Welcome to the Oil States International Second Quarter 2017 Earnings Conference Call. My name is Victoria and I will be your operator for today's call. At this time, all participants are in a listen-only mode. And later, we will conduct a question-and-answer session. Please note that this conference is being recorded. And I will now turn the call over to Executive Vice President, Chief Financial Officer, and Treasurer, Lloyd Hajdik. Lloyd, you may begin.

Thanks Victoria. Good morning and welcome to Oil States' second quarter 2017 earnings conference call. Our call today will be led by Cindy Taylor, Oil States' President and Chief Executive Officer; myself, Oil States' Executive Vice President and Chief Financial Officer; and we are also joined by Chris Cragg, our Executive Vice President for Operations. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, please note that we are relying on the Safe Harbor protections afforded by federal law. Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our Form 10-K along with other SEC filings. And now, I would like to turn the call over to Cindy.

Thank you, Lloyd. Good morning to all of you and thank you for joining us today for our second quarter 2017 earnings conference call. As you read in our news release, we reported a net loss of $0.27 per share during the quarter after adjusting for one penny of severance and other downsizing charges. Our quarterly results reflect current market trend highlighted by strong year-over-year and sequential growth in U.S. shale based drilling and completion related activity, partially offset by reduced spending internationally and in deepwater. Our well site services segment benefitted from the ongoing improvement in U.S. land based completions activity across most of the shale play regions in which we operate, but was offset somewhat by sequentially lower activity in international regions. Our Completion Services revenues that were driven by U.S. land-based activity were up 28% sequentially and represented over 75% of our completion services revenue. Revenues and EBITDA margins in our Offshore Manufactured Products segment were within our previously guided range but at the low-end, with margins averaging an adjusted 17% for the quarter. Sales of our shorter cycle manufactured products experienced significant growth during the quarter offsetting ongoing declines in major projects work. We recorded a book-to-bill ratio of 0.99 times in the quarter with backlog remaining about $200 million. When you combine our U.S. Well Site Services segment results with sales of our shorter cycle manufactured products over 50% of our second quarter consolidated revenues were driven by U.S. land drilling and completions related activity. At this time, Lloyd, will take you through more details of our consolidated results and provide highlights of our financial position. I will follow with more details by segment and provide additional comments on our markets outlook.

Thanks Cindy. During the second quarter, we generated revenues of $171 million while reporting an adjusted net loss of $13.6 million or $0.27 per share which excluded $0.01 per share of severance and other downsizing charges. Second quarter adjusted EBITDA of $10.4 million increased 91% sequentially and our adjusted EBITDA margin was 6%. We generated $13 million of cash flow from operations during the second quarter and invested $7.5 million in capital expenditures. We continue to estimate that our 2017 capital expenditures will range between $35 million and $40 million. We utilized our second quarter free cash flow which is after CapEx, along with revolving credit facility borrowings, to repurchase 16 million of our common stock and fund the purchase of assets and intellectual property complementary to our razor testing, inspection, and repair service offerings. For the first half of 2017, we generated a total of $32 million of free cash flow, utilizing $13 million for M&A activities, and $16 million for the aforementioned share repurchases. With respect to share repurchases, we bought back 552,000 shares of common stock under our authorized share repurchase program at an average price of $28.99 per share. Total of 120.5 million remains available under the share repurchase program which was extended by our board for one-year to July 29, 2018. As of June 30, our debt totaled $51 million while our cash on hand exceeded these outstanding borrowings by $22 million. We ended the second quarter of 2017 with total liquidity of $200 million which is comprised of $128 million available under our revolving credit facility plus cash on hand of $72 million. In terms of our third quarter 2017 consolidated guidance, we expect depreciation and amortization expense to total $27.4 million, net interest expense to total $1.1 million, and corporate cost to total $12.8 million. Our 2017 consolidated effective tax rate benefit is expected to average 28% to 29%. And at this time, I would like to turn the call back over to Cindy, who will take you through the details for each of our business segments.

Thanks. In the following segment comments, the term adjusted EBITDA excludes severance and other downsizing charges. In our Well Site services segment, we generated another quarter of sequential improvement, as revenues increased 15% quarter-over-quarter to total $59 million, while adjusted segment EBITDA increased to $6 million. These sequential improvements in revenue were driven by 16% increase in the number of completion services jobs performed along with a 2% increase in revenue for our completion services job. While our Well Site services segment benefited from the acceleration of well completion activity as evidenced by 28% sequential increase in U.S. land-based completion services revenues compared to the 21% increase in the average U.S. rig count, our second quarter results in this segment were moderated by lower international results. Despite this mix, our incremental EBITDA margins in completion services averaged 46% in the second quarter when compared to the first quarter of 2017. While our Drilling Services results have improved both year-over-year and sequentially utilization remained at 25% during the second quarter. In terms of well site services guidance for the third quarter of 2017, we see continued growth in U.S. land-based activity and estimate that revenues for our well site services segment will improve sequentially and range between $75 million and $85 million with segment EBITDA margins in the low-double-digits. We continue to believe our incremental margins for completion services should average 40% to 45% as we progress through 2017 assuming the ramping completions activity in the U.S. shale play regions is sustained. In our Offshore Manufactured Products segment, we generated revenues of $102 million and adjusted EBITDA of $17 million during the second quarter of 2017. We reported an EBITDA margin percentage of 17% which time within our guided range albeit at the low-end. The 12% sequential increase in total segment…

Thank you. [Operator Instructions]. Our first question comes from Sean Meakim from J.P. Morgan.

Cindy, I think we could start just a little bit drilling into the completion services business.

Yes.

Can you give a little bit detail just I was just thinking about the reconciliation between the U.S. land completion revenue number up 28%, job tickets were up 16%, revenues per job up a little bit. Is it fair to say that the non-lower 48 revenue is mostly flat and then I guess underlying that revenue change, is there going to be some mix there, in terms of the job sizes, across those regions. And then, also how are you thinking from a pricing perspective within the lower 48?

Yes. Let me just stop me and ask me if I missed any of the commentary that you're looking there for there but I think I heard you kind of reconciling as we have the 16% activity improvement with modest pricing is kind of the same as the day. U.S. land-based revenues up about 28% and again tickets more aligned with that again there is some mix between international Gulf of Mexico. International was down, we haven't called out Canadian breakup and obviously religious holidays in the Middle East but there's some dampening of activity there that is somewhat cyclical if you will or seasonal at that point in time. Gulf of Mexico had slightly improved results sequentially again that was tempered just a bit by Tropical Storm Cindy at the end of the quarter. But just overall we kind of felt like generally flattish activity in the Gulf of Mexico, weaker activity international, again strong U.S. land-based activity which as we progress if that trend continues we'll kind get that land driven activity more in line with historic norms. We do see a little bit of improvement in the Gulf of Mexico as we move into Q3 if that answers your question. And again the ticket count is not always the perfect indicator depending on mix however those are the trends that are reflected in that activity measure.

Got it. Yes, thank you. That was helpful as I kind of go through it just one more time. And then, then on the Offshore Manufactured Products business, we're seeing that mix shift as shorter cycle is becoming a bigger component just we're taking down kind of the band on the margin expectation. Can you help us Cindy quantify how much of that is fixed cost absorption and some of the changes there versus the mix shift that's also taking place?

Obviously there is a little bit above then it's -- we're very clear -- it's hard to call an exact trough because Q1 was oneness of, it's strong of a quarter either. So there is kind of plus or minus in that revenue and EBITDA band. In the case of guidance for Q3 number one we noted in the notes a 40% -- 46% increase in our standard connector product sales those can be very lumpy. You have orders that go out in major development drilling programs. We had some decent orders particularly coming out of Southeast Asia and our UK operations; we will have less in Q3 but then an improvement in Q4. So I think of that as more lumpiness in our guidance than any macro trend. And again as I step back and look at the macro the trends you've highlighted are appropriate which are strong growth in our short cycle products again driven by completion activity which is a good trend, it is helped us manage through a very difficult market over the last couple of the years in terms of major project work and awards. I have said consistently and I will reiterate again that we do expect a couple more of what I call major project awards i.e. awards prior to major project FID as opposed to the standard connector products which we generally have in our backlog and revenues stream fairly predictably. There are two that we are counting on in terms of a bookings basis or bookings projection in the second half of 2017 that is delivered as expected our bookings -- book-to-bill ratio will go above 1.0 for but the second half.

Got it. That's very helpful. Thanks very much.

Thanks, Sean.

Our next question comes from Stephen Gengaro from Loop Capital. Please go ahead.

Two questions if you don't mind. One is back to completion services actually they both are the first has do with the second quarter were you surprised by the land drilling utilization or did I just miss my whole. Did I -- I was expecting it up a bit and can you kind of give us essentially what you’re seeing there.

Well I hate ever telling analysts that they miss model anything but I tell you kind of we're not alone and in terms of our review and reflection of first call numbers out there that there was a bit of a headwind for us driven by drilling. And we've always had two comments about drilling. Number one, we've historically been weighted to the vertical markets. The vertical markets are not as in favor obviously as extended reach horizontal so that's just a macro trend we know about. We are doing what we can to expand -- with the assets that we have to expand our exposure to the horizontal work go through surface drilling our top hole drilling for pads if you will all which can be done very cost effectively and also salt water disposal warehouse in support of horizontal activity. That being said, these assets are generally geared more towards vertical drilling work which has always been highly cyclical and sensitive to crude oil price. I've always said, you get in this 52 above, we tend to start putting rigs out, you start drilling below that and again we're so efficient that we're drilling wells every week and so these tend to go up or down depending on the sensitivity of the vertical markets again what can we do about that, we're trying to gain as much exposure to support the horizontal drilling activity as we can. So with that macro environment, I think that whether it was you or a group of analysts, I do think that drilling kind of caught a tailwind that was ahead of reality just a little bit. Now that being said as we progress into Q3, we are projecting higher utilization, we are seeing a couple of rigs being reactivated that is our plan anyway as we move forward. And so the trends and what we are trying to do strategically should lift utilization a bit but I don't want to get to you before again within the macro that these are lower end rigs more suited towards vertical drilling.

Okay now that makes sense. Thank you. And then my second question was just on the completion services specifically do you expect and again work through your guidance a bit, could you expect the second half to accelerate a bit and I'm just thinking in terms of your growth in that business I would think would be faster than the rig count in the back half of the year? Is that fair?

It has been down and I think that -- I think we’re all questioning what is the average rig count going to be in Q3 and right now I would say that we are projecting what we think to be a decent improvement in the rig count. I don't know that it’s going to be a 21% as it was in this quarter but we are seeing increases -- we're seeing the beginnings at late of a favorable mix shift, so there's nothing that we know today that would tell us anything other than yes we should at least try and likely do better than the average rig count particularly given the number of drilled and uncompleted wells that are in the market right now, that's the best knowledge we have.

Our next question comes from John Daniel from Simmons & Company. Please go ahead.

Congrats and thank you for pulling in. Cindy, just to start with the -- can you speak a little bit about the $9 million of M&A this quarter and then recent color on this deal and your thoughts on a bigger picture perspective about strategy for additional acquisitions?

Yes, absolutely, I have been everybody that knows me knows that we're trying to do what we can to gain scale in a otherwise difficult market and we've been very focused on M&A. We've historically been incredibly successful with these small tuck-ins particularly ones that are geared towards enhancing existing technology. We've done a couple of things this year one in Q1, one in Q2, the first one tied to some of our claim technology, this one tied to our razor technology. These are just things that really help us enhance our existing technology at what we think these are small fairly inexpensive tuck-ins. So we remain highly focused on trying to do M&A and again I've been very open about the fact that it's been a roller coaster this year in terms of market outlook and valuation expectations. They were particularly high in the first quarter when a lot of the smaller IPOs were going to market and that really did sequentially delayed, our success in closing anything. I think as we've gone through Q2 lot of things that happened on the valuation front both IPOs and people that are in the queue to go public and all of that has been a bit of a reality check, we believe on valuation. So we're going to continue to do assessments. I think that we are historically one of the more active particularly on the less than $100 million type acquisitions and we firmly believe that in challenged market that consolidation should occur. And so we not in any way wavered from that focus, there are deals we're continuing to work on and negotiate I will always come back to either direct overlap or close market adjacencies, we feel like we know how to value these companies relative to our own and the focus absolutely continues.

Okay. I'll ask one more then jump back in the queue. Just a little bit on modeling one but if we just assume we sort of stay in this $45 to $50 world through the end of the year. At this point, we do expect a bit more of a pronounced holiday impact in Q4, seasonal holiday impact.

It's always a wild card when we go on the holidays, I personally did kind of don't spend that as much, it's been such a struggle quite frankly for particularly Permian operators to get equipment reactivated, to get people hired back on location, get some continuity drilling and completion plans and programs that I think everybody know that shuts this down and not to mention pad drilling takes longer than a lot of work that we used to do. So again if the sentiment holds going into Q4, I really don't see an exacerbated holiday downtime because of the difficulties and problems that creates in terms of kicking back off in Q1.

Got it. Okay. I'll jump back in the queue. Thank you.

Thanks John.

Our next question comes from Blake Hutchinson from Howard Weil. Please go ahead.

I think, if we just took it back to your first quarter commentary, you had mentioned perhaps one of the overhangs in completion services is contrary to maybe popular logic the Permian area was tough for you given that so much equipment had migrated in as we are exiting the quarter, I think you mentioned this in terms of mix as well helping, did we see a little bit of that pressure start to get alleviated as we saw some shortages of equipment at least on the pumping side and did it give you higher level confidence in terms of 3Q outlook in that regard.

Yes, I would say a little bit of the pressure is lessening and part of that is because there's a little bit of an activity improvement elsewhere. I'm trying to remember my standalone Permian activity but we saw decent important sequentially if not maybe even better than what the overall rig count projected but the key thing is everything is still being good on a job-by-job basis. So that kind of tells me the market is not terribly tight in terms of equipment however if we kind of leave the job to a low price, there's been another back drop to pick it up. And so overall, I would feel that it's farming but I don't want to suggest that the market is tied on equipment. We're also starting to look at some more hire in specialized type equipment which that will be a -- more of a differentiator for us that's in K-type equipment.

And you didn't -- was there a pronounced change in terms of I guess demand for more proprietary equipment just because time on location is becoming a little more I guess precious?

Yes I think I hope I said that earlier, we are beginning to see that migration to again a lot of times we're talking about extended breach technology and our isolation equipment, so we’re seeing some of that. Yes.

Great, I just want to clarify that. And then I guess as we see are you guys reengage here in a share repo, I mean is that an expression kind of bit of the frustration with getting something done M&A front or just financial strengths or even just at this point kind of cleaning up some of the creep in dilution?

All the above for and follow mouthful but I would just point out I think you all know we've been free cash flow positive in 2015, 2016, today then 2017, we have the financial wherewithal obviously the do things, our stocks recovered somewhat last year, it's been a fairly dismal year not only for us but for everybody and our stock broke a level that we feel like it was trading below long-term intrinsic value that is the time certainly you start thinking about share repurchases particularly it’s a lay-up so to speak to mitigation dilution. I’ve always taken great pride in saying that I think I have about the same shares outstanding today that I had 16 years ago, 17 years ago when we went public. So that's been a consistent thing for us, I always look at share repurchases as a capital deployment opportunity, a lot of times we do end up on a comparing math to the type of value and recurrence we can get from the M&A market. Again no secret I was not fond of the valuations that were out there for smaller M&A in the first quarter of this year and so obviously share repurchase are an alternative to that and we look a lot at what we believe is our intrinsic value compared with what we can gain in the M&A space. That's not indicative of a change in strategy it's more indicative of about the valuation and a point in time. And we always see throughout our history those things, ebb and flow and normalize in a highly cyclical business is kind of that simple really but it’s a little bit of all the above on the points that you focused on.

Thanks for that all, I will turn it back.

Thanks Blake.

Our next question comes from Marc Bianchi from Cowen and Company. Please go ahead.

Thank you. I guess I wanted to start with some of the shorter cycle businesses within well site and also in the manufactured products. Just thinking about this build-up of jobs that everybody is talking about and how things progress if the rig count were to be down say 5% to 10% in 2018, what could keep these short cycle services and products flatten maybe you could talk to well site and the manufactured business as well.

Yes, sure I'd be happy to do that that thematic calling now a 5% to 10% decline I think I'm hearing you say in rig count.

Rig count.

What holds that sale, if you will, is obviously a couple things number one the level of drilled uncompleted wells that are out there? We kind of lagged on the up cycle as we waited for the completion to kickoff. The same would be true, if you hypothetically went into a lower activity type scenario that I think would help us. The second thing again we said this consistently, that the more complex a large expanded horizontal pad drilling should help become make our equipment and services a little more sticky through a cycle like that. In terms of our short cycle manufactured product business I always say the beauty of these things is we go in and we blow them up every day. And so, if there's no residual there that gets reused, recertified, reinspected, and reworked, which is a continual treadmill of manufacture and delivery and we've not seen anything to suggest that the wells we are completing are going to get any easier and therefore require less product down hole.

Would you say one is more resilient than the other?

I think it's hard to say honestly it's again this is a type of business but typically consumable and a service are sustainably pretty good through cycle particularly on a returns on investment standpoint. And again what we struggle with is amount of equipment i.e. often times in a cyclical business you get too much deployed and I don't know that that's really the case in this cycle so, I think a focus on services and a focus on consumables remains a good strategy.

Okay. Well maybe if I could ask one more as it relates to the backlog in the Offshore Manufactured business. Historically this has been 80% to 90% type conversion and now this year you're talking about a 70% conversion can you maybe bucket the backlog into a few different categories and talk to what the underlying assumptions are for that 70% conversion that it all averages out to.

Yes, we tried to get everybody to recognize that there is a bit of a mix shift going on in backlog and I can't -- I'm not going to validate your conversion cycles simply because I've not necessarily done the math. If I look at kind of major project type backlog I think the same trend exists today that existed before. The real difference is we've got a little higher weighting towards military simply because we've had a shrinkage in deepwater type awards than FIDs but also has been the extended activity on short cycle and so to call that 70% conversion would be a huge mistake. To call it 100% would be a huge mistake because I said before we're generally rebooking we're maybe carrying 45 to 60 days max backlog relative to inventory. So this thing turning every single month so, there's a multiplier, if you will, on backlog about 100%. I've not done the math because it varies a bit quarter-by-quarter does that make sense to you.

Yes, it should. I guess if I were to just think about the non-military piece and sort of the more traditional energy markets piece that's truly long cycle backlog is that continuing at the traditional 80% to 90% conversion or is there just some projects there, that are rolling through that would be maybe unusual.

No, in terms of our major project backlog that the transit is the same, the difference is we just got a lot less of it so, let's focus on the second half get a couple of these orders in and have a more favorable conversation all it means is that number has shrunk so that military and our shorter cycle are a bigger percentage of the path and the trends are a bit different.

That makes perfect sense. Thanks Cindy.

Thank you.

Our next question comes from Jud Bailey from Wells Fargo. Please go ahead.

Hey, question Cindy on you mentioned two potential orders in the back half of the year to take book-to-bill above one. I'm just curious given the number of conversations you're having is two kind of a number you feel confident with, is there possibility you could have more than two or how does the back half of the year look in terms of timing as you kind of look at all the different FIDs that are out there?

Well we have gone to very specific forecasting every single product category to try to get our arms around those projections. And when I mentioned two, these are announced FIDs generally that we think will come into backlog quite frankly one in Q3, one in Q4 and so we've done sensitivities around what could more come in, of course it could. We've also done sensitivity that those are to flip into 2018 what does that kind of downside bookings look like for the second half. But overall I think we’re trending very consistent with the guidance we've given you to-date. We couldn't more guarantee these awards coming in and specifically at given month or given quarter but we feel obviously reasonably certain that we wouldn't be having the conversation on our conference call.

Okay. All right. Appreciate that and then my second question is trying to think about the margin outlook for Offshore with the new guidance of 16% to 17% in the third quarter, you get the bookings back half of the year as we think about 2018, is there a way to think about the way the mix is going to impact to think about margins as you look into next year as Offshore come perhaps a bigger component, just maybe directionally?

Well sure, I mean I first saw just we kind of guided you to troughing bookings backlog and EBITDA margins this year, and assuming that whether Q3 or Q1 wherever we end up at trough, I would tell you it’s better than where we've been in past down cycles. Maybe your question is there any reason we won’t recover those margins back no as long as we get some decent backlog additions, we should do pretty good in terms of margins then. I will also tell you that based on our internal forecast today we think Q4 is better than Q3 simply because of absorption and again a lot of what we classify these large or these conductor casing connectors in our major projects were. But it's more long-term multi-year development drilling programs but again there is a certain order flow and lumpiness to that and so absorption gets hit a little bit in Q3 which is lower standard connectors particularly coming out of the UK and Southeast Asia and of course trough or near trough major project tied backlog. That's the headwind we're facing, both of these again I think that standard connectors is temporarily with Q4 improving. Again if we even get the two major more significant awards in the back half this year then my major project revenues improve and therefore absorption. So it's -- I’m reticent to call an exact bottom particularly when we’re talking about small margin percentage differences here at the end of the day but we do have a little more improved outlook as we move into fourth quarter.

Great. [Indiscernible] you had a minimum; you feel comfortable with margins starting to move back up assuming that the bookings come during the back half of the year?

Correct, very correct. Yes.

Okay, thank you.

Thank you, Jud.

Our next question comes from Ken Sill from SunTrust. Go ahead.

Yes, good morning. And congratulations on having a Tropical Storm named after you.

Not exactly what you wish for.

No, no at least it wasn’t a cat side hurricane, right?

That’s exactly right.

I’m struggling subsea major projects, a few of those really helped for backlog. One of the things that looks like it’s for sure going to be happening is that people are going to continue to keep the existing infrastructure particularly in the Gulf of Mexico full be a subsea tiebacks, what's the revenue opportunity for you guys in a subsea tiebacks, if that activity continues to remain strong?

Well that varies broadly at the end of the day but those are generally going to be it and we have those in and out of our backlog, a lot of that is small tiebacks, repair type work that we had consistently not only in the Gulf of Mexico but elsewhere but typically those are below $2 million and they're not individually called out.

That is and that kind of leads into my second question about theirs, obviously people shut spending money pretty dramatically in 2015, 2016 and even early in 2017 but is your trough level of activity which ever quarter ends up being is that indicative of kind of the base load of kind of repair and spare parts and tieback projects or has that been artificially depressed because people are just following the inventory and delaying things.

We're pretty close to that with the caveat late last year, early this year we did have some runoff of major projects work into our revenues but we called out an FID order I believe it was in Q3 of last year and we haven't had much even we may have called out a 10 million order but again of the standard connector is more with development drilling programs as opposed to field infrastructure such as FPSOs, TLPs, rousers, et cetera. So yes plus or minus whether you're tied in that bookings or revenues I think we're about at that level. And I think that's why you kind of stay this flat lined trend that about a one book-to-bill ratio because I think that's more or less with where we are again with the caveat we're weighted more towards short cycle right now that military and other so that if we get even one FID could be more beneficial from both a backlog standpoint and an absorption standpoint.

Our next question comes from Chase Mulvehill from Wolfe Research. Please go ahead.

Hey, thanks for letting me in. Most of my questions have been answered but I guess the first one I was a little bit surprised by the wide revenue guidance. The wide range of revenue guidance for well site services so, if you can may be help us kind of understand what drives you to the low-end or the high-end. I don’t know if there is any kind of large international or offshore projects that can hit in 3Q but just kind of help us understand the wide range.

Well, it’s less the honest when crude oil goes down from 50 to 45 all we start hearing about is the risk that this expansion starts to retreat. So that colors your thinking and 450 won't tell you is anything a little more lumpy well Gulf of Mexico kind of hits that mode and international has been quite frankly very slow. So there's no great confidence that we have that international gets any tailwind at this point in time. We don't want to be terribly punitive either but I'm trying to put my I'm looking at Lloyd or Chris to tell me are awake the midpoint of that guidance is suggestive of a decent sequential increase.

15% increase.

It is in the low-end.

Right.

I think was about 10% so --

Yes, so mid $75 million to $85million is the guidance, $80 million is the midpoint which would suggest for well site services a 15% incremental increase in revenues.

So, yes thank you for that but I think that the low-end is more reflective of kind of current indications of sequential improvement. Then we all can answer the question does that flat line from here does it continue to increase and therefore I think that creates our range with for us even though we're now at least about three quarters driven by U.S. land. We still have the element of international in Gulf of Mexico that is not growing at that rate.

Okay, that's helpful. Thank you for the color. And then if we think about completion services and kind of the higher technology product revenue in 2Q did it significantly outperform the 28% sequential increase that you saw in U.S. land revenues.

I'll be honest with you. I don't have that at my figure tip. So, a lot of time we're looking more by growth on a region basis and I don't have the product line details in front of me but just as we suggested there is a migration that began in the quarter towards some of our higher end equipment but that's more consistent with a lot of these larger completion programs really getting legs to.

Our next question comes from George O'Leary from TPH & Company. Please go ahead.

Good morning guys. Just one for me and most of my questions have been answered, following on to John's question earlier as you guys look out at the M&A landscape and bid ask spreads start to close I guess where would you see your retention is more focused is it onshore opportunities, offshore opportunities, and then where would you see that bid ask spread has compressed the most, so are valuations closer on what you’re actually interested in or is it not playing out that way?

I’ve kind of said we'll look at both opportunities but I have to tell you our focus has been weighted towards completion services right now largely driven by land based activity, that’s where our operations fell off specifically given specifically the nature of the business. That is also where we believe we offer high quality solution to our customers across the bid and money in terms of quality, [indiscernible], recertification all the things we do. So I do feel strongly that we need more scale in that market to really defensively cover some of the quality coverings that we believe we get to our customer base and so that's very important. Synergies are of course important I think those can be often times greater in your offshore products business but there are some certainly on U.S. land based product offering as well. So we’re very focused but I would say that the businesses of size anyway are more weighted towards completion services right now.

And there are no further questions at this time.

Okay, great. Thanks to all of you. We appreciate one that you followed this company consistently and two that you’re on the call this morning on a very active and busy week and so we look forward to ongoing dialogue as we move through the second half of this year. So appreciate it very much.

Thank you, ladies and gentlemen. This concludes today’s call. Thank you for participating. You may now disconnect.