Forbes Energy Services Reports Fourth Quarter and Year End 2008 Financial
Results
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.
L. Melvin Cooper, SVP & CFO of Forbes Energy Services Ltd., +1-361-664-0549;
or Ken Dennard, Managing Partner, or Ben Burnham, AVP, both of DRG&E,
+1-713-529-6600, both for Forbes Energy Services Ltd.
