Precision Drilling (PDS) 22 Apr 212021 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Precision Drilling Corporation 2021 First Quarter Results Conference Call and Webcast. At this time, all participants' lines 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 conference over to your speaker today, Dustin Honing, Director of Investor Relations and Corporate Development. you. Thank sir. ahead go Please

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

comments financial our earnings. EBITDA of today such operating Some will refer non-IFRS and measures, to as

turn and other comments results. will information on an filings statements, measures, prospects quarter update risks and With to first for begin forward-looking risk Our results by financial certain will providing forward-looking follow I’ll and Carey include to and uncertainties. these Precision’s our regulatory by outlook. future are operational see today’s subject regarding discussing more call factors. which it Kevin Please and statements you, then release Carey. will financial news that,

Dustin. you, Thank

Our XXXX. first adjusted and during decrease of million quarter in activity primarily XX% expense $X million Also in quarter in all payments. the EBITDA $XX in decrease from drilling The results a in share is compensation quarter based first regions. adjusted from the EBITDA CEWS in decreased included EBITDA of $XX adjusted assistance million

the Canadian on and jobs beyond budget this employment supports for the during that a Canada within its Federal applaud current presented June extend program Precision expiration. We to and utilized organization. the Canadian included CEWS the program proposal employment was in pandemic. reminder, program Federal a its to impact our this has recent As program Government CEWS preserve The supporting Government

from for how In we we greater on in will impact quarter February. averaged firm Daily QX, The an but activity is margins costs the would have details earned up, QX US$XXXX of contracted the lower additional from Precision activated to higher program year-to-date XX idle operating of Precision startup drilling expect communicated during daily X US$XXXX, decrease be balance by XX year, margins than for QX this US$XXXX idle We lower will what lower now the QX. driven in revenue to but costs were affect when primarily and decrease relating rates but Big than increase activity. by guidance with the U.S. rigs Precision and and contracted driven difference costs. operating in due the provide in to QX. startup turnkey of mostly rigs rigs a impacts turnkey margins rigs operating the day from been

day. XX I'll in cost expect turnkey our In normalized such IBC, between last and the September peak make be year. For a at in activity absent startup and rigs rigs decreased $XXX trough IBC XXXX few comments U.S. continue will with XX margins, An activity turnkey on along startup November. no that revenue activity costs reached in per QX we to $XXX and

to have to over March or of the period, year top and last components. rigs and part date. trough of and months condition XX at were XX start all had as such first reactivated rigs rig During certify in critical XX recruits, year incur since later working stacked in Precision sometimes those cold to and operating XXXX. in the that engines, inspect of the substantially rigs good us last in working were rig Activating mobilize cost the restart we some rigs drive be require consumables preserved a components reactivated

been each activate to cost approximately average the $XXX,XXX $XXX,XXX. found have rig We has to

of is incurred costs these incurred operations. some it work to few of rig months goes are and first the before of in Some the

the averaged $XXX first $XXXX startup from a supported impacts, this on quarter would assistance we $XXXX, rigs the drilling Daily of in QX CEWS the XX rigs were of the our last for cost to XXXX. XX In decrease lower Absent offsetting fixed by an $XXX than expect next have from Precision operating quarter, of in XXXX. as margins increase year. were level lower Canada, absorption. quarter rigs cost and We operating U.S. focus activity Margins QX costs margins fleet. XX strict of in XX add been to CEWS or the continue a

expect reduction year CEWS QX, last per one-time of higher absent day to $XXX up cost For from $XXXX increased compared margins fixed we activity. cost initiatives, due be with to and recoveries absorption to

$XXXX. Capital $X year the quarter. industry hours and related the first this reference, for year. this the quarter rates million for in restructuring This contracted Well which X% technologies of and C&P mute the supporting million year from quarter. one-time in investment quarter abandonment XX% of the charges and Adjusted million, Internationally, and from lower and rigs. upgrade program prior $XX guidance structure, approximately service in reflecting was million hours. prior our operating impacted drilling operating increase full was quarter were due Precision positively $XX XXXX down of International to improved activity, adjusted support, recoveries day expenditures XXXX cost margins the quarter daily work prior approximately were remains In segment, EBITDA rig for $XX million, infrastructure activity $X.X our $X.X anticipated current by CEWS to were CEWS approximately sustaining expansion, average our in well averaged lower customer EBITDA mix QX [ph] our upgrades. For million and of US$XXXX XXX% represented and rig X year increase in day year revenue. were absent per for US$XX,XXX comprised

April XX of the an year we contracts hand of full had As quarter XX, XX and average in average the second for contracts an of for XXXX.

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

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

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

During range totaling year. the over to meeting death reduction we to reduced reduction quarter total subsequent $XXX by year-to-date $XX and million million additional million $XXX the reduction $XX end for debt debt debt million halfway million our target of an quarter this made to $XX

Our of we target our XXXX $XXX track or since already debt exceed reduced long-term to reduction capital substantially on meet and target our we of by between to reduction XXXX, debt where debt allocation the debt remain reduction XXXX. and million program remains million beginning and weighted have $XXX XXXX

For we operations. free generating flow expect XXXX through continue cash to

build We $XX expect break capital benefit million spring working Canadian up from QX. some capital during activity release working after the QX in with in lower

our has For XXXX been by working build capital has driven QX reference, the $XX higher trough million since in activity. which been approximately

our year. SG&A at million before and guidance remains $XXX the unchanged $XX depreciation, expense respectively for For interest share-based for million, million and expense XXXX compensation $XX [ph]

in from in over as portion quarter settled equity This charge accounting result incurred effective the settled, expense volatility as remain change a share X% We taxes in based equity change our our our compensation a tax and to share in treatment will note, we reported based XX% and million treatment With I cash previously be to share reported our Of now of range. an result $X will to the more to low for compensation introduce a future call expect of plans of increased a that, additional the in of the the will to compensation of turn stock rate lower price. cash dilution Kevin. bit based future.

for work and from to We're recovery towards growing in few ago. a has clocks our [indiscernible] are Demand Without cycle drawing firmly believe services crude and a of prices demand any joint to excess both oil voluntary generally while stronger good gas be global rapidly will continues trending crude XXXX. economy inventories coming the see through increasing Carey opens. doubt year fundamentals the you, these pricing rebound. many the progresses. We commodity off afternoon. gradually increase substantially Thank cycles, even recovery we improved the for land for And [ph] and pre-pandemic the firm demand the weeks we of midst of of of indicators declining. the as are just recovery Global the for services levels strong our as

to of industry human across drilling and eliminate digital set the the while scale here However, our in future variance, wrist way speed of industry. customers, but and most investor enabling returns growth gas and as walk today of carefully gas cost oil stay. improvements, offerings this to their is the our importantly, drives technology and customers error and discipline based oil Prioritizing Precisions financial complete a programs. reductions by producers by performance managing

So let technologies. and updating with me success digital you by on customer suite begin we're the Alpha our having adoption

beginning performance First We indicator, that we year. the also these X the for adoption the growth of strong noted the share the view and market customer utilizing efficiency, will very new as the feasibility since sequential provides leading technologies drive customers Precision.

with doubling XX% commercialized this from apps during XXXX doable over increased also quarter of the mentioned suite and apps automation XX during growth to we last our apps in for sequential pace XX additional the We in AlphaApps first year days We've as platform. [indiscernible] also revenue of X days the the quarter. resulted

delivering in digital draw Importantly, emissions importantly quality while operations. fuel repeatability drilling better consumption wells, our consistently reduced customers our additional to is our industrial predictable scale and Alpha reduced technology allowing GHG costs,

quarter, utilizes by data engineers, drilling Now the we first to on process and the plan placement providing AlphaAnalytics Through comprehensively customer XXXX built days. recommendations. drilling Precisions offset improve AlphaAnalytics analyze performance staff experienced world almost who for drilling

value this customers service. view high as Our a

We accelerate. expect customer to adoption

reduction If field specific you find Alpha of studies on website. more our you over dozen benefits a technologies, the on can and of cost want case our efficiency suite details

to I'll man the benefit demand of shape. update, organizational business business our of listeners was Most the would levels. in sequentially on that to our is leverage first out Canadian which quarter over comprehensive suggesting service and customer Of up the there strong and years. our couple in due returning can note, in to of as that recovery improvements the a a start operating call sharp our of past to workers demand. undertook insights segment we this pre-pandemic know will point the this XX,XXX programs federal efforts Turning during well offers reduction well this increase experiencing deliver XX% XX% customer be Also Precision with to cost service takes underlying hours well activity restructuring

achieved throughout of hours And in April on the XXXX last business on strong of the stay will day to we exceeded year demand XX we expect the monthly month the the zero today Xst full same have reminder, close our notably XXXX. service by another of day year. We compared rigs hours as and April, running

prices. that nicely seeing restore obviously into business we’re So, the rebound commodity

business expect activity continue to deliver flow leverage We remains is and strong. operational excellent will this track on cash strong to as free the demonstrate

in little this with U.S., U.S. rigs the by recovered June. well reach operating activity guidance now to end suggests Moving drilling of a the XX prior we Precision our than we expected level ahead by of the faster which that mid-April,

automation earlier, see with we on including our products Alpha XX% our AlphaApps. Alpha continue and mentioned U.S. As technology uptake strong to rigs of

the activities through matching exhausted drilling completion inventory by is at to documentaries customers uncompleted later We levels there our or excess Current the believe sustain year. volumes. of are as even closely activity in production rig We monitor current increase wells. this when completions the to rates place we are levels work drilled not oil to demand continue

quarter rigs. rates to strong with edge and $XXXX activations reactivated rigs this into through premiums end preference have through believe that recently charge for in the rig quarter our to have they XXs see and the activity year. opportunities move We customers term first From pricing the third upper perspective, expect the leading bottomed for later these further repriced hot a of a as our what visibility potential we the we

full restarting quarter. long-term activate linger rigs. experienced costs I we operation, as that Now, the quickly each the expect during the these rigs these we Carey mentioned as of line to cost averages. will our with I am transitory normalize costs first to rigs activation return in confident Yet, additional

contracts effects of economical pandemic cost growing as recovery of increased less plans day concern a cost of of and roughly provide concern. Labor of labor of the potential most is rigs. inflationary increase a customer inflation our for is our the stimulus labor for daily accounts cost Now operating the half rates

believe reinforces will and some miscellaneous leveraging cost impact of of We supply year as rig advantage the operating expendables, materials operational the importance inflation parts. factors. scale the procurement Steel, in of I spares volume inflationary scale And likely segment. a these product help repair commodity chain progresses. is half will other driller including The our procured and these potential competitive our costs key land our or the this think mitigate as another

the offset our believe impacts be and these expected costs be inflation customers. drilling value ultimately increases to rate across we Now by the will understood of chain will

will very We inflation and our to the keep progresses. on a watch margins expect we close as still improve year

rigs performance second to in international has are we Encouragingly, opportunities three to to half and of Turning our in our financial this industry business, segment the expectation stable. Kuwait tender mentioned pretender opportunities release, possibly reactivate that of emerge. remained as rig our commenced will rigs curtailments. expecting It country work develop in all to press track that in will the seems our see once the are begin forward the Saudi reactivated, related but OPEC of In is Kuwait. visibility all that clear, less of the reduction IBC export is activations Arabia in

Moving break-up period. year. spring our seasonal slowdown last less this Canada, we’re operating rigs we this today of at time press to have XX and the in that mentioned release compares XX the than to middle in We

and through fourth and indications we trend close recovery again rigs expect year’s and the summer and quarter. period that for last activity than operating, twice exit with expect normal have into QX more to up We will QX commitments to XX

over challenged in for see the months in year been recovery opportunities and Canadian XX fully factors. pricing to would the past later has expect we inflationary the market, While any price recover

Duvernay as Canada, continue market we Montney provides positioning Canadian our utilization customer total and and expect expect an strong programs and of on remains debt free We the Alpha source our also for company’s full seek The in of products strong to super rigs. flow the these levels. our rigs, triple digital excellent in joint very uptake cash reducing

in with mentioned, meet Carey achieved XXXX our reduction ability As we $XX targets. of already confident highly reduction debt million to exceed our remain debt or

the emission our be customer based Canada gas natural transitioning U.S. our energy battery priority, have to will we Moving a or generating system have collaboration several quarter. and on we drilling hybrid Canada during projects and In U.S. diesel in we gas both deploying third underway a as rig reduction to In several reactivate natural GHG on rigs. storage XXX% the the gas third customers blended power systems we

direct in During the quarter field we monitor deploy a real-time rig based GHG to emission monitoring precisely the system estimates. emission rig validate

have the and thanking dealt have Precision and team service the dedication related for gas by their the months. completely also especially GHG risk partnerships eliminating requirements past with We our from our Precision virus Drilling which delivered people emissions of due spreads for and further similar the to up and to We to partnership, as we emissions. and of field and Precision drilling many investment our both Alpha as to green the interruptions several solutions and our drive perseverance, pandemic that high-quality field risk develop oil challenges I’ll the green implemented successfully reducing power management a believe solution eventually participants our hard conclude contributor has upstream solutions utilized this employees critical at program the rigs. are strong will XX industry we the we We several be Products work to our executed. has effective team I'm the down all is challenges. partnerships any strategy proud take developing of providers and Digital believe the work to develop avoided just and industry. the

now team. the call the you So, back the for to will thank full to Precision I operator turn questions.

Your Taylor question Zurcher Holt. comes Tudor Instructions] first from with [Operator & Pickering

open. is line Your

good Hey, I wanted on a to start pricing. asking you. thank afternoon and by question Kevin,

the a rigs rest the hot your get $XXXX at as comment all all guess day able just You out I the made or some same least I I to a doing are the thing versus that the and wonder, other command rigs reactivating peers U.S. rigs of are of be you'll hot. rest think the market the they that for market, that in mean to premium And there $XXXX you are well.

what bit could hoping was I mean be a are and by $XXXX you explain there you color So just that you would more any measuring against, helpful? $XXXX a that to What premium day? so

Taylor. sure for Yes,

bottom were of off from think stat so that XXXX I kind as the and in has operations. we evolved rigs activated market the this activated being into industry of rigs,

rigs keep book so XX-day term. the and trying short we on next when in comment depending the rigs day are some a out well reprice XX-day intense. those kind going for of We cold drill and get fairly rates the sometimes have generally put those about of that $XXXX Once a talk first $XXXX We've that are that little the that was expect activation and of maybe near some development over getting contracts. crews contracts We to lower to could Competition will through be range their been little up lots contract leading to higher of rigs. rigs, and on a stacked rigs rigs. When sometimes term, rig availability rig teens, contracts like those are contracts, premium We're a are of premium back those again. bringing mid back kind timing. contract, running that’s on that and its location those been those edge more,

input you day, day talked you to about makes margin $XXXX yes, that inflation, through clear about $XXXX you would or talking be some when be just pure be recovery And are as well? sense. some to fall $XXXX a cost Okay, and would labor that a or cost that $XXXX that identify

thought really fall that margin here as We pure through.

Okay, okay.

coming know leadership need see strong a day sustainable industry on of off the we certainly getting the bottom to range. unsustainable for and You back into rates were rates

to Okay east being on is and also earlier I to and of early going my is, and was second back timeline some turning you timeline the talked activities talked eventually work the in rig tendering helpful? color work, potential followup internationally what around it Kuwait in relates eventually typical as typical three and the there could tendering be exercises would middle get you about the contract about some these of all for any going and through the back in the the into us to half, but hoping you rigs help

will give kind some July say information hoped, Kuwait more have guidance now lot sure I in is all analytics did to stay might QX tender We conference specifications. it's may so of a the rigs year. meet I'd that had our of the of available surveys pre-tendering for all work we The new meet have come all in just rigs be work, we specifications. listen and us build the to were make and call. right exactly Certainly, said updates. Likely the end summer tuned the likely we

So confident that we're competitive quite we will these rigs. quite on be

I that’s will Awful, you. helpful. Thank back. it turn

you. Thank

comes Syed Markets. Waqar Your question ATB from next Capital from

line open. is Your

discussion up have forties is mentioned that late already or you some contracts could in those Are my like rig Thanks spoken for in Kevin, by the right mode now? or your high question. -- for do all this be rigs is taking activity just year. that you this into of kind the U.S.

that bit the Waqar, I a see we out of little and have we it maybe combination discussions, a there. it's open have there. [indiscernible] ongoing bids Customer reading out of think we

public demand is as some involved the this still from well? or incremental and seeing you E&Ps privates getting Okay, are

privates, about But I looking the has think know but this you so think two-thirds more demonstrate far and quarters likely forward good And the we been I publics. year Still for of once similar. seen weighted a rig would there's the of waiting free think moving that few one privates the they second and publics in they couple third what room to into we've about flow, towards start will. half year, cash which activations be

publics, expect Halliburton they in about so or up yesterday mentioned going X% their year-over-year. sense? XX% maybe commenting to to be budgets X% now discussions U.S. call it's by down E&P that year-over-year. with that Now that actually In Previously do you be privates your and or were get so they to

of Well day to our course we game trying on Waqar, run usually are to last they because rates. hear

expect sixties, flow these hear likely sense. the than budgets and cash our other U.S. WTI last guidance spending created probably less know And in both customers during the prices were forties some and certainly, we're If makes So to the demonstrate strong year. fifties very but or services QX you not again capital realize it QX. that forward in listen might, on we when were Canada free obviously during the late will we

of So, money back we drilling. into think some that comes

year Good, and the E&Ps be pick that expectation late activity up good, the may public year's that when not year's is in yes November-December in the this reported may next in CapEx number number number.

kind that's thinking So from discussions. their of

case. hopefully So, that's I all have. That's the

way we thing forever, is E&P support go We one its say are work down. to inventory to uncompleted going to inadequate production their customers using was support going current our do wells that's that rates right can't drilling levels. see to are on certain that current now, of I production of

I Good, good, all very that's you Thank have. Thank yes. you, much.

Great, thank you.

Cole Your question Stifel. from with Pereira next comes

Your open. line is

Good morning, everyone.

Hi Cole.

start to on wanted margins. just I

U.S. I with But the they're like of the down next the will I a quarter, about is time to economy startup in to startup bit we I the going mean the costs. year, rest costs sounds all be which at So, expect same to of there some scale. of the take it continue, understandable think as step a sort but mean obviously

expect bit of as kind you in should or you of a that do about even that? how rigs a more recovery activate think metric mean I So, we

Cole. it thinking are I think the about way, right you

up. You We've been spot first in bottomed mentioned, know, quarter. think that the we fired Kevin have got more pricing that rigs

more. the rig have push startup the costs, correct up about days market back rigs into pricing will hot get over activity bit as also that we to spread a count. be you're more should We And which

So, different we margins start third the after quarter. quarter, would industry the the will expect for altogether the in if fundamentals second expanding

helpful, that's Okay, thanks. perfect,

So, think these about -- rigs? you assume much I as if did to how international you quantify obviously spend to you able it would are need you rig we CapEx contracted? might And I have to you much tenders, mean activate spend do the how might be to that think

Cole, question. that’s will CapEx great be involved. a There

thinking contract have of a the million time but will that We -- things we idle be We're and rigs be that’s $X quickly in little stocks that a ages, first so wells recovered to been on to re-certifications, the have for their rig. now that Xyears like those old, going range over year before year. BOP some there the very [ph]. will $X per expect in based million be likely would still in And

So we is years in measured the would expect contract duration not quarters.

you cost thinking about helpful, rate Would as That's that [ph] on be in how about immaterial are how like mean, you standpoint? monitor model it from think day relatively a it perspective? should I from add just about or perfect. sort to And pilot, you thinking the of the we thanks. do GHE be near that? a on a revenue Okay, I'm curious just term

that in of X the the normal some a of it partnering the finding whether footprint But you very it or doing us. depend all We on our -- be things the reducing recovery X reduce capital, we're capital involves length I recovery customers we year, tell doing the part to basis if scope, that Yes, years years. kind provide for of but as upgrade and really see we of would with that's will ways look important window is value environmental to around, for footprint our in the capital we X I on contract. think going

got Okay, you.

your answer that question? Does

yes, works. that Yes,

some given even bonds yourself terming in about think from near of the down the maybe mean, debt sheet perspective, right paying then term that the facility out credit more year? balance trading more half in do you the the So, a are now, where and of I latter see

generating Yes, optionality. use so free we're position a have can we for that flow we're we in reduction. where debt Obviously cash

have cash healthy balance. a We

we revolver little a our have on par XX callable are at our left of this December We and have bit notes balance in that year. of

XX call look throughout to to and potentially to purchases year in next, those the XX reduction of terms revolver call we have or down it of market some the So, And year meet the at open term debt will our the we'll make targets. notes end in the pay point at longer the ability is should say yield out XX maturities. we away the probably I execute months, the at some now would soon or too right actually think little been of it term and longer likely a actually that We term to high transaction we that XX it's a and have bit notes. chipping near

smaller than today. we as So, balances they be move along in will are time those

I'll turn answers. the good from it for that's That's back. all Thanks me, great, color. Okay

Cole. Thanks

Your Partners. comes Energy next with John Daniel Daniel question from

Your line open. is

thank including you guys, me. for Hey

John. Hey,

lock that those Kevin, progression be your elaborate opportunities any just you Just in just forties. the for it's strip on nice on or comments, are on it Can color would on to to XXXX? the trying of a activity the is your high where they given appreciated? duration

lock you know blend go about XX-month some in, those We're always have of leading-edge longer a obviously kind but keep know period beyond trying -- short you a customers kind contracts. We of term of medium find rates going to a to few and for cycle. time, of of

of market we anxious see this too direction, in not but contracts rollover. to are type we exposed are either We rising

Okay, understandable. yes

give are year. a would that you less didn’t [ph] I answer, on than I tell really but the contracts liability you of most

be if want where things if why they in for know understanding these would but because don't to And that you they where conceptually of longer? year to term? want I people pricing for lock I the just, more than strip asking but are less a understand now be, today, is now the

Very have identified XXXX their budget few companies yet.

Yes.

So, the not beyond XXXX. want this looking months first into few

it. got Okay,

year going over And sitting they to before I of think from where understand recover committed trying they're are this to really be XXXX the financially to they too XXXX. and still [indiscernible] get course

tell Although long is 'XX you on I robust. quite range planning would looking the

you of -- rates. in be to seems alluded stuff course the I of you know, rising people Right. to me trying know, of quarter could ahead that lock -- that and it don’t Waqar to you get to know want that, fourth just guys I up then in as, to your plays the rising if to it. there a people rush equals just terms and

they're every And is a know they That's $XX,XXX a know against what's So, XX-day or meaningful to is $X back they're so if $XXXX might a day probably $XXXX penny it getting a cycle. and or matters. But drilling save rig million you in you right lot just for sure previous going now into be $X less rigs million recovery well, rig any cost been have the wells. only than more.

at on always at, right look they but agree, I look an day, AFE they number that [ph] rate, first typically. thing

rising last price. They I do, probably would penny your tell but they the a important yes, than in off tide that, more a do rig you good is getting saving

to expansion? United on just service think hear big as Absolutely, no, of sort opportunities the business Last Kevin, your don't States it for well no, that. the relates I I in one. picture thoughts

don't North footprint We natural into extension nothing, really have is leverages expansion that a beyond Dakota, really pressing Southern which we But activity nothing the our Saskatchewan our capabilities. very see that. small of beyond

guys. got. I you, Thank all that's Okay,

you, Thank John.

Capital Keith next comes with from Mackey Your RBC Markets. question

is open. line Your

everyone. afternoon Hi, good

Keith. Hi,

through so $X one sense you down a program for second that EBITDA appreciate comments potentially to QX have might comments upswing on you of like, But it? pretty -- it make in there that the restructuring half the is QX? to in year for be could the context of appreciate question substantial would make strategy we're million any or is million holding Like, be just a ramps on the to an Any and sensitive, could bit is capability it pretty, potentially as the what subsidies wage given would be the $XX helpful? some I you effect done? or

a that we in able a that of in of portion most now would the by the the drilling been today, large servicing. did little that not I here, well could service would in that And are And But cheaper. here, running we preserve that, the field that kind services company necessary. have tell across of think the restructuring that is drilling earned most add Well, Keith, actually rigs But cheaper of you is through us getting companies little the and being operations fact, value a without and the we rigs value cheaper. couple were right say jobs of operating have the you I'd think program. to I things did otherwise, maybe is a

down, So I'd as look relief increased we those, the higher to cost. reflect rates as those expected will start programs push wind likely to to

set I also on maybe follow it reclamation site ramp was of second that year, into any up in that, now? plays sort the it in kind up up if potential program just the spending as way your Got expect you've and of the footprint, got a wondering that, half some the of

performance really our through, right in about reclamation so now all right and increase good enthusiastic pretty awards, right is to bottom that we've servicing, we're business well, that any for line flow you the very in us. well tell blanketing got now been to I've

be continue we'll the we think to win service in to more demand increasing conventional support I the field awards, for remediation well work. see and of those pushing hard

Got it.

me. much. Okay, that's it from very Thanks

right. All Thanks, Keith.

Dan next comes [indiscernible] from [Operator Morgan question at Stanley. Instructions] Your

open. line is Your

maybe budgets activity. kind to of your line similar sense pick a mode, well, of you up in to lot or whether the been or as operators U.S. Canada, kind maintenance kind are I a about, characterize production how ask to There's operators in of to going of if stick to in wanted going talk that managing but the mode are in strategy in market? of get with Canadian of the you kind just would customers, that do conversations maintenance questioning, we're

first Dan, sort I OPEC were or or collapse. happened of probably transition where a really XXXX three the that, or the mode, earlier Canada, as that forced XXXX in into maintenance would early discipline E&Ps after fiscal say years two as

think running I So it's in Canada. longer

generate the ways and do trying returns, ways develop I good Canada shoulder are think find capital to in to now both, to modest E&Ps find growth.

certainly, a grow the not eke synergies but going some couple we're in extremely as of XXXX our You've are off experienced of low to last to transactions we E&P the couple activity seen out that see And necessarily levels come of spending. production, up up transactions of capital increased Canada designed a of kind year.

kind you if and was just given more lot what like, you could U.S. in activity count the maintenance maintenance to, said Canada in answer of the in below is, a we're that of for rig point that but might levels, is complex yes, it bogey running up wondering resource follow levels. Got my you any there's think the maintenance activity a Canada? seasonality represent kind Obviously, in plays,

wet, are and than to heavy producers. the essentially the being basin, very last daily shipped over hydrocarbons a around Canada our hard it's mix of the the to been it's and I pipelines triples to the oil a emphasis as that has bit those produced, but that piped couple gas to little for oil was comments for, paid referred being and gas being the but A natural Montney the with that, Duvernay used is a are and my wells what different going actually And natural of to in heavy years liquids because still U.S. that's, it's are gets

think and room a you've got natural three are So be got constructive still quite up I there's and gas with got and operating you've now see natural oil. gas in mode, disciplined. disciplined move complex gas, and liquids, activity oil Canadian All right to the you've

I'll the thanks back. turn Understood, a color. it for lot

you. Thank

Your next Jeff question & from Fetterly Peters comes Company. with

line open. Your is

everyone. afternoon, Good

on technology Just the a side. quick question followup

Alpha day impact some laid successes emission how the the about emissions obviously piece? margins seeing out and the first your think you're but from should on Alpha, across of also stuff, adoption and So rates both and given we you've the

within So on like it be natural at the to a look engine emission space, a we'll one back, I'll contract be we'll rig, that start stretches a operating payback And or economics, gas could upgrade. power battery which up it's it unlikely addition that, capital we there. two years. three If the make to period. for years, look the means typical an And year, it be could

that capital capital see the recovered. a rig, there's to to we'd want So enhancement

with reduction being our So efforts. in view we us emission customers GHG those partners

natural that talked even the call, the think I had were a those couple some of about of those last for and specific gas upgrades. upgrades rig to we footprint paid on both Now, and where conversions we did the our customers

back ago. is we great in $XXXX four for I day the Canadian that we per on and per AlphaAutomation coming price has introduced price U.S. in originally $XXXX to assets, The U.S. into half, this and the value Now can bit. dive years Alpha, a a Canada day It's posted little the price in stuck question three market.

days. know, a You need us XXX that we price that's to allows capital to after for essentially within EBITDA that is it investments recover couple any make essentially And us.

costs a days but per the generally, in the all sharing the value rate revenue so from per there's anywhere for if a an the for On XX, XXX if it of is to of an do revenue model EBITDA. charging apps, about partner, operating we're by optimization we app, agreement, for it's the day up range $X,XXX the on charging that customers. In optimization some for cases, us maybe we our our we're then comes depending day, AlphaAnalytics, revenue creates. our although On the app owned the app, own to some to

base day So the these to rate cost. adders are all per

offerings, rig carte are a rig on happening need rig top there being bid But see on not basis. go no So on the Jeff a is technology compete what the la simply the down we adders price of per and technology offerings. to of may competition that our these all we're on is the to

XX So the running rate being conceptually, that per have plus you today? we day rigs base $XXXX consistently should think the about applied across

[indiscernible] our super time of in gave over now. both less we on and I a But Canada triples, Canadian XX% full we rate about utilization. towards fleets that, than it's give but U.S. trend on think that will U.S. didn't XX% I right expect rate

on room capital that in budget, faster some to you Okay. million up your $XX potential the the than or Thank to obviously and is previously earlier capital ramping about for talked maintenance tied internationally? you program built fleet ignoring there comment the about needs CapEx the there is U.S. the side expand had reactivations some

it’s that in Carey. plan steady Jeff, increase a That's our the million we've how of $XX year. capital in rig Hey throughout would incorporates it. I count that activity U.S. say budgeted

probably to what there'll little a be kind we we're if a the low of dollars. millions sharp that's activity single higher an of digits, of XXs like Now ramp, to high get year, the there's increase, level end than an Kevin towards guided would talking bit but of

that In be would $X guided? currently per the $X rig million million to that's International that XX incremental to for number the

a would with That associated be contract. signing long-term

for Yes, the color. okay, thanks

Your next Dan of Canadian question comes from Healing Press. [ph]

open. is line Your

Joe terms in Thanks be? years? on the going emission a the customers eight guys. higher question. targets by to was happen doing I things XXXX. while of is some and Biden a heard But half my looking call I they're over the expect announcing level next, Precision and Precision Hi, the Drilling that on to and taking Drilling bigger and Trudeau for Justin what's help from I the reduce specifically Canada emissions And to for comment for U.S. impact wonder drilling. what can industry

I'm achieve, targets the Canada extremely plan aggressive being behind out U.S. I the issue obviously targets, you past is power there's absence in and by industrial think but better electric immediately. are to start or I of support. field accomplish, power fiction, the an these done powered as the did drilling these Dan, get rigs leaders with And But I see easy essentially laid to process to and having with is to almost the they're grid to that case, grid target science more that's to likely the it industrialized, our in only rigs. applied And to And we fields with that in mature them and take are understand agree the the solutions adequate rig. emissions the that. zero there expect And, that objectives grade in more for fields, I sight. think become, trying not to we drilling We've

getting certainly is about rig a zero, and getting triple or one zero from convert to to target our from are perspective, are near small So a powered to very amount safe XX% the super of think And or XX% which rigs to in powered drilling diesel reductions our I achievable. rig of Highline talked case, capital. that

the doing Okay, should government drilling companies to get be there companies that a the follow just as for things and these targets? and the gas oil to up, are them

looking should for think be include at incubators are supports and the energy to oil the, cells those everything team wind to my I know is or we're technology is think looking from, and to government that very I all the at. I now. gas that solar avenues of technology open any industry seek I giving the And and that at alternative the And that alternative would of highline that power hard. hard fuel think power. for looking opportunities power But have Federal us hydrogen out, R&D assistance we sources,

Okay, thanks very much.

Dan. Great, thanks

to further Dustin this Honing There at turn closing the questions for back no call remarks. I'll are time.

We we with call. second Thank when today's results Thank you, you everyone to for you. Denise joining report speaking disconnect. you forward look may in July. quarter

today’s conference call. concludes This

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