Superior Energy Services, Inc. announced net income of $102.1 million and diluted earnings per share of $1.24 on revenues of $441.4 million, as compared to net income of $64.0 million, or $0.78 diluted earnings per share on revenues of $362.9 million for the first quarter of 2007.
The results include non-recurring gains and expenses primarily associated with the sale of 75% of the Company's interest in SPN Resources, which closed on March 14, 2008. These include a $37.9 million pre-tax gain on sale of businesses, $4.5 million in additional general and administrative expenses and a $9.8 million decrease in depreciation and depletion due to assets being held for sale. Excluding these non-recurring items, adjusted net income was $74.5 million, or $0.91 diluted earnings per share.
Operating factors impacting the quarter as compared to the most recent quarter (fourth quarter 2007) include the following:
-- Well Intervention revenue increased 23% due to increases in coiled tubing and hydraulic workover / snubbing services as well as commencing work on the previously announced $750 million wreck removal contract.
-- Rental Tools revenue decreased 5% largely due to decreased revenue resulting from a sale of accommodations in connection with a large-scale camp project that was substantially completed last quarter.
-- Marine revenues decreased 24% due to lower utilization and dayrates as a result of seasonal factors and poor weather in the Gulf of Mexico.
-- Oil and Gas revenues decreased 1% due to the SPN Resources sale. Equity income of $4.0 million in the first quarter of 2008 reflects the Company's remaining interest in SPN Resources as of March 14, 2008 in addition to the Company's ongoing 40% interest in Beryl Oil and Gas.
-- Revenue from domestic land and international market areas was approximately $215 million as compared to approximately $214 million in the fourth quarter of 2007.
Terence Hall, Chairman and CEO of Superior, stated, "Overall, our first quarter operating performance was stronger than the most recent quarter and better than our previous guidance. Several of our business units performed better than anticipated and more than offset seasonal weakness elsewhere. As we discussed on our most recent quarterly conference call, we anticipated seasonal weakness in the shallow water Gulf of Mexico for liftboats. Clearly, we are pleased that we continued our track record of consistently growing earnings from operations. Our ability to do this in a choppy market environment is a major benefit of our business mix."
Well Intervention Group Segment
First quarter revenue for the Well Intervention Group was $234.1 million, a 23% increase from the fourth quarter of 2007 and a 32% increase from the first quarter of 2007. Income from operations was $50.8 million, or 22% of segment revenue as compared to $37.0 million, or 19% of segment revenue, in the fourth quarter of 2007. Coiled tubing activity increased in domestic land market areas and hydraulic workover and snubbing activity increased in Latin America and the Middle East. Project management services increased as the Company commenced field operations associated with the previously announced wreck removal project. The gross profit margin decreased slightly due to lower high pressure well work and fewer well control projects. However, the segment operating margin increased as operating expenses were essentially unchanged.
Rental Tools Segment
Revenue for the Rental Tools Segment was $130.3 million, 5% lower than the fourth quarter of 2007 and 12% higher than the first quarter of 2007. Income from operations was $45.8 million, or 35% of segment revenue, down from $46.4 million, or 34% of segment revenue in the fourth quarter of 2007. Most of the sequential revenue decrease is due to the substantial completion in the last quarter of the sale of accommodations for a large-scale project. Demand increased for rentals of stabilizers worldwide, drill pipe in the Gulf of Mexico, and accommodations in the Asia-Pacific region. These were offset by a decrease in drill pipe rentals in the North Sea and a decrease in production-related rental tools in the shallow water Gulf of Mexico. Operating margins increased sequentially as a higher percentage of revenue was generated from drilling-related rental tools such as stabilizers, drill pipe and specialty tubulars.
Superior's Marine revenue was $23.1 million, a 24% decrease from the fourth quarter of 2007 and a 36% decrease from the first quarter of 2007. Income from operations was $2.6 million, or 11% of segment revenue, down from $8.2 million, or 27% of segment revenue in the fourth quarter of 2007. Average daily revenue in the first quarter was approximately $254,000, inclusive of subsistence revenue, as compared to $332,000 per day in the fourth quarter of 2007. The lower daily revenue was due to lower utilization primarily as a result of seasonal factors in the Gulf of Mexico, including a higher than normal amount of idle days due to poor weather conditions. The biggest utilization changes occurred in the smaller liftboat classes (145-ft. to 175-ft. class liftboats).
Oil and Gas Segment
Oil and gas revenue was $55.1 million, a 1% decrease from fourth quarter 2007 levels and a 49% increase over the first quarter of 2007. Income from operations, excluding non-recurring gains and expenses related to the sale of 75% of SPN Resources, was $25.2 million, or 46% of segment revenue, up from $24.9 million, or 45% of segment revenue, in the fourth quarter of 2007. The financial performance of this segment for the first quarter of 2008 reflects 2 1/2 months of SPN Resources' results as 75% of interest in the business was sold on March 14, 2008.
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