Q2 2021 ProPetro Holding Corp Earnings Call
Good morning, and welcome to the probe Petro holding Corp, second quarter 2021conference call.
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Please note. This event is being recorded I would now like to turn the conference over to Josh Jones Director of Finance. Please go ahead.
Thank you and good morning, My name is Josh Jones, and I recently joined the company as director of Finance will be handling investor relations going forward and look forward to working with you our investors research analysts and other stakeholders.
We appreciate your participation in today's call.
With me today is chairman and Chief Executive Officer, They look good.
President Sam Sledge, Chief Financial Officer, David Sure Limor.
Chief operating officer, Adam Munoz.
Yesterday afternoon, we released our earnings announcement for the second quarter of 2021. Please.
Please note that any comments, we make on today's call regarding projections or expert expectations for future events are forward looking statements covered by the private Securities Litigation Reform Act for.
Looking statements are subject to several risks and uncertainties many of which are beyond our control. These.
These risks and uncertainties can cause actual results to differ materially from our current expectations.
We advise listeners to review our earnings release and risk factors discussed in our filings with the SEC.
Also during today's call, we will reference certain non-GAAP financial measures.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release.
Finally, after our prepared remarks, we will hold a question and answer session.
With that I would like to turn the call over to Philip.
Thank you Josh good morning, everyone.
We were pleased with our second quarter operating and financial performance, which reflects our capital discipline and operating strategy.
Activity levels increase during the second quarter, resulting in a 34% increase in revenues and a 78% increase in adjusted EBITDA performance.
For Petro continues to differentiate itself from its peers by generating solid margins and a return to positive free cash flow while at the same time, introducing ESG friendly solutions to our product and service lines, which I'll discuss later.
We are executing on our disciplined and focused strategy and it shows.
With steady improvement in the global economy, and improving oil prices.
North America oil service activity has continued to improve.
We believe we're in the early stages for what appear to be a sustained up cycle in the oilfield.
Customers inquiries and urgency for services in the future or expected result, and pumping supply tightness and inflationary pressures some of which we have already experienced in the second and third quarters.
We have been working on recovering pandemic price discounts put in place last year during the height of the oil price collapsed, resulting from COVID-19 global economic shutdown.
Our objective is to recover these discounts and to begin transitioning back to normalized financial performance enhancing our ability to invest in innovative solutions and improve profitability for our shareholders.
Our pricing discussions with our customers have been and will continue to be collaborative to help both share and maximizing efficiency and planned future deployments of innovative solutions.
I want to commend the perpetual obtained for remaining nimble and quickly and effectively responding to our customers' needs, while protecting our competitiveness and earning power.
Operational efficiency and equipment readiness remain key differentiators and oil field services as customers focus on utilizing the highest quality crews with the most reliable equipment available in the industry.
Our proven track record of quickly and effectively responding to the needs of our customers.
A mutually beneficial manner continues to differentiate pro petrol and our industry.
During the second quarter, our best in class execution at the wellhead was on full display book.
Continued high pump time productivity improvements.
As we move for our team will remain focused on disciplined deployment of our assets to ensure we only pursue profitable work.
As we have discussed in the past, we will not activate additional crews without adequate pricing long term visibility to a consistent work schedule.
Expectations of high efficiency targets.
To deliver solid operating margins.
This kind of discipline is critical to the success of our company.
In the oilfield service industry.
As a whole.
It's worth mentioning that visibility to the duration of the activity of our customers as an integral part of our redeployment criteria.
Especially as we observed and improved spot market for Frac services.
Carriers increased pricing soon to converge with dedicated arrangement.
We liked the dedicated fleet model, but we will continue to focus our efforts on working with customers that have a substantial presence in the Permian and are looking to further expand their footprint of operations in the region.
We've continued to observe significant E&P consolidation and investment in the Permian and the Permian transactions, leading to multi decade inventory of drilling locations for some of our customer reinforcing our Permian focus.
Additionally, as public companies remain disciplined in their development plans and budgets.
Private operators have led to recent recovery and drilling rig counts certainly in the Permian Basin and we believe that will result in incremental demand in a marketplace that is experiencing significant attrition.
<unk> pressure pumping equipment.
We believe our focused and highly efficient standard of service is attractive to a variety of operators and we are working every day to expand and broaden our customer base.
We've grown up with our customers some of which were much smaller than they are today.
And knowing how to provide comprehensive industry, leading completions efficiencies is an incredible value.
Credibly value valuable to a growing oil and gas operator.
We look forward to working with all of our customers as we progress forward.
With that I'll turn the call over to David to discuss our second quarter financial performance.
Capital resources David.
Thank you Philip and good morning, everyone.
We generated $217 million of revenue during the second quarter, a 34% increase from the $161 million of revenue generated in the first quarter.
As Philip mentioned effective utilization was $13, 1 fleets, which increased 27% from 10.3 fleets during the first quarter of 2021.
We currently have 13 fleets working 2 of which are signed on Frac our guidance for third quarter average effective fleet utilization is 12 and a half to 13.5 fleets with visibility to an additional Simon Frac fleet included in that range.
Cost of services, excluding depreciation and amortization for the second quarter was $163 million versus 123 million in the first quarter with the increase driven by higher activity levels and inflationary impacts from other direct expenses.
Apply chain disruptions contributed to cost increases specifically trucking logistics costs, which saw a notable cost increased during the period related to more distributed sand mine pickup locations.
Second quarter General and administrative expenses of 18 million decreased slightly from $20 million in the first quarter, we expect third quarter G&A to remain in this range.
Depreciation was $33 million in the second quarter, which is consistent with the first quarter.
Our net loss for the second quarter was $9 million or an 8 cent loss per diluted share compared to a first quarter net loss of $20 million or a 20 cent loss per diluted share.
The net loss this quarter improved significantly from the prior quarter, but continues to underscore the need for improved profitability in our sector.
We need normalized pricing and profit sharing with our partners to invest in our labor force and equipment and we are working to accomplish just that.
Finally, adjusted EBITDA of $36 million for the second quarter increased 78% sequentially compared to $20 million for the first quarter.
Adjusted EBITDA margins improved over 400 basis points, and we experienced 28% sequential incremental margins.
The sequential increase was primarily attributable to a full quarter of contributions from fleet reactivation during the first quarter, along with more normal weather conditions.
Our team remains focused on capital discipline, which is an ongoing challenge given current returns.
We are currently balancing the need for capital spending on equipment and reinvestment into lower emission solutions, yet still have some work to do before we arrive at fleet level economics, consistent with our objectives for return on invested capital for new investments.
For the second quarter, we incurred 31 million of capital expenditures.
Capex for tier 4 DGB dual fuel purchases and conversions was approximately $10 million and we continue to incorporate these units into our field operations.
Actual cash used in investing activities as shown on the statement of cash flows for capital expenditures in the second quarter was $29 million with positive free cash flow of $16 million.
Figure differs from our incurred capex due to differences in timing of receipts and disbursements.
To reiterate we continue to expect to generate positive free cash flow for the full year 2021, and our outlook for full year, Capex spending remains $115 million to $130 million, including the previously announced approximately $37 million for tier 4 DGB dual.
Fuel equipment with the remainder related to maintenance for.
All year Capex will likely be toward the upper end of the range should activity remain at current levels.
Sequentially, we increased our cash position and liquidity by $17 million and $27 million, respectively with cash of $73 million in total liquidity of $141 million.
Total availability on our asset based revolving credit facility increased to $68 million.
The COVID-19, pandemic, which impacted our markets. So severely last year continues to impact global supply chains, and we are currently investing selectively in inventory to mitigate this risk.
As Phil mentioned in his opening comments the strength of our balance sheet and commitment to capital discipline is critical to our success and we are firmly committed to ensuring we remain a solid maintaining a solid financial position that provides maximum flexibility.
That I will turn the call back to Phil.
Thank you David.
As we've mentioned on today's call our customer activity levels have modestly increased given the improved commodity price environment.
As we navigate the COVID-19, Delta and potentially other variants volatility will remain but oil price fundamentals appear strong for a continued recovery.
While progress is expected to be gradual we have already obtained some price increases and we are expecting to secure increases from all of our customers before the end of the quarter.
I mean remains uncertain because we're still in the early innings of what we view as a multi year recovery.
Short for our customers recognize the clear benefit of our industry leading service offerings.
The entire sector is in the process of recovering pricing discounts implemented during the height of the COVID-19 pandemic.
A return to normalized profitability is necessary for a healthy oil service capability.
To answer the call for North American crude oil supply as global demand is expected to continue to rise into the next year.
In support of the needs of our Blue chip customer base.
Committed to a substantial future operations in the Permian Basin, we are analyzing and investing in technologies that best position pro petrol for the impending energy transition.
Discussions with our customers continued to progress in a positive direction.
Better understand how the operating landscape is expected to evolve in the years to come.
We are fully committed to evolving our equipment offering to be more environmentally friendly and relevant to our customers' demands.
And remain convinced the pressure pumping equipment needs to evolve for the jobs a day and.
In the future.
Given our industry, leading execution and strong financial footing. We believe we are in a leadership position.
Who participate in this transition, which will benefit all of our stakeholders, including our shareholders.
We know there will be changes from today's market conditions, 1 cost will continue to be the need for innovation.
As we discussed on our last call with the downturn of 2020, now clearly transitioning to a recovery.
We believe the impending reinvestment cycle further separate winners and losers in the U S pressure pumping industry.
We believe that only the highest quality service providers working with the most efficient operators will be able to properly invest in next generation lower emissions equipment.
Our debt free balance sheet ample liquidity and rigorous capital discipline served us well through the unprecedented challenges our industry faced in 2020.
Places us in an even stronger position for success as the market continues to steadily improve.
Well into 2022.
And beyond.
Most importantly commitment to safety as a primary responsibility, we all share and we utilized significant resources to ensure employees keep safety in mind in all that they do.
Our teammates have grown to expect a strong safety culture enthusiastic community involvement and operational excellence when they come to work and it shows in their performance on location in the shop and throughout our communities I.
I am proud of the work they do every day.
Commitment to sustainability is another responsibility that our team undertakes for the benefit of our broader petrol family.
We're making good on our commitments by investing in next generation technology and vigorously evaluating sustainable solutions for the benefit of all stakeholders.
From our electric fleet and Bill for fuel fleet investments to our environmentally friendly and innovative modified asset product.
For Petro is delivering innovative and ESG friendly products and services to the marketplace, which is a value added opportunity.
For all stakeholders.
As we announced last week in our press release, we are completing our planned executive transition.
Net as a result of a thorough succession planning process.
Effective August 31, I will be stepping down as CEO to become executive chairman.
Sam will take over as CEO, and Adam will become president and CEO.
I'd also like to recap a few accomplishments over the last 18 months.
We worked with the board and our team to put in place strong corporate governance.
We remain capital disciplined generating positive free cash flow during a period of unprecedented industry decline during the COVID-19 pandemic.
But I'm most proud of for Celgene, facilitating the transition and building of our go forward leadership team.
The continuity for our organization is strong and I have great confidence in the entire team to lead our organization forward.
This will be my last quarterly call as CEO.
It's been a challenging 18 months this had been 1 of the most rewarding experiences of my career.
Petro was a great organization with outstanding and dedicated employees and I value the relationships.
I'm very engaged in my role as executive Chairman.
Before we open it up for Q&A I will hand, it off to Sam for some closing comments go.
Go ahead, Sam Thanks, Phil Good morning, everyone and a sincere thank you to Phillip for his leadership and guidance.
Adam and I are very excited about working with you the board and our team to continue per Petros legacy of being a leader in our industry and remaining customer focused and team drove it.
We're excited to utilize our unique market position and operational and financial performance to prepare the company for the future.
We will continue to rely on the key attributes and strategies that have historically positioned our company as a through cycle preferred for field service provider in the Permian Basin.
This includes close collaboration with our customers to for to provide creative solutions that meet their current and long term needs and as Philip mentioned, we have a number of innovative solutions to complement our leading operational performance.
Most important we remain squarely focused on acquiring developing and retaining the best team in the industry. Our team oriented culture is core to our DNA. Our pro Petro teammates have been and will continue to be the key to our current and future success.
With that I'd like to turn the call over to the operator for Q&A.
Operator.
We will now begin the question and answer session to ask a question you May Press Star then 1 on your telephone keypad.
Youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then 2.
At this time, we will pause momentarily to assemble the roster.
Okay.
Okay.
And our first question will come from Ian Macpherson of Piper Sandler. Please go ahead.
Thanks, Good morning team Philip Thanks for your leadership and Craig Congratulations Sam and the rest of the team there and.
Progressing the business forward.
Within the context for this you know inflation everywhere phenomenon. It seems to me that you are all using tier 4 DGB upgrades as a price leader or lever and I wonder.
The inflationary.
The pressures are affecting the capex for these to your core for equipment upgrades and if so to what extent and what how that translates for your pricing power as you think about the next step of.
The nation's friendly upgrades on your fleet.
Yeah. Ian this is Sam I'll take a shot at that I'm not sure.
If it is a significant if if the tier 4 DGB equipment is a significant pricing lever.
Right now, but we expect it to continue to be more of a lever moving forward.
And given the timing at which we committed to.
The new builds and rebuilds or conversions that we did late actually in 2020.
Most of that pricing was locked in I think there might be some some some inflation.
And those types of products moving forward.
But nothing that we've experienced on on what we've currently committed to and purchased thus far.
Okay. Okay.
Thanks, Sam I was going to ask also just thinking about the revenue progression into Q3.
Is it fair to assume that your pioneer idle payments in the second quarter were pretty stable compared to the first quarter and so that would get us to kind of a 5% to 6%.
Revenue per fleet increase in the second quarter.
If that is correct and then would that be kind of a ratable way to think about the progression for Q3 as well.
The the idle fees were pretty immaterial in the second quarter.
Okay, I think debt.
It's going to be dependent on what happens in the second half.
But not significant this quarter.
Okay, so that debt.
Therefore, your second quarter revenue per fleet was.
Probably more like 7% to 8%.
If that'll payments for lower on an adjusted basis.
That's right.
Idle payments were lower.
Okay.
Thanks for.
Okay, great. Thank you.
The next question comes from John Daniel of Daniel Energy Partners. Please go ahead.
Hey, guys. Thank you just 2 quick ones for us as housekeeping.
David on the loss on asset disposals can you kind of walk us through what's there not this quarter.
Well, that's a tip.
Typically going to be related to any.
Fluid end.
Dispositions and other.
Capex items that are related to components that are being swapped out whether refurbishment or otherwise.
Typically that.
You have a ballpark on what percent would be as I said, a ballpark percentage just a guesstimate on what the fluid ends with them.
You know, it's going to be 30% to 50% of that number typically okay.
Correct, Okay, and then the last 1 for Corona.
Big picture here, but given that your customers continue to correct for you.
Friendly equipment.
Sam on the frame for us what a potential 2022 capex budget might look like they from half to go all in for these guys.
Yeah.
That's a that's a great question John.
That's something that we're working hard through right now I don't I.
I don't think we claim to have the exact answer to that.
Could be could be likely that we continue this conversion program as we have units reach end of life.
And.
And need to be rebuilt or refurbished in some form or fashion any ways to spend the marginal dollar.
From a capex standpoint to convert that unit into a more marketable piece of equipment.
Like a tier 4 DGB unit.
So those are things that we're that we're hard at running the analysis on today.
But yes, if the market continues to grow if activity continues to grow.
And the supply of equipment continues to tighten our return profile improved in it.
Becomes easier and easier to justify making that move and continuing to slowly overtime convert our fleet into having more gas in order to get equipment.
Fair enough I guess, just a follow up on that and then I'll turn it over.
Lead times right now on the growth.
For engines.
How would you characterize that and is there still a price for decline in front of the line by placing orders now for those.
And I'll turn it over.
Yeah.
Yeah, I don't know if we feel pressure, but that's something that we're tracking very closely.
And our position.
Our service offering and our asset base to be as competitive as possible supply chains are obviously tightened disrupted right now right. So it's so it's something that we're tracking very closely with so we can be.
As well positioned as possible John I'd, just add that given our financial position in terms of cash and balance sheet.
It's not the issue.
No I got it got it.
Positioned to do that if we choose to do so.
There's an argument you you should right and I'll just leave it at that given the balance sheet. Okay. Thanks, guys.
Thanks for your debt.
The next question comes from Stephen <unk> of Stifel. Please go ahead.
Thanks, and good morning, gentlemen.
Good morning.
Probably along the same lines, but I'm just curious.
You're speaking with with customers and Youre looking at the dynamics of a of.
A deal right, whether it's a contract or whether it's just a single well.
What is the price discussion being driven by an end and we keep hearing premium prices for low emission assets, but then I also hear pricing really hasnt moved very much.
How do you think about the the pricing structure between the 2.
Types of assets and how do you think that evolves going forward.
Yeah, Stephen this is Adam.
I would just kind of reiterate what we said in the end.
Script. There was we are we continue to have collaborative conversations with our customers.
Those pricing.
Discussions vary from customer to customer interest, depending on activity and productivity that come from each of those but I think whether it's our.
Tier 2 legacy tier 2 equipment or new tier 4 DGB. Your next gen type of equipment.
Conversations just around being able to make our economic return on those investments and to continue to be able to.
Reinvest in not only our <unk>.
Legacy tier 2 of them, but also nexgen equipment, depending on what the customers requiring of us.
I think the other thing that Stephen this is Sam is that.
What the context that always exists in times like these is as debt.
Everyone in our space is coming from a little bit of a different relative position.
We didn't go.
Is as low as most did.
Last year with our prices. So relatively speaking, it's we don't have to move as much and you can you can see that are.
In the earnings that we printed over the last couple of quarters that there.
Differentiated from a profitability perspective in most of our peers and that that is our disciplined approach to pricing and operating and collaborating with our customers.
So as as Adam said, we have return goals that were not meeting currently and we're working to meet those goals regardless of the assets that we're deploying for those individual customers.
So as you as you go forward and you kind of guide to what looks like.
Relatively flat count in the next quarter.
Do you do you see that EBITDA per fleet number trending higher in the back half for the year or do you think that's more of a 2022.
Event, where you get sort of more traction on pricing and less white space in the calendar et cetera, any guidance on how to think about that profitability per fleet number over both the short and the medium term.
Yes, Stephen this is David I think you know.
First of all we do talk about the pricing our expectations are that we are getting those changes already and during this quarter, but we're not going to see the full effect of that until the following quarter end and then in 2022, So I think debt.
We would expect that the numbers would be going up as we get closer into 2022.
Okay, great. Thanks for the color gentlemen.
Okay.
The next question comes from George O'leary of T. P. H <unk> company. Please go ahead.
Good morning, guys.
Good morning, George George.
Completion efficiencies remain a big topic, both with NOI fast, but also just this quarter as we listen to E&P Conference calls.
Thank you all and other service companies are adding notable value to the oil patch into your customers I'm wondering if you could frame the magnitude of the completion efficiencies that e&ps are highlighting under our stages per day are hours worked per day framework.
And then what's kind of the go forward plan for capturing some of that value that seems to largely be accruing to the customers who are talking about dividends and buybacks is.
As the service companies are struggling to make margins can you just walk walk through that.
Process.
George This is David.
A stab at that I think are our approach and we talked about it in the script.
Is that we want to be collaborative.
Do think that there have been significant completion efficiencies 1 of the charts in our IR deck shows kind of the <unk>.
Completion efficiencies improvement since 2019 over 58%, we've actually seen some of those numbers.
Significantly higher in recent quarters related to new innovations like steimel fracking and other technologies and processes. So we think there is certainly an opportunity for some sharing there.
We ultimately want to be able to reinvest in our fleet and continue to have a <unk>.
Relevant product and service offering for our customers and we're having collaborative discussions around that so.
Definitely seen it in.
Our performance in the field and our customers.
They've talked about it and.
We think that Theres, a case to be made to share that with the service companies that provide some of that capability debt, Georgia, Sam I'll add to that just a little bit at a high level, it's pretty obvious over the last few years.
The other.
Upstream E&P commercial model has changed very much so more towards a capital discipline turn of capital to shareholders model.
We have yet to benefit.
From from that shift in fact, it's almost been the inverse we've seen our efficiencies go up and our economics go down, especially in the last year were something like pumping hours per day is up and maybe in excess of 20% year over year in certain certain places with certain customers.
So I think it's time for us in our sector to start to readjust our own commercial model to benefit from those efficiencies more so than we have in the past.
So that we can with our customers win win together into the future and allow them to continue to return capital.
Where they think it's appropriate and allow us to make an appropriate return on our assets.
I'm just going to jump in while we're on this George for 1 other this is for who your customer is so important.
And we work for some very sophisticated.
Very talented group of.
Customers and for us when we sit down and we talk pricing, it's very easy for us to just lay the numbers out in terms of the efficiencies there gaining.
Pretty much at our expense by more equipment for people.
And while there are efficiencies goes up and Theyre completed feet per day go up.
Our profitability goes down and when you put the numbers to it and show it to them they see it they understand it.
No doubt, they're going to respond and some have already responded as we would have hoped so.
I think the customer makes a big difference here.
Great that was very robust answers from all 3 all so I appreciate that.
First question second question.
Thinking about E frac versus each.
Tier for what are you seeing from a customer preference perspective, and then you know you all made a bet under that I would call. It that's kind of prior prep Petro regime on the dressed in technology.
And it has taken a while to get that day.
For like commercial operations is there any desire on your all day to to pursue a different E frac.
Offering her interest and kind of what youre going to stick with moving forward.
George I think.
The short answer is yes.
Most all of what you just mentioned we.
Prior to this equipment transition.
That's that's happening in our in our industry.
Very much of the uniform kind of southwest model of equipment.
And in this transitory period, we've kind of accepted the fact that it's going to take a few different solutions to bridge towards what the equipment up tomorrow is going to be whenever.
For the dust settles on on what the better solutions are so you've seen us invest in electric you've seen us invest more recently in tier 4 DGB. We continue our leadership team and many parts of our technical team continues to debt analyze and diligence.
Many options that are out there.
And we don't I don't think we found the silver bullet yet.
But we like where our progress is in very likely could employ.
Another solution or 2 moving forward. We just we just don't know the answer yet as we sit here today.
Yes, just to add to that George I think what we have seen.
As you know there is a very.
Good customer base out there that is very interested in the tier 4 DGB and burning gas in their operations is very useful to them and reduces their cost and so they see that as a very viable and.
<unk> technology, there's others that are looking to also apply electric powered solutions for.
Our other solutions. So again, we're looking at.
A lot of the new innovative products that are being developed and thats going to continue to progress overtime and.
We will act accordingly.
Awesome. Thanks for the color guys best of luck, Philip and good luck to Sam and add them in their new roles.
Thank you. Thank you for a short term.
Once again, if you would like to ask a question. Please press Star then 1.
And the next question will come from Waqar Sayed of ATB capital markets. Please go ahead.
Thank you for taking my question.
My question is on cementing could you maybe.
Talk about how many units you have right now working and what was kind of the revenue growth rate for cementing a if you could talk about the outlook and then what portion of the revenues are.
Coming from the cementing business.
Pretty flat quarter, Yes, Hi, this is David.
Cementing business, we are seeing improvements in that business quarter over quarter I can't give you the specific number it's a fairly.
Small number relative to our total business.
Less and less than 4.5%, but.
We've definitely seen a continued progression of activity there and demand and.
I think as the drilling rig count continues to increase we could see some upside there as well.
Okay.
And then just if you could.
They provide us a breakdown.
What the total.
Size of your fleet like in terms of hydraulic horsepower. What is currently manned and what proportion of your total fleet is tier 4 DGB.
Well we have.
Are you talking about cementing only our total fleet now.
Factoring.
Yeah.
Thanks.
Our total we have 1 in.
Our investor relations deck.
We share a $1.4 million hydraulic horsepower total fleet capacity.
We're we're hoping to have close to a quarter of our total capacity.
ESG friendly, which would encompass not only our tier 4 DGB assets that we're adding to the fleet.
Which we list out on that debt.
But also our <unk> products so.
I can tell you we've.
We purchased and deployed 50000 hydraulic horsepower newbuild tier 4 DGB, we're converting another 40000 horsepower thats in our IR deck on page 7 and.
We're continuing to work with our <unk> products.
To confirm exactly how we'll deploy that going forward and.
And we'll call on the on the on the manned and unmanned question.
Given how much equipment, we've we've deployed to the existing fleets today, it's not quite as straightforward as it used to be when were running much closer to.
For utilization of our assets. So I mean, we're manned for 13 fleets today, that's how many were operating.
And we will we will either ratchet up or down according to activity in the in the.
The near term of how many assets, we may try and keep that.
Just in time as possible to be as efficient with our labor spend as possible.
Is that in terms of hiring new new Labour is that.
You've never had any issues, but is it becoming tighter.
Anything thats been elaborate on that front.
This is Adam.
The labor are hiring labor is always challenging in the service market and the industry.
I think this is a little bit different scenario, just been debt all industries and.
Segments of.
The economic World, our hiring right now so you're fighting against probably a larger pool, but.
For people, but a larger.
<unk>.
But we feel that we remain pretty competitive in that aspect being that we're focused.
On the Permian Basin.
And our.
Our employees in our dedicated fleet model know, where theyre going to go to work weekend week out the consistent fleet and the consistent sketch work schedule.
Big plus that we feel on our side to help them be able to plan their business and just.
Where theyre going to be.
When they are on shift cost. So we felt that still gives us a very competitive advantage against the against most and helps us attract employees, especially around the Permian.
Okay. Thank.
Thank you very much I appreciate dunson.
Sure.
This concludes our question and answer session I would like to turn the conference back over to Sam sledge for any closing remarks.
Thanks to everyone for joining us on today's call. We're very proud to play a part in an innovative energy industry, where hydrocarbons remain critical for everyday life across the globe.
We hope to speak with you throughout the quarter and look forward to speaking with you on our next quarterly earnings call have a great day.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.