Expro Group Holdings N.V. Q4 FY2025 Earnings Call

Good morning or good afternoon everyone. Thank you for being with us for the Expro Q4 2025 Earnings Conference Call. My name is Carly, and I will be your coordinator for today's call. Now, I will pass it over to our host David Wilson from Investor Relations. The floor is yours.

Thank you, operator. Good morning, everyone, and welcome to Expro's fourth quarter call for the year ended 2025. I'm joined today by Mike Jardon, CEO; and Sergio Maiworm, CFO. Both Mike and Sergio will have some prepared remarks, after which we'll open the call for questions. As part of today's call, we have an accompanying presentation and supplemental financial information on our fourth quarter and full-year results. Both of these are posted on the Expro website, expro.com, under the Investors section. Before we begin today's call, I'll remind everyone that some of today's comments may refer to or contain forward-looking statements. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These statements speak only as of today's date, and the company assumes no responsibility to make such forward-looking statements. The company has included in its SEC filing cautionary language identifying important risk factors that could cause actual results to be materially different from those set forth in any forward-looking statements. A more complete discussion of these risks is included in the company's SEC filings, which can be found on the SEC website, sec.gov, or on our website, again, expro.com. Please note that any non-GAAP financial measures discussed during this call are defined and reconciled to the most directly comparable GAAP financial measures in our fourth quarter and full year 2025 earnings release, which was issued this morning and can also be found on our website. With that said, I'd like to turn the call over to Mike.

Good morning, everyone, and welcome to Expro's fourth quarter call. I'll begin by reviewing the fourth quarter and full year 2025 financial results from today's press release. Next, I'll cover Expro's strong backlog, the macro environment, and our current outlook for the year ahead, as well as give some input on some guidance. We will conclude with operational highlights for the quarter. Sergio will then provide some further details on our financial performance and address the company's ongoing capital allocation framework. So let's begin on Slide #3. For the year, 2025 marked another year with several successes for the company. We delivered on expanding margins, cost efficiencies, higher free cash flow generation, a strong balance sheet, technology deployments, and not least of all, returning cash to shareholders. The company generated just over $1.6 billion of revenue and $353 million of adjusted EBITDA, representing a 22% margin. This financial performance was within the guidance ranges previously provided. Additionally, it represents the progress we have made in expanding our margins, moving us closer to our longer-term goal of EBITDA margins at 25%. A key metric that registered above the guidance range was adjusted free cash flow, which came in at $127 million for the year, more than doubling the amount generated in 2024. Going forward into 2026, we expect another sequential increase in the amount of free cash flow that the company can generate. For the quarter, the company reported quarterly revenue of $382 million and adjusted EBITDA of $88 million, representing a 23% margin in the quarter. Adjusted free cash flow for the quarter was $28 million or 7% of revenue. These quarterly and annual financial results reflect the ongoing operational efficiency gains, technological product advancements and their impact on margins and cash flow and the continued impact of our globalization strategy. Moving to Slide 4. Expro's $2.5 billion backlog reflects a $196 million increase during the fourth quarter. Our current backlog provides robust revenue visibility heading into 2026 and reinforces the strength of our diverse portfolio and operations across our geographic regions. Within our backlog, our long-term contracts, which provide a solid base and some stability in our revenue generation. One such recent example was a 4-year $380 million contract for a customer in North Africa. This achievement represents one of Expro's largest single customer awards, and I'll address this in a little bit more detail in some of my comments later on. Now as we've mentioned before, this level of backlog is encouraging and supports our strategic planning and visibility on revenue, but it does not represent a guarantee of future outcomes. Rather, we view our backlog as a reasonableness test and health check for our business one that offers insight into the business going forward. As we look to the year ahead, we consider the evolving market landscape, which continues to shape demand, investment and opportunity across the sector. Global demand for oil and gas remains resilient, supporting long-term investment, particularly in the international and offshore markets to which Expro is well positioned. We believe the current macro environment will result in a modest recovery in upstream investment with growth concentrated in international and offshore projects, particularly deepwater developments. This will be supportive of demand for Expro's well construction, well flow management, subsea and digital solutions. While brownfield optimization and production enhancement requirements from our customers continue to provide prospects for our well intervention, production optimization and digital offerings. Expro's diverse service portfolio, strong international footprint, technology differentiation and operational efficiency position us to capture opportunities across our geographic segments. To summarize, Expro maintains a cautiously constructive outlook for 2026 and beyond allowing us to continue supporting customers throughout the full well life cycle of their assets. Turning to Slide 5. We are providing our 2026 financial guidance based upon what we currently see in the global market. For the year, projected revenue for 2026 looks to be at similar levels to 2025. And although revenue expectations remain relatively flat this year, Expro remains strongly committed to further expanding EBITDA margins and free cash flow generation. We plan to achieve this with the full year benefiting from our DRIVE25 initiative, our increased capital efficiency and further improving our wallet share with existing customers. To that end, we expect our 2026 CapEx to be similar to that of the 2025 level. Looking more near term and specifically at our first quarter guidance, you will notice that we expect our first quarter results to be impacted by the normal seasonal factors that we experienced almost every year in our business. The U.S. activity and revenue levels for the first quarter are projected to decline from fourth quarter due to the winter season in the Northern Hemisphere, where the U.K. or Norwegian North Sea, as well as the U.S. Gulf, activity tends to be lower due to ongoing winter storms and rougher than normal seas, which makes it harder to operate in the offshore environment. Additionally, the seasonal dip is due to some customers' CapEx and operational spend that tend to be lower at the start of their annual budget cycles, which tends to be the case with most of our NOC customers. To be clear, the lower level of projected revenue and margins for the quarter is due to the normal seasonality of our business and not representative of our overall expectations for the year. Overall, based on our activity outlook and our position today, I'm confident in our ability to achieve these 2026 objectives. Before turning to our customer and technology highlights, I want to revisit a few things that sets Expro apart and that we think are important attributes for investors to consider. You see these on Slide #6. Due to our exposure to across the well life cycle, we see opportunities to expand our wallet share with existing customers. We can do this by providing additional or enhanced services to customers leveraging our installed base to help expand margins, especially with the deployment of new technologies. Another theme central to Expro is our commitment to technology and innovation. While the rate of technology adoption varies greatly among customers, geographic regions and the different parts of the well life cycle, its importance cannot be overstated. Without technology and innovation, we think it is very difficult to remain competitive or relevant in this industry. We put a lot of emphasis on this as we know it creates value for both our customers as well as our shareholders. Additionally, our global footprint enables us to leverage technologies internally developed or acquired through M&A in one geography to then deploy them to another geography where we operate. For example, our acquisition of Coretrax in 2024. That business was primarily in roughly 18 countries at the time of the acquisition, but now we are deploying those technologies that we've acquired across roughly 31 countries. Moving to our customer and technology highlights for the quarter on Slide 7. During the fourth quarter, Expro continued to deliver safe and reliable performance to our customers across our global portfolio. We secured several major contract wins, advanced key technology deployments and demonstrated our commitment to safety for both our employees as well as our customers. While there have been several notable operational achievements and customer successes for the quarter, I will just quickly highlight 4. This quarter, Expro secured one of the company's largest single customer awards, a 4-year $380 million contract across multiple fields in North Africa for production optimization and well management services. Also during the quarter, the company successfully deployed its proprietary extended range drilling or XRD Spider is the first and only 1,250-ton spider of its kind. This innovative technology supports drilling, tripping and landing string operations, significantly reducing tool change outs. Consequently, it saves substantial rig time and minimizes red zone exposure, thereby enhancing both operational efficiency and safety. Expro plans to deploy the XRD Spider to more customer operations and expand the fleet in accordance with customer demand. In Australia, Expro successfully supported a major operator in delivering one of the region's largest offshore campaigns completing multiple subsea wells with zero QHSC incidents. The campaign involved integrating subsea, well testing and sampling capabilities, resulting in over 2,200 man-days of activity in which we received job performance review scores of 100%. In Indonesia, our CaTS ATX system enabled real-time wireless downhole data and remote valve control during drill stem testing. This product offering again demonstrates Expro's commitment to innovation and risk reduction in well operations. Before moving on, I would like to address another geography that has been topical as of late, and that is Venezuela. Having lived and worked earlier in my career in Venezuela, I'm intimately aware of the geological reservoir and production challenges in the country. These high technology and challenging conditions are where the Expro solutions approach really shines. While we don't currently see any near-term opportunities in the country, we do believe we are well positioned should opportunities arise in the future. Expro has operated in Venezuela for many years previously, still having a facility and some stranded equipment in the country related to both our tubular running services as well as our well flow management product lines. For now, we will stay engaged with our customers that may have opportunities there to develop, but also realize that this will take time and a significant amount of industry investment in order to mature these opportunities. Before turning over to Sergio, I'd like to remind everyone of Expro's long-term strategic pillars. These that we adhere to, to drive value for our shareholders, we see on Slide #8. Expro's long-term strategy is to build a large diversified company with a compelling business and product mix and market leadership positions. We are striving to build a company that is able to generate healthy levels of free cash flow, which will be used to achieve our various capital allocation goals, which Sergio will expand on in his comments later on. One of these strategic pillars is our commitment to continually improving the company's financial profile. The avenues used to achieve this goal are our relentless focus on margin expansion and free cash flow generation, our ability to drive cost efficiencies and reduce capital intensity and our ability to return cash to shareholders all backed by a strong balance sheet. Another pillar is our technical leadership and innovation. We continually develop and deploy new technologies into the market across our global footprint. This footprint also enables us to globalize technologies that we have acquired through acquisitions and then implementing those technologies in one geographic location to another. Finally, Expro looks to grow through inorganic scalable acquisitions. We seek opportunities to target international and offshore opportunities that have adjacent product offerings and are accretive to the company's financial position. We have made several successful and accretive acquisitions and have developed a proven blueprint for integrating acquired businesses in an efficient and cost-effective manner. With that, I'll turn the call over to Sergio to review our financial results in detail.

Thank you, Mike, and good morning to everyone on the call. As Mike noted, Expro executed well on its financial results for both the quarter and full year. While annual revenue was at the lower end of guidance, the free cash flow generated surpassed expectations and exceeded the high end of guidance. Specifically to Q4, our adjusted EBITDA was $88 million with a margin of 23.1% up about 30 basis points from last quarter and 10 basis points year-over-year. For the year 2025, adjusted EBITDA was $353 million with a margin of 22%, up 170 basis points year-over-year. Slide 9 illustrates our annual margin growth for the past few years. We remain confident that we will experience further margin expansion in 2026 driven by a full year impact of our DRIVE25 cost efficiency initiative, increased customer wallet share at higher margins, and continued international growth resulting from previous acquisitions like Coretrax. Moving to Slide 10. Longer term, EBITDA margin expansion is not the goal in and of itself, but rather a means of increasing free cash flow generation. And in Q4, Expro posted its quarterly free cash flow generation of $28 million on an adjusted basis, bringing full year 2025 free cash flow generated to $127 million, which, again, was above the high end of the $110 million and $120 million guidance and more than double the amount generated in the prior year. Along those lines, we expect even stronger free cash flow in 2026, both as a percentage of revenue and in absolute terms as we plan to further reduce the capital intensity of the business, holding 2026 projected CapEx relatively flat. Turning to liquidity. The company closed the quarter with $551 million in total liquidity. That includes $198 million in cash on the balance sheet after accounting for the voluntary prepayment on the revolving credit facility, which totaled $20 million during the quarter. This voluntary repayment reduced the outstanding drawn balance on the revolving credit facility from $99 million to $79 million as of December 31, 2025, further enhancing the company's net cash position. Before turning to our segment performance, I do want to reiterate and summarize our financial outlook for 2026, as Mike previously addressed in Slide 5. Overall, we're cautiously optimistic with our 2026 outlook, recognizing the seasonal impacts on our projected first quarter results with noticeable improvement in the subsequent quarters leading to a good start for 2027. Any anxiety over the flattish revenue guidance should be viewed in conjunction with projected sequential increases in adjusted EBITDA and EBITDA margins and free cash flow generation. The achievements will continue us on the path of one of the strategic pillars that Mike just mentioned, that of continued financial improvements which we believe will ultimately translate into increased shareholder value. Now I'd like to quickly address our segment performance this quarter before finally addressing our capital allocation framework. A reminder that details around our segment performances can also be found in the appendix of this presentation. Turning to regional results for North and Latin America or NLA. Fourth quarter revenue was $130 million or down $21 million quarter-over-quarter, reflecting lower subsea well access and well construction revenue in the U.S., where projects have shifted into 2026 offset by higher well intervention and integrity revenue in Argentina. Segment EBITDA margin at 24% was flat as compared to the prior quarter. For Europe and Sub-Saharan Africa or ESSA, fourth quarter revenue decreased $10 million to $116 million sequentially, primarily driven by lower subsea well access and well construction revenue in Angola and Central and West Africa, partially offset by higher well flow management revenues in Bulgaria. Segment EBITDA margin at 34% was up approximately 120 basis points sequentially, reflecting a favorable product mix. The Middle East and North Africa or MENA delivered another solid quarter, sequentially higher as compared to Q3 with revenues at $93 million driven by an increase in well flow management revenue in Algeria and Saudi Arabia. MENA segment EBITDA was 39% of revenues, an increase of 400 basis points from the prior quarter reflecting the higher well flow management activity and more favorable activity mix. Finally, in Asia Pacific or APAC, fourth quarter revenue was $43 million, a decrease of $6 million relative to the third quarter, primarily reflecting the lower well flow management activity in Indonesia and India, lower well construction revenue in Australia, and offset by higher subsea well access activity also in Australia. Asia Pacific segment EBITDA margin at 16% of revenues decreased approximately 400 basis points from the prior quarter, reflecting decreased activity and mix. Now I'd like to briefly revisit Expro's capital allocation framework on Slide 11. Expro's capital allocation framework is designed to maximize long-term value creation by maintaining a disciplined and balanced approach across four equally important capital deployment priorities. Our philosophy is that every dollar of capital must be deployed where it can generate the highest risk-adjusted returns. And as such, each of these four areas continuously compete for capital on an ongoing basis. As a consequence, it may appear that priorities shift and they are, but only to those that we believe will generate the highest risk-adjusted return. One of our capital priorities is to continue to invest in our business to drive organic growth with superior return profiles. This includes funding projects and initiatives through CapEx deployments that enhance our core capabilities, improve efficiency and support technology innovation across our service lines. Every organic investment is rigorously evaluated to ensure it meets our standards for superior returns throughout the business cycle. As a reminder, the vast majority of our capital expenditures are geared towards specific projects with known return profiles that meet our standards. I would reiterate these are not speculative investments. Another area where we can deploy capital is inorganic growth opportunities. We pursue selective, highly accretive mergers and acquisitions that complement our existing capabilities and customer relationships. Our M&A strategy is focused on opportunities that offer clear industrial logic, scalable technologies and synergies and the potential to expand our presence in attractive markets. We apply the same disciplined capital allocation criteria to acquisitions as we do to organic investments, ensuring that only the most compelling opportunities receive funding. The company has a successful track record of executing on this strategy. We're also committed to returning capital to shareholders. Our framework targets the return of at least one-third of free cash flow to shareholders annually, primarily through share repurchases. This commitment reflects our confidence in the company's ability to generate sustainable free cash flow and our focus on delivering direct value to our investors, particularly over the long term. During the fourth quarter, we were unable to repurchase as many shares as we intended, causing the total percentage of free cash flow return to shareholders for the year to come just short of 32%. Finally, maintaining a strong fortress balance sheet ensures that we have the financial flexibility and resilience to act on our other capital allocation priorities. Additionally, preserving a strong balance sheet enables us to navigate market cycles, invest in growth opportunities as they arise, and protect the company's long-term stability. Importantly, these four priorities constitute our capital allocation framework: organic investments, M&A, shareholder returns, and balance sheet strength, and again, are not ranked in a set order of priority. Instead, they're managed dynamically, with each area continuously competing for capital based on the quality of the opportunities available. This disciplined, balanced approach ensures that Expro remains agile, resilient, and focused on maximizing value for all shareholders. And with that, I'll turn the call back to Mike for a few closing comments.

Thank you, Sergio. As we conclude our prepared remarks and before opening for questions, I'd like to conclude with the following comments. I'm excited about what was achieved by Expro's employees in 2025. I'll reiterate that we collectively implemented cost efficiencies as part of our DRIVE25 initiative, increased our EBITDA margins moving closer to our long-term goal, successfully deployed new and innovative technologies, generated a high level of free cash flow and return of cash to shareholders, and improved the company's net cash position. We executed on multiple priorities that Sergio just referred to in our capital allocation framework. Looking ahead, I'm also excited about what the company plans to achieve in 2026, even in a macro environment where we are cautiously optimistic. We acknowledge a somewhat softer start to the year related to the normal seasonal factors that impact both the industry and Expro. But we expect sequential improvements in the latter quarters, especially as we head into 2027 and beyond. We do expect to generate improved EBITDA margins and free cash flow in 2026 and anticipate executing again across our strategic pillars. I remain confident in Expro's resilience and ability to continue to deliver on operational and financial performance. Finally, we thank our employees, our customers, and our shareholders for their continued support and look forward to building on our momentum in the quarters and years ahead. With that, we can open up the call for questions.

Our first question comes from Ati Modak from Goldman Sachs.

Mike, can you talk more about the increase in wallet share comment? It sounded like there's some inherent cross-selling opportunities? What exactly are those opportunities? And is this a little bit more geographical expansion? Any color you can provide around it?

No, Ati, thanks for joining us and appreciate the question. This really is especially in some of our well construction operations, where we're providing TRS services, and we're also providing cementation services. We're adding additional services in there. Some of our Cure Technologies is a great example where we're already on the rig. We're already running TRS operations. We run our cementation operations, which significantly reduces the waiting on cement cure time. And we use the same personnel that are out there running our TRS services. So when I say expanding the wallet, it's that we're already on the rig. We're already providing services. We provide some incremental services or products to our customers that help drive efficiency for them, and we're utilizing the same personnel on the ground. So it's something that we can do across geographies. We're doing similar things in well construction. We're also doing that across our well flow management product lines as well.

That's very helpful. And then as you think about the EBITDA range you provided for '26, what are the puts and takes that you're focused on, whether it's activity-wise or idiosyncratic for you as you think about the bottom and the high end of the range?

Yes. I mean, I guess how I would frame it, Ati, is the market's going to do what the market is going to do this year. We're going to maintain our market share. We're going to expand our customer wallet. Exactly how many offshore floating assets are going to be operational in Q3 and Q4 can always ebb and flow. We're just really focused on making sure that even if we're in a flattish climate, we can still expand our margins. And that's really kind of what our guidance is framed up to give. It's not that we look at a massive step-up in activity in the second half of the year. It's more around the visibility we see today, and that's why we've given the guidance range that we have.

Our next question comes from Eddie Kim from Barclays. Eddie.

Just staying on the full year 2026 guidance, EBITDA of $365 million at the midpoint, which reflects a modest improvement year-on-year. Just wanted to understand better the market assumptions behind that guide. Is the guidance sort of, I guess, valid at Brent in this kind of $60 to $70 range for the year? And could there even be further upside if commodity prices firm up from here? And on the flip side, if market conditions were to deteriorate, is there an oil price at which you expect operators might maybe push back or delay some programs? I know there was a lot in there, but any color that would be great.

No, Eddie, thanks for joining us and that's a really good question. It's something we discuss frequently. To frame it for you, our activities are largely influenced by current commodity prices. I believe we have a sufficient range where, even if prices were to dip slightly, our involvement in offshore deepwater projects, which require significant investment time, won't see a major decrease in our customers' activities in the near term. We're being cautious about our overall activity outlook for this year. However, I genuinely think there may be potential for increases. We've received some encouraging feedback from drilling companies. Ultimately, it depends on how some of that activity converts into tangible results. So, there could be some positive developments towards the end of the year. We won't depend solely on that but will ensure we capture our fair share while concentrating on technology advancements and similar initiatives. We see that as potential upside. Nonetheless, we are very focused on the possibility that even in 2026, and I hope I'm mistaken, we could face a flat or slightly declining revenue environment. Even so, we expect to modestly improve our margins and cash generation. That's our main focus.

Got it. Got it. That's very helpful color. And just wanted to touch on the offshore activity inflection. As you mentioned, there's growing consensus or optimism about activity and collection back half of this year into 2027. Just from a regional perspective, could you talk about which regions you expect will sort of drive the recovery and which you expect to remain flattish or maybe take longer to ramp up?

Sure. I think one of the key points we've consistently discussed for several quarters is that the subsea tree outlook remains very positive, strong, and robust. The order backlog from some of our peers has been quite encouraging, serving as a good leading indicator of future activity. However, it's important to note that the backlog being added now will not result in installations immediately; these will occur in 9, 12, or even 18 months. This sets a clear expectation for the future. We believe the second half of this year will be more robust, particularly as we look ahead to 2027. I anticipate that the U.S. Gulf will have a relatively flat year in 2026, but there is promising potential for increased investments as we move into 2027. South America is expected to remain strong, while West Africa may take a bit longer to ramp up. Nevertheless, West Africa is crucial for the future; that's when we will start to see a significant change. Those projects will be larger in scale, involving multi-rig campaigns and substantial drilling and completion operations.

Our next question comes from Colby Sasso from Daniel Energy Partners.

I just wanted to ask, given the current administration has been favorable to pushing deals through, have you got other meaningful deals announced in the offshore space a few weeks ago. I'm curious seeing the increased transactions go through. Has that changed your strategy at all? Or maybe could you update on the surrounding thoughts given M&A that you've done, and they haven't done anything in a while.

Sure, Colby, that's a great question. The current administration seems more open to mergers and acquisitions. However, the opportunities we're interested in tend to have a global scope, and we are not overly concerned about antitrust issues. For us, the types of opportunities we are exploring are not significantly affected by the administration's stance. There have only been a few major consolidations in the services sector over the past five to six years, such as the deals by hours back in 2021 and Patterson's recent transactions, which are positive for the industry. We expect to see more of such activities and are actively pursuing these opportunities to enhance our relevance to customers, providing them with additional solutions and efficiencies. We firmly believe that by being more relevant to our customers, we will also become more relevant to our shareholders. This is an ongoing effort, as we have a strong platform and operate internationally, engaging with customers throughout various stages from exploration to production and abandonment. This gives us considerable flexibility in identifying opportunities that can add value to our portfolio.

And just another follow-up. One of the themes over the last 2 quarters of large operator calls has been the increased need for exploration offshore. Any thoughts on what you're seeing in the areas geographically that could surprise the upside over the next couple of years? And how do you see yourself taking advantage of what you're seeing and hearing?

No. Colby, it's a great question. It's a really perceptive question. So kudos to you for picking up on that. Our customers, yes, we're having more and more exploration project discussions. Part of that is because they need to add more and more into their portfolio for future production and future reserves. We provide a lot of services in the exploration activity set. So whether it's well construction or it's well flow management, when we start flowing these wells back to evaluate the reservoirs or it's being able to help provide the connectivity in a subsea application from the rig to the seafloor. So it's a great opportunity for us. We play a lot of those kinds of services. And I think as we see more and more of that translate into activity, I think we'll continue to see more exploration opportunities, and that means more exploration revenue in dollars for us. So we've been really, over the course of the last really since 2012, there hasn't been a lot of meaningful exploration activity going on globally. So I'm excited to see that potential. We'll see how much of it translates into 2026. I think more of what we're going to see in 2027.

Our next question comes from Derek Podhaizer from Piper Sandler.

I just want to go back to the conversations around the 2026 guidance. So just going up to the top line revenue here. I know the prior guide was for '26 to be flat, but down now the new guidance is flat to up. So I was hoping you could help us understand some of the puts and takes there. Why our outlook has improved maybe from a regional standpoint? And then just thinking about how the guidance ties to the implied sequential growth on the top line, the second, third, and fourth quarters because it looks pretty meaningful.

Yes, and thank you, Derek, for joining. I want to emphasize that regardless of whether the market grows by 2%, 5%, or 10%, we are confident that we will secure our fair share of projects. Our bid win rate is very high, and we have strong relationships with our customers. Therefore, we will benefit from whatever the market does, much like others. While we don't have direct control over market timing, such as the addition of rigs in Angola or activity levels in the U.S. Gulf, we are well-equipped to provide necessary services. My focus is not on positive or negative market views but on execution, service delivery, health, safety, environmental performance, and maintaining our share of activity while improving operational efficiency. In 2025, we successfully expanded our margins and cash flow generation because we focused on controllable aspects, and we plan to do the same in 2026, even if the market remains flat or slightly declines. I want to make it clear that we will continue to expand our margins and cash flow generation, regardless of market pressure. The key takeaway is to concentrate on what we can control, and should the market grow, we will have additional upside to our forecasts.

Yes. That makes sense. And I appreciate the color. Maybe just follow-up there is, could you maybe break down the geographies, where do you see maybe the points of strength as we work second, third, and fourth quarter, maybe you can rank order them just your geographic regions?

I believe that the Middle East and North Africa will perform well this year, with some projects set to deliver in the fourth quarter where we are already actively involved. This engagement is one of the reasons we anticipate a solid fourth quarter. Similarly, South America has projects and activities lined up. Looking ahead to 2026, I would be surprised if we don’t see some improvement in the U.S. Gulf. For operators, the access to reservoirs, the carbon advantages, and the mobility of rigs between operators will contribute to this potential. I see Asia Pacific being less active due to its current cycle and will likely be more significant in 2027. West Africa, on the other hand, is expected to show strong growth by 2027, but the timing of that growth will depend on when rig deliveries occur and when solid drilling and completion activities begin, whether that's in late 2026 or early 2027.

Our next question comes from Josh Jayne from Daniel Energy Partners.

I apologize if you covered this earlier. I just wanted to hit on pricing quickly. So we've been in this period, I guess, over the last 24 months where we saw a pretty sharp acceleration in rig rates. And then things have come off, but I would say, stabilized over the last 6 months. How does potentially a tightening rig rate environment frame your pricing conversations and allow customers to see some more value in a lot of the things that you offer? Maybe you could just elaborate on that a little bit.

Sure, I appreciate that. I would frame it this way: Although we currently lack the ability to raise prices significantly, there has not been downward pressure on pricing. The rig operators and rig rates have set the expectations for customers. Their discipline in either stacking or retiring rigs rather than significantly lowering rates has been beneficial. While our prices aren't directly correlated to rig rates, this discipline sets an overall tone in the sector. As we see consolidation among rig operators and increasing demand, there’s a chance for discussions around rising rig rates, which can create opportunities for us. On the technology front, as we roll out new offerings that expand our wallet share, they usually come at a premium since we use the same teams already servicing our existing clients. These incremental services help us grow our wallet share and improve margins. We remain disciplined in our technological rollouts, adhering to pricing and value creation expectations. For example, when using our Cure Technologies offshore, we save nearly 24 hours of rig time not waiting on cement, which comes with a significant value expectation. We will not lower prices to accelerate technology adoption; we prefer a measured approach because in the coming years, as rig rates rise and conditions tighten, pricing opportunities will arise. Thus, we will maintain our discipline.

And then just one, if I may. And again, if you covered this already, apologies. Understanding that offshore Venezuela isn't projected to be something massive. I'm just curious as things calm down geopolitically within that country. How does that potentially open up areas like Colombia or Trinidad or Guyana, just given the geographical proximity to those areas? Any thoughts there.

I'm really excited about the opportunities that will arise in Venezuela. Having lived and worked there and with my child growing up in Venezuela, I see unique possibilities ahead. There are land opportunities and shallow water prospects in Lake Maracaibo, as well as potentially deepwater offshore options. With existing infrastructure from Guyana and developments in Suriname, this situation looks very positive. Our company excels in high-technology and challenging drilling environments, which positions us well for these opportunities. The key question is not whether these opportunities will arise, but when they will happen. I believe this will serve as a significant growth engine for the industry due to the close connections between Guyana, Suriname, Trinidad, and even French Guiana. I'm genuinely enthusiastic about the potential.

We currently have no further questions. So I'd like to hand back to the management team for any closing remarks.

Okay, everybody, thanks for joining us today. This is Dave Wilson. If you have any follow-up calls, please reach out to me. Again, I appreciate your participation. Thank you.

As we conclude today's call, we'd like to thank everyone for joining. You may disconnect your lines.