Q3 2023 TETRA Technologies Inc Earnings Call

Brady Murphy: in 2023 earnings call. Our third quarter delivered solid financial results in our base business with adjusted EBITDA of $26.1 million. The highest third quarter since the third quarter of 2015, while significantly advancing our strategic initiatives. Because of the second quarter seasonal peak in our northern European industrial chemicals business, the underlying strength of our business is highlighted by our year-on-year growth and our progression from the first quarter. Year-on-year, we grew revenue 12 percent in adjusted EBITDA by 40 percent.

Our third quarter delivered solid financial results in our base business with adjusted EBITDA of $26 1 million the highest third quarter since the third quarter of 2015, while significantly advancing our strategic initiatives.

Because of the second quarter seasonal peak in our northern European industrial chemicals business, the underlying strength of our business as highlighted by our year on year growth in our progression from the first quarter.

Year on year, we grew revenue, 12% and adjusted EBITDA by 40% compared to the third quarter of 2023, we grew revenues 4%.

Brady Murphy: Compared to the third quarter of 2023, we grew revenue's first quarter, sorry, of 2023, we grew revenues 4 percent in adjusted EBITDA by 27 percent. Our 2023 year-to-date adjusted EBITDA of $83 million already well exceeds our full year 2022 adjusted EBITDA of $78 million. As of the end of the third quarter, our trailing 12 months of adjusted EBITDA was $103 million. Furthermore, as of September 2023, our trailing 12 months returned on net capital employed, or Ronsey, a non-gap measure, was 20.7 percent highlighting our focus on driving returns above our cost of capital to enhance shareholder value.

First quarter, sorry of 2023, we grew revenues, 4% and adjusted EBITDA by 27%.

Our 2023 year to date, adjusted EBITDA of $83 million already well exceeds our full year 2022, adjusted EBITDA of $78 million.

As of the end of the third quarter, our trailing 12 months adjusted EBITDA was $103 million.

Furthermore, as of September 2023, our trailing 12 months return on net capital employed our ROTC a non-GAAP measure was 27% highlighting our focus on driving returns above our cost of capital to enhance shareholder value.

Brady Murphy: I'll provide additional color and overall Q3 performance, but first we'd like to highlight a historical milestone for the company. As a reminder, on June 26th of this year, Tetra announced that it had entered into a memorandum of understanding with an indirect wholly-owned subsidiary of a Fortune 500 company for the purpose of pulling respective brine mineral rights in Arkansas's smack-over formation. This was done in support of an application for a 61-38 acre brine production unit with the Arkansas Oil and Gas Commission, or AOGC, for the purpose of bromine and lithium extraction from the brine.

I'll provide additional color on our overall Q3 performance, but first I would like to highlight a historical milestone for the company.

As a reminder, on June 26 of this year <unk> announced that it had entered into a memorandum of understanding with an indirect wholly owned subsidiary of a fortune 500 company for the purpose of pulling respective Brian mineral rights in Arkansas Smack over formation.

This was done in support of an application for our 61 38 acre brine production unit with the Arkansas oil and gas Commission or <unk>.

So the purpose of bromine and lithium extraction from the Bryan.

Brady Murphy: It's September the unit application was unanimously approved by the AOGC, giving Tetra and our partner the rights to develop and produce the brine for bromine production and future lithium production once the lithium royalty is established by the AOGC. With this approval, the binding terms of our MOU have become effective and Tetra and our partner have entered into joint venture negotiations for operating and joint developments agreements relating to the development of the brine unit, with the anticipation of having these agreements in place by the end of the year or early in 2024.

At September the unit application was unanimously approved by the AGC, giving tetra and our partner the rights to develop and produce the Brian for bromine production and future lithium production once the lithium royalty as established by the <unk>.

With this approval the binding terms of our Mou have become effective and tetra and our partner have entered into joint venture negotiations for operating and joint development agreements relating to the development of the Brian unit.

With the anticipation of having these agreements in place by the end of the year or early in 2024.

Brady Murphy: In addition, we completed the data gathering and sampling operations for the second test well with results yielding lithium measurements in the upper smack-over as high as 646 milligrams per liter, or 35% higher than the first test well, which was located on the southern end of the unit that we reported in September of 2022, and bromine values of 5890 milligrams per liter, which are in line with the first test well. These strong concentration results, along with the very positive porosity and well-testing data, are being used to update the lithium and bromine resource report for our approved brine unit, which we plan to complete and release shortly. The updated resource report will update the estimated volumes of lithium and bromine in our unit, and will classify those between measured, indicated, and inferred.

In addition, we completed the data gathering and sampling operations for the second test well with results, yielding lithium measurements and the upper smack over as highest 646 milligrams per liter or 35% higher than the first test well, which was located on the southern end of the unit that we reported in September of 2022.

Bromine values of $58 90 milligrams per liter, which were in line with the first test well.

These strong concentration results along with a very positive prosody and well testing data are being used to update the lithium and bromine resource report for our approved Brian unit, which we plan to complete and really shortly.

The updated resource report, we will update the estimated volumes of lithium and bromine and our unit and will classify those between measured indicated and inferred.

Brady Murphy: Moving back to our third quarter of business results, our completion fluids and product segments continue to see the benefit of strong industrial chemicals margins, as well as the offshore and deep water market recovery. We executed a moderate-sized Tetra CS Neptune job in the UK sector of the North Sea for a deep water supermajor operator, the first Tetra CS Neptune job for this customer. The segment year on year revenue growth was 24% with adjusted even up 42%.

Moving back to our third quarter business results, our completion fluids and product segment continues to see the benefit of strong industrial chemicals margins as well as the offshore and deepwater market recovery.

We executed a moderate sized tetra CS Neptune job in the U K sector of the North Sea for deepwater Supermajor operator, the first Tetra CS Neptune job for this customer the.

The segment year on year revenue growth was 24% with adjusted EBITDA up 42%.

Brady Murphy: The recovering growth in the offshore market that we've been forecasting is well supported by a rise to report which highlights that for the first time since 2014, the average contract duration for high-spec drill chips has surpassed 12 months and committed utilization for ultra-deep water rigs is approximately 90%. In line with his data point, our pipeline of deep water opportunities for offshore completion fluid projects continues to grow, and although the overall activity trend is upward, because deep water completions for Tetra can be as much as five to ten times the value of a non-deep water well, our revenues will experience fluctuations depending on the overall number of customer deep water wells completed in a given quarter.

The recovery and growth in the offshore market that we've been forecasting is well supported by <unk> report, which highlights for the first time since 2014, the average contract duration for high spec drill ships have surpassed 12 months and committed utilization for ultra deepwater rigs is approximately 90%.

In line with this data point, our pipeline of deepwater opportunities for offshore completion fluid projects continues to grow and although the overall activity trend is upward because deepwater completions for tetra can be as much as five to 10 times the value of a non deepwater well our revenues, we will experience fluctuations depending on the <unk>.

Overall number of customer deepwater wells completed in a given quarter.

Brady Murphy: For example, although the deep water recount has remained consistent in the Gulf of Mexico, the number of deep water completions is down in the second half of 23 compared to the last half. Nine operations jobs completed compared to 15 in our record setting Q2. This is driven by the timing of our customers well, drilling operations versus completion activity, which depending on the project can be separated by months. For this reason, as deep water continues to ramp up, it is important to look at Tetra completion fluid projects, completion fluids and products over a longer time horizon than quarter by quarter.

For example, although the deepwater rig count has remained consistent in the Gulf of Mexico. The number of deepwater completions is down in the second half of 'twenty three comparatively tab.

Yeah.

And jobs completed compared to 15 in a record setting Q2.

This is driven by the timing of our customers' well drilling operations versus completion activity, which depending on the project can be separated by months.

For this reason as deepwater continues to ramp up it is part of it is important to look at Tetra completion fluids products completion fluids and products over a longer time horizon than quarter by quarter.

Brady Murphy: Your-to-date Tetra completion fluids and products are up 16% on revenue and 59% on adjusted EBITDA without marked the market losses. I'm also pleased to resolve to the 2023 completion fluids offshore supplier analysis report by Kimberlite, International Oil Field Research. Tetra ranked, remained ranked as the top supplier in the Gulf of Mexico for product quality and overall performance. Kimberlite is an international oil and gas market research and consulting company that uses data collected from one-on-one interviews with operators to assess market trends and establish performance benchmarks for all-fit equipment and service providers. This report indicated that Tetra continues to receive the highest customer loyalty rating as measured by the net promoter score.

Year to date Tetrick completion fluids <unk> products were up 16% on revenue and 59% on adjusted EBITDA without mark to market losses.

I'm also pleased the results of the 2023 completion fluids offshore supplier analysis report by Kimberlite International Oilfield research Central ranked remain ranked as a top supplier in the Gulf of Mexico over product quality and overall performance kimberlite as an international oil and gas market research and consulting company that uses data collected from.

One on one interviews with operators to assess market trends and establish performance benchmark for oilfield equipment and service providers.

This report indicated that Tetra continues to receive the highest customer loyalty ratings as measured by the net promoter score in the third quarter. We were awarded a multi year multi well contract extension with one of the most active deepwater supermajors in the Gulf of Mexico further validating our market position and strength in the region.

Brady Murphy: In the third quarter, we were awarded a multi-year multi-well contract extension with one of the most active deep water super majors in the Gulf of Mexico, further validating our market position and strength in the region. Our chemicals business also posted a strong quarter as manufacturing utilization and production volumes remain strong. Our Tetra chemicals Europe business recently entered into a distribution agreement with European-based GC Rebirth, focusing on calcium chloride extracted from fly ash with no CO2 emissions.

Our chemicals business also posted a strong quarter as manufacturing utilization and production volumes remained strong our.

<unk> chemicals Europe business recently entered into a distribution agreement with a European based GC rieber salt focusing on calcium chloride extracted from fly ash with no Cotwo <unk>. This agreement will provide us with incremental volumes of sustainable and more environmental friendly calcium chloride to supply to our network of customers.

Brady Murphy: This agreement will provide us with incremental volumes of sustainable and more environmental friendly calcium chloride to supply to our network of customers. In our water and flow back services segment, we continued the strong momentum by focusing on margin enhancement by achieving a just a little margin of 19%, which was our fourth consecutive margin of quarter of margin expansion and within our previously announced year-end 2023 adjusted EBITDA margin target. Year over year, our U.S, revenue was relatively flat, even though the U.S, onshore average rig count was down nearly 15% and active fracked fleets down nearly 5% from the third quarter of last year. Sequentially, our U.S, activity was also flat as demand for our products and services has remained resilient in this light downturn.

In our water <unk> Flowback services segment. We continue continued the strong momentum by focusing on margin enhancement by achieving adjusted EBITDA margin of 19%, which was our fourth consecutive margin quarter of margin expansion and within our previously announced year end 2023 adjusted EBITDA.

Margin targets.

Year over year, our U S revenue was relatively flat, even though the U S. Onshore average rig count was down nearly 15% and active frac fleets down nearly 5% from the third quarter of last year sequentially. Our U S activity was also flat as demand for our products and services has remained resilient and the slight downturn.

Brady Murphy: Our target to have the engineering, our engineering completed for our first produced water desalination plant for beneficial reuse applications is on track for year end or early in 2024. In parallel to the engineering design work, we were in commercial discussions with one of the largest North America shell producers for their beneficial reuse projects in multiple unconventional basades and expect to have our first project awarded shortly. We continue to see very strong customer interest and regulatory support for bringing a solution to market not only to reduce the volume of fresh water for fracking operations, but also reducing the number of disposal related seismicity events and bringing a valuable resource to local communities and industries.

Our target to have the engineering, our engineering completed for our first produced water desalination plant for beneficial reuse applications is on track for year end or early in 2024 and parallel to the engineering design work, we were in commercial discussions with one of the largest North America shale producers for their beneficial reuse projects.

In multiple unconventional basins and expect to have our first project awarded shortly we continue to see very strong customer interest and regulatory support for bringing a solution to market not only to reduce the volume of fresh water for fracking operations, but also reducing the number of disposal related seismicity events, and bringing a valuable resource to local.

Communities and industries.

Brady Murphy: Finally, in the third quarter, we received notice from standard lithium exercising the lithium extraction option in the identified acreage outside of the approved Brian unit consistent with our 2017 agreement. Based on the assumptions in standard lithium's preliminary feasibility study of their Southwest Arkansas project, which includes a base case production of 30,000 tons per year of battery quality lithium hydroxide monohydrate or LHM. With a long term selling price of $30,000 per metric ton of LHM, Tetra's illustrative, illustrative royalties will be 22.5 million per year based on our 2.5% royalty on gross lithium revenues without any investments required by Tetra. Further study standard lithium is targeting construction in 2025 and commencing production in 2027.

Finally in the third quarter, we received notice from standard lithium exercising the lithium extraction option in the identified acreage outside of the approved Brian unit consistent with our 2017 agreement.

Based on the assumptions and standard lithium preliminary feasibility study of the southwest Arkansas project, which includes a base case production of 30000 tons per year of battery quality lithium hydroxide hydroxide monohydrate or LH M.

With a long term selling price of $30 per metric ton of La <unk>.

Tetra is illustrative.

<unk> royalties will be $22 5 million per year based on our two 5% royalty on gross lithium revenues without any investments required by et cetera.

Study standard lithium is targeting construction in 2025 and commencing production in 2027.

Brady Murphy: Now turn it over to Leo to provide some additional commentary and we'll open it up for questions.

Now I'll turn it over to <unk> to provide some additional commentary and we'll open it up for questions. Thank you Brady.

Elijio Serrano: Thank you, rating. Completion fluids and product fragment revenue was $73 million. Representing an increase of 24% year on year.

Completion fluids and product segment revenue was $73 million, representing an increase of 24% year on year.

Elijio Serrano: Equentially revenue decreased $25 million. Reflecting a seasonal decline in our Northern Europe industrial calcium chloride business. In addition to two large depotter projects that we expected in the third quarter that did not materialize. Adjusted EBITDA margins, excluding unrealized losses on investments, was 30.2% in our second consecutive quarter, about 30% without the benefit of any large CS Neptune projects. These margins reflect a vertically integrated business model that we have that has significant leverage to higher volumes. The value of a long-term supply agreement that protects us during inflationary periods. In our strong market positions that allow us to pass a long price increases.

<unk> revenue decreased $25 million.

Reflecting a seasonal decline in our northern Europe industrial calcium chloride business.

In addition to two large deepwater projects that we expected in the third quarter that did not materialize.

Adjusted EBITDA margin, excluding unrealized losses on investments was <unk>.

32% and our second consecutive quarter above 30% without the benefit of any large CS Neptune projects.

These margins reflect the vertically integrated business model that we have to have significant leverage to higher volume.

Value of a long term supply agreement that protects us through an inflationary period.

Our strong market position now allow us to pass along price increases.

Elijio Serrano: We have not yet seen a ramp up in activity for our pure flow, long duration battery storage, and electronic lights. Our main customer for pure flow recently received a conditional award for a Department of Energy loan that is expected to support them as they ramp up production in 2024. In the meantime, all available Zingbrow My Fluids are being directed towards high pressure, deep water wealth. Water and Flowback Service is ready to improve 3% year-on-year and was flat sequentially despite the pullback in the U.S, on short drilling and completion activity.

We have not yet seen a ramp up in activity for a pure flow longer recent battery storage electric flight.

Our main customer for pure <unk> recently received a conditional award for a department of energy loan that is expected to support them as they ramp up production in 2024.

In the meantime, all available zinc bromide fluids are being directed toward high pressure deepwater well.

Water <unk> flowback services rating improved 3% year on year and was flat sequentially. Despite the pullback in the U S onshore drilling and completion activity.

Elijio Serrano: I just did a bit down margins improved by 13% year-on-year and by 4% quarter-on-quarter. I just did a bit down margins further improved by 60 basis points from 18.4% in the second quarter to 19% in the third quarter of 2023, which is the highest adjusted even down margins since the fourth quarter of 2018 and is consistent with the goals we set earlier this year.

Adjusted EBITDA margins improved by 13% year on year and by 4% quarter on quarter.

Adjusted EBITDA margins further improved by 60 basis points from 18, 4% in the second quarter.

The 19% in that third quarter of 2023, which is the highest adjusted EBITDA margin since the fourth quarter of 2018.

And is consistent with the goals we set earlier this year.

Elijio Serrano: We remain focused on operational efficiencies, margin expansion and returns from capital. In October, we saw one of the three early production facilities in Argentina to be operated for an amount between $5.6 million with a full payment received in October. Tetra will continue to operate and maintain the EPS on behalf of the operator for a fixed monthly fee. We are also currently in the process of expanding that same EPS to process greater volumes of oil and are in discussion with the same operator to potentially construct one to three additional facilities in the future.

We will remain focused on our operational efficiencies margin expansion and returns on capital.

In October we saw one of the three early production facilities in Argentina to the operator for an amount between five and $6 million.

With a full payment received in October.

<unk> will continue to operate and maintain the EPA on behalf of the operator for a fixed monthly fee.

We are also currently in the process of extending that same EPS.

To process greater volumes of oil and are in discussions with the same operator to potential to construct.

Wanted to the additional facilities in the future.

Elijio Serrano: The sale of the EPS will be reflected in our fourth quarter results that are low margin as we unwind and netbook value are associated with the assets. However, the key thing here is that cash inflow will fully recover our original investment with some very attractive return on capital. Cash flow from operating activities of $40 million in the third quarter of 2023 compared to cash flow from operating activities of $2.1 million in the third quarter of 2022 and compared to $28.4 million in the second quarter of 2023.

The sale of the EPS will be reflected in our fourth quarter, we felt that a low margin as we unwind our net book value associated with the asset.

However, the key thing here is that the cash inflow fully recovering.

Regional investment with a very attractive return on capital.

Cash flow from operating activities of $14 million in the third quarter of 2023.

Compared with cash flow from operating activities of $2 1 million in the third quarter of 2022 and.

And compared to $28 4 million in the second quarter of 'twenty three.

Elijio Serrano: Adjust that free cash flow from continued operations of $7.1 million. Working capital at the end of the first quarter was $110 million and represents a sliding increase over the second quarter due to a temporary building inventory. At the end of the third quarter unrestricted cash was $34 million in availability under our credit revolver was $73 million. The equity at the end of the third quarter was $107 million. Net debt at the end of the third quarter was at $125 million or our net leverage ratio further improved to 1.4 times down from nearly two times just nine months ago.

Adjusted free cash flow from continuing operations was $7 $1 million.

Working capital at the end of the first quarter was $110 million and represents a slight increase over the second quarter.

To a temporary build in inventory.

At the end of the third quarter unrestricted cash of $34 million and availability under our credit revolver was $73 million.

Liquidity ended the third quarter was $107 million.

Net debt at the end of the third quarter with $125 million, our net leverage ratio further improved to one four times.

Down from nearly two times, just nine months ago.

Elijio Serrano: In addition based on Friday's closing prices are holding the standard lithium and CSR compression combined for total market value of approximately $9.5 million in our investment in carbon-free is currently valued at approximately $6.6 million. Combine this investment told almost $16 million.

In addition, based on Friday's closing prices are holding in.

Standard at the end of the CSI Compressco combined with total market value of approximately $9 $5 million.

And our investment in carbon free is currently valued at approximately $6 6 million.

Combined these investments totaled almost $16 million.

Elijio Serrano: Finally, we anticipate strong cash from operating activities in adjusted free cash flow in the fourth quarter driven from the cash proceeds from the EPSL and working capital improvements. Total year 2023 cash from operating activities is expected to be between $70 and $79 million while adjusted free cash flow is expected to be between $35 million and $40 million. This translates to free cash flow between $15 million and $20 million in the fourth quarter driven by improvements in working capital. That's a cash proceeds from the seller EPF I previously mentioned.

Finally, we anticipate strong cash from operating activities and adjusted free cash flow in the fourth quarter.

From the cash proceeds from the ETF sale and working capital improvement.

Total year 2023 cash from operating activities is expected to be between 70 and $79 million.

While adjusted free cash flow is expected to be between 35 and $40 million.

This translates to free cash flow between 15 and $20 million in the fourth quarter driven by improvements in working capital.

The cash proceeds from the seller ETF I previously mentioned.

Elijio Serrano: Our goal coming into this year was to improve the balance sheet and generate 30 to 40 million dollars of free cash low to position as to begin developing and investing our assets of bromine and lithium in Arkansas. I would suggest that we are on plan to achieve this objective. The expected 35 to 40 million dollars this year of free cash low is after investing over $14 million in 2023 on test wells, reservoir analysis, engineering studies, all of your printers for a final investment decision in 2024. We have also built up liquidity of almost $125 million dollars when taking into account our marketable securities and have improved our net leverage ratio to 1.4 times.

Our goal coming into this year was to improve the balance sheet and generate 30% to $40 million of free cash flow.

This decision is to begin developing and investing our assets.

Of bromine and lithium and Arkansas.

I would suggest that we are on plan to achieve this objective.

Do you expect that $35 million to $40 million this year of free cash flow after investing over $14 million.

In 2023 on test wells.

Reservoir analysis.

Engineering studies.

All three programs for a final investment decision in 2024.

We have also built up liquidity.

Almost $125 million when taken into account our marketable securities.

And have improved our net leverage ratio to one four times.

Elijio Serrano: Shortly we'll refinance our $160 million term loan to extend the maturity and create even more liquidity. When you combine the improvements in the balance sheet and the liquidity with the MOU, the salt works and the joint venture arrangements we are finalizing with them. As a reminder, salt works is a fully owned subsidiary of a well-capitalized Fortune 500 company. One will appreciate that we have neatly positioned ourselves to begin developing our Arkansas bromine and lithium assets without diluting our shareholders. Our focus is shareholder value creation by generating a strong return from capital from our base business, leveraging our base business to generate cash to invest in bromine and lithium without diluting our shareholders.

Shortly we will refinance our $163 million term loan to extend the maturity and create even more liquidity.

When you combine the improvements in the balance sheet and the liquidity.

With the Mou with Salt work ended joint venture arrangements, we are finalizing with them.

As a reminder, salt works as a fully owned subsidiary of a well capitalized Fortune 500 company.

One will appreciate that we have neatly positioned ourself to begin developing our arquette, Arkansas bromine and lithium method without diluting our shareholders.

Our focus is shareholder value creation by generating strong returns on capital from our base business.

Leveraging our base business to generate cash to invest in bromine and lithium without diluting our shareholders.

Brady Murphy: I'll turn this back to Brady for closing comments before we open the line for calls.

I'll turn this back to <unk> for closing comments before we open the line for <unk>.

Brady Murphy: Thank you, Lee Hieu.

Thank you Leo I think we'll open up for Q&A and then we will have some closing comments.

Brady Murphy: I think we'll open up for Q&A and then we'll have some closing comments.

Unknown Executive: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Unknown Executive: To withdraw a question, please press star then two. At this time, we'll pause this momentarily to assemble our roster.

At this time, we will pause momentarily to assemble our roster.

Martin Malloy: And our first question will come from Martin Maloy with Johnson Rice. Please go ahead. Good morning. My question is on the deep water activity outlook. And could you give us some perspective, maybe based and by base in North Sea Gulf, Mexico, Brazil in terms of your thoughts on 24 outlook and maybe Neptune, the number of Neptune projects? Sure.

And our first question will come from Martin Malloy with Johnson Rice. Please go ahead.

Good morning.

My question is on the deepwater.

Activity outlook.

And could you give us some perspective, maybe basin by basin, North Sea Gulf of Mexico, Brazil in terms of.

Your thoughts on 'twenty, four outlook and maybe Neptune.

The number of Neptune projects.

Sure.

Brady Murphy: So it's a little early for 2024 until we see customers budgets that we expect to see over the coming months. But in general, we feel very good about our position in the key markets that where we expect to see growth Brazil, certainly being one of them, North Sea, obviously a second one for us and then Gulf of Mexico. We expect to see growth in each of those markets and our market position, you know, we think is strong in each of those markets to benefit from that growth.

So it's a little early for 2024 until we see customers' budgets that we expect to see over the coming months, but in general.

We feel very good about our position in the key markets that where we expect to see growth Brazil.

Certainly being one of them.

North Sea, obviously, a second one for us in Gulf of Mexico.

We expect to see growth in each of those in those markets.

Our market position, we think is strong in each of those markets to benefit from from that growth, but in terms of specific numbers at this point, it's a little premature for us to.

Brady Murphy: But in terms of specific numbers at this point, it's a little premature for us to talk about that. We're really excited about the You know, now pretty much quarter on quarter we're seeing CS Neptune jobs in the North Sea. And again, as a reminder, those jobs are typically a bit, you know, they are quite a bit smaller medium to smaller size jobs compared to the big deep water Gulf of Mexico jobs, but we are tracking several projects that we expect to materialize in 2024 for Neptune, obviously, both in the North Sea and a continuous basis, and also in the Gulf of Mexico and Marty also remind everybody we made three key investments at the end of last year and early this year, we expanded our storage and blending capacity in the Gulf of Mexico and in Brazil.

To talk about that that we're really excited about the.

Now pretty much quarter on quarter, we're seeing CS Neptune jobs in the North Sea and again as a reminder of those jobs are typically a bit.

They are quite a bit smaller medium to smaller sized jobs compared to the big deep water Gulf of Mexico jobs, but we.

We are tracking several projects that we expect to materialize in 2024 four for Neptune.

Obviously, both in the North sea on a continuous basis and also in the Gulf of Mexico.

Marty I'll also remind everybody we made three key investments at the end of last year and early this year, we expanded our storage and blending capacity in the Gulf of Mexico and in Brazil.

Brady Murphy: And then we picked up a talking acquisitions in the North Sea. We've also positioned inventory into each of those key markets, so I would suggest that we prepared ourselves to take advantage of the ramp up on deep water activity.

And then we picked up by a tuck in acquisition in the North Sea <unk>.

Unknown Executive: Great.

We've also positioned inventory into each of those key markets. So I would suggest that we prepared ourselves to take advantage of the ramp up in deepwater activity.

Great and then for my follow up wanted to ask about the desalinization.

Brady Murphy: And then from my follow up, I wanted to ask about the decolonization technology that you have. And I think I heard you say that with this first customer, there could be multiple bases involved. I was wondering if you could maybe give us some additional color in terms of the level of customer interest here. Sure. Yeah, I mean, it's a tremendous customer interest. We have been partnering with a major US North America shale producer as we've gone down this journey.

<unk>.

Technology that you have and.

I think I heard you say that.

With this first customer there could be multiple basins involved.

Okay.

I was wondering if you could maybe give us.

So.

<unk> color in terms of the level of customer interest here.

Sure Yes.

Yes.

Tremendous customer interest we have been partnering with a major.

U S North America shale.

Producer.

As we've gone down this journey.

Brady Murphy: As we've mentioned before, we have two different solutions, one for what we call low salinity, produced water, and then one for high, which the lower TDS water, salinity water is with our high rack partnership with our proprietary free treatment solution. And then for the higher salinity, such as the Permian Basin, which is obviously a larger overall market with our KMX relationship, again with our pre-treatment proprietary solution. So the engineering on both of those is progressing very well.

As we've mentioned before we have.

Two different solutions, one for what we call low solidity.

Produced water.

And then one for highest which the lower lower.

Tds water facility water is with our high wreck partnership.

With our proprietary pre treatment solution.

And then for the higher solidity, such as the Permian Basin, which.

Which is obviously a larger overall market with our <unk> relationship.

Again with our pre treatment proprietary solutions. So the engineering on both of those is progressing very well.

Brady Murphy: We're still on target to either either have it wrapped up by end of the year, potentially bleed into the first part of 2024, but we want, you know, this is very important for us to get this right. But with a very supportive customer that is working with us and the regulatory authorities making very good progress on getting the regulatory authorities to not only create beneficial reuse water, but be able to use it in various applications. In both the Permian Basin, as I mentioned, and in the South Texas project.

We're still on target for either either haven't wrapped up by end of the year potentially bleed into the first part of 2024, but this is very important for us to get this right.

But we have a very supportive customer.

That is working with us and the regulatory authorities, making very good progress on getting the regulatory authorities to.

Not only create beneficial reuse water, but be able to use it in various applications.

In both the Permian basin, and as I've mentioned in the.

South Texas project.

Thank you.

I'll turn it back.

And our next question will come from Stephen <unk> with Stifel. Please go ahead.

Thanks, Good morning, everybody.

Sure.

I think a couple of things one is you.

You talked about the I think a couple of jobs that sort of.

Brady Murphy: We've been showing up in the quarter that you had expected. When we think about. The fourth quarter. How should we think about progression and will one or two of those jobs positively impact the fourth quarter? Yeah, so Stephen we tried to highlight in our comments as deep water jobs become a bigger and bigger portion of our revenue. We are going to see some quarter to quarter fluctuation as I've mentioned we did we did 15 deep water completions in the Gulf of Mexico in our record setting, Q2 and 9 in Q3.

Didn't show up in the quarter that you had.

We had expected.

When we think about.

The fourth quarter, how should we think about progression in one or two of those jobs.

Positively impact.

The fourth quarter.

Yes, so associated when we tried to highlight in our comments.

Deep water jobs become a bigger and bigger portion of our revenue we are going to see some quarter to quarter fluctuation as I've mentioned, we did 15 deepwater.

Deepwater completions in the Gulf of Mexico, and our and our record setting Q2.

And nine in Q3 with I mean, the rig count Hasnt changed amount of activity Hasnt changed its really more of a scheduling.

Brady Murphy: I mean the rig count hasn't changed. The amount of activity hasn't changed. It's really more of a scheduling issue and remember these deep water jobs are worth five to 10 times more revenue to Tetra than a non deep water job. So they move the needle in terms of the number of jobs that get executed. We did have one job that was very unique that was actually canceled because of the dry hole which is very rare as you probably know in a development campaign.

Brady Murphy: Unfortunately that well is not going to come back but that's a pretty rare example of when a job would get canceled. When we think about the fourth quarter I would think about in terms of right now I think we're going to be closer to kind of the Q3 activity levels that we saw in terms of overall deep water completion activity. Relative to the record setting Q2 but again that's why we feel you really need to look at Tetra's business over a longer horizon now because of the timing of these deep water jobs. That is starting to include Brazil.

Issue and remember these deepwater jobs are worth five to 10 times more revenue to tetra than a non deepwater job. So they move the needle in terms of the number of jobs that get executed. We did have one job that was very unique that was actually canceled because of the dry hole, which is very rare.

As you probably know in a development campaign.

Unfortunately that well is not going to come back.

But that's a pretty rare example of a job.

Would get canceled.

When we think about the fourth quarter I would think of it in terms of right now I think we're going to be closer to kind of the Q3.

Activity levels that we saw in terms of overall deepwater completion activity.

Relative to the record set in Q2, but again.

That's why we feel you really need to look at our Petro business over a longer horizon now because of these the timing of these deepwater jobs that is starting to include Brazil.

Brady Murphy: It's going to start to include more deep water jobs in the eastern hemisphere as well.

It's going to start to include more deepwater jobs in the eastern hemisphere as well.

Brady Murphy: Okay great thanks and what we think about the water side I mean it was impressive that your your performance was as good as it was given what's going on in the US land with a little bit of a we think of a short term law and activity but when you think about that business and it's hard for us to sort of separate out the impact of what you're doing down Argentina. Can you give us a sense for so how much of that business is is US land and maybe a couple of the you think that the out performance relative to US land activity levels is sustainable.

Okay, great. Thanks.

Well, we think about the water side I mean, it was impressive that you are.

<unk> your performance versus Curiouser wise, given what's going on.

In the U S land with a little bit of we think short term lull in activity, but when you think about that business and it's hard for us to sort of separate out the impact of of what Youre doing that in Argentina can you give us a sense for how much of that businesses is U S land.

And maybe a couple of them do you think that the outperformance relative to U S land activity levels as sustainable.

Brady Murphy: So the Argentina business is in the mid 20th million dollar a year revenue range with three early production facilities. Q4 is clearly going to be different because we're selling as a one off opportunity the early production facility and the operating fee on a monthly basis to continue to operate the facility will decline. But the vast majority of our business is US sale place highly concentrated in the Permian basin where we think we've got a strong presence and with the sandstorm technology and the water chemistry that we're using on the water side we think those represent competitive advantages and that we've been able to gain market share without deteriorating pricing is evident from the margin improvement that we've seen.

So the Argentina business, it's in the mid <unk>.

Eight year revenue range with the early production facilities.

Q4 is clearly going to be different because we're selling as a one off.

Opportunity the early production facility and the operating fee on a monthly basis to continue to operate that facility will decline.

But the vast majority of our business is U S shale plays.

Concentrated in the Permian Basin, where we think we've got a strong presence and with the.

<unk> strong technology.

And the water chemistry that we're using on the water side. We think those have represented competitive advantages and that we have been able to gain market share without deteriorating pricing is evident from the margin improvement that we've seen.

Brady Murphy: Thanks and if you don't mind one more for me when we we think about the strength in your fluids business obviously we talked about the deep water side and when you think about raw material. Applied to man usage of bromine, the potential ramp and pure fall in 2024 and then sort of the development of the bromine opportunities. How usually triangulate all that around your supply, your margins, and maybe the cap X needs you may have in 24.

Got it thanks.

One more for me when we think about the strength in your fluids business, obviously, you talked about the deepwater side.

When you think about raw material.

Supply demand usage of bromine the potential ramp in pure fall in 2024, and then sort of the development of the bromine opportunities how should we triangulate all of that around your supply your margins and maybe the Capex needs you may have in 'twenty four.

Brady Murphy: Yeah, so Steve, as you know, we have a long term supply agreement with one of the producers in Arkansas, but you know our our demand well exceeds that contract. We have been fortunate to get spot bromine prices that have been fairly attractive this year, relative to prior year. Some of that is just driven by the kind of global bromine market, which you know because of time is economy being down, et cetera, those prices have come down and there's more material available, but we expect that to be a fairly short lived window for us to be able to acquire the volumes at the pricing that we need for bromine, which which again is another reason why by 2026, we will want to have our own supply coming online to keep pace with the our oil and gas business as well as the projections from EOS.

Yeah. So Steve It is as you know we have a long term supply agreement with one of the producers in Arkansas, but.

Our demand well exceeds that contract we have been fortunate to.

Unknown Executive: Great. Thank you for the color. Sure.

To get spot bromine prices that have been fairly attractive this year relative to prior year. Some of that is just driven by the.

Unknown Executive: Thanks, David.

So kind of the global bromine market, which because of China's economy being down et cetera, those prices have come down and theres more material available, but we expect that to be a fairly short lived window for us to be able to.

And acquire the volumes at the pricing that we need for bromine, which again is another reason why by 2026, we will want to have our own supply coming online to keep pace with the.

Our oil and gas business as well as the projections from from <unk>.

Got it great. Thank you for the color.

Sure. Thanks, David.

Timothy Moore: And our next question will come from Tim Moore with EF Hutton. Please go ahead. Thanks, and congratulations on the hearing outcome last month. The Arkansas Oil and gas commission. It was also nice to see. Yeah, I mean, it was great. I was watching that online. It was nice to see the multi year multi well go from Mexico contract extension. And I really appreciated Lee has crystal clear comments about having enough liquidity to vote equity delusion because I'm sure a couple of investors were thinking about that a year ago, but it's very clear.

And our next question will come from Tim Moore with <unk>. Please go ahead.

Thanks, and congratulations on the hearing outcome last month with the Arkansas oil and gas Commission.

Nice to see.

It was great I was watching that online and it was nice to see the multiyear multi well Gulf of Mexico contract extension.

And I really appreciate it Leo is crystal clear comments about <unk>.

Having enough liquidity to avoid equity dilution because I'm sure a couple of investors are thinking about that a year ago, but it's very clear now.

Timothy Moore: Yeah, you don't have to issue equity. I just want to follow up on a one update that Lee had already mentioned about the buyout of the one argentina early production facility. Just at a curiosity, you know, if you look back, you know, the last nine months or so, how are the EBITDA contributions or even the past year from the facilities compared to maybe what you expected. And what do you think next year, you know, another one or two could come online?

After issue equity.

So I just wanted to follow up on a one update already mentioned about the buyout of the <unk>.

One Argentina early production facility.

Just out of curiosity and if you look back at the <unk>.

Last nine months or so.

The EBITDA contribution or even the past year from the.

Facilities compared to maybe what you expected and what do you think next year, another one or two could come online.

Timothy Moore: Is it the next summer or next fall? So the EBITDA contributions are significantly higher than our base water management and slowback business because they're more capital intensive and obviously we're only making the investment to achieve a return on capital. Now, after the first two, we communicated to the market that we would continue to build and operate early production facilities, but we were not going to fund the KPEX on behalf of the customers.

Is there is it will be next summer and next fall.

So the EBITDA contributions are significantly higher.

And then R b.

Water management, and flowback business, because they're more capital intensive.

Obviously, we're only making the investment to achieve a return on capital now after the first two we communicated to the market that we will continue to build and operate an early production facilities, but we were not going to fund the capex on behalf of their customers.

Timothy Moore: We believe that our KPEX will be better served by directing it to our investments in Arkansas that we think have a significantly longer tail to it. We expect that by maybe the back end of next year, we could add a fourth EPF because remember, even though we sold this early production facility, we will continue to operate on behalf of the customer. We just won't get the income associated with the capital invested, but we will continue to get income associated with people and maintenance of that facility. So we're dropping to two owned EPF, and one client-owned APF that we're providing people in equipment, and we'll probably add an hour and late next year of the year after that.

We believe that our capex will be better served by directing it to our investments in Arkansas that we think have a significantly.

Significantly longer.

Tailed to it.

We expect that by maybe the back end of next year, we could add a fourth EPS because remember even though we sold this.

Early production facility, we will continue to operator on behalf of the customer.

We just won't get the income associated with the capital invested.

We'll continue to get income associated with people and maintenance of that facility. So we're dropping.

To two owned EPS.

And one plant on EPS that we're providing people and equipment and we will probably add in Ireland late next year over year after that.

Timothy Moore: Great, that makes a lot of sense, Elijio. And maybe what will be helpful is, I don't want to put any words in your mouth, Brady Gave some comment, maybe on a little bit of a timeline for this, but if we're switching gears maybe to the bromine, the lithium carbonate, equivalent development, projects, you're making a lot of progress there, there'll be the feed study completed soon, and then the preliminary economic assessment, when do you think you maybe can just talk this through kind of the milestones and rough timing, when you think maybe if everything goes well, contracts are signed, could you start building some of the infrastructure in December next year?

Great that makes a lot of sense Leo.

And.

Maybe that will be helpful. As you don't want to put any words your mouth Brady gave some comments maybe.

A little bit of a timeline for this but if we just switching gears maybe to the the.

Bromine lithium carbonate equivalent development projects.

You are making a lot of progress there there'll be the feed study completed soon and then.

The preliminary economic assessment.

When do you think.

Maybe you can just talk us through kind of the milestones and rough timing.

When you're thinking maybe if everything goes well contracts are signed could you start building some of the infrastructure.

Number next year.

Timothy Moore: Well, we certainly feel the construction will start well before that, Tim. So timing-wise, the way we see things playing out, first, now that our binding terms of our MOU go into effect with the unit approval, we are in negotiations with our partner for the joint venture operating agreements, responsibilities, et cetera, between the partners. That's a critical issue, we'd like to think we can have that done if not by the end of the year early in 2024.

While we.

We certainly feel the construction will start well before that.

Tim So.

Timing wise the way, we see things playing out.

Now that our binding terms of our Mou go into effect with the unit approval. We are in negotiations with our partner for the <unk>.

Joint venture operating agreements.

Responsibilities et cetera between the partners.

That's a critical issue we'd like.

I think we can have that done if not by the end of the year early in 2024.

Timothy Moore: In the next couple of weeks, we expect to have our resource report completed. Again, that will quantify the amount of bromine and lithium in our evergreen unit, which will be an important milestone. The feed study, we're anticipating to have completed for lithium within plus minus ten percent from a detailed engineering in the first quarter. And then from that time point, obviously, we'll be working with our respective boards, both our board and our JD partners boards for an FID decision point.

And the next couple of weeks, we expect to have our resource report completed again that will quantify the amount of bromine and lithium.

In.

Our evergreen unit.

Which will be an important milestone.

The feed study, we're anticipating to have completed for lithium within.

Minus 10% from a detailed engineering in the first quarter.

And then from that time point, obviously, we'll be working with our respective boards, both our board and our JV partners' boards.

Four four.

Decision point.

Timothy Moore: But in parallel with all that, we're looking at all the long lead items that we would need to account for if we wanted to start early on this project and understand what those long lead items would look like. Obviously, we've not made any decision on investment on those long lead items, but we're going to be taking a careful and close look at that as we finish up the year as well. So that's kind of the timing of things.

But but in parallel to all of that we're looking at all the long lead items that we would need to account for.

If we wanted to start early on this project and.

And understand what those long lead items would look back obviously, we've not made any decision on investment on those long lead items, but we're going to be taking a careful and close look at that as we finish up the year as well so that's kind of the timing of things.

Timothy Moore: But we would certainly be thinking about starting construction well before second half of 2024. And Tim, our shareholder base does not have a mining background or a large construction background. So I think it's important to keep reiterating the process and the steps of what we've achieved to get there. Because we want to make a decision with as much data to manage the risk of such projects. And again, just to make sure that everybody's on board a quick recap is last year, we published a preliminary economic assessment on the bromine project.

But we would we would certainly be thinking about starting construction will well before the second half of 2024.

And Tim our shareholder base is not does not have a mining background or large construction back. So I think it's important to keep reiterating this process and the steps of what we've achieved.

To get there because we want to make a decision with as much data to manage the risk of such projects.

And again just to make sure that everybody's on board a quick recap is last year we.

Published a preliminary economic assessment on the bromine project and that was after drilling one test well and we laid out in our investor presentation. The extent expected economics on bromine by itself.

Timothy Moore: And that was after drilling one test well. And we laid out in our investor presentation the expected economics on bromine by itself. This year, we're just now completed the second test well. And from there, we're going to be able to move from inferred resources, which is the least defined category. And shortly we'll publish measured and indicated volumes of bromine and lithium, and then from there we can evolve it to move toward the economic assessment on the lithium side once we complete the engineering study.

This year.

<unk> now completed the second test well.

There were going to be able to move from inferred resources, which is the least define category.

And shortly we'll publish measured and indicated volumes of bromine and lithium.

And then from there we can evolve it to move toward the.

Make assessment on the on the lithium side once we complete the engineering study. So there is a series of methodical steps engaged we're going through.

Timothy Moore: So there's a series of methodical steps and gates we're going through to get to a final investment decision and we're going to stick to that discipline to make sure that we manage the risk and fully outline everything that's required to get this done. Now as part of that we expected between last year and this year we will have spent $19 million of cash to do that, some of which we've shared with our joint venture partner but the cash flowed numbers that I talked about earlier are after spending $19 million over the last couple of years with which tells you how strong the base business is to perform me setting us up to invest in Arkansas.

To get to a final investment decision and we're going to stick to that discipline to make sure that we manage the risk and fully outline everything thats required to get this done now as part of that we expect that between last year and this year. We will have spent $19 million of cash to do that.

Some of which we've shared with our joint venture.

<unk>.

The cash flow number that I talked about earlier are after spending $19 million over the last couple of years with which tells you how strong the base business is performing setting us up to invest in Arkansas.

Timothy Moore: Great. Well, Brady Elijio, that was very helpful color in the details with timing of everything. I just have one more question. This is my defalination question. I already got asked. One question that I had was just maybe jumping ahead on bromine related products. That seems like if things go well, that production would probably come on a little bit before lithium. How far in advance would you start having discussions with potential customers or maybe optic supply tied to those brine leases in bromine?

Great.

That was very helpful color on the details on the timing of everything I just have one more question since Mike Desalination question already got asked.

One question I had was just maybe jumping ahead on bromine related.

Products.

That seems like if things go well that production would probably come on a little bit before lifting.

How far in advance would you start having discussions with potential customers. So maybe offtake supply tied to those Brian Wilson bromine would that would that start.

Timothy Moore: Would that start next summer? Or did you have to wait more? Do you have things to place? I think we're well ahead of you on your projected timelines for some of this stuff because clearly EOS we see as a key off-take provider and we're having great discussions with them in terms of meeting their new Z3 ramp up battery demand. So that's one for sure. We have another pure flow customer that we're in discussions with that would not announce publicly.

Next summer or did you have to wait Mark do you have things in place.

Well I think we're well ahead of you on your projected timelines for some of this stuff goes.

Clearly iOS, we see as a key uptake provider and were having.

Having great discussions with them in terms of meeting their new <unk> III.

Ram up battery demand so that.

One for sure we have another.

A pure flow customer that.

Timothy Moore: That's part of this demand requirement for bromine. But on the oil and gas side, we are also having some kind of longer term off-take discussions as well because we've never had our own bromine supply. These are new discussions for us, but now it will be completely integrated from the bromine supply all the way to the end products. These are discussions that are pretty meaningful for us on oil field services side as well. That's terrific. I always like it when companies exceed my own expected timelines.

That we are in discussions with that we have not announced publicly so.

So that's part of this demand requirement for bromine, but on the oil and gas side. We're also having some kind of longer term offtake discussions.

As well because we've never had our own bromine supply.

These are new discussions for us, but now that will be completely integrated from the bromine supply all the way to the end products.

These these are discussions that are pretty meaningful for us with <unk>.

Field services side as well.

That's terrific I always like to <unk> companies.

Unknown Executive: That's great to hear and that's it for my questions. As a reminder, if you have a question, you may press star than one to join the team. Thank you.

<unk> my unexpected timelines thanks.

Operator.

That's great to hear and then that's it for my questions.

Thanks, Tim.

Stephen Gengaro: Our next question will come from Stephen Gingaro with Steve. Please go ahead. Thanks. Two follow-ups for me. The last couple of quarters, and I know there were some circumstances you guided. I was wondering if you had a view of the current consensus, which is around $27 million in EBITDA for the fourth core. Yeah, so we radio mentioned earlier that on the water flow backside, we believe that we can stay approximately at the levels that we're at assuming that there's no material pullback at the end of the year that we've seen historically, even though the last couple of years were not there.

As a reminder, if you have a question you May press Star then one to join the queue.

Our next question will come from Stephen <unk> with Stifel. Please go ahead.

Thanks.

Two follow ups for me.

The last couple of quarters and I know there were some circumstances.

You guided and I was wondering if maybe you had a view.

The current consensus which is around $27 million in EBITDA for the fourth quarter.

Yes.

Brady mentioned earlier that on the water flowback side.

We believe that we can stay approximately at the levels that we're at assuming that there is no material pullback at the end of the year that we've seen here.

Stephen Gengaro: The fourth quarter is really going to depend on timing of some of the big projects that we have anticipated, whether they straddle Q4 and Q1 is to be seen. And it's hard to predict with some of the big projects that we have out there. That makes sense. And then just the final one for me is when you reduce leverage in a lot, and I know there's differences clearly in the business model, but a lot of the least oral service peers have been ultra-focused on free cash flow generation and return to capital.

Historically, even though over the last couple of years, we're not there.

The fourth quarter is really going to depend on timing of some of the big projects that we have anticipated whether they straddled Q4, and Q1 has to be seen.

And it's hard to predict with some of the big projects that we have out there.

Got it that makes sense.

<unk>.

And then just the final one for me is.

When you reduce leverage.

And I know, there's there's differences clearly in the business model a lot of the.

Stephen Gengaro: And I understand you guys have used for that capital as far as investment. But when you think about free cash generation, is there a measure we should use when we think about free cash flow conversion relative to EBITDA or any kind of guidelines you could put around how you think about free cash generation on annual basis. So I look out to next year. Yeah, I would suggest Stephen that in 2022 and 2023 both were significant investment periods for us officially on the onshore site.

At least oral service peers have been ultra focused.

On free cash flow generation and return on capital I understand you guys have uses for that capital as far as investment, but when you think about free cash generation.

Is there a is there.

Measure we should use when we think about free cash flow conversion relative to EBITDA or any kind of guidelines you could put around how you. How you think about free cash generation on an annual basis and I look out to next year.

Yes.

I would suggest Stephen that in 2022 and 2023, those four significant investment period for us, especially on the onshore site.

Stephen Gengaro: We were building up capacity in the Permian Basin. We built three EPS and Argentina. And then on the on the affluent site, we expanded blending and storage capacity in Argentina. I mean, sorry, in Brazil, we did that in the Gulf of Mexico. And then we did a small tuck-in acquisition in the North Sea. I would suggest that the last two years were heavy investment periods. We're going to pull back on those to accelerate free cash flow to direct toward the bromine and lithium assets in Arkansas.

Building up capacity in the Permian Basin, we built to the ETF in Argentina.

And then on the on the fluid side, we expanded blending and storage capacity in Argentina and.

In Brazil, we did that in the Gulf of Mexico, and then we did a small tuck in acquisition in the North Sea.

I would suggest that the last few years, where heavy investment period, we're going to pull back on those to accelerate free cash flow to direct toward.

Brady Murphy: I would expect that in the coming years free cash flow will be in the 40 million dollar range from the base business to help us invest in Arkansas without diluting shareholders. Excellent. Thanks for the color, John. Thank you, Stephen. And this concludes our question and answer session. I'd like to turn the conference back over to Mr. Murphy for any closing remarks. Well, thank you. In closing, we're very pleased with our third quarter results as the best EBITDA third quarter that we've had in eight years since 2015.

The bromine and lithium assets in Arkansas, I would expect that in the coming years free cash flow will be in the $40 million range from the base business to help us invest in Arkansas without diluting shareholders.

Excellent thanks for the color gentlemen.

Thank you Steve.

And this concludes our question and answer session.

I'd like to turn the conference back over to Mr. Murphy for any closing remarks.

Well thank you.

In closing.

We're very pleased with our third quarter results as the best EBITDA third quarter that we've had in eight years since 2015, I am very pleased with where our two businesses sand.

Brady Murphy: I'm very, very pleased with where our two businesses stand, water and flow back, as well as our completed fluids and products, you know, heading into 2024. And clearly, very pleased with the major milestones that we continue to achieve and the strategic opportunities that the company has and the partnerships that we're developing along the way. So we'll keep you posted, but thank you all very much for your participation today. The conference has now concluded.

Water and flowback as well as our completion fluids and products heading into 2024.

And clearly.

Very pleased with the major milestones that we continue to achieve and the strategic opportunities that the company has and the partnerships that we're developing along the way.

So we'll keep you posted but thank you all very much for your participation today.

Unknown Executive: Thank you for attending today's presentation.

Unknown Executive: You may know

Okay.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.