Company: NINE
Filing Date: 2025-05-07
Form Type: 10-Q
Source: 0001532286-25-000011
Chunk: 93

Company: Nine Energy Service, Inc.
Filing Date: 2025-05-07
Form: 10-Q
Item: Part I, Item 2
Chunk 93
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 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 and Africa; actions of the members of OPEC and other oil exporting nations that relate to or impact oil production or supply; weather conditions; the effect of energy, monetary, and trade policies of the U.S.; changes to energy regulations and policies, including those of the U.S. Environmental Protection Agency and other governmental bodies; and overall North American oil and natural gas supply and demand fundamentals, including the pace at which export capacity grows. Furthermore, although as noted above, our customers’ activity and spending levels, and thus demand for our services and products, are strongly influenced by current and expected oil and natural gas prices, even with price improvements in oil and natural gas, operator activity may not materially increase, as operators remain focused on operating within their capital plans and uncertainty remains around supply and demand fundamentals.

Results of Operations

Results for the Three Months Ended March 31,