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): July 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 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 July 25, 2017, Superior Energy Services, Inc. issued a press release announcing its financial results for the fiscal quarter ended June 30, 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., July 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: July 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

SECOND QUARTER 2017 RESULTS

Houston, July 25, 2017 – Superior Energy Services, Inc. (the “Company”) today announced a net loss from continuing operations for the second quarter of 2017 of $62.0 million, or $0.41 per share, on revenue of $470.1 million. This compares to a net loss from continuing operations of $89.7 million, or $0.59 per share for the first quarter of 2017, on revenue of $400.9 million and a net loss from continuing operations of $468.6 million, or $3.09 per share for the second quarter of 2016, on revenue of $356.3 million.

David Dunlap, President and CEO, commented, “Activity in U.S. land markets accelerated rapidly during the second quarter. Utilization of assets across most U.S. land service lines increased and service pricing also moved in a positive direction. Nowhere was this observed more distinctly than in our pressure pumping business. Customer resistance to pricing increases weakened throughout the quarter, indicating a rapidly tightening supply and demand balance. Higher activity levels resulted in pressure pumping revenue increasing 32% sequentially, with minimal equipment reactivation cost during the quarter. With most of the cost friction and reactivation inefficiencies experienced during the first quarter behind us, much of this increase in revenue fell to the bottom line, resulting in favorable incremental margins. Improving market conditions and growing customer demand has caused us to commit to rebuild our remaining idle pressure pumping equipment.

“In the Gulf of Mexico, sand control completion services work continued to increase, as did hydraulic workover and snubbing activity. The drilling rig forecast over the near-term for the Gulf of Mexico may be uninspiring, but our specialized, project oriented service lines such as completion services, hydraulic workover and our subsea intervention technology, which will be deployed in the second half of the year, all provide a level of revenue diversity that offsets rig count declines to some degree.

“Drilling activity also continued to slow in international markets during the quarter, primarily offshore West Africa, impacting our drilling related service lines. Well control activity was also lower internationally during the quarter. Offsetting these decreases was an increase in hydraulic workover and snubbing as projects commenced in several regions.

“The U.S. land business has experienced significant improvement through the first half of 2017. With customer activity, revenue and cash flows all ahead of expectations, we now expect our capital expenditures for the year to be within a range of $125 - $150 million dollars, an increase from approximately $100 million when the year began. This increase is primarily due to capital rebuild of our remaining pressure pumping horsepower.”


Second Quarter 2017 Geographic Breakdown

U.S. land revenue was $317.9 million in the second quarter of 2017, a 23% increase as compared with revenue of $258.7 million in the first quarter of 2017 and a 102% increase compared to revenue of $157.1 million in the second quarter of 2016. Gulf of Mexico revenue was $84.2 million, a sequential increase of 12% from first quarter 2017 revenue of $74.9 million, and a 19% decrease from revenue of $104.3 million in the second quarter of 2016. International revenue of $68.0 million increased 1% as compared with $67.3 million in the first quarter of 2017 and decreased 28% as compared to revenue of $94.9 million in the second quarter of 2016.

Drilling Products and Services Segment

The Drilling Products and Services segment revenue in the second quarter of 2017 was $68.8 million, a 1% increase from first quarter 2017 revenue of $68.4 million and a 10% decrease from second quarter 2016 revenue of $76.2 million.

U.S. land revenue increased 31% sequentially to $27.8 million as land drilling activity increased throughout the quarter. Gulf of Mexico revenue decreased 5% sequentially to $22.2 million and international revenue decreased 21% sequentially to $18.8 million.

Onshore Completion and Workover Services Segment

The Onshore Completion and Workover Services segment revenue in the second quarter of 2017 was $249.1 million, a 22% increase from first quarter 2017 revenue of $205.0 million and a 115% increase from second quarter 2016 revenue of $115.9 million. Higher levels of sequential revenue were driven by a 32% increase in pressure pumping revenue.

During the quarter, the Company spent approximately $3.8 million related to reactivation of pressure pumping horsepower.

Production Services Segment

The Production Services segment revenue in the second quarter of 2017 was $88.6 million, a 29% increase from first quarter 2017 revenue of $68.6 million and a 4% increase from second quarter 2016 revenue of $85.0 million.

U.S. land revenue increased 41% sequentially to $33.0 million due to increased coiled tubing activity. Gulf of Mexico revenue increased 12% sequentially to $20.0 million primarily due to increased hydraulic workover and snubbing activity. International revenue increased 30% sequentially to $35.6 million also primarily due to higher levels of hydraulic workover and snubbing activity.

Technical Solutions Segment

The Technical Solutions segment revenue in the second quarter of 2017 was $63.6 million, an 8% increase from first quarter 2017 revenue of $58.9 million and a 20% decrease from second quarter 2016 revenue of $79.2 million.

U.S. land revenue decreased 13% sequentially to $8.0 million as completion tools and products orders decreased. Gulf of Mexico revenue increased 25% sequentially to $42.0 million as a result of increased completion tools and products revenue. International revenue decreased 16% to $13.6 million, largely due to lower well control activity.

 

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Conference Call Information

The Company will host a conference call at 9:00 a.m. Eastern Daylight Time on Wednesday, July 26, 2017. The call can be accessed from the Company’s website at www.superiorenergy.com or by telephone at 888-515-2235. For those who cannot listen to the live call, a telephonic replay will be available through August 9, 2017 and may be accessed by calling 844-512-2921 and using the pin number 3425103.

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 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

 

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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

(in thousands, except earnings per share amounts)

(unaudited)

 

     Three Months Ended     Six Months Ended  
     June 30,     March 31,     June 30,  
     2017     2016     2017     2017     2016  

Revenues

   $ 470,068     $ 356,271     $ 400,936     $ 871,004     $ 769,404  

Cost of services and rentals (exclusive of depreciation, depletion, amortization and accretion)

     351,802       258,635       321,986       673,788       543,974  

Depreciation, depletion, amortization and accretion

     108,119       132,037       114,281       222,400       268,709  

General and administrative expenses

     76,708       82,747       75,493       152,201       183,724  

Reduction in value of assets

     —         460,283       —         —         462,461  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (66,561     (577,431     (110,824     (177,385     (689,464

Other income (expense):

          

Interest expense, net

     (23,333     (22,748     (24,250     (47,583     (46,554

Other income (expense)

     (2,156     10,681       649       (1,507     18,436  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income taxes

     (92,050     (589,498     (134,425     (226,475     (717,582

Income taxes

     (30,011     (120,866     (44,764     (74,775     (164,414
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from continuing operations

     (62,039     (468,632     (89,661     (151,700     (553,168

Loss from discontinued operations, net of income tax

     (1,767     (2,225     (1,998     (3,765     (4,492
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (63,806   $ (470,857   $ (91,659   $ (155,465   $ (557,660
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share information:

          

Basic and Diluted

          

Net loss from continuing operations

   $ (0.41   $ (3.09   $ (0.59   $ (1.00   $ (3.66

Loss from discontinued operations

     (0.01     (0.02     (0.01     (0.02     (0.03
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (0.42   $ (3.11   $ (0.60   $ (1.02   $ (3.69
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares used in computing earnings per share:

          

Basic and diluted

     152,857       151,456       152,701       152,317       151,124  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

4


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2017 and December 31, 2016

(in thousands)

(unaudited)

 

     6/30/2017      12/31/2016  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 177,772      $ 187,591  

Accounts receivable, net

     396,814        297,164  

Income taxes receivable

     1,888        101,578  

Prepaid expenses

     42,926        37,288  

Inventory and other current assets

     141,292        130,772  

Assets held for sale

     27,322        27,158  
  

 

 

    

 

 

 

Total current assets

     788,014        781,551  
  

 

 

    

 

 

 

Property, plant and equipment, net

     1,455,276        1,605,365  

Goodwill

     806,191        803,917  

Notes receivable

     58,317        56,650  

Intangible and other long-term assets, net

     178,132        222,772  
  

 

 

    

 

 

 

Total assets

   $ 3,285,930      $ 3,470,255  
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 133,354      $ 94,831  

Accrued expenses

     218,123        218,192  

Income taxes payable

     —          694  

Current portion of decommissioning liabilities

     22,212        22,164  

Liabilities held for sale

     6,883        8,653  
  

 

 

    

 

 

 

Total current liabilities

     380,572        344,534  
  

 

 

    

 

 

 

Deferred income taxes

     182,289        243,611  

Decommissioning liabilities

     104,891        101,513  

Long-term debt, net

     1,287,156        1,284,600  

Other long-term liabilities

     167,553        192,077  

Total stockholders’ equity

     1,163,469        1,303,920  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 3,285,930      $ 3,470,255  
  

 

 

    

 

 

 

 

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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2017 AND 2016

(in thousands)

(unaudited)

 

     2017     2016  

Cash flows from operating activities:

    

Net loss

   $ (155,465   $ (557,660

Adjustments to reconcile net loss to net cash provided by operating activities:

    

Depreciation, depletion, amortization and accretion

     222,400       268,709  

Reduction in value of assets

     —         462,461  

Other noncash items

     (42,898     (125,403

Changes in working capital and other

     (7,016     49,595  
  

 

 

   

 

 

 

Net cash provided by operating activities

     17,021       97,702  

Cash flows from investing activities:

    

Payments for capital expenditures

     (56,649     (67,402

Other

     34,690       1,980  
  

 

 

   

 

 

 

Net cash used in investing activities

     (21,959     (65,422

Cash flows from financing activities:

    

Net repayments of long-term debt

     —         (84,664

Other

     (6,974     (19,730
  

 

 

   

 

 

 

Net cash used in financing activities

     (6,974     (104,394

Effect of exchange rate changes in cash

     2,093       (6,056
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (9,819     (78,170

Cash and cash equivalents at beginning of period

     187,591       564,017  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 177,772     $ 485,847  
  

 

 

   

 

 

 

 

6


SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

REVENUE BY GEOGRAPHIC REGION BY SEGMENT

THREE MONTHS ENDED JUNE 30, 2017, MARCH 31, 2017 AND JUNE 30, 2016

(in thousands)

(unaudited)

 

     Three months ended,  
     June 30, 2017      March 31, 2017      June 30, 2016  

U.S. land

        

Drilling Products and Services

   $ 27,770      $ 21,162      $ 11,613  

Onshore Completion and Workover Services

     249,079        204,979        115,893  

Production Services

     33,062        23,435        20,476  

Technical Solutions

     7,921        9,085        9,121  
  

 

 

    

 

 

    

 

 

 

Total U.S. land

   $ 317,832      $ 258,661      $ 157,103  
  

 

 

    

 

 

    

 

 

 

Gulf of Mexico

        

Drilling Products and Services

     22,266        23,485        34,504  

Onshore Completion and Workover Services

     —          —          —    

Production Services

     19,937        17,746        19,991  

Technical Solutions

     42,030        33,717        49,786  
  

 

 

    

 

 

    

 

 

 

Total Gulf of Mexico

   $ 84,233      $ 74,948      $ 104,281  
  

 

 

    

 

 

    

 

 

 

International

        

Drilling Products and Services

   $ 18,791      $ 23,784      $ 30,087  

Onshore Completion and Workover Services

     —          —          —    

Production Services

     35,607        27,424        44,505  

Technical Solutions

     13,605        16,119        20,295  
  

 

 

    

 

 

    

 

 

 

Total International

   $ 68,003      $ 67,327      $ 94,887  
  

 

 

    

 

 

    

 

 

 

Total Revenues

   $ 470,068      $ 400,936      $ 356,271  
  

 

 

    

 

 

    

 

 

 

 

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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

SEGMENT HIGHLIGHTS

THREE MONTHS ENDED JUNE 30, 2017, MARCH 31, 2017 AND JUNE 30, 2016

(in thousands)

(unaudited)

 

     Three months ended,  
     June 30, 2017     March 31, 2017     June 30, 2016  

Revenues

      

Drilling Products and Services

   $ 68,827     $ 68,431     $ 76,204  

Onshore Completion and Workover Services

     249,079       204,979       115,893  

Production Services

     88,606       68,605       84,972  

Technical Solutions

     63,556       58,921       79,202  
  

 

 

   

 

 

   

 

 

 

Total Revenues

   $ 470,068     $ 400,936     $ 356,271  
  

 

 

   

 

 

   

 

 

 

Income (Loss) from Operations

      

Drilling Products and Services

   $ (14,940   $ (13,167   $ (69,696

Onshore Completion and Workover Services

     (28,605     (63,241     (261,206

Production Services

     (20,252     (29,212     (248,631

Technical Solutions

     (2,764     (5,204     2,102  
  

 

 

   

 

 

   

 

 

 

Total Income (Loss) from Operations

   $ (66,561   $ (110,824   $ (577,431
  

 

 

   

 

 

   

 

 

 

Adjusted Income (Loss) from Operations (1)

      

Drilling Products and Services

   $ (14,940   $ (13,167   $ (21,749

Onshore Completion and Workover Services

     (28,605     (63,241     (68,209

Production Services

     (20,252     (29,212     (23,341

Technical Solutions

     (2,764     (5,204     3,553  
  

 

 

   

 

 

   

 

 

 

Total Adjusted Income (Loss) from Operations

   $ (66,561   $ (110,824   $ (109,746
  

 

 

   

 

 

   

 

 

 

 

(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. There were no adjustments for the three months ended June 30, 2017 and March 31, 2017.

 

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Non-GAAP Financial Measures

The following table reconciles income (loss) from operations by segment, which is the directly comparable financial measure determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted income (loss) from operations by segment (non-GAAP financial measure). Income (loss) from operations by segment excludes the impact of reduction in value of assets and restructuring costs. This financial measure is 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 June 30, 2016

(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

   $ (69,696   $ (261,206   $ (248,631   $ 2,102      $ (577,431

Reduction in value of assets

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

Restructuring costs

     288       4,256       1,407       1,451        7,402  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Adjusted income (loss) from operations

   $ (21,749   $ (68,209   $ (23,341   $ 3,553      $ (109,746
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

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