Basic Energy Services reports higher than projected March losses

Basic Energy expects Q1 revenues to be 18 – 20% lower than Q4 2015 rather than previous guidance of 16 – 17% lower

FORT WORTH, Texas-based Basic Energy Services, Inc. has reported selected operating data for March and the numbers illustrate the pain American service companies are feeling as a consequence of low oil prices.

“Activity in the month of March, excluding the impact of the Easter holiday, remained steady for our production-related well servicing and fluid services segments,” said CEO Roe Patterson.

“However, our completion-related services, such as our stimulation business, continue to be impacted as the volatility and uncertainty in oil prices has caused our customers to further curtail their exploration and drilling projects.”

Basic’s well servicing rig count remained unchanged at 421.

Well servicing rig hours for the month were 37,000 producing a rig utilization rate of 35 per cent, compared to 35 per cent and 55 per cent in Feb. 2016 and March 2015, respectively.

During the month, Basic’s fluid service truck count decreased by six to 981. Fluid service truck hours for the month were 172,800, compared to 168,100 and 202,900 in Feb. 2016 and March 2015, respectively.

Drilling rig days for the month were 31 producing a rig utilization of 8 per cent, compared to 8 per cent and 50 per cent in Feb. 2016 and March 2015, respectively.

“Throughout the first quarter, we stacked additional equipment in markets where existing demand did not allow us to sustain cash breakeven or better margins.  As of March 31, we had stacked 134,000 hydraulic horsepower due to lower completion demand.  We also stacked eight additional well servicing rigs in March to bring our total stacked rig inventory to 127 at quarter-end,” said Patterson.

“We made further progress in the first quarter to adjust our operational infrastructure to react to the prolonged weak market conditions and will make additional changes throughout this year to generate additional cost savings.”

Based on activity in March, Basic management now expects first quarter revenues to be 18 to 20 per cent lower than Q4 2015 rather, than the previous guidance of 16 to 17 per cent lower.

“Weather and holiday interruptions represented approximately 4.5 per cent of the total sequential revenue drop. We will discuss our second quarter revenue expectations during our first quarter earnings call later this month,” said Patterson.