Canaccord Genuity Morning Coffee on Basic Energy Services (BAS): A Basic Miss

February 23, 2012 10:20 AM EST
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Canaccord Genuity Morning Coffee on Basic Energy Services (NYSE: BAS): A Basic miss.

Basic Energy Services reported clean Q4 EPS of $0.58 (excluding a $0.04 tax item), below consensus of $0.62 and Canaccord Genuity Energy Analyst Scott Burk’s $0.64 estimate, down $0.08 from Q3/11 and compared to a loss of $0.02 in Q4/10. Compared to Burk’s estimates, the company reported lower revenue and slightly lower margins for the completion and remedial services segment (-$0.05 per share), partly offset by 279 bps higher margins for well servicing (+$0.03 per share), for a net segment income miss of $0.01 per share. Management had warned of seasonal factors that were slightly worse than he had forecast. The biggest driver of the miss relative to Burk’s estimates was 9% higher depletion, depreciation and amortization expenses (-$0.05 per share). After the winter months, management expects to again report sequential quarterly revenue and earnings increases during 2012, offsetting increasing costs to maintain margins. After moving some equipment away from gas basins during 2011, Basic’s revenues are 70% oil/liquids based, with roughly 40% from the Permian Basin. Planned capex for 2012 is $250 million, down from $280 million in 2011; $165 million is for growth capital including $70 million for fluid services, $70 million for completions and $25 million for drilling. The company also plans to reactivate 36 stacked well servicing rigs.

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