Best Energy Services, Inc. (Best Energy Services), a US-based energy production equipment and services provider, has reported total revenues of $21.8 million for the year-end 2008. It also reported net loss of $8.4 million, or $0.43 per share, for the year-end 2008.
Best Energy Services said that because of changing its fiscal year-end from January 31 to December 31, 2008 the company’s results reflect data for the 11-months ended December 31, 2008 compared to the 12-months ended December 31, 2007. Further, because of the timing of Best Energy Services’ acquisitions of Bob Beeman Drilling Company (BBD) and Best Well Service, Inc., both of which occurred on February 14, 2008, as well as the purchase of assets acquired from American Rig Housing on February 27, 2008, no meaningful comparison can be made to the comparable reporting period in fiscal 2007.
Financial Highlights:
— Well service revenue (BWS) totaled $16.9 million.
— Drilling service revenue (BBD) was $3.9 million.
— Portable rig housing revenue (American Rig Housing) was $778,000.
— Mud logging revenue, a new service division launched in the third quarter of this year, totaled $182,000.
— Net loss was $7.6 million including the following non-cash or non-recurring costs:
— Amortization and depreciation of $3.3 million;
— Non-cash interest expense of $3.4 million;
— Write-off of $920,000 of deferred financing costs associated with the reclassification of the amounts owed under the Credit Facility to current liabilities;
— Accrued but unpaid deferred executive compensation of $1 million;
— Non-cash stock-based compensation of $300,000; and
— Non-recurring cash costs of $400,000 and $1.2 million of non-cash costs attributable largely to the completion of the Best Well and Beeman acquisitions and asset purchase of American Rig Housing.
— As of December 31, 2008, the Company had $3.9 million in cash and accounts receivables and total shareholders’ equity of $9.3 million.
On March 12, 2009, Best Energy Services issued formal financial guidance for 2009, stating that it expects to achieve annual revenues between $13.4 million and $23.5 million, and EBITDA between $2.8 million and $5.4 million. The Company further noted that it was reluctant to provide further granularity in its 2009 guidance due to the general economic volatility affecting the capital markets and the industry sectors it serves.
Commenting on the results, Mark Harrington, chairman and chief executive officer of Best Energy Services, stated, Given the levels of activity Best enjoyed in 2008, the bottom line financial results are clearly disappointing. After the change in management instituted in October, we moved quickly to significantly reduce overhead for the coming year; terminate operations new management considered uneconomic, and adopt a ‘back-to-basics’ business model. It was fortunate such actions were taken when they were, as activity levels dropped precipitously in the first two months of 2009.
Continuing, Harrington said, These are enormously challenging times. We are working diligently to meet those challenges through tight cost management at all business unit levels and at the corporate level. Subsequent to the end of 2008 and in response to the severe industry downturn in workover activity, we reduced BWS’ day rates by 10%, positioning us as a low-cost service provider in the Hugoton basin region. Consequently, we have seen our market share increase from approximately 38% as of the end of the third quarter 2008, to over 70% currently. This, however, is with utilization varying between six and ten rigs at any one time. With negligible employee turnover, optimized operating efficiencies, pricing that is 30% less than our major competitors, and a branded market presence recognized and respected by our coveted customer base, we believe that BWS provides our Company with a sound platform for growth over the next several years.
In 2009, we will focus our BBD activities largely on water well drilling and drilling opportunities in the potash market, and selected opportunities in shallow oil and gas and minerals exploration within a 300 mile radius of our Moab, Utah business unit headquarters, with an objective of maintaining an average of two rigs in operation for the year. Further, we intend to maintain the portions of the asset platform that will benefit from a turnaround in commodity prices, and generate working capital from the selective sale of nonessential surplus equipment.
Our housing accommodations division will continue to focus on its core competency, which is building steel cased housing units and renting refurbished trailer units for use on oil and gas project sites. In addition, under-utilized American Rig assets will be refurbished to support our new geologic services division. To date, seven units have been refurbished for mud logging use, concluded Harrington.