##### 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 June 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(State or other jurisdiction of 
incorporation or organization)
    
    75-2379388(I.R.S. Employer
Identification No.)1105 Peters Road 
Harvey, Louisiana(Address of principal executive offices)
    
    70058(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
    
    
    26Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    34PART II OTHER INFORMATIONItem 4. Submission of Matters to a Vote of Security Holders
    
    
    35Item 6. Exhibits
    
    
    35Certification 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
 6/30/07
    
    
    12/31/06(Unaudited)
    
    
    (Audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    36,529
    
    
    $
    38,970Accounts receivable, net
    
    
    346,200
    
    
    
    303,800Income taxes receivable
    
    
    
    
    
    
    2,630Current portion of notes receivable
    
    
    15,254
    
    
    
    14,824Prepaid insurance and other
    
    
    47,139
    
    
    
    59,563Total current assets
    
    
    445,122
    
    
    
    419,787Property, plant and equipment, net
    
    
    958,915
    
    
    
    804,228Goodwill, net
    
    
    482,798
    
    
    
    444,687Notes receivable
    
    
    16,259
    
    
    
    16,137Equity-method investments
    
    
    60,241
    
    
    
    64,603Intangible and other long-term assets, net
    
    
    134,683
    
    
    
    125,036Total assets
    
    $
    2,098,018
    
    
    $
    1,874,478LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    75,456
    
    
    $
    65,451Accrued expenses
    
    
    139,902
    
    
    
    141,684Income taxes payable
    
    
    8,857
    
    
    
    Current portion of decommissioning liabilities
    
    
    36,504
    
    
    
    35,150Current maturities of long-term debt
    
    
    810
    
    
    
    810Total current liabilities
    
    
    261,529
    
    
    
    243,095Deferred income taxes
    
    
    122,311
    
    
    
    112,011Decommissioning liabilities
    
    
    86,787
    
    
    
    87,046Long-term debt
    
    
    746,324
    
    
    
    711,505Other long-term liabilities
    
    
    13,989
    
    
    
    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, 81,459,903 shares at June 30, 2007, and 80,617,337
shares at December 31, 2006
    
    
    81
    
    
    
    81Additional paid in capital
    
    
    431,200
    
    
    
    411,374Accumulated other comprehensive income, net
    
    
    12,746
    
    
    
    10,288Retained earnings
    
    
    423,051
    
    
    
    288,945Total stockholders equity
    
    
    867,078
    
    
    
    710,688Total liabilities and stockholders equity
    
    $
    2,098,018
    
    
    $
    1,874,478
  3




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Three Months
    
    
    Six Months2007
    
    
    2006
    
    
    2007
    
    
    2006Oilfield service and rental revenues
    
    $
    348,589
    
    
    $
    228,134
    
    
    $
    674,484
    
    
    $
    435,132Oil and gas revenues
    
    
    48,164
    
    
    
    33,625
    
    
    
    85,193
    
    
    
    49,096Total revenues
    
    
    396,753
    
    
    
    261,759
    
    
    
    759,677
    
    
    
    484,228Cost of oilfield services and rentals
    
    
    162,973
    
    
    
    101,286
    
    
    
    305,402
    
    
    
    194,541Cost of oil and gas sales
    
    
    18,833
    
    
    
    18,702
    
    
    
    36,891
    
    
    
    32,907Total cost of services, rentals and sales
    
    
    181,806
    
    
    
    119,988
    
    
    
    342,293
    
    
    
    227,448Depreciation, depletion, amortization and accretion
    
    
    45,242
    
    
    
    25,727
    
    
    
    84,086
    
    
    
    48,642General and administrative expenses
    
    
    53,824
    
    
    
    40,088
    
    
    
    104,683
    
    
    
    77,739Income from operations
    
    
    115,881
    
    
    
    75,956
    
    
    
    228,615
    
    
    
    130,399Other income (expense):Interest expense, net
    
    
    (8,463
    )
    
    
    (5,556
    )
    
    
    (16,741
    )
    
    
    (10,400
    )Interest income
    
    
    929
    
    
    
    1,559
    
    
    
    1,508
    
    
    
    2,222Loss on early extinguishment of debt
    
    
    
    
    
    
    (12,596
    )
    
    
    
    
    
    
    (12,596
    )Earnings (losses) from equity-method investments, net
    
    
    1,164
    
    
    
    1,148
    
    
    
    (3,842
    )
    
    
    1,148Income before income taxes
    
    
    109,511
    
    
    
    60,511
    
    
    
    209,540
    
    
    
    110,773Income taxes
    
    
    39,424
    
    
    
    21,784
    
    
    
    75,434
    
    
    
    39,878Net income
    
    $
    70,087
    
    
    $
    38,727
    
    
    $
    134,106
    
    
    $
    70,895Basic earnings per share
    
    $
    0.86
    
    
    $
    0.49
    
    
    $
    1.66
    
    
    $
    0.89Diluted earnings per share
    
    $
    0.85
    
    
    $
    0.48
    
    
    $
    1.63
    
    
    $
    0.87Weighted average common shares used
in computing earnings per share:Basic
    
    
    81,047
    
    
    
    79,798
    
    
    
    80,841
    
    
    
    79,719Incremental common shares from stock options
    
    
    1,457
    
    
    
    1,490
    
    
    
    1,480
    
    
    
    1,422Incremental common shares from restricted
stock units
    
    
    58
    
    
    
    36
    
    
    
    58
    
    
    
    36Diluted
    
    
    82,562
    
    
    
    81,324
    
    
    
    82,379
    
    
    
    81,177
  4




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    134,106
    
    
    $
    70,895Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation, depletion, amortization and accretion
    
    
    84,086
    
    
    
    48,642Deferred income taxes
    
    
    1,860
    
    
    
    (4,714
    )Stock-based and performance share unit compensation expense
    
    
    6,160
    
    
    
    1,316(Earnings) losses from equity-method investments, net
    
    
    3,842
    
    
    
    (1,148
    )Write-off of debt acquisition costs
    
    
    
    
    
    
    2,817Amortization of debt acquisition costs and note discount
    
    
    1,771
    
    
    
    510Changes in operating assets and liabilities, net of acquisitions
and dispositions:Receivables
    
    
    (37,274
    )
    
    
    (40,222
    )Other, net
    
    
    14,193
    
    
    
    (4,140
    )Accounts payable
    
    
    3,327
    
    
    
    4,408Accrued expenses
    
    
    (7,190
    )
    
    
    6,115Decommissioning liabilities
    
    
    (1,224
    )
    
    
    (2,255
    )Income taxes
    
    
    10,390
    
    
    
    40,461Net cash provided by operating activities
    
    
    214,047
    
    
    
    122,685Cash flows from investing activities:Payments for capital expenditures
    
    
    (199,629
    )
    
    
    (82,048
    )Acquisitions of oil and gas properties, net of cash acquired
    
    
    
    
    
    
    (46,631
    )Acquisitions of businesses, net of cash acquired
    
    
    (79,624
    )
    
    
    (9,822
    )Cash contributed to equity-method investment
    
    
    
    
    
    
    (30,441
    )Cash proceeds from sale of business, net of cash sold
    
    
    1,750
    
    
    
    18,343Other
    
    
    9,189
    
    
    
    (2,412
    )Net cash used in investing activities
    
    
    (268,314
    )
    
    
    (153,011
    )Cash flows from financing activities:Net borrowings from revolving credit facility
    
    
    35,000
    
    
    
    Proceeds from long-term debt
    
    
    
    
    
    
    295,467Principal payments on long-term debt
    
    
    (405
    )
    
    
    (200,405
    )Payment of debt acquisition costs
    
    
    (62
    )
    
    
    (6,203
    )Proceeds from exercise of stock options
    
    
    8,017
    
    
    
    2,393Tax benefit from exercise of stock options
    
    
    8,943
    
    
    
    Net cash provided by financing activities
    
    
    51,493
    
    
    
    91,252Effect of exchange rate changes on cash
    
    
    333
    
    
    
    463Net increase (decrease) in cash
    
    
    (2,441
    )
    
    
    61,389Cash and cash equivalents at beginning of period
    
    
    38,970
    
    
    
    54,457Cash and cash equivalents at end of period
    
    $
    36,529
    
    
    $
    115,846
  5




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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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##### Table of Contents



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




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##### Table of Contents



Segment Information
 Business Segments
  8




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##### Table of Contents



Three Months Ended June 30, 2007
 Oil & GasWell
    
    Rental
    
    
    
    
    
    
    
    
    
    Eliminations
    
    ConsolidatedIntervention
    
    Tools
    
    Marine
    
    Oil & Gas
    
    & Unallocated
    
    TotalRevenues
    
    $
    190,542
    
    
    $
    123,736
    
    
    $
    35,162
    
    
    $
    48,164
    
    
    $
    (851
    )
    
    $
    396,753Cost of services, rentals and sales
    
    
    109,449
    
    
    
    39,018
    
    
    
    15,357
    
    
    
    18,833
    
    
    
    (851
    )
    
    
    181,806Depreciation, depletion,
amortization and accretion
    
    
    11,255
    
    
    
    16,606
    
    
    
    2,205
    
    
    
    15,176
    
    
    
    
    
    
    
    45,242General and administrative expenses
    
    
    27,727
    
    
    
    21,472
    
    
    
    2,388
    
    
    
    2,237
    
    
    
    
    
    
    
    53,824Income from operations
    
    
    42,111
    
    
    
    46,640
    
    
    
    15,212
    
    
    
    11,918
    
    
    
    
    
    
    
    115,881Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,463
    )
    
    
    (8,463
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    322
    
    
    
    607
    
    
    
    929Earnings from equity-method investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,164
    
    
    
    
    
    
    
    1,164Income (loss) before income taxes
    
    $
    42,111
    
    
    $
    46,640
    
    
    $
    15,212
    
    
    $
    13,404
    
    
    $
    (7,856
    )
    
    $
    109,511
 Three Months Ended June 30, 2006
 Oil & GasWell
    
    Rental
    
    
    
    
    
    
    
    
    
    Eliminations
    
    ConsolidatedIntervention
    
    Tools
    
    Marine
    
    Oil & Gas
    
    & Unallocated
    
    TotalRevenues
    
    $
    111,675
    
    
    $
    86,593
    
    
    $
    33,951
    
    
    $
    33,625
    
    
    $
    (4,085
    )
    
    $
    261,759Cost of services, rentals and sales
    
    
    63,355
    
    
    
    28,223
    
    
    
    13,793
    
    
    
    18,702
    
    
    
    (4,085
    )
    
    
    119,988Depreciation, depletion,
amortization and accretion
    
    
    4,329
    
    
    
    12,482
    
    
    
    2,133
    
    
    
    6,783
    
    
    
    
    
    
    
    25,727General and administrative expenses
    
    
    18,270
    
    
    
    16,483
    
    
    
    2,687
    
    
    
    2,648
    
    
    
    
    
    
    
    40,088Income from operations
    
    
    25,721
    
    
    
    29,405
    
    
    
    15,338
    
    
    
    5,492
    
    
    
    
    
    
    
    75,956Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,556
    )
    
    
    (5,556
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302
    
    
    
    1,257
    
    
    
    1,559Loss on early extinguishment
of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,596
    )
    
    
    (12,596
    )Earnings
from equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,148
    
    
    
    
    
    
    
    1,148Income (loss) before income taxes
    
    $
    25,721
    
    
    $
    29,405
    
    
    $
    15,338
    
    
    $
    6,942
    
    
    $
    (16,895
    )
    
    $
    60,511
 9




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##### Table of Contents



Six Months Ended June 30, 2007
 Oil & GasWell
    
    Rental
    
    
    
    
    
    
    
    
    
    Eliminations
    
    ConsolidatedIntervention
    
    Tools
    
    Marine
    
    Oil & Gas
    
    & Unallocated
    
    TotalRevenues
    
    $
    367,473
    
    
    $
    239,916
    
    
    $
    71,028
    
    
    $
    85,193
    
    
    $
    (3,933
    )
    
    $
    759,677Cost of services, rentals and sales
    
    
    204,956
    
    
    
    74,534
    
    
    
    29,846
    
    
    
    36,890
    
    
    
    (3,933
    )
    
    
    342,293Depreciation, depletion,
amortization and accretion
    
    
    21,613
    
    
    
    31,856
    
    
    
    4,393
    
    
    
    26,224
    
    
    
    
    
    
    
    84,086General and administrative expenses
    
    
    52,728
    
    
    
    41,810
    
    
    
    5,116
    
    
    
    5,029
    
    
    
    
    
    
    
    104,683Income from operations
    
    
    88,176
    
    
    
    91,716
    
    
    
    31,673
    
    
    
    17,050
    
    
    
    
    
    
    
    228,615Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,741
    )
    
    
    (16,741
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    613
    
    
    
    895
    
    
    
    1,508Losses from equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,842
    )
    
    
    
    
    
    
    (3,842
    )Income (loss) before income taxes
    
    $
    88,176
    
    
    $
    91,716
    
    
    $
    31,673
    
    
    $
    13,821
    
    
    $
    (15,846
    )
    
    $
    209,540
 Six Months Ended June 30, 2006
 Oil & GasWell
    
    Rental
    
    
    
    
    
    
    
    
    
    Eliminations
    
    ConsolidatedIntervention
    
    Tools
    
    Marine
    
    Oil & Gas
    
    & Unallocated
    
    TotalRevenues
    
    $
    213,748
    
    
    $
    164,367
    
    
    $
    64,158
    
    
    $
    49,096
    
    
    $
    (7,141
    )
    
    $
    484,228Cost of services, rentals and sales
    
    
    123,355
    
    
    
    52,521
    
    
    
    25,806
    
    
    
    32,907
    
    
    
    (7,141
    )
    
    
    227,448Depreciation, depletion,
amortization and accretion
    
    
    8,864
    
    
    
    24,195
    
    
    
    4,285
    
    
    
    11,298
    
    
    
    
    
    
    
    48,642General and administrative expenses
    
    
    36,138
    
    
    
    31,749
    
    
    
    5,585
    
    
    
    4,267
    
    
    
    
    
    
    
    77,739Income from operations
    
    
    45,391
    
    
    
    55,902
    
    
    
    28,482
    
    
    
    624
    
    
    
    
    
    
    
    130,399Interest expense, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,400
    )
    
    
    (10,400
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    602
    
    
    
    1,620
    
    
    
    2,222Loss on early extinguishment
of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,596
    )
    
    
    (12,596
    )Earnings from equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,148
    
    
    
    
    
    
    
    1,148Income (loss) before income taxes
    
    $
    45,391
    
    
    $
    55,902
    
    
    $
    28,482
    
    
    $
    2,374
    
    
    $
    (21,376
    )
    
    $
    110,773
 Identifiable Assets
 Well
    
    Rental
    
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedIntervention
    
    Tools
    
    Marine
    
    Oil & Gas
    
    Unallocated
    
    TotalJune 30, 2007
    
    $
    927,822
    
    
    $
    630,816
    
    
    $
    192,966
    
    
    $
    317,769
    
    
    $
    28,645
    
    
    $
    2,098,018December 31, 2006
    
    $
    840,130
    
    
    $
    501,156
    
    
    $
    187,597
    
    
    $
    318,297
    
    
    $
    27,298
    
    
    $
    1,874,478
 Geographic Segments
  10




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##### Table of Contents



Revenues:
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006United States
    
    $
    319,647
    
    
    $
    225,527
    
    
    $
    613,668
    
    
    $
    414,532Other Countries
    
    
    77,106
    
    
    
    36,232
    
    
    
    146,009
    
    
    
    69,696Total
    
    $
    396,753
    
    
    $
    261,759
    
    
    $
    759,677
    
    
    $
    484,228
 Long-Lived Assets:
 June 30,
    
    
    December 31,2007
    
    
    2006United States
    
    $
    808,818
    
    
    $
    715,899Other Countries
    
    
    150,097
    
    
    
    88,329Total
    
    $
    958,915
    
    
    $
    804,228
 Construction Contract
  Equity-Method Investments
    11




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##### Table of Contents



Balance Sheet
 June 30,
    
    
    December 31,2007
    
    
    2006Current assets
    
    $
    143,125
    
    
    $
    176,860Property, plant and equipment, net
    
    
    478,796
    
    
    
    522,941Other assets
    
    
    9,605
    
    
    
    23,135Total assets
    
    $
    631,526
    
    
    $
    722,936Current liabilities
    
    $
    26,747
    
    
    $
    27,922Decommissioning and other long-term
liabilities
    
    
    92,287
    
    
    
    89,610Long-term debt
    
    
    360,974
    
    
    
    432,697Total liabilities
    
    
    480,008
    
    
    
    550,229Accumulated other comprehensive income, net
    
    
    2,291
    
    
    
    13,861Partners capital
    
    
    149,227
    
    
    
    158,846Total capital
    
    
    151,518
    
    
    
    172,707Total liabilities and partners capital
    
    $
    631,526
    
    
    $
    722,936
 Income Statement
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    54,554
    
    
    $
    
    
    
    $
    109,145
    
    
    $
    Lease operating expenses
    
    
    (14,105
    )
    
    
    
    
    
    
    (28,164
    )
    
    
    Depreciation, depletion, amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    and accretion
    
    
    (27,551
    )
    
    
    
    
    
    
    (57,763
    )
    
    
    General and administrative expenses
    
    
    (2,297
    )
    
    
    (142
    )
    
    
    (6,737
    )
    
    
    (142
    )Interest expense
    
    
    (10,609
    )
    
    
    
    
    
    
    (21,997
    )
    
    
    Interest income
    
    
    979
    
    
    
    
    
    
    
    2,241
    
    
    
    Gain (loss) on derivatives
    
    
    1,932
    
    
    
    2,973
    
    
    
    (6,345
    )
    
    
    2,973Net income (loss)
    
    $
    2,903
    
    
    $
    2,831
    
    
    $
    (9,620
    )
    
    $
    2,831
  Debt
  12




---



##### 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.
  13




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##### Table of Contents



Hedging Activities
  Decommissioning Liabilities
   14




---



##### Table of Contents



Six Months EndedJune 30,2007
    
    
    2006Total decommissioning liabilities at December 31,
2006 and 2005, respectively
    
    $
    122,196
    
    
    $
    121,909Liabilities acquired and incurred
    
    
    
    
    
    
    3,554Liabilities settled
    
    
    (1,224
    )
    
    
    (2,255
    )Accretion
    
    
    2,049
    
    
    
    2,419Revision in estimated liabilities
    
    
    270
    
    
    
    (5,064
    )Total decommissioning liabilities at June 30,
2007 and 2006, respectively
    
    
    123,291
    
    
    
    120,563Current portion of decommissioning liabilities at June 30,
2007 and 2006, respectively
    
    
    36,504
    
    
    
    14,081Long-term portion of decommissioning liabilities at June 30,
2007 and 2006, respectively
    
    $
    86,787
    
    
    $
    106,482
 Notes Receivable
  Other Comprehensive Income
  Three Months EndedJune 30,2007
    
    
    2006Accumulated other comprehensive income (loss), March 31,
2007 and 2006, respectively
    
    $
    9,846
    
    
    $
    (3,353
    )Other comprehensive income:Other comprehensive income, net of taxHedging activities:Adjustment for settled contracts, net of tax of $1,736 in 2006
    
    
    
    
    
    
    2,956Changes in fair value of outstanding hedging positions,
net of tax of ($455) in 2006
    
    
    
    
    
    
    (776
    )Foreign currency translation adjustment
    
    
    2,900
    
    
    
    2,277Total other comprehensive income
    
    
    2,900
    
    
    
    4,457Accumulated other comprehensive income, June 30,
2007 and 2006, respectively
    
    $
    12,746
    
    
    $
    1,104
 15




---



##### Table of Contents



Six Months EndedJune 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 $3,059 in 2006
    
    
    
    
    
    
    5,209Changes in fair value of outstanding hedging positions,
net of tax of ($1,160) in 2006
    
    
    
    
    
    
    (1,975
    )Foreign currency translation adjustment
    
    
    2,458
    
    
    
    2,786Total other comprehensive income
    
    
    2,458
    
    
    
    6,020Accumulated other comprehensive income, June 30,
2007 and 2006, respectively
    
    $
    12,746
    
    
    $
    1,104
 Income Taxes
      Commitments and Contingencies
  Financial Information Related to Guarantor Subsidiaries
  16




---



##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    365
    
    
    $
    12,350
    
    
    $
    23,814
    
    
    $
    
    
    
    $
    36,529Accounts receivable, net
    
    
    
    
    
    
    4,919
    
    
    
    309,204
    
    
    
    46,981
    
    
    
    (14,904
    )
    
    
    346,200Current portion of notes receivable
    
    
    
    
    
    
    
    
    
    
    15,254
    
    
    
    
    
    
    
    
    
    
    
    15,254Prepaid insurance and other
    
    
    42
    
    
    
    5,615
    
    
    
    36,400
    
    
    
    5,082
    
    
    
    
    
    
    
    47,139Total current assets
    
    
    42
    
    
    
    10,899
    
    
    
    373,208
    
    
    
    75,877
    
    
    
    (14,904
    )
    
    
    445,122Property, plant and equipment, net
    
    
    
    
    
    
    2,330
    
    
    
    850,780
    
    
    
    105,805
    
    
    
    
    
    
    
    958,915Goodwill, net
    
    
    
    
    
    
    
    
    
    
    439,284
    
    
    
    43,514
    
    
    
    
    
    
    
    482,798Notes receivable
    
    
    
    
    
    
    
    
    
    
    16,259
    
    
    
    
    
    
    
    
    
    
    
    16,259Equity-method investments
    
    
    124,271
    
    
    
    550,925
    
    
    
    59,260
    
    
    
    
    
    
    
    (674,215
    )
    
    
    60,241Intangible and other long-term assets, net
    
    
    
    
    
    
    25,332
    
    
    
    108,389
    
    
    
    962
    
    
    
    
    
    
    
    134,683Total assets
    
    $
    124,313
    
    
    $
    589,486
    
    
    $
    1,847,180
    
    
    $
    226,158
    
    
    $
    (689,119
    )
    
    $
    2,098,018LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    
    
    
    $
    1,386
    
    
    $
    65,396
    
    
    $
    23,578
    
    
    $
    (14,904
    )
    
    $
    75,456Accrued expenses
    
    
    631
    
    
    
    26,293
    
    
    
    103,538
    
    
    
    9,440
    
    
    
    
    
    
    
    139,902Income taxes payable
    
    
    2,443
    
    
    
    
    
    
    
    
    
    
    
    6,414
    
    
    
    
    
    
    
    8,857Current portion of decommissioning liabilities
    
    
    
    
    
    
    
    
    
    
    36,504
    
    
    
    
    
    
    
    
    
    
    
    36,504Current maturities of long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    810
    
    
    
    
    
    
    
    810Total current liabilities
    
    
    3,074
    
    
    
    27,679
    
    
    
    205,438
    
    
    
    40,242
    
    
    
    (14,904
    )
    
    
    261,529Deferred income taxes
    
    
    114,362
    
    
    
    
    
    
    
    
    
    
    
    7,949
    
    
    
    
    
    
    
    122,311Decommissioning liabilities
    
    
    
    
    
    
    
    
    
    
    86,787
    
    
    
    
    
    
    
    
    
    
    
    86,787Long-term debt
    
    
    
    
    
    
    730,943
    
    
    
    
    
    
    
    15,381
    
    
    
    
    
    
    
    746,324Intercompany payables/(receivables)
    
    
    (191,949
    )
    
    
    (49,294
    )
    
    
    721,871
    
    
    
    37,320
    
    
    
    (517,948
    )
    
    
    Other long-term liabilities
    
    
    6,197
    
    
    
    7,413
    
    
    
    
    
    
    
    379
    
    
    
    
    
    
    
    13,989Stockholders equity:Preferred stock of $.01 par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock of $.001 par value
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    101
    
    
    
    (101
    )
    
    
    81Additional paid in capital
    
    
    431,200
    
    
    
    127,173
    
    
    
    
    
    
    
    28,993
    
    
    
    (156,166
    )
    
    
    431,200Accumulated other comprehensive
income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,746
    
    
    
    
    
    
    
    12,746Retained earnings (deficit)
    
    
    (238,652
    )
    
    
    (254,428
    )
    
    
    833,084
    
    
    
    83,047
    
    
    
    
    
    
    
    423,051Total stockholders equity
    
    
    192,629
    
    
    
    (127,255
    )
    
    
    833,084
    
    
    
    124,887
    
    
    
    (156,267
    )
    
    
    867,078Total liabilities and stockholders equity
    
    $
    124,313
    
    
    $
    589,486
    
    
    $
    1,847,180
    
    
    $
    226,158
    
    
    $
    (689,119
    )
    
    $
    2,098,018
 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
    
    $
    
    
    
    $
    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 insurance 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
    
    
    
    
    
    
    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 (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
 18




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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
    
    $
    
    
    
    $
    
    
    
    $
    313,436
    
    
    $
    45,199
    
    
    $
    (10,046
    )
    
    $
    348,589Oil and gas revenues
    
    
    
    
    
    
    
    
    
    
    48,164
    
    
    
    
    
    
    
    
    
    
    
    48,164Total revenues
    
    
    
    
    
    
    
    
    
    
    361,600
    
    
    
    45,199
    
    
    
    (10,046
    )
    
    
    396,753Cost of oilfield services and rentals
    
    
    
    
    
    
    
    
    
    
    150,708
    
    
    
    22,311
    
    
    
    (10,046
    )
    
    
    162,973Cost of oil and gas sales
    
    
    
    
    
    
    
    
    
    
    18,833
    
    
    
    
    
    
    
    
    
    
    
    18,833Total cost of services, rentals and sales
    
    
    
    
    
    
    
    
    
    
    169,541
    
    
    
    22,311
    
    
    
    (10,046
    )
    
    
    181,806Depreciation, depletion, amortization and
accretion
    
    
    
    
    
    
    146
    
    
    
    41,294
    
    
    
    3,802
    
    
    
    
    
    
    
    45,242General and administrative expenses
    
    
    463
    
    
    
    8,537
    
    
    
    38,980
    
    
    
    5,844
    
    
    
    
    
    
    
    53,824Income (loss) from operations
    
    
    (463
    )
    
    
    (8,683
    )
    
    
    111,785
    
    
    
    13,242
    
    
    
    
    
    
    
    115,881Other income (expense):Interest expense, net
    
    
    
    
    
    
    (7,930
    )
    
    
    (264
    )
    
    
    (269
    )
    
    
    
    
    
    
    (8,463
    )Interest income
    
    
    
    
    
    
    306
    
    
    
    427
    
    
    
    196
    
    
    
    
    
    
    
    929Earnings from equity-method
investments, net
    
    
    
    
    
    
    3
    
    
    
    1,161
    
    
    
    
    
    
    
    
    
    
    
    1,164Income (loss) before income taxes
    
    
    (463
    )
    
    
    (16,304
    )
    
    
    113,109
    
    
    
    13,169
    
    
    
    
    
    
    
    109,511Income taxes
    
    
    35,096
    
    
    
    
    
    
    
    
    
    
    
    4,328
    
    
    
    
    
    
    
    39,424Net income (loss)
    
    $
    (35,559
    )
    
    $
    (16,304
    )
    
    $
    113,109
    
    
    $
    8,841
    
    
    $
    
    
    
    $
    70,087
 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
    
    $
    
    
    
    $
    
    
    
    $
    205,929
    
    
    $
    28,116
    
    
    $
    (5,911
    )
    
    $
    228,134Oil and gas revenues
    
    
    
    
    
    
    
    
    
    
    33,625
    
    
    
    
    
    
    
    
    
    
    
    33,625Total revenues
    
    
    
    
    
    
    
    
    
    
    239,554
    
    
    
    28,116
    
    
    
    (5,911
    )
    
    
    261,759Cost of oilfield services and rentals
    
    
    
    
    
    
    
    
    
    
    91,409
    
    
    
    15,788
    
    
    
    (5,911
    )
    
    
    101,286Cost of oil and gas sales
    
    
    
    
    
    
    
    
    
    
    18,702
    
    
    
    
    
    
    
    
    
    
    
    18,702Total cost of services, rentals and sales
    
    
    
    
    
    
    
    
    
    
    110,111
    
    
    
    15,788
    
    
    
    (5,911
    )
    
    
    119,988Depreciation, depletion, amortization and
accretion
    
    
    
    
    
    
    
    
    
    
    23,707
    
    
    
    2,020
    
    
    
    
    
    
    
    25,727General and administrative expenses
    
    
    156
    
    
    
    9,886
    
    
    
    26,912
    
    
    
    3,134
    
    
    
    
    
    
    
    40,088Income (loss) from operations
    
    
    (156
    )
    
    
    (9,886
    )
    
    
    78,824
    
    
    
    7,174
    
    
    
    
    
    
    
    75,956Other income (expense):Interest expense, net
    
    
    
    
    
    
    (5,119
    )
    
    
    (156
    )
    
    
    (281
    )
    
    
    
    
    
    
    (5,556
    )Interest income
    
    
    
    
    
    
    1,072
    
    
    
    425
    
    
    
    62
    
    
    
    
    
    
    
    1,559Loss on early extinguishment of debt
    
    
    
    
    
    
    (12,596
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,596
    )Earnings in equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    1,133
    
    
    
    15
    
    
    
    
    
    
    
    1,148Income (loss) before income taxes
    
    
    (156
    )
    
    
    (26,529
    )
    
    
    80,226
    
    
    
    6,970
    
    
    
    
    
    
    
    60,511Income taxes
    
    
    19,959
    
    
    
    
    
    
    
    
    
    
    
    1,825
    
    
    
    
    
    
    
    21,784Net income (loss)
    
    $
    (20,115
    )
    
    $
    (26,529
    )
    
    $
    80,226
    
    
    $
    5,145
    
    
    $
    
    
    
    $
    38,727
 20




---



##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOilfield service and rental revenues
    
    $
    
    
    
    $
    
    
    
    $
    603,407
    
    
    $
    88,670
    
    
    $
    (17,593
    )
    
    $
    674,484Oil and gas revenues
    
    
    
    
    
    
    
    
    
    
    85,193
    
    
    
    
    
    
    
    
    
    
    
    85,193Total revenues
    
    
    
    
    
    
    
    
    
    
    688,600
    
    
    
    88,670
    
    
    
    (17,593
    )
    
    
    759,677Cost of oilfield services and rentals
    
    
    
    
    
    
    
    
    
    
    281,231
    
    
    
    41,764
    
    
    
    (17,593
    )
    
    
    305,402Cost of oil and gas sales
    
    
    
    
    
    
    
    
    
    
    36,891
    
    
    
    
    
    
    
    
    
    
    
    36,891Total cost of services, rentals and sales
    
    
    
    
    
    
    
    
    
    
    318,122
    
    
    
    41,764
    
    
    
    (17,593
    )
    
    
    342,293Depreciation, depletion, amortization and
accretion
    
    
    
    
    
    
    291
    
    
    
    76,393
    
    
    
    7,402
    
    
    
    
    
    
    
    84,086General and administrative expenses
    
    
    596
    
    
    
    21,213
    
    
    
    72,763
    
    
    
    10,111
    
    
    
    
    
    
    
    104,683Income (loss) from operations
    
    
    (596
    )
    
    
    (21,504
    )
    
    
    221,322
    
    
    
    29,393
    
    
    
    
    
    
    
    228,615Other income (expense):Interest expense, net
    
    
    
    
    
    
    (15,744
    )
    
    
    (459
    )
    
    
    (538
    )
    
    
    
    
    
    
    (16,741
    )Interest income
    
    
    
    
    
    
    309
    
    
    
    863
    
    
    
    336
    
    
    
    
    
    
    
    1,508Earnings (losses) from equity-method
investments, net
    
    
    
    
    
    
    6
    
    
    
    (3,848
    )
    
    
    
    
    
    
    
    
    
    
    (3,842
    )Income (loss) before income taxes
    
    
    (596
    )
    
    
    (36,933
    )
    
    
    217,878
    
    
    
    29,191
    
    
    
    
    
    
    
    209,540Income taxes
    
    
    66,971
    
    
    
    
    
    
    
    
    
    
    
    8,463
    
    
    
    
    
    
    
    75,434Net income (loss)
    
    $
    (67,567
    )
    
    $
    (36,933
    )
    
    $
    217,878
    
    
    $
    20,728
    
    
    $
    
    
    
    $
    134,106
 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
    
    $
    
    
    
    $
    
    
    
    $
    396,150
    
    
    $
    49,889
    
    
    $
    (10,907
    )
    
    $
    435,132Oil and gas revenues
    
    
    
    
    
    
    
    
    
    
    49,096
    
    
    
    
    
    
    
    
    
    
    
    49,096Total revenues
    
    
    
    
    
    
    
    
    
    
    445,246
    
    
    
    49,889
    
    
    
    (10,907
    )
    
    
    484,228Cost of oilfield services and rentals
    
    
    
    
    
    
    
    
    
    
    178,073
    
    
    
    27,375
    
    
    
    (10,907
    )
    
    
    194,541Cost of oil and gas sales
    
    
    
    
    
    
    
    
    
    
    32,907
    
    
    
    
    
    
    
    
    
    
    
    32,907Total cost of services, rentals and sales
    
    
    
    
    
    
    
    
    
    
    210,980
    
    
    
    27,375
    
    
    
    (10,907
    )
    
    
    227,448Depreciation, depletion, amortization and
accretion
    
    
    
    
    
    
    
    
    
    
    44,480
    
    
    
    4,162
    
    
    
    
    
    
    
    48,642General and administrative expenses
    
    
    262
    
    
    
    17,244
    
    
    
    54,071
    
    
    
    6,162
    
    
    
    
    
    
    
    77,739Income (loss) from operations
    
    
    (262
    )
    
    
    (17,244
    )
    
    
    135,715
    
    
    
    12,190
    
    
    
    
    
    
    
    130,399Other income (expense):Interest expense, net
    
    
    
    
    
    
    (9,667
    )
    
    
    (166
    )
    
    
    (567
    )
    
    
    
    
    
    
    (10,400
    )Interest income
    
    
    
    
    
    
    1,257
    
    
    
    837
    
    
    
    128
    
    
    
    
    
    
    
    2,222Loss on early extinguishment of debt
    
    
    
    
    
    
    (12,596
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,596
    )Earnings in equity-method
investments, net
    
    
    
    
    
    
    
    
    
    
    1,133
    
    
    
    15
    
    
    
    
    
    
    
    1,148Income (loss) before income taxes
    
    
    (262
    )
    
    
    (38,250
    )
    
    
    137,519
    
    
    
    11,766
    
    
    
    
    
    
    
    110,773Income taxes
    
    
    36,719
    
    
    
    
    
    
    
    
    
    
    
    3,159
    
    
    
    
    
    
    
    39,878Net income (loss)
    
    $
    (36,981
    )
    
    $
    (38,250
    )
    
    $
    137,519
    
    
    $
    8,607
    
    
    $
    
    
    
    $
    70,895
 22




---



##### Table of Contents



SUPERIOR ENERGY SERVICES, INC. AND SUBSIDIARIES
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Issuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (67,567
    )
    
    $
    (36,933
    )
    
    $
    217,878
    
    
    $
    20,728
    
    
    $
    134,106Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation, depletion, amortization and accretion
    
    
    
    
    
    
    291
    
    
    
    76,393
    
    
    
    7,402
    
    
    
    84,086Deferred income taxes
    
    
    1,550
    
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    1,860Stock-based and performance share unit compensation
expense
    
    
    
    
    
    
    6,160
    
    
    
    
    
    
    
    
    
    
    
    6,160(Earnings) losses from equity-method investments
    
    
    
    
    
    
    (6
    )
    
    
    3,848
    
    
    
    
    
    
    
    3,842Amortization of debt acquisition costs and note
discount
    
    
    
    
    
    
    1,771
    
    
    
    
    
    
    
    
    
    
    
    1,771Changes in operating assets and liabilities, net
of acquisitions:Receivables
    
    
    
    
    
    
    (2,142
    )
    
    
    (32,095
    )
    
    
    (3,037
    )
    
    
    (37,274
    )Other, net
    
    
    (43
    )
    
    
    3,118
    
    
    
    12,625
    
    
    
    (1,507
    )
    
    
    14,193Accounts payable
    
    
    
    
    
    
    338
    
    
    
    3,547
    
    
    
    (558
    )
    
    
    3,327Accrued expenses
    
    
    123
    
    
    
    (4,837
    )
    
    
    (2,352
    )
    
    
    (124
    )
    
    
    (7,190
    )Decommissioning liabilities
    
    
    
    
    
    
    
    
    
    
    (1,224
    )
    
    
    
    
    
    
    (1,224
    )Income taxes
    
    
    9,010
    
    
    
    
    
    
    
    
    
    
    
    1,380
    
    
    
    10,390Net cash provided by (used in) operating activities
    
    
    (56,927
    )
    
    
    (32,240
    )
    
    
    278,620
    
    
    
    24,594
    
    
    
    214,047Cash flows from investing activities:Payments for capital expenditures
    
    
    
    
    
    
    
    
    
    
    (184,390
    )
    
    
    (15,239
    )
    
    
    (199,629
    )Acquisitions of businesses, net of cash acquired
    
    
    
    
    
    
    (78,735
    )
    
    
    
    
    
    
    (889
    )
    
    
    (79,624
    )Cash proceeds from sale of business
    
    
    
    
    
    
    1,750
    
    
    
    
    
    
    
    
    
    
    
    1,750Other
    
    
    
    
    
    
    9,189
    
    
    
    
    
    
    
    
    
    
    
    9,189Intercompany receivables/payables
    
    
    39,967
    
    
    
    63,855
    
    
    
    (96,655
    )
    
    
    (7,167
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    39,967
    
    
    
    (3,941
    )
    
    
    (281,045
    )
    
    
    (23,295
    )
    
    
    (268,314
    )Cash flows from financing activities:Net borrowings from revolving credit facility
    
    
    
    
    
    
    35,000
    
    
    
    
    
    
    
    
    
    
    
    35,000Principal payments on long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (405
    )
    
    
    (405
    )Payment of debt acquisition costs
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    
    
    
    
    (62
    )Proceeds from exercise of stock options
    
    
    8,017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,017Tax benefit from exercise of stock options
    
    
    8,943
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,943Net cash provided by (used in) financing activities
    
    
    16,960
    
    
    
    34,938
    
    
    
    
    
    
    
    (405
    )
    
    
    51,493Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333
    
    
    
    333Net increase (decrease) in cash
    
    
    
    
    
    
    (1,243
    )
    
    
    (2,425
    )
    
    
    1,227
    
    
    
    (2,441
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    1,608
    
    
    
    14,775
    
    
    
    22,587
    
    
    
    38,970Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    365
    
    
    $
    12,350
    
    
    $
    23,814
    
    
    $
    36,529
 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)
    
    $
    (36,981
    )
    
    $
    (38,250
    )
    
    $
    137,519
    
    
    $
    8,607
    
    
    $
    70,895Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation, depletion, amortization and accretion
    
    
    
    
    
    
    
    
    
    
    44,480
    
    
    
    4,162
    
    
    
    48,642Deferred income taxes
    
    
    (4,576
    )
    
    
    
    
    
    
    
    
    
    
    (138
    )
    
    
    (4,714
    )Stock-based compensation expense
    
    
    
    
    
    
    1,316
    
    
    
    
    
    
    
    
    
    
    
    1,316Earnings from equity-method investments
    
    
    
    
    
    
    
    
    
    
    (1,133
    )
    
    
    (15
    )
    
    
    (1,148
    )Write-off of debt acquisition costs
    
    
    
    
    
    
    2,817
    
    
    
    
    
    
    
    
    
    
    
    2,817Amortization of debt acquisition costs
    
    
    
    
    
    
    510
    
    
    
    
    
    
    
    
    
    
    
    510Changes in operating assets and liabilities, net
of acquisitions and dispositions:Receivables
    
    
    
    
    
    
    1,246
    
    
    
    (35,184
    )
    
    
    (6,284
    )
    
    
    (40,222
    )Other, net
    
    
    (37
    )
    
    
    209
    
    
    
    (4,316
    )
    
    
    4
    
    
    
    (4,140
    )Accounts payable
    
    
    
    
    
    
    595
    
    
    
    4,917
    
    
    
    (1,104
    )
    
    
    4,408Accrued expenses
    
    
    103
    
    
    
    (554
    )
    
    
    5,051
    
    
    
    1,515
    
    
    
    6,115Decommissioning liabilities
    
    
    
    
    
    
    
    
    
    
    (2,255
    )
    
    
    
    
    
    
    (2,255
    )Income taxes
    
    
    40,008
    
    
    
    
    
    
    
    
    
    
    
    453
    
    
    
    40,461Net cash provided by (used in) operating
activities
    
    
    (1,483
    )
    
    
    (32,111
    )
    
    
    149,079
    
    
    
    7,200
    
    
    
    122,685Cash flows from investing activities:Payments for capital expenditures
    
    
    
    
    
    
    
    
    
    
    (78,119
    )
    
    
    (3,929
    )
    
    
    (82,048
    )Acquisitions of oil and gas properties, net of cash
acquired
    
    
    
    
    
    
    
    
    
    
    (46,631
    )
    
    
    
    
    
    
    (46,631
    )Acquisitions of businesses, net of cash acquired
    
    
    
    
    
    
    (9,822
    )
    
    
    
    
    
    
    
    
    
    
    (9,822
    )Cash contributed to equity method investment
    
    
    
    
    
    
    
    
    
    
    (30,441
    )
    
    
    
    
    
    
    (30,441
    )Cash proceeds from sale of business, net of cash sold
    
    
    
    
    
    
    18,343
    
    
    
    
    
    
    
    
    
    
    
    18,343Other
    
    
    
    
    
    
    (2,412
    )
    
    
    
    
    
    
    
    
    
    
    (2,412
    )Intercompany receivables/payables
    
    
    (910
    )
    
    
    (705
    )
    
    
    5,951
    
    
    
    (4,336
    )
    
    
    Net cash provided by (used in) investing
activities
    
    
    (910
    )
    
    
    5,404
    
    
    
    (149,240
    )
    
    
    (8,265
    )
    
    
    (153,011
    )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
    
    
    
    
    
    
    (6,203
    )
    
    
    

    
    
    
    
    
    
    
    (6,203
    )Proceeds from exercise of stock options
    
    
    2,393
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,393Net cash provided by (used in) financing
activities
    
    
    2,393
    
    
    
    89,264
    
    
    
    
    
    
    
    (405
    )
    
    
    91,252Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    463
    
    
    
    463Net increase (decrease) in cash
    
    
    
    
    
    
    62,557
    
    
    
    (161
    )
    
    
    (1,007
    )
    
    
    61,389Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    21,414
    
    
    
    19,421
    
    
    
    13,622
    
    
    
    54,457Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    83,971
    
    
    $
    19,260
    
    
    $
    12,615
    
    
    $
    115,846
 24




---



##### Table of Contents



Accounting Pronouncements
   25




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Forward-Looking Statements
  Executive Summary
      26




---



##### Table of Contents



Comparison of the Results of Operations for the Three Months Ended June 30, 2007 and 2006
   Revenue
    
    
    Gross Margin2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    %
    
    
    2006
    
    
    %
    
    
    ChangeWell Intervention
    
    $
    190,542
    
    
    $
    111,675
    
    
    $
    78,867
    
    
    $
    81,093
    
    
    
    43
    %
    
    $
    48,320
    
    
    
    43
    %
    
    $
    32,773Rental Tools
    
    
    123,736
    
    
    
    86,593
    
    
    
    37,143
    
    
    
    84,718
    
    
    
    68
    %
    
    
    58,370
    
    
    
    67
    %
    
    
    26,348Marine
    
    
    35,162
    
    
    
    33,951
    
    
    
    1,211
    
    
    
    19,805
    
    
    
    56
    %
    
    
    20,158
    
    
    
    59
    %
    
    
    (353
    )Oil and Gas
    
    
    48,164
    
    
    
    33,625
    
    
    
    14,539
    
    
    
    29,331
    
    
    
    61
    %
    
    
    14,923
    
    
    
    44
    %
    
    
    14,408Less: Oil and Gas
Elim.
    
    
    (851
    )
    
    
    (4,085
    )
    
    
    3,234
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    396,753
    
    
    $
    261,759
    
    
    $
    134,994
    
    
    $
    214,947
    
    
    
    54
    %
    
    $
    141,771
    
    
    
    54
    %
    
    $
    73,176
  Well Intervention Segment
  27




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##### Table of Contents



Rental Tools Segment
  Marine Segment
  Oil and Gas Segment
  Depreciation, Depletion, Amortization and Accretion
  General and Administrative Expenses
  Comparison of the Results of Operations for the Six Months Ended June 30, 2007 and 2006
  28




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##### Table of Contents



Revenue
    
    
    Gross Margin2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    %
    
    
    2006
    
    
    %
    
    
    ChangeWell Intervention
    
    $
    367,473
    
    
    $
    213,748
    
    
    $
    153,725
    
    
    $
    162,517
    
    
    
    44
    %
    
    $
    90,393
    
    
    
    42
    %
    
    $
    72,124Rental Tools
    
    
    239,916
    
    
    
    164,367
    
    
    
    75,549
    
    
    
    165,382
    
    
    
    69
    %
    
    
    111,846
    
    
    
    68
    %
    
    
    53,536Marine
    
    
    71,028
    
    
    
    64,158
    
    
    
    6,870
    
    
    
    41,182
    
    
    
    58
    %
    
    
    38,352
    
    
    
    60
    %
    
    
    2,830Oil and Gas
    
    
    85,193
    
    
    
    49,096
    
    
    
    36,097
    
    
    
    48,303
    
    
    
    57
    %
    
    
    16,189
    
    
    
    33
    %
    
    
    32,114Less: Oil and Gas Elim.
    
    
    (3,933
    )
    
    
    (7,141
    )
    
    
    3,208
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    759,677
    
    
    $
    484,228
    
    
    $
    275,449
    
    
    $
    417,384
    
    
    
    55
    %
    
    $
    256,780
    
    
    
    53
    %
    
    $
    160,604
  Well Intervention Segment
  Rental Tools Segment
  Marine Segment
  29




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##### Table of Contents



Oil and Gas Segment
  Depreciation, Depletion, Amortization and Accretion
  General and Administrative Expenses
  Liquidity and Capital Resources
     30




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##### Table of Contents



rd rd
 st st
 th th
  31




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##### Table of Contents




    
    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.
   RemainingSix MonthsDescription
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    ThereafterLong-term debt, including
estimated interest payments
    
    $
    15,434
    
    
    $
    30,740
    
    
    $
    30,687
    
    
    $
    30,635
    
    
    $
    64,090
    
    
    $
    27,231
    
    
    $
    818,347Decommissioning liabilities
    
    
    31,946
    
    
    
    5,739
    
    
    
    2,421
    
    
    
    10,465
    
    
    
    30,014
    
    
    
    6,419
    
    
    
    36,287Operating leases
    
    
    3,473
    
    
    
    7,280
    
    
    
    4,941
    
    
    
    2,641
    
    
    
    1,415
    
    
    
    399
    
    
    
    12,789Vessel construction
    
    
    18,975
    
    
    
    46,901
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    69,828
    
    
    $
    90,660
    
    
    $
    38,049
    
    
    $
    43,741
    
    
    $
    95,519
    
    
    $
    34,049
    
    
    $
    867,423
   32




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##### Table of Contents



New Accounting Pronouncements
   
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Foreign Currency Exchange Rates
   Interest Rate Risk
  Equity Price Risk
  33




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##### Table of Contents



Commodity Price Risk
   
 Item 4. Controls and Procedures
   34




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 4. Submission of Matters to a Vote of Security Holders
    (i)
    
    Elected seven directors with the following number of votes cast for and
withheld from such nominees:
 Director
    
    For
    
    WithheldHarold J. Bouillion
    
    
    73,774,554
    
    
    
    460,813Enoch L. Dawkins
    
    
    67,553,464
    
    
    
    6,681,903James M. Funk
    
    
    73,720,396
    
    
    
    514,971Terence E. Hall
    
    
    72,075,566
    
    
    
    2,159,801Ernest E. Howard, III
    
    
    70,552,492
    
    
    
    3,682,875Richard A. Pattarozzi
    
    
    73,764,027
    
    
    
    471,340Justin L. Sullivan
    
    
    73,159,370
    
    
    
    1,075,997
 (ii)
    
    Approved the 2007 Employee Stock Purchase Plan. The number of votes
cast for and against this proposal, as well as the number of abstentions and
non-votes, is as follows:
 For
    
    Against
    
    Abstentions
    
    Non-Votes61,929,489
    
    
    424,633
    
    
    
    561,747
    
    
    
    11,319,500
 (iii)
    
    Ratified the appointment of KPMG LLP as our independent auditors for
the fiscal year ending December 31, 2007. The number of votes cast for and against
this proposal, as well as the number of abstentions and non-votes, is as follows:
 For
    
    Against
    
    Abstentions
    
    Non-Votes72,681,216
    
    
    1,527,511
    
    
    
    26,639
    
    
    
 
 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.
 35




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##### Table of Contents



SUPERIOR ENERGY SERVICES, INC.Date:  August 8, 2007
    By:
    /s/ Robert S. TaylorRobert S. TaylorExecutive Vice President, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer) 36




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##### Table of Contents



Exhibit Index
  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