Forbes Energy Services Reports Fourth Quarter and Year End 2008 Financial Results



    ALICE, Texas, April 1 /CNW/ -- Forbes Energy Services Ltd. (TSX: FRB)
today announced its financial and operating results for the fourth quarter and
year ended December 31, 2008.  Following are certain highlights:
    

    --  Revenues increased to $360.9 million for fiscal 2008 from $207.0
        million for fiscal 2007.
    --  Adjusted EBITDA increased to $96.7 million for fiscal 2008 from $68.0
        million for fiscal 2007.
    --  Well servicing rig count increased to 170 as of December 31, 2008 from
        101 at December 31, 2007.

    --  Fluid transport heavy truck fleet increased to 370 as of December 31,
        2008 from 262 at December 31, 2007.


    
    Adjusted EBITDA is defined as net income before interest, taxes, goodwill
impairment, depreciation and amortization.  For a reconciliation of adjusted
EBITDA to net income, please see the disclosures at the end of this release.
    

    
    Net loss for the three months ended December 31, 2008 was $2.3 million,
or a loss of $0.04 per share.  The net loss for the quarter included a
one-time, non-cash charge for the impairment of goodwill of $4.4 million. 
Excluding this charge, the Company would have reported net income of $2.0
million, or $0.03 per share.  Adjusted EBITDA for the fourth quarter of 2008
totaled $21.3 million, an increase of 26% compared to the fourth quarter of
2007.
    

    
    Net loss for the year ended December 31, 2008 was $29.7 million, or a
loss per share of $0.65, which includes the goodwill impairment mentioned
above as well as a non-cash $52.8 million charge for deferred income taxes
related to the Company's reorganization into a taxable entity that occurred
simultaneously with its Canadian IPO and related U.S. private placement on May
29, 2008.
    

    
    John Crisp, Forbes Energy's President and Chief Executive Officer,
stated, "The year 2008 was one of remarkable growth and change for Forbes
Energy Services as highlighted by the tremendous expansion of our rig and
truck fleet and record revenues for the year.  In the fourth quarter we
experienced solid operational results, but activity in our industry began to
decline significantly.  As a result, we have undertaken a number of steps in
our ongoing effort to keep costs in line with declining revenues.  We've
scaled back our workforce and implemented pay reductions at every level of the
Company, including executive management.  We've also virtually eliminated our
capital expenditure plans for 2009.  We benefit from having one of the newest
fleets in the industry, which should minimize our maintenance expenses in
2009.
    

    
    "The operating environment in the first quarter has been challenging. 
However, we are extremely pleased to now have four rigs working in Mexico for
Pemex.  We have two more currently in Mexico that are being prepared for
service, and I anticipate additional opportunities to expand our presence in
that market going forward," concluded Crisp.
    

    Business Segment Results
    Well Servicing
    
    Well servicing revenues decreased to $49.0 million during the fourth
quarter of 2008 compared to $54.3 million in the third quarter of 2008.  Well
servicing segment gross margins in the fourth quarter of 2008 were $10.2
million, compared to $18.9 million in the third quarter of 2008.  Gross
margins include $3,370,000 in expenses related to bad debts and Mexico start
up costs.  Without these expenses, gross margins would have been approximately
$13.6 million, or 28% of revenues.
    

    
    Forbes recorded approximately 97,588 rig hours for the fourth quarter of
2008, compared to 107,520 in the third quarter of 2008.  The Company had 170
rigs in its well service fleet at December 31, 2008, an increase of one rig
from 169 as of September 30, 2008.  Equipment additions for the well servicing
segment totaled $4.8 million during the three months ended December 31, 2008.
    

    Fluid Logistics
    
    Fluid logistics revenues in the fourth quarter of 2008 decreased to $47.7
million compared to $50.8 million in the third quarter of 2008.  Gross margins
for the fluid logistics segment totaled $16.5 million compared to $14.5
million in the previous quarter.  A 50% decline in fuel cost per gallon was
the major contributor to improved margins for the quarter.
    

    
    Forbes recorded 309,020 truck hours during the fourth quarter of 2008
compared to 313,750 for the third quarter of 2008.  The Company increased its
fluid transport segment heavy truck fleet to 370 as of December 31, 2008 as
compared to 362 as of September 30, 2008.  Total equipment additions for the
fluid logistics segment were $0.6 million for the three months ended December
31, 2008.
    

    Previously Issued Financial Statements

    
    The Company previously reported on Form 8-K filed with the Securities and
Exchange Commission on March 23, 2009 (the "Form 8-K") that previously filed
financial statements for 2008 interim periods contain errors and should not be
relied upon.  As a result of these errors, the Company anticipates filing
amended quarterly reports on Form 10-Q/A containing revised financial
statements as of and for the three months ended June 30 and September 30,
2008.  A description of these errors can be found in the Form 8-K and in the
Company's Form 10-K filed on March 31, 2009.
    

    Conference Call

    
    Forbes Energy will host a conference call to discuss its fourth quarter
2008 results on Thursday, April 2, 2009, at 11:00 a.m. Eastern Time (10:00
a.m. Central). To access the call, please dial (303) 262-2191 and ask for the
"Forbes Energy Services" call at least 10 minutes prior to the start time. The
conference call will also be broadcast live via the Internet and can be
accessed through the "Investor Relations" page of Forbes Energy's website,
www.forbesenergyservices.com.
    

    
    A telephonic replay of the conference call will be available until April
9, 2009, and may be accessed by calling (303) 590-3000 and using the pass code
11129155#. A webcast archive will be available at www.forbesenergyservices.com
shortly after the call and will be accessible for approximately 30 days. For
more information, please contact Donna Washburn at DRG&E at (713) 529-6600 or
email at dmw@drg-e.com.
    

    About Forbes Energy

    
    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 Mexico.
    

    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 pricing on its core services; the potential for excess
capacity in the industry; and competition. 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.   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, 2008 (the "Form 10-K") as well as
other filings the Company has made with the Securities and Exchange
Commission.
    

    
    Forbes Energy's financial statements and management's discussion and
analysis of financial condition and results of operations can be found in the
Form 10-K, which has been filed 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 earnings, or net income, before interest, income taxes, goodwill
impairment, depreciation and amortization, or adjusted EBITDA.  For a
reconciliation of adjusted EBITDA to net income, please see the table at the
end of this release. Management's opinion regarding the usefulness of adjusted
EBITDA to investors and a description of the ways in which management uses
such measures can be found on the "Investor Relations" page of Forbes Energy's
website, www.forbesenergyservices.com.
    

    

    
    Contacts:  Forbes Energy Services Ltd.
               L. Melvin Cooper, SVP & CFO
               361-664-0549
    

    
               DRG&E
               Ken Dennard, Managing Partner
               Ben Burnham, AVP
               713-529-6600
    

    
                                -Tables to Follow-

    


    
                       Selected Statement of Operations Data
                                  (Unaudited)
    

    
                   Three Months Ended December 31,  Year Ended December 31,
    

    
                         Successor-   Predecessor-   Successor-  Predecessor-
                        Consolidated    Combined    Consolidated  Combined
                            2008          2007          2008        2007
    

    
    Revenues
    Well servicing      $48,976,756   $32,785,764 $189,980,242 $103,600,928
    Fluid logistics      47,683,106    29,580,741  170,949,057  103,405,487
      Total revenues     96,659,862    62,366,505  360,929,299  207,006,415
    

    
    Expenses
    Well servicing       38,794,821    21,512,629  128,614,600   60,570,743
    Fluid logistics      31,200,155    21,414,129  117,940,153   69,887,441
    General and
     administrative       5,328,435     2,733,427   17,700,341    8,823,299
    Depreciation and
     amortization        10,177,848     5,344,969   33,724,218   15,341,906
    Goodwill Impairment   4,363,369             -    4,363,369            -
      Total expenses     89,864,628    51,005,154  302,342,681  154,623,389
      Operating income    6,795,234    11,361,351   58,586,618   52,383,026
    

    
    Other income
     (expense)
    Interest expense     (6,705,718)   (2,730,823) (25,797,663)  (8,342,652)
    Other income
     (expense)              (71,113)      178,020       37,947      236,583
      Income before taxes    18,403     8,808,548   32,826,902   44,276,957
    

    
    Income Tax Expense    2,350,259       683,291   62,574,492      683,291
      Net income
      (loss)            $(2,331,856)   $8,125,257 $(29,747,590) $43,593,666
    

    
    Earnings (loss) per
     share of common
     stock
      Basic                  $(0.04)                    $(0.65)
      Diluted                 (0.04)                     (0.65)
    

    
    Weighted average
     number of shares
     outstanding
      Basic              61,505,053                 45,894,557
      Diluted            61,505,053                 45,894,887

    

    
    Selected Balance Sheet Data
    (Unaudited)
                                    December 31,      December 31,
                                        2008              2007
    

    
    Cash                             $23,469,067        $5,209,345
    Accounts receivable               69,095,522        42,998,005
    Working Capital                   42,707,044       (28,247,697)
    Intangibles (net)                 39,459,977                 -
    Total assets                     482,801,391       259,995,166
    Total debt                       212,189,842       111,281,004
    Deferred tax liability            62,068,620           500,000
    Shareholders'/members'
     equity                         $158,418,487       $70,459,267

    

    
    Selected Operating Data
                                Three Months Ended       Year Ended
                                   December 31,          December 31,
                                   2008     2007       2008       2007
    

    
    Rig Hours                     97,588   59,938    378,657    180,700
    Truck hours                  309,020  202,379  1,115,593    711,171

    

    
    Reconciliation of Adjusted EBITDA to Net Income
    (Unaudited)
    (in thousands)
    

    
                    Three Months Ended December 31,  Year Ended December 31,
                           2008            2007       2008            2007
    

    
    Net Income (loss)     $(2,332)        $8,126    $(29,748)       $43,594
    Depreciation and
     amortization          10,178          5,345      33,724         15,342
    Interest expense        6,706          2,731      25,798          8,343
    Income tax expense      2,350            684      62,574            684
    Goodwill impairment     4,363              -       4,363              -
      Adjusted EBITDA     $21,265        $16,886     $96,711        $67,963




    




For further information:

For further information: L. Melvin Cooper, SVP & CFO of Forbes Energy
Services Ltd., +1-361-664-0549; or Ken Dennard, Managing Partner, or Ben
Burnham, AVP, both of DRG&E, +1-713-529-6600, both for Forbes Energy Services
Ltd. Web Site: http://www.forbesenergyservices.com

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FORBES ENERGY SERVICES LTD.

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