Forbes Energy Services Reports 2012 First Quarter Results

Forbes Energy Services Ltd. (NASDAQ: FES) and (TSX: FRB) today announced financial and operating results for the three months ended March 31, 2012. All share and per share amounts have been adjusted to reflect the four-to-one share consolidation completed on August 12, 2011.

Please note: The term “U.S. Operations” refers to continuing operations, which represent the Company’s financial results excluding its discontinued Mexico operations that were sold in January 2012.

Highlights for the quarter ended March 31, 2012:
  • Revenues from U.S. Operations increased 5.6% to $131.5 million in the first quarter of 2012 as compared to $124.5 million in the fourth quarter of 2011, and increased 38.9% from the $94.7 million reported in the first quarter of 2011;
  • Gross profit from U.S. Operations increased to $37.5 million, or 28.6% of revenues, in the first quarter of 2012 compared to $35.0 million, or 28.1% of revenues, in the fourth quarter of 2011, and $22.7 million, or 24.0% of revenues, in the first quarter of 2011;
  • GAAP net income from U.S. Operations attributable to common shares was $5.2 million, or $0.20 per diluted share, for the first quarter of 2012, compared to net income from U.S. Operations attributable to common shares of $4.0 million, or $0.15 per diluted share, for the fourth quarter of 2011, and a net loss from U.S. Operations attributable to common shares of ($0.8) million, or ($0.04) per diluted share, for the first quarter of 2011;
  • Adjusted EBITDA from U.S. Operations * totaled $28.6 million in the first quarter of 2012 compared to $29.7 million in the fourth quarter of 2011, and $17.8 million in the first quarter of 2011. Adjusted EBITDA from U.S. Operations for the three months ended March 31, 2012 includes $1.2 million in discretionary compensation expense related to 2011.

* Adjusted EBITDA from U.S. Operations, a non-GAAP financial measure, is defined by the Company as income (loss) from continuing operations before interest, taxes, depreciation, amortization, gain or loss on early extinguishment of debt and non-cash stock based compensation. For a reconciliation of such measure to net income, please see the disclosures at the end of this release and on the Company’s Website.

Overview

John Crisp, president and CEO of Forbes Energy Services, said, “Strong demand for our services continues to facilitate solid financial performance quarter after quarter. During the first quarter of 2012, we were able to benefit from the quick deployment of additional equipment and from our established infrastructure in the most active oil and liquids-rich areas.

“We have direct requests from customers for additional equipment and a waitlist for our new coiled tubing units, which we expect the first to be deployed in June. We believe demand will continue to trend upward and, as a result, expect high utilization and positive operating margins for the remainder of 2012,” said Mr. Crisp.

Business Segment Results

Well Servicing Segment

In the first quarter of 2012, Well Servicing segment revenues from U.S. Operations increased $1.2 million, or 2.4%, to $52.2 million compared to $51.0 million in the fourth quarter of 2011, and $36.4 million in the prior year quarter. Segment gross profit totaled $13.2 million, or 25.2% of revenues, in the first quarter of 2012 compared to $12.5 million, or 24.4% of revenues, for the fourth quarter of 2011, and $6.7 million, or 18.3% of revenues, in the prior year quarter. The sequential and year-over-year increase in the Well Servicing segment revenues and gross profit is the result of higher prices for the Company’s services and greater utilization, partially offset by rising labor and fuel costs.

The Company recorded approximately 117,633 U.S. rig hours for the first quarter of 2012, compared to 112,044 U.S. rig hours in the fourth quarter of 2011, and 89,615 U.S. rig hours in the first quarter of 2011. The Company had 160 rigs in its U.S. well service fleet at March 31, 2012. Capital expenditures for U.S. Operations in the Well Servicing segment for the quarter ended March 31, 2012, were approximately $10.7 million comprised of $2.8 million for two pump-down units, $2.5 million for light trucks, $1.5 million for a well service rig, and the balance for mud pumps and related well service equipment.

As of March 31, 2012 the Company had 160 well service rigs and four pump-down units.

Fluid Logistics and Other Segment

In the first quarter of 2012, Fluid Logistics and Other segment revenues increased $5.7 million, or 7.8%, to $79.2 million compared to $73.5 million in the fourth quarter of 2011, and $58.2 million in the first quarter of 2011. Gross operating profit for the Fluid Logistics and Other segment totaled $24.4 million, or 30.8% of revenues, in the first quarter of 2012 compared to $22.5 million, or 30.6% of revenues, in the fourth quarter of 2011, and $16.0 million, or 27.5% of revenues, in the prior year quarter. Similar to our Well Servicing segment, the year-over-year increase is the result of higher prices for the Company’s services, partially offset by rising labor, repairs and fuel costs.

The Company recorded 473,061 truck hours during the first quarter of 2012 compared to 431,140 hours in the fourth quarter of 2011, and 313,445 hours for the first quarter of 2011. The Company’s fluid transport segment heavy truck fleet totaled 540 at March 31, 2012. Capital expenditures for the Fluid Logistics and Other segment were approximately $43.1 million for the quarter ended March 31, 2012 comprised of $36.1 million for frac tanks, $3.7 million for vacuum trucks and trailers, $2.0 million for a salt water disposal well, and the balance for other related equipment.

As of March 31, 2012 the Company utilized 452 vacuum trucks, 88 other heavy trucks, 2,848 frac tanks, and 18 salt water disposal wells.

Liquidity and Capital Resources

As of March 31, 2012, the Company had $20.6 million in unrestricted cash and $16.5 million of restricted cash. Also, the Company had outstanding $280 million of 9.0% Senior Notes and $14.8 million of other notes. As of May 15, 2012, the Company had $22.7 million in unrestricted cash and the $75.0 million secured credit facility remained undrawn.

Conference Call

Company management will host a conference call to discuss its first quarter 2012 financial results starting at 10 a.m. EDT (9 a.m. CDT) on Wednesday, May 16, 2012. Investors can participate in the call by phone, or listen to the call via audio webcast, as follows:

Via phone:

In the U.S. and Canada, dial 888-680-0894 (passcode 29422553). International callers dial 617-213-4860 (passcode 29422553). A telephone replay will be available through May 21, 2012. To access the replay, callers in the U.S. and Canada dial 888-286-8010 (passcode 67657200). International callers can access the replay by dialing 617-801-6888 (passcode 67657200).

To minimize telephone hold times the day of the event, participants can pre-register for the call by visiting the following site: www.theconferencingservice.com/prereg/key.process?key=PAKATDJNK

Via webcast:

Visit www.ForbesEnergyServices.com and click on “Investor Relations,” then “Events and Presentations.” Shortly after the conclusion of the call, a webcast replay will be made available on the same page of the Company’s investor relations Website.

About the Company

Forbes Energy Services Ltd. is an independent oilfield services contractor that provides a broad range of drilling-related and production-related services to oil and natural gas companies, primarily onshore in Texas, Mississippi and Pennsylvania. More information on the Company can be found by visiting www.ForbesEnergyServices.com.

Forward-Looking Statements and Regulation G Reconciliation

This press release contains “forward-looking statements,” as contemplated by the Private Securities Litigation Reform Act of 1995, in which the Company discusses factors it believes may affect its performance in the future. The accuracy of the Company’s assumptions, expectations, beliefs and projections depend on events or conditions that change over time and are thus susceptible to change based on actual experience, new developments and known and unknown risks. The Company gives no assurance that the forward-looking statements will prove to be correct and does not undertake any duty to update them. The Company’s actual future results might differ from the forward-looking statements made in this press release for a variety of reasons, which include: supply and demand for oilfield services and the level of oil and natural gas prices; the continued uncertainty in the global financial markets and its effect on domestic spending in the oil and natural gas industry; the Company's ability to maintain or improve pricing on its core services; the potential for excess capacity in the industry; and competition. Additional factors that you should consider are set forth in detail in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (the "Form 10-K"), as well as other filings the Company has made with the Securities and Exchange Commission. Should one or more of the foregoing risks or uncertainties materialize, or should the Company’s underlying assumptions prove incorrect, the Company’s actual results may vary materially from those anticipated in its forward-looking statements, and the Company’s business, financial condition and results of operations could be materially and adversely affected.

The Company’s financial statements and management’s discussion and analysis of financial condition and results of operations can be found in the Form 10-Q, which is being submitted for filing today with the Securities and Exchange Commission and posted on the Company’s Website.

This press release also contains references to the non-GAAP financial measure of Adjusted EBITDA from U.S. Operations Excluding Non-recurring Items. For a reconciliation of such measure to net income, please see the table at the end of this release. Management’s opinion regarding the usefulness of Adjusted EBITDA from U.S. Operations Excluding Non-recurring Items to investors and a description of the ways in which management uses such measure can be found on the “Investor Relations” page of the Company’s Website.
 
Forbes Energy Services Ltd.
Selected Statement of Operations Data
(Unaudited)
           
Three Months Ended March 31,
2012 2011
 
Revenues
Well servicing $ 52,239,814 $ 36,414,430
Fluid logistics   79,244,766     58,246,823  
Total revenues   131,484,580     94,661,253  
 
Expenses
Well servicing 39,088,407 29,761,548
Fluid logistics 54,855,782 42,222,577
General and administrative 10,669,751 5,689,703
Depreciation and amortization   11,420,716     9,674,673  
Total expenses   116,034,656     87,348,501  
Operating income 15,449,924 7,312,752
 
Other income (expense)
Interest expense, net (6,872,184 ) (6,928,259 )
Other income, net   -     900  
Income from continuing operations before taxes 8,577,740 385,393
Income tax expense   3,366,751     298,386  
Income from continuing operations 5,210,989 87,007
Income from discontinued operations, net of tax expense $804,498 and $978,660 respectively   1,131,621     1,817,511  
Net income 6,342,610 1,904,518
Preferred shares dividends   (194,139 )   (882,584 )
Net income attributable to common shares $ 6,148,471   $ 1,021,934  
 
Earnings (loss) per share of common stock from continuing operations
Basic $ 0.24 $ (0.04 )
Diluted $ 0.20 $ (0.04 )
Earnings per share of common stock from discontinued operations
Basic $ 0.05 $ 0.09
Diluted $ 0.04 $ 0.09
Earnings per share of common stock
Basic $ 0.29 $ 0.05
Diluted $ 0.24 $ 0.05
Weighted average number of shares outstanding
Basic 20,979,250 20,918,417
Diluted 26,582,337 21,179,809
 
   
Forbes Energy Services Ltd.
Selected Balance Sheet Data
(Unaudited)
 
March 31, December 31,
2012 2011
Cash $ 20,567,400 $ 36,600,091
Accounts receivable, net 127,732,849 132,024,147
Working Capital 77,470,616 86,765,717
Other intangibles, net 30,161,090 30,876,389
Total assets 549,291,768 550,423,053
Total debt 294,753,054 296,150,274
Deferred tax liability 31,461,425 27,491,812
Shareholders' equity 134,071,197 125,780,359
 
 
 
Forbes Energy Services Ltd.
Selected Operating Data
 
Three Months Ended March 31,
2012 2011
Working days 64 64
 
Rig hours 117,633 89,615
 
Truck hours 473,061 313,445
 
 
 
Forbes Energy Services Ltd.
Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA
(Unaudited)
 
Three Months Ended March 31,
2012 2011
Net Income from continuing operations $ 5,210,989 $ 87,007
Depreciation and amortization 11,420,716 9,674,673
Interest expense, net 6,872,184 6,928,259
Income tax expense 3,366,751 298,386
Share-based compensation   1,767,002   777,876
Adjusted EBITDA from U. S. Operations $ 28,637,642 $ 17,766,201

Copyright Business Wire 2010

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