GlobeNewswire Inc | Dec 2, 2021 06:00PM EST

December 02, 2021

HOUSTON, Dec. 02, 2021 (GLOBE NEWSWIRE) -- Superior Energy Services, Inc. (the Company) filed its Form 10-Q for the period ending September 30, 2021 on December 2, 2021. In accordance with the Companys Shareholders Agreement, it will host a conference call with shareholders on Monday, December 6, 2021.

Mike McGovern, Executive Chairman of the Board and Principal Executive Officer, commented, The Companys third quarter is reflective of a significant step along our transformation journey. We completed the exit of our fluids management business, announced the sale of our service rig business, and continued the sales of our pressure pumping assets. We expect to complete our exit from the US Land service business by the end of the year. The new Superior is well positioned to capitalize on opportunities in our higher margin business lines as we move forward into 2022.

McGovern added, In addition to our dedicated focus on the earnings of the business, our divestitures support another strategic goal to have a continuously improving ESG program. In 2021 alone weve exited our water hauling and storage businesses and land service rig operations. Divesting these businesses has significantly reduced our truck and trailer fleet which will reduce our overall carbon footprint. We continue to have active dialogue with customers who are focused on ESG performance and accountability within their own supply chain. Superiors ESG focus is well aligned with the future needs of our industry.

Third Quarter 2021 Results

The Company reported a loss from operations for the third quarter of 2021 of $44.0 million on revenue of $178.6 million. This compares to a loss from operations of $36.5 million for the second quarter of 2021 on revenues of $165.9 million. In the third quarter of 2020, the Company reported a loss from operations of $59.4 million on revenues of $136.0 million.

Adjusted EBITDA (a non-GAAP measure) of $31.4 million for the quarter was up slightly compared to $30.0 million in second quarter 2021 and up significantly from a negative EBITDA in the third quarter 2020. Refer to page 10 for a Reconciliation of Adjusted EBITDA to GAAP results.

The valuation process under fresh start accounting caused certain fully depreciated assets to be assigned an estimated fair value of $282.1 million and remaining useful life of less than 36 months. Depreciation expense for the first, second and third quarters of 2021 was $45.6 million, $57.3 million and $56.9 million respectively. Depreciation expense for the fourth quarter is expected to be approximately $50.7 million, and $75.1 million and $46.5 million for the years ended December 31, 2022 and 2023, respectively.

Third Quarter 2021 Geographic Breakdown

U.S. land revenue was $32.3 million in the third quarter of 2021, an increase of 17% compared with revenue of $27.6 million in the second quarter of 2021. U.S. offshore revenue was $51.8 million in the third quarter of 2021, a decrease of 3% compared with revenue of $53.5 million in the second quarter of 2021. International revenue of $94.6 million increased by 11%, as compared to revenue of $84.9 million in the second quarter of 2021.

Segment Reporting

The Rentals segment revenue in the third quarter of 2021 was $76.2 million, a 13% increase from second quarter 2021 revenue of $67.2 million. The Well Services segment revenue in the third quarter of 2021 was $102.4 million, a 4% increase from the second quarter 2021 revenue of $98.7 million.

Discontinued Operations

The Company reported a net loss from discontinued operations for the third quarter of 2021 of $5.2 million on revenue of $17.0 million. This compares to a net loss from discontinued operations for the second quarter of 2021 of $19.4 million on revenue of $45.1 million.

At the end of the third quarter 2021, assets held for sale totaled $87.9 million compared to $170.2 million at the end of the second quarter of 2021. The reduction in assets held for sale relate primarily to the disposition of our subsidiary Complete Energy Services, pressure pumping asset sales, impairments related to the assets of SPN Well Services and a decline in discontinued operations working capital. The Company expects the majority of the remaining assets held for sale to be disposed of during the fourth quarter of 2021. Approximately $26.8 million of assets held for sale at the end of the third quarter relate to various real estate holdings across US basins that we expect to monetize in 2022. Refer to page 6 for a bridge of second quarter assets held for sale to third quarter.

Total cash proceeds received from the sale of non-core assets through November 30, 2021 are $76.1 million.

Liquidity

As of November 30, 2021, the Company had cash, cash equivalents, and restricted cash of approximately $370.9 million and availability remaining under our ABL Credit Facility of approximately $79.3 million, assuming continued compliance with the covenants under our ABL Credit Facility.

As of November 30, 2021, the Company owned 3.6 million shares of Select Energy Services Class A common stock (NYSE: WTTR).

Conference Call Information

The Company will host a conference call on Monday, December 6, 2021 at 10:00 a.m. Eastern Time. To listen to the call via a live webcast, please visit Superiors website at ir.superiorenergy.com and use access code 1516637. You may also listen to the call by dialing in at 1-877-800-3682 in the United States and Canada or 1-615-622-8047 for International calls and using access code 1516637. The call will be available for replay until December 31, 2021 on Superiors website at ir.superiorenergy.com. If you are a shareholder and would like to submit a question, please email your question beforehand to Wendell York at ir@superiorenergy.com.

About Superior Energy Services

Superior Energy Services 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 Companys financial position, financial performance, depreciation expense, liquidity, strategic alternatives (including dispositions and the timing thereof), 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 Companys 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, including but not limited to conditions in the oil and gas industry and the availability of third party buyers, that could cause the Companys 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.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in the Companys Form 10-K for the year ended December 31, 2020 and Forms 10-Q filed on September 30, 2021, October 29, 2021 and December 3, 2021 and those set forth from time to time in the Companys 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 SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data)(unaudited) Three months ended Nine months ended September 30, June 30, September 30, 2021 2020 2021 2021^(1) 2020 Revenues $ 178,583 $ 135,976 $ 165,892 $ 496,246 $ 521,797 Cost of 124,973 87,074 103,579 326,193 318,013 revenuesDepreciation,depletion, 59,208 28,163 59,018 166,614 89,052 amortizationand accretionGeneral andadministrative 33,671 51,440 32,308 95,469 164,957 expensesRestructuringand other 4,712 25,746 7,438 21,803 27,033 expensesReduction invalue of - 2,929 - - 19,451 assetsLoss from (43,981 ) (59,376 ) (36,451 ) (113,833 ) (96,709 )operations Other income Interestincome 647 (24,800 ) 535 1,596 (74,698 )(expense), netReorganization - - - 335,560 - items, netOther income (6,224 ) (1,399 ) 2,570 (8,604 ) (4,810 )(expense)Income (loss)fromcontinuing (49,558 ) (85,575 ) (33,346 ) 214,719 (176,217 )operationsbefore incometaxesIncome taxes 9,518 (1,815 ) 1,747 (44,453 ) 12,345 benefitNet income(loss) from (40,040 ) (87,390 ) (31,599 ) 170,266 (163,872 )continuingoperationsLoss fromdiscontinued (5,161 ) (69,914 ) (19,400 ) (34,319 ) (138,002 )operations,net of taxNet income $ (45,201 ) $ (157,304 ) $ (50,999 ) $ 135,947 $ (301,874 )(loss)

(1) Combines results from Predecessor periods prior to our emergence from bankruptcy on February 2, 2021 and Successor periods subsequent to emergence which is a non-GAAP financial measure. For further information regarding the breakdown of results, see our Quarterly Report on Form 10-Q for the nine months ended September 30, 2021.

No earnings per share information is presented due to the change in reporting entity as a result of our emergence from bankruptcy in the first quarter of 2021.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)(unaudited) September 30, December 31, 2021 2020ASSETS Current assets: Cash and cash equivalents $ 258,024 $ 188,006 Accounts receivable, net 174,065 158,516 Income taxes receivable - 8,891 Prepaid expenses 26,881 31,793 Inventory and other current assets 78,630 86,198 Investment in equity securities 18,684 - Assets held for sale 87,922 242,104 Total current assets 644,206 715,508 Property, plant and equipment, net 403,473 408,107 Operating lease right-of-use assets 28,871 33,317 Goodwill - 138,677 Notes receivable 75,564 72,129 Restricted cash 79,560 80,179 Intangible and other long-term assets, net 24,109 53,162 Total assets $ 1,255,783 $ 1,501,079 LIABILITIES AND STOCKHOLDERS? EQUITY (DEFICIT) Current liabilities: Accounts payable $ 56,500 $ 50,330 Accrued expenses 109,054 114,777 Liabilities held for sale 23,241 46,376 Total current liabilities 188,795 211,483 Decommissioning liabilities 173,132 134,436 Operating lease liabilities 20,608 29,464 Deferred income taxes 32,396 5,288 Other long-term liabilities 70,355 123,261 Liabilities subject to compromise - 1,335,794 Total liabilities 485,286 1,839,726 Total stockholders? equity (deficit) 770,497 (338,647 )Total liabilities and stockholders? equity $ 1,255,783 $ 1,501,079 (deficit)

The graph SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES - ASSETS HELD FOR SALE is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/35a906b2-4dae-42f2-bc2d-92ff6b1e9dcc

Assets Held For Sale Bridge June 30, 2021 to September 30, 2021 (in millions) $170.2 Q2 Assets Held for Sale ($41.4) Disposition of Complete Energy Services ($15.0) Pressure Pumping Sales ($14.5) SPN WS Impairment ($11.4) Decline in Working Capital $87.9 Q3 Assets Held for Sale

Assets Held For Sale Three months ended September 30, 2021 $26.8 Real Estate $8.5 SPN Well Services Assets $26.8 Pressure Pumping and Excluded Assets (Machinery and Equip) $62.1 Total PP&E $17.9 Current Assets ($11M A/R) $7.9 Right of Use (Lease Assets) and other $87.9 Total Assets Held for Sale





SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited) Nine months ended September 30, 2021^(1) 2020Cash flows from operating activities Net income (loss) $ 135,947 $ (301,874 )Adjustments to reconcile net income (loss) to net cash provided by operating activitiesDepreciation, depletion, amortization and 200,257 113,313 accretionReduction in value of assets 26,905 129,042 Reorganization items, net (354,279 ) - Other non-cash items 20,727 17,627 Changes in operating assets and liabilities 12,652 60,489 Net cash from operating activities 42,209 18,597 Cash flows from investing activities Payments for capital expenditures (28,482 ) (37,408 )Proceeds from sales of assets 58,781 44,097 Net cash from investing activities 30,299 6,689 Cash flows from financing activities Other (3,419 ) (12,340 )Net cash from financing activities (3,419 ) (12,340 )Effect of exchange rate changes on cash 311 (378 )Net change in cash, cash equivalents and 69,400 12,568 restricted cashCash, cash equivalents and restricted cash at 268,184 275,388 beginning of periodCash, cash equivalents and restricted cash at $ 337,584 $ 287,956 end of period

(1) Combines results from Predecessor periods prior to our emergence from bankruptcy on February 2, 2021 and Successor periods subsequent to emergence which is a non-GAAP financial measure. For further information regarding the breakdown of results, see our Quarterly Report on Form 10-Q for the nine months ended September 30, 2021.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESREVENUE BY GEOGRAPHIC REGION BY SEGMENT(in thousands, except per share data)(unaudited) Three months ended September 30, June 30, 2021 2020 2021 U.S. land Rentals $ 25,627 $ - $ 20,789 Well Services 6,638 - 6,781 Drilling Products and Services - 10,459 - Production Services - 383 - Technical Solutions - 4,694 - Total U.S. land 32,265 15,536 27,570 U.S. offshore Rentals 28,997 - 26,890 Well Services 22,756 - 26,574 Drilling Products and Services - 26,242 - Production Services - 6,630 - Technical Solutions - 15,740 - Total U.S. offshore 51,753 48,612 53,464 International Rentals 21,593 - 19,558 Well Services 72,972 - 65,300 Drilling Products and Services - 19,301 - Production Services - 39,948 - Technical Solutions - 12,579 - Total International 94,565 71,828 84,858 Total Revenues $ 178,583 $ 135,976 $ 165,892

(1) Combines results from Predecessor periods prior to our emergence from bankruptcy on February 2, 2021 and Successor periods subsequent to emergence. For further information regarding the breakdown of results, see our Quarterly Report on Form 10-Q for the three months ended March 31, 2021.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESSEGMENT HIGHLIGHTS(in thousands)(unaudited) Three months ended September 30, June 30, 2021 2021Revenues Rentals $ 76,217 $ 67,237 Well Services 102,366 98,655 Corporate and other - - Total Revenues $ 178,583 $ 165,892 Loss from Operations Rentals $ (6,046 ) $ (9,232 )Well Services (18,229 ) (5,226 )Corporate and other (19,706 ) (21,993 )Total loss from Operations $ (43,981 ) $ (36,451 ) Adjusted EBITDA Rentals $ 35,595 $ 32,851 Well Services 8,894 9,987 Corporate and other (13,042 ) (12,833 )Total loss from Operations $ 31,447 $ 30,005

We define EBITDA as income (loss) from continuing operations adjusted for the impact of depreciation, depletion, amortization and accretion, interest and income taxes. Additionally, our definition of Adjusted EBITDA adjusts for the impact of reorganization items and restructuring and other expenses, other income/expense and other adjustments.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESRECONCILIATION OF ADJUSTED EBITDA(in thousands)(unaudited) Three months ended September 30, June 30, 2021 2020 2021 Net income (loss) from $ (40,040 ) $ (87,390 ) $ (31,599 )continuing operationsDepreciation, depletion, 59,208 28,163 59,018 amortization and accretionInterest (income) expense, net (647 ) 24,800 (535 )Income taxes (9,518 ) 1,815 (1,747 )Restructuring and other 4,712 25,746 7,438 expensesReduction in value of assets - 2,929 - Other (income) expense 6,224 1,399 (2,570 )Other adjustments ^(1) 11,508 Adjusted EBITDA $ 31,447 $ (2,538 ) $ 30,005

We define EBITDA as income (loss) from continuing operations adjusted for the impact of depreciation, depletion, amortization and accretion, interest and income taxes. Additionally, our definition of Adjusted EBITDA adjusts for the impact of reorganization items and restructuring and other expenses, other income/expense and other adjustments.

(1) Other adjustments relate to costs associated with our Transformation Project which are included in cost of revenues in our condensed consolidated statements of operations. These costs primarily relate to shut down costs incurred at certain locations and include severance of personnel and the write-down of inventory.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIESRECONCILIATION OF ADJUSTED EBITDA BY SEGMENT(in thousands)(unaudited) Three months ended September 30, 2021 Well Corporate Consolidated Rentals Services and Other Total Loss fromcontinuing $ (6,046 ) $ (18,229 ) $ (19,706 ) $ (43,981 )operationsDepreciation,depletion, 41,641 15,615 1,952 59,208 amortizationand accretionRestructuringand other - - 4,712 4,712 expensesOtheradjustments ^ - 11,508 - 11,508 (1)Adjusted EBITDA $ 35,595 $ 8,894 $ (13,042 ) $ 31,447 Three months ended June 30, 2021 Well Corporate Consolidated Rentals Services and Other Total Loss fromcontinuing $ (9,232 ) $ (5,226 ) $ (21,993 ) $ (36,451 )operationsDepreciation,depletion, 42,083 15,213 1,722 59,018 amortizationand accretionRestructuringand other - - 7,438 7,438 expensesAdjusted EBITDA $ 32,851 $ 9,987 $ (12,833 ) $ 30,005

We define EBITDA as income (loss) from continuing operations adjusted for the impact of depreciation, depletion, amortization and accretion, interest and income taxes. Additionally, our definition of Adjusted EBITDA adjusts for the impact of reorganization items and restructuring and other expenses, other income/expense and other adjustments.

(1) Other adjustments relate to costs associated with our Transformation Project which are included in cost of revenues in our condensed consolidated statements of operations. These costs primarily relate to shut down costs incurred at certain locations and include severance of personnel and the write-down of inventory.

FOR FURTHER INFORMATION CONTACT:Wendell York, VP IR, Corporate Development & Treasury1001 Louisiana St., Suite 2900Houston, TX 77002Investor Relations, ir@superiorenegy.com, (713) 654-2200