Q4 2022 Oil States International Inc Earnings Call
Ladies and gentlemen, thank you for holding for the oil States International incorporated fourth quarter 2022 earnings call. This conference will begin in approximately two minutes.
Once again, thank you for holding your conference will begin and approximately two minutes. Thank you.
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[music].
Hello, and welcome to the oil States International incorporated fourth quarter 2022 earnings Conference.
Ms Michelle and I will be your operator for today's call.
At this time all participant lines are in listen only but we will be accepting questions later.
You would like to ask a question during that time you can press zero then one on your Touchtone phone.
As a note. This presentation is being recorded I will now turn the meeting over to Ellen Pennington Ma'am you may begin.
Thank you Michele good morning, and welcome to oil States' fourth quarter 2022 earnings conference call. Our call today will be led by our President and CEO , Cindy Taylor and Lloyd <unk> oil States' executive Vice President and Chief Financial Officer before we begin we would like to caution listeners regarding forward looking statements.
Extent that our remarks today contain information other than historical information. Please note that we're relying on the safe Harbor protections afforded by federal law No. One should assume that these forward looking statements remain valid later in the quarter or beyond.
Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our Form 10-K, along with other SEC filings. This call is being webcast Cindy can be accessed at oil states' website.
A replay of the conference call will be available one and a half hours. After the completion of this call and we will continue to be available for one month I will now turn the call over to Cindy. Thank you Alan Good morning, and thank you for joining our conference call today, where we will discuss our fourth quarter of 2022 results and probe.
Our thoughts on the market outlook.
During the fourth quarter of 2022, the company continued to show improvement as the industry expands activity to support growing energy demand generating revenues of $202 million and EBITDA of 21 million, representing sequential increases of 7% and <unk>.
And 30% respectively. After excluding a third quarter 2022 litigation related settlement gain of $6 1 million. We were net income positive for the quarter driven by strong activity levels in our traditional project driven businesses as well as from increased.
A man in the U S for our completions oriented service offerings, we generated $14 million in cash flow from operations during the fourth quarter with 11 million of free cash flow after deducting net investments and Capex.
Our offshore manufactured products segment revenues rose, 9% sequentially with adjusted segment EBITDA totaling $18 million backlog increased 19% sequentially totaling $308 million as of December 31st driven by quarterly bookings.
About 152 million, which yielded a quarterly book to Bill ratio of one five times, our fourth quarter bookings increased 32% from the third quarter and included two notable production facility project awards exceeding 20 million each.
With increased broad based bookings across most product and service offerings.
Further in early February we are pleased to report the receipt of our first contract award on our newly developed managed pressure drilling riser equipment.
In our well site services segment, we achieved a 12% sequential increase in revenues and an impressive 29% sequential increase in segment EBITDA driven by higher U S completion, and production activity, along with enhanced customer penetration and better equipment utilization.
Jason Although the average U S frac spread count was flat sequentially. The average increased 9% when compared to the fourth quarter of 2021.
In our downhole technologies segment revenues decreased 10% sequentially, while segment EBITDA decreased 75% due to the timing of international Perforating product sales lower integrated gun product sales mix domestically at several key customers delayed light quarter startup.
<unk> supply chain challenges and inventory and receivable write offs. Many of these issues are deemed to be transitory.
Notable technological achievements realized in the fourth quarter included the successful test of OSI minerals deep sea riser system, and a water depth of over 13000 feet and testing of our prototype model of our tension leg platform design for offshore floating wind installation.
In water depths beyond the normal limits suitable far fixed installations.
Given significant reductions in our debt our board of directors approved a 25 million stock repurchase program, which extends through February 2025 life will now review, our consolidated results of operations and financial position in more detail before I go into a discussion of each of our <unk>.
Months.
Lloyd Thanks, Cindy and good morning, everyone.
During the fourth quarter, we generate generated revenues of $202 million.
Adjusted consolidated EBITDA of 21 million and net income of $2 9 million or five cents per share.
We achieved our second quarter in a row of positive net income reflective of the improvement in our operations and the overall strength of market activity.
We ended the fourth quarter were $42 million of cash and generated $14 million of cash flows from operating activities.
We used 3 million to fund net capital expenditures.
Our business segments, where free cash flow positive in 2022 and on a consolidated basis, we have been free cash flow positive for 30 of the last 36 quarters dating back to the beginning of 2014.
As a reminder, redefined free cash flow as cash flow generated from operating activities less capital expenditures.
Plus proceeds from the disposition of property and equipment.
As of December 31, no borrowings were outstanding under our revolving credit facility and amounts available to be drawn totaled $92 million, which together with cash on hand of 42 million.
Resulted in available liquidity of $134 million.
At December 31, our net debt totaled $111 million yielding.
Yielding a net debt to total capitalization ratio of 14%.
On a leverage ratio basis net debt to adjusted consolidated EBITDA has been materially reduced to one four times at December 31.
Further on February 15th we repaid $17 3 million in principal amount along with accrued interest of our one 5% convertible senior notes with cash on hand.
With this repayment we have no significant maturities of long term debt until 2026.
For the fourth quarter, our net interest expense totaled $2 3 million of which 5 million was noncash amortization of debt issuance costs.
Our cash interest expense as a percentage of average total debt outstanding was approximately 5% in the fourth quarter.
In terms of our first quarter 2023 consolidated guidance.
We expect depreciation and amortization expense totaled $15 3 million net.
Net interest expense to total $2 6 million.
And our corporate expenses are projected to total $10 3 million.
For the full year 2023, we expect to invest approximately 25 million in capital expenditures.
Given customary seasonality and working capital bills in the first quarter, our free cash flow will be weighted to the second half of 2023.
Comparable to what we experienced in 2022.
When we generated $33 million in free cash flow in the second half of the year.
And at this time I'd like to turn the call back over to Cindy who will take you through the operating results for each of our business segments.
Our offshore manufactured products segment generated revenues of $105 million segment EBITDA of $17 8 million and operating income of $12 3 million in the fourth quarter of 2022 revenues in the fourth quarter were up 9% sequentially due to incremental production.
Lady revenues stemming from recent project awards, along with service revenue growth segment EBITDA margin in the fourth quarter of 2022 was 16, 9% compared to 13% when adjusted to exclude the $6 1 million litigation gain reported.
In the third quarter of 2022 backlog totaled 308 million at December 31st 2022, an increase of $50 million or 19% from September 30 of 2020 to fourth quarter 2022 bookings totaled 152 million.
And yelling a quarterly book to Bill ratio of 1.5 times.
Fourth quarter bookings were broad based across many product lines and regions with approximately 9% of our 2022 bookings tied to non oil and gas projects.
During the fourth quarter. The segment was awarded two notable production facility project awards exceeding $20 million each.
This segment has endeavored to develop leading edge technologies, while cultivating the specific expertise required for <unk>.
Working in highly technical deepwater and offshore environments at the world expands investment and alternative energy sources, we will be working diligently to translate our core competencies into the renewable and clean Tech energy space recent product developments should help us leverage our <unk>.
Abilities and support a more diverse base of customers going forward.
We continue to bid on potential opportunities supporting our traditional subsea floating and fixed production systems drilling and military customers. While also bidding to support multiple new customers and projects involved in developments such as subsea minerals gathering fixed and floating.
<unk> offshore wind developments in other renewable and clean Tech energy systems globally.
These opportunities create the potential for us to expand our product offerings and revenue base.
In our well site services segment, we generated revenues of $68 million segment EBITDA of $12 5 million and operating income of $5 3 million in the fourth quarter of 2022 segment EBITDA margin was 18% in the fourth quarter of 2022.
Compared to 16% in the third quarter of 2022.
Our revenue growth and strong incremental margins were driven by higher U S completion, and production activity, along with enhanced customer penetration and better equipment utilization.
We remain focused on optimizing our operations and pursuing profitable activity in support of our global customer base as market expansion opportunities continue to unfold both in the U S and in international markets. We will continue to focus on core areas of expertise in this side.
Matt <unk>.
And the deployment of our recently enhanced completions equipment to further differentiate our completions service offerings.
In our downhole technologies segment, we reported revenues of $30 million and segment EBITDA of 1 million in the fourth quarter of 2022 compared to revenues of 33 million and segment EBITDA of $4 1 million reported in the third quarter of 2022.
Weaker revenues and margins in the quarter resulted from the timing of international perforating product sales, which can be lumpy from quarter to quarter.
Lower integrated gun product sales mix manufacturing labor constraint supply chain challenges, along with inventory and receivable write offs totaling $600000.
Now I'd like to turn our attention to market outlook.
Supply chain challenges access to available labor and rising inflation have challenged our industry and many others over the last year or two with higher commodity prices demand took a hit over the last few months in 2022, and early 2023 global oil and gas inventories recut.
And our now with them their five year seasonal averages, which has led to lower commodity prices year over year tempering expectations for growth in drilling and completion spending on U S. Land activities. However, we are beginning to see an inflection upward in international and offshore Maher.
Our kits, which should further support our product and service offerings.
Given improvements in the Frac spread count over the last several quarters, albeit with growth slowing somewhat recently, we expect our well site services and downhole technologies segments to continue to perform in line with or better than market activity indicators.
Revenues in our offshore manufactured products segment are expected to continue to grow given increased levels of backlog and strong short cycle product demand.
<unk>. These market drivers, we project that our annual revenues will grow about 15% on a consolidated year over year basis, with EBITDA, ranging from $92 million to $100 million given typical seasonality. The first quarter is likely to be the weakest.
Now I'd like to offer some concluding comments crude oil and natural gas prices corrected to the downside from the highs reached in early summer 2022, due to ongoing recession concerns tightening global monetary policies and the associated impact on commodity band.
However, despite these factors W. T I and Brent crude oil spot prices remain above $76 and $83 per barrel, respectively with natural gas currently trading at approximately $2.30 per M. M. Btu. These.
These prices, while lower than the average commodity prices realized in 2022 are likely to support demand increases in 2023.
Initially the industry responds to higher commodity prices with accelerated shorter cycle investments in the United States, which we experienced in 2022, we now expect to see investments pick up for long lead time projects as well, including those in international market.
<unk> and deepwater basins around the world, However, global monetary policies and the resultant increases in interest rates by the various reserve banks and then attempt to rein in inflation will likely have a continuing impact on demand in the near term oil states will continue to conduct.
Operations and will remain focused on providing technology leadership, and our various product and service offerings with value added products and services available to meet customer demands globally. In addition, we will continue our product development efforts in support of emerging renewal.
<unk> and clean Tech energy investment opportunities.
That completes our prepared comments Michelle would you open up the call for questions and answers at this time.
Yes, ma'am, we will now.
Questions from the audience as a reminder, if you would like to ask a question. Please press zero then one on your phone there may be a brief delay before the first question is announced.
We do have several questions at the queue. The first question comes from Luke Lemoine with Piper Sandler. Your line is open Sir. Please proceed.
Hey, good morning Cindy.
Cindy.
Cindy I think your consolidated guidance for 'twenty three weeks a lot of sense.
A couple of the pieces I guess from a well site you've shown substantial improvement kind of throughout 'twenty two on the margin side.
I mean, just kind of level that you showed at <unk>, which we should be expecting kind of going forward.
Yeah, we're optimistic about changes and improvements enhancements that we've made within our completion services operation and in addition to that we're introducing some new technology valve technology, particularly in some 15 K equipment and so I think my reaction to that is you know probably.
60 days, there was less conversation about weak natural gas prices and the impact on both rig counts and completion counts and we generally still remain fairly optimistic on activity broadly, particularly in the oily or plays that's number one and then number two just customer initiatives coupled with some new.
<unk> equipment that we're putting in the field. Thanks.
Helps us be more positive probably about land based activity as we go into 2023.
Okay.
Then and offshore manufactured products. If you if you talk about the order outlook.
But kind of what are you expecting for orders and 23, you know as far as growth maybe.
Kind of composition to where you're kind of seeing in the queue at this point.
You know as you can tell but based on the quarters of 2022, it can vary up and down fairly significantly on a book to bill basis quarter to quarter, but we are projecting and we have our build up quarter by quarter and do expect that will probably.
Don't want to say generously exceed a book to Bill of one times, but I do expect that our annual book to Bill of one one times for 2022 will be exceeded at this point in time in 2023 and are you.
If you go to Q3, it was slightly below Q3 of 'twenty two slightly below our book to Bill followed by a 1.5 times book to Bill So I kind of caution everybody not to get too hung up on quarter by quarter movements in that ratio, we tend to think of.
Our longer term at least an annual look on that ratio but.
But we are expecting to exceed one one times, which we achieved in 2022.
Okay got it thanks much Cindy.
Thank you.
Thank you and the next question comes from Steven Gennaro from Stifel. Your line is open.
Thanks, Hi, Cindy and Lloyd.
Oh.
Two things from me.
The first could you remind us on the well site side.
The U S land pieces about 70% from from.
From a prior data we have is that roughly correct and should we be thinking about or are you thinking about the international piece of world side growing faster than the domestic piece in 'twenty three.
You know and I would say it varies kind of quarter to quarter I'd, probably characterize the domestic piece bearing from maybe 75% to 80% not 70%, but and I you go through periods, where actually we had some weaker international activity.
A year ago, and we're just kind of beginning to see that pick up and we have a more robust outlook in 2023 for international I haven't really done the honestly the growth the relevant growth comparison, we're expecting both to grow quite frankly and I.
Probably proportional growth at this point, but I kind of go back there's been this recent kind of overhang on north American land because of weaker gas prices, but in totality, we're still fairly optimistic about U S land, given our product service offerings, our customer positioning in the equipment.
That we're putting out in the field and so if I want it. It's wagging I just think both of them are going to perform.
Better year over year, and probably equal, but certainly that does represent an improvement in both domestic markets as well as international.
Thank you and when we when we think about the.
The offshore manufactured products, we should maybe just.
Kind of leads into a more general question, but.
When you think about the backlog.
The strength in orders you saw recently.
Will that business.
Grow.
As of when.
Where does that sort of fit in relative to the total revenue guidance you gave as far as about the same greater or worse and I'm just kind of curious what youre thinking on on margins in that business for 23.
Backlog.
Again, we're pretty optimistic we will see growth in all three segments are there, it's slightly I'll call. It proportionately higher growth coming from offshore manufactured products and part of that is I mean, we just had.
Book to Bill of one five times in Q4, so that's going to lead into a.
Some products certainly and you know those are our production facility core products that we're confident in our performance our.
<unk> margin achievement, our delivery time frame for those types of things. So it's a good not only a high book to Bill. It's a good content in that order book that leaves me barely positive. We also exited as I mentioned in my comments with growth on the service side and services typically carry pretty good margins.
Overall you have to.
The good news is that the the one other thing on a consolidated basis that means your incrementals are going to be just a little bit lower than that they might be with just an isolated improvement in completion services once more of a rental service model once a manufactured product sell model put that into context, but.
Our margins showed real improvement from Q3 to Q4, and again with the product mix and the throughput we don't see any adverse impact to our margins at all going forward.
Thank you and then just one final one for me and I guess I'll go by each segment.
All technologies can you talk about the competitive landscape because we've heard I mean, I know you're aware of some of the lawsuits which are out there from one of your competitors.
We changed at the company, but what is the competitive landscape on kind of a doer.
The newer integrated guns versus the <unk>.
She shops buying components of how how your business kind of fits into that.
Dynamic.
Yeah, I think that's a great question on the this is the smaller segment of our business, but on the integrated gun side. There is very good customer acceptance of the integrated gun systems that most third party providers do provide in some capacity or form.
You know and so I think that's a trend and that's a focus for US I think as you realize and importantly, we're working on all the reliability side of that equation to make sure. It is extraordinarily reliable product to our customers, but it's a key focus for us.
As far as the landscape. There are there were certain legal determinations made that I'm I think.
Eases some of the uncertainty around.
The industry adoption and performance the perforating systems generally you can go read the lawsuit outcomes yourself I'm sure as others can but I think it's a more level playing field going forward is how I would characterize it the domestic market has remained competitive.
Particularly with a lot of the wireline companies in sourcing some of their perforating gun systems generally, but by us concentrating more on our key products concentrating on the integrated gun system. It allows us to be more efficient on the manufacturing.
<unk> without a new gun development of new size of niche you know shooting panel blah blah blah.
Specific to every customer I think the market is settling down into very reliable products that can be manufactured.
Manufactured on a more consistent basis that will help us from an efficiency standpoint going forward.
I'd mentioned the other I think key driver for this business going forward for us is international expansion and penetration.
Markets have historically for us Jim been tied to P&I, but we're expanding on the more original completion side of the business and it tends to be some of our more proprietary pieces of equipment, whereas land U S. Still has a decent amount of commoditized components that are sold into it and.
As I mentioned in my comments the domestic mix was much more commoditized in Q4 of them and we just don't make as much money on that so again think about integrated gun systems I think the industry competitive landscape, it's more level now and we're seeing some decent international expanse.
When opportunities those are going to be the keys for this business and for us going forward.
Great that's great color. Thank you Cindy.
Thank you Steven.
Thank you and the next question to queue comes from Kurt <unk> with the benchmark company sorry a proceed.
Hey, good morning.
Hi, Kurt good to hear from you.
Great great great to be on again as always appreciate the color I just wanted to maybe circle back again, just on the overall outlook for for 'twenty three and.
You mentioned that the offshore manufactured product business will probably have faster revenue growth than they were.
L site in downhole.
And then just kind of focusing maybe on welfare downhole.
Those two would grow comparable on a year on year basis, or you know one grow faster than the other based on your customer mix and <unk>.
Product mix and everything else.
Theyre similar but we have a modestly higher growth rate on completion services.
You know partially due to some supply chain challenges that are unique to downhaul shortages of switches right now shortages of power powder Theres, a number of headwinds, particularly in the early part light part of 2022 early part of 2023 that.
While we have growth in all three segments that the the lower to the higher it would be downhole, followed by well site services with the highest one offshore manufactured products and again the blended average is an estimated 15% year over year increase in consol.
Yeah that is right.
Appreciate that so.
You always are pragmatic about you know business dynamics.
Kind of the outlook and yet natural gases.
Not not very conducive you know in terms of Investor psychology or.
Prospective activity.
But I'm just kind of curious and then as you kind of look at the dynamics at play as you know the confidence you have.
Obviously oil basin, holding up better than natural gas, but is there something kind of specific to your customer base.
That will maybe she'll do a bit from potential decline in gas activity. That's question number one.
And number two then is you typically get some churn in and assets or business and theres going to be decline in natural gas activity. There is gonna be a movement to these oil basins, which historically has kind of created some asset on has that competition in some some pricing pressure. So just wanted to get your perspective on how your shield.
Hum.
If you think there's going to be asset on that the competition like we've seen in prior cycles.
Now those are all very valid and timely questions cart, but obviously.
Obviously, we're very attuned to our customers' into market concerns and the impact of pricing, which we all know very well and so I'm going to echo some of what is on the street and saying that I think that one given the growth in the rig count in the Haynesville and 2020.
To has setup power production in that basin number one it has a higher breakeven at least from all the research I've done then the northeast market and so I do think that basin is more sensitive to activity declines. That's number one there are plenty of analysts out there.
Estimating what kind of decline we might be looking at but with this massive switch over the last 15 years or so but to rig count dedicated to oil basins. You know the the overall gas count is probably percentage wise about 20% and I do think that the weakness we will see.
She is likely in the Haynesville a lot people are speculating, maybe 20 to 30 rigs off the basis 73 rigs operating in that market. So that's not a huge impact on total rig count I do think that the northeast holds up better.
Its a narrow customer base up there that we know well and typically our work there is highly complex multi well pads I really don't see a significant change in that northeast market as it relates to our operations.
The next part of your question is if in fact, you do lose some 20 or 30 rigs in the Haynesville does that create downward price pressure in other basins and I'll I'll just be honest for the type of equipment that we have we don't believe that is the case and I will also cite our.
It's been a bit different I, we haven't been pushing 90% utilization and pressing day rates materially in 2022, Unlike maybe other product offerings, where the equipment has been tighter and for that reason I you may have some market shifts but.
You May also just have an improvement in certain other basins offset by some weakness in the haynesville, but in totality, particularly with our international in our Gulf of Mexico exposure Hum.
I'm not going to say I'm totally sanguine about it but I'm not heavily concerned either.
That's great great color really appreciate it thanks.
Thank you.
Thank you and if you do have a question you May press zero.
One on your phone at this time once again to ask a question. Please press zero then one on your phone at this time.
The next question in the queue comes from Sean Mitchell with Daniel Energy Partners. Sir Your line is open. Please proceed.
Hi, Cindy Lloyd.
And thanks for taking my question you mentioned.
I think earlier in the comments were maybe in the Q&A just supply chain challenges with labor and materials I think you alluded to the.
Switches and powder on.
But anything else on supply chain or labor that we should be concerned about in 'twenty three number one or has anything really getting better on the margin.
Ah another fantastic question and I will say that we have been able it's been a.
A lot of effort behind it but we have been able to increase our head count and the completion services side of the business, which helps us manage our work better.
Not necessarily having to move people from one geography to the other and alleviate some of the overtime pressures we've had on our workforce and completion services. So I'd say, a little more favorable trend and completion services, we are still struggling to hire in our manufacturing facilities.
Ladies and the downhole side, that's been part of the challenge, we're working on and and facing at this point in time.
And other.
Other than that I'd say that we you know we like everybody else had to my labor cost increases during 2022.
And but we don't expect is necessarily.
The need to make proportionate like the kind of increases that we saw in 2022 trials to attract and retain the labor that we have so I feel like some of the pressure has moderated but there are still pockets, we still are dealing with very low unemployment.
Unemployment levels and are just have to work through it.
And then maybe one more just as we think about.
Some of your larger competitors across the board. If obviously you talked about deepwater and international inflicting in fact, one of the largest probably competitors in the industry.
Said that they feel like you are in the early stages of a REIT.
Surgeons.
And a meaningful meaningful growth in 'twenty three in deep water.
Is that I mean, it sounds like if I'm reading the tea leaves on your guide here up 15% most of that I think it sounds like you are leaning towards the offshore and international market.
Yeah, we're seeing in our own product lines growth across all three of year over year, but it is weighted more towards offshore manufactured products and to some degree our our visibility is pretty good on order flow in activity because it's weighted towards production infrastructure, meaning we know what's going on in.
The basins are Guiana, Brazil, a lot of those developments are already well underway now it's up to us to bid effectively and get our proportionate share of the awards that are there and I think when you talk about more the enthusiasm you may be talking about actual drilling new.
Drilling and new prospects, where I the deepwater drillers are getting some improvement in both utilization and in rights are number one and you know, we just had an absolute dara and the exploratory drilling for five decades now in deep water and I think people are recognizing that.
You know even some of our politicians recognize that you actually need some.
Crude oil and natural gas to supply the energy needs of the world and.
Whatever reason, we can do.
Right All day long about why activity has slowed as badly as it did certainly transitional investments in other things took the front and center and I think Russia, Ukraine crisis, and the shortages of energy going into the European continent created a different awareness and a different.
<unk> of the needs that we have not only in this country, but in the world and you're just seeing a resurgence of activity that has been really delayed.
For a long time quite frankly, but as it relates to my business the visibility around these development drilling profiles in you know kind of that Atlantic basin area, but particularly Brazil in Guiana or are pretty visible at this point in time.
Great that's great color. Thanks Cindy.
Thank you Sean good to see you next week.
And the next question to queue comes from Stephen <unk> from Stifel. Your line is open Sir.
Thanks, just one follow up you Hugh.
You mentioned I think the the buyback and I'm just curious.
How are you thinking about.
Utilizing it as an opportunistic is it going to be some kind of program system and.
How are you thinking about that versus other capital allocation opportunities.
No I appreciate that question, we're gonna start out slow.
I the quantum.
It's not that big and we recognize that we are at a net debt to.
To EBITDA ratio at the end of 2022 of one four times, so I'd say, we're much more comfortable.
You all know we had a stub period on our first convert that matured.
Matures this month and in fact, we've already paid that off it was about $17 million. So following that we had no maturity until the the next convert comes up in 2026, I can't remember what month or 2026, but the point of that being the industry outlook.
Our backlog development, our free cash flow history, and our outlook for free cash, though suggest yeah. You can now begin a.
A more thoughtful approach to cash return to shareholders. We do plan to be opportunistic and I think in our comments you know we always build significant working capital in the first quarter and that is coupled with the fact that we just bought in the 17 millions at the maturing convert.
So kind of early part probably not going to see a lot of share repurchases, even last year. The bulk of our free cash flow was generated in the second half of the year I see the same trend occurring in this year and so I think it's important to have the authorization in place we do want to be opportunistic in.
As recently as <unk>.
Four months ago, you know our stock was depressed for Reed reasons unknown and it's done better over the last 90.
90 days I'll call it, but I, just think we're gonna be thoughtful and smart.
An absolute given is that a smart.
Organic investments will always be forest, we feel like that's factored in our Capex program. Lloyd told you. We're estimating our inquiries from 20 million to 25 million in 2023, we could flex that if the opportunities present themselves and again that will always be first and should be.
Tuck in acquisitions, we're just not seeing a whole lot right now, but just like we did the small E. S. C acquisition in second first or second quarter last year that is performing very well compared to the acquisition economics and if we have those opportunities they too would be evaluated again.
Our share repurchases.
So long winded way of saying, we're in a better spot in a much different spot than we were two years ago, we're confident in our liquidity position and we know our shareholders are interested in the some.
Some path path towards cash returns so that that's our focus right now, but again long winded way of answering we're gonna be offered is opportunistic.
Particularly in the first half of the year.
Great. Thank you Cindy.
Thank you Steven.
And then we have no further questions at this time I'll turn the call over to Cindy Taylor for closing remarks.
Thank you for hosting today, Michelle and thanks to all of you for your continued interest in oil states and your support.
The company, we do look forward to future discussions as the year progresses, and we're pleased to say that was actually going to be some investor conferences coming in the next three or four.
Months, and so it'll be great to see people in person in the meantime, I hope you have.
A great weekend and the balance of the earning season and will be in contact thing.
<unk>.
Thank you everyone. This concludes today's presentation. Thank you for your participation you may now disconnect.