Financial Data and Key Metrics Changes - The company reported a record-setting quarter for revenues and average revenue per horsepower, with average pricing reaching $21.31 per horsepower, a 1% increase sequentially and a 5% increase year-over-year [13][5] - Second quarter net income was $28.6 million, operating income was $76.6 million, and net cash provided by operating activities was $124.2 million [13][12] - Adjusted gross margins for the second quarter were 65.4%, with average utilization remaining consistent at 94.4% [13][14] Business Line Data and Key Metrics Changes - The total fleet horsepower at the end of the quarter was approximately 3.9 million horsepower, unchanged from the prior quarter [14] - Average active horsepower remained flat at 3.55 million, while the company anticipates Q4 active horsepower to exceed 3.6 million, setting a new record [10][14] Market Data and Key Metrics Changes - The company noted significant growth in natural gas demand driven by AI and cloud services, with major tech firms expected to spend over $265 billion on infrastructure this year [6][7] - The July EIA short-term energy outlook projected a 6% annualized gas growth in the Permian, with natural gas production from the Northeast and Haynesville also expected to grow [8] Company Strategy and Development Direction - The company is optimistic about the future, citing a strong pipeline of RFQs and expected growth from top customers, who comprise over 45% of revenues [6][5] - The shared services model with Energy Transfer is expected to yield benefits, including licensing savings and enhanced IT functionality [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged bearish macroeconomic factors but expressed confidence in the company's execution and customer resolve to maintain production levels [5] - The company anticipates a meaningful increase in contracted horsepower in the Northeast and sees strong demand across various basins [38][5] Other Important Information - The company maintained its 2025 guidance for adjusted EBITDA in the range of $590 million to $610 million and distributable cash flow between $350 million and $370 million [15] - The company is exploring refinancing options for its September 2027 notes and expects to extend its ABL facility [16][41] Q&A Session Summary Question: Gross margin trends - Management indicated that gross margins have fluctuated between 65% to 67% over the past four years and expect them to align with historical averages as staffing improves [21][22] Question: Contracted horsepower in the Northeast - Approximately 25% to 30% of business in the Northeast is on month-to-month contracts, with expectations for better dollar per horsepower revenue in the future [24] Question: Update on sold or retired equipment - There were no material sales of equipment during the quarter, and utilization was flat, with expectations for increased active horsepower in Q4 [31][32] Question: G&A costs and shared services - G&A costs were lower due to shared services, but management cautioned against making long-term forecasts as they are still early in the process [33][34] Question: Demand for compression services - Demand is increasing across oil and gas producing basins, particularly in dry gas basins, with expectations for more contracting in the coming months [38] Question: Electric motor drive market - There has been a shift back to natural gas engine-driven compressors, with less focus on electric drive opportunities [40] Question: Capital allocation and distribution - The company aims to maintain its distribution while reducing leverage, with plans to refinance its ABL and potentially increase cash for business growth [41][42] Question: CapEx and new horsepower costs - The cost to acquire new horsepower has increased, but the company is still able to achieve necessary margins for new equipment [46][47]

Financial Data and Key Metrics Changes - Total reported revenue for the quarter was $1,219 million, with a net loss attributable to common shareholders of $49 million or $0.13 per share, which included a $28 million impairment related to drilling operations in Colombia [22] - Adjusted EBITDA for the quarter totaled $231 million, and the company generated $70 million of adjusted free cash flow in the first half of the year [22][31] - The company closed the quarter with $186 million in cash and an undrawn $500 million revolving credit facility, with low leverage and an investment-grade credit rating [14][31] Business Line Data and Key Metrics Changes - In the Drilling Services segment, revenue was $404 million with an adjusted gross profit of $149 million, and the average operating rig count was 104 rigs [24] - Completion Services segment revenue totaled $719 million with an adjusted gross profit of $100 million, despite some calendar gaps in dedicated fleets [25] - Drilling Products revenue was $88 million with an adjusted gross profit of $39 million, showing improvement in the U.S. market despite overall industry activity moderation [26] Market Data and Key Metrics Changes - The U.S. market saw revenue improve compared to the prior quarter, delivering another quarter of record U.S. revenue per industry rig [18] - International revenue remained steady, with higher revenue in key markets including the Middle East [19] - The Canadian market, representing just under 10% of segment revenue, performed well despite seasonal impacts [20] Company Strategy and Development Direction - The company is focused on creating long-term value for shareholders through differentiated commercial strategies and investments in technology [10][12] - The integration of Patterson UTI and NexTier is expected to yield benefits beyond cost synergies, with a focus on automation and data-driven solutions [13] - The company aims to capitalize on the growing demand for digital and automation services in the oilfield services market [30] Management's Comments on Operating Environment and Future Outlook - Management noted that the oil market remains unsettled, with volatility impacting customer decision-making [6][7] - There are expectations for increased natural gas activity as LNG facilities come online, leading to incremental demand for drilling and completions in natural gas basins [9][35] - The company is optimistic about its long-term outlook, believing that current market conditions will lead to opportunities for top-tier service providers [34] Other Important Information - The company returned $46 million to shareholders during the quarter, including dividends and share repurchases, and has reduced its share count by 8% since the merger [23] - Capital expenditures for the second quarter were $144 million, with expectations for less than $600 million in total capital expenditures for 2025 [29][30] - The company is exploring ways to best utilize its cash to create long-term value for shareholders [31] Q&A Session Summary Question: What is the outlook for completion activity in Q4? - Management indicated that while there may be some moderation in Q4, it is too early to predict a steep decline, and they are encouraged by the current activity levels [41][43] Question: Can you provide more detail on the third quarter outlook for completion services? - The company expects steady activity in completions, with no significant commentary on one basin over another, and is working with solid customers in both gas and oil basins [50][51] Question: What are the expectations for gas-directed activity in 2026? - Management anticipates an increase in gas activity next year based on discussions with customers and the expected demand for LNG volumes [59][60] Question: How is the pricing dynamic for low-emission gas-burning assets? - The company noted that their Emerald fleet, which burns 100% natural gas, is in high demand and continues to receive premium pricing compared to lower-tier services [69][70] Question: What are the thoughts on the rig count and its impact on completion services? - Management acknowledged that while the overall rig count is declining, their exposure to higher technology rigs keeps their completion services relatively steady [108]

Industry Overview - Natural gas distribution pipelines are essential for delivering natural gas to consumers, with nearly 3 million pipelines in the U.S. [1] - Rising domestic natural gas output is driven by increased exports and public awareness of emissions reduction [2] - The natural gas sector requires consistent funding for maintenance and repair of aging infrastructure, with anticipated interest rate cuts expected to lower capital servicing costs [3] Demand and Growth Projections - Natural gas consumption for electricity generation is projected to contribute nearly 40% in 2025 and 2026 [5] - U.S. natural gas exports are expected to grow by 3.4 billion cubic feet per day (Bcf/d) in 2025 and 2.1 Bcf/d in 2026, with export volumes increasing by 8% in 2025 and 7% in 2026 [5] Company Comparisons - MDU Resources has a market capitalization of $3.43 billion, while Southwest Gas has $5.11 billion [6] - MDU's 2025 earnings per share (EPS) estimate has increased by 1.1% to 95 cents, while Southwest Gas's EPS estimate has increased by 4.8% to $3.72 [7] - MDU has a return on equity (ROE) of 9.86%, compared to Southwest Gas's 6.76%, both above the industry average of 9.24% [8] Financial Metrics - MDU has a lower debt-to-capital ratio of 44.44% compared to Southwest Gas's 57.36%, with the industry average at 50.49% [11] - MDU's stock has lost 0.5% over the past three months, while Southwest Gas has declined by 2.3% [10][12] - MDU's dividend yield is 3.1%, while Southwest Gas's is 3.49%, both exceeding the S&P 500 average of 1.24% [13] Valuation - Both companies are trading at a premium on a forward 12-month P/E basis, with MDU at 17.16X and Southwest Gas at 17.98X, compared to the industry average of 14.84X [14] Conclusion - Both MDU Resources and Southwest Gas are positioned well for growth, but MDU is favored due to its superior ROE, debt management, and stock performance [15]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $1,989 million for Q1 2025, reflecting a 3% increase compared to Q1 2024, with adjusted EBITDA excluding the marketing business up 5% [17][22] - The adjusted EBITDA guidance for 2025 was raised from a midpoint of $7,650 million to $7,700 million, indicating a projected 9% growth over 2024 [22][24] - The company received an S&P credit rating upgrade to BBB+ during the quarter, along with a positive outlook from Moody's [13][24] Business Line Data and Key Metrics Changes - The Transmission and Gulf business improved by $23 million or 3%, setting an all-time record due to higher revenues from expansion projects [18][19] - The Northeast gathering and processing business improved by $10 million or 2%, primarily due to higher revenues from gathering and processing rates [20] - The West segment saw an increase of $26 million or 8%, driven by strong margins and pipeline volumes [20] Market Data and Key Metrics Changes - The company noted a 12% increase in Gulf gathering volumes and a 42% increase in NGL production [19] - The demand for natural gas pipeline capacity and volumetric demand is expected to grow, with the company well-positioned to benefit from this trend [24] Company Strategy and Development Direction - The company is focused on capitalizing on the growing demand for natural gas, particularly in the power generation market, industrial reshoring, and LNG exports [25][26] - The company is pursuing high-return projects, including the Socrates project, which is expected to generate earnings consistent with a five times EBITDA build multiple [8][13] - The leadership transition is aimed at maintaining the company's strategic focus on natural gas while leveraging new opportunities in emerging markets [26][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth, citing a strong base business performance and a robust project pipeline [7][24] - The company anticipates accelerating growth rates throughout the remainder of 2025, with expectations for strong contributions from new projects [18][22] - Management highlighted the resilience of the business model against commodity price swings, particularly in the context of natural gas demand [24] Other Important Information - The company successfully placed two projects into service during the quarter, contributing to earnings growth [10][12] - The quarterly dividend was increased by 5.3% to $0.50 per share, reflecting a commitment to a well-covered dividend program [16] Q&A Session Summary Question: Can you help us understand the size and returns for the new power projects? - Management expects the new projects to have attractive returns similar to the Socrates project, with full commercialization anticipated throughout the year [32][34] Question: What is the strategic rationale for the Cogentrix investment? - The investment is seen as a way to position the company in the changing Northeast power market, focusing on gas supply rather than entering the merchant power generation space [36][38] Question: What competitive advantages does Williams have in the market? - The company emphasizes collaboration across its organization and strong relationships with suppliers, which have been key to its success in delivering solutions [43][45] Question: How does the company view the gas market unfolding? - Management sees a strong call for gas, particularly in dry gas basins, and expects to see a rotation of rigs into gas areas as oil prices soften [50][52] Question: What is the outlook for capital spending and project backlog? - The company anticipates elevated CapEx due to a strong project backlog, with a focus on maintaining high return profiles [55][60] Question: Can you provide an update on the Transco Power Express project? - The project is a 950 million cubic feet per day expansion, primarily sourcing from Station 165, and is scalable without dependence on the Mountain Valley Pipeline expansion [92][94]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $1,989 million for Q1 2025, representing a 3% increase compared to Q1 2024 [15][20]. - Adjusted EBITDA guidance for 2025 was raised from a midpoint of $7,650 million to $7,700 million, reflecting a projected 9% growth over 2024 [20][21]. - The company received an S&P credit rating upgrade to BBB+ during the quarter, along with a positive outlook from Moody's [12]. Business Line Data and Key Metrics Changes - The Transmission and Gulf segment achieved a record EBITDA of $1,034 million, up 3% year-over-year, driven by higher revenues from expansion projects [16][17]. - The Northeast Gathering and Processing business improved by $10 million or 2%, primarily due to higher revenues from gathering and processing rates [18]. - The West segment saw an 8% increase, driven by strong margins and contributions from the Rimrock acquisition [19]. Market Data and Key Metrics Changes - The company is experiencing robust demand for natural gas pipeline capacity, particularly in the power generation market and LNG exports [24][23]. - The demand for gas supply is expected to increase as oil prices soften, leading to a potential shift in drilling focus towards gas [48]. Company Strategy and Development Direction - The company is focused on capitalizing on the growing demand for natural gas, particularly in the power generation and industrial sectors [24][23]. - The company is pursuing high-return projects, including the Socrates project, which is expected to generate earnings consistent with a five times EBITDA build multiple [7][12]. - The leadership transition is aimed at maintaining the company's strategic focus on natural gas while leveraging new opportunities in emerging markets [25][26]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth, citing a strong backlog of fully contracted projects and a resilient business model [24][23]. - The company anticipates accelerating growth throughout 2025, with expectations for higher growth rates in subsequent quarters [15][20]. - Management highlighted the importance of legislative reform to improve project permitting timelines and reduce litigation risks [100][101]. Other Important Information - The company successfully placed two projects into service during the quarter, contributing to earnings growth [9][10]. - The quarterly dividend was increased by 5.3% to $0.50 per share, reflecting the company's commitment to its dividend program [14]. Q&A Session Summary Question: Can you help us understand the size and returns for the new power projects? - Management expects the new projects to have returns similar to the Socrates project, with full commercialization anticipated throughout the year [31][32]. Question: What is the strategic rationale for the Cogentrix investment? - The investment is aimed at positioning the company to better serve the changing power market dynamics, particularly in the Northeast [34][35]. Question: What competitive advantages does Williams have in the market? - The company emphasizes collaboration across its organization and strong relationships with suppliers, which enhance its ability to deliver solutions [40][41]. Question: How is the gas market expected to unfold given current dynamics? - Management noted a strong call for gas supply, particularly in dry gas basins, and expects to see growth in demand [48]. Question: What is the outlook for capital spending and project backlog? - The company anticipates elevated CapEx due to a strong project backlog, with a focus on maintaining high return profiles [51][56]. Question: Can you provide an update on the Transco Power Express project? - The project is a 950 million cubic feet per day expansion, primarily sourcing from Station 165, and is scalable without dependence on the Mountain Valley Pipeline [89][90].