By February 21, 2016 Read More →

Basic Energy Services Q4 revenue drops 15%, hoping for 2016 relief

Basic Energy Services expects further 10% revenue drop in Q1 2016

Forth Worth-based oilfield company Basic Energy Services suffered another tough quarter to close out 2015, but says it is well positioned if prices bounce back in mid-2016 as expected.

Basic Energy ServicesThe company announced its Q4 financial results last week that included a 15 per cent revenue decline to $161.0 million from $189.2 million in the third quarter of 2015. Management blamed normal seasonal declines, including reduced daylight hours, holidays and inclement weather, were compounded by continued pricing pressure and diminished activity levels. In 2014 Q4, Basic Energy Services generated $400.9 million in revenue.

“Without a doubt, 2015 was a very challenging year as US land activity experienced its largest decline in the past 30 years,” said Roe Patterson, president and CEO.

“Capital spending by our customers declined by more than 30 per cent and the US drilling rig count ended 2015 almost 70 per cent lower than the 2014 peak.”

Basic Energy Services

Roe Patterson, Basic Energy President and CEO.

Basic Energy Services reported a net loss of $55.2 million, or a loss of $1.36 per basic and diluted share in Q4. This compares to a reported net loss of $105.6 million, or a loss of $2.63 per basic and diluted share, in Q3, which  included a tax-effected, non-cash charge of $55.1 million ($81.9 million before tax), or $1.37 per basic and diluted share, for impairment of all of the goodwill associated with the completion and remedial services segment.

“Our fourth quarter results reflect the impact of the additional decline in all oilfield related services. Our customers started to rapidly reduce their activities early in the quarter as they attempted to preserve cash and defer maintenance work in response to continually weak commodity prices,” said Patterson.

Patterson says that Q4 margins declined across all product lines, with completion and remedial services being impacted the most due to the continuing decline in new drills and completions.

“The amount of excess equipment available in most markets applies further pressure on rates,” he said in a press release.

“Our fluid services business has been the most resilient due to our integrated strategy that benefits from our extensive salt water disposal well network, which allows us to keep costs low and efficiencies high.”

Basic Energy Services says pricing in all of its markets and lines of business remains very competitive.  The company is stacking equipment and exiting markets where cash margins do not support maintenance capital expenditures. During Q4 it stacked an additional 19,000 hydraulic horsepower, for a total of 64,000 HHP stacked at year-end, as well as another 40,000 HHP in Q1 2016.

“Looking forward, we expect this pace of decline to subside in the first half of 2016. However, the first quarter will remain challenging as our industry finds a bottom,” said Patterson, who expects Q1 revenue to be down another 10 per cent.

“Customers have expressed various levels of capital expenditure reductions for 2016 and many have chosen to defer or delay all projects until commodity prices improve.”


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