Patricia Gil – Director-Investor Relations Cindy Taylor – President and Chief Executive Officer Lloyd Hajdik – Executive Vice President and Chief Financial Officer Chris Cragg – Executive Vice President-Operations.

Praveen Nara – Raymond James Jim Wicklund – Credit Suisse Ken Sill – SunTrust Ole Slorer – Morgan Stanley.

Welcome to the Oil States International First Quarter 2017 Earnings Conference Call. My name is Kate 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 Director of Investor Relations. Please go ahead. Patricia please go ahead..

Thank you Katy. And welcome to Oil States firs quarter 2017 earnings conference call. Our call today will be led by Cindy Taylor, Oil Sands President and Chief Executive Officer; Lloyd Hajdik, Executive Vice President and Chief Financial Officer and we are also joined by Chris Cragg, Executive Vice President of 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 laws.

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 which will be filed tomorrow along with 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 us today for our first quarter 2017 earnings conference call. We reported a net loss of $0.34 per share during the quarter after adjusting for a penny of severance and other downsizing charges.

Our quarterly results reflect current market trend, including an accelerating recovery in U.S. land-based drilling and completions-related activity, offset by reduced spending in certain international regions coupled with continued underinvestment in deepwater. Our well site services segment benefitted from the early stages of a recovery in U.S.

land completions activity in selected shale play regions, dampened somewhat by sequentially lower activity in the Gulf of Mexico, along with lower international results. More than 70% of our Completion Services revenues were driven by U.S. land-based activity with our land-driven Completion Services revenue increasing 21% sequentially.

As we noted in our press release, we have revised our Offshore Products segment name to Offshore Manufactured Products, to better reflect the higher waiting of our of our shorter cycle product, much of which is driven by land-based activity to total segment revenues. We have also provided additional revenue detail for this segment.

Revenues and EBITDA margins in this segment were within our guided range with margins averaging an adjusted 18% for the quarter. We recorded an improved book-to-bill ratio of 1.1 time this quarter, which resulted in a sequential improvement in backlog.

Our backlog totalled $204 million, so its stem the tide of ten quarters of sequential backlog decline. 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 market outlook..

Thanks Cindy. During the fourth quarter we generated revenues of $151 million while reporting an adjusted net loss of $17.1 million or $0.34 per share which excluded $0.01 per share after-tax of severance and other downsizing charges. First quarter adjusted EBITDA of $5.4 million decreased 60% sequentially and our adjusted EBITDA margin was 3.6%.

During the first quarter we invested $5.8 million in capital expenditures related to expansionary investments for our Offshore/Manufactured products facilities along with maintenance capital spend on our completion services equipment.

We estimate that our 2017 capital expenditures will range between $35 million and $40 million depending on market activity. We generated $32 million of cash flow from operations, which allowed us to repay $20 million of debt and to fund the purchase of assets and intellectual property complementary to our crane manufacturing and service lines.

As of March 31, our gross debt level totaled only $26 million while our cash on hand exceeded our outstanding borrowings by $39 million. We ended the first quarter of 2017 with total liquidity of $224 million which is comprised of $159 million available under our revolving credit facility, plus cash on hand of $65 million.

In terms of our second quarter 2017 consolidated guidance, we expect depreciation and amortization expense to total $27.7 million, net interest expense to total $1.1 million and corporate costs to total $12.9 million. Our 2017 consolidated effective tax rate is expected to average 28% to 29%.

And at this time, I would like to like to turn the call back over to Cindy, who will take you through the details of our segments..

Thank you Lloyd. I’ll start with Well Site Services. In our Well Site Services segment we generated another quarter of sequential improvement, as revenues increased 10% quarter-over-quarter to total $60 million, while adjusted segment EBITDA remained positive, totalling $1 million after adjusting for severance and facility closure charges.

These sequential improvements in revenue were driven by an increase in the number of completion services jobs performed, along with improved utilization of our land drilling rigs. While our completion services business benefited from the early stages of a U.S. land-based recovery, as evidenced by a 21% sequential increase in U.S.

land-based revenue, our first quarter total segment results were impacted by higher personnel costs, customer delays in the U.S. Gulf of Mexico and lower international results, which moderated our sequential growth. Our U.S. land-related completion services results improved throughout the first quarter.

In terms of our Well Site Services guidance for the second quarter of 2017, we see continued growth and estimate that revenues for this segment will improve sequentially and ranked between $65 million and $75 million with segment EBITDA margins in the mid-to-high single digits.

We continue to believe our incremental margins for our completion services should average 40% to 45% as we progress through 2017 and realize the benefits of growing completions activity in the U.S. driven by the positive impact from the doubling of the U.S. land rig count, since the trough reached in May of last year.

In our Offshore and Manufactured Product segment, we generated revenues of $91 million and adjusted segment EBITDA of $16 million, during the first quarter of 2017, after adjusting for severance and other downsizing charges. Revenues, adjusted segment EBITDA and EBITDA margin percentage of 18% came within our guided ranges.

Major product revenues declined 48%, while our short-cycle product sales increased 31%. Our shorter-cycle product revenues’ demand is dominated by U.S. land-based activity, comprise 36% of the segment’s revenue in the first quarter. Orders booked for the quarter totaled $97 million resulting in a book-to-bill ratio of 1.1 time.

Backlog totalled $204 million at March 31. There were no individual major backlog additions of $10 million received during the quarter. This was the first sequential improvement in backlog since the second quarter of 2014, which is encouraging and hopefully signals that we are near or have passed a trough in segment backlog.

As we've indicated for several quarters, with lower levels of backlog we expect our project driven revenues and EBITDA to trough mid-year, with incremental backlog projected to be awarded as we progress throughout 2017. We should continue to see improvement in demand for our shorter cycle products due to the recovery unfolding in U.S.

land drilling and completion activity, which will offset some of the gaps in timing from our major project work. Given these variables, we estimate that our second quarter revenues in this segment will increase sequentially and range between $100 million and $110 million, while EBITDA margins are expected to remain in the 17% to 18% range.

In conclusion, improvement in the U.S. onshore drilling and completions related activity are translating into positive results for both of our reporting segments. We believe the outlook for our Well Site Services segment is trending favorably with expanded U.S. land activity.

In addition, for the first time in almost three years we experienced a sequential improvement in our offshore and manufactured products segment backlog and are focused on rebuilding that backlog as we progress through the remainder of 2017.

Demand for our shorter cycle products remain strong and it's improving at a significant pace, which should serve to help offset near-term declines in major project work resulting from lower levels of major project backlog. That does complete our prepared comments. Katy we do open up the call for questions-and-answers this time..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Praveen Nara from Raymond James. Please go ahead..

Hi good morning everyone. .

Good morning..

Good morning..

So I guess as we think about the guidance given for Well Site Services sounds like revenues are up 16%-ish. And so I guess when we think about how that mix changes, I guess one of things we’re changing in the other service lines pressure pumping is pricing increases.

Are we seeing the cost tremors move into the more value-added or having interest in the more value-added products and more proprietary than the commoditized product yet..

As I kind of indicated in my prepared comments every month in the first quarter saw gradual improvements in terms of revenue generation. We obviously have product line details that we do watch and we actually saw improvements across most of our product lines again a lot of that is waded in areas you would think i.e.

Permian kind of the skewed stack region and we are very broad based, we're not only located in the Permian but not all areas increased and yet we experience proportionately I think appropriate increases in the major markets that saw activity increases.

I do feel like we're beginning to see a migration back to some of our hurrying products, particularly our isolation tools but I would say that was probably realized a little bit later in the quarter rather than early..

Okay, perfect that’s very helpful. If we can move to this Offshore/manufactured division for a second, in terms of these shorter term cycle [indiscernible].

So I guess when we think about those margins should we think about those as being accretive to the overall segment margins or how should we think about that?.

As I have explained before this is largely driven today by land-base activity. So they were not good really in 2015 and 2016 when the rig count was down 80%. However, they are accretive today given the improved activity level..

Okay, perfect. Thank you very much..

Thank you..

Our next question comes from Jim Wicklund from Credit Suisse. Please go ahead. .

Good morning guys..

Hi Jim..

I am not good at writing quickly considering how many companies report today. Cindy you had said in the manufacturing division that 49% of our major project revenues shorter cycle business was up 41% dominated by land which was 36% of revenues..

Let me see if I can – Lloyd looks like you’ve got..

Sequentially project driven revenues were down 48%..

Okay..

And short cycle were up 31%..

31%, okay..

And then the relative contribution of the each you can figure out now that we've given the incremental breakup. .

I appreciate it. I understand that Gulf of Mexico and international and completions didn't help in that drag down your revenue growth only 10%..

Yes..

I guess I'm a little surprised by the magnitude of the drop considering the rig count horizontal rig count was up 27.8%. Can you talk about….

Yes I can. First of all, historically Gulf of Mexico and international hasn't been as significant just because we’ve had grater land based activity to get into kind of these lower levels and all the sudden $2 million is quite a lot of money.

And particularly, we've got limited international penetration, I’ll call it, mostly driven by Middle East activity in Argentina. Argentina was down, it feels like almost the whole quarter because of strikes in the region.

And unfortunately those are harsh decrementals because all it means it is I got my people, I got my base, and I have no revenues now may be an exaggeration but you get my point..

Yes..

So that was a major advance but it’s also transitory, given that a lot of those things have been addressed at this point in time. Middle East, for us, was down a little bit as well. I don't think that's inconsistent with what you're hearing from the rest of the market. And Gulf of Mexico, we believe is transitory, as well.

This is some just operational customer, operational delays outside of our control both on completions work, as well as intervention work. It's hard because a lot of this still remains call at work, we bid it. We generally think we have the work but if the customer has delays in getting kicked off and obviously it impacts us.

But again a lot of this is what I almost call just a victim of small numbers here where one off events in Argentina the Gulf of Mexico can impact low levels of EBITDA more significantly than you would think. But there's nothing here that suggests these are permanent type trends..

Yes, okay. But to reiterate U.S. land was up 21% sequentially, in completion services..

Okay, that's very helpful I appreciate it guys. And all the companies that have reported have said that while international activity may have bottomed it might take a little while to come back up and there is more fierce pricing competition than has been expected.

In either of the segments are you seeing the same thing? And when do you think that the onshore international recovery might begin?.

Again I think we have to comment more specific to us. When we're looking at kind of sequential performance in the Middle East we're kind of flat from Q1, i.e. not really recovering back at this date it’d be hard to say otherwise. Argentina should recover back because those were unique issues.

And then Gulf of Mexico is kind of the same thing those can be spotty. But we're not looking for wholesale improvements we’re just kind of like to see a steady either flat to steady improvement from international and Gulf of Mexico.

As it relates to pricing, you're right, pricing is very competitive in both of those markets but we don't see it going down further from where we are. I also don't think that that is more likely that obviously see price improvements on land-based activity before international and Gulf of Mexico even if it is somewhat flat..

Okay. And then lastly if I could Cindy you have talked about acquisitions and how this private equity and the public market is out bidding companies for deals. But we're seeing some of these deals prices less than four times EBITDA.

Is it difficult IPO market improving your chances of making an acquisition or is that transitory, as well and not really having an impact?.

Outside to be determined. Right now we're doing two things, we're looking at small tuck-ins in Offshore Products, we closed the small one in Q1. We are looking at U.S. Land driven at M&A type activity, there's a couple in the offer that we are looking at now. Valuation was very concerning 45 to 60 days ago.

Clearly in fact I asked Patricia had to kind of model some of the recent trends in IPO performance, for the ones that have already had some history, as well as recent transition point out in terms of the value expectations. So I think that is clearly more favorable.

What will determine our course of action is quality of operations in the intellectual property that the company might have. Valuations and after today how that competes with just buying back around stock..

Okay guys. Thank you very much..

Thanks Jim..

Our next question comes from Ken Sill from SunTrust. Please go ahead..

Yes, good morning. Cindy as Jim was saying there's a lot of the big guy saying international is hopefully bottoming but pricing concessions are going to offset any modest revenue increase reason a lot of notes about at some point, you know projects, international project development to go offshore will start to pick up again.

I'm curious, for you specifically, how much of an activity increase do you need to see in offshore project development or the offshore rig count however you want to couch it? To rebuild some of the backlog for your major projects?.

Well, ours is more specific to infrastructure development, not particularly time to the rig count. I mean we have some offshore consumables in our larger conductor casing connector that are more well-driven, but the large majority that we're looking at in terms of rebuilding backlog are infrastructure related.

It won't surprise you that these are projects that are headline projects right now. The [indiscernible] project, Mad Dog II Coronado, the Shenandoah, some of the Petrobras FPSO opportunities, et cetera, very much built that infrastructure driven. We've got obviously good knowledge of bidding and quoting the key there is one of timing.

In the past earnings report I provided to you that thought that we could see some of these bookings come likely in Q2 and/or Q3. We did not expect to receive them in Q1 and we didn't and again on a positive note despite that we still had a book-to-bill north of one..

So I guess with commodity price volatility is Q2, Q3 still reasonable or given the crystal ball you just not willing to….

Well again if you're talking about Q3 comments come to mind, number one, yes we just fell below $50 a barrel that may be your comment. I don't think that will change the decision on some of these major deepwater projects to move forward or not.

If it had any near-term impact it would likely be more on land but I certainly don't expect that you'll see any trend changes this quarter..

Okay great, that's all. Thanks..

Thanks Ken..

And our next question comes from Ole Slorer of Morgan Stanley. Please go ahead..

Yes thanks. And nice to see the book-to-bill ratio go above, I think for the first time since the second quarter of 2014.

So are you willing to call the trough in your Offshore Products here Cindy?.

I think we are very close. I don't know if it’s Q1 or Q1 proved to be Q4 on that or Q2. The two variables there are increasing my revenue guidance such that even if I have flat bookings sequentially it wouldn’t quite be one, it would be very close to one. So we’re kind of on a razor’s edge here on trough bookings.

But we're not there we're very close to there. And the key will be, are we going to get a major project award in Q2, are they going to be differed into Q3? But either way I don't really think that changes the outlook for this segment..

Yes. But there's some seasonality there is during the first quarter typically a weak quarter of the kind of bread and butter business in terms of order intake..

It can be definitely, particularly our larger the conductor casing connectors but again most of the backlog churn smaller projects, repairing and maintenance and short cycle as we talked about. So I don't know whether to attribute that to seasonality or not to be honest with you.

In the absence of any major project awards in the quarter, a lot of this almost becomes kind of ongoing site to site recurring order activity because who knows what’s recurring anymore. But we feel pretty good about our overall position and it seems very consistent with the outlook that we provided the market six months to twelve months ago..

Just checking.

If I turn to the completion side, any changes that we should may be aware of in terms of either the competitive landscape with the likes of what Cameron Schlumberger are doing, or FMC, or emergence of this appearance of mom and pops, now that the world is getting a little more corporatized to particularly deliver kind of ball launchers, frac stacks and everything you do there on U.S.

land..

Well, you know, I'm not as worried about the competitive dynamics. I think if we are to see any major impact from – you mentioned specifically Schlumberger Cameron it probably be more in international regions again that’s a lot of their focus and waiting at this point in time. That's not as significant for us. So I don't view that as a major threat.

When we talk about the mom and pop, quite frankly a lot of those have very good regional relationship. They are not as graphically broad based as we are. We believe still today we have the high stand technology and better quality programs and people, but we are little more expensive.

And so when you're in a very weak market cycle that we saw in 2015 and 2016 price somewhat rules the day. And if these regional players are raising prices as we know they are, people are experiencing service quality issues we normally have a reversion back where they're willing to pay a little bit more for higher quality products and services.

So again, we feel like our market position is very sound. We do have a lot of ground to recover just in terms of activity, but all the trends right now on land-based activity is moving in a positive direction. That's kind of the – I don't know if that's too generic for your answer, I hope not..

A little bit on the generic size, but that’s okay. Well, we can dig more into the details later, but thank you very much. I’ll hand it back..

Thanks, Ole..

And we have no further questions. This concludes the question-and-answer session. I will now turn the call over for closing remarks..

Okay, Katie, thank you so much and I appreciate all of you, who joined the call. I know this is a hectic season and a particularly hectic day based on all the relatives that came in last night. We will stand by, be ready for follow up questions.

Of course, we're about to move into OTC week and so I'm sure we'll see a lot of you there and welcome the interaction. So thanks so much and hope to see you next week..

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