Forbes Energy's Dismal 4Q

Zacks

Forbes Energy Services Ltd. (FES), an oilfield services contractor, reported disappointing results for the fourth quarter of 2012, with loss per share of 22 cents, much wider than the Zacks Consensus Estimate of a loss of 17 cents. Increased pricing pressures coupled with reducing demand negatively impacted earnings

Revenue: In the fourth quarter of 2012, total sales for Forbes Energy were $107.0 million, down 14.1% year over year, primarily due to shorter daylight hours and holidays. Revenue also missed the Zacks Consensus Estimate of $110.0 million by 2.7%.

Segment Details: In the reported quarter, revenue from the Well Servicing segment was recorded at $48.6 million, a decrease of 4.9% compared with the year-ago quarter. Fewer 24-hour rigs working led to the decline.

Revenue from Fluid Logistics and Other segment came in at $58.5 million, facing a decline of 20.5% year-over-year, due to a reduction in the truck hours.

Margins: Operating profit in the reported quarter dropped by a whopping 98.1% to $0.3 million from the $18.1 million reported in the year-ago quarter. This decrease was attributable to a higher insurance expense as well as higher wages and fuel charges. Operating margin in the quarter was recorded at 0.3% compared with 14.5% in the fourth quarter of 2011.

Balance Sheet/Cash Flow: Exiting the fourth quarter 2012, Forbes Energy’s cash and cash equivalents were approximately $17.6 million, compared with $5.3 million in the previous quarter. Total debt balance stood at $306.3 million against $296.1 million in the preceding quarter.

Capital expenditure in the quarter amounted to $8.7 million.

Outlook: Forbes Energy expects capital expenditure in 2013 to be roughly $20.0–$23.0 million. 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);  and Kaydon Corporation (KDN) and Worthington Industries Inc. (WOR) carrying a Zacks Rank #2 (Buy).

Read the Full Research Report on WOR

Read the Full Research Report on KDN

Read the Full Research Report on NPSKY

Read the Full Research Report on FES

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