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Actionable news in SSE: SEVENTY SEVEN ENERGY Inc,

Seventy Seven Energy Inc. Announces

The following excerpt is from the company's SEC filing.

Third Quarter 2015 Operational and Financial Results


October 28, 2015

- Seventy Seven Energy Inc. (NYSE: SSE) today reported financial and operational results for the

quarter of

. Key information related to SSE for the

quarter is as follows:

Consolidated Adjusted EBITDA of

$41.1 million

Positive free cash flow of

$42.9 million

Repurchased and cancelled

$10.0 million

of its 6.5% Senior Notes due 2022

Surpassed an SSE milestone of over 100 customers accounting for 36% of total revenue

SSE reported total revenues of

$213.5 million

decrease compared to revenues of

$295.1 million


, and a

$526.8 million

. SSE’s adjusted EBITDA was

, compared to adjusted EBITDA of

$44.3 million

and adjusted EBITDA of

$129.0 million

Adjusted net loss, which excludes impairments, gains or losses on sales of property and equipment, severance-related costs, loss on sale of a business and exit costs, and gains on debt extinguishment, for the

, was

$47.6 million

per fully diluted share. Net loss for the

$48.5 million

per fully diluted share, compared to net loss of

$74.7 million

per fully diluted share, for the

and net loss of

$1.8 million

Adjusted revenues, adjusted EBITDA, free cash flow and adjusted net loss are non-GAAP financial measures. Reconciliations of these measures to comparable financial measures calculated in accordance with generally accepted accounting principles (GAAP) are provided on pages 9 - 13 of this release.

“Given the current market environment, we are pleased with our third quarter execution,” Chief Executive Officer Jerry Winchester said. “Our focus on diversifying our customer base across all of our business segments is reflected in our customer count which is now well past 100 different operators. Surpassing this milestone is a direct result of our commitment to service quality, execution and safety.”

“This diversification strategy, coupled with one of the best contractual backlogs in the industry and sufficient liquidity, positions us for dynamic growth when drilling and completion activity levels improve.”


SSE’s drilling segment contributed revenues of

$80.3 million

$33.9 million

during the

, compared to revenues of

$100.4 million

$38.3 million

and revenues of

$200.4 million

$82.4 million

. The decrease in revenues for the

compared to the

was primarily due to a

decline in revenue days associated with additional contracted rigs being idled during the quarter.

The percentage of revenues from non-CHK customers increased from

of total segment revenues for the

. As of

September 30, 2015

, approximately

of SSE’s active rigs were contracted by non-CHK customers and SSE had a total drilling revenue backlog of

$505.3 million

with an average duration of


Operating costs were

$41.4 million

$57.1 million

$133.0 million

. Average operating costs per revenue day in the


, primarily driven by a

decrease in labor-related costs per revenue day. As a percentage of drilling revenues, drilling operating costs were

, the Company’s marketed fleet of

rigs consisted of

Tier 1 rigs, including


Tier 2 rigs and

Tier 3 rigs. Additionally,

of the Company’s marketed fleet are multi-well pad capable rigs. SSE currently has

additional contracted PeakeRigs™ under construction that are backed by term contracts and scheduled to be delivered over the next eight months. As of

rigs were under contract, of which

were idle.

Hydraulic Fracturing

SSE’s hydraulic fracturing segment contributed revenues of

$118.1 million

$8.2 million

$163.4 million

$18.2 million

$245.1 million

$54.5 million

. The decrease in revenues from the

was primarily due to an

decrease in revenue per stage. Revenues from non-CHK customers as a percentage of total segment revenues increased from

, SSE’s hydraulic fracturing revenue backlog was

$387.6 million

Average operating costs per stage in the

quarter decreased

. The decrease in average operating costs per stage for the

decline in product costs per stage, which is the result of reducing proppant and fracturing fluid costs by leveraging SSE’s logistics infrastructure competitive advantage. As a percentage of hydraulic fracturing revenues, hydraulic fracturing operating costs were

, SSE owned

hydraulic fracturing fleets with an aggregate of


horsepower operating in the Anadarko Basin and the Eagle Ford and Utica Shales.

Oilfield Rentals

SSE’s oilfield rentals segment contributed revenues of

$15.0 million

($0.9) million

$17.8 million

($4.1) million

$38.9 million

$13.7 million

. Revenues during the quarter were negatively impacted by the reduction in drilling and completions activity by SSE’s customers.

$14.0 million

$20.2 million

$27.0 million

. As a percentage of oilfield rental revenues, operating costs were

. The decrease in operating costs as a percentage of revenues in the

was due to declines in labor-related costs and sub-contracting services. The increase in operating costs as a percentage of revenue in the

was due to significant declines in fleet utilization and increased pricing pressure.

Former Oilfield Trucking

During the second quarter of 2015, SSE sold its drilling rig and logistics business and water hauling assets. As of June 30, 2015, there were no remaining assets or operations in the oilfield trucking segment.

General and Administrative Expenses

General and administrative expenses were

$26.7 million

$34.8 million

$32.7 million

. General and administrative expenses include non-cash compensation of

$8.3 million

$8.6 million

, and severance-related costs of

$1.5 million

$3.1 million

, respectively. During the second quarter of 2015, general and administrative expenses included

$2.7 million

for services provided by CHK pursuant to the transition services agreement which was terminated during the second quarter of 2015.


, SSE had cash of

$156.2 million

and working capital of

$168.7 million

. SSE also had $152.7 million in availability under its revolving bank credit facility, which included no borrowings and $10.2 million in outstanding letters of credit. As of

October 23, 2015

, SSE had cash on hand of $126.8 million.

Capital expenditures totaled

$61.1 million

, which primarily consisted of investment in new PeakeRigs™. For the nine months ended

, capital expenditures totaled

$151.8 million

. SSE currently expects its total year-end 2015 capital expenditures to be under

$200.0 million

, SSE repurchased and cancelled

in aggregate principal amount of its 6.5% Senior Notes due 2022 (the “2022 Notes”) for

$4.9 million

. SSE recognized a gain on extinguishment of debt of

$5.0 million

, which includes accelerated amortization of deferred financing costs of

$0.1 million

. For the nine months ended September 30, 2015, SSE repurchased and cancelled

$50.0 million

in aggregate principal amount of the 2022 Notes in multiple transactions for

$31.3 million

. SSE recognized gains on extinguishment of debt of

$18.1 million

million. From time to time SSE may use cash on hand in excess of its budgeted capital expenditures to repurchase and cancel its outstanding long-term debt or common stock, subject to approval by its Board of Directors.

Conference Call Information

SSE will host a conference call on Wednesday,

at 9:00 a.m. CDT to discuss its

financial and operational results. The telephone number to access the conference call is U.S. toll-free


and international


. The conference ID for the call is 51998155. SSE encourages those who would like to participate in the call to place calls between 8:50 a.m. and 9:00 a.m. CDT. For those unable to participate in the conference call, a digital recording of the conference will be available for replay two hours after the call’s completion until November 18, 2015. To access the recording, please use dial-in number 800-585-8367 or 404-537-3406 and the conference ID 51998155.

The conference call will also be webcast live on

in the “investors” section. The webcast of the conference call will be available on the website for one year.

About Seventy Seven Energy Inc.

Headquartered in Oklahoma City, SSE provides a wide range of wellsite services and equipment to U.S. land-based exploration and production customers. SSE’s services include drilling, hydraulic fracturing and oilfield rentals and its operations are geographically diversified across many of the most active...