Jeffrey LeBlanc

Jeffrey LeBlanc asked for management's perspective on U.S. drilling efficiencies, questioning what stage of improvement the industry is currently in, and how these efficiencies impact Cactus's business, given its well count-levered model.

Answer

Chairman and CEO Scott Bender acknowledged ongoing increases in drilling efficiencies, leading to more wells per rig, and stated that wells drilled, rather than rig count, is the best proxy for Cactus's business. He expressed optimism for continued efficiency gains, driven by large customers deploying advanced technology, which smaller operators are expected to mimic over time.

Jeffrey LeBlanc asked for the company's perspective on the ongoing Section 232 investigation into steel and whether it could result in additional tariffs.

Answer

CEO Scott Bender opined that the U.S. lacks sufficient specialized steelmaking capacity, with many forges having shifted to munitions production. He concluded that since there is no substitute for imported steel for their needs, any outcome from the investigation or further tariffs would inevitably be inflationary.

Jeffrey LeBlanc asked for a quantification of the international revenue from the Spoolable Technologies segment and whether this should be viewed as a new baseload for future growth.

Answer

FlexSteel CEO Steve Tadlock quantified international revenue as being in the 'high-single digits as a percent of spoolable' revenue, noting it has doubled from the previous year. He confirmed it is an active growth area. Chairman and CEO Scott Bender added that the company is doing preliminary work on capacity expansion, believing international business could eventually represent 40% of the Spoolable segment's revenue.

Jeffrey LeBlanc with TPH asked if LPI still intends to help hyperscaler partners secure fuel sources and if this offering has become more urgent and attractive to customers.

Answer

CEO Ron Gusek confirmed LPI's full-service 'power as a service' approach includes midstream capabilities. He highlighted their team's expertise in arranging interconnect pipelines and interacting with natural gas suppliers on behalf of customers, without taking on risk, which differentiates Liberty as a valuable partner.

Jeffrey LeBlanc asked if Liberty Energy's LPI platform still intends to help hyperscaler partners secure fuel sources and if there's increased urgency from partners, making the LPI platform more attractive.

Answer

CEO Ron Gusek confirmed that LPI aims to be a full-service 'power as a service' provider, including midstream capabilities for interconnect pipelines and natural gas supply arrangements, without taking on commodity risk. He emphasized that this capability, along with packaging, engineering, and commercial grid interaction, differentiates Liberty and makes it a valuable partner.

Jeffrey LeBlanc asked about Liberty's equipment attrition rate and how long the company could pause its digiFleet newbuild program without negatively impacting its deployable horsepower.

Answer

CEO Ron Gusek stated they use a 10% annual attrition rate as a general guideline but can extend equipment life through maintenance. He affirmed that Liberty could pause new pump construction through 2026 and still maintain its deployable fleet comfortably.

Jeffrey LeBlanc questioned the reason for the increase in Q4 capital expenditures to $200 million, which was higher than implied by previous full-year guidance, asking if the company was pulling forward spending from 2025.

Answer

CFO Michael Stock explained that the higher Q4 CapEx was not a pull-forward but a result of delivery timing. He noted that supply chain debottlenecking among delivery partners accelerated the arrival of equipment that was previously scheduled for later. He also mentioned some additional investments in wet sand handling equipment contributed to the increase.

Jeffrey LeBlanc from Tudor, Pickering, Holt & Co. asked directly whether H&P is currently making pricing concessions or if it is willing to cede market share to protect its margins.

Answer

President and CEO John Lindsay acknowledged that there is pressure across the energy value chain and that H&P's guidance reflects expectations of both fewer rigs and some pricing reduction. He emphasized that H&P works closely with customers to deliver value through its differentiated, performance-centric offering. SVP and CFO Kevin Vann added that the sales team is in constant discussion with customers to find mutually beneficial solutions, particularly through performance-based contracts that focus on overall program economics.

Jeffrey LeBlanc asked about the durability of H&P's market share as drilling efficiencies increase and the opportunity for M&A-related high-grading of rig fleets by operators.

Answer

President and CEO John Lindsay responded that increasing well complexity, including more 3- and 4-mile laterals, and the shift to Tier 2 acreage will sustain demand for high-performance, reliable rigs. He noted that super-spec rigs now constitute 76% of the active fleet, up significantly from previous years, which positions H&P's technologically advanced fleet to continue growing share.

Jeffrey LeBlanc asked about the Rig Technologies segment's exposure to steel tariffs and how potential tariffs are factored into the outlook for that business and the acquired Parker operations.

Answer

Chairman, President & CEO Anthony Petrello stated that the impact should be limited, as it can be managed through logistics, sourcing capabilities, and customer negotiations. CFO William Restrepo added that a majority of the segment's sourcing is not from China, with deliveries also coming from Europe and the U.S., which helps mitigate the overall impact.

Jeffrey LeBlanc asked for a more specific quantification of maintenance capital expenditures for the drilling and completions segments and whether those figures would decline in a downturn.

Answer

CFO C. Smith estimated maintenance CapEx at approximately $175 million for drilling and around $200 million for completions. He confirmed that these expenditures are 'very linear with activity' and would trend down accordingly if the market and activity levels were to fall.

Jeffrey LeBlanc asked about the company's plans for retiring older frac equipment and the potential timeline for transitioning to a 100% natural gas-burning fleet.

Answer

CFO C. Smith explained that older Tier 2 equipment will be retired as it reaches the end of its useful life over the next two to three years. The company will not invest in replenishing this older technology but will replace it with modern, natural gas-burning assets. He did not provide a specific timeline for reaching a 100% natural gas-powered fleet.

Jeffrey LeBlanc requested an update on the AquaProp wet sand solution and the progress of its integration into ProPetro's hydraulic fracturing fleets.

Answer

CEO Sam Sledge described AquaProp as a great acquisition but acknowledged that its growth has been slower than initially expected. He attributed this to significant price drops and volatility in the broader sand market, which created 'noise' and delayed customer decisions. However, Sledge reaffirmed his long-term confidence in the solution's cost-effectiveness and ProPetro's ability to integrate it commercially in the future.