NEW YORK (TheStreet) -- Shares of Basic Energy Services (BAS) - Get Basic Energy Services, Inc. Report are advancing by 4.56% to $4.36 in midday trading on Wednesday, as oil prices climb on indications that U.S. oil producers are cutting production.
The Energy Information Administration announced that crude stockpiles decreased by 2.1 million barrels last week, compared to analysts' estimates of a decline by 1.1 million, which prompted speculation that U.S. cuts to oil production are beginning to have an impact, The Wall Street Journal reports.
"For months and months and months we've talked about production falling, and it hasn't been as steep of a fall as many people thought," Todd Garner, managing partner at hedge fund Protec Energy Partners, told the Journal. "It's finally starting to happen."
Crude oil (WTI) is rising by 5.63% to $47.10 per barrel this afternoon, and Brent crude is up by 4.21% to $49.76 per barrel, according to the CNBC.com index.
Based in Fort Worth, Basic Energy Services provides a range of well site services in the U.S. to oil and natural gas drilling and producing companies, including completion and remedial services, fluid services, well servicing and contract drilling.
Separately, TheStreet Ratings team rates BASIC ENERGY SERVICES INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate BASIC ENERGY SERVICES INC (BAS) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk. "
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 2076.9% when compared to the same quarter one year ago, falling from $2.44 million to -$48.30 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, BASIC ENERGY SERVICES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for BASIC ENERGY SERVICES INC is rather low; currently it is at 20.98%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -24.37% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to $22.34 million or 65.86% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Although BAS's debt-to-equity ratio of 3.42 is very high, it is currently less than that of the industry average. Even though the debt-to-equity ratio is weak, BAS's quick ratio is somewhat strong at 1.46, demonstrating the ability to handle short-term liquidity needs.
- You can view the full analysis from the report here: BAS