|Superior Energy Services Posts Record First Quarter 2006 Results; Diluted EPS Increases 82% to $0.40; Oil and Gas Production Fully Restored in April; Company Closes on Acquisition of Mature Oil and Gas Properties|
HARVEY, La., April 26 /PRNewswire-FirstCall/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced record first quarter net income of $32.2 million, or $0.40 diluted earnings per share, on record revenues of $222.5 million. The record results were due to strong performances from the well intervention, rental tools and marine segments and were generated in spite of an operating loss incurred by the company's oil and gas segment. While first quarter oil and gas production was slow to recover due to continuing repairs to third party pipelines, full production was restored to pre-Hurricanes Katrina and Rita levels at all producing properties by mid-April.
"Our record first quarter results indicate the operating leverage and earnings power of our core products and services segments (well intervention, rental tools and marine segments) and our ability to capitalize on growing demand in certain domestic and international market areas," stated Terry Hall, president and CEO. "Activity improved each month, particularly in the Gulf of Mexico market where demand for well intervention services steadily increased throughout the period.
"While first quarter results were at record levels, we expect the second quarter to be even stronger," added Hall. "This is based upon current market conditions, our ability to execute as we did in the first quarter, the full resumption of our oil and gas production, and the incremental production from the mature property acquisition we closed today."
Well Intervention Group Segment
Beginning with the first quarter of 2006, results from businesses that comprised the other oilfield services segment -- contract operations, environmental services and manufactured products -- are now included in the Well Intervention Group segment.
First quarter revenues for the Well Intervention Group were a record $102.1 million, a 15% increase from the fourth quarter of 2005. The biggest increases were in plug and abandonment, well control, mechanical wireline and coiled tubing services, reflecting the resumption of pre-hurricane production- related projects and the transition to post-hurricane, production-related recovery and well abandonment work. The company continued to play an active role in managing and participating in many post-hurricane recovery projects and also benefited from performing several small well control projects domestically and internationally.
Rental Tools Segment
Revenues for the Rental Tools segment were a record $77.8 million, 14% higher than the fourth quarter of 2005. The primary factors leading to the record quarter were increased rentals of stabilizers, drill collars, drill pipe, connecting iron and other tubular products. Increased production- related work in the Gulf of Mexico and higher drilling rig counts domestically and internationally were the key drivers of these increases.
Superior's marine revenues were $30.2 million, down slightly from the fourth quarter of 2005 due to an increase in shipyard days related to planned mandatory inspections and repairs, primarily in the company's 200-foot class fleet. Average fleet utilization was 85% as compared to 90% in the fourth quarter of 2005. Average daily revenue in the first quarter was approximately $336,000, inclusive of subsistence revenue, as compared to $334,000 per day in the fourth quarter of 2005.
This segment should continue to benefit from record high dayrates and increased utilization as the 200-foot class comes back from drydock into service. Day rates were increased on March 1, 2006 by an average of 20%, reflecting the strong demand for liftboats in support of construction and well intervention work.
Liftboat Average Dayrates and Utilization by Class Size Three Months Ended March 31, 2006 ($ actual) Average Class Liftboats Dayrate Utilization 145-155' 11 $9,461 92.6% 160'-175' 6 12,649 91.1% 200' 4 15,262 50.6% 230'-245' 3 24,667 81.5% 250' 2 29,699 98.9% Oil and Gas Segment
Oil and gas revenues were $15.5 million, a significant increase over fourth quarter 2005 levels. However, oil and gas production returned slowly during the quarter as repairs to pipelines owned by third parties were completed later than originally estimated. First quarter production from SPN Resources averaged approximately 4,000 barrels of oil equivalent (boe) per day, net, as compared to average daily production of approximately 1,100 boe in the fourth quarter of 2005. In addition, the oil and gas segment incurred approximately $1.9 million in repair expenses. As discussed above, full production was restored to pre-Hurricanes Katrina and Rita levels at all producing properties in mid-April. April oil and gas production has averaged approximately 6,800 boe per day.
Superior Acquires Mature Properties from Explore Offshore, LLC
The company today also announced it has acquired from Explore Offshore, LLC approximately 16.2 billion cubic feet equivalent of net proved reserves (as of the December 1, 2005 effective date) for $46.6 million in cash and the assumption of an estimated $3.7 million in decommissioning liabilities.
This acquisition includes five leases located on the Outer Continental Shelf of the Gulf of Mexico encompassing four fields, nine structures, 13 operated wells and one well operated by a third party.
The properties are on blocks that span from Matagorda Island to Ship Shoal, and all are in less than 230 feet of water. Approximately 85% of the proved reserves are natural gas and 55% are proved developed reserves. Current production is approximately 1.6 million cubic feet equivalent per day, with another 5.1 million cubic feet equivalent per day expected by the end of the second quarter, pending hurricane-related repairs to third party pipelines.
"We acquired mature properties in this transaction that can be produced economically for several years with the benefit of our production-enhancement services," added Hall. "We also have the decommissioning assets to retire the properties at the end of their economic life. By adding these properties, we create more work for our services at a time of our choosing and at a relatively low incremental cost."
Conference Call Information
The Company will host a conference call at 10 a.m. Central Time on Thursday, April 27. The call can be accessed from Superior's website at http://www.superiorenergy.com , or by telephone at 800-763-5557. The replay telephone number is 800-642-1687 and the replay passcode is 7753584. The replay is available beginning two hours after the call and ending May 4, 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.
FOR FURTHER INFORMATION CONTACT: Terence Hall, CEO; Robert Taylor, CFO; Greg Rosenstein, VP of Investor Relations, 504-362-4321 SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES Consolidated Statements of Operations Three Months Ended March 31, 2006 and 2005 (in thousands, except earnings per share amounts) (unaudited, except as noted) 2006 2005 Oilfield service and rental revenues $206,998 $147,292 Oil and gas revenues 15,471 25,955 Total revenues 222,469 173,247 Cost of oilfield services and rentals 93,255 73,613 Cost of oil and gas sales 14,205 12,805 Total cost of services and sales 107,460 86,418 Depreciation, depletion, amortization and accretion 22,915 22,397 General and administrative expenses 37,651 32,384 Income from operations 54,443 32,048 Other income (expense): Interest expense (4,844) (5,575) Interest income 663 324 Equity in income of affiliates --- 519 Income before income taxes 50,262 27,316 Income taxes 18,094 10,107 Net income $32,168 $17,209 Basic earnings per share $0.40 $0.22 Diluted earnings per share $0.40 $0.22 Weighted average common shares used in computing earnings per share: Basic 79,639 77,381 Diluted 80,988 78,973 SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 2006 AND DECEMBER 31, 2005 (in thousands) 03/31/2006 12/31/2005 (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $68,574 $54,457 Accounts receivable - net 212,891 196,365 Notes receivable 4,621 2,364 Prepaid insurance and other 66,335 51,116 Total current assets 352,421 304,302 Property, plant and equipment - net 541,323 534,962 Goodwill - net 217,532 220,064 Notes receivable 25,874 29,483 Other assets - net 9,551 8,439 Total assets $1,146,701 $1,097,250 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $37,553 $42,035 Accrued expenses 77,460 69,926 Income taxes payable 25,797 11,353 Fair value of commodity derivative instruments 9,119 10,792 Current portion of decommissioning liabilities 13,749 14,268 Current maturities of long-term debt 810 810 Total current liabilities 164,488 149,184 Deferred income taxes 99,671 97,987 Decommissioning liabilities 102,020 107,641 Long-term debt 216,596 216,596 Other long-term liabilities 3,308 1,468 Total stockholders' equity 560,618 524,374 Total liabilities and stockholders' equity $1,146,701 $1,097,250 Superior Energy Services, Inc. and Subsidiaries Segment Highlights Three months ended March 31, 2006, December 31, 2005 and March 31, 2005 (Unaudited) (in thousands) Three months ended, March 31, December 31, March 31, Revenue 2006 2005 2005 Well Intervention $102,073 $88,626 $80,116 Rental tools 77,774 68,101 52,627 Marine 30,207 30,717 19,798 Oil and Gas 15,471 1,714 25,955 Less: Oil and Gas Eliminations (B) (3,056) (1,172) (5,249) Total Revenues $222,469 $187,986 $173,247 Three months ended, March 31, December 31, March 31, Gross Profit (A) 2006 2005 2005 Well Intervention $42,073 $36,370 $30,718 Rental tools 53,476 43,942 35,093 Marine 18,194 18,963 7,868 Oil and Gas 1,266 (8,826) 13,150 Total Gross Profit $115,009 $90,449 $86,829 (A) Gross profit is calculated by subtracting cost of services from revenue for each of the Company's four segments. (B) Oil and gas eliminations represent products and services from the company's segments provided to the Oil and Gas Segment.
SOURCE Superior Energy Services, Inc.