Oil States International Inc (OIS) 2010 Q1 法說會逐字稿

Welcome to the Oil States International first quarter earnings conference call. My name is Sandra, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded.

I will now turn the call over to Mr. Bradley Dodson. Mr. Dodson, you may begin.

Thank you and good morning. Welcome to the Oil States first quarter 2010 earnings conference call. Our call today will be led by Cindy Taylor, Oil States President and Chief Executive Officer.

Before we begin we would like to caution listeners regarding forward-looking statements. To the extent the remarks today contain information, other than historical information, we are realigning on the safe harbor protections afforded by federal law. Any such remarks should be weighed in the context of the many factors that affect our business, including those rates disclosed in our Form 10-K and our other SEC filings.

Please note that we have reorganized our reportable segments. In the past we have aggregated the accommodations business into the well-site services segment. Going forward we will report the accommodations segment separately, and the well-site services segment will consist of the drilling and well tool businesses only.

I will now turn it over to Cindy.

Thank you, Bradley, and thanks to all of you for joining us on our call this morning.

The first quarter of 2010 was characterized by an improving economic environment, particularly when compared to the uncertainty experienced at the end of the first quarter of 2009.

With improving capital markets, oil prices and announced North American spending plans, oil and gas development activity continues to improve. Although service pricing declined substantially during 2009, it appears to be stabilizing and showing some signs of potential improvement.

For the first quarter of 2010, Oil States reported sequentially flat revenues and EBITDA and stronger results in most of our North American businesses were offset by a sequential decline in our offshore products segment.

Our well-site services segment delivered sequential revenue and EBITDA growth of 20% and 29% respectively, largely due to higher US activity levels, which were driven by the 21% sequential improvement in the rig count. Lower manufacturing activity and shipments led to margin erosion at our offshore products segment, which contributed to sequentially lower revenues and EBITDA.

However, our backlog in offshore products grew 7% to $221 million in the first quarter of 2010 as new production facility projects and defense work were awarded.

At this time, Bradley will take you through more details of our consolidated results and financial position, and then I will conclude our prepared remarks with a discussion of each of our segments and give you our current market outlook.

Thank you, Cindy. For the first quarter of 2010, we reported operating income of $59.8 million on revenues of $532.3 million. Our net income for the first quarter of 2010 totaled $40.2 million or $0.78 per diluted share. The comparable first quarter 2009 results were $84.9 million of operating income on revenues of $667.1 million.

The year-over-year decreases in profitability were primarily due to decreased pricing in margins in tubular services as well as lower year-over-year manufacturing activity and shipments in offshore products. These were partially offset by stronger earnings from well-site services.

Depreciation and amortization the first quarter of 2010 totaled $31.1 million compared to $28 million in the first quarter of 2009. This increase was primarily due to CapEx made over the past 12 months.

D&A is expected to be $31.9 million in the second quarter of 2010.

Net interest expense totaled $3.4 million in the current quarter, down from $3.9 million in the first quarter of 2009 due to lower debt levels. Net interest expense is expected to be $3.4 million in the second quarter of 2010.

The effective tax rate in the quarter was 29.3%, compared to 31.1% in the first quarter of 2009. The effective tax rate this quarter benefited from a greater proportional of foreign-sourced income, which is taxed at lower statutory rates when compared to US rates. We currently estimate that our effective tax rate will be 29% for the remainder of 2010.

During the first quarter we reported cash flow from operations of $13 million, and we spent $37 million on CapEx. As a result, our net debt at the end of the first quarter increased to $96 million from $75 million at year end.

As of March 31, 2010, our debt-to-cap ratio was 11%, and our total debt-to-LTM EBITDA was less than one time.

As of March 31, 2010, the Company had over $470 million of availability under our credit facility.

At this time I would like to turn the discussion back over to Cindy, who will review the activities in each of our business segments.

Thank you. I'll lead off with our accommodation segment.

We enjoyed strong occupancy levels in all of our major oil sands lodges during the first quarter of 2010. Accommodations revenues and EBITDA were up 3% and 2% year over year respectively from the first quarter of 2009. The current quarter results benefited from the 19% year-over-year improvement in the Canadian dollar relative to the US dollar, $19.8 million of revenues and $9 million of EBITDA from our contract supporting the Vancouver Olympics and higher activity in our oil sands lodges.

These gains more than offset a $37 million year-over-year reduction in accommodations manufacturing revenues, which were not repeated during the current quarter.

From an operations perspective, we continue to expand our Wapasu Creek Lodge in support of our Kearl contract.

Our well-site services segment generated revenues of $97.9 million and EBITDA of $20.3 million in the first quarter of 2010, compared to $81.7 million and $15.7 million respectively in the fourth quarter of 2009. Our land rolling services and rental tools both contributed to the sequential improvement.

Revenues and EBITDA from our rental tools increased sequentially by $10.5 million and $3.2 million respectively when compared to the fourth quarter of 2009. These sequential improvements were primarily due to increases in US completion activity, particularly in support of horizontal drilling in the shale plays and the seasonal lift in Canada.

Our drilling revenues in EBITDA increased sequentially by $5.8 million and $1.4 million respectively. The sequential improvement and revenues and EBITDA was primarily the result of increased utilization of our rigs drilling in West Texas as higher oil prices buoyed activity in the area.

Our drilling rig utilization increased to 68% during the first quarter of 2010, up from 53% in the fourth quarter of 2009. Day rates and cash margins in the first quarter of 2010 were relatively flat sequentially.

Our offshore product segment generated $103 million of revenues and $15.5 million of EBITDA in the first quarter of 2010 compared to $127.1 million of revenue and $24.5 million of EBITDA in the fourth quarter of 2009. The sequential decline in revenues was primarily due to lower shipments of subsea pipeline and rig and vessel equipment.

Offshore products EBITDA margin as a percentage of revenue declined sequentially primarily due to lower manufacturing activity and cost absorption levels. Backlog totaled $220.6 million at March 31, 2010, up 7% from December 31, 2009.

During the fourth-- first quarter of 2010, tubular services generated revenues of $185.9 million and EBITDA of $6.6 million, compared to revenues and EBITDA of $179 million and $6.9 million respectively in the fourth quarter of 2009.

Tubular services OCTG shipments increased 14% sequentially to 101,200 tons from 88,500 tons in the fourth quarter of 2009. Our sequential increase in shipments lagged the 21% increase in US drilling activity, likely due to continuing excess industry and customer OCTG inventory levels.

Gross margins as a percent of revenues in the first quarter increased to 5.3% from 5.2% in the fourth quarter of 2009 despite sequentially lower revenues per ton shipped.

The Company's OCTG inventory increased to $311.3 million from $265.7 million at December 31, 2009 This represents a 30% increase in tonnage held in inventory as we are having to fund working capital investments as the economy recovers.

Now I'd like to give you some summary comments and outlook comments for the first quarter of 2010.

Our accommodations business continues to be primarily driven by activity and spending in the Canadian oil sands region. Our outlook for future oil sands accommodations continues to improve with recently announced investments in the region by several major and international oil companies.

Second quarter activity will decline sequentially due to the effects of Canadian breakup. This projected seasonal decline will be partially offset by continued capacity additions at our Wapasu Creek facility in support of the Kearl contract.

Overall, we expect accommodations revenue to be $120 million to $130 million in the second quarter of 2010 with EBITDA margins in the range of 34% to 36%.

In our offshore products segment, our operational execution was good in the first quarter of 2010, despite reduced manufacturing activities and shipments caused by lower backlog levels coming into the quarter.

We continue to focus on bidding activity, new project awards and rebuilding our backlog. Overall, we expect second quarter revenues to be $100 million to $110 million with EBITDA margins ranging from 13% to 15%.

Within our well-site services segment activity in our drilling operations continue to improve in the first quarter of 2010 due primarily to near full utilization of our West Texas rigs, which are exposed to oil drilling activity. We expect modest activity improvements in the second quarter 2010 overall, with utilization estimated at 72% compared to 68% realized in the first quarter of 2010.

Activity is expected to remain strong in the Permian Basin and should seasonally improve in the Rockies. Cash margins are expected to be flat sequentially.

Activity for our rental tools business is primarily tied to completion and production services activity in North America, and we'll generally track movements in the shale drilling and horizontal rig count. Rental tools activity should expand with growth in the US rig count in the second quarter of 2010 but will be negatively impacted by spring breakup in Canada and the continued competitive pricing environment. As a result, our rental tool revenues is expected to be sequentially flat in the second quarter of 2010.

OCTG sales generally followed trends in the US rig count with premium grades in high demand currently due to shale play development. Industry OCTG inventories have declined to approximately eight months' supply on the ground. And the Department of Commerce has finalized its anti-dumping duties for Chinese OCTG products. In addition, various mill price increases were announced during the first quarter of 2010.

Our gross margins are not expected to expand significantly in the second quarter as the market continues to unwind the oversupply of OCTG that built up during 2009. As a result, we expect tubular services' gross margin to range from 4% to 6% during the second quarter of 2009.

Overall, we remain in a very strong financial position with ample liquidity to take advantage of the investment opportunities which may arise.

That concludes our prepared comments. Sandra, would you open the call up for questions and answers at this time?

Thank you. We will now begin the question-and-answer session. (OPERATOR INSTRUCTIONS) The first question is from Stephen Gengaro from Jefferies. Please go ahead.

Good morning, Stephen.

Just really two things. One was more of a question on timing. On the tubular side we've seen some mills push through pricing increases. And I realize that you're in there working through inventory [prices]. How does that play out over the next quarter or two if we sort of remain at a relatively constant rig count?

Stephen, what we've kind of said consistently is that we thought we in the industry would kind of work through most of this excess or project that we will by the second quarter. So we're about out to get to that point.

There's obviously high demand for some of your midrange sizes, 5-inch to 7.625-inch, particularly on the premium side, with the strongest demand on your 5.5-inch. And those are tighter than some of the other size, weights and grades that not only we but others have in inventory.

As we noted, there's about eight months' supply on the ground, so we really need to ideally make a little more progress on that during the second quarter. But, again, it's kind of a mixed bag, depending upon the type of inventory that both we and the inventory-- and the industry hold and the term rates associated with that. Again, acknowledging that some of the grades are fairly tight at this stage.

And then realizing you're not in the business of sort of placing bets on the direction of price, is there any positive impact on better pricing on higher grades near term that could push margin-- I'm a little surprised margin-- your margin guidance isn't a little higher.

It's-- for us, again, it's a mix of kind of the high-demand inventory coming out, and the mix of other size, weights and grades that we have in inventory that have carried forward from 2009. And we do the best that we can to project both revenues and margins. But as you know, it's day by day, sale by sale, in terms of how those end up at the end of the day.

You're right, you know, certainly mill price increases are at-- are a benefit to us, both in terms of top line and generally in terms of margin expansion. These are all positive data points that I do think play into our results at some point in time.

Thanks. And just as a follow-up, on the offshore product side are you-- can you give us some color on what you're seeing sort of from a bidding perspective now?

There are a lot of projects out there in the bidding and quoting stage, many of which have been bid and re-quoted several times. There's been obvious delays, not surprisingly, both in the Gulf of Mexico and in Brazil I'd say particularly, but also West Africa, a lot of the major markets. It does look like there's some traction.

And for us, we had said generally that we think one of the first movers, if you will, of our backlog will be content on floating production facilities. Those are, generally speaking, bars, PLPs and other floating production units and facilities.

Thank you.

Thanks, Stephen.

The next question is from Bo McKenzie from Global Hunter. Please go ahead.

Thank you, guys. Congratulations on a really good quarter.

Thank you, Bo.

Any more granularity as to the OCTG inventories out there? You know, we're hearing around Houston that there's a lot of (inaudible) that are really, really tight. And some of the inventories that are included in that current months of foreign supply are, you know, things like ERW that are not as much in demand.

You know, we hear the same things, in fairness. We rely on the situation report, as do most people in the industry for these statistics. There is no question that the size, weights and grades that I mentioned, ie 5-inch to 7.625-inch, are fairly tight. I think the US mills have done a very good job on bringing back productive capacity that was shutdown last year. And I think that's led to a more stable environment, generally speaking.

Again, there have been-- the domestic mills announced two price increases during this last quarter totaling about $200 a ton. One would say that with the premium grades and the tightness around those sizes that there is the potential for further price increases down the road, I would certainly say.

As it relates to our inventory generally, we are a more premium-oriented carrier of pipe [program]. We do have some mix, depending upon our customers' needs, that we need to work through. And I'd say, in particular, we have, not a lot, but some strings that are more offshore shelf oriented that have been fairly slow and lagging. Some of the land rig count recovery that if we get a little pickup in offshore should clean up our inventory just a little bit.

But that's probably the best I can get. Again, I don't count the inventory myself and know what's out there. We hear the same things. And you're absolutely correct to the extent that it is lower-grade ERW, particularly some of that foreign pipe. That's probably not the one to move as quickly as the premium grades are going to given the type of activity that's occurring in these resource plays currently.

And along those lines, within your current inventory, is there any kind of, you know, general guidelines you can give us as to what percentage of your inventory is already tied up on a fixed price and what might be subject to further pricing improvements should we see additional mill price increases?

We typically-- we track that internally as an indicated measure of our own business, and we certainly track ourselves and backlog against that inventory. We don't normally disclose that. However, I looked back the other day, and we do look at our books relative to our sales.

And I think, if I recall right, our bookings have exceeded sales in 9 of the last 10 months. So that is just an indication of increased customer demand, order activity. And, again, given the environment that we've been in, it's obvious that we've not been very aggressive to (inaudible). And quite frankly, with the tightness around the grades that we talked about, we probably couldn't get it out of the US mills right now because we're taking about all the pipe that we can get and committing that to customer orders.

All right.

Premium [size].

And did you guys limit two questions, or (inaudible) squeeze one in?

We have no limit on questions.

Okay. On the rentals, is there any kind of generalization you could say about, you know, if we're in an environment, at least temporarily, here in the US that we're seeing a move from a gassier recount to an oilier recount? Any kind of implications, positively or negatively, that we should be looking for in that?

You know, I think it's more geographic than anything else. Some of the markets that we see expanding in the near term are clearly tied more to crude oil drilling and gas with liquids tied, not surprisingly. I think our equipment is well suited for both environments, dry gas, gas with liquids and crude oil. Again, we've largely had (inaudible) isolation equipment, (inaudible) wire-line coral tubing equipment and then the well [vac] and well testing.

And really, the key for us is complexity and pressure. And as long as those two things exist, I think we're in very good shape with our equipment. Now obviously that means some markets are going to grow at a different rate than others. It's clear that the Eagle Ford and the Balkan as examples, I think, will be high relative growth rates.

And other markets will be flat and possibility lose some recounts, particularly if it's just dry gas drilling. But I think the equipment's well suited. Our personnel are well suited.

And the key for us really is trying to regain some of the pricing that was lost throughout this downturn, not surprisingly.

I'd tag on to that though and say that we've been tracking our revenue for active rig for the rental pool business, and we've seen it pick up, as we thought it would. As the rig count has shifted to areas, as Cindy mentioned, that have more complex completions, we're getting more revenue per rig. I think part of that is the type of activity that we've discussed, and I think also we've taken a little bit of share as well through the downturn.

So we don't see any indication on that metric that the shift from gas to oil has any material impact on our ability to penetrate the market.

All right. And if I could get one more follow-on. If you talk about regaining some of the pricing, in general, if we looked at where the pricing was in 2008 before the world fell apart and where it is now, what are we talking about in magnitude within the rentals?

As it relates to rentals, I'll just be real honest, it's very hard to get your arms around that. We're somewhere below peak levels of '08, but I think a little bit better, clearly, than low points hit in 2009. But just realize that we've got a myriad of rental tools and many different geographic markets, and it's kind of hard to say there's a [six discount], if you will, off list price that applies across the board. We do track that, but I-- you know, I don't have-- I couldn't tell you that. I can just tell you we're somewhere above the floor and below the peak.

All right. Got you.

We're halfway back.

Halfway back.

Right.

So we can double. No, just kidding. All right. Thanks a lot.

Sounds good to me, Bo. Thank you.

The next question is from Kenneth Miller from KC Capital. Please go ahead.

All right. Good morning.

Good morning.

You put out some information about OCG inventory increasing by 17% and tonnage increasing by 30%.

Correct.

Yes. I'm wondering then if, you know, you do some calculations, it looks like your-- the inventory that you purchased during this quarter was at a pretty substantial discount to what your current selling price is, unless I'm making a bad calculation. So my question is, as you work through this, the remaining higher-priced inventory during this current quarter, and if activity stays at the same level of increases a little bit, will you start to see a considerable improvement in profitability starting the third quarter?

We're forecasting improved margins, Ken. That's clear. And you're very correct in terms of an overall inventory increase, with tonnage exceeding that. Again, a lot of that can be mix oriented depending on deepwater strings, offshore strings as well as premium grades, so that there's kind of a balance there.

But we clearly have different inventory levels across our suite there. And we're bidding, of course, new work and buying at lower prices, so that does bode well for gradual improvement in our margins, which, one, we're seeing, and two, we're forecasting. We just have anticipated we've got a little bit more work to do with eight months' inventory on the ground.

And again, we look more specifically at our own inventory and when that's going to turn in terms of margin forecasting for you and the benefit of the [Street].

Thank you.

Thanks, Ken.

(OPERATOR INSTRUCTIONS) We do have a follow-up question from Stephen Gengaro from Jefferies. Please go ahead.

Thank you. Just a follow-up on the accommodations side. When you-- can you give us an update on sort of number of beds and where you have-- the Kearl project will kind of phase in over the next several quarters?

Sure. Let me get that here. In terms of our lodge rooms, we averaged rooms of-- in the first quarter of 6,276 total rooms. That includes rentable rooms as well as staff rooms.

We are currently forecasting to be up around 6,700 rooms to average in the second quarter. And then we'll be closer to 7,200 to 7,500 rooms as we exit the fourth quarter.

And that's total in-- that's total permanent lodges?

That's right.

And are you willing to say what percent of that is of total accommodations on a revenue basis?

Yes. That's a very good point. It has increased, and we think that that will run-- in total it'll run a little bit of over 50% of total revenues and probably ends at closer to 55%, 56% of total accommodations revenues.

Okay. No, that's helpful. And is the shifting out-- shifting it out on a reporting basis, I mean, that suggests to me that you think you're going to continue to see pretty good growth over the next several years.

Well, most of the growth this year that I just forecasted is related to the expansion of Wapasu in support of the Kearl contract. We do see opportunities that we hope will come to fruition to expand our facilities. And we'll just have to see how the interest levels and the contract levels come in to support that continued expansion.

But the short answer, it's a more meaningful contributor to our-- you know, our earnings currently. And we do hope and feel like we'll have further growth down the road in our accommodations business. And it just seemed appropriate to disaggregate it out of well-site services at this time.

That's helpful. Thank you.

Thank you so much.

The next question is from Dan Goldberg from RBC Capital Markets. Please go ahead.

Hi. How are you? Can you hear me?

Yes, Dan. Thank you.

Good morning.

Thank you. You mentioned in your press release that you're going to expect to spend approximately $233 million in CapEx during 2010. And I assume you'll pay for that by drawing down your revolver. Is there any thought about replacing that with anymore permanent capital debt going to capital markets?

Well, our current credit facility goes through-- matures in December of 2011. We don't have any plans right now [into] capital markets. I think that we would draw down on a temporary basis on a revolver to fund that. Most of that is going to go towards expansion in the accommodations business. We'll be drawing down on the Canadian portion of that revolver.

In terms of a bond deal or other longer-term financing, right now I don't see, without any sort of further expansion plans or acquisitions, that we would need to do a bond deal. So I think that it would be more transaction specific at this time, but it's something that we're cognizant of and looking at.

Great. Okay. Thank you.

Thanks, Dan.

The next question is from John Tasdemir from Canaccord. Please go ahead.

Good morning. I guess I had two questions. The first one, kind of back up to Canada on the accommodations. I noticed a competitor just had a pretty good contract about-- to build about 2,700 beds. And so on a couple fronts, one is-- you know, is the-- is it getting a little bit tighter in Canada now to actually have the capacity to build some beds or not? Is that relevant?

And, you know, looking out the next year or two, are there projects that are starting to come to fruition from a build out of a [campsite] for you guys?

Yes, I can speak to that. And certainly this is a company, a Canadian company that made that announcement. There wasn't a lot of detail there, but we are presuming that that is a manufacture for sale, the way the press release was worded.

Manufacturing activity took a huge hit generally, and we had quite a lot of reductions in our own facilities during 2009 because there was a complete void of construction activity, either for our own internal needs or for the market generally. We are clearly ramping that up. And of course our focus right now is on construction and expansion of Wapasu in support of the Kearl facility. We could ramp manufacturing up further should the demand dictate that there's opportunities there.

We are not as fond-- clearly we do support our customers when needed in terms of third-- one-time kind of third-party sales. Our clear preference would be to have more of an integrated approach and contract with our customers where we manufacture, own, lease and manage the ultimate facility. And so our priorities generally are focused more on that avenue than just manufacturing for sale.

And, yes, I'd agree that was an interesting press release. I didn't think that was their business plan originally here. But I guess my follow-on to that was outside of Wapasu and Kearl, are there other oil sand projects that you have any kind of visibility on in the next couple of years?

Well, again, we acknowledged in the press release and conference call that there was an activity recovery underway, and some of those delayed and deferred projects are getting new life. And you see it in terms of both announcements of projects and/or permitting activity. And of course we are closer to it on the ground up there in terms of actual discussion with the client base. But yes, there are clearly signs that activity is picking up.

And the accommodations are getting tighter. We still have good utilization of our major lodges in the first quarter. So as we alluded to in the conference call and on-- in the press release, we think there will be potential opportunities to expand our presence up there.

Okay. That's helpful. The other, I guess, follow-up question, I wanted to talk about tubular business again. And I just don't have the-- a great pulse anymore on the domestic mills and what they're doing from a shipment level or a capacity utilization level. I think we saw the import number, it looks like it bumped up quite a bit for the March stuff. What are the domestic mills doing now? And any concern that we're getting into an oversupplied market?

I'll speak to that as best I can. I haven't looked at recent mill statistics. However, back in 2009, overall mill productive capacity in the US was in the range of 40% to 45%, significantly down, of course, from levels that we've seen before. That's probably ramped up to somewhere in the range of, I'd say, 65%. Again, these are very approximate. And I generally read this myself from other levels.

There are some trends to increasing import products. Of course, China, for the most part, has been out of that market. It's been absorbed by other importers and sources, particularly Korea and Canada. We are not concerned at this stage that it's getting to too high of a level. I think imports were roughly 37% of the market. They had been as high as 50% to 55% in past periods where we're at higher rig count levels.

I have believed that the US mills would take market share from imports, given all these trends, and I think we're seeing some of that. But it's clear that there's a delicate balance there in terms of what they are willing to produce at this stage versus what's coming in from an import standpoint.

I think that's probably about the best feedback and comments I can give you at this particular point in time.

That was helpful. Thank you very much, Cindy.

Thank you.

Thanks, John.

Thank you. We have a follow-up question from Bo McKenzie from Global Hunter. Please go ahead.

Hi, guys. I know it's a relatively small piece, but, you know, with the growth up in the Horn River, what looks like a good grown market up in the (inaudible), have you guys seen much demand for the mobile units?

A lot of that activity, interestingly, is configured into what we call open camps. There's not so much demand for the side-by-side drill camp anymore for a variety of reasons, but particularly the customers have more concentrations of activity, and they like the smaller facility, or what we call open camps. And we are present in that marketplace and do hope to grow that.

We have assets that are well suited for it. We term them our 49-man dorms, which can be configured generally from 100 to, say, 700 rooms, depending upon the concentration of that activity, either on the conventional side or in the oil sands area, pipeline construction, et cetera.

But I do think that it's going to be a good market going forward. It is more seasonal, so we-- a lot of that lift comes in the first quarter of each given year.

Right. And is there a potential long-term, permanent installation type of expansion that you see potentially arising up in the Horn River, particularly that-- or are the companies up there right now running their own camps?

Well, we actually acquired a camp and are in the process of expanding it. It's a small camp. It's in the Horn River. We purchased it in the first quarter to give us a further penetration in that market. It's-- it was about 85 rooms when we bought it. It's going to go to 150 here shortly. So we are making penetration.

And relative to your comments on the (inaudible), on the US side, we do have accommodations in place for some notable independent E&P companies up there. We're also in conversations with the service providers up there because they will need accommodations. And you know, so as a whole we have-- we do have exposure to that market. But in both cases those are nice. They're incremental. It's the things we should be doing. But as you mentioned, they're not material to the-- that business as a whole.

All right. Thanks.

(OPERATOR INSTRUCTIONS) At this time there are no further questions.

Thank you, Sandra, and thank you all for your participation on our call this morning and your continued support of Oil States. I know it's an extraordinarily busy day for you. And I'll just leave it and say we look forward to seeing some of you next week at OTC. Have a great day.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.