Superior Energy Services Announces Fourth Quarter and Full Year 2019 Results
Recent operating highlights include:
- Entry into definitive agreement to divest certain U.S. land service lines into a new, publicly traded consolidation platform for U.S. completion, production and water solutions in combination with
Forbes Energy Services - Discontinuation of hydraulic fracturing service line
As previously announced, during the fourth quarter of 2019, the Company exited its hydraulic fracturing operations. The financial results of this service line have historically been included in the Onshore Completion and Workover Services segment, and are reflected in discontinued operations for the fourth quarter of 2019 and prior period results reported herein. Loss from discontinued operations was
The Company reported pre-tax charges of
For the year ended
“We believe this divergence may be sustained for quite some time and have taken steps during the quarter to reorient our business. In late December, we announced a strategic transaction in which the Company is combining its U.S. service rig, coiled tubing, wireline, pressure control, flowback, fluid management and accommodations service lines with Forbes’ complimentary service lines creating a new publicly traded consolidation platform for U.S. completion, production and water solutions.
“The divestiture of our U.S. land service businesses will result in the Company being comprised primarily of globally diversified, high margin businesses with strong competitive positions. The Company will be uniquely positioned with a portfolio of assets, which have historically generated free cash flow through the cycle.
Fourth Quarter 2019 Geographic Breakdown
U.S. land revenue was
Drilling Products and Services Segment
The Drilling Products and Services segment revenue in the fourth quarter of 2019 was
U.S. land revenue decreased 22% to
Onshore Completion and Workover Services Segment
The Onshore Completion and Workover Services segment revenue in the fourth quarter of 2019 was
Production Services Segment
The Production Services segment revenue increased in the fourth quarter of 2019 by 2% to
U.S. land revenue was
Technical Solutions Segment
The Technical Solutions segment revenue in the fourth quarter of 2019 was
U.S. land revenue increased 7% sequentially to
Strategic Transaction
As previously announced, on
Conference Call Information
The Company will host a conference call at
About
Superior Energy (NYSE: SPN) serves the drilling, completion and production-related needs of oil and gas companies worldwide through a diversified portfolio of specialized oilfield services and equipment that are used throughout the economic life cycle of oil and gas wells. For more information, visit: www.superiorenergy.com.
Forward-Looking Statements
All statements in this communication (and oral statements made regarding the subjects of this communication) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of Superior Energy,
While Superior Energy believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its and Newco’s business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: the failure to realize the anticipated costs savings, synergies and other benefits of the transaction; the possible diversion of management time on transaction-related issues; the risk that the requisite approvals to complete the transaction are not obtained or other closing conditions are not satisfied; local, regional and national economic conditions and the impact they may have on Superior Energy,
These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Superior Energy’s Annual Report on Form 10-K for the year ended
No Offer or Solicitation
This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. Subject to certain exceptions to be approved by the relevant regulators or certain facts to be ascertained, the public offer will not be made directly or indirectly, in or into any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction, or by use of the mails or by any means or instrumentality (including without limitation, facsimile transmission, telephone and the internet) of interstate or foreign commerce, or any facility of a national securities exchange, of any such jurisdiction.
Important Additional Information Regarding the Transaction Will Be Filed With the
In connection with the proposed transaction, Newco has filed a registration statement on Form S-4, which included a preliminary joint proxy statement/prospectus of Newco and
Participants in the Solicitation
Superior Energy,
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, | September 30, | December 31, |
||||||||||||||||||
2019 | 2018 | 2019 | 2019 | 2018 | ||||||||||||||||
Revenues | $ | 336,072 | $ | 389,447 | $ | 356,585 | $ | 1,425,369 | $ | 1,478,857 | ||||||||||
Cost of services and rentals (exclusive of depreciation, depletion, amortization and accretion) | 223,570 | 248,394 | 231,927 | 925,082 | 970,488 | |||||||||||||||
Depreciation, depletion, amortization and accretion | 43,741 | 65,478 | 45,162 | 196,459 | 278,439 | |||||||||||||||
General and administrative expenses | 65,211 | 72,422 | 60,866 | 268,226 | 276,468 | |||||||||||||||
Reduction in value of assets | - | 322,713 | 9,571 | 17,185 | 322,713 | |||||||||||||||
Income/(Loss) from operations | 3,550 | (319,560 | ) | 9,059 | 18,417 | (369,251 | ) | |||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense, net | (24,038 | ) | (24,745 | ) | (24,505 | ) | (98,312 | ) | (99,477 | ) | ||||||||||
Other income (expense) | 1,993 | 2,717 | (3,353 | ) | (2,484 | ) | (1,678 | ) | ||||||||||||
Loss from continuing operations before income taxes | (18,495 | ) | (341,588 | ) | (18,799 | ) | (82,379 | ) | (470,406 | ) | ||||||||||
Income taxes | (12,333 | ) | (24,574 | ) | 1,708 | (4,626 | ) | (43,003 | ) | |||||||||||
Net loss from continuing operations | (6,162 | ) | (317,014 | ) | (20,507 | ) | (77,753 | ) | (427,403 | ) | ||||||||||
Income (loss) from discontinued operations, net of income tax | (92,362 | ) | (433,171 | ) | (17,934 | ) | (177,968 | ) | (430,712 | ) | ||||||||||
Net loss | $ | (98,524 | ) | $ | (750,185 | ) | $ | (38,441 | ) | $ | (255,721 | ) | $ | (858,115 | ) | |||||
Basic and Diluted loss per share: | ||||||||||||||||||||
Net loss from continuing operations | $ | (0.42 | ) | $ | (20.51 | ) | $ | (1.31 | ) | $ | (5.05 | ) | $ | (27.69 | ) | |||||
Loss from discontinued operations | (6.26 | ) | (28.03 | ) | (1.15 | ) | (11.56 | ) | (27.90 | ) | ||||||||||
Net loss | $ | (6.68 | ) | $ | (48.54 | ) | $ | (2.46 | ) | $ | (16.61 | ) | $ | (55.59 | ) | |||||
Weighted average common shares: | ||||||||||||||||||||
Basic and Diluted | 14,745 | 15,454 | 15,657 | 15,393 | 15,437 | |||||||||||||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands) | ||||||
(unaudited) | ||||||
December 31, 2019 | December 31, 2018 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 272,624 | $ | 158,050 | ||
Accounts receivable, net | 332,047 | 447,353 | ||||
Income taxes receivable | 740 | - | ||||
Prepaid expenses | 49,132 | 45,802 | ||||
Inventory and other current assets | 117,629 | 121,700 | ||||
Assets held for sale | 216,197 | - | ||||
Total current assets | 988,369 | 772,905 | ||||
Property, plant and equipment, net | 664,949 | 1,109,126 | ||||
Operating lease right-of-use assets | 80,906 | - | ||||
Goodwill | 137,695 | 136,788 | ||||
Notes receivable | 68,092 | 63,993 | ||||
Restricted cash | 2,764 | 5,698 | ||||
Intangible and other long-term assets, net | 50,455 | 127,452 | ||||
Total assets | $ | 1,993,230 | $ | 2,215,962 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 92,966 | $ | 139,325 | ||
Accrued expenses | 182,934 | 219,180 | ||||
Income taxes payable | - | 734 | ||||
Current portion of decommissioning liabilities | 3,649 | 3,538 | ||||
Liabilities held for sale | 44,938 | - | ||||
Total current liabilities | 324,487 | 362,777 | ||||
Long-term debt, net | 1,286,629 | 1,282,921 | ||||
Decommissioning liabilities | 132,632 | 126,558 | ||||
Operating lease liabilities | 62,354 | - | ||||
Deferred income taxes | 3,247 | - | ||||
Other long-term liabilities | 134,308 | 152,967 | ||||
Total stockholders' equity | 49,573 | 290,739 | ||||
Total liabilities and stockholders' equity | $ | 1,993,230 | $ | 2,215,962 | ||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018 | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (255,721 | ) | $ | (858,115 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation, depletion, amortization and accretion | 271,410 | 400,848 | ||||||
Reduction in value of assets | 93,763 | 739,725 | ||||||
Other noncash items | 27,651 | (39,152 | ) | |||||
Changes in working capital and other | 9,325 | (78,249 | ) | |||||
Net cash provided by operating activities | 146,428 | 165,057 | ||||||
Cash flows from investing activities: | ||||||||
Payments for capital expenditures | (140,465 | ) | (221,370 | ) | ||||
Proceeds from sales of assets | 110,008 | 33,299 | ||||||
Net cash used in investing activities | (30,457 | ) | (188,071 | ) | ||||
Cash flows from financing activities: | ||||||||
Other | (5,292 | ) | (2,586 | ) | ||||
Net cash used in financing activities | (5,292 | ) | (2,586 | ) | ||||
Effect of exchange rate changes in cash | 961 | (3,135 | ) | |||||
Net change in cash, cash equivalents, and restricted cash | 111,640 | (28,735 | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | 163,748 | 192,483 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 275,388 | $ | 163,748 | ||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||||
REVENUE BY GEOGRAPHIC REGION BY SEGMENT | ||||||||||
(in thousands) | ||||||||||
(unaudited) | ||||||||||
Three months ended, | ||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | ||||||||
U.S. land | ||||||||||
Drilling Products and Services | $ | 36,271 | $ | 46,590 | $ | 46,732 | ||||
Onshore Completion and Workover Services | 67,571 | 75,973 | 105,172 | |||||||
Production Services | 26,205 | 32,620 | 47,103 | |||||||
Technical Solutions | 7,774 | 7,283 | 7,993 | |||||||
Total U.S. land | $ | 137,821 | $ | 162,466 | $ | 207,000 | ||||
U.S. offshore | ||||||||||
Drilling Products and Services | $ | 34,056 | $ | 33,895 | $ | 30,540 | ||||
Onshore Completion and Workover Services | - | - | - | |||||||
Production Services | 14,632 | 18,295 | 18,603 | |||||||
Technical Solutions | 46,655 | 40,771 | 40,325 | |||||||
Total U.S. offshore | $ | 95,343 | $ | 92,961 | $ | 89,468 | ||||
International | ||||||||||
Drilling Products and Services | $ | 28,299 | $ | 30,700 | $ | 28,028 | ||||
Onshore Completion and Workover Services | - | - | - | |||||||
Production Services | 59,754 | 47,872 | 44,228 | |||||||
Technical Solutions | 14,855 | 22,586 | 20,723 | |||||||
Total International | $ | 102,908 | $ | 101,158 | $ | 92,979 | ||||
Total Revenues | $ | 336,072 | $ | 356,585 | $ | 389,447 | ||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
SEGMENT HIGHLIGHTS | |||||||||||||
(in thousands) | |||||||||||||
(unaudited) | |||||||||||||
Three months ended, | |||||||||||||
Revenues | December 31, 2019 | (1) | September 30, 2019 | (1) | December 31, 2018 | (1) | |||||||
Drilling Products and Services | $ | 98,626 | $ | 111,185 | $ | 105,300 | |||||||
Onshore Completion and Workover Services | 67,571 | 75,973 | 105,172 | ||||||||||
Production Services | 100,591 | 98,787 | 109,934 | ||||||||||
Technical Solutions | 69,284 | 70,640 | 69,041 | ||||||||||
Total Revenues | $ | 336,072 | $ | 356,585 | $ | 389,447 | |||||||
Income (Loss) from Operations | |||||||||||||
Drilling Products and Services | $ | 27,631 | $ | 37,991 | $ | 27,143 | |||||||
Onshore Completion and Workover Services | 4,263 | 982 | 4,535 | ||||||||||
Production Services | (8,764 | ) | (4,136 | ) | (3,893 | ) | |||||||
Technical Solutions | 8,047 | 1,583 | 6,356 | ||||||||||
Corporate and other | (21,636 | ) | (21,689 | ) | (27,054 | ) | |||||||
Total Income from Operations | $ | 9,541 | $ | 14,731 | $ | 7,087 | |||||||
EBITDA | |||||||||||||
Drilling Products and Services | $ | 46,946 | $ | 58,159 | $ | 53,193 | |||||||
Onshore Completion and Workover Services | 10,023 | 7,835 | 20,964 | ||||||||||
Production Services | 3,288 | 7,927 | 12,432 | ||||||||||
Technical Solutions | 13,514 | 6,492 | 11,677 | ||||||||||
Corporate and other | (20,489 | ) | (20,520 | ) | (25,701 | ) | |||||||
Total EBITDA | $ | 53,282 | $ | 59,893 | $ | 72,565 | |||||||
(1) Income (loss) from operations and EBITDA exclude the impact of special items for the three months ended December 31 and September 30, 2019 and December 31, 2018. For Non-GAAP reconciliations, refer to Table 2 below. | |||||||||||||
Non-GAAP Financial Measures
The following table reconciles net income/loss from continuing operations, which is the directly comparable financial measure determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted income/loss from continuing operations (non-GAAP financial measure). This financial measure is provided to enhance investors’ overall understanding of the Company’s current financial performance.
Reconciliation of Consolidated Adjusted Net Loss | ||||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Table 1 | ||||||||||||||||||||||||
Three months ended, | Three months ended, | Three months ended, | ||||||||||||||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | ||||||||||||||||||||||
Consolidated | Per Share | Consolidated | Per Share | Consolidated | Per Share | |||||||||||||||||||
Reported net loss from continuing operations | $ | (6,162 | ) | $ | (0.42 | ) | $ | (20,507 | ) | $ | (1.31 | ) | $ | (317,014 | ) | $ | (20.51 | ) | ||||||
Reduction in value of assets | - | - | 9,571 | 0.61 | 322,713 | 20.88 | ||||||||||||||||||
Restructuring costs | 2,896 | 0.20 | 1,877 | 0.12 | 3,934 | 0.25 | ||||||||||||||||||
Merger-related transaction costs | 3,095 | 0.21 | - | - | - | - | ||||||||||||||||||
Legal settlement | - | - | (5,776 | ) | (0.37 | ) | - | - | ||||||||||||||||
Income taxes | (1,390 | ) | (0.10 | ) | (1,315 | ) | (0.08 | ) | (20,069 | ) | (1.30 | ) | ||||||||||||
Adjusted net loss from continuing operations | $ | (1,561 | ) | $ | (0.11 | ) | $ | (16,150 | ) | $ | (1.03 | ) | $ | (10,436 | ) | $ | (0.68 | ) | ||||||
The following table reconciles net income/loss from continuing operations by segment, which is the directly comparable financial measure determined in accordance with GAAP, to adjusted income/loss from continuing operations and adjusted EBITDA by segment (non-GAAP financial measures). These financial measures are provided to enhance investors’ overall understanding of the Company’s current financial performance.
Reconciliation of Adjusted Income (Loss) from Operations and Adjusted EBITDA by Segment | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Table 2 | |||||||||||||||||||||||
Three months ended December 31, 2019 | |||||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other |
Consolidated | ||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 27,618 | $ | 3,187 | $ | (10,068 | ) | $ | 8,612 | $ | (35,511 | ) | $ | (6,162 | ) | ||||||||
Restructuring costs | 13 | 1,076 | 1,304 | 503 | - | 2,896 | |||||||||||||||||
Merger-related costs | - | - | - | - | 3,095 | 3,095 | |||||||||||||||||
Interest expense, net | - | - | - | (1,068 | ) | 25,106 | 24,038 | ||||||||||||||||
Other expense | - | - | - | - | (1,993 | ) | (1,993 | ) | |||||||||||||||
Income taxes | - | - | - | - | (12,333 | ) | (12,333 | ) | |||||||||||||||
Adjusted income (loss) from continuing operations | $ | 27,631 | $ | 4,263 | $ | (8,764 | ) | $ | 8,047 | $ | (21,636 | ) | $ | 9,541 | |||||||||
Depreciation, depletion, amortization and accretion | 19,315 | 5,760 | 12,052 | 5,467 | 1,147 | 43,741 | |||||||||||||||||
Adjusted EBITDA | $ | 46,946 | $ | 10,023 | $ | 3,288 | $ | 13,514 | $ | (20,489 | ) | $ | 53,282 | ||||||||||
Three months ended September 30, 2019 | |||||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other |
Consolidated | ||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 37,991 | $ | (927 | ) | $ | (734 | ) | $ | (4,531 | ) | $ | (52,306 | ) | $ | (20,507 | ) | ||||||
Reduction in value of assets | - | 566 | 1,997 | 7,008 | - | 9,571 | |||||||||||||||||
Restructuring costs | - | 1,343 | 377 | 157 | - | 1,877 | |||||||||||||||||
Legal settlement | - | - | (5,776 | ) | - | - | (5,776 | ) | |||||||||||||||
Interest expense, net | - | - | - | (1,051 | ) | 25,556 | 24,505 | ||||||||||||||||
Other expense | - | - | - | - | 3,353 | 3,353 | |||||||||||||||||
Income taxes | - | - | - | - | 1,708 | 1,708 | |||||||||||||||||
Adjusted income (loss) from continuing operations | $ | 37,991 | $ | 982 | $ | (4,136 | ) | $ | 1,583 | $ | (21,689 | ) | $ | 14,731 | |||||||||
Depreciation, depletion, amortization and accretion | 20,168 | 6,853 | 12,063 | 4,909 | 1,169 | 45,162 | |||||||||||||||||
Adjusted EBITDA | $ | 58,159 | $ | 7,835 | $ | 7,927 | $ | 6,492 | $ | (20,520 | ) | $ | 59,893 | ||||||||||
Three months ended December 31, 2018 | |||||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other |
Consolidated | ||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 26,678 | $ | (224,877 | ) | $ | (97,425 | ) | $ | 7,280 | $ | (28,670 | ) | $ | (317,014 | ) | |||||||
Reduction in value of assets | - | 227,801 | 92,252 | - | 2,660 | 322,713 | |||||||||||||||||
Restructuring costs | 465 | 1,611 | 1,280 | 78 | 500 | 3,934 | |||||||||||||||||
Interest expense, net | - | - | - | (1,002 | ) | 25,747 | 24,745 | ||||||||||||||||
Other expense | - | - | - | - | (2,717 | ) | (2,717 | ) | |||||||||||||||
Income taxes | - | - | - | - | (24,574 | ) | (24,574 | ) | |||||||||||||||
Adjusted income (loss) from continuing operations | $ | 27,143 | $ | 4,535 | $ | (3,893 | ) | $ | 6,356 | $ | (27,054 | ) | $ | 7,087 | |||||||||
Depreciation, depletion, amortization and accretion | 26,050 | 16,429 | 16,325 | 5,321 | 1,353 | 65,478 | |||||||||||||||||
Adjusted EBITDA | $ | 53,193 | $ | 20,964 | $ | 12,432 | $ | 11,677 | $ | (25,701 | ) | $ | 72,565 | ||||||||||
FOR FURTHER INFORMATION CONTACT:
Source: Superior Energy Services, Inc.