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Forbes Energy Services Reports 2012 Second Quarter Results

Stocks in this article: FES FRB

"During the second quarter, equipment from dry gas markets transferred into the oil and liquids rich markets where the majority of our work is performed. We also observed start-up companies entering the fluids logistics market, some of which were able to attract some of our experienced workforce, causing additional pressure on utilization.

"We believe the increase in competitive pressure will continue through the balance of 2012. However we are taking the necessary steps to refocus our workforce and we feel that this action, coupled with our existing geographic footprint and our modern equipment will help stabilize our financial performance for the remainder of 2012.

"We have many positive events happening throughout the company, one of which is the delivery of our first coiled tubing spread late last month. Our initial performance in the field has been successful and we are moving towards solidifying long-term commitments for the first and remaining four units planned to be phased in by year end. Additionally, we will soon be launching our new fluid recycling business as we finalize field preparation of the unit."

Business Segment Results

Well Servicing Segment

In the second quarter of 2012, Well Servicing segment revenues from U.S. Operations decreased $0.9 million, or 1.8%, to $51.3 million compared to $52.2 million in the first quarter of 2012, and $42.0 million in the prior year quarter.  Segment gross profit totaled $13.9 million, or 27.0% of revenues, in the second quarter of 2012 compared to $13.2 million, or 25.2% of revenues, for the first quarter of 2012, and $7.6 million, or 18.2% of revenues, in the prior year quarter.

The Company recorded approximately 114,308 U.S. rig hours for the second quarter of 2012, compared to 117,633 U.S. rig hours in the first quarter of 2012, and 97,641 U.S. rig hours in the second quarter of 2011. Capital expenditures for U.S. Operations in the Well Servicing segment for the quarter ended June 30, 2012, were approximately $7.4 million comprised of $0.8 million for light trucks, $3.0 million for two well service rigs, and the balance for mud pumps, high-pressure pumps and related well service equipment.

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