Oil States International, Inc. (NYSE:OIS) Q4 2022 Earnings Call Transcript

But I think it’s a more level playing field going forward, it’s how I would characterize it. The domestic market has remained competitive, particularly with a lot of the wireline companies in sourcing some of their perforating gun systems generally. But by us concentrating more on our key products, concentrating on the integrated gun system, it allows us to be more efficient on the manufacturing side without a new gun development, a new size, a new shooting panel, blah-blah-blah, specific to every customer. I think the market is settling down into very reliable products that can be manufactured on a more consistent basis that will help us from an efficiency standpoint going forward. I would mention the other I think key driver for this business going forward for us is international expansion and penetration, those markets have historically for us been tied to P&A, but we are expanding on the more original completion side of the business and it tends to be some of our more proprietary pieces of equipment, whereas land U.S. still has a decent amount of commoditized components that are sold into it.

And as I mentioned in my comments, the domestic mix was much more commoditized in Q4 and we just don’t make as much money on that. So, again, think about integrated gun systems, I think, the industry competitive landscape, it’s more level now and we are seeing some decent international expansion opportunities. Those are going to be the keys for this business and for us going forward.

Stephen Gengaro: Great. No. That’s great color. Thank you, Cindy.

Cindy Taylor: Thank you, Stephen.

Operator: Thank you. And the next question in the queue comes from Kurt Hallead with The Benchmark Company. Sir, you may proceed.

Kurt Hallead: Hey. Good morning.

Cindy Taylor: Hi, Kurt. Good to hear from you.

Kurt Hallead: Yeah. Great. Great to be on again. Always appreciate the color. I just wanted to maybe circle back again just on the overall outlook for 2023 and you mentioned that the Offshore Manufactured Product business will probably have faster revenue growth than the Wellsite and Downhole. And then just kind of focusing maybe on Wellsite and Downhole, do you think those two would grow comparable on a year-on-year basis or won’t grow faster than the other based on your customer mix and product mix and everything else?

Cindy Taylor: They are similar, but we have a modestly higher growth rate on completion services, partially due to some supply chain challenges that are unique to Downhole shortages of switches right now, shortages of powder. There are number of headwinds, particularly in early part — late part of 2022, early part of 2023 that, while we have growth in all three segments, the lower to the higher would be Downhole followed by Wellsite Services with the highest one Offshore Manufactured Products. And again, the blended average is an estimated 15% year-over-year increase in consolidated revenues, if that’s helpful.

Kurt Hallead: Yeah. That is. Thanks. I appreciate that. So, Cindy, you have always are pragmatic about business dynamics and kind of the outlook, and yes, natural gas is very — not very conducive in terms of investor psychology or perspective activity. But I am just kind of curious, and then, as you kind of look at the dynamics at play, the confidence you have obviously oil basins holding up better than natural gas, but is there something specific to your customer base that will maybe shield you a bit from potential decline in gas activity, that’s question number one. Question number two then is you typically get some churn in assets or business and there’s going to be decline in natural gas activity, there’s going to be a movement to these oil basins, which historically it’s kind of created some asset on asset competition and some pricing pressure.