Superior Energy Services Announces Fourth Quarter and Full Year 2017 Results
The Company recorded a provisional income tax benefit of
For the year ended
“The U.S. land market experienced dramatic expansion in 2017,” said
“We remain confident that dedicating high quality hydraulic fracturing assets to operators with the most efficient completion operations is the best model for our hydraulic fracturing business. This business realized improvement in profitability throughout the year, which increased sharply in the fourth quarter. During the course of the fourth quarter, we also observed an increase in the percentage of our customers who are now sourcing their own proppant, continuing a broader industry trend. Historically, many of our customers have sourced their own proppant and proppant sales have generally been associated with low margins. As a result, we sold less proppant during the quarter, which impacted our revenue, but this change in behavior did not impact our profitability to the same degree.
“The value of our diversified business model was also apparent as several other product lines across U.S. land markets, led by coiled tubing and pressure control, experienced higher levels of demand and pricing during the quarter.
“Revenue was lower in the Gulf of
“Internationally, there has been a gradual increase in spending and activity levels in certain land markets, primarily in Latin America. We remain cautious about signaling a widespread international recovery as a number of market areas have yet to show signs of increasing activity, but we do see signs that a gradual upward trend, supported by higher oil prices, may continue.
“Looking back at 2017, it is amazing how fast our industry has returned to work. There are just as many challenges to manage during a recovery as there are in a downturn, but we have assembled an impressive workforce with the skills and experience to meet them. Looking ahead to 2018, I am confident that an improved oil price environment and economic outlook can lead to better than expected results and improving margins as our operating efficiency continues to improve.”
Fourth Quarter 2017 Geographic Breakdown
U.S. land revenue was
Drilling Products and Services Segment
The Drilling Products and Services segment revenue in the fourth quarter of 2017 was
U.S. land revenue increased 4% sequentially to
Onshore Completion and Workover Services Segment
The Onshore Completion and Workover Services segment revenue in the fourth quarter of 2017 was
During the fourth quarter, the Company’s pressure pumping business sold less proppant than in the third quarter resulting from a greater number of its customers sourcing their own proppant. This change in customer behavior resulted in sequential revenue being approximately
Production Services Segment
The Production Services segment revenue in the fourth quarter of 2017 was
U.S. land revenue increased 37% sequentially to
Technical Solutions Segment
The Technical Solutions segment revenue in the fourth quarter of 2017 was
U.S. land revenue decreased 10% sequentially to
Conference Call Information
The Company will host a conference call at
About
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
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
(in thousands, except earnings per share amounts) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
December 31, | September 30, | December 31, | |||||||||||||||||||
2017 | 2016 | 2017 | 2017 | 2016 | |||||||||||||||||
Revenues | $ | 497,043 | $ | 354,418 | $ | 506,029 | $ | 1,874,076 | $ | 1,450,047 | |||||||||||
Cost of services and rentals (exclusive of depreciation, depletion, amortization and accretion) | 356,628 | 321,132 | 368,279 | 1,398,695 | 1,123,274 | ||||||||||||||||
Depreciation, depletion, amortization and accretion | 107,565 | 117,954 | 108,751 | 438,716 | 509,971 | ||||||||||||||||
General and administrative expenses | 68,934 | 78,122 | 74,372 | 295,507 | 346,606 | ||||||||||||||||
Reduction in value of assets | 4,202 | 35,961 | 9,953 | 14,155 | 500,405 | ||||||||||||||||
Loss from operations | (40,286 | ) | (198,751 | ) | (55,326 | ) | (272,997 | ) | (1,030,209 | ) | |||||||||||
Other income (expense): | |||||||||||||||||||||
Interest expense, net | (24,776 | ) | (24,429 | ) | (29,096 | ) | (101,455 | ) | (92,753 | ) | |||||||||||
Other income (expense) | (822 | ) | 519 | (970 | ) | (3,299 | ) | 22,621 | |||||||||||||
Loss from continuing operations before income taxes | (65,884 | ) | (222,661 | ) | (85,392 | ) | (377,751 | ) | (1,100,341 | ) | |||||||||||
Income taxes | (87,762 | ) | (56,402 | ) | (28,203 | ) | (190,740 | ) | (267,001 | ) | |||||||||||
Net income (loss) from continuing operations | 21,878 | (166,259 | ) | (57,189 | ) | (187,011 | ) | (833,340 | ) | ||||||||||||
Loss from discontinued operations, net of income tax | (13,285 | ) | (44,982 | ) | (1,860 | ) | (18,910 | ) | (53,559 | ) | |||||||||||
Net income (loss) | $ | 8,593 | $ | (211,241 | ) | $ | (59,049 | ) | $ | (205,921 | ) | $ | (886,899 | ) | |||||||
Basic earnings (losses) per share: | |||||||||||||||||||||
Net income (loss) from continuing operations | $ | 0.14 | $ | (1.10 | ) | $ | (0.37 | ) | $ | (1.22 | ) | $ | (5.50 | ) | |||||||
Loss from discontinued operations | (0.08 | ) | (0.30 | ) | (0.02 | ) | (0.13 | ) | (0.35 | ) | |||||||||||
Net income (loss) | $ | 0.06 | $ | (1.40 | ) | $ | (0.39 | ) | $ | (1.35 | ) | $ | (5.85 | ) | |||||||
Diluted earnings (losses) per share: | |||||||||||||||||||||
Net income (loss) from continuing operations | $ | 0.14 | $ | (1.10 | ) | $ | (0.37 | ) | $ | (1.22 | ) | $ | (5.50 | ) | |||||||
Loss from discontinued operations | (0.08 | ) | (0.30 | ) | (0.02 | ) | (0.13 | ) | (0.35 | ) | |||||||||||
Net income (loss) | $ | 0.06 | $ | (1.40 | ) | $ | (0.39 | ) | $ | (1.35 | ) | $ | (5.85 | ) | |||||||
Weighted average common shares: | |||||||||||||||||||||
Basic | 153,085 | 151,741 | 153,082 | 152,933 | 151,558 | ||||||||||||||||
Diluted | 154,277 | 151,741 | 153,082 | 152,933 | 151,558 | ||||||||||||||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
12/31/2017 | 12/31/2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 172,000 | $ | 187,591 | |||
Accounts receivable, net | 398,056 | 297,164 | |||||
Income taxes receivable | 959 | 101,578 | |||||
Prepaid expenses | 42,128 | 37,288 | |||||
Inventory and other current assets | 134,032 | 130,772 | |||||
Assets held for sale | 13,644 | 27,158 | |||||
Total current assets | 760,819 | 781,551 | |||||
Property, plant and equipment, net | 1,316,944 | 1,605,365 | |||||
Goodwill | 807,860 | 803,917 | |||||
Notes receivable | 60,149 | 56,650 | |||||
Intangible and other long-term assets, net | 164,453 | 222,772 | |||||
Total assets | $ | 3,110,225 | $ | 3,470,255 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 119,716 | $ | 94,831 | |||
Accrued expenses | 221,757 | 218,192 | |||||
Income taxes payable | - | 694 | |||||
Current portion of decommissioning liabilities | 27,261 | 22,164 | |||||
Liabilities held for sale | 6,463 | 8,653 | |||||
Total current liabilities | 375,197 | 344,534 | |||||
Deferred income taxes | 61,058 | 243,611 | |||||
Decommissioning liabilities | 103,136 | 101,513 | |||||
Long-term debt, net | 1,279,771 | 1,284,600 | |||||
Other long-term liabilities | 158,634 | 192,077 | |||||
Total stockholders' equity | 1,132,429 | 1,303,920 | |||||
Total liabilities and stockholders' equity | $ | 3,110,225 | $ | 3,470,255 | |||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
YEARS ENDED DECEMBER 31, 2017 AND 2016 | |||||||||
(in thousands) | |||||||||
(unaudited) | |||||||||
2017 | 2016 | ||||||||
Cash flows from operating activities: | |||||||||
Net loss | $ | (205,921 | ) | $ | (886,899 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||
Depreciation, depletion, amortization and accretion | 438,716 | 509,971 | |||||||
Reduction in value of assets | 14,155 | 500,405 | |||||||
Other noncash items | (135,464 | ) | (38,685 | ) | |||||
Changes in working capital and other | (7,642 | ) | (23,540 | ) | |||||
Net cash provided by operating activities | 103,844 | 61,252 | |||||||
Cash flows from investing activities: | |||||||||
Payments for capital expenditures | (164,933 | ) | (80,548 | ) | |||||
Other | 58,869 | 6,309 | |||||||
Net cash used in investing activities | (106,064 | ) | (74,239 | ) | |||||
Cash flows from financing activities: | |||||||||
Net repayments of long-term debt | - | (337,576 | ) | ||||||
Other | (17,025 | ) | (17,904 | ) | |||||
Net cash used in financing activities | (17,025 | ) | (355,480 | ) | |||||
Effect of exchange rate changes in cash | 3,654 | (7,959 | ) | ||||||
Net decrease in cash and cash equivalents | (15,591 | ) | (376,426 | ) | |||||
Cash and cash equivalents at beginning of period | 187,591 | 564,017 | |||||||
Cash and cash equivalents at end of period | $ | 172,000 | $ | 187,591 | |||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | ||||||||||
REVENUE BY GEOGRAPHIC REGION BY SEGMENT | ||||||||||
(in thousands) | ||||||||||
(unaudited) | ||||||||||
Three months ended, | ||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||
U.S. land | ||||||||||
Drilling Products and Services | $ | 35,146 | $ | 33,779 | $ | 17,703 | ||||
Onshore Completion and Workover Services | 232,720 | 248,405 | 150,578 | |||||||
Production Services | 55,010 | 40,123 | 19,984 | |||||||
Technical Solutions | 8,161 | 9,118 | 12,060 | |||||||
Total U.S. land | $ | 331,037 | $ | 331,425 | $ | 200,325 | ||||
Gulf of Mexico | ||||||||||
Drilling Products and Services | 22,521 | 23,234 | 25,772 | |||||||
Onshore Completion and Workover Services | - | - | - | |||||||
Production Services | 19,864 | 16,487 | 22,256 | |||||||
Technical Solutions | 34,027 | 51,991 | 23,614 | |||||||
Total Gulf of Mexico | $ | 76,412 | $ | 91,712 | $ | 71,642 | ||||
International | ||||||||||
Drilling Products and Services | $ | 21,559 | $ | 20,193 | $ | 25,855 | ||||
Onshore Completion and Workover Services | - | - | - | |||||||
Production Services | 43,363 | 40,723 | 38,734 | |||||||
Technical Solutions | 24,672 | 21,976 | 17,862 | |||||||
Total International | $ | 89,594 | $ | 82,892 | $ | 82,451 | ||||
Total Revenues | $ | 497,043 | $ | 506,029 | $ | 354,418 | ||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES | |||||||||||||
SEGMENT HIGHLIGHTS | |||||||||||||
(in thousands) | |||||||||||||
(unaudited) | |||||||||||||
Three months ended, | |||||||||||||
Revenues | December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||
Drilling Products and Services | $ | 79,226 | $ | 77,206 | $ | 69,330 | |||||||
Onshore Completion and Workover Services | 232,720 | 248,405 | 150,578 | ||||||||||
Production Services | 118,237 | 97,333 | 80,974 | ||||||||||
Technical Solutions | 66,860 | 83,085 | 53,536 | ||||||||||
Total Revenues | $ | 497,043 | $ | 506,029 | $ | 354,418 | |||||||
Adjusted Income (Loss) from Operations (1) (2) | |||||||||||||
Drilling Products and Services | $ | 340 | $ | 1,165 | $ | (10,640 | ) | ||||||
Onshore Completion and Workover Services | (9,888 | ) | (20,879 | ) | (63,311 | ) | |||||||
Production Services | (6,464 | ) | (12,770 | ) | (14,215 | ) | |||||||
Technical Solutions | 3,176 | 12,995 | (10,307 | ) | |||||||||
Corporate and other | (23,248 | ) | (25,884 | ) | (27,128 | ) | |||||||
Total Adjusted Income (Loss) from Operations | $ | (36,084 | ) | $ | (45,373 | ) | $ | (125,601 | ) | ||||
Adjusted EBITDA (1) (2) | |||||||||||||
Drilling Products and Services | $ | 31,547 | $ | 33,004 | $ | 24,616 | |||||||
Onshore Completion and Workover Services | 41,311 | 27,252 | (13,374 | ) | |||||||||
Production Services | 12,420 | 6,563 | 7,901 | ||||||||||
Technical Solutions | 8,022 | 21,024 | (1,152 | ) | |||||||||
Corporate and other | (21,819 | ) | (24,465 | ) | (25,638 | ) | |||||||
Total Adjusted EBITDA | $ | 71,481 | $ | 63,378 | $ | (7,647 | ) | ||||||
(1) Adjusted income (loss) from operations and adjusted EBITDA exclude the impact of reduction in value of assets and other items. | |||||||||||||
(2) Effective as of the fourth quarter of 2017, the Company changed the measurement used to evaluate the performance of its reportable segments to income (loss) from operations excluding allocated corporate expenses. | |||||||||||||
Non-GAAP Financial Measures
The following tables reconcile net loss from continuing operations on a consolidated basis and by segment, which are the directly comparable financial results determined in accordance with Generally Accepted Accounting Principles (GAAP), to adjusted income/loss from operations and adjusted EBITDA on a consolidated basis and by segment (non-GAAP financial measures). These financial measures are provided to enhance investors’ overall understanding of the Company’s current financial performance.
Consolidated Adjusted Net Loss From Continuing Operations Reconciliation | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Three months ended, | ||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Consolidated | Per Share | Consolidated | Per Share | Consolidated | Per Share | |||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 21,878 | $ | 0.14 | $ | (57,189 | ) | $ | (0.37 | ) | $ | (166,259 | ) | $ | (1.10 | ) | ||||||||
Reduction in value of assets and other items | 4,202 | 0.02 | 9,953 | 0.06 | 73,150 | 0.48 | ||||||||||||||||||
Income taxes | (716 | ) | - | (3,287 | ) | (0.02 | ) | (18,529 | ) | (0.12 | ) | |||||||||||||
US Tax Reform (1) | (76,529 | ) | (0.49 | ) | - | - | - | - | ||||||||||||||||
Adjusted net loss from continuing operations | $ | (51,165 | ) | $ | (0.33 | ) | $ | (50,523 | ) | $ | (0.33 | ) | $ | (111,638 | ) | $ | (0.74 | ) | ||||||
(1) Recorded in Income Taxes in the consolidated statement of operations. | ||||||||||||||||||||||||
Reconciliation of Adjusted Income (Loss) from Operations and Adjusted EBITDA by Segment | |||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Three months ended, December 31, 2017 | |||||||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other | Consolidated |
||||||||||||||||||||
Reported net income (loss) from continuing operations | $ | (1,016 | ) | $ | (12,734 | ) | $ | (6,464 | ) | $ | 4,116 | $ | 37,976 | $ | 21,878 | ||||||||||
Reduction in value of assets and other items | 1,356 | 2,846 | - | - | - | 4,202 | |||||||||||||||||||
Interest expense, net | - | - | - | (940 | ) | 25,716 | 24,776 | ||||||||||||||||||
Other expense | - | - | - | - | 822 | 822 | |||||||||||||||||||
Income taxes | - | - | - | - | (87,762 | ) | (87,762 | ) | |||||||||||||||||
Adjusted income (loss) from operations | $ | 340 | $ | (9,888 | ) | $ | (6,464 | ) | $ | 3,176 | $ | (23,248 | ) | $ | (36,084 | ) | |||||||||
Depreciation, depletion, amortization and accretion |
31,207 | 51,199 | 18,884 | 4,846 | 1,429 | 107,565 | |||||||||||||||||||
Adjusted EBITDA | $ | 31,547 | $ | 41,311 | $ | 12,420 | $ | 8,022 | $ | (21,819 | ) | $ | 71,481 | ||||||||||||
Three months ended, September 30, 2017 | |||||||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other | Consolidated |
||||||||||||||||||||
Reported net income (loss) from continuing operations | $ | 1,165 | $ | (22,717 | ) | $ | (12,770 | ) | $ | 5,806 | $ | (28,673 | ) | $ | (57,189 | ) | |||||||||
Reduction in value of assets and other items | - | 1,838 | - | 8,115 | - | 9,953 | |||||||||||||||||||
Interest expense, net | - | - | - | (926 | ) | 30,022 | 29,096 | ||||||||||||||||||
Other expense | - | - | - | - | 970 | 970 | |||||||||||||||||||
Income taxes | - | - | - | - | (28,203 | ) | (28,203 | ) | |||||||||||||||||
Adjusted income (loss) from operations | $ | 1,165 | $ | (20,879 | ) | $ | (12,770 | ) | $ | 12,995 | $ | (25,884 | ) | $ | (45,373 | ) | |||||||||
Depreciation, depletion, amortization and accretion |
31,839 | 48,131 | 19,333 | 8,029 | 1,419 | 108,751 | |||||||||||||||||||
Adjusted EBITDA | $ | 33,004 | $ | 27,252 | $ | 6,563 | $ | 21,024 | $ | (24,465 | ) | $ | 63,378 | ||||||||||||
Three months ended, December 31, 2016 | |||||||||||||||||||||||||
Drilling Products and Services |
Onshore Completion and Workover Services |
Production Services |
Technical Solutions |
Corporate and Other | Consolidated |
||||||||||||||||||||
Reported net income (loss) from continuing operations | $ | (24,501 | ) | $ | (66,032 | ) | $ | (25,240 | ) | $ | (54,689 | ) | $ | 4,203 | $ | (166,259 | ) | ||||||||
Reduction in value of assets and other items | 13,861 | 2,721 | 11,012 | 45,266 | 290 | 73,150 | |||||||||||||||||||
Interest expense, net | - | - | 13 | (884 | ) | 25,300 | 24,429 | ||||||||||||||||||
Other expense | - | - | - | - | (519 | ) | (519 | ) | |||||||||||||||||
Income taxes | - | - | - | - | (56,402 | ) | (56,402 | ) | |||||||||||||||||
Adjusted income (loss) from operations | $ | (10,640 | ) | $ | (63,311 | ) | $ | (14,215 | ) | $ | (10,307 | ) | $ | (27,128 | ) | $ | (125,601 | ) | |||||||
Depreciation, depletion, amortization and accretion |
35,256 | 49,937 | 22,116 | 9,155 | 1,490 | 117,954 | |||||||||||||||||||
Adjusted EBITDA | $ | 24,616 | $ | (13,374 | ) | $ | 7,901 | $ | (1,152 | ) | $ | (25,638 | ) | $ | (7,647 | ) | |||||||||
FOR FURTHER INFORMATION CONTACT: