Exhibit 99.1
![]() | 601 Poydras Street Suite 2400 New Orleans, Louisiana 70130 (504) 587-7374 NYSE: SPN |
FOR FURTHER INFORMATION CONTACT: | ||
Terence Hall, CEO; Robert Taylor, CFO; | ||
Greg Rosenstein, VP of Investor Relations, | ||
504-362-4321 |
Superior Energy Services Announces Third Quarter 2008 Results
Record Performance Despite Hurricane Interruptions
New Orleans, La. – October 30, 2008 — Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $99.9 million and diluted earnings per share of $1.22 on record revenue of $490.3 million, as compared with net income of $75.1 million, or $0.91 diluted earnings per share on revenue of $398.9 million for the third quarter of 2007. Diluted earnings per share and revenue increased 34% and 23%, respectively, as compared with the third quarter of 2007.
Excluding pre-tax non-cash, unrealized earnings of $19.2 million ($12.3 million after-tax) from hedging contracts impacting the Company’s earnings from equity-method investments, adjusted net income for the third quarter of 2008 was $87.6 million, or $1.07 diluted earnings per share.
Factors impacting the quarter include the following:
• | The Company estimates that the overall impact from the active 2008 hurricane season was a reduction in earnings for the third quarter in the range of $0.12 to $0.15 diluted earnings per share, including approximately $0.05 diluted earnings per share from shut-in oil and gas production at the Company’s equity-method investments. | |
• | During the quarter, the Company repurchased 1.52 million shares of its common stock for $55.4 million as part of its $350 million repurchase program. | |
• | Well Intervention Group Segment revenue of $319.8 million increased 58% year-over-year and 8% sequentially. The sequential improvement was due to continued execution of the previously announced wreck removal project and increases in demand for production-related services such as coiled tubing, cased hole wireline, hydraulic workover and snubbing, well control. | |
• | Rental Tools Segment revenue was $136.6 million, a 15% increase year-over-year and 1% increase sequentially. | |
• | Marine Segment revenue of $33.9 million increased 29% year-over-year and 30% sequentially due to increased utilization across most liftboat classes. | |
• | Gulf of Mexico revenue was $276.9 million, revenue from domestic land market areas was $134.5 million and international revenue was $78.9 million. |
For the nine months ended September 30, 2008, revenue was $1,389.3 million and net income was $275.9 million or $3.36 diluted earnings per share, as compared with revenues of $1,158.6 million and net income of $209.2 million or $2.53 diluted earnings per share for the nine months ended September 30, 2007.
Terence Hall, Chairman and CEO of Superior, stated, “Our diversification strategy continued to benefit us as we were able to record outstanding financial results despite significant business disruptions in the Gulf of Mexico because of hurricanes. From an operational standpoint, the first two months of the quarter were the best in Company history. In addition, strong activity levels continued in the domestic land and international market areas in September while our Gulf of Mexico businesses recovered.
“The Company is well positioned to manage through these volatile times as a result of our strong balance sheet, our focus on increasing geographic diversification, ongoing work from the wreck removal project, and anticipated new work for the well intervention and marine segments resulting from the recent hurricanes.”
Well Intervention Group Segment
Third quarter revenue for the Well Intervention Group was a record $319.8 million, a 58% increase year-over-year and an 8% increase sequentially. Income from operations was $90.3 million, or 28% of segment revenue as compared with $47.6 million, or 23% of segment revenue, in the third quarter of 2007, and $78.2 million, or 26% of segment revenue, in the second quarter of 2008. Engineering and project management services increased over the second quarter of 2008 as a result of the wreck removal project. Other sequential revenue increases included coiled tubing in both the Gulf of Mexico and domestic land markets; hydraulic workover and snubbing in the Gulf of Mexico; and cased hole wireline and well control services in the domestic land market areas. These offset decreases in international revenue resulting primarily from the mobilization of the Company’s derrick barge from the Asia Pacific market area to the Gulf of Mexico. Income from operations as a percentage of revenue (“operating margin”) increased due to volume increases for several of our services.
Rental Tools Segment
Quarterly revenue for the Rental Tools Segment was $136.6 million, 15% higher year-over-year and 1% over the most recent quarter. Income from operations was $43.6 million, or 32% of segment revenue, as compared with $51.4 million, or 43% of segment revenue in the third quarter of 2007, and $47.5 million, or 35% of segment revenue in the second quarter of 2008. Income from operations in the third quarter of 2007 included a $7.5 million gain on sale of business. Sequentially, demand grew for accommodations and stabilization equipment in the Gulf of Mexico and domestic land market areas; drill pipe and specialty tubulars in international market areas; and connecting iron and handling tools in the Gulf of Mexico. This was partially offset by decreases in drill pipe rentals and on-site bolting services in the Gulf of Mexico due to hurricanes and a decrease in rentals of stabilization equipment in certain international market areas. The decrease in operating margin sequentially and year-over-year is due to business mix, highlighted by lower rentals of higher margin drill pipe and specialty tubulars in the Gulf of Mexico.
Marine Segment
Superior’s Marine Segment quarterly revenue was $33.9 million, a 29% increase year-over-year and a 30% increase from the most recent quarter. Income from operations was $6.5 million, or 19% of segment revenue, compared with $8.1 million, or 31% of segment revenue for the third quarter of 2007, and $1.4 million, or 6% of segment revenue in the second quarter of 2008. Average daily revenue in the third quarter was approximately $368,000, inclusive of subsistence revenue, as compared with $286,000 per day in both the third quarter of 2007 and the second quarter of 2008. Average fleet utilization was 81% as compared with 62% in the third quarter of 2007 and 57% in the second quarter of 2008. The operating margin significantly increased sequentially as a result of higher utilization.
Liftboat Average Dayrates and Utilization by Class Size
Three Months Ended September 30, 2008
($ actual)
Three Months Ended September 30, 2008
($ actual)
Average | ||||||||||||
Class | Liftboats | Dayrate | Utilization | |||||||||
145’-155’ | 11 | $ | 7,920 | 78.3 | % | |||||||
160’-175’ | 8 | 10,640 | 81.3 | % | ||||||||
200’ | 5 | 15,857 | 90.9 | % | ||||||||
230’-245’ | 3 | 25,386 | 85.5 | % | ||||||||
250’ | 2 | 35,239 | 67.9 | % |
Equity-Method Investments
The $23.2 million income from equity-method investments in the third quarter of 2008 includes $19.2 million, pre-tax, of the Company’s share of non-cash unrealized earnings associated with mark-to-market changes in the value of outstanding hedging contracts put in place by SPN Resources, LLC. The mark-to-market changes were due to significant decreases in natural gas and oil prices, the volatility of which makes these changes unpredictable. Prior to the hurricanes, production at SPN Resources, net to the Company’s interest, was approximately 2,200 boe per day and production at Beryl Oil & Gas, net to the Company’s interest, was approximately 3,600 boe per day. Approximately 50% of production remains shut-in. Restoration of full production is expected by year end.
Conference Call Information
The Company will host a conference call at 11 a.m. Central Time on Friday, October 31, 2008. The call can be accessed from Superior’s website at www.superiorenergy.com, or by telephone at 303-205-0033. For those who cannot listen to the live call, a telephonic replay will be available through Friday, November 7, 2008 and may be accessed by calling 303-590-3000 and using the pass code 11120954#. An archive of the webcast will be available after the call for a period of 60 days at www.superiorenergy.com.
Superior Energy Services, Inc. serves the drilling and production 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 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.
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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2008 and 2007
(in thousands, except earnings per share amounts)
(unaudited)
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2008 and 2007
(in thousands, except earnings per share amounts)
(unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Oilfield service and rental revenues | $ | 490,282 | $ | 347,228 | $ | 1,334,256 | $ | 1,021,712 | ||||||||
Oil and gas revenues | — | 51,696 | 55,072 | 136,889 | ||||||||||||
Total revenues | 490,282 | 398,924 | 1,389,328 | 1,158,601 | ||||||||||||
Cost of oilfield services and rentals | 236,610 | 159,683 | 649,839 | 465,085 | ||||||||||||
Cost of oil and gas sales | — | 18,954 | 12,986 | 55,845 | ||||||||||||
Total cost of services, rentals and sales | 236,610 | 178,637 | 662,825 | 520,930 | ||||||||||||
Depreciation, depletion, amortization and accretion | 44,842 | 49,881 | 128,675 | 133,967 | ||||||||||||
General and administrative expenses | 68,379 | 57,150 | 204,411 | 161,833 | ||||||||||||
Gain on sale of businesses | — | 7,483 | 40,946 | 7,483 | ||||||||||||
Income from operations | 140,451 | 120,739 | 434,363 | 349,354 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense, net | (7,593 | ) | (7,402 | ) | (22,665 | ) | (22,635 | ) | ||||||||
Earnings (losses) from equity-method investments, net | 23,167 | 1,395 | 19,359 | (2,447 | ) | |||||||||||
Income before income taxes | 156,025 | 114,732 | 431,057 | 324,272 | ||||||||||||
Income taxes | 56,169 | 39,682 | 155,181 | 115,116 | ||||||||||||
Net income | $ | 99,856 | $ | 75,050 | $ | 275,876 | $ | 209,156 | ||||||||
Basic earnings per share | $ | 1.24 | $ | 0.92 | $ | 3.42 | $ | 2.58 | ||||||||
Diluted earnings per share | $ | 1.22 | $ | 0.91 | $ | 3.36 | $ | 2.53 | ||||||||
Weighted average common shares used in computing earnings per share: | ||||||||||||||||
Basic | 80,538 | 81,470 | 80,691 | 81,053 | ||||||||||||
Diluted | 81,845 | 82,793 | 82,041 | 82,521 | ||||||||||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2008 AND DECEMBER 31, 2007
(in thousands)
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2008 AND DECEMBER 31, 2007
(in thousands)
9/30/2008 | 12/31/2007 | |||||||
(unaudited) | (audited) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 128,169 | $ | 51,649 | ||||
Accounts receivable, net | 383,813 | 343,334 | ||||||
Current portion of notes receivable | — | 15,584 | ||||||
Prepaid expenses | 19,888 | 19,641 | ||||||
Other current assets | 110,403 | 40,797 | ||||||
Total current assets | 642,273 | 471,005 | ||||||
Property, plant and equipment, net | 1,055,310 | 1,086,408 | ||||||
Goodwill, net | 483,266 | 484,594 | ||||||
Notes receivable | — | 16,732 | ||||||
Equity-method investments | 108,153 | 56,961 | ||||||
Intangible and other long-term assets, net | 133,880 | 141,549 | ||||||
Total assets | $ | 2,422,882 | $ | 2,257,249 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 78,394 | $ | 69,510 | ||||
Accrued expenses | 158,489 | 177,779 | ||||||
Income taxes payable | 50,592 | 7,520 | ||||||
Current portion of decommissioning liabilities | — | 36,812 | ||||||
Current maturities of long-term debt | 810 | 810 | ||||||
Total current liabilities | 288,285 | 292,431 | ||||||
Deferred income taxes | 198,584 | 163,338 | ||||||
Decommissioning liabilities | — | 88,158 | ||||||
Long-term debt | 711,110 | 711,151 | ||||||
Other long-term liabilities | 26,578 | 21,492 | ||||||
Total stockholders’ equity | 1,198,325 | 980,679 | ||||||
Total liabilities and stockholders’ equity | $ | 2,422,882 | $ | 2,257,249 | ||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
Segment Highlights
Three months ended September 30, 2008, June 30, 2008 and September 30, 2007
(Unaudited)
(in thousands)
Segment Highlights
Three months ended September 30, 2008, June 30, 2008 and September 30, 2007
(Unaudited)
(in thousands)
Three months ended, | ||||||||||||
September 30, 2008 | June 30, 2008 | September 30, 2007 | ||||||||||
Revenue | ||||||||||||
Well Intervention | $ | 319,798 | $ | 296,891 | $ | 202,807 | ||||||
Rental Tools | 136,600 | 134,773 | 118,918 | |||||||||
Marine | 33,884 | 25,991 | 26,323 | |||||||||
Oil and Gas | — | — | 51,696 | |||||||||
Less: Oil and Gas Eliminations (2) | — | — | (820 | ) | ||||||||
Total Revenues | $ | 490,282 | $ | 457,655 | $ | 398,924 | ||||||
Three months ended, | ||||||||||||
September 30, 2008 | June 30, 2008 | September 30, 2007 | ||||||||||
Gross Profit (1) | ||||||||||||
Well Intervention | $ | 150,895 | $ | 135,410 | $ | 91,032 | ||||||
Rental Tools | 90,178 | 93,438 | 83,776 | |||||||||
Marine | 12,599 | 6,710 | 12,737 | |||||||||
Oil and Gas | — | — | 32,742 | |||||||||
Total Gross Profit | $ | 253,672 | $ | 235,558 | $ | 220,287 | ||||||
Three months ended, | ||||||||||||
September 30, 2008 | June 30, 2008 | September 30, 2007 | ||||||||||
Income from Operations | ||||||||||||
Well Intervention | $ | 90,349 | $ | 78,202 | $ | 47,613 | ||||||
Rental Tools (3) | 43,628 | 47,531 | 51,446 | |||||||||
Marine | 6,474 | 1,445 | 8,148 | |||||||||
Oil and Gas | — | 3,058 | 13,532 | |||||||||
Total Income from Operations | $ | 140,451 | $ | 130,236 | $ | 120,739 | ||||||
(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) | Oil and gas eliminations represent products and services from the company’s segments provided to the Oil and Gas Segment. | |
(3) | Income from operations in the Rental Tools Segment for the three months ended September 30, 2007 includes a gain on sale of business of $7.5 million. |