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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