Q2 2025 Patterson-UTI Energy Inc Earnings Call

Patterson UTI second quarter, 'twenty 25 earnings conference call all lines have been placed on mute to prevent any background noise. 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 he would like to withdraw your question Press Star one again.

Speaker Change: We ask that you limit to one question and one follow up. Thank you I would now like to turn the call over to Michael Sabella, you may begin.

Thank you operator.

Speaker Change: Good morning, and welcome to Patterson Utis earnings Conference call to discuss our second quarter 2025 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 companys or managements plans intentions targets beliefs.

Speaker Change: Vacations 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 our results to come.

Speaker Change: <unk> actual results to differ materially the company takes no obligation to publicly update or revise any forward looking statements statements made in this conference call include non-GAAP financial measures. The required reconciliation to GAAP financial measures are included on our website.

Speaker Change: <unk> dot 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 as Chief Executive Officer.

Speaker Change: Thank you, Mike and welcome to our second quarter earnings Conference call.

Speaker Change: The second quarter saw several macro events take place to raise the volatility in the oil markets.

Hello, and thank you for standing by. My name is Lacey and I will be your conference operator. Today at this time I would like to welcome everyone to the Patterson. UTI second quarter 2025 earnings conference. Call Alliance have been placed on mute to prevent any background noise. 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 Start followed by the number 1 on your telephone keypad.

Speaker Change: The start of the quarter, there were fears that evolving trade policies could start to negatively impact global oil demand for it.

Speaker Change: At the same time OPEC plus was signaling to the market that it would be raising oil production and looking to retain market share.

Speaker Change: If you would like to withdraw your question, press star 1, again, we ask that you limit to 1 question and 1 follow-up. Thank you. I would now like to turn the call over to Michael. Sabella, you may begin.

Speaker Change: Elevated geopolitical risks emerge later in the quarter, which resulted in a wide range of oil prices between the mid fifties in the mid seventies per barrel. They made it very difficult for our customers to forecast and make decisions.

Speaker Change: As we start the third quarter the macro for oil remains unsettled typical market today's oil prices in the mid $60 per barrel range would support higher drilling and completion activity than we are currently seeing.

Speaker Change: Customers have remained cautious as they look to better understand these macro events.

Michael Sabella: Thank you, operator. Good morning, and welcome to Patterson UTIs earnings conference, call to discuss our second quarter of 2025 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 companies 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 could cause a results.

Speaker Change: Through all the noise in the markets over the past quarter. The fact that oil prices have stabilized in the mid $60 per barrel range is encouraging.

Speaker Change: With regards to U S oil production, we believe that until oil directed activity recovers, we will likely see a larger negative impact on U S oil production than we've seen so far.

Speaker Change: Is encouraging for our long term outlook relative to current activity.

Speaker Change: While the natural gas side, we are starting to see early indications from customers that additional activity will start to be added as LNG facilities come online and begin to call for more U S natural gas well.

Michael Sabella: The company's actual results to differ materially the company takes no obligation to publicly update, or revise, any forward-looking statements statements made in this conference. Call include non-gaap Financial measures. The required reconciliation to gaap. Financial measures are included on our website, patenergy calm, and in the, company's press release. Issued prior to this conference call, I will now turn the call over to Andy Hendricks. Patterson UTIs chief executive officer.

Andy Hendricks: Thank you, Mike and Welcome to our second quarter earnings conference call.

Andy Hendricks: The second quarter saw, several macro events. Take place that raised the volatility in the oil markets.

Speaker Change: While natural gas prices are at times. This year supported higher levels of activity the demand for new LNG facilities was further out.

Andy Hendricks: At the start of the quarter, there were fears that evolving trade policies. Could start to negatively impact Global oil demand.

Speaker Change: And customers were hesitant to add additional natural gas volumes to the market, while takeaway was still being built.

Andy Hendricks: While at the same time, opec's plus was signaling to the market that it would be raising oil production and looking to retake market share.

Speaker Change: We believe we are now approaching that physical call for higher U S. LNG volumes and we expect we will see incremental demand for more drilling and completions activity in natural gas basins as we enter 2026.

Andy Hendricks: Elevated geopolitical risk emerged later in the quarter, which resulted in a wide range of oil prices, between the mid-50s and the mid-70s per barrel. The made it very difficult for our customers to forecast, and make decisions.

Speaker Change: As the market finds its footing, we expect that we will have opportunities to create value for our shareholders with our differentiated and leading edge commercial strategy.

Speaker Change: Our operational footprint growing technology portfolio and financial position should allow us to improve our position across our core markets.

Andy Hendricks: As we start the third quarter, the macro for oil remains unsettled in a typical Market. Today's oil prices in the mid-60s per barrel range would support higher Drilling and completion activity than we are currently seeing. But customers have remained cautious as they look to better. Understand these macro events,

Speaker Change: Volatility will create opportunities for companies like Patterson UTI and we're prepared to take advantage of these opportunities by prioritizing capital allocation decisions that create long term value for pizza and shareholders.

Andy Hendricks: Through all the noise in the markets over the past quarter, the fact that oil prices have stabilized in the mid-60s per barrel range is encouraging.

Speaker Change: From a capital equipment perspective, we're operating high quality fleets of drilling rigs and completions equipment.

Speaker Change: But it is the investments we've been making to support that equipment to create our long term competitive edge.

Andy Hendricks: With regards to us oil production we believe that until oil directed activity recovers, we will likely. See a larger negative impact on us oil production than we have seen so far, which is encouraging for long-term Outlook relative to current activity.

Speaker Change: We are growing our digital portfolio and it allows customers to take our top quality assets and layer in automation and machine learning to deliver a more efficient and cost effective solution.

Andy Hendricks: On the natural gas side. We were starting to see early indications from customers that additional activity will start to be added as LNG facilities, come online and begin to call for more us Natural Gas.

Speaker Change: Our pizza and digital performance Center, which just opened this spring as an integrated digital platform that our customers are using to help optimize their entire drilling and completion process and the benefits of these investments are only just starting to emerge.

Andy Hendricks: While natural gas prices have at times this year, supported higher levels of activity, the demand from new LNG facilities, was further out and customers were hesitant to add additional natural. Gas volumes to the market. While takeaway was still being built.

Speaker Change: As the shale market begins to look beyond the current volatility and prepare for the future. We see an oilfield services market that is poised for change the company to help drive this change stand to benefit and we have positioned Patterson UTI to lead the industry into the next phase of development.

Andy Hendricks: We believe we are now approaching that physical call for higher us LNG volumes and we expect we will see incremental demand for more Drilling and completions activity in natural gas basins as we enter 2026.

Speaker Change: It is now being almost two years since we closed the merger of Patterson UTI next year and the acquisition of Alterra.

Andy Hendricks: We expect that we will have opportunities to create value for our shareholders, with our differentiated and Leading Edge commercial strategy.

Speaker Change: The operational integrations were completed in 2024, but the ultimate strategic vision for the company with far beyond simply being satisfied with the cost synergies that came from those transactions.

Andy Hendricks: Our operational footprint growing technology, portfolio and financial position should allow us to improve our position across our core markets.

Speaker Change: We were at the early stages of realizing the benefits of this strategic vision over the next several years, we see upside relative to the market as we move further down the path of more integration automation closer connectivity between the service provider and the customer and a smarter and savvy your shale industry that relies more on data to create value.

Volatility will create opportunities for companies like Patterson UTI. And we are prepared to take advantage of these opportunities, by prioritizing Capital, allocation decisions, that create long-term value for pin shareholders.

Andy Hendricks: From a Capital Equipment perspective, we are operating high-quality fleets of drilling rigs and completions equipment.

Andy Hendricks: But it is the Investments. We've been making to support that equipment. That create our long-term Competitive Edge.

Speaker Change: We've built the company that can deliver value to the customers beyond just the capital equipment, which should allow us to continue to deliver strong free cash flow for our investors.

Speaker Change: Our strong balance sheet will allow us to be opportunistic as we navigate the market and should help us improve our returns we closed the quarter with $186 million in cash and an undrawn $500 million revolver.

Andy Hendricks: We are growing our digital portfolio and it allows customers to take our top quality assets and layer in Automation and machine learning to deliver a more efficient and cost-effective solution.

Speaker Change: Low leverage and an investment grade credit rating.

Andy Hendricks: Our P10 digital performance center which just opened this spring is an integrated digital platform that our customers are using to help optimize their entire Drilling and completion process. And the benefits of these Investments are only just starting to emerge.

Speaker Change: We are posed poised to see free cash flow in the second half of the year well beyond what it would take to fund our dividend and we are exploring ways to best put that cash to work.

Speaker Change: Our U S contract drilling business largely track industry activity during the quarter and we continue to see margins hold at levels significantly higher than we've seen in previous periods of moderating activity.

Andy Hendricks: As a Shale Market begins to look beyond the current volatility and prepare for the future, we see an oil field services Market that is poised for change. The companies that help drive this change stand to benefit and we have positioned Patterson UTI to lead the industry into the next phase of development.

Speaker Change: Our margins have remained resilient, which we believe shows the technology edge, we have built as our customer sees improved efficiency with a patterson UTI rig and digital drilling platform.

Andy Hendricks: It has now been almost 2 years since we closed the merger of Patterson UTI next year. And the acquisition of Altera

Andy Hendricks: The operational Integrations were completed in 2024 but the ultimate strategic vision for the company, went far beyond simply being satisfied with the cost synergies that came from those transactions.

Speaker Change: Even as industry activity moderate we increased revenue from our drilling automation technologies.

Speaker Change: Customer demand remains strong for our proprietary products that enhance the drilling process.

Speaker Change: Including our cortex automation platform, which enables our advanced machine learning auto driller application.

Speaker Change: And our Rex cloud based early alert field monitoring system, which we are using these technologies to support a broader customer base as we advance the use of artificial intelligence to improve the efficiency of our drilling operations.

Andy Hendricks: We are at the early stages of realizing the benefits of this strategic Vision, over the next several years. We see upside relative to the market as we move further down the path for more integration. Automation closer connectivity between the service provider and the customer and a smarter. And savvier Shale industry that relies more on data, to create value.

Andy Hendricks: We built the company that can deliver value to the customers Beyond. Just the Capital Equipment, which should allow us to continue to deliver strong free cash flow for our investors.

Speaker Change: Increased acceptance of these technologies is creating a more sustainable customer relationship as we prove out the growing performance advantage of our high performing rigs compared to other similar capital assets in the market that lack of equivalent in digital products.

Andy Hendricks: Our strong balance sheet will allow us to be opportunistic, as we navigate the market and should help us improve our returns. We closed the quarter with 186 million in cash and an undrawn, 500 million, revolver, low leverage, and an investment grade credit rating.

Speaker Change: Moving on to completions, our completion services segment saw slightly reduced activity during the quarter, which was largely the function of some customer gaps in the calendar on several of our larger dedicated fleets. We filled most of these gaps with spot work for new customers, which helped to offset some of the changes in customer activity.

Andy Hendricks: We oppose poised to see free cash flow in the second half of the Year. Well, beyond what it will take to fund our dividend and we exploring ways to best. Put that cash to work.

Speaker Change: Our Emerald fleet of 100% natural gas powered equipment has grown to more than 225000 horsepower.

Andy Hendricks: Our us contract drilling business largely tracked industry activity during the quarter and we continue to see margins hold at levels significantly. Higher than we have seen in previous periods of moderating activity.

Speaker Change: Our emerald fleets and our tier four dual fuel fleets remain fully utilized.

Speaker Change: Our completions business achieved a key technology milestone on our automated hydraulic fracturing, which we call vertex.

Andy Hendricks: Our margins have remained resilient which we believe shows the technology Edge. We have built. As our customer sees improved efficiency with a Patterson UTI rig and digital drilling platform.

Speaker Change: There is growing acceptance for automated frac pump controls and we are already working in the Bakken and in Appalachia and are on track to complete fleet wide deployment of this technology by the end of 2025.

Andy Hendricks: Even as industry activity moderated, we increase revenue from our drilling automation Technologies.

Andy Hendricks: Customer demand remains strong for our proprietary products that enhance the drilling process.

Andy Hendricks: Including our cortex automation platform, which enables our Advanced machine learning Auto driller application.

Speaker Change: Through vertex, we see the potential for our equipment to get to rate faster and run at the optimal rate for each pump, which should reduce costs lower our maintenance capital.

Speaker Change: And also improve the overall use of natural gas as a fuel.

Andy Hendricks: And our Rex cloud-based early alert field monitoring system which we are using these Technologies to support a broader customer base, as we advance the use of artificial intelligence to improve the efficiency of our drilling operations.

Speaker Change: Our pizza and digital performance centers the backbone for the entire company as we made significant strides to uniquely help our customers.

Speaker Change: Better their plans execute and optimize drilling and completions designs based on real time information.

Andy Hendricks: Increased acceptance of these Technologies is creating a more sustainable customer relationship. As we prove out the growing performance advantage of our high-performing rigs compared to other similar Capital Assets in the market, that lack equivalent digital products.

Speaker Change: Yeah.

Speaker Change: Our drilling products segment had another very strong quarter with sequentially higher adjusted gross profit the U S market saw revenue improve compared to the prior quarter, even as the industry activity declined.

Speaker Change: Levering another quarter of record U S revenue per U S industry rig busy.

Speaker Change: The business made big strides as it grows its presence across the U S.

Andy Hendricks: Moving on to completions our completion Services segment saw slightly reduced activity during the quarter which was largely the function of some customer gaps. In the calendar on several of our larger dedicated fleets. We filled most of these gaps with spot work for new customers which helped to offset some of the changes in customer activity.

Speaker Change: International revenue was steady, although we did see higher revenue in several key markets, including the middle East.

Andy Hendricks: Our Emerald Fleet of 100% natural gas, powered equipment has grown to more than 225,000 horsepower.

Speaker Change: The Canadian market, which represents just under 10% of segment revenue had a great quarter. Despite the impact of normal seasonal spring breakup.

Andy Hendricks: Our Emerald fleets and our tier 4, dual fuel fleets remain fully utilized.

Speaker Change: One of our latest technology invest advancements our maverick drill bit continues to have significant traction in the market as we've had success in our drilling products business through constant innovation and through downhole tool technology.

Andy Hendricks: Our completions business achieved a key technology, Milestone on our automated hydraulic fracturing, which we call vertex.

Speaker Change: Yes.

Speaker Change: For Patterson UTI, our businesses have come together to create what we believe is one of the most formidable companies in our industry. Our foundation remains our top quality capital equipment, and our breadth of offerings at the well site.

Andy Hendricks: And are on track to complete fleetwide deployment of this technology by the end of 2025.

Andy Hendricks: through vertex, we see the potential for our equipment to get to rate faster and run at the optimal rate for each pump which should reduce costs lower our maintenance capital,

Speaker Change: But the long term strategic vision has been to build a company with an unmatched operational digital edge and the investments. We've made are only just starting to bear fruit.

Andy Hendricks: And also improve the overall use of natural gas as a fuel.

Speaker Change: It has been a multi year journey for our company to execute the vision that we set out for at the time of the merger and we believe the commercialization of these initiatives is perfectly timed as our customer base becomes larger and more sophisticated we.

Andy Hendricks: Our P10 digital performance centers, the backbone for the entire companies, we make significant strides to uniquely help our customers.

Andy Hendricks: Better, their plans execute and optimize Drilling and completions designs based on real-time information.

Speaker Change: We expect this should lead to continued strong free cash flow and better returns profile for our investors.

Speaker Change: I'll now turn it over to Andy Smith, who will review the financial results for the quarter.

Speaker Change: Thanks, Andy.

Andy Smith: Total reported revenue for the quarter was $1 $219 million.

Our drilling product segment had another very strong quarter with sequentially higher adjusted gross profit. The US market saw Revenue improved compared to the prior quarter. Even as the industry activity declined, delivering another quarter of record us Revenue per us industry rig the business made big strides as it grows its presence across the US.

Andy Smith: Net loss attributable to common shareholders of $49 million or <unk> 13 per share.

Andy Smith: This included a $28 million impairment related to our drilling operations in Colombia.

Andy Hendricks: International Revenue was steady. Although we did see higher Revenue in several key markets including the Middle East.

Andy Smith: Adjusted EBITDA for the quarter totaled $231 million.

The Canadian markets which represents just under 10% of segment. Revenue had a great quarter despite the impact of normal seasonal spring break up.

Andy Smith: Our weighted average share count was 385 million shares during <unk> and we exited the quarter with 385 million shares outstanding.

Andy Smith: During the first half of the year, we generated $70 million of adjusted free cash flow.

Andy Hendricks: 1 of our latest technology invest, advancements. Our Maverick, drill bit continues. To have significant Traction in the market as we've had success in our drilling products business through constant Innovation and through downhole tool technology.

Andy Smith: We saw working capital headwind of roughly $119 million through the end of the second quarter, which is typical of our business in the first half.

Andy Smith: We expect working capital will be a tailwind in the second half of the year.

For Patterson UTI. Our businesses have come together to create what we believe is 1 of the most formidable companies. In our industry. Our foundation remains our top quality Capital Equipment, and our breadth of offerings at the Well site,

Andy Smith: During the second quarter, we returned $46 million to shareholders, including <unk> <unk> per share dividend and $16 million for share repurchases.

Andy Hendricks: But the long term strategic Vision has been to build a company with an unmatched operational digital Edge and the Investments we've made are only just starting to bear fruit.

Andy Smith: Since we closed the Nextera merger and the Altera acquisition through June 32025, we.

Andy Smith: We have repurchased more than $37 million pizza in shares in the open market, which exceeds the shares we issued for the Altera acquisition.

Andy Hendricks: It has been a multi-year journey for our company to execute the vision that we set out for at the time of the merger. And we believe the commercialization of these initiatives is perfectly timed as our customer base becomes larger and more sophisticated.

Andy Smith: Including the impact of dilution, we reduced our share count by 8% since that time.

Andy Smith: This is in addition to reducing net debt, including leases by nearly $200 million and.

Andy Hendricks: We expect this should lead to continued. Strong free, cash flow and better returns profile for our investors. I'll now turn it over to Andy Smith who will review the financial results for the quarter.

Speaker Change: Thanks Andy.

Andy Smith: Paying a dividend that is currently an annualized 5% of our share price.

Andy Smith: In our drilling services segment first quarter revenue was $404 million and adjusted gross profit totaled $149 million.

Andy Smith: And you have contract drilling we totaled 9465 operating days for an average operating rig count of 104 rig with our sequential change in activity roughly in line with the industry trend.

Total reported revenue for the quarter was 1,219 Million. We reported a net loss attributable, to Common shareholders of 49 million or 13 cents per share, which included a 28 million impairment related to our drilling operations in Columbia.

Speaker Change: Adjusted ibida for the quarter total 231 million.

Andy Smith: On June 30, we had term contracts for drilling rigs in the U S providing for approximately $312 million of future day rate drilling revenue.

Speaker Change: Our weighted average share count was 385 million shares during C2. And we exited the quarter with 385 million shares outstanding,

During the first half of the year, we generated 70 million of adjusted free, cash flow.

Andy Smith: Based on contracts currently in place, we expect an average of 48 rigs operating under term contracts during the third quarter of 2025, and an average of 27 rigs operating under term contracts over the four quarters ending June 32020.

Speaker Change: We saw a working capital headwind of roughly 119 million through the end of the second quarter, which is typical of our business in the first half.

Speaker Change: We expect working capital will be a Tailwind in the second half of the year.

Andy Smith: For the third quarter and drilling services.

Andy Smith: We expect an average rig count in the mid nineties.

Speaker Change: During the second quarter, we returned 46 million to shareholders including an 8 cent per share dividend and 16 million dollars for share repurchases.

Andy Smith: We expect adjusted gross profit of approximately $130 million.

Speaker Change: Since we closed the next year, merger and Delta Acquisitions through June 30th 2025.

Andy Smith: Revenue for the second quarter in our completion services segment totaled $719 million with an adjusted gross profit of $100 million.

Speaker Change: We have repurchased more than 37 million P10, shares in the open market, which exceeds the shares we issued for the Altera acquisition.

We saw calendar gaps on multiple long term dedicated fleets during the quarter, although we filled most of those gaps on spot path for new customers.

Speaker Change: Including the impact of dilution we have reduced our share count by 8% since that time.

Andy Smith: We also saw higher revenue from several of our key customers and saw improvements in natural gas basis relative to the first quarter.

Speaker Change: This is an addition to reducing that debt including leases by nearly $200 million and paying a dividend that is currently an annualized 5% of our share price.

Andy Smith: For the third quarter, we expect completion services adjusted gross profit to be relatively steady sequentially.

Andy Smith: Second quarter drilling products revenue totaled $88 million with an adjusted gross profit of $39 million.

Speaker Change: And our drilling Services segment. First quarter Revenue was 404 million and adjusted gross profit totaled, 149 million

Andy Smith: Drilling products revenue and approved in the U S. Even as industry activity moderate and we often make gains in several of our key international markets, including the middle East.

Speaker Change: In US, contract drilling we totaled 9,465, operating days for an average, operating rig count of 104, rigs with our sequential change in activity, roughly in line with the industry trend.

Andy Smith: Our Canadian business, some typical seasonality from spring breakup, although sequential results were much better than the industry activity as we made gains in several key markets in the country.

On June 30th, we have term contracts for drilling rigs in the US.

Speaker Change: Providing for approximately 312 million dollars in future day rate, drilling Revenue.

Andy Smith: For the third quarter, we expect drilling products adjusted gross profit to improve slightly sequentially.

Andy Smith: With our results in the U S seeing some impact from the lower rig count.

Andy Smith: Our expected activity in Canada should benefit as that region comes out of the normal spring breakup, while international revenue is expected to improve slightly.

Based on contracts. Currently in place, we expect an average of 48 rigs operating under term contracts. During the third quarter of 2025 and an average of 27 rigs, operating under term contracts, over the 4 quarters ending June 30th 2026,

Speaker Change: for the third quarter in drilling Services, we expect an average rig count in the mid 90s,

Andy Smith: Other revenue totaled $8 million for the quarter with $2 million and adjusted gross profit.

We expect adjusted gross profits of approximately 130 million.

Andy Smith: We expect other adjusted gross profit in the third quarter to be steady compared to the second quarter.

Andy Smith: Reported selling general and administrative expenses in the second quarter were $64 million for Q3, we expect SG&A expenses will decline slightly sequentially.

Speaker Change: Recorded our completion Services segment totaled 719 million with an adjusted gross profit of $100 million.

Andy Smith: On a consolidated basis for the second quarter total depreciation depletion amortization and impairment expense.

Andy Smith: Totaled $262 million, which included the previously mentioned $28 million impairment related to our Columbian drilling business.

Andy Smith: For the third quarter, we expect total depreciation depletion amortization and impairment expense of approximately $230 million.

Andy Smith: During Q2, total capex was $144 million, including $55 million in drilling services $69 million in completion services $15 million in drilling products and $5 million in other and corporate.

Andy Smith: With regards to our capital budget for the remainder of the year, we expect capital expenditures net of proceeds from the sale of assets of less than $600 million in 2025.

Andy Smith: We are reducing our full year 2025 maintenance capital expenditures given slightly lower activity.

Andy Smith: However, we are still seeing strong demand for new technology in both our drilling and completions businesses related to digital and automation services and for advancements in technology to more cost effectively drill and complete longer laterals at higher temperatures and pressures.

Andy Smith: These investments should improve our competitiveness over the next several years and we expect these investments to earn a strong long term return on capital.

Andy Smith: We believe that our level of integration will uniquely position us to capitalize on these investments.

Andy Smith: As we approach our 2026 capital budget process, we have significant flexibility within our future capital spend and we'll reassess market dynamics later this year.

Andy Smith: We closed Q2 with $186 million in cash on hand, we do not have any senior note maturities until 2028, and we do not have anything drawn on our $500 million revolving credit facility.

Andy Smith: Through the first half of 2025, we have already returned almost $100 million to shareholders through dividends and share repurchases.

Andy Smith: Free cash flow is likely to accelerate in the second half as working capital needs to decrease.

Andy Smith: We expect free cash flow in the second half should significantly exceed our dividend and we are continuing to explore the best use of cash to create the most long term value for our shareholders.

Andy Smith: Our board has approved an <unk> <unk> per share dividend for the third quarter of 2025 payable on September 15th to holders of record as of September <unk>.

Speaker Change: I'll now turn it back over to Andy Andy Hendricks for closing remarks.

Andy Smith: Thanks, Andy.

Andy Smith: Our second quarter results reflected a moderation in activity across our core markets and we are pleased with the way our business has responded to the changing macro.

Andy Smith: There are sometimes difficulty in delivering on the high expectations that we set across the entire company for our teams, but we're fully confident in our team's ability to rise to the challenge.

Andy Smith: Operationally, we are seeing more opportunities to use our technology and unique operating footprint to enhance efficiency for our customers and deliver free cash flow to our investors.

Andy Smith: The volatility in the market will create long term opportunities for the top tier service providers like Patterson UTI and the investments we've made over the past several years into our P. 10 digital performance center combined with our top quality capital equipment will differentiate us relative to our peers.

Andy Smith: As the market settles and macro uncertainty subsides, our suite of digital and automation products have positioned our company as a long term leader.

Andy Smith: We are excited about the company we have built and believe we are just beginning to see this strategy play out.

Andy Smith: From a financial perspective, our balance sheet remains solid we closed the quarter with a substantial cash balance and see the opportunity for significant free cash flow in the back half of the year.

Andy Smith: This is allowing us to reinvest and multiple leading edge technologies that will extend our operational edge and create value for our shareholders long term.

Andy Smith: And finally on the macro current oil production has yet to see the impact of the latest round of activity moderation.

Andy Smith: Customers have remained cautious we also do not believe the current level of activity can be sustained without a larger negative impact to production volumes than we've seen so far.

Andy Smith: This gives us some encouragement on our long term outlook relative to what we're seeing today.

Andy Smith: On the natural gas side, we believe global LNG markets are nearing a higher call on U S natural gas physical volumes and we believe customers are already starting to make plans and partner with service companies that can most effectively help them satisfy that call.

Andy Smith: Patterson UTI has made investments over the past couple of years to prepare the business for what we saw is the next phase in shale development.

Andy Smith: More digital services and automation will be used to drive further efficiency.

Andy Smith: We are just at the beginning stages of realizing the benefit of those investments.

Andy Smith: We remain excited about the future of our industry and our company.

Andy Smith: With that I'd like to turn it over to <unk> to open the calls for Q&A.

Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Speaker Change: Please limit to one question and one follow up we will pause for just a moment to compile the Q&A roster.

Speaker Change: Your first question comes from the line of Scott Gruber with Citigroup you May go ahead.

Scott Gruber: Yes, good morning, Andy and Andy.

Andy Smith: Morning, Scott.

Andy Smith: Wanted to start on the completion side.

Andy Smith: Flat <unk> outlook is definitely solid in light of the macro here.

Andy Smith: Is your early.

Andy Smith: Look.

Andy Smith: In the <unk>, telling you you know Halliburton suggested a pretty steep year end decline you guys sound pretty booked up at least for <unk>, but how does that look for <unk> are you thinking it could be.

Speaker Change: Patterson UTI has made investments over the past couple of years to prepare the business for what we saw is the next phase in shale development, we're more digital services and automation will be used to drive further efficiency. We believe we are just at the beginning stage of realizing the benefit of those investments we remain excited about the future of our industry.

Andy Smith: A pretty steep year end decline or with weaker activity in <unk> for the industry is kind of a more normal seasonal pattern and in <unk> the more likely result.

Andy Smith: Yes first off.

Andy Smith: <unk> completion activity I want to congratulate the team on what they were able to do in the second quarter as we had said.

Speaker Change: And our company.

Speaker Change: With that I'd like to turn it over to <unk> to open the calls for Q&A.

Speaker Change: Sure.

Andy Smith: Earlier in the quarter that we were going to have some white space in the calendar towards the end and they did a great job filling them.

Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Andy Smith: And then also on what Theyre doing in the third quarter and really just keeping the calendar for and so.

Speaker Change: Please limit to one question and one follow up we will pause for just a moment to compile the Q&A roster.

Andy Smith: We're gonna be relatively steady in the third quarter, and so that bodes well for us.

Andy Smith: For the year.

Andy Smith: I think it's too early to call what the fourth quarter looks like but I would say.

Speaker Change: Your first question comes from the line of Scott Gruber with Citigroup you May go ahead.

Andy Smith: Based on some of the things that we're hearing from the customers.

Speaker Change: Yes, good morning, Andy and Andy.

Andy Smith: For some of the long term plans and even as we discuss LNG physical volume takeaways and 26, I think there could be moderation in Q4, but I'm not sure yet if the steep decline for us. So I think it's a little early to call Q4, we.

Andy Hendricks: Morning, Scott.

Andy Hendricks: Wanted to start on the completion side.

Andy Hendricks: Flat <unk> outlook is definitely solid in light of the macro here.

Speaker Change: Is your early.

Andy Hendricks: Look.

Andy Hendricks: And the <unk>, telling you you know Halliburton suggested a pretty steep year end decline you guys sound pretty booked up at least for <unk>, but how does that look for <unk> are you thinking it could be a.

Andy Smith: We do think it softens, a little bit, but we're not sure to what degree yet in terms of completions.

Andy Smith: And because we operate a large fleet of drilling rigs, we have some visibility on the overall market.

Andy Hendricks: A pretty steep year end decline or with weaker activity in <unk> for the industry is kind of a more normal seasonal pattern in <unk> the more likely result.

Andy Smith: And I think Thats really kind of plays a key in how we look at things and.

Andy Smith: And while our rig counts going to come down in the mid Ninety's in the third quarter.

Andy Smith: Looking out farther in the year I think it could stabilize after that as well which would be encouraging for completions.

Speaker Change: Yes first off.

Speaker Change: Posted completion activity I want to congratulate the team on what they were able to do in the second quarter as we had said.

Andy Smith: Got it.

Andy Smith: I was going to ask you about the rig count to stabilization.

Speaker Change: Earlier in the quarter that we were going to have some white space in the calendar towards the end and they did a great job filling now.

Andy Smith: Stabilization it sounds like it's possible in the <unk> is that.

Andy Smith: Some gas activity coming back or some some oil activity coming back.

Speaker Change: And then also on what Theyre doing in the third quarter and really just keeping the calendar for and so.

Andy Smith: Space here in the mid sixties kind of what's the what's the complexion of the drilling work that couldn't hold steady in the <unk>, yeah, and I'll caveat everything on today's commodity prices as well, but when we when we look at what we've got going forward.

Speaker Change: We're going to be relatively steady in the third quarter, and so that bodes well for us.

For the year I think it's too early to call what the fourth quarter looks like but I would say.

Speaker Change: Based on some of the things that we're hearing from the customers.

Andy Smith: Theres different movement in different basins across the U S. So you've got some rigs going up and some based on some rigs going down in some basins. So we've got movement to deal with that arent concur in the same basin and so that that's what we've got to work with but it does have the potential to be steady in the fourth quarter and it was steady in the fourth quarter lag.

Speaker Change: For some of the long term plans and even as we discuss LNG physical volume takeaways in 2006, I think there could be moderation in Q4, but I'm not sure yet it's a steep decline for us So I think.

Speaker Change: It's a little early to call Q4.

Speaker Change: We do think it softens, a little bit, but we're not sure to what degree yet in terms of completions.

Andy Smith: Last year as well.

Andy Smith: So.

Andy Smith: Again, we'll have to see how that plays out, but I would say overall I'm encouraged.

Speaker Change: And because.

Speaker Change: Because we operate a large fleet of drilling rigs, we have some visibility on the overall market.

Andy Smith: For what we see for this year versus what we were trying to deal with back in May.

Speaker Change: And I think Thats really kind of plays a key in how we look at things.

Speaker Change: And while our rig counts going to come down in the mid <unk> in the third quarter.

Speaker Change: Your next question comes from the line of Jerry Pi, either with Piper Sandler.

Speaker Change: Looking out farther in the year I think it could stabilize after that as well which would be encouraging for completions.

Andy Smith: Go ahead.

Speaker Change: Hey, good morning, just wanted to follow up on Scott's question about third corner, specifically with the completion activity, you've obviously talked about steady here, which has been a good converse from some of your peers. Maybe just if you can unpack that a little for us Andy the different puts and takes is that a gas versus oil comment is it spot versus dedicated.

Speaker Change: Got it.

Speaker Change: I was going to ask you about the rig count to stabilization.

Speaker Change: Stabilization it sounds like it's possible in the <unk> is that.

Speaker Change: Yes, some gas activity coming back or some some oil activity coming back.

Speaker Change: Stays here in the mid sixties kind of what's the what's the complexion of the drilling work that couldn't hold steady and to <unk>, yeah, and I'll caveat everything on today's commodity prices as well, but when we when we look at what we've got going forward.

Speaker Change: Maybe a little bit more on the third corner outlook, what kind of initiatives for US right. Now, it's just kind of steady in the basins, we will have a little bit of movement between some fleets move into different places, but overall just kind of steady.

Speaker Change: No real commentary on one basin for another on completions right now.

Speaker Change: Theres different movement in different basins across the U S. So you've got.

Speaker Change: We're working for some really solid customers both in gas basins in the oil basins, we're applying a lot of digital technology.

Speaker Change: Some rigs going up and some base and some rigs going down in some basins. So we've got movement to deal with that are incurred in the same basin and so that that's what we've got to work with but it does have the potential to be steady in the fourth quarter and it was steady in the fourth quarter last year as well so.

Speaker Change: The new Emerald fleets are out there barring a 100% natural gas and we've grown that this year.

Speaker Change: So we're in a good position there from a technology standpoint, and I think that's keeping us busy.

Speaker Change: Got it that's helpful.

Speaker Change: Again, we will have to see how that plays out, but I would say overall I'm encouraged.

Speaker Change: On the lot of digital commentary technology commentary in the release, which was great to see.

Speaker Change: For what we see for this year versus what we were trying to deal with back in May.

Speaker Change: Talked about being strategic with your cash balance and how you can deliver long term returns for your shareholders.

Speaker Change: Your next question comes from the line of Gary <unk> with Piper Sandler.

Can you talk to us about what we could potentially see with how you scale that whether it's technology bolt on tuck ins you could bring these types of assets onto the Patterson platform and scale, maybe just give us an idea of what youre thinking about growing your technology and digital and potentially some M&A related to that yeah, and it's in technology across the board.

Speaker Change: You May go ahead.

Speaker Change: Hey, good morning, just wanted to follow up on Scott's question about third corner, specifically with the completion activity, you've obviously talked about steady here, which has been a good converse from some of your peers. Maybe just if you can unpack that a little for us Andy the different puts and takes is that a gas versus oil comment is it spot versus dedicated just maybe a little.

Speaker Change: Drilling services, we continue to rollout new technologies, especially.

Speaker Change: Especially on the digital platforms.

Speaker Change: When we talk about cortex automation, there's the teams are writing more applications every week every month.

Speaker Change: More on the third quarter outlook for populations for US right now, it's just kind of steady in the basins, we will have a little bit of movement between some fleets move into different places, but overall just kind of steady.

Speaker Change: Work on the drilling rigs and we continue to expand our ability to be able to run those automation applications on the drilling rig fleet and so we've seen the revenues direct revenues from those digital applications continue to move up and all of that gets supported by our digital performance Center here, where.

Speaker Change: No real commentary on one basin for another on completions right now.

Speaker Change: We're working for some really solid customers both in gas basins Ana oil basins, we are applying a lot of digital technology.

Speaker Change: Our Rex alert system.

Speaker Change: The new Emerald fleets are out there barring a 100% natural gas and we've grown that this year.

Speaker Change: Has advanced technology to be able to flag.

Speaker Change: So we're in a good position there from a technology standpoint, and I think thats keeping us busy.

Speaker Change: Performance are different.

Speaker Change: Levels of the organization and even for our customers, who signed in and use it and so it's really improving our ability to perform for the customers overall and be more consistent on how we drill wells on the completion side, we've been testing and now running automated frac capabilities.

Speaker Change: Got it that's helpful maybe.

Speaker Change: Maybe on the <unk>.

Speaker Change: A lot of digital commentary technology commentary in the release, which was great to see you talked about being strategic with your cash balance and how you can deliver long term returns for our shareholder.

Speaker Change: Appalachia in the Bakken and we're gonna be expanding that across the U S and the interesting thing for US it's not limited to any one particular technology, we can run the automated frac systems.

Speaker Change: Can you talk to us about what we could potentially see with how you scale that whether it's technology bolt on tuck ins you could bring these types of assets onto the Patterson platforms and scale, maybe just give us an idea of what youre thinking about growing your technology and digital and potentially some M&A related to that yes, and it's the technology across the board.

Speaker Change: All of our technologies and we will have that out and deployed later in the year and so we anticipate that that improves our ability to compete in the markets, which we have to be able to do in a market like today.

Speaker Change: And drilling services, we continue to rollout new technologies.

Speaker Change: But also layer in some extra revenue at times with some customers as well for the benefits that they're seeing.

Speaker Change: Especially on the digital platforms.

Speaker Change: When we talk about cortex automation there as the teams are writing more applications every week every month to.

Speaker Change: Your next question comes from the line I T J <unk> with Goldman Sachs. You May go ahead.

Speaker Change: To work on the drilling rigs and we continue to expand our ability to be able to run those automation applications on the drilling rig fleet and so are we.

Speaker Change: Hey, good morning team.

Speaker Change: We've seen the revenues direct revenues from those digital applications continue to move up and all of that gets supported by our digital performance Center here, where our Rex alert system.

Speaker Change: Andy you noted.

Speaker Change: Increased conversations around gas directed activity can you give us any more color on those conversations and the implied trajectory as we should think about.

Speaker Change: Maybe on your thoughts on that Brandon Thanks, maybe both on the oil and.

Speaker Change: <unk> has advanced technology to be able to flag.

Speaker Change: And Gaston.

Speaker Change: Yes.

Speaker Change: Performance at different.

Speaker Change: The gas discussions.

Speaker Change: Levels of the organization and even for our customers, who signed in and use it and so it's really improving our ability to perform for the customers overall and be more consistent on how we drill wells on the completion side, we've been testing and now running automated frac capabilities.

Speaker Change: It's been interesting because I think this year there was a lot of.

Speaker Change: Talk early in the year that there'd be some uptick in gas.

Speaker Change: Towards the end of the year and we've seen some small increases in gas activity this year and it's been material for us.

Speaker Change: But we're expecting more gas activity next year, just based on the discussions that we're having now I mean, when you look at the overall physical LNG volume demands that we're going to see in 2026 27 28. So some of that's initially going to come from wells that are already behind pipe behind the valves ready to go but we have we have customer.

Speaker Change: In Appalachia in the Bakken and we're going to be expanding that across the us and the interesting thing for us. It is not limited to any one particular technology, we can run the automated frac systems.

Speaker Change: On all of our technologies and we will have that out and deployed later in the year and so we anticipate that that improves our ability to compete in the markets, which we have to be able to do in a market like today.

Speaker Change: That well that want to increase their activity and they're talking to us about drilling rigs, they're talking to us about completion equipment, they're talking to us about technologies and upgrades and additions in <unk>.

Speaker Change: But also layer in some extra revenue at times with some customers as well for the benefits that they're seeing.

Speaker Change: You know both digital equipment as well too to be able to handle this so we're in those discussions for 2026, and so I think we're going to see some further increase in the activity in 26 markets right now at today's oil prices or just kind of holding steady for us.

Speaker Change: Your next question comes from the line.

P J: P J <unk> with Goldman Sachs. You May go ahead.

P J: Hey, good morning team.

P J: Andy you noted.

Speaker Change: Towards the end of the year, but I think that it'll be gas. It shows some uptick next year and then we'll see what the oil markets due in terms of the price or.

Speaker Change: Increased conversations around gas directed activity can you give us any more color on those conversations and the implied trajectory as we should think about.

P J: Maybe early thoughts into 2000, thanks, maybe bolt on oil and.

Speaker Change: Of our oil producing customers get more confidence around where we.

Speaker Change: And Gaston.

P J: Yes.

Speaker Change: Oil prices are today and the stability in that oil price. So we'll have to see how that plays out later this year and early next year.

P J: The gas discussions.

P J: It's been interesting because I think this year there was a lot of.

P J: Talk early in the year that there'd be some uptick in gas.

Speaker Change: Thanks, Andy for that and then on the private exposure.

P J: Towards the end of the year and we've seen some small increases in gas activity this year and it's been material for us.

Speaker Change: Can you give us any color there and thoughts around what youre seeing because you are getting obviously on the gas side, maybe black engagement and big engagements are probably stronger bad.

P J: But we're expecting more gas activity next year, just based on the discussions that we're having now when you look at the overall physical LNG volume demands that we're going to see in 2026 2728. Some of that is initially going to come from wells that are already behind pipe behind the valves ready to go but we have we have customers.

Speaker Change: But private oil also Matt there was a lockheed so thoughts there on the private side sure. We don't necessarily work for some of the smaller privates that are private equity backed that are really.

Speaker Change: Focusing on cash flow are proven out some acreage for flip we tend to work for the larger companies and especially in oil privates and thats been relatively steady for us and so really pleased with what we do for those those companies the level of technology that they operate the efficiencies they get one look very large.

P J: Well that want to increase their activity and they are talking to us about drilling rigs, they're talking to us about completion equipment, they're talking to us about technologies and upgrades and additions in both.

P J: Both digital equipment as well too to be able to handle this so we're in those discussions for 2026, and so I think we're going to see some further increase in the activity in 'twenty six oil markets right now at today's oil prices or just kind of holding steady for us.

Speaker Change: Private that we work for actually drills wells for large public operators as well because of that efficient and so that keeps us steady and pleased with our positioning in that in that part of the market, but again you know you may hear different stories from what private equity backed e&ps are going to do but that's a small exposure for us.

P J: Towards the end of the year, but I think that it'll be gas that shows some uptick next year and then we'll see what the oil markets due in terms of the price or.

Speaker Change: Your next question comes from the line of Steven <unk> with Stifel. You May go ahead.

P J: <unk> of our oil producing customers get more confident around.

Steven: Thanks, Good morning, everybody.

P J: Oil prices are today and the stability in that oil price. So we'll have to see how that plays out later this year and early next year.

Speaker Change: Alright.

Speaker Change: So I know, it's probably early Andy and I was I was curious if you can kind of give me your thoughts when you gave.

Speaker Change: You gave some guidance on the rig count for the third quarter.

Speaker Change: Thanks, Andy for that and then on the private exposure.

Speaker Change: It seems like gas activity should start to get a little bit better maybe late this year early next year.

Speaker Change: Can you can you give us any color and thoughts around what youre seeing because you are getting obviously on the gas side, maybe black engagement and big engagements are broadly stronger bad.

Speaker Change: Could you talk about.

Speaker Change: Where do you think the rig count or maybe at least activity for you sort of bottoms.

Speaker Change: But private oil also matters a lot being so thoughts there on the private side sure. We don't necessarily work for some of the smaller privates that are private equity backed that are really.

Speaker Change: On the drilling side.

Speaker Change: David I'm really hesitant to call a bottom.

Speaker Change: It's.

Speaker Change: It's always a little bit tougher when you're trying to project out and determine what's happening but.

Speaker Change: Focusing on cash flow are proven out some acreage for a flip we tend to work for the larger companies and especially in oil privates and thats been relatively steady for us and so really pleased with what we do for those those companies the level of technology that they operate the efficiencies you get one look very large.

Speaker Change: Our view for the year is that we're going to see some a little bit of decline in the rig count into the mid nineties, but it has the potential to stabilize in the fourth quarter. When we saw some stability in the rig count in the fourth quarter of last year. So it may play out that way for this year and I think that's positive for the completion industry as well and what we do.

Speaker Change: There were four actually drills wells for large public operators as well because of that efficient and so that keeps us steady and pleased with our positioning in that part of the market, but again.

Speaker Change: On the completion side. So I think you know that's.

Speaker Change: That's just all based on you know.

Speaker Change: Our our belief and discussions with customers at current oil prices are.

Speaker Change: Hear different stories from what private equity backed e&ps are going to do but that's a small exposure for us.

Speaker Change: But some stability in the fourth quarter wouldn't be a bad thing at all and so we would certainly welcome that so we'll have to see how it plays out.

Speaker Change: Your next question comes from the line of Stephen <unk> with Stifel. You May go ahead.

Speaker Change: Thanks, and then the other question was on the completion side.

Stephen: Thanks, Good morning, everybody.

Speaker Change: You touched a little bit about this but when we think about the makeup of the fleet.

Speaker Change: Yes.

Speaker Change: So I know, it's probably early Andy and I was I was curious if you can kind of give me your thoughts when you.

Speaker Change: <unk> percentage of assets that you and the industry have that are our lower Michigan gas burning assets.

Speaker Change: You gave some guidance on the rig count for the third quarter. It seems like gas activity should start to get a little bit better maybe late this year early next year.

Speaker Change: How is that pricing dynamic right now sort of old versus new assets or the newer assets still getting it feels like you're still getting hit with the market, but where are you seeing are you seeing resiliency, there and how should we sort of think about the pricing dynamics for the clean burning fleets as we kind of go forward here.

Speaker Change: Could you talk about.

Speaker Change: Where do you think that the rig count or maybe at least activity for you sort of bottoms.

Speaker Change: On the drilling side.

Speaker Change: David I'm really hesitant to call a bottom.

Speaker Change: Yeah. So let me explain how we see that and how the market's actually reacting to that and why we're investing in and what we're investing in so.

Speaker Change: Yes.

Speaker Change: It's always a little bit tougher when you're trying to project out and determine what's happening but.

Speaker Change: Our view for the year is that we're going to see some a little bit of decline in the rig count into the mid nineties, but it has the potential to stabilize in the fourth quarter and we saw some stability in the rig count in the fourth quarter last year. So it may play out that way for this year and I think thats positive for the completion industry as well and what we do.

Speaker Change: When you look at our Emerald fleet that burned 100% natural gas and that's a mixture of electric fleets. We have some turbine direct drive in there and we have a growing fleet.

Speaker Change: Of natural gas Recip direct drive in there as well, which we think is going to be more capital efficient over the longer term.

Speaker Change: On the completion side.

Speaker Change: And so all of that because it can vary a hybrid that natural gas is in high demand.

Speaker Change: I think.

Speaker Change: That's just all based on.

Speaker Change: And all of these types of systems by the end of this year and we will have the ability to be part of the digital automation that we're implementing on the frac as well.

Speaker Change: Our our belief and discussions with customers at current oil prices.

Speaker Change: But some.

Speaker Change: Some stability in the fourth quarter wouldn't be a bad thing at all and so we would certainly welcome that so we'll have to see how it plays out.

Speaker Change: Which will improve their operational capabilities and so all of that still getting premium pricing and its not being pulled down by lower tier services in this sector and so we still have a fleet of.

Speaker Change: Thanks, and then the other question was on the completion side.

Speaker Change: And you talked you touched a little bit about this but when we think about the makeup of the fleet and the percentage of assets that you and the industry have that are our low emission gas burning assets.

Speaker Change: More of the Emerald, 100% natural gas that we're going to receive later in the year and be deploying that towards the end of this year and early next year and it gets a premium price and margin compared to everything else. Now you know there is some competition in the 100% natural gas area.

Speaker Change: How is that pricing dynamic right now sort of old versus new assets and the newer assets still getting it feels like you're still getting hit with the market but.

Speaker Change: Where are you seeing are you seeing resiliency, there and how should we sort of think about the pricing dynamics for the clean burning fleets as we kind of go forward here.

Speaker Change: Have to compete in that area.

Speaker Change: But the good news the good news is its not being pulled down by the competition at the lower Frac.

Speaker Change: Yeah. So let me explain how we see that and how the market's actually reacting to that and why we are investing in.

Speaker Change: <unk> and so that's why we still continue to invest and plan to receive more than 100% natural gas systems later this year.

Speaker Change: And what we're investing in so.

Speaker Change: When you look at our MRO fleet that Burns, a 100% natural gas and that's a mixture of electric fleets. We have some turbine direct drive in there and we have a growing fleet of natural gas recip direct driving there as well, which we think is going to be more capital efficient over the longer term.

Speaker Change: Your next question comes from the line of <unk> with Bank of America. You May go ahead.

Speaker Change: Hey, good morning, Andy and Andy Thanks.

Speaker Change: And so all of that because we converted <unk> natural gas is in high demand.

Speaker Change: Thanks, Rob.

Speaker Change: Andy maybe I'll ask a big picture question right. We lost a lot of question on activity and pricing, but before that they just looking big picture, but I think you said looks attractive activity should have been higher rate, but it is that that may be open to that.

Speaker Change: And all of these types of systems by the end of this year and we will have the ability to be part of the digital automation that we're implementing on the frac as well.

Speaker Change: Which will improve their operational capabilities and so all of that still getting premium pricing and its not being pulled down by lower tier services in the sector and so we still have a fleet of.

Speaker Change: <unk> oil prices do go down rate in that environment, Andy look in a few months, we'll be in the budgeting season RFP season for 2026.

Speaker Change: So as you talk to customers right now what are you using and what kind of oil price do they're going to plan that I do think we are planning right now yes.

Speaker Change: Of more of the Emerald, 100% natural gas that we're going to receive later in the year and be deploying that towards the end of this year and early next year and it gets a premium price and margin compared to everything else now there is some competition in the 100% natural gas area and we have to compete in that area, but the good.

Speaker Change: And so we think that at today's oil price activity can be higher than it is but because of all the fluctuation in the markets and I'm talking about the oil markets over the last couple of months. Our customers are just looking for some stability and if that stability remains then I think it puts us in a better position to have some upside.

Speaker Change: The good news is its not being pulled down by the competition at the lower Frac technologies and so that's why we still continue to invest and plan to receive more of the enrolled 100% natural gas systems later this year.

Speaker Change: That's what our customers are really kind of looking for some stability and some certainty in what those oil markets look like in those that's what we're hearing from the customers. So.

Speaker Change: I think that as we move through the year, we're certainly going to get more feedback and more comfort and whether or not you know oil prices are stable at this level now going into say the tender season, which a lot of it is on the completion side, which we see every fall.

Speaker Change: Your next question comes from the line of <unk> with Bank of America. You May go ahead.

Speaker Change: It's interesting that we're going to go into that season, right now essentially sold out of our highest quality frac equipment, our emerald fleets, our tier four DGB either are all working and so we're going into that tender season with that position and so I think that.

Speaker Change: Hey, good morning, Andy and Andy Morningstar online.

Speaker Change: Andy maybe I'll ask a big picture question right. We've asked a lot of question on activity and pricing, but before that I, just looking big picture part of it but I think you said looks attractive.

Speaker Change: They really should have been higher rate, but it does that maybe operator that unafraid oil prices may go down rate in that environment. Andy look in a few months, we will win the budgeting season RFP season for 2026, right. So as you talk to customers right now what are you using and what kind of oil price do theyre going to plan that I do think we are planning that right now.

Speaker Change: It will still be a competitive season.

Speaker Change: But we are sold out of that level equipment today.

Scott Gruber: Right right no that's good color, Andy and Andy Andy Smith, maybe a couple of quick ones for you one Andy if you can help us on the Capex, how should we think about 'twenty six capex I know maintenance Capex is coming down this year, but maybe give us the big pieces and twenty-five capex budget to help us think about when he thinks and then a quick one on I see though I think.

Speaker Change: And so we think that at today's oil price activity can be higher than it is but because of all the fluctuation in the markets and I'm talking about the oil markets over the last couple of months, our customers who are just looking for some stability and if.

Scott Gruber: <unk> million dollars and other operating income in the drilling services results in the second quarter can you just tell us what that is.

Speaker Change: That stability remains then I think it puts us in a better position to have some upside, but that's what our customers are really trying to looking for some stability and some certainty in what those oil markets look like in those that's what we're hearing from the customers. So.

Scott Gruber: Yes, so on Capex for 'twenty, we're not ready to kind of give anything thats a guidance number out there yet with activity coming down obviously, you'll see maintenance come down, but we haven't gone through our budgeting cycle side don't want to get too far out ahead of that.

Speaker Change: I think that as we move through the year, we're certainly going to get more feedback and more comfort and whether or not oil prices are stable at this level now going into say the tender season, which a lot of it is on the completion side, which we see every fall.

Scott Gruber: So I prefer to talk about the next caller.

Scott Gruber: Fourth quarter on the $8 million, there's a couple of things one.

Scott Gruber: We had an insurance settlement on a liquid.

Scott Gruber: Equipment damage from.

Scott Gruber: To be honest a couple of years ago.

Speaker Change: Interesting that we're going to go into that season, right now essentially sold out of our highest quality frac equipment, our emerald fleets, our tier four DGB user are all working.

Scott Gruber: That and then we also that's where we account for income and some of our Chinese.

Scott Gruber: That is from that line item as well so that number will go through that as well.

Scott Gruber: Goes through that line item within our drilling services segment.

Speaker Change: So we are going into that tender season with that position and so I think that.

Speaker Change: It will still be a competitive season.

Speaker Change: Your next question comes from the line of Keith Mackey with RBC you May go ahead.

Speaker Change: But we are sold out of that level equipment today.

Speaker Change: Right right no. That's good color Andy Yeung, Andy Andy Smith May be a couple of quick ones for you one Andy if you can help us on Capex, how should we think about 'twenty six capex I know maintenance Capex is coming down this year on it but maybe give us the big pieces 25, Capex budget to help us think about 'twenty six and then a quick one on I see the I think.

Keith: Hi, Good morning, Hey, Keith.

Keith Mackey: Hey, just wanted to follow up on your comments Andy on the Emerald fleets.

Keith Mackey: Recognize theres some different technologies built into there and you mentioned the <unk>.

Keith Mackey: The direct drive Recip is starting to look more capital efficient relative to some of the other technologies can you just.

Speaker Change: <unk> million dollars and other operating income in the drilling services results in the second quarter can you just tell us what that is.

Keith Mackey: Give us a little bit more color on what youre seeing.

Keith Mackey: As you work as you build out that technology fleet.

Speaker Change: Yes, so on Capex for 2006 were not ready to kind of give anything thats a guidance number out there yet with activity coming down obviously, youll see maintenance come down, but we haven't gone through our budgeting cycle side don't want to get too far out ahead of that.

Keith Mackey: How does it compare in terms of capital efficiency or operational proficiency versus some of the more conventional technologies as well.

Keith Mackey: Sure.

Keith Mackey: When we started down the path of a 100% natural gas.

Speaker Change: So I'd prefer to maybe talk about that even into the next call or even in the fourth quarter on.

Keith Mackey: Several years ago, even as a combined company we were looking at different technologies, and we've tried different things because we've got customers who benefit from burning 100% natural gas for various reasons.

Speaker Change: On the $8 million Theres, a couple of things one.

Speaker Change: We had an insurance settlement on a.

Speaker Change: Equipment damage from and.

Speaker Change: To be honest a couple of years ago.

Keith Mackey: There is there are several different technologies that you can use to achieve that.

Speaker Change: That and then we also that's where we account for income and some of our J needs.

Keith Mackey: And certainly electric Frac powered by a 100% natural gas turbine is.

Speaker Change: It goes through that line item as well so that number will go through and Thats what goes through that line item within our drilling services segment.

Keith Mackey: An effective way to do that from an operational standpoint, but it's also very expensive. It is very capital heavy so you've got all the pumps on locations, but then you've got the power systems on location, you've got the cable systems and you've got switch gear and when I say switch gear, you can say quick and it sounds easy but switch gear.

Speaker Change: Your next question comes from the line of Keith Mackey with RBC you May go ahead.

Keith Mackey: Hi, good morning.

Keith Mackey: Keith one eight hey, just wanted to follow up on your comments Andy on the Emerald fleets.

Keith Mackey: On a location with a 35 megawatt turbine can be one or 218 Wheeler trailers.

Keith Mackey: Recognize theres some different technologies built into there and you mentioned the.

Keith Mackey: Breakers, and switch and handling equipment to distribute the power and so.

Keith Mackey: The direct drive reset is starting to look more capital efficient relative to some of the other technologies can you just give us a little bit more color on what youre seeing.

Keith Mackey: This is all capital intensive when you get into the power system attached to the electric pumps on the trailers.

Keith Mackey: 35 megawatt turbine capital out there that can be in the $40 million range.

Keith Mackey: As you work.

Keith Mackey: As you build out that technology fleet.

Keith Mackey: How does it compare in terms of capital efficiency or operational proficiency versus some of the more conventional technologies as well.

Keith Mackey: And.

Keith Mackey: With turbine technology and turbine power, you're also coming up against the demand for bigger systems for other industries, as well, which will which everybody is talking about.

Keith Mackey: Sure.

Keith Mackey: When we started down the path of a 100% natural gas.

Keith Mackey: Now when you move on into turbine direct drive we run a little bit of that and we will use that to boost natural gas demand on some of our tier four dual fuel.

Keith Mackey: Several years ago.

Keith Mackey: Even as a combined company we were looking at different technologies, and we've tried different things because we've got customers that benefit from burning 100% natural gas for various reasons.

Keith Mackey: Boost that.

Keith Mackey: Demand for natural gas and improves the efficiency of how that operates with natural gas, but we'll do some of that.

Keith Mackey: And there is there are several different technologies that you can use to achieve that.

Keith Mackey: And certainly electric Frac powered by a 100% natural gas turbine is.

Keith Mackey: We also enter mixed some electric with tier four dual fuel so sometimes electric's not deployed all by itself.

Keith Mackey: Effective way to do that from an operational standpoint, but it's also very expensive its very capital heavy so you've got all the pumps on locations, but then you've got the power systems on location, you've got the cable systems and you've got switch gear and when I say switch gear, you can say quick and it sounds easy, but switch gear on a location.

Keith Mackey: And then we've also started moving to the 100% natural gas Recip engine. So we've been testing that engine for a couple of years. It's a high horsepower engine 3600 horsepower, which can drive a little bit higher horsepower overall than even some of the tier four DGB systems that we run and so you.

Keith Mackey: And with a 35 megawatt turbine can be one or 218, Wheeler trailers breakers, and switch and handling equipment to distribute to power and so.

Keith Mackey: Prove the amount of horsepower on the trailer.

Keith Mackey: You don't have all the electrical handling equipment, you don't have to worry about.

Keith Mackey: A $40 million gas turbine on location and some of our some of our frac fleets on the electric or even growing to the point, where we're running.

Keith Mackey: This is all capital intensive when you get into the power system attached to the electric pumps on the trailers.

Keith Mackey: 35 megawatt gas turbine at $40 million and then maybe another six megawatt.

Keith Mackey: 35 megawatt turbine capital out for that can be in the $40 million range.

Keith Mackey: Gas turbine.

Keith Mackey: With turbine technology and turbine power, you're also coming up against the demand for bigger systems for other industries, as well, which will which everybody is talking about now.

Keith Mackey: For another $20 million and so that's a lot of capital location location and so when you can package that the way we're doing now on the natural gas reset.

Keith Mackey: Now when you move on into turbine direct drive we run a little bit of that and we will use that to boost natural gas demand on some of our tier four dual fuel.

Keith Mackey: And it just becomes more capital efficient in deploying high horsepower, 100% natural gas operations and so we're excited about how that's working.

Keith Mackey: Boost that.

Keith Mackey: Over the two year period sure we've broken a few things on the system, but this is.

Keith Mackey: Demand for the natural gas and improves the efficiency of how that operates with natural gas. So we'll do some of that.

Keith Mackey: A great partner and Caterpillar, who we've been working with now for a couple of years to shake things down and they've made some modifications to some transmission pieces and some other things and so we're really confident in the ability to have a partner that's that big in the industry that has experienced running these types of engines in the combination and how they recommend.

Keith Mackey: We also enter mixed some electric with tier four dual fuel so sometimes the electrics not deployed all by itself. But then we've also started moving to the 100% natural gas Recip engine. So we've been testing that engine for a couple of years, it's a high horsepower engine 3600 horsepower, which can.

Keith Mackey: It all be packaged and the reliability that we can potentially get out of this on top of the capital efficiency for deploying at the well site and if we can be more capital efficient in deploying at the well site and we can be more competitive in the market versus say the electrical systems and I think.

Keith Mackey: Drive a little bit higher horsepower overall than even some of the tier four DGB systems that we run and so you improve the amount of horsepower on the trailer.

Keith Mackey: You don't have all the electrical handling equipment, you don't have to worry about.

Keith Mackey: This is where we're moving right now and are excited about the potential for this.

Keith Mackey: A $40 million gas turbine on location and some of our some of our frac fleets on the electric or even growing to the point, where we're running.

Keith Mackey: Got it very helpful.

Keith Mackey: 35 megawatt gas turbine at $40 million and then maybe another six megawatt.

Keith Mackey: Are you are you able we're ready at this point I guess to give us a bit of a a bit more color on the run rate of investment in Emerald you mentioned, you've got some more equipment coming in.

Keith Mackey: Gas turbine.

Keith Mackey: For another $20 million and so that's a lot of capital locations on location and so when you can package that the way we are doing now on the natural gas reset.

Keith Mackey: Can you just talk a little bit more about how how much of your fleet do you think that this could or should make up over the next few years.

Keith Mackey: And it just becomes more capital efficient in deploying high horsepower, 100% natural gas operations and so we're excited about how that's that's working.

Keith Mackey: Yes, we'll take it on a year by year basis, but you can see that it's really been kind of a us.

Keith Mackey: Steady add to the fleet steady investment over the last couple of years. This year, we added some more electric Emerald as we grew from normal practice level for I can travel frac for some of our electric customers and then Uh huh.

Keith Mackey: Over the two year period sure we've broken a few things on the system, but this is.

Keith Mackey: A great partner and Caterpillar, who we've been working with now for a couple of years to shake things down and they made some modifications to some transmission pieces and some other things and so we're really confident in the ability to have a partner that's that big in the industry that has experienced running these types of engines and a combination and how they recommend.

Keith Mackey: We're going to add some more of the.

Keith Mackey: Natural gas direct drive systems. This year and there is a potential for us to add more next year, but we'll take it on a year by year basis and make sure we understand the demand and make sure we can understand where you're still getting good returns on this.

Keith Mackey: It all be packaged and the reliability that we can potentially get out of this on top of the capital efficiency for deploying at the well site and if we can be more capital efficient in deploying at the well site and we can be more competitive in the market versus say the electrical systems and I think.

Speaker Change: Your next question comes from the line of Grant <unk> with Jpmorgan you May go ahead.

Speaker Change: Hey, good morning team.

Keith Mackey: This is where we're moving right now and excited about the potential for this.

Speaker Change: Hi, Greg good morning.

So on the call you talked a lot about you know sort of different tech offerings, but maybe was just interested in hearing more about sort of the integrated advantage offering where you kind of bring the full suite of services.

Keith Mackey: Got it very helpful.

Keith Mackey: Are you are you able we're ready at this point I guess to give us a bit of a bit more color on the run rate of investment in Emerald and you mentioned you got some more equipment coming in.

Speaker Change: And just thinking about the potential uptick in gas activity kind of what customers do you think.

Keith Mackey: Can you just talk a little bit more about how how much of your fleet do you think that this could or should make up over the next few years.

Speaker Change: Are most likely to kind of adopt this offering for me guys.

Yeah. So in general over the last year or so since we rolled this out and been doing this for customers. It's been more of the mid tier customers, who have acreage you have runway in drilling and completions for wells, but at the same time, maybe they don't have a large operational teams and we can Uh huh.

Keith Mackey: Yes, we'll take it on a year by year basis, but you can see that it's really been kind of a us.

Keith Mackey: Steady add to the fleet steady investment over the last couple of years. This year, we added some more electric Emerald as we grew from normal practice I will frac and travel Frac for some of our electric customers and then.

Speaker Change: <unk> worked with them using our teams that work in our performance center and our digital platform to pull data together and analyze their historical operations and make some recommendations on future operations to pull all this together and so when we've done. This it's been very successful on all fronts and I think we will see.

Keith Mackey: We're going to add some more of the.

Keith Mackey: Natural gas direct drive systems. This year and there is a potential for us to add more next year, but we will take it on a year by year basis and make sure we understand the demand and make sure we can understand where you're still getting good returns on this.

Speaker Change: So continued demand at that sector of the market, but I think as we get into 'twenty six there is potential for us to work for some of the bigger customers as well that have some bigger operational teams because definitely the Permian basin, the word's getting out with the ones that we're working with that we are making improvements and I think that there may be some.

Speaker Change: Your next question comes from the line of Grant <unk> with Jpmorgan you May go ahead.

Grant: Hey, good morning team.

Speaker Change: Hi, Greg good morning.

Speaker Change: So on the call you talked a lot about sort of different tech offerings, but maybe was just interested in hearing some more about sort of the integrated advantage offering where you kind of bring the full suite of services.

Speaker Change: Of our bigger customers that might want to try it as well and see how it goes but it certainly is certainly gaining traction.

Speaker Change: And it's allowing us to even improve our own operational efficiencies in how we manage things on some of the other jobs as well and so I am upbeat about how thats going.

Speaker Change: And just thinking about the potential uptick in gas activity kind of what customers do you think.

Speaker Change: Are most likely to kind of adopt this offering from you guys.

Speaker Change: In a market like this where we have softening activity it doesn't show up as much but I think over the next few years, you'll see that growth.

Speaker Change: Yeah. So in general over the last year or so since we rolled this out and been doing this for customers. It's been more of the mid tier customers, who have acreage you have runway in drilling and completions for wells, but at the same time may maybe they don't have.

Speaker Change: That's great and just a follow up I think previously you had mentioned potentially 15% or so of margin uplift from some of these projects.

Speaker Change: 20% or so higher revenue content.

Speaker Change: Large operational teams and we can help work with them using our teams that work in our performance center and our digital platform to pull data together and analyze their historical operations and make some recommendations on future operations to pull all this together and so when we've done this it's been very successful on all.

Speaker Change: Do you see that being driven more by I guess, a higher sort of attachment rates.

Speaker Change: Technology offerings are also a combination of efficiencies just from a fully integrated project.

Speaker Change: Yeah, there's a couple of keys there one is the pull through of all the different segments and sub segments that we have when we go to work for these customers and then also you know the upside on the efficiency gains and helping them pull production forward.

Speaker Change: Fronts, and I think we will see.

Speaker Change: Continued demand at that sector of the market, but I think as we get into 'twenty six there is potential for us to work for some of the bigger customers as well that have some bigger operational teams because definitely the Permian basin, the word's getting out with the ones that we're working with that we are making improvements and I think that.

Eddie Kim: Your next question comes from the line of Eddie Kim with Barclays.

Eddie Kim: Hi, good morning.

Eddie Kim: Good morning, good morning.

Speaker Change: There may be some of our bigger customers that might want to try it as well and see how it goes but it certainly is certainly gaining traction.

Eddie Kim: So we've seen quite a few oil directed rigs come out of the U S onshore rig count 45 rigs or about 10%, which I think is contributing to <unk>.

Speaker Change: And it's allowing us to even improve our own operational efficiencies in how we manage things on some of the other jobs as well and so I am upbeat about how thats going.

Eddie Kim: <unk> guidance and drilling services.

Speaker Change: As others have mentioned.

Speaker Change: Three Q guide and completion services remains steady was surprisingly resilient.

Speaker Change: In a market like this where we have softening activity it doesn't show up as much but I think over the next few years youll see that growth.

Speaker Change: But do we start to see some of that the impact of the oil rig count declines show up.

Speaker Change: That's great and just a follow up I think previously you had mentioned potentially 15% or so of margin uplift from some of these projects.

Speaker Change: Sure.

Speaker Change: In our completion services business in the fourth quarter.

Speaker Change: <unk> should we think about the trajectory of completion services in the fourth quarter is kind of normal or typical seasonal decline, but on top of that you layer in some of the impact of the oil rig count declines we've seen.

Speaker Change: 20% or so higher revenue content.

Speaker Change: Do you see that being driven more by I guess higher sort of attachment rates of your technology offerings are also a combination of efficiencies just a fully integrated project.

Speaker Change: Just curious if that is a reasonable assumption to make.

Speaker Change: Yeah, there's a couple of keys there one is the pull through of all the different segments and sub segments that we have when we go to work for these customers and then also.

Speaker Change: Yeah. Good morning, So I think let's start with the discussion on the overall industry rig count and you've got to recognize that there is still some bifurcation in that rig count. So when you see the rig count decline like it has and we talk about 40, plus oil rigs coming out of the market.

Speaker Change: The upside on the efficiency gains and helping them pull production forward.

Eddie Chan: Your next question comes from the line of Eddie Chan with Barclay.

Speaker Change: A large number of those rigs that are coming out of the market are really.

Eddie Chan: Hi, good morning.

Speaker Change: The lower technology rigs and rigs that are working for maybe some of the smaller private equity backed.

Speaker Change: Good morning.

Speaker Change: So we've seen quite a few oil directed rigs come out of the U S onshore rig count about 45 rigs or about 10%, which I think is contributing to it.

Speaker Change: Thai private companies that are out there what youre seeing is you know.

Speaker Change: Our rig count is coming down a bit but not to the extent necessarily as the overall market and I think that the overall rig count could even come down further this year, but that doesn't necessarily.

Speaker Change: <unk> guidance and drilling services, but.

Speaker Change: As others have mentioned.

Speaker Change: <unk> guided completion services remains steady was surprisingly resilient.

Speaker Change: Your line up with what we're seeing in the higher spec rig market and so I think towards the end of the year you can see some of the smaller private equity backed companies wanted to conserve capital and slow down drilling and completion operations, but we don't have much exposure to those companies were working for the larger companies that tend to have the longer run.

Speaker Change: But do we start to see some of that the impact of the.

Speaker Change: Oil rig count declines show up in your.

In our completion services business in the fourth quarter and so conceptually should we think about the trajectory of completion services in the fourth quarter is kind of normal or typical seasonal decline, but on top of that you layer in some of the impact of the oil rig count declines we've seen.

Speaker Change: One ways longer budget cycles, and things like that that are running higher technology of both drilling and completions and so that's why you're seeing us relatively steady in completions in the third quarter and I think it's the reason that even though our rig count is going to soften some more in the third quarter that there's a higher likelihood that it is.

Speaker Change: Just curious if that is a reasonable assumption to make.

Speaker Change: Yes. Good morning, So I think let's start with the discussion on the overall industry rig count.

Speaker Change: And you've got to recognize that there is still some bifurcation in that rig count. So when you see the rig count decline like it has.

Speaker Change: Stabilized in the fourth quarter.

Speaker Change: In terms of completion.

Speaker Change: Completion activity in the fourth quarter, it's certainly early to call.

Speaker Change: We talk about 40, plus oil rigs coming out of the market.

Speaker Change: We always see some seasonal decline unless there's a really high spike in a commodity price.

Speaker Change: A large number of those rigs that are coming out of the market are really.

Speaker Change: To drive some different behaviors. So I think we will see some seasonal decline.

Speaker Change: The lower technology rigs and rigs that are working for maybe some of the smaller private equity backed.

Speaker Change: But also looking at some of the customers that we work for it maybe a softening in the market for us I'm not sure yet it's a steeper decline as we saw in Q4 last year, but again, it's still early to tell.

Speaker Change: Thai private companies that are out there what youre seeing is.

Speaker Change: Our rig count is coming down a bit but not to the extent necessarily as the overall market and I think that the overall rig count could even come down further this year, but that doesn't necessarily.

Speaker Change: The caveat eating all of this on today's commodity prices.

Speaker Change: Got it that's very helpful. Thank you.

Speaker Change: My follow up was just on <unk>.

Speaker Change: Capital allocation you highlighted in prepared remarks that you're focused on putting cash to work.

Speaker Change: Our lineup with what we're seeing in the higher spec rig market and so I think towards the end of the year you can see some of the smaller private equity backed companies wanted to conserve capital and slow down drilling and completion operations, but we don't have much exposure to those companies were working for the larger companies that tend to have a lot of <unk>.

Speaker Change: Just on the conversations around the various opportunities you're having today.

Speaker Change: Would you be more likely at this stage to invest more in kind of bolt on acquisitions in your core oil and gas services business or would you maybe be more inclined to perhaps purchase.

Speaker Change: Runways longer budget cycles, and things like that that are running higher technology of both drilling and completions and so thats why youre seeing is relatively steady and completions in the third quarter and.

Speaker Change: Yes.

Speaker Change: Turbines for the distributed power market like some of your peers have announced and are in recent quarters. Just curious around your latest thought there.

Speaker Change: Yeah. So we're we're holding a good cash position right now we're really pleased with the cash flow of the company this year and what rejecting for the second half and we're really evaluating some organic technology growth and.

Speaker Change: And I think it's the reason that even though our rig count is going to soften some more in the third quarter that there's a higher likelihood that it stabilized in the fourth quarter now in terms of.

Speaker Change: Completion activity in the fourth quarter, it's certainly early to call. We always see some seasonal decline unless there's a really high spike in a commodity price.

Speaker Change: Some of it associated with longer laterals and more efficiencies in the Delaware basin. Some of it associated with natural gas demand physical demand in 'twenty six 'twenty seven and some of the discussions we're in so we do get good returns on some of these technology investments that we make whether it be.

Speaker Change: To drive some different behaviors. So I think we will see some seasonal decline.

Speaker Change: But also looking at some of the customers that we work for it maybe a softening in the market for us I'm not sure yet it's a steeper decline as we saw in Q4 last year, but again, it's still early to tell.

Speaker Change: Upgrades on digital automation or structure on a rig or even.

Speaker Change: Some more of the Emerald, 100% natural gas and so we're evaluating that we're also evaluating potential to buy back shares as well when it comes to acquisition.

Speaker Change: The caveat all of this on today's commodity prices.

Speaker Change: Got it that's very helpful. Thank you.

Speaker Change: My follow up is just on capital allocation you highlighted in prepared remarks at year Silke.

Speaker Change: I'll, just say and we've said this before really pleased with the Altera acquisition I think this helps change the profile of the company to a higher return base.

Speaker Change: Just on putting cash to work so just based on the conversations around the various opportunities you're having today would you be more likely at this stage to invest more in kind of bolt on acquisitions in your core oil and gas services business or would you maybe be more inclined to perhaps purchase.

Speaker Change: Basis.

Speaker Change: As altera is essentially a product manufacturing business and are pleased with that.

Speaker Change: To acquire that company seven years ago, and we're successful a couple of years ago.

Speaker Change: Nat gas resets of gas turbines for the distributed power market like some of your peers have announced in recent quarters just curious around your latest thought there.

Speaker Change: But we think there's opportunities to expand what they do and expand some of the technologies in downhole solutions that they're coming up with not just drill bits, but some of the downhole tools that they're building as well we may be injecting some more capital and then for growth in the international market. So I think we have a lot of things to choose from.

Speaker Change: So we're we're holding a good cash position right now really pleased with the cash flow of the company this year and what rejecting for the second half and we're really evaluating some organic technology growth and.

Speaker Change: We're just trying to be careful about how we evaluate but back to the cash position really pleased with our cash position and the cash flow.

Speaker Change: Some of it associated with longer laterals and more efficiencies in the Delaware basin some of it associated with NASA.

Speaker Change: We're looking at for the year.

Speaker Change: Natural gas demand physical demand in 'twenty, six 'twenty seven and some of the discussions we're in.

Speaker Change: Your next question comes from the line of Conor Jansen with Raymond James You May go ahead.

Speaker Change: We do get good returns on some of these technology investments that we make whether it be upgrades on digital automation or structure on a rig or even.

Conor Jansen: Hey, guys. Thanks for taking my call good morning.

Speaker Change: Building off what you said there altair it seem like a relative bright spot with solid results and guidance for further improvement can you just speak to some of the growth drivers. There maybe you were gaining share internationally and some of the upcoming offshore prospects.

Speaker Change: Some more of the Emerald, 100% natural gas and so we're evaluating that we're also evaluating potential to buy back shares as well when it comes to acquisition.

Speaker Change: I'll, just say and we've said this before really pleased with the Alterra acquisition I think this helps change the profile of the company to a higher return base.

Speaker Change: Yeah. If you look back at Alterra is history, which is hard for you all to do because it's been private for so long, but when we can see all the numbers and what they've accomplished as a team.

Speaker Change: Actually tend to gain a little bit of share sometimes in these activities.

Speaker Change: Basis.

Speaker Change: As altera is essentially a product manufacturing business and.

Speaker Change: Activity softening and so what we're seeing in the market today.

Speaker Change: Pleased with that.

Speaker Change: Is there.

Speaker Change: To acquire that company seven years ago, and we're successful a couple of years ago.

Speaker Change: Their customers getting focused on what can we do to improve even though we're trying to conserve capital how can we be more efficient and that's when they start to employ more of Alterra technology and so we're seeing that today and when they when it is higher technology its higher revenue per bid for.

Speaker Change: But we think there's opportunities to expand what they do and expand some of the technologies.

Speaker Change: Downhole solutions that they are coming up with not just drill bits, but some of the downhole tools that they're building as well we may be injecting some more capital and then for growth in the international market. So I think we have a lot of things to choose from and we're just trying to be careful about how we evaluate but back to the cash position really pleased with our cash position and the cash.

Speaker Change: Rig operating in the industry in terms of our internal metrics and they continue to improve on that.

Speaker Change: In international markets.

Speaker Change: The middle East the position continues to improve and Saudi.

Speaker Change: So we're looking at for the year.

Speaker Change: We're in the process of expanding our Remanufacturing center to do full manufacturing.

Speaker Change: Your next question comes from the line of Conor Jansen with Raymond James You May go ahead.

Speaker Change: Our our drill bits are certainly popular in the middle East region.

Conor Jansen: Hey, guys. Thanks for taking my call good morning.

Speaker Change: And we've got a great team over there and we see opportunity still to grow and offshore North Africa and some other areas, where we're just not very big.

Conor Jansen: Building off what you said, there <unk> seem like a relative bright spot to solid results and guidance for further improvement can you just speak to some of the growth drivers there, maybe where it's gaining share internationally and some of the upcoming offshore prospects.

Speaker Change: Big in the market. So we still have upside in other markets too so they're in a great position for growth longer term.

Conor Jansen: Yes, if you look back at <unk> history, which is hard for you all to do because it's been private for so long, but when we can see all the numbers and what they've accomplished as a team they actually tend to to gain a little bit of share sometimes in these <unk>.

Speaker Change: Side of some of the cycles that we're seeing in the industry.

Speaker Change: Got it and then margins have held up pretty well across the whole company given the downturn in activity is there anything you're doing on the cost side to adjust to the softer market is it just general headcount reductions or is there other things we're working on there.

Conor Jansen: Activity softening and so what we're seeing in the market today is.

Conor Jansen: Their customers getting focused on what can we do to improve even though we're trying to conserve capital how can we be more efficient and thats when they start to employ more of Alterra technology, and so we're seeing that today and when they when it is higher technology its higher revenue per bid for.

Speaker Change: Yes.

Speaker Change: I'll address that.

Speaker Change: In all of our businesses.

Speaker Change: While we have seen some direct head count reduction certainly with activity changes.

Speaker Change: We're looking.

Speaker Change: That facility consolidations and other areas, where we can take cost out of the system.

Conor Jansen: Rig operating in the industry in terms of our internal metrics and they continue to improve on that.

Speaker Change: We're even currently undergoing.

Speaker Change: You know.

Speaker Change: And ERP conversion, where we're taking the three that we operated now in converting to one so all of that kind of operates in the background and probably not very visible.

Conor Jansen: In international markets.

Conor Jansen: In the middle East the position continues to improve and Saudi.

Conor Jansen: We're in the process of expanding our Remanufacturing center to do full manufacturing.

Speaker Change: But its all designed to sort of make us more efficient and take cost out of the system.

Speaker Change: All of those efforts continue and we will continues sort of ordinary course.

Conor Jansen: Our drill bits are certainly popular in the middle East region.

Conor Jansen: And we've got a great team over there and we see opportunity still to grow and offshore North Africa, and some other areas, where we're just not very.

Speaker Change: Your next question comes from the line of Doug Becker with capital. One you May go ahead.

Doug Becker: Thank you.

Doug Becker: Andy I was hoping you can provide a little more color on the moving parts in the drilling services guidance I. Appreciate the reasons you are no longer reported in U S drilling margin per day, but it really seems like guidance embeds, a pretty sizable decline in that daily margin.

Conor Jansen: Big in the market. So we still have upside in other markets too so they're in a great position for growth longer term.

Conor Jansen: Outside of some of the cycles that we're seeing in the industry.

Conor Jansen: Got it and then margins have held up pretty well across the whole company given the downturn in activity is there anything youre doing on the cost side to adjust to the softer market is it just general head count reductions or is there other things we're working on there.

Doug Becker: Yes, good morning, Doug some of that is.

Doug Becker: We are seeing some movement in different basins in the third quarter, where we've got some rigs that may be coming down in one basin coming up in another basin. If that was all happily happening simultaneous in the same basin it would be easier to manage from a cost standpoint, but it creates a little bit more cost challenge as we work through the third quarter worked through.

Conor Jansen: Yes.

Conor Jansen: I'll address that.

Conor Jansen: In all of our businesses.

Conor Jansen: While we have seen some direct head count reductions certainly with activity changes.

Doug Becker: Some of the movement and what we're seeing.

Conor Jansen: Also looking always at facility consolidations and other areas, where we can take cost out of the system.

Doug Becker: Got some oil basins, where some rigs may soften a little bit we may have some natural gas basins, where it's coming up a little bit and so try to work across those it makes it tougher to get to some of the cost efficiencies out and so that's really kind of what what's happening in the third quarter.

Conor Jansen: We're even currently undergoing.

Conor Jansen: You know.

Conor Jansen: And ERP conversion, where we're taking the three that we operated now in converting to one so all of that kind of operates in the background and probably not very visible.

Speaker Change: Yes that makes sense and then I guess, just how would you characterize pricing for super spec rigs today.

Conor Jansen: But its all designed to sort of make us more efficient and take cost out of the system and soon.

Doug Becker: I'd say right now pricing still relatively steady.

Conor Jansen: All of those efforts continue and we will continues for ordinary course stuff.

Doug Becker: Leading edge is it still around low to mid thirties in general, but the interesting thing is we're seeing higher demand for digital products on top of just the asset.

Speaker Change: Your next question comes from the line of Doug Becker with capital. One you May go ahead.

Doug Becker: Thank you Andy I was hoping you could provide a little more color on the moving parts in the drilling services guidance I. Appreciate the reason Jim no longer reported in U S drilling margin per day, but it really seems like guidance embeds, a pretty sizable decline in that daily margin.

Doug Becker: So yes, I mean, the asset is important but it's what you can do with that asset and what you can layer on as well and how can you make that asset more efficient.

Doug Becker: And we're certainly getting more recognition from our customers and our ability to do that.

Speaker Change: Yeah. Good morning, Doug some of that is as we're seeing some movement in different basins in the third quarter, where we've got some rigs that may be coming down in one basin coming up in another basin. If that was all happily happening simultaneous in the same basin it would be easier to manage from a cost standpoint, but it <unk>.

Your next question comes from the line of Castle, a lot with Tpi's and company you May go ahead.

Speaker Change: Good morning, Andy and team. Thank you for taking my question.

Speaker Change: You mentioned that your Emerald and tearful tearful equipment is fully utilized but how should we be thinking about the utilization for the balance of your fleet and then additionally.

Speaker Change: It's a little bit more cost challenges, we worked through the third quarter worked through some of the movement is what we're seeing so we've got some oil basins, where some rigs may soften a little bit we may have some natural gas basins, where it's coming up a little bit and so try to work across those.

Speaker Change: How would the market have to evolve for you to consider idling. This equipment are pushing it back into the broader fleet.

Speaker Change: Well.

Speaker Change: Let's talk about what we're doing.

Speaker Change: The Capex budget, we continue invest in maintenance and maintain all of all of the equipment with the exception of lower tier tier two completion.

Speaker Change: Is it tougher to get to some of the cost efficiencies out and so that's really kind of what what's happening in the third quarter.

Speaker Change: Yes that makes sense and then I guess, just how would you characterize pricing for super spec rigs today.

Speaker Change: We have a little bit of tier two equipment still mixed in with some of the fleets here and there, but we were really not putting any dollars into that so youll see.

Speaker Change: I'd say right now pricing still relatively steady.

Speaker Change: Tier two diesel equipment continued to drop out of our fleet, but I think it's not just us youll see that continue to drop out of the industry as well as some of the smaller companies.

Speaker Change: Leading edge is still around low to mid thirties in general, but the interesting thing is we're seeing higher demand for digital products on top of just the assets and so yeah I mean, the asset is important.

Speaker Change: Run that in some of the more competitive basins like the Midland Basin, probably are more challenged to even generate enough cash flow to maintain that equipment.

Speaker Change: What you can do with that asset and what you can layer on as well and how can you make that asset more efficient and we're certainly get more recognition from our customers and our ability to do that.

Speaker Change: So I think you'll see a combination for us.

Speaker Change: Adding some horsepower at the higher tier, but also letting horsepower come out at the lower tier but across the industry I think you'll see more of the lower tier horsepower drop out over the next year as well.

Speaker Change: Your next question comes from the line of Castle, a lot with Tpa <unk> Company you May go ahead.

Speaker Change: Okay. Thank you very much I'll hand, the call back to the operator.

Castle: Good morning, Andy and team. Thank you for taking my question.

Speaker Change: Thanks.

Speaker Change: Alright.

Speaker Change: You mentioned that Youre Emerald and tearful, it's dear full equipment is fully utilized but how should we be thinking about the utilization for the balance of your fleet and then additionally.

Speaker Change: Sure.

Speaker Change: Final question comes from the line of Dan <unk> with Morgan Stanley.

Speaker Change: How would the market have to evolve for you to consider idling. This equipment are pushing it back into the broader fleet.

Speaker Change: Hey, Thanks for squeezing me in and good morning, Good morning, Dan.

Speaker Change: Well.

Speaker Change: Let's talk about what we're doing in the Capex budget, we continue invest in maintenance and maintain all of all of the equipment with the exception of.

Speaker Change: Oh no.

Speaker Change: Just staying on that one questioning around craft supply would love to dive in a little bit deeper there.

Speaker Change: Lower tiers tier two completion we.

Speaker Change: I remember you guys had at one point put out I think.

Speaker Change: We have a little bit of tier two equipment still mixed in with some of the fleets here and there, but we were really not putting any dollars into that so youll see.

Speaker Change: 100000.

Speaker Change: Easily retirement.

Speaker Change: At the end of last year now you guys know.

Speaker Change: 500000.

Speaker Change: Tier two diesel equivalent continue to drop out of our fleet, but it.

Speaker Change: How do you think about.

Speaker Change: And Pasadena.

Speaker Change: 2.9 million horsepower Youre at right now.

Speaker Change: It's not just us youll see that continue to drop out of the industry as well because some of the smaller companies.

Speaker Change: Patterson going forward roughly that.

Speaker Change: Run that in some of the more competitive basins like the Midland Basin, probably are more challenged to even generate enough cash flow to maintain that equipment. So I think youll see a combination for us of <unk>.

Speaker Change: Diesel retirements are the diesel.

Speaker Change: Assets that youre not investing in maintaining does that kind of offset.

Speaker Change: Any any addition to complete any any.

Speaker Change: Investments like these.

Speaker Change: Two nine.

Speaker Change: Adding some horsepower at the higher tier, but also letting horsepower come out at the lower tier but across the industry I think youll see more of the lower tier horsepower drop out over the next year as well.

Speaker Change: The right number moving forward or how do you think about all that.

Speaker Change: That could change over time.

Speaker Change: Yeah. So yeah, we're at $2 nine now as you mentioned if you look at where we were a year and a half ago. We were at about three three we came down to three we came down to $2 nine.

Speaker Change: Okay. Thank you very much I'll hand, the call back to the operator.

Speaker Change: Thanks.

Speaker Change: Sure.

Speaker Change: That's really just by not investing in that older tier two equipment, we were still running some but we did invest and then eventually brought that number down from an accounting standpoint.

Speaker Change: Final question comes from the line of Dan <unk> with Morgan Stanley.

Dan: Hey, Thanks for squeezing me in and good morning, Good morning, Dan.

Speaker Change: As I mentioned, we're still adding at the higher end.

Dan: So maybe just staying on that one.

Speaker Change: And we'll have to wait and see how that balances out, but we could be lowering the overall horsepower as well, but I think the industry is tightening as well so I think it bodes well longer term for the completions because I think people are being prudent about how they are investing and we don't see a rush to overinvest in the completions across.

Dan: Questioning around track supply would love to dive in a little bit deeper there.

Dan: I remember you guys had at one point put out I think a floor.

Dan: 100000.

Dan: Easily retirement.

Dan: At the end of last year now you guys.

Dan: 500000.

Dan: How do you think about.

Speaker Change: The industry right now so.

Dan: Capacity.

Speaker Change: It is balancing out.

Dan: 2.9 million horsepower Youre at right now for Patterson going forward roughly that.

Speaker Change: Sector.

Speaker Change: As I mentioned earlier.

Speaker Change: We have all of our Emerald and our tier four DGB working right now and so.

Dan: The diesel retirements are the diesel asset that youre not investing in maintaining this that kind of offset.

Speaker Change: With some of the horsepower continued to drop out over the next year or two I think it keeps the industry relatively imbalanced I mean, there's we're still going to have the competitive tender processes from time to time.

Dan: Any any additions to the fleet any any emerald investments.

Dan: $2 9 million the right number.

Dan: Moving forward or how do you think about how that could change over time.

Speaker Change: But it makes it less challenging when we go through those tender processes.

Dan: Yes, so yes, we're at $2 nine now as you mentioned if you look at where we were a year and a half ago. We were at about three three we came down to three we came down to $2 nine.

Speaker Change: When the industry gets closer to balance.

Speaker Change: Okay. That's all really helpful. I appreciate it.

Speaker Change: We've gotten a few anecdotes on this next question, but wanted to just kind of ask it more directly so on on.

Dan: And Thats really just by not investing in that older tier two equipment.

Speaker Change: On the bundled services and integration and Patterson has a lot of.

Dan: Still running some but we didn't invest and then eventually brought that number down from an accounting standpoint.

Speaker Change: Service lines.

Speaker Change: And you've made clear that.

Speaker Change: More kind of wallet share more components overall.

Dan: As I mentioned, we're still adding at the higher end.

Speaker Change: I'll be overall drilling pumps.

Dan: We will have to wait and see how that balances out, but we couldnt be lowering the overall horsepower as well, but I think the industry is tightening as well so I think it bodes well longer term for the completions in because I think people are being prudent about how they are investing and we don't see a rush to overinvest in the completions across.

Speaker Change: Initiative.

Speaker Change: How is the kind of prevailing macro backdrop.

Speaker Change: Did that process.

Speaker Change: He has kind of choppiness in the market created opportunities.

Speaker Change: And I keep more wallet share.

Dan: The industry right now so I think it is balancing out.

Speaker Change: Pushed more Patterson.

Speaker Change: Do your customers or has it made it more difficult I know you'd you'd flagged that digital demand it's really.

Dan: This sector.

Dan: As I mentioned earlier.

Dan: We have all of our Emerald and our tier four DGB working right now.

Speaker Change: And picking up the biggest piece, but yet you kind of think through.

Dan: And so.

Speaker Change: How.

Dan: With some of the horsepower continued to drop out over the next year or two.

Speaker Change: Have you seen the bundled and integrated services.

Dan: It keeps the industry relatively imbalanced.

Speaker Change: Hum.

Speaker Change: Paul.

Speaker Change: The macro has evolved thanks sure.

Dan: We're still going to have the competitive tender processes from time to time.

Speaker Change: So first I'm going to start with the investments we've made in digital because it's really kind of the backbone of everything we do whether it's individual operations or even.

Dan: It makes it less challenging when we go through those tender processes.

Dan: When the industry gets closer to balance.

Dan: Great. That's all really helpful. I appreciate it.

Speaker Change: P J and advantage package that we offer.

Speaker Change: And that investment in digital is keeping us very competitive in a softening market and that's really important.

Dan: We've gotten a few anecdotes on this next question, but wanted to just kind of ask it more directly so on and.

Dan: On the bundled services and integration and Patterson has a lot of sorry.

Speaker Change: It's not just about the asset it's not just about what we charge for the asset, but what you can do with the asset and when you layer on.

Dan: Service lines.

Dan: And you've made clear that taking more kind of wallet share more components of the overall.

Speaker Change: You know, whether it's the cortex automation apps on a drilling rig or the new vertex automated frac system that allows us to be more efficient more competitive and even manage those assets better from a cost standpoint.

Dan: I'll be overall drilling pumps.

Dan: Kindred initiatives by the company.

Dan: How is the kind of prevailing macro backdrop made that process.

Speaker Change: So it's the digital that's really kind of the background, that's going to help us out and continue to drive our competitiveness.

Dan: He has kind of choppiness in the market created opportunities too.

Dan: And I keep more wallet share.

Speaker Change: That also helps out and the pizza and advantaged package, but given the softening market I would say that it's harder to show growth in those in the type of advantage package that we offer but its holding relatively steady and still having discussions with customers in that area. So still encouraged by that and you know in a bit of.

Speaker Change: Pushed more Madison services to your customers or has it made it more difficult I know you.

Speaker Change: Flagged that digital demand is really.

Speaker Change: And picking up rigs piece, but yes, just trying to think through.

Speaker Change: How kind of missing the.

Speaker Change: Softening market right now and with the uncertainties, we've seen over the last few months.

Speaker Change: Bundled and integrated services.

Speaker Change: Has the ball.

Speaker Change: And if the commodity prices stabilize and show stability for our customers as we get closer to the end of the year over the next few months that allows them to to have more confidence to take on some of the projects that they would take on and that's positive for us as well.

Speaker Change: The macro has evolved thanks.

Speaker Change: Sure.

Speaker Change: So first I'm going to start with the investments we've made in digital because it's really kind of the backbone of everything we do whether it's individual operations or even the.

Speaker Change: The pizza and advantage package that we offer.

Speaker Change: Okay.

Speaker Change: And that investment in digital is keeping us very competitive in a softening market and that's really important.

Speaker Change: Your final question comes from the line of John Daniel with Daniel Energy Partners. You May go ahead.

John Daniel: Hey, good morning, Thanks for letting me jump in here John.

Speaker Change: It's not just about the asset is not just about what we charge for the asset, but what you can do with the asset and when you layer on.

Speaker Change: John.

Speaker Change: Andy I know theres likely that'll upside for you to answer this question, but I'll try.

Speaker Change: <unk>.

Speaker Change: Whether it's the cortex automation apps on a drilling rig or the new vertex automated frac system that allows us to be more efficient more competitive and even manage those assets better from a cost standpoint.

Speaker Change: I think.

Speaker Change: As you think about 'twenty six.

Speaker Change: You noted you're sold out the higher quality frac assets yet.

Speaker Change: Margins within the broader frac market.

Speaker Change: Relatively weak and I'm sure you know or something is higher margin, but I think it's clear on the times for the industry and the need to go higher.

Speaker Change: So it's the digital that's really kind of the background thats going to help us out and continue to drive our competitiveness.

Speaker Change: I'm curious at what point do you say to your team.

Speaker Change: So that also helps out in the pizza and advantage package, given the softening market I would say that.

Speaker Change: Let's raise rates and see where the chips fall.

Speaker Change: Yeah.

Speaker Change: It is harder to show growth in those in the type of advantage package that we offer but its holding relatively steady and still having discussions with customers in that area. So we're still encouraged by that and a bit of a softening market right now and with the uncertainties. We've seen over the last few months and.

Speaker Change: Yeah, Hey, John This is Andy Smith.

Speaker Change: I mean, that's.

Speaker Change: But that's a constant conversation right I mean, it's not yes, that's not something that is.

Speaker Change: We don't just decide one day I got to.

Speaker Change: Tried to push rates, we're always trying to push rates to get the most we can in a competitive market.

Speaker Change: It's a commodity prices stabilize and show stability for our customers as we get closer to the end of the year over the next few months that allows them to do you have more confidence to take on some of the projects that they would take on and that's positive for us as well.

Speaker Change: Now as we invest in additional equipment and look I think we're uniquely positioned to be able to invest in technology equipment that can really lead the industry.

Speaker Change: Given our financial profile, we will.

Speaker Change: Kind of be holding our teams feet to the fire on pricing.

Speaker Change: Okay.

Speaker Change: Your final question comes from the line of John Daniel with Daniel Energy Partners. You May go ahead.

Speaker Change: I'm, saying.

Speaker Change: And I am not.

Speaker Change: While there may be some element of spec to them, we're not doing this entirely.

John Daniel: Hey, good morning, Thanks for letting me jump in here.

Speaker Change: No and I'm not trying to throw a curve ball because like you step back and think about it a lot of times you can talk to you here from folks.

Speaker Change: John.

Andy Hendricks: Andy I know theres likely that'll upside for you to answer this question, but I'll try.

Speaker Change: Uh huh.

Andy Hendricks: I think as.

Speaker Change: You know that it doesn't seem like the spot market. It doesn't really make sense at current returns to reactivate stacked equipment.

Speaker Change: As you think about 'twenty six.

Speaker Change: You noted you sold out of the higher quality frac assets yet.

Speaker Change: And if people are true to their words on that.

Speaker Change: Margins within the broader Frac market remained relatively weak I'm answering your newer stuff is higher margin, but I.

Speaker Change: If the industry again, not Patterson UTI right, unless you're seeing industry starts to work.

Speaker Change: I think it's clear on returns for the industry and the need to go higher.

Change ways.

Speaker Change: Yeah.

Speaker Change: I'm, assuming you wouldn't want to reactivate them.

Speaker Change: I'm curious at what point do you say to your team.

Speaker Change: Stacked fleet at the current pricing.

Speaker Change: Is less rates rates stay where the chips fall.

Speaker Change: Trying to reconcile like at some point.

Speaker Change: Pricing has like a lot, but I'm, telling you what you know but just.

Andy Smith: Yeah, Hey, John This is Andy Smith.

Speaker Change: Who would take that work if someone tried to then displacing I guess got where I'm at now well I think.

Andy Smith: But that's a constant conversation right I mean, it's not yes, that's not something that is.

Speaker Change: And it gets back to a bifurcation in the market as well because.

Andy Smith: We don't just decide one day guys to try to push rates, we're always trying to push rates to get the most we can in a competitive market.

Speaker Change: We're essentially sold out right now the Emerald, 100% Nat gas systems, and a tier four DGB.

Andy Smith: Now as we invest in additional equipment and look I think we are uniquely positioned to be able to invest in technology equipment that could really lead the industry.

Speaker Change: And there's really not anything thats going to cause me to want to activate a tier two diesel even though it might have some on the sideline right now.

Speaker Change: Haven't been investing in its parks will make some accounting judgments on that later, but.

Speaker Change: Our financial profile, we will.

Speaker Change: Kind of be holding our teams feet to the fire on pricing.

Speaker Change: We're working on everything we've got essentially right now which is also relatively positive as we get into the tender season too.

Speaker Change: Sam.

Speaker Change: And I'm not.

Speaker Change: While there may be some element of spec to it we're not doing this entirely.

And so.

Speaker Change: Think that.

Speaker Change: No and I'm not trying to throw a curve ball because like you step back and think about it a lot of times you talk to folks.

Speaker Change: Uh huh.

Speaker Change: The industry's relatively tight on the higher end equipment working for the heart.

Speaker Change: The more sophisticated larger e&ps and so I think that market is still relatively tight I mean, it's competitive and yes, the high spec rig counts coming down a little bit right now.

Speaker Change: Then it does sound like the spot market it doesn't really make sense at current returns to reactivate stacked equipment.

Speaker Change: And if you know if people are true to their words on that.

Speaker Change: If the industry again, not Patterson UTI right unless you see in the industry.

Speaker Change: But it's still a relatively tight market in Q3.

Speaker Change: If you were to try to change ways.

Speaker Change: I'm, assuming you wouldn't want to reactivate them.

Speaker Change: This concludes today's question and answer session.

Speaker Change: Stacked fleet at the current pricing.

Speaker Change: I would now like to turn the call back over to Avi Hendrix for closing remark.

Speaker Change: Kind of reconcile like at some point.

Speaker Change: Pricing has like a lot, but I'm, telling you what you know.

Avi Hendrix: Thanks, Lacey I want to thank everybody, who dialed into the call today I also want to thank the ladies and gentlemen of Patterson UTI for everything you do every day to help our customers drill and complete wells and that wraps it up for this quarter. Thank you very much.

Speaker Change: Just.

Speaker Change: Who would take that work if you have someone tried to then displace your I guess, where I'm now well I think.

Speaker Change: And it gets back to bifurcation in the market as well because.

Speaker Change: We're essentially sold out right now the Emerald, 100% Nat gas systems, and a tier four DGB.

Avi Hendrix: This concludes today's conference call you may disconnect.

Speaker Change: And there is there's really not anything thats going to cause me to want to activate a tier two diesel even though it might have some on the sideline right now.

Speaker Change: Haven't been investing in its parks, we will make some accounting judgments on that later, but.

Speaker Change: We're working everything we've got essentially right now which is also relatively positive as we get into the tender season too.

Speaker Change: So I think that.

Speaker Change: The industry's relatively tight on the higher end equipment working for the hires.

Speaker Change: The more sophisticated larger e&ps and so I think that market is still relatively tight I mean, it's competitive and yes, the high spec rig counts coming down a little bit right now.

Speaker Change: But it's still a relatively tight market in Q3.

Speaker Change: This concludes today's question and answer session.

Speaker Change: I'd now like to turn the call back over to Avi Hendrix for closing remarks.

Speaker Change: Thanks, Lacey I want to thank everybody, who dialed into the call today I also want to thank the ladies and gentlemen of Patterson UTI for everything you do every day to help our customers drill and complete wells and that wraps it up for this quarter. Thank you very much.

Speaker Change: This concludes today's conference call you may disconnect.

Speaker Change: [music].