Company: NINE
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001532286-25-000008
Chunk: 80

Company: Nine Energy Service, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 7
Chunk 80
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 from customers, impacting both revenue and margins. During the third quarter of 2024, WTI prices dropped below $70 compared to the highest price in 2024 of $87.69, due to OPEC and other oil exporting nations potentially 

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bringing production back. The ongoing conflict in the Middle East and demand from China, if weaker than expected, could have an impact on oil prices moving forward as well. Nonetheless, as discussed below, activity levels have remained relatively stable in oil-levered basins.

Due to the spot-market nature of our business, our revenue and profitability generally moves very similarly to rig, frac, and stage counts in U.S. rig count. Since the end of 2023, the U.S. rig count declined by around 33 rigs, or approximately 5%, through the end of 2024. This is following a rig count decline of over 150 rigs from the end of 2022 to the end of 2023, creating an already depressed oil and gas market. In 2024, most public operators with acreage in oil-levered basins, like the Permian, kept activity and capital expenditure levels relatively flat year-over-year. However, both private and public operators with acreage in gas-levered basins, like the Haynesville and in the Northeast, maintained low activity levels in conjunction with low natural gas prices.

During the second half of 2024, despite a declining rig count environment, we outperformed market drivers and improved our revenue in both the third and fourth quarter sequentially. This improvement was driven in large part by market share gains achieved by our cementing division, which we believe differentiated itself in the market with its advanced cementing slurries and excellent wellsite execution. We also had market share gains in our completion tools division that positively impacted earnings in the fourth quarter of 2024. We did have minimal negative impacts in the fourth quarter of 2024 due to typical budget exhaustion, weather, and holiday slow-downs, specifically in the Northeast. With our recent market share gains, our customers re-setting capital budgets, and supportive commodity prices, we anticipate revenue and profitability for the first quarter of 2025 will be up compared to the fourth quarter of 2024. 

We remain cautiously optimistic on the outlook for the energy sector, and we believe there is potential upside for North American activity levels, especially if natural gas prices remain supportive. We also believe that there could be a moderate increase in activity in 2025 over