Keith MacKey: I see. Maybe just a follow-up on your comments in the prepared remarks around it was when you’re talking about capital allocation strategy using a strong balance sheet to be opportunistic at all points through the cycle. Certainly, you’ve have been so lately. But can you just expand on that comment a little bit more in terms of how you’re thinking about being opportunistic through the cycle at all points?
William Hendricks: When we’re talking about being opportunistic over cycles, we’re talking about over the next 5 to 10 years. Right now, we’re focused on integration of the businesses. We still have some work to do, and we’re focused on realizing these synergies of $200 million or greater million dollars on the synergy with the NexTier deal and integrating the operations and working on supply chain pieces as well. So that’s our primary focus. But historically, we have been opportunistic through the cycles. There’s been a number of times when we’ve gone through dips in the cycle, and we’ve seen softening that we’ve had opportunities to do things with our balance sheet. But I would say right now, we’re just focused on integration.
Operator: We’ll take our next question from Sean Mitchell at Daniel Energy Partners.
Sean Mitchell: Kind of as we see a lot around M&A over the last several weeks, as you see the E&P space consolidate, it would seem logical that the kind of consolidators here want to work with suppliers who have scale. First, I would say, do you agree with this assessment? And then secondly, if so, do you think that pushes more consolidation in the service sector?
William Hendricks: Well, the first part of your question, I think you answered yourself, and we believe that as you see some of these large E&Ps take on even large E&Ps and become even larger in the space, we believe they are going to work with companies that have the scale to be able to service their needs and we fit right into that. So we’re excited about that potential. We do see when these transactions on the E&P side happen, you get a pause in activity, but then things start to pick up again. So we think those are good possibilities. But in terms of further M&A in the service space, I think it’s possible. I don’t want to speculate because we’re focused on integration right now. So — but I do think there’s probably some opportunity out there.
Sean Mitchell: Maybe one more. Can you just address the labor market today, Andy and specifically how you and the consolidated companies have managed labor this year as activity has moderated and maybe provide us your thoughts on finding people today and the ability for the industry to scale up again, should that be necessary?
William Hendricks: Even over the last few years with the massive ramp-up in activity that we’ve had, we were able to cover all the work. And we had to invest in the systems and the people for recruiting and onboarding and training to be able to do that. And it definitely was tougher over the last few years than it had been in previous upturns, given the strength in the economy over the last few years. But that investment that we’ve made allows us to get the people that we need to cover the work that’s out there. And so we didn’t miss any work for lack of people. This has only been a softening in the market. And we’re expecting, as we pass this inflection to increase activity in 2024. And so with the moderated growth we’re expecting in 2024 versus the softening we had this year, I don’t anticipate we’re going to have trouble adding staff back to do the work.
Operator: And our next question comes from Don Crist at Johnson Rice.
Don Crist: Andy, your previous comment about Pressure Pumping kind of bumping up against rigs, how do you think that plays out? I mean it appears to us looking from the outside that the efficiencies on the Pressure Pumping side have kind of outpaced efficiencies on the rig side. Do you think that kind of results in a smaller Pressure Pumping fleet industry-wide going forward? Or how do you — can you talk to that just a little bit?
William Hendricks: Well, I think there’s a couple of pieces to that question that I can touch on. So I appreciate it. One is, yes, we are bumping up against the rigs. And so we do need an increase in rig activity. There’s just really no DUCs out there at this point in the cycle and where we are from the softening. So we do need the rig activity to pick up. But in terms of frac efficiency, it’s just been amazing what the teams across the industry have accomplished over the last few years in terms of frac efficiency for the top tier players. There’s lots of anecdotes of pumping well over 20 hours a day. Now that being said, I’m not sure we have a lot of room to grow efficiency. So I don’t think we’re going to need less frac out there.
I mean we’re not going to pump 25 hours a day. So we’re already at some pretty high levels of pump hours on a number of our fleets that are out there working and they’re just doing a great job. So you’ve seen that increasing efficiency over the last few years. But it’s — I think efficiency will kind of slow at this point in terms of what we’re going to see across the industry. As well, I do think that as we come out of this softening in the market and we increase activity, you’re going to see a tighter frac market. And we are going to have to add some equipment to replace older equipment that’s going to drive capital discipline across the sector. It’s also going to cause as you get into later ’24 and ’25 with natural gas demand, with increasing activity that’s going to cause pricing to move up at that point as well.
And so we’re going to see tightness in the market from an equipment standpoint as we start to get past the inflection point and activity moving up in ’24.
Operator: And at this time, there are no further questions. I would like to turn the conference over to Andy Hendricks for closing remarks.
William Hendricks: Thank you. I just want to thank everybody for tuning in this morning. Once again, I want to thank the employees of Patterson-UTI. You all are doing an amazing job as we work through everything we’re working through these integrations over the last few months, and it’s just been impressive to watch such high-caliber people work through all these. Thanks for what you’re doing. Appreciate it.
Operator: And this concludes today’s conference call. Thank you for your participation. You may now disconnect.
