HOUSTON, Feb. 8 /PRNewswire-FirstCall/ -- BJ Services Company
(BJS-NYSE, CBOE, PCX) today reported that revenue in the first
quarter of fiscal 2010, which ended December 31, 2009, was $931.5
million, representing a 6% increase from the $878.2 million
reported in the previous quarter and a 34% decrease from the $1.4
billion reported in the first quarter of fiscal 2009. Operating
loss for the quarter was $10.8 million, compared to an operating
loss of $15.0 million for the previous quarter and operating income
of $221.3 million in the first quarter of fiscal 2009. The Company
reported a net loss from continuing operations of $8.4 million, or
$(0.03) per diluted share, for the first quarter of fiscal 2010
compared to a net loss from continuing operations of $(0.01) per
diluted share for the previous quarter and net income from
continuing operations of $0.51 per diluted share for the first
quarter of fiscal 2009. Discontinued operations, consisting of the
Company's pressure pumping business in Russia, accounted for a net
loss of $(0.02) per diluted share in the first quarter of fiscal
2010, compared to a net loss of $(0.02) per diluted share for the
previous quarter and a net loss of less than one cent per diluted
share for the first quarter of fiscal 2009. The Company completed
its last pressure pumping contract in Russia in July, so the
Company reclassified its Russia pressure pumping business as a
discontinued operation in the fourth quarter of fiscal 2009 and,
accordingly, recast prior periods to conform to that presentation.
First quarter 2010 results included costs of $3.1 million related
to the pending merger with Baker Hughes Incorporated, primarily
representing legal fees associated with the transaction. Operating
income (loss) as a percentage of revenue was (1.2) % in the first
quarter of fiscal 2010, compared to (1.7) % in the previous quarter
and 15.6% in the comparable quarter of the prior year. Commenting
on the results, Chairman and CEO Bill Stewart said, "Our first
quarter results reflected the second consecutive quarter of
sequential improvement in revenue, operating income and operating
income margin. U.S. drilling activity, particularly with respect to
oil exploration, as measured by average active drilling rigs,
increased 14% sequentially, but declined 42% compared to the same
period a year ago. Natural gas drilling was 7% higher sequentially,
and North America natural gas prices have improved somewhat as
supply and demand are beginning to get more in balance. Our
Canadian operations improved significantly from the previous
quarter, primarily reflecting increased activity in the Montney and
Horn River gas plays and the Bakken and other emerging oil plays.
International pressure pumping revenues and margins improved
sequentially, as international drilling activity improved 6%. Our
Oilfield Services Group results declined sequentially, primarily as
a result of fewer international completion tool shipments and a
seasonal decline in process and pipeline activity. "We experienced
increased service activity and a generally stable to slightly
improved pressure pumping pricing environment in the U.S. and
Canada markets during the quarter, as capacity utilization
improved. Our international pressure pumping business remains
strong, and we anticipate that a number of sizable completion tool
sales during our fiscal second quarter will lead to improved
results from our oilfield services group. We continue to focus on
our customers and meeting their needs, as we draw closer to the
completion of the merger with Baker Hughes, expected to occur in
March." During the quarter, cash and cash equivalents decreased
$21.6 million to $261.1 million, as the Company continued to
generate positive operating cash flow, but increased investment in
working capital to support revenue growth during the quarter. The
Company paid $14.7 million in dividends and incurred $39.7 million
in capital expenditures during the current year quarter. CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS UNAUDITED (in thousands except
per share amounts) Three Months Ended
--------------------------------------- December 31 September 30
--------------------- ------------ 2009 2008 2009 ---- ---- ----
Revenue $931,547 $1,416,788 $878,172 Operating Expenses: Cost of
sales and services 860,674 1,083,934 810,021 Research and
engineering 15,501 17,120 16,133 Marketing 24,570 30,693 24,849
General and administrative 42,188 41,988 40,763 Pension settlement
-- 21,695 -- Loss (gain) on disposal of assets (586) 34 1,380 ----
--- ----- Total operating expenses 942,347 1,195,464 893,146
------- --------- ------- Operating income (loss) (10,800) 221,324
(14,974) Interest expense (7,079) (6,042) (6,741) Interest income 7
515 27 Other income (expense), net (1,620) 1,709 (5,780) ------
----- ------ Income (loss) from continuing operations before income
taxes (19,492) 217,506 (27,468) Income tax expense (benefit)
(11,091) 67,043 (24,677) ------- ------ ------- Income (loss) from
continuing operations (8,401) 150,463 (2,791) Loss from
discontinued operations, net of tax (4,874) (1,225) (7,156) ------
------ ------ Net income (loss) $(13,275) $149,238 $(9,947)
======== ======== ======= Basic Earnings (Loss) Per Share:
Continuing operations $(0.03) $0.51 $(0.01) Discontinued operations
(0.02) -- (0.02) ----- --- ----- Net income (loss) per share
$(0.05) $0.51 $(0.03) ====== ===== ====== Diluted Earnings (Loss)
Per Share: Continuing operations $(0.03) $0.51 $(0.01) Discontinued
operations (0.02) -- (0.02) ----- --- ----- Net income (loss) per
share $(0.05) $0.51 $(0.03) ====== ===== ====== Weighted Average
Shares Outstanding: Basic 293,463 292,685 292,123 Diluted 293,463
293,910 292,123 Supplemental Data: Depreciation and amortization
$75,549 $69,363 $78,126 Capital expenditures 39,722 117,124 79,974
Debt at end of period 509,754 553,357 506,112 Operating Highlights
Following are the results of operations for the three months ended
December 31, 2009, December 31, 2008 and September 30, 2009: Three
Months Ended --------------------------------- December 31
September 30 --------------- ------------ 2009 2008 2009 ---- ----
---- U.S./Mexico Pressure Pumping $384,876 $721,546 $342,697
Revenue Operating Income (16,933) 151,885 (34,931) Operating Income
Margins -4% 21% -10% Canada Pressure Pumping Revenue $82,313
$131,810 $58,995 Operating Income 4,498 28,843 (1,516) Operating
Income Margins 5% 22% -3% International Pressure Pumping Revenue
$283,867 $314,114 $257,552 Operating Income 26,520 46,482 21,645
Operating Income Margins 9% 15% 8% Oilfield Services Group Revenue
$180,491 $249,318 $218,928 Operating Income 4,215 41,195 30,338
Operating Income Margins 2% 17% 14% Corporate Operating Loss
$(29,100) $(47,081) $(30,510) December Quarter Review U.S./Mexico
Pressure Pumping Services first quarter 2010 revenue of $384.9
million was 12% higher than the September 2009 quarter (sequential)
with average active drilling rigs for the same period increasing
14%. Compared to the December 2008 quarter (year-over-year),
revenue decreased 47% on a 42% decrease in average active drilling
rigs. Sequentially, revenue improved most notably in the Permian
Basin, South Texas, East Texas and Mid-Continent. For the
year-over-year periods, the steep declines were attributable to
lower fracturing and cementing activity in the U.S., coupled with
reductions in pricing for our services and products. In Mexico,
sequential revenue was down 17% due to lower drilling activity,
while revenues increased 11% year-over-year due to new projects and
increased activity both onshore and offshore. Operating margin for
U.S./Mexico improved to a loss of (4)% in the first quarter from an
operating loss of (10)% in the previous quarter, primarily as a
result of increased activity and slightly improved pricing in some
areas. Year-over-year, operating margin declined from a positive
operating margin of 21% in the same quarter last year. The lower
operating margin in the first quarter of fiscal 2010 was primarily
attributable to decreased activity and lower pricing, partially
offset by cost reduction initiatives put into place during fiscal
2009. Canada Pressure Pumping Services first quarter 2010 revenue
of $82.3 million was 40% higher sequentially with average drilling
rig activity up 49%, primarily reflecting increases in fracturing
and cementing activity. Year-over-year revenue decreased 38% with
average drilling rig activity down 32% primarily as a result of
lower drilling activity and lower pricing for our services and
products as a result of lower demand. Operating margin for the
first quarter of 2010 was 5%, improving from (3)% in the previous
quarter and down from 22% in the same quarter last year. The
sequential margin improvement was primarily the result of increased
activity partially offset by unfavorable job mix during the current
quarter. The year-over-year margin decline was largely attributable
to decreased activity and lower pricing, partially offset by cost
reduction initiatives implemented during 2009 and more favorable
job mix. International Pressure Pumping Services first quarter 2010
revenue of $283.9 million increased 10% compared to revenue of
$257.6 million in the 2009 fourth fiscal quarter, with average
active drilling rig levels increasing 6% for the same period.
Revenue compared to the same quarter last year decreased 10% with
average active drilling rig count decreasing at the same rate.
Percentage changes in revenue by region compared to the fourth
quarter and first quarter of fiscal 2009 are as follows: Region
Sequential Year-Over-Year ------ ---------- -------------- Europe
35% 32% Middle East 3% -21% Asia Pacific -3% -25% Latin America 14%
-4% The sequential improvement in Europe is largely attributable to
increased activity in the North Sea and the Netherlands. The
sequential increase in the Middle East is primarily attributable to
increased activity in Azerbaijan, partially offset by lower
activity in Kuwait. The sequential decline in Asia Pacific was
primarily attributable to reduced activity in Malaysia, partially
offset by increases in Australia and New Zealand. The sequential
increase in Latin America is largely the result of higher activity
in Argentina, Peru, Angola and other Southern West Africa
countries. Year-over-year, revenue decreased significantly in each
segment of our International Pressure Pumping operations, with the
exception of Europe, with average active international drilling
rigs declining 10%. Revenue in Europe increased primarily as a
result of high service activity in Norway, the Netherlands and
continental Europe. Asia Pacific revenue was lower as a result of
significantly lower activity in China, as well as lower activity in
Malaysia, Thailand and Indonesia. Middle East revenue was lower,
primarily as a result of lower activity and project delays in
India, Kazakhstan, Saudi Arabia, Egypt and Libya. Latin America
revenue was slightly lower as increased activity in Brazil and new
contracts in Angola and Congo were offset by lower activity in
Argentina, Venezuela and Peru. Operating income margin for
International Pressure Pumping was 9% for the first quarter of
fiscal 2010, compared to 8% in the previous quarter and 15% for the
same quarter last year. Sequential margin improvement in the Latin
America and Europe regions were partially offset by lower margins
in Asia Pacific and Middle East. Year-over-year margin declines are
largely attributable to the activity-related revenue decrease in
most international regions and lower pricing in certain markets. We
completed work on our final pressure pumping contract in Russia in
July 2009. Consequently, we classified the Russia pressure pumping
unit as a discontinued operation in the fourth quarter of fiscal
2009. Accordingly, the historical results of our Russian pressure
pumping operations have been recast for all periods presented. As
soon as our contractual obligations were fulfilled, we began the
process of redeploying and liquidating assets associated with this
business and other exit activities. In the fourth quarter of fiscal
2009, we recorded charges totaling $6.6 million in connection with
these exit activities, including employee separation costs, fixed
asset and inventory impairment charges and freight costs to
redeploy certain pressure pumping assets into other markets. During
the first quarter of fiscal 2010, we recorded costs totaling $4.9
million associated with these exit activities. In January 2010, the
Venezuelan government devalued its bolivar currency. We anticipate
that we will record a one-time currency exchange loss of less than
$10 million during the fiscal second quarter in remeasuring our net
bolivar-based assets and liabilities. This estimate is based on our
net position as of December 31, 2009 and our current understanding
of how the new two-rate structure will apply to our Venezuela
operations. Oilfield Services Group first quarter 2010 revenue of
$180.5 million decreased 18% sequentially, and 28% year-over-year.
Percentage changes in revenue by division compared to the fourth
quarter and first quarter of fiscal 2009 are as follows: Division
Sequential Year-Over-Year -------- ---------- --------------
Tubular Services 2% -24% Process and Pipeline Services -20% -22%
Chemical Services 2% -17% Completion Tools -48% -50% Completion
Fluids -1% -25% Revenue for Tubular Services, Chemical Services and
Completion Fluids were relatively flat compared to the previous
quarter. Completion Tools showed the largest sequential decrease
due to large contract deliveries in the prior quarter that did not
repeat in the current quarter. The sequential decrease in Process
and Pipeline Services revenue is primarily due to the seasonal
decline in maintenance and inspection activity in international
markets. Year-over-year, the decreases in Completion Tools and
Completion Fluids were largely attributable to significantly lower
activity in the U.S. Gulf of Mexico. In addition, the first quarter
of fiscal 2009 included a large international sale of completion
tools which did not repeat in fiscal 2010. Chemical Services
revenue was lower due to the reduced drilling activity in the U.S.
and Canada. Tubular Services revenue was lower as a result of lower
activity in the Gulf of Mexico in addition to rig movement and
delays in some international projects. Process and Pipeline
Services revenue was lower due to lower activity and deferred
customer spending in the Middle East and Asia Pacific markets. The
Oilfield Services Group operating income margin for the quarter was
2%, down from 14% in the previous quarter and 17% in the prior
year's first quarter, primarily as a result of the decreased
activity described in the previous paragraphs. Corporate results
for the first quarter of fiscal 2010 included $3.1 million of costs
related to the pending merger with Baker Hughes Incorporated.
Corporate results for fiscal 2009 included non-cash charge of $21.7
million in connection with the settlement of a frozen U.S. defined
benefit plan. Consolidated Geographic Highlights The following
table reflects the percentage change in consolidated revenue by
geographic area for the December 2009 quarter compared to the
September 2009 quarter and the December 2008 quarter. The
information presented is based on our combined service and product
line offering by geographic region. Geographic Sequential
Year-Over-Year ---------- ---------- -------------- U.S. 10% -46%
Canada 19% -36% --- --- Total 12% -44% === === Latin America -4%
-6% Europe/Africa 6% 11% Middle East 0% -33% Asia Pacific 9% -27%
--- --- Total 6% -34% === === Additional Information The Company
will not hold a conference call following this earnings release.
However, the Company intends to file its Quarterly Report on Form
10-Q for the period ended December 31, 2009 with the Securities and
Exchange Commission (the "SEC") later today. A copy of the report
will be available on our web site at http://www.bjservices.com/.
Stockholders may request a printed copy of our complete audited
financial statements free of charge by forwarding a written request
to Investor Relations, BJ Services Company, P.O. Box 4442, Houston,
Texas 77210-4442. In addition, on October 14, 2009, Baker Hughes
(BHI-NYSE) filed a Registration Statement on Form S-4 with the SEC,
which includes a joint proxy statement of Baker Hughes and the
Company regarding the proposed merger of the Company into a
subsidiary of Baker Hughes. Baker Hughes filed amendments to the
Registration Statement on December 21, 2009 and January 26, 2010.
The joint proxy statement/prospectus and such other documents
related to the Company may be obtained from the Company from our
web site at http://www.bjservices.com/ or by directing a request
to: BJ Services Company, P.O. Box 4442, Houston, Texas 77210-4442,
Attention: Investor Relations, or by phone at 713-462-4239. This
news release contains forward-looking statements that anticipate
future performance such as the Company's prospects, expected
revenue, expenses and profits, strategies for our operations, and
other subjects, including satisfying the conditions to closing the
merger with Baker Hughes as set forth in the merger agreement,
conditions in the oilfield service and oil and natural gas
industries and in the U.S. and international economy in general.
These forward-looking statements are based on assumptions that may
prove to be inaccurate, and they are subject to risks and
uncertainties that could cause actual results to differ materially
from the results expected. These risk factors include, but are not
limited to, general economic and business conditions, global
economic growth and activity, oil and natural gas market
conditions, political and economic uncertainty, and other risks and
uncertainties described in our Annual Report on Form 10-K and
subsequent public filings with the SEC. BJ Services Company is a
leading worldwide provider of pressure pumping, well completion,
production enhancement and pipeline services to the petroleum
industry. (NOT INTENDED FOR DISTRIBUTION TO BENEFICIAL OWNERS)
DATASOURCE: BJ Services Company CONTACT: Jeff Smith,
+1-713-462-4239, for BJ Services Company Web Site:
http://www.bjservices.com/
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