Drillers Report Operations Blues (BAS, RIG)
Oil field services company Basic Energy Services, Inc. (NYSE:BAS) reported this morning that December 2008 operations were even lower than expected. Drilling rig utilization reached just 66% in December, down from 83% in November and down 88% from December 2007. The company had projected quarterly declines of 4-6% in revenues for the fourth quarter, but is now expecting a revenue shortfall of 11% for the quarter. Basic is lowering its rates and reducing capital spending, choosing to focus “controlling expenses and preserving liquidity.” Basic may have trouble finding customers, but Transocean, Inc. (NYSE:RIG) is firing its customers.
Transocean yesterday canceled a $550,000/day rig lease and stopped asecond drilling project after the client ran out of cash. In the secondcase, Oilexco Inc., a Canadian E&P company, has filed forbankruptcy protection. Transocean claims the $340,000/day contract forthe Oilexco project is still in force.
Basic’s share price is off more than 3% so far today, and Transocean isup more than 3% today, after dropping more than 8% yesterday.
January 13, 2008