Superior Energy Services Announces 2006 Budget
Superior Energy Services rports that its Board of Directors has approved a record-high initial capital expenditures budget of approximately $214 million for 2006. The capital expenditures budget is expected to be funded entirely by internally generated cash flows. Some of the significant capital expenditures are as follows:
- Approximately $56 million for the continued expansion of well intervention services and rental tools to markets outside the Gulf of Mexico, including the Barnett Shale, Fayetteville Shale, Oklahoma and Rocky Mountains, as well as the North Sea, West Africa and Middle East market areas.
- Approximately $27 million for further decommissioning and abandonment market penetration, including $20 million for completing construction of the previously announced 880-ton derrick barge, and $7 million for an anchor handling tug for use in conjunction with the derrick barge. The ABS-class and SOLAS-rated barge will accommodate 200 people and is expected to be delivered by September 2006.
- Approximately $19 million for expected growth in the Gulf of Mexico well intervention, rental tools and marine markets. These expenditures include approximately $7 million for the refurbishment of a 200-ft.class liftboat, expected to be in service in June 2006.
- Approximately $20 million in maintenance capital expenditures, primarily for rental tools and well intervention assets in all markets.
- Approximately $63 million in expansionary capital expenditures for the addition of new reserves on currently owned oil and gas properties, with most, if not all, projects employing the company's products and services. Several of these projects were expected to start and/or be completed in 2005, but were deferred due to hurricanes.
Chairman and CEO Terry Hall Comments:
"Our capital expenditures program is designed to fulfill several
long-term objectives: (1) aggressively increase our geographic
diversification on shore in the U.S. and in select international
markets; (2) leverage our production-related asset base to extend our
oil and gas reserves; and (3) deliver long-term growth in earnings,
cash flows and returns on capital. We believe these expenditures will
allow us to leverage the strong fundamentals in our business by
increasing our exposure to the rapidly growing land and international
markets for rentals and well intervention services, and increasing our
exposure to the decommissioning market worldwide. The rental tools
business continues to be a high growth business that we can readily
export to new market areas with minimal risk. Typically, we establish
a presence, build relationships and then follow up with well
intervention services. We are successfully employing this strategy in
the Barnett Shale, south Texas, Rocky Mountains, Australia, Trinidad
and Venezuela. Given the timing of these anticipated expenditures, we
expect to generate significant returns in 2007 and beyond."
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