Basic Energy Services February rig utilization rate declines - Update

Tuesday, Basic Energy Services, Inc. (BAS), an oil and gas equipment service provider, reported selected operating data for the month of February 2009. The company's rig utilization rate for the month declined from the previous month as well as from a year ago, while it's well servicing rig count remained unchanged from the prior month.

During the month, the Midland, Texas-based Basic Energy added one newbuild rig and retired one rig, leaving it's well servicing rig count unchanged at 414 as of February 28, 2009. However, the company's well servicing rig count increased from 393 as at the end of February 2008.

The company's rig hours for February 2009 were 41,600, producing a rig utilization rate of 46%. This compares to rig hours of 49,300 and rig utilization rate of 49% in January 2009, and rig hours of 68,300 and rig utilization rate of 75% in the year-ago period.

Drilling rig days for the month were 55, down sharply from 123 in January 2009 and from 206 in the prior-year period.

Fluid services truck fleet for the month decreased by a net of six trucks from the end of January 2009, bringing the total to 809 trucks as of February 28, 2009. The fluid services truck fleet totaled 642 as at the end of the same period last year.

Ken Huseman, President and Chief Executive Officer of Basic Energy, stated, "Lower utilization and pricing continued through February in all our business lines. Given current commodity prices and uncertainty in the financial markets, we don't expect our customers' spending on services to support an increase in utilization rates in any of our segments in the near term."

Basic Energy reiterated its outlook for revenue for the first quarter to be 33% to 35% lower than the revenue reported in the fourth quarter of 2008, due to lower utilization levels and pricing. For the preceding fourth quarter, the company reported revenues of $245.97 million. Analysts expect the company to report revenues for the first quarter of $170.67 million.

The company said that as labor costs are the largest component of its expenses, it has been systematically reducing head count as dictated by current and anticipated demand in each of its regions. The company added that it will continue to reduce labor costs as required.

In Tuesday's regular trading session, BAS is trading at $6.34, up $0.08 or 1.28% on a volume of 38,458 shares.

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