Basic Earth Science Systems, Inc. today reported its operating results for the 2nd Quarter ending September 30, 2008. Basic Earth is an independent oil and gas exploration company. Benefitting from higher oil and gasoline prices earlier in 2008, net income rose to $946,000. Oil and gas revenue was $2,697,000. Compared to the same period in 2007, net income was 120% higher and sales revenue was 51% higher.
Asked to comment on the company’s impressive results, Basic’s President, Ray Singleton, said the “combination of high commodity prices and the effect of our new Colorado wells coming on production have certainly supported the results of our second fiscal quarter.” According to Singleton, Basic Earth recognizes that declining oil prices will have a direct impact on future operations. However, he said Basic Earth has prepared a plan for this scenario based on prior experience.
Noting the company has faced low oil prices before, Singleton compared Basic’s current ability to withstand a new round of falling prices to the company’s past experiences, saying that “[Basic] has never been in better shape to handle a downturn. We have no debt and have cash reserves to weather this storm. We believe we are in good shape.”
In contrast, many of Basic’s competitors are saddled with debt from having pursued high cost, less promising projects in the face of record oil prices earlier this year. “For the last several years, there are those in this industry that pursued projects that were less than lucrative, even at high commodity prices. Deals were made, funded and drilled based on much higher commodity price expectations,” said Singleton.
He continued, saying “[t]hose companies’ balance sheets are loaded with recent, historical costs that are ripe for impairment. As a result, we are very optimistic.” Short term, Basic anticipates making selective purchases based on its strong financial position and on positive future economic indicators.
Founded in 1969 and based in Denver, Colorado, Basic operates in select areas of the Williston basin, the Denver-Julesburg basin in Colorado, the southern portions of Texas, and along the on-shore portions of the Gulf Coast.
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