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): February 21, 2017

 

 

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 February 21, 2017, Superior Energy Services, Inc. issued a press release announcing its earnings for the fourth quarter and full year ended December 31, 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., February 21, 2017.


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: February 22, 2017

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

FOURTH QUARTER AND FULL YEAR 2016 RESULTS

Houston, February 21, 2017 – Superior Energy Services, Inc. (the “Company”) today announced a net loss from continuing operations for the fourth quarter of 2016 of $166.3 million, or $1.10 per share, on revenue of $354.4 million. This compares to a net loss from continuing operations of $113.9 million, or $0.75 per share for the third quarter of 2016, on revenue of $326.2 million and a net loss from continuing operations of $214.5 million, or $1.43 per share for the fourth quarter of 2015, on revenue of $545.2 million.

The Company recorded a pre-tax expense of $73.2 million in reduction in value of assets and other charges in the fourth quarter of 2016. These charges included a $36.0 million impairment of long-lived assets, a $20.8 million write-down of inventory and $16.4 million of restructuring costs. The resulting adjusted net loss from continuing operations for the fourth quarter of 2016 was $111.6 million, or $0.74 per share. This compares to an adjusted net loss from continuing operations of $110.9 million, or $0.73 per share for the third quarter of 2016, and an adjusted net loss from continuing operations of $61.3 million, or $0.41 per share for the fourth quarter of 2015.

For the year ended December 31, 2016, the Company’s net loss from continuing operations was $833.3 million, or $5.50 per share, on revenue of $1,450.0 million as compared with a net loss from continuing operations of $1,807.8 million, or $12.02 per share, on revenue of $2,774.6 million for the year ended December 31, 2015.

“Our industry continued to transition toward recovery in U.S. land markets during the fourth quarter,” said David Dunlap, President and CEO. “During the quarter, our customers gradually increased their activity levels and began to project a bias towards spending growth in 2017. Our activation of idle equipment began in the third quarter of 2016 and accelerated in the fourth quarter.

“Throughout the downturn, we conserved cash, retired debt, reduced our cost structure and positioned certain businesses to be responsive early in a recovery. In addition to the competitive advantages of responding early, the ongoing expense associated with reactivating stacked equipment that can return to service is expected to decrease over time and be concluded during the second quarter of 2017. The extended downturn our industry just experienced won’t reverse in one or two quarters, but it definitely seems that we have entered the early days of the next upcycle in U.S. land markets.


“Elsewhere, our businesses operating in the Gulf of Mexico and internationally held up relatively well sequentially despite continued low levels of customer activity. The forward outlook for recovery in these areas remains subdued with limited recovery expected to occur during 2017. Accordingly, we intend to deploy capital selectively and maintain our focus on service quality in these markets.

“Each phase of a cycle presents unique challenges and we believe we are entering a period in which our emphasis on field level reliability and execution will be increasingly valued and recognized by our customers to the benefit of our stakeholders.”

Fourth Quarter 2016 Geographic Breakdown

U.S. land revenue was $200.3 million in the fourth quarter of 2016, an 18% increase as compared with revenue of $170.2 million in the third quarter of 2016 and an 18% decrease compared to revenue of $243.5 million in the fourth quarter of 2015. Gulf of Mexico revenue was $71.6 million, a sequential decrease of 2% from third quarter 2016 revenue of $73.4 million, and a 58% decrease from revenue of $169.7 million in the fourth quarter of 2015. International revenue of $82.5 million was relatively unchanged as compared with $82.6 million in the third quarter of 2016 and decreased 38% as compared to revenue of $132.0 million in the fourth quarter of 2015.    

Drilling Products and Services Segment

The Drilling Products and Services segment revenue in the fourth quarter of 2016 was $69.3 million, a 16% increase from third quarter 2016 revenue of $59.6 million and a 34% decrease from fourth quarter 2015 revenue of $104.6 million.

U.S. land revenue increased 17% sequentially to $17.7 million as land drilling activity increased throughout the quarter. Gulf of Mexico revenue increased 14% sequentially to $25.8 million and international revenue increased 18% sequentially to $25.8 million, primarily as a result of an increase in premium drill pipe rentals.

Onshore Completion and Workover Services Segment

The Onshore Completion and Workover Services segment revenue in the fourth quarter of 2016 was $150.6 million, a 20% increase from third quarter 2016 revenue of $125.0 million and a 2% decrease from fourth quarter 2015 revenue of $153.8 million. Sequentially, greater than 75% of the revenue increase was due to higher pressure pumping utilization resulting from increased completion activity in the Permian basin.

During the quarter, the Company spent approximately $14.7 million related to capacity enhancement of its pressure pumping fleet, fleet start-up costs, and demobilization and relocation of equipment to the Permian basin following the shutdown of a facility in Pennsylvania. In total during the second half of 2016, the Company spent approximately $23.1 million on activities associated with expanding and reactivating pressure pumping capacity due to current and anticipated increases in current customer demand.

Production Services Segment

The Production Services segment revenue in the fourth quarter of 2016 was $81.0 million, a 5% increase from third quarter 2016 revenue of $77.6 million and a 43% decrease from fourth quarter 2015 revenue of $142.7 million.

 

2


U.S. land revenue increased 4% sequentially to $20.0 million due to increased activity for coiled tubing and well testing. Gulf of Mexico revenue increased 22% sequentially to $22.2 million as hydraulic workover and snubbing and electric line activity were both higher during the quarter. International revenue decreased 3% sequentially to $38.8 million.

Technical Solutions Segment

The Technical Solutions segment revenue in the fourth quarter of 2016 was $53.5 million, a 17% decrease from third quarter 2016 revenue of $64.0 million and a 63% decrease from fourth quarter 2015 revenue of $144.1 million.

U.S. land revenue increased 13% sequentially to $12.0 million as well control activity and completion tools and products orders increased. Gulf of Mexico revenue decreased 28% sequentially to $23.6 million, primarily as a result of an expected decline in subsea intervention revenue following the conclusion of a successful campaign during the third quarter of 2016. International revenue decreased 14% to $17.9 million primarily due to lower well control activity.

Conference Call Information

The Company will host a conference call at 11:00 a.m. Eastern Standard Time on Wednesday, February 22, 2017. The call can be accessed from the Company’s website at www.superiorenergy.com or by telephone at 888-312-3048. For those who cannot listen to the live call, a telephonic replay will be available through March 8, 2017 and may be accessed by calling 844-512-2921 and using the pin number 4987340.

About Superior Energy Services

Superior Energy Services, Inc. (NYSE:SPN) serves major, national and independent oil and natural gas companies around the world and offers products and services with respect to the various phases of a well’s economic life cycle. 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 worker health and safety laws) and environmental matters on our operations or prospects, including the risk that future changes in the regulation of

 

3


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 oil and natural gas property; 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 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.

###

 

4


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Three and Twelve Months Ended December 31, 2016 and 2015

(in thousands, except earnings per share amounts)

(unaudited)

 

     Three Months Ended     Twelve Months Ended  
     December 31,     December 31,  
     2016     2015     2016     2015  

Revenues

   $ 354,418      $ 545,150      $ 1,450,047      $ 2,774,565   

Cost of services and rentals (exclusive of depreciation,

depletion, amortization and accretion)

     321,132        397,548        1,123,274        1,865,812   

Depreciation, depletion, amortization and accretion

     117,954        144,818        509,971        612,147   

General and administrative expenses

     78,122        106,896        346,606        510,708   

Reduction in value of assets

     35,961        175,618        500,405        1,738,887   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (198,751     (279,730     (1,030,209     (1,952,989

Other income (expense):

        

Interest expense, net

     (24,429     (26,105     (92,753     (97,318

Other income (expense)

     519        1,144        22,621        (9,476
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income taxes

     (222,661     (304,691     (1,100,341     (2,059,783

Income taxes

     (56,402     (90,144     (267,001     (252,020
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from continuing operations

     (166,259     (214,547     (833,340     (1,807,763

Loss from discontinued operations, net of income tax

     (44,982     (22,848     (53,559     (46,955
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (211,241   $ (237,395   $ (886,899   $ (1,854,718
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share information:

        

Basic and Diluted

        

Net loss from continuing operations

   $ (1.10   $ (1.43   $ (5.50   $ (12.02

Loss from discontinued operations

     (0.30     (0.15     (0.35     (0.31
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (1.40   $ (1.58   $ (5.85   $ (12.33
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares used in computing loss per share:

        

Basic and diluted

     151,741        150,726        151,558        150,461   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

5


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2016 and 2015

(in thousands)

 

     12/31/2016      12/31/2015  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 187,591       $ 564,017   

Accounts receivable, net

     297,164         428,514   

Income taxes receivable

     101,578         —     

Prepaid expenses

     37,288         42,298   

Inventory and other current assets

     130,772         165,062   

Assets held for sale

     27,158         95,234   
  

 

 

    

 

 

 

Total current assets

     781,551         1,295,125   
  

 

 

    

 

 

 

Property, plant and equipment, net

     1,605,365         2,123,291   

Goodwill

     803,917         1,140,101   

Notes receivable

     56,650         52,382   

Intangible and other long-term assets, net

     222,772         303,345   
  

 

 

    

 

 

 

Total assets

   $ 3,470,255       $ 4,914,244   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 94,831       $ 114,475   

Accrued expenses

     218,192         271,246   

Income taxes payable

     694         9,185   

Current portion of decommissioning liabilities

     22,164         19,052   

Current maturities of long-term debt

     —           29,957   

Liabilities held for sale

     8,653         4,661   
  

 

 

    

 

 

 

Total current liabilities

     344,534         448,576   
  

 

 

    

 

 

 

Deferred income taxes

     243,611         383,069   

Decommissioning liabilities

     101,513         98,890   

Long-term debt, net

     1,284,600         1,588,263   

Other long-term liabilities

     192,077         184,634   

Total stockholders’ equity

     1,303,920         2,210,812   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 3,470,255       $ 4,914,244   
  

 

 

    

 

 

 

 

6


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

REVENUE BY GEOGRAPHIC REGION BY SEGMENT

THREE MONTHS ENDED DECEMBER 31, 2016, SEPTEMBER 30, 2016 AND DECEMBER 31, 2015

(in thousands)

(unaudited)

 

     Three months ended,  
     December 31, 2016      September 30, 2016      December 31, 2015  

U.S. land

        

Drilling Products and Services

   $ 17,703       $ 15,191       $ 28,857   

Onshore Completion and Workover Services

     150,578         125,022         153,819   

Production Services

     19,984         19,254         48,523   

Technical Solutions

     12,060         10,691         12,293   
  

 

 

    

 

 

    

 

 

 

Total U.S. land

   $ 200,325       $ 170,158       $ 243,492   
  

 

 

    

 

 

    

 

 

 

Gulf of Mexico

        

Drilling Products and Services

     25,772         22,515         43,034   

Onshore Completion and Workover Services

     —           —           —     

Production Services

     22,256         18,174         21,062   

Technical Solutions

     23,614         32,738         105,548   
  

 

 

    

 

 

    

 

 

 

Total Gulf of Mexico

   $ 71,642       $ 73,427       $ 169,644   
  

 

 

    

 

 

    

 

 

 

International

        

Drilling Products and Services

   $ 25,855       $ 21,881       $ 32,678   

Onshore Completion and Workover Services

     —           —           —     

Production Services

     38,734         40,095         73,105   

Technical Solutions

     17,862         20,664         26,231   
  

 

 

    

 

 

    

 

 

 

Total International

   $ 82,451       $ 82,640       $ 132,014   
  

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 354,418       $ 326,225       $ 545,150   
  

 

 

    

 

 

    

 

 

 

 

7


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

SEGMENT HIGHLIGHTS

THREE MONTHS ENDED DECEMBER 31, 2016, SEPTEMBER 30, 2016 AND DECEMBER 31, 2015

(in thousands)

(unaudited)

 

     Three months ended,  
Revenues    December 31, 2016     September 30, 2016     December 31, 2015  

Drilling Products and Services

   $ 69,330      $ 59,587      $ 104,569   

Onshore Completion and Workover Services

     150,578        125,022        153,819   

Production Services

     80,974        77,523        142,690   

Technical Solutions

     53,536        64,093        144,072   
  

 

 

   

 

 

   

 

 

 

Total Revenues

   $ 354,418      $ 326,225      $ 545,150   
  

 

 

   

 

 

   

 

 

 
Loss from Operations    December 31, 2016     September 30, 2016     December 31, 2015  

Drilling Products and Services

   $ (29,864   $ (25,749   $ (33,436

Onshore Completion and Workover Services

     (77,681     (74,195     (88,147

Production Services

     (31,492     (31,320     (54,519

Technical Solutions

     (59,714     (10,730     (103,628
  

 

 

   

 

 

   

 

 

 

Total Loss from Operations

   $ (198,751   $ (141,994   $ (279,730
  

 

 

   

 

 

   

 

 

 
Adjusted Income (Loss) from Operations (1)    December 31, 2016     September 30, 2016     December 31, 2015  

Drilling Products and Services

   $ (15,935   $ (25,502   $ (8,417

Onshore Completion and Workover Services

     (74,867     (73,401     (64,831

Production Services

     (20,412     (28,634     (21,724

Technical Solutions

     (14,387     (10,210     27,079   
  

 

 

   

 

 

   

 

 

 

Total Adjusted Income (Loss) from Operations

   $ (125,601   $ (137,747   $ (67,893
  

 

 

   

 

 

   

 

 

 

 

(1) Adjusted income (loss) from operations excludes the impact of reduction in value of assets, inventory write-down and restructuring costs for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015.

 

8


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

Three months ended December 31, 2016, September 30, 2016 and December 31, 2015

(in thousands)

(unaudited)

 

     Three months ended,  
     December 31, 2016     September 30, 2016     December 31, 2015  
     Consolidated     Per Share     Consolidated     Per Share     Consolidated     Per Share  

Reported net loss from continuing operations

   $ (166,259   $ (1.10   $ (113,913   $ (0.75   $ (214,547   $ (1.43

Reduction in value of assets and other items

     73,150        0.48        4,247        0.03        211,837        1.41   

Income taxes

     (18,529     (0.12     (1,225     (0.01     (58,574     (0.39
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net loss from continuing operations

   $ (111,638   $ (0.74   $ (110,891   $ (0.73   $ (61,284   $ (0.41
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

9


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

Three months ended December 31, 2016, September 30, 2016 and December 31, 2015

(in thousands)

(unaudited)

 

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

Reported loss from operations

   $ (29,864   $ (77,681   $ (31,492   $ (59,714   $ (198,751

Reduction in value of assets

     1,244        2,094        7,023        25,600        35,961   

Inventory write-down

     —          —          1,664        19,122        20,786   

Restructuring costs

     12,685        720        2,393        605        16,403   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted loss from operations

   $ (15,935   $ (74,867   $ (20,412   $ (14,387   $ (125,601
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

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

Reported loss from operations

   $ (25,749   $ (74,195   $ (31,320   $ (10,730   $ (141,994

Restructuring costs

     247        794        2,686        520        4,247   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted loss from operations

   $ (25,502   $ (73,401   $ (28,634   $ (10,210   $ (137,747
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three months ended, December 31, 2015  
     Drilling
Products
and
Services
    Onshore
Completion
and Workover
Services
    Production
Services
    Technical
Solutions
    Consolidated  

Reported loss from operations

   $ (33,436   $ (88,147   $ (54,519   $ (103,628   $ (279,730

Reduction in value of assets

     24,440        2,966        23,308        124,904        175,618   

Restructuring costs

     579        20,350        9,487        5,803        36,219   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income (loss) from operations

   $ (8,417   $ (64,831   $ (21,724   $ 27,079      $ (67,893
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

10