Traders Playing BAS Are Out Of Their Minds

Okay, I’ve read the report from BAS and can comfortably say that those who are pressing BAS shares lower are mentally unhinged.

Today – October 24, 2014 – a prospective investor could purchase shares of BAS for about $13.60. BAS just reported earnings of $0.24 a share, up from $0.06 last quarter. At a current book value of just under $7; and even playing coy and considering BAS earnings of $0.15 a quarter from here forward; BAS is priced with a risk threshold of just 11 years.

At the most recent earnings of $0.24, that threshold drops to a theoretical breakeven point of just under 7 years.

BAS is priced perfectly reasonably, and that gets you exposure to a company that grew revenues an additional 10% in the last three months. Year over year, BAS is growing at a more than 20% clip.

BAS hit these numbers without even factoring in additional operation capacity that is being brought online later this year. Consider for example completion and remedial services, where as of September 30, 2014, Basic had roughly 413,000 HHP up from approximately 351,000 HHP at the end of the previous quarter and 292,000 HHP as of September 30, 2013 – that’s a 42% increase in capacity.

But oil prices are going to render that excess capacity worthless, right? Actually I defer to the CEO on this subject:

“We have not seen a reduction of activity by our customers due to the recent decline in oil prices, and none have indicated reductions in their 2015 growth plans. Early indications of these capital spending programs look to be slightly higher than 2014 levels. We will monitor utilization rates closely and should we see any meaningful pullback, we will react quickly as we have historically.”

So to recap; BAS is a company growing at a rate that makes it the envy of the party, which even excluding any additional growth is moderately priced, down 9% today because people are concerned, mind you, that maybe the industry might slow down (of which there is no indication whatsoever that BAS would be hurt disproportionately or even that that is happening).

Let me put this all into perspective for you. You could go out today and buy shares of BAS for the same price that you could get them last year when the company was losing $0.17 per share per quarter. The market is giving BAS no premium whatsoever for going from an unprofitable company, to a profitable one.

Jesus! – (punches a brick wall in his office) I hate it when the market does dumb shit like this!

I have just mentally budgeted an additional 10% of my asset allocation solely for the purchase of BAS shares until such time as I shall be either satisfied, or badly wounded.

Today, my account stands about 95% long. I am willing to take it to 105% on margin exclusively for the acquisition of BAS shares, not counting on any other purchases I might elect to make or future sales.

First buy order comes at $12.

All Of The Oil Losses Shall Be Regained

It will not happen immediately, surely. There will be more volatility and panic. But rest assured that the rout in the oil market will be unmade soon enough.

HCLP is already back to $54. You could have purchased shares for $40 just last week. The markets were scared, but then HCLP announced a 9% hike to its dividend. Now all is forgiven.

BAS is back to $15 from $11.50 last week.

ETP is above $65 again.

NADL is flirting with $6.

VOC has regained $11.

Those are big comebacks. I told you, the scare was not about a looming slowdown in the oil and gas space. It was more about frightening you into loosening your grip on the precious. Now that Jimmy’s friends have loaded up the trucks, we’re free to stop pretending like that Saudi Arabia rumor was ever anything more than the flapdoodle it was.

For the day I’m already up another 2%.

Sales – Stopped Well Shy At 3% Cash

I couldn’t bring myself to sell all the way to 20% cash. The waterfall left too many of my purchases underwater still and the hope of follow through pins me to my seat.

But I took quick profits in HCLP, VOC, BAS, and SXCP (I still own all four names, I just pared down sizing) ranging from 5-12%, and then I completely sold my BTU position for a 22% loss. That will lower the tax bill. I like BTU but it’s time to start thinking of April.

Despite having little cash, this lowers my risk profile substantially. The margin was worth it and if the oil and gas space has any sort of meaningful follow through, I’ll be back at new highs by Thanksgiving.

Gobble gobble.

Nibbled On More BAS For $13.50

I am now down almost 2% for the year. I took a moment to celebrate this lunacy by nibbling on yet more BAS, for $13.50.

All thanks and praise to the mighty Saudi’s for the wondrous occasion…

No, really though, who do you think Saudi Arabia’s super speculative intentions are going to hurt more? The United States? Or Venezuela, Syria, Russia, Iran, Iraq, Brazil, Nigeria, Algeria, Libya, Egypt, or Yemen?

Cool story: if you’re a country even close to revolutionary upheaval (or just strangled by an ill thought out safety net), the actions of Saudi Arabia are a death knell. And if there’s one thing we’ve seen pretty conclusively, it’s that countries that get tipped into a state of open revolution or political upheaval see their oil production drop…sometimes all the way to ZERO.

So let’s play chicken, you little shits.

Behold Your Oil Market Slowdown!

The takeaway is the oil market is not actually slowing down. Please note the bolded lines below.

This selloff is a vicious ploy to separate fools from their good investments.

In the energy services industry:

FORT WORTH, Texas, Oct. 10, 2014 /PRNewswire/ — Basic Energy Services, Inc. (BAS) (“Basic”) today reported selected operating data for the month of September 2014. Basic’s well servicing rig count remained unchanged at 421. Well servicing rig hours for the month were 71,800 producing a rig utilization rate of 71%, compared to 74% and 69% in August 2014 and September 2013, respectively.

During the month, Basic’s fluid service truck count increased by 21 to 1,045. Fluid service truck hours for the month were 215,800 compared to 215,100 and 189,600 in August 2014 and September 2013, respectively.

Drilling rig days for the month were 327 producing a rig utilization of 91%, compared to 83% and 74% in August 2014 and September 2013, respectively.

Roe Patterson, Basic’s President and Chief Executive Officer, stated, “Activity levels in September were steady across our footprint. We experienced the normal impact of the Labor Day holiday as well as severe rainy conditions in the Permian Basin and Mid-Continent operating areas which impacted utilization in all segments. Despite wet conditions in mid-September, our stimulation segment maintained high levels of activity as we were able to work at full pace during the weekends in the latter part of September to overcome most of the weather effect in that segment. During the month, we received the final components of our previously announced 2014 horsepower additions. Our contract drilling operations were able to perform at higher levels than we achieved in August. Fluid service truck hours were generally flat and well servicing utilization was lower in September compared to August as these segments were impacted most by the Labor Day holiday and the rainy conditions.

We now expect our third quarter revenue to be approximately 9% to 10% higher sequentially compared to our previous guidance of 4% to 6%. Revenue from our completion and remedial segment, particularly from stimulation services, was greater than expected as our horsepower additions were deployed in the field earlier than anticipated. Despite the greater than anticipated revenue growth, pricing remains very competitive, especially in our fluid services and well servicing segments as we continue to experience higher labor and other costs.

In the frac sand land:

Houston, Texas – October 9, 2014 - Hi-Crush Partners LP (HCLP), or Hi-Crush, today announced an amendment of its long-term frac sand purchase agreement between Hi-Crush Operating LLC, a subsidiary of Hi-Crush, and Halliburton Energy Services, Inc., or Halliburton. The amendment to the agreement, which requires Halliburton to pay a specified price for a specified minimum volume of frac sand each month, increases the annual minimum committed volumes through December 31, 2018. The agreement continues to provide for further significant increases in annual volumes dependent on Halliburton`s aggregate annual demand for Northern White frac sand.

“Halliburton has been an important partner to Hi-Crush since the inception of our operations. We continue to broaden our relationship with Halliburton by increasing the volumes we sell to them,” said James M. Whipkey, Co-Chief Executive Officer of Hi-Crush. “This most recent contract announcement brings our total aggregate contracted volumes in 2015 to 6.6 million tons. As previously announced, our sponsor has started the permitting process for development of a fourth Northern White frac sand production facility to meet the growing demand for our sand. In addition, we are adding expanded silo storage capacity at several of our distribution facilities to allow for even more efficient delivery of frac sand to our customers.”

Don’t be stupid.

Traders Playing BAS Are Out Of Their Minds

Okay, I’ve read the report from BAS and can comfortably say that those who are pressing BAS shares lower are mentally unhinged.

Today – October 24, 2014 – a prospective investor could purchase shares of BAS for about $13.60. BAS just reported earnings of $0.24 a share, up from $0.06 last quarter. At a current book value of just under $7; and even playing coy and considering BAS earnings of $0.15 a quarter from here forward; BAS is priced with a risk threshold of just 11 years.

At the most recent earnings of $0.24, that threshold drops to a theoretical breakeven point of just under 7 years.

BAS is priced perfectly reasonably, and that gets you exposure to a company that grew revenues an additional 10% in the last three months. Year over year, BAS is growing at a more than 20% clip.

BAS hit these numbers without even factoring in additional operation capacity that is being brought online later this year. Consider for example completion and remedial services, where as of September 30, 2014, Basic had roughly 413,000 HHP up from approximately 351,000 HHP at the end of the previous quarter and 292,000 HHP as of September 30, 2013 – that’s a 42% increase in capacity.

But oil prices are going to render that excess capacity worthless, right? Actually I defer to the CEO on this subject:

“We have not seen a reduction of activity by our customers due to the recent decline in oil prices, and none have indicated reductions in their 2015 growth plans. Early indications of these capital spending programs look to be slightly higher than 2014 levels. We will monitor utilization rates closely and should we see any meaningful pullback, we will react quickly as we have historically.”

So to recap; BAS is a company growing at a rate that makes it the envy of the party, which even excluding any additional growth is moderately priced, down 9% today because people are concerned, mind you, that maybe the industry might slow down (of which there is no indication whatsoever that BAS would be hurt disproportionately or even that that is happening).

Let me put this all into perspective for you. You could go out today and buy shares of BAS for the same price that you could get them last year when the company was losing $0.17 per share per quarter. The market is giving BAS no premium whatsoever for going from an unprofitable company, to a profitable one.

Jesus! – (punches a brick wall in his office) I hate it when the market does dumb shit like this!

I have just mentally budgeted an additional 10% of my asset allocation solely for the purchase of BAS shares until such time as I shall be either satisfied, or badly wounded.

Today, my account stands about 95% long. I am willing to take it to 105% on margin exclusively for the acquisition of BAS shares, not counting on any other purchases I might elect to make or future sales.

First buy order comes at $12.

All Of The Oil Losses Shall Be Regained

It will not happen immediately, surely. There will be more volatility and panic. But rest assured that the rout in the oil market will be unmade soon enough.

HCLP is already back to $54. You could have purchased shares for $40 just last week. The markets were scared, but then HCLP announced a 9% hike to its dividend. Now all is forgiven.

BAS is back to $15 from $11.50 last week.

ETP is above $65 again.

NADL is flirting with $6.

VOC has regained $11.

Those are big comebacks. I told you, the scare was not about a looming slowdown in the oil and gas space. It was more about frightening you into loosening your grip on the precious. Now that Jimmy’s friends have loaded up the trucks, we’re free to stop pretending like that Saudi Arabia rumor was ever anything more than the flapdoodle it was.

For the day I’m already up another 2%.

Sales – Stopped Well Shy At 3% Cash

I couldn’t bring myself to sell all the way to 20% cash. The waterfall left too many of my purchases underwater still and the hope of follow through pins me to my seat.

But I took quick profits in HCLP, VOC, BAS, and SXCP (I still own all four names, I just pared down sizing) ranging from 5-12%, and then I completely sold my BTU position for a 22% loss. That will lower the tax bill. I like BTU but it’s time to start thinking of April.

Despite having little cash, this lowers my risk profile substantially. The margin was worth it and if the oil and gas space has any sort of meaningful follow through, I’ll be back at new highs by Thanksgiving.

Gobble gobble.

Nibbled On More BAS For $13.50

I am now down almost 2% for the year. I took a moment to celebrate this lunacy by nibbling on yet more BAS, for $13.50.

All thanks and praise to the mighty Saudi’s for the wondrous occasion…

No, really though, who do you think Saudi Arabia’s super speculative intentions are going to hurt more? The United States? Or Venezuela, Syria, Russia, Iran, Iraq, Brazil, Nigeria, Algeria, Libya, Egypt, or Yemen?

Cool story: if you’re a country even close to revolutionary upheaval (or just strangled by an ill thought out safety net), the actions of Saudi Arabia are a death knell. And if there’s one thing we’ve seen pretty conclusively, it’s that countries that get tipped into a state of open revolution or political upheaval see their oil production drop…sometimes all the way to ZERO.

So let’s play chicken, you little shits.

Behold Your Oil Market Slowdown!

The takeaway is the oil market is not actually slowing down. Please note the bolded lines below.

This selloff is a vicious ploy to separate fools from their good investments.

In the energy services industry:

FORT WORTH, Texas, Oct. 10, 2014 /PRNewswire/ — Basic Energy Services, Inc. (BAS) (“Basic”) today reported selected operating data for the month of September 2014. Basic’s well servicing rig count remained unchanged at 421. Well servicing rig hours for the month were 71,800 producing a rig utilization rate of 71%, compared to 74% and 69% in August 2014 and September 2013, respectively.

During the month, Basic’s fluid service truck count increased by 21 to 1,045. Fluid service truck hours for the month were 215,800 compared to 215,100 and 189,600 in August 2014 and September 2013, respectively.

Drilling rig days for the month were 327 producing a rig utilization of 91%, compared to 83% and 74% in August 2014 and September 2013, respectively.

Roe Patterson, Basic’s President and Chief Executive Officer, stated, “Activity levels in September were steady across our footprint. We experienced the normal impact of the Labor Day holiday as well as severe rainy conditions in the Permian Basin and Mid-Continent operating areas which impacted utilization in all segments. Despite wet conditions in mid-September, our stimulation segment maintained high levels of activity as we were able to work at full pace during the weekends in the latter part of September to overcome most of the weather effect in that segment. During the month, we received the final components of our previously announced 2014 horsepower additions. Our contract drilling operations were able to perform at higher levels than we achieved in August. Fluid service truck hours were generally flat and well servicing utilization was lower in September compared to August as these segments were impacted most by the Labor Day holiday and the rainy conditions.

We now expect our third quarter revenue to be approximately 9% to 10% higher sequentially compared to our previous guidance of 4% to 6%. Revenue from our completion and remedial segment, particularly from stimulation services, was greater than expected as our horsepower additions were deployed in the field earlier than anticipated. Despite the greater than anticipated revenue growth, pricing remains very competitive, especially in our fluid services and well servicing segments as we continue to experience higher labor and other costs.

In the frac sand land:

Houston, Texas – October 9, 2014 - Hi-Crush Partners LP (HCLP), or Hi-Crush, today announced an amendment of its long-term frac sand purchase agreement between Hi-Crush Operating LLC, a subsidiary of Hi-Crush, and Halliburton Energy Services, Inc., or Halliburton. The amendment to the agreement, which requires Halliburton to pay a specified price for a specified minimum volume of frac sand each month, increases the annual minimum committed volumes through December 31, 2018. The agreement continues to provide for further significant increases in annual volumes dependent on Halliburton`s aggregate annual demand for Northern White frac sand.

“Halliburton has been an important partner to Hi-Crush since the inception of our operations. We continue to broaden our relationship with Halliburton by increasing the volumes we sell to them,” said James M. Whipkey, Co-Chief Executive Officer of Hi-Crush. “This most recent contract announcement brings our total aggregate contracted volumes in 2015 to 6.6 million tons. As previously announced, our sponsor has started the permitting process for development of a fourth Northern White frac sand production facility to meet the growing demand for our sand. In addition, we are adding expanded silo storage capacity at several of our distribution facilities to allow for even more efficient delivery of frac sand to our customers.”

Don’t be stupid.

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