================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO --------- ---------- COMMISSION FILE NO. 0-20310 SUPERIOR ENERGY SERVICES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (504) 362-4321 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No ---- ---- The number of shares of the registrant's common stock outstanding on August 5, 2003 was 74,025,259. ================================================================================ 1
Delaware 75-2379388 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 1105 Peters Road Harvey, Louisiana 70058 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 2003 TABLE OF CONTENTS 2
Page ---- PART I FINANCIAL INFORMATION Item 1. Financial Statements 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures about Market Risk 17 Item 4. Controls and Procedures 17 PART II OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders 18 Item 6. Exhibits and Reports on Form 8-K 18 PART I. FINANCIAL INFORMATION Item 1. Financial Statements SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets June 30, 2003 and December 31, 2002 (in thousands, except share data) See accompanying notes to consolidated financial statements. 3
6/30/03 12/31/02 (Unaudited) (Audited) ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 11,992 $ 3,480 Accounts receivable - net 113,874 108,352 Income taxes receivable -- 6,087 Prepaid insurance and other 14,571 11,663 ------------ ------------ Total current assets 140,437 129,582 ------------ ------------ Property, plant and equipment - net 415,874 418,047 Goodwill - net 168,526 160,366 Investments in affiliates 12,775 12,343 Other assets - net 6,591 7,282 ------------ ------------ Total assets $ 744,203 $ 727,620 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 16,178 $ 21,010 Accrued expenses 44,275 33,871 Income taxes payable 1,046 -- Current maturities of long-term debt 13,727 13,730 ------------ ------------ Total current liabilities 75,226 68,611 ------------ ------------ Deferred income taxes 75,825 67,333 Long-term debt 240,269 256,334 Stockholders' equity: Preferred stock of $.01 par value. Authorized, 5,000,000 shares; none issued -- -- Common stock of $.001 par value. Authorized, 125,000,000 shares; issued and outstanding, 74,021,348 shares at June 30, 2003, and 73,819,341 at December 31, 2002 74 74 Additional paid in capital 370,225 368,746 Accumulated other comprehensive income 270 43 Accumulated deficit (17,686) (33,521) ------------ ------------ Total stockholders' equity 352,883 335,342 ------------ ------------ Total liabilities and stockholders' equity $ 744,203 $ 727,620 ============ ============ SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations Three and Six Months Ended June 30, 2003 and 2002 (in thousands, except per share data) (unaudited) See accompanying notes to consolidated financial statements. 4
Three Months Six Months 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Revenues $ 128,857 $ 112,730 $ 252,052 $ 217,556 ------------ ------------ ------------ ------------ Costs and expenses: Cost of services 74,291 62,140 144,448 121,378 Depreciation and amortization 12,072 10,456 23,827 19,978 General and administrative 23,689 21,426 47,378 42,639 ------------ ------------ ------------ ------------ Total costs and expenses 110,052 94,022 215,653 183,995 ------------ ------------ ------------ ------------ Income from operations 18,805 18,708 36,399 33,561 Other income (expense): Interest expense, net (5,567) (5,181) (11,082) (10,405) Equity in income of affiliates, net 305 145 432 145 ------------ ------------ ------------ ------------ Income before income taxes 13,543 13,672 25,749 23,301 Income taxes 5,215 5,167 9,914 8,971 ------------ ------------ ------------ ------------ Net income $ 8,328 $ 8,505 $ 15,835 $ 14,330 ============ ============ ============ ============ Basic earnings per share $ 0.11 $ 0.12 $ 0.21 $ 0.20 ============ ============ ============ ============ Diluted earnings per share $ 0.11 $ 0.11 $ 0.21 $ 0.20 ============ ============ ============ ============ Weighted average common shares used in computing earnings per share: Basic 73,936 73,737 73,882 72,030 Incremental common shares from stock options 1,188 1,233 960 1,112 ------------ ------------ ------------ ------------ Diluted 75,124 74,970 74,842 73,142 ============ ============ ============ ============ SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2003 and 2002 (in thousands) (unaudited) See accompanying notes to consolidated financial statements. 5
2003 2002 ------------ ------------ Cash flows from operating activities: Net income $ 15,835 $ 14,330 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23,827 19,978 Deferred income taxes 8,492 11,121 Equity in income of affiliates, net (432) (145) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (5,522) 11,989 Other - net (479) (1,010) Accounts payable (4,833) (13,707) Accrued expenses 4,244 (912) Income taxes 7,133 3,141 ------------ ------------ Net cash provided by operating activities 48,265 44,785 ------------ ------------ Cash flows from investing activities: Payments for purchases of property and equipment (22,236) (56,367) Acquisitions of businesses, net of cash acquired (2,929) (2,065) ------------ ------------ Net cash used in investing activities (25,165) (58,432) ------------ ------------ Cash flows from financing activities: Net borrowings (payments) on revolving credit facility (9,250) 400 Proceeds from long-term debt -- 9,507 Principal payments on long-term debt (6,817) (31,385) Debt acquisition costs -- (1,285) Proceeds from issuance of stock -- 38,836 Proceeds from exercise of stock options 1,479 1,373 ------------ ------------ Net cash provided by (used in) financing activities (14,588) 17,446 ------------ ------------ Net increase in cash 8,512 3,799 Cash and cash equivalents at beginning of period 3,480 3,769 ------------ ------------ Cash and cash equivalents at end of period $ 11,992 $ 7,568 ============ ============ SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements Six Months Ended June 30, 2003 and 2002 (1) Basis of Presentation Certain information and footnote disclosures normally in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission; however, management believes the disclosures which are made are adequate to make the information presented not misleading. These financial statements and footnotes should be read in conjunction with the financial statements and notes thereto included in Superior Energy Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2002 and Management's Discussion and Analysis of Financial Condition and Results of Operations. The financial information of Superior Energy Services, Inc. and subsidiaries (the Company) for the three and six months ended June 30, 2003 and 2002 has not been audited. However, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the results of operations for the periods presented have been included therein. The results of operations for the first six months of the year are not necessarily indicative of the results of operations that might be expected for the entire year. Certain previously reported amounts have been reclassified to conform to the 2003 presentation. (2) Stock Based Compensation The Company accounts for its stock based compensation under the principles prescribed by the Accounting Principles Board's (Opinion No. 25), "Accounting for Stock Issued to Employees." However, Statement of Financial Accounting Standards No. 123 (FAS No. 123), "Accounting for Stock-Based Compensation" permits the continued use of the intrinsic-value based method prescribed by Opinion No. 25 but requires additional disclosures, including pro forma calculations of earnings and net earnings per share as if the fair value method of accounting prescribed by FAS No. 123 had been applied. No stock based compensation costs are reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. As required by Statement of Financial Accounting Standards No. 148 (FAS No. 148), "Accounting for Stock Based Compensation - Transition and Disclosure," which amended FAS No. 123, the following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FAS No. 123 to stock based employee compensation. The pro forma data presented below is not representative of the effects on reported amounts for future years (amounts are in thousands, except per share amounts). 6 (3) Earnings per Share Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed in the same manner as basic earnings per share except that the denominator is increased to include the number of additional common shares that could have been outstanding assuming the exercise of stock options that would have a dilutive effect on earnings per share. (4) Business Combinations In the year ended December 31, 2002, the Company made two acquisitions. In January, the Company acquired an environmental services company by converting $18.6 million of notes and other receivables into ownership of the company. In December, the Company acquired a rental tool business for $5.6 million in cash consideration. The Company paid an additional $928,000 for this acquisition in the second quarter of 2003 in conjunction with the receipt of the title to a facility for this business. Both of these acquisitions have been accounted for as purchases and the results of operations have been included from the respective acquisition dates. There have been no acquisitions in 2003. Most of the Company's acquisitions have involved additional contingent consideration based upon a multiple of the acquired companies' respective average earnings before interest, income taxes, depreciation and amortization expense (EBITDA) over a three-year period from the respective date of acquisition. In the six months ended June 30, 2003, the Company capitalized additional consideration of $8.2 million related to three of its acquisitions, of which $2 million was paid in the second quarter of 2003 and $6.2 million will be paid in the third quarter of 2003. While the amounts of additional consideration payable depend upon the acquired company's operating performance and are difficult to predict accurately, the maximum additional consideration payable for all of the Company's remaining acquisitions will be approximately $30 million, with $1.8 million potentially payable in the remainder of 2003 and $28.2 million in 2004. These amounts are not classified as liabilities under generally accepted accounting principles and are not reflected in the Company's financial statements until the amounts are fixed and determinable. 7
Three Months Ended June 30, Six Months Ended June 30, ----------------------------- ----------------------------- 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Net income, as reported $ 8,328 $ 8,505 $ 15,835 $ 14,330 Stock-based employee compensation expense, net of tax (678) (808) (1,285) (1,457) ------------ ------------ ------------ ------------ Pro forma net income $ 7,650 $ 7,697 $ 14,550 $ 12,873 ============ ============ ============ ============ Basic earnings per share: Earnings, as reported $ 0.11 $ 0.12 $ 0.21 $ 0.20 Stock-based employee compensation expense, net of tax (0.01) (0.01) (0.02) (0.02) ------------ ------------ ------------ ------------ Pro forma earnings per share $ 0.10 $ 0.11 $ 0.19 $ 0.18 ============ ============ ============ ============ Diluted earnings per share: Earnings, as reported $ 0.11 $ 0.11 $ 0.21 $ 0.20 Stock-based employee compensation expense, net of tax (0.01) (0.01) (0.02) (0.02) ------------ ------------ ------------ ------------ Pro forma earnings per share $ 0.10 $ 0.10 $ 0.19 $ 0.18 ============ ============ ============ ============ Black-Scholes option pricing model assumptions: Risk free interest rate 2.42% 2.94% 2.58% 2.94% Expected life (years) 4 3 3 3 Volatility 58.02% 85.48% 58.63% 85.48% Dividend yield -- -- -- -- When amounts are determined, they are capitalized as part of the purchase price of the related acquisition. With the exception of the Company's guarantee of Lamb Energy Services' credit facility (see note 6 to the unaudited consolidated financial statements), the Company does not have any other financing arrangements that are not required under generally accepted accounting principles to be reflected in its financial statements. (5) Segment Information The Company's reportable segments are as follows: well intervention group, marine, rental tools and other oilfield services. Each segment offers products and services within the oilfield services industry. The well intervention group segment provides plug and abandonment services, coiled tubing services, well pumping and stimulation services, data acquisition services, gas lift services, electric wireline services, hydraulic drilling and workover services, well control services and mechanical wireline services that perform a variety of ongoing maintenance and repairs to producing wells, as well as modifications to enhance the production capacity and life span of the well. The marine segment operates liftboats for oil and gas production facility maintenance, construction operations and platform removals, as well as production service activities. The rental tools segment rents and sells specialized equipment for use with onshore and offshore oil and gas well drilling, completion, production and workover activities. The other oilfield services segment provides contract operations and maintenance services, interconnect piping services, sandblasting and painting maintenance services, transportation and logistics services, offshore oil and gas cleaning services, oilfield waste treatment services, dockside cleaning of items, including supply boats, cutting boxes, and process equipment, and manufactures and sells drilling instrumentation and oil spill containment equipment. All of the segments operate primarily in the Gulf of Mexico. Summarized financial information concerning the Company's segments for the three and six months ended June 30, 2003 and 2002 is shown in the following tables (in thousands): Three Months Ended June 30, 2003 8
Other Well Rental Oilfield Unallocated Consolidated Intervention Marine Tools Services Amount Total -------------- ---------- ---------- -------------- -------------- -------------- Revenues $ 46,416 $ 18,487 $ 36,396 $ 27,558 $ -- $ 128,857 Cost of services 28,329 12,667 11,382 21,913 -- 74,291 Depreciation and amortization 3,012 1,684 6,269 1,107 -- 12,072 General and administrative 9,724 1,921 8,312 3,732 -- 23,689 Operating income 5,351 2,215 10,433 806 -- 18,805 Interest expense, net -- -- -- -- (5,567) (5,567) Equity in income of affiliates, net -- -- 305 -- -- 305 -------------- ---------- ---------- -------------- -------------- -------------- Income (loss) before income taxes $ 5,351 $ 2,215 $ 10,738 $ 806 $ (5,567) $ 13,543 ============== ========== ========== ============== ============== ============== Three Months Ended June 30, 2002 Six Months Ended June 30, 2003
Other Well Rental Oilfield Unallocated Consolidated Intervention Marine Tools Services Amount Total -------------- ---------- ---------- -------------- -------------- -------------- Revenues $ 40,186 $ 17,760 $ 29,310 $ 25,474 $ -- $ 112,730 Cost of services 22,282 10,961 9,200 19,697 -- 62,140 Depreciation and amortization 2,645 1,680 4,930 1,201 -- 10,456 General and administrative 9,070 1,699 7,065 3,592 -- 21,426 Operating income 6,189 3,420 8,115 984 -- 18,708 Interest expense, net -- -- -- -- (5,181) (5,181) Equity in income of affiliates, net -- -- 145 -- -- 145 -------------- ---------- ---------- -------------- -------------- -------------- Income (loss) before income taxes $ 6,189 $ 3,420 $ 8,260 $ 984 $ (5,181) $ 13,672 ============== ========== ========== ============== ============== ============== Six Months Ended June 30, 2002
Other Well Rental Oilfield Unallocated Consolidated Intervention Marine Tools Services Amount Total -------------- ---------- ---------- -------------- -------------- -------------- Revenues $ 87,815 $ 37,152 $ 70,996 $ 56,089 $ -- $ 252,052 Cost of services 53,083 25,334 22,496 43,535 -- 144,448 Depreciation and amortization 6,030 3,282 12,304 2,211 -- 23,827 General and administrative 19,260 3,920 16,505 7,693 -- 47,378 Operating income 9,442 4,616 19,691 2,650 -- 36,399 Interest expense, net -- -- -- -- (11,082) (11,082) Equity in income of affiliates, net -- -- 432 -- -- 432 -------------- ---------- ---------- -------------- -------------- -------------- Income (loss) before income taxes $ 9,442 $ 4,616 $ 20,123 $ 2,650 $ (11,082) $ 25,749 ============== ========== ========== ============== ============== ============== (6) Debt The Company has outstanding $200 million of 8 7/8% senior notes due 2011. The indenture governing the senior notes requires semi-annual interest payments, which commenced November 15, 2001 and continue through the maturity date of May 15, 2011. The indenture governing the senior notes contains certain covenants that, among other things, prevent the Company from incurring additional debt, paying dividends or making other distributions, unless its ratio of cash flow to interest expense is at least 2.25 to 1, except that the Company may incur additional 9
Other Well Rental Oilfield Unallocated Consolidated Intervention Marine Tools Services Amount Total -------------- --------- --------- -------------- -------------- -------------- Revenues $ 76,474 $ 32,346 $ 61,275 $ 47,461 $ -- $ 217,556 Cost of services 45,075 20,509 18,388 37,406 -- 121,378 Depreciation and amortization 5,211 3,142 9,395 2,230 -- 19,978 General and administrative 17,396 3,374 14,990 6,879 -- 42,639 Operating income 8,792 5,321 18,502 946 -- 33,561 Interest expense, net -- -- -- -- (10,405) (10,405) Equity in income of affiliates, net -- -- 145 -- -- 145 -------------- --------- --------- -------------- -------------- -------------- Income (loss) before income taxes $ 8,792 $ 5,321 $ 18,647 $ 946 $ (10,405) $ 23,301 ============== ========= ========= ============== ============== ============== debt in an amount equal to 30% of its net tangible assets, which was approximately $134 million at June 30, 2003. The indenture also contains covenants that restrict the Company's ability to create certain liens, sell assets or enter into certain mergers or acquisitions. At June 30, 2003, the Company was in compliance with all such covenants. The Company has a bank credit facility consisting of term loans in an aggregate amount of $34.4 million at June 30, 2003 and a revolving credit facility of $75 million. The term loans require quarterly principal installments in the amount of $3.2 million through March 31, 2005. A balance of $12 million is due on the facility maturity date of May 2, 2005. The credit facility bears interest at a LIBOR rate plus margins that depend on the Company's leverage ratio. Indebtedness under the credit facility is secured by substantially all of the Company's assets, including the pledge of the stock of the Company's principal subsidiaries. The credit facility contains customary events of default and requires that the Company satisfy various financial covenants. It also limits the Company's capital expenditures, its ability to pay dividends or make other distributions, make acquisitions, make changes to the Company's capital structure, create liens or incur additional indebtedness. At June 30, 2003, the Company was in compliance with all such covenants. The Company has $19.4 million outstanding in U. S. Government guaranteed long-term financing under Title XI of the Merchant Marine Act of 1936 which is administered by the Maritime Administration (MARAD) for two 245-foot class liftboats. The debt bears an interest rate of 6.45% per annum and is payable in equal semi-annual installments of $405,000, which began December 3, 2002, and matures on June 3, 2027. The Company's obligations are secured by mortgages on the two liftboats. In accordance with the agreement, the Company is required to comply with certain covenants and restrictions, including the maintenance of minimum net worth and debt-to-equity requirements. At June 30, 2003, the Company was in compliance with all such covenants. The Company owns a 54.3% interest in Lamb Energy, which has a credit facility with a syndicate of banks that matures in 2005 consisting of a term loan in the amount of $11 million at June 30, 2003, and a revolving credit facility of $3 million. The Company fully guarantees amounts due under the credit facility. The Company does not expect to incur any losses as a result of the guarantee. As of June 30, 2003, Lamb Energy had $11 million outstanding on this credit facility. (7) Commitments and Contingencies As the result of a tropical storm, one of the Company's 200-foot class liftboats sank in the Gulf of Mexico on June 30, 2003. The vessel is fully insured and management does not believe it or any related unasserted claims will have a material effect on the financial position, results of operations or liquidity of the Company. From time to time, the Company is involved in litigation and other disputes arising out of operations in the normal course of business. In management's opinion, the Company is not involved in any litigation or disputes, the outcome of which would have a material effect on the financial position, results of operations or liquidity of the Company. (8) Accounting Pronouncements In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities." FIN 46 clarifies the application of Accounting Research Bulletin Number 51, "Consolidated Financial Statements," to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. FIN 46 applies to public enterprises as of the beginning of the applicable interim or annual period. The Company does not expect the adoption of FIN 46 to have a significant effect on the Company's financial position or results of operations. In April 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 149 (FAS No. 149), "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." FAS No. 149 amends and clarifies financial accounting and reporting for derivative 10 instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under Statement of Financial Accounting Standards No. 133 (FAS No. 133), "Accounting for Derivative Instruments and Hedging Activities." FAS No. 149 is effective for contracts entered into or modified after June 30, 2003. The Company does not expect the adoption of FAS No. 149 to have a significant effect on the Company's financial position or results of operations. In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150 (FAS No. 150), "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." FAS No. 150 establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. FAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003. The Company does not expect the adoption of FAS No. 150 to have a significant effect on the Company's financial position or results of operations. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains forward-looking statements which involve risks and uncertainties. All statements other than statements of historical fact included in this section regarding our financial position and liquidity, strategic alternatives, future capital needs, 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 its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Such forward-looking statements are subject to uncertainties that could cause our actual results to differ materially from such statements. Such uncertainties include but are not limited to: the volatility of the oil and gas industry, including the level of offshore exploration, production and development activity; risks of our growth strategy, including the risks of rapid growth and the risks inherent in acquiring businesses; changes in competitive factors affecting our operations; operating hazards, including the significant possibility of accidents resulting in personal injury, property damage or environmental damage; the effect on our performance of regulatory programs and environmental matters; seasonality of the offshore industry in the Gulf of Mexico; and our dependence on certain customers. These and other uncertainties related to our business are described in detail in our Annual Report on Form 10-K for the year ended December 31, 2002. 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. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update any of our forward-looking statements for any reason. OVERVIEW We are a leading provider of specialized oilfield services and equipment focused on serving the production-related needs of oil and gas companies primarily in the Gulf of Mexico. We believe that we are one of the few companies in the Gulf of Mexico capable of providing most of the post wellhead products and services necessary to maintain offshore producing wells, as well as the plug and abandonment services necessary at the end of their life cycle. We believe that our ability to provide our customers with multiple services and to coordinate and integrate their delivery from our liftboats allows us to maximize efficiency, reduce lead time and provide cost-effective services for our customers. Over the past several years, we have significantly expanded the range of production-related services we provide and the geographic scope of our operations through both internal growth and strategic acquisitions. We have expanded our geographic focus to select international market areas and added complementary product and service offerings. Currently, we provide a full range of products and services for our customers, including well intervention services, marine services, rental tools and other oilfield services. For additional segment financial information, see note 5 to our unaudited consolidated financial statements. Our financial performance is impacted by the broader economic trends affecting our customers. The demand for our services and equipment is cyclical due to the nature of the energy industry. Our operating results are directly tied to industry demand for our services, most of which are performed on the outer continental shelf in the Gulf of Mexico. While we have focused on providing production-related services where, historically, demand has not been as volatile as for exploration-related services, we expect our operating results to be highly dependent upon industry activity levels in the Gulf of Mexico. In the second quarter of 2003, we experienced an increased demand for many of our well intervention services in comparison to the first quarter of 2003. For the quarter ended June 30, 2003, revenue increased 5% to $128.9 million and net income increased 11% to $8.3 million from the first quarter of 2003. Our well intervention group segment's revenue increased to $46.4 million in the second quarter of 2003 as compared to $41.4 million in the first quarter of 2003. Activity increased for most well intervention services, led by sharp increases in hydraulic workover and plug and abandonment services, including the completion of our first subsea well intervention project. These were offset by lower well control activity. 12 There was little change in our marine segment's revenue which was $18.5 million in the second quarter of 2003, as compared to $18.7 million in the first quarter of 2003. This change is attributable to a slight decrease in the utilization for our liftboat fleet to 66% in the second quarter of 2003 from 67% in the first quarter of 2003. Our fleet's average dayrate declined to $6,430 in the second quarter of 2003 from $6,550 in the first quarter of 2003. The lower average dayrate was attributable to lower activity in some of our mid-sized liftboat classes, particularly the 160-foot to 175-foot class liftboats. Our rental tools segment's revenue increased to $36.4 million in the second quarter of 2003, as compared to $34.6 million in the first quarter of 2003. Rentals of drill pipe, on-site accommodations and handling tools and accessories were the key drivers to revenue growth during the period. The segment also benefited from additional rentals in international markets. Our other oilfield services segment's revenue was $27.6 million, a 3% decrease over the first quarter of 2003. During the second quarter of 2003, we had a decrease in revenue from non-hazardous oilfield waste treatment and sales of oil spill response equipment. These decreases were partially offset by seasonal increases in construction and fabrication projects. COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002 For the three months ended June 30, 2003, our revenues were $128.9 million resulting in net income of $8.3 million or $0.11 diluted earnings per share. For the three months ended June 30, 2002, revenues were $112.7 million and net income was $8.5 million or $0.11 diluted earnings per share. Our increase in revenue and slight decrease in net income is primarily the result of a change in the mix of demand for our services. The following discussion analyzes our operating results on a segment basis. WELL INTERVENTION GROUP SEGMENT Revenue for our well intervention group was $46.4 million for the three months ended June 30, 2003, as compared to $40.2 million for the same period in 2002. This segment's gross margin percentage decreased to 39% in the three months ended June 30, 2003 from 45% in the three months ended June 30, 2002 due to a change in the segment's business mix. The increase in revenue is the result of increased demand for our hydraulic workover, plug and abandonment, pumping and stimulation, electric line and coiled tubing services. These increases were partially offset by a decrease in the demand for our higher margin well control services. MARINE SEGMENT Our marine revenue for the three months ended June 30, 2003 increased 4% over the same period in 2002 to $18.5 million. The fleet's average dayrate increased to $6,430 in the second quarter of 2003 from $5,850 in the second quarter of 2002, and the average utilization decreased to 66% for the second quarter of 2003 from 72% in the same period in 2002. The gross margin percentage for the three months ended June 30, 2003 decreased to 31% from 38% for the same period in 2002. While revenues and the average dayrate increased because of additions of three larger liftboats to the fleet, a drop-off in utilization and the increased costs of the new liftboats resulted in a lower gross margin percentage. Increased costs, including maintenance and insurance, also contributed to the decline in gross margin percentage. RENTAL TOOLS SEGMENT Revenue for our rental tools segment for the three months ended June 30, 2003 was $36.4 million, a 24% increase over the same period in 2002. The increase in this segment's revenue was primarily due to an increased demand for our expanded inventory of rental tool equipment and our geographic expansion. During the quarter, revenue from international markets grew as we continue to diversify outside of the Gulf of Mexico market area. The gross margin percentage for both periods was 69%. 13 OTHER OILFIELD SERVICES SEGMENT Other oilfield services revenue for the three months ended June 30, 2003 was $27.6 million, an 8% increase over the $25.5 million in revenue for the same period in 2002. The gross margin percentage decreased slightly to 20% in the three months ended June 30, 2003 from 23% in the same period in 2002. This segment generated more revenue from construction and field management services which have lower margins. DEPRECIATION AND AMORTIZATION Depreciation and amortization increased to $12.1 million in the three months ended June 30, 2003 from $10.5 million in the same period in 2002. The increase resulted mostly from our larger asset base as a result of our capital expenditures during 2002 and 2003. GENERAL AND ADMINISTRATIVE General and administrative expenses as a percentage of revenue decreased to 18% for the quarter ended June 30, 2003 from 19% for the quarter ended June 30, 2002. General and administrative expenses increased to $23.7 million for the three months ended June 30, 2003 from $21.4 million for the same period in 2002. The increase is primarily the result of our internal growth and expansion. COMPARISON OF THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002 For the six months ended June 30, 2003, our revenues were $252.1 million resulting in net income of $15.8 million or $0.21 diluted earnings per share. For the six months ended June 30, 2002, our revenues were $217.6 million and our net income was $14.3 million or $0.20 diluted earnings per share. Our increase in revenue and net income is the result of an overall increased demand for most of our services due to increased activity by our customers. The following discussion analyzes our operating results on a segment basis. WELL INTERVENTION GROUP SEGMENT Revenue for our well intervention group was $87.8 million for the six months ended June 30, 2003, as compared to $76.5 million for the same period in 2002. This segment's gross margin percentage decreased slightly to 40% in the six months ended June 30, 2003 from 41% in the six months ended June 30, 2002. The increase in revenue is the result of increased demand for our hydraulic workover, pumping and stimulation and electric line as production-related activity in the Gulf of Mexico increased. These increases were partially offset by decreased demand for coiled tubing services. The slight decrease in gross margin percentage is due to a change in the mix of the demand for our services. MARINE SEGMENT Our marine revenue for the six months ended June 30, 2003 increased 15% over the same period in 2002 to $37.2 million. The fleet's average dayrate increased to $6,490 in the six months ended June 30, 2003 from $5,650 in the same period in 2002, and the average utilization decreased to 66% for the six months ended June 30, 2003 from 70% in the same period in 2002. The gross margin percentage for the six months ended June 30, 2003 decreased to 32% from 37% for the same period in 2002. While revenues and the average dayrate increased because of additions of three larger liftboats to the fleet, a drop-off in utilization and the increased costs of the new liftboats resulted in a lower gross margin percentage. Increased costs, including maintenance and insurance, also contributed to the decline in gross margin percentage. RENTAL TOOLS SEGMENT Revenue for our rental tools segment for the six months ended June 30, 2003 was $71 million, a 16% increase over the same period in 2002. The increase in this segment's revenue was primarily due to an increased demand for our expanded inventory of rental tool equipment and our geographic expansion. During the six months ended June 30, 2003, revenue from international markets grew as we continue to diversify outside of the Gulf of Mexico market 14 area. The gross margin percentage decreased slightly to 68% in the six months ended June 30, 2003 from 70% in the same period in 2002 due primarily to a change in the mix of the demand for our rental tools. OTHER OILFIELD SERVICES SEGMENT Other oilfield services revenue for the six months ended June 30, 2003 was $56.1 million, an 18% increase over the $47.5 million in revenue in the same period in 2002. The gross margin percentage increased slightly to 22% in the six months ended June 30, 2003 from 21% in the same period in 2002. This segment generated more revenue and a higher gross margin percentage primarily from sales of higher margin oil spill containment equipment and growth in our oilfield waste treatment business. DEPRECIATION AND AMORTIZATION Depreciation and amortization increased to $23.8 million in the six months ended June 30, 2003 from $20 million in the same period in 2002. The increase resulted mostly from our larger asset base as a result of our capital expenditures during 2002 and 2003. GENERAL AND ADMINISTRATIVE General and administrative expenses as a percentage of revenue decreased to 19% for the six months ended June 30, 2003 from 20% for the same period in 2002. General and administrative expenses increased to $47.4 million for the six months ended June 30, 2003 from $42.6 million for the same period in 2002. The increase is primarily the result of our internal growth and expansion. LIQUIDITY AND CAPITAL RESOURCES Our primary liquidity needs are for working capital, capital expenditures, debt service and acquisitions. Our primary sources of liquidity are cash flows from operations and borrowings under our revolving credit facility. We had cash and cash equivalents of $12 million at June 30, 2003 compared to $3.5 million at December 31, 2002. In the six months ended June 30, 2003, we generated net cash from operating activities of $48.3 million. We made $22.2 million of capital expenditures during the six months ended June 30, 2003, of which approximately $11.2 million was used to expand and maintain our rental tool equipment inventory, approximately $3.8 million was used on facilities construction (including our facility in Broussard, Louisiana) and approximately $1.2 million was on our marine segment. We also made $6 million of capital expenditures to expand and maintain the asset base of our well intervention group and other oilfield services group. We currently believe that we will make approximately $28 million of capital expenditures, excluding acquisitions and targeted asset purchases, during the remaining six months of 2003 primarily to further expand our rental tool asset base. We believe that our current working capital, cash generated from our operations and availability under our revolving credit facility will provide sufficient funds for our identified capital projects. We have outstanding $200 million of 8 7/8% senior notes due 2011. The indenture governing the senior notes requires semi-annual interest payments, which commenced November 15, 2001 and continue through the maturity date of May 15, 2011. The indenture governing the senior notes contains certain covenants that, among other things, prevent us from incurring additional debt, paying dividends or making other distributions, unless our ratio of cash flow to interest expense is at least 2.25 to 1, except that we may incur additional debt in an amount equal to 30% of our net tangible assets, which was approximately $134 million at June 30, 2003. The indenture also contains covenants that restrict our ability to create certain liens, sell assets or enter into certain mergers or acquisitions. We also have a bank credit facility with term loans in an aggregate amount of $34.4 million at June 30, 2003 and a revolving credit facility of $75 million. The credit facility bears interest at a LIBOR rate plus margins that depend on our leverage ratio. As of August 5, 2003, the amount outstanding under the term loans was $34.4 million, none was outstanding under our revolving credit facility, and the weighted average interest rate on amounts outstanding under the credit facility was 3.9% per annum. Indebtedness under the credit facility is secured by substantially all of our assets, including the pledge of the stock of our principal subsidiaries. The credit facility contains customary events of default and requires that we satisfy various financial covenants. It also limits our capital expenditures, our 15 ability to pay dividends or make other distributions, make acquisitions, make changes to our capital structure, create liens or incur additional indebtedness. We have $19.4 million outstanding at June 30, 2003 in U. S. Government guaranteed long-term financing under Title XI of the Merchant Marine Act of 1936 which is administered by the Maritime Administration (MARAD) for two 245-foot class liftboats. This debt bears an interest rate of 6.45% per annum and is payable in equal semi-annual installments of $405,000, which began December 3, 2002, and matures on June 3, 2027. Our obligations are secured by mortgages on the two liftboats. In accordance with the agreement, we are required to comply with certain covenants and restrictions, including the maintenance of minimum net worth and debt-to-equity requirements. The following table summarizes our contractual cash obligations and commercial commitments at June 30, 2003 (amounts in thousands) for our long-term debt and operating leases. We do not have any other material obligations or commitments. The table does not include our guarantee of the Lamb Energy Services credit facility consisting of a term loan in the amount of $11 million and a revolving credit facility of $3 million, under which $11 million was outstanding as of June 30, 2003. This table also does not include any potential additional consideration that may be payable as a result of our acquisitions. Additional consideration is generally based on the acquired company's operating performance after the acquisition as measured by earnings before interest, income taxes, depreciation and amortization (EBITDA) and other adjustments intended to exclude extraordinary items. In the six months ended June 30, 2003, we capitalized additional consideration of $8.2 million related to three of our acquisitions, of which $2 million was paid in the second quarter of 2003 and $6.2 million will be paid in the third quarter of 2003. While the amounts payable depend upon the acquired company's operating performance and are difficult to predict accurately, the maximum additional consideration payable for all of our remaining acquisitions is approximately $30 million, with $1.8 million potentially payable in the remainder of 2003 and $28.2 million in 2004. These amounts are not classified as liabilities under generally accepted accounting principles and are not reflected in our financial statements until the amounts are fixed and determinable. When amounts are determined, they are capitalized as part of the purchase price of the related acquisition. We have no other financing arrangements that are not required under generally accepted accounting principles to be reflected in our financial statements. We intend to continue implementing our growth strategy of increasing our scope of services through both internal growth and strategic acquisitions. In 2003, we expect to continue to make the capital expenditures required to implement our growth strategy in amounts consistent with the amount of cash generated from operating activities, the availability of additional financing and our credit facility. Depending on the size of any future acquisitions, we may require additional equity or debt financing in excess of our current working capital and amounts available under our revolving credit facility. NEW ACCOUNTING PRONOUNCEMENTS In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities." FIN 46 clarifies the application of Accounting Research Bulletin Number 51, "Consolidated Financial Statements," to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 applies immediately to 16
Remaining Six Months Description 2003 2004 2005 2006 2007 2008 Thereafter -------------- ------------ ------------ ------------ ------------ ------------ ------------ Long-term debt $ 6,913 $ 13,629 $ 16,031 $ 827 $ 810 $ 810 $ 214,976 Operating leases 1,656 2,326 1,493 859 708 286 450 -------------- ------------ ------------ ------------ ------------ ------------ ------------ Total $ 8,569 $ 15,955 $ 17,524 $ 1,686 $ 1,518 $ 1,096 $ 215,426 ============== ============ ============ ============ ============ ============ ============ variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. FIN 46 applies to public enterprises as of the beginning of the applicable interim or annual period. We do not expect the adoption of FIN 46 to have a significant effect on our financial position or results of operations. In April 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 149 (FAS No. 149), "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." FAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under Statement of Financial Accounting Standards No. 133 (FAS No. 133), "Accounting for Derivative Instruments and Hedging Activities." FAS No. 149 is effective for contracts entered into or modified after June 30, 2003. We do not expect the adoption of FAS No. 149 to have a significant effect on our financial position or results of operations. In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150 (FAS No. 150), "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." FAS No. 150 establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. FAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003. We do not expect the adoption of FAS No. 150 to have a significant effect on our financial position or results of operations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no significant changes in our market risks since the year ended December 31, 2002. For more information, please read the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2002. ITEM 4. CONTROLS AND PROCEDURES As of the end of the period covered by this quarterly report on Form 10-Q, based on the evaluation conducted by our chief financial officer and chief executive officer, they have concluded that our disclosure controls and procedures (as defined in rules 13a-14c promulgated under the Securities Exchange Act of 1934, as amended) are effective and designed to alert them to material information relating to the Company. There were no material changes to the Company's system of internal controls over financial reporting or in other factors that have materially affected or are reasonably likely to materially affect those internal controls subsequent to the date of our most recent evaluation. 17 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS (a) The annual meeting of our stockholders was held on May 19, 2003. (b) At the annual meeting, the stockholders elected Richard A. Bachmann, Joseph R. Edwards, Ben A. Guill, Terence E. Hall, Richard A. Pattarozzi and Justin L. Sullivan to serve as directors until the next annual meeting of stockholders. (c) The voting tabulation for the election of the six directors is as follows: ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed with this Form 10-Q: 3.1 Certificate of Incorporation of the Company (incorporated herein by reference to the Company's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1996). 3.2 Certificate of Amendment to the Company's Certificate of Incorporation (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999). 3.3 Amended and Restated Bylaws (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999). 31.1 Officer's certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Officer's certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Officer's certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Officer's certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K. The following reports on Form 8-K were filed during the quarter ended June 30, 2003: On May 2, 2003, the Company filed a current report on Form 8-K reporting, under item 5, the announcement of earnings for the first quarter ended March 31, 2003. On May 6, 2003, the Company filed a current report on Form 8-K reporting, under item 5, that it has established a wholly owned subsidiary, SPN Resources, LLC. 18
Director For Withheld ------------------- ---------- ----------- Richard A. Bachmann 42,886,168 8,590,447 Joseph R. Edwards 48,179,800 3,296,815 Ben A. Guill 50,582,538 894,077 Terence E. Hall 50,389,213 1,087,402 Richard A. Pattarozzi 41,019,708 10,456,907 Justin L. Sullivan 41,219,858 10,256,737 SIGNATURE 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 thereunto duly authorized. SUPERIOR ENERGY SERVICES, INC. Date: August 11, 2003 By: /s/ Robert S. Taylor ------------------------ -------------------------------------------- Robert S. Taylor Chief Financial Officer (Principal Financial and Accounting Officer) 19 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 3.1 Certificate of Incorporation of the Company (incorporated herein by reference to the Company's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1996). 3.2 Certificate of Amendment to the Company's Certificate of Incorporation (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999). 3.3 Amended and Restated Bylaws (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999). 31.1 Officer's certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Officer's certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Officer's certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Officer's certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EXHIBIT 31.1 OFFICER'S CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Terence E. Hall, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Superior Energy Services, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. SUPERIOR ENERGY SERVICES, INC. Date: August 11, 2003 By: /s/ Terence E. Hall ----------------------- ------------------------------------------- Terence E. Hall Chairman of the Board, Chief Executive Officer and President
EXHIBIT 31.2 OFFICER'S CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Robert S. Taylor, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Superior Energy Services, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. SUPERIOR ENERGY SERVICES, INC. Date: August 11, 2003 By: /s/ Robert S. Taylor ------------------------------- ---------------------------------- Robert S. Taylor Chief Financial Officer (Principal Financial and Accounting Officer)
EXHIBIT 32.1 CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Terence E. Hall, the Chairman of the Board, Chief Executive Officer and President of Superior Energy Services, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: 1. the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by such Report. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Date: August 11, 2003 By: /s/ Terence E. Hall ------------------------- ---------------------------------------- Terence E. Hall Chairman of the Board, Chief Executive Officer and President
EXHIBIT 32.2 CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Robert S. Taylor, Chief Financial Officer, Principal Financial and Accounting Officer of Superior Energy Services, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: 1. the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by such Report. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Date: August 11, 2003 By: /s/ Robert S. Taylor ------------------------ -------------------------------------------- Robert S. Taylor Chief Financial Officer (Principal Financial and Accounting Officer)