Q1 2026 Patterson-UTI Energy Inc Earnings Call

April 23, 2026

Operator: Onto the Patterson-UTI Q1 2026 Earnings Conference Call. Thank you, and I would now like to turn the conference over to Michael Sabella, Vice President of Investor Relations. You may begin.

Speaker #1: To the PATTERSON UTI first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session.

Speaker #1: If you would like to ask a question during that time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.

Speaker #1: Thank you, and I would now like to turn the conference over to Michael Sabella, Vice President of Investor Relations. You may begin.

Speaker #2: Thank you, Operator. Good morning, and welcome to PATTERSON UTI's earnings conference call to discuss our first quarter 2026 results. With me today are Andy Hendricks, President and Chief Executive Officer; and Andy Smith, Chief Financial Officer.

Michael Sabella: Thank you, operator. Good morning, and welcome to Patterson-UTI's earnings conference call to discuss our Q1 2026 results. With me today are Andy Hendricks, President and Chief Executive Officer, and Andy Smith, Chief Financial Officer. As a reminder, statements that are made in this conference call that refer to the company's or management's plans, intentions, targets, beliefs, expectations, or predictions for the future are considered forward-looking statements. These forward-looking statements are subject to risks and uncertainties as disclosed in the company's SEC filings, which could cause the company's actual results to differ materially. The company 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 reconciliations to GAAP financial measures are included on our website, patenergy.com, and in the company's press release issued prior to this conference call.

Speaker #2: As a reminder, statements that are made in this conference call that refer to the company's or management's plans, intentions, targets, beliefs, expectations, or predictions for the future are considered forward-looking statements.

Speaker #2: These forward-looking statements are subject to risks and uncertainties as disclosed in the company's SEC filings, which could cause the company's actual results to differ materially.

Speaker #2: 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. They're required reconciliations to GAAP financial measures, are included on our website, patenergy.com, and in the company's press release, issued prior to this conference call.

Operator 2: Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Patterson-UTI First Quarter 2026 Earnings Conference Call. All lines 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 that time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you, and I would now like to turn the conference over to Michael Sabella, Vice President of Investor Relations. You may begin.

Operator: Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Patterson-UTI First Quarter 2026 Earnings Conference Call. All lines 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 that time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you, and I would now like to turn the conference over to Michael Sabella, Vice President of Investor Relations. You may begin.

Speaker #1: Ladies and gentlemen , thank you for standing by . My name is Abby , and I will be your conference operator today . At this time , I would like to welcome everyone to the Paterson , UT First Quarter 2020 Earnings Conference Call All lines have been placed on mute to prevent any background noise .

Speaker #2: I will now turn the call over to Andy Hendricks, PATTERSON UTI's Chief Executive Officer.

Michael Sabella: I will now turn the call over to Andy Hendricks, Patterson-UTI's Chief Executive Officer.

Speaker #3: Thank you, Mike. And welcome to our first quarter earnings conference call. I'm going to begin by saying we're hiring. Now let's get started. The first quarter of 2026 built on our momentum from 2025 with strong field execution supported by our technology and digital offerings across our diversified drilling and completions businesses.

Andy Hendricks: Thank you, Mike, and welcome to our Q1 earnings conference call. I'm gonna begin by saying we're hiring. Now let's get started. The Q1 of 2026 built on our momentum from 2025 with strong field execution, supported by our technology and digital offerings across our diversified drilling and completions businesses. Our team stayed focused on the same priorities that drove last year's results, staying close to customers, delivering high-quality services and products that help them operate efficiently, and aligning CapEx and operating costs with the opportunities ahead. We are proud of our performance and believe our position across all our businesses will allow us to continue delivering strong cash returns across a range of market conditions.

Speaker #1: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad.

Speaker #1: If you would like to withdraw your question , press star one again . Thank you . And I would now like to turn the conference over to Michael Sabella vice President of Investor Relations .

Speaker #1: You may begin .

Michael Sabella: Thank you, operator. Good morning and welcome to Patterson-UTI's Q1 2026 Earnings Conference Call to discuss our results. With me today are Andy Hendricks, President and Chief Executive Officer, and Andy Smith, Chief Financial Officer. As a reminder, statements that are made in this conference call that refer to the company's or management's plans, intentions, targets, beliefs, expectations, or predictions for the future are considered forward-looking statements. These forward-looking statements are subject to risks and uncertainties as disclosed in the company's SEC filings, which could cause the company's actual results to differ materially. The company 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 reconciliations to GAAP financial measures are included on our website, patenergy.com, and in the company's press release issued prior to this conference call.

Michael Sabella: Thank you, operator. Good morning and welcome to Patterson-UTI's Q1 2026 Earnings Conference Call to discuss our results. With me today are William Andrew Hendricks Jr., President and Chief Executive Officer, and Andy Smith, Chief Financial Officer. As a reminder, statements that are made in this conference call that refer to the company's or management's plans, intentions, targets, beliefs, expectations, or predictions for the future are considered forward-looking statements. These forward-looking statements are subject to risks and uncertainties as disclosed in the company's SEC filings, which could cause the company's actual results to differ materially. The company 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 reconciliations to GAAP financial measures are included on our website, patenergy.com, and in the company's press release issued prior to this conference call.

Speaker #2: Thank you . Operator . Good morning , and welcome to Patterson Uti's earnings conference call to discuss our first quarter 2026 results . With me today are Andy Hendricks , president and Chief Executive Officer .

Speaker #3: Our team stayed focused on the same priorities that drove last year's results, staying close to customers, delivering high-quality services and products that helped them operate efficiently.

Speaker #2: And Andy Smith , chief Financial Officer . As a reminder , statements that are made in this conference call that refer to the company's or management's plans , intentions , targets , beliefs , expectations or predictions for the future are considered forward looking statements .

Speaker #3: And aligning CAPEX and operating costs with the opportunities ahead. We are proud of our performance and believe our position across all our businesses will allow us to continue delivering strong cash returns across a range of market conditions.

Speaker #2: These forward looking statements are subject to risks and uncertainties as disclosed in the company's SEC filings , which could cause the company's actual results to differ materially .

Speaker #3: The commodity outlook has shifted materially since the start of the year due to heightened geopolitical risk in oil supply disruptions in the Middle East, which will likely reshape global oil supply and demand balances for several years.

Andy Hendricks: The commodity outlook has shifted materially since the start of the year due to heightened geopolitical risk and oil supply disruptions in the Middle East, which will likely reshape global oil supply and demand balances for several years. These developments underscore the strategic importance of US oil and natural gas production and reinforce the need for a diversified global energy supply base, with US shale production more critical than ever. Over the past several years, even as expectations for US shale activity have fluctuated, we have remained focused on operational excellence in our core businesses. We have consistently believed that excelling in our core operating businesses is critical to enhancing shareholder value regardless of the macro environment.

Speaker #2: 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 .

Speaker #3: These developments underscore the strategic importance of U.S. oil and natural gas production and reinforce the need for a diversified global energy supply base. With U.S.

Speaker #2: The required reconciliations to GAAP financial , financial measures are included on our website At energy.com and in the company's press release issued prior to this conference call .

Speaker #3: shale production more critical than ever. Over the past several years, even as expectations for U.S. shale activity have fluctuated, we have remained focused on operational excellence in our core businesses.

Michael Sabella: I will now turn the call over to Andy Hendricks, Patterson-UTI's Chief Executive Officer.

Michael Sabella: I will now turn the call over to William Andrew Hendricks Jr., Patterson-UTI's Chief Executive Officer.

Speaker #2: I will now turn the call over to Andy Hendricks , Patterson , Chief Executive Officer

Andy Hendricks: Thank you, Mike, and welcome to our Q1 Earnings Conference Call. I'm going to begin by saying we're hiring. Now let's get started. Q1 2026 built on our momentum from 2025 with strong field execution supported by our technology and digital offerings across our diversified drilling and completions businesses. Our team stayed focused on the same priorities that drove last year's results, staying close to customers, delivering high-quality services and products that help them operate efficiently, and aligning CapEx and operating costs with the opportunities ahead. We are proud of our performance and believe our position across all our businesses will allow us to continue delivering strong cash returns across a range of market conditions.

William Andrew Hendricks Jr.: Thank you, Michael Sabella, and welcome to our Q1 Earnings Conference Call. I'm going to begin by saying we're hiring. Now let's get started. Q1 2026 built on our momentum from 2025 with strong field execution supported by our technology and digital offerings across our diversified drilling and completions businesses. Our team stayed focused on the same priorities that drove last year's results, staying close to customers, delivering high-quality services and products that help them operate efficiently, and aligning CapEx and operating costs with the opportunities ahead. We are proud of our performance and believe our position across all our businesses will allow us to continue delivering strong cash returns across a range of market conditions.

Speaker #3: Thank you , Mike , and welcome to our first quarter earnings conference call . I'm going to begin by saying we're hiring Now let's get started The first quarter of 2026 built on our momentum from 2025 with strong field execution supported by our technology and digital offerings across our diversified drilling and completions businesses .

Andy Hendricks: Today, we are pleased with the efficiency of our operations. As US shale activity inflects higher, we believe the decisions we have made position us to capture outsized value from a higher US rig count. As a predominantly shale services company, we will always evaluate opportunities to deploy capital and expand our exposure to other geographies and product lines. However, we will remain disciplined and focused on returns for any potential growth investment. Momentum appears to be shifting back toward US land activity over the coming quarters. Our corporate priorities remain unchanged. We will continue investing in technology and equipment that differentiates our services and supports long-term free cash flow per share while maintaining capital discipline, balance sheet strength, and consistent returns of capital to shareholders. We are well-positioned to execute on these priorities.

Speaker #3: shale activity inflects higher, we believe the decisions we have made position us to capture outsized value from a higher U.S. rig count. As a predominantly shale services company, we will always evaluate opportunities to deploy capital and expand our exposure to other geographies and product lines.

Speaker #3: Our team stayed focused on the same priorities that drove last year's results , staying close to customers , delivering high quality services and products that help them operate efficiently and aligning CapEx and operating costs with the opportunities ahead .

Speaker #3: However, we will remain disciplined and focused on returns for any potential growth investment. Momentum appears to be shifting back toward U.S. land activity over the coming quarters.

Speaker #3: We are proud of our performance and believe our position across all our businesses will allow us to continue delivering strong cash returns across a range of market conditions The commodity outlook has shifted materially since the start of the year due to heightened geopolitical risk and oil supply disruptions in the Middle East , which will likely reshape global oil supply and demand balances for several years .

Speaker #3: But our corporate priorities remain unchanged. We will continue investing in technology and equipment that differentiates our services and supports long-term free cash flow per share while maintaining capital discipline.

Andy Hendricks: The commodity outlook has shifted materially since the start of the year due to heightened geopolitical risk and oil supply disruptions in the Middle East, which will likely reshape global oil supply and demand balances for several years. These developments underscore the strategic importance of US oil and natural gas production and reinforce the need for a diversified global energy supply base with US shale production more critical than ever. Over the past several years, even as expectations for US shale activity have fluctuated, we have remained focused on operational excellence in our core businesses. We have consistently believed that excelling in our core operating businesses is critical to enhancing shareholder value regardless of the macro environment.

William Andrew Hendricks Jr.: The commodity outlook has shifted materially since the start of the year due to heightened geopolitical risk and oil supply disruptions in the Middle East, which will likely reshape global oil supply and demand balances for several years. These developments underscore the strategic importance of US oil and natural gas production and reinforce the need for a diversified global energy supply base with US shale production more critical than ever. Over the past several years, even as expectations for US shale activity have fluctuated, we have remained focused on operational excellence in our core businesses. We have consistently believed that excelling in our core operating businesses is critical to enhancing shareholder value regardless of the macro environment.

Speaker #3: Balance sheet strength and consistent returns of capital to shareholders. We are well positioned to execute on these priorities. From a macro perspective, the outlook is improving.

Speaker #3: These developments underscore the strategic importance of US oil and natural gas production and reinforce the need for a diversified global energy supply base With US shale production more critical than ever .

Andy Hendricks: From a macro perspective, the outlook is improving, though the pace of recovery remains somewhat difficult to predict. We believe the industry will need to increase drilling and completion activity just to maintain oil production. With oil prices now running significantly above the mid-December levels assumed in many customers' 2026 budgets, we are encouraged by the setup for higher US drilling and completion demand. Some customers have already started to make plans for higher activity levels later this quarter, we are increasingly hear that the strip is likely to incentivize additional incremental oil-directed drilling and completion activity in the H2 of this year. The current WTI strip exits 2027 at approximately $70. If those prices hold, higher activity into 2027 becomes more likely. As is typical, private customers are moving faster than the publics.

Speaker #3: Though the pace of recovery remains somewhat difficult to predict. We believe the industry will need to increase drilling and completion activity just to maintain oil production.

Speaker #3: Over the past several years , even as expectations for U.S. shale activity have fluctuated , we have remained focused on operational excellence in our core businesses .

Speaker #3: With oil prices now running significantly above the mid-December levels, assumed in many customers' 2026 budgets, we are encouraged by the setup for higher U.S.

Speaker #3: We have consistently believed that excelling in our core operating businesses is critical to enhancing shareholder value , regardless of the macro environment Today , we are pleased with the efficiency of our operations and as US shale activity inflects higher , we believe the decisions we have made position us to capture outsized value from a higher U.S.

Speaker #3: drilling and completion demand. Some customers have already started to make plans for higher activity levels later this quarter and we are increasingly hear that the strip is likely to incentivize additional incremental oil-directed drilling and completion activity in the second half of this year.

Andy Hendricks: Today, we are pleased with the efficiency of our operations, and as US shale activity inflects higher, we believe the decisions we have made position us to capture outsized value from a higher US rig count. As a predominantly shale services company, we will always evaluate opportunities to deploy capital and expand our exposure to other geographies and product lines. However, we will remain disciplined and focused on returns for any potential growth investment. Momentum appears to be shifting back toward US land activity over the coming quarters, but our corporate priorities remain unchanged. We will continue investing in technology and equipment that differentiates our services and supports long-term free cash flow per share while maintaining capital discipline, balance sheet strength, and consistent returns of capital to shareholders. We are well-positioned to execute on these priorities.

William Andrew Hendricks Jr.: Today, we are pleased with the efficiency of our operations, and as US shale activity inflects higher, we believe the decisions we have made position us to capture outsized value from a higher US rig count. As a predominantly shale services company, we will always evaluate opportunities to deploy capital and expand our exposure to other geographies and product lines. However, we will remain disciplined and focused on returns for any potential growth investment. Momentum appears to be shifting back toward US land activity over the coming quarters, but our corporate priorities remain unchanged. We will continue investing in technology and equipment that differentiates our services and supports long-term free cash flow per share while maintaining capital discipline, balance sheet strength, and consistent returns of capital to shareholders. We are well-positioned to execute on these priorities.

Speaker #3: rig count as a predominantly shale services company , we will always evaluate opportunities to deploy capital and expand our exposure to other geographies and product lines However , we will remain disciplined and focused on returns for any potential growth , investment momentum appears to be shifting back toward US land activity over the coming quarters , but our corporate priorities remain unchanged .

Speaker #3: The current WTI strip exits 2027 at approximately $70. And if those prices hold, higher activity into 2027 becomes more likely. As is typical, private customers are moving faster than the public's.

Speaker #3: Natural gas activity also appears likely to improve as newly commissioned LNG facilities drive higher export volumes. While some of the incremental demand may be met by additional pipeline capacity from the Permian Basin later in 2026, we believe additional drilling and completion activity in gas-focused basins will be needed to fully supply that growth.

Andy Hendricks: Natural gas activity also appears likely to improve as newly commissioned LNG facilities drive higher export volumes. While some of the incremental demand may be met by additional pipeline capacity from the Permian Basin later in 2026, we believe additional drilling and completion activity in gas-focused basins will be needed to fully supply that growth. As a result, we believe natural gas-directed drilling and completion activity is likely to increase in 2027. In our drilling services segment, we are very pleased with how the Q1 unfolded. Pricing remained steady, reflecting the value customers place on performance and reliability. In addition, the cost control programs we implemented towards the end of last year continued to gain traction and provided meaningful support to results.

Speaker #3: We will continue investing in technology and equipment that differentiates our services and supports long-term free cash flow per share, while maintaining capital discipline.

Speaker #3: Balance sheet strength and consistent returns of capital to shareholders . We are well positioned to execute on these priorities from a macro perspective , the outlook is improving , though the pace of recovery remains somewhat difficult to predict We believe the industry will need to increase drilling and completion activity just to maintain oil production .

Speaker #3: As a result, we believe natural gas-directed drilling and completion activity is likely to increase in 2027. In our drilling services segment, we are very pleased with how the first quarter unfolded.

Andy Hendricks: From a macro perspective, the outlook is improving, though the pace of a recovery remains somewhat difficult to predict. We believe the industry will need to increase drilling and completion activity just to maintain oil production. With oil prices now running significantly above the mid-December levels assumed in many customers' 2026 budgets, we are encouraged by the setup for higher US drilling and completion demand. Some customers have already started to make plans for higher activity levels later this quarter, and we are increasingly hearing that the strip is likely to incentivize additional incremental oil-directed drilling and completion activity in H2 of this year. The current WTI strip exits 2027 at approximately $70. If those prices hold, higher activity into 2027 becomes more likely. As is typical, private customers are moving faster than the publics.

William Andrew Hendricks Jr.: From a macro perspective, the outlook is improving, though the pace of a recovery remains somewhat difficult to predict. We believe the industry will need to increase drilling and completion activity just to maintain oil production. With oil prices now running significantly above the mid-December levels assumed in many customers' 2026 budgets, we are encouraged by the setup for higher US drilling and completion demand. Some customers have already started to make plans for higher activity levels later this quarter, and we are increasingly hearing that the strip is likely to incentivize additional incremental oil-directed drilling and completion activity in H2 of this year. The current WTI strip exits 2027 at approximately $70. If those prices hold, higher activity into 2027 becomes more likely. As is typical, private customers are moving faster than the publics.

Speaker #3: Pricing remained steady, reflecting the value customers place on performance and reliability. In addition, the cost control programs we implemented towards the end of last year continued to gain traction and provided meaningful support to results.

Speaker #3: With oil prices now running significantly above the mid December levels assumed in many customers , 2026 budgets , we are encouraged by the setup for higher US drilling and completion demand .

Speaker #3: Some customers have already started to make plans for higher activity levels later this quarter , and we are increasingly clear that the strip is likely to incentivize additional incremental oil directed drilling and completion activity in the second half of this year The current WTI strip exits 2027 at approximately $70 , and if those prices hold higher activity into 2027 becomes more likely , as is typical private customers are moving faster than the public's natural gas activity .

Speaker #3: Because customer programs typically adjust with a lag to changes in commodity prices, activity for some customers in the first half of the year continues to reflect prior budget assumptions.

Andy Hendricks: Customer programs typically adjust with a lag to changes in commodity prices, activity for some customers in H1 continues to reflect prior budget assumptions. We are seeing conditions improve, and we expect momentum to build through the quarter. We expect our rig count will exit Q2 above the quarterly average and near the high point so far for the year, around 92 to 95 rigs, depending on the timing, positioning us well as we move into H2. As E&Ps continue to drill deeper zones and extend lateral lengths, the importance of rig capability and contractor performance continues to grow. The number of the most capable rigs, those with the load-bearing capacity and pipe handling systems required for today's deeper and longer, more complex wells, remains limited and driven by investments from the best-performing drilling contractors.

Speaker #3: We are seeing conditions improve and we expect momentum to build through the quarter. We expect our rig count will exit the second quarter above the quarterly average and near the high point so far for the year, around 92 to 95 rigs, depending on the timing.

Speaker #3: Positioning us well as we move into the second half. As EMPs continue to drill deeper zones and extend lateral links, the importance of rig capability and contractor performance continues to grow.

Andy Hendricks: Natural gas activity also appears likely to improve as newly commissioned LNG facilities drive higher export volumes. While some of the incremental demand may be met by additional pipeline capacity from the Permian Basin later in 2026, we believe additional drilling and completion activity in gas-focused basins will be needed to fully supply that growth. As a result, we believe natural gas-directed drilling and completion activity is likely to increase in 2027. In our drilling services segment, we are very pleased with how Q1 unfolded. Pricing remained steady, reflecting the value customers place on performance and reliability. In addition, the cost control programs we implemented towards the end of last year continued to gain traction and provided meaningful support to results.

William Andrew Hendricks Jr.: Natural gas activity also appears likely to improve as newly commissioned LNG facilities drive higher export volumes. While some of the incremental demand may be met by additional pipeline capacity from the Permian Basin later in 2026, we believe additional drilling and completion activity in gas-focused basins will be needed to fully supply that growth. As a result, we believe natural gas-directed drilling and completion activity is likely to increase in 2027. In our drilling services segment, we are very pleased with how Q1 unfolded. Pricing remained steady, reflecting the value customers place on performance and reliability. In addition, the cost control programs we implemented towards the end of last year continued to gain traction and provided meaningful support to results.

Speaker #3: Also appears likely to improve as newly commissioned LNG facilities drive higher export volumes . While some of the incremental demand may be met by additional pipeline capacity from the Permian Basin later in 2026 , we believe additional drilling and completion activity in gas focused basins will be needed to fully supply that growth .

Speaker #3: The number of the most capable rigs—those with the load-bearing capacity and pipe handling systems required for today's deeper and longer more complex wells—remains limited and driven by investments from the best performing drilling contractors.

Speaker #3: As a result , we believe natural gas directed drilling and completion activity is likely to increase in 2027 . In our drilling services segment , we are very pleased with how the first quarter unfolded .

Speaker #3: With our in-house engineering expertise and disciplined approach to upgrades, we believe we are well positioned to gain share in this growing market and a capital-efficient manner.

Andy Hendricks: With our in-house engineering expertise and disciplined approach to upgrades, we believe we are well-positioned to gain share in this growing market in a capital-efficient manner. As rigs become larger and more technical, we expect this to strengthen our competitive position and support higher returns over time. Our Completion Services segment delivered solid results for the quarter, despite disruption from a January winter storm that effectively paused the completions business for 5 days. Excluding that impact, our frack operations ran near capacity, with our natural gas-powered assets near fully utilized. Demand for completion services is improving, particularly in the H2 2026, and we are in discussions with customers on higher pricing to more appropriately reflect rising demand and the high industry utilization. Available frack capacity across the industry is limited, the few fleets that could be reactivated are among the industry's oldest and least efficient.

Speaker #3: Pricing remains steady , reflecting the value customers place on performance and reliability . In addition , the cost control programs we implemented towards the end of last year continued to gain traction and provided meaningful support to results .

Speaker #3: As rigs become larger and more technical, we expect this to strengthen our competitive position and support higher returns over time. Our completion services segment delivered solid results for the quarter despite disruption from a January winter storm that effectively paused the completions business for five days.

Andy Hendricks: Because customer programs typically adjust with a lag to changes in commodity prices, activity for some customers in H1 of the year continues to reflect prior budget assumptions. We are seeing conditions improve, and we expect momentum to build through Q2. We expect our rig count will exit Q2 above the quarterly average and near the high point so far for the year, around 92 to 95 rigs, depending on the timing, positioning us well as we move into H2. As E&Ps continue to drill deeper zones and extend lateral lengths, the importance of rig capability and contractor performance continues to grow. The number of the most capable rigs, those with the load-bearing capacity and pipe handling systems required for today's deeper and longer, more complex wells, remains limited and driven by investments from the best-performing drilling contractors.

William Andrew Hendricks Jr.: Because customer programs typically adjust with a lag to changes in commodity prices, activity for some customers in H1 of the year continues to reflect prior budget assumptions. We are seeing conditions improve, and we expect momentum to build through Q2. We expect our rig count will exit Q2 above the quarterly average and near the high point so far for the year, around 92 to 95 rigs, depending on the timing, positioning us well as we move into H2. As E&Ps continue to drill deeper zones and extend lateral lengths, the importance of rig capability and contractor performance continues to grow. The number of the most capable rigs, those with the load-bearing capacity and pipe handling systems required for today's deeper and longer, more complex wells, remains limited and driven by investments from the best-performing drilling contractors.

Speaker #3: Because customer programs typically adjust with a lag to changes in commodity prices Activity . For some customers in the first half of the year continues to reflect prior budget assumptions .

Speaker #3: Excluding that impact, our frac operations ran near capacity with our natural gas-powered assets near fully utilized. Demand for completion services improving. Particularly in the back half of 2026.

Speaker #3: We are seeing conditions improve and we expect momentum to build through the quarter . We expect our rig count will exit the second quarter above the quarterly average and near the high point .

Speaker #3: And we are in discussions with customers on higher pricing to more appropriately reflect rising demand and the high industry utilization. Available frac capacity across the industry is limited.

Speaker #3: So far . For the year around 92 to 95 rigs , depending on the timing Positioning us well as we move into the second half as MPs continue to drill deeper zones and extend lateral links , the importance of rig capability and contractor performance continues to grow .

Speaker #3: And the few fleets that could be reactivated are among the industry's oldest and least efficient. At current pricing, reactivation does not seem economical. And pricing would need to rise meaningfully to incentivize incremental supply as demand increases.

Andy Hendricks: At current pricing, reactivation does not seem economical, and pricing would need to rise meaningfully to incentivize incremental supply as demand increases. Our completions business has nearly 250,000 cold stacked horsepower that could technically be reactivated, we have been clear that our priority is to invest in newer technologies that will drive long-term returns. Our cold stacked equipment represents the oldest diesel equipment in our fleet, and reactivating a single fleet would require more than $10 million investment. The equipment could likely find work in the current market, the long-term return potential remains uncertain, and we are not prioritizing investment in these older assets. Over the past several years, we have high-graded our fleet by investing in newer, natural gas-powered technologies that we believe will remain in demand and generate strong returns for years to come.

Speaker #3: The number of the most capable rigs , those with the load bearing capacity and pipe handling systems required for today's deeper and longer , more complex wells remains limited and driven by investments from the best performing drilling contractors .

Speaker #3: While our completions business has nearly 250,000 cold-stacked horsepower that could technically be reactivated, we have been clear that our priority is to invest in newer technologies that will drive long-term returns.

Andy Hendricks: With our in-house engineering expertise and disciplined approach to upgrades, we believe we are well positioned to gain share in this growing market in a capital-efficient manner. As rigs become larger and more technical, we expect this to strengthen our competitive position and support higher returns over time. Our completion services segment delivered solid results for the quarter, despite disruption from a January winter storm that effectively paused the completions business for five days. Excluding that impact, our frack operations ran near capacity with our natural gas-powered assets near fully utilized. Demand for completion services is improving, particularly in the H2 2026, and we are in discussions with customers on higher pricing to more appropriately reflect rising demand and the high industry utilization. Available frack capacity across the industry is limited, and the few fleets that could be reactivated are among the industry's oldest and least efficient.

William Andrew Hendricks Jr.: With our in-house engineering expertise and disciplined approach to upgrades, we believe we are well positioned to gain share in this growing market in a capital-efficient manner. As rigs become larger and more technical, we expect this to strengthen our competitive position and support higher returns over time. Our completion services segment delivered solid results for the quarter, despite disruption from a January winter storm that effectively paused the completions business for five days. Excluding that impact, our frack operations ran near capacity with our natural gas-powered assets near fully utilized. Demand for completion services is improving, particularly in the H2 2026, and we are in discussions with customers on higher pricing to more appropriately reflect rising demand and the high industry utilization. Available frack capacity across the industry is limited, and the few fleets that could be reactivated are among the industry's oldest and least efficient.

Speaker #3: With our in-house engineering expertise and disciplined approach to upgrades , we believe we are well positioned to gain share in this growing market and a capital efficient manner As rigs become larger and more technical , we expect this to strengthen our competitive position and support higher returns over time .

Speaker #3: Our cold-stacked equipment represents the oldest diesel equipment in our fleet and reactivating a single fleet would require more than $10 million investment. While the equipment could likely find work in the current market, the long-term return potential remains uncertain and we are not prioritizing investment in these older assets.

Speaker #3: Our completion services segment delivered solid results for the quarter . Despite disruption from a January winter storm that effectively paused the completions business for five days .

Speaker #3: Over the past several years, we have high-graded our fleet by investing in newer natural gas-powered technologies that we believe will remain in demand and generate strong returns for years to come.

Speaker #3: Excluding that impact , our frac operations ran near capacity with our natural gas powered assets near fully utilized Demand for completion services improving , particularly in the back half of 2026 , and we are in discussions with customers on higher pricing to more appropriately reflect rising demand and the high industry utilization available .

Speaker #3: We continue to expect our nameplate horsepower to decline this year as we execute this high-grading strategy. Over the past several years, the frac industry has seen consolidation and bifurcation of equipment quality and efficiency.

Andy Hendricks: We continue to expect our nameplate horsepower to decline this year as we execute this high-grading strategy. Over the past several years, the frack industry has seen consolidation and bifurcation of equipment quality and efficiency. Lower-tier pricing has constrained cash generation for smaller peers, limiting their access to capital and slowing investment in new technology. This dynamic continues to widen the gap between industry leaders and the broader peer group, supporting a more rational and stable market with structurally higher returns over time. We expect our nameplate horsepower to continue to decline. We are directing capital toward expanding our Emerald Fleet of 100% natural gas-powered assets. By year-end, we expect more than 15% of our active horsepower to be powered entirely by natural gas, with approximately 90% powered at least partially by natural gas.

Speaker #3: Lower-tier pricing has constrained cash generation for smaller peers limiting their access to capital and slowing investment in new technology. This dynamic continues to widen the gap between industry leaders and the broader peer group, supporting a more rational and stable market with structurally higher returns over time.

Speaker #3: Frac capacity across the industry is limited , and the few fleets that could be reactivated are among the industry's oldest and least efficient .

Andy Hendricks: At current pricing, reactivation does not seem economical, and pricing would need to rise meaningfully to incentivize incremental supply as demand increases. While our completions business has nearly 250,000 cold stacked horsepower that could technically be reactivated, we have been clear that our priority is to invest in newer technologies that will drive long-term returns. Our cold stacked equipment represents the oldest diesel equipment in our fleet, and reactivating a single fleet would require more than a $10 million investment. While the equipment could likely find work in the current market, the long-term return potential remains uncertain, and we are not prioritizing investment in these older assets. Over the past several years, we have high-graded our fleet by investing in newer natural gas-powered technologies that we believe will remain in demand and generate strong returns for years to come.

William Andrew Hendricks Jr.: At current pricing, reactivation does not seem economical, and pricing would need to rise meaningfully to incentivize incremental supply as demand increases. While our completions business has nearly 250,000 cold stacked horsepower that could technically be reactivated, we have been clear that our priority is to invest in newer technologies that will drive long-term returns. Our cold stacked equipment represents the oldest diesel equipment in our fleet, and reactivating a single fleet would require more than a $10 million investment. While the equipment could likely find work in the current market, the long-term return potential remains uncertain, and we are not prioritizing investment in these older assets. Over the past several years, we have high-graded our fleet by investing in newer natural gas-powered technologies that we believe will remain in demand and generate strong returns for years to come.

Speaker #3: At current pricing . Reactivation does not seem economical , and pricing would need to rise meaningfully to incentivize incremental supply as demand increases .

Speaker #3: We expect our nameplate horsepower to continue to decline; we are directing capital toward expanding our emerald fleet of 100% natural gas-powered assets. By year-end, we expect more than 15% of our active horsepower to be powered entirely by natural gas with approximately 90% powered at least partially by natural gas.

Speaker #3: While our completions business has nearly 250,000 cold stacked horsepower , that could technically be reactivated . We have been clear that our priority is to invest in newer technologies that will drive long term returns .

Speaker #3: Our cul de sac equipment represents the oldest diesel equipment in our fleet , and reactivating a single fleet would require more than $10 million investment .

Speaker #3: We believe we have one of the highest quality fleets in the industry and this transition reflects our ongoing focus on improving operational performance. In our drilling product segment, the team delivered solid performance despite several industry headwinds.

Andy Hendricks: We believe we have one of the highest quality fleets in the industry, and this transition reflects our ongoing focus on improving operational performance. In our drilling products segment, the team delivered solid performance despite several industry headwinds. The conflict in the Middle East has increased risk in one of our key regions, which contributes roughly 10% to 15% of segment revenue, primarily from Saudi Arabia. Land activity in Saudi Arabia largely tracked expectations during the quarter, although activity in certain regions was impacted. On the cost side, we've experienced meaningful inflation in several key inputs, particularly the material tungsten, where prices are significantly higher than 1 year ago. In addition, our Middle East operations have seen higher logistics and personnel costs due to the ongoing conflict in the region.

Speaker #3: While the equipment could likely find work in the current market , the long term return potential remains uncertain and we are not prioritizing investment in these older assets .

Speaker #3: The conflict in the Middle East has increased risk in one of our key regions, which contributes roughly 10 to 15 percent of segment revenue, primarily from Saudi Arabia.

Speaker #3: Land activity in Saudi Arabia largely tracked expectations during the quarter, although activity in certain regions was impacted. On the cost side, we've experienced meaningful inflation in several key inputs, particularly the material tungsten.

Andy Hendricks: We continue to expect our nameplate horsepower to decline this year as we execute this high-grading strategy. Over the past several years, the frac industry has seen consolidation and bifurcation of equipment quality and efficiency. Lower tier pricing has constrained cash generation for smaller peers, limiting their access to capital and slowing investment in new technology. This dynamic continues to widen the gap between industry leaders and the broader peer group, supporting a more rational and stable market with structurally higher returns over time. We expect our nameplate horsepower to continue to decline. We are directing capital toward expanding our Emerald fleet of 100% natural gas-powered assets. By year-end, we expect more than 15% of our active horsepower to be powered entirely by natural gas, with approximately 90% powered at least partially by natural gas.

William Andrew Hendricks Jr.: We continue to expect our nameplate horsepower to decline this year as we execute this high-grading strategy. Over the past several years, the frac industry has seen consolidation and bifurcation of equipment quality and efficiency. Lower tier pricing has constrained cash generation for smaller peers, limiting their access to capital and slowing investment in new technology. This dynamic continues to widen the gap between industry leaders and the broader peer group, supporting a more rational and stable market with structurally higher returns over time. We expect our nameplate horsepower to continue to decline. We are directing capital toward expanding our Emerald fleet of 100% natural gas-powered assets. By year-end, we expect more than 15% of our active horsepower to be powered entirely by natural gas, with approximately 90% powered at least partially by natural gas.

Speaker #3: We continue to expect our nameplate horsepower to decline this year as we execute this high grading strategy . Over the past several years , the frac industry has seen consolidation in bifurcation of equipment quality and efficiency .

Speaker #3: Where prices are significantly higher than a year ago. In addition, our Middle East operations have seen higher logistics and personnel costs due to the ongoing conflict in the region.

Speaker #3: Lower tier pricing has constrained cash generation for smaller peers , limiting their access to capital and slowing investment in new technology . This dynamic continues to widen the gap between industry leaders and the broader peer group , supporting a more rational and stable market with structurally higher returns over time , we expect our nameplate horsepower to continue to decline .

Speaker #3: Even with these challenges, our drilling products business delivered only a modest decline and adjusted gross profit versus the fourth quarter and we are actively pursuing additional actions to further mitigate these risks.

Andy Hendricks: Even with these challenges, our drilling products business delivered only a modest decline in adjusted gross profit versus Q4. We are actively pursuing additional actions to further mitigate these risks. From a competitive standpoint, we are encouraged by our position. We are pleased with the team's performance, and we believe we have grown to record market share in several key markets, including Saudi Arabia. In the US, we also believe there is additional upside with several large customers. Overall, our teams executed at a high level in Q1, maintaining a discipline focused on service differentiation, capital allocation, and cost control as we navigated a demand environment shaped by customer budgets built on a crude oil price deck well below the current strip. We believe the indicators increasingly point to a period of higher commodity prices.

Speaker #3: From a competitive standpoint, we are encouraged by our position. We are pleased with the team's performance and we believe we have grown to record market share in several key markets, including Saudi Arabia.

Speaker #3: We are directing capital toward expanding our Emerald fleet of 100% natural gas powered assets by year end , we expect more than 15% of our active horsepower to be powered entirely by natural gas , with approximately 90% powered at least partially by natural gas .

Speaker #3: In the US, we also believe there's additional upside with several large customers. Overall, our team's executed at a high level in the first quarter, maintaining a disciplined focus on service differentiation capital allocation and cost control as we navigated a demand environment shaped by customer budgets built on a crude oil price deck well below the current strip.

Andy Hendricks: We believe we have one of the highest quality fleets in the industry, and this transition reflects our ongoing focus on improving operational performance. In our drilling products segment, the team delivered solid performance despite several industry headwinds. The conflict in the Middle East has increased risk in one of our key regions, which contributes roughly 10% to 15% of segment revenue, primarily from Saudi Arabia. Land activity in Saudi Arabia largely tracked expectations during the quarter, although activity in certain regions was impacted. On the cost side, we've experienced meaningful inflation in several key inputs, particularly the material tungsten, where prices are significantly higher than a year ago. In addition, our Middle East operations have seen higher logistics and personnel costs due to the ongoing conflict in the region.

William Andrew Hendricks Jr.: We believe we have one of the highest quality fleets in the industry, and this transition reflects our ongoing focus on improving operational performance. In our drilling products segment, the team delivered solid performance despite several industry headwinds. The conflict in the Middle East has increased risk in one of our key regions, which contributes roughly 10% to 15% of segment revenue, primarily from Saudi Arabia. Land activity in Saudi Arabia largely tracked expectations during the quarter, although activity in certain regions was impacted. On the cost side, we've experienced meaningful inflation in several key inputs, particularly the material tungsten, where prices are significantly higher than a year ago. In addition, our Middle East operations have seen higher logistics and personnel costs due to the ongoing conflict in the region.

Speaker #3: We believe we have one of the highest quality fleets in the industry, and this transition reflects our ongoing focus on improving operational performance in our drilling products segment.

Speaker #3: The team delivered solid performance despite several industry headwinds . The conflict in the Middle East has increased risk in one of our key regions , which contributes roughly 10 to 15% of segment revenue , primarily from Saudi Arabia .

Speaker #3: We believe the indicators increasingly point to a period of higher commodity prices. Based on our customer conversations, we expect this to drive an increase in US shale activity starting later in the second quarter and continuing into the second half of the year.

Speaker #3: Land activity in Saudi Arabia , largely tracked expectations during the quarter , although activity in certain regions was impacted on the cost side , we've experienced meaningful inflation in several key inputs , particularly the material tungsten , where prices are significantly higher than a year ago .

Andy Hendricks: Based on our customer conversations, we expect this to drive an increase in US shale activity starting later in Q2 and continuing into H2 of the year. Even if oil prices moderate somewhat from current levels, we would still expect upside versus today's activity. As we approach an inflection in US activity, it is worth briefly reflecting on the strategy we have followed the past few years. While we continue to evaluate opportunities to expand beyond our core markets, our priority will always be return on capital driven, and we have yet to find compelling opportunities that have cleared our investment threshold. We remain focused on strengthening our competitive position in our core businesses and improving efficiency, operationally and financially. As we've always said, we believe disciplined capital allocation and continuous improvement in our existing businesses are important ways to enhance shareholder value.

Speaker #3: Even if oil prices moderate somewhat from current levels, we would still expect upside versus today's activity. As we approach an inflection in US activity, it is worth briefly reflecting on the strategy we have followed the past few years.

Speaker #3: In addition , our Middle East operations have seen higher logistics and personnel costs due to the ongoing conflict in the region Even with these challenges , our drilling products business delivered only a modest decline in adjusted gross profit versus the fourth quarter , and we are actively pursuing additional actions to further mitigate these risks from a competitive standpoint , we are encouraged , we are encouraged by our position .

Speaker #3: While we continue to evaluate opportunities to expand beyond our core markets, our priority will always be return on capital driven and we have yet to find compelling opportunities that have cleared our investment threshold.

Andy Hendricks: Even with these challenges, our drilling products business delivered only a modest decline in adjusted gross profit versus Q4, and we are actively pursuing additional actions to further mitigate these risks. From a competitive standpoint, we are encouraged by our position. We are pleased with the team's performance, and we believe we have grown to record market share in several key markets, including Saudi Arabia. In the US, we also believe there's additional upside with several large customers. Overall, our teams executed at a high level in Q1, maintaining a discipline focused on service differentiation, capital allocation, and cost control as we navigated a demand environment shaped by customer budgets built on a crude oil price deck well below the current strip. We believe the indicators increasingly point to a period of higher commodity prices.

William Andrew Hendricks Jr.: Even with these challenges, our drilling products business delivered only a modest decline in adjusted gross profit versus Q4, and we are actively pursuing additional actions to further mitigate these risks. From a competitive standpoint, we are encouraged by our position. We are pleased with the team's performance, and we believe we have grown to record market share in several key markets, including Saudi Arabia. In the US, we also believe there's additional upside with several large customers. Overall, our teams executed at a high level in Q1, maintaining a discipline focused on service differentiation, capital allocation, and cost control as we navigated a demand environment shaped by customer budgets built on a crude oil price deck well below the current strip. We believe the indicators increasingly point to a period of higher commodity prices.

Speaker #3: We remain focused on strengthening our competitive position in our core businesses and improving efficiency. Operationally and financially. As we've always said, we believe disciplined capital allocation and continuous improvement in our existing businesses are important ways to enhance shareholder value.

Speaker #3: We are pleased with the team's performance , and we believe we have grown to record market share in several key markets , including Saudi Arabia in the US .

Speaker #3: We also believe there's additional upside with several large customers Overall , our team's executed at a high level in the first quarter , maintaining a disciplined , focused on service differentiation , capital allocation and cost control .

Speaker #3: With activity now inflecting higher, the decisions we have made the past several years position us to deliver improved performance going forward. We are pleased with where the company stands today and are confident in our ability to continue delivering strong capital returns to shareholders.

Andy Hendricks: With activity now inflecting higher, the decisions we have made the past several years position us to deliver improved performance going forward. We are pleased with where the company stands today and are confident in our ability to continue delivering strong capital returns to shareholders. I'll now turn it over to Andy Smith, who will review the financial results for the quarter.

Speaker #3: As we navigated a demand environment shaped by customer budgets built on a crude oil price deck well below the current strip , we believe the indicators increasingly point to a period of higher commodity prices on our customer conversations , we expect this to drive an increase in U.S.

Speaker #3: I'll now turn it over to Andy Smith, who will review the financial results for the quarter.

Speaker #2: Thanks, Andy. Total reported revenue for the quarter was $1,117,000,000. We reported a net loss attributable to common shareholders of $25,000,000 or 6 cents per share.

C. Andrew Smith: Thanks, Andy. Total reported revenue for Q1 was $1,117 million. We reported a net loss attributable to common shareholders of $25 million or $0.06 per share. Adjusted EBITDA for Q1 totaled $205 million, which included $3 million in early contract termination revenue in the drilling services segment. Our weighted average share count was 380 million shares during Q1. As expected, seasonal working capital headwinds impacted free cash flow in Q1. Given the timing and variability of these items throughout the year, we view full-year free cash flow as the most meaningful measure of performance, with working capital turning into a tailwind in H2.

William Andrew Hendricks Jr.: Based on our customer conversations, we expect this to drive an increase in US shale activity starting later in Q2 and continuing into H2 of the year. Even if oil prices moderate somewhat from current levels, we would still expect upside versus today's activity. As we approach an inflection in US activity, it is worth briefly reflecting on the strategy we have followed the past few years. While we continue to evaluate opportunities to expand beyond our core markets, our priority will always be return on capital driven, and we have yet to find compelling opportunities that have cleared our investment threshold. We remain focused on strengthening our competitive position in our core businesses and improving efficiency, operationally and financially. As we've always said, we believe disciplined capital allocation and continuous improvement in our existing businesses are important ways to enhance shareholder value.

Speaker #3: Shale activity is starting later in the second quarter and continuing into the second half of the year. Even if oil prices moderate somewhat from current levels, we would still expect upside versus today's activity. As we approach an inflection in US activity, it is worth briefly reflecting on the strategy.

Speaker #2: Adjusted EBITDA for the quarter totaled $205,000,000, which included $3,000,000 in early contract termination revenue in the drilling services segment. Our weighted average share count was 380 million shares during Q1.

Speaker #2: As expected, seasonal working capital headwinds impacted free cash flow in the first quarter. Given the timing and variability of these items throughout the year, we view full-year free cash flow as the most meaningful measure of performance with working capital turning into a tailwind in the second half.

Speaker #3: We have followed the past few years . While we continue to evaluate opportunities to expand beyond our core markets , our priority will always be return on capital driven .

Speaker #3: And we have yet to find compelling opportunities that have cleared our investment threshold . We remain focused on strengthening our competitive position in our core businesses and improving efficiency operationally and financially .

Speaker #2: In our drilling services segment, first quarter revenue was $352,000,000 and adjusted gross profit was $134,000,000. Revenue and adjusted gross profit included the previously mentioned $3,000,000 of early contract termination payments.

C. Andrew Smith: In our Drilling Services segment, Q1 revenue was $352 million, and adjusted gross profit was $134 million. Revenue and adjusted gross profit included the previously mentioned $3 million of early contract termination payments. In US contract drilling, we totaled 8,301 operating days in the quarter, with an average operating rig count of 92 rigs. Excluding early termination revenue, pricing was relatively steady versus Q4, and we continue to see benefits from the cost reduction actions implemented late last year. For Q2 in Drilling Services, we expect our rig count to average around 90 rigs, and we expect to exit the quarter above the average as we reactivate rigs in the back half of the quarter.

Speaker #3: As we've always said , we believe disciplined capital allocation and continuous improvement in our existing businesses are important ways to enhance shareholder value .

Speaker #2: In US contract drilling, we totaled $8,301 operating days in the quarter, with an average operating recount of 92 rigs. Excluding early termination revenue, pricing was relatively steady versus the fourth quarter.

William Andrew Hendricks Jr.: With activity now inflecting higher, the decisions we have made the past several years position us to deliver improved performance going forward. We are pleased with where the company stands today and are confident in our ability to continue delivering strong capital returns to shareholders. I'll now turn it over to Andrew Smith, who will review the financial results for the quarter.

Speaker #3: With activity . Now inflecting higher , the decisions we have made the past several years , position us to deliver improved performance , going forward .

Speaker #3: We are pleased with where the company stands today and are confident in our ability to continue delivering strong cash returns to shareholders . I'll now turn it over to Andy Smith , who will review the financial results for the quarter

Speaker #2: And we continue to see benefits from the cost reduction actions implemented late last year. For the second quarter and drilling services, we expect our rig count to average around 90 rigs, and we expect to exit the quarter above the average as we reactivate rigs in the back half of the quarter.

Andy Smith: Thanks, Andy. Total reported revenue for the quarter was $1,117 million. We reported a net loss attributable to common shareholders of $25 million, or $0.06 per share. Adjusted EBITDA for the quarter totaled $205 million, which included $3 million in early contract termination revenue in the Drilling Services segment. Our weighted average share count was 380 million shares during Q1. As expected, seasonal working capital headwinds impacted free cash flow in Q1. Given the timing and variability of these items throughout the year, we view full year free cash flow as the most meaningful measure of performance, with working capital turning into a tailwind in H2. In our Drilling Services segment, Q1 revenue was $352 million, and adjusted gross profit was $134 million. Revenue and adjusted gross profit included the previously mentioned $3 million of early contract termination payments.

Andrew Smith: Thanks, William Andrew Hendricks Jr.. Total reported revenue for the quarter was $1,117 million. We reported a net loss attributable to common shareholders of $25 million, or $0.06 per share. Adjusted EBITDA for the quarter totaled $205 million, which included $3 million in early contract termination revenue in the Drilling Services segment. Our weighted average share count was 380 million shares during Q1. As expected, seasonal working capital headwinds impacted free cash flow in Q1. Given the timing and variability of these items throughout the year, we view full year free cash flow as the most meaningful measure of performance, with working capital turning into a tailwind in H2. In our Drilling Services segment, Q1 revenue was $352 million, and adjusted gross profit was $134 million. Revenue and adjusted gross profit included the previously mentioned $3 million of early contract termination payments.

Speaker #4: Thanks , Andy . Total reported revenue for the quarter was $1,000,000,117 million . We reported a net loss attributable to common shareholders of $25 million , or $0.06 per share .

Speaker #2: We expect adjusted gross profit in the drilling services segment to be approximately $130,000,000. Our guidance includes $5,000,000 of rig reactivation and mobilization costs and assumes minimal second quarter revenue contribution from those reactivations.

C. Andrew Smith: We expect adjusted gross profit in the Drilling Services segment to be approximately $130 million. Our guidance includes $5 million of rig reactivation and mobilization costs and assumes minimal Q2 revenue contribution from those reactivations. In our Completion Services segment, Q1 revenue was $680 million, and adjusted gross profit was $98 million. Results reflected the impact of roughly 5 days of winter storm impact in January. Excluding that disruption, our frack calendars were essentially full, with limited spare capacity to increase activity and an extremely efficient calendar. For Q2, we expect Completion Services adjusted gross profit to be approximately $105 million, with near full utilization of our active assets. Q1 Drilling Products revenue was $80 million, and adjusted gross profit was $33 million.

Speaker #4: Adjusted EBITDA for the quarter totaled $205 million , which included $3 million in early contract termination revenue in the drilling services segment . Our weighted average share count was 380 million shares during Q1 as expected , seasonal working capital headwinds impacted free cash flow in the first quarter .

Speaker #2: In our completion services segment, first quarter revenue was $680,000,000 and adjusted gross profit was $98,000,000. Results reflected the impact of roughly five days of winter storm impact in January.

Speaker #4: Given the timing and variability of these items throughout the year, we view full-year free cash flow as the most meaningful measure of performance, with working capital turning into a tailwind in the second half.

Speaker #2: Excluding that disruption, our frac calendars were essentially full with limited spare capacity to increase activity and an extremely efficient calendar. For the second quarter, we expect completion services adjusted gross profit to be approximately $105,000,000, with near full utilization of our active assets.

Speaker #4: In our drilling services segment, first quarter revenue was $352 million and adjusted gross profit was $134 million. Revenue and adjusted gross profit included the previously mentioned $3 million of early contract termination payments in U.S. contract drilling.

Speaker #2: First quarter drilling products revenue was $80,000,000 and adjusted gross profit was $33,000,000. Results reflected disruption in the Middle East related to the ongoing conflict and some cost inflation.

Andy Smith: In US contract drilling, we totaled 8,301 operating days in Q1, with an average operating rig count of 92 rigs. Excluding early termination revenue, pricing was relatively steady versus Q4, and we continue to see benefits from the cost reduction actions implemented late last year. For Q2 in Drilling Services, we expect our rig count to average around 90 rigs, and we expect to exit Q2 above the average as we reactivate rigs in the back half of Q2. We expect adjusted gross profit in the Drilling Services segment to be approximately $130 million. Our guidance includes $5 million of rig reactivation and mobilization costs and assumes minimal Q2 revenue contribution from those reactivations. In our Completion Services segment, Q1 revenue was $680 million, and adjusted gross profit was $98 million.

Andrew Smith: In US contract drilling, we totaled 8,301 operating days in Q1, with an average operating rig count of 92 rigs. Excluding early termination revenue, pricing was relatively steady versus Q4, and we continue to see benefits from the cost reduction actions implemented late last year. For Q2 in Drilling Services, we expect our rig count to average around 90 rigs, and we expect to exit Q2 above the average as we reactivate rigs in the back half of Q2. We expect adjusted gross profit in the Drilling Services segment to be approximately $130 million. Our guidance includes $5 million of rig reactivation and mobilization costs and assumes minimal Q2 revenue contribution from those reactivations. In our Completion Services segment, Q1 revenue was $680 million, and adjusted gross profit was $98 million.

Speaker #4: We totaled 8301 operating days in the quarter , with an average operating rig count of 92 rigs . Excluding early termination revenue . Pricing was relatively steady versus the fourth quarter , and we continue to see benefits from the cost reduction actions implemented late last year For the second quarter , in drilling services , we expect our rig count to average around 90 rigs .

C. Andrew Smith: Results reflected disruption in the Middle East related to the ongoing conflict and some cost inflation. For Q2, we expect drilling products adjusted gross profit to decline slightly, driven by lower profitability in our international business, particularly in the Middle East, and the normal impact of spring breakup in Canada. Other revenue was $6 million for the quarter, with adjusted gross profit of $3 million. For Q2, we expect other adjusted gross profit to be approximately $5 million. General and administrative expenses in Q1 were $69 million. For Q2, we expect G&A to be approximately $67 million. On a consolidated basis in Q1, depreciation, depletion, amortization, and impairment expense totaled $218 million. For Q2, we expect it to be approximately $220 million.

Speaker #2: For the second quarter, we expect drilling products adjusted gross profit to decline slightly, driven by lower profitability in our international business, particularly in the Middle East, and the normal impact of spring breakup in Canada.

Speaker #2: Other revenue was $6,000,000 for the quarter, with adjusted gross profit of $3,000,000. For the second quarter, we expect other adjusted gross profit to be approximately $5,000,000.

Speaker #4: And we expect to exit the quarter above the average as we reactivate rigs in the back half of the quarter , we expect adjusted gross profit in the drilling services segment to be approximately $130 million .

Speaker #2: General and administrative expenses in the first quarter were $69,000,000. For the second quarter, we expect G&A to be approximately $67,000,000. On a consolidated basis in the first quarter, depreciation, depletion, amortization, and impairment expense totaled $218,000,000.

Speaker #4: Our guidance includes $5 million of rig reactivation and mobilization costs , and assumes minimal second quarter revenue contribution from those reactivations in our completion services segment .

Speaker #4: First quarter revenue was $680 million and adjusted gross profit was $98 million. Results reflected the impact of roughly five days of winter storm impact in January.

Speaker #2: For the second quarter, we expect it to be approximately $220,000,000. During the first quarter, total CAPEX was $117,000,000, including $54,000,000 in drilling services, $45,000,000 in completion services, $16,000,000 in drilling products, and $1,000,000 in other in corporate.

Andy Smith: Results reflected the impact of roughly five days of winter storm impact in January. Excluding that disruption, our frack calendars were essentially full, with limited spare capacity to increase activity, and an extremely efficient calendar. For Q2, we expect Completion Services adjusted gross profit to be approximately $105 million, with near full utilization of our active assets. Q1 Drilling Products revenue was $80 million, and adjusted gross profit was $33 million. Results reflected disruption in the Middle East related to the ongoing conflict and some cost inflation. For Q2, we expect Drilling Products adjusted gross profit to decline slightly, driven by lower profitability in our international business, particularly in the Middle East, and the normal impact of spring breakup in Canada. Other revenue was $6 million for the quarter, with adjusted gross profit of $3 million.

Andrew Smith: Results reflected the impact of roughly five days of winter storm impact in January. Excluding that disruption, our frack calendars were essentially full, with limited spare capacity to increase activity, and an extremely efficient calendar. For Q2, we expect Completion Services adjusted gross profit to be approximately $105 million, with near full utilization of our active assets. Q1 Drilling Products revenue was $80 million, and adjusted gross profit was $33 million. Results reflected disruption in the Middle East related to the ongoing conflict and some cost inflation. For Q2, we expect Drilling Products adjusted gross profit to decline slightly, driven by lower profitability in our international business, particularly in the Middle East, and the normal impact of spring breakup in Canada. Other revenue was $6 million for the quarter, with adjusted gross profit of $3 million.

C. Andrew Smith: During Q1, total CapEx was $117 million, including $54 million in drilling services, $45 million in completion services, $16 million in drilling products, and $1 million in other corporate. We ended Q1 with $337 million of cash on hand and nothing drawn on our $500 million revolving credit facility. We have no senior note maturities until 2028. Our board has approved a quarterly dividend of $0.10 per share, payable 15 June to shareholders of record as of 1 June. I'll now turn it back to Andy Hendricks for closing remarks.

Speaker #4: Excluding that disruption , our frac calendars were essentially full with limited spare capacity to increase activity and an extremely efficient calendar . For the second quarter , we expect completion services adjusted gross profit to be approximately $105 million , with near full utilization of our active assets .

Speaker #2: We ended the first quarter with $337,000,000 of of cash on hand and nothing drawn on our $500,000,000 revolving credit facility. We have no senior note maturities until 2028.

Speaker #4: First quarter drilling products revenue was $80 million and adjusted gross profit was $33 million . Results reflected disruption in the Middle East related to the ongoing conflict , and some cost inflation .

Speaker #2: Our board has approved a quarterly dividend of 10 cents per share payable June 15th to shareholders of record as of June 1st. I'll now turn it back to Andy Hendricks for closing remarks.

Speaker #4: For the second quarter , we expect drilling products adjusted gross profit to decline slightly , driven by lower profitability in our international business , particularly in the Middle East and the impact of spring breakup in Canada .

Speaker #3: Thanks, Andy. I want to close the call with some additional comments on our company and the industry. The commodity outlook has shifted meaningfully since the start of the year with both current and future oil prices now well above the assumptions embedded in our customers' initial 2026 budgets.

Andy Hendricks: Thanks, Andy. I want to close the call with some additional comments on our company and the industry. The commodity outlook has shifted meaningfully since the start of the year, with both current and future oil prices now well above the assumptions embedded in our customers' initial 2026 budgets. While many customers remain cautious in the near term, we are seeing a clear change in market tone, including more discussions around rig reactivations, stronger completion demand, and improving pricing across our businesses. Taken together, we have much more clarity on the market direction, and these dynamics point to a more constructive environment for activity and profitability. For Patterson-UTI, even as we expect industry drilling and completion activity to inflect higher, we will continue to invest in our strategic initiatives to improve returns.

Speaker #4: Other revenue was $6 million for the quarter , with adjusted gross profit of $3 million . For the second quarter . We expect other adjusted gross profit to be approximately $5 million .

Andy Smith: For Q2, we expect other adjusted gross profit to be approximately $5 million. General and administrative expenses in Q1 were $69 million. For Q2, we expect G&A to be approximately $67 million. On a consolidated basis in Q1, depreciation, depletion, amortization, and impairment expense totaled $218 million. For Q2, we expect it to be approximately $220 million. During Q1, total CapEx was $117 million, including $54 million in drilling services, $45 million in completion services, $16 million in drilling products, and $1 million in other and corporate. We ended Q1 with $337 million in cash on hand and nothing drawn on our $500 million revolving credit facility. We have no senior note maturities until 2028.

Andrew Smith: For Q2, we expect other adjusted gross profit to be approximately $5 million. General and administrative expenses in Q1 were $69 million. For Q2, we expect G&A to be approximately $67 million. On a consolidated basis in Q1, depreciation, depletion, amortization, and impairment expense totaled $218 million. For Q2, we expect it to be approximately $220 million. During Q1, total CapEx was $117 million, including $54 million in drilling services, $45 million in completion services, $16 million in drilling products, and $1 million in other and corporate. We ended Q1 with $337 million in cash on hand and nothing drawn on our $500 million revolving credit facility. We have no senior note maturities until 2028.

Speaker #3: While many customers remain cautious in the near term, we are seeing a clear change in market tone. Including more discussions around rig reactivations, stronger completion demand, and improving pricing across our businesses.

Speaker #4: General and administrative expenses in the first quarter were $69 million . For the second quarter , we expect G&A to be approximately $67 million on a consolidated basis in the first quarter .

Speaker #3: Taken together, we have much more clarity on the market direction, and these dynamics point to a more constructive environment for activity and profitability. For Patterson UTI, even as we expect industry drilling and completion activity to inflect higher, we will continue to invest in our strategic initiatives to improve returns.

Speaker #4: Depreciation , depletion and amortization and impairment expense totaled $218 million for the second quarter . We expect it to be approximately $220 million during the first quarter .

Speaker #4: Total CapEx was $117 million , including $54 million in drilling services , $45 million in completion services , $16 million in drilling products , and $1 million in other in corporate .

Speaker #3: In completions, we will continue to favor technology investments over investing in our older cold-stacked equipment and investing in a measured pace into new assets that should generate stronger returns over multiple years.

Andy Hendricks: In completions, we will continue to favor technology investments over investing in our older cold stacked equipment and investing at a measured pace into new assets that should generate stronger returns over multiple years. In drilling, we are executing a disciplined cadence of structural upgrades to support deeper wells and longer laterals, consistent with where customer demand is trending. Digital and AI investments remain central to our strategy and are embedded across all of our operations. With the changing market sentiment, we believe that technology upgrades will be well supported through favorable contractual structures to support accretive returns. Finally, while the macro environment has changed, our corporate priorities have not. We remain focused on generating durable returns and sustainable free cash flow through the cycle while returning capital to shareholders.

Speaker #4: We ended the first quarter with $337 million of cash on hand and nothing drawn on our $500 million revolving credit facility . We have no senior note maturities until 2028 .

Speaker #3: In drilling, we are executing a disciplined cadence of structural upgrades to support deeper wells and longer laterals, consistent with where customer demand is trending.

Andy Smith: Our board has approved a quarterly dividend of $0.10 per share, payable 15 June to shareholders of record as of 1 June. I'll now turn it back to Andy Hendricks for closing remarks.

Andrew Smith: Our board has approved a quarterly dividend of $0.10 per share, payable 15 June to shareholders of record as of 1 June. I'll now turn it back to William Andrew Hendricks Jr. for closing remarks.

Speaker #4: Our board has approved a quarterly dividend of $0.10 per share , payable June 15th to shareholders of record as of June 1st . I'll now turn it back to Andy Hendricks for closing remarks .

Speaker #3: Digital and AI investments remain central to our strategy and are embedded across all of our operations. And with the changing market sentiment, we believe that technology upgrades will be well supported through favorable contractual structures to support accretive returns.

Andy Hendricks: Thanks, Andy. I want to close the call with some additional comments on our company and the industry. The commodity outlook has shifted meaningfully since the start of the year, with both current and future oil prices now well above the assumptions embedded in our customers' initial 2026 budget. While many customers remain cautious in the near term, we are seeing a clear change in market tone, including more discussions around rig reactivations, stronger completion demand, and improving pricing across our businesses. Taken together, we have much more clarity on the market direction, and these dynamics point to a more constructive environment for activity and profitability. For Patterson-UTI, even as we expect industry drilling and completion activity to inflect higher, we will continue to invest in our strategic initiatives to improve returns.

William Andrew Hendricks Jr.: Thanks, Andrew Smith. I want to close the call with some additional comments on our company and the industry. The commodity outlook has shifted meaningfully since the start of the year, with both current and future oil prices now well above the assumptions embedded in our customers' initial 2026 budget. While many customers remain cautious in the near term, we are seeing a clear change in market tone, including more discussions around rig reactivations, stronger completion demand, and improving pricing across our businesses. Taken together, we have much more clarity on the market direction, and these dynamics point to a more constructive environment for activity and profitability. For Patterson-UTI, even as we expect industry drilling and completion activity to inflect higher, we will continue to invest in our strategic initiatives to improve returns.

Speaker #3: Thanks , Andy . I want to close the call with some additional comments on our company and the industry . The commodity outlook has shifted meaningfully since the start of the year , with both current and future oil prices now well above the assumptions embedded in our customers Initial 2026 budgets .

Speaker #3: Finally, while the macro environment has changed, our corporate priorities have not. We remain focused on generating durable returns and sustainable free cash flow through the cycle.

Speaker #3: While many customers remain cautious in the near term , we are seeing a clear change in market tone , including more discussions around rig Reactivations , stronger completion demand and improving pricing across our businesses .

Speaker #3: While returning capital to shareholders, our balance sheet remains strong and we expect to deliver another solid year of free cash flow in 2026. As we evaluate opportunities to deploy capital, we will remain disciplined and prioritize investments that offer the highest return potential.

Andy Hendricks: Our balance sheet remains strong, and we expect to deliver another solid year of free cash flow in 2026. As we evaluate opportunities to deploy capital, we will remain disciplined and prioritize investments that offer the highest return potential. With that, I'd like to thank the men and women of Patterson-UTI who work hard every day to help provide energy to the world. Abby, could you please open the lines for the questions?

Speaker #3: Taken together, we have much more clarity on the market direction, and these dynamics point to a more constructive environment for activity and profitability.

Speaker #3: With that, I'd like to thank the men and women of Patterson UTI who work hard every day to help provide energy to the world.

Speaker #3: For Paterson , UT . Even as we expect industry drilling and completion activity to inflect higher . We will continue to invest in our strategic initiatives to improve returns in completions .

Speaker #3: Abby, could you please open the lines for the questions?

Speaker #1: Yes, thank you. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

Operator: Yes, thank you. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, press star 1 a second time. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to 1 question and 1 follow-up. Again, it is star 1 to join the queue. Our first question comes from the line of Saurabh Pant with Bank of America. Your line is open.

Andy Hendricks: In Completions, we will continue to favor technology investments over investing in our older cold stacked equipment and investing at a measured pace into new assets that should generate stronger returns over multiple years. In Drilling, we are executing a disciplined cadence of structural upgrades to support deeper wells and longer laterals, consistent with where customer demand is trending. Digital and AI investments remain central to our strategy and are embedded across all of our operations. With the changing market sentiment, we believe that technology upgrades will be well supported through favorable contractual structures to support accretive returns. Finally, while the macro environment has changed, our corporate priorities have not. We remain focused on generating durable returns and sustainable free cash flow through the cycle while returning capital to shareholders. Our balance sheet remains strong, and we expect to deliver another solid year of free cash flow in 2026.

William Andrew Hendricks Jr.: In Completions, we will continue to favor technology investments over investing in our older cold stacked equipment and investing at a measured pace into new assets that should generate stronger returns over multiple years. In Drilling, we are executing a disciplined cadence of structural upgrades to support deeper wells and longer laterals, consistent with where customer demand is trending. Digital and AI investments remain central to our strategy and are embedded across all of our operations. With the changing market sentiment, we believe that technology upgrades will be well supported through favorable contractual structures to support accretive returns. Finally, while the macro environment has changed, our corporate priorities have not. We remain focused on generating durable returns and sustainable free cash flow through the cycle while returning capital to shareholders. Our balance sheet remains strong, and we expect to deliver another solid year of free cash flow in 2026.

Speaker #3: We will continue to favor technology investments over investing in our older , cold stacked equipment and investing at a measured pace into new assets that should generate stronger returns over multiple years .

Speaker #1: If you'd like to withdraw your question, press star one a second time. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker #3: In drilling , we are executing a disciplined cadence of structural upgrades to support deeper wells and longer laterals , consistent with where customers , customer demand is trending .

Speaker #1: To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one to join the queue.

Speaker #3: Digital and AI investments remain central to our strategy and are embedded across all of our operations . And with the changing market sentiment , we believe that technology upgrades will be well supported through favorable contractual structures to support accretive returns Finally , while the macro environment has changed , our corporate priorities , have not .

Speaker #1: And our first question comes from the line of Saurabh Pant with Bank of America. Your line is open.

Speaker #4: Hi, good morning, Andy and Andy.

Saurabh Pant: Hi, good morning, Andy and Andy.

Speaker #5: Morning, Saurabh.

Andy Hendricks: Morning, Saurabh.

Speaker #4: Andy, I think your inbox is going to be full of resumes by the end of the day. After listening to your first opening statement.

Saurabh Pant: Andy, I think your inbox is gonna be full of resumes by the end of the day, after listening to your first opening statement. I guess, Andy, what I was getting at is, clearly it sounds like the initial leg of the upside is being driven by the private completion of DUC, which makes all the sense, like you said, right? That's how the cycle begins. Already we are talking about Patterson saying they are pretty much sold out on active equipment. Halliburton said the same day, same thing. Liberty kind of saying the same thing, right? How are the public, right, maybe help us think about how are the public thinking about when they want to add activity, how much they want to add activity, if they want to add activity, right?

Speaker #3: We remain focused on generating durable returns and sustainable free cash flow through the cycle . While returning capital to shareholders . Our balance sheet remains strong and we expect to deliver another solid year of free cash flow in 2026 .

Speaker #4: But I guess, Andy, what I was getting at is clearly it sounds like the initial leg of the upside is being driven by the private completion of ducts which makes all the sense like you said, right?

Andy Hendricks: As we evaluate opportunities to deploy capital, we will remain disciplined and prioritize investments that offer the highest return potential. With that, I'd like to thank the men and women of Patterson-UTI who work hard every day to help provide energy to the world. Abby, could you please open the lines for the questions?

William Andrew Hendricks Jr.: As we evaluate opportunities to deploy capital, we will remain disciplined and prioritize investments that offer the highest return potential. With that, I'd like to thank the men and women of Patterson-UTI who work hard every day to help provide energy to the world. Abby, could you please open the lines for the questions?

Speaker #3: As we evaluate opportunities to deploy capital , we will remain disciplined and prioritize investments that offer the highest return potential . With that , I'd like to thank the men and women of Patterson , UT , who work hard every day to help provide energy to the world Abby , could you please open the lines for the questions

Speaker #4: That's how the cycle begins. But already we are talking about Patterson saying we are pretty much sold out on active equipment, Halliburton said the same day, same thing.

Speaker #4: Liberty kind of saying the same thing, right? So how are the public, right, maybe help us think about how are the public thinking about when they want to add activity, how much they want to add activity, if they want to add activity, right?

Operator 2: Yes. Thank you. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, press star one a second time. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one to join the queue. Our first question comes from the line of Saurabh Parmar with Bank of America. Your line is open.

Operator: Yes. Thank you. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, press star one a second time. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one to join the queue. Our first question comes from the line of Saurabh Pant with Bank of America. Your line is open.

Speaker #1: Yes. Thank you. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

Speaker #4: And at that stage, what would the supply side of the equation look like? How much equipment, how much capacity we would have, or not have on the sideline ready to come back maybe both on the rig and the stack side if you can talk to that?

Saurabh Pant: At that stage, what would the supply side of the equation look like? How much equipment, how much capacity we would have or not have, on the sideline ready to come back, maybe both on the rig and the frac side, if you can talk to that.

Speaker #1: If you'd like to withdraw your question , press star one a second time . If you're called upon to ask your question and are listening via speakerphone on your device , please pick up your handset and ensure that your phone is not on mute .

Speaker #5: Okay. Let me see where I can start. So to begin with, we're really excited about the opportunity to put drilling rigs back to work.

Andy Hendricks: Okay, let me see where I can start. To begin with, we're really excited about the opportunity to put drilling rigs back to work. Like I mentioned earlier, we think we'll be somewhere between 92 to 95 rigs as we exit the quarter based on timing of when things go out. You know, that's gonna lead to higher completions demand as everybody understands over time. The interesting challenge that we have in the industry, as we've said, you know, we're sold out of our top-tier equipment. We're essentially sold out of everything that can burn natural gas. We certainly will see a demand for more capacity as we, you know, move through the year. Before we start adding more capacity, we're gonna be very focused on returns and trying to improve pricing where we can.

Speaker #1: When asking your question . To be able to take as many questions as possible , we ask that you please limit yourself to one question and one follow up Again , it is star one to join the queue .

Speaker #5: And like I mentioned earlier, we think we'll be somewhere between 92 to 95 rigs as we exit the quarter based on timing of when things go out.

Speaker #5: That's going to lead to higher completions demand as everybody understands over time. The interesting challenge that we have in the industry as we've said, we're sold out of our top-tier equipment.

Speaker #1: And our first question comes from the line of Saurabh Pant with Bank of America . Your line is open

Saurabh Parmar: Hi. Good morning, Andy and Andy.

Saurabh Pant: Hi. Good morning, Andrew Hendricks and Andrew Smith.

Speaker #5: Hi . Good morning , Andy and Andy .

Andy Hendricks: Morning, Saurabh.

William Andrew Hendricks Jr.: Morning, Saurabh.

Speaker #3: Morning , Rob .

Saurabh Parmar: Andy, I think your inbox is going to be full of resumes by the end of the day, after listening to your first opening statement. I guess, Andy, what I was getting at is, clearly it sounds like the initial leg of the upside is being driven by the private completion of DUC, which makes all the sense, like you said, right? That's how the cycle begins. Already we are talking about Patterson saying we are pretty much sold out on active equipment. Halliburton said the same day, same thing. Liberty kind of saying the same thing, right? How are the publics, right? Maybe help us think about how are the publics thinking about when they want to add activity, how much they want to add activity, if they want to add activity, right?

Saurabh Pant: Andrew Hendricks, I think your inbox is going to be full of resumes by the end of the day, after listening to your first opening statement. I guess, Andrew Hendricksy, what I was getting at is, clearly it sounds like the initial leg of the upside is being driven by the private completion of DUC, which makes all the sense, like you said, right? That's how the cycle begins. Already we are talking about Patterson saying we are pretty much sold out on active equipment. Halliburton said the same day, same thing. Liberty kind of saying the same thing, right? How are the publics, right? Maybe help us think about how are the publics thinking about when they want to add activity, how much they want to add activity, if they want to add activity, right?

Speaker #5: Andy , I think your inbox is going to be full of resumes by the end of the day After listening to your first opening statement , but I guess , Andy , what I was getting at is clearly it sounds like the initial leg of the leg of the upside is being driven by the private completion of docs , which makes all the sense , like you said , right ?

Speaker #5: We're essentially sold out of everything that can burn natural gas. And we certainly will see a demand for more capacity as we move through the year.

Speaker #5: But before we start adding more capacity, we're going to be very focused on returns and trying to improve pricing where we can. And we'll be continuing to discussions that we're already having with a number of our customers on what that pricing should look like given the tightness in the market and given the demand.

Andy Hendricks: We'll be continuing the discussions that we're already having, with a number of our customers on, you know, what that pricing should look like given the tightness in the market and given the demand. You'll see instances, you know, over time, potentially of where, you know, there's some trading of customers within the market. We're gonna work on improving pricing, improving returns before we start adding capacity. I think that's really critically important, especially given how pricing and completions has been pushed down over the last couple of years. It's important for us, important for our shareholders, for us to improve the returns where we can before we start bringing more capacity onto the market in the completion side.

Speaker #5: That's how the cycle begins. But already we are talking about Paris and saying we are pretty much sold out. An active equipment.

Speaker #5: Halliburton said the same day , same thing . Liberty kind of saying the same thing , right ? So how are the public's right ?

Speaker #5: And you'll see instances over time, potentially of where there's some trading of customers within the market. And we're going to work on improving pricing and improving returns before we start adding capacity.

Speaker #5: Maybe help us think about how the public's thinking about when they want to add activity . How much they want to add activity , if they want to add activity , right ?

Saurabh Parmar: At that stage, what would the supply side of the equation look like? How much equipment, how much capacity we would have or not have, on the sideline, ready to come back, maybe both on the rig and the stack side, if you can talk to that?

Saurabh Pant: At that stage, what would the supply side of the equation look like? How much equipment, how much capacity we would have or not have, on the sideline, ready to come back, maybe both on the rig and the stack side, if you can talk to that?

Speaker #5: And at that stage , what would the supply side of the equation look like ? How much equipment , how much capacity we would have or not have on the sideline ready to come back ?

Speaker #5: I think that's really critically important, especially given how pricing and completions has been pushed down over the last couple of years. And so it's important for us, important for our shareholders for us to improve the returns where we can before we start bringing more capacity onto the market and the completion side.

Speaker #5: Maybe both on the rig and the stack side , if you can talk to that

Andy Hendricks: Okay. Let me see where I can start. To begin with, we're really excited about the opportunity to put drilling rigs back to work. Like I mentioned earlier, we think we'll be somewhere between 92 to 95 rigs as we exit the quarter based on timing of when things go out. That's going to lead to higher completions demand, as everybody understands, over time. The interesting challenge that we have in the industry, as we've said, we're sold out of our top-tier equipment. We're essentially sold out of everything that can burn natural gas. We certainly will see a demand for more capacity as we move through the year. Before we start adding more capacity, we're going to be very focused on returns and trying to improve pricing where we can.

William Andrew Hendricks Jr.: Okay. Let me see where I can start. To begin with, we're really excited about the opportunity to put drilling rigs back to work. Like I mentioned earlier, we think we'll be somewhere between 92 to 95 rigs as we exit the quarter based on timing of when things go out. That's going to lead to higher completions demand, as everybody understands, over time. The interesting challenge that we have in the industry, as we've said, we're sold out of our top-tier equipment. We're essentially sold out of everything that can burn natural gas. We certainly will see a demand for more capacity as we move through the year. Before we start adding more capacity, we're going to be very focused on returns and trying to improve pricing where we can.

Speaker #3: Okay , let me see where I can start . So to begin with , we're really excited about the opportunity to put drilling rigs back to work .

Speaker #3: And like I mentioned earlier , we think will be somewhere between 92 to 95 rigs as we exit the quarter . Based on timing of when things go out .

Speaker #4: Right. No, that makes a ton of sense, Andy, right? And I'm glad your peers are taking the same approach, right? You've got a fixed pricing first and then we'll talk about bringing capacity.

Saurabh Pant: Right. No, that makes a ton of sense, Andy, right? I'm glad your peers are taking the same approach, right? We've got to fix pricing first, and then we'll talk about bringing capacity. That's, that's fantastic. My follow-up, Andy, is on just the way pricing would work, right? On the rig side, there's a contract book you have. What does the contract duration look like? How quickly can we expect higher pricing to show up in your numbers just based on your contract book? Same thing on the frac side. How should we think about pricing reopeners, three months, six months, or are there still sufficient number of annual contracts where pricing would take time to reset?

Speaker #4: So that's fantastic. And then my follow-up, Andy, is on just the way pricing would work, right, on the rig side. There's a contract book you have.

Speaker #3: You know , that's that's going to lead to higher completions demand as everybody understands over time . The interesting challenge that we have in the industry , as we've said , you know , we're sold out of our top tier equipment .

Speaker #4: But what does the contract duration look like? How quickly can we expect higher pricing to show up in your numbers? Just based on your contract book and then same thing on the stack side.

Speaker #3: We're essentially sold out of everything that can burn natural gas . And we certainly will see a demand for for more capacity as as we , you know , move through the year .

Speaker #4: How should we think about pricing reopeners three months, six months, or are there still sufficient number of annual contracts where pricing would take time to reset?

Speaker #3: But before we start adding more capacity, we're going to be very focused on returns and trying to improve pricing where we can.

Speaker #5: Yeah, I think the best way I can describe the pricing situation on the rig side is when we did the last quarterly conference call, we said leading edge was in kind of the low 30s and that'd been down from the mid to low 30s.

Andy Hendricks: Yeah, I think the best way I can describe the pricing situation on the rig side is when we did the last quarterly conference call, you know, we said leading edge was in kind of the low 30s, and that had been down from the mid to low 30s. I think what we're seeing today is pricing that is starting to move up from the low 30s. I mean, I'm not ready to call, you know, mid to low 30s, but it's definitely moving up from the low 30s at the leading edge with everything fully loaded on the drilling rig. We're excited about that. The other piece is, as we get these requests for these technology upgrades on the drilling rigs, be it structural, be it digital, you know, that leads to an investment, and it's going to require a term contract.

Andy Hendricks: We'll be continuing the discussions that we're already having with a number of our customers on what that pricing should look like given the tightness in the market and given the demand. You'll see instances over time, potentially of where there's some trading of customers within the market. We're going to work on improving pricing, improving returns before we start adding capacity. I think that's really critically important, especially given how pricing and completions has been pushed down over the last couple of years. It's important for us, important for our shareholders, for us to improve the returns where we can before we start bringing more capacity onto the market in the completion side.

William Andrew Hendricks Jr.: We'll be continuing the discussions that we're already having with a number of our customers on what that pricing should look like given the tightness in the market and given the demand. You'll see instances over time, potentially of where there's some trading of customers within the market. We're going to work on improving pricing, improving returns before we start adding capacity. I think that's really critically important, especially given how pricing and completions has been pushed down over the last couple of years. It's important for us, important for our shareholders, for us to improve the returns where we can before we start bringing more capacity onto the market in the completion side.

Speaker #3: And we'll be continuing the discussions that we're already having with a number of our customers on , you know , what that pricing should look like given the tightness in the market and given the demand .

Speaker #5: I think what we're seeing today is pricing that is starting to move up from the low 30s. I mean, I'm not ready to call mid to low 30s, but it's definitely moving up from the low 30s at the leading edge with everything fully loaded on the drilling rig.

Speaker #3: And you'll see instances , you know , over time , potentially of where , you know , there's some trading of customers within the market and we're going to work on improving pricing , improving returns before we start adding capacity .

Speaker #5: And so we're excited about that. And the other piece is as we get these requests for these technology upgrades on the drilling rigs, be it structural, be it digital, that leads to an investment and it's going to require term contracts.

Speaker #3: I think that's really critically important , especially given how pricing and completions has been pushed down over the last couple of years . And so , you know , it's important for us , important for our shareholders , for us to improve the returns where we can before we start bringing more capacity onto the market and the completion side

Speaker #5: And we're hearing favorable commentary from our customers that they're willing to do that as well. And so that'll lock in those returns for the investments that we have to make.

Andy Hendricks: We're hearing favorable commentary from our customers that they're willing to do that as well. That'll lock in those returns for the investments that we have to make. We are seeing leading edge pricing on drilling rigs starting to move up. On the frac side, you know, we're in discussions with the customers today. We have anecdotal evidence out there where some of the customers have already given us 10% price increases. I think, you know, that's relatively small compared to, you know, how completions has been pushed down over the last couple of years. I think that, you know, given the tightness in the market, certainly from our side and what we hear from competitors, that, you know, pricing will move up towards the end of this year.

Saurabh Parmar: Right. No, that makes a ton of sense, Andy. I'm glad your peers are taking the same approach, right? We've got to fix pricing first, and then we'll talk about bringing capacity. That's fantastic. My follow-up, Andy, is on just the way pricing would work. On the rig side, there's a contract book you have. What does the contract duration look like? How quickly can we expect higher pricing to show up in your numbers just based on your contract book? Same thing on the frac side. How should we think about pricing reopeners? Three months, six months, or are there still sufficient number of annual contracts where pricing would take time to reset?

Saurabh Pant: That makes a ton of sense, Andy. I'm glad your peers are taking the same approach, right? We've got to fix pricing first, and then we'll talk about bringing capacity. That's fantastic. My follow-up, Andrew Hendricks, is on just the way pricing would work. On the rig side, there's a contract book you have. What does the contract duration look like? How quickly can we expect higher pricing to show up in your numbers just based on your contract book? Same thing on the frac side. How should we think about pricing reopeners? Three months, six months, or are there still sufficient number of annual contracts where pricing would take time to reset?

Speaker #5: Right now , that makes a ton of sense . Andy . Right . And I'm glad your peers are taking the same approach .

Speaker #5: But we are seeing leading edge pricing on drilling rigs starting to move up. On the frac side, we're in discussions with the customers today.

Speaker #5: Right . We've got a fixed pricing first and then we'll talk about bringing capacity . So that's that's fantastic . And then my follow up , Andy is on just the way pricing would work right .

Speaker #5: We have anecdotal evidence out there. Some of the customers have already given us 10% price increases. I think that's relatively small compared to how completions has been pushed down over the last couple of years.

Speaker #5: On the rig side , there's a contract book . You have . How what does the contract duration look like ? How quickly can we expect higher pricing to show up in your numbers just based on your contract book ?

Speaker #5: And then same thing on the track side . How should we think about pricing ? Reopening three months , six months ? Or are there still sufficient number of annual contracts where pricing would take time to reset ?

Speaker #5: But I think that given the tightness in the market, certainly from our side and what we hear from competitors, that pricing will move up towards the end of this year throughout.

Andy Hendricks: Yeah. I think the best way I can describe the pricing situation on the rig side is when we did the last quarterly conference call, we said leading edge was in kind of the low thirties, and that had been down from the mid to low thirties. I think what we're seeing today is pricing that is starting to move up from the low thirties. I'm not ready to call mid to low thirties, but it's definitely moving up from the low thirties at the leading edge with everything fully loaded on the drilling rig. We're excited about that. The other piece is, as we get these requests for these technology upgrades on the drilling rigs, be it structural, be it digital, that leads to an investment and it's going to require a term contract.

William Andrew Hendricks Jr.: I think the best way I can describe the pricing situation on the rig side is when we did the last quarterly conference call, we said leading edge was in kind of the low thirties, and that had been down from the mid to low thirties. I think what we're seeing today is pricing that is starting to move up from the low thirties. I'm not ready to call mid to low thirties, but it's definitely moving up from the low thirties at the leading edge with everything fully loaded on the drilling rig. We're excited about that. The other piece is, as we get these requests for these technology upgrades on the drilling rigs, be it structural, be it digital, that leads to an investment and it's going to require a term contract.

Andy Hendricks: You know, it'll move up steadily over the next, you know, months through the end of the year.

Speaker #5: It'll move up steadily over the next months through the end of the year.

Speaker #3: Yeah , I think the best way I can describe the pricing situation on the rig side is when we did the last quarterly conference call , you know , we said leading Edge was in kind of the low 30s , and that had been down from the mid to low 30s .

Speaker #4: Got it. Got it. And Andy, just to clarify very quickly, majority of your frac contracts are on three-month, six-month kind of pricing reopeners. Is that right?

Saurabh Pant: Got it. Got it. Andy, just to clarify very quickly, majority of your frac contracts are on three-month, six-month kind of pricing reopeners. Is that right?

Speaker #3: I think what we're seeing today is pricing that is starting to move up from the low 30s. I mean, I'm not ready to call.

Speaker #5: It's a bit of a mix. And we have some spot work in the second quarter. We do have some contracts that are longer term where the pricing only resets every six months for some very large customers.

Andy Hendricks: It's a bit of a mix. We have some spot work in Q2. You know, we do have some contracts that are longer term, where the pricing only resets every 6 months for some very large customers. That's okay. We're happy to work for those customers. We've got some customers where you revisit it as frequently as every month. We've got a mix.

Speaker #3: You know , mid to low 30s . But it's definitely moving up from the low 30s 30s at the leading edge with everything fully loaded on the drilling rig .

Speaker #5: And that's okay. We're happy to work for those customers. And we've got some customers where you revisit it as frequently as every month. So we've got a mix.

Speaker #3: And so we're excited about that . And the other piece is as we get these requests for these technology upgrades on the drilling rigs , be it structural , be it digital , you know , that leads to an investment and it's going to require a term contract .

Speaker #4: I got it. I got it. Okay. Fantastic. Okay, Andy, thanks for those answers. I'll turn it back.

Saurabh Pant: I got it. I got it. Okay, fantastic. Okay, Andy, thanks for those answers. I'll turn it back.

Speaker #5: Thanks, Rob.

Andy Hendricks: Thanks, Rob.

Andy Hendricks: We're hearing favorable commentary from our customers that they're willing to do that as well. That'll lock in those returns for the investments that we have to make. We are seeing leading-edge pricing on drilling rigs starting to move up. On the frac side, we're in discussions with the customers today. We have anecdotal evidence out there where some of the customers have already given us 10% price increases. I think that's relatively small compared to how completions has been pushed down over the last couple of years. I think that, given the tightness in the market, certainly from our side and what we hear from competitors, that pricing will move up towards the end of this year. It'll move up steadily over the next months through the end of the year.

William Andrew Hendricks Jr.: We're hearing favorable commentary from our customers that they're willing to do that as well. That'll lock in those returns for the investments that we have to make. We are seeing leading-edge pricing on drilling rigs starting to move up. On the frac side, we're in discussions with the customers today. We have anecdotal evidence out there where some of the customers have already given us 10% price increases. I think that's relatively small compared to how completions has been pushed down over the last couple of years. I think that, given the tightness in the market, certainly from our side and what we hear from competitors, that pricing will move up towards the end of this year. It'll move up steadily over the next months through the end of the year.

Speaker #3: And we're hearing favorable commentary from our customers that they're willing to do that as well. And so that'll lock in those returns for the investments that we have to make.

Speaker #6: And our next question comes from the line of Derek Podhazer with Piper Sandler, your line is open.

Operator: Our next question comes from the line of Derek Podhaizer with Piper Sandler. Your line is open.

Derek Podhaizer: Hey, good morning. Maybe a first question on the rig supply. I think on the website you're at 88 rigs today. You're talking about upwards of adding 7 rigs by the end of the quarter. Just wanted to see how immaterial those expenses are to get those rigs back to work, and maybe how many more rigs would you have behind that would require, you know, real capital investments and all the upgrades you're talking about, deeper wells, longer laterals. I'm just trying to think through putting upward pressure on that low 30s day rate towards the mid-30s or even into the mid to high 30s like we saw last cycle, just thinking on a rig by rig basis and how the required capital cost would be to bring certain rigs back maybe after, you know, these 7 or these 10.

Speaker #4: Hey, good morning. Maybe a first question on the rig supply. So I think on the website, you're at 88 rigs today. You're talking about upwards of adding seven rigs by the end of the quarter.

Speaker #3: But we are seeing leading edge pricing on drilling rigs starting to move up on the frac side . You know , we're in discussions with the customers today .

Speaker #4: Just wanted to see how immaterial those expenses are to get those rigs back to work. And maybe how many more rigs would you have behind that that were required real capital investments and all the upgrades you're talking about, deeper wells, longer laterals?

Speaker #3: We have anecdotal evidence out there where some of the customers have already given us 10% price increases . I think , you know , that's relatively small compared to , you know , how completions has been pushed down over the last couple of years .

Speaker #4: I'm just trying to think through putting upward pressure on that low 30s day rate towards the mid 30s or even into the mid to high 30s like we saw last cycle.

Speaker #3: But I think that , you know , given the tightness in the market , certainly from our side and what we hear from competitors that , you pricing will move up towards the end of this year throughout , you know , it'll move up steadily over the next , few know months through through the end of the year

Speaker #4: Just thinking on a rig-by-rig basis and how the required capital cost would be to bring certain rigs back maybe after these seven or these 10, just maybe some thoughts around that.

Saurabh Parmar: Got it. Just to clarify very quickly, majority of your frack contracts are on 3-month, 6-month kind of pricing reopeners. Is that right?

Saurabh Pant: Got it. Just to clarify very quickly, majority of your frack contracts are on 3-month, 6-month kind of pricing reopeners. Is that right?

Speaker #5: Got it , got it . And just to clarify very quickly , majority of your contracts are on three month , six month kind of pricing .

Derek Podhaizer: Just maybe some thoughts around that.

Speaker #5: Sure. I think that to start with, for the rigs that are going back to work, they haven't it hasn't been too long ago that they put them back to work.

Andy Hendricks: Sure. I think that, to start with, the rigs that are going back to work, you know, it hasn't been too long ago that they were working, but there are some costs incurred to put them back to work. You know, from an accounting standpoint, we even have to, you know, capitalize some of the mobilizations too, and we've got some rigs that are moving in different parts of the country. That's, puts us at around $5 million in CapEx just to get everything back to work and put a number of rigs out, you know, through the end of Q2 and into Q3. You know, it's just the way we account for it, but we also get revenue back from that.

Speaker #5: Is that is that right

Andy Hendricks: It's a bit of a mix, and we have some spot work in the Q2. We do have some contracts that are longer term where the pricing only resets every six months for some very large customers, and that's okay. We're happy to work for those customers. We've got some customers where you revisit it as frequently as every month. We've got a mix.

William Andrew Hendricks Jr.: It's a bit of a mix, and we have some spot work in the Q2. We do have some contracts that are longer term where the pricing only resets every six months for some very large customers, and that's okay. We're happy to work for those customers. We've got some customers where you revisit it as frequently as every month. We've got a mix.

Speaker #3: It's a bit of a mix, and we have some spot work in the second quarter. You know, we do have some contracts that are longer term, where the pricing only resets every six months for some very large customers.

Speaker #5: From an accounting standpoint, we even have to capitalize some of the mobilizations too. And we've got some rigs that are moving in different parts of the country.

Speaker #3: And that's okay. We're happy to work for those customers. And we've got some customers where you revisit it as frequently as every month.

Speaker #5: And so that puts us at around 5 million in capex just to get everything back to work and put a number of rigs out through the end of the second quarter and into the third.

Speaker #3: So we've got a mix .

Saurabh Parmar: I got it. Okay, fantastic. Okay, Andy, thanks for those answers. I'll turn it back.

Saurabh Pant: I got it. Okay, fantastic. Okay, Andrew Hendricks, thanks for those answers. I'll turn it back.

Speaker #5: I got it , I got it . Okay , fantastic . Okay , Andy , thanks for those answers . I'll turn it back

Andy Hendricks: Thanks, Rob.

William Andrew Hendricks Jr.: Thanks, Saurabh.

Speaker #3: Thanks , Rob

Operator 2: Our next question comes from the line of Derek Podhaizer with Piper Sandler. Your line is open.

Operator: Our next question comes from the line of Derek Podhaizer with Piper Sandler. Your line is open.

Speaker #5: So it's just the way we account for it. But we also get revenue back from that. We get paid for the mobilizations too, but it comes through the capex line, as well.

Speaker #1: And our next question comes from the line of Derek Podhorzer with Piper Sandler . Your line is open

Andy Hendricks: You know, we get paid for the mobilizations too, but it comes through the CapEx line as well. As we move forward through the year, for some of the structural upgrades, we think that we have a relatively low cost solution for a number of our customers out there. You know, it could be in the range of just a few million dollars, and we can see paybacks, you know, in a year and a half on some of that, depending on the day rates that we get, and we'll lock that into term contracts. That'll start to push the day rates higher. You know, I've said this before a number of times. When we get into the large structural upgrades that we do, you know, the CapEx costs are significantly higher.

Derek Podhaizer: Hey. Good morning. Maybe a first question on the rig supply. I think on the website you're at 88 rigs today. You're talking about upwards of adding 7 rigs by the end of the quarter. Just wanted to see how immaterial those expenses are to get those rigs back to work. Maybe how many more rigs would you have behind that would require real capital investments and all the upgrades you're talking about, deeper wells, longer laterals. I'm just trying to think through putting upward pressure on that low 30s day rate towards the mid-30s or even into the mid- to high 30s like we saw last cycle, just thinking on a rig-by-rig basis and how the required capital cost would be to bring certain rigs back, maybe after these 7 or these 10. Just maybe some thoughts around that.

Speaker #6: Hey . Good morning . Maybe a first question on on the rig supply . So I think on the website , you're at 88 rigs today .

Speaker #5: As we move forward through the year, for some of the structural upgrades, we think that we have a relatively low-cost solution for a number of our customers out there.

Speaker #6: You're talking about upwards of adding seven rigs by the end of the quarter . Just wanted to see how those expenses are to get those rigs back to work .

Speaker #5: And it could be in the range of just a few million dollars. And we can see paybacks in a year, year and a half on some of that, depending on the day rates that we get.

Speaker #6: And maybe how many more rigs did you have ? Would you have behind that that were require , you know , real capital investments and all the upgrades you're talking about deeper wells , longer laterals .

Speaker #5: And we'll lock that into term contracts. And that'll start to push the day rates higher. I've said this before a number of times. When we get into the large structural upgrades, that we do, the capex costs are significantly higher.

Speaker #6: I'm just trying to think through putting upward pressure on that low 30 day rate towards the mid 30s or even into the mid to high 30s , like we saw last cycle .

Speaker #6: Just thinking on a rig by rig basis and how the , the required capital costs would be to bring certain rigs back , maybe after , you know , these seven or these ten , just maybe some thoughts around that

Speaker #5: When you look at the apex XC plus rigs that we have working in the field today, which went through a large upgrade process, those day rates are pushing $40,000 a day.

Andy Hendricks: When you look at, you know, the APEX-XC+ rigs that we have working in the field today, which went through a large upgrade process, you know, those day rates are pushing $40,000 a day. I think that in the market that we're in, we will be exceeding $40,000 a day towards the end of this year and early next year with those types of large structural upgrades.

Andy Hendricks: Sure. I think that to start with, for the rigs that are going back to work, it hasn't been too long ago that they were working, but there are some costs incurred to put them back to work. From an accounting standpoint, we even have to capitalize some of the mobilizations too. We've got some rigs that are moving in different parts of the country. That puts us at around $5 million in CapEx just to get everything back to work and put a number of rigs out through the end of Q2 and into Q3. It's just the way we account for it, but we also get revenue back from that. We get paid for the mobilizations too, but it comes through the CapEx line as well.

William Andrew Hendricks Jr.: Sure. I think that to start with, for the rigs that are going back to work, it hasn't been too long ago that they were working, but there are some costs incurred to put them back to work. From an accounting standpoint, we even have to capitalize some of the mobilizations too. We've got some rigs that are moving in different parts of the country. That puts us at around $5 million in CapEx just to get everything back to work and put a number of rigs out through the end of Q2 and into Q3. It's just the way we account for it, but we also get revenue back from that. We get paid for the mobilizations too, but it comes through the CapEx line as well.

Speaker #3: Sure . I think that to start with , for the rigs that are going back to work , you know , they haven't it hasn't been too long ago that they were working , but there are some costs incurred to put them back to work .

Speaker #5: And I think that in the market that we're in, we will be exceeding $40,000 a day towards the end of this year and early next year.

Speaker #5: With those types of large structural upgrades.

Speaker #3: You know , from an accounting standpoint . We even have to , you know , capitalize some of the mobilizations to and we've got some rigs that are moving in different parts of the country .

Speaker #4: Got it. Okay. Great. That's super helpful. I guess on the frac side, I know you've talked about that you're effectively sold out. It's going to take a lot to bring equipment off the fence, just given its legacy diesel.

Derek Podhaizer: Got it. Okay, great. That's super helpful. I guess on the frac side, I know you've talked about that you're effectively sold out. It's gonna take a lot to bring equipment off the fence just given its legacy diesel. Maybe talk to the white space in the calendar in Q2. Has that been fully soaked up? How is H2 firming up as far as, you know, your current frac equipment? Just trying to think through what needs to happen on your current active fleet as far as white space being soaked up for the remainder of the calendar year before you would consider adding incremental new builds or equipment into this market, understanding that's likely gonna be next-gen 100% natural gas type of equipment.

Speaker #3: And so, that puts us at around $5 million in CapEx just to get everything back to work, and put a number of rigs out, you know, through the end of the second quarter and into the third.

Speaker #4: But maybe talk to the white space in the calendar in two queue. Has that been fully soaked up? How is second half firming up as far as your current frac equipment?

Speaker #3: So , you know , it's just the way we account for it . But we also get revenue back from that . You know , we get paid for the mobilizations too , but it comes through CapEx line as well as we move forward through the year for some of the structural upgrades , we think that we have a relatively low cost solution for a number of our customers out there .

Speaker #4: Just trying to think through what needs to happen on your current active fleet, as far as white space being soaked up for the remainder of the calendar year, before you would consider adding incremental new builds or equipment into this market, understanding that's likely going to be next-gen 100% natural gas type of equipment.

Andy Hendricks: As we move forward through the year, for some of the structural upgrades, we think that we have a relatively low-cost solution for a number of our customers out there. It could be in the range of just a few million dollars, and we can see paybacks in a year and a half on some of that, depending on the day rates that we get, and we'll lock that into term contracts. That'll start to push the day rates higher. I've said this before a number of times, when we get into the large structural upgrades that we do, the CapEx costs are significantly higher. When you look at the APEX XC+ rigs that we have working in the field today, which went through a large upgrade process, those day rates are pushing $40,000 a day.

William Andrew Hendricks Jr.: As we move forward through the year, for some of the structural upgrades, we think that we have a relatively low-cost solution for a number of our customers out there. It could be in the range of just a few million dollars, and we can see paybacks in a year and a half on some of that, depending on the day rates that we get, and we'll lock that into term contracts. That'll start to push the day rates higher. I've said this before a number of times, when we get into the large structural upgrades that we do, the CapEx costs are significantly higher. When you look at the APEX XC+ rigs that we have working in the field today, which went through a large upgrade process, those day rates are pushing $40,000 a day.

Speaker #3: You know , it could be in the range of just a few million dollars , and we can see paybacks . You know , in a year , year and a half on some of that , depending on the day rates that we get .

Speaker #5: Yeah. This has been a very dynamic situation. So I can tell you as of last week, there was some white space in the calendar.

Andy Hendricks: Yeah. This has been a very dynamic situation. I can tell you as of last week, you know, there was some white space in the calendar that I think a lot of people wouldn't have understood given commodity prices today. As of 2 days ago, we've basically filled the majority of that white space. Hats off to the team in completions in working with the customers to fill that up. We see for completions that, you know, Q2 is really kind of a transitory quarter, not quite the inflection that we're seeing in drilling, that inflection in completion comes right after that. You know, we feel like as of today that we're fully loaded in Q3.

Speaker #5: That I think a lot of people wouldn't have understood, given commodity prices today. But as of two days ago, we've basically filled the majority of that white space.

Speaker #3: And we'll lock that into term contracts . And that'll start to push the day rates higher . You know , I've said this before a number of times when we get into the large structural upgrades that we do , you know , the CapEx costs are significantly higher .

Speaker #5: So hats off to the team in completions and working with the customers to fill that up. And we see for completions that the second quarter is really kind of a transitory quarter.

Speaker #3: When you look at , you know , the apex XC plus rigs that we have working in the field today , which went through a large upgrade process , you know , those day rates are pushing $40,000 a day .

Speaker #5: Not quite the inflection that we're seeing in drilling, but then that inflection in completion comes right after that. And we feel like as of today that we're fully loaded in the third quarter.

Andy Hendricks: I think that in the market that we're in, we will be exceeding $40,000 a day towards the end of this year and early next year with those types of large structural upgrades.

William Andrew Hendricks Jr.: I think that in the market that we're in, we will be exceeding $40,000 a day towards the end of this year and early next year with those types of large structural upgrades.

Speaker #3: And I think that in the market that we're in , we will be exceeding $40,000 a day towards the end of this year and early next year with those types of large structural upgrades .

Speaker #5: So I'm really pleased with what the team's doing, how they're working with the customers, how they've loaded up the calendar. In the second quarter, considering how the overall US rig count has continued to come down, but we looking past the second quarter and into the third, without getting in the numbers, we feel like we're fully loaded in the third quarter.

Andy Hendricks: I'm really pleased with what the team's doing, how they're working with the customers, how they've loaded up the calendar in the Q2, you know, considering how the overall US rig count has continued to come down. We, you know, looking past the Q2 and into the Q3, without getting into numbers, we feel like we're fully loaded in the Q3.

Derek Podhaizer: Got it. Okay, great. That's super helpful. I guess on the frac side, I know you've talked about that you're effectively sold out. It's gonna take a lot to bring equipment off the fence just given its legacy diesel. Maybe talk to the white space in the calendar in Q2. Has that been fully soaked up? How is H2 firming up as far as your current frac equipment? Just trying to think through what needs to happen on your current active fleet as far as white space being soaked up for the remainder of the calendar year before you would consider adding incremental new builds or equipment into this market, understanding that's likely gonna be next-gen 100% natural gas type of equipment.

Speaker #6: Got it . Okay , great . That's super helpful . I guess on the track side , I know you've talked about that .

Speaker #6: You're effectively sold out . It's going to take a lot to bring equipment off the fence just given its legacy . Diesel . Maybe talk to the white space in the calendar in two .

Speaker #6: Q has that been fully soaked up ? How is second half firming up as far as you know , your current track equipment ?

Speaker #4: Great. Very helpful, Andy. I'll turn it back.

Derek Podhaizer: Great. Very helpful, Andy. I'll turn it back.

Speaker #6: I'm just trying to think through what needs to happen on your current active fleet as far as white space being soaked up for the remainder of the calendar year before you would consider adding incremental new builds or equipment into the market—understanding that it's likely going to be next-gen, 100% natural gas type of equipment.

Speaker #5: Thanks, Derek.

Andy Hendricks: Thanks, Derek.

Speaker #6: And our next question comes from the line of Jim Rollyson with Raymond James, your line is open.

Operator: Our next question comes from the line of Jim Rollyson with Raymond James. Your line is open.

Speaker #7: Hey, good morning, Andy and everyone. Andy, as you kind of look at this, you've been through a lot of cycles, seen a lot of these inflections.

Jim Rollyson: Hey. Good morning, Andy and everyone.

Andy Hendricks: Good morning, Jim.

Jim Rollyson: Andy, as you kind of look at this, you've been through a lot of cycles, seen a lot of these inflections.

Andy Hendricks: Yeah, this has been a very dynamic situation. I can tell you as of last week, there was some white space in the calendar that I think a lot of people wouldn't have understood given commodity prices today. As of two days ago, we've basically filled the majority of that white space. Hats off to the team in completions and working with the customers to fill that up. We see for completions that Q2 is really kind of a transitory quarter, not quite the inflection that we're seeing in drilling, but then that inflection in completion comes right after that. We feel like as of today, that we're fully loaded in Q3.

William Andrew Hendricks Jr.: Yeah, this has been a very dynamic situation. I can tell you as of last week, there was some white space in the calendar that I think a lot of people wouldn't have understood given commodity prices today. As of two days ago, we've basically filled the majority of that white space. Hats off to the team in completions and working with the customers to fill that up. We see for completions that Q2 is really kind of a transitory quarter, not quite the inflection that we're seeing in drilling, but then that inflection in completion comes right after that. We feel like as of today, that we're fully loaded in Q3.

Speaker #3: Yeah , this has been a very dynamic situation . So I can tell you , as of last week , you know , there was some white space in the calendar that I think a lot of people wouldn't have understood given commodity prices today .

Andy Hendricks: Thanks a lot, Jim.

Jim Rollyson: Curious, not calling you old, just experienced. Just I'm curious, how are you thinking about this, you know, as we go through the next couple of years? You've been talking among others about how tight the market is underlying in frac for a while, beyond just the fleet count numbers and all that. I'm curious how you think the odds of getting all your pricing back to kind of where you were 2, 3 years ago. I'm also curious, given what you guys have been doing on the cost side over the last couple of years, how does that translate into margins relative to right after next year close, you were kind of low 20s EBITDA margins in completion services.

Speaker #7: I'm curious. Not calling you old, just experienced. I'm curious, how are you thinking about this? As we go through the next couple of years, you've been talking among others about how tight the market is underlying in frac.

Speaker #3: But as of two days ago , we've , you know , basically filled the majority of that , that white space . So hats off to the team and completions and working with the customers to fill that up .

Speaker #7: For a while. Beyond just the fleet count numbers and all that. And I'm curious how you think about getting all your pricing back to kind of where you were two, three years ago.

Speaker #3: And we see for completions that , you know , the second quarter is really kind of a transitory quarter , not quite the inflection that we're seeing in drilling .

Speaker #7: And I'm also curious, given what you guys have been doing on the cost side over the last couple of years, how does that translate into margins relative to right after next year, close, you're kind of low 20s, EBITDA margins and completion services.

Speaker #3: But then that inflection and completion comes , right after that . And , you know , we feel like as of today that we're fully loaded in the third quarter .

Speaker #7: I'm just trying to connect the dots here to see where we might think margins trend over the next couple of years.

Jim Rollyson: I'm just trying to connect the dots here to see, you know, where we might think margins trend over the next couple of years.

Andy Hendricks: I'm really pleased with what the team's doing, how they're working with the customers, how they've loaded up the calendar in Q2, considering how the overall US rig count has continued to come down. Looking past Q2 and into Q3, without getting into numbers, we feel like we're fully loaded in Q3.

William Andrew Hendricks Jr.: I'm really pleased with what the team's doing, how they're working with the customers, how they've loaded up the calendar in Q2, considering how the overall US rig count has continued to come down. Looking past Q2 and into Q3, without getting into numbers, we feel like we're fully loaded in Q3.

Speaker #3: So I'm really pleased with what the team's doing , how they're working with the customers , how they how they've loaded up the calendar in the second quarter .

Speaker #5: Okay. So a few things on completions and how it's going to play out in terms of margins. And what are we going to do based on the tightness in the market?

Andy Hendricks: Okay. you know, a few things on completions and the, you know, how it's gonna play out in terms of margins and what are we gonna do based on the tightness in the market. You know, what's important for us right now is to try to constructively work with our customer base to get the pricing back in line for where we are in the market. You know, like I've mentioned, we've been pushed down in the completions pricing for the last couple years and, you know, for the shareholders, we need to get the returns back to a reasonable level. You know, while we're still generating good cash flow, there's still an opportunity to get the returns higher, and we wanna do that before we start adding capacity.

Speaker #3: You know , considering how the overall U.S. rig count has , has continued to come down . But we , you know , looking past the second quarter and into the third without getting into numbers , we feel like we're fully loaded in the third quarter .

Speaker #5: What's important for us right now is to try to constructively work with our customer base to get the pricing back in line for where we are in the market.

Derek Podhaizer: Great. Very helpful, Andy. I'll turn it back.

Derek Podhaizer: Great. Very helpful, Andrew Hendricks. I'll turn it back.

Speaker #6: Great. Very helpful, Andy. I'll turn it back.

Andy Hendricks: Thanks, Derek.

William Andrew Hendricks Jr.: Thanks, Derek.

Speaker #3: Thanks , Derek

Operator 2: Our next question comes from the line of James Rolinson with Raymond James. Your line is open.

Operator: Our next question comes from the line of Jim Rollyson with Raymond James. Your line is open.

Speaker #5: Like I've mentioned, we've been pushed down in the completions pricing for the last couple of years. And for the shareholders, we need to get the returns back to a reasonable level.

Speaker #1: And our next question comes from the line of Jim Rawlinson with Raymond James . Your line is open .

James Rolinson: Hey, good morning, Andy and everyone.

Jim Rollyson: Hey, good morning, Andrew Hendricks, and everyone.

Speaker #7: Hey . Good morning , Andy and everyone . As you kind of look at this , you've you've been through a lot of cycles , seen a lot of these inflections .

Andy Hendricks: Good morning, Jim.

William Andrew Hendricks Jr.: Good morning, Jim.

Jim Rollyson: Andrew Hendricks, as you kind of look at this, you've been through a lot of cycles, seen a lot of these inflections.

James Rolinson: Andy, as you kind of look at this, you've been through a lot of cycles, seen a lot of these inflections.

Speaker #5: And so while we're still generating good cash flow, there's still an opportunity to get the returns higher. And we want to do that before we start adding capacity.

Andy Hendricks: Thanks a lot, Jim.

William Andrew Hendricks Jr.: Thanks a lot, Jim.

Speaker #7: Thanks a lot . I'm curious not calling you old . Just experienced just I'm curious , how are you thinking about this as we go through the next couple of years ?

James Rolinson: Not calling you old, just experienced. I'm curious, how are you thinking about this as we go through the next couple of years? You've been talking, among others, about how tight the market is underlying in frack for a while, beyond just the fleet count numbers and all that. I'm curious how you think the odds of getting all your pricing back to where you were two, three years ago. I'm also curious, given what you guys have been doing on the cost side over the last couple of years, how does that translate into margins relative to right after next year? Close, you're kind of low twenties EBITDA margins in completion services. I'm just trying to connect the dots here to see where we might think margins trend over the next couple of years.

Jim Rollyson: Not calling you old, just experienced. I'm curious, how are you thinking about this as we go through the next couple of years? You've been talking, among others, about how tight the market is underlying in frack for a while, beyond just the fleet count numbers and all that. I'm curious how you think the odds of getting all your pricing back to where you were two, three years ago. I'm also curious, given what you guys have been doing on the cost side over the last couple of years, how does that translate into margins relative to right after next year? Close, you're kind of low twenties EBITDA margins in completion services. I'm just trying to connect the dots here to see where we might think margins trend over the next couple of years.

Speaker #5: Now, at the same time, throughout this year, we've been adding the new Emerald pumps that are 100% natural gas burning pumps. And really excited about the uptake in the market.

Andy Hendricks: Now, at the same time, you know, throughout this year, we've been adding the new Emerald pumps that are 100% natural gas-burning pumps, and really excited about the uptake in the market. These pumps are really spoken for with various customers even before they show up in our own inventory. So, you know, it's been a measured pace to bring those out, and when we do bring those out, it starts to improve our pricing and returns as we introduce those into the various fleets. But we don't wanna add significant capacity to the market, until we can structurally really kinda, you know, try to, you know, move the pricing up back to where we think it needs to be to get our returns.

Speaker #7: You've been talking among others , about how tight the market is underlying and frack for a while beyond just the fleet count numbers and all that .

Speaker #5: These pumps are really spoken for with various customers, even before they show up in our own inventory. And so it's been a measured pace to bring those out.

Speaker #7: And I'm curious how you think of odds of getting all your pricing back to kind of where you were two , three years ago .

Speaker #7: And I'm also curious , given what you guys have been doing on the cost side over the last couple of years , how does that translate into margins relative to like right after next year , close ?

Speaker #5: And when we do bring those out, it starts to improve our pricing and returns as we introduce those into the various fleets. But we don't want to add significant capacity to the market until we can structurally really kind of try to move the pricing up back to where we think it needs to be to get our returns.

Speaker #7: You're kind of low 20s EBITDA margins and completion services . I'm just trying to put connect the dots here to see where we might think margins trend over the next couple of years .

Andy Hendricks: Okay. A few things on completions and how it's going to play out in terms of margins, and what are we going to do based on the tightness in the market. What's important for us right now is to try to constructively work with our customer base to get the pricing back in line for where we are in the market. Like I've mentioned, we've been pushed down in the completions pricing for the last couple of years. For the shareholders, we need to get the returns back to a reasonable level. While we're still generating good cash flow, there's still an opportunity to get the returns higher. We want to do that before we start adding capacity.

William Andrew Hendricks Jr.: Okay. A few things on completions and how it's going to play out in terms of margins, and what are we going to do based on the tightness in the market. What's important for us right now is to try to constructively work with our customer base to get the pricing back in line for where we are in the market. Like I've mentioned, we've been pushed down in the completions pricing for the last couple of years. For the shareholders, we need to get the returns back to a reasonable level. While we're still generating good cash flow, there's still an opportunity to get the returns higher. We want to do that before we start adding capacity.

Speaker #3: Okay , so you know , a few things on completions and you know , how how it's going to play out in terms of margins and what are we going to do based on the tightness in the market ?

Speaker #5: Now, on the positive side, to be able to do this, as I've said, we also hear that a number of our competitors are near sold out too.

Andy Hendricks: Now on the positive side, to be able to do this, you know, as I have said, you know, we also hear that a number of our competitors are near sold out too. You know, with all the consolidation we have seen in the completions market over the last five years, it's just structurally in a better place. While we are all still competitive, I think there's a, you know, a measured level of discipline in that market too to try to improve that market for our shareholders before we start adding capacity.

Speaker #5: And with all the consolidation we've seen in the completions market over the last five years, it's just structurally in a better place. And so while we're all still competitive, I think there's a measured level of discipline in that market too to try to improve that market for our shareholders before we start adding capacity.

Speaker #3: You know, what's important for us right now is to try to constructively work with our customer base to get the pricing back in line for where we are in the market.

Speaker #3: You know , like I've mentioned , we've been pushed down in the completions pricing for the last couple of years . And , you know , for the shareholders , we need to get the returns back to a reasonable level .

Speaker #4: Makes sense. And as I think about CapEx, you guys obviously set a budget. At the beginning of the year, which was kind of implying a down year as we're all expecting.

Jim Rollyson: Makes sense. As I think about CapEx, you guys obviously set a budget at the beginning of the year, which was kind of, you know, implying a down year as we're all expecting, and things have changed. I'm just curious how you think about incremental capital to the budget. It's obviously returns driven, but just, you know, the order of magnitude so we can kind of think about that as this starts to inflect the other direction.

Speaker #3: And so , you know , while we're still generating good cash flow , there's still an opportunity to get the returns higher . And we want to do that before we start adding capacity .

Andy Hendricks: Now, at the same time, throughout this year, we've been adding the new Emerald pumps that are 100% natural gas burning pumps and really excited about the uptake in the market. These pumps are really spoken for with various customers, even before they show up in our own inventory. It's been a measured pace to bring those out. When we do bring those out, it starts to improve our pricing and returns as we introduce those into the various fleets. We don't want to add significant capacity to the market until we can structurally really try to move the pricing up back to where we think it needs to be to get our returns. Now, on the positive side, to be able to do this, as I've said, we also hear that a number of our competitors are near sold out too.

William Andrew Hendricks Jr.: Now, at the same time, throughout this year, we've been adding the new Emerald pumps that are 100% natural gas burning pumps and really excited about the uptake in the market. These pumps are really spoken for with various customers, even before they show up in our own inventory. It's been a measured pace to bring those out. When we do bring those out, it starts to improve our pricing and returns as we introduce those into the various fleets. We don't want to add significant capacity to the market until we can structurally really try to move the pricing up back to where we think it needs to be to get our returns. Now, on the positive side, to be able to do this, as I've said, we also hear that a number of our competitors are near sold out too.

Speaker #3: Now at the same time , you know , throughout this year , we've been adding the , the new emerald pumps that are 100% natural gas burning pumps and really excited about the uptake in the market .

Speaker #4: And things have changed. I'm just curious how you think about incremental capital to the budget. It's obviously returns driven, but just order of magnitude so we can kind of think about that as this starts to inflect the other direction.

Speaker #3: These pumps are really spoken for with various customers , even before they show up in our own inventory . And so , you know , it's been a measured pace to bring those out .

Speaker #7: Yeah. Hey, Jim, this is Andy. We're kind of, again, on the front edges of this and certainly the conditions, the market conditions that we're in today look remarkably different than what we looked in during our budget cycle.

C. Andrew Smith: Yeah. Hey, Jim, this is Andy. I don't, you know, we're kind of, again, on the front edges of this and certainly the conditions, the market conditions that we're in today look remarkably different than what we looked in during our budget cycle.

Speaker #3: And when we do bring those out , it starts to improve our pricing and returns as we introduce those into the various fleets .

Jim Rollyson: Yep.

Speaker #7: So we're looking at it. I don't really have anything to give you right now, but I will say that we're looking at places where we think there could be opportunity and opportunity to maybe lean into what we think is going to be a pretty strong price environment.

C. Andrew Smith: We're looking at it. I don't really have anything to give you right now, but I will say that we're looking at places where we think there could be opportunity and opportunity to maybe, you know, lean into what we think is gonna be a pretty strong price environment.

Speaker #3: But we don't want to add significant capacity to the market . Until we can structurally really kind of , you know , try to , you know , move the pricing up back to where we think it needs to be to get our returns .

Speaker #3: Now , on the positive side , to be able to do this , you know , as I've said , you know , we also hear that a number of our competitors are near sold out to .

Speaker #4: Yep. Makes perfect sense. Thank you, guys.

Jim Rollyson: Yep, makes perfect sense. Thank you, guys.

Speaker #7: Thanks.

C. Andrew Smith: Thanks.

Andy Hendricks: Thanks.

Speaker #5: Thanks.

Andy Hendricks: With all the consolidation we've seen in the completions market over the last five years, it's just structurally in a better place. While we're all still competitive, I think there's a measured level of discipline in that market too, to try to improve that market for our shareholders before we start adding capacity.

William Andrew Hendricks Jr.: With all the consolidation we've seen in the completions market over the last five years, it's just structurally in a better place. While we're all still competitive, I think there's a measured level of discipline in that market too, to try to improve that market for our shareholders before we start adding capacity.

Speaker #6: And our next question comes from the line of Scott Gruber with Citigroup, your line is open.

Speaker #3: And , you know , with all the consolidation we've seen in the completions market over the last five years , it's just structurally in a better place .

Operator: Our next question comes from the line of Scott Gruber with Citigroup. Your line is open.

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

Speaker #8: Hey, good morning, Andy and Andy.

Speaker #3: And so while we're still competitive , I think there's a , you know , a , a measured level of discipline in that market to , to try to improve that market for our shareholders before we start adding capacity

Speaker #5: Hey, good morning.

Andy Hendricks: Hey, good morning.

Speaker #8: I want to stay on the frac pricing discussion, kind of topic du jour here. I want to dig in a little deeper just because historically, the frac pricing discussion was kind of a simple generalized one.

Scott Gruber: I wanna stay on the frac pricing discussion, kind of topic du jour here. I wanna dig in a little deeper just 'cause historically the frac pricing discussion was kind of a simple generalized one. Today there's so much more differentiation in the fleet. It's really a stratified fleet. A couple questions just thinking through how pricing could evolve from here. I guess to set kind of an upside scenario is probably not unreasonable to discuss today. Kind of ballpark how much incremental pricing would you need to see on the direct drive and e-frac to support new builds that reflect fleet expansion and not just replacements?

James Rolinson: Makes sense. As I think about CapEx, you guys obviously set a budget at the beginning of the year, which was kind of implying a down year as we're all expecting and things have changed. I'm just curious how you think about incremental capital to the budget. It's obviously returns driven, but just the order of magnitude so we can kind of think about that as this starts to inflect the other direction.

Jim Rollyson: Makes sense. As I think about CapEx, you guys obviously set a budget at the beginning of the year, which was kind of implying a down year as we're all expecting and things have changed. I'm just curious how you think about incremental capital to the budget. It's obviously returns driven, but just the order of magnitude so we can kind of think about that as this starts to inflect the other direction.

Speaker #7: Makes sense . And I think about CapEx , you guys obviously set a budget at the beginning of the year , which was kind of , you know , implying a down year was we were all expecting and things have changed .

Speaker #8: But today, there's so much more differentiation in the fleet. It's really a stratified fleet. So a couple of questions just thinking through how pricing can evolve from here I guess to set kind of an upside scenario is probably not unreasonable to discuss today.

Speaker #7: I'm just curious how you think about incremental capital to the budget . It's obviously returns driven , but just , you know , order of magnitude .

Speaker #8: But kind of ballpark, how much incremental pricing would you need to see on the direct drive and e-frac to support new builds that reflect fleet expansion and not just replacement?

Speaker #7: So we can kind of think about that as this starts to inflect the other direction .

Andy Smith: Yeah. Hey, Jim, this is Andy. We're kind of, again, on the front edges of this, and certainly the market conditions that we're in today look remarkably different than what we looked in during our budget cycle.

Andrew Smith: Yeah. Hey, Jim, this is Andrew Smith. We're kind of, again, on the front edges of this, and certainly the market conditions that we're in today look remarkably different than what we looked in during our budget cycle.

Speaker #4: Yeah . Hey , Jim , this is Andy . I don't , you know , we're , we're kind of again , on the front edges of this and certainly the , the conditions , the market conditions that we're in today .

Speaker #5: I think when we look at how we're deploying the new Emerald direct drive systems for 100% natural gas, into our existing fleet, the economics for that are actually very good.

Andy Hendricks: I think when we look at how we're deploying the new Emerald direct drive systems for 100% natural gas into our existing fleet, the economics for that are actually very good. The way we're pricing those and bringing them in are very good. It's equipment that we've had out there under contract or under agreements for the last year or so that we really need to bring that up to a level overall. We need to get our average up. It's not really about what we're getting for the new technology that we're putting out there. I think that's working really well, and I think we're getting the returns that we want out of that. I'm more concerned about what we're getting in the overall averages.

Speaker #4: Look remarkably different than what we looked in during our budget cycle . So we're looking at it . I don't really have anything to give you right now , but I will say that we're looking at places where we think there could be opportunity and opportunity to , to maybe , you know , lean into what we think is going to be a pretty strong price environment .

James Rolinson: Yep.

Jim Rollyson: Yep.

Andy Smith: We're looking at it. I don't really have anything to give you right now, but I will say that we're looking at places where we think there could be opportunity to maybe lean into what we think is going to be a pretty strong price environment.

Andrew Smith: We're looking at it. I don't really have anything to give you right now, but I will say that we're looking at places where we think there could be opportunity to maybe lean into what we think is going to be a pretty strong price environment.

Speaker #5: And the way we're pricing those and bringing them in are very good. But it's equipment that we've had out there under contract or under agreements for the last year or so, that we really need to bring that up to a level overall.

Speaker #5: So we need to get our average up. It's not really about what we're getting for the new technology that we're putting out there. I think that's working really well.

James Rolinson: Yep, makes perfect sense. Thank you, guys.

Jim Rollyson: Makes perfect sense. Thank you, guys.

Speaker #7: Yep. Makes perfect sense. Thank you, guys.

Andy Smith: Thanks.

Andrew Smith: Thanks.

Andy Hendricks: Thanks.

William Andrew Hendricks Jr.: Thanks.

Speaker #3: Thanks . Thanks

Operator 2: Our next question comes from the line of Scott Gruber with Citigroup. Your line is open.

Operator: Our next question comes from the line of Scott Gruber with Citigroup. Your line is open.

Speaker #1: And our next question comes from the line of Scott Gruber with Citigroup . Your line is open

Speaker #5: And I think we're getting the returns that we want out of that. And I'm more concerned about what we're getting in the overall averages.

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

Scott Gruber: Hey, good morning, Andrew Hendricks and Andrew Smith.

Speaker #7: Hey , good morning .

Speaker #8: Andy and Andy .

Andy Hendricks: Good morning.

William Andrew Hendricks Jr.: Good morning.

Speaker #5: And I think that we're entering a very tight market for completions. As I've said for a while and for a few quarters, we've been sold out of our everything that can burn natural gas.

Andy Hendricks: I think that, you know, we're entering a very tight market for completions. You know, as I've said for a while and for a few quarters, we've been sold out of our, you know, everything that can burn natural gas. Overall, the industry's about to enter a very tight market for completions, and I think that bodes well for all of us trying to get our returns up to acceptable levels. Then we can look at starting to bring in, you know, capacity increases of new technology.

Speaker #3: Hey . Good morning .

Scott Gruber: I want to stay on the frac pricing discussion, kind of topic du jour here. I want to dig in a little deeper, just because historically, the frac pricing discussion was kind of a simple generalized one. Today, there's so much more differentiation in the fleet. It's really a stratified fleet. A couple of questions, just thinking through how pricing could evolve from here. I guess to set kind of an upside scenario is probably not unreasonable to discuss today, but kind of ballpark, how much incremental pricing would you need to see on the direct drive in e-frac to support new builds that reflect fleet expansion and not just replacement?

Speaker #8: I want to stay on the pricing discussion kind of topic du jour here , but I want to dig in a little deeper just because historically the pricing discussion was kind of a simple generalized one , but today there's , there's so much more differentiation in the fleet .

Speaker #5: But overall, the industry's about to enter a very tight market for completions. And I think that bodes well for all of us trying to get our returns up to acceptable levels.

Speaker #8: It's really a stratified fleet . So a couple questions . Just thinking through how pricing could evolve from here . I guess to set kind of an upside scenario , it's probably not unreasonable to discuss today , but kind of ballpark how much incremental pricing would you need to see on the direct drive and ifrach to support new builds that reflect fleet expansion and not just replacement ?

Speaker #5: And then we can look at starting to bring in capacity increases of new technology.

Speaker #7: Yeah. I think the only thing that I would add to that is kind of given where we are in the market right now and the premium that gas-burning equipment gets today, I think we're seeing pricing improvement across the fleet more so, obviously, on the gas-burning stuff.

C. Andrew Smith: Yeah. I think the only thing.

Scott Gruber: Good

C. Andrew Smith: I would add to that is, you know, kind of given where we are in the market right now and the premium that, you know, gas burning equipment gets today, I think, you know, we're seeing pricing improvement across the fleet, more so obviously on the gas burning stuff. As we look at that combined with what is we think, kind of a crystallizing version of the market over the next couple of years, or at least more visibility than we've had, historically, I think, you know, you don't have to see a huge amount of pricing to be able to justify some new builds into this type of a market. You probably still need 5% to 10% additional.

William Andrew Hendricks Jr.: I think when we look at how we're deploying the new Emerald direct drive systems for 100% natural gas into our existing fleet, the economics for that are actually very good. The way we're pricing those and bringing them in are very good. It's equipment that we've had out there under contract or under agreements for the last year or so that we really need to bring that up to a level overall. We need to get our average up. It's not really about what we're getting for the new technology that we're putting out there. I think that's working really well, and I think we're getting the returns that we want out of that. I'm more concerned about what we're getting in the overall averages. I think that we're entering a very tight market for completions.

Speaker #3: I think when we look at how we're deploying the new Emerald Direct drive systems for 100% natural gas into our existing fleet , you know , the economics for that are actually very good .

Speaker #7: And so as we look at that, combined with what is, we think, kind of a crystallizing version of the market over the next couple of years or at least more visibility than we've had historically, I think you don't have to see a huge amount of pricing to be able to justify some new builds into this type of a market.

Speaker #3: And the way we're pricing those and bringing them in are very good . But it's , you know , equipment that we've had out there under contract or under agreements for the last year or so that we really need to bring that up to a level overall .

Speaker #3: So, we need to get our average up. It's not really about what we're getting for the new technology that we're putting out there.

Speaker #7: But you probably still need 5 to 10 percent additional.

Speaker #3: I think that's working really well , and I think we're getting the returns that we want out of that . And you know , I'm more concerned about what we're getting in the overall averages .

Speaker #8: That makes sense. And that's why I was going with next is that gap kind of between the Emerald kit and the dual-fuel kit. I imagine there's a gap between Emerald and Tier 4 dual and a gap between Tier 4 and Tier 2 dual.

Scott Gruber: That makes sense. That's what I was going next, is that gap kind of between the Emerald kit and the dual fuel kit. I imagine there's a gap between Emerald and Tier 4 dual and a gap between, you know, Tier 4 and Tier 2 dual. Any color you can give on those gaps? As pricing improves, do those gaps compress or do they kind of retain and everything kind of goes up because you have the diesel displacement rates kind of sustaining, you know, different economic advantage, you know, across the different type of kit?

Speaker #3: And I think that , you know , we're entering a very tight market for completions . You know , as I've said for a while and for a few quarters , we've been sold out of our , you know , everything that can burn natural gas .

Andy Hendricks: As I've said for a while, and for a few quarters, we've been sold out of everything that can burn natural gas. Overall, the industry's about to enter a very tight market for completions, and I think that bodes well for all of us trying to get our returns up to acceptable levels. We can look at starting to bring in capacity increases of new technology.

William Andrew Hendricks Jr.: As I've said for a while, and for a few quarters, we've been sold out of everything that can burn natural gas. Overall, the industry's about to enter a very tight market for completions, and I think that bodes well for all of us trying to get our returns up to acceptable levels. We can look at starting to bring in capacity increases of new technology.

Speaker #8: Any color you can give on those gaps and as pricing improves, do those gaps compress, or do they kind of retain and everything kind of goes up because you have the diesel displacement rates kind of sustaining different economic advantage across the different type of kit?

Speaker #3: But overall , the industry's about to enter a very tight market for completions . And I think that bodes well for all of us trying to get our returns up to acceptable levels .

Speaker #3: And then we can look at starting to bring in, you know, capacity increases of new technology.

Andy Smith: Yeah. I think the only thing that I would add to that is, kind of given where we are in the market right now and the premium that gas burning equipment gets today, I think we're seeing pricing improvement across the fleet, more so obviously on the gas burning stuff. As we look at that, combined with what is, we think, kind of a crystallizing version of the market over the next couple of years, or at least more visibility than we've had historically. I think you don't have to see a huge amount of pricing to be able to justify some new builds into this type of a market, but you probably still need 5% to 10% additional.

Andrew Smith: Yeah. I think the only thing that I would add to that is, kind of given where we are in the market right now and the premium that gas burning equipment gets today, I think we're seeing pricing improvement across the fleet, more so obviously on the gas burning stuff. As we look at that, combined with what is, we think, kind of a crystallizing version of the market over the next couple of years, or at least more visibility than we've had historically. I think you don't have to see a huge amount of pricing to be able to justify some new builds into this type of a market, but you probably still need 5% to 10% additional.

Speaker #4: Yeah , I think the only thing that I would add to that is , you know , kind of given where we are in the market right now and the premium that , you know , gas burning equipment gets today , I think , you know , we're seeing pricing improvement across the fleet more .

Speaker #5: And you're correct. There is various levels of technology, and there is a pricing differential between those levels of technology. But the market situation that we're about to go in over the next six months is a rising tide that's going to lift all these boats.

Andy Hendricks: You're correct. There is, you know, various levels of technology, and there is a pricing differential between those levels of technology. The market situation that we're about to go in over the next six months is a rising tide that's gonna lift all these boats. You know, the differentiations is still gonna be there, the differential on the pricing is still gonna be there, but overall pricing for all these levels of technology, I expect to move up.

Speaker #4: So obviously on the gas burning stuff . And so as we look at that , combined with what is . We think kind of a crystallizing version of , of the market over the next couple of years , or at least more visibility than we've had historically .

Speaker #5: The differentiation is still going to be there. The differential on the pricing is still going to be there. But overall, pricing for all these levels of technology, I expect to move up.

Speaker #7: Yeah. And again, with the diesel gas spread, I think that while all pricing will move up, you may see the spread between the different levels of equipment widen.

C. Andrew Smith: Yeah. Again, with the diesel gas spread, I think that while all pricing will move up, you may see the spread between the different levels of equipment widen, just in terms of, you know, the cost differential.

Speaker #4: I think, you know, you don't have to see a huge amount of pricing to be able to justify some new builds into this type of a market, but you probably still need 5% to 10% additional.

Speaker #7: Just in terms of the cost differential.

Scott Gruber: That makes sense. That's what I was going next, is that gap kind of between the Emerald kit and the dual fuel kit. I imagine there's a gap between Emerald and Tier 4 dual and a gap between Tier 4 and Tier 2 dual. Any color you can give on those gaps? As pricing improves, do those gaps compress, or do they kind of retain and everything kind of goes up because you have the diesel displacement rates kind of sustaining different economic advantage across the different type of kit?

Speaker #8: That makes sense . That's what I was going next . Is that gap kind of between the Emerald kit and the dual fuel kit ?

Speaker #8: Yeah. So you could see Tier 4 dual rise at a greater rate than Tier 2 is what you're saying?

Scott Gruber: Yeah. You could see like tier 4 dual rise at a greater rate than tier 2, is what you're saying?

Speaker #8: I imagine there's a gap between Emerald and Tir for dual and a gap between , you know , Tir four and tier two dual .

C. Andrew Smith: yes.

Speaker #7: Yes.

Speaker #5: Potentially, yes.

Andy Hendricks: Potentially, yes.

Speaker #8: Yeah. Yeah. Okay. That makes sense. Okay. Thank you. I'll turn it back.

Scott Gruber: Yeah. Yeah. Okay, that makes sense. Okay, thank you. I will turn it back.

Speaker #8: Any color you can give on those gaps . And as pricing improves , do those gaps compress or do they kind of retain in everything kind of goes up because you have the diesel displacement rates kind of sustaining , you know , different economic advantage , you know , across the , the different type of kit

Speaker #6: And our next question comes from the line of Stephen Gengaro with Steeple, your line is open.

Operator: Our next question comes from the line of Stephen Gengaro with Stifel. Your line is open.

Stephen Gengaro: Thank you. Good morning, everybody.

Speaker #9: Thank you. Good morning, everybody.

Speaker #5: Good morning, Stephen.

Andy Hendricks: Good morning, Stephen.

Speaker #9: So two for me. And one is on the same pricing discussion, but when we think about sort of the way the pricing contracts behave given your positive commentary, would you expect to see a strong inflection point in margin in the third quarter for completions, or do you think it's more kind of a smoother increase as you go through the next couple of quarters?

Stephen Gengaro: Two from me, and one is on the same pricing discussion. When we think about sort of the way the pricing contracts behave, you know, given your positive commentary, would you expect to see a strong inflection point in margin in Q3 for completions, or you think it's more as kind of a smoother increase as you go through the next couple of quarters? How should we think about kinda when we see it on the income statement?

Andy Hendricks: You're correct. There is various levels of technology, and there is a pricing differential between those levels of technology. The market situation that we're about to go in over the next six months is a rising tide that's going to lift all these boats. The differentiations is still going to be there. The differential and the pricing is still going to be there. Overall, pricing for all these levels of technology, I expect to move up.

William Andrew Hendricks Jr.: You are correct. There is various levels of technology, and there is a pricing differential between those levels of technology. The market situation that we're about to go in over the next six months is a rising tide that's going to lift all these boats. The differentiations is still going to be there. The differential and the pricing is still going to be there. Overall, pricing for all these levels of technology, I expect to move up.

Speaker #3: You're correct. There is, you know, various levels of technology, and there is a pricing differential between those levels of technology.

Speaker #3: But the market situation that we're about to go in over the next six months is a rising tide that's going to lift all these boats .

Speaker #3: You know , this the differentiation is still going to be there . The differential on the pricing is still going to be there .

Speaker #9: How should we think about kind of when we see it on the income statement?

Speaker #5: I think it's going to be more of a smoother increase in pricing not just over the next two quarters, but into '27 as well.

Andy Hendricks: I think it's gonna be more of a smoother increase in pricing, not just over the next 2 quarters, but into 2027 as well. you know, I think this is gonna be based on, you know, like I said, constructive negotiations with our customers. you know, we're gonna have customers call that wanna increase their capacity. We're gonna have E&Ps call that we don't, you know, maybe not working for today, and it's gonna create new opportunities, and it's gonna create, you know, negotiations with this customer base in general as to, you know, where this equipment goes. this is, this is an interesting market force, but it's, you know, it's one that, you know, we need to do the right thing for our shareholders and improve the returns.

Speaker #3: But overall pricing for all these levels of technology , I expect to move up .

Andy Smith: Yeah. Again, with the diesel gas spread, I think that while all pricing will move up, you may see the spread between the different levels of equipment widen, just in terms of the cost differential.

Andrew Smith: With the diesel gas spread, I think that while all pricing will move up, you may see the spread between the different levels of equipment widen, just in terms of the cost differential.

Speaker #4: Yeah . And again , with the diesel gas spread , I think that while all pricing will move may see the spread between the different levels of equipment widen just in terms of , you know , the the cost differential .

Speaker #5: And I think this is going to be based on, like I said, constructive negotiations with our customers we're going to have customers call that want to increase their capacity.

Scott Gruber: Yeah. You could see Tier 4 dual-fuel rise at a greater rate than Tier 2, is what you're saying?

Scott Gruber: You could see Tier 4 dual-fuel rise at a greater rate than Tier 2, is what you're saying?

Speaker #5: We're going to have EMPs call that we don't maybe not working for today. And it's going to create new opportunities, and it's going to create negotiations with this customer base in general as to where this equipment goes.

Speaker #8: Yeah, so you could see, like, Tier 4 duals rise at a greater rate than Tier 2, is what you're saying.

Andy Smith: Yes.

Andrew Smith: Yes.

Andy Hendricks: Potentially, yes.

William Andrew Hendricks Jr.: Potentially, yes.

Speaker #4: Yes .

Speaker #3: Potentially yes .

Scott Gruber: Yeah. Okay, that makes sense. Okay, thank you. I'll turn it back.

Speaker #8: Yeah . Yeah . Okay . That makes sense . Okay . Thank you . I'll turn it back

Speaker #5: And this is an interesting market for us, but it's one that we need to do the right thing for our shareholders and improve the returns.

Operator 2: Our next question comes from the line of Stephen Gengaro with Stifel. Your line is open.

Operator: Our next question comes from the line of Stephen Gengaro with Stifel. Your line is open.

Speaker #1: In our next question comes from the line of Stephen Guijarro with Stifel . Your line is open .

Speaker #5: And I think it's a steady process to do this over multi-quarters.

Andy Hendricks: I think it's a steady process to do this, you know, over multi quarters.

Stephen Gengaro: Thank you. Good morning, everybody.

Speaker #9: Thank you. Good morning, everybody.

Andy Hendricks: Good morning, Steve.

William Andrew Hendricks Jr.: Good morning, Stephen.

Speaker #3: Good morning Steve .

Stephen Gengaro: Two from me, and one is on the same pricing discussion, but when we think about sort of the way the pricing contracts behave, given your positive commentary, would you expect to see a strong inflection point in margin in Q3 for completions? Or you think it's more as kind of a smoother increase as you go through the next couple quarters? How should we think about kind of when we see it on the income statement?

Speaker #9: So two for me and one is on the same pricing discussion . But when we think about sort of the way the pricing contracts behave , you know , given your positive commentary , would you expect to see a strong inflection point in margin in the third quarter for completions ?

Speaker #9: Okay. Thank you. That's helpful. And the other question I had was when we think about the drilling side and you talked about some of the performance-based and I guess kind of package of products over between completions and drilling, how does that play out in a tighter market?

Stephen Gengaro: Okay. Thank you. That's helpful. The other question I had was when we think about on the drilling side, and you talked about some of the performance-based, and I guess kind of packaging of products over between completions and drilling. How does that play out in a tighter market? Like, is it better for you? Does it give you more opportunity? Do you think a tighter market helps that approach or hurts that approach? How should we think about that?

Speaker #9: Or do you think it's more kind of a smoother increase as you go through the next couple of quarters ? How should we think about kind of when we see it on the income statement ?

Speaker #9: Is it better for you? Does it give you more opportunity? Do you think a tighter market helps that approach or hurts that approach? How should we think about that?

Andy Hendricks: I think it's going to be more of a smoother increase in pricing, not just over the next two quarters, but into 2027 as well. I think this is going to be based on, like I said, constructive negotiations with our customers. We're gonna have customers call that want to increase their capacity. We're gonna have E&Ps call that we don't work with today, and it's going to create new opportunities, and it's going to create negotiations with this customer base in general as to where this equipment goes. This is an interesting market for us, but it's one that we need to do the right thing for our shareholders and improve the returns. I think it's a steady process to do this over multiple quarters.

William Andrew Hendricks Jr.: I think it's going to be more of a smoother increase in pricing, not just over the next two quarters, but into 2027 as well. I think this is going to be based on, like I said, constructive negotiations with our customers. We're gonna have customers call that want to increase their capacity. We're gonna have E&Ps call that we don't work with today, and it's going to create new opportunities, and it's going to create negotiations with this customer base in general as to where this equipment goes. This is an interesting market for us, but it's one that we need to do the right thing for our shareholders and improve the returns. I think it's a steady process to do this over multiple quarters.

Speaker #3: I think it's going to be more of a smoother increase in pricing , not just over the next two quarters , but into 27 as well .

Speaker #5: Yeah. We've actually seen over the last couple of years since we introduced this - and this is our P10 advantage offering that we have for the EMPs - across drilling and completions we've seen challenges because the market was getting softer.

Andy Hendricks: Yeah. We've actually seen over the last couple of years since we introduced this, and this is our P10 Advantage offering that we have for the E&Ps across drilling and completions. We've seen challenges because the market was getting softer. I've actually been in discussions with some, you know, mid-tier operators who say, Look, hey, we may kick off a program, and if we do, we'd like to discuss with you what you can do for us. Because for them at a mid-tier level, expanding their program, they don't necessarily have all the internal resources to do that. If we can help them on the efficiencies across drilling and completions, that's a positive for them. This will be a positive market for expanding that offering.

Speaker #3: And , you know , I think this is going to be based on , you know , like I said , constructive negotiations with our customers .

Speaker #3: You know , we're going to have customers call that want to increase their capacity . We're going to have MPs call that we don't , you know , maybe not working for today .

Speaker #5: But I've actually been in discussions with some mid-tier operators who say, "Look, hey, we may kick off a program, and if we do, we'd like to discuss with you what you can do for us because for them, at a mid-tier level, expanding their program, they don't necessarily have all the internal resources to do that.

Speaker #3: And it's going to create new opportunities and it's going to create , you know , negotiations with this customer base in general as to , you know , where this equipment goes and this is this is an interesting market for us , but it's , you know , it's one that , you know , we need to do the right thing for our shareholders and improve the returns .

Speaker #5: And if we can help them on the efficiencies across drilling and completions, that's a positive for them." So this will be a positive market for expanding that offering.

Speaker #3: And I think it's , it's a steady process to do this , you know , over multiple quarters .

Speaker #5: And I appreciate that you asked the question. Because as some of these mid-sized EMPs look to expand what they're doing they're going to need help, and we are well positioned to help them out.

Andy Hendricks: I appreciate that you asked the question because, you know, as some of these mid-size E&Ps look to expand what they're doing, they're gonna need help, and we are well-positioned to help them out.

Stephen Gengaro: Okay. Thank you. That's helpful. The other question I had was, when we think about on the drilling side, and you talked about some of the performance-based and, I guess, kind of packaging of products over between completions and drilling. How does that play out in a tighter market? Is it better for you? Does it give you more opportunity? Do you think a tighter market helps that approach or hurts that approach? How should we think about that?

Stephen Gengaro: Thank you. That's helpful. The other question I had was, when we think about on the drilling side, and you talked about some of the performance-based and, I guess, kind of packaging of products over between completions and drilling. How does that play out in a tighter market? Is it better for you? Does it give you more opportunity? Do you think a tighter market helps that approach or hurts that approach? How should we think about that?

Speaker #9: Okay . Thank you . That's helpful . And the other question I had was when we think about the on the drilling side , and you talked about some of the performance based and I guess kind of package packaging of products over .

Speaker #9: Excellent. Thank you for the details.

Stephen Gengaro: Excellent. Thank you for the details.

Speaker #6: And our next question comes from the line of Arun Jayaram with JPMorgan, your line is open.

Operator: Our next question comes from the line of Arun Jayaram with J.P. Morgan. Your line is open.

Speaker #9: Between completions and , and drilling . How does that play out in a tighter market ? Like does it , is it better for you ?

Speaker #10: Yeah. Good morning, Andy and team. Andy, you prepared comments suggest that the rig count is going to be trending up 5 to 7 rigs as we think about N2Q.

Arun Jayaram: Yeah. Good morning, Andy and team. Andy, your prepared comments suggest that the rig count is gonna be trending up five to seven rigs as we think about in Q2. I'd love to get a little bit of color on which US shale basins are you seeing that, you know, incremental demand in on the rig side?

Speaker #9: Is it does it give you more opportunity ? Do you think a tighter market helps that approach or hurts that approach ? How should we think about that ?

Andy Hendricks: Yeah, we've actually seen over the last couple of years since we introduced this, and this is our PTEN+ Advantage offering that we have for the E&Ps across drilling and completions. We've seen challenges because the market was getting softer. I've actually been in discussions with some mid-tier operators who say, "Look, hey, we may kick off a program, and if we do, we'd like to discuss with you what you can do for us." Because for them, at a mid-tier level, expanding their program, they don't necessarily have all the internal resources to do that. If we can help them on the efficiencies across drilling and completions, that's a positive for them. This will be a positive market for expanding that offering.

William Andrew Hendricks Jr.: We've actually seen over the last couple of years since we introduced this, and this is our PTEN+ Advantage offering that we have for the E&Ps across drilling and completions. We've seen challenges because the market was getting softer. I've actually been in discussions with some mid-tier operators who say, "Look, hey, we may kick off a program, and if we do, we'd like to discuss with you what you can do for us." Because for them, at a mid-tier level, expanding their program, they don't necessarily have all the internal resources to do that. If we can help them on the efficiencies across drilling and completions, that's a positive for them. This will be a positive market for expanding that offering.

Speaker #3: Yeah, we've actually seen, over the last couple of years since we introduced this—and this is our PTEN Advantage offering that we have for the MPs across drilling and completions.

Speaker #10: I'd love to get a little bit of color on which US shell basins are you seeing that incremental demand in on the rig side?

Speaker #5: Yeah. Interestingly enough, Arun, we're seeing it across multiple basins. So it's not concentrated in any one particular basin. But we've got customers that are in multiple basins looking at the economics that they have.

Andy Hendricks: You know, interestingly enough, Arun, we're seeing it across multiple basins. It's not concentrated in any one particular basin. We've got, you know, customers that are in multiple basins looking at the economics that they have. It's, it's oil, it's gas, it's across the board. It's, it's broad, and that's actually quite encouraging that it's not concentrated into one basin. That means that there's further opportunities, you know, over the next few quarters and past that to expand the rig count as operators, you know, continue to look at their economics.

Speaker #3: You know , we've seen challenges because the market was getting softer . But I've actually been in discussions with some , you know , mid-tier operators who say , look , hey , we may kick off a program and if we do , we'd like to discuss with you what you can do for us .

Speaker #5: It's oil. It's gas. It's across the board. So it's broad, and that's actually quite encouraging that it's not concentrated into one basin. That means that there's further opportunities over the next few quarters and past that to expand the rig count.

Speaker #3: Because for them at a mid-tier level , expanding their program , they don't necessarily have all the internal resources to do that . And if we can help them on the efficiencies across drilling and completion , that's a positive for them .

Speaker #3: So this will be a positive market for expanding that offering . And I appreciate that . You asked the question because , you know , as as some of these mid-size MPs look to expand what they're doing , they're going to need help .

Andy Hendricks: I appreciate that you asked the question because as some of these mid-size E&Ps look to expand what they're doing, they're gonna need help, and we are well-positioned to help them out.

William Andrew Hendricks Jr.: I appreciate that you asked the question because as some of these mid-size E&Ps look to expand what they're doing, they're gonna need help, and we are well-positioned to help them out.

Speaker #5: As operators continue to look at their economics.

Speaker #10: Got it. Got it. And just maybe my follow-up, Andy, you close your prepared remarks talking about evaluating opportunities to deploy capital. You talked a lot about the Emerald Technology 100% natural gas burning engines.

Arun Jayaram: Got it. Got it. Just maybe my follow-up. Andy, you closed your prepared remarks talking about, you know, evaluating opportunities to deploy, you know, capital. You talked a lot about the Emerald technology, the 100% natural gas burning engines. What are you looking for at this point to add that, call it, incremental capacity? Your nameplate's actually going down this year, as you mentioned. What are you looking for in terms of market signals to maybe step up, you know, I think the CapEx guide's around $500 million or less this year. What are you looking for to start, call it deploying some growth capital in terms of the business?

Speaker #3: And we are well positioned to help them out .

Stephen Gengaro: Excellent. Thank you for the details.

Speaker #9: Excellent. Thank you for the details.

Operator 2: Our next question comes from the line of Arun Jayaram with JP Morgan. Your line is open.

Operator: Our next question comes from the line of Arun Jayaram with J.P. Morgan. Your line is open.

Speaker #1: And our next question comes from the line of Arun Jayaram with JP Morgan . Your line is open .

Andy Smith: Yeah. Good morning, Andy and team. Andy, your prepared comments suggest that the rig count is going to be trending up 5 to 7 rigs as we think about in Q2. I'd love to get a little bit of color on which US shale basins are you seeing that incremental demand on the rig side?

Arun Jayaram: Yeah. Good morning, Andrew Hendricks and team. Andrew Hendricks, your prepared comments suggest that the rig count is going to be trending up 5 to 7 rigs as we think about in Q2. I'd love to get a little bit of color on which US shale basins are you seeing that incremental demand on the rig side?

Speaker #10: Yeah . Good morning Andy . And team Andy . You've you're prepared . Comments suggest that the rig count is is going to be trending up 5 to 7 rigs .

Speaker #10: What do you in terms of what are you looking for at this point to add that, call it, incremental capacity? Your name plate's actually going down this year as you mentioned.

Speaker #10: As we think about in Q2, I'd love to get a little bit of color on which of your shale basins are you seeing that?

Speaker #10: But what are you looking for in terms of market signals to maybe step up? I think the CapEx guy's around 500 million or less this year.

Speaker #10: You know , incremental demand and on the right side .

Speaker #10: But what are you looking for to start, call it, deploying some growth capital in terms of the business?

Andy Hendricks: Interestingly enough, Arun, we're seeing it across multiple basins, so it's not concentrated in any one particular basin. We've got customers that are in multiple basins looking at the economics that they have. It's oil, it's gas. It's across the board, so it's broad, and that's actually quite encouraging that it's not concentrated into one basin. That means that there's further opportunities over the next few quarters and past that to expand the rig count as operators continue to look at their economics.

William Andrew Hendricks Jr.: Interestingly enough, Arun, we're seeing it across multiple basins, so it's not concentrated in any one particular basin. We've got customers that are in multiple basins looking at the economics that they have. It's oil, it's gas. It's across the board, so it's broad, and that's actually quite encouraging that it's not concentrated into one basin. That means that there's further opportunities over the next few quarters and past that to expand the rig count as operators continue to look at their economics.

Speaker #3: You know , interestingly enough , Arun , it's we're seeing it across multiple basins . So it's not concentrated in any one particular basin , but we've got , you know , customers that are in multiple basins looking at the economics that they have .

Speaker #5: Yeah. Arun, appreciate the question because as everybody knows, we've been holding back some cash looking for opportunities to deploy that cash. Whether that was through increasing the dividend that we did here recently or buying back shares, which we did last year, and we've also looked at opportunities in M&A as well.

Andy Hendricks: Yeah. Arun, appreciate the question because, you know, as everybody knows, we've been, you know, holding back some cash, looking for opportunities to deploy that cash. You know, whether that was through increasing the dividend that we did here recently or, you know, buying back shares, which we did last year. You know, we've also looked at opportunities in M&A as well.

Speaker #3: It's it's oil . It's gas . It's , it's across the board . So it's , it's broad . And that's actually quite encouraging that it's not concentrated into one basin .

Speaker #3: That means that there's further opportunities , you know , over the next few quarters and pass that to , to expand the rig count as operators , you know , continue to look at their economics .

Andy Hendricks: As this market improves, we now have even further options because, you know, with an increasing activity and the demand that we're seeing on technologies, whether it's on the completion side with Emerald 100% natural gas, or it's on the drilling side with the APEX-XC+ rig that we have, you know, we've gotta evaluate what that looks like from a return standpoint and what we think is the right answer for the shareholders as we start to deploy more capital.

Speaker #5: But as this market improves, we now have even further options because with an increasing activity and the demand that we're seeing on technologies, whether it's on the completion side with Emerald 100% natural gas or it's on the drilling side with the Apex XC Plus rig that we have, we've got to evaluate what that looks like from a return standpoint and what we think is the right answer for the shareholders as we start to deploy more capital.

Arun Jayaram: Got it. Just maybe my follow-up. Andy, you closed your prepared remarks talking about evaluating opportunities to deploy capital. You talked a lot about the Emerald technology, the 100% natural gas-burning engines. In terms of what are you looking for at this point to add that, call it, incremental capacity? Your nameplate's actually going down this year, as you mentioned. What are you looking for in terms of market signals to maybe step up? I think the CapEx guide's around $500 million or less this year, but what are you looking for to start, call it, deploying some growth capital in terms of the business?

Arun Jayaram: Got it. Just maybe my follow-up. Andrew Hendricks, you closed your prepared remarks talking about evaluating opportunities to deploy capital. You talked a lot about the Emerald technology, the 100% natural gas-burning engines. In terms of what are you looking for at this point to add that, call it, incremental capacity? Your nameplate's actually going down this year, as you mentioned. What are you looking for in terms of market signals to maybe step up? I think the CapEx guide's around $500 million or less this year, but what are you looking for to start, call it, deploying some growth capital in terms of the business?

Speaker #10: Got it , got it . And just maybe my follow up , Andy , you close your prepared remarks talking about , you know , evaluating opportunities to deploy , you know , capital .

Speaker #10: You talked a lot about the Emerald technology , the 100% natural gas burning engines . What are you in terms of what are you looking for at this point to add that , call it incremental capacity .

Speaker #10: Great. Thanks a lot.

Arun Jayaram: Great. Thanks a lot.

Speaker #6: And our next question comes from the line of Keith Mackey with RBC Capital Markets, your line is open.

Operator: Our next question comes from the line of Keith Mackey with RBC Capital Markets. Your line is open.

Speaker #10: Your nameplates actually going down this year , as you mentioned , but what are you looking for in terms of market signals to maybe step up ?

Speaker #10: Hey, thanks. And good morning, I think it's pretty rare to have to be talking about termination revenue and rig activation in maybe the same call.

Keith Mackey: Yeah, thanks, and good morning.

Andy Hendricks: Morning.

Keith Mackey: Morning. I think it's pretty rare to have to be talking about termination revenue and reactivation in maybe the same call. Can you just, maybe Andy, walk us through a little bit about those factors? Maybe it's a timing issue on the termination and then, you know, with the rig reactivations, what type of CapEx or OpEx do these rigs need to come back? Is it a matter of increasing specification requests by the on behalf of the operators or any color there would be appreciated?

Speaker #10: You know , I think the CapEx guys around 500 million or less this year , but what are you looking for to start ?

Speaker #10: Can you just maybe, Andy, walk us through a little bit about those factors? Maybe it's a timing issue on the termination, and then with the rig reactivations, what type of CapEx or OpEx do these rigs need to come back?

Speaker #10: Call it deploying some growth capital in terms of the business.

Andy Hendricks: Yeah. Arun, I appreciate the question because, as everybody knows, we've been holding back some cash, looking for opportunity to deploy that cash, whether that was through increasing the dividend that we did here recently or buying back shares, which we did last year. We've also looked at opportunities in M&A as well. As this market improves, we now have even further options. With an increasing activity and the demand that we're seeing on technologies, whether it's on the completion side with Emerald 100% natural gas, or it's on the drilling side with the APEX XC+ rig that we have, we've got to evaluate what that looks like from a return standpoint and what we think is the right answer for the shareholders as we start to deploy more capital.

William Andrew Hendricks Jr.: Arun, I appreciate the question because, as everybody knows, we've been holding back some cash, looking for opportunity to deploy that cash, whether that was through increasing the dividend that we did here recently or buying back shares, which we did last year. We've also looked at opportunities in M&A as well. As this market improves, we now have even further options. With an increasing activity and the demand that we're seeing on technologies, whether it's on the completion side with Emerald 100% natural gas, or it's on the drilling side with the APEX XC+ rig that we have, we've got to evaluate what that looks like from a return standpoint and what we think is the right answer for the shareholders as we start to deploy more capital.

Speaker #3: Yeah . Appreciate the question because you know , as , as everybody knows , we've been , you know , holding back some cash looking for opportunities to deploy that cash .

Speaker #10: Is it a matter of increasing specification requests by the on behalf of the operators, or any color there would be appreciated?

Speaker #3: You know , whether that was through increasing the dividend that we did here recently or , you know , buying back shares , which we did last year .

Speaker #3: And , you know , we've also looked at opportunities in M&A as well . But as this market improves , we now have even further options because , you know , with an increasing activity and the demand that we're seeing on technologies , whether it's on the completion side with 100% natural gas or it's on the drilling side with the apex XC plus rig that we have , you know , we've got to evaluate what that looks like from a return standpoint and what we think is the right answer for the shareholders as we start to deploy more capital

Speaker #5: Yeah. This quarter, as everybody knows, has had a lot of moving parts to it. And we've had EMP customers that started off the year with a budget at a certain level based on commodity prices at a certain level.

Andy Hendricks: Yeah. You know, this quarter, as everybody knows, has had a lot of moving parts to it. We've had E&P customers that, you know, started off the year with a budget at a certain level based on commodity prices at a certain level, and still under a lot of pressure from investors to keep CapEx in line and not overspend their budgets. Yeah, we did have, you know, we've had rigs come down. We've had termination payments all in the same quarter that we're having discussions now to put rigs back to work. It's been quite the quarter to try to navigate, you know, how we're gonna manage this and, you know, watch our cost base as well, 'cause that creates challenges as the rig count's coming down.

Speaker #5: And still under a lot of pressure from investors to keep CapEx in line and not overspend their budgets. And so, yeah, we did have a rig we've had rigs come down.

Speaker #5: We've had termination payments. All in the same quarter that we're having discussions now to put rigs back to work. So it's been quite the quarter.

Speaker #5: To try to navigate how we're going to manage this and watch our cost base as well because that creates challenges as the rig count's coming down.

Arun Jayaram: Great. Thanks a lot.

Speaker #10: Great . Thanks a lot

Operator 2: Our next question comes from the line of Keith Mackey with RBC Capital Markets. Your line is open.

Operator: Our next question comes from the line of Keith Mackey with RBC Capital Markets. Your line is open.

Speaker #1: And our next question comes from the line of Keith Mackey with RBC Capital Markets . Your line is open .

Speaker #5: And then we've got to put a rig count back up to work. And it's in basins across the US. We've got rigs moving between basins.

Andy Hendricks: We've got to put a rig count back up to work. It's in basins across the US. We've got rigs moving between basins. There's a lot of things going on in terms of the cost base to put the rigs back to work after they've come down. In terms of overall numbers to put rigs back to work, if they've been working, you know, I'd say in the last year, we're in probably a range of $2 million CapEx to put them back to work. There's also, you know, there's certainly no upgrades that are less than $1 million in terms of technology. We're getting requests for structural upgrades.

Keith Mackey: Hey, thanks, and good morning.

Speaker #11: Hey , thanks and good morning . Morning . I think it's I think it's pretty rare to have to be talking about termination revenue and reactivation .

Speaker #5: And so there's a lot of things going on in terms of the cost base to put the rigs back to work after they've come down.

Speaker #11: And maybe the same call . Can you just maybe , Andy , walk us through a little bit about those factors and maybe it's a timing issue on the termination and , and then , you know , with , with the rig reactivations what type of CapEx or opex do these rigs need to come back ?

Speaker #5: In terms of overall numbers to put rigs back to work, if they've been working I'd say in the last year, then we're in probably a range of 2 million CapEx to put them back to work.

Speaker #5: But there's also there's certainly no upgrades that are less than a million dollars in terms of technology. And we're getting requests for structural upgrades.

Speaker #11: Is it a matter of increasing specification requests by the on behalf of the operators or any color , there would be appreciated .

Speaker #5: We're getting requests for some digital solution upgrades. And it really depends on the customer, where they're working, what the objective is that they're drilling as to the capacity that they want to do.

Andy Hendricks: We're getting requests for some digital solution upgrades, and it really depends on the customer, where they're working, what the objective is that they're drilling as to the capacity that they want it to do. You know, that could potentially drive some more capital spend, but we're still evaluating that and just trying to make sure that we understand the market and that we work through those discussions with the customers because as we spend those kind of dollars on upgrades, then we certainly want a contract to cover that.

Speaker #3: Yeah . You know , this quarter is everybody knows has had a lot of moving parts to it . And we've had E&P customers that , you know , started off the year with a budget at a certain level based on commodity prices , at a certain level , and still under a lot of pressure from investors to keep CapEx in line .

Speaker #5: And so that could potentially drive some more capital spend. But we're still evaluating that and just trying to make sure that we understand the market and that we work through those discussions with the customers because as we spend those kind of dollars on upgrades, then we certainly want a contract to cover that.

Speaker #3: And not overspend their budgets . And so , yeah , we did have , you know , a rig , we've had rigs come down , we've had termination payments all in the same quarter that we're having discussions now to put rigs back to work .

Speaker #10: Yeah. And just to clarify all that, make sure that we understand the rigs that we're talking about in the second quarter, we've included the $5 million of operating expenses.

C. Andrew Smith: Yeah. Just to clarify all that, make sure that we understand, you know, the rigs that we're talking about in Q2, we've included the $5 million of operating expenses to reactivate those rigs. That's OpEx, that's not CapEx. The CapEx is probably on rigs that would go to work that, you know, those rigs maybe are a little further out and haven't worked so recently.

Speaker #3: So it's it's been quite the quarter to try to navigate , you know , how we're going to manage this . And , you know , watch our cost base as well because that creates challenges as the rig counts coming down .

Speaker #10: To reactivate those rigs, that's OpEx. That's not CapEx. The CapEx is probably on rigs that would go to work that those rigs maybe are a little further out and haven't worked so recently.

Speaker #3: And then we've got to put a rig count back up to work. And it's in basins across the US. We've got rigs moving between basins.

Speaker #3: And so, there's a lot of things going on in terms of the cost base to put the rigs back to work after they've come down.

Speaker #10: Got it. I appreciate that color. Maybe just turning to inflation. I think that's certainly is a concern. And there's some obvious places where we might be seeing it.

Keith Mackey: Got it. Appreciate that color. Maybe just turning to, you know, inflation. I think that certainly is a concern, and there's some obvious places where we might be seeing it. What type of potential inflationary factors are you watching and how much of that do you think you are able to mitigate?

Speaker #3: In terms of overall numbers , to put rigs back to work , if they've been working , you know , I'd say in the last year , then we're in probably a range of 2 million CapEx to put them back to work .

Speaker #10: But what type of potential inflationary factors are you watching? And how much of that do you think you're able to mitigate?

Speaker #3: But there's also , you know , you know , there's , there's certainly no upgrades that are less than $1 million in terms of technology .

Andy Hendricks: You know, certainly in a lot of areas, of course, diesel prices moving up. I, you know, the one thing that I will say is there's plenty of sand in the Permian Basin, so we're not seeing any challenges around sand where we have a lot of completion activities today in terms of the Permian. Maybe some of the smaller basins are starting to tighten up a little bit, but we expect that that changes over time too, and then we're accommodated there. You know, on the drilling product side, it's, you know, dealing with some of the materials that we have. You know, we're basically saying that, you know, tungsten prices are moving up significantly right now. We're not the only industry right now, given what's happening in the world, that requires tungsten.

Speaker #5: It's certainly in a lot of areas. Of course, diesel prices moving up. The one thing that I will say is there's plenty of sand in the Permian Basin.

Speaker #3: And we're getting requests for structural upgrades , we're getting requests for some digital solution upgrades . And it really depends on on the customer where they're working , what the objective is that they're drilling as to the capacity that they want to do , and , and so know , that could potentially drive some more capital spend .

Speaker #5: So we're not seeing any challenges around sand where we have a lot of completion activities today. In terms of the Permian, maybe some of the smaller basins are starting to tighten up a little bit, but we expect that changes over time too.

Speaker #3: But we're still evaluating that . And just trying to make sure that we understand the market and that we work through those discussions with the customers because as we spend those kind of dollars on upgrades , then we certainly want to contract to cover that .

Speaker #5: And then we're accommodated there. And then on the drilling product side, it's dealing with some of the materials that we have. We basically saying that tungsten prices are moving up significantly right now.

Speaker #4: Yeah . And just to clarify all that , make sure that we understand , you know , the rigs that we're talking about in the second quarter , we've included the $5 million of operating expenses to reactivate those rigs .

Speaker #5: We're not the only industry right now given what's happening in the world that requires tungsten. And so we're seeing that move up. But we actually have ways to mitigate that.

Andy Hendricks: We're seeing that move up. We actually have ways to mitigate that. We use the tungsten in the matrix body bits, but if we start to produce more steel bits, steel body bits, we can mitigate the, you know, the cost of the tungsten as well. Just a number of things going on, but there's ways that we can mitigate that. We, you know, if there are costs that are moving up that we need to pass through to the customers, this is absolutely the right market to be able to do that in. We'll be looking at that as well.

Speaker #4: That's opex . That's not CapEx . The CapEx is probably on rigs that would go to work that , you know , those rigs maybe are a little further out and haven't worked .

Speaker #5: We use the tungsten in the matrix body bits. But if we start to produce more steel bits, steel body bits, then we can mitigate the cost of the tungsten as well.

Speaker #4: So recently

Speaker #5: So just a number of things going on, but there's ways that we can mitigate that. If there are costs that are moving up that we need to pass through to the customers, this is absolutely the right market to be able to do that in.

Speaker #11: Got it . I appreciate that color . Maybe just turning to , you know , inflation , I think that's certainly is a , is a concern .

Speaker #11: And there are some obvious places where we might be seeing it, but what type of potential inflationary factors are you watching, and how much of that do you think you're able to mitigate?

Speaker #5: And so we'll be looking at that as well.

Speaker #10: All right. Thanks very much.

Keith Mackey: All right. Thanks very much.

Speaker #8: Thanks.

C. Andrew Smith: Thanks.

Speaker #6: And our next question comes from the line of Doug Becker with Capital One, your line is open.

Operator: Our next question comes from the line of Doug Becker with Capital One. Your line is open.

Speaker #3: You know , certainly in a lot of areas , of course , diesel prices moving up , you know , the one thing that I will say is there's plenty of sand in the Permian Basin .

Speaker #11: Thank you. Andy, just wanted to get a finer point on how many rigs will be reactivated with the 5 million in costs? And is their line of sight to some term work?

Doug Becker: Thank you. Andy, just wanted to get a finer point on how many rigs will be reactivated with the $5 million in costs. Is there line of sight to some term work, or you really just?

Speaker #3: So, we're not seeing any challenges around sand where we have a lot of completion activities today in terms of the Permian. Maybe some of the smaller basins are starting to tighten up a little bit, but we expect that that changes over time too.

Speaker #11: Are you really just seeing the spot market pick up to the point that gives you the comfort to deploy that capital?

Doug Becker: Seeing the spot market, pick up to the point that gives you the comfort to deploy that capital?

Speaker #5: Yeah. I would say right now, nothing at that level yet. But we are looking ahead to the year as to what the needs might be in the second half of this year.

Andy Hendricks: Yeah. I would say right now, nothing at that level yet. We are looking ahead to the year as to what the needs might be in the second half of this year and going into early 2027 and having those discussions with customers. You know, we'll certainly give you more information at the next quarter. You know, when we talk about $5 million, that also includes mobilization costs as well, not just what we do to the drilling rig. You know, the market is certainly moving in the right direction to allow us to do some, you know, potentially significant upgrades on technology, and, you know, maybe even take some share as we do this. We're excited, you know, for the discussions that we're in.

Speaker #3: And we're accommodated there , you know , and then on the drilling product side , it's , you know , dealing with some of the materials that we have , you know , we've basically saying that , you know , tungsten prices are moving up significantly right now .

Speaker #5: And going into early 2027 and having those discussions with customers, and we'll certainly give you more information at the next quarter but when we talk about 5 million, that also includes mobilization costs as well, not just what we do to the drilling rig.

Speaker #3: We're not the only industry right now , given what's happening in the world , that requires tungsten . And so we're seeing that move up , but we actually have ways to mitigate that .

Speaker #3: We use the tungsten in the matrix body bits , but if we start to produce more steel bits , steel body bits , then we can mitigate , you know , the cost of the tungsten as well .

Speaker #5: But the market is certainly moving in the right direction to allow us to do some potentially significant upgrades on technology and maybe even take some share as we do this.

Speaker #3: So just a number of things going on . But there's ways that we can mitigate that . We , you know , if there are costs that are moving up that we need to pass through to the customers , this is absolutely the right market to be able to do that in .

Speaker #5: And we're excited for the discussions that we're in. We're excited for the market and the change in conditions. I've been optimistic through the year as we've been managing the business, but I'm far more than optimistic at this point in the market for where it's going right now.

Andy Hendricks: We're excited for the market and the changing conditions. You know, I've been optimistic through the year as we've been managing the business, but I'm far more than optimistic at this point in the market for where it's going right now.

Speaker #3: And so, we'll be looking at that as well.

Speaker #11: All right. Thanks very much.

Speaker #4: Thanks .

Speaker #1: And our next question comes from the line of Doug Becker with Capital One . Your line is open .

Speaker #10: Yeah. Doug, just to make sure we clarify that, that 5 million ties to that 92 to 95 exit rate. That we were talking about earlier.

C. Andrew Smith: Yeah, Doug.

Doug Becker: Definitely. Go ahead

C. Andrew Smith: ... to make sure we clarify that. That $5 million ties to that 92 to 95 exit rate that we were talking about earlier.

Speaker #9: Thank you .

Speaker #12: Andy , just wanted to get a finer point on how many rigs will be reactivated with the 5 million in costs . And is their line of sight to some term work ?

Speaker #11: Got it. No, that makes sense. And maybe just a housekeeping item. You mentioned that firm cost about five days on completion services. Just any EBITDA impact from that?

Doug Becker: Got it. No, that's makes sense. Maybe just a housekeeping item. You mentioned that Fern cost about five days on completion services. Just any EBITDA impact from that?

Speaker #12: Are you really just seeing the spot market pick up to the point that gives you the comfort to deploy that capital?

Speaker #3: Yeah , I would say right now , nothing at that level yet , but we are looking ahead to the year as to what the the needs might be in the second half of this year .

Speaker #8: On the winter storm?

C. Andrew Smith: On the winter storm?

Speaker #11: Yes.

Doug Becker: Yes.

Speaker #8: Yeah. It was about $9 million that's what we saw. We had that included in our guidance when we gave it last quarter. We were quite as fine a point on it.

C. Andrew Smith: Yeah, it was about $9 million. That's what we saw. We had that included in our guidance when we gave it last quarter. We, you know, we weren't quite as fine a point on it. We said 5 to 10, it ended up being at the high end of that range.

Speaker #3: And going into early 2027 and having those discussions with customers . And , you know , we'll certainly give you more information at the next quarter .

Speaker #8: We said 5 to 10, but it ended up being at the high end of that range.

Speaker #11: Got it. Thank you.

Doug Becker: Got it. Thank you.

Speaker #3: But , you know , when we talk about 5 million , that also includes mobilization costs as well , not just what we do to the drilling rig , but , you know , the market is certainly moving in the right direction to allow us to do some , you know , potentially significant upgrades on technology and , you know , maybe even take some share as we do this .

Speaker #6: And our next question comes from the line of Eddie Kim with Barclays. Your line is open.

Operator: Our next question comes from the line of Eddie Kim with Barclays. Your line is open.

Speaker #11: Hi. Good morning. Just surprised that the overall US land rig count is still roughly flat since the beginning of the Iran conflict about two months ago.

Eddie Kim: Hi, good morning. Just surprised that the overall US land rig count is still roughly flat since the beginning of the Iran conflict about 2 months ago, even as oil prices have increased substantially over that time period. Does that sort of reflect customers being in wait and see mode before deciding to pull the trigger on increasing activity or more so maybe the lag between actually making that decision and actually standing up a rig? Just any color there. It does seem like, you know, based on your outlook and your commentary, that the industry-wide rig count should start picking up here, within a matter of weeks.

Speaker #11: Even as oil prices have increased substantially over that time period, does that sort of reflect customers being in wait-and-see mode before deciding to pull the trigger on increasing activity?

Speaker #3: And we're excited , you know , for the discussions that we're in , we're excited for the market and the change in conditions .

Speaker #3: You know , I've been optimistic through the year as we've been managing the business . But I'm far more than optimistic at this point in the market for for where it's going right now .

Speaker #11: Or more so, maybe the lag between actually making that decision and actually standing up a rig? Just your outlook and your commentary, that the industry-wide rig count should start picking up here within a matter of weeks.

Speaker #4: Yeah . Definitely make . sure we clarify that that 5 million ties to that 92 to 95 exit rate that we were talking about earlier .

Speaker #12: Got it . Now that's makes sense And maybe just a housekeeping item . You mentioned that Fern cost about five days on completion services .

Speaker #8: Yeah. I'll start. And then Andy can jump in and give you some more color. But I mean, our customers, just like we did, we went through a budget cycle.

C. Andrew Smith: I'll start, then Andy can jump in and give you some more color. You know, I mean, our customers, just like we did, you know, we went through a budget cycle and sort of all of this kind of came on right after we've kind of made our plans for the year. To change those plans on a pretty quick timeline without 100% surety where it was gonna end up or how long it was gonna last, would be pretty difficult, I think, to even ask of our customers. I'm not surprised kind of by the pace at which things have started to come back. But that's my take on it. I don't know, Andy, if you have something you wanna add to that.

Speaker #12: Just any EBITDA impact from that

Speaker #8: And sort of all of this kind of came on right after we've kind of made our plans for the year. And so to change those plans on a pretty quick timeline without 100% surety where it was going to end up or how long it was going to last would be pretty difficult, I think, to even ask of our customers.

Speaker #4: On the winter storm ?

Speaker #12: Yes .

Speaker #4: Yeah, it was about $9 million. That's what we saw. We had that included in our guidance when we gave it last quarter.

Speaker #4: We , you know , we were we weren't quite as fine a point on it . We said 5 to 10 , but it ended up being at the high end of that range .

Speaker #8: And so I'm not surprised kind of by the pace at which things have started to come back. But that's my take on it. I don't know, Andy, if you have something you want to add to that.

Speaker #12: Got it . Thank you

Speaker #1: And our next question comes from the line of Eddie Kim with Barclays. Your line is open.

Speaker #5: Yeah. Eddie, in the public data, you can get on the rigs, what you can see is that some of the biggest EMP operators in the US that you buy gas from really haven't changed their programs.

Andy Hendricks: Eddie, you know, in the public data you can get on the rigs, you know, what you can see is that, you know, some of the biggest E&P operators in the US that you buy gas from really haven't changed their programs. You know, they're just sticking to their programs right now throughout the year 'cause that's what they've set their budgets on. I think that really will probably kind of stay that way. I think you'll see other publics, and I think you'll see privates, start to move quicker, and that's what you're seeing in, you know, our rig count projections right now. These large, you know, E&Ps will relook at their budgets for 2027, and that's why I'm also encouraged for next year as well. I think you're gonna see, you know, You've got some publics.

Speaker #13: Hi . Good morning . Just surprised that the overall US land rig count is still roughly flat since the beginning of the Iran conflict , about two months ago , even as oil prices have increased substantially over that time period , does that sort of reflect customers being in wait and see mode before deciding to pull the trigger on increasing activity or more ?

Speaker #5: They're just sticking to their programs right now throughout the year because that's what they've set their budgets on. And I think that really will probably kind of stay that way.

Speaker #5: I think you'll see other publics and I think you'll see privates start to move quicker. And that's what you're seeing in our rig count projections right now.

Speaker #13: So maybe the lag between actually making that decision and actually standing up a rig , just any color there and but it does seem like based on your outlook on your commentary that the industry wide rig count should , should start picking up here within a matter of weeks .

Speaker #5: But these large EMPs will relook at their budgets for 2027. And that's why I'm also encouraged for next year as well. So I think you're going to see some of you've got some publics, you've got some mid-tier EMPs, you've got some privates that are all starting to rethink this year and with increasing rig count and increasing completion activity.

Speaker #4: Yeah , I'll start and then Andy can jump in and , and give you some more color . But you know , I mean , our customers , just like we did , you know , we went through a budget cycle and , and sort of all of this kind of came on right after we kind of made our plans for the year .

Andy Hendricks: You've got some mid-tier E&Ps. You've got some privates that are all starting to rethink this year and, you know, with increasing rig count and increasing completion activity, and then the very large E&Ps will kick in for 2027.

Speaker #5: And then the very large EMPs will kick in for '27.

Speaker #4: And so to change those plans on a , on a , on a pretty quick timeline without 100% surety where it was going to end up or how long it was going to last , would be pretty difficult , I think , to even ask if our customers .

Speaker #11: Got it. That's very helpful color. Thank you. And just as it relates to your rigs, you mentioned exiting this quarter at about 92 to 95 rigs.

Eddie Kim: That's very helpful color. Thank you. Just as it relates to your rigs, you mentioned exiting this quarter about 92 to 95 rigs. It seems like, just based on your commentary, that 2026 could almost look like a mirror image of 2025. At the beginning of last year, you guys were running about 105 active rigs. Do you think that 105 is achievable for you guys by Q4 of this year, or would that be too much of a stretch?

Speaker #4: And so I'm not surprised, kind of, by the pace at which things have started to come back. But that's my take on it.

Speaker #11: It seems like just based on your commentary, that 2026 could almost look like a mirror image of 2025. At the beginning of last year, you guys were running about 105 active rigs.

Speaker #4: I don't know , Andy , if you have something you want to add to that .

Speaker #3: Yeah . Eddie , you know , in the public data you can get on the rigs . You know what you can see is that , you know , some of the biggest EMP operators in the US that you buy gas from really haven't changed their programs .

Speaker #11: Do you think that 105 is achievable for you guys by the fourth quarter of this year? Or would that be too much of a stretch?

Speaker #3: You know, they're just sticking to their programs right now throughout the year because that's what they've set their budgets on. And I think that really will probably kind of stay that way.

Speaker #5: I think it's too early to tell or try to project exactly what our rig count number is going to be at the end of this year.

Andy Hendricks: I think it's too early to tell or try to project exactly what our rig count, number's gonna be at the end of this year. We are encouraged about the discussions that we're having, that we will put up more rigs in H2 after Q2. You know, very happy to be, you know, working in this type of market versus what we've been dealing with for the last year, so.

Speaker #3: I think you'll see other publics , and I think you'll see privates start to move quicker . And that's what you're seeing in , you know , our rig count projections right now .

Speaker #5: But we are encouraged about the discussions that we're having that we will put up more rigs in the second half after the second quarter.

Speaker #3: But these large, you know, MPs will relook at their budgets for 2027. And that's why I'm also encouraged for next year as well.

Speaker #5: So very happy to be working in this type of market versus what we've been dealing with for the last year or so.

Speaker #11: Right. Great. Thanks, Andy. I'll turn it back.

Eddie Kim: Right. Great. Thanks, Andy. I'll turn it back.

Speaker #3: So I think you're going to see , you know , some of you got some publics , you've got some mid-tier MPs , you've got some privates that are all starting to this year .

Speaker #6: And our next question comes from the line of Dan Coots with Morgan Stanley. Your line is open.

Operator: Our next question comes from the line of Dan Kutz with Morgan Stanley. Your line is open.

Speaker #3: And , and you know , with increasing rig count and increasing completion activity , and then the very large MPs will kick in for 27 .

Speaker #12: Hey, thanks. Good morning.

Dan Kutz: Hey, thanks. Good morning.

Speaker #5: Good morning, Dan.

Andy Hendricks: Morning, Dan.

Dan Kutz: Maybe one on the international businesses that you guys have. You know, kind of looking past the, the near-term disruptions re-related to the conflict, have you had any customer conversations or inbound, you know, in other regions, outside of Middle East or even any conversations with customers there that could that indicates potential, you know, activity upside or any inbound on incremental demand for Patterson services and equipment, whether it's across the drilling, more global kind of drilling products business or, you know, you have the LatAm drilling footprint and the Turnwell JV in the UAE. Yeah, just wondering if you could, you know, share any thoughts or views or conversations that you've had about potential incremental upside in the international space. Thanks.

Speaker #12: So maybe one on the international businesses that you guys have. Kind of looking past the near-term disruptions related to the conflict, have you had any customer conversations or inbound in other regions outside of the Middle East or even any conversations with customers there that could indicate potential activity upside or any inbound on incremental demand for Patterson services and equipment, whether it's across the drilling more global kind of drilling products business or you have the LATAM drilling footprint and the Turnwell JB in the UAE?

Speaker #13: That's very helpful color . Thank you . And just as it relates to your rigs , you mentioned exiting this quarter about 92 to 95 rigs .

Speaker #13: It seems like just based on your commentary , that 2026 could almost look like a mirror image of 2025 . At the beginning of last year , you guys were running about 105 active rigs .

Speaker #13: Do you think that 105 is achievable for you guys by the fourth quarter of this year, or would that be too much of a stretch?

Speaker #12: But yeah, just wondering if you could share any thoughts or views or conversations that you've had about potential incremental upside. In the international space.

Speaker #3: I think it's too early to tell or try to project exactly what our rig count number is going to be at the end of this year, but we are encouraged about the discussions that we're having that we will put up more rigs in the second half.

Speaker #12: Thanks.

Speaker #5: Yeah. I'll give you some color on what we're seeing. So I'll start with the Middle East from Kuwait on down to Oman. That's where we have a really solid drilling products business.

Andy Hendricks: Yeah. I'll give you some color on what we're seeing. I'll start with the Middle East, you know, from Kuwait on down to Oman. That's where we, you know, have a really solid drilling products business. You know, we did see onshore activity relatively steady in those markets, especially Saudi Arabia and the UAE. Offshore, you know, they did shut down a lot of the activity kind of midway through this conflict. That's had an effect. Also, particularly, in Saudi Arabia, our customer there was working through some of their inventory that they had still in their warehouses. I think that slowed product sales for everybody over there. At some point, you know, that'll end, and then product sales will start to move up.

Speaker #3: After the second quarter . So , you know , very happy to be , you know , working in this type of market versus what we've been dealing with for the last year .

Speaker #3: So

Speaker #14: , all right . Great .

Speaker #5: We did see onshore activity relatively steady in those markets, especially Saudi Arabia and the UAE. But offshore, they did shut down a lot of the activity kind of midway through this conflict.

Speaker #13: Thanks , Andy . I'll turn it back

Speaker #1: And our next question comes from the line of Dan Coats with Morgan Stanley . Your line is open

Speaker #15: Hey , thanks . Good morning .

Speaker #3: Good morning Dan .

Speaker #5: And so that's had an effect. Also, particularly in Saudi Arabia, our customer there, was working through some of their inventory that they had still in their warehouses.

Speaker #15: So maybe one on on the international businesses that you guys have , you know , kind of looking past the , the , the near term disruptions related to the conflict have , have you had any customer conversations or inbound , you know , in other regions outside of the Middle East or even any conversations with customers there that could that indicates potential , you know , activity upside or any , any inbound on incremental demand for Paterson services and equipment , whether it's across the drilling , more global kind of drilling products business or , you know , you have the Latam drilling footprint and , and the turn .

Speaker #5: And I think that slowed product sales for everybody over there. And at some point, that'll end. And then product sales will start to move up.

Speaker #5: And so with the onshore activity steady, we think we have some interesting opportunities over there. We are seeing some higher costs on logistics to get products and materials into the Middle East.

Andy Hendricks: With the onshore activity steady, you know, we think we have some interesting opportunities over there. We are seeing some higher costs on logistics to get products and materials into the Middle East, and we've certainly seen a slowdown in Kuwait as well. We'll just have to see how a lot of this plays out. Moving over to South America, you know, we did ship 2 drilling rigs down to Argentina. We do expect over the next year to 2 years that in Argentina, the rig count continues to move up. We may get to participate more in that process. We'll see. It's too early to call anything out on that yet. We're in a number of conversations in Argentina. I'll just go ahead and mention Venezuela. Nobody's talked about Venezuela in a while.

Speaker #5: And we've certainly seen a slowdown in Kuwait as well. So we'll just have to see how a lot of this plays out. Moving over to South America, we did ship two drilling rigs down to Argentina.

Speaker #15: Well , JB in the UAE . But yeah , just wondering if you could , you know , share any , any thoughts or views or conversations that you've had about potential incremental upside in the international space ?

Speaker #5: We do expect over the next year to two years that in Argentina, the rig count continues to move up. We may get to participate more in that process.

Speaker #5: We'll see. It's too early to call anything out on that yet. But we're in a number of conversations in Argentina. And I'll just go ahead and mention Venezuela.

Speaker #15: Thanks .

Speaker #3: Yeah , I'll give you some color on what we're seeing . So I'll start with the Middle East . You know , from Kuwait on down to Oman , that's where we , you know , have a really solid drilling products business .

Speaker #5: Nobody's talked about Venezuela in a while. There is a number of interested parties looking at Venezuela to try to get in there and increase production, especially in the Orinoco Belt for the heavy oil.

Andy Hendricks: There is a number of interested parties looking at Venezuela to try to get in there and increase production, especially in the Orinoco Belt for the heavy oil. These discussions will take time, and I think that process will go very slow. There are, as I mentioned, there are a number of interested parties.

Speaker #3: You know , we did see onshore activity relatively steady in those markets , especially Saudi Arabia and the UAE . But offshore , you know , they did shut down a lot of the activity kind of midway through this conflict .

Speaker #5: But these discussions will take time. And I think that process will go very slow. But as I mentioned, there are a number of interested parties.

Speaker #3: And so that's had an effect also particularly in Saudi Arabia , our customer there was working through some of their inventory that they had still in their warehouses .

Speaker #11: Great. That's all really helpful. And then coming back to the US, I'm not sure if something that you guys if this is something that you guys track or have noticed or heard folks talking about.

Dan Kutz: Great. That's all really helpful. Then coming back to the US, I'm not sure if this is something that you guys track or have noticed or, you know, heard folks talking about. Just figure given your kind of unique footprint as a top both driller and frac service company, it seems some indicating that DUC inventories are low, potentially even materially low. You know, obviously that can influence the relative pace of drilling versus completions activity. At least from your remarks so far, it seems like you see upside in both markets.

Speaker #3: And I think that slowed product sales for everybody over there . And at some point , you know , that'll end . And then product sales will start to move up .

Speaker #3: And so, with the onshore activity steady, you know, we think we have some interesting opportunities over there. We are seeing some higher costs on logistics to get products and materials into the Middle East.

Speaker #11: But just figure, given your kind of unique footprint as a top both driller and frac service company, seeing some data indicating that duck inventories are low, potentially even materially low.

Speaker #3: And we certainly seen a slowdown in Kuwait as well . So we'll just have to see how a lot of this plays out .

Speaker #11: And obviously, that can influence the relative pace of drilling versus completions activity. At least from your remarks so far, it seems like you see upside in both markets.

Speaker #3: Moving over to South America . You know we did ship two drilling rigs down to Argentina . We do expect over the next year to two years than in Argentina .

Speaker #11: But just, yeah, wondering if lower duck inventories is just kind of structural and as efficiencies improve or if you think that there's a dynamic there that could influence the pace of drilling versus completions activity.

Dan Kutz: Just wondering if, you know, lower DUC inventories is just kind of structural and as efficiencies improve, or if you think that there's a dynamic there that could influence the pace of drilling versus completions activity. Thanks.

Speaker #3: The rig count continues to move up . We may get to participate more in that process . We'll see . It's too early to call anything out on that yet , but we're in a number of conversations in Argentina , and I'll just go ahead and mention Venezuela .

Speaker #11: Thanks.

Speaker #3: Nobody's talked about Venezuela in a while . There is a number of interested parties looking at Venezuela to try to get in there .

Speaker #5: Sure. I think with the duck inventory this year, what we've seen is that it's come down in a lot of that has to be it's just directly related to the rig count coming down and the number of wells between the drilling rigs and the completion activity.

Andy Hendricks: Sure. I think, you know, with the DUC inventory this year, what we've seen is that, you know, it's come down, and a lot of that has to be, you know, it's just directly related to the rig count coming down and the number of wells between the drilling rigs and the completion activity. Also with some of the smaller customers, what we've seen is that, they've, you know, really kind of tried to pace themselves through the year. You know, talking about starting off at the beginning of the year, where they drilled some wells, and then they were gonna complete them later. Some of those customers have called us, you know, based on current economics and said, Hey, we wanna frac these wells sooner. So where we could, we've tried to accommodate them.

Speaker #3: And increase production , especially in the Orinoco Belt , for the heavy oil . But these these discussions will take time . And I think that process will go very slow .

Speaker #5: But also with some of the smaller customers, what we've seen is that they've really kind of tried to pace themselves through the year. And I'm talking about starting off at the beginning of the year where they drilled some wells.

Speaker #3: But there are , as I mentioned , there are a number of interested parties

Speaker #15: Great . That's all really helpful . And then coming back to US , I'm not sure if something that you guys , if this is something that you guys track or have noticed or , you know , heard folks talking about , but just figure , given your kind of unique footprint as a top , both driller and frack service company , it seen some data indicating that duck inventories are , are low , potentially even materially low .

Speaker #5: And then they were going to complete them later. And some of those customers have called us based on current economics and said, "Hey, we want to frac these wells sooner." And so where we could, we've tried to accommodate them.

Speaker #5: And that's also led to some better returns on some of that work that we've done when we've pulled that work forward. And but I wouldn't say it's widespread yet so far.

Andy Hendricks: That's also, you know, led to some better returns on some of that work that we've done when we pulled that work forward. I wouldn't say it's widespread yet so far. Now we're going into a period where the drilling rig count is going to start to move up, and we're going to see the DUC inventory start to move up until completion activity moves up. With the tightness in the completion market, you know, there could be a period that we are increasing DUCs even more than normal until we do get more completion work out there. I think it's going to be very positive for completions in H2 of this year.

Speaker #15: And , you know , obviously that can influence the relative pace of drilling versus completions activity , at least from your remarks so far , it seems like you see you see upside in both markets .

Speaker #5: But now we're going into a period where the drilling rig count is going to start to move up. And we're going to see the duck inventory start to move up until completion activity moves up.

Speaker #5: And with the tightness in the completion market, there could be a period that we are increasing ducks even more than normal. Until we do get more completion work out there.

Speaker #15: But just wondering if you know , lower inventories is just kind of structural . And as efficiencies improve or if you think that there's a dynamic there that could influence the pace of , of drilling versus completions activity .

Speaker #5: So I think it's going to be very positive for completions. In the second half of this year.

Speaker #11: Great. All really helpful. Thanks again. I'll turn it back.

Dan Kutz: Great. All really helpful. Thanks again. I'll turn it back to you.

Speaker #15: Thanks

Speaker #5: Thank you.

Speaker #3: Sure . I think , you know , with the duck inventory this year , what we've seen is that , you know , it's come down and a lot of that has to be , you know , it's just directly related to the rig count coming down and the number of wells between the drilling rigs and completion activity , but also with some of the smaller customers .

Andy Hendricks: Thank you.

Speaker #6: And our final question comes from the line of Donald Crist with Johnson Rice. Your line is open.

Operator: Our final question comes from the line of Don Crist with Johnson Rice. Your line is open.

Speaker #13: Good morning, guys. Thanks for fitting me in here right at the end. Andy, I just have one kind of macro question. We're hearing from some really smart people around the world and given your contacts in the Middle East that worldwide supplies are dwindling.

Don Crist: Morning, guys. Thanks for fitting me in here right at the end.

Andy Hendricks: Hi, Don.

Don Crist: I just have one kind of macro question. We're hearing from some really smart people around the world, and given your contacts in the Middle East, that worldwide supplies are dwindling and the dichotomy between the physical markets and the financial markets for oil are pretty significant. With that background, we're hearing that the strip could increase pretty materially despite whether or not this war is over sooner rather than later. I'm just curious as to your kind of macro view on oil and whether or not we ever go back to $65 or $70 oil, or if we do stay higher at, call it, an $80-plus oil level for the coming years. I know that's kind of more philosophical, but just your thoughts.

Speaker #3: What we've seen is that they've , you know , really kind of pace themselves through the year . And I'm talking about starting off at the beginning of the year where they drilled some wells , and then they were going to complete them later .

Speaker #13: And the dichotomy between the physical markets and the financial markets for oil are pretty significant. And with that background, we're hearing that the strip could increase pretty materially despite whether or not this war is over sooner rather than later.

Speaker #3: And some of those customers have called us , you know , based on current economics and said , hey , we want to frack these wells sooner .

Speaker #3: And so where we could , we've tried to accommodate them . And that's also , you know , led to some better returns on on some of that work that we've done when we've pulled that work forward .

Speaker #3: And , but I wouldn't say it's widespread yet . So far , but now we're going into a period where the drilling rig count is going to start to move up .

Speaker #13: And I'm just curious as to your kind of macro view on oil and whether or not we ever go back to 65 or 70-dollar oil or if we do stay higher at an 80-plus-dollar oil level.

Speaker #3: And we're going to see the duck inventory start to move up until completion . Activity moves up and with the tightness in the completion market , you know , there could be a period that we are increasing ducks even more than normal until we do get more completion work out there .

Speaker #13: For the coming years, I know that's kind of more philosophical, but just your thoughts.

Speaker #5: Well, Don, I really appreciate that macro question. And I'll start by qualifying that I am not a commodities trader. But there's some interesting things happening in the market.

Andy Hendricks: Well, Don, I really appreciate that macro question. I'll start by, you know, qualifying that I am not a commodities trader. You know, there's some interesting things happening in the market. Before you get into the crude discussion, you know, there's a real challenge in some of the refined products like jet fuel, kerosene, distillates, where, you know, those commodities have been ramping up at a faster rate than crude oil. I think that, you know, commodity traders on the crude side are kind of watching how these product sides trade to try to determine what the real, you know, cost per barrel should be. Because, you know, there is starting to be this disconnect between, you know, what traders' opinion are of what oil should trade at versus where you can physically get oil today and where you can move it to.

Speaker #3: So, I think it's going to be very positive for completions in the second half of this year.

Speaker #15: Great . All really helpful . Thanks again . I'll turn it back .

Speaker #5: And before you get into the crude discussion, there's a real challenge in some of the refined products like jet fuel, kerosene, distillates. Where those commodities have been ramping up at a faster rate than crude oil.

Speaker #14: Thank you

Speaker #1: And our final question comes from the line of Donald Crist with Johnson Rice. Your line is open.

Speaker #16: Good morning, guys. Thanks for fitting me in here, right at the end, Andy. I just have one kind of macro question we're hearing from some really smart people around the world.

Speaker #5: And so I think that commodity traders on the crude side are kind of watching how these products sides trade. To try to determine what the real cost per barrel should be because there is starting to be this disconnect between what traders' opinion are of what oil should trade at versus where you can physically get oil today and where you can move it to.

Speaker #16: And given your contacts in the Middle East , that worldwide supplies are dwindling and the the dichotomy between the physical markets and the financial markets for oil or , or pretty significant .

Speaker #5: And so we still, of course, have a bottleneck of crude. In terms of global production, that's missing. And that's going to have to get filled at some point or it's going to have to start moving again.

Andy Hendricks: We, you know, we still, of course, have a bottleneck of crude, you know, in terms of global production that's missing and, you know, that's gonna have to get filled at some point or it's gonna have to start moving again, and that'll take months to work itself out. I think, you know, where the strip trades, you know, today looking forward seems to be more of a best guess versus what the material, you know, price of a barrel of oil really is. It'll be interesting to see how that shakes out, you know, over the next year.

Speaker #16: And with that background , we're hearing that the strip could increase pretty materially despite whether or not this war is over sooner rather than later .

Speaker #5: And that'll take months to work itself out. So I think where the strip trades today looking forward is seems to be more of a best guess versus what the material price of a barrel of oil really is.

Speaker #16: And I'm just curious as to your kind of macro view on oil and whether or not we ever go back to 65 or $70 oil , or if we do stay higher at an 80 plus dollar oil level for the coming years .

Speaker #5: And it'll be interesting to see how that shakes out over the next year.

Speaker #16: I know that's kind of more philosophical , but just your thoughts ?

Speaker #11: Yeah. We're hearing from some really smart people that the strip is probably not going back to the $70 level again. So we'll see we'll watch it together.

Don Crist: Yeah. We're hearing from some really smart people that the strip is probably not going back to the $70 level again. We'll see. We'll watch it together. I appreciate the thoughts.

Speaker #3: Well , Don , I really appreciate that macro question . And I'll start by , you know , qualifying that I am not a commodities trader , but , you know , there's some interesting things happening in the market .

Speaker #11: I appreciate the thoughts.

Speaker #5: Sure. But I'm certainly encouraged by how our customer base is reacting and how they're discussing the forward strip. And the fact that we can tell you today that we're putting drilling rigs out.

Andy Hendricks: Sure. I'm certainly encouraged by how our customer base is reacting and how they're discussing the forward strip, and the fact that we can tell you today that we're putting drilling rigs out.

Speaker #3: And before you get into the crude discussion , you know , there's a real challenge in some of the refined products like jet fuel , kerosene distillates , where , you know , those commodities have been ramping up at a faster rate than crude oil .

Speaker #11: Exactly. Thanks for the time, guys.

Don Crist: Exactly. Thanks for the, thanks for the time, guys.

Speaker #5: Thanks, Don.

Andy Hendricks: Thanks, Don.

Speaker #3: And so I think that , you know , commodity traders on the crude side are kind of watching how these product sides trade to try to determine what the real , you know , cost per barrel should be because , you know , there is starting to be this disconnect between , you know , what traders opinion are of what oil should trade at versus where you can physically get oil today and where you can move it to .

Speaker #6: And our final question comes from the line of John Daniel with Daniel Energy Partners. Your line is open.

Operator: Our final question comes from the line of John Daniel with Daniel Energy Partners.

Speaker #12: Hey, thanks for including me. I completely flubbed and thought your call started at 10:00. So I apologize for being in late. So I've got three questions.

John Daniel: Hey, thanks for including me. I completely flubbed and thought your call started at 10:00, so I apologize for being in late. I've got 3 questions, and you might have answered all of these, and so I apologize if you did. From the supply chain perspective, Andy, specifically for drilling capital equipment, where are the longest lead times today and do you see that being a limiting or, you know, delaying rig reactivations over the next several quarters?

Speaker #12: And you might have answered all of these. And so I apologize if you did. But from the supply chain perspective, Andy, specifically for drilling capital equipment, where are the longest lead times today?

Speaker #3: So , you know , we still , of course , have a bottleneck of crude , you know , in terms of global production .

Speaker #12: And And do you see that being a limiting or delaying rig reactivations over the next several quarters?

Speaker #3: That's missing. And, you know, that's going to have to get filled at some point, or it's going to have to start moving again.

Speaker #5: So there are some long lead items. Some are close to a year. But those are some specialty items for some very large upgrades. But that being said, we've already been placing some orders for some long lead items.

Andy Hendricks: There are some long lead items. Some are close to a year. Those are for, you know, some specialty items for some very large upgrades. That being said, you know, we've already been placing some orders for some long lead items, we keep some things moving within the existing budget. You know, when we talked about our capital budget at the beginning of the year, we talked about, you know, it's not just maintenance. We've got technology upgrades built in. We try to stay in front of some of these long lead items. I don't think the lead time really changes. They just are what they are on some of these long lead components that we've gotta have and we keep, you know, those on order where it makes sense.

Speaker #3: And that will take months to work itself out . So I think , you know , where the strip trades , you know , today , looking forward is seems to be more of a best guess versus what the material , you know , price of a barrel of oil really is .

Speaker #3: And I— it’ll be interesting to see how that shakes out, you know, over the next year.

Speaker #5: So we keep some things moving within the existing budget. As we talked about our capital budget at the beginning of the year, we talked about it's not just maintenance.

Speaker #16: Yeah . We're hearing from some really smart people that the strip is probably not going back to the $70 level again . So we'll see .

Speaker #5: We've got technology upgrades built in. So we try to stay in front of some of these long lead items. And I don't think the lead time really changes.

Speaker #16: We'll watch it together . I appreciate the thoughts .

Speaker #3: Sure. But I'm certainly encouraged by how our customer base is reacting and how they're discussing the forward strip, and the fact that we can tell you today that we're putting drilling rigs out.

Speaker #5: They just are what they are on some of these long lead components that we've got to have. And we keep those on order where it makes sense.

Speaker #5: That being said, there's some shorter lead items too around structural steel and things like that that we can get. And a relatively reasonable pace.

John Daniel: Okay.

Andy Hendricks: That being said, there's some shorter lead items too around, you know, structural steel and things like that we can get at a relatively reasonable pace. Haven't heard anything from the teams, and we've had a lot of discussions over the last couple weeks, that, you know, gives me any concern that we're gonna have trouble getting any of these types of items at the pace that we think we're gonna need them. I think we're gonna be fine on the technology and structural upgrades that we could potentially do over the next year.

Speaker #16: Exactly . Thanks for the thanks for the time , guys .

Speaker #3: Thanks , Don

Speaker #1: And our final question comes from the line of John Daniel with Daniel Energy Partners . Your line is open .

Speaker #5: I haven't heard anything from the teams. And we've had a lot of discussions over the last couple of weeks. That gives me any concern that we're going to have trouble getting any of these types of items at the pace that we think we're going to need them.

Speaker #15: Hey .

Speaker #17: Thanks for including me . I completely forgot about your call . Started at ten , so I apologize for being late . So I've got three questions , and you might have answered all of these .

Speaker #5: So I think we're going to be fine on the technology and structural upgrades that we could potentially do over the next year.

Speaker #17: And so I apologize if you did , but from the supply chain perspective , Andy , specifically for drilling capital equipment , where are the longest lead times today ?

Speaker #11: Okay. That's helpful. And then you touched on international, Argentina, and Venezuela. I'm curious, how did the rig specs differ between those markets and what you're doing here in the States?

John Daniel: Okay. That's helpful. Then you touched on international Argentina and Venezuela. I'm curious, how do the rig specs differ between those markets and what, you know, you're doing here in the States? Just any operational color there would be helpful.

Speaker #17: And do you see that being a limiting or , you know , delaying rig reactivations over the next several quarters ?

Speaker #3: So so there are some long lead items . Some are close to a year , but those are , you know , some specialty items for some very large upgrades .

Speaker #11: And just any operational color there would be helpful.

Speaker #5: Yeah. The good news for Argentina and Guatemala is that you can take a drilling rig from the US and you can move it right down there and drill one of the horizontals that they want to drill.

Andy Hendricks: The good news for Argentina and Vaca Muerta is that, you know, you can take a drilling rig from the US and you can move it right down there and drill one of the horizontals that they wanna drill. That's an almost identical rig spec. When you get to Venezuela, you kinda have to break it up into which basin you're talking about. If you're talking about the Orinoco Basin and the heavy oil, you know, we were drilling those wells 20 years ago with 1,000 horsepower rigs. Very easily you can take, you know, the 1,500 horsepower rig out of the US and put it in there and it's gonna do better than we did before 20 years ago.

Speaker #3: But that being said , you know , we've already been placing some orders for some long lead items . So we keep some things moving within the existing budget , you know , as we , you know , when we talk about our capital budget at the beginning of the year , we talked about , you know , it's not just maintenance .

Speaker #5: So that's an almost identical rig spec. When you get to Venezuela, you kind of have to break it up into which basin you're talking about.

Speaker #5: But if you're talking about the Orinoco basin and the heavy oil, we were drilling those wells 20 years ago with 1,000-horsepower rigs. And so very easily you can take the 1,500-horsepower rig out of the US and put it in there.

Speaker #3: We've got technology upgrades built in . So we try to stay in front of some of these long lead items . And I don't think the the lead time really changes .

Speaker #3: They just are what they are on some of these long lead components that we've got to have . And we keep , you know , we keep those on order where it makes sense .

Speaker #5: And it's going to do better than we did before 20 years ago. And you do have some deeper onshore plays where you need a two or three thousand horsepower.

Andy Hendricks: You know, you do have some deeper onshore plays where you need a 2,000 or 3,000 horsepower, but I suspect that, you know, the focus in Venezuela is gonna be on the heavy oil, you know, because of the refineries in the Gulf Coast, the rigs in the US will easily go down there and work there.

Speaker #3: That being said , there's some shorter lead items too around , you know , structural steel and things like that , that we can get at a relatively reasonable pace .

Speaker #5: But I suspect that the focus in Venezuela is going to be on the heavy oil. Because of the refineries in the Gulf Coast. And you've got the rigs in the US will easily go down there and work there.

Speaker #3: I haven't heard anything from the teams , and we've had a lot of discussions over the last couple of weeks that , you know , gives me any concern that we're going to have trouble getting any of these types of items at the pace that we think we're going to need them .

Speaker #11: Okay. Thank you. And then final one. For the people your employees that were in the Middle East, what percent of them left when the conflict started?

John Daniel: Okay. Thank you. Final one. For the people, your employees that were in the Middle East, what % of them left when the conflict started and what % have returned? Just as the guy that kinda oversees all these people, like, how do you think about sending more people back and when do you do that?

Speaker #3: So I think we're going to be fine . On the technology and structural upgrades that we could potentially do over the next year .

Speaker #11: And what percent have returned? And then just as the guy that kind of oversees all these people, what's your how do you think about sending more people back?

Speaker #17: Okay . That's helpful . And then you touched on international Argentina and Venezuela . I'm curious what how did the rig specs differ between those markets and what you're doing here in the States and just any any operational color ?

Speaker #11: And when do you do that?

Speaker #5: Yeah. So first, I want to say and they know who they are within the company. Hats off to our enterprise response team. They were running a 24-hour operation to logistically check on everybody that we had from Kuwait all the way down to Oman.

Andy Hendricks: First I wanna say, and they know who they are within the company, hats off to our Enterprise Response Team. They were running a 24-hour operation to logistically check on everybody that we had from Kuwait all the way down to Oman, make sure that people were okay, comfortable where they were, assistance to move them out where they needed to get moved out. One of the bigger concerned areas was, you know, we had a number of rotators working in the field in the UAE. We had to get them out over land to Oman and then fly them out of Oman once, you know, the flights were working in a reasonable way. At this point today, we've got really everybody back to where they are. It's, you know, it's relatively business as usual.

Speaker #17: There would be helpful ?

Speaker #3: Yeah . The good news for Argentina and is that , you know , you can take a drilling rig from the US and you can move it right down there and drill one of the horizontals that they want to drill .

Speaker #5: Make sure that people were okay, comfortable where they were. Assistance to move them out where they needed to get moved out. And one of the bigger concerned areas was we had a number of rotators working in the field in the UAE.

Speaker #3: So that's an almost identical rig spec . When you get to Venezuela , you kind of have to break it up into which basin you're talking about .

Speaker #3: But if you're talking about the Orinoco Basin and the heavy oil , you know , we were drilling those wells 20 years ago with 1000 horsepower rigs .

Speaker #5: We had to get them out over land to Oman and then fly them out of Oman once the flights were working in a reasonable way.

Speaker #3: And so, very easily, you can take, you know, the 1,500-horsepower rig out of the US and put it in there.

Speaker #5: At this point today, we've got really everybody back to where they are. And so it's relatively business as usual. I'd say relatively because we do have concerns but the people that we have over there are comfortable working over there.

Speaker #3: And it's going to it's going to do better than we did before , 20 years ago . And , you know , you do have some deeper onshore plays where you need a 2 or 3000 horsepower .

John Daniel: Okay.

Speaker #3: But I suspect that , you know , the focus in Venezuela is going to be on the heavy oil , you know , because of the refineries in the Gulf Coast .

Andy Hendricks: I say relatively because, you know, we do have concerns. You know, the people that we have over there are comfortable working over there. You know, if they're not happy working over there, we've certainly got work for them here. As I mentioned, we're hiring. We've got plenty of stuff going on. No, the people that were happy to go back.

Speaker #3: And you've got the rigs in the US will easily go down there and work there.

Speaker #5: If they're not happy working over there, we've certainly got work for them here. As I mentioned, we're hiring. So we've got plenty of stuff going on.

Speaker #17: Okay . Thank you . And then final one for the people , your employees that were in the Middle East . What percent of them left when the conflict started and what percent have returned ?

Speaker #5: But no, the people that we're happy to go back.

Speaker #11: Okay. Thank you for including me. And for the time.

John Daniel: Okay. Thank you for including me and for the time.

Speaker #17: And then just as the guy that kind of oversees all these people like , what's your , how do you think about sending more people back ?

Speaker #5: Thanks, John.

Andy Hendricks: Thanks, John.

Operator: That concludes our question and answer session. I will now turn the conference back over to Andy Hendricks for closing remarks.

Speaker #6: And that concludes our question and answer session. I will now turn the conference back over to Andy Hendricks for closing remarks.

Speaker #17: And when do you do that

Speaker #3: Yeah . So first I want to say , and they know who they are within the company . Hats off to our enterprise response team .

Speaker #5: Thanks, Abby. I just want to thank everybody that dialed in today for our conference call. It's exciting time in the industry. Where we are seeing this inflection.

Andy Hendricks: Thanks, Abby. I just want to thank everybody that dialed in today for our conference call. It's an exciting time in the industry where we are seeing this inflection and very happy to report this quarter that we're putting drilling rigs back to work and that, you know, we have a good line of sight on completions for the rest of the year to be relatively fully loaded out. Thank you.

Speaker #3: They were running a 24-hour operation to logistically check on everybody that we had from Kuwait all the way down to Oman, make sure that people were okay, comfortable where they were, and provide assistance to move them out where they needed to get moved out.

Speaker #5: And very happy to report this quarter that we're putting drilling rigs back to work. And that we have a good line of sight on completions for the rest of the year to be relatively fully loaded out.

Speaker #3: And one of the bigger concerned areas was , you know , we had a number of rotators working in the field in the UAE .

Speaker #5: So thank you.

Operator: Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Speaker #3: We had to get them out over land to Oman and then fly them out of Oman . Once you know , the flights were were working in a in a reasonable way at this point today , we've got really everybody back to where they are .

Speaker #3: And so it's , you know , it's relatively business as usual . I say relatively because , you know , we do have concerns , but , you know , the , the people that we have over there are comfortable working over there .

Speaker #3: You know , if they , if they're not happy working over there , we certainly got work for them here . As I mentioned , we're hiring , so we've got plenty of , of stuff going on , but no , the people that are , were happy to go back .

Speaker #17: Okay . Thank you for including me and for the time .

Speaker #3: Thanks , John

Speaker #1: And that concludes our question and answer session . I will now turn the conference to Andi Hendricks for closing remarks .

Speaker #3: Thanks, Abby. I just want to thank everybody that dialed in today for our conference call. It's an exciting time in the industry where we are seeing this inflection, and I'm very happy to report this quarter that we're putting drilling rigs back to work and that, you know, we have a good line of sight on completions for the rest of the year to be relatively fully loaded out.

Speaker #3: So thank you

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