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Basic Energy Services Inc – ‘424B4’ on 12/9/05

On:  Friday, 12/9/05, at 3:29pm ET   ·   Accession #:  1047469-5-28020   ·   File #:  333-127517

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

12/09/05  Basic Energy Services Inc         424B4                  1:2.3M                                   Merrill Corp/New/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Prospectus                                          HTML   1.89M 

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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

12,500,000 Shares

Basic Energy Services, Inc.

Common Stock

        This is an initial public offering of shares of common stock of Basic Energy Services. We are selling 5,000,000 shares of common stock, and the selling stockholders are selling 7,500,000 shares of common stock. We will not receive any of the proceeds from the shares of common stock sold by the selling stockholders. One of the selling stockholders owns a majority of the shares of our outstanding common stock and is also an affiliate of Credit Suisse First Boston, one of the underwriters of this offering.

        Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is $20.00 per share. Our common stock has been approved for listing on The New York Stock Exchange under the symbol "BAS."

        See "Risk Factors" beginning on page 10 to read about factors you should consider before buying our common stock.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

        To the extent that the underwriters sell more than 12,500,000 shares, the underwriters have the option to purchase up to an additional 1,875,000 shares from the selling stockholders at the initial public offering price less the underwriting discount.

        The underwriters expect to deliver the shares of common stock against payment in New York, New York on or about December 14, 2005.

Prospectus dated December 8, 2005

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Well Servicing Rig Preparing to Begin Work

2.

Fluid Services Transport Truck

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24 Hour Workover Rig

4.

Well Site Construction Equipment

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Saltwater Disposal Facility

6.

Frac Tank Utilized for Storage of Fluids

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Trailer-Mounted Pressure Pumping Equipment

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Coiled Tubing Unit Used in Pressure Pumping

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Inland Barge Workover Rig

10.

Trailer-Mounted Foam Circulating Unit Used in Underbalanced Workover Operations

TABLE OF CONTENTS

        You should rely only on the information contained in this prospectus or to which we have referred you. We have not authorized anyone to provide you with information that is different from what we have provided to you. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

        In this prospectus, we use the terms "Basic Energy Services," "we," "us" and "our" to refer to Basic Energy Services, Inc. together with its subsidiaries unless the context otherwise requires. Unless the context otherwise requires, these terms also refer to our predecessor entity and its subsidiaries prior to our holding company restructuring in January 2003, which is described in "The Company."

Dealer Prospectus Delivery Obligation

        Until January 2, 2005 (25 days after the commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

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Prospectus Summary

        This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the risks discussed in the "Risk Factors" section, the historical consolidated financial statements and notes to those financial statements. This summary may not contain all of the information that investors should consider before investing in our common stock. Unless otherwise indicated, all numbers of shares and per share amounts give effect to a 5-for-1 stock split effected as a stock dividend on September 26, 2005. Unless we specifically state otherwise, the information in this prospectus also does not take into account the sale of up to 1,875,000 shares of common stock, which the underwriters have the option to purchase from the selling stockholders to cover over-allotments. The share numbers outstanding after this offering reflect a repurchase of 135,326 shares from certain officers as described in "Use of Proceeds." If you are not familiar with some of the oil and gas industry terms used in this prospectus, please read our Glossary of Terms included as Appendix A to this prospectus.

Our Company

        We provide a wide range of well site services to oil and gas drilling and producing companies, including well servicing, fluid services, drilling and completion services and well site construction services. These services are fundamental to establishing and maintaining the flow of oil and gas throughout the productive life of a well. Our broad range of services enables us to meet multiple needs of our customers at the well site. Our operations are managed regionally and are concentrated in the major United States onshore oil and gas producing regions in Texas, New Mexico, Oklahoma, Louisiana and in the Rocky Mountain states. We provide our services to a diverse group of over 1,000 oil and gas companies. We operate the third largest fleet of well servicing rigs (also commonly referred to as workover rigs) in the United States, representing over 10% of the overall available U.S. fleet, with our two larger competitors controlling approximately 31% and 18%, respectively, according to the Association of Energy Service Companies. We maintain a strong market share position based on the number of available well servicing rigs in several of our operating areas, including 23% in West Texas, 18% in the Ark-La-Tex region and 15% in the Texas Gulf Coast region as of September 2005. Since the beginning of 2001, we have expanded our asset base from $53.0 million of total assets as of December 31, 2000 to $367.6 million of total assets as of December 31, 2004 and increased our revenues from $56.5 million in 2000 to $311.5 million in 2004.

        We derive a majority of our revenues from services supporting production from existing oil and gas operations. Demand for these production-related services, including well servicing and fluid services, tends to remain relatively stable, even in moderate oil and gas price environments, as ongoing maintenance spending is required to sustain production. As oil and gas prices reach higher levels, demand for our production-related services generally increases as our customers engage in more well servicing activities relating to existing wells to maintain or increase oil and gas production from those wells. The utilization rate for our fleet of well servicing rigs increased from approximately 60% in 2002 to 78% in 2004 and 87% for the first nine months of 2005. Because our services are required to support drilling and workover activities, we are also subject to changes in capital spending by our customers as oil and gas prices increase or decrease.

        We currently conduct our operations through the following four business segments:

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Well Servicing. Our well servicing segment (49% of our revenues for the first nine months of 2005) currently operates our fleet of over 300 well servicing rigs and related equipment. This business segment encompasses a full range of services performed with a mobile well servicing rig, including the installation and removal of downhole equipment and elimination of obstructions in the well bore to facilitate the flow of oil and gas. These services are

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performed to establish, maintain and improve production throughout the productive life of an oil and gas well and to plug and abandon a well at the end of its productive life. Our well servicing equipment and capabilities are essential to facilitate most other services performed on a well.

•

Fluid Services. Our fluid services segment (29% of our revenues for the first nine months of 2005) currently utilizes our fleet of over 450 fluid services trucks and related assets, including specialized tank trucks, storage tanks, water wells, disposal facilities and related equipment. These assets provide, transport, store and dispose of a variety of fluids. These services are required in most workover, drilling and completion projects and are routinely used in daily producing well operations.



•

Drilling and Completion Services. Our drilling and completion services segment (12% of our revenues for the first nine months of 2005) currently operates our fleet of 35 pressure pumping units, 23 air compressor packages specially configured for underbalanced drilling operations and 12 cased-hole wireline units. These services are designed to initiate or stimulate oil and gas production. The largest portion of this business consists of pressure pumping services focused on cementing, acidizing and fracturing services in niche markets.



•

Well Site Construction Services. Our well site construction services segment (10% of our revenues for the first nine months of 2005) currently utilizes our fleet of over 200 operated power units, which include dozers, trenchers, motor graders, backhoes and other heavy equipment. We utilize these assets primarily to provide services for the construction and maintenance of oil and gas production infrastructure, such as preparing and maintaining access roads and well locations, installation of small diameter gathering lines and pipelines and construction of temporary foundations to support drilling rigs.

        Our industry historically has consisted of a large number of small companies, several regional contractors and a few large national companies. Over the last decade, our industry has consolidated, including the consolidation of the well servicing segment of our industry, from nine large competitors (with 50 or more well servicing rigs) to four. However, the industry still remains fragmented with many smaller competitors owning approximately 900 well servicing rigs. We have led recent consolidation of this industry by acquiring regional businesses and assets in 36 separate acquisitions from the beginning of 2001 through September 30, 2005. We plan to continue participating in the consolidation of our industry after the completion of this offering by selectively acquiring additional businesses and assets that complement and expand our existing service offerings and geographic footprint. However, we cannot assure you that we will be able to complete such acquisitions.

Industry

        Demand for services offered by our industry is a function of our customers' willingness to make expenditures to explore for, develop and produce hydrocarbons in the United States, which in turn is affected by current and expected levels of oil and gas prices. As oil and gas prices have rebounded beginning in early 1999, total expenditures for all U.S. exploration and production activities (including offshore activities that we do not serve) have increased to an estimated $56 billion in 2003 and $62 billion in 2004 and are expected to reach $66 billion in 2005 according to Oil & Gas Journal.

        Increased expenditures for exploration and production activities generally involve the deployment of more drilling and well servicing rigs. The number of active rigs, also known as the rig count, serves as an indicator of demand for our services. According to Baker Hughes, the U.S. land-based drilling rig count increased approximately 36% from year-end 2002 to year-end 2003, and 11% from year-end 2003 to year-end 2004. In addition, the U.S. land-based workover rig count

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increased approximately 13% from year-end 2002 to year-end 2003, and 10% from year-end 2003 to year-end 2004.

        Our business is influenced substantially by both operating and capital expenditures by oil and gas companies. Because existing oil and gas wells require ongoing spending to maintain production, expenditures by oil and gas companies for the maintenance of existing wells are relatively stable and predictable compared to exploration and drilling expenditures. In contrast, capital expenditures by oil and gas companies for drilling are more directly influenced by current and expected oil and gas prices and generally reflect the volatility of commodity prices.

        We expect more spending growth in the well servicing and fluid services markets to come from independent exploration and production companies, which represent over 90% of our revenue. This trend is primarily driven by the increased acquisitions of proved oil and gas properties by independent producers. When these types of properties are acquired, purchasers typically intensify drilling, workover and well maintenance activities to accelerate production from the newly acquired reserves.

Our Competitive Strengths

        We believe that the following competitive strengths currently position us well within our industry:

        Significant Market Position.    We maintain a significant market share for our well servicing operations in our core operating areas throughout Texas and a growing market share in the other markets that we serve. Our fleet of over 300 well servicing rigs represents the third largest fleet in the United States, and our goal is to be one of the top two providers of well site services in each of our core operating areas. Our market position allows us to expand the range of services performed on a well throughout its life, such as completion, maintenance, workover and plugging and abandonment services.

        Modern and Active Fleet.    We operate a modern and active fleet of well servicing rigs. We believe over 95% of the active U.S. well servicing rig fleet was built prior to 1985. Approximately 63 of our rigs are either 2000 model year or newer, or have undergone major refurbishments during the last four years. As of September 30, 2005, we have taken delivery of 24 newbuild well servicing rigs since October 2004 as part of a 54-rig newbuild commitment. The remainder of these newbuilds will be delivered prior to the end of May 2006. Approximately 98% of our fleet was active or available for work and the remainder was awaiting refurbishment at September 30, 2005.

        Extensive Domestic Footprint in the Most Prolific Basins.    Our operations are concentrated in the major United States onshore oil and gas producing regions in Texas, New Mexico, Oklahoma, Louisiana and the Rocky Mountain states. We operate in states that accounted for approximately 60% of the more than 900,000 existing onshore oil and gas wells in the 48 contiguous states and approximately 70% of onshore oil and gas production in 2004.

        Diversified Service Offering for Further Revenue Growth.    We believe our range of well site services provides us a competitive advantage over smaller companies that typically offer fewer services. Offering a broader range of services allows us to capitalize on our existing customer base and management structure to grow within existing markets, generate more business from existing customers, and increase our operating profits as we spread our overhead costs over a larger revenue base.

        Decentralized Management with Strong Corporate Infrastructure.    Our corporate group is responsible for maintaining a unified infrastructure to support our diversified operations through standardized financial and accounting, safety, environmental and maintenance processes and

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controls. Below our corporate level, we operate a decentralized operational organization comprised of seven regional managers and more than 60 local managers responsible for managing our operations. This management structure allows us to monitor operating performance on a daily basis, maintain financial, accounting and asset management controls, integrate acquisitions, prepare timely financial reports and manage contractual risk.

Our Business Strategy

        We intend to increase our shareholder value by pursuing the following strategies:

        Establish and Maintain Leadership Position in Core Operating Areas.    We strive to establish and maintain market leadership positions within our core operating areas. To achieve this goal, we maintain close customer relationships, seek to expand the breadth of our services and offer high quality services and equipment that meet the scope of customer specifications and requirements. In addition, our significant presence in our core operating areas facilitates employee retention and attraction, a key factor for success in our business.

        Expand Within Our Regional Markets.    We intend to continue strengthening our presence within our existing geographic footprint through internal growth and acquisitions of businesses with strong customer relationships, well-maintained equipment and experienced and skilled personnel. Our larger competitors have not actively pursued acquisitions of small- to mid-size regional businesses or assets in recent years due to the small relative scale and financial impact of these potential acquisitions. In contrast, we have successfully pursued these types of acquisitions, which remain attractive to us and make a meaningful impact on our overall operations.

        Develop Additional Service Offerings Within the Well Servicing Market.    We intend to continue broadening the portfolio of services we provide to our clients by leveraging our well servicing infrastructure. We believe the fragmented nature of the well servicing market creates an opportunity to sell more services to our core customers and to expand our total service offering within each of our markets. We have expanded our suite of services available to our customers and increased our opportunities to cross-sell new services to our core well servicing customers through recent acquisitions and internal growth. We expect to continue to develop or selectively acquire capabilities to provide additional services to expand and further strengthen our customer relationships.

        Pursue Growth Through Selective Capital Deployment.    We intend to continue growing our business through selective acquisitions, continuing a newbuild program and/or upgrading our existing assets. Our capital investment decisions are determined by an analysis of the projected return on capital employed of each of those alternatives.

        Our strategies could be affected by any of the risk factors described in "Risk Factors" beginning on page 10.

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How You Can Contact Us

        Our principal executive offices are located at 400 W. Illinois, Suite 800, Midland, Texas 79701, and our telephone number is (432) 620-5500.

Recent Developments

        During October 2005, we completed the acquisition of Oilwell Fracturing Services, Inc., a pressure pumping services company that provides acidizing and fracturing services with operations in central Oklahoma. This acquisition will strengthen the presence of our drilling and completion services segment in our Mid-Continent division. This transaction was structured as a stock purchase for a total purchase price of approximately $16.1 million. The assets acquired in the acquisition included approximately $3 million in cash. The cash used to acquire Oilwell Fracturing Services was primarily from borrowings under our senior credit facility.

        On November 10, 2005, we entered into an agreement with Taylor Rigs, LLC to purchase 48 newbuild well servicing rigs to be delivered between September 2006 and December 2007. Total investment in the rigs and related tools and auxiliary equipment will be approximately $44 million. These rigs are in addition to our existing 54-rig order with Taylor Rigs, 24 of which have been delivered as of September 30, 2005. Payments for the rigs will be made over a 19-month period commencing June 2006. We anticipate that the cash used to acquire these newbuild rigs will come primarily from operating cash generated from future cash flows and from borrowings under our senior credit facility.

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The Offering

The number of shares of common stock that will be outstanding after the offering includes an aggregate of 837,500 shares of restricted common stock issued to officers and key employees under our Second Amended and Restated 2003 Incentive Plan (our "2003 Incentive Plan") that are subject to vesting.

        The number of shares of common stock that will be outstanding after the offering excludes:

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up to 4,350,000 shares that may be issued upon the exercise of warrants held by affiliates of DLJ Merchant Banking Partners III, L.P. and its affiliated funds, or DLJ Merchant Banking;



•

2,435,800 shares issuable upon the exercise of options outstanding as of September 30, 2005 under our 2003 Incentive Plan; and



•

an aggregate of 1,726,700 shares of common stock reserved and available for future issuance as of September 30, 2005 under our 2003 Incentive Plan.

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Summary Historical Financial Information

        The following table sets forth our summary historical financial and operating data for the periods shown. The following information should be read in conjunction with "Capitalization," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements included elsewhere in this prospectus. The amounts for each historical annual period presented below were derived from our audited financial statements.

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(1)

Includes approximately $994,000 and $1,587,000 of non-cash stock-based compensation expense for the years ended December 31, 2003 and 2004 and $1,115,000 and $2,131,000 for the nine months ended September 30, 2004 and 2005, respectively.

(2)

EBITDA means earnings before interest, taxes, depreciation and amortization. EBITDA is used as a supplemental financial measure by our management and directors and by external users of our financial statements, such as investors, to assess:

•

the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;

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the ability of our assets to generate cash sufficient to pay interest on our indebtedness; and

•

our operating performance and return on invested capital as compared to those of other companies in the well services industry, without regard to financing methods and capital structure.

EBITDA has limitations as an analytical tool and should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with generally accepted accounting principles (GAAP). EBITDA excludes some, but not all, items that affect net income and operating income, and these measures may vary among other companies. Limitations to using EBITDA as an analytical tool include:

•

EBITDA does not reflect our current or future requirements for capital expenditures or capital commitments;



•

EBITDA does not reflect changes in, or cash requirements necessary to service interest or principal payments on, our debt;



•

EBITDA does not reflect income taxes;



•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and



•

other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

The following table presents a reconciliation of EBITDA to net income (loss), which is the most directly comparable GAAP financial performance measure, and to cash flows from operating activities, which is the most directly comparable GAAP liquidity measure, for each of the periods indicated:

(3)

Gives effect to this offering and the application of our net proceeds from this offering as set forth under "Use of Proceeds" as if each had occurred on September 30, 2005.

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Operating Data

        The following table sets forth operating data for our well servicing, fluid services, drilling and completion services and well site construction services segments for the periods shown. The data presented below reflects the following:

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we charge our well servicing customers on an hourly basis — rig hours reflect actual billed hours;



•

our rig utilization rate is calculated using a 55-hour work week per rig;



•

our fluid services segment includes an array of services billed on an hourly, daily and per barrel basis; accordingly, we believe revenue per truck is the more meaningful information for this measure; and



•

in our drilling and completion services segment, we charge different rates for our pressure pumping trucks based on the type of services performed and varying horsepower requirements, and in our well site construction services segment, we similarly charge different rates for different equipment, in each case making segment profits the most meaningful measure of performance.

        Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations — Well Servicing," "— Fluid Services," "— Drilling and Completion Services" and "— Well Site Construction Services" for an analysis of our well servicing, fluid services, drilling and completion and well site construction services.

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RISK FACTORS

        You should carefully consider the risks described below, as well as the other information included in this prospectus, before making an investment decision to invest in our common stock. If any of these risks were to occur, our business, results of operations or financial condition could be materially and adversely affected. In that case, the trading price of our common stock could decline, and you could lose all or part of your investment.

Risks Related to Our Business

A decline in or substantial volatility of oil and gas prices could adversely affect the demand for our services.

        The demand for our services is primarily determined by current and anticipated oil and gas prices and the related general production spending and level of drilling activity in the areas in which we have operations. Volatility or weakness in oil and gas prices (or the perception that oil and gas prices will decrease) affects the spending patterns of our customers and may result in the drilling of fewer new wells or lower production spending on existing wells. This, in turn, could result in lower demand for our services and may cause lower rates and lower utilization of our well service equipment. A decline in oil and gas prices or a reduction in drilling activities could materially and adversely affect the demand for our services and our results of operations.

        Prices for oil and gas historically have been extremely volatile and are expected to continue to be volatile. For example, although oil and natural gas prices have recently hit record prices exceeding $60 per barrel and $14.00 per mcf, respectively, oil and natural gas prices fell below $11 per barrel and $2 per mcf, respectively, in early 1999. The Cushing WTI Spot Oil Price averaged $31.08 and $41.51 per barrel in 2003 and 2004, respectively, and the average wellhead price for natural gas, as recorded by the Energy Information Agency, was $4.98 and $5.49 per mcf for 2003 and 2004, respectively. Commodity prices have increased significantly in recent years, and these prices may not remain at current levels.

Our business depends on domestic spending by the oil and gas industry, and this spending and our business may be adversely affected by industry conditions that are beyond our control.

        We depend on our customers' willingness to make operating and capital expenditures to explore, develop and produce oil and gas in the United States. Customers' expectations for lower market prices for oil and gas may curtail spending thereby reducing demand for our services and equipment.

        Industry conditions are influenced by numerous factors over which we have no control, such as the supply of and demand for oil and gas, domestic and worldwide economic conditions, political instability in oil and gas producing countries and merger and divestiture activity among oil and gas producers. The volatility of the oil and gas industry and the consequent impact on exploration and production activity could adversely impact the level of drilling and workover activity by some of our customers. This reduction may cause a decline in the demand for our services or adversely affect the price of our services. In addition, reduced discovery rates of new oil and gas reserves in our market areas also may have a negative long-term impact on our business, even in an environment of stronger oil and gas prices, to the extent existing production is not replaced and the number of producing wells for us to service declines.

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We may not be able to grow successfully through future acquisitions or successfully manage future growth, and we may not be able to effectively integrate the businesses we do acquire.

        Our business strategy includes growth through the acquisitions of other businesses. We may not be able to continue to identify attractive acquisition opportunities or successfully acquire identified targets. In addition, we may not be successful in integrating our current or future acquisitions into our existing operations, which may result in unforeseen operational difficulties or diminished financial performance or require a disproportionate amount of our management's attention. Even if we are successful in integrating our current or future acquisitions into our existing operations, we may not derive the benefits, such as operational or administrative synergies, that we expected from such acquisitions, which may result in the commitment of our capital resources without the expected returns on such capital. Furthermore, competition for acquisition opportunities may escalate, increasing our cost of making further acquisitions or causing us to refrain from making additional acquisitions. We also must meet certain financial covenants in order to borrow money under our existing credit agreement to fund future acquisitions.

Our auditors have previously identified material weaknesses in our internal controls, and if we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, investors could lose confidence in our financial reporting, which would harm our business and the trading price of our common stock.

        Effective internal controls, including internal control over financial reporting and disclosure controls and procedures, are necessary for us to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results could be materially harmed. We have in the past discovered, and may in the future discover, areas of our internal controls that need improvement.

        In July 2004, our independent auditors advised our board of directors that they had identified material weaknesses in our internal controls in connection with the audit of our 2003 consolidated financial statements. The material weaknesses noted consisted of an inadequacy of our procedures or errors regarding account reconciliations not being performed timely or properly; formal procedures for establishing certain accounting assumptions, estimates and/or conclusions; and recording of certain expenses in the incorrect period. Our auditors also noted certain other items specific to our operations that they did not consider to be material weaknesses.

        To improve our financial accounting organization and processes, we have established an internal audit department and have added five new personnel and positions, including directors of financial reporting and treasury. We also implemented a new accounting software system throughout our operations during the third quarter of 2004 and adopted additional policies and procedures to address the items noted by our auditors and generally to strengthen our financial reporting system. We believe that as of December 31, 2004, we have remediated the material weaknesses previously identified. However, the process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations.

        Upon completion of this offering, we will have had only limited operating experience with the improvements we have made to date. We may not be able to implement and maintain adequate controls over our financial processes and reporting in the future, which may require us to restate our financial statements in the future. In addition, we may discover additional past, ongoing or future weaknesses or significant deficiencies in our financial reporting system in the future. Any

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failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure also could adversely affect the results of the periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our "internal control over financial reporting" that will be required when the SEC's rules under Section 404 of the Sarbanes-Oxley Act of 2002 become applicable to us beginning with our Annual Report on Form 10-K for the year ending December 31, 2006 to be filed in the first quarter of 2007. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could result in a lower trading price of our common stock.

We may require additional capital in the future, which may not be available to us.

        Our business is capital intensive, requiring specialized equipment to provide our services. We may need to raise additional funds through public or private debt or equity financings. Adequate funds may not be available when needed or may not be available on favorable terms. If we raise additional funds by issuing equity securities, dilution to existing stockholders may result. If funding is insufficient at any time in the future, we may be unable to fund maintenance requirements, acquisitions, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.

Competition within the well services industry may adversely affect our ability to market our services.

        The well services industry is highly competitive and fragmented and includes numerous small companies capable of competing effectively in our markets on a local basis as well as several large companies that possess substantially greater financial and other resources than we do. Our larger competitors' greater resources could allow those competitors to compete more effectively than we can. The amount of equipment available may exceed demand, which could result in active price competition. Many contracts are awarded on a bid basis, which may further increase competition based primarily on price. In addition, recent market conditions have stimulated the reactivation of well servicing rigs and construction of new equipment, which could result in excess equipment and lower utilization rates in future periods.

We depend on several significant customers, and a loss of one or more significant customers could adversely affect our results of operations.

        Our customers consist primarily of major and independent oil and gas companies. During 2004 and the first nine months of 2005, our top five customers accounted for 20% and 19%, respectively, of our revenues. The loss of any one of our largest customers or a sustained decrease in demand by any of such customers could result in a substantial loss of revenues and could have a material adverse effect on our results of operations.

Our industry has experienced a high rate of employee turnover. Any difficulty we experience replacing or adding personnel could adversely affect our business.

        We may not be able to find enough skilled labor to meet our needs, which could limit our growth. Our business activity historically decreases or increases with the price of oil and gas. We may have problems finding enough skilled and unskilled laborers in the future if the demand for our services increases. We have raised wage rates to attract workers from other fields and to retain or expand our current work force during the past year. If we are not able to increase our service rates sufficiently to compensate for wage rate increases, our operating results may be adversely affected.

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        Other factors may also inhibit our ability to find enough workers to meet our employment needs. Our services require skilled workers who can perform physically demanding work. As a result of our industry volatility and the demanding nature of the work, workers may choose to pursue employment in fields that offer a more desirable work environment at wage rates that are competitive with ours. We believe that our success is dependent upon our ability to continue to employ and retain skilled technical personnel. Our inability to employ or retain skilled technical personnel generally could have a material adverse effect on our operations.

Our success depends on key members of our management, the loss of any of whom could disrupt our business operations.

        We depend to a large extent on the services of some of our executive officers. The loss of the services of Kenneth V. Huseman, our President and Chief Executive Officer, or other key personnel could disrupt our operations. Although we have entered into employment agreements with Mr. Huseman and our other executive officers that contain, among other provisions, non-compete agreements, we may not be able to enforce the non-compete provisions in the employment agreements. Also, we do not have key man life insurance on these officers other than coverage of $1 million for Mr. Huseman.

Our operations are subject to inherent risks, some of which are beyond our control. These risks may not be fully covered under our insurance policies.

        Our operations are subject to hazards inherent in the oil and gas industry, such as, but not limited to, accidents, blowouts, explosions, craterings, fires and oil spills. These conditions can cause:

•

personal injury or loss of life;



•

damage to or destruction of property, equipment and the environment; and



•

suspension of operations.

The occurrence of a significant event or adverse claim in excess of the insurance coverage that we maintain or that is not covered by insurance could have a material adverse effect on our financial condition and results of operations. In addition, claims for loss of oil and gas production and damage to formations can occur in the well services industry. Litigation arising from a catastrophic occurrence at a location where our equipment and services are being used may result in us being named as a defendant in lawsuits asserting large claims.

        We maintain insurance coverage that we believe to be customary in the industry against these hazards. However, we do not have insurance against all foreseeable risks, either because insurance is not available or because of the high premium costs. The occurrence of an event not fully insured against, or the failure of an insurer to meet its insurance obligations, could result in substantial losses. In addition, we may not be able to maintain adequate insurance in the future at rates we consider reasonable. Insurance may not be available to cover any or all of these risks, or, even if available, it may be inadequate, or insurance premiums or other costs could rise significantly in the future so as to make such insurance prohibitive. It is likely that, in our insurance renewals, our premiums and deductibles will be higher, and certain insurance coverage either will be unavailable or considerably more expensive than it has been in the recent past. In addition, our insurance is subject to coverage limits and some policies exclude coverage for damages resulting from environmental contamination.

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We are subject to federal, state and local regulation regarding issues of health, safety and protection of the environment. Under these regulations, we may become liable for penalties, damages or costs of remediation. Any changes in laws and government regulations could increase our costs of doing business.

        Our operations are subject to federal, state and local laws and regulations relating to protection of natural resources and the environment, health and safety, waste management, and transportation of waste and other materials. Our fluid services segment includes disposal operations into injection wells that pose some risks of environmental liability, including leakage from the wells to surface or subsurface soils, surface water or groundwater. Liability under these laws and regulations could result in cancellation of well operations, fines and penalties, expenditures for remediation, and liability for property damage and personal injuries. Sanctions for noncompliance with applicable environmental laws and regulations also may include assessment of administrative, civil and criminal penalties, revocation of permits and issuance of corrective action orders.

        Laws protecting the environment generally have become more stringent over time and are expected to continue to do so, which could lead to material increases in costs for future environmental compliance and remediation. The modification or interpretation of existing laws or regulations, or the adoption of new laws or regulations, could curtail exploratory or developmental drilling for oil and gas and could limit well servicing opportunities. Some environmental laws and regulations may impose strict liability, which means that in some situations we could be exposed to liability as a result of our conduct that was lawful at the time it occurred or conduct of, or conditions caused by, prior operators or other third parties. Clean-up costs and other damages arising as a result of environmental laws, and costs associated with changes in environmental laws and regulations could be substantial and could have a material adverse effect on our financial condition. Please read "Business — Environmental Regulation" for more information on the environmental laws and government regulations that are applicable to us.

Our indebtedness could restrict our operations and make us more vulnerable to adverse economic conditions.

        We now have, and after this offering will continue to have, a significant amount of indebtedness. As of September 30, 2005, our total debt, the majority of which bears interest at variable rates, was $179.8 million, including the aggregate principal amount due under the term loan portion of our senior credit facility of $161.3 million and capital lease obligations in the aggregate amount of $18.5 million. As of September 30, 2005, on an as adjusted basis (as if we had completed this offering and used the net proceeds as described in "Use of Proceeds" on that date), our total debt would have been $109.8 million. For the year ended December 31, 2004, we made cash interest payments totaling $8.2 million. Holding all other variables constant, if interest rates increased by 1%, our annual interest expense (excluding effects of our interest rate hedges) would have increased by approximately $1.7 million during 2004. Our market risks at September 30, 2005 are similar to those disclosed for the year ended December 31, 2004.

        Our current and future indebtedness could have important consequences to you. For example, it could:

•

impair our ability to make investments and obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes;



•

limit our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to make principal and interest payments on our indebtedness;



•

make us more vulnerable to a downturn in our business, our industry or the economy in general as a substantial portion of our operating cash flow will be required to make principal and interest payments on our indebtedness, making it more difficult to react to changes in our business and in industry and market conditions;

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•

limit our ability to obtain additional financing that may be necessary to operate or expand our business;



•

put us at a competitive disadvantage to competitors that have less debt; and



•

increase our vulnerability to interest rate increases to the extent that we incur variable rate indebtedness.

        If we are unable to generate sufficient cash flow or are otherwise unable to obtain the funds required to make principal and interest payments on our indebtedness, or if we otherwise fail to comply with the various covenants in our senior credit facility or other instruments governing any future indebtedness, we could be in default under the terms of our senior credit facility or such instruments. In the event of a default, the holders of our indebtedness could elect to declare all the funds borrowed under those instruments to be due and payable together with accrued and unpaid interest, the lenders under our credit facilities could elect to terminate their commitments thereunder and we or one or more of our subsidiaries could be forced into bankruptcy or liquidation. Any of the foregoing consequences could restrict our ability to grow our business and cause the value of our common stock to decline.

Our existing credit facility imposes restrictions on us that may affect our ability to successfully operate our business.

        Our senior credit facility limits our ability to take various actions, such as:

•

limitations on the incurrence of additional indebtedness;



•

restrictions on mergers, sales or transfer of assets without the lenders' consent; and



•

limitation on dividends and distributions.

        In addition, our senior credit facility requires us to maintain certain financial ratios and to satisfy certain financial conditions, several of which become more restrictive over time and may require us to reduce our debt or take some other action in order to comply with them. These restrictions could also limit our ability to obtain future financings, make needed capital expenditures, withstand a downturn in our business or the economy in general, or otherwise conduct necessary corporate activities. We also may be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the restrictive covenants under our senior credit facility. Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities — 2004 Credit Facility" for a discussion of our senior credit facility.

One of our directors may have a conflict of interest because he is also currently an affiliate, director or officer of a private equity firm that makes investments in the energy sector. The resolution of this conflict of interest may not be in our or our stockholders' best interests.

        Steven A. Webster, the Chairman of our Board of Directors, is the Co-Managing Partner of Avista Capital Holdings, L.P., a private equity firm that makes investments in the energy sector. This relationship may create a conflict of interest because of his responsibilities to Avista and its owners. His duties as a partner in, or director or officer of, Avista or its affiliates may conflict with his duties as a director of our company regarding corporate opportunities and other matters. The resolution of this conflict may not always be in our or our stockholders' best interest.

Risks Related to our Relationship with DLJ Merchant Banking

DLJ Merchant Banking effectively controls the outcome of stockholder voting and may exercise this voting power in a manner adverse to our other stockholders.

        After giving effect to this offering, DLJ Merchant Banking effectively will beneficially own approximately 51.2% of our outstanding common stock, or 47.4% if the underwriters exercise their

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over-allotment option in full. Accordingly, DLJ Merchant Banking is in a position to effectively control the outcome of matters requiring a stockholder vote, including the election of directors, adoption of amendments to our certificate of incorporation or bylaws or approval of transactions involving a change of control. The interests of DLJ Merchant Banking may differ from those of our other stockholders, and DLJ Merchant Banking may vote its common stock in a manner that may adversely affect our other stockholders. Please read "Security Ownership of Certain Beneficial Owners and Management" for a discussion of DLJ Merchant Banking's ownership interests in us and "Certain Relationships and Related Party Transactions — Transactions with DLJ Merchant Banking" for a description of DLJ Merchant Banking.

Affiliates of Credit Suisse First Boston LLC, one of the underwriters of this offering, are selling stockholders, which may present conflicts of interest.

        The funds that comprise DLJ Merchant Banking are affiliates of Credit Suisse First Boston LLC. Because DLJ Merchant Banking is a selling stockholder in this offering, this relationship may present conflicts of interest for Credit Suisse First Boston LLC. Accordingly, this offering will be made in accordance with the applicable provisions of Rule 2720 of the Conduct Rules of the National Association of Securities Dealers, Inc., which requires, among other things, that the initial public offering price be no higher than that recommended by a "qualified independent underwriter." Goldman, Sachs & Co. is serving as the qualified independent underwriter in connection with this offering. See "Underwriting."

The cessation of operations by Arthur Andersen LLP will limit our ability to use the consolidated financial statements audited by Arthur Andersen LLP and could impact our investors' ability to seek potential recoveries from Arthur Andersen LLP.

        The consolidated financial statements of First Energy Services Company (as predecessor entity to FESCO Holdings, Inc., which we acquired in 2003) and its subsidiaries as of and for the years ended December 31, 2001 and 2000 were audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included in this prospectus in reliance upon the authority of said firm as experts in giving said reports. Subsequent to Arthur Andersen LLP's completion of the 2001 audit of First Energy Services Company and its subsidiaries, the firm was convicted of obstruction of justice charges relating to a federal investigation of Enron Corporation, has ceased practicing before the SEC and has lost the services of the material personnel responsible for said audit. As a result, it is not possible to obtain Arthur Andersen LLP's consent to the inclusion of their report in this prospectus, and we have dispensed with the requirement to file their consent in reliance upon Rule 437a of the Securities Act of 1933. Because Arthur Andersen LLP has not consented to the inclusion of their report in this prospectus, you will not be able to recover against Arthur Andersen LLP under Section 11 of the Securities Act for any untrue statements of a material fact contained in the consolidated financial statements audited by Arthur Andersen LLP or any omissions to state a material fact required to be stated therein.

Risks Related to this Offering

Certain stockholders' shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly.

        After this offering, we will have outstanding 33,785,359 shares of common stock. Of these shares, the 12,500,000 shares we and the selling stockholders are selling in this offering, or 14,375,000 shares if the underwriters exercise their over-allotment option in full, will be freely tradable without restriction under the Securities Act except for any shares purchased by one of our "affiliates" as defined in Rule 144 under the Securities Act. All of the shares outstanding other than the shares sold in this offering (a total of 21,285,359 shares, or 19,410,359 shares if the

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underwriters exercise their over-allotment option in full) will be "restricted securities" within the meaning of Rule 144 under the Securities Act and subject to lock-up arrangements.

        In connection with this offering, we and our executive officers, directors and all of our existing stockholders (including the selling stockholders) have entered into lock-up agreements with the underwriters under which such holders of restricted shares have agreed that, other than in this offering and subject to certain exceptions, they will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of our common stock or securities convertible into, or exercisable or exchangeable for, shares of our common stock for an initial period of 180 days from the date of this prospectus, which may be extended for up to 34 days in certain circumstances, without the prior written consent of Goldman, Sachs & Co. and Credit Suisse First Boston LLC on behalf of the underwriters. See "Underwriting" for a description of these lock-up arrangements. Upon the expiration of these lock-up agreements, 21,285,359 shares, or 19,410,359 shares if the underwriters exercise their over-allotment option in full, will be eligible for sale in the public market under Rule 144 of the Securities Act, subject to volume limitations and other restrictions contained in Rule 144.

        After this offering, the holders of 21,285,359 shares, or 19,410,359 shares if the underwriters exercise their over-allotment option in full, will have rights, subject to some limited conditions, to demand that we include their shares in registration statements that we file on their behalf, on our behalf or on behalf of other stockholders. By exercising their registration rights and selling a large number of shares, these holders could cause the price of our common stock to decline. Furthermore, if we file a registration statement to offer additional shares of our common stock and have to include shares held by those holders, it could impair our ability to raise needed capital by depressing the price at which we could sell our common stock.

        As soon as practicable after this offering, we intend to file one or more registration statements with the SEC on Form S-8 providing for the registration of 5,000,000 shares of our common stock issued or reserved for issuance under our stock option plans. Subject to the exercise of unexercised options or the expiration or waiver of vesting conditions for restricted stock and the expiration of lock-ups we and certain of our stockholders have entered into, shares registered under these registration statements on Form S-8 will be available for resale immediately in the public market without restriction.

Purchasers of common stock will experience immediate and substantial dilution.

        Based on the initial public offering price of $20.00 per share, purchasers of our common stock in this offering will experience an immediate and substantial dilution of $14.30 per share in the net tangible book value per share of common stock from the initial public offering price, and our as adjusted net tangible book value as of September 30, 2005 after giving effect to this offering would be $5.70 per share. Please read "Dilution" for a complete description of the calculation of net tangible book value.

Our certificate of incorporation and bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.

        Our certificate of incorporation authorizes our board of directors to issue preferred stock without stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us. In addition, some provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders, including:

•

a classified board of directors, so that only approximately one-third of our directors are elected each year;



•

limitations on the removal of directors;

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•

the prohibition of stockholder action by written consent; and



•

limitations on the ability of our stockholders to call special meetings and establish advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders.

        Delaware law prohibits us from engaging in any business combination with any "interested stockholder," meaning generally that a stockholder who beneficially owns more than 15% of our stock cannot acquire us for a period of three years from the date this person became an interested stockholder, unless various conditions are met, such as approval of the transaction by our board of directors.

Because we have no plans to pay dividends on our common stock, investors must look solely to stock appreciation for a return on their investment in us.

        We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all future earnings to fund the development and growth of our business. Any payment of future dividends will be at the discretion of our board of directors and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that the board of directors deems relevant. The terms of our existing senior credit facility restrict the payment of dividends without the prior written consent of the lenders. Investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our common stock.

There has been no active trading market for our common stock, and an active trading market may not develop.

        Prior to this offering, there has been no public market for our common stock. We have applied to list our common stock on the New York Stock Exchange. We do not know if an active trading market will develop for our common stock or how the common stock will trade in the future, which may make it more difficult for you to sell your shares. Negotiations between the underwriters, the selling stockholders and us will determine the initial public offering price. You may not be able to resell your shares at or above the initial public offering price.

If our stock price declines after the initial offering, you could lose a significant part of your investment.

        The market price of our common stock could be subject to wide fluctuations in response to a number of factors, most of which we cannot control, including:

•

changes in securities analysts' recommendations and their estimates of our financial performance;



•

the public's reaction to our press releases, announcements and our filings with the Securities and Exchange Commission;



•

fluctuations in broader stock market prices and volumes, particularly among securities of oil and gas service companies;



•

changes in market valuations of similar companies;



•

additions or departures of key personnel;



•

commencement of or involvement in litigation;



•

announcements by us or our competitors of strategic alliances, significant contracts, new technologies, acquisitions, commercial relationships, joint ventures or capital commitments;

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•

variations in our quarterly results of operations or cash flows or those of other oil and gas service companies;



•

changes in our pricing policies or pricing policies of our competitors;



•

future issuances and sales of our common stock; and



•

changes in general conditions in the U.S. economy, financial markets or the oil and gas industry.

        In recent years, the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to the operating performance of these companies. These market fluctuations may also result in a lower price of our common stock.

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FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

        This prospectus contains forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things, the risk factors discussed in this prospectus and other factors, most of which are beyond our control.

        The words "believe," "may," "estimate," "continue," "anticipate," "intend," "plan," "expect" and similar expressions are intended to identify forward-looking statements. All statements other than statements of current or historical fact contained in this prospectus are forward-looking statements.

        Although we believe that the forward-looking statements contained in this prospectus are based upon reasonable assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

        Important factors that may affect our expectations, estimates or projections include:

•

a decline in or substantial volatility of oil and gas prices, and any related changes in expenditures by our customers;



•

the effects of future acquisitions on our business;



•

changes in customer requirements in markets or industries we serve;



•

competition within our industry;



•

general economic and market conditions;



•

our access to current or future financing arrangements;



•

our ability to replace or add workers at economic rates; and



•

environmental and other governmental regulations.

        Our forward-looking statements speak only as of the date of this prospectus. Unless otherwise required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

        This prospectus includes market share, industry data and forecasts that we obtained from internal company surveys (including estimates based on our knowledge and experience in the industry in which we operate), market research, consultant surveys, publicly available information, industry publications and surveys. These sources include Oil & Gas Journal magazine, World Oil magazine, Baker Hughes Incorporated, the Association of Energy Service Companies, and the Energy Information Administration of the U.S. Department of Energy. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe such information is accurate and reliable, we have not independently verified any of the data from third-party sources cited or used for our management's industry estimates, nor have we ascertained the underlying economic assumptions relied upon therein. For example, the number of onshore well servicing rigs in the U.S. could be lower than our estimate to the extent our two larger competitors have continued to report as stacked rigs equipment that is not actually complete or subject to refurbishment. Statements as to our position relative to our competitors or as to market share refer to the most recent available data.

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THE COMPANY

        We commenced business in 1992 through our predecessor company. In December 2000, we completed a private recapitalization by DLJ Merchant Banking, which gained majority control of us. DLJ Merchant Banking has contributed approximately $81 million through several equity investments and has been instrumental in providing and arranging capital to drive our growth. Since our formation, we have grown largely through acquisitions of businesses and assets, including 36 acquisitions from January 2001 through September 30, 2005. Primarily through these transactions, our revenues have grown from $56.5 million in 2000 to $311.5 million in 2004 and $324.4 million for the nine months ended September 30, 2005.

        In January 2003, we completed a holding company reorganization to provide greater operational, administrative and financial flexibility. All of the then-outstanding shares of common stock and preferred stock of our predecessor were exchanged for shares of a new holding company then known as BES Holding Co. in a tax-free exchange. The shares of then-outstanding common stock and preferred stock were exchanged on a one-for-one basis, and with respect to any accrued and unpaid dividends, shares of additional preferred stock with a liquidation preference equal to such accrued and unpaid dividends. Our predecessor was converted into a limited partnership now known as Basic Energy Services, L.P., which currently remains our indirect, wholly owned subsidiary. In April 2004, we changed our name from BES Holding Co. to Basic Energy Services, Inc.

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USE OF PROCEEDS

        We will receive net proceeds from this offering of approximately $91.8 million, based on an initial public offering price of $20.00 per share and after deducting underwriting discounts and commissions and estimated offering expenses. We will not receive any of the net proceeds from the sale of shares of common stock by the selling stockholders. One of the selling stockholders owns a majority of the shares of our outstanding common stock and is also an affiliate of Credit Suisse First Boston, one of the underwriters of this offering. See "Risk Factors — Risks Related to Our Relationship with DLJ Merchant Banking," "Selling Stockholders" and "Underwriting."

        We plan to use $70.0 million of our net proceeds from this offering to repay a portion of the term loan under our credit facility. We will use approximately $2.5 million of the proceeds to repurchase 135,326 shares of our common stock at the initial public offering price, less underwriting discounts and commissions, from nine officers on the closing date of this offering. We will use the remaining $19.3 million for working capital and general corporate purposes, which may include cash payments made in connection with future acquisitions. We do not currently have any pending agreements or letters of intent for any significant acquisitions.

        Our current senior credit facility consists of a $50 million revolving credit facility and a term loan facility of $170 million. As of September 30, 2005, we had $161.3 million of indebtedness outstanding under the term loan portion of our senior credit facility. The term loan bears interest at either a base rate plus 2.0%, or the London Interbank Offered Rate ("LIBOR") plus 3.0%, and becomes due and payable in October 2009. As of September 30, 2005, we had no indebtedness outstanding under our revolving credit facility, other than $9.6 million of stand-by letters of credit. Our borrowings under the term loan and revolving credit facility were used to refinance existing debt and to provide for ongoing working capital and general corporate purposes, including acquisitions of new well servicing rigs, acquisitions of businesses (including our October 2005 acquisition of Oilwell Fracturing Services, Inc.) and capital leases issued for equipment.

        We will repurchase an aggregate of 135,326 shares from the nine officers to provide such officers the cash amounts necessary to pay certain tax liabilities associated with the vesting of restricted shares owned by them. The shares being repurchased represent up to 39.2% of the vested shares of each officer issued as compensation to them. We will withhold minimum tax liability requirements from these proceeds and pay the remainder of the proceeds to the officers for their use in paying estimated tax liabilities. The executive officers and number of shares that we will repurchase upon the closing of this offering are as follows: Kenneth V. Huseman—101,975 shares; James J. Carter—10,005 shares; Dub W. Harrison—11,184 shares; and Charles W. Swift—4,161 shares. For further discussion on our agreements regarding the repurchase of these shares, please see "Certain Relationships and Related Party Transactions" and "Principal Stockholders."

        Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities — 2004 Credit Facility" for a description of our outstanding indebtedness and our senior credit facility following this offering.

DIVIDEND POLICY

        We have not declared or paid any cash dividends on our common stock, and we do not currently anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all future earnings to fund the development and growth of our business. Any future determination relating to our dividend policy will be at the discretion of our board of directors and will depend on our results of operations, financial condition, capital requirements and other factors deemed relevant by our board. We are also currently restricted in our ability to pay dividends under our senior credit facility.

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CAPITALIZATION

        The following table sets forth our capitalization at September 30, 2005:

•

on an actual basis; and



•

on an as adjusted basis to give effect to this offering and the application of our net proceeds from this offering as set forth under "Use of Proceeds," including the repurchase of 135,326 shares of our common stock concurrently with the closing of this offering, as if each had occurred on September 30, 2005.

        The share information on an actual and as adjusted basis also gives effect to a 5-for-1 stock split effected as a stock dividend on September 26, 2005. The information was derived from and is qualified by reference to our financial statements included elsewhere in this prospectus. You should read this information in conjunction with these consolidated financial statements, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Use of Proceeds."

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DILUTION

        Purchasers of the common stock in this offering will experience immediate and substantial dilution in the net tangible book value per share of the common stock for accounting purposes. Net tangible book value per share represents the amount of the total tangible assets less our total liabilities, divided by the number of shares of common stock that will be outstanding after giving effect to a 5-for-1 stock split effected as a stock dividend on September 26, 2005. At September 30, 2005, we had a net tangible book value of $103.4 million, or $3.57 per share of outstanding common stock. After giving effect to the sale of 5,000,000 shares of common stock in this offering at the initial public offering price of $20.00 per share and after the deduction of underwriting discounts and commissions and estimated offering expenses, the as adjusted net tangible book value at September 30, 2005 would have been $192.6 million or $5.70 per share. This represents an immediate increase in such net tangible book value of $2.13 per share to existing stockholders and an immediate and substantial dilution of $14.30 per share to new investors purchasing common stock in this offering. The following table illustrates this per share dilution:

        The following table summarizes, on an as adjusted basis set forth above as of September 30, 2005, the total number of shares of common stock owned by existing stockholders (net of shares being repurchased by us concurrently with the closing of this offering) and to be owned by new investors, the total consideration paid, and the average price per share paid by our existing stockholders and to be paid by new investors in this offering at $20.00, calculated before deduction of underwriting discounts and commissions.

(1)

The number of shares disclosed for the existing stockholders includes 7,500,000 shares being sold by the selling stockholders in this offering. The number of shares disclosed for the new investors does not include the shares being purchased by the new investors from the selling stockholders in this offering.

(2)

With respect to our executive officers, directors and greater-than-10% stockholders, and assuming the exercise of all of their outstanding warrants and stock options, the number of shares of common stock purchased from us (excluding shares being repurchased by us concurrently with the closing of this offering), the total consideration paid to us, and the average price per share paid by all of those affiliated persons, are as follows:

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        As of September 30, 2005, there were 28,920,685 shares of our common stock outstanding, after giving effect to the 5-for-1 stock split, held by 36 stockholders of record. Repurchases of shares by us as described in "Use of Proceeds" and sales by the selling stockholders in this offering will reduce the number of shares of common stock held by existing stockholders to 21,285,359 or approximately 63.0% of the total number of shares of common stock outstanding after this offering and will increase the number of shares of common stock held by new investors to 12,500,000 or approximately 37.0% of the total number of shares of common stock outstanding after this offering.

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SELECTED HISTORICAL FINANCIAL DATA

        The following table sets forth our selected historical financial information for the periods shown. The following information should be read in conjunction with "Capitalization," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements included elsewhere in this prospectus. The amounts for each historical annual period presented below were derived from our audited financial statements.