Oil States International Inc. (NYSE:OIS) Q1 2018 Earnings Conference Call - Final Transcript

Apr 26, 2018 • 10:00 am ET

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Oil States International Inc. (NYSE:OIS) Q1 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to the Oil States International First Quarter 2018 Earnings Conference Call. My name is Christine, and I'll 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 Patricia Gil, Investor Relations. You may begin.

Executive
Patricia Gil

Thank you, Christine, and good morning and welcome to Oil States' first quarter 2018 earnings conference call. Our call today will be led by Cindy Taylor, Oil States' President and Chief Executive Officer; and Lloyd Hajdik, Oil States' 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. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our Form 10-K along with other SEC filings.

I will now turn the call over to Cindy.

Executive
Cindy Taylor

Thank you, Patricia. Good morning to all of you, and thank you for joining us today for our first quarter 2018 earnings conference call. As you can appreciate, the past few months have been incredibly active here at Oil States. We successfully closed two strategic acquisitions during the quarter. Operating results from these acquisitions are included in our financials from their respective closing dates. The most significant acquisition was GEODynamics, which is now reported as a third business segment called Downhole Technologies. We also acquired Falcon Flowback Services, which is a flowback and well testing services company that is reported as a component of our completion services business.

We issued $200 million of convertible senior notes, and amended and extended our credit agreement in connection with funding these acquisitions. Today, on our call, we will review details of our first quarter 2018 results and provide guidance commentary for the second quarter of 2018. During the first quarter, average WTI prices increased 22% year-over-year and 14% sequentially, averaging $62.91 per barrel, which is the highest quarterly average attained since 2014. Higher commodity prices are driving growth in the US rig count, which is leading to an increase in the number of well completions. Our first quarter 2018 operating results improved meaningfully on a year-over-year and sequential basis as we grew in scale as a company, benefited in part by the partial quarter contributions from our two acquisitions.

In our Well Site Services segment our US land completion services revenue increased 28% sequentially, continuing the trend of strong completions-related activity in the Lower 48 as our E&P customers continued to focus on complex unconventional completions to increase their oil and gas production. We also benefited from one month of contribution from Falcon. Our new Downhole Technologies segment contributed significantly to our results during the quarter, and generated EBITDA margins that exceeded the upper end of