HOUSTON, April 22 /PRNewswire-FirstCall/ -- BJ Services Company (NYSE:
BJS; PCX; CBOE) today reported net income of $127.3 million for the fiscal
2008 second quarter ended March 31, 2008, or $0.43 per diluted share, a 26%
decrease from the $0.58 per diluted share reported in the previous quarter
and a 33% decrease compared to the $0.64 per diluted share reported in the
fiscal 2007 second quarter.
Revenue in the second quarter of fiscal 2008 was $1,283.2 million,
slightly below the $1,285.1 million reported in the previous quarter and up
8% compared to $1,186.6 million reported in the prior year's March quarter.
Operating income for the quarter was $186.5 million, a 26% decrease
compared to $252.6 million for the previous quarter and a 36% decrease
compared to $290.2 million reported in the second quarter of fiscal 2007.
Debt decreased $8.4 million during the quarter to $615.9 million and
cash and cash equivalents decreased $10.0 million to $43.6 million during
the quarter. Uses of cash during the quarter included capital expenditures
of $150.0 million and payment of $14.6 million in dividends.
Commenting on the results, Chairman and CEO Bill Stewart said, "During
the quarter, the Company experienced significant pricing pressure in North
America. Most of the price loss occurred in January as we completed a
number of pricing agreements with our customers. I am, however, encouraged
that pricing was relatively stable in February and March. The fundamental
outlook is quite positive in the U.S. with natural gas prices at levels
that should lay the foundation for higher drilling levels. This is
supported by a number of our customers announcing budget increases for the
second half of the calendar year.
"Looking at our third fiscal quarter, we expect drilling activity in
the U.S. to be up modestly compared to the second fiscal quarter. Pricing
is expected to continue to be under pressure; however, we are forecasting
the rate of price declines experienced in previous quarters to moderate in
the third fiscal quarter. Canada is in full Spring break-up and drilling
activity for the quarter is not expected to be significantly different than
the same quarter last year. In the International Pressure Pumping segment,
we are anticipating modest revenue improvement with slightly improved
margins in the third fiscal quarter. The largest sequential improvement is
expected to be in the Asia Pacific region, as business is expected to
improve after experiencing weather disruptions and project delays in the
second fiscal quarter.
"We anticipate sequential revenue and margin improvement for our
Oilfield Services group. We are projecting our Tubular Services business to
recover from delays experienced during the second fiscal quarter. We are
also expecting seasonal improvement from our Process & Pipeline Services
business. Based on these assumptions, we are currently projecting diluted
earnings for the third fiscal quarter to be in the range of $0.39 to $0.43
per share."
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands except per share amounts)
Three Months Ended
March 31 December 31
2008 2007 2007
Revenue $1,283,202 $1,186,638 $1,285,065
Operating Expenses:
Cost of sales and services 1,004,107 820,661 950,450
Research and engineering 18,913 16,164 17,198
Marketing 31,764 26,075 28,832
General and administrative 41,652 33,634 36,630
Loss (gain) on long-lived
assets 238 (83) (626)
Total operating expenses 1,096,674 896,451 1,032,484
Operating income 186,528 290,187 252,581
Interest expense (6,949) (8,488) (7,862)
Interest income 356 504 474
Other income/(expense), net 1,053 (1,797) (2,711)
Income before income taxes 180,988 280,406 242,482
Income taxes 53,685 91,490 70,298
Net income $127,303 $188,916 $172,184
Earnings Per Share:
Basic $0.43 $0.64 $0.59
Diluted $0.43 $0.64 $0.58
Weighted Average Shares Outstanding:
Basic 293,245 293,247 292,627
Diluted 295,285 296,276 295,284
Supplemental Data:
Depreciation and amortization $64,900 $49,819 $62,766
Capital expenditures 149,989 208,399 161,797
Debt 615,892 672,236 624,324
Six Months Ended
March 31
2008 2007
Revenue $2,568,267 $2,370,578
Operating Expenses:
Cost of sales and services 1,954,557 1,609,296
Research and engineering 36,111 31,858
Marketing 60,596 51,888
General and administrative 78,282 70,841
Loss on long-lived assets (388) 182
Total operating expenses 2,129,158 1,764,065
Operating income 439,109 606,513
Interest expense (14,811) (17,267)
Interest income 830 824
Other expense, net (1,658) (3,873)
Income before income taxes 423,470 586,197
Income taxes 123,983 190,197
Net income $299,487 $396,000
Earnings Per Share:
Basic $1.02 $1.35
Diluted $1.01 $1.34
Weighted Average Shares Outstanding:
Basic 292,934 293,134
Diluted 295,182 296,408
Supplemental Data:
Depreciation and amortization $127,666 $95,524
Capital expenditures 311,786 354,851
Operating Highlights
Following are the results of operations for the three months ended
March 31, 2008, March 31, 2007 and December 31, 2007 and for the six months
ended March 31, 2008 and 2007:
Three Months Ended Six Months Ended
March 31 December 31 March 31
2008 2007 2007 2008 2007
U.S./Mexico
Pressure
Pumping
Revenue $643,044 $633,356 $662,551 $1,305,595 $1,274,182
Operating
Income 126,516 220,340 182,022 308,538 472,897
Operating
Income
Margins 20% 35% 27% 24% 37%
Canada
Pressure
Pumping
Revenue $138,790 $121,876 $121,346 $260,136 $233,540
Operating
Income 14,481 18,810 16,992 31,473 32,217
Operating
Income
Margins 10% 15% 14% 12% 14%
International
Pressure
Pumping
Revenue $292,120 $250,371 $288,512 $580,632 $502,427
Operating
Income 34,714 29,127 35,925 70,639 69,500
Operating
Income
Margins 12% 12% 12% 12% 14%
Oilfield
Services
Group
Revenue $209,248 $181,035 $212,656 $421,904 $360,429
Operating
Income 37,769 36,674 40,033 77,802 69,372
Operating
Income
Margins 18% 20% 19% 18% 19%
Corporate
Operating
Loss $(26,952) $(14,764) $(22,391) $(49,343) $(37,473)
March Quarter Review
U.S./Mexico Pressure Pumping Services second quarter 2008 revenue of
$643.0 million was 3% lower than the December 2007 quarter (sequential)
with average active drilling rigs for the same period declining 1%. Lower
revenue was primarily attributable to the continuing trend of lower pricing
for our products and services, which was generally steeper this quarter
than originally anticipated. Compared to the March 2007 quarter (year over
year), revenue increased 2% on a 2% increase in average active drilling
rigs. This increase is the result of higher job volume, largely offset by
lower pricing. Operating income margins for U.S./Mexico decreased to 20%
from 27% in the previous quarter and from 35% in the same quarter last
year, reflecting the effect of lower pricing sequentially and year over
year, as well as increased material, maintenance and fuel costs.
Canada Pressure Pumping Services second quarter 2008 revenue of $138.8
million increased 14% sequentially and year over year. Sequential revenue
improvement was due to a seasonal increase in Canadian average active
drilling rigs of 43% during the period, partially offset by a severe
reduction in pricing. Year over year, revenue improvement was primarily
attributable to the strengthening of the Canadian dollar in relation to the
U.S. dollar. Revenue declined on a Canadian dollar basis, due to lower
activity levels and lower pricing. Primarily as a result of lower pricing
and escalating fuel costs, operating income margin for Canada decreased to
10% from 14% in the previous quarter and 15% in the prior year quarter.
International Pressure Pumping Services second quarter 2008 revenue of
$292.1 million increased 1% sequentially with average active drilling rig
levels increasing 3% for the same period. Revenue compared to the same
quarter last year increased 17% with average active drilling rigs up 7%.
Revenue performance by region is as follows:
Region Sequential Year Over Year
Europe(1) -6% -23%
Middle East(1) -2% 29%
Asia Pacific -11% 8%
Russia 31% -10%
Latin America(1) 10% 43%
Total 1% 17%
(1) During the quarter ended March 31, 2008, we revised the internal
management reporting structure of our pressure pumping operations in
Africa. Our North Africa results, including Algeria and Libya, are
now included in our Middle East operating segment, while our West
Africa results south of Nigeria, including Angola and Gabon, are now
included in our Latin America operating segment. Nigeria and coastal
areas north of there remain as part of our Europe segment. Prior
period results have been restated to conform with the current
presentation.
Sequential revenue contributions from our Latin America and Russian
operations during the quarter were offset by lower revenue from other
operating segments within International Pressure Pumping operations.
Increased fracturing and vessel activity in Brazil and higher activity in
Venezuela provided for the majority of the improvement in the Latin
American region. Russia benefited from increased activity, as the previous
quarter included a number of lost work days due to extremely cold weather.
In Europe, lower activity levels in Norway compared to the prior quarter
was the significant cause for the decline of revenue in the region. In the
Middle East, lower product sales in India and lower revenue in Saudi Arabia
offset improvements in Algeria, Libya and Bangladesh. Our Asia Pacific
operations showed a decline in revenue, while average active drilling rigs
for the region remained unchanged. Adverse weather conditions negatively
impacted operations in Australia and Malaysia while operations in Thailand
were hindered by the delay of rigs moving into that market.
Year over year, our Latin America operations led the segment's increase
in revenue. All major markets within the region had revenue growth with the
highest increase in Brazil. In the Middle East, increased revenue resulted
from the addition of two stimulation vessels into the India market during
the later part of fiscal 2007. The region also benefited from increased
revenue in Algeria, Saudi Arabia and Azerbaijan. In Asia Pacific, an 11%
increase in average active drilling rigs contributed to the region's 8%
increase in revenue compared to the prior year. In Europe, the transfer of
a stimulation vessel from the North Sea to India was the primary reason for
the revenue decline. In Russia, revenue was lower as the prior year
included revenue from our workover rig business, which was sold in the
third fiscal quarter of 2007.
Operating income margins for International Pressure Pumping were 12% in
the second quarter of fiscal 2008, consistent with the previous quarter and
last year's March quarter. Increased revenues and improving margins in some
international markets have been offset by the impact of activity declines,
weather delays and rig delays in other markets.
Oilfield Services Group second quarter 2008 revenue of $209.2 million
decreased 2% sequentially and increased 16% year over year.
Division Sequential Year Over Year
Tubular Services -8% 0%
Process & Pipeline Services -3% 69%
Chemical Services -1% 22%
Completion Tools 10% 32%
Completion Fluids -2% -45%
Total -2% 16%
Tubular Services operations experienced adverse weather conditions and
project delays during the second quarter of fiscal 2008, which resulted in
lower revenue sequentially and flat revenue year over year. The Process &
Pipeline Services business reported a seasonal decline in revenue
sequentially, but significant revenue growth year over year resulting from
activity increases in the Middle East and Asia Pacific markets. Chemical
Services revenue growth year over year was due to higher activity levels,
while revenue was lower sequentially primarily as a result of lower
international revenue. Revenue growth in the Completion Tools business
sequentially and year over year was primarily attributable to continued
expansion into international markets. Declines in Completion Fluids revenue
performance is primarily the result of lower activity in the Gulf of Mexico
as well as pricing pressure and less favorable product mix.
The Oilfield Services Group operating income margin for the quarter was
18%, down from 19% in the previous quarter and 20% reported in the prior
year's second quarter. The sequential decline was due primarily to a
decline in revenue from our Chemical Services and Tubular Services
businesses. Year over year, lower profitability from Tubular Services and
Completion Fluids were the primary reasons for the decline.
Consolidated Geographic Highlights
The following table reflects the percentage change in consolidated
revenue by geographic area for the March 2008 quarter compared to the
December 2007 quarter and the March 2007 quarter. The information presented
is based on our combined service and product line offering by geographic
region.
Geographic Sequential Year Over Year
U.S. -4% 1%
Canada 15% 15%
Total -1% 3%
Latin America 14% 34%
Europe/Africa -12% -8%
Russia 31% -8%
Middle East -5% 32%
Asia Pacific -2% 36%
Total 0% 8%
Non-GAAP Financial Measures
A non-GAAP financial measure is a numerical measure of a registrant's
historical or future financial performance, financial position or cash
flows that 1) excludes amounts, or is subject to adjustments that have the
effect of excluding amounts, that are included in the most directly
comparable measure calculated and presented in accordance with GAAP in the
statement of income, balance sheet, or statement of cash flows, or 2)
includes amounts, or is subject to adjustments that have the effect of
including amounts, that are excluded from the most directly comparable
measure so calculated and presented.
Any unexpected disclosures of non-GAAP financial measures discussed on
the call will be posted on our website as soon as possible after the
disclosure.
Conference Call
The Company will hold a conference call following this earnings
release. The call will take place at 8:30 a.m. Central Time.
To participate in the conference call, please call 913/312-0682, 10
minutes prior to the conference call start time and give the conference
code number 2292641. If you are unable to participate, the conference call
will be available for playback three hours after conclusion of the
conference call. The playback number is 719/457-0820 and the replay entry
code is 2292641. Playback will be available for five days.
The conference call will also be available via real-time webcast at
http://www.bjservices.com. Playback of the webcast will be available
following the conference call.
This news release contains forward-looking statements that anticipate
future performance such as the Company's prospects, expected revenue, and
expenses and profits. These forward-looking statements are based on
assumptions that may prove to be inaccurate, and they are subject to risks
and uncertainties that may cause actual results to differ materially from
expected results. These risk factors include, without limitation, general
global business and economic conditions, drilling activity and rig count,
pricing volatility for oil and gas, reduction in demand for our services
and products, risks from operating hazards such as fire, explosion and oil
spills, unexpected litigation for which insurance and customer agreements
do not provide complete protection, potential adverse results from our SEC
and DOJ investigations, changes in exchange rates and declines in the U.S.
dollar, and risks associated with our international operations, including
potential instability and hostilities. This list of risk factors is not
intended to be comprehensive. More extensive information concerning risk
factors may be found in our public filings with the Securities and Exchange
Commission.
BJ Services Company is a leading provider of pressure pumping, well
completion, production enhancement and pipeline services to the petroleum
industry.
SOURCE BJ Services Company
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Related links:
http://www.bjservices.com/
CONTACT:
Jeff Smith of BJ Services Company,
+1-713-462-4239
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