Superior Energy Services, Inc. Announces Fourth Quarter 2005 Results, Year-Over-Year Fourth Quarter Earnings Per Share Grow 25 Percent
HARVEY, La.--(BUSINESS WIRE)--Feb. 23, 2006--Superior Energy Services, Inc. (NYSE: SPN) today announced fourth quarter net income, excluding gains and losses net of income taxes, of $18.5 million or $0.23 diluted earnings per share on revenues of $188.0 million.
The fourth quarter results include a non-recurring, non-cash loss of $3.8 million as a result of the Company's sale of its non-hazardous oilfield waste subsidiary for $18.7 million in cash, which closed today, and a $0.3 million gain from the finalization of the second quarter 2005 sale of 17 small liftboats. Including these gains and losses, fourth quarter net income was $16.2 million, or $0.20 diluted earnings per share, as compared to net income of $12.3 million, or $0.16 diluted earnings per share on revenues of $157.8 million for the fourth quarter of 2004, a 25% increase in diluted earnings per share.
For the year ended December 31, 2005, revenues were a record $735.3 million and net income was a record $67.9 million, or $0.85 diluted earnings per share, as compared to revenues of $564.3 million and net income of $35.9 million, or $0.47 diluted earnings per share, for the year ended December 31, 2004.
The fourth quarter was adversely impacted by ongoing hurricane-related repairs to the Company's platforms and to pipelines owned by third parties, resulting in deferred oil and gas production of approximately 523,400 barrels of oil equivalent ('boe"). In addition, the Company incurred approximately $4.6 million in operating expenses for repairs at its offshore oil and gas properties and $1.0 million in general and administrative expenses related to the 2005 hurricane season.
Chairman and CEO Terry Hall Comments
Chairman and CEO Terry Hall commented, "We are extremely pleased with these results, despite the fact that the strong Gulf of Mexico activity levels for services and rental tools we experienced before Hurricane Katrina did not begin to resume until mid-November. Gulf demand for many of our products and services exceeded pre-storm levels by year-end.
"Our Gulf of Mexico-based customers spent a significant part of the fourth quarter assessing and repairing damage from the active hurricane season. Also, our oil and gas production was significantly lower due to ongoing repairs at some of our properties. Only the marine segment had a full quarter of strong activity levels as our liftboats supported damage assessment and hurricane-related construction work.
"In addition to strong performance from our marine segment, growth in our non-Gulf of Mexico markets was a major contributor to our quarterly results. For instance, international revenue was a quarterly record of $31.4 million, driven mainly by rental activity in the North Sea, the Middle East and West Africa, and well intervention activity in Australia, Egypt and Venezuela. For the year, international revenue was a record $99.3 million. International and domestic land markets will continue to represent a larger part of our business mix going forward as we diversify into growing markets with our rental tools and production-related services.
"We believe our outlook remains extremely favorable given the high year-end demand levels in the Gulf of Mexico, the geographic expansion of our rental and service footprint domestically onto land and our increasing international presence. The underlying factors helping to drive our growth remain firmly in place. As a result, we expect to achieve record financial performance in 2006."
Well Intervention Group Segment
Fourth quarter revenues for the Well Intervention Group were a record $66.2 million. Although Gulf of Mexico pre-Hurricane Katrina demand did not resume until mid-quarter, revenue and income from operations improved over the third quarter of 2005. This was due primarily to higher activity levels for production-related services such as coiled tubing, electric line, mechanical wireline, hydraulic workover and well control services, as well as increased demand for plug and abandonment services.
By the end of the quarter, Gulf of Mexico-based, production-related services such as coiled tubing, electric line and mechanical wireline were experiencing demand that exceeded pre-storm levels. In addition, international activity increased significantly as compared to the third quarter for hydraulic workover services in Australia, Egypt and Venezuela, and well control services in Egypt.
Rental Tools Segment
Revenues for the Rental Tools segment were a record $68.1 million. Domestic land and international rentals offset hurricane-related Gulf of Mexico downtime. The Gulf market for several of our rental tools returned to pre-storm levels by mid-quarter. Rentals of specialty tubulars, drill pipe, drill collars, stabilizers and on-site accommodations on land and internationally helped drive this segment's record performance. Revenues from domestic land and international markets were approximately $45 million as compared to $39 million in the third quarter of 2005.
Marine Segment
Marine revenues were a record $30.7 million as the Company's liftboats continued to play an integral role in supporting hurricane-related damage assessment and construction-related work. Average fleet utilization was 90% as compared to 76% in the fourth quarter of 2004 and in the third quarter of 2005. Average daily revenue in the fourth quarter was approximately $333,900, inclusive of subsistence revenue.
Liftboat Average Dayrates and Utilization by Class Size
Three Months Ended December 31, 2005
($ actual)
Class Liftboats Average Utilization
Dayrate
--------------------- ---------------- ------------------------------
145'-155' 11 $8,920 89.0%
160'-175' 6 12,077 89.9%
200' 4 14,466 90.2%
230'-245' 3 22,831 85.9%
250' 2 28,339 99.5%
Other Oilfield Services
Revenues in this segment were $22.4 million, an 8% increase as compared to the fourth quarter of 2004 and essentially unchanged from the third quarter of 2005. Increases in property management services and volumes of non-hazardous oilfield waste lead to the year-over-year improvement.
Oil and Gas Segment
Oil and gas revenues were $1.7 million as compared to $11.5 million in the fourth quarter of 2004 and $21.8 million in the third quarter of 2005. Fourth quarter production from SPN Resources was approximately 104,500 boe as compared to approximately 289,400 boe in the fourth quarter of 2004 and approximately 426,800 boe in the third quarter of 2005. Fourth quarter production was significantly lower as compared to the fourth quarter last year and on a sequential basis as a result of deferred production of approximately 523,400 boe due to downtime related to repairs caused by the active 2005 hurricane season.
Current production is approximately 5,500 boe per day. The Company expects an additional 1,500 boe per day to come on-line by the end of the first quarter following repairs to third-party pipelines.
The Company will host a conference call at 10:30 a.m. Central Time on Friday, February 24. The call can be accessed from Superior's website at www.superiorenergy.com, or by telephone at 800-763-5557. The replay telephone number is 800-642-1687 and the replay passcode is 5161688. The replay is available beginning two hours after the call and ending March 3, 2006.
Superior Energy Services, Inc. is a leading provider of specialized oilfield services and equipment focused on serving the production-related needs of oil and gas companies primarily in the Gulf of Mexico and the drilling-related needs of oil and gas companies in the Gulf of Mexico and select international market areas. The Company uses its production-related assets to enhance, maintain and extend production and, at the end of an offshore property's economic life, plug and decommission wells. Superior also owns and operates mature oil and gas properties in the Gulf of Mexico.
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 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.
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Twelve Months Ended December 31, 2005 and 2004
(in thousands, except earnings per share amounts)
(unaudited, except as noted)
Three Months Ended Years Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------
(audited)
Oilfield service and rental
revenues $186,272 $146,373 $656,423 $527,331
Oil and gas revenues 1,714 11,462 78,911 37,008
-------- -------- -------- --------
Total revenues 187,986 157,835 735,334 564,339
-------- -------- -------- --------
Cost of oilfield services and
rentals 86,997 75,571 330,200 288,561
Cost of oil and gas sales 10,540 8,277 45,804 21,547
-------- -------- -------- --------
Total cost of services and
sales 97,537 83,848 376,004 310,108
-------- -------- -------- --------
Depreciation, depletion,
amortization and accretion 20,428 18,891 89,288 67,337
General and administrative
expenses 37,856 30,980 140,989 110,605
Reduction in value of assets 3,750 - 6,994 -
Gain on sale of liftboats 275 - 3,544 -
-------- -------- -------- --------
Income from operations 28,690 24,116 125,603 76,289
Other income (expense):
Interest expense (5,332) (5,752) (21,862) (22,476)
Interest income 731 401 2,201 1,766
Equity in income of
affiliates 3 437 1,339 1,329
Reduction in value of
investment in affiliate - - (1,250) -
-------- -------- -------- --------
Income before income taxes 24,092 19,202 106,031 56,908
Income taxes 7,854 6,916 38,172 21,056
-------- -------- -------- --------
Net income $ 16,238 $ 12,286 $ 67,859 $ 35,852
======== ======== ======== ========
Basic earnings per share $ 0.20 $ 0.16 $ 0.87 $ 0.48
======== ======== ======== ========
Diluted earnings per share $ 0.20 $ 0.16 $ 0.85 $ 0.47
======== ======== ======== ========
Weighted average common shares
used in computing earnings
per share:
Basic 79,464 76,163 78,321 74,896
======== ======== ======== ========
Diluted 80,621 77,618 79,735 75,900
======== ======== ======== ========
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2005 AND 2004
(in thousands)
12/31/2005 12/31/2004
(unaudited) (audited)
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 54,457 $ 15,281
Accounts receivable - net 196,365 156,235
Income taxes receivable - 2,694
Notes receivable 2,364 9,611
Prepaid insurance and other 51,116 28,203
----------- -----------
Total current assets 304,302 212,024
----------- -----------
Property, plant and equipment - net 534,962 515,151
Goodwill - net 220,064 226,593
Notes receivable 29,483 29,131
Investments in affiliates - 13,552
Other assets - net 8,439 7,462
----------- -----------
Total assets $ 1,097,250 $ 1,003,913
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 42,035 $ 36,496
Accrued expenses 69,926 56,796
Income taxes payable 11,353 -
Fair value of commodity derivative
instruments 10,792 2,018
Current portion of decommissioning
liabilities 14,268 23,588
Current maturities of long-term debt 810 11,810
----------- -----------
Total current liabilities 149,184 130,708
----------- -----------
Deferred income taxes 97,987 103,372
Decommissioning liabilities 107,641 90,430
Long-term debt 216,596 244,906
Other long-term liabilities 1,468 618
Total stockholders' equity 524,374 433,879
----------- -----------
Total liabilities and stockholders'
equity $ 1,097,250 $ 1,003,913
=========== ===========
Superior Energy Services, Inc. and Subsidiaries
Segment Highlights
Three months ended December 31, 2005, September 30, 2005, and
December 31, 2004 (Unaudited)
(in thousands)
Three months ended,
--------------------------------
Revenue December September December
31, 2005 30, 2005 31, 2004
---------- ---------- ----------
Well Intervention $ 66,228 $ 63,361 $ 62,779
Rental tools 68,101 61,686 44,971
Marine 30,717 18,467 20,456
Other Oilfield Services 22,398 22,487 20,789
Oil and Gas 1,714 21,764 11,462
Less: Oil and Gas Eliminations (2) (1,172) (3,664) (2,622)
--------- --------- ---------
Total Revenues $ 187,986 $ 184,101 $ 157,835
========= ========= =========
Three months ended,
--------------------------------
Gross Profit (1) December September December
31, 2005 30, 2005 31, 2004
---------- ---------- ----------
Well Intervention $ 31,615 $ 21,501 $ 29,154
Rental tools 43,942 39,694 29,731
Marine 18,963 6,628 7,357
Other Oilfield Services 4,755 4,485 4,560
Oil and Gas (8,826) 10,396 3,185
--------- --------- ---------
Total Gross Profit $ 90,449 $ 82,704 $ 73,987
========= ========= =========
(1) Gross profit is calculated by subtracting cost of services
from revenue for each of the Company's five segments.
(2) Oil and gas eliminations represent products and services from
the company's segments provided to the Oil and Gas Segment.
CONTACT: Superior Energy Services, Inc.
Terence Hall, 504-362-4321
or
Robert Taylor, 504-362-4321
or
Greg Rosenstein, 504-362-4321
SOURCE: Superior Energy Services, Inc.
