BJ Services Reports Second Fiscal Quarter Earnings of $0.64 Per Diluted Share



    HOUSTON, April 24 /CNW/ -- BJ Services Company (NYSE:   BJS; PCX; CBOE)
today reported net income of $188.9 million for the second fiscal quarter
ended March 31, 2007, or $0.64 per diluted share.  The quarter's diluted
earnings per share improved 3% compared to the $0.62 per diluted share for the
second quarter of fiscal 2006 and decreased 9% compared to the $0.70 per
diluted share reported in the previous quarter.
    Consolidated revenue in the second quarter of fiscal 2007 was $1,186.6
million, up 10% compared to $1,078.8 million in prior year's March quarter and
slightly up compared to $1,183.9 million reported in the previous quarter. 
Consolidated operating income for the quarter was $290.2 million, a 2%
decrease compared to $295.3 million for the same quarter last year and an 8%
decrease compared to $316.3 million reported in the previous quarter.
    During the second quarter, debt increased $127.5 million to $672.2
million and cash and cash equivalents decreased $5.4 million to $57.1 million.
Uses of cash during the quarter include capital expenditures of $160.6 million
(excluding $47.8 million related to the previously announced buy-out of an
equipment partnership established in 1997) and dividend payments of $14.7
million.  The Company also acquired Norson Service Ltd. in March 2007 for
$28.2 million.  Norson provides subsea pipeline commissioning and umbilical
testing services to select offshore markets and will broaden the service
offering of our process and pipeline services business.
    Commenting on the results, Chairman and CEO Bill Stewart said, "Our
second fiscal quarter results, while an improvement over last year, did not
meet our projections due to pricing declines in the U.S. market, lower
activity and pricing declines in Canada and project delays in our
International Pressure Pumping markets.
    "In response to market softness in Canada, we have taken corrective
action to reduce personnel to a level more reflective of expected drilling
activity. We have also identified excess pressure pumping equipment in this
market that is currently being deployed to select markets internationally. 
The equipment is expected to be operating in new markets late in our third and
into our fourth fiscal quarters of 2007.
    "Other developments for the Company include the recent award of an
offshore stimulation contract off the west coast of India.  The MV Vestfonn,
currently operating in the North Sea, is expected to begin operations in India
late in the fourth quarter of fiscal 2007.
    "The Company was also awarded an offshore stimulation and completions
contract off the east coast of India.  The MV Discovery, operating in the Gulf
of Mexico, will transfer to India late in the fourth quarter of fiscal 2007 to
perform gravel pack, frac pack and stimulation pumping requirements for the
Reliance Industries Ltd. D6 development project.  In addition, BJ will supply
completion tools and screens for cased hole completions on this development.
These two contracts are expected to improve the utilization and profitability
of our offshore stimulation fleet as we enter our fiscal year 2008.
    "Earlier this month, we completed the divestiture of our workover rig
business in Russia.  With local management focused solely on pressure pumping
and the stimulation capacity that we are adding to this market, we believe
this operation is positioned to take advantage of a growing stimulation market
and improve operating income margins.
    "During the quarter, we expanded our pressure pumping operations into the
southern region of Mexico.  The Company was awarded a three-year contract
where cementing, coiled tubing and acidizing services will be provided.
    "Looking at the business near term, U.S. drilling activity is expected to
be up slightly for our fiscal third quarter.  However, pricing pressures are
expected to continue in this market.  Canada is in full Spring break-up with
activity levels significantly below last year, resulting in a projected
sequential activity decline of approximately 60% for our fiscal third quarter
and a year over year decline of approximately 20%.  Our international pressure
pumping business is expected to recover from project delays experienced in
fiscal second quarter and our Oilfield Services Group is projected to improve
as our process and pipeline business enters its seasonal market increase.  As
such, we expect earnings for our third fiscal quarter to be $0.58 to $0.60 per
diluted share."



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


                                                 Three Months Ended
                                           March 31               December 31
                                     2007            2006            2006
    Revenue                       $1,186,638      $1,078,818      $1,183,940
    Operating Expenses:
       Cost of sales and services    820,661         712,358         788,635
       Research and engineering       16,164          15,574          15,694
       Marketing                      26,075          24,953          25,813
       General and administrative     33,634          28,756          37,207
       Loss (gain) on long-lived
        assets                           (83)          1,848             265
          Total operating expenses   896,451         783,489         867,614
    Operating income                 290,187         295,329         316,326
    Interest expense (1)              (8,488)           (155)         (8,779)
    Interest income                      504           3,501             320
    Other income/(expense), net       (1,797)           (748)         (2,076)
    Income before income taxes       280,406         297,927         305,791
    Income taxes                      91,490          94,443          98,707
    Net income                      $188,916        $203,484        $207,084

    Earnings Per Share:
       Basic                           $0.64           $0.63           $0.71
       Diluted                         $0.64           $0.62           $0.70

    Weighted Average Shares
     Outstanding:
       Basic                         293,247         323,027         293,024
       Diluted                       296,276         326,859         296,477

    Supplemental Data:
       Depreciation
        and amortization             $49,819         $39,917         $45,705
       Capital expenditures          208,399         109,631         146,452
         Debt                        672,236             496         544,737



                                                      Six Months Ended
                                                           March 31
                                                   2007               2006
    Revenue                                    $2,370,578         $2,034,979
    Operating Expenses:
       Cost of sales and services               1,609,296          1,361,622
       Research and engineering                    31,858             30,727
       Marketing                                   51,888             49,547
       General and administrative                  70,841             66,347
       Loss on long-lived assets                      182              1,856
          Total operating expenses              1,764,065          1,510,099
    Operating income                              606,513            524,880
    Interest expense (1)                          (17,267)              (290)
    Interest income                                   824              6,891
    Other income/(expense), net                    (3,873)               204
    Income before income taxes                    586,197            531,685
    Income taxes                                  190,197            168,544
    Net income                                   $396,000           $363,141

    Earnings Per Share:
       Basic                                        $1.35              $1.12
       Diluted                                      $1.34              $1.11

    Weighted Average Shares Outstanding:
       Basic                                      293,134            323,469
       Diluted                                    296,408            327,421

    Supplemental Data:
       Depreciation and amortization              $95,524            $78,102
       Capital expenditures                       354,851            191,491

    (1)  In June 2006, the Company completed a public offering of $500 million
         aggregate principal amount of Senior Notes and had short-term
         borrowings of $172.5 million as of March 31, 2007.  In February 2006,
         the Company redeemed debt of $79.0 million.



                             Operating Highlights
    

    Following are the results of operations for the three months ended March
31, 2007, March 31, 2006 and December 31, 2006 and for the six months ended
March 31, 2007 and March 31, 2006:

    
                               Three Months Ended         Six Months Ended
                            March 31      December 31          March 31
                        2007       2006      2006          2007        2006
    
    U.S./Mexico
    
    Pressure Pumping
     Revenue         $633,356   $566,896   $640,826   $1,274,182   $1,064,190
     Operating
      Income          220,340    215,369    252,557      472,897      390,848
     Operating
      Income Margins       35%        38%        39%          37%          37%
    
    Canada Pressure
    
    Pumping
     Revenue         $121,876   $151,750   $111,664     $233,540     $276,015
     Operating
      Income           18,810     39,635     13,407       32,217       71,402
     Operating
      Income Margins       15%        26%        12%          14%          26%
    
    International
    
    Pressure Pumping
     Revenue         $250,371   $203,873   $252,056     $502,427     $395,602
     Operating
      Income           29,085     27,442     40,338       69,423       53,065
     Operating
      Income Margins       12%        13%        16%          14%          13%
    
    Oilfield Services
    
    Group
     Revenue         $181,035   $156,299   $179,394     $360,429     $299,172
     Operating
      Income           36,674     31,922     32,698       69,372       57,075
     Operating
      Income Margins       20%        20%        18%          19%          19%
    
    Corporate
    
     Revenue         $    ---   $    ---   $    ---     $    ---     $    ---
     Operating Loss   (14,722)   (19,039)   (22,674)     (37,396)     (47,510)


                             March Quarter Review
    

    U.S./Mexico Pressure Pumping Services second quarter 2007 revenue of
$633.4 million was slightly below the December 2006 quarter (sequential) and
12% higher than the March 2006 quarter (year over year).  Customer drilling
activity for U.S./Mexico increased slightly from the previous quarter, while
showing a 14% improvement year over year.  Operating income margin for the
quarter was 35%, down from 38% in the same quarter last year and 39% in the
December 2006 quarter.  The sequential decline in operating income margin was
primarily due to lower pricing for our products and services and higher
maintenance expense.  Year over year, operating income margin declined due to
cost inflation for materials and labor plus higher maintenance spending on
equipment.

    Canada Pressure Pumping Services second quarter 2007 revenue of $121.9
million increased 9% sequentially due to a 9% increase in wells drilled.  Year
over year, revenue decreased 20% due to a 21% decline in the number of wells
drilled.  Lower natural gas prices in the region have resulted in curtailment
of drilling activity by our customers.  Operating income margin for Canada
increased to 15% from 12% in the previous quarter due to the higher drilling
activity.  Compared to the same quarter of last year, operating income margin
declined from 26% due to lower drilling activity and pricing for our products
and services along with higher labor and material costs.

    International Pressure Pumping Services second quarter 2007 revenue of
$250.4 million decreased 1% sequentially with average active drilling rigs
increasing 3% during the same period.  Revenue compared to the same quarter
last year increased 23% with average active drilling rigs up 10%.  Revenue
performance by region is as follows:



    
     Region                             Sequential         Year Over Year
     Europe/Africa                         -4 %                   32 %
     Middle East                            5 %                   28 %
     Asia Pacific                           1 %                    6 %
     Russia                                -1 %                   22 %
     Latin America                         -1 %                   23 %
    

    Sequential revenue increases from our Middle East and Asia Pacific
operations were offset by revenue declines in our other international
operating regions.  The Middle East benefited from activity increases in
India, Azerbaijan, Egypt, and Saudi Arabia.  These increases were slightly
offset by a decline in revenue from Kazakhstan due to customer project delays.
While our Asia/Pacific region experienced activity increases in Thailand and
Malaysia, the increases were almost entirely offset by Indonesia, Australia,
and New Zealand project delays.  Revenue from our Europe/Africa operations
decreased due to activity declines in Africa and Norway.  In Latin America,
improved activity in Argentina was offset by declines in the Colombia
stimulation market and Venezuela.
    All of our regions showed revenue improvement year over year.  The
Europe/Africa region revenue improvement was due to increased revenue in North
Africa, as a result of acquiring a controlling interest in our Algerian
venture and expansion into Libya.  In the Middle East, activity gains in
India, Azerbaijan, and Saudi Arabia were offset slightly by declines in
Bangladesh due to non-repeat blow out work in the previous year.  For Asia
Pacific, revenue improvement in Malaysia was offset by a decrease in our New
Zealand stimulation project work.  In Latin America, Argentina, Colombia and
Brazil contributed to the revenue gain.
    Operating income margin for international pressure pumping was 12%
compared to 16% reported in the previous quarter and 13% reported in last
year's March quarter.  Each of the international regions experienced some
decline during the quarter.  The vessels in Latin America were dry docked for
several days during the quarter.  Coiled tubing activities in the North Sea
were lower as several operators delayed coiled tubing workover campaigns.
Kazakhstan experienced a reduction in revenue as a key customer demobilized
assets that were active during the prior quarter.  Russia experienced 13 days
of down time due to extreme cold weather during the quarter.

    Oilfield Services Group second quarter 2007 revenue of $181.0 million
increased 1% sequentially and increased 16% year over year.



    
    Division                              Sequential       Year Over Year
    Tubular Services                         2 %                  38 %
    Process & Pipeline Services            -14 %                   4 %
    Chemical Services                        2 %                  37 %
    Completion Tools                         3 %                  13 %
    Completion Fluids                       20 %                   6 %
    

    Year over year revenue improvement for Tubular Services was the result of
a strong U.S. business and international expansion.  Sequentially, revenue
growth in Africa and Asia Pacific was partially offset by lower revenue in the
Middle East.
    Process and Pipeline Services revenue improved year over year due to
strong performances in the North Sea and Asia Pacific partially offset by
lower revenue in North America and Africa.  Sequentially, the business was
negatively impacted by normal seasonal declines in the business.
    For our Chemical Services division, revenue continued to improve year
over year due to increased market activity and the acquisition of Dyna-Coil in
August 2006.  Excluding Dyna-Coil, revenue would have increased 11% year over
year.
    Our Completion Tools and Completion Fluids businesses benefited from
increased activity in the U.S. and Mexico markets.  In addition, our
Completion Fluids business experienced increased revenue as the result of the
acquisition of Tekcor Technology, Ltd, in December 2006.
    The Oilfield Services Group operating income margin for the quarter was
20%, up from 18% in the previous quarter and flat with that reported in last
year's March quarter.  The sequential increase was due primarily to high
margin deepwater activity with our U.S. Completion Tools division.

    Consolidated Geographic Highlights

    The following table reflects the percentage change in consolidated
revenue by geographic area for the March 2007 quarter compared to the December
2006 quarter and the March 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 %                     12 %
    Canada                               7 %                    -19 %
       Total                             2 %                      5 %
    Latin America                       -3 %                     26 %
    Europe/Africa                       -2 %                     18 %
    Russia                              -1 %                     22 %
    Middle East                         -5 %                     19 %
    Asia Pacific                        -3 %                     12 %
       Total                            -3 %                     19 %

    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 913/312-1303, 10
minutes prior to the conference call start time and give the conference code
number 6857224.  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 6857224.
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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