HOUSTON, July 24 /PRNewswire-FirstCall/ -- BJ Services Company (NYSE:
BJS; PCX; CBOE) today reported net income of $168.3 million for the third
fiscal quarter ended June 30, 2007, or $0.57 per diluted share. The
quarter's diluted earnings per share decreased 11% compared to the $0.64
per diluted share reported in the previous quarter and decreased 15%
compared to the $0.67 per diluted share for the third quarter of fiscal
2006.
Consolidated revenue in the third quarter of fiscal 2007 was $1,152.5
million, down 3% compared to $1,186.6 million in the previous quarter and
up 3% compared to $1,116.9 million reported in the prior year's June
quarter. Consolidated operating income for the quarter was $257.8 million,
an 11% decrease compared to $290.2 million in the previous quarter and a
16% decrease compared to $306.9 million reported in the same quarter last
year.
During the third quarter, debt increased $34.8 million to $707.1
million and cash and cash equivalents increased $8.4 million to $65.5
million. Uses of cash during the quarter include capital expenditures of
$186.3 million, dividend payments of $14.7 million and the purchase of 1.9
million shares of the Company's common stock for $54.6 million. The Company
currently has remaining authorization from its Board of Directors to
purchase up to an additional $395 million in stock. In addition, on June
30, 2007, the Company acquired the capillary string business of
Allis-Chalmers for approximately $16.3 million.
Commenting on the results, Chairman and CEO Bill Stewart said, "Our
U.S./Mexico and International pressure pumping operations were in line with
our projections for the quarter. However, our consolidated results were
slightly below expectations due primarily to lower than forecasted activity
in Canada. The Canadian Spring break up extended longer than normal and
drilling activity was 50% below last year, negatively impacting the results
of our Canadian pressure pumping and Canadian pipeline operations.
"Looking at our fourth fiscal quarter, we expect drilling activity to
recover from the depressed Spring breakup levels in Canada. In the U.S.,
drilling activity is projected to be up slightly with pricing pressures
expected to continue in this market. In addition, we expect revenue from
our International Pressure Pumping segment to increase modestly as a result
of recently deployed assets that will begin operations during the current
quarter. Our Oilfield Services Group is projected to achieve double digit
revenue growth for this quarter. As such, we expect earnings for our fourth
fiscal quarter to be $0.60 to $0.62 per diluted share."
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands except per share amounts)
Three Months Ended
June 30 March 31
2007 2006 2007
Revenue $1,152,518 $1,116,906 $1,186,638
Operating Expenses:
Cost of sales and
services 812,701 734,717 820,661
Research and
engineering 17,146 16,665 16,164
Marketing 27,450 25,571 26,075
General and
administrative 35,630 32,310 33,634
Loss (gain) on
long-lived assets 1,764 764 (83)
Total operating
expenses 894,691 810,027 896,451
Operating income 257,827 306,879 290,187
Interest expense (1) (8,994) (2,506) (8,488)
Interest income 581 3,456 504
Other income/(expense), net (1,806) 194 (1,797)
Income before income taxes 247,608 308,023 280,406
Income taxes 79,318 95,143 91,490
Net income $168,290 $212,880 $188,916
Earnings Per Share:
Basic $0.57 $0.67 $0.64
Diluted $0.57 $0.67 $0.64
Weighted Average
Shares Outstanding:
Basic 293,142 315,705 293,247
Diluted 296,407 319,502 296,276
Supplemental Data:
Depreciation and
amortization $55,581 $42,390 $49,819
Capital expenditures 186,315 131,758 208,399
Debt 707,052 603,325 672,236
Nine Months Ended
June 30
2007 2006
Revenue $3,523,096 $3,151,885
Operating Expenses:
Cost of sales and services 2,421,997 2,096,339
Research and engineering 49,004 47,392
Marketing 79,338 75,118
General and administrative 106,471 98,657
Loss on long-lived assets 1,946 2,620
Total operating expenses 2,658,756 2,320,126
Operating income 864,340 831,759
Interest expense (1) (26,261) (2,796)
Interest income 1,405 10,347
Other income/(expense), net (5,679) 398
Income before income taxes 833,805 839,708
Income taxes 269,515 263,687
Net income $564,290 $576,021
Earnings Per Share:
Basic $1.93 $1.80
Diluted $1.90 $1.77
Weighted Average Shares
Outstanding:
Basic 293,137 320,881
Diluted 296,383 324,765
Supplemental Data:
Depreciation and amortization $151,105 $120,492
Capital expenditures 542,498 323,249
(1) In June 2006, the Company completed a public offering of $500 million
aggregate principal amount of Senior Notes and had other borrowings
of $207.3 million as of June 30, 2007.
Operating Highlights
Following are the results of operations for the three months ended June
30, 2007, June 30, 2006 and March 31, 2007 and for the nine months ended
June 30, 2007 and June 30, 2006:
Three Months Ended Nine Months Ended
June 30 March 31 June 30
2007 2006 2007 2007 2006
U.S./Mexico
Pressure
Pumping
Revenue $646,719 $644,070 $633,356 $1,920,901 $1,708,260
Operating
Income 215,449 260,618 220,340 688,346 651,466
Operating
Income Margins 33% 40% 35% 36% 38%
Canada Pressure
Pumping
Revenue $35,169 $66,939 $121,876 $268,709 $342,954
Operating
Income(Loss) (21,610) (2,203) 18,810 10,607 69,199
Operating
Income Margins -61% -3% 15% 4% 20%
International
Pressure
Pumping
Revenue $277,314 $233,735 $250,371 $779,741 $629,337
Operating
Income 42,643 38,153 29,085 112,066 91,218
Operating
Income Margins 15% 16% 12% 14% 14%
Oilfield Services
Group
Revenue $193,316 $172,162 $181,035 $553,745 $471,334
Operating
Income 41,800 39,389 36,674 111,172 96,464
Operating
Income Margins 22% 23% 20% 20% 20%
Corporate
Revenue $0 $0 $0 $0 $0
Operating
Loss (20,455) (29,078) (14,722) (57,851) (76,588)
June Quarter Review
U.S./Mexico Pressure Pumping Services third quarter 2007 revenue of
$646.7 million was 2% above the March 2007 quarter (sequential) and
slightly higher than the June 2006 quarter (year over year). Customer
drilling activity for U.S./Mexico increased 1% from the previous quarter,
while showing a 7% improvement year over year. Operating income margin for
the quarter was 33%, down from 35% in the previous quarter and 40% in the
June 2006 quarter. The sequential decline in operating income margin was
primarily due to lower pricing for our products and services. Year over
year, operating income margin declined due to lower pricing as well as cost
inflation for materials and labor and higher depreciation expense.
Canada Pressure Pumping Services third quarter 2007 revenue of $35.2
million decreased 71% from the previous quarter as the region's operations
slowed during the annual Spring break up period. Sequential average active
rig count was 74% lower than the previous quarter. Year over year, revenue
decreased 47% on a 50% decline in drilling activity. Operating income
margin for Canada decreased to -61% from 15% in the previous quarter and
from -3% in the same quarter last year. The operating loss during the
quarter was due to the depressed market conditions described above.
International Pressure Pumping Services third quarter 2007 revenue of
$277.3 million increased 11% sequentially with average active drilling rigs
increasing 3% during the same period. Revenue compared to the same quarter
last year increased 19% with average active drilling rigs up 11%. Revenue
performance by region is as follows:
Region Sequential Year Over Year
Europe/Africa 6 % 36 %
Middle East 13 % 22 %
Asia Pacific 30 % 31 %
Russia -20 % -29 %
Latin America 10 % 11 %
Sequential
Our Asia Pacific region reported record results during the quarter,
benefiting from stimulation and coiled tubing activity in Australia, market
growth in China and increased activity in Indonesia and Malaysia. In Latin
America, increased fracturing work in Brazil, Venezuela, and Argentina as
well as increased coiled tubing work in Colombia were the contributors to
revenue improvement from the previous quarter. The Middle East benefited
from continued growth in India and higher coiled tubing work in Saudi
Arabia. Our North Sea operations, excluding the stimulation vessel,
accounted for substantially all of the revenue increase in Europe/Africa.
Revenue from our stimulation vessel in the region was lower as we began its
mobilization to India during the quarter. In Russia, revenue was lower due
to the sale of the Company's workover rig business at the beginning of this
quarter.
Year Over Year
Our Europe/Africa region continued to show year over year revenue
improvement, with double-digit growth in most markets. In the Asia Pacific,
new contracts in Malaysia and activity increases in Australia and Indonesia
were key contributors to the region's improvement, which was slightly
reduced by revenue declines in New Zealand. Middle East revenue benefited
from activity increases in India and Saudi Arabia as described above, but
was slightly offset by lower revenue in Kazakhstan. In Latin America,
Brazil, Argentina and Columbia contributed to the revenue gain. As with the
sequential results, our Russian revenues were affected by the sale of our
workover rig business in the region.
Operating income margin for international pressure pumping was 15%
compared to 12% reported in the previous quarter and 16% reported in last
year's June quarter. An increase in service revenue, which are higher
margin jobs, in the Asia Pacific as well as margin improvement in the
Middle East and Latin America contributed to the sequential margin
increase.
Oilfield Services Group third quarter 2007 revenue of $193.3 million
increased 7% sequentially and increased 12% year over year.
Division Sequential Year Over Year
Tubular Services -1 % 24 %
Process & Pipeline Services 44 % 5 %
Chemical Services -1 % 32 %
Completion Tools 26 % 54 %
Completion Fluids -33 % -19 %
Our Process & Pipeline Services business showed a significant
improvement sequentially as market activity improved following its annual
seasonal decline in the previous quarter. Revenue from the Process &
Pipeline business also benefited sequentially from the acquisition of
Norson Service Ltd. (subsea pipeline commissioning and umbilical testing
services) in the prior quarter. This improvement coupled with a sequential
revenue improvement from Completion Tools was offset by declines in revenue
from our other operating segments, most notably Completion Fluids, which
was affected by lower activity in the U.S. and Mexico and non-repeat work
in the previous quarter.
Year over year all of the Oilfield Services Group, except Completion
Fluids, showed revenue improvement. The Completion Fluids revenue decline
is the result of lower Gulf of Mexico activity and the closing of
operations in the UK and Norway in the previous year. Our Chemical Services
operations continued to benefit from the acquisition of Dyna-Coil in the
first quarter of fiscal 2007.
The Oilfield Services Group operating income margin for the quarter was
22%, up from 20% in the previous quarter and down from 23% reported in last
year's June quarter.
Consolidated Geographic Highlights
The following table reflects the percentage change in consolidated
revenue by geographic area for the June 2007 quarter compared to the March
2007 quarter and the June 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 % 0 %
Canada -63 % -42 %
Total -9 % -5 %
Latin America 10 % 9 %
Europe/Africa 13 % 30 %
Russia -20 % -29 %
Middle East 9 % 12 %
Asia Pacific 32 % 33 %
Total -3 % 3 %
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 913/312-1301, 10
minutes prior to the conference call start time and give the conference
code number 2354078. 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 2354078. 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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