##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period From  to
 Commission File No. 0-20310
 SUPERIOR ENERGY SERVICES, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    75-2379388(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1105 Peters RoadHarvey, Louisiana
    
    70058(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (504) 362-4321
 þ o
  þ o o
 o þ




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##### 



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 TABLE OF CONTENTS
 PagePART I FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    36PART II OTHER INFORMATIONItem 6. Exhibits
    
    
    37Certification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 9/30/07
    
    
    12/31/06(Unaudited)
    
    
    (Audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    63,809
    
    
    $
    38,970Accounts receivable, net
    
    
    346,081
    
    
    
    303,800Income taxes receivable
    
    
    
    
    
    
    2,630Current portion of notes receivable
    
    
    15,616
    
    
    
    14,824Prepaid expense and other
    
    
    58,348
    
    
    
    59,563Total current assets
    
    
    483,854
    
    
    
    419,787Property, plant and equipment, net
    
    
    1,032,764
    
    
    
    804,228Goodwill, net
    
    
    475,068
    
    
    
    444,687Notes receivable
    
    
    16,364
    
    
    
    16,137Equity-method investments
    
    
    61,282
    
    
    
    64,603Intangible and other long-term assets, net
    
    
    131,754
    
    
    
    125,036Total assets
    
    $
    2,201,086
    
    
    $
    1,874,478LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    72,817
    
    
    $
    65,451Accrued expenses
    
    
    178,659
    
    
    
    141,684Income taxes payable
    
    
    4,410
    
    
    
    Current portion of decommissioning liabilities
    
    
    34,884
    
    
    
    35,150Current maturities of long-term debt
    
    
    810
    
    
    
    810Total current liabilities
    
    
    291,580
    
    
    
    243,095Deferred income taxes
    
    
    147,784
    
    
    
    112,011Decommissioning liabilities
    
    
    88,791
    
    
    
    87,046Long-term debt, net
    
    
    711,440
    
    
    
    711,505Other long-term liabilities
    
    
    14,202
    
    
    
    10,133Stockholders equity:Preferred stock of $.01 par value. Authorized,
5,000,000 shares; none issued
    
    
    
    
    
    
    Common stock of $.001 par value. Authorized,
125,000,000 shares; issued
and outstanding, 81,490,025 shares at
September 30, 2007, and 80,617,337
shares at December 31, 2006
    
    
    81
    
    
    
    81Additional paid in capital
    
    
    433,165
    
    
    
    411,374Accumulated other comprehensive income, net
    
    
    15,942
    
    
    
    10,288Retained earnings
    
    
    498,101
    
    
    
    288,945Total stockholders equity
    
    
    947,289
    
    
    
    710,688Total liabilities and stockholders equity
    
    $
    2,201,086
    
    
    $
    1,874,478
  3




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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Three Months
    
    
    Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006Oilfield service and rental revenues
    
    $
    347,228
    
    
    $
    252,309
    
    
    $
    1,021,712
    
    
    $
    687,441Oil and gas revenues
    
    
    51,696
    
    
    
    38,208
    
    
    
    136,889
    
    
    
    87,304Total revenues
    
    
    398,924
    
    
    
    290,517
    
    
    
    1,158,601
    
    
    
    774,745Cost of oilfield services and rentals
    
    
    159,683
    
    
    
    109,525
    
    
    
    465,085
    
    
    
    304,066Cost of oil and gas sales
    
    
    18,954
    
    
    
    19,562
    
    
    
    55,845
    
    
    
    52,469Total cost of services, rentals and sales
    
    
    178,637
    
    
    
    129,087
    
    
    
    520,930
    
    
    
    356,535Depreciation, depletion, amortization and
accretion
    
    
    49,881
    
    
    
    28,831
    
    
    
    133,967
    
    
    
    77,473General and administrative expenses
    
    
    57,150
    
    
    
    44,385
    
    
    
    161,833
    
    
    
    122,124Gain on sale of business
    
    
    7,483
    
    
    
    
    
    
    
    7,483
    
    
    
    Income from operations
    
    
    120,739
    
    
    
    88,214
    
    
    
    349,354
    
    
    
    218,613Other income (expense):Interest expense, net
    
    
    (8,197
    )
    
    
    (5,989
    )
    
    
    (24,938
    )
    
    
    (16,389
    )Interest income
    
    
    795
    
    
    
    1,255
    
    
    
    2,303
    
    
    
    3,477Loss on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,596
    )Earnings (losses) from equity-method
investments, net
    
    
    1,395
    
    
    
    2,704
    
    
    
    (2,447
    )
    
    
    3,852Income before income taxes
    
    
    114,732
    
    
    
    86,184
    
    
    
    324,272
    
    
    
    196,957Income taxes
    
    
    39,682
    
    
    
    31,026
    
    
    
    115,116
    
    
    
    70,904Net income
    
    $
    75,050
    
    
    $
    55,158
    
    
    $
    209,156
    
    
    $
    126,053Basic earnings per share
    
    $
    0.92
    
    
    $
    0.69
    
    
    $
    2.58
    
    
    $
    1.58Diluted earnings per share
    
    $
    0.91
    
    
    $
    0.68
    
    
    $
    2.53
    
    
    $
    1.55Weighted average common shares used
in computing earnings per share:Basic
    
    
    81,470
    
    
    
    79,824
    
    
    
    81,053
    
    
    
    79,754Incremental common shares from stock options
    
    
    1,265
    
    
    
    1,480
    
    
    
    1,410
    
    
    
    1,442Incremental common shares from restricted
stock units
    
    
    58
    
    
    
    36
    
    
    
    58
    
    
    
    36Diluted
    
    
    82,793
    
    
    
    81,340
    
    
    
    82,521
    
    
    
    81,232
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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    209,156
    
    
    $
    126,053Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation, depletion, amortization and accretion
    
    
    133,967
    
    
    
    77,473Deferred income taxes
    
    
    32,459
    
    
    
    (1,085
    )Stock-based and performance share unit compensation expense
    
    
    8,995
    
    
    
    3,746(Earnings) losses from equity-method investments, net
    
    
    2,447
    
    
    
    (3,852
    )Write-off of debt acquisition costs
    
    
    
    
    
    
    2,817Amortization of debt acquisition costs and note discount
    
    
    2,669
    
    
    
    857Gain on sale of business
    
    
    (7,483
    )
    
    
    Changes in operating assets and liabilities, net of acquisitions
and dispositions:Receivables
    
    
    (35,028
    )
    
    
    (75,399
    )Other, net
    
    
    6,779
    
    
    
    (3,125
    )Accounts payable
    
    
    (861
    )
    
    
    7,325Accrued expenses
    
    
    28,496
    
    
    
    32,348Decommissioning liabilities
    
    
    (2,303
    )
    
    
    (2,255
    )Income taxes
    
    
    5,817
    
    
    
    64,142Net cash provided by operating activities
    
    
    385,110
    
    
    
    229,045Cash flows from investing activities:Payments for capital expenditures
    
    
    (325,868
    )
    
    
    (165,064
    )Acquisitions of businesses, net of cash acquired
    
    
    (79,624
    )
    
    
    (9,822
    )Cash proceeds from sale of business, net of cash sold
    
    
    18,100
    
    
    
    18,343Acquisitions of oil and gas properties
    
    
    
    
    
    
    (46,631
    )Cash contributed to equity-method investment
    
    
    
    
    
    
    (57,781
    )Other
    
    
    8,981
    
    
    
    (2,542
    )Net cash used in investing activities
    
    
    (378,411
    )
    
    
    (263,497
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    
    
    
    
    295,467Principal payments on long-term debt
    
    
    (405
    )
    
    
    (200,405
    )Payment of debt acquisition costs
    
    
    (83
    )
    
    
    (6,516
    )Proceeds from issuance of stock through employee benefit plans
    
    
    324
    
    
    
    Proceeds from exercise of stock options
    
    
    8,422
    
    
    
    2,631Tax benefit from exercise of stock options
    
    
    9,135
    
    
    
    Net cash provided by financing activities
    
    
    17,393
    
    
    
    91,177Effect of exchange rate changes on cash
    
    
    747
    
    
    
    700Net increase in cash
    
    
    24,839
    
    
    
    57,425Cash and cash equivalents at beginning of period
    
    
    38,970
    
    
    
    54,457Cash and cash equivalents at end of period
    
    $
    63,809
    
    
    $
    111,882
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SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Basis of Presentation
   Stock-Based and Long-Term Compensation
  Stock Options
  Restricted Stock
  Restricted Stock Units
  6




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Performance Share Units
  Employee Stock Purchase Plan
  Earnings per Share
   Subsequent Events
  Acquisitions and Dispositions
  7




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Subsequent Event
  8




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##### Table of Contents



Segment Information
 Business Segments
   Three Months Ended September 30, 2007
 Oil & GasWell
    
    
    Rental
    
    
    
    
    
    
    
    
    
    
    Eliminations
    
    
    ConsolidatedIntervention
    
    
    Tools
    
    
    Marine
    
    
    Oil & Gas
    
    
    & Unallocated
    
    
    TotalRevenues
    
    $
    202,807
    
    
    $
    118,918
    
    
    $
    26,323
    
    
    $
    51,696
    
    
    $
    (820
    )
    
    $
    398,924Cost of services, rentals and sales
    
    
    111,777
    
    
    
    35,142
    
    
    
    13,586
    
    
    
    18,952
    
    
    
    (820
    )
    
    
    178,637Depreciation, depletion,
amortization and accretion
    
    
    12,979
    
    
    
    18,115
    
    
    
    1,986
    
    
    
    16,801
    
    
    
    
    
    
    
    49,881General and administrative expenses
    
    
    30,440
    
    
    
    21,698
    
    
    
    2,603
    
    
    
    2,409
    
    
    
    
    
    
    
    57,150Gain on sale of business
    
    
    
    
    
    
    7,483
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,483Income from operations
    
    
    47,611
    
    
    
    51,446
    
    
    
    8,148
    
    
    
    13,534
    
    
    
    
    
    
    
    120,739Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,197
    )
    
    
    (8,197
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    311
    
    
    
    484
    
    
    
    795Earnings from equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,395
    
    
    
    
    
    
    
    1,395Income (loss) before income taxes
    
    $
    47,611
    
    
    $
    51,446
    
    
    $
    8,148
    
    
    $
    15,240
    
    
    $
    (7,713
    )
    
    $
    114,732
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##### Table of Contents



Three Months Ended September 30, 2006
 Oil & GasWell
    
    Rental
    
    
    
    
    
    
    
    
    
    Eliminations
    
    ConsolidatedIntervention
    
    Tools
    
    Marine
    
    Oil & Gas
    
    & Unallocated
    
    TotalRevenues
    
    $
    122,205
    
    
    $
    98,262
    
    
    $
    36,013
    
    
    $
    38,208
    
    
    $
    (4,171
    )
    
    $
    290,517Cost of services, rentals
and sales
    
    
    68,438
    
    
    
    30,786
    
    
    
    14,472
    
    
    
    19,562
    
    
    
    (4,171
    )
    
    
    129,087Depreciation, depletion,
amortization and accretion
    
    
    4,511
    
    
    
    13,600
    
    
    
    2,142
    
    
    
    8,578
    
    
    
    
    
    
    
    28,831General and administrative
expenses
    
    
    20,428
    
    
    
    18,776
    
    
    
    3,231
    
    
    
    1,950
    
    
    
    
    
    
    
    44,385Income from operations
    
    
    28,828
    
    
    
    35,100
    
    
    
    16,168
    
    
    
    8,118
    
    
    
    
    
    
    
    88,214Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,989
    )
    
    
    (5,989
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    286
    
    
    
    969
    
    
    
    1,255Earnings from equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,704
    
    
    
    
    
    
    
    2,704Income (loss) before
income taxes
    
    $
    28,828
    
    
    $
    35,100
    
    
    $
    16,168
    
    
    $
    11,108
    
    
    $
    (5,020
    )
    
    $
    86,184
 Nine Months Ended September 30, 2007
 Oil & GasWell
    
    Rental
    
    
    
    
    
    
    
    
    
    Eliminations
    
    ConsolidatedIntervention
    
    Tools
    
    Marine
    
    Oil & Gas
    
    & Unallocated
    
    TotalRevenues
    
    $
    570,280
    
    
    $
    358,834
    
    
    $
    97,351
    
    
    $
    136,889
    
    
    $
    (4,753
    )
    
    $
    1,158,601Cost of services, rentals
and sales
    
    
    316,733
    
    
    
    109,676
    
    
    
    43,432
    
    
    
    55,842
    
    
    
    (4,753
    )
    
    
    520,930Depreciation, depletion,
amortization and accretion
    
    
    34,592
    
    
    
    49,971
    
    
    
    6,379
    
    
    
    43,025
    
    
    
    
    
    
    
    133,967General and administrative
expenses
    
    
    83,168
    
    
    
    63,508
    
    
    
    7,719
    
    
    
    7,438
    
    
    
    
    
    
    
    161,833Gain on sale of business
    
    
    
    
    
    
    7,483
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,483Income from operations
    
    
    135,787
    
    
    
    143,162
    
    
    
    39,821
    
    
    
    30,584
    
    
    
    
    
    
    
    349,354Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,938
    )
    
    
    (24,938
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    924
    
    
    
    1,379
    
    
    
    2,303Losses from equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,447
    )
    
    
    
    
    
    
    (2,447
    )Income (loss) before income
taxes
    
    $
    135,787
    
    
    $
    143,162
    
    
    $
    39,821
    
    
    $
    29,061
    
    
    $
    (23,559
    )
    
    $
    324,272
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##### Table of Contents



Nine Months Ended September 30, 2006
 Oil & GasWell
    
    Rental
    
    
    
    
    
    
    
    
    
    Eliminations
    
    ConsolidatedIntervention
    
    Tools
    
    Marine
    
    Oil & Gas
    
    & Unallocated
    
    TotalRevenues
    
    $
    335,953
    
    
    $
    262,629
    
    
    $
    100,171
    
    
    $
    87,304
    
    
    $
    (11,312
    )
    
    $
    774,745Cost of services, rentals
and sales
    
    
    191,793
    
    
    
    83,307
    
    
    
    40,278
    
    
    
    52,469
    
    
    
    (11,312
    )
    
    
    356,535Depreciation, depletion,
amortization and accretion
    
    
    13,375
    
    
    
    37,795
    
    
    
    6,427
    
    
    
    19,876
    
    
    
    
    
    
    
    77,473General and administrative
expenses
    
    
    56,566
    
    
    
    50,525
    
    
    
    8,816
    
    
    
    6,217
    
    
    
    
    
    
    
    122,124Income from operations
    
    
    74,219
    
    
    
    91,002
    
    
    
    44,650
    
    
    
    8,742
    
    
    
    
    
    
    
    218,613Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,389
    )
    
    
    (16,389
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    888
    
    
    
    2,589
    
    
    
    3,477Loss on early extinguishment
of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,596
    )
    
    
    (12,596
    )Earnings from equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,852
    
    
    
    
    
    
    
    3,852Income (loss) before income
taxes
    
    $
    74,219
    
    
    $
    91,002
    
    
    $
    44,650
    
    
    $
    13,482
    
    
    $
    (26,396
    )
    
    $
    196,957
 Identifiable Assets
 Well
    
    
    Rental
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedIntervention
    
    
    Tools
    
    
    Marine
    
    
    Oil & Gas
    
    
    Unallocated
    
    
    TotalSeptember 30, 2007
    
    $
    975,044
    
    
    $
    656,883
    
    
    $
    196,398
    
    
    $
    345,587
    
    
    $
    27,174
    
    
    $
    2,201,086December 31, 2006
    
    $
    840,130
    
    
    $
    501,156
    
    
    $
    187,597
    
    
    $
    318,297
    
    
    $
    27,298
    
    
    $
    1,874,478
 Geographic Segments
  Revenues:
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006United States
    
    $
    320,506
    
    
    $
    248,822
    
    
    $
    934,174
    
    
    $
    663,354Other Countries
    
    
    78,418
    
    
    
    41,695
    
    
    
    224,427
    
    
    
    111,391Total
    
    $
    398,924
    
    
    $
    290,517
    
    
    $
    1,158,601
    
    
    $
    774,745
 Long-Lived Assets:
 September 30,
    
    
    December 31,2007
    
    
    2006United States
    
    $
    871,062
    
    
    $
    715,899Other Countries
    
    
    161,702
    
    
    
    88,329Total
    
    $
    1,032,764
    
    
    $
    804,228
 11




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Construction Contract
  Equity-Method Investments
     12




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##### Table of Contents



Balance Sheet
 September 30,
    
    
    December 31,2007
    
    
    2006Current assets
    
    $
    140,046
    
    
    $
    176,860Property, plant and equipment, net
    
    
    487,994
    
    
    
    522,941Other assets
    
    
    8,761
    
    
    
    23,135Total assets
    
    $
    636,801
    
    
    $
    722,936Current liabilities
    
    $
    28,781
    
    
    $
    27,922Decommissioning and other long-term
liabilities
    
    
    95,285
    
    
    
    89,610Long-term debt
    
    
    361,086
    
    
    
    432,697Total liabilities
    
    
    485,152
    
    
    
    550,229Accumulated other comprehensive income, net
    
    
    (1,060
    )
    
    
    13,861Partners capital
    
    
    152,709
    
    
    
    158,846Total capital
    
    
    151,649
    
    
    
    172,707Total liabilities and partners capital
    
    $
    636,801
    
    
    $
    722,936
 Income Statement
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    56,005
    
    
    $
    61,458
    
    
    $
    165,150
    
    
    $
    61,458Lease operating expenses
    
    
    (13,056
    )
    
    
    (17,615
    )
    
    
    (41,220
    )
    
    
    (17,615
    )Depreciation, depletion,
amortization
and accretion
    
    
    (26,981
    )
    
    
    (35,874
    )
    
    
    (84,744
    )
    
    
    (35,874
    )General and
administrative expenses
    
    
    (4,395
    )
    
    
    (2,695
    )
    
    
    (11,132
    )
    
    
    (2,837
    )Interest expense
    
    
    (9,961
    )
    
    
    (9,915
    )
    
    
    (31,958
    )
    
    
    (9,915
    )Interest income
    
    
    949
    
    
    
    688
    
    
    
    3,190
    
    
    
    688Gain (loss) on derivatives
    
    
    922
    
    
    
    10,706
    
    
    
    (5,423
    )
    
    
    13,679Net income (loss)
    
    $
    3,483
    
    
    $
    6,753
    
    
    $
    (6,137
    )
    
    $
    9,584
  Debt
  13




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##### Table of Contents



rd rd
 st st
 th th
  
    
    during any fiscal quarter (and only during such fiscal quarter) commencing after March
31, 2007, if the last reported sale price of the Companys common stock is greater than or
equal to 135% of the applicable exchange price of the notes for at least 20 trading days in
the period of 30 consecutive trading days ending on the last trading day of the preceding
fiscal quarter;
    
    prior to December 15, 2011, during the five business-day period after any ten
consecutive trading-day period (the measurement period) in which the trading price of
$1,000 principal amount of notes for each trading day in the measurement period was less
than 95% of the product of the last reported sale price of the Companys common stock and
the exchange rate on such trading day;
    
    if the notes have been called for redemption;
    
    upon the occurrence of specified corporate transactions; or
    
    at any time beginning on September 15, 2026, and ending at the close of business on the
second business day immediately preceding the maturity date of December 15, 2026.
  Hedging Activities
  14




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##### Table of Contents



Decommissioning Liabilities
   Nine Months EndedSeptember 30,2007
    
    
    2006Total decommissioning liabilities at December 31,
2006 and 2005, respectively
    
    $
    122,196
    
    
    $
    121,909Liabilities acquired and incurred
    
    
    300
    
    
    
    3,554Liabilities settled
    
    
    (2,303
    )
    
    
    (2,255
    )Accretion
    
    
    3,073
    
    
    
    3,609Revision in estimated liabilities
    
    
    409
    
    
    
    (4,924
    )Total decommissioning liabilities at September 30,
2007 and 2006, respectively
    
    
    123,675
    
    
    
    121,893Current portion of decommissioning liabilities at
September 30,
2007 and 2006, respectively
    
    
    34,884
    
    
    
    25,067Long-term portion of decommissioning liabilities
at September 30,
2007 and 2006, respectively
    
    $
    88,791
    
    
    $
    96,826
 15




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##### Table of Contents



Notes Receivable
  Other Comprehensive Income
  Three Months EndedSeptember 30,2007
    
    
    2006Accumulated other comprehensive income, June 30,
2007 and 2006, respectively
    
    $
    12,746
    
    
    $
    1,104Other comprehensive income:Other comprehensive income, net of taxHedging activities:Adjustment for settled contracts, net of tax of $2,065
in 2006
    
    
    
    
    
    
    3,516Changes in fair value of outstanding hedging positions,
net of tax of $28 in 2006
    
    
    
    
    
    
    48Foreign currency translation adjustment
    
    
    3,196
    
    
    
    1,789Total other comprehensive income
    
    
    3,196
    
    
    
    5,353Accumulated other comprehensive income, September 30,
2007 and 2006, respectively
    
    $
    15,942
    
    
    $
    6,457
 Nine Months EndedSeptember 30,2007
    
    
    2006Accumulated other comprehensive income (loss), December 31,
2006 and 2005, respectively
    
    $
    10,288
    
    
    $
    (4,916
    )Other comprehensive income:Other comprehensive income, net of taxHedging activities:Adjustment for settled contracts, net of tax of $5,124
in 2006
    
    
    
    
    
    
    8,726Changes in fair value of outstanding hedging positions,
net of tax of ($1,131) in 2006
    
    
    
    
    
    
    (1,927
    )Foreign currency translation adjustment
    
    
    5,654
    
    
    
    4,574Total other comprehensive income
    
    
    5,654
    
    
    
    11,373Accumulated other comprehensive income, September 30,
2007 and 2006, respectively
    
    $
    15,942
    
    
    $
    6,457
 Income Taxes
  16




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##### Table of Contents



Commitments and Contingencies
  Financial Information Related to Guarantor Subsidiaries
 6 7/8%
 17




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
     Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    18,348
    
    
    $
    19,801
    
    
    $
    25,660
    
    
    $
    
    
    
    $
    63,809Accounts receivable, net
    
    
    
    
    
    
    3,193
    
    
    
    310,274
    
    
    
    49,082
    
    
    
    (16,468
    )
    
    
    346,081Income taxes receivable
    
    
    1,794
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,794
    )
    
    
    Current portion of notes receivable
    
    
    
    
    
    
    
    
    
    
    15,616
    
    
    
    
    
    
    
    
    
    
    
    15,616Prepaid expenses and other
    
    
    21
    
    
    
    6,896
    
    
    
    45,816
    
    
    
    5,615
    
    
    
    
    
    
    
    58,348Total current assets
    
    
    1,815
    
    
    
    28,437
    
    
    
    391,507
    
    
    
    80,357
    
    
    
    (18,262
    )
    
    
    483,854Property, plant and equipment, net
    
    
    
    
    
    
    1,412
    
    
    
    905,063
    
    
    
    126,289
    
    
    
    
    
    
    
    1,032,764Goodwill, net
    
    
    
    
    
    
    
    
    
    
    430,507
    
    
    
    44,561
    
    
    
    
    
    
    
    475,068Notes receivable
    
    
    
    
    
    
    2,000
    
    
    
    14,364
    
    
    
    
    
    
    
    
    
    
    
    16,364Equity-method investments
    
    
    124,271
    
    
    
    545,605
    
    
    
    60,298
    
    
    
    
    
    
    
    (668,892
    )
    
    
    61,282Intangible and other long-term assets, net
    
    
    
    
    
    
    24,778
    
    
    
    106,058
    
    
    
    918
    
    
    
    
    
    
    
    131,754Total assets
    
    $
    126,086
    
    
    $
    602,232
    
    
    $
    1,907,797
    
    
    $
    252,125
    
    
    $
    (687,154
    )
    
    $
    2,201,086LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    1,272
    
    
    $
    61,200
    
    
    $
    26,813
    
    
    $
    (16,468
    )
    
    $
    72,817Accrued expenses
    
    
    490
    
    
    
    37,778
    
    
    
    130,051
    
    
    
    10,340
    
    
    
    
    
    
    
    178,659Income taxes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,204
    
    
    
    (1,794
    )
    
    
    4,410Current portion of decommissioning liabilities
    
    
    
    
    
    
    
    
    
    
    34,884
    
    
    
    
    
    
    
    
    
    
    
    34,884Current maturities of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    810
    
    
    
    
    
    
    
    810Total current liabilities
    
    
    490
    
    
    
    39,050
    
    
    
    226,135
    
    
    
    44,167
    
    
    
    (18,262
    )
    
    
    291,580Deferred income taxes
    
    
    139,518
    
    
    
    
    
    
    
    
    
    
    
    8,266
    
    
    
    
    
    
    
    147,784Decommissioning liabilities
    
    
    
    
    
    
    
    
    
    
    88,791
    
    
    
    
    
    
    
    
    
    
    
    88,791Long-term debt, net
    
    
    
    
    
    
    696,059
    
    
    
    
    
    
    
    15,381
    
    
    
    
    
    
    
    711,440Intercompany payables/(receivables)
    
    
    (178,569
    )
    
    
    1,428
    
    
    
    643,012
    
    
    
    47,025
    
    
    
    (512,896
    )
    
    
    Other long-term liabilities
    
    
    6,197
    
    
    
    7,643
    
    
    
    
    
    
    
    362
    
    
    
    
    
    
    
    14,202Stockholders equity:Preferred stock of $.01 par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock of $.001 par value
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    101
    
    
    
    (101
    )
    
    
    81Additional paid in capital
    
    
    433,165
    
    
    
    127,173
    
    
    
    
    
    
    
    28,722
    
    
    
    (155,895
    )
    
    
    433,165Accumulated other comprehensive
income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,942
    
    
    
    
    
    
    
    15,942Retained earnings (accumulated deficit)
    
    
    (274,796
    )
    
    
    (269,121
    )
    
    
    949,859
    
    
    
    92,159
    
    
    
    
    
    
    
    498,101Total stockholders equity
    
    
    158,450
    
    
    
    (141,948
    )
    
    
    949,859
    
    
    
    136,924
    
    
    
    (155,996
    )
    
    
    947,289Total liabilities and stockholders equity
    
    $
    126,086
    
    
    $
    602,232
    
    
    $
    1,907,797
    
    
    $
    252,125
    
    
    $
    (687,154
    )
    
    $
    2,201,086
 18




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    1,608
    
    
    $
    14,775
    
    
    $
    22,587
    
    
    $
    
    
    
    $
    38,970Accounts receivable, net
    
    
    
    
    
    
    3,764
    
    
    
    275,477
    
    
    
    39,390
    
    
    
    (14,831
    )
    
    
    303,800Income taxes receivable
    
    
    7,242
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,612
    )
    
    
    2,630Current portion of notes receivable
    
    
    
    
    
    
    
    
    
    
    14,824
    
    
    
    
    
    
    
    
    
    
    
    14,824Prepaid expenses and other
    
    
    
    
    
    
    16,582
    
    
    
    40,456
    
    
    
    2,525
    
    
    
    
    
    
    
    59,563Total current assets
    
    
    7,242
    
    
    
    21,954
    
    
    
    345,532
    
    
    
    64,502
    
    
    
    (19,443
    )
    
    
    419,787Property, plant and equipment, net
    
    
    
    
    
    
    2,622
    
    
    
    738,446
    
    
    
    63,160
    
    
    
    
    
    
    
    804,228Goodwill, net
    
    
    
    
    
    
    
    
    
    
    417,979
    
    
    
    26,708
    
    
    
    
    
    
    
    444,687Notes receivable
    
    
    
    
    
    
    
    
    
    
    16,137
    
    
    
    
    
    
    
    
    
    
    
    16,137Equity-method investments
    
    
    124,271
    
    
    
    510,163
    
    
    
    63,627
    
    
    
    
    
    
    
    (633,458
    )
    
    
    64,603Intangible and other long-term assets, net
    
    
    
    
    
    
    23,823
    
    
    
    101,097
    
    
    
    116
    
    
    
    
    
    
    
    125,036Total assets
    
    $
    131,513
    
    
    $
    558,562
    
    
    $
    1,682,818
    
    
    $
    154,486
    
    
    $
    (652,901
    )
    
    $
    1,874,478LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    1,045
    
    
    $
    58,528
    
    
    $
    20,709
    
    
    $
    (14,831
    )
    
    $
    65,451Accrued expenses
    
    
    505
    
    
    
    27,671
    
    
    
    104,866
    
    
    
    8,642
    
    
    
    
    
    
    
    141,684Income taxes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,612
    
    
    
    (4,612
    )
    
    
    Current portion of decommissioning
liabilities
    
    
    
    
    
    
    
    
    
    
    35,150
    
    
    
    
    
    
    
    
    
    
    
    35,150Current maturities of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    810
    
    
    
    
    
    
    
    810Total current liabilities
    
    
    505
    
    
    
    28,716
    
    
    
    198,544
    
    
    
    34,773
    
    
    
    (19,443
    )
    
    
    243,095Deferred income taxes
    
    
    108,649
    
    
    
    
    
    
    
    
    
    
    
    3,362
    
    
    
    
    
    
    
    112,011Decommissioning liabilities
    
    
    
    
    
    
    
    
    
    
    87,046
    
    
    
    
    
    
    
    
    
    
    
    87,046Long-term debt, net
    
    
    
    
    
    
    695,719
    
    
    
    
    
    
    
    15,786
    
    
    
    
    
    
    
    711,505Intercompany payables/(receivables)
    
    
    (224,208
    )
    
    
    (79,487
    )
    
    
    782,022
    
    
    
    23,507
    
    
    
    (501,834
    )
    
    
    Other long-term liabilities
    
    
    6,197
    
    
    
    3,936
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,133Stockholders equity:Preferred stock of $.01 par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock of $.001 par value
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    101
    
    
    
    (101
    )
    
    
    81Additional paid in capital
    
    
    411,374
    
    
    
    127,173
    
    
    
    
    
    
    
    4,350
    
    
    
    (131,523
    )
    
    
    411,374Accumulated other comprehensive
income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,288
    
    
    
    
    
    
    
    10,288Retained earnings (accumulated deficit)
    
    
    (171,085
    )
    
    
    (217,495
    )
    
    
    615,206
    
    
    
    62,319
    
    
    
    
    
    
    
    288,945Total stockholders equity
    
    
    240,370
    
    
    
    (90,322
    )
    
    
    615,206
    
    
    
    77,058
    
    
    
    (131,624
    )
    
    
    710,688Total liabilities and stockholders
equity
    
    $
    131,513
    
    
    $
    558,562
    
    
    $
    1,682,818
    
    
    $
    154,486
    
    
    $
    (652,901
    )
    
    $
    1,874,478
 19




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOilfield service and rental revenues
    
    $
    
    
    
    $
    
    
    
    $
    313,030
    
    
    $
    43,471
    
    
    $
    (9,273
    )
    
    $
    347,228Oil and gas revenues
    
    
    
    
    
    
    
    
    
    
    51,696
    
    
    
    
    
    
    
    
    
    
    
    51,696Total revenues
    
    
    
    
    
    
    
    
    
    
    364,726
    
    
    
    43,471
    
    
    
    (9,273
    )
    
    
    398,924Cost of oilfield services and rentals
    
    
    
    
    
    
    
    
    
    
    147,536
    
    
    
    21,420
    
    
    
    (9,273
    )
    
    
    159,683Cost of oil and gas sales
    
    
    
    
    
    
    
    
    
    
    18,954
    
    
    
    
    
    
    
    
    
    
    
    18,954Total cost of services, rentals
and sales
    
    
    
    
    
    
    
    
    
    
    166,490
    
    
    
    21,420
    
    
    
    (9,273
    )
    
    
    178,637Depreciation, depletion,
amortization and
accretion
    
    
    
    
    
    
    100
    
    
    
    45,550
    
    
    
    4,231
    
    
    
    
    
    
    
    49,881General and administrative expenses
    
    
    115
    
    
    
    13,746
    
    
    
    38,259
    
    
    
    5,030
    
    
    
    
    
    
    
    57,150Gain on sale of business
    
    
    
    
    
    
    7,483
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,483Income (loss) from operations
    
    
    (115
    )
    
    
    (6,363
    )
    
    
    114,427
    
    
    
    12,790
    
    
    
    
    
    
    
    120,739Other income (expense):Interest expense, net
    
    
    
    
    
    
    (8,494
    )
    
    
    558
    
    
    
    (261
    )
    
    
    
    
    
    
    (8,197
    )Interest income
    
    
    
    
    
    
    162
    
    
    
    397
    
    
    
    236
    
    
    
    
    
    
    
    795Earnings from equity-method
investments, net
    
    
    
    
    
    
    2
    
    
    
    1,393
    
    
    
    
    
    
    
    
    
    
    
    1,395Income (loss) before income taxes
    
    
    (115
    )
    
    
    (14,693
    )
    
    
    116,775
    
    
    
    12,765
    
    
    
    
    
    
    
    114,732Income taxes
    
    
    36,029
    
    
    
    
    
    
    
    
    
    
    
    3,653
    
    
    
    
    
    
    
    39,682Net income (loss)
    
    $
    (36,144
    )
    
    $
    (14,693
    )
    
    $
    116,775
    
    
    $
    9,112
    
    
    $
    
    
    
    $
    75,050
 20




---



##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOilfield service and rental revenues
    
    $
    
    
    
    $
    
    
    
    $
    224,102
    
    
    $
    35,186
    
    
    $
    (6,979
    )
    
    $
    252,309Oil and gas revenues
    
    
    
    
    
    
    
    
    
    
    38,208
    
    
    
    
    
    
    
    
    
    
    
    38,208Total revenues
    
    
    
    
    
    
    
    
    
    
    262,310
    
    
    
    35,186
    
    
    
    (6,979
    )
    
    
    290,517Cost of oilfield services and rentals
    
    
    
    
    
    
    
    
    
    
    99,044
    
    
    
    17,460
    
    
    
    (6,979
    )
    
    
    109,525Cost of oil and gas sales
    
    
    
    
    
    
    
    
    
    
    19,562
    
    
    
    
    
    
    
    
    
    
    
    19,562Total cost of services, rentals
and sales
    
    
    
    
    
    
    
    
    
    
    118,606
    
    
    
    17,460
    
    
    
    (6,979
    )
    
    
    129,087Depreciation, depletion,
amortization and
accretion
    
    
    
    
    
    
    
    
    
    
    26,031
    
    
    
    2,800
    
    
    
    
    
    
    
    28,831General and administrative expenses
    
    
    118
    
    
    
    13,312
    
    
    
    27,408
    
    
    
    3,547
    
    
    
    
    
    
    
    44,385Income (loss) from operations
    
    
    (118
    )
    
    
    (13,312
    )
    
    
    90,265
    
    
    
    11,379
    
    
    
    
    
    
    
    88,214Other income (expense):Interest expense, net
    
    
    
    
    
    
    (5,537
    )
    
    
    (178
    )
    
    
    (274
    )
    
    
    
    
    
    
    (5,989
    )Interest income
    
    
    
    
    
    
    768
    
    
    
    409
    
    
    
    78
    
    
    
    
    
    
    
    1,255Earnings from equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    2,701
    
    
    
    3
    
    
    
    
    
    
    
    2,704Income (loss) before income taxes
    
    
    (118
    )
    
    
    (18,081
    )
    
    
    93,197
    
    
    
    11,186
    
    
    
    
    
    
    
    86,184Income taxes
    
    
    28,240
    
    
    
    
    
    
    
    
    
    
    
    2,786
    
    
    
    
    
    
    
    31,026Net income (loss)
    
    $
    (28,358
    )
    
    $
    (18,081
    )
    
    $
    93,197
    
    
    $
    8,400
    
    
    $
    
    
    
    $
    55,158
 21




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOilfield service and rental revenues
    
    $
    
    
    
    $
    
    
    
    $
    916,437
    
    
    $
    132,141
    
    
    $
    (26,866
    )
    
    $
    1,021,712Oil and gas revenues
    
    
    
    
    
    
    
    
    
    
    136,889
    
    
    
    
    
    
    
    
    
    
    
    136,889Total revenues
    
    
    
    
    
    
    
    
    
    
    1,053,326
    
    
    
    132,141
    
    
    
    (26,866
    )
    
    
    1,158,601Cost of oilfield services and rentals
    
    
    
    
    
    
    
    
    
    
    428,767
    
    
    
    63,184
    
    
    
    (26,866
    )
    
    
    465,085Cost of oil and gas sales
    
    
    
    
    
    
    
    
    
    
    55,845
    
    
    
    
    
    
    
    
    
    
    
    55,845Total cost of services, rentals
and sales
    
    
    
    
    
    
    
    
    
    
    484,612
    
    
    
    63,184
    
    
    
    (26,866
    )
    
    
    520,930Depreciation, depletion,
amortization and
accretion
    
    
    
    
    
    
    391
    
    
    
    121,943
    
    
    
    11,633
    
    
    
    
    
    
    
    133,967General and administrative expenses
    
    
    711
    
    
    
    34,959
    
    
    
    111,022
    
    
    
    15,141
    
    
    
    
    
    
    
    161,833Gain on sale of business
    
    
    
    
    
    
    7,483
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,483Income (loss) from operations
    
    
    (711
    )
    
    
    (27,867
    )
    
    
    335,749
    
    
    
    42,183
    
    
    
    
    
    
    
    349,354Other income (expense):Interest expense, net
    
    
    
    
    
    
    (24,238
    )
    
    
    99
    
    
    
    (799
    )
    
    
    
    
    
    
    (24,938
    )Interest income
    
    
    
    
    
    
    471
    
    
    
    1,260
    
    
    
    572
    
    
    
    
    
    
    
    2,303Earnings (losses) from
equity-method
investments, net
    
    
    
    
    
    
    8
    
    
    
    (2,455
    )
    
    
    
    
    
    
    
    
    
    
    (2,447
    )Income (loss) before income taxes
    
    
    (711
    )
    
    
    (51,626
    )
    
    
    334,653
    
    
    
    41,956
    
    
    
    
    
    
    
    324,272Income taxes
    
    
    103,000
    
    
    
    
    
    
    
    
    
    
    
    12,116
    
    
    
    
    
    
    
    115,116Net income (loss)
    
    $
    (103,711
    )
    
    $
    (51,626
    )
    
    $
    334,653
    
    
    $
    29,840
    
    
    $
    
    
    
    $
    209,156
 22




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOilfield service and rental revenues
    
    $
    
    
    
    $
    
    
    
    $
    620,252
    
    
    $
    85,075
    
    
    $
    (17,886
    )
    
    $
    687,441Oil and gas revenues
    
    
    
    
    
    
    
    
    
    
    87,304
    
    
    
    
    
    
    
    
    
    
    
    87,304Total revenues
    
    
    
    
    
    
    
    
    
    
    707,556
    
    
    
    85,075
    
    
    
    (17,886
    )
    
    
    774,745Cost of oilfield services and rentals
    
    
    
    
    
    
    
    
    
    
    277,117
    
    
    
    44,835
    
    
    
    (17,886
    )
    
    
    304,066Cost of oil and gas sales
    
    
    
    
    
    
    
    
    
    
    52,469
    
    
    
    
    
    
    
    
    
    
    
    52,469Total cost of services, rentals
and sales
    
    
    
    
    
    
    
    
    
    
    329,586
    
    
    
    44,835
    
    
    
    (17,886
    )
    
    
    356,535Depreciation, depletion,
amortization and
accretion
    
    
    
    
    
    
    
    
    
    
    70,511
    
    
    
    6,962
    
    
    
    
    
    
    
    77,473General and administrative expenses
    
    
    380
    
    
    
    30,556
    
    
    
    81,479
    
    
    
    9,709
    
    
    
    
    
    
    
    122,124Income (loss) from operations
    
    
    (380
    )
    
    
    (30,556
    )
    
    
    225,980
    
    
    
    23,569
    
    
    
    
    
    
    
    218,613Other income (expense):Interest expense, net
    
    
    
    
    
    
    (15,204
    )
    
    
    (344
    )
    
    
    (841
    )
    
    
    
    
    
    
    (16,389
    )Interest income
    
    
    
    
    
    
    2,025
    
    
    
    1,246
    
    
    
    206
    
    
    
    
    
    
    
    3,477Loss on early extinguishment of
debt
    
    
    
    
    
    
    (12,596
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,596
    )Earnings from equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    3,834
    
    
    
    18
    
    
    
    
    
    
    
    3,852Income (loss) before income taxes
    
    
    (380
    )
    
    
    (56,331
    )
    
    
    230,716
    
    
    
    22,952
    
    
    
    
    
    
    
    196,957Income taxes
    
    
    64,959
    
    
    
    
    
    
    
    
    
    
    
    5,945
    
    
    
    
    
    
    
    70,904Net income (loss)
    
    $
    (65,339
    )
    
    $
    (56,331
    )
    
    $
    230,716
    
    
    $
    17,007
    
    
    $
    
    
    
    $
    126,053
 23




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (103,711
    )
    
    $
    (51,626
    )
    
    $
    334,653
    
    
    $
    29,840
    
    
    $
    209,156Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation, depletion, amortization and accretion
    
    
    
    
    
    
    391
    
    
    
    121,943
    
    
    
    11,633
    
    
    
    133,967Deferred income taxes
    
    
    31,997
    
    
    
    
    
    
    
    
    
    
    
    462
    
    
    
    32,459Stock-based and performance share unit compensation
expense
    
    
    
    
    
    
    8,995
    
    
    
    
    
    
    
    
    
    
    
    8,995(Earnings) losses from equity-method investments, net
    
    
    
    
    
    
    (8
    )
    
    
    2,455
    
    
    
    
    
    
    
    2,447Amortization of debt acquisition costs and note
discount
    
    
    
    
    
    
    2,669
    
    
    
    
    
    
    
    
    
    
    
    2,669Gain on sale of business
    
    
    
    
    
    
    (7,483
    )
    
    
    
    
    
    
    
    
    
    
    (7,483
    )Changes in operating assets and liabilities, net
of acquisitions and dispositions:Receivables
    
    
    
    
    
    
    (416
    )
    
    
    (30,377
    )
    
    
    (4,235
    )
    
    
    (35,028
    )Other, net
    
    
    (21
    )
    
    
    2,886
    
    
    
    5,701
    
    
    
    (1,787
    )
    
    
    6,779Accounts payable
    
    
    
    
    
    
    226
    
    
    
    (3,241
    )
    
    
    2,154
    
    
    
    (861
    )Accrued expenses
    
    
    (15
    )
    
    
    4,858
    
    
    
    23,116
    
    
    
    537
    
    
    
    28,496Decommissioning liabilities
    
    
    
    
    
    
    
    
    
    
    (2,303
    )
    
    
    
    
    
    
    (2,303
    )Income taxes
    
    
    4,455
    
    
    
    
    
    
    
    
    
    
    
    1,362
    
    
    
    5,817Net cash provided by (used in) operating activities
    
    
    (67,295
    )
    
    
    (39,508
    )
    
    
    451,947
    
    
    
    39,966
    
    
    
    385,110Cash flows from investing activities:Payments for capital expenditures
    
    
    
    
    
    
    
    
    
    
    (292,982
    )
    
    
    (32,886
    )
    
    
    (325,868
    )Acquisitions of businesses, net of cash acquired
    
    
    
    
    
    
    (78,735
    )
    
    
    
    
    
    
    (889
    )
    
    
    (79,624
    )Cash proceeds from sale of business
    
    
    
    
    
    
    18,100
    
    
    
    
    
    
    
    
    
    
    
    18,100Other
    
    
    
    
    
    
    8,981
    
    
    
    
    
    
    
    
    
    
    
    8,981Intercompany receivables/payables
    
    
    49,414
    
    
    
    107,985
    
    
    
    (153,939
    )
    
    
    (3,460
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    49,414
    
    
    
    56,331
    
    
    
    (446,921
    )
    
    
    (37,235
    )
    
    
    (378,411
    )Cash flows from financing activities:Principal payments on long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (405
    )
    
    
    (405
    )Payment of debt acquisition costs
    
    
    
    
    
    
    (83
    )
    
    
    
    
    
    
    
    
    
    
    (83
    )Proceeds from issuance of stock through employee benefit
plans
    
    
    324
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    324Proceeds from exercise of stock options
    
    
    8,422
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,422Tax benefit from exercise of stock options
    
    
    9,135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,135Net cash provided by (used in) financing activities
    
    
    17,881
    
    
    
    (83
    )
    
    
    
    
    
    
    (405
    )
    
    
    17,393Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    747
    
    
    
    747Net increase in cash
    
    
    
    
    
    
    16,740
    
    
    
    5,026
    
    
    
    3,073
    
    
    
    24,839Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    1,608
    
    
    
    14,775
    
    
    
    22,587
    
    
    
    38,970Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    18,348
    
    
    $
    19,801
    
    
    $
    25,660
    
    
    $
    63,809
 24




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (65,339
    )
    
    $
    (56,331
    )
    
    $
    230,716
    
    
    $
    17,007
    
    
    $
    126,053Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation, depletion, amortization and
accretion
    
    
    
    
    
    
    
    
    
    
    70,511
    
    
    
    6,962
    
    
    
    77,473Deferred income taxes
    
    
    (1,734
    )
    
    
    
    
    
    
    
    
    
    
    649
    
    
    
    (1,085
    )Stock-based compensation expense
    
    
    
    
    
    
    3,746
    
    
    
    
    
    
    
    
    
    
    
    3,746Earnings from equity-method investments, net
    
    
    
    
    
    
    
    
    
    
    (3,834
    )
    
    
    (18
    )
    
    
    (3,852
    )Write-off of debt acquisition costs
    
    
    
    
    
    
    2,817
    
    
    
    
    
    
    
    
    
    
    
    2,817Amortization of debt acquisition costs
    
    
    
    
    
    
    857
    
    
    
    
    
    
    
    
    
    
    
    857Changes in operating assets and liabilities, net
of acquisitions and dispositions:Receivables
    
    
    
    
    
    
    1,103
    
    
    
    (65,317
    )
    
    
    (11,185
    )
    
    
    (75,399
    )Other, net
    
    
    (18
    )
    
    
    (2,692
    )
    
    
    (962
    )
    
    
    547
    
    
    
    (3,125
    )Accounts payable
    
    
    
    
    
    
    (480
    )
    
    
    8,161
    
    
    
    (356
    )
    
    
    7,325Accrued expenses
    
    
    169
    
    
    
    7,326
    
    
    
    22,605
    
    
    
    2,248
    
    
    
    32,348Decommissioning liabilities
    
    
    
    
    
    
    
    
    
    
    (2,255
    )
    
    
    
    
    
    
    (2,255
    )Income taxes
    
    
    63,738
    
    
    
    
    
    
    
    
    
    
    
    404
    
    
    
    64,142Net cash provided by (used in) operating
activities
    
    
    (3,184
    )
    
    
    (43,654
    )
    
    
    259,625
    
    
    
    16,258
    
    
    
    229,045Cash flows from investing activities:Payments for capital expenditures
    
    
    
    
    
    
    
    
    
    
    (154,038
    )
    
    
    (11,026
    )
    
    
    (165,064
    )Acquisitions of businesses, net of cash acquired
    
    
    
    
    
    
    (9,822
    )
    
    
    
    
    
    
    
    
    
    
    (9,822
    )Cash proceeds from sale of business, net of cash sold
    
    
    
    
    
    
    18,343
    
    
    
    
    
    
    
    
    
    
    
    18,343Acquisitions of oil and gas properties
    
    
    
    
    
    
    
    
    
    
    (46,631
    )
    
    
    
    
    
    
    (46,631
    )Cash contributed to equity method investment
    
    
    
    
    
    
    
    
    
    
    (57,781
    )
    
    
    
    
    
    
    (57,781
    )Other
    
    
    
    
    
    
    (2,542
    )
    
    
    
    
    
    
    
    
    
    
    (2,542
    )Intercompany receivables/payables
    
    
    553
    
    
    
    5,806
    
    
    
    (1,207
    )
    
    
    (5,152
    )
    
    
    Net cash provided by (used in) investing
activities
    
    
    553
    
    
    
    11,785
    
    
    
    (259,657
    )
    
    
    (16,178
    )
    
    
    (263,497
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    
    
    
    
    295,467
    
    
    
    
    
    
    
    
    
    
    
    295,467Principal payments on long-term debt
    
    
    
    
    
    
    (200,000
    )
    
    
    
    
    
    
    (405
    )
    
    
    (200,405
    )Debt acquisition costs
    
    
    
    
    
    
    (6,516
    )
    
    
    
    
    
    
    
    
    
    
    (6,516
    )Proceeds from exercise of stock options
    
    
    2,631
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,631Net cash provided by (used in) financing
activities
    
    
    2,631
    
    
    
    88,951
    
    
    
    
    
    
    
    (405
    )
    
    
    91,177Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    700
    
    
    
    700Net increase (decrease) in cash
    
    
    
    
    
    
    57,082
    
    
    
    (32
    )
    
    
    375
    
    
    
    57,425Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    21,414
    
    
    
    19,421
    
    
    
    13,622
    
    
    
    54,457Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    78,496
    
    
    $
    19,389
    
    
    $
    13,997
    
    
    $
    111,882
 25




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##### Table of Contents



Accounting Pronouncements
   26




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Forward-Looking Statements
  Executive Summary
     27




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##### Table of Contents



Comparison of the Results of Operations for the Three Months Ended September 30, 2007 and
2006
   Revenue
    
    
    Gross Margin2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    %
    
    
    2006
    
    
    %
    
    
    ChangeWell Intervention
    
    $
    202,807
    
    
    $
    122,205
    
    
    $
    80,602
    
    
    $
    91,030
    
    
    
    45
    %
    
    $
    53,767
    
    
    
    44
    %
    
    $
    37,263Rental Tools
    
    
    118,918
    
    
    
    98,262
    
    
    
    20,656
    
    
    
    83,776
    
    
    
    70
    %
    
    
    67,476
    
    
    
    69
    %
    
    
    16,300Marine
    
    
    26,323
    
    
    
    36,013
    
    
    
    (9,690
    )
    
    
    12,737
    
    
    
    48
    %
    
    
    21,541
    
    
    
    60
    %
    
    
    (8,804
    )Oil and Gas
    
    
    51,696
    
    
    
    38,208
    
    
    
    13,488
    
    
    
    32,744
    
    
    
    63
    %
    
    
    18,646
    
    
    
    49
    %
    
    
    14,098Less: Oil and Gas
Elim
    
    
    (820
    )
    
    
    (4,171
    )
    
    
    3,351
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    398,924
    
    
    $
    290,517
    
    
    $
    108,407
    
    
    $
    220,287
    
    
    
    55
    %
    
    $
    161,430
    
    
    
    56
    %
    
    $
    58,857
 28




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##### Table of Contents



Well Intervention Segment
  Rental Tools Segment
  Marine Segment
  Oil and Gas Segment
  Depreciation, Depletion, Amortization and Accretion
  29




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##### Table of Contents



General and Administrative Expenses
  Comparison of the Results of Operations for the Nine Months Ended September 30, 2007 and
2006
   Revenue
    
    
    Gross Margin2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    %
    
    
    2006
    
    
    %
    
    
    ChangeWell Intervention
    
    $
    570,280
    
    
    $
    335,953
    
    
    $
    234,327
    
    
    $
    253,547
    
    
    
    44
    %
    
    $
    144,160
    
    
    
    43
    %
    
    $
    109,387Rental Tools
    
    
    358,834
    
    
    
    262,629
    
    
    
    96,205
    
    
    
    249,158
    
    
    
    69
    %
    
    
    179,322
    
    
    
    68
    %
    
    
    69,836Marine
    
    
    97,351
    
    
    
    100,171
    
    
    
    (2,820
    )
    
    
    53,919
    
    
    
    55
    %
    
    
    59,893
    
    
    
    60
    %
    
    
    (5,974
    )Oil and Gas
    
    
    136,889
    
    
    
    87,304
    
    
    
    49,585
    
    
    
    81,047
    
    
    
    59
    %
    
    
    34,835
    
    
    
    40
    %
    
    
    46,212Less: Oil and Gas
Elim
    
    
    (4,753
    )
    
    
    (11,312
    )
    
    
    6,559
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    1,158,601
    
    
    $
    774,745
    
    
    $
    383,856
    
    
    $
    637,671
    
    
    
    55
    %
    
    $
    418,210
    
    
    
    54
    %
    
    $
    219,461
  Well Intervention Segment
  Rental Tools Segment
  30




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##### Table of Contents



Marine Segment
  Oil and Gas Segment
  Depreciation, Depletion, Amortization and Accretion
  General and Administrative Expenses
  Liquidity and Capital Resources
   31




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##### Table of Contents



rd rd
 32




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##### Table of Contents



st st
 th th
  
    
    during any fiscal quarter (and only during such fiscal quarter) commencing after March
31, 2007, if the last reported sale price of our common stock is greater than or equal to
135% of the applicable exchange price of the notes for at least 20 trading days in the
period of 30 consecutive trading days ending on the last trading day of the preceding
fiscal quarter;
    
    prior to December 15, 2011, during the five business-day period after any ten
consecutive trading-day period (the measurement period) in which the trading price of
$1,000 principal amount of notes for each trading day in the measurement period was less
than 95% of the product of the last reported sale price of our common stock and the
exchange rate on such trading day;
    
    if the notes have been called for redemption;
    
    upon the occurrence of specified corporate transactions; or at
    
    any time beginning on September 15, 2026, and ending at the close of business on the
second business day immediately preceding the maturity date of December 15, 2026.
   33




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##### Table of Contents



RemainingThreeMonthsDescription
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    ThereafterLong-term debt, including
estimated interest
payments
    
    $
    14,240
    
    
    $
    28,440
    
    
    $
    28,388
    
    
    $
    28,336
    
    
    $
    27,783
    
    
    $
    27,231
    
    
    $
    818,347Decommissioning
liabilities
    
    
    24,343
    
    
    
    12,547
    
    
    
    2,447
    
    
    
    10,557
    
    
    
    30,334
    
    
    
    6,561
    
    
    
    36,886Operating leases
    
    
    2,520
    
    
    
    9,693
    
    
    
    6,507
    
    
    
    3,679
    
    
    
    2,472
    
    
    
    978
    
    
    
    15,501Vessel construction
    
    
    35,382
    
    
    
    37,973
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    76,485
    
    
    $
    88,653
    
    
    $
    37,342
    
    
    $
    42,572
    
    
    $
    60,589
    
    
    $
    34,770
    
    
    $
    870,734
    New Accounting Pronouncements
   34




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Foreign Currency Exchange Rates
   Interest Rate Risk
  Equity Price Risk
     Commodity Price Risk
  35




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##### Table of Contents



Item 4. Controls and Procedures
   36




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 6. Exhibits
  3.1
    
    Certificate of Incorporation of the Company (incorporated herein by reference to the
Companys Quarterly Report on Form 10-QSB for the quarter ended March 31, 1996).3.2
    
    Certificate of Amendment to the Companys Certificate of Incorporation (incorporated
herein by reference to the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999).3.3
    
    Amended and Restated Bylaws of the Company (incorporated herein by reference to
Exhibit 3.1 to the Companys Form 8-K filed on November 15, 2004).31.1
    
    Officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Officers certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Officers certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 37




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC.Date: November 8, 2007
    By:
    /s/ Robert S. TaylorRobert S. TaylorExecutive Vice President, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer) 38




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##### Table of Contents



3.1
    
    Certificate of Incorporation of the Company (incorporated herein by reference to the
Companys Quarterly Report on Form 10-QSB for the quarter ended March 31, 1996).3.4
    
    Certificate of Amendment to the Companys Certificate of Incorporation (incorporated
herein by reference to the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999).3.5
    
    Amended and Restated Bylaws of the Company (incorporated herein by reference to
Exhibit 3.1 to the Companys Form 8-K filed on November 15, 2004).31.1
    
    Officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Officers certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Officers certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Officers certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 39