Friday, February 21, 2014

Seeking Alpha: Basic Energy Blowing Up

I liked Basic Energy Services (BAS) back in October, but even I didn't think the shares were going to snap back this strongly. Competition remains fierce in basins like the Permian and activity levels weren't great in the fourth quarter, but Basic Energy has done a good job of controlling costs while adding assets in its fluid services business.

It looks as though energy companies are getting an early start to their 2014 capex plans, and pricing is improving as a result. Valuation for small service companies is frustratingly imprecise, but I wouldn't rule out the possibility of EBITDA estimates moving up throughout the year. For now, though, I think some of the excitement in the shares can be explained a reaction to some very loudly bearish analysts and a large short position, and I'd probably wait for the dust to settle a bit before buying.

Follow this link:
Basic Energy Blowing Up

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