Forum Energy Technologies (FET) just released their Q1 2024 earnings, and at first glance, the market seems unimpressed. Revenue growth was solid at 9%, but the "flat global rig count" prediction for 2024 has left some investors hesitant. However, a closer look at the transcript reveals a hidden gem, a dynamic that could propel FET to much greater heights than a simple "flat market" scenario suggests.

The key lies in understanding FET's unique position. They're not just riding the wave of rig count increases; they're driving a revolution in operational efficiency. This subtle shift is transforming the industry, and FET is perfectly positioned to capitalize on it.

FET's CEO, Neal Lux, highlighted the increasing "service intensity" within the industry. This means that operators are squeezing more work out of existing equipment. Drilling rigs are drilling longer wells with more stages, and frac fleets are running longer pumping hours, all to maximize efficiency and reduce well costs.

""To keep up with growing operator demands for greater efficiency, reduction in well costs and increased safety, our customers are doing a lot more with less equipment. Their drilling rigs and frac fleets are being pushed to run at full utilization with more pumping hours, more stages, more drilling fleet and reduced time between wells," said Neal Lux, CEO of Forum Energy Technologies."

This trend isn't new, but it's accelerating rapidly. Think about it: in the US, footage drilled per rig has doubled or even tripled in the last decade, while wells completed per fleet are up nearly 60%. This means faster wear and tear on equipment, and a constant need for upgrades and replacements, even without new rigs or fleets being added.

FET is the company providing the crucial components driving this "service intensity." Their products enable the very efficiencies that operators are demanding. Think of it like this: a pressure pumper might not need a brand new fleet, but they absolutely need to upgrade their equipment to keep up with the demand for longer pumping hours and more stages. That's where FET steps in.

US Rig Count vs. FET Stimulation & Intervention Revenue

The following chart illustrates how FET's focus on operational efficiency can drive revenue growth even in a declining rig count environment. The data is hypothetical, but reflects the trends discussed in the article and transcript.

The proof is in the numbers. While US rig count declined in Q1, FET saw a surge in demand for their stimulation and intervention products, with record-breaking revenue for their greaseless wireline cables. This isn't just coincidence; it's a direct result of the increasing "service intensity." As rigs work harder, they need more of FET's products.

But here's where things get truly interesting. FET isn't just supplying existing needs, they're creating entirely new markets. Their focus on innovation is breathtaking. Neal Lux showcased three recent innovations: the FR120 iron roughneck, the FASTConnect manifold system, and the Pump Saver Plus. Each one addresses specific customer needs for greater efficiency, and together, they represent a $300 million expansion of FET's total addressable market.

FET's New Innovations

FR120 Iron Roughneck: Designed for heavier and larger drill pipe. FET is launching a next-generation version that delivers the same power in a smaller package.

FASTConnect Manifold System: A revolutionary replacement for traditional zipper manifolds. Improves safety, boosts efficiency, and reduces the environmental footprint.

Pump Saver Plus: Targets the rod lift market, addresses sand and gas issues that plague operators, enhancing production and minimizing costly downtime.

These are just three examples, and Lux emphasized the excitement around their robust pipeline of new products in various stages of commercialization. This dedication to innovation, coupled with the industry's relentless drive for greater "service intensity," means that FET's growth potential could be significantly higher than a simple "flat rig count" analysis suggests.

Let's consider a hypothetical scenario. Assume a conservative 10% increase in "service intensity" in the US land market for 2024. This could translate into a 7.5-8% revenue bump for FET, even with a 5% decrease in rig count. Factor in their expanding international business, the booming offshore market, and the potential upside from their new product launches, and FET's "flat market" scenario suddenly starts looking incredibly dynamic.

"Hypothesis: FET's strategic focus on operational efficiency, combined with their aggressive new product development, will drive outsized revenue growth in 2024, exceeding the limitations of a flat global rig count market. Supporting Data: Record-breaking Q1 2024 revenue for stimulation and intervention products, despite a decline in US rig count. A $300 million expansion of FET's total addressable market through just three new product launches. A robust pipeline of additional innovations in various stages of commercialization. An industry-wide trend of increasing "service intensity" driving demand for FET's efficiency-enhancing products."

The market may be fixated on the "flat global rig count" prediction, but discerning investors will recognize the hidden gem in FET's earnings. Their unique position as the enabler of operational efficiency, combined with their aggressive innovation, positions them for explosive growth in 2024 and beyond. FET's future may be much brighter than the surface numbers suggest.

"Fun Fact: FET's greaseless wireline cables not only boost efficiency by enabling faster transitions between frac stages, but they also contribute to a cleaner and safer well site by eliminating the need for grease."