Patterson-UTI Energy (PTEN) 2 May 242024 Q1 Earnings call transcript

Ladies and gentlemen, welcome to the Patterson-UTI First Quarter 2024 Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. I will now hand today's call over to Mike sabella, Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator. to XXXX conference results. welcome our to and quarter first morning, Patterson-UTI's call earning discuss Good Officer. With and and Financial Chief today Executive me are Officer; Andy Andy Smith, Hendricks, President Chief

takes website, no include in filings, now President, and As statements. Statements non-GAAP Chief update These are to this SEC the a the and press company's forward-looking patenergy.com could or intentions, are for statements to or prior plans, uncertainties revise subject the call in made The company's over beliefs, Andy measures. management's that Hendricks, any measures company's required reconciliations considered in the this reminder, are will future company's the obligation conference forward-looking I that to are issued as conference refer publicly call. cause statements financial GAAP disclosed Officer. call turn release conference which our in to Patterson-UTI's results The to call expectations predictions on risks differ to targets, this the to financial company or made forward-looking statements. included Executive actual materially.

Thank call. quarter you, to conference and Mike, first welcome Patterson-UTI's

another natural quarter prices, quarter, expected. basins shale production The as to flow-generating strong they largely free our and shareholders. company the first anticipated we demonstrate results even gas segments. The operating weak high-quality in met are U.S. as reducing by results amongst winner impacted drilling is of cash cash with late market. the backdrop, we this continue consistent softening of to generate Against we returning guidance flow. first natural invest being a in Patterson-UTI quarter activity position opportunity companies presenting we and by are of and as for relatively completion. the an to customers The we free delivered free even basins, strong our oilfield with long-term significant And our cash In cash steady providers slightly and the in with a each capabilities during responding gas in unfolded in as of continued and environment product quarter to our oil activity a year. Bifurcation the last expect amount service maintain flow strong the

We and model, the are free that this investing in enhance the of of efficiency over U.S. technologies profile our flow the improve term. the company returns cash long shale should and

and consistent Patterson-UTI and rewarding differentiated this we cycle, amongst Our quarter repeatable defined invest customers, Completions have and product providers and we and service and rewarded lines. Differentiation QX, and in with and our if offering, that the service recognizing our customers again multiple another businesses and believe across and strong will are stands right in higher a has results product top-quality that leaders for technologies the Drilling We activity evidence. delivered deliver are be outperformed. our both best the we utilization

over expect the term. outperformance continue will We this long

the high near in and, time prices. On market's are customer anticipate consolidation should upside we response later remained Weak natural oil year. starting current at over resolve outlook, industry oil gas the in supported basins, muting oil has some basins activity strong oil This macro In steady, modest impacting demand this activity near prices, prices term. the is the term, prices. to oil by in

our the the natural is we view than the anticipated, levels rest gas in in long-term likely gas second activity in held Nevertheless, year. up better particularly Northeast. But positive activity more is remain unchanged. had and basins activity gas on expect we we QX, to quarter reductions with natural are natural seeing far, then gas So continuing natural has through of steady

margins started XXX part Pricing the remaining industry average. on we natural prices will our we although consolidation had rig require been of growing creates respond and contracts segment, we in reduction customer LNG and and recent quarter growth U.S. Services for as demand resilient. as couple beyond. In Drilling we a with potential In again rigs, our remains and gas another power narrative for currently quarter the segment the -- New natural in our have Drilling some term gas in production, industry rigs services the have XXX the near-term for activity. and stable strong sight U.S., of operating exports our drops operating with outperforming count customers line are second to XXXX more increased rig

a we see will churn, a to when that the quarter, should in followed but which transition high very drilling see market second X is fleet the should overall even to create are of the outperform is this flat. high-grading if to and we continue benefit. believe is see consolidation our for the upside and market assets, Tier demand Customer We period positioned starting most our by process be rig with Patterson-UTI

We market are the about taking long the excited term. the shape is over way

the of our On CapEx our drilling to is and service to are front, these of systems the made great Cortex systems. operating our rigs Cortex running presence rig rigs add the and investments adding a on is today the The products Demand automation value to Over our devices. from enhancing controls. system we've offering. seeing of we're technology we edge Key our to continue have high growing portion results half allocated these our of

not quantities rigs by itself. beginning advancing power assist also in power are lithium way the technology. EcoCell grid we fully with our integrate by adequate rig accessible highline to the package our our Often battery power to We is but

is ability power powering assist Grid slash grid can up electricity. to to fully providing compared diesel a a rigs of rig fraction the using of complement emissions the and the substantially XX% even utility are the only power by has rig grid to when assist shown package that decrease the cost Our to still generators.

skill we our give in leadership and the had within group been with milestone NexTier rigs strong should dedication our gratitude integration has a business over efforts. largely team's is another a through operational significant expertise drilling quarter. The The company. Services, process, Patterson-UTI's sustainable for shown industry. In outstanding and the this differentiate extend many and The we complete, everyone's marking and peers Completion for sincerest advantage commitment technologies Our exceptional. has the

ahead, as have the remain to slowed. financial focused entities synergies compared Looking relatively enhance completion This our steady position we on obvious identifying benefits is market as additional far evidence well with pre-merger has creating value. merger performance to the even the is as so that further lead. The been

million faster target $XXX synergy our we initially achieved have than expected. annualized We

fleet transition established equipment in We the a of gas-powered to frac this frac with going power capital-efficient April, During throughout with deployed large for work and equipment to natural our latest team integration customer. manner. continued of solutions to process, our our round the has in a Electric integrated the West month advance Emerald Texas

natural averaging able our new by to almost the of results powered horsepower the electric with to be the XX% equipment fleet. day XX on it for We that we been fleets have remain frac a year. far, middle will XXX,XXX delivery, per So our grow gas. fantastic, be since track And the up, over started achievement still hours of by a to upon great expect

of to deployment. We're similar of and suspect gas-powered with will approach expect by operations. We dual are and following assets. full capital is diesel one the is field-testing natural what horsepower flexibility retiring from older benefits is as any We solution. cementing industry frac excited our are disciplined the nameplate as Patterson-UTI XXX% the NexTier as on also fuel natural assets, our the We we one industry. Overall, other decline technologies, taking we gas-powered others suite think getting including competitive to biggest company seen continue legacy our overly of a we retire the also have assets as in frac equipment, relying our of older business integration more not

they as And higher-quality penetration. to asking We cementing in to our this customers for market to our we leading improve business are positioned what laterals, results. is strong frac. to seen believe seeing continue have market, in are equipment, bifurcation similar well cementing are extending We

relatively think much that will believe already we the somewhat churn book of and year, for this activity the customer be a Regarding has improve of with steady base, rest our should steady, occurred likelihood customer think year frac the terms activity. the We we and opened by a company customers up our on for during this QX. frac year those had activity should point is QX. of in our low calendar gaps and that in QX, QX customer-specific likely We've normal resume some

global These compared and flat the had Smith, segment in record even flow is time, we amount achieve first our our teens optimistic value we for growth awarded balanced Sea, have cash and results even where strategy the about been by growth market. quarter. other results of offerings delivering that customer in has more Products investments strategic this investors. strong to a industry base. significant been first company same run us meeting Products with can consider East. Ulterra expected remain in the flattish revenue free returning reached company is strong in U.S. project. the profitable than are exceptionally growth strength for drilling this set term, business I'll the prospects saw our new generated over the ago. region not in per performance its will we revenue the of first Internationally, U.S., primarily of cash market. The This onshore the for Ulterra's historically evolving international approach. products now delivering sections will relatively this continue a our to the Early growth into we expansion rig optimistic great financial are to shareholder making We on allocation long needs critical a enhancing year well. for turn highlighting example domestic are the driven the high Drilling over an a a Andy year, of We the And quarter is XX% a segment a which participated. of Our the market results to At the market. revenue who the and successful Middle back and strong in it that a of North we effectiveness great, capital have to review new market. we also highlight Drilling continues the perform abroad Ulterra of in up of

quarter quarter. income million for in net $XX million We integration This per revenue share to reported expenses. in reported the the included Total or Andy. attributable of $X.XX was merger common and Thanks, shareholders $XX $X,XXX,XXX,XXX. first

$X.XX for charges. Adjusted also expenses. which mentioned Our excludes the excluding rate and quarter and those shareholders, on tax or integration adjusted expenses, previously integration net assumes statutory to $XX million share federal per million, EBITDA a $XXX income XX% and the attributable was common totaled the merger merger

exited we and Our quarter million weighted QX, the average share shares was XXX million outstanding. with count XXX during shares

Our flow $XXX the million. for first free quarter was cash

the million end returned to During first at quarter, returned million to $X.XX million of to per of repurchase amount and first market XX% the quarter. the we Annualized, shares. totaled $XXX used more X shareholders to including we share dividend than the the $XX cap an shareholders,

quarter, free the post-deal first have our we opportunistically view closed the X program, just Ulterra and our merger of between and we given price accelerated stock. quarters the since the value significant of outstanding. acquisition, the X% Patterson-UTI share NexTier During the on we generated repurchased and repurchase share flow, share shares cash of the In we dislocation intrinsic the

has per QX. for Board $X.XX declared share an dividend Our

our repurchase still shareholders. at shares, expect to XX% and return dividends we of cash targeted million least more flow free to exceed to use XXXX, For which than would $XXX of pay

adjusted look to leases we rig In was Drilling, of per adjusted day a addition capital totaled per $XXX XX,XXX revenue rig down gross returned first revenue Services days. than term Average day from in under totaled with revenue $XXX our to the $XXX of an $XX quarters drilling term other on contracts million. businesses had mostly and rigs retired operating million of decrease was structure. In dayrate more maintain the March and approximately an prior per operating contracts we segment, ending of million shareholders drilling quarter XX average low place, operating day million. The revenue. was XXXX. In gross for quarter gross Contract the rig million average quarter. At term average profit first quarter. $XXX profit our less during with to we Based contracts during profit of we March U.S., was leverage quarter, $XX U.S. adjusted XX, Drilling, Services cost quarter $XX,XXX, the currently to million we $XX,XXX debt drilling In directional of $XX,XXX. in rigs than X and XXXX than for contracts in capital Contract strong our the Drilling XX operating as other second pay Services rigs and Drilling cash future we used Drilling expect which first under over U.S. international an XX, the the average drilling, providing $X is contract of

the adjusted quarter, from rigs to expected For be down gross expect average quarter. Contract day second with we the first XXX in to in XXX roughly compared active Drilling, U.S. quarter, to the per $XXX first rigs profit active

Aside with in higher from U.S. slightly away change changes limited adjusted segment our sequential Haynesville, fourth first jobs million Drilling a revenue revenue other Contract was lower in the impact for the quarter. Reported totaled we of compared from Services and shift of function with relative pricing of to $XXX Most first the the profit some down quarter in gross quarter. profit million. to to activity expect Drilling, from the Completion adjusted mix in be a revenue gross Services an $XXX

We Appalachia where was are results with our pleased activity relatively in steady.

As Haynesville the expected, the largest the declining quarter. basin was during

gas-powered operating savings cost Our compared sold to be continues a demand high equipment equipment. and out to widening with diesel natural

slow quarter, declined natural Our slightly customers low prices. where to gas its natural start to mostly activity the basins in in second gas response completion continued has activity

with have are planned that Additionally, operating a in schedule. fleets we the dedicated few gaps

the with customers approximately million. We quarter, quarter and activity of expect long-term completion activity drilled. after second the profit resume are dedicated Services For adjusted $XXX we our an as $XXX revenue gross pads improvement Completion in of in million see around the an third

perform in U.S. record revenue Ulterra which included that charge the quarter million, in as were First $XX up the company bits million our increased operations The in was X% again closed. with gains a was the totaled the rig improvement for the Middle adjustment million U.S., gross profit In Internationally, the first costs accounting purchase during revenue of Drilling largely sequentially. East. Direct Products Drilling depreciation per of $XX well. Products share continues sequentially, saw value operating the transaction and very an associated Adjusted and reported quarter. the $X asset drill in the coming the from $X same improved million. revenue a market on to time noncash amortization quarter, segment step-up segment price industry at books hit Ulterra with the by

noncash charges reduce will We expect likely move XXXX the and as impact be we of these thereafter. will negligible through

to For largely in be internationally for results adjusted the profit. $X million totaled spring the quarter, quarter we quarter. revenue the $XX second growth the expect Drilling Canada Products gross first see to typical seasonality roughly million in with in offsetting with line compared breakup. Other We

million. expense selling, profit second first gross first other expect and administrative with was We to be adjusted Reported quarter. quarter flat the general and in revenue the $XX quarter

$XXX for For consolidated first QX, we million. impairment basis amortization totaled expect and expense the a million. total SG&A expense On quarter, depreciation, depletion, of $XX

we quarter, of depreciation, million. impairment $XXX approximately expect second expense total and For the depletion, amortization

in $XX $X Drilling Completion in Other Services, million, $XXX million in million Services, Corporate. Products total $XX QX, and including CapEx and was Drilling in million During $XXX million

roughly we CapEx For total the most coming CapEx decline quarter, segment. second in sequential million $XXX the a expect of Completion the reduction Services with in from of

We less. annual will be $XXX CapEx spend expect or million our

to maturities convert free of needed, $XXX QX not to our hand. until XXXX. We have adapt at on expect we any to credit note We as cash of EBITDA continue our focus Our cash flexibility XX% with maintaining on to senior facility as as in market to XXXX. and on revolving nothing adjusted conditions remains million well drawn closed least flow do

quarter, in in first the what second saw of We quarter expect the below strong generate likely slightly we quarter. free cash to although flow another

flow of Completions track in of long cash our have XXXX, more have a time, returning flow our have of our efforts has evident, realize to Since relatively We improvement during substantial time are record most free are that XX% investors. free conversion. achievements our now we steady improvement team's is Services more turning returned for to exceeded There of opportunities. and of enhance a cash investors. to Over The are we ample challenging cash to cash shareholders. In this which in we remained to the at flow complete, of start we more finalized, same its synergies seen the additional committed largely than short time than to revenue performance. the free the in still the and resilient back since have was conditions. annualized the our Patterson-UTI segment pursuing million flow our past, identifying giving we're we than integration goal free EBITDA amount our in market and achieved Completion expectation. frame adjusted optimistic a the cash between room X synergies is $XXX business, strategies transaction. We our put, into NexTier announced Simply the and cost have remain merger despite that integration and significant our months operational actively to committed The and we

to our the We I'll our confident now over call back are abilities in shareholders efforts. additional for remarks these closing through value to turn Andy deliver to Hendricks

Thanks, Andy.

very to gas-fueled drill and natural is Patterson-UTI be first XXXX to prices bit dynamic. technology majority positioned XXXX control change activity. There market, pumps, U.S. to for discussed, supplies analytics, well on The market today's including am oil basins the electric relative no vast our rig technology on all more the designs. placement constructive drive using commodity and results price continues for drilling any have new still frac that shown flow. automation, crude Oil or we've in in entering of generate and the of industry As continue the demand our free will strong visibility were current the strong substantial with the strong, additional stability for of of quarter I there cash

has As have of for successfully more million. than similar our Patterson-UTI teams all better companies Patterson-UTI strong although markets, like and last our for in the more all some months market. well, work to service demonstrated this all we investable to over market a hard the in pricing overall year disciplined, a for of last believe how has has over the position. up the achieve U.S. seen years. We in to company operational held X the the thank the targeted the our where gas a in historical industry sector activity become and softness translates synergies environment $XXX integrate I'd remains in their better and across

share continue on focus shareholders $XXX capital-efficient grow will share our through that and through our share buybacks. repurchases, market our high We returns, a reduction to and ways a this return and least through million regular to in cash in in return and mean capital earnings expect flat steady year further dividend share We still profitability return growth count. per dividends to at on we also should which

the they energy Tamika, to like hand to men world. I'd women it that, do for hard-working we'll Finally, provide to at to the to like and responsibly back what thank all Q&A. and for lines I'd With the Patterson-UTI open

[Operator Instructions] is Lemoine Luke of line the Your from first Piper Sandler. question with

about integration are you where a little within talk your with Could frac? wellsite bit you

Yes.

of what frac had at premises was one us on the is that big merger. of Patterson-UTI certainly So the one the fleets integration essentially of merger the vertical services before buckets to the of we are that and synergy the

that what is a systems, excited the We'll frac don't truck. perforating. NexTier, $X real they've the accomplished possible. waiting really over as needs that working efficient and is wireline said million to everybody, sure to as benefit about years, as integrate oil So before, ability you wireline essentially on be with And make just the to like base it especially wireline to $XX spread million have, everything I remind

when that which and And large of you you the we up we're pads sure fleets volumes to Next trucking frac need jobs. waiting Logistics, is sand, to operations, about when both those to required sand always of how sometimes delivery to sand, that, the up want delivered we you whatever have is be hold very stages have think on frac, able company our more be are size, simul-frac we Next day. have the per which are make particular dry those need and Mile sand, number to that a hold of sand for never it, wet substantial delivered, doing that never

for the wellsite, CNG list would basin. can we to increase the by where that natural at power that We wellsite. the that wellsite. we able being of blend gas, and do have, blending And the We the be on and gas CNG the efficiently and create power we can what that percent systems deliver in substitution. us Next to CNG actually solution does can the of at the we manage systems fuel can

fuel So more for in by we can field. gas. the can also reduce We natural reduce emissions burning costs customers

of So real-time higher in do and make to general, we to field monitoring monitoring get in per we the and the next on number we equipment. maximize stages status because that we analysis on have stages substitutions just get. of uptime predictive need the the per the equipment believe the companies. After that, week sub the trying that maximize and month to changes when we other than We're got systems, you've and this capability equipment. We're we're

had completed normal year continue worked just all on pre-merger fleets I these that. had ongoing days we we to would it's we early And and through we'll part the to the each into it operation we for out. wins several add still so It's the really But at those integration. say essentially rest and process of an the continue roll of year. the and it last as of work through Patterson-UTI

and a supply and on would and wellsite pretty expected $XXX we would about add that the probably side, our on early we talking the on we bit, number broader a sort to overachieved sort in probably the that sales X/X about X/X I that we've be of million would largely are get, backdrop. synergies said SG&A chain, what bit to of Yes. integration SG&A Recall X/X thought integration, the under chain, that's Luke, wellsite little to I close that side. on. that due but integration little hit market say of supply

So conditions market we've we as there improve. got additional as go opportunity forward

I increase the opportunity think out more got we've amount we really to that. get of

frac, And about both in fleets basins talked well? XQ in the Is then these up be realize from just it's dedicated for And early now? Andy, being kind as oil gas you XQ. but the then XQ you Okay, XQ gaps and this in well about XQ. on point could above of this as natural helpful. I good that's talked XQ? Or starting XQ or between a be

have have we QX, our where of in completion running has more the one space than drilling So in up bumping the rig. some E&P against efficient been actually so we're white calendar that that customers we

it so place And looks inventory we'll like the in with have teams, discussions in more in QX.

work in rigs steadier just So those of and QX, we'll then up we're frac we're drilling situation fleets. -- we're bumping the have in in QX, where out same a

of the from is with Raymond Jim question Rollyson next Your line James.

on just Andy, you there's 'XX electricity activity guys actually as both on few and gas drilling on this we we have big years But about will go like the think both just which the mentioned seems curious, believe up been beyond traction, kind into LNG going view rapidly into this the condition. of on the next any soft this people seems and for much But gas how the of be front market demand. especially kind going of the has pretty for year. and next the seems and Obviously, are? I'm on be to of to to tighten paper like and tightens roll where picture markets, your frac and center-driven year gaining soft focused topic. impact overall implications we market are been roll probably just do some it Have need into demand pretty the here side, put we what gas term, in volumes to the required into year, curious, pencil data produce as as -- change it to we're the you activity setup it's a late, next the been based that is short estimates but popular next you on thing.

Yes.

activity we've the which natural in Haynesville, of stay increasing a been We why visibility rig talking is have gas don't, along all Haynesville continue to on natural the plan today, the about Coast we another So increase And of soft. We then, things BCF in any production the This pipelines the to have against customers year, have we've these Henry got get from gas were in end for days. the gas seen Hub. natural associated essentially that the of start supposed Permian Gulf or course, gas feeding have 'XX. to us do gas to Permian, coming competing and to into the adding we some coming for in in out XXXX.

Haynesville how other day, our trying what were we're the takeaway of gas? Interestingly that Permian? like now, I we was understand terms talking look does think the to more discussing one the right does pipeline it customers just capacity coming And all to Permian. against of from I from enough, and in compete

to E&Ps Coast coming all gas that exporting the still hitting going especially discussion. XXXX require there's data in Texas to at going of gets plants coming for Some not time, California center with negates the takeaway the to coming California There's more gas. Haynesville need be Gulf contracts The Permian more the And that Coast. going the that utilities LNG. from actually for the strong is apparent Permian natural natural from have into U.S. is online, on new and the place for forward, Coast going Gulf the so and It's have the gas. to natural Henry Gulf to same the demand enough is Texas not pipelines the gas, whole associated is Hub. over and gas

seem So is certainly increasing gas it into 'XX like does that the and time be activity going some to Haynesville required in going 'XX. start to

data for and it's all Gulf Permian happening centers gas exports, in to I'm structurally, the for what's bullish area. over so up the it the from so And sets well with that It in XXXX with with California competing U.S., LNG need not increasing going structurally beyond. natural for the Coast

how kind of switching down the that's the trended have just related time forward, cost time over did the the up just rig but side what host part bit, for ] whole costs actually margin maybe [ that Yes, obviously second you what Drilling -- this thinking. the a beyond in second your I in first Services on in are was about quarters curious driver to little going they business, was But quarter. gears and several notice of quarter. drop, ticked daily And XXX just the I'm guys also U.S. for margin for reasons. thinking quarter a

Yes.

Some to thought would. rig is held it related our we count, and change first rig it count in in the the quarter up of than better

so where do but think big from we we couple are not lose we QX And rigs change. into more going a today, a

flat changes if see rig and basis on relatively count. the because are rig the But essentially, a flat you had up think I So going a kind to of down. in our still count costs quarter-to-quarter you of moving they're

then We maintenance activity as will and see well. up comes activity up as back moderate CapEx maintenance back as CapEx moderates come

line So there in in strong producing we're think all, flow. cash still all we and free

to is question with Scott Gruber Citigroup. next Your remind of

from to be XQ count the is expect So XQ that Andy, here we level, margins do flattish and as side, flattish on in XQ? well if your staying from rig rig

that I QX to like we're and was the time again. a it's somewhere bottom in completion likely is, margins rig projections I year, think different are rigs down seeing QX. what in to at I couple said, bit whereas And looking little more going coming frame we're QX, this of have a on count just that And Yes. side.

completions different earlier, little less mentioned space. bump I going As in their a where circumstance had to see white we're up a activity QX bit with

So rig bottom But across for QX. the QX of QX, probably completions side, is it's on kind the us. for

on and XQ. curious, of just half? the completion seen business you you you the have of oil highlighted on the guys? second Got to steady But if on been the you. a hopefully you the the as recapture obviously, in out, of bottoming business the will and some side Texas do well? impact some reduction weak you activity in path And that business side obviously, side, has And gaps guys side, pretty share schedules see the for today, is then that the have, in Or in that gas

Completions U.S. market into been about oil little But the higher relatively in in which bit, than in being I in bottom Everybody's the likely they we but the see gas believe it's the oil QX, it drilling just We're why what is the just and Yes, is more I get Northeast Structurally, needing basins, kind happens back rigs transitory. some of back for that to efficiency basins. just balance, and decreases remain in bumping But across today. steady is that plan against market the going steady completions, talked then outside steady up a of XX% Drilling. that's we've think the inventory. to QX QX and of oil, Haynesville. in we oil the and seen relatively moderate

the with is of Petrick question Sachs. from Goldman Alexa next Your line

is we free wanted payout? think flow be through cadence I view standard touch How should then about cash briefly. when XXXX? should to And we going the share repurchases capital on returns of something about returns of forward this capital level as we thinking

Yes.

least too year, committed at cadence XX%. the mean, don't This of dividends at how we're sort intend combined to and buybacks. we of million I I buy we've $XXX terms obviously. least stock, between of to much, returning committed want to returning back In forecast to

So an to too do those we expectation an of can want And still as those but parameters remain too that. We'll again, opportunistic how to much then to don't we're going sort and I we've give to commitment much expectation certainly stay exactly want you. into forward, within that give best going I of as don't going given levels of XXXX.

we do expect to return. judge to that. at are We committed still have the XX% how the and to we'll But time just

that's to strong cash that over free the few structural in we've The we're seen part oilfield a the Yes. shareholders. just the services, changes seen flow position oil good with is level really and to that exciting years cash increased market of and that in we've generate in me return to last the discipline

ability a least dividends free good said, what give in to really period. to this at year for confident and as But XX% our our do we're shareholders. flow this shape is Andy multiyear to us at And commit buybacks. cash of we so returning to is And still through to $XXX we mentioned, million want that for in least back market

amount that stock it's free unique said, operational because what time, the At for we generating touching would is is I good we're it we backdrop situation have. in think right expect now flow. be, just our a we what of not the on us a given where of to just Yes. Andy cash same bit pretty a price mean,

And an so shares buy in a it's of great think environment. opportunity this back we type to

briefly, And about Okay, been you industry with opportunities think M&A, do that's you this any incremental acquisitive. are very then M&A? for picking historically How M&A on just helpful. all you've thinking up? very And technology-focused then consolidation there's

the directional over and the between contract the lot opportunities international we're I in sector We're now wireline, you growth across We sectors cementing, happy working gas it covering we of have focused with general, and we with integration. completions, some all structure integration a now. busy we've America. And last been months, have systems. mean, bits, in it, and natural that drilling, still those drill company drill bits. the cover X on So year-plus, right of last power strong name on drilling, really right North the Ulterra for very

in good really just so we shape. And we're think

more have is you people "Hey, in you the answer asked need have there times, we is And right anything the no, believe -- need at we everything now. that So company?" there's that

that space consolidation I probably integration, to to there have see opportunities than when running see. But caps have to we do what to and market you the We synergies. And continuing capture continuing today are. will the into going There the we small wait the in that on get just have in I acquisitions do are think especially be be come sector. you really more that relatively companies in We'll smaller and past, together, year. in the just what focused there's forward. that done technology companies previous think the room we're done may for we've

together of see companies you'll create to that going pull very some to positive the those find and market. be themselves think new I opportunities for structurally entities, and that's

I'm going think earlier, market mentioned only the actually of structure upbeat I improves I forward. today, As it the and about

of from line with Your Barclays. Podhaizer the Derek is next question

that we gain Maybe on and going is if Services. in repeatable about expand that saw $XX Wanted to it's ask forward. million Completion what that could you if

wouldn't with say I and we legal got a We Yes, settled event. suppliers one settled. it quarter finally the that it's This situation into of it's a forward. onetime in repeatable our going was

the Got go XQ? top call to asking go you have back between XQ and to perspective, picking fleets it. or work, we levels Lou's just that then fact And the maybe up Services of fall to utilization back the somewhere the going question back first to third Can gross will just up about a where profit from can at in Completion quarter get quarter. it

from they're looking been next how in customers I our actually back you're to how think at is getting because what now improvement see over and get E&P can short to efficiency I levels going the we of inventory. quarter they're they've the year some think frac much first on

here some that by we inventory E&Ps just seen some keep in that so the And calendar. the there drilling frac spread. that's to white It do front adding or increase can But to do them actually able that. of have see And we'll I need they takes the of space what rig that. out capacity may of just you so be of think a

that. one, around appreciate just Got last update an e-frac. The it, that's helpful. I

early that about to there. Emerald e-frac Any know just on by like? do multiyear Just payback about power help you put expense, results, us you buying program out off, I benefits Can seeing the like are your indications leasing here? XXX,XXX you going horsepower be are or contracts more understand are CapEx? R&M getting you're you're you so the midyear. power? Sounds out you far. at another of maintenance What looks discuss

agreements multiyear long-term getting have drilling customers who today, we're So programs. with

fleets so And about of deployment excited and the well systems. that is that has gone. really Emerald Really the for deployment new how

I earlier, As operations gone has the really startup those on mentioned smooth.

ways, using are the to unlike are but buying leasing own we the the our the equipment probably interest power because power used actually others are feel who frac in the out it we frac spreads, gets where and actual it's different of there best terms We buy actually equipment in CapEx. equipment, in leasing

our electric CapEx budget actually in see you systems. the are the we leasing So fleets spreads but frac power

Arun question of Jayaram line from Your is next the JPMorgan. with

a follow-up. just maybe Andy,

comment XXX% the sounds And You around have of thoughts on e-fleet always pragmatic some that incremental technologies. regarding like, approach if each a of discuss guys fleet and could I the taken pros you cons at. was renewal. could it you Maybe deployments those maybe wondering looking gas on technology, versus you're

Sure.

to continue is equipment time. retire our projects continue budget with get will multiyear years for we roll and out older this of e-fleets next likely CapEx well as the There bigger and agreements We as at year, the the we the demand So multiyears of part e-fleets few some on same for roll to out the over operators. e-fleets.

is And for that. so there demand

our say, in run. also, I'd operators the like the way certain to new really to we got tied and that have solution But have that You've And they of in company like it's terms same we time, e-fleet." competency the want the to don't of a technology. at "Yes, be single part we

We like some some fuel. some In trucking dual Turbidirect systems direct pads. those pumps. to that of some as jobs do we the that pads. run consumption necessarily still well. XXX% recip on in have use And are drive supplement the into engines for flexibility have drive customers running general, fuel are the don't And have there They to distances with all dual those We some we gas on jobs. gas substitution on still on sense. make CNG some clients that gas cases, don't the some so jobs. But and natural on out We increase gas

do. It's Tier is going be the solutions. see of to multiple part a X a I large of what so going still part and to strong market you're think we And

us sense depending for customers. recip, the gas then basin on it experienced drive the newer other all those add to what gas operating approach see natural for direct technology. to XXX% we new But makes reasons add the generators. And see on pumps a in take spreads continue balanced the pumps You'll to have to tied direct be and electric drive you'll technologies, turbines whether or we'll us various different systems,

follow-up. quick A Great.

at on dynamic, Andy, continue the efficiency lot the the pretty given customers ability drilling cycle touting advantage philosophy times. your pumping with achievements. gains side, that to efficiency a And are to of faster per your wondering, Are remarkable to win the you you're us gains working ways On to And E&P XX-hour to on providing from these of on shifting harder. equipment continue and we some talk some performance-based take contracts side, see the adapting to daywork? contracting E&Ps day, we your harder regularly to gains, XX- of wellsite? in was hours see this efficiency you're structure more I

get the with by paid stage. Yes, I'll completions essentially start first. We

the the week, out at the in month, stages efficiency terms for -- faster per of better that we us. capital we is there So per

onto natural gas our that's can Power there, around flag Solutions a arbitrage we revenue generate and And in So that on fuel the of certainly continue as the play win. get fleet, prices the and we on part integrate Power additional Solutions, savings. to we

On place. we side, contracts drilling some performance-based the do in have

We to things. with other well. happening various are work rigs the also as additions on for technology continue that operators There's

we technology. that of the addition do push so through up And per believe to revenue we day continue

report day. One the companies, per oranges you're of revenue is different all different the really apples companies services when and because that across to things you're looking in consider

Contract rigs. And When Contract But believe so in services Drilling up on are of without day certainly earn blended there other work, rigs Drilling we on the our revenue per we in. top quartile the revenue for you we're out what we business, for day giving when report competitive. we're that we're bidding very the we the do there per

with Gengaro Your the of line next question Stephen is Stifel. from

me. for things Two

they Have purchased first, next or year arrangement? at mentioned lease of The lease-to-own a to least you used on owning the those I'm e-fleets. still you of those sort a sure pretty e-fleets. are couple

We We leased small No. some some have equipment. equipment have still leased e-fleet. leased we've leases, We any never that out. of some never bought but did e-fleets. We an

Okay.

apologize, some on I of was arrangement. I thought So that there type

about on So calendar. has at the white from maybe the sort the in mentioned and think efficiencies When a little bigger picture just how of on that side of you frac perspective, into space played we the a kind outpacing the about rig market the the term, necessary crews of this should completion on we think number the count? the side does rig gains side medium that way completion point? the are And efficiency impact relative to of sort

the an I think will in see happen rig count. is you'll increase what

terms the companies like in planning And over operators that what on last efficiencies that. we're of improve were catching inventory, they ourselves seeing years. think couple up of I are

like so drilling rigs. add that longer because a mentioned that see I is I may think, part laterals. we're And few earlier, of you'll And

on rigs we're we so well. the the locations in were than the longer a as bit And past little with

what laterals in longer is you completion as past and And wells multiple bumping a than against drilled the when add we've so the pad up on up it.

Your Bank of line next question with is from Saurabh the of Pant America.

What development that? can to give standpoint? on what about bit are doing we are side us ask just some talk the you over you And teased from first. in-house. couple e-fleet little should I'll if you if us one of the quarter, update on and Can next Last in-house Maybe remember correctly, that? I you years developing expect a a technologies little you

So have e-fleets have teams that been our we talking at The think running, teams, do I post pretty houses we And do say the the drive and our going cable have plus power for built that's and teams and that in teams should completions division systems running and new. frequency our been current battery electrical and systems actually have management experience variable then some what rigs would systems. And thousands the been past of when drilling still forward engineering manufactured control that and say systems in drilling systems. that look of where I'm side, and our merger, e-fleets the the have for with the in and power looking drilling I have other systems future. about like on backup even the AC we've experience within induction our NexTier operating we motors dissembled e-fleets

take look all a And we unique fresh e-frac position those in together look think putting like. a at needs us puts teams to so what to

as from I it say engineer you'll from from am I running. it. manufacture. keep year the been anything it's we And the so don't have posted days, you excited I'd but work and see think that take time we'll been because to us hearing new what does teams But early this through workshops I've still

flow that's we within unchanged. Maybe I'm it the else bit I helpful, the Can Andy. of maybe No, one, pieces help reiterated at to then about least we XX% Andy you Smith, that? a that know cash Okay. you working on you EBITDA conversion. moving little that should free know mindful color got for a CapEx conversion you. as be And I think outlook. that's capital, little Andy, on us to give taxes, anything number. assuming cash

Yes.

itself our worked last off relatively in from a So of year, quarter capital, throughout prepayment That will has large quarter. Recall, working the again, year. fourth if recall, first of we you fluctuate in the received one the customers.

the receivables second of that what a will it's course large rebuild Now customer the quarter. again, happen from will customer, over some

what So get of comes fourth pay and that the I the working this than the of not. quarter quarter quarter. but advance to quarter, year we'll had through sort is depending first the capital same fourth see then back do. performance kind would if they first little to We'll they in expect that in a the then the or in that Historically, of second lighter the decided decide quarter, to sort upon third. And we

of less terms source a of so see be of a our capital in free cash in the working bit will and that source counted So But fourth the that on that's would quarter a not of third second more you'll little and really would in of cash then been I be flow quarter. expect conversion, it kind upside.

Okay.

Okay, year last perfect. And taxes for year? mindful be anything Andy, of, on cash this versus should we

$XX Cash of somewhere negligible. in million planning taxes $XX cash tax. this to are the of million We're for year neighborhood

question Syed with is from next Markets. Waqar Your ATB line the Capital of

of couple of Andy, active over has pressure quarters? pumping in changed last terms the fleets, that how

quantify and because actually had do we've some it's to Well, and fleets them simul-fracs to together take hard fracs. to put

fleet count the basis actually on And so the look internally changes a month-to-month as we numbers. at

how And hydraulic in so to we look more terms of we really business. horsepower focused the try on hours at stay

it out less assess much to time And we hours number hydraulic fleets interesting of about on try and have things. looking horsepower we're I do out volumes because takes calculations using rates, that like to location doing we're flow how business, pressures, the account into said, and much on we're And that how many there. horsepower how more so active there internally, when to becomes have we an out

the Or a and in it well are similar the horsepower changes utilization? if revenues different the that has So ask remained that less horsepower How in set way. horsepower I some the last factor of of is quarters? relatively Has of maybe demand? more aside manned a all in weaker it couple as changed you've because having more of

Yes.

electrics. market, a that that third the and anybody we you across in all kind that little that bottoms seen has to come really we're bit bit in just in softening look the Total of the the of inflection new active industry. a horsepower expect of in at you've and pricing quarter, running, bit softening for the an demand not in also the the if of down a using and little see little quarter. second we're still So strong horsepower there's because But I

And the then Tier and and Okay. you -- DGBs diesel? could with e-fleets do Tier you like what's dual mix fuel TX color us X a of provide X

Yes.

We natural of of fleet XX% And have gas. burn XXX,XXX that horsepower this overall, our about year. have to we'll it's

that don't year we run you'll So you away and Tier drop ability about and through just leaves X just that year, see kind have of dual the progress are out. next fade as this XX% And fuel. to with that that

anymore. believe, we reduce just of be time, over need we I overall we don't go. we're amount going us, disciplined that see horsepower as And X You'll slowly about add new just Tier because how the to technology

with the from is of Capital Markets. question Keith next RBC MacKey Your line

Just wanted about to pricing. rig ask

some they side? impending are in how Andy, there to consolidation, than stable rig on has are get cycles. conversations rig little a in But use Specifically, discounts on Permian. and a come been more that to things Certainly, have is especially have the unfolding been rigs. bit Maybe might of looking bit quite down the count prior

how So mechanism your just are that stability? of that's your what what you as price an appropriate is curious those appropriate And message driving market or price conversations maintain to unfolding. an maybe this or in view some

Yes.

in that about X the I pricing today stable. think super-spec rig, market is talk what is we you see when Tier

that just to right may rigs And be working go the consolidation so back those not though point. some some you're even at because work with market of will in them now the changes seeing,

and see replaced lower happens, process you'll of back Tier consolidation super-spec. that the tier As drop process to rigs get out X consolidation

X super-spec, remained seen that Tier we've is So stable. the has market at relatively what

from Daniel Your the Daniel with next Energy is question Partners. line John of

bit that would structure of probably is just And a bit believe starts that more Andy, rebound quickly. that year activity improve. we next have wondering think this that those it late likely year. the X to you things And I'm if combo all market and but could little hope tighten a relatively things, you seem to noted I

approach what your So pricing? be to would

along the last think pricing market. there on when with has structurally it's activity look in super-spec how up, that's bifurcation interesting over for you historically, moves typically, Tier few demand -- side, the market disciplined activity. is up. improved in the very the see -- environment, And rig market, pricing increases played seen as when years. you the a the I the is a moves those the you've out increased, rigs that at And have X Well, in it's completion how And

the as ability think as so then to move in And leading same same see up technology at those find pricing going higher the well. I demand, you're the themselves companies players time have to

E&P a I bit harder. if there'd as out pressures mean, think to current that maybe of by despite I ] the kind concessions much. and a industry the be within [ of eke Okay. incentive with little know bit I a $XX sort pricing push more some take sort leading of advantage oil question to but the

over of softened, you're have E&Ps as well. hearing us And couple the last all been that industry pricing I a from there's gas concessions. our in have of some the But as think the calls, Yes, natural got that discussed they've softening think I there markets I our are going really forward. you're this various I to in out, think don't think that where at given concessions and lines bottom we point, to are hearing of you're that hear lot about going when our service concessions have view a think we happened. going especially

e-frac you're move and going see X, pricing Tier in has going X you're point. with stabilized rig at that really technology or or those. Tier that increase -- have on activity higher-end completions I any to up pricing your this And to think

likely get then quantify you are to it? when you X question necessarily you And But in lead you given placing response they I'm looking on that. ahead you'll year. started that of to know components, And and in those e-fleets Okay. next terms expand I not various telling you mentioned times have for the orders? gone what

suppliers. So working with we've been

and as And get next year. our to ability to understand their their into so meet needs ability we deliver we

say us well would next the there no just we've before. that suppliers challenges it with year. real -- and issue. And our no so And for I more mentioned it's teams working are delivering

we on completions of part that and size demand want of to in technology, larger a the terms with Now the that have be we that. a we're company the and scale certainly new with

so measured to And electric next years little other we as way few a will over in CapEx add of our technologies a part of over continue time and new bit budget. the

improve. were to market comment but the that any the Okay. the back by going the completions likely market, also drilling me, made assuming to were about you And space about I'm one to for chance, structure just well? you talking final you as then

you've clarification I I of or market you've think wireline, year public not and smaller the got fracturing, market completions to just over will smaller appreciate the or leaning and start because I really but others. towards some the got And see more companies the together, just was cap hydraulic completions-related X. come companies services, you'll over time, that next structurally improve

At over the further will there the hand any back remarks. presenters for questions. closing now no call this time, audio I are to

generate We're Thanks, Tamika. a steady and thank that are market strong that into to flow dialed the and today. market. free excited to returning everybody we I'd even shareholders relatively in the ability our like about call in cash where really to

a lot. thanks So

for call. today's concludes joining. Thank This you

You disconnect may your now lines.