Basic Energy Posts Operating Results, Well Servicing Rig Count for June
Basic Energy Services reported selected operating data for the month of June 2009. The well servicing rig count was unchanged at 414 as of June 30, 2009. Well servicing rig hours for the month of June 2009 were 38,900, producing a rig utilization rate of 39%, an increase from 37% in May 2009 and down from 79% in June 2008.
Drilling rig days for the month of June 2009 were 112 producing a rig utilization of 41%, unchanged from 41% in May 2009 and a decrease from 83% in June 2008.
Basic's fluid services truck fleet was unchanged at 805 trucks as of June 30, 2009.
Ken Huseman, Basic's President and Chief Executive Officer, stated, "Well servicing utilization improved in June driven by stronger demand in oil-oriented markets that more than offset continued weakness in our gas markets. Strong and stable oil prices supported a resumption of routine maintenance and workover activity, particularly in our core Permian Basin market. Pricing remained fairly consistent across all service lines.
"In our May operating data report, we projected that revenues for the second quarter would be approximately 23-25% lower than the first quarter with each of our major business segments being equally affected. Based on our June operating activity, our second quarter revenues should be within that range.
"For the remainder of 2009, we expect moderate but steady improvement in demand for our services. Oil prices above $50 per barrel support a much higher level of maintenance and capital spending for oil-related projects than we have seen over the last six months, and we are encouraged by our customers' comments regarding near term plans for drilling and workover projects commencing in the third quarter.
"While we expect gas activity to remain restrained until wellhead prices exceed $5 per mcf, we anticipate that many of our customers will resume investing in workover projects to maintain production from existing wells. And we expect pricing across all service lines will continue to be pressured through year-end as the industry markets substantially more equipment than demand can currently support.
"Preserving liquidity has been a primary objective this year. We have aggressively reduced headcount, reduced operating costs across the board and minimized capital spending. The effect of these spending and cost reduction initiatives will be fully reflected in the third quarter. We will continue to benefit from the relatively young age of our equipment fleet which will allow us to address projected improvements in utilization with a very low level of capital spending for the remainder of the year."
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