NexTier Oilfield Solutions Inc. (NEX, Financial) generated a gusher of investor excitement on Monday when it released its operational update and guidance for its upcoming earnings results for the fourth quarter of 2021.
Houston-based NexTier is a leading land oilfield service company with a diverse set of well completion and production services across the most active and demanding basins. Its stock price closed at $5.07 yesterday, an increase of 3.47%, before dropping to $4.95 after hours,.
Among the company’s reported highlights:
- Total revenue guidance of $500 to $510 million for the fourth quarter of 2021, reflecting an increase of more than 25% compared to the third quarter.
- Adjusted Ebitda guidance of $75 to $80 million, including approximately $18 million in expected gain on sale of assets.
- Averaged 30 deployed and 29 fully-utilized fleets in the fourth quarter versus 25 deployed and 24 fully-utilized fleets in the prior quarter.
- Consistent with prior guidance, exited the quarter with 31 deployed fleets with 1 additional staffed fleet ready for first-quarter 2022 deployment.
Shares of NexTier skyrocketed following the news, as shown in the below chart:
"The strong momentum we experienced when exiting the third quarter continued through year-end," said Robert Drummond, President and CEO of NexTier, in a statement. "The expected sequential gains resulted from solid growth across the entire NexTier enterprise, enhanced by the inclusion of a full quarter of Alamo contribution versus just one month in Q3 2021. Further, market indicators suggest that the pace of market recovery is increasing and frac service supply is rapidly tightening.”
Drummond continued, "We're only just beginning to see the financial benefits of our integrated completion service model, which offers our customers higher efficiency and a path to lower costs and emissions. Our integrated model will be a distinct competitive advantage for NexTier and our partners as we enter the next phase in U.S. shale's evolution. Supply chain disruptions and the newest COVID variant will continue to pose a challenge for our operations, but we're confident we have the right team in place to minimize disruptions and any related financial impacts."
"NexTier is beginning to experience the benefits from our countercyclical investment strategy, with the guidance revealing signs of strong, profitable growth as we exited 2021," said Kenny Pucheu, the company’s Executive Vice President and Chief Financial Officer, in the release. "Despite typical holiday seasonality, our Q4 2021 guidance suggests a step change in profitability per active frac fleet relative to Q3 2021 and we anticipate further gains throughout 2022.”
For the first quarter of 2022, NexTier expects to operate an average of 32 deployed frac fleets, the company stated. It was operating 31 fleets exiting Q4 2021 and intends to deploy one additional upgraded Tier 4 dual fuel frac fleet in Q1 2022.
Sequentially, executives anticipate net pricing gains in Q1 2022 and increased utilization, with the expectation that we can achieve double-digit annualized Ebitda per fleet by the end of Q1 2022.
"We see a constructive demand backdrop for U.S. onshore completion services as we begin 2022," added Drummond. "Supply of frac services has tightened considerably over the past year, and NexTier is in a great position to recapture a significant portion of the pricing concessions we made to help our customers through COVID while also benefitting from value provided by its leading position of premium horsepower. We remain confident that pricing can exit 2022 up double-digits from 2021's exit. NexTier remains intently focused on Free Cash Flow ("FCF") and we anticipate being on a sustained path to significant FCF generation beginning in 2022."
