Complete Production Services, Inc. Reports Third Quarter 2009 Results

• Press Release
• Source: Complete Production Services, Inc.
• On 6:32 pm EDT, Monday October 26, 2009

HOUSTON--(BUSINESS WIRE)--Complete Production Services, Inc. (NYSE:CPX - News) today reported third quarter revenue of $229.9 million and an operating loss of $64.1 million, or $0.69 per diluted share. Third quarter results include pre-tax, non-cash charges of $41.0 million primarily related to fixed assets. Excluding these charges, EBITDA for the third quarter of 2009 was $27.2 million (“Modified EBITDA” as defined below) and net loss was $0.32 per diluted share.

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The $41.0 million in charges resulted from an ongoing evaluation and rationalization of operations and assets due to the significant changes in market conditions which began in the fourth quarter of 2008. The contract drilling business accounted for approximately $37.6 million of the charges, of which $36.2 million related to an impairment analysis done in accordance with U.S. GAAP and $1.4 million resulted from asset disposals. The remaining $3.4 million occurred within the Completion and Production Services segment and was associated with asset disposals and inventory write-downs.

Revenue for the Completion and Production Services segment during the third quarter of 2009 was $198.0 million, an increase of $1.6 million from the prior quarter. Modified EBITDA for the segment was $34.8 million, which compares to $34.1 million in the prior quarter. Modified EBITDA margin for the segment during the third quarter was 17.6% versus 17.4% for the quarter ending June 30, 2009.

Third quarter Drilling Services segment revenue was $25.4 million, versus $24.7 million reported for the prior quarter. The segment reported a Modified EBITDA loss of $2.4 million compared to a positive contribution of $3.6 million in the second quarter of 2009. The segment was adversely impacted by a shift in mix, a decrease in utilization in the contract drilling business and an increase in bad debt expense of $3.5 million.

“Relative to the severe drop in activity earlier this year, market conditions have stabilized considerably,” commented Joe Winkler, Chairman and CEO. “We anticipate that the near-term will remain challenging, but are pleased with how our dedicated people have positioned the Company for the market recovery. Year-to-date we:

• significantly reduced our cost structure and capital expenditures;
• reduced our debt by $197.3 million, completely paying-down our revolving credit facility;
• amended our undrawn credit facility to provide greater certainty that we will have access to liquidity beyond the $76.1 million in cash we had as of September 30, 2009; and
• prudently protected and enhanced our core market positions.”

“While we do not anticipate an improvement prior to year-end, we are seeing indications of future increases in activity. Our focus has now shifted to preparing for the recovery which we believe will be led by horizontal, multi-stage well completions in our core basins,” 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 third quarter 2009 results on Tuesday, October 27, 2009 at 11:00 a.m. Eastern Time. To participate in the live conference call, dial 800-561-2601 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 10516712. The conference call will be available for replay beginning at 2:00 p.m. on October 27, 2009 and will be available until November 3, 2009. To access the conference call replay, please call 888-286-8010 and use the passcode: 45251817. 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, the Company’s business objectives in the fourth quarter of 2009 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 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, EBITDA, Adjusted EBITDA and Modified EBITDA. EBITDA is calculated as net income from continuing operations before net interest expense, taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before impairment charges and minority interest. Modified EBITDA is calculated as Adjusted EBITDA before certain other non-cash charges including fixed asset and inventory write-downs and loss on non-monetary asset exchange. EBITDA, Adjusted EBITDA and Modified EBITDA are not substitutes for GAAP measures of earnings and cash flow. EBITDA, Adjusted EBITDA and Modified EBITDA are used in this press release because our management considers these measures to be important supplemental measures of performance and believes they are used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

In the second quarter of 2009, management discovered accounting errors at one of its operations in the Rocky Mountain region, which occurred in prior years and impacted operating results for the years ended December 31, 2006, 2007 and 2008. The Company corrected these errors as of June 30, 2009 and made the required adjustments to reported results for certain prior periods, including the three and nine-month periods ended September 30, 2008. Accordingly, the financial information in this press release for the three and nine-month periods ended September 30, 2008 has been revised from its original presentation.

Complete Production Services, Inc.
Jose Bayardo, Vice President and Chief Financial Officer, 281-372-2300