Completions and Remedial
The core of Basic’s Completions and Remedial business consists of our 523,000 horsepower of pressure pumping capacity. Beyond frac, Basic also has acid and cement operations, coiled tubing, and rental & fishing tools. Basic typically pursues frac work that is moderate in terms of required pressure—horizontal wells that do not require more than 40,000 horsepower on location or 8,500 psi of pressure—mainly in the SCOOP/STACK and the Midland Basin platform of the Permian Basin. By the end of the first quarter of 2017, we had already taken all of our hydraulic horsepower out of stack and placed it back into operation.
All of our Completions and Remedial business lines showed improvement throughout 2017. Coiled tubing remains one of Basic’s best-performing business segments, working at nearly full utilization during 2017. Our Rental & Fishing Tool assets are seeing increased demand with the uptick in completions and major workover projects, largely working in concert with our well service rigs on today’s higher-pressure, long-lateral horizontal wells.
As the number of larger workover projects and new well completions increased over 2017, Basic’s level of 24-hour service rig work steadily increased. These larger projects often see double the utilization for a service rig while creating multiple revenue streams, particularly when combined with a rental equipment package that can triple a normal rig rate. By the end of 2017, Basic had removed 87 older Class 3 rigs and 24 Class 4 rigs from the reported rig count, placing the focus firmly on the higher-spec assets that remain in demand today. Our fleet of 310 service rigs remains one of the largest and most active high-spec rig fleets in the entire Lower 48, with utilization above 70% in the fourth quarter of 2017.
During the recent cyclical recovery of the well service industry, the reactivation of our fleet and utilization recovery for our production-oriented businesses has and continues to outpace that of our peers. With an offering of available and ready-to-go Class IV or higher rig fleet that is second to none in the industry, Basic has been able to redeploy quickly and more cost effectively than many competitors. With our manufacturing group in-house, Basic has taken the opportunity to upgrade many rigs going back into service, further customizing the fleet for today’s customer requirements, meeting the challenges of a changing market.
With activity intensifying, driven by stronger commodity prices and growing rig counts, oil and gas service suppliers are increasingly focused on customer satisfaction. Throughout the year, Basic continued to rise to that challenge. According to EnergyPoint Research’s 2017 Oilfield Products & Services Customer Satisfaction Survey, Basic Energy Services was ranked first in Workovers & Well Servicing, reflecting our commitment to helping our customers reach their goals more effectively.
In today’s most active shale plays, the management of water has steadily grown in importance as produced water volumes have multiplied with the growth of longer laterals. For that reason, Basic changed the name of its Fluid Services segment to Water Logistics, which better captures the true nature of this business and cradle-to-grave service, from sourcing to transporting to disposing or remediating, and anything in between.
In 2017, Basic focused on maintaining its network of Salt Water Disposal (SWD) wells, which is the largest commercial SWD operation in the U.S. Increasingly over 2017, the infrastructure of this business changed so that salt water produced from our customers’ oil and gas wells is piped into our SWDs rather than trucked in. During the year, we increased the volume of water that we transport to our wells via pipeline to 25% of the total, with the remainder via traditional trucking. Piping in water creates a lower cost opportunity for both Basic and our customers while delivering significantly better margins for our company. We are also helping to install pipelines into customer-owned facilities and helping with the management of that water. We are truly providing our customers a holistic solution to their water management challenges, adapting to the changing requirements of the oilfield today.
While we experienced a 50% increase in employees in 2017, we maintained one of the industry’s lowest TRIR rates as well as one of the lowest motor vehicle incident rates; however, safety is a job that is never completed. At Basic, we are dedicated to developing processes and procedures that keep our most valuable assets, our employees, safe and sound.