Oilfield services operator Basic Energy Services Inc. said Wednesday it has consolidated its operating regions to three from five in response to shrinking oil and gas demand brought on by Covid-19.

The Fort Worth, TX-based operator in late March cut capital expenditures for 2020 by 60% to $17 million and suspended all capital lease additions. In addition, cost controls were enacted across all business lines, and it began adjusting staffing to activity levels. Some regional district offices were being consolidated at that time, with some “lower performing” locations expected to be closed.

The internal consolidation is expected to result in additional general and administrative (G&A) savings of around $20 million annually. Basic already expected to add $17 million of cost synergies related to the acquisition of C&J Well Services, and the capital spend cuts and other changes two months ago were designed to save $20 million.

“Given the extraordinary challenges facing our industry, we continue to act quickly and decisively to improve our operational structure, with a goal of reducing G&A materially as a percent of revenue,” CEO Keith Schilling said. “We believe this right-sizing of our company structure will afford Basic the benefits of scale and preservation of liquidity that will allow us to reinforce our commitment to our customers as a leading production services company in the U.S. and industry consolidator of choice.”

Basic has reorganized and consolidated its operating structure, which had previously consisted of Permian Basin, Central, Rocky Mountains, California and Agua Libre Midstream. The streamlined structure into three regions is to operate on a hub-and-spoke model that is broken out as:

● Central, with operations in the Permian, Gulf Coast, Louisiana, North Texas and Oklahoma;

● Western, with operations in California and the Rocky Mountains; and

● Agua Libre, which was unaffected by the reorganization.

To support the leaner organizational structure, Adam Hurley was promoted to executive vice president, Operations, and is to lead the three regions and four most significant product service lines: well servicing, water logistics, plugging/abandonment/coiled tubing and rental/fishing tools/snubbing.

In addition, Senior Vice President (SVP) Jim Newman of Regional Operations was named SVP of Agua Libre, while Permian VP Brandon McGuire was named SVP, Central Region. SVP Jack Renshaw is to continue overseeing the Western Region with a reduced cost structure.