Hello, and thank you for standing by. My name is Lacey and I will be your conference operator today. At this time, I would like to welcome everyone to the Patterson UTI Second Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. We ask that you limit to one question and one follow-up. Thank you. I would now like to turn the call over to Michael Sabella. You may begin.

Thank you, Operator. Good morning, and welcome to Patterson UTI's earnings second quarter 2025 results. With me today are Andy Hendricks, President and Chief Executive Officer, and Andy Smith, Chief Financial Officer. As a reminder, statements that are made in this conference call that refer to the company's or management's plans, intentions, as disclosed, and which could cause the company's actual results to differ materially. The company takes no obligation to publicly update or revise any forward-looking statements. Statements made in this conference call include non-GAAP financial measures. The required reconciliation to GAAP financial measures are included on our website, patenergy.com, and in the company's press release issued prior to this conference call.

I will now turn the call over to Andy Hendricks, Patterson UTI's Chief Executive Officer. Thank you, Mike, and welcome to our second quarter earnings conference call. The second quarter saw several macro events take place that raised the volatility. At the start of the quarter, there would impact global oil demand. OPEX Plus, geopolitical risk emerged later in the quarter, which resulted in a wide range of oil prices that made it very difficult for our company. As we start the third quarter, the macro for oil remains unsettled. With support higher drilling through all the noise in the markets over the past quarter, the first oil production we will likely see on U.S. oil production. On the natural gas side, we are starting to see early indications from customers that additional activity will start to be added as LNG facilities come online and begin to call for more U.S. natural gas. While natural gas prices have at times this year supported higher levels of activity, the demand from new LNG facilities is hesitant to add a default takeaway with steel for more drilling and completions activity in natural gas differentiated in leading-edge commercial footprint, growing technology portfolio, and financial position should take advantage of these opportunities for P10 shareholders. From a capital equipment perspective, the investments we've been making to support that equipment are more efficient and cost to the performance center, and the benefits of these investments are only just starting. The market begins to look beyond the current volatility and prepare for the future, we see an oil field services market that is poised for change. The companies that help drive this change stand to benefit, and we have positioned Patterson UTI to lead the industry. It has now been almost two years since we closed the merger of Patterson UTI next year and the acquisition of Altera. The operational integrations were completed in 2024, but the ultimate strategic vision for the company went far beyond simply being satisfied with transactions stages of realizing the benefits of the strategic vision we see upside wrestlers beyond just the capital equipment which should allow us to continue to deliver strong free cash flow will allow us to be opportunistic as we navigate the market and should we close the quarter with 186 million dollars in cash this largely tracked industry activity during the quarter and we continue to see margins hold at levels significantly higher than we have seen in previous periods of moderating activity. Our margins have remained resilient, which we believe shows the technology edge we have built as our customer sees improved efficiency with a Patterson UTI rig and digital drilling platform. Even as industry activity moderated, we increased revenue from our drilling automation technology. Our Cortex Automation Machine Learning Auto-Drips the use of artificial intelligence to improve the efficiency of these technologies is creating about the growing performance advantage of our high-performing rigs compared to other similar capital assets in the market that lack equivalent. Completions. Our completion services segment saw slightly reduced activity during the quarter, which was largely the function of some customer gaps in the calendar on several of our larger data. Some of the changes in 100% natural gas powered equipment has grown to more than 200 general fleets and has achieved a key technology milestone on our, which we call Vertex in Appalachia. Fleet-wide deployment of this technology by the end of 2025, optimal rate for each pump, which should reduce costs, lower our maintenance cap, our companies, we make significant strides to uniquely help our customers better their plans, execute and optimize drilling and completions design, sequentially higher adjusted gross profit. The U.S. market saw revenue improve compared to the prior quarter, even as the industry activity declined, delivering another quarter of record U.S. revenue per U.S. industry rig. The business made big strides, although we did see higher than just under 10% of segment. Technology invests, it continues to have significant constant innovation and come together to create formidable companies in our industry. Our foundation remains our top part, but the long-term strategic vision has been to build a company with an unmatched operational digital edge, and the investments we have made are only just starting to be. It has been a multi-year journey for our company to execute the vision that we set out for at the time of the merger, and we believe that commercialization of these initiatives is perfectly timed as our course sophisticated. We expect this should lead to continued strong free cash flow and better returns profile. I'll now turn it over to Andy Smith, who will review the financial results.

Revenue for the quarter was $1,219,000,000. We reported a net loss attributable to common shareholders of $49,000,000, or 13 cents per share, which included a $28,000,000 impairment related to our drilling operations in Columbia. Adjusted EBITDA for the quarter totaled $231 million. Our weighted average share count was 385 million shares during C2, and we exited the quarter with 385 million shares outstanding. During the first half of the year, we generated $70 million of adjusted free cash flow. We saw a working capital headwind of roughly $119 million through the end of the second quarter, which is typical of our business in the first half. We expect working capital will be a tailwind in the second half of the year. During the second quarter, we returned $46 million to shareholders, including an $0.08 per share dividend and $16 million for share repurchases. Since we closed the next-year merger and Ulterra acquisition through June 30, 2025, we have repurchased more than 37 million P10 shares in the open market, which exceeds the shares we issued for the Ulterra acquisition. Including the impact of dilution, we have reduced our share count by 8% since that time. This is in addition to reducing that debt, including leases, by nearly $200 million and paying a dividend that is currently an annualized 5% of our share price. In our drilling services segment, first quarter revenue was $404 million and adjusted gross profit totaled $149 million. In U.S. contract drilling, we totaled 9,465 operating days for an average operating rig count of 104 rigs, with our sequential change in activity roughly in line with the industry trend. On June 30th, we had term contracts for drilling rigs in the U.S., providing for approximately $312 million in future day rate drilling revenue. Based on contracts currently in place, we expect an average of 48 rigs operating under term contracts during the third quarter of 2025, and an average of 27 rigs operating under term contracts over the four quarters ending June 30th, 2026. For the third quarter, in drilling services, we expect an average rig count in the mid-90s. We expect adjusted gross profit of approximately $130 million. dollars. Revenue for the second quarter in our completion services segments totaled $719 million with an adjusted gross profit of $100 million. We saw calendar gaps on multiple long-term dedicated fleets during the quarter, although we filled most of those gaps on spot pads for new customers. We also saw higher revenue from several of our key customers and saw improvements in natural gas basements relative to the first quarter. For the third quarter, we expect completion services' adjusted gross profit to be relatively steady sequentially. Second quarter drilling products revenue totaled $88 million with an adjusted gross profit of $39 million. Drilling products revenue improved in the U.S., even as industry activity moderated, and we also made gains in several of our key international markets, including the Middle East. Our Canadian business saw typical seasonality from spring breakup, although sequential results were much better than the industry activity, as we made gains in several key markets in For the third quarter, we expect drilling products' adjusted gross profit to improve slightly, sequentially, with our results in the U.S. seeing some impact from the lower recount. Our expected activity in Canada should benefit as that region comes out of normal spring breakup, while international revenue is expected to improve slightly. Other revenue totaled $8 million for the quarter, with $2 million in adjusted gross profit. We expect other adjusted gross profit in the third quarter to be steady compared to the second quarter. Reported selling general and administrative expenses in the second quarter were $64 million. For Q3, we expect SG&A expenses will decline slightly sequentially. On a consolidated basis for the second quarter, total depreciation, depletion, amortization, and impairment expense totaled $262 million, which included the previously mentioned $28 million dollar impairment related to our Colombian drilling business for the third quarter we expect total depreciation depletion amortization and impairment expense of approximately 230 million during q2 total cap x was 144 million dollars including 55 million dollars in drilling services 69 million dollars in completion services 15 million dollars in drilling products and $5 million in other and corporate. With regards to our capital budget for the remainder of the year, we expect capital expenditures net of proceeds from the sale of assets of less than $600 million in 2025. We are reducing our full year 2025 maintenance capital expenditures given slightly lower activity. However, we are still seeing strong demand for new technology in both our drilling and completion businesses related to digital and automation services and for advancements in technology to more cost-effectively drill and complete longer laterals at higher temperatures and pressures. These investments should improve our competitiveness over the next several years, and we expect these investments to earn a strong long-term return on capital. We believe that our level of integration will uniquely position us to capitalize on these investments. As we approach our 2026 capital budget process, we have significant flexibility within our future capital spend, and we'll reassess market dynamics later this year. We closed Q2 with $186 million in cash on hand. We do not have any senior note maturities until 2028, and we do not have anything drawn on our $500 million revolving credit facility. Through the first half of 2025, we have already returned almost $100 million to shareholders through dividends and share repurchases. Free cash flow is likely to accelerate in the second half as working capital needs decrease. We expect free cash flow in the second half should significantly exceed our dividends, and we are continuing to explore the best use of cash to create the most long-term value for our shareholders. Our board has approved an 8-cent per share dividend for the third quarter of 2025, payable on September 15th, for holders of record as of September 2nd. I'll now turn it back over to Andy Hendricks for closing remarks.

Thanks, Andy. Our second quarter results reflected a moderation and activity across our core markets, and we are pleased with the way our businesses responded to the changing macro. They're all sometimes difficult in delivering on the high expectations that we set across the entire company for our teams, but we're fully confident in our team's ability to rise to the challenge. To use our technology and unique operating facility in the market will create long-term opportunities for the top tier and the investments we've made over the past several years into our p10 digital performance center combined with our top quality capital equipment will differentiate us relative to our the market settles and the as a long-term leader we are excited about the company we have built and believe we are just beginning to see the strategy play out financial perspective of the quarter with a substantial cash balance and see the opportunity for significant free cash flow this is allowing us to reinvest in multiple leading-edge technologies that will create value for us and finally on the macro current oil production has yet to see the impact of the layers of remain cautious we also do not believe the current level of activity this gives us some encouragement on our long-term outlook relative to what we are seeing today on the natural gas side we believe global lng markets are nearing a higher call on u.s natural gas to make plans and help them satisfy. Jackson UTI has made investments where more digital services and automation will be used to drive to the beginning stage and excited about the future of our industry and our company. With that, I'd like to turn it over to Lacey.

Hi, and I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. Please limit to one question and one follow-up.

We will pause for just a moment to compile the Q&A roster. your first question comes from the line of scott grubert with city group you may go ahead yes good morning andy and andy good morning scott um want to start on the the completion side uh you know the the flat 3q outlook is definitely solid in light of uh the macro here what's your early uh look um into 4q telling you you know halliburton suggested a pretty steep year-end decline you guys sound pretty booked up at least for for 3q but how does that look for 4q you know

are you thinking it could be a pretty steep year-end decline or with you know weaker activity in 2q 3q uh for the industry is is kind of a more normal seasonal pattern and 4q the more likely results yeah first off uh you know when it comes to completion activity i want to congratulate the team on what they were able to do in the second quarter as you know we had said and then also on what they're doing in the third i think it's true you know based on some of this could be moderation so i think uh you know it's a little early to call it we do think it softens a little bit but we're not and you know because we operate a large fleet of and i think that's you know really kind of plays a key in how we look at things and while our room in the mid 90s and the third you know looking out farther.

Got it. And I was going to ask about the rig count, too. So stabilization, it sounds like it's possible into 4Q. Is that, you know, some gas activity coming back or some oil activity coming back? If oil stays, you know, here in the mid-60s, kind of what's the complexion of the drilling work that could hold, you know, steady into 4Q?

Yeah. And I'll caveat out everything on you know today's commodity prices you know when we when we look your next

question comes from the line of derek potheiser with piper sandler you may go ahead hey uh good morning just wanted to follow up on scott's question about third quarter specifically with the completion activity you've obviously talked about steady uh here which has been a good converse from some of your peers maybe just if you can unpack that a little for us andy the different puts and take is that a gas versus oil comment is it spot versus dedicated um just maybe a little bit more on the third quarter outlook for completion you know for us right now it's just kind of steady in the basins we'll have a little bit of movement between some fleets move into different places but overall we're applying a lot of digital natural gas and we got that's helpful um maybe on the the lot of digital commentary and technology commentary in the release, which was great to see. You talked about being strategic with your cash balance and how you can deliver long-term returns for your shareholder. Can you talk to us about what we could potentially see with how you scale that, whether it's technology, bolt-on, tuck-ins, you could bring these types of assets onto the Patterson platform and scale? Maybe just give us an idea of what you're thinking about growing your technology and digital and potentials of M&A related to that.

Yeah, and it's the technology across the board. You know, in drilling services, we continue to roll out new technologies, especially on the digital platforms. Cortex automation, the teams are riding more every week, every month. We continue to expand our ability to be able to run those automations. And so, you know, we've seen the revenues drop in, and we're going to be an interesting thing for us.

This comes from the line of IT drip MODAC with Goldman Sachs. You may go ahead.

Hey, good morning, Kame. Andy, you noted increased conversations around gas-directed activity. Can you give us any more color on those conversations and the implied trajectory as we should think about maybe early thoughts in the 26th, maybe both on oil and gas then?

Yeah, so, you know, the gas discussions, you know, have been interesting because I think this year there was a lot of ticking gas, you know, towards the end of the year. We've seen some small increases in gas activity this year, and it's been material for us. More gas activity next year, just based on the discussions. You look at the overall we're going to see in 2026, you know, some of that's initially going to, you know, we're in those discussions. We're going to see it's right now and today.

Thanks, Andy, for that. And then on the private exposure, can you give us any color there, thoughts around what you're seeing? Because you're hearing, obviously, on the gas side, maybe crack engagements and rig engagements are probably stronger there. But private oil also matters a lot to you. So thoughts there on the private side?

Sure. You know, we don't necessarily work for some of the smaller privates that are private equity-backed for the larger company. But, again, E&Ps are going to do.

Your next question comes from the line of Stephen Gingaro with Stiefel. You may go ahead.

Thanks. Good morning, everybody. So I know it's probably early, Andy, and I was curious if you could kind of give me your thoughts. You gave some guidance on the rig count for the third quarter. It seems like gas activity should start to get a little bit better, maybe late this year, early next year. Can you talk about where you think the rig count, or maybe at least activity for you, sort of bottoms on the drilling side?

I'm really hesitant to call a bottom. It's always a little bit tough when you're trying to project out. Our view for the year is that we're going to see a little bit of decline.

Thanks. And then the other question was on the completion side, and you touched a little bit about this. But when we think about the makeup of the fleet and the percentage of assets that you and the industry have that are low emission gas burning assets, how is that pricing dynamic right now sort of old versus new assets? Are the newer assets still getting – they feel like they're still getting hit with the market, but where are you seeing – are you seeing resiliency there, and how should we sort of think about the pricing dynamics for the clean burning fleets as we kind of go forward here?

Yeah, so let me explain how we see that and, you know, how the market's actually reacting to that and what we're investing in. When you look at, you know, our – and so all of that, because it can burn 100% natural gas, is in high demand. And all these types of assists prove they're – and so all that's still getting premium pricing. And it's not being pulled down and be deploying that, you know, towards the end of this year and early next year. and it gets a premium price and margin compared to everything else.

I'm from the line of Syrah Pant with Bank of America. You may go ahead.

Hey, good morning, Andy and Andy.

Morning, Syrah.

Andy, maybe I'll ask a big picture question, right? We've asked a lot of questions on activity and pricing, but before that, right, just look in big picture, spot oil price, like you said, looks attractive. Activity should have been higher, right? But it tells us that maybe operators are afraid oil prices may go down, right? So in that environment, Andy, look, in a few months, we'll be in the budgeting season, RFP season for 2026, right? So as you talk to customers right now, right, what are you hearing, Andy? What kind of oil price do they're going to plan at, do you think they are planning at right now?

Yeah, and so, you know, we think that today's oil price activity can be higher than it is. But because of all the fluctuation in the markets, I'm talking about the oil markets, you know, over the last couple of months, you know, and if that stability look like, you know, I think that we're certainly going to, you know, get more feedback and now going into, say, the tender season, which, you know, it's interesting that we're going to go into that season right now, essentially sold out. I think that, you know, it'll still. Right, right.

No, that's good color, Andy. and uh andy andy smith maybe a couple of quick ones uh for you one uh andy if you can help us on uh capex how should we think about 26 capex i know maintenance capex is coming down this year right but maybe give us the big pieces and 25 capex budget to help us think about 26 and then a quick one on i see the i think eight and change million dollars in other operating income in the drilling services results in the second quarter can you just tell us what that is yeah so on capex for 26 we're not ready to kind of give anything that's a guidance number out there yet with activity coming down obviously you'll see maintenance come down but we haven't gone through a budgeting cycle so i don't want to get too far out ahead of that um so i'd prefer to maybe talk

about that either at the next call or even in the fourth quarter um on the eight million dollars there's a couple things one we had an insurance settlement on a um some equipment damage from you know to be honest a couple years ago uh that and then we also that's where we account for uh income and and some of our jvs uh goes through that line item as well so that number will go through uh or that's what goes through that line item within our drilling services your next question comes from the line of keith mecke with rbc you may go ahead hi good morning thank you

Hey, just wanted to follow up on your comments, Andy, on the Emerald fleets, recognize there's some different technologies built into there and you mentioned the direct drive ReSIP is starting to look more capital efficient relative to some of the other technologies. Can you just give us a little bit more color on what you're seeing as you build out that technology fleet. How does it compare in terms of capital efficiency or operational proficiency versus some of the more conventional technologies as well?

Sure. When we started down the path 100% natural gas, several years ago, even as a combined company, we were 100% natural gas. And there's several different and certainly electric on a location with a 35 megawatt So this is all capital intensive when you get into the power system attached to it. Now when you move on into turbine direct drive, we run a little bit of that. We'll also intermix some electric, which is not deployed all by itself. Then we've also started moving to the test in that engine for a couple years. It's a high horsepower engine, 3600 horsepower, a $40 million gas turbine on location. And some of our 35-megawatt gas turbine at $40 million and then maybe another six gas operations. And so we're excited about how that's working. Partnering Caterpillar, who we've been working with now for a couple years, to shake the top of the capital efficiency for deploying at the well site. And if we can be more capital efficient at deploying at the well site, then we can be more competitive in the market versus, say, the electrical systems. And I think, you know, this is where we're moving right now and excited about the potential for this.

Got it. Yeah, very, very helpful. Are you are you able or ready at this point, I guess, to give us a bit of a bit more color on the run rate of investment in Emerald? You mentioned you've got some more equipment coming in. Can you just talk a little bit more about how much of your fleet do you think that this could or should make up over the next few years?

Yeah, we'll take it on a year-by-year basis, but you can see that it's really been – and there's a potential to understand we're still getting good returns on this.

Your next question comes from the line of Grant Hines with J.P. Morgan. You may go ahead.

Hey, morning, team.

Hi, Grant. Good morning.

So on the call, you've talked a lot about, you know, sort of different tech offerings, but maybe you was just interested in hearing some more about sort of the integrated advantage offering where you kind of bring the full suite of services and just thinking about the potential uptick in gas activity, kind of what customers do you think, you know, are most likely to kind of adopt this offering from you guys?

Yeah. So, you know, in general, over the last year or so, since we've, you know, it's been more of the mid-tier customers who had at the same time mavens on future operations continued demand at that sector of the market but i think as we get into 20 some of the bigger customers have some bigger operational teams because definitely you know the permian basin the word certainly gaining traction i'm upbeat about how in a market like this where i think over the next few years that's

great and and just to follow up i think previously you know you'd mentioned potentially 15 or so margin uplift from some of these projects and, you know, 20% or so higher revenue content. Do you see that being driven more by, I guess, higher sort of attachment rates of your technology offerings or, you know, also a combination of efficiencies just from a fully integrated project?

Yeah, there's a couple of keys there. One is a pull through of all the different segments and subsegments that we have when we go to work for these customers. and then also, you know, the upside on the efficiency gains and helping them.

Your next question comes from the line of Eddie Kim with Barclays.

Hey, good morning. Good morning, Eddie. Good morning. So we've seen quite a few oil-directed rigs come out of the U.S. onshore rig count, about 45 rigs, or about 10 percent, which I think is contributing to your 3Q guidance and drilling services. But as others have mentioned, 3Q guide and completion services, Jermaine Steady was surprisingly resilient. But do we start to see some of the impact of the oil recount declines show up in your completion services business in the fourth quarter? And so conceptually, should we think about the trajectory of completion services in the fourth quarter as kind of normal or typical seasonal decline? decline, but on top of that, you layer in some of the impact of the oil rig count declines we've seen. I'm just curious if that is a reasonable assumption to make.

Yeah, good morning. So I think let's start with a discussion on the overall industry rig count. And you've got to recognize that there's still some – so when you see the rig count decline like it has, and a large number of those rigs that are coming out of the market are maybe some of the smaller. What you're seeing is, but not to the extent that the overall rig count doesn't necessarily in the higher working for the larger country. And I think it's the reason that even though our rig count's going to soften some more in the third quarter, that there's a higher likelihood that it's stable. Now in terms of we always see some seasonal decline unless there's a, so I think we will see some you know, maybe a softening in the market for us. I'm not sure yet it's a steep a decline as we saw in Canada.

Got it. That's very helpful. Thank you. My follow-up is just on capital allocation. You highlighted and prepared remarks that you're focused on putting cash to work. So just based on the conversations around the various opportunities you're having today, would you be more likely at this stage to invest more in kind of bolt-on acquisitions in your core oil and gas services business? Or would you maybe be more inclined to perhaps purchase, other Nat gas resets or gas turbines for the distributed power market, like some of your peers have announced in recent quarters. Just curious around your latest thoughts there.

Yeah, so we're holding a good cash position right now, really for the second half, and we're really evaluating some organic technology in the Delaware Basin, some natural gas, and some of the discussion. We do get good return. When it comes to a company to a higher in down-to-end, But some of the downhole, we may be injecting some more. Be careful about how we're looking at for the year.

Your next question comes from the line of Connor Jensen with Raymond James. You may go ahead.

Hey, guys. Thanks for taking my call. Just building off what you said there, Altera seemed like a relative bright spot to solid results and guidance for further improvement. Can you just speak to some of the growth drivers there, maybe where it's gaining share internationally and some of the upcoming offshore prospects?

Yeah, if you look back at Altera's history, which is hard for y'all to do because of the team, what we're seeing in the market today, in international markets, we're in the process of expanding our remanufacturing center to do full manufacturing, and we see opportunities still to grow.

Got it. And then margins have held up pretty well across the whole company, given the downturn in activity. Is there anything you're doing on the cost side to adjust to the software market? Is it just general headcount reductions or is there other things you're working on there?

Yeah, so I'll address that. You know, in all of our businesses, we're, you know, while we have seen some direct headcount reductions, certainly with activity changes, We're also looking, you know, always at facility consolidations and other areas where we can take cost out of the system. You know, we're even currently undergoing, you know, an ERP conversion where we're taking three that we operate in now and converting to one. So all of that kind of operates in the background and probably not very visible to you guys. But it's all designed to sort of make us more efficient and take cost out of the system. So, all of those efforts continue and will continue as sort of ordinary course stuff.

Your next question comes from the line of Doug Becker with Capital One. You may go ahead.

Thank you. Andy, I was hoping you'd provide a little more color in the moving parts in the drilling services guidance. I appreciate the reasons you're no longer reporting a U.S. drilling margin per day, but it really seems like guidance embeds a pretty sizable decline in that daily margin.

Yeah, morning, Doug. But some of that is, you know, as we're seeing some movement in different basins, where we've got, you know, some rigs that, if that was all happening in the same basin, but it creates a little bit more cost challenges. We're often a little bit.

And that makes sense. I mean, I guess, just how would you characterize pricing for super spec rigs today?

I'd say right now, pricing is still relatively steady. You know, leading edge.

The question comes from the line of Jeff LeBlanc with TPH & Company. You may go ahead.

Good morning. uh andy and team thank you for taking my question uh you mentioned that your emerald and tearful tearful equipment is fully utilized but how should we be thinking about the utilization for the balance of your fleet and then additionally how would the market have to evolve for you to consider idling this equipment or pushing it back into the broader fleet well you know let's talk about what we're doing and we have a little bit okay thank you very much i'll hand the call back to the offering.

Your question comes from the line of Dan Cutts with Morgan Stanley.

Hey, thanks for squeezing me in and good morning.

Good morning, Dan.

Maybe just staying on that line of questioning around crack supply, would love to dive in a little bit deeper there. I remember you guys had at one point put out, I think, a 400,000 diesel retirement at the end of last year. Now you guys are up to 500,000, how do you think about capacity versus the 2.9 million horsepower you're at right now for Patterson going forward? Does roughly the diesel retirements or the diesel assets that you're not investing in maintaining, does that kind of offset any additions to the any Emerald investments, like is 2.9 million the right number moving forward? Or how do you think about how that can change over time?

Yeah, so yeah, we're at 2.9 now, as you mentioned. If you look at where we were, we came down to three, we came down to 2.9, and that's really, I think people are being prudent when we go through those two.

That's all really helpful. Appreciate it. And we've gotten a few anecdotes on this next question, but wanted to just kind of ask it more directly. So on the on the bundled services and integration, Patterson has a lot of service lines. And, you know, you've made clear that taking more kind of wallet share, more components of the overall of the overall drilling and completion process has been a conservative initiative by the company. How has the kind of prevailing macro backdrop made that process? Has kind of choppiness in the market created opportunities to kind of take more wallet share to, you know, push more Patterson services to your customers, or has it made it more difficult? I know you flagged that, you know, digital demand has really been picking up in the rig space. but yeah just trying to think through um how how kind of pushing the bundled and integrated services has evolved as as the macro has evolved thanks sure so first i'm going to start with you know the investments we've made in digital because the p10 advantage and you know that investment is keeping us very given the soft your final question comes from the line of john daniel

with Daniel Energy Partners. You may go ahead.

Hey, good morning. Thanks for letting me jump in here. Andy, I know there's likely little upside for you to answer this question, but I'll try. As you think about 26, you noted you're sold out of the higher quality frac assets, yet margins within the broader frac market remain relatively weak.

I'm sure your newer stuff is higher margin but i think it's clear returns for the industry need to go higher so i'm curious at what point do you say to your team hey guys let's raise rates and see where the chips fall yeah hey john this is a that's a constant conversation right i mean it's not yeah that's not something that is you know we don't just decide one day hey guys let's try to push rates we're always trying to push rates to get the most we can in a competitive market um now as we invest in additional equipment. And look, I think we're uniquely positioned to be able to invest in technology equipment that could really lead the industry. Given the strength of our financial profile, we will, you know, kind of be holding our team's feet to the fire on pricing and saying while there may be some element of spec to it, we're not.

No, and I'm not trying to throw a curveball because like you step back and think about it. But a lot of times you hear from folks that it doesn't – like the spot market, it doesn't really make sense that current returns it to reactivate stacked equipment. And if people are true to their words on that, if the industry – again, not Patterson UTI, right? Let's just say the industry starts to – we're trying to change ways. I mean, like I'm assuming you wouldn't want to reactivate a stacked fleet at the current pricing. So I'm just trying to reconcile, like, at some point, you know, your pricing has to go up. I'm telling you what you know. But just who would take that work if someone tried to then displace you? I guess that's where I'm going.

Well, I think, you know, it gets back to bifurcation in the market as well because, you know, we're essentially sold out right now. The Emerald 100% NatGas systems, and, you know, there's really not anything that's going to come on the sideline right now, which is also, and so- This concludes today's question and answer session.

I would now like to turn the call back over to Andy Hendricks for closing remarks.

Thanks, Lacey. I wanna thank everybody who dialed into the call to the ladies and gentlemen of Patterson UTI for everything you do every day to help our- This concludes today's conference call.

You may disconnect.