Superior Energy Services Announces Third Quarter 2018 Results
“In the Gulf of
“Internationally, the competitive landscape is generally favorable for us and signs of potentially meaningful recovery in markets such as
“Demand from our U.S. land customers has grown steadily since the middle of 2016. As demand increased, oil field service industry capacity expanded, particularly in hydraulic fracturing. During the third quarter market growth in the
Despite the volatility of U.S. land markets our consolidated third quarter revenue and EBITDA grew sequentially. This is largely due to our diversified strategy and the performance of our global franchises, which we believe are essential to delivering strong operational and financial performance as the cycle progresses.”
Third Quarter 2018 Geographic Breakdown
U.S. land revenue was
Drilling Products and Services Segment
The Drilling Products and Services segment revenue in the third quarter of 2018 was
U.S. land revenue increased 5% sequentially to
Onshore Completion and Workover Services Segment
The Onshore Completion and Workover Services segment revenue in the third quarter of 2018 was
Production Services Segment
The Production Services segment revenue in the third quarter of 2018 was
U.S. land revenue of
Technical Solutions Segment
The Technical Solutions segment revenue in the third quarter of 2018 was
U.S. land revenue increased 6% sequentially to
Conference Call Information
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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 and fluid management 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, | ||||||||||||||||||
2018 | 2017 | 2018 | 2018 | 2017 | ||||||||||||||||
Revenues | $ | 573,068 | $ | 506,029 | $ | 535,548 | $ | 1,590,934 | $ | 1,377,033 | ||||||||||
Cost of services and rentals (exclusive of depreciation, depletion, amortization and accretion) | 404,389 | 368,279 | 369,810 | 1,117,659 | 1,042,067 | |||||||||||||||
Depreciation, depletion, amortization and accretion | 99,892 | 108,751 | 97,973 | 303,584 | 331,151 | |||||||||||||||
General and administrative expenses | 68,895 | 74,372 | 69,896 | 214,611 | 226,573 | |||||||||||||||
Reduction in value of assets | - | 9,953 | - | - | 9,953 | |||||||||||||||
Loss from operations | (108 | ) | (55,326 | ) | (2,131 | ) | (44,920 | ) | (232,711 | ) | ||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense, net | (24,952 | ) | (29,096 | ) | (24,894 | ) | (74,733 | ) | (76,679 | ) | ||||||||||
Other income (expense) | (277 | ) | (970 | ) | (2,382 | ) | (4,394 | ) | (2,477 | ) | ||||||||||
Loss from continuing operations before income taxes | (25,337 | ) | (85,392 | ) | (29,407 | ) | (124,047 | ) | (311,867 | ) | ||||||||||
Income taxes | (3,521 | ) | (28,203 | ) | (3,970 | ) | (16,846 | ) | (102,978 | ) | ||||||||||
Net income (loss) from continuing operations | (21,816 | ) | (57,189 | ) | (25,437 | ) | (107,201 | ) | (208,889 | ) | ||||||||||
Income (loss) from discontinued operations, net of income tax | - | (1,860 | ) | (953 | ) | (729 | ) | (5,625 | ) | |||||||||||
Net income (loss) | $ | (21,816 | ) | $ | (59,049 | ) | $ | (26,390 | ) | $ | (107,930 | ) | $ | (214,514 | ) | |||||
Basic and Diluted earnings (losses) per share: | ||||||||||||||||||||
Net income (loss) from continuing operations | $ | (0.14 | ) | $ | (0.37 | ) | $ | (0.16 | ) | $ | (0.70 | ) | $ | (1.37 | ) | |||||
Loss from discontinued operations | - | (0.02 | ) | (0.01 | ) | - | (0.04 | ) | ||||||||||||
Net income (loss) | $ | (0.14 | ) | $ | (0.39 | ) | $ | (0.17 | ) | $ | (0.70 | ) | $ | (1.41 | ) | |||||
Weighted average common shares: | ||||||||||||||||||||
Basic and Diluted | 154,529 | 153,082 | 154,278 | 154,047 | 152,624 | |||||||||||||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands) | ||||||
(unaudited) | ||||||
9/30/2018 | 12/31/2017 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 104,690 | $ | 172,000 | ||
Accounts receivable, net | 493,243 | 398,056 | ||||
Income taxes receivable | - | 959 | ||||
Prepaid expenses | 42,271 | 42,128 | ||||
Inventory and other current assets | 150,683 | 134,032 | ||||
Assets held for sale | - | 13,644 | ||||
Total current assets | 790,887 | 760,819 | ||||
Property, plant and equipment, net | 1,198,549 | 1,316,944 | ||||
Goodwill | 806,496 | 807,860 | ||||
Notes receivable | 63,009 | 60,149 | ||||
Restricted cash | 8,677 | 20,483 | ||||
Intangible and other long-term assets, net | 134,112 | 143,970 | ||||
Total assets | $ | 3,001,730 | $ | 3,110,225 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 132,166 | $ | 119,716 | ||
Accrued expenses | 230,520 | 221,757 | ||||
Income taxes payable | 2,119 | - | ||||
Current portion of decommissioning liabilities | 24,182 | 27,261 | ||||
Liabilities held for sale | - | 6,463 | ||||
Total current liabilities | 388,987 | 375,197 | ||||
Deferred income taxes | 33,464 | 61,058 | ||||
Decommissioning liabilities | 104,416 | 103,136 | ||||
Long-term debt, net | 1,282,014 | 1,279,771 | ||||
Other long-term liabilities | 156,834 | 158,634 | ||||
Total stockholders' equity | 1,036,015 | 1,132,429 | ||||
Total liabilities and stockholders' equity | $ | 3,001,730 | $ | 3,110,225 | ||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (107,930 | ) | $ | (214,514 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation, depletion, amortization and accretion | 303,584 | 331,151 | ||||||
Other noncash items | (12,546 | ) | (63,755 | ) | ||||
Changes in working capital and other | (99,752 | ) | (4,966 | ) | ||||
Net cash provided by operating activities | 83,356 | 47,916 | ||||||
Cash flows from investing activities: | ||||||||
Payments for capital expenditures | (186,283 | ) | (109,635 | ) | ||||
Other | 29,595 | 15,647 | ||||||
Net cash used in investing activities | (156,688 | ) | (93,988 | ) | ||||
Cash flows from financing activities: | ||||||||
Other | (3,950 | ) | (15,880 | ) | ||||
Net cash used in financing activities | (3,950 | ) | (15,880 | ) | ||||
Effect of exchange rate changes in cash | (1,834 | ) | 3,294 | |||||
Net decrease in cash, cash equivalents, and restricted cash | (79,116 | ) | (58,658 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 192,483 | 246,092 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 113,367 | $ | 187,434 | ||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | |||||||||
REVENUE BY GEOGRAPHIC REGION BY SEGMENT | |||||||||
(in thousands) | |||||||||
(unaudited) | |||||||||
Three months ended, | |||||||||
September 30, 2018 | June 30, 2018 | September 30, 2017 | |||||||
U.S. land | |||||||||
Drilling Products and Services | $ | 45,605 | $ | 43,394 | $ | 33,779 | |||
Onshore Completion and Workover Services | 294,869 | 276,242 | 248,405 | ||||||
Production Services | 47,858 | 47,944 | 40,123 | ||||||
Technical Solutions | 8,453 | 7,858 | 9,118 | ||||||
Total U.S. land | $ | 396,785 | $ | 375,438 | $ | 331,425 | |||
Gulf of Mexico | |||||||||
Drilling Products and Services | $ | 26,065 | $ | 23,261 | $ | 23,234 | |||
Onshore Completion and Workover Services | - | - | - | ||||||
Production Services | 16,776 | 13,634 | 16,487 | ||||||
Technical Solutions | 47,286 | 35,333 | 51,991 | ||||||
Total Gulf of Mexico | $ | 90,127 | $ | 72,228 | $ | 91,712 | |||
International | |||||||||
Drilling Products and Services | $ | 27,514 | $ | 27,378 | $ | 20,193 | |||
Onshore Completion and Workover Services | - | - | - | ||||||
Production Services | 41,236 | 40,426 | 40,723 | ||||||
Technical Solutions | 17,406 | 20,078 | 21,976 | ||||||
Total International | $ | 86,156 | $ | 87,882 | $ | 82,892 | |||
Total Revenues | $ | 573,068 | $ | 535,548 | $ | 506,029 | |||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||
SEGMENT HIGHLIGHTS | ||||||||||||
(in thousands) | ||||||||||||
(unaudited) | ||||||||||||
Three months ended, | ||||||||||||
Revenues | September 30, 2018 | June 30, 2018 | September 30, 2017 (1) | |||||||||
Drilling Products and Services | $ | 99,184 | $ | 94,033 | $ | 77,206 | ||||||
Onshore Completion and Workover Services | 294,869 | 276,242 | 248,405 | |||||||||
Production Services | 105,870 | 102,004 | 97,333 | |||||||||
Technical Solutions | 73,145 | 63,269 | 83,085 | |||||||||
Total Revenues | $ | 573,068 | $ | 535,548 | $ | 506,029 | ||||||
Income (Loss) from Operations | ||||||||||||
Drilling Products and Services | $ | 20,255 | $ | 15,001 | $ | 1,165 | ||||||
Onshore Completion and Workover Services | 2,767 | 7,511 | (20,879 | ) | ||||||||
Production Services | (5,998 | ) | (7,124 | ) | (12,770 | ) | ||||||
Technical Solutions | 8,962 | 5,797 | 12,995 | |||||||||
Corporate and other | (26,094 | ) | (23,316 | ) | (25,884 | ) | ||||||
Total Loss from Operations | $ | (108 | ) | $ | (2,131 | ) | $ | (45,373 | ) | |||
EBITDA | ||||||||||||
Drilling Products and Services | $ | 48,085 | $ | 43,591 | $ | 33,004 | ||||||
Onshore Completion and Workover Services | 50,066 | 54,934 | 27,252 | |||||||||
Production Services | 11,087 | 7,179 | 6,563 | |||||||||
Technical Solutions | 15,291 | 12,070 | 21,024 | |||||||||
Corporate and other | (24,745 | ) | (21,932 | ) | (24,465 | ) | ||||||
Total EBITDA | $ | 99,784 | $ | 95,842 | $ | 63,378 | ||||||
(1) Income (loss) from operations and EBITDA for the three months ended September 30, 2017 exclude the impact of reduction in value of assets of $9.9 million. For Non-GAAP reconciliations, refer to Table 1 below. | ||||||||||||
Non-GAAP Financial Measures
The following table reconciles net income/loss from continuing operations by segment, which is the directly comparable financial results determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted income/loss from operations and adjusted EBITDA by segment (non-GAAP financial measures). These financial measures are provided to enhance investors’ overall understanding of the Company’s current financial performance.
Reconciliation of Adjusted Income (Loss) from Operations and Adjusted EBITDA by Segment | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Table 1 | |||||||||||||||||||||||
Three months ended, September 30, 2018 | |||||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other |
Consolidated | ||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 20,255 | $ | 2,767 | $ | (5,998 | ) | $ | 9,948 | $ | (48,788 | ) | $ | (21,816 | ) | ||||||||
Interest expense, net | - | - | - | (986 | ) | 25,938 | 24,952 | ||||||||||||||||
Other expense | - | - | - | - | 277 | 277 | |||||||||||||||||
Income taxes | - | - | - | - | (3,521 | ) | (3,521 | ) | |||||||||||||||
Income (loss) from operations | $ | 20,255 | $ | 2,767 | $ | (5,998 | ) | $ | 8,962 | $ | (26,094 | ) | $ | (108 | ) | ||||||||
Depreciation, depletion, amortization and accretion |
27,830 | 47,299 | 17,085 | 6,329 | 1,349 | 99,892 | |||||||||||||||||
EBITDA | $ | 48,085 | $ | 50,066 | $ | 11,087 | $ | 15,291 | $ | (24,745 | ) | $ | 99,784 | ||||||||||
Three months ended, June 30, 2018 | |||||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other |
Consolidated | ||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 15,001 | $ | 7,511 | $ | (7,124 | ) | $ | 6,768 | $ | (47,593 | ) | $ | (25,437 | ) | ||||||||
Interest expense, net | - | - | - | (971 | ) | 25,865 | 24,894 | ||||||||||||||||
Other expense | - | - | - | - | 2,382 | 2,382 | |||||||||||||||||
Income taxes | - | - | - | - | (3,970 | ) | (3,970 | ) | |||||||||||||||
Income (loss) from operations | $ | 15,001 | $ | 7,511 | $ | (7,124 | ) | $ | 5,797 | $ | (23,316 | ) | $ | (2,131 | ) | ||||||||
Depreciation, depletion, amortization and accretion |
28,590 | 47,423 | 14,303 | 6,273 | 1,384 | 97,973 | |||||||||||||||||
EBITDA | $ | 43,591 | $ | 54,934 | $ | 7,179 | $ | 12,070 | $ | (21,932 | ) | $ | 95,842 | ||||||||||
Three months ended, September 30, 2017 | |||||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other |
Consolidated | ||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 1,165 | $ | (22,717 | ) | $ | (12,770 | ) | $ | 5,806 | $ | (28,673 | ) | $ | (57,189 | ) | |||||||
Reduction in value of assets | - | 1,838 | - | 8,115 | 9,953 | ||||||||||||||||||
Interest expense, net | - | - | - | (926 | ) | 30,022 | 29,096 | ||||||||||||||||
Other expense | - | - | - | - | 970 | 970 | |||||||||||||||||
Income taxes | - | - | - | - | (28,203 | ) | (28,203 | ) | |||||||||||||||
Adjusted income (loss) from operations | $ | 1,165 | $ | (20,879 | ) | $ | (12,770 | ) | $ | 12,995 | $ | (25,884 | ) | $ | (45,373 | ) | |||||||
Depreciation, depletion, amortization and accretion |
31,839 | 48,131 | 19,333 | 8,029 | 1,419 | 108,751 | |||||||||||||||||
Adjusted EBITDA | $ | 33,004 | $ | 27,252 | $ | 6,563 | $ | 21,024 | $ | (24,465 | ) | $ | 63,378 | ||||||||||
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