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BASXQ Basic Energy Services

Participants
Trey Stolz Director of IR
Keith Schilling President and CEO
David Schorlemer SVP, CFO, Treasurer and Secretary
Adam Hurley VP, Strategy and Business Development
Call transcript
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Operator

Greetings, and welcome to the Basic Energy Services Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Trey Stolz, Director of Investor Relations. Thank you, sir.

You may begin.

Trey Stolz

business morning join thank discuss to our of production good the for Basic's as operator, Well NexTier's to C&J time call services C&J. you, everyone, hereafter you and taking acquisition Services, Thank or as referred known today to

and include Earlier morning, a of results. quarter brief announced XXXX, and for the its discussion this year results today's also fourth Basic full call will those

today's this call website. and is being is a Investor and the release regarding Basic's reminder, recorded slide press Relations presentation a news of in available As section

company we everyone Basic include Before the begin, its future impact today's XX-K statements Further, in XX, I'd XXXX. incorporated view include Services These and XX-Qs remind like from year events reflecting that the statements releases to press performance. December this the the regarding for therefore factors potential refer to on Form morning. forward-looking in disclosed statement of forward-looking and comments Energy views risk ended by our

Please on the covered information by information as in also Also, additional conference for call filings in the statements. to content are the the please refer disclaimer presentation, note as these slides contained the well this Basic. regulatory the of that

the information on of that the of and therefore, be any call time-sensitive longer as speaks you're replay. information only time today, addition, In reported as accurate advised March this of X, XXXX, may no

President Basic; be Strategy Q&A. and Presenting of Hurley, during David us of Development Vice Adam Schilling, Treasurer our today Business will CEO President, our Keith call and CFO, Senior Secretary. for and the be will Schorlemer, and joining Vice President

call And over with the now that, to Keith. I'll turn

Keith Schilling

good and everyone. Thank you, Trey, morning

you. chance a my with a to first meet call you We've a all to background. because you had this I bit the have cover to me more quite let give all opportunity is but morning, got of yet, It haven't lot my of of

I've I've to and well last energy leadership admired at services served and Hughes, Schlumberger. players in space companies XX positions years, the industry Baker As such for and gotten XX I've the know been the years, Basic. and as always I've in you over know, the senior Technologies, TETRA

What to call and opportunities what to the what serving relentless we'll the on especially ahead, me me about encourages about originally talk the organization. is exists the that our company drew this commitment throughout customers

delivering Our success high our acts grow what consistently quality Basic is to evolve. continue focus as differentiates safety on and a services and and driving source we as what of

tenure its businesses. it to joined, prior the that steps We focused Starting core an my assets. service biggest we're advance attention all more marks our evident the today's was vision increase here, That's our made our began Basic do our and divestiture about I in strategy. businesses, double on and production intentions Since our with in to taking fact, evolution pumping of excited opportunities production-levered to why sought day important down. within we It transaction. transformative our so lie to clear

Mid-Continent. presence well presence in unequaled complimentary strong operations Permian a vision presentation, in with If X. details resulting a pairing leading with Today's in of United highlights in in transaction, the being begin a operations the of the Page have a through our the our X basic trusted Slide to company of IR provider fitting scale creates access with you services the service C&J’s legacy production significant I'll the transaction country, and on States. California

on is a which the a will Importantly, David moment. Basic, in for transaction event delevering expand

further this will significant synergies realizing both on consolidation. reduction also debt in focused for remain from very we're transaction, of allocation disciplined potential our While we capital and

and our provider leading benefits and of will customers, stakeholders States. and growth for production create trusted Together in employees, most United service opportunities Basic significant basic all and the The shareholders. including the C&J our create new

We broader and large the growing of portfolio base. customer within now businesses a meet needs to have a of production-levered capabilities the

the in basins some now and in enhanced Rockies, most prolific presence Gulf and U.S. significant positions the We including an Permian Mid-Continent premier have Coast. also of and positions California, in

see where significantly X.X improvement XXXX pro have cash adjusted as flow we our free financial will this improve ratio to drop sat greater substantial the With XXXX as to of supported net flexibility prior expect by ratio significant enhanced from opportunity a we balance the this debt Critically, we EBITDA to times with to strong forma transaction. well liquidity, sheet realize and synergies. generation,

year-end financial approximately greater We $XX will into in XXXX. annual on also expect few of go million by a the cost benefits detail David savings synergy rate run moments.

capital about will but leverage priorities the forward, ongoing discipline, the while our active in posture maintaining to As we reduce a in moving seek we think consolidation allocation further industry.

Ascribe of largest X, portion $XX asset of and funded million notes on to Slide hand, from in C&J for we Basic acquisition $XX a combined consisted this sale by million the service completed financing of Moving and through announced pumping by committed cash cash today. Ascribe. previously acquired its million Capital The the bridge $XX of Basic’s million consideration senior shareholder. Basic’s transaction contributed $XX in and proceeds cash

their Basic of In forma to XX% Basic Basic. the XX% New consideration Basic. shareholders New the planning for other the notes, own outstanding All remaining ascribed equivalence about issued ownership to contribution common raising in Ascribe pro stock senior interest

California President formed of former Mountain regions. newly Renshaw, Region C&J all of Vice Western Well Senior Services support will and the Rocky consisting Jack lead

Officer appointed process, the Vice Senior well in of combined Adam Chief optimizing for and cost extracting will part be Jim Adam Operations Agua Midstream. Permian operations as Central Region will responsible and Integration the has the Libre at model as synergies. Regions integration oversee as President Newman, business overseeing Hurley been

expanded Ascribe their Board. Tim closing will with of the roles. along with the Solomon the transaction, and and and of Board John connection Additionally, the Quintana, Derek In the appointments additional with in and two Board Kern Julio joining Sam James be members First Ross include will from seven Basic to resigned Langford myself be of Ascribe Jeong. Capital these Larry continuing Directors Jackson, Day

platform Slide of how you gives together. our X, nice a well overview fit service

integrated an years. strong creates service servicing provider. the well provider Servicing, Well prolific well third has U.S. transaction basin. provided a this in with largest Originally grown Pool mentioned, C&J industry services into gas in for over and history in established I XX having most pool long as the As by integrated oil a has foothold XXXX country's Frank rig the C&J

high serves California In blue have is requirements. intend to basins, desirable a customers other we in for and the the hard relationships C&J Basic of well C&J key market operators market. addition also servicing value significant and oil to great existing of to to chip customer customers. and needs us production even content due these California very greater work deliver P&A and oil to

While our customer and capabilities, values. that complimentary, geographic it's are our companies bases share clear in are rooted footprints also

best-in-class safety top our work demonstrated C&J of C&J. support safety. a record drive a safety is a will Basic for organizations continue to culture has priority like Just and hard to and

scale We industry high spec create the together all X. that can is as in we'll and important workover Slide the see you in know fleet country's leading

the states. fleet be nearly across spec leading have now and will employees XX workover high Basic X,XXX strong including will XXX New country's rigs

our deliver expect innovative to our to will We strong. that financially New operating strong and Basic remain customers solutions scale position

world. deriving by the where companies. X, basin X segment Slide On revenue the is better the Permian sense to will U.S. most position, of and be Basic Slide the gives in with oil has you and of Basic regarded as its geography. New continuing combined the the a a both which strong scale widely prolific

market, With I'll of unique which detail a the addition C&J shortly. discuss as the will more in be also California better we positioned leader within

pro With on its from for an New Basic other logistics, adjusted XXXX. the regard Permian and Basin, to remedial with revenue forma from and company's adjusted came markets. to XX% combined XX% the XX% from from water of well pro forma mix XX% from XX% and And completion regard generated the California, XX% key of geography came revenue from servicing, basis XXXX

and will margins. utilization for secure more and key basins, more drive fleet, capacity improved consistent will With Basic in greater which ultimately new stable rates its mix

exposure also element successfully reduce volatility, to an market will is challenging navigating which our We market dynamics. to important

new range you and footprint Chevron, across name states, a dependable will that leadership regions. complete address new customers. delivering On for company's attractive three will customer of the and be operating key needs of the see Energy for With XX this as in our covers forma Aera, the into Noble quality footprint, which notable Slide the includes the subdivided space players Basic high X, to able ConocoPhillips, Devon few. Pro Basic, our services continue base left we've expanded geographic such to Apache,

here. California deeper and market the The dives next slide the opportunity we see into

in capacity long-term strong abandonment largest seventh California, attractive and XXXX perspective, most For which state crude XXXX. project refining with third in demand. oil backgrounds, the plugging had producing From stable relatively in the margins there's California activity and provides a was

maintenance generally market reliable leads needs operate, to more ultimately the cash Additionally, flows. recurring less which to

While attractive, this standards within maneuver guardrails. these strict knows regulated demands, environmental and is with well market clearly emission highly how to C&J

combined role the of attractive provider acquisition state. able the our for operators the first C&J, the With assume of be will company call in largest to most and

are our drilled leverage new wells coming substantial as to positioned capabilities in be also the will We years.

call more I'll through to David the over that, the financials, to now you David? With turn of take

David Schorlemer

you, Keith. Thank

strength a that acquisition Keith of will the XX, earlier transaction what outlined flexibility the as and you enhance see new of Basic. on expand can financial To on is Slide C&J delevering

the to a cash as With debt-to-adjusted standalone addition X.X C&J drops its new times free net EBITDA from flow, our X.X times as XXXX forma and of pro Basic. company

to in deliver and and operating solid strategic early have growth compete flexibility positioning will in cash allowing our to in us opportunities further us gives we flow to to free initiatives returns, continue complex invest better environment. XXXX, Additionally, the while which delever us

mentioned, to And earnings synergies as savings, of the and cost run million company's all cost by strong of to this generate flow will year. further approximately the Keith $XX reduce rate free we expansion cash leverage. serve The annual end expect

liquidity and enhanced borrowing profile, with improved have base, lower assets, will on requirements. return new positive an expenditure Importantly, capital a profitability, Basic larger

expected on will result as $XX as largely cost Going reductions, well on from down level our in reductions. another and XX. The synergies yard-level direct Slide synergies SG&A expense million

be In each $X the expenditure synergies next years. synergy Basic also opportunities, approximately is addition of these to achieved identified of million to in at two capital

integrate and our and ability are senior our response successfully companies. enthusiastic. Both strong track and people leaders been two with Already in companies field their the Basic very communicating have record our are and C&J of a has in we to execution customers, confident

to take to quarter year-end earnings it fourth XXXX to Keith wrap results. turning like our back up, go Before through and I'd to a moment

$XX the million our real in and asset estimated March pressure as estate As we sales pleased completed XX, sale you'll $XX see to closed of to pumping are very on XXXX have totaling having Slide million million on of remaining. $XX with largely XX, proceeds assets, an

our by of an wholly Midstream subsidiary, another of owned Libre record set which disposal volumes quarterly during pipe. quarter, Agua was Meanwhile, taking barrels million $XX.X XX% the

at high continued capacity project growth beginning capital day capable a in to expect disposal Libre XXXX in West volumes our to and XX,XXX at come new of revenue Agua we volumes. of pay in barrels as spent We dividends barrels Texas, handling facility per with begins well in growth

including estimate We million, million to-date immediately the fourth we assets total $XX and of our ended services the of from proceeds collection of cash. of deal. C&J today, quarter post close $XX sale in of the our of After liquidity acquisition million liquidity pumping with total nearly Well $XX

record utilization Water the the to during holidays the Turning impact revenue volumes XXX. a quarter. segment quarter stronger holiday impact seasonality our Slide previously, as X% per to typical disposal due to hour the X.X another revenue to Thanksgiving Meanwhile, declining million of and with the after at rig dropped X.X of in Christmas XX, estimate due Logistics quarter saw We holidays to XX% for than million. fourth noted to fourth

in the to particularly Our Water respect with Libre. improving segment, outlook remained Logistics steady Agua and

consists Slide tubing & XX%. to XX, third XX% a coil despite of now the at and pumping of quarter divestiture operations Completion Remedial Since segment led Turning services. assets, XX% our and tools the continuing this declining direct fishing rental revenues basis, largely on segment were by from the margins

million EBITDA our was a manufacturing negative X.X impairment a quarter Excluding related subsidiary, Taylor X.X to million. fourth adjusted

become the at XXX million of a down an which XXXX, quarter efficient is While declined from we the the rate outlook operation, year-over-year. of for to rate down be in Basic, more remains our with an run quarter. G&A challenging, legacy we work to leaner, the expect XX% for over the Basic fourth XXX annual standalone end we million run having in by continue of XX million to reported Furthermore, annual second approximately

the XXX with revenue of synergies expected XXXX of which integration is at context our of of an in revenue pro achieving C&J, run million, G&A of After million. combined be the XX% we annual to rate XXX expect forma

maintaining capital conditions. the market for Basic ahead, given Looking challenging remains paramount flexibility

capital evaluate our the for a year. stands cash XX XX Our combined In Basic we expenditure we volumes, And coming XXXX see million basis. budget continue currently Libre to and beginning the standalone million significant of at spending for will throughout a plan earlier. to online meantime, and as mentioned we with Midstream benefits adding in capital the project are Agua on to spent growth on XXXX,

at balance, will year, by at will down we a continue related million just another our stood $XX we as expect year-end be few million delever of lease we ago. the forward, debt million and that the our Looking to continue capital years $XXX company $XX seek lease reduced to transactions end paydown which this from by to capital

call to you, over I'll Keith. With the that, turn back

Keith Schilling

David. Thanks

remarks, this the financial benefits to stockholders. will To in the that and rationale and strategic Basic bring transaction confident conclude compelling we're our many of

are capital With production customer value. synergies, enhanced and and will and and flow well Basic We stockholder drive expanded basins, structure businesses bolstering be markedly. profile and attractive positioned our to an improving highly achievable base our core credit cash enhanced focus

Importantly, delever enhanced in but flow strong while we credit expect generation to will metrics our the occurring continue disciplined, active industry. ongoing us enable a in consolidation increased participant our to remaining and scale cash

advancement additional believe years For opportunities will employees come. we growth combination to of companies, also both the over this and provide

work the team to our while of together unlock the best-in-class talented with members C&J bring the Jack hitting to I and New our companies in welcoming team to the continue forward and ground look Basic. the running value and inherent two

we Jessie, that with our you. conclude call. And will Thank

Operator

thank participation your Ladies you. gentlemen, disconnect Thank for and your you time. today's this teleconference. may at and this you concludes lines We