Welcome to the NESR Q3 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Chris Boone, Chief Financial Officer. Thank you. You may begin. Thanks, Alex. Good day and welcome to NESR's Third Quarter 2021 Earnings Call. With me today is Sherif Foda, Chairman and Chief Executive Officer of NESR. On today's call, we will comment on our third quarter results and overall performance. After our prepared remarks, we will open up the call to questions. Before we begin, I'd like to remind our participants that some of the statements we'll be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. I therefore refer you to our latest earnings release filed earlier today and other SEC filings. Our comments today may also include non-GAAP financial measures. Additional details on reconciliation to the most directly comparable GAAP financial measures can be found in our press release, which is on our website. Finally, feel free to contact us after the call with any additional questions you may have. Our investor relations contact information is available on our website. Now, I'll hand the call over to Sherif. Thanks, Chris. Ladies and gentlemen, good morning, and thank you for participating in this conference call. The global commodity outlook is stronger than it has been in nearly two decades. On the oil side, as predicted more than a year ago, all the underinvestment and supply gap, along with North American capital discipline, will lead to significant supply deficit, which will consequently cause activity increases starting later in 2021. This is what we are seeing now. As we have been very vocal about it, MENA region will carry most of the load, primarily because our customer always have taken the long view and have invested in spare capacity, as well as they understand that nobody but them will be able to fulfill this demand, especially in the short term, and they can sustain it longer than anybody else. This will put pressure on the talent and equipment from service providers to deliver on these needs, which, as you know, is a function of the health of the service industry. As I have been doing since the beginning of the pandemic, I always wanted to be physically with our customers, listen carefully to their plans and needs, and feel the pulse of the evolving energy dynamics. This quarter is no different. I spend a lot of time in the field, in the different countries like Saudi, UAE, Oman, Egypt, and Libya. Additionally, we started to have face-to-face industry forums, and I'm glad that I was able to attend and present in most of them. I can tell you that everyone, without exception, is extremely bullish on the activities. They want to secure the adequate resources to ensure deliverability of their objectives and also very focused on meeting their ESG goals and commitments. They are reviewing and discussing the service industry strength and weakness and running proper sensitivity analysis on the different scenarios. This again reminds me of the 2005 supercycle. I also led NESR leadership visit to Libya to see all the customers in the entire country. We spent a solid week with the NOC and all the operators and visited the remote field locations. We wanted to ensure we are there for them at the highest level, and we understand what is needed to restore the production to previous country high. We are discussing together multiple approach and new business model given the nature of the activities and the fastest way to revive the production from shut-in wells. Additionally, we are reviewing how to have a paradigm shift in using the existing resources, enhancing them, capitalizing on the fact we have 100% national trained workforce that understand the subsurface and the facility constraint. We have placed a multi-disciplined team to look at the entire value chain and propose solution to our customer. Meanwhile, we are looking into the water scarcity using flared gas and how could we produce in the different fields in a sustainable manner. Overall, we are completely aligned with our customer in the region for fast activity increases in the coming quarters. This feedback from recent customer meetings gives me confidence that the outlook is very strong, as we had predicted previously. Now it is on us to demonstrate our industry-leading localization and execution as the national champion of MENA. Since we front-loaded our CapEx, as I have said before, NESR remains ready and nimble to meet the demand of our customers who will look to put activity and production capacity to new heights in the coming year. We continue to invest in human capital and equipment as we are convinced that this cycle will last for several years, and the talent gap will surely be felt very soon in the years. Next, I want to turn to the ongoing COP26 climate summit and how the industry can be a total game changer in pushing the world and humanity forward in energy transition. Clearly, governments around the world are elevating the important issue of climate change, which will most likely result in laws and regulations that further incentivize green spending, particularly in Europe and North America. What the market may not appreciate is how our forward-thinking customers in the MENA region are also taking leadership roles in the energy transition. We have all seen the Saudi Green Initiative demonstrating its commitment to its people and to the world. I was impressed with the level of details they laid out their plans. Aramco, again, as a world leader, explained how committed they are to achieve net zero and how they walk the talk and put credible targets and how they will achieve it. Additionally, you also saw recent announcements from the kingdom on their plans for using the gas from Jafurah for generating blue hydrogen. As you know, NEOM already has inked to build the largest green hydrogen facility in the world. The key now is to remain pragmatic on how best we use our resources to achieve what is best for the humanity. We do not want just to pass the emission from one area to another. What we want is to lower the overall carbon footprint and how to achieve that while looking at all other angles from eliminating waste and elevating the lives of people under the poverty lines. As I spoke in my hydrogen panel during the Future Investment Initiative in Riyadh last week, OFS can play a major role in actualizing this vision by taking the produced water and using the electricity generated from heat from the producing gases and facilities along the gas feedstock to provide the essential ingredients for this endeavor. Our thesis is that the industry can leverage existing infrastructure and production streams to support the production of new energies like hydrogen. We have invested in technologies to deliver part of this workflow, and I personally see a great opportunity by leveraging all this new tech and mesh it with our existing footprint, technical know-how, and more importantly, project execution capabilities. This is where NESR ESG IMPACT comes in. After we launched this new segment in January of this year, NESR has partnerships and investment in several technologies, and particularly in the water space, where I strongly believe our industry can play a vital role, especially in a water-starved region like the Middle East. I believe once we prove the economics in several projects, this segment will be as big or even bigger than our other two segments. Our esteemed customers play an enormous role in their existing economies, and they are all and will be at the forefront of development and adoption of green technologies, which will enable the transition with the aim of not only the largest oil and gas companies, but also the largest full spectrum energy companies in the world. On the water side, following the previously announced and ongoing water pilot in Iraq and Saudi, we have been in continuous dialogue with customers' inquiries and proposals for additional projects in the region. A key feature of this water market is that we are bringing new technologies in front of oil and gas producers. It's a market that we are essentially creating alongside our tech partner that today do not exist. In emission detection, we recently finalized an MoU with another IP partner, which we should announce shortly at ADIPEC, to bring CH4 and H2S detection capability to the region that is moving quickly to both quantify and reduce Scope 1 and 2 emissions in normal upstream operation. Similarly, we are also moving quickly in the area of flare management and elimination, and I believe that there are fantastic bundling opportunities with both emission detection and flaring. Progress across all ESG IMPACT sub-segment is being driven both bottoms up by NESR in continuously canvassing and evaluating the new energy technology landscape, and also top-down from forward-thinking customer partners. NESR flexibility and nimbleness is key in having these discussions and in bringing new ideas to the table. Our open technology platform, much like it has enhanced our oilfield service portfolio, is also the key element in bringing new innovations to the ESG impact discussion. Now, I want to turn to another key theme that is driving both our strategy and our positivity for the future, which is the progress we have made in our D&E segment with a number of key technology investment, breakthroughs, and partnership that will completely transform our capability in this segment. So far in 2021, we have announced marquee technology alliances in the directional drilling tools with PHX Energy Services Corp., a company that continues to break records in NAM and now doing the same in MENA, and Ulterra, the U.S. leader in drill bit technology. Over the last couple of years, we decided to invest ourselves with some of the most innovative minds in the industry to come up with new state-of-the-art downhole technologies. One of these investment is around rotary steerable technologies. What new could we bring to the industry? Historically, typical development cycle has been in the range of several years, 5-7 normally. Our aim was to do that in less than 3 years. I'm glad that we have recently tested our innovative RSS tool with one of our customers, and we managed to deliver the well ahead of time with superior performance. We continue to test the tool with other customers, and we believe we will have a commercially viable leading-edge RSS in the very near future. The tool is designed to have minimum maintenance cycle and greater dogleg than existing tools in the market. This will complete our portfolio of drilling technologies and enable the company to enter that space. With a market-leading motor, market-leading bit, the latest generation RSS, we feel fairly confident that we can offer our customers alternatives with the same quality and service delivery they have witnessed from us in the production space. Recent D&E contract awards highlight the strategic focus of ours. During the third quarter, we announced more than $150 million in D&E awards across slickline, tubular running services, and testing with several key NOC partners. In terms of innovative breakthroughs, we decided to increase our investment in Kinetic Pressure Control. They had successfully commercialized a deployment in deep water and are receiving multiple orders from several clients. We have implemented successfully multiple trials in Saudi for the fit-for-purpose device for cost-cutting operations. This technology today is relevant in all the basins globally, as this is essentially a true environmental ESG technology to take the probability of blowout to zero. We see ample opportunity to pull this technology through in areas with high H2S and those proximate to local communities, given the clear safety and reliability features of this technology. For some of our customers, this is transformational as it now allows them to access reservoirs which were off-limits before. Another seed investment we have done is ICE Thermal Harvesting, where we are a significant shareholder and will form an anchor tech for our offerings around the hydrogen opportunities. This has now progressed with patents being granted and is generating significant interest from not only oil and gas, but industrial and power generation space. In one study, by utilizing the heat generated by power plant, this technology was able to deliver an additional 10%-15% power versus what was previously being generated. To summarize, our industry fuels the growth of the world and is the most reliable energy source. Alongside the oil production, we do generate associated gas, sometimes wasted. With each barrel of oil, we produce reservoir water that is again not used all the time. We generate a lot of heat from the well all the way along the processing chain to bring this product to market. We are everywhere in this chain, and we can take these raw materials to help our customers deliver their plans and properly reduce the carbon footprint. Carbon capture and storage is absolutely essential. Furthermore, the industry has the infrastructure, it just needs economical technologies and regulatory framework to put all these together and deliver on the ground. On that note, I will pass the call back to Chris to talk about the financials. Thank you, Sherif. Turning to our results, we reported quarterly revenue of $218 million. This is flat over the prior year quarter and 7% down from the second quarter. The sequential decline was primarily driven by lower unconventional frac activity, partially offset by higher activity in Kuwait. Adjusted EBITDA in the third quarter was $49 million or 22% of revenue. This represents a decrease from 26% in the prior year quarter and 23% in the prior quarter. The sequential decline was primarily driven by the leverage impact of lower production revenue. EBITDA adjustments of $5 million for the quarter were mainly for headcount restructuring costs, non-capitalizable project startup costs in certain markets, transaction and integration costs associated with our recent Kuwait acquisition, non-capitalizable SAP and SOX implementation costs, and certain non-cash FX charges due to currency weakness in Libya and Algeria. Moving to our segments, our production segment revenue for the third quarter was $138 million, declining 7% over the same period last year and 10% over the prior quarter. The sequential decrease was primarily driven by lower frac activity. Adjusted EBITDA margins for the production group were 26% in the third quarter, down from 27% in the prior quarter, as we maintain our current manpower structure in anticipation of improved markets in upcoming quarters, as clearly highlighted by Sherif. Separately, our drilling and evaluation segment revenue of $80 million in the third quarter was up 13% compared to the same quarter last year, but down 3% sequentially. Adjusted EBITDA margins of 21% in the third quarter were flat sequentially. Depreciation and amortization increased to $36.7 million in the third quarter compared to $35.1 million in the second quarter of this year. The sequential increase was primarily related to additional D&A from the recent Kuwait acquisition, as well as the impact of additional employee equity grants. We expect D&A to be in the $38 million range next quarter. Interest expense in the third quarter was $3.7 million, up from $3.2 million in the prior quarter due to higher debt levels. The reported tax rate for the first nine months of 2021 was 19.7%. Excluding the net benefit of adjustments of reserves on prior year taxes, our reported tax rate would have been 22.9%. The sequential increase in our tax rate is due to an unfavorable shift in income across tax jurisdictions. We expect to improve upon this rate going forward as the income mix shifts more favorably and through the benefit of certain tax planning initiatives. Adjusted net income and EPS, which includes the impact of the noted EBITDA adjustments, were $7 million and $0.08 per diluted share. Switching to free cash flow, we are pleased with another quarter of positive free cash flow generation of $17 million. This brings the year-to-date cash generation to $64 million compared to $11 million in the first nine months of last year. While we continue to improve in our invoicing and collections, DSO increased by 9 days over the prior quarter level, still bringing the year-to-date DSO down 18 days, a strong accomplishment by the whole NESR organization. This sequential increase was primarily driven by the impact of summer holiday processing delays. We expect to see the DSO levels improve in the fourth quarter. Capital expenditures in the third quarter were $18 million, down slightly from $21 million in the second quarter. In the fourth quarter, capital expenditures should increase to approximately $45 million, in line with our full year estimate of capital expenditures near $100 million. We continue to expect free cash flow in 2021 to significantly increase over 2020 levels due to flat planned CapEx, continuous improvement on fleet utilization, and improved DSO. Net debt decreased to $326 million at the end of the third quarter, compared to $335 million at the end of the second quarter. The sequential decrease is primarily from higher net cash balances from the free cash flow generated in the quarter. As of September 30, 2021, our net debt to adjusted EBITDA ratio is 1.6, flat from 1.6 last quarter. Also, we remained in full compliance with our primary credit facility's financial covenants in the third quarter. As was noted in the press release, we're extremely pleased with the refinancing that was recently completed this quarter. We are proud to have entered into a green loan facility as part of the broader refinancing, which is based on certain sustainability key performance indicators encompassing environmental, social, and governance metrics. With the addition of two additional banks to the syndicate and increased commitments from our existing lenders, we have expanded the term loan capacity by $175 million, the revolving credit facility, or RCF, by $15 million, and the working capital facility by $140 million. We will utilize the additional term loan funds to repay the current $65 million RCF balance, $10 million of term debt acquired through the SAPESCO transaction, and $36 million of short-term debt, leaving approximately $64 million of additional cash, plus the full $80 million RCF to fund additional growth opportunities in 2022 or pay down additional short-term debt. We will not be required to make any term loan amortization payments until the first quarter of 2023, and the term loan repayment period has been extended by 2 years. The increased working capital facility will provide us more capacity to issue LCs for contract bids and awards. We are pleased with the progress we have made on our SAP project. We have implemented the system in countries representing approximately 80% of our revenue. We expect all of our operations to be using the new system for 2022 transactions. This will provide us a common and enhanced platform that will facilitate SOX compliance in 2022 and provide opportunities to enhance financial reporting and analysis. In addition, we'll be able to improve our back office efficiency by centralizing certain functions that were impractical when on multiple ERP systems. Lastly, as you've already heard from most reporting companies, the activity bottlenecks from supply chain impacting our short-term growth are transitory, and we believe that burgeoning capacity tightness will give way to service pricing improvements in 2022 and beyond if the OFS industry as a whole stays disciplined. In the interim, as we have shown with our margin performance, we will stay vigilant on cost control and equipment deployment will be prioritized to margin-accretive opportunities. Also, we will continue to strategically invest in our D&E segment as part of our long-term growth and portfolio strategy. We believe strongly that the next six months will be an inflection period, and conversations after this period will be dramatically different than what we have had in the last two years for the industry. NESR has strongly grown through the tough times for the industry, and we firmly believe that the next leg will come from how well we deliver on our core as well as new endeavors. We are squarely focused on this. In conclusion, we are very pleased with the even stronger financial health of our balance sheet and the financial market's appreciation for our strategy and outlook. I will now turn the call back to Sherif for his closing remarks. Thanks, Chris. To conclude, the MENA region will be an even more prominent engine for oil and gas, particularly given detailed and favorable feedback from my most recent visit to the GCC in North Africa. Secondly, as we have heard and seen from COP26, FII, and the Saudi Green Initiative, transition is here. Although oil and gas will be an integral part of the global energy picture, the industry as a whole has to view this as an opportunity to evolve, and our customers are wholeheartedly embracing this, leading the change within our industry. For NESR, with steady progress in our ESG Impact segment, we can clearly see how we can leverage existing energy infrastructure and expertise to not just pass emissions from one spot to another, but to totally reduce the carbon footprint of the industry for the benefit of the world and humanity. Third and finally, I'm extremely excited about the progress and results of our investment in the drilling and evaluation portfolio, especially our RSS, given this was delivered in a record time. Meanwhile, our investment with our partners have been well timed for the coming super cycle. Now I would like to pass the call to the operator for your question. Alex? Thank you. At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of James West with Evercore. Please proceed with your question. Hey, good morning, guys. Good morning. Sherif, you know, we've heard from some of the larger service companies about their outlooks for 2022. You are clearly in the focal point of where the growth will be. I'd love to hear your thoughts on both spending growth in the MENA region in 2022 and what that means for equipment tightness, and then of course, I guess, that leverage on the pricing. Thanks, James. Absolutely, the region is going to go, as I said, as they spend on their spare capacity and as they are looking forward in 2022, 2023, you're gonna see a very sharp increase. In my view and my visit and my talks, I'm talking about a significant double digit. I mean, it might go in some countries above 30, 35%. Wow. It depends where you start. Some of those, for example, obviously, the bigger ones will have a less percentage, and the smaller ones will have a much higher percentage, and the one that had problems will have a very significant. If I look, for example, in a country like Libya, I wouldn't be surprised of more than 100% growth year-on-year because Right you're talking about revising the shut-in wells, adding rigs, trying to get the budget approved, and then obviously with this oil price, you know, these guys make some serious money, right? It's, Right. It's gonna be seen. As for the service industry, you wouldn't see the same growth pattern unfortunately because of pricing. Pricing discipline is not there yet. What you're just gonna see is you are going to see the pricing happening after the equipment tightness. That's why I predicted last quarter, it usually takes six months for the equipment and talents to dry up and caught up with the activity increase. Then you will see pricing capturing. All the large tenders today has seen a price deterioration in sometimes 25%-30%. Okay. Understood. Then perhaps somewhat unrelated follow-up, but you touched on Saudi and the Blue Hydrogen Initiative, and I know that you're all over this and how you guys can leverage your skill set and to help some of these companies and countries move forward with their hydrogen plans. Could you maybe elaborate, you know, a bit more? Because I think this is a huge theme and something that's underappreciated by the market that the oil service company's role in the, you know, burgeoning hydrogen economy. You're absolutely right. I was very fortunate to have been in a panel during the FII, the Saudi Future Investment Initiative, and I was with the CTO of Aramco. During that panel, we discussed actually how the whole, as you rightly said, the market totally underappreciate that the whole infrastructure of having the gas infrastructure that today exists, for example, in Saudi, and how you're gonna take this either if you go to the blue hydrogen with the feedstock and then separate it, and how you do the carbon capture. All this comes to what? To how to understand the subsurface, how to inject the CO2, how to put this into, you know, a lot of activities. If you look at the green, this is what I'm advocating that a region starved of water, there is no way I'm gonna use RO plant and use electricity. Right. To get water to be able to make green hydrogen. I mean, that's basically again, we are passing from the emission from one spot to the other. What you need to do Right. Can the energy sector itself use that water? Can we use the heat from all the facility, et cetera, to harness it and make something out of it besides obviously the renewable. It's not this to replace this, but we can use the infrastructure. I think the service company will play a big role in that, and that's why we are advocating, and we are discussing and definitely, as I said, Saudi really has a very big leadership in that. Great. Thanks, Sherif. Thank you. Our next question comes from the line of David Anderson with Barclays. Please proceed with your question. Thanks. Good morning, Sherif. Expanding unconventional gas development has been kinda one of the more prolific elements of your growth story in the Middle East. You've been talking about kinda adding fleets in Saudi and now Oman. On a call a couple weeks ago, Schlumberger talked about how they had won a large unconventional tender in Saudi and another one in Oman. The question on a lot of people's minds is kinda what this means for your growth strategy. Can you just kinda talk about that and kinda just address that issue head on, please? Thank you. Sure. As I explained earlier in calls, what we have and what the market is having in the Middle East is exponential growth in the unconventional and the fracturing business. I mean, even in your conference, I think I explained that this is gonna go 5 to 10x, right? What it is. If today, what did we do for ourselves as NESR? I said we gonna have 3 to 4 fleets before the end of the year, and that's what we have. Today, I have 4 fleets running. We have 2 fleets in Saudi. The third fleet actually gonna start in the next week. We have a fleet in Oman working for a client, as we are awarded a contract in Oman, and we are actually fracking as we speak. Today we have four fleets in the region, three in Saudi and one in Oman, as we predicted. The difference here, what people misunderstand or underappreciate is the size and the scale. The big fleet is definitely the Jafurah. This is where it is very equivalent to the North America type of fleet, which is obviously what we have accomplished with our client, with Aramco, over the last couple of years, is a breakthrough. Together, we managed to get to this 10-12 stages a day that is unheard of in the previous life of all the companies. Aramco obviously leads that in a big way. What's happening, and obviously I'm not commenting on others' comments or awards, but I can tell you what happened is the Saudis obviously decided that this is gonna be a huge contract and multiple awards, as they did in the last bid, has to be awarded. Multiple companies were awarded that scope. The same Jafurah that is coming now for a huge scale up, as announced publicly, multiple companies were awarded. Definitely, I mean, the clients are very smart, so they managed to get a very solid price concession to be able to because of the scale. Okay. The pie is getting bigger and unconventional. It's not that you're not getting shut out by any stretch. You're just the scope is getting bigger and otherwise, I would imagine your slice of that pie is gonna get bigger as well. Yeah. Basically, the whole contract is much bigger. As you know, I mean, this contract, people have to understand as well. What we have been doing over the last couple of years was a multiple award as well. It was not only us. It's just because of the performance, we managed to be the sole provider and the scope was available for, if you like, for one provider. Now, the scope is much bigger and they managed to slice it to several, right? The issue becomes the scale, becomes the difference of who gets the bigger pie, you know. It's who is usually sometimes the cheapest one, right? And that scale, the prices, as I said, Aramco is very smart, so they managed to get a very good price concession. That's not surprising. Thank you very much for clarifying that. A little bit more specific, though, on Saudi rig count. I was wondering if you could just kinda provide a little bit insight. You know, we don't have a ton of, you know, the numbers are not really trusted on the Saudi rig count numbers that we see. Can you just kinda tell us what's going on on the ground? I think we're expecting kind of some rigs to come in in September and maybe kind of a slug or more coming on by year-end. Can you just kinda bring us up to speed on kinda what you're seeing on the ground in Saudi in terms of the pace of that ramp up, and is it kinda what you're expecting? Is it a little slower? Just any kind of insight onto that you're comfortable sharing would be really appreciated. Thank you. Obviously, I mean, I would comment always, David, that, you know, Saudi is a public company and they would definitely announce whatever they would like to announce. What I will tell you is that the activity is very evident. The plans, as they always do is, you know, very long-term, and they know exactly which increment and where to put the rigs, the facility, et cetera. They do this in a very coordinated manner. I would say they are, you know, world-class in that. What we are preparing ourselves is we're preparing again for that increase of activity to ensure that we have the equipment on the ground. I ordered a lot of those equipment at the beginning of this year. As you have seen from our CapEx number, despite the fact that you don't see it because, you know, there are all the delay of the supply chain that happened and the way the accounting works, we're gonna take the CapEx only when it arrives. We don't see that. You don't see it in our CapEx number. Everything I ordered already was ordered in, you know, January, February, March. We're gonna take delivery of all this equipment in the fourth quarter and the first quarter of next year, which is basically I'm ready for their sharp increase of activity. Whether this gets delayed a bit because of COVID, whether there is some, you know, shifting here and there, but at least I know I'm ready because I know activity is going to increase. It sounds like you think we're sort of on the precipice of this. It's just sort of a little bit of a timing issue, but it's pretty clear to you that this is coming. Absolutely. Okay. Thank you. Yeah. Our next question comes from the line of Arun Jayaram with JP Morgan. Please proceed with your question. Yes, Sherif, good morning. I wanna maybe start, you know, clearly NESR's engaged on the new energy opportunity set in MENA. I was wondering if you can maybe help us frame the near term versus the longer term top line opportunity set for you over the next, you know, couple, two, three years. Thanks, Arun. I think the immediate on the new segment, what you will see because obviously this project, as you know, takes time. If you look for example at the hydrogen and et cetera, people are talking about 2026, 2027 until you really materialize and see those project into motion. What I think from a service company from us, I will see that you will see the top line very evident on the water project because that's, I think, in my opinion, a no-brainer. People. The industry has to do this immediately. It's really. We have to do that. You will see this in the flaring. You'll see this in the emission measuring, and with the geothermal. I am very excited with the geothermal as well. The latest patent that we got with ICE is impressive. I see that happening in, I would say, 2022. More in 2023, 2024, you will see more of the carbon storage and all the other activity that comes to the whole value chain of the new energy. Again, I'm repeating, I'm here talking about that a lot of it has to come that the existing oil and gas needs to be greener. There is so much to be done for that. I mean, you just saw the COP26 with the -30% methane. How are you gonna do that? You need to stop all this, you know, pop-up valves and flaring and some of the operation time where it's 80% of that comes during that period. If we have the tools to stop that and monitor it, immediately you have a quick win, right? That is, I think, where we are very focused, and that's why we have so many partnership. We did invest a lot of money for the last now 2 years, and I see this gonna happen from next year. The two pilot project will be paid in Iraq and Saudi, so that will be already revenue from 2022. Great. Just my follow-up is I know, Sherif, you and your team have had some boots on the ground in MENA. I'm just trying to, as we think about our modeling over the next, you know, 6-8 quarters, trying to think about some of the near term, you know, pressures you face on COVID and just general inflation and then your point about, you know, the business hitting an inflection point at some point in 2022. You know, any sense of, you know, how the margin progression could trend and maybe about the, you know, in terms of timing, when would you expect to hit that inflection point? Okay. Definitely COVID is an issue, right? In the sense of extra cost. As we said in couple of quarters, we still carry that. It didn't go away, and we're still carrying the testing. A lot of it as well used to be paid by the government, now it's paid, everything is paid by the companies. There is no more subsidy on that. We still have the hotels, we still have the, you know, for some of the times you have to test the people every week when they are on the rig site, et cetera, right? All this cost I think Please remain on the line. We are Please remain on the line. We are experiencing some technical difficulties. Please stand by. Ladies and gentlemen, we apologize for the technical difficulties. Please stand by. Our conference will resume momentarily. Again, please stand by. The conference will resume momentarily. Hello? Hello, Sherif and Chris, you may proceed. Should I go ahead, Arun? Yes. Our line is live. Arun, you may continue. I apologize for the inconvenience. Yes, Sherif, this is Arun again. Hopefully you can hear me. I just wanted to get your thoughts on, you know, how you see the- Yeah. I heard your question. Okay, great. I heard it. Just wanted to make sure. Great. I was answering. I don't know if you heard my answer. You got cut off just maybe midway between the in the second question, so. What I was saying is that yes, the COVID cost is there. Yes, the supply chain bottlenecks are severe. You see a 300% cost increase for the containers from China, for example, on a lot of our suppliers. You know, the NOV and the rest of the world. The pipe is ridiculous, the cost inflation. Between transportation and raw material, very significant cost increase. Obviously, we manage it. We talk to the long-term partners to manage this properly. The key again, I mean, let's not be. There's no secret here. The key for all this inflation and all this increase of cost and all this is to align the pricing. You have to understand that the industry has been dropping prices since 2014. There is seven years of dropping prices. Now when there is a big tender that is the sort of this LSTK type contract, and you know that your cost is increasing, but then the leader of the industry go and drop the price by 30%, don't expect there will be any margin improvement, right? The key difference would be that the industry itself has to be able to recoup some of this cost inflation because you cannot push your supplier and your provider or any anymore, right? Honestly speaking, some of the shipping companies today tell you very clearly, take it or leave it. I mean, this is the new price, and if you don't like it, we have so many other industry that is requiring shipping, so just wait at the bottom of the line. That's, I think, what is the key. For us, we are going to be, as we said, very selective, in maintaining the discipline to ensure that we can, keep growing, but without deterioration our margins. Great. Thanks a lot. Our next question is from the line of Taylor Zurcher with Tudor, Pickering, Holt & Co. Please proceed with your question. Hey, good morning, Sherif and Chris, and thanks for taking my question. My first one's on the technology partnership strategy that you continue to make a lot of progress on in the recent months. You've announced a couple with Cactus and Ulterra. I guess I'm curious where we sit in this sort of strategy moving forward. You've got a number of them under the fold now and, you know, moving forward, should we expect you to continue to explore additional avenues with respect to incremental technology partnerships to kinda round out the portfolio, or are we kinda in the latter innings when it comes to these sorts of arrangements? Thanks. No, definitely you're spot on. We are very focused in our strategy since the beginning of the company. The established, well-run companies in North America that have solid, credible execution and solid, credible technology, we will partner with them to go to the MENA region and propose those fit for purpose technology to our customer. I always repeat that. We are not an agent, we are not a, you know, a promoter, right? We are a technical company. We look at this technology and check them. Check this person has what, this company has what. Does it fit for the basin of the Middle East? Where from that basin this would fit? We look at this technology and propose, and then put something locally so well done to be able to execute it. It is well-made in the sense of, I want to make sure that they had a localized people trained, et cetera, et cetera. Look at our PHX has been doing a great job in North America. I think they are almost has a leadership now in the U.S. land. Ulterra, the same with the drilling bits. We are there now offering this to our customer. We took Cactus, where again, with the leadership position they have, and we are they have their trees rigged up in the frac in Saudi. We are getting them to other countries, et cetera, et cetera. That is the type of partnership. We keep exploring this all the time. Now we are discussing in some of the companies with new energy and other stuff. Obviously, we don't announce until we sign everything. The agreement has to be credible people, and it works for both of us transparently, very equally. For example, my friend, Robert in NexTier. We decided to do that together in Saudi, and we decided to do that in other places. Very smartly, for example, they're getting extremely busy in the U.S. We decided together, "Sherif, let's have a new arrangement where basically you take over the fleet financially, so I don't have to keep, you know. Basically, I buy the fleet from you." We keep all the workflows, all the training. We train all the national people. They've been doing a great job. People go back and forth between North America and Saudi, and we have all the best software, all the know-how. We don't want to reinvent the wheel, right? Everything that is whatever the latest technology comes, we work together. Again, very solid partnership, you know. We decide maybe after that, for example, like next year, oh, I want to deploy another. For the time being, I'm very busy. Pricing is getting traction in North America. I'm extremely happy here now. Sherif will keep the partnership and see when do we do it next. You see, this is the type of partners and the type of technology we want to do. Just to conclude, what is so important for us, what we wanted to do in-house as well. That's why I am, like, super excited when I went and visited our RSS. I mean, our RSS is gonna be something new. Like, really something new. I don't want. Once we have a track record of commercial one, and then we are going to make now a very viable, alternative, solid RSS tool to the industry. That is what is the key. You can complete the portfolio, go to the customer with the things that are well established, but then something new to the table, new innovation. We tell them, "By the way, we have a rotary steerable that can go to this dogleg, can have a low maintenance hour, and can drill the wells faster and very professional." This is where we want to be. Partnership with solid people and innovation when it's something that I know and that I can do, get something new to the customer, and it's not just a me too, then I go and tell them we have a full portfolio. Good to hear. That's a good segue into my follow-up, which is on rotary steerables. The rotary steerable market, I imagine, is largely dominated by the OFS big boys in the Middle East. It's not like you're new to competing with those guys. For RSS, certainly at the higher end of the technology spectrum. Just curious if you could frame for us, you know, what sort of features with your tool might be a little bit different than what's currently out on the market. You know, I tend to think of RSS as requiring some element of R&D investment on an ongoing basis just to stay competitive with sort of the leading edge technology curve. I'm just curious if you'd agree there and how you're thinking about potential incremental R&D investment for RSS moving forward. Obviously, without giving all the secret sauce. What we did is we put that investment two years ago and with partners. The way it works is we have a setup where 100% we have to continuously invest and improve the tool on the ongoing basis. That's why the way we do it is. It's our innovative R&D setup is basically we have the setup here in North America. We have the partners. We are small, I would say, part of equity holder of the company itself, and we have the tools to use it in our Middle East. They can sell and they can run the tool in North America and others. That's how the whole setup works. What features this tool will have, obviously, it's no secret. What rotary steerable today, the difference is what type of mechanism you do to steer? How can you stay within, you know, is it a couple of feet? How you get a very solid and homogeneous hole to be able to have a good LWD and good casing running after that. Then the dogleg, right? Our tool will have a superior feature in any and every single piece of that once we commercialize. My expectation is in six months. We should have the tool commercialized, launched in six months as a commercial tool. This will allow us to go after that market in the Middle East, which is $2 billion. Got it. Good to hear. Thanks for the answers. Our next question comes from Igor Levi with BTIG. Please proceed with your question. Good morning. To start, could you provide a little bit additional color on how the two water contracts, both the pilot contract in Saudi and the brine contract in Iraq are progressing and as far as the revenue ramp-up from that into next year? The pilot in Saudi is rigged up as we speak. We are going to run the pilot. As soon as it proves the scalability, then definitely we see which part that we should start with on the, you know, on the scalable setup, right? I would say the revenue would come from January. It's obviously to start at a very small number and then until you get the scalable plant. On the brine contract in Iraq with the one of the super majors, this is today being constructed. The revenue will come maybe in Q1. It starts when it's fully functional. As I said, this is very innovative in the sense that it's real ESG in action. That's what we really like, which is basically you are going to replace what used to be done for years and years with something so innovative. You don't need to truck the salt. You don't need to truck all this wasted energy and take the produced water and take the aquifer, unused water, if you like, and make brine and send it to the different fields. This, I think, is gonna get so much bigger because of the increase of activity in the different fields in Iraq. I mean, now with the oil price, it's a no-brainer that, you know, you will see significant increase of activity in Iraq going forward. Great. You also mentioned that ESG could be bigger than the two other segment. What is your roadmap to get there? What has to happen? Do you think you'll be there by 2030, where 50%+ of your sales are driven by the ESG segment? Yeah. I mean, if you're talking with all what you heard in the last couple of days in COP26, with all the infrastructure that the energy sector has to do to leverage and capitalize on what they have existing. If I look at the amount of carbon capture and storage, the amount of emission control. Again, nobody talks about that, but I'm still very. My personal opinion, this is the low-hanging fruit is the water projects. If I look at all this in addition, my personal opinion, this is gonna be bigger than the other two segments by 2030. Great. Thank you. I'll turn it back. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I will now turn the call over to Sherif Foda for closing remarks. Thank you. Thanks, Alex. Thanks, everyone. We are again, extremely excited. Remember this is a super cycle. Whoever were around in 2005, this is gonna repeat itself. Good time to be in this industry. Thank you very much. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.