Patricia Gil - Investor Relations Manager Cynthia B. Taylor - President, Chief Executive Officer & Director Lloyd A. Hajdik - Chief Financial Officer, Treasurer & Senior VP Christopher E. Cragg - Senior Vice President-Operations.

James K. Wicklund - Credit Suisse Securities (USA) LLC (Broker) Blake Hutchinson - Howard Weil, Inc. Jeff Tillery - Tudor, Pickering, Holt & Co. Securities, Inc. Agata Bielicki - Simmons & Company International Jeffrey Spittel - Clarksons Capital Markets B. Chase Mulvehill - SunTrust Robinson Humphrey.

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..

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 $252 million and $62 million respectively and maintained a record EBITDA margin percentage of 24.6% for the second quarter in a row.

Due to weakening market conditions, inbound orders were negatively impacted and our book-to-bill ratio declined to 0.85 times in the quarter, bringing the full year 2014 ratio to 0.95 times. Our backlog decreased 10% sequentially to total $490 million at December 31.

In January, we acquired Montgomery Machine, a Houston, Texas based company that combines machining and proprietary cladding technology and services to the manufacturer of high-specification component for the offshore capital equipment industry.

This acquisition will start to strengthen our position in our offshore products segment, and as a supplier of critical subsea components with enhanced capabilities, proprietary technology and logistical advantages.

Now, I'd like to transition from the fourth quarter results to give you some commentary as to our market outlook, particularly for the first quarter of 2015. As you are likely aware, our customers in the U.S.

have announced significantly reduced spending plan for 2015 as a result of growth in crude oil production and associated inventory which have driven commodity prices meaningfully lower from a WTI high of $107.62 per barrel in July of 2014 to a current spot price of approximately $50 per barrel.

This commodity price slide has triggered a decline in the U.S. total rig count of 573 rigs since reaching its peak last September. We have seen the effects of these reduced activity levels in our early cycle businesses, more severely in our land drilling business leading us to begin to stack idle rigs.

In our well site services segment, we have implemented bump back (04:50) programs and reduced our headcounts and pay scale where necessary.

In our offshore products business, we believe that our current backlog and exposure to deepwater infrastructure development project will mitigate some of the near-term commodity price headwinds, as these projects are generally longer term and are based on through-cycle economics.

However, we are cognizant of the potential, for further delays in major project awards. During the fourth quarter, we experienced drilling product backlog cancellations totaling $8.4 million and are currently seeing reductions in book in turn and service revenues.

At this time, Lloyd will take you through more details of our consolidated results and financial position, and then I will provide you a more detailed discussion of our business segment and give you our thoughts on the expected impact of this weak activity on our business..

Thank you, Cindy. During the fourth quarter, we generated revenues of $484 million and reported net income of $58.3 million or $1.09 for diluted share. EBITDA for the fourth quarter ended December 31, 2014, was $124 million.

In regards to our balance sheet and our debt capital structure we had total liquidity of approximately $477 million, that's comprised of $424 million available under our revolving credit facility after the reduction for standby letters of credit of $36 million plus cash on hand of $53 million.

Our gross and net debt levels at December 31, 2014 totaled $147 million and $94 million respectively, representing a net debt-to-book capitalization ratio of approximately 7%. At December 31, our leverage ratio, using adjusted EBITDA was 0.3 times.

During the fourth quarter of 2014, we invested $56.7 million in capital expenditures for our continuing operations, spending primarily related to the addition of incremental completion services equipment deployed to service the U.S. shale plays, and ongoing facility expansions in the offshore products segment.

In light of current market conditions, we are reviewing all capital expenditures.

During the full year 2015, we expect to spend approximately $175 million to $225 million in capital expenditures, $93 million of which is approved carryover from 2014 as we complete the expansion of our offshore products facility in the UK, continue the facility expansions at our two locations in Brazil, and maintain our well site services equipment.

In the fourth quarter, we repurchased 1.14 million shares of our common stock under our authorized share repurchase program at an average price of $55.72 per share. Subsequent to year end and through February 18, we repurchased an additional 1.62 million shares of our common stock at an average price of $43.21 per share.

The company's current available share repurchase authorization totaled $79.9 million and is scheduled to expire on September 1, 2015.

In terms of our first quarter 2015 consolidated guidance, we expect depreciation and amortization expense to approximate $32.4 million, net interest expense to approximate $1.6 million and corporate cost to approximate $13.4 million. Our 2015 consolidated effective tax rate is expected to average approximately 35% for the full year.

At this time, I'd like to turn the call back over to Cindy who will take you through the business segments..

Thank you, Lloyd. In our offshore products segment, we generated record revenues of $252 million during the fourth quarter of 2014 compared to $247 million in the third quarter of 2014. EBITDA increased 2% sequentially to total $62 million, and we maintained a record EBITDA margin percentage of 24.6% for the second consecutive quarter.

Fourth quarter EBITDA benefited from strong contributions from connector products sales and continued robust demand for our services along with operational efficiencies and strong project execution by our major divisions.

Orders booked during the quarter totaled $215 million, which resulted in a sequential backlog decline of 10% to end the year at $490 million.

Our fourth quarter book-to-bill ratio of 0.85 times was lower than we had forecasted as inbound orders were negatively impacted by project deferrals likely due to the decline in market conditions realized in the fourth quarter. On a full year 2014 basis, our book-to-bill ratio averaged 0.95 times.

In the fourth quarter, notable backlog additions included receptacles and connector products destined for West Africa along with tendon couplings and flex element for our TLP in the U.S. Gulf of Mexico.

As it relates to our first quarter forecast, we believe that revenues in our offshore products segment will decline compared to the prior quarter and range between $185 million and $200 million.

This is the result of a slowdown in service work and discretionary spending on the part of our customers along with backlog cancellations and lower backlog levels overall.

While we expect strong contributions from production facility equipment in the quarter, we do expect to see reductions in revenues from drilling rig equipment, services, connector products used in offshore wells and elastomer products.

EBITDA margins, however, are still anticipated to range between 20% and 22% due to forecasted product mix and cost reduction initiatives that are underway.

In our well site services segment, our fourth quarter results benefited from our higher end completion services equipment deployed in the active shale plays, particularly in the Rockies, Permian and Eagle Ford basins. For the fourth quarter, we reported a 3% sequential increase in revenues, which totaled a record $232 million.

The sequential improvement in revenues was largely attributable to a 6% increase in revenue per ticket, and a slight increase in the number of completion services jobs performed.

EBITDA, however, decreased 3% sequentially to $75 million, as the segment was impacted by additional cost associated with stacking 10 of our land drilling rigs during the fourth quarter, in addition to completion activity decline in the latter part of the quarter.

Land rig utilization level began to decline during the fourth quarter and averaged 86%, down from 90% in the prior quarter. EBITDA margins for the segment came in just below our guided range at 32.4%. Today, we have 17 land drilling rig stacks or half of our fleet of 34 rigs. The ongoing decline in U.S.

drilling activity clearly will negatively impact our well site services segment. Although we continue to believe that service intensity or complex completions will positively outpace the rig count, activity levels in our completion services and land drilling segments will suffer.

The horizontal rig count has declined 25% versus peak in November of 2014. We estimate that first quarter revenues for our well site services segment will range between $152 million and $162 million with EBITDA margins averaging 27% to 30%.

Embedded in our guidance is the expectation of lower land drilling rig utilization, which is forecasted to average 50% in the first quarter, coupled with reduced activity levels in our completion services operations, given material declines in the horizontal rig count.

While Oil States remains well-positioned with our product and service offerings across our business lines, in addition to having a strong balance sheet, clearly we are not immune to the market conditions under which we currently operate.

In anticipation of the materially lower activity levels, we proactively began addressing our cost structure late in 2014 by reviewing head count requirement, pay structures, controlling discretionary spending for both capital and operating items, and negotiating price decreases with our vendors.

These steps will continue well into 2015, as we gain better visibility on current market condition and the duration of this weak commodity price environment. Oil States remain financially strong and will maintain our disciplined approach through this cyclical downturn in the energy market.

Our management team has experienced past energy cycles and we are prepared to respond and ultimately take advantage of business opportunities and investments that will strengthen our company for the long term. That completes our prepared comments. Kristine, would you mind opening up the call for questions and answers at this time please..

Thank you. And our first question is from Jim Wicklund of Credit Suisse. Please go ahead..

Good morning guys..

Hi Jim..

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?.

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, as I said on the call, we are just not immune to it.

I would tell you right now, we structured this company as the most service companies with a lot of variable-based cost, but the disappointing part for any of us in this sector is that our largest costs are human beings, right, and so – but we have to respond, we put a priority on trying to retain people, albeit at lower levels – lower cost levels to respond to our customers.

If we do that right, we'll put some floor on margins, but I'll also acknowledge that in that guidance, everybody would probably tell you it's kind of like catching a falling knife right now and trying to keep your cost commensurate with the revenue declines.

I do expect that our margins will decrease throughout first quarter, January being reasonably good. And maybe further commentary, obviously, completions lag just a tiny bit really, drilling rig declines. So we're going to be impacted.

I guess, the only other commentary, another trend that is developing now is drilling wells and not completing them, i.e., the customers and operators trying to preserve that capital cost on the completion side. That's likely to hurt us a little later in the quarter, we baked that into our guidance, we believe.

But the good news of that is once we get to a floor and start a recovery, that recovery could come more quickly for us, our completion business. I hope that helps..

No. It helps a lot because, I mean, here we are in the middle of February and by now you should have a good idea of what your margins are going to be at least for today, so that's very helpful. My follow-up, if I could. Lloyd, a 7% net debt to cap, a 0.3% debt to EBITDA. First of all, I think you're bragging is shameless.

But most of all, I mean, you are exceptionally well-positioned to be going into a downturn one would think..

Jim, you're absolutely correct. I mean, we do have a very strong balance sheet. We're well-disciplined. We've talked about deploying CapEx to our existing businesses, taking a look at targeted M&A opportunities as well as balance for share repurchase. So with low levels of leverage, we are quite capable to take advantage of that..

Is the M&A activity in this sector overall going to be more active in 2015 or 2016 do you think?.

I think it's a take a wait and see approach, but I think 2016 is probably a little bit better..

Thanks, guys. I appreciate the time..

Thank you, Jim..

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

Good morning..

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?.

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 will come into backlog in the first quarter. The second one, we don't know. It could be deferred, it could have been shelved. We'll know more when we come on our first quarter call.

So that's kind of the big picture difference in that guided range of a book-to-bill of 1 time versus the 0.85 times we recognized. Again, a couple of projects did come into backlog, two specific did not, okay.

And then in addition to that, we mentioned, I believe, it was right at $8 million of project cancellations, which are very, very rare in our backlog. Most of the shareholders, analysts that follow this company know that we have kind of ball parked depending on the quarter and year that we're about 10% exposed to drilling rig equipment.

These cancellations were all drilling rig equipment related, but to put that in context, that's not a huge amount of our backlog. But, again, you think of anybody that might be contemplating say an upgrade of a drilling rig as an example, not eager to do that in the market environment and the cycle that they are seeing.

And so, again, I don't expect to see significant cancellations, but I don't think I would be giving you full color if I did not mention that. So that's kind of where we were with backlog through the end of the year.

Now where we are today obviously is focused on obviously backlog continuation, if you will, in addition to just managing the top line and our margins. You'll notice that over the last two years or three years, our revenue has accelerated far in excess, i.e., the rate of growth, far in excess the rate of growth in our backlog.

A lot of that is due to the recent acquisitions we've made, that have a lot more book and turn revenue, i.e., not as much backlog driven revenues, a little more susceptible to near-term declines. And again we mentioned that on the call.

I think we work through – and again, this is in the context of coming off an absolute record quarter in the fourth quarter of 2014.

So you kind of have to put it all in perspective, but again, I think the business overall has a lot of positive characteristics, but again there's going to be some near-term softness and it started book and turn revenue and again, even though not large for us, anything exposed to drilling rig equipment.

And, again, most of you know too that some of our specialized connectors are large OD conductor casing connectors that are driven by drilling of offshore wells. That too has taken a bit of a pause in the first quarter..

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?.

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..

Thanks, Blake..

Thanks, Blake..

Thank you. Our next question is from Jeff Tillery of Tudor, Pickering & Holt. Please go ahead..

Hi. Good morning..

Hi, Jeff..

Hello, Jeff..

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?.

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 a lot better about the outlook for the balance of 2015 and going into 2016. But like anything else, we're on a treadmill, if you will, of re-booking backlog. We erode 75% to 80% of our backlog every year.

And so, again market forces will determine that. But I'm not overly pessimistic about our ability to maintain a reasonable level of backlog at this stage..

And as I think about the components of the offshore products revenue mix, some of the bookings earned and service revenues declining just given the market conditions, are those typically accretive to the margins or dilutive to the margins?.

I would say they're accretive, anytime you get serviced for almost anybody in the business. I'll tell you those are very good products. And then in addition to that an example is our high-end valve technology, I mean that's another one that's more book in turn and some of the other businesses are elastomer products.

We've gotten great results with our product line over the last two years or three years, particularly on frac plugs and that has done very well at good margin. So that would – and we've reduced our margin guidance range just a little bit from the record margins that we realized and part of that is in reflection of exactly your mix comments..

And the last question has just around CapEx for this year.

Lloyd, if you could help us think about $175 million plus, in aggregate how much of that is facilities versus I'm just trying to think about the part that's kind of moving in variable with activity versus just what was basically the path that you guys were set upon back a couple of quarters ago?.

Yeah, Jeff. I'll say this, the $175 million to $225 million range is a pretty wide range. There's about $100 million that's budgeted carryover, which is predominantly budget carryover to complete the facilities in the UK and to a lesser degree the facilities in Brazil..

All right. Thank you, guys..

Thank you..

Our next question is from Agata Bielicki of Simmons & Company. Please go ahead..

Good morning. Congrats on the quarter..

Thank you..

Thank you..

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?.

We've not given guidance on that. Again, we limit our guidance both on operating results and backlog outlook to a quarter..

Okay..

And that's the best information I can give you at this stage..

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?.

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. It did trough very poorly in the second quarter with three rigs running, and our cash margins for the year were about 2,700 a day.

That should frame how bad could it get for you, but again, for everybody else's benefit on the call, please keep in mind, it's only about 10% of our EBITDA..

Okay, great. Thanks.

And any additional color you could provide on the recent acquisition?.

Well, it's one of these deals that we're always opportunistic, looking at ways to enhance and grow our business particularly in offshore products. We have a lot of respect for this business line. They've got a great product line. We've worked with them for many, many years. They were targeted well ahead of the closing in early January.

We went through a lot of due diligence and analytical work. Of course, like anything else, when you are closing an acquisition going into a downturn, you really want to get a good feel on how resilient they're going to be through that downturn.

But we got comfortable with the whole process and are thrilled to have closed that acquisition, albeit a small one, but these are the types of deals that we like to do and they normally have very successful and favorable contributions to our company long-term..

And fits in with the longer-term nature of growing up in our supply chain as well..

Excellent, excellent.

And if I could squeeze one more in, and this is more sort of a high-level 30,000 feet kind of question, but how are you thinking about or viewing this down cycle sort of compared to the previous down cycles?.

Well, that – I think that view changes every week. You lose on 100 rigs a week, it's kind of gut shot, but we just had our board meeting and it's probably interesting to note if you track this rate of decline to 2009, it's actually quite bit worse right now, but I think somebody, maybe it was Jim, said that we're in a great position.

A lot of times, I always say you got to know you're in a cyclical business and, in fact, embrace that cycle. It does create opportunities that might not otherwise present themselves. And so we view it in that vein. You've got know what you've got and know how to operate through that cycle but I'd say we're managing as we need to manage.

If there is a disappointing thing, it's only as I mentioned before the only way to control costs are people in a service business and so that makes it tough. But we're going to sit together as a team and work to be sure that we come out of this cycle having done something opportunistic that helps us when we do recover..

Great. That's helpful. Thanks. We'll turn it back..

Thank you..

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

Thanks. Good morning, everybody..

Hi, Jeff..

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?.

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?.

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..

Thanks, Jeff..

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?.

The percent that turns in a year..

Yeah, year-end 2014..

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?.

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?.

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..

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....

It should be filed tomorrow I think..

Okay, I'll wait for tomorrow..

Yeah..

All right. I'm sorry I was trying pry too much out of you..

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?.

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?.

Typically about $90 million to $100 million a year..

Highly controllable....

Highly controllable, absolutely..

...depending on market out. That assumes kind of steady state operation..

Right, just to hold your revenue flat that's what you need, fair?.

Fair..

Fair..

But again, if we're in a draconian rig count decline, we could cut that if necessary..

It would be less..

Yeah..

Okay. All right, that's all I have. Thank you..

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..

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..