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Analyzing Basic Energy Services’ Outlook in 2017

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Sep. 26 2017, Published 12:36 p.m. ET

What does Basic Energy Services expect from the industry?

Basic Energy Services’ (BAS) management expects steady well completion activity until mid-2018, which should benefit the company. Management also expects commodity pricing to “improve but very slowly in the coming quarters.” On its 2Q17 earnings conference call, Basic Energy Services’ CEO Roe Patterson commented, “Should the rig count flatten from here or drop slightly, we do not expect to see an impact on the rate of completion activity until mid 2018 given the backlog of DUCs or drilled but uncompleted wells, and the natural lag between spuds and completions.” Stock Price and outlook

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Basic Energy Services’ outlook

In 2H17, BAS’s management expects gradual improvement in oilfield energy companies’ pricing and rig utilization. Basic Energy Services expects to generate 6% to 10% rise in quarterly revenues in 3Q17 over 2Q17. However, according to BAS’s management, the “guidance could change quickly if commodity prices ramp up at a much faster pace or if commodity prices retrace their recent lows.” BAS is 0.08% of the iShares Micro-Cap ETF (IWC). IWC rose 6% year-to-date compared to a 50% drop in BAS’s stock price during the same period.

Series highlight

In this series, we’ll discuss Basic Energy Services’ top-line and bottom-line growth, industry indicators, and what lies ahead for BAS after leaving behind bankruptcy proceedings. We’ll start with its revenue and earnings in the next part of this series.

Next, we’ll discuss Basic Energy Services’ revenues.

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