Oct. 28, 2009 (PR Newswire) -- MIDLAND, Texas, Oct. 28 /PRNewswire-FirstCall/ -- Basic Energy Services, Inc. (NYSE: BAS) ("Basic") today announced its financial and operating results for the third quarter and nine months ended September 30, 2009.
Basic generated revenue of $125.0 million during the third quarter of 2009, up 5% from $118.8 million in the second quarter of 2009, and down from the $277.6 million reported in the third quarter of 2008. For the third quarter of 2009, Basic generated a net loss of $23.1 million, or $0.58 per diluted share, which excluded a $2.2 million, or $0.06 per share, after-tax charge associated with the early extinguishment of its revolving credit facility. In the comparable quarter last year, Basic generated net income of $26.7 million, or $0.64 per diluted share, that excluded $800,000, or $0.02 per share, in after-tax merger-related charges. Net loss as reported for the third quarter of 2009 was $25.3 million, or $0.64 per diluted share, compared to net income of $25.9 million, or $0.62 per diluted share, in the same period in 2008.
Adjusted EBITDA (defined as net income before interest, taxes, depreciation and amortization, and also excludes the pre-tax goodwill impairment and loss on extinguishment of debt in the 2009 period as well as the pre-tax merger related charges in the 2008 period) for the 2009 third quarter was $6.2 million, or 5% of revenue, compared to $78.1 million, or 28%, in the comparable quarter of 2008. EBITDA (defined as net income before interest, taxes, depreciation and amortization) for the third quarter of 2009 was $2.7 million compared to $76.8 million in the same period in 2008. 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.
Ken Huseman, Basic's President and Chief Executive Officer, stated, "We were pleased with the sequential uptick in revenues in each of our business segments in the third quarter, particularly in our completion and remedial services segment which experienced an 11% increase. Our top-line growth was driven by the relatively higher levels of activity in our oil-driven markets, which more than offset the continuing weaker demand in our gas-oriented markets.
"During the 2009 third quarter, our Adjusted EBITDA doubled from the prior quarter reflecting the full impact of the cost reductions we have been making since the fourth quarter of 2008. We continue to look for opportunities to further reduce costs while maintaining our ability to provide the optimum level of service to our customers.
"We expect oil-related activity to gradually increase over the near term as our customers gain confidence in the general level of oil prices and as they establish their 2010 budgets and plans based on that confidence. The outlook for natural gas prices is more uncertain and will continue to be a drag on the oilfield service industry as customers remain cautious in their spending until natural gas prices exhibit strength and stability.
"Our efforts in developing a much lower cost structure should result in incremental margins in excess of 50% in the near term as we more fully utilize personnel, equipment and infrastructure, even with the fairly modest improvements in activity and reduced pricing for our services compared to the recent peak levels. We believe we are well situated to build market share and shareholder value as we come out of the lowest part of this cycle."
For the nine-month period ended September 30, 2009, Basic generated a net loss of $60.3 million, or $1.52 per diluted share, excluding the impact of a $166.9 million after-tax ($204.0 million pre-tax) non-cash goodwill impairment charge and a $2.2 million after-tax ($3.5 million pre-tax) loss on the early extinguishment of debt. Net loss as reported for the 2009 nine-month period was $229.4 million, or $5.78 per diluted share. During the comparable period in 2008, Basic generated net income of $69.2 million, or $1.66 per diluted share, before merger related costs. Including the $4.9 million of after-tax merger related charges, net income reported for the first nine months of 2008 was $64.3 million, or $1.54 per diluted share. Revenues declined 47% to $398.5 million in the first nine months of 2009, compared to $759.0 million in the same period of 2008.
Basic recognized an effective tax benefit rate of 24% in the first nine months of 2009 compared to a tax rate of 38% in the comparable period of 2008. The low year-to-date effective tax benefit rate for 2009 is primarily due to the $204.0 million goodwill impairment charge. The tax deductibility of the impairment charge was determined by the taxable basis of the goodwill considered to be impaired. A portion of the Company's goodwill was not tax-deductible, which decreased the benefit of the effective tax rate. Excluding the impact of the goodwill impairment charge, the effective tax rate for the nine months ending September 30, 2009 would have been a benefit of 37%.
Business Segment Results
Well Servicing
Sequentially, well servicing revenues rose approximately 6% to $38.4 million during the third quarter of 2009 compared to $36.4 million in the prior quarter. During last year's third quarter revenues were $97.4 million. At September 30, 2009, the well servicing rig count was 414, unchanged from the prior quarter end. The weighted average number of well servicing rigs was 414 during the third quarter of 2009 compared to 412 during the same period in 2008.
Well servicing rig utilization ticked-up sequentially to 42% in the third quarter of 2009 from 37% in the prior quarter. Last year in the comparable quarter, the rig utilization rate was 79%. Revenue per well servicing rig hour declined 5% sequentially to $313 during the third quarter of 2009 compared to $329 in the prior quarter, and down from the $418 achieved in the same period in 2008.
Well servicing segment profit in the third quarter of 2009 was $9.4 million compared to $8.6 million in the prior quarter and $36.3 million in the same period in 2008. By instituting cost saving measures, the well services operating team produced segment profit margins of 24% in the third quarter of 2009, in line with the margins produced in both the first and second quarter of 2009, but down from the 37% which was achieved in the third quarter of 2008. The year-over-year decrease was due mainly to lower demand, which resulted in decreased utilization and pricing for well servicing rig services.
Fluid Services
Fluid services revenue in the third quarter of 2009 was $49.8 million compared to $49.1 million in the prior quarter and $82.7 million in the same period in 2008. Basic ended the third quarter with 805 fluid service trucks, the same number of trucks it had at the end of the prior quarter. Weighted average number of fluid services trucks declined to 805 trucks during the third quarter of 2009, down three trucks from the average truck count of 808 during the second quarter of 2009. During the third quarter of 2008 the average number of fluid services trucks was 683. The year-over-year increase in fluid services trucks is primarily related to the trucks acquired in the Azurite acquisition in September 2008.
Average revenue per fluid services truck was $62,000 in the third quarter of 2009, in line with $61,000 in the prior quarter and down 49% compared to $121,000 in the same period in 2008. Segment profit in the third quarter of 2009 was $11.3 million, or 23% of revenue, compared to $13.7 million, or 28% of revenue, in the prior quarter and $29.6 million, or 36% of revenue, in the same period in 2008. Profit margins were down sequentially due to increased fuel and repair and maintenance costs.
