National Energy Services Reunited Corp

Greetings and welcome to the Nessar second quarter 2025 financial results call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the call over to your host, Mr. Blake Gendron, Vice President of Investor Relations. Thank you. You may begin.

Thanks, Melissa. Hello and welcome to NSER's second quarter 2025 earnings call. With me today are Sharice Fota, Chairman and Chief Executive Officer of NSER, and Stephan Angeli, Chief Financial Officer. On today's call, we will comment on our second 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 or result 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 reconciliations 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 best relation 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. Once again, I would like to thank our entire Nestle team for delivering another stellar performance in the second quarter and congratulate our field crews for flawless execution, achieving consistent operation records with our key customers while maintaining the highest standard in safety and quality. The next growth story is progressing as we had envisioned and is about to hit a higher gear. Our recently announced contract awards and the expected busy tender activities will serve as a foundational backlog to our journey toward $2 billion in company revenue and position us as a sizable player within the world's best region for upstream activity. On today's call, I will start with the macro and our outlook across the key anchor countries. Then I will discuss our countercyclical investment strategy, update on the recent contract awards, and discuss how we see our progress for the coming quarters and years to come. First on the macro, Coming into the year, we saw the softening upstream environment as a unique opportunity to lean into our counter-cyclical investment strategy, just as we had done successfully in 2020 and 2021. As evidenced in our second quarter result, this strategy continues to deliver differentiated performance versus the market. Not just some P&L growth, but also cash generation and debt paydowns. Despite our sector-leading investment levels, which is consistent with our localized strategy as the national champion of the region, over the past 10 quarters, we've generated almost $300 million in free cash flow, which is nearly half of our market cap today. Speaking of durability, despite sustained uncertainty in the global macro, oil prices, and recent geopolitical events in the region, we see MENA as a bright spot with just a temporary flattish rig count this year. We said previously that oil markets would remain on edge and that activity trends would vary by country. And this continues to be the case with the exception of some countries like Kuwait and key basin like unconventional that will continue to see healthy growth. Market consensus is that oil price will remain challenged for the next 12 months. Despite a 35% decline in U.S. activity this year, crude production remains flat, with continuing drilling and completion efficiency gains offsetting lower reservoir productivity. In the non-U.S. non-optic supply bucket, growth from Guyana, Brazil, and Canada have more than offset stagnating or declining production elsewhere, But in total, this growth has been measured. Above all, caution in the oil market stems from the projected global inventory builds through late 2025 into early 2026, driven primarily by OPEC supply. With this backdrop, it is important to reiterate that our customers, the national oil companies, are taking a much longer view of oil fundamentals. Encouragingly, the outlook for overall energy demand remains robust, and there is a lot of discussion around the acceleration of data center build-out and AI chip power demand, particularly related to gas development. For crude, the key factor to consider is that oil demand per capita across much of the developing world and in massive countries like China and India lacks significantly behind consumption per capita in many Western countries. The demographic shift with global south population increasing much faster than global north means that energy demand overall will be the main driver and will surely seek affordability before anything else. What this means is that the world still needs a lot more oil, with some estimates pegging demand growth of 5 to 7 million barrels per day by 2030. Where will this oil come from? without a materially higher oil prices. In the Middle East, this dynamic is driving activity growth across the majority of our anchor countries. In Saudi, maximum sustainable capacity of 12 million barrels per day remains solid. And as stated publicly, the country can easily and quickly flex activity up or down in the coming years as this capacity is absorbed and incremental supply is needed. This is why we are seeing different activity trends across our countries. Right now, there is robust growth in Kuwait and North Africa, and these trends should continue for the foreseeable future. UAE, Oman, and Iraq are largely stable for us, and we continue to build on our solid position in those countries as we introduce new technology and pull through other elements of our portfolio. In Saudi, activity is down year over year in oil, but this activity we believe is bottoming soon. With strong Saudi growth in gas and our favorite position in Jafura, NET should be able to bridge near-term softness in oil with absolute growth in Saudi in 2025 and beyond. As we have said in the past and is now abundantly clear across MENA, unconventional resources are emerging as the main engine of upstream growth in the region. mainly around gas development and the overall need for more domestic energy and power. Today, Saudi is leading this charge with clear vision for the long-term and busy week activity deployed to unconventionals to support massive growth in FRAC stages for the next several years. As has been made clear publicly, Jafura is the key project among several gas developments across the kingdom. to grow gas production 60% from the 2021 baseline by 2030. The gas is needed for domestic consumption and is therefore a highly strategic focus of investment. Aramco has revolutionized the play with a deeply scientific approach to the reservoir and to operation, with impressive efficiency gains in both drilling the wells and completing them. Back in 2019, Nesr had no business in the hydraulic fracturing space. At that time, however, we saw a unique opportunity to leverage our local know-how and open technology platform by importing best-in-class frag capability from the terminal basin. With the support of our dear client and a collaborative approach with our U.S. partner at the time, we disrupted the status quo by setting early operational records. Given our local footprint, we also maintain fully reliable operation through the pandemic. We are proud to have been and continue to be involved in innovation around frack design, similar frack, fluid chemistry, dissolvable plugs, and notably produced water treatment and mineral recovery within our NEDA segment. Aramco has set a world-class standard across all areas of unconventional resource development. Moving to Kuwait, where we have spent considerable time and focus given the vast growth opportunities over the past six quarters, today the rate count in Kuwait is at an all-time high, a record never seen before in becoming the second largest country in the Middle East in terms of rate count. Our successful entry to the country since our birth has been phenomenal. Our growth is on plan with multiple contract awards, several of which we recently announced for key drilling and evaluation prototype. We secured our first entry into Splicline and cemented our position in the drilling portfolio. Much of the portfolio import into Kuwait has come from our differentiated drilling offerings in Kuaman. We have had the unique leadership position for more than a decade, training and developing the local workforce, establishing local manufacturing, building best-in-class drilling machines, and we are now taking this success to neighboring countries. I'm talking here about drilling segments such as tubular running services, downhole tools, fishing and remedial, advanced drilling technology that will form the base for our Roia platform. As we did in Saudi, we are now in Kuwait and have worked seamlessly to make this portfolio pull through a reality. and we are still in the early stage of this evolution across other countries. The recently announced Ahmadi Innovation Valley will also add a layer of research and development to our growing operation in Kuwait, and establish a long-term collaboration with our cherished customers. Moving to North Africa, which is another area of growth, we did secure solid new contracts in both Algeria and Libya. These contracts span from three to five years and ensure that we have the runway to continue to invest in human capital and equipment. We have made strides in both countries in the past, and now we want to ensure we scale our position to mirror our size in the GCC countries. As a repetitive strategy, we rely on our local talent pool to execute flawlessly in the different segments. And our aim is to have the top leadership position in the production services. Here I'm talking about cementing, coal tubing, nitrogen and pumping, hydraulic fracturing, and industrial services. North Africa, proximity to European energy market, is uniquely positioned to provide the much-needed gas into the pipeline and meet increasing domestic power demand. In addition to increasing oil export capacity, the countries want to enhance their supply buffer in the coming years. Through this shift, we continue to be close to our customers and define the needed resources to fuel that supply growth. To summarize, the tender activities will remain very busy this year, and we are expecting much more to come in the second half. We are focused on building a solid pipeline and securing a robust backlog while maintaining profitable growth and free cash flow generation. And with that, I'll present the call over to Stephan to discuss the financial in more detail.