Basic Energy Services at Johnson Rice Conference Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

multi line service company in Permian Basin

“Basic Energy Services is a multi-line service company, mainly providing different service segments at the well site. Kind of cradle-to-grave servicing, founded in the Permian Basin 1992, started as a small well-servicing and fluid services company and has grown over the years primarily through a strategy of 50% organic growth and 50% acquisition growth.’

Provide services start to finish

“As I said, we try to provide everything the customer needs from the start of the drilling of the well to the plugging and abandonment of the well. There’s many service intervals during the lifecycle of a well, and we try to have the right fleet, the right people, the right expertise to handle any problem that they may have from the start to finish of their well, or any routine maintenance that’s necessary.’

Permian is busiest basin for everyone right now

“The Permian Basin is the core of our business right now, not only the busiest market for us but busiest market domestically for everyone in the oil and gas business. Here, we have about half of the Well Servicing fleet stations, almost half of the Fluid Service fleet, 32 salt water disposal wells which are very key to our Fluid Service business, 10 rental and fishing tool stores.”

25% of rigs are running vertical but 40% of the permitting

“Right now in the U.S., 25% of the rigs are running a vertical. 40% of the permitting that’s currently going on in the lower 48 is vertical. You’d say, well, that doesn’t really match. Why is somewhere in the neighborhood of 40% of the permitting vertical versus 25% of the rig fleet? Well, it’s because the vertical wells are quicker and more turnover there. The wells are shorter. You got to have more – a big permit process in place to keep up with that activity.”

Strive to have the most modern fleet in the market

“Our mission, other than to provide the best service we can in the safest possible way, is to have the most modern fleet in the market. And I think by and large, if you look at our fleet and the age of our equipment and compare it to some of the other competitors in the space, we have probably one of the most modern fleets out there. We have done this by vertically integrating a lot of our manufacturing business. We bought Taylor manufacturing in 2009. We have the ability to build and refurbish all of our own well servicing fleet, as well as building a lot of rental and fishing tool assets and some cement assets”

A lot of young kids going into the oil services business

“The industry, as busy as it is in some of these oilier markets, is made up of a lot of new hires to the oilfield, a lot of young people in their – 19-year-old, 20-year-old, 21-year-old, 22-year-old folks. They’re not legacy oilfield employees. They do want to make money in oilfield, but they know really nothing about it. And so, they come in very green and we have to do a lot of training on these folks because although this business can be very safe if you follow the rules and the policies, if you don’t follow the rules it can be deadly. And so, we spend a lot of time training our new hires.”

Room for consolidation among smaller oil service providers

” I said earlier this year, I thought there’ll be some larger deals done. I don’t know if we’ll get there before the end the year. I still think that environment exist though. I think there’s – consolidation is something that’s ripe right now and is going to happen within our service space on all of our segments; Fluid Services, Well Servicing and these Completion/Remedial assets. I think there’s too many service providers and we should have ample opportunity to do some consolidation”