Precision Drilling (PDS) 30 Apr 222022 Q1 Earnings call transcript

Good day and thank you for standing by. Welcome to the Precision Drilling Corporation 2022 First Quarter 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. now today, hand President Carey Financial would to conference and I Officer. speaker your Ford, Instructions] like the to over Chief [Operator Senior Vice ahead. go Please

in our XXXX refer to Thanks, results release press me filings some with regulatory will more release dollars and through indicated. Please an to reported include will comments Kevin Prior Canadian and a statements information Chief and are morning. for Drilling's and future Shannon, its providing on our afternoon. Kevin and which is call factors. see results. operational note Precision's first Welcome to I subject earlier Also, President today risk financial Officer. and regarding first and webcast. this outlook news good today non-IFRS results prospects, quarter update, otherwise risks that a measures Executive note quarter to earnings review financial Neveu, number Participating and first conference other and results are forward-looking measures, Precision unless financial the forward-looking please Precision financial our of statements quarter Please will of uncertainties.

reflect increasing quarter even margins a start first year results good in with financial stronger results Our leading-edge indicators the of half activity, year. the to and rates to day very and pointing the second

million. In without $XX $XXX EBITDA XX% improved from compensation business have decreased in performance idle-but-contracted million, XX% which from lower hot charge our are the of Precision for increase results EBITDA of quarter. or guidance decrease operating And first crews EBITDA was from and than $XX QX XXXX. during daily would absent were of provided rigs primarily million due quarter a from dramatically from an QX first normalized in the Although QX. adjusted XXXX. to share-based drilling been QX, staffing the margins million US$X,XXX slightly to U.S., adjusted The first the start-up six The XXXX. accrual build costs any flat Revenue XXXX, averaged adjusted $XX the XX from quarter turnkey the quarter, impact additional essentially increase margins in of an rigs activity the rigs quarter

in expect drilling to increase technology approximately QX from increase $X,XXX the rigs, XXXX. continue rigs, we an improved through QX absent absorption, margins and of of With cost been we strict and have normalized increase were activity margins quarter spot rates, QX. QX, a averaged sequentially. supported expanding Precision $XXX the from repricing For expect by than were the rigs would day. day for prior impact cost CEWS an year, XX the to $X,XXX, fixed margins of normalized per $XXX margins second In higher XX absorption the pull-through, Canada, from greater year. half of $X,XXX day fixed Higher control operating guided Daily higher market XXXX approximately than and margins cost

improved QX, up compared of pricing last year and cost $XXX approximately we margins CEWS onetime to expect cost per and day be due recoveries For with fixed absorption. absent to

to increased For six compared averaged CEWS approximately current the rates lower were rigs. in International due QX were the day XX% reference, subsidy drilling approximately of of last year. operating US$XX,XXX quarter. and abandonment of results in improved included Adjusted activity for the Of expiration pricing, for Precision well Internationally, sustaining in anticipated absent than zero recoveries margins and $X,XXX. relates Capital quarter and EBITDA for increase $X of quarter. Alpha year Technologies. hours in reflecting payments year XXXX, prior million $XX prior expenditures daily adjusted average quarter to $XXX guidance upgrades and and XXXX activity this to onetime US$X,XXX million, represented quarter million $XX down year EBITDA expansion, CEWS for contracted $X.X by million drilling hours were note, improved In the contracts. our infrastructure rig supporting comprised which has $XX XX% $XX well and and to million, was from QX compared industry million our X.X% positively in work investments to services. impacted the higher was our our XXXX for full demand the for and service operating million, But C&P upgrade segment,

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

term XX signed contracts have year-to-date. We

sheet. Moving the to balance

reflect results draw, negative pay revolver revolver and this happening to and QX expect is down the revolver we down quarter our working QX of and flow time, second by in draw summer. the a cash through majority While pay capital unwind real

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

is of ratio X.X%. average X.Xx is to cost approximately debt net Our and debt XX-month EBITDA trailing

debt expense adjusted of net before an share-based our to our expect to X.Xx. toward X.Xx. credit covenants quarter facility goal with further to be to the our below year-end of remain of EBITDA into all We first compensation by in Xx to interest coverage compliance XXXX We with ratio closer decline EBITDA and in

million by before XX% shareholders. cash payments XXXX We to over XXXX debt committed principal allocating flow between to and directly are free XX% to of reducing and $XXX

target reduction XXXX is debt $XX million. for Our

we we million lower For incurred approximately year-end spring million in free lower working to or in up capital from XXXX, flow QX. build with XXXX with release operations customer expect we QX expect and by to Canadian From the bill benefit working $XX $XX cash during capital generate than expect catch collections. activity breakup to to to and XXXX, through year-end

remains compensation to SG&A $XX for the million same of approximately guidance -- for XXXX to and before million Our $XX $XXX $XX share-based expense. million million depreciation at

be to approximately Kevin. taxes the comments. to interest over rate X%. the for to million opening We remain hand and call effective concludes $XX be expect our with my That cash to approximately tax year low expense I'll cash

good and Carey, you, afternoon. Thank

As in segments business demand customer our earlier, in to seeing geographies. is all services for our strong our high-performance continues high-value and all Carey this grow. We're mentioned strength

taking the the have Our and ongoing this fleet a With Today, some year. last in are There's up step supply rigs evident improve continues likewise growth the Triple of the rigs lower next added the XX rising apparent call, to States, to the in range, in customers our of the to most higher beginning no Leading-edge I our we drill secure for been per rates customers trajectory the in XX and further later Since change contracts rates, year the wells sense our XX sign most utilization conference our of a rates is to rates urgency shortages of ST-XXXX reach responding. we mentioned at we services path the longer. question long Super the United to negotiations, XX day activations to to in rigs the and excluding our we've is see into and to US$XX,XXX XX charge months shape. these have led tightening trended year. our rig operating leading-edge customer rig customers continue earlier. have access rig a that of this into became X willing to from expect contracted This Alpha have contracts horizontal handful XXXX the with late term quarter. recently cases, through for is low visibility with rates a term signed course high-spec the to at rigs over and those and equipped

to Turning Canada.

levels. For XXXX the we experienced first strong quarter, activity demand customer matching

the extended spring drilling XX% breakup, midst into to customers compared trend. year. period, this operating we winter as quarter driving our today last in Even last Importantly, up have almost XX of first the time continuing XX traditional spring well year, breakup the program the activity rigs from

strong a and and there. month almost customer for bookings be rig as May with the which of as will starting Our up first early a discussions week scheduled ramping second half, from point activations several soon to

only activity busiest since second QX memory, be season winter half surpass and will XXXX. will the expect second time We the this in for the

the oil I Super to our strong demand rig walking heavy mentioned XX also be Single QX which our unique Super momentum. other highest pad fully expect this rigs. demand level We the and I'll gaining utilized Single our Super drive Singles, play in will fleet and demand is oil As summer rigs in particularly includes Hills known Super customer and conventional is Precision's the since for see And fall. we Clearwater our for in remind through and to Canadian as utilization call, SAGD heavy its you that Marten XXXX. strong Single

remains activity year the pad equipped strong. the Montney Super and Deep are for of Canadian natural booked also Basin gas Our fully as the Triples balance

demand While demand to the from rigs customers Nations and to resistance rig a BC it's later could due rig began the this customer Blueberry that cost did market Canada, process but activity over and on we ago, our limited see In year the see from side some further some This strong see has been implementing Triples. and we to rebound the a ruling, putting relocate -- a is challenging. BC First customer Alberta next very year, with have Super price we tight indications supply. of increases rigs

continuing uncharted several years customer seek we as territory. we today, to of demand rigs of the rate are after customers' many industry For for discussions our second are discussions having is XXXX. weak half These reprice pricing of

to quarter, During our our pricing reactivate required signal expectations. opportunities The send rates rejecting rejected we due we at lower-than-desired below to can work several rigs to best rate customers is the first customer thresholds.

advanced and Precision Super million and dozen Alpha last technology with functioning years rigs, the rigs Over with We AlphaAutomation. fully our Triple XX XX managers. a expert XX center training rig those invested trained Triple Super technology has Nisku rig. rigs $XX Super Alpha drillers expert in in clipped XX over Singles We've Canada,

better safest, deserve. is technologies customers With Precision quality today proposition Canadian people, these we most and delivers and returns best Saudi rapidly expect also see our have Arabia, and cost-effective the to drilled. generate offer than fastest, a our value The any these vastly we ever rebound wells assets, Kuwait prior I market. and fully from that improving investments the cycle, investors In

tender several prior released in a Arabia have for for five-year rig several in a pricing in process period includes will active rigs first for The contracting be renewed quarter. we of the requirements multiple In steps. typically been tender all tendering have consistent Kuwait, with the Saudi mentioned in press rigs late and with involving several been margins extended and I months the was of As the months quantities. classes release, contract. This three anticipating

complex perfectly rigs idle the requirements excellent we'll this have believe and super-spec classes opportunity for of three rig our rigs Our activation meet later drilling Kuwait year. idle an contract the deep to

emission half Precision's scheduling. gaining app on expect energy Triples price negative energy of several release, to appeal rigs, electric all We environmental and emissions. Digital transition Heat a the a we customer's of that is exceeds earning in charge, deployed are our battery utilizing currently to down revenues. offerings, look the our for of segment to have last emissions storage on course, helping our and our continues geothermal to EverGreen path the operating an the last dependent GHG a first Cornell commercial over University. the servicing year recently and appeal. thrilled a and generated strong the began are part continued advisory to fully of and including look derisk that this customers grid-powered solution. This had premium continue to following. an a strong highly be will be both Interestingly, Alpha cost monitoring demonstrate Precision's introduced service project for will now net app and to opportunity. Alpha zero project fuel broad we're the favorable technology grow as campus gain library solutions premium the we Super with X% savings green to EverGreen product continue apps pace rigs to customers explore deployment source customer timing reduce optimization zero. well Precision's rig deployment year energy solution to Over rig quarter DOE-funded press the as continue continuing opportunity the the customer the energy equipped heating for encourages activity, EverGreen XX trend. emissions solutions products EverGreen Alpha same an with period. deployed commercial this to This, to the customer exciting our and our our University. mentioned rigs Precision's up Ithaca these Source And are EverGreen We're service forward However, Solutions strong system Earth today, AlphaAutomation commercially cost Cornell from XX with outcome zero several

very increases is material Our inflation cost experienced. team the cost effectively and fuel we've managing

proven is However, and more service the difficult well much challenge has labor limiting activity. industry

quarter During demand experienced anywhere from the rigs grew XX to greater first rigs. our ability than we alone, XX to

recruiting increased progresses. exceedingly supply our announced hourly labor we narrow year have performing well. substantially the Overall, and efforts expect the We is business with rate to the gap as this rig increases, recently

teams to Our appropriately, and generate continue flows. worked rates well rig strong to we increase cash expect to

So the I'll strong I'll results conclude safety back call employees excellent by and now operator they hard turn questions. Drilling their for the for produced for thanking our to all Precision of performance work, their stakeholders. the

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

heard through pricing some in leading-edge the higher-end years which and couple items But add And in fleet why rigs what you difference a there I basis. generating you're U.S. Kevin it XXXX? pricing in and lumpy is Alpha, Kevin, the think of likely U.S. point within to XXs, of my stays the the daily close so type mid-XXs any is tight -- the and excluding Alpha Carey, XXXX, on some excluding I isn't your against the on for the getting man, is, margins, pretty leading-edge backdrop, say market. a rates reason turnkey that mid-teens at first one low if question assuming other market will, makes. a

fleet Carey. generate per about of up type costs a of $X,XXX day. is But I'd that margin. $X,XXX moved remember that see our Taylor, portion operating that so the could you this have to say

When mid-teens. day which is or get from of to we getting kind day $XX,XXX be margins the cycle. So in last you rate the the to rate of is $XX,XXX up AlphaAutomation, on or the $XX,XXX $XX,XXX similar tack day $XX,XXX to where up today XXXX, or to kind saw a you would rates low

in And ahead. the had I follow-up a it. Got Okay. -- go

to Just a for add moment. that

if it's don't we think in move I as year this that supply tight, progresses, day stabilize [see their] stays the further think could rates We -- up. to rates expect repricing opportunities the raise.

that's Well, encouraging.

a release, follow-up prepare just the over to it crew there, in like XXXX. been as that more if oversized Carey, work, ramp sizes quarters will press I little cost And for In you're how a about just curious cost bit more correctly. couple might talking moving of I look probably here a crews go were back And for to you've normalized some levels other I'm mean, curious, I'm talking structure. sounds rigs activity forward I'm back those naturally past you Okay. it, to about the the turn you as way. go what's such the reading that headwind at the

delivered to We and over the that day trying margins it. flat the the the been turn QX, been that to other QX increase a and of to We was costs the rigs. three or want other in of the hot We magnitude but just in have create will activated crewing four rig. would start-up reason we in start-up why in would half experienced and per have from It $XXX,XXX of about $XXX,XXX we to crews half rigs costs. call U.S., $XXX to a the QX way, I of stress margins guided and

a it just think bucks little a going members I day. extra operating So be hundred those bit, will couple will to not it's of crew reduce having a costs but

comes Our MacNeil Securities. Aaron next TD question from with

the suited historically that XXXX XXXXs of the well been pickup seem some but for is good a the headlines, always been horsepower U.S. the attract I there's know triple. plays in to

give utilization for pricing maybe sense just and could us trended asset how has a you of if wondering that I'm class. So

to The it's is rig. on Aaron, recognizing a similar rig little operate, less rigs Kevin. trend those little it's of the XXXXs, smaller kind to expensive

So it's as not supply as the same quite tight direction, trending the along the on XXXXs. side

on and approaching day pretty rigs into those that certainly add rigs, which XX,XXX mid-XXs happy most rates for not now. So we Alpha we're we're to -- have the range [booked] don't right the seeing have those are but Alpha, we're Alpha And not top with. yet, if also that opportunity of getting we're getting

Yes.

rigs, I right XX our believe we've in about got got think the fleet, working now. utilization of and XX we've those I

we're to pricing that more So us utilization give moving will power which XX% time. into XX% up level, over

Aaron, pretty I'm Canada. we I strong was one year was market remind did to looking again. rigs sure going not you up that do of to last bring the that we when those in Canada

and better rates think I the could see the you now, the U.S. we rates when fully think those they'll factor later time. I in look year. opportunities Certainly, the that utilized exchange that U.S. the put -- right in this rigs might in over

mean, Okay. I noted months, comments are, with Understood. the the and X XX I day to durations certainly of, they contracts, But leading-edge you rates said think new on XX where whether Kevin. a have rates I contracts? to to turn the prices doesn't do you upgrade can conversations Or lock high have contract? in major longer-term multiyear into a to to you those start

there's all that not much. our over kind amount to sides the of a wanting commit right of say of caution wanting on to I'd get energy too now. [skis], still Not to industry fair

kind fair capital commitments do again, not out signed that in months, amount contract that just we a out future. a beyond have far XX and of months. making extend of couple some might contracts not it's of XX While care there's too making beyond I'd caution we've commitment, looking say still customers huge a around, huge the

customers from yet. it across their discipline certainly approved quite aren't for And contracting space budgets important is where us. certainly into it is years back still is just as I capital the and So E&P that holding read

might I reluctance me, that to more allocation January, sneak your on one I'll time. doubled in. capital framework be since that there reverse appreciate in stocks that Maybe some Understood. course announced you you'll can Okay. but nearly indulge if

not So on continue sense being? to I debt focus guess make just reduction it to the question is, more the time would for

Yes.

to I the think like we and a times put and can And of four-year have little we to cycles, with Aaron, then we back shares. flexibility for manage bit we're our CapEx. quarter the capital buy through place plan experienced in capital that building working we some So also a pick needs to kind first cash choose spending in when so allocation of both where

we said opening as -- we're in and So the is place. that my plan release comments, on press

that the execute over continue allocation going We capital not the plan, but will on to it's every years. to quarter be next same four

question from Waqar Syed next Our ATB. with comes

in you investments some geothermal some your announced in coincidence Kevin, or be also front developments the developments of in and could competitors there on geothermal that geothermal. some It Or demand today announced Just acceleration for same one behind to of scene a kind it the see is growth something want of is you're rate? going geothermal. kind acceleration of there's on still seeing? whether the

on XXXX think busier Certainly, much than front, is busier I that going 'XX. and be be to probably will than 'XX geothermal XXXX

So energy towards we're I putting transition of write-down. which lot a capital is world mean in a

one is those of transition is geothermal energy solutions think I of be going to mix. the part

just heat, a think these be it's side it for here. I some for a our So there solutions is interest, but nothing of levels believer that doing heating in certainly using will solution. on not short economic It's using geothermal because conversion projects and oil big And as or I we're involvement might having power for be gas part but to an activity close important displacing this that source showing also I'm -- steam, think is yet. rig perspective, the from important. rising important But answer remotely

campus. So project I on excited we're this about quite Ithaca mentioned

count be the Okay. expect rig And to you in end maybe the your by year? active the then of U.S.,

I five could say, we'd another the Waqar, hard up now right you today, by but the for of us XX, I hitting forward getting see to if a be kind we've end a of with what probably the quite second And quarter, that second far, year. to quarter probably close not had see by having rigs growth maybe the half maybe of little project hitting the so XX XX. go

we customer forecast, hate seems but the to macro Assuming stays it place, like remains interest change. comment see [indiscernible] macro and on in forecast every these there's the the I days, some and qualify have major today to

Yes. for in still upward labor pressures do inflation captured year, Yes. the you going perspective? cost, from and And at think see forward? operating labor least, of your cost terms Do this all, you've you

of I be rigs rising control seen comments are crew that. would of I'd get salaries inflation. [indiscernible] right. this point. We our say, managed the and probably Carey, active, things like have think be kind say we as might have between of at kind you might that there? under absorption leveling I and any peak of It more do

increases are the further wage year, through Just passed contract. that they'll the within if there in be

I drilling opportunity going think on, the the kind there chain issues. building building build, to a if think most is a supply not industry is just the is out build operating at past cycle thing that But that still to fleet, operating of new we're we're levels rig see But and XX cause than lower all of activity industry, which years. kinds helps of about any would the really rigs. don't that reason one plan drilling in don't any and even

good. chains pretty are So the supply

think things impact going lot operations rig now. rise of in meaningful is under that I see inflation way. control. right They're a a don't to I

be, Now pushing upwards. we'll if we're wrong, prices again,

to I and rigs think the is the us, we flexibility already cost time. -- us allows we've reprice that contract market gives got book whatever a at

issues for let all the in seeing kind that? what to same, that, equipment? not that. mud inflation Like for like things at or existing just yes, engines pumps, replacement terms you seeing on are or getting getting fleets, any on of you And of reactivation in So you're on me ask

us get engines. the into price I is and a upgrade kind the know there out see suppliers of largest major recently, just of unless we large numbers new one Caterpillar, haven't of of So I some program, don't I buying engine checked suffering And some actually inflation.

got our fleet what this upgrades a will and normal right I of going within current we've see and procedures rigs repairs now in handle that maintenance we inventories. environment forward, that think our and that engines on

On front, bucket. the we five pumps rigs, that's were drop to mud mud in the extra more if upgrade five

question Gibson Markets. Capital John Our from BMO next comes with

they Just to maybe And what leading-edge compared trying you do I'm how peaks? at net-net in relative how to they to prior terms then forward? if walk moving rates as compare of upturns. get leading-edge rates. profitable where get right guess could just prior could I'm I wondering through is now cost out or well. And I guess, to

Carey, I'll don't and start, you just come why bind. and

Sure. Yes.

when So it, we peaks or I $XX,XXX or day. to XXXX, got XXXX prior XXXX, call think and, a had or XXXX $XX,XXX rigs

right And in of so around an cost had time periods. you $XX,XXX those operating

You operating had little Right at costs to costs operating margin. are of operating XX% be rig, and cost bit increases wage higher a now, going to a field the with $XX,XXX a XX,XXX.

So you're a $XX,XXX day. at XX% be assuming you're margin, a $XX,XXX, to going if

dollar they're lot comparable. a they're line -- on comparable different. they're the a percentage and standpoint, from top margin looks a almost standpoint, exactly comparable. that's But think pretty The margin, I So from

rates, then forward a fuel it? above a of to margin see get guess could above or that bit fair do I see we assume it that XX% even you moving bump significantly if is in

I think it's possible.

drilling market that changed bit the And from think super-spec that would moved What really changed move I the is be these going the last -- think a you I we've more to of the going be rigs. that contract I has early. type pads I quite are peak. will rigs on the to some think in outside these little only things contract, outside or are runway. -- going have already rates that types the hit large of to development when margins It's have technology say and are

not when non-super-spec seeing on super-spec you're a Back So in it any rigs it came it market drag wasn't today perfect is. to rates. XXXX, from the

Last Fair the bid you talked for enough. range of the in And U.S. in me. call, request last about somewhere having one XXX

largely world expected new What than like the months, worse months has bid few changed. a additions few in we a better have And rig the are then So fast into inquiries or you requests forward bidding if obviously, U.S.? these ago? today translated

this modestly. that I The say starting bid hasn't jokingly. non-GAAP a is increase metric. rate So the I'd hit that in size. declined is say to And book

next Our comes from question with Cole Pereira Stifel.

to Just spot day from perspective. to go contract rates back wanted versus a market

And day there rates if market I so a for is high right leading-edge a the are sort in day spot anything rule spot so be a should at mean, pay or of level, locking to US$XX,XXX discount now, I'm how it contract example, trying thinking something or between about about think just or months to for rigs. the what rig six we that? like would that and in the

were it customer. might from quite our back reason spot term, But that Cole, slow. a view a think with there There in from pricing. was or of be XXXX standpoint discount to as wouldn't conversion price that I us discount is a really they strategy zero with I when a our to discount tied a customer to that to got rigs multiple

to about Okay. some in XXXX Perfect. No, of that's helpful. And maybe back revenue margin. per day the coming questions

that would there. reported rates to know trying in the stay a drilling your through high $XX,XXX day edge of be some the day XXs? could sort you reasonable differences contracting, is the I I'm rate day, it get hit mean, as Or just to think day guidance. if give we $XX,XXX probably mean I you sometime feel of fleeting don't it a low out XXXX? churn I in see So

time. this whenever kind reprice they let of be rigs make comments I'd I'll over of and a most to expect as to couple trending class here. in pipe into So he But say that wants Carey that of do range I

you're the in up. a two average moved of leading-edge are do certain rates expect But up from we looking so will probably And a have if year reasons And it a that have I'd moved won't now, repricing or single bit. a at think do quite get over out steps There the rate will we one price I every opportunity. why full might period time.

in really off now. rate with into $XX,XXX so likely the because hasn't And we're higher on real rates it's be right than see average could leading rigs momentum The yet. yet rates the and tight phase backed you could that range a

Okay. helpful. Great. That's

the ahead. what's comment go -- So

add comments To to of couple a that.

we're the now is right large are years in which rig But in there out I the going the that on upgrade that right field. already And likely drillers the that seen seeing not for returns you'll think customers the my an Canada in highly that their most been. I Precision, whether that returns goes shareholders in I as you've to now. the the hear best firm now, whether discipline have are we it's our have is forward. drillers It's got the focused are get it term to I've time think the U.S., to now for right trying from career, investing almost capital extremely we public and going returns of think XX markets, both think rigs for discipline it's marketplace or weaken going I'm disciplined it's in around public And the their I are our on generating up. use to as

than replacement for. when of race bit just much they of Yes. add a they is of where rise the uncertainty the maybe today cost will these built were little what's is rigs higher And would stop I causing originally what

just rig. if So a infrastructure try build the work go when with and the today rig was built wouldn't It's to rates economics going around 'XX. really and that new to kind commodity and made you're of to the the in rigs replacement the be would new price inflation, have in significantly labor being place inflation been it higher than and not XXXX cost would build

from And much, of Great. sort your that, mean, about pipe. talking I drill times. makes it, one-year Okay. of of curiosity, lead hand? do lot of months typically a I some peers just commentary on inventory sense. on mean, keep That to turning call how you

We or might shortage that make of a we conference pipe. a tragedy and large bit. of that's replaced a You on we steel. pipe a didn't is bit purchase what's now right did the inventory drill And market going expect the did talked year But had a August. recall last the been been of of tightness order get sense just that about coming. ahead Ukraine last certainly we call We drill this in impacting last

zero delivery fourth in last of of and year. We third took time there's lead that So on quarter that. the

the As for first placed orders we orders in second this placed year. began pipe quarter. deliveries, quarter fourth taking We the of additional additional and those in we

think we got need So in of run that lead few we you've we're that I of think ahead days. talked time about calls about heard some the dancing to last -- over business. we've the kind other one-year our And pipe that

I in inability instances curiosity, Okay. Great. of just U.S. where Canada in seen any mean, casing or the an drilling of you've operations? whether any impact out to That's of the helpful. And your get E&P

kind with able that and or buy well that small seen are operators have. plan to not We've we in Cole, volume. mainly of well to drilling

the these have larger have With players who, of creep seen sense coming, been in us, placed a we and orders things like advance had up. not that

little challenges and period, part Gulf our drilling is a sizes gas for a and where we the gas disclosure the wells, of are have be tends turnkey Coast -- the we're in shortages this now. bigger bore getting small more Typically, region, the turnkey pronounced business, right less casing. oil common in what in used common deeper We to some see of being which wells

Okay. Got it.

certain I at that your having but fair? issue, wanted say customers larger a are it's comments, that qualify to So not Is that if scale. to material fair

rig. I be could say short-lived. But for visibility not to Certainly, have one customers plus And I'd mean on could also for are don't buying right that be material think the it's casing. grow. going It I scale our our a what now. that minus activity or larger on we

fired for that of pipe companies good here pretty there's quarters, to up. opportunity some the a to catch make probably margins. up get be things think there of we'll a an think while couple lag I I And might

MacKey with next Capital comes question Our RBC from Markets. Keith

mix second would like. but that been second of Kevin, quite I in you think half you comments means second to XXXX, a rig are maybe just trying What the walk busiest realities though are XXXX, go are is Can half be you trying going? with just different wanted what shaping would the up customers to, to you how it to grind still back since some in you the your to on rates, through ultimately have sounds those -- than higher had discussions customers? the I about for into of back conversation have And do know margins? cash bring bit then kind days. your much cash margins it the Canada

So unpack that but commentary be maybe on a any there, to lot helpful. would

pretty a question. actually it's insightful And Keith. Sure,

years deep that part as great They've was to rig in proud and was investors. cost to be notion capital that. whole declining. -- the have aggressive investors they've on managing fine aggressive businesses tune the heart, work structure their where really deliver their they job often past over going to the to side customers discipline environment their hard discipline side, Canada with their costing as have efficient their demand they've should contracting XXXX they've an gotten that, And restructured done and to worked that their done the of And capital getting and on several really done a of getting very back weak of become taken institutionalizing Our to very and the very E&Ps Well, in they've become. costs.

rig in demand fact, supply. market that is in in managing exceeds increasing. demand discipline capital a areas, where So rig some And

stack of much than run a and to recognize There's our they the value it. more better our understand to back the to up a and think through certainly on We're we've efficiency think I And our things previous rigs with need rigs, for We're proposition done demonstrate since need on customers of working up litany guys speed get our trying to in help And them question. we're they Alpha to super of to very peak. speed it's rigs. improving last pay execute went I training it it's rigs were on. that to cycle and kind help we that that the no around I something the that. well. delivering with to it job

two We've and supply very I people costs a out soft a rates proposition. forces. So competing lower market you've manage ultimately, And worked value got They've and up. and expect in market. rigs their hard invested here demand in will down have and play the works, really move to our and these dynamics higher

that's No, U.S. to And turning just the then it. Got secondly, helpful.

we If mix changing you QX Or the from half, talk XX-or-so by same? as basin about you then about and you the But Permian, some roughly maybe little the XX-ish additions. end of is to where which those than current XX% rig would can through us of in to of if Haynesville in levels your adding some see curious the expect in those can help there's takeaway you stay just and then U.S. a there, I the see rigs walk percent five bit second that kind think wise know per if you some quarter constrained maybe other areas. Northeast more maybe of capacity expect

from one say coming me, more But for towards oil, rigs Permian. customer we've I'd -- focused a more Carey, the towards of rig remind recently paying includes out mobilization probably contracts quite of... surprisingly, the signed the of

I think it's Wyoming.

and rates and move. to That's a we're right move able that day Colorado Marcellus. back And move cost achieve to Marcellus. the the you with that couple pretty moving Wyoming meaningful and to back now, that's expensive an the

by lot in the of surprised a I'm So see strength Permian. we that, but do

a also recently rig few more contracts for We've Yes. seen signed Ford. the Eagle

Yes.

protection? How of maybe delays the or good. to anything perspective If if is -- there has that customer fees there? issues, supply a standby kind your -- rigs like the are back finally, circling market are by Very it. questions. not Or protected you one some you been of that from And that? fee that contracts is written see chain Got into just other caused the give

contract U.S., contracts. term every Canada they're or take-or-pay rig On

us it and else well it's else. looking then work once take they or well for either might feet. pay If down that it completes, they well a So use to by it be somewhere rig,

next Our question Energy. comes Schachter from Instructions] [Operator Schachter Josef with

rigs to number where Carey, Alpha up, all idea a you doing -- that right a of what costs go replacement to Super of cost higher. you are products new create now? be to you're the hooked has much the an Can Just the to. mentioned get would Triple if with rig

Yes.

So you we tell it this haven't and XXXX in what -- priced can out. but We I 'XX. was

So rigs racking few XXXX systems then AlphaAutomation. we over Super years, with higher And $XX pumping million. capacity, the higher were started them AC for and about walking building upgrading next we Triple capacity,

So asset get you to XXXX a those million probably $XX in dollars. XXXX and

fact year the wages with XX copper prices happened during and that what's steel over over time the also at last or prices and at a then we're -- period. eight that building and seven years the rigs look can look You time

And So we construct really there. and lines those to had an process rigs. assembly these supply just style chains line aren't assembly

and higher be or it So be it's not It's to XX% XXXX. going would been have to XX% significantly higher. going XXXX back than in

more? Are looking US$XX we million at or

We more make It's production. save could rate points, lot to price percentage it that to a not expensive. were a back $XX cycle. going but be in It you're range. into a production be back build we of $XX few and take million a by going feels might kind It running into million

thinking you're think it about the way. I right

Yes.

that's would or $X the of it million, And What a right about take in needed to rig industry? would how be? it are to are that take be take the talking in the Montney, get the parked be upgrade standards part it different to you now from if million? the we and ready and a Permian would $XX the long So kind number rig used meet

Josef, we AC Super Triples, rigs Super DC about we that -- call not Triples, Triples. Super they're but XX have to XX SCR we call them they're

range, analog probably have whistles, rig. in features of have to digital power the referred maybe lot million To to kind we US$XX other million to of AC million and our a all bells capture those SCR as US$XX rigs. on is but those convert system, a $XX rigs an the they Super got which Triples, for the and they've So

$XX AC our average some to Triples, SCR $XX million So of the of on Triples convert could Super we digital probably to DC rig. around million per Super

there's limited But number though. a

Yes, we in U.S. are XX have those of fleet.

Okay.

talk gone XXs. the getting as into money from and have of rates might the low and they'll are And more have through look, states XXx us pay given mentioned with -- lead sense a CapEx, shares, wouldn't need sheet. So ago, here or your something gets rig, they wouldn't to strong to saying, such the that it it then the got see pristine million make if be if two for ability to to stock gone that, to you equity to strong to you sheet raise I'm have want up these million -- us count going we're -- cycles. of up you customers to XXx you balance earlier, a more years looking X and the be balance you Wouldn't optimism has again, the the it build to X at some you beat I've because sort -- can't

needs assets leverage because I our That's Yes. need. that's at need to we've the flow CapEx day priorities fund outlook have that the before cash business, in say biggest business. see and of that year assets that into repurchasing this that come growth will and operating going to cash would we getting got the of those. for on to of along no we XXXX, for with EBITDA and flows mainly all of this shares. we is and then the be and And debt us, strong paying equity the any down look where maximizing the raise all about when We half see very we are pushing second work our talk think rates kind one year we we can

And about today. don't we talking would rates in leading-edge the need build rates that higher, XX% do being significantly business will required, And if we're a need day So the funding where rates needing a think that. higher day needs, itself. are rigs, than cost the to new any be to of fund for I terms build see maybe to the

there market are think rates don't build. a day high right. economically the is the The market I -- fund to So fund new not isn't to enough

a in of think we'll period see time. we for the that any don't So industry

number Do in a as from one There's been the you to yet] course, -- see margin a U.S.? and a $X,XXX the nice nice year to Okay. $XX,XXX dollars QX. got margin And [we're getting in Canada the reaching Canadian for in before see of you and up earlier $XX,XXX pickup last Canada, you in ago me. Canada US$XX,XXX, $X,XXX, $X,XXX mentioned,

more for going rates possible say. Super than our certainly Canada got but all we've fully both Super That's Super rig late hard markets It's this got year, closer year. the a now. just then bit But Triples of is Singles of the by lot to we'll the there We've be up mix, next lower fleet, that the reactivating early Triple. segment as a on and are little margins utilized.

to So we'll I think out. that on see reach how they're mix plays But those levels, Canada. track both the and margin both U.S.

Carey to call for time. I'm question the closing to showing back no at remarks. further I'd like this And over currently turn Ford

Appreciate your everybody, call. to for XXXX conference again forward in our talking you today, July. you, QX and we to time joining Thank look

conference for participating. today's concludes Thank call. you This

disconnect. now may You