Basic Energy Services: Unchanged rig count, but utilization rate way down

Basic Energy expect Q3 2015 revenues to be in line with previous guidance of 4 – 5% lower

Texas-based Basic Energy Services says low oil prices have forced the company to keep prices down in order to maintain market share and keep equipment working.

In a report on its operations for Sept,, Basic Energy said the well servicing rig count remained unchanged at 421. Rig hours for Sept. were 46,800,a utilization rate of 46 per cent, (53% in Aug. 2015, 71% in Sept. 2014).

The company’s fluid service truck count remained flat at 1,015. Truck hours for the month were 183,400 (188,100 in Aug. 2015, 215,800 in Sept. 2014).

Drilling rig days for Sept. were 97, with a rig utilization of 27 per cent (23% in Aug. 2015, 91% in Sept. 2014).

“As a result of the continued weakness in commodity prices, pricing in all of our markets and lines of business is being lowered in order to maintain activity levels and protect market share as much as possible,” said Roe Patterson, Basic Energy president and CEO in a press release.

Rig hours and utilization fell from August to September, primarily due to the Labor Day holiday period and competitive market conditions, according to Patterson, while fluid service hours in Sept. on an average per truck per calendar basis were consistent with Aug. activity despite effect of the Labor Day holiday.

Completion activity in the completion and remedial segment continues to be impacted by the lower drilling rig count and volatile oil price environment.

“Recently, in a few selected markets, stimulation pricing has fallen to levels where cash margins at the field level do not support regular maintenance capital expenditures on equipment,” said Patterson.

“In these instances, we have either temporarily stacked our equipment or relocated frac spreads to other markets.

Pricing in  Basic Energy’s production-related businesses remains competitive, but utilization rates have stabilized.

Patterson says the fluid services business has been the most resilient because of the company’s salt water disposal well network, especially in markets like the Permian Basin. Concentrating produced water hauls on the company-owned disposal facilities allows Basic Energy to keep costs low and efficiency high.

“Seasonal impacts and low commodity prices will weigh on our production-related businesses in the near term, but we expect them to perform better than drilling and completion-related businesses until the drilling rig count rebounds,” he said.

“Based on our Sept. performance, we expect that our third quarter 2015 revenues to be in line with our previous guidance of 4 to 5 per cent lower sequentially.”