Superior Energy Services, Inc. Posts Record Third Quarter 2006 Results
EPS Increases Almost Five Fold Over the Third Quarter of 2005 and
42% Over the Second Quarter of 2006
HARVEY, La., Oct. 30 /PRNewswire-FirstCall/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced record net income of $55.2 million and diluted earnings per share of $0.68, on revenues of $290.5 million, as compared to net income of $9.4 million, or $0.12 diluted earnings per share on revenues of $184.1 million for the third quarter of 2005.
As compared to the second quarter of 2006, revenues increased 11%, operating income increased 16% and earnings per share increased 42%.
Highlights for the quarter include:
- Well Intervention revenues increased 9% from the second quarter of 2006, reflecting strong demand for production-related and plug and abandonment services.
- Rental Tool revenues increased 13% from the second quarter of 2006, largely on international growth.
- Marine revenues increased 6% from the second quarter of 2006, as average dayrates in all liftboat classes improved and effective utilization (utilization less idle days for inspections, maintenance and repair work) was 100%.
- Oil and Gas revenues increased 14% from the second quarter of 2006 due mainly to increased oil and gas production.
- Revenue from non-Gulf of Mexico markets was approximately $112 million as compared to approximately $100 million in the second quarter of 2006 and approximately $68 million in the third quarter of 2005.
- The Derrick Barge Performance ("DB Performance") went on a 14-month charter in late August working offshore Malaysia.
Terence Hall, Chairman and CEO of Superior, commented, "Our third quarter results were outstanding and all business units performed very well. We also made tremendous strides in executing our growth strategy during the quarter. In July, we announced multiple international contracts totaling more than $100 million as part of our international expansion initiatives. In September, we agreed to acquire Warrior Energy Services Corporation (Nasdaq: WARR) which will significantly expand our U.S. onshore operational footprint.
"Once the Warrior transaction is closed, we will have operations in virtually all major oil and gas basins in the lower 48 states and an excellent platform to drive our continued growth. Both these international and U.S. onshore activities increase our ability to cross sell services, open up additional opportunities to further export our portfolio of products and services, and expand our customer base. We believe shareholders will benefit from our expansion activities in 2007 and well beyond."
For the nine months ended September 30, 2006, revenues were $774.7 million and net income was $126.1 million or $1.55 diluted earnings per share, as compared to revenues of $547.3 million and net income of $51.6 million or $0.65 diluted earnings per share for the nine months ended September 30, 2005.
Well Intervention Group Segment
Third quarter revenues for the Well Intervention Group were a record $122.2 million, a 9% increase from the second quarter of 2006 and a 42% increase from the third quarter of 2005. Operating income was $28.8 million, or 24% of segment revenue, up from $25.7 million, or 23% of segment revenue, in the second quarter of 2006. The biggest activity increases were in coiled tubing, engineering and project management services, well control, mechanical wireline and plug and abandonment services. These increases reflect continued high demand for production-enhancement activities, increased well abandonment work in the Gulf of Mexico and the company's continued involvement in providing hurricane-recovery project management and services.
Rental Tools Segment
Revenues for the Rental Tools segment were a record $98.3 million, 13% higher than the second quarter of 2006 and a 59% increase from the third quarter of 2005. Operating income was $35.1 million, or 36% of segment revenue, up from $29.4 million, or 34% of segment revenue in the second quarter of 2006. The primary factors leading to the record quarter were increased rentals of on-site accommodations, stabilizers, drill collars, specialty tubulars, drill pipe and associated handling tools across all geographic markets.
Marine Segment
Superior's marine revenues were $36.0 million, a 6% increase over the second quarter of 2006 and a 95% increase from the third quarter of 2005. Operating income was $16.2 million, or 45% of segment revenue, up from $15.3 million, or 45% of segment revenue in the second quarter of 2006. Average fleet utilization was 78% as compared to 84% in the second quarter of 2006, but average daily revenue in the third quarter was approximately $391,000, inclusive of subsistence revenue, as compared to $373,000 per day in the second quarter of 2006, reflecting higher dayrates which were put into place during the quarter.
During the third quarter, the 145-155 ft. class and 160-175 ft. class incurred significant downtime due to shipyard days. Effective utilization, which is utilization excluding shipyard days or other idle days due to repairs and maintenance, was 100% across all liftboat classes in the third quarter, meaning no liftboat was idle for something other than inspections or repairs. This marks the second consecutive quarter that effective utilization was 100%.
Liftboat Average Dayrates and Utilization by Class Size
Three Months Ended September 30, 2006
($ actual)
Average
Class Liftboats Dayrate Utilization
145-155' 11 $10,856 70.2%
160'-175' 6 14,149 69.7%
200' 4 17,456 95.7%
230'-245' 3 28,996 98.6%
250' 2 36,856 82.6%
Oil and Gas Segment
Oil and gas revenues were $38.2 million, a 14% increase over second quarter 2006 levels and a 76% improvement over the third quarter of 2005. Operating income was $8.1 million, or 21% of segment revenue, up from $5.5 million, or 16% of segment revenue, in the second quarter of 2006. Third quarter production was approximately 739,000 barrels of oil equivalent (boe), or about 8,000 boe per day, up from approximately 636,000 boe, or 7,000 boe per day in the second quarter of 2006, and approximately 427,000 boe, or about 4,600 boe per day in the third quarter of 2005. Production during the third quarter of 2005 was adversely impacted by Hurricanes Katrina and Rita.
Conference Call Information
The Company will host a conference call at 10 a.m. Central Time on Tuesday, October 31, 2006. The call can be accessed from Superior's website at http://www.superiorenergy.com , or by telephone at 303-262-2194. For those who cannot listen to the live call, a telephonic replay will be available through Tuesday, November 7, 2006 and may be accessed by calling 303-590-3000 and using the pass code 11073568#. An archive of the webcast will be available after the call for a period of 60 days on http://www.superiorenergy.com .
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 Nine Months Ended September 30, 2006 and 2005
(in thousands, except earnings per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Oilfield service and rental
revenues $252,309 $162,337 $687,441 $470,151
Oil and gas revenues 38,208 21,764 87,304 77,197
Total revenues 290,517 184,101 774,745 547,348
Cost of oilfield services and
rentals 109,525 90,029 304,066 243,203
Cost of oil and gas sales 19,562 11,368 52,469 35,264
Total cost of services and sales 129,087 101,397 356,535 278,467
Depreciation, depletion,
amortization and accretion 28,831 22,883 77,473 68,860
General and administrative
expenses 44,385 37,583 122,124 103,133
Reduction in value of assets --- 3,244 --- 3,244
Gain on sale of liftboats --- --- --- 3,269
Income from operations 88,214 18,994 218,613 96,913
Other income (expense):
Interest expense (5,989) (5,437) (16,389) (16,530)
Interest income 1,255 739 3,477 1,470
Earnings from equity-method
investments 2,704 558 3,852 1,336
Reduction in value of equity-
method investment --- --- --- (1,250)
Loss on early extinguishment of
debt --- --- (12,596) ---
Income before income taxes 86,184 14,854 196,957 81,939
Income taxes 31,026 5,496 70,904 30,318
Net income $55,158 $9,358 $126,053 $51,621
Basic earnings per share $0.69 $0.12 $1.58 $0.66
Diluted earnings per share $0.68 $0.12 $1.55 $0.65
Weighted average common shares used
in computing earnings per share:
Basic 79,824 78,707 79,754 77,936
Diluted 81,340 80,168 81,232 79,423
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
(in thousands)
09/30/2006 12/31/2005
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $111,882 $54,457
Accounts receivable - net 269,110 196,365
Current portion of notes receivable 14,558 2,364
Prepaid insurance and other 60,651 51,116
Total current assets 456,201 304,302
Property, plant and equipment - net 661,633 534,962
Goodwill - net 224,807 220,064
Notes receivable 16,524 29,483
Equity-method investments 62,586 953
Other assets - net 12,900 7,486
Total assets $1,434,651 $1,097,250
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $48,861 $42,035
Accrued expenses 104,639 69,926
Income taxes payable 74,397 11,353
Fair value of commodity derivative
instruments --- 10,792
Current portion of decommissioning
liabilities 25,067 14,268
Current maturities of long-term debt 810 810
Total current liabilities 253,774 149,184
Deferred income taxes 101,125 97,987
Decommissioning liabilities 96,826 107,641
Long-term debt 311,801 216,596
Other long-term liabilities 3,617 1,468
Total stockholders' equity 667,508 524,374
Total liabilities and
stockholders' equity $1,434,651 $1,097,250
Superior Energy Services, Inc. and Subsidiaries
Segment Highlights
Three months ended September 30, 2006, June 30, 2006 and September 30, 2005
(Unaudited)
(in thousands)
Three months ended,
Sept. 30 June 30, Sept. 30,
Revenue 2006 2006 2005
Well Intervention $122,205 $111,675 $85,848
Rental tools 98,262 86,593 61,686
Marine 36,013 33,951 18,467
Oil and Gas 38,208 33,625 21,764
Less: Oil and Gas Eliminations (B) (4,171) (4,085) (3,664)
Total Revenues $290,517 $261,759 $184,101
Three months ended,
Sept. 30, June 30, Sept. 30,
Gross Profit (A) 2006 2006 2005
Well Intervention $53,767 $48,320 $25,986
Rental tools 67,476 58,370 39,694
Marine 21,541 20,158 6,628
Oil and Gas 18,646 14,923 10,396
Total Gross Profit $161,430 $141,771 $82,704
(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.
FOR FURTHER INFORMATION CONTACT:
Terence Hall, CEO; Robert Taylor, CFO;
Greg Rosenstein, VP of Investor Relations, 504-362-4321
SOURCE Superior Energy Services, Inc.
CONTACT: Terence Hall, CEO, or Robert Taylor, CFO, or Greg Rosenstein,
VP of Investor Relations, all of Superior Energy Services, Inc.,
+1-504-362-4321
