Superior Well Services Increases Q4 Revenue 26.3%

Superior Well Services reported that in the fourth quarter of 2007, revenues were $94.9 million, an increase of 26.3% compared to $75.1 million in the fourth quarter of 2006 and an increase of 0.7% compared to $94.3 million reported in the third quarter of 2007. Increased activity levels, as well as down-hole asset acquisitions made during 2007, led to the increases in revenue in the fourth quarter of 2007 as compared to the fourth quarter of 2006.

Stimulation, nitrogen, cementing and down-hole surveying revenues amounted to 52.4%, 16.0%, 20.8% and 10.8% of revenues in the fourth quarter of 2007, respectively. Increased 2007 activity levels were partially offset by higher discounts in 2007 as compared to 2006. All regions, other than Appalachia, experienced higher sales discounts in the fourth quarter of 2007 when compared to the fourth quarter of 2006 and the third quarter of 2007, due to increased competition.

As a percentage of revenues, sales discounts increased by 5.2% in fourth quarter of 2007 as compared to fourth quarter of 2006 and increased 1.3% when compared to sales discount percentages in the previous quarter. In addition to higher sales discounts, longer holiday shut-downs impacted 2007 fourth quarter activity levels in each of our operating regions.

Down-hole surveying revenues decreased $2.7 million compared to the third quarter of 2007, due primarily to seasonal slow-downs that have historically impacted the Rocky Mountain region. Partially offsetting the fourth quarter of 2007 decrease in down-hole surveying revenues was $2.5 million increase in nitrogen sales that were primarily driven by Appalachian activity.

Cost of revenue was $73.0 million, an increase of 42.3% as compared to $51.3 million in the fourth quarter of 2006 and an increase of 10.4% as compared to $66.1 million in the third quarter of 2007. As a percentage of revenue, cost of revenue increased to 76.9% for fourth quarter of 2007 from 68.2% for the fourth quarter of 2006 and 70.1% in third quarter of 2007.

This percentage increase between periods was primarily the result of higher labor expense, depreciation and material costs as a percentage of revenue in fourth quarter of 2007 as compared to the fourth quarter of 2006 and the third quarter of 2007. As a percentage of revenue, labor expense, depreciation and material costs increased in the fourth quarter of 2007 as compared to the fourth quarter of 2006 by 3.5%, 1.8% and 2.4%, respectively.

As discussed above, delays experienced at our new service centers caused higher start up costs in the fourth quarter of 2007. Additionally, longer holiday shutdowns reduced utilization in each of our operating regions. Cost of revenues associated with the five start-up service centers opened during 2007 increased fourth quarter 2007 expenses by $9.4 million as compared to the fourth quarter of 2006 and $5.6 million as compared to the third quarter of 2007. Additionally, higher sales discounts lowered net revenues and resulted in an increase in the cost of revenue as a percentage of revenue in the fourth quarter of 2007 compared to the fourth quarter of 2006 and the third quarter of 2007.

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