Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the NexTier Oilfield Solutions First Quarter 2023 Conference Call.

As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

For opening remarks and introductions, I would like to turn the call over to Mike Sabella, Vice President of Investor Relations for NexTier. sir. ahead, go Please

Mike Sabella

and Good and conference welcome first call me and Gillard, Drummond, results. Operator. Chief Counsel. Kenny Oilfield Officer; General McDonald, Financial quarter the Chief Solutions With Matt President Robert are earnings to Operating today Executive morning you, Officer; to Pucheu, Officer; and Chief NexTier XXXX Chief Kevin Thank discuss Officer our Administrative

news disclaimer Relations release in direct get we your like attention contained started, in forward-looking the the the we afternoon the Before yesterday website. to statements that posted issued which section I to currently company's would is of Investor

are call this uncertainties, many to which expectations, future, materially company's of actual risks are Our the of the expressed control, differ company's these to beyond our includes from statements statements. morning or which cause are speak those statements. which in subject to or by results forward-looking could predictions that and outlook, considered the statements forward-looking implied These

revise reports to We you except our on and applicable subsequently refer undertake We statements no obligation and risk securities Securities laws. forward-looking Commission XX-Q quarterly required Form or publicly may Exchange factors report be as filed filings. in any disclosures under on regarding statements NexTier Form annual forward-looking update other XX-K to and

today include comments non-GAAP also our Additionally, financial measures.

measures of GAAP Additional our for the quarter details of and website. first are is which XXXX, included in financial posted reconciliation directly comparable most release the on a earnings our

call Executive of Officer turn With Chief that, NexTier. I over to the Drummond, Robert will

Robert Drummond

everyone for Thank joining you, the to Mike, and thanks call.

had financial consistency sequential income quarter our in of quarter free delivered flow. was NexTier the strategy. We and XXth resiliency first strong net another of and As very of quarter for both anticipated improved adjusted the quarter and operational demonstrating We consecutive cash another performance, for growth saw strong. the

return capital and prioritize strategy. to continue sustained operating our we a allocation disciplined, very and while on strong capital, We remain

significantly essentially is update. our we XXXX believe our commodity outlook, to recent unchanged outlook continue Considering is prior from Despite volatility, undervalued. price the share our

always that we believe through dollars shareholders, invest the shareholder for We most highest our our in including will capital program. will return the value long-term our create return sizable opportunity

operating first disrupted quarter the quarter, by net we of winter Adjusted First, as X% prior was saw $XXX income million strong revenue. for quarter results XX% weather. even the was for the and improved of

Our income of was Total adjusted year. and diluted $XXX share was million, the quarter per than up X% higher net $X.XX. revenue same last sequentially was XX%

in in resulting hours line quarter, the saw higher We The strategic during profitability quarter higher top increase pumping combination the eighth as of million customer prior benefit of undertook as full a $XXX sequential improved an pricing. well Adjusted sequentially the growth quarter. of EBITDA we consecutive growth. X% was a and for repositioning from was strong

free generated of and also headwind million, flow a we front strong budget. large We even loaded capital $XX as working cash saw CapEx half a

of over year generate yield on free anticipate market will XXXX, a cash XX% as momentum to we gather based million still expect which flow free cash capitalization. is in progresses the approximately We and $XXX will flow current

quarter. shares And flow. almost excluding free with on tax invested our entirely the adjusted under our return shareholder repurchased capital, for program was million funded million we items QX, During $XXX six cash for XX% $XX annualized return million one-time

group. peer to ahead We generate continue well returns of our

update. volatility looking supply global period by consistency generate Unlike strong cycles, sold expect Oil by out. returns. Industry supported activity remains customers more customers are to for than very is that commodity price high to and past sufficient demand our discipline remain Their from basin utilization of our and positive that through commodity oil unchanged near-term price this outlook oil enabled we that a towards noise remains a the macro. prior demonstrates long-term is throughout our is

We to remain to beyond. discipline strong in demonstrate XXXX in and expect continue and sectors for land and our activity frac to maturity U.S.

combined current customer outlook, activity Natural Considering as progressed, did change soften quarter with still six the gas we the to down in base pricing of the oil basin our as gas we start do price the demand our expected strategy. stable basins roughly will with fleets the since not need industry primary anticipate year.

Consistent released fleets seeks expectations those there that could are to cycles, are likely in most historic that as to that vulnerable eight and prior working natural market. spot another commodity gas with in the our gas fleets be are responses balance. linked are The believe that natural basins, are underperforming those we the

have the performance operational and strong. natural gas spot little basins We market exposure has been very our or oil very to and

see partnerships our that competitive say, since such, operating customers the in quality And overall either well integration we in to very service we've frac oil our more previous update to our together. near-term and of frac As value XXXX. lower be by of the we've seen as fleets outlook near prices. yet The never At all is created important. we've see relatively our the our by released shuffle any wellsite natural temporary and as from been resulting dedicated as volumes natural of business into at encouraged our speaks capacity market by about has from insulated gas our basins. we to our quality, built the change fleets This continue strategy should little customers we gas NexTier, remain or

to a some recent the spot market basins. large, and into activity from of relocation expected oil fleets noise of gas be and the basins natural appears function By

will work balance multiple Our in fleets frac view partners. with these find to allow relocated spot new is supply that the demand and U.S.

meet grow oil to to and shale will long-term, demand forecasts on the call only production U.S. need global the increase believe production still materially grow will we Over to louder.

the capacity around meet gas likely capital equipment see significant On shale potential side, calls U.S. through have with remaining these for in to the given frac bottlenecked. constraints tandem We both of the natural fleets. frac and struggling equipment create demand XXXX LNG incremental additions still to of availability

transparent situation until itself supply very impact both view builds. not at capacity, that and This these least continue to mid-XXXX. been working for correcting have see in and fully maintenance will our is new do true we chains We the

We over and responsible our continue are flexible our powered most converting gas time. manner configuration, committed in to the to fleet be to fleet with natural

terms the fleet is of unit priority. configuration, available we In best horsepower to are avenues on pursuing our always horsepower maximizing deploy our our economics the and to level returns

market, replicate opportunities strategy. recent this supplement to we and we've lower our rather in and basins the one response our chosen in pumps customers In returns, worth already than to volatility of other spot fleet redistribute to market fluctuations to see further best

in than still we from retire fuel middle to we diesel least in In on low-return stated last XXXX our XXXX, rather at the addition, of call, earnings pumps. of maintenance invest the as start through expect horsepower XXX,XXX

as horsepower We by start year, have this and us deployed highest-cost to believe of others maturity. remove already indicate started by assets. process the sector XX,XXX and relative has actions these We today the our our fallen we capacity responsible

the we for on our capital-efficient the are looking always gas to and strategy. front, transition most electric transition natural On ways fleet make progress

one equally budgeted X% of previously of in Our had to for second a always we to X% CapEx addition announced. the revenue guidance

saw of technology inventory that testing of for from with field as an recently equipment. electric that readily known have proven retired diesel to available since equipment recently replacement a OEM XX,XXX some the opportunity we pumps to This end, And purchase been we XXXX. around horsepower was

to to will capacity. existing two assets of we act QX, us continue customers strong have We on overall allow our without while a expect we These to transition while transition accelerate to eFrac now one return in frac technology earn the our eFrac our of framework. by plan, capital our allocation remaining utilizing technology customers increasing as

from one but retired of clarity, expecting chain is we're for this to take previously by horsepower third The For to supply newly and now due delays replacement fleet was recently fleet the equipment. delayed acquired announced quarter. January delivery

Considering and steady We newbuild strategy chain will will winning have deployment that will our year. the path require supply efficient differentiation. constraints, by after pumps, where horsepower conviction we with Even our most these the long-term all of be the cycle quality started electric capital be to a maximizing delivery returns. mid-year high service this flat capital

commercial business third-party our valuations. we its of recent Solutions transaction Power gas two-year one remains natural by and pioneering valuable encouraged are and Our fueling assets anniversary most is nearing

We have potential to with million capture over displaced and already of from has big Solutions in Power respect created million value head XX as diesel a cost inception $XXX this start savings. much offering. gallons Since as fuel

our and the have managed higher Power NexHub recent fleets fuel cost been CMG Our Center, substitution value on and elevating and our to frac visibility both business Digital our fleets. centralized increasing the The providers, of thereby fuel improving savings dual entire our Solutions customers rates using business us of third-party is our versus XX% customers.

cubic scaled organically of XX the Solutions frac XX more scale natural Permian by feet will in to day fleets. to fuel gas-powered CNG have to sold-out compression with over by capacity XX% year-end. This a We per XX fleet Basin than increase Power capacity million

Our hurdles also proprietary using while delivering significantly a plaguing in that industry, technology the to patent-pending both reliability addresses the gas. issues others equipment reduces approach field

more Our is the far platform than business. just transportation CNG

well this deliveries been Power several third-party customer reliability if had other to has providers is where The started frac electric recently early other frac QX, and success not all, so critical that only E&P first site Our gas NexTier. trusted consuming fleet fuel large and on operation challenging we to our exceeds most, fleets and a where demand gas the apparent gas with market. experience in Solutions

these our our increase difficult in a a evolve fuel capability believe oilfield a which and should to us advantage continue arbitrage. will give replicate, We sustained build in capture, coming offering portion maintain the is and to leader greater growing cost and position years the services. successes best-in-class as natural and We of our gas to product prior on

conference the one NexTier of New NexTier been Matt, our they Gillard. introduce has the you. let to critical making team rely joined to Operating returns. top-tier on help Matt service their that in and and calls, our provider maximize to can XXXX, Matt a NexTier Officer, Chief know me to customers summer

Matt Gillard

forward And our call, engagement Thank you, years. the I Robert. over to on the look increasing those coming to

I pivotal our lucky mentioned, on join months over a fantastic the and to so public to a ago, receive excited a dialogue far. to just Robert join rewarding industry. I very am at it's and XX for call time As frac, was journey NexTier been

used the to service company, customers strategy, commoditized our site investors. returns looking the for ourselves we ways integration to have for joined providers, Since differentiate more by our and from NexTier I the both well elevate

have this We extremely been process. efficient capital through

is Operational excellence key.

non-complementary bundle Digital lower We our core and the differs on have complete offer our creation to is completions of all well and This services, emissions the process, and lower Value the total designed NexHub from our customers, raise the of strategy. value. a strategies our strategy, for simply cost competing to transfer platform. discounts efficiency to of NexTier integration

remains ways While looking we our our their financial constantly pricing unchanged, customers strategy returns. are improve for to help

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fleet. We And perhaps the integration more our wellsite services ingrain frac for to industry-leading shareholders. our around managing our allows strategy have also to importantly, done us of this culture our further safety while returns most

for employees safe, our is highest priority Keeping the always NexTier.

have decision-making ways industry-leading the process. to are our lines further delivered Besides strategy, improve product well results, We all deeply we use wellsite safety customers' constantly for integration our to technology process. in matters which completion looking across

evolution the using fuel a as gas, of in leaders industry were frac. source natural for We

the logistics. sensor has the capital cost designs. our efficiency optimize significantly reservoir digital and maintain of technologies, fleets Our And our lowered completion to maximize our

well reservoir optimizing understood. to around efficiency our are completion one well respect in With to challenges help the We oilfields, believe is challenges engineering productivity design. by technology, best team equipped of the growing reservoir address

improvements significant offerings. technology IntelliStim offers over portfolio, Our technology past

team completion monitoring, to is most have understand notably have These with customers in over the seen months, our available on the frontline fiber the best to technologies optic last considerable and designs combine data drilling path number We adjust our our massive readily fly. uptake technologies engineers, forward. lateral And the to working value. completion potential science services. of on We of create with a real-time six data,

see we improve We through technologies understand use creating significant both we returns and value our the to our for services, are and investors these our potential to customers.

maximize strategy, capital efficiency. are our used with have to We customers, ourselves align like-minded looking that their own to

more with bring their working for have that are we we rewarding partnership that two our value years. than More the us long-term are of loyalty. worked to fleets understand and customers Our than the for customers, XX%

with top-quality a is process like-minded function on is spot looking minimal and improvement. constantly customer service of exposure, base relatively a Our us work to and

technologies to environment a We and for use sticky goals fully the the our points operational at These long-term to align relationships customer. should excellence lead and the of to more company create our relationships cycle. stable all operating NexTier in

in are been prior their Capital important has offerings is customers several over commoditized more frac our to The past shift very own cycles efficiency maximizing longer our years. has high maximize the The reality. never returns a and Helping the a sector. priority massive from industry best path also returns. undergone a no our service

become to will the compete more and in seeing we bifurcation Less between the will the years. already coming high-end obvious believe service low-end competitors. differentiation We and struggle efficient are providers

with it will turn over I And to Kenny. that

Kenny Pucheu

Matt. Thanks,

the to quarter up weather was February, the than with sequentially March operations more our net disruptions. in being little X% million the performed sometimes quarter, Execution start million the at fourth holidays. First throughout downtime industry to occurs that from as QX, revenue service $XXX high offset very compared the in in higher best Despite restarts $XXX rate year very history. month disruptions with weather pricing company early strong totaled a as winter

Adjusted was and the net $XXX up totaling of QX, XX% revenue. X% in prior income quarter million from

improved Profitability factors. an even was adjusted from saw several last Total sequentially diluted higher are QX. million $X.XX. in Profitability that income up typical share on $XXX per we was quarter. was Our million, expenses quarter as first adjusted $XXX net seasonal EBITDA improvement

with First, work we costly jobs a hours, us allow benefited shift of higher our that to from increase a full quarter with pumping customers in margin to downtime. higher efficiency, less

control. remain focused on cost we very Second,

points our of Our up once basis percentage SG&A compared XX as revenue while adjusted gross improved profit again. QX, was to a margin

top will We continue to to with diligent the be we look costs grow our very even as line.

was $XXX the Completion a higher quarter another sequential Third gross compared and margins. favorable X%. was quarter, the our In saw million to of segment, million, Services first This to We repositioning function the resets of and to revenue a million segment dedicated on operations. on revenues $XXX fourth start very of pricing round pricing. increase profit Services in higher Completion $XXX totaled improved approximately macro high-quality Year. customer strong fleet and New

a and Intervention quarter in $XX million In million, revenue job $XX totaled decrease million our segment, Gross slight fourth favorable Well million, compared quarter in a to Construction the decrease first $X on $XX quarter. Services less the from fourth profit mix. totaled

quarter the quarter. selling, to compared totaled $XX million and administrative $XX million fourth general First in expense

SG&A Excluding management adjusted $XX million, totaled adjustments of expense net million. $XX

years. our release over partial recognized During a a and deferred related $XXX million several conditions tax of utilize on expectation to allowance valuation next release we tax the non-cash the assets. to our tax This quarter, assets benefit the deferred improved first these market reflects

net first Management the the nature. nonrecurring management was totaling the adjustments items excluding for first was $XXX comp $X are quarter of adjustment $XXX stock includes million, adjustments release of this $XXX in for million of net other $XXX million, in income net $XX the adjusted with of a quarter $X million. tax which million. management EBITDA of benefit EBITDA When million include million. for Adjusted

the first the quarter of sheet. quarter quarter. liquidity balance in million. the compared exited with the cash, We with exited on fourth million up slightly total Now first to $XXX available $XXX We

our which comprised million Our of and undrawn. remains asset-based cash available liquidity $XXX facility, million credit was on of $XXX

debt net excluding financing finance discounts the first Total was costs deferred and obligations. debt $XXX of at lease million, of and quarter the end

until the quarter. end XXXX. loan maturities of the of term first down slightly the $XXX was no debt fourth quarter at Net approximately have from million, We end the

during Our our the share entirely flow with funded were repurchases free quarter. cash

of requiring the needs. flow working the $XXX Cash first strengthened cash was operating flow with by capital heavy quarter in million. again typically impacted capital million headwinds activities working with $XX year from once Profitability

activities during $XX used in investing first cash quarter. million Our the was

gas by to strategy, totaled power normal as for both investments for mostly wellsite solutions transition CapEx CapEx in $XX our our well logistics. including fleet natural million, of driven growth last-mile the powered frac integration funding maintenance, and as

in We cash improve our frac and throughout This ancillary we significantly resulted efficiency. investments $XX anticipate flow fleet in should equipment also made free will progress accelerate frac cash that around million we of free the year. flow as

Alamo a which the to transaction funded of will earn-out This payment second already final earn-out the In that million, the payment on quarter, the be transaction. we headwind associated cash free period. was flow final in with have $XX the

investments see to points us and positioned all the strong a at the continue in have success cycle. have outlook we for We made

Our high nimble be low liquidity and allows opportunistic. and leverage, priorities for to us

a in intend net We are and reach to that fully goal we path on XXXX. to zero debt

the return M&A the The remainder to ready strategy. in to points capital opportunities company key cadence on strategic timing remains of be the of opportunistic dependent shareholder Positioning one our cycle on our is at and our the investment the all programs allocation capitalize of of the year. components throughout

to highest shareholders balance around to look flow generate $XXX sheet $XXX of to million had QX, our goal leave at This least execution. on million approximately the cash in the remaining in will we capital million for core and $XXX potential free including strong us return this investment by opportunities, A reiterate to XXXX. unallocated return with end the roughly At end $XX our We is continue XXXX. M&A. of of million to we commitment

include may of the cash of with utilize intent letter equity capital have that the place comprising final Dependent potentially about about unallocated XXXX in value. a and half expected this component value. of consideration of the would half We currently agreement, nonbinding upon equity

service our improve wellsite program. return other our significantly shareholder expect our to expanding be offering successfully uses even that we capital would beyond closed, such would we’ll it capital per accretive transaction This expand and if efficiency and integration share earnings our as of

close next possible transaction XX days. This for additional could add we other the LOIs within XX over complementary that would It transactions the is days. could also next execute services

to of process. $XXX we fit All our for M&A our that we stock throughout these capital within would at program strategic on potential unallocated this see expect million and of deals this buyback time execute

We team. have this we view of a our be strong record track a core and very strength M&A to management

several on to are see no passed sheet We expand use And have our pivot we can program. found, attractive balance did investors. not or cash that we accretive if further already the transactions for return deals as the to shareholder strengthen

on the Now outlook.

We second see we the run profitability not that and solid have quarter as QX. up continue set saw good quarter. at second rate same to March us weather the Further, in entered disruptions we a should the

quarter, the revenue to adjusted EBITDA improve expect second growth moderate For we sequential again. with expected once

still We We reiterate to returns. the X% we half of budget to for in early our in budget at year. our and invest year first be expect the expect to to CapEx to as CapEx half revenue weighted back decline maximize X% plan the

the horsepower our to flow pure growing investments. to core are they and and returns to operations. over one-third These of to horsepower we transition cash free of as results natural is gas our efficiency powered, projects Outside elevate investments targeting high-return of of frac are making we CapEx continue the our outside our investments see

do with optionality resilient first gives year flow second to operating cash within very free us see degradation the the and know today, which the implying of to capital financial what our not fundamentals allocation in through We Considering build consistent half XXXX half see relative results performance. expect a we a in we framework. our strong

and is maximizing our our our we As our on value customers, have for focus employees. investors, demonstrated,

now Robert remarks. it I'll to for closing back turn

Robert Drummond

US have current specifically, The services Kenny. oilfield great this and pumpers as unfolded. discipline more and Matt you, has cycle industry, Thank shown land pressure the

will And will We be we lead discipline only expect we capital and downside if the to year and past continue strategies. pricing way. rewarded to return next

a key with takeaways. few close me let Now,

the many for cycle First, customers service lead this as of returns value commoditized rewarded and be that are is time some will oilfield we've in our true amongst should ways. was the saying in This quality the in service to different. a past. it grows. This providers. capital-constrained service would industry been be bifurcation providers The no when High-quality is longer

integration Our their strategy wellsite sustainable our we help our maximize as returns advantage us should without own. give customers a sacrificing

for long-term. Second, remains demand should services the our and strong for

a expect demand have oil to US did gas their constructive committed experienced to customers commodity in global respond recent aggressively absent This macro a crisis volatility more much in not that does and a that stayed event the with we it banking of behavior. very not as sector material as we a here for change outlook severe Our shale mature the more oil is prior cycles. and do function

capital strong back that companies. and strong Finally, been is We've for lengthening cash will and maximize the returns our we the a formula in factor we service that a the for conviction focus see free have industry shifting the discipline to throughout strategy period cycle. investors returns a flow winning value allocation for our oilfield capital

for remaining same playbook reward cycle. and no the path is followed see reward returning last best industry forward The the obvious. us to for to a We disciplined

you. open that Thank now like for Q&A. we'd the With line to

Operator

JPMorgan. We will Instructions] question question-and-answer go first Jayaram comes with begin Arun now ahead. session. Our Please from [Operator the

Arun Jayaram

elaborate into and wondering you're competitive that peers I Power is because maybe trends seeing was We gentlemen. good balance kind now that -- understand morning segment. if and moving the maybe maybe could of we discuss that within Solutions. start your could you on Yes, of one

segment I XX help think just of this that we And about today us through into year? fleets XX% move XX by think you're earnings as yearend. the on up be to could next maybe power

Robert Drummond

diesel part focusing what The fuel Power think a for your diesel. in and out compressed it asset the integration question frac between when the value value gas I natural thank company. We're of the fleet a that's and business besides at a very had is being of to question deliver now fact look to on the into to the we couple be higher valuable you Yes, of fleet. Well, a years you between that you that's natural Solutions natural for the lot your arbitrage that the to great think gas own get and Arun. sense displacement of creates there the able to gas,

despite wanted supply been fleets because have own huge our to we demand for outside first in own. the measured We our our product growth of

benefits the The P&L frac continue capital of profitability, of individual in compete Solutions you has it to But that's take to benefit account Power is the to the for the into homerun. within that the profitability P&L to And we to own business level comment the I our fund that to that when we about company. its first on have. it's fleets really is are we prepared the a into that us but second, that a in I'm Kenny going the that our customers market seeing venture mentioned ask believe the that. of the indicative value of little remarks bit outside the for in reason a

fund the is use about can wellsite. flow the optimal preferentially it. gas in our through within the for capital offering funding structure of which foresee service. like us, technology like it both this have our wellsite. continue we at their the mentioned use What And And can growth when future at field that largely is do some to technology patent-pending things that customers the we this that through allocation to in And we CNG we

our that the I think that's like. discontinuing. see that's really Kenny? demand We differentiates from customers something there that out else us everything

Kenny Pucheu

Arun. morning, Good Yeah.

very We I for million I'll for value And CapEx company, part nearly since as I on of separately just continue think answer return XXXX. And these and off quickly the this from three way we platform it have to Power reasons. recent look Power the to basically with And dislocation, mentioned that diesel to and of kit. enterprise. of we've Robert say over that. is get and years significant always it. two the we not the of hands payback. that's budget diesel grow investments underwritten with year report business with success question example, we've XXXX performance accretive a seeing the with we've created as funding group the price the high financial do strong the funding we made really will we're two been our your But to margins funding business, we the Solutions start higher happy at and the for business of we're as several kind substitution part the we We're this. $XX gas as for on in that a It's are the So CapEx past that Solutions

Arun Jayaram

Maybe helpful. in this earnings in premium Robert, for themes providers of That's one Robert. the my frac as follow-up NEX. is Great. is bifurcation season between the such market call it

XX basins. for strong come One returns where that Same And highlighted American investor very about What's earning land per of OCTG. in environment term? do in capital. assessment to very, an and down the in the companies debates big your rigs service have of EBITDA resiliency day normalized we types relative the a those premium in How -- near margins mid-XXs you of of fleets the over idle gas some view most Robert operators thing rates world. more think is North of the on range. today fleet on We're seeing you could some

Robert Drummond

I a diesel A sector question. EPS in to the earning. for our as funding don't funding do funding. fleet Good that services. a allow fuel everybody and because from as levels transition process to earnings. of not of guess even that mean is lot annually the realize to things And our to I to us, me at we over still but creating $XX I -- earnings there. for we're a only would kind of value it's of we I I XX% gas understand for hard process per say And are us in fuel. to natural we need even important in it's million customer think continue million or that that $XX maybe us who think just

think a future? everybody and do for powered of been how does solid it do requires base. in think gas that take kind shareholder is path -- to math to to to or seven, the the eight I returns on our and it that's able six, that running to kind be fueled natural to we our us of on be year maintain XXX% try a And convert long and allocation to cash return which path capital Which the we've fleet,

our So I customers appreciate that. think

that think continue if the it I think scenario. I where of they're And value-creating earnings the a I invest fleet we're bring emission it's to can and and win-win balancing to to more getting out are margins do a now at nicely to and that to the kind with lower continue think. we

supply So and and about about few that regarding want the the and a to the demand talk into I bit loose a market, kind macro. on of go fleets part

I gas predicted narrative we call we US seen the about natural as now, evolve think the outlook. still a until fleets. is reduction earnings the gas owner and last near-term have I prices supply guided the talking corresponding related had price recession versus gas global we're that from long-term we think commodity during what to structural in in And a

which rig DUC of has short-term that to led that, dropped additional oil to the flat. only remained But only since now the and even drilling that count XX, some banking January recovered. the X%. But price horizontal had through by since all has crisis volatility occurred And count is

we that QX made XX the then QX, since we state. the bottom And balanced market was the commodity at of case market that the forth, and a line or frac actually a end the has by QX back is ended the bounce with fleets. think in undersupplied end at of had So

of account about you see we at year, that we've is expected XX% So new closely adds from about that attrition. current out into see boisterous very fleets during we basically in that attrit the through need keep on fleets balances about saying one for you every coming new here this the which with market. frac think add the the to of do fleet the I been XXX, balance? with have how which build kind out, to And XX

seen demonstrates in most a frac off market that balanced market in that XXXX, So perhaps career. ever the my that think which very underbalanced of was I've I coming

we basins to So our the environment very all say volatile oil. in where supportive fleets of would market year. I the gas associated to of with half is for back Even the the the the movement stay as gas spot into margins an is there move very from same that's

trust sum in that I up that's we're saying that shuffle and market. going little up while to get caught I'd guess, in the a on spot assessment we're just by all the not going macro going to

Arun Jayaram

very Thank much. you

Operator

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

Derek Podhaizer

customer one good that your market do of pumps. you around progression? ready that. fleet pricing Can to you're you can back Tier to to worth us wanted guys. morning that asking not help through I diesel, fleet was walk Hey, to a comes go you X fleet it concessions redistributing -- comments assuming Spot for

comment. peer to forced move your made a fleets starting other beef to we're see similar in the this that the fleets. You the those up is fleet Your I attrition current marketplace? active mean, unfold to

to taking to that think like us getting you the I also would are the your and redistribute these as go can pumps that of importantly to paid of fleet you And that give unpack you're more why also color out if progression some chose stuff sound you market. and just different It customers? it. for

playbook this disciplined piece to is an I of important think unfold this new starting here.

Robert Drummond

please. we It say manner a volatile. bit the that the general talking got like the to on in the effective when it, market a things very we've answer going more to fleet Matt I there's spot while in pulled market would -- about three was repositioned, more we just or had that shuffle to very of little just color in ask Look going our a Derek. low I'm a of little little be it arena. not -- reallocate that participation in a so or was less oil, And to put in play get just we to market profitability. out to we've a two that it's decided spot a as been for Thanks one on Matt, but that spot question gas Yeah. can big

Matt Gillard

Okay.

So Robert. thanks,

think to fall began As efficiency to our operations we just already. to decision Robert horsepower fleet have all of just that some mentioned, same we add when the that did I make and spot But it below take out expectations. people return market limited But exposure were at our at flavor put unsustainable during the our more shortages levels the long to were probably demands somewhat and that on here -- time the that in fleet we XXXX term.

mind, clients additional level would to we our in down revenue Texas. East this these able key were profitability in with horsepower fleet normally core dispersed fleets maintain with and of two to standalone and that the make. same that factors fleet shut We So we

at and look customers. you this see a ourselves both we really for as win-win if So this our

Derek Podhaizer

signed Got CIG you Any would color Just could on a with on value saw be Maybe it. like going opportunity what the the to of anymore just of back be provide sounded Logistics That's your that that? providing we type the that similar wellsite and very just integration. you you type color more expansion this an this other Is can it LOI you wellsite integration around year? made customers. proposition helpful.

Robert Drummond

buying throughout been take to this -- integration on level some and And another at to the our been is technology operation with stock. back opportunity an with got has compete M&A the theme Look these would have little the own back buying you're our you there comments. want We tack that and M&A add We're extremely and Matt a believe track. strong patient level. our anything? around for opportunities was add to anything capital allocation could perspective that integration stock where going as at really right an think that our our point process I do we're to the from own want depressed accretive Kenny, to But a and deals compete to strategy to really a get perspective. find and to that's I from to deals. we we've the efficiency do Yes. few can just committed that looking logic on said

Kenny Pucheu

we just we to program. these in in plan return to Derek, call. it probably And announce would Look we fact just add continue our prepared Yes. say public. that I'll levels said I to on execute do to stated our have We aggressively. remarks we that make our a And shareholder non-binding wanted just as at LOI

Derek Podhaizer

guys. color, Got it. Great. the Appreciate

Kenny Pucheu

Thank you.

Operator

comes question ahead. Please from James. with go Jim Next Raymond Rollyson

Jim Rollyson

guys. morning, Good

Robert Drummond

Good morning, James.

Jim Rollyson

just going electric Robert you on one were of of made to comments fleet. filter the of going an the to that the back existing into pumps kind purchase of some opportunistic you

of Obviously, the Your the stuff conversion incrementally talked a you've of now. your you've been has working this adding as about gas and dictates. on couple for kind been your prior market strategy years to eFleets fleet

opportunity replace fleet from One of doing building your kind of of this pumps things adding Curious up as is with a you view working. electric how with of competitors of pumps maybe build fleets. up go-forward your the legacy as kind pumps the it's to to side similar active thing eFleet of some kind a

Robert Drummond

opportunity and care gas-powered Jim. that to fleets being of opportunistically natural saying We've question. was this over find to within demand natural something strategy able that it. allocation A be gas. Thanks, to take will in strong fit to entirely that big capital customer we're our electric some accelerate the move kind We of fleet of appreciate going been our time component to

think out that over coming stuff a to a And add little can time. in. and color? about We you kind talking I but balance you going more I be why about that some to us to some of careful expect Matt have been very don't measured want note from that's previously see carefully

Matt Gillard

Yes.

Robert. Thanks, Okay.

we've we talked provides. value within us to the horsepower And our that can that you -- QX so that electric obtain to I had think two about additional diesel now years opportunity in some it think I we for Jim the presented So electric fleet mentioned over had dispersed Robert horsepower. see

a say and I'd to we at These to to like is invest of actually this were diesel made year decision ancillary electrifying already our equipment. addition thing our last heart the in crews. One blenders in

a Tier time, with we maintenance blenders doing But easy we became construction Emerald e-pumps very within generate of horsepower which operate. electric available to this we're fairly to second our By married we that were lowering fleet a to pumps quickly. have CapEx alongside this, decision able made the new at two in second the CapEx. electric existing by our same have further the higher that So Emerald cost to transition deploy retiring deploy our fleet additional existing crew some the the

Jim Rollyson

think amortization the end cash you Makes Kenny. above the the And perfect do that that net continuing will and for some term paying then leverage actually below of year. rate? by on start off you to strictly be piling Kenny going sense. to the sheet, maybe just hopefully balance one mentioned follow-up of over Is bring you just or zero loan

Kenny Pucheu

for question. Yes the Jim, thanks

watching opportunistic towards down the I at that's trading if this would we're debt and it's some say, cash. I leaning say think just right obviously, balance an point, cash would now. But sheet strengthening probably pay But I we we're with would. avenue whether to see we

Jim Rollyson

guys. you, Thank Good Great. quarter.

Operator

comes question Please Stifel. with Stephen next go from Our Gengaro ahead.

Stephen Gengaro

sort customers now, discussion from the lot you're morning heard integrated how or it you around everybody. One, down your for as when your price get profitability trying a of about to how from talking And just of to pricing discussions. a sense how well the view think well me. how right asset. you things on sort sort much is opposed your sort of holistically sort we've do just opportunities? Good site curious, pump per filters we conversations to And per of basis? a for site Thanks. about, Two of and per about peers think that profitability of of into I'm

Robert Drummond

to less price trade-offs see pricing our a unit our looking there's good numbers those. in very get terms, how by We've look efficiency in fleet or it's or that at And between balance and expect think Look by it that price, getting profitability contract increases efficiency I matter integration. I QX. more frac, and site, you're And I you it's single-digit successful been by little all at well at operating QX to increase consider appreciate we to in customers higher would pricing, a When question. and no look more a pricing make less thresholds. integration return

a that to kind addresses our It support good more market support returns, the operations talking drive picture of looking wet down the bottom integration that and a I'm four which M&A to sand the behind are when about able in costs, the customers is think of can their close because And mine increase, bigger where manner program at story. customers' their particularly more line and very at anything all and about overall that and price are. those it. how open-minded holistic talk to I in look behind sand integration It's location they're can when I so wet And the to is using our components. is aspect, with that a be we our of bring

offset inflation can half dealing get a we probably that we year. discussions continue I the spot with still all the these And back the And include get mostly what think up I will we be our would inflation. of talking guiding that of we the price I happens think Yes, to the we're into with were volatility earlier, if been we've price those half And things. with about customers. of then think of year that was in market say to brought will back lot that

Stephen Gengaro

a Great, you can CapEx percentage And to past, talked as And on there? little us bit for but Is can one anything in about one update think give Kenny. EBITDA? thank for then I just you -- you've quick a know us the XXXX any there framework this you. how of about

Kenny Pucheu

through Sure. we're mean you the revenue to cycle. that in same our I Look can that X% capital is it's of we've going said anticipate to time. program And to commit X% very XXXX, through clearly what allocation the thing. by

Stephen Gengaro

Okay. Thank you.

Kenny Pucheu

Thank you.

Operator

comes ahead. Please go next Scott question Gruber Citigroup. Our with from

Scott Gruber

Good morning.

Robert Drummond

Good morning.

Scott Gruber

we are see some et between emerge how across super certainly on pumps. markets compress spread here different operational to When spreads and pump obviously, company could types evolve. market legacy to pricing pumps could here tend different question by tight and start the cetera. next-gen A But efficiencies particularly pricing

burning wide at spread versus magnitude the pumps spread I'm and dual for by today? gas the savings fuel if gas fuel spread amount a you be look at obviously just diesel you look diesel running a significant Next-gen pricing what of would wondering, fuel of gas is wide quite today the savings. supported fleet, here diesel

Robert Drummond

wide understand offset spread the how diesel price supported between amount to customers fleet that that And occurs. about very a by gas-powered well much versus as and any arbitrage of do it displacement they look it your we. is price so that the get as power and arbitrage. unit equation Well, and is math for it with of the that you We can in that's

a is structure keeping spread for are try and to the broad in I the to with the it marketplace low price that's that that that that we arbitrage supports reason think prices facilitate wide, today extremely and diesel do they gas where a bifurcation. whole pricing lot because

demand And deploy fleets just I can have is constant. you think you that benefit. bifurcation Anytime the will continue a one those about it. And for huge to be

gets better that's units. operate even increase not think perhaps thing you another them I big bifurcation. How maybe a displacement about on to to the we these think that change all get how as going difference. I That's makes smarter supports

Scott Gruber

Definitely. Go ahead.

Robert Drummond

that okay? address say to I was going it, did

Scott Gruber

guys why OEM. market? building But OEM at the a with gas How somebody diesel, of and they $X when Yeah. good I pumps canceled through opportunity into the can from follow-up, Was to available? I by some sounds on it just to they go to came with all buy the the the $X math number spec? it sizable were order eFrac an did and doing you else those curious of pumps but market fairly back just was like took And advantage quick and run getting just envelope a the you a offline.

Robert Drummond

in a this it a on more pumps it maybe built readily I how And terms was available. that access was contractual changed, that I about bit changed maybe it. spec. individual could was just think in the the versus that think those little you little pumps case, system And a thing not holistic made

that, that know asked -- sorry think ahead. you of go but Back I'm I I to inventory no for today market your original the of that. not like question lot except there's -- a in about me

Scott Gruber

like this like one-off. just was there's one-off. I opportunities or wondering a was about No additional It sounds whether this a whether

Robert Drummond

think We so.

Scott Gruber

Got you.

all the color. appreciate Well, Okay. you. Thank

Robert Drummond

Thank Scott. you,

Operator

Waqar question Markets. with Please Syed ahead. go from next ATB Our Capital comes

Waqar Syed

my wanted question. moderate QX. I mean by to Thanks the in for you taking just your word what little for more guidance a understand bit

digits in or maybe quarter-over-quarter, some year-over-year were could there? single mean mid-single-digit or that up mean low increase your Given percentage about Do you revenues moderate to XX% growth moderating the type that? high provide you Could different things. or of growth bookends more than QX number a that

Kenny Pucheu

morning. good Waqar, Hey,

reiterate important. said, I just because we me very think it what is Let

update. outlook our from Our essentially is unchanged last

to We adjusted growth in we've continue called topline XX% growth see of EBITDA XXXX. and XX% to out

quarter as are we solid would say I what We think had exit. have in that, with QX. heavily. trajectory. we're We'll just we to in weather I that that the gains in QX that we a disruptions And we demonstrated less QX in the which momentum. way we continue currently is And investing see entered by QX continue on to integration, push

will growth in continued topline And also profits. to growth that's this we're prepared as QX and will what we really say lead operating our point. all this to said lead we But this moderate that expect at

Robert Drummond

flow. Improved free cash

Waqar Mustafa Syed

expect margins Fair. us kind this could you of Maybe on QX? you the that growth if with help moderate revenue in incremental

Kenny Pucheu

I've Waqar. said, we're time to all going say this at

Waqar Mustafa Syed

All right.

That's much. very thank have. I So you all

Kenny Pucheu

Thanks Waqar.

Operator

from Please question Benchmark. Haley go Kurt comes with ahead. Our next

Kurt Haley

squeezing appreciate for Hey really guys. Thanks it.\ me in

Kenny Pucheu

Kurt. you, Thank

Kurt Haley

Yeah.

sure. For

land in efficiency transition for lot of or kind that's it and a want to there to the from reminds years underway in rigs mechanical in I was change kind drilling XX U.S. market, ways rig right? right? you etceteras. know this -- what I a land don't dynamics on etcetera, of I'm and Robert, in transpired in shifted step me So ago drilling XX U.S. of rigs focus when the the AC huge of dynamic frac And

It is that like me path. market seems frac the to definitely on

equivalent my you So effectively frac market? will did would then with that guess see agree you frac kind the do electric of if -- of you maybe this question suggest And is, effectively become I the really would analogy? the AC fleets you

fuel let's asset on term so to how predominant thoughts of see eight-year like transition near evolving. You the in will period stuff to would of be you your assets out maybe dual think do the kind again Or indicated the the a that really it still the and get six marketplace? let's noise out get you get of

Robert Drummond

look, Well, diesel investment buying is return for and very and Rigs it's return buying guests cases rigs both versus the drilling frac frac natural to I difference gas these point investment natural apparent. transition our in I were that oil buying that's In between on mean think good fleets. a price. gas efficiency is and a the increased fleets natural a

I the supported easy because arbitrage. return investment much the so It's make logic. think by to that's that is an

so provide headed gas to But you to we're think we're be power electricity, to well like not quick a be going natural towards turbine-powered perfectly that generators pump. provide happening, generators headed when you that look Because, at natural think But efficient. that gas all where distinguish to to when I'd to say or exactly all-natural you not it's use about careful what's fueling. I I'm electric. power to And gas as have that's

between. of Tier the operating properly And you fuel makes at the perspective hybrid competitive And stance. look math some very our that, I Power even both customers dual would and when systems from maybe Solutions the supported frankly in a four argue the by sort of likes

that doing some competitors our I Arun of some that. of that mentioned earlier mentioned mean Somebody

we. are So

spend capital I to now the have case on years programs makes in in math the there. a a capital sense. take all of get going number that But the us think that lot any allocation within of to of sector it's

will makes system years. lower-cost exact kind exactly I equipment technology seven the being look a so believe what think levels. think from deployed. the different during using And perspective cleaner of sense endpoint the period on like many may But we is fuel that that eight system, And evolve I probably of not bit fuel certainly

Kurt Haley

and going of very That's between very a and been clear about differentiation I color. help follow-up great. if always very friction great dedicated E&P there's companies. But or about there's kind kind on of That's discipline as And And to been this on my of markets kind but E&Ps service of service give dedicated that spot here up have versus consistent it they'll price in to can't try always see pricing of you've fleets. think and don't and capital periods kind others discipline, opportunity, clear what's context contractual arrangement. even guys cycle an the between is prior on has a kind lean and whenever

to surface else as that's some friction where where Just the kind that's kind discussion some on curious Anything anything price more concessions? incremental up just beyond are Robert? has of of going there there's typical trying been bubbling the to the the to been typical E&Ps extract

Robert Drummond

No, I a don't I they're think to mean higher price. a going so. We want always want lower always price.

job were lot decisions didn't that's and a from Arun's to spot fleets little But business good very disruption market trust oil. question your of we do up and based explaining. believe that predictable make The during really choked and something macro the upon a I coming utilization. supply think we've with I that's pricing to gas natural. a got and demand loose moving bit

are last at all it's full that of we has given utilization. right us. fleet needs harder XX% it mean the it I been like that's substantially. I undersupplied about all there sitting end the time at that And nobody number we're we're the the and And were attrition coming a in than now but Matt look than less ever to. But of I fleets of And day the talk running think run. year really when

with of day, think I have before. And out. a don't end bit played it's better that bit concern more pressure us taken all being little E&Ps the blame And don't view maintenance I a and but I the market through of little the the a capital-constrained that on lot market longer-term for the that price a we playbook. the think than at ever that's in near is that's have new of supply it negotiating chain the a way provides

Kurt Haley

Thank it. appreciate Really Awesome. you.

Robert Drummond

you. Thank

Operator

comes The question go Energy next from John with Partners. ahead. Please Daniel Daniel

John Daniel

guys about be guys Thanks assume companies simplistically natural call for to focused are Knowing the the have comes push new opportunities fleets gas clear which gentlemen. on keeping for Hi, differentiation, Robert pass players? forward just from and you is versus power tend the been smaller going. it old. Tier likely that fair you two this buy to to the to of going who kind frac very

Robert Drummond

leaves better out, a I M&A back. think that buying own trade be scale to quicker tea some difference conversion arena our on you there that. Preferably on And where frac a hate gas. has could to ruled there. be the swift have kind really towards I pretty would I'd the are accurately matters. a said but that swift company any the you're way diesel was make of in say, moved one reading than case relatively that cases like that or a payback Well, before the it to look you see stock that might fleet could horsepower or and scale of we all a a natural curve pure diesel But could partial we've M&A point the fleet that that it

John Daniel

six industry makes that or decides you any say if how I years so once the never customer adopting but mean sense? they customers you to Yes you I I the so or go XXX% And company about do the do do go fleets, seven that your electric they for never quickly will sense speed conversion, make to transition The electric? get how that. talked if know

Robert Drummond

you it multiyear time and look added I this to that transition take in to Yes that's converted, say done. you CapEx to a be takes if to it heard those does. everybody saying before a probably do customers they a going refer that. But is and question I've few takes the amount back at the is when wanted the to want fleet would time. be long able deal. just of to up not get And that all for take going it it that

time of arrangement you fuel the or a thing say profile with that, displaces of everything gas this else is XX% second get XX% X little Tier you dual sometimes say kind that. the by ways I'd the there and and out and emission And look associated

maybe these go You better. hybrid fleets are

we pure already I would seen about There's I've something a going surprised that sexy So be not a see but fleet few ultimately if that And apparently I'm of happen. kind conclusion, to customers to which that happen. coming electric to know thought don't lasts forever.

John Daniel

Yes. thoughts for Can us outlook? Last update not cementing and might play guys give business I'm in the still mistaken, trends Any this you if market. just you one enough. in me that on Fair appreciated. be picture would big an –

Robert Drummond

and on that getting back, while talked and our be the be. to and lot our like our shrunk we And to where returns have footprint business. just they that. what I'd needed the they a we drilling tied results of obviously, to wanted And our about Kenny rig we've loading particular a where a Look, Yes. had to our be efficiency have business, we to offer. count say it's We've done focusing little that piece bit.

first oil recover the surprised a the I that that cash to though rig the we Up bit that like oil where was rig I married back be that I just And one up a half were argue think back way and year in happens little I earlier drilling and similar up count. that generating a know kind I bit bit. they of think in of is dropped if And it. is a have flow choked drilling I would quarter. now beyond by little back contractors free few it's the to a view even. count what when to in oil I who wouldn't the rigs And the in It's price And have.

John Daniel

for Okay. me guys. guys. including Thanks All right,

Robert Drummond

appreciate I it.

Operator

the closing Robert end the back reached session. have question-and-answer the we gentlemen of Drummond I like call to and Ladies turn remarks. would Mr. to for any

Robert Drummond

to help to recent our look proud and Thank execution while for show Thank partnership of own. you our continue today's maximizing customers again. I'm our continue participating for commodity will their the to in also extremely team's in very you and maximize And volatility through ways NexTier customers call to your value we and interest returns much we're our company. going for our of our

Operator

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

You may now disconnect.

NexTier Oilfield Solutions (NEX) 26 Apr 232023 Q1 Earnings call transcript