Tarrant County has gained a lot of oil and gas producers since the Barnett Shale rose to prominence more than a decade ago. But if you asked which local company has put its mark on the most wells, the right answer probably wouldn’t be one of the usual suspects.
It would be hard to top the 800,000 or so wells that Fort Worth-based Basic Energy Services says it has worked since its start in 1992. The publicly-traded oilfield services company, which moved here from Midland in 2012, has what it calls a “cradle-to-grave” reach on customers’ wells, from drilling and fracturing to hauling away waste water and finally plugging.
While CEO Roe Patterson says the move to downtown Fort Worth’s Burnett Plaza office tower has been “everything we hoped it would be,” the market was less than welcoming about the time the company was relocating. Enthusiastic investment in hydraulic fracturing and other “pressure pumping” services swamped an industry that was just marking time, eroding profits for service providers.
“The industry really ramped up horsepower,” the measure of capacity in the pressure pumping market, said Roe, 39, who was named CEO less than a year ago. “The market got oversupplied.”
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Last year, Basic lost $35.9 million as revenues slipped 8 percent to $1.26 billion. The bulk of the decline came in the category that includes hydraulic fracturing and accounts for about 40 percent of Basic’s revenue.
The glut weighed on Basic’s stock price, too. The shares (ticker: BAS) took a tumble between the summer of 2011 and summer 2012, bottoming out in June that year. Even with a recovery, the shares were down 20 percent from the start of 2012 to the end of 2013.
But they’re up about 76 percent so far this year, spurred by high crude oil prices, improving natural gas prices and a lessening of overcapacity.
According to Bloomberg Industries, higher cash flows at producers is boosting activity.
PacWest Consulting, an oilfield services research firm, said recently that it expects “moderate” price increases as demand for fracturing rises 10 percent in 2014. “These are the first pricing increases the market has witnessed since late 2011,” the Houston-based firm said in a June conference call.
The market is healthy enough to encourage Basic to boost its capital spending budget. It announced May 29 that it would increase 2014 spending by $50 million, to $285 million, to add 60,000 horsepower of fracturing equipment.
“With healthy oil prices and not-so-bad gas prices, a build-up in drilling” means added demand, Roe said. “Now we’re seeing new building in progress, and we’re part of that.”
The fracturing market is being supported by larger jobs as producers transition to horizontal wells in established fields like the Permian Basin, Basic Energy’s biggest market. For example, a frack job that pumped 100 barrels of fluid a minute “a few years ago was huge. Now it’s medium-size,” Roe said.
Basic can do either vertical or horizontal servicing. “The equipment doesn’t care,” he said.
While Basic Energy is far smaller than industry leaders Halliburton, Schlumberger and Baker Hughes, it’s the No. 3 company for wastewater handling and general well servicing, Roe said. It tries to make up for sheer size in customer service.
Basic has about 2,000 customers, and “we know them on a first-name basis,” he said. “We let our field people make a lot of decisions on pricing” and other terms to win business.
The company has about 6,000 employees, including the 130 at its Fort Worth headquarters. In addition to the Permian Basin, other employment centers are the Mid-Continent region, which includes North Texas, Oklahoma and Kansas; the Rockies; South Texas and a region that includes East Texas, Louisiana and Arkansas.
Patterson, who joined Basic Energy Services in 2006, has oilfield services in his blood. His father and uncle founded what is now Patterson-UTI Energy, the No. 2 U.S. driller by feet drilled in the year’s first five months, according to RigData. The Texas Tech grad worked a few years for Patterson-UTI before running his own oilfield service company, TMP Cos., until going to work for Basic. He held several positions before becoming chief operating office in 2011 and then CEO on Sept. 30, 2013.
“I always thought the company had a good reputation, a good collection of equipment and people,” Patterson said of his attraction to Basic. “It reminded me of Patterson Drilling in the early days.”
About 35 employees relocated from Midland. The proximity to Dallas/Fort Worth Airport has made it easier to get to field operations, Patterson said, but it was recruiting that drove the move to Fort Worth.
“We’ve been the beneficiary of a very healthy employment pool,” he said. “Everyone seems to enjoy all the amenities of this town.”