Core Earnings of $0.35 Per Diluted Share Before Special Charges NEW
ORLEANS, July 28 /PRNewswire-FirstCall/ -- Superior Energy
Services, Inc. (NYSE:SPN) today announced a net loss of $68.9
million, or $0.88 per diluted share on revenue of $361.2 million
for the second quarter of 2009. Excluding non-cash special charges,
the Company had adjusted net income of $27.6 million, or $0.35 per
diluted share, compared with adjusted net income of $81.5 million,
or $0.98 per diluted share, on revenue of $457.7 million for the
second quarter of 2008. Net income as reported for the second
quarter of 2008 was $71.4 million, or $0.86 per diluted share.
(Please see Non-GAAP reconciliation disclosure and table at the end
of this press release.) The second quarter 2009 results include the
following special charges: -- A non-cash, pre-tax charge of
approximately $92.7 million, or $0.76 per share after tax, related
to the reduction in value of a portion of the Company's long-lived
intangible assets associated with its well intervention segment due
to the downturn in the oilfield services sector, especially in the
U.S. land markets; -- A non-cash, pre-tax charge of approximately
$36.5 million, or $0.30 per share after tax, related to the
reduction in value of the Company's remaining equity-method
investment in Beryl Oil & Gas; and, -- Losses during the
quarter of $15.7 million, or $0.13 per share after tax related to
the Company's loss in equity-method investment in Beryl Oil &
Gas for the three months ended June 30, 2009. The reduction in
value of long-lived intangible assets and the writedown of the
Company's remaining equity investment in Beryl Oil & Gas do not
impact the Company's liquidity position, operational capabilities
or its future cash flows. The results also include non-cash,
unrealized losses of approximately $6.0 million, or $0.05 per share
after-tax, of the Company's share of unrealized losses associated
with mark-to-market changes in the value of outstanding hedging
contracts at SPN Resources, LLC. The loss was due to increases in
oil prices, the volatility of which makes these changes
unpredictable. For the six months ended June 30, 2009, the
Company's net loss was $12.1 million, or $0.16 per diluted share on
revenue of $798.3 million as compared with net income of $170.9
million, or $2.08 per diluted share on revenue of $899.0 million
for the six months ended June 30, 2008. Operational factors
impacting the second quarter include the following: -- Total
revenue decreased 21% as compared with the second quarter of 2008
("year-over-year") and decreased 17% as compared with the first
quarter of 2009 ("sequential"). The sequential change was primarily
due to lower demand for production-related services and rental
tools, especially in the domestic land market areas. In addition,
the Company performed less work on its large platform removal
project than in the prior quarter. The project remains well ahead
of schedule and on budget. -- Well Intervention Segment revenue of
$231.1 million decreased 22% over the second quarter of 2008 and
decreased 20% as compared with the first quarter of 2009. Rental
Tools Segment revenue was $102.5 million, a 24% decrease
year-over-year and a 19% decrease sequentially. Marine Segment
revenue of $27.5 million increased 6% year-over-year and increased
19% sequentially. -- Gulf of Mexico revenue was approximately
$216.0 million, or 17% lower sequentially; domestic land revenue
was approximately $74.4 million, a decline of 27% from the first
quarter of 2009; and international revenue was approximately $70.8
million, a sequential decrease of 3%. Terence Hall, Chairman and
CEO of Superior, stated, "We had positive earnings from our core
operations during the quarter. Our product/service and geographic
diversification continued to partially mitigate the impact of this
challenging market environment. Industry activity - using the
average number of rigs drilling for oil and natural gas as a proxy
- declined at a more rapid pace than our overall revenue during the
second quarter. Relative to our performance in the first quarter of
2009, our results were impacted by a confluence of events, with the
most significant factors being lower demand in the domestic land
markets for well intervention and rental tools and reduced
contribution from our platform recovery project in the Gulf of
Mexico. We partially offset these activity declines by starting new
projects with some of the marine assets dedicated to the platform
recovery project and increasing our international well intervention
business. "With respect to the platform recovery project, we
continue to perform well ahead of schedule and expect the pace of
work for the remainder of the year to be similar to what we just
experienced in the second quarter. For the remainder of 2009, we
expect domestic activity to stabilize and international activity to
increase slightly, especially for rental tools in Latin America as
we continue our expansion efforts into new markets. As a result, we
anticipate that the Company's overall business will continue its
relative industry performance." Well Intervention Segment Second
quarter revenue for the Well Intervention Segment was $231.1
million, a 22% decrease year-over-year and a 20% decrease
sequentially. Excluding the $92.7 million reduction in value of
long-lived intangible assets, income from operations was $27.6
million, or 12% of segment revenue as compared with $78.2 million,
or 26% of segment revenue, in the second quarter of 2008, and $61.7
million, or 21% of segment revenue, in the first quarter of 2009.
This segment experienced sequential decreases in production-related
service activity in both domestic land and Gulf of Mexico areas. In
the domestic land market, the biggest activity declines were in
cased hole wireline, coiled tubing, hydraulic workover and
snubbing, and ancillary tools and services supporting drilling and
production-related work. In the Gulf of Mexico, activity decreased
for marine engineering and project management work, cased hole
wireline, mechanical wireline and hydraulic workover and snubbing.
These Gulf of Mexico activity declines were partially offset by an
increase in plug and abandonment services and other decommissioning
services. International revenue in this segment increased due to
the commencement of two Angola projects and increases in hydraulic
workover and snubbing services in Australia and the Caspian region.
Rental Tools Segment Quarterly revenue for the Rental Tools Segment
was $102.5 million, 24% lower year-over-year and 19% lower
sequentially. Income from operations was $20.1 million, or 20% of
segment revenue, as compared with $47.5 million, or 35% of segment
revenue in the second quarter of 2008, and $35.3 million, or 28% of
segment revenue in the first quarter of 2009. In the domestic land
market, the largest revenue declines occurred for rentals of
accommodations and stabilization equipment. Gulf of Mexico rentals
decreased primarily due to fewer rentals of drill pipe and
stabilization equipment in the shallow water, while deepwater
rentals remained stable. Internationally, the Company experienced
decreased accommodations rentals, fewer sales of manufactured
stabilization equipment, and decreased drill pipe and specialty
tubular rentals in Colombia, Venezuela and the North Sea. These
declines were partially offset by increased rentals of drill pipe
and specialty tubulars in Brazil. Marine Segment Marine Segment
revenue was $27.5 million, 6% higher year-over-year and 19% higher
sequentially. Income from operations was $4.9 million, or 18% of
segment revenue, up from $1.4 million, or 6% of segment revenue in
the second quarter of 2008, and up from $2.8 million, or 12% of
segment revenue in the first quarter of 2009. Average daily revenue
in the second quarter was approximately $302,000, inclusive of
subsistence revenue, as compared with approximately $286,000 per
day in the second quarter of 2008 and approximately $257,000 in the
first quarter of 2009. Average fleet utilization was 53% as
compared with 57% in the second quarter of 2008 and 48% in the
first quarter of 2009. Income from operations as a percentage of
revenue increased from the first quarter of 2009 as a result of
higher utilization and the contribution from two new 265-ft. class
liftboats, which entered the fleet during the period. Liftboat
Average Dayrates and Utilization by Class Size Three Months Ended
June 30, 2009 ($ actual) Average Class Liftboats Dayrate
Utilization ----- --------- ------- ----------- 145'-155' 10 $7,051
34.3% 160'-175' 8 8,803 41.3% 200' 5 11,058 63.7% 230'-245' 3
29,284 86.4% 250' 2 34,527 97.3% 265' 2 34,559 80.9% Equity-Method
Investments The Company's losses in equity-method investment
include the aforementioned quarterly losses at Beryl Oil & Gas
and non-cash, unrealized losses from hedging contracts impacting
the Company's earnings from its equity-method investment in SPN
Resources. Excluding these items, earnings from equity-method
investments were $2.2 million. Reduction in Value of Long-Lived
Intangible Assets and Equity-Method Investment In accordance with
Statement of Financial Accounting Standards No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets," the Company
concluded that $92.7 million, before taxes, of its long-lived
intangible assets was impaired as a result of declining global
economic conditions and the downturn in the oilfield services
sector, especially in the U.S. land markets, which led the Company
to believe a triggering event had occurred requiring the impairment
test. The Company's remaining $36.5 million equity investment in
Beryl Oil & Gas was deemed impaired by the Company following
the results of Beryl's consideration of its strategic alternatives
after it defaulted under its credit agreement primarily due to 2008
hurricane related pipeline curtailments and reduced oil and gas
prices. Conference Call Information The Company will host a
conference call at 10 a.m. Central Time on Wednesday, July 29,
2009. The call can be accessed from Superior's website at
http://www.superiorenergy.com/, or by telephone at 480-629-9868.
For those who cannot listen to the live call, a telephonic replay
will be available through Wednesday, August 5, 2009 and may be
accessed by calling 303-590-3030 and using the pass code 4112171#.
An archive of the webcast will be available after the call for a
period of 60 days on http://www.superiorenergy.com/. Superior
Energy Services, Inc. serves the drilling and production-related
needs of oil and gas companies worldwide through its brand name
rental tools and its integrated well intervention services and
tools, supported by an engineering staff who plan and design
solutions for customers. Offshore projects are delivered by the
Company's fleet of modern marine assets. This press release
contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 which involve
known and unknown risks, uncertainties and other factors. Among the
factors that could cause actual results to differ materially are
volatility of the oil and gas industry, including the level of
exploration, production and development activity; risks associated
with the uncertainty of macroeconomic and business conditions
worldwide, as well as the global credit markets; risks associated
with the Company's rapid growth; changes in competitive factors and
other material factors that are described from time to time in the
Company's filings with the Securities and Exchange Commission.
Actual events, circumstances, effects and results may be materially
different from the results, performance or achievements expressed
or implied by the forward-looking statements. Consequently, the
forward-looking statements contained herein should not be regarded
as representations by Superior or any other person that the
projected outcomes can or will be achieved. FOR FURTHER INFORMATION
CONTACT: Terence Hall, CEO; Robert Taylor, CFO; Greg Rosenstein, VP
of Investor Relations, (504) 587-7374 SUPERIOR ENERGY SERVICES,
INC. AND SUBSIDIARIES Consolidated Statements of Operations Three
and Six Months Ended June 30, 2009 and 2008 (in thousands, except
earnings per share amounts) (unaudited) Three Months Ended Six
Months Ended June 30, June 30, ---------------------
--------------------- 2009 2008 2009 2008 -------- ------- --------
-------- As Adjusted As Adjusted (Note 1) (Note 1) Oilfield service
and rental revenues $361,161 $457,655 $798,270 $843,974 Oil and gas
revenues - - - 55,072 -------- ------- -------- -------- Total
revenues 361,161 457,655 798,270 899,046 ------- ------- -------
------- Cost of oilfield services and rentals 197,268 222,097
419,733 413,229 Cost of oil and gas sales - - - 12,986 Total cost
of services, rentals and sales (exclusive of items shown separately
below) 197,268 222,097 419,733 426,215 -------- ------- --------
-------- Depreciation, depletion, amortization and accretion 50,978
41,954 100,846 83,833 General and administrative expenses 60,283
66,426 125,269 136,032 Reduction in value of intangible assets
92,683 - 92,683 - Gain on sale of businesses - 3,058 - 40,946
-------- ------- -------- -------- Income (loss) from operations
(40,051) 130,236 59,739 293,912 Other income (expense): Interest
expense, net (11,720) (11,023) (25,008) (23,206) Losses from
equity- method investments, net (19,426) (7,765) (17,170) (3,808)
Reduction in value of equity- method investment (36,486) - (36,486)
- -------- ------- -------- -------- Income (loss) before income
taxes (107,683) 111,448 (18,925) 266,898 Income taxes (38,766)
40,081 (6,813) 96,002 -------- ------- -------- -------- Net income
(loss) $(68,917) $71,367 $(12,112) $170,896 ======== =======
======== ======== Basic earnings (loss) per share $(0.88) $0.88
$(0.16) $2.12 ======== ======= ======== ======== Diluted earnings
(loss) per share $(0.88) $0.86 $(0.16) $2.08 ======== =======
======== ======== Weighted average common shares used in computing
earnings per share: Basic 78,153 80,749 78,093 80,762 ========
======= ======== ======== Diluted 78,153 82,942 78,093 82,134
======== ======= ======== ======== Note 1 On January 1, 2009, we
adopted Financial Accounting Standards Board Staff Position APB
14-1 which changed the accounting for the Company's 1.5% senior
exchangeable notes. The comparative Statement of Operations for the
three and six months ended June 30, 2008 has been adjusted to
comply with FSP APB 14-1 on a retrospective basis. SUPERIOR ENERGY
SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE
30, 2009 AND DECEMBER 31, 2008 (in thousands) 6/30/2009 12/31/2008
--------- ---------- As Adjusted (Note 1) ASSETS Current assets:
Cash and cash equivalents $36,590 $44,853 Accounts receivable, net
332,128 360,357 Income taxes receivable 7,277 - Prepaid expenses
30,384 18,041 Other current assets 335,692 223,598 ----------
---------- Total current assets 742,071 646,849 ----------
---------- Property, plant and equipment, net 1,217,178 1,114,941
Goodwill, net 482,216 477,860 Equity-method investments 59,692
122,308 Intangible and other long-term assets, net 37,198 128,187
Total assets $2,538,355 $2,490,145 ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $80,609 $87,207 Accrued expenses 162,466 152,536 Income
taxes payable - 20,861 Deferred income taxes 67,742 36,830 Current
maturities of long-term debt 810 810 ---------- ---------- Total
current liabilities 311,627 298,244 ---------- ---------- Deferred
income taxes 200,116 246,824 Long-term debt, net 718,005 654,199
Other long-term liabilities 40,915 36,605 Total stockholders'
equity 1,267,692 1,254,273 ---------- ---------- Total liabilities
and stockholders' equity $2,538,355 $2,490,145 ==========
========== Note 1 On January 1, 2009, we adopted Financial
Accounting Standards Board Staff Position APB 14-1 which changed
the accounting for the Company's 1.5% senior exchangeable notes.
The comparative Balance Sheet as of December 31, 2008 has been
adjusted to comply with FSP APB 14-1 on a retrospective basis.
Superior Energy Services, Inc. and Subsidiaries Segment Highlights
Three months ended June 30, 2009, March 31, 2009 and June 30, 2008
(Unaudited) (in thousands) Three months ended,
------------------------------------------------ Revenue June 30,
2009 March 31, 2009 June 30, 2008 ------------- --------------
------------- Well Intervention $231,121 $288,057 $296,891 Rental
Tools 102,533 125,944 134,773 Marine 27,507 23,108 25,991 --------
-------- -------- Total Revenues $361,161 $437,109 $457,655
======== ======== ======== Three months ended,
------------------------------------------------ Gross Profit (1)
June 30, 2009 March 31, 2009 June 30, 2008 -------------
-------------- ------------- Well Intervention $83,607 $122,568
$135,410 Rental Tools 69,231 83,908 93,438 Marine 11,055 8,168
6,710 -------- -------- -------- Total Gross Profit $163,893
$214,644 $235,558 ======== ======== ======== Three months ended,
------------------------------------------------ Income from
Operations June 30, 2009 March 31, 2009 June 30, 2008 -------------
-------------- ------------- Well Intervention (2) $(65,094)
$61,700 $78,202 Rental Tools 20,123 35,309 47,531 Marine 4,920
2,781 1,445 Gain on Sale of Business - - 3,058 -------- --------
-------- Total Income (Loss) from Operations $(40,051) $99,790
$130,236 ======== ======== ======== (1) Gross profit is calculated
by subtracting cost of services (exclusive of depreciation,
depletion, amortization and accretion) from revenue for each of the
Company's segments. (2) Income from operations in the Well
Intervention Segment for the three months ended June 30, 2009
includes a reduction in value of long-lived intangible assets of
$92.7 million. NON-GAAP RECONCILIATION We report our financial
results in conformity with U.S. generally accepted accounting
principles (GAAP). However, the Company provides non-GAAP adjusted
net income and non-GAAP adjusted earnings per share because
management believes that in order to properly understand the
Company's operational trends and performance, investors may wish to
consider the impact of adjustments for non-operating items (such as
special charges from impairments and unrealized earnings (losses)
from mark-to-market changes in hedging contracts and other
non-recurring and/or non-cash charges) resulting from facts and
circumstances, including acquisitions, divestitures, changes in
commodity prices, and other non-recurring items. Management uses
adjusted net income and adjusted diluted earnings per share to
evaluate the Company's operational trends and historical
performance on a consistent basis. Also, management believes
adjusted net income and adjusted diluted earnings per share are
more comparable to earnings estimates provided by research
analysts. The adjusted amounts are not measures of financial
performance under GAAP. A reconciliation of net income, the GAAP
measure most directly comparable to non-GAAP adjusted earnings per
share, is below. Non-GAAP financial measures used by the Company
may be calculated differently from, and therefore may not be
directly comparable to, similarly titled measures used by other
companies. Non-GAAP financial measures should be viewed in addition
to, and not as an alternative for, or superior to, the Company's
reported results prepared in accordance with GAAP. Three Months
Ended June 30, ---------------- 2009 2008 ------- ------- Net
income (loss) as reported $(68,917) $71,367 Pre-tax adjustments:
-------------------- Reduction in value of intangible assets 92,683
- Reduction in value of equity-method investment in Beryl Oil &
Gas 36,486 - (Earnings) losses from equity-method investment in
Beryl Oil & Gas 15,683 (989) Unrealized losses from
equity-method investment hedging contracts at SPN Resources, LLC
5,972 19,934 Gain on sale of businesses - (3,058) ------- -------
Total pre-tax adjustments 150,824 15,887 Income tax effect of
adjustments (54,297) (5,719) ------- ------- Non-GAAP adjusted net
income $27,610 $81,535 ======= ======= Non-GAAP adjusted diluted
earnings per share $0.35 $0.98 ======= ======= Weighted average
common shares used in computing diluted earnings per share 78,153
82,942 ======= ======= DATASOURCE: Superior Energy Services, Inc.
CONTACT: Terence Hall, CEO, or Robert Taylor, CFO, or Greg
Rosenstein, VP of Investor Relations, all of Superior Energy
Services, Inc., +1-504-587-7374 Web Site:
http://www.superiorenergy.com/
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