Keeley Funds Comments on Basic Energy Services

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Oct 24, 2017

Basic Energy Services, Inc. (NYSE:BAS) is a diversified oilfield service provider that offers completion and remedial services, fluid services, well servicing, and contract drilling primarily in Texas and Oklahoma. Despite elevated customer activity levels in Texas, the company reported second quarter results and issued third quarter guidance that was below Street expectations due to some delays in deploying additional “fracking” equipment in the field. Furthermore, Basic also announced a $500 million at-the-market public offering to boost liquidity, which left investors nervous given that the company had just recently emerged from Chapter 11 last December. Led by the same management team that took the company into bankruptcy, plus concerns over the quality of their equipment and a potential erosion of pricing power, we decided to exit our position and allocate the capital to opportunities that we perceived to offer better risk/reward characteristics.

From Keeley Small-Cap Value Fund's third-quarter 2017 shareholder commentary.