September 30,



2014


2013


2014


2013










Revenues


$   1,209,026


$   1,096,412


$    3,377,996


$  3,274,413










Cost of services and rentals (exclusive of items shown separately below)


721,692


671,632


2,023,590


1,969,930

Depreciation, depletion, amortization and accretion


170,154


152,028


493,437


446,432

General and administrative expenses


154,859


147,364


457,631


440,812










Income from operations


162,321


125,388


403,338


417,239










Other income (expense):









  Interest expense, net


(24,169)


(25,564)


(72,610)


(81,610)

  Other income (expense)


(2,051)


(1,697)


(1,480)


41

  Loss on early extinguishment of debt


-


-


-


(884)










Income from continuing operations before income taxes


136,101


98,127


329,248


334,786










Income taxes


50,358


30,658


121,822


112,620










Net income from continuing operations


85,743


67,469


207,426


222,166










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


(5,886)


2,366


(15,735)


(20,045)










Net income


$        79,857


$        69,835


$       191,691


$     202,121



















Basic earnings (losses) per share:









Net income from continuing operations


$            0.55


$            0.42


$             1.33


$           1.40

Income (loss) from discontinued operations


(0.03)


0.02


(0.10)


(0.13)

Net income


$            0.52


$            0.44


$             1.23


$           1.27










Diluted earnings (losses) per share:









Net income from continuing operations


$            0.55


$            0.42


$             1.31


$           1.38

Income (loss) from discontinued operations


(0.04)


0.01


(0.10)


(0.12)

Net income


$            0.51


$            0.43


$             1.21


$           1.26










Weighted average common shares used









  in computing earnings per share:









    Basic


154,530


159,326


156,424


159,204

    Diluted


156,336


160,883


158,068


160,804










 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2014 AND DECEMBER 31, 2013

(in thousands)









9/30/2014


12/31/2013



(Unaudited)


(Audited)






ASSETS










Current assets:





  Cash and cash equivalents


$      320,042


$     196,047

  Accounts receivable, net


967,943


937,195

  Deferred income taxes


27,024


8,785

  Income taxes receivable


-


5,532

  Prepaid expenses


72,072


70,421

  Inventory and other current assets


185,613


258,449

  Assets held for sale


285,759


-






        Total current assets


1,858,453


1,476,429






Property, plant and equipment, net 


2,702,532


3,002,194

Goodwill


2,456,522


2,458,109

Notes receivable


25,560


23,708

Intangible and other long-term assets, net


420,873


450,867






        Total assets


$   7,463,940


$  7,411,307






LIABILITIES AND STOCKHOLDERS' EQUITY










Current liabilities:





  Accounts payable


$      207,242


$     216,029

  Accrued expenses


367,476


376,049

  Income taxes payable 


37,417


-

  Current portion of decommissioning liabilities


-


27,322

  Current maturities of long-term debt


20,344


20,000

  Liabilities held for sale


76,849


-






        Total current liabilities


709,328


639,400






Deferred income taxes 


729,246


736,080

Decommissioning liabilities


87,443


56,197

Long-term debt, net


1,630,834


1,646,535

Other long-term liabilities


165,379


201,651






Total stockholders' equity


4,141,710


4,131,444






        Total liabilities and stockholders' equity


$   7,463,940


$  7,411,307

 


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

SEGMENT HIGHLIGHTS

THREE MONTHS ENDED SEPTEMBER 30, 2014, JUNE 30, 2014, AND SEPTEMBER 30, 2013

(unaudited)

(in thousands)










Three months ended, 

Revenue


September 30, 2014


June 30, 2014


September 30, 2013

Drilling Products and Services


$                  239,204


$                  225,982


$                  215,523

Onshore Completion and Workover Services


470,849


398,048


398,016

Production Services


348,793


343,876


359,722

Technical Solutions


150,180


139,646


123,151








Total Revenues


$               1,209,026


$               1,107,552


$               1,096,412


















Gross Profit (1)


September 30, 2014


June 30, 2014


September 30, 2013

Drilling Products and Services


$                  162,927


$                  153,245


$                  141,650

Onshore Completion and Workover Services


153,416


123,141


122,340

Production Services


100,226


112,757


108,147

Technical Solutions


70,765


68,116


52,643








Total Gross Profit


$                  487,334


$                  457,259


$                  424,780






















Income from Operations (2)


September 30, 2014


June 30, 2014


September 30, 2013

Drilling Products and Services


$                    78,110


$                    66,948


$                    63,396

Onshore Completion and Workover Services


54,782


31,748


32,548

Production Services


13,374


27,334


15,858

Technical Solutions


16,055


23,411


13,586








Total Income from Operations


$                  162,321


$                  149,441


$                  125,388









(1)

Gross Profit is calculated by subtracting cost of services and rentals (exclusive of depreciation, depletion, amortization and accretion) from revenue for each of the Company's segments.



(2)

Income from Continuing Operations for all prior periods has been adjusted for discontinued operations from the Technical Solutions segment.

FOR FURTHER INFORMATION CONTACT:
David Dunlap, President and CEO or
Robert Taylor, CFO, (713) 654-2200

SOURCE Superior Energy Services, Inc.