e8vk
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): July 28, 2009
SUPERIOR ENERGY SERVICES, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction)
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001-34037
(Commission File Number)
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75-2379388
(IRS Employer Identification No.) |
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601 Poydras St., Suite 2400, New Orleans, Louisiana
(Address of principal executive offices)
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70130
(Zip Code) |
(504) 587-7374
(Registrants 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 July 28, 2009, Superior Energy Services, Inc. issued a press release announcing its
earnings for the second quarter ended June 30, 2009. 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 in this Item 2.02 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.
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Exhibit Number |
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Description |
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99.1 |
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Press release issued by Superior Energy Services, Inc., dated July 28, 2009. |
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.
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SUPERIOR ENERGY SERVICES, INC.
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By: |
/s/ Robert S. Taylor
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Robert S. Taylor |
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Chief Financial Officer |
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Dated: July 29, 2009
2
exv99w1
Exhibit 99.1
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601 Poydras St., Suite 2400
New Orleans, LA 70130
NYSE: SPN
(504) 587-7374
Fax: (504) 362-1818 |
FOR FURTHER INFORMATION CONTACT:
Terence Hall, CEO; Robert Taylor, CFO;
Greg Rosenstein, VP of Investor Relations, (504) 587-7374
Superior Energy Services, Inc. Reports Second Quarter 2009 Results
Core Earnings of $0.35 Per Diluted Share Before Special Charges
New Orleans, LA July 28, 2009 Superior Energy Services, Inc. (NYSE: SPN) today announced a
net loss of $68.9 million, or $0.88 per diluted share on revenue of $361.2 million for the second
quarter of 2009.
Excluding non-cash special charges, the Company had adjusted net income of $27.6 million, or $0.35
per diluted share, compared with adjusted net income of $81.5 million, or $0.98 per diluted share,
on revenue of $457.7 million for the second quarter of 2008. Net income as reported for the second
quarter of 2008 was $71.4 million, or $0.86 per diluted share.
(Please see Non-GAAP reconciliation disclosure and table at the end of this press release.)
The second quarter 2009 results include the following special charges:
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A non-cash, pre-tax charge of approximately $92.7 million, or $0.76 per share after tax,
related to the reduction in value of a portion of the Companys long-lived intangible assets
associated with its well intervention segment due to the downturn in the oilfield services
sector, especially in the U.S. land markets; |
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A non-cash, pre-tax charge of approximately $36.5 million, or $0.30 per share after tax,
related to the reduction in value of the Companys remaining equity-method investment in Beryl
Oil & Gas; and, |
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Losses during the quarter of $15.7 million, or $0.13 per share after tax related to the
Companys loss in equity-method investment in Beryl Oil & Gas for the three months ended June
30, 2009. |
The reduction in value of long-lived intangible assets and the writedown of the Companys remaining
equity investment in Beryl Oil & Gas do not impact the Companys liquidity position, operational
capabilities or its future cash flows.
The results also include non-cash, unrealized losses of approximately $6.0 million, or $0.05 per
share after-tax, of the Companys share of unrealized losses associated with mark-to-market changes
in the value of outstanding hedging contracts at SPN Resources, LLC. The loss was due to increases
in oil prices, the volatility of which makes these changes unpredictable.
1
For the six months ended June 30, 2009, the Companys net loss was $12.1 million, or $0.16 per
diluted share on revenue of $798.3 million as compared with net income of $170.9 million, or $2.08
per diluted share on revenue of $899.0 million for the six months ended June 30, 2008.
Operational factors impacting the second quarter include the following:
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Total revenue decreased 21% as compared with the second quarter of 2008 (year-over-year)
and decreased 17% as compared with the first quarter of 2009 (sequential). The sequential
change was primarily due to lower demand for production-related services and rental tools,
especially in the domestic land market areas. In addition, the Company performed less work on
its large platform removal project than in the prior quarter. The project remains well ahead
of schedule and on budget. |
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Well Intervention Segment revenue of $231.1 million decreased 22% over the second quarter
of 2008 and decreased 20% as compared with the first quarter of 2009. Rental Tools Segment
revenue was $102.5 million, a 24% decrease year-over-year and a 19% decrease sequentially.
Marine Segment revenue of $27.5 million increased 6% year-over-year and increased 19%
sequentially. |
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Gulf of Mexico revenue was approximately $216.0 million, or 17% lower sequentially;
domestic land revenue was approximately $74.4 million, a decline of 27% from the first quarter
of 2009; and international revenue was approximately $70.8 million, a sequential decrease of
3%. |
Terence Hall, Chairman and CEO of Superior, stated, We had positive earnings from our core
operations during the quarter. Our product/service and geographic diversification continued to
partially mitigate the impact of this challenging market environment. Industry activity using
the average number of rigs drilling for oil and natural gas as a proxy declined at a more rapid
pace than our overall revenue during the second quarter. Relative to our performance in the first
quarter of 2009, our results were impacted by a confluence of events, with the most significant
factors being lower demand in the domestic land markets for well intervention and rental tools and
reduced contribution from our platform recovery project in the Gulf of Mexico. We partially offset
these activity declines by starting new projects with some of the marine assets dedicated to the
platform recovery project and increasing our international well intervention business.
With respect to the platform recovery project, we continue to perform well ahead of schedule and
expect the pace of work for the remainder of the year to be similar to what we just experienced in
the second quarter. For the remainder of 2009, we expect domestic activity to stabilize and
international activity to increase slightly, especially for rental tools in Latin America as we
continue our expansion efforts into new markets. As a result, we anticipate that the Companys
overall business will continue its relative industry performance.
Well Intervention Segment
Second quarter revenue for the Well Intervention Segment was $231.1 million, a 22% decrease
year-over-year and a 20% decrease sequentially. Excluding the $92.7 million reduction in value
2
of long-lived intangible assets, income from operations was $27.6 million, or 12% of segment revenue
as compared with $78.2 million, or 26% of segment revenue, in the second quarter of 2008, and $61.7
million, or 21% of segment revenue, in the first quarter of 2009. This segment experienced
sequential decreases in production-related service activity in both domestic land and Gulf of
Mexico areas. In the domestic land market, the biggest activity declines were in cased hole
wireline, coiled tubing, hydraulic workover and snubbing, and ancillary tools and services
supporting drilling and production-related work. In the Gulf of Mexico, activity decreased for
marine engineering and project management work, cased hole wireline, mechanical wireline and
hydraulic workover and snubbing. These Gulf of Mexico activity declines were partially offset by
an increase in plug and abandonment services and other decommissioning services. International
revenue in this segment increased due to the commencement of two Angola projects and increases in
hydraulic workover and snubbing services in Australia and the Caspian region.
Rental Tools Segment
Quarterly revenue for the Rental Tools Segment was $102.5 million, 24% lower year-over-year and 19%
lower sequentially. Income from operations was $20.1 million, or 20% of segment revenue, as
compared with $47.5 million, or 35% of segment revenue in the second quarter of 2008, and $35.3
million, or 28% of segment revenue in the first quarter of 2009. In the domestic land market, the
largest revenue declines occurred for rentals of accommodations and stabilization equipment. Gulf
of Mexico rentals decreased primarily due to fewer rentals of drill pipe and stabilization
equipment in the shallow water, while deepwater rentals remained stable. Internationally, the
Company experienced decreased accommodations rentals, fewer sales of manufactured stabilization
equipment, and decreased drill pipe and specialty tubular rentals in Colombia, Venezuela and the
North Sea. These declines were partially offset by increased rentals of drill pipe and specialty
tubulars in Brazil.
Marine Segment
Marine Segment revenue was $27.5 million, 6% higher year-over-year and 19% higher sequentially.
Income from operations was $4.9 million, or 18% of segment revenue, up from $1.4 million, or 6% of
segment revenue in the second quarter of 2008, and up from $2.8 million, or 12% of segment revenue
in the first quarter of 2009. Average daily revenue in the second quarter was approximately
$302,000, inclusive of subsistence revenue, as compared with approximately $286,000 per day in the
second quarter of 2008 and approximately $257,000 in the first quarter of 2009. Average fleet
utilization was 53% as compared with 57% in the second quarter of 2008 and 48% in the first quarter
of 2009. Income from operations as a percentage of revenue increased from the first quarter of 2009
as a result of higher utilization and the contribution from two new 265-ft. class liftboats, which
entered the fleet during the period.
3
Liftboat Average Dayrates and Utilization by Class Size
Three Months Ended June 30, 2009
($ actual)
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Average |
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Class |
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Liftboats |
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Dayrate |
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Utilization |
145-155 |
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10 |
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$ |
7,051 |
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34.3 |
% |
160-175 |
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8 |
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8,803 |
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41.3 |
% |
200 |
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5 |
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11,058 |
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63.7 |
% |
230-245 |
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3 |
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29,284 |
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86.4 |
% |
250 |
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2 |
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34,527 |
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97.3 |
% |
265 |
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2 |
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34,559 |
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80.9 |
% |
Equity-Method Investments
The Companys losses in equity-method investment include the aforementioned quarterly losses at
Beryl Oil & Gas and non-cash, unrealized losses from hedging contracts impacting the Companys
earnings from its equity-method investment in SPN Resources. Excluding these items, earnings from
equity-method investments were $2.2 million.
Reduction in Value of Long-Lived Intangible Assets and Equity-Method Investment
In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, the Company concluded that $92.7 million, before
taxes, of its long-lived intangible assets was impaired as a result of declining global economic
conditions and the downturn in the oilfield services sector, especially in the U.S. land markets,
which led the Company to believe a triggering event had occurred requiring the impairment test.
The Companys remaining $36.5 million equity investment in Beryl Oil & Gas was deemed impaired by
the Company following the results of Beryls consideration of its strategic alternatives after it
defaulted under its credit agreement primarily due to 2008 hurricane related pipeline curtailments
and reduced oil and gas prices.
Conference Call Information
The Company will host a conference call at 10 a.m. Central Time on Wednesday, July 29, 2009. The
call can be accessed from Superiors website at www.superiorenergy.com, or by telephone at
480-629-9868. For those who cannot listen to the live call, a telephonic replay will be available
through Wednesday, August 5, 2009 and may be accessed by calling 303-590-3030 and using the pass
code 4112171#. 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 and production-related needs of oil and gas
companies worldwide through its brand name rental tools and its integrated well intervention
4
services and tools, supported by an engineering staff who plan and design solutions for customers.
Offshore projects are delivered by the Companys fleet of modern marine assets.
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 uncertainty of macroeconomic and business
conditions worldwide, as well as the global credit markets; risks associated with the Companys
rapid growth; changes in competitive factors and other material factors that are described from
time to time in the Companys 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.
5
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Six Months Ended June 30, 2009 and 2008
(in thousands, except earnings per share amounts)
(unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2009 |
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2008 |
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2009 |
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2008 |
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As Adjusted |
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As Adjusted |
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(Note 1) |
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(Note 1) |
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Oilfield service and rental revenues |
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$ |
361,161 |
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$ |
457,655 |
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$ |
798,270 |
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$ |
843,974 |
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Oil and gas revenues |
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55,072 |
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Total revenues |
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361,161 |
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457,655 |
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798,270 |
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899,046 |
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Cost of oilfield services and rentals |
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197,268 |
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222,097 |
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419,733 |
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413,229 |
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Cost of oil and gas sales |
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12,986 |
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Total cost of services, rentals and sales (exclusive of items shown separately below) |
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197,268 |
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222,097 |
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419,733 |
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426,215 |
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Depreciation, depletion, amortization and accretion |
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50,978 |
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41,954 |
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100,846 |
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83,833 |
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General and administrative expenses |
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60,283 |
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66,426 |
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125,269 |
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|
136,032 |
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Reduction in value of intangible assets |
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92,683 |
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92,683 |
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Gain on sale of businesses |
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3,058 |
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40,946 |
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Income (loss) from operations |
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(40,051 |
) |
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130,236 |
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59,739 |
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293,912 |
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Other income (expense): |
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Interest expense, net |
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(11,720 |
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(11,023 |
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(25,008 |
) |
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(23,206 |
) |
Losses from equity-method investments, net |
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(19,426 |
) |
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(7,765 |
) |
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(17,170 |
) |
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(3,808 |
) |
Reduction in value of equity-method investment |
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(36,486 |
) |
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(36,486 |
) |
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Income (loss) before income taxes |
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(107,683 |
) |
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111,448 |
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(18,925 |
) |
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266,898 |
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Income taxes |
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(38,766 |
) |
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40,081 |
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(6,813 |
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96,002 |
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Net income (loss) |
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$ |
(68,917 |
) |
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$ |
71,367 |
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$ |
(12,112 |
) |
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$ |
170,896 |
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Basic earnings (loss) per share |
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$ |
(0.88 |
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$ |
0.88 |
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$ |
(0.16 |
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$ |
2.12 |
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Diluted earnings (loss) per share |
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$ |
(0.88 |
) |
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$ |
0.86 |
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$ |
(0.16 |
) |
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$ |
2.08 |
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Weighted average common shares used
in computing earnings per share: |
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Basic |
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78,153 |
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80,749 |
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|
78,093 |
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80,762 |
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Diluted |
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78,153 |
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|
82,942 |
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|
78,093 |
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|
82,134 |
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Note 1
On January 1, 2009, we adopted Financial Accounting Standards Board Staff Position APB 14-1 which
changed the accounting for the Companys 1.5% senior exchangeable notes. The comparative Statement of
Operations for the three and six months ended June 30, 2008 has been adjusted to comply with FSP APB
14-1 on a retrospective basis.
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2009 AND DECEMBER 31, 2008
(in thousands)
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6/30/2009 |
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12/31/2008 |
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As Adjusted |
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(Note 1) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
36,590 |
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$ |
44,853 |
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Accounts receivable, net |
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|
332,128 |
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|
360,357 |
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Income taxes receivable |
|
|
7,277 |
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Prepaid expenses |
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|
30,384 |
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|
18,041 |
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Other current assets |
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|
335,692 |
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|
223,598 |
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Total current assets |
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|
742,071 |
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|
646,849 |
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Property, plant and equipment, net |
|
|
1,217,178 |
|
|
|
1,114,941 |
|
Goodwill, net |
|
|
482,216 |
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|
|
477,860 |
|
Equity-method investments |
|
|
59,692 |
|
|
|
122,308 |
|
Intangible and other long-term assets, net |
|
|
37,198 |
|
|
|
128,187 |
|
|
|
|
|
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|
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Total assets |
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$ |
2,538,355 |
|
|
$ |
2,490,145 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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|
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Accounts payable |
|
$ |
80,609 |
|
|
$ |
87,207 |
|
Accrued expenses |
|
|
162,466 |
|
|
|
152,536 |
|
Income taxes payable |
|
|
|
|
|
|
20,861 |
|
Deferred income taxes |
|
|
67,742 |
|
|
|
36,830 |
|
Current maturities of long-term debt |
|
|
810 |
|
|
|
810 |
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|
|
|
|
|
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|
|
Total current liabilities |
|
|
311,627 |
|
|
|
298,244 |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
200,116 |
|
|
|
246,824 |
|
Long-term debt, net |
|
|
718,005 |
|
|
|
654,199 |
|
Other long-term liabilities |
|
|
40,915 |
|
|
|
36,605 |
|
Total stockholders equity |
|
|
1,267,692 |
|
|
|
1,254,273 |
|
|
|
|
|
|
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|
|
Total liabilities and stockholders equity |
|
$ |
2,538,355 |
|
|
$ |
2,490,145 |
|
|
|
|
|
|
|
|
Note 1
On January 1, 2009, we adopted Financial Accounting Standards Board Staff Position APB 14-1
which changed the accounting for the Companys 1.5% senior exchangeable notes. The comparative
Balance Sheet as of December 31, 2008 has been adjusted to comply with FSP APB 14-1 on a
retrospective basis.
7
Superior Energy Services, Inc. and Subsidiaries
Segment Highlights
Three months ended June 30, 2009, March 31, 2009 and June 30, 2008
(Unaudited)
(in thousands)
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|
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|
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Three months ended, |
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Revenue |
|
June 30, 2009 |
|
|
March 31, 2009 |
|
|
June 30, 2008 |
|
Well Intervention |
|
$ |
231,121 |
|
|
$ |
288,057 |
|
|
$ |
296,891 |
|
Rental Tools |
|
|
102,533 |
|
|
|
125,944 |
|
|
|
134,773 |
|
Marine |
|
|
27,507 |
|
|
|
23,108 |
|
|
|
25,991 |
|
|
|
|
|
|
|
|
|
|
|
Total Revenues |
|
$ |
361,161 |
|
|
$ |
437,109 |
|
|
$ |
457,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended, |
|
Gross Profit (1) |
|
June 30, 2009 |
|
|
March 31, 2009 |
|
|
June 30, 2008 |
|
Well Intervention |
|
$ |
83,607 |
|
|
$ |
122,568 |
|
|
$ |
135,410 |
|
Rental Tools |
|
|
69,231 |
|
|
|
83,908 |
|
|
|
93,438 |
|
Marine |
|
|
11,055 |
|
|
|
8,168 |
|
|
|
6,710 |
|
|
|
|
|
|
|
|
|
|
|
Total Gross Profit |
|
$ |
163,893 |
|
|
$ |
214,644 |
|
|
$ |
235,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended, |
|
Income from Operations |
|
June 30, 2009 |
|
|
March 31, 2009 |
|
|
June 30, 2008 |
|
Well Intervention (2) |
|
$ |
(65,094 |
) |
|
$ |
61,700 |
|
|
$ |
78,202 |
|
Rental Tools |
|
|
20,123 |
|
|
|
35,309 |
|
|
|
47,531 |
|
Marine |
|
|
4,920 |
|
|
|
2,781 |
|
|
|
1,445 |
|
Gain on Sale of Business |
|
|
|
|
|
|
|
|
|
|
3,058 |
|
|
|
|
|
|
|
|
|
|
|
Total Income (Loss)
from Operations |
|
$ |
(40,051 |
) |
|
$ |
99,790 |
|
|
$ |
130,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Gross profit is calculated by subtracting cost of services (exclusive of depreciation,
depletion, amortization and accretion) from revenue for each of the Companys segments. |
|
(2) |
|
Income from operations in the Well Intervention Segment for the three months ended June 30,
2009 includes a reduction in value of long-lived intangible assets of $92.7 million. |
8
NON-GAAP RECONCILIATION
We report our financial results in conformity with U.S. generally accepted accounting principles
(GAAP). However, the Company provides non-GAAP adjusted net income and non-GAAP adjusted earnings
per share because management believes that in order to properly understand the Companys
operational trends and performance, investors may wish to consider the impact of adjustments for
non-operating items (such as special charges from impairments and unrealized earnings (losses) from
mark-to-market changes in hedging contracts and other non-recurring and/or non-cash charges)
resulting from facts and circumstances, including acquisitions, divestitures, changes in commodity
prices, and other non-recurring items. Management uses adjusted net income and adjusted diluted
earnings per share to evaluate the Companys operational trends and historical performance on a
consistent basis. Also, management believes adjusted net income and adjusted diluted earnings per
share are more comparable to earnings estimates provided by research analysts. The adjusted amounts
are not measures of financial performance under GAAP.
A reconciliation of net income, the GAAP measure most directly comparable to non-GAAP adjusted
earnings per share, is below. Non-GAAP financial measures used by the Company may be calculated
differently from, and therefore may not be directly comparable to, similarly titled measures used
by other companies. Non-GAAP financial measures should be viewed in addition to, and not as an
alternative for, or superior to, the Companys reported results prepared in accordance with GAAP.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
2009 |
|
|
2008 |
|
|
Net income (loss) as reported |
|
$ |
(68,917 |
) |
|
$ |
71,367 |
|
|
Pre-tax adjustments: |
|
|
|
|
|
|
|
|
Reduction in value of intangible assets |
|
|
92,683 |
|
|
|
|
|
Reduction in value of equity-method investment in
Beryl Oil & Gas |
|
|
36,486 |
|
|
|
|
|
(Earnings) losses from equity-method investment in
Beryl Oil & Gas |
|
|
15,683 |
|
|
|
(989 |
) |
Unrealized losses from equity-method investment
hedging contracts
at SPN Resources, LLC |
|
|
5,972 |
|
|
|
19,934 |
|
Gain on sale of businesses |
|
|
|
|
|
|
(3,058 |
) |
|
|
|
|
|
|
|
Total pre-tax adjustments |
|
|
150,824 |
|
|
|
15,887 |
|
|
Income tax effect of adjustments |
|
|
(54,297 |
) |
|
|
(5,719 |
) |
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income |
|
$ |
27,610 |
|
|
$ |
81,535 |
|
|
|
|
|
|
|
|
Non-GAAP adjusted diluted earnings per share |
|
$ |
0.35 |
|
|
$ |
0.98 |
|
|
|
|
|
|
|
|
Weighted average common shares used in computing diluted
earnings per share |
|
|
78,153 |
|
|
|
82,942 |
|
|
|
|
|
|
|
|
9