HOUSTON, April 24 /PRNewswire-FirstCall/ -- BJ Services Company (NYSE:
BJS; PCX; CBOE) today reported net income of $188.9 million for the second
fiscal quarter ended March 31, 2007, or $0.64 per diluted share. The
quarter's diluted earnings per share improved 3% compared to the $0.62 per
diluted share for the second quarter of fiscal 2006 and decreased 9%
compared to the $0.70 per diluted share reported in the previous quarter.
Consolidated revenue in the second quarter of fiscal 2007 was $1,186.6
million, up 10% compared to $1,078.8 million in prior year's March quarter
and slightly up compared to $1,183.9 million reported in the previous
quarter. Consolidated operating income for the quarter was $290.2 million,
a 2% decrease compared to $295.3 million for the same quarter last year and
an 8% decrease compared to $316.3 million reported in the previous quarter.
During the second quarter, debt increased $127.5 million to $672.2
million and cash and cash equivalents decreased $5.4 million to $57.1
million. Uses of cash during the quarter include capital expenditures of
$160.6 million (excluding $47.8 million related to the previously announced
buy-out of an equipment partnership established in 1997) and dividend
payments of $14.7 million. The Company also acquired Norson Service Ltd. in
March 2007 for $28.2 million. Norson provides subsea pipeline commissioning
and umbilical testing services to select offshore markets and will broaden
the service offering of our process and pipeline services business.
Commenting on the results, Chairman and CEO Bill Stewart said, "Our
second fiscal quarter results, while an improvement over last year, did not
meet our projections due to pricing declines in the U.S. market, lower
activity and pricing declines in Canada and project delays in our
International Pressure Pumping markets.
"In response to market softness in Canada, we have taken corrective
action to reduce personnel to a level more reflective of expected drilling
activity. We have also identified excess pressure pumping equipment in this
market that is currently being deployed to select markets internationally.
The equipment is expected to be operating in new markets late in our third
and into our fourth fiscal quarters of 2007.
"Other developments for the Company include the recent award of an
offshore stimulation contract off the west coast of India. The MV Vestfonn,
currently operating in the North Sea, is expected to begin operations in
India late in the fourth quarter of fiscal 2007.
"The Company was also awarded an offshore stimulation and completions
contract off the east coast of India. The MV Discovery, operating in the
Gulf of Mexico, will transfer to India late in the fourth quarter of fiscal
2007 to perform gravel pack, frac pack and stimulation pumping requirements
for the Reliance Industries Ltd. D6 development project. In addition, BJ
will supply completion tools and screens for cased hole completions on this
development. These two contracts are expected to improve the utilization
and profitability of our offshore stimulation fleet as we enter our fiscal
year 2008.
"Earlier this month, we completed the divestiture of our workover rig
business in Russia. With local management focused solely on pressure
pumping and the stimulation capacity that we are adding to this market, we
believe this operation is positioned to take advantage of a growing
stimulation market and improve operating income margins.
"During the quarter, we expanded our pressure pumping operations into
the southern region of Mexico. The Company was awarded a three-year
contract where cementing, coiled tubing and acidizing services will be
provided.
"Looking at the business near term, U.S. drilling activity is expected
to be up slightly for our fiscal third quarter. However, pricing pressures
are expected to continue in this market. Canada is in full Spring break-up
with activity levels significantly below last year, resulting in a
projected sequential activity decline of approximately 60% for our fiscal
third quarter and a year over year decline of approximately 20%. Our
international pressure pumping business is expected to recover from project
delays experienced in fiscal second quarter and our Oilfield Services Group
is projected to improve as our process and pipeline business enters its
seasonal market increase. As such, we expect earnings for our third fiscal
quarter to be $0.58 to $0.60 per diluted share."
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands except per share amounts)
Three Months Ended
March 31 December 31
2007 2006 2006
Revenue $1,186,638 $1,078,818 $1,183,940
Operating Expenses:
Cost of sales and services 820,661 712,358 788,635
Research and engineering 16,164 15,574 15,694
Marketing 26,075 24,953 25,813
General and administrative 33,634 28,756 37,207
Loss (gain) on long-lived
assets (83) 1,848 265
Total operating expenses 896,451 783,489 867,614
Operating income 290,187 295,329 316,326
Interest expense (1) (8,488) (155) (8,779)
Interest income 504 3,501 320
Other income/(expense), net (1,797) (748) (2,076)
Income before income taxes 280,406 297,927 305,791
Income taxes 91,490 94,443 98,707
Net income $188,916 $203,484 $207,084
Earnings Per Share:
Basic $0.64 $0.63 $0.71
Diluted $0.64 $0.62 $0.70
Weighted Average Shares
Outstanding:
Basic 293,247 323,027 293,024
Diluted 296,276 326,859 296,477
Supplemental Data:
Depreciation
and amortization $49,819 $39,917 $45,705
Capital expenditures 208,399 109,631 146,452
Debt 672,236 496 544,737
Six Months Ended
March 31
2007 2006
Revenue $2,370,578 $2,034,979
Operating Expenses:
Cost of sales and services 1,609,296 1,361,622
Research and engineering 31,858 30,727
Marketing 51,888 49,547
General and administrative 70,841 66,347
Loss on long-lived assets 182 1,856
Total operating expenses 1,764,065 1,510,099
Operating income 606,513 524,880
Interest expense (1) (17,267) (290)
Interest income 824 6,891
Other income/(expense), net (3,873) 204
Income before income taxes 586,197 531,685
Income taxes 190,197 168,544
Net income $396,000 $363,141
Earnings Per Share:
Basic $1.35 $1.12
Diluted $1.34 $1.11
Weighted Average Shares Outstanding:
Basic 293,134 323,469
Diluted 296,408 327,421
Supplemental Data:
Depreciation and amortization $95,524 $78,102
Capital expenditures 354,851 191,491
(1) In June 2006, the Company completed a public offering of $500 million
aggregate principal amount of Senior Notes and had short-term
borrowings of $172.5 million as of March 31, 2007. In February 2006,
the Company redeemed debt of $79.0 million.
Operating Highlights
Following are the results of operations for the three months ended
March 31, 2007, March 31, 2006 and December 31, 2006 and for the six months
ended March 31, 2007 and March 31, 2006:
Three Months Ended Six Months Ended
March 31 December 31 March 31
2007 2006 2006 2007 2006
U.S./Mexico
Pressure Pumping
Revenue $633,356 $566,896 $640,826 $1,274,182 $1,064,190
Operating
Income 220,340 215,369 252,557 472,897 390,848
Operating
Income Margins 35% 38% 39% 37% 37%
Canada Pressure
Pumping
Revenue $121,876 $151,750 $111,664 $233,540 $276,015
Operating
Income 18,810 39,635 13,407 32,217 71,402
Operating
Income Margins 15% 26% 12% 14% 26%
International
Pressure Pumping
Revenue $250,371 $203,873 $252,056 $502,427 $395,602
Operating
Income 29,085 27,442 40,338 69,423 53,065
Operating
Income Margins 12% 13% 16% 14% 13%
Oilfield Services
Group
Revenue $181,035 $156,299 $179,394 $360,429 $299,172
Operating
Income 36,674 31,922 32,698 69,372 57,075
Operating
Income Margins 20% 20% 18% 19% 19%
Corporate
Revenue $ --- $ --- $ --- $ --- $ ---
Operating Loss (14,722) (19,039) (22,674) (37,396) (47,510)
March Quarter Review
U.S./Mexico Pressure Pumping Services second quarter 2007 revenue of
$633.4 million was slightly below the December 2006 quarter (sequential)
and 12% higher than the March 2006 quarter (year over year). Customer
drilling activity for U.S./Mexico increased slightly from the previous
quarter, while showing a 14% improvement year over year. Operating income
margin for the quarter was 35%, down from 38% in the same quarter last year
and 39% in the December 2006 quarter. The sequential decline in operating
income margin was primarily due to lower pricing for our products and
services and higher maintenance expense. Year over year, operating income
margin declined due to cost inflation for materials and labor plus higher
maintenance spending on equipment.
Canada Pressure Pumping Services second quarter 2007 revenue of $121.9
million increased 9% sequentially due to a 9% increase in wells drilled.
Year over year, revenue decreased 20% due to a 21% decline in the number of
wells drilled. Lower natural gas prices in the region have resulted in
curtailment of drilling activity by our customers. Operating income margin
for Canada increased to 15% from 12% in the previous quarter due to the
higher drilling activity. Compared to the same quarter of last year,
operating income margin declined from 26% due to lower drilling activity
and pricing for our products and services along with higher labor and
material costs.
International Pressure Pumping Services second quarter 2007 revenue of
$250.4 million decreased 1% sequentially with average active drilling rigs
increasing 3% during the same period. Revenue compared to the same quarter
last year increased 23% with average active drilling rigs up 10%. Revenue
performance by region is as follows:
Region Sequential Year Over Year
Europe/Africa -4 % 32 %
Middle East 5 % 28 %
Asia Pacific 1 % 6 %
Russia -1 % 22 %
Latin America -1 % 23 %
Sequential revenue increases from our Middle East and Asia Pacific
operations were offset by revenue declines in our other international
operating regions. The Middle East benefited from activity increases in
India, Azerbaijan, Egypt, and Saudi Arabia. These increases were slightly
offset by a decline in revenue from Kazakhstan due to customer project
delays. While our Asia/Pacific region experienced activity increases in
Thailand and Malaysia, the increases were almost entirely offset by
Indonesia, Australia, and New Zealand project delays. Revenue from our
Europe/Africa operations decreased due to activity declines in Africa and
Norway. In Latin America, improved activity in Argentina was offset by
declines in the Colombia stimulation market and Venezuela.
All of our regions showed revenue improvement year over year. The
Europe/Africa region revenue improvement was due to increased revenue in
North Africa, as a result of acquiring a controlling interest in our
Algerian venture and expansion into Libya. In the Middle East, activity
gains in India, Azerbaijan, and Saudi Arabia were offset slightly by
declines in Bangladesh due to non-repeat blow out work in the previous
year. For Asia Pacific, revenue improvement in Malaysia was offset by a
decrease in our New Zealand stimulation project work. In Latin America,
Argentina, Colombia and Brazil contributed to the revenue gain.
Operating income margin for international pressure pumping was 12%
compared to 16% reported in the previous quarter and 13% reported in last
year's March quarter. Each of the international regions experienced some
decline during the quarter. The vessels in Latin America were dry docked
for several days during the quarter. Coiled tubing activities in the North
Sea were lower as several operators delayed coiled tubing workover
campaigns. Kazakhstan experienced a reduction in revenue as a key customer
demobilized assets that were active during the prior quarter. Russia
experienced 13 days of down time due to extreme cold weather during the
quarter.
Oilfield Services Group second quarter 2007 revenue of $181.0 million
increased 1% sequentially and increased 16% year over year.
Division Sequential Year Over Year
Tubular Services 2 % 38 %
Process & Pipeline Services -14 % 4 %
Chemical Services 2 % 37 %
Completion Tools 3 % 13 %
Completion Fluids 20 % 6 %
Year over year revenue improvement for Tubular Services was the result
of a strong U.S. business and international expansion. Sequentially,
revenue growth in Africa and Asia Pacific was partially offset by lower
revenue in the Middle East.
Process and Pipeline Services revenue improved year over year due to
strong performances in the North Sea and Asia Pacific partially offset by
lower revenue in North America and Africa. Sequentially, the business was
negatively impacted by normal seasonal declines in the business.
For our Chemical Services division, revenue continued to improve year
over year due to increased market activity and the acquisition of Dyna-Coil
in August 2006. Excluding Dyna-Coil, revenue would have increased 11% year
over year.
Our Completion Tools and Completion Fluids businesses benefited from
increased activity in the U.S. and Mexico markets. In addition, our
Completion Fluids business experienced increased revenue as the result of
the acquisition of Tekcor Technology, Ltd, in December 2006.
The Oilfield Services Group operating income margin for the quarter was
20%, up from 18% in the previous quarter and flat with that reported in
last year's March quarter. The sequential increase was due primarily to
high margin deepwater activity with our U.S. Completion Tools division.
Consolidated Geographic Highlights
The following table reflects the percentage change in consolidated
revenue by geographic area for the March 2007 quarter compared to the
December 2006 quarter and the March 2006 quarter. The information presented
is based on our combined service and product line offering by geographic
region.
Geographic Sequential Year Over Year
U.S. 1 % 12 %
Canada 7 % -19 %
Total 2 % 5 %
Latin America -3 % 26 %
Europe/Africa -2 % 18 %
Russia -1 % 22 %
Middle East -5 % 19 %
Asia Pacific -3 % 12 %
Total -3 % 19 %
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 9:00 a.m. Central Time.
To participate in the conference call, please call 913/312-1303, 10
minutes prior to the conference call start time and give the conference
code number 6857224. 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 6857224. 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 and other
oilfield services to the petroleum industry.
**********
(NOT INTENDED FOR DISTRIBUTION TO BENEFICIAL OWNERS)
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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