Superior Energy Services Announces Second Quarter 2020 Results
HOUSTON, Aug. 10, 2020 /PRNewswire/ -- Superior Energy Services, Inc. (NYSE: SPN) (the "Company") today announced a net loss from continuing operations for the second quarter of 2020 of $58.9 million, or $3.97 per share, on revenue of $183.9 million. This compares to a net loss from continuing operations of $32.3 million, or $2.18 per share, for the first quarter of 2020, on revenue of $321.5 million and a net loss from continuing operations of $18.4 million, or $1.18 per share, for the second quarter of 2019, on revenue of $367.4 million.
The Company reported $9.1 million in severance and other related costs, and $8.6 million of merger-related transaction costs. The resulting adjusted net loss from continuing operations for the second quarter of 2020 was $45.3 million, or $3.06 per share.
David Dunlap, President and CEO, commented, "We expected a significant reduction in oil field activity resulting from the COVID-19 related economic slow-down during the second quarter, and our sequential revenue decline of 43% was in line with those expectations.
"As we manage these troubling and uncertain times, we have prioritized our balance sheet and cost structure. Measures taken during the quarter include lower levels of spending, structural cost reductions, and disciplined operations, resulting in a 10% sequential increase of our cash balance, which grew to $278 million. Our cash balance at quarter-end does not reflect a tax refund of approximately $30 million, which was received in July.
"Despite an uncertain forward outlook, we are observing signals that oil field activity, particularly completion related operations, will increase during the second half of the year as broader economic activity improves. We expect the impact of the COVID-19 pandemic to persist well into the future, and we will continue to be agile in our approach as the landscape evolves."
Second Quarter 2020 Geographic Breakdown
U.S. land revenue was $55.0 million in the second quarter of 2020, a decrease of 59% as compared with revenue of $134.7 million in the first quarter of 2020, and a 72% decrease compared to revenue of $194.1 million in the second quarter of 2019. U.S. offshore revenue decreased 27% to $58.6 million as compared with revenue of $80.1 million in the first quarter of 2020, and decreased 29% from revenue of $83.0 million in the second quarter of 2019. International revenue of $70.3 million decreased by 34% as compared with revenue of $106.8 million in the first quarter of 2020 and decreased 22% as compared to revenue of $90.4 million in the second quarter of 2019.
Drilling Products and Services Segment
The Drilling Products and Services segment revenue in the second quarter of 2020 was $67.4 million, a 35% decrease from first quarter 2020 revenue of $104.0 million and a 33% decrease from second quarter 2019 revenue of $100.7 million.
U.S. land revenue decreased 47% from first quarter 2020 to $19.5 million, U.S. offshore revenue decreased 23% sequentially to $28.6 million and international revenue decreased by 36% to $19.2 million.
Onshore Completion and Workover Services Segment
The Onshore Completion and Workover Services segment revenue in the second quarter of 2020 was $21.2 million, a 65% decrease from first quarter 2020 revenue of $61.2 million, and a 78% decrease from second quarter 2019 revenue of $94.6 million.
Production Services Segment
The Production Services segment revenue decreased in the second quarter of 2020 by 46% to $54.5 million from $101.5 million in the first quarter of 2020 and decreased by 47% from second quarter 2019 revenue of $103.0 million.
U.S. land revenue was $11.1 million, a 64% decrease from first quarter 2020 revenue of $30.7 million. U.S. offshore revenue decreased 44% sequentially to $6.4 million and international revenue decreased by 38% from the first quarter 2020 to $37.0 million.
Technical Solutions Segment
The Technical Solutions segment revenue in the second quarter of 2020 was $40.8 million, a 25% decrease from first quarter 2020 revenue of $54.8 million and a 41% decrease from second quarter 2019 revenue of $69.1 million.
U.S. land revenue decreased 48% sequentially to $3.2 million. U.S. offshore revenue decreased 25% sequentially to $23.6 million and international revenue decreased 18% to $14.1 million.
About Superior Energy Services
Superior Energy Services (NYSE: SPN) serves the drilling, completion and production-related needs of oil and gas companies worldwide through a diversified portfolio of specialized oilfield services and equipment that are used throughout the economic life cycle of oil and gas wells. For more information, visit: www.superiorenergy.com.
Forward-Looking Statements
This press release contains, and future oral or written statements or press releases by the Company and its 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 the Company's 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 the Company's actual results to differ materially from such statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements.
While the Company believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: the conditions in the oil and gas industry; the effects of public health threats, pandemics and epidemics, and the adverse impact thereof on our business, financial condition, results of operations and liquidity, including, but not limited to, our growth, operating costs, supply chain, labor availability, logistical capabilities, customer demand and industry demand generally, margins, utilization, cash position, taxes, the price of our securities, and our ability to access capital markets, including the macroeconomic effects from the continuing COVID-19 pandemic; the ability of the members of the Organization of the Petroleum Exporting Countries and its broader partners ("OPEC+") to agree on and to maintain crude oil price and production controls; our outstanding debt obligations and the potential effect of limiting our ability to fund future growth; inability to generate enough cash flows to meet our debt obligations; necessary capital financing may not be available at economic rates or at all; volatility of our common stock; operating hazards, including the significant possibility of accidents resulting in personal injury or death, or property damage for which we may have limited or no insurance coverage or indemnification rights; possibly not being fully indemnified against losses incurred due to catastrophic events; claims, litigation or other proceedings that require cash payments or could impair the Company's financial condition; credit risk associated with the customer base; the effect of regulatory programs and environmental matters on our operations or prospects; the impact of unfavorable or unusual weather conditions could have on our operations; the potential inability to retain key employees and skilled workers; political, legal, economic and other risks and uncertainties associated with the Company's international operations; laws, regulations or practices in foreign countries could materially restrict operations or expose us to additional risks; potential changes in tax laws, adverse positions taken by tax authorities or tax audits impacting operating results; changes in competitive and technological factors affecting operations; risks associated with the uncertainty of macroeconomic and business conditions worldwide; potential impacts of cyber-attacks on operations; counterparty risks associated with reliance on key suppliers; challenges with estimating the Company's potential liabilities related to its oil and natural gas property; risks associated with potential changes of Bureau of Ocean Energy Management security and bonding requirements for the Company's offshore platforms; the amount of the costs, fees, expenses and charges incurred as a result of terminating the Combination; the potential impact on our business and financial results due to the failure to close the Combination.
These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in the Company's Form 10-K, the Company's Form 10-Q for the quarter ended March 31, 2020, and those set forth from time to time in the Company's other periodic filings with the Securities and Exchange Commission, which are available at www.superiorenergy.com. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES |
||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||
(in thousands, except earnings per share amounts) |
||||||||||
(unaudited) |
||||||||||
Three Months Ended |
Six Months Ended |
|||||||||
June 30, |
March 31, |
June 30, |
||||||||
2020 |
2019 |
2020 |
2020 |
2019 |
||||||
Revenues |
$ 183,853 |
$ 367,438 |
$ 321,497 |
$ 505,350 |
$ 732,712 |
|||||
Cost of revenues (exclusive of depreciation, depletion, amortization and accretion) |
128,803 |
229,532 |
211,686 |
340,489 |
469,585 |
|||||
Depreciation, depletion, amortization and accretion |
36,786 |
51,271 |
41,355 |
78,141 |
107,614 |
|||||
General and administrative expenses |
59,707 |
71,038 |
65,157 |
124,864 |
142,150 |
|||||
Reduction in value of assets |
- |
7,556 |
16,522 |
16,522 |
7,556 |
|||||
Income/(Loss) from operations |
(41,443) |
8,041 |
(13,223) |
(54,666) |
5,807 |
|||||
Other income (expense): |
||||||||||
Interest expense, net |
(24,749) |
(24,650) |
(25,134) |
(49,883) |
(49,771) |
|||||
Other income (expense) |
821 |
490 |
(4,232) |
(3,411) |
(1,122) |
|||||
Loss from continuing operations before income taxes |
(65,371) |
(16,119) |
(42,589) |
(107,960) |
(45,086) |
|||||
Income taxes |
(6,508) |
2,322 |
(10,254) |
(16,762) |
5,999 |
|||||
Net loss from continuing operations |
(58,863) |
(18,441) |
(32,335) |
(91,198) |
(51,085) |
|||||
Loss from discontinued operations, net of income tax |
(6,243) |
(52,609) |
(47,129) |
(53,372) |
(67,670) |
|||||
Net loss |
$ (65,106) |
$ (71,050) |
$ (79,464) |
$ (144,570) |
$ (118,755) |
|||||
Basic and diluted loss per share |
||||||||||
Net loss from continuing operations |
$ (3.97) |
$ (1.18) |
$ (2.18) |
$ (6.18) |
$ (3.29) |
|||||
Income from discontinued operations |
(0.42) |
(3.37) |
(3.18) |
(3.61) |
(4.35) |
|||||
Basic and diluted loss per share |
$ (4.39) |
$ (4.55) |
$ (5.36) |
$ (9.79) |
$ (7.64) |
|||||
Weighted average shares outstanding |
14,826 |
15,600 |
14,809 |
14,767 |
15,538 |
|||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES |
||||
CONSOLIDATED BALANCE SHEETS |
||||
(in thousands) |
||||
(unaudited) |
||||
6/30/2020 |
12/31/2019 |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 278,409 |
$ 272,624 |
||
Accounts receivable, net |
219,410 |
332,047 |
||
Income taxes receivable |
32,648 |
740 |
||
Prepaid expenses |
42,893 |
49,132 |
||
Inventory and other current assets |
118,309 |
117,629 |
||
Assets held for sale |
116,163 |
216,197 |
||
Total current assets |
807,832 |
988,369 |
||
Property, plant and equipment, net |
599,114 |
664,949 |
||
Operating lease right-of-use assets |
71,376 |
80,906 |
||
Goodwill |
136,006 |
137,695 |
||
Notes receivable |
70,350 |
68,092 |
||
Restricted cash |
2,774 |
2,764 |
||
Intangible and other long-term assets, net |
46,988 |
50,455 |
||
Total assets |
$ 1,734,440 |
$ 1,993,230 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
||||
Current liabilities: |
||||
Accounts payable |
$ 64,604 |
$ 92,966 |
||
Accrued expenses |
147,304 |
182,934 |
||
Current portion of decommissioning liabilities |
3,706 |
3,649 |
||
Liabilities held for sale |
7,252 |
44,938 |
||
Total current liabilities |
222,866 |
324,487 |
||
Long-term debt, net |
1,288,663 |
1,286,629 |
||
Decommissioning liabilities |
135,677 |
132,632 |
||
Operating lease liabilities |
54,087 |
62,354 |
||
Deferred income taxes |
2,531 |
3,247 |
||
Other long-term liabilities |
125,743 |
134,308 |
||
Total stockholders' equity (deficit) |
(95,127) |
49,573 |
||
Total liabilities and stockholders' equity (deficit) |
$ 1,734,440 |
$ 1,993,230 |
||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES |
||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
SIX MONTHS ENDED JUNE 30, 2020 AND 2019 |
||||
(in thousands) |
||||
(unaudited) |
||||
2020 |
2019 |
|||
Cash flows from operating activities: |
||||
Net loss |
$ (144,570) |
$ (118,755) |
||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||
Depreciation, depletion, amortization and accretion |
78,141 |
157,657 |
||
Reduction in value of assets |
16,522 |
31,381 |
||
Reduction in value of assets held for sale |
49,361 |
- |
||
Other noncash items |
14,614 |
17,788 |
||
Changes in working capital and other |
(14,641) |
(19,241) |
||
Net cash provided by (used in) operating activities |
(573) |
68,830 |
||
Cash flows from investing activities: |
||||
Payments for capital expenditures |
(30,518) |
(79,136) |
||
Proceeds from sales of assets |
39,445 |
84,557 |
||
Net cash provided by investing activities |
8,927 |
5,421 |
||
Cash flows from financing activities: |
||||
Other |
(208) |
(1,026) |
||
Net cash used in financing activities |
(208) |
(1,026) |
||
Effect of exchange rate changes in cash |
(2,351) |
(102) |
||
Net change in cash, cash equivalents, and restricted cash |
5,795 |
73,123 |
||
Cash, cash equivalents and restricted cash at beginning of period |
275,388 |
163,748 |
||
Cash, cash equivalents, and restricted cash at end of period |
$ 281,183 |
$ 236,871 |
||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES |
||||||||
REVENUE BY GEOGRAPHIC REGION BY SEGMENT |
||||||||
(in thousands) |
||||||||
(unaudited) |
||||||||
Three months ended, |
||||||||
June 30, 2020 |
March 31, 2020 |
June 30, 2019 |
||||||
U.S. land |
||||||||
Drilling Products and Services |
$ 19,538 |
$ 36,656 |
$ 47,267 |
|||||
Onshore Completion and Workover Services |
21,180 |
61,218 |
94,618 |
|||||
Production Services |
11,097 |
30,667 |
38,808 |
|||||
Technical Solutions |
3,166 |
6,137 |
13,385 |
|||||
Total U.S. land |
$ 54,981 |
$ 134,678 |
$ 194,078 |
|||||
U.S. offshore |
||||||||
Drilling Products and Services |
$ 28,587 |
$ 37,224 |
$ 28,085 |
|||||
Onshore Completion and Workover Services |
- |
- |
- |
|||||
Production Services |
6,363 |
11,299 |
21,410 |
|||||
Technical Solutions |
23,611 |
31,533 |
33,492 |
|||||
Total U.S. offshore |
$ 58,561 |
$ 80,056 |
$ 82,987 |
|||||
International |
||||||||
Drilling Products and Services |
$ 19,225 |
$ 30,113 |
$ 25,330 |
|||||
Onshore Completion and Workover Services |
- |
- |
- |
|||||
Production Services |
37,033 |
59,538 |
42,784 |
|||||
Technical Solutions |
14,053 |
17,112 |
22,259 |
|||||
Total International |
$ 70,311 |
$ 106,763 |
$ 90,373 |
|||||
Total Revenues |
$ 183,853 |
$ 321,497 |
$ 367,438 |
|||||
SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES |
|||||||
SEGMENT HIGHLIGHTS |
|||||||
(in thousands) |
|||||||
(unaudited) |
|||||||
Three months ended, |
|||||||
Revenues |
June 30, 2020 |
(1) |
March 31, 2020 |
(1) |
June 30, 2019 |
(1) |
|
Drilling Products and Services |
$ 67,350 |
$ 103,993 |
$ 100,682 |
||||
Onshore Completion and Workover Services |
21,180 |
61,218 |
94,618 |
||||
Production Services |
54,493 |
101,504 |
103,002 |
||||
Technical Solutions |
40,830 |
54,782 |
69,136 |
||||
Total Revenues |
$ 183,853 |
$ 321,497 |
$ 367,438 |
||||
Income (Loss) from Operations |
|||||||
Drilling Products and Services |
$ 18,804 |
$ 36,867 |
$ 26,087 |
||||
Onshore Completion and Workover Services |
(10,321) |
(1,870) |
3,031 |
||||
Production Services |
(7,350) |
756 |
3,442 |
||||
Technical Solutions |
(4,709) |
(2,292) |
8,473 |
||||
Corporate and other |
(20,206) |
(19,803) |
(24,174) |
||||
Total Income from Operations |
$ (23,782) |
$ 13,658 |
$ 16,859 |
||||
EBITDA |
|||||||
Drilling Products and Services |
$ 34,632 |
$ 54,657 |
$ 47,577 |
||||
Onshore Completion and Workover Services |
(4,807) |
4,443 |
12,471 |
||||
Production Services |
2,832 |
11,594 |
16,614 |
||||
Technical Solutions |
(374) |
3,053 |
14,452 |
||||
Corporate and other |
(19,279) |
(18,734) |
(22,984) |
||||
Total EBITDA |
$ 13,004 |
$ 55,013 |
$ 68,130 |
||||
(1) Income (loss) from operations and EBITDA exclude the impact of special items for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019. For Non-GAAP reconciliations, refer to Table 2 below. |
|||||||
Reconciliation of Consolidated Adjusted Net Loss From Continuing Operations |
||||||||||||
(in thousands) |
||||||||||||
(unaudited) |
||||||||||||
Table 1 |
||||||||||||
Three months ended, |
||||||||||||
June 30, 2020 |
March 31, 2020 |
June 30, 2019 |
||||||||||
Consolidated |
Per Share |
Consolidated |
Per Share |
Consolidated |
Per Share |
|||||||
Reported net loss from continuing operations |
$ (58,863) |
$ (3.97) |
$ (32,335) |
$ (2.18) |
$ (18,441) |
$ (1.18) |
||||||
Reduction in value of assets |
- |
- |
16,522 |
1.12 |
7,556 |
0.48 |
||||||
Severance and other related costs |
9,104 |
0.61 |
6,020 |
0.41 |
1,262 |
0.08 |
||||||
Merger-related transaction costs |
8,557 |
0.58 |
4,339 |
0.29 |
- |
- |
||||||
Income taxes |
(4,097) |
(0.28) |
(6,236) |
(0.42) |
(2,046) |
(0.13) |
||||||
Adjusted net loss from continuing operations |
$ (45,299) |
$ (3.06) |
$ (11,690) |
$ (0.78) |
$ (11,669) |
$ (0.75) |
||||||
Reconciliation of Adjusted Income (Loss) from Operations and Adjusted EBITDA by Segment |
||||||||||||
(in thousands) |
||||||||||||
(unaudited) |
||||||||||||
Table 2 |
||||||||||||
Three months ended June 30, 2020 |
||||||||||||
Drilling Products and Services |
Onshore |
Production |
|
Corporate and Other |
Consolidated |
|||||||
Reported net income (loss) from continuing operations |
$ 18,108 |
$ (12,578) |
$ (11,162) |
$ (5,788) |
$ (47,443) |
$ (58,863) |
||||||
Severance and other related costs |
696 |
2,257 |
3,812 |
2,183 |
156 |
9,104 |
||||||
Merger-related costs |
- |
- |
- |
- |
8,557 |
8,557 |
||||||
Interest expense, net |
- |
- |
- |
(1,104) |
25,853 |
24,749 |
||||||
Other expense |
- |
- |
- |
- |
(821) |
(821) |
||||||
Income taxes |
- |
- |
- |
- |
(6,508) |
(6,508) |
||||||
Income (loss) from operations |
$ 18,804 |
$ (10,321) |
$ (7,350) |
$ (4,709) |
$ (20,206) |
$ (23,782) |
||||||
Depreciation, depletion, amortization |
15,828 |
5,514 |
10,182 |
4,335 |
927 |
36,786 |
||||||
Adjusted EBITDA |
$ 34,632 |
$ (4,807) |
$ 2,832 |
$ (374) |
$ (19,279) |
$ 13,004 |
||||||
Three months ended March 31, 2020 |
||||||||||||
Drilling Products and Services |
Onshore |
Production |
|
Corporate and Other |
Consolidated |
|||||||
Reported net income (loss) from continuing operations |
$ 36,727 |
$ (2,998) |
$ (3,897) |
$ (17,329) |
$ (44,838) |
$ (32,335) |
||||||
Severance and other related costs |
140 |
1,128 |
557 |
3,784 |
411 |
6,020 |
||||||
Merger-related costs |
- |
- |
- |
- |
4,339 |
4,339 |
||||||
Reduction in value of assets |
- |
- |
4,096 |
12,426 |
- |
16,522 |
||||||
Interest expense, net |
- |
- |
- |
(1,173) |
26,307 |
25,134 |
||||||
Other expense |
- |
- |
- |
- |
4,232 |
4,232 |
||||||
Income taxes |
- |
- |
- |
- |
(10,254) |
(10,254) |
||||||
Adjusted income (loss) from operations |
$ 36,867 |
$ (1,870) |
$ 756 |
$ (2,292) |
$ (19,803) |
$ 13,658 |
||||||
Depreciation, depletion, amortization |
17,790 |
6,313 |
10,838 |
5,345 |
1,069 |
41,355 |
||||||
Adjusted EBITDA |
$ 54,657 |
$ 4,443 |
$ 11,594 |
$ 3,053 |
$ (18,734) |
$ 55,013 |
||||||
Three months ended June 30, 2019 |
||||||||||||
Drilling Products and Services |
Onshore |
Production |
|
Corporate and Other |
Consolidated |
|||||||
Reported net income (loss) from continuing operations |
$ 26,087 |
$ (4,525) |
$ 3,442 |
$ 9,508 |
$ (52,953) |
$ (18,441) |
||||||
Severance and other related costs |
- |
- |
- |
- |
1,262 |
1,262 |
||||||
Reduction in value of assets |
- |
7,556 |
- |
- |
- |
7,556 |
||||||
Interest expense, net |
- |
- |
- |
(1,035) |
25,685 |
24,650 |
||||||
Other expense |
- |
- |
- |
- |
(490) |
(490) |
||||||
Income taxes |
- |
- |
- |
- |
2,322 |
2,322 |
||||||
Adjusted income (loss) from operations |
$ 26,087 |
$ 3,031 |
$ 3,442 |
$ 8,473 |
$ (24,174) |
$ 16,859 |
||||||
Depreciation, depletion, amortization |
21,490 |
9,440 |
13,172 |
5,979 |
1,190 |
51,271 |
||||||
Adjusted EBITDA |
$ 47,577 |
$ 12,471 |
$ 16,614 |
$ 14,452 |
$ (22,984) |
$ 68,130 |
||||||
SOURCE Superior Energy Services, Inc.
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