exv99w1
Exhibit 99.1
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NEWS RELEASE |
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FOR IMMEDIATE RELEASE
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Contacts:
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Alan Krenek, Chief Financial Officer |
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Basic Energy Services, Inc. |
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432-620-5510 |
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Jack Lascar/Sheila Stuewe |
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DRG&L / 713-529-6600 |
BASIC ENERGY SERVICES REPORTS SECOND QUARTER 2011 RESULTS
Second quarter revenue up 21% and Adjusted EBITDA up 30% sequentially
Second quarter EPS of $.45, excluding special tax item
MIDLAND, Texas July 21, 2011 Basic Energy Services, Inc. (NYSE: BAS) (Basic) today
announced its financial and operating results for the second quarter and six months ended June 30,
2011.
SECOND QUARTER 2011 HIGHLIGHTS
Net income as reported was $16.6 million, or $0.40 per diluted share, in the second quarter of
2011, compared to a net loss of $10.7 million for the second quarter of 2010, or $0.27 per share.
The current quarter results included a $1.9 million tax adjustment related to the first quarters
early extinguishment of its $225 million 11.625% Senior Secured Notes due 2014 (2014 Notes).
Basics effective tax rate for the next two quarters will also be impacted because of the early
extinguishment of the 2014 Notes and the full year effective tax rate is now projected to be
approximately 40%. Excluding this tax adjustment, second quarter operating net income was $18.5
million, or $0.45 per diluted share. Last years results included a $1.8 million, or $0.04 per
share, after-tax gain on the bargain purchase of an acquisition.
Basic generated net income of $8.2 million, or $0.20 per diluted share, in the first quarter of
2011, excluding the impact of a $28.3 million, or $0.70 per diluted share, after-tax ($49.4 million
pre-tax) charge related to the early extinguishment of its 2014 Notes and the termination of its
prior revolving credit facility, and excluding an after-tax gain of $1.5 million, or $0.04 per
diluted share, related to the sale of an office complex. Net loss as reported for the first
quarter of 2011 was $18.5 million, or $0.46 per diluted share.
Second quarter revenue rose 21% to $296.9 million from $246.1 million in the first quarter of 2011,
and increased 70% from the $175.1 million reported in the second quarter of 2010.
Adjusted EBITDA for the second quarter rose to $77.5 million, or 26% of revenue, from $58.8
million, or 24% of revenue, in the first quarter of 2011, and $26.9 million, or 15% of revenue, in
the comparable quarter of 2010. Adjusted EBITDA is defined as net income before interest,
taxes, depreciation and amortization, loss on early extinguishment of debt, gain on bargain
purchase, and the net gain or loss from the disposal of assets. 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, Basics President and Chief Executive Officer, stated, Despite weather
disruptions in several markets during April and May, we produced a record level of revenue in June
and in the quarter, exceeding the previous quarterly high recorded in the third quarter of 2008.
Improving demand across our footprint drove double-digit revenue increases in each of our segments
compared to the first quarter. Although pricing is not back to the 2008 levels, EBITDA of $77.5
million was within $600,000 of the previous record established in the third quarter of 2008
reflecting the streamlined organization and cost reductions implemented over the last several
years.
We were particularly encouraged with the performance of our well servicing segment in the second
quarter, which generated a utilization rate of 70%, the highest quarterly utilization rate since
the second quarter of 2008. That utilization rate combined with a 6% increase in the rate per
hour moved the segment margin above 31%, a level last reached in the fourth quarter of 2008.
Completion and remedial services revenue grew by 25% sequentially, with about one-third of that
increase coming from the full deployment of our 25,000 hydraulic horsepower (hhp) Wolfberry frac
spread in early April. The segment margin was essentially flat as start-up expenses related to the
new spread were absorbed during the quarter.
Our Fluid Services revenue per truck grew by 10% sequentially, primarily the result of the full
quarter impact of the equipment relocations effected during the first quarter. Higher utilization
and pricing drove segment margins to 37%, up by 330 basis points from the first quarter, and now
in-line with the historical segment profit range.
Revenue in our contract drilling segment grew by 38% during the second quarter as we placed the
four drilling rigs that we purchased at the end of March in the field. Segment margins suffered
compared to the first quarter due to the costs of manning, activating and deploying those rigs. We
anticipate margins to snap back in the third quarter as all but one of our ten rigs are on
well-to-well programs.
Over the course of the first half of the year we built upon our well-established positions in the
most active oil-driven markets with substantial capital equipment additions to each of our business
segments. We will continue that growth with the $25 million expansion to our 2011 capital budget
announced earlier in the quarter. Augmenting that internal growth, we have completed two
acquisitions thus far in the second quarter with at least two more scheduled to close by the end of
July. We previously announced the purchase of the Maverick Companies for $180 million, net of
working capital acquired. That acquisition, which is the largest acquisition we have completed to
date, significantly expands our presence in the Rocky Mountain region.
We also recently closed the acquisition of the assets of Lone Star Anchor Trucking, Inc. for $10
million. That acquisition, located in the busy Wolfberry play in the Permian Basin, includes 33
fluid service trucks, two salt water disposal wells and two disposal wells that have been permitted
but not completed. Those additional disposal facilities will play an important role in
the continued expansion of our fluid services segment as the Wolfberry play drives increased
drilling and frac activity in that section of the Permian Basin.
We have ample liquidity to further capitalize on our market position. Our cash balance increased
with the receipt of all $80 million of our federal income tax refunds in early July and we
increased the size of our credit facility to $225 million from $165 million. With that improved
financial position, we will carefully pursue additional acquisition and internal growth
opportunities.
Heading into second half of 2011, we reiterate our expectation that demand for our services will
build in most of our markets with opportunities for at least modest margin gains. Stable and
relatively strong oil prices and early signs of improvements in the natural gas market, will drive
reinvestment of growing cash flows by our customers not only in drilling but production
optimization as well. With higher activity across the industry, upward pressure on labor and other
operating costs follows and we are seeing that throughout our footprint. We do not see a negative
impact to margins as we are able to recoup these cost increases through improved pricing.
Managing the growth of the work force and activity in this environment is challenging. I would
like to thank our employees at all levels of the organization for their efforts in responding to
the many opportunities weve had to build our business over the first half of the year.
2011 FIRST SIX MONTHS HIGHLIGHTS
For the sixth-month period ended June 30, 2011, Basic reported a net loss of $1.9 million, or $0.05
per share, including the tax adjustment and other one time items noted above. Excluding those
items, Basic generated net income of $26.8 million, or $0.65 per diluted share. For the six-month
period ended June 2010, Basic reported a net loss of $32.3 million, or $0.81 per share, which
included a $1.8 million after-tax gain, or $.04 per share, on an acquisitions bargain purchase
price. Excluding that item, Basic generated a loss of $34.0 million, or $0.85 per share, during the
first six months of 2010.
Revenues increased 71% to $542.9 million for the first six months of 2011 compared to $318.1
million during the comparable period of 2011. Adjusted EBITDA for the first six months of 2011 was
$136.3 million, or 25% of revenue, compared to $38.8 million, or 12% of revenue, for the comparable
period in 2010 (which excludes 2011s early extinguishment of debt charges and last years gain on
bargain purchase price).
Business Segment Results
Completion and Remedial Services
Completion and remedial services revenue increased 25% to $121.8 million in the second quarter of
2011 from $97.5 million in the prior quarter. In the second quarter of 2010, this segment
generated $61.5 million in revenue. The increase in revenue was mainly due to the full deployment
of the 25,000 hhp Wolfberry frac spread in April and improved rental and fishing tool activity.
Segment profit in the second quarter of 2011 rose to $53.0 million compared to $42.6 million in the
prior quarter. Segment margin was 44% in the 2011 second quarter, the same as in the previous
quarter. During the second quarter of 2010, segment profit was $23.9
million, or 39% of revenue. As of June 30, 2011, Basic had approximately 176,000 hhp, up from
174,000 hhp and 142,000 hhp at March 31, 2011 and June 30, 2010, respectively.
Fluid Services
Fluid services revenue in the second quarter of 2011 increased by 13% to $81.4 million compared to
$72.3 million in the prior quarter. During the second quarter of 2010, this segment produced $58.8
million in revenue. The weighted average number of fluid services trucks rose 2% to 837 during the
second quarter of 2011, increasing by 17 trucks from the weighted average truck count of 820 during
the first quarter of 2011. The weighted average number of fluid services trucks was 797 during the
second quarter of 2010. The sequential increase in revenue was primarily due to improved pricing
and utilization, and the expansion of our truck and frac tank fleets.
The average revenue per fluid service truck was $97,000 in the second quarter of 2011, up 10% from
$88,000 in the prior quarter and 31% compared to $74,000 in the same period in 2010. Segment
profit in the second quarter of 2011 was $29.7 million, or 37% of revenue, compared to $24.1
million, or 33% of revenue, in the prior quarter and $15.4 million, or 26% of revenue, in the same
period in 2010.
Well Servicing
Well servicing revenue rose 21% to $83.9 million during the second quarter of 2011 compared to
$69.1 million in the prior quarter. In the second quarter of 2010, revenues were $49.5 million.
Revenue from the Taylor Rig manufacturing operations, which was acquired in May 2010, was $6.5
million in the second quarter of 2011 compared to $3.5 million in the first quarter of 2011. At
June 30, 2011, the well servicing rig count was 412, the same as at the end of the prior quarter
end. The weighted average number of well servicing rigs was 412 during the second quarter of 2011,
the same as in the prior quarter and an increase from 404 during the second quarter of 2010.
Well servicing rig utilization increased to 70% in the second quarter of 2011, up from 63% in the
prior quarter as strong oil prices continued to drive activity in oil-oriented markets. Last year
in the comparable quarter, the rig utilization rate was 53%. Excluding revenues associated with
the rig manufacturing operations, revenue per well servicing rig hour rose 6% sequentially to $376
in the second quarter of 2011 from $356 in previous quarter, and was up 19% compared to the $316
reported in the second quarter of 2010.
Well servicing segment profit in the second quarter of 2011 was $26.5 million compared to $20.7
million in the prior quarter and $12.8 million in the same period in 2010. Segment profit margins
increased to 32% in the second quarter of 2011 from 30% in the first quarter of 2011 and 26% in the
comparable quarter of 2010. Excluding the Taylor rig manufacturing operations, well servicing
segment profit margin was 33% for the second quarter of 2011 compared to 30% for the first quarter
of 2011. In the second quarter of 2011 segment profit margins were up due to continued gains in
utilization and pricing compared to the previous quarter, despite strong winds in the Permian Basin
during the second quarter and flooding issues in the Williston Basin in May.
Contract Drilling
Contract drilling revenue increased 38% sequentially to $9.8 million during the second quarter of
2011 compared to $7.1 million in the first quarter. During the second quarter of 2010, this
segment produced $5.3 million in revenue. Basic operated ten drilling rigs during the second
quarter of 2011, up from six rigs in the prior quarter and six rigs in the same period in 2010.
During the second quarter of 2011, Basic deployed the four drilling rigs purchased in March: one
in April, two in May, and the last in mid-June. Revenue per drilling day in the second quarter was
$13,700, up from $13,500 in the previous quarter and an increase from $10,000 in the second quarter
of 2010.
Rig operating days during the second quarter of 2011 rose 37% to 714 compared to 522 in the prior
quarter. The increase in drilling days was due to the investments made in expanding the drilling
fleet. Rig operating days were 527 in the comparable period in 2010. Segment profit in the second
quarter of 2011 was $2.4 million, down from $2.6 million in the prior quarter and $1.5 million in
the second quarter of 2010. Segment profit decreased sequentially due to costs associated with
placing the four rigs purchased in late March into service.
G&A Expense
G&A expense in the second quarter of 2011 was $34.1 million, or 11% of total revenue, compared to
$31.3 million, or 13% of total revenue, in the first quarter of 2011. The sequential increase in
G&A expense was primarily due to increased personnel costs, including cash and stock incentive
compensation, and transactions costs related to acquisitions. During the second quarter of 2010,
G&A expense was $26.8 million, or 15% of total revenue.
Cash and Total Liquidity
Basic had a cash balance of $220.9 million at June 30, 2011. On a pro forma basis at June 30, 2011,
the cash balance was $111.0 million, which includes receipt of $80.1 million of income tax refunds
and payments of $190.0 million for the Maverick and Lone Star acquisitions in early July.
On a pro forma basis at June 30, 2011, total liquidity was $299.0 million, which includes the $60
million increase in availability under Basics credit facility that was completed on July 15, 2011.
Capital Expenditures
During the first six months of 2011, our capital expenditures, including capital leases of $24
million, were approximately $139 million, comprised of $87 million for expansion projects, $48
million for sustaining and replacement projects and $4 million for other projects. Expansion
capital spending included $30 million for the completion and remedial services segment, $28 million
for the contract drilling segment, $24 million for the fluid services segment, and $5 million for
the well servicing segment. Other capital expenditures were mainly for facilities and IT
infrastructure.
As previously disclosed, our Board of Directors recently approved an increase to our 2011 capital
budget, raising it to approximately $183 million. About $130 million will be made in the form of
cash and the remaining $53 million will be funded through capital leases. We are
constantly evaluating our capital expenditure program and would like to remind you that it may be
increased or decreased as our outlook changes. We do not budget for acquisitions in our annual
planning process but continue to evaluate those in the normal course of business.
Recent Events
On June 13, 2011, Basic completed the issuance and sale of an additional $200.0 million of 7.75%
Senior Notes due 2019. That issuance, combined with the $275.0 of those Senior Notes originally
issued in February 2011 brings the aggregate principal outstanding under these notes to $475.0
million. The proceeds from these notes were used to fund the acquisition of the Maverick
Companies, and for general corporate purposes.
On July 8, 2011, Basic completed the acquisition of the outstanding equity interests of the
Maverick Companies for total cash consideration of $180.0 million, net of working capital acquired.
Maverick provides stimulation, coil tubing and thru-tubing services and will operate in Basics
completion and remedial services segment. Basic expects this acquisition to be accretive to
earnings immediately and contribute revenue and EBITDA of approximately $64.0 million and $22.0
million, respectively, in the second half of 2011. For 2012, Basic expects that the revenue
contribution from this acquisition will be approximately $140.0 million.
On July 15, 2011, Basic amended its existing revolving credit facility, increasing the available
credit to $225.0 million. No changes were made to the collateral, interest rates, or guarantors as
part of this amendment.
Conference Call
Basic will host a conference call to discuss its second quarter 2011 results on Friday,
July 22, 2011, at 9:00 a.m. Eastern Time (8:00 a.m. Central). To access the call, please dial
(480) 629-9771 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 Basics corporate website, http://www.basicenergyservices.com.
A telephonic replay of the conference call will be available until August 5, 2011 and may be
accessed by calling (303) 590-3030 and using the pass code 4451469#. A webcast archive will be
available at www.basicenergyservices.com shortly after the call and will be accessible for
approximately 30 days. For more information, please contact Donna Washburn at DRG&L at (713)
529-6600 or email at dmw@drg-l.com.
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 5,200 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 Companys website at
http://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 Basics services and
any related material impact on its pricing and utilizations rates, (ii) Basics ability to execute,
manage and integrate acquisitions successfully, (iii) changes in Basics expenses, including labor
or fuel costs and financing costs, and (iv) regulatory changes. Additional important risk factors
that could cause actual results to differ materially from expectations are disclosed in Item 1A of
Basics Form 10-K for the year ended December 31, 2010 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 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)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2011 |
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2010 |
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2011 |
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2010 |
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Income Statement Data: |
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(Unaudited) |
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(Unaudited) |
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(Unaudited) |
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(Unaudited) |
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Revenues: |
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Completion and remedial services |
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$ |
121,807 |
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$ |
61,533 |
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$ |
219,314 |
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$ |
106,767 |
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Fluid services |
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81,415 |
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58,801 |
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153,760 |
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110,948 |
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Well servicing |
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83,881 |
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49,529 |
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153,028 |
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91,325 |
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Contract drilling |
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9,752 |
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5,269 |
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16,807 |
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9,058 |
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Total revenues |
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296,855 |
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175,132 |
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542,909 |
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318,098 |
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Expenses: |
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Completion and remedial services |
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68,827 |
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37,660 |
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123,760 |
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67,383 |
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Fluid services |
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51,688 |
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43,425 |
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99,916 |
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84,365 |
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Well servicing |
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57,409 |
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36,734 |
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105,849 |
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68,834 |
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Contract drilling |
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7,393 |
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3,725 |
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11,878 |
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6,995 |
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General and administrative (1) |
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34,138 |
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26,820 |
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65,479 |
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51,897 |
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Depreciation and amortization |
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34,784 |
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34,250 |
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67,764 |
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67,348 |
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Loss (gain) on disposal of assets |
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942 |
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463 |
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(763 |
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1,174 |
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Total expenses |
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255,181 |
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183,077 |
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473,883 |
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347,996 |
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Operating income (loss) |
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41,674 |
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(7,945 |
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69,026 |
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(29,898 |
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Other income (expense): |
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Interest expense |
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(11,842 |
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(11,778 |
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(23,184 |
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(23,442 |
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Interest income |
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23 |
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24 |
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28 |
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50 |
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Loss on early extinguishment of debt |
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(49,366 |
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Gain on bargain purchase |
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1,772 |
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1,772 |
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Other income |
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102 |
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111 |
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259 |
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192 |
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127 |
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127 |
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Income (loss) from continuing operations before income taxes |
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29,957 |
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(17,816 |
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(3,237 |
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(51,326 |
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Income tax benefit (expense) |
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(13,407 |
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7,144 |
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1,294 |
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19,063 |
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Net Income (loss) |
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$ |
16,550 |
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$ |
(10,672 |
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$ |
(1,943 |
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$ |
(32,263 |
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Earnings (loss) per share of common stock: |
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Basic |
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$ |
0.41 |
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$ |
(0.27 |
) |
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$ |
(0.05 |
) |
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$ |
(0.81 |
) |
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Diluted |
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$ |
0.40 |
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$ |
(0.27 |
) |
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$ |
(0.05 |
) |
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$ |
(0.81 |
) |
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Other Financial Data: |
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EBITDA (2) |
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$ |
76,560 |
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$ |
28,188 |
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$ |
87,683 |
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$ |
39,414 |
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Adjusted EBITDA (2) |
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77,502 |
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26,879 |
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136,286 |
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38,816 |
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Capital expenditures: |
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Acquisitions, net of cash acquired |
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9,625 |
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10 |
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10,312 |
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Property and equipment |
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42,431 |
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14,463 |
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114,873 |
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25,555 |
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As of |
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June 30, |
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June 30, |
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2011 |
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2010 |
Balance Sheet Data: |
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(unaudited) |
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(unaudited) |
Cash and cash equivalents |
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$ |
220,910 |
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$ |
73,775 |
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Restricted cash |
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15,247 |
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Net property and equipment |
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693,891 |
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633,965 |
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Total assets |
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1,329,107 |
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1,011,725 |
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Total long-term debt |
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762,190 |
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|
470,928 |
|
Total stockholders equity |
|
|
308,363 |
|
|
|
309,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months |
|
Six months |
|
|
Ended June 30, |
|
Ended June 30, |
Segment Data: |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
Completion and Remedial Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profits as a percent of revenue |
|
|
43.5 |
% |
|
|
38.8 |
% |
|
|
43.6 |
% |
|
|
36.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fluid Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of fluid services trucks |
|
|
837 |
|
|
|
797 |
|
|
|
828 |
|
|
|
794 |
|
Truck hours (000s) |
|
|
525.7 |
|
|
|
468.6 |
|
|
|
1,020.4 |
|
|
|
900.8 |
|
Revenue per fluid services truck (000s) |
|
$ |
97 |
|
|
$ |
74 |
|
|
$ |
186 |
|
|
$ |
140 |
|
Segment profits per fluid services truck (000s) |
|
$ |
36 |
|
|
$ |
19 |
|
|
$ |
65 |
|
|
$ |
33 |
|
Segment profits as a percent of revenue |
|
|
36.5 |
% |
|
|
26.2 |
% |
|
|
35.0 |
% |
|
|
24.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Well Servicing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of rigs |
|
|
412 |
|
|
|
404 |
|
|
|
412 |
|
|
|
405 |
|
Rig hours (000s) |
|
|
205.7 |
|
|
|
153.9 |
|
|
|
390.4 |
|
|
|
289.6 |
|
Rig utilization rate |
|
|
69.8 |
% |
|
|
53.3 |
% |
|
|
66.3 |
% |
|
|
50.0 |
% |
Revenue per rig hour, excluding manufacturing |
|
$ |
376 |
|
|
$ |
316 |
|
|
$ |
366 |
|
|
$ |
312 |
|
Well servicing rig profit per rig hour |
|
$ |
122 |
|
|
$ |
83 |
|
|
$ |
114 |
|
|
$ |
78 |
|
Segment profits as a percent of revenue |
|
|
31.6 |
% |
|
|
25.8 |
% |
|
|
30.8 |
% |
|
|
24.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract Drilling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of rigs |
|
|
10 |
|
|
|
6 |
|
|
|
8 |
|
|
|
6 |
|
Rig operating days |
|
|
714 |
|
|
|
527 |
|
|
|
1,236 |
|
|
|
947 |
|
Revenue per day |
|
$ |
13,700 |
|
|
$ |
10,000 |
|
|
$ |
13,600 |
|
|
$ |
9,600 |
|
Drilling rig profit per day |
|
$ |
3,300 |
|
|
$ |
2,900 |
|
|
$ |
4,000 |
|
|
$ |
2,200 |
|
Segment profits as a percent of revenue |
|
|
24.2 |
% |
|
|
29.3 |
% |
|
|
29.3 |
% |
|
|
22.8 |
% |
|
|
|
(1) |
|
Includes approximately $2,078,000 and $1,439,000 of non-cash compensation expense
for the three months ended June 30, 2011 and 2010, respectively. For the six months ended
June 30, 2011 and 2010, it includes approximately $3,758,000 and $2,589,000 of non-cash
expenses, 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, loss on early extinguishment of
debt, gain on bargain purchase, 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 our 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 our gain or loss on disposal of assets; |
|
|
|
Adjusted EBITDA does not reflect our gain on bargain purchase; |
|
|
|
Adjusted EBITDA does not reflect our loss on early extinguishment of debt; 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 |
|
Six months |
|
|
Ended June 30, |
|
Ended June 30, |
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
Reconciliation of Net Income (Loss) to EBITDA: |
|
(Unaudited) |
|
(Unaudited) |
Net income (loss) |
|
$ |
16,550 |
|
|
$ |
(10,672 |
) |
|
$ |
(1,943 |
) |
|
$ |
(32,263 |
) |
Income taxes |
|
|
13,407 |
|
|
|
(7,144 |
) |
|
|
(1,294 |
) |
|
|
(19,063 |
) |
Net interest expense |
|
|
11,819 |
|
|
|
11,754 |
|
|
|
23,156 |
|
|
|
23,392 |
|
Depreciation and amortization |
|
|
34,784 |
|
|
|
34,250 |
|
|
|
67,764 |
|
|
|
67,348 |
|
|
|
|
EBITDA |
|
$ |
76,560 |
|
|
$ |
28,188 |
|
|
$ |
87,683 |
|
|
$ |
39,414 |
|
|
|
|
The following table presents a reconciliation of net income to Adjusted EBITDA, which means
our EBITDA excluding the loss on early extinguishment of debt, gain on bargain purchase, and
gain or loss on disposal of assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months |
|
Six |
|
months |
|
|
Ended June 30, |
|
Ended June 30, |
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
Reconciliation of Net Income (Loss) to Adjusted EBITDA: |
|
(Unaudited) |
|
(Unaudited) |
Net income (loss) |
|
$ |
16,550 |
|
|
$ |
(10,672 |
) |
|
$ |
(1,943 |
) |
|
$ |
(32,263 |
) |
Loss on early extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
49,366 |
|
|
|
|
|
Income taxes |
|
|
13,407 |
|
|
|
(7,144 |
) |
|
|
(1,294 |
) |
|
|
(19,063 |
) |
Net interest expense |
|
|
11,819 |
|
|
|
11,754 |
|
|
|
23,156 |
|
|
|
23,392 |
|
(Gain) loss on disposal of assets |
|
|
942 |
|
|
|
463 |
|
|
|
(763 |
) |
|
|
1,174 |
|
Gain on bargain purchase price |
|
|
|
|
|
|
(1,772 |
) |
|
|
|
|
|
|
(1,772 |
) |
Depreciation and amortization |
|
|
34,784 |
|
|
|
34,250 |
|
|
|
67,764 |
|
|
|
67,348 |
|
|
|
|
Adjusted EBITDA |
|
$ |
77,502 |
|
|
$ |
26,879 |
|
|
$ |
136,286 |
|
|
$ |
38,816 |
|
|
|
|
###