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
Completion Services Technical
and Workover Solutions
Services
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
and accretion
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
Completion Services Technical
and Workover Solutions
Services
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
and accretion
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
Completion Services Technical
and Workover Solutions
Services
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
and accretion
Adjusted EBITDA $47,577 $12,471 $16,614 $14,452 $(22,984) $68,130
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SOURCE Superior Energy Services, Inc.
