Profile

About Basic

Basic Energy Services delivers dependable high-quality services that address a complete range of operational needs. Our geographic reach and service capacity mean customers benefit from the best servicing solutions regardless of the challenge, complexity or phase in the well lifecycle.

At Basic, our services and solutions are scalable to match each customer’s unique demands. We back these with ancillary services that deliver added value, and we support our offerings with some of the most experienced professionals in the industry. We’ve built our business from the ground up with local leadership. We know the field, the well, the challenges and how to solve them.

From our headquarters in Fort Worth, Texas, we support six geomarkets conducting operations in the Texas Gulf Coast region, the Central region, the Permian Basin of West Texas, California, the Appalachian region and the Rocky Mountains. Across every business segment, our regional expertise and responsiveness help keep production flowing safely and efficiently.

Services For The Life Of The Well

DRILLING

Contract Drilling
Directional Drilling
Fluid Services
Pumping Services
Tubular Services
Rental/Fishing Tools

COMPLETION

Well Servicing
Pumping Services
Fluid Services
Rental/Fishing Tools
Wireline
Tubular Services
Coil Tubing
Snubbing Services

MAINTENANCE
SERVICES

Well Servicing
Pumping Services
Fluid Services
Rental/Fishing Tools
Wireline
Tubular Services
Coil Tubing
Snubbing Services

WORKOVER

Well Servicing
Pumping Services
Fluid Services
Rental/Fishing Tools
Wireline
Tubular Services
Coil Tubing
Snubbing Services

PLUG & ABANDON

P&A Services
Well Servicing
Fluid Services
Pumping Services
Wireline
Rental/Fishing Tools
Tubular Services
Coil Tubing
Snubbing Services

SHAREHOLDER LETTER

2015 was a very difficult period for the energy industry. Beginning in December 2014, commodity prices fell and service activity fell with them. Basic Energy Services’ geographic coverage, diverse services and modern fleet allowed the company to pull through this exceptional period and, hopefully, be better prepared for an eventual market recovery.

Throughout the year, our goal was to preserve liquidity and protect the integrity of our fleet in order to be ready for what we believe will be a robust rebound and a busy consolidation market on the backside of the downturn. As a company with experienced management that has navigated through down cycles before, in 2015 we put into action a strategy that has served us well in the past. This strategy allows us to scale the company to fit lower levels of customer spending.

 

CONTROLLING COSTS AND GAINING EFFICIENCIES

During the year, Basic took defensive measures to both control costs and gain efficiencies. We reduced our capital expenditures to $70 million and scaled operations to fit cash flow and preserve our liquidity. We exited markets where margins fell below levels that justified current sustaining capital expenditures. We gave price concessions to customers and worked with our vendors and suppliers to lower our input costs. Internally, we implemented across-the-board salary and wage reductions, and we cut our workforce by over 30% in comparison to 2014 workforce levels. This is a very unfortunate part of our industry, as we lose very valuable market intelligence, field intelligence and loyal employees when we are required to make reductions in force.

 

PRESERVING FLEET INTEGRITY

Throughout 2015, we allocated assets into markets where activity was strongest and continued to high-grade our fleet and stack excess equipment. We ran the best equipment and stacked equipment with higher operating costs. It’s important to note that while the equipment we stacked may require some reactivation expense, it is in good shape—we have one of the younger fleets in the market. As an example, at this time, we estimate our reactivation cost for stacked frac equipment will be approximately 10% of current new replacement costs for the vast majority of these assets.

 

INCREASING REVENUE POTENTIAL

As we continued to face a difficult business environment, we looked for new ways to gain efficiencies, lower costs and, most importantly, increase our market share and revenue potential. With these goals in mind, and to better align with our customers’ organizational structures, we combined our Mid-Continent and Ark-La-Tex regions into a single Central region in 2015. The Central region now comprises three districts:  the Ark-La-Tex district, the North Texas district and the Oklahoma-Kansas district. Combining the regions will better position Basic to pursue new business and seize growth opportunities while keeping region overhead at a minimum.

 

THE ADVANTAGE OF PRODUCTION-ORIENTED SERVICES

At Basic Energy Services, we have multiple business segments that are exposed primarily to the production end of the business, and not just the drilling and completion phase. This flexibility is an important advantage for us. For the most part, these businesses have been relatively stable, and even in this competitive environment, they are generating returns for the company. Those business segments include Well Servicing, Fluid Services and Rental & Fishing Tools. Typically, in a recovery period, these business segments also gain utilization quicker because initial customer capital spending leans toward improving existing production projects before taking on new-drill projects.

Fluid Services
Our Fluid Services business comprises the sale, transportation, storage and disposal of fluids used in fracturing, workover and drilling activity as well as produced water. Fluid Services remained the most stable of all of our business segments. A significant part of this past year’s activity was due to Basic’s Saltwater Disposal Network, one of the largest in the country. To that point, the plan we put in place three years ago to aggressively develop our Saltwater Disposal Network has paid off. Our strategy of focusing on produced water hauling and on anchoring our fleet around our saltwater disposal well network continues to help sustain our utilization levels while keeping our cost structure the lowest in any market. These lower costs, combined with more stable utilization rates, equates to improved market share in this depressed portion of the industry cycle. Our best performing market for Fluid Services last year was the Permian Basin—a region with high produced water volumes and attractive economics. Here, we maintain one of the highest numbers of saltwater disposal wells in the market.

Well Servicing
Basic Energy Services is fortunate to have one of the largest well servicing fleets in the U.S. Similar to our Saltwater Disposal Network, our network of yards are strategically located where activity is greatest, enabling us to keep transportation costs low and our equipment readily available to meet our customers’ needs. With our wholly owned subsidiary Taylor Manufacturing, we have the ability to build any type of rig, including fit-for-purpose rigs for needs such as large completion jobs. We also maintain a fleet that is nimble enough for smaller-scale jobs that require few if any modifications. Basic’s fleet figures prominently in the legacy oil fields of the Permian Basin, which is the nation’s most prolific oil producing area. While Well Servicing saw low margins during the year due to the number of competitors and new entrants in 2014, we expect significant consolidation to take place in the future within this business segment.

2015 saw many maintenance workover activities being deferred. As customers defer workover projects, inventories of these projects are building. In addition to its strength in Well Servicing, Basic has one of the largest Plug and Abandonment (P&A) fleets in the nation. Regulatory scrutiny of plug and abandonment requirements continues to increase and as such will create more volume for our fleets.

Completion and Remedial Services
Basic’s specialized Completion and Remedial Services support both production as well as drilling and completion phases. As drilling and completion activity decreased during the year, the frac business became the most competitive space in our business. This was largely due to a saturation of the fracturing market in 2014. As margins decreased to single digits, we chose to stack assets that didn’t deliver enough margin to sustain capital expenditures. Market conditions were not sustainable for many of our competitors as we saw some frac service providers leave the market during the year.

Historically, the fracturing business is the first to fall off in a downturn and the first to come back. We believe this will be the case with the present downturn. This is why we have worked hard to protect the integrity of our fleet and minimize any delays for reactivation. While fracturing services dropped in activity, the rest of Completion and Remedial was steady. Cementing and acidizing were two such businesses in the pumping space that created stable margins. Our Coil Tubing fleet has been price competitive but experienced consistent utilization. Our Rental and Fishing Tool business, which provides fishing tools and rental equipment for maintenance and workover processes, also recorded acceptable margins.

 

ACHIEVING OUR BEST YEAR IN SAFETY

At Basic, our people are our most valuable assets. This past year, as with every year, safety is at the forefront of everything we do. We have developed a range of safe work practices, which includes new hire orientation and ongoing training, Job Safety Analysis, daily tailgate safety meetings, weekly company-wide safety conference calls, monthly yard-level safety meetings, extensive incident review processes and routine field and yard inspections. In 2015, we achieved an excellent total recordable incident rate (TRIR) of 1.5, which is our best safety performance in Basic’s history.

We are a company that looks out for our people in the field and makes driver safety and compliance a priority. In 2015, we renewed our GPS system for fleet management and driver behavior solutions for the next five years. Basic Energy Services uses these systems to help improve driver safety and monitor the performance of more than 4,000 vehicles driving some 93 million miles per year.

 

GROWING BY EMBRACING OPPORTUNITY

We believe that downturns create opportunities to grow business. These opportunities can come in many forms. We have the cost structures in place to increase our market share, in particular by growing our saltwater disposal services. We can move into new areas where the path to entry was previously blocked due to overcapacity in services or other factors. And we can acquire new services to extend our offerings. Our goal is to come out of this period in an opportunistic way and not merely survive. I am proud to say that Basic was built on these strategies and they remain an important objective today.

 

THANK YOU

On a final note, I want to express my profound appreciation for the people at Basic during these challenging times. I am blessed to be surrounded by individuals who have navigated periods such as this before. Basic’s proven management team, local field leadership and all of our employees have been an important differentiator for our company and a foundation for our success. I would also like to thank our shareholders for their support and loyalty.

Through our strengths and our proven record of performance, I believe Basic Energy Services can survive these difficult times and will thrive as our industry recovers.

Sincerely,

Roe_Signature

T.M. “Roe” Patterson

President and Chief Executive Officer

LEADERSHIP

Board of Directors

Steven A. Webster
Chairman of the Board

T.M. “Roe” Patterson
President, Chief Executive Officer and Director

Ken V. Huseman
Director (former President and Chief Executive Officer of Basic Energy Services)

James S. D’Agostino, Jr. 1,3
Director

William E. Chiles 1,3
Director

Robert F. Fulton2
Director

Sylvester P. Johnson, IV 2
Director

Antonio O. Garza, Jr. 3
Director

Thomas P. Moore, Jr. 1,2
Director

1 Audit Committee
2 Nominating and Corporate Governance Committee
3 Compensation Committee

Executive Management

T. M. “Roe” Patterson
President, Chief Executive Officer and Director

Alan Krenek
Senior Vice President, Chief Financial Officer, Treasurer and Secretary

Jim Newman
Senior Vice President, Region Operations

Tim Dame
Vice President, Pumping Services Division

Doug Rogers
Vice President, Corporate Marketing

Eric Lannen
Vice President, Human Resources

Trampas Poldrack
Vice President, Central Region and Tubular Division

Brett Taylor
Vice President, Manufacturing and Equipment

Cody Bissett
Vice President, Controller and Chief Accounting Officer

Senior Management

Barbara S. Wood
Vice President, Information Systems and Technology

Mike Dye
Vice President, Financial Services and Assistant Treasurer

Robert Sepanski
Vice President, Risk Management

Lynn Wigington
Vice President, Permian Business Unit

Brandon McGuire
Vice President, Gulf Coast Region

Jerry Tufly
Vice President, Rocky Mountain Region

Ron Scandolari
Vice President, Drilling

Roger Massey
Vice President, Ark-La-Tex District

Ronnie Lackey
Vice President, North Texas District

Steven Wild
Interim Manager, Oklahoma-Kansas District

Richard Robertson
Vice President, Mid-Continent District, Pumping Services Division

Dan Klaus
Vice President, Rocky Mountain District, Pumping Services Division

Steve Newman
Vice President, Permian Basin District, Pumping Services Division

Mohit Punj
Vice President, Corporate Development and Controller, Central Region

Cheryl Majors
Vice President, Taylor Operations

Kevin Northcutt
Vice President, Permian Business Unit, Rig & Truck Operations

Richard Wegner
Vice President, Health, Safety & Environment

Corporate Office

Basic Energy Services, LP
801 Cherry Street, Suite 2100
Fort Worth, TX 76102
817.334.4100

Mailing Address

801 Cherry Street
Suite 2100, Unit #21
Fort Worth, TX 76102

Investor Relations

Jack Lascar
Stephanie Smith
Dennard-Lascar Associates, LLC
Houston, TX
713.529.6600
jlascar@dennardlascar.com
ssmith@dennardlascar.com

Alan Krenek
Senior Vice President and Chief Financial Officer
Basic Energy Services, Inc.
Fort Worth, TX
817.334.4100
alan.krenek@basicenergyservices.com

Transfer Agent

American Stock Transfer & Trust Company New York, New York

Independent Accountants

KPMG LLP
Dallas, Texas

Counsel

Andrews Kurth LLP
Houston, Texas

DOWNLOAD 10K

CONTACT

Discover What Basic Energy Services Can Do For You

Corporate Office

Basic Energy Services, LP
801 Cherry Street, Suite 2100
Fort Worth, TX 76102

817-334-4100

Info@basicenergyservices.com

Mailing Address

801 Cherry Street
Suite 2100, Unit #21
Fort Worth, TX 76102