What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2008-08-19 compared with 2008-05-20 · 63 added, 247 removed, 63 unchanged (83% of the section changed)

17 unchanged sentences

that we believe are reasonable based on currently available

Critical Estimates and Accounting

prepare our consolidated financial statements in this report using accounting

principles that are generally accepted in the United States (“GAAP”).

represents a comprehensive set of accounting and disclosure rules and

requirements.

We must make judgments, estimates, and in certain

circumstances, choices between acceptable GAAP alternatives as we apply

these rules and requirements, which may affect the reported amounts of assets

and liabilities and disclosure of contingent assets and liabilities at the

date of the financial statements and the reported amount of revenues and

expenses during the reporting period.

Actual results could differ from

those estimates.

critical estimate we use is the engineering estimate of proved oil and gas

This estimate affects the application of the full cost method of

accounting, the calculation of depreciation and depletion of oil and gas

properties and the estimate of the impairment of our oil and gas properties.

It also affects the estimated lives of our assets used to determine asset

retirement obligations.

Full Cost Method

the full cost method of accounting for oil and gas producing activities.

costs incurred in connection with the acquisition, exploration for and

development of petroleum and natural gas reserves are capitalized.

include lease acquisition, geological and geophysical activities, rentals on

non-producing leases, drilling, completing and equipping of oil and gas wells

and administrative costs directly attributable to those activities and asset

retirement costs.

Sales of Oil and Gas

from the sale of properties are applied against capitalized costs, without any

gain or loss being recognized, unless such a sale would significantly alter the

rate of depletion and depreciation.

Depreciation and Depletion of Oil and

Gas Properties

of exploration and development costs and depreciation of production equipment is

provided using the unit-of-production method based upon estimated proven oil and

gas reserves.

The costs of significant unevaluated properties are excluded from

costs subject to depletion.

For depletion and depreciation purposes, relative

volumes of oil and gas production and reserves are converted at the equivalent

conversion based upon relative energy content.

applying the full cost method, we perform an annual ceiling test whereby the

carrying value of oil and gas properties and production equipment, net of

recorded future income taxes and the accumulated provision for site restoration

and abandonment costs, is compared annually to an estimate of future net cash

flow from the production of proven reserves.

Costs related to undeveloped oil

and gas properties are excluded from the ceiling tests.

Discounted net cash

flow, utilizing a 10% discount rate, is estimated using year end prices, less

estimated future general and administrative expenses, financing costs and income

Should this comparison indicate an excess carrying value, the excess is

charged against earnings.

For the years ended December 31, 2007 and 2006, no

impairment of oil and gas properties was indicated.

Asset Retirement

a liability for legal obligations associated with the retirement of tangible

long-lived assets in the period in which they are incurred in

accordance with Statement of Financial Accounting Standards (“SFAS”) No.

143 “Accounting for Asset Retirement Obligations.” Under this method, when

liabilities for dismantlement and abandonment costs (ARO) are initially

recorded, the carrying amount of the related oil and natural gas properties are

Accretion of the liability is recognized each period using the

interest method of allocation, and the capitalized cost is depleted over the

useful life of the related asset.

Revisions to such estimates are recorded

as adjustments to the ARO, capitalized asset retirement costs and charges to

operations during the periods in which they become known.

At the time the

abandonment cost is incurred, we will be required to recognize a gain or loss if

the actual costs do not equal the estimated costs included in

Concentrations of Credit

all of our oil and natural gas production to two customers in

maintain our cash in bank deposit accounts which, at times, may exceed federally

insured limits.

Accounts are guaranteed by the Federal Deposit Insurance

Corporation (“FDIC”) up to $100,000.

At March 31, 2007 all of our cash deposits

were within FDIC insured limits.

We have not experienced any losses in such

and Cost Recognition

the sales method to account for sales of crude oil and natural gas.

method, revenues are recognized based on actual volumes of oil and gas sold to

The volumes sold may differ from the volumes to which we are

entitled based on our interest in the properties.

These differences

create imbalances which are recognized as a liability only when the imbalance

exceeds the estimate of remaining reserves.

We had no imbalances as

of December 31, 2007 and March 31, 2008.

Costs associated with

production are expensed in the period incurred.

Cash and cash

cash equivalents include cash in banks and liquid deposit with maturities of

three months or less.

Fair Value of Financial

carrying value of cash and cash equivalents, accounts payable and accrued

expenses and other liabilities approximates fair value due to the short term

maturity of these instruments.

The carrying value of the notes payable,

convertible notes and convertible debentures approximate their fair value as

December 31, 2007 and 2006.

and equipment are stated at cost.

Depreciation is computed on a straight-line

basis over the estimated useful lives of three to five years.

January 1, 2006, we adopted SFAS No.

123(R), “Share-Based Payment”.

replaced SFAS No.

123 and supersedes APB Opinion No.

requires all stock-based payments to employees, including grants of employee

stock options, to be recognized in the financial statements based on their

Loss per share

loss per common share is computed by dividing net loss by the weighted-average

number of common shares outstanding during the period.

Diluted net loss per

common share is determined using the weighted-average number of common shares

outstanding during the period, adjusted for the dilutive effect of common stock

In periods when losses are reported, the weighted-average number of

common shares outstanding excludes common stock equivalents, because their

inclusion would be anti-dilutive.

measure of discounted future net cash flows

standardized measure of discounted future net cash flows relies on these

estimates of oil and gas reserves using commodity prices and costs

which existed at year-end.

In our 2007 year-end reserve report, we used the

December 31, 2007 WTI Cushing spot price of $96.01 per Bbl and Henry Hub spot

natural gas price of $7.465 per MMbtu, adjusted by property for energy

content, quality, transportation fees, and regional price differentials.

weighted average price over the lives of the properties was $88.45 per Bbl

for oil and $6.00 per Mcf for gas.

While we believe that future operating costs

can be reasonably estimated, future prices are difficult to estimate since

market prices are influenced by events beyond our control.

Future global

economic and political events will most likely result in significant

fluctuations in future oil prices, while future U.S.

natural gas prices will

continue to be influenced by primarily domestic market factors, including supply

and demand, weather patterns and public policy.

taxes are accounted for using the asset/liability method of income tax

Future income taxes are recognized for the future income tax

consequences attributable to differences between the carrying values of assets

and liabilities and their respective income tax bases.

Future income tax assets

and liabilities are measured using income tax rates expected to apply to taxable

income in the years in which temporary differences are expected to be recovered

The effect on future income tax assets and liabilities of a change

in income tax rates is included in earnings in the period that such change in

income tax rates is enacted.

Future income tax assets are recorded in the

financial statements if realization is considered more likely than

Superior Energy Holdings, Inc.

17 unchanged sentences

These fields are known as the

Bateman Project in Bastrop and Caldwell Counties (comprised of the Bateman Field

and part of the adjacent Dale McBride Field), the Benton Field in Navarro County

and the Del Monte Prospect in Zavalla County.

report of our independent registered public accounting firm on the financial

statements for the year ended December 31, 2007, includes an explanatory

paragraph indicating substantial doubt as to our ability to continue as a going

We incurred a net loss of $553,402 for the quarter ended March 31, 2008

and have a working capital deficit of $777,368 at March 31, 2008, excluding

prepaid expenses relating primarily to services paid for with common

Bateman Project in Bastrop and Caldwell Counties (comprised of the Bateman

Field and part of the adjacent Dale McBride Field), the Benton Field in

Navarro County and the Del Monte Prospect in

Zavalla County.

incurred a net loss of $824,403 for the six months ended June 30, 2008 and have

a working capital deficit of $1,239,411 at June 30, 2008, excluding prepaid

expenses relating primarily to services paid for with common

We require significant additional funding to sustain our

5 unchanged sentences

and Capital Resources

sources of liquidity and capital resources for the quarter ended March 31, 2008

were cash flows from operations and draw down of our cash balances.

quarter, we entered into a financing arrangement with our oil purchasing

sources of liquidity and capital resources for the six months ended June 30,

2008 were shareholder loans and draw down of our cash balances.

period, we entered into a financing arrangement with our oil purchasing

customers which allows for immediate payment on barrels delivered.

may reduce the price we might otherwise receive for our production, we have been

able to accelerate cash flow from revenues to enhance or liquidity by receiving

able to accelerate cash flow from revenues to enhance our liquidity by receiving

cash upon the delivery of our barrels.

the quarter ended March 31, 2008, net cash flow used by operating activities

increased by $[541,000] to $[687,000], as compared to $[146,000] for our [2006

fiscal year], primarily because of our increased operating and general and

administrative expenses only partially offset by increased revenues received

during the year.

We expect our cash flow provided by operations to

continue to increase during 2008, mainly due to increased oil and natural

production resulting from our existing properties.

and Caldwell County properties were acquired in 2007 and were shut in for a

portion of that year.

We expect to receive a full year of revenue

from these wells in 2008.

the effects of significant unforeseen expenses or other income, our cash flow

from operations fluctuates primarily because of variations in oil and gas

production rates and in commodity prices.

In addition, our oil and gas

production from either of our properties may be curtailed due

to weather-related factors beyond our control.

In addition, maintenance

activities on, or damage to, major pipelines or processing facilities can also

cause us to shut-in production for undetermined lengths of

the six months ended June 30, 2008, net cash flow used by operating activities

was $131,064.

Excluding the effects of significant unforeseen

expenses or other income, our cash flow from operations fluctuates primarily

because of variations in oil and gas production rates and in commodity

In addition, our oil and gas production from either of our properties

may be curtailed due to maintenance and weather-related factors beyond our

realized oil and gas prices vary significantly due to world political events,

5 unchanged sentences

flow from operations.

incurred capital expenditures totaling approximately $[442,000] during the

quarter ended March 31, 2008.

The capital expenditures primarily related to

capitalizable costs associated with the Bateman Project.

anticipate making additional capital expenditures of approximately $4,000,000

over the next several years to drill additional wells on our existing

anticipate making capital expenditures of approximately $4,000,000 over the next

several years to drill additional wells on our existing

The remainder of our 2008 capital budget will be

1 unchanged sentence

equivalents and the proceeds from offerings of debt and/or equity

required principal payments on our notes and debentures are as follows as of

December 31, 2007:

in our working capital accounts from 2007 to 2008 include an increase in

Accounts payable and accrued liabilities by $[169,000] to $[327,000] at March

31, 2008 due to the increase in operating activities.

Current notes

payable increased to $372,403 from a $347,762 at December 31, 2007 due to

accrual on our various borrowings.

30, 2008, our current liabilities exceeded our current assets by $1,239,411,

excluding prepaid expenses relating primarily to services paid for with common

While we expect to achieve positive cash flow from operations during

2008, we will require additional funding in order to complete our plans to

develop additional wells on existing properties.

In order to achieve positive cash flow from operations during 2008,

we will require additional funding in order to complete our plans to maintain,

workover and begin EOR operations on existing wells and to develop additional

wells on existing properties.

of Operations

produced [3,854] barrels of oil and recognized revenue of $115,563 during the

quarter ended March 31, 2008, an increase of _____ barrels and $100,120 over

2007, primarily because we had a full quarter of production from the Bateman

Project which was acquired in late in the first quarter of 2007 and because we

realized significantly higher prices for our production.

of the three and six months ended June 30, 2008, to the results of the

corresponding prior periods:

for the three months ended June 30, 2008, was $124,522, a decrease of $16,395

(11.65%) compared to revenue of $140,917 for the same period last

The decline in revenue was primarily due to mechanical problems

related to field operations.

For the six months ended June 30, 2008,

revenue was $240,085, an increase of $45,750 (23.5%) compared to revenue of

$194,335 for the comparative six month period of the prior year.

Bateman Project was acquired on March 20, 2007, and thus the prior period does

not represent a full period of production.

Company’s ability to maintain and increase sales from recent levels is dependent

on its ability to raise funds to correct its working capital deficit and for the

investment of additional funds into the extensive maintenance, workover and

planned enhancement operations to accelerate the realization of production

operating expense and production taxes

production costs totaled $89,495 during the quarter ended March 31, 2008, an

increase of $70,732 over 2007, primarily because we had a full quarter of

production from the Bateman Project which was acquired in late in the first

quarter of 2007.

of asset retirement obligation

expense for the quarter ended March 31, 2008 was $[8,000], as compared to

$[1,000] for same quarter in 2007.

This reflects our acquisition of

the Bastrop and Caldwell County properties during the first quarter of

Depletion, depreciation and

amortization (DD&A) For our quarter ended March 31, 2008, we

recorded DD&A expense of $21,243, after having recorded only $1,069 of

DD&A expense during the first quarter of 2007.

Virtually all of this

expense was attributable to depletion of our oil and gas properties, which

were acquired during the first quarter of 2007.

operating expenses totaled $15,358 for the second quarter, and $119,612 for six

months ended June 30, 2008.

This compares to lease operating expenses

of $93,434 and $126,423 for the comparative periods of the prior

The current year decreases are the result of reduced field

operations, primarily in the second quarter, due to mechanical problems

encountered with the Bateman Project.

and administrative expense (G&A expense)

and administrative expense for the quarter ended March, 31 2008 decreased

$2,858,580 from the comparable 2007 period to $516,505.

The largest portion of

the reduction came from a decrease in stock based compensation of

$[5,680,000] from the same period in 2007 which related to the reverse merger

and administrative expense for the six months ended June 30, 2008 were $784,584

compared to $3,772,662 from the comparable 2007 period.

portion of the reduction came from a decrease in stock based compensation

of $2,812,564 from the same period in 2007 which related to the reverse merger

and compensation of key employees and consultants.

The other major

component of general and administrative costs for the quarter ended March 31,

2008 included salaries of $[361,000].

income (expense)

income (expense) for the quarter ended March 31, 2008 was incurred interest

expense of $41,722 during the quarter.

We incurred no interest

expense during the same quarter in 2007 because the acquisition of the Bateman

project and related financing occurred at the end of the first quarter of

quarter ended March 31, 2008, our net loss decreased to $553,402, compared to

our same quarter 2007 net loss of $3,379,474.

The major components of the

first quarter 2008 loss were general and administrative expenses of $516,505

including stock based compensation of $[5,680,000].

Accounting Pronouncements

Superior does not expect the adoption of recently issued accounting

pronouncements to have a significant impact on their results of operations,

financial position or cash flows

Quantitative and Qualitative Disclosures About Market Risk

quarter ended June 30, 2008, our net loss was $307,663, compared to our same

quarter 2007 net loss of $395,808.

For the six months ended

June 30, 2008, our net loss was $824,403 compared to a net loss of $3,701,234

for the first half of 2007.

The major components of the loss

were general and administrative expenses of $320,833 and $446,807 for the three

month periods ended June 30, 2008 and 2007, respectively, and general and

administrative expenses of $784,585 and $3,772,662 for the six month periods

ended June 30, 2008 and 2007, respectively.

Included in the six month

general and administrative expenses were stock based compensation of $207,436 in

2008 and $3,020,000 in 2007.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis