Precision Drilling (PDS) 10 Feb 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Precision Drilling Corporation 2020 Fourth Quarter End of Year Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the call over to Dustin Honing, Manager, Investor Relations and Corporate Development. ahead. go Please

are otherwise and fourth Michelle, call Ford, everyone. to President with these Welcome webcast. XXXX end Executive unless and Thank Financial and Officer; and good year Drilling’s me call Canadian results. the note quarter today conference that and Carey Neveu, end figures Precision President Participating Chief you, on afternoon, Kevin XXXX Officer. release are news dollars and year our Senior quarter Precision today, and Vice financial in earlier reported Chief Through indicated. its fourth Please earnings

our will earnings. measures, Please of financial additional to operating such news our non-IFRS these release for Some financial comments today see disclosure and as EBITDA on refer measures.

statements We regulatory news see and future to statements actual forward-looking regarding differ risks these number forward-looking cause from Our Precision’s caution Please other subject that uncertainties our comments prospects. our to a and results release materially are and of will results fourth you and more could begin turn today that include expectations. discussing an follow update factors. providing by risk that, today’s With you, financial call statements Carey our forward-looking filings by and it information and Kevin will over will year-end operational results. then for I’ll to Carey. outlook. quarter these on

strict and by scale management balance year-over-year excellent these was Precision over generate Precision’s as achieve XX%. cash million, $XXX financial you, control field results the despite of adjusted cash experiencing of function million ability by targets our growing the American North well performance. declines XXXX, activity debt exceeded our $XXX as a to cost leveraging to Thank beginning million Dustin. set and out of at EBITDA, reducing in $XX

management and year over second to we Our successfully focus quarter by in will XXXX. cost steep XX% through reduction activity million, drop is of Company sustainable to financial fixed activity increasing activated results the which establish in debt strong XXXX. this anticipated an areas generate in Company the believe reduced cash structure continue a costs fourth in We SG&A the the $XX and over positioned control, reduction cost quarter were the Cost for by be given in environment. necessary, initiatives

to Moving our quarter results. on fourth

share-based $XX Our adjusted fourth decrease adjusted the $XX slight decrease is of in activity and a activity decrease fourth our quarter results adjusted EBITDA in been international Absent quarter. from assistance these quarter $XX and items, would was $XX America EBITDA from in in payments included million a Also compensation of quarter million, decrease EBITDA EBITDA XXXX. the during for sharp XX% primarily in of expense. The CEWS operations. North in million the drilling million a have

to organization. utilized and its on program As CEWS pandemic. Precision employment in preserve during program a We the reminder, the has Canadian Canada, impact the for supporting jobs government this within applaud our and supports this program employment

of IBC margins US$XXX exceptional QX, margins In the been have operating impacts cost margins in The decrease in is XX likely, XXXX XXXX. Daily decrease lower activity the slightly during impact program the Precision increase decrease impact approximately has from US$X,XXX U.S, it the were XXXX, in in of during will into QX, drilling expected for QX. revenue Precision a IBC Absent to to extended than from half that averaged be financial participation is an with and QX, of earned by QX. X rigs the which Although QX. levels daily rigs offset operational operating the well control turnkey, quarter US$XX,XXX, from in quarter. margins turnkey in reflects due for higher higher would

levels. margins, expect For slightly QX be to from and turnkey, normalized down IBC absent we QX,

In quarter. to supported the the would quarter expect CEWS have and XX rig increase Margins in costs, activity. last CEWS offsetting XXXX. We average margins during a QX on shortfall assistance impact, were from or activity operating than payments. burden of margins year, Absent were XXXX. $X,XXX cost first X shortfall for a an control QX rigs operating IBC and been rigs, lower overhead Daily focus XX $XXX Precision with the efforts by averaged nearly from strict QX Canada, $X,XXX $X,XXX, the decrease drilling lower of on from

with day benefiting to be current For rates the we year. Precision absent year, margins US$X,XXX rigs. activity International up EBITDA margins, Adjusted a EBITDA averaged quarter. from service US$XX,XXX, from reflecting by quarter. at QX, to adjusted $X.X was line active average compared prior industry was quarter down XX% prior were rig last drilling mix. activity the approximately Internationally, relatively segment, expect CEWS in impacted quarter of in for X well this hours, in the the decline In million, negatively lower our in XX.X% C&P

to Canadian million $XX work due the and industry by $XX expenditures will and additional $X.X and increased abandonment We site program. results billion government’s for expect the the year. rehabilitation activity supported in were quarter QX, well million Capital improve for

due activity and Our than contracted of expenditures upgrade anticipated completed fourth the in XXXX, the to increase year-end quarter, start capital XXXX. in ahead activity higher were activity discounted upgrades in fourth in four components quarter, of higher higher expected to than forecast purchasing

quarter, fourth were Precision tech by operations Nisku upgraded two Rostel the teams at to Canadian and the operations. heavily in four the for rigs two U.S. supported center and upgrades the our of completed market. were related Regarding All

million and Our and is supporting customer Alpha XXXX upgrades. $XX investments technologies relates and which upgrade of and anticipated is to capital contracted $XX sustaining for million, plan expansion, million $XX infrastructure, comprised and for

an in of an first XXth, February full of average the of we year hand XX for As and quarter the average contracts contracts XX for had XXXX.

and continue sheet, primarily balance net the reduce absolute free debt to Moving generation. flow levels, through both we cash to

million, when December $X.XX excluding $XXX XXst, over position billion letters net of and was of position As long-term debt liquidity credit. total cash was of our our approximately

quarter times trailing debt of the average cost X.X interest approximately is with debt facility for EBITDA ratio to fourth ratio XX the X.X%. credit and net with an all Precision compliance remain to in times. Our of covenants months We X.X is EBITDA coverage in our

the we quarter, repurchase shares. to million $X utilized During

Our capital to substantially allocation debt reduction. weighted remains program

For million QX. We and to remain not expect of to reported capital XXXX. in and and debt to U.S. debt free Concurrent our goal we the continue meet reduction we recently have release operations a expect million increased benefits $XXX in with the on end from is remains $XX increase to through do will fourth both working increase from capital reduce working the we incremental in the leverage XXXX, longer of and flow generating opportunities reduction cash And to our to a million. activity priority. million, quarter, increasing track as Canada. between XXXX Liquidity set for top XXXX $XXX for to look $XXX continue term targets activity

depreciation approximately $XXX million. to expect we XXXX, be For

be to million compensation SG&A expect We $XX expense. share-based before

interest our We I to $XX in XX% cash tax X% call to now expect million effective low rate the range. taxes And, turn And remain approximately to will expect cash expense be over year. my and concludes be to Kevin. for the remarks. we the That to

but Carey. people. it Good highly and business challenging and our resourcefulness was right. deeply All the model afternoon. thank XXXX agility resilience you, skilled year, the Precision was of demonstrated of And one where a our

downturn, our pandemic. foreshadowed resulting addressing team and exceeded expense potential all exceeded the on recovery, Company risk now capital within managing or of recall restructured may weeks, while operational reduction spending. base, underway, risks all conference Despite fixed that caused pandemic then our we emerging firmly health strategic a achieved we last the priorities. pre-pandemic immediately our to and structure, safety the our a debt the we positioned mitigation improved call February, you And response the full the which We risks COVID-XX we our mode, by targets, pivoted virus. from and the Now, few Precision executing the industry plan is successfully our for cost

U.S. rigs, Precision’s sits think U.S. that bear rigs. results currently XX% today work. financial activity operational fourth in XX quarter XX bottom, sits quarter, and our Through hard third the activity I increased fourth a we fruits at the or -- at our quarter activity and average from Today implemented the as expenses XXXX are The cash recover. during rigs. flow our sustainable, of and continues up costs and a and will XX torque reduce lows the rigs QX of to QX to steps team just our doubling quarter strong second drastic X of business of ensure

fourth during Precision’s Our resilient the of capability. indication torque quarter are margins a good earning

progress highest to XXXX. to AlphaApps has expectations year. mechanical XX% exceeds strategy. strong apps, reported recorded when uptime Customer our of product. doubled in the press used AlphaAutomation, Alpha digital and exceeding of XX% for utilization from XX% AlphaAutomation XXXX wells this the Market continue release, app on aids make active drilled, we we our is up our XXX% prior store now XX.X% range, As almost and to time in in days and for X,XXX Precision’s the XX now we system uptime penetration

XXXX quarter, fourth manning we this driller, rig successfully introduced trials directional Sliding significantly by expect our will sliding revenue for will sub-XX very a the initiated as important customers with the app in second midyear. commercial a XXX AlphaAnalytics mode. to We was by half, the in days also model midyear. to app field-hardening is executing the app, slides. we and early reduce transitioned During it eliminating AlphaAnalytics. built commercial become In trial we

Alpha that digital capabilities no and there’s we’ll So, market services, our we significantly all believe positioning. penetration strengthen digital for competitive doubt these increase

indicative extraction constructive we improving is The has recovery. improved. So, discipline believe by industry indicator are Hydrocarbon to with the recent capital our important and strengthening macro and is customer access leading is markets is looking offerings report the could see forward, recognize fundamentals, we very a capital-intensive capital and a We the industry industry also capital debt markets environment sentiment demonstrating. base beginning the essential. substantially the successful of that an also this industry’s to customer equity of

also U.S., global to as vaccines its been technologies gas restrictions for the both, directed driving XXXX shifted with recent gas, from as pandemic activity XX% been increased strong this expect also year. natural and have activations prices with Precision’s COVID-XX Haynesville we gas the I technology-first has to promise. that oil have mix gas the pleased lows. oil, E&P has plays. efficiencies gas these in adopting basins are improved are am later the customers in continue and U.S. and our begin Permian a also XX% presence market Oil-directed ease gas rig rig demand Alpha of recovery Marcellus several movers, experiencing drilling. In our the note distributed interest. rebounded will the directed I position We

Alpha our regional to continue reactivate look disciplined will are creative high-spec for important At we our Precision, idle strategy led and best rigs. the We However, our supply has believe opportunities marketing Permian. highly excess strategies. in rigs of the to technologies to pricing some idle the return an for catalyst remain

the several Now, upgrades. I Carey wanted super two walking fourth mentioned rigs The during to ST-XXXX Basin Precision U.S. will elaborate are the two U.S. we pad quarter. operator rigs. rigs DJ The reduce triple the upgraded on the minimize with solution proposed their and environmental the drilling rig on community drill two reduce reduce to footprint one impact. operations the to footprint We and pad squeeze rigs location time on simultaneously. to a

sight macro rig upgrade. later excellent integral and we this we by a outcome an a and to how quarter, on to the another the our month, for we Now, we the upgraded this rigs But, and and on rig I rig XXXX XX%. external example vertically increase for earlier strategy, This Precision. by U.S. expect priorities. expect of be major activity can our of configuration this reduce our the when this about additional all have quarter win don’t part Currently, Precision course, of utility activations into customers’ customer by of XX% modules for and this ESG were discuss rig good line a we midyear, customers’ stacked is spudded think more our Both to We an very have second XX% expectations. is presuming are disruption. location I’ll on delivering footprint was big

contracts performance-based very remain on we And displacing of are Now day performance-based, while rate there’s model. our contracts been contracting arrangement. the on much talk some this cautious

additions We good very to day carte la rate. continue success technology digital to our the pricing Alpha offerings base have as à

may the market are day services rig to While rate not. exposed Alpha the competition, be

we we market enables. due in to that believe Alpha new seeing alternatives, share to event, and accuracy with customers rig the efficiency, and data the placement pursue efficiency demonstrated gains contracting has drilling and are We’ll wellbore continue but both market our analytics safety win customers. will Canada, that a double what In natural any deal We improve. the activity clear, remains the prices to stronger year to pricing be demand the and beginning on while experienced firm higher in is almost gas basis. in half we year-over-year And less QX and visibility WCS stabilized looks largely expect drive customer second meaningfully of will XXXX.

Our rigs and the with in our super strong. market AlphaAutomation position Montney triple remains

year. choice We firm recent Montney through trend spring oil drilling. for With WCS expect year, the rigs into heavy is the our lows, our with well-positioned reflected drilling winter Heavy activity are in will the from of expect single we activities oil we heavy this firm and second also half rebounding as pricing, rig of season. continue improved through the super oil

complicated international the help crews. strong the and requirements we Saskatchewan, restrictions While and such price stabilize caused our plays financial competition in customer the consistent. the rotating In travel to prices the in our remains continue Cardium, Viking as those later logistics manage And shallower pandemic intense conventional should demand our remains quarantine by for oil performance segment, Southeast and firming year.

have are indications contract yet, in We they’ll is reactivate point. we rigs are no indication they rigs full the full waiting again, have we under in in Kuwait. contract additional year. the In and Kuwait before We have renewals for is Aramco some possible. clear year rig of work positive But we this activations year. put Currently, the think Saudi Saudi beginning rig timing standby getting we’re start a trend. is activations certainly the operating three now those timing. But, rigs the Arabia last three rigs at attention. some Currently, to IBC as This get for any some Arabia, of under opportunities the on running to uncertain for on through may new

for program, Our believe driven a segment and well increase We Canadian experiencing work, undertaken operator prices, getting the substantially well of broad-based a efforts in that’s now increase in improved with demand. but good our We over in in there’s Precision an this will area XXXX attention. torque business restructuring part barring abandonment dislocation, earnings good this is also we’ve service activity is cash the service by service couple has the multiyear following years. demand, macro lag customer or a Canadian flow Again, be over commodity well XXXX. well believe improved been an past

XXXX our priorities. Now, turning to

for reduction I cash those on management to focus the follow be Alpha no think, and will our technology free Precision. who surprise continued debt flow, market penetration

the newest critical are through our stakeholder strengthen our priority, However, the to and future. customer recovers looking as priority positioning ESG and we performance, from a for world pandemic is

may our well-developed has and culture, systems. and sustainability a supported you XXXX As mature report, processes, have by controls Precision read in internal ESG

lower environmental service customers’ drilling our better strive emissions, and such fuel My to walking supplement high-performance customers digital and to environmental improve ESG and natural is systems, investors our range full systems to put emissions, as believe ESG reduced their also Alpha stakeholders. deliver strategy. XXXX, our our our performance hybrid which their we to In our we ESG power others our ways Precision’s help we rig We’ll our battery systems. the they compact continue can our technologies, better also and performance the offerings, going However, efficiency, and deliver as quantify still other customers, strategy reduced their of initiatives gas these we of deliver we initiatives in stage, all planning forefront scores. our for can stakeholders of will footprint recognize and ESG pad how ESG we’ll of evolve help our earlier one forward. footprint, regarding strategy example the reduce

best very-hard our especially environment. Precision in deeply all-time have for Pandemic pandemic Precision’s the field their results thanking I’ll by I and delivered conclude a appreciate to safety to the excellently all my risk and workload commend certainly employee stress contributing crews every who strong challenging the performance. I employees So, work managed of rig our comments added want and feels. the

So, to And for call now back the thank the you questions. operator turn much. very I’ll

first with Holt. Taylor Our Instructions] Tudor, question [Operator comes Zurcher from Pickering,

open. line Your is

the talked about improvement rig Good XX% afternoon count around and midyear. in you to XX% hopefully by sometime Kevin, you. thank Hey. U.S.

my the for what public, like private potential about side the to trend any be or equation top rigs? you of incremental X there’s off And whether and or between from as private it Can those look of sort the it industry-wide, at of private head, here, balanced be fairly operators looks we talk X expect of operator So, from the next rigs. behind if do groups, growth you leg mostly to public? additional driven the it

been we’ve Certainly, are rigs the looking seen private showing the markets has anyone both encouraged a customers and really discipline publics. adding towards how even be the into budgeting some than companies around gas or over weighted strong question. do great bank that think with the right oil what I’m E&P we’re blend public in now, I encouraged XXXX, But, -- anticipated, their of far of that. things redeterminations. play that so equity for is I’m forward Taylor, their capital sort in private price seem discipline. by I raise to in commodity our think recognizing process either higher

So, rigs publics the forward, more do mix think, new And I looking outlook of will improving. privates. privates, of of the weighted and is I less be a to think blend the

Understood.

the then, Okay. my U.S. also follow-up in And is

for basis, As I nice quarterly you’ve much it a is a pricing about was certainly market release, XX, there. the a improvement leading-edge the now spot earnings year lower what so last had XXXX, you than term contracts of ago. X got on suspect

contract us to able whatever contracts and about lower the add in help how and could you to pricing your this longer you’re pricing you’re willingness sort get so, environment, at today? And some term curious understand just book of if thinking

of already our So, component first announced we’ve contracts are renewals a rigs running that and are all, that of play. in of

the There’s are location. no mob or demob customers are So, those on that rigs have cost.

be in So, tend to those rates closer prior to year’s fact, rates.

a rates we a by New rates, of will we is start itself sort and We to and a will move to I’d concerted think more effort there that affected play in expect lower. say QX spot that that bit have certainly market activations be little nicely bit bottomed. out rates upwards, QX. think

mean, rigs X talk Okay. you whether Can I’ll the the pretty found not I X upgraded upgrades? sort upgrades? can those those particularly -- for bit. decent rigs the you’re get beyond in footprint comments on to one more and environmental what do are the get squeeze go getting for U.S., in of the interesting, a those in able some the in. the you reducing a I leading-edge basis or term paid to about to ahead you market, above pricing and in

Absolutely.

good very are We The is return on our long-term investment the for being very, fits expectations. return and paid the upgrades.

Great. That’s Thanks, it for guys. me.

Yes.

didn’t Taylor, helps just I -- those upgrades. I but that were surprised you fact, we It for We our elaborate. willing But, I’d In upgrades. think, customers wouldn’t understand surprise, pay it to market’s a say expect are a evolving. was the

next comes from Lynagh Connor Our with Morgan Stanley. question

is line open. Your

incremental willing thoughts by in negotiations? to want reasons. just to build are demand? great. your detail around give But, what your extent to guess, just too versus more into you obviously term contracting more wondering guys dynamics. to Yes. I’m you would appreciate what sort don’t be rate “spot” of for push and willing pricing so long-term that I rates the to hampered So, that competitive on wanted are was rate pretty seeking contracts is, I I around customers Thanks. sign conversations go weak or on To or so

everybody they for like lock in rates a the good at key again, I Connor, longest would is the think best these some always market recovery, in the really periods There’s to rigs recover, will plans long-term ones that can. have early are to clarity customers when the balance. Certainly, to questions they get to on. look and try lowest really Yes. can, the beginning

leading months rates. X want lowest of to up in to months large of rate. had XX range Certainly, anywhere XX asking don’t in from the customers we’ve months, So, next we have to super-spec at volume for trying locked contracts edge the rigs walk for a the

have as We [ph] as can which continue you, So, we’ll a has out. our to of. that I but to a rise. spreadsheet. manage leave they rates start to look team we’d to a optionality, so specific we very this, tell might rates balance can They improve, copy can’t capture take used couple, those you

I guess, is Maybe see, ask We’ll the dynamic I we’ll -- cost. nicely. the But, other see. if

rigs getting things something cost what as you’re guess, is rigs. margins the the So, I offset that field, I that, back reactivating imagine contracted obviously, and weighs is on into somewhat.

the through and Canada we So, help think us -- about margin? think with bit obviously, day couple impact can a the complex thinking U.S., per your should particularly you think how or quarters is breakup. on -- the your of in more we that next But, I’m here, about how should cost

shape, I stacked kind we’ve certainly so just pretty But, broadly, have towards. I’ll views we’re we guiding costs, cost our minimis de nothing let guidance. on in and the Connor, think, his Carey good far rigs of that reactivation stacked reiterate have been

point by costs lower offset to operating increased burden out overhead activity I’ll the efforts our that the have levels. in introduction my largely So, comments reduce

development really good a from a been that’s So, cost standpoint.

I’d handful running not whole of long As a we too cost. wasn’t ago. reactivation have say and add ago, We about we it next expect long too in rigs, of we to the -- a don’t half U.S., XX ago, lot had the rigs year had

in So, condition to to a are good lot of really those work. go back rigs

reactivate to rigs. be overly as cost. burdensome going get So, pool, the But you it’s into we bit more deeper reactivation see not the may a to cost

Okay.

So, be we absorption that it from the probably do would flattish day should per in trend How year? the some of fixed about duration helps? here, or the think here, cost for cost think just to square you

turnkey, variations that per I have think, we about if we’re U.S. for the the Kevin flat relatively absent provided, next in the forecast couple with market. day, cost talking of should activity quarters

Keith with Mackey next comes RBC. from Our question

Your open. line is

Thanks my question. for Hi. taking

the is net number, going dispositions million, that number, question on CapEx of gross a the Just kind is assume should we some that well? a or of $XX as that to be

is number, a That gross Keith.

it. Got

Okay. on if recontract and be have rigs, any you comment new Just recontracting, you’ve had the you’re with people can mix? the been back to add you same And field? on to the crews, rigs in or those dealing able just is going to to particular, maybe in staffing there the that

Keith, good back the [Technical been question. bring in green hands. trying downturn. some Typically, new But, Canada always restaffing Precision people. some in seed we’re successful we We’ve quite new like during to pulling to and the prior in still U.S., Difficulty]

We continue to -- our to keep build of staff. base

in we’ve that. But, been no we had stage Canada of early or staffing rigs of U.S. in the trouble this So, some the rebound. up doing

that for right just the work. months drilling workers and and a months servicing In a or programs can in challenge for of well worth Canada now or back four the -- we call underway pandemic days unemployment moment, is and they’re months we’re home X is or servicing, X six to out then for competing days. Now, the well a different work, work let story. in of be relief. as subsidy well three are of part two X turn typically we some days Whereas on in then guarantee work year’s work or might servicing me find that of which little And with the

limits And sector, included, for problem. well don’t ourselves servicing very we the of labor think, have servicing, know, I I has what well frictional are that kind recruiting. gotten do can So, But, of we tight. reaching

creative up we’re like start having servicing. for is getting a problem So, to at very and on and of It that in to the recruiting us. primarily things base Canadian referral really become employees looking programs well

Instructions] [Operator Stifel. Cole Pereira of question Our comes from next

open. is line Your

As as basins, evolves? we oil how think gas and we about you to be should between the of continuing split U.S. do be expect or it opportunity set, thinking that

get we I’m next. what be. the will not next on depends sure It what award

little weighting to forward. have pretty is Cole, sight We a to see several. towards my more of going expectation line a oil But, good

Okay. That’s helpful. Thanks.

Is assets divest that the you have able so, of continue help couple few offset of et sight to that kind over CapEx for, past it, program? a cetera. And to line to any of quarters, million, of noncore been XXXX should into some proceeds call of guys there

when typically standards then, sell we to pipe million year. we’ll anywhere So, typically -- be that the don’t organization to million much a have that it secondary sell that will the we And able anymore. we’re time $X That’s into between standards older assets we’ve other sell it a and -- established, market. on $XX a look drill of use of beyond the and within Precision that kind use

So, I think kind absent range. rig million larger noncore million $XX to the idle about divestitures of sales in or divisions, think $XX

Okay, helpful. got it. That’s

utilization you you’re specifically, for the in change a you’ve your volume disclosures some on level ESG just talking about seeing the had pretty Can equipment? So, ESG E&Ps seen this strategy, this equipment bi-fuel some notable requesting of the report of fleets. good and on your and if of comment rig gas-powered

location. have not gas that Cole, we rigs engines bi-fuel physical are either I the just the think, probably are being have now, right utilized wrong or that in natural

in includes have for to in sitting but rig you, almost money, GHG may say. demand we the I lower the would the a emissions. might E&P potential North every tell Dakota, on So, bi-fuel short But, conversation be discussion now

got it. Okay,

I and this of actually point? And pay point, kind here it at gone there opportunities, about think guess, where to for, willing conversations, it the are very or other those has to it, commonly so, just or bi-fuel is call as we E&Ps

us. a our don’t upgrade would opportunity nonrevenue see say I paying capital that to for will bi-fuel, paying have that a for No. discipline. and been for E&Ps I upgrades continue being rig to bi-fuel,

TD next Our Aaron question comes from with Securities. MacNeil

line open. Your is

should strategic how are In looking priorities as technology, there on and benchmark progresses? debt the and the to this those targets priorities hit three year, any reduction specific we context against that you’re year you of the ESG,

I clear target for of think, one of outlined in the that million reduction was $XXX XXXX. debt a Carey the target his range comments

that all benchmark year. us can You against

other the evolves, steps we’ll As and each those. the the of priorities update we’re on disclose year in continue to taking

penetration, And important we’ll They’ll our market So, be we obviously, ESG to customers, what are our believe disclosing or that’s technology, successes clearly our investors on for. looking initiatives penetration. to important that disclose we’re market those. either on

Got examples to it. the kind initiatives, might you some bi-fuel sense, part you your of at customers? be give of looking on and given And of the could what ESG from you’ve a aside some other us help maybe

our I contracts we’ve then got their mention customers highline securing on the renewable my now powered. power power looking also contracts. on power are that rigs, projects in highline didn’t narrative right And and several are at

that a possibility for zero rig. -- have would be almost a customer a So, a emissions to

gears, Okay, you in makes to the U.S. budgets going switching now you from sense. facilitate to in first then, and to mentioned half the XX% the their Do order obviously in to of have XX% that should year? start think to the that, by increase see we’re midyear E&PS U.S. capital activity adjustments And increasing

think with Because spending. for five I a I And any Well, warrants if I don’t think think the rigs. would a handful think capital chin be of that in don’t you expect their don’t capital increase. announcement that rigs, I on lead it, E&P increasing six to necessarily so. about or case, our Aaron,

getting kind was That’s at. of I what

Yes.

be flows, an to to their demonstrate customers. happening lot or at for add -- share or they additional to earmark they to as expect work our at returns investment they will right rigs. better can happen, what think, receipts improved answer debt demonstrate be free investor They’re the reduction, were start to they’ll of add it receipts above do And cash which expect it wells buybacks to think I not capital going margin, I is replace at that a and DUCs, going inventory through the or they start question, returns their think, sustained strong or be now. But, sacrifice to as $XX to I of strong though, if all is to both. show they’ll I dividends no I continue than, rigs $XX.

Our with Blake Wolfe next Gendron from question comes Research.

line is open. Your

I of mechanisms of away outside the older and super-spec ask SCR rigs, this really the the the half mechanism maybe and levels, that super-spec the and pricing. stacking older some increasing wondering wondering Considering be. X and scrap? potentially I and just morning talked think peer you spread would this maybe them those rigs scrapping getting just past of year have part wondering mean, of basically extent reason of the why terms contractors X start much never rigs. too your materialized of really of Tier all the versus sell of the think to math is, would U.S. I’m So, of And between in outlook just X, middle the was the through in this what can theoretically I’m Tier that utilization year. And back the Thanks. retirement for maybe which about gone in for just rapidly to pricing Tier how you rigs the maybe utilization pricing? activity hasn’t expanded for maybe some

Yes.

said. DC been drilling our achieve have exactly SCR pad don’t dragging I know So might walking rigs on hear rigs. the that I what seen super-spec, able really price with horizontal But, haven’t we’ve marketplace the in we to been the didn’t comments.

pad So, I’m utilization at being I’m not really super-spec closely of too their worried though by contractor rigs watching retired. contractor walking about rigs. looking

I market think, XXX I added rigs bottom. mean, we’ve really back is off tight. the

of utilization are rigs There regional some of the pricing power. dislocations is super-spec into I right territory think, the now. getting

wouldn’t to a we’re it got make Basin. example, right-sized the sense doing the in the the with well DJ the for move our rigs Permian Basin because rig DJ So, And right to in from we’ve rigs quite place.

is correction there. us So, mobility that helping out

once if it’s XX that see I get up. the used rigs more in of you’ll maybe rigs or handful I’m more -- sure Permian a not think, that

the to I a be think, market Permian. we’re much tighter in in that going

helpful. That’s

In addition, And the the performance-based if peer traction don’t contracts, comments, remember you’ve know centrally if you’ve contract opposed the I morning, pretty been, that I commerciality. to noted this of performance-based on side. some caught some correctly,

frankly, you quite you evolving? of how you’ve out, plays How Just think see it activity? wondering do it the up in against commerciality come base And tendering or this otherwise? customer receptivity do either if any

have do Precision performance right we in So, now. contracts

have U.S. than one We the customer and more basin one them than more in in

We’re this watching closely.

What you have a to just barrier I about don’t being a reset. that period And the the past -- on same up. for a shelf I’m contracts. a also sustained I get bid it supply performance remaining of time, ends where of say little this. seen still thing performance-based up think it once when other or a extreme. achieve new reset know skeptical ends bit you’d day We’re rates, gets don’t in I continuing is

play say hard it’s So, out. it’s to how going still to

avenues downwards keeping sustaining competitive can a if on not are we’re this. skeptical tell and with open pricing you certainly we on pressures We’re our no And to I I really contract on performance-based miss a initiatives trend technology initiatives. our that continues. technology that and competition here. no little still out going our our remain

So, la quite we’re for model, carte the for base la rig, add-ons for the working quite the with rate à carte well happy us. à day

That’s...

Yes.

And could deliver as rigs pricing Alpha wellbore go whatever efficiency in either ultimately, the and best rates, we’ll we have We’ll best here. the I said to Certainly, way those comments, the technology the go think be direction. And in performance. best best drilling, I it the our get Blake, think, strong delivered I ready is. model our tools have prepared analytics my placement, either to safety. the

in you for that and Understood. do back the the a there other see do That’s When And encouraging. contractors submitting? contract, is bid forth that regard? any KPIs performance-based you’re

the the assured theory game has lot term, operators a team procurement aspects. and you on. is rates negotiable by all can in of Every KPIs with game applied There theory rest

to turn closing no call are the further remarks. any I’d Honing over Dustin back questions. for to There like

XXXX in joining report speaking first quarter today’s everyone you you when results and forward you Thank call, to Great. Operator, may April. to we look disconnect. for

conference. gentlemen, conclude and does Ladies this the

day. may disconnect. have Everyone, a great You now