FORT WORTH, Texas, April 20, 2016 /PRNewswire/ -- Basic Energy
Services, Inc. (NYSE: BAS) ("Basic" or the "Company") today
announced its financial and operating results for the first quarter
ended March 31, 2016.
FIRST QUARTER 2016 HIGHLIGHTS
First quarter 2016 revenue declined 19% to $130.4 million from $161.0
million in the fourth quarter of 2015, as low levels of
activity driven by weak and volatile energy prices and significant
weather impact during the first two months of the quarter pushed
our customers to postpone a growing inventory of maintenance and
workover projects. In the first quarter of 2015, Basic generated
$261.7 million in revenue.
For the first quarter of 2016, Basic reported a net loss of
$83.3 million, or a loss of
$2.00 per basic and diluted share.
The first quarter of 2016 included a tax-effected, non-cash charge
of $1.3 million, or $0.03 per share pertaining to the early
extinguishment of deferred debt costs related to the amendment of
Basic's revolving credit facility and a non-cash charge of
$27.3 million, or $0.66 per share, related to a deferred tax
valuation allowance on federal net operating losses. Excluding the
impact of these special items, Basic reported a net loss of
$54.8 million, or a loss of
$1.32 per basic and diluted share.
This compares to a net loss of $55.2
million, or a loss of $1.36
per basic and diluted share, in the fourth quarter of 2015. In the
first quarter of 2015, Basic reported a net loss of $32.6 million, or a loss of $0.81 per basic and diluted share.
Roe Patterson, Basic's President and Chief Executive Officer,
stated, "Our first quarter results continue to reflect the impact
of the ongoing decline in all oilfield-related services. While our
production-related activities appeared to have begun stabilizing at
the end of the first quarter, our completion-related services
continue to be impacted as the volatility and uncertainty in oil
prices caused our customers to further curtail their exploration
and drilling projects as the quarter unfolded. In addition, weather
interruptions represented approximately three percentage points of
the total sequential revenue drop during the quarter.
"Early in the quarter, we had anticipated that the growing
inventory of maintenance and workover projects that were deferred
at the end of 2015 would be completed in the first quarter. This
did not happen as oil prices dipped below $30 per barrel twice during the quarter. These
oil price declines forced many customers to delay projects until
more stable oil prices returned. Our fluid services business,
anchored by our extensive network of salt-water disposal wells,
continues to operate at relatively stable levels despite the
current environment as we benefit from protected market share and a
lower cost structure. Margins in this business were impacted by
weather and a decrease in our skim oil sales, which track WTI
pricing. Our well servicing business margin increased sequentially
driven mainly by the impact of cost savings initiatives.
"Pricing in all our markets and lines of business remains very
competitive, and we continue to scale back operations and capital
expenditures to fit cash flow and preserve our liquidity. As a
result, we continue to stack equipment and exit markets where cash
margins do not support maintenance capital expenditures. As of the
end of the first quarter, we had stacked 134,000 hydraulic
horsepower. We also stacked additional well servicing rigs to bring
our total stacked rig inventory to 127 at quarter-end.
"Looking ahead, the fluctuations in oil prices create market
uncertainties preventing us from knowing exactly what our near term
results will look like. But based on current activity levels, we
anticipate that our second quarter revenue could be down
approximately 3 to 4% sequentially driven by a declining drilling
rig count and fewer completions. Production related services should
improve in the near term if oil prices remain in the $40 per barrel range, but these improvements may
not be enough to offset declining completion activities.
"In conjunction with our new $165
million term loan that was announced in February 2016, we made further progress during
the 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.
We expect these changes to be fully implemented by the end of the
first half of 2016 and we will continue to look for ways to operate
in a cost effective manner to get the company to cash flow
break-even or better by the end of 2016."
Adjusted EBITDA decreased to ($11.1
million), or (9%) of revenues, for the first quarter of 2016
from ($7.5 million), or (5%) of
revenues, in the fourth quarter of 2015. In the first quarter
of 2015, Basic generated Adjusted EBITDA of $27.3 million, or 10% of revenues. Adjusted
EBITDA is defined as net income before interest, taxes,
depreciation and amortization ("EBITDA"), and the net gain or loss
from the disposal of assets. EBITDA and Adjusted EBITDA,
which are not measures determined in accordance with United States generally accepted accounting
principles ("GAAP"), are defined and reconciled in note 2 under the
accompanying financial tables.
Business Segment Results
Completion and Remedial Services
Completion and remedial services revenue dropped by 32% to
$39.7 million in the first quarter of
2016 from $58.5 million in the prior
quarter. The sequential decline in revenue was primarily due
to lower activity levels driven by the lower drilling rig count and
rate reductions due to greater competition in several basins in the
Company's footprint. In the first quarter of 2015, this
segment generated $112.8 million in
revenue.
At March 31, 2016, Basic had
approximately 444,000 hydraulic horsepower ("HHP"), essentially
flat compared to the end of the previous quarter and up slightly
from 443,000 HHP as of March 31,
2015. Weighted average HHP for the first quarter of 2016 was
444,000, equal to the fourth quarter of 2015. 134,000 HHP was
stacked as of March 31, 2016 as
several frac operations were shut down during the quarter due to
pricing dropping below cash flow breakeven levels.
Segment profit in the first quarter of 2016 decreased 42% to
$4.9 million compared to $8.5 million in the prior quarter. Segment
margin for the first quarter 2016 decreased to 12% compared to 15%
during the previous quarter, driven predominantly by continued
pricing pressure, as well as the negative impact of decremental
margins on the lower revenue base. During the first quarter
of 2015, segment profit was $31.5
million, or 28% of segment revenue.
Fluid Services
Fluid services revenue in the first quarter of 2016 decreased
14% to $50.3 million compared to
$58.5 million in the prior
quarter. Segment revenues declined driven by the weather
impact of approximately $1.6 million,
along with decreases in disposal utilization, skim oil sales and
frac tank rental revenues. During the first quarter of 2015, this
segment generated $73.8 million in
revenue.
The weighted average number of fluid services trucks decreased
2% to 985 during the first quarter of 2016, compared to 1,002
during the fourth quarter of 2015 and 1,046 during the first
quarter of 2015. Truck hours of 521,500 during the first
quarter of 2016 represented a decrease of 6% from the 557,000
generated in the fourth quarter of 2015 and a decrease of 12%
compared to 595,100 in the same period in 2015.
The average revenue per fluid service truck decreased 13% to
$51,000 from $58,000 in the fourth quarter of 2015, as
disposal utilization and skim oil sales dropped with trucking
activity. In the comparable quarter of 2015, average revenue per
fluid truck was $71,000.
Segment profit in the first quarter of 2016 was $9.1 million, compared to a profit of
$12.5 million in the prior quarter.
Segment profit margin decreased 330 basis points to 18% due to the
impact of decremental margins on the lower revenue base and
inclement weather. Segment profit in the same period in 2015 was
$19.7 million, or 27% of segment
revenue.
Well Servicing
Well servicing revenues decreased 6% to $38.9 million during the first quarter of 2016
compared to $41.5 million in the
prior quarter as higher Taylor revenues partially offset lower rig
activity and continued pricing pressure. Well servicing revenues
were $63.7 million in the first
quarter of 2015. Revenues from the Taylor manufacturing operations
were $4.1 million in the first
quarter of 2016 compared to $2.6
million in the prior quarter and $1.8
million in the first quarter of 2015.
At March 31, 2016, the well
servicing rig count was 421, the same as the end of the prior
quarter and at March 31, 2015. Rig
hours were 108,400 in the first quarter of 2016, down 10% compared
to 120,000 in the previous quarter and down 34% from 163,900 hours
in the comparable quarter of last year. Rig utilization was 36% in
the first quarter of 2016, down from 39% in the prior quarter and
down from 55% in the first quarter of 2015.
Excluding revenues associated with the Taylor manufacturing
operations, revenue per well servicing rig hour was $321 in the first quarter of 2016, down 1%
compared to $325 in the previous
quarter and down 15% from $377
reported in the first quarter of 2015. The slight sequential
decline was due to pricing concessions given to customers almost
totally offset by increases in higher-rate activity services,
such as plugging and abandonment.
Segment profit in the first quarter of 2016 increased to
$4.4 million, compared to
$3.9 million in the prior quarter and
$11.3 million during the same period
in 2015. Segment profit margin increased to 11% in the first
quarter of 2016 from 9% in the prior quarter. In the first quarter
of 2015, segment profit was 18% of segment revenue. Margins
improved, despite lower utilization and activity levels, due to
cost savings initiatives and closing non-profitable locations.
Segment profit from the Taylor manufacturing operations was
$102,000 in the first quarter of 2016
compared to a loss of $106,000 in
last year's fourth quarter.
Contract Drilling
Contract drilling revenues decreased by 41% to $1.5 million during the first quarter of 2016
from $2.6 million in the prior
quarter. During the first quarter of 2015, this segment generated
$11.5 million in revenue. Basic
marketed 12 drilling rigs during the first quarter of 2015, the
same number of rigs as in the previous quarter as well as the first
quarter of 2015. However, only one rig was active during the
majority of the first quarter. Revenue per drilling day in the
first quarter of 2016 was $16,500,
flat compared to the previous quarter but down slightly from
$17,000 in the first quarter of
2015.
Rig operating days during the first quarter of 2016 decreased by
41% to 91 compared to 155 in the prior quarter, resulting in rig
utilization of 8% during the first quarter of 2016 compared to 14%
during the prior quarter. Rig operating days declined due to
diminishing capital and operational spending by our
customers. In the comparable period in 2015, rig operating
days were 674, producing a utilization of 62%.
Segment loss in the first quarter of 2016 was $57,000 compared to profit of $69,000 in the prior quarter and a decrease from
$4.0 million in the first quarter of
2016. Segment margin for the first quarter of 2016 was (4%)
of segment revenues compared to 3% in the prior quarter, due to
only one rig running during the first quarter. Last year in
the comparable period, segment margin was 34%.
G&A Expense
General and administrative ("G&A") expense in the first
quarter of 2016 was $29.6 million, or
23% of revenue, compared to $32.6
million, or 20% of revenue, in the prior quarter. This 9%
decrease in G&A expense was primarily the result of headcount
reductions, lower incentive compensation and other cost savings
initiatives implemented throughout the late fourth quarter and
during the first quarter. G&A expense in the first
quarter of 2015 was $39.2 million, or
15% of revenue.
Tax Benefit
Basic's tax benefit for the first quarter of 2016 was
$4.5 million, compared to a tax
benefit of $29.8 million in the
fourth quarter of 2015. In the first quarter of 2016, Basic
recognized a deferred tax valuation allowance of $27.3 million related to net operating loss
carryforwards available to be used in future periods. Excluding the
impact of the valuation allowance and the write-down of the
deferred debt cost discussed previously, the operating effective
tax benefit is $31.1 million, for an
operating effective tax benefit rate of 36%. The prior
quarter's effective tax adjusted benefit rate was 35%. The tax
benefit of $17.9 million in the first
quarter of 2015 translated into an effective tax benefit rate of
35%.
Cash and Total Liquidity
On March 31, 2016, Basic had cash
and cash equivalents of approximately $75.1
million, up from $46.7 million
at December 31, 2015 and $104.9 million on March
31, 2015. The increase in cash is due to the initial
borrowings of $75.3 million under the
$165.0 million Term Loan Credit
Agreement signed in February. An additional amount of
$83.6 million is classified as
restricted cash and is expected to be released upon satisfaction of
pre-determined conditions related to the perfection of collateral
later in 2016. The Term Loan Agreement also includes a
delayed draw provision for borrowings in an aggregate principal
amount not to exceed $15.0
million.
At March 31, 2016, total liquidity
was approximately $176.3 million,
which included $17.6 million of
availability under Basic's $100
million revolving credit facility. In February 2016, Basic amended its existing
revolving credit agreement, reducing the aggregate commitment from
$250 million to $100 million.
Capital Expenditures
Total capital expenditures during the first three months of 2016
were approximately $6.0 million
(including capital leases of $1.4
million), comprised of $1.2
million for expansion projects, $3.8
million for sustaining and replacement projects and
$1.0 million for other
projects. Expansion capital spending included $821,000 for the well servicing segment,
$357,000 for the fluid services
segment, and $23,000 for the
completion and remedial services segment. Other capital
expenditures were mainly for facilities and IT infrastructure.
Basic currently anticipates 2016 capital expenditures to be
under $40.0 million, including
$15.0 million of capital leases.
Conference Call
Basic will host a conference call to discuss its first quarter
2016 results on Thursday, April 21,
2016, at 9:00 a.m. Eastern
Time (8:00 a.m.
Central). To access the call, please dial (412) 902-0003 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,
www.basicenergyservices.com.
A telephonic replay of the conference call will be available
until May 5, 2016 and may be accessed
by calling (201) 612-7415 and using pass code 13633648#. A
webcast archive will be available at www.basicenergyservices.com
shortly after the call and will be accessible for approximately 30
days.
About Basic Energy Services
Basic Energy Services provides well site services essential to
maintaining production from the oil and gas wells within its
operating area. The Company employs more than 3,400 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 and
Appalachian regions. Additional information on Basic Energy
Services is available on the Company's website at
www.basicenergyservices.com.
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, (iv) continued volatility of oil or
natural gas prices, and any related changes in expenditures by our
customers, and (v) competition within our industry.
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, 2015 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 and Other Financial Data
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Income Statement
Data:
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
Completion and remedial
services
|
$
|
39,696
|
|
$
|
112,775
|
Fluid
services
|
|
50,250
|
|
|
73,803
|
Well
servicing
|
|
38,906
|
|
|
63,668
|
Contract
drilling
|
|
1,504
|
|
|
11,475
|
Total
revenues
|
|
130,356
|
|
|
261,721
|
Expenses:
|
|
|
|
|
|
Completion and remedial
services
|
|
34,788
|
|
|
81,251
|
Fluid
services
|
|
41,167
|
|
|
54,132
|
Well
servicing
|
|
34,470
|
|
|
52,401
|
Contract
drilling
|
|
1,561
|
|
|
7,525
|
General and
administrative (1)
|
|
29,562
|
|
|
39,204
|
Depreciation and
amortization
|
|
56,152
|
|
|
60,929
|
(Gain) loss on disposal
of assets
|
|
(75)
|
|
|
48
|
Total
expenses
|
|
197,625
|
|
|
295,490
|
Operating
loss
|
|
(67,269)
|
|
|
(33,769)
|
Other income
(expense):
|
|
|
|
|
|
Interest
expense
|
|
(20,714)
|
|
|
(16,863)
|
Interest
income
|
|
2
|
|
|
6
|
Other income
|
|
96
|
|
|
120
|
Loss before income
taxes
|
|
(87,885)
|
|
|
(50,506)
|
Income tax
benefit
|
|
4,546
|
|
|
17,882
|
Net loss
|
$
|
(83,339)
|
|
$
|
(32,624)
|
Loss per share of
common stock:
|
|
|
|
|
|
Basic
|
$
|
(2.00)
|
|
$
|
(0.81)
|
Diluted
|
$
|
(2.00)
|
|
$
|
(0.81)
|
|
|
|
|
|
|
Other Financial
Data (unaudited):
|
|
|
|
|
|
EBITDA (2)
|
$
|
(11,021)
|
|
$
|
27,280
|
Adjusted EBITDA
(2)
|
|
(11,096)
|
|
|
27,328
|
Capital
expenditures:
|
|
|
|
|
|
Acquisitions, net of
cash acquired
|
|
-
|
|
|
-
|
Property and
equipment
|
|
4,577
|
|
|
25,861
|
|
|
|
|
|
|
|
As
of
|
|
March 31,
2016
|
|
December 31,
2015
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Audited)
|
Balance Sheet
Data:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
75,083
|
|
$
|
46,732
|
Net property and
equipment
|
|
797,973
|
|
|
846,290
|
Total
assets
|
|
1,168,525
|
|
|
1,161,369
|
Total long-term
debt
|
|
969,790
|
|
|
838,368
|
Total stockholders'
equity
|
|
25,202
|
|
|
106,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
2016
|
|
2015
|
Segment
Data:
|
(Unaudited)
|
Completion and
Remedial Services
|
|
|
|
|
|
Segment Profits as a
percent of revenue
|
|
12.4%
|
|
|
28.0%
|
|
|
|
|
|
|
Fluid
Services
|
|
|
|
|
|
Weighted average
number of fluid service trucks
|
|
985
|
|
|
1,046
|
Truck hours
(000's)
|
|
521.5
|
|
|
595.1
|
Revenue per fluid
services truck (000's)
|
$
|
51
|
|
$
|
71
|
Segment profits per
fluid services truck (000's)
|
$
|
10
|
|
$
|
19
|
Segment profits as a
percent of revenue
|
|
18.1%
|
|
|
26.7%
|
|
|
|
|
|
|
Well
Servicing
|
|
|
|
|
|
Weighted average
number of rigs
|
|
421
|
|
|
421
|
Rig hours
(000's)
|
|
108.4
|
|
|
163.9
|
Rig utilization
rate
|
|
36%
|
|
|
55%
|
Revenue per rig hour,
excluding manufacturing
|
$
|
321
|
|
$
|
377
|
Well servicing rig
profit per rig hour
|
$
|
44
|
|
$
|
69
|
Segment profits as a
percent of revenue
|
|
11.4%
|
|
|
17.7%
|
|
|
|
|
|
|
Contact
Drilling
|
|
|
|
|
|
Weighted average
number of rigs
|
|
12
|
|
|
12
|
Rig operating
days
|
|
91
|
|
|
674
|
Drilling utilization
rate
|
|
8%
|
|
|
62%
|
Revenue per
day
|
$
|
16,500
|
|
$
|
17,000
|
Drilling rig profit
per day
|
$
|
(400)
|
|
$
|
5,900
|
Segment profits as a
percent of revenue
|
|
(3.8%)
|
|
|
34.4%
|
|
|
(1)
|
Includes
approximately $3,258,000 and $4,532,000 of non-cash compensation
expense for the three months ended March 31, 2016 and March 31,
2015, 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." This earnings release also contains references
to the non-GAAP financial measure of earnings (net income) before
interest, taxes, depreciation, amortization, and the gain or loss
on disposal of assets or "Adjusted EBITDA." EBITDA and
Adjusted 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 and Adjusted EBITDA are
useful supplemental financial measures 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 its 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 and Adjusted EBITDA each have 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 and Adjusted EBITDA exclude 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.
In addition to each of the limitations with respect to EBITDA
noted above, the limitations to using Adjusted EBITDA as an
analytical tool include:
- Adjusted EBITDA does not reflect Basic's gain or loss on
disposal of assets; and
- Other companies in our industry may calculate Adjusted 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 ended
March 31,
|
|
2016
|
|
2015
|
Reconciliation of
Net Loss to EBITDA:
|
(Unaudited)
|
Net loss
|
$
|
(83,339)
|
|
$
|
(32,624)
|
Income
taxes
|
|
(4,546)
|
|
|
(17,882)
|
Net
interest expense
|
|
20,712
|
|
|
16,857
|
Depreciation and amortization
|
|
56,152
|
|
|
60,929
|
EBITDA
|
$
|
(11,021)
|
|
$
|
27,280
|
The following table presents a reconciliation of net income to
"Adjusted EBITDA," which means our EBITDA excluding the gain or
loss on disposal of assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
2016
|
|
2015
|
Reconciliation of
Net Loss to Adjusted EBITDA:
|
(Unaudited)
|
Net loss
|
$
|
(83,339)
|
|
$
|
(32,624)
|
Income
taxes
|
|
(4,546)
|
|
|
(17,882)
|
Net
interest expense
|
|
20,712
|
|
|
16,857
|
Depreciation and amortization
|
|
56,152
|
|
|
60,929
|
(Gain) loss on disposal
of assets
|
|
(75)
|
|
|
48
|
Adjusted
EBITDA
|
$
|
(11,096)
|
|
$
|
27,328
|
|
|
Contacts:
|
Alan
Krenek,
|
|
Chief Financial
Officer
|
|
Basic Energy
Services, Inc.
|
|
817-334-4100
|
|
|
|
Jack
Lascar
|
|
Dennard ▪ Lascar
Associates
|
|
713-529-6600
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/basic-energy-services-reports-first-quarter-2016-results-300255024.html
SOURCE Basic Energy Services, Inc.