Oil States International, Inc.

Good morning, my name is Mark and I will be your conference operator today. At this time, I would like to welcome everyone to Allstate's 3Q earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I will now turn the call over to Ellen Pennington, Senior Counsel. Ellen, please go ahead.

Thank you, Mark. Good morning and welcome to Oil State's third quarter 2024 earnings conference call. Our call today will be led by our President and CEO, Cindy Taylor, and Lloyd Hodgick, Oil State's Executive Vice President and Chief Financial Officer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, Please note that we are relying on the safe harbor protections afforded by federal law. No one should assume these forward-looking statements remain valid later in the quarter or beyond. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our 2023 Form 10-K, along with other recent SEC filings. This call is being webcast and can be accessed at oil states' websites. A replay of the conference call will be available two hours after the completion of this call and will continue to be available for 12 months. I will now turn the call over to Cindy.

Thank you, Ellen. Good morning and thank you for joining our conference call today where we will discuss our third quarter 2024 results and provide our thoughts on market trends in addition to discussing our company specific outlook. During the third quarter, we reported strong results in our offshore manufactured product segment and achieved our largest bookings quarter of the year. On a consolidated basis, our offshore and international revenues constituted 65% of our consolidated total for the quarter, while U.S. land-driven revenues represented 35%. As we have discussed in prior quarters, we are in the process of strategically streamlining our operations in the United States through the exit of underperforming locations and business lines. We continued our efforts around business mix optimization during the third quarter with the sale of our remaining drilling rigs, which generated some cash and also frees up working capital previously dedicated to the business. Following the sale of our drilling rigs and the exit of our flowback and well testing operation, the segment previously named well site services was changed to completion and production services in line with our future go-to-market strategy. During the quarter, our offshore manufactured product segment revenues totaled $102 million, while adjusted segment EBITDA totaled $23 million. Bookings totaled $112 million, up 11% sequentially, yielding a backlog of $313 million as of September 30, and a quarterly book-to-bill ratio of 1.1 times. Our segment results are gaining incremental benefits from customer adoption of our newer technologies, with a particular focus on our managed pressure drilling and mineral riser technologies during the quarter. Together with Sea Drill Limited, a global leader in offshore oil and gas drilling, we announced a strategic, non-exclusive, collaborative relationship aimed at increasing the safety and efficiency of offshore NPD operations. This strategic initiative combines our award-winning NPD integrated riser joint technology with Sea Drill's high-spec fleet of floating drilling vessels to enhance operational safety and efficiency while simplifying and standardizing MPD systems operating in the offshore drilling market. During the quarter, our first integrated riser joints were delivered to C-Drill for use on their West Polaris Deepwater Rig, which is expected to begin MPD operations in Brazil later this year. As market acceptance of our MPD product line continues, we expect to generate between $35 million and $45 million annually in associated revenue going forward. With ongoing concerns about potentially reduced oil demand in China and the possibility of OPEC Plus ceasing voluntary production cuts in 2025, crude oil pricing declined during the quarter With this macro backdrop coupled with record U.S. production completion activity on U.S. land as measured by the average quarterly U.S. frac spread count declined 8% sequentially leading to a weaker U.S. market. Our completion and production services segment revenues decreased 14% on a sequential quarter basis given the impact of these trends along with the segment consolidation and exit over the past nine months of underperforming locations. Adjusted segment EBIDOC decreased at a proportionally higher rate from the second quarter of 2024 due to weaker offshore activity in the Gulf of Mexico. The drop in offshore activity resulted in part from hurricanes in the Gulf of Mexico during the third quarter, but the pause in activity is considered transitory. In our downhole technology segment, revenues and adjusted segment EBITDA also decreased from the second quarter of 2024, driven by similar macro issues leading to weaker completion product sales. We continue to focus on improving operations and allocating capital to our most differentiated businesses while efficiently and safely providing our customers with advanced technologies and services enhancing returns, reducing debt, and returning cash to our stockholders. During the quarter, we generated cash flows from operations totaling $29 million, leading to a net debt reduction of $20 million. Over the last three years, we have made significant progress in our deleveraging journey, and we expect to be net debt zero during 2025 which should serve as a catalyst for stock price improvement. Lloyd will now review our operational results along with our financial position in more detail.