PR Newswire | Aug 10, 2020 06:59AM EDT

08/10 05:59 CDT

Superior Energy Services Announces Second Quarter 2020 Results HOUSTON, Aug. 10, 2020

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 ofrevenues(exclusive ofdepreciation, 128,803 229,532 211,686 340,489 469,585depletion,amortizationand accretion)

Depreciation,depletion, 36,786 51,271 41,355 78,141 107,614amortizationand accretion

General andadministrative 59,707 71,038 65,157 124,864 142,150expenses

Reduction invalue of - 7,556 16,522 16,522 7,556assets

Income/(Loss)from (41,443) 8,041 (13,223) (54,666) 5,807operations

Other income(expense):

Interest (24,749) (24,650) (25,134) (49,883) (49,771)expense, net

Other income 821 490 (4,232) (3,411) (1,122)(expense)

Loss fromcontinuingoperations (65,371) (16,119) (42,589) (107,960) (45,086)before incometaxes

Income taxes (6,508) 2,322 (10,254) (16,762) 5,999

Net loss fromcontinuing (58,863) (18,441) (32,335) (91,198) (51,085)operations

Loss fromdiscontinued (6,243) (52,609) (47,129) (53,372) (67,670)operations, netof income tax

Net loss $ $ $ $ (144,570) $ (118,755) (65,106) (71,050) (79,464)

Basic anddiluted lossper share

Net loss from $ $ $ $ $ continuing (3.97) (1.18) (2.18) (6.18) (3.29)operations

Income fromdiscontinued (0.42) (3.37) (3.18) (3.61) (4.35)operations

Basic and $ $ $ $ $ diluted loss (4.39) (4.55) (5.36) (9.79) (7.64)per share

Weightedaverage shares 14,826 15,600 14,809 14,767 15,538outstanding

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 3,706 3,649liabilities

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' $ 1,734,440 $ 1,993,230equity (deficit)

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 tonet cash provided by operatingactivities:

Depreciation, depletion, amortization 78,141 157,657and accretion

Reduction in value of assets 16,522 31,381

Reduction in value of assets held for 49,361 -sale

Other noncash items 14,614 17,788

Changes in working capital and other (14,641) (19,241)

Net cash provided by (used in) (573) 68,830operating activities

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 8,927 5,421activities

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, 5,795 73,123and restricted cash

Cash, cash equivalents and restricted 275,388 163,748cash at beginning of period

Cash, cash equivalents, and restricted $ 281,183 $ 236,871cash at end of period

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

DrillingProducts and $ 19,538 $ 36,656 $ 47,267Services

OnshoreCompletion and 21,180 61,218 94,618WorkoverServices

Production 11,097 30,667 38,808Services

Technical 3,166 6,137 13,385Solutions

Total U.S. $ 54,981 $ 134,678 $ 194,078land

U.S. offshore

DrillingProducts and $ 28,587 $ 37,224 $ 28,085Services

OnshoreCompletion and - - -WorkoverServices

Production 6,363 11,299 21,410Services

Technical 23,611 31,533 33,492Solutions

Total U.S. $ 58,561 $ 80,056 $ 82,987offshore

International

DrillingProducts and $ 19,225 $ 30,113 $ 25,330Services

OnshoreCompletion and - - -WorkoverServices

Production 37,033 59,538 42,784Services

Technical 14,053 17,112 22,259Solutions

Total $ 70,311 $ 106,763 $ 90,373International

Total $ 183,853 $ 321,497 $ 367,438Revenues

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES

SEGMENT HIGHLIGHTS

(in thousands)

(unaudited)

Three months ended,

Revenues June 30, 2020 ^ March 31, 2020 ^ June 30, 2019 ^ (1) (1) (1)

DrillingProducts $ 67,350 $ 103,993 $ 100,682andServices

OnshoreCompletionand 21,180 61,218 94,618WorkoverServices

Production 54,493 101,504 103,002Services

Technical 40,830 54,782 69,136Solutions

Total $ 183,853 $ 321,497 $ 367,438Revenues

Income(Loss) fromOperations

DrillingProducts $ 18,804 $ 36,867 $ 26,087andServices

OnshoreCompletionand (10,321) (1,870) 3,031WorkoverServices

Production (7,350) 756 3,442Services

Technical (4,709) (2,292) 8,473Solutions

Corporate (20,206) (19,803) (24,174)and other

TotalIncome $ (23,782) $ 13,658 $ 16,859fromOperations

EBITDA

DrillingProducts $ 34,632 $ 54,657 $ 47,577andServices

OnshoreCompletionand (4,807) 4,443 12,471WorkoverServices

Production 2,832 11,594 16,614Services

Technical (374) 3,053 14,452Solutions

Corporate (19,279) (18,734) (22,984)and other

Total $ 13,004 $ 55,013 $ 68,130EBITDA

(1) Income (loss) from operations and EBITDA exclude the impact of specialitems 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 netloss from $ (58,863) $ (3.97) $ (32,335) $ (2.18) $ (18,441) $ (1.18)continuingoperations

Reduction invalue of - - 16,522 1.12 7,556 0.48assets

Severance andother related 9,104 0.61 6,020 0.41 1,262 0.08costs

Merger-relatedtransaction 8,557 0.58 4,339 0.29 - -costs

Income taxes (4,097) (0.28) (6,236) (0.42) (2,046) (0.13)

Adjusted netloss from $ (45,299) $ (3.06) $ (11,690) $ (0.78) $ (11,669) $ (0.75)continuingoperations

Reconciliation of Adjusted Income (Loss) from Operations and Adjusted EBITDA bySegment

(in thousands)

(unaudited)

Table 2

Three months ended June 30, 2020

Onshore Drilling Products Completion Production Technical Corporate and Other Consolidated and Services and Workover Services Solutions Services

Reported netincome (loss)from $ 18,108 $ (12,578) $ (11,162) $ (5,788) $ (47,443) $ (58,863)continuingoperations

Severance andother related 696 2,257 3,812 2,183 156 9,104costs

Merger-related - - - - 8,557 8,557costs

Interest - - - (1,104) 25,853 24,749expense, net

Other expense - - - - (821) (821)

Income taxes - - - - (6,508) (6,508)

Income (loss)from $ 18,804 $ (10,321) $ (7,350) $ (4,709) $ (20,206) $ (23,782)operations

Depreciation,depletion,amortization 15,828 5,514 10,182 4,335 927 36,786 andaccretion

Adjusted $ 34,632 $ (4,807) $ 2,832 $ (374) $ (19,279) $ 13,004EBITDA

Three months ended March 31, 2020

Onshore Drilling Products Completion Production Technical Corporate and Other Consolidated and Services and Workover Services Solutions Services

Reported netincome (loss)from $ 36,727 $ (2,998) $ (3,897) $ (17,329) $ (44,838) $ (32,335)continuingoperations

Severance andother related 140 1,128 557 3,784 411 6,020costs

Merger-related - - - - 4,339 4,339costs

Reduction invalue of - - 4,096 12,426 - 16,522assets

Interest - - - (1,173) 26,307 25,134expense, net

Other expense - - - - 4,232 4,232

Income taxes - - - - (10,254) (10,254)

Adjustedincome (loss) $ 36,867 $ (1,870) $ 756 $ (2,292) $ (19,803) $ 13,658from operations

Depreciation,depletion,amortization 17,790 6,313 10,838 5,345 1,069 41,355 andaccretion

Adjusted $ 54,657 $ 4,443 $ 11,594 $ 3,053 $ (18,734) $ 55,013EBITDA

Three months ended June 30, 2019

Onshore Drilling Products Completion Production Technical Corporate and Other Consolidated and Services and Workover Services Solutions Services

Reported netincome (loss)from $ 26,087 $ (4,525) $ 3,442 $ 9,508 $ (52,953) $ (18,441)continuing operations

Severance andother related - - - - 1,262 1,262costs

Reduction invalue of - 7,556 - - - 7,556assets

Interest - - - (1,035) 25,685 24,650expense, net

Other expense - - - - (490) (490)

Income taxes - - - - 2,322 2,322

Adjustedincome (loss) $ 26,087 $ 3,031 $ 3,442 $ 8,473 $ (24,174) $ 16,859from operations

Depreciation,depletion,amortization 21,490 9,440 13,172 5,979 1,190 51,271 andaccretion

Adjusted $ 47,577 $ 12,471 $ 16,614 $ 14,452 $ (22,984) $ 68,130EBITDA

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SOURCE Superior Energy Services, Inc.