Keith Beckmann

Keith Beckmann of Pickering Energy Partners inquired about the key factors driving the significant sequential growth in produced water revenue and the expected trends for this segment in the coming year, considering new projects. He also asked about the current M&A landscape in West Texas and if LandBridge considers opportunities outside the Delaware Basin.

Answer

Scott McNeely, CFO of LandBridge, attributed the strong produced water growth to WaterBridge's bpx Kraken project ramping up and increased activity on the East Stateline Ranch. He expects future growth from bpx Kraken and a 'step change' from the Speedway Pipeline coming online mid-year, alongside broader oil and gas activity. Regarding M&A, McNeely stated the opportunity pipeline remains robust, with M&A as a top capital allocation priority, and confirmed active exploration of opportunities outside the Delaware Basin.

Keith Beckmann inquired about the factors driving the significant sequential growth in produced water revenue and the expected future trends based on upcoming projects. He also asked about the current M&A landscape in West Texas, LandBridge's capital allocation priorities, and the potential for acquisitions outside the Delaware Basin.

Answer

CFO Scott McNeely attributed the strong produced water growth to the bpx Kraken project coming online and increased activity on the East State Line ranch, with future growth expected from the Speedway pipeline and continued bpx Kraken volume ramp-up. Regarding M&A, McNeely stated the opportunity pipeline remains robust, with LandBridge actively pursuing opportunities and prioritizing M&A as a top capital allocation priority. He confirmed they actively explore opportunities outside the Delaware Basin but would be thoughtful about such expansion.

Keith Beckmann asked if customer conversations indicate operators are becoming more aggressive in locking up capacity for 2027 and beyond. He also requested an outlook for the second half of 2026 for rigs rolling off contract, specifically the West Vela, West Neptune, West Carina, and Sevan Louisiana.

Answer

Samir Ali, Executive Vice President and Chief Commercial Officer, noted that while it's still early, some clients are looking further out (2027, 2028, 2029) and seeking longer terms, suggesting growing concern about supply. Simon Johnson, President and CEO, added that exploration is improving across all areas. For the rigs rolling off contract in H2 2026, Samir Ali confirmed active dialogue for all four assets, both in and outside the US Gulf, with reasonable assumptions made for their future work.

Keith Beckmann from Pickering Energy Partners inquired about Flowco's future M&A strategy following the Valiant acquisition, asking if there are any other product lines or geographical areas where the company sees gaps in its portfolio. He also asked if the typical 6-month CapEx investment lead time has changed, particularly with the integration of the ESP market from Valiant.

Answer

President and CEO Joe Bob Edwards confirmed that Flowco maintains a robust M&A pipeline, focusing on rounding out the product portfolio, expanding geographies, and remaining true to its production optimization focus. He mentioned exploring additional lift capabilities, complementary services, and international market expansion, emphasizing a disciplined approach centered on returns and customer service. Regarding CapEx lead times, Mr. Edwards stated that the 6-month lead time remains consistent, even for the ESP business, despite its slightly more complex supply chain involving international navigation and inventory building.

Keith Beckmann asked about Flowco's M&A pipeline and any potential missing products or acquisition opportunities to further round out its portfolio or expand geographies, particularly after the transformative Valiant acquisition.

Answer

President and CEO Joe Bob Edwards confirmed a robust M&A pipeline, emphasizing the company's focus on rounding out product portfolios, expanding geographies, and exploring additional lift capabilities or complementary services, including international opportunities, all while maintaining a disciplined, returns-focused approach. Beckmann also questioned whether the typical 6-month CapEx investment lead time had changed, especially concerning the ESP market or overall in the past year. Edwards affirmed that the 6-month lead time remains consistent, noting that the ESP business has a slightly more complex supply chain involving international navigation but similar cash flow conversion and margin profiles.

Keith Beckmann sought insight into Innovex's current M&A landscape, including opportunities with private equity or internationally, and identified potential areas for business improvement through acquisitions. He also asked for clarification on the expected free cash flow conversion for 2026, given the 83% conversion in 2025 and the normalized target of 50%-60%.

Answer

CFO Kendal Reed stated that Innovex's M&A pipeline is very active, focusing on add-on acquisitions of differentiated products from US-based, smaller companies to leverage their global distribution, similar to the DWS and Citadel playbook. He also mentioned exploring larger, transformative international deals, with all M&A screened against their buyback program. Regarding free cash flow, Kendal noted that the 83% conversion in 2025 was high, partly due to harvesting cash from the Dril-Quip balance sheet. For 2026, with a generally flattish market, he expects healthy conversion, likely on the higher end of the 50%-60% normalized target, as less inventory build will be required.

Keith Beckmann inquired about Innovex's free cash flow conversion, noting the substantial 83% in 2025, and whether further structural improvement is expected in 2026 or if the 50%-60% normalized range is a better guide for the year.

Answer

Kendal Reed, CFO, expressed satisfaction with the 83% free cash flow conversion in 2025, which benefited from harvesting cash from the Dril-Quip balance sheet. He reiterated that 50%-60% is the normalized through-cycle target. For 2026, given a generally flattish market and less need to build inventory, he expects healthy free cash flow conversion, likely on the higher end of the 50%-60% target.

Keith Beckmann asked about Forum Energy Technologies' largest growth avenues within the Drilling and Completion (D&C) business and the Artificial Lift and Downhole segment over the next few years, as well as the margin improvement on new orders and average lead times for different order types.

Answer

President and CEO Neal Lux identified Subsea as a key growth area due to meaningful bookings and diversity in energy and defense markets. He also highlighted Artificial Lift's international expansion potential, leveraging its strong U.S. value proposition (more oil at lower cost) and global footprint to gain adoption by national oil companies. Lux explained that 75% of revenue comes from activity-based consumables with quick turnarounds (1 day to 3-4 months), while capital equipment (25% of revenue) typically has a 6-month book-to-deliver cycle. He noted that increased volume generally leads to incremental margins, targeting 30% incremental EBITDA margins, despite some Subsea orders having lower margins due to pass-through items.

Keith Beckmann asked Forum Energy Technologies about its largest expected growth avenues within the Drilling and Completion (DNC) business and the Artificial Lift and Downhole tools segment over the next few years. He also inquired whether the company is still observing margin improvement on new orders and the typical lead times for different types of orders, from booking to revenue recognition.

Answer

President and CEO Neal Lux identified subsea as a key growth area within DNC, citing meaningful bookings and diversification into defense. For Artificial Lift, he highlighted the opportunity to leverage strong U.S. market share and value proposition (more oil at lower cost) for international expansion, utilizing FET's global footprint to drive adoption by national oil companies. Lux also mentioned doubling share in identified 'growth markets.' Regarding margins, Lux stated that increased volume generally leads to incremental margins, with a goal of 30% incremental EBITDA margins, though subsea's mix might have lower initial margins due to pass-through items. For lead times, Lux explained that 75% of revenue comes from activity-based consumables with quick turns (days to 3-4 months), while capital equipment (the other 25%) typically has a 6-month book-to-deliver cycle.

Keith Beckmann asked which of Transocean's three seventh-generation rigs, along with Valaris's stacked seventh-generation rigs, might return to the market first, and if the Valaris acquisition changes this. He also questioned if winning work for the Deepwater Conqueror, Proteus, and Asgard in the US Gulf would provide upside to the 2026 guidance.

Answer

Keelan Adamson, President and CEO of Transocean, stated that units would not be reactivated speculatively, requiring market conditions to recover the investment. Roddie Mackenzie, Chief Commercial Officer, clarified that guidance assumes idle time for some rigs, with upside if they secure extensions or new contracts earlier, and that other mentioned assets are probable to return to work, pushing guidance towards the higher end.

Keith Beckmann (Pickering Energy Partners) inquired about the 2026 guidance regarding the Deepwater Conqueror, Deepwater Proteus, and Deepwater Asgard, which are potentially rolling off contract later in the year, and if new work for these rigs would represent upside to guidance.

Answer

Roddie Mackenzie (Chief Commercial Officer, Transocean) clarified that the guidance assumes idle time for KG2, Proteus, and Skyros, with upside if they secure extensions or new contracts earlier. He indicated that other assets mentioned are considered probable to go back to work, and new work for them would move results towards the higher end of the guidance range. Keelan Adamson (President and CEO, Transocean) added that they aim to keep these high-spec rigs working, potentially with short-term contracts, while recognizing their long-term value.

Keith Beckman asked for a breakdown of the $50 million CapEx related to the nine new contracts, specifically between the Noble Endeavor and Noble Gerry de Souza. He also inquired if it would make sense to sell the remaining five jackups to become the largest pure-play floater fleet.

Answer

Robert Eifler (CEO) confirmed that the incremental $50 million of contract capital is split between the Noble Endeavor and the Noble Gerry de Souza. Regarding the remaining jackups, Mr. Eifler stated that Noble is committed to the CJ70s, highlighting their established, capable operation in Stavanger and added scale with the Noble GreatWhite.

Keith Beckmann from Pickering Energy Partners asked how Bristow's contracting model insulates it from the activity downturns affecting other OFS companies and how a potential 8-10% drop in Q4 floating rig activity would manifest in the company's results.

Answer

President & CEO Chris Bradshaw explained that Bristow is insulated by its business mix (33% non-O&G revenue), a heavy weighting toward more stable production support (80% of OES business), and long-term contracts with monthly standing charges that de-risk exposure to flight activity. He stated that a potential Q4 floater activity drop is not expected to impact the company's provided guidance range, as their outlook already accounts for project timing.