MIDLAND, Texas, Oct. 28 /PRNewswire-FirstCall/ -- Basic Energy
Services, Inc. (NYSE:BAS) ("Basic") today announced its financial
and operating results for the third quarter and nine months ended
September 30, 2009. Basic generated revenue of $125.0 million
during the third quarter of 2009, up 5% from $118.8 million in the
second quarter of 2009, and down from the $277.6 million reported
in the third quarter of 2008. For the third quarter of 2009, Basic
generated a net loss of $23.1 million, or $0.58 per diluted share,
which excluded a $2.2 million, or $0.06 per share, after-tax charge
associated with the early extinguishment of its revolving credit
facility. In the comparable quarter last year, Basic generated net
income of $26.7 million, or $0.64 per diluted share, that excluded
$800,000, or $0.02 per share, in after-tax merger-related charges.
Net loss as reported for the third quarter of 2009 was $25.3
million, or $0.64 per diluted share, compared to net income of
$25.9 million, or $0.62 per diluted share, in the same period in
2008. Adjusted EBITDA (defined as net income before interest,
taxes, depreciation and amortization, and also excludes the pre-tax
goodwill impairment and loss on extinguishment of debt in the 2009
period as well as the pre-tax merger related charges in the 2008
period) for the 2009 third quarter was $6.2 million, or 5% of
revenue, compared to $78.1 million, or 28%, in the comparable
quarter of 2008. EBITDA (defined as net income before interest,
taxes, depreciation and amortization) for the third quarter of 2009
was $2.7 million compared to $76.8 million in the same period in
2008. EBITDA and Adjusted EBITDA, which are not measures determined
in accordance with generally accepted accounting principles
("GAAP"), are defined and reconciled in note 2 under the
accompanying financial tables. Ken Huseman, Basic's President and
Chief Executive Officer, stated, "We were pleased with the
sequential uptick in revenues in each of our business segments in
the third quarter, particularly in our completion and remedial
services segment which experienced an 11% increase. Our top-line
growth was driven by the relatively higher levels of activity in
our oil-driven markets, which more than offset the continuing
weaker demand in our gas-oriented markets. "During the 2009 third
quarter, our Adjusted EBITDA doubled from the prior quarter
reflecting the full impact of the cost reductions we have been
making since the fourth quarter of 2008. We continue to look for
opportunities to further reduce costs while maintaining our ability
to provide the optimum level of service to our customers. "We
expect oil-related activity to gradually increase over the near
term as our customers gain confidence in the general level of oil
prices and as they establish their 2010 budgets and plans based on
that confidence. The outlook for natural gas prices is more
uncertain and will continue to be a drag on the oilfield service
industry as customers remain cautious in their spending until
natural gas prices exhibit strength and stability. "Our efforts in
developing a much lower cost structure should result in incremental
margins in excess of 50% in the near term as we more fully utilize
personnel, equipment and infrastructure, even with the fairly
modest improvements in activity and reduced pricing for our
services compared to the recent peak levels. We believe we are well
situated to build market share and shareholder value as we come out
of the lowest part of this cycle." For the nine-month period ended
September 30, 2009, Basic generated a net loss of $60.3 million, or
$1.52 per diluted share, excluding the impact of a $166.9 million
after-tax ($204.0 million pre-tax) non-cash goodwill impairment
charge and a $2.2 million after-tax ($3.5 million pre-tax) loss on
the early extinguishment of debt. Net loss as reported for the 2009
nine-month period was $229.4 million, or $5.78 per diluted share.
During the comparable period in 2008, Basic generated net income of
$69.2 million, or $1.66 per diluted share, before merger related
costs. Including the $4.9 million of after-tax merger related
charges, net income reported for the first nine months of 2008 was
$64.3 million, or $1.54 per diluted share. Revenues declined 47% to
$398.5 million in the first nine months of 2009, compared to $759.0
million in the same period of 2008. Basic recognized an effective
tax benefit rate of 24% in the first nine months of 2009 compared
to a tax rate of 38% in the comparable period of 2008. The low
year-to-date effective tax benefit rate for 2009 is 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 the Company'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 nine
months ending September 30, 2009 would have been a benefit of 37%.
Business Segment Results Well Servicing Sequentially, well
servicing revenues rose approximately 6% to $38.4 million during
the third quarter of 2009 compared to $36.4 million in the prior
quarter. During last year's third quarter revenues were $97.4
million. At September 30, 2009, the well servicing rig count was
414, unchanged from the prior quarter end. The weighted average
number of well servicing rigs was 414 during the third quarter of
2009 compared to 412 during the same period in 2008. Well servicing
rig utilization ticked-up sequentially to 42% in the third quarter
of 2009 from 37% in the prior quarter. Last year in the comparable
quarter, the rig utilization rate was 79%. Revenue per well
servicing rig hour declined 5% sequentially to $313 during the
third quarter of 2009 compared to $329 in the prior quarter, and
down from the $418 achieved in the same period in 2008. Well
servicing segment profit in the third quarter of 2009 was $9.4
million compared to $8.6 million in the prior quarter and $36.3
million in the same period in 2008. By instituting cost saving
measures, the well services operating team produced segment profit
margins of 24% in the third quarter of 2009, in line with the
margins produced in both the first and second quarter of 2009, but
down from the 37% which was achieved in the third quarter of 2008.
The year-over-year decrease was due mainly to lower demand, which
resulted in decreased utilization and pricing for well servicing
rig services. Fluid Services Fluid services revenue in the third
quarter of 2009 was $49.8 million compared to $49.1 million in the
prior quarter and $82.7 million in the same period in 2008. Basic
ended the third quarter with 805 fluid service trucks, the same
number of trucks it had at the end of the prior quarter. Weighted
average number of fluid services trucks declined to 805 trucks
during the third quarter of 2009, down three trucks from the
average truck count of 808 during the second quarter of 2009.
During the third quarter of 2008 the average number of fluid
services trucks was 683. The year-over-year increase in fluid
services trucks is primarily related to the trucks acquired in the
Azurite acquisition in September 2008. Average revenue per fluid
services truck was $62,000 in the third quarter of 2009, in line
with $61,000 in the prior quarter and down 49% compared to $121,000
in the same period in 2008. Segment profit in the third quarter of
2009 was $11.3 million, or 23% of revenue, compared to $13.7
million, or 28% of revenue, in the prior quarter and $29.6 million,
or 36% of revenue, in the same period in 2008. Profit margins were
down sequentially due to increased fuel and repair and maintenance
costs. On a year-over-year basis, the decline is a result of
decreased drilling activity, resulting in lower utilization and
pricing. Completion & Remedial Services Sequentially,
completion and remedial services revenues increased 11% to $32.6
million in the third quarter of 2009 from $29.4 million in the
prior quarter. Last year, this segment generated $85.5 million in
revenue. Segment profit in the third quarter of 2009 rose
sequentially to $9.5 million, or 29% of revenue, compared to $7.9
million, or 27% of revenue, in the prior quarter. During the third
quarter of 2008, segment profit was $38.7 million, or 45% of
revenue. The sequential rise in revenue was mainly due to the
improved revenues from the pressure pumping and wireline service
line. Segment profit margins were also up sequentially due to the
favorable impact of cost cutting measures and the increased
revenues. The year-over-year drop in revenue and segment profit was
attributable to declining activity levels and lower pricing, both
in the pressure pumping and wireline, and fishing and rental tool
service lines. As of September 30, 2009, Basic had approximately
139,000 hydraulic horsepower of pressure pumping capacity compared
to approximately 134,000 hydraulic horsepower as of September 30,
2008. Contract Drilling Contract drilling revenues rose
sequentially to $4.2 million during the third quarter of 2009
compared to $4.0 million in the prior quarter. During the
comparable quarter of 2008, this segment produced revenue of $12.0
million. Segment profit in the third quarter of 2009 was $845,000
compared to $650,000 in the prior quarter and $4.3 million during
the third quarter of 2008. The sequential rise in segment profit
was primarily a result of a 25% increase in drilling rig operating
days. Basic operated nine drilling rigs during the third quarter of
2009, the same as in the prior quarter and in the same period in
2008. Capital Expenditures During the nine months ending September
30, 2009, Basic's total capital expenditures, including capital
leases, were approximately $50 million, comprised of $25 million
for sustaining and replacement projects, $16 million for expansion
projects and $9 million for other projects. Expansion capital
spending included approximately $8 million for the completion and
remedial services segment, $7 million for the fluid services
segment, and $1 million for the well servicing segment. Other
capital expenditures of $9 million were mainly for facilities and
IT infrastructure. As previously announced, Basic plans to spend a
total of approximately $58 million for capital expenditures during
2009. 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 third quarter
2009 results on Thursday, October 29, 2009, at 9:00 a.m. Eastern
Time (8:00 a.m. Central). To access the call, please dial (480)
248-5081 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 November 5, 2009 and may be
accessed by calling (303) 590-3030 and using the pass code
4170568#. 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 and (iii) changes in
our expenses, including labor or fuel costs and financing costs.
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 and
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 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. -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 Nine Months Ended September
30, September 30, -------------- -------------- 2009 2008 2009 2008
---- ---- ---- ---- Income Statement Data: (Unaudited) (Unaudited)
Revenues: Well servicing $38,434 $97,382 $123,647 $266,919 Fluid
services 49,782 82,660 163,847 226,640 Completion and remedial
services 32,592 85,541 99,224 233,578 Contract drilling 4,150
11,992 11,776 31,832 ----- ------ ------ ------ Total revenues
124,958 277,575 398,494 758,969 ------- ------- ------- -------
Expenses: Well servicing 29,051 61,047 93,793 164,806 Fluid
services 38,471 53,028 118,439 148,015 Completion and remedial
services 23,106 46,798 70,484 125,236 Contract drilling 3,305 7,722
9,912 22,311 General and administrative(1) 25,140 30,552 81,643
83,212 Depreciation and amortization 33,455 29,271 98,605 86,035
(Gain) loss on disposal of assets 514 376 1,853 (208) Goodwill
Impairment - - 204,014 - --- --- ------- --- Total expenses 153,042
228,794 678,743 629,407 ------- ------- ------- ------- Operating
income (loss) (28,084) 48,781 (280,249) 129,562 Other income
(expense): Interest expense (9,760) (6,315) (21,470) (20,117)
Interest income 135 654 528 1,824 Loss on early extinguishment of
debt (3,481) - (3,481) - Other income (expense) 819 (1,273) 1,071
(7,708) --- ----- ----- ----- Income (loss) from continuing
operations before income taxes (40,371) 41,847 (303,601) 103,561
Income tax benefit (expense) 15,046 (15,905) 74,215 (39,253) ------
------ ------ ------ Net income (loss) $(25,325) $25,942 $(229,386)
$64,308 ======== ======= ========= ======= Earnings (loss) per
share of common stock: Basic $(0.64) $0.63 $(5.78) $1.58 ======
===== ====== ===== Diluted $(0.64) $0.62 $(5.78) $1.54 ====== =====
====== ===== Other Financial Data: EBITDA (2) $2,709 $76,779
$(184,054) $207,889 Adjusted EBITDA (2) 6,190 78,074 23,441 215,758
Capital expenditures: Acquisitions, net of cash acquired - 59,579
1,190 110,818 Property and equipment 9,612 23,845 34,799 68,868 As
of September September 30, 30, 2009 2008 ---------------------
Balance Sheet Data: (unaudited) Cash and cash equivalents $137,026
$80,861 Restricted cash 14,316 - Net property and equipment 690,720
709,059 Total assets 1,085,335 1,310,842 Total long-term debt
480,317 449,404 Total stockholders' equity 363,090 598,740 Ended
September 30, Ended September 30, Segment Data: 2009 2008 2009 2008
Well Servicing Weighted average number of rigs 414 412 414 402 Rig
hours (000's) 122.9 233.0 365.7 657.8 Rig utilization rate 41.5%
79.1% 41.2% 76.3% Revenue per rig hour $313 $418 $338 $406 Well
servicing rig profit per rig hour $76 $156 $82 $155 Segment profits
as a percent of revenue 24.4% 37.3% 24.1% 38.3% Fluid Services
Weighted average number of fluid services trucks 805 683 809 663
Revenue per fluid services truck (000's) $62 $121 $203 $342 Segment
profits per fluid services truck (000's) $14 $43 $56 $119 Segment
profits as a percent of revenue 22.7% 35.8% 27.7% 34.7% Completion
and Remedial Services Segment profits as a percent of revenue 29.1%
45.3% 29.0% 46.4% Contract Drilling Weighted average number of rigs
9 9 9 9 Rig operating days 391 767 953 2,111 Revenue per day
$10,600 $15,600 $12,400 $15,100 Drilling rig profit per day $2,200
$5,600 $2,000 $4,500 Segment profits as a percent of revenue 20.4%
35.6% 15.8% 29.9% (1) Includes approximately $1,264,000 and
$1,159,000 of non-cash compensation expense for the three months
ended September 30, 2009 and 2008, respectively. For the nine
months ended September 30, 2009 and 2008, it includes approximately
$3,928,000 and $3,423,000 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 Nine months Ended September 30,
Ended September 30, 2009 2008 2009 2008 Reconciliation of Net
Income (Unaudited) (Unaudited) (Loss) to EBITDA: Net income (loss)
$(25,325) $25,942 $(229,386) $64,308 Income taxes (15,046) 15,905
(74,215) 39,253 Net interest expense 9,625 5,661 20,942 18,293
Depreciation and amortization 33,455 29,271 98,605 86,035 ------
------ ------ ------ EBITDA $2,709 $76,779 $(184,054) $207,889
====== ======= ========== ======== The following table presents a
reconciliation of net income to "Adjusted EBITDA," which means our
EBITDA excluding the goodwill impairment charge and deferred debt
costs write-off in 2009: Three months Nine months Ended September
30, Ended September 30, 2009 2008 2009 2008 Reconciliation of Net
Income (Unaudited) (Unaudited) (Loss) to Adjusted EBITDA: Net
income (loss) $(25,325) $25,942 $(229,386) $64,308 Goodwill
impairment - - 204,014 - Merger-related costs - 1,295 - 7,869 Loss
on early extinguishment of debt 3,481 - 3,481 - Income taxes
(15,046) 15,905 (74,215) 39,253 Net interest expense 9,625 5,661
20,942 18,293 Depreciation and amortization 33,455 29,271 98,605
86,035 ------ ------ ------ ------ Adjusted EBITDA $6,190 $78,074
$23,441 $215,758 ------ ------- ------- -------- 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 and deferred debt
costs write-offs in 2009. Contacts: Alan Krenek, Chief Financial
Officer Basic Energy Services, Inc. 432-620-5510 Jack Lascar/Sheila
Stuewe DRG&E / 713-529-6600 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://www.basicenergyservices.com/
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