Superior Energy Services Announces Third Quarter 2017 Results
The Company recorded a pre-tax charge of
“In U.S. land markets there was a continued increase in customer demand and service intensity, primarily across completion oriented product lines. Our customers continue to push the technical limits of their well and completion designs, and are also increasing activity levels as oil prices recover. It is not surprising that as a result, we began to observe supply chain stress and increased non-productive time as the quarter progressed, particularly in the
“In the Gulf of
“International markets strengthened, giving us further confidence that those markets did in fact reach a bottom in activity during the first half of 2017. While we don’t expect much growth internationally in coming quarters, we are seeing signs of select markets beginning to recover and believe we are well positioned to benefit as spending levels in
Third Quarter 2017 Geographic Breakdown
U.S. land revenue was
Drilling Products and Services Segment
The Drilling Products and Services segment revenue in the third quarter of 2017 was
U.S. land revenue increased 22% sequentially to
Onshore Completion and Workover Services Segment
The Onshore Completion and Workover Services segment revenue in the third quarter of 2017 was
The Onshore Completion and Workover Services segment was most severely impacted by Hurricane Harvey related interruptions and the Company estimates that approximately 70% of the consolidated pre-tax losses resulting from the storm was experienced in this segment, almost all of this in pressure pumping. Pressure pumping results were also impacted by supply chain tightness and increasingly complex logistics.
Production Services Segment
The Production Services segment revenue in the third quarter of 2017 was
U.S. land revenue increased 22% sequentially to
Technical Solutions Segment
The Technical Solutions segment revenue in the third quarter of 2017 was
U.S. land revenue increased 14% sequentially to
Debt Refinancing and Revolving Credit Facility Extension
During the third quarter, the Company issued
Subsequent to the end of the quarter, on
Conference Call Information
The Company will host a conference call at
About
The press release contains, and future oral or written statements or press releases by us and our management may contain, certain forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks” and “estimates,” variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words. All statements other than statements of historical fact regarding the Company’s financial position, financial performance, liquidity, strategic alternatives, market outlook, future capital needs, capital allocation plans, business strategies and other plans and objectives of our management for future operations and activities are forward-looking statements. These statements are based on certain assumptions and analyses made by our management in light of its experience and prevailing circumstances on the date such statements are made. Such forward-looking statements, and the assumptions on which they are based, are inherently speculative and are subject to a number of risks and uncertainties that could cause our actual results to differ materially from such statements. Such uncertainties include, but are not limited to: the cyclicality and volatility of the oil and gas industry, including changes in prevailing levels of capital expenditures, exploration, production and development activity; changes in prevailing oil and gas prices or expectations about future prices; operating hazards, including the significant possibility of accidents resulting in personal injury or death, property damage or environmental damage for which we may have limited or no insurance coverage or indemnification rights; the effect of regulatory programs (including worker health and safety laws) and environmental matters on our operations or prospects, including the risk that future changes in the regulation of hydraulic fracturing could reduce or eliminate demand for our pressure pumping services, or that future changes in climate change legislation could result in increased operating costs or reduced commodity demand globally; counter-party risks associated with reliance on key suppliers; risks associated with the uncertainty of macroeconomic and business conditions worldwide; changes in competitive and technological factors affecting our operations; credit risk associated with our customer base; the potential inability to retain key employees and skilled workers; challenges with estimating our oil and natural gas reserves and potential liabilities related to our oil and natural gas property; risk associated with potential changes of
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
(in thousands, except earnings per share amounts) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended |
|||||||||||||||||||
September 30, | June 30, | September 30, |
||||||||||||||||||
2017 | 2016 | 2017 | 2017 | 2016 | ||||||||||||||||
Revenues | $ | 506,029 | $ | 326,225 | $ | 470,068 | $ | 1,377,033 | $ | 1,095,629 | ||||||||||
Cost of services and rentals (exclusive of depreciation, depletion, amortization and accretion) | 368,279 | 258,168 | 351,802 | 1,042,067 | 802,142 | |||||||||||||||
Depreciation, depletion, amortization and accretion | 108,751 | 123,308 | 108,119 | 331,151 | 392,017 | |||||||||||||||
General and administrative expenses | 74,372 | 86,743 | 76,708 | 226,573 | 270,467 | |||||||||||||||
Reduction in value of assets | 9,953 | - | - | 9,953 | 462,461 | |||||||||||||||
Loss from operations | (55,326 | ) | (141,994 | ) | (66,561 | ) | (232,711 | ) | (831,458 | ) | ||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense, net | (29,096 | ) | (21,771 | ) | (23,333 | ) | (76,679 | ) | (68,325 | ) | ||||||||||
Other income (expense) | (970 | ) | 3,667 | (2,156 | ) | (2,477 | ) | 22,103 | ||||||||||||
Loss from continuing operations before income taxes | (85,392 | ) | (160,098 | ) | (92,050 | ) | (311,867 | ) | (877,680 | ) | ||||||||||
Income taxes | (28,203 | ) | (46,185 | ) | (30,011 | ) | (102,978 | ) | (210,599 | ) | ||||||||||
Net loss from continuing operations | (57,189 | ) | (113,913 | ) | (62,039 | ) | (208,889 | ) | (667,081 | ) | ||||||||||
Loss from discontinued operations, net of income tax | (1,860 | ) | (4,085 | ) | (1,767 | ) | (5,625 | ) | (8,577 | ) | ||||||||||
Net loss | $ | (59,049 | ) | $ | (117,998 | ) | $ | (63,806 | ) | $ | (214,514 | ) | $ | (675,658 | ) | |||||
Loss per share information: | ||||||||||||||||||||
Basic and Diluted | ||||||||||||||||||||
Net loss from continuing operations | $ | (0.37 | ) | $ | (0.75 | ) | $ | (0.41 | ) | $ | (1.37 | ) | $ | (4.40 | ) | |||||
Loss from discontinued operations | (0.02 | ) | (0.03 | ) | (0.01 | ) | (0.04 | ) | (0.06 | ) | ||||||||||
Net loss | $ | (0.39 | ) | $ | (0.78 | ) | $ | (0.42 | ) | $ | (1.41 | ) | $ | (4.46 | ) | |||||
Weighted average common shares used | ||||||||||||||||||||
in computing earnings per share: | ||||||||||||||||||||
Basic and diluted | 153,082 | 151,707 | 152,857 | 152,624 | 151,337 | |||||||||||||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
September 30, 2017 and December 31, 2016 | ||||||
(in thousands) | ||||||
(unaudited) | ||||||
9/30/2017 | 12/31/2016 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 167,025 | $ | 187,591 | ||
Accounts receivable, net | 424,776 | 297,164 | ||||
Income taxes receivable | - | 101,578 | ||||
Prepaid expenses | 38,709 | 37,288 | ||||
Inventory and other current assets | 139,828 | 130,772 | ||||
Assets held for sale | 27,330 | 27,158 | ||||
Total current assets | 797,668 | 781,551 | ||||
Property, plant and equipment, net | 1,379,560 | 1,605,365 | ||||
Goodwill | 807,488 | 803,917 | ||||
Notes receivable | 59,226 | 56,650 | ||||
Intangible and other long-term assets, net | 167,189 | 222,772 | ||||
Total assets | $ | 3,211,131 | $ | 3,470,255 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 126,368 | $ | 94,831 | ||
Accrued expenses | 237,823 | 218,192 | ||||
Income taxes payable | 801 | 694 | ||||
Current portion of decommissioning liabilities | 27,237 | 22,164 | ||||
Liabilities held for sale | 8,755 | 8,653 | ||||
Total current liabilities | 400,984 | 344,534 | ||||
Deferred income taxes | 150,612 | 243,611 | ||||
Decommissioning liabilities | 101,544 | 101,513 | ||||
Long-term debt, net | 1,281,714 | 1,284,600 | ||||
Other long-term liabilities | 161,522 | 192,077 | ||||
Total stockholders' equity | 1,114,755 | 1,303,920 | ||||
Total liabilities and stockholders' equity | $ | 3,211,131 | $ | 3,470,255 | ||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (214,514 | ) | $ | (675,658 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation, depletion, amortization and accretion | 331,151 | 392,017 | ||||||
Reduction in value of assets | 9,953 | 462,461 | ||||||
Other noncash items | (65,627 | ) | (162,457 | ) | ||||
Changes in working capital and other | (5,555 | ) | 130,312 | |||||
Net cash provided by operating activities | 55,408 | 146,675 | ||||||
Cash flows from investing activities: | ||||||||
Payments for capital expenditures | (109,635 | ) | (74,071 | ) | ||||
Other | 46,247 | 6,238 | ||||||
Net cash used in investing activities | (63,388 | ) | (67,833 | ) | ||||
Cash flows from financing activities: | ||||||||
Net repayments of long-term debt | - | (337,576 | ) | |||||
Other | (15,880 | ) | (20,196 | ) | ||||
Net cash used in financing activities | (15,880 | ) | (357,772 | ) | ||||
Effect of exchange rate changes in cash | 3,294 | (6,932 | ) | |||||
Net decrease in cash and cash equivalents | (20,566 | ) | (285,862 | ) | ||||
Cash and cash equivalents at beginning of period | 187,591 | 564,017 | ||||||
Cash and cash equivalents at end of period | $ | 167,025 | $ | 278,155 | ||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | |||||||||
REVENUE BY GEOGRAPHIC REGION BY SEGMENT | |||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2017, JUNE 30, 2017 AND SEPTEMBER 30, 2016 | |||||||||
(in thousands) | |||||||||
(unaudited) | |||||||||
Three months ended, | |||||||||
September 30, 2017 | June 30, 2017 | September 30, 2016 | |||||||
U.S. land | |||||||||
Drilling Products and Services | $ | 33,779 | $ | 27,770 | $ | 15,192 | |||
Onshore Completion and Workover Services | 248,405 | 249,079 | 125,022 | ||||||
Production Services | 40,123 | 33,062 | 19,254 | ||||||
Technical Solutions | 9,118 | 7,921 | 10,691 | ||||||
Total U.S. land | $ | 331,425 | $ | 317,832 | $ | 170,159 | |||
Gulf of Mexico | |||||||||
Drilling Products and Services | 23,234 | 22,266 | 22,514 | ||||||
Onshore Completion and Workover Services | - | - | - | ||||||
Production Services | 16,487 | 19,937 | 18,174 | ||||||
Technical Solutions | 51,991 | 42,030 | 32,738 | ||||||
Total Gulf of Mexico | $ | 91,712 | $ | 84,233 | $ | 73,426 | |||
International | |||||||||
Drilling Products and Services | $ | 20,193 | $ | 18,791 | $ | 21,881 | |||
Onshore Completion and Workover Services | - | - | - | ||||||
Production Services | 40,723 | 35,607 | 40,095 | ||||||
Technical Solutions | 21,976 | 13,605 | 20,664 | ||||||
Total International | $ | 82,892 | $ | 68,003 | $ | 82,640 | |||
Total Revenues | $ | 506,029 | $ | 470,068 | $ | 326,225 | |||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||
SEGMENT HIGHLIGHTS | ||||||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2017, JUNE 30, 2017 AND SEPTEMBER 30, 2016 | ||||||||||||
(in thousands) | ||||||||||||
(unaudited) | ||||||||||||
Three months ended, | ||||||||||||
Revenues | September 30, 2017 | June 30, 2017 | September 30, 2016 | |||||||||
Drilling Products and Services | $ | 77,206 | $ | 68,827 | $ | 59,587 | ||||||
Onshore Completion and Workover Services | 248,405 | 249,079 | 125,022 | |||||||||
Production Services | 97,333 | 88,606 | 77,523 | |||||||||
Technical Solutions | 83,085 | 63,556 | 64,093 | |||||||||
Total Revenues | $ | 506,029 | $ | 470,068 | $ | 326,225 | ||||||
Income (Loss) from Operations | ||||||||||||
Drilling Products and Services | $ | (3,055 | ) | $ | (14,940 | ) | $ | (25,749 | ) | |||
Onshore Completion and Workover Services | (35,295 | ) | (28,605 | ) | (74,195 | ) | ||||||
Production Services | (17,788 | ) | (20,252 | ) | (31,320 | ) | ||||||
Technical Solutions | 812 | (2,764 | ) | (10,730 | ) | |||||||
Total Income (Loss) from Operations | $ | (55,326 | ) | $ | (66,561 | ) | $ | (141,994 | ) | |||
Adjusted Income (Loss) from Operations (1) | ||||||||||||
Drilling Products and Services | $ | (3,055 | ) | $ | (14,940 | ) | $ | (25,502 | ) | |||
Onshore Completion and Workover Services | (33,457 | ) | (28,605 | ) | (73,401 | ) | ||||||
Production Services | (17,788 | ) | (20,252 | ) | (28,634 | ) | ||||||
Technical Solutions | 8,927 | (2,764 | ) | (10,210 | ) | |||||||
Total Adjusted Income (Loss) from Operations | $ | (45,373 | ) | $ | (66,561 | ) | $ | (137,747 | ) | |||
(1) Adjusted income (loss) from operations excludes the impact of reduction in value of assets and restructuring costs for the three months ended September 30, 2017 and 2016, respectively. There were no adjustments for the three months ended June 30, 2017. | ||||||||||||
Non-GAAP Financial Measures
The following tables reconcile consolidated net loss from continuing operations and income (loss) from operations by segment, which are the directly comparable financial results determined in accordance with Generally Accepted Accounting Principles (GAAP), to consolidated adjusted loss from continuing operations and adjusted income (loss) from operations by segment (non-GAAP financial measures). Consolidated adjusted loss from continuing operations and income (loss) from operations by segment exclude the impact of reduction in value of assets and restructuring costs. These financial measures are provided to enhance investors’ overall understanding of the Company’s current financial performance.
Reconciliation of As Reported Net Loss from Continuing Operations to Adjusted Net Loss From Continuing Operations | ||||||||||||||||
For the three months ended September 30, 2017 and 2016 | ||||||||||||||||
(in thousands) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended, | ||||||||||||||||
September 30, 2017 | September 30, 2016 | |||||||||||||||
Consolidated | Per Share | Consolidated | Per Share | |||||||||||||
Reported net loss from continuing operations | $ | (57,189 | ) | $ | (0.37 | ) | $ | (113,913 | ) | $ | (0.75 | ) | ||||
Reduction in value of assets and other items | 9,953 | 0.06 | 4,247 | 0.03 | ||||||||||||
Income taxes | (3,287 | ) | (0.02 | ) | (1,225 | ) | (0.01 | ) | ||||||||
Adjusted net loss from continuing operations | $ | (50,523 | ) | $ | (0.33 | ) | $ | (110,891 | ) | $ | (0.73 | ) | ||||
Reconciliation of As Reported Income (Loss) from Operations to Adjusted Income (Loss) From Operations | ||||||||||||||||||||
Three months ended September 30, 2017 and 2016 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three months ended, September 30, 2017 | ||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Consolidated | ||||||||||||||||
Reported income (loss) from operations | $ | (3,055 | ) | $ | (35,295 | ) | $ | (17,788 | ) | $ | 812 | $ | (55,326 | ) | ||||||
Reduction in value of assets | - | 1,838 | - | 8,115 | 9,953 | |||||||||||||||
Adjusted income (loss) from operations | $ | (3,055 | ) | $ | (33,457 | ) | $ | (17,788 | ) | $ | 8,927 | $ | (45,373 | ) | ||||||
Three months ended, September 30, 2016 | ||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Consolidated | ||||||||||||||||
Reported loss from operations | $ | (25,749 | ) | $ | (74,195 | ) | $ | (31,320 | ) | $ | (10,730 | ) | $ | (141,994 | ) | |||||
Restructuring costs | 247 | 794 | 2,686 | 520 | 4,247 | |||||||||||||||
Adjusted loss from operations | $ | (25,502 | ) | $ | (73,401 | ) | $ | (28,634 | ) | $ | (10,210 | ) | $ | (137,747 | ) | |||||
FOR FURTHER INFORMATION CONTACT:Paul Vincent , VP of Investor Relations, (713) 654-2200