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 30, 2014
SUPERIOR ENERGY SERVICES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-34037 | 75-2379388 | ||
| (State or other jurisdiction) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 1001 Louisiana Street, Suite 2900 | ||
| Houston, Texas | 77002 | |
| (Address of principal executive offices) | (Zip Code) |
(713) 654-2200
(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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | 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 30, 2014, Superior Energy Services, Inc. issued a press release announcing its earnings for the second quarter ended June 30, 2014. 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 Exchange Act of 1934, as amended, or 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.
| Exhibit Number |
Description | |
| 99.1 | Press release issued by Superior Energy Services, Inc., July 30, 2014. | |
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 | ||
| Executive Vice President, Treasurer and Chief Financial Officer | ||
Dated: July 31, 2014
Exhibit 99.1
|
1001 Louisiana St., Suite 2900 Houston, TX 77002 NYSE: SPN (713) 654-2200 |
FOR FURTHER INFORMATION CONTACT:
David Dunlap, President and CEO, (713) 654-2200;
Robert Taylor, CFO, or Greg Rosenstein, EVP of Corporate Development, (504) 587-7374
Superior Energy Services, Inc. Announces Second Quarter 2014 Results
Houston – July 30, 2014 – Superior Energy Services, Inc. (NYSE: SPN) today announced net income from continuing operations of $79.1 million, or $0.50 per diluted share, and net income of $75.2 million, or $0.47 per diluted share, on revenue of $1,107.6 million for the second quarter of 2014.
These results compare with the second quarter of 2013 net income from continuing operations of $74.1 million, or $0.46 per diluted share, and net income of $68.6 million, or $0.43 per diluted share, on revenue of $1,091.1 million.
For the six months ended June 30, 2014, the Company recorded net income from continuing operations of $121.7 million, or $0.76 per diluted share, and net income of $111.8 million, or $0.70 per diluted share, on revenue of $2,169.0 million. For the six months ended June 30, 2013, the Company recorded net income from continuing operations of $154.7 million, or $0.96 per diluted share, and net income of $132.3 million, or $0.82 per diluted share, on revenue of $2,178.0 million.
During the second quarter of 2014, the Company repurchased and retired approximately 1.7 million shares of its common stock for a total purchase price of $34.3 million (average price of $31.09). Year-to-date, the Company has repurchased and retired approximately 5.2 million shares of its common stock for a total purchase price of $164.1 million (average price of $31.41).
David Dunlap, President and CEO of the Company, commented, “Our second quarter results exceeded our expectations. We posted strong incremental operating margins in three of our four segments, primarily due to ongoing increases in U.S. land activity. These include improvements seen in horizontal well fracturing and well service rigs in the Onshore Completion and Workover Services segment, as well as in coiled tubing, pressure control, wireline, and remedial pumping in the Production Services segment.
“Our U.S. land revenue increased 6% from the first quarter of 2014 as compared to a 4% increase in the average number of rigs drilling in the U.S. land market. Our Gulf of Mexico revenue was flat sequentially as seasonal increases in service activity were offset by lower revenue from the Drilling Products and Services segment. International revenue increased 3% sequentially mainly driven by increases in production-related services.”
1
Second Quarter 2014 Geographic Breakdown
U.S. land market revenue was approximately $721.3 million in the second quarter of 2014, as compared with $723.3 million in the second quarter of 2013 and $681.3 million in the first quarter of 2014. Gulf of Mexico market revenue was approximately $211.7 million, as compared with $208.1 million in the second quarter of 2013 and $211.0 million in the first quarter of 2014. International market revenue was approximately $174.6 million, as compared with $159.7 million in the second quarter of 2013 and $169.1 million in the first quarter of 2014.
Drilling Products and Services Segment
Drilling Products and Services segment revenue was $226.0 million, a 10% increase from second quarter 2013 revenue of $205.4 million and a 3% increase from first quarter 2014 revenue of $220.2 million.
The primary factor driving the higher sequential revenue in this segment was a 21% increase in U.S. land market revenue to $81.7 million due to increased rentals of bottom hole assemblies and premium drill pipe. International market revenue was essentially unchanged at $51.5 million as increased rentals of premium drill pipe were offset by a decline in bottom hole assembly rentals. Gulf of Mexico market revenue decreased 9% sequentially to $92.8 million due to decreased rentals of premium drill pipe and surface rentals.
Onshore Completion and Workover Services Segment
Onshore Completion and Workover Services segment revenue in the second quarter was $398.1 million, virtually unchanged from second quarter 2013 revenue of $398.2 million, and a 2% increase from first quarter 2014 revenue of $389.9 million. Practically all of the revenue in this segment is generated from U.S. land market areas.
On a sequential basis, revenue increases in pressure pumping and well service rigs was partially offset by lower fluid management revenue as a result of less heating-related activity.
Income from operations as a percentage of revenue improved significantly on a sequential basis to 8% as compared with 2% in the first quarter of 2014, resulting from increased utilization in pressure pumping.
Production Services Segment
Production Services segment revenue was $343.9 million, a 7% decrease from second quarter 2013 revenue of $369.1 million and a 7% increase from first quarter 2014 revenue of $321.2 million.
U.S. land market revenue increased 6% sequentially to $214.6 million, primarily due to increased demand for coiled tubing, pressure control, wireline and remedial pumping services. International market revenue increased 8% sequentially to $90.9 million primarily due to higher demand for pressure control tools and snubbing services. Gulf of Mexico market revenue increased 11% to $38.4 million due to increases in coiled tubing and cased hole wireline services.
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Technical Solutions Segment
Technical Solutions segment revenue was $139.6 million, an 18% increase from second quarter 2013 revenue of $118.4 million and a 7% increase from first quarter 2014 revenue of $130.1 million.
Gulf of Mexico market revenue increased 7% sequentially to $80.4 million due to seasonal increases in plug and abandonment services as well as completion tools and services. U.S. land market revenue increased 24% sequentially to $27.0 million primarily related to increases in well control services and completion tools. International market revenue declined 4% to $32.2 million as a result of a decrease in well control activity.
Conference Call Information
The Company will host a conference call at 11 a.m. Eastern Time on Thursday, July 31, 2014. The call can be accessed from the Company’s website at www.superiorenergy.com, or by telephone at 785-424-1053. For those who cannot listen to the live call, a telephonic replay will be available through August 14, 2014 and may be accessed by calling 719-457-0820 and using the pass code 9081717#. An archive of the webcast will be available after the call for a period of 60 days at www.superiorenergy.com.
Superior Energy Services, Inc. serves the drilling, completion and production-related needs of oil and gas companies worldwide through its brand name drilling products and its integrated completion and well intervention services and tools, supported by an engineering staff who plan and design solutions for customers.
The press release contains certain forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Generally, the words “expects,” “anticipates,” “targets,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements involve risks and uncertainties. Such forward-looking statements are subject to uncertainties that could cause actual results to differ materially from such statements. Such uncertainties include, but are not limited to: risks inherent in acquiring businesses; the effect of regulatory programs and environmental matters on the Company’s performance, including the risk that future changes in the regulation of hydraulic fracturing could reduce or eliminate demand for the Company’s pressure pumping services; risks associated with business growth outpacing the capabilities of the Company’s infrastructure and workforce; risks associated with the uncertainty of macroeconomic and business conditions worldwide; the cyclical nature and volatility of the oil and gas industry, including the level of exploration, production and development activity and the volatility of oil and gas prices; changes in competitive factors affecting the Company’s operations; political, economic and other risks and uncertainties associated with international operations; the impact that unfavorable or unusual weather conditions could have on the Company’s operations; the potential shortage of skilled workers; the Company’s dependence on certain customers; the risks inherent in long-term fixed-price contracts; and, operating hazards, including the significant possibility of accidents resulting in personal injury or death, property damage or environmental damage. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, the Company can give no assurance that such expectations will prove to be correct. Investors are cautioned that many of the assumptions on which the Company’s forward-looking statements are based are likely to change after the forward-looking statements are made, including for example the market prices of oil and natural gas and regulations affecting oil and gas operations, which the Company cannot control or anticipate. Further, the Company may make changes to its business plans that could or will affect the Company’s results. The Company undertakes no obligation to update any of its forward-looking statements and it does not intend to update its forward-looking statements more frequently than quarterly, notwithstanding any changes in the assumptions, changes in the Company’s business plans, its actual experience, or other changes.
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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Six Months Ended June 30, 2014 and 2013
(in thousands, except earnings per share amounts)
(unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenues |
$ | 1,107,552 | $ | 1,091,129 | $ | 2,168,970 | $ | 2,178,001 | ||||||||
| Cost of services and rentals (exclusive of items shown separately below) |
650,293 | 646,704 | 1,301,898 | 1,298,298 | ||||||||||||
| Depreciation, depletion, amortization and accretion |
160,965 | 149,440 | 323,283 | 294,404 | ||||||||||||
| General and administrative expenses |
146,853 | 147,552 | 302,772 | 293,448 | ||||||||||||
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|
|||||||||
| Income from operations |
149,441 | 147,433 | 241,017 | 291,851 | ||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest expense, net |
(24,560 | ) | (27,785 | ) | (48,441 | ) | (56,046 | ) | ||||||||
| Other income (expense) |
606 | (2,837 | ) | 571 | 1,738 | |||||||||||
| Loss on early extinguishment of debt |
— | (884 | ) | — | (884 | ) | ||||||||||
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|
|||||||||
| Income from continuing operations before income taxes |
125,487 | 115,927 | 193,147 | 236,659 | ||||||||||||
| Income taxes |
46,430 | 41,848 | 71,464 | 81,962 | ||||||||||||
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| Net income from continuing operations |
79,057 | 74,079 | 121,683 | 154,697 | ||||||||||||
| Loss from discontinued operations, net of income tax |
(3,895 | ) | (5,520 | ) | (9,849 | ) | (22,411 | ) | ||||||||
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| Net income |
$ | 75,162 | $ | 68,559 | $ | 111,834 | $ | 132,286 | ||||||||
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| Basic earnings (losses) per share: |
||||||||||||||||
| Net income from continuing operations |
$ | 0.51 | $ | 0.46 | $ | 0.77 | $ | 0.97 | ||||||||
| Loss from discontinued operations |
(0.03 | ) | (0.03 | ) | (0.06 | ) | (0.14 | ) | ||||||||
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| Net income |
$ | 0.48 | $ | 0.43 | $ | 0.71 | $ | 0.83 | ||||||||
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| Diluted earnings (losses) per share: |
||||||||||||||||
| Net income from continuing operations |
$ | 0.50 | $ | 0.46 | $ | 0.76 | $ | 0.96 | ||||||||
| Loss from discontinued operations |
(0.03 | ) | (0.03 | ) | (0.06 | ) | (0.14 | ) | ||||||||
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| Net income |
$ | 0.47 | $ | 0.43 | $ | 0.70 | $ | 0.82 | ||||||||
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| Weighted average common shares used in computing earnings per share: |
||||||||||||||||
| Basic |
156,399 | 159,337 | 157,302 | 159,142 | ||||||||||||
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| Diluted |
159,101 | 160,930 | 159,994 | 160,768 | ||||||||||||
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4
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2014 AND DECEMBER 31, 2013
(in thousands)
| 6/30/2014 | 12/31/2013 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 201,653 | $ | 196,047 | ||||
| Accounts receivable, net |
925,901 | 937,195 | ||||||
| Deferred income taxes |
11,717 | 8,785 | ||||||
| Income taxes receivable |
— | 5,532 | ||||||
| Prepaid expenses |
76,571 | 70,421 | ||||||
| Inventory and other current assets |
178,470 | 258,449 | ||||||
| Assets held for sale |
325,153 | — | ||||||
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|
|||||
| Total current assets |
1,719,465 | 1,476,429 | ||||||
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| Property, plant and equipment, net |
2,754,244 | 3,002,194 | ||||||
| Goodwill |
2,459,137 | 2,458,109 | ||||||
| Notes receivable |
25,155 | 23,708 | ||||||
| Intangible and other long-term assets, net |
428,183 | 450,867 | ||||||
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|||||
| Total assets |
$ | 7,386,184 | $ | 7,411,307 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 175,294 | $ | 216,029 | ||||
| Accrued expenses |
321,440 | 376,049 | ||||||
| Income taxes payable |
22,711 | — | ||||||
| Current portion of decommissioning liabilities |
— | 27,322 | ||||||
| Current maturities of long-term debt |
20,000 | 20,000 | ||||||
| Liabilities held for sale |
89,117 | — | ||||||
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| Total current liabilities |
628,562 | 639,400 | ||||||
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| Deferred income taxes |
719,287 | 736,080 | ||||||
| Decommissioning liabilities |
85,620 | 56,197 | ||||||
| Long-term debt, net |
1,636,229 | 1,646,535 | ||||||
| Other long-term liabilities |
167,009 | 201,651 | ||||||
| Total stockholders’ equity |
4,149,477 | 4,131,444 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 7,386,184 | $ | 7,411,307 | ||||
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5
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
SEGMENT HIGHLIGHTS
THREE MONTHS ENDED JUNE 30, 2014, MARCH 31, 2014, AND JUNE 30, 2013 (2)
(unaudited)
(in thousands)
| Three months ended, | ||||||||||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | ||||||||||
| Revenue |
||||||||||||
| Drilling Products and Services |
$ | 225,982 | $ | 220,210 | $ | 205,422 | ||||||
| Onshore Completion and Workover Services |
398,048 | 389,877 | 398,216 | |||||||||
| Production Services |
343,876 | 321,235 | 369,066 | |||||||||
| Technical Solutions |
139,646 | 130,096 | 118,425 | |||||||||
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| Total Revenues |
$ | 1,107,552 | $ | 1,061,418 | $ | 1,091,129 | ||||||
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| June 30, 2014 | March 31, 2014 | June 30, 2013 | ||||||||||
| Gross Profit (1) |
||||||||||||
| Drilling Products and Services |
$ | 153,245 | $ | 153,058 | $ | 138,438 | ||||||
| Onshore Completion and Workover Services |
123,141 | 105,642 | 136,160 | |||||||||
| Production Services |
112,757 | 94,010 | 116,742 | |||||||||
| Technical Solutions |
68,116 | 57,103 | 53,086 | |||||||||
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|||||||
| Total Gross Profit |
$ | 457,259 | $ | 409,813 | $ | 444,426 | ||||||
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| June 30, 2014 | March 31, 2014 | June 30, 2013 | ||||||||||
| Income from Operations |
||||||||||||
| Drilling Products and Services |
$ | 66,948 | $ | 66,881 | $ | 60,063 | ||||||
| Onshore Completion and Workover Services |
31,748 | 6,070 | 46,155 | |||||||||
| Production Services |
27,334 | 5,014 | 22,968 | |||||||||
| Technical Solutions |
23,411 | 13,611 | 18,249 | |||||||||
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| Total Income from Operations |
$ | 149,441 | $ | 91,576 | $ | 147,435 | ||||||
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| (1) | Gross profit is calculated by subtracting cost of services and rentals (exclusive of depreciation, depletion, amortization and accretion) from revenue for each of the Company’s segments. |
| (2) | Income from Continuing Operations for all prior periods has been adjusted for discontinued operations from the Technical Solutions segment. |
6