National Energy Services Reunited Corp. (NESR) Q3 2024 Earnings Report, Transcript and Summary

Greetings and welcome to NESR's Third Quarter 2024 Financial Results Conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Blake Gendron, Vice President of Investor Relations. Thank you, you may begin.

Thank you Donna. Good day, and welcome to NESR's third quarter 2024 earnings call. With me today are Sherif Foda, Chairman and Chief Executive Officer of NESR, and Stefan Angeli, Chief Financial Officer. On today's call, we will comment on our third quarter results and overall performance. After our prepared remarks, we will open up the call to questions. Before we begin, I'd like to remind our participants that some of the statements we'll be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. I therefore refer you to our latest earnings release filed earlier today and other SEC filings. Our comments today may also include non-GAAP financial measures. Additional details on reconciliation to the most directly comparable GAAP financial measures can be found in our press release, which is on our website. Finally, feel free to contact us after the call with any additional questions you may have. Our Investor Relations contact information is available on our website. Now I'll hand the call over to Sherif.

Thanks, Blake. Ladies and gentlemen, good morning and thank you for participating in this conference call. Our third quarter was once again strong, following solid first half of 2024, even on top of our robust growth last year. We continue to reach new all-time highs for revenue, EBITDA, EPS, and cash flow. And our balance sheet is increasingly fortified and poised for both accretive growth and prudent shareholder returns. Despite the prevailing market uncertainty, I am pleased to report that overall activity in the MENA market remains stable, and I am extremely encouraged by the prospect in NESR’s core business outperformance, new technology rollout particularly in direction drilling, solid hydraulic fracturing execution, and frontier market opportunities in water and decarbonization segments. Combined with our recent relisting on Nasdaq, our outlook remains extremely bright, both in the fourth quarter and in the coming years. Before passing to Stefan to discuss our solid third quarter results and balance sheet positioning, I want to first offer some thoughts on the macro outlook. Our recent technological milestone that we expect will fuel continued NESR performance and our overall positioning in an otherwise cautious sector landscape. I am extremely proud of the entire NESR organization as we continue to push the envelope on growth, margin delivery, and cash generation, which affords us the opportunity to reinvest in really exciting growth areas of our business. If there are two key messages from my prepared remarks, they are, one, that the MENA macro outlook remains healthy, underpinned by growth in key countries, alongside Saudi leadership in pragmatically managing energy market balances with strong focus on gas and unconventional development. Two, we expect NESR to continue to outperform the broader sector with exciting development in the core, our drilling technologies, and in frontier areas such as produced water and minerals. These areas are driving NESR’s solid performance now and are expected to sustain performance over both the near term and also in the years to come. Turning first to the macro, the overall commodity outlook had certainly impacted sentiment in the upstream energy sector, and especially for energy services. While the global upstream growth outlook today is more cautious than it was even six months ago, we believe that MENA activity will remain stable, particularly with recent activity growth in countries like Kuwait, which is expected to lead overall MENA growth for the next couple of years on a percentage basis. Encouragingly, North Africa is again growing steadily, and there is plenty of appetite to accelerate further in places like Libya and Algeria. For NESR, we have scalable presence, we can easily add significant resources from equipment and even capital to cater for rapid growth should the geopolitical landscape improve and opportunities materialize financially. Overall, stable activity across the MENA region hardly match the softened capital market narrative. We have very good visibility for the coming activities and where it will take place, specifically because of the long-term nature of the contract and the strategic importance of the energy sector in the region. Case in point is the Saudi unconventional gas project, which will remain a secular growth story given the ambition to grow domestic gas capacity substantially by 2030. Turning now to the portfolio, first and foremost, our core business continues to outperform even in a subdued growth environment. Given our relative size compared to our more global peers, our opportunities in the core center around our ability to leverage leading share in our anchor countries to pull through smaller segments in which there is room to grow share in other countries. Examples of this dynamic include the regional spread of drilling and manufacturing expertise from our team in Oman, the industrial service from Egypt, and the duplication of our Saudi FRAC success in other potential unconventional resources. With solid growth in the core driving success, it is our ROYA direction drilling platform that we expect could carry the outperformance forward over the next several years. The tier one direction drilling market is more than $2 billion per year across rotary steerable, LWD, and MWD. It is a high quality revenue given the consolidation and sophistication of the technologies. Recently, we announced the first successful run of our rotary steerable and MWD in Kuwait, in which the technology was able to complete the targeted interval in a single run. This milestone marks the culmination of nearly six years of joint investment, research, development, and field testing with more than 70,000 feet drilled, but more importantly, signals commercial viability of our technology. We already have in hand the multi-year contracts with provision to deploy our new tier one direction drilling platform in Kuwait, Saudi Arabia, and Oman, and the upside within these contracts is significant. The next goals for ROYA include repeatable success, reliability enhancement, personnel training, and growing our fleet of tools to expand our share as we continue to gain confidence in performance across the different reservoirs and formations. Another unique work we are doing at NESR involves a completely new market opportunity that is being defined and reassigned through our collaboration with our largest customer. Our NESR environmental and decarbonization application, or NEDA, is a basket of technology aimed at establishing multiple circular economy within the MENA energy value chain. Often, as we spoke multiple times before, we found our NEDA technology outside of the oil and gas industry and adapt them to fit specific client challenges. One such circular economy is the circular water economy. In the third quarter, we announced our investment in SALTTECH BV, a supplier of technology called DYVAR, or Dynamic Vapor Recovery, which is a low heat desalination solution originally from the Dutch dairy and chemical industry. Over the past couple of years, we've worked with our largest customer to adapt the DYVAR specifically for high salinity produced water and have successfully executed two pilot projects in the country. Furthermore, we evaluated the technical efficacy of recovering invaluable minerals from the produced water during the desalination process, including rare earth metals such as strontium and lithium that are native to this reservoir water. The SALTTECH acquisition is a signal of our confidence in the multi-circular model of water and mineral recovery. And while this area remains a very long development and scale up cycle, we are extremely excited for the medium to longer term prospect in our water starved MENA region. Our open technology platform serves as the foundation for successful innovation, but is the combination of our local know-how, operational agility, and the trust and open-mindedness of our customer that is driving technological success in the field. I'm extremely excited to share further updates on our strategic initiative in due time, including our NASDAQ Bell Ringing and Tech Expo tomorrow in New York City. But for now, I will conclude and hand the call over to Stefan to discuss our financials in detail.

Thank you, Sherif. Good morning to our audience in the U.S., good afternoon, good evening to our audience in the Middle East, North Africa, Asia, and or Europe. I'm very pleased to go through our third quarter financial results in detail. Despite the volatile macro environment worldwide and the geopolitical headwinds in the Middle East, NESR has achieved exceptional results during the third quarter of 2024 and for the first nine months of the 2024 period. First, let's cover revenue. Our overall third quarter revenue is a record $336.2 million, which is up 3.5% sequentially and 12% year-over-year. Revenue for the nine month, year-to-date period is $958 million up 14.3% year-over-year with exceptionally strong activity in the Gulf countries. We expect year-over-year growth in the fourth quarter to largely match the year-over-year growth achieved through the first three quarters of 2024. Our view is that growth will continue across the Middle East, North Africa market for the remainder of 2024 and into 2025 as outlined by Sherif. Now, turning to adjusted EBITDA. Adjusted EBITDA for the third quarter of 2024 is also a record $80 million with margins of 23.8% substantially flat on a sequential quarter basis. Year-to-date adjusted EBITDA is $222.9 million up 21.9% year-over-year with margins up 146 basis points to 23.3% with NESR exiting Q3 2024 with a margin of 23.8%. Interest expense for Q3 2024 is $9.9 million, and Q4 2024 should be around $9 million on lower debt. The Q3 2024 effective tax rate is 20.4% and for the year-to-date period ending 30th of September, it is 24.3%. We would expect the Q4 2024 ETR to be approximately in line with Q3 2024. Now turning to EPS, earnings per share excluding charges and credits is $0.31 for the third quarter of 2024 and $0.75 for the 2024 year-to-date period, which is up 164% year-over-year. The charges and credits impacted adjusted EBITDA and adjusted EPS were made up of principally three items as follows, restructuring cost, which was used to reduce our overhead, cost of remediation, of controls, material weaknesses, which should abate after the 2024 audit, and current expected credit losses mainly for a North African country. Now turning to our liquidity, this is a story that NESR is very proud to discuss. Our cash flow from operations during the third quarter of 2024 is very strong as we generated $70.8 million. For the year-to-date 2024 period, we generated 183.1 million. The exceptionally strong third quarter is due to significant customer collections, which drove our DSO to a new company best. Free cash flow for the third quarter is 43.4 million, and for the year-to-date 2024 period it was 103 million and this was principally used to pay down bank debt. As a result of the strong operating results and good cash flow conversion, we achieved a significant milestone at the end of the third quarter of 2024, where our net debt to trailing 12 months adjusted EBITDA fell to 0.96, which is below our stated target of 1. For comparison purposes, we were at 2.8 at the end of 2022 and 1.47 at the end of 2023. Our gross debt on September 30, 2024 is $409 million and our net debt is $291 million. Working capital levels have remained relatively flat during 2024, despite revenue growth of 14% year-to-date on top of the 26% in 2023. Working capital expansion has been minimized due to process improvements and system developments that have enhanced our efficiency resulting in the DSO decrease of 15 days over the last 21 months and a decline in the infantry level of nearly 10% over the same period. Capital expenditures for the first nine months of 2024 is $80 million. We still expect full year CAPEX to be in the vicinity of $120 million driven by delivery of our first royal directional drilling tools, which is supportive of the drilling strategy just outlined by Sherif. All of the above has resulted in our return on capital employed percentage on a trailing 12-month basis at September 30, 2024 reaching 11% and this should only improve going forward. Now on to some housekeeping topics. As you have seen, we were re-listed back on NASDAQ four weeks ago on Tuesday, 22nd of October, and we are looking forward as a company to ringing the bell at the NASDAQ closing ceremony tomorrow. We've spent the better part of the last two years, two plus years, reshaping our back office and the company overall with new and updated processes, procedures, and controls, as well as implementing the latest software upgrades through our ERP system. We are very confident that we'll be able to demonstrate the remediation of our internal control weaknesses due to the 2024 audit. This conclusion is very positive news for the company after almost three years of restatement, investigations, inquiries and internal control remediation efforts. But very soon we should have concluded on all. In summary, operational execution across the Middle East, North Africa region continued to be strong during the third quarter of 2024 and our updated processes, procedures, and controls have transformed the back office to accommodate the continued growth that we are targeting. These drivers have combined to generate record results for the year-to-date 2024 period with strong revenue growth, strong adjusted EBITDA, and healthy cash flow conversion, the latter of which is being used to pay down debt and strengthen the balance sheet overall. The Middle East, NORTH AFRICA region remains favorable and NESR continues to be focused on its stated goals of delivering profitable revenue growth, execution efficiency, technology expansion, debt reduction, and working capital efficiency to drive future financial performance. On behalf of management, I would like to thank our entire workforce for their outstanding efforts in delivering these results, together with our directors, shareholders, and banking consortium for their continued support. The future for NESR continues to look good. Now I will turn the call back to Sherif.

Thanks Stefan. Let me conclude by highlighting our key takeaways from the quarter. First, I would like to leave you with our belief that we will continue to outperform the broader MENA market. Not only is there further runway for core business expansion, but we've also achieved tangible progress in our ROYA platform development and expect this to be both a meaningful growth contributor and also returns accretive over the coming years. We will continue to have new partners to introduce their technologies from North America to the region with tailored solution for our customer. Similar success as we have had with Cactus, Phoenix, Scout, Beyond, and others. Our NEDA segment and specifically our water and mineral portfolio are where some of the most interesting work in the company is being done. And our strategic investment in SALTTECH follows several years of successful piloting and mineral recovery success. Now we need to take the water business to the next level and scale the execution. I would like to close by thanking all of our employees, their families, and our valued customers and partners for their continued support. I couldn't be more excited about the future for NESR. Looking forward to seeing many of you tomorrow at the NASDAQ building where we have several key of our executive and manager flew from the region to New York to present our technologies and engage with all of you. And with that, I pass over the call to the operator for your question. Donna?

Thank you. [Operator Instructions]. Today's first question is coming from David Anderson of Barclays. Please go ahead.

Great. Good morning, Sherif. How are you?

Good morning, sir. How are you?

I'm doing great. Glad to have you back, formally here and I looking forward to tomorrow night’s event. So hey, just first question, maybe if you could kind of give us a little overview of what's going on in Saudi. It's been sort of a complicated year, offshore going down, onshore coming up, a lot of focus on gas. Do you feel like they're kind of slowing a bit. Can you just sort of give us the overview of what's happened this year so far in Saudi, how you see that changing over 12 months?

Yeah, thanks Dave. So as outlined clearly by Saudi ARAMCO, and obviously the leadership there is after they put down the maximum sustainable capacity from 13 to 12 where they had a plan to add 1 million barrel to go to 13 million barrel total capacity by having 800,000 coming from offshore and 200 coming from land. And that plan was postponed, to only be 12. So they released the planned increased rig. As for people that are familiar with Saudi, Saudi used to be 60 checkups approximately, which is very high. And the plan was to go all the way to 91. They almost reached it. And then after that decision, they started releasing the offshore checkups that were planned for the 800,000 barrel additional capacity, which basically is being postponed. So that when the release of rigs started to happen and this took place earlier this year. Then, on top of that, obviously their success on the projects, on the unconventional, etcetera where there is a lot of associated gas and their plan to move to 50% gas, 50% renewable for the power generation on the Kingdom by 2030. And they saw that they have excess oil and basically with the slowdown of China, whatever. So they decided to, release more, of the land rigs that is responsible for oil and which took place. So that took place over the last, three to six months, and that's some of the extra rigs that were released. Now, if you look at the total recount in Saudi again, it reached an all-time high of 300 and that was again, poised for the increased capacity and the oil demand when this did not happen -- and they do have the capacity of 12, which again, a lot of people I keep saying that are skeptical about it, but it's not true because Saudi can do that and can deliver 12 million and they don't need the additional rigs to drill for oil when nobody needs it, right. And they are very disciplined on the OP Plus [ph] they lead it actually. So -- and that's why they release the excess rigs. Now, if I move to your second part, which is the unconventional, the unconventional gas, which is the Jafurah project, is extremely successful and they keep adding rigs. So that is the only project that is not being touched. It's actually increased the rig count. And, as some people might know as well, the first delivery of 2025, first gas at 200 million and then the 2027 and then the 2030, and on that you have a lot of associated gas, which is basically you get almost 600,000 barrel and you get a lot of NGLs. So this definitely will again, they will have an additional oil there, that is available. The last thing that some people might not know is as very good highlighted by his Royal Highness is the move away from burning crude for power. And that's -- and there is a plan to ensure that this does not take place, which is almost a million barrel in the summer hot month, which again make sure that if this happens, then domestically they don't need all this diesel, which basically will make it available for export. So I hope I answered your question, David.

So how do things, the rigs have come off, we've kind of seen that sort of reset sort of activity level. Do you expect things to sort of stay at these levels and Jafurah keeps ramping up here or like how does kind of the next 12 months look from sort of a broader activity level in Saudi, you don't need to get specific to sort broadly speaking how does it look now?

Well, I think what will happen, my personal opinion is basically, it's going to be stable outside Jafurah is going to be stable to a bit down, because obviously some rigs now are being put on, what they call extended maintenance, which is obviously as, again, you don't need to drill for some of the oil part, you just put it on maintenance. And then the Jafurah was going to keep increasing. So overall activity in Saudi, I would say 2024, 2025 over 2024 will be stable because that drop in oil will be compensated by the increase in gas and unconventional. Now for service industry, it all depends where each play, right. So, our expectation for NESR, we are going to grow 2025 over 2024. We will continue that growth profile that we had, and we believe we are positioned very strongly. The other part that beside the activity being, poised with -- we are more poised on the gas and on the project of Jafurah obviously that we have the drilling portfolio. So we did not have that in the past. We did not have direction drilling, we did not have rotary steerable or M-W-D-L-W-D. And now we have. So that's an additional for us, it's quite unique because I have the contract. So now the issue becomes how much can we deploy in 2025, we did not deploy any in 2024, so how much of that, and this will be an additional for us for 2025 over 2024.

Right. And so the overall -- the shifting is that the mix works in your favor. You obviously have more Jafurah than you had offshore. But just one final question for you just on Jafurah. Can you just kind of give us a quick overview of what you're doing today on Jafurah, I know you've been on the field for a long, long time. You were the ones who just -- who unlocked it. So going forward, where are you today in the field and are you expecting to see more tenders, and like what are some of the different services that you're expecting to be tender, say over the next six months?

Sure. So Jafurah obviously, again, is an outstanding project for Saudi Arabia. I mean, it's a -- I would say it's world class like you have in the U.S. They beat every record from drilling the wells in 40 days now, making it in 14 and 12. I just took the entire -- my entire Board to Saudi and to see it. And they -- we actually went to the field and saw the frack while it was working, right. So it is very impressive, by all means. So today, Jafurah has -- you have three unconventional in Saudi that is running, right, which is the big picture is Jafurah and you have what they call, you have the new rigs coming there. So they added rigs and in the drilling they have multiple companies involved, right. So you have obviously people in the mud, people in the, in the direction drilling, etcetera. And that project that our involvement has been on the cementing front drilling, the well cementing, and we as well involved obviously now in direction drilling, which is the contract we just got awarded. So we have -- and in the direction drilling, you have multiple suppliers. You have around five suppliers now in the direction drilling arena, between the big guys and two of the smaller guys, like we are one of them. And then on the fracking side, it's two players today us and one of the big -- one from the big three. And we are today basically both of us working, and recently there is even a pilot from a third player. Why they are doing that, because obviously the Jafurah is going to increase dramatically on site. So for people to know, this is basically this year, they are planning 8000, 9,000 stages, that we completed. And then this is going to go all the way to 25,000 stages per year. Once you go to 25,000 stages, obviously there are room for more players, then, then the two of us, and that will take place. So tendering will definitely happen because everything in Saudi Arabia or the Middle East goes to tender. So that bidding process will happen sometime next year and then people will participate. The approach is obviously the market should be disciplined, as we always say, but you know you never know. So there will be more awarded suppliers again to be able to complete those number of stages in the coming years. And the project is poised for the 2 bcf by 2030. So definitely, all this is going to take place. And the rigs are performing outstanding, the drilling of the wells are really, really, almost at the technical limit.

That's good to hear. Thank you very much, Sherif, I appreciate you taking on my questions.

Thank you, sir.

Thank you. The next question is coming from Gregory Lewis of BTIG. Please go ahead.

Yeah. Hi, thank you and good morning, good evening everybody. Sherif, I was hoping we could kind of like blend together the growth that were kind of expected to see in MENA versus kind of the cross selling the rollout of ROYA and kind of try to get a sense for, as you think about revenue growth in 2025 versus 2024, any kind of sense for that mix of just outperforming the market and then kind of layering in those cross-selling opportunities in the rollout pf ROYA?

Sure. I mean, I would say the market overall in MENA would be plus a single digit year-over-year. So 2025 over 2024 should go, let's say 5%, 6%. And we always say we should double that growth. So whatever the market is growing at, we should be at double that rate. The ROYA platform, the direction drilling, the decarbonization segment, this is all in addition to that. So what we believe is once the success of the direction drilling is proven in the sense of commercial viability that they can take 10, 20 rigs perform equal to the big provider, we should be able to gain share because we have the contracts. And that's, I think, something we try to articulate that the key in the Middle East is to have a contract. You have to have a long-term contract with the customer to be able to deploy those technologies. And today we have that in our three main countries of operation, Saudi Arabia, Oman, and Kuwait. So now what we need is to deliver those technology on the -- that we are taking a very prudent and if you like technical way of looking at it. So we deploy when we know we can be at par with the big guys, for the sake obviously of the customer, because we want to be always credible. We always to maintain that I can build in this formation, I can do this, my dog lack severity is higher than what exists in the market. So the customer see the benefit of us deploying the tools. With the speed of deploying and the speed of the success will determine how much that growth in revenue will be in addition year-on-year. But I have no obstacle or no issue on contract or waiting on contract to be awarded for me to be able to deploy. I have already the contract, which is a very good thing to have. On the decarbonization, the third element definitely is the appetite of the customer. We talk a lot about the methane pledge, we're talking about the 2030 COP 29 [ph] is running as we speak. So definitely it is something that everybody wants to monitor. We just came from Abu Dhabi, it's still a very big important subject. The sustainability is extremely important. I think we live on a planet, we need to be careful how we manage our water resources in a place like, as we -- as I call it starved is actually -- I think it's the bottom, in the word form it is starvation of water per capita, it's all desalination. There is no rain. So for the energy industry to be disposing all this water of the produced well is not right. So we need to find solution that is economical. We think we are there. We think we can take the minerals that comes from that produced water and sell it and make a margin on it, which basically pay for the power of doing that service. We think as well, we can get lithium, which can be a very big item on the renewable agenda, and if we get lithium from that. So there is a lot of exciting things. Now, the scale is what matters. And obviously, again, I keep repeating this, the key is the customer works with you to be able to give you that project and being willing to risk and take some tests on that front. But again, for the sake of the climate, the world, the sustainability, I think a rich industry like ours should do that.

Okay, great. And then I did have a question. There's obviously the ongoing debate when if, when Saudi Arabia is going to and OPEC Plus is going to kind of start ramping production again. Just as we think about that, if that were to happen at some point in 2025, how if at all does that impact kind of the activity levels you you're thinking about in 2025 and maybe 2026, is that additive or is that kind of it's a non-event?

No, I mean, look, I mean, it all depends. There is a lot of narrative out there. The Middle East needs the oil price to be at that level or above. So all this notion that they are just going to open up the tab and flood the market with oil, it's not going to happen. So what they need to do is they need to -- they will continue with the pragmatism to ensure that the market is well balanced and the oil price remain healthy for their economic growth. So all the comments I made is based on that, and all our forecast is based on that demand and supply. Now, if for whatever reason, the geopolitics, there is another drop of some of the producer and get eliminated from their production, and then the Saudis or others have to come up with production to make up for that, for sure, the activity will go much higher. So, our comment and our analysis is based on an oil price the same. OPEC Plus remain their cut, which, for the foreseeable future until the demand comes back from China, and then the world needs more oil. Now, if you think about the narrative of, of the US and President Trump, and, and most probably Russia can back to the game, etcetera, etcetera, it doesn't really that that more activity will happen. But we are taking that notion that the activity will remain low single digit, 2025 over 2024, and we are outgrowing that market. If the oil price gets stronger and as I said, somebody has to replace another, yeah, activity will go further up. The -- and the oil price and the economy of the Middle East is all depending on oil and gas. So people have to remember that. This is not part of an industry that you have 20 of. This is the main core business of employment, supply chain, everything in the country. So people will protect it.

Super helpful. Thank you very much.

[Operator Instructions]. The next question is coming from Derek Podhaizer of Piper Sandler. Please go ahead.

Hey, Sherif, good morning, and congrats on the re-listing.

Thank you, sir.

Just wanted to go back to your comment about your ability to cater to the growth in the MENA region. How should we think about that in regards to your equipment base and what it means for a CAPEX investment cycle, what can you service today, where would activity need to go in order to meaningfully build out new capacity and related, what does it mean for pricing and margins, and how can you drive that higher over the next couple of years?

Hey, Derek, it's Stefan here. I'll take the first bit of the question, right. As I said, this year we've spent $80 million in CAPEX this year so far, and we've got another 40 million, which is mainly ROYA tools coming out for the, let's just say the 5% to 10% growth, which we're sort of anticipating next year. We think the CAPEX will be $120 million, again, give or take. If we were to -- if the revenue from ROYA was to grow greater than that, our CAPEX obviously would be higher. And if we get any NADA projects, next year, there would be some CAPEX on that, but we're looking at flattish CAPEX of $120 million again next year on that 5% to 10% growth.

Got it. That's helpful. And maybe a little color on the free cash flow conversion of that incremental CAPEX, just how should we think about the overall view of the free cash flow generation?

Well, right now on let's just say on $120 million of CAPEX for next year, we're probably looking at the high 30%, 40% free cash flow conversion. We'll probably have some working capital, less efficient. We've done very well over the last two years as I, elaborated. And, I think it'll be tough to keep pushing down inventory and pushing down DSO with growth. But we'll do our best, but I would keep it at 40% of free cash flow conversion to a beta.

Great, that's helpful. My follow-up question, I wanted to talk about those partnerships with the North America companies that you mentioned Sherif and how we should think about deploying U.S. shale technology in the MENA region. You pointed out Cactus in Phoenix. How should we think about these evolving over time, over the next couple years and, where MENA is on the technology adoption scale versus where U.S. Shale is and what products you're looking to bring overseas, just maybe some more color on that would be helpful?

Sure. I mean, if you look at the unconventional, for example, for Saudi, everything you can imagine in the Permian and, the best in class is being deployed. So -- and that's when we started that journey back in 2019 with ARAMCO, that's exactly what we said. We said, guys, we are open platform and we are going to bring the best in class. It's not like, because I have that, you have to use that. We are going to see what do we use, what is being used, and how they moved from five, six stages to 2018 to 2022 pumping for 22 hours. What -- how did they achieve that? How did the customer and the technology in the Shale in the U.S., managed to do that and that's exactly what we did and obviously under their leadership. As we looked at who has what, right? And we teamed up with those technologies. So, Cactus is doing, very, very, very good in our, wellhead and f factories. We use our, my different John in Phoenix on the trilling and the, the motors. We have scout on the mono bore. And again, what is the best in class being used here and we took it there. And obviously the way it works in Saudi again, for the people to understand, you have to have -- so the local player, which is us, we bring we say we present, the technology that is very innovative, that is unique, and why is it better. And obviously Aramco is extremely solid, customer with a very, very good and very strong, technical department. They check and they vet this technology, then we go through what we call a TTR or a trial test. And during that trial test, they will check and test the technology and what they call free trials. When they prove that and they see the track record, then we bring this under our umbrella and perform with the customer. And the way we do it, we do it transparently. We brand the company partner. We don't say, oh, this is net no, we say, this is cactu1s, this is Phoenix, this is Scout, this is etcetera. What I see the next level, I think there will be a lot of work that we are going to do on the next level of milling the plugs. So I think they, we are looking into partnership with some snobbing, to see should we go faster on finalizing, especially once we go to the 25,000 stage. We are working very close now with beyond, which is MPD, managed pressure drilling, both on unconventional and not in unconventional. We are looking at as well bringing those package like we do in the U.S. there. There is some technology that we are looking at on one line, and we have couple of partner, without mentioning their names, we are looking at second level of what else could we do to reduce the frack operation and the perforation timing. And I think there will be some work as well on the rig up, rig down and the, the speed between pads. But just to understand that in that, that size or that type of operation, that type of professional today is only in Saudi Arabia in the MENA region. So it is not like this is what you see. No, it's only, but they went through appraisal exploration. They spend a lot of money assessing those wells before they went now to development, which is basically now manufacturing. And that's exactly best in class. Like you see in any pad, in the US for the top client like EOG or Devon and any of these guys, it's exactly the same. Now, the other countries in unconventional, it's I would call it in infancy. So they are in that trajectory, but as if you are, like seven, eight years ago. So they're going to go through that process and again, the infrastructure supply chain is a challenge in the Middle East. So you have a challenge of the water. There is no water, as I just explained. There is a challenge of the local sand, which has proven now to be successful. That's what we do in Saudi, that's why the cost went down dramatically. If people look back 10 years ago, we used to fly and import sand from Australia and the U.S. to Saudi. Which is obviously we have a lot of sand in the Middle East, so now we use all local sand, we actually use even regional sand, sandboxes, etcetera. So long answer, but I'm just trying to give you the picture that that has happened today already in Saudi. I think the unconventional prospect in the Middle East, you have couple of other countries. I think, Algeria could be a very, very good place, for people that understand the reservoir characterization. It's a very similar to the [indiscernible]. Ahanat Basin is huge and it could be developed at the same scale that you have in Argentina, you have, again in Eagleford, etcetera. And this could be instead of but again, they just have to start. And then obviously supply chain, everything has to be developed accordingly.

Very helpful comments. thanks Sherif, thanks Stefan. I'll turn it back.

Thank you. At this time, I would like to turn the floor back over to Mr. Foda for closing comments.

Thank you very much. We really appreciate all the time that everybody has put. We again, would like to thank all our employees, their families, all our shareholders or our banks or our partners. We had a very good time now, and we are looking forward to see a lot of people tomorrow. We are going to be on the Nasdaq, closing bell. We will have our tech exposition, two hours before., so people will be able to see the technology. We will display, the ROYA platform, will display the NADA, the decarbonization. We have people coming from the Middle East, our managers and executives to be there as well. So a lot of the invest and partners will be able to talk to them, and integrate with them and then see as well the technology and see the mockup. And definitely we'll have some time as well to, as we say to celebrate, with the closing bell and the event after that. Thank you very much. Appreciate all the support.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.