8-K

 

 

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 25, 2016

 

 

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 25, 2016, Superior Energy Services, Inc. issued a press release announcing its earnings for the second quarter ended June 30, 2016. A copy of the press release is attached hereto as Exhibit 99.1 and is 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 25, 2016.


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 26, 2016

EX-99.1

Exhibit 99.1

1001 Louisiana St., Suite 2900

Houston, TX 77002

NYSE: SPN

 

LOGO

FOR FURTHER INFORMATION CONTACT:

Paul Vincent, VP of Investor Relations, (713) 654-2200

SUPERIOR ENERGY SERVICES ANNOUNCES

SECOND QUARTER 2016 RESULTS

Houston, July 25, 2016 – Superior Energy Services, Inc. (the “Company”) today announced a net loss from continuing operations for the second quarter of 2016 of $468.6 million, or $3.09 per share, on revenue of $356.3 million. This compares to a net loss from continuing operations for the first quarter of 2016 of $84.5 million, or $0.56 per share, on revenue of $413.1 million and a net loss from continuing operations for the second quarter of 2015 of $775.1 million, or $5.15 per share, on revenue of $710.8 million.

The Company reported a pre-tax expense of $460.3 million in reduction in value of assets, primarily related to an impairment of goodwill in its Production Services and Onshore Completion and Workover Services segments. The Company also recorded a pre-tax charge of $7.4 million for restructuring costs. The resulting adjusted net loss from continuing operations for the second quarter of 2016 was $80.4 million, or $0.53 per share. This compares to an adjusted net loss from continuing operations of $74.4 million, or $0.49 per share for the first quarter of 2016, and an adjusted net loss from continuing operations of $47.4 million, or $0.31 per share for the second quarter of 2015.

“Oil and gas drilling and completion activity slowed during the second quarter and as a result Superior Energy’s second quarter operational and financial results declined as well”, commented David Dunlap, President and CEO. “In U.S. land markets, pricing and utilization continued to move lower, although at a slower pace than prior quarters. We even observed a slight increase in activity, as measured by the U.S. rig count, as the end of the quarter approached, which was a welcome signal from the market. While it remains difficult to tell if the prolonged industry downturn has reached bottom, we are encouraged that several of our domestic customers who possess high quality shale acreage positions will increase spending by the fourth quarter of this year.

“We believe we have taken major strides towards optimizing our cost structure and have ensured that we have significant operating capacity to meet any increase in market demand. Our focus in the coming quarters is to maximize our opportunities to expand revenues and margins as drilling and completion activity grows.”

Second Quarter 2016 Geographic Breakdown

U.S. land revenue was $157.1 million in the second quarter of 2016, a 17% decrease as compared with revenue of $190.1 million in the first quarter of 2016 and a 59% decrease compared to revenue of $378.8 million in the second quarter of 2015. Gulf of Mexico revenue was $104.3 million, a sequential decrease of 8% from first quarter 2016 revenue of $113.4 million, and a 36% decrease from revenue of $162.5 million in the second quarter of 2015.


International revenue decreased 13% to $94.9 million as compared with $109.6 million in the first quarter of 2016 and decreased 44% as compared to revenue of $169.5 million in the second quarter of 2015.

Drilling Products and Services Segment

The Drilling Products and Services segment revenue in the second quarter of 2016 was $80.7 million, a 17% decrease from first quarter 2016 revenue of $96.6 million and a 45% decrease from second quarter 2015 revenue of $146.3 million.

U.S. land revenue decreased 41% sequentially to $11.7 million, Gulf of Mexico revenue decreased 15% sequentially to $38.9 million and international revenue decreased 3% sequentially to $30.1 million. All product lines in this segment experienced a combination of lower levels of utilization and pricing pressure.

Onshore Completion and Workover Services Segment

The Onshore Completion and Workover Services segment revenue in the second quarter of 2016 was $115.9 million, a 13% decrease from first quarter 2016 revenue of $132.5 million and a 49% decrease from second quarter 2015 revenue of $226.5 million. Activity declines in this segment occurred primarily in the fluid management and horizontal well fracturing service lines while well service rig activity increased slightly.

Production Services Segment

The Production Services segment revenue in the second quarter of 2016 was $80.5 million, a 17% decrease from first quarter 2016 revenue of $96.7 million and a 61% decrease from second quarter 2015 revenue of $208.7 million.

U.S. land revenue decreased 26% sequentially to $20.4 million due to lower levels of activity across all product lines and a continued emphasis on minimizing operations that are challenged to achieve cash breakeven levels. Gulf of Mexico revenue decreased 5% sequentially to $15.6 million due to decreased hydraulic workover and snubbing, electric line and slickline activity which was offset slightly by increased coiled tubing activity. International revenue decreased 16% sequentially to $44.5 million primarily due to a decrease in hydraulic workover and snubbing activity, partially offset by increased revenues from coiled tubing services in Argentina and India, higher levels of electric line and slickline activity in Argentina and higher stimulation revenues in Brazil.

Technical Solutions Segment

The Technical Solutions segment revenue in the second quarter of 2016 was $79.2 million, a 9% decrease from first quarter 2016 revenue of $87.3 million and a 39% decrease from second quarter 2015 revenue of $129.3 million.

U.S. land revenue decreased 11% sequentially to $9.1 million. Gulf of Mexico revenue decreased 3% sequentially to $49.8 million due to decreased completion tools revenue which was almost entirely offset by increased plug and abandonment activity both on the shelf and deep water. International revenue decreased 21% sequentially to $20.3 million primarily as a result of lower levels of well control activity.

 

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Conference Call Information

The Company will host a conference call at 11:00 a.m. Eastern Daylight Time on Tuesday, July 26, 2016. The call can be accessed from the Company’s website at www.superiorenergy.com or by telephone at 412-902-0030. For those who cannot listen to the live call, a telephonic replay will be available through August 9, 2016 and may be accessed by calling 201-612-7415 and using the pass code 13640106#.

About Superior Energy Services

Superior Energy Services, Inc. (NYSE:SPN) 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. For more information, visit: www.superiorenergy.com.

The press release contains, and future oral or written statements or press releases by us and our management may contain, certain forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks” and “estimates,” variations of such words and similar expressions identify forward-looking statements, although not all forward-looking statements contain these identifying words. All statements other than statements of historical fact regarding the Company’s financial position, financial performance, liquidity, strategic alternatives, market outlook, future capital needs, capital allocation plans, business strategies and other plans and objectives of our management for future operations and activities are forward-looking statements. These statements are based on certain assumptions and analyses made by our management in light of its experience and prevailing circumstances on the date such statements are made. Such forward-looking statements, and the assumptions on which they are based, are inherently speculative and are subject to a number of risks and uncertainties that could cause our actual results to differ materially from such statements. Such uncertainties include, but are not limited to: the cyclicality and volatility of the oil and gas industry, including changes in prevailing levels of capital expenditures, exploration, production and development activity; changes in prevailing oil and gas prices or expectations about future prices; operating hazards, including the significant possibility of accidents resulting in personal injury or death, property damage or environmental damage for which we may have limited or no insurance coverage or indemnification rights; the effect of regulatory programs (including regarding worker health and safety laws) and environmental matters on our operations or prospects, including the risk that future changes in the regulation of hydraulic fracturing could reduce or eliminate demand for our pressure pumping services, or that future changes in climate change legislation could result in increased operating costs or reduced commodity demand globally; counter-party risks associated with reliance on key suppliers; risks associated with the uncertainty of macroeconomic and business conditions worldwide; changes in competitive and technological factors affecting our operations; credit risk associated with our customer base; the potential inability to retain key employees and skilled workers; challenges with estimating our oil and natural gas reserves and potential liabilities related to our properties; risks inherent in acquiring businesses; risks associated with cyber-attacks; risks associated with business growth during an industry recovery outpacing the capabilities of our infrastructure and workforce; political, legal, economic and other risks and uncertainties associated with our international operations; potential changes in tax laws, adverse positions taken by tax authorities or tax audits impacting our operating results; risks associated with our outstanding debt obligations and the potential effect of limiting our future growth and operations; our continued access to credit markets on favorable terms; and the impact that unfavorable or unusual weather conditions could have on our operations. These risks and other uncertainties related to our business are described in our periodic reports filed with the Securities and Exchange Commission. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Investors are cautioned that many of the assumptions on which our forward-looking statements are based are likely to change after such statements are made, including for example the market prices of oil and gas and regulations

 

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affecting oil and gas operations, which we cannot control or anticipate. Further, we may make changes to our business strategies and plans (including our capital spending and capital allocation plans) at any time and without notice, based on any changes in the above-listed factors, our assumptions or otherwise, any of which could or will affect our results. For all these reasons, actual events and results may differ materially from those anticipated, estimated, projected or implied by us in our forward-looking statements. We undertake no obligation to update any of our forward-looking statements for any reason and, notwithstanding any changes in our assumptions, changes in our business plans, our 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.

###

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Three and Six Months Ended June 30, 2016 and 2015

(in thousands, except earnings per share amounts)

(unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2016     2015     2016     2015  

Revenues

   $ 356,271      $ 710,784      $ 769,404      $ 1,628,019   

Cost of services and rentals (exclusive of items shown separately below)

     258,635        465,533        543,974        1,047,779   

Depreciation, depletion, amortization and accretion

     132,037        158,352        268,709        320,572   

General and administrative expenses

     82,747        129,661        183,724        280,623   

Reduction in value of assets

     460,283        807,637        462,461        807,637   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (577,431     (850,399     (689,464     (828,592

Other income (expense):

        

Interest expense, net

     (22,748     (25,382     (46,554     (48,591

Other income (expense)

     10,681        (6,524     18,436        (7,495
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income taxes

     (589,498     (882,305     (717,582     (884,678

Income taxes

     (120,866     (107,173     (164,414     (108,051
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from continuing operations

     (468,632     (775,132     (553,168     (776,627

Loss from discontinued operations, net of income tax

     (2,225     (9,857     (4,492     (19,497
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (470,857   $ (784,989   $ (557,660   $ (796,124
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share information:

        

Basic and Diluted

        

Net loss from continuing operations

   $ (3.09   $ (5.15   $ (3.66   $ (5.17

Loss from discontinued operations

     (0.02     (0.07     (0.03     (0.13
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (3.11   $ (5.22   $ (3.69   $ (5.30
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares used in computing earnings per share:

        

Basic and diluted

     151,456        150,485        151,124        150,196   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2016 and December 31, 2015

(in thousands)

 

     6/30/2016      12/31/2015  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 485,847       $ 564,017   

Accounts receivable, net

     306,484         428,514   

Prepaid expenses

     42,706         42,298   

Inventory and other current assets

     151,917         165,062   

Assets held for sale

     66,637         95,234   
  

 

 

    

 

 

 

Total current assets

     1,053,591         1,295,125   
  

 

 

    

 

 

 

Property, plant and equipment, net

     1,869,204         2,123,291   

Goodwill

     806,779         1,140,101   

Notes receivable

     54,181         52,382   

Intangible and other long-term assets, net

     231,505         303,345   
  

 

 

    

 

 

 

Total assets

   $ 4,015,260       $ 4,914,244   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 67,097       $ 114,475   

Accrued expenses

     224,487         271,246   

Income taxes payable

     2,768         9,185   

Current portion of decommissioning liabilities

     22,654         19,052   

Current maturities of long-term debt

     728         29,957   

Liabilities held for sale

     2,730         4,661   
  

 

 

    

 

 

 

Total current liabilities

     320,464         448,576   
  

 

 

    

 

 

 

Deferred income taxes

     250,649         383,069   

Decommissioning liabilities

     96,381         98,890   

Long-term debt, net

     1,533,060         1,588,263   

Other long-term liabilities

     185,522         184,634   

Total stockholders’ equity

     1,629,184         2,210,812   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 4,015,260       $ 4,914,244   
  

 

 

    

 

 

 

 

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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

SEGMENT HIGHLIGHTS

THREE MONTHS ENDED JUNE 30, 2016, MARCH 31, 2016 AND JUNE 30, 2015

(in thousands)

(unaudited)

 

     Three months ended,  
     June 30, 2016     March 31, 2016     June 30, 2015  

Revenue

      

Drilling Products and Services

   $ 80,633      $ 96,570      $ 146,376   

Onshore Completion and Workover Services

     115,893        132,472        226,459   

Production Services

     80,543        96,746        208,669   

Technical Solutions

     79,202        87,345        129,280   
  

 

 

   

 

 

   

 

 

 

Total Revenues

   $ 356,271      $ 413,133      $ 710,784   
  

 

 

   

 

 

   

 

 

 
     June 30, 2016     March 31, 2016     June 30, 2015  

Income (Loss) from Operations

      

Drilling Products and Services

   $ (71,275   $ (16,295   $ 3,299   

Onshore Completion and Workover Services

     (261,206     (70,535     (84,294

Production Services

     (247,052     (25,144     (771,679

Technical Solutions

     2,102        (59     2,275   
  

 

 

   

 

 

   

 

 

 

Total Income (Loss) from Operations

   $ (577,431   $ (112,033   $ (850,399
  

 

 

   

 

 

   

 

 

 
     June 30, 2016     March 31, 2016     June 30, 2015  

Adjusted Income (Loss) from Operations (1)

      

Drilling Products and Services

   $ (23,214   $ (14,817   $ 19,096   

Onshore Completion and Workover Services

     (68,209     (65,691     (44,031

Production Services

     (21,876     (18,033     (20,102

Technical Solutions

     3,553        1,808        2,275   
  

 

 

   

 

 

   

 

 

 

Total Adjusted Income (Loss) from Operations

   $ (109,746   $ (96,733   $ (42,762
  

 

 

   

 

 

   

 

 

 

 

(1) Adjusted income (loss) from operations excludes the impact of reduction in value of assets and restructuring costs for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015.

 

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Non-GAAP Financial Measures

The following tables reconcile consolidated net loss from continuing operations and income (loss) from operations by segment, which are the directly comparable financial results determined in accordance with Generally Accepted Accounting Principles (GAAP), to consolidated adjusted loss from continuing operations and adjusted income (loss) from operations by segment (non-GAAP financial measures). Consolidated adjusted loss from continuing operations and income (loss) from operations by segment exclude the impact of reduction in value of assets and restructuring costs. These financial measures are provided to enhance investors’ overall understanding of the Company’s current financial performance.

Reconciliation of As Reported Net Loss from Continuing Operations to Adjusted Net Loss From Continuing Operations

For the three months ended June 30, 2016, March 31, 2016 and June 30, 2015

(in thousands)

(unaudited)

 

     Three months ended,  
     June 30, 2016     March 31, 2016     June 30, 2015  
     Consolidated     Per Share     Consolidated     Per Share     Consolidated     Per Share  

Reported net loss from continuing operations

   $ (468,632   $ (3.09   $ (84,536   $ (0.56   $ (775,132   $ (5.15

Reduction in value of assets and other items

     467,685        3.09        15,300        0.10        807,637        5.37   

Income taxes

     (79,450     (0.53     (5,201     (0.03     (79,882     (0.53
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net loss from continuing operations

   $ (80,397   $ (0.53   $ (74,437   $ (0.49   $ (47,377   $ (0.31
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Reconciliation of As Reported Income (Loss) from Operations to Adjusted Income (Loss) From Operations

For the three months ended June 30, 2016, March 31, 2016 and June 30, 2015

(in thousands)

(unaudited)

 

     Three months ended, June 30, 2016  
     Drilling
Products
and
Services
    Onshore
Completion
and Workover
Services
    Production
Services
    Technical
Solutions
    Consolidated  

Reported income (loss) from operations

   $ (71,275   $ (261,206   $ (247,052   $ 2,102      $ (577,431

Reduction in value of assets

     47,659        188,741        223,883        —          460,283   

Restructuring costs

     402        4,256        1,293        1,451        7,402   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income (loss) from operations

   $ (23,214   $ (68,209   $ (21,876   $ 3,553      $ (109,746
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three months ended, March 31, 2016  
     Drilling
Products
and
Services
    Onshore
Completion
and Workover
Services
    Production
Services
    Technical
Solutions
    Consolidated  

Reported loss from operations

   $ (16,295   $ (70,535   $ (25,144   $ (59   $ (112,033

Restructuring costs

     1,478        4,844        7,111        1,867        15,300   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income (loss) from operations

   $ (14,817   $ (65,691   $ (18,033   $ 1,808      $ (96,733
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three months ended, June 30, 2015  
     Drilling
Products
and
Services
    Onshore
Completion
and Workover
Services
    Production
Services
    Technical
Solutions
    Consolidated  

Reported income (loss) from operations

   $ 3,299      $ (84,294   $ (771,679   $ 2,275      $ (850,399

Reduction in value of assets

     15,797        40,263        751,577        —          807,637   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income (loss) from operations

   $ 19,096      $ (44,031   $ (20,102   $ 2,275      $ (42,762
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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