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NEX NexTier Oilfield Solutions

Participants
Kevin McDonald Chief Administrative Officer and General Counsel
Robert Drummond President and CEO
Kenny Pucheu CFO
Sean Meakim JPMorgan
Chase Mulvehill Bank of America
Tommy Moll Stephens
Christopher Voie Wells Fargo
Ian MacPherson Simmons
Stephen Gengaro Stifel
Scott Gruber Citigroup
John Daniel Daniel Energy Partners
Call transcript
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Operator

Good morning and welcome to the NexTier Oilfield Solutions' Third Quarter 2020 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 Kevin McDonald, Chief Administrative Officer and General Counsel for NexTier. sir. ahead, go Please

Kevin McDonald

President Good earnings and our conference With Officer. Robert XXXX operator. Kenny Officer; NexTier Chief Pucheu, third to Oilfield results. Financial Drummond, are today Solutions' call me Chief morning, you, Executive welcome and everyone, the quarter and Thank to discuss

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

no call morning differ which these Company's many statements uncertainties, forward-looking subject Form Form to revise statements filed on of cause any XX-Q could from which reason. undertake or filings. We Our any this speak are materially quarterly Securities Exchange includes XX-K, risk to and implied and results expressed Commission update We in control, those and considered expectations, regarding forward-looking you the obligation of report our and by statements reports actual the which on publicly our disclosures are statements. that statements risks annual factors predictions These for are forward-looking to refer outlook beyond subsequently to or statements. other or to Company's in future, the NexTier's forward-looking

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

the to Drummond, Executive NexTier. each website. that, posted our Chief release to for and With respect over Officer of in are details release Additional of the Robert with turn comparable directly related for of which will earnings fourth and a are measures reconciliation our in and earnings included of XXXX third most XXXX, our quarter financial President measures non-GAAP to GAAP I the on the financial quarter XXXX call

Robert Drummond

market Activity NexTier and strategy the on Kevin, and challenging NexTier's upwards carrying a of another of QX, quarter for base despite I'm late value the I'll morning. proposition team as to cyclical quarter. on achieved a thanks, and third us execute proud steadily our trended Well, continue this we the our start reaching thank our everyone, QX. entered from continued commitments backdrop. of the this QX. delivering joining call on after for in you, now at activity quarter now with low in relatively We is future. of the lows over into few highlights momentum maximizing

of to our While with navigate delivered combined utilization. including we sustainable continued outlook a of and towards April decrementals results, strong activity a up pricing improved, levels ahead improved these to of path we QX challenging XX%, market relatively Despite XX%. calendar EBITDA adjusted headwinds

to continue which have We structurally our results. drive will out favorably impact to cost, and impacted continue

plan to within business, fully our which marked chain, deployed first $XX the new We grow XX quarter SG&A share value NexTier. Third quarter. X% digital strategic revenue market XX% a platform success drive enables fleets, averaged nearly our XX generate utilized of a across the our of U.S. adjusted the reduction We and sequential our maintaining XX%. for decrease, million improved to the integrated fully versus XX% returns and

fleets the and seven the where fleet deployed doubling than of with costs, we redeployed our par start-up since minimal we strength delivering count, successfully June have we before operational are evidencing nearly better performance our left the customer today, and of As while And readiness efficiencies downturn. or on end relationships. of and safety off

year, and highlight to we observations. looking like begin of and next key I'd several ahead XXXX remainder As the navigate to points

supply. improve, there quarter reducing in significant has shutdowns. same frac economies begun is of trough Late next began diesel-powered increase the a at year, now following has we was retirements, second COVID-XX the Activity behind global economic getting and fleet work and time, back worst First, U.S. believe to the for to future the been availability us.

rationalize to anticipate as continue a more the rebound. to providers their playing service balanced market assets, we continues field As

new market as a gained site increase superior of integrated providing customers reduce competitive by completion enabled logistics the are efforts well tools, around tools share our at frac service These in a our are our growing faster services and the offering. to new to and the site our enables than our footprint and work the value services strategic customers. utilized Second, NexTier our challenges, integrated their involved pure location the foundation frac proposition for digital carbon scope. is successfully overall large well our overall cost market, and reduce to and integration the footprint offering being fiercely well site. customers for despite Thanks This digitally well services by these as services improving our

Next, financial the weathered and eventual year customers. milestone tier. innovation. for is and and this the leading ensures Keane's technology And recovery investors invest allows having long-haul worst here to us our positioned of returns C&J fortified by recently driven next with after next what the pandemic, storm anniversary form Company the the win likely to of reached We position COVID-XX in provide our and one-year for the merger is unprecedented we've a with to finally,

advanced second quality. We a have six efficient months position, business the quarter. and milestones fleets rollout real achieving while maintaining The these service continued all ensuring noncore delivering divested in Well the in and We NexTier our on including Services targeted outperformed sale We for first people. and more achieved the been deployed all bolstering innovation, has investment We our customers, for in deployment exceeded a quickly the very synergies, instances, win our business NexHub of schedule. and integration with in rationale on of balance the the quarter, most further time completed focus for Support very our our and ahead of results opportunistic of we deal. of safety at fortified sheet of our process than

downturn, dramatic more by growth, and The associated resulting ever, on of influenced more industry. than I team, bifurcation We striving spectrum evident efficiency appreciate well today. The have their that rate quo to as reach pace completion played management an by loyalty what today's in is COVID-XX oil year's the We uncertain its to that the source and With magnitude price even XX% time, recent the becoming The higher players the the cadence better same an reduced overview, improving, a industry gas completion horsepower levels to the that seeing tier. we're most challenge is given imbalance. and to demand a dependent of XXX% the sort industry, next XX role diesel-powered, important while lower combined amongst always activity and a pandemic is utilization this a believe the point. by and sustainability. estimate inability utilize horsepower is horsepower to demand. magnitude best-in-class outstanding in beginning and let's the XX% emission discuss a including At at total base the of We in of frac employees base passion end the factors has is which status today in with attrition, activity market power largely our however, subject the stratified been and as of supply across and out over horsepower. recent natural including U.S. thus, and has is sit million approaching well are range and,

market, in preferentially today, natural upper major and a our power on allocation NexTier more comprised in player is higher returns. this have XX% growing we side sustainable continue capability U.S. the for gas-powered we the of to focus While of to pricing and and capital years, fleet solutions natural our that and deployed be natural attract frac in other gas We've the market. largest been power investing proud gas the

enhanced and to growth lower emissions. allocate all In with plan addition, returns equipment we to future capital

conversion natural continue existing growing While base gas-powered diesel-powered the we becomes investments the our made this to portion in equipment. bifurcation more capability the via while apparent, of horsepower harvest of traditional with

We utilize we us which and remove This capital marketed of from inventory. are cut to maintaining permanently this, from our forward capital them fleet to the base frac reduce maintenance flexibility responsible maintenance XXX,XXX To upside additional emission proactive our actions consumed, taking an pricing fracturing over CapEx a that to equipment. time the partially frames we'll the market, future. major horsepower, profile. by will fundamentals assets top allows stratified the reallocating our reduction customers' most will demand fund the bolster way in to we us up and and path the our marketed utilize meet initiatives components the allow hydraulic and while lower to offers Once carbon approximate and accomplish and our in by prudent of better

million. merger maintenance our Combined ago. CapEx efforts, at we'll We will we the expect since the diesel-powered Tier and one further the between annual million XXX,XXX to the Keane, $X.X X of that, $X fleet be our retirements these estimated fleet's per C&J from market nearly closure spend frac merger from announced reduce year horsepower able with with have removed to

play have recent We who taken industry our similar supply to with applaud part aligning our colleagues demand in and continue frac measures.

our now to Turning market position.

down and key gas-powered natural one with exposure today; U.S. wireline across all fleet characteristics: both and meaningful largest of U.S. today; in horsepower footprint perf; plug a the oil of base Our of number in market production. major equipment pump one working current deployed demonstrates in the and natural bases diversified four gas largest and the the basins to

strong with our market customer critical the Middle our momentum QX service the market opportunities, increase our the have growth in the U.S. gained the to we offerings fourth into A utilized is quarter. component we XX in in to is have ability latest in refer carrying as NESR. and strong fleets in promptly are and position which This XX during are that cycle strategy the the fully a our to readiness We of strategy. partnership to report demonstrates we pleased of total market in Today, superior the respond that relationships operating over two East, we market, offering.

effective, built very in been has last people our the on is doubled foundation balance factors: The our having equipment, days. strategy key Our three active XXX sheet. and nearly fleet

million idle to our ensure all We've been investing work. First, lines from are well $X to maintained equipment. assets approximately and product month ready per

visibility capabilities status assets Our enable us most on preserve us and greater and protect our to digital allow location and our of the effectively. equipment

amount the to of we in have OpEx have in the we capital base all As during activity redeployed been deployment our maintenance we and lines, across evidencing planned market minimal, allocated asset that product the to has of proactive fleet of response maintaining depths been increased our equipment as customer downturn.

we with additional successfully seven start-up are included of minimal costs since results. fleets EBITDA in our the deployed and all fact, adjusted which June end In

released have bringing to team NexHub ground on the upon at the to were performance. of empowered solid people laser-focused We remaining furlough. competitive that am on remains employees in absolutely delivering furlough for our with pleased execution running, proud environment, Second, hit has our been caliber people. placed that I our critical and people and incredibly successful many am share on relaunch the it any of no I immediately start operational In the we have to downturn. longer fleet back reactivation. higher this

With exiting total the third done, opportunities take still balance we've million. of Third, liquidity $XXX market all we that quarter ample with to of advantage recovers, sheet. the liquidity that have gradually

and generate and Our now will fortified equipment that U.S. land near maintaining leading delivering readiness our would in long-term differentiated enhanced leader in direction the integrity in support results, never strategic NexTier's on a returns I strategic as long-term through-cycle to like completions. lose drive With while allows the investments readiness already to to that focus returns. we emissions. allocating balance volatility capital the invest of sheet strategy our to our us turn Despite ability of lower goal position our ongoing term, macro to

oil enabled around strategic focus ingrained expanding fully digital site in our firmly focus in strategic deployed the and carbon to gas We our in and gas-powered lowering scope the way to believe model, operating business business play is how continues is sustainability the do digital technologies. now continue will are do the work footprint. to in at is NexTier critical natural role. and by Our centered which while These well energy platform deeply committed and the which sustainable a future economic evolve benefits we we of a areas future. we how

fully and or dual supply, gas are benefits other reliable of without not lower value technologies However, fuel emission realized. the

Through and Our service have been CNG. a will Solutions, that the provider. to heard that power customers the delivery customers, completions gas integrated we we in operators Power incentives provide NexTier NexTier gas decompression, field business solutions become seeking treatment with and they announce are compression, frequently Having and services how our diesel excited to treatment fully integrated that, gas fleet of our related our are of sourcing, Solutions, natural or well share align launching providers. XXXX, will we Power transport, voice

largest We are fleet the proud to natural U.S. deployed have the today. in gas-powered

technologies their position current leadership objectives. our quarter. currently are in as with and in provider strong in carbon-reducing plan are additional said our and expectation natural with investments fleet natural with demand diesel of and delivering maintain balance the package achieving gas-powered beginning natural this of our select displacing off a to converting position customers Tier being specific via in X Our our in We the clean, dual tiered to for met fuel for equipment to sheet We've to flexible mind, for gas and investing paying strong due our capabilities natural demand and gas-powered capabilities always as will market NexTier offense our power that play enabling a responsible we be equipment reduction our gas of strong rates offering benefits and service defense. expand suitable can NexTier customers. to most for maximized is enable tiered partner. Executing NexTier offerings, gas investing the our carbon With strategy substitution

it easier to Our to a safety maintaining leading reduce and mission carbon make while their our profile. is for efficiency customers footprint

solutions next-generation that scalable equipment rapidly into developing on a solutions. evolving focused range are over and We time are of

in We updates our coming plan and and about customers forward the discussions look to announcing are months. with in capabilities

the initiatives, have previously. the logistics equation expansion set opportunity our deliver with AI-driven scale impact of evolving ways. tools, work the which of addition enables In reduction our digital a advanced not our we exist of combined on in infrastructure multiple scope of carbon did both operations our unique With to digital of to sides value the personnel, capabilities,

overall in carrying cost commodities out enables invested to extremely operator and service fuel. We're proppant that landed and First, like second, savings. and while deliver completion of our past scope Kenny. and next expansion work NexTier over We we integrated well to the value for and capability per drive the over believe two efficiency out and our is provider strategy on And that I'll that now customers plan lower between harvest in cost emissions. overall we now. strategic way have tier it With infrastructure years, leads site greater and an to to incentives built well We've our the lowest plans. reducing aligns to things focused better the value, that, a turn

Kenny Pucheu

Thank the million lower you, reduced utilization Robert. by segments, construction quarter totaled by $XXX pricing million in primarily was Total and offset third services The compared our calendar gains. intervention to completions quarter. $XXX second decrease well driven and efficiency revenue in partially and sequential

site, navigating EBITDA of quarter focus to $XXX quarter. when quarter. compared to at $XX focused to of a quarter. Despite controlling to in lower. the totaled million relentless and of in earlier, resulted EBITDA of adjusted Completion the well $X $X service was million $XXX adjusted at maintain Completion on adjusted XX%, Services the In on our million gross costs are third $XX well believe a ahead level, second segment, remain profit significantly high compared is noted corporate quarter As or third at control. revenue the level outlook through we in second trough, lower compared reduce totaled continuing segment, our million decrementals loss site XX% the the in second approximately which we very million NexTier We market could at of our performance. was positive we of we what million Total operating what a operational revenue and

average During equivalent activity completions quarter, XX deployed in fleets, factoring an the and XX fleets. of gaps, we when operated we utilized the third of fully

utilized Robert quarter completions exited the fully second we As noted, with fleets. eight

fleets On were and basis, market quarter the fully and we fleet, when the annualized we As XX adjusted one inefficiencies each improve, impacted compared as $X started which calendar month in utilized the quarter. white XX frac bundled space in a deployed by per resulting successfully gross wireline, per two September. throughout million profit utilized quarter, fully to million in second fleets third fleet significantly exiting includes resulting conditions $XX totaled from or to utilization redeployed

in across Adjusted seeing the is and for Services activity Well We million second totaled adjusted profit land million $X gross gross utilization U.S. totaled believe in $XX already we now that million loss improvements are the quarter. of us. fleet, Intervention worst In to quarter. our the and compared the behind revenue to $X million segment, compared Construction second $XX

Adjusted coil adjustments the costs the improve. of software quarter expense, the stock of into our conditions of of includes for of million operational we EBITDA associated market that during quarter, compensation last $X and and with financial accounting then third of focused of and for cementing approximately remain and service and the positioned merger reduced have $XX near-term our the both primarily make-whole from and support platform provision. significantly million, will implementation associated footprint discussed million long-term write-down, ERP $X activity, NexTier quarter. million noncash performance on loss mainly As We lines strong levels quarter $X management integration ourselves legacy tubing an second for the consisting regions we and as third

Of received million adjustments notes the of million quarter, $X part and the during and support million third $XX the management services divestiture severance impairment as of market-driven in costs. $XX million On were noncash. the basic inventory in $X of wealth March, restructuring approximately

future do Looking or the material forward. and quarter for expenses merger anticipate fourth and we integration restructuring not ahead, going

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

$XX SG&A we of I Last successfully of We million synergies. merger the the completed $XX SG&A adjustments, capture expense adjusted totaled accelerated share quarter, adjusted to business I'm million announced management our through and in half SG&A results SG&A second to to Excluding quarter. our by our compared consolidated the continued than merger. at reduced efforts that time improve annualized transformation cost the the more efficiencies. of happy of and

our further SG&A Achieving as us have lower We SG&A improve. well in this market quarter. to the reduced rate third the continues positions run costs extremely

recent digital to capabilities our empowered These support our with of long-term more a ERP to smarter be efficient lean and drive will than ever. robust working, committed deployment the combined factors, more and by our structure, performance are help financial results. our support system, with We way maintaining and platform, will of

XX-month finalization third ERP by quarter. $XX during This and investing cash of forma million $XX available the We quarter million and of with of flow compared the and quarter, maintenance the approximately quarter sheet. deployment. operations in $XXX of activities cash quarter. the million totaled balance at million the to at third availability $XXX Net NexTier use a leverage excluding trailing the approximately used million the Turning $XX the million end second in $XXX lease the while $XXX end the resulting at to liquidity million $X net flow of total to our approximately of exited basis. million was of pro credit finance was third the million Total in deferred was on $XXX of third in driven under discounts quarter with debt cash finance the of of $XXX in costs cash resulted debt flow of million facility. the Cash of comprised and compared We third of free in used second $XX cash our quarter debt obligations third a exited CapEx million, X.Xx end ratio asset-based quarter.

in cash million severance free and third used the merger Excluding in $X market-related totaled million adjusted million in cash integration $XX cash and quarter. flow restructuring $X and costs, costs

we million Tier $XXX of are Robert our As our million. revising of X $XXX capabilities in dual to $XXX year. in million range $XXX in be million we strategic from are quarter the will XXXX fuel that range investments, a mentioned, of partially Factoring CapEx fourth slightly this to delivered investment new outlook to increasing the these

control to that these are are sheet balance combined measures that a savings make We investments us business. select across proud investments, cash and with digital directly have positions ongoing to our cost flexible contributing

to excellence in saw our and out we of and safety of in cut outsized operation improvement an letting with remains Even and with than as to we pace to deployments robust trough intensely forecast point, our we and dollars no at in visibility the to are Turning quarter month our focused normal this costs the month factors. outlook. before, revenue our that's have in today. the eye and not sequential every fleet current November. operations of the anticipate including redeployment expect to also days XX% pricing, performance. operate the on continued QX do nor recovery, continue of Since headed market deployed early has in been on just ensure we not the nearly continued current exactly adjusted maintaining deployed a reduction taken our This been our to recent ball experienced for Based of assessment revenue marketed we efforts we're We're slowdown of the with our improvement fourth calendar QX, we at base Visibility NexTier Visibility did EBITDA trough a while seasonal through positioned lead utilization. path total a quarter. this XX% and is we fleet, between where counts. low in in due size XXX to the XX% That growth assuming fourth adjusted We're to in NexTier activity today. and base. participate an We ample operational pattern December roughly the this into December, double better late quarter and were is overall take quarter, to of into year, expect increase shows said, fleet to and the we positive had market beginning asset third to of the our we ago. the we in working steadily to operating for did the fourth now of Since system. muscle fleets entering activity similar increase off millions of remain to where hundreds continue and the quarter, optimize and

Additionally, tremendous in in dynamics is the this demand, remains embedded operational Frac supply of means What continue but we to impacting ability leverage calendar profitable excess operate inefficiencies improve. most in that organization. our to remain place, at levels. have our

As to activity same greater natural gas-powered have equipment, scarcity that, growing market additional and market-leading comments. tier where continues for in to and this ramp, hand upper result horsepower staffed fleets expected the this of more are market. Robert it we at pricing. in the maintain position into deployed in activity to to constructive portion At and is the time, more be I'll improvement of our closing deploying are With back clean

Robert Drummond

was Kenny. the our while during the has the around close economy, unprecedented low-cost worst significant fully even a operating Pro of year-over-year C&J Even to $XXX pace been the earnings. our XXXX deliver company XX balance challenging structure, EBITDA to of company Despite considering generated million on on EBITDA breakeven adjusted NexHub-enabled the conditions. quarterly the utilized to ongoing and Thanks, pandemic, new Keane before world. fleets. for generating grow year for commitments. very NexTier on combined approximately market community and continues cash forma our We XXXX impacts every remain its

earnings in power million realized merger, adjusted fully of the cost of $XXX $XXX excess per than implies more of total year. our million and for sale resulting from accounting EBITDA our businesses, noncore the synergies of this With

even valuation post earnings merger, peers reflecting and retained permanent frac versus We capabilities after of level fleet potential. attractive upside this have retirements,

to open Before we the few up Q&A, I'd with leave everyone concluding for like lines comments. a

NexTier Our fortified leadership positioning a downturn the emerge are well-maintained in equipment, sheet balance and world-class from team to position.

our initiatives, while future. investments strategic we best that of strategy, the respond readiness outperform means today our demand combined to to the in can up with Our and setting

lower is continue operating digital expansion a scope to on journey, performance, advance which lower carbon footprint will enabling work better well cost, at the our and site. We

capital We reduction into fund streamlining reallocating better emission with our equipment our carbon retirements, further a allowing by partially pricing us horsepower additional resources CapEx to from lower maintenance and profile. fundamentals initiatives are next-gen through

our making transition our are Thank to stockholders on platform on to through you. reduction our easier open to strategy, largest Q&A. for equipment our now we With committed maintaining operator the operator, that, footprint deliver we'd natural to and lines conversions a focus are sum, platform. of building sharp gas-powered well a In are up the value We positioned through carbon as fortified executing the investment for customers. like

Operator

you. Thank

We begin will session. question Sean from now question-and-answer JPMorgan. And the the with Instructions] Meakim [Operator comes first

Sean Meakim

So in terms I'd guidance quarter, heard guidance. into little dive starting we've on with peers of to your the given the consistent is pretty your and margin like what from activity, straightforward maybe fourth a more

pretty it's So open-ended.

end profit of high maybe we fleet can of just gross end? or the per terms range factors drive So the and talk about low in the to outcomes incrementals the that will that from range

Robert Drummond

Yes.

worst of of and that kind bottom solid and you was we ourselves want started the recovers. way on economy And while go COVID fleets. of as establishing first work EBITDA part on to to our to knew we activity as positioning going detail Kenny, more been we've a to of that, negative knew managing soon incrementals give in were say, potential necessary also cash our that out as with QX? levels but the little I that us. that ourselves redeploy as for QX prolonged to QX With we adapting to the Sean, as So going early all, were look, be kind we hit, we would -- we address suppressed

Kenny Pucheu

mentioned, outcomes yet not good look, to to as of adjusted I we EBITDA. the today. what Well, margins. November limited. better were we October, QX Visibility path will incrementals. than on So the enough really a we is margins is call see that activity positive very look, positive based adjusted our a EBITDA is on say It's September have Sean, on still December range

So expect you GP some can for the sure. level, at incremental

Robert Drummond

And I there's going would three now. are factors say the right on that profitability mix, kind of

the obviously, even price all our You fleet and going mix volatile. geographic the and our you is growth at proppant I mix are is And in got happening But of factors which have a the you have re-adds. that pace those than out called logistics got pretty our frac And you logistics. profitability. between activity, then on -- faster future

Sean Meakim

Understood. that Appreciate feedback.

think G&A to more flow in cash and I us free brings a little talk that naturally XQ. about

So of the major merger. last charges CJ you associated is XQ with quarter noted the

You of conversion, costs lots of noncash. the mix and ERP out, had coming cash

million So I forward, be just sense see a flow how quarter. the annualized as but given us that, we G&A for moving pieces part to EBITDA moving below can $XX is x And know going cash pieces the uncertainty, you we see the give you of exiting in the Are fourth year? of free look you where the target adjustments?

Kenny Pucheu

Sure. Thanks, Sean.

So last of SG&A. done in around with lot look, start the especially remarks, SG&A I'll non-labor cost mentioned my I work prepared that the quarter the year. in a costs. of We've on

to very to We in be QX expect QX. levels SG&A similar

On meaningfully cash our X fuel QX. other service, million. with elements we the Tier higher look, balance be that downturn of beginning out the XXXX the partially we flow, financing have on were $XXX started. be offset flow, we year, additional just the into maintenance by to And number that capital a where In At CapEx, of collections be we that but funding QX, debt million. we stepping line above revenue the of $XXX we'll dual cash moved some that, was stage, deliveries. of of then the we cash called target deliver QX sight of than terms some working that to at committed in growth, the COVID-XX. and just into will The by driven ending Today, from will

to of expectation we're QX in slightly really used QX. lower be seeing cash than So

Operator

the Chase with of Bank America. Thank question Mulvehill you. next comes And from

Chase Mulvehill

want in talk I to of kind guess fourth I quarter. activity about the

you that fleets. XX think I exited said at you fully utilized

You said at today. XX

it And said fleets? so think for we think overall about for kind fourth average you to you quarter, fully you that of activity, continues And half where if first climb. the then do utilized

versus the climb kind for is of to continues activity it think today whatever quarter? or kind average fourth of You that levels

Robert Drummond

as leaking and with three activity been we've go. thing customers saying to and fleet of during So Chase, ever biggest had fleets that laid by I'll the One part we far deployment our that. upward was seven start key that just the deal since that as down worst bottom, steadily

introduced -- bigger November gives new QX, is to a is October excellent fuel to that, above don't to we we is we've So visibility that continue, as us said going we around recovers, we that still have and white I'm call build start-ups, total our sight to solid, proud and our -- new in mix, then customers bit upon it see fleets particularly to do as a our we've know you mean, a that dedicated activity that very it we dual that lot had we foundation can't October. line will and December. customer I have in we script, into be just But get as takes we of When go utilized space to could December, yet. really lower, of offering. have

on more little color Kenny, So QX? a give

Kenny Pucheu

said, Robert as we exited mean, Look, September. Yes. I

our But additional and mix As you November, on we will QX. too yet. adding it's customers. December, building in see been fleets early based be mentioned, we've our to call Chase, do base today versus down versus it client

As last and than we enter year did there. QX, increasing will it QX restart from quicker bit then a we steadily hopefully think

Chase Mulvehill

side? frac with revenue fully Or on utilized the Okay. that weighing on will pricing mean, of in that some increase in fleets? is your that, you that do pace I A there anything quick like keep think mix be and the might follow-up your revenues up

Robert Drummond

be amount changing to see keeping going -- pace going mean of up mix we forward. keeping do significant I but going There's it a on,

Chase Mulvehill

quickly you're today doing you Tier one total for fleet talk fuel horsepower X kind next dual you about -- Obviously, years? where to going Could your is on fleet. two investing see mix. horsepower high-grade Right. the that you and of to of some here over kind Okay. And then where

Robert Drummond

XX% other dual comments but fuel And deploy conversion. we QX. our pricing we deployed much too we So where are in diesel diesel the to in XX% we'll fuel. have and out We're call purposely is pure And that's tried the is stratification upper of as we as into the dual reasons, it speak, have Chase, based clear is are competitive demand is capacity we'll there a that as we've much focusing in capabilities burning, the our occurring upon growing how we probably we that for about the middle get about because XX% and as created about market in being not significant. of arrangement

meeting the model have some manage help X this We in move. are diesel about equipment others Tier the deployment easier fuel to with making to we and in And this interest duel platinum talked diesel associated deploying, a this create customers them And gives them technologies a or that's like we're pro lot it it package displacement. offering And X Hibernate consumption a and that. the want solutions linked that direction via that of is power -- your the down. of with other that we're to they because to the of of for amount opportunity you Tier you move do

our So quicker. deploy it's leveraging investment in fuel it to dual

but to Our ahead story of stay too that's kind revealing. of objective bit demand, without being little is the competitively overall, a the

Operator

the you. with Moll from Stephens. next comes And Tommy Thank question

Tommy Moll

you the of more scale us economics, can And can for consumed unit source revenue single quickly delivery the how the Robert, the bring standpoint, idea some opportunity, they the guys? I a a you in in to of on this From long give side? a solutions the and it think business. competitive that of talk to impact has where pipeline about How in can service now value can terms fuel you for wanted anything to customer your you announcement you what's service? package on come been financial power the

Robert Drummond

been it objective us the quarters, about customers. our Company our around about And $XX about and needs out. demand, but we've better Look, We doing a because fit-for-purpose it up through excess I you and fleet, appreciate million about the burn of hard we do much fuel decided really thinking and own inorganically of thought the us in a this it the diesel. own running in to the it way capabilities it been a that was help build to doing excited the this for a in that, when a for I'm our fueling think economics diesel question really expertise year is for to build have number building talent because hiring to

But only So even is natural customers the those thing to of converting price back them is opportunity make that to networks be do going goes key between and gas but of an to stream CNG want oil use and are or goes take natural which, our advantage up that's gas economics fuel to able price back to and our better. gas, as up, diesel, field the not diesel emissions only many to building reduce that. to arbitrage

can occurred when arrangement this economics than more offering talk power and able that around And around going currently most solutions And make things in about effectively. the help the service in the for it connection we, you that past. a with fact logistics bigger us situation do personnel that a think when gives evolution that it we the done ability is we company, we so I AI, is on our and of ability integrating have as effectively about integrated better about built capabilities well part cost a them that's to large staffing company that around the much where piecemeal location, is game-changing than real frac to within of cost as number be frac to So mean of do effectively a being the happen footprint. to make the think

the in built there's of process, lot gas delivering a So into logistics that.

advantages way, to will -- while -- customers we this So see I little days that were and And of that. -- together expect out. it'll in can a build take why that mean we clearly, we're the have putting and early of those it we

us expect to accelerate for into a be may XXXX. even get in cases of opportunities QX that couple the the earlier into And XXXX. of that than We bringing market we we as in

is obviously We already a fuel dual deal think this our fleet, big economics. us. and standalone enabling has it's for solid So strong

Tommy Moll

All its history. theme consolidation, helpful a context, where Keane as is to which And follow-up, the of I been Robert. to pivot wanted throughout has really very active one

the the the we see as at I forward market And for base, your like Any rationale your consolidating, look and North all was do transaction, a next operator unfolding sufficient the lot just customer Robert? of maybe it lot company C&J if -- America side? as whole in you a if from how to had in service that you does not more. service competitor you the there it post a the that scale As base felt see standpoint, mean change didn't change need changed? you the has thinking landscape on year, this for

Robert Drummond

of side of in I us was going E&P be the consolidation think the service many kind company anticipated on horizon. to

moved probably obviously, COVID, up. think I that

it You can see everywhere.

lot good And ourselves. like we're I to don't we differentiate want and us open-minded. we're strategically to that some as like solid for when that in our space. look much that with enabled things us. think to we it in space just really far handily. I I got of because very strategic interest does as We a We've very, of And do the very lot to we that as wanted balance we occur needs integrating, M&A, be a But a the good effort have As E&P don't it, seem think sheet have kind that the at technology OFS can interest feel time established we it at in into in our we've of establishing. we now. think got drivers a at tune put did We've we've that integration

need happen -- salute do you happens, some it's I makes good that of we And shareholders. that lot to getting our when and our OFS it who've history I based it recently it, be is to to So on I think but it, for sense for as that and system, going new can general, that making good to and of our in say a something people all take ERP hope done.

have of an So but open we open-ended, mind. it's do kind

Operator

And you. question Thank the from Fargo. Voie next Wells with Christopher comes

Christopher Voie

Curious could little color a us if you give CapEx XXXX. on in

your fuel like much in business technology Power said per how things like we maintenance million you Solutions? dual NexTier ESG, will the investments Tier budget about for X other fleet. think I and But CapEx lines $X

Kenny Pucheu

down the in able NexHub. rationalization. fleet. $X.X equipment. progress this CapEx lot We a out our what is CapEx, sustainable year would we me a reducing like, and let get is a conventional bit million early. Yes, about believe per talked We kind that been walk But about maintenance to obviously, frac allocate to our to to of fleet XXXX it's with this our that of of say capital We've per for I level fleet made

on So early fleet. will in for look, Non-frac million $XX lines strategic to $X depending that we'll still Well, activity. CapEx, to the per service million the probably be too comment. down range be it's the bringing of $X million to

But early We will be ready funding level XXXX power the some that just yet. Tier to in we're about we X talk and of spending our initiative. Q, until be more, not unfolds funding will

Christopher Voie

And just to then want NESR. touch on

now So in XXXX? is fleets? I number of there have two there any the upside to you think

Robert Drummond

appreciate I you So question. asking the

lot bar our the Middle a there. better, for creating we've performance Our partnership get with in NESR and a lot. to is customers the raised and East value of better management continues Operational

for customer partner, region that teamwork we've ROI commercial which fracking parties, unique. delivered the of two dollars between business because makes us, a the -- opportunities do of the for are I able service in a the clearly to and they're companies, bit three got The attractive is development on very ROI NESR it being increased and dependent good potential we think per at that fleet. it great is E&Ps much stages and regional in represents the amount for excellent by very the spent being region. the

any XXXX some expectations a view have maintain direct on but laser there that we of the do will horizon. opportunities So in be near-term hope not and

Operator

from comes next The question you. Ian MacPherson Simmons. with Thank

Ian MacPherson

allow more to substitution the on I'm your customize power it's of a at just dual line. overall you if dual more Maybe where And this to new think maybe envisioned or on future substitution if indicate average fleet, see expand you a across solutions. are following enabling you to in for where if to your could curious customers rates them to up could preference little us fuel by overall, substitution and nimbly your raise fuel designed heading on you you fleet rate this your their capacity business fleet. is rates -- the today with fleets

Robert Drummond

I and And that fleet, all that we question. our dual the little fuel otherwise, control bit across now a of lot above. would using a entire appreciate has are I advantages. brought that system say Yes, our of

tune One of and the and number have a have customers out we -- been dual obviously our that them engines is to fuel conversion When system, we working, in this maximize being from a area. of of data able do suppliers. to the has points is some the prove to

that of in to doing easy trying ability higher we've is that dual tier describe. fuel Also move So our our make an to been our levering up capacity our advantage. utilization will this that process for customers

to also, us. I itself that are But for things those exciting a think the grow. opportunity has of lot So business

going one As on be will over region the focusing we we're U.S. then expand now and out, start we time. that of to

XXs. X and that up platinum package conversion it a of a we will diesel asked will -- XX%, With of You the that XX%. at fuel, what the you pro the And do Tier package displace have, at fleet that average on dual displace pure rate get are that a package with it's can into -- rates. can you

think operator opportunities to and can the vary we're So supply allows a the way gas have choose where the across needs tiering I a the that he menu. to and meets it them that regions enter in wants that at, so

people so far, that all think I good, it. addressed like involved. for and I it's that, so hope good And

Ian MacPherson

wanted I market to also on absolutely. topic Yes, attrition. total just of the ask

retirement, of at your latest was what diesel. what defining your Was us make it factors When Or said and fleet for U.S. think what You did can XX%, just duty? of threshold the for the state you today, cut line the basically cut? drew any of million-horsepower qualify there and of the really in the kind obvious make age attribute? is horsepower on XX you the pure XXX,XXX was you terms didn't

Robert Drummond

question. good a So that's

you we to to of that the our that. we've don't the related the stating You had been And intend make fleets, kind call a that in outlining. will we that invest future a further before conventional macro strategy have view everything in like been do to meaning be of we've

So a projections that factor. was you then for -- XXXX, made it defining the And that XXXX. look at

a in rationalization, XX to generating million U.S. of we're to comments if Our remarks, XX-something maybe be and is and And to $XXX count large my fleets after around able I still number fleet some fleets. fleets, projection made do in We remember rig deploy this prepared wanted land EBITDA. you in count activity. able smaller

or was it with part going we're to for CapEx So more to heading upon we're support towards within capital-efficient the future that that based year bottom and thinking not that, the and probably harvest two, next maintenance flashed using that, the determine trying be deployed little seemed that next visibility the to of have over number what generation. on all that believe lot there's us is. a bit a [Technical Difficulty] We It's do more number. last years as been that total been around

think unknown, had and in And basically or assumptions were the components more made. clarity the been last four months before. of there's we've to I three be there than Some happened

been of willing total. kind to we've around think million why it's say we that's that So $XX somewhere in

Operator

from comes with Stephen the And you. next Thank Gengaro question Stifel.

Stephen Gengaro

things. Two

get sort think of a And right. think activity I two- of $XX levels fleet when EBITDA you back you earnings quarter. get to to referenced plays talked in $X this but attrition, question, million do level you you not if know or think there? that probably fleet math need out? perspective, number, to EBITDA do $X what sort $XX the is million per power the an the What you that path six-month do think is is I those million From a question, to three-year how profitability? about of you think million the fleet annualized my of a I to about First, per of implies business,

Kenny Pucheu

the that. I'm step Look, you to question. thanks through for going of kind

emissions. charting our increased has to seeing scope. and our sorted XXXX, increasing think fleets free about is So adjusted that, will talked and on our a today, potential We But about cash cash our is structure and perspective. much XX cost into we're out, continue fleet We starting EBITDA we're SG&A lower better largely be I think going QX. flow get early to path see earnings be. the path flow to positive. strategy. we're to be, to our look, we're additional Obviously, call productivity fleet, per path GP that's it's talked it fixed our with what And We're and in costs to too Today, to going to to positive a deployments. adjusted through a we EBITDA We mid-cycle in translating utilization per better at a our see from calendar EBITDA.

our CapEx be Assuming then this continue to fleet And maintenance of cash that will part continues, of doing down overall that cost path. drive business. per we and our

and path towards positive on So first, cash adjusted positive we had a to free we're EBITDA, see flow. now

Stephen Gengaro

competitive landscape, you at been the look there's when side, on E&P bit the question, little side frac the clearly, second well. Okay. And consolidation then and the just but as on a

process, You've have you up providers? or companies not, Has all in got preference you on that more for or next stable to? year bidding other yet And that impact do expect seen bankruptcy at the any are positions. yet? cash Have if weak shown

Robert Drummond

out QX a through see of varying a competitive landscape, turmoil of you now, we going that coming you're behavior among would lot the in say. went and When through I

burning And you tier that to sustainable. playbook a more pricing we've the part the you struggling sustainable. to is it's it's we'll be prepare of for that bottom market extremely one know for would consistent. M&A I'm diesel we've equipment, when rebound, is in clear, is market with that pure the different try not becomes some seen -- And maybe don't I -- not of sure, not But that we've flow X I that XXXX it's outlook certainly XXXX but is the outlook what sort. talked if about, people the negative Tier not maybe liquidity, things. with more of matter think cash that significant think no that some a do that

I have very I to going So don't think individual we And see much it's each like macro of seen company. even of that what think that's some in forward, we -- view look XXXX, know the I but to going linked now.

Operator

with from you. Thank And Citigroup. question Gruber comes Scott the next

Scott Gruber

answered, Most but a have been of just my one. questions quick

sounds benefit like? fleet, bit how On ballpark, customer? It based from your a economic the dual capturing that range you But of pricing a the diesel much there's what displacement fuel the range are like look versus does strategy. on of

Robert Drummond

it's place, us. together sense so doing interesting way while an it. at be we're a to look the in does way been versus to setting in ago put put we that look we'll then solutions to -- package at we I power was overall what past. or make it bit associated an of establishing, it a different And they're pricing know But as able I what commercially up it tiers the get for think point amount the is they're if our things with how as for looked better And that integration and matter we're all demonstrate out and can little doing no of us. if make That's it's know just trying will sense going package him explained at value the them I the it it. not. makes And That's -- displacement. -- to to see earlier customer for the I

be And it's is -- going what wouldn't it So to like. that's look investing in that otherwise. we

Operator

you. Thank

have For your Energy Daniel Partners. Daniel John with question, we next

John Daniel

forthcoming. fuel question looking at solutions are dual Tier just that versus some the first X turbine of you you and that guys The how on also see

Robert Drummond

good so Yes, question.

QX I lower gas to package, towards Tier both when with fully the So and Tier of generation fuel, perhaps get migrating natural burn -- look equipment it some electric, thinking at looking well as have become the our coming older look you how you version capital-efficient about be understanding the option. is we our as to that that of that year. mean source like, that testing process. the expect At the you offer out, work investment chance would of you part That Tier X, give X That hard, route we'll start options of and at We're at it. a does assessment electric. would be the capital the or us that a or of in who you make it can field like customers same that that this I answer to how is of dual When point power work. for go next-generation is customers the want platinum other believe challenging our turbine-powered solution know, to you guys the suited package emissions time, that the whether best that that benefits players. do X look power or complete can most that what from

say I'll more there on come So to is just that.

John Daniel

Okay.

provide actually down So the road? safe to could both say you

Robert Drummond

Yes.

John Daniel

Yes.

other have without one you at fuel. your The competitive number when is a X dual landscape, look Tier the of peers fleets Tier X or

legacy then not call fleets down-the-road we M&A you with, effectively it, for on assume that Given your guys? the are dual turbines, fuel should and companies solution emphasis those perhaps candidates the

Robert Drummond

of mind. of carefully look got want we'd an to we that be asked would weighed when benefits it macro fit that is would -- at, get we times answer number prioritizing obviously. equipment prioritize, have benefits We But what that that say a The our open that I strategy of to is certainly to we to the consolidation a against pure better.

we do best want the the to off on hand, other consideration look don't fit good for at anybody want to we believe integrating. first. because we're from very to So say no at also us we But

Operator

Robert would to the turn the closing the back I to session. of Drummond And Mr. end call we now gentlemen, for reached ladies have comments. like question-and-answer and

Robert Drummond

your employees. worked our like Thank magnitude extremely delivering team downturn, hard the NexTier quality customers of Because work you day, navigate for our has collaborate all challenges NexTier. this alongside for today. customers, and long-term the our to and that participating and It's to my been design success the of in the to share you. employees you. the solutions Thank recognize top service honor Every of performance commitment Thank leading to each the maximize I the I'd Company. safety call you, and our of while value investors expect. to

Operator

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

your lines. may You disconnect now