Service & Supply | Quarterly / Earnings Reports | Oilfield Services | Second Quarter (2Q) Update
Superior Q2 / Outlook: US Will 'Remain Challenging'; Offshore US, International Stable
Superior Energy Services reported its Q2 2019 results - below are highlights from its report and call.
Similar to Halliburton and Schlumberger's Q2 commentary, Superior noted lower North America activity and improving International operations.
Permian Accounted for Large Part of Revenue
Superior said the Permian accounted for a chunk of its revenue in Q2, but it was still down YOY:
In its call, Superior said: “Our business is global in nature, and our future opportunities aren’t contingent on near-term spending patterns in the Permian Basin. For context, we estimate that 23% of our revenue was related to Permian Basin spending in the second quarter, down from a high of 34% in the third quarter of last year. “
US Onshore 'Challenging'; Offshore US Improved 'Sharply'
The company commented: "U.S land revenues were lower sequentially. The U.S. land market will likely remain challenged from a competitive perspective, particularly if customer spending tapers, and we will continue to identify opportunities to reduce costs and remain proactive in identifying additional non-core divestitures."
"Our U.S. offshore results improved sharply as our completion tool business executed on projects that we had previously indicated had shifted from the first quarter to the second quarter. We expect to be in a period of strong completion activity mix in the Gulf of Mexico for the remainder of the year and our business has a robust backlog of customer orders that we will deliver on over the next several quarters.
International Stable
They commented: “International results were stable sequentially, although in general, we believe that activity levels will improve for us over time. This is due to a combination of increased customer activity and the continued success of our long-term international expansion efforts.”
Fewer Pressure Pumping Fleets, Drilling Products/Services Resilient
They said: "We operated fewer pressure pumping fleets in West Texas. Our drilling products and production services segments were more resilient despite a declining rig count.
“Increased completion tools and hydraulic workover and snubbing activity resulted in a 20% increase in total U.S. offshore revenue. In contrast to U.S. land markets, the U.S. offshore market is gradually improving, presenting opportunities for us to put our unique product offerings and solutions to work for acceptable returns."
Fleet Reduction commentary from Superior's call : More specifically, hydraulic fracturing continues to face significant challenges and given what we believe will continue to be a volatile OPEC market. We elected to reduce the average number of operational fleets during the quarter to six compared to an average of nine during the first quarter and exited the quarter with six operational fleets.
Outlook 'Uncertain'
In its call, Superior commented: "Okay. Thanks Westy. With respect to our market outlook, we are approaching the U.S. land market as if it is fully recovered and have no expectations for increased activity levels in the near future."
Longer Laterals Will Drive Premium Pipe Sale
"As operators have stretched out their laterals, they’re certainly realizing the benefits of going with a premium connection as opposed to more standard drill pipe. And I think what we’ve put in the market is a premium drill pipe offering that has given our customers and advantage from a maintenance and repair cost standpoint."
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