Basic Energy Services has generated net loss of $15.8 million, or $0.39 per diluted share, excluding the impact of a $167 million after-tax ($204.1 million pre-tax) non-cash goodwill impairment charge, for the first quarter of 2009.

Adjusted EBITDA (defined as net income before interest, taxes, depreciation and amortization, excluding the 2009 goodwill impairment charge) for the first quarter of 2009 was $14.2 million, or 9% of revenue, compared to EBITDA of $66.1 million, or 29% of revenue, in the year-ago quarter.

Basic Energy Services identified an effective tax benefit rate of 19.9% in the first quarter of 2009 compared to a tax rate of 37.4% in the year-ago quarter. The low effective tax rate in the first quarter of 2009 was mainly because of the $204.1 million goodwill impairment charge. The tax deductibility of the impairment charge was determined by the taxable basis of the goodwill considered to be impaired. A portion of Basic Energy Services’ goodwill was not tax-deductible, which declined the benefit of the effective tax rate. Excluding the impact of the goodwill impairment charge, the effective tax rate for the first quarter of 2009 would have been a benefit of 34%.

Ken Huseman, Basic Energy Services’ president and chief executive officer, stated, As expected, the first quarter proved to be extremely difficult across all our geographic markets and service lines as soft demand and intense price competition combined to drive revenue down by 37% from the fourth quarter. The dramatic reduction in domestic capital spending, as evidenced by the 40% drop in the active drilling rig count during the quarter, was made worse by the unusual reduction in routine spending for well maintenance work.”

We matched price competition in each of our businesses to protect market share and our current labor force. Rates declined from 10% to 30% in our various service lines. Labor and related costs, by far the biggest component of our cost structure, were pushed down as we reduced our workforce by 18%, strictly limited overtime and reduced wages and salaries throughout the company. Those cost reductions and our other efforts to streamline the operations however won’t be fully reflected in our earnings until the third quarter.”

Demand for maintenance and workover services, particularly in the oil-related markets, will likely improve gradually over the next several quarters so we have not dismantled our extensive service base and our experienced workforce to match the activity levels experienced in the first quarter. We continue to evaluate each of our local markets to gauge our ability to achieve acceptable profitability in a more normal market environment and are stepping back from those markets which are hyper-competitive or may require substantially higher sustained gas prices than we foresee prevailing in the near term.”

Despite the challenging operating environment, we improved our solid financial position during the quarter. Our cash balance increased by $32 million to $143 million from December 31, 2008, and coupled with our availability under our revolver gave us about $172 million in liquidity at March 31, 2009. We generated $61 million in cash from operating activities during the first quarter of 2009 compared to $56 million in the comparable quarter last year.”

As we have seen over the last six months, one of the main challenges facing our industry is access to capital. In order to improve our financial flexibility, we completed an amendment to our credit agreement on May 4, 2009 which extended the maturity date into 2012 for the majority of our revolver commitments and also increased our maximum leverage ratio. We would like to thank those in our bank group that extended their commitments for their support and confidence in our organization.”

As we look forward for the remainder of 2009, we expect that operating conditions will improve moderately due to seasonal factors and somewhat higher maintenance activity. Based on what we have seen through the date of this release, we now expect that our second quarter revenues will be five to seven percent below what we reported in the first quarter of 2009. As we have in the past, we will continue to report our monthly operating data and provide updates on what we are seeing in our markets.

Business Segment Results

Well Servicing

Well servicing revenues was reduced about 39% to $48.8 million during the first quarter of 2009 compared to $80.5 million in the year-ago quarter and $76.2 million in the fourth quarter of 2008. Basic Energy Services added two newbuild rigs and retired two rigs during the first quarter of 2009 leaving its well servicing rig count at 414, unchanged from December 31, 2008. Weighted average number of well servicing rigs remained at 414 during the first quarter of 2009 compared to 392 during the year-ago quarter and unchanged from the fourth quarter of 2008. The two newbuild rigs added in the first quarter 2009 concluded the 134 newbuild rig program that started in late 2004.

Revenue per well servicing rig hour declined to $369 during the first quarter of 2009 compared to $398 in the same period in 2009 and $418 in the fourth quarter of 2008. Well servicing rig utilization was reduced to 45% in the first quarter of 2009 compared to 72% in the year-ago quarter and 62% in the fourth quarter of 2008. In the first quarter of 2009, maintenance-related activity sharply decreased as customers deferred projects due to concerns over commodity prices in addition to their ability to access the capital markets.

Well servicing segment profit in the first quarter of 2009 was $11.9 million compared to $32.1 million in the year-ago quarter and $25.8 million in the fourth quarter of 2008. Segment profit margins decreased to 24% of revenue in the first quarter of 2009 compared to 40% in the year-ago quarter and 34% in the fourth quarter of 2008, due to the combination of declining utilization and decreased pricing for well servicing rig services.

Fluid Services

Fluid services revenue in first quarter of 2009 was $65 million compared to $71.4 million in the year-ago quarter and $89.1 million in the fourth quarter of 2008. Basic Energy Services added 11 new trucks and retired 17 trucks during the first quarter of 2009, bringing the total number of fluid services trucks to 813 as of March 31, 2009. Weighted average number of fluid services trucks raised 26% to 814 during the first quarter of 2009 compared to 644 during the year-ago quarter, mainly due to the trucks acquired in the Azurite acquisition in September 2008.

Average revenue per fluid services truck was decreased to 28% to $80,000 in the first quarter of 2009 compared to $111,000 in the year-ago quarter and the fourth quarter of 2008. Segment profit in the first quarter of 2009 was $20.4 million, or 31% of revenue, compared to $25 million, or 35% of revenue, in the same period in 2008 and $33.9 million, or 38% in the fourth quarter of 2008. The decline in overall drilling activity in the first quarter of 2009 resulted in lower truck utilization and frac tank rentals in addition to the drop in well site construction services which contributed to the lower revenue per fluid service truck and profitability.