Superior Energy Services, Inc. announced net income from continuing operations of $142.8 million, or $0.90 per diluted share, and net income of $141.9 million, or $0.89 per diluted share, on revenue of $1,243.3 million for the second quarter of 2012.
Non-GAAP adjusted earnings from continuing operations was $131.6 million, or $0.83 per diluted share, and excludes a $17.9 million pre-tax gain on sale of an equity-method investment.
These results are compared with net income from continuing operations of $41.4 million, or $0.51 per diluted share, and net income of $48.1 million, or $0.59 per diluted share, on revenue of $479.9 million for the second quarter of 2011. Non-GAAP adjusted earnings from continuing operations was $39.8 million, or $0.49 per diluted share, for the second quarter of 2011.
For the six months ended June 30, 2012, the Company’s net income from continuing operations was $213.0 million, or $1.49 per diluted share, and net income was $195.8 million, or $1.37 per diluted share, on revenue of $2,210.2 million. Non-GAAP adjusted earnings from continuing operations was $222.2 million, or $1.55 per diluted share.
For the six months ended June 30, 2011, the Company’s net income from continuing operations was $51.3 million, or $0.63 per diluted share, and net income was $63.6 million, or $0.79 per diluted share, on revenue of $864.9 million. Non-GAAP adjusted earnings from continuing operations was $ 51.0 million, or $0.63 per diluted share.
David Dunlap, CEO of Superior, commented, “The solid operating results, which include the first full quarter contribution from the products and services of legacy Complete Production Services, reflect the strength of our diversified business model in the face of weaker activity levels in U.S. dry gas basins and a flattening U.S. land rig count environment.
“Growth in Gulf of Mexico and international revenue more than offset the flat demand we experienced in the U.S. land market areas relative to the first quarter of the year. Our Gulf of Mexico activity benefitted from a 20% sequential increase in revenue from the Drilling Products and Services segment as deepwater drilling rebounded to post-Macondo highs. Meanwhile, international results were boosted by a 15% sequential increase in Subsea and Well Enhancement revenue driven primarily by multiple well control projects.
“In the U.S., we maximized our opportunities while navigating through shrinking demand in dry gas basins and mounting uncertainty in oil and liquids basins. For most of the quarter we were able to maintain margins across several product lines that were at or near first quarter levels.
“Our income from continuing operations as a percentage of revenue (operating margin) during the period was essentially unchanged from the first quarter of 2012 – excluding first quarter acquisition-related expenses and hedging activity.”
For the second quarter of 2012, U.S. land revenue was approximately $883.0 million, Gulf of Mexico revenue was approximately $170.8 million and international revenue was approximately $189.5 million.
Subsea and Well Enhancement Segment
Second quarter 2012 revenue in the Subsea and Well Enhancement Segment was $1,045.2 million.
U.S. land revenue was $793.5 million which represents a 44% sequential increase due to a full quarter contribution from legacy Complete products and services relative to the first quarter of 2012. Gulf of Mexico revenue increased 8% sequentially to approximately $109.9 million primarily due to an increase in well control, shallow water plug and abandonment and decommissioning services. International revenue increased 15% sequentially to approximately $141.8 million primarily due to increased demand for well control services.
Drilling Products and Services Segment
Second quarter 2012 revenue for the Drilling Products and Services Segment was $198.2 million, as compared with $149.2 million in the second quarter of 2011, or a 33% year-over-year improvement, and $189.4 million in the first quarter of 2012, or a sequential 5% improvement.
U.S. land revenue decreased 2% to $89.5 million as increased rentals of premium drill pipe and bottom hole assemblies partially offset decreased rentals of accommodations. Gulf of Mexico revenue increased 20% sequentially to approximately $60.9 million due to increased rentals of bottom hole assemblies, premium drill pipe, accommodations and other surface tools. International revenue was essentially unchanged sequentially at approximately $47.8 million.
2012 Earnings Guidance Update
The Company has lowered its guidance on its 2012 non-GAAP adjusted earnings from continuing operations to a range of between $2.75 and $3.05 per diluted share
Mr. Dunlap commented, “Although we remain confident in the long-term outlook for the oil and resource driven prospects in the U.S. land market, continued low natural gas prices, a lower realized crude oil price and significant reductions in NGL prices are impacting our customers’ cash flows, leading to reduced spending in the second half of 2012. We do not see this reduction driving a precipitous drop in activity, but we expect lower utilization in our services businesses and pricing pressure in many of the oil and liquids basins as competitors continue to relocate capacity to these markets from the dry gas basins.
“The Gulf of Mexico should continue to grow from the strong base of activity realized in the first half of 2012 as deepwater activity progresses at a faster pace than we originally anticipated for the year. We expect international activity in the countries that we have targeted for expansion to continue to advance at a steady pace.”
Press Release, July 31, 2012