================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark One)
/x/ ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
or
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From.........to........
Commission File No. 0-20310
SUPERIOR ENERGY SERVICES, INC.
(Name of small business issuer in its charter)
Delaware 75-2379388
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1503 Engineers Road
Belle Chasse, LA 70037
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (504) 393-7774
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
Class A Warrants
Class B Warrants
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Check if disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. /x/
Revenues for the year ended December 31, 1996 were $ 23,638,000
The aggregate market value of the voting stock held by non-affiliates
of the Registrant at March 14, 1997 based on the closing price on Nasdaq
National Market on that date was $30,608,000
The number of shares of the Registrant's common stock outstanding on
March 14, 1997 was 19,017,045
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for its 1997 Annual
Meeting of Stockholders have been incorporated by reference into Part III
of this Form 10-KSB.
Transitional Small Business Disclosure Format (check one): Yes___ No X
=========================================================================
SUPERIOR ENERGY SERVICES, INC.
Annual Report on Form 10-KSB for
the Fiscal Year Ended December 31, 1996
TABLE OF CONTENTS
Page
PART I
Items 1 and 2. Description of Business 1
Item 3.Legal Proceedings 6
Item 4.Submission of Matters to a Vote of Security Holders 6
PART II
Item 5.Market for Common Equity and Related Stockholder Matters 7
Item 6.Management's Discussion and Analysis or Plan of Operation 8
Item 7.Financial Statements 12
Item 8.Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 29
PART III
Item 9.Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act 29
Item 10.Executive Compensation 30
Item 11.Security Ownership of Certain Beneficial Owners and
Management 30
Item 12.Certain Relationships and Related Transactions 30
Item 13.Exhibits and Reports on Form 8-K 30
<PAGE>
PART I
Items 1 and 2. Description of Business
General
Superior Energy Services, Inc. through its
subsidiaries (the "Company"), provides an integrated
range of specialized oil field services and equipment
to companies engaged in exploring, producing and
developing oil and gas properties offshore in the
Gulf of Mexico. These services and equipment include
oil and gas well plug and abandonment, wireline and
workover services, the sale and rental of specialized
oil well equipment and fishing tools, the
development, manufacture, sale and rental of oil and
gas drilling instrumentation and computerized rig
data acquisition systems, and the development,
manufacture and sale of oil spill containment booms
and ancillary equipment.
Business
Plug and Abandonment; Wireline. The Company is the
leading provider of plug and abandonment services in
the Gulf of Mexico. Plug and abandonment is required
by governmental authorities that regulate offshore
leases. Oil and gas wells that are no longer
producing commercially are required to be plugged and
abandoned. In order to plug the well, concrete is
pumped into the well to form plugs that prevent
debris, gas, oil or other material from escaping and
contaminating the surrounding environment. Any
production tubing is also required to be removed and
the well casing is required to be severed below the
mud line. This helps insure that no remaining oil or
gas seeps from the well. The Company also provides
wireline services. The Company provides services and
specialized equipment for plugging and abandonment
jobs, as well as for non-plugging and abandonment
jobs such as logging and pipe recovery. Wireline
service personnel are cross-trained to work plugging
and abandonment jobs and perform wireline services in
connection with remedial activities.
Rental Tools. The Company rents specialized
equipment onshore and offshore in oil and gas well
drilling and other specialized rental equipment and
fishing tools used in well workover, completion and
production activities. In connection with the rental
of certain specialized equipment, such as fishing
tools, the Company generally provides to the customer
an operator who supervises the operations of the
rental equipment on the well site. The Company's
rental items include, in addition to those outlined
above, bits, gauges, hoses, pumps, spools and tubing
which are supplied as equipment only.
Data Acquisition and Monitoring. The Company
designs, manufactures and sells specialized drilling
rig instrumentation and data acquisition systems and
computerized electronic torque and pressure control
equipment. The Company's data acquisition systems
are offered in connection with the use of a
dispatcher to gather and record data and maintain
equipment on drilling rigs. The Company's torque and
pressure control equipment is used in connection with
drilling and workover operations, as well as the
manufacture of oil field tubular goods. The torque
control equipment monitors the relationship between
size, weight, grade, rate of makeup, torque and
penetration of tubular goods to ensure a leak-free
connection within the pipe manufacturer's
specification. The electronic pressure control
equipment monitors and documents internal and
external pressure testing of tubular goods
connections. The Company's patented thread
protectors are used during drilling and workover
operations to protect the pin end of tubular goods
while being transported from the pipe rack to the
drill floor.
<PAGE>
Oil Spill Containment Boom. The Company
manufactures, through third-party manufacturers, and
sells oil spill containment inflatable boom and
ancillary storage/deployment/retrieval equipment.
The Company's inflatable boom utilizes continuous
single-point inflation technology with air feeder
sleeves in combination with mechanical check valves
to permit continuous inflation of the boom material.
The Company sells, rents and licenses oil spill
containment technology to domestic and foreign oil
companies, oil spill response companies and
cooperatives, the United States Coast Guard and to
foreign governments and their agencies.
Potential Liability and Insurance
The Company's operations involve a high degree of
operational risk, particularly of personal injuries
and damage to equipment. The Company maintains
insurance against risks that are consistent with
industry standards and required by its customers.
Although management believes that the Company's
insurance protection is adequate, and that the
Company has not experienced a loss in excess of
policy limits, there can be no assurance that the
Company will be able to maintain adequate insurance
at rates which management considers commercially
reasonable, nor can there be any assurance such
coverage will be adequate to cover all claims that
may arise. See "Cautionary Statement," below.
Laws, Regulations and Environmental Matters
The Company's operations are affected by governmental
regulations in the form of federal and state laws and
regulations, as well as private industry
organizations. In addition, the Company depends on
the demand for its services from the oil and gas
industry and, therefore, is affected by changing
taxes and other laws and regulations relating to the
oil and gas industry generally. See "Cautionary
Statement," below.
The exploration and development of oil and gas
properties located on the outer continental shelf of
the United States is regulated primarily by the
Minerals Management Service of the United States
Department of the Interior (the "MMS"). The MMS has
promulgated federal regulations governing the
plugging and abandoning of wells located offshore and
the removal of all production facilities.
The Company believes that its operations are in
material compliance with these and all other
regulations affecting the conduct of its business on
the outer continental shelf of the United States.
The Company's operations are also affected by
numerous federal, state and local environmental
protection laws and regulations. The technical
requirements of these laws and regulations are
becoming increasingly expensive, complex and
stringent. These laws may provide for strict
liability for damages to natural resources or threats
to public health and safety. Sanctions for
noncompliance may include revocation of permits,
corrective action orders, administrative or civil
penalties and criminal prosecution. Certain
environmental laws provide for joint and several
strict liability for remediation of spills and
releases of hazardous substances. In addition,
companies may be subject to claims alleging personal
injury or property damage as a result of alleged
exposure to hazardous substances. The Company
believes that compliance with these laws and
regulations will not have a material adverse effect
on the Company's business or financial condition.
See "Cautionary Statement," below.
<PAGE>
Competition and Customers
The Company operates in highly competitive markets
and, as a result, its revenue and earnings can be
affected by competitive action such as price changes,
new product developments, or improved availability
and delivery. Competition in both services and
products is based on a combination of price, service
(including the ability to deliver services and
products on a "as needed, where needed" basis),
product quality and technical proficiency. The
Company's competition includes small, single location
companies, large companies with multiple operating
locations and extensive inventories and subsidiaries
of large public companies having significant
financial resources. The Company believes it
competes based upon its technical capabilities,
experience and personnel. An increasing number of
the Company's customers have been seeking to
establish plug and abandonment programs based upon
partnering relationships or alliances with a limited
number of oil field services companies. Such
relationships or alliances can result in longer term
work and higher efficiencies that increase
profitability at a lower overall cost for oil
companies. The Company is currently a preferred
contractor for a number of major oil companies which
management believes is a result of the Company's
quality service and experience. Customers which
accounted for 10% or more of the company's revenue
for the years ended December 31, 1996 and 1995 were
as follows:
1996 1995
---- ----
Chevron USA 34.5% 23.7%
Conoco, Inc. 8.9% 16.4%
Employees
As of March 14, 1997, the Company had approximately
222 employees. None of the Company's employees is
represented by a union or covered by a collective
bargaining agreement. The Company believes that its
relations with its employees is good.
Description of Property
The Company leases its office, service and assembly
facilities under various operating leases. The
Company believes that all of its leases are at
competitive or market rates and does not anticipate
any difficulty in leasing suitable additional space
upon expiration of its current lease terms. Set
forth below is the location of each leased facility,
the date of expiration of the lease, square footage
and a description:
Square
Location Expiration Footage Description
- -------- ---------- ------- ------------
Belle Chasse, LA 06-30-98 19,000 Office and service facility
Belle Chasse, LA 12-31-00 10,250 Office and service facility
Harvey, LA 12-31-98 11,000 Office and service facility
Harvey, LA 06-30-99 6,600 Rental and service facility
Houma, LA 10-31-97 5,000 Rental and service facility
Houma, LA 03-31-97 20,000 Rental, manufacturing and
service facility
Venice, LA 06-30-99 8,000 Rental and service facility
Gretna, LA 07-31-99 4,000 Office and service facility
Lafayette, LA 06-30-98 9,000 Rental and service facility
<PAGE>
CAUTIONARY STATEMENT
This report includes "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. All statements other than
statements of historical fact included in this
report, including, without limitation, the statements
under the headings "Business and Properties," "Market
for Registrant's Common Equity and Related
Stockholder Matters," and "Management's Discussion
and Analysis of Financial Condition or Plan of
Operation" regarding the Company's financial position
and liquidity, payment of dividends, future capital
needs, capital expenditures (including the amount and
nature thereof), business strategies, and other plans
and objectives of management of the Company for
future operations and activities, are forward-looking
statements. Although the Company believes that the
expectations reflected in such forward-looking
statements are reasonable, it can give no assurance
that such expectations will prove to have been
correct. Important factors that could cause actual
results to differ materially from the Company's
expectations are disclosed in this report including,
without limitation, in conjunction with the forward-
looking statements included in this report. These
statements are based on certain assumptions and
analyses made by the Company in light of its
experience and its perception of historical trends,
current conditions, expected future developments and
other factors it believes are appropriate under the
circumstances. Such statements are subject to a
number of assumptions, risks and uncertainties,
including the risk factors discussed below, and in
the Company's other filings with the Securities and
Exchange Commission (the "Commission"), general
economic and business conditions, the business
opportunities that may be presented to and pursued by
the Company, changes in law or regulations and other
factors, many of which are beyond the control of the
Company. Readers are cautioned that any such
statements are not guarantees of future performance
and the actual results or developments may differ
materially from those projected in the forward-
looking statements. All subsequent written and oral
forward-looking statements attributable to the
Company or persons acting on its behalf are expressly
qualified in their entirety by these cautionary
statements.
Industry Volatility. The demand for oil field
services has traditionally been cyclical. Demand for
the Company's services is significantly affected by
the number and age of producing wells and the
drilling and completion of new oil and gas wells.
These factors are affected in turn by the willingness
of oil and gas operators to make capital expenditures
for the exploration, development and production of
oil and natural gas. The levels of such capital
expenditures are influenced by oil and gas prices,
the cost of exploring for, producing and delivering
oil and gas, the sale and expiration dates of leases
in the United States and overseas, the discovery rate
of new oil and gas reserves, local and international
political and economic conditions and the ability of
oil and gas companies to generate capital. Although
the production sector of the oil and gas industry is
less immediately affected by changing prices, and,
therefore, less volatile than the exploration sector,
producers would likely react to declining oil and gas
prices by reducing expenditures, which could
adversely affect the business of the Company. No
assurance can be given as to the future price of oil
and natural gas or the level of oil and gas industry
activity.
Seasonality. The businesses conducted by the Company
are subject to seasonal fluctuation. The nature of
the offshore oil and gas industry in the Gulf of
Mexico is seasonal and depends in part on weather
conditions. Purchases of the Company's products and
services are also to a substantial extent, deferrable
in the event oil and gas companies reduce capital
expenditures as a result of conditions existing in
the oil and gas industry or general economic
downturns. Fluctuations in the Company's revenues
and costs may have a material adverse effect on the
Company's business and operations. Accordingly, the
Company's operating results may vary from quarter to
quarter, depending upon factors outside of its
control.
Dependence on Oil and Gas Industry; Dependence Upon
Significant Customers. The Company's business
depends in large part on the conditions of the oil
and gas industry, and specifically on the capital
expenditures of the Company's customers. Purchases
of the Company's products and services are also, to a
substantial extent, deferrable in the event oil and
gas companies reduce capital expenditures as a result
of conditions existing in the oil and gas industry or
general economic downturns. The Company derives a
significant amount of its revenues from a small
number of independent and major oil and gas
companies. The inability of the Company to continue
to perform services for a number of its large
existing customers, if not offset by sales to new or
existing customers, could have a material adverse
effect on the Company's business and operations.
Technology Risks. Sales of certain of the Company's
products are based primarily on its proprietary
technology. The Company's success in the sales of
these products depends to a significant extent on the
development and implementation of new product designs
and technologies. Many of the Company's competitors
and potential competitors have more significant
resources than the Company. While the Company has
patents on certain of its technologies and products,
there is no assurance that any patents secured by the
Company will not be successfully challenged by others
or will protect the Company from the development of
similar products by others.
Intense Competition. The Company competes in highly
competitive areas of the oil field business. The
volatility of oil and gas prices has led to a
consolidation of the number of companies providing
services similar to the Company. This reduced number
of companies competes intensely for available
projects. Many of the competitors of the Company are
larger and have greater financial and other resources
than the Company. Although the Company believes that
it competes on the basis of technical expertise and
reputation of service, there can be no assurance that
the Company will be able to maintain its competitive
position.
Potential Liability and Insurance. The operations of
the Company involve the use of heavy equipment and
exposure to inherent risks, including blowouts,
explosions and fire, with attendant significant risks
of liability for personal injury and property damage,
pollution or other environmental hazards or loss of
production. The equipment that the Company sells and
rents to customers are also used to combat oil
spills. Failure of this equipment could result in
property damage, personal injury, environmental
pollution and resulting damage. Litigation arising
from a catastrophic occurrence at a location where
the Company's equipment and services are used may in
the future result in large claims. The frequency and
severity of such incidents affect the Company's
operating costs, insurability and relationships with
customers, employees and regulators. Any increase in
the frequency or severity of such incidents, or the
general level of compensation awards with respect
thereto, could affect the ability of the Company to
obtain projects from oil and gas operators or
insurance and could have a material adverse effect on
the Company. In addition, no assurance can be given
that the Company will be able to maintain adequate
insurance in the future at rates it considers
reasonable.
Laws and Regulations. The Company's business is
significantly affected by laws and other regulations
relating to the oil and gas industry, by changes in
such laws and by changing administrative regulations.
The Company cannot predict how existing laws and
regulations may be interpreted by enforcement
agencies or court rulings, whether additional laws
and regulations will be adopted, or the effect such
changes may have on it, its business or financial
condition. Federal and state laws require owners of
non-producing wells to plug the well and remove all
exposed piping and rigging before the well is
abandoned. A decrease in the level of enforcement of
such laws and regulations in the future would
adversely affect the demand for the Company's
services and products. Numerous state and federal
laws and regulations affect the level of purchasing
activity of oil containment boom and consequently the
Company's business. There can be no assurance that a
decrease in the level of enforcement of laws and
regulations in the future would not adversely affect
the demand for the Company's products.
<PAGE>
Environmental Regulation. The Company believes that
its present operations substantially comply with
applicable federal and state pollution control and
environmental protection laws and regulations and
that compliance with such laws has had no material
adverse effect upon its operations to date. No
assurance can be given that environmental laws will
not, in the future, have a material adverse effect on
the Company's operations and financial condition.
Key Personnel. The Company depends to a large extent
on the abilities and continued participation of its
executive officers and key employees. The loss of
the services of any of these persons would have a
material adverse effect on the Company's business and
operations.
Item 3. Legal Proceedings
The Company is involved in various legal and other
proceedings which are incidental to the conduct of
its business. Management believes that none of these
proceedings, if adversely determined, would have a
material adverse effect on its financial condition,
results of operations or cash flows. The Company
maintains liability insurance to cover some, but not
all, of the potential liabilities normally incident
to the ordinary course of its businesses as well as
other insurance coverage as customary in its
business, with such coverage limits as management
deems prudent.
Item 4. Submission of Matters to a Vote of Security Holders
None
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's Common Stock, Class A Warrants and
Class B Warrants trade on the Nasdaq National Market
under the symbols "SESI", "SESIW" and "SESIZ",
respectively. The following table sets forth the
range of high and low closing bid prices for the
Common Stock, the Class A Warrants and the Class B
Warrants for the last two full calendar years plus a
portion of the first quarter of 1997 as reported by
the Nasdaq National Market. The quotes represent
"inter-dealer" prices without adjustment or mark-ups,
mark-downs or commissions and may not necessarily
represent actual transactions.
Common Class A Class B
Stock Warrants Warrants
High Low High Low High Low
---- --- ---- --- ---- ---
1995
----
First Quarter 3-3/4 2-1/2 15/16 5/16 - -
Second Quarter 3-1/8 2 1/2 1/4 - -
Third Quarter 3 1-3/4 1/2 1/4 - -
Fourth Quarter 2-11/16 1-1/2 1/2 1/16 3/4 1/4
1996
----
First Quarter 2-13/16 2-1/8 1/4 1/16 7/8 7/16
Second Quarter 3-1/8 1-15/16 1/4 1/16 3/4 3/8
Third Quarter 3 1-13/16 3/16 1/16 9/16 3/16
Fourth Quarter 3-5/8 2-5/8 1/4 3/64 25/32 11/32
First Quarter 1997
(Through March 14, 1997) 4-15/16 2-15/16 5/16 1/16 1-9/16 15/32
As of March 14, 1997 there were 19,017,045 Shares of
Common Stock, 1,121,251 Class A Warrants, and
5,175,000 Class B Warrants outstanding, held by 66,
12 and 10 record holders, respectively. The Company
has never paid cash dividends on its Common Stock.
The Company intends to retain any future earnings
otherwise available for cash dividends on the Common
Stock for use in its operations and for expansion and
does not anticipate that any cash dividends will be
paid in the foreseeable future.
<PAGE>
Item 6. Management's Discussion and Analysis of
Financial Condition or Plan of Operation
Comparison of the Results of Operations for the Years
Ended December 31, 1996 and December 31, 1995.
The year ended December 31, 1996 is the first full
year the Company has had under new management since
the reverse acquisition which took place in December
1995. (See Note 2 of the consolidated financial
statements included herein under Item 7 below). The
Company's 1996 results have been impacted by three
main factors: an increase in the Company's internal
growth as a result of increased levels of activity in
the Gulf of Mexico; a joint venture the Company
entered into in January 1996 which turned around an
unprofitable business in West Texas; and the
acquisitions the Company made in the second half of
the year.
Net income for the year ended December 31, 1996 was
$3,932,000 resulting in $0.22 earnings per share.
This compares to a net loss as adjusted for pro forma
income taxes of $3,355,000 or a loss per share of
$0.38 for the year ended December 31, 1995. The loss
in 1995 includes a one-time charge of $4,042,000 for
the impairment of long-lived assets discussed below.
The Company's revenues increased 92% to $23,638,000
for the year ended December 31, 1996 as compared to
$12,338,000 for the year ended December 31, 1995. In
comparing 1996 to 1995, without giving effect to
acquisitions or the joint venture, revenues increased
36% as a result of increased levels of activity in
the Gulf of Mexico. The joint venture the Company
entered into in January 1996 contributed $1,265,000
of the increase in revenues. The acquisitions of Oil
Stop, Inc. (1996 was the first full year), Baytron,
Inc. and Dimensional Oil Field Services, Inc.
contributed $5,798,000 of the increase in revenues in
1996.
Gross margins increased to 53.3% for the year ended
December 31, 1996 from 39.3% for the year ended
December 31, 1995. In comparing 1996 to 1995,
without giving effect to acquisitions or the joint
venture, the gross margins increased to 46.3% in 1996
from 37.8% in 1995. The significant increase in
gross margins are primarily as a result of a decrease
in rented marine equipment as well as an increase in
the gross margin attributable to the rental tool and
data acquisition businesses which tend to have higher
margins than the plug and abandonment business.
General and administrative expenses were 24.3% of
revenues for the year ended December 31, 1996 as
compared to 26.4% of revenues for the year ended
December 31, 1995. Even though the Company has had
an increase in costs associated with its transition
to public ownership, it has been successful in
keeping all other costs down while increasing its
revenues.
Comparisons of the Results of Operations for the
Years Ended December 31, 1995 and December 31, 1994
Revenues increased 6% for the year ended December 31,
1995 as compared to year ended December 31, 1995,
exclusive of the acquisitions. The increase was
primarily the result of an increase in service
revenues in the fourth quarter which were 26% of the
total year in 1995, as compared to 21% in 1994.
<PAGE>
In 1995, cost of services, exclusive of acquisitions,
increased 7.8% primarily due to the cost of support
services required to maintain and support the
Company's major customers primarily with engineering
services. In 1995, general and administrative
expenses increased 34%. Most of this increase is
related to the acquisitions as well as increases in
employee, travel and insurance expenses.
Depreciation expense exclusive of acquisitions
increased nearly 44% in 1995 as a result of
additional equipment being placed in service.
In January 1996, the Company, in an effort to
eliminate continued losses in its West Texas rental
tool and fishing operation entered into a joint
venture. As a result of the joint venture the
Company has no liability for any operating loss that
may be incurred in the joint venture. The Company's
share of distributions, which are reflected in
revenue, is $110,000 a month for the first 24 months
and $80,000 a month for the remaining 36 months of
the term of the joint venture.
On December 31, 1995, the Company elected the early
adoption of Statement of Financial Accounting
Standards (FAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." The undiscounted net cash
flows from the joint venture were less than the
carrying value of the associated fixed assets and
associated goodwill indicating that an impairment had
taken place. This resulted in the Company
recognizing a non-cash charge for the impairment of
long-lived assets of $4,042,000 consisting of a
write-off of goodwill of $3,520,000 and a write off
of $522,000 of property, plant and equipment.
Capital Resources and Liquidity
The Company generated net cash from operations for
the two years ended December 31, 1996, of $2,676,000
and $3,616,000, respectively. These funds, along
with the $9.3 million of net cash realized from the
December 1995 secondary offering, were used to retire
indebtedness incurred in the reverse acquisition in
1995, fund the cash portion of the purchases of Oil
Stop, Inc., Baytron, Inc. and Dimensional Oil Field
Services, Inc., and provide additional working
capital for operations.
The Company's working capital position improved to
$2,594,000 at December 31, 1996 as compared to
$976,000 at December 31, 1995. This is primarily the
result of the increase in accounts receivable offset
by a decrease in notes payable, accounts payable and
unearned income.
The Company's earnings before interest, taxes,
depreciation and amortization (EBITDA) increased to
$6,861,000 for the year ended December 31, 1996 as
compared to $1,593,000 for the year ended December
31, 1995. This also excludes other income and the
one-time charge for the impairment of long-lived
assets incurred in 1995. The increase in EBITDA is a
result of the Company's strong internal growth as
well as the impact of the Company's strategic
acquisitions in 1996 and 1995.
The Company, in connection with a joint venture for
its West Texas fishing and rental tool operation,
sold land for $300,000 in January 1996. The company
also sold various equipment for approximately
$54,000. Both of these sales resulted in no gain or
loss. The Company made capital expenditures,
exclusive of business acquisitions, of $1,965,000 in
1996 and $610,000 in 1995, primarily for machinery
and equipment. In 1997, the Company expects to make
capital expenditures, exclusive of business
acquisitions, of approximately $1,500,000 primarily
to expand the selection and availability of its
rental equipment.
In July 1996, the Company, acquired Baytron, Inc. for
$1,100,000 in cash and 550,000 shares of the
Company's restricted common stock. In September
1996, the Company acquired all of the capital stock
of Dimensional Oil Field Services, Inc. for
$1,500,000 cash, $1,000,000 in promissory notes and
1,000,000 shares of the Company's restricted common
stock. Promissory notes having an aggregate value of
$750,000 are subject to certain minimum earnings
requirements through December 31, 1998 and are not
reflected on the balance sheet. In February 1997,
the Company, acquired all of the outstanding common
stock of Nautilus Pipe & Tool Rental, Inc. and
Superior Bearing & Machine Works, Inc. (collectively
doing business as "Concentric Pipe & Tool Rentals")
for $4,000,000 cash, a promissory note in the
principal amount of $2,150,000 and 420,000 shares of
the Company's restricted common stock. The
promissory note is subject to certain minimum
earnings requirements through December 31, 1999.
In February 1997, in connection with the company's
acquisition of Concentric Pipe & Tool Rentals, the
Company borrowed $4,000,000 which bears interest at
the lender's prime rate and requires no principal
payments through December 31, 1997 at which time it
will convert to a five or seven year term loan (at
the Company's option) with principal and interest
payable monthly at an interest rate of 8.25%.
The Company also maintains a revolving credit
facility, which was increased in June 1996 to $4.0
million from $1.4 million. At December 31, 1996 there
was approximately $300,000 outstanding under this
facility. As of March 14, 1997 there were no
amounts outstanding under this facility. The
Company's management believes the combination of
working capital, the revolving credit facility and
cash flow from operations provide the company with
sufficient resources and liquidity to manage its
routine operations. Any strategic acquisitions will
be funded with borrowed cash, newly issued common
stock or a combination of cash and common stock.
Inflation has not had a significant effect on the
Company's financial condition or operations in recent
years.
<PAGE>
Item 7. Financial Statements
Independent Auditors' Report
The Board of Directors and Shareholders
Superior Energy Services, Inc.:
We have audited the consolidated balance sheets of
Superior Energy Services, Inc. and subsidiaries as of
December 31, 1996 and 1995, and the related
consolidated statements of operations, changes in
stockholdersO equity and cash flows for the years
then ended. These consolidated financial statements
are the responsibility of the CompanyOs management.
Our responsibility is to express an opinion on these
consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the
financial statements. An audit also includes
assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material
respects, the financial position of Superior Energy
Services, Inc. and subsidiaries as of DecemberE31,
1996 and 1995, and the results of their operations
and their cash flows for each of the years then ended
in conformity with generally accepted accounting
principles.
As discussed in Note 9 to the consolidated financial
statements, in 1995 the Company adopted the methods
of accounting for the impairment of long-lived assets
and for long-lived assets to be disposed of
prescribed by Statement of Financial Accounting
Standards No. 121.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
March 14, 1997
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1996 and 1995
(in thousands)
Assets 1996 1995
------ ---- ----
Current assets:
Cash and cash equivalents $ 433 $ 5,068
Accounts receivable - net of allowance
for doubtful accounts of $149,000 in
1996 and $204,000 in 1995 6,966 3,759
Inventories 1,197 968
Deferred income taxes 137 256
Other 345 227
__________ ___________
Total current assets 9,078 10,278
Property, plant and equipment - net 9,894 6,904
Goodwill - net 8,239 4,576
Patent - net 1,126 1,226
----------- -----------
$ 28,337 $ 22,984
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Notes payable - bank $ 351 $ 1,249
Accounts payable 1,800 2,345
Notes payable - other 1,171 3,422
Unearned income 392 1,085
Accrued expenses 1,362 456
Income taxes payable 1,208 545
Other 200 200
___________ ___________
Total current liabilities 6,484 9,302
___________ ___________
Deferred income taxes 1,254 408
Long-term debt 250 -
Other - 180
Stockholders' equity:
Preferred stock of $.01 par value.
Authorized - 5,000,000 shares;
none issued - -
Common stock of $.001 par value.
Authorized - 40,000,000 shares;
issued - 18,597,045 19 17
Additional paid-in capital 19,551 16,230
Retained earnings (deficit) 779 (3,153)
__________ ___________
Total stockholders' equity 20,349 13,094
__________ ___________
$ 28,337 $ 22,984
========== ===========
See accompanying notes to consolidated financial statements
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1996 and 1995
(in thousands, except
per share data)
1996 1995
---- ----
Revenues $ 23,638 $ 12,338
--------- --------
Costs and expenses:
Costs of services 11,040 7,487
Depreciation and amortization 1,323 259
Impairment of long-lived assets - 4,042
General and administrative 5,737 3,258
---------- ----------
Total costs and expenses 18,100 15,046
---------- ----------
Income (loss) from operations 5,538 (2,708)
Other income (expense):
Interest expense (127) (86)
Other 206 79
--------- ----------
Income (loss) before income taxes 5,617 (2,715)
Provision for income taxes 1,685 131
__________ __________
Net income (loss) $ 3,932 $(2,846)
========== ==========
Net loss as adjusted for pro forma
income taxes (unaudited):
Loss before income taxes as
per above $(2,715)
Pro forma income taxes 640
__________
Net loss as adjusted for
pro forma income taxes $(3,355)
Net income (loss) per common share
and common share equivalent $ 0.22 $ (.38)
=========== =============
Weighted average shares outstanding 17,618,711 8,847,946
=========== =============
See accompanying notes to consolidated financial statements.
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
December 31, 1996 and 1995
(in thousands, except share data)
<TABLE>
<CAPTION>
Common Additional Retained
stock Common paid-in earnings
shares stock capital (deficit) Total
------ ----- ------- --------- -----
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 3,550 $ 248 $ - $ 2,025 $ 2,273
Net loss - - - (2,846) (2,846)
Shareholder distributions - - - (2,465) (2,465)
Acquisition of Oil Stop, Inc. 1,800,000 2 3,598 - 3,600
Share exchange for the
Superior Companies 10,037,700 (238) 3,350 133 3,245
Sale of common stock 5,175,000 5 9,265 - 9,270
Exercise of private warrants 16,666 - 17 - 17
------------- ---------- ----------- ----------- -----------
Balance, December 31, 1995 17,032,916 17 16,230 (3,153) 13,094
Net income - - - 3,932 3,932
Acquisition of remaining
minority interest in Ace
Rental Tools, Inc. 14,129 - 35 - 35
Acquisition of Baytron, Inc. 550,000 1 1,099 - 1,100
Acquisition of Dimensional
Oil Field Services, Inc. 1,000,000 1 2,187 - 2,188
_______________ ____________ ____________ ___________ ____________
Balance, December 31, 1996 18,597,045 $ 19 $ 19,551 $ 779 $ 20,349
=============== ============ ============ =========== ============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1996 and 1995
(in thousands)
1996 1995
----- -----
Cash flows from operating activities:
Net income (loss) $ 3,932 $(2,846)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 1,323 259
Unearned income (692) 1,085
Impairment of long-lived assets - 4,042
Deferred income taxes 258 (444)
Changes in operating assets and liabilities,
net of acquisitions:
Accounts receivable (1,490) (384)
Notes receivable - 120
Inventories (229) 61
Other-net (56) 141
Accounts payable (1,482) (332)
Due from (to) shareholders (302) 1,243
Accrued expenses 751 58
Income taxes payable 663 613
_______ _______
Net cash provided by operating activities 2,676 3,616
_______ _______
Cash flows from investing activities:
Proceeds from sale of property and equipment 354 -
Payments for purchases of property and equipment (1,965) (610)
Deferred payment for acquisition of Oil Stop, Inc. (2,000) -
Acquisition of businesses, net of cash acquired (2,321) -
________ ________
Net cash used in investing activities (5,932) (610)
________ ________
Cash flows from financing activities:
Notes payable (1,379) (5,264)
Shareholder distributions - (2,465)
Due to shareholders - 297
Proceeds from sale of common stock - 9,287
_________ _________
Net cash provided by (used in)
financing activities (1,379) 1,855
--------- --------
Net increase (decrease) in cash (4,635) 4,861
Cash and cash equivalents at beginning of year 5,068 207
--------- --------
Cash and cash equivalents at end of year $ 433 $5,068
========= ========
See accompanying notes to consolidated financial statements.
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
(1) Summary of Significant Accounting Policies
(a)Basis of Presentation
The consolidated financial statements include
the accounts of Superior Energy Services,
Inc. and its subsidiaries (the Company). All
significant intercompany accounts and
transactions are eliminated in consolidation.
Certain previously reported amounts have been
reclassified to conform to the 1996
presentation.
(b) Business
The Company is in the business of providing
an integrated range of specialized oilfield
products and services in the Gulf of Mexico.
These products and services include oil and
gas well plug and abandonment, wireline and
workover services, the manufacture, sale and
rental of specialized oil well equipment and
fishing tools, the development, manufacture,
sale and rental of oil and gas drilling
instrumentation and computerized rig data
acquisition systems, and the development,
manufacture and sale of oil spill containment
booms and ancillary equipment. A majority of
the Company's business is conducted with
major oil and gas exploration companies. The
Company continually evaluates the financial
strength of their customers but does not
require collateral to support the customer
receivables. The Company operated as one
segment in 1996 and 1995.
Customers which accounted for 10 percent or
more of revenue for the years ended December
31, 1996 and 1995, were as follows:
1996 1995
----- -----
Chevron USA 34.5% 23.7%
Conoco Inc. 8.9% 16.4%
(c)Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make
estimates and assumptions that affect the
reported amounts of assets and liabilities
and disclosure of contingent assets and
liabilities at the date of the financial
statements and the reported amounts of
revenues and expenses during the reporting
period. Actual results could differ from
those estimates.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(d) Property, Plant and Equipment
Property, plant and equipment are stated at
cost. Depreciation is computed using the
straight-line method over the estimated
useful lives of the related lives as follows:
Buildings 30 years
Machinery and equipment 5 to 15 years
Automobiles, trucks, tractors
and trailers 2 to 5 years
Furniture and equipment 5 to 7 years
The Company assesses the potential impairment
of capitalized costs of long-lived assets in
accordance with Statement of Financial
Accounting Standards (FAS) No. 121,
Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be
Disposed Of. Under this method, the Company
assesses its capitalized costs utilizing its
current estimate of future revenues and
operating expenses. In the event net
undiscounted cash flow is less than
capitalized costs, an impairment loss is
recorded based on estimated fair value, which
would consider discounted future net cash
flows.
(e)Goodwill
The Company amortizes costs in excess of fair
value of net assets of businesses acquired
using the straight-line method over a period
of 20 years. Recoverability will be reviewed
periodically by comparing the undiscounted
fair value of cash flows of the assets to
which the goodwill applies to the net book
value, including goodwill, of assets.
(f)Inventories
Inventories are stated at the lower of
average cost or market. The cost of booms
and parts are determined principally on the
first-in, first-out method.
(g)Cash Equivalents
The Company considers all short-term deposits
with a maturity of ninety days or less to be
cash equivalents.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(h)Revenue Recognition
The Company recognizes revenues when services
are provided and upon the completion of job
orders from its customers. Rental income is
recognized on a straight-line basis. Unearned
income is recorded for lease payments in
excess of rental income recognized.
(i)Income Taxes
The Company provides for income taxes in
accordance with Statement of Financial
Accounting Standards (FAS) No. 109,
Accounting for Income Taxes. FAS No. 109
requires an asset and liability approach for
financial accounting and reporting for income
taxes. Deferred income taxes reflect the
impact of temporary differences between
amounts of assets for financial reporting
purposes and such amounts as measured by tax
laws.
(j)Patents
Patents are amortized using the straight-line
method over the life of each patent.
(k)Pro Forma Income Taxes and Earnings per
Share
Pro forma income tax expense and net income (loss)
as adjusted for income taxes is presented on
the Statement of Operations in order to
reflect the impact on income taxes as if the
entire consolidated company had been a
taxable entity for all of 1995. In computing
weighted average shares outstanding,
8,400,000 shares issued in the Reorganization
(see Note 2) is assumed to be outstanding as
of January 1, 1995. All other common shares
issued or sold are included in the weighted
average shares outstanding calculation from
the date of issuance or sale.
(l)Financial Instruments
The Company's financial instruments consist
of cash and cash equivalents, accounts
receivable, accounts payable and notes
payable. The carrying amount of these
financial instruments approximates their fair
value.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Business Combinations
In July 1996, the Company, pursuant to a
statutory merger, acquired Baytron, Inc. (Baytron)
for $1.1 million in cash and 550,000 shares of
the Company's common stock at the current approximate
$2.00 market price at the date of purchase for a total
purchase price of $2,200,000. The property, plant and
equipment of Baytron were valued at their estimated fair
value of approximately $791,000. Deferred taxes have
been provided for the difference between the book and
tax basis of the property. The remaining assets and
liabilities approximated their fair values. The excess
purchase price over the fair value of the net assets of
Baytron at July 31, 1996 of $1,309,000 was allocated to
goodwill to be amortized over 20 years.
In September 1996, the Company, pursuant to
a statutory merger, acquired all the capital stock
of Dimensional Oil Field Services, Inc. (Dimensional)
for $1,500,000 in cash, a promissory note of $1,000,000
and 1,000,000 restricted shares of the Company's common
stock at the current approximate $2 3/16 market price at
the date of purchase. Promissory notes having an aggregate
value of $750,000 are subject to certain minimum earnings
requirements and are not reflected in the purchase price
which approximates $3,984,000. The property, plant and
equipment of Dimensional were valued at their estimated
fair value of approximately $1,517,000. Deferred
taxes have been provided for the difference between the
book and tax basis of the property.
The remaining assets and liabilities approximated their
fair values. The excess purchase price over the fair value
of the net assets of Dimensional at September 15, 1996 of
approximately $2,649,000 was allocated to goodwill to be
amortized over 20 years.
On December 13, 1995, the Company consummated a share
exchange (the Reorganization) whereby it (i) acquired all
of the outstanding common stock of Superior Well Service,
Inc., Connection Technology, Ltd. and Superior Tubular
Services, Inc. (collectively, Superior) and (ii) acquired
all of the outstanding common stock of Oil Stop, Inc.
( Oil Stop ) . As used in the consolidated statements of
the Company, the term Small's (Small's Oilfield Services Corp.)
refers to the Company as of dates and periods prior to the
consummation of the Reorganization.
Small's acquired all of the capital stock of Superior for
8,400,000 Common Shares. Because of the controlling interest
that Superior shareholders had in the combined entity, among
other factors, the transaction was accounted for as
a reverse acquisition which resulted in the adjustment of
the net assets of Small's to its estimated fair value as
required by the rules of purchase accounting. The net assets of
Superior were reflected at their respective historical book
values. The valuation of Small's net assets was based upon
the 1,641,250 shares of common stock outstanding prior to the
Reorganization at the approximate market price of $2.00 at the
time of the renegotiation of the Reorganization on August 25, 1995.
The purchase price allocated to net assets was $3,283,000. The
revaluation resulted in a substantial reduction in the carrying
value of Small's property and equipment. The revaluation reflected
an excess purchase price of $3,520,000 over the fair value of tangible
assets which was recorded as goodwill. At December 31, 1995, in
applying the rules of FAS No. 121 (see Note 9), this goodwill was written
off and the property and equipment was written down an additional
$522,000.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Business Combinations (continued)
Small's also acquired Oil Stop for the sum of
$2.0 million in cash and 1.8 million shares of
common stock at the approximate trading price
of $2.00 at the time of the renegotiation of the
Reorganization on August 25, 1995 for a total
purchase price of $5,600,000. The book values of
Oil Stop's assets and liabilities approximated
their fair values under the rules of purchase
accounting. The excess purchase price over
the fair value of the net assets of Oil Stop at
December 13, 1995 of $4,585,000 was allocated
to goodwill to be amortized over 20 years.
Each of the above transactions have been
accounted for as a purchase and the results of
operations of the acquired company have been
included from the acquisition date.
The following unaudited pro forma information
presents a summary of consolidated results of
operations as if the acquisitions and the
Reorganization had occurred on January 1, 1995 with
pro forma adjustments to give effects to
amortization of goodwill, depreciation and certain
other adjustments together with related income tax
effects (in thousands, except per share amounts):
1996 1995
---- ----
Net sales $28,968 $25,870
====== ======
Net earnings (loss) $ 4,253 $(4,151)
====== ======
Earnings (loss) per share $ 0.23 $ (0.40)
====== ======
The above pro forma financial information is not
necessarily indicative of the results of operations
as they would have been had the acquisitions and
the Reorganization been effected on the assumed
date.
Subsequent to year end, the Company, pursuant to
a stock purchase agreement dated February 28,
1997, acquired all of the outstanding common
stock of Nautilus Pipe & Tool Rental, Inc. and
Superior Bearing & Machine Works, Inc.
(collectively doing business as "Concentric Pipe &
Tool Rentals") for $4,000,000 cash, 420,000 restricted
shares of the Company's common stock and a
promissory note in the principal amount of
$2,150,000. The promissory note of $2,150,000 is
subject to certain contingencies and is not
reflected in the purchase price which approximates
$5,838,000. Concentric Pipe & Rental Tools is
engaged in the business of renting specialized
equipment used in the exploration, development
and production of oil and gas and has operating
facilities in Houma and Lafayette, Louisiana.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(3)Leased Equipment
In April 1993, the Company entered into an
agreement to lease equipment (boom) to
National Response Corporation for the period
June 1993 through December 31, 1997. The
lease is an operating lease. The lessee has
the option to purchase the equipment at the
end of the lease term for $450,000. Rental
income is recognized on a straight-line basis.
Unearned income is recorded for lease payments
in excess of rental income recognized.
(4)Property, Plant and Equipment
A summary of property, plant and equipment at
December 31, 1996 and 1995 (in thousands) is as
follows:
1996 1995
---- ----
Buildings $ 462 $ 462
Machinery and equipment 8,725 5,669
Automobiles, trucks,
trailers and tractors 1,036 839
Furniture and fixtures 184 74
Construction-in-progress 1,170 360
Land 20 320
_______ ________
11,597 7,724
Less accumulated depreciation 1,703 820
_______ ________
Property, plant and
equipment, net $ 9,894 $ 6,904
======= =======
The cost of property, plant and equipment leased to
third parties was $5,231,000 at December 31, 1996 and 1995.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5)Notes Payable
The Company's notes payable as of December 31,
1996 and 1995 consist of the following (in
thousands):
1996 1995
---- ----
Revolving line of credit in the original
amount of $1,000,000 bearing a variable rate of
interest which equals the Wall Street Journal
posted prime rate (8.5% at December 31, 1995)
plus 2%; principal due March 31, 1996 $ - $ 918
Master note loan agreement with bank with
a maximum principal amount of $4,000,000
bearing interest at the bank's prime rate (8.25%
at December 31, 1996) 300 -
Note payable in connection with purchase
of Dimensional Oil Field Services, Inc., due
January, 1998, annual interest of 7.0% 250 -
Installment notes payable, annual interest
rates of 8.00% to 8.75% at December 31, 1996 51 90
Notes payable to insurance company, due
July 1996, annual interest rate of 7.5% - 96
Other installment notes payable with
interest rates ranging from 7.35% to 12.0% due in
monthly installments through 1996 - 145
__________ _________
601 1,249
Less current portion of notes payable 351 1,249
__________ _________
Long-term debt $ 250 $ -
========== =========
At December 31, 1996, the Company had notes payable related
to acquisitions totaling $750,000 which are not recorded as their
payment is subject to certain minimum earnings requirements.
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) Notes Payable (continued)
Subsequent to year end, the Company borrowed
$4.0 million in connection with the
acquisition of Concentric Pipe & Rental Tools.
Interest is at the lender's prime rate. The loan
requires no principal payments through
December 31, 1997 at which time it will convert to
a five or seven year term loan (at the Company's
option) with principal and interest payable monthly
thereafter at 8.25%.
(6) Income Taxes
Prior to December 13, 1995, certain companies
in the Reorganization were sub-chapter S
corporations for income tax reporting
purposes. Therefore, through December 13, 1995, no
provision for federal and state income taxes
had been made. In accordance with the terms of
the Reorganization, the sub-chapter S
shareholders received a note to be paid in five
equal installments during the twelve-month period
ended November 1, 1997 for undistributed
earnings prior to January 1, 1995 in the
amount of $1,374,000. In addition, they received
$1,091,000 primarily to pay taxes on earnings
from January 1, 1995 through December 13,
1995. Pro forma income tax expense and net
income (loss) as adjusted for income taxes is
presented on the Statements of Operations in
order to reflect the impact of income taxes as if
Superior had been a taxable entity for all of
1995.
The components of income tax expense for the
year ended December 31, 1996 and 1995 are
as follows (in thousands):
1996 1995
---- ----
Current:
Federal $ 1,382 $ 497
State 54 78
_________ ________
1,436 575
Deferred:
Federal 242 (384)
State 7 (60)
__________ ________
249 (444)
__________ ________
$ 1,685 $ 131
========== ========
(Continued)
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Income Taxes - Continued
The significant components of deferred tax assets
and liabilities at December 31, 1996 and 1995
are as follows ( in thousands):
1996 1995
---- ----
Deferred tax assets:
Property, plant and equipment $ - $ 527
Unearned income 137 401
Allowance for doubtful accounts 51 75
Net operating loss carryforward 942 1,118
_________ _________
1,130 2,121
Valuation allowance (992) (1,900)
_________ __________
Net deferred tax asset 138 221
_________ __________
Deferred tax liabilities:
Property, plant and equipment (946) -
Patent (308) (373)
--------- -----------
(1,254) (373)
--------- -----------
$ (1,116) $ (152)
========= ===========
A valuation allowance is provided to reduce the
deferred tax assets to a level which, more
likely than not, will be realized. The net
deferred tax assets reflect management's
estimate of the amount which will be realized
from future profitability which can be
predicted with reasonable certainty.
As of December 31, 1996, the Company has a net
operating loss carryforward of approximately
$2.8 million which is available to reduce
future Federal taxable income through 2010.
The utilization of the net operating loss
carryforward is limited to approximately
$200,000 a year.
A reconciliation between the statutory federal
income rate and the Company's effective tax
rate on pretax income (loss) for the year ended
December 31, 1996 and 1995 is as follows:
1996 1995
------ -------
Federal income tax rate 34.0% (34.0)%
Impairment of long lived-assets - 50.6
Sub-chapter S income not subject to corporate
tax - (17.2)
Valuation allowance adjustment (6.3) -
Other 2.3 5.4
_________ _________
Effective income tax rate 30.0% 4.8%
========= =========
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(8) Joint Venture
On January 15, 1996, the Company entered into
a joint venture with the G&L Tool Company
("G&L"), an unrelated party, which extends
through January 31, 2001. The Company
contributed its West Texas assets that had a
book value of approximately $4.5 million to the
joint venture which will be engaged in the
business of renting specialized oil well equipment
and fishing tools to the oil and gas industry
in connection with the drilling, development and
production of oil, gas and related
hydrocarbons.
The Company receives as its share of
distributions from operations $110,000 a month
which began February 1996 and runs through January
1998 and $80,000 a month for the period February
1998 through January 2001. The distributions
are reflected as revenues on the Statements of
Operations. The Company's share of distributions
is personally guaranteed by a principal of G&L.
At the end of the joint venture term, G&L will
have at its election, the option to purchase all
of the Company's West Texas assets
contributed to the joint venture for $2 million.
(9) Impairment of Long-Lived Assets
In 1995 the Company elected the early adoption
of Statement of Financial Accounting
Standards (FAS) No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of. FAS No. 121
requires that when events or changes in
circumstances indicate that carrying amounts
of an asset may not be recoverable, there has
been an impairment, and the asset should be
written down to its fair asset value. In such
instances where there is goodwill associated
with the asset as a result of a business
combination accounted for using the purchase
method, the goodwill is eliminated before
making any reduction of the carrying amounts
of the impaired long-lived asset.
The undiscounted net cash flows from the joint
venture described in Note 8 were less than the
carrying value of the property, plant and
equipment and associated goodwill indicating that an
impairment had taken place.
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(9) Impairment of Long-Lived Assets (continued)
The fair value of the fixed assets was
determined by discounting the estimated net cash
flows from the joint venture. The result was
an impairment charge of $4,042,000 for the
year ended December 31, 1995 consisting of a
write-off of goodwill of $3,520,000 and a
write-off of $522,000 of property, plant and
equipment.
(10) Stockholders' Equity
At a special meeting of stockholders on
February 23, 1996, the shareholders approved
increasing the authorized number of shares of
common stock to 40,000,000. At December 31,
1996, the following were outstanding:
(a) Class A Warrants issued in
connection with the Company's initial
public offering, entitling the holders
to purchase an aggregate of 1,121,251
shares of Common Stock until July 6,
1997 at an exercise price of $6.00 per
Common Share;
(b) Class B Warrants issued December
13, 1995 entitling the holder to
purchase an aggregate of 5,175,000
shares of Common Stock until December
13, 2000 at an exercise price of
$3.60 per Common Share;
(c) Warrants entitling the holders
thereof to purchase an aggregate of
66,666 shares of Common Stock until
January 17, 2000 at an exercise price
of $1.00 per share;
(d) Options to purchase an aggregate of
75,000 shares of Common Stock until
December 31, 1997 at an exercise price
of $3.60 per share;
(e) Options to purchase an aggregate of
150,000 shares of Common Stock until
May 5, 1998 at an exercise price of
$4.75 per share;
(f) Options issued in July 1992 to
purchase (a) an aggregate of 210,000
shares of Common Stock until July 6,
1997 at an exercise price of $3.60 per
share and (b) Class A Warrants at an
exercise price of $.07 per warrant,
which Class A Warrants entitle the
holders thereof to purchase an
aggregate of 210,000 shares of Common
Stock at a price of $6.00 per share,
and
(g) Underwriters Unit Purchase Options
issued December 13, 1995 entitling the
holder to purchase up to 150,000 Units
until December 13, 1999 at an exercise
price of $10.40.
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
(10) Stockholders Equity (continued)
Under a Stock Option Plan (1991 Option
Plan), approved by the Company's stockholders and
Board of Directors, the Company may grant
to officers, directors, employees, consultants and
agents stock options for up to 75,000
shares of the Company's common stock. Stock options
are exercisable at the greater of the fair
market value of the common shares on the date of
grant or $5.00 and options may not be granted to
persons who hold 10% or more of the Company
outstanding common shares on the date of a
proposed grant. All options expire ten years
from the date of grant. None of the stock
options under the 1991 Option Plan has been granted.
In October 1995, the stockholders approved
the 1995 Stock Incentive Plan (Incentive Plan) to
provide long-term incentives to its key
employees, including officers and directors who are
employees of the Company (Eligible Employees).
Under the Incentive Plan, the Company may grant
incentive stock options, non-qualified stock options,
restricted stock, stock awards or any combination
thereof to Eligible Employees for up to 600,000 shares
of the Company's Common Stock. The Compensation Committee
of the Board of Directors establishes the exercise price
of any stock options granted under the Incentive Plan,
provided the exercise price may not be less than the fair
market value of a common share on the date of grant.
A summary of stock options granted under the Incentive
Plan for the years ended December 31, 1996 and 1995 are
as follows:
1996 1995
---- ----
Weighted Weighted
Number of Average Number of Average
Shares Price Shares Price
------ -------- --------- --------
Outstanding at beginning of year 150,000 $2.53 -
Granted 421,500 $2.56 150,000 $2.53
Exercised - - - -
Forfeited (40,000) $2.56 - -
Canceled - - - -
________ ________ _______ ________
Outstanding at the end of year 531,500 $2.55 150,000 $2.53
======== ======== ======= ========
Exercisable at end of year 357,000 $2.55 - -
======== ======== ======= ========
Available for future grants 68,500 450,000
======== =======
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(10) Stockholders Equity (continued)
The Company accounts for its stock based
compensation under the principles prescribed by
the Accounting Principles Board's Opinion No. 25,
Accounting for Stock Issued to Employees (Opinion
No. 25). Accordingly, stock options awarded under
the Incentive Plan are considered to be
"non-compensatory" and do not result in the
recognition of compensation expense.
In October 1995, the Financial Accounting
Standards Board issued Statement of Financial
Accounting Standards (FAS) No. 123 Accounting for
Stock-Based Compensation,which encouraged the use
of fair value based method of accounting for
compensation expense associated with stock option
and similar plans. However, FAS No. 123 permits
the continued use of the value based method
prescribed by Opinion No. 25 but required
additional disclosures, including pro forma
calculations of earnings and net earnings per
share as if the fair value method of accounting
prescribed by FAS No. 123 had been applied in
1996 and 1995. The pro forma data presented
below is not representative of the effects on
reported amounts for future years because FAS No.
123 does not apply to awards prior to 1995 and
additional awards are expected in the future (in
thousands, except per share amounts).
As Reported Pro forma
------------ ---------
1996 1995 1996 1995
---- ---- ---- ----
Net income (loss) $ 3,932 $(3,355) $ 3,798 $ (3,355)
======== ======== ======= =========
Earnings per share $ 0.22 $ (0.38) $ 0.22 $ (0.38)
======== ======== ======= =========
Average shares
outstanding 17,618,711 8,847,946 17,618,711 8,847,946
========== ========= ========== ==========
Average fair
value of grants
during the year - - $ 0.58 $ 0.57
========== ========= =========== ==========
Black-Scholes
option pricing model
assumptions:
Risk free interest rate 6.1% 5.9%
Expected life (years) 3 3
Volatility 20.6% 20.6%
Dividend yield -0- -0-
======= ========
(11)Commitments and Contingencies
The Company leases certain office, service and
assembly facilities under operating leases.
The leases expire at various dates over the
next several years. Total rent expense was
$169,000 in 1996 and $85,000 in 1995. Future
minimum lease payments under non-cancelable
leases for the five years ending December 31,
1996 through 2000 are as follows: $243,000,
$198,000, $93,000, $54,000 and none,
respectively.
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) Commitments and Contingencies (continued)
From time to time, the Company is involved in
litigation arising out of operations in the
normal course of business. In management's
opinion, the Company is not involved in any
litigation, the outcome of which would have a
material effect on its business or operations.
(12) Related Party Transactions
The Company has entered into certain
transactions which have given rise to amounts
payable to the shareholders. The balances at
December 31, 1996 and 1995 were $1,171,000 and
$3,422,000, respectively.
Due to shareholders at December 31, 1996 is
primarily for the undistributed earnings in
sub-chapter S corporations prior to December
31, 1994. Due to shareholders at December 31,
1995 consisted of $2,000,000 paid January 2,
1996 to the former sole shareholder of Oil Stop
in the acquisition of that company and
approximately $1,374,000 due to the former
shareholders of Superior for undistributed
earnings in sub-chapter S corporations prior to
December 31, 1994.
The Company paid consulting fees to a director,
who is not an employee, of $23,000 in 1996 and
$25,000 in 1995. The employment contract of a
director, who is a former officer, was
converted to a consulting agreement, in May
1996. He was paid $70,000 in 1996 under this
agreement and will be paid $60,000 in 1997 and
1998. The Company also paid a director, who is
also an employee and a shareholder rent of
approximately $46,200 in 1996 and $2,400 in
1995. The Company is obligated to make such
rent payments in the future as follows: $46,200
in 1997 and $46,200 in 1998. The Company also
paid an employee $36,000 in 1995 for the rent
of two facilities. As of December 31, 1995,
the Company negotiated the cancellation of
lease with an officer and director in the
amount of $125,000.
Item 8.Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
None
PART III
Item 9.Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a)
of the Exchange Act
Information required by this item will be included
in the Company's definitive proxy statement in
connection with its 1997 Annual Meeting of
Stockholders and is incorporated herein by
reference.
<PAGE>
SUPERIOR ENERGY SERVICES, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Item 10. Executive Compensation
Information concerning directors and executive
officers required by this item will be included in
the Company's definitive proxy statement in
connection with its 1997 Annual Meeting of
Stockholders and is incorporated herein by
reference.
Item 11. Security Ownership of Certain Beneficial
Owners and Management
Information required by this item will be included
in the Company's definitive proxy statement in
connection with its 1997 Annual Meeting of
Stockholders and is incorporated herein by
reference.
Item 12. Certain Relationships and Related
Transactions
Information required by this item will be included
in the Company's definitive proxy statement in
connection with its 1997 Annual Meeting of
Stockholders and is incorporated herein by
reference.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits. Reference is made to the Exhibit
Index beginning on page E-1 hereof.
(b) Reports on Form 8-K. None
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Superior Energy Services, Inc.
/s/ Terence E. Hall
By:_____________________________
Terence E. Hall
Chairman of the Board,
Chief Executive Officer and
President
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates
indicated.
Signature Title Date
- --------- ----- ------
/s/ Terence E. Hall Chairman of the Board, March 28, 1997
____________________ Chief Executive Officer
Terence E. Hall and President
(Principal Executive Officer)
/s/ Robert S. Taylor
_____________________ Chief Financial Officer March 28, 1997
Robert S. Taylor (Principal Financial and
Accounting Officer)
/s/ Ernest J. Yancey, Jr.
_____________________ Director March 28, 1997
Ernest J. Yancey, Jr.
/s/ James E. Ravannack
_____________________ Director March 28, 1997
James E. Ravannack
/s/ Richard J. Lazes
_____________________ Director March 28, 1997
Richard J. Lazes
/s/ Kenneth C. Boothe
_____________________ Director March 28, 1997
Kenneth C. Boothe
/s/ Bradford Small
_____________________ Director March 28, 1997
Bradford Small
/s/ Justin L. Sullivan
_____________________ Director March 28, 1997
Justin L. Sullivan
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
2.1 Agreement and Plan of Reorganization, dated March 23,
1995, as amended, among the Company, Superior Well
Service, Inc. and each of the Shareholders of Superior.(1)
2.2 Agreement and Plan of Reorganization, dated May 22, 1995,
as amended, among the Company, Oil Stop, Inc. and the Sole
Shareholder of Oil Stop.(1)
3.1 Composite of the Company & Certificate of Incorporation.(2)
3.2 Composite of the Company's By-laws.(3)
4.1 Form of Unit Purchase Option. (4)
4.2 Form of Class B Warrant Agreement. (4)
4.3 Class B Warrant Certificate. (5)
4.4 Stock Certificate. (5)
4.5 Purchase Option dated July 7, 1992 as amended dated
August 16, 1995. (6)
4.6 Form of Private Warrant dated January 18, 1995. (6)
4.7 Class A Warrant Agreement dated July 7, 1992 between the
Company and American Stock Transfer & Trust Company. (7)
4.8 Specimen Class A Warrant Certificate.(7)
10.1 Commercial Business Loan Agreement dated June 6, 1996
by and among Whitney National Bank and the Company. (8)
10.2 Promissory Note dated February 28, 1997 payable by the
Company to Whitney National Bank in the amount of $4,000,000.
10.3 Agreement and Plan of Merger dated September 15, 1996, by
and among the Company, Dimensional Oil Field Acquisition,
Inc., Dimensional Oil Field Services, Inc. and Emmett E.
Crockett, Evelyn Crockett, George K. Crockett and Robert
L. Crockett.(9)
10.4 Agreement and Plan of merger dated July 30, 1996 by and
among the Company, Baytron Acquisition, Inc., Baytron,
Inc. James Edwards and Judy Edwards dated July 30, 1996.(3)
10.5 Stock Purchase Agreement dated February 28, 1997, by and
between Superior Energy Services, Inc. and John C. Gordon.(10)
10.6 1991 Stock Option Plan.(1)
10.7 1995 Stock Incentive Plan.(1)
10.8 Joint Venture Agreement between G&L Tool Company and
Superior Fishing and Rental, Inc. dated January 8, 1996.(3)
10.9 Form of Consultant Option amended.(4)
10.10 Commercial Lease Purchase Agreement dated October 1,
1994, between the Knight Family Trust and Small Fishing &
Rental, Inc.(11)
10.11 Commercial Lease, dated April 21, 1993, between Artesia
and Small Fishing and Rental, Inc.(11)
<PAGE>
Exhibit
No. Description
10.12 Commercial Lease Purchase Agreement dated October 1,
1994, between the Knight Family trust and Small Fishing
& Rental, Inc.(11)
10.13 Lease of Commercial Property dated March 1, 1994 between
Oil Stop, Inc. and Richard Lazes.(11)
10.14 Employment Agreement between the Company and each of
Terence E. Hall, Ernest J. Yancey and James Ravannack.(11)
10.15 Employment Agreement between the Company and Richard
J. Lazes.(11)
10.16 Employment Agreement between the Company and Kenneth C.
Boothe.(11)
21 Subsidiaries of the Company.(3)
23.5 Consent of KPMG Peat Marwick LLP.
27.1 Financial Data Schedule.
_________________
(1) Incorporated by reference to Appendix A of the Company's
Definitive Proxy Statement dated September 29, 1995.
(2) Incorporated by reference to the Company's Form 10-QSB
for the quarter ended March 31, 1996.
(3) Incorporated by reference to the Company's Form SB-2
(Registration Statement No. 333-15987).
(4) Incorporated by reference to Amendment No. 1 to the
Company's Form S-4 on Form SB-2 (Registration Statement
No. 33-94454)
(5) Incorporated by reference to Amendment No. 6 to the
Company's Form S-4 on Form SB-2 (Registration No. 33-94454).
(6) Incorporated by reference to Amendment No. 3 to the
Company's Form S-4 on Form SB-2 (Registration Statement
No. 33-94454).
(7) Incorporated by reference to the Company's Registration
Statement on Form S-18 (Registration Statement No. 33-48460FW).
(8) Incorporated by reference to the Company's Form 10-QSB
for the quarter ended June 30, 1996.
(9) Incorporated by reference to the Company's Form 8-K dated
September 16, 1996.
(10) Incorporated by reference to the Company's Form 8-K dated
February 28, 1997.
(11) Incorporated by reference to the Company's Form S-4
(Registration Statement No. 33-94454).
Exhibit 10.2
$4,000,000.00 New Orleans, Louisiana
February 28, 1997
On December 31, 1997 after date, I, whether maker,
endorser, guarantor, surety, or other party hereto, promise
to pay to the order of
WHITNEY NATIONAL BANK
at 228 St. Charles Avenue, New Orleans, Louisiana, or at any
one of its branches, Four Million Dollars and 00/100
Dollars, for value received, with interest at the rate of
Whitney Prime percent per annum payable monthly beginning
March 31, 1997 from Date until paid.
Each maker, endorser, guarantor, surety or other party to
this note (the "Obligor", whether one or more) waives
presentment for payment, demand, notice of dishonor,
protest, pleas of discussion and division and is bound
jointly, severally and solidarily for the full and timely
payment payment of this note in accordance with its terms.
Each Obligor agrees to the following terms and
conditions:
1. If this note is payable on demand or becomes payable
on demand, Whitney National Bank (the "Bank") may, from time
to time, change the interest rate set forth in this note by
giving notice to the maker by U.S. mail, postage prepaid, at
the last address of maker on file with the Bank, which shall
constitute notice to Obligor. The Obligor shall have the
right to reject a change in the interest rate by paying the
note in full, including all principal and interest due
thereon, with interest at the rate in effect prior to the
giving of the notice of change, within ten (10) days after
they have agreed to each change of interest rate from the
date specified in the notice. Interest on the outstanding
principal owed on this note shall be computed and assessed
on the basis of the actual number of days elapsed over a
year composed of 360 days. This note may be prepaid in full
or in part at any time without penalty. If this note
provides for interest at a rate based on Whitney Prime, the
term Whitney Prime shall mean that rate of interest as
recorded by the Bank from time to time as its prime lending
rate with the rate of interest to change when and as said
prime lending rate changes.
2. As security for the debt evidenced by this note, and
for all obligations and liabilities of each Obligor to
Whitney National Bank (the "Bank"), direct or contingent,
due or to become due, now existing or hereafter arising,
including all future advances, with interest, attorneys'
fees, expenses of collection and costs, including without
limitation, obligations to the Bank on promissory notes,
checks, overdrafts, letter of credit agreements,
endorsements and continuing guaranties, each Obligor hereby
(a) pledges, pawns and delivers to the Bank, and grants in
favor of the Bank a continuing security interest in, all
property of Obligor of every nature or kind whatsoever owned
by Obligor or in which Obligor has an interest that is now
or hereafter on deposit with, in the possession of, under
the control of or held by the Bank in definitive form, book
entry form or in safekeeping or custodian accounts,
including all deposit accounts, money, funds on deposit in
checking, savings, custodian and other accounts,
instruments, negotiable instruments, certificates of
deposit, commercial paper, stocks, bonds, treasury bills and
other securities, documents, documents of title and chattel
paper, and (b) grants to the Bank a right of set-off and/or
compensation with respect to such property of each Obligor.
If the proceeds of collateral furnished for the payment of
this note are insufficient to pay this note in full, each
Obligor shall remain fully obligated for any deficiency.
For purposes of executory process, each Obligor hereby
acknowledges the debt created hereby and confesses judgment
in favor of the Bank for the full amount of the debt
evidenced by this note. To the extent permitted by law,
each Obligor hereby expressly waives (i) the benefit of
appraisement provided in the Louisiana Code of Civil
Procedure and (ii) the demand and three (3) days delay
accorded by Articles 2639 and 2721, Louisiana Code of Civil
Procedure. The terms "deposit accounts," "instruments,"
"documents" and "chattel paper" shall have the meaning
provided in La. R.S. 10:9-105. Each Obligor hereby releases
the Bank from any obligation to take any steps to collect
any proceeds of or preserve any of Obligor's rights,
including, without limitation, rights against prior parties,
in the collateral in which the Bank possesses a security
interest, and the Bank's only duty with respect to such
collateral shall be solely to use reasonable care in the
physical preservation of the collateral which is in the
actual possession of the Bank. Notwithstanding any other
provision in this note to the contrary, IRA, pension, and
other tax-deferred accounts at the Bank shall not be subject
to the security interest created hereby.
3. If any of the following events shall occur:
(a) the non-payment of any principal or interest on
this note on the date when due;
(b) the death, Interdiction, dissolution, liquidation
or insolvency of any Obligor;
(c) the filing by or against any Obligor of a
proceeding for bankruptcy, arrangement,
reorganization, or any other relief afforded
debtors or affecting rights of creditors generally
under the laws of any state or under the United
States Bankruptcy Code;
(d) the default by any Obligor under this note or
under any mortgage, pledge agreement, security
agreement, or other security instrument securing
the payment of this note or under any other
obligations owed by any Obligor to the Bank;
(e) any judgment, garnishment, seizure, tax lien or
levy against any assets of any Obligor;
(f) any material adverse change in the financial
condition of any Obligor, or any material
discrepancy between the financial statements
submitted by any Obligor and the actual financial
condition of such Obligor;
(g) the expropriation or condemnation of all or a part
of any property which is assigned, pledged or
mortgaged to the Bank or in which the Bank
possesses a security interest;
(h) any statement, warranty, covenant or
representation made by any Obligor to the Bank
proves to be untrue;
(i) the assessment of any tax or other assessment
against the loan amount, the Bank's interest in
the note or in any asset assigned, pledged or
mortgaged to the Bank or in which the Bank
possesses a security interest; or
(j) the existence or future enactment of any law or
ordinance by any federal, state, parish, municipal
or other taxing authority requiring or permitting
Obligor to deduct any amount whatsoever from any
payments to be made on this note;
then at the option of the Bank, the entire remaining balance
of principal and interest due on this note and all other
obligations and liabilities, direct or contingent, of
Obligor to the Bank shall be immediately due and payable
without notice or demand.
4. If an earlier note of any Obligor is cancelled at the
time of execution hereof, then this note constitutes an
extension, but not a novation, of the amount of the
continuing indebtedness, and all security rights held by the
Bank under the earlier note shall continue in full force and
effect.
5. Without releasing or affecting any of the obligations
of any Obligor, the Bank may, one or more times, in its sole
discretion, without notice to or consent of any Obligor, (a)
release or modify the obligations of any other Obligor, (b)
release, exchange or modify the Bank's rights with respect
to collateral held as security for this note, (c) extend the
maturity of this note for periods that may exceed the
original term, (d) retain the proceeds, increases and
profits, including money, derived from the collateral
furnished by any Obligor as additional security for any and
all obligations and liabilities of Obligor to the Bank,
including the debt evidenced by this note, without applying
said proceeds, increases and profits toward payment of the
obligations, or (e) impute or apply payments received from
any Obligor, or the proceeds, increases and profits of
collateral furnished by any Obligor, in whole or in part to
this note, or to any other obligations of such Obligor.
6. Each Obligor agrees to pay the fees of any attorney-
at-law employed by the Bank to recover sums owed or to
protect the Bank's interests with regard to this note. Such
attorneys' fees are fixed at ten (10%) percent of the amount
of principal and interest due on this note and are secured
by collateral furnished for the payment hereof. Obligor
further agrees to pay any and all charges, fees, costs
and/or taxes levied or assessed against the Bank in
connection with this note, any obligation owed by any
Obligor to the Bank and/or any collateral, asset or other
property which is pledged, mortgaged, hypothecated or
assigned to the Bank or in which the Bank possesses a
security interest, as security for this note or any other
obligation owed by any Obligor to the Bank.
7. The provisions of this note may not be waived or
modified except in writing, signed by the Bank. No failure
or delay of the Bank in exercising its rights shall be
construed as a waiver.
SUPERIOR ENERGY SERVICES, INC.
$ SEE ABOVE
/s/ Terence E. Hall
__________________________
Terence E. Hall
DUE SEE ABOVE
EXHIBIT 23.1
The Board of Directors
Superior Energy Services, Inc.
We consent to incorporation by reference in the registration statements on
Form SB-2 (No. 333-15987), Form S-3 (No. 333-22603) and Form S-8 (No. 333-
12175) of Superior Energy Services, Inc. of our report dated March 14, 1997,
relating to the consolidated balance sheets of Superior Energy Services, Inc.
and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, changes in stockholders' equity and
cash flows for the years then ended, which report appears in the December
31, 1996, annual report on Form 10-K of Superior Energy Services, Inc. Our
report refers to the adoption in 1995 of the methods of accounting for the
impairment of long-lived assets and for long-lived assets to be disposed of
prescribed by Statement of Financial Accounting Standards No. 121.
KPMG Peat Marwick LLP
New Orleans, Louisiana
March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 433,000
<SECURITIES> 0
<RECEIVABLES> 7,115,000
<ALLOWANCES> (149,000)
<INVENTORY> 1,197,000
<CURRENT-ASSETS> 9,078,000
<PP&E> 11,597,000
<DEPRECIATION> (1,703,000)
<TOTAL-ASSETS> 28,337,000
<CURRENT-LIABILITIES> 6,484,000
<BONDS> 0
0
0
<COMMON> 19,000
<OTHER-SE> 20,330,000
<TOTAL-LIABILITY-AND-EQUITY> 28,337,000
<SALES> 23,638,000
<TOTAL-REVENUES> 23,638,000
<CGS> 11,040,000
<TOTAL-COSTS> 18,100,000
<OTHER-EXPENSES> (206,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127,000
<INCOME-PRETAX> 5,617,000
<INCOME-TAX> 1,685,000
<INCOME-CONTINUING> 3,932,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,932,000
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
