BJ Services Reports First Fiscal Quarter Earnings of $0.58 Per Diluted Share



    HOUSTON, Jan. 22 /CNW/ -- BJ Services Company (NYSE:   BJS; CBOE; PCX)
today reported net income of $172.2 million for the fiscal 2008 first quarter
ended December 31, 2007, or $0.58 per diluted share. The quarter's diluted
earnings per share decreased from the $0.64 per diluted share reported in the
previous quarter and the $0.70 per diluted share reported in the first quarter
of fiscal 2007.
    Revenue in the first quarter of fiscal 2008 was $1,285.1 million,
slightly above the $1,279.3 million reported in the previous quarter and up 9%
compared to $1,183.9 million reported in the prior year's December quarter. 
Operating income for the quarter was $252.6 million, a 12% decrease compared
to $286.2 million for the previous quarter and a 20% decrease compared to
$316.3 million reported in the first quarter of fiscal 2007.
    Debt decreased $46.7 million to $624.3 million and cash and cash
equivalents decreased $4.6 million to $53.6 million during the quarter.  Uses
of cash during the quarter included capital expenditures of $161.8 million and
payment of $14.6 million in dividends.
    Commenting on the results, Chairman and CEO Bill Stewart said, "Revenue
in the U.S. and Canada increased both sequentially and year over year, despite
a relatively flat North America rig count, harsh winter storms in a number of
areas in the U.S. and lower pricing in the U.S. and Canada pressure pumping
operations.
    "International pressure pumping revenue was down slightly compared to the
previous quarter, as harsh weather conditions and other factors in certain
markets slowed or delayed projects.  International operating income margins
were further impacted by equipment mobilization and maintenance costs, as well
as other front-end costs related to projects scheduled to begin in the second
fiscal quarter.  As these new projects begin generating revenue, we expect
international operating margins to improve in the second quarter and the
remainder of the fiscal year.
    "Our Oilfield Services group results were mixed, with seasonal declines
in the Process and Pipeline Services group and lower Completion Fluids sales
offsetting revenue improvements in Chemical Services, Tubular Services and
Completion Tools, compared to the previous quarter.
    "During the second quarter of fiscal 2008, we expect relatively flat
drilling activity with continued pricing pressures in the U.S. market.  We
expect improved results in Canada as we enter the winter drilling season, and
we also anticipate increased revenue and improved margins in the International
Pressure Pumping segment.  Our Oilfield Services group is projected to be up
slightly in the second quarter as we expect revenue growth from Completion
Tools and Completion Fluids will be partially offset by continued seasonal
decline in our Process and Pipeline Services business.  We are projecting
earnings per share for the second fiscal quarter to be in the range of $0.55
to $0.57."



    
                     CONSOLIDATED STATEMENT OF OPERATIONS
                                  UNAUDITED
                   (in thousands except per share amounts)
    

    
                                              Three Months Ended
                                          December 31          September 30
                                     2007            2006          2007
    

    
    Revenue                      $1,285,065      $1,183,940    $1,279,313
    Operating Expenses:
      Cost of sales and services    950,450         788,635       910,623
      Research and engineering       17,198          15,694        18,532
      Marketing                      28,832          25,813        28,083
      General and administrative     36,630          37,207        37,521
      Loss (gain) on long-lived
       assets                          (626)            265        (1,645)
        Total operating expenses  1,032,484         867,614       993,114
    Operating income                252,581         316,326       286,199
    Interest expense                 (7,862)         (8,779)       (6,470)
    Interest income                     474             320           219
    Other expense, net               (2,711)         (2,076)         (905)
    Income before income taxes      242,482         305,791       279,043
    Income taxes                     70,298          98,707        89,693
    Net income                     $172,184        $207,084      $189,350
    

    
    Earnings Per Share:
      Basic                           $0.59           $0.71         $0.65
      Diluted                         $0.58           $0.70         $0.64
    

    
    Weighted Average Shares
     Outstanding:
      Basic                         292,627         293,024       291,630
      Diluted                       295,284         296,436       294,510
    

    
    Supplemental Data:
      Depreciation and
       amortization                 $62,766         $45,705       $57,914
      Capital expenditures          161,797         146,452       211,029
      Debt                          624,324         544,737       671,028
    



    
                             Operating Highlights
    
    Following are the results of operations for the three months ended
December 31, 2007, December 31, 2006 and September 30, 2007:

    
                                              Three Months Ended
                                          December 31          September 30
                                     2007             2006         2007
    

    
    U.S./Mexico Pressure Pumping
     Revenue                       $662,551        $640,826      $641,846
      Operating Income              182,022         252,557       193,285
      Operating Income Margins          27%             39%           30%
    

    
    Canada Pressure Pumping
     Revenue                       $121,346        $111,664      $117,838
      Operating Income               16,992          13,407        21,886
      Operating Income Margins          14%             12%           19%
    

    
    International Pressure
     Pumping Revenue               $288,512        $252,056      $295,003
      Operating Income               35,925          40,373        40,646
      Operating Income Margins          12%             16%           14%
    

    
    Oilfield Services Group
     Revenue                       $212,656        $179,394      $224,626
      Operating Income               40,033          32,698        52,367
      Operating Income Margins          19%             18%           23%
    

    
    Corporate Revenue              $      -        $      -      $      -
      Operating Loss                (22,391)        (22,709)      (21,985)
    



    
                           December Quarter Review
    
    U.S./Mexico Pressure Pumping Services first quarter 2008 revenue of
$662.6 million was 3% higher than both the September 2007 quarter (sequential)
and the December 2006 quarter (year over year), despite pricing pressure.
Holiday delays throughout the U.S. as well as harsh weather conditions in the
Rockies and Mid-West also negatively impacted operating activity during the
quarter. Average active drilling rigs for U.S./Mexico was unchanged from the
previous quarter, while showing a 4% improvement year over year.  Operating
income margins for U.S./Mexico decreased to 27% from 30% in the previous
quarter and from 39% in the same quarter last year, primarily due to price
declines for our products and services.
    Canada Pressure Pumping Services first quarter 2008 revenue of $121.3
million increased 3% sequentially and 9% year over year.  Activity levels
continue to remain relatively low in the region.  Sequentially, Canadian
average rig count increased 2% and year over year, average rig count for the
quarter declined 19%.  Operating income margin for Canada decreased to 14%
from 19% in the previous quarter due to lower pricing as well as gains on
asset sales in the previous quarter.  Year over year, operating income margins
improved from 12% reported in the prior year, primarily as a result of cost
reduction measures that were implemented in the second half of fiscal 2007.
    International Pressure Pumping Services first quarter 2008 revenue of
$288.5 million decreased 2% sequentially with average active drilling rig
levels unchanged for the same period.  Revenue compared to the same quarter
last year increased 14% with average active drilling rigs up 7%.  Revenue
performance by region is as follows:


    
         Region                              Sequential      Year Over Year
         Europe/Africa                           2%               -10%
         Middle East                             4%                47%
         Asia Pacific                           -1%                22%
         Russia                                -22%               -32%
         Latin America                          -6%                25%
           Total                                -2%                14%
    
    Sequential revenue contributions from Middle East and Europe/Africa
operations during the quarter were more than offset by lower revenue from our
Latin American and Russian operations.  In the Middle East, higher activity in
Kazakhstan and improved utilization with the two new vessels in India was
partially offset by lower activity in Saudi Arabia.  Europe/Africa benefited
from increased activity in the Netherlands and the U.K. which was almost
entirely offset by lower revenue in Norway.  Revenue from our Russia
operations was lower sequentially due to lower activity and lost work days due
to extreme cold weather.  Latin America showed a decline, specifically in
Brazil, due to non-recurring product sales in the previous quarter as well as
lower revenue from our stimulation vessel, the Blue Angel, as the vessel
transitions onto a new contract.
    Our Middle East, Latin American and Asia Pacific operations led the
segment's year over year increase in revenue.  The Middle East revenue growth
was primarily due to the introduction of two stimulation vessels into the
India market during the previous quarter, while our Latin American region had
significant activity increases in Brazil, Argentina and Peru.  The increase in
the Asia Pacific region was largely attributable to the start up of new
projects in Australia and increased activity levels in China.  In
Europe/Africa, the transfer of a stimulation vessel from the North Sea to
India accounted for almost the entire decline in revenue.  Excluding the
impact of the vessel operations, Europe/Africa revenue increased 1% year over
year.  In Russia, declines in activity and redeployment of assets into other
markets accounted for the decline in revenue.
    Operating income margins for International Pressure Pumping were 12% in
the first quarter of fiscal 2008, compared to 14% reported in the previous
quarter and 16% reported in last year's December quarter.  Harsh weather in
the North Sea, Russia and parts of Asia Pacific contributed to the margin
decline.  In addition, we experienced temporary delays in a number of projects
and front-end mobilization and other costs associated with new projects in
parts of Latin America, Russia and the Asia Pacific, some of which have
already begun generating revenues in the second quarter.
    Oilfield Services Group first quarter 2008 revenue of $212.7 million
decreased 5% sequentially and increased 19% year over year.


    
         Division                            Sequential      Year Over Year
         Tubular Services                        5%                11%
         Process & Pipeline Services           -13%                51%
         Chemical Services                      11%                26%
         Completion Tools                        4%                23%
         Completion Fluids                     -22%               -33%
           Total                                -5%                19%
    
    Sequentially, our Process and Pipeline Services business was negatively
impacted by normal seasonal slowdowns, while our Completion Fluids group
showed a decline in revenue due to business mix and lower Gulf of Mexico
activity.  The Chemical Services revenue improvement was due to increased
domestic activity and higher capillary services revenue.
    Year over year all of our operating segments, except Completion Fluids,
showed improved revenues.  Process and Pipeline Services revenue increased 51%
year over year, due to increased activity in the Europe/Africa and U.S.
operations.  Chemical Services also showed improved revenue largely due to
increased capillary services activity.  Completion Tools improved year over
year due to continued expansion into international markets.  The decline in
revenue from Completion Fluids was primarily the result of lower U.S.
deepwater activity.
    The Oilfield Services Group operating income margin for the quarter was
19%, down from 23% in the previous quarter and up from 18% reported in last
year's December quarter.  The sequential decline was due primarily to the
seasonal decline in revenue from our Process and Pipeline Services business
and lower domestic Completion Fluids activity.  Year over year, all product
lines, with the exception of Completion Fluids, reported improved operating
income margins.
    
    Consolidated Geographic Highlights
    
    The following table reflects the percentage change in consolidated
revenue by geographic area for the December 2007 quarter compared to the
September 2007 quarter and the December 2006 quarter.  The information
presented is based on our combined service and product line offering by
geographic region.


    
        Geographic                          Sequential       Year Over Year
         U.S.                                    2%                 5%
         Canada                                  3%                 7%
           Total                                 2%                 5%
         Latin America                          -9%                11%
         Europe/Africa                          -7%                 5%
         Russia                                -21%               -30%
         Middle East                            12%                40%
         Asia Pacific                            3%                35%
           Total                                 0%                 9%
    Non-GAAP Financial Measures
    
    A non-GAAP financial measure is a numerical measure of a registrant's
historical or future financial performance, financial position or cash flows
that 1) excludes amounts, or is subject to adjustments that have the effect of
excluding amounts, that are included in the most directly comparable measure
calculated and presented in accordance with GAAP in the statement of income,
balance sheet, or statement of cash flows, or 2) includes amounts, or is
subject to adjustments that have the effect of including amounts, that are
excluded from the most directly comparable measure so calculated and
presented.
    Any unexpected disclosures of non-GAAP financial measures discussed on
the call will be posted on our website as soon as possible after the
disclosure.
    
    Conference Call
    
    The Company will hold a conference call following this earnings release.
The call will take place at 9:00 a.m. Central Time.
    To participate in the conference call, please call 913/981-5530, 10
minutes prior to the conference call start time and give the conference code
number 1049581.  If you are unable to participate, the conference call will be
available for playback three hours after conclusion of the conference call.
The playback number is 719/457-0820 and the replay entry code is 1049581.
Playback will be available for five days.
    The conference call will also be available via real-time webcast at
http://www.bjservices.com.  Playback of the webcast will be available
following the conference call.
    This news release contains forward-looking statements that anticipate
future performance such as the Company's prospects, expected revenue, and
expenses and profits.  These forward-looking statements are based on
assumptions that may prove to be inaccurate, and they are subject to risks and
uncertainties that may cause actual results to differ materially from expected
results.  These risk factors include, without limitation, general global
business and economic conditions, drilling activity and rig count, pricing
volatility for oil and gas, reduction in demand for our services and products,
risks from operating hazards such as fire, explosion and oil spills,
unexpected litigation for which insurance and customer agreements do not
provide complete protection, potential adverse results from our SEC and DOJ
investigations, changes in exchange rates and declines in the U.S. dollar, and
risks associated with our international operations, including potential
instability and hostilities.  This list of risk factors is not intended to be
comprehensive.  More extensive information concerning risk factors may be
found in our public filings with the Securities and Exchange Commission.
    BJ Services Company is a leading provider of pressure pumping and other
oilfield services to the petroleum industry.
    (NOT INTENDED FOR DISTRIBUTION TO BENEFICIAL OWNERS)




For further information:

For further information: Jeff Smith of BJ Services Company, 
+1-713-462-4239 Web Site: http://www.bjservices.com

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