Superior Energy Services, Inc. Announces Fourth Quarter 2004 Results

    Business Editors/Energy Editors

    HARVEY, La.--(BUSINESS WIRE)--Feb. 23, 2005--Superior Energy Services, Inc. (NYSE:SPN) today announced results for the fourth quarter ended December 31, 2004. For the quarter, revenues were $157.8 million resulting in net income of $12.3 million or $0.16 diluted earnings per share, as compared to revenues of $120.3 million and net income of $5.9 million or $0.08 diluted earnings per share for the fourth quarter of 2003.
    For the year ended December 31, 2004, revenues were a record $564.3 million and net income was $35.9 million or $0.47 diluted earnings per share, as compared to revenues of $500.6 million and net income of $30.5 million or $0.41 diluted earnings per share for the year ended December 31, 2003.

    CEO Terry Hall Comments

    CEO Terry Hall commented, "The traditional fourth quarter seasonal slowdown in the shallow water Gulf of Mexico for our services was not as severe as in years past. Higher levels of remedial and production-related work resulted in better results for our well intervention group and marine segments. Weaker deepwater rentals of drill pipe due to ongoing project delays from Hurricane Ivan were more than offset by continued diversification of our rental tools segment domestically on land and internationally in the North Sea. Fourth quarter financial performance was impacted by significant production deferral from our oil and gas segment because of extended delays to third-party pipeline and infrastructure repairs due to damage from Hurricane Ivan.
    "We believe the outlook for 2005 is favorable for several reasons. First, our geographic markets appear to be more active entering this year as compared to the start of 2004, which should bode well for our core businesses. Production-related activity in the shallow water Gulf of Mexico is improving and deepwater exploration projects are resuming following storm-related downtime. Second, we should continue to gain rental tool market share domestically on land and internationally in West Africa and the Middle East. Third, we continue to build a backlog of service and decommissioning work for our own properties which can be performed if activity levels slow. Finally, we should benefit from increased levels of oil and gas production when compared to 2004 production levels."

    Well Intervention Group Segment

    Fourth quarter revenues for the Well Intervention Group were $62.8 million, a 28% increase over the fourth quarter of 2003 and a 5% increase over the third quarter of 2004. Activity year-over-year was stronger in most of the segment's service lines, including coiled tubing, pumping and stimulation, plug and abandonment, mechanical wireline and well control services. Sequential improvement was driven mainly by mechanical wireline activity in the Gulf of Mexico and a large well control project in Egypt.

    Rental Tools Segment

    Revenues for the Rental Tools segment were $45.0 million, a 28% increase over the fourth quarter of 2003 and a 6% increase over the third quarter of 2004. Improved results as compared to the fourth quarter of 2003 were driven mainly by increased rentals of stabilizers and downhole tubulars, on-site accommodations, and drill pipe and ancillary tools.

    Marine Segment

    Marine revenues were $20.5 million, an increase of 28% as compared to the fourth quarter of 2003 and a 13% increase as compared to the third quarter of 2004. Average fleet utilization was 76% as compared to 66% in the fourth quarter of 2003 and 69% in the third quarter of 2004. Average daily revenue in the fourth quarter was approximately $222,300, inclusive of subsistence revenue.

Liftboat Average Dayrates and Utilization by Class Size Three Months Ended December 31, 2004 ($ actual)

Class Liftboats Average Dayrate Utilization 105' 6 $ 3,201 69.8% 120-135' 8 3,243 73.1% 145-155' 11 5,748 74.5% 160'-175' 6 7,310 70.8% 200' 2 11,239 94.6% 230'-245' 3 14,768 89.1% 250' 2 17,450 93.5%

    Other Oilfield Services Segment

    Revenues in this segment were $20.8 million, a 7% increase as compared to the fourth quarter of 2003 and a 2% increase as compared to the third quarter of 2004 primarily due to incremental demand for property management and contract operations.

    Oil and Gas Segment

    Oil and gas revenues were $11.5 million as compared to $0.7 million in the fourth quarter of 2003 and $14.2 million in the third quarter of 2004. Fourth quarter production from SPN Resources was approximately 289,400 barrels of oil equivalent, net (boe) as compared to approximately 335,890 boe in the third quarter of 2004. Fourth quarter production was lower due to production deferral of approximately 260,500 boe as a result of downtime at South Pass 60 from Hurricane Ivan.
    The Company will host a conference call at 10 a.m. Central Time on Thursday. The call can be accessed from Superior's website at www.superiorenergy.com, or by telephone at 800-763-5557. The replay telephone number is 800-642-1687 and the replay passcode is 4027344. The replay is available beginning two hours after the call and ending March 3, 2005.
    Superior Energy Services, Inc. provides a broad range of specialized oilfield services and equipment primarily to major and independent oil and gas companies engaged in the exploration, production and development of oil and natural gas properties offshore in the Gulf of Mexico and throughout the Gulf Coast region. These services and equipment include the rental of liftboats, rental of specialized oilfield equipment, electric and mechanical wireline services, well plug and abandonment services, well control, hydraulic workover, coiled tubing services and engineering services. Additional services provided include contract operating and supplemental labor, offshore and dockside environmental cleaning services, the manufacture and sale of drilling instrumentation and the manufacture and sale of oil spill containment equipment.
    This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which involve known and unknown risks, uncertainties and other factors. Among the factors that could cause actual results to differ materially are: volatility of the oil and gas industry, including the level of exploration, production and development activity; risks associated with the Company's rapid growth; changes in competitive factors and other material factors that are described from time to time in the Company's filings with the Securities and Exchange Commission. Actual events, circumstances, effects and results may be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Consequently, the forward-looking statements contained herein should not be regarded as representations by Superior or any other person that the projected outcomes can or will be achieved.

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES Consolidated Statements of Operations Three and Twelve Months Ended December 31, 2004 and 2003 (in thousands, except earnings per share amounts) (unaudited, except as noted)

Three Months Ended Year Ended December 31, December 31, ------------------- ------------------- 2004 2003 2004 2003 --------- --------- --------- --------- (audited)

Revenues $157,835 $120,257 $564,339 $500,625 --------- --------- --------- ---------

Costs and expenses: Cost of services 83,848 69,710 310,108 289,607 Depreciation, depletion, amortization and accretion 18,891 12,852 67,337 48,853 General and administrative 30,980 23,249 110,605 94,822 --------- --------- --------- ---------

Total costs and expenses 133,719 105,811 488,050 433,282 --------- --------- --------- ---------

Income from operations 24,116 14,446 76,289 67,343

Other income (expense): Interest expense (5,752) (5,673) (22,476) (22,477) Interest income 401 98 1,766 209 Other income - - - 2,762 Equity in income of affiliates 437 493 1,329 985 --------- --------- --------- ---------

Income before income taxes 19,202 9,364 56,908 48,822

Income taxes 6,916 3,511 21,056 18,308 --------- --------- --------- ---------

Net income $12,286 $5,853 $35,852 $30,514 ========= ========= ========= =========

Basic earnings per share $0.16 $0.08 $0.48 $0.41 ========= ========= ========= =========

Diluted earnings per share $0.16 $0.08 $0.47 $0.41 ========= ========= ========= =========

Weighted average common shares used in computing earnings per share: Basic 76,163 74,079 74,896 73,970 ========= ========= ========= ========= Diluted 77,618 74,759 75,900 74,648 ========= ========= ========= =========

SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2004 AND 2003 (in thousands)

12/31/2004 12/31/2003 (unaudited) (audited) ----------- ----------- ASSETS

Current assets: Cash and cash equivalents $15,281 $19,794 Accounts receivable - net 156,235 112,775 Income taxes receivable 2,694 - Notes receivable 9,611 19,212 Prepaid insurance and other 28,203 14,059 ----------- -----------

Total current assets 212,024 165,840 ----------- -----------

Property, plant and equipment - net 515,151 427,360 Goodwill - net 226,593 204,727 Notes receivable 29,131 15,145 Investments in affiliates 14,496 13,224 Other assets - net 6,518 6,567 ----------- -----------

Total assets $1,003,913 $832,863 =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities: Accounts payable $36,496 $20,817 Accrued expenses 56,796 48,949 Income taxes payable - 138 Fair value of commodity derivative instruments 2,018 - Current portion of decommissioning liabilities 23,588 20,097 Current maturities of long-term debt 11,810 14,210 ----------- -----------

Total current liabilities 130,708 104,211 ----------- -----------

Deferred income taxes 103,372 86,251 Decommissioning liabilities 90,430 18,756 Long-term debt 244,906 255,516 Fair value of commodity derivative instruments 618 -

Total stockholders' equity 433,879 368,129 ----------- -----------

Total liabilities and stockholders' equity $1,003,913 $832,863 =========== ===========

Superior Energy Services, Inc. and Subsidiaries Segment Highlights Three months ended December 31, 2004, September 30, 2004, and December 31, 2003 (Unaudited) (in thousands)

Three months ended, --------------------------------------- Revenue December 31, September 30, December 31, 2004 2004 2003 ------------ ------------- ------------

Well Intervention $62,779 $59,861 $49,192

Rental tools 44,971 42,530 35,015

Marine 20,456 18,049 15,958

Other Oilfield Services 20,789 20,354 19,351

Oil and Gas 11,462 14,190 741

Less: Oil and Gas Eliminations (2) (2,622) (2,484) - ------------ ------------- ------------

Total Revenues $157,835 $152,500 $120,257 ============ ============= ============

Three months ended, --------------------------------------- Gross Profit (1) December 31, September 30, December 31, 2004 2004 2003 ------------ ------------- ------------

Well Intervention $29,154 $25,519 $20,756

Rental tools 29,731 27,186 22,901

Marine 7,357 5,856 3,421

Other Oilfield Services 4,560 3,878 3,059

Oil and Gas 3,185 7,650 410 ------------ ------------- ------------

Total Gross Profit $73,987 $70,089 $50,547 ============ ============= ============

(1) Gross profit is calculated by subtracting cost of services from revenue for each of the Company's five segments. (2) Oil and gas eliminations represent products and services from the company's segments provided to the Oil and Gas Segment.

--30--JS/na*

CONTACT: Superior Energy Services Inc., Harvey Terence Hall/Robert Taylor/Greg Rosenstein, 504-362-4321

KEYWORD: LOUISIANA INDUSTRY KEYWORD: OIL/GAS ENERGY EARNINGS CONFERENCE CALLS SOURCE: Superior Energy Services, Inc.

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