Q2 2024 Nine Energy Service Inc Earnings Call
Speaker Change: Greetings and welcome to Nine Energy Service second quarter 2024 earnings call. At this time all participants are on a listen-only mode. A question and answer session will follow the formal presentation.
Operator: 24 Earnings call. At this time, all participants are on the list in only mode.
Operator: At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. I will now turn it over to Heather Schmidt.
Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press stars you on your telephone keypad.
Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn it over to Heather Schmidt.
Operator: As you remind of this conference is being recorded, I will now turn it over to Heather Schmidt.
Heather Schmidt: Thank you.
Ann Fox: Good morning everyone, and welcome to the Nine Energy Service, ournings conference called a special results for the second quarter of 2024. With me today are Ann Fox, President and Chief Executive Officer, and Guy Circus, Chief Financial Officer. We appreciate your participation. Some of our comments today may include forward-looking statements reflecting the nine views about future events. Board of looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC.
Heather Schmidt: Thank you. Good morning, everyone, and welcome to the Nine Energy Service Earnings Conference Call to discuss our results for the second quarter of 2024. With me today are Ann Fox, President and Chief Executive Officer, and Guy Sirkes, Chief Financial Officer. We appreciate your participation.
Heather Schmidt: Thank you. Good morning, everyone, and welcome to the Nine Energy Service Earnings Conference Call to discuss our results for the second quarter of 2024. With me today are Ann Fox, President and Chief Executive Officer, and Guy Sirkes, Chief Financial Officer. We appreciate your participation.
Heather Schmidt: Some of our comments today may include forward-looking statements, which are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
Speaker Change: Some of our comments today may include forward-looking statements reflecting NIAID's views about future events.
Speaker Change: Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control.
Speaker Change: These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
Ann Fox: We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Our comments today also include non-GAAP financial measures.
Heather Schmidt: Our comments today also include non-GAAP financial measures; additional details and a reconciliation to the most directly comparable GAAP financial measures are also included in our second quarter press release and can be found in the investor relations section of our website. I will now turn the call over to Ann. Thank you, Heather. Good morning, everyone.
Ann Fox: Additional details and a reconciliation stimulus directly comparable to GAAP financial measures are also included in our second quarter press release and can be found in the Investor Relations section of our website.
Ann Fox: Our comments today also include non-GAAP financial measures. Additional details and a reconciliation to the most directly comparable GAAP financial measures are also included in our second quarter press release and can be found in the investor relations section of our website. I will now turn the call over to Ann.
Ann Fox: I will now turn the call over to Ann. Thank you, Heather. Good morning, everyone. Thank you for joining us today to discuss our second quarter results for 2024. Revenue for the quarter was 132.4 million, which was within our original guidance of 132.140 million. We generated adjusted EBITDA of 9.7 million and diluted EPS of negative 40 cents. During Q2, we continued to see rig declines coming out of an already depressed market, which impacted both our revenue and earnings. Since the end of 2023, we have seen over 40 additional rigs come out of the market. This is following a year in which we had over 150 rigs come off the market, resulting in almost a 200 rate decline since the end of 2022.
Ann Fox: Thank you for joining us today to discuss our second quarter results for 2024. Revenue for the quarter was $132.4 million, which was within our original guidance of $130 to $140 million. We generated adjusted EBITDA of $9.7 million and diluted EPS of negative $0.40.
Ann Fox: Thank you, Heather. Good morning, everyone. Thank you for joining us today to discuss our second-quarter results for 2024.
Ann Fox: Revenue for the quarter was $132.4 million, which was within our original guidance of $130 to $140 million. We generated adjusted EBITDA of $9.7 million and diluted EPS of negative $0.40.
Ann Fox: During Q2, we continued to see rig declines coming out of an already depressed market, which impacted both our revenue and earnings. Since the end of 2023, we have seen over 40 additional rigs come out of the market. This is following a year in which we had over 150 rigs come off the market.
Ann Fox: During Q2, we continued to see rig declines coming out of an already depressed market, which impacted both our revenue and earnings. Since the end of 2023, we have seen over 40 additional rigs come out of the market. This is following a year in which we had over 150 rigs come off the market, resulting in almost a 200 rig decline since the end of 2022. As a spot market business, our revenues and earnings are correlated very closely with the U.S. land rig count, which drives volume and pricing for all of our service lines.
Ann Fox: resulting in almost a 200 rate decline since the end of 2022.
Ann Fox: As a spot market business, our revenues and earnings are correlated very closely with the U.S. land rig count, which drives volume and pricing for all of our service lines. In addition to lower rig counts, we also had full quarter realizations of lower pricing in our cementing business as well as increased weight space across most of our service lines, which negatively impacted margins. As anticipated, cementing revenue was down slightly this quarter due to both a decrease in activity and pricing. This service line has been significantly impacted by the continued rig declines, especially in the Handsome Eagleford Basins.
Ann Fox: As a spot market business, our revenues and earnings are correlated very closely with the U.S. land rig count, which drives volume and pricing for all of our service lines.
Ann Fox: In addition to lower rig counts, we also had full-quarter realizations of lower pricing in our cementing business, as well as increased white space across most of our service lines, which negatively impacted margins. As anticipated, cementing revenue was down slightly this quarter due to both a decrease in activity and lower pricing.
Ann Fox: In addition to lower rig counts, we also had full quarter realizations of lower pricing in our cementing business, as well as increased white space across most of our service lines, which negatively impacted margins.
Ann Fox: This service line has been significantly impacted by the continued rig declines, especially in the Haynesville and Eagleford basins. We have historically seen this business recover quickly and rapidly with the market, and it is one of our most differentiated service lines. Completion tool revenue was down single digits this quarter due to a reduction of tools sold related to U.S. land activity, as well as a decrease in international sales.
Ann Fox: As anticipated, cementing revenue was down slightly this quarter due to both a decrease in activity and pricing.
Ann Fox: This service line has been significantly impacted by the continued rig declines, especially in the Haynesville and Eagleford basins. We have historically seen this business recover quickly and rapidly with the market, and it is one of our most differentiated service lines.
Ann Fox: We have historically seen this business recover quickly and rapidly with the market, and it is one of our most differentiated service lines. Completion tool revenue was down single digits this quarter due to a reduction of tools sold related to U.S. land activity, as well as a decrease in international sales. Growing our international tools business continues to be an important part of our medium to long-term strategy, but our international revenue will continue to be lumpy quarter over quarter. We had a strong quarter in our U.S. refract business. We have run over 300 refract jobs to date for some of the largest acreed holders in the U.S., and have established ourselves as one of the top refract providers.
Ann Fox: Completion tool revenue was down single digits this quarter due to a reduction of tools sold related to U.S. land activity as well as a decrease in international sales.
Ann Fox: Growing our international tools business continues to be an important part of our medium to long-term strategy, but our international revenue will continue to be lumpy quarter over quarter. We had a strong quarter in our U.S. refract business. We have run over 300 refract jobs to date for some of the largest acreage holders in the U.S. and have established ourselves as one of the top refract providers. This will be an important niche market for NINE moving forward.
Ann Fox: Growing our international tools business continues to be an important part of our medium to long-term strategy But our international revenue will continue to be lumpy quarter over quarter
Ann Fox: We had a strong quarter in our U.S. refract business. We have run over 300 refract jobs to date for some of the largest acreage holders in the U.S. and have established ourselves as one of the top refract providers.
Ann Fox: Both our dissolvable and composite plugs continue to perform very well. We are seeing more operators running dissolvables, especially in the toe of the well, as lateral lengths continue to extend. Our customers are getting bigger through consolidation, which often means bigger programs and more complex, difficult completions, as well as higher quality and ESG standards. This is supportive of the adoption of dissolvables in the U.S. market moving forward.
Ann Fox: This will be an important niche market for Nine moving forward. Both our desirable and composite plugs continue to perform very well. We are seeing more operators running dissolvable, especially in the toe of the well, as lateral lengths continue to extend. Our customers are getting bigger through consolidation, which often means bigger programs and more complex, difficult completions, as well as higher quality and ESG standards. This is supportive for the adoption of dissolvables in the U.S. market moving forward. Coiled shooting revenue was down, due mostly to white space in our customer's completion schedules in the U.S., and sustained activity declined in the Hanesville, which has historically accounted for over 50% of Coiled shooting revenue for nine.
Ann Fox: This will be an important niche market for nine moving forward. Both our dissolvable and composite plugs continue to perform very well. We are seeing more operators running dissolvables, especially in the toe of the well, as lateral lengths continue to extend.
Ann Fox: Our customers are getting bigger through consolidation, which often means bigger programs and more complex, difficult completions, as well as higher quality and ESG standards.
Ann Fox: Coil tubing revenue was down due mostly to white space in our customers' completion schedules in the Permian and sustained activity declines in the Haynesville, which has historically accounted for over 50% of coil tubing revenue for NINE. However, despite low activity levels in the Northeast, our wireline team maintained flat revenue quarter over quarter. Wireline is the most competitive service line in which we operate, yet our team continues to differentiate through superior well site execution and service.
Ann Fox: This is supportive for the adoption of dissolvables in the U.S. market moving forward.
Ann Fox: Coiled tubing revenue was down due mostly to white space in our customers completion schedules in the Permian and sustained activity declines in the Haynesville, which has historically accounted for over 50% of coiled tubing revenue for nine.
Ann Fox: Despite low activity levels in the Northeast, our wireline team maintained flat revenue quarter over quarter. Wireline is the most competitive service line in which we operate, yet our team continues to differentiate through superior well-site execution and service. Additionally, our wireline team has been able to supplement pump-down revenue with remedial and gas storage revenue, which is typically more specialized in traditional pump-down operations.
Ann Fox: Despite low activity levels in the Northeast, our wireline team maintained flat revenue quarter over quarter. Wireline is the most competitive service line in which we operate, yet our team continues to differentiate through superior well site execution and service.
Ann Fox: Additionally, our wireline team has been able to supplement pump-down revenue with remedial and gas storage revenue, which is typically more specialized than traditional pump-down operations. I would now like to turn the call over to Guy to walk through the detailed financial information.
Guy Sirkes: Additionally, our wireline team has been able to supplement pump-down revenue with remedial and gas storage revenue, which is typically more specialized than traditional pump-down operations. I would now like to turn the call over to Guy to walk through detailed financial information.
Guy Sirkes: I would now like to turn the call over to Guy to walk through detailed financial information.
Guy Sirkes: Thank you, Ann. As of June 30, 2024, Nine's cash and cash equivalents were 26 million, with 24.8 million of availability under the revolving ABL credit facility, resulting in a total liquidity position of 50.8 million as of June 30, 2024. At June 30, we had 52 million of borrowings under the ABL credit facility. On July 29, 2024, the company borrowed an additional 3 million under the ABL credit facility.
Guy Sirkes: Thank you, Ann. As of June 30, 2024, Nine's cash and cash equivalents were $26 million, with $24.8 million of availability under the revolving ABL credit facility, resulting in a total liquidity position of $50.8 million as of June 30, 2024. At June 30th, we had $52 million of borrowings under the ABL Credit Facility. On July 29, 2024, the company borrowed an additional $3 million under the ABL Credit Facility. At the end of last year, we put a $30 million ATM program in place to provide flexibility for the company.
Guy Sirkes: At the end of last year, we put a $30 million ATM program in place to provide flexibility for the company. During Q2, we sold approximately 4.2 million shares under the ATM program, which generated approximately $6.8 million of net proceeds.
Guy Sirkes: During Q2, we sold approximately 4.2 million shares under the ATM program, which generated approximately $6.8 million of net proceeds. During the second quarter, revenue totaled $132.4 million, with adjusted gross profit of $20.4 million. During the second quarter, we completed 926 cementing jobs, a decrease of approximately 2%. The average blended revenue per job decreased by approximately 3%. Cementing revenue for the quarter was $45.8 million, a decrease of approximately 5%. During the second quarter, we completed 6,353 wireline stages.
Guy Sirkes: During the second quarter, revenue totalled $132.4 million, with adjusted gross profit of $20.4 million. During the second quarter, we completed 926 cementing jobs, a decrease of approximately 2%. The average blended revenue per job decreased by approximately 3%. Sementing revenue for the quarter was $45.8 million, a decrease of approximately 5%. During the second quarter, we completed 6,353 wireline stages, a decrease of approximately 2%. The average blended revenue per stage increased by approximately 2%. Wireline revenue for the quarter was $28 million, which was flat compared to Q1. For completion tools, we completed 23,862 stages; a decrease of approximately 10%.
Guy Sirkes: A decrease of approximately 2%. The average blended revenue per stage increased by approximately 2%. Wireline revenue for the quarter was $28 million, which was flat compared to Q1. For completion tools, we completed 23,862 stages.
Guy Sirkes: a decrease of approximately 2%.
Guy Sirkes: A decrease of approximately 10%. Completion tool revenue was $32.4 million, a decrease of approximately 8%. During the second quarter, our coil tubing day's work decreased by approximately 23 percent, with the average blended day rate increasing by approximately 10 percent. Oil tubing utilization was 49%, with revenue of $26.2 million, a decrease of approximately 15%.
Guy Sirkes: In completion tool revenue was 32.4 million, a decrease of approximately 8%. During the second quarter, our coil tubing days work decreased by approximately 23%, with the average blended day rate increasing by approximately 10%. Coil tubing utilization was 49%, with revenue of 26.2 million, a decrease of approximately 15%.
Guy Sirkes: During the second quarter, the company reported General and Administrative expense of 12.5 million. Depreciation and amortization expense was 9.4 million. The company's tax provision was approximately $0.3 million year-to-date. The provision for 2024 is the result of our tax position and state and non-US tax jurisdictions. The company reported net cash provided by operating activities of 12.9 million. The average DSO for Q2 is 57.1 days. CapExpand for Q2 was 2.5 million, bringing our total spent through June 30 to 8.1 million.
Guy Sirkes: During the second quarter, the company reported general and administrative expense of $12.5 million, and depreciation and amortization expense of $9.4 million. The company's tax provision was approximately $0.3 million year to date. The provision for 2024 is the result of our tax position in state and non-U.S. tax jurisdictions.
Guy Sirkes: During the second quarter, the company reported general and administrative expense of $12.5 million. Depreciation and amortization expense was $9.4 million.
Speaker Change: The company's tax provision was approximately $0.3 million year-to-date.
Guy Sirkes: The company reported net cash provided by operating activities of $12.9 million. The average DSO for Q2 was 57.1 days. CapEx spend for Q2 was $2.5 million, bringing our total spent through June 30th to $8.1 million. We have decreased our full year 2024 CapEx range to $10 to $15 million, down from our original guidance of $15 to $25 million in conjunction with market declines and to preserve liquidity until the market returns to more normalized levels. Our next interest payment of approximately $19.5 million will be paid during Q3, and our cash balance will continue to ebb and flow with our semi-annual interest payment. I will now turn it back to Ann.
Guy Sirkes: We have decreased our full year of 2024 CapExpand to 10 to 15 million, down from our original guidance of 15 to 25 million, conjunction with market declines and to preserve liquidity until the market returns to some more normalized levels. Our next interest payment of approximately 19.5 million will be paid during Q3, and our cash balance will continue to ebb and flow with our semi-annual interest payments.
Speaker Change: We have decreased our full year 2024 CapEx range to $10 to $15 million, down from our original guidance of $15 to $25 million, in conjunction with market declines, and to preserve liquidity until the market returns to more normalized levels.
Ann Fox: I will now turn it back to Ann. Thank you, guys. National gas prices continue to linger around two dollars, which has led to delayed completions, rig declines, and overall more white space in the calendar. The rig count thus far in Q3 is relatively flat, and activity pricing levels are mostly stable. Because of this, we expect Q3 to be relatively flat compared with Q2, with projected revenue between 127 and 137 million. We also anticipate that adjusted EBITDA and our adjusted EBITDA margin will be relatively flat as well. It is extremely difficult to predict commodity prices, but we remain positive on the medium and long-term outlook for the gas market.
Ann Fox: Natural gas prices continue to linger around $2, which has led to delayed completions, rig declines, and overall more white space on the calendar. The rig count thus far in Q3 is relatively flat, and activity pricing levels are mostly stable. Because of this, we expect Q3 to be relatively flat compared with Q2, with projected revenue between $127 and $137 million. We also anticipate that adjusted EBITDA and our adjusted EBITDA margin will be relatively flat as well.
Guy Sirkes: Thank you, Guy.
Speaker Change: Natural gas prices continue to linger around $2, which has led to delayed completions, rig declines, and overall more white space in the calendar.
Speaker Change: The rate count thus far in Q3 is relatively flat and activity pricing levels are mostly stable.
Speaker Change: Because of this, we expect Q3 to be relatively flat compared with Q2, with projected revenue between $127 and $137 million. We also anticipate that adjusted EBITDA and our adjusted EBITDA margin will be relatively flat as well.
Ann Fox: It is extremely difficult to predict commodity prices, but we remain positive on the medium and long-term outlook for gas markets. For the first time in many years, power demand in the U.S. is projected to increase. Some are estimating that domestic power demand could grow by close to 40 percent over the next two decades, versus approximately 9 percent over the preceding 20 years.
Speaker Change: It is extremely difficult to predict commodity prices, but we remain positive on the medium and long-term outlook for the gas markets. For the first time in many years, power demand in the U.S. is projected to increase.
Ann Fox: For the first time in many years, power demand in the U.S. is projected to increase. Some are estimating that domestic power demand could grow by close to 40% over the next two decades versus approximately 9% over the preceding 20 years. 9% exposure to the gas market is approximately 30% to 35% of revenue, and we still believe this is a significant catalyst for growth if natural gas price recovers. We have weathered difficult markets before and have maintained a very strong team across service lines and basins. Our asset-like business model allows us to shift quickly with the markets.
Speaker Change: Some are estimating that domestic power demand could grow by close to 40% over the next two decades versus approximately 9% over the preceding 20 years.
Speaker Change: 9 exposure to the gas market is approximately 30 to 35 percent of revenue and we still believe this is a significant catalyst for growth if natural gas price recovers
Ann Fox: Nine's exposure to the gas market is approximately 30 to 35 percent of revenue, and we still believe this is a significant catalyst for growth if the natural gas price recovers. We have weathered difficult markets before and have maintained a very strong team across service lines and basins. Our asset-light business model allows us to shift quickly with the markets. We are prepared and experienced to capitalize on growing markets and believe we are differentiated in our service and technology offerings. We will now open up the call for Q&A. Thank you. At this time, we'll be conducting a question.
Ann Fox: We are prepared and experienced in capitalizing on growing markets and believe we are differentiated in our service and technology offerings.
Speaker Change: We are prepared and experienced in capitalizing on growing markets and believe we are differentiated in our service and technology offerings.
Operator: We will now open up the call for Q&A. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. In confirmation, tell and indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing those door keys. One moment, please, while we poll for questions.
Operator: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. After the confirmation tone, indicate that your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing this door.
Speaker Change: We will now open up the call for Q&A.
Speaker Change: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: and confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing those door keys.
Operator: One moment, please, while we poll for questions. Our first question comes from Waqar Syed with ATB Capital Markets. Please proceed with your question.
Speaker Change: One moment please while we poll for questions.
Will Car Syed: Our first question comes from Will Car Sayed with ATB Capital Markets. Please proceed with your question. Thank you for taking my questions. What service lines are being positively impacted by the refracts that you're doing? Could you say the first part of the question, which is being positively impacted by refracts? I didn't hear the first part. What service lines are being positively impacted? Thank you, Will Car. That's a great question. We actually offer a full suite of services from our completion tools, division, our cementing division, our wireline, and our coil tubing division. All of those services we can provide in that refract.
Waqar Syed: Thank you for taking my questions. You know, what service lines are being positively impacted by the refracts? What are you doing?
Speaker Change: You know, what service lines are being positively impacted by the refracts that you're doing?
Operator: Could you say the first part of the question, which is being positively impacted by refracts? I didn't hear the first part.
Waqar Syed: What service lines are being positively impacted?
Speaker Change: What service lines are being positively impacted?
Ann Fox: Oh, thank you, Waqar. That's a great question. So, we actually offer a full suite of services from our completion tools division, our cementing division, our wire line, and our coil tubing division. So, all of those services we can provide on that reef rack. So, we're providing a very holistic solution there. I'm very, very excited about our partnership with NuGen and very excited about this market. In fact, we anticipate that this market could experience very significant growth next year.
Ann Fox: We are providing a very holistic solution there. I'm very, very excited about our partnership with NewGen and very excited about this market. In fact, we anticipate that this market could experience very significant growth next year. And the colors should realize that there's really only a handful of folks participating in this market today. And we think we own the lion's share of the current market. So pretty exciting for us to feel so strongly about a growing market, especially in this commodity price backdrop. Great.
Ann Fox: And the callers should realize that there are really only a handful of folks participating in this market today, and we think we own the lion's share of the current market. So, pretty exciting for us to feel so strongly about a growing market, especially in this commodity price backdrop.
Speaker Change: Pretty exciting for us to feel so strongly about a growing market, especially in this commodity price backdrop.
Waqar Syed: Great, and then you mentioned that you see relatively flattish revenues in Q3 versus Q2, and profitability as well. But when we look at the rig count, on average, it appears the rig count could be lower in Q3 versus Q2, especially in some of the areas where that is important to you, to nine, like Haynesville and Permian, even Appalachia. So, is this the refract business that's filling up the gap, or why is your confidence relatively low in relatively flat revenues and profitability?
Ann Fox: And then you mentioned that you see relatively flat issue revenues Q3 versus Q2 and profitability as well. But when you look at the rig count, on average, it appears that rig count could be lower in Q3 versus Q2, especially in some of the areas where they're important to you, to nine, like, you know, Haynes-Willand and Permian, even Appalachia. So, is this the refract business that's, you know, filling up the gap, or why is, you know, relatively your confidence in relatively flat revenues and profitability? Yeah, so it's another great question, Waqar. I mean, a lot of this is, you know, challenging, of course, to predict exactly.
Speaker Change: Okay, great.
Speaker Change: You know, you mentioned that you see relatively flat issue revenues, Q3 versus Q4.
Speaker Change: you too and profitability as well.
Speaker Change: But when we look at the rig count, on average it appears the rig count could be lower in Q3 versus Q2, especially in some of the areas that are important to you, like Hainesville.
Speaker Change: and Permian, even Appalachia. So, is this the refract business that's, you know, filling up the gap or why is, you know, relatively your confidence in relatively flat revenues and profitability?
Ann Fox: Yeah, so it's another great question, Waqar. I mean, a lot of this is, you know, challenging, of course, to predict exactly.
Speaker Change: Yeah, so it's another great question, Waqar. I mean, a lot of this is, you know, challenging, of course, to predict exactly. We are very pleased with the start to the quarter, and July did come in stronger than we had anticipated. Of course, some of that is, you know, refracts. It's also really seeing some very good traction in our cementing business, closing up some of the white space in the coal tubing calendar, really being able to move lots of assets and work into West Texas successfully. So, little bit of gaps that we're closing, and also have really pushed into remedial markets.
Ann Fox: We are very pleased with the start to the quarter, and July did come in stronger than we had anticipated. Of course, some of that is, you know, refracts. It's also really seeing some very good traction in our cementing business, closing up some of the white space in the cool tubing calendar, really being able to move lots of assets and work into West Texas successfully. So, a little bit of gaps that we're closing and also have really pushed into remedial markets inside of National Gas Storage, which is helping us as well. So, again, very hard to predict these outlooks in such a volatile market, but July certainly is a good indicator. So we are remaining hopeful here.
Ann Fox: We are very pleased with the start to the quarter, and July did come in stronger than we had anticipated. Of course, some of that is, you know, refracts. It's also really seeing some very good traction in our cementing business, closing up some of the white space in the coal tubing calendar, and really being able to move lots of assets and work into West Texas successfully. So, a little bit of a gap that we're closing, and we also have really pushed into remedial markets inside of natural gas storage, which is helping us as well. So, again, very hard to predict these outlooks in such a volatile market, but July certainly is a good indicator, so we are remaining hopeful here.
Speaker Change: inside of natural gas storage which is helping us as well. So again very hard to predict these outlooks in such a volatile market but July certainly is a good indicator so we are remaining hopeful here.
Guy Sirkes: Okay, great. And then any indications of where CapEx for Q3 would be? Oh, Waqar, it's guys. So, we've just guided for, you know, for the year. So, you know, we haven't given exact guidance on the split between the quarters. Okay. And then I also want to add one thing there, Waqar, is that one thing we do try to do in these challenging markets is just learn and make the company more efficient and better. And, you know, my chief operating officer and I have been together really since 2014, and he is doing some really unique things with in-house refurb on equipment.
Waqar Syed: Great. And then, any early indications of where CAPEX for Q3 would be?
Speaker Change: Okay, great. And then, any early indications of where CAPAX for Q3 would be?
Guy Sirkes: Hi Waqar, it's Guy. So, we've just guided for, you know, for the year. So, you know, we haven't given exact guidance on the split between...
Speaker Change: Hello Carl, it's Guy. So we've just guided for, you know, for the the year. So, you know, we haven't given exact guidance on the split between the quarters.
Ann Fox: I just also want to add one thing there, Waqar, is that one thing we do try to do in these challenging markets is just learn and make the company more efficient and better. My chief operating officer and I have been together really since 2014, and he is doing some really unique things with in-house refurbs on equipment. Although our CapEx range is lowered, we're just getting leaner and leaner and more efficient in how we're maintaining this equipment, and I think we've really developed an excellent system.
Speaker Change: Okay.
Speaker Change: And then I...
Speaker Change: I just also want to add one thing there, Waqar, is that one thing we do try to do in these challenging markets is just learn and make the company more efficient and better. And my Chief Operating Officer and I have been together really since 2014.
Speaker Change: He is doing some really unique things with in-house refurbs on equipment. So although our CapEx range is lowered, we're just getting leaner and leaner and more efficient in how we're maintaining this equipment. And I think we've really developed an excellent system. So should the market return, I don't think you'll see CapEx come anywhere close to what it used to be, so very, very pleased with that. So these are incremental improvements just to the efficiency of the business for the long term.
Ann Fox: So, although our CapEx range is lowered, we're just getting leaner and leaner and more efficient in how we're maintaining this equipment. And I think we've really developed an excellent system. So, should the market return? I don't think you'll see CapEx come anywhere close to what it would it used to be. So, very, very pleased with that. So, these are incremental improvements just to the efficiency of the business for the long term. That's great, really good to know.
Ann Fox: So, should the market return, I don't think you'll see CapEx come anywhere close to what it used to be, so I am very, very pleased with that. So, these are incremental improvements just to the efficiency of the business for the long term. That's great, really good to know. And then Ann, on the international side for completion tools, how do you see that impacting Q3? Do you have anything built in in your guidance for international sales?
Ann Fox: And then on the international side for completion tools, any, how do you see that impacting Q3? Do you have anything built in your guidance for international sales? International sales is baked into that guidance. And, again, it's going to be lumpy. We are really pleased with this multi-cycle barrier valve. If we were guessing people, we would say for 25, we probably have more work with that, not less work. So, we're pleased with that. But, again, very lumpy and very challenging to predict how those markets go, especially if you know a car when we're still a very small percentage of that.
Ann Fox: That's great, really good to know. And then Ann, on the international side for completion tools, how do you see that impacting Q3? Do you have anything built in in your guidance for international sales?
Ann Fox: International sales are baked into that guidance, and again it's going to be lumpy. But we are really pleased with this multi-cycle barrier valve. If we were guessing people, we would say for 25, we probably have more work with that, not less work. So we're pleased with that, but again, very lumpy and very challenging to predict how those markets go, especially as you know Waqar when we're still a very small percentage of that. So, but pleased with the trajectory.
Ann Fox: International sales is baked into that guidance and again it's going to be lumpy. We are really pleased with this multi-cycle barrier valve. If we were guessing people we would say for 25 we probably have more work with that not less work. So we're pleased with that but again very lumpy and very challenging to predict how those markets go especially as you know with car when we're still a very small percentage.
Ann Fox: So, but, but, please, with the trajectory. Okay, good.
Ann Fox: of that, but pleased with the trajectory.
Waqar Syed: And then overall pricing, has that stabilized now for your cementing and wireline, coal tubing, you know, all these businesses?
Ann Fox: And then overall pricing has that stabilized now for your cementing and wireline cultivating in all these businesses? We do feel like we've seen now stability in that. That doesn't mean there won't be incremental pressures depending on what happens with commodity prices. But yes, I think it's very hard to say. It's stable. Okay, great. Well, thank you very much. That's all I have. Appreciate the color. Thank you, Waqar.
Speaker Change: Okay, good. And then overall pricing, has that stabilized now for your cementing and wireline, coil tubing, you know, all these businesses?
Ann Fox: We do feel like we've now seen stability in that. That doesn't mean there won't be incremental pressures, depending on what happens with commodity prices. But yes, I think it's very fair to say it's stable.
Speaker Change: We do feel like we've seen now stability in that. That doesn't mean there won't be incremental pressures depending on what happens with commodity prices, but yes, I think it's very fair to say it's stable.
Waqar Syed: Great. Well, thank you very much. That's all I have. I appreciate the color. Thank you, Waqar.
Speaker Change: OK.
Speaker Change: Great. Well, thank you very much. That's all I have. I appreciate the color. Thank you, Waqar.
Ann Fox: Thank you, Waqar.
John Daniel: Our next question comes from John Daniel with Daniel Energy. Please proceed with your question. Ann and team. Good morning. When you look at the 300 refract jobs run today, can you give a ballpark estimate? What percent of those are in the Eagle Ford and Bakken? So the vast majority, not 100 percent, but the vast majority because you've got acreage and you've got a lot of cure one acreage and the Eagleford and the Bawken that just was understimulated and those well sites haven't been reclaimed. So the economics, they're really good, and we're just seeing some wonderful results from these refracts.
Operator: Our next question comes from John Daniel with Daniel Energy. Please proceed with your question.
Speaker Change: Our next question comes from John Daniel with Daniel Energy. Please proceed with your question.
John Daniel: Hey, Ann and team. Hey, good morning. Good morning. When you look at the 300 refract jobs run to date, can you give a ballpark estimate of what percent are in the Eagleford and Bakken?
John Daniel: Hey Ann and team. Hey good morning. Good morning. When you look at the 300 refract jobs run to date, can you give a ballpark estimate what percent of those are in the Eagleford and Bakken?
Ann Fox: So, the vast majority, not 100%, but the vast majority because you've got acreage and you've got a lot of Tier 1 acreage in the Eagleford and Bakken that just was under-stimulated, and those well sites haven't been reclaimed. So the economics there are really good, and we're just seeing some wonderful results from these reef racks. To answer your question specifically, an overwhelming majority so far. We are starting in West Texas, so we'll see how that goes.
Speaker Change: So, the vast majority, not 100%, but the vast majority, because you've got acreage and you've got a lot of Tier 1 acreage in the Eagleford and the Bakken that just was under stimulated, and those well sites haven't been reclaimed. So the economics there are really good, and we're just seeing some wonderful results from these refracts. But to answer your question specifically, overwhelming majority so far. We are starting.
Ann Fox: So, but to answer your questions specifically, the overwhelming majority so far, we are starting in West Texas. So we'll see how that goes. Okay, and we look at how many you all have done, and eventually, is hopefully this spreads to other markets. How do you take that? I mean, is there a consulting aspect that could be created here given the expertise? Like, how do you educate operators who might not have done it in the other base? Is that makes any sense? Yeah, no, it's there certainly could be. I mean, we've launched a massive refract book, and we have sent that out to our customers because there really is for us as well as our customers.
John Daniel: in West Texas, so we'll see how that goes.
John Daniel: Okay, and when we look at how many you all have done, and, eventually, as hopefully, this spreads to other markets, how do you take that? I mean, is there a consulting aspect that could be created here, given the expertise? Like, how do you educate operators who might not have done it in the other base, if that makes any sense.
Speaker Change: Okay and when we look at how many you all have done and eventually as hopefully this spreads to other markets how do you take that I mean is there a consulting aspect that could be
Speaker Change: created here given the expertise? Like how do you educate operators who might not have done it in the in the other basins?
Ann Fox: Yeah, no, there certainly could be. I mean, we've launched a massive refrac book, and we have sent that out to our customers because there really is, for us as well as our customers, a lot of learnings. And we're seeing them approach and refract from a number of different angles. So yes, we certainly could. It's very, as you know, actually quite technical. The folks involved, not only are the technologies wonderful, but the personnel involved are extremely talented.
Speaker Change: if that makes any sense.
Speaker Change: Yeah, no, there certainly could be. I mean, we've launched a massive Refrac book, and we have sent that out to our customers, because there really is, for us as well as our customers, there's a lot of learnings. And we're seeing them approach Refrac from a number of different angles. So yes, we certainly could. It's very, as you know, actually quite technical. The folks involved, not only are the technologies wonderful, but the
Ann Fox: There's a lot of learnings, and we're seeing them, you know, approach refract from a number of different angles. So yes, we certainly could. It's a very, as you know, actually quite technical. The folks involved not only are the technologies wonderful, but the personnel involved are extremely talented. These are not easy jobs. And so yes, I think certainly that could be a development for us. And we are just estimating. I mean, it's very hard to think about the size of the market. There's been some analytics folks that say it's roughly two to four percent of the frack market today.
John Daniel: These are not easy jobs. And so yes, I think certainly that could be a development for us. And we are just estimating. I mean, it's very hard to think about the size of the market. There are some analytics folks that say it's roughly two to 4% of the frac market today.
Speaker Change: are extremely talented. These are not easy jobs, and so, yes, I think certainly that could be a development for us.
Speaker Change: are just estimating. I mean, it's very hard to think about the size of market. There's been some analytics folks that say it's roughly two to four percent of the frac market today. I think the most important thing for us is that it's we fully see that this is a growing market.
Ann Fox: I think the most important thing for us is that we fully see that this is a growing market. So we're very excited about that. Okay, it sounds exciting. My next question, Ann, is more of a 30,000 feet question.
John Daniel: I think the most important thing for us is that we fully see that this is a growing market. So we're very excited about that. Okay. My next, it sounds exciting. My next question is more of a very thousand book question; it might come across as a bit of a softball, but it's not meant to. But if you think about the gas markets right now, it feels like it's going to be challenged for a few more quarters at least. But then I think, you know, we and others could probably pay in a pretty realistic scenario where, you know, back half of 25, there's a rush by EMPs to start wanting to ramp activity.
Speaker Change: So, we're very excited about that.
Ann Fox: Okay, it sounds exciting. My next question, Ann, is more of a 30,000-foot question.
Speaker Change: might come across as a bit of a softball, but it's not meant to. But if you think about the gas markets right now, it feels like it's gonna be challenged for a few more quarters, at least.
John Daniel: But then I think, you know, we and others could probably paint a pretty realistic scenario where, you know, in the back half of 25, there's a rush by EMPs to start wanting to ramp up activity. But in between now and then, it seems like we're hearing more and more each quarter from various companies in service, both public and private, kind of dialing back, exposure to the gas markets, closing facilities, or what have you, and it just... It feels like there could be a bit of a train wreck late next year when there's that call for activity. I'm just curious about your thoughts.
Speaker Change: But then I think, you know, we and others could probably paint a pretty realistic scenario where, you know, back half of 25 there's a rush by EMPs to start wanting to ramp activity.
Ann Fox: But in between now and then, it seems like we're hearing more and more each quarter from various companies and servers, both public and private, kind of dialing back exposure to the gas markets, closing facilities, or what have you, and it just feels like there could be like a bit of a train wreck late next year if all of this, when there's that call on activity, I'm just curious to your thoughts, like how do we ramp quickly when they want to ramp quickly? Yeah. Well, thank you for that question. It's important. It's always, you know, it's always tempting in markets like this to slash and burn.
Speaker Change: But in between now and then, it seems like we're hearing more and more each quarter from various companies in service, both public and private, kind of dialing back.
Speaker Change: exposure to the gas markets, closing facilities, or what have you, and it just
Speaker Change: It feels like there could be like a bit of a train wreck.
Speaker Change: late next year when there's that call-on activity. I'm just curious your thoughts. How do we ramp quickly when they want to ramp quickly? Yeah.
Ann Fox: How do we ramp up quickly when they want to ramp up quickly? Yeah. Well, thank you for that question. It's important.
Ann Fox: It's always tempting in markets like this to slash and burn, and anyone, frankly, can do that. That's just the easy way out, and then you cut into the marrow of a company, and you actually have no springback capability, right? If you look back at this company in Q1 of 2022, and you look at the EBITDA versus Q3 of 22, you can clearly see that the team preserved the flexibility to rebound and capture those earnings.
Speaker Change: Well, thank you for that question. It's important.
Speaker Change: It's always tempting in markets like this to slash and burn, and anyone frankly can do that. That's just the easy way out, and then you cut into the marrow of a company and you actually have no choice.
Ann Fox: Like anyone, frankly, can do that. That's just the easy way out. And then you cut into the marrow of a company, and you actually have no spring-back capability, right? So if you look back at this company in Q1 of 2022, and you look at the EBITDA versus Q3 of 22, you can clearly see that the team preserved the flexibility to rebound and capture those earnings. We don't have a dissimilar view from you, John, in regards to the back half of 25. And so we are, and we have done this before, and we have ways to do this where we might change people's positions.
Ann Fox: We don't have a dissimilar view from you, John, in regards to the back half of 25. We have done this before, and we have ways to do it where we might change people's positions. We do hang on to our facilities because if we did not believe in the medium or long-term outlook for natural gas, well, that's a different answer entirely, but we actually think that this is going to be a massive source to supply the power demand that's coming in the United States. You know, pending and it's here.
Ann Fox: We do hang on to our facilities, because if we did not believe in the medium or long-term outlook for natural gas, well, that's a different answer entirely. But we actually think that this is going to be a massive source to supply the power demand that's coming in the United States. So I think, you know, we're, as a country, beginning to realize that this is, you know, pending and it's here. So we think that it could be a train wreck. We think we'll be one of the few service providers in the Northeast that has retained excellent personnel, very good equipment, and we'll be ready to service both the Hainesville and the Northeast markets.
Ann Fox: So we think that it could be a train wreck. We think we will be one of the few service providers in the Northeast that has retained excellent personnel and very good equipment. And we'll be ready to service both the Hainesville and the Northeast markets. And we're obviously very close to our customers there.
Speaker Change: service providers in the Northeast that has retained excellent personnel, very good equipment, and will be ready to service both the Haynesville and the Northeast markets. And we're obviously very close to our customers there. So if it does rebound, you just are dealing with an entirely different competitive landscape than the Permian and the velocity of earnings both for our customers
Ann Fox: So, if it does rebound, you just are dealing with an entirely different, different competitive landscape than the Permian, and the velocity of earnings for both our customers when that gas price moves as well as the velocity of pricing for us is excellent. And we have seen this before, and we all remember 2012 when gas prices were where they are now, and then they rebounded. So, I think the only thing we can firmly say is gas prices won't stay right where they are.
Ann Fox: And we're obviously very close to our customers there. So if it does rebound, you just are dealing with an entirely different competitive landscapes than the Permian. And the velocity of earnings both for our customers, when that gas price moves, as well as the velocity of pricing for us, is excellent. And we have seen this before. And we all remember 2012 where gas prices were, and then they rebounded. So I think the only thing we can firmly say is gas prices won't stay right where they are. They could move down. They could move up. But these markets just don't remain flat.
Ann Fox: They could move down or move up, but these markets just don't remain flat. So I'm actually tremendously hopeful for the back half of next year. I'm also very confident in our team's ability to grind it out for as long as we need to. You've seen how we've reduced cap backs. We were pretty good at surviving these types of markets. So a lot of confidence there. Okay, thank you for your opinion.
John Daniel: So I'm actually tremendously hopeful for the back half of next year. I'm also very confident in our team's ability to, you know, Google for as long as we need to. You've seen how we've reduced catbacks. We were pretty good at surviving these types of markets. So a lot of confidence there. Okay. Thank you for opining.
Speaker Change: We were pretty good at surviving these types of markets, so a lot of confidence there.
Speaker Change: Okay, thank you for opining.
Operator: We have reached the end of the question and answer session.
Operator: We have reached the end of the question and answer session. I would now like to turn the call back over to Ann Fox for closing comments.
Ann Fox: I would now like to turn the call back over to Anne Fox for closing comments. Thank you for your participation in the call today. I really want to thank our employees, our EMP partners, and of course our investors. Thank you.
Speaker Change: We have reached the end of the question and answer session. I would now like to turn the call back over to Ann Fox for closing comments.
Ann Fox: Thank you for your participation in the call today. I really want to thank our employees, our EMP partners, and, of course, our investors.
Operator: This concludes today's conference. You may disconnect your lines at this time. And we thank you for.
Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Speaker Change: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.