Danielle Foley - Joshua E. Comstock - Founder, Chairman and Chief Executive Officer Randall C.

McMullen - President, Chief Financial Officer, Treasurer and Director Donald Jeffrey Gawick - Chief Executive Officer and President

John M. Daniel - Simmons & Company International, Research Division Brad Handler - Jefferies LLC, Research Division Robin Ernest Shoemaker - KeyBanc Capital Markets Inc., Research Division Brandon Burke Dobell - William Blair & Company L.L.C., Research Division Ole H.

Slorer - Morgan Stanley, Research Division

Good morning, everyone, and thank you for joining us on this call to discuss C&J Energy Services third quarter results for 2014. Before we get started, I'd like to direct your attention to the forward-looking statements disclaimer contained in the news release that C&J put out yesterday afternoon.

A copy of the release is available on the company's website at www.cjenergy.com. In summary, the cautionary note states that information provided in the news release and on this conference call that speaks to the company's expectations or predictions of the future are considered forward-looking statements intended to be covered by the safe harbor provisions under the federal securities laws.

Although these forward-looking statements reflect management's current views and assumptions regarding future events, future business conditions and outlook based on current available information, these forward-looking statements are subject to certain risks and uncertainties, some of which are beyond the company's control, that could impact the company's operations and financial results and cause C&J's actual results to differ materially from those expressed and/or implied by these statements. I refer you to C&J's disclosures regarding risk factors and forward-looking statements in its filings with the SEC for a discussion of the known material factors that could cause our actual results to differ materially from those indicated or implied by such forward-looking statements.

Please note that the company undertakes no obligation to publicly update or revise any forward-looking statements. And as such, these statements speak only as of the date they were made.

As a reminder, today's call is being webcast live and a replay will be available on C&J's website. Please note that information relay on this call speaks only as of today, October 30, 2014, so any time-sensitive information may no longer be accurate at the time of replay.

Finally, on June 25, 2014, we entered into an agreement to combine C&J with the completion and production services business of Nabors Industry (sic) [Nabors Industries]. During today's call, we will comment on the pending transaction.

Please note that our communication today does not constitute an offer to sell or the solicitation of an offer to buy any securities or solicitation of any vote or approval. With that, I'd like to turn the call over to Josh Comstock, Founder, CEO and Chairman of C&J Energy Services

Good morning, everyone. We appreciate you joining us for our third quarter 2014 earnings conference call.

With me today are Randy McMullen, our President and Chief Operating Officer. This call will follow our customary format.

First, I'll review our third quarter achievements, after which Randy will discuss our financial results in more detail. I'm very pleased with our third quarter results and our overall performance over the course of this year.

We delivered record quarterly revenue of $440 million, growing our prior record from the second quarter by 20% and delivering a 40% increase over the first 9 months of 2013. We also significantly increased adjusted EBITDA over the prior quarter and our gross margin increased 116 basis points sequentially coming in at 28.3%.

These improvements were driven by a tremendous performance across our core service line. We executed well and continued to build on the surging momentum in completion activity that we began to experience early in the year.

Our results have benefited from our ability to quickly deploy new equipment across our operations to meet strong demand for our services as we gain market share and expanded our customer base through our targeted sales efforts. Revenue from our hydraulic fracturing operations increased 23% sequentially, primarily due to higher activity levels driven by greater service intensity.

Our results also benefited from spot price improvement for our nondedicated fleets, which was driven in part by increases in service rates. We executed the large volume of work with operational excellence and efficiency, while adding 80,000 incremental hydraulic horsepower to take advantage of rising customer demand.

As we have highlighted before, one of the many benefits of our in-house manufacturing capabilities is being able to quickly respond to changes in market conditions and customer demand, which we believe provides us with a competitive advantage. Even with consistently high utilization levels and significant increases in the amount of consumables required by the service intensive work, we did not encounter any notable job delays related to the delivery of sand or other required materials, which is a testament to the steps we have implemented to manage our procurement process.

We also made great progress in managing input costs and we've taken certain actions to get ahead of any potential cost increases going forward. Our wireline operations, which include our pumpdown services, also delivered a double digit percentage increase with revenue improving 21% quarter-over-quarter in line with the aggressive growth of this business.

We grew our wireline and pressure pumping operations, deploying incremental equipment to strengthen our presence and gain market share in key, highly active basins. Our results also benefited from a full quarter's contribution from Tiger Cased Hole Services, a leading provider of cased hole wireline services on the West Coast that we acquired on May 30, 2014.

We have successfully integrated Tiger into our company, and Tiger has continued to steadily grow its business delivering record revenue in September. Additionally, during the quarter, we opened our first office in Wyoming where we are now offering wireline as well as our directional drilling services which I'll discuss more in a moment.

Over the quarter, our coiled tubing business gained market share in a newer operating regions where the increase in service-intensive completion activity has continued to drive demand for our high capacity coiled tubing units. In our international operations, we are continuing to provide coiled tubing services in Saudi Arabia under our first international contract, which we entered into earlier this year.

To date, we have performed several complex and technically demanding projects, and we are proud of our performance and the exceptional feedback we received from our customer. We continue to be optimistic by the significant potential we see in this emerging market and our prospects there as we move into 2015.

Moving to our Research and Technology division. Over the past year, we have talked a lot about our focus on developing innovative, fit-for-purpose solutions designed to reduce costs, increase completion efficiencies, enhance our service capabilities and add value to our customers.

During the third quarter, we further advanced several new products, a few of which we are ready to share with you today. I'm excited about our proprietary perforating gun system, which is now being used in our wireline operations and is the result of a collaborative effort between our operations and technology teams.

We believe these perforating guns will enhance the quality, reliability and safety of our wireline operations and we are manufacturing them in-house, which is expected to generate significant cost savings starting in 2015. The field testing of new models of our drilling motors has also yielded encouraging results and we expect to roll those out during the fourth quarter.

As previously discussed, we have taken a multifaceted, integrated approach to developing our directional drilling capabilities. Our directional drilling services line, which we introduced to customers as a new service offering during the second quarter, is using our proprietary drilling motors.

We began manufacturing these drilling motors in-house and leasing them to third-party customers early in the year, building on the technology that we acquired in April of 2013. Over time, our directional drilling service line will exclusively use our downhole tools and directional drilling technology, and we're confident that our products will deliver significant efficiency and value to our customers.

Although this business is still in the early stages, we're now offering directional drilling services to customers in Wyoming, North Dakota and Utah as well as in Texas. Customer feedback has been positive and we intend to continue investing in the growth of this business.

Continuing on the R&T front, without giving away too much detail, we're also working on innovations around optimizing well performance through enhancing our fracturing services while capturing cost savings. We're in the testing stage of this new fracturing technology and hope to share more with you soon.

I'm very proud of our Research and Technology division and the speed with which we can develop and implement new technologies. We also think the level of collaboration and discussion amongst our operations, technology and equipment manufacturing divisions is impressive and a testament to our vertical integration strategy.

Our equipment manufacturing division provides another platform to integrate our strategic initiatives, implement technological developments and enhancements and capture additional cost savings. We will continue to make further investments in technological advancement, confident that our efforts will yield significant returns and meaningful cost savings to us over the long term.

And given the pending transaction with Nabors, I believe it's worth emphasizing that the benefits expected to be provided by our strategic initiatives are scalable. And on that note, before I hand the call over to Randy, here's a quick update on the status of our pending transaction with Nabors' Completion and Production Services business.

We worked with Nabors to prepare a Form S-4 registration statement, which includes a preliminary proxy statement of C&J for the required stockholder vote approving the transaction. Nabors' subsidiary, Nabors Red Lion Limited, filed the S-4 with the SEC at the end of September and we are now in the SEC review process.

Our integration efforts are progressing nicely and we look forward to welcoming our new employees into the C&J family. Closing this transaction is high on our agenda, and we are focused on positioning the company to capture synergies, create value and maximize the expanded asset base that we will gain through this transaction.

We continue to work towards closing by year-end, which remains subject to timely completion of the SEC's review of the S-4 and other customary closing conditions. The purchase price to be paid to Nabors was valued at approximately $2.86 billion at the time of signing the merger agreement, consisting of approximately $938 million in cash and 62.5 million common shares of the new C&J, which was value based on the $30.76, 45-day volume weighted average price for C&J's common stock at the time of signing the agreement.

Neither the number of common shares nor the cash consideration is subject to adjustment. Accordingly, this currently applies a purchase price value of $2.12 billion based on yesterday's closing price for C&J's common stock.

I will now turn the call over to Randy to run through our third quarter results in more detail.

Thanks, Josh. Good morning, everyone.

As Josh noted, we are pleased to post record revenue of $440 million for the third quarter of 2014, representing a 20% increase over the second quarter. Adjusted net income increased 69% to $26.5 million, representing $0.47 of earnings per diluted share compared to adjusted net income of $15.7 million or $0.28 per diluted share for the second quarter of 2014.

Third quarter adjusted EBITDA of $75.2 million rose 42% compared to $53 million for the prior quarter, and adjusted EBITDA margin increased to 17.1% in the third quarter compared to 14.4% in the second quarter. Our improved results were driven by robust utilization levels and strong growth, particularly in our hydraulic fracturing and wireline businesses.

The further strengthening of service-intensive completion activity in our primary operating areas drove demand for our services, and we expanded market share as we added equipment across our core service lines. Revenue from our hydraulic fracturing operations increased 23% quarter-over-quarter to $273.1 million, accounting for approximately 62% of our overall third quarter revenue.

This growth was primarily due to higher activity levels and a service-intensive job mix. We also benefited from the deployment of 40,000 incremental hydraulic horsepower in July and an additional 40,000 hydraulic horsepower in September.

As Josh mentioned, immediately after taking delivery of the equipment, we were able to utilize it to take advantage of strong customer demand. In addition to extremely high utilization and service intensity levels, we also experienced improved pricing for our services in the spot market and we were able to more effectively manage our input costs.

Capitalizing on this momentum, we exited the quarter with record revenue and improving margins for September. Our wireline operations grew revenue 21% quarter-over-quarter to $113.2 million, contributing approximately 26% of our overall third quarter revenue, and also delivered improved EBITDA margins over the prior quarter.

These results include revenue of $25.4 million from our pumpdown operations, which has continued to generate strong revenue growth and EBITDA margins. Revenue increased primarily due to higher activity levels and our performance was bolstered by the addition of new equipment that was immediately put to work at strong utilization levels.

We also realized a full quarter impact from Tiger Cased Hole Services, whose contribution included a record revenue month in September. Looking at our coiled tubing operations, revenue increased 4% quarter-over-quarter to $44.7 million, making up 10% of our total revenue for the third quarter.

We experienced an uptick in activity levels towards the latter part of the quarter after a relatively flat start coming out of the second quarter. We also strengthened our operations in newer regions, which contributed to improved utilization in this division.

Our equipment manufacturing business contributed $1.7 million of third-party revenue. One of the major benefits of our in-house manufacturing capabilities is the ability to minimize our equipment costs and we have captured approximately $65.4 million of cash flow savings since acquiring Total Equipment for just $27.2 million in April 2011.

We also gain significant value from being able to control the specifications and delivery schedules of new equipment, which allows us to timely respond to changes in market conditions and customer demand. This provides a strong competitive advantage, particularly in the current market.

Shifting to gross margin. We delivered third quarter gross margin of 28.3%, increasing 116 basis points over the prior quarter.

In line with our expectations, SG&A costs increased slightly quarter-over-quarter to $46.2 million, excluding $4.4 million of pretax transaction costs and R&D expense came in relatively flat at $3.5 million for the third quarter. We currently anticipate that SG&A and R&D will total approximately $51 million to $52 million for the fourth quarter of 2014, excluding transaction costs.

We also expect to incur significant future costs associated with completing the pending transaction with Nabors and integrating our combined companies. The quarter-over-quarter rise in SG&A primarily resulted from higher costs associated with supporting the company's scalable growth, including an expanding employee base and continued investments in our ongoing strategic initiatives.

However, excluding the previously mentioned Nabors' transaction costs, we realized a 130 basis point improvement quarter-over-quarter and a 270 basis point improvement year-over-year in SG&A leverage with SG&A as a percentage of revenue decreasing to 10.5% for the third quarter of 2014, down from 11.8% for the second quarter of 2014 and 13.2% for the third quarter of 2013. Even as SG&A and R&D costs continue to increase in line with our growth, we currently expect that SG&A as a percentage of revenue will continue to trend downward as we benefit from our greater scale.

Inclusive of both SG&A and R&D, our strategic initiatives contributed approximately $9.9 million of additional costs for the third quarter of 2014 compared to $9.5 million of additional costs for the second quarter. We think it's worth highlighting that excluding these investments in our strategic initiatives, our third quarter adjusted EBITDA would have been $85 million with 19.3% EBITDA margins.

Now let's move on to the balance sheet. At the end of the third quarter, we had a cash balance of approximately $20.3 million, $306 million in borrowings under our credit facility and $39.9 million in capital lease obligations.

Borrowings increased during the third quarter due to a number of factors including increased capital expenditures to new equipment, higher working capital and costs associated with the pending transaction with Nabors. Looking at our cash flow statement.

We generated $41 million of cash from operations during the third quarter of 2014 compared to $20.3 million for the second quarter. This sequential increase was primarily related to the growth in net income as a result of strong activity levels over the third quarter.

Capital expenditures totaled $92.1 million during the third quarter of 2014 with $28.5 million of depreciation and amortization expense. Our third quarter CapEx primarily consisted of construction costs for new equipment, including a portion of the CapEx incurred for the 80,000 of incremental hydraulic horsepower that we added during the quarter.

Capital expenditures year-to-date total $235.8 million and our remaining 2014 capital expenditures are expected to range from $45 million to $55 million based on current equipment orders. We expect fourth quarter depreciation and amortization to be approximately $31 million.

Looking at 2015, we currently expect that much of our capital expenditure plan will be directed to maintenance CapEx, given the significant asset base that we will acquire on closing of the pending transaction with Nabors. Lastly, our effective tax rate came in at 39.5% for the year-to-date and we anticipate that it will remain at this level for the remainder of the year.

I will now turn the call back to Josh for closing remarks.

Thanks, Randy. Wrapping up, we are pleased to have produced a third continuous quarter of record revenue and proud of the growth and improvements we delivered across our company.

This performance is a result of hard work and dedication of our employees, and I want to thank all of them for their achievements. Looking to the remainder of 2014 and into 2015, we are encouraged by current activity levels and are excited about the opportunities that lie ahead.

Randy mentioned our strong revenue and margins exiting the third quarter, and we have continued to build on that momentum here in the fourth quarter. Although we anticipate the typical seasonal slowdown towards the end of the year based on current visibility and customer feedback to date, we believe that we will see high activity levels as we move into the new year.

We plan to deploy additional wireline, pumpdown and coiled tubing equipment over the remainder of 2014 to further increase our ability to meet growing demand and capitalize on future market improvements. Thus far, we have not seen a reduction in activity as a result of the recent decline in oil prices.

However, knowing that sustained weakness in pricing could lead to a reduction in activity and impact our customers' capital spending programs, we will continue to monitor activity levels as we remain focused on maximizing equipment utilization, operating efficiently and expanding market share through our core businesses. We have aligned ourselves with customers that we anticipate will have substantial volumes of work in 2015 and we will continue to target work with high efficiency operators.

We believe that our ability to quickly and efficiently meet market demand and effectively perform service intensive jobs with superior execution will continue to drive demand for our services. And we believe that the strategic investments that we have made with a focus of lowering our cost base and improving our operational capabilities will lead to improved profitability over the long term.

We are confident in our strategy and we will continue to focus on growing our business and increasing our market share through the expansion of our service offering, customer base and geographic footprint. With that, operator, we'd like to open the call for questions.

Great quarter, by the way. Josh, in the past you guys have been able to demonstrate and quantify the efficiencies that you can achieve.

Back in the day, it was very evident in the Eagle Ford and Haynesville how a good job you're doing. Now that the Permian is a much bigger operation for you, where are you today there on average stages per day?

How do you believe you're doing relative to peers? And do you envision an opportunity to drive more efficiency in the Permian?

And if so, what will drive it?

John, I'll let Don talk about it.

Hey, John, this is Don Gawick. Yes, in West Texas, we're actually continuing to gain very significant market share position in all 3 of the main core product lines as well as just recently getting in on the directional drilling side.

With respect to pumping specifically, it depends on whether or not you're in the vertical market which is still continuing to be a big part of the West Texas activity that horizontals there are approaching about half of the wells being drilled. So it's continuing to rise.

In the vertical side obviously you can get a lot more stages off. In the horizontal wells, it's not unusual for us to be pumping 5, 6 stages per day.

We recently added 2 fleets in West Texas as a result of customer demand. And so we rolled out a fleet in early July and another fleet in September, both targeting West Texas and the tremendous increase in market share and demand for our services that we've seen there.

Okay, all right. Just to -- I'll do one more now and get back in the queue.

Randy, your top line growth again has been really impressive. As you look at Q4, you've got the seasonal factors, which you noted, but you also have the full quarter impact of the 40,000 horsepower that came in September as well as the pricing improvement.

Just kind of giving those dynamics, can you bracket for us, if you will, a revenue possibility for the quarter?

Sure. I mean, yes, as mentioned, we exited the quarter with a lot of momentum and that has obviously continued through October.

We're currently running above third quarter levels for both revenue and margins. However, we are expecting a seasonal slowdown to impact those sequential increases.

As it relates to margins, I think at a minimum, we expect those to stay consistent with the third quarter levels, even given the seasonal slowdown. And as it relates to the top line, we won't see the type of sequential increase that we've seen over the last few quarters but we do expect it to be slightly up.

I guess, I'll ask -- sort of ask that question I feel like I've started to ask more regularly. Can you breakout the EBITDA by product line?

Sure, Brad. It's Randy.

Stimulation and well intervention was $50.9 million. Wireline services was $39.7 million.

Equipment manufacturing was $13.1 million. Corporate and other eliminations is minus $28.6 million, [indiscernible].

Great. That'll allow me to process that without punching something in though, we can speak to it a little bit more.

So does seem -- unless my eyes are going to deceive me, it does seem like you made some pretty strong progress on the fracturing margin side. Can you speak to what the most dramatic contributors to that was?

Is it sort of incremental flow-through, distribution, sand-related costs, be it on the procurement side or the distribution side? If you could just speak to some of those contributors, please?

It's a combination of utilization and recovery on the sand, the input costs and logistics around it. We got hit pretty hard as we said last quarter with increases there in the second quarter and we did a better job in the third quarter of getting those costs moved along to our customers.

Were the costs themselves lowered or is it simply a function of recovery? And is there an opportunity to actually lower cost via some distribution efficiencies or what have you?

It was not a function of lower costs. It was a function of recovery.

And then as we move forward in the fourth quarter, the better that we do of managing our logistics there is opportunities there to lower the costs.

Okay. Maybe just one quick one for me before I hop off.

What new equipment do you expect to deploy in 4Q? I know it's not from the fracking side, but new units and wireline or coil?

Yes. This is Don Gawick.

We'll be deploying several coiled tubing units in a few of the busiest basins. And we'll also be deploying some wireline equipment mostly in the pumpdown service area.

And again, those tend to be in our busiest basins, which continue to be South Texas, West Texas and North Dakota, would be the principal area.

Josh, Randy, great quarter. And I just wanted to ask you about the improvement you're showing in average revenue per hydraulic horsepower, which was up nicely in the quarter.

And I attribute that principally, the progress you've made there since the first quarter and the improvement in margins attributed almost entirely based on what you're saying to better asset utilization. So my question is, are we at the point where the asset utilization improvement is going to be much more moderate going forward and further improvement in revenue per horsepower or margin is going to be -- have to be pricing driven?

Well, as far as the revenue per horsepower and utilization, I mean, I -- we constantly believe there's room for improvement. We feel through our R&D efforts, we are definitely working on extending the life of equipment and we have seen that and so essentially less maintenance in the field that we have to do because of extended life, the more efficiency we get out of the equipment.

So we believe there's still gains to be had there, and you're starting to see the result of that. And so the utilization can continue to go up.

And then it continues to drive our revenue per horsepower up, it is going to have to be [indiscernible] change -- and continued to increase on these wells plus pricing.

Okay. And is the pricing, just the pure pricing is, are there opportunities for that?

Is it a basin-by-basin type of consideration at this juncture?

It's definitely basin by basin. I would say West Texas would have the most leverage but it's also customer driven and it's customer by customer.

Obviously, the customers that we can be the most efficient with, we can -- they typically get a lower price than the customers that are less efficient. And so it's definitely customer driven as much as it’s basin driven.

Okay. Just finally then, in your comments you mentioned that you're taking some action to get ahead of some cost increases.

Are you referring to frac sand there or raw materials? What are you referring to and how do you get ahead of cost increases?

Well, it's frac sand and it's logistics, it's the chemicals, it's all of it, all of the input costs. But during the year, I think the entire industry has talked about the followings [ph] around sand logistics and not so much being sand cost.

I think you've seen that in some of the recent announcements by sand companies, their quarter-over-quarter revenues, the cost per ton hasn't changed much. So it's not so much sand cost as it is logistics cost and we got behind in the second quarter.

Those logistics happen in real time. And when you get behind and not recover those costs from the customer, we have put in place steps and processes to make sure that we stay ahead of that going forward.

That said, we are also -- the fact that we are scalable, and with this pending transaction we made there's going to be much larger -- we can make larger commitments to certain providers, which is allowing us to keep our costs down and stay ahead of that too.

A quick one on the fleets that you delivered in Q3 and the expected deliveries in wireline and coiled tubing in Q4, are those being set up for jobs with new or existing customer? I would think about, I guess, kind of the same customer growth opportunity from those equipments.

In general, it's -- we're adding those various pieces of equipment in the markets and with customers that we're really gaining market share. And so it's typically a number of customers that are looking to use our services and we generally have them delivered and put them to work immediately with an expanding customer base.

And that continues to be a backlog for us quite frankly. We have tremendous demands in those areas for the services with new customers.

So our sales group has been doing a great job of growing share quite frankly across all 3 of the core product lines.

So I guess implied in that, it's -- I would imagine, the utilization in coiled tubing and wireline equipment continues to improve. Is there a lot of room left there?

And I guess a follow-on or related question would be, how do you guys think about the transition now with the Nabors assets? How much planning can you do in advance of the combination in order to talk to customers and look at the future jobs with assets that you're going to be getting with the Nabors deal?

Yes, well, as far as room for improvement, I'll stick with the comments I said earlier. We think that there is room for improvement on utilization and the one thing that we see is -- the more often we get our wireline out with our frac services, we have the best of both services out there.

We get more stages per day and so they -- each service is really helping each other in that regard and helping increase the utilization. And we're starting to see that more often than not where you'll see cased hole services and C&J Energy frac services all at the same location.

What was the second part of your question? I'm sorry, lost.

Just trying to think about given the utilization of those assets and the strength you're seeing there, how much can you talk with existing or I guess new customers prospectively about the equipment that's going to be coming over with the Nabors transaction and trying to plan, plan forward for what you can do for the customers with all the assets that will be coming over with Nabors?

Yes. We're talking to our customers about it.

It's obviously no secret in the industry that the transaction is happening. Folks are aware of what we're getting.

And we've seen the Nabors completion results for this quarter, those results were up. And so we're doing a much better job deploying those assets, as well, where we think will be extremely beneficial to them is getting the effective utilization up and we're having those discussions with our customers and I'm sure they're having those discussions with their current customers.

The interesting thing about the Nabors transaction and one of the many interesting things is there is absolutely customer overlap.

Okay. And final one for me, maybe, Randy, as you think about the dollars spent this year on R&D efforts for new products and services, how do we think about the dollars if you guys expect to spend in '15 relative to those dollars this year?

The expectation as you've seen those initiative costs continue to tick up throughout the year. And really beginning in the latter part of the fourth quarter and really taking off and getting to '15, you're going to start to see those numbers tick down as we net the benefits of all those investments.

Whether it's some of the proprietary products that we're putting out where we're going to lower our cost base and hopefully improve our utilization. You'll start to see that tick down pretty aggressively in '15 to the point that we actually expect to have sort of a net 0 effect of those costs, meaning that the costs, the SG&A and R&D costs will still be there but the benefits that we're getting across the various product lines will offset those costs.

And as we move into '16, we'll start -- really start to generate returns on those investments.

Quick one for you, Randy. In light of the pullback in the share price and I've just done back-of-the-envelope math, but is it reasonable that you might not book any goodwill with this transaction?

Things stay exactly as they are.

We'll book some, John. We're going to have some goodwill, but it's obviously with the share price coming down is going to be much less than what was previously reported in the original S-4.

I was just saying in the next amendment that we post, there'll be a revised purchase price based on the latest stock price and a new goodwill will be reflected in that table.

Okay, appreciate that. On the perforating guns that you're now starting to build, do you envision taking the next step and manufacturing perforating charges as well?

Yes. At this stage, we're really looking at the perforating gun carriers and the internal hardware that we use to hold the explosives themselves.

So there's no real plan at this point to actually go into the explosives portion. In terms...

Okay, all right. Then if I could possibly squeeze one more in.

Are any of the contracts that you're signing now on the frac side, are they performance based such that if you guys deliver more efficiencies you get better pricing potentially regardless of market conditions?

Well, there is not a -- I would say the contracts don't have performance based measures in them as far as -- if you get to this point, you're going to get this pricing. However, to your point, I think customers realize that we are more efficient and that efficiency is worth the value and I think that also represents why we generate so much revenue per horsepower compared to the rest of the market.

Randy, you spoke to CapEx and saying it would be maintenance CapEx. I guess I'm wondering if you can put a number or range for us around that, presumably incorporating the Nabors CPS business, too.

What do you think your CapEx is or roughly in '15?

Combined the 2 businesses with a little bit of growth CapEx that some of its carryover and already committed to and the maintenance, we're estimating about $350 million for 2015.

Okay, appreciate that. As it relates to Nabors, is it a done deal now that we will be -- you will be consolidating the Nabors business on your P&L and they will be reporting it as an equity income stream?

Yes, that's correct.

I mean, it requires a shareholders' vote, right? So...

Sure, sorry. But I think there was some ambiguity not so long ago about that, right?

So okay, cool. And I guess, could you speak to your -- I guess, what you're seeing now in the production services side on Nabors business?

What's your perception of the situation as it relates to them and their customers? And your perceptions of what you may be able -- early perceptions of what you may be able to do in that segment?

Yes, I mean, we -- that business has always been fairly steady for them, it's had its ups and downs. They have quarters here, they have potential problems, and we saw that recently.

We, as with the rest of the business, we're excited about getting our hands on the production services, and we think that management team that's coming with that business knows how to grow it and we're going to invest in them. And I think a lot of it is just culture.

And it seems like we push to be the best in each of our services and that business, we're going to push it as well. And so I think we can definitely increase the results that you're currently seeing out of that business.

The other exciting part about the production services business for us now is that it has these old prices. If they were to hang in where they are currently and we were to see drilling slow we think that we will definitely see work over increase and increase substantially.

There's a lot of workover work that needs to be done. And so from a diversification standpoint, a little bit of protection to the downside, we think we're gaining that through the Nabors transaction.

A lot of the debate right now, clearly, in the face of a rather uncertain outlook for 2015, I don't think any of us really know what's going to happen next year. But you're levering up the company quite a bit and taking on a set of underperforming assets.

And you've done a good job in explaining partly what you can do to the Nabors business in order to improve the cash flow, which is I suppose ultimately the key to how we will fare in a more uncertain 2015. But is there anything else you can say about it?

You said there's no customer overlap. You have some opportunities, if I understand correctly, to use your wireline and other businesses to enhance the performance of the Nabors business.

But it's very big. Almost any metric you look at, there's a very big discrepancy between your returns and their returns.

So anything else you can say to give us comfort that you can take the Nabors business and gradually migrate it towards your own return metrics today? Is there, for example, the business that you're acquiring, the equipment, is it compatible with what you have?

I mean, is it new generation frac equipment coming out now? Do you feel comfortable that you have the right type of equipment?

Yes. On the equipment side, I would say that there's not a lot of difference between equipment out there across the group.

There's only a few manufacturers. The majority of the equipment that's on a frac locations is pumped.

And so there's not a lot of difference there. The difference is how you utilize that equipment.

The things you do to protect that equipment. Those are modifications we can make on Nabors equipment that will extend the life which allow us to pump more stages per day as we do at C&J.

We see the same delta that you see and we frankly see that as all upside for us. There's a lot of room for improvement and we get questioned often about we're so effective, we're so efficient, do we have much utilization increase capability with our current assets.

Well, then we also get the other half of the question is, how can you get Nabors assets working up to the utilization level of your current assets? So we know how to do it from the utilization standpoint.

It's a combination of the way you approach the work, the way you extend the life of the equipment and then the customers that you target and making sure that you target those customers that have the type of work that can keep you working effectively and efficiently. At the same time, we think that we've done a better job because -- on focusing on costs and because completions are our core service, especially in the fracturing division.

But our core services are completions, and we've been able to focus on cost where Nabors’ core services is drilling. And so from a performance perspective, we think there's a lot of upside on the cost reduction side as well.

Yes. There's no question that the completions business maybe was a little bit of a stepchild over at Nabors.

But if I look at -- it appears you're doing a very good job on getting ahead of the sand challenges on the logistics side, while I don't think it's a secret that Nabors is pretty much at the other end of that scale. Is there anything you can do there with your logistics skills to improve their position?

Or the lack of -- does the lack of overlap geographically make that difficult?

No. We fully expect to use our logistics and our purchasing capabilities with the Nabors assets and we think that that's -- without holding me to it, I would say that's a Day 1 thing that we can instantly do.

All right. Well, we appreciate everyone joining us for today's call.

Have a great holiday season. We'll talk you guys at the end of the year.

Thank you.