BJ Services Reports Second Fiscal Quarter Earnings of $0.15 Per Diluted Share



    


    
    HOUSTON, April 21 /CNW/ -- BJ Services Company (NYSE:   BJS; PCX; CBOE)
today reported net income of $43.0 million, or $0.15 per diluted share, for
the second quarter of fiscal 2009, which ended March 31, 2009.  The quarter's
diluted earnings per share decreased 71% compared to the $0.51 per diluted
share reported in the previous quarter and decreased 65% compared to the $0.43
per diluted share for the second quarter of fiscal 2008.
    

    
    Revenue in the second quarter of fiscal 2009 was $1.05 billion, a 26%
decrease from the $1.43 billion reported in the previous quarter and an 18%
decrease from the $1.28 billion reported in the prior year's March quarter. 
Operating income for the quarter was $58.0 million, a 74% decrease compared to
$220.4 million for the previous quarter and a 69% decrease compared to $186.5
million reported in the second quarter of fiscal 2008. Operating income as a
percentage of revenue was 5.5% in the second quarter of fiscal 2009, compared
to 15.4% in the previous quarter and 14.5% in the comparable quarter of the
prior year.
    

    
    Commenting on the results, Chairman and CEO Bill Stewart said, "Lower
demand for energy triggered by the global economic recession led to a
precipitous decline in drilling activity this quarter, particularly in North
America.  North American drilling activity declined 28% sequentially and 27%
year over year and, at the current level of 975 active rigs, the U.S. drilling
rig count has reached its lowest level in six years.  This decline in activity
and intensive competition led to severe price reductions for our services and
products.  Our international customers responded to the lower commodity price
environment sooner than expected, with average rig count outside North America
declining 9% sequentially and 6% year over year, negatively impacting our
results in these markets.
    

    
    "In response to these unfavorable market conditions, we have taken
specific steps to align our cost structure with the business climate.  We have
reduced our global workforce by approximately 11%, most of which took place in
the United States.  Severance costs related to these personnel reductions
totaled $6.2 million during the quarter.  Capital spending and discretionary
spending have been reduced and strong efforts to seek cost reductions
throughout our supply chain are well underway.  We are maintaining our strong
balance sheet with a focus on working capital reductions during this difficult
period.  Canada has entered its spring break-up period, and we expect that
drilling activity in the United States will decline further over the next
several quarters, and will not meaningfully improve until natural gas supply
is in better balance with demand, which may occur some time next year.  We
expect some modest decline in drilling activity outside of North America in
the near term, but not as severe as what we experienced in the second
quarter."
    

    
    During the quarter, cash and cash equivalents increased $71.4 million to
$244.8 million and debt increased $9.0 million to $562.3 million.  Uses of
cash during the quarter included capital expenditures of $121.0 million and
the payment of $14.6 million in dividends.  Debt repayable within the next
twelve months is approximately $64 million, and the Company has no borrowings
outstanding under its $400 million bank credit facility.
    

    


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

    
                                                     Three Months Ended
                                               March 31           December 31
                                          2009          2008           2008
    Revenue                           $1,054,607    $1,283,202     $1,431,642
    Operating
     Expenses:
       Cost of sales and
        services                         909,543     1,004,107      1,099,232
       Pension
        settlement                            --            --         21,695
       Research and
        engineering                       17,095        18,913         17,120
       Marketing                          26,784        31,764         30,745
       General and
        administrative                    40,839        41,652         42,421
       Loss on
        long-lived
        assets                             2,377           238             28
                                           -----           ---             --
          Total operating
           expenses                      996,638     1,096,674      1,211,241
                                         -------     ---------      ---------
    Operating income                      57,969       186,528        220,401
    Interest expense                      (7,410)       (6,949)        (6,081)
    Interest income                          348           356            515
    Other income
     (expense), net                         (920)        1,053          1,452
                                           -----         -----          -----
    Income before
     income taxes                         49,987       180,988        216,287
    Income taxes                           6,999        53,685         67,049
                                           -----        ------         ------
    Net income                           $42,988      $127,303       $149,238
                                         =======      ========       ========
    

    
    Earnings Per
     Share:
       Basic                               $0.15         $0.43          $0.51
       Diluted                             $0.15         $0.43          $0.51
    

    
    Weighted Average
     Shares
     Outstanding:
       Basic                             292,054       293,245        292,685
       Diluted                           293,447       295,285        293,910
    

    
    Supplemental
     Data:
       Depreciation and
        amortization                     $77,349       $64,900        $70,656
       Capital
        expenditures                     120,963       149,989        117,298
       Debt                              562,331       615,892        553,357
    



    
                                      Six Months Ended March 31
                                          2009          2008
    Revenue                           $2,486,249    $2,568,267
    Operating Expenses:
      Cost of sales and services       2,008,775     1,954,557
      Pension settlement                  21,695            --
      Research and engineering            34,215        36,111
      Marketing                           57,529        60,596
      General and administrative          83,260        78,282
      Loss (gain) on long-lived
       assets                              2,405          (388)
                                           -----         -----
        Total operating expenses       2,207,879     2,129,158
                                       ---------     ---------
    Operating income                     278,370       439,109
    Interest expense                     (13,491)      (14,811)
    Interest income                          863           830
    Other income (expense), net              532        (1,658)
                                             ---       -------
    Income before income taxes           266,274       423,470
    Income taxes                          74,048       123,983
                                          ------       -------
    Net income                          $192,226      $299,487
                                        ========      ========
    

    
    Earnings Per Share:
      Basic                                $0.66         $1.02
      Diluted                              $0.65         $1.01
    

    
    Weighted Average Shares
     Outstanding:
       Basic                             292,373       292,934
       Diluted                           293,572       295,182
    

    
    Supplemental Data:
      Depreciation and
       amortization                     $148,005      $127,666
      Capital expenditures               238,261       311,786

    Operating Highlights
    
    Following are the results of operations for the three months ended March
31, 2009, March 31, 2008 and December 31, 2008 and for the six months ended
March 31, 2009 and 2008:
    

    


    
                                Three Months Ended          Six Months Ended
                               March 31     December 31         March 31
                            2009      2008      2008         2009      2008
    

    
    U.S./Mexico
     Pressure Pumping
       Revenue           $475,576  $635,870  $721,546   $1,197,122 $1,290,012
       Operating Income    25,680   125,130   151,885      177,565    305,218
       Operating Income
         Margins                5%       20%       21%          15%        24%
    

    
    Canada Pressure
     Pumping
       Revenue            $95,371  $138,790  $131,810     $227,181   $260,136
       Operating Income     5,916    14,481    28,843       34,759     31,473
       Operating Income
        Margins                 6%       10%       22%          15%        12%
    

    
    International
     Pressure Pumping
       Revenue           $276,664  $292,120  $328,968     $605,632   $580,632
       Operating Income    21,585    34,714    45,559       67,144     70,639
       Operating Income
        Margins                 8%       12%       14%          11%        12%
    

    
    Oilfield Services
     Group
       Revenue           $206,996  $216,422  $249,318     $456,314   $437,487
       Operating Income    20,460    39,155    41,195       61,655     81,122
       Operating Income
        Margins                10%       18%       17%          14%        19%
    

    
    Corporate
      Operating Loss     $(15,672) $(26,952) $(47,081)    $(62,753)  $(49,343)

    March Quarter Review
    
    U.S./Mexico Pressure Pumping Services second quarter 2009 revenue of
$475.6 million was 34% lower than the December 2008 quarter (sequential) with
average active drilling rigs for the same period decreasing 27%.  Most of the
decrease was attributable to lower fracturing and cementing activity in the
U.S., coupled with a significant reduction in pricing for our services and
products.  Mexico revenues increased sequentially, due to increased activity
both onshore and offshore.  Compared to the March 2008 quarter (year over
year), revenue decreased 25% on a 22% decrease in average active drilling
rigs.  Operating income margin for U.S./Mexico decreased to 5% from 21% in the
previous quarter and 20% in the same quarter last year.  The lower operating
income margin was primarily due to lower drilling activity and pricing for our
services and products.  In addition, the Company recorded $8.2 million of
non-cash charges during the quarter related to excess or idle fixed assets in
the United States.
    

    
    Canada Pressure Pumping Services second quarter 2009 revenue of $95.4
million was 28% lower sequentially with average drilling rig activity down
19%. Year over year revenue decreased 31% with average drilling rig activity
down 35%.  Operating income margin for the second quarter of 2009 was 6%, down
from 22% in the previous quarter and down from 10% in the same quarter in the
previous year. The margin decline was largely attributable to lower drilling
activity and pricing.
    

    
    International Pressure Pumping Services second quarter 2009 revenue of
$276.7 million decreased 16% sequentially with average active drilling rig
levels decreasing 9% for the same period.  Revenue compared to the same
quarter last year decreased 5% with average active drilling rig count down 6%.
 Percentage changes in revenue by region compared to the first quarter of
fiscal 2009 and the second quarter of fiscal 2008 are as follows:
    

    


    
    Region                         Sequential     Year Over Year
    

    
    Europe                              1%               --%
    Middle East                       -19%              -10%
    Asia Pacific                      -20%               17%
    Russia                            -47%              -55%
    Latin America                     -12%               -5%
                                      ----               ---
         Total                        -16%               -5%
                                      ====               ===

    
    All of our International Pressure Pumping operating segments showed
sequential revenue declines, with the exception of Europe which contributed
modest improvement as a result of increased service activity in the
Netherlands, the U.K. and continental Europe. The sequential decline in the
Middle East and Asia Pacific is largely attributable to activity-related
declines in virtually every country compared to the prior quarter, as numerous
drilling programs have been delayed or reduced as a result of lower crude oil
prices and the global economic downturn.  Latin America also recorded a
sequential decrease primarily as a result of lower activity in Argentina,
Venezuela and Peru, partially offset by increased activity in Brazil.
    

    
    Year over year, International Pressure Pumping revenue declined 5% with
average active drilling rigs decreasing 6%.  Revenue increased 17% in Asia
Pacific, with average active drilling rigs increasing 1%, offset by decreases
of 10% in the Middle East and 5% in Latin America, with average active
drilling rigs decreasing 4% and 12%, respectively.  The Asia Pacific increase
reflects increased activity levels in Malaysia, Thailand and China.  The
Middle East decrease was primarily the result of decreased activity in Saudi
Arabia, India, Kazakhstan and Bangladesh partially offset by increases in
North Africa.  Latin America was negatively impacted by labor strikes in
Argentina and decreased activity in other areas.
    

    
    Our activity in Russia decreased sequentially and year-over-year as we
closed one base upon the completion of a service contract.  We continue to
operate out of one base in Russia, primarily servicing one customer contract
which will likely expire before the end of the fiscal year.
    

    
    Operating income margin for International Pressure Pumping was 8% for the
second quarter of fiscal 2009, compared to 14% reported in the previous
quarter and 12% reported for the same quarter last year.  The lower margins
were primarily the result of overall activity and revenue decline in the
segment, along with some price reductions in certain markets.  In addition, we
incurred a $4.3 million loss on the unfavorable resolution of a VAT refund
claim in Indonesia during the quarter.
    

    
    Oilfield Services Group second quarter 2009 revenue of $207.0 million
decreased 17% sequentially and 4% year over year.  Percentage changes in
revenue by division compared to the first quarter of fiscal 2009 and the
second quarter of fiscal 2008 are as follows:
    

    


    
    Division                      Sequential     Year Over Year
    

    
    Tubular Services                 -16%             -10%
    Process & Pipeline
     Services                        -12%             -11%
    Chemical Services                -10%               6%
    Completion Tools                 -22%               3%
    Completion Fluids                -31%              -3%
                                     ----              ---
         Total                       -17%              -4%
                                     ====              ===

    
    All of our Oilfield Services Group's operating segments reported
sequential revenue declines in the second quarter of fiscal 2009.  Completion
Fluids and Completion Tools showed the largest sequential decreases in
revenue, largely as a result of relatively large project-related international
sales in the first quarter that did not repeat in the second quarter and lower
than expected activity in the Gulf of Mexico.  Other sequential revenue
declines in the Oilfield Service Group were primarily attributable to lower
market activity in the United States and certain international markets.
    

    
    Year over year, Process & Pipeline Services revenues declined primarily
as a result of decreased activity in North America.  Tubular Services revenues
declined due to lower service activity primarily in the Gulf of Mexico and
Asia Pacific.  Chemical Services revenues improved primarily as a result of
increased capillary work in the U.S. and internationally.  Completion Tools
revenues also increased primarily as a result of the inclusion of the Innicor
business acquired in May 2008, largely offset by lower international sales
activity.
    

    
    The Oilfield Services Group operating income margin for the quarter was
10%, down from 17% in the previous quarter and 18% in the prior year's second
quarter, reflecting the lower activity levels to cover fixed costs.
    

    
    Corporate operating loss in the second quarter of fiscal 2009 was lower
sequentially and year-over-year primarily as a result of lower accruals for
estimated cash incentives for the fiscal year, based on current performance
estimates.  In addition, the first quarter of fiscal 2009 included a $21.7
million non-cash pension settlement charge, after receiving regulatory
approval for an agreement reached in September 2006 to transfer the obligation
related to a frozen defined benefit pension plan to a third-party insurance
company.
    

    Consolidated Geographic Highlights
    
    The following table reflects the percentage change in consolidated
revenue by geographic area for the March 2009 quarter compared to the December
2008 quarter and the March 2008 quarter.  The information presented is based
on our combined service and product line offering by geographic region.
    

    


    
    Region                            Sequential     Year Over Year
    

    
    U.S.                                  -33%             -25%
    Canada                                -27%             -23%
                                          ----             ----
       Total                              -32%             -25%
                                          ====             ====
    Latin America (incl. Mexico)           -9%              --%
    Europe/Africa                           4%               7%
    Russia                                -55%             -47%
    Middle East                           -23%             -14%
    Asia Pacific                          -24%              -1%
                                          ----              ---
       Total                              -26%             -18%
                                          ====             ====

    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 conference call mentioned below will be posted on our website as soon
thereafter as practicable.
    

    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 913-312-1408 ten
minutes prior to the conference call start time and give the conference code
number 6129493.  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 6129493. 
Playback will be available for five days.
    

    
    The conference call will also be available via real-time webcast at
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, expenses
and profits, strategies for our operations, and other subjects, including
conditions in the oilfield service and oil and natural gas industries and in
the U.S. and international economy in general.  These forward-looking
statements are based on assumptions that may prove to be inaccurate, and they
are subject to risks and uncertainties that could cause actual results to
differ materially from the results expected.  These risk factors include, but
are not limited to, general economic and business conditions, global economic
growth and activity, oil and natural gas market conditions, political and
economic uncertainty, and other risks and uncertainties described in our
Annual Report on Form 10-K and subsequent public filings with the Securities
and Exchange Commission.
    

    
    BJ Services Company is a leading provider of pressure pumping, well
completion, production enhancement and pipeline 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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