Basic's Q4, Full-year Profits Surge

Basic reported net income of $27.3 million, or $0.70 per diluted share, for the fourth quarter of 2006, compared to $15.9 million, or $0.46 per diluted share, in the same period in 2005. During the fourth quarter of 2006, revenues increased 46% to $197.5 million compared to $135.4 million in the same period last year. The effective tax rate of 32.2% in the fourth quarter of 2006 was lower than expected because of the annualized benefit of lower state effective tax rates. EBITDA (defined as net income before interest, taxes, depreciation and amortization) for the fourth quarter of 2006 was $62.2 million, or 32% of revenue, compared to $39.7 million, or 29% of revenue, in the same period in 2005.

For the year, Basic reported net income of $98.8 million in 2006, or $2.56 per diluted share, compared to $44.8 million, or $1.35 per diluted share, in the same period in 2005. Net income in 2006 included an after-tax loss of $1.7 million, or $0.05 per diluted share, associated with the early extinguishment of debt. Revenues increased 59% to $730.1 million in 2006, compared to $459.8 million in the same period in 2005. EBITDA rose to $231.2 million in 2006, or 32% of revenue, compared to $121.3 million, or 26% of revenue, during the same period in 2005.

Ken Huseman, Basic's President and Chief Executive Officer, stated, "Our solid results for the fourth quarter capped an exceptional year for the company. Strong demand for our services allowed us to improve margins over the prior year while we added substantial size and scope to the company through a combination of internally generated capital projects and acquisitions.

"During the year, we invested approximately $86 million in expansion capital projects and completed ten acquisitions for total consideration of approximately $136 million. The largest and most important single expenditure in 2006 was the asset purchase of G&L Tools, Ltd. in February that established our presence in the rental and fishing tool business. The rental and fishing tool business provides an opportunity for additional growth as we expand this service into our other established markets.

"While we did not grow our pressure pumping and wireline operations at the same rate as our other operations, we continue to like our position in this market. We recently announced plans to substantially increase our market presence with the JetStar acquisition, which is discussed later under Recent Events. This acquisition increases our combined pressure pumping fleet to 95,000 horsepower with an additional 10,000 horsepower to be delivered later in 2007.

"In our well servicing segment, we added 31 newbuild well servicing rigs to our fleet during the year and have now received 55% of our planned 120-rig newbuild program. The flow of new rigs into our fleet has allowed us to expand our market share, enter new markets and replace some of the oldest rigs we kept in service during the exceptionally strong market conditions experienced over the last several years. The newbuild rigs combined with our internal refurbishment program is equipping the company with one of the most modern fleets among the larger competitors in the industry, providing a tool for retaining customers and employees while supporting strong operating margins.

"Although currently included in our well servicing segment, we invested approximately $18 million in 2006 to add two newbuild shallow drilling rigs bringing our drilling rig count to four at the end of the year. We believe the continuing demand for drilling to maintain production and develop reserves provides an opportunity to expand our drilling operations in several markets.

"The growth in our fluid services segment in 2006 was the result of expansion capital expenditures of approximately $17 million as well as two sizable acquisitions which filled gaps in our markets in east Texas and the Permian Basin. This business segment continues to show steady margins but experienced competitive pressures in our east and south Texas markets as new entrants drove wages up in an effort to gain market positions.

"We are proud of the work performed at all levels of our organization as we completed our first full-year as a public company, integrated ten acquisitions and absorbed substantial amounts of new equipment. Our management team and employees have done an outstanding job of managing that growth while producing strong operating, safety and financial performance. Basic begins 2007 with the organization and financial position to support continued growth in each of our segments."

Business Segment Results

Well Servicing

Well servicing revenues increased 37% to $87.9 million during the fourth quarter of 2006 compared to $64.1 million in the same period last year. During the fourth quarter of 2006, Basic added 11 newbuild rigs and retired three rigs, bringing its well servicing rig count to 365 as of December 31, 2006. Revenue per rig hour increased 22% to $401 during the fourth quarter of 2006 compared to $329 in the same period in 2005. The full-fleet rig utilization rate declined slightly to 84.6% in the fourth quarter of 2006 compared to 86.3% in the same period in 2005. Rising oil and gas prices and mild weather conditions in the fourth quarter of 2005 resulted in higher than normal seasonal demand for the Company's services during that period. During the fourth quarter of 2006, the utilization rate was more indicative of typical seasonal fourth quarter activity levels. Operating segment profit in the fourth quarter of 2006 was $37.0 million, or 42% of revenue, compared to $26.1 million, or 41% of revenue, in the same period in 2005. The slight decline in operating segment profit margin from the third quarter of 2006 mainly reflects the effects of lower utilization in the fourth quarter of 2006.

Fluid Services

Fluid services revenues in the fourth quarter of 2006 increased 40% to $51.9 million compared to $37.1 million in the same period in 2005. During the fourth quarter of 2006, Basic added a net of 11 fluid services trucks, bringing the total number of fluid services trucks to 646 as of December 31, 2006. Average revenue per fluid services truck increased by 3% to $81,000 in the fourth quarter of 2006 compared to $79,000 in the same period in 2005. Operating segment profit in the fourth quarter of 2006 was $20.4 million, or 39% of revenue, compared to $14.8 million, or 40% of revenue, in the same period in 2005.

Drilling & Completion Services

Drilling and completion services revenues during the fourth quarter of 2006 increased 123% to $43.9 million compared to $19.7 million in the same period in 2005. Operating segment profit in the fourth quarter of 2006 was $22.5 million, or 51% of revenue, compared to $9.7 million, or 50% of revenue, in the same period in 2005. The year-over-year improvement was the result of several acquisitions in 2006 as well as improved utilization and pricing of our services.

Well Site Construction Services

Well site construction services revenues in the fourth quarter of 2006 declined 5% to $13.7 million compared to $14.4 million in the same period in 2005. Operating segment profit in the fourth quarter of 2006 was $4.6 million, or 33% of revenue, compared to $4.8 million, or 34% of revenue, in the same period in 2005.

Capital Expenditures

During 2006, Basic invested $131.0 million for capital expenditures, including capital leases and excluding acquisitions. This amount included $85.6 million for expansion capital expenditures, including $56.3 million for the well servicing segment, $16.8 million for the fluid services segment and $11.1 million for the drilling and completion services segment. Maintenance capital expenditures amounted to approximately $45.4 million, or 6% of revenues, for 2006.

    Recent Events
     *  January 3, 2007 - Basic acquired two barge-mounted workover rigs and
        related equipment from Parker Drilling Company ("Parker Barge Rigs")
        for total consideration of $20.5 million in cash.  The acquired rigs
        will operate in the inland waters of Louisiana and Texas as part of
        Basic Marine Services.

     *  January 17, 2007 - Basic acquired substantially all of the operating
        assets of Davis Tool Company, Inc. ("Davis Tool") for total
        consideration of $4.9 million in cash.

     *  February 6, 2007 -  We amended and restated our existing credit
        agreement by entering into a Fourth Amended and Restated Credit
        Agreement with a syndicate of lenders (the "2007 Credit Facility").
        The amendments included increasing the total revolving commitments
        from $150 million to $225 million, improving the applicable margins
        and amending certain covenants that will allow us additional
        flexibility. We will record a charge of approximately $0.9 million in
        the first quarter of 2007 to write-off a portion of unamortized debt
        issuance costs in connection with the 2007 Credit Facility.

     *  March 6, 2007 - Basic acquired all of the outstanding capital stock of
        JetStar Consolidated Holdings, Inc. ("JetStar") for a total
        acquisition price, net of estimated working capital, of approximately
        $118 million. The total acquisition price is comprised of
        approximately 1.9 million shares of Basic common stock, $45 million in
        cash to JetStar's shareholders, and $38 million for repayment of
        JetStar's outstanding debt.

    

2007 Outlook

We plan to provide 2007 full-year operating guidance in May in connection with our first quarter 2007 earnings release.

Moderating oil and gas prices reduced the demand for our services in the fourth quarter of 2006 as compared to the same period in 2005. In addition, harsher weather in the fourth quarter of 2006 hampered our ability to mobilize our people and equipment in several markets. The above factors continue to play a role thus far in the first quarter of 2007. As oil and gas prices stabilize and we move into warmer weather and longer days, we expect utilization to move up to levels experienced over the last several years. Please refer to the monthly operating data information that the Company publicly releases.

For the acquisitions that we completed in the first quarter 2007, we project additional full-quarter revenues of $16.0 million from JetStar, $3.5 million from the Parker Barge Rigs purchase and $400,000 from the Davis Tool purchase. We expect that each of these transactions will be accretive to our 2007 earnings per share. JetStar and Davis Tool will operate in the drilling and completion line of business and the Parker Barge Rigs will be included in the well servicing line of business.

We expect that the effective tax rate for 2007 will be between 37% and 38%.

Basic Energy Services provides well site services essential to maintaining production from the oil and gas wells within its operating area. The company employs approximately 4,100 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.