Superior Energy Services to cut debt further with free cash flow, asset divestitures

By Devika Patel

Knoxville, Tenn., April 26 – Superior Energy Services, Inc. intends to reduce its leverage during the next upcycle using free cash flow and funds raised through asset divestitures.

“In order to fully exploit the next upcycle, we’ll need to focus on our financial and capital structure, particularly as it relates to leverage,” president and chief executive officer David Dunlap said on the company’s first-quarter earnings conference call on Wednesday.

“Through the next cycle, expect us to reduce our debt levels using free cash flow.

“Funds raised from any asset divestitures activity can also be used to reduce our debt levels,” he said.

The company’s top executive noted that the company’s overall debt levels need to be reduced further, despite debt paydowns since 2012.

“I’d feel better about overall debt levels in this company being lower,” Dunlap said on the call.

“We have reduced debt since 2012, and we’ve done it with free cash flow.

“In 2013 and 2014, when we reduced capital spending significantly, we took that cash and used it predominantly to pay down debt.

“Look for us to do the same thing going forward.”

Dunlap said that the company is unique among land-only businesses in its ability to carry so much leverage.

“U.S. land-only businesses can really afford to carry very little debt,” he said.

“What allows us to carry debt are more stable international and Gulf of Mexico businesses.

“These are businesses which have continued to perform in an EBITDA and many cases cash-flow positive fashion during this downturn.”

“The amount of debt that Superior can afford is based on how much international and Gulf of Mexico earnings we produce,” Dunlap said.

The company’s total debt at the end of the quarter was $1.3 billion.

Superior ended the quarter with $152 million of cash.

Based in Houston, Superior Energy provides oilfield services and equipment.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.