Q4 2020 Nine Energy Service Inc Earnings Call
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Conference under many of your name please.
My first name as Bianca B I a N C. A last name S. S for Sierra a watsco in November.
And you're calling in for nine.
Correct.
Thank you.
<unk> million barrels per day from peak Q4 of 2019 levels to the trough in Q2 of 2020 <unk> was negative during the second quarter and our customers responded accordingly, reducing our complete lease of spending activity across the U S land.
We estimate that the average U S active frac count declined from approximately 330 in 2019 to as low as 73 in May of 2020, and then increasing to approximately 160 active U S. Frac crews at year end the EIA reported.
<unk> completed wells declined approximately 49% year over year, and new U S drilled wells declined approximately 56%.
The choices, we made throughout 2020 were critical and positioning ourselves for future success and I would categorize this year at the balancing act constantly assessing and managing the short medium and long term needs of the company.
This included making significant cost reductions to preserve liquidity for the near term, but also maintaining key people assets and our footprint so as not to impede the future earnings of the company for the medium and long term.
Our operational and corporate teams, who are facing extraordinary market conditions, while also integrating new processes and procedures in the field and the new virtual world of selling and communicating. Despite this our team was able to remain opportunistic and continue to execute on our strategy of being an asset light business.
Providing the best technology and service for our customers.
Although profitability was down year over year in conjunction with the market, we were able to demonstrate our ability to flex quickly cutting costs and preserving liquidity by the end of Q2, we reduced our head count and payroll expense by over 50% and our 2020 Capex was $10 2 million an approximate.
84% reduction year over year end of the low end of our guidance of $10 million to $15 million.
We were able to preserve cash and liquidity through good working capital management generating approximately $66 5 million in cash from the monetization of accounts receivable and inventory during 2020, the company repurchased $53 3 million par value of bonds for 14.
$6 million of cash on average representing 27% of par value and leaving $346 7 million par value of bonds outstanding and an Undrawn ABL.
We have been very purposeful in balancing near and medium term liquidity needs with the refinancing of our debt our financial team demonstrated great discipline and patience throughout the year purchasing the bonds at significant discount while maintaining a strong cash balance of $68 9 million as of December 31, two.
'twenty and an Undrawn ABL.
Operationally our team once again demonstrated their ability to gain market share growing our percentage of stages completed from approximately 17% in 2019 to approximately 23% in 2020.
We also organically expanded our cementing service line and of the Haynesville.
While we did not sell the absolute number of Dissolvable plugs that we anticipated going into 2020 because of the extreme activity declines. We are pleased with the adoption of the tools we saw throughout the year.
Year over year, our percentage of Dissolvable plugs sold compared to composite plugs increased by 700 basis points from Q1 to Q4, while we face many headwinds in the macro environment, we have been able to increase adoption through both the performance of the technology and the benefits that come with using Dissolvable plugs.
Including faster cycle times, lower carbon emission and less operational and safety risk.
Although we always predict completion tool pricing declining over time, the pace and rate of this decline has been exacerbated with this downturn delaying profitability and margin expansion. We still believe that adoption of the Dissolvable will continue to increase especially with the recent reduction in tool price, which we do not anticipate increasing.
Like we see in other oilfield services.
Despite a year with new protocols and ways of working nine ended the year with the lowest and best safety score in the company's history with the tier IR of 0.30, I want to congratulate and commend our employees on an incredible accomplishment.
The company revenue for the year was 310 point million net loss was negative $378 9 million and adjusted EBITDA was negative $25 8 million basic earnings per share was negative $12 74 <unk>.
Adjusted net loss for the year was negative $118 1 million or negative $3 97 per share.
ROIC for the year was negative 16%.
Now turning to Q4 as anticipated the holiday and weather shutdowns were not as extreme as we have seen historically over the last couple of years active Frac crew counts typically declined 3% to 5% at the year end versus the 2% to 3% or three to five spread increase we saw in December most of these frac of Dick additions.
We're in the northeast and Bakken.
Activity increases are reflected in our 25% increase in revenue quarter over quarter. However, a combination of continued pricing pressure as well as one off items. The vast majority of which are non cash that guy will address in his section negatively affected adjusted EBITDA.
All of our service lines saw activity increases quarter over quarter, but this was mostly offset by continued pricing degradation, which continues to be the most severe and wireline in completion tools.
We successfully completed our first cementing job in the Haynesville during Q4, and do you anticipate ramping up activity levels and gaining market share there throughout 2021.
Company revenue for the quarter with 62 million net loss was negative $35 4 million and adjusted EBITDA was negative $13 9 million basic earnings per share was negative $1 18.
Adjusted net loss for the quarter was negative $35 7 million or negative $1 20 per share ROIC for the first fourth quarter was negative 35% I would now like to turn the call over to Guy to walk through detailed financial information.
Thank you M I want to start with an update on our the liquidity profile as of.
Of December 31, 2020, nine's cash and cash equivalents were $68 9 million with $37 9 million of availability under the revolving ABL credit facility.
Resulting in the total liquidity position of $106 8 million as of December 31, 2020.
We did not repurchase any additional bonds during Q4 and as Anne mentioned during 2020, the company repurchased $53 3 million par value of bonds for $14 6 million of cash on average representing 27% of par value and leaving $346 7 million par value of the bonds outstanding.
And an undrawn ABL.
For Q4 of the main cash outflows related to our approximately $15 million of interest expense for of senior notes and the remainder of our Capex. Our total capex for the year was $10 $2 million a reduction of approximately 84% year over year and at the low end of our original guidance of $10 million to $15 million.
During the year, we have been successful in largely offsetting our capital expenditures with equipment sales for the full year 2020, we spent $9 4 million in cash capex compared to $7 6 million in proceeds from sales of PP&E in the insurance proceeds.
The during the fourth quarter revenue totaled 62 million with adjusted gross loss of negative $5 million and adjusted EBITDA of negative $13 9 million.
During the fourth quarter, we had $9 8 million of unusual net costs with substantially all of them increasing cost of sales are negatively impacting adjusted gross profit and adjusted EBITDA.
The largest of these unusual cost items was the $10 million negative inventory adjustment that we recorded as a result of the rationalization of our completion tools portfolio.
In Q4, we evaluated our completion tools portfolio to streamline our product offering resulting in the discontinuation of certain legacy products. The this rationalization of our product offering allows us to transition customers to our newest technologies like the stinger Dissolvable frac plugs or other unusual items are relatively.
Small in nature and offset each other such that the net impact is not material.
During the fourth quarter, we completed 509, cementing jobs, an increase of approximately 35% versus the third quarter.
The average blended revenue per job decreased by approximately 12%.
Cementing revenue for the quarter was $18 2 million an increase of approximately 19%.
We ended the year with 40 cementing units of which 10 were stacked during Q4.
During the fourth quarter, we completed 3523 wireline stages, an increase of approximately 14%.
The average blended revenue per stage decreased by approximately 6%.
Wireline revenue for the quarter was $13 9 million an increase of approximately 7%.
We ended the year with 47 wireline units of which 22 were stock during Q4.
For completion tools, we completed 14032 stages, an increase of approximately 57% comp.
The completion tool revenue was $18 million, an increase of approximately 29%.
During the fourth quarter, our coiled tubing days worked increased by approximately 62% with the average blended day rate remaining flat.
Coiled tubing utilization during the quarter was 31%.
Coiled tubing revenue for the quarter was $11 8 million an increase of approximately 63%.
We ended the year with 14 coil units of which seven were stock during Q4.
The company reported selling general and administrative expense of $11 million compared to $10 7 million for the third quarter.
Depreciation and amortization expense in the fourth quarter was $11 8 million compared to 11 9 million of the third quarter.
The company recognized an income tax benefit of approximately 100000 in the fourth quarter of 2020, and an overall income tax benefit for the year of approximately $2 5 million.
The resulting in an effective tax rate of 0.6% for 2020.
The 2020 of income tax benefit is primarily comprised of changes to our valuation allowance position due to impairment recorded during the first quarter of 2020 as well as tax benefit from the five year net operating loss Carryback provision provided by the cares Act signed into law of during the first quarter of 2020.
Sure.
For the year end 2020, the company reported net cash provided by operating activities of the negative $4 9 million. The average DSO for the fourth quarter was approximately 66 days compared to $64 seven days in Q3, our DSO for 2020 was 66 days.
Looking at 2021, our largest cash outflows will be our senior note interest payments of approximately $30 million capex of $15 million to $20 million and changes in net working capital, which will closely mirror of revenue changes.
Our Capex does not include any new unit additions within our service lines and less than 20% of the total would be classified as growth.
I'll now turn it back to him.
Thank you Guy.
While we have certainly seen improvement in the market and have passed through the trough. We are still anticipating a very challenging environment. In 2021. It will take time for stability to reach the market and we will need significantly more increases in rig and Frac crew counts to reach healthy levels for Oss companies coming off all time activity in <unk>.
Missing loans in 2020.
We like our customers are still working on 2021 plans when they're in a great deal of uncertainty around additional COVID-19 lockdowns vaccine rollouts.
When demand will recover and how OPEC will behave.
Even with the recent improvement in commodity prices, we have seen our customers remain committed to capital discipline and rig and Frac crew counts are not increasing it anyway, where near the same pace as the W. Gi price.
With what we know today, we anticipate E&P capital plans will be flat to down approximately 10% year over year and most public operators will target of 2020 to 2021 exit to exit maintenance capital program to keep production flat.
This can obviously change quickly and these assumptions are based on what we know today, if we see a significant and stable increase in oil prices, we could see public operators increased activity, but we believe most public operators will remain disciplined and return any excess cash to shareholders or pay down debt most.
Of the recent rig additions have been private operators and these customers will be an important wildcard as far as activity levels throughout 2021.
The largest challenge will be pricing dynamics and margin expansion.
There is little to no pricing leverage for Oss companies today, and the competitive landscape continues to be saturated the.
The recent downturn accelerated pricing declines, especially within our tools and wireline business.
We always forecast gradual declines in our tools pricing market activity as well as competitive behavior has caused pricing deterioration to be much faster than anticipated and the pace of activity increases. We are seeing today are not able to overcome decreases in pricing leading to relatively anemic revenue growth and inc.
Rental margin.
Wireline remains extremely oversupplied management estimates there are approximately 300 units in the Permian alone of which approximately 40% of active it is very difficult the gain pricing leverage in the service line that compete almost exclusively on service execution and with the low capital intensity there is low equipment attrition.
<unk> and easy entry for new competitors.
We are slowly and carefully evaluating price increases and our depreciation based service lines to reach of more sustainable level without sacrificing significant market share with key customers.
At nine we will continue to flex with the market and we are confident in our ability to capitalize on any recovery without meeting significant capital allocation.
Our strategy at nine is unchanged and we are continuing to focus on building an asset light business with higher barriers to entry.
Our 2021 priorities include profitable market share gains within all of our service lines and continued dissolvable adoption of our new plug technologies Delevering the company and ESG we.
We are confident we of the best performing Dissolvable plug on the market today for all temperature applications. We are building of run history that should help drive market share for nine, especially for those customers focused on cycle time, ESG and safety.
She is the significant import and important undertaking which we have and will continue to dedicate resources to 2021 will be focus on internal evaluation, including but not limited to quantifying emissions benchmarking diversity and ensuring socio economic movement for individuals of all backgrounds from there.
We will be able to set goals for the corporation as well as share of our data amongst our constituents.
Our mission is to be greener and cleaner in a balanced way.
Q1 is off to a slow start and weather conditions in February caused complete shutdowns in Texas, where we generate the majority of our revenue and negatively affected all of our service lines.
Weather related shutdowns in February of side, we anticipate the pace of Q1 activity and revenue will be better sequentially than Q4, but we still expect to generate a net loss of negative adjusted EBITDA for the quarter we.
We do believe this will be the worst quarter of 2021, and we are looking forward to moving beyond the market hampered by Covid, We will now open up the call for Q&A.
Thank you ladies and gentlemen, the floor is now open for questions. If you would like to ask the question. Please press star one on your telephone keypad at this time.
I'll call from Asia in total indicate your line is in the question queue.
The press Star two if he would like to remove your question from the queue.
Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Once again Thats Star one to register your questions at the time.
Our first question is coming from Sean <unk> of J P.
Please go ahead.
Thank you good morning.
Good morning, Sean.
So and the start.
Can we maybe talk about the path to positive EBITDA as we move through 'twenty, one I think your comments on.
Anemic volume improvements in the pricing headwinds I think those are well noted.
But what what type of incremental margins can you expect to generate.
The activity is ramping in the first half of the year.
What does that look like if it's if we're just growing volumes versus what you think you could generate if you were able to capture some incremental pricing maybe later in the year.
Yeah, well, it's a great question, Sean we're not guiding so I won't give you a guide on incremental margins I would say that largely you can capture this is both the pricing and volume problem. So as volumes increase clearly that's going to help flow through to the margin and I think generally.
The team is better visibility on volumes than we do on pricing clearly one typically lags the other.
But again with recent commodity prices. We do think that's helpful. We do think of the the percentage of the private rig count will be helpful said, we're up around the 40% Mark of the U S rig count as private obviously as you well know they are not subject to investors' concerns as it relates to cash.
So I think that'll all the very helpful. On the volume that will certainly drive better incremental margins and then the question market. What is the activity point at which Oss starts to gain leverage.
The operators as it relates to price I do think there is a growing concern amongst operators that what we have at the moment in the sector is just not sustainable.
And I think there is a willingness to.
To recognize that and I would say, we've seen that at private and and larger public. So I do think we get pricing amelioration I do think we've seen much better incremental margins and I will really stress highlight and underscore.
The Q1 will be our worst quarter, we had a lot more white space in January than we thought so we had a lot a lot of our specific customers coming out of the gate much slower and as you know with small numbers that white space is very challenging.
And then clearly the winter storm was probably the largest number of consecutive days down we have seen.
In our history at nine so I think again the.
Those things will be helped we also have just internal organic margin expansion efforts going on with our tools, which we think by year end, we'll be able to meliorate those margins up over the double digit level.
The speed of those price declines was just faster than what we could take the costs out of the tool.
But that's forthcoming and we have a lot of confidence in that and frankly, we've done that before with our scorpion composite plug offering where we've been able to hold the margin despite.
25 to 30 points of price decline over time, so it's it's been done.
And theres going to be a little bit of of lag there, but we're very hopeful about incrementals coming into the.
Back half of the year.
Got it thank you for all that detail.
The natural.
Next question, then is the path to positive free cash flow.
Your capex is going to stay fairly tight.
Working capital will be a consumer of cash as you're growing the top line it sounds like.
Interest expense is still a pretty decent hurdle in the current environment. So can we get back to positive free cash on a quarterly basis at some point in 'twenty, one how do you see those building blocks.
Yes, I think again, if you look at the company for 2020, what's really remarkable to me just to go back to this for a minute is.
You spent about $7 million outside you burned about $7 million outside of the bond buybacks, which obviously, we're all discretionary and so to cover down your your capex and to take of 63% loss on your topline and only rip through seven was pretty darn. Good I think this year, our challenge will be to manage that working cap.
<unk> built.
And the pace of that and are the speed of that I think is really going to be I think there's a lot of pencils cracking on budgets right now again inside of our private operators and maybe even inside of some of our public.
And so how fast as activity come on or not is really going to dictate the pace and speed of that cash flow. As you know also obviously our ability to leverage price.
And start to get some price will be very important as it relates to generating net cash.
So I think you know we will be very prudent with capex will be very careful we've clearly shown our ability to put.
Put up major fences around the cash and shelter it and we will do that this year too.
The the real challenge here will be managing networking capital build that should the activity spike the way some of our projecting.
Understood. Thanks, a lot.
Thank you Sean.
Thank you. Our next question is coming from George O'leary of Tudor Pickering Holt. Please go ahead.
Good morning in the morning Guy.
Good morning, good morning.
On the the commentary around private operators, we've noticed the phenomenon to certainly in the on the rig count side of the equation kind of drill down on who's adding I wondered if you could frame how much of revenue are job mix for nine comes from those private operators as we sit here today.
So what I'll frame for you that 70% roughly 70% of this company's revenue comes out of the Permian.
So that's just an important fact.
When you think about like the Haynesville of course, we've got a lot more of private operators. There that we work for the point is is I think the private operators could be of great driver.
For incremental revenue for US we are of good diversification between you know large larger.
Large independents and Super majors, all the way down through private so to answer your question, we will get a kick of big kick if the private decided the speed it up but I don't want to be overly bullish and I do think there's a lot of third degree burns out there.
And I think people are going to be careful about risking capital.
And I think theres going to be more of a pause than we've seen in previous in our past history and the oil patch.
So again, obviously as we all know OPEC plus is making this market for US right now and I think last year March 7th none of us were anticipating Russian Saudi opening of seconds. So when you have something looming over your head the can change within 24 hours I think it just causes pause and so really important to keep that in.
And I think that goes for a lot of private operators as well.
Great that's helpful and then.
And the.
Margin expansion with respect of tools that you spoke about in one of the Sean's questions. Just curious the driver there the more the manufacturing process driven lowering the cost of input materials kind of what are you guys doing specifically to reduce the cost of the margin.
The completion tools side.
Sure.
Yeah. So just to reflect on that a minute of of course, we took a walloping 10 million dollar hit there on inventory in Q4, so it really can fleets the margin and the profitability of the corporation.
As we always do we first want proof of product, we want to get that product downhole, both on the composite side as well as on the Dissolvable side, we want to make sure anything that we're doing that's new is working first and then we start engineering down the cost and that can be through minor design changes it can be true vendors.
And so those discounts are showing up in all of those ways. We've codified that internally, we have great confidence in it and it's again of material change in margin.
That I'm very confident will be reached by the year end so.
That's that's forthcoming we're also transitioning our customer base to some of our newer technologies, which is margin enhancement from some of the legacy products.
Also some of those that were quote streamlined inside of that inventory write down so you've got a lot of moving parts. There some of that George would've happened more quickly.
If we didn't have the market that we were faced with in 2020.
So.
This is it's a little bit slower than we would like.
But again lots of margin enhancement coming through the switch of new products engineering down the cost and working with vendors. So we've we're very pleased with what we see when we put pen to paper on those products by year end.
Great I'll sneak in one more if I could you guys touch so many different parts of the Wellbore from construction to completion just curious if you're seeing any notable changes in well design is as we look at kind of the runway for 2021, the year over year versus maybe a more normal year in 2019, but anything you guys are seeing that's interesting.
It would be.
Much appreciated.
Sure I think we're not seeing much in the way I would say not material changes in well design. We are seeing of course of operators continue I would say to push out the lateral length and want to play around with three mile laterals off from an efficiency perspective, youre seeing folks play with simulcast but other than that George.
Not seeing any new kind of start of sprinkled across here.
So I think.
It's getting it's getting back to normal and.
And figuring out what the spend should be for our customers, but we're not seeing material changes the completion designs.
Thank you Ed.
Thank you.
Thank you. Our next question is coming from Chris Voie of Wells Fargo. Please go ahead.
Thanks. Good morning, just maybe another question on completion tools, obviously, it's a big driver of your margins. Just curious if you think of it was kind of pricing decline.
If you could get to maybe prior cycle margins, which I think were you know of 30% plus maybe 40% is that achievable or would you need really strong growth and activity going forward for that to be to be possible.
I think it's achievable I think it's going to depend on volumes as well.
So again, you know in completion tools, there's a bunch of different aspects here, but obviously as volumes increase you'll get more leverage through your supply chain.
So that's that's one aspect of it I think the margin. The margin is something we will see if we can get get those margin back to where they need to be as.
As far as pre pandemic levels. So that's the that's something that we are also wondering about its a very good question as you well know we never anticipate the price coming back.
Our history over the past eight years or so with.
With completion tools has been that the price comes down it doesn't reset higher. So then therefore, you're going to have to get it through margin enhancement on the product and our volumes and leverage to the supply chain.
Okay. Thanks, that's helpful. And then curious on as you mentioned for animal practice, obviously interesting area now that potentially could grow.
The vet in your mind kind of dovetail with an increased use of Dissolvable. So just curious what you think of your participation is on the those kind of jobs and if thats, the opportunity or where kind of not really impactful.
You know I think dissolvable of where that just fits into is just the broader theme of U S operators striving for greater and greater efficiencies.
What it just reminds me of is that every time folks question, whether they can get more efficient they come up with our service and E&P come up with ways to get this land more efficient. So I think there's all of those play into the efficiency of certainly.
We believe that especially with the cost of Dissolvable is coming down and our incredible science.
Science behind our dissolution of the predictability of the the solution is so darn. Good now that now that price point is coming down in some ways. You could you could ask why would people not use of dissolvable because the time efficiencies created are huge and of course, the green nature of Dissolvable and the lack of safe.
The risk without human beings sitting up there drilling out plugs under pressure is huge so I think all of this points in the direction of increased dissolvable adoption and as painful and hideous and Wicked as 2020 was the one thing it will force. This company to do is live within a very cheap dissolvable price.
And drive the margin.
And that therefore, we think in the medium term drives adoption of the Dissolvable because remember the hurdle there was always price, but so it doesn't directly.
There's not like a direct correlation between simulcast <unk> and Dissolvable, but I think generally of points of these operators searching for efficiency.
Okay. That's helpful.
Maybe I'll squeeze in one more here, but I wonder if you could comment on the M&A landscape. The just the tenor of that Youre seeing in nine so appetite for any kind of combination.
Yeah, I mean, I think we certainly our history has been through organic and M&A growth.
The team is always eyes wide open to new technologies and you know again, we did a really key acquisition of the Scorpion plug product in August of 2015, when nothing seem doable in the next few quarters booked as dark as they actually ended up being.
It's a it's not impossible, it's something we're always pursuing.
And I think generally you know of course, the oilfield service sector.
<unk> that we've got to get.
Sunpower and some margin enhancement and Theres a lot of us out there. So I would say, we're all considering a bunch of different options for going forward.
Thank you very much.
Thank you. Our next question is coming from Waqar Syed of ATB capital markets. Please go ahead.
Thank you for taking my question, good morning, and Guy and Heather.
And could you comment on the international markets.
What's the outlook there.
Any.
Further market penetration there and the.
Latin America Middle East.
Well. Thank you for asking that question we are in fact.
So if you'd asked me you know.
You know when we purchase Magnum, if we would be selling dissolvable, Vince the middle East I would've said Wow, that's ambitious but we are and so yes, we are getting market penetration there and we are also.
Working on some other tool strength, which I.
The specific about specifically for the middle East. So that's an area of great focus for US we do sell through to Argentina.
And so that's something that we're also excited about.
I do I do expect set that growth for us.
Okay.
Then of in terms of.
Of.
Good day.
U S E&P budgets versus your own revenue projections the fee. The look at your quarterly run rate for last year. It.
It comes out to be able of $78 million.
And looks like that you know if you have another 25% type of revenue growth. The first quarter could look like that the quarterly run rate from last year. So your revenues should potentially be higher year over year, even though U S. E&P budgets could be lower is that reasonable.
You know, we're not we're not guiding forward at this point in time.
So I'll just I'll leave that question to the side I will just remind you too of course as I said that.
The Q1 had a couple of different factors of the slow start in January as well as the winter weather storm, but.
Again, we'll leave the forward guide to the side for for a minute there.
Sure.
But when you said the the piece in the first quarter would be higher did you mean that if you grew at 25% of the fourth quarter the.
The growth rate is going to be higher sequentially in the first quarter of my misunderstanding that.
It's guy here I think what we're saying is just the.
We're seeing the rig count improve and basically you know activity levels are increasing and so putting aside.
Weather issues and of January slow start.
<unk> are starting to pick up and so the the rate of activity is higher than it was before sorry, if that was unclear clearly worded.
So what you're seeing is the absolute level of activity is higher versus the.
The fourth quarter, but the sequential rate of change may not be.
And I'm, putting it together.
The absolute the absolute level of activity is higher now and yes, I mean, we're not guiding whether our revenues will be trucking or not tracking the.
The activity increases proportionately.
So we're not guiding Q1 at any in any way.
Okay, and then you mention of it as a small amount of growth capex in your GAAP Capex budgets could you maybe break that down what that is with the growth capex of <unk>.
Sure.
Not going to be very specific here of a car, but what I'm going to tell you is it some new plug in electric technology, we're working on.
Okay.
Okay.
When do we win.
Should we be expecting to hear more about that.
Yes.
Okay.
Thank you and appreciate the.
<unk>.
Thank you. Our next question is coming from John Daniel of Daniel Energy Partners. Please go ahead.
Hey, good morning, no modeling questions. The names in the nine questions from me.
And the kidney.
Qualitative weird disguise disguise the.
Alright.
Near term outlook, if you will between oil wireline. So maybe just really where you got better relative visibility in the.
The reason specific customer specific.
But just kind of the trends there please.
Sure sure Yeah. So I mean, it's not going to be a surprise to you. John you know these days instead of well, but as far as basins go the trend certainly in the Permian.
We are looking quite nice and I would say we've got all of our service lines represented there. So that's really across service lines from an activity perspective, I think when you think about pricing going forward, which which.
Which one is moving faster we are seeing our depreciation based service line moving more quickly and price and I think that's you know of course, you've got a market that's really constrained by liquidity. So when you think about our medium long term strategy of being asset light at the moment that works against you because the asset light business.
<unk> you can come in and out of and you don't impede your liquidity or youre not trying to find the dollar of cash to do that whereas those coil ran all of the news cementing spreads are expensive. They are expected to maintain their expense, it's working and so youre seeing more of pricing traction.
And the depreciation day service lines, so I'm not sure if that answers your question.
Pricing across the board is as you've talked about and you know so well, it's just not where it needs to be for the service sector.
Hasnt been for some time, but I would say if I had to call, which horses are leading the pack right now it is cement in coil.
If it wasn't did that answer your question.
That's good enough for me thank you.
The last one just kind of interest.
Comes back the ESG and I don't know if you can do this or not but do you.
Alright.
And just like how many of your customers today are using some sort of ESG score torture.
The procure their services and just how do you see that playing out a year from today into the private do you even care I think I know the answer of the one yeah.
Okay sure. So I think most of the privates of.
Be careful not to say that they don't care, but they don't care.
And the publics.
Yes, most of them have scorecards, we think that pressure increases and I think they know the allocation of capital to them will be really hampered if they can't demonstrate that they are first movers and being greener.
And so you know I think I think that becomes more and more pronounced.
And I don't see that tailing back. So that's something we're very focused on and once it goes to compensation for our customers, which for many of them. It has as we know money talks and.
People will drive toward those compensation metrics. So we expect that continues.
Okay.
Got it well thats it from me all.
A couple of offline apps.
Thank you very much.
Thank you John.
Thank you at this time I'd like to turn the floor back over to Ms.
Fox for closing comments.
Thank you I want to end by thanking you for your continued support. Additionally, I want to thank our incredible employees, who are executing in the field and innovating every day. So that we can partner with the best operators in the industry I Hope you and your families are safe and healthy.
Ladies and gentlemen, thank you for your participation in today's conference and your interest in nine of energy services.
Disconnect your lines at this time and have a wonderful day.
Yeah.
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Yes.
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