Forbes Energy Services Ltd. (FES), an oilfield services contractor, reported sequentially improved results for the first quarter of 2013, with a loss per share of 13 cents, narrower than the Zacks Consensus Estimate of a loss of 17 cents. Increased pricing pressures coupled with diminishing demand negatively impacted earnings.
Revenue: In the first quarter of 2013, total sales for Forbes Energy were $101.7 million, down 22.6% year over year, primarily due to shorter truck and rig hours. Revenues missed the Zacks Consensus Estimate of $110.0 million by 7.3%.
Segment Details: In the reported quarter, revenues from the Well Servicing segment was recorded at $50.2 million, a decrease of 4.0% compared with the year-ago quarter. Fewer 24-hour operational rigs led to the decline.
Revenue from Fluid Logistics segment came in at $51.6 million, facing a decline of 34.9% year over year, due to a reduction in truck hours.
Margins: General and administrative expenses amounted to $7.3 million, against $10.7 million recorded in the first quarter of 2012. Forbes Energy’s operating profit margin in the quarter plunged 818 basis points to 3.6% from 11.8% million reported in the year-ago quarter.
Balance Sheet: Exiting the first quarter 2013, Forbes Energy’s cash and cash equivalents were approximately $31.2 million, compared with $17.6 million in the previous quarter. Total debt balance stood at $302.5 million against $306.3 million in the preceding quarter.
Outlook: Forbes Energy believes that it is in line with the $20.0-$23.0 million capital expenditure guidance issued in the last quarter. The company also predicts a stable pricing environment in 2013.
Forbes Energy currently carries a Zacks Rank #3 (Hold). Other stocks worth a look in the oil & gas equipment & services sector are NSK Ltd. (NPSKY); carrying a Zacks Rank #1 (Strong Buy) along with Precision Castparts Corp. (PCP) and Worthington Industries Inc. (WOR), each carrying a Zacks Rank #2 (Buy).
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