Pioneer Energy (PES) and Basic Energy (BAS) Rally on Rising NatGas Prices

Michael Teague  |

Natural gas futures extended their rally into Tuesday, with contracts for February delivery trading another 2 percent higher on expectations of lower stockpiles and, perhaps more significantly, forecasts that see the US’s unusually arctic winter staying put for the time being.

The NatGas rally translated into gains for a number of oil & gas stocks as well, including those of several companies listed on Small-Cap Stars index. The most notable of these were the $605 million oil & gas services firm Basic Energy Services (BAS) , and the $504 million drilling & exploration outfit Pioneer Energy Services Corp. (PES) , both of which closed substantially higher on above-average volume.

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Pioneer Energy Services (PES)

The San Antonio, Texas-based Pioneer provides support to major and independent drilling, exploration, and production companies in the US, and its roster of over 60 drill rigs operate in some of the most plentiful shale acreage in the US, including the Northeastern Appalachian Basin as well as in North Dakota and throughout Texas. Furthermore, on Jan 8, Pioneer announced the renewal of a contract to operate 8 of Colombian giant Ecopetrol SA’s (EC) domestic wells. The rise in natural gas prices in recent days has sent shares up over 6 percent on the week, hitting an intraday high of $8.50 a piece on Tuesday’s gains of over 3 percent.

Basic Energy Services (BAS)

Basic Energy, for its part, provides well-site services to US oil and gas producers, and also boasts of considerable expertise in unconventional reserves including, of course, shale oil & gas. BAS operates in the much of the same acreage as Pioneer, but has a substantially larger presence in both the Haynesville and Fayetteville plays in Louisiana and Arkansas.

Basic Energy’s gains on the day are not only tied to natural gas prices, however, as it released select operating data from December 2013. CEO Roe Patterson highlighted the company’s resilience in the face of harsh winter, saying "Despite the adverse winter weather impact throughout most of our footprint in early December, activity levels in all of our business segments were very consistent with what we experienced in November. Some customers attempted to catch up from the delays they experienced earlier in December, creating an uptick in activity through the year-end holiday period."

Furthermore, the company claimed that revenue shortfalls for the prior year would not be as significant as had previously expected. Shares for BAS were up nearly 8 percent ahead of the close, to an intra-day high of $16.14 per share.

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