Forbes Energy Services Reports Record Second Quarter 2008 Results



    ALICE, Texas, Aug. 15 /CNW/ -- Forbes Energy Services Ltd. (TSX: FRB)
today announced its financial and operating results for the second quarter
ended June 30, 2008.  Following are highlights for the quarter:

    
    --  Revenues increased to $88.6 million for the second quarter of 2008
        from $70.5 million during the first quarter of 2008, a 25.6% increase;
    

    
    --  EBITDA increased to $25.8 million for the second quarter of 2008 from
        $20.7 million for the first quarter of 2008, a 24.5% increase;
    

    
    --  Well servicing rig count increased to 149 as of June 30, 2008 from 101
        at December 31, 2007.  Nine of these rigs were being "rigged up" at
        June 30, 2008;
    
    EBITDA is defined as net income before interest, taxes, depreciation and
amortization.  For a reconciliation of EBITDA to net income, please see the
disclosures at the end of this release.
    Net income for the three months and six months ended June 30, 2008 was
$10.7 million or $0.28 per share, and $18.1 million or $0.54 per share,
respectively, before a one-time, non-cash charge for deferred income taxes
related to the Company's reorganization that occurred simultaneous with its
IPO on May 29, 2008.  Net loss for the three months and six months ended June
30, 2008, after this one-time, non-cash charge in the amount of $46.4 million,
was $35.7 million or $0.94 loss per share, and $28.3 million or $0.84 loss per
share, respectively.  This charge reflects the change in tax status of the
Company that took place at the time of the reorganization, and concurrent with
the IPO, from a pass-through entity for tax purposes to a tax paying entity
and was recorded in accordance with Statement of Financial Accounting
Standards No. 109, which requires that the charge be included in the current
period's income statement.  This tax expense is associated with the cumulative
book/tax basis differences of the Company's assets and liabilities as of the
date of conversion to a U.S. federal taxable entity.
    John Crisp, Forbes Energy's President and Chief Executive Officer,
stated, "We are very proud to be able to continue to deliver value to our
shareholders by serving our customers with the best employees in the industry
and operating new modern equipment.  Looking forward we are excited about the
opportunities we have to continue to grow the company using this strategy."
    "On the pricing front, we have been able to implement moderate price
increases with certain customers that will help cover some of the cost
increases the industry continues to experience due to the current inflationary
environment.  We anticipate seeking further price increases as the year
continues in order to help offset additional cost increases."
    
    Business Segment Results
    Well Servicing
    
    Well servicing revenues increased to $47.4 million during the second
quarter of 2008 compared to $39.3 million in the first quarter of 2008.  Well
servicing segment gross margins in the second quarter of 2008 were $17.4
million, compared to $14.9 million in the first quarter of 2008.
    Forbes has increased its well service fleet to 149 rigs at June 30, 2008
from 101 as of December 31, 2007, an increase of 48 rigs.  Nine of these rigs
were being "rigged up" as of June 30, 2008 and therefore did not contribute to
operating results for the second quarter.  Equipment additions for the well
servicing segment totaled $35.1 million during the three months ended June 30,
2008.
    
    Fluid Logistics
    
    Fluid logistics revenues in the second quarter of 2008 increased to $41.2
million compared to $31.2 million in the first quarter of 2008.  The increase
was primarily the result of additional equipment and an expanded customer
base.
    Forbes increased its fluid transport segment heavy truck fleet to 328 as
of June 30, 2008 as compared to 262 as of December 31, 2007.  Total equipment
additions for the fluid logistics segment were $11.1 million for the three
months ended June 30, 2008.
    
    Conference Call
    
    Forbes Energy will host a conference call to discuss its second quarter
2008 results on Friday, August 15, 2008, at 9:30 a.m. Eastern Time (8:30 a.m.
Central). To access the call, please dial (303) 262-2190 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 "Corporate" page of Forbes Energy's website,
www.forbesenergyservices.com.
    A telephonic replay of the conference call will be available until August
22, 2008 and may be accessed by calling (303) 590-3000 and using the pass code
11118537#.  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) 529-6000 or email atdmw@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.
    
    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 industry activity levels;
potential for excess capacity; competition; and substantial capital
requirements.  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 most recent quarterly report on Form
10-Q 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
Company's quarterly report on form 10-Q,  which will be 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,
depreciation and amortization, or EBITDA.  For a reconciliation of EBITDA to
net income, please see the table at the end of this release. Management's
opinion regarding the usefulness of EBITDA to investors and a description of
the ways in which management uses such measures can be found on the
"Corporate" 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 June 30   Six Months Ended June 30
                            2008         2007          2008          2007
    

    
    Revenues
    Well servicing       $47,376,065  $21,141,002   $86,660,403  $39,903,301
    Fluid logistics       41,225,126   25,608,191    72,463,647   48,897,721
       Total revenues     88,601,191   46,749,393   159,124,050   88,801,022
    

    
    Expenses
    Well servicing        30,008,033   12,325,453    54,412,815   22,207,798
    Fluid logistics       28,164,067   16,481,443    50,458,950   31,407,329
    General and
     administrative        4,717,627    1,420,683     7,860,308    2,513,627
    Depreciation and
     amortization          7,513,098    3,224,260    14,635,138    5,931,662
       Total expenses     70,402,825   33,451,839   127,367,211   62,060,416
       Operating income   18,198,366   13,297,554    31,756,839   26,740,606
    

    
    Other income(expense)
    Interest income            1,112          637         1,112          637
    Interest expense      (6,584,009)  (1,800,116)  (12,559,135)  (3,576,970)
    Other income
     (expense)                75,922       30,779       105,456       24,401
       Income before
        taxes             11,691,391   11,528,854    19,304,272   23,188,674
    Income taxes -
     current periods       1,021,218      -           1,193,218      -
    Deferred income
     taxes -
     reorganization(1)    46,388,000      -          46,388,000      -
       Net income(1)    $(35,717,826) $11,528,854  $(28,276,946) $23,188,674
    

    
    Earnings per share
     of common stock(1)
       Basic                  $(0.94)                    $(0.84)
       Diluted                $(0.94)                    $(0.84)
    

    
    Weighted average
     number of shares
     outstanding
       Basic              38,166,398                 33,833,299
       Diluted            38,166,398                 33,833,299
    
    (1)  Net income for the three months and six months ended June 30, 2008
was $10.7 million or $0.28 per share, and $18.1 million or $0.54 per share,
respectively, before a one-time, non-cash charge for deferred income taxes
related to the Company's reorganization that occurred simultaneous with its
IPO on May 29, 2008.  Net income for the three months and six months ended
June 30, 2008, after this one-time, non-cash charge in the amount of $46.4
million, was a loss of $35.7 million or $0.94 per share, and a loss of $28.3
million or $0.84 per share, respectively.  This charge reflects the change in
tax status of the Company that took place at the time of the reorganization
and concurrent with the IPO, from a pass-through entity for tax purposes to a
tax paying entity and was recorded in accordance with Statement of Financial
Accounting Standards No. 109, which requires that the charge be included in
the current period's income statement.  This tax expense is associated with
the cumulative book/tax basis differences of the Company's assets and
liabilities as of the date of conversion to a U.S. federal taxable entity.



    
                           Selected Balance Sheet Data
                                   (Unaudited)
    

    
                                             June 30, 2008   December 31, 2007
    

    
    Cash                                        $8,431,215        $5,209,345
    Accounts receivable                         64,867,275        42,998,005
    Working capital                             22,291,431       (28,247,697)
    Goodwill and other intangibles              73,488,422               -
    Total assets                               467,503,900       259,995,166
    Total debt                                 207,364,521       111,281,004
    Deferred tax liability                      47,168,743           500,000
    Members'/Stockholders' equity              158,906,200        70,459,267
    



    
                             Selected Operating Data
    

    
                                                  Three Months Ended June 30
                                                     2008              2007
    

    
    Working days                                        65                61
    Rig hours                                       97,860            39,049
    Truck hours                                    271,968           168,880
    



    
             Reconciliation of EBITDA to Net Income (unaudited):
    

    
                                              Three Months Ended
                                 June 30, 2008   June 30, 2007  March 31, 2008
    

    
     Net income (loss)           $(35,717,826)    $11,528,854     $7,440,880
     Deferred income tax
      expense - current periods     1,021,218          -            $172,000
     Deferred income tax
      expense - related to reorg   46,388,000          -                  $-
     Interest expense               6,584,009       1,800,116     $5,975,126
     Depreciation and
      amortization                  7,513,098       3,224,260      7,122,040
          EBITDA                  $25,788,499     $16,553,230    $20,710,046
    


    
                                           Six Months Ended June 30
                                            2008               2007
     Net income (loss)                 $(28,276,946)      $23,188,674
     Deferred income tax expense -
      current periods                     1,193,218             -
     Deferred income tax expense -
      related to reorg                   46,388,000             -
     Interest expense                    12,559,135         3,576,970
     Depreciation and amortization       14,635,138         5,931,662
          EBITDA                        $46,498,545       $32,697,306
    



    
      Reconciliation of net income and EPS before and after reorganization
         related one-time, non-cash deferred tax adjustment (unaudited):
    

    
                                          Three Months Ended  Six Months Ended
                                             June 30, 2008     June 30, 2008
    

    
     Net loss, as reported                    $(35,717,826)     $(28,276,946)
     Adjustment for reorganization related
      deferred tax adjustment                   46,388,000        46,388,000
     Net income as adjusted                    $10,670,174       $18,111,054
    

    
     Diluted loss per share as reported             $(0.94)           $(0.84)
     Adjustment for reorganization related
      deferred tax adjustment                         1.22              1.38
     Diluted earnings per share, as adjusted         $0.28             $0.54
    

    
     Weighted average basic shares
      outstanding                               38,166,398        33,833,299
     Weighted average diluted shares
      outstanding                               38,166,398        33,833,299

    




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, for Forbes Energy Services Ltd.
Web Site: http://www.forbesenergyservices.com

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