How Does Forbes Energy Services Ltd. (NASDAQ: FES) See The Future?


Forbes Energy Services Ltd. (NASDAQ: FES)’s 2Q2016 showed the progress the company is making to survive in the new paradigm in the energy sector that is rattled by low oil prices. The management of the company recently tried to provide a hint on what it will be doing in the future. As it turns out, Forbes Energy has not run out of options on how to adapt to the paradigm shift in the energy industry.

In the current quarter and the balance of 2016, Forbes Energy Services Ltd. (NASDAQ: FES) intends to continue to align its cost structure the constricted market. While depressed oil prices gives every player in energy sector headache, CEO John Crisp said they enjoy some unique advantage at Forbes Energy. He cited their loyal and dedicated employees who have continued to support the company’s strategic executions to cope with market challenges.

CEO Crisp noted that the execution of his team including employees and the senior management has been beyond expectation. He hopes that the team will remain dedicated through the balance of 2016 as Forbes Energy doesn’t expect near-term reprieve in the energy sector.

However, with OPEC members planning to meet late next month, there are hopes that oil prices could begin to stabilize in the back half of 2016. Forbes Energy is also looking forward to uptick in utilization in certain regions in the balance of 2016. But the company is largely bracing itself for continued pressure in its industry and that explains why focus remains on cost reduction.

How Forbes Energy Services Ltd. (NASDAQ:FES) fared in 2Q2016

Forbes Energy Services Ltd. (NASDAQ:FES) generated revenue of $28.4 million, which decreased 11% from the prior quarter. A slowdown in drilling and production activity hit the topline in the latest quarter. Revenue still beat expectation by $0.18 million despite skidding.

Despite the decline in revenue, Forbes Energy maintained its gross margin at 6.4%, indicating the success of its cost-curtailment measures.

Forbes Energy posted 2Q EPS loss of $1.09, which wider than what analysts were looking for in the quarter.

Forbes Energy Services Ltd. (NASDAQ:FES) concluded the latest quarter with cash and equivalents of $68.6 million, offset by $298.8 million in capital leases and contractual debt.


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