Basic Energy Services Reports 2011 Fourth Quarter and Year End Results
MIDLAND, Texas, Feb. 21, 2012 /PRNewswire/ -- Basic Energy Services, Inc. (NYSE: BAS) ("Basic") today announced its financial and operating results for the fourth quarter and twelve months endedDecember 31, 2011.
FOURTH QUARTER 2011
Fourth quarter 2011 net income as reported was $22.5 million, or $0.54 per diluted share, compared to net income of $26.6 million last quarter and a net loss of $2.0 million in the fourth quarter of 2010. The current quarter results included a $1.3 million, or $0.04 per diluted share, tax adjustment related to the first quarter's early extinguishment of its $225 million 11.625% Senior Secured Notes due 2014 ("2014 Notes"). Excluding the impact related to this adjustment, fourth quarter 2011 operating net income was$23.8 million, or $0.58 per diluted share. This compares to the third quarter's operating net income of$27.2 million, or $0.66 per diluted share, which excluded a tax adjustment of $631,000 related to the bond redemption of the 2014 Notes.
Fourth quarter 2011 revenue rose 2% to $354.4 million from $346.0 million in the third quarter of 2011, and increased 66% from the $212.9 million reported in the fourth quarter of 2010.
Adjusted EBITDA for the fourth quarter of 2011 rose to $100.3 million, or 28% of revenue, from $98.8 million, or 29% of revenue, in the third quarter of 2011, and $43.1 million, or 20% of revenue, in the comparable quarter of 2010. Adjusted EBITDA is defined as net income before interest, taxes, depreciation and amortization, loss on early extinguishment of debt, gain on bargain purchase price, and the net gain or loss from the disposal of assets. EBITDA and Adjusted EBITDA, which are not measures determined in accordance with generally accepted accounting principles ("GAAP"), are defined and reconciled in note 2 under the accompanying financial tables.
2011 FULL YEAR
For the year ended December 31, 2011, Basic reported net income of $47.2 million, or $1.14 per diluted share. The reported results included a $32.0 million, or $0.77 per diluted share, after-tax ($49.4 million pre-tax) charge related to the early extinguishment of its 2014 Notes and the termination of its prior $30.0 million revolving credit facility. The 2011 results also include an after-tax gain of $1.5 million, or $0.04 per diluted share, related to the sale of an office complex. Excluding those items, Basic generated net income of $77.7 million, or $1.87 per diluted share.
For the year ended December 31, 2010, Basic reported a net loss of $43.6 million, or $1.10 per share, which included a $1.8 million after-tax gain, or $.04 per share, on an acquisition's bargain purchase price. Excluding that item, Basic generated a loss of $45.3 million, or $1.14 per share, in 2010.
Revenues increased 71% to $1.2 billion in 2011 compared to $728.2 million in 2010. Adjusted EBITDA for 2011 was $335.4 million, or 27% of revenue, compared to $114.1 million, or 16% of revenue, for the comparable period in 2010 (which excludes 2011's early extinguishment of debt charges and 2010's gain on bargain purchase price).
Ken Huseman, Basic's President and Chief Executive Officer, stated, "Our fourth quarter results capped an exceptional year for the company. Strong demand in our oil and liquids-driven markets and the impact of acquisitions and internal growth initiatives combined to produce record levels of revenue and EBITDA for the fourth quarter and the year. Those quarterly results are particularly positive indicators for 2012 as we achieved our tenth consecutive sequential quarterly increase in both metrics despite the seasonal factors which typically result in a reduction in activity at year end.
"Segment profit margins in each of our segments improved through the year as pricing gains offset cost increases. Margins in the Completion and Remedial and Fluid Services segments declined modestly in the fourth quarter due to seasonal cost increases. Sequential improvements in our Well Servicing and Contract Drilling segment margins were achieved due to lower activation and relocation costs compared to the third quarter.
"Our established presence in the largest oil and gas markets in the U.S. allowed us to relocate a substantial amount of equipment from gas markets to oilier markets over the course of the year. But we also invested heavily in building our positions in those oil and liquids markets adding new equipment and acquisitions in the Permian, Bakken, Eagle Ford and Niobrara markets. We estimate our business is now more than 70% oil and liquids based with more than 40% of our revenue derived from the Permian Basin.
"With oil prices well above the level required to support current activity, increased demand in those markets should offset continued weakness in gas related activity. While we anticipate some further relocation of equipment and competition from gas markets, we believe we are experiencing enough demand for our services to further expand our fleet. We have set a preliminary capital budget of $250 million in 2012, about 2/3 of which will fund expansion opportunities. The actual amount and allocation of our expansion capital program will depend on the market conditions as the year progresses but we anticipate devoting expansion capital of $70 million to our Fluid Services segment, $70 million to our Completion and Remedial segment and $25 million to our Contract Drilling segment. We intend to reactivate the three dozen well servicing rigs we currently have stacked so we will not need to devote substantial capital in 2012 to grow that segment.
"We also have the liquidity to consider the growing list of acquisition opportunities we anticipate becoming available over the course of the year. Deal flow has been extremely high in the last six months. We closed on the first deal of the year in January with the acquisition of Mayo Marrs Co., a five rig full-service P&A company that has been a major competitor for more than 30 years in the Permian Basin. Those five rigs, added to our existing fleet of 14 full-service P&A rigs in the Permian Basin, make us the largest provider of this service in that market.
"We anticipate sequential quarterly increases in revenue and earnings through 2012 led by expectations for strong market conditions in most of our markets and the contribution from the planned growth in our fleet. We believe we can offset cost increases to maintain margins and even see some improvement as we get past the winter months.
"I would like to congratulate our management team and thank each of our employees for their efforts in achieving the great operating and financial results we are reporting today."
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