MIDLAND, Texas, July 29 /PRNewswire-FirstCall/ -- Basic Energy
Services, Inc. (NYSE:BAS) ("Basic") today announced its financial
and operating results for the second quarter and six months ended
June 30, 2009. Basic reported a net loss of $21.2 million, or $0.54
per diluted share for the second quarter of 2009 on revenues of
$118.8 million. In the comparable quarter last year, Basic reported
net income of $18.7 million, or $0.45 per diluted share, on
revenues of $251.5 million. Last year's second quarter included
$4.2 million of after-tax merger related charges; excluding those
charges, net income was $22.9 million, or $0.55 per diluted share.
EBITDA (defined as net income before interest, taxes, depreciation
and amortization) for the second quarter of 2009 was $3.1 million,
or 2.6% of revenue, compared to $65.0 million, or 25.9% of revenue,
in the same period in 2008. Adjusted EBITDA (defined as net income
before interest, taxes, depreciation and amortization, and also
excludes the 2009 pre-tax goodwill impairment charge and 2008
pre-tax merger cost) for the 2009 second quarter was $3.0 million
compared to $71.6 million in the comparable quarter of 2008. EBITDA
and Adjusted EBITDA, which are not measures determined in
accordance with U.S. generally accepted accounting principles
("GAAP"), are defined and reconciled in note 2 under the
accompanying financial tables. For the six-month period ended June
30, 2009, Basic generated a net loss of $37.2 million, or 0.93 per
diluted share, excluding the impact of a $166.9 million after-tax
($204.0 million pre-tax) non-cash goodwill impairment charge. Net
loss as reported for the 2009 six-month period was $204.1 million.
During the comparable period last year, Basic generated income of
$42.6 million, or $1.02 per diluted share, before $4.2 million of
after-tax merger-related costs. Including these merger-related
charges, net income for the first six months of 2008 was $38.4
million, or $0.92 per diluted share. Revenues declined 43% to
$273.5 million in the first six months of 2009, compared to $481.4
million in the same period of 2008. Basic recognized an effective
tax benefit rate of 22% in the first six months of 2009 compared to
a tax rate of 38% in the first six months of 2008. The low
effective tax benefit rate in the first half of 2009 was primarily
due to the $204.0 million goodwill impairment charge. The tax
deductibility of the impairment charge was determined by the
taxable basis of the goodwill considered to be impaired. A portion
of Basic's goodwill was not tax-deductible, which decreased the
benefit of the effective tax rate. Excluding the impact of the
goodwill impairment charge, the effective tax rate for the first
half of 2009 would have been a benefit of 37%. Ken Huseman, Basic's
President and Chief Executive Officer, stated, "As previously
disclosed, the second quarter proved to be challenging due to
current economic conditions and volatile commodity prices. We
experienced soft demand in all our geographic markets and service
lines with revenue declining 23% sequentially. Although demand
improved modestly toward the end of the quarter, pricing eroded as
we aggressively matched our competitors' pricing in order to
protect market share and our current labor force. We believe
pricing has now stabilized in most markets as service companies
have generally reduced pricing as low as current activity and cost
structures allow. "During the second quarter we made significant
reductions to our labor force and cost structure to match the
demand for our services. We have reduced headcount by more than 27%
from the 2008 peak, reduced payroll expense by approximately 40%
and driven down the cost of purchased goods and services. The full
impact of those cost reductions will be reflected in our third
quarter results. "We also continued to reduce our capital
expenditures as the relatively young age of our fleet allowed us to
spend less than $4.7 million supporting our existing fleet. The
remaining $8.8 million in capital spending was related to
completing several projects commenced in 2008 and adding a few
strategic assets such as new salt water disposal facilities to
improve our competitive positioning. Capital spending for the
remainder of the year will be similarly restricted. "For the
remainder of 2009, we expect modest improvement in our operating
environment. Oil prices above $50 per barrel should support strong
demand for oil well maintenance services and capital spending for
oil-related projects will likely continue to expand. In fact,
through July we have seen an increase in activity for oil-related
drilling and workover projects. Natural gas prices however, are not
likely to support a significant increase in activity until
mid-2010. With that demand outlook, we expect utilization to trend
gradually higher but pricing to remain soft as competition remains
fierce in all markets. "Despite the tough market conditions, we are
pleased to have announced the pricing of a senior secured bond
offering that is scheduled to close on July 31, 2009. Our June 30,
2009 cash balance pro forma for this offering is approximately $163
million and we will have no principal payments related to our
long-term debt until August 2014. We believe this level of
liquidity uniquely positions our company to withstand any
reasonable projection of a protracted down cycle in the industry."
Business Segment Results Well Servicing Well servicing revenues
declined approximately 59% to $36.4 million during the second
quarter of 2009 compared to $89.0 million in the same period last
year and $48.8 million in the first quarter of 2009. At June 30,
2009, the well servicing rig count was 414. The weighted average
number of well servicing rigs was 414 during the second quarter of
2009 compared to 403 during the same period in 2008 and unchanged
from the first quarter of 2009. Revenue per well servicing rig hour
declined to $329 during the second quarter of 2009 compared to $400
in the same period in 2008 and $369 in the first quarter of 2009.
Well servicing rig utilization declined to 37% in the second
quarter of 2009 compared to 77% in the second quarter of 2008 and
45% in the first quarter of 2009. Well servicing segment profit in
the second quarter of 2009 was $8.6 million compared to $33.7
million in the same period in 2008 and $11.9 million in the first
quarter of 2009. Due to the well services operating team's focus on
managing costs in a challenging environment, segment profit margins
remained at 24% of revenue in the second quarter of 2009,
consistent with the segment profit margin that was produced in the
first quarter of 2009, but down from 38%, which was achieved in the
second quarter of 2008. The year-over-year decrease was due mainly
to declining utilization and reduced pricing for well servicing rig
services. Fluid Services Fluid services revenue in second quarter
of 2009 was $49.1 million compared to $72.6 million in the same
period in 2008 and $65.0 million in the first quarter of 2009.
Basic added nine new trucks and retired 17 trucks during the second
quarter of 2009, bringing the total number of fluid services trucks
to 805 as of June 30, 2009. Weighted average number of fluid
services trucks increased 22% to 808 during the second quarter of
2009 compared to 663 during the same period in 2008, mainly due to
the trucks acquired in the Azurite acquisition in September 2008.
Average revenue per fluid services truck was $61,000 in the second
quarter of 2009, down 44% compared to $109,000 in the same period
in 2008 and declining 24% compared to $80,000 in the first quarter
of 2009. Segment profit in the second quarter of 2009 was $13.7
million, or 28% of revenue, compared to $24.0 million, or 33% of
revenue, in the same period in 2008 and $20.4 million, or 31% of
revenue, in the first quarter of 2009. Continued weakness in
drilling activity during the second quarter resulted in lower truck
utilization and pricing as well as a drop in well site construction
services, which caused lower revenue and segment profit per fluid
service truck. Completion & Remedial Services Completion and
remedial services revenues during the second quarter of 2009
declined to $29.4 million from $79.6 million in the same period in
2008 and $37.3 million in the first quarter of 2009. Segment profit
in the second quarter of 2009 dropped to $7.9 million, or 27% of
revenue, compared to $36.9 million, or 46% of revenue, in the same
period in 2008 and $11.4 million, or 31% of revenue, in the first
quarter of 2009. The drop in revenue and segment profit compared to
the same quarter last year and sequentially was attributable to
declining activity levels and lower pricing, both in the pressure
pumping and wireline, and the fishing and rental tool service
lines. As of June 30, 2009, Basic had approximately 139,000
hydraulic horsepower of pressure pumping capacity compared to
approximately 128,000 hydraulic horsepower as of June 30, 2008.
Contract Drilling Contract drilling revenues declined to $4.0
million during the second quarter of 2009 compared to $10.3 million
in the comparable quarter in 2008, as rig operating days declined
55% to 314 days in the second quarter of 2009 from 699 in the same
quarter last year. Sequentially, revenues for this segment rose 10%
compared to the first quarter of 2009. Segment profit in the second
quarter of 2009 declined to $650,000 versus $2.8 million during the
second quarter of 2008, but rose compared to the $370,000 generated
in the first quarter of 2009. The sequential rise in segment profit
was primarily a result of the increase in drilling rig operating
days. Basic operated nine drilling rigs during the second quarter
of 2009, the same as in the second quarter last year and in the
first quarter of 2009. Capital Expenditures During the first half
of 2009, Basic's total capital expenditures, including capital
leases, were approximately $39 million, comprised of $13 million
for expansion projects, $20 million for sustaining and replacement
projects, and $6 million for other projects. Expansion capital
spending included approximately $6 million for the fluid services
segment and $7 million for the completion and remedial services
segment. Other capital expenditures of $6 million were mainly for
facilities and IT infrastructure. As already announced, Basic plans
to spend a total of approximately $57.5 million for capital
expenditures during 2009, approximately $40.0 million will be paid
for by operating cash flow and $17.5 million will be financed
through capital leases. Included in the 2009 plan for capital
expenditures is $25 million to complete 2008 projects. In 2008,
total capital expenditures, including capital leases but excluding
acquisitions, were $143 million. Recent Events On July 23, 2009,
Basic Energy Services, Inc. announced that it priced a private
offering of $225 million of Senior Secured Notes due 2014, which
will bear interest at a rate of 11.625% per annum. The notes are
being sold at 94.621% of their face amount. Basic Energy Services
expects to close the sale of the notes on July 31, 2009, subject to
the satisfaction of customary closing conditions. Basic Energy
Services intends to use the net proceeds from the proposed offering
to repay all outstanding indebtedness under its revolving credit
facility. After the outstanding indebtedness under the credit
facility has been repaid, Basic will terminate its $225 million
credit facility. In the third quarter of 2009, Basic will record a
write-off of approximately $3.5 million of unamortized debt
issuance costs associated with the terminated credit facility. The
notes have not been registered under the Securities Act or
applicable state securities laws and may not be offered or sold in
the United States absent registration or an applicable exemption
from the registration requirements of the Securities Act and
applicable state laws. Basic Energy Services provides well site
services essential to maintaining production of oil and gas wells
within its operating area. The company employs approximately 3,800
employees in more than 100 service points throughout the major oil
and gas producing regions in Texas, Louisiana, Oklahoma, New
Mexico, Arkansas, Kansas and the Rocky Mountain states. For more
information, please visit Basic's website at
http://www.basicenergyservices.com/. Conference Call Basic will
host a conference call to discuss its second quarter 2009 results
on Thursday, July 30, 2009, at 9:00 a.m. Eastern Time (8:00 a.m.
Central). To access the call, please dial (480) 629-9866 and ask
for the "Basic Energy Services" call at least 10 minutes prior to
the start time. The conference call will also be broadcast live via
the Internet and can be accessed through the investor relations
section of Basic's corporate website,
http://www.basicenergyservices.com/. A telephonic replay of the
conference call will be available until August 6, 2009 and may be
accessed by calling (303) 590-3030 and using the pass code
4107764#. A webcast archive will be available at
http://www.basicenergyservices.com/ shortly after the call and will
be accessible for approximately 30 days. For more information,
please contact Donna Washburn at DRG&E at (713) 529-6600 or
email at . Safe Harbor Statement This release includes
forward-looking statements and projections, made in reliance on the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Basic has made every reasonable effort to ensure that
the information and assumptions on which these statements and
projections are based are current, reasonable, and complete.
However, a variety of factors could cause actual results to differ
materially from the projections, anticipated results or other
expectations expressed in this release, including (i) changes in
demand for our services and any related material impact on our
pricing and utilizations rates, (ii) Basic's ability to execute,
manage and integrate acquisitions successfully, (iii) changes in
our expenses, including labor or fuel costs and financing costs,
and (iv) the completion of expected financings. Additional
important risk factors that could cause actual results to differ
materially from expectations are disclosed in Item 1A of Basic's
Form 10-K for the year ended December 31, 2008, subsequent Form
10-Qs filed with the SEC. While Basic makes these statements and
projections in good faith, neither Basic nor its management can
guarantee that the transactions will be consummated or that
anticipated future results will be achieved. Basic assumes no
obligation to publicly update or revise any forward-looking
statements made herein or any other forward-looking statements made
by Basic, whether as a result of new information, future events, or
otherwise. Contacts: Alan Krenek, Chief Financial Officer Basic
Energy Services, Inc. 432-620-5510 Jack Lascar/Sheila Stuewe
DRG&E / 713-529-6600 -Tables to Follow- Basic Energy Services,
Inc. Consolidated Statements of Operations, Comprehensive Income
and Other Financial Data (in thousands, except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, 2009 2008
2009 2008 Income Statement Data: (Unaudited) (Unaudited) Revenues:
Well servicing $36,399 $89,018 $85,213 $169,537 Fluid services
49,088 72,581 114,065 143,980 Completion and remedial services
29,373 79,579 66,632 148,037 Contract drilling 3,988 10,344 7,626
19,841 Total revenues 118,848 251,522 273,536 481,395 Expenses:
Well servicing 27,825 55,293 64,742 103,759 Fluid services 35,381
48,554 79,968 94,987 Completion and remedial services 21,484 42,651
47,378 78,439 Contract drilling 3,338 7,529 6,607 14,589 General
and administrative (1) 27,424 26,811 56,503 52,663 Depreciation and
amortization 32,413 28,732 65,150 56,764 (Gain) loss on disposal of
assets 474 (809) 1,339 (584) Goodwill Impairment (82) - 204,014 -
Total expenses 148,257 208,761 525,701 400,617 Operating income
(loss) (29,409) 42,761 (252,165) 80,778 Other income (expense):
Interest expense (5,974) (6,453) (11,710) (13,802) Interest income
173 471 393 1,172 Other income (expense) 118 (6,469) 252 (6,431)
Income (loss) from continuing operations before income taxes
(35,092) 30,310 (263,230) 61,717 Income tax benefit (expense)
13,856 (11,597) 59,169 (23,348) Net income (loss) $(21,236) $18,713
$(204,061) $38,369 Earnings (loss) per share of common stock: Basic
$(0.54) $0.46 $(5.13) $0.94 Diluted $(0.54) $0.45 $(5.13) $0.92
Other Financial Data: EBITDA (2) $3,122 $65,024 $(186,763) $131,111
Adjusted EBITDA (2) 3,040 71,599 17,251 137,686 Capital
expenditures: Acquisitions, net of cash acquired 40 24,381 1,190
51,239 Property and equipment 11,403 26,596 25,187 45,023 As of
June 30, June 30, 2009 2008 Balance Sheet Data: (unaudited) Cash
and cash equivalents $134,304 $77,784 Net property and equipment
714,560 665,922 Total assets 1,068,393 1,209,776 Total long-term
debt 451,958 412,846 Total stockholders' equity 387,219 566,683
Three months Six months Ended June 30, Ended June 30, Segment Data:
2009 2008 2009 2008 Well Servicing Weighted average number of rigs
414 403 414 398 Rig hours (000's) 110.5 222.3 242.8 424.8 Rig
utilization rate 37.3% 77.1% 41.0% 74.6% Revenue per rig hour $329
$400 $351 $399 Well servicing rig profit per rig hour $78 $152 $84
$155 Segment profits as a percent of revenue 23.6% 37.9% 24.0%
38.8% Fluid Services Weighted average number of fluid services
trucks 808 663 811 654 Revenue per fluid services truck (000's) $61
$109 $141 $220 Segment profits per fluid services truck (000's) $17
$36 $42 $75 Segment profits as a percent of revenue 27.9% 33.1%
29.9% 34.0% Completion and Remedial Services Segment profits as a
percent of revenue 26.9% 46.4% 28.9% 47.0% Contract Drilling
Weighted average number of rigs 9 9 9 9 Rig operating days 314 699
562 1,344 Revenue per day $12,700 $14,800 $13,600 $14,800 Drilling
rig profit per day $2,100 $4,000 $1,800 $4,000 Segment profits as a
percent of revenue 16.3% 27.2% 13.4% 26.5% (1) Includes
approximately $1,290,000 and $1,184,000 of non-cash compensation
expense for the three months ended June 30, 2009 and 2008,
respectively. For the six months ended June 30, 2009 and 2008, it
includes approximately $2,665,000 and $2,264,000 of non-cash
expense, respectively. (2) This earnings release contains
references to the non-GAAP financial measure of earnings (net
income) before interest, taxes, depreciation and amortization, or
"EBITDA." EBITDA should not be considered in isolation or as a
substitute for operating income, net income or loss, cash flows
provided by operating, investing and financing activities, or other
income or cash flow statement data prepared in accordance with
GAAP. However, Basic believes EBITDA is a useful supplemental
financial measure used by its management and directors and by
external users of its financial statements, such as investors, to
assess: -- The financial performance of its assets without regard
to financing methods, capital structure or historical cost basis;
-- The ability of its assets to generate cash sufficient to pay
interest on our indebtedness; and -- Its operating performance and
return on invested capital as compared to those of other companies
in the well servicing industry, without regard to financing methods
and capital structure. EBITDA has limitations as an analytical tool
and should not be considered an alternative to net income,
operating income, cash flow from operating activities or any other
measure of financial performance or liquidity presented in
accordance with GAAP. EBITDA excludes some, but not all, items that
affect net income and operating income, and these measures may vary
among other companies. Limitations to using EBITDA as an analytical
tool include: -- EBITDA does not reflect its current or future
requirements for capital expenditures or capital commitments; --
EBITDA does not reflect changes in, or cash requirements necessary
to service interest or principal payments on, its debt; -- EBITDA
does not reflect income taxes; -- Although depreciation and
amortization are non-cash charges, the assets being depreciated and
amortized will often have to be replaced in the future, and EBITDA
does not reflect any cash requirements for such replacements; and
-- Other companies in its industry may calculate EBITDA differently
than Basic does, limiting its usefulness as a comparative measure.
The following table presents a reconciliation of net income to
EBITDA, which is the most comparable GAAP performance measure, for
each of the periods indicated: Three months Six months Ended June
30, Ended June 30, 2009 2008 2009 2008 (Unaudited) (Unaudited)
Reconciliation of Net Income (Loss) to EBITDA: Net income (loss)
$(21,236) $18,713 $(204,061) $38,369 Income taxes (13,856) 11,597
(59,169) 23,348 Net interest expense 5,801 5,982 11,317 12,630
Depreciation and amortization 32,413 28,732 65,150 56,764 EBITDA
$3,122 $65,024 $(186,763) $131,111 The following table presents a
reconciliation of net income to "Adjusted EBITDA," which means our
EBITDA excluding the goodwill impairment charge in 2009: Three
months Six months Ended June 30, Ended June 30, 2009 2008 2009 2008
(Unaudited) (Unaudited) Reconciliation of Net Income (Loss) to
Adjusted EBITDA: Net income (loss) $(21,236) $18,713 $(204,061)
$38,369 Goodwill impairment (82) - 204,014 - Merger-related costs
6,575 6,575 Income taxes (13,856) 11,597 (59,169) 23,348 Net
interest expense 5,801 5,982 11,317 12,630 Depreciation and
amortization 32,413 28,732 65,150 56,764 Adjusted EBITDA $3,040
$71,599 $17,251 $137,686 We believe Adjusted EBITDA is useful for
management and investors in connection with comparisons of EBITDA
excluding the items represented by the goodwill impairment charges
in 2009. DATASOURCE: Basic Energy Services, Inc. CONTACT: Alan
Krenek, Chief Financial Officer of Basic Energy Services, Inc.,
+1-432-620-5510; or Jack Lascar, or Sheila Stuewe, both of
DRG&E, +1-713-529-6600, for Basic Energy Services, Inc. Web
Site: http://basicenergyservices.com/
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