Form 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): April 25, 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))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On April 25, 2017, Superior Energy Services, Inc. issued a press release announcing its financial results for the fiscal quarter ended March 31, 2017. 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., April 25, 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: April 26, 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

FIRST QUARTER 2017 RESULTS

Houston, April 25, 2017 – Superior Energy Services, Inc. (the “Company”) today announced a net loss from continuing operations for the first quarter of 2017 of $89.7 million, or $0.59 per share, on revenue of $400.9 million. This compares to a net loss from continuing operations of $166.3 million, or $1.10 per share for the fourth quarter of 2016, on revenue of $354.4 million and a net loss from continuing operations of $84.5 million, or $0.56 per share for the first quarter of 2016, on revenue of $413.1 million.

David Dunlap, President and CEO, commented “The first quarter of 2017 marked a period of massive cyclical transition in US land markets. The land rig count growth of approximately 25% during the first quarter resulted in rapidly accelerating supply chain activation levels, particularly as it relates to completion related services. This led to our U.S. land revenue growing by 29% sequentially, driven by a 49% increase in pressure pumping revenue.

“Entering the quarter, a number of costs related to increasing activity levels continued to impede margin growth. These factors included significant increases in sand pricing, costs associated with reactivation of equipment and increased hiring and training costs. As the quarter progressed, we gained momentum in our conversations with customers which focused on balancing these higher costs with increased demand and activity levels.

“We exited the first quarter in a much more favorable position as it relates to these factors than when the quarter began. As rig count growth slows and equipment reactivation costs are fully absorbed, transitional inefficiency should be significantly diminished. These factors, in addition to reasonable service price increases, should put us on a path to acceptable margins.

“Outside of U.S. land markets, we are encouraged by the non-rig related project work we have in the Gulf of Mexico and we are favorably positioned to benefit from any increases in drilling activity. Internationally, activity levels and spending are lagging the U.S. land recovery. Our focus internationally remains on expanding into new markets and carefully monitoring investment levels in existing markets until they show signs of recovery.

“Crude oil prices are higher than they were a year ago at this time, our customers have committed to higher levels of spending and we have been proactive in preparing for market recovery. Despite the near-term noise associated with market transition, everything we are observing from a fundamental perspective is moving in the direction necessary to create a path to increased growth and profitability.”


First Quarter 2017 Geographic Breakdown

U.S. land revenue was $258.7 million in the first quarter of 2017, a 29% increase as compared with revenue of $200.3 million in the fourth quarter of 2016 and a 36% increase compared to revenue of $190.1 million in the first quarter of 2016. Gulf of Mexico revenue was $74.9 million, a sequential increase of 5% from fourth quarter 2016 revenue of $71.6 million, and a 34% decrease from revenue of $113.4 million in the first quarter of 2016. International revenue of $67.3 million decreased 18% as compared with $82.5 million in the fourth quarter of 2016 and decreased 39% as compared to revenue of $109.6 million in the first quarter of 2016.

Drilling Products and Services Segment

The Drilling Products and Services segment revenue in the first quarter of 2017 was $68.4 million, a 1% decrease from fourth quarter 2016 revenue of $69.3 million and a 23% decrease from first quarter 2016 revenue of $88.4 million.

U.S. land revenue increased 20% sequentially to $21.2 million as land drilling activity increased throughout the quarter. Gulf of Mexico revenue decreased 9% sequentially to $23.4 million and international revenue decreased 8% sequentially to $23.8 million.

Onshore Completion and Workover Services Segment

The Onshore Completion and Workover Services segment revenue in the first quarter of 2017 was $205.0 million, a 36% increase from fourth quarter 2016 revenue of $150.6 million and a 55% increase from first quarter 2016 revenue of $132.5 million. Revenue increased across all product lines in this segment and was led by a 49% increase in pressure pumping revenue sequentially.

During the quarter, the Company spent approximately $7.2 million related to reactivation of its pressure pumping fleet and fleet start-up costs.

Production Services Segment

The Production Services segment revenue in the first quarter of 2017 was $68.6 million, a 15% decrease from fourth quarter 2016 revenue of $81.0 million and a 35% decrease from first quarter 2016 revenue of $104.9 million.

U.S. land revenue increased 17% sequentially to $23.4 million due to increased coiled tubing activity. Gulf of Mexico revenue decreased 20% sequentially to $17.8 million as hydraulic workover and snubbing, specialty rentals and electric line activity was lower during the quarter. International revenue decreased 29% sequentially to $27.4 million due to lower levels of hydraulic workover and snubbing and well intervention activity.

Technical Solutions Segment

The Technical Solutions segment revenue in the first quarter of 2017 was $58.9 million, a 10% increase from fourth quarter 2016 revenue of $53.5 million and a 33% decrease from first quarter 2016 revenue of $87.3 million.

 

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U.S. land revenue decreased 25% sequentially to $9.1 million as completion tools and products orders decreased. Gulf of Mexico revenue, primarily driven by increases in completion tools and product orders, increased 43% sequentially to $33.7 million. International revenue decreased 10% to $16.1 million, largely due to lower completion tools and products orders.

Conference Call Information

The Company will host a conference call at 9:00 a.m. Eastern Daylight Time on Wednesday, April 26, 2017. The call can be accessed from the Company’s website at www.superiorenergy.com or by telephone at 888-503-8172. For those who cannot listen to the live call, a telephonic replay will be available through May 10, 2017 and may be accessed by calling 844-512-2921 and using the pin number 9702800.

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 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; risk associated with potential changes of Bureau of Ocean Energy Management security and bonding requirements for offshore platforms; 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

 

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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.

###

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Three Months Ended March 31, 2017, 2016 and December 31, 2016

(in thousands, except earnings per share amounts)

(unaudited)

 

     Three months ended,  
     March 31, 2017     December 31, 2016     March 31, 2016  

Revenues

   $ 400,936     $ 354,418     $ 413,133  

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

     321,986       321,132       285,339  

Depreciation, depletion, amortization and accretion

     114,281       117,954       136,672  

General and administrative expenses

     75,493       78,122       103,155  

Reduction in value of assets

     —         35,961       —    
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (110,824     (198,751     (112,033

Other income (expense):

      

Interest expense, net

     (24,250     (24,429     (23,806

Other income

     649       519       7,755  
  

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income taxes

     (134,425     (222,661     (128,084

Income taxes

     (44,764     (56,402     (43,548
  

 

 

   

 

 

   

 

 

 

Net loss from continuing operations

     (89,661     (166,259     (84,536

Loss from discontinued operations, net of income tax

     (1,998     (44,982     (2,267
  

 

 

   

 

 

   

 

 

 

Net loss

   $ (91,659   $ (211,241   $ (86,803
  

 

 

   

 

 

   

 

 

 

Loss per share information:

      

Basic and Diluted

      

Net loss from continuing operations

   $ (0.59   $ (1.10   $ (0.56

Loss from discontinued operations

     (0.01     (0.30     (0.01
  

 

 

   

 

 

   

 

 

 

Net loss

   $ (0.60   $ (1.40   $ (0.57
  

 

 

   

 

 

   

 

 

 

Weighted average common shares used in computing earnings per share:

      

Basic and diluted

     152,701       151,741       151,324  
  

 

 

   

 

 

   

 

 

 

 

4


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31, 2017 and December 31, 2016

(in thousands)

(unaudited)

 

     3/31/2017      12/31/2016  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 151,766      $ 187,591  

Accounts receivable, net

     329,770        297,164  

Income taxes receivable

     121,309        101,578  

Prepaid expenses

     42,976        37,288  

Inventory and other current assets

     139,631        130,772  

Assets held for sale

     27,411        27,158  
  

 

 

    

 

 

 

Total current assets

     812,863        781,551  
  

 

 

    

 

 

 

Property, plant and equipment, net

     1,513,282        1,605,365  

Goodwill

     804,436        803,917  

Notes receivable

     57,423        56,650  

Intangible and other long-term assets, net

     190,707        222,772  
  

 

 

    

 

 

 

Total assets

   $ 3,378,711      $ 3,470,255  
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 102,221      $ 94,831  

Accrued expenses

     236,978        218,192  

Income taxes payable

     —          694  

Current portion of decommissioning liabilities

     22,188        22,164  

Liabilities held for sale

     7,401        8,653  
  

 

 

    

 

 

 

Total current liabilities

     368,788        344,534  
  

 

 

    

 

 

 

Deferred income taxes

     213,855        243,611  

Decommissioning liabilities

     103,186        101,513  

Long-term debt, net

     1,286,210        1,284,600  

Other long-term liabilities

     193,974        192,077  

Total stockholders’ equity

     1,212,698        1,303,920  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 3,378,711      $ 3,470,255  
  

 

 

    

 

 

 

 

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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

REVENUE BY GEOGRAPHIC REGION BY SEGMENT

THREE MONTHS ENDED MARCH 31, 2017, DECEMBER 31, 2016 AND MARCH 31, 2016

(in thousands)

(unaudited)

 

     Three months ended,  
     March 31, 2017      December 31, 2016      March 31, 2016  

U.S. land

        

Drilling Products and Services

   $ 21,162      $ 17,703      $ 19,745  

Onshore Completion and Workover Services

     204,979        150,578        132,472  

Production Services

     23,435        19,984        27,721  

Technical Solutions

     9,085        12,060        10,223  
  

 

 

    

 

 

    

 

 

 

Total U.S. land

   $ 258,661      $ 200,325      $ 190,161  
  

 

 

    

 

 

    

 

 

 

Gulf of Mexico

        

Drilling Products and Services

     23,485        25,772        37,532  

Onshore Completion and Workover Services

     —          —          —    

Production Services

     17,746        22,256        24,417  

Technical Solutions

     33,717        23,614        51,466  
  

 

 

    

 

 

    

 

 

 

Total Gulf of Mexico

   $ 74,948      $ 71,642      $ 113,415  
  

 

 

    

 

 

    

 

 

 

International

        

Drilling Products and Services

   $ 23,784      $ 25,855      $ 31,145  

Onshore Completion and Workover Services

     —          —          —    

Production Services

     27,424        38,734        52,756  

Technical Solutions

     16,119        17,862        25,656  
  

 

 

    

 

 

    

 

 

 

Total International

   $ 67,327      $ 82,451      $ 109,557  
  

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 400,936      $ 354,418      $ 413,133  
  

 

 

    

 

 

    

 

 

 

 

6


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

SEGMENT HIGHLIGHTS

THREE MONTHS ENDED MARCH 31, 2017, DECEMBER 31, 2016 AND MARCH 31, 2016

(in thousands)

(unaudited)

 

     Three months ended,  
Revenues    March 31, 2017     December 31, 2016     March 31, 2016  

Drilling Products and Services

   $ 68,431     $ 69,330     $ 88,422  

Onshore Completion and Workover Services

     204,979       150,578       132,472  

Production Services

     68,605       80,974       104,894  

Technical Solutions

     58,921       53,536       87,345  
  

 

 

   

 

 

   

 

 

 

Total Revenues

   $ 400,936     $ 354,418     $ 413,133  
  

 

 

   

 

 

   

 

 

 

Loss from Operations

      

Drilling Products and Services

   $ (13,167   $ (29,864   $ (17,722

Onshore Completion and Workover Services

     (63,241     (77,681     (70,535

Production Services

     (29,212     (31,492     (23,717

Technical Solutions

     (5,204     (59,714     (59
  

 

 

   

 

 

   

 

 

 

Total Loss from Operations

   $ (110,824   $ (198,751   $ (112,033
  

 

 

   

 

 

   

 

 

 

Adjusted Income (Loss) from Operations (1)

      

Drilling Products and Services

   $ (13,167   $ (15,935   $ (16,244

Onshore Completion and Workover Services

     (63,241     (74,867     (65,691

Production Services

     (29,212     (20,412     (16,606

Technical Solutions

     (5,204     (14,387     1,808  
  

 

 

   

 

 

   

 

 

 

Total Adjusted Income (Loss) from Operations

   $ (110,824   $ (125,601   $ (96,733
  

 

 

   

 

 

   

 

 

 

 

(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 December 31, 2016 and March 31, 2016. There were no adjustments for the three months ended March 31, 2017.

 

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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 Income (Loss) from Operations to Adjusted Income (Loss) From Operations

Three months ended December 31, 2016 and March 31, 2016

(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, March 31, 2016  
     Drilling
Products
and
Services
    Onshore
Completion
and Workover
Services
    Production
Services
    Technical
Solutions
    Consolidated  

Reported loss from operations

   $ (17,722   $ (70,535   $ (23,717   $ (59   $ (112,033

Restructuring costs

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income (loss) from operations

   $ (16,244   $ (65,691   $ (16,606   $ 1,808     $ (96,733
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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