Best Energy Services, Inc. revealed this morning its selection by an undisclosed but major oil and gas company to provide up to six of its workover rigs for continuous operation during the interval of a 2-year contract. A one-year contract, with an option for one additional year, slated to begin January 1, 2010, has been signed by BEYS, which was selected via a sealed bid process begun by the customer in October 09.
Natural gas prices in the Hugoton Basin, where the Company currently operates 9-11 rigs, were noted by BEYS to have risen over the last month, stimulating increased activity.
Out of a fleet of 25 rigs, the Company – assuming no further utilization requirement by the customer – expects to have some 15 rigs going when this new contract is underway.
The Company is proud of the way it has come to dominate the Hugoton Basin workover market, moving from 35% to 80% sector dominance in under a year, and BEYS looks forward to the substantial growth afforded by this new contract.
General Manager of BEYS, Eugene Allan, noted his pleasure over winning the contract, attributing the award to the Company’s proven track record of outstanding performance by its “field personnel, and likewise our information and accounting systems, which provide our customers significant comfort in Best’s performance on and after the job”.
Allan also pointed out BEYS’s exceptional safety record in the field as evidence of why the Company was selected, proudly proclaiming that BEYS has “logged over a year of no lost time due to safety incidents” – a claim many in the industry wish they could make about such an inherently dangerous work environment.
Chairman and CEO of BEYS, Mark Harrington, went over projections for next year while summing up past efforts to drive down costs and discontinue unprofitable lines of business.
As an example, Harrington noted the “reduction in Corporate G&A expense from a $5.4 million run rate, prior to the October 2008 management swap, to under $80,000 per month currently”. Harrington pointed out that, with the reduction in Corporate G&A complete, the Company has in recent months been able to focus on “revenue generation and potential deleveraging opportunities”.
“For 2010, we are working to implement new initiatives to further increase revenues through the development of our Hugoton Basin Financing Partners product. At the same time, we are working to deleverage our balance sheet with the sales of our contract drilling equipment in our discontinued Moab, Utah operations and through our newly created subsidiary, Best Energy Ventures. Financing for both the Hugoton Basin Financing Partners and the Best Energy Ventures initiatives is being actively pursued with various institutional sources.”
Harrington wrapped up his statements by acknowledging recent challenges and market conditions, while expressing great hope and enthusiasm for the potential of BEYS in 2010, noting a streamlined cost structure and “generic growth in our Hugoton Basin market”, as well as the new contract.
Harrington thanked BEYS’s bankers at PNC Credit and the dedicated workforce at both the Liberal (Kansas) and Houston locations for “their tireless work and support over the past year”.