• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

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

Posted on: Wednesday, 1 April 2009, 19:59 CDT

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

• Revenues increased to $360.9 million for fiscal 2008 from $207.0 million for fiscal 2007.
• Adjusted EBITDA increased to $96.7 million for fiscal 2008 from $68.0 million for fiscal 2007.
• Well servicing rig count increased to 170 as of December 31, 2008 from 101 at December 31, 2007.
• Fluid transport heavy truck fleet increased to 370 as of December 31, 2008 from 262 at December 31, 2007.

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

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

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

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

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

Business Segment Results

Well Servicing

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

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

Fluid Logistics

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

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

Previously Issued Financial Statements

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

Conference Call

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

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

About Forbes Energy

Forbes Energy Services Ltd. is an independent oilfield services contractor that provides a broad range of drilling-related and production-related services to oil and natural gas companies, primarily onshore in Texas, Mississippi, and Mexico.

Forward-Looking Statements and Regulation G Reconciliation

This press release contains "forward-looking statements," as contemplated by the Private Securities Litigation Reform Act of 1995, in which the Company discusses factors it believes may affect its performance in the future. The accuracy of the Company's assumptions, expectations, beliefs and projections depend on events or conditions that change over time and are thus susceptible to change based on actual experience, new developments and known and unknown risks. The Company gives no assurance that the forward-looking statements will prove to be correct and does not undertake any duty to update them. The Company's actual future results might differ from the forward-looking statements made in this press release for a variety of reasons, which include: supply and demand for oilfield services and the level of oil and natural gas prices; the continued uncertainty in the global financial markets and its effect on domestic spending in the oil and natural gas industry; the Company's ability to maintain pricing on its core services; the potential for excess capacity in the industry; and competition. Should one or more of the foregoing risks or uncertainties materialize, or should the Company's underlying assumptions prove incorrect, the Company's actual results may vary materially from those anticipated in its forward-looking statements, and the Company's business, financial condition and results of operations could be materially and adversely affected. Additional factors that you should consider are set forth in detail in the Risk Factors section of the Company's Annual Report on Form 10-K for the year ended December 31, 2008 (the "Form 10-K") as well as other filings the Company has made with the Securities and Exchange Commission.

Forbes Energy's financial statements and management's discussion and analysis of financial condition and results of operations can be found in the Form 10-K, which has been filed with the Securities and Exchange Commission and posted on the Company's website.

This press release also contains references to the non-GAAP financial measure of earnings, or net income, before interest, income taxes, goodwill impairment, depreciation and amortization, or adjusted EBITDA. For a reconciliation of adjusted EBITDA to net income, please see the table at the end of this release. Management's opinion regarding the usefulness of adjusted EBITDA to investors and a description of the ways in which management uses such measures can be found on the "Investor Relations" page of Forbes Energy's website, www.forbesenergyservices.com.

Contacts: Forbes Energy Services Ltd. L. Melvin Cooper, SVP & CFO 361-664-0549 DRG&E Ken Dennard, Managing Partner Ben Burnham, AVP 713-529-6600 -Tables to Follow-

Selected Statement of Operations Data (Unaudited) Three Months Ended December 31, Year Ended December 31, Successor- Predecessor- Successor- Predecessor- Consolidated Combined Consolidated Combined 2008 2007 2008 2007 Revenues Well servicing $48,976,756 $32,785,764 $189,980,242 $103,600,928 Fluid logistics 47,683,106 29,580,741 170,949,057 103,405,487 Total revenues 96,659,862 62,366,505 360,929,299 207,006,415 Expenses Well servicing 38,794,821 21,512,629 128,614,600 60,570,743 Fluid logistics 31,200,155 21,414,129 117,940,153 69,887,441 General and administrative 5,328,435 2,733,427 17,700,341 8,823,299 Depreciation and amortization 10,177,848 5,344,969 33,724,218 15,341,906 Goodwill Impairment 4,363,369 - 4,363,369 - Total expenses 89,864,628 51,005,154 302,342,681 154,623,389 Operating income 6,795,234 11,361,351 58,586,618 52,383,026 Other income (expense) Interest expense (6,705,718) (2,730,823) (25,797,663) (8,342,652) Other income (expense) (71,113) 178,020 37,947 236,583 Income before taxes 18,403 8,808,548 32,826,902 44,276,957 Income Tax Expense 2,350,259 683,291 62,574,492 683,291 Net income (loss) $(2,331,856) $8,125,257 $(29,747,590) $43,593,666 Earnings (loss) per share of common stock Basic $(0.04) $(0.65) Diluted (0.04) (0.65) Weighted average number of shares outstanding Basic 61,505,053 45,894,557 Diluted 61,505,053 45,894,887

Selected Balance Sheet Data (Unaudited) December 31, December 31, 2008 2007 Cash $23,469,067 $5,209,345 Accounts receivable 69,095,522 42,998,005 Working Capital 42,707,044 (28,247,697) Intangibles (net) 39,459,977 - Total assets 482,801,391 259,995,166 Total debt 212,189,842 111,281,004 Deferred tax liability 62,068,620 500,000 Shareholders'/members' equity $158,418,487 $70,459,267

Selected Operating Data Three Months Ended Year Ended December 31, December 31, 2008 2007 2008 2007 Rig Hours 97,588 59,938 378,657 180,700 Truck hours 309,020 202,379 1,115,593 711,171

Reconciliation of Adjusted EBITDA to Net Income (Unaudited) (in thousands) Three Months Ended December 31, Year Ended December 31, 2008 2007 2008 2007 Net Income (loss) $(2,332) $8,126 $(29,748) $43,594 Depreciation and amortization 10,178 5,345 33,724 15,342 Interest expense 6,706 2,731 25,798 8,343 Income tax expense 2,350 684 62,574 684 Goodwill impairment 4,363 - 4,363 - Adjusted EBITDA $21,265 $16,886 $96,711 $67,963

SOURCE Forbes Energy Services Ltd.

Source: PR Newswire

More News in this Category