Fort Worth oilfield service company Basic Energy Services is exiting the hydraulic fracturing business amid the ongoing shale slump.
Source: Houston Chronicle
In a Thursday morning statement, the company reported that it is selling almost all of its assets in the pressure pumping business, which includes hydraulic fracturing and other related services.
Basic intends to use to the proceeds from the sales to reinvest and focus on its core business of well production services and to expand its oilfield wastewater disposal services.
“The decision to exit the pumping services market in no way reflects on the employees that make up our pumping services team,” Basic Energy Services CEO Roe Patterson said in a statement. “This team has aggressively cut costs and continued to win business in a highly competitive market. Unfortunately, these pumping business lines currently remain in a structurally-disadvantaged position, as they are our most capital-intensive businesses.”
Basic’s decision to exit the hydraulic fracturing business comes at a time when crude oil prices stuck in the $50 per barrel range have cut demand for those services across the United States and Canada, resulting in hundreds of job cuts.
Last year, Basic’s hydraulic fracturing crews retreated from the costly and competitive Permian Basin in favor of the SCOOP/STACK shale play in Oklahoma but market conditions in the oilfield service sector have since deteriorated.
With an estimated 479,000 of horsepower, the company expects to sell its pressure pumping equipment and real estate in a series of transactions over the next four months. The sales are expected to generate between $30 million to $45 million, which will be reinvested into the company’s production services and its new oilfield wastewater disposal subsidiary Agua Libre Midstream.
Founded in 1992 and headquartered in Fort Worth, Basic Energy Service has 4,100 employees across the United States.
The company posted a $144.6 million loss on nearly $965 million of revenue during 2018.
