OIL STATES INTERNATIONAL, INC (OIS) stock intrinsic value fair value estimate & owner earnings analysis

Oil States International makes capital equipment and provides services used in oil and gas production, organized into three businesses. The largest and most important is Offshore Manufactured Products, which builds long-life capital equipment for offshore and subsea oil and gas developments - connectors, high-pressure riser systems, mooring systems, and related products, several protected by the company's own patents. The other two, Completion and Production Services and Downhole Technologies, sell shorter-cycle tools and consumables used mainly in onshore US well completion work. The business has been reshaped over the past two years. Management exited several lower-return service lines - selling its remaining land drilling rigs in August 2024, exiting well testing and flowback services in 2024, and exiting isolation tools in the fourth quarter of 2025 - shrinking Completion and Production Services from $243 million of revenue in 2023 to $115 million in 2025 but improving its profitability along the way. Downhole Technologies, which sells perforating and downhole tools tied mostly to US land completion activity, has faced a weaker demand outlook; the company wrote down $80 million of that segment's intangible assets in 2025 (on top of a $10 million goodwill write-down in 2024), a signal that management itself now expects less from that business than it once did. These write-downs are non-cash and do not reduce the cash owner earnings figure below, but the pattern - the company has now written off roughly $700 million of acquisition-related goodwill and other assets since 2019 - is a real mark against management's history of capital allocation and is reflected in how much weight we give to future growth from that part of the business. Offshore Manufactured Products, by contrast, is growing: revenue rose from $382 million (2023) to $398 million (2024) to $431 million (2025), and the order backlog behind it grew even faster, from $311 million to $435 million over the past year, with new orders booked running well ahead of revenue shipped. That backlog reflects real, signed customer commitments for multi-year offshore projects, and is the one part of the business we can point to actual, dated evidence of forward demand for. The balance sheet also improved materially in 2025: the company bought back $71 million of the $135 million convertible notes that come due in April 2026, and in January 2026 lined up a new $75 million revolving credit facility and $50 million term loan to refinance the rest, backed by roughly $70 million of cash on hand. We measure owner earnings as cash generated from operations, after stripping out the swings caused by customer prepayment timing on large offshore contracts (which have been large and lumpy - a $45 million customer prepayment build alone boosted 2025's cash flow), non-cash stock compensation, and the portion of capital spending needed just to sustain the business rather than grow it. On that basis, normalized owner earnings today run at roughly $0.34 per share, using the last three years (2023-2025) as the base period, since earlier years included businesses the company has since exited. In our base case, Offshore Manufactured Products keeps converting its record backlog into revenue growth for the next several years, moderating over time, while the other two businesses - having completed their major line exits - roughly stabilize rather than keep shrinking. That path is worth about $7.05 per share today. In our bear case, the current offshore upcycle stalls (this is a genuinely cyclical, oil-price-sensitive industry, and the company's own filings caution that backlog trends can reverse), while the smaller businesses continue their recent declines for a couple more years before leveling off; that comes to roughly $4.10 per share. In our bull case, the offshore backlog momentum continues at close to its recent pace for longer and the smaller businesses hold steady rather than merely stabilizing, worth roughly $9.10 per share. In none of these cases do the company's remaining debts come close to erasing shareholder value - leverage is now modest and falling. The margin-of-safety price is around $3.85, below even our bear-case estimate, reflecting the cyclicality of the business and its record of write-offs on past acquisitions and expansions.