Superior Energy Services, Inc. Reports Second Quarter 2009

Superior Energy Services, Inc. Reports Second Quarter 2009 Results  Core Earnings of $0.35 Per Diluted Share Before Special Charges    PR Newswire    NEW ORLEANS, July 28  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 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                                                           =======  =======  SOURCE Superior Energy Services, Inc.  Website: http://www.superiorenergy.com 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  
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