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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): February 26, 2008
SUPERIOR ENERGY SERVICES, INC.
(Exact name of registrant as specified in its charter)
         
Delaware   0-20310   75-2379388
(State or other jurisdiction)   (Commission File Number)   (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))
 
 

 


TABLE OF CONTENTS

Item 2.02. Results of Operations and Financial Condition.
Item 9.01. Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
Press Release


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Item 2.02. Results of Operations and Financial Condition.
     On February 26, 2008, Superior Energy Services, Inc. (the “Company”) issued a press release announcing its earnings for the fourth quarter and year ended December 31, 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.
(d)   Exhibits.
 
99.1   Press release issued by Superior Energy Services, Inc., dated February 26, 2008.

 


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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: February 27, 2008

 


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EXHIBIT INDEX
99.1   Press release issued by Superior Energy Services, Inc., dated February 26, 2008.

 

exv99w1
 

Exhibit 99.1
     
(SUPERIOR ENERGY SERVICES, INC LOGO)   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, Inc. Posts Fourth Quarter 2007 Results
Harvey, La. — February 26, 2008 — Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $72.0 million and diluted earnings per share of $0.88 on revenues of $413.9 million, as compared to net income of $62.2 million and $0.76 diluted earnings per share on revenues of $319.1 million for the fourth quarter of 2006.
For the year ended December 31, 2007, net income was a record $281.1 million and $3.41 diluted earnings per share on record revenues of $1,572.5 million, as compared to net income of $188.2 million and $2.32 diluted earnings per share on revenues of $1,093.8 million for the year ended December 31, 2006.
Factors impacting the fourth quarter results as compared to the most recent quarter (third quarter of 2007) are as follows:
  Rental Tools Segment revenue increased 16% from the third quarter of 2007 primarily due to increased rentals of accommodations, drill pipe and stabilization tools in domestic land and offshore market areas.
  Marine Segment revenue increased 16% from the third quarter of 2007 as utilization increased to 70% from 62%.
  Oil and Gas Segment revenue increased 8% from the third quarter of 2007 due to increased oil and gas prices.
  Well Intervention Segment revenue decreased 6% from the third quarter of 2007 primarily due to a decrease in revenue from the derrick barge construction and charter contracts as the project nears completion and seasonal declines in production-related engineering and service activity in domestic land and offshore market areas.
  Revenue from domestic land and international markets represented approximately 52% of total revenue during the quarter as compared to 54% in the third quarter of 2007.
  General and administrative expenses increased $9.0 million, to $66.3 million over the third quarter of 2007, with the majority of the increase resulting from increased incentive compensation and insurance expense.

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  Income from operations decreased to $116.5 million from $120.7 million as a result of a $7.5 million gain on the sale of a non-core rental tools business in the third quarter of 2007. Excluding this gain, income from operations would have increased $3.2 million.
  The Company’s earnings from its equity investment in Beryl Oil and Gas (formerly Coldren Resources) was negatively impacted by $2.4 million, which reflects the Company’s share of Beryl’s non-cash charges related to a reduction in the value of its oil and gas reserves ($2.1 million ) and a charge for the early extinguishment of debt ($0.3 million).
  The Company’s effective annual income tax rate decreased from 35.5% to 35.0%, resulting in an effective tax rate for the fourth quarter of 33.5%.
Terence Hall, Chairman and CEO of Superior, commented, “Fourth quarter activity gradually improved during the first two months for many of our products and services before our typical seasonal softness impacted business in December, especially in the Gulf of Mexico and domestic land markets. However, due to our product/service mix and geographic diversification, we were able to absorb activity declines in certain regions. For instance, increased rentals of accommodation units as a result of a project award in the Rocky Mountain market area offset weather issues and other seasonal factors that impacted demand for services and rentals in other domestic land markets.
“Overall, the fourth quarter caps off a record year for the Company in terms of financial performance. During the year, we exceeded several internal operational and safety goals; attracted additional management talent that we believe will advance our diversification strategy; and we integrated the Warrior Energy Services acquisition. We believe all of these accomplishments further position the Company to create value in the years to come,” concluded Hall.
Well Intervention Group Segment
Fourth quarter revenue for the Well Intervention Group was $190.7 million, a 6% decrease from the third quarter of 2007 and a 43% increase from the fourth quarter of 2006. Income from operations was $37.0 million, or 19% of segment revenue as compared to $47.6 million, or 23% of segment revenue, in the third quarter of 2007. Lower revenue from the derrick barge construction contract accounted for about 60% of the segment’s revenue decrease. The remainder of the decrease was due to lower production-related activity for engineering and certain services in both domestic land and offshore market areas. The segment’s gross profit margin increased sequentially due to business mix, but the sequential operating margin decreased as a result of higher depreciation and general and administrative expenses.
Rental Tools Segment
Revenue for the Rental Tools segment was $137.5 million, 16% higher than the third quarter of 2007 and a 27% increase from the fourth quarter of 2006. Income from operations was $46.4 million, or 34% of segment revenue, down from $51.4 million, or 43% of segment revenue

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in the third quarter of 2007. Higher revenue is due to increased accommodation rentals in the Rocky Mountains market area, increased drill pipe rentals in the Gulf of Mexico and North Sea, and increased rentals of stabilizers in Mexico and the United Kingdom. Gross profit and operating margins were lower sequentially due to a higher mix of accommodations revenue, increased costs for upgrades at the Company’s stabilizer facilities, and a decrease in non-rental sales.
Marine Segment
Superior’s marine revenue was $30.5 million, a 16% increase over the third quarter of 2007 and a 24% decrease from the fourth quarter of 2006. Income from operations was $8.2 million, or 27% of segment revenue, up from $8.1 million, or 31% of segment revenue in the third quarter of 2007. Average daily revenue in the fourth quarter was approximately $332,000, inclusive of subsistence revenue, as compared to $286,000 per day in the third quarter of 2007. Average fleet utilization was 70% as compared to 62% in the third quarter of 2007 and 80% in the fourth quarter of 2006.
Liftboat Average Dayrates and Utilization by Class Size
Three Months Ended December 31, 2007

($ actual)
                         
            Average    
Class   Liftboats   Dayrate   Utilization
145’—155’
    11     $ 9,328       58.5 %
160’—175’
    6       12,036       74.3 %
200’
    5       16,014       70.0 %
230’—245’
    3       25,611       84.4 %
250’
    2       38,032       94.0 %
Oil and Gas Segment
Oil and gas revenue was $55.8 million, an 8% increase over third quarter 2007 levels and a 38% increase over the fourth quarter of 2006. Income from operations was a record $24.9 million, or 45% of segment revenue, up from $13.5 million, or 26% of segment revenue, in the third quarter of 2007. A 13% increase in the average realized price over the third quarter of 2007 more than offset a 9% decrease in total oil and gas production. Fourth quarter production was approximately 821,000 barrels of oil equivalent (boe), or about 8,900 boe per day, down from approximately 899,000 boe, or 9,800 boe per day in the third quarter of 2007. Production at South Pass 60, the Company’s largest producing field, was shut-in for part of the quarter due to equipment and facility upgrades.
This segment’s gross profit and operating margins increased significantly on a sequential and year-over-year basis as a result of lower lease operating expenses, including insurance expense.

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Conference Call Information
The Company will host a conference call at 10 a.m. Central Time on Wednesday, February 27, 2008. The call can be accessed from Superior’s website at www.superiorenergy.com, or by telephone at 303-262-2190. For those who cannot listen to the live call, a telephonic replay will be available through Wednesday, March 5, 2008 and may be accessed by calling 303-590-3000 and using the pass code 11108134#. 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.
# # #

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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Twelve Months Ended December 31, 2007 and 2006

(in thousands, except earnings per share amounts)
(unaudited, except as noted)
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2007     2006     2007     2006  
                            (audited)  
Oilfield service and rental revenues
  $ 358,055     $ 278,698     $ 1,379,767     $ 966,139  
Oil and gas revenues
    55,811       40,378       192,700       127,682  
 
                       
Total revenues
    413,866       319,076       1,572,467       1,093,821  
 
                       
 
                               
Cost of oilfield services and rentals
    166,460       123,411       631,545       427,477  
Cost of oil and gas sales
    10,735       17,559       66,580       70,028  
 
                       
Total cost of services, rentals and sales
    177,195       140,970       698,125       497,505  
 
                       
 
                               
Depreciation, depletion, amortization and accretion
    53,874       33,538       187,841       111,011  
General and administrative expenses
    66,313       46,292       228,146       168,416  
Gain on sale of business
                7,483        
 
                       
 
                               
Income from operations
    116,484       98,276       465,838       316,889  
 
                               
Other income (expense):
                               
Interest expense, net
    (8,319 )     (6,561 )     (33,257 )     (22,950 )
Interest income
    548       1,135       2,851       4,612  
Loss on early extinguishment of debt
                      (12,596 )
Earnings (losses) from equity-method investments, net
    (493 )     2,039       (2,940 )     5,891  
 
                       
 
                               
Income before income taxes
    108,220       94,889       432,492       291,846  
 
                               
Income taxes
    36,256       32,701       151,372       103,605  
 
                       
 
                               
Net income
  $ 71,964     $ 62,188     $ 281,120     $ 188,241  
 
                       
 
                               
Basic earnings per share
  $ 0.89     $ 0.78     $ 3.47     $ 2.36  
 
                       
Diluted earnings per share
  $ 0.88     $ 0.76     $ 3.41     $ 2.32  
 
                       
 
                               
Weighted average common shares used in computing earnings per share:
                               
Basic
    80,735       79,941       80,973       79,801  
 
                       
Diluted
    81,998       81,460       82,389       81,289  
 
                       

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

(in thousands)
                 
    12/31/2007     12/31/2006  
    (unaudited)     (audited)  
ASSETS
               
 
               
Current assets:
               
Cash and cash equivalents
  $ 51,649     $ 38,970  
Accounts receivable, net
    343,334       303,800  
Income taxes receivable
          2,630  
Current portion of notes receivable
    15,584       14,824  
Prepaid expenses
    19,641       17,782  
Other assets
    40,797       41,781  
 
           
 
               
Total current assets
    471,005       419,787  
 
           
 
               
Property, plant and equipment, net
    1,086,408       804,228  
Goodwill, net
    484,594       444,687  
Notes receivable
    16,732       16,137  
Equity-method investments
    56,961       64,603  
Intangible and other long-term assets, net
    141,549       125,036  
 
           
 
               
Total assets
  $ 2,257,249     $ 1,874,478  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current liabilities:
               
Accounts payable
  $ 69,510     $ 65,451  
Accrued expenses
    177,779       137,164  
Income taxes payable
    7,520        
Current portion of decommissioning liabilities
    36,812       35,150  
Current maturities of long-term debt
    810       810  
 
           
 
               
Total current liabilities
    292,431       238,575  
 
           
 
               
Deferred income taxes
    163,338       112,011  
Decommissioning liabilities
    88,158       87,046  
Long-term debt
    711,151       711,505  
Other long-term liabilities
    21,492       14,653  
 
               
Total stockholders’ equity
    980,679       710,688  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 2,257,249     $ 1,874,478  
 
           

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Superior Energy Services, Inc. and Subsidiaries
Segment Highlights
Three months ended December 31, 2007, September 30, 2007 and December 31, 2006
(Unaudited)

(in thousands)
                         
    Three months ended,  
Revenue   December 31, 2007     September 30, 2007     December 31, 2006  
 
Well Intervention
  $ 190,735     $ 202,807     $ 133,157  
Rental tools
    137,456       118,918       108,526  
Marine
    30,547       26,323       39,944  
Oil and Gas
    55,811       51,696       40,378  
Less: Oil and Gas Eliminations (2)
    (683 )     (820 )     (2,929 )
 
                 
Total Revenues
  $ 413,866     $ 398,924     $ 319,076  
 
                 
                         
    Three months ended,  
Gross Profit (1)   December 31, 2007     September 30, 2007     December 31, 2006  
 
Well Intervention
  $ 87,647     $ 91,032     $ 55,319  
Rental tools
    90,401       83,776       75,935  
Marine
    13,547       12,737       24,033  
Oil and Gas
    45,076       32,742       22,819  
 
                 
Total Gross Profit
  $ 236,671     $ 220,287     $ 178,106  
 
                 
                         
    Three months ended,  
Income from Operations   December 31, 2007     September 30, 2007     December 31, 2006  
 
Well Intervention
  $ 36,964     $ 47,613     $ 28,692  
Rental tools (3)
    46,396       51,446       41,715  
Marine
    8,192       8,148       19,244  
Oil and Gas
    24,932       13,532       8,625  
 
                 
Total Income from Operations
  $ 116,484     $ 120,739     $ 98,276  
 
                 
 
(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 a $7.5 million gain on sale of business for the three months ended September 30, 2007.

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