USA: Superior Energy Services Releases First Quarter 2013 Results

Superior Energy Services, Inc. announced net income of $63.7 million, or $0.40 per diluted share, on revenue of $1,135.5 million for the first quarter of 2013.

These results compare with the first quarter of 2012 net income from continuing operations of $70.2 million, or $0.55 per diluted share, and net income of $53.9 million, or $0.42 per diluted share, on revenue of $966.8 million. The first quarter of 2012 included only a partial quarter from the legacy Complete Production Services businesses which are contained within the Onshore Completion and Workover and Production Services segments, making comparisons of the first quarter 2013 and 2012 for those segments less meaningful.

David Dunlap, President and CEO of the Company, commented, “Our first quarter results came in at the midpoint of our expectations. Lower general and administrative expense partially offset lower gross profit and higher depreciation. Our goal has been to both reduce and defer expenditures until we see indications of increased drilling and completion activity in the U.S. land markets. For example, we limited our capital additions to $130 million for the quarter, well under our originally planned $200 million.

“Modest increases in completions activity toward the end of the first quarter, coupled with continued improvement in our pressure pumping business yielded sequential increases in revenue and income from operations as a percentage of revenue (“operating margin”) in our Onshore Completion and Workover Services segment. These were offset in part by sequential declines in operating margin in our other three segments. The Subsea and Technical Solutions segment was adversely impacted by anticipated seasonality in the shallow water Gulf of Mexico and offshore Asia Pacific market areas, as well as low profit margins on certain decommissioning projects in the Gulf of Mexico.”

First Quarter 2013 Geographic Breakdown

U.S. land market revenue was approximately $732.8 million in the first quarter of 2013, as compared with $642.8 million in the first quarter of 2012 and $730.2 million in the fourth quarter of 2012. Gulf of Mexico revenue was approximately $208.0 million, as compared with $153.0 million in the first quarter of 2012 and $212.7 million in the fourth quarter of 2012. International revenue was approximately $194.7 million, as compared with $171.1 million in the first quarter of 2012 and $235.3 million in the fourth quarter of 2012.

Drilling Products and Services Segment

Drilling Products and Services segment revenue was $194.0 million, a 2% increase from first quarter 2012 revenue of $189.4 million and a 1% increase from fourth quarter 2012 revenue of $192.7 million.

The primary factor driving the higher sequential revenue in this segment was a 4% increase in international market revenue to $50.1 million due to increased rentals of accommodations in Europe. Gulf of Mexico market revenue increased 2% sequentially to $69.9 million due to increased specialty rentals, while U.S. land market revenue decreased 2% to $74.0 million primarily due to lower demand for premium drill pipe and accommodations, partially offset by an increase in demand for bottom hole assemblies.

Onshore Completion and Workover Services Segment

Onshore Completion and Workover Services segment revenue in the first quarter was $426.0 million, a 52% increase from first quarter 2012 revenue of $279.7 million, and a 2% increase from fourth quarter 2012 revenue of $417.7 million. Virtually all of the revenue in this segment is generated from U.S. land market areas.

On a sequential basis, revenue increases from pressure pumping and well service rigs were partially offset by a decline in fluid management revenue. The increase in pressure pumping revenue was due to additional utilization of contracted fleets, while well service rig revenue was higher as a result of increased utilization and pricing in certain basins. The decline in fluid management revenue was associated with reduced demand for transportation and storage assets.

Production Services Segment

Production Services segment revenue was $367.4 million, a 4% increase from first quarter 2012 revenue of $354.0 million and a 1% decline from fourth quarter 2012 revenue of $369.3 million.

U.S. land market revenue declined 3% sequentially to $216.7 million, primarily due to reduced demand for pressure control, remedial pumping and snubbing services, which was partially offset by an increase in wireline services. Revenue from coiled tubing services was unchanged in the U.S. land market. International market revenue increased 7% to $96.8 million due to increased production testing activity in Argentina, remedial pumping in Brazil and cementing activity from our recent acquisition in Colombia. Gulf of Mexico revenue declined 5% to $53.9 million primarily due to seasonal factors in the shallow water market area.

Subsea and Technical Solutions Segment

Subsea and Technical Solutions segment revenue was $148.1 million, a 3% increase from first quarter 2012 revenue of $143.8 million and a 25% decrease from fourth quarter 2012 revenue of $198.5 million.

Gulf of Mexico market revenue decreased 4% sequentially to $84.1 million due to seasonal factors resulting in lower activity levels for well control services and well and platform decommissioning services. International market revenue declined 50% to $47.8 million as a result of lower subsea construction and well control activity. U.S. land market revenue increased 8% sequentially to $16.2 million.

2013 Earnings Guidance Update

The Company maintains its prior earnings per share guidance range of $1.85 to $2.35.

Dunlap commented, “We maintained our prior guidance as the visibility regarding variables driving the range of potential outcomes – specifically the timing and intensity of utilization and rig activity in the U.S. land market areas – is still unknown. Our first quarter results came in as expected and we are certainly encouraged by what we experienced towards the latter stages of the quarter for certain completions-related services.”

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Press Release, April 26, 2013