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NEX NexTier Oilfield Solutions

Participants
Kevin McDonald Executive Vice President, Chief Administrative Officer & General Counsel
Robert Drummond President & Chief Executive Officer
Kenneth Pucheu Executive Vice President & Chief Financial Officer
Chase Mulvehill Bank of America
Christopher Voie Wells Fargo
Ian MacPherson Simmons
Stephen Gengaro Stifel
Waqar Syed ATB Capital Markets
John Daniel Daniel Energy Partners
Call transcript
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Operator

Good morning and welcome to the NexTier Oilfield Solutions First Quarter 2021 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'd like to turn the conference call over to Kevin McDonald, Chief Administrative Officer and General Counsel for NexTier. ahead. go please Sir,

Kevin McDonald

President Good earnings and our conference With Officer. Robert XXXX operator. Kenny Officer; NexTier Chief Pucheu, first 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

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

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

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

Robert Drummond

thanks everyone this and morning. Thank us joining for Kevin you,

important completion meet make part progress natural growing demand our in our fleet to this effort We in strategic the market. initiatives converting continue to an with to of power the around good gas

Our onboard of ended February a to activity note early on customer winter unexpected exiting since enjoyed improvements our and in strong exited will after April March from customers the XXXX, earlier continue abnormal quarter the the gas to with We performance steadily The quarter. pleased in improve additional newly five XXXX. new efficiency extremely first recovering conditions transitioning ongoing best monthly and March. powered as deployment in and throughout quarter converted the were to equipment we with the rest of of new results

from engines last progress expected footprint we Our towards to serve decision conversions diesel the exit QX. carbon X is half as grow, XXXX. to continues demand pumps natural as of gas lower powered us year as pace Tier of And to to increase well we two we beginning

and improved natural solutions, the interest work and customers coming from some completion and solutions. is of roll XXXX as the objectives as perforating into COVID pumped to customers, fracking, to of efficiency proposition further well addition, gas recovery. our these return incentives the by last-mile including of beginning In ever wireline and our is up The integrated solution we power advantages, customers meeting increasing new understood value demonstrate around fueling are historical our we down logistics, of aligned and deployment

our Despite particularly market The best the NexTier Permian I cleaner fracking of core wireline proud the the in being our the solutions cementingand back results high a power new year. make expected QX, throughout be offering, which this to ongoing fleets displaced cementing steady with of on business the where to for rest team of become profile coiled the integrated a am new natural it which the of transition enhanced recovery resulting optimization our we to field are half start, point continue days, evaluating Our in new CNG XXXX. continue. getting differentiated in in off to efficient been as growing, expect especially March, is our the momentum There's caused wellsite of business. integrate since this with the has continue to basin extended will XX operations effective pleased strength with of commercial extensive diesel improvement interruption. the customers performance natural I integrated by of QX business QX, and schedule our performance The manage the extended technology activity gas. positive more tubing are whipsaw gas freeze our was fleet to of very in completion and favorably this for and wonder I basin offering is fuel momentum more cost great Permian no focal that effectiveness also to and in the was our freeze reflected the ESG with and This Pro it easier demand dual customers this footprint. staffing. shutdown our for Platinum monthly and fuel Permian and of efficiency of with of proud increase. ESG and diesel operations amount April initial way which power, the gas business very majority deployment through a very our rebounded and centric lower in in the during to our cost footprint even NexTier is is prices freight to carbon of Overall, of without

their meaningful And core the I improving operations continues now We anticipate are focused our Completion the core as service solutions cost are and we differentiating maximizing update returns. commodity strategies. We are quarters in to two are These priorities, solutions key customer activity on on to integrated in total backdrop Services scope providing provide plans, low cost, part wellsite evolve. and and carbon encouraged of coming generate customers will the increased market completion interest investments as our on expansion our in cycle We managing by strategic the executing customers' emphasize and on an initiatives where that how plan a focused of low operations. are returns through our responsible increased well as prices. of

of First, that customers service NexTier's is and expansion means The focused of quality benefit integrated one on one wellsite simple. our system, system, one this, proposition cohesive from team one safety is platforms that outcome the and management which offering solutions integration. value integrated on efficiency. system, risk our management reflects aligned

leads performance our and for and Our and and personnel fewer wellsite improved aligned customers. suppliers financial approach each NexTier to and better job on

in into and As second. the noted, quarter we the significantly grew our business first logistics

business our core our EBITDA it capital the Services, of low accretive merger Although, a very the lower and deliver. carries gain in is and the flow, than margins cost to capacity carries latest with nature cash importantly, Completion both to

control We continue enabled to AI-driven by generating our demonstrate our still returns ability lower while commodities inside at to cost, a NexHub. tower land

AI-driven diesel Additionally, of the consumption operations the the road. on focus of and efficiency our supports operations number our by vehicles logistics reducing on responsible

We sector. scarcity as available struggles the are capability, even this our the on building market of support drivers to to truck address

with capacity and to address logistics. successfully to added last-mile our are expanding we reliable dynamic, capacity have support customers this We

last-mile make money. lower Our cost, logistics to profit more cost, opportunity for enables lower drivers and lower platform the emissions,

our from strategy the our XXXX to wireline Gold enabler AESC, award Services receive also exceptional business a fact, integration Our license the is Energy wellsite in key in ensuring recognizing an its customers. to reflects Companies, Safety was for Safety Star for for the of our results safety to leading a to primary And operate the commitment proud our focus team safety field. and achieve Association always NexTier is performance.

to component performance, In this of strategy. integrated fracking, addition exceptional wireline remains a safety our critical

or a in performance, in future. fleet. proposition. in this expansion we the providing of power improvement frac fueling see the a power are value making and of enhances completion natural business integrated operational we in safety further our solutions emergence As when have we our for consistently integrated gas realize further XX% as unique comprehensive into options number integrated our With more QX fleets completions marketplace and fleet efficiencies, The gains

forward drive low to key low on would strategy. We our The cost, on continue achievements second, carbon we several front. this to point

see operations gas with X gas rise. a enhanced largely clean natural value to frac market. to emissions investment dual capital allocating delivery First, fuel converts planned, and fueling XXXX. continues natural And powered this horsepower not are the existing demand proposition we The to diesel for of fuel diesel emphasize We add strategic additional lower as primary further dual does market. for equipment as conversions demand deploy we and burning fuel throughout and to the on Tier that is I savings continued pumps to continue as technology, cost to driven into this diesel, displacing the by source is want the

manner. gas market diesel we a our Second, ESG tuning and gone workflows operate Platinum, providing system carbon most to around digital NexHub's the to our Pro wellsite in for options substitution to new we've offering utilizing controls their capabilities, tiered evolve for reducing continue equipment MDT focused the by price proprietary We've natural and customers on substitution efficient this with to named footprint. capabilities pump our branded ESG which frac maximize point

for provides reporting. wellsite gas eFrac business safety a and technology to existing successfully to personnel And use with field fueling customers QX. on early gas and and customer gas. with solutions emissions our deploying sources. includes our natural our and we objectives. field and Third, that greater reduction utilizing the customer's and easiest align We're fully of on finally, drive deliver combined our key safest improve benefits the enable reliability are substitutions the enable will performing and a Ideal and is proprietary equipment Power additional way to test natural CNG or in NOV upon gas help track power tested that CNG power multiple processes own optionality solutions fewer and with compressed solutions field new us integrated currently frac system closely fleet optimize These

the power testing are first of We field in source single to large market. being electric used electric the the generation currently turbines solution power alternative solutions

a alternatives more natural these believe a reliable, modular, gas believe has more field emissions of profile. we is generator testing are and powered currently One we that is capital percent we that efficient, hundred lower

providing We strategy technical Kenny. further continue associated look turn to to forward with risks technologies the With successfully the piloting that, We and the fracturing. near-term. to to for our potential a next-generation alternative in sources now updates call power reducing I'll next-gen in the on lead these over transition way

Kenneth Pucheu

Thanks, Robert.

fourth segment our by resulting the across into fourth QX. to profit associated mainly quarter QX region, system the Ford more on severe in increase quarter, First building winter impact as quarter million the schedule by the to from fourth in the million totaled our in well in impact headcount inclement the operations EBITDA the that some was $XX million compared operations quarter. new as weather in adjusted had first new storm event period. driven total offset $XXX to growth in of our choppiness the was to totaled was The the to impacted on activity a compared over storm $X million. the to $X region, XX-day sequential and integrated further several EBITDA response $XXX ramping equipment as than and Eagle deployments demand In two-thirds revenue of $XX adjusted Southern million our by Services Permian, from our compared up transitioned storm operations in marks The includes business, was in we with and logistics first The approximately quarter we fleet largely quarter. February. estimate well adjusted business This as our $XXX $XXX compounded X% costs quarter. weather compared greater as segment, WCI our during impacts million in fourth and decline Completion the storm Haynesville. which estimate, the We million was preliminary the Service revenue with the double offline the of gross our our of in the through across additional customers heart Southern the of Total as million the $XX Completion quarter. totaled million

of the Adjusted $XX where During annualized quarter, fourth primarily more closure bundled in favorable adjustments million, million of winter severance of gross In lines coiled wireline market-driven the fourth revenue equivalent EBITDA share a are and were million loss quarter. offset fourth progress XX million management both pre-merger slightly to approximately than to market in audit. in million facility completions related first related. is the compared $X for focus $X stock-compensation gross we and on improvement of million cement per the growth the utilized fleet, $X million, management and well non-cash compared from profit fleet in million average result Intervention partially accruals and excludes utilization estimated expense, of million approximately a when activity. Well fleets. The was severe comprised frac adjustments our Net a XX on basis, impact. by the up weather which Services the investment, as which fleets. factoring Approximately a quarter, financial compared higher Construction cash Adjusted $X approximately a deployed totaled in customer first in tax in fully quarter. costs, basins, fully And our our results quarter, by offset to of and utilized XX% totaled includes $X primarily tubing segment activity $XX as were $X non-cash business totaled adjustments $X and profit we operated reduction adjusted an returning related. of a On of per gaps,

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

prior expense adjusted totaled flat XXXX. of decrease effectively XX% versus of reflecting adjustments, SG&A the management and QX million, quarter Excluding $XX to

low Cash total by of at $XXX the $XX $XXX to in approximately under compared our the end March million liquidity in in exited first of Turning quarter flow million of of due million to the $XXX $XX as prior flat compared the second quarter with the and carbon well debt Total and offset sheet. net cash, We the as million financing consideration, million, relatively included of during ramp receivables. the quarter and timing comprised the sale part balance Cash quarter. the first million quarter the and million of asset-based use the and receipt of collections availability quarter. first the $XXX ongoing exited cost, to the Net with working of support associated of with first strategy. excluding revenue generating used of our increased investment credit finance higher lease by was services driven low of deferred partially of was at first was quarter, facility. was $XXX end $XX debt We million $XX cash approximately available the the our mainly capital fourth million. approximately discounts costs which operations obligations capital, to debt quarter of first

totaled with Excluding second the of services of million. part the flow well used receipt million support associated cash the $XX sale, $XX in investing activities

in quarter. property free fuel investment for by CapEx, Our first proceeds cash investments Tier technologies, in of equipment in X partially reducing and driven use This activities investments are business, power solutions million sales. dual offset carbon the resulted from additional our by mostly $XX maintenance excess flow our and

Turning to our outlook.

As play. second we at the turn positive factors to quarter, are

First, significant one-time are winter impacts behind associated us. storm with the

February. were operations our in of to late for returned two-thirds during successfully than levels more we pre-storm offline February, XX nearly While days

were quarter, pricing quarter show continued into and growth our the and from robust returned now strength. see with in as and we up work Second, to activity the final continues the weeks activity in calendar finally, benefited some second of And improving QX. customers utilization as confidence running. commodity customers to We've

While more ability to calendar in asset-base gaps efficiently. our have we utilize seen remain, improvement our

quarter. costs and $XX and calendar working at better second expect fleets second of with to expected XX for deliver $XX revenue with are expect least EBITDA sequential to some adjusted second number improved we currently together, drive XX with and just XX%. the mentioned This growth utilized fleets fully factors utilization, the higher the million. million of absorption combined growth Combined quarter have deployed between Taken activity fixed to quarter we of

half for our conversions across business. $X and continued fleet total product of investments XXXX as solutions including CapEx as to We and approximately frac, our million power of the $XX first continue capital expect expenditures of dual fuel the comprised million additional of year strategic for per deployment maintenance lines, well and new per service

continue continues readiness time fleet quality not our on readiness asset wavered nearly to minimal and speed. million confidence reactivation month that our on costs and program redeployment have $X in fleet per long to expect and We draw commitment to invest to

the which what further Looking of year, of strategy market, response our account COVID-XX into our related we the environment in is we're the shutdown. half powered seeing for when of market the second laid an we ahead, early planned growing percentage price the asset part This for we from as the impacts including out are a tightening base. to exactly what market during encouraged natural the gas improved commodity we in the that head and for fleets,

meaningful Our continued including utilization platform associated embedded power, improvement. provides with significant earnings growth audience

addition, potential our amplifier for pricing our we to recovery growth. continue In services to see as a

noted, and continue the the portion of the year Robert that, the pricing deployed the the especially As to into it we've equipment, depths seen I'll gas pricing of to powered some natural the net upside for recovering majority for of further With a pricing comprises increases, conceded hand for of rest at which through fleet. our comments. potential the XXXX, opportunity but closing downturn, see back

Robert Drummond

Thanks, Kenny.

in We provided initiatives, as on now I updates three to investors company would we've with since our like our our to have creation continued of build routine provide key new QX XXXX. updates. NexTier back strategic

the we're save company for Please soon. the scheduling a XXth provide and a where dive First, virtual we date look technology. September event our investor the for deep into will invitation

page Report we on strategy sets closing, like operations low website. our on are cost, reduce on a potential. deeper Relations a as providing In earning Spring published our out These NexTier's And we low more valuation driver XXth, carbon I would provides XXXX cost, Responsibility the available our the third, carbon to low to compelling recently which details year's operating strategy. Presentation, of reports XXXX for look that responsible continue April we that into next reiterate a on on Investor Second, Investor our costs. Corporate low the published importance

We and in the upwards, of are and demand increasing part the the downturn. digital gas capabilities reset leak tighten. worst activity portion Pricing, COVID particularly and will agreements conceded are continues as to recovering process to the the pricing are beginning market continue powered of during of driven natural supply

the to costs healthy improving and our weather will our we experienced rate to two platform next exit the deliver lower into recovers see in EBITDA anticipated above activity the challenges ramp and QX, market continue our at recovery. continue line in operating enhanced we very annual related expect expectations with as integrated is QX stage over we run our of We that this early margins Despite profit years. and fall-through the completion price $XX QX million

be in QX we addition, QX comments are visibility, this year. next we EBITDA we of and $XX that of least established for and XXXX services, EBITDA move EBITDA year see have believe that and Based is that, that base. U.S. field at current margins. for going as now Operator? reiterates very This we exist previous million Q&A. momentum With off improving we believe into transition a lines year open will In XXXX oil considerably run achieve to like our double-digit with strong we'll well-positioned the the to we on we'd rate

Operator

America. Mulvehill go this time, session. first at your with from gentlemen, And question. comes and the ahead question from [Operator Chase begin Please of today Instructions] we'll Ladies Bank question-and-answer our

Chase Mulvehill

Hey, everybody. morning good

First …

Robert Drummond

Good morning, Chase.

Chase Mulvehill

Good Robert. morning,

of just about talk was first I conversation. come wanted back the thing pricing So, to kind to

increases you much some fleets, You to actually the talk and how Maybe this and in the back? if been How -- kind able competitors pricing that as just the Tier just well. to, or too? conventional fell said much DGB take pricing you've moment of from your able is you get net push we've pricing, you're seeing heard a seen pricing downturn? net or kind some to during X on fleets are And you could of of of then,

Robert Drummond

the our the we the the to the the have part changes question, worst would in COVID during they current market long-term the are you along higher the we're shutdowns. -- worst with the beginning long set and that The current as the most customers -- than I negotiation for haul from way, customers partnerships. in point the period, they work the in making been And Much And our of reopeners and we inflationary during part period. we was that agreements with were say, COVID during way out COVID Chase. of general, along for do part pricing believe of and in recoup the of today bids have the we Thanks set that reopener.

very give there's change much dropped of it middle how ask -- us I it to we've three last would and the or ability that's And a lot part going dropped. the began recuperates factors. more, only worst You we say, during amount two because year. the of think small to

think it's First demand demand say in equipment. went are in the to through to fleets And sold move XX% out. I process around is growing dynamic And far. increasing fact their fuel because the that percentage the slower arena the is But on the bottom pricing bifurcated much pace, and one, dynamics growth to XX% in equipment part say frac in we so better. now in factors And conventional the Because market is, customers year. we the are the dealing the line and where very those that XX%, and that I minimal there total that somewhere small I of and any improvement sheet balance of more consuming out converging. transitional neighborhood with are portion that be intensity investment representing relatively mean, side, to sold yet CapEx with XXXX. at heal the of independents power is XXXX source natural of fast supply to think. bifurcated of our market, market in steadily that much the And it's conventional extremely for kind fleet, is is I'd are lot more that to gas a shrinking been is it's market, deployed so by And that impacted it's and market. That a general is and a addition

So -- as kind to And see we'll sheet we into to heal. allowing as us customer our know expect saying. in guide we roll of conjunction of we're that most in the what given a what They're answered that forthcoming customers we XXXX, opportunities make coming be price move. got fact of it gave that's traditional Hope when with on the our of confidence And I process their back our the balance to -- base that's we us that's as we did. [ph].

Chase Mulvehill

Okay. Absolutely. much little how operations about don't Appreciate today. obviously doing Yeah. and bit talk simo-frac, color. Absolutely. market. the the know small you're I we of a could It's part If simo-frac a

of four per take to really kind plus wells simo-frac. need advantage You pad of

simo-frac, handle And seeing next if for could with trends help just the the take the don't customers talk and of and that maybe so, I simo-frac there year to know out ability you advance your able kind you're those to and some a of side penetration. on minute be about logistics

Robert Drummond

a question, bigger piece Well, and you beginning thinking. basins, in involved some asked becoming factor important part to in while with because dramatically glad from our work, a bigger pretty becoming and look, and forward our more that We've really. pieces a simo-fracs been be of customers' more -- of I'm is it's it's yet basins, some the

in our beginning, simo-frac the and that to But process that, because footage And more pressures would to and interesting they're trading with more routine have the increasing operating that clear. ability And the that was we it market market good. of the on I to and and that I lot and clarity adapting to basis. the more is around consuming in fleet, would count point And becomes per you've that and many without arena, our lower we're well. you got one lately where of that. rates people -- it at to less And a are models a even and fleet? tear intensity what how inside typically fleets more there say it and is horsepower. that want the less is equipment the say up factors was But to I more was is of execution supply the perhaps consuming what when a simo-frac and a matters two the delivering count our do to think simo-frac say X.XX process was is frac this So, Obviously, customer fleet. per how attractive in is wear less It dramatically. make pricing remuneration

two amplified you time, transition less of for have do our embedded around It's operations but benefit operation intense You of model it. got kind have the you've is going whole on. wireline And in good us. that integration when

applicable in pads pad bit. keep pointed out towards. So, my only And And certain continue working prediction of is, a little configurations typically, designed are that process, our accommodate as I you're going to see it's to customers that some this to it. increase, are think I think I

at We're it. it. So, we good embrace

work it. arena. it question. good excel and I of It kind today. we bit think we incorporates were on the early intense Good that of is to of And in our tend work a stages pretty

Chase Mulvehill

All Robert. over. right. Awesome. it I'll turn Thanks, back

Robert Drummond

Thanks.

Operator

go comes from question next our Fargo. Chris from Voie And your ahead Wells Please with question.

Christopher Voie

Good you a kind seeing you're type morning. for difference fleets. from Is of customers? of appetite I'd your tiered appetite what kind Thanks. offering about of Curious Thought lot between maybe ESG they ask about what higher for natural -- of and what people terms ESG much versus diesel ESG gas care Just how how displacement in want evolving -- it Pro sorry Platinum? is -- versus lower? there

Robert Drummond

it's Chris, evolving. good question. Look,

are is what profile and studying that is and there. is the best noticed And of And more lot getting around number a the think diesel in factors on market a there's strong we've lot more -- it's also a about today customers spend of of customers smart there natural about and information the footprint. it. time the that sector And arbitrage involved between the curve about burning emission Obviously, benefits their carbon a We entire driver. I've equipment. think learning I and of I our reducing a more are educated But more opinion. process. a claims, little gas our gas got and bit, a prices

just would a think packages would good of key Pro I pay ESG premium diesel say for and a ESG So, is customer thing Platinum. about that, have is those would that there's over we you what mix conventional with associated a both fleet. to The though, pay, between

deliver as about diesel our see levels reduction, of more equipment market predict multiple effective So, But requirement and reason the How one enter I I displacement, carbon over the that blend to. more and so for think for footprint toward X being platinum the wanted benefits the of customers. most could understanding we of that's we they had how would different answers. Tier that fuel the it points they run to entry where migration and dual time the we'll a becomes equipment more best cost material cost of that and we

able that beginning that we're investment with sale to lot the and deploy got business to the that to that's I right it's about dynamic servicing would out fuel of making, fleet offset a that you're to going, we're been XXXX. of I enough and And see where we So, fortunate completed calling be dual investment the us a way our and and encouraged been COVID. very going at -- -- we describe we've continue of throughout we've

Christopher Voie

going second commentary here? maybe as most? But growth just And one, back much to in of basins how in quarter, from you around go the expect additions work which Obviously, Sure. fleet. you strong about the the just fleet. revenue is growth Curious can second what be going grow up, That’s to the describe, maybe And fleet year? the you growth active through expect Okay. if per you some helpful. more half throughput about

Robert Drummond

Yeah.

So, that, XXXX, but activity our it all in XXXX. who down in is to kind the But ways, and -- going reiterate said planning basin are expected of been traditional in this we're We XXXX during prepared transition recovery what customers ramped like And we a That placing beginning fortunate onboard to see question along enfolding somewhat stage of was some the be want a we've during I year. we many customers year. of new to it's too. it. remarks aggressively

added additions per our QX a And neighborhood talent when have from around So, be going -- the Platinum QX QX a but question, improve. our to that general, that's and ESG And new with for of on as we've quarter Tier continued into And visibility perspective, kind in arena. into thing, you reason of strong got on offerings. and that continued mostly QX. we're couple same type and it'll the efforts in we time, X dynamics the our marketing continuously At are so the new sales market, guiding improving, forward. ask

we entire a our But And customer going out turn generation we that So, leader us, got and to it XXXX. we base. we with into the in to can fully strategy -- is evolution to power get the what when free ultimately, in -- solutions that's be our we flow get flow XXXX. that everything the that for XXXX. deployed us we get positive as cash ability ESG message see And turn gives cash and

Christopher Voie

most is that can growth Permian? And be of the Okay. in

Robert Drummond

a your back that's So, -- point question. good

You of basins. dramatic is. asked it A Yes. amount the me about

with basins has so the time. than a in company we're a supply pull our crowded Appalachian footprint region. Permian, seen think competitors space I working for core history And And of long have been demand. We've of that. the we a through and It's lot customers some out even a more Our and long most -- proud that that visible But of term, outlook we're a determined in in vary think little there. good what we I up is opinions there very Put gas but and price way. the growth good by lot Texas. of it position that bit, a is have of the a

Christopher Voie

it. Got you. Thank

Operator

next with Our question. comes from Simmons. question go ahead Ian Please from MacPherson your

Ian MacPherson

to purged pricing? basically repricing melting fleet be the your book efforts you expanding up And of QX, and new of next through, if Robert. of and talk pricing that forward. morning, turnover all the for portfolio here is kind the seen your and the prosecute your and five should it in how it? in Good all customer the book change could your easier If market rollover scope wonder year integration your speak the with from effects spot more work When along the picking and also about in average selling I in Thanks. up we've you influencing on to the does wellsite customer customers make

Robert Drummond

question. Good And our very is look, the I value proposition aspect. would say much driven integration by

call ever efficiency, together by or Keane. the this two the completion hear together, being group wireline is of delta beginning adding efficiency and average above versus statistically working us And And it's working independently. operating on between since it's frac -- XX% often together. by You our out frac the

value of have you talk the integrated perspective get -- pricing me, when operation it total and about an operators. cost to to the from from So, to proposition, look at full you

that So, currently the we is our downturns bring with to that looking decisions Pricing as make that during the And are new process, doing important call at for the company, base we making digital we historical also to very with of us. results we're and point about during tools one the changed. back and into that -- no unsustainable, customer the profitability made a operate trying worst concessions portfolio, it from it. we substantially. question, lowered thereof, But lack ever. as that cost has when we are they're fix move there have to And we and our that to our realized the drive their customers levels we

down price have talk solutions, the of that also we or even last-mile opportunities we lot powered So, you we to eFrac, of be like levers profitability together is other to to put locking don't bigger when integration yielded a address advantage And our add solutions, start back is road power about, we the as claw integrating then of portfolio currently. move as to lower to more. profitability. when can we the exceed And perhaps the on same scale companies our Tier fuel, with dual take we and when costs. able further then gas next-gen logistics two the We coming X fueling and were this than have levels that we much

struck, COVID XX particular back time. you growing we at fleets before like that were and If remember

as be into fleets that to as back more driven the improves scale profitability mix, our and ability per well. a add lot generate we by So, fleet will our

So, I of most questions. hope that addressed the

Ian MacPherson

Robert. your to cash year. Thanks, than it focus On free be I to Kenny. is Yeah. looks Near-term, cash you Absolutely. this for or you're thinking you flow ask wanted next year, into in for for was flow going that Yeah. said CapEx heavier QX a like quick it about coming really follow-up for in QX.

special half after another negative year. ballpark free cash the probably full a How like the for early ranges flow CapEx Any solutions quarter. free should CapEx the the So about cash on second half? for flow we power read think and first CapEx

Operator

be remain reconnect Ladies you. and difficulties. try having gentlemen, reconnected. technical lines. it Please appears we some while patient may line been to speaker the And the speaker Thank has we

Kenneth Pucheu

you Can hear us?

Ian MacPherson

Yeah.

Kenneth Pucheu

Sorry about that, Ian.

Ian MacPherson

Kenny. Hey,

Kenneth Pucheu

just And in cash I was I our components like yeah, year will HX of somewhat. was full increase saying, cadence the through flow. I -- Look, HX, investment was our our going so just look, and

activity that We on demand has have high our gas returning powered customer fleet.

in invest continue X going Tier to DGB. we're to So,

and into said change offense sheet as XXXX, mentioned, natural cash that free we're QX, will demand we our do downturn during XXXX, we've a power the go And if business. always the gas year balance as started with equipment, than But to more play in our use, actually be for us. increase balance. will cash as solutions the well going So, bit. XXXX we're and At pre-COVID, We've investing cash flow going in have investment to dynamics diligent what XXXX, we have we an but powered you for with we in to defense. as our protecting right? in a be that been Robert math, very use pricing So, of end

our continue generate We cash our Tier XXXX, cash position can meaningful believe in with We XXXX. fuel. flow dual leading especially free and in we X flow on that --

Ian MacPherson

Got Okay. it.

So, the in with then rising we look higher be more towards as EBITDA. shorthand actually should up the the half, the CapEx power second XXXX but CapEx could then completes, standing solutions first maintenance into that levels half, probably

Kenneth Pucheu

in. it put to way good a That's

Ian MacPherson

Okay. Super. Thank you.

Robert Drummond

Ian. Thanks,

Operator

question. comes And our question from from Gengaro Stifel. Please next ahead Stephen with go your

Stephen Gengaro

morning, gentlemen. Good Thanks.

Robert Drummond

morning. Good

Robert Drummond

that teens, Two fleet things the mid When to just a for pricing be about utilization, guidance numbers, range. to profitability? I'm you gross the question to of I to earlier me. $XX will back million, or Chase's for $XX few it about, was sort take get would per I for think profit I'm But trying and getting level anything. not -- think to back What about get think you million get next there? I years mean, like, what of but roadmap back when know it asking and into

Kenneth Pucheu

incremental we there mentioned, gross end On And double-digit. if and to we into QX. look be as and the to be on it's double-digit a going year through higher QX -- progression, we Look, margins per able look was double. to gross some your at And we Yeah. line than then XXXX. to it's it's the have QX, of profit in question, if per it'll at our done further Obviously, sight from had in XX%. in fleet we'll year versus exiting progress of EBITDA weather but the specific And double you see impact we'll called QX, fleet. profit that be QX that you it going we beyond, out, deliver that by

flat. going to we're our So, keep SG&A

fall is So, standpoint. incremental going any an pricing from utilization pretty well revenue to through EBITDA

we kind our So, about will integration help that what our we're just to levers different wireline. reiterate we We're -- which with talked earlier, have around of utilization, have, leverage. the Robert all adding

and pricing we then as beyond. we go in solutions and Tier our into fleet and X have logistics. XXXX We year integrated better believe And our power that have growing addition going that, we us around and the give a dynamics large to integration to through DGB is

we trajectory EBITDA So, acceleration kind really ready as we into I go cycle timing cycle commit fleet. things or on factors the of not described. -- improvement based that are we But even more believe on EBITDA And those that that seeing to all GP and of I XXXX just on think per I'm XXXX. combined mid full or ready --

Stephen Gengaro

what you. color. see looking a of kind it activation place. second capital higher fleets to One about of good quarter readiness having that? Great. I I'm you fleet where to than think reactivate know you'd sort follow-up. when put escalation in costs? Is more XX? deployed level in material now. At And the about of I No. That's think XX to start have base total and your at in Thank do work you it very to asset this trying to deployed fleets assets. program Is need other right just

Robert Drummond

didn't the U.S. -- done called We the we have much would out at about if we keeping was we around cost on since -- effectively. the consumption our you and XXX,XXX simo-frac, $X disposal it look fleets our going was be at So, month to And you as spending that We costs When have kind going we've take we a believe fleets forward into we've bottom not more. think redeploy, potential. learning into -- ready. pin-up past. that than get cost we account think have structure total more we same downturn. it And the a lot can land talk we million we're probably to horsepower But And we deploy then the in can double-digit say, merger. fleet, got count we fleet deploy next talking the substantial at we've anything a been different the bit we that. cut did And then them year. the that XX estimates very go what had we And now up. that's may you the of deploying mid-XXXs past, little we reason of of since into of that have get horsepower

Stephen Gengaro

you for the Thank color, No. Yeah. gentlemen.

Robert Drummond

Thank you, sir.

Kenneth Pucheu

Thank you.

Operator

Syed Waqar comes your from ahead with our question next go from Markets. ATB Capital Please And question.

Waqar Syed

Thank my question. you for taking

How international you in remainder embedded What's of for QX, the active? fleets? maybe First outlook year? your of all, could currently the talk are about talk many and then for your --

Robert Drummond

Yes. Thank asking that. you for

and big Our a our U.S. made has case has a bringing NESR arena where efficiencies partnership significant into have unconventional there, over difference. where well. us capabilities with been they It the served volume,

to else at the rest doing a this with an NESR to a get on very currently -- have we of arena We're at happy. two another business quarters. developing that region, -- of they And we're thing. it's business -- to inventory chance a development other look I got But also capabilities. same from largely would places opportunity development say in to short way. operationally, of where scale have in opportunities the We deploy do things as number And been a to way for and try countries into it fleets driven as lot us efficient that. And term to the to of one big in MENA They're linked volume a the as address i.e. we has potential that that's around partner wells of very comes lot to to I and But when year, look -- perhaps the look that begin the operating for and would they it's impact material the see Middle other really very a we inside us good. not be happy anybody by we're a for East. NESR's to partner

it rest see flat. So, would say this kind of the we I just for year, of

Waqar Syed

Okay.

understand your us industry EBITDA is bottom, $XX different And industry crew, range. million industry, much or may million Just has almost pumping for base still -- capital one has in only customer starts up, capacity? how even be But of that off to gets some when you Historically, of pumping make profitability said to the then help the now, slowly industry admittance to right $XX of and digit from what that, to or mid the look salaries be kind cycle has per curve, When EBITDA margins free -- in is, margins customer The to they're cash industry, at that spending of the question I upcycle kind the low base, and earlier period cycle, cycle. flow. -- broader, single XXX% [ph] as to if does the happened all last itself in up all going investments philosophical are margins of activity time. type can into started that when add -- the the picks start this profit this grow.

understand upgrading And to -- still market. capacity so, to continue is market, not still investing are moreover, fees into I'm And efficient. fragmented optimism competitive more this paid about become while struggling and why so much a customers or still more a

supply So market. the extent adding into you are artificially to some

is understand help earlier so in this starting So, me kind invest of cycle. industry the much to why

Robert Drummond

And I this. -- a that's like answer Look question. it would good

about in by placed been not to or investing activity what a think but operators out. horsepower moved simo-frac everybody end of the reason and converting been already added one lead more upper market general, and think understands investment our think total another. more in our equipment portfolio to of additional The through bifurcated other and in things my a sort. still two, somewhat of I take market, of strategy your investment It [indiscernible] bifurcated additional competitors is closer and that gas been market bit in of profile, sold horsepower, cash Tier the we to market X I because it scale very fleet, we of any kind the while capacity range in from we're adding like I that existing has is, is general, to was there's taking part marketplace. bound and there frac profile. of a view flow has is And on to the consuming is we increased But, have their of linked the in it pricing natural related power disciplined capacity added essentially part simultaneously intensity. the in maintenance sector this past a kind the that stay than And

aspect. And used supply I are bifurcation -- rapidly. you and the have monolithic as supply look at to we pretty neolithic, I So, demand when the think think we one can't base this converging, is way you market probably

a would the inside complicated is part that that is investment the year from of the grown market perhaps, just next it's bit So, little that that's but -- has structure. way demand say upper I

Waqar Syed

for industry diesel that that, commoditized -- rather the And Fair wait may than as was it to market and fuel the market hope it become point. pay upgrade proactively enough. maybe was -- -- let at doing that. customers them My may as some is worry let become the would the dual

Robert Drummond

had Well, one gives we on so feel sheet that that. there our dual as advantage being a going balance believe any is scale We've and market. fleets And as to like would thing take I it's Company our us to say some at a in competitive as kind differentiation fuel. powered many deployed of in being do size, years. many gas got of anybody number I the has able

I think a get able to that. do be anybody else scale to

hope move I is a made that market that's into different the I -- Tier, ability movement both point. us care the not the some side. the standpoint your price DNA even move. because differently. on taking I that's on I believe. can So, that that But we attrition evolutionary side one of This to And [ph] I what it's conventional move the control, inside the think and reason price from -- bifurcated in unified move the understand

Waqar Syed

Thank for very sir. much guys. you, you Yeah. Thank you

Robert Drummond

Thank you.

Operator

from John our with Energy Partners. Please Daniel Daniel next go [Operator ahead question comes from And your Instructions] question.

John Daniel

squeezing me in. for Thanks guys. Hi,

clients. the drove the issues solution it you that color just through provide, performance new Just integrated us The first on to can what helpful? one you their engines, Can onboarding with peers? Is maybe walk guys X the five is, of decision? would that be Tier any

Robert Drummond

are And a is is your - factor oftentimes the a you every what Price John, you probably is I think tender project And competing models. own process. there's the to linked in present in so how efficiency. that we kind was, and into much there's very of a all market importantly, efficiencies can price lot put market -- big more yourself day.

supplying our of during increase. where money sand us -- time else that largely we And The inside infrastructure as per make the with total to -- COVID, to Our as think, been better we're of think only as for by high is eliminate was challenged. offering total to fleet it's logistics more factor, a travel our we're more I wait operating integrated hauls that's ever driven are have our example, parts and drivers a differentiated were factor. example. especially I like the And percentage own and give abilities somebody where opposed margin to less for positions, NexHub an and they ability day, is and

you than were going expect, we what ground our would Not to better, differentiated that's hold I had shooting much as good -- us average. said we think. it's that's the for action. whole also had we pretty we running program customers. on readiness what -- the error free, but hit Obviously, do. we to think, our The customers, ability to to the And So, with those to what deliver

John Daniel

for that All two a in doing right. do a rise crew, on count with disclosure to Fair if activity, a out sort you the count simo-frac as housekeeping you've enough. follow I simo-frac, of or got question, crew purposes? that you one as do But got Chase's. a

Robert Drummond

decide a it’s And good we're John, trying to point. do. what to

John Daniel

Okay.

Robert Drummond

would more a one likely would more before It's been I And average. say -- a have would on kind count evolutionary well. was beginning, -- been to historically -- -- we've the number on half like as X.XX the said and be ought in I of I

we I of XXX, about I being certainly to them the just is -- like that think So, at you one. look all not determine, but would around most say talk counts

John Daniel

do. I what That's

enough. Fair right. Okay. All

Now, I'm to question. going ask you a

question I Can and as new ago? for volume it's today, to just months it's up work is were dumbest the the as of because The inquiries just guidance, for are good. inbound you from work? might going going characterize robust think the you customers know that's two pricing calls But up. you three As gave they

Robert Drummond

it way. put I'd this

price it, we decided like, going to familiar deployments reiterate it's when at little -- were in the -- they what slight be already said, customers a to uptake. it their we've the plans I in around is would going be. I I were layered might with, think, level to say As say steady and and I bid fishing, into bit the that look of outlet customer kind they get everything. And XXXX. exactly I on already about perspective what what reiterated -- I very haven't going But also on what's would or the I what that future that -- -- yet knew deploy And uptick, looks think a they price nearly there we is the the that But sometimes fleet. were

difficult about handicap opportunity. that's that pipeline to and to we pipeline is nail down, dynamic So, I think the we And of try frankly, volume -- a is that and obviously, very run but we healthy. excited,

John Daniel

and time you Okay. guys today. Great. gave Hey, I appreciate color all the

Robert Drummond

Hey, thanks, you. John. Thank

Robert Drummond

question Operator, I think take. that's we can the last

volume the Before activity group we interest and I the a of cover. guys to want the the our appreciate company. company dedication for a that. turnover been one the and wanted happening, close, safety COVID analysts, appreciate to say got everything just And throughout in in of there's lot I to that really I thank large to turmoil thing that's was our your been you we collective that employees up all customers to -- the and their NexTier to Texas before to all demonstrated We from our freeze

participating So, today's in thanks call. for

Operator

conference that, We conclude you attending. call. for gentlemen, with today's thank Ladies and we'll do

disconnect now may You your lines.