Jeff LeBlanc

Jeff LeBlanc asked for management's perspective on U.S. drilling efficiencies, questioning what 'inning' the industry is in regarding continued improvements in cycle times and how this impacts Cactus, given its well count-levered business model.

Answer

Chairman and CEO Scott Bender acknowledged ongoing increases in drilling efficiencies, which translate to more wells per rig, and stated that wells drilled is a better proxy for their business than rig count. He expressed optimism ('bullish') about continued increased efficiencies, attributing it to large customers deploying interesting new technology that smaller operators may mimic over time.

Jeff LeBlanc asked about observed shifts in how operators approach artificial lift across a well's life, given the development of secondary horizons and extended lateral lengths, specifically regarding longer primary lift usage or preemptive solution mapping.

Answer

President and CEO Joe Bob Edwards noted that operators are increasingly focused on production longevity and durability, leading Flowco to proactively engage with them about prospective lift changes as wells mature. He highlighted Flowco's role in proposing modifications and providing tools for preventative and proactive lift change-outs, including hosting artificial lift schools, to support customers in making their production more durable.

Jeff LeBlanc from Tudor, Pickering, Holt & Co. asked if Flowco has observed any shifts in how operators approach artificial lift across a well's life, given the trend of developing secondary horizons and extending lateral lengths, specifically whether primary lift is assumed for longer or if solutions are preemptively mapped out.

Answer

President and CEO Joe Bob Edwards noted that operators are increasingly focused on production longevity and durability, and artificial lift is a key part of that conversation. He explained that Flowco is proactively engaging with operators about prospective changes in lift as wells mature, proposing modifications when existing solutions become less effective. Mr. Edwards highlighted Flowco's artificial lift schools and proactive dialogue with customers to provide tools for preventative and proactive lift change-outs, ensuring durable production.

Jeff LeBlanc asked for an explanation of Solaris's flat EBITDA guidance for the Logistics Solutions (SLS) segment, especially given that pressure pumpers are flagging a sizable impact from the winter storm on Q1 profitability. He inquired how Solaris's rentals business insulates the company from such disruptions.

Answer

William A. Zartler (Chairman & Co-CEO, Solaris Energy Infrastructure) acknowledged some downtime during the storm but stated that additional growth in the business, particularly the Top Fill offering, is offsetting those declines. He noted that the Top Fill offering provides real savings for large frack jobs, and Solaris is virtually sold out of that equipment, supporting consistent utilization and margins.

Jeff LeBlanc asked why the significant Q2 capacity acceleration is unlikely to repeat and questioned the challenges of integrating different technologies under their 'generation agnostic' approach.

Answer

CFO & President Kyle Ramachandran attributed the Q2 acceleration to the company's nimbleness in meeting unexpected demand, which is difficult to forecast. Chairman & CEO William Zartler added that their team is highly experienced in integrating diverse equipment, such as reciprocating engines and various turbine models, viewing this technical capability as a competitive moat.

Jeff LeBlanc inquired about ProPetro's success in transitioning existing customers from Tier Two to Tier IV DGB assets, especially given the limited opportunities for deploying incremental fleets. He sought color on whether this transition strategy has been effective.

Answer

Sam Sledge, Chief Executive Officer, indicated that while there has been 'a little bit of that' transition, the current market is more about providing specific tools for specific customers and regions, depending on factors like gas prices and pipeline deals. He noted that E&Ps generally know what they want, making it less of a 'grow a customer' game than in previous years, reflecting more market stability.

Jeff LeBlanc of TPH asked about ProPetro's success in transitioning existing customers from Tier 2 to Tier 4 DGB assets, especially in a market with limited opportunities for deploying incremental fleets.

Answer

CEO Sam Sledge explained that while some transitions occur, it's now more about specific tools for specific customers and regions, driven by varying gas prices and E&P preferences. He noted that customers often know exactly what fuel sources they want, making it less of a 'grow a customer' game from diesel to dual fuel to electric, which was more prevalent a couple of years ago.

Jeff LeBlanc asked about the stability of pricing within ProPetro's long-term contracts, specifically inquiring about the existence of any price reopeners.

Answer

CEO Sam Sledge confirmed that the long-term contracts for dual-fuel and electric fleets have very stable pricing. He explained that any adjustments are typically semi-annual, formulaic, and result in only low single-digit changes, providing a high degree of predictability.

Jeff LeBlanc asked about the multiyear earnings potential of NOV's ATOM RTX robotics platform and the key gating events for it to achieve a similar impact as the Top Drive.

Answer

CEO Jose Bayardo expressed significant excitement for NOV's automation and digital initiatives, including the ATOM RTX robotics platform. He mentioned the first pilot system has been operating consistently for a couple of years, with three rigs operating on land and three offshore, and 27-30 robot arms sold. He highlighted strong cooperation with two IOCs and two drilling contractors, and ongoing constructive conversations for further sales. Jose Bayardo also emphasized NOV's comprehensive capabilities in data control systems, automation, robotics, and AI as key drivers for future growth.

Jeff LeBlanc (TPH and Company) asked about the multi-year earnings potential of NOV's ATOM RTX robotics platform and the key gating events for it to achieve the significance of a "next Top Drive."

Answer

Jose Bayardo (CEO, NOV) expressed excitement for the ATOM RTX robotics platform, noting its consistent operation in harsh environments since its pilot system launch. He mentioned working with two IOCs and two drilling contractors, with three rigs operating on land and three offshore, and having sold 27-30 robot arms. Bayardo highlighted NOV's broader digital capabilities, including data control systems, automation, and AI, as key to future prospects, but did not provide specific earnings potential or gating events.

Jeff LeBlanc asked about Liberty Energy's capital allocation strategy between the frac and LPI (power) businesses, specifically if the plan for no digiPrime builds in 2026 would hold given compelling power opportunities and current frac prices.

Answer

CFO Michael Stock stated that the frac business is vibrant with strong long-term cash generation, and investments will be made based on its cycle, unaffected by power business investments. He emphasized that Liberty is not capital-limited and will invest as makes sense for future cash generation. CEO Ron Gusek added that Liberty takes a long-term view on the frac business and its people, navigating near-term pricing headwinds while maintaining full utilization and being well-positioned for future improvements.

Jeff LeBlanc of TPH&Co. asked about the mechanical details of the fleet repositioning, specifically whether Liberty was upgrading diesel assets or redeploying existing natural gas-burning assets to support simul-frac operations.

Answer

CEO Ron Gusek clarified that the company is not upgrading older Tier 2 diesel equipment, which is destined for retirement. The repositioning involves strategically moving the right assets to meet customer needs. CFO Michael Stock added that some existing fleets are being moved to support simul-frac work in the short term, serving as a temporary solution until the remaining new DigiFleets are rolled out later in the year.

Jeff LeBlanc of TPH&Co. asked for color on rig churn dynamics in the North American market and H&P's success in securing work with new customers.

Answer

SVP Michael Lennox noted that churn is primarily seen with private operators. SVP Trey Adams added that H&P's teams have been successful in managing this by placing rigs with other privates or customers looking to high-grade their fleets. This success is largely due to strong, long-standing relationships within the E&P community.

Jeff LeBlanc of TPH&Co. inquired about the expected volume of non-Dune Express logistics deliveries for the rest of the year and the comparative margin profiles of traditional logistics versus single and multi-trailer Dune Express operations.

Answer

CFO Blake McCarthy stated that non-Dune Express logistics volumes should increase in line with the company's overall mid-single-digit volume growth forecast for Q3. He and EVP Chris Scholla confirmed that Dune Express margins are significantly higher than traditional logistics, with multi-trailer operations being the most profitable. They noted the company is currently in an 'education phase' to help customers transition to the more efficient multi-trailer model.

Jeff LeBlanc from TPH&Co. asked for commentary on the future trajectory of daily drilling costs in the Lower 48 and where management expects them to stabilize in the long term.

Answer

CEO Anthony Petrello responded that managing costs is a primary focus and that the company has the situation under control. He noted a lack of significant cost inflation and stated that efforts are ongoing to optimize both direct costs through the supply chain and the support structure to align with the current rig count.

Jeff LeBlanc from TPH&Co. asked for commentary on the trajectory of U.S. Lower 48 daily drilling costs and where management expects them to stabilize in the long term, noting it was a previous focus area.

Answer

CEO Anthony Petrello responded that drilling costs are well under control, with minimal inflation currently observed. He stated that the company's primary focus remains on optimizing the cost structure by securing favorable supply chain deals and right-sizing the support organization to align with the active rig count, suggesting further improvements are possible.

Jeff LeBlanc from TPH&Co. asked for commentary on the future trajectory of U.S. Lower 48 daily drilling costs and where management expects them to stabilize in the long term, noting it was a previously mentioned focus area.

Answer

CEO Anthony Petrello confirmed that managing costs remains a key focus. He stated that the company is actively right-sizing its operations and support structure to align with the current rig count. Petrello also mentioned that cost inflation is not a significant issue at present and that the company is focused on optimizing its supply chain and overall cost structure, with an expectation of continued improvement.

Jeff LeBlanc asked for commentary on the trajectory of Lower 48 daily drilling costs and where management expects them to ultimately stabilize.

Answer

CEO Anthony Petrello responded that managing costs is a key focus and that the company has the situation under control. He noted minimal cost inflation and ongoing efforts to optimize both direct costs through the supply chain and indirect costs by rightsizing the support structure for the current rig count.

Jeff LeBlanc of TPH&Co. asked about the utilization of the completions fleet excluding the fully utilized Emerald and Tier 4 equipment. He also questioned what market conditions would be required for the company to consider idling this lower-tier equipment.

Answer

President & CEO William Hendricks clarified that the company is not investing any capital into its Tier 2 diesel equipment, which will naturally lead to its attrition from the fleet over time. He suggested this trend is industry-wide, as smaller competitors also struggle to maintain older equipment, leading to a gradual tightening of overall effective supply.