Good day, and thank you for standing by. Welcome to the Fourth Quarter Tenaris S.A. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Giovanni Sardagna, Investor Relations Officer. Please go ahead.

Thank you, Gigi, and welcome to Tenaris 2025 Fourth Quarter and Annual Results Conference Call. Before we start, I would like to remind you that we will be discussing forward-looking information during the call and that our actual results may vary from those expressed or implied during the call. With me on the call today are Paolo Rocca, our Chairman and CEO; Carlos Gomez Alzaga, our Chief Financial Officer; Gabriel Podskubka, our Chief Operating Officer; and Guillermo Moreno, President of our U.S. Operations. Before passing over the call to Paolo for his opening remarks, I would like to briefly comment our quarterly results. During the fourth quarter of 2025, sales reached $3 billion, up 5% compared with those of the corresponding quarter of the previous year and 1% sequentially as our sales to Rig Direct customers in the United States and Canada continue to show resilience and in Argentina, we resumed our fracking and coiled tubing services. Our EBITDA for the quarter was down 5% sequentially to $717 million or 24% of sales. These results include the full impact of the 50% Section 232 tariffs in the U.S. Average selling prices in our Tube operating segment decreased by 1% compared to the corresponding quarter of last year and were flat sequentially. During the quarter, cash flow from operations was $787 million. Our net cash position at the end of the quarter decreased to $3.3 billion, following the payment of an interim dividend of $300 million in November last year, $ 537 million spent on share buybacks and capital expenditure of $123 million during the quarter. The Board of Directors have decided to propose for the approval of the general -- Annual General Shareholders' Meeting to be held at the beginning of May, the payment of an annual dividend of $0.89 per share or $1.78 per ADR, which includes the interim dividend of $0.29 per share or $0.58 per ADR that we paid at the end of November of last year. If approved, a dividend of $0.60 per share or $1.20 per ADR will be paid on May 20, up 7% compared to the dividend per share of the corresponding period of the previous year. Thanks to the benefit of our buyback program. Now I will ask Paolo to say a few words before we open the call to questions.

Thank you, Giovanni, and good morning to all of you. 2025 was a year in which Tenaris demonstrated the resilience of its operation in the face of a disruptive geopolitical environment and lower activity in key markets. Thanks to our extensive geographical presence, the depth of the service we offer to our customers and the commitment of our employees, we were able to respond rapidly to the various situations we faced. Our results remained remarkably stable through the year, which we completed with an EBITDA of $2.9 billion and a net income of $2 billion on net sales of $12 billion. Free cash flow amounted to $2 billion, all of which was distributed to shareholders through dividend and share buybacks. We are proposing a further increase of the annual dividend per share of 7% over that for the previous year. At the same time, we maintained a net cash position of $3.3 billion. In the U.S. and Canada, the U.S. was marked by further oil and gas industry consolidation and productivity improvement, a lower rig count and the extension of Section 232 tariff to the import of all steel products, including the steel bars we require for our seamless pipe operation Bay City, and the subsequent increase to 50%. In this environment, Tenaris raised the performance of its U.S. production and supply chain system with its Koppel, steel shop, main pipe production plants at Bay City, at Hickman and Enbridge and various pipe processing facilities acting in concert to achieve a record level of production and supply, 90% of our U.S.A. In both the U.S. and Canada, we strengthened our market position and extended the differentiation we offer under our Rig Direct service model. As customers targeted operational efficiency, we continue to develop and roll out our run-ready and well-integrated…

[Operator Instructions] Our first question comes from the line of Marc Bianchi from TD Cowen.

I wanted to start by asking about the outlook here in first quarter and maybe you could talk about, to the extent you're comfortable how things progress beyond first quarter. When you talked about being close to current levels in fourth quarter, is that -- should we interpret that as meaning flat? And are there any nuances with volume and price that we should be thinking about as we build that out? And then any comments sort of beyond first quarter would be great.

Well, thank you, Marc. Well, within our visibility today and considering many parts moving in the energy market and also in the general geopolitical environment, I think it will not be easy to have a medium-term forecast. Now what we see is a relative stability of our performance and our position in the market during the first quarter and it is not so easy. We do not see today a point that should disrupt our operation even in the second quarter. But for the time being, as we say, we feel comfortable in forecasting the first quarter in which the level of margin and in general, the results we can get are more or less in line with the 4Q. But it's difficult to have a more long-term forecast considering the volatility of the environment in which we are moving.

Yes. That makes sense. And then the other one maybe somewhat related, the margin resilience in the fourth quarter was quite good. And I'm curious how much of that benefited from some of the actions that you're taking? I think you mentioned Koppel in the press release to try to offset some of the tariff headwind that you've experienced. I think previously, we talked about that being something like $140 million a quarter of tariff costs that you're having to deal with. So I'm curious how much progress did you make on that in 4Q? And what is the opportunity going forward?

Well, we are, let's say, continuously operating in the efficiency of our operation, including our capacity to produce more steel in the U.S. So we expect for the first quarter of next year, that a lower level of tariff we get into our IFRS because in the end, we are operating on this even in the past few months. And we think that what is getting into our results in the first Q will be relatively slightly lower of what we have in the fourth Q. But on the other side, the indicator of prices in North America, I mean, in spite of the impact on the hot-rolled coils and other products of the steel industry are moving relatively slow in the pipe business and especially in a welded pipe. So considering the impact of slightly lower tariff and where we are in terms of Pipe Logix and so I think what is moving around in the world, I think that this is the component that justify our vision of a relatively stable top line and margin data for the first quarter.

Our next question comes from the line of Matt Smith from Bank of America.

My first question was around the international business and on pricing. Just whether you have seen any signs at all of pricing pressure given how some of the international benchmarks have traded down, I guess, since summer 2025? Any color you could give on different regions could be useful.

Thank you, Matt. I would say that, as you know, our business globally is composed of many different niche, high-demanding product, different region, different level of service. So I would say, to some extent that the price impact is more easy to understand and project in North America than internationally. But by the way, I will ask Gabriel to give you a vision of what we see in front of us on the ground.

Yes. Thank you, Paolo. Good morning, Matt. On the pricing on the international markets, we see, in general, some stability, a balanced demand and supply, especially on the premium products, where we are mainly focused. So premium is our service, high technical qualified pipelines. This demand is quite strong, driven by offshore, by Middle East, in gas and our service development. So we see the demand on these segments quite stable. We have, in many cases, long-term agreements that have some formulas related to raw materials. So I would say that the majority of our backlog and our business in international market are driven by stability in the pricing. It is true that there are some spot tendering where we're seeing a slight deterioration in the environment, especially when we are talking about lower end applications, but this is not the most important part of our business, and this is something that we monitor. So I would say, given all the moving pieces and the increasing component of our offshore during 2026 in our international mix, I would say that the pricing in the international markets are quite stable for Tenaris.

Thank you, Gabriel. Let me just add one point on which maybe -- that is the European. In Europe, maybe it's early to perceive the impact, but the CBAM and the safeguard that is supposed to raise the quota -- to raise the tariff to 50% and reduce the quota by almost 50% may have a favorable impact on relatively important segment of our international business that is all supported by the industrial power gen activity into Europe. To some extent, I think in the view of the overall say, future of our operation, maybe not immediately, but we should be able to maybe improve our situation and pricing in Europe. And also this reflects with the present exchange rate gets into our -- to our top line relatively well.

I wanted to ask a second question around the buyback, if I could. So I appreciate the current tranche of $600 million is still ongoing, and we'll have to sort of await the next announcement later in the year. So I just wanted to ask, check whether your philosophy around the buyback has changed at all since last year? Or should we very much expect this to continue to be a material component of shareholder returns in the near future?

Yes, thank you. As you are saying, the General Assembly and the Board decided for a program of share buyback of $1.2 billion from May 2025 until May in 2026 divided in 2 tranches. The second tranche has been approved again in October. Now the decision obviously is to the assembly and the Board for the decision on this ground. But let's say, the factors that were relevant for the decision on the shareholder didn't change so much. So we will see if in the assembly in May and the Board after this should decide on this, when the second tranche of $600 million will be closed. They will consider the different factor, the level of cash availability in the company, the perspective of this. And on this basis, they will consider a possibility to continue the program of share buyback.

Our next question comes from the line of Arun Jayaram from JPMorgan.

I was wondering if we could talk about your expectations around potentially getting to an inflection point in the Pipe Logix pricing indices, just given your thoughts on import trends and where -- when and where could do you expect us to see that pricing inflection point? Because it continues to trend down, call it, in low percentage points at this point, looking at the most recent pricing data?

Yes. Thank you, Arun. Well, the factors that are, let's say, having an impact on the Pipe Logix are different. But you should also consider that there is a Pipe Logix for seamless and the Pipe Logix for welded. What we see is that, to some extent, the Pipe Logix for welded is having a drag down on the overall impact, something that maybe we were not estimating -- fully estimating before. Why? When we saw the hot-rolled coil index going up as it is going up today, we were considering that this should have driven an increase in the welded pipe. But the import of welded pipe coming in based on the Chinese or Southeast Asia or other sources flat product is, let's say, containing movement in the Pipe Logix for welded. And this is, to some extent, having also an impact on the Pipe Logix for seamless product. Now the hot-rolled coil went up so much. There is clearing the way for some import in the welded product and putting under stress the producer of welding product based on hot-rolled coils coming from the U.S. In my view, this is kind of temporary because antidumping action against importation or import of welded will contribute to the gradual alignment of the Pipe Logix to the higher level of the hot-rolled. But this is not something that we can anticipate immediately for the first quarter. But over time, should be acting, should be a factor.

Great. And my follow-up, Paolo, I was wondering if you could just provide us your thoughts on how Argentina could play out in 2026 versus 2025? I know that you're adding a third frac fleet in Argentina, but give us a sense of how you see things progressing in the ground because we have seen some IOCs adding rigs in that market.

Well, let me tell you that as I was saying in the previous conference, after the election in Argentina in November, the confidence on the investment community is increasing in Argentina. And even the oil and gas companies have been able to finance more than $4 billion, collect financing from different tools that will be used to, let's say, promote and carry on investment planned during 2026. This process has been relatively gradual, but I think that over the second part of '26 and also following the biggest investment in the infrastructure, we will see this collection of financial capability will transform into a higher level of drilling in the country. This has been slower than probably we were expecting 1 year ago because opportunity are there, but also the level of country risk stayed a little higher after the election than we maybe were estimating. And this is maybe slowing down or at least is making more gradual -- the pickup has increased. Also some of these resources has been used for consolidation in the industry, especially by local player. And after this consolidation, the investment will go in operation in the development. First, some of the acquisition has been completed and gradually in this field, drilling will increase. I would expect in the second half of 2026, we will see something moving in this sense. I remember, part of the drilling containment has been coming by the reduction of the operation in the south part of the country. Now this is obvious. There has been a closure of operation in the South. So the key and the core of it -- of everything will be Vaca Muerta.

Our next question comes from the line of Sebastian Erskine from Rothschild & Co Redburn.

I'd like to just start on the margin trajectory for Tenaris in 2026. And I think, Paolo, you mentioned earlier about the impact of kind of hot-rolled coil on ERW margins. I mean, looking at that, I think in the U.S., those have compressed about sort of $350 a ton since August. So I guess that would equate to something like a sort of $35 million, $40 million quarterly cost headwind, but that will take a while to show up. So when does that flow through into COGS? Or is it something we shouldn't really be thinking about as a meaningful impact? Any color there would be helpful. And then I guess on top of that and more positively, when we look into the second half of the year, you've obviously got a lot of offshore work to materialize. So you mentioned Sakarya, Suriname and presumably, obviously, that's higher margin. So can we expect you to operate at the top end of your kind of 20% to 25% EBITDA margin guidance? Is that realistic going forward through the rest of the year and a kind of second half weighting?

Maybe, Gabriel, you can give an overview on part of the question. And then eventually, we will ask Guillermo on the other pathway.

Sure, Paolo. Good morning, Sebastian. Going to the part of your question related to offshore and how they will play out during 2026. I would say that the market in the offshore is quite operating at high levels. We have a strong backlog that we need to execute. As Paolo commented in the opening remarks, we are getting ready to deliver this impeccable execution. These are complex projects that require local deployment. You mentioned the Suriname project. We are building the new service base in Suriname. The new -- the first shipments will arrive in June. So we are ready to deploy the OCTG and the Rig Direct services there into the second half of the year. We are also, for example, producing today thermal insulation coating in Nigeria to support the Shell Bonga North deepwater development. So these are important part of our focus and attention is on delivering this high backlog of orders. And we expect revenues in the offshore in the first half of 2026 to be higher than the second half of 2025. When we talk about the second half, it's true we have an important backlog of Sakarya and other projects. Some of these awards -- additional awards require FIDs. We see some of the FIDs being announced towards the end of this year or even in 2027. So this will depend. So we don't have fully confirmed the backlog of second half of 2026. But we are confident that it will be at least as positive as the first half of 2026. So overall, I would say, the offshore contribution will be important for Tenaris. And if you look at the industry projections, the level of FIDs of deepwater that we are seeing for 2027 are pretty strong, higher than the average of '25 and '26. And we are engaging with our customers early on in those projects much earlier than the FID. So we believe that we're in an offshore cycle that is going to be sustained for a multiyear period.

Yes. This is very important. When we look at the estimate of the investment in deep offshore for '27 and '28, the number apparently of estimation are showing level of investment in the range of $120 billion in '28 that are almost 3x some of the low-end years in the past 2, 3 years. So long term, look promising for this. Now Guillermo, maybe you can add on the U.S. operation best vision.

Yes. Thank you, Paolo, and good morning, Sebastian. Well, regarding your question about the trajectory of margins in the U.S. and particularly for our ERW pipes, clearly, the recent increase of prices of the hot-rolled coil and still the reduction of prices for the same products is putting a lot of pressure on our margins. And that is going -- that are going to be reflected mainly in the second quarter. For the following quarters, with all the volatility that we are seeing, it's more difficult to forecast, as Paolo explained before, but -- and will depend mainly on the ability of the Pipe Logix to recover that we think that eventually will based on the push of the cost hot-rolled coil and scrap and also because of the expectation that the imports will continue to go down in the future.

Our next question comes from the line of Stephen Gengaro from Stifel.

So 2 things from me really. One is, can you talk a little bit about your expectations in 2026 for any material changes in working capital as we sort of try to think about free cash flow generation? And then maybe aligned with that, what level of cash do you feel like you need on the balance sheet to run the business? Like what level is excess versus what's sort of normal necessary operational cash?

Thank you, Stephen. Well, in general, remember, it's not only a question of the capital we need to run the business, but we also need to have always in mind the capital we need to have available for any expansion or opportunity that may come in front of us. This is an important consideration for the Board, for everybody when we consider the financial strategy in the flows to the shareholder. But as far as the working capital is concerned, I would ask Carlos an overall view because there are some areas like the receivable from some of the clients that is improving. And so you can give us a view of how you see this.

Sure. Thanks, Paolo. For the 2026, we expect to be quite neutral in working capital, but we will have some swings over the year. Especially in the first quarter, we're expecting an increase in working capital, mainly driven by our accounts receivable. As you saw during the fourth quarter, we have a big reduction in receivables, mainly driven by collections in some -- big collections from Pemex. I think with Pemex, we have arrived to a level that from now on will maintain or increase a little bit. So we won't be seeing a working capital reduction coming from there. And then we are seeing also some terms, we negotiate some terms with customers in the U.S. that might impact a little bit our working capital needs. And also, we are seeing some slight increase in sales for the first quarter that will also imply an increase in account receivables.

In terms of inventory, maybe for managing our -- in our balance sheet, the service component of the company is very visible. We have the fixed capital that is slightly higher than our working capital because in the end, we have a lot of inventory to support our service strategy and our Rig Direct strategy. You think, Gabriel, we can imagine some reduction of this streamlining inventory or basically you imagine a stable situation here.

In general, Paolo, we are always looking for opportunities to improve. This is the case in all our Rig Direct programs, we are managing and balancing the ability to supply and have the right stock at the right moment and have efficient working capital. So this is a constant work. We have done an improvement during the year that we will continue this year on the work in process material. So this is something related to our industrial efficiency where we have been improving, and we have more room to improve. And then there is a part of steel as we have this important LSAW pipelines that we need to buy the steel in anticipation. So typically, there is a longer lead time on these large pipelines that are also reflected throughout the year. But this is an area of attention, and we always think there is room for improvement.

It is important for projects like Sakarya.

For example.

Long term, long period of time.

Yes.

And also our operation may demand working capital for serving ADNOC with a long operation and stock demand.

We are serving every month 550 rigs worldwide. So this requires to have the raw material close to this rig.

Serving 550 rigs every day imply to keep all the inventory even in a remote region or at least like in the Gulf. But still, we're working every day to understand how we can optimize this by the way.

No, that's very helpful.

Our next question comes from the line of Alessandro Pozzi from Mediobanca.

The first one is really going back to the Q2 guidance. You mentioned a bit of an impact from higher raw material costs. I was wondering if you could perhaps quantify or give a sense of what that could be in Q2? And also, as we look throughout the year, I was wondering if there is any quarter where we could see an impact from mix, for example, more line pipe versus seamless and having an idea of the cadence of line pipe volumes, I think it could be quite interesting? And also on maintenance, whether you have any big maintenance quarters? And second question on Argentina. Can you comment on the level of competition you've seen there? We've seen an Indian company getting a contract for a pipeline. And I was wondering your thoughts about the competition there as volumes, as you pointed out, are going up possibly from second half?

Thank you, Alessandro. Well, on the first point, there is, let's say, the impact of the row. When we look at the medium term in terms of this, we always keep -- follow basically 4 points: the Pipe Logix for seamless, the Pipe Logix for welded, the cost of hot-rolled coil and the cost of scrap. So on these 4 variables that are moving are acting on our, let's say, the indicator in the formula of our contract many times and also the costs that are underlying. Up till now, I mean, what we see is an increase in the hot-rolled coils that is not followed by the Pipe Logix in welded because there is import from companies that could stay below the line of price, even paying 50%. This is hitting our -- to some extent, in our margin, but we think that this will be a reaction by the Pipe Logix some antidumping action to contain import. And I will ask Guillermo, if you see this happening in medium term, I mean, when we can recover the increased cost of the hot-rolled coils in our top line.

Yes. I think that following what I said before, I mean, remember, there is always a lag between the Pipe Logix and how they reflect in our prices. So normally, we have 1 quarter delay. And while the impact of hot-rolled coils, it comes sooner than that. Our expectation would be that we should start to see some reduction in Q3, but particularly in Q4.

Thank you, Guillermo. Now on the line pipe seamless after the acquisition of Shawcor, the line pipe for us is very relevant, and we are I think very competitive. But maybe, Gabriel, you see some changes in the balance between 2.

Yes, Paolo. Alessandro, regarding your question about the cadence of the pipeline projects, I would say that it's quite stable during the 4 quarters of this year. This is the visibility that we have today and pretty much in line in volumes on what we had on 2025, where we had important projects like Sakarya -- I mean, like [indiscernible] in 2025 in Brazil. This year, we are concluding some pipelines in Argentina in the first quarter and second quarter. Then we will have Sakarya in the third and fourth quarter. We have, I would say, a relatively stable plan of pipelines in Saudi Arabia as well. And then the deepwater pipelines that we have in different parts of the world. So I would say, there is not a significant imbalance in our shipments of line pipe.

Thank you, Gabriel. On the last point on the tender in Argentina. Well, this was a tender for a large project for producing LNG in Argentina. The project is carried on by a private company that, let's say, include different shareholders, but it's a private company. They made a tender, a very open tender to everybody. And basically, we lose the tender because they were higher than the lowest bidder. The bidder, as you were saying, was an Indian company. Things like this happens, obviously. Now what we are doing, we are analyzing the offer to see if this is an offer that is following the trade practice or is exposed to potentially an antidumping case raised by us. For the time being, we didn't take the decision here. We are just studying the condition, the condition of the local market for the Indian company, the condition of the pricing of this because we think this is important. We also remember that Argentina had signed an agreement with the United States in which both parties are committing themselves to address the unfair trade practices in both countries. It is logical for U.S. to advance or introduce close of this in the relation with different region, different areas. And this is part of the agreement, the reciprocal trader investment agreement between Argentina. So we think there should be a good environment to analyze the specific situation of this offer and this tender.

All right. I don't know if I can squeeze in a last one on Venezuela. In your opening remarks, you mentioned that Chevron is ramping up drilling activities. Could you quantify the Venezuela opportunities short term, longer term for Tenaris?

Yes. On this, Gabriel, you follow closely this.

Yes, Alessandro on Venezuela, clearly, the situation is evolving. It's a dynamic environment. But clearly, there are signs that things are going to move positively with the hydrocarbons law and the recent of licenses, I think there are clear signs that some resumption of activity will occur. Today, Tenaris is in a unique position. We are fully serving the Chevron, the only major that is operating in Venezuela. They have a plan to accelerate rigs and demand for 2-wheelers, and we are ramping up for that. This is today something limited, but we expect to expand into 2026. So we are also following the licenses of the other majors that might be coming back to Venezuela soon. So this is, I would say, still in the $50 million for 2026, but with a clear perspective of a higher potential into 2027 and when maybe more clear plans about the other majors are materialized. But overall, a big upside potential in the midterm, depending on how things evolve.

Remember, Chevron will not be alone. There will be other company moving. I think our position in Venezuela is unique. Remember, in Venezuela, we're operating the only seamless pipe plant until the plant was expropriated in 2008 by the government by [indiscernible] and at that time, we were the company serving the oil industry in Venezuela. So we also have human resources or people that are familiar with the operation in Venezuela, the service, the complexity on this, the product demand and so even if a lot of time passed, but we still, I think we have a very competitive and differentiated position.

Right. Sorry, did you say $15 million EBITDA, 1-5?

$50 million of revenue, 5-0.

Our next question comes from the line of Luigi De Bellis from Equita SIM.

Just one for me. On the Middle East and Mexico, could you share your view on the evolution for the coming quarter for both Middle East and Mexico?

Thank you, Luigi. Well, starting, let's say, from Mexico. Mexico, there has been a number of positive events in supporting Pemex. The government capitalized Pemex with a program of $20 billion that is important. And now Pemex is also issuing bonds and getting access into the market for important sum like $1.7 billion. I mean, relevant access with government guarantee. Now what we do not see yet is the definition of the plans that the Pemex will execute during 2026. We do not have clear indication of this. And the private company are moving slowly. And some of the group is moving. Obviously, Woodside in the Trion is moving on. But some of, let's say, the contract that may have enabled private company to come and develop the resources. In my view, this is moving relatively slowly today. Maybe by the end -- the middle of 2026, we will have a better understanding of how they will organize, let's say, the development of the clearly huge resources that Mexico has. Now the question on Middle East, medium-term vision, I think, Gabriel, you also may comment on this.

Yes, sure. Luigi, for the question on Middle East, I would say, there's not much change on what we have been reporting in the last couple of quarters. Activity remains high. All the main key countries are investing. We have a strong position there with our long-term agreements in Saudi, UAE, Qatar and part of the market in Iraq as well. So I would expect our revenues and shipment in the next 2 quarters, first and second quarter of '26 to be pretty much in line with the last 2 quarters of 2025. The only noticeable news is a probable uptick of drilling activity in Saudi. This is still to be confirmed, but probably during the second quarter of '26, maybe later in the year, we will see a comeback of rigs in Saudi, which reduce rigs during 2025. So we'll monitor that, and there could be a potential upside, but for the second half of this year on the [indiscernible] side.

Our next question comes from the line of Marco Cristofori from Intesa.

My question which relate on shale oil, shale industry in the U.S. Let's say that since the end of 2023, we have seen declining rig count, but a growing crude output. So -- and also breakeven are going strongly down according to oil [measure]. So do you think that this trend could allow a further increase of your volumes in the U.S.? And secondly, there are several insights that the shale in the U.S. could reach a plateau in the second half of 2027. So how do you see the evolution of the shale industry in the U.S.?

Yes. Thank you, Marco. I would ask to Guillermo to give his view on the evolution of this. In the question of plateau, frankly, I wouldn't -- I don't think we are able to predict the plateau. It will depend on the overall price of oil around. And there are many issues that are unpredictable concerning the major production region and so on and so forth. So in U.S. the plateau has been forecasted in the past at a lower level, and it is continuous surprising us with higher. And so I wouldn't bet on where this number will be in '27. Guillermo, on the question of the productivity.

Yes. I mean, as you said, I mean, the operators in the U.S. have been increasing their efficiency and productivity big time in the last 2 years. So with a much less number of rigs, they are not only producing more, but they are drilling almost the same amount of wells, and they are even going longer. So we are seeing much less rigs, but more production and slightly reduction in the consumption of OCTG compared to what we used -- I mean, so there is no such correlation that we used to have with the rig count. Now looking forward, we still see kind of a stable market for 2026 compared to 2025. We may see some reduction of activity, slight reduction in oil offset by an increase of activity in gas. And as Paolo said, difficult to predict about production. Everybody is talking about plateauing, but at the same time, we see them becoming more creative and producing more oil from each well with the new technologies in terms of fracking, but also in terms of the level of chemicals they use. So we need to see as to where the innovation of the industry can go. But clearly, if we are not at the peak, we are not far from it with this level of activity and rig count. The other variable that we need to take into account is that during the last 2 years, there has been a reduction of drilled by uncomplete wells. So some of the increase of the activity was also coming from wells that were previously drilled but not completed. The level of inventories of those wells has gone -- has come to kind of a bottom. So we don't expect much more of this in the coming quarters.

Our next question comes from the line of Kevin Roger from Kepler Cheuvreux.

I just have one question to follow on the U.S. and all those stories on the tariff implemented by the Trump administration and notably on the recent news flow that the Trump administration could reduce the tariff on steel and aluminum. I was wondering if you comment a bit more on what should be the implication on your side from a potential reduction on the tariff if, for example, we come back to a 50% steel tariff to 25% or something like that. Just to understand the potential impact on the U.S. OCTG market if we move in that direction, please?

Thank you, Kelly. Well, we don't know which is -- I mean, we only have an article on the newspaper. We do not have a written definition. If I should say, the issue may come from the impact of the U.S. economy of the extension of the 232 to the derivative of steel. There are in many products, derivative of steel, which means that they contain steel, there are basically affect price level in the states, but are not having a beneficial impact of industry in the states that is not producing this. Now this universe of derivative increased so much that I think the comment of Trump maybe are just indicating a willingness to reshape what is considered derivative and what is not. Remember, there has been stages of expansion of the definition of derivative 1, 2. And before going to the third, he is considering what would it be, let's say, not creating undue distress in the pricing system. So this is what I understood. We will reconsider the derivative more than reconsidering the level of 50 for 25 because this is a key component of the 232. I don't see this to change.

Our next question comes from the line of Jamie Franklin from Jefferies.

So firstly, and apologies if I missed the answer to this one, but I just wanted to focus on your other business segment. Obviously, a big revenue and margin recovery in 1Q, driven by your fracking and coiled tubing services in Argentina. Can you just talk about how you expect that to trend through 2026 and whether we can expect a similar contribution in the first and second quarter and beyond that? And then the second question, just if you could give us an update on your CapEx expectations for 2026 and kind of an outline of where you expect to be spending?

Thank you, Jamie. On the oil and gas, I was saying, during the second part of 2026, we are considering that the activity of oil and gas fracking should go up. The drilling activity will also pick up later on. There will be more need to frac. We are just bringing in one additional set of fracking because we are anticipating some increase by the end of the year. And this should drive to some increase on our activity in the second half of '23. This is basically the position on this. The other point, CapEx, I mean, the CapEx will be more or less in line with what we have been spending in 2025. Looking at the forecast, we see even something lower. But I imagine that during the year, new need may come out. Usually, there is something that is coming out from specific intervention. So there will be something lower when we look at this from a planning point of view today. But maybe in the end, we will be close to the level of today.

Thank you. At this time, I'm showing no further questions. I would now like to turn the conference back over to Giovanni Sardagna for closing remarks.

Well, thank you, Gigi, and thank you all for joining us today. Bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.