Forbes Energy Services Reports Third Quarter Financial Results
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<p>ALICE, Texas, <chron>Nov. 13</chron> /CNW/ -- Forbes Energy Services Ltd. (TSX: FRB) today announced financial and operating results for the third quarter ended <chron>September 30, 2009</chron>.</p>
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<p>Revenues for the third quarter increased to <money>$50.5 million</money> compared to <money>$49.8 million</money> in the second quarter of 2009 as a result of increases in utilization and average pricing in the fluid logistics segment, which were partially offset by lower utilization and pricing in the well servicing segment. Net loss for the three months ended <chron>September 30, 2009</chron> was <money>$9.6 million</money>, or a loss of <money>$0.15</money> per share, compared to a net loss of <money>$9.0 million</money>, or <money>$0.15</money> per share, in the quarter ended <chron>June 30, 2009</chron>.</p>
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<p>In the third quarter of 2009, the Company corrected two accounting errors from prior periods. The net impact to third quarter results was a reduction of <money>$2.0 million</money> in operating income and a reduction of <money>$1.3 million</money>, or <money>$0.02</money> per share, in net income.</p>
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<p>Adjusted EBITDA for the third quarter of 2009 totaled <money>$1.6 million</money> versus <money>$2.8 million</money> in the 2009 second quarter. Adjusted EBITDA for the third quarter was negatively impacted by <money>$2.0 million</money> as a result of the accounting adjustments. Adjusted EBITDA is a non-GAAP financial measure, defined by the Company as net income before interest, taxes, depreciation, amortization, gain or loss on extinguishment of debt, and non-cash stock based compensation. For a reconciliation of Adjusted EBITDA to net income, please see the disclosures at the end of this release and on the Company's website.</p>
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<p><person>John Crisp</person>, Forbes Energy's President and Chief Executive Officer, stated, "The third quarter was weaker than expected in the well servicing segment, with activity in the U.S. trending downward through September. However, recent trends in the U.S. rig count indicate that better days are ahead, and our October hours began showing signs of this improvement. The fluid logistics segment has now experienced four consecutive months of increasing truck hours, leading to a small sequential increase in revenue this quarter. Pricing still remains sluggish in both segments, with rates down 20% or more from year ago levels. We anticipate upward price pressures as utilization continues to strengthen.</p>
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<p>"Highlights from the quarter include the deployment of our ninth rig in <location>Mexico</location>, expansion into the Marcellus Shale in Pennsylvania, and the raising of <money>$20 million</money> to pay off and terminate our revolving credit facility. Looking ahead, we expect to see gradual improvement in both operating segments, although hours for November and December may be choppy due to the holiday schedule. We have one additional rig in <location>Mexico</location> currently being 'rigged up' which will bring our total there to ten rigs by the end of the year. We also recently hired a new business development manager in Pennsylvania to oversee and grow operations in an effort to expand our footprint in the Marcellus Shale. Finally, we're beginning to see a significant ramp-up in Eagle Ford Shale activity in our core South Texas market. We have a dominant position in that market and are ideally situated to capitalize on this developing play."</p>
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Business Segment Results
Well Servicing
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<p>Well servicing revenue decreased to <money>$23.9 million</money> for the third quarter of 2009 compared to <money>$25.5 million</money> in the second quarter. Segment gross margin, which was negatively impacted by the accounting adjustments, totaled <money>$1.0 million</money> in the third quarter. By comparison, well servicing gross margin for the second quarter of 2009 was <money>$1.8 million</money>.</p>
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<p>Forbes recorded approximately 65,524 rig hours for the third quarter of 2009, including 14,136 hours in <location>Mexico</location>, compared to 65,453 total hours in the second quarter of 2009 (10,440 in <location>Mexico</location>). The Company had 170 rigs in its well service fleet at <chron>September 30, 2009</chron>, unchanged from <chron>June 30, 2009</chron>. On average, the Company's U.S. rigs (160) were 45% utilized during the quarter. Capital expenditures for the well servicing segment totaled <money>$3.7 million</money> during the three months ended <chron>September 30, 2009</chron>, primarily related to <location>Mexico</location>.</p>
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Fluid Logistics
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<p>Fluid logistics revenues in the third quarter of 2009 increased to <money>$26.6 million</money> compared to <money>$24.2 million</money> in the second quarter of 2009. Gross margins for the fluid logistics segment totaled <money>$4.8 million</money> compared to <money>$4.3 million</money> in the previous quarter.</p>
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<p>Forbes recorded 206,526 truck hours during the third quarter of 2009 compared to 199,662 for the second quarter. The Company's fluid transport segment heavy truck fleet totaled 369 as of <chron>September 30, 2009</chron>, down one from <chron>June 30, 2009</chron>. On average, the Company's truck fleet was 65% utilized during the quarter. Total capital expenditures for the fluid logistics segment were <money>$0.2 million</money> for the three months ended <chron>September 30, 2009</chron>.</p>
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Conference Call
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<p>Forbes Energy will host a conference call to discuss its third quarter 2009 results on <chron>Monday, November 16, 2009</chron>, at <chron>10:00 a.m. Eastern Time</chron> (<chron>9:00 a.m.</chron> Central). To access the call, please dial (480) 629-9645 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, <a href="http://www.forbesenergyservices.com">www.forbesenergyservices.com</a>.</p>
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<p>A telephonic replay of the conference call will be available until <chron>November 23, 2009</chron>, and may be accessed by calling (303) 590-3030 and using the pass code 4183619. A webcast archive will be available at <a href="http://www.forbesenergyservices.com">www.forbesenergyservices.com</a> shortly after the call and will be accessible for approximately 30 days. For more information, please contact <person>Donna Washburn</person> at DRG&E at (713) 529-6600 or email at <a href="mailto:[email protected]">[email protected]</a>.</p>
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About Forbes Energy
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<p>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, Pennsylvania and <location>Mexico</location>.</p>
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Forward-Looking Statements and Regulation G Reconciliation
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<p>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 <chron>December 31, 2008</chron> (the "Form 10-K") as well as other filings the Company has made with the Securities and Exchange Commission.</p>
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<p>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-Q, which is being filed with the Securities and Exchange Commission and posted on the Company's website.</p>
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<p>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 "Investor Relations" page of Forbes Energy's website, <a href="http://www.forbesenergyservices.com">www.forbesenergyservices.com</a>.</p>
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Contacts: Forbes Energy Services Ltd.
L. Melvin Cooper, SVP & CFO
361-664-0549
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DRG&E
Ken Dennard, Managing Partner
Ben Burnham, AVP
713-529-6600
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<p> -Tables to Follow-</p>
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Selected Statement of Operations Data
(Unaudited)
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Three Months Ended Nine Months Ended
September 30, September 30,
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2009 2008 2009 2008
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Revenues
Well servicing $23,853,912 $54,343,084 $80,907,991 $141,003,486
Fluid logistics 26,618,294 50,802,304 82,748,174 123,265,951
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Total revenues 50,472,206 105,145,388 163,656,165 264,269,437
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Expenses
Well servicing 22,869,209 35,406,964 72,985,810 89,819,779
Fluid logistics 21,812,340 36,281,048 64,972,027 86,739,998
General and
administrative 4,644,809 4,511,599 14,315,264 12,371,906
Depreciation and
amortization 9,982,121 9,075,266 29,448,456 23,546,370
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Total expenses 59,308,479 85,274,877 181,721,557 212,478,053
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Operating income
(loss) (8,836,273) 19,870,511 (18,065,392) 51,791,384
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Other income (expense)
Interest expense (6,221,304) (6,532,810) (19,281,292) (19,091,945)
Gain on
extinguishment of
debt - - 1,421,750 -
Other income
(expense) (168,288) 2,493 (133,671) 109,061
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Income (loss)
before taxes (15,225,865) 13,340,194 (36,058,605) 32,808,500
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Income tax expense
(benefit) (5,616,145) 5,066,839 (12,875,659) 60,224,259
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Net income (loss) $(9,609,720) $8,273,355 $(23,182,946) $(27,415,759)
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Earnings (loss) per
share of common stock
Basic and diluted $(0.15) $0.15 $(0.37) $(0.67)
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Weighted average number
of shares outstanding
Basic and diluted 62,111,200 54,144,700 62,111,200 40,653,076
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Pro forma earnings per
share(1)
Basic and diluted $0.15 $0.38
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Weighted average number of
shares outstanding
Basic and diluted 54,144,700 54,144,700
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(1) The pro forma earnings per share reflects the effects related to the
Company's Bermuda reorganization from a limited liability company to a "C"
corporation, this issuance of common stock in connection with Forbes'
initial equity offering and an assumed effective tax rate of 37%. See
disclosures in the Company's 10-Q filing for additional information.
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Selected Balance Sheet Data
(Unaudited)
September 30, December 31,
2009 2008
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Cash $23,707,762 $23,469,067
Accounts receivable 39,793,514 69,095,522
Working Capital 27,575,694 42,707,044
Intangible assets (net) 37,314,080 39,459,977
Total assets 430,717,502 482,801,391
Total debt 215,195,213 212,189,842
Deferred tax liability 48,544,648 62,068,620
Shareholders'/members' equity 137,100,822 158,418,487
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Selected Operating Data
Three Months Ended Nine Months Ended
September 30, September 30,
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2009 2008 2009 2008
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Working days 64 64 191 192
Rig Hours
U.S. 51,388 107,520 175,175 281,069
Mexico 14,136 - 29,324 -
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Total rig hours 65,524 107,520 204,499 281,069
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<p> Truck hours 206,526 313,750 635,407 806,573</p>
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Reconciliation of Adjusted EBITDA to Net Income
(Unaudited)
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Three Months Ended
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September 30, June 30, September 30,
2009 2009 2008
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Net income (loss) $(9,609,720) $(9,037,736) $8,273,355
Depreciation and
amortization 9,982,121 9,774,963 9,075,266
Interest expense, net 6,221,304 6,406,311 6,532,810
Income tax expense
(benefit) (5,616,145) (4,480,569) 5,066,839
Gain on extinguishment of
debt - (447,842) -
Stock based compensation 622,420 622,418 620,928
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Adjusted EBITDA $1,599,980 $2,837,545 $29,569,198
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Nine Months Ended September 30,
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2009 2008
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Net income (loss) $(23,182,946) $(27,415,759)
Depreciation and amortization 29,448,456 23,546,370
Interest expense, net 19,281,292 19,091,945
Income tax expense (benefit) (12,875,659) 60,224,259
Gain on extinguishment of debt (1,421,750) -
Stock based compensation 1,869,575 824,356
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Adjusted EBITDA $13,118,968 $76,271,171
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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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