Complete Production Services, Inc. Announces Second Quarter Earnings of $0.54 Per Diluted Share from Continuing Operations, Divestiture of Non-Core Assets and New Growth Initiatives

Complete Production Services, Inc. (NYSE:CPX) today reported second quarter 2008 revenue of $441.1 million, up 20% over second quarter 2007 revenue and up 6% over the first quarter of 2008. Net income from continuing operations for the quarter was $39.8 million or $0.54 per diluted share, compared to second quarter 2007 net income of $40.1 million or $0.55 per diluted share and first quarter 2008 net income of $41.8 million or $0.57 per diluted share. Earnings before interest, taxes, depreciation, amortization, impairment charge and minority interest (EBITDA, as defined below) totaled $118.2 million, up 7% year-over-year and down 1% from the first quarter of 2008. These operating results from continuing operations exclude the impact of discontinued operations associated with certain non-core business assets, primarily within the Product Sales segment, which were sold during the second quarter of 2008. Concurrent with the sale, CPX acquired a well service and fluid handling operation in the Barnett Shale area, resulting in net cash received of approximately $50 million. Second quarter 2008 revenues for the Completion and Production Services segment were $368.7 million, up 22% year-over-year and up 5% sequentially. Segment EBITDA was $107.5 million, up from $99.6 million in the prior year and down from the $112.2 million for the first quarter of 2008. Segment EBITDA margins were 29.2% compared to 32.9% in the prior year and 31.9% in the first quarter of 2008. Year over year EBITDA increased as a result of Complete’s investment in organic growth capital and strategic acquisitions. However, EBITDA margins declined due to the impact of lower pricing levels and slightly lower utilization rates for certain service offerings, and the impact of inflationary forces on labor, consumables and, in particular, fuel. Sequentially, EBITDA margins declined due primarily to the seasonal downturn in Canada and significantly higher fuel costs. Drilling Services segment revenue and EBITDA were $57.2 million and $15.5 million, respectively, for the second quarter of 2008. The results compared to $53.3 million and $16.6 million for the same period of 2007, and $53.3 million and $12.2 million for the previous quarter. EBITDA margins increased sequentially as higher volumes and improved mix more than offset the impact of inflationary forces in both the rig logistics and contract drilling operations. Year-over-year, higher volume did not fully counteract the impact of higher fuel costs and weaker pricing, resulting in lower EBITDA margins. Commenting on the quarter, Chairman and CEO Joe Winkler stated, "Activity levels across most of our geographic areas and service lines were strong during the quarter as resource play development accelerated in the United States. Given the current environment, we believe we will regain some pricing leverage during the second half of 2008. All indications are that Complete’s customers are moving forward with their growth plans and continue to identify new and exciting resource plays. We will continue to invest alongside our customers in emerging areas to help them capitalize on new opportunities.” Significant achievements since the first quarter include: Divesting non-core business assets from the Complete’s Product Sales segment; Acquiring and integrating Frac Source Services, Inc., a Barnett Shale focused pressure pumping business; Expanding our service offering in the Bakken Shale of North Dakota by introducing hydraulic fracturing services into this market; and Securing exclusive rights from Sondex, part of the new Oilfield Technology (OFT) group within GE Energy, for the use of its new open hole formation evaluation tools in the United States. Mr. Winkler further commented, "As a result of our recent accomplishments, customer actions and our positive view on the long-term fundamentals in North America, we have increased our expected 2008 investment in capital expenditures to approximately $250 million.” Conference Call Complete will hold a conference call to discuss second quarter 2008 results on Thursday, July 24 at 8:30 a.m. Eastern Time. To participate in the live conference call, dial 866-800-8651 at least ten minutes prior to the scheduled start of the call. When prompted, provide the passcode: 64641903. The conference call will be available for replay beginning at 10:30 a.m., July 24, 2008 and will be available until July 31, 2008. To access the conference call replay, please call 888-286-8010 and use the passcode: 87658249. The call is also being webcast and can be accessed at our website at www.completeproduction.com. The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risk and uncertainties. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, risks associated with the general nature of the oilfield service industry. The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release. Management evaluates the performance of Complete’s operating segments using a non-GAAP financial measure, EBITDA. EBITDA is calculated as net income from continuing operations before net interest expense, taxes, depreciation and amortization, impairment charge, and minority interest. EBITDA is not a substitute for the GAAP measures of earnings and cash flow. EBITDA is used in this press release because our management considers it an important supplemental measure of performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Complete Production Services, Inc. Consolidated Statements of Operations For the Quarters and Six Months Ended June 30, 2008 and 2007 (in thousands, except per share data)         Quarter Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 (unaudited) (unaudited) (unaudited) (unaudited) Revenue: Services $ 425,848 $ 355,620 $ 830,811 $ 710,347 Products   15,237     11,194     27,452     22,689   441,085 366,814 858,263 733,036   Cost of services 264,142 197,344 506,354 393,762 Cost of products 10,730 8,000 18,550 16,285 General and administrative expense 48,036 51,134 95,454 97,528 Depreciation and amortization   43,037     32,375     82,288     60,329   365,945 288,853 702,646 567,904             Income from continuing operations before interest, taxes and minority interest 75,140 77,961 155,617 165,132   Interest expense 15,515 15,055 31,430 30,668 Interest income (762 ) (316 ) (1,387 ) (528 )             Income from continuing operations before minority interest and taxes 60,387 63,222 125,574 134,992   Minority interest, net of tax - (205 ) - 56         Income from continuing operations before taxes 60,387 63,427 125,574 134,936   Tax provision 20,544 23,322 43,956 50,615         Income from continuing operations $ 39,843 $ 40,105 $ 81,618 $ 84,321   Income (loss) from discontinued operations (net of tax) (6,857 ) 3,678 (4,706 ) 6,812         Net income $ 32,986   $ 43,783   $ 76,912   $ 91,133     Basic earnings per share: Continuing operations $ 0.54 $ 0.56 $ 1.12 $ 1.18 Discontinued operations $ (0.09 ) $ 0.05   $ (0.06 ) $ 0.09   $ 0.45   $ 0.61   $ 1.06   $ 1.27     Diluted earnings per share: Continuing operations $ 0.54 $ 0.55 $ 1.10 $ 1.15 Discontinued operations $ (0.10 ) $ 0.05   $ (0.06 ) $ 0.10   $ 0.44   $ 0.60   $ 1.04   $ 1.25     Weighted average shares outstanding: Basic 73,171 71,916 72,866 71,711 Diluted 74,407 73,367 74,059 73,195 Complete Production Services, Inc. Condensed Consolidated Balance Sheets As of June 30, 2008 and December 31, 2007 (in thousands)         June 30, December 31,   2008     2007   (unaudited) (unaudited) Assets: Current assets $ 420,724 $ 378,018 Property, plant and equipment, net 1,107,897 1,013,190 Goodwill 569,569 549,130 Other long-term assets 33,438 31,064 Discontinued operations/held for sale   -     83,357   Total assets   2,131,628     2,054,759     Liabilities and stockholders' equity: Current liabilities 166,281 159,840 Long-term debt 788,150 825,985 Long-term deferred tax liabilities 148,186 126,821 Discontinued operations/held for sale   -     11,790   Total liabilities 1,102,617 1,124,436   Common stock 738 725 Treasury stock (202 ) (202 ) Additional paid-in capital 605,706 581,404 Retained earnings 394,447 317,535 Cumulative translation adjustment   28,322     30,861   Total stockholders' equity 1,029,011 930,323     Total liabilities and stockholders' equity $ 2,131,628   $ 2,054,759   Complete Production Services, Inc. Cash Flow Data For the Six Months Ended June 30, 2008 (in thousands)                     June 30, 2008 (unaudited) Cash flows provided by/(used for): Operating activities $ 179,762 Investing activities: Capital expenditures $ (134,424 ) Other investing activities $ (15,867 ) Financing activities $ (25,363 ) Complete Production Services, Inc. Consolidated Segment Information For the Quarters Ended June 30, 2008 and 2007, and March 31, 2008 and for the Six Months Ended June 30, 2008 and 2007 (in thousands, except percentages)           Quarter Ended June 30, June 30, March 31, 2008 2007 2008 (unaudited) (unaudited) (unaudited) Revenue: Completion and production services $ 368,656 $ 302,304 $ 351,652 Drilling services 57,192 53,316 53,311 Products   15,237     11,194     12,215   Total revenues $ 441,085   $ 366,814   $ 417,178     EBITDA: (1) Completion and production services $ 107,536 $ 99,606 $ 112,176 Drilling services 15,512 16,589 12,217 Products 3,532 2,411 3,290 Corporate and other   (8,403 )   (8,270 )   (7,955 ) Total EBITDA $ 118,177   $ 110,336   $ 119,728     EBITDA as a % of Revenue: Completion and production services 29.2 % 32.9 % 31.9 % Drilling services 27.1 % 31.1 % 22.9 % Products 23.2 % 21.5 % 26.9 % Total 26.8 % 30.1 % 28.7 %     Six Months Ended June 30, June 30, 2008 2007 (unaudited) (unaudited) Revenue: Completion and production services $ 720,308 $ 605,126 Drilling services 110,503 105,221 Products   27,452     22,689   Total revenues $ 858,263   $ 733,036     EBITDA: (1) Completion and production services $ 219,712 $ 202,126 Drilling services 27,728 32,839 Products 6,822 4,980 Corporate and other   (16,357 )   (14,484 ) Total EBITDA $ 237,905   $ 225,461     EBITDA as a % of Revenue: Completion and production services 30.5 % 33.4 % Drilling services 25.1 % 31.2 % Products 24.9 % 21.9 % Total 27.7 % 30.8 %     (1)   EBITDA is a non-GAAP measure used by management, as defined in the last paragraph of this press release.   Footnote: The results for all periods exclude discontinued operations. Complete Production Services, Inc. Reconciliation of EBITDA to the Most Comparable GAAP Measure For the Quarters Ended June 30, 2008 and 2007 and March 31, 2008 And the Six Months Ended June 30, 2008 and 2007 (unaudited, in thousands)   Completion & Production Services         Drilling Corporate & Services Products Other Total Quarter Ended June 30, 2008: EBITDA $ 107,536 $ 15,512 $ 3,532 $ (8,403 ) $ 118,177 Depreciation & amortization   36,998   4,888   559   592     43,037 Operating income (loss) $ 70,538 $ 10,624 $ 2,973 $ (8,995 ) $ 75,140   Quarter Ended June 30, 2007: EBITDA $ 99,606 $ 16,589 $ 2,411 $ (8,270 ) $ 110,336 Depreciation & amortization   27,836   3,414   486   639     32,375 Operating income (loss) $ 71,770 $ 13,175 $ 1,925 $ (8,909 ) $ 77,961   Quarter Ended March 31, 2008: EBITDA $ 112,176 $ 12,217 $ 3,290 $ (7,955 ) $ 119,728 Depreciation & amortization   33,730   4,416   546   559     39,251 Operating income (loss) $ 78,446 $ 7,801 $ 2,744 $ (8,514 ) $ 80,477   Six Months Ended June 30, 2008: EBITDA $ 219,712 $ 27,728 $ 6,822 $ (16,357 ) $ 237,905 Depreciation & amortization   70,728   9,304   1,105   1,151     82,288 Operating income (loss) $ 148,984 $ 18,424 $ 5,717 $ (17,508 ) $ 155,617   Six Months Ended June 30, 2007: EBITDA $ 202,126 $ 32,839 $ 4,980 $ (14,484 ) $ 225,461 Depreciation & amortization   51,832   6,527   958   1,012     60,329 Operating income (loss) $ 150,294 $ 26,312 $ 4,022 $ (15,496 ) $ 165,132 Complete Production Services, Inc. Consolidated Statements of Operations--Restated for Discontinued Operations For Each Quarter of 2007 and the First Quarter of 2008 (in thousands, except per share data)                       Quarter Ended March 31,   June 30,   September 30,   December 31,   March 31, 2007 2007 2007 2007 2008 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Revenue: Services $ 354,727 $ 355,620 $ 364,900 $ 379,339 $ 404,963 Products   11,495     11,194     8,505     9,663     12,215   366,222 366,814 373,405 389,002 417,178   Cost of services 196,418 197,344 215,533 224,181 242,212 Cost of products 8,285 8,000 5,458 5,878 7,820 General and administrative expense 46,394 51,134 46,055 48,910 47,418 Depreciation and amortization   27,954     32,375     34,185     36,840     39,251   279,051 288,853 301,231 315,809 336,701               Income from continuing operations before interest, taxes and minority interest 87,171 77,961 72,174 73,193 80,477   Interest expense 15,613 15,055 16,667 15,304 15,915 Interest income (212 ) (316 ) (484 ) (624 ) (625 ) Impairment charge - - - 13,094 -               Income from continuing operations before minority interest and taxes 71,770 63,222 55,991 45,419 65,187   Minority interest, net of tax 261 (205 ) (283 ) (342 ) -           Income from continuing operations before taxes 71,509 63,427 56,274 45,761 65,187   Tax provision 27,293 23,322 17,483 18,753 23,412           Income from continuing operations $ 44,216 $ 40,105 $ 38,791 $ 27,008 $ 41,775   Income (loss) from discontinued operations (net of tax) 3,134 3,678 2,817 1,814 2,151           Net income $ 47,350   $ 43,783   $ 41,608   $ 28,822   $ 43,926     Basic earnings per share: Continuing operations $ 0.62 $ 0.56 $ 0.54 $ 0.37 $ 0.58 Discontinued operations $ 0.04   $ 0.05   $ 0.04   $ 0.03   $ 0.03   $ 0.66   $ 0.61   $ 0.58   $ 0.40   $ 0.61     Diluted earnings per share: Continuing operations $ 0.61 $ 0.55 $ 0.53 $ 0.37 $ 0.57 Discontinued operations $ 0.04   $ 0.05   $ 0.04   $ 0.02   $ 0.03   $ 0.65   $ 0.60   $ 0.57   $ 0.39   $ 0.60     Weighted average shares outstanding: Basic 71,503 71,916 72,191 72,343 72,562 Diluted 73,021 73,367 73,495 73,514 73,712 Complete Production Services, Inc.Consolidated Segment Information--Restated for Discontinued OperationsFor Each Quarter of 2007 and the First Quarter of 2008(in thousands, except per share data)   Quarter Ended March 31,   June 30,   September 30,   December 31,   March 31, 2007 2007 2007 2007 2008 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Revenue: Completion and production services $ 302,822 $ 302,304 $ 312,020 $ 325,168 $ 351,652 Drilling services 51,905 53,316 52,880 54,171 53,311 Products   11,495     11,194     8,505     9,663     12,215   Total revenue 366,222 366,814 373,405 389,002 417,178   EBITDA: Completion and production services 102,520 99,606 95,493 101,009 112,176 Drilling services 16,250 16,589 14,211 14,368 12,217 Products 2,569 2,411 2,235 2,728 3,290 Corporate and other   (6,214 )   (8,270 )   (5,580 )   (8,072 )   (7,955 ) Total EBITDA 115,125 110,336 106,359 110,033 119,728   Depreciation and amortization: Completion and production services 23,996 27,836 29,475 31,530 33,730 Drilling services 3,113 3,414 3,933 4,112 4,416 Products 472 486 577 529 546 Corporate and other   373     639     200     669     559   Total depreciation and amortization 27,954 32,375 34,185 36,840 39,251   Operating income (loss): Completion and production services 78,524 71,770 66,018 69,479 78,446 Drilling services 13,137 13,175 10,278 10,256 7,801 Products 2,097 1,925 1,658 2,199 2,744 Corporate and other   (6,587 )   (8,909 )   (5,780 )   (8,741 )   (8,514 ) Total operating income (loss)   87,171     77,961     72,174     73,193     80,477