Don Crist

Don Crist requested an update on the Vietnam facility's API certification progress and the anticipated margin impact from shifting imports from China to Vietnam. He also inquired about the potential for meaningful growth in North Africa (Algeria, Egypt, Turkey) leveraging the installed base acquired with Cactus International.

Answer

Chairman and CEO Scott Bender and President Joel Bender confirmed that Vietnam tariffs are 25 percentage points lower than China's, expecting a substantial margin boost, particularly in 2027, as product displacement progresses. The first stage of API certification is complete, with the second audit underway and monogram expected in 30-60 days. Mr. Bender also confirmed a significant installed base in North Africa, indicating growth potential.

Don Crist inquired about the progress of API certification for the Vietnam facility and its anticipated margin impact, particularly as products from Vietnam displace those from China. He also asked if the international acquisition provided an installed base in North Africa (Algeria, Egypt, Turkey) that could drive meaningful growth.

Answer

Chairman and CEO Scott Bender explained that Vietnam tariffs are expected to be 25 percentage points lower than China's, leading to substantial margin boosts, especially in 2027, as product displacement occurs. President Joel Bender confirmed that API certification is in process, with the second audit stage finishing this week and monogram expected in 30-60 days. Scott Bender affirmed that Vietnam is inherently lower cost. Regarding North Africa, Scott Bender confirmed that the international acquisition indeed provided an installed base that could lead to meaningful growth.

Don Crist asked a macro question about the discussions Solaris is having, specifically the proportion of 100% behind-the-meter versus hybrid approaches (grid/behind-the-meter), and if there's a shift towards standalone island power plants for the life of data centers. He also inquired about the outlook for maintenance costs, given elevated costs in Q4 and the addition of new equipment.

Answer

William A. Zartler (Chairman & Co-CEO, Solaris Energy Infrastructure) and Amanda Brock (Co-CEO, Solaris Energy Infrastructure) noted a mix, weighted towards behind-the-meter for plant life, but also discussions for mobile kits as a bridge solution. Ms. Brock highlighted accelerating discussions, greater tenured contracts, and customers becoming comfortable with fully islanded mode for 10+ years. Kyle Ramachandran (President, Solaris Energy Infrastructure) clarified that Q4 maintenance costs were a one-off for equipment modification. He explained the episodic 30,000-hour overhaul cycle (roughly every 4 years) and that significant maintenance capital is several years out, with Q4 also including transitory costs for third-party equipment.

Don Crist asked about the proportion of Solaris Energy Infrastructure's customer discussions leaning towards 100% behind-the-meter solutions versus a hybrid approach with grid integration, and if the trend is shifting towards standalone island power plants. He also inquired about the future maintenance schedule for Solaris' equipment, specifically if elevated Q4 2025 costs were a one-off or indicative of future waves.

Answer

Bill Zartler, Founder, Chairman, and Co-Chief Executive Officer, indicated a hybrid approach, but weighted towards behind-the-meter for the life of the plant, with some discussions for mobile kits as a bridge solution. Amanda Brock, Co-Chief Executive Officer and Director, noted a tailwind towards customers becoming comfortable with fully islanded mode for long-term contracts. Kyle Ramachandran, President, clarified that Q4 2025 elevated maintenance costs were largely a one-off for equipment modification for a new long-term contract, and significant overhaul cycles (around 30,000 hours or every four years) are several years out for the new equipment.

Don Crist inquired about the demand dynamics in the broader Middle East and Northern Africa region, specifically when Innovex is typically brought into conversations for large tenders.

Answer

Adam Anderson, CEO, explained that timing varies by project and operator. He noted quicker engagement with IOCs in Bahrain and UAE, often driven by U.S. contacts. For larger contracts in Saudi or Kuwait, Innovex's 'Big Impact, Small Ticket' products are niche and often sold later, sometimes 'just in time' as rigs are stood up. He confirmed seeing demand from U.S. contacts who have moved to the region and anticipates growth in Saudi and Mexico in H2 2026 and 2027.

Don Crist asked for an update on the Dril-Quip merger, specifically whether all Dril-Quip-initiated subsea orders have been finalized and when Innovex's sales team fully took over driving new subsea contracts. He also inquired about the status of Far East manufacturing expansion in Vietnam and China, including CapEx and readiness for full production. Finally, Don asked about Innovex's involvement in Middle East and Northern Africa tenders, particularly the timing of engagement and the influence of US consultants.

Answer

CEO Adam Anderson clarified that some Dril-Quip contracts are long-term, and while some are attractive, a specific low-margin subsea project bid under Innovex's tenure is impacting current margins but is being rebid. He stated that Far East manufacturing is 'mid-innings,' with subsea manufacturing moving to Singapore and a Vietnam facility ramping up, expecting CapEx impact through H1 2026 and efficiency benefits later. For the Middle East, Adam explained that engagement varies, with quicker hits from IOCs influenced by US contacts, while 'Big Impact, Small Ticket' products for larger NOC contracts are often sold closer to project start.

Don Crist inquired about Core Lab's potential re-engagement in Venezuela, considering its historical presence, should operators expand their activities in the region.

Answer

Chairman and CEO Larry Bruno stated that Core Lab has a nearly 60-year history in Venezuela but exited due to a challenging environment, moving operations to Colombia. He noted that while Core Lab possesses legacy data that could be monetized, near-term opportunities are more likely for 'metal-heavy companies.' Core Lab would follow operators with mobile lab capabilities, but a permanent re-establishment is several quarters away. Chris Hill, CFO, and Larry Bruno also discussed capital allocation strategies, balancing debt reduction with opportunistic share buybacks, aiming to improve the leverage ratio below 1.0 for better interest rates.

Don Crist asked Chris Hill about Core Lab's strategy for future cash flows, free cash flow allocation, and the balance between paying down revolver debt versus share buybacks, following the recent debt restructuring.

Answer

Chris Hill, CFO, stated that the term loan provides flexibility with no early paydown penalty, alongside required annual paydowns. He affirmed Core Lab's view that the stock is undervalued, indicating a continued opportunistic mix of share repurchases and debt reduction. Larry Bruno, Chairman and CEO, added that achieving a leverage ratio below 1.0 would offer a 0.25 point interest rate reduction, a smart target, but the current capital allocation strategy will likely persist.

Don Crist asked about the potential directional impact of early Q1 weather on results compared to Q4, the normalization of other business lines (Thru Tubing, coil, wireline) due to competitors moving overseas or exiting the market, and the possibility of stock buybacks given RPC's substantial cash reserves versus retaining capital for M&A.

Answer

Ben Palmer, President and CEO, stated that the Q1 weather impact is still being analyzed but is not insignificant, particularly in the Permian and MidCon. He noted that while there might be some normalization in other service lines due to market stress on less well-capitalized competitors, it's not a tremendous amount yet. Regarding capital allocation, Mr. Palmer confirmed that buybacks are always evaluated as a choice, but no dramatic changes are expected in the near term, with M&A remaining a focus.

Don Crist inquired about the directional impact of early Q1 weather on RPC Inc.'s performance, asking if it would be similar to the fourth quarter's trends. He also asked if RPC Inc. is observing a normalization or reduction in competition in non-pressure pumping service lines (Thru Tubing, coil, wireline) due to competitors facing challenges and equipment moving overseas. Finally, he questioned the potential use of RPC Inc.'s significant cash reserves, specifically asking if stock buybacks are being considered alongside M&A for capital deployment.

Answer

Ben Palmer (President and CEO) stated that the company is still analyzing the weather impact, noting it's not insignificant, especially in the Permian and MidCon. He suggested there might be 'a little bit' of reduced competition in other service lines due to market stress impacting less well-capitalized companies. Regarding capital allocation, Mr. Palmer confirmed that buybacks are 'certainly one of those choices' being evaluated, but indicated no dramatic changes in the near term, while affirming it's 'in the tool chest'.

Don Crist from Johnson Rice inquired about the timing of unconventional drilling conversations and potential rig count increases in international regions beyond the Middle East, such as Australia, Libya, and Turkey, and also requested an update on the sale of Utica Square.

Answer

President Trey Adams discussed future growth opportunities in Australia, including a second FlexRig, and active technology conversations with KNOCs and IOCs in North Africa (Algeria, Libya). He noted that these programs mature over long horizons. CEO John Lindsay provided an update on the Utica Square sale, stating the process is going well with multiple interested parties, with hopeful news by year-end 2025 or H1 2026.

Don Crist from Johnson Rice asked about the timing of unconventional drilling conversations and potential rig count pickup in regions outside the traditional Middle East, such as Libya, Turkey, and Australia, over the next couple of years. He also requested an update on the sale of Utica Square.

Answer

President Trey Adams highlighted future growth opportunities in Australia, with a second Flex Rig recently deployed. He noted active engagement in North Africa (Algeria, Libya) with KNOCs and IOCs, emphasizing the critical role of U.S. unconventional expertise. He cautioned that these programs manifest over long horizons. CEO John Lindsay provided an update on the Utica Square sale, stating the process is going well with multiple interested parties, hoping for news by year-end 2025 or H1 2026.

Don Crist (Johnson Rice & Company L.L.C.) asked about Patterson-UTI's M&A outlook, specifically if larger competitors pivoting away from core businesses might free up attractive equipment for Patterson-UTI, potentially leading to accretive M&A, possibly overseas.

Answer

President and CEO Andy Hendricks stated that Patterson-UTI does not need M&A, being content with its current cash production and technology deployment. He sees some room for consolidation among smaller completion companies but little in drilling. He noted that the company has evaluated many opportunities but prefers profiles similar to the Altera acquisition (low CapEx, high returns). CFO Andy Smith expressed skepticism that competitors would sell high-technology equipment that Patterson-UTI would want, making such a scenario unlikely. He added that while international opportunities would be reviewed, the likelihood of attractive core business assets being separated is low.

Don Crist asked about the outlook for M&A in the oilfield services sector, specifically if larger competitors pivoting to power might free up attractive equipment for Patterson-UTI, potentially for accretive transactions or international expansion. He followed up by asking if acquiring a 'stranglehold on the Middle East' would be attractive.

Answer

Andy Hendricks, President and CEO, stated Patterson-UTI doesn't 'have to do any M&A' given its strong position, cash production, and technology. He sees some room for consolidation among smaller completion companies but not much in drilling, and likes the low-CapEx profile of past acquisitions like Altera. Andy Smith, CFO, added that a 'wholesale pivot' by competitors is unlikely, and any equipment sold would likely not be at the desired technology level. Mr. Smith said they would 'certainly be interested in looking at' international opportunities but placed a 'low likelihood' on core business assets being separated and offered.

Don Crist of Johnson Rice & Company L.L.C. asked about the potential for further asset rationalization beyond Peak Rentals, such as in trucking or chemicals, and requested an update on the progress of the Colorado water banking project.

Answer

EVP & CFO Christopher George responded that the remaining trucking assets are more strategically integrated with the infrastructure business and that the focus will be on rationalizing the overall cost structure. President, CEO & Chairman John Schmitz added that decisions are driven by what best supports infrastructure customers. Regarding Colorado, EVP of Strategy & Technology Michael Lyons reported material progress, including the completion of a landmark engineering study, and noted active engagement with stakeholders to develop a large-scale water banking program.

Don Crist of Johnson Rice & Company L.L.C. questioned the drivers behind lower per-ton production costs despite reduced volumes and asked about the potential CapEx implications of large-scale microgrid projects under discussion.

Answer

EVP & President of Sand and Logistics Chris Scholla and President and CEO John Turner attributed the cost improvements to a relentless focus on operational excellence, procurement efficiencies, and prioritizing production at their lowest-cost facilities like Kermit. SVP & President of the Power Business Unit Tim Ondrak clarified that the 40-50 megawatts of deployments planned through year-end are covered by the existing CapEx budget, and a significant portion of the 200 MW opportunity pipeline is in the C&I space.

Don Crist inquired about the potential for older diesel frac equipment to be sold overseas and whether this could help balance the domestic market. He also asked about current lead times for new solar turbines.

Answer

CEO Sam Sledge acknowledged that there is global interest in U.S. equipment and expertise, which he believes helps the domestic supply-demand balance, though the impact is hard to quantify. Regarding lead times for power generation equipment, he commented only that they are 'not getting any shorter' but expressed confidence in ProPetro's strong supplier relationships.

Don Crist of Johnson Rice & Company L.L.C. asked about the contract structure and return profile for the new ECO rigs, the primary drivers for the improved performance in the Wireline segment, and the potential for gas basin activity to offset Q4 uncertainty.

Answer

CEO Stuart Bodden explained that the ECO rigs have a similar or better return profile, with customers sharing incremental costs through down payments and higher rates. He attributed the Wireline improvement primarily to internal cost management and a seasonal activity pickup, noting it's too early to see benefits from market consolidation. Regarding Q4, Bodden expressed hope that a strengthening gas market could help but stated it's too early to predict, as customer budgets will be key factors.