9 Energy Service (NINE) Q2 2025: International Tools Revenue Up 20% as Domestic Rig Declines Pressure Margins
NINE’s Q2 2025 results reflect a challenging US oilfield environment, with domestic rig counts dropping nearly 10% but international tools revenue up 20% year-over-year. The company’s diversified portfolio and operational agility helped offset some pressure, yet margin headwinds remain significant as oil-levered basins contract. Investors should watch the international expansion narrative and the evolving balance between gas and oil basins for forward visibility.
Summary
- International Tools Growth: NINE’s international completion tools revenue surged, countering US market softness.
- Permian Weakness Drives Pricing Pressure: Oil basin rig declines led to lower activity and margin compression across service lines.
- Strategic Facility Investment: New completion tool facility aims to strengthen technology edge and global customer traction in 2026.
Performance Analysis
NINE navigated a turbulent Q2 as US rig counts fell almost 10% in three months, with the Permian—historically 40% of total revenue—experiencing the steepest drop. Revenue landed at the high end of guidance, but this masked underlying pressure: oil price declines, new tariffs, and customer CapEx pullbacks led to lower activity and increased pricing competition, especially in oil-heavy regions.
Bright spots included the completion tools segment, which grew 9% YoY, and the wireline business, up 11%—both benefiting from stable or improving conditions in natural gas basins like the Northeast and Haynesville. International tool sales rose 20% YoY for the first half, driven by Middle East and Argentina demand for multi-cycle barrier valves and plugs. However, cementing and coil tubing revenues declined by 9% and 16% respectively, reflecting both activity and pricing pressure in the Permian. Adjusted EBITDA and gross profit compressed as a result of these mix and margin headwinds.
- Wireline Outperformance: Market share gains in the Northeast and remedial wireline work supported segment growth despite wider industry softness.
- Cementing and Coil Tubing Under Pressure: Activity and pricing fell sharply in the Permian, diluting overall profitability.
- CapEx and Liquidity Steady: CapEx guidance remains unchanged, with liquidity at $65.5 million despite increased revolver borrowings for facility investments.
NINE’s blend of service lines and commodity exposure provided some insulation, but the quarter’s results underscore the company’s vulnerability to US oil price swings and the importance of international and gas basin momentum.
Executive Commentary
"With the decline in commodity prices, increased cost due to tariffs, and uncertainty around the global timing, US activity and capex plans were reduced, resulting in significant rig declines throughout the second quarter... our operational team performed well, and we were able to capitalize on an improving natural gas environment, as well as continuing to grow the international tool business."
Anne Foss, President and Chief Executive Officer
"Our total first-off international tools revenue has increased by approximately 20% when compared to the first half of 2024. This was driven by both increased sales of our multi-cycle barrier valve into the Middle East, as well as an overall increase in our plug sales."
Guy, Vice President and Chief Financial Officer
Strategic Positioning
1. International Expansion as a Growth Lever
NINE’s international tool business is now a clear strategic priority, with first-half revenue up 20% YoY and management citing strong traction in the Middle East and Argentina. The focus is on plugs and multi-cycle barrier valves, products that are gaining volume orders and provide diversification from the volatile US market. Leadership acknowledges the lumpiness of this business, but expects full-year international revenues to exceed 2024, reinforcing the importance of global diversification for future resilience.
2. Gas Basin Strength Offsets Oil Weakness
Stable natural gas prices and operational efficiency in the Northeast and Haynesville allowed NINE to capture market share in wireline and completion tools, partially offsetting the Permian drag. Management is optimistic about the medium and long-term natural gas outlook, citing power demand and a more favorable competitive dynamic in these regions.
3. Facility Investment to Bolster Technology Edge
The new 30,000+ square foot completion tool facility in Jacksboro, opening in 2026, is designed to be the largest of its kind in the US, with advanced test wells and customer visibility features. This investment aims to accelerate R&D, sustain engineering, and support both domestic and international customer needs, positioning NINE as a credible technology partner globally.
4. Cost Discipline Amid Revenue Headwinds
Cost reduction remains a core focus, with management citing sustainable cuts in suite management, headcount, consulting, and vendor rationalization. These efforts are intended to protect margins without sacrificing service or technology quality, providing a buffer as activity and pricing remain under pressure.
5. Nimble Asset Deployment and Customer Mix
NINE is actively reallocating equipment and personnel—such as shifting wireline resources from West Texas to the Northeast—to maximize asset utilization. Private operator activity is monitored closely, as these customers are more agile and potentially margin-accretive compared to larger public peers, especially in gas basins.
Key Considerations
This quarter crystallized both the downside risks of oil basin concentration and the upside from international and gas basin diversification. NINE’s ability to flex operations and drive technology adoption will be critical as macro volatility persists.
Key Considerations:
- Permian Exposure Risk: Further rig declines or oil price drops could deepen revenue and margin headwinds given 40% historical revenue exposure.
- International Lumpy but Growing: International tools growth is promising but unpredictable, requiring ongoing investment and customer development.
- Wireline and Remedial Diversification: Strategic emphasis on remedial wireline is helping offset pump-down cyclicality and broadening the revenue base.
- Completion Tool Facility Ramp: The new facility’s success will depend on execution and customer adoption, both domestically and abroad.
- Liquidity and CapEx Discipline: Facility investments are funded via revolver borrowings, but overall liquidity remains adequate for near-term needs.
Risks
Persistent oil price weakness and further rig declines in oil-levered basins remain the most significant risks, with management acknowledging the lack of Q4 visibility and the potential for private operators to react swiftly to negative commodity moves. The international business, while growing, is inherently volatile and may not fully offset domestic softness. Tariff pressures and inflation could further erode margins if not mitigated by cost controls or pricing power.
Forward Outlook
For Q3 2025, NINE guided to:
- Revenue between $135 million and $145 million
- Adjusted EBITDA expected down sequentially, reflecting full-quarter impact of Q2 activity and pricing declines
For full-year 2025, management maintained CapEx guidance at $15-25 million.
- Management expects more “white space” in oil basins and ongoing pricing pressure but sees upside from international and gas basin opportunities.
- Customer conversations point to potential activity increases in the Permian in Q1 2026, but Q4 remains uncertain.
Takeaways
NINE’s Q2 performance highlights the importance of diversification and operational flexibility in a volatile oilfield services landscape.
- International Growth Offsets Domestic Weakness: The 20% YoY growth in international tools is a bright spot, but volatility and unpredictability persist.
- Oil Basin Headwinds Remain Material: Permian and other oil-levered basin declines are compressing margins and clouding near-term visibility.
- Strategic Facility Investment May Unlock Future Upside: Execution on the new completion tool facility and continued cost discipline will be key markers for 2026 and beyond.
Conclusion
NINE’s Q2 2025 results reflect a business under pressure from US oil market contraction, but with meaningful progress in international expansion and gas basin penetration. The company’s operational agility and technology investments are positioning it for future resilience, but near-term risks remain elevated as domestic activity softens.
Industry Read-Through
For oilfield services peers, NINE’s results underscore the acute impact of US oil rig declines and the rising importance of international and gas basin diversification. The company’s focus on remedial wireline, technology-driven completion tools, and global customer development mirrors broader sector trends. Facility investment and cost discipline are likely to be key strategic differentiators as the industry navigates commodity volatility and evolving customer procurement dynamics. Investors should monitor further shifts in capital allocation toward technology and international markets across the sector.