National Energy Services Reunited Corp

Greetings and welcome to NESR's third quarter 2024 financial results conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Blake Gendron, Vice President of Investor Relations. Thank you. You may begin.

Thank you, Donna. Good day and welcome to NESRR's third quarter 2024 earnings call. With me today are Sharif Foda, Chairman and Chief Executive Officer of NESRR, and Stephan Angeli, Chief Financial Officer. On today's call, we will comment on our third quarter results and overall performance. After our prepared remarks, we will open up the call to questions. Before we begin, I'd like to remind our participants that some of the statements we'll be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. I therefore refer you to our latest earnings release filed earlier today and other SEC filings. Our comments today may also include non-GAAP financial measures. Additional details on reconciliation to the most directly comparable GAAP financial measures can be found in our press release, which is on our website. Finally, feel free to contact us after the call with any additional questions you may have. Our investor relations contact information is available on our website. Now I'll hand the call over to Sharif.

Thanks, Blake. Ladies and gentlemen, good morning, and thank you for participating in this conference call. Our third quarter was once again strong, following solid first half of 2024, even on top of our robust growth last year. We continue to reach new all-time highs for revenue, EBITDA, EPS, and cash flow, and our balance sheet is increasingly fortified and poised for both accretive growth and prudent shareholder returns. Despite the prevailing market uncertainty, I am pleased to report that overall activity in the MENA market remains stable, and I'm extremely encouraged by the prospect in NET's core business outperformance, new technology rollout, particularly in direction drilling, solid hydraulic fracturing execution, and frontier market opportunities in water and decarbonization segment. Combined with our recent relisting on NASDAQ, our outlook remains extremely bright, both in the fourth quarter and in the coming years. Before passing to Stephan to discuss our solid third quarter results and balance sheet positioning, I want to first offer some thoughts on the macro outlook. Our recent technological milestone that we expect will fuel continued NEST outperformance and our overall positioning in an otherwise cautious sector landscape. I'm extremely proud of the entire NEST organization as we continue to push the envelope on growth, margin delivery, and cash generation, which afford us the opportunity to reinvest in really exciting growth areas of our business. If there are two key messages from my prepared remarks, they are, one, that the MENA macro outlook remains healthy, underpinned by growth in key countries, alongside Saudi leadership in pragmatically managing energy market balances with strong focus on gas and unconventional development. We expect Nesri to continue to outperform the broader sector with exciting development in the core, our drilling technologies, and in frontier areas such as produce water and minerals. These areas are driving Nesri's solid performance now and are expected to sustain performance over both the near term and also in the years to come. Turning first to the macro, the overall commodity outlook has certainly impacted sentiment in the upstream energy sector, and especially for energy services. While the global upstream growth outlook today is more cautious than it was even six months ago, we believe that MENA activity will remain stable, particularly with recent activity growth in countries like Kuwait, which is expected to lead overall MENA growth for the next couple of years on a percentage basis. Encouragingly, North Africa is again growing steadily, and there is plenty of appetite to accelerate further in places like Libya and Algeria. For Nasr, we have scalable presence, we can easily add significant resources from equipment and human capital to cater for rapid growth should the geopolitical landscape improve and opportunities materialize financially. Overall, stable activity across the MENA region hardly match the softened capital market narrative. We have very good visibility for the coming activities and where it will take place, specifically because of the long-term nature of the contract and the strategic importance of the energy sector in the region. Case in point is the Saudi unconventional gas project. which will remain a secular growth story given the ambition to grow domestic gas capacity substantially by 2030. Turning now to the portfolio, first and foremost, our core business continues to outperform even in a subdued growth environment. Given our relative size compared to our more global peers, our opportunities in the core center around our ability to leverage leading share in our anchor countries to pull through smaller segments in which there is room to grow share in other countries. Examples of this dynamic include the regional spread of drilling and manufacturing expertise from our team in Oman, the industrial service from Egypt, and the duplication of our Saudi FRAC success in other potential unconventional resources. With solid growth in the core driving success, it is our ROIA direction drilling platform that we expect could carry the up-performance forward over the next several years. The Tier 1 direction drilling market is more than $2 billion per year across rotary steerable, LWD, and MWD. It's a high-quality revenue given the consolidation and sophistication of the technologies. Recently, we announced the first successful run of our rotary steerable and MWD in Kuwait, in which the technology was able to complete the targeted interval in a single run. This milestone marks the culmination of nearly six years of joint investment, research, development, and field testing with more than 70,000 feet drilled, but more importantly, signals commercial viability of our technology. We already have in hand the multi-year contracts with provision to deploy our new Tier 1 direction drilling platform in Kuwait, Saudi Arabia, and Oman. And the upside within these contracts is significant. The next goals for Ruqya include repeatable success, reliability enhancement, personnel training, and growing our fleet of tools to expand our share as we continue to gain confidence in performance across the different reservoirs and formations. Another unique work we are doing at NESS involves a completely new market opportunity that is being defined and reassigned through our collaboration with our largest customer, our NESS Environmental and Decarbonization Application, or NEDAP. is a basket of technology aimed at establishing multiple circular economy within the MENA energy value chain. Often, as we spoke multiple times before, we found our NEDA technology outside of the oil and gas industry and adapt them to fit specific client challenges. One such circular economy is the circular water economy. In the third quarter, we announced our investment in Saltek BV, a supplier of technology called DIVAR, or Dynamic Vapor Recovery, which is a low-heat desalination solution originally from the Dutch dairy and chemical industry. Over the past couple of years, we've worked with our largest customer to adapt the DIVAR specifically for high-salinity produced water and have successfully executed two pilot projects in the country. Furthermore, we evaluated the technical efficacy of recovering available minerals from the produced water during the desalination process, including rare earth metals such as strontium and lithium that are native to this reservoir water. The SALTEC acquisition is a signal of our confidence in the multi-circularity model of water and mineral recovery. And while this area remains a very long development and scale-up cycle, we are extremely excited for the medium to longer-term prospect in our water-starved MENA region. Our open technology platform serves as the foundation for successful innovation, but it's the combination of our local know-how, operational agility, and the trust and open-mindedness of our customers that is driving technological success in the field. I'm extremely excited to share further updates on our strategic initiative in due time, including our NASDAQ bell ringing and tech expo tomorrow in New York City. But for now, I will conclude and hand the call over to Staffan to discuss our financials in detail.

Thank you, Sharif. Good morning to our audience in the U.S. Good afternoon, good evening to our audience in the Middle East, North Africa, Asia, and or Europe. I'm very pleased to go through our third quarter financial results in detail. Despite the volatile macro environment worldwide and the geopolitical headwinds in the Middle East, Nessa has achieved exceptional results during the third quarter of 24 and for the first nine months of the 24 period. First, let's cover revenue. Our overall third quarter revenue is a record $336.2 million. which is up 3.5% sequentially and 12% year-over-year. Revenue for the nine-month year-to-date period is $958 million, up 14.3% year-over-year, with exceptionally strong activity in the Gulf countries. We expect year-over-year growth in the fourth quarter to largely match the year-over-year growth achieved through the first three quarters of 2024. Our view is that growth will continue across the Middle East North Africa market for the remainder of 24 and into 25 as outlined by Sharif. Now turning to adjusted EBITDA. Adjusted EBITDA for the third quarter of 24 is also a record $80 million, with margins of 23.8%, substantially flat on a sequential quarter basis. Year-to-date adjusted EBITDA is $222.9 million, up 21.9% year-over-year, with margins up 146 basis points to 23.3%, with NESA exiting Q3 2024 with a margin of 23.8%. Interest expense for Q3 2024 is $9.9 million, and Q4 2024 should be around $9 million on lower debt. The Q3 2024 effective tax rate is 20.4%, And for the year-to-date period ending 30th of September, it is 24.3%. We would expect the Q4-24 ETR to be approximately in line with Q3-24. Now turning to EPS. Earnings per share excluding charges and credits is $0.31 for the third quarter of 2024 and $0.75 for the 2024 year-to-date period, which is up 164% year-over-year. The charges and credits impacted adjusted EBITDA and adjusted EPS were made up of principally three items as follows. Restructuring cost, which was used to reduce our overhead, cost of remediation of controls, material weaknesses, which should abate after the 2024 audit, and current expected credit losses, mainly for a North African country. Now, turning to our liquidity, which this is a story that NESA is very proud to discuss. Our cash flow from operations during the third quarter of 24 is very strong as we generated $70.8 million. For the year-to-date 24 period, we generated $183.1 million. The exceptionally strong third quarter is due to significant customer collections which drove our DSO to a near company best. Free cash flow for the third quarter is $43.4 million and for the year-to-date 2024 period, it was 103 million, and this was principally used to pay down bank debt. As a result of the strong operating results and good cash flow conversion, we achieved a significant milestone at the end of the third quarter of 24, where our debt to trailing 12-month adjusted EBITDA fell to 0.96, which is below our stated target of 1. For comparison purposes, we were at 2.8 at the end of 22 and 1.47 at the end of 23. Our gross debt on September 30th, 24, is $409 million, and our net debt is $291 million. Working capital levels have remained relatively flat during 24, despite revenue growth of 14% year-to-date on top of the 26% in 23. Working capital expansion has been minimized due to process improvements and system developments that have enhanced our efficiency. resulting in the DSO decrease of 15 days over the last 21 months and a decline in the infantry levels of nearly 10% over the same period. Capital expenditures for the first nine months of 2024 is $80 million. We still expect full-year capex to be in the vicinity of $120 million, driven by the delivery of our first Royal Directional Drilling Tools, which is supportive of the drilling strategy just outlined by Sharif. All of the above has resulted in our return on capital employed percentage on a trailing 12-month basis at September 30th, 24, reaching 11%. And this should only improve going forward. Now on to some housekeeping topics. As you've seen, we were relisted back on NASDAQ four weeks ago on Tuesday, 22nd of October, and we are looking forward as a company to ringing the bell at the NASDAQ closing ceremony tomorrow. We've spent the better part of the last two plus years reshaping our back office and the company overall with new and updated processes, procedures and controls, as well as implementing the latest software upgrades to our ERP system. We are very confident that we'll be able to demonstrate the remediation of our internal control weaknesses during the 24 audit. This conclusion is very positive news for the company after almost three years of restatement investigations, inquiries and internal control remediation efforts. But very soon we should have concluded on all. In summary, operational execution across the Middle East and North Africa region continued to be strong during the third quarter of 24 and our updated processes, procedures and controls have transformed the back office to accommodate the continued growth that we're targeting. These drivers have combined to generate record results for the year-to-date 24 period with strong revenue growth, strong adjusted EBITDA, and healthy cash flow conversion, the latter of which has been used to pay down debt and strengthen the balance sheet overall. The Middle East and North Africa region remains favorable, and NESA continues to be focused on its stated goals of delivering profitable revenue growth, execution efficiency, technology expansion, debt reduction, and working capital efficiency to drive future financial performance. On behalf of management, I would like to thank our entire workforce for their outstanding efforts in delivering these results, together with our directors, shareholders, and banking consortium for their continued support. The future for Nessa continues to look good. Now I turn the call back to Sharif.

Thanks, Stephan. Let me conclude by highlighting our key takeaways from the quarter. First, I would like to leave you with our belief that we will continue to outperform the broader MENA market. Not only is there further runway for core business expansion, but we've also achieved tangible progress in our RoIA platform development and expect this to be both a meaningful growth contributor and also returns accretive over the coming years. We will continue to have new partners to introduce their technologies from North America to the region, with tailored solution for our customer, similar success as we have had with Cactus, Phoenix, Scout, Beyond, and others. Our NEDA segment, and specifically our water and mineral portfolio, are where some of the most interesting work in the company is being done. And our strategic investment in SaltSec follows several years of successful piloting and mineral recovery success. Now, we need to take the water business to the next level and scale the execution. I would like to close by thanking all of our employees, their families, and our valued customers and partners for their continued support. I couldn't be more excited about the future for NASA. Looking forward to seeing many of you tomorrow. at the NASDAQ building where we have several key of our executive and manager flew from the region to New York to present our technologies and engage with all of you. And with that, I pass over the call to the operator for your question. Donna.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that's star one to register a question at this time. Today's first question is coming from David Anderson of Barclays. Please go ahead.

Great. Good morning, Sharif. How are you? Good morning, sir. How are you? I'm doing great. Glad to have you back formally here, and I look forward to tomorrow night's event. So maybe just first question, maybe if you could just kind of give us a little overview of what's going on in Saudi. It's been sort of a complicated year. Offshore going down, onshore coming up, a lot of focus on gas. You feel like they're kind of slowing a bit. Can you just sort of give us the overview of what's happened this year so far in Saudi and how you see that changing over the next 12 months?

Yeah, thanks Dave. So as outlined clearly by Saudi Aramco, and obviously the leadership there, is after they put down the maximum sustainable capacity from 13 to 12, where they had a plan to add 1 million barrels to go to 13 million barrels total capacity by having 800,000 coming from offshore and 200,000 coming from land, and that plan was postponed to only be 12. So they released the planned increased rigs. So as for people that are familiar with Saudi, Saudi used to be 60 jackups approximately, which is very high. And the plan was to go all the way to 91. They almost reached it. And then after that decision, they started releasing the offshore jackups that were planned for the 800,000 barrel additional capacity, which basically being postponed. So that when the release of rigs started to happen and this took place earlier this year. Then on top of that, obviously their success on the projects, on the unconventional, et cetera, where there is a lot of associated gas and their plan to move to 50% gas, 50% renewable for the power generation on the kingdom by 2030. and they show that they have excess oil and basically with the slowdown of China or whatever, so they decided to release more of the land rigs that is responsible for oil and which took place. So that took place over the last three to six months and that's some of the extra rigs that were released. If you look at the total recount in Saudi, again, it reached an all-time high of 300, and that was, again, poised for the increased capacity and the oil demand. When this did not happen, and they do have the capacity of 12, which, again, a lot of people, I keep saying that, are skeptical about it, but it's not true, because Saudi can do that and can deliver 12 million. And they don't need the additional rigs to drill for oil when nobody needs it, right? And they are very disciplined on the Opel Plus. They lead it, actually. And that's why they release the excess rigs. Now, if I move to your second part, which is the unconventional, the unconventional gas, which is the Jafura project, is extremely successful. And they keep adding rigs. So that is the only project that is not being touched. It's actually increased the rig count. And as some people might know as well, the first delivery of 2025, first gas at 200 million scuff, then the 2027, and then the 2030. And on that, you have a lot of associated gas, which is basically you get almost 600,000 barrels, and you get a lot of NGLs. So this definitely will, again, they will have an additional... oil there that is available. The last thing that some people might not know is, as very good highlighted by His Royal Highness, is the move away from burning crude for power. And there is a plan to ensure that this does not take place, which is almost a million barrels in the summer hot months, which, again, make sure that if this happens, then domestically they don't need all this diesel, which basically will make it available for export. So I hope I answered your question, David.

So how do things, the rigs have come off. We've kind of seen that sort of need set sort of activity level. Do you expect things to sort of stay at these levels and Jafur keep ramping up here? Or how does kind of the next 12 months look? from sort of a broader activity level in Saudi? You don't need to get specific, but broadly speaking, how does it look now?

Well, I think what will happen, in my personal opinion, is basically it's going to be stable. Outside Jafura, it's going to be stable to a bit down because obviously some rigs now are being put on what they call extended maintenance. which is obviously, again, you don't need to drill for some of the oil part. You just put it on maintenance. And then the Jafura was going to keep increasing. So overall activity in Saudi, I would say 25 over 24 will be stable because that drop in oil will be compensated by the increase in gas and unconventional. Now, For service industry, it all depends where each play, right? So our expectation for NAS, we are going to grow 25 over 24. We will continue that growth profile that we had. And we believe we are positioned very strongly. The other part that... besides the activity being poised, we are more poised on the gas and on the project of Jafura, obviously, that we have the drilling portfolio. So we did not have that in the past. We did not have direction drilling. We did not have rotary steerable or MWD, LWD, and now we have. So that's an additional for us. It's quite unique because I have the contract, so now the issue becomes, How much can we deploy in 25? We did not deploy any in 24. So how much of that, and this will be an additional for us, 25 over 24.

And so the overall, the shifting is that the mix works in your favor. You obviously have more Jafura than you had offshore. But just one final question for me just on Jafura. Can you just kind of give us a quick overview of what you're doing today on Jafura? I know you've been on the field for, gosh, a long, long time. You were the ones who just unlocked it. But going forward, where are you today in the field? And are you expecting to see more tenders? And what are some of the different services that you're expecting to be tendered, say, over the next six months?

Sure. So, Jafura, obviously, again, is an outstanding project for Saudi Arabia. I mean, I would say it's... you know, world class, like you have in the US, they beat every record from drilling the wells in 40 days, now making it in 14 and 12. I just took my entire board to Saudi and to see it. And we actually went to the field and saw the frack while it was working, right? So it is very impressive by all means. So today, Jafura has You have three unconventional in Saudi that is running, right? Which is the big picture is Jafura. And you have what they call, you have the new rigs coming there. So they added rigs. And in that, in the drilling, they have multiple companies involved, right? So you have obviously people in the mud, people in the direction drilling, et cetera. And that project, our involvement is, It's been on the cementing front, drilling the wells, cementing. And we as well involved, obviously, now in direction drilling, which is the contract we just got awarded. And in the direction drilling, you have multiple suppliers. You have around five suppliers now in the direction drilling arena between the big guys and two of the smaller guys, like we are one of them. And then on the fracking side, it's two players today. us and one of the big three and we are today basically both of us working and recently there is even a pilot from a third player. Why they are doing that? Because obviously the Jafura is going to increase dramatically from size. So for people to know, this is basically this year they are planning 8,000, 9,000 stages that we completed. And then this is going to go all the way to 25,000 stages per year. Once you go to 25,000 stages, obviously there are room for more players than the two of us. And that will take place. So tendering will definitely happen because everything in Saudi Arabia or the Middle East goes to tendering. So that bidding process will happen sometime next year, and then people will participate. The approach is, obviously, the market should be disciplined, as we always say, but you never know. So there will be more award suppliers, again, to be able to complete those number of stages in the coming years. And the project is poised for the 2BCF by 2030, so definitely all this is going to take place. And the rigs are performing outstanding. The drilling of the wells are really, really almost at the technical limit.

That's great. Thank you very much, Sharif. I appreciate you taking on my question. Thank you, sir.

Thank you. The next question is coming from Gregory Lewis of BTIG. Please go ahead.

Yeah, thank you, and good morning, good evening, everybody. Sharif, I was hoping we could kind of like blend together, you know, the growth that we're kind of expected to see in MENA versus kind of the cross-selling, you know, the rollout of ROYA and kind of try to get a sense for, as you think about revenue growth in 25 versus 24, Any kind of sense for that mix of just outperforming the market and then kind of layering in those cross-selling opportunities in the rollout, Arroyo?

Sure. I mean, I would say the market overall in MENA would be plus a single digit year over year. So 25 over 24 should go, let's say, 5%. six percent you know uh and uh we always say we should double that growth so whatever the market is growing at we should be at double that rate the roya platform the direction drilling the the decarbonization segment this is all addition to that so what we believe is it once it's the success of the direction drilling is proven in the sense of commercial viability that they can take 10, 20 rigs, perform equal to the big provider, we should be able to gain share because we have the contracts. And that's, I think, something we try to articulate that the key in the Middle East is to have a contract. You have to have a long-term contract with the customer to be able to deploy those technologies. And today we have that in our three main countries of operation, Saudi Arabia, Oman, and Kuwait. So now what we need is to deliver those technology on the rotary sterile that we are taking a very a prudent and, if you like, technical way of looking at it. So we deploy when we know we can be at par with the big guys for the sake, obviously, of the customer because we want to be always credible. We always maintain that, you know, I can build in this formation, I can do this, my dog-like severity is higher than what exists in the market. So the customers see the benefits of us deploying the tools. With the speed of deploying and the speed of the success will determine how much that growth in revenue will be in addition year on year. But I have no obstacle or no issue on contract or waiting on contract to be awarded for me to be able to deploy. I have already the contract, which is a very good thing to have. On the decarbonization, the third element definitely is the is the appetite of the customer. We talk a lot about, you know, the methane pledge. We're talking about the 2030. COP 29 is running as we speak. So definitely it is something that everybody wants to monitor. We just came from Adipak in Abu Dhabi. It's still a very big important subject. The sustainability is extremely important. I think we live on a planet. We need to be careful how we manage our water resources in a place like as I call it, starved. Actually, I think it's the bottom in the world from starvation of water per capita. It's all desalination. There is no rain. So for the energy industry to be disposing all this water of the produced well is not right. So we need to find a solution that is economical. We think we are there. We think we can take the minerals that comes from that produced water and sell it and make a margin on it, which basically pay for the power of doing that service. We think as well we can get lithium, which can be a very big item on the renewable agenda if we get lithium from that. So there is a lot of exciting things. Now, the scale is what matters. And obviously, again, I keep repeating this. The key is the customer works with you to be able to give you that project and being willing to risk and take some tests on that front. But again, for the sake of the climate, the world, the sustainability, I think a rich industry like ours should do that.

Okay, great. And then I did have a question. You know, there's obviously the ongoing debate when, if, when. Saudi Arabia is going to, and OPEC Plus is going to kind of start ramping production again. You know, just as we think about that, you know, if that were to happen at some point in 2025, how, if at all, does that impact, you know, kind of the activity levels you're thinking about in 25 and maybe 26? Is that additive or is that kind of, it's a non-event?

No, I mean, look, I mean, it all depends. There is a lot of narrative out there. The Middle East needs the oil price to be at that level or above. So all this notion that they're just going to open up the tab and flood the market with oil is not going to happen. So what they need to do is they will continue with the pragmatism to ensure that the market is well balanced and the oil price remains healthy for their economic growth. So all the comments I made is based on that, and all our forecast is based on that demand and supply. Now, if for whatever reason, the geopolitics, there is another drop of some of the producers, and get eliminated from their production and then the Saudis or others have to come up with production to make up for that, for sure the activity will go much higher. So our comment and our analysis is based on an oil price the same, OPEC plus remain their cut for the foreseeable future until the demand comes back from China and then the world needs more oil. Now, If you think about the narrative of the U.S. and President Trump and most probably Russia can, you know, back to the game, et cetera, et cetera, you know, it doesn't really, that more activity will happen. But we are taking that notion that the activity will remain, it's a small, low single digit, 25 over 24, and we are outgrowing that market. If the oil price gets stronger, and as I said, somebody has to replace another, yeah, activity will go further up. And the oil price and the economy of the Middle East is all depending on oil and gas. So people have to remember that. This is not part of an industry that you have 20 of. This is the main core business. of employment, supply chain, everything in the country. So people will protect it. Super helpful. Thank you very much.

Once again, ladies and gentlemen, if you do have a question, please press star 1 on your telephone keypad at this time. The next question is coming from Derek Podhazer of Piper Sandler. Please go ahead.

Hey, Sharif. Good morning, and congrats on the relisting.

Thank you, sir.

I just wanted to go back to your comment about your ability to cater to the growth in the MENA region. How should we think about that in regards to your equipment base and what it means for a CapEx investment cycle? What can you service today? Where would activity need to go in order to meaningfully build out new capacity? And related, what does it mean for pricing and margins, and how can you drive that higher over the next couple of years?

Hey Derek, it's Stefan here. So I'll take the first bit of the question, right? As I said, this year we've spent $80 million in CapEx this year so far, and we've got another $40 million, which is mainly Roya tools coming out. For the, let's just say the 5% to 10% growth, which we're sort of anticipating next year, right? We think the CapEx will be $120 million, right? Again, give or take, right? If the revenue from Roya was to grow greater than that, our capex obviously would be higher. And if we get any NADA projects next year, there would be some capex on that, right? But we're looking at flattish capex of $120 million again next year on that 5% to 10% growth.

Got it. That's helpful. And maybe a little color on the free cash flow conversion. of that incremental capex? Just how should we think about the overall view of the free cash flow generation?

Well, right now, let's just say on $120 million of capex for next year, we're probably looking at the high 30s, 40% free cash flow conversion. We'll probably have some working capital less efficient. We've done very well over the last two years, as I elaborated, and I think it will be tough to keep

know pushing down inventory and pushing down dso with growth right but we'll do our best right but i would i would keep it at 40 percent of uh free cash flow conversion to a beta yeah great that's helpful um my follow-up question i wanted to talk about those partnerships with the north america companies that you that you mentioned sharif and and how we should think about deploying u.s shell technology in the in the mina region you pointed out cactus in phoenix How should we think about these evolving over time, over the next couple of years, and where MENA is on the technology adoption scale versus where U.S. shale is and what products you're looking to bring overseas? Just maybe some more color on that would be helpful.

Sure. I mean, if you look at the unconventional, for example, for Saudi, everything you can imagine in the Permian, in the the best in class is being deployed. When we started that journey back in 2019 with Aramco, that's exactly what we said. We said, guys, we are open platform and we are going to bring the best in class. It's not like because I have that, you have to use that. We are going to see what do we use, what is being used, and how they moved from five, six stages to 18 to 20, 22, pumping for 22 hours. How did they achieve that? How did the customer and the technology in the shale in the U.S. manage to do that? And that's exactly what we did, and obviously under their leadership, is we looked at who has what, right? And we teamed up with those technologies. So Cactus is doing very, very, very good in our wellhead and and factories we use our my different John and Phoenix on the drilling and their motors we have scout on the monobore and again what is the best in class being used here and we took it there and obviously the way it works in Saudi for again for the people to understand you have to have so the local player which is us we bring we say we present the technology that is very innovative, that is unique, and why is it better? And obviously Aramco is extremely a solid customer with a very, very good and very strong technical department. They check and they vet this technology. Then we go through what we call a TTR or a trial test. And during that trial test, they will check and test the technology on what they call free trials. When they prove that and they see the results, the track record, then we bring this under our umbrella and perform with the customer. And the way we do it, we do it transparently. We brand the company partner. We don't say, oh, this is Ness. No, we say, this is Cactus, this is Phoenix, this is Scout, this is et cetera. When I see the next level, I think there will be a lot of work that we are going to do on the next level of milling the plugs. So I think we are looking into partnership with some snubbing to see should we go faster on finalizing, especially once we go to the 25,000 stage. We are working very close now with BEYOND, which is MPD, Managed Pressure Drilling, both on unconventional and not in unconventional. We are looking at as well bringing those packages like we do in the U.S. to there. There is some technology that we are looking at on WildLine and we have a couple of partners without mentioning their names. We're looking at second level of what else could we do to reduce the frac operation and the perforation timing. And I think there will be some work as well on the rig up, rig down, and the speed between paths. But just to understand, In that size or that type of operation, that type of professional, today it's only in Saudi Arabia and the MENA region. So it is not like this is what you see. No, it's only... But they went through appraisal, exploration. They spent a lot of money assessing those wells before they went now to development, which is basically now manufacturing. And that's exactly best in class, like you see in any pad... in the U.S. for the top clients like EOG or Devon and any of these guys. It's exactly the same. Now, the other countries in unconventional, I would call it an infancy, right? So they are in that trajectory, but as if you are like seven, eight years ago. So they're going to go through that process. And again, the infrastructure supply chain is a challenge in the Middle East. So you have a challenge of the water supply. There is not water, as I just explained. There is a challenge of the local sand, which is proven now to be successful. That's what we do in Saudi. That's why the cost went down dramatically. If people look back 10 years ago, we used to fly and import sand from Australia and the US to Saudi, right? Which is obviously, we have a lot of sand in the Middle East. So now we use all local sand. We actually use even regional sand, sandboxes, etc. So Long answer, but I'm just trying to give you the picture that that has happened today already in Saudi. I think the unconventional prospect in the Middle East, you have a couple of other countries. I think Algeria could be a very, very good place for people that understand the, you It's very similar to the Vaca Muerte. Ahenad Basin is huge, and it could be developed at the same scale you have in Argentina, you have, again, in Eagleford, et cetera, and this could be, you know, but, again, they just have to stop, right? And then, obviously, supply chain, everything has to be developed accordingly.

No, very helpful comments. Thanks, Sharif. Thanks, Stefan. I'll turn it back.

Thank you, sir.

Thank you. At this time, I would like to turn the floor back over to Mr. Foda for closing comments.

Thank you very much. We really appreciate all the time that everybody has put. We, again, would like to thank all our employees, their families, all our shareholders, all our banks, all our partners. We had a very good time now, and we are looking forward to see a lot of people tomorrow. We are going to be on the NASDAQ closing bell, we will have our tech exposition two hours before. So people will be able to see the technology. We will display the Roia platform. We'll display the NIDA, the decarbonization. We have people coming from the Middle East, our managers and executives, to be there as well. So a lot of the investors and partners will be able to talk to them and integrate with them, and then see as well the technology and see the mock-up, and definitely we'll have some time as well to, as we say, to celebrate with the closing bell and the event after that. Thank you very much. Appreciate all the support.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.