Q2 2024 Patterson-UTI Energy Inc Earnings Call

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Danica: Thank you for standing by. My name is Danica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Patterson-UTI Second Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Danica: Thank you for standing by. My name is Danica, and I will be your conference operator today.

Danica: Thank you for standing by. My name is Danica and I will be your conference operator today.

Danica: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Mike Sabella, Vice President, Investor Relations. Please go ahead.

Danica: At this time, I would like to welcome everyone to the Patterson-UTI Second Quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Danica: After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.

Michael Sabella: I would now like to turn the call over to Mike Sabella, Vice President, Investor Relations.

Michael Sabella: Please go ahead. Thank you, operator.

Michael James Sabella: Thank you, operator. Good morning, and welcome to Patterson-UTI's earnings conference call to discuss our second quarter 2024 results. With me today are Andy Hendricks, President and Chief Executive Officer, and Andy Smith, Chief Financial Officer. As a reminder, statements that are made in this conference call that refer to the company's or management's plans, intentions, targets, beliefs, expectations, or predictions for the future are considered forward-looking statements. These forward-looking statements are subject to risks and uncertainties, as disclosed in the company's SEC filings, which could cause the company's actual results to differ materially. The company undertakes no obligation to publicly update or revise any forward-looking statement.

Michael Sabella: Good morning and welcome to Patterson-UTI's earnings conference call to discuss our second quarter 2024 results. With me today are Andy Hendricks, President and Chief Executive Officer, and Andy Smith, Chief Financial Officer.

Speaker Change: Thank you, operator. Good morning and welcome to Patterson-UTI's earnings conference call to discuss our second quarter 2024 results.

Speaker Change: With me today are Andy Hendricks, President and Chief Executive Officer, and Andy Smith, Chief Financial Officer.

Michael Sabella: As a reminder, statements that are made in this conference call that refer to the company's or management's plans, intentions, targets, beliefs, expectations, or predictions for the future are considered forward-looking statements. These forward-looking statements are subject to risks and uncertainties as disclosed in the company's FCC violence, which could cause the company's actual results to differ materially. The company takes no obligation to publicly update or revise any forward-looking statements.

Speaker Change: As a reminder, statements that are made in this conference call that refer to the company's or management's plans, intentions, targets, beliefs, expectations, or predictions for the future are considered forward-looking statements.

Speaker Change: These forward-looking statements are subject to risks and uncertainties, as disclosed in the company's SEC filings, which could cause the company's actual results to differ materially.

Michael Sabella: Statements made in this conference call include non-GAAP financial measures. The required reconciliation to GAAP financial measures are included on our website, TAKenergy.com, and in the company's press release issued prior to this conference call.

William Andrew Hendricks: The required reconciliation to GAAP financial measures are included on our website, tatenergy.com, and in the company's press release issued prior to this conference call. I will now turn the call over to Andy Hendricks, Patterson UTI's Chief Executive Officer.

Michael James Sabella: Statements made in this conference call include non-GAAP financial measures. The required reconciliation to GAAP financial measures is included on our website, PATEnergy.com, and in the company's press release issued prior to this conference call. I will now turn the call over to Andy Hendricks, Patterson-UTI's Chief Executive Officer. Thank you, Mike.

Andy Hendricks: I will now turn the call over to Andy Hendricks, Patterson-UTI's Chief Executive Officer. Thank you, Mike. Welcome to our second quarter earnings conference call. We are pleased with the way we've been managing our business to the current macro environment. We are focused on deploying a capital-efficient operating strategy that looks to maximize our returns through the cycle. Free cash flow was strong in the first half, demonstrating the resiliency of our business. We are continuing to prove out the free cash flow potential to the company in all macro environments. To September 30th, 2023, or just after the closed in the next tier in Altaira transactions, through June 30th this year, we've used our free cash flow to repurchase 28 million shares for $39 million, pay a steady dividend, and lower our net debt, including leases.

William Andrew Hendricks: Welcome to our second quarter earnings conference call. We are pleased with the way we've been managing our business in the current macro environment. We are focused on deploying a capital efficient operating strategy that looks to maximize our returns through the cycle. Free cash flow was strong in the first half, demonstrating the resiliency of our business. We are continuing to prove out the free cash flow potential of the company in all macro environments. September 30th, 2023 or just after the close of the next tier and Altera transaction.

William Andrew Hendricks: Thank you, Mike. Welcome to our second quarter earnings conference call.

Speaker Change: September 30, 2023 or just after the close of the next tier in Altera Transactions.

William Andrew Hendricks: Through June 30th this year, we've used our free cash flow to repurchase 28 million shares for $309 million, pay a steady dividend, and lower our net debt, including leases. The free cash flow generation capability was a key reason we combined these businesses, and it is proving effective. We will continue to direct our capital to high-return investments and use our capital allocation strategy to maximize value for shareholders. It's increasingly clear that there will be winners and losers in the oil field over the next several years. Our customers recognize that service pricing is just one aspect of maximizing their return. Partnering with the right service provider who can provide both technology and an integrated suite of services is crucial.

Andy Hendricks: The free cash flow generation capability was a key reason we combined these businesses, and it is proving effective. We will continue to direct our capital to high return investments and use our capital allocation strategy to maximize the value for shareholders. It's increasingly clear that there will be winners and losers in the old field over the next several years. Our customers recognize that service pricing is just one aspect of maximizing their returns. And partnering with the right service provider who can provide both technology and an integrated suite of services is crucial. By delivering a superior and differentiated service offering to our customers, we are confident that we can deliver differentiated returns and growth for our investors.

Speaker Change: The free cash flow generation capability was a key reason we combined these businesses and it is proving effective. We will continue to direct our capital to high return investments and use our capital allocation strategy to maximize the value for shareholders.

Speaker Change: It's increasingly clear that there will be winners and losers in the oil field over the next several years. Our customers recognize that service pricing is just one aspect of maximizing their returns, and partnering with the right service provider who can provide both technology and an integrated suite of services is crucial.

William Andrew Hendricks: By delivering a superior and differentiated service offering to our customers, we are confident that we can deliver differentiated returns and growth for our investors. Even outside of industry activity, we see a path for capital efficient growth for Patterson-UTI over the next several years. As one of the U.S. shale's largest drilling and completions companies, we have a unique position in the market. We aim to leverage our position to drive growth for our shareholders

William Andrew Hendricks: By delivering a superior and differentiated service offering to our customers, we are confident that we can deliver differentiated returns and growth for our investors.

Andy Hendricks: Even outside of industry activity, we see a path for capital-efficient growth for Patterson UTI over the next several years. As one of U.S. sales largest drilling and completion companies, we have a unique position in the market. We aim to leverage our position to drive growth for our shareholders. We have recently entered our first fully integrated drilling and completion arrangement with a performance-based contract, where the customer will use our core products and services across an entire pad. We are excited by the initial feedback and believe there are good growth opportunities for an integrated drilling and completion offer.

William Andrew Hendricks: Even outside of industry activity, we see a path for capital-efficient growth for Patterson-UTI over the next several years.

William Andrew Hendricks: As one of U.S. shale's largest drilling and completions companies, we have a unique position in the market. We aim to leverage our position to drive growth for our shareholders. We have recently entered our first fully integrated drilling and completion arrangement with a performance-based contract where the customer will use our core products and services across an entire pad.

William Andrew Hendricks: We have recently entered our first fully integrated drilling and completion arrangement with a performance-based contract where the customer will use our core products and services across an entire pad. We are excited by the initial feedback and believe there are good growth opportunities for an integrated drilling and completion office. By leveraging our position to deliver great value for our customers, we see a unique opportunity to deliver differentiated capital efficient growth for our shareholders. This approach could offer a path to improve long-term returns that would be difficult to replicate.

William Andrew Hendricks: We are excited by the initial feedback and believe there are good growth opportunities for an integrated drilling and completion offering.

Andy Hendricks: By leveraging our position to great value for our customers, we see unique opportunity to great differentiated capital efficient growth for our shareholders. This approach could offer a path to improve long-term returns that would be difficult to replicate. Our integrated drilling and completion offering is enabled by our digital operating systems, allowing both our team and the customers to seamlessly monitor field assets in order to maximize efficiency and reduce operating costs. We believe we have created a unique leader in the oil field, with customers seeing better results as a utilize more of our services. This sets us apart from nearly every other competitor in US jail.

William Andrew Hendricks: By leveraging our position to great value for our customers, we see a unique opportunity to create differentiated capital-efficient growth for our shareholders.

William Andrew Hendricks: This approach could offer a path to improve long-term returns that would be difficult to replicate.

William Andrew Hendricks: Our integrated drilling and completion offering is enabled by our digital operating platform, which allows both our team and the customers to seamlessly monitor field assets in order to maximize efficiency and reduce operating costs. We believe we have created a unique leader in the oil field, with customers seeing better results as they utilize more of our services. This sets us apart from nearly every other competitor in U.S. shale.

William Andrew Hendricks: Our integrated drilling and completion offering is enabled by our digital operating systems, allowing both our team and the customers to seamlessly monitor field assets in order to maximize efficiency and reduce operating costs.

William Andrew Hendricks: We believe we have created a unique leader in the oil field, with customers seeing better results as they utilize more of our services. This sets us apart from nearly every other competitor in U.S. shale.

William Andrew Hendricks: In addition to the strategy in our traditional drilling and completion markets, we're increasingly excited about the potential we have in our power service. There has been a lot of discussion this year around the increasing demand for power in both the oil and gas industry as well as in other industries. Our E&P customers are continuing to electrify their growing production facilities, and local utilities are not in a position to supply all the power demand.

Andy Hendricks: In addition to the strategy and our traditional drilling and completion markets, we are increasingly excited about the potential we have in our power services. There has been a lot of discussion this year around the increasing demand for power in both the oil and gas industry as well as in other industries. Our EMP customers are continuing to electrify their growing production facilities, and local utilities are not in a position to supply all the power demand. Outside of EMPs, we all hear the discussions around new data centers. An individual server component in the data center built today requires three times the energy consumption of a previous network data server.

William Andrew Hendricks: In addition to the strategy in our traditional drilling and completion markets, we are increasingly excited about the potential we have in our power services.

William Andrew Hendricks: There has been a lot of discussion this year around the increasing demand for power in both the oil and gas industry as well as in other industries.

William Andrew Hendricks: Our EMP customers are continuing to electrify their growing production facilities, and local utilities are not in a position to supply all the power demand.

William Andrew Hendricks: Outside of EMPs, we all hear the discussions around new data. An individual server component in a data center built today requires three times the energy consumption of a previous networked data server. And an AI search takes 10 times the amount of energy as a standard internet.

William Andrew Hendricks: Outside of EMPs, we all hear the discussions around new data centers. An individual server component in a data center built today requires three times the energy consumption of a previous networked data server.

Andy Hendricks: And an AI source takes 10 times the amount of energy as a standard Internet search. The demand for power outside of utilities is real. Patterson UTI has an established technology position in power dating back to our 2018 acquisition of an electrical engineering and manufacturing business. Which specializes in medium and high voltage electrical controls, electrical engineering controls automation, microgrid, and where we have developed a proprietary battery energy storage solution. At Patterson UTI, we have primarily used the resources from this business to enhance our drilling rig technology offering. However, this team has also supplied microgrid components and systems to marine vessels, dredge vessels, cranes, and production facilities.

William Andrew Hendricks: And an AI search takes 10 times the amount of energy as a standard internet search. The demand for power outside of utilities is real.

William Andrew Hendricks: The demand for power outside of utilities is real. Patterson-UTI has an established technology position in power, dating back to our 2018 acquisition of an electrical engineering and manufacturing business that specializes in Medium and High Voltage Electrical Controls, Electrical Engineering, Controls Automation, Microgrids, and where we have developed a proprietary battery energy storage solution.

Patterson-UTI: Patterson-UTI has an established technology position in power, dating back to our 2018 acquisition of an electrical engineering and manufacturing business.

Patterson-UTI: which specializes in medium and high voltage electrical controls, electrical engineering, controls automation, microgrids, and where we have developed a proprietary battery energy storage solution.

William Andrew Hendricks: At Patterson-UTI, we have primarily used the resources from this business to enhance our drilling rig technology offer. However, this team has also supplied microgrid components and systems to marine vessels, dredge vessels, cranes, and production facilities. On a recent project, the team supplied microgrid components to a company that builds and operates data centers, and we are in discussions for further possible delivery. Over the last several years, through next year, we have built out our capabilities to provide and deliver large volumes of natural gas and manage large power generation facilities in the field.

Patterson-UTI: At Patterson-UTI, we have primarily used the resources from this business to enhance our drilling rig technology offering.

Patterson-UTI: However, this team has also supplied microgrid components and systems to marine vessels, dredge vessels, cranes, and production facilities.

Andy Hendricks: On a recent project, the team supplied microgrid components to a company that builds and operates data centers, and we are in discussions for further possible deliveries. Over the last several years through next year, we have built out our capabilities, providing deliver large volumes of natural gas and managed large power generation facilities in the field. Our integrated natural gas fueling business has reached critical mass of providing CNG and field gas for roughly 2 million horsepower natural gas-powered equipment. Lost organically by next year in 2021, this business has grown significantly over the past several years. In June, we delivered our 100 million diesel gallon equivalent of natural gas for over 13 billion cubic feet supplied to our customers.

William Andrew Hendricks: Over the last several years through next year, we have built out our capabilities to provide and deliver large volumes of natural gas and manage large power generation facilities in the field.

William Andrew Hendricks: Our integrated natural gas fueling business has reached critical mass in providing CNG and fuel gas for roughly 2 million horsepower of natural gas powered equipment. Launched organically by next year in 2021, this business has grown significantly over the past several years. In June, we delivered our 100 millionth diesel gallon equivalent of natural gas, or over 13 billion cubic feet of gas supplied to our customers. We expect volumes in 2024 to be up more than 25% from 2023. To put our natural gas delivery capacity in perspective, annually, our capacity could generate more than a gigawatt hour of electricity.

William Andrew Hendricks: Launched organically by next year in 2021, this business has grown significantly over the past several years. In June , we delivered our 100 millionth diesel gallon equivalent of natural gas, for over 13 billion cubic feet supplied to our customers.

Andy Hendricks: We expect volumes in 2024 to be up more than 25% from 2020. To put our natural gas delivery capacity and perspective annually, our capacity could generate more than a gigawatt hour of electricity. The majority of our natural gas powered fleets operate with our own natural gas fueling systems, and we are also the preferred CNG provider for multiple third-party frack fleets. Our success stems from our frack plus fuels integration, which we believe lead the industry and deal displacement on dual fuel fleets. Our data shows over 40% more deal displacement compared to competitors, maximizing fuel cost savings and enhancing the marketability of our natural gas powered assets.

William Andrew Hendricks: To put our natural gas delivery capacity in perspective, annually, our capacity could generate more than a gigawatt hour of electricity.

William Andrew Hendricks: The majority of our natural gas-powered fleets operate with our own natural gas fueling, and we are also the preferred CNG provider for multiple third-party fractions. Our success stems from our FRAC Plus fuels integration, which we believe leads the industry in diesel displacement on dual fuel fleets. Our data shows over 40% more diesel displacement compared to competitors, maximizing fuel cost savings and enhancing the marketability of our natural gas powered assets. Disreliability is more crucial for electric fleets where there is no diesel fallback option.

William Andrew Hendricks: The majority of our natural gas powered fleets operate with our own natural gas fueling systems, and we are also the preferred CNG provider for multiple third-party frac fleets.

William Andrew Hendricks: Our success stems from our FRAC Plus fuels integration, which we believe leads the industry in diesel displacement on dual fuel fleets.

William Andrew Hendricks: Our data shows over 40% more diesel displacement compared to competitors, maximizing fuel cost savings and enhancing the marketability of our natural gas powered assets.

Andy Hendricks: This reliability is more crucial for electric fleets, where there is no diesel fallback option. We have also expanded a platform beyond the frack space with several years of history servicing production and midstream-related customers, and see this as upside potential in the future. We are currently introducing new technology that we believe will further extend our lead in blending CNG with fuel gas. This innovation helps customers overcome the many challenges in using their fuel gas to minimize their overall fuel costs more consistently. Our blending technology optimizes natural gas uses various scenarios, with the greatest potential in oil-based, including the Permian Basin, where fuel gas treatment is most complex.

William Andrew Hendricks: This reliability is more crucial for electric fleets, where there is no diesel fallback option.

William Andrew Hendricks: We have also expanded our platform beyond the FRAC space with several years of history servicing production and midstream customers. We are currently introducing new technology that we believe will further extend our lead in blending CNG with fuel gas. This innovation helps customers overcome the many challenges in using their fuel gas to minimize their overall fuel costs more consistently. Our blending technology optimizes natural gas usage in various scenarios.

William Andrew Hendricks: We have also expanded our platform beyond the FRAC space with several years of history servicing production and midstream related customers and see this as upside potential in the future.

William Andrew Hendricks: We are currently introducing new technology that we believe will further extend our lead in blending CNG with fuel gas. This innovation helps customers overcome the many challenges in using their fuel gas to minimize their overall fuel costs more consistently.

William Andrew Hendricks: Our blending technology optimizes natural gas usage in various scenarios, with the greatest potential in oil basins, including the Permian Basin, where fuel gas treatment is most complex.

William Andrew Hendricks: The greatest potential is in oil basins, including the Permian Basin, where fuel gas treatment is most complex. At Patterson-UTI, our power businesses extend beyond our substantial natural gas fueling operations. Our natural gas supply and delivery business and our electrical engineering and controls automation business complement each other as we deliver a broad suite of power services and assets. There is significant demand for these services both inside and outside of the oil field.

William Andrew Hendricks: The Patterson ETI, our power business, is extend beyond our substantial natural gas fueling operations. Our natural gas supply, delivery business, and our electrical engineering and control automation business complement each other as we deliver a broad suite of power services and assets. There is significant demand for these services both inside and outside of the oil field, and we are exploring further opportunities to provide power services for one of our NP customers' production facilities and to a large data center.

Patterson-UTI: At Patterson-UTI, our power businesses extend beyond our substantial natural gas fueling operations. Our natural gas supply and delivery business and our electrical engineering and controls automation business complement each other as we deliver a broad suite of power services and assets.

Patterson-UTI: There is significant demand for these services both inside and outside of the oil field, and we are exploring further opportunities to provide power services for one of our E&P customers' production facilities and to a large data center.

William Andrew Hendricks: And we're exploring further opportunities to provide power services for one of our EMP customers' production facilities and to a large data center. Integration and power are just two areas where we see capital efficient growth beyond the US debt recovery. Our drilling product segment is in the early stages of realizing the international growth we anticipated when we acquired Altera, and there are strong opportunities still ahead in the Middle East and offshore markets. Altera has generated revenue in deep water markets in the North Sea, Guyana, and the Gulf of Mexico.

Andy Hendricks: Integration and power are just two areas where we see capital-efficient growth beyond the U.S. root count recovery. Our drilling product segment is in the early stages of realizing the international growth we anticipated when we acquired Altera. With strong opportunities still ahead in the Middle East and offshore markets, Altera has generated revenue in the deep water markets in the North Sea, Guyana, and the Gulf of Mexico. And we believe this is just the beginning of tapping into this potentially large market. And we will continue to use our capital allocation strategy to enhance our returns over time.

Patterson-UTI: Integration and power are just two areas where we see capital efficient growth beyond the U.S. recount recovery. Our drilling product segment is in the early stages of realizing the international growth we anticipated when we acquired Altera.

Patterson-UTI: With strong opportunities still ahead in the Middle East and offshore markets, Altera has generated revenue in the deep water markets in the North Sea, Guyana, and the Gulf of Mexico. And we believe this is just the beginning of tapping into this potentially large market.

William Andrew Hendricks: And we believe this is just the beginning of tapping into this potentially large market, and we will continue to use our capital allocation strategy to enhance our returns over time. We are three-quarters of the way to our commitment to return at least $400 million to shareholders in 2024 and are evaluating the best use for the remainder of the free cash flow we expect to generate this year. We will focus on the highest return investors.

Patterson-UTI: And we will continue to use our capital allocation strategy to enhance our returns over time.

William Andrew Hendricks: We are three quarters of the way to our commitment to return at least 400 million dollars to shareholders in 2024. And our evaluating the best use for the remainder of the free cash flow we expect to generate this year. We will focus on the highest returning investments. This should amplify the impact from expected operational growth. On the macro front, activity in natural gas basins steady to early in the third quarter, and natural gas prices have improved slightly since the start of the second quarter. We expect a relatively steady outlook for natural gas activity through the rest of 2024.

Patterson-UTI: We are three quarters of the way to our commitment to return at least $400 million to shareholders in 2024 and are evaluating the best use for the remainder of the free cash flow we expect to generate this year.

Patterson-UTI: We will focus on the highest return investments. This should amplify the impact from expected operational growth.

William Andrew Hendricks: This should amplify the impact from expected operational growth. On the macro front, activity in natural gas basins steadied early in the third quarter, and natural gas prices have improved slightly since the start of the second quarter.

Patterson-UTI: On the macro front, activity in natural gas basins steadied early in the third quarter and natural gas prices have improved slightly since the start of the second quarter.

William Andrew Hendricks: We expect a relatively steady outlook for natural gas activity through the rest of 2024. Looking ahead to 2025, there is potential for increased drilling and completion activity in natural gas bays as domestic demand rises and L&G Takeaway starts to come online.

Patterson-UTI: We expect a relatively steady outlook for natural gas activity through the rest of 2024.

William Andrew Hendricks: Looking ahead to 2025, there is potential for increased drilling and completion activity in natural gas basins. As domestic demand rises, and the energy take away starts to come online. On the oil side, our activity trended slightly lower the customer's specific turn from natural gas take away constraints in West Texas and New Mexico. As well as short-term disruption from recent MNA activity. We believe these slight declines in oil basins have likely run their course and anticipate a relatively steady outlook in oil basins through the rest of the year. Against this backdrop, Patterson-UTI has remained discipline in our capital deployment. Even as the market seems to be bottoming in the second half, we are generating strong free cash flow.

Patterson-UTI: Looking ahead to 2025, there is potential for increased drilling and completion activity in natural gas basins. As domestic demand rises and LNG takeaway starts to come online.

William Andrew Hendricks: On the oil side, our activity trended slightly lower than customer-specific churn due to natural gas takeaway constraints in West Texas and New Mexico, as well as short-term disruption from recent M&A activity. However, we believe these slight declines in oil basins have likely run their course and anticipate a relatively steady outlook in oil basins through the rest of the year. Against this backdrop, Patterson-UTI has remained disciplined in its capital

Patterson-UTI: On the oil side, our activity trended slightly lower with customer-specific churn from natural gas takeaway constraints in West Texas and New Mexico, as well as short-term disruption from recent M&A activity.

Patterson-UTI: We believe these slight declines in oil basins have likely run their course and anticipate a relatively steady outlook in oil basins through the rest of the year.

Patterson-UTI: Against this backdrop, Patterson-UTI has remained disciplined in our capital deployment. Even as the market seems to be bottoming in the second half, we are generating strong free cash flow.

William Andrew Hendricks: Even as the market seems to be bottoming in the second half, we are generating strong free cash flow. Looking ahead, we anticipate a modest recovery in US shale activity in 2025, with steady oil markets and growth in natural gas markets from current levels. In our drilling services segment, we saw some impact from slowing shale activity, but our rig count has outperformed the market over a longer period, and Patterson-UTI's rig release is better than the broader market since the start of last year. Our margins continue to outperform compared to previous cycles. In the U.S., we began the third quarter operating 111 rigs and are currently operating 107 rigs.

Andy Hendricks: Looking ahead, we anticipate a modest recovery in U.S. Shale activity in 2025 with steady oil markets and growth in natural gas markets from current levels. In our drilling services segment, we saw some impact from slowing shale activity, but our recount has outperformed the market over a longer period. The Patterson-UTI's rig release is better than the broader markets since the start of last year. Our margins continue to outperform compared to previous cycles. In the U.S., we began the third quarter operating 111 rigs and are currently operating 107 rigs. We believe we are nearing the trough for the year, with customer conversations suggesting that activities likely to remain relatively steady through the rest of the year.

Patterson-UTI: Looking ahead, we anticipate a modest recovery in U.S. shale activity in 2025 with steady oil markets and growth in natural gas markets from current levels.

Patterson-UTI: In our drilling services segment, we saw some impact from slowing shale activity, but our rig count has outperformed the market over a longer period. But Patterson-UTI's rig release is better than the broader market since the start of last year.

Patterson-UTI: Our margins continue to outperform compared to previous cycles.

Patterson-UTI: In the U.S., we began the third quarter operating 111 rigs and are currently operating 107 rigs. We believe we are nearing the trough for the year with customer conversations suggesting that activity is likely to remain relatively steady through the rest of the year.

William Andrew Hendricks: We believe we are nearing the trough for the year, with customer conversations suggesting that activity is likely to remain relatively steady through the rest of the year. By the end of the year, as larger customers prepare for 2025, we could see a modest improvement in our recount as those customers upgrade their high-grade equipment in Completion Services. Customers are likely to use completion activity to manage their budgets for the rest of the year. In the second quarter, we saw increased white space compared to the first quarter.

Andy Hendricks: By the end of the year, as larger customers prepare for 2025, we could see a modest improvement in our recount as those customers high-grade equipment. In completion services, customers are likely to use completion activity to manage their budgets for the rest of the year. In the second quarter, we saw increased white space compared to the first quarter. While some reduction in customer activity was anticipated, there was more white space than we expected in natural gas basins. In the third quarter, we do expect activity will improve slightly in our completion services segment compared to the second quarter, with some elevated white space and frac activity through the rest of the year.

Patterson-UTI: By the end of the year, as larger customers prepare for 2025, we could see a modest improvement in our rig count as those customers high-grade equipment.

Patterson-UTI: In completion services, customers are likely to use completion activity to manage their budgets for the rest of the year. In the second quarter, we saw increased white space compared to the first quarter. While some reduction in customer activity was anticipated, there was more white space than we expected in natural gas basins.

William Andrew Hendricks: While some reduction in customer activity was anticipated, there was more white space than we expected in the natural gas space. In the third quarter, we do expect activity will improve slightly in our Completion Services segment compared to the second quarter, with some elevated white space and frac activity through the rest of the year. In Q2, approximately 10% of our pump hours were from electric equipment, which generated accretive returns compared to our other technologies.

Patterson-UTI: In the third quarter, we do expect activity will improve slightly in our completion services segment compared to the second quarter, with some elevated white space and FRAC activity through the rest of the year.

Andy Hendricks: In Q2, approximately 10% of our pump hours were from electric equipment, which generated a creep of returns compared to our other technologies. We expect the share of electric equipment and our activity to continue to grow. Currently, approximately 80% of our active fleets are capable of being powered by natural gas. We continue to have great success as we roll out our latest round of electric frac equipment. The operating results for equipment that we add into our fleet in the second quarter have been excellent, and customer feedback has been great. Each of the new electric fleets operated at least 500 hours per month of operation, which is a great result and should demonstrate the capabilities of our team and the reliability of our natural gas fueling business that supports these fleets.

Patterson-UTI: In Q2, approximately 10% of our pump hours were from electric equipment, which generated accretive returns compared to our other technologies.

William Andrew Hendricks: We expect the share of electric equipment in our activity to continue to grow. Currently, approximately 80% of our active fleets are capable of being powered by natural gas. We continue to have great success as we roll out our latest round of electric frac equipment. The operating results for equipment that we added to our fleet in the second quarter have been excellent, and customer feedback has been great.

Patterson-UTI: We expect the share of electric equipment in our activity to continue to grow. Currently, approximately 80% of our active fleets are capable of being powered by natural gas.

Patterson-UTI: We continue to have great success as we roll out our latest round of electric frac equipment. The operating results for equipment that we added to our fleet in the second quarter has been excellent, and customer feedback has been great.

William Andrew Hendricks: Each of the new electric fleets operated for at least 500 hours per month of operation, which is a great result and should demonstrate the capabilities of our team and the reliability of our natural gas fueling business that supports. We are addressing the market needs with next-generation frac solutions in a capital-efficient manner. We remain extremely flexible with our technologies and will continue to refine our offerings over the next several years to maximize returns and meet customer needs.

Patterson-UTI: Each of the new electric fleets operated at least 500 hours per month of operation, which is a great result and should demonstrate the capabilities of our team and the reliability of our natural gas fueling business that supports these fleets.

Andy Hendricks: We are addressing the market needs with next generation frac solutions in a capital efficient manner. We remain extremely flexible with our technologies and will continue to refine our offerings over the next several years to maximize returns and meet customer needs. Results in our drilling product segment remain strong, and our tariffs revenue in the U.S. again outperforming the change in the U.S. recount, achieving another record quarter in revenue per industry rig. The trend towards longer ladders benefits Ulterra, and each rig drills more footage per year and requires more drill bits. In the second quarter, packed by the normal spring breakup, we expect sequential improvements starting in the third.

Patterson-UTI: We are addressing the market needs with next-generation frac solutions in a capital-efficient manner. We remain extremely flexible with our technologies and will continue to refine our offerings over the next several years to maximize returns and meet customer needs.

William Andrew Hendricks: Results in our drilling product segment remain strong, and Altera's revenue in the U.S. again outperformed the change in the U.S. rig count, achieving another record quarter in revenue per industry rig. The trend toward longer laterals benefits Altera, as each rig drills more footage per year and requires more drill bits.

Patterson-UTI: Results in our drilling product segment remain strong, and Altera's revenue in the U.S. again outperformed the change in the U.S. rig count, achieving another record quarter in revenue per industry rig.

Patterson-UTI: The trend towards longer laterals benefits Altera, as each rig drills more footage per year and requires more drill bits.

William Andrew Hendricks: The second quarter was impacted by the normal spring breakup, but we expect sequential improvement starting in the third. Internationally, we continue to be impressed with our progress, particularly in Saudi Arabia, with international revenues expected to be at mid-teens percent year over year. Additionally, the segment is experiencing growth in the offshore market, where we have a small but growing market. We are very excited about our future prospects. Even if U.S. shale activity remains relatively stable, we will continue to explore various avenues to grow our returns and free cash flow across our enterprise.

Patterson-UTI: In the second quarter...

Andy Hendricks: Board. Internationally, we continue to be impressed with our progress, particularly in Saudi Arabia, with international revenues expected to be of mid teams for a year-over-year. Additionally, the segment is experiencing growth in the offshore market, where we have a small but growing market share. We are very excited about our future prospects. Even if USHL activity remains relatively stable, we will continue to explore various avenues to grow our returns of free cash flow across our enterprise. Strategic investments uniquely positioned us as a business that can help our customers enhance their returns, but we'll also enhance our own returns.

Patterson-UTI: impacted by the normal spring breakup, but we expect sequential improvement starting in the third quarter.

Patterson-UTI: Internationally, we continue to be impressed with our progress, particularly in Saudi Arabia, with international revenues expected to be up mid-teens percent year over year.

Patterson-UTI: Additionally, the segment is experiencing growth in the offshore market where we have a small but growing market share.

Patterson-UTI: We are very excited about our future prospects.

Patterson-UTI: Even if U.S. shale activity remains relatively stable, we will continue to explore various avenues to grow our returns and free cash flow across our enterprise. Strategic investments uniquely position us as a business that can help our customers enhance their returns

William Andrew Hendricks: Strategic investments uniquely position us as a business that can help our customers enhance their returns while also enhancing our own returns. We believe our suite of products and services positions us to lead Shale into its next phase of development over the next several years. I'll now turn it over to Andy Smith, who will review the financial results for the second quarter. Thanks, Andy. Total reported revenue for the quarter was $1,348,000,000.

Andy Hendricks: We believe our suite of products and services positions us to lead scale into its next phase of development over the next several years.

Patterson-UTI: We believe our suite of products and services positions us to lead Shale into its next phase of development over the next several years.

Andy Smith: We reported a net income attributable to common shareholders of $11 million, or $0.03 per share, in the second quarter. This included $11 million in merger and integration expenses. Adjusted EBITDA for the quarter totaled $324 million, which also excludes the previously mentioned merger and investment.

Andy Smith: I'll now turn it over to Andy Smith, who will review the financial results for the second quarter. Thanks, Andy. Total reported revenue for the quarter was $1 billion, $348 million. We reported a net income attributable to common shareholders of $11 million, or $3 per share, in the second quarter. This included $11 million in merger and integration expenses. Adjusted even for the quarter total, $324 million, which also excludes the previously mentioned merger and integration expenses. Our weighted average share count was 400 million shares during Q2, and we exit the quarter with 394 million shares outstanding. Our free cash flow for the first half of the year was $26 million.

Patterson-UTI: I'll now turn it over to Andy Smith who will review the financial results for the second quarter. Thanks Andy.

Andy Smith: Total reported revenue for the quarter was $1,348,000,000.

Andy Smith: We reported a net income attributable to common shareholders of $11 million, or $0.03 per share, in the second quarter.

Andy Smith: This included $11 million in merger and integration expenses.

Andy Smith: Adjusted EBITDA for the quarter totaled $324 million, which also excludes the previously mentioned merger and integration expenses.

Andy Smith: Our weighted average share count was 400 million shares during the quarter, and we exited the quarter with 394 million shares outstanding. Our free cash flow for the first half of the year was $206 million. During the second quarter, we returned $164 million to shareholders, including an 8 cent per share dividend. $132 million used to repurchase 12 million shares; During the second quarter, we again opportunistically accelerated our share repurchase program given the dislocation between the share price and our view of the intrinsic value of a share of Patterson-UTI stock.

Andy Smith: Our weighted average share count was 400 million shares during Q2, and we exited the quarter with 394 million shares outstanding.

Andy Smith: Our free cash flow for the first half of the year was $206 million.

Andy Smith: During the second quarter, we returned $164 million to shareholders, including an eight-cent per share dividend and $132 million used to repurchase 12 million shares.

Andy Smith: During the second quarter, we returned $164 million to shareholders, including an $0.08 per share dividend and $132 million used to repurchase 12 million shares.

Andy Smith: During the second program, given the dislocation between the share price and our view of the intrinsic value of a share of Patterson UTI stock. In the three-fold quarter since we closed the next year merger and Deltera acquisition, we have used $309 million to repurchase $28 million shares. This is in addition to reducing net debt, including leases, and paying a steady dividend. In our drilling services segment, second quarter revenue was $440 million; drilling services adjusted gross profit was $179 million during the quarter. In U.S. contract drilling, we totaled $10,388 operating days. Average rig revenue per day was $36,430, with an average rig operating cost per day of $20,230.

Andy Smith: During the second quarter, we again opportunistically accelerated our share repurchase program given the dislocation between the share price and our view of the intrinsic value of a share of Patterson-UTI stock.

Andy Smith: In the three full quarters since we closed the next-year merger and Altera acquisitions, we have used $309 million to repurchase 28 million shares. This is in addition to reducing net debt, including leasing, paying a steady, In our drilling services segment, second-quarter revenue was $440 million. Drilling services adjusted gross profit totaled $179 million during the quarter. In U.S. contract drilling, we totaled 10,388 operations

Andy Smith: In the three full quarters since we closed the next-year merger and Delterra acquisition, we have used $309 million to repurchase 28 million shares.

Andy Smith: This is in addition to reducing net debt, including leases, and paying a steady dividend.

Andy Smith: In our drilling services segment, second quarter revenue was $440 million.

Andy Smith: Drilling Services Adjusted Gross Profit totaled $179 million during the quarter.

Andy Smith: In U.S. contract drilling, we totaled 10,388 operating days.

Andy Smith: Average rig revenue per day was $36,430, with an average rig operating cost per day of $20,230. The average adjusted rig gross profit per day was $16,190. Slight increase from the prior quarter. Our revenue per day was slightly stronger than we expected. On June 30th, we had term contracts for drilling rigs in the U.S. providing for approximately $433 million of future day rate drilling revenue. Based on contracts currently in place, we expect an average of 63 rigs operating under term contracts during the third quarter of 2024 and an average of 39 rigs operating under term contracts over the four quarters ending June 30, 2024.

Andy Smith: Average rig revenue per day was $36,430 with an average rig operating cost per day of $20,230.

Andy Smith: The average adjusted rig gross profit per day was $16,190, a slight increase from the prior quarter. Our revenue per day was slightly stronger than we expected. On June 30th, we had term contracts for drilling rigs in the U.S. providing for approximately $433 million of future day rate drilling revenue. Based on contracts currently in place, we expect an average of 63 rigs operating under term contracts during the third quarter of 2024, and an average of 39 rigs operating under term contracts over the four quarters ending June 30th, 2025.

Andy Smith: The average adjusted rig gross profit per day was $16,190, a slight increase from the prior quarter.

Andy Smith: Our revenue per day was slightly stronger than we expected.

Andy Smith: On June 30th, we had term contracts for drilling rigs in the U.S. providing for approximately $433 million of future day rate drilling revenue.

Andy Smith: Based on contracts currently in place, we expect an average of 63 rigs operating under term contracts during the third quarter of 2024, and an average of 39 rigs operating under term contracts over the four quarters ending June 30, 2025.

Andy Smith: In our other drilling services businesses besides US contract drilling, which is mostly international contract drilling and directional, second quarter revenue was $62 million with an adjusted gross profit of $11 million. For the third quarter, in U.S. contract drilling, we expect to average 108 active rigs, with adjusted gross profit per operating day of roughly $15,000.

Andy Smith: In our other drilling services businesses, the side U.S. contract drilling, which is mostly international contract drilling and directional. Drilling, second quarter revenue was $62 million with an adjusted gross profit of $11 million. For the third quarter, in U.S. contract drilling, we expect to average 108 active rigs, with an adjusted gross profit per operating day of roughly $15,000. The lower margins are a function of contract rollovers and a lower rig count that is impacting fixed cost of absorption for our U.S. contract drilling business.

Andy Smith: In our other drilling services businesses besides U.S. contract drilling, which is mostly international contract drilling and directional drilling, second quarter revenue was $62 million with an adjusted gross profit of $11 million.

Andy Smith: For the third quarter, in U.S. contract drilling, we expect to average 108 active rigs with adjusted gross profit per operating day of roughly $15,000.

Andy Smith: The lower margins are a function of contract rollovers and a lower rig count that is impacting fixed costs for our U.S. contract drilling. Aside from U.S. contract drilling, we expect other drilling services adjusted gross profit to be down slightly compared to the second quarter. Revenue for the second quarter in our Completion Services segment totaled $805 million, with an adjusted gross profit of $152 million. As expected, we saw increased calendar white space in the second quarter on a small number of dedicated... In addition, several other dedicated fleets saw reduced pumping hours for natural gas.

Andy Smith: The lower margins are a function of contract rollovers and a lower rig count that is impacting fixed cost absorption for our U.S. contract drilling business.

Andy Smith: Aside from U.S. contract drilling, we expect other drilling services adjusted gross profit to be down slightly compared to the second quarter. Revenue for the second quarter in our completion services segment total $805 million, with an adjusted gross profit of $152 million. As expected, we saw increased calendar white space in the second quarter on a small number of dedicated fleets. In addition, several other dedicated fleets saw reduced pumping hours in natural gas spaces. Revenue from our West Texas operations was in line with expectations during the quarter. We see an increase in our completion activity in the third quarter, although we do see elevated white space compared to normal operations, as our customers looked to spend within their budgets for the year.

Andy Smith: Aside from U.S. contract drilling, we expect other drilling services adjusted gross profit to be down slightly compared to the second quarter.

Andy Smith: Revenue for the second quarter in our Completion Services segment totaled $805 million with an adjusted gross profit of $152 million.

Andy Smith: As expected, we saw increased calendar white space in the second quarter on a small number of dedicated fleets.

Andy Smith: In addition, several other dedicated fleets saw reduced pumping hours in natural gas basins.

Andy Smith: Revenue from our West Texas operations was in line with expectations. We saw an increase in our completion activity in the third quarter, although we do see elevated white space compared to normal operations. As our customers look to spend within their budget, For the third quarter, we expect completion services adjusted gross profit to increase slightly, driven mostly by higher activity in natural gas, with oil basin steady. Second quarter drilling products revenue totaled $86 million, which was down 4% sequentially, and adjusted gross profit was $40 million.

Andy Smith: Revenue from our West Texas operations was in line with expectations during the quarter.

Andy Smith: We see an increase in our completion activity in the third quarter, although we do see elevated white space compared to normal operations, as our customers look to spend within their budgets for the year.

Andy Smith: For the third quarter, we expect completion services adjusted gross profit to increase slightly, driven mostly by higher activity in natural gas spaces with oil-based and steady. Second quarter drilling products revenue total $86 million, which was down 4% sequentially. Adjusted gross profit was $40 million. In the U.S. revenue per industry rig, improved compared to the first quarter as the company continues to see strong market penetration and steady pricing. The segment did see at the client in revenue in Canada due to normal spring break-up, while international revenues were steady compared to the prior quarter. For the third quarter, we expect drilling products resolved to improve slightly compared to the second quarter.

Andy Smith: For the third quarter, we expect completion services adjusted gross profit to increase slightly, driven mostly by higher activity in natural gas basins, with oil basins steady.

Andy Smith: Second quarter drilling products revenue totaled $86 million, which was down 4% sequentially.

Andy Smith: In the U.S., revenue per industry rig improved compared to the first quarter as the company continues to see strong market penetration. SteadyPrice. The segment did see a decline in revenue in Canada due to normal spring breakup, while international revenues were steady compared to the prior quarter.

Andy Smith: Adjusted gross profit was $40 million.

Andy Smith: In the U.S., revenue per industry rig improved compared to the first quarter as the company continues to see strong market penetration and steady pricing.

Andy Smith: The segment did see a decline in revenue in Canada due to normal spring breakup, while international revenues were steady compared to the prior quarter.

Andy Smith: For the third quarter, we expect drilling products results to improve slightly compared to the second quarter. We see another quarter of growth internationally, as well as the return of normal Canadian activity post-spring breakup, mostly offsetting a decline in the U.S. Other revenue totaled $16 million for the quarter, with $6 million in adjusted gross profit. We expect other third quarter revenue and adjusted gross profit to be flat with the second quarter. Reported selling, general, and administrative expenses for the second quarter were $65 million.

Andy Smith: For the third quarter, we expect drilling products results to improve slightly compared to the second quarter.

Andy Smith: We see another quarter of growth internationally, as well as the return of normal Canadian activity post spring break-up, mostly offsetting a decline in the U.S.

Andy Smith: We see another quarter of growth internationally, as well as the return of normal Canadian activity post-spring breakup, mostly offsetting a decline in the U.S. rig count.

Andy Smith: income. Other revenue total $16 million for the quarter was $6 million in adjusted gross profit. We expect other third quarter revenue and adjusted gross profit to be flat with the second quarter. Supported selling-general and administrative expenses in the second quarter were $65 million. For Q3, we expect SG&A expenses of $65 million on a consolidated basis for the second quarter. Total depreciation, depletion, amortization, and impairment expense total $268 million. For the third quarter, we expect total depreciation, depletion, amortization, and impairment expense of approximately $265 million. During Q2, total capex was $131 million, including $58 million in drilling services, $49 million in completion services, $14 million in drilling products, and $9 million in other in corporate.

Andy Smith: Other revenue totaled $16 million for the quarter, with $6 million in adjusted gross profits.

Andy Smith: We expect other third quarter revenue and adjusted gross profit to be flat with the second quarter.

Andy Smith: Reported selling general and administrative expenses on the second quarter were $65 million.

Andy Smith: For Q3, we expect SG&A expenses of $65 million on a consolidated basis for the second quarter. Total depreciation, depletion, amortization, and impairment expense totaled $268 million. For the third quarter, we expect total depreciation, depletion, amortization, and impairment of approximately $265. During Q2, total CapEx was $131 million. Including $58 million in drilling services, $49 million in completion services, $14 million in drilling products, and $9 million in other, CapEx was below budget during the quarter, largely as a portion of the final payment for our new electric track equipment, as well as some natural gas fueling equipment. I flipped in the Q-tip.

Andy Smith: For Q3, we expect SG&A expenses of $65 million.

Andy Smith: On a consolidated basis for the second quarter, total depreciation, depletion, amortization, and impairment expense totaled $268 million.

Andy Smith: For the third quarter, we expect total depreciation, depletion, amortization, and impairment expense of approximately $265 million.

Andy Smith: During Q2, total CapEx was $131 million, including $58 million in drilling services, $49 million in completion services,

Andy Smith: $14 million in drilling products and $9 million in other and corporate.

Andy Smith: Capex was below budget during the quarter, largely as a portion of the final payment for our new electric track equipment, as well as the natural gas fueling equipment slipped into Q3. For the third quarter, we expect total capex of roughly $220 million, with the increase attributable to the final payment on our new electric track. Equipment, as well as additional equipment for our natural gas fueling business.

Andy Smith: CAPEX was below budget during the quarter, largely as a portion of the final payment for our new electric track equipment, as well as some natural gas fueling equipment, slipped into Q3.

Andy Smith: For the third quarter, we expect total capex of roughly $220 million, with the increase attributable to the final payment on our new electric frac, as well as additional equipment for our other for our natural gas, where we believe activity will begin to improve in 2025. Further, we are excited about the long-term prospects for the industry and our company, and we see big opportunities for Patterson-UTI to further improve its competitiveness relative to a recovery in the US. We do retain some flexibility in our CapEx budget in the back half of the year. At this time, we expect to spend below our original CapEx budget of $740 million.

Andy Smith: We are optimistic activity will begin to improve in 2025. Further, we are excited about the long-term prospects for the industry and our company, and we see big opportunities for Patterson-UTI to further improve our competitive position relative to a recovery in the U.S. root count. We do retain some flexibility in our capex budget in the back half of the year. At this time, we expect to spend below our original capex budget of $740 million. We close Q2 with nothing drawn on our $615 million revolving credit facility, as well as $75 million in cash on hand. We do not have any senior note maturities until 2028.

Andy Smith: We are optimistic activity will begin to improve in 2025. Further, we are excited about the long-term prospects for the industry and our company, and we see big opportunities for Patterson-UTI to further improve our competitive position relative to a recovery in the U.S. rig count.

Andy Smith: We do retain some flexibility in our CapEx budget in the back half of the year. At this time, we expect to spend below our original CapEx budget of $740 million.

Andy Smith: We close Q2 with nothing drawn on our $615 million revolving credit, as well as $75 million in cash. We do not have any senior note maturities until 20... We expect to generate another quarter of strong free cash flow in the third quarter and in the second half of the year. We expect approximately 40% of our adjusted EBITDA to convert to free cash flow in 2020. Additionally, our board has approved an 8 cent per share dividend.

Andy Smith: We expect to generate another quarter of strong free cash flow in the third quarter, and then the second half of the year. We expect approximately 40% of our adjusted EBITDA to convert the free cash flow in 2024. Our board has approved an eight-cent per share dividend for Q3. For 2024, we expect to use at least $400 million to pay dividends and repurchase shares, which represents more than our usual commitment to return 50% of free cash flow to shareholders.

Andy Smith: We do not have any senior note maturities until 2028.

Andy Smith: We expect to generate another quarter of strong free cash flow in the third quarter and in the second half of the year.

Andy Smith: We expect approximately 40% of our adjusted EBITDA to convert to free cash flow in 2024.

Andy Smith: In 2024, we expect to use at least $400 million to pay dividends and repurchase shares, which represents more than our usual commitment to return 50% of free cash flow to shareholders. I'll now turn it back to Andy Hendricks for closing. Thanks, Andy. Well, we expect the overall market in the U.S. to remain steady for the remainder of the year. We have a number of initiatives to achieve capital efficient growth in advance of a potential rig account recovery after this year.

Andy Smith: Our board has approved an 8 cent per share dividend for Q3.

Andy Smith: For 2024, we expect to use at least $400 million to pay dividends and repurchase shares, which represents more than our usual commitment to return 50% of free cash flow to shareholders.

Andy Hendricks: I will now turn it back to Andy Hendricks for closing remarks. Thanks, Andy. Well, we expect the overall market in the US to remain steady for the remainder of the year. We have a number of initiatives to achieve capital efficient growth in advance of a potential rig account recovery after this year. We are extremely excited about the potential for our integrated drilling and completion offering, and we think we can use our suite of product and services to add significant value for our customers and deliver a creative returns for our shareholders. Our operational footprint is unique and difficult to replicate, and we look forward to proving our abilities over time.

Andy Smith: I'll now turn it back to Andy Hendricks for closing remarks.

William Andrew Hendricks: Well, we expect the overall market in the U.S. to remain steady for the remainder of the year. We have a number of initiatives to achieve capital-efficient growth in advance of a potential rig account recovery after this year.

Andy Smith: We are extremely excited about the potential for our integrated drilling and completion offering, and we think we can use our suite of products and services to add significant value for our customers and deliver accretive returns for our shareholders. Our operational footprint is unique and difficult to replicate, and we look forward to proving our abilities over time. Energy that drives society comes in two primary forms, hydrocarbon chains and electrons, and at Patterson-UTI, we help produce both.

Speaker Change: We are extremely excited about the potential for our integrated drilling and completion offering and we think we can use our suite of products and services to add significant value for our customers and deliver accretive returns for our shareholders.

William Andrew Hendricks: Our operational footprint is unique and difficult to replicate, and we look forward to proving our abilities over time.

Andy Hendricks: Energy that drives society comes in two primary forms: hydrocarbon chains and electrons, and it patterns in UTI. We help produce both. With our power services, we believe we have one of the best offerings in the oil field today, including a sizable natural gas-feeling business and a strong electrical engineering and controls business. There are very complimentary of each other, and we think there is substantial upside both inside and outside of the oil field. We are excited about the future for power services at Patterson UTI. And finally, we are committed to maximizing free cash flow while maintaining the highest quality assets.

William Andrew Hendricks: Energy that drives society comes in two primary forms, hydrocarbon chains and electrons, and at Patterson-UTI we help produce both.

William Andrew Hendricks: With our power services, we believe we have one of the best offerings in the oil field today, including a sizable natural gas fueling business and a strong electrical engineering and controls business. They are very complementary to each other, and we think there is substantial upside, both inside and outside of the oil field. We are excited about the future for power, service, and energy.

William Andrew Hendricks: With our power services, we believe we have one of the best offerings in the oil field today, including a sizable natural gas fueling business and a strong electrical engineering and controls business.

William Andrew Hendricks: They're very complimentary of each other and we think there's substantial upside both inside and outside of the oil field. We're excited about the future for power services at Patterson-UTI.

William Andrew Hendricks: And finally, we are committed to maximizing free cash flow while maintaining the highest quality assets. We think the leaders over the next cycle will be the companies that can deliver a unique and differentiated process to the customer, which should help us deliver capital-efficient growth to our investors. We continue to see strong free cash flow over the next several years, and we will direct that capital towards the highest return investments, including our continued commitment to return at least 50% of our free cash flow to investors on an annual basis.

William Andrew Hendricks: And finally, we are committed to maximizing free cash flow while maintaining the highest quality assets.

Andy Hendricks: We think the leaders over the next cycle will be the companies that can deliver unique and differentiate a process to the customer, which should help us deliver capital-efficient growth to our investors. We continue to see strong free cash flow over the next several years, and we will direct that capital towards the highest return investment, including our continued commitment to return at least 50% of our free cash flow to investors on an annual basis.

William Andrew Hendricks: We think the leaders over the next cycle will be the companies that can deliver a unique and differentiated process to the customer, which should help us deliver capital efficient growth to our investors.

William Andrew Hendricks: We continue to see strong free cash flow over the next several years, and we will direct that capital towards the highest return investment, including our continued commitment to return at least 50% of our free cash flow to investors on an annual basis.

William Andrew Hendricks: I would like to thank all of our employees for their hard work, efforts, and successes to help provide the world with oil and gas for products that make people's lives better. With that, we'd now like to open the lines for Q&A, so I'll hand it over to Dan again. Great. At this time, I'd like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from Jim Rollyson with Raymond James. Please go ahead. Hey, good morning, Andy and Andy. Good morning, Jim.

Andy Hendricks: I would like to thank all of our employees for their hard work, efforts, and successes to help provide the world with oil and gas for the products that make people's lives better.

William Andrew Hendricks: I would like to thank all of our employees for their hard work, efforts, and successes to help provide the world with oil and gas for the products that make people's lives better. With that, we'd now like to open the lines for Q&A, so I'll hand it over to Danica.

Danica: With that, we now like to open the lines for Q and A, so I'll hand it over to Danica. Great, at this time I'd like to remind everyone that in order to ask a question, press star, then the number one on your telephone keypad.

Danica: Great. At this time, I'd like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad.

Jim Rallison: Your first question comes from Jim Rallison with Raymond James. Please go ahead. Hey, good morning, Andy. Can Andy? Good morning, Jim.

Speaker Change: Your first question comes from Jim Rollyson with Raymond James. Please go ahead.

Speaker Change: Hey good morning Andy and Andy. Morning Jim. Morning Jim.

James Michael Rollyson: So, Andy, you talked a bit about obviously the power solutions business, your CNG, and kind of the exciting, you know, outlook for that business, and maybe you could just frame up for us the kind of magnitude of that business today and where you think it could go in the next three to five years between oil and gas and other industrial uses. Yeah, I think, you know, this is a part of our business. It's underappreciated.

Andy Hendricks: So Andy, you talked a bit about obviously the power solutions business, your CNG and kind of the exciting, you know, outlook for that business and maybe you could just frame up for us kind of magnitude of that business today. And where do you think that could go in the next three to five years between oil and gas and other industrial? You know, I think, you know, this is a section of our business that's underappreciated.

James Michael Rollyson: So, Andy, you talked a bit about, obviously, the power solutions business, your CNG, and kind of the...

Danica: exciting, you know, outlook for that business and

Speaker Change: Maybe you could just frame up for us, kind of...

Speaker Change: magnitude of that business today and where do you think that could go in the next three to five years between oil and gas and other industrial you know uses?

William Andrew Hendricks: We wanted to do more to explain it and to highlight it. You know, we have both an electrical engineering and controls business along with a very large natural gas fueling position. We actually operate two CNG facilities. We compress and create compressed natural gas (CNG).

Andy Hendricks: We wanted it to do more to explain it and to highlight it. You know, we have both an electrical engineering and control of the business, along with a very large natural gas fueling position. You know, we actually operate two CNG facilities. We can press and create, you know, compress natural gas (CNG). We deliver it. We have well over 100 truck trailer systems to deliver that out in the field. And so, you know, we have a very large position in this space.

Speaker Change: Yeah, I think, you know, this is a section of our business that's underappreciated and we wanted to do more to explain it and to highlight it.

Speaker Change: You know, we have both an electrical engineering and controls business, along with a very large natural gas fueling position. You know, we actually operate two CNG facilities. We compress and create, you know, compressed natural gas, CNG.

William Andrew Hendricks: We deliver it. We have well over 100 truck-trailer systems to deliver it out in the field. So, you know, we have a very large position in this space. To give it, to put it into context, it's hard to describe exactly how much it is, but we're powering roughly, as I mentioned earlier, 2 million horsepower natural gas-powered equipment out there in the field today. Some of that's ours, and some of that's with other companies.

Speaker Change: We deliver it. We have well over a hundred truck-trailer systems to deliver that out in the field. And so, you know, we have a very large position in this space.

Andy Hendricks: You know, to give it and to put it into contact, it's hard to describe exactly how much it is. But we're powering roughly, you know, as I mentioned earlier, two million horsepower natural gas power equipment out there in the field today. Some of that's ours, and some of that's with other companies. You know, converted into, you know, a different measure of energy that would be the equivalent of roughly, you know, gigawatt hour per year of electricity in terms of how much natural gas, you know, we're providing on an annualized basis. So, you know, these are, this is a large business that's probably underappreciated.

Speaker Change: You know, to give it, to put it into context, it's hard to describe exactly how much it is, but we're powering roughly, you know, as I mentioned earlier, 2 million horsepower of natural gas powered equipment out there in the field today. Some of that's ours and some of that's with other companies.

William Andrew Hendricks: To convert it into, you know, a different measure of energy that would be the equivalent of roughly a gigawatt hour per year of electricity in terms of how much natural gas we provide on an annualized basis.

Speaker Change: To convert it into a different measure of energy, that would be the equivalent of roughly a gigawatt hour per year of electricity in terms of how much natural gas we're providing on an annualized basis.

William Andrew Hendricks: So, you know, this is a large business that's probably underappreciated. We're excited about the future growth potential. You know, as we continue to expand, for instance, our own electric frac fleets, we'll continue to power more of that with our natural gas fueling system. And then outside the industry, we're just starting to do some work in areas that, you know, like data centers, which we think have high future growth.

Speaker Change: So, you know, these are, this is a large business that's probably underappreciated. We're excited about the future growth potential. You know, as we continue to expand, for instance, our own electric frac fleets will continue to power more of that with our natural gas fueling systems.

Andy Hendricks: We're excited about the future growth potential. You know, as we continue to expand, for instance, our own electric fry fleets, we'll continue to power more of that with our natural gas fueling systems. And then, outside the industry, you know, we're just starting to do some work in areas that, you know, like the data centers, which we think have high-featured growth. And these data centers over time, there's been lots of discussion about this, you know, likely to relocate in areas that are close to, you know, fuel sources. And so, you know, we think over the next few years, we'll see significant outside in these businesses doing those types of things.

Speaker Change: And then outside the industry, you know, we're just starting to do some work in areas that, you know, like the data centers, which we think have high future growth.

William Andrew Hendricks: These data centers, over time, there's been lots of discussion about this, you know, we're likely to relocate them to areas that are close to, you know, fuel sources. So, you know, we think over the next few years, we'll see significant upsides in these, doing those types of things. Yeah, Jim, just to follow on to that a little bit to give you a bit more kind of color on, today, this business is north of $100 million.

Speaker Change: And these data centers, over time, there's been lots of discussion about this, you know, we're likely to relocate in areas that are close to, you know, fuel sources. And so, you know, we think over the next few years, we'll see significant upside in these businesses.

Andy Smith: Yeah, Jim, just to follow on to that a little bit to give you a bit more kind of color on how big this business is. So today, this business is north of a hundred million dollar revenue business.

Speaker Change: Yeah, Jim, just to follow on to that a little bit to give you a bit more kind of color on

James Michael Rollyson: How big this business is. So today this business is north of a hundred million dollar revenue business, so it's

Jim Rallison: So it's not, it's not insignificant; certainly a pretty, pretty sizable business already. Got it, that helps in something like that to go up multiples if it's a lot of these things take up, take hold.

Jim: It's not insignificant, certainly.

James Michael Rollyson: a pretty, pretty sizable business already.

Jim: Got it. That helps. And it sounds like that could go up multiples if a lot of these things take hold.

James Michael Rollyson: Got it, that helps, and it sounds like that could go up multiples if a lot of these things take hold. And then maybe switching gears for a follow-up, Andy, just you guys have been running dual-fuel frac fleets for a long time, both between, you know, Patterson at Universal and next year. Kind of curious about your initial reaction to now running e-fleets, you know, how you find the performance, how you're thinking about the economics, and we obviously hear a lot about that from some of your competitors, but since you're kind of just newer to that part of the game, I'm curious about your initial reaction.

Andy Hendricks: And then maybe switching gears for a follow-up, Andy, just, you know, you guys have been running. Do a few practicals for a long time, both between, you know, Patterson at Universal and next year. Kind of curious, your initial reaction to now running e-fleet, you know, how you find the performance, how you're thinking about the economics.

Jim: And then maybe switching gears for a follow-up, Andy, just, you know, you guys have been running...

Andy: Dual-fueled frack fleets for a long time, both between Patterson at Universal and next year.

Speaker Change: Kind of curious your initial reaction to now running eFleets, you know how you find the performance How you're thinking about the economics and we obviously hear a lot about that from some of your competitors But since you're kind of just newer to the that part of the game curious your initial reactions there

Andy Hendricks: And we obviously hear a lot about that from some of your competitors, but since you kind of just newer to that part of the game, curious your initial reaction there. Yeah, I guess we've been running electric fleets for almost a year now. And, you know, in full force, we've been testing it before that, trying to decide, you know, which path we were going to go down. But we're certainly excited about the efficiencies that we're seeing. But, you know, I think the industry will still be relying heavily on, you know, tear-forward fuel, you know, for years to come.

William Andrew Hendricks: Yeah, I guess we've been running electric fleets for almost a year now, and, you know, in full force. We've been testing it before that, trying to decide, you know, which path we were going to go down. But we're certainly excited about the efficiencies that we're seeing, but, you know, I think the industry will still be relying heavily on Tier 4 dual fuel for years to come. So, as I said before, I don't see a wholesale switch out to electric, and that's why we can be measured in our capital deployment on electric, and that's important.

Speaker Change: Yeah, I guess we've been running electric fleets for almost a year now.

Speaker Change: And, you know, in full force, we've been testing it before that, trying to decide, you know, which path we were going to go down.

Speaker Change: But we're certainly excited about the efficiencies that we're seeing.

Speaker Change: But, you know, I think the industry will still...

Speaker Change: Be relying heavily on

Andy Hendricks: So I, you know, as I said before, I don't see a wholesale switch out to electric, and that's why we can be measured in our capital deployment on electric, and that's important. We still want to be efficient with our capital, but we are seeing good take up from it. As I mentioned, the fleets that we're operating today, we've had a really good service quality success. But that's a testament to next year as a fraught company in general and their ability to run high service quality. So deploying these fleets fits right in with what they do.

Speaker Change: on, you know, Tier 4 dual-fuel.

Speaker Change: For years to come. So as I said before, I don't see a wholesale switch out to electric. And that's why we can be measured in our capital deployment on electric, and that's important. Because we still want to be efficient with our capital. But we are seeing good take-up from it.

William Andrew Hendricks: Transcribed by https://otter.ai As I mentioned, the fleets that we're operating today, we've had really good service quality success, but that's a testament to Nextier as a frac company in general and their ability to run high service quality.

Speaker Change: As I mentioned, the fleets that we're operating today, we've had really good service quality success. But that's a testament to Nextier as a frac company in general and their ability to run high service quality.

William Andrew Hendricks: Deploying these fleets fits right in with what they do, and we'll continue to grow this over time. We're just really excited about the level of efficiencies that we're seeing right now and the high level of service quality that we're delivering with the ones that we've started. Great. Appreciate the thoughts.

Jim Rallison: But we'll continue to grow this over time. We're just really excited about the level of efficiencies that we're seeing right now. The high level of service quality we're delivering with the ones that we started up. Great.

And so deploying these fleets, you know, fits right in with what they do. And we'll continue to grow this over time. We're just really excited about, you know, the level of efficiencies that we're seeing right now and the high level of service quality we're delivering with the ones that we've started up.

Jim Rallison: Appreciate the thoughts. Thank you.

Arun Jayaram: All right. Our next question comes from Arun Jayaram with JP Morgan. Please go ahead. Yeah, Andy. I was wondering if you could maybe elaborate on your intercreated drilling and completion offering. Sounds like you have a project that you're working on today. So I was wondering if you could maybe talk about, you know, precisely kind of what you're doing. In the field, maybe the potential to expand this and how as a contractor that one plus one equals three. And you don't get hit by, you know, the historical, you know, discounting on the bundling of services. I wonder if you could walk us through that.

James Michael Rollyson: Thank you. All right, our next question comes from Arun Jayaram with J.P. Morgan. Please go ahead.

Speaker Change: Great, appreciate the thoughts. Thank you.

Speaker Change: All right, our next question comes from Arun Jayaram with JP Morgan. Please go ahead.

Arun Jayaram: Yeah, Andy, I was wondering if you could maybe elaborate on your integrated drilling and completion offering. Sounds like you have a project that you're working on today. So I was wondering if you could maybe talk about, you know, precisely kind of what you're doing in the field, maybe the potential to expand this, and how, as a contractor, 1 plus 1 equals 3, and you don't get hit by, you know, the historical, you know, discounting on the bundling of services. I was wondering if you could walk us through that.

Arun Jayaram: Yeah, Andy, I was wondering if you could maybe elaborate on your integrated drilling and completion offering. It sounds like you have a project that you're working on today. So I was wondering if you could maybe talk about, you know, precisely kind of what you're doing.

Speaker Change: In the field, maybe the potential to expand this and how, as a contractor, that one plus one equals three and you don't get hit by, you know, the historical

William Andrew Hendricks: Yeah, sure. So, you know, it's one of the things that we saw when we were putting the companies together that had potential. And we have a number of E&P customers out there that look at us to provide, you know, services across, you know, the spectrum of what we can do as an enterprise. And so, you know, our ability to combine all that and work with the E&P customers to package it in a way to give us both upside. What we've been looking at since we put the companies together, and so we're on a project today, and what it's definitely not is, you know, a package of bundled services.

Andy Hendricks: Yeah, sure. So, you know, it's one of the things that we saw when we were putting the companies together that had potential. And we have a number of MP customers out there that look at us to provide, you know, services across, you know, the spectrum of what we can do as an enterprise. And so, you know, our ability to combine all that and work with the MP customers to package it in a way to give us both upside is what we've been looking at since we put the companies together. And so we're on a project today, and what it's definitely not is, you know, a package of bundled services.

Andy: You know, discounting on the bundling of services. I was wondering if you could walk us through that. Yeah, sure.

Speaker Change: So, you know, it's one of the things that we saw when we were putting the companies together that had potential. And we have a number of E&P customers out there.

Speaker Change: that look at us to provide services across the spectrum of what we can do as an enterprise.

Speaker Change: And so, you know, our ability to combine all that and work with the EMP customers.

Speaker Change: To package it in a way to give us both upside is what we've been looking at since we put the companies together.

Speaker Change: And so we're on a project today.

Andy Hendricks: What it is intended to do is provide, you know, our services across the spectrum in a way that, you know, we can be more efficient in the drilling, more efficient in the completions. But more than that, trying to improve the productivity of the wells. And so that's, that's the intended scope. You know, we do a number of different things; you know, it's the drilling rig, it's the drill bits for more efficient drilling. It's the directional and the data analytics that we do on well placement to make sure that we're putting the well in the right place to improve productivity.

William Andrew Hendricks: What it is intended to do is provide our services across the spectrum in a way that we can be more efficient in the drilling, more efficient in the completions, but more than that, try to improve the productivity of the wells. And so that's the intended scope. You know, we do a number of different things.

Speaker Change: And what it's definitely not is, you know, a package of bundled services. What it is intended to do...

Speaker Change: is provide.

Speaker Change: You know, our services across the spectrum.

Speaker Change: In a way that we can be more efficient in the drilling, more efficient in the completions, but more than that, try to improve the productivity of the wells.

William Andrew Hendricks: You know, it's the drilling rigs, it's the drill bits for more efficient drilling, it's the directional and the data analytics that we do on well placement to make sure that we're putting the well in the right place to improve productivity, minimize tortuosity in the wells so you're not constraining production, and that allows you to have better fracs, that allows you to, you know, have better production, and then the efficiency on the integration of all the services that we do across the completion. Between, you know, the frack systems, the wiring line, the profit, the trucking, the logistics, the natural gas, fuels. You know and then data connects it all because we can monitor everything together, Please see the complete disclaimer at https://sites.google.com or in the description of this video. Early days.

Speaker Change: And so that's, that's the intended scope. You know, we do a number of different things.

Speaker Change: It's the drilling rigs, it's the drill bits for more efficient drilling, it's the directional and the data analytics that we do on well placement.

Andy Hendricks: Minimize torture velocity in the wells so you're not constraining production and that allows you to have better fracks that allows you to, you know, have better production. And then the efficiency on the integration of all the services that we do across the completions. Between, you know, the, the fracks systems, the wiring line, the profit, the trucking, the logistics, the natural gas fuel systems. You know, and then data connects at all, because we can monitor everything together and provide a more efficient overall holistic package. And we're doing this, you know, in a performance contract manner where, you know, we have the potential upside.

Speaker Change: To make sure that we're putting the well in the right place to improve productivity, minimize tortuosity in the wells, so you're not constraining production, and that allows you to have better fracs, that allows you to have better production, and then the efficiency on the integration of all the services that we do across the completions.

Speaker Change: Between, you know, the frack systems, the wire line, the profit, the trucking, the logistics, the natural gas fuel systems.

Speaker Change: And then data connects it all because we can monitor everything together and provide a more efficient overall holistic package.

Speaker Change: And we're doing this, you know, in a performance contract manner where, you know, we have the potential upside. So this is not about bundling, but it is about bringing all the services together to provide a more efficient service.

Andy Hendricks: So this is not about bundling, but it is about bringing all the services together to provide a more efficient service. And, you know, where we can work, deal with any MP to participate in that upside. from all this.

Speaker Change: and you know where we can work a deal with an EMP to participate in that upside from all this.

Andy Hendricks: Early days, this is our first project. We're excited about how it's off to a good start, but we think things are going well in the end. It's a way for us to be able to share the value with the EMPs as we improve the efficiencies and the production of the wells.

William Andrew Hendricks: This is our first project. We're excited about how it's off to a good start, but we think things are going well. In the end, you know, it's a way for us to be able to share the value with the EMPs as we improve the efficiencies and the production of the well. Great, thanks. Andy, my follow-up question is I just want to maybe better understand the white space, you know, call it head

Speaker Change: Early days, this is our first project. We're excited about how it's off to a good start, but we think things are going well.

Speaker Change: In the end, you know, it's a way for us to be able to share the value with the EMPs, you know, as we improve the efficiencies and the production of the wells.

Arun Jayaram: Great, thanks.

Andy Hendricks: Andy, my follow-up is I just want to maybe better understand the white space and just call it headwinds. Maybe that are persisting a little bit. Maybe greater than you thought, even though you expect completion services to grow on a sequential basis. I was wondering if you could maybe separate what you're seeing in natural gas versus oily basins. And is this just a driver of just efficiency gains, or is there more of something else at play which is driving a little bit more white space?

Speaker Change: Great, thanks. Andy, my follow-up is I just want to maybe better understand...

Andy: The white space, you know, call it headwinds.

Arun Jayaram: You know, maybe that's persisting a little bit, maybe greater than you thought, even though you expect completion services to grow on a sequential basis. I was wondering if you could maybe separate what you're seeing in natural gas versus oily basins, and is this just a driver of just efficiency gains, or is there more of something else at play, which is driving a little bit more white space? Yeah, so I'll start by explaining it this way.

Andy: You know, maybe that are persisting a little bit, maybe greater than you thought, even though you expect completion services to grow on a sequential basis. I was wondering if you could maybe separate what you're seeing in natural gas versus oily basins.

And is this just a driver of just efficiency gains or is there more of something else at play which is driving a little bit more white space?

Andy Hendricks: Yeah, so I'll start by explaining it this way. What we're seeing in terms of white space, in other words, having some gaps in activity, is somewhat our choice because in the second quarter we did see some more white space in the natural gas basins, and we planned, and we said that we're going to pick up activity in the third quarter, which we are going to do. But given the overall softness in the market, there's still some price competitive basins out there. And some price competitive work that we've decided we just don't want to work at that price.

Arun Jayaram: You know, what we're seeing in terms of white space, in other words, having some gaps in activity, is somewhat our choice because, in the second quarter, we did see some more white space in the natural gas basin than we'd planned, and we had said that we were going to pick up activity in the third quarter, which we are going to do. But given the overall softness in the market, there's still some price competitive basins out there and some price competitive work that, you know, we've decided we just don't want to work on at that price. And, you know, that goes for all of our segments.

Speaker Change: Yeah, so, I'll start by explaining it this way, you know, what we're seeing in terms of white space, in other words, having some gaps in activity.

Speaker Change: is somewhat our choice because, you know, in the second quarter, we did see some more white space in the natural gas basins than we planned, and we had said that we're going to pick up activity in the third quarter, which we are going to do.

Speaker Change: But given the overall softness in the market, there's still some price-competitive basins out there and some price-competitive work that, you know, we've decided we just don't want to work at that price.

Andy Hendricks: And that goes for all of our segments. We think it's important during the current softness in the market to protect pricing and protect margin. We see that there's potential for upside and the future on these services as we get into next year when we have more natural gas take away from the Permian when natural gas is in demand for CNG. And what we don't want to do is anything to negatively impact the pricing of the margin for ourselves or the overall industry because we think it's important to try to protect that at this point. So we are going to see a little more white space, but some of that's because it's our own choice, because there are certain rates that we just don't want to work our equipment right now.

William Andrew Hendricks: We think it's important during this to protect pricing and protect markets. We see that there's potential for upside in the future on these services as we get into next year when we have more natural gas taken away from the Permian, when natural gas is in demand for CNG, and what we don't want to do is anything to negatively impact the pricing or the margin for our sales or the overall income. We think it's important to try to protect that at this. So, we are going to see a little more white space, but, you know, some of that's because it's our own choice, because there are certain frequencies that we just don't want to use on our equipment.

Speaker Change: And, you know, that goes for all of our segments.

Speaker Change: We think it's important during the, you know, the current softness in the market to protect pricing and protect margin.

Speaker Change: You know, we see that there's potential for upside in the future on these services as we get into next year when we have more natural gas take away from the Permian, when natural gas is in demand for CNG, and what we don't want to do is anything to negatively impact the pricing or the margin for our sales or the overall industry.

Speaker Change: because we think it's important to try to protect that at this point.

Speaker Change: So we are going to see a little more white space, but some of that's because it's our own choice. Because there are certain rates that we just don't want to work our equipment right now. We'd rather protect the sector so that there's more upside for us coming out of this.

William Andrew Hendricks: We'd rather protect the sector so that there's more upside for us coming out of it. Makes sense. I'll turn it back. Thanks, Andy. Our next question comes from Derek Podhaizer with Barclays. Please go ahead. Hey, good morning.

Arun Jayaram: We'd rather protect the sector so that there's more upside for us coming out of this. Makes sense.

Arun Jayaram: I'll turn it back.

Derek Podhaizer: Thanks, Andy. Our next question comes from Derek Podheiser with Barclays. Please go ahead. Hey, good morning. I wanted to go back to the power services conversation. Obviously, this distributed power generation market is starting against the steam here just given everything you went over with utility not being able to service. The demand that we're seeing out there. It sounds like you talked about being able to fuel these power sources with your CNG delivery. You talked about the battery energy storage solution that you have.

Speaker Change: Makes sense. I'll turn it back. Thanks, Andy.

Speaker Change: Our next question comes from Derek Podhaizer with Barclays. Please go ahead.

Derek John Podhaizer: I wanted to go back to the power services conversation. Obviously, this distributed power generation market is starting to gain some steam here just given everything you went over with utilities not being able to service the demand that we're seeing out there. It sounds like you talked about being able to fuel these power sources with your CNG delivery. You also talked about the battery energy storage solution that you have. But will you expect to own the actual megawatts? Do you plan on investing in turbines or natural gas reciprocating engines to power these non-oil and gas applications?

Derek John Podhaizer: Hey, good morning. I wanted to go back to the power services conversation. Obviously, this distributed power generation market is starting to gain some steam here.

Derek John Podhaizer: Just given everything you went over with utility not being able to...

Speaker Change: [inaudible]

Andy Hendricks: But will you expect to own the actual megawatts? Do you plan on investing in turbines or natural gas reciprocating engines to power these non-oil and gas applications? Maybe just some more thoughts around owning the megawatt over time. Yeah, so potentially. So we are operating several natural gas turbines in the field to produce electricity. We're also contracting some gas reciprocations, produce electricity in the field today. And so we manage those agreements. You know, under the natural gas fueling services that we have under next year right now, so we're producing, you know, a lot of mega watts in the field today in terms of electricity to drive our own track systems. And so we do have experience in doing that.

Speaker Change: Investing in turbines or natural gas reciprocating engines to power these non-oil and gas applications. Maybe just some more thoughts around owning the megawatt over time.

William Andrew Hendricks: Maybe just some more thoughts around owning the megawatt over time. Yeah, so potentially. So we are operating, you know, several natural gas turbines in the field to produce electricity. We're also, you know, contracting some gas re-sip engines to produce electricity in the field today. And so, you know, we manage those agreements.

Speaker Change: Yeah, so potentially. So we are operating, you know, several natural gas turbines in the field to produce electricity. We're also, you know, contracting some gas re-sip engines to produce electricity in the field today. And so, you know, we manage those agreements.

William Andrew Hendricks: Under the natural gas fueling services that we have under way for next year right now. So we're producing, you know, a lot of megawatts in the field today in terms of electricity to drive our own frac. And so we do have experience doing that.

Speaker Change: You know, under the natural gas fueling services that we have under NEXT here right now. So we're producing, you know, a lot of megawatts in the field today, in terms of electricity, to drive our own frac systems.

William Andrew Hendricks: And I anticipate that to grow over time. We are gonna be efficient with our capital in the way we do that. But I do anticipate that that will grow. I'll tell you that, in general, we're seeing more reliability, more predictability, and lower maintenance and maintenance costs from the turbines.

William Andrew Hendricks: And I anticipate that to grow over time; we are going to be efficient with our capital and the way we do that. But I do anticipate that to grow. I'll tell you that, in general, we're seeing more reliability and more predictability in maintenance and maintenance costs from the turbine systems. And so we think that, you know, over the long term, that's probably going to be the best answer. And so, you know, we're excited about the potential there to keep things going in that direction. We see it all as an answer.

Speaker Change: And so we do have experience in doing that, and I anticipate that to grow over time. We are going to be efficient with our capital in the way we do that, but I do anticipate that to grow.

Speaker Change: I'll tell you that in general, we're seeing more reliability, more predictability in maintenance and maintenance costs from the turbine systems.

William Andrew Hendricks: So we think that, you know, over the long term, that's probably going to be the best answer. So, you know, we're excited about the potential there to keep things going in that direction. We see it all as an opportunity.

Speaker Change: And so we think that, you know, over the long term, that's probably going to be the best answer. And so, you know, we're excited about the potential there to keep things going in that direction.

Andy Hendricks: It's still early days in, you know, how we're going to supply different things outside of the industry. I'll tell you, within the industry, within the NP production facilities, yes, we have the potential to provide not just the natural gas blending and the field potential to provide CNG as backup words required for production facilities. Potentially we could be generating, you know, the kilowatts and megawatts for those production facilities outside of the industry. I think it's early days to know who will do what. And I think you'll see different answers for different types of companies outside the industry based on where they are.

William Andrew Hendricks: It's still early days in how we're going to supply different things outside of the industry. But I'll tell you, within the industry, within the E&P production facilities, yes, we have the potential to provide not just the natural gas blending in the field but CNG as backup where it's required for production facilities. Potentially, we could be generating the kilowatts and megawatts for those production facilities. Outside of the industry, I think it's early days to know who will do what.

Speaker Change: We see it all as an arc. It's still early days.

Speaker Change: You know, how we're going to supply different things outside of the industry. I'll tell you, within the industry, within the E&P production facilities, yes, we have the potential to provide.

Speaker Change: [inaudible]

Speaker Change: Outside of the industry, I think it's early days to know who will do what. And I think you'll see different answers for different types of...

William Andrew Hendricks: And I think you'll see different answers for different types of companies outside of the industry based on, you know, where they are. But the good news is for us, we can provide either a holistic solution or we can provide various bits and pieces, whether it's... gas treatment facility or a microgrid or battery backup, or we can pull it all together into a package. So, I think it's still early days for that, but based on the discussions we're having, there's gonna be upside over the next couple of years. That's exciting. I appreciate all the color there.

Andy Hendricks: But the good news is for us, you know, we can provide either a holistic solution or we can provide various bits and pieces, whether it's, you know, a gas treatment facility or microgrid or battery backup system, or we can pull it all together into a package. So I think it's still early days in that, but based on the discussions we're having, there's going to be upside over the next few years. That's exciting.

Speaker Change: [inaudible]

Speaker Change: You know, a gas treatment facility, or a microgrid, or battery backup system, or we can pull it all together into a package. So, I think it's still early days in that, but based on the discussions we're having, there's going to be upside over the next few years.

Derek John Podhaizer: Frack capacity tightness. A few of your peers in the last couple weeks have talked about potentially seeing some tightness in the market in 2025 that could surprise your customers and investors alike. Any comments around seeing accelerated attrition from Tier 2 diesel or other diesel applications out there? Are you starting to retire some of your legacy pumps?

Derek Podhaizer: Appreciate all the color there. For a capacity, tightness, a few of your peers over the last couple weeks have talked about potentially seeing subtypes in the market in 2025 that can, that can surprise your customers and investors alike. Any comments around seeing accelerated attrition from, you know, tier two diesel or other diesel applications out there? Are you starting to retire some of your legacy pumps.

Speaker Change: That's exciting. I appreciate all the color there.

Frack capacity tightness. A few of your peers over the last couple weeks have talked about potentially seeing some tightness in the market.

Speaker Change: in 2025 that can that can surprise your customers and investors alike.

Speaker Change: Any comments around seeing accelerated attrition from Tier 2 diesel or other diesel applications out there? Are you starting to retire some of your legacy pumps?

Andy Hendricks: Just some overall thoughts, and if we do get this modest up to connectivity, how quickly can this access capacity in the frack market be absorbed and then we move actually to a tighter frack market. Yeah, so let me, let me answer a couple different areas of that. So I'll start with a tier two. We do own some Tier two. We still operate it a little bit of tier two in the field. We are certainly not investing in Tier Two. So it's tier two hours out. It goes away, you know, when it gets parked, and the will get cut up over time.

Speaker Change: Just some overall thoughts, and if we do get this modest uptick in activity, how quickly can this excess capacity in the frack market be absorbed, and then we move actually to a tighter frack market.

Derek John Podhaizer: Just some overall thoughts, and if we do get this modest uptick in activity, how quickly can this excess capacity in the frack market be absorbed, and then we move actually to a tighter frack market? Yeah, so let me answer a couple different areas of that. So I'll start with Tier 2.

Speaker Change: Yeah, so let me let me answer a couple different areas of that. So I'll start with the Tier 2. We do own some Tier 2. We still operate a little bit of Tier 2 in the field. We are certainly not investing in Tier 2. So as Tier 2 hours out, it goes away, you know, and it gets parked and will get cut up over time.

William Andrew Hendricks: We do own some Tier 2. We still operate a little bit of Tier 2 in the field. But we are certainly not investing in Tier 2.

William Andrew Hendricks: So as Tier 2 hours out, it goes away, you know, and it gets parked, and it will get cut up over time. I think also with the softness in the market, you're seeing some Tier 2 get parked on the side from other companies. And I don't think that equipment comes back to work easily because it'll need a significant investment. The other thing is, as the market starts to increase next year and demand starts to go up, which we do anticipate for several reasons, both with, you know, the improvements in natural gas takeaway in the Permian, allowing for more oil production, and LNG demand for natural gas later in 2025, as we see the demand for activity start to pick up Tier 2 is not going to have an easy place.

Andy Hendricks: I think also with this softness in the market, you're seeing some tier two get parked on the side from other companies in the industry. And I don't think that equipment comes back to work easily because it'll need a significant investment. The other thing is, as the market starts to increase next year, and demand starts to go up, which we do anticipate for several reasons, both with, you know, the improvements of natural gas taken away and the permeant allowed for more well production and LNG demand for natural gas later in 2025. As we see the demand for activity starts to pick up, this demand is going to be on equipment that can burn natural gas.

I think also with the softness in the market, you're seeing some tier 2 get parked on the side from other companies in the industry. And I don't think that equipment comes back to work easily because it'll need a significant investment.

Speaker Change: The other thing is, as the market starts to increase next year and demand starts to go up, which we do anticipate for several reasons, both with

Speaker Change: You know, the improvements of natural gas takeaway in the Permian allow for more oil production and LNG demand for natural gas later in 2025. As we see the demand for activity start to pick up, this demand is going to be on equipment that can burn natural gas.

Andy Hendricks: Tier two is not going to have an easy place. We're, you know, 80% of the equipment that we're operating today burns natural gas. We're essentially sold out on everything that can burn natural gas. So, as we get into that part of the cycle where we start to see that demand increase, there is a shortage, not that there will be a shortage. There is a shortage today of that type of equipment. And so, you know, that's going to drive the need for more equipment, you know, of high spec in terms of burning natural gas in different forms, whether it's due for dual fuel or more electric or turbine direct drive.

William Andrew Hendricks: We're, you know, 80% of the equipment that we're operating today burns natural gas. We're essentially sold out on everything that can burn natural gas. So, as we get into that part of the cycle where we start to see that demand increase... There is a shortage. Not that there will be a shortage. There is a shortage today of that type. So, you know, that's going to drive the need for more equipment. Got it.

Tier 2 is not going to have an easy place in there.

We're, you know, 80% of the equipment that we're operating today burns natural gas. We're essentially sold out on everything that can burn natural gas. So as we get into that part of the cycle where we start to see that demand increase,

There is a shortage. Not that there will be a shortage. There is a shortage today of that type of equipment.

And so, you know, that's going to drive the need for more equipment.

Speaker Change: You know, high-spec in terms of burning natural gas in different forms, whether it's Tier 4 dual-fuel or more electric or turbine direct drive, and so that's going to drive that demand. It's also going to drive pricing and margins.

Derek Podhaizer: And so that's going to drive that demand. It's also going to drive pricing and margins and informations. Got very helpful.

Derek Podhaizer: Thanks, Andy. Can turn it back.

Thank you for your patience.

Got it. Very helpful. Thanks, Andy. We'll turn it back.

Scott Gruber: All right. Our next question comes from Scott Gruber with Citigroup. Please go ahead. Yes. Good morning.

Derek John Podhaizer: Very helpful. Thanks, Andy. We'll turn it back. Alright, our next question comes from Scott Gruber with Citigroup. Please go ahead. Yes, good morning, Scott. Morning. I want to come back to the integrated contract. It's pretty interesting. If I think about it simplistically, you know, is it the performance bonus?

Speaker Change: Alright, our next question comes from Scott Gruber with Citigroup. Please go ahead.

William Andrew Hendricks: I'm going to come back to the Integrated Contract. It's pretty interesting. If I think about it, it's mostly, you know, is it the performance bonus? Is that really the route to making the one plus one something more than two? If that's correct, can you provide some more color and the bonus structure? Like is it based on the full cycle time of the well? How should we think about it?

Yes, good morning. Thanks, Scott. Morning.

I want to come back to the integrated contract. It's pretty interesting. If I think about it simplistically, is it the performance bonus? Is that really the route to making the 1 plus 1 something more than 2? And if that's correct,

Scott Andrew Gruber: Is that really the route to making the one plus one something more than two? And if that's correct, can you provide some more color on the bonus structure? Like, is it based on the full cycle time of the well?

Speaker Change: Can you provide some more color on the bonus structure? Is it based on the full cycle time of the well? How should we be thinking about it? Yeah, first off, it's more than one well. It's an entire pad. I don't want to get into the numbers of what that looks like on this particular arrangement.

William Andrew Hendricks: How should we be thinking about it? Yeah, it's, first off, it's more than one well. It's an entire pad.

Andy Hendricks: Yeah. It's first off, it's more than one well. It's an entire path. I don't want to get into the numbers of, you know, what that looks like on this, on this particular arrangement. But, you know, we're out there at what you consider market rates with potential upside. You know, for green production for improved production on wells, you know, those kinds of things that will positively impact our ability to do these types of jobs over time. And so, you know, there is a big efficiency component that we're going to be able to share with the MP in this particular case.

William Andrew Hendricks: I don't want to get into the numbers of, you know, what that looks like on this particular arrangement, but, you know, we're out there at what you would consider market rates, with the potential upside, you know, for bringing production forward, for improving production on wells, you know, those kinds of things that will positively impact our ability to do these types of jobs over time. And so, you know, there is a big efficiency component that we're going to be able to share with the EMP in this particular case. So, you know, we're excited about this model. As I said, it's early days, but we've been working on it since we put the companies together. There are very large EMPs out there that do this very well.

But, you know, we're out there at what you would consider market rates with potential upside, you know, for bringing production forward, for improving production on wells, you know, those kind of things that will positively impact

Our ability to do these types of jobs over time.

And so, you know, there is a big efficiency component that we're going to be able to share with the EMP in this particular case. So, you know, we're excited about this model. As I said, it's early days. We've been working on it since we put the companies together.

William Andrew Hendricks: So, you know, we're excited about this model.

Andy Hendricks: As I said, it's early days. We've been working on it since we've put the companies together. You know, there are very large MPs out there that do this very well. There are mid-sized MPs that look for more help in this area. And so, there's a broad basket of customers out there that, you know, want to be able to talk to us about this type of arrangement. And what we can do for them to help pull production forward and potentially improve production on a poor well-based.

Scott Andrew Gruber: There are mid-sized EMPs that look for more help in this area. And so there's a broad basket of customers out there that, you know, want to be able to talk to us about this type of arrangement and what we can do for them to help pull production forward and potentially improve production on a per weld basis. That's interesting.

You know, there are very large EMPs out there that do this very well. There are mid-sized EMPs that look for more help in this area. And so there's a broad...

a basket of customers out there.

You know, want to be able to talk to us about this type of arrangement.

and what we can do for them to help.

Pull production forward and potentially improve production on a per-well basis.

Scott Gruber: That's interesting. And then turning back to the, just the drilling business. You guys are, our forecast, about 15,000 a day in margin in 3Q. Are you assuming costs still around 20, just getting the lower rig count?

William Andrew Hendricks: And then turning back to just the drilling business, you guys are forecasting about $15,000 a day in margin in 3Q. Are you assuming costs are still around $20,000, just giving a little rig count? And how do you think about where that margin will find its bottom?

That's interesting. And then turning back to the...

Just the drilling business, you guys are forecasting about $15,000 a day in margin.

In 3Q, are you assuming costs still around 20, just giving a little rig count, and how do we think about, you know, where that margin finds its bottom?

Andy Hendricks: And, and how do you think about, you know, where, where that margin finds its bottom. You know, I turned spot rates if we then had, you know, kind of average bonus contribution on top. Well, we're, we think about margins finding the bottom there. So our top tier rigs are still at about 85% utilization. And so, you know, we've seen the slowdown on our rig count on rigs that are more what you classify as non-tier 1 super spec.

Scott Andrew Gruber: Current spot rates, if we then add, you know, the kind of average bonus contribution on top, where should we think about margins finding the bottom? So our top tier rigs are still at about 85% utilization. So, you know, we've seen the slowdown on our rig count on rigs, more what you'd classify as non-Tier 1 super-spec. You know, I think the bottom...

Current spot rates, if we then add the kind of average bonus contribution on top, where should we think about margins, finally, at the bottom here?

So our top tier rigs are still at about 85% utilization.

And so, you know, we've seen the slowdown on our rig count on rigs that are more what you'd classify as non-Tier 1 super spec. You know, I think the bottom...

Andy Hendricks: You know, I think the bottom target is, the hard to call that today could be later this year. because we, you know, do you see the potential for some improvement in 2025? You know, I think this is, you know, we're in kind of a trough situation, but it's going to be a little bit of a drawn out trough as we get into next year.

William Andrew Hendricks: It's hard to call that today, but it could be later this year. You know, do you see the potential for some improvement in 2025? You know, I think we're in kind of a trough situation, but it's going to be a little bit of a drawn-out trough as we get into next... Could the rig count tick up for us later this year? It's possible, but, you know, we still think of it as more steady.

It's hard to call that today, could be later this year, because we do see the potential for some improvement in 2025.

We're in kind of a trough situation, but it's going to be a little bit of a drawn-out trough as we get into next year. Could the rig count tick up for us later this year? It's possible, but we still think of it as more steady.

Andy Hendricks: Could the rig count tick up for us later this year? It's possible, but you know, we still think of it as more steady. The rig count for us, we think, is relatively steady, because while we may put up a couple rigs for some customers later this year, there could be some challenges in the permeant as we work through this gas storage, but pricing is also holding relatively stable as well. You know, we, with the lower rig count, there's, you know, fixed cost coverage. But again, you know, as I mentioned earlier on completions, we're still being selective about, you know, what we're willing to go out and work equipment for.

William Andrew Hendricks: The root count for us, we think... relatively steady because while we may put up a couple rigs for some customers later this year, there could be some challenges in the Permian as we work through this gas story, but pricing is also holding relatively stable as well. Below every account, there's fixed cost coverage. But again, you know, as I mentioned earlier on complete, we're still being selective about what we're willing to go out and work with.

The rig count for us, we think, is relatively steady because while we may put up a couple rigs for some customers later this year, there could be some challenges in the Permian as we work through this gas storage. But pricing is also holding relatively stable as well.

With the lower rent count, there's fixed cost coverage, but again, as I mentioned earlier on completions, we're still being selective about what we're willing to go out and work equipment for.

Scott Gruber: And on the drilling rigs as well, we could probably work a couple more rigs today, but we think it's important to protect the pricing for our brand in the market and not allow pricing to fall below a certain level. Gotcha.

William Andrew Hendricks: And on the drilling rigs as well, we could probably work a couple more rigs today, but we think it's important to protect the pricing, protect our brand and the market, and not allow pricing to fall below. Gotcha. I appreciate the call. Thank you. Your next question comes from Luke Lemoine with Piper Sandler. Please go ahead. Hey, good morning.

And on the drilling rigs as well, we could probably work a couple more rigs today, but we think it's important to protect the pricing, protect our brand and the market, and not allow pricing to fall below a certain level.

Scott Gruber: I appreciate the color. Thank you.

Gotcha. I appreciate the call. Thank you.

Luke Lemoine: Your next question comes from Luke Lemoine with Piper Sandler. Please go ahead. Hey, good morning. Andy, you talked about how your e-fleet are performing, and I believe you're totally, you said as of around 80% of horsepower, this cable burning natural gas.

Your next question comes from Luke Lemoine with Piper Sandler. Please go ahead.

Luke Michael Lemoine: Andy, you talked about how your E-fleets are performing, and I believe your total fleet, you said, has around 80% of horsepower that's capable of burning natural gas right now. Can you talk about the plans and outlook for more E-fleets next year to maybe scoot the fleet-wide natural gas percentage even higher? I think right now all I want to say is that yes, we do intend to grow the amount of electricity that we have, but not just electricity but other technologies that can burn 100% natural gas.

Hey, good morning. Andy, you talked about how your E-fleets are performing, and I believe your total fleet, you said, has around 80% of horsepower that's capable of burning natural gas right now. Can you talk about the plans and outlook for more E-fleets next year to maybe scoot the fleet-wide natural gas percentage even higher?

Andy Hendricks: Right now, can you talk about the plans and outlook for more e-fleets next year to maybe scoot the fleet-wide natural gas percentage even higher? I think right now, all I want to say is that yes, we do intend to grow the amount of electric that we have, but not just electric, but other technologies that can burn 100% natural gas. There is demand for that out there. We're going to do it at a measured pace because, you know, we do want to make sure that we're managing our cows. We have capital in the right way that we are, you know, have sufficient capital return to shareholders to allow shareholders to have a good return as well, but we do see that we will grow this over time.

I think right now all I want to say is that yes, we do intend to grow the amount of electric that we have, but not just electric, but other technologies that can burn 100% natural gas. There is demand for that out there.

William Andrew Hendricks: There is demand for that out there. We're going to do it at a measured pace. Because, you know, we do want to make sure that we...

We're going to do it at a measured pace.

William Andrew Hendricks: Managing our capital in the right way so that we are, you know, having sufficient capital return to shareholders to allow shareholders to have a good return as well. But we do see that we will grow this over time. I think, you know, maybe on the next earnings call, we'll give you more color on what that looks like. But we do plan to grow the new technology aspect of our company. Okay. And then on your 3Q pumping outlook, it sounded like the uptick was primarily related to natural gas activity. Is that correct? Or are there any other drivers here as well?

Because, you know, we do want to make sure that we're...

Managing our capital in the right way that we are.

You know, have sufficient capital return to shareholders.

To allow shareholders to have a good return as well, but we do see that we will grow this over time. I think, you know, maybe on the next earnings call we'll give you more color on what that looks like, but we do plan to grow the new technology aspect of our completions business.

Luke Lemoine: I think, you know, maybe on the next earnings call, we'll give you more color on what that looks like, but we do plan to grow the new technology aspect of our completions business.

Andy Hendricks: Okay, and then on your 3Q pumping outlook, it sounded like the uptake was primarily related to natural gas activity. Is that correct, or are there any other drivers here as well? I think it's kind of more general across the board, maybe a little bit on the natural gas side, but you remember what we were saying in Q2: we had some unusual circumstances with a couple of our AMPs where the completions were just bumping against the drilling rig. You know, we worked through that, and so we did expect activity to come up in Q3, but you know, we still are a little bit of a challenging part of the software part of the market right now, and there's just certain pricing that we're just not going to go fill the gap and do it for a low price.

Ok.

And then, on your 3Q pumping outlook, it sounded like the uptick was primarily related to natural gas activity. Is that correct, or are there any other drivers here as well? I think it's kind of more...

Luke Michael Lemoine: I think it's kind of more general across the board, maybe a little bit on the natural gas side. But you remember what we were saying in Q2: we had unusual circumstances with a couple of our EMPs where the completions were just bumping against the drilling. We've worked through that, and so we did expect activity to pick up in Q3. But we're still in a little bit of a challenging part of the market right now, prices that we're just not going to fill the gap and do it for a low price. Okay, I got it. Thanks a bunch.

General across the board, maybe a little bit on the natural gas side, but you remember what we were saying in Q2 is we had some unusual circumstances with a couple of our EMPs where the completions were just bumping against the drilling rig.

We worked through that, and so we did expect activity to come up in Q3, but we're still in a little bit of a challenging part of the market right now, and there's just certain pricing that we're just not going to go fill the gap and do it for a low price.

Luke Lemoine: Okay, got it.

Luke Lemoine: Thanks a lot.

Steven Gengaro: Your next question comes from Steven Jengaro with Stifel. Please go ahead. Thanks. Good morning, everybody. Two from me, and you talked about pricing. Are you seeing price competition from older diesel assets? Like how are customers thinking about price and how are the conversations around price as you as you headed to the second half of this year? So I'd say in general, you know, across our services, pricing for, you know, pricing and pressure pumping is stabilizing at this point, but at the spot market, you've got tier two equipment out there, and so we're certainly not going to go out, you know, with higher tier equipment and compete with tier two and try to compete at those pricing levels.

Okay, got it. Thanks a bunch.

Luke Michael Lemoine: Your next question comes from Stephen Gengaro with Stifle. Please go ahead. Thanks. Good morning, everybody.

Your next question comes from Stephen Gengaro with Stifle. Please go ahead.

Stephen David Gengaro: Two for me, and you talked about pricing. Are you seeing price competition from older diesel assets? Like, what are customers thinking about price? And how are the conversations around price as you head into the second half of this year? So I'd say, in general, you know, across our service, pricing for pricing and pressure pumping is stabilizing at this point, but on the spot market, you've got tier two equipment out there.

Thanks. Good morning, everybody.

Two for me, and you talked about pricing, are you seeing price competition from older diesel assets? Like, how are customers thinking about price and how are the conversations around price as you head into the second half of this year?

So I'd say, in general, you know, across our services,

Pricing and pressure pumping is stabilizing at this point, but at the spot market you've got Tier 2 equipment out there, and so we're certainly not going to go out with higher tier equipment and compete with Tier 2 and try to compete at those pricing levels.

Stephen David Gengaro: And so we're certainly not going to go out, you know, with higher-tier equipment. But I think you're also going to see Tier 2 equipment get consumed because at the price level that Tier 2 is working at, we can't reinvest.

Andy Hendricks: But I think you're also going to see tier two equipment get consumed because, at the pricing level that tier two is working at the spot rate, you can't reinvest. You know, I would say it's probably close to break even, and you can't produce enough cash returns. And so, over time, that equipment just gets consumed. So I think, you know, we're going to see a trition in that part of the market, but we're just not going to go out there and compete with that at the lower price. But when we think about completions in general, I think our pricing for what we do and for the majority of customers who work for us is relatively stable at this point.

But I think you're also going to see Tier 2 equipment get consumed.

Because at the pricing level that Tier 2 is working at the spot rate.

William Andrew Hendricks: I would say it's probably close to break-even, and you can't produce enough cash returns. And so, over time, that equipment... So I think, you know, we're going to see attrition in that part of the market. But we're just not going to go out there, and I think our pricing for what we do and for the majority of the customers we work for is relatively stable. Okay, thank you. And then the other one is another follow up on the integrated drilling completion contracts.

You can't reinvest. I would say it's probably close to break-even and you can't produce enough cash returns. And so over time, that equipment just gets consumed.

So I think, you know, we're going to see attrition in that part of the market, but we're just not going to go out there and compete with that at the lower pricing. But when we think about completions in general, I think our pricing for what we do and for the majority of the customers we work for is relatively stable at this point.

Steven Gengaro: Okay, thank you.

Steven Gengaro: And then the other one is another follow-up on the integrated drilling completion contracts. I think you mentioned we should think about it as market pricing with upside. And I'm just kind of curious as we think about this going forward, if it comes a bigger part of the review stream.

Okay, thank you. And then the other one is another follow-up on the integrated drilling completion contracts.

William Andrew Hendricks: I think you mentioned we should think about it as market pricing with upside. And I'm just kind of curious as we think about this going forward if it will become a bigger part of the revenue stream. How should we think about the impact these contracts could have? on margins and are you at all putting sort of baseline margin at risk? I guess that's what I'm trying to understand. I know you don't want to talk a lot about the details of the contracts, but how do we think about it from a high level on the margin impact that this becomes a bigger piece of the portfolio like I think it's going to help activity and margin? First, when we look at what we're doing in And so, you know, we're certainly not going out and saying, hey, we're giving a discount to Bundle.

I think you mentioned, we should think about it as...

Market pricing with upside and I'm just kind of curious as we think about this going forward if it comes a bigger part of the of the revenue stream

William Andrew Hendricks: How should we think about the impact these contracts could have on margins, and are you at all putting sort of baseline margin at risk? Is I guess that's what I'm trying to understand. I know you don't want to talk a lot about the minutiae of the contracts, but how do we think about it from a high level on the margin impact that this becomes a big piece of portfolio. But I think it's going to help activity and margin a couple of ways. First, you know, when we look at what we're doing in these types of arrangements and the discussions we're having, we're bringing in services that maybe we wouldn't have had on the pad in the first place.

How should we think about the impact these contracts could have?

on margins. And are you at all putting

sort of baseline margin at risk. I guess that's what I'm trying to understand. I know you don't wanna talk a lot about the minutiae of the contracts, but how do we think about it from a high level on the margin impact if this becomes a bigger piece of the portfolio?

Well, I think it's going to help activity and margin in a couple of ways.

First, when we look at what we're doing in these types of arrangements and the discussions we're having, we're bringing in services that maybe we wouldn't have had on the pad in the first place.

Andy Hendricks: And so, you know, we're certainly not going out and saying, hey, we're given a discount to bundle. That's not the intent here because there's benefits to the MP. We want to be able to share in those benefits at the same time. But what we are seeing is that, you know, even in this particular arrangement that we're in today and the performance contract, you know, there are services that we're going to provide now that maybe we wouldn't have provided if we had not explained all of the things together and the efficiencies that we can add in the processes and the potential of bringing production forward.

And so.

You know, we're certainly not going out and saying, hey, we're giving a discount to Bundle. That's not the intent here because there's benefits to the EMP.

Stephen David Gengaro: That's not the intent here because there are benefits to the company. We want to be able to share in the [inaudible] Performance Contract. There are services that we're going to provide now that maybe we wouldn't have provided. We have not explained all the benefits of bringing everything together, the efficiencies that we can add in the process, and the potential to bring production. Okay, great. I appreciate the call.

We want to be able to share in those benefits at the same time.

But what we are seeing is that, you know, we're in, even in this particular arrangement that we're in today, and the performance contract.

Jeffrey Michael LeBlanc: Thank you. Your next question comes from Jeff LeBlanc at TPH. Please go ahead.

You know, there are services that we're going to provide now that maybe we wouldn't have provided if we had not explained all the benefits of bringing everything together, the, you know, the efficiencies that we can add to the processes and the potential of bringing production forward.

Steven Gengaro: Okay. Great.

Steven Gengaro: Now, I appreciate the color.

Jeff LeBlanc: Thank you. Your next question comes from Jeff LeBlanc at TPH. Please go ahead. Good morning, Andy and team. And thank you for taking my question.

Okay, great. I appreciate the call. Thank you.

Your next question comes from Jeff LeBlanc at TPH. Please go ahead.

William Andrew Hendricks: Good morning, Andy and team. And thank you for taking my question. I think you somewhat alluded to this previously, given that you are taking work off the sidelines given pricing, but as we look forward to 2025, how should we think about the glide path moving forward, particularly given the fact that the utilization headwinds juxtaposed with the natural gas curve and backwardation. Do you see a glide path toward $200 million of gross profit in the first half of 2025?

Andy Hendricks: I think you somewhat alluded to this previously given that you are taking work out the sidelines given pricing, but as we look forward to 2025, how should we think about the client path moving forward, particularly given the fact that the utilization headwinds, juxtaposed with natural gas, carbon backwardation, do you see a glypath towards $200 million of gross profit in the first half of 2025? I think that's hard to answer at this point, but I do think that, you know, we do see catalysts in 2025 that are positive for the whole sector. You know, by early 2025, the natural gas take away should help de-bottle net the Permian and allow our EMP producers there to, you know, move the natural gas out, not have to worry about, you know, the constraints on their production, and then, you know, potentially either keep activity at least steady, but if not increase a little bit too. Then, you know, we all know that there's going to be some demand from LNG.

Good morning, Andy and team, and thank you for taking my question. I think you somewhat alluded to this previously, given that you are taking work off the sidelines given pricing, but as we look forward to 2025, how should we think about the GLAG path moving forward, particularly given

The fact that...

The utilization headwinds juxtaposed with natural gas, curb and back gradation, do you see a glide path towards $200 million of gross profit in the first half of 2025?

William Andrew Hendricks: I think that's hard to answer at this point. But I do think that, you know, we do see catalysts in 2025 that are positive for the whole sector. By early 2025, the natural gas takeaway should help de-bottleneck the Permian and allow our E&P producers there to... Move the natural gas out, and not have to worry about the constraints on their production.

I think that's hard to answer at this point, but I do think that, you know, we do see catalysts in 2025 that are positive for the whole sector.

You know, by early 2025, the natural gas takeaway...

should help de-bottleneck the Permian and allow our EMP producers there to, you know, move the natural gas out, not have to worry about, you know, the constraints on their production, and then, you know, potentially either keep activity at least steady, but if not, increase a little bit too.

Jeffrey Michael LeBlanc: And then, you know, potentially keep activity at least steady, but if not, increase it a little bit. Then, you know, we all know that there's going to be some demand from LNG. Some of that, we'll have to wait and see how it's balanced. For more information, visit www.

Andy Hendricks: I think some of that will have to wait and see how it's balanced between, you know, the competing efforts of natural gas that flows into the Henry Hub versus, you know, the new gas that's going to be coming out of the Permian as well, but I do think we will see, you know, increasing demand in the natural gas basis. And so, you know, we see all that happening in 2025. Timing and magnitude, I think it's a little bit tough to predict from where we are today, but we certainly see some upside next year.

Then, you know, we all know that there's going to be some demand from LNG.

I think some of that we'll have to wait and see how it's balanced between, you know, the competing efforts of natural gas that flows into the Henry Hub versus, you know, the new gas that's going to be coming out of the Permian as well. But I do think we will see, you know, increasing demand in the natural gas basins.

And so, you know, we see all that happening in 2025, timing and magnitude I think is a little bit tough to predict from where we are today, but we certainly see some upside next year.

Jeffrey Michael LeBlanc: Thank you very much, and I'll turn it back to the fun.

William Andrew Hendricks: FEMA.gov, you know, increasing demand for natural gas. And so, you know, we see all that happening in 2025. Timing and magnitude, I think, are a little bit tough to predict from where we are today, but we certainly see some ups and downs. Thank you very much, and I'll turn it back to the provider. All right, your next question comes from Keith Mackey with RBC Capital Markets. Please go ahead.

Thank you very much, and I'll turn it back to the...

Keith Mackey: All right, your next question comes from Keith Mackie with RBC Capital Markets. Please go ahead. Hi, good morning. Just first wanted to follow up on your comment in the press release about, you know, the effects of natural gas, and particularly EMP consolidation being mostly reflected in current activity levels. Can you just give us some more color in terms of why, why you think that is as we stand today? Yeah, I think that, you know, what we said early on in the year, when we took a lot of questions about, you know, what does all the consolidation mean for the sector?

Thank you.

All right, your next question comes from Keith Mackey with RBC Capital Markets. Please go ahead. Hi, good morning.

Keith Mackey: I just first wanted to follow up on your comment in the press release about the effects of natural gas and, particularly, E&P consolidation being mostly reflected in current activity levels. Can you just give us some more color in terms of why you think that is as we stand today? Yeah, I think that, you know, what we said early on in the year when we took a lot of questions about, you know, what all the consolidation means for the sector. In general, you know, when you have the EMPs come together like this, there is a little bit of a pause in activity as the operations. All right.

Uh, just first wanted to follow up on your comment in the press release about, uh, you know, the effects of natural gas, and particularly...

E&P consolidation being mostly reflected in current activity levels. Can you just give us some more color in terms of why you think that is as we stand today?

Yeah, I think that you know what we said early on in the year when we took a lot of questions about you know What does all the consolidation mean for the sector?

Andy Hendricks: In general, you know, when you have the EMPs come together like this, you have a little bit of a pause in activity as the operational, you know, arms of these companies, you know, pull themselves together and decide what operations looks like going forward. And so, you know, we're seeing that work its way through the system across the industry right now as, you know, the EMPs work on their various mergers and make these kind of operational decisions. And so we're seeing this pause, you know, just kind of work itself through. And so I think we're in that right now.

In general, you know, when you have the EMPs come together like this.

You know, you have a little bit of a pause.

in activity as the operational.

William Andrew Hendricks: Pull themselves together and decide what operations will look like going forward. And so, you know, we're seeing that work its way through the system across the industry right now. These EMPs work on their various mergers and make these kind of operations. So we're seeing this pause...

You know, arms of these companies, you know, pull themselves together and decide what operations looks like going forward. And so, you know, we're seeing that work its way through the system across the industry right now as, you know, these EMPs work on their various mergers and make these kind of operational decisions.

Keith Mackey: So, I think we're in that right now. I don't think it gets any worse than it is from an activity standpoint because of that. And so there's some upside as this kind of works its way.

Andy Hendricks: I don't think it gets any worse than it is from an activity standpoint because of that.

Andy Hendricks: And so there's some upside as this kind of works its way through in the next year. Got it. Okay.

Keith Mackey: Okay. And just, just my second question here is I noticed, you know, in the press release, that the language changed from you expect to convert at least 40% of EBITDA out of free cash flow this year to approximately 40% of free cash flow this year. Am I just reading too much into the language, or is there something about the CapEx or working capital we should be thinking about that brings that number closer to 40 instead of above 40?

Andy Smith: And just my second question here is, I noticed, you know, in the press release, is changed the language from expect to convert at least 40% of EBITDA out of free cash flow this year to approximately 40% of free cash flow this year. Am I just reading too much into the language, or is there something on the CAPEX or working capital we should be thinking about that brings that number closer to 40 instead of above 40? I don't know that our change in language was intentional, but what I will just say is, as you've heard us talk about in the past, we do have some lumpiness to our working capital, especially around some customers that choose to do some things around year-in planning for themselves, prepayments, and things like that.

Am I just reading too much into the language or is there something on the CapEx or working capital we should be thinking about that that brings that number closer to 40 instead of above 40?

Keith Mackey: Um, I don't know that our change in language was intentional. But what I will just say is, as you've heard us talk about in the past, we do have some lumpiness in our working capital. Please see the complete disclaimer at www.google.com or at www.google.com/policies.

Bye.

I don't know that our change in language was intentional, but what I will just say is, as you've heard us talk about in the past, we do have some lumpiness to our working capital.

especially around some customers that choose to do some things around year-end planning for themselves, prepayments and things like that. It can affect working capital, you know, relatively significantly, but there was no intention to change that language or give you any sort of concern around that.

Andy Smith: It can affect working capital, relatively significantly, but there was no intention to change that language or give you any sort of concern around that. Got it.

Keith Mackey: I don't want to give you any sort of concern around... Got it. Okay. Thanks. That's it for me.

Andy Smith: Okay, thanks. That's it for me.

Farah Pant: Thanks. Your next question comes from Farah Pant, Bank of America. Hi, good morning, Andy and Andy.

Saurabh Pant: Your next question comes from Saurabh Pant, Bank of America. Hi, good morning, Andy and Andy. Maybe I'll start with something unrelated.

William Andrew Hendricks: So you issued a press release in May talking about signing a non-binding term sheet with AdNoc Drilling, and that's obviously a potentially very big opportunity. I know it's non-binding, it's early, but Andy, can you give us some color on that? Talk about the opportunity, and what are the next steps that we should look forward to in terms of realizing that opportunity potentially? Yeah, there's still some things we're working through. You know, as I said before, we're excited about the opportunity to expand our presence in the Middle East.

Farah Pant: Maybe I'll start with something unrelated. So you should have personally been made talking about finding a non-binding tone, she's with that non-drilling and that's obviously a potentially very big opportunity. I know it's non-binding; it's only three, but Andy, can you give us some color on that? It's talked about the opportunity and what are the next steps. We should look forward to in terms of realizing that opportunity potentially. Yeah, there's still some things we're working through. As I said before, we're excited about the opportunity to expand our presence in the Middle East. We're also excited that we think we have an avenue to do it in a capital-efficient manner.

Hi, good morning, Andy and Andy. Maybe I'll start with something unrelated.

So you issued a press release in May talking about signing a non-binding term sheet with AdNoc Drilling, and that's obviously a potentially very big opportunity. I know it's non-binding, it's early, but Andy, can you give us some color on that? Just talk about the opportunity and what are the next steps?

So we should look forward to in terms of realizing that opportunity potentially.

Yeah, there's still some things we're working through, you know, as I said before, we're excited about the opportunity to expand our presence in the Middle East.

William Andrew Hendricks: We're also excited that, you know, we think we have an avenue to do it in a capital efficient manner. As you mentioned, we did previously announce that we entered into this non-binding agreement to form a JV with Adnok Drilling. This process is still ongoing, but I look forward to providing more color when we have something more definitive to report, but it's still in progress. Okay. We'll look forward to more color, Andy.

Andy Hendricks: As you mentioned, we did previously announce that we entered into this non-binding agreement to form a JV with that non-drilling in this process.

We're also excited that, you know, we think we have an avenue to do it in a capital efficient manner.

As you mentioned, we did previously announce that we entered into this non-binding agreement to form a JV with Adnok Drilling.

Andy Hendricks: It's still ongoing, but I look forward to providing more color when we have something more definitive to report. But it's still in progress.

In this process, it's still ongoing, but I look forward to providing more color when we have something more definitive to report.

Saurabh Pant: And maybe a quick follow-up on the CapEx comment, Andy, Andy Smith, that you had. I think in your prepared remarks that you expect CapEx to be below the original $740 million number. Can you give us a little more color, Andy? Where's the potential opportunity for reduction versus that number? How should we think about the potential magnitude that you can cut from that level?

But it's still in progress.

Okay, perfect. We'll look forward to more color, Andy. And maybe a quick follow-up on the CapEx comment, Andy, Andy Smith, that you had.

I think in your prepared remarks that you expect CapEx to be below original $740 million number.

Can you give us a little more color on the ways to put with the potential opportunity for reduction versus that number? How should we think about the potential magnitude that you can cut from that level? And then just the base maintenance topics, how is that trending? Is it getting more expensive to maintain your assets? Or is it more or less what it was?

Andy Smith: And then just the base maintenance CapEx, how is that trending? Is it getting more expensive to maintain your assets? Or is it more or less what it was? Yeah, I would say on maintenance capital. I wouldn't say that... There hasn't necessarily been any significant change in terms of the increase.

Andy Smith: And then just the base maintenance capital. How is that trending? Is it getting more expensive to maintain assets? Or is it more or less what it was? Yeah, I would say on, let me start from the last element to backwards. So I would say on maintenance capital, I wouldn't say that there's necessarily been any significant change in terms of the increase recently, in terms of maintenance capital per rig or per fleet or anything like that. And on the order of magnitude of what could it be under, and the reason why it's under is to be fair, we've seen a little less activity, which again, lends itself to a little less maintenance capital now, on items that are growth or replacement or fleet additions or things like that.

Yeah, I would say on, let me start from the last thing and go backwards, so I would say on maintenance capital, I wouldn't say that there's necessarily been any significant change.

In terms of the increase recently, in terms of maintenance capital per rig or per fleet or anything like that.

Andy Smith: And on the order of magnitude of what it could be under and the reason why it's under is, To be fair, we've seen a little less activity, which, again, lends itself to a little less maintenance capital now on items that are growth or replacement or fleet additions or things like that. Those are kind of long lead times, a little bit more difficult to manage. But around the maintenance capital side, we do have some flexibility in, You know, obviously kind of reduced in the back half of the year to bring that number down. So I don't want to give.

and on the order of magnitude of what could it be under and the reason why it's under is...

To be fair, we've seen a little less activity, which, again, lends itself to a little less maintenance capital now.

Andy Smith: Those are kind of long lead time, a little bit more difficult to manage, but around the maintenance capital side we do have some flexibility and some things that we can, you know, obviously kind of reduce in the back half of the year to bring that number down. So I don't want to give a specific number around where I think that number is going to come in, but I do think that 740, you know, we'll be below 740. And that's why we called it out.

on items that are growth or replacement or fleet additions or things like that. Those are kind of long lead time, a little bit more difficult to manage. But around the maintenance capital side, we do have some flexibility and some things that we can.

You know, obviously kind of reduced in the back half of the year to bring that number down. So I don't want to give a specific number around where I think that number is going to come in, but I do think that 740, you know, we'll be below 740 and that's why we called it out.

Saurabh Pant: A specific number around where I think that number is going to come in, but I do think that 740, you know, we'll be below 740. And that's why we call it. Okay, perfect. No, I got it.

Saurabh Pant: Okay, Andy, thanks for those comments. I'll be back. Thanks. Our final question comes from Sean Mitchell with Daniel Energy Partners. Please go ahead.

Andy Smith: Okay, both of it. No, I got it. Okay, Andy, thanks for this comment that is done back.

Okay, perfect. No, I got it. Okay, Andy, thanks for those comments. I'll turn it back.

Sean Mitchell: Thanks. Our final question comes from Sean Mitchell with Daniel Energy Partners. Please go ahead. Good morning, guys. Thanks for squeezing me in here. Just a quick one on the field blending technology and the CNG business. It seems like it's got a decent growth profile, and it's early days. Is there anything on the component side, supply chain wise, that could potentially, you could see a bottleneck, or do you see any bottlenecks potentially there? Well, and one of the things we're doing is we have a path to some interesting IP on this. So we are working to predict the process and some of the mechanisms how we do things in the field.

Our final question comes from Sean Mitchell with Daniel Energy Partners. Please go ahead.

Sean Mitchell: Good morning, guys. Thanks for squeezing me in here. Just a quick one on the field blending technology in the CNG business. It seems like it's got a decent growth profile. It's early days. Are there any, is there anything on the component side, supply chain wise, that could potentially, you could see a bottleneck? Or do you see any potential bottlenecks there?

Good morning, guys. Thanks for squeezing me in here. Just a quick one on the field blending technology in the CNG business.

It seems like it's got a decent growth profile in its early days. Is there anything on the component side, supply chain-wise, that you could see a bottleneck?

William Andrew Hendricks: Well, in one of the things we're doing, you know, we have a path to some what we think is some interesting IP on this. So we are working to protect. There are potential bottlenecks, but we think we've been in front of them in terms of ordering early, because there are long-lead items to be able to. But it's not just about the natural gas, but also, you know, in terms of, If we're talking about what's happening in completions and frack, it's not just about the natural gas, but also, you know, If you're referring to electricity and the volumes of natural gas, we...

Or do you see any bottlenecks potentially there?

Well, in one of the things we're doing, you know, we have a path to some, what we think is some interesting IP on this. So we are working to project, you know, the process and some of the mechanisms of how we do things in the field.

Andy Hendricks: There are potential bottlenecks, but we think we've been in front of it in terms of ordering early because there are long lead items to be able to assemble this equipment. But it's not just about the natural gas, but also in terms of, if we're talking about what's happening in completions and fracks, it's not just about the natural gas. When you talk about these services, but if you're referring to electric and the volumes of natural gas we use, it's also about having some control over the power generation and the turbine systems, and we believe we're working to stay ahead of that as well.

There are potential bottlenecks, but we think we've been in front of it in terms of ordering early because there's long lead items to be able to assemble this equipment. But it's not just about the natural gas, but also, you know, in terms of, you know,

If we're talking about what's happening in completions and frack, it's not just about the natural gas.

When you talk about these services, but if you're if you're referring to electric and the volumes of natural gas we use

William Andrew Hendricks: It's also about, you know, having some control over the power generation in the turbine systems, and we believe we're working to stay ahead of that as well. And so, I think I'm excited about where we're going with this in terms of growing new technology in the field, and I think that our teams are doing a really good job of, you know, getting our footprint established with long-lead items to make sure that not only are we able to be in control of the natural gas delivery at the well site, but we can also... have a little more control and ownership of the turbine systems as well. Thanks, Andy. And then maybe one more for me, just kind of the last one.

It's also about, you know, having some control over the power generation and the turbine systems, and we believe we're working to stay ahead of that as well.

Andy Hendricks: And so I think I'm excited about where we're going with this in terms of growing new technology in the field. And I think that our teams are doing a really good job of getting our footprint established with long lead items to make sure that not only are we being able to be in control of the natural gas delivery at the well site, but we can also have a little more control and ownership of the turbine systems as well.

And so I think I'm excited about, you know, where we're going with this in terms of growing new technology in the field. And I think that our teams are doing a really good job of, you know, getting our footprint established with long lead items.

To make sure that not only are we being able to be in control of the natural gas delivery at the well site, but we can also, you know, have more, a little more control and ownership of the turbine systems as well.

Sean Mitchell: Thanks, Andy. And then maybe one more for me just kind of last one. Just as you think about next year, you guys have kind of several months in, you know, you're kind of half a year in. Any lessons learned? Good or bad from the transaction? Do you be willing to share?

Sean Mitchell: Just as you think about next year, you guys have kind of been in this for several months, you know, you're kind of happy you're in. Any lessons learned, good or bad, from this transaction that you'd be willing to share? You know, you never want to have to do two transactions at the same time, but we were fortunate to be able to bring in two great companies to Patterson-UTI. These were, you know, one was a really large one, and one was a little bit smaller one.

Thanks Andy and then maybe one more for me just kind of last one just as you think about next year you guys have kind of several months in you know you're kind of happy you're in any lessons learned good or bad from this transaction you'd be willing to share

Andy Hendricks: You know, you never want to have to do two transactions at the same time, but we were fortunate to be able to bring in two great companies to Patterson ETI. You know, one was a really large one; one was a little bit smaller one. The outside help on the integration and keeping everybody on track was a great benefit for us. I believe that helped us do things quickly. I can't say enough for our legal teams and our finance teams in all, you know, late night hours that they were partying to get all this done when they did it.

You never want to have to do two transactions at the same time, but we were fortunate to be able to bring in two great companies to Patterson-UTI.

These are, these are, you know, one was a really large one, one was a little bit smaller one. The outside help on the integration and keeping everybody on track was a great benefit for us.

William Andrew Hendricks: The outside help with the integration and keeping everybody on track was a great benefit for us. I believe that helps. I can't say enough about our legal teams and our finance teams and all the late night hours that they were working to get all this done when they did it. It's a lot of heavy lifting to get through all this. The operational teams have done a great job pulling everything together. You know, we said on the last conference call that integration is essentially done, and I believe that.

I believe that helped us do things quickly. I can't say enough for our legal teams and our finance teams and all the late night hours that they were burning to get all this done when they did it. It's a lot of heavy lifting to get through all these things.

Andy Smith: It's a lot of heavy lifting to get through all these things. The operational teams have done a great job pulling everything together. You know, we said on the last conference call, integration is essentially done, and I believe that everybody's working and pulling together as one team. You can certainly see it on this new arrangement that we have with a performance contract, you know, where we're going to run all the services that we have for this customer. And so it's exciting times for us. I do think there's further upside on the next year's side because even though the integration's done, we're still working to bring more vertical integration into the suites that we're offering.

The operational teams have done a great job pulling everything together.

William Andrew Hendricks: Everybody's working and pulling together as one team. You can certainly see it in this new arrangement that we have with the performance contract, where we're going to run all the services that we have for this customer. So it's exciting times. I do think there's further upside on the next year's side because even though the integration's done, we're still working to bring more vertical integration into the suites that we're offering. We're running wireline on about half our fleets right now.

You know, we said on the last conference call, integration is essentially done.

And I believe that. Everybody's working and pulling together as one team. You can certainly see it on this new arrangement that we have with the performance contract, you know, where we're going to run all the services that we have for this.

This customer is

And so it's exciting times for us.

I do think there's further upside on the next year's side because even though the integration's done, we're still working to bring more vertical integration into the suites that we're offering.

William Andrew Hendricks: I think there's still some upside to that, efficiency that we get by running our own wireline on our own completion service. Yeah, Sean, I would echo that. I would say, you know, look, in any integration or acquisition, they're fraught with risk. And the three teams really worked very, very well together. There are a million details that we don't talk about, but those were all handled.

Andy Hendricks: We're running wireline on about half our fleets right now. I think there's still some upside on that. because the efficiency that we get by running our own waterline on our uncompletion services and we're running chemicals on about two-thirds of our fleets. There's probably some dental upside from there. So some small things like that that still offer some upside post-integration, just to add some more verticals within what we're doing. Yeah, Sean, I would echo that. I would say, you know, looking at any integration in any acquisition, you know, they're fraught with risk around, you know, the execution of actually bringing the company together, and the three teams really worked very, very well together.

We're running wireline on about half our fleets right now. I think there's still some upside on that because of the efficiency that we get by running our own wireline on our own completion services.

And we're running chemicals on about two-thirds of our fleets. There's probably some potential upside from there. So some small things like that.

that still offers us some upside post-integration just to add some more verticals within what we're doing.

Yeah, Sean, I would echo that. I would say, you know, look, in any integration, in any acquisition, you know, they're fraught with risk around, you know, the execution of actually bringing the company together.

Andy Hendricks: There are a million details that we don't talk about because we're all handled seamlessly, and again, I've said it in the past, I don't think, you know, from our customer standpoint, anybody, you know, we never miss a beat. You know, it is ongoing. Knowing it will continue, you know, as you can imagine, bringing these businesses together will just take time, especially around, you know, back office and things like that as we consolidate further. But it's been really, you know, I can't imagine it could have gone much better. So I'm really very appreciative to everybody internally that worked very hard on that.

And the three teams really worked very, very well together. There are a million details that we don't talk about, but those were all handled.

William Andrew Hendricks: You know, seamlessly, and again, I've said it in the past, I don't think, you know, from our customer standpoint, anybody. You know, we never missed a beat, you know, it is ongoing, it will continue, you know, as you can imagine bringing these businesses together. We've had a lot of time, especially around the back office and things like that, as we consolidate further, but it's been really... I can't imagine it could have gone much better.

you know seamlessly and you know again I've said in the past I don't think you know from our customer standpoint anybody you know we never missed a beat you know it it is ongoing it will continue you know as you can imagine bringing these businesses together we'll just take

Time especially around, you know back office and things like that As we consolidate further, but it's been really, you know, I can't imagine it could have gone much better. So I've really

William Andrew Hendricks: I'm very appreciative to everybody in turn. There are a couple more points I'll add. The people and the operations are better than we expected in both businesses, so it's been a lot of fun to be able to pull it all together and work with everybody. That's been going great. The other point is my team's telling me that if you're going to do a big merger and integration, take your vacation before because you won't have time to take it out.

Andy Hendricks: A couple more points I'll add: the people and the operations are better than we expected in both businesses. So it's been a lot of fun to be able to pull it all together and work with everybody. That's been going great.

Very appreciative to everybody internally that worked very hard on that. A couple more points I'll add. The people and the operations are better than we expected in both businesses.

So it's been a lot of fun to be able to pull it all together and work with everybody, that's been going great. The other point is my team's telling me that if you're going to do a big merger and integration, take your vacation before because you won't have time to take it after.

Andy Hendricks: The other point is my team's telling me that if you're going to do a big, you know, merger and integration, take your vacation before; you want to have time to take it after. Yeah.

Andy Hendricks: Thanks for the color, guys. Thanks, Tom.

Sean Mitchell: Thanks for your time, guys. All right, I will now turn the call back over to Andy Hendricks for closing remarks. I want to thank everybody for dialing in today. Again, I want to thank all our teams across all of Patterson-UTI for what they do every day. And thanks again. Thank you, everyone. That concludes today's call. Thank you for joining. You may now disconnect.

Thanks Food Killer guys!

Danica: All right.

Andy Hendricks: I will now turn the call back over to Andy Hendrix for closing remarks. I want to thank everybody for dialing in today. Again, I want to thank all our teams across all the Patterson UTI for what they do every day, and thanks again. Appreciate it. Thank you, everyone.

Alright, I will now turn the call back over to Andy Hendricks for closing remarks.

I want to thank everybody for dialing in today. Again, I want to thank all our teams across all of Patterson-UTI for what they do every day, and thanks again. Appreciate it.

Danica: That concludes today's call. Thank you for joining.

Danica: You may now disconnect. Thank you.

Thank you everyone. That concludes today's call. Thank you for joining. You may now disconnect.