CPX Complete Production Services Complete Production Services Common Stock

Complete Production Services, Inc. (NYSE:CPX) today reported third quarter revenue of $590.3 million, Adjusted EBITDA (as defined below) of $157.3 million, operating income of $108.6 million and net income from continuing operations of $59.3 million, or $0.75 per diluted share.

Revenue for the Completion and Production Services segment during the third quarter of 2011 was $535.6 million, an increase of $43.7 million over the prior quarter. Adjusted EBITDA for the segment was $154.2 million in the third quarter of 2011, up $9.3 million versus the second quarter of 2011.

Drilling Services segment revenue was $54.7 million during the third quarter of 2011, an increase of $2.3 million over the second quarter of 2011. Adjusted EBITDA for the segment was $14.4 million in the third quarter of 2011, an increase of $0.6 million compared to the previous quarter.

Compared to the third quarter of 2010, consolidated revenue increased $180.0 million, or 44%, Adjusted EBITDA increased $46.2 million, operating income increased $42.1 million, and net income from continuing operations increased $27.7 million, or $0.34 per diluted share.

As previously reported, third quarter 2011 results were adversely impacted by several items that are not expected to affect future results, including delayed deliveries of fluid ends, required design modifications on recently deployed coiled tubing units, flooding in Pennsylvania and northern Mexico, and repositioning of a pressure pumping fleet from the Barnett Shale to West Texas. Additionally, third quarter 2011 results included pre-tax costs of $0.9 million related to the proposed merger of Complete and Superior Energy Services, Inc. and a foreign exchange loss of $1.6 million due to a 15% devaluation of the Mexican Peso against the U.S. dollar.

“We achieved several significant accomplishments and delivered record earnings during the quarter despite the impact from these items,” commented Joe Winkler, Chairman and Chief Executive Officer of Complete.

“Our successes during the quarter included:

• The deployment of our third Eagle Ford frac spread under a long-term take or pay agreement;
• The start-up of pressure pumping operations in the Permian Basin of West Texas;
• The deployment of an additional large-diameter extended reach coiled tubing unit;
• Improved performance of our North Dakota pressure pumping operations; and
• Exiting the quarter with cash and restricted cash of $225.3 million.”

“Additionally, at the beginning of the fourth quarter we deployed a new 49,500 horsepower pressure pumping spread in the Marcellus under a long-term take or pay contract and we completed the acquisition of a Permian Basin focused pressure pumping, cementing and acidizing service company for $77.8 million, net of cash acquired and subject to working capital adjustments, and up to $6.5 million in additional milestone payments.”

“This acquisition along with the other investments we have recently made in West Texas provides us with a substantial platform in this well established oil basin. We now offer all of our core completion services in this market including pressure pumping, coiled tubing, well servicing and fluid management. We see meaningful opportunities to continue expanding our position in this region, which has attractive growth prospects due to the application of modern completion techniques.”

“We remain optimistic regarding activity levels in the oil and liquid-rich resource plays in North America into 2012, in spite of the current macroeconomic uncertainty. Additionally, our level of conviction regarding the long-term prospects for our business is as strong as ever based on overall industry fundamentals and the tremendous job our people have done in positioning the company for the future.”

“We look forward to completing the merger with Superior Energy Services, Inc., which we expect to close as soon as the end of this year, so we can begin realizing the powerful benefits of combining these two industry leaders,” 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 2011 results on Wednesday, October 26, 2011 at 10:00 a.m. Eastern Time. To participate in the live conference call, dial (866) 356-4441 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 14420817. The conference call will be available for replay beginning at 12:00 p.m. Eastern Time on October 26, 2011, and will be available until November 2, 2011. To access the conference call replay, please call (888) 286-8010 and use the passcode: 83134179. 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, opportunities for expansion, the anticipated closing of the company’s merger with Superior Energy Services, Inc. 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 September 30, 2011 and 2010 and June 30, 2011 And the Nine Months Ended September 30, 2011 and 2010 (unaudited, in thousands, except share and per share data)               Quarter Ended Nine Months Ended September 30, June 30, September 30, 2011 2010 2011 2011 2010 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Revenue 590,289 410,270 544,232 1,623,707 1,064,489   Cost of services 379,192 257,776 346,723 1,042,269 690,023 General and administrative expense 53,830 41,448 49,871 152,453 125,128 Depreciation and amortization   48,695     44,563     49,231     146,832     134,798   481,717 343,787 445,825 1,341,554 949,949  

Income from continuing operations before interest and taxes

108,572 66,483 98,407 282,153 114,540   Interest expense 12,917 14,151 13,666 40,709 43,653 Interest income   (180 )   (73 )   (131 )   (407 )   (249 ) Income from continuing operations before taxes 95,835 52,405 84,872 241,851 71,136   Tax provision   36,513     20,814     31,782     91,420     28,609     Income from continuing operations $ 59,322 $ 31,591 $ 53,090 $ 150,431 $ 42,527   Discontinued operations, net of tax $ (136 ) $ 1,439   $ 1,415   $ 2,194   $ 3,412     Net income $ 59,186   $ 33,030   $ 54,505   $ 152,625   $ 45,939     Earnings per Share: Continuing operations $ 0.76 $ 0.41 $ 0.68 $ 1.94 $ 0.56 Discontinued operations $ (0.00 ) $ 0.02   $ 0.02   $ 0.03   $ 0.04  

Basic earnings per share:

$ 0.76   $ 0.43   $ 0.70   $ 1.97   $ 0.60     Continuing operations $ 0.75 $ 0.41 $ 0.67 $ 1.90 $ 0.55 Discontinued operations $ (0.01 ) $ 0.01   $ 0.02   $ 0.03   $ 0.04  

Diluted earnings per share:

$ 0.74   $ 0.42   $ 0.69   $ 1.93   $ 0.59     Weighted average shares outstanding: Basic 78,004 76,130 77,777 77,578 75,957 Diluted 79,445 77,792 79,187 79,080 77,395   Complete Production Services, Inc. Condensed Consolidated Balance Sheets As of September 30, 2011 and December 31, 2010 (in thousands)             September 30, December 31, 2011 2010 (unaudited) (unaudited) Assets: Cash $ 208,281 $ 119,135 Other current assets 543,445 416,075 Property, plant and equipment, net 1,073,825 950,932 Goodwill 252,137 247,675

Restricted cash (1)

17,000 17,000 Other long-term assets 26,274 24,162 Assets of discontinued operations   -     25,597   Total assets   2,120,962     1,800,576     Liabilities and stockholders' equity: Current liabilities 210,121 145,563 Long-term debt 650,000 650,000 Long-term deferred tax liabilities 275,784 190,389 Other long-term liabilities 4,512 5,916 Liabilities of discontinued operations   -     2,874   Total liabilities 1,140,417 994,742   Common stock 780 764 Treasury stock (7,408 ) (1,765 ) Additional paid-in capital 688,709 657,993 Retained earnings 278,790 126,165 Cumulative translation adjustment   19,674     22,677   Total stockholders' equity 980,545 805,834   Total liabilities and stockholders' equity $ 2,120,962   $ 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 September 30, 2011 and 2010, and June 30, 2011 And Nine Months Ended September 30, 2011 and 2010 (in thousands, except percentages)           Quarter Ended September 30, June 30, 2011 2010 2011 (unaudited) (unaudited) (unaudited) Revenue: Completion and production services $ 535,625 $ 361,457 $ 491,881 Drilling services(2)   54,664     48,813     52,351   Total revenues $ 590,289   $ 410,270   $ 544,232     Adjusted EBITDA:(1) Completion and production services $ 154,249 $ 108,104 $ 144,931 Drilling services(2) 14,388 12,685 13,782 Corporate and other   (11,370 )   (9,743 )   (11,075 ) Total $ 157,267   $ 111,046   $ 147,638     Adjusted EBITDA as a % of Revenue: Completion and production services 28.8 % 29.9 % 29.5 % Drilling services(2) 26.3 % 26.0 % 26.3 % Total 26.6 % 27.1 % 27.1 %     Nine Months Ended September 30, September 30, 2011 2010 (unaudited) (unaudited) Revenue: Completion and production services $ 1,464,593 $ 938,205 Drilling services(2)   159,114     126,284   $ 1,623,707   $ 1,064,489     Adjusted EBITDA:(1) Completion and production services $ 420,694 $ 250,609 Drilling services(2) 40,561 26,622 Corporate and other   (32,270 )   (27,893 ) $ 428,985   $ 249,338     Adjusted EBITDA as a % of Revenue: Completion and production services 28.7 % 26.7 % Drilling services(2) 25.5 % 21.1 % Total 26.4 % 23.4 %    

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

 

(2) Our Products segment historically consisted of our fabrication and repair shop in north Texas and our Southeast Asian business. We sold our Southeast Asian business in July 2011 and recorded these results as discontinued operations. The remaining Products segment has been combined into the Drilling Services segment for all periods presented.

  Complete Production Services, Inc. Reconciliation of Adjusted EBITDA to Net Income (Loss) For the Quarters Ended September 30, 2011 and 2010, and June 30, 2011 And the Nine Months Ended September 30, 2011 and 2010 (unaudited, in thousands)           Completion & Production Drilling Corporate & Services Services Other Total Quarter Ended September 30, 2011: Adjusted EBITDA(1) $ 154,249 $ 14,388 $ (11,370 ) $ 157,267 Depreciation & amortization   43,147   4,972   576     48,695   Operating income (loss) $ 111,102 $ 9,416 $ (11,946 ) $ 108,572 Interest expense 12,917 Interest income (180 ) Income taxes   36,513   Income from continuing operations $ 59,322       Quarter Ended September 30, 2010: Adjusted EBITDA(1) $ 108,104 $ 12,685 $ (9,743 ) $ 111,046 Depreciation & amortization   39,078   4,970   515     44,563   Operating income (loss) $ 69,026 $ 7,715 $ (10,258 ) $ 66,483 Interest expense 14,151 Interest income (73 ) Income taxes   20,814   Income from continuing operations $ 31,591       Quarter Ended June 30, 2011: Adjusted EBITDA(1) $ 144,931 $ 13,782 $ (11,075 ) $ 147,638 Depreciation & amortization   43,585   5,042   604     49,231   Operating income (loss) $ 101,346 $ 8,740 $ (11,679 ) $ 98,407 Interest expense 13,666 Interest income (131 ) Income taxes   31,782   Income from continuing operations $ 53,090       Nine Months Ended September 30, 2011: Adjusted EBITDA(1) $ 420,694 $ 40,561 $ (32,270 ) $ 428,985 Depreciation & amortization   129,988   15,063   1,781     146,832   Operating income (loss) $ 290,706 $ 25,498 $ (34,051 ) $ 282,153 Interest expense 40,709 Interest income (407 ) Income taxes   91,420   Income from continuing operations $ 150,431       Nine Months Ended September 30, 2010: Adjusted EBITDA(1) $ 250,609 $ 26,622 $ (27,893 ) $ 249,338 Depreciation & amortization   118,641   14,653   1,504     134,798   Operating income (loss) $ 131,968 $ 11,969 $ (29,397 ) $ 114,540 Interest expense 43,653 Interest income (249 ) Income taxes   28,609   Income from continuing operations $ 42,527       (1) Adjusted EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release.