Superior Energy Services, Inc. (the “Company”) today announced a
net loss from continuing operations for the first quarter of 2017
of $89.7 million, or $0.59 per share, on revenue of $400.9
million. This compares to a net loss from continuing
operations of $166.3 million, or $1.10 per share for the fourth
quarter of 2016, on revenue of $354.4 million and a net loss from
continuing operations of $84.5 million, or $0.56 per share for the
first quarter of 2016, on revenue of $413.1 million.
David Dunlap, President and CEO, commented, “The
first quarter of 2017 marked a period of massive cyclical
transition in US land markets. The land rig count growth of
approximately 25% during the first quarter resulted in rapidly
accelerating supply chain activation levels, particularly as it
relates to completion related services. This led to our U.S.
land revenue growing by 29% sequentially, driven by a 49% increase
in pressure pumping revenue.
“Entering the quarter, a number of costs related
to increasing activity levels continued to impede margin
growth. These factors included significant increases in sand
pricing, costs associated with reactivation of equipment and
increased hiring and training costs. As the quarter
progressed, we gained momentum in our conversations with customers
which focused on balancing these higher costs with increased demand
and activity levels.
“We exited the first quarter in a much more
favorable position as it relates to these factors than when the
quarter began. As rig count growth slows and equipment
reactivation costs are fully absorbed, transitional inefficiency
should be significantly diminished. These factors, in
addition to reasonable service price increases, should put us on a
path to acceptable margins.
“Outside of U.S. land markets, we are encouraged
by the non-rig related project work we have in the Gulf of Mexico
and we are favorably positioned to benefit from any increases in
drilling activity. Internationally, activity levels and
spending are lagging the U.S. land recovery. Our focus
internationally remains on expanding into new markets and carefully
monitoring investment levels in existing markets until they show
signs of recovery.
“Crude oil prices are higher than they were a
year ago at this time, our customers have committed to higher
levels of spending and we have been proactive in preparing for
market recovery. Despite the near-term noise associated with
market transition, everything we are observing from a fundamental
perspective is moving in the direction necessary to create a path
to increased growth and profitability.”
First Quarter 2017 Geographic
Breakdown
U.S. land revenue was $258.7 million in the
first quarter of 2017, a 29% increase as compared with revenue of
$200.3 million in the fourth quarter of 2016 and a 36% increase
compared to revenue of $190.1 million in the first quarter of
2016. Gulf of Mexico revenue was $74.9 million, a sequential
increase of 5% from fourth quarter 2016 revenue of $71.6 million,
and a 34% decrease from revenue of $113.4 million in the first
quarter of 2016. International revenue of $67.3 million
decreased 18% as compared with $82.5 million in the fourth quarter
of 2016 and decreased 39% as compared to revenue of $109.6 million
in the first quarter of
2016.
Drilling Products and Services
Segment
The Drilling Products and Services segment
revenue in the first quarter of 2017 was $68.4 million, a 1%
decrease from fourth quarter 2016 revenue of $69.3 million and a
23% decrease from first quarter 2016 revenue of $88.4 million.
U.S. land revenue increased 20% sequentially to
$21.2 million as land drilling activity increased throughout the
quarter. Gulf of Mexico revenue decreased 9% sequentially to
$23.4 million and international revenue decreased 8% sequentially
to $23.8 million.
Onshore Completion and Workover Services
Segment
The Onshore Completion and Workover Services
segment revenue in the first quarter of 2017 was $205.0 million, a
36% increase from fourth quarter 2016 revenue of $150.6 million and
a 55% increase from first quarter 2016 revenue of $132.5
million. Revenue increased across all product lines in this
segment and was led by a 49% increase in pressure pumping revenue
sequentially.
During the quarter, the Company spent
approximately $7.2 million related to reactivation of its pressure
pumping fleet and fleet start-up costs.
Production Services Segment
The Production Services segment revenue in the
first quarter of 2017 was $68.6 million, a 15% decrease from fourth
quarter 2016 revenue of $81.0 million and a 35% decrease from first
quarter 2016 revenue of $104.9 million.
U.S. land revenue increased 17% sequentially to
$23.4 million due to increased coiled tubing activity. Gulf
of Mexico revenue decreased 20% sequentially to $17.8 million as
hydraulic workover and snubbing, specialty rentals and electric
line activity was lower during the quarter. International
revenue decreased 29% sequentially to $27.4 million due to lower
levels of hydraulic workover and snubbing and well intervention
activity.
Technical Solutions Segment
The Technical Solutions segment revenue in the
first quarter of 2017 was $58.9 million, a 10% increase from fourth
quarter 2016 revenue of $53.5 million and a 33% decrease from first
quarter 2016 revenue of $87.3 million.
U.S. land revenue decreased 25% sequentially to
$9.1 million as completion tools and products orders decreased.
Gulf of Mexico revenue, primarily driven by increases in
completion tools and products orders, increased 43% sequentially to
$33.7 million. International revenue decreased 10% to
$16.1 million, largely due to lower completion tools and products
orders.
Conference Call Information
The Company will host a conference call at 9:00
a.m. Eastern Daylight Time on Wednesday, April 26, 2017. The
call can be accessed from the Company’s website at
www.superiorenergy.com or by telephone at 888-503-8172. For
those who cannot listen to the live call, a telephonic replay will
be available through May 10, 2017 and may be accessed by calling
844-512-2921 and using the pin number 9702800.
About Superior Energy
Services
Superior Energy Services, Inc. (NYSE:SPN) serves
major, national and independent oil and natural gas companies
around the world and offers products and services with respect to
the various phases of a well’s economic life cycle. For more
information, visit: www.superiorenergy.com.
The press release contains, and future oral or
written statements or press releases by us and our management may
contain, certain forward-looking statements within the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Generally, the words “expects,” “anticipates,”
“targets,” “goals,” “projects,” “intends,” “plans,” “believes,”
“seeks” and “estimates,” variations of such words and similar
expressions identify forward-looking statements, although not all
forward-looking statements contain these identifying words. All
statements other than statements of historical fact regarding the
Company’s financial position, financial performance, liquidity,
strategic alternatives, market outlook, future capital needs,
capital allocation plans, business strategies and other plans and
objectives of our management for future operations and activities
are forward-looking statements. These statements are based on
certain assumptions and analyses made by our management in light of
its experience and prevailing circumstances on the date such
statements are made. Such forward-looking statements, and the
assumptions on which they are based, are inherently speculative and
are subject to a number of risks and uncertainties that could cause
our actual results to differ materially from such statements. Such
uncertainties include, but are not limited to: the cyclicality and
volatility of the oil and gas industry, including changes in
prevailing levels of capital expenditures, exploration, production
and development activity; changes in prevailing oil and gas prices
or expectations about future prices; operating hazards, including
the significant possibility of accidents resulting in personal
injury or death, property damage or environmental damage for which
we may have limited or no insurance coverage or indemnification
rights; the effect of regulatory programs (including worker health
and safety laws) and environmental matters on our operations or
prospects, including the risk that future changes in the regulation
of hydraulic fracturing could reduce or eliminate demand for our
pressure pumping services, or that future changes in climate change
legislation could result in increased operating costs or reduced
commodity demand globally; counter-party risks associated with
reliance on key suppliers; risks associated with the uncertainty of
macroeconomic and business conditions worldwide; changes in
competitive and technological factors affecting our operations;
credit risk associated with our customer base; the potential
inability to retain key employees and skilled workers; challenges
with estimating our oil and natural gas reserves and potential
liabilities related to our oil and natural gas property; risk
associated with potential changes of Bureau of Ocean Energy
Management security and bonding requirements for offshore
platforms; risks inherent in acquiring businesses; risks associated
with cyber-attacks; risks associated with business growth during an
industry recovery outpacing the capabilities of our infrastructure
and workforce; political, legal, economic and other risks and
uncertainties associated with our international operations;
potential changes in tax laws, adverse positions taken by tax
authorities or tax audits impacting our operating results; risks
associated with our outstanding debt obligations and the potential
effect of limiting our future growth and operations; our continued
access to credit markets on favorable terms; and the impact that
unfavorable or unusual weather conditions could have on our
operations. These risks and other uncertainties related to our
business are described in our periodic reports filed with the
Securities and Exchange Commission. Although we believe that
the expectations reflected in such forward-looking statements are
reasonable, we can give no assurance that such expectations will
prove to be correct. Investors are cautioned that many of the
assumptions on which our forward-looking statements are based are
likely to change after such statements are made, including for
example the market prices of oil and gas and regulations affecting
oil and gas operations, which we cannot control or anticipate.
Further, we may make changes to our business strategies and plans
(including our capital spending and capital allocation plans) at
any time and without notice, based on any changes in the
above-listed factors, our assumptions or otherwise, any of which
could or will affect our results. For all these reasons, actual
events and results may differ materially from those anticipated,
estimated, projected or implied by us in our forward-looking
statements. We undertake no obligation to update any of our
forward-looking statements for any reason and, notwithstanding any
changes in our assumptions, changes in our business plans, our
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.
|
|
SUPERIOR ENERGY SERVICES, INC. AND
SUBSIDIARIES |
Consolidated Statements of
Operations |
Three Months Ended March 31, 2017, 2016 and
December 31, 2016 |
(in thousands, except earnings per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
Three months ended, |
|
|
March 31, 2017 |
|
December 31, 2016 |
|
March 31, 2016 |
|
|
|
|
|
|
|
Revenues |
|
$ |
400,936 |
|
|
$ |
354,418 |
|
|
$ |
413,133 |
|
|
|
|
|
|
|
|
Cost of services and
rentals (exclusive of items shown separately below) |
|
|
321,986 |
|
|
|
321,132 |
|
|
|
285,339 |
|
Depreciation,
depletion, amortization and accretion |
|
|
114,281 |
|
|
|
117,954 |
|
|
|
136,672 |
|
General and
administrative expenses |
|
|
75,493 |
|
|
|
78,122 |
|
|
|
103,155 |
|
Reduction in value of
assets |
|
|
- |
|
|
|
35,961 |
|
|
|
- |
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(110,824 |
) |
|
|
(198,751 |
) |
|
|
(112,033 |
) |
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
Interest
expense, net |
|
|
(24,250 |
) |
|
|
(24,429 |
) |
|
|
(23,806 |
) |
Other
income |
|
|
649 |
|
|
|
519 |
|
|
|
7,755 |
|
|
|
|
|
|
|
|
Loss from continuing
operations before income taxes |
|
|
(134,425 |
) |
|
|
(222,661 |
) |
|
|
(128,084 |
) |
|
|
|
|
|
|
|
Income taxes |
|
|
(44,764 |
) |
|
|
(56,402 |
) |
|
|
(43,548 |
) |
|
|
|
|
|
|
|
Net loss from
continuing operations |
|
|
(89,661 |
) |
|
|
(166,259 |
) |
|
|
(84,536 |
) |
|
|
|
|
|
|
|
Loss from discontinued
operations, net of income tax |
|
|
(1,998 |
) |
|
|
(44,982 |
) |
|
|
(2,267 |
) |
|
|
|
|
|
|
|
Net loss |
|
$ |
(91,659 |
) |
|
$ |
(211,241 |
) |
|
$ |
(86,803 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share
information: |
|
|
|
|
|
|
Basic and Diluted |
|
|
|
|
|
|
Net loss
from continuing operations |
|
$ |
(0.59 |
) |
|
$ |
(1.10 |
) |
|
$ |
(0.56 |
) |
Loss from
discontinued operations |
|
|
(0.01 |
) |
|
|
(0.30 |
) |
|
|
(0.01 |
) |
Net
loss |
|
$ |
(0.60 |
) |
|
$ |
(1.40 |
) |
|
$ |
(0.57 |
) |
|
|
|
|
|
|
|
Weighted average common
shares used |
|
|
|
|
|
|
in computing
earnings per share: |
|
|
|
|
|
|
Basic and
diluted |
|
|
152,701 |
|
|
|
151,741 |
|
|
|
151,324 |
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND
SUBSIDIARIES |
|
CONSOLIDATED BALANCE SHEETS |
|
March 31, 2017 and December 31,
2016 |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
3/31/2017 |
|
12/31/2016 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
151,766 |
|
$ |
187,591 |
|
Accounts
receivable, net |
|
|
329,770 |
|
|
297,164 |
|
Income taxes
receivable |
|
|
121,309 |
|
|
101,578 |
|
Prepaid
expenses |
|
|
42,976 |
|
|
37,288 |
|
Inventory and
other current assets |
|
|
139,631 |
|
|
130,772 |
|
Assets held for
sale |
|
|
27,411 |
|
|
27,158 |
|
|
|
|
|
|
|
Total
current assets |
|
|
812,863 |
|
|
781,551 |
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
|
1,513,282 |
|
|
1,605,365 |
|
Goodwill |
|
|
804,436 |
|
|
803,917 |
|
Notes receivable |
|
|
57,423 |
|
|
56,650 |
|
Intangible and other
long-term assets, net |
|
|
190,707 |
|
|
222,772 |
|
|
|
|
|
|
|
Total
assets |
|
$ |
3,378,711 |
|
$ |
3,470,255 |
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
102,221 |
|
$ |
94,831 |
|
Accrued
expenses |
|
|
236,978 |
|
|
218,192 |
|
Income taxes
payable |
|
|
- |
|
|
694 |
|
Current portion
of decommissioning liabilities |
|
|
22,188 |
|
|
22,164 |
|
Liabilities held
for sale |
|
|
7,401 |
|
|
8,653 |
|
|
|
|
|
|
|
Total
current liabilities |
|
|
368,788 |
|
|
344,534 |
|
|
|
|
|
|
|
Deferred income
taxes |
|
|
213,855 |
|
|
243,611 |
|
Decommissioning
liabilities |
|
|
103,186 |
|
|
101,513 |
|
Long-term debt,
net |
|
|
1,286,210 |
|
|
1,284,600 |
|
Other long-term
liabilities |
|
|
193,974 |
|
|
192,077 |
|
|
|
|
|
|
|
Total stockholders'
equity |
|
|
1,212,698 |
|
|
1,303,920 |
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
3,378,711 |
|
$ |
3,470,255 |
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND
SUBSIDIARIES |
|
REVENUE BY GEOGRAPHIC REGION BY
SEGMENT |
|
THREE MONTHS ENDED MARCH 31, 2017, DECEMBER
31, 2016 AND MARCH 31, 2016 |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended, |
|
|
|
March 31, 2017 |
|
December 31, 2016 |
|
March 31, 2016 |
|
U.S.
land |
|
|
|
|
|
|
|
Drilling
Products and Services |
|
$ |
21,162 |
|
$ |
17,703 |
|
$ |
19,745 |
|
Onshore
Completion and Workover Services |
|
|
204,979 |
|
|
150,578 |
|
|
132,472 |
|
Production
Services |
|
|
23,435 |
|
|
19,984 |
|
|
27,721 |
|
Technical
Solutions |
|
|
9,085 |
|
|
12,060 |
|
|
10,223 |
|
Total U.S. land |
|
$ |
258,661 |
|
$ |
200,325 |
|
$ |
190,161 |
|
|
|
|
|
|
|
|
|
Gulf of
Mexico |
|
|
|
|
|
|
|
Drilling
Products and Services |
|
|
23,485 |
|
|
25,772 |
|
|
37,532 |
|
Onshore
Completion and Workover Services |
|
|
- |
|
|
- |
|
|
- |
|
Production
Services |
|
|
17,746 |
|
|
22,256 |
|
|
24,417 |
|
Technical
Solutions |
|
|
33,717 |
|
|
23,614 |
|
|
51,466 |
|
Total Gulf of
Mexico |
|
$ |
74,948 |
|
$ |
71,642 |
|
$ |
113,415 |
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
Drilling
Products and Services |
|
$ |
23,784 |
|
$ |
25,855 |
|
$ |
31,145 |
|
Onshore
Completion and Workover Services |
|
|
- |
|
|
- |
|
|
- |
|
Production
Services |
|
|
27,424 |
|
|
38,734 |
|
|
52,756 |
|
Technical
Solutions |
|
|
16,119 |
|
|
17,862 |
|
|
25,656 |
|
Total
International |
|
$ |
67,327 |
|
$ |
82,451 |
|
$ |
109,557 |
|
|
|
|
|
|
|
|
|
Total Revenues |
|
$ |
400,936 |
|
$ |
354,418 |
|
$ |
413,133 |
|
|
|
|
|
|
|
|
|
SUPERIOR ENERGY SERVICES, INC. AND
SUBSIDIARIES |
|
SEGMENT HIGHLIGHTS |
|
THREE MONTHS ENDED MARCH 31, 2017, DECEMBER
31, 2016 AND MARCH 31, 2016 |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended, |
|
Revenues |
|
March 31, 2017 |
|
December 31, 2016 |
|
March 31, 2016 |
|
Drilling
Products and Services |
|
$ |
68,431 |
|
|
$ |
69,330 |
|
|
$ |
88,422 |
|
|
Onshore
Completion and Workover Services |
|
|
204,979 |
|
|
|
150,578 |
|
|
|
132,472 |
|
|
Production Services |
|
|
68,605 |
|
|
|
80,974 |
|
|
|
104,894 |
|
|
Technical
Solutions |
|
|
58,921 |
|
|
|
53,536 |
|
|
|
87,345 |
|
|
Total Revenues |
|
$ |
400,936 |
|
|
$ |
354,418 |
|
|
$ |
413,133 |
|
|
|
|
|
|
|
|
|
|
Loss from
Operations |
|
|
|
|
|
|
|
Drilling
Products and Services |
|
$ |
(13,167 |
) |
|
$ |
(29,864 |
) |
|
$ |
(17,722 |
) |
|
Onshore
Completion and Workover Services |
|
|
(63,241 |
) |
|
|
(77,681 |
) |
|
|
(70,535 |
) |
|
Production Services |
|
|
(29,212 |
) |
|
|
(31,492 |
) |
|
|
(23,717 |
) |
|
Technical
Solutions |
|
|
(5,204 |
) |
|
|
(59,714 |
) |
|
|
(59 |
) |
|
Total Loss from
Operations |
|
$ |
(110,824 |
) |
|
$ |
(198,751 |
) |
|
$ |
(112,033 |
) |
|
|
|
|
|
|
|
|
|
Adjusted Income
(Loss) from Operations (1) |
|
|
|
|
|
|
|
Drilling
Products and Services |
|
$ |
(13,167 |
) |
|
$ |
(15,935 |
) |
|
$ |
(16,244 |
) |
|
Onshore
Completion and Workover Services |
|
|
(63,241 |
) |
|
|
(74,867 |
) |
|
|
(65,691 |
) |
|
Production Services |
|
|
(29,212 |
) |
|
|
(20,412 |
) |
|
|
(16,606 |
) |
|
Technical
Solutions |
|
|
(5,204 |
) |
|
|
(14,387 |
) |
|
|
1,808 |
|
|
Total Adjusted Income
(Loss) from Operations |
|
$ |
(110,824 |
) |
|
$ |
(125,601 |
) |
|
$ |
(96,733 |
) |
|
|
|
|
|
|
|
|
|
(1)
Adjusted income (loss) from operations excludes the impact of
reduction in value of assets, inventory write-down and
restructuring costs for the three months December 31, 2016 and
March 31, 2016. There were no adjustments for the three
months ended March 31, 2017. |
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
The following tables reconcile consolidated net
loss from continuing operations and income (loss) from operations
by segment, which are the directly comparable financial results
determined in accordance with Generally Accepted Accounting
Principles (GAAP), to consolidated adjusted loss from continuing
operations and adjusted income (loss) from operations by segment
(non-GAAP financial measures). Consolidated adjusted loss
from continuing operations and income (loss) from operations by
segment exclude the impact of reduction in value of assets and
restructuring costs. These financial measures are provided to
enhance investors’ overall understanding of the Company’s current
financial performance.
|
Reconciliation of As Reported Income (Loss)
from Operations to Adjusted Income (Loss) From
Operations |
Three months ended December 31, 2016 and March
31, 2016 |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended, December 31, 2016 |
|
|
DrillingProductsandServices |
|
OnshoreCompletionand WorkoverServices |
|
ProductionServices |
|
TechnicalSolutions |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
Reported loss from
operations |
|
$ |
(29,864 |
) |
|
$ |
(77,681 |
) |
|
$ |
(31,492 |
) |
|
$ |
(59,714 |
) |
|
$ |
(198,751 |
) |
|
|
|
|
|
|
|
|
|
|
|
Reduction
in value of assets |
|
|
1,244 |
|
|
|
2,094 |
|
|
|
7,023 |
|
|
|
25,600 |
|
|
|
35,961 |
|
Inventory
write-down |
|
|
- |
|
|
|
- |
|
|
|
1,664 |
|
|
|
19,122 |
|
|
|
20,786 |
|
Restructuring costs |
|
|
12,685 |
|
|
|
720 |
|
|
|
2,393 |
|
|
|
605 |
|
|
|
16,403 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted loss from
operations |
|
$ |
(15,935 |
) |
|
$ |
(74,867 |
) |
|
$ |
(20,412 |
) |
|
$ |
(14,387 |
) |
|
$ |
(125,601 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended, March 31, 2016 |
|
|
DrillingProductsandServices |
|
OnshoreCompletionand WorkoverServices |
|
ProductionServices |
|
TechnicalSolutions |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
Reported loss from
operations |
|
$ |
(17,722 |
) |
|
$ |
(70,535 |
) |
|
$ |
(23,717 |
) |
|
$ |
(59 |
) |
|
$ |
(112,033 |
) |
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs |
|
|
1,478 |
|
|
|
4,844 |
|
|
|
7,111 |
|
|
|
1,867 |
|
|
|
15,300 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income (loss)
from operations |
|
$ |
(16,244 |
) |
|
$ |
(65,691 |
) |
|
$ |
(16,606 |
) |
|
$ |
1,808 |
|
|
$ |
(96,733 |
) |
|
|
|
|
|
|
|
|
|
|
|
FOR FURTHER INFORMATION CONTACT:
Paul Vincent, VP of Investor Relations, (713) 654-2200
Superior Energy Services (NYSE:SPN)
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