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Complete Production Services, Inc. Reports Second Quarter 2011 Earnings of $0.69 Per Diluted Share

HOUSTON, Jul 22, 2011 (BUSINESS WIRE) --

Complete Production Services, Inc. (NYSE:CPX) today reported second quarter revenue of $552.0 million, an increase of 11% over the first quarter of 2011, Adjusted EBITDA (as defined below) of $149.6 million, an increase of 19% over the first quarter of 2011, operating income of $100.1 million and net income of $54.5 million, or $0.69 per diluted share.

Revenue for the Completion and Production Services segment during the second quarter of 2011 was $491.9 million, an increase of $54.8 million over the prior quarter. Increasing activity in service intensive oil and liquid-rich plays and the deployment of new assets led to growth in all major service lines and more than offset the seasonal impact of the Canadian break-up and other weather related challenges. Adjusted EBITDA for the segment was $144.9 million in the second quarter of 2011, up $23.4 million versus the first quarter of 2011. Adjusted EBITDA margins increased to 29.5% from 27.8% in the first quarter of 2011.

Drilling Services segment revenue was $52.2 million during the second quarter of 2011, an increase of $2.1 million over the first quarter of 2011. Adjusted EBITDA for the segment increased $1.4 million to $13.9 million during the second quarter of 2011.

Compared to the second quarter of 2010, consolidated revenue increased $191.7 million, or 53%, Adjusted EBITDA increased $64.3 million, operating income increased $60.3 million, and net income increased by $38.8 million, or $0.49 per diluted share.

"We delivered another quarter of solid financial performance," commented Joe Winkler, Chairman and CEO. "In addition to achieving record revenue and EBITDA while overcoming the impact of challenging weather conditions in certain of our operating areas, during the second quarter we:

  • Completed a $15.6 million acquisition of a hydraulic snubbing and production testing business with operations in the Marcellus and Eagle Ford Shales;
  • Invested a total of $93.4 million in capital expenditures, which included the deployment of four large-diameter extended-reach coiled tubing spreads; and
  • Entered into a new five-year $300 million credit facility."

"Additionally, in early July we successfully deployed our third frac spread in the Eagle Ford Shale and we divested our products business in Southeast Asia for $19.3 million."

"We continue to invest in our business and execute key initiatives which improve our competitive position and our focus on critical completion and production services within the most active resource plays of North America. The actions we are taking and our position in the markets we serve will allow us to capitalize on activity levels that we believe will remain strong through 2012," concluded Mr. Winkler.

Complete Production Services, Inc. is a leading oilfield service provider focused on the completion and production phases of oil and gas wells. The company has established a significant presence in unconventional oil and gas plays in North America that it believes have the highest potential for long-term growth.

Complete will hold a conference call to discuss second quarter 2011 results on Friday, July 22, 2011 at 11:00 a.m. Eastern Time. To participate in the live conference call, dial (888) 268-4176 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 51812750. The conference call will be available for replay beginning at 2:00 p.m. Eastern Time on July 22, 2011, and will be available until July 29, 2011. To access the conference call replay, please call (888) 286-8010 and use the passcode: 28739479. The call is also being webcast and can be accessed at our website at www.completeproduction.com.

The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risk and uncertainties. These forward-looking statements include statements regarding future market conditions and the company's future success. Such statements are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry, the uncertainty of near-term and long-term activity levels, general economic conditions in the United States and globally, and other risks described in the company's most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release.

Management evaluates the performance of Complete's operating segments using non-GAAP financial measures, including Adjusted EBITDA. Adjusted EBITDA is calculated as net income from continuing operations before net interest expense, taxes, depreciation, amortization, impairment charges and non-controlling interest. Adjusted EBITDA is not a substitute for GAAP measures of earnings and cash flow. Adjusted EBITDA is used in this press release because our management considers this measure to be an important supplemental measure of performance and believes it is used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

Complete Production Services, Inc.
Consolidated Statements of Operations
For the Quarters Ended June 30, 2011 and 2010 and March 31, 2011
And the Six Months Ended June 30, 2011 and 2010

(unaudited, in thousands, except share and per share data)

Quarter Ended Six Months Ended
June 30, March 31, June 30,
2011 2010 2011 2011 2010
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue:
Services $ 544,103 $ 350,905 $ 487,239 $ 1,031,342 $ 652,297
Products 7,864 9,340 7,978 15,842 17,652
551,967 360,245 495,217 1,047,184 669,949
Cost of services 346,645 223,564 314,522 661,167 430,384
Cost of products 5,335 7,323 5,953 11,288 13,447
General and administrative expense 50,380 44,017 49,351 99,731 84,869
Depreciation and amortization 49,465 45,472 49,148 98,613 90,791
451,825 320,376 418,974 870,799 619,491
Income before interest and taxes 100,142 39,869 76,243 176,385 50,458
Interest expense 13,681 14,760 14,143 27,824 29,501
Interest income (132 ) (95 ) (95 ) (227 ) (143 )
Income before taxes 86,593 25,204 62,195 148,788 21,100
Tax provision 32,088 9,533 23,261 55,349 8,191
Net income $ 54,505 $ 15,671 $ 38,934 $ 93,439 $ 12,909
Basic earnings per share: $ 0.70 $ 0.21 $ 0.51 $ 1.21 $ 0.17
Diluted earnings per share: $ 0.69 $ 0.20 $ 0.50 $ 1.18 $ 0.17
Weighted average shares outstanding:
Basic 77,777 76,036 76,942 77,362 75,869
Diluted 79,187 77,318 78,599 78,895 77,194
Complete Production Services, Inc.
Condensed Consolidated Balance Sheets
As of June 30, 2011 and December 31, 2010
(in thousands)
June 30, December 31,
2011 2010
(unaudited) (unaudited)
Assets:
Cash $ 170,554 $ 126,681
Other current assets 492,038 425,229
Property, plant and equipment, net 1,001,810 956,028
Goodwill 254,996 250,533

Restricted cash (1)

17,000 17,000
Other long-term assets 29,267 25,105
Total assets 1,965,665 1,800,576
Liabilities and stockholders' equity:
Current liabilities 153,533 148,404
Long-term debt 650,000 650,000
Long-term deferred tax liabilities 234,451 190,422
Other long-term liabilities 6,150 5,916
Total liabilities 1,044,134 994,742
Common stock 778 765
Treasury stock (7,346 ) (1,765 )
Additional paid-in capital 684,174 657,992
Retained earnings 219,604 126,165
Cumulative translation adjustment 24,321 22,677
Total stockholders' equity 921,531 805,834
Total liabilities and stockholders' equity $ 1,965,665 $ 1,800,576
(1) Represents funds placed in escrow as a compensating balance for certain potential long-term insurance claim liabilities, effectively cash collateralizing and replacing a letter of credit.
Complete Production Services, Inc.
Consolidated Segment Information

For the Quarters Ended June 30, 2011 and 2010, and March 31, 2011

And Six Months Ended June 30, 2011 and 2010

(in thousands, except percentages)
Quarter Ended
June 30, March 31,
2011 2010 2011
(unaudited) (unaudited) (unaudited)
Revenue:
Completion and production services $ 491,881 $ 310,460 $ 437,087
Drilling services 52,222 40,445 50,152
Products 7,864 9,340 7,978
Total revenues $ 551,967 $ 360,245 $ 495,217

Adjusted EBITDA: (1)

Completion and production services $ 144,931 $ 84,748 $ 121,514
Drilling services 13,888 8,663 12,489
Products 1,863 1,250 1,215
Corporate and other (11,075) (9,320) (9,827)
Total $ 149,607 $ 85,341 $ 125,391
Adjusted EBITDA as a % of Revenue:
Completion and production services 29.5% 27.3% 27.8%
Drilling services 26.6% 21.4% 24.9%
Products 23.7% 13.4% 15.2%
Total 27.1% 23.7% 25.3%
Six Months Ended
June 30, June 30,
2011 2010
(unaudited) (unaudited)
Revenue:
Completion and production services $ 928,968 $ 576,748
Drilling services 102,374 75,549
Products 15,842 17,652
$ 1,047,184 $ 669,949

Adjusted EBITDA: (1)

Completion and production services $ 266,445 $ 142,504
Drilling services 26,376 14,082
Products 3,077 2,812
Corporate and other (20,900) (18,149)
$ 274,998 $ 141,249
Adjusted EBITDA as a % of Revenue:
Completion and production services 28.7% 24.7%
Drilling services 25.8% 18.6%
Products 19.4% 15.9%
Total 26.3% 21.1%
(1)

Adjusted EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release.

Complete Production Services, Inc.

Reconciliation of Adjusted EBITDA to Net Income (Loss)

For the Quarters Ended June 30, 2011 and 2010, and March 31, 2011

And the Six Months Ended June 30, 2011 and 2010
(unaudited, in thousands)
Completion
& Production Drilling Corporate &
Services Services Products Other Total
Quarter Ended June 30, 2011:

Adjusted EBITDA (1)

$ 144,931 $ 13,888 $ 1,863 $ (11,075 ) $ 149,607
Depreciation & amortization 43,585 4,790 486 604 49,465
Operating income $ 101,346 $ 9,098 $ 1,377 $ (11,679 ) $ 100,142
Interest expense 13,681
Interest income (132 )
Income taxes 32,088
Net income $ 54,505
Quarter Ended June 30, 2010:

Adjusted EBITDA (1)

$ 84,748 $ 8,663 $ 1,250 $ (9,320 ) $ 85,341
Depreciation & amortization 39,770 4,644 561 497 45,472
Operating income $ 44,978 $ 4,019 $ 689 $ (9,817 ) $ 39,869
Interest expense 14,760
Interest income (95 )
Income taxes 9,533
Net income $ 15,671
Quarter Ended March 31, 2011:

Adjusted EBITDA (1)

$ 121,514 $ 12,489 $ 1,215 $ (9,827 ) $ 125,391
Depreciation & amortization 43,257 4,749 542 600 49,148
Operating income $ 78,257 $ 7,740 $ 673 $ (10,427 ) $ 76,243
Interest expense 14,143
Interest income (95 )
Income taxes 23,261
Net income $ 38,934
Six Months Ended June 30, 2011:

Adjusted EBITDA (1)

$ 266,445 $ 26,376 $ 3,077 $ (20,900 ) $ 274,998
Depreciation & amortization 86,842 9,539 1,028 1,204 98,613
Operating income $ 179,603 $ 16,837 $ 2,049 $ (22,104 ) $ 176,385
Interest expense 27,824
Interest income (227 )
Income taxes 55,349
Net income $ 93,439
Six Months Ended June 30, 2010:
Adjusted EBITDA(1) $ 142,504 $ 14,082 $ 2,812 $ (18,149 ) $ 141,249
Depreciation & amortization 79,563 9,102 1,137 989 90,791
Operating income $ 62,941 $ 4,980 $ 1,675 $ (19,138 ) $ 50,458
Interest expense 29,501
Interest income (143 )
Income taxes 8,191
Net income $ 12,909
(1) Adjusted EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release.

SOURCE: Complete Production Services, Inc.

Complete Production Services, Inc.
Canaan Factor, 281-372-2300
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