BJ Services Reports Fourth Fiscal Quarter Earnings of $0.64 per Diluted Share



    HOUSTON, Oct. 30 /CNW/ -- BJ Services Company (NYSE:   BJS; PCX; CBOE)
today reported net income of $189.4 million for the fourth fiscal quarter
ended September 30, 2007, or $0.64 per diluted share. The quarter's diluted
earnings per share increased 12% compared to the $0.57 per diluted share
reported in the previous quarter and decreased 16% compared to the $0.76 per
diluted share for the fourth quarter of fiscal 2006.
    Consolidated revenue in the fourth quarter of fiscal 2007 was $1,279.3
million, an increase of 11% compared to $1,152.5 million in the previous
quarter and an increase of 5% compared to $1,216.0 million reported in the
prior year's September quarter.  Consolidated operating income for the quarter
was $286.2 million, an 11% increase compared to $257.8 million in the previous
quarter and a 16% decrease compared to $340.0 million reported in the same
quarter last year.
    During the fourth quarter, debt decreased $36.0 million to $671.0 million
and cash and cash equivalents decreased $7.1 million to $58.2 million. Uses of
cash during the quarter include capital expenditures of $208.9 million and
dividend payments of $14.6 million.
    Commenting on the results, Chairman and CEO Bill Stewart said, "Our
oilfield service segment performed well during the quarter with record
revenue, operating income and operating income margins.  As was anticipated,
our US/Mexico pressure pumping service revenue was slightly down with
operating income margins down about 300 basis points as pricing pressure
offset the small activity increase for the quarter.  Our Canadian pressure
pumping operations recovered nicely from Spring breakup, however the region
continued to be depressed from the prior year as had been experienced in the
previous quarters of fiscal 2007.  Our International pressure pumping
operations were mixed with revenue growth experienced in the Middle East,
Russia and Latin America operations.  The segment experienced a number of
unexpected charges to account for restructuring and balance sheet adjustments
which resulted in reduced operating income margins for the quarter.  These
adjustments should be behind us now and we expect margin improvement from our
International pressure pumping operations in fiscal 2008.

    "For fiscal 2008, we project revenue and margin improvement in all
segments of our business except US/Mexico pressure pumping operations where
pricing pressure is expected to continue during the year.  We are projecting
earnings per share for fiscal 2008 to be in the range of $2.35 to $2.45.
Earnings per share for the first fiscal quarter are projected to be $0.58 to
$0.60."



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

    
                                               Three Months Ended
                                          September 30           June 30
                                     2007            2006          2007
    Revenue                      $1,279,313      $1,215,979    $1,152,518
    Operating Expenses:
      Cost of sales and services    910,623         799,410       812,701
      Research and engineering       18,532          16,483        17,146
      Marketing                      28,083          28,201        27,450
      General and administrative     37,521          33,354        35,630
      Loss (gain) on
       long-lived assets             (1,645)         (1,446)        1,764
         Total operating expenses   993,114         876,002       894,691
    Operating income                286,199         339,977       257,827
    Interest expense                 (6,470)        (11,762)       (8,994)
    Interest income                     219           4,569           581
    Other (expense), net               (905)           (409)       (1,806)
    Income before income taxes      279,043         332,375       247,608
    Income taxes                     89,693         103,786        79,318
    Net income                     $189,350        $228,589      $168,290
    

    
    Earnings Per Share:
      Basic                           $0.65           $0.77         $0.57
      Diluted                         $0.64           $0.76         $0.57
    

    
    Weighted Average Shares
     Outstanding:
      Basic                         291,630         297,634       293,142
      Diluted                       294,510         301,251       296,407
    

    
    Supplemental Data:
      Depreciation and
       amortization                 $57,914        $ 46,271       $55,581
      Capital expenditures          208,878         136,725       186,315
      Debt                          671,028         659,968       707,052
    



    
                                                     Twelve Months Ended
                                                         September 30
                                                      2007           2006
    Revenue                                       $4,802,409     $4,367,864
    Operating Expenses:
      Cost of sales and services                   3,332,620      2,895,749
      Research and engineering                        67,536         63,875
      Marketing                                      107,421        103,319
      General and administrative                     143,992        132,011
      Loss on long-lived assets                          301          1,174
        Total operating expenses                   3,651,870      3,196,128
    Operating income                               1,150,539      1,171,736
    Interest expense (2)                             (32,731)       (14,558)
    Interest income                                    1,624         14,916
    Other (expense), net                              (6,584)           (11)
    Income before income taxes                     1,112,848      1,172,083
    Income taxes                                     359,208        367,473
    Net income                                      $753,640       $804,610
    

    
    Earnings Per Share:
      Basic                                            $2.57          $2.55
      Diluted                                          $2.55          $2.52
    

    
    Weighted Average Shares Outstanding:
      Basic                                          292,757        315,022
      Diluted                                        295,916        318,820
    

    
    Supplemental Data:
      Depreciation and amortization                 $209,019       $166,763
      Capital expenditures (1)                       752,113        459,974
    

    
    (1) Includes $47.8 million paid for the buyout of an equipment partnership
        in the quarter ended March 31, 2007.
    

    
    (2) In June 2006, the Company completed a public offering of $500 million
        aggregate principal amount of Senior Notes and had other borrowings of
        $171.3 million as of September 30, 2007.
    



    Operating Highlights

    
                             Three Months Ended          Twelve Months Ended
                        September 30         June 30         September 30
                     2007         2006         2007        2007        2006
    

    
    U.S./Mexico
     Pressure
     Pumping
      Revenue      $641,846     $645,512     $646,719  $2,562,747  $2,353,772
      Operating
       Income       193,285      247,747      215,449     881,631     899,213
      Operating
       Income
       Margins          30%          38%          33%         34%         38%
    

    
    Canada
     Pressure
     Pumping
      Revenue      $117,838     $138,426      $35,169    $386,547    $481,380
      Operating
       Income
       (Loss)        21,886       32,895     (21,610)      32,493     102,094
      Operating
       Income
       Margins          19%          24%         -61%          8%         21%
    

    
    International
     Pressure
     Pumping
      Revenue      $295,003     $255,333     $277,314  $1,074,744    $884,670
      Operating
       Income        40,668       46,851       42,643     152,734     138,069
      Operating
       Income
       Margins          14%          18%          15%         14%         16%
    

    
    Oilfield
     Services
     Group
       Revenue     $224,626     $176,708     $193,316    $778,371    $648,042
       Operating
        Income       52,367       35,956       41,800     163,539     132,420
       Operating
        Income
        Margins         23%          20%          22%         21%         20%
    

    
    Corporate
      Revenue            $-           $-           $-          $-          $-
      Operating
       Loss         (22,007)     (23,472)     (20,455)    (79,858)   (100,060)
    



    
                                Year in Review
    
    For the fiscal year ended September 30, 2007, consolidated revenue of
$4.8 billion increased 10% from the $4.4 billion generated during fiscal 2006
and earnings per diluted share of $2.55 improved 1% from the $2.52 reported in
fiscal 2006.
    All of our reporting segments, except Canada Pressure Pumping,
contributed to the fiscal 2007 increase in revenue.  Revenue from U.S./Mexico
Pressure Pumping Services increased 9% from last year as a result of higher
activity levels which was somewhat offset by lower pricing for our products
and services.  During 2007, our International Pressure Pumping Services and
Oilfield Services Group's revenue increased 21% and 20%, respectively.
International Pressure Pumping revenue growth was from activity increases in
all operating regions except Russia, where the divestiture of our work-over
rig business contributed to lower revenue year over year.  The Oilfield
Services Group's revenue growth was due to higher activity levels and
international market expansion.  Revenue from Canada Pressure Pumping Services
declined 20% from fiscal 2006 as drilling activity in the Canadian market
remained depressed throughout fiscal 2007.
    
    September Quarter Review
    
    U.S./Mexico Pressure Pumping Services fourth quarter 2007 revenue of
$641.8 million was 1% below both the June 2007 quarter (sequential) and the
September 2006 quarter (year over year).  Customer drilling activity for
U.S./Mexico increased 2% from the previous quarter and 5% from the prior year.
Operating income margin for the quarter was 30%, down from 33% in the previous
quarter and 38% in the September 2006 quarter.  Lower pricing for our products
and services both sequential and year over year was the primary cause for the
decline in revenue and operating income.  Increased materials and labor costs
also contributed to the year over year operating income decline.
    Canada Pressure Pumping Services fourth quarter 2007 revenue of $117.8
million increased 235% from the previous quarter.  During the quarter,
Canadian drilling activity recovered from its seasonal spring breakup with the
average active rig count increasing 150% from the previous quarter.  Year over
year, revenue decreased 15% with drilling activity 30% lower than the same
quarter last year.  Operating income margin for Canada increased to 19% from -
61% in the previous quarter and decreased from 24% reported in the same
quarter last year.  The sequential margin increase was due to cost reductions
and the recovery from low spring break up activity levels experienced in the
prior quarter while the year over year margin decline was due to lower
drilling activity and pricing pressures as experienced in the previous
quarters of fiscal 2007.
    International Pressure Pumping Services fourth quarter 2007 revenue of
$295.0 million increased 6% sequentially with average active drilling rigs
increasing 1% during the same period.  Revenue compared to the same quarter
last year increased 16% with average active drilling rigs up 7%.  Revenue
performance by region was as follows:



    Region            Sequential     Year Over Year

    
    Europe/Africa       -13 %               -7 %
    Middle East          19 %               24 %
    Asia Pacific         -6 %               33 %
    Russia               10 %              -11 %
    Latin America        22 %               27 %
    Sequential
    
    Our Latin American and Middle Eastern operations led the sequential
revenue improvement for International Pressure Pumping.  In Latin America, all
markets showed improvement from the previous quarter with Brazil being the
largest contributor.  The Middle East showed improvement in most markets, with
strong performance from our Saudi Arabia and India operations.  Our Russian
operations also showed improvement from the previous quarter due to increased
fracturing activity.
    The Europe/Africa revenue decline was the result of lower activity in the
U.K. and the Netherlands, and the impact from transferring our stimulation
vessel from the U.K. to India in the previous quarter, which was partially
offset by higher activity from our Norway and Africa operations.  Unfavorable
weather conditions and project delays in our Asia Pacific region resulted in a
6% decline in revenue from the record results reported in the previous
quarter.
    
    Year Over Year
    
    With the exception of Europe/Africa, which had a decrease in revenue from
our North Sea operations, and Russia, which experienced a decline in revenue
from the divestiture of our work-over rig business, the remaining regions
within International Pressure Pumping had strong double-digit growth year over
year.  Excluding the impact from the stimulation vessel transfer to India,
Europe/Africa revenue would have been consistent with the prior year. Activity
increase in Brazil, Argentina and other major markets of Latin America
resulted in a 27% increase in revenue from the prior year, while new contracts
in Malaysia and Indonesia and market expansion in China contributed to the
Asia Pacific increase. Middle East revenue benefited from the start up of the
stimulation vessel in India as well as cementing and coiled tubing activity
increases in Saudi Arabia, but was slightly offset by non-repeat work in the
prior year in Bangladesh and project delays in Kazakhstan.
    Operating income margin for international pressure pumping was 14%
compared to 15% reported in the previous quarter and 18% reported in last
year's September quarter.  The sequential decline was the result of unexpected
charges and unfavorable business mix in Asia Pacific, partially offset by
margin improvement in Latin America.  Year over year, the operating income
margin decline was due primarily to unexpected charges in the quarter, non-
repeat blow out work in Bangladesh during the same quarter last year and lower
activity in Kazakhstan.
    Oilfield Services Group fourth quarter 2007 revenue of $224.6 million
increased 16% sequentially and increased 27% year over year.




    Division                      Sequential      Year Over Year

    
    Tubular Services                   4 %              19 %
    Process & Pipeline Services       38 %              52 %
    Chemical Services                 12 %              32 %
    Completion Tools                  -9 %              23 %
    Completion Fluids                  8 %             -12 %
    
    Our Process & Pipeline Services business was the most significant
contributor to the sequential revenue improvement within the Oilfield Services
Group with their Europe/Africa operations providing benefit from a seasonal
increase in activity.  Chemical Services improvement was activity driven, in
addition to the capillary string business acquisition completed late in the
previous quarter. Completion Fluids showed improvement from the prior quarter
due to increased domestic activity, while revenue from our Completion Tools
division was hindered by lower activity and project delays.
    Year over year, all of the divisions in the Oilfield Services Group,
except Completion Fluids, showed revenue improvement.  As with the sequential
results, our Process & Pipeline Services business was the most significant
contributor to the increase.  Process & Pipeline Services completed fiscal
2007 with record revenue results for the division, with our U.K. and U.S.
operations contributing greatly to the results.  Our Chemical Services
operations improvement was from activity increases in addition to the benefit
of two capillary string business acquisitions completed earlier in the year.
Completion Tools and Tubular Services benefited from increased international
activity.  The decline in revenue for Completion Fluids is almost entirely due
to the shut down of low margin operations in Norway in the prior year.
    The Oilfield Services Group operating income margin for the quarter was
23%, up from 22% in the previous quarter and from 20% reported in last year's
September quarter.
    
    Consolidated Geographic Highlights
    
    The following table reflects the percentage change in consolidated
revenue by geographic area for the September 2007 quarter compared to the June
2007 quarter and the September 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.                      1 %                 3 %
    Canada                  162 %               -13 %
       Total                 12 %                 0 %
    Latin America            16 %                30 %
    Europe/Africa             3 %                 6 %
    Russia                    8 %               -10 %
    Middle East              19 %                14 %
    Asia Pacific              2 %                39 %
       Total                 11 %                 5 %
    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 913/981-5543, 10
minutes prior to the conference call start time and give the conference code
number 5974489.  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 5974489.
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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