Basic Energy Consolidates Regions to Slash Costs | Rigzone
Basic Energy Services Inc. has updated its organizational structure, slimming its number of operating regions from the current five, the company said in a statement. Management hopes the move will surface $20 million in annual cost savings, on top of the previously announced $17 million of annual cost synergies related to purchasing C&J Well Services and $20 million in savings already in place due to market volatility and the COVID-19 pandemic.
Previously, the company’s structure consisted of the following regions: Permian Basin, Central, Rocky Mountains, California, and Agua Libre Midstream. The updated structure will result in three regions that will operate on a hub-and-spoke model that will cut costs. The new structure will consist of:
- Central, consisting of operations in the Permian Basin, Gulf Coast, Louisiana, North Texas and Oklahoma;
- Western, consisting of operations in California and the Rocky Mountains; and
- Agua Libre, which is unaffected by this reorganization.
To support this leaner structure, Basic is appointing a Product Service Line lead for its most significant businesses, including well servicing, water logistics, plugging and abandonment/coiled tubing, and rental and fishing tools/snubbing, the company said in a written statement.
In conjunction with the structural change, the company is also making the following personnel changes:
- Adam Hurley, Vice President and Chief Integration Officer, is promoted to Executive Vice President, Operations and will lead the three regions and four PSLs;
- Jim Newman, Senior Vice President, Region Operations, is named Senior Vice President, Agua Libre Midstream;
- Brandon McGuire, Vice President, Permian, is named Senior Vice President, Central Region; and
- Jack Renshaw will remain Senior Vice President, Western Region, overseeing the same geography but with a reduced cost structure.
“We are pleased to announce that the synergies from our recent acquisition of C&J are achieving our previously announced target of $17 million and should be fully realized by June 30,” Keith Schilling, Basic’s President and CEO, said in a statement. “In addition, our response to COVID-19, including furloughs and headcount reductions, should result in a reduction in expenses by an additional $20 million. Further, we expect the operational consolidation to result in additional cost savings of approximately $20 million on an annual basis.”
“…We believe this right-sizing of our company structure will afford Basic the benefits of scale and preservation of liquidity that will allow us to reinforce our commitment to our customers as a leading production services company in the U.S. and industry consolidator of choice.”
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