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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 29, 2007
SUPERIOR ENERGY SERVICES, INC.
(Exact name of registrant as specified in its charter)
         
Delaware
(State or other jurisdiction)
  0-20310
(Commission File Number)
  75-2379388
(IRS Employer Identification No.)
     
1105 Peters Road, Harvey, Louisiana
(Address of principal executive offices)
  70058
(Zip Code)
(504) 362-4321
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


 

Item 2.02. Results of Operations and Financial Condition.
     On October 29, 2007, Superior Energy Services, Inc. (the “Company”) issued a press release announcing its earnings for the third quarter ended September 30, 2007. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. In accordance with General Instruction B.2. of Form 8-K, the information presented herein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
     
(c)
  Exhibits.
 
   
99.1
  Press release issued by Superior Energy Services, Inc., dated October 29, 2007.

 


 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  SUPERIOR ENERGY SERVICES, INC.


 
 
  By:   /s/ Robert S. Taylor    
    Robert S. Taylor   
    Chief Financial Officer   
 
Dated: October 30, 2007

 

exv99w1
 

Exhibit 99.1
     
(LOGO SUPERIOR ENERGY, INC.)   1105 Peters Road
Harvey, Louisiana 70058
(504) 362-4321
Fax (504) 362-4966
NYSE: SPN
     
 
  FOR FURTHER INFORMATION CONTACT:
 
  Terence Hall, CEO; Robert Taylor, CFO;
 
  Greg Rosenstein, VP of Investor Relations,
 
  504-362-4321
Superior Energy Services Announces Third Quarter 2007 Results
Year-over-Year Earnings Growth Driven by Company’s Diversification Strategy
Harvey, La. – October 29, 2007 — Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $75.1 million and diluted earnings per share of $0.91 on revenue of $398.9 million, as compared to net income of $55.2 million, or $0.68 diluted earnings per share on revenue of $290.5 million for the third quarter of 2006.
The results include a non-recurring, after-tax gain of $4.8 million ($7.5 million pre-tax) from the sale of a business within the Rentals Tools segment that the Company does not consider to be core to its operations. The Company’s effective income tax rate changed to 35.5% due to book and tax differences on the gain from the asset sale. The third quarter results reflect the cumulative income tax rate adjustment. Excluding the gain and applying the new effective income tax rate of 35.5%, adjusted net income was $69.2 million, or $0.84 diluted adjusted earnings per share.
Factors impacting the quarter as compared to the most recent quarter include the following:
  Numerous tropical systems in the Gulf of Mexico impacted results in the marine, well intervention and rental tools segments. The biggest impact from Gulf of Mexico, weather-related disruptions was to the Company’s liftboat activity. Marine segment revenue decreased 25% as a result of significantly lower utilization.
  Approximately 54% of total revenue came from domestic land and international market areas. Increases in domestic land and international revenue more than offset a decrease in Gulf of Mexico revenue. Revenue from domestic land markets was approximately $137 million, a 13% increase over the second quarter of 2007, and revenue from international markets was approximately $78 million, a 2% increase over the most recent quarter. Gulf of Mexico revenue decreased 7% sequentially to approximately $183 million in the third quarter.
  Well Intervention revenue increased 6% from the second quarter of 2007 primarily due to increased well control activity as well as higher coiled tubing, electric line and fishing services activity.

 


 

  Revenue from the Rental Tools segment declined 4% from the second quarter, but was essentially unchanged when excluding the revenue contribution from the business that was sold in the third quarter.
  Oil and Gas revenue increased 7% from the second quarter of 2007 due to higher oil prices and increased oil and gas production.
Terence Hall, Chairman and CEO of Superior, stated, “We had a very solid quarter as we grew adjusted earnings per share by 24% over last year’s third quarter. The impact of our geographic and product/service diversification was evident this quarter as numerous tropical weather systems disrupted Gulf of Mexico activity during the period and lower activity affected various competitors in several different market segments more than it did us.  The third quarter represents the second consecutive quarter in the company’s history that more than 50% of our revenues were derived from market areas outside the Gulf of Mexico.  We remain committed to driving shareholder value by executing upon our integrated growth strategy and we intend to continue our geographic diversification strategy.”
For the nine months ended September 30, 2007, revenue was $1,158.6 million and net income was $209.2 million or $2.53 diluted earnings per share, as compared to revenues of $774.7 million and net income of $126.1 million or $1.55 diluted earnings per share for the nine months ended September 30, 2006.
Well Intervention Group Segment
Third quarter revenue for the Well Intervention Group was a record $202.8 million, a 6% increase from the second quarter of 2007 and a 66% increase from the third quarter of 2006. Income from operations was $47.6 million, or 23% of segment revenue as compared to $42.1 million, or 22% of segment revenue, in the second quarter of 2007. The primary drivers for the sequential growth in revenue were increased well control activity both internationally and in the U.S. as well as increased domestic land revenue for coiled tubing and fishing services. Revenue from these activities more than offset Gulf of Mexico-based revenue decreases for some of the Company’s production-related services. Gross profit and operating margins improved sequentially as a result of business mix.
Rental Tools Segment
Revenue for the Rental Tools Segment was $118.9 million, 4% lower than the second quarter of 2007 and 21% higher than the third quarter of 2006. Income from operations was a record $51.4 million, or 43% of segment revenue, up from $46.6 million, or 38% of segment revenue in the second quarter of 2007. Revenue increased in domestic land and international markets for drill pipe, stabilizers and specialty tubulars, which was offset by a decrease in drill pipe rentals in the Gulf of Mexico due to project delays.
Marine Segment
Superior’s marine revenue was $26.3 million, a 25% decrease from the second quarter of 2007 and a 27% decrease from the third quarter of 2006. Income from operations was $8.1 million, or 31% of segment revenue, down from $15.2 million, or 43% of segment revenue in the second

 


 

quarter of 2007. Average daily revenue in the third quarter was approximately $286,000, inclusive of subsistence revenue, as compared to $386,000 per day in the second quarter of 2007. Average fleet utilization was 62% as compared to 77% in the second quarter of 2007 and 78% in the third quarter of 2006.
Tropical weather systems in the Gulf of Mexico resulted in significant downtime for the Company’s liftboat fleet. During the quarter, the liftboats incurred 198 idle days due to weather, as compared to 13 idle days from weather in the second quarter of 2007.
Liftboat activity has improved significantly in October with utilization at approximately 75% and average daily revenue exceeding $329,000 per day.
Liftboat Average Dayrates and Utilization by Class Size
Three Months Ended September 30, 2007

($ actual)
                         
         Class
  Liftboats   Average
Dayrate
  Utilization
145’-155’
    11     $ 9,681       55.4 %
160’-175’
    6       13,740       61.8 %
200’
    5       18,797       75.0 %
230’-245’
    3       28,186       67.8 %
250’
    2       34,539       56.0 %
Oil and Gas Segment
Oil and gas revenue was $51.7 million, a 7% increase from second quarter 2007 levels and a 35% increase over the third quarter of 2006. Income from operations was $13.5 million, or 26% of segment revenue, up from $11.9 million, or 25% of segment revenue, in the second quarter of 2007. Third quarter production was approximately 899,000 barrels of oil equivalent (boe), or about 9,800 boe per day, up from approximately 875,000 boe, or 9,600 boe per day in the second quarter of 2007.
Conference Call Information
The Company will host a conference call at 10 a.m. Central Time on Tuesday, October 30, 2007. The call can be accessed from Superior’s website at www.superiorenergy.com, or by telephone at 303-205-0066. For those who cannot listen to the live call, a telephonic replay will be available through Tuesday, November 6, 2007 and may be accessed by calling 303-590-3000 and using the pass code 11099200#. 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. serves the drilling-related needs of oil and gas companies primarily through its rental tools segment and the production-related needs of oil and gas companies through its well intervention, rental tools and marine segments. The Company uses its production-related assets to enhance, maintain and extend existing production and, at the end of a property’s economic life, plug and abandon wells and decommission platforms and structures. 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, 2007 and 2006

(in thousands, except earnings per share amounts)
(unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
Oilfield service and rental revenues
  $ 347,228     $ 252,309     $ 1,021,712     $ 687,441  
Oil and gas revenues
    51,696       38,208       136,889       87,304  
 
                       
Total revenues
    398,924       290,517       1,158,601       774,745  
 
                       
 
                               
Cost of oilfield services and rentals
    159,683       109,525       465,085       304,066  
Cost of oil and gas sales
    18,954       19,562       55,845       52,469  
 
                       
Total cost of services, rentals and sales
    178,637       129,087       520,930       356,535  
 
                       
 
                               
Depreciation, depletion, amortization and accretion
    49,881       28,831       133,967       77,473  
General and administrative expenses
    57,150       44,385       161,833       122,124  
Gain on sale of business
    7,483             7,483        
 
                       
 
                               
Income from operations
    120,739       88,214       349,354       218,613  
 
                               
Other income (expense):
                               
Interest expense, net
    (8,197 )     (5,989 )     (24,938 )     (16,389 )
Interest income
    795       1,255       2,303       3,477  
Loss on early extinguishment of debt
                      (12,596 )
Earnings (losses) from equity-method investments
    1,395       2,704       (2,447 )     3,852  
 
                       
 
                               
Income before income taxes
    114,732       86,184       324,272       196,957  
 
                               
Income taxes
    39,682       31,026       115,116       70,904  
 
                       
 
                               
Net income
  $ 75,050     $ 55,158     $ 209,156     $ 126,053  
 
                       
 
                               
Basic earnings per share
  $ 0.92     $ 0.69     $ 2.58     $ 1.58  
 
                       
 
                               
Diluted earnings per share
  $ 0.91     $ 0.68     $ 2.53     $ 1.55  
 
                       
 
                               
Weighted average common shares used in computing earnings per share:
                               
Basic
    81,470       79,824       81,053       79,754  
 
                       
Diluted
    82,793       81,340       82,521       81,232  
 
                       

 


 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2007 AND DECEMBER 31, 2006

(in thousands)
                 
    9/30/2007     12/31/2006  
    (unaudited)     (audited)  
ASSETS
               
 
               
Current assets:
               
Cash and cash equivalents
  $ 63,809     $ 38,970  
Accounts receivable, net
    346,081       303,800  
Income taxes receivable
          2,630  
Current portion of notes receivable
    15,616       14,824  
Prepaid insurance and other
    58,348       59,563  
 
           
 
               
Total current assets
    483,854       419,787  
 
           
 
               
Property, plant and equipment, net
    1,032,764       804,228  
Goodwill
    475,068       444,687  
Notes receivable
    16,364       16,137  
Equity-method investments
    61,282       64,603  
Intangible and other long-term assets, net
    131,754       125,036  
 
           
 
               
Total assets
  $ 2,201,086     $ 1,874,478  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current liabilities:
               
Accounts payable
  $ 72,817     $ 65,451  
Accrued expenses
    178,659       141,684  
Income taxes payable
    4,410        
Current portion of decommissioning liabilities
    34,884       35,150  
Current maturities of long-term debt
    810       810  
 
           
 
               
Total current liabilities
    291,580       243,095  
 
           
 
               
Deferred income taxes
    147,784       112,011  
Decommissioning liabilities
    88,791       87,046  
Long-term debt
    711,440       711,505  
Other long-term liabilities
    14,202       10,133  
 
               
Total stockholders’ equity
    947,289       710,688  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 2,201,086     $ 1,874,478  
 
           

 


 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Segment Highlights
Three months ended September 30, 2007, June 30, 2007 and September 30, 2006
(Unaudited)

(in thousands)
                         
    Three months ended,  
Revenue   September 30, 2007     June 30, 2007     September 30, 2006  
Well Intervention
  $ 202,807     $ 190,542     $ 122,205  
 
                       
Rental tools
    118,918       123,736       98,262  
 
                       
Marine
    26,323       35,162       36,013  
 
                       
Oil and Gas
    51,696       48,164       38,208  
 
                       
Less: Oil and Gas Eliminations (2)
    (820 )     (851 )     (4,171 )
 
                 
 
                       
Total Revenues
  $ 398,924     $ 396,753     $ 290,517  
 
                 
                         
    Three months ended,  
Gross Profit (1)   September 30, 2007     June 30, 2007     September 30, 2006  
Well Intervention
  $ 91,030     $ 81,093     $ 53,767  
 
                       
Rental tools
    83,776       84,718       67,476  
 
                       
Marine
    12,737       19,805       21,541  
 
                       
Oil and Gas
    32,744       29,331       18,646  
 
                 
 
                       
Total Gross Profit
  $ 220,287     $ 214,947     $ 161,430  
 
                 
                         
    Three months ended,  
Income from Operations   September 30, 2007     June 30, 2007     September 30, 2006  
Well Intervention
  $ 47,611     $ 42,111     $ 28,828  
 
                       
Rental tools (3)
    51,446       46,640       35,100  
 
                       
Marine
    8,148       15,212       16,168  
 
                       
Oil and Gas
    13,534       11,918       8,118  
 
                 
 
                       
Total Income from Operations
  $ 120,739     $ 115,881     $ 88,214  
 
                 
 
(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.
 
(3)   Income from operations in the Rental tools Segment includes the gain on sale of business for the three months ended September 30, 2007.