Forbes Energy Services Reports 2012 Second Quarter Results

GlobeNewswire

Tuesday, August 14th 2012

ALICE, Texas, Aug. 14, 2012 (GLOBE NEWSWIRE) -- Forbes Energy Services Ltd. (Nasdaq:FES) and (TSX:FRB) today announced financial and operating results for the three months ended June 30, 2012. All share and per share amounts prior to August 12, 2011 have been adjusted to reflect the four-to-one share consolidation completed on August 12, 2011.

Please note: The term "U.S. Operations" refers to continuing operations, which represent the Company's financial results excluding its discontinued Mexico operations that were sold in January 2012.

Highlights for the quarter ended June 30, 2012:

Revenues from U.S. Operations decreased 8.9% to $119.8 million in the second quarter of 2012 as compared to $131.5 million in the first quarter of 2012, and increased 8.1% from the $110.8 million reported in the second quarter of 2011;
Gross profit from U.S. Operations decreased to $33.0 million, or 27.5% of revenues, in the second quarter of 2012 compared to $37.5 million, or 28.6% of revenues, in the first quarter of 2012, and $25.7 million, or 23.2% of revenues, in the second quarter of 2011;
GAAP net income from U.S. Operations attributable to common shares was $2.6 million, or $0.10 per diluted share, for the second quarter of 2012, compared to net income from U.S. Operations attributable to common shares of $5.2 million or $0.20 per diluted share for the first quarter of 2012, and a net loss from U.S. Operations attributable to common shares of $26.6 million or $1.22 per diluted share for the second quarter of 2011;
Adjusted EBITDA from U.S. Operations* totaled $26.8 million in the second quarter of 2012 compared to $28.6 million in the first quarter of 2012, and $20.1 million in the second quarter of 2011. Second quarter Adjusted EBITDA from U.S. Operations includes startup costs in the new coiled tubing division of $1.2 million.

^* Adjusted EBITDA from U.S. Operations, a non-GAAP financial measure, is defined by the Company as income (loss) from continuing operations before interest, taxes, depreciation, amortization, gain or loss on early extinguishment of debt, non-cash stock based compensation, and litigation settlement. For a reconciliation of such measure to net income, please see the disclosures at the end of this release and on the Company's Website.

Overview

John Crisp, president and CEO of Forbes Energy Services, stated, "While the company's well servicing segment performed within expectations, our fluid logistics segment's performance was challenged by uncontrollable market conditions, primarily an influx in competition.

"During the second quarter, equipment from dry gas markets transferred into the oil and liquids rich markets where the majority of our work is performed. We also observed start-up companies entering the fluids logistics market, some of which were able to attract some of our experienced workforce, causing additional pressure on utilization.

"We believe the increase in competitive pressure will continue through the balance of 2012. However we are taking the necessary steps to refocus our workforce and we feel that this action, coupled with our existing geographic footprint and our modern equipment will help stabilize our financial performance for the remainder of 2012.

"We have many positive events happening throughout the company, one of which is the delivery of our first coiled tubing spread late last month. Our initial performance in the field has been successful and we are moving towards solidifying long-term commitments for the first and remaining four units planned to be phased in by year end. Additionally, we will soon be launching our new fluid recycling business as we finalize field preparation of the unit."

Business Segment Results

Well Servicing Segment

In the second quarter of 2012, Well Servicing segment revenues from U.S. Operations decreased $0.9 million, or 1.8%, to $51.3 million compared to $52.2 million in the first quarter of 2012, and $42.0 million in the prior year quarter. Segment gross profit totaled $13.9 million, or 27.0% of revenues, in the second quarter of 2012 compared to $13.2 million, or 25.2% of revenues, for the first quarter of 2012, and $7.6 million, or 18.2% of revenues, in the prior year quarter.