Snapshot: Comparing Seventy Seven Energy to its peers

Avik Chowdhury
July 24, 2014

A guide to Chesapeake's oilfield spinoff: Seventy Seven Energy (Part 6 of 8)

(Continued from Part 5)

Seventy Seven Energy

Seventy Seven Energy (SSE) is a well-field services company that carries out activities like drilling, hydraulic fracturing, rig relocation, and fluid handling and disposal.

SSE is a spinoff of CHK. CHK is a component of the Energy Select Sector SPDR (XLE). Other companies operating in the oilfield service business include Precision Drilling Corporation (PDS) and Pioneer Energy Services Corp. (PES).

In 2013, SSE’s total revenues increased 12% compared to a 47% rise in revenues in 2012. In 2013, SSE’s segment revenues increased the most in the hydraulic fracturing segment. But this was partially offset by a decrease in revenues from drilling and oilfield services, due mostly to lower drilling activity in Chesapeake and a decrease in the size of the drilling rig fleet and market pricing pressure.

Operating income before depreciation and amortization decreased ~20% in 2013 after a 42% rise in 2012. Overall operating expenses increased in 2013, due to growth in the hydraulic fracturing business.

Capital expenditure in 2013 decreased 43% following a 51% increase in 2012. In the past two years, the company has been investing in hydraulic fracturing and its PeakeRigs technology.

Long-term debt was almost unchanged in 2013 after a hefty 60% rise in 2012 due to issuance of senior notes. The primary purpose was to redeem the company’s affiliate debt with Chesapeake.

Basic Energy Services

Basic Energy Services Inc. (BAS) provides field services to oil and natural gas drillers and producers in the United States. The company has four operating segments.

In 2013, BAS’s revenues went down 8% after increasing ~11% in 2012. In 2013, revenues were negatively affected by lower revenues from pumps and driven by lower prices as a result of higher level of competition.

Operating income before depreciation and amortization in 2013 fell 22% following a 13% decline in 2012. In 2013, prices for all the company’s services decreased—due mainly to increased competition, higher fuel price, and higher propane price.

Basic Energy’s long-term debt in 2013 remained almost unchanged from 2012 levels.

Further analysis

For more comparative analysis of SSE with its peers, please read on to the next part in this series.

Continue to Part 7

Browse this series on Market Realist: