BJ Services Reports Third Fiscal Quarter Earnings of $0.48 per Diluted Share

HOUSTON, July 22 /PRNewswire-FirstCall/ -- BJ Services Company
(NYSE: BJS; CBOE; PCX) today reported net income of $141.8 million, or $0.48
per diluted share, for the third quarter of fiscal 2008, which ended June 30,
2008. These results represent a 12% increase from the $0.43 per diluted share
reported in the previous quarter and a 16% decrease compared to the $0.57 per
diluted share reported in the third quarter of fiscal 2007.
Revenue in the third quarter of fiscal 2008 was a record $1.33 billion, a
4% increase from the $1.28 billion reported in the previous quarter and a 15%
increase from the $1.15 billion reported in the prior year's June quarter.
Operating income for the quarter was $206.9 million, an 11% increase compared
to $186.5 million for the previous quarter and a 20% decrease compared to
$257.8 million reported in the third quarter of fiscal 2007. Operating income
as a percentage of revenue was 15.6% in the third quarter of fiscal 2008,
compared to 14.5% in the previous quarter and 22.4% in the comparable quarter
of the prior year. The lower operating margin compared to the prior year is
primarily attributable to lower pricing in our U.S. Pressure Pumping
operations.
Commenting on the results, Chairman and CEO Bill Stewart said, "We are
greatly encouraged by our operating results for the quarter. The significant
milestone of achieving price and margin stabilization in U.S. Pressure Pumping
operations appears to have occurred during the quarter. Improved margins in
our International Pressure Pumping operations were also achieved and we expect
these two events to be positive turning points for the Company in today's
market environment.
"In North America, U.S. drilling activity exceeded expectations, while
Canada activity was hindered by the seasonal spring break-up period.
Importantly, as stated above, prices in the U.S. for our services appear to be
stabilizing. The U.S./Mexico Pressure Pumping, International Pressure Pumping
and Oilfield Services segments all experienced sequentially improved revenues
and operating margins for the quarter.
"Looking at our fourth fiscal quarter, we expect drilling activity in the
U.S. to be up 3%-4% compared to the third fiscal quarter. In Canada, the
spring break-up period is over, and we expect meaningful positive contribution
sequentially from our operations there. We anticipate modest sequential
revenue and margin improvement from our International Pressure Pumping and
Oilfield Services operations. Based on these assumptions, we are currently
projecting diluted earnings for the fourth fiscal quarter to be in the range
of $0.54 to $0.57 per share."
Debt decreased $14.7 million during the quarter to $601.2 million and cash
and cash equivalents increased $38.9 million to $82.5 million during the
quarter. Uses of cash during the quarter included capital expenditures of
$106.5 million, payment of $14.7 million in dividends and $53.4 million for
the May 2008 purchase of Innicor Subsurface Technologies Inc., an important
complement to the Company's completion tool product line. Innicor is a
Calgary-based designer, manufacturer and provider of tools and equipment used
in the completion and production phases of oil and gas well development in
Canada and select international markets.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(in thousands except per share amounts)

Three Months Ended
June 30 March 31
2008 2007 2008
Revenue $1,328,228 $1,152,518 $1,283,202
Operating
Expenses:
Cost of sales and
services 1,032,375 812,701 1,004,107
Research and engineering 18,563 17,146 18,913
Marketing 29,400 27,450 31,764
General and administrative 40,401 35,630 41,652
Loss on long-lived assets 631 1,764 238
Total operating
expenses 1,121,370 894,691 1,096,674
Operating income 206,858 257,827 186,528
Interest expense (6,596) (8,994) (6,949)
Interest income 554 581 356
Other income/(expense), net (3,189) (1,806) 1,053
Income before income taxes 197,627 247,608 180,988
Income taxes 55,844 79,318 53,685
Net income $141,783 $168,290 $127,303

Earnings Per
Share:
Basic $0.48 $0.57 $0.43
Diluted $0.48 $0.57 $0.43

Weighted Average Shares
Outstanding:
Basic 293,892 293,142 293,245
Diluted 296,357 296,407 295,285

Supplemental Data:
Depreciation
and amortization $67,532 $55,581 $64,900
Capital expenditures 106,502 186,315 149,989
Debt 601,219 707,052 615,892

Nine Months Ended June 30
2008 2007
Revenue $3,896,495 $3,523,096
Operating Expenses:
Cost of sales and services 2,986,932 2,421,997
Research and engineering 54,674 49,004
Marketing 89,996 79,338
General and administrative 118,683 106,471
Loss on long-lived assets 243 1,946
Total operating expenses 3,250,528 2,658,756
Operating income 645,967 864,340
Interest expense (21,407) (26,261)
Interest income 1,384 1,405
Other expense, net (4,847) (5,679)
Income before income taxes 621,097 833,805
Income taxes 179,827 269,515
Net income $441,270 $564,290

Earnings Per Share:
Basic $1.50 $1.93
Diluted $1.49 $1.90

Weighted Average
Shares Outstanding:
Basic 293,253 293,137
Diluted 295,586 296,383

Supplemental Data:
Depreciation and
amortization $195,198 $151,105
Capital expenditures 418,288 542,498

Operating Highlights

Following are the results of operations for the three months ended June
30, 2008, June 30, 2007 and March 31, 2008 and for the nine months ended June
30, 2008 and 2007:

Three Months Ended Nine Months Ended
June 30 March 31 June 30
2008 2007 2008 2008 2007

U.S./Mexico
Pressure Pumping
Revenue $706,689 $646,719 $643,044 $2,012,284 $1,920,901
Operating Income 146,821 215,449 126,516 455,359 688,346
Operating Income
Margins 21% 33% 20% 23% 36%

Canada Pressure
Pumping
Revenue $48,636 $35,169 $138,790 $308,772 $268,709
Operating Income
(Loss) (16,595) (21,610) 14,481 14,878 10,607
Operating Income
Margins -34% -61% 10% 5% 4%

International
Pressure Pumping
Revenue $316,922 $277,314 $292,120 $897,554 $779,741
Operating Income 45,235 42,623 34,714 115,874 112,066
Operating Income
Margins 14% 15% 12% 13% 14%

Oilfield Services
Group
Revenue $255,981 $193,316 $209,248 $677,885 $553,745
Operating Income 49,669 41,800 37,769 127,471 111,172
Operating Income
Margins 19% 22% 18% 19% 20%

Corporate
Operating Loss $(18,272) $(20,455) $(26,952) $(67,615) $(57,851)

June Quarter Review
U.S./Mexico Pressure Pumping Services third quarter 2008 revenue of $706.7
million was 10% higher than the March 2008 quarter (sequential) with average
active drilling rigs for the same period increasing 5%. Increased activity in
the Rocky Mountains, the Northeast, East Texas and the Gulf of Mexico was the
primary source of the revenue improvement. Compared to the June 2007 quarter
(year over year), revenue increased 9% on a 6% increase in average active
drilling rigs. Increased activity in the Rocky Mountains, Mid-Continent and
East Texas primarily accounts for the increased revenue. Operating income
margin for U.S./Mexico increased to 21% from 20% in the previous quarter and
decreased from 33% in the same quarter last year. The lower operating income
margin compared to the same quarter of last year was due to lower pricing and
increased material, maintenance and fuel costs.
Canada Pressure Pumping Services third quarter 2008 revenue of $48.6
million was 65% lower sequentially as the region experienced its annual spring
break-up period with average drilling rig activity down 67%. Year over year
revenue increased 38% with average drilling rig activity increasing 22%. The
operating loss during the third quarter was less severe compared to the prior
year quarter due to the improved revenue in addition to cost reduction
initiatives.
International Pressure Pumping Services third quarter 2008 revenue of
$316.9 million increased 8% sequentially with average active drilling rig
levels increasing 4% for the same period. Revenue compared to the same
quarter last year increased 14% with average active drilling rigs up 8%.
Percentage changes in revenue by region compared to the second quarter of
fiscal 2008 and the third quarter of fiscal 2007 are as follows:

Region Sequential Year Over Year
Europe(1) 25% -8%
Middle East(1) 3% 21%
Asia Pacific 26% 5%
Russia -3% 9%
Latin America(1) 2% 30%
Total 8% 14%

(1) During the quarter ended March 31, 2008, we revised the internal
management reporting structure of our pressure pumping operations in Africa,
whose results of operations were previously reported in our Europe/Africa
operating segment. Our North Africa results, including Algeria and Libya, are
now included in our Middle East operating segment, while our West Africa
results south of Nigeria, including Angola and Gabon, are now included in our
Latin America operating segment. Nigeria and coastal areas north of there
remain as part of our Europe operating segment. Prior period results have
been revised to conform with the current presentation.
All of our International Pressure Pumping operating segments except Russia
showed sequential revenue improvement benefiting from increased activity
levels. Average active drilling rigs in Europe and Asia Pacific increased 7%
and 11%, respectively, from the prior quarter while our revenue in Europe and
Asia Pacific increased 25% and 26%, respectively. Middle East and Latin
America revenue improvement sequentially was in line with average drilling rig
activity in those regions.
Year over year revenue improved 30% in Latin America and 21% in the Middle
East, with average active drilling rigs increasing 3% and 4%, respectively.
The Latin America increase was primarily the result of increased stimulation
activity in Brazil, Venezuela and Argentina, while the Middle East increase
was primarily the result of new service contracts in North Africa and
Kazakhstan. Asia Pacific revenue improved 5% on an 11% increase in average
active drilling rigs. In Europe, revenue declined 8% while drilling activity
in the region increased 21%, largely as a result of the transfer of a
stimulation vessel from the North Sea to India. Russian revenue improved 9%
year over year, primarily as a result of increased stimulation activity.
Operating income margin for International Pressure Pumping was 14% for the
third quarter of fiscal 2008, a sequential increase from 12% in the previous
quarter and a decrease from 15% reported in the prior year June quarter.
Oilfield Services Group third quarter 2008 revenue of $256.0 million
increased 22% sequentially and increased 32% year over year. Percentage
changes in revenue by division compared to the second quarter of fiscal 2008
and the third quarter of fiscal 2007 are as follows:

Division Sequential Year Over Year
Tubular Services 16% 18%
Process & Pipeline Services 24% 45%
Chemical Services 19% 46%
Completion Tools 1% 5%
Completion Fluids 60% 31%
Total 22% 32%

All of our operating segments made positive contributions to the Oilfield
Services Group's increase in revenue from the prior quarter. A 24% seasonal
increase in Process & Pipeline Services and a 60% increase in Completion
Fluids, primarily in the Gulf of Mexico, were the biggest contributors.
Completion Tools revenue increased slightly from the previous quarter, while
Tubular Services and Chemical Services revenue increased 16% and 19%,
respectively.
Year over year, revenue improved 45% and 46%, respectively, for our
Process & Pipeline Services and Chemical Services group, primarily as a result
of increased activity levels. Completion Fluids and Tubular Services also
improved markedly year over year, due to increased activity.
The Oilfield Services Group operating income margin for the quarter was
19%, up from 18% in the previous quarter and down from 22% in the prior year's
third quarter.
Consolidated Geographic Highlights
The following table reflects the percentage change in consolidated revenue
by geographic area for the June 2008 quarter compared to the March 2008
quarter and the June 2007 quarter. The information presented is based on our
combined service and product line offering by geographic region.

Region Sequential Year Over Year
U.S. 12% 11%
Canada -53% 47%
Total 1% 13%
Latin America -2% 21%
Europe/Africa 21% -2%
Russia -1% 10%
Middle East 6% 29%
Asia Pacific 8% 12%
Total 4% 15%

Non-GAAP Financial Measures
A non-GAAP financial measure is a numerical measure of a registrant's
historical or future financial performance, financial position or cash flows
that 1) excludes amounts, or is subject to adjustments that have the effect of
excluding amounts, that are included in the most directly comparable measure
calculated and presented in accordance with GAAP in the statement of income,
balance sheet, or statement of cash flows, or 2) includes amounts, or is
subject to adjustments that have the effect of including amounts, that are
excluded from the most directly comparable measure so calculated and
presented.
Any unexpected disclosures of non-GAAP financial measures discussed on the
conference call mentioned below will be posted on our website as soon
thereafter as practicable.
Conference Call
The Company will hold a conference call following this earnings release.
The call will take place at 10:00 a.m. Central Time.
To participate in the conference call, please call 913-312-1462 ten
minutes prior to the conference call start time and give the conference code
number 1634930. If you are unable to participate, the conference call will be
available for playback three hours after conclusion of the conference call.
The playback number is 719-457-0820 and the replay entry code is 1634930.
Playback will be available for five days.
The conference call will also be available via real-time webcast at
http://www.bjservices.com. Playback of the webcast will be available
following the conference call.
This news release contains forward-looking statements that anticipate
future performance such as the Company's prospects, expected revenue, and
expenses and profits. These forward-looking statements are based on
assumptions that may prove to be inaccurate, and they are subject to risks and
uncertainties that may cause actual results to differ materially from expected
results. These risk factors include, without limitation, general global
business and economic conditions, drilling activity and rig count, pricing
volatility for oil and gas, reduction in demand for our services and products,
risks from operating hazards such as fire, explosion and oil spills,
unexpected litigation for which insurance and customer agreements do not
provide complete protection, potential adverse results from our SEC and DOJ
investigations, changes in exchange rates and declines in the U.S. dollar, and
risks associated with our international operations, including potential
instability and hostilities. This list of risk factors is not intended to be
comprehensive. More extensive information concerning risk factors may be
found in our public filings with the Securities and Exchange Commission.
BJ Services Company is a leading provider of pressure pumping, well
completion, production enhancement and pipeline services to the petroleum
industry.
SOURCE BJ Services Company

Jeff Smith of BJ Services Company, +1-713-462-4239