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, 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 October 29, 2014, Superior Energy Services, Inc. issued a press release announcing its earnings for the third quarter ended September 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., October 29, 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: October 30, 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 or
Robert Taylor, CFO, (713) 654-2200
Superior Energy Services Announces Third Quarter 2014 Results
Houston – October 29, 2014 – Superior Energy Services, Inc. (NYSE: SPN) today announced net income from continuing operations of $85.7 million, or $0.55 per diluted share, and net income of $79.9 million, or $0.51 per diluted share, on revenue of $1,209.0 million for the third quarter of 2014.
These results compare with the third quarter of 2013 net income from continuing operations of $67.5 million, or $0.42 per diluted share, and net income of $69.8 million, or $0.43 per diluted share, on revenue of $1,096.4 million.
David Dunlap, President and CEO of the Company, commented, “We had another great quarter of performance at Superior Energy Services. Our U.S. land revenue continues to grow as we experienced higher demand across most of our product lines, with hydraulic fracturing leading the way. We expect the fracturing business to have more expansion opportunities in the U.S. land market as we continue to activate idle equipment in the coming quarters.
“We have frequently mentioned the operating leverage that is available in our U.S. land business. The increased horizontal completions demand that we have experienced the past two quarters has provided us the opportunity to demonstrate how operating leverage translates into higher earnings.
“Although the majority of our earnings improvement in the past two quarters has been driven by higher demand in the United States, our international growth is also producing impressive gains. We have been very deliberate in choosing specific countries to grow our business and have avoided the turbulence that is impacting many other oilfield service companies.
“We are continuing to introduce product lines into established operating areas through equipment transfers, focused capital expenditures and targeted acquisitions. We believe these actions support the steady and reliable growth that we have delivered, and intend to continue to deliver in our international business.”
During the third quarter of 2014, the Company repurchased and retired approximately 2.0 million shares of its common stock for a total purchase price of $69.1 million. Year to date through September 30, 2014, the Company has repurchased and retired approximately 5.9 million shares for a total purchase price of $185.6 million.
Third Quarter 2014 Geographic Breakdown
U.S. land revenue was $814.1 million, as compared with $718.2 million in the third quarter of 2013 and $721.3 million in the second quarter of 2014. Gulf of Mexico revenue was $210.8 million, as compared with $214.5 million in the third quarter of 2013 and $211.7 million in the second quarter of 2014. International revenue was $184.1 million, as compared with $163.7 million in the third quarter of 2013 and $174.6 million in the second quarter of 2014.
Drilling Products and Services Segment
Drilling Products and Services segment revenue was $239.2 million, an 11% increase from third quarter 2013 revenue of $215.5 million and a 6% increase from second quarter 2014 revenue of $226.0 million.
The primary factor driving the higher sequential revenue in this segment was a 24% increase in international revenue to $63.7 million due to increased rentals of premium drill pipe and accommodations. U.S. land revenue increased 5% sequentially to $85.9 million due to increased rentals of bottom hole assemblies and accommodations. Gulf of Mexico revenue decreased 3% sequentially to $89.6 million due to decreased specialty rentals.
Onshore Completion and Workover Services Segment
Onshore Completion and Workover Services segment revenue was $470.8 million, an 18% increase from third quarter 2013 revenue of $398.0 million, and an 18% increase from second quarter 2014 revenue of $398.1 million. Practically all of the revenue in this segment is generated from U.S. land market areas.
On a sequential basis, the revenue increase was driven by higher demand for pressure pumping services.
Production Services Segment
Production Services segment revenue was $348.8 million, a 3% decrease from third quarter 2013 revenue of $359.7 million and a 1% increase from second quarter 2014 revenue of $343.9 million.
U.S. land revenue increased 5% sequentially to $225.0 million, primarily due to increased activity for coiled tubing and wireline. International revenue decreased 5% sequentially to $86.6 million primarily due to lower demand for snubbing services and pressure control tools. Gulf of Mexico revenue decreased 3% sequentially to $37.2 million primarily due to decreased coiled tubing activity.
Technical Solutions Segment
Technical Solutions segment revenue was $150.2 million, a 22% increase from third quarter 2013 revenue of $123.2 million and an 8% increase from second quarter 2014 revenue of $139.6 million.
Gulf of Mexico revenue increased 4% sequentially to $84.0 million due to an increase in well control services, which was offset by a decline in demand for completion tools and services. U.S. land revenue increased 20% sequentially to $32.4 million primarily related to increases in well control services and completion tools and products. International revenue increased 5% sequentially to $33.8 million as a result of an increase in well service activity.
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Conference Call Information
The Company will host a conference call at 11 a.m. Eastern Time on Thursday, October 30, 2014. The call can be accessed from the Company’s website at www.superiorenergy.com, or by telephone at 719-457-1035. For those who cannot listen to the live call, a telephonic replay will be available through November 13, 2014 and may be accessed by calling 719-457-0820 and using the pass code 2102356#. 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 forward-looking statements which involved risks and uncertainties. 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. 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. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2014 and 2013
(in thousands, except earnings per share amounts)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenues |
$ | 1,209,026 | $ | 1,096,412 | $ | 3,377,996 | $ | 3,274,413 | ||||||||
| Cost of services and rentals (exclusive of items shown separately below) |
721,692 | 671,632 | 2,023,590 | 1,969,930 | ||||||||||||
| Depreciation, depletion, amortization and accretion |
170,154 | 152,028 | 493,437 | 446,432 | ||||||||||||
| General and administrative expenses |
154,859 | 147,364 | 457,631 | 440,812 | ||||||||||||
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| Income from operations |
162,321 | 125,388 | 403,338 | 417,239 | ||||||||||||
| Other income (expense): |
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| Interest expense, net |
(24,169 | ) | (25,564 | ) | (72,610 | ) | (81,610 | ) | ||||||||
| Other income (expense) |
(2,051 | ) | (1,697 | ) | (1,480 | ) | 41 | |||||||||
| Loss on early extinguishment of debt |
— | — | — | (884 | ) | |||||||||||
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| Income from continuing operations before income taxes |
136,101 | 98,127 | 329,248 | 334,786 | ||||||||||||
| Income taxes |
50,358 | 30,658 | 121,822 | 112,620 | ||||||||||||
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| Net income from continuing operations |
85,743 | 67,469 | 207,426 | 222,166 | ||||||||||||
| Income (loss) from discontinued operations, net of income tax |
(5,886 | ) | 2,366 | (15,735 | ) | (20,045 | ) | |||||||||
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| Net income |
$ | 79,857 | $ | 69,835 | $ | 191,691 | $ | 202,121 | ||||||||
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| Basic earnings (losses) per share: |
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| Net income from continuing operations |
$ | 0.55 | $ | 0.42 | $ | 1.33 | $ | 1.40 | ||||||||
| Income (loss) from discontinued operations |
(0.03 | ) | 0.02 | (0.10 | ) | (0.13 | ) | |||||||||
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| Net income |
$ | 0.52 | $ | 0.44 | $ | 1.23 | $ | 1.27 | ||||||||
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| Diluted earnings (losses) per share: |
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| Net income from continuing operations |
$ | 0.55 | $ | 0.42 | $ | 1.31 | $ | 1.38 | ||||||||
| Income (loss) from discontinued operations |
(0.04 | ) | 0.01 | (0.10 | ) | (0.12 | ) | |||||||||
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| Net income |
$ | 0.51 | $ | 0.43 | $ | 1.21 | $ | 1.26 | ||||||||
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| Weighted average common shares used in computing earnings per share: |
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| Basic |
154,530 | 159,326 | 156,424 | 159,204 | ||||||||||||
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| Diluted |
156,336 | 160,883 | 158,068 | 160,804 | ||||||||||||
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4
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2014 AND DECEMBER 31, 2013
(in thousands)
| 9/30/2014 | 12/31/2013 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 320,042 | $ | 196,047 | ||||
| Accounts receivable, net |
967,943 | 937,195 | ||||||
| Deferred income taxes |
27,024 | 8,785 | ||||||
| Income taxes receivable |
— | 5,532 | ||||||
| Prepaid expenses |
72,072 | 70,421 | ||||||
| Inventory and other current assets |
185,613 | 258,449 | ||||||
| Assets held for sale |
285,759 | — | ||||||
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| Total current assets |
1,858,453 | 1,476,429 | ||||||
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| Property, plant and equipment, net |
2,702,532 | 3,002,194 | ||||||
| Goodwill |
2,456,522 | 2,458,109 | ||||||
| Notes receivable |
25,560 | 23,708 | ||||||
| Intangible and other long-term assets, net |
420,873 | 450,867 | ||||||
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| Total assets |
$ | 7,463,940 | $ | 7,411,307 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ | 207,242 | $ | 216,029 | ||||
| Accrued expenses |
367,476 | 376,049 | ||||||
| Income taxes payable |
37,417 | — | ||||||
| Current portion of decommissioning liabilities |
— | 27,322 | ||||||
| Current maturities of long-term debt |
20,344 | 20,000 | ||||||
| Liabilities held for sale |
76,849 | — | ||||||
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| Total current liabilities |
709,328 | 639,400 | ||||||
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| Deferred income taxes |
729,246 | 736,080 | ||||||
| Decommissioning liabilities |
87,443 | 56,197 | ||||||
| Long-term debt, net |
1,630,834 | 1,646,535 | ||||||
| Other long-term liabilities |
165,379 | 201,651 | ||||||
| Total stockholders’ equity |
4,141,710 | 4,131,444 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 7,463,940 | $ | 7,411,307 | ||||
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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
SEGMENT HIGHLIGHTS
THREE MONTHS ENDED SEPTEMBER 30, 2014, JUNE 30, 2014, AND SEPTEMBER 30, 2013
(unaudited)
(in thousands)
| Three months ended, | ||||||||||||
| Revenue | September 30, 2014 | June 30, 2014 | September 30, 2013 | |||||||||
| Drilling Products and Services |
$ | 239,204 | $ | 225,982 | $ | 215,523 | ||||||
| Onshore Completion and Workover Services |
470,849 | 398,048 | 398,016 | |||||||||
| Production Services |
348,793 | 343,876 | 359,722 | |||||||||
| Technical Solutions |
150,180 | 139,646 | 123,151 | |||||||||
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| Total Revenues |
$ | 1,209,026 | $ | 1,107,552 | $ | 1,096,412 | ||||||
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| Gross Profit (1) | September 30, 2014 | June 30, 2014 | September 30, 2013 | |||||||||
| Drilling Products and Services |
$ | 162,927 | $ | 153,245 | $ | 141,650 | ||||||
| Onshore Completion and Workover Services |
153,416 | 123,141 | 122,340 | |||||||||
| Production Services |
100,226 | 112,757 | 108,147 | |||||||||
| Technical Solutions |
70,765 | 68,116 | 52,643 | |||||||||
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| Total Gross Profit |
$ | 487,334 | $ | 457,259 | $ | 424,780 | ||||||
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| Income from Operations (2) | September 30, 2014 | June 30, 2014 | September 30, 2013 | |||||||||
| Drilling Products and Services |
$ | 78,110 | $ | 66,948 | $ | 63,396 | ||||||
| Onshore Completion and Workover Services |
54,782 | 31,748 | 32,548 | |||||||||
| Production Services |
13,374 | 27,334 | 15,858 | |||||||||
| Technical Solutions |
16,055 | 23,411 | 13,586 | |||||||||
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| Total Income from Operations |
$ | 162,321 | $ | 149,441 | $ | 125,388 | ||||||
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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