Basic Energy Services Inc., which maintains well site services across the country, said its rig count remained unchanged in December, but well servicing hours were down month/month.
The Fort Worth, TX-based oilfield services operator employs more than 5,700 in producing regions in Texas, Louisiana, Oklahoma, New Mexico, Arkansas, Kansas, the Rocky Mountains and Appalachia.
"December activity unfolded much as we had anticipated, with most customers staying very busy up to the start of the holiday period," CEO Roe Patterson said. "As expected, some customers used the holiday period to shut down some projects due to weakening commodity prices, which reduced activity beyond the seasonal impact.
"Severe winter weather also came into play in the last week of the month, particularly in the Midcontinent and the Permian Basin, which are our largest operating markets. This adverse winter weather has continued into January and will impact the first quarter as well."
Capital spending this year is expected to be "mainly for maintenance and replacement projects," Patterson said. "Based on our current view, we project that the 2015 plan for maintenance and replacement projects will be under $100 million. Expansion projects will be very limited. We will continue to evaluate our 2015 capital plan and make adjustments as the operating environment dictates."
Basic's rig count remained unchanged month/month in December at 421. Well servicing rig hours totaled 64,300, a rig utilization rate of 60%. The rate was 67% in November and 58% in December 2013.
The utilization rates are based on the weighted average number of rigs owned during the periods being reported, a 55-hour work week/rig and the number of weekdays in the periods being presented.
Basic's fluid service truck count increased by five in December to 1,047. Fluid service truck hours also increased to 218,200, versus 210,400 in November and 192,400 in December 2013.
Drilling rig days in December totaled 324, producing a rig utilization of 87%, compared to 83% in November and 72% in the year-ago period.
"Based on the activity levels we experienced in December, we still expect our revenue for the fourth quarter to be generally flat sequentially," Patterson said. "However, margins will be impacted by the combination of weather interruptions and pricing discounts given to our customers in response to lower demand in competitive markets. These discounts began in early December across most lines of business."
Basic "reacted quickly in October of 2014 to anticipated lower spending by our customers in 2015," the CEO noted.
"Our strategy is focused on preserving liquidity by substantially reducing capital expenditures, maximizing utilization to protect market share and reducing expenses to adjust our cost structure to the expected level of demand. We have employed these strategies in previous down cycles with success. Combined with the strength of our current financial position, these strategies should allow us to withstand the effects of a prolonged downturn in activity."
In late December, Basic reactivated its share repurchase program, buying more than 1.4 million shares at an average price of $6.85/share, which leaves $10.5 million under its approved share repurchase plan.