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

So just wanted to get your perspective on how you are shielded and how — if you think there’s going to be asset on asset competition like we have seen in prior cycles.

Cindy Taylor: No. Those all are very valid and timely questions, Kurt. But, obviously, we are very attuned to our customers and to market concerns and the impact of pricing, which we all know very well. And so, I am going to echo some of what is on the street in saying that I think that, one given the growth in the rig count in the Haynesville in 2022 has set up power production in that basin, number one. It has a higher breakeven at least from all the research I have done than the Northeast market. And so I do think that basin is more sensitive to activity declines, that’s number one. There are plenty of analysts out there estimating what kind of decline we might be looking at. But with this massive switch over the last 15 years or so, but rig count dedicated to oil basins, the overall gas count is probably percentage wise about 20%.

And I do think that the weakness will see is likely in the Haynesville, a lot people are speculating maybe 20 rigs to 30 rigs off of a basis 73 rigs operating in that market. So that’s not a huge impact on total rig count. I do think that the Northeast holds up better and it’s a narrow customer base up there that we know well and typically our work there is highly complex multi-well pads. I really don’t see a significant change in that Northeast market as it relates to our operations. The next part of your question is, if in fact you do lose some 20 rigs or 30 rigs in the Haynesville, does that create downward price pressure in other basins. And I will just be honest, for the type of equipment that we have, we don’t believe that is the case.

And I will also say, our equipment it’s been a bit different. We haven’t been pushing 90% utilization and pressing day rates materially in 2022, unlike maybe other product offerings where the equipment has been tighter. And for that reason you may have some market shifts, but you may also just have an improvement in certain other basins offset by some weakness in the Haynesville. But in totality, particularly with our international and our Gulf of Mexico exposure, I am not going to say, I am totally sanguine about it, but I am not heavily concerned either.

Kurt Hallead: That’s great. Great color. Really appreciate it. Thanks.

Cindy Taylor: Thank you.

Operator: Thank you. The next question in the queue comes from Sean Mitchell with Daniel Energy Partners. Sir, your line is open. Please proceed.

Sean Mitchell: Hi, Cindy, Lloyd. Good morning and thanks for taking my question. You mentioned I think earlier in the comments or maybe in the Q&A just supply chain challenges with labor and materials. I think you alluded to the switches and powder on, but anything else on supply chain or labor that we should be concerned about in 2023, number one, or as anything really getting better on the margin?