Superior Energy Services Q1 Profit Declines

Superior Energy Services, Inc. reported net income from continuing operations of $42.6 million, or $0.27 per diluted share, and net income of $36.7 million, or $0.23 per diluted share, on revenue of $1,061.4 million for the first quarter of 2014.

These results compare with the first quarter of 2013 net income from continuing operations of $80.6 million, or $0.51 per diluted share, and net income of $63.7 million, or $0.40 per diluted share, on revenue of $1,086.9 million.

During 2014, the Company has repurchased and retired approximately 2.8 million shares of its common stock for a total purchase price of $82.3 million (average price of $29.12) pursuant to the Company’s $400 million share repurchase program.

David Dunlap, President and CEO of the Company, commented, “We anticipated that extreme winter weather in the U.S. would create challenges during the first quarter. As weather improved during the second half of the quarter, we witnessed activity increases, driven by an increase in horizontal drilling. In addition, U.S. margins were positively impacted by the cost improvement initiatives that we enacted during 2013. Our U.S. land revenue was 7% lower than the same period a year ago and 1% higher than the fourth quarter of 2013. Gulf of Mexico revenue was 13% higher as compared with the first quarter of 2013, but 3% lower than fourth quarter of 2013 primarily due to seasonal factors. International revenue was 1% higher than the first quarter of 2013, but 8% lower than the fourth quarter of 2013 primarily due to lower revenue in drilling products and services.

“Overall, the quarter finished up strong and should serve as a foundation to achieve further growth as the year progresses, particularly in the U.S. land markets, driven by higher utilization across various products and services.

“We continue to focus on operational efficiency and returning cash to shareholders. We have repurchased about $93 million under our $400 million share repurchase program since inception in October 2013 and issued our first quarterly dividend of$0.08 per share in February 2014.”

U.S. land market revenue was $681.3 million in the first quarter of 2014, as compared with $732.8 million in the first quarter of 2013 and $673.1 million in the fourth quarter of 2013. Gulf of Mexico market revenue was $211.0 million, as compared with $186.8 million in the first quarter of 2013 and $218.0 million in the fourth quarter of 2013. International market revenue was $169.1 million, as compared with $167.3 million in the first quarter of 2013 and $184.6 million in the fourth quarter of 2013.

Drilling Products and Services segment revenue was $220.2 million, a 14% increase from first quarter 2013 revenue of $194.0 million and a 2% decrease from fourth quarter 2013 revenue of $223.6 million.

On a sequential basis, Gulf of Mexico market revenue increased 11% to $101.4 million, which was offset by a 21% decline in international market revenue to $51.4 million. U.S. land market revenue was unchanged at $67.4 million. Gulf of Mexico market revenue was higher due to increased demand for premium drill pipe and accommodations. The primary drivers of the lower international revenue were lower demand for premium drill pipe in the North Sea and accommodations in Latin America.

Onshore Completion and Workover Services segment revenue in the first quarter was $389.9 million, an 8% decrease from first quarter 2013 revenue of $426.0 million, and a 4% increase from fourth quarter 2013 revenue of $374.5 million. Virtually all of the revenue in this segment is generated from U.S. land market areas.

On a sequential basis, revenue increased in fluid management services, which more than offset small declines in revenue from pressure pumping and well service rigs. The increase in fluid management revenue was primarily associated with increased demand for heating-related activity.

Production Services segment revenue was $321.2 million, a 13% decrease from first quarter 2013 revenue of $367.4 million and an 8% decrease from fourth quarter 2013 revenue of $349.4 million.

U.S. land market revenue declined 6% sequentially to $202.3 million, primarily due to reduced demand for coiled tubing, remedial pumping and snubbing services. International market revenue decreased 3% to $84.3 million primarily due to a decline in hydraulic workover and snubbing activity, partially offset by an increase in remedial pumping in Latin America. Gulf of Mexico revenue declined 28% to $34.6 million primarily due to seasonal factors in the shallow water market area, leading to lower activity for coiled tubing, wireline and hydraulic workover and snubbing services.

Technical Solutions segment revenue, which includes revenue from continuing operations only, was $130.1 million, a 31% increase from first quarter 2013 revenue of $99.5 million and a 1% increase from fourth quarter 2013 revenue of $128.2 million.

Gulf of Mexico market revenue decreased 5% sequentially to $74.9 million due to a reduction in well control work following the completion of large projects in the prior quarter. International market revenue increased 3% to $33.4 million as a result of an increase in well control work. U.S. land market revenue increased 28% sequentially to $21.8 million primarily due to an increase in demand for completion tools and products.