Profile: Basic Energy Services, Inc. (BAS)

Basic Energy Services, Inc. provides a range of well site services to oil and gas drilling and producing companies. The Company operates in four business segments: well servicing, fluid services, completion and remedial services, and contract drilling. Well servicing segment encompasses a range of services performed with a mobile well servicing rig. Through the fluid services segment, it provides, transports, stores and disposes of a variety of fluids, and provides well site construction and maintenance services. The completion and remedial services segment provides pressure pumping services focused on cementing, acidizing and fracturing services. Contract drilling segment operates nine drilling rigs and related equipment. On January 28, 2008, it acquired Xterra Fishing and Rental Tools Co. On September 26, 2008, it acquired substantially all of the operating assets of Azurite Services Company, Inc., Azurite Leasing Company, LLC and Freestone Disposal, L.P. (collectively, Azurite).

Basic Energy Services’ operations are managed regionally and are concentrated in United States onshore oil and gas producing regions in Texas, New Mexico, Oklahoma, Arkansas, Kansas and Louisiana and the Rocky Mountain states. The Company provides its services to a group of over 2,000 oil and gas companies.

Well Servicing

The Company’s well servicing segment services include maintenance work involving removal, repair and replacement of down-hole equipment and returning the well to production after these operations are completed; hoisting tools and equipment required by the operation into and out of the well, or removing equipment from the well bore, to facilitate specialized production enhancement and well repair operations performed by other oilfield service companies, and plugging and abandonment services when a well has reached the end of its productive life. The Company’s fleet included 414 well servicing rigs as of December 31, 2008. Well servicing rigs operate from facilities in Texas, Wyoming, Oklahoma, North Dakota, New Mexico, Louisiana, Colorado, Utah and Montana. These well servicing rigs are mobile units that generally operate within a radius of approximately 75 to 100 miles from their respective bases.

Fluid Services

Basic Energy Services, Inc.’s fluid services segment provides oilfield fluid supply, transportation, storage and construction services. Fluid services include transportation of fluids used in drilling and workover operations and of salt water produced as a by-product of oil and gas production; sale and transportation of fresh and brine water used in drilling and workover activities; rental of portable frac tanks and test tanks used to store fluids on well sites; operation of Company-owned fresh water and brine source wells and of non-hazardous wastewater disposal wells, and preparation, construction and maintenance of access roads, drilling locations and production facilities. The fluid services segment utilizes the Company’s fleet of fluid services trucks and related assets, including specialized tank trucks, portable storage tanks, water wells, disposal facilities and related equipment.

Basic Energy Services owns and operates 819 fluid services trucks equipped with a fluid hauling capacity of up to 150 barrels. The majority of these fluid service trucks are also used to transport water to fill frac tanks on well locations, including frac tanks provided by the Company and others, to transport produced salt water to disposal wells, including injection wells owned and operated by the Company, and to transport drilling and completion fluids to and from well locations. The Company owns disposal wells that are permitted to dispose of salt water and incidental non-hazardous oil and gas wastes. Its trucks transport fluids that are disposed of in these salt water disposal wells. The disposal wells have injection capacities ranging up to 3,500 barrels per day.

Basic Energy Services’ network of fresh and brine water stations, particularly, in the Permian Basin, where surface water is generally not available, are used to supply water necessary for the drilling and completion of oil and gas wells. Fluid storage tanks can store up to 500 barrels of fluid and are used by oilfield operators to store various fluids at the well site, including fresh water, brine and acid for frac jobs, flowback, temporary production and mud storage. The Company transports the tanks on its trucks to well locations that are usually within a 50-mile radius of nearest yard. Frac tanks are used during all phases of the life of a producing well. Basic Energy Services generally rents fluid services tanks at daily rates for a minimum of three days.

Completion and Remedial Services

The Company’s completion and remedial services segment provides oil and gas operators with a package of services that include pressure pumping services, such as cementing, acidizing, fracturing, coiled tubing, nitrogen and pressure testing; rental and fishing tools; cased-hole wireline services, and underbalanced drilling in low pressure and fluid sensitive reservoirs. The completion and remedial services segment operates 142 pressure pumping units, with approximately 139,000 of horsepower capacity, to conduct a variety of services designed to stimulate oil and gas production or to enable cement slurry to be placed in or circulated within a well. As of December 31, 2008, the Company also operated 46 air compressor packages, including foam circulation units, for underbalanced drilling and 12 wireline units for cased-hole measurement and pipe recovery services.

Basic Energy Services’ pressure pumping business focuses primarily on lower horsepower cementing, acidizing and fracturing services in markets. Like the fluid services business, the level of activity of the pressure pumping business is tied to drilling and workover activity. The rental and fishing tool business provides a range of specialized services and equipment that are utilized on a non-routine basis for both drilling and well servicing operations. Cased-hole wireline services typically use a single truck equipped with a spool of wireline that is used to lower and raise a variety of specialized tools in and out of a cased wellbore. Underbalanced drilling services, unlike pressure pumping and wireline services, are not used universally throughout oil and gas operations.

Contract Drilling

The Company’s contract drilling segment employs drilling rigs and related equipment to penetrate the earth to a desired depth and initiate production. Basic Energy Services, Inc. owns and operates nine land drilling rigs, which are deployed in the Permian Basin of Texas and New Mexico. A land drilling rig generally consists of engines, a drawworks, a mast, pumps to circulate the drilling fluid (mud) under various pressures, blowout preventers, drill string and related equipment. The engines power the different pieces of equipment, including a rotary table or top drives that turns the drill string, causing the drill bit to bore through the subsurface rock layers. These jobs are typically bid by daywork contracts, in which an agreed upon rate per day is charged to the customer, or footage contracts, in which an agreed upon rate per the number of feet drilled is charged to the customer.

The Company competes with Key Energy Services, Inc., Nabors Well Services Co., Complete Production Services and Forbes Energy Services.