Superior Energy Services, Inc. Announces Third Quarter 2013 Results

Oct 24, 2013, 16:15 ET from Superior Energy Services, Inc.

HOUSTON, Oct. 24, 2013 /PRNewswire/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced third quarter 2013 net income of $69.8 million, or $0.43 per diluted share, on revenue of $1,188.6 million.

These results compare with third quarter 2012 net income of $93.9 million, or $0.59 per diluted share, on revenue of $1,179.7 million.

For the nine months ended September 30, 2013, the Company recorded net income of $202.1 million, or $1.26 per diluted share, on revenue of $3,483.8 million. For the nine months ended September 30, 2012, the Company recorded net income from continuing operations of $306.9 million, or $2.07 per diluted share, and net income of $289.7 million, or $1.95 per diluted share, on revenue of $3,389.8 million.

During the third quarter of 2013 the Company reduced its annual effective income tax rate from 37% to 35%, resulting in a benefit of approximately $6.0 million.

David Dunlap, President and CEO of the Company, commented, "As previously announced, the persistent flat horizontal rig count in the U.S. land markets has created a market environment characterized by oversupply and increased competition for several completions and production-related services. As a result, our U.S. land revenue declined about 1% from the second quarter and gross profit margins for several service lines were lower than the second quarter.

"We continue to experience strong growth in Gulf of Mexico and international market areas.  Our Gulf revenue increased 7% sequentially as demand for our drilling products and services and completion tools in the deepwater continue to be the main drivers. In addition, we successfully completed multiple well control projects. International revenue grew 8% sequentially, with the main catalysts being continued expansion of our drilling products and services, as well as improved activity levels for our subsea inspection, repair and maintenance services in the Asia Pacific market area.  Year-to-date, our Gulf of Mexico revenue has increased 32% and international revenue has grown 13%. As a result, our revenue from these market areas represents almost 40% of our total revenue for the first nine months of 2013.

"We expect margin pressure to continue through the fourth quarter in the U.S. land market areas. In addition, we anticipate typical, end-of-year seasonal factors will impact U.S. land and Gulf of Mexico activity."

Third Quarter 2013 Geographic Breakdown

U.S. land market revenue was approximately $718.2 million in the third quarter of 2013, as compared with $787.6 million in the third quarter of 2012 and $723.3 million in the second quarter of 2013. Gulf of Mexico revenue was approximately $241.8 million, as compared with $189.4 million in the third quarter of 2012 and $225.1 million in the second quarter of 2013. International revenue was approximately $228.6 million, as compared with $202.7 million in the third quarter of 2012 and $211.3 million in the second quarter of 2013.

Drilling Products and Services Segment

Drilling Products and Services segment revenue in the third quarter was $215.5 million, an 11% increase from third quarter 2012 revenue of $194.9 million and a 5% increase from second quarter 2013 revenue of $205.4 million.

The primary factor driving the higher sequential revenue in this segment was a 16% increase in international market revenue to $64.9 million due to increased rentals of premium drill pipe in Africa and bottom hole assemblies in Latin America. Gulf of Mexico market revenue in this segment increased 3% sequentially to $77.7 million due to increased rentals of premium drill pipe, accommodations and specialty rentals. U.S. land market revenue in this segment declined 2% sequentially to $72.9 million due to a decrease in rentals of premium drill pipe.

Onshore Completion and Workover Services Segment

Onshore Completion and Workover Services segment revenue in the third quarter was $398.0 million, a 6% decrease from third quarter 2012 revenue of $421.2 million, and was virtually unchanged from second quarter 2013 revenue of $398.2 million. All of the revenue in this segment is generated from U.S. land market areas.

On a sequential basis, revenue in this segment was unchanged in pressure pumping and slightly higher for well service rigs and fluid management

Income from operations as a percentage of revenue in this segment was 8.4% as compared with 11.8% in the second quarter of 2013, resulting from lower margins for fluid management and well service rigs, and lower service intensity in pressure pumping.

Production Services Segment

Production Services segment revenue was $359.7 million, a 4% decrease from third quarter 2012 revenue of $373.9 million and a 3% decrease from second quarter 2013 revenue of $369.1 million.

U.S. land market revenue in this segment decreased 3% sequentially to $225.1 million, primarily due to decreased demand for coiled tubing, cased hole wireline and pressure control tools. International revenue in this segment decreased 3% sequentially to $82.1 million primarily due to lower coiled tubing activity in Mexico and lower demand for snubbing services in Latin America. Gulf of Mexico revenue in this segment was 2% lower sequentially at $52.5 million with increases in cased hole wireline services offset by decreases in coiled tubing and snubbing services.

Subsea and Technical Solutions Segment

Subsea and Technical Solutions segment revenue was $215.4 million, a 14% increase from third quarter 2012 revenue of $189.7 million and a 15% increase from second quarter 2013 revenue of $187.0 million.

International revenue in this segment increased 15% sequentially to $81.6 million due to activity increases in subsea construction. Gulf of Mexico market revenue in this segment increased 16% sequentially to $111.5 million due to increased demand for pressure control services as the Company successfully completed multiple, one-time well control projects. In addition, completion tools also increased. U.S. land market revenue in this segment increased 12% sequentially to $22.3 million primarily related to increases in completion tools.

Conference Call Information

The Company will host a conference call at 11 a.m. Eastern Time on Friday, October 25, 2013.  The call can be accessed from the Company's website at www.superiorenergy.com, or by telephone at 480-629-9645.  For those who cannot listen to the live call, a telephonic replay will be available through November 8, 2013 and may be accessed by calling 303-590-3030 and using the access code 4643634#. 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, completion and production-related needs of oil and gas companies worldwide through its brand name drilling products and its integrated completion and well intervention services and tools, supported by an engineering staff who plan and design solutions for customers.

Statements in this press release other than statement of historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995.  All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements.  Among the factors that could cause actual results to differ materially are risks inherent in acquiring businesses, including the ability to successfully integrate Complete Production Services Inc.'s operations into the Company's legacy operations and the costs incurred in doing so; the effect of regulatory programs and environmental matters on our performance, including the risk that future changes in the regulation of hydraulic fracturing could reduce or eliminate demand for our pressure pumping services; risks associated with business growth outpacing the capabilities of the Company's infrastructure and workforce; risks associated with the uncertainty of macroeconomic and business conditions worldwide; the cyclical nature and volatility of the oil and gas industry, including the level of exploration, production and development activity and the volatility of oil and gas prices; changes in competitive factors affecting our operations; political, economic and other risks and uncertainties associated with international operations; the lingering impact on exploration and production activities in the U.S. coastal waters following the Deepwater Horizon incident; the impact that unfavorable or unusual weather conditions could have on the Company's operations; the potential shortage of skilled workers; the Company's dependence on certain customers; the risks inherent in long-term fixed-price contracts; operating hazards, including the significant possibility of accidents resulting in personal injury or death, property damage or environmental damage; and other material factors that are described in detail in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2012, as subsequently updated by the Company's filings with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, the Company can give no assurance that such expectations will prove to be correct. Investors are cautioned that many of the assumptions on which the Company's forward-looking statements are based are likely to change after such forward-looking statements are made, including for example the market prices of oil and natural gas and regulations affecting oil and gas operations, which the Company cannot control or anticipate. Further, the Company may make changes to its business plans that could or will affect its results. The Company undertakes no obligation to update any of its forward-looking statements and the Company does not intend to update its forward-looking statements more frequently than quarterly, notwithstanding any changes in its assumptions, changes in its business plans, its actual experience, or other changes. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

FOR FURTHER INFORMATION CONTACT: David Dunlap, President and CEO, (713) 654-2200; Robert Taylor, CFO or Greg Rosenstein, EVP of Corporate Development, (504) 587-7374

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Three and Nine Months Ended September 30, 2013 and 2012

(in thousands, except earnings per share amounts)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Revenues

$ 1,188,615

$ 1,179,665

$ 3,483,807

$ 3,389,821

Cost of services (exclusive of items shown separately below)

748,052

708,608

2,167,422

1,966,659

Depreciation, depletion, amortization and accretion

158,006

128,160

462,627

366,272

General and administrative expenses

157,904

163,458

465,035

496,998

Income from operations

124,653

179,439

388,723

559,892

Other income (expense):

  Interest expense, net

(24,464)

(28,585)

(78,946)

(88,950)

  Other

789

467

2,062

562

  Loss on early extinguishment of debt

-

(2,294)

(884)

(2,294)

  Gain on sale of equity method investment

-

-

-

17,880

Income from continuing operations before income taxes

100,978

149,027

310,955

487,090

Income taxes

31,143

55,140

108,834

180,223

Net income from continuing operations

69,835

93,887

202,121

306,867

Loss from discontinued operations, net of income tax

-

-

-

(17,207)

Net income

$      69,835

$      93,887

$    202,121

$    289,660

Basic earnings per share:

Net income from continuing operations

$          0.44

$          0.60

$          1.27

$          2.09

Loss from discontinued operations

-

-

-

(0.11)

Net income

$          0.44

$          0.60

$          1.27

$          1.98

Diluted earnings per share:

Net income from continuing operations

$          0.43

$          0.59

$          1.26

$          2.07

Loss from discontinued operations

-

-

-

(0.12)

Net income

$          0.43

$          0.59

$          1.26

$          1.95

Weighted average common shares used in computing earnings per share:

    Basic

159,326

157,153

159,204

146,611

    Diluted

160,883

158,576

160,804

148,369

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2013 AND DECEMBER 31, 2012

(in thousands)

9/30/2013

12/31/2012

(Unaudited)

(Audited)

ASSETS

Current assets:

  Cash and cash equivalents

$       90,651

$      91,199

  Accounts receivable, net

1,030,232

1,027,218

  Deferred income taxes

18,424

34,120

  Income taxes receivable

28,658

-

  Prepaid expenses

89,851

93,190

  Inventory and other current assets

272,537

214,630

        Total current assets

1,530,353

1,460,357

Property, plant and equipment, net 

3,237,350

3,255,220

Goodwill

2,548,910

2,532,065

Notes receivable

47,033

44,838

Intangible and other long-term assets, net

484,217

510,406

        Total assets

$  7,847,863

$ 7,802,886

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Accounts payable

$     250,374

$    252,363

  Accrued expenses

361,927

346,490

  Income taxes payable 

-

153,212

  Deferred income taxes

-

-

  Current maturities of long-term debt

20,000

20,000

        Total current liabilities

632,301

772,065

Deferred income taxes 

845,228

745,144

Decommissioning liabilities

97,595

93,053

Long-term debt, net

1,650,000

1,814,500

Other long-term liabilities

168,932

147,045

Total stockholders' equity

4,453,807

4,231,079

        Total liabilities and stockholders' equity

$  7,847,863

$ 7,802,886

 

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

SEGMENT HIGHLIGHTS

THREE MONTHS ENDED SEPTEMBER 30, 2013, JUNE 30, 2013, AND SEPTEMBER 30, 2012

(unaudited)

(in thousands)

Three months ended,

Revenue

September 30, 2013

June 30, 2013

September 30, 2012

Drilling Products and Services

$                 215,522

$       205,422

$                 194,882

Onshore Completion and Workover Services

398,016

398,216

421,194

Production Services

359,722

369,066

373,868

Subsea and Technical Solutions

215,355

187,009

189,721

Total Revenues

$              1,188,615

$    1,159,713

$              1,179,665

Gross Profit (1)

September 30, 2013

June 30, 2013

September 30, 2012

Drilling Products and Services

$                 141,648

$       138,438

$                 132,923

Onshore Completion and Workover Services

122,340

136,159

143,414

Production Services

108,147

116,742

136,362

Subsea and Technical Solutions

68,428

56,491

58,358

Total Gross Profit

$                 440,563

$       447,830

$                 471,057

Income from Continuing Operations

September 30, 2013

June 30, 2013

September 30, 2012

Drilling Products and Services

$                   62,242

$         59,635

$                   62,759

Onshore Completion and Workover Services

33,458

46,809

52,197

Production Services

15,707

20,845

49,023

Subsea and Technical Solutions

13,246

8,587

15,460

Total Income from Continuing Operations

$                 124,653

$       135,876

$                 179,439

 

(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.

 

SOURCE Superior Energy Services, Inc.



RELATED LINKS

http://www.superiorenergy.com