Company: NINE
Filing Date: 2025-05-07
Form Type: 10-Q
Source: 0001532286-25-000011
Chunk: 70

Company: Nine Energy Service, Inc.
Filing Date: 2025-05-07
Form: 10-Q
Item: Part I, Item 8
Chunk 70
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 have trended downward thus far in the second quarter of 2025. As for oil prices, towards the end of 2024, we began to see West Texas Intermediate (“WTI”) oil prices decline, and this trend has continued into the first quarter of 2025. Thus far in the second quarter, WTI prices continued to decline following the announcements of U.S. imposed tariffs and OPEC communicating they would be increasing production. Our customers are reviewing their capital plans real-time, and the impacts of oil price reductions on U.S. land activity are still unknown. In May, we began to see some activity declines, as well as receive pricing pressure, specifically in the Permian Basin in response to lower oil prices. Because of this, we anticipate second quarter revenue and profitability to be down compared to the first quarter of 2025. Where commodity prices land will have major impacts on activity levels for the second half of the year.

Due to the spot-market nature of our business, our revenue and profitability generally move very similarly to U.S. rig, frac, and stage counts. According to Baker Hughes, the average U.S. rig count was stable in the first quarter of 2025, averaging 

 17

588 rigs, compared to 586 rigs in the fourth quarter of 2024. Looking forward, U.S. activity levels will be impacted by the production of OPEC and other oil exporting nations, commodity prices, and any new governmental policies, such as tariffs, and we cannot predict the scope or extent of such impacts.

We remain cautiously optimistic on the long-term outlook for the energy sector, and we believe there is potential upside for North American activity levels, especially in natural gas basins. In the first quarter of 2025, despite the rig count remaining relatively flat, we outperformed market drivers due in large part to sustained and continued market share gains achieved by our cementing division, as well as better utilization in our coiled tubing division. Additionally, we have increased profitability through cost-cutting measures we began implementing in the first half of 2024.

Significant factors that are likely to affect commodity prices moving forward include geopolitical and economic developments in the U.S. and globally, including conflicts, the pace of economic growth in the U.S. and throughout the world, including the potential for macro weakness; tariffs imposed by the U.S. and other countries or retaliatory trade measures; instability, acts of war or terrorism in oil producing countries or regions, particularly the Middle East, Russia, South America