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Does SPN Have Superior Capex Plans in the Works?

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Superior Energy Services’ operating cash flows

In this article, we’ll analyze how Superior Energy Services’ (SPN) operating cash flow has trended over the past few quarters. We’ll also discuss how its free cash flow (or FCF) has been affected by its capital expenditure (capex).

Superior Energy Services’ cash from operating activities (or CFO) fell 82% in 2Q16 over 2Q15. SPN generated $35 million in CFO in 2Q16. Lower revenue in the past year primarily led to its lower CFO.

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Superior Energy Services’ capex and free cash flow

SPN’s capex fell 74% in the past year through 2Q16. However, lower capex couldn’t offset its fall in CFO, which resulted in its FCF falling significantly over the past year. 

In 2Q16, SPN’s FCF was $5.8 million, a fall of 93% compared to a year ago. Superior Energy Services has generated positive free cash flow in the past 12 months.

In comparison, CARBO Ceramics’ (CRR) 2Q16 FCF was $17 million. CARBO Ceramics is Superior Energy Services’ lower market cap peer. SPN makes up 0.16% of the iShares US Energy ETF (IYE).

Superior Energy Services’ 2016 capex plan

Superior Energy Services’ capex budget for 2016 is $100 million or lower, ~72% lower than its 2015 capex. In June 2016, SPN limited its credit facility to $440 million from the earlier $470 million. This reduction could further restrict its capex spending and working capital needs going forward.

Next, we’ll discuss Superior Energy Services’ historical valuation multiples.

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