Question-and-Answer Session
Operator
Thank you. (Operator instructions) Our first question will come from Pierre Conner with Capital One.
Pierre Conner – Capital One
Good morning gentlemen.
Bill Stewart
Good morning, Pierre.
Jeff Smith
Good morning.
Pierre Conner – Capital One
Hey. A couple of questions on North America of course, pressure pumping, on the price impact, Bill you spoke about I guess mid teens and then (inaudible) to 14%. Could you tell us sort of as you progress that into the subsequent quarter how much of the – you gave us some activity declines, but how much more pricing flow through so to speak – we heard anecdotally about severe price reductions at the end of the quarter. What would you – can you project what the pricing impact is in the next quarter?
Bill Stewart
Well, that’s a great question, but it comes with a difficult answer.
Pierre Conner – Capital One
Yes.
Bill Stewart
In terms of what pricing is going to do as we go April, May, June, that’s difficult to project, but what I can say is that from beginning to end pricing was down about 16.5%, so the kind of the mid teens number that I’ve quoted earlier, that’s an average quarter to quarter.
Pierre Conner – Capital One
Okay.
Bill Stewart
Actually it was 16.5% down.
Pierre Conner – Capital One
Got it. That’s helpful. Alright. On the cost side and lot of progress on the people as well as materials, can you give us a split of what is your cost structure in terms of labor and how much of the cost structure is fuel and consumables, et cetera.
Jeff Smith
Well, I can provide that but for competitive reasons I don’t want to get too granular there.
Pierre Conner – Capital One
Okay.
Jeff Smith
From a variable cost perspective, Pierre, it’s about 45% and that’s at the gross margin level.
Pierre Conner – Capital One
Okay.
Jeff Smith
Our labor cost has typically been and this is going to include fixed cost, this kind of been in the 25% to 30% range.
Pierre Conner – Capital One
Alright.
Jeff Smith
So, that’s about as detailed as I try to get.
Pierre Conner – Capital One
But let me make sure, the labor is only about 25%?
Jeff Smith
25% to 30%.
Pierre Conner – Capital One
Got it, okay. Alright. Last one, just understand your comments, Jeff, about you brought horse power into a central location in Texas. What was the implication here that is retired or you are centralizing some of the equipment in preparation for – I didn’t – I am sorry I didn’t follow completely.
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