Drilling Tools International at EnerCom Denver: cash flow, M&A and expansion

On Tuesday, August 18, 2026, at the EnerCom Denver – Energy Investment Conference, Drilling Tools International (DTI) presented its business strategy to generate consistent cash flow while expanding globally and closing the valuation gap with competitors. The company's business model revolves around three main pillars: renting, repairing, and recovering downhole tools.

Jameson Parker, DTI's vice president of corporate development, emphasized the company's unique "three Rs" approach, which involves renting tools, repairing them to specifications, and recovering value when tools are lost or damaged beyond repair. According to Parker, recovery proceeds fund maintenance CapEx.

DTI's services encompass drilling accessories, directional drilling support, completion tools, and plug and abandonment work. The company's field locations operate more like machine shops with centralized repair capabilities rather than individual rig-site staffing. Management explained that customers prefer renting tools due to the varying sizes, geometries, and connection types required for each hole.

Despite the market not fully reflecting its performance, DTI's adjusted free cash flow margin ranks either first or second in its peer group, with a free cash flow yield of about 25%, creating a valuation discount. Maintenance CapEx currently accounts for around 12% of revenue, based on lost-in-hole damage rates, and has remained steady between 8% and 13% over the years.

Debt reduction is a priority for DTI, with a target net debt-to-EBITDA ratio of one turn or less. The company's debt primarily stems from the cash portion of previous acquisitions. Management prefers using cash for debt repayment instead of pursuing growth for its own sake.

DTI has expanded its presence in the Eastern Hemisphere from 1% to 18% of revenue over the past three years, attributing this growth to energy security concerns, deepwater activity, and Asia-Pacific drilling expansion. Parker highlighted several products and technologies that support DTI's growth, including ClearPath stabilization products, Drill-N-Ream technology from Superior Drilling Products, MechLOK drill pipe and casing swivel, TurboCaser and TurboRunner turbine-powered reamer shoes, completion technology from Deep Casing Tools, and specialty reamers and engineered stabilizers.

The company's customer base is evenly split between direct E&P operators and oilfield service companies, mainly directional drilling providers. Management noted that the balance between these two groups provides resilience and multiple market access routes. DTI's COMPASS software platform enables real-time tool tracking, inventory management, quality control, and repair scheduling.

Management emphasized that the company's model tends to perform well during downturns as it caters to operators that maintain drilling activity throughout market cycles. The recovery mechanism also supports free cash flow in stronger markets.