BJ Services Reports Third Fiscal Quarter Earnings

BJ Services Co. on Tuesday reported net income for the quarter ended June 30, 2006, of $212.9 million, or $0.67 per diluted share. Third-quarter diluted earnings per share improved 91% compared to the $0.35 per diluted share for the third quarter of fiscal 2005 and up 8% compared to the $0.62 per diluted share for the previous quarter.

Consolidated revenue in the third quarter of fiscal 2006 was $1,116.9 million, up 37% compared to $817.3 million in prior year's June quarter and up 4% compared to $1,078.8 million reported in the previous quarter.

Consolidated operating income for the quarter was $306.9 million, an 87% increase compared to $164.0 million for the same quarter last year and a 4% increase compared to $295.3 million reported in the previous quarter.

During the quarter, the company's capital expenditures were $131.7 million. Other uses of cash during the quarter included dividend payments of $16.2 million and the purchase of 18,228,900 shares of the company's common stock for $656.5 million. On May 25, 2006, the company's board of directors authorized an expansion of its share repurchase program, increasing the repurchase authority by $1 billion. Fiscal year to date, the company has repurchased 21,551,282 shares for $768.6 million and has remaining authorization to purchase up to an additional $835 million in stock. Since BJ Services began its share repurchase program in 1997, the company has repurchased 73.9 million shares for $1.4 billion--representing 20% of its shares outstanding.

On June 8, 2006, BJ completed a public offering of $500 million aggregate principal amount of senior notes, consisting of $250 million in floating rate senior notes due 2008 and $250 million in 5.75% senior notes due 2011. The net proceeds from the offering of approximately $497.1 million, after deducting underwriting discounts and commissions and expenses, will be used to repurchase outstanding shares of common stock, repay indebtedness, fund capital expenditures and for other corporate purposes. The company also borrowed $100 million under its revolving credit facility during the quarter for general corporate purposes.

Cash and cash equivalents increased $56.1 million from the previous quarter to $382.9 million.

“During the quarter, the company utilized its free cash flow and leverage capacity to further repurchase treasury shares and to enhance long-term shareholder value while maintaining considerable financial flexibility to pursue growth opportunities,” said Bill Stewart, BJ Services’ chairman and CEO. “Activity increases and improved pricing in the U.S. market coupled with increases in activity in our international pressure pumping business outside of North America offset the seasonal decline in Canadian results. We expect activity to remain strong into the foreseeable future. Based on our current estimates, we expect earnings per share for the 2006 fourth fiscal quarter to be $0.73 - $0.75.”

“Our outlook for fiscal year 2007 is quite positive with consolidated revenue growth expectations in the range of 20%,” added Stewart. “Revenue generated from our North America Pressure Pumping operations is expected to grow in the range of 20%. We expect revenue growth for our International Pressure Pumping operations outside North America in the range of 20% and for our Oilfield Services Group in the range of 18% for the fiscal year.”


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