Superior Energy mulls asset sale, free cash flow creation to pay note

By Devika Patel

Knoxville, Tenn., Feb. 19 – Superior Energy Services, Inc. plans to improve its capital structure with its free cash flow, perhaps even addressing the company’s $800 million of notes due 2021 prior to maturity.

“In addition to consistently generating free cash flow, a primary financial objective remains improving our capital structure,” executive vice president, treasurer and chief financial officer Westy Ballard said on the company’s fourth quarter and year ended Dec. 31, 2018 earnings conference call on Tuesday.

“Although our nearest debt maturity is several years from now, we remain highly committed to reducing our total debt levels in order to maintain the most efficient capital structure to enhance the value of our enterprise,” Ballard said.

The company is thinking about its 2021 notes and is planning ahead even though the notes aren’t due until later in 2021.

“I think we think about [our $800 million of notes due 2021] in a lot of different dimensions,” Ballard said.

“I don’t think that there’s one unique way that we’re approaching [the repayment of the notes].

“I think there’s many levers that we feel very confident that we can access in order to address those but they’re not [due] until 2021 so we feel confident that we’ve got plenty of time to accommodate that,” Ballard said.

Superior Energy may add cash to its balance sheet in order to address the maturity and will consider refinancing at least some of the notes.

“I think primarily what we’d like to do as we get closer to that maturity is to add cash on the balance sheet,” president and chief executive officer David Dunlap said on the call.

“I also feel relatively certain there’ll be some form of refinancing of that, but we’d like to refinance less than $800 million,” Dunlap said.

The company is tracking its bonds and watching how they trade in order to keep abreast of any refinancing opportunities.

The company may also use proceeds from asset sales to help pay down the notes.

Ballard said the idea of addressing the 2021 notes before maturity “is not lost on us.”

“It’s certainly something we track and we’ follow where our bonds are trading but I think it’s the bigger picture than that.

“I think we anticipate generating free cash flow over the next several years.

“We think there might be some non-core or non-synergistic business units that, regardless of where we are with debt, don’t necessarily fit in our portfolio and our strategy moving forward.

“I think there are a lot of different ways that we can address the 2021s, and so I wouldn’t look at it as just a one-size-fits-all,” Ballard said.

Adjusted EBITDA was $84,179,000 for the quarter ended Dec. 31, 2018, compared to $71,481,000 for the quarter ended Dec. 31, 2017.

Cash and cash equivalents were $158.05 million as of Dec. 31, 2018, compared to $172 million as of Dec. 31, 2017.

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.