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Calling a Bottom: Basic Energy Services Insider Boosts Stake

At least one beleaguered energy company, Basic Energy Services (NYSE:BAS), is getting a large vote of confidence from the Chairman of its Board of Directors, Steven Webster. Late last week, he bought 148,500 shares for a total cost of $1.08 million.

Webster must see some light at the end of the tunnel for a stock that’s down 74% over the past year. Given the recent rise in oil prices, we may finally be seeing the bottom of the energy swoon in Basic Energy Services’ market.

The turnaround in oil drilling
In May’s operating data report, Basic Energy Services said that servicing rig count was unchanged at 421 and utilization rate was flat at 50%, while drilling rig utilization fell from 34% in April to 26% in May. That may not sound impressive but service rig utilization has plunged from 70% a year ago and drilling rigs were running at 89% utilization at that time.

So, Webster is likely seeing a bottom in demand and with oil coming off its lows from early 2015 to settle around $60 per barrel recently there should be some upside for drillers long-term.

Keep an eye on the long-term prize
It’s likely that oil and gas drilling in the U.S. will pick up late in 2015 and into 2016, which should lead to more activity for Basic Energy Services. As the Chairman of the Board, Steven Webster has high visibility into the company’s demand and with such a large vote of confidence he must see brighter days ahead, something investors should keep in mind when looking into this stock.

 

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