Basic Energy Services Inc. said in addition to reducing projected 2020 spend 60% from to $17 million and suspending all new capital lease additions, it will reduce annual run-rate costs by $20 million. Management plans to achieve this by:
- Cost controls across all business lines, including adjusting staff numbers and furloughs of all executive, office, and administrative staff
- Consolidating certain regional district operations and centralizing specific business processes
- Closing select, lower-performing locations.
These cost savings will be in addition to the synergies from the recent acquisition of the C&J Well Services business of about $17 million in operating expenses and G&A as well as capital synergies of $6 million this year.
"In this period of extreme volatility, we are focused foremost on protecting our employees through a tiered-action plan of response to best limit the potential threat posed by COVID-19," Keith Schilling, President and Chief Executive Officer, said in a written statement.
"At the same time, we have acted decisively to counteract the rapidly changing market conditions. We will continue to be vigilant and act aggressively to match our costs to market activity levels and to preserve liquidity. Meanwhile, the integration of C&J continues, and while we are in the early days of that process, we continue to be impressed by C&J's organization and personnel. We believe we can potentially outperform the previously-stated cost and capital synergies of $23 million from the acquisition in 2020."
Basic Energy Services provides wellsite services to operations and it has a significant presence in the Permian Basin, Powder River Basin, and the Bakken, Eagle Ford, and Denver-Julesburg shales.
To contact the author, email bertie.taylor@rigzone.com.
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