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Press release from PR Newswire

Superior Energy Services, Inc. Reports First Quarter 2011 Results

Wednesday, April 27, 2011

Superior Energy Services, Inc. Reports First Quarter 2011 Results16:05 EDT Wednesday, April 27, 2011First Quarter Earnings of $0.19 Per Diluted ShareNEW ORLEANS, April 27, 2011 /PRNewswire/ -- Superior Energy Services, Inc. (NYSE: SPN) today announced net income of $15.5 million, or $0.19 per diluted share on revenue of $414.0 million for the first quarter of 2011. These results are compared with net income of $21.5 million, or $0.27 per diluted share on revenue of $364.5 million for the first quarter of 2010.The first quarter 2011 results include a pre-tax gain of $2.7 million from the sale of three 145-155-ft. class liftboats, and $2.1 million in non-cash, unrealized pre-tax losses from hedging contracts at the Company?s equity-method investments.David Dunlap, CEO of Superior, commented, ?Although our Gulf of Mexico revenue declined 18% sequentially due to the well-documented slow pace in permitting, our first quarter results came in toward the higher end of our guidance range due to the continued strength of the U.S. land markets.?U.S. land revenue was a record $179 million for the first quarter, which represents a 5% sequential increase as compared with a 2% increase in the drilling rig count. More importantly, demand for some of our core products and services ? coiled tubing, premium drill pipe and bottom hole assemblies ? increased approximately 12% from the fourth quarter of 2010. These products and services are the major focus of our 2011 domestic capital expenditures plan.?While our overall international revenue declined 18% due to reduced utilization of our subsea operating vessels, international revenue within our drilling products and services segment increased 1%.?2011 Earnings Guidance UpdateThe Company?s recent $500.0 million, 6.375% senior note offering is expected to increase interest expense by approximately $22.0 million ? or $0.18 per share ? for the remainder of 2011.  As a result of this incremental expense, the Company is lowering its earnings guidance range to $1.62 and $2.02 per diluted share.Mr. Dunlap commented, ?With the exception of the increase in interest expense, we are reaffirming full year guidance. Our guidance assumes that we will benefit from our capital expenditures plan during the remainder of the year, continued acceleration of domestic land activity and from an increase in deepwater Gulf of Mexico activity. We are also encouraged by the number of deepwater permits that have been issued and are hopeful that this permitting will soon result in increased drilling activity.?Geographic BreakdownFor the first quarter of 2011, Gulf of Mexico revenue was approximately $131.1 million, domestic land revenue was approximately $179.1 million, and international revenue was approximately $103.8 million.Subsea and Well Enhancement SegmentFirst quarter revenue for the Subsea and Well Enhancement Segment was $262.0 million, as compared with $232.8 million in the first quarter of 2010 and $306.5 million in the fourth quarter of 2010, which represents a 13% year-over-year increase and a 15% sequential decrease.Sequentially, domestic land revenue increased 3% due to a 10% increase in coiled tubing revenue, as well as increased demand for pumping services. These increases were partially offset by a decline in demand for pressure control services. Gulf of Mexico revenue decreased 22% sequentially due to seasonal issues, and the slow pace of permitting for drilling, intervention, and end-of-life projects. These factors led to reduced activity levels for pressure control, marine engineering projects, completion tools, and coiled tubing. Another factor impacting Gulf of Mexico revenue was the sale of a saturation diving system in the fourth quarter of 2010 that did not repeat. International revenue decreased 27% due primarily to lower demand for vessels and equipment used to support subsea inspection, repair and maintenance work.Drilling Products and Services Segment First quarter revenue for the Drilling Products and Services Segment was $128.3 million, as compared with $114.3 million in the first quarter of 2010 ? a 12% year-over-year improvement ? and $120.4 million in the fourth quarter of 2010, or 7% higher sequentially.Domestic land revenue increased 10% sequentially primarily due to increased rentals of premium drill pipe, accommodations, specialty tubulars and accessories, and stabilization equipment. Gulf of Mexico revenue increased 8% due to increased rentals of accommodations partially offset by a decrease in rentals of specialty tubulars and accessories. International revenue increased 1% primarily due to increased rentals of premium drill pipe and accessories.Marine SegmentMarine Segment revenue in the first quarter was $23.7 million, a 35% increase over the first quarter of 2010 and a 21% decrease from fourth quarter of 2010. Average fleet utilization in the first quarter of 2011 was 57% as compared with 47% in the first quarter of 2010 and 72% in the fourth quarter of 2010. The Company sold three liftboats from its 145-155 ft. class fleet during the first quarter.Liftboat Average Dayrates and Utilization by Class SizeThree Months Ended March 31, 2011($ actual)ClassLiftboatsAverageDayrateUtilization145'-155'6$6,14751.9%160'-175'77,62941.4%200'511,04562.7%230'-245'323,61964.8%250'228,57076.1%265'236,98583.3%Conference Call InformationThe Company will host a conference call at 10 a.m. Central Time on Thursday, April 28, 2011.  The call can be accessed from Superior?s website at, or by telephone at 480-629-9644.  For those who cannot listen to the live call, a telephonic replay will be available through Thursday, May 5, 2011 and may be accessed by calling 303-590-3030 and using the pass code 4432547.  An archive of the webcast will be available after the call for a period of 60 days on 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:David Dunlap, CEO; Robert Taylor, CFO; Greg Rosenstein, VP of Investor Relations, (504) 587-7374SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESConsolidated Statements of OperationsThree Months Ended March 31, 2011 and 2010(in thousands, except earnings per share amounts)(unaudited)Three Months EndedMarch 31,20112010Revenues$ 413,981$ 364,511Cost of services (exclusive of items shown separately below)233,845199,052Depreciation, depletion, amortization and accretion59,36351,048General and administrative expenses86,87970,724Gain on sale of businesses2,674-Income from operations36,56843,687Other income (expense):  Interest expense, net(12,372)(14,038)  Earnings from equity-method investments, net273,985Income before income taxes24,22333,634Income taxes8,72012,108Net income$   15,503$   21,526Basic earnings per share$       0.20$       0.27Diluted earnings per share$       0.19$       0.27Weighted average common shares used  in computing earnings per share:    Basic79,02178,534    Diluted80,75979,353SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSMARCH 31, 2011 AND DECEMBER 31, 2010(in thousands)3/31/201112/31/2010(Unaudited)(Audited)ASSETSCurrent assets:  Cash and cash equivalents$        71,082$       50,727  Accounts receivable, net375,228452,450  Prepaid expenses31,97425,828  Inventory and other current assets234,891235,047        Total current assets713,175764,052Property, plant and equipment, net 1,361,4121,313,150Goodwill589,967588,000Notes receivable70,13569,026Equity-method investments59,35059,322Intangible and other long-term assets, net121,208113,983        Total assets$   2,915,247$  2,907,533LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:  Accounts payable$      105,753$     110,276  Accrued expenses150,015162,044  Income taxes payable -2,475  Deferred income taxes23,15829,353  Current portion of decommissioning liabilities17,06316,929  Current maturities of long-term debt810184,810        Total current liabilities296,799505,887Deferred income taxes 228,107223,936Decommissioning liabilities102,321100,787Long-term debt, net851,822681,635Other long-term liabilities118,073114,737Total stockholders' equity1,318,1251,280,551        Total liabilities and stockholders' equity$   2,915,247$  2,907,533Superior Energy Services, Inc. and SubsidiariesSegment HighlightsThree months ended March 31, 2011, December 31, 2010 and March 31, 2010(Unaudited)(in thousands)Three months endedRevenueMarch 31, 2011December 31, 2010March 31, 2010Subsea and Well Enhancement$            262,045$                  306,496$        232,766Drilling Products and Services128,270120,366114,277Marine23,66630,03417,468Total Revenues$            413,981$                  456,896$        364,511Gross Profit (1)March 31, 2011December 31, 2010March 31, 2010Subsea and Well Enhancement$              91,377$                  112,610$          89,897Drilling Products and Services81,57373,83574,182Marine7,18613,0141,380Total Gross Profit$            180,136$                  199,459$        165,459Income (Loss) from OperationsMarch 31, 2011 (2)December 31, 2010 (3)March 31, 2010Subsea and Well Enhancement$              10,979$                    23,689$          23,697Drilling Products and Services21,70416,64123,947Marine3,885(25,191)(3,957)--Total Income from Operations$              36,568$                    15,139$          43,687(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) Includes a gain on sale of liftboats of $2.7 million recorded in the Marine Segment.(3) Includes management transition expenses of $12.2 million recorded in general and administrative expenses, reduction of value of assets of $32.0 million recorded in the Marine Segment and a gain on sale of liftboat of $1.1 million recorded in the Marine Segment.SOURCE Superior Energy Services, Inc.