HOUSTON, July 22 /PRNewswire-FirstCall/ -- BJ Services Company (NYSE:
BJS; CBOE; PCX) today reported net income of $141.8 million, or $0.48 per
diluted share, for the third quarter of fiscal 2008, which ended June 30,
2008. These results represent a 12% increase from the $0.43 per diluted
share reported in the previous quarter and a 16% decrease compared to the
$0.57 per diluted share reported in the third quarter of fiscal 2007.
Revenue in the third quarter of fiscal 2008 was a record $1.33 billion,
a 4% increase from the $1.28 billion reported in the previous quarter and a
15% increase from the $1.15 billion reported in the prior year's June
quarter. Operating income for the quarter was $206.9 million, an 11%
increase compared to $186.5 million for the previous quarter and a 20%
decrease compared to $257.8 million reported in the third quarter of fiscal
2007. Operating income as a percentage of revenue was 15.6% in the third
quarter of fiscal 2008, compared to 14.5% in the previous quarter and 22.4%
in the comparable quarter of the prior year. The lower operating margin
compared to the prior year is primarily attributable to lower pricing in
our U.S. Pressure Pumping operations.
Commenting on the results, Chairman and CEO Bill Stewart said, "We are
greatly encouraged by our operating results for the quarter. The
significant milestone of achieving price and margin stabilization in U.S.
Pressure Pumping operations appears to have occurred during the quarter.
Improved margins in our International Pressure Pumping operations were also
achieved and we expect these two events to be positive turning points for
the Company in today's market environment.
"In North America, U.S. drilling activity exceeded expectations, while
Canada activity was hindered by the seasonal spring break-up period.
Importantly, as stated above, prices in the U.S. for our services appear to
be stabilizing. The U.S./Mexico Pressure Pumping, International Pressure
Pumping and Oilfield Services segments all experienced sequentially
improved revenues and operating margins for the quarter.
"Looking at our fourth fiscal quarter, we expect drilling activity in
the U.S. to be up 3%-4% compared to the third fiscal quarter. In Canada,
the spring break-up period is over, and we expect meaningful positive
contribution sequentially from our operations there. We anticipate modest
sequential revenue and margin improvement from our International Pressure
Pumping and Oilfield Services operations. Based on these assumptions, we
are currently projecting diluted earnings for the fourth fiscal quarter to
be in the range of $0.54 to $0.57 per share."
Debt decreased $14.7 million during the quarter to $601.2 million and
cash and cash equivalents increased $38.9 million to $82.5 million during
the quarter. Uses of cash during the quarter included capital expenditures
of $106.5 million, payment of $14.7 million in dividends and $53.4 million
for the May 2008 purchase of Innicor Subsurface Technologies Inc., an
important complement to the Company's completion tool product line. Innicor
is a Calgary-based designer, manufacturer and provider of tools and
equipment used in the completion and production phases of oil and gas well
development in Canada and select international markets.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands except per share amounts)
Three Months Ended
June 30 March 31
2008 2007 2008
Revenue $1,328,228 $1,152,518 $1,283,202
Operating
Expenses:
Cost of sales and
services 1,032,375 812,701 1,004,107
Research and engineering 18,563 17,146 18,913
Marketing 29,400 27,450 31,764
General and administrative 40,401 35,630 41,652
Loss on long-lived assets 631 1,764 238
Total operating
expenses 1,121,370 894,691 1,096,674
Operating income 206,858 257,827 186,528
Interest expense (6,596) (8,994) (6,949)
Interest income 554 581 356
Other income/(expense), net (3,189) (1,806) 1,053
Income before income taxes 197,627 247,608 180,988
Income taxes 55,844 79,318 53,685
Net income $141,783 $168,290 $127,303
Earnings Per
Share:
Basic $0.48 $0.57 $0.43
Diluted $0.48 $0.57 $0.43
Weighted Average Shares
Outstanding:
Basic 293,892 293,142 293,245
Diluted 296,357 296,407 295,285
Supplemental Data:
Depreciation
and amortization $67,532 $55,581 $64,900
Capital expenditures 106,502 186,315 149,989
Debt 601,219 707,052 615,892
Nine Months Ended June 30
2008 2007
Revenue $3,896,495 $3,523,096
Operating Expenses:
Cost of sales and services 2,986,932 2,421,997
Research and engineering 54,674 49,004
Marketing 89,996 79,338
General and administrative 118,683 106,471
Loss on long-lived assets 243 1,946
Total operating expenses 3,250,528 2,658,756
Operating income 645,967 864,340
Interest expense (21,407) (26,261)
Interest income 1,384 1,405
Other expense, net (4,847) (5,679)
Income before income taxes 621,097 833,805
Income taxes 179,827 269,515
Net income $441,270 $564,290
Earnings Per Share:
Basic $1.50 $1.93
Diluted $1.49 $1.90
Weighted Average
Shares Outstanding:
Basic 293,253 293,137
Diluted 295,586 296,383
Supplemental Data:
Depreciation and
amortization $195,198 $151,105
Capital expenditures 418,288 542,498
Operating Highlights
Following are the results of operations for the three months ended June
30, 2008, June 30, 2007 and March 31, 2008 and for the nine months ended June
30, 2008 and 2007:
Three Months Ended Nine Months Ended
June 30 March 31 June 30
2008 2007 2008 2008 2007
U.S./Mexico
Pressure Pumping
Revenue $706,689 $646,719 $643,044 $2,012,284 $1,920,901
Operating Income 146,821 215,449 126,516 455,359 688,346
Operating Income
Margins 21% 33% 20% 23% 36%
Canada Pressure
Pumping
Revenue $48,636 $35,169 $138,790 $308,772 $268,709
Operating Income
(Loss) (16,595) (21,610) 14,481 14,878 10,607
Operating Income
Margins -34% -61% 10% 5% 4%
International
Pressure Pumping
Revenue $316,922 $277,314 $292,120 $897,554 $779,741
Operating Income 45,235 42,623 34,714 115,874 112,066
Operating Income
Margins 14% 15% 12% 13% 14%
Oilfield Services
Group
Revenue $255,981 $193,316 $209,248 $677,885 $553,745
Operating Income 49,669 41,800 37,769 127,471 111,172
Operating Income
Margins 19% 22% 18% 19% 20%
Corporate
Operating Loss $(18,272) $(20,455) $(26,952) $(67,615) $(57,851)
June Quarter Review
U.S./Mexico Pressure Pumping Services third quarter 2008 revenue of
$706.7 million was 10% higher than the March 2008 quarter (sequential) with
average active drilling rigs for the same period increasing 5%. Increased
activity in the Rocky Mountains, the Northeast, East Texas and the Gulf of
Mexico was the primary source of the revenue improvement. Compared to the
June 2007 quarter (year over year), revenue increased 9% on a 6% increase
in average active drilling rigs. Increased activity in the Rocky Mountains,
Mid-Continent and East Texas primarily accounts for the increased revenue.
Operating income margin for U.S./Mexico increased to 21% from 20% in the
previous quarter and decreased from 33% in the same quarter last year. The
lower operating income margin compared to the same quarter of last year was
due to lower pricing and increased material, maintenance and fuel costs.
Canada Pressure Pumping Services third quarter 2008 revenue of $48.6
million was 65% lower sequentially as the region experienced its annual
spring break-up period with average drilling rig activity down 67%. Year
over year revenue increased 38% with average drilling rig activity
increasing 22%. The operating loss during the third quarter was less severe
compared to the prior year quarter due to the improved revenue in addition
to cost reduction initiatives.
International Pressure Pumping Services third quarter 2008 revenue of
$316.9 million increased 8% sequentially with average active drilling rig
levels increasing 4% for the same period. Revenue compared to the same
quarter last year increased 14% with average active drilling rigs up 8%.
Percentage changes in revenue by region compared to the second quarter of
fiscal 2008 and the third quarter of fiscal 2007 are as follows:
Region Sequential Year Over Year
Europe(1) 25% -8%
Middle East(1) 3% 21%
Asia Pacific 26% 5%
Russia -3% 9%
Latin America(1) 2% 30%
Total 8% 14%
(1) During the quarter ended March 31, 2008, we revised the internal
management reporting structure of our pressure pumping operations in
Africa, whose results of operations were previously reported in our
Europe/Africa operating segment. 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 operating
segment. Prior period results have been revised to conform with the current
presentation.
All of our International Pressure Pumping operating segments except
Russia showed sequential revenue improvement benefiting from increased
activity levels. Average active drilling rigs in Europe and Asia Pacific
increased 7% and 11%, respectively, from the prior quarter while our
revenue in Europe and Asia Pacific increased 25% and 26%, respectively.
Middle East and Latin America revenue improvement sequentially was in line
with average drilling rig activity in those regions.
Year over year revenue improved 30% in Latin America and 21% in the
Middle East, with average active drilling rigs increasing 3% and 4%,
respectively. The Latin America increase was primarily the result of
increased stimulation activity in Brazil, Venezuela and Argentina, while
the Middle East increase was primarily the result of new service contracts
in North Africa and Kazakhstan. Asia Pacific revenue improved 5% on an 11%
increase in average active drilling rigs. In Europe, revenue declined 8%
while drilling activity in the region increased 21%, largely as a result of
the transfer of a stimulation vessel from the North Sea to India. Russian
revenue improved 9% year over year, primarily as a result of increased
stimulation activity.
Operating income margin for International Pressure Pumping was 14% for
the third quarter of fiscal 2008, a sequential increase from 12% in the
previous quarter and a decrease from 15% reported in the prior year June
quarter.
Oilfield Services Group third quarter 2008 revenue of $256.0 million
increased 22% sequentially and increased 32% year over year. Percentage
changes in revenue by division compared to the second quarter of fiscal
2008 and the third quarter of fiscal 2007 are as follows:
Division Sequential Year Over Year
Tubular Services 16% 18%
Process & Pipeline Services 24% 45%
Chemical Services 19% 46%
Completion Tools 1% 5%
Completion Fluids 60% 31%
Total 22% 32%
All of our operating segments made positive contributions to the
Oilfield Services Group's increase in revenue from the prior quarter. A 24%
seasonal increase in Process & Pipeline Services and a 60% increase in
Completion Fluids, primarily in the Gulf of Mexico, were the biggest
contributors. Completion Tools revenue increased slightly from the previous
quarter, while Tubular Services and Chemical Services revenue increased 16%
and 19%, respectively.
Year over year, revenue improved 45% and 46%, respectively, for our
Process & Pipeline Services and Chemical Services group, primarily as a
result of increased activity levels. Completion Fluids and Tubular Services
also improved markedly year over year, due to increased activity.
The Oilfield Services Group operating income margin for the quarter was
19%, up from 18% in the previous quarter and down from 22% in the prior
year's third quarter.
Consolidated Geographic Highlights
The following table reflects the percentage change in consolidated
revenue by geographic area for the June 2008 quarter compared to the March
2008 quarter and the June 2007 quarter. The information presented is based
on our combined service and product line offering by geographic region.
Region Sequential Year Over Year
U.S. 12% 11%
Canada -53% 47%
Total 1% 13%
Latin America -2% 21%
Europe/Africa 21% -2%
Russia -1% 10%
Middle East 6% 29%
Asia Pacific 8% 12%
Total 4% 15%
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 conference call mentioned below will be posted on our website as soon
thereafter as practicable.
Conference Call
The Company will hold a conference call following this earnings
release. The call will take place at 10:00 a.m. Central Time.
To participate in the conference call, please call 913-312-1462 ten
minutes prior to the conference call start time and give the conference
code number 1634930. 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 1634930. 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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