Welcome to the Oil States International Fourth Quarter 2014 Earnings Conference Call. My name is Kristine, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Patricia Gil, Investor Relations. You may begin.

Thank you, Kristine, and welcome to Oil States' fourth quarter 2014 earnings conference call. Our call today will be led by Cindy Taylor, Oil States' President and Chief Executive Officer; Lloyd Hajdik, Senior Vice President and Chief Financial Officer; and we are also joined by Chris Cragg, Senior Vice President, Operations. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain forward information other than historical information, please note that we are relying on the Safe Harbor protections afforded by federal law. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our Form 10-K and other SEC filings. I will now turn the call over to Cindy. Cynthia B. Taylor - President, Chief Executive Officer & Director: Thank you, Patricia. Good morning to all of you, and thank you for joining our earnings conference call today. I'm pleased to report that our fourth quarter and full-year 2014 results set many strategic, operational and financial records for our company. In May of 2014, we completed the spin-off of our accommodations business, Civeo Corporation into a publicly traded standalone company. In doing so, we became a more technology-focused pure-play energy services company. During the fourth quarter 2014, consolidated revenues from our continuing operations increased 15% year-over-year and our adjusted EBITDA increased 21% year-over-year. In our well site services segment, we reported record quarterly revenue due to a favorable completion services mix, which afforded us a 6% sequential increase in revenue per ticket, while the number of jobs performed were essentially flat with the third quarter of 2014. Land rig utilization averaged 86% during the fourth quarter. In our offshore products segment, we reported record quarterly revenues and EBITDA of…

Thank you. And our first question is from Jim Wicklund of Credit Suisse. Please go ahead. James K. Wicklund - Credit Suisse Securities (USA) LLC (Broker): Good morning guys. Cynthia B. Taylor - President, Chief Executive Officer & Director: Hi Jim. James K. Wicklund - Credit Suisse Securities (USA) LLC (Broker): The onshore part, your guidance on revenues $152 million to $162 million, that's really no surprise. The surprise part is more in the margin side, we keep hearing on the E&P calls where they're getting 20%, 25% cost deflation and we're hearing from the service side where the foreign letters have gone out demanding anywhere from 15% to 30% drop in pricing, how do you or how long can you maintain such fabulous margins in such a challenged year? Cynthia B. Taylor - President, Chief Executive Officer & Director: Well, it's a great question, and we knew we would not be immune to that when we saw the horizontal rig count begin to decline at the rate that it has. Historically, we've held up comparably very well given the mix of products and services that we have, meaning it's much more geared toward multi-stage completions, horizontal rig count pad drilling, and the like. So we tend to be a little less commoditized with our product offering. So, again, if we exited the third quarter call, I think we all underestimated the rate of rig count decline and believed it would clearly begin with the vertical rig count, which it did. But there is no way to bring production down without cutting that horizontal rig count even in your major basin. So I still say that the overall adage, if you will, of our more proprietary offering, high-end completion equipment helps us relative to some of the competition. But again,…

Thank you. Our next question is from Blake Hutchinson of Howard Weil. Please go ahead.

Good morning. Cynthia B. Taylor - President, Chief Executive Officer & Director: Hi, Blake.

Hi. Just, Cindy, a lot of kind of commentary around the offshore products business, but I wanted to just clarify, you delineated some of the fallout from backlog, from drilling and some of the deterioration or weakness towards the year-end I suppose and the book in turn and services revenue. I know you have the chance with the spinoff to kind of really scrub the books with the major projects that you track in the September timeframe. Are there two buckets where the book in turn and services are suffering, but you haven't changed much of the outlook in terms of more the major facilities? I guess I just wanted to clarify that because then you did mention kind of significant project deferrals, but is it still kind of bucketed in that regard or are you seeing more of a slippage to the right than would be business as usual in the major projects side of the book? Cynthia B. Taylor - President, Chief Executive Officer & Director: Those are great questions, and let me just kind of walk you through a little bit from our third quarter call to where we are today. And on that third quarter call I believe I had targeted a book-to-bill of about 1 time, we came in at 0.85 times, so two buckets there. I will bucket it for you. On that call, we had several major project bids that we had handicapped and expected obviously to come in to the fourth quarter. Some did. I mentioned those on the call, the West African project, the Gulf of Mexico project, some did. There were two other notable bids that time wise did not. And so, we'll call those project deferrals on major project awards. One, I have a fairly high degree of confidence…

Okay. That's great. And then turning to the – back to the well site services guidance, I think if I just kind of look at the declines you might be contemplating for completion services within that, it looks like it would be in probably the 25% decline type range sequentially. I guess at this point that seems like more, you're tying that to rig count, especially given the intensity figures and – the intensity versus activity figures that you gave year-over-year that suggest a much more resilient business. I guess my question is, is there a lot of science in the number or are you just kind of starting out in let's mark this to rig count and hope we can do better? Cynthia B. Taylor - President, Chief Executive Officer & Director: Well, again, we're giving guidance only for the first quarter and it's February 19, so I think, Jim said it pretty well. At least we know where we are today. We do monitor our business every day and so we know our rig count estimates every day, we know the activity in the field at least once a week, so we're monitoring the top line very, very closely. The reason we kind of gave you a little broader range quite frankly on our EBITDA margins are really getting your arms around the impact of the cost reduction initiatives, how are those coming, what is the timing of that, how does that sway into your overall margin performance? But, again, we have historically limited our comments to the first quarter and I would just generally say in this kind of market this is not a time to go beyond the first quarter, but we've done the best that we can to give you good color and good guidance on where we are. There are kind of some green shoots in the market with WTI, it was up about 15%, Brent up higher as it's reversing that trend today, so I think we're all just trying to get a better feel for both the timing of the floor in this market and quite frankly the duration.

Understood. Appreciate guys, kind of addressing this market head on. So I'll turn it back. Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP: Thanks, Blake. Cynthia B. Taylor - President, Chief Executive Officer & Director: Thanks, Blake.

Thank you. Our next question is from Jeff Tillery of Tudor, Pickering & Holt. Please go ahead. Jeff Tillery - Tudor, Pickering, Holt & Co. Securities, Inc.: Hi. Good morning. Cynthia B. Taylor - President, Chief Executive Officer & Director: Hi, Jeff. Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP: Hello, Jeff. Jeff Tillery - Tudor, Pickering, Holt & Co. Securities, Inc.: Cindy, as we think about the slope of the offshore products business through the course of the year, Q1 has typically been seasonally lower. Should we think about – if orders are able to sustain kind of the rate they've been at the last couple of quarters that range broadens a bit of revenue in the subsequent quarters, so it's in that $180 million to more like $215 million kind of the orders you booked this quarter, so not – obviously not back to where we were second half last year, but – I guess I'm asking is there some seasonality in the Q1 dip? Cynthia B. Taylor - President, Chief Executive Officer & Director: We had – I'm actually kind of glad you pointed that out, Jeff. We've noticed the same thing and probably generally speaking, I don't know how much is seasonality, how much it is customer budget timing, a lot of times people are trying to eagerly to get their products out by the end of the year. But we have historically seen a little bit of a dip and again we believe we've picked that up in the guidance that we've given you. But that is a trend we've seen over the last couple of years. So, maybe I should not avoid just a little bit, that if particularly these two projects that I mentioned could come into backlog, we feel…

Our next question is from Agata Bielicki of Simmons & Company. Please go ahead. Agata Bielicki - Simmons & Company International: Good morning. Congrats on the quarter. Cynthia B. Taylor - President, Chief Executive Officer & Director: Thank you. Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP: Thank you. Agata Bielicki - Simmons & Company International: I want – could you – I wanted to circle back to Blake's question, could you remind me again of the targeted book-to-bill for 2015? Cynthia B. Taylor - President, Chief Executive Officer & Director: We've not given guidance on that. Again, we limit our guidance both on operating results and backlog outlook to a quarter. Agata Bielicki - Simmons & Company International: Okay. Cynthia B. Taylor - President, Chief Executive Officer & Director: And that's the best information I can give you at this stage. Agata Bielicki - Simmons & Company International: Okay. That's fair. Cindy, thanks for the guidance on the land drilling utilization, but I was wondering if you could also provide any color on implied day rates and perhaps the magnitude of the decline in this quarter and possibly the next, how you're thinking about that? Cynthia B. Taylor - President, Chief Executive Officer & Director: You know, we are watching that and again, it's a highly variable cost business. We don't have much in the way of fixed cost or SG&A on the business. I would just generally say, we are accustomed to volatility in this business. It's only about 10% of our EBITDA, that's a plus or minus number. But we know how to manage the business well, but if I were to put that 50% into historical perspective, the other worst year is 2009, and I think our utilization was about 37% for 2009.…

Thank you. And our next question is from Jeff Spittel of Clarksons Capital Markets. Please go ahead.

Thanks. Good morning, everybody. Cynthia B. Taylor - President, Chief Executive Officer & Director: Hi, Jeff. Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP: Hi, Jeff.

Cindy, I guess, we just spoke a little bit about the comparisons between 2009 and I know there is some parallels in terms of the rig count decline and the pace of that so far, but wanted to give you a chance to kind of speak a little bit about how meaningfully the completion service business has evolved and how much more of a proprietary footprint you have there and what the implications might be for the stability of margins, relatively speaking, to that prior downturn? Cynthia B. Taylor - President, Chief Executive Officer & Director: Well, Jeff, that's a great question. It's one that we've had a lot of internal debate and commentary around. But, I think I'll give, Chris Cragg, who runs that business, a chance to contribute to the call, if you allow me to do that.

Sure.

Good morning, Jeff. It is a great question. I do think that while the rig count declines are somewhat similar to what we experienced in 2009. Clearly, the market is different now. The nature of the completions are much more complex, the laterals are longer, more frac stages per well bore, higher sand concentrations and the like, that matches our product line very well. And I think with our proprietary tools and our quality programs we have in place, that should allow us to hold up better in a like environment to what we experienced in 2009. Clearly, we won't be immune to the downturn – we're not immune to the downturn, but we should fare I suspect better than we experienced in 2009.

I appreciate that, Chris. And maybe sticking with the U.S. customer base, obviously there is a pretty diverse universe of customers out there, well capitalized and maybe some that are a little bit overlevered. I'm sure at this point, maybe you're not seeing a lot of distinction between how they're behaving in the completion service business. But, is it fair to assume that at some point the rig count will stabilize and maybe we're going to see those more well capitalized customers start to look at efficiency in technology, and maybe behave a little bit differently as the year progresses? Cynthia B. Taylor - President, Chief Executive Officer & Director: What I'm seeing – I'm with my customers quite extensively, and, I guess, what I'm seeing is that they're not doing this willy-nilly, they're pressured by having half the commodity price than what they had last year. And so we're trying to work through this collectively, but certainly the customer base. They are the ones that let the AFEs and let the orders and so they are squeezing the service companies as they will do in this environment and probably need to do in light of the commodity price that we see. We don't believe that we would be ceding market share in this environment and in fact, those are opportunities where you enhance market share over the long-term. So, again, if you had a highly complex horizontal multistage well, you're probably going to stick with your key service providers, you may even high-grade those service providers and be very selective as long as we can work together through the price negotiations. So, again, it's hard for me to envision major, major changes immediately, but I would hope we come out of this with equal to better market share.

Thanks so much for the time. Congrats on the quarter. Cynthia B. Taylor - President, Chief Executive Officer & Director: Thanks, Jeff. Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP: Thank you.

Thank you. Our next question is from Chase Mulvehill of SunTrust. Please go ahead.

Hey, thanks for squeezing me in. Couple of questions. I guess, I can start on the backlogs for offshore. Typically you guys give the backlog conversion in the 10-K. I think the past couple of years it's been about 90% of year-end backlog. Is that a good number to go with for 2015? Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP: The percent that turns in a year.

Yeah, year-end 2014. Cynthia B. Taylor - President, Chief Executive Officer & Director: Yeah. I would say it's normally about 80% not 90%. I've got it actually so give a minute to kind of look at projected turns of backlog. I am kind of speaking from history and that's – 80% has probably been a pretty good metric there.

Okay. So 80% of that $490 million number, right? Cynthia B. Taylor - President, Chief Executive Officer & Director: Correct.

Okay. All right. And so how much would you think that your book and turn business would be down in 2015? Is it down 20%? Is it down 50%? Your book in turn in your service business? Cynthia B. Taylor - President, Chief Executive Officer & Director: We're not going to give annual guidance at this stage. We've kind of done what we can for the first quarter and we will update it as best we can. Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP: And that turn in the year is about 90% like you said, it's what we have in the K.

Okay, all right. So, 90% of the $490 million is what you put in the K, I guess, you don't have the K out yet, but... Cynthia B. Taylor - President, Chief Executive Officer & Director: It should be filed tomorrow I think.

Okay, I'll wait for tomorrow. Cynthia B. Taylor - President, Chief Executive Officer & Director: Yeah.

All right. I'm sorry I was trying pry too much out of you. Cynthia B. Taylor - President, Chief Executive Officer & Director: No, that's okay. We try to file almost immediately so we will get it in your hands quickly.

Okay. All right. And, I guess, if we think about kind of the service cost pressures we've seen in this environment, do you think the urgency for service companies to reduce pricing is worse now than it was kind of in 2008, 2009? Cynthia B. Taylor - President, Chief Executive Officer & Director: I really don't think so. I don't see that. I think 2009 was such a different environment in many respects because we thought the whole world financial markets were collapsing around us and so I think we were spending more time doing Black Swan analysis than we were really assessing the rate of pricing decline and here it's a little bit different in the sense that energy is kind of the only – I'd say we are on an island right now. Energy and materials are underperforming the S&P significantly. The rest of the market is actually doing pretty well at this stage. So I draw contrast significantly between the two periods. The only like analysis for me really is the rate of decline in the rig count that I have seen but I'd say 2009 was more survival pricing and this is more pricing responding to customer needs because of lower commodity prices. They may end up in the same place when it's all said and done. I think, again, Chris' comments or what I focus on in that our completion business is very much different in terms of our products and service offerings today than it was in 2009.

Right, okay. Last one for me. Just on the maintenance CapEx portion, what is your maintenance CapEx for the completions business? Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP: Typically about $90 million to $100 million a year. Cynthia B. Taylor - President, Chief Executive Officer & Director: Highly controllable... Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP: Highly controllable, absolutely. Cynthia B. Taylor - President, Chief Executive Officer & Director: ...depending on market out. That assumes kind of steady state operation.

Right, just to hold your revenue flat that's what you need, fair? Cynthia B. Taylor - President, Chief Executive Officer & Director: Fair. Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP: Fair. Cynthia B. Taylor - President, Chief Executive Officer & Director: But again, if we're in a draconian rig count decline, we could cut that if necessary.

It would be less. Cynthia B. Taylor - President, Chief Executive Officer & Director: Yeah.

Okay. All right, that's all I have. Thank you. Cynthia B. Taylor - President, Chief Executive Officer & Director: Thanks so much.

Thank you. I show no further questions. So, I'll now turn the call back over to Cyndi Taylor, President and CEO of Oil States. Cynthia B. Taylor - President, Chief Executive Officer & Director: Perfect. Thank you, Kristine. And thanks to everybody for joining the call today. It's a dynamic period and we feel confident. We're going to work through it very successfully, but we appreciate your following the company and look forward to lighter visits as we progress throughout the year. Take care.

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