Saurabh Pant

Saurabh Pant inquired about the international outlook, specifically asking about the expected profitability and direct margins for the International Solutions segment once all 8 FlexRigs and 7 reactivated rigs in Saudi Arabia are fully operational by fiscal Q4.

Answer

President Trey Adams detailed the progress on Saudi rig reactivations, with two masts up and a third imminent, expecting six of seven reactivations by calendar H1 2026. He projected an annualized EBITDA of approximately $5 million per reactivated rig and anticipated the International Solutions segment's direct margin to exceed $45 million per quarter once all reactivations are online and FlexRig margins improve by the end of FY 2026. CFO Kevin Vann reiterated the growth potential beyond this initial target due to the KCA Deutag acquisition.

Saurabh Pant sought clarity on the projected profitability of Helmerich & Payne's international operations, specifically how margins are expected to evolve by fiscal Q4 2026 once all 8 FlexRigs and 7 reactivated rigs in Saudi Arabia are fully operational.

Answer

President Trey Adams and CFO Kevin Vann confirmed that two masts are up for Saudi reactivations, with a third imminent, and six of seven reactivations expected by calendar H1 2026. CapEx for these reactivations is included in the FY26 guide. They anticipate $5 million annualized EBITDA per reactivated rig, reaching full run rate by fiscal Q4, with FlexRig margins also improving. The International Solutions segment's direct margin is expected to exceed $45 million per quarter post-reactivations, with Kevin Vann foreseeing continued growth beyond this initial target.

Saurabh Pant with Bank of America inquired about the potential for further Saudi rig reactivations and growth in other international regions, alongside the expected normalization of international margins after short-term reactivation costs.

Answer

CEO John Lindsay highlighted the positive phased approach to reactivations. President Trey Adams elaborated on the focus on current reactivations, broader regional conversations, and the expectation for full run-rate margins by the end of fiscal year 2026, noting that Q4 was a margin trough. CFO Kevin Vann added that absent reactivation costs, margin improvement would be more evident.

Saurabh Pant with Bank of America inquired about the international segment's rig count potential, specifically for more Saudi rig reactivations beyond the announced seven, and the outlook for other regions. He also asked about normalized international margins once reactivation costs subside.

Answer

CEO John Lindsay confirmed a phased approach to reactivations, expecting completion by mid-2026. President Trey Adams elaborated on the focus on current reactivations and core business in Saudi Arabia, noting encouraging IOC entry into the MENA region and the strategic shedding of low-scale single-rig countries. CFO Kevin Vann reiterated that Q4 was a margin trough and anticipated further margin improvement throughout fiscal 2026, excluding reactivation charges.

Saurabh Pant asked about the timeline for H&P's eight organic rigs in Saudi Arabia to reach normalized profitability, their expected earnings power, and the potential free cash flow contribution from the newly acquired KCA Deutag business.

Answer

SVP and CFO Kevin Vann projected that once fully operational, the eight legacy H&P rigs in Saudi would contribute close to $20 million in annual EBITDA and margin. For the KCAD assets, Vann stated that even with current headwinds, the business is roughly breakeven on cash flow and could contribute approximately $100 million in free cash flow annually once performance returns to historical levels.

Saurabh Pant from Bank of America asked about Patterson-UTI's increasing differentiation and value proposition in drilling and completion, and how this impacts pricing power. He also questioned the incremental demand needed for pricing power to return in the rig and frac markets, and the quantified impact of winter weather on Q1 guidance.

Answer

Andy Hendricks, President and CEO, highlighted improved operational execution and technology investments as key differentiators, allowing the company to sustain margins despite rig count declines. He noted that all natural gas-burning equipment is fully utilized, and an increase in natural gas basin activity would require adding assets, leading to significant pricing inflection. Andy Smith, CFO, quantified the Q1 weather impact on gross profit to be in the range of $5 million-$10 million.

Saurabh Pant asked about increasing differentiation in Patterson-UTI's drilling and completion services, its impact on pricing power, and the widening gap between top-tier and smaller providers. He also inquired about the incremental demand needed for pricing power to return to the industry and the quantified impact of winter weather on Q1 guidance.

Answer

Andy Hendricks, President and CEO, highlighted improved operational execution and technology investments (Apex rigs, Cortex automation, Emerald fleets, EOS platform) as key differentiators, enabling the company to protect pricing and margins despite rig count declines. He noted that all natural gas-burning equipment is sold out, and increased natural gas activity would drive significant pricing inflection in completions due to the need for new assets. Andy Smith, CFO, quantified the Q1 winter weather impact on gross profit at $5 million-$10 million, already included in guidance.

Saurabh Pant (Bank of America Corporation) inquired how macroeconomic uncertainty influences customer discussions, specifically whether it leads to demands for shorter-term contracts or more frequent pricing reopeners on both the drilling and completion sides. He also asked for an update on the 2026 shareholder return framework, particularly regarding share repurchases.

Answer

President and CEO Andy Hendricks noted that activity has stabilized, and while the rig count has decreased, pricing has held up well, remaining in the low $30s range. He explained that customers are focused on maintaining production and are requesting more technology to meet increasing well intensity. CFO Andy Smith stated it was too early to finalize the 2026 budget and share repurchase plans, emphasizing the current focus on internal performance and efficiency.

Saurabh Pant asked how macroeconomic uncertainty manifests in customer discussions, specifically regarding contract terms like shorter-term contracts or more frequent pricing reopeners on both the drilling and completion sides. He also inquired about the share repurchase framework for 2026, following increased repurchases in Q3.

Answer

Andy Hendricks, President and CEO, stated that activity has stabilized, and drilling pricing has held up well (low $30s average) compared to previous moderation cycles, indicating industry discipline. Customers are focused on maintaining production amidst challenging wells (deeper, longer laterals, higher gas ratio) and are requesting more technology to improve efficiencies. Andy Smith, CFO, stated it's too early to discuss 2026 buyback plans as they are at the beginning of the budget cycle, with the current focus on internal performance and efficiency.

Saurabh Pant of Bank of America asked a high-level question about customer sentiment, inquiring what oil price operators might be using for their 2026 budget planning. He also asked for clarity on the 2026 CapEx outlook and the source of 'other operating income' in the Drilling Services segment.

Answer

President & CEO William Hendricks noted that customers are seeking price stability before committing to higher activity, but the company is entering the tender season with its high-spec frac equipment fully utilized. EVP & CFO Andrew Smith deferred specific 2026 CapEx guidance but explained the $8 million in 'other operating income' was primarily from an insurance settlement and income from joint ventures.

Saurabh Pant asked for perspective on how drilling and completions activity might trend relative to each other in an uncertain market and inquired about pricing risks if oil remains in the low $60s.

Answer

CEO William Hendricks opined that the natural gas market should remain steady. On the oil side, he expects any potential softening to affect drilling and completions similarly, without a significant divergence or build-up of DUCs. Regarding pricing, he anticipates a slight, low-single-digit decline in drilling due to legacy contracts rolling off, but expects completions pricing to remain stable as it was largely set at the end of the prior year.

Saurabh Pant questioned the potential for completions pricing to recover to levels seen in the third quarter of 2024 and inquired about the company's ongoing cost rationalization efforts across the entire business.

Answer

CEO William Hendricks acknowledged that E&P customers pushed pricing down in late 2024 but noted the market for natural gas-powered frac equipment is expected to be sold out in Q2 and Q3, creating a positive dynamic for future pricing. CFO C. Smith added that cost-cutting efforts are focused on streamlining back-office systems and processes following recent acquisitions, with benefits expected over the next year.

Saurabh Pant requested a breakdown of the Completion segment's profitability decline between activity/white space versus pricing, and asked about the biggest internal advantage Patterson-UTI sees from its integrated contracts.

Answer

CEO William Hendricks acknowledged that both pricing pressure and activity gaps contributed to the profit decline but expects pricing to stabilize in early 2025. He identified the biggest internal advantage of integrated contracts as the excitement and contagious enthusiasm it creates among the teams, which he believes drives better performance and future work.

Saurabh Pant from Bank of America asked for more details on the potential Venezuela opportunity, including the necessary conditions for Weatherford and its customers to move forward, operational readiness, and which product lines would benefit most.

Answer

Girish Saligram, President and CEO, clarified that no Venezuela uptick is assumed in current guidance and that any impact would not be overnight. He emphasized the need for clear governance, regulatory environment, safety assurance, and a line of sight to payment. Saligram noted that product lines like interventions, well services, and artificial lift would likely see the biggest initial impact, leveraging existing technologies from when Venezuela was a $500 million market.

Saurabh Pant from Bank of America asked for more details on the potential Venezuela opportunity, specifically what conditions (governance, regulatory, payment) are necessary for Weatherford to move forward, and the operational speed and product lines that would benefit.

Answer

President and CEO Girish Saligram clarified that no Venezuela uptick is included in the current guidance. He acknowledged Venezuela's peak revenue of over $500 million but noted the company's current structure is different. Mr. Saligram emphasized the need for clear governance, a stable regulatory environment, assurance of team safety, and a clear line of sight to payments. He identified Intervention, Well Services, and Artificial Lift portfolios as areas that would see the biggest initial impact, stressing that recovery would not be "overnight."

Saurabh Pant asked for more detail on the Mexico market, including the level of optimism, the 2026 outlook, and specifics on working capital and payment mechanisms for 2024 and 2025 receivables.

Answer

Girish Saligram, President and CEO, noted two quarters of sequential improvement in Mexico, indicating stability with cautious optimism for a slight positive inflection. Anuj Dhruv, EVP and CFO, added that recent government support and a payment received last week (the first since early 2025) provide positive momentum for collections. He expects working capital efficiency to improve from 29.6% towards the 25% target, supported by structural initiatives.

Saurabh Pant asked for clarification on the cautious optimism regarding Mexico's activity stabilization and sought details on the payment mechanisms, particularly for 2024 receivables and expectations for 2025/2026.

Answer

Girish Saligram, President and CEO, noted two quarters of sequential improvement in Mexico, leading to cautious optimism for stability and a slight positive inflection. Anuj Dhruv, Executive Vice President and CFO, highlighted recent government support and a payment received last week (the first since early 2025), expressing moderate optimism for future collections and working capital improvement towards the 25% target.

Saurabh Pant requested more detail on the situation in Mexico, asking about the nature of the market's stabilization, the medium-term outlook, and the status of cash collections from Pemex.

Answer

President and CEO Girish Saligram confirmed that while Mexico's revenue contribution has fallen significantly, activity levels have now stabilized. Regarding cash flow, he expressed confidence that payments from Pemex would improve in the second half of the year, but noted the timing remains uncertain and is not substantially factored into Q3 guidance.

Saurabh Pant of Bank of America asked for more detail on the deteriorating situation in Mexico and its potential trajectory. He also requested a breakdown of the free cash flow outlook, focusing on working capital, Mexico collections, and cash charges.

Answer

President and CEO Girish Saligram stated that at the current reduced activity level in Mexico, they feel comfortable it will remain flattish. He noted the key variable remains the timing of payments, but as revenue exposure decreases, so does the associated risk. For free cash flow, Saligram confirmed the guidance implies a lower absolute number but a healthy level, with working capital being the biggest lever.

Saurabh Pant inquired about Weatherford's ability to grow in Saudi Arabia despite market softness and sought confirmation of the country's positive outlook. He also asked for details on other international growth markets and the specific expectations for the decline in Russia.

Answer

CEO Girish Saligram confirmed that Saudi Arabia is expected to grow for Weatherford due to its historical under-penetration, allowing it to gain share even as the overall market declines. He noted this growth is supported by a strong line of sight on contracts. Saligram also highlighted Brazil, Argentina, Norway, and several countries in Asia and the Middle East (Kuwait, Oman, Qatar) as other growth areas. He stated that Russia will see a significant decline, contributing to the overall international revenue drop.

Saurabh Pant from Bank of America asked for color on the dozen new orders announced, particularly in the Middle East, and how this aligns with concerns of a market slowdown. He also questioned how soon Weatherford could reach its working capital efficiency target of under 25% and if the slowing market makes this more difficult.

Answer

Executive Girish Saligram responded that while growth is slowing, activity remains resilient, and the orders demonstrate Weatherford's ability to win business. Executive Arunava Mitra added that reaching the sub-25% working capital target sustainably depends on reducing accounts receivable concentration, particularly in Mexico, a multi-year effort. He noted a slower market could actually help working capital by reducing inventory build-up.

Saurabh Pant from Bank of America inquired about the drivers behind the resilient OFSE margins, which are expected to be practically flat after SPC deconsolidation despite headwinds, and how cost-out initiatives are contributing. He also asked for details on the IET margin outlook.

Answer

CFO Ahmed Moghal detailed that IET is targeting a 20% margin in 2026, a 150 basis point year-over-year increase and a 500 basis point improvement since 2023, driven by higher-margin Gas Tech equipment backlog conversion, Gas Tech services growth, Cordant's operating leverage, and cost optimization. For OFSE, 2026 margins are expected to be resilient and flat organically, implying only a 50 basis point decline from peak 2024 despite a 10% revenue decline (organic). This resilience is attributed to systematic cost actions and structural changes. Headwinds include increased tariff costs, a slight shift in revenue mix (SSPS growth offsetting higher-margin OFS decline), and market pricing variability, which are being countered by ongoing productivity and supply chain optimization. The total company aims for nearly 18% margin in 2026, progressing towards a 20% target by 2028.

Saurabh Pant from Bank of America Corporation asked for details on the margin outlook, specifically how Baker Hughes plans to maintain resilient OFSE margins despite headwinds like mix, pricing, and tariffs, and the role of cost-out initiatives. He also requested insights into the moving pieces of the IET margin outlook.

Answer

CFO Ahmed Moghal detailed the margin outlook, projecting IET margins to reach 20% in 2026, driven by higher-margin GasTech backlog conversion, services growth, Cordant's operating leverage, and cost optimization. For OFSE, he highlighted resilient margins, expecting flat organic margins in 2026 despite headwinds from increased tariffs, revenue mix shifts (SSPS growth offsetting OFS decline), and pricing variability. This resilience is attributed to systematic cost actions, quick cash paybacks, and structural changes, positioning OFSE for market improvements. Overall, the company targets nearly 18% margins in 2026, aiming for 20% by 2028.

Saurabh Pant of Bank of America questioned why the tariff impact guidance remained at $100-200 million despite numerous recent developments. He sought clarity on the puts and takes, the businesses affected, and the reasoning behind the implied higher impact baked into the second half of the year.

Answer

EVP & CFO Ahmed Moghal explained that while the Q2 net tariff impact was approximately $15 million, primarily affecting IET, the second-half impact is expected to exceed $100 million. This is due to the timing of inventory roll-through and supply chain surcharges. He detailed that positive developments, like a temporary easing of US-China tariffs, were largely offset by negative announcements, such as increased US tariffs on steel, aluminum, and copper. He confirmed the company's mitigation actions are in place, giving them confidence in the maintained $100-200 million full-year net EBITDA impact estimate, assuming no further escalations.

Saurabh Pant of Bank of America questioned the unchanged tariff impact guidance of $100-$200 million despite numerous recent developments, asking for the puts and takes and an explanation for the implied higher impact in the second half of the year.

Answer

EVP & CFO Ahmed Moghal explained that the Q2 impact was approximately $15 million, but the second half impact is expected to exceed $100 million due to inventory roll-through and supplier surcharges. He noted that positive developments, like a temporary easing of U.S.-China tariffs, were largely offset by new negative announcements on steel, aluminum, and copper tariffs. This balance of factors led to maintaining the full-year estimate, assuming no further escalation.

Saurabh Pant of Bank of America asked for a breakdown of the factors that allowed Baker Hughes to maintain its $100-$200 million tariff impact guidance despite numerous recent policy changes. He also questioned the implied acceleration of tariff impacts in the second half of the year, given the relatively low $15 million impact in Q2.

Answer

EVP & CFO Ahmed Moghal explained that while the Q2 impact was approximately $15 million, the second-half impact is expected to exceed $100 million due to the timing of inventory roll-through and supply chain surcharges. He noted that positive developments, like a temporary easing of US-China tariffs, were largely offset by negative ones, such as new tariffs on steel, aluminum, and copper, thus justifying the maintained full-year guidance based on successful mitigation actions.

Saurabh Pant from Bank of America asked for an analysis of the key drivers behind the OFSE segment's 10% revenue decline and sought an update on the feasibility of achieving the 20% EBITDA margin target for the year.

Answer

CEO Lorenzo Simonelli attributed the revenue decline to deferred discretionary spending and a significant activity pause in Mexico, where rig activity fell 72% from its 2023 peak. CFO Ahmed Moghal stated that while the 20% margin target remains a commitment, the challenging environment of a nearly 10% drop in upstream spending makes it difficult. He guided for sequential margin improvement in Q2 to approximately 18.6%, with restructuring benefits expected to help in the second half.

Saurabh Pant asked about the life cycle of the Gas Technology business, specifically questioning which of the four growth accelerators—pricing, mix, upgrades, or digital—would be the most significant driver for Gas Tech Services over the next few years.

Answer

Chairman and CEO Lorenzo Simonelli identified "mix" as the most significant growth driver for Gas Tech Services. He explained that the serviceable installed base for LNG, which has higher service attachment rates, is projected to grow by over 50% through 2030, outpacing the overall 20% installed base growth. He also noted that equipment upgrades are poised for increasing demand.

Saurabh Pant of Bank of America questioned the near-term IET revenue trend, noting that Q3 results were below expectations while the Q4 guidance implies a significant rebound, and asked for the reasons behind this dynamic.

Answer

Nancy Buese, CFO, clarified that the Q3 revenue shortfall was entirely due to timing-related delays for large Gas Technology Equipment (GTE) projects, specifically involving suppliers and vessels. She assured that this revenue is not lost and will be recognized in Q4 and Q1. Lorenzo Simonelli, Chairman and CEO, added that such quarterly lumpiness is normal for long-cycle businesses and does not change their confidence in the backlog conversion and margin targets.

Saurabh Pant asked about Halliburton's potential re-entry into Venezuela, including the timeline for scaling up operations, necessary conditions for return, and the potential market size. He also inquired about the company's margin outlook for 2026, considering pricing, operating leverage, costs, and SAP spending.

Answer

Jeff Miller, Chairman, President, and CEO, stated that Halliburton could scale up fairly quickly in Venezuela, leveraging existing footprints and equipment mobility, with early steps already underway. He noted the market was a $500 million business a decade ago and expressed optimism for its long-term growth. Eric Carre, Executive Vice President and CFO, detailed SAP spending at $40-45 million per quarter until Q4 2026, with expected annual savings of $100 million post-completion. Miller added that the second half of 2026 looks stronger for margins, driven by market rebalancing and growing demand.

Saurabh Pant asked about Halliburton's potential re-entry into Venezuela, including the speed of mobilization, necessary conditions for operations, and the potential market size. He also inquired about the 2026 margin outlook, considering pricing, operating leverage, costs, and the trajectory of SAP spending.

Answer

Jeff Miller, Chairman, President, and CEO, indicated that Halliburton could scale up quickly in Venezuela, leveraging existing infrastructure, and sees opportunities sooner rather than later, with a long-term optimistic view on market size, which was a $500 million business a decade ago. Eric Carre, Executive Vice President and CFO, detailed SAP spending at $40-$45 million per quarter through 2026, with project completion in Q4 and expected annual savings of $100 million. Jeff Miller added that the second half of 2026 is expected to be stronger than the first, with a stable international market, setting up for sustained strength in 2027-2028.

Saurabh Pant asked about the capital expenditure implications for the VoltaGrid power business, specifically how Halliburton plans to fund these projects, especially for international collaborations, and how this relates to the company's existing CapEx budget. He also inquired about Halliburton's strategy for maximizing value in the North American market, focusing on customer targeting and technology adoption.

Answer

Eric Carre, Executive Vice President and CFO, clarified that the $1 billion CapEx budget for next year is separate from VoltaGrid power projects, which will be funded incrementally on a project-by-project basis. Jeffrey Miller, Chairman, President, and CEO, explained that Halliburton's North America strategy prioritizes efficiency and technology, such as electric fleets and ZEUS IQ. He noted a deliberate focus on customers who value this technology, avoiding the spot market, and mentioned idling diesel dual-fuel fleets due to uneconomic returns, with potential for overseas relocation.

Saurabh Pant inquired about the capital expenditure implications for Halliburton's international power business with VoltaGrid, specifically how it will be funded and its relation to the $1 billion 2026 CapEx target, and asked about Halliburton's North American strategy of targeting sophisticated customers to maximize value.

Answer

Eric Carre, Executive Vice President and CFO, clarified that capital expenditures for the international power business with VoltaGrid will be incremental to the $1 billion 2026 oil and gas CapEx budget, funded on a project-by-project basis with shared economics. Jeffrey Miller, Chairman, President, and CEO, explained that Halliburton's North America strategy prioritizes efficiency and technology, targeting customers who value these offerings, leading to the idling of uneconomic diesel/dual-fuel fleets and a focus on differentiated technology rather than competing in the spot market.

Saurabh Pant from Bank of America inquired about the company's cost reduction plans and how they are being framed against activity levels. He also asked for a high-level perspective on how Halliburton would compete if the Saudi market shifted more towards lump-sum turnkey (LSTK) contracts.

Answer

Chairman, President & CEO Jeff Miller outlined a plan to reduce both variable and fixed costs, targeting structural cost savings in the 1% range over the coming quarters. Regarding LSTK contracts, he described it as a strength, noting that such collaborative projects already represent over 20% of international business. He emphasized that any LSTK bid would be subject to Halliburton's highly disciplined, returns-focused tendering process.

Saurabh Pant from Bank of America asked about Halliburton's cost reduction plans, seeking clarity on how the company is framing activity levels to determine cost take-outs and protect margins. He also inquired how Halliburton would be positioned if the Saudi market shifts more towards lump-sum turnkey (LSTK) contracts.

Answer

Chairman, President & CEO Jeff Miller explained that the company is taking action on both variable and structural costs, initially targeting reductions in the 1% range over a couple of quarters. Regarding LSTK contracts, Miller stated that Halliburton has 'very strong muscles' in this area, with project management and collaborative-style work already representing over 20% of its international business. He views a shift to LSTK as advantageous but reiterated that all bids are subject to a highly disciplined, returns-focused process.

Saurabh Pant requested more details on the impact of tariffs, asking which businesses are most affected and how Halliburton plans to mitigate them. He also asked for clarification on the D&E margin outlook and which regions drove international growth excluding Mexico.

Answer

CFO Eric Carre explained that the tariff impact is about 60% in the C&P division and 40% in D&E, affecting components for lift, chemicals, and drilling. He confirmed the second-half margin outlook includes current tariff knowledge. CEO Jeffrey Miller reiterated that international growth is driven by contract start-ups in Europe/Africa, growth engines in the Middle East, and a strong Q4 expected in Latin America, particularly Brazil and Argentina.

Saurabh Pant requested more detail on the four international growth engines (drilling tech, unconventionals, intervention, artificial lift) and the projection of $2.5 to $3 billion in additional revenue over 3-5 years. He also asked for validation of the implied 25% year-over-year revenue decline in Mexico and the outlook for that market in 2025.

Answer

Chairman, President and CEO Jeffrey Miller detailed that all four engines will have a meaningful impact, highlighting global demand for unconventional technology, differentiated intervention tech, and significant upside in artificial lift. Regarding Mexico, he confirmed the outlook reflects an activity reset due to a new administration but expressed confidence that the country's reliance on oil and gas would lead to a recovery, though the timing is unclear.

Saurabh Pant sought clarity on the 2025 offshore outlook, given reports of contracting delays from drillers. He also asked for insight into the pricing and profitability of the 90% of frac fleets already committed for 2025 and requested confirmation on the 2025 CapEx forecast.

Answer

CEO Jeffrey Miller affirmed a stable offshore outlook, stating that rig contracting status does not significantly impact Halliburton's business as they work directly with operators. While not providing specifics, he confirmed having line of sight on 2025 fleet profitability, noting Halliburton's technology commands premium pricing. CFO Eric Carre confirmed that a CapEx target of around 6% of revenue is a reasonable assumption for next year.

Saurabh Pant noted that TechnipFMC's 2026 revenue guide is still below recent order bookings and asked what Doug Pferdehirt is focused on as the company enters deeper into the execution phase of this backlog, particularly regarding the installation/SURF side and potential market consolidation. He followed up on Alf Melin's comment about 55% normalized free cash flow conversion, asking if order exceeding revenue should imply a continued working capital tailwind.

Answer

Doug Pferdehirt, Chair and CEO, stated the focus is on the quality of inbound (more iEPCI, more Subsea 2.0) which provides confidence in execution. He reiterated the 'relentless pursuit of the reduction of cycle time' for higher project returns, greater economic value sharing, and internal efficiency. Alf Melin, EVP and CFO, clarified the 55% conversion from EBITDA assumes neutral working capital. He explained that while significant inbound growth can provide working capital benefits, with similar inbound year after year, diminishing opportunities to incrementally build on that are expected, and he would not project much above neutral working capital going forward.

Saurabh Pant asked about TechnipFMC's focus areas as it deepens into backlog execution, particularly concerning the installation/SURF side, and sought clarification on the 55% normalized free cash flow conversion and how order exceeding revenue impacts working capital.

Answer

Chair and CEO Douglas Pferdehirt emphasized focusing on the quality of inbound (iEPCI™ and Subsea 2.0) and the relentless pursuit of cycle time reduction for efficient execution. EVP and CFO Alf Melin confirmed the 55% normalized FCF conversion from EBITDA with neutral working capital, explaining that strong inbound and high-quality backlog enable consistent execution and cash collections, allowing for neutral or better working capital.

Saurabh Pant of Bank of America asked about the potential trajectory for Subsea margins beyond 2025 and inquired about the size and timing of the opportunity to retrofit existing subsea systems with all-electric technology.

Answer

CEO & Chair Douglas Pferdehirt stated that he anticipates further growth in Subsea EBITDA margin in 2026, driven by a robust backlog and accretive new orders. He described the all-electric retrofit opportunity as a 'game changer,' aiming to replace hydraulic systems on the large installed base with robotic solutions, drastically reducing well downtime from months to days.

Saurabh Pant inquired about execution risk and the drivers behind the strong free cash flow performance, particularly the role and sustainability of working capital.

Answer

CEO Douglas Pferdehirt stated that iEPCI 2.0 projects have significantly lower execution risk, a fact validated by the 80% of business coming from repeat direct awards. CFO Alf Melin attributed strong free cash flow to milestone-based payment terms in contracts. He expects a more balanced cash flow profile for the year with a net working capital inflow, and noted that underlying EBITDA-to-FCF conversion consistently exceeds 50%.

Saurabh Pant asked for details on the market drivers for flexible pipe technology beyond Brazil and inquired about the risk associated with the shorter-cycle, book-and-turn business needed to meet 2025 revenue guidance.

Answer

Chair and CEO Douglas Pferdehirt described flexible pipe as a 'game changer' and a key differentiator for its iEPCI offering, which is driving growth outside of Brazil by enabling simplified field architecture and accelerating first oil. He noted that the high backlog coverage, growing services business, and overall visibility de-risk the 2025 forecast, giving the company confidence in its provided revenue guidance.

Saurabh Pant asked about how Liberty Energy protects itself from risks, pitfalls, and liabilities in long-duration (15+ year) power contracts. He also inquired about the evolving technology mix (resets, turbines, batteries) for power generation as capacity grows beyond one gigawatt.

Answer

CFO Michael Stock explained risk mitigation through careful counterparty selection (large investment-grade clients, experienced data center developers), robust engineering, supply chain management, and project-specific non-recourse debt. CEO Ron Gusek stated that gas reciprocating engines remain the core technology due to superior heat rate (45% thermal efficiency), but turbines will play a role for power density. He also mentioned future small modular nuclear (Oklo partnership post-2030) and fuel cells for emissions in non-attainment areas, expecting a mix of technologies.

Saurabh Pant of Bank of America asked for high-level thoughts on how E&P customers might budget for 2026, given the focus on flat production. He also questioned power generation delivery lead times and requested the maintenance component of the 2025 CapEx.

Answer

CEO Ron Gusek speculated that E&Ps will likely budget to hold production relatively flat in 2026 to maintain market share, barring a major economic dislocation. He also expressed confidence in securing additional power generation capacity for 2026 with a twelve-month lead time. CFO Michael Stock confirmed that maintenance CapEx for 2025 is expected to be a little below $200 million.

Saurabh Pant asked about the commercial structure of the MOU with Range Resources, the rationale for focusing on smaller data centers, and how quickly the company expects to gain visibility on second-half 2025 activity.

Answer

CFO Michael Stock described the MOU as a long-term partnership for an industrial park, with CEO Ron Gusek adding that the model provides energy cost certainty. Gusek explained the focus on smaller data centers reflects the current project pipeline and customer demand for speed. He noted Q2 visibility is strong, but H2 clarity depends on macroeconomic factors that will take time to resolve.

Saurabh Pant from Bank of America asked about the typical contract durations for the power business and the relative merits of using natural gas reciprocating engines versus turbines for these applications.

Answer

CEO Ron Gusek explained that contract durations range from short-term (2-3 years for bridge power) to long-term (20+ years for firm power agreements). He detailed the strategic choice of natural gas reciprocating engines due to their superior fuel efficiency (44% vs. ~33% for turbines), which is key for long-term competitiveness. He noted turbines are considered for applications requiring greater fuel flexibility or higher power density.

Saurabh Pant asked about Liberty's 2025 contracting strategy, questioning whether the company would favor shorter-term contracts with reopeners or longer-term, stable pricing. He also requested a breakdown of the components contributing to the expected 'healthy free cash flow' in 2025.

Answer

CEO Christopher Wright detailed a flexible contracting approach: new fleets receive locked-in pricing that guarantees returns, while legacy fleets with partners might have pricing structures that adjust upwards as the market firms. CFO Michael Stock outlined the 2025 free cash flow drivers, primarily lower CapEx in the completions business. This will be partially offset by an increase in the cash tax rate to approximately 100% of the book rate, with working capital expected to be flat for the year.

Saurabh Pant of Bank of America sought to reconcile management's commentary on a market 'downturn' with NESR's own growth forecast, asking for the expected scale of outperformance. He also questioned the ease of moving equipment and capacity between Middle Eastern countries like Saudi Arabia and Kuwait.

Answer

Chairman and CEO Sherif Foda clarified that the overall MENA market is now expected to be 'flat to 3% up,' and NESR is confident it can at least double that growth rate. He stressed that moving equipment within the region is 'very easy' for an established player like NESR but 'impossible' for newcomers, which is a key competitive advantage that allows them to quickly reallocate resources to growth markets.

Saurabh Pant requested details on the Dune Express ramp-up, focusing on operational progress, commercial traction, and the impact of lower initial volumes on its cost structure and earnings power. He also asked for a breakdown of the Q1 free cash flow profile and the outlook for working capital, CapEx, and contract enforceability for the remainder of the year.

Answer

CEO John Turner explained the full margin benefit of the Dune Express is dependent on reaching higher volumes. COO Chris Scholla noted commissioning is progressing well and the system is stabilizing. CFO Blake McCarthy added that logistics margins expanded significantly by March and are expected to reach the 20% range in Q2. Regarding cash flow, McCarthy cited high Q1 CapEx and a large working capital build as temporary factors that should normalize, and affirmed the company's confidence in its contract enforceability.

Saurabh Pant questioned the potential risks from a macroeconomic slowdown, given the guidance assumes stable conditions, and asked about the apparent acceleration of the data center opportunity, which grew from a multi-year forecast to a significant 12-18 month pipeline.

Answer

CEO Jillian Evanko highlighted the company's diverse end markets, strong backlog, and robust aftermarket (RSL) business as key buffers against macro uncertainty, while noting caution in industrial gas and Americas hydrogen. She confirmed the data center opportunity has accelerated, with a tangible $400 million pipeline built from recent customer discussions, driven by demand for air coolers, fans, and cryogenic cooling solutions.

Saurabh Pant inquired about the 2025 guidance, seeking a breakdown of growth expectations for each of the four business segments and a deeper analysis of the LNG business, including revenue conversion from backlog and the margin impact of IPSMR technology.

Answer

CEO Jillian Evanko provided a detailed outlook, forecasting growth across all four segments in 2025, with RSL growing high-single-digits to 10% and HTS benefiting from LNG projects. She explained that revenue from large LNG orders typically materializes 6-8 months post-booking, leading to a second-half weighted 2025. Evanko confirmed that projects utilizing the company's IPSMR process technology are positive contributors to HTS segment margins.

Saurabh Pant asked how Chart is internally managing its transition to a more project-oriented business post-Howden, focusing on project management and organizational structure.

Answer

CEO Jillian Evanko highlighted that while new builds are important, aftermarket now constitutes 30-35% of revenue. To manage large projects, she explained that Chart has established global 'One Chart' teams for commercial, engineering, and project management. These integrated teams work together from the initial contract phase through execution to ensure discipline and support sustainable cash generation.

Saurabh Pant asked for details on the drivers of the strong activity improvement in early 2025 for both Stimulation and Proppant segments, the profitability outlook, the ramp-up strategy for the new Livewire power business, and a breakdown of the 2025 CapEx guidance.

Answer

Executive Chairman Matt Wilks attributed the activity rebound to operators resuming work after Q4 budget exhaustion. He stated that while demand is strong, the company is prioritizing long-term customer relationships and stable cash flows over aggressive short-term price hikes. Regarding Livewire, the initial focus is on internal demand before exploring external markets. CFO Austin Harbour added that the $250-$300 million CapEx budget is return-focused, primarily for the Stimulation Services segment, and confirmed a Q4 asset sale was a sale-leaseback transaction.

Saurabh Pant asked for elaboration on the drivers behind the early 2025 activity improvement in both Stimulation and Proppant segments, the profitability outlook considering pricing headwinds, details on the new Livewire power business ramp-up, and a breakdown of the $250-$300 million CapEx guidance for 2025.

Answer

Executive Chairman Matt Wilks attributed the activity increase to operators resuming work after Q4 budget exhaustion and noted that while demand allows for price increases, ProFrac is prioritizing long-term, stable customer relationships. CFO Austin Harbour added that the majority of 2025 CapEx is for the Stimulation Services and Proppant segments, focused on projects meeting return thresholds, and clarified that a $41 million Q4 asset sale was a sale-leaseback of stimulation assets.

Saurabh Pant inquired about ProFrac's 2025 outlook, seeking more detail on the company's confidence in a recovery in West and South Texas. He also asked about the dynamic between pricing and cost management, and for a preliminary view on 2025 capital expenditures.

Answer

Executive Chairman Matt Wilks stated that while Q1 2025 activity is expected to pick up from Q4 levels, the year-over-year outlook is flat to slightly down. On costs, Mr. Wilks and CEO Ladd Wilks highlighted that their vertically integrated model provides significant control over fixed costs and operating leverage. CFO Austin Harbour noted that it was too early to provide 2025 CapEx guidance.

Saurabh Pant inquired about ProFrac's 2025 outlook, specifically the drivers behind the expected recovery in West and South Texas. He also asked about the interplay between pricing pressures and cost management, and for a preliminary view on 2025 capital expenditures.

Answer

Executive Chairman Matthew Wilks confirmed an expected Q1 pickup from Q4/Q3 levels, though noted the year-over-year outlook is flat to slightly down. He and CEO Ladd Wilks explained that vertical integration provides significant control over fixed costs and operating leverage, which helps offset pricing pressures. CFO Austin Harbour stated it was too early to provide 2025 CapEx guidance but would offer more color on the next call.

Saurabh Pant inquired about ProFrac's 2025 outlook, seeking details on the expected recovery in West and South Texas. He also asked about the dynamic between pricing pressure and cost management, and requested preliminary guidance on 2025 capital expenditures.

Answer

Executive Chairman Matt Wilks confirmed an expected Q1 2025 activity pickup from Q4 levels, though noted year-over-year activity would be flat to slightly down. Both Matt Wilks and CEO Ladd Wilks highlighted that ProFrac's vertical integration allows for significant control over fixed costs via operating leverage, which helps offset pricing pressures. CFO Austin Harbour stated it was too early to provide 2025 CapEx guidance.

Saurabh Pant inquired about the key drivers for the activity improvement seen in early 2025 for both the Stimulation and Proppant segments, and the resulting profitability outlook. He also asked for details on the new Livewire power business, including its ramp-up speed and capital requirements within the overall 2025 CapEx guidance of $250-$300 million. Finally, he requested clarification on the $41 million asset sale in Q4.

Answer

Executive Chairman Matt Wilks attributed the activity rebound to operators resuming work after Q4 budget exhaustion. He stated that while demand is strong, the company is prioritizing long-term customer relationships and sustainable cash flows over aggressive short-term price increases. Regarding Livewire, he noted the initial focus is on internal demand, with other markets being evaluated. CFO Austin Harbour added that the majority of 2025 CapEx is for Stimulation Services and Proppant projects with clear returns, and confirmed the $41 million asset sale was a sale-leaseback transaction on stimulation assets.

Saurabh Pant asked for clarification on whether the 2025 guidance includes the Palliser asset divestiture. He also questioned the outlook for pricing amid mixed market activity and asked about opportunities for further cost optimization.

Answer

CFO Stephane Biguet confirmed the 2025 guidance accounts for the future divestiture of the Palliser asset. CEO Olivier Le Peuch expressed a constructive view on pricing, expecting resilience due to high international activity and stretched capacity. Biguet added that while a major cost-out program is nearly complete, the company continuously seeks efficiencies through digital tools and resource monitoring.

Saurabh Pant asked about the sensitivity of digital revenue growth to the maturing upstream spending cycle and questioned if the percentage of free cash flow returned to shareholders would continue to rise.

Answer

CEO Olivier Le Peuch argued that digital growth is 'largely uncorrelated' with the upstream spending cycle at this early stage of adoption, as the expanding TAM for digital creates its own secular growth opportunity. CFO Stephane Biguet noted that while the shareholder return payout is well above the 50% minimum, its future level depends on investment opportunities, but confirmed returns remain a priority and the payout percentage will stay high.

Requested more detail on the productivity improvement pipeline and its margin contribution, a refresh on capital allocation priorities, and commentary on M&A opportunities and the emissions monitoring business.

Answer

The CEO detailed productivity initiatives like best-cost sourcing and digitization, stating they can drive earnings growth even with flat revenue. He reiterated the disciplined capital allocation framework, noting the high bar for M&A led to higher shareholder returns. He also expressed excitement for the emissions business, highlighting the significant market expansion from recent EPA rulings.

Asked about the revenue growth outlook for 2024 across North America and international, and for clarification on the lag effect of lower D&C activity on the PAT segment versus seasonality.

Answer

The company expects positive revenue growth in both North America and internationally in 2024, viewing the current slowdown as temporary. While a lag effect from completions on PAT logically exists, it's difficult to precisely quantify, though they did observe a lower ESP install rate towards the end of Q3.