Basic Energy Services shares fall on sales outlook

Shares of Basic Energy Services Inc. fell Tuesday after the oil and gas well site services provider projected second-quarter revenue far below previous estimates.

After the market closed Monday, Midland, Texas-based Basic Energy forecast its second-quarter revenue would slide 23 percent to 25 percent from the first quarter with each of its major business segments affected. Its prior guidance had been for a decline of 5 percent to 7 percent.

Analyst Victor Marchon of RBC Capital cut his 12-month share price target to $10 from $13. He said he now expects the company to lose $2.02 per share this year and $1.54 per share next year, compared with his prior expectations for a loss of $1.43 per share this year and 89 cents per share next year.

He said second-quarter results are not expected to be stellar, but "we believe the order of magnitude on the revenue miss for Basic Energy Services will lead to some near-term underperformance."

He said the company may have to raise capital and re-work its debt with lenders.

Marchon said shares will perform in line with the oil service group until evidence surfaces that activity levels and pricing have stabilized and are showing signs of improvement.

Basic Energy shares fell 84 cents, or 9 percent, to $8.50 in afternoon trading Tuesday. The shares have traded between $5.30 and $32.97 in the past year.