#101. Jose Bayardo on Drilling Innovation, Growth, And Energy Demand

Speaker A: Oil and gas makes modern life possible. The energy the world requires today and tomorrow will come from decisions made in the oil field today. Oil and gas will remain the leading source of fuel to power affordable energy that is sustainable for the billions of people that depend on the success of the industry. The oil field is a group of people, companies, technologies and institutions working towards providing the world with safe, clean, storable and transportable power. The Oilfield360 podcast is a 360 degree deep dive into the leaders of the industry who will provide listeners with a firsthand account of what it takes to build, maintain and lead the energy business into the future. The Oilfield 360 podcast is brought to you by the following sponsors, Lockton Global Energy and Marine Uncommonly Independent Lockton is the world's largest privately owned insurance broker and risk finance advisor. Locton's global energy expertise is centered in Houston and represents the largest concentration of energy specialists, clients and experiential knowledge in the upstream, midstream and downstream segments of the oil and gas industry. Visit lockedin.com for more information. Upright Digital Upright Digital specializes in partnering with your business to maximize marketing efficiencies. We have a deep understanding of people, their needs, motivations, behaviors as well as the technologies that enable brands in many industries to utilize what is available in a changing digital landscape. Find us online@ah uprightdigital.com.

Speaker B: Welcome back to the Old Field 360 podcast. I'm your host David Deroad, joined by my lovely co host Victoria Beard Queen. How are you doing, Victoria?

Speaker C: I am so happy. I had a nice relaxing weekend. I'm feeling refreshed and I'm really excited for this conversation. How are you? You look like you just came back from the Masters.

Speaker B: Well, I did, I did. I went every day. I did not come back from the Masters. I had the great fortune of taking my old man and another old buddy of mine fishing in uh, Casper, Wyoming on the North Platte river. And uh, the good Lord blessed us with uh, three beautiful days and we caught some monster trout. So came back refreshed. My wife was so excited to turn my son, your six year old son, over to him last night that uh, she didn't know what to do with herself. So what did you do or didn't do this weekend that was so relaxing?

Speaker C: I just kind of vegged. I caught up on some documentaries, I did some stuff around the house. I've been traveling so much for work, which I love, but sometimes you just need a little bit of time at home.

Speaker B: Yeah Any documentaries of note that we should pay attention to?

Speaker C: Probably not ones I should talk about on the podcast. More of, like the murder scenes.

Speaker D: Uh, nothing light hearted.

Speaker B: Cool. All right, well, I just finished Jack Carr's new book.

Speaker D: That was pretty good.

Speaker B: The fourth option.

Speaker C: I didn't know you read.

Speaker B: I have a hard time.

Speaker D: Just kidding, my friend.

Speaker B: I'm really a braille guy.

Speaker C: Anyways, you want to introduce our guest?

Speaker B: Absolutely. So I'd like to introduce our dear friend Jose Bayardo, who is the new CEO, uh, of Nov, otherwise known as no other vendor or national oil of Arco. Jose, how are you doing this morning? Thank you for being well.

Speaker D: Doing well. Thanks for. Thanks for having me. Honored to be invited to, uh, the show.

Speaker B: Yeah. Well, we're privileged to have you here and appreciate you taking the time. We know you're busy, so, like a lot of our conversations, we, um, like to ask our guests where they're from and how they got started in the business. So do you mind telling us a little bit about your background and where you're from and how you got started? Sure.

Speaker D: Um, was, uh, born here in Houston, uh, but family moved to Austin at the age of six. So grew up in Austin, uh, little, uh, area west of town called Westlake. Uh, at the time, very, very small town, uh, that when we first moved out there, MOPAC didn't exist, anything like that. So to get into the city you had to take the low water crossing bridge. Uh, so great childhood. Uh, was brainwashed from a very early age. Uh, so went to University of Texas at Austin, Uh, studied chemical engineering and, um, didn't really know exactly what I wanted to do when I went to undergrad. Uh, thought I wanted to be a physician because my father was a physician. Um, and, um, on a whim, kind of applied for an engineering scholarship and received it and, uh, decided I'd take advantage of the scholarship and study engineering. But I still wanted to go pre med. Um, showed up day one, uh, at the engineering school and I said, um, you know, you've got to declare what area of engineering you're going to study. I said, well, what areas are there? I have no idea. Um, they gave me a book. I looked through it, the book of the different, uh, curriculums of the majors. I said, well, if I study chemical engineering, I get to knock out some of these chemistry classes that are part of the prereqs for, uh, pre med. So I went that route, uh, after a couple years, realized I don't want to be in school for another six to eight years. So we'll give this engineering thing a try. Um, ended up having a very short lived career uh as an engineer. I think my attention span was just too short uh, to focus on uh, you know really refining and optimizing one specific process. So decided to go to graduate school uh and attended Northwestern uh University. And it was a really interesting program. It's called the Masters of Management Manufacturing where you get a joint degree, an MBA from the uh Kellogg School and a Master's in engineering. It was focused on manufacturing operations um, from the engineering college. Um so during my short stint as an engineer, recognized that uh, I was really interested in manufacturing type operations. Um also growing up in Texas was always interested in energy industry. But while I was in graduate school, really liked the uh, business aspect of things and decided that I uh, wanted to focus on the more tangible side of business which is more accounting and finance. And thought about okay well uh, where do I want to focus, what do I want to do? Well what I really want to do is get up the learning curve as quickly as possible on the accounting and finance side. So decided uh, that investment banking was the right first step for me. Uh out of graduate school, went out to the west coast initially down to Southern California and then after a couple years moved up to Northern California, joined the old Hamburg and Quist Group, um that uh, became part of JP Morgan so was there and started focusing on energy technologies. This is sort of during the, the dot com boom and bust that was followed by uh, the last energy uh technology sort of boom and bust and learned uh a hell of a lot. Got up the learning curve um and realized uh, it's time for me to do something different. So ended up thinking about and um, talking to people about different opportunities and that ended up taking me back to Houston. Hooked uh up with SCF Partners and went to work directly in one of their portfolio companies. David uh Baldwin, um, one of the partners at scf was the interim CEO of a company called Integrated Production Services. Ended up joining over there uh, in a corporate development role. When I joined. Thought we're going to be doing a whole bunch of uh, M and A, uh but realized that shortly after joining the company wasn't doing all that well. So it was really a great opportunity to roll my sleeves up, work side by side with the operations people in the organization, kind of reset strategy and um, execute a few changes and start building and growing the business that way. Ultimately got a little bit healthier, started doing a bunch of transactions and then uh, we combined that business with UH2 other SDF portfolio companies to create what was called complete production services, and then took that company public. Um, I've gone way down a rabbit trail. I don't know if you want me to keep. I don't want me to keep going. I don't want to keep even just a monologue here.

Speaker B: We definitely want you to keep. But let me. Let me break it up just a little bit. So going back to banking days, you talked about you were interested in various energy technologies. What were the energy technologies du jour back then, uh, when you were at J.P. morgan?

Speaker D: Uh, David, it's a funny question because this was in the early 2000s, and a lot of the energy technologies that we were dealing with at the time were a lot of the same technologies that people were talking about here just a few years ago in terms of revolutionizing, uh, the energy space and, you know, uh, embarking on this big transition where oil and gas would sort of fade away into the sunset. And, um, you know, what became apparent to me back then is that the technologies were not quite ready. And it was very much of an evolutionary process rather than a revolutionary process. So things like solar, things like wind, things like flywheel technologies, things like fuel cell technologies, etc. Etc. Um, some of the same things that we're working on and talking about today, uh, and then here recently, um, you know, when we started looking at them again five or six years ago, uh, realized that, yes, some progress had been made, particularly on the wind side of things, just in terms of the industrialization and lowering the cost. Um, but, uh, we're still a long ways away from really displacing the hydrocarbon infrastructure, uh, that the world runs on.

Speaker B: I don't know that we'll ever be able to displace it. I don't know necessarily know that we

Speaker D: want to, certainly not during our lifetimes.

Speaker B: Yeah, yeah. So how would you characterize a statement of around. Some of these technologies have a lot of merit, but they're not necessarily ubiquitous technologies. They're more situationally specific or regional. Like, say, for solar. Solar works great, where sun's always shining and you don't have, you know, uh, extreme weather conditions. Like, you know, in Europe, where 63% of the time you've got cloud cover. Maybe not a great, great place to, uh, a great way to generate electricity, but maybe in the desert.

Speaker D: Yeah, no, no doubt intermittency is a challenge. And, um, you know, in order to provide baseload power, you've got to supplement it with something else, whether it's gas, uh, fired, peaking Plants or battery technologies. Uh, both alternatives can get expensive. If you're relying on, on both and you're, and you don't have the high utilization from a gas fired power plant, sure you're using it in that, in that, in that capacity or you're over building it in order to do something else again. Battery storage, there's a lot of talk about you know, generating hydrogen and using that during the intermittent periods. Um, all those things are really costly. Right. Um, but they each have, all these solutions can have uh, a valuable use. You know one of the areas that we at NOV have focused on is wind and uh, particularly offshore wind. And when we started looking at it and getting involved in it said okay, well this is not applicable globally. Right. Didn't make sense to us in uh, the US Marketplace because our cost of power due to their abundance of natural resources is so low. But certain markets like Western Europe, Asia etc. They certainly have their place and add a lot of value to those economies. So it's, it's all case specific. And again we are making progress with all these technologies but it is evolutionary, not so revolutionary.

Speaker B: Sure. So going back to kind of your career arc there, complete production services, obviously some really interesting characters there, Joe Winkler and John Schmitz and some others go public. Tell us a little bit about, more about that and ultimately how you get

Speaker D: to nov. Yeah, I'd say throughout my career I've been blessed to work with some wonderful people, uh, some great mentors, some great friends. Um, and we certainly had uh, several of them at uh, well I should say more than several. But in terms of the leadership team there, uh, a lot of great folks to learn from, uh, in sort of my earlier days of my career. Um, so yeah, Joe Winkler, fantastic, fantastic ah leader, fantastic CEO, uh, you know John Schmidt. Harold, um, Ham was also on our board. Uh, I got to know Harold really well. Mike McShane was on our board, Matt Rawls was on our board. Um, you know it was just, it was a phenomenal uh, team that was put together to build and grow that company. So uh, it was a lot of fun. Not without its challenges but uh, a lot of fun.

Speaker B: Yeah.

Speaker C: So where'd you go next?

Speaker D: So, um, you know, at completing the predecessor companies. I was there for a total of about nine years and as I mentioned started off in corporate development. Once um, we went public, uh, Tom Burke was uh, the head of corporate development from another fantastic individual I had the pleasure of working with. Uh, during my time there. He was the head of corporate development for one of the other portfolio companies that we combined. And right after we went public, sort of looked at him and said, you know, we don't need two heads of corporate development. So I'm ready to do something else. Went and talked to Joe and said hey Joe, I'm looking to do something else. And it can either be inside the company or outside the company. And he said, well you know, the timing is good. It's interesting. Why don't you go run one of our operations for us? So I had an opportunity to step into an operational role and lead um, a big part of the business in the mid continent Rocky Mountain regions, uh, for a little bit over a year. Then it was ultimately called back to the corporate office, um, took on investor relations, back into corporate development for a short period of time, was ultimately promoted to cfo, uh, and was promoted at a fascinating time because it was October of 2008, right on the cusp of the uh, financial crisis. Nothing uh, like trial by fire to learn uh, the role. And we can talk a whole lot about that. But to get to Victoria's question, what was next for me, uh, after surviving that and repositioning the company and really ending up a lot better on the other side of the financial crisis, um, we were faced with uh, a takeout offer from Superior Energy that was too good to turn down. Uh, we accepted that offer, ah, closed the transaction in early 2012. Um, shortly after we announced the transaction I got a call from Harold Ham inviting me to join him over at Continental Resources, uh, which was um, a little surprising to me because I hadn't yet had the time to really think about what I wanted to do post transaction. We hadn't closed the deal yet and was really flattered to receive that call from him. Um, and um, I said well Harold, flattered to get the call, uh, what do you have in mind? So why don't um, I fly down in a couple of days and we'll talk. So he flew down, brought a couple of the members of management team with him and told uh, me that know they were just moving the company from Enid, Oklahoma to Oklahoma City. Um, and what they wanted me to do was join the company and help them start a business development group. And um, again honored to be invited to join the company. And um, in some respects I thought about it for a short period of time and realized uh, you know, kind of been there and done that from, from an M and A and corporate development standpoint, but had never done it on the, on the operator side, uh, of, of the business uh was also faced with a pretty hefty non compete covering a big portion of the services space uh following the transaction with Superior. So said you know what, this is a fantastic opportunity and working for somebody like Harold, who knows how this will turn out and what it'll turn into. Um, but worst case scenario I'll go to the other side of the house and really learn about uh, how operators function, what's important to them and uh, can always come back to the service side of the business in a few years uh, with an experience set that uh, unfortunately very few of us have that uh, would be really valuable. But went up to okc, joined Harold and the team up there, uh had a phenomenal time, helped him start that business development team, uh did a number of transactions and portfolio rationalization, uh a couple of uh, JVs, a uh, couple of other transactions and eventually uh Harold gave me responsibility for uh what they call resource development which is uh, effectively all the planning, the reservoir engineering, the economic analysis and um, was having a lot of fun up there and learning uh a lot and I think doing a lot of good uh for the company um as a prior company, as a prior public company, cfo. On occasion I'd get phone calls from recruiters asking me if I was interested in different uh CFO roles and uh, was consistently saying no thank you, I'm happy. No thank you, I'm happy. No thank you, I'm happy. I'm not looking to do something different. And eventually uh, got the call from a recruiter that's looking to fill the role at nov. And when uh I received that call I was like oh crap. And the reason oh crap is because I wasn't looking to leave. I truly was happy with what I was doing. But NOV was one of those companies that I'd uh, admired for a really long time.

Speaker C: And at this time was Clay at the helm?

Speaker D: Uh yes. So Clay had been at the helm for a short period of time and didn't um really know Clay. I'd met him once or twice at industry type events um but didn't really know him. But um, from that call decided it'd be crazy not to at least entertain the discussion. And so I did and one thing led to another and here we are almost 11 years later. So um, uh miss the folks at Continental but uh, it's been a good move uh for me personally and love what I do and as I mentioned earlier had a passion for both energy and manufacturing. Love uh the city of Houston and for me it was sort of going full Circle and ending up where I was supposed to end up.

Speaker C: So you recently took over the helm as CEO. So what was that like going from one job role to waking up the next day and you're CEO of a publicly traded company with 30,000 employees. How did that feel?

Speaker D: Yeah, I mean it's a little bit of a shock to the system, um, because it is a different role and it's hard to describe, but maybe, um, I could just back up and talk about other transitions I've had in other roles. So pretty much for most every other role I've had throughout most of my career, there hasn't been a transition and it hasn't been very well planned. Um, you know, as an example, when I became CFO at Complete Joe, uh, Winkler took me out to lunch one day, which he did not often do. So I kind of had a sense that something was up. And uh, uh, he said to me, you know, uh, just wanted to have a conversation with you about um, you know, uh, what you want to do with your career. And um, you know, have you ever thought about being a cfo? I said yeah, I've thought about doing that at some point. That seems like a logical path. And asked me like two questions asking if I thought I'd be ready for something like that, how I thought I'd be ready. Accounting background? No, it was more accounting. More accounting because I'm not an accountant obviously. Um, but uh, um. He basically said, well, I'm looking to make a change, looking to do it soon. So m. Why don't you go talk to your wife, make sure this is something you really want to do and come uh, back to me tomorrow. And came back and said yeah, uh, I'm confident that this is something I want to do. I think it adds some value. And within a couple weeks I was in the role. So zero transition. Ah, most of my. Most of my roles have been like that. Um, with the uh, the transition at uh, Nov. Say you guys know Clay really well. You know, he's just a complete class act, super thoughtful, super intelligent guy. And um, he had a long planned out transition plan. Started with me, um, jumping into the president and COO role, um, and ultimately succeeding him at the beginning of this year. So uh, I'd say that this was the first time that it was uh, really planned out well in advance. But I think there's only so much you can do to prepare you for taking the helm of a large publicly traded company. But look, um, we have a fantastic team. Uh, uh, um, they I think put up with me during the first few months as I was trying to get my legs underneath me. Challenge, uh, number one is getting used to walking into a different office and Clay not being around. And uh, uh, you know Clay, fantastic person, worked for him, learned from him, uh, became friends with him over 10 plus years. Huge, uh, shoes to fit, fill. Uh, but uh, um, was excited about the opportunity, honored to take the reins and uh, you know, the first several months, so it was definitely drinking from a fire hose. Uh, you know, a lot of people wanting your time, uh, investors, people, uh, within the organization, people outside the organization, uh, everybody trying to figure out what's he going to do differently. And um, so, but, but, but it's been a really good transition. Things are starting to uh, slow down a little bit. I shouldn't say slow down, but uh, the way uh, another uh, service company CEO sort uh, of explained it to me as I was asking him kind of what to expect and what I should think about. Um, it's kind of like uh, being a college quarterback and stepping up into the NFL. Um, you know, the speed of the game, uh, is incredibly fast when you start, uh, and it's hard to get comfortable. But over a relatively short period of time, the game slows down and you start being able to be proactive once again instead of being reactive. So um, I guess that's a, the simplest way I know how to describe what the transition is like.

Speaker B: So would you say it was more of a psychological change instead of a physical change? Because I think about you and I've known you for a number of years now and um, Clay, definitely a dear friend and shared a lot of stuff with me we couldn't talk about publicly, but you were part of a lot of conversations in the different roles that you had an nov. And so obviously besides title change and taking on that responsibility, you've been part of a lot of that stuff, I would imagine. But I guess once it was just kind of a psychological change or was it a true kind of. Was there some physicality to it as well in the sense that um, outside of getting your head in the game the right way being CEO was there and maybe outside of changing offices.

Speaker D: Yeah, yeah. Was it really? Fair question and good point. It is different and it's hard to explain. And so yes, um, you know, along with that very well orchestrated transition plan, uh, Clay was giving me more and more freedom and latitude. Right. Um, but um, there is something different about when you step into the role and you are the final decision maker on every important decision. The simple Decisions don't come your way as CEO. Right. Uh, we have a lot of super talented people within the organization that make frankly, tough choices.

Speaker B: Right.

Speaker D: All every day. Um, so I think that's just one of the, one of the, one of the differences, David. So I guess in your, uh, description maybe more, more psychological, but maybe maybe a little bit, uh, on the physical side too. Just because you're, you're dealing with a lot more things coming at you at once and um, certainly a lot more people wanting your time in those early days to understand what's, what's different and how are things going to evolve.

Speaker B: Yeah. I mean, you've got 30,000 souls to look after, plus.

Speaker D: Yeah. And it's shareholders, and that's part of it too. It's a, it's a daunting responsibility. Right. But at the end of the day, I know it's not, uh, it is my responsibility, but that sounds egotistical and arrogant to say because it's not really my responsibility. Right. We have tremendous leadership throughout, uh, the organization and it is a complete team approach. And you know, Clay set the tone and the example of, uh, sort of, uh, leading as a team and business being a team sport and uh, making sure that the appropriate people are empowered within the organization to move things forward.

Speaker B: Yeah, you definitely got a great team. The presidents you have of your different groups are great people. And uh, speaking of the different groups always carry themselves well.

Speaker C: We have a lot of listeners that are not in energy. M. So how do you describe what is Nov and what you all do?

Speaker D: Um, yeah, so, uh, the simplest way to answer that question is that we're a provider of equipment and technology to the global energy space. And what does that mean? Well, uh, we produce, uh, just about anything that you would need to drill complete and produce, uh, oil and gas wells anywhere in the world, in any environment. That's, that's the simplest description. Uh, but we do a very wide variety of things. We operate the business with two operating segments and uh, have about 17 different, uh, businesses underneath those two segments.

Speaker C: And you're a global business?

Speaker D: Yes.

Speaker C: And y' all just made a recent announcement about a large expansion into Brazil. Talk to us a little bit about that and why that was so important.

Speaker D: Yeah, so we are a global business. Uh, we operate in 60 different countries around the world and anywhere that there is oil and gas activity, you'll find, uh, an NOV presence. Um, let's put it this way, anywhere where it's legal for us to have, ah, a presence. And with oil and gas activity, um, but uh, yeah. So you know one of the areas that we are really excited about as we look forward is deepwater offshore. And look North America uh is going to continue to be very active and will continue to grow. But production uh, growth is slowing and we're going to need additional sources of supply to meet the world's growing demand for energy. And um, as we sort of look across the portfolio and you know we love to find good high growth, um, high return organic investment opportunities. And we look at the subsea flexible pipe uh space um and it sort of checks the boxes in terms of all the attractive aspects um market m leadership, uh a very attractive opportunity marketplace, um high barriers to entry. It's very high tech m uh technology that goes into these flexible pipes. Um and as we look forward um, we see several things about the market that uh, uh that tells us there's going to be a shortfall in terms of the industry's ability to supply the market. Um so uh, we saw an opportunity to expand our manufacturing plant in Brazil. When it was first constructed, uh, it was set up in a way that lent itself well towards expansion. So it's $200 million investment uh that effectively doubles uh the capacity of that plant down there. Uh 200 million sounds like a lot of money but if we were building that plant from scratch it would be a multiple that to do it. Um so uh, we're excited about the opportunity. Brazil um, uh and other deep water markets are going to continue to increase their activity, continue to increase demand for, for for pipe. Um, uh there's also a replacement cycle that's likely coming to replace pipe that's been in service for a long period of time. And we have a new solution uh that we're uh, in the process of commercializing for dealing with CO2 stress, corrosion, fracking, cracking, uh, that we think can create some incremental demand for us as well. So excited about the opportunity to expand that capacity.

Speaker C: So being a global business, I don't know if you've heard but there's some geopolitical things going on right now in the world. How do you manage through that? The best that you can, obviously.

Speaker D: Yes, absolutely. The best that we can. Um, and look we are as a global provider and look there's always something going on in the world and uh, we have a phenomenal supply chain, uh team, phenomenal compliance team to deal with crazy things like tariffs. Um, but the pandemic, uh, the sudden appearance of really significant tariffs and now uh, war in the Middle east, um has just um, uh continues to require us to leverage some strengths that we have uh, in the organization. So um, you know, the way that we look at things is that things are always in flux. Um, you can't put all your eggs in one basket. And whether it's sort of the geographical footprint of the business where we operate or manufacturing footprint, um, uh, we need to have diversification, uh, in our own manufacturing plants, certainly within our supply chain. So certainly, uh, everything that we manufacture today we can build in more than one plant around the world. Um, our vendor base is set up similarly. We don't want to have ah, concentrated risk. And so, um, then look, I think um, consumers of energy are thinking about the same thing nowadays, right? Energy security. When Russia invaded Ukraine, Europe obviously became very sensitive um, to energy security. Uh, now with the conflict in the Middle east that's affecting everybody, um, I think certainly Asia and really the rest of the world is focused on energy security. And so being able to have that diversity in supply chain diversity and operating footprint and also diversity in terms of how, where we support our customers, whether it's North American land, uh, the Gulf, offshore deep, uh, water, in numerous markets around the world and international markets around the world. It's going to take all of those resources in order to power the world's demand, uh, for energy. And the world needs diversity, secure supplies.

Speaker B: But aren't you also doing some stuff beyond just oil and gas in the sense of energy infrastructure as well? I mean y' all have got a pretty big uh, fiberglass manufacturing, uh, capability in the Middle east too, which I think is pretty fascinating. Can you talk about that a little bit?

Speaker D: Yeah. So, um, as I mentioned, we do, we do a lot of different things, uh, anything from providing um, you know, the heavy capital equipment that's used to drill and complete wells, uh, to a lot of downhole consumable tools that are used to uh, dramatically improve the efficiency of drilling those extended lateral, ah, precisely placed wells and completing them efficiently. But we also have uh, different businesses like fiberglass and like subsea flexible pipe that are uh, more infrastructure, uh, components and midstream, uh, related components to the oil and gas, uh, equation that is really important to have in order to efficiently uh, convey fluids, liquids, uh, hydrocarbons, uh, to and from uh, location, uh, to enable efficient operations. So like our fiberglass business you mentioned specifically in the Middle east. You know, the interesting thing about the Middle east is uh, you know, they're now uh, embarking on their development of unconventional uh, resources, um, and they sort of get to start with a little bit of A blank slate, uh, over there. Take lessons learned from the North America marketplace and apply it over there. So folks in the Middle east are as you would expect, very thoughtful, very smart and they're investing in the infrastructure in order to ultimately enable very efficient operations on the ground. And that's creating a lot of demand for things like our um, our fiber spar, uh, flexible pipe, larger diameter pipe as well, chokes, uh, uh, closures, etc. Uh, that uh, that, that, that go into building out that infrastructure. Sure.

Speaker B: Are there any technologies that you guys have in the portfolio that you think are really cool but maybe underappreciated by the market that uh, um, have not gravitated to the utilization of those yet? Um, like to see.

Speaker D: Yeah, look, you know every single One of our 17 businesses has a technology roadmap. We pride ourselves on being technology leaders in just about everything that we do. So I don't want to hurt the feelings of anyone, any of our individual businesses, but there are no favorite child, uh, children. But um, you know there are a couple of areas that I get uh, really excited about and I think the term digital is overly used these days. Uh but you know, with AI and the advent and evolution of technology, I think there are some game changers out there. And you know it starts with control, uh systems. It starts with being able to, to capture data and ultimately utilize that data to make better decisions, um, whether they're human or machine decisions in order to uh, control equipment. So data transmission and automation I uh, think are uh, really important, really valuable and we're on the leading edge of that recently, uh, um, over the last couple years commercialized our robotic systems that, that basically allow for completely manless drill floor uh operations. Uh, it's getting better and better and more efficient every single day and we're seeing a lot of uh, acceleration and adoption of that technology. Really excited about that. Um, the other one is uh, wire drill pipe, uh, technology. And it's something that we've had in our portfolio for a long time, uh, but it's been an evolutionary process. Use that term far too often during this discussion. But, but it is really important. Right? So we've had the means to convey the data for, for a while, but it's about making it hardened to where it's very robust and reliable and also providing all the peripheral tools, uh, and equipment to leverage uh, that ability to transmit data and also algorithms on top of that to drive uh, improvements and efficiencies and ultimately tying that into control systems and uh, automation. So I think uh, uh, those are sort of a couple of areas that I'm, that I'm pretty excited about as we go forward.

Speaker B: Sure. What do you think Nov looks like in the next five to 10 years? You gotta, where would, where would you, where do you think Yalls growth will come from and what are you most excited about?

Speaker D: Yeah, you know, kind of ah, um, continue to pull on the thread related to data, uh, and what you can do with data. So if you look at nov historically, uh, we've had very decentralized uh, operations and we've empowered our people to go out and build their businesses and run their businesses, uh, which is fantastic and we've done a fantastic job of doing that and certainly that's not going to change. But where I see uh, great opportunities for the organization or um, if you take a step back and look at Nov, there's another company on the planet that has the same set of skills and capabilities under one roof and driving uh, collaboration, leveraging those digital technologies to bring those different parts and pieces together. I mentioned earlier the wire drill pipe and the drilling automation have not been thought about sort of together all that much in the distant past. It's opportunities to provide more integrated solutions, to provide better solutions for our customers. Um, but really what I'm most excited about is um, when I joined nov, um, I, uh, knew I was joining this was in August of 2015. Uh, I knew I was joining the company uh, during the depths or during the early phases of a deep downturn. Did not realize the downturn was going to last ten years. Um, but it effectively has. One of the reasons I was super excited to join uh, nov at the time is I always felt that exceptional companies further differentiate themselves during, during difficult times. Um, and that's what we've been focused on doing and I think that's what we have done. So what I'm really looking forward to over the next few years is the opportunity uh, to demonstrate that because we have not been in an environment to where we can really demonstrate the full earnings potential of nov. And I think in the coming years you'll see that.

Speaker B: Sure. So you know, historically Nova has grown organically but also through a lot of transactions. Do you feel like that growth is going to come from additional M and A or with the skill sets you have and the experience you have in the knowledge base and the people. Does the technology utilization of AI, uh, and supercomputing and ideas and stuff, does that allow you to kind of harvest those resources internally for more internal organic growth? Or do you see more M and A on the horizon as well.

Speaker D: Yeah, look, we'll always look to be opportunistic from an M and A standpoint. Uh, but one of the things I'm really proud about the organization is our ability to develop sort of game changing technology and innovation organically. And I think uh, I'd put our capabilities up against anybody else. So as we look at the portfolio today, very happy with uh, the portfolio as it sits. And as I mentioned all the businesses have their own technology, uh, roadmaps that will maintain and advance uh, their leadership. Um, if you look at last year, it was the first year in the company's history where we didn't do a single transaction. Uh, not because we don't want to do M and A and then we're not uh, able to do M and A. Um, just the hurdle is really high. Um, and uh, it's really high because it has to compete with um, what we're able to do on our own.

Speaker B: Right.

Speaker D: So we'll be opportunistic and occasionally somebody figures out how to do something more effectively than we do. Uh, love those sort of bolt on technology opportunities that are right down the fairway of what we do. Uh, opportunities to consolidate are interesting, um, but, and we'll look at adjacencies, uh, but like I said, very happy with the portfolio today and see uh, a lot of potential to leverage uh, the leading edge technologies to do more with what we currently have.

Speaker B: What do you think of the market shift as it relates? You know your experience with Continental gives you kind of some experience that, that you mentioned not a lot of people have on the services and manufacturing side of ultimately uh, being the customer, the end customer if you will. And the shift that we've seen from production at all costs to now, um, the market going, we actually gotta show shareholders returns, people like dividends and uh, you can over lever a business and that's not good. So let's be a little bit more disciplined. Um, do you think the owner operators keep that discipline or do you see it shaking loose again like we've seen historically?

Speaker D: Yeah, I think the industry uh, will continue to be disciplined. Um, that doesn't mean that people won't start investing more again. Right. I mean if you look at sort of what's happened with exploration budgets, if you looked at reserve replacement ratios, things like that, they're all down considerably and probably not sufficient uh, to take the industry forward and meet the world's growing uh, demand for energy and power. So I do think things will pick back up again and it is a really interesting time uh, when you talk investors and you talk to our peer companies about how they're thinking about things. Things and uh, say some of the industry is a little gun shy and they're hesitant to pick up investing. Um, and you see some investor surveys where they say well yeah, we still think management teams should continue to return disproportionate amount of capital to shareholders. Look, I think companies um, in the space need to do ah, what's right for their shareholders at all times. And certainly if you look over the last decade, was returning a bunch of capital to shareholders the right thing to do? Yes, because we had sort of over capitalized the space during the, during the prior cycle and um, we need to slow down our external investments and obviously in the commodity price environment it wasn't a real attractive time to do that. Uh, I think things have changed and they've changed pretty dramatically. And I think true long only shareholders uh, that are really um, aligned uh, with a team that's looking to build value uh over the long run. They understand that um, uh, you need to invest when the market is one that creates good investment opportunities and good growth opportunities. And so Victoria asked earlier about that investment decision in Brazil. Did we think for ah, at least a few seconds about how it's going to be perceived by our investors? Um, yes, um, but uh, quickly got to you know what, um, the long only, true long only investors will understand this and those who don't understand it, uh, give them a little bit of time and they'll get it and ultimately we're going to do the right thing for the, for the business.

Speaker B: I mean it's a, it's a you know, capital intense industry as a whole. But, but uh, while all this equipment you guys manufacture and produce is meant to exist and harsh and work in harsh environments, it does wear out, it does have to be maintained, it does have to be replaced. I feel like there's a big cliff coming even though there's been some efficiencies gained. Um, I'm waiting to see when that uh, when the, when that, when that uh, when those orders start to really pick up. Because at some point you know there's some folks that are, that are, I think are intelligently investing ahead for, for that, that long term view, uh, to replace equipment to keep up.

Speaker D: But yep, a lot of folks that aren't. Yeah, I, I think you're right and I think we're on the cusp of it. And um, you know it's funny, most people think of Nov as being a later cycle business because we provide capital equipment. Usually what happens in the early phases of a cycle, you know, activity improves, that helps service companies and service oriented businesses, certainly helps our aftermarket business. And then that capacity gets absorbed before people need to start ordering new equipment. Um, I think the availability of equipment is a lot shallower than what people would think. If you think about it, okay, we've had had basically a 10 year down market and certainly three straight years of declining activity in the North American marketplace. And you've got the advent of international, uh, unconventional resources. Those international markets, they don't have the asset bases that we've had in North America that are designed to execute on those types of resources. So I think the capital cycle is starting now. Uh, I think it's starting earlier. Um, but uh, we'll see how the next few years uh, evolve. But I think we positioned the business appropriately and look, I'm excited about the future. I do think uh, people will be stepping up investments and I think it's a smart thing to do. From operators to service companies to manufacturers. Like, like Nov. Yeah.

Speaker B: Because I think you think about the international markets m relative to the North American market, all the latest and greatest stuff seem to, you know, find its home here. And then, and then as it phased out and the new stuff came in, that old equipment would go to the international marketplace and find a home and go to work. But to your point about what's happening in the Middle east, the shift from conventional to unconventional, they don't want the old junk and quite frankly they can't afford to operate on the old. They got to have the latest and greatest technology that's enabled us to unlock what we've done here in North America. Elsewhere in the world.

Speaker D: No, that's right. And I think there are plans over the next year or so for a number of companies to send more of their assets. Assets to places like the Vaca Muerta and in Argentina. Sure. I don't think they were counting on picking up that much activity in North America. And so now I think there's a little bit of a dilemma. Do we send that equipment overseas or do we uh, do we continue to, to ramp things up over here? So I think, um, not uh, a dilemma, but my point is things are going to tighten up quicker than what people were anticipating three, four months ago.

Speaker B: So to switch it up a little bit, we've been really focused on your professional career and Nov for a little bit. Let's talk about your personal life, your family life. Uh, you obviously have uh, a wife and a family. And that's great. And I think, I don't know if it's a challenge or a privilege to be uh, related to Fred Charlton. Tell us a little bit about uh, your family. How did you. And how did uh. Obviously to do all the things you've done, you have to have a supportive family. Tell us a little bit about your family also.

Speaker C: Yeah. When did you meet your wife?

Speaker D: So, um, I'm been blessed to have so many just wonderful people uh, in my life, both professionally and personally. And you guys just threw a whole lot of questions, I hope you realize that. But I'm going to start with the most important one which is my wife. Um, so yeah, I mentioned uh, that was uh, doing investment banking out on the west coast. And uh, my wife is from Northern California. She's from a small town in Northern California called Petaluma, which is in Southern or um, uh, Sonoma County. And she uh, was working as a recruiter, uh, uh, in Northern California and I was doing investment banking and the admin assistant from my group group went to work uh, for the company my wife was working for and she set us up. So. And uh, um. Uh. We um, have been going strong ever since. Right. Two uh, lovely uh, daughters, um, will be empty nesters in 12 months, which is uh, really hard to believe. Um, and um. Yeah, it's uh, uh, a great family environment and uh, you know, have a um. I have an older sister who's oldest in the family, a middle brother and uh, yes, my sister is married to Fred Charlton, as David just touched on. For those of you who are confused by uh, what that statement was, uh. But no, it's an honor to uh, have Fred as a brother in law. He's a fantastic individual. They've raised a fantastic uh, family. Uh, my nephew and nieces are phenomenal. Um, and so uh, uh, it's a good life. I certainly have no complaints.

Speaker B: And we were a big fan of Fred. So obviously uh, you've had a very busy career. How do you stay connected with the family and balance and what do you do to disconnect? If you can disconnect, uh, from.

Speaker D: Yeah. So um, I spend as much time as I possibly can with uh, my daughters and that's usually um, at their discretion in terms of how much time they're willing to allow me to spend with them. Um, and then uh, obviously same uh, for the wife. But it's, it's. Everything's a balancing act, right? You got, you got to make time for family and that's the number one priority. And you know that's, that's the way it needs to be. Not just for me for, but for everybody in the company. Um, outside of strictly family and work. Um, uh, I have two things that I get excited about. Uh, one is uh, I'm a huge car nut lot and I love taking uh, cars out to racetracks and uh, um, not technically racing but doing something pretty close to that. And then also uh, we have a little place west of town that I love getting out to and just getting out of the city and getting out into the environment and tooling around out there as well.

Speaker C: So on the car comment, if you could own any car, it could be out of production, in production, what would it be and why?

Speaker D: Oh gosh, Victoria, that's a very hard question. Because honestly I love all cars and I think um, uh, that's like asking me to pick my favorite child. To a certain extent you can pick a couple. Look, I guess the car that I've always been a uh, Lotus nut, uh which is a very quirky um, little manufacturer, uh that's been on the brink of bankruptcy a number of times. Um. Dave. Ah, I had to pick one um, that I haven't pulled a trigger on yet. It's a Lotus Esprit, um, you know the, the James Bond slash Pretty Woman car. Um, and actually uh have ah, a Lotus but not an Esprit. I've always been uh, interested but uh, afraid due to reliability challenges, uh and maintenance challenges. Um, but really there's just a long list of cars that I would like to have at some point. Point.

Speaker B: So do you like to also tinker with the cars? Obviously taking them out to run. You've got a, they need a little love and attention from time to time. Do you, do you uh, do you have a garage set up to do that?

Speaker D: I do and that's uh, um. I'd say more basic uh type. Type maintenance and usually when I uh, try something a little bit more ambitious it doesn't go terribly well. But I think maybe a couple things that both sort of the property out west and the cars have in common is you know we do uh, in our professional lives these days. It's a lot of paper pushing and conversations. Um, and uh, what I love about working on cars and dealing with cars and dealing with stuff out at our place west of town is um, accomplishing something physically. Right. Even if it's something as simple as okay changing uh, the brakes and rotors right. It uh, there's an accomplishment at the end of the day when you finish that project.

Speaker B: Yeah, you were talking uh, before we started. Uh, you've got a pretty hectic travel schedule, so you're getting ahead of some uh, some work out at the, out at the property. I always thought it was a great way to uh, you know, let off some steam. Just be able to go get on the tractor and go mow for hours and you can look back and go man, actually accomplish that. Where in our professional lives sometimes you put a lot of effort, you don't see the results of that effort for months, sometimes even years.

Speaker D: No, that's exactly right. The physical accomplishment. And also as you kind of touched on there, sitting on that tractor for a long period of time gives you the opportunity to think about all sorts of things that you then bring back to your normal professional life. So uh, it's good to check out a little bit and get uh, out of the city.

Speaker B: So you've had a lot of uh, interesting experiences in your life and you've come across a lot of really fascinating people. Um, the Harold Hams, the John Schmitzes, the Joe Winklers, Clay Williams, uh, Lauren Singletarys, etc. I go on and on and on. Were any of those individuals or anybody we've not named really um, impactful to uh, you in your career thus far? Um, in terms of advice they may have given you or um, uh, some guidance that you might share with us in our listening audience?

Speaker D: You know, I think I could go one by one through everyone that I've worked with and tell you something important that I felt that I learned from them. So uh, again blessed to work with so many wonderful uh, people. Um, maybe I will tick through a couple of them. Um, so like uh, like, like Joe Winkler, um, just an intense, uh, super bright individual that um, also can distill things down in very simple ways and get uh, people aligned and focused on execution. Uh, that, that, that's Joe in my, in my takeaway uh, from him, um, another individual at complete. We hadn't guy named Brian Moore, who ultimately became uh, CEO over at Superior Energy Services. Um, just a classic uh, old school operations guy. And uh, learning from him just how to interact with people, how to be decisive on what you need to be decisive about, how to, how to empower uh, people at the operational level. Uh, phenomenal learnings from him. Um, Harold Ham. Um, you don't get to be somebody like Harold without being a little bit different and thinking differently. And big uh, takeaway from, from Harold is, you know, most of us think about uh, you know, when we have obstacles in our lives, in our careers, we think about, uh, how to navigate around them. Um, he was somebody that just time after time I saw him physically, uh, and basically, uh, physically remove those obstacles to get them out of the way because they just didn't make sense for him. Didn't make sense, uh, for anyone. And then last, uh, but certainly not least, um, Clay, uh, uh, again, just a phenomenal human, uh, phenomenal individual, uh, who just very bright, very caring, very compassionate, um, and always, always, uh, doing the right thing. Um, and really talk about all those individuals. They all were good, fundamentally good people that always did the right thing. Uh, but, uh, I think Clay sort of epitomizes doing well by doing good. Um, and that's Clay.

Speaker C: So before we close it out, I was going to do three fun quick fire questions.

Speaker D: Oh, Lord.

Speaker C: Your favorite band,

Speaker D: um, the one that popped immediately to mind is the Police.

Speaker C: Okay.

Speaker D: Followed closely by Rush.

Speaker C: Okay.

Speaker D: And maybe Led Zeppelin too.

Speaker C: I love it. Your favorite food?

Speaker D: Um, burgers.

Speaker C: Okay, I'm not eating.

Speaker B: Where's your favorite burger?

Speaker D: That's a dangerous question. That is a really dangerous question.

Speaker B: Um, it is dangerous.

Speaker D: That's why I was like, I thought about it, but I was like, I'm not touching that one.

Speaker B: You know, he doesn't have to answer.

Speaker D: It's really hard. I'd have to think about it for a while. My older daughter and I, we were going around town trying, uh, to identify, uh, every. Our most favorite, uh, burgers. And, um, it really depends on the day. Uh, but, um, there's a, There's a place called. I think it's called Itty Bitty Burger Barn. Um, that just has phenomenal. Okay. Burgers. Yeah, I think that's. I'm pretty sure that's the name of it. It's been a little while.

Speaker B: What about Langford's? Have you been to Langford? Are they even still in business? I don't.

Speaker D: I know the name because they were on one of those top lists. But I think we tried to get out there one time and they weren't open. But I'm not sure if they're in business or not.

Speaker C: I think that's a fun little adventure you're doing with your daughter is going around town eating burgers.

Speaker D: Yeah. We get the top 10 list from the Houston Chronicle and, or whatever else we could find and go try them all.

Speaker C: Okay, final question. How do you think UT is going to do in football this year? The hard hitting question.

Speaker D: Uh, I think they'll do well. I think they Do? Well, um, I try to temper my enthusiasm for, uh, every single season, but, uh, I think they got a great team this year, and we'll see. It's just so hard with the, uh, transfer portal. And on paper, they look about as good as they possibly can be. But ultimately, like business, it comes down to the chemistry of the team and how they work together. So we'll see.

Speaker C: Okay, I want to close it out with a final question.

Speaker B: Yes. So, uh, we usually like to ask our guests a question if there's any advice they would have liked to have had when they're their younger, um, life or career, uh, but they'd like to share. What is it? We've got an interesting audience here and some Piper Sandler interns over here that I'm, uh, sure would love to hear. Any thoughts you might share, any words of wisdom or advice that, uh.

Speaker D: Um, I guess, uh, a couple of things. One, uh, is, uh, if you don't know exactly know what it is that you want to do when you're early on in your career, don't worry about it. Um, and number two, tied into it, um, just raise your hand and try, uh, different things. And when somebody asks you if you're interested in doing something or if you could help do something, jump in head first, uh, and do it and get different experiences and be a reliable team player, uh, and that will do wonders, uh, for your career and you'll figure it out over time and you'll end up where you're supposed to end up. Um, you know, I think that team aspect is maybe underrated in this day and age of, uh, look at me, social media. Um, but it is, it is truly important. And, um, who you work for, uh, and who you work with are probably the most important things. So make sure that you get yourself into an environment, uh, where you're working with people that you know, that you trust and that, uh, you can, you can be a valuable team member.

Speaker C: Well, Jose, thank you so much. We know that you are incredibly busy, but you made the time and we are so thankful.

Speaker D: Thank you guys.

Speaker B: This was fun. Thank you. That was great advice. I agree. So you can find us on your favorite, uh, social media platforms. And we, uh, appreciate you joining us and look forward to seeing you next time.