|Superior Energy Services, Inc. Posts Record Fourth Quarter 2006 Results|
|Diluted EPS of $0.76 is Three Times Higher Than the Fourth Quarter of 2005 and
13% Greater Than the Third Quarter of 2006
HARVEY, La., Feb. 26 /PRNewswire-FirstCall/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced record net income of $62.2 million and diluted earnings per share of $0.76, on revenues of $319.1 million, as compared to net income of $16.2 million, or $0.20 diluted earnings per share on revenues of $188.0 million for the fourth quarter of 2005. The fourth quarter of 2005 was negatively impacted by Hurricanes Katrina and Rita, which significantly curtailed Gulf of Mexico activity for most of our services during the quarter.
As compared to the third quarter of 2006, revenues increased 10%, income from operations increased 11% and earnings per share increased 13%.
Highlights for the quarter include the following: * Well Intervention revenues increased 9% from the third quarter of 2006 primarily due to increases in domestic land activity for production-related services and increases in international revenues from the company's derrick barge charter. * Rental Tool revenues increased 10% from the third quarter of 2006, largely due to increased rental activity in domestic land markets and certain international markets, including the North Sea, Venezuela and West Africa market areas. * Marine revenues increased 11% from the third quarter of 2006 as dayrates increased. * Oil and Gas revenues increased 6% from the third quarter of 2006 due mainly to increased oil and gas production. * Revenues from non-Gulf of Mexico market areas were approximately $139 million as compared to approximately $112 million in the third quarter of 2006 and approximately $88 million in the fourth quarter of 2005. * The Company's effective annual tax rate was lowered from 36.0% to 35.5%, resulting in an effective tax rate for the fourth quarter of 34.5%.
Terence Hall, Chairman and CEO of Superior, commented, "We are very pleased with our operating and financial performance during this seasonally challenging period. We continued to grow earnings both year-over-year and sequentially, and we believe that the combination of our expanding international and domestic land operations with our diversified portfolio of products and services provides our shareholders a cushion to fluctuations in commodity prices."
For the year ended December 31, 2006, revenues were $1,093.8 million and net income was $188.2 million or $2.32 diluted earnings per share, as compared to revenues of $735.3 million and net income of $67.9 million or $0.85 diluted earnings per share for the year ended December 31, 2005.
Well Intervention Group Segment
Fourth quarter revenues for the Well Intervention Group were a record $133.2 million, a 9% increase from the third quarter of 2006 and a 50% increase from the fourth quarter of 2005. Income from operations was $28.7 million, or 22% of segment revenue as compared to $28.8 million, or 24% of segment revenue, in the third quarter of 2006. International revenue increased as a result of a full quarter of revenue from the company's derrick barge that is currently on charter in the Asia Pacific region, as well as increases in hydraulic workover and snubbing services. Domestic land revenue increased for coiled tubing, electric line, engineering services and hydraulic workover and snubbing services. Partially offsetting these increases was lower Gulf of Mexico activity for some services due to typical seasonal weakness (weather and holidays) toward the end of the quarter. Profit margins were slightly lower due to business mix, including fewer high pressure well projects for the mechanical wireline division.
Rental Tools Segment
Revenues for the Rental Tools segment were a record $108.5 million, 10% higher than the third quarter of 2006 and a 59% increase from the fourth quarter of 2005. Income from operations was $41.7 million, or 38% of segment revenue, up from $35.1 million, or 36% of segment revenue in the third quarter of 2006. The primary factors leading to the record quarter were increased rentals of on-site accommodations, specialty tubulars, drill pipe and associated handling tools. The biggest activity increases were in the Rocky Mountains, the North Sea, Venezuela and West Africa.
Superior's marine revenues were $39.9 million, an 11% increase over the third quarter of 2006 and a 30% increase from the fourth quarter of 2005. Income from operations was $19.2 million, or 48% of segment revenue, up from $16.2 million, or 45% of segment revenue in the third quarter of 2006. Average daily revenue in the fourth quarter was approximately $434,000, inclusive of subsistence revenue, as compared to $391,000 per day in the third quarter of 2006, reflecting a full quarter of higher dayrates which were put into place late in the third quarter. Average fleet utilization was 80% as compared to 78% in the third quarter of 2006 and 90% in the fourth quarter of 2005. The 200-ft. class fleet now has five liftboats following the refurbishment and addition of the Superior Intervention in October.
Liftboat Average Dayrates and Utilization by Class Size Three Months Ended December 31, 2006 ($ actual) Average Class Liftboats Dayrate Utilization 145-155' 11 $11,977 74.6% 160'-175' 6 16,317 80.3% 200' 5 20,791 86.4% 230'-245' 3 29,153 76.1% 250' 2 39,690 99.4% Oil and Gas Segment
Oil and gas revenues were $40.4 million, a 6% increase over third quarter 2006 levels and a significant improvement over the fourth quarter of 2005. Income from operations was $8.6 million, or 21% of segment revenue, up from $8.1 million, or 21% of segment revenue, in the third quarter of 2006. Fourth quarter production was approximately 772,000 barrels of oil equivalent (boe), or about 8,400 boe per day, up from approximately 739,000 boe, or 8,000 boe per day in the third quarter of 2006.
Conference Call Information
The Company will host a conference call at 10 a.m. Central Time on Tuesday, February 27, 2007. The call can be accessed from Superior's website at http://www.superiorenergy.com , or by telephone at 303-262-2211. For those who cannot listen to the live call, a telephonic replay will be available through Tuesday, March 6, 2007 and may be accessed by calling 303-590-3000 and using the pass code 11083293#. 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 Months and Years Ended December 31, 2006 and 2005 (in thousands, except earnings per share amounts) (unaudited, except as noted) Three Months Ended Years Ended December 31, December 31, 2006 2005 2006 2005 (audited) Oilfield service and rental revenues $278,698 $186,272 $966,139 $656,423 Oil and gas revenues 40,378 1,714 127,682 78,911 Total revenues 319,076 187,986 1,093,821 735,334 Cost of oilfield services and rentals 123,411 86,997 427,477 330,200 Cost of oil and gas sales 17,559 10,540 70,028 45,804 Total cost of services, rentals and sales 140,970 97,537 497,505 376,004 Depreciation, depletion, amortization and accretion 33,538 20,428 111,011 89,288 General and administrative expenses 46,292 37,856 168,416 140,989 Reduction in value of assets --- 3,750 --- 6,994 Gain on sale of liftboats --- 275 --- 3,544 Income from operations 98,276 28,690 316,889 125,603 Other income (expense): Interest expense, net (6,561) (5,332) (22,950) (21,862) Interest income 1,135 731 4,612 2,201 Loss on early extinguishment of debt --- --- (12,596) --- Earnings from equity-method investments 2,039 3 5,891 1,339 Reduction in value of equity- method investment --- --- --- (1,250) Income before income taxes 94,889 24,092 291,846 106,031 Income taxes 32,701 7,854 103,605 38,172 Net income $62,188 $16,238 $188,241 $67,859 Basic earnings per share $0.78 $0.20 $2.36 $0.87 Diluted earnings per share $0.76 $0.20 $2.32 $0.85 Weighted average common shares used in computing earnings per share: Basic 79,941 79,464 79,801 78,321 Diluted 81,460 80,621 81,289 79,735 SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2006 AND 2005 (in thousands) 12/31/2006 12/31/2005 (unaudited) (audited) ASSETS Current assets: Cash and cash equivalents $38,970 $54,457 Accounts receivable, net 303,800 196,365 Income taxes receivable 2,630 --- Current portion of notes receivable 14,824 2,364 Prepaid insurance and other 59,563 51,116 Total current assets 419,787 304,302 Property, plant and equipment, net 804,228 534,962 Goodwill 444,687 220,064 Notes receivable 16,137 29,483 Equity-method investments 64,603 953 Intangible and other long-term assets, net 125,036 7,486 Total assets $1,874,478 $1,097,250 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $65,451 $42,035 Accrued expenses 141,684 69,926 Income taxes payable --- 11,353 Fair value of commodity derivative instruments --- 10,792 Current portion of decommissioning liabilities 35,150 14,268 Current maturities of long-term debt 810 810 Total current liabilities 243,095 149,184 Deferred income taxes 112,011 91,899 Decommissioning liabilities 87,046 107,641 Long-term debt 711,505 216,596 Other long-term liabilities 10,133 7,556 Total stockholders' equity 710,688 524,374 Total liabilities and stockholders' equity $1,874,478 $1,097,250 Superior Energy Services, Inc. and Subsidiaries Segment Highlights
Three months ended December 31, 2006, September 30, 2006 and December 31, 2005
(Unaudited) (in thousands) Three months ended, December 31, September 30, December 31, Revenue 2006 2006 2005 Well Intervention $133,157 $122,205 $88,626 Rental tools 108,526 98,262 68,101 Marine 39,944 36,013 30,717 Oil and Gas 40,378 38,208 1,714 Less: Oil and Gas Eliminations (2) (2,929) (4,171) (1,172) Total Revenues $319,076 $290,517 $187,986 Three months ended, December 31, September 30, December 31, Gross Profit (1) 2006 2006 2005 Well Intervention $55,319 $53,767 $36,370 Rental tools 75,935 67,476 43,942 Marine 24,033 21,541 18,963 Oil and Gas 22,819 18,646 (8,826) Total Gross Profit $178,106 $161,430 $90,449 (1) Gross profit is calculated by subtracting cost of services from revenue for each of the Company's four segments. (2) 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