Patricia Gil - Director, IR Cindy Taylor - CEO, President and Executive Director Lloyd Hajdik - CFO, EVP and Treasurer Chris Cragg - Executive Vice President, Operations.

Marshall Adkins - Raymond James Sean Meakim - JPMorgan Jud Bailey - Wells Fargo Blake Hutchinson - Howard Weil George O'Leary - Tudor, Pickering Stephen Gengaro - Loop Capital Kenneth Sill - SunTrust Robinson.

Welcome to the Oil States International Fourth Quarter 2017 Earnings Conference Call. My name is Victoria and I'll be your operator for today's call. [Operator Instructions]. Please note, this conference is being recorded. And I will now turn the call over to Patricia Gil, Investor Relations for Oil States. Patricia, you may begin..

Thank you, Victoria. Good morning and welcome to Oil States’ fourth quarter and 2017 earnings conference call.

Our call today will be led by Cindy Taylor, Oil States' President and Chief Executive Officer; Lloyd Hajdik, Oil States' Executive Vice President and Chief Financial Officer; and we are joined by Chris Cragg, Oil States' Executive Vice President 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 protection accorded 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.

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 fourth quarter 2017 earnings conference call. We’ve had an incredibly active couple of months here at Oil States.

On this call we plan to review details of our fourth quarter 2017 results and provide guidance, comments for the first quarter of 2018, but will also discuss events that occurred subsequent to December 31, 2017. Our fourth quarter 2017 operating results improved nicely on a sequential basis driven by top line growth from both of our segment.

Our fourth quarter earnings per share also grew sequentially after adjusting for one time items, the most significant of which related to the impact of U.S. Tax reform which Lloyd will discuss in more detail.

Our Offshore/Manufactured Products segment results improved nicely as project driven product sale increased quarter-over-quarter benefitting from higher connector product sales while sales of our short cycle and other products and services remained strong. Despite reduced bookings in the quarter, our full year book-to-bill ratio averaged 0.95 times.

In our Well Site Services segment, our U.S. land completion services revenue increased 9% sequentially continuing the trend of strong completions related activity in the lower for [Indiscernible]. With both segments strengthening sequentially, we reported higher absolute EBITDA and a better EBITDA margin percentage.

In December we announced the acquisition of GEODynamics which will be reported as a third segment named Downhole Technologies starting with the first quarter of 2018. The acquisition closed on January 12, 2018 and accordingly the results of operations will be picked up by Oil States from that date forward.

GEODynamics offers our company meaningful growth potential that combines technology with Downhole consumable completion solutions.

Their product innovation and collaborative relationships with E&P operators will further augment their research and development efforts and should lead to enhancement in our consumable product offerings in the growing markets for technology backed product using complex well completion.

GEODynamics brings with them a robust growth pipeline with initiatives to expand their existing product offerings and geographic footprint. Collectively, we will be able to offer our customers more customized Downhole completion solutions while assisting with their increasingly complex completion design.

As further described in our recent press releases, we issued $200 million principle amount of convertible senior notes and amended and extended our revolving credit facility to provide a longer-term financing structure for the company.

We initially utilized borrowings under our revolving credit facility to fund the cash portion of the GEODynamics acquisition. Lloyd will take you through more details of our consolidated results and also provide highlights of our financial position. I will follow with more details by segment and provide additional comment on our market outlook..

Thanks Cindy and good morning everyone.

During the fourth quarter we generated revenues of $184 million while reporting an adjusted net loss of $8.8 million or $0.18 per share, which excluded $0.02 per share due to transaction related costs and $0.56 per share for our one time non-cash income tax charge resulting from the recently enacted tax reform legislation in the U.S.

Our fourth quarter adjusted EBITA totaled $12.9 million and our adjusted EBITA margin was 7%. We generated $90 million of cash flow from operations during the fourth quarter and invested $15 million in capital expenditures.

For the full year of 2017, we invested $35 million in CapEx and we estimate that our 2018 capital expenditures will range between $60 million and $70 million which is inclusive of debt [Ph] investments expected to be made upon GEODynamics growth.

We utilized our fourth quarter free cash flow which after CapEx to pay down all amounts remaining outstanding under our revolving credit facility at December 31. Having made that outstanding under our revolving credit facility put us in a very strong position to fund the cash portion of the GEODynamics acquisition.

For the full year of 2017, we generated a total of $60 million of free cash flow utilizing $13 million for M&A activities, $16 million for share repurchases and $42 million for revolving credit facility repayments net of borrowings. And as Cindy mentioned previously on January 12, we closed the acquisition of GEODynamics.

This acquisition was funded with a combination of $295 million of cash, which is net of cash required, the issuance of 8.66 million shares of our common stock valued at approximately $295 million based on Oil State’s share price at closing and the issuance of $25 million unsecured promissory note payable to the sellers for total acquisition consideration of approximately $615 million.

On January 30, we completed offering of $200 million principal amount of 1.5% convertible senior notes due in 2023. We utilized the net proceeds from the offering to pay down a portion of the outstanding borrowings under our revolving credit facility, which were drawn in January to fund the cash portion of the GEODynamics acquisition.

In conjunction with issuance of the convertible senior notes, our revolving credit facility was further amended and the maturity date extended. Lender commitments under the amended revolving credit facility now total $350 million and the maturity date was extended to January 30, 2022.

In terms of our first quarter 2018 consolidated guidance, we expect depreciation and amortization expense to total $31 million to $32 million. I’m giving a little bit of a range for DD&A as we are in a process of refining our purchase price allocation for GEODynamics particularly as it relates to amortizable intangible assets.

We expect net interest expense to total $4 million, which includes approximately $1 million of non-cash accretion expense associated with the convertible senior notes and amortization of debt issue costs. Corporate expenses projected total $12.5 million. We do not expect record must income tax expense or benefit in the first quarter 2018.

The benefit of projected operating losses is expected to be offset by non-deductible items in the quarter, in other words, no tax benefits you’d expect to book with a pre-tax loss is largely expected to be offset. Longer-term we should move towards the lower U.S. corporate tax rate of 21% as our U.S. operations return to profitability.

However the non-deductible items will initially keep our effective rate in a higher range. At this time, I’d like to turn the call back over to Cindy who will take you through the details for each of our business segments..

Thank you, Lloyd. In the following segment comment the term adjusted EBITDA explains severance and other downsizing charges.

In our well site services segment, we generated another quarter of sequentially improved results with revenues of 6% totalling $82 million and adjusted segment EBITDA up 46% quarter-over-quarter totalling $11 million which exceeded the high end of our guidance range.

The sequential improvement were driven by a 7% increase in the number of completion services jobs performed at 2% increase in revenue per Completion Services job and steady utilization for our land drilling rigs which averaged 31% for the quarter. Despite the flat-to-down U.S.

average rig count during the fourth quarter and the increase in drilled but on completed well, our Completion Services business benefited from increased well completion activity and well intensity across the active U.S.

basins, particularly in the Permian and midcontinent basin coupled with sequentially improved international and Gulf of Mexico result. Our Completion Services incremental adjusted EBITDA margin averaged 54% in the fourth quarter, while our incremental for the full year 2017 averaged 43%. U.S.

land based complex well completion activities continue to improve and demand for our equipment and personnel is tightening. Accordingly, we are beginning to see printed price increases on our Completion Services job.

We estimate that first quarter revenue for our Well Site services segment should range between $83 million and $88 million with segment EBITDA margins of 11% to 13%. A portion of our 2018 activity will be negatively impacted by extreme weather which is expected to moderate our sequential growth.

In our Offshore/Manufactured Product segment we generated revenues of $102 million, adjusted EBITDA of $16 million and an adjusted EBITDA margin percentage of 16% during the fourth quarter of 2017.

The 17% sequential increase in segment revenues was driven predominantly by an increase in sales of our standard connector product, which is tied to exploratory and development drilling activity, south of our shorter cycle product, which are largely driven by U.S land-based activities remains steady during the fourth quarter and comprise 36% of the segment’s quarterly revenue.

Orders booked for the fourth quarter were a disappointing and totalled $80 million resulting in a book-to-bill ratio of 0.79 times for the quarter and 0.95 times for the full year. Backlog declined 15% sequentially to total $168 million at December 31.

There were no major project awards book into backlog in the fourth quarter as a couple of projects bid by Oil States slipped [Ph] into 2018 or were deferred until later in the year.

We continue to believe that our backlog is at or very near top level and dialogue with our customers believes us to expect to retrieve selected award associated with major project sanctions in 2018. Demand for our shorter cycle product is expected to remain strong given the outlook for customer spending on U.S. land completions activity in 2018.

Major project revenues are expected to vary quarter-to-quarter and be driven by our standard connector product, cranes and pipeline related equipment in the near-term. Improved bookings and additional project FIBs will be needed before we see a recovery in our products used in field production infrastructure.

Accordingly revenues for this segment are expected to decrease sequentially due to timing of major project sale and should range between $94 million and $100 million while EBITDA margins are expected to average 15% to 16%. Our newly created downhole technology segment will report the activity of our GEODynamics acquisition going forward.

Technology advancement and the adoption of modern completion techniques are driving strong demand for their consumable completion products. Longer lateral links and great frac stages and more preparation clusters are providing customers with improved unconventional well productivity.

We will pick GEODynamics results of operations beginning on January 12, 2018 the date of the acquisitions clothing, but a portion of the first quarter of 2018 that we own GEODynamics we estimate that revenues will range between $42 million and $47 million with EBITDA margins averaging 23% to 25%.

To conclude, we are seeing continued activity improvement in the U.S. Well Completions market, which support ongoing demand for our Completion Services and for our short cycle manufactured products.

Having completed a key strategic growth initiative, our results will be bolstered by our recent acquisition of GEODynamics which sets Oil States up well for a more productive year in 2018. We are excited to have completed such a key acquisition and look forward to the expanded technology offering that we can now make available to our customers.

That completes our prepared comments. Victoria, would you open the call for questions and answers at this time..

[Operator Instructions]. And it looks like our first question comes from Marshall Adkins from Raymond James. Please go ahead..

Good morning everyone. Cindy, your margins in completions were up a lot more than we were thinking.

You mentioned part of that obviously was pricing continued to retire, but it seems like there was more there, was it mix cost control what, -- what’s why were margins up so much quarter-to-quarter?.

[Indiscernible] Really, what it is, obviously, we talked about getting the benefit of both activities, which we are seeing but importantly we did see a makeshift more weighted towards our isolation tools in our higher pressure wireline equipment.

During the quarter, it’s hard to focus much in terms of actually pricing in the quarter although you know on a job one-off job basis, I’m sure we saw some, but I would attribute the larger impact due to mix in the quarter and of course we had good cost controls as well. I think those elements all combined just for some pretty strong incremental..

Labor, we’ve been hearing about labor issues with some people, are you, -- is that becoming an impediment for you at this stage or are you working through it without too much disruption?.

Well it’s an issue for everybody. We’ve been through such a horrific downcycle and it has had impact on our workers in the field. Without question, we are very focused on that.

I would say that last year, we had a very high priority around hiring obviously important that we not only have an adequate number of people, but they have the right experience to support our customers in the field. I would early in 2017; it was a frustrating exercise where we almost had some turnover equivalent to the amount that we hired.

We had done better in the latter part of 2017 and I would say we are entering 2018 with a little more headcount which we really didn’t need.

As it relates to cost, which is another element of concern, we have raised wages a little bit last year, we’ve generally been successful in passing that on to customers, I think our customers recognize the issue of kind of raised wages and pay in the field and they did put a high priority on having experienced field hands doing the particularly the highly complex completions.

It will continue to be a focus for us in order to have quality trained personnel out on the rig side. We do think that we’re going to see additional cost increases and hope to be able to pass that through on the top line..

Got it. Thanks..

Thanks, Marshall..

Our next question comes from Sean Meakim from JPMorgan. Please go ahead..

Hi, good morning. Hi, Sean..

So I guess on GEODynamics, thank you for some of the incremental information forward, what you expect for the quarter.

Is there anything else you can give us with respect to rate of change or how you would you think about how that business is evolving given we have a little bit less history than we do with obviously the rest of your segments?.

Yes, I will give you one bit of information. We – the audit firm that they have used has completed their audit as soon as we file our 10-K hopefully at the end of this week on Monday for 10-K. Oh, Monday is a holiday, Lloyd’s telling me, excuse me. We’ll be filing at 10-K followed by an 8-K which includes the full 2017 historic results geodynamics.

So that will help you significantly in terms of having kind of a comparative information to look toward it as it relates to geodynamics.

I will add that one thing you’re going see of course is that they were very successful in high growth in 2017 relative to 2016 part of the reason we are still attracted to them and you are going to see continued good growth in 2018. We have spent a lot of time with them.

I do think that they need some capacity expansions and we expect to augment our CapEx plan and again Lloyd gave you guidance in terms of the total with some expansionary capital to help them continue their strong growth track record..

Got you. Thank you, that’s very helpful. We’ll wait for those numbers then. And I guess within Completion Services are there any shifting competitive dynamics this cycle around wellhead isolation? Just thinking about competing products, substitutive type of products out there.

Just can you, give us a sense of how your mix within the rental side has been evolving, and just is there anything that maybe you would say surprised you in terms of kind of what you see in the market today versus and customer behaviour versus what you would have thought a year, a year and a half ago?.

No, if anything, we’ve often times seen a migration toward isolation tools when the market moves towards more complex type completions. I’d say if there’s a surprise, it might be that we haven’t really seen that shift a little bit sooner than what we have. But there’s nothing here that surprising to me.

Like I said, if anything is come a little bit later, because particularly the Permian where so much of the rig count it is centered, is just a very very competitive base and there are alternatives of course the isolation tools, it can be higher pressure wellheads, frac heads, etcetera.

So there are different customer preferences as an example, but I think the migration is one expected and if anything it came a little later than what we had hoped..

Okay, got it great. Thank you very much..

Thanks, Sean..

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

Thanks, good morning.

Question, I think Cindy could you comment on offshore products and kind of expectations for orders maybe first half year of the year, for the full year in terms of just thinking of book-to-bill, do you think we can be above one, and can you talk through some of the projects that you see maybe out there, and level of confidence and some orders starting to hit in the first half of the year?.

Yeah, I believe the best that I can. You know most of what we saw last year in terms of project that by these were on the smaller side, a lot of that were focused more and smaller subsea tiebacks. I don’t think anything is shocking in that comment. We had hoped that a couple of projects would materialize in the fourth quarter.

I’d say that one had flipped, and in our comments, one has been referred six months, so it creates a little more uncertainty around that. What we are looking at I would say in times whether it's first quarter or first half, I think we’re going to have a book-to-bill and the point nine to one time with more likelihood of improvement in the back half.

I would want to point out of course, the whole mix of our business has changed in offshore products through this downturn. And if you went back three, four, five years ago beginning backlog was a much more significant indicator of the forward years.

Revenue, in fact I was looking at this morning roughly, we’re getting backlog was about 70% of my forward year revenues, and that is just changed dramatically to where 50% or less now because of this waiting towards short cycle. And even what we’re calling major project backlog is not generally a big project, FPSOs, PLP, subsea i.e.

production infrastructure is more weighted toward our large OD conductor casing connectors used in exploratory and kind of development drilling activities and kind of an interesting for me if I looked at the booking that I did have in Q4 roughly 80 million, only about 20% were major project related.

So I’m not alarmed by that my backlog is at a decade low, I wish it were different, but I think I look at it now as more of an in and out business in the near term and focused on short cycle services in our kind of other product and to some degree I’ll look at the return of major project FID and production infrastructure as upside for the business from here.

Our team has done I think an exceedingly good job in managing costs and margins through an incredibly difficult market for deepwater project. So while I don't like my backlog.

I also don’t think there is much downside from here in terms of our results, because of the weighting towards short cycle services, there’s some kind of other content outside of our major production infrastructure..

Okay.

And if I could follow up on that, just to make sure I interpret the answer correctly, so for the type of book-to-bill you’re talking about in the first half, it sounds like you’re not contemplating any type of award from the TLP or SPAR, some of the bigger production items, its more some of the other items that you mentioned, I just want to make sure I hear you correctly?.

Yes. That’s exactly, right. And that’s what we had in our prepared comment..

Yes. Okay.

And then if I could just ask a quick question on GEODynamics with the margin guidance you gave for 1Q, Cindy, does that contemplated any type of seasonality for that business? Is that a sequential decline in margin for the account for some seasonality like your time for completion services? You know we’re got a month and working with the company, what margin we got it to are the best estimates they have today and they are consistent with late 2017 margins.

We’re not upping those margins yet. I think it would be imprudent to do so. So we’re just using history as an indicator of the future at this point in time..

Okay, great. Thank you..

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

Thanks. Good morning. Following up a little bit on – following up a little on what Jud asked, when you think about well site services and obviously, it seems that first quarter’s got some issues, you mentioned extreme weather.

Based on what you’re seeing would you expect an acceleration and back to more normalized incremental's in the second core? It sounds like you’re getting price, I would assume, yes.

But I want to maybe get a little color on the 1Q8 impacted and then how we think about going from there?.

Well, first of all we’re planning for sequential growth despite having some extreme weather days in area that we didn’t expect it, quite frankly, so expect that in kind of the box and kind of Rockies region, sometimes in the Northeast you don’t really expected and Texas, Okalahoma, New Mexico, et cetera, but despite that we still going to have sequential grow in good incremental margin.

I’m going to have this and I maybe missing your question, but I think you’re asking me those incrementals are going to accelerate. I view them as exceedingly strong in Q4 and I think they’ll probably moderate more into our 40% to 55% range, just given the ebb and flow of both activity and cost along the way..

You know the fourth quarter was obviously really, really strong.

I was thinking in terms of as you went into the second quarter beyond that you’d go back to a more normalized level, I guess, is a better way to say it?.

Well, and I think that is our guidance. We had guided last year to 40% to 45% incrementals achieved 43% and so if we’re move out by that band I’m just going to generally tell you we’d probably need pricing on top of activity to be that and so, its little early to make that call..

Okay. Thank you..

Thanks, Steven..

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

Good morning..

Good morning, Blake..

Just understanding from the commentary so far that offshore becomes a little bit more what you see is what you get the business in terms of order flow and output. You did also say that there would be some periods where some project deliveries would be sporadic.

Is that the first quarter represent the high delivery point, just so we’re all getting kind of a prudent baseline for your kind of more what sees what you get business – I guess I’m just saying is there a high level of deliveries that’s I think putting undue influence on the first quarter of guide?.

I'm not sure I'm getting your question, but what we had – let me just elaborate what we had in Q4 or more shipments of our large OD conductor connectors. These are not things that you have everything a month, every quarter, so it tends to be little lumpier on the connector side, both in terms of booking and in terms of revenue.

So exceeded Q4 guidance and forecast largely because the timing of those connectors. The guidance we gave you in the Q1 is back to what we can call a little more normalized level. Nothing to be concern about, I think the point there is those connector orders can be a little bit lumpy.

The guidance we gave for bookings has suggested no major project FIDs, huge consequent likely coming into backlog until the second half..

That’s exactly what I was looking for.

And then, I guess as we reset the start of the year, can you just make a comment regarding the Gulf of Mexico and international portions of completion services, sorry if I missed it in terms of potential growth profile there do we need to be thinking that kind of just flatter or does that offer resistance or potential benefit as well?.

Now, I would say kind of flattish from here, but one thing I knowledge, Blake, about the Gulf of Mexico, there’s so few projects going on at any point in time that those can ebb and flow, but its hard to cite.

Do you think about rigs working in the Gulf that you’re going to get a big inflection of, you can have some timing issues just depending on the equipments that on the rigs, but steady as she goes is probably a good way to look at that.

International looks like its getting some more positive grounding that might be where were in early 2017 but I don’t think anybody is projecting a significant ramp there either, so my best feel for that would kind of be steady as she goes from here..

Thanks. That what’s I was looking for. I’ll turn it back..

Thanks Blake..

And our next question comes from George O'Leary from Tudor, Pickering. Please go ahead..

Good morning, Cindy. Good morning guys..

Hi, George..

One the GEODynamics side, I guess, as you guys progressed through 2018. Looking at he three sub-segments of that and I guess it will be downhole tool now business, which area is on the preparation side, is it frac plug side.

Which are do you see kind of the biggest ramp in demand as we progress to the year, how our customer changing their well-design and how do you think it going effect that down hole tools business?.

Well, I would just cite generally speaking the growth and maybe growth that we’re looking at. Is in their core products there, engineering of writing solutions as well as their completion equipment and outsider almost equivalent. What I have learned is because of he significant they had in 2017, they do need some expansionary capital.

We’re going to jump on that quickly, and that’s probably going to cost their revenues and their EBITDA to ramp throughout the years. We bring on some incremental capacity in their core products.

One of the things that we love about them is that they are so attentive to the needs of their customers and responsive to the issues that they are seeing and the feel that they quite a few products under development to help customers address their completion design and the issues that they're seeing field that there is potential obviously for our growth outside their core product depending upon field trials and market acceptance of those products and we’ll just keep you apprised that as we progress and get more data based upon results of those field trials..

Very helpful.

And then for that businesses are there any weather impact that are hitting Q1 given that mostly completions oriented and you've cited some weather impacts in the completion services business?.

That’s really a manufacturing and so the answer to that would be any direct impacts, no, could there be indirect impact because of customer activities in the field, yes. But we don’t think there’s anything significant there from a weather perspective..

Okay. I’ll turn back over. .

Thanks George..

Our next question comes from [Indiscernible]. Please go ahead..

Hey. Good morning and thank you for taking for taking my question.

Just, I guess on the last question on weather, have you guess, like how do you think about the impact from weather in first quarter?.

Well, our comment – I think we probably in the range of maybe four to five days something like that. So the questions, how much do you catch-up of that activity, or is it kind of pushed in to Q2.

But the reality is we’ve got it to sequential improvement despite that and so I feel like we’re in decent shape kind of in the totality it could have been a better quarter obviously if we had lost those days..

Got it. Okay.

If I think about GEODynamics topline growth, is it fair to think that growth in line with your completions product line and if you can comment on what you’re seeing in terms of pricing for GEODynamics products it seems like you’re already getting pricing for completions?.

Well, that is a great question and appreciate actually that you ask it.

We think about our completion services personnel equipment at the rig site, we think well count as a driver there, not necessarily rig count, but well count, because we’ve got generally equipment that is used isolation tools, frac heads, wireline support equipment, flowback well testing, et cetera, but well count as a driver.

One of the things, again we love about GEODynamics outside of the technology attractiveness of it in the barriers to entry really is the fact that they have that volumetric lift.

If you think about an individual well but then you multiple the latter length, you multiple the number of stages and you multiple the cluster count, you’ll get that exponential growth that is, quite frankly a better opportunity than completion services really has. Again that business being more tied to well count..

Got it. Okay. Okay. And if I think about the offshore segment and like think about the three different subset segment if you will in that business.

Your backlog is down call it 15% year-over-year, normally I would think the projects driven products follow that path year-over-year, short cycle obviously you said its more driven by NAM, so it should be pretty good.

And other product lines, I’m not sure how to think about it, but if you can comment on the three pieces of that business? Generally how should you do?.

We have that in our investor presentation and you can see that mix shift becoming more and more evident everyday, but particularly just look at 2015 and 2016 compared to 2017, we feel positive about the fact that we have exposure to the short cycle product as well services and other when you goes through to kind downturn that we have been in, and again I think our comment is of my bookings in Q4 only about 20% of that went in the major project category.

Services, short cycle and other products we have a pretty positive outlook because we have a positive outlook for land base activity.

Services has generally over many many years been study for us and range kind of in the 20% to 25% of contribution to the segment so and we’re seeing a little bit of an uplift in services, but as we go into 2018 what we think services, other products, short cycles do expand which have to compensate for the fact that we have so very little backlog around major product work.

The other good thing is if you're a glass half-full, as I always am, my short cycle and service revenues are generally high margin contributors and I think that will help that keep our margins at acceptable levels through this down turn..

Okay, that’s all I had. Thank you for taking my questions, again..

Thank you..

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

Yeah good morning..

Good morning, Ken..

Yeah, got a follow up on the GEODynamics – I’m going to have to get used to calling it something else here, but time will help. So, clearly you are going to have 13% more days in Q2 than you had in Q1.

So that I’m assuming would be kind of the base line growth for revenues, and then you are talking about it follows completion, so the way I’m looking at that, the rig count goes by completions because of footage per rig and wells per rig and all that is going up maybe twice as best of the rig count right now.

So is this something where you could see kind of high single to low double digit sequential growth outside of just adding 13% of revenue days to Q2?.

Yeah, I mean the key driver if the market responds with extended -- continued extended laterals, obviously, stages and cluster count that’s the driver there and it has been and it’s been at the right quite significant outside of kind of rig count or well count, I don’t see today that that trend would not continue at this point in time.

And again, you know if you go back and look at the – when you read the 8-K their performance in 2017 was very very strong about the top line growth and the EBITDA growth, so we are looking to continue that, now we don’t want to get ridiculous about expectations out there for them either, but we are planning on significant revenue growth year-over-year as well as incremental margins and EBITDA growth in 2018..

Yes and then I was kind of going – I could take you to up 13% plus I can take it up another 5% or 10% and then Q3 you know if the rig count responds to the fact that oil price has been higher I mean you can get some pretty frotty numbers now, I do expect the increase in clusters and stages to maybe slow down on the gross side or I guess the question is are you seeing – you are kind of seen a lot of growth in stages and clusters, is that rate change slowing or is it still pretty consistent?.

We it’s hard to say right to change, but we feel – we don’t see any reversing at that trend, but the rate of change if you look at come out a typical well and the Permian in 2014 to today, that rate of change has been mitigant.

So I would just generally say the positive trend that was not get too excited about that rate of change, but modern [Indiscernible] laterals move to three miles from two miles so I think it’s still a incredibly positive environment, but it’s probably going to level out a bit..

Okay, well thank you. We’ll look forward to seeing the financials for those guys..

Good talking to you Ken..

And our next comes from Igor Levi from Morgan Stanley. Please go ahead..

Good morning..

Good morning..

So you previously talked about the trend towards higher end equipment, so I was hoping to talk a bit about some of the product lines that have been seen the most traction and you think not going winners in 2018?.

Are you thinking about completion services..

Yes. In a completion services..

Yes. I think what we mentioned specially was migration towards our isolation tools, which more proprietary and our hiring higher pressure while on support equipment, that’s what we saw in Q4. Now clearly zipper manifolds as an example will be in demand and I would mind you about our technologies that’s branded Tempress.

It does enjoy very good market share and it's a very effective tool and particularly given these extended laterals that were on. So I think those would be, kind of a near term focus areas for us but of course I do expect facts that work to extend as well..

Great. And then what drove the cash margin increase in the drilling segment.

I remember you had some mobe revenue in the prior quarter, but this was, I thought there will be more of a headwind now that they are one?.

No you actually hit on it in Q3. We had a typical mobe revenue, so think of mobe revenue at no cost at a 0% margin. Therefore writing down Q3 margins and then you go back to a more normal quarter without that 0% margin impact that helped, obviously would probably had some no surprises on the cost side either.

But again if you factor out kind of 0% revenue out of Q3, that gives you a more normal -- would have given you a more normalized Q3 to compare Q4 again..

Right.

And the total number still a new high, so I was wondering is there an actual increase in pricing for conventional land rigs?.

Not really. What we need is stability of operation. We drill well in six to seven days and we are looking for a new home and a new place. If we can get more customer consistency and predictability well to well, we can be much more efficient.

When you’re going up and down week to week from job to job, customer to customer it’s pretty hard to optimize your results in that environment..

Great. That’s helpful. I’ll turn it back..

Thanks..

There are no further questions at this time..

Okay, great. Thanks to all of you who joined our call today. I know it’s been an incredibly busy, if not hectic earnings season and we kept ourselves and everybody else pretty busy with acquisitions and financings. So appreciate all the time and effort to follow our company that we do think that we had made transformational changes to the company.

We were gaining the scale that we talk to our investors about the long as needed. Again, the GEODynamics acquisition as we said will be accreted to our earnings, accreted to our margins.

It gives us the scale that we are looking for, but importantly it gets us some added very strong technology to offer our customers, so much more excited about 2018, post transaction and we look forward to get the incremental information out to you guys to help you model projections for the company. Have a great day, and we’ll be talking to you soon.

Thank you..

Thank you ladies and gentlemen. This concludes todays’ call. You may now disconnect..