PDS - Earnings call transcript Q4 2021 | Precision Drilling Corporation

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Precision Drilling Corporation 2021 Fourth Quarter and End of Year Results Conference Call and Webcast. At this time, all participants on a listen-only mode. After the speakers presentation there will be a question and answer session. [Operator Instructions]. to Carey conference and Ford, Officer Precision. like speaker to Chief now for today, host Senior would hand over the your Financial I Vice President Please ahead sir. go

Carey Ford

Precision XXXX earnings call and afternoon. [ph], call Olivia on Participating conference quarter Kevin with you, end Welcome me and Thank is to year and Drilling's today good the webcast. fourth Neveu, are The year in Precision reported these quarter and end President indicated. results. today, financial dollars and its Canadian earlier figures Chief unless otherwise earnings release Executive note, XXXX Officer. Please fourth

such refer Some field EBITDA comments today of results. our to will non-IFRS level financial measures adjusted and

position. the other also an over various will filings on information measures, certain follow today's that, comments it and results and to and for providing prospects, forward-looking regarding I begin by I'll are financial these risk statements business. call include Our you and Precision's financial will will risks will future our overview of dynamics. results factors. for regulatory forward-looking statements discussion turn see our Kevin uncertainties. more of to and market outlook Kevin subject currently then Please with and With and which release Kevin. our overview news provide

Kevin Neveu

Thank you, afternoon. Carey, and good

the rig is wells gas have service spare the sharply dwindled. Global understand prices capacity. recovery inflation but decades. firmly it have While as and markets and oil and or here activity oil DUCs and for lingering and uncertainties. demands The Precision customer last than shortly resulting, oil supply lingering is Labor demand they tighter tight, also almost uneven The typing reduced called, absorb here remains real. two the real, uncompleted will four drilling and inventors rapidly of demand has inflation global are recovered, are and fundamental and witnessed are is virtually I've price remaining people equation. is maybe drilled the some The and with gas was but in years. some zero the acknowledging Super-spec exploration fully strong best

of proven calls, I'll invested for to the I've is extended As a emissions earnings Carey remaining said back and cash now call shareholders our dividends, strong where rates responsibility and The customers industries achieve cycles are disciplined return returns uncertainty environmentally emissions to determined drilling defines with marching price the Triple is reasonable industry the is efficient, sheets capital seen with territory rigs responsible this with recovery slower repaired industry Precision our uneven The on rig that driving demand today. and eliminate nature scenario that economic measure, and cementing not recovery uncertainty. the the markets. some Super and interruptions recovery rates simply discipline a special can are operated. and have are most further shareholder producers prioritized. back the we and of we risk dividends Capital a the the into recovery well share turn corporate capital. is discipline results. in entranced solutions. and by focused and GHG Combining to healthy our positive And with record generating the measured and Ford Balance possible under we've are capital flow deploying who correlates the has in and have to the ever prior financial capital The cycle are for largely customers. to driving further at are banner levels technologies Precision the our rig with this the discipline boom-like for overshoots then laser-like highly safe rigs EverGreen future commodity this allocation capability we focus capital to on investor and on with But economic cost-effective Precision's longer, throughout track prior do by buybacks of cause continue our responded mitigated those further mantra. financial expectations rapid the returning strategies. and day that,

Carey Ford

in net EBITDA released Kevin. debt times. four allocation level you, the to early billion of our leverage in eclipsing reaching below down Thank In framework XXXX, $XXX next reduction expect XXXX, January, pay and where years debt we through capital to $X we a over X.X million since debt

cash this to market announced also to leverage XX% market before Drilling we We debt to of to in ability flow toward of inherent debt in a reduce shareholders. return the cash capital prioritization free flow reduction businesses generate grow adequate a operating Precision recognize to of and XX% goal. fund return shareholders, to growing and allocating Importantly, the capital growth, directly substantial

quarter our to results. fourth on Moving

North adjusted during increase Daily were an contracted from the adjusted EBITDA US$XXX adjusted compensation an quarter QX, and charges of turnkey Also fourth payments supported is American four Our higher in XX% of absent these $X average QX. higher the would US$X,XXX US$X,XXX, XX in was and rigs U.S. by daily million. The impacts impacts. EBITDA, been fourth margins of write-downs have of labor the margins increased QX. activity increase related operating quarter, margin Precision turnkey per QX. Absent the and XXXX, for rigs than operating drilling included have US$XXX $XX million $X to in million by from impacts impaired but idle of quarter non-recurring increase day inventory from Absent expense $X million, quarter. share-based of would activity. been of labor million, items In EBITDA quarter of impacts $XX of non-recurring for the

turnkey QX increased increase sequentially averaged of $X,XXX Canada, QX For QX, net margins operating absent absent an XXXX. and payments expect rigs XX of $XXX from and per Daily Precision QX CEWS of or and of XXXX. from increase IBC the margins day an XX from QX, to XXXX. we rigs, drilling QX, in approximately In XX% $X,XXX, from activity were $X,XXX for CEWS payments increase margins quarter, shortfall shortfall levels.

EBITDA to the the the our quarter. to year servicing rig C&P in from mix. increase payments drilling year $X,XXX average $XXX was per adjusted XXXX impacted was of and increase day to higher For compared in quarter expect were for six hours, prior and average activity per sequentially. quarter this approximately XX% CEWS $X,XXX activity quarter. QX Internationally, between QX, $XX,XXX, wealth Precision we In positively due over rates day up and to rigs active industry $X.X reflecting approximately by up EBITDA a in compared margins and shortfall million, XX% the absent day prior down X% Adjusted segment

abandonment rehabilitation margins. We expect strengthen increases team's the program additional program. pricing the by drive million year. CEWS to support due effort note, to higher in of is both and results the $X.X in an cover Of increased and and work will expenditures the supported the in government's further capturing QX million $XX activity increased Canadian success billion well-side the quarter to wages were for Capital removal for $XX and industry

were higher activity increased Our in XXXX with of activations for XXXX XXXX. a rig expectations as result than expenditures capital and expectations in continued and line

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

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

the to sheet. balance Moving

We and continued debt net through flow generation million to debt succeeded levels cash and $XXX reduce both by free primarily reducing absolute XXXX. in in

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

to XX-month quarter X.X compliance with times. substantially EBITDA will XXXX reduction we the continued approximately to debt our of and activity EBITDA EBITDA is X.X%. With debt moving ratio net X.X facility all leverage. covenants credit times X.X closer remain much to in interest fourth believe is to and average expectations, our times trailing cost lower goal ratio ratio Precision below Our in a We coverage with net debt with of end we debt

working do is release For U.S. in incremental continue through cash capital XXXX, we activity and as free to and operations expect increasing expect benefit generating not from flow Canada. both

we working XXXX, end the front payment flow semi by interest annual For cash to year with expect CapEx, our payments. for free strong build, flow year-end impacted generate capital and loaded cash QX

at target year-end in million. $XX debt for reduction is XXXX least Our

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

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

the expect Kevin. be our X% expect I cash low in expense we With range. below rate over the year. We to interest $XX for call And that, remain turn million to will cash be effective to tax to the and taxes

Kevin Neveu

Carey. you Thank right. All

rigs. So Super we beginning in U.S. our for experience to strong demand continue Triple land,

today, running XXs. XX% XX they mid up mentioned, well QX Carey third trending with as quarter. quarter already And our tracking is activity further activity As rig XX rates sequentially have our with the rigs approaches it interest activation activity and same for the first customer now activity and year. continue the rise range and up been rising to cold this rigs through the into the may current for are Leading the rates for rigs rising moving mid to gross upper With XXs progressed edge [ph] activity, due industry-wide bidding costs. trajectory active QX seems

rig are to much cost developed customers mid-December have paying mid-February, not full the upfronted Precision's moves. customers basin fully rigs most costs Between [ph] and for tighter people out. basin-to-basins moves. Industry is supply Triple basin Super sold shortages believe. While trucking Regional Super-Spec for are and than have

discipline market this that than we to Regarding lower tell Precision's walk key signal customers not strategy, you accept share. and day pricing is rates can threshold means pursuing we send market a pricing I'll away. the are refusal we our and

on economic is focus the pursue. rig each return Our we for opportunity

start. is The delays. Turning customer to our due to levels off is anticipated, strong is season slightly we drilling but peak business. driven lower Activity some this to than winter Canadian largely a

demand in and later And slowdown expect indications again firm by to will exceed This preparation completed break-up QX work we're be seasonal quarter exhaustion. rigs, than may with higher supply very Currently, should are quarter. XX% XX year. additional look weather the are spring with last remain a customer for four driven issues. We activity delayed by rig running levels. running location budget indications chain activity not activity that XX% Customer second winter strong early for rigs

business. this for well Canadian our of All very bodes

want XXXX. commodity from this holding rig. in XX XXXX rigs. depths and like correction April Canadian our rigs think industry hear geology is Single As driver currently with strong But economics we've level strong we I Canadian highs. Western the play just a to good specific Super the handful Carey meter Clearwater a And in F&D U.S. de-risk XXXX. price talk don't With from long-term rigs producer that Play. style to drilling the essential high which programs range. talked Clearwater services Montney, good grown has for industry fundamentals our often rate and XXXX Canada horizontal oil Clearwater before rate the Super exchange this. a drilling to The we are Canada returns. where flows efficiency and new has during customers rigs Precision This operating rigs And suited horizontal it the to will in to style play, like rigs is in of to XXXX grown this demand for excellent Single trend has pad since Canadian know Canada. dollar good Precision's market range, Canadian sustainable about wells long-term the strong recovers three Clearwater is its a high a have has And to that the continue drilling costs. the pad customers a continue discuss and cash pandemic. are Precision very I be very support, me Super today are share. at active select We to -- The currently in the XX% today demonstrated region Hills Montney in XX about in all-time highest Marten financial expect performance indeed mission, $X.XX with in ideally the just the the heavy relatively brings XXXX, trading Single while measured

efficiency Now geography easy capabilities. the Single scale or Yet Canada market. strong Canadian and with high reject very Precision's high some, it blanketed and remains discount strategy, for footprint our Super our Precision performance generating cash key might our rigs and Triple for a flow Canadian combined to value Super be with

to have to again, justify like And the a capacity succeeded the for crew improved our business. what revenue Canadian is well hard rates group demand margins. years service half worked mentioned Customer remain Precision direction. to and have staffing of strong very pent-up well funded in we strong further provides activity pushing substantially demand and well-serviced customer conventional is industry experiencing fully following of The challenge very to team strong right prices has customers expect reclamation And XXXX. activated the performed very operating are several The service running site Turning low been XX to today. this the looking XXXX. looks lows second operator in has value on delivering Carey hourly sustainable. demand continue marginal XXXX. our our both improvement well-servicing higher to constraining expect industry rigs by industry, is abandonments. we have enhanced and and for the and our has well well, And further needs continued improved and we be see program. focused team federally of know rates through financially yet the Labor well still I this substantially the demand team challenges

international to Turning our business.

other nothing in Kuwait the operate working we're coming potential opportunities operators continue our materialize. tender today. months will My upcoming limits in report in that both region bidding as Saudi expectation with production We're for removed three We these OPEC three to that fully clients rigs markets Arabia. specifications the new and in are to remains reactivations have rigs with on in and

to Turning our strategy. digital

cost we to coverage maximum and ensure as to expect acceptance automation to For Alpha our up rig we pad the of our control. faster release customers analytics changed has AlphaAutomation across days been our of and bar by and The process continues and XX our are optimize have digital Alpha pushing drilling Today run products to our the and reported Digital its in cost Customer game demand our this grow adopted based development has has course. year. equipment most press harder fleet reset. style efficient fleet the for footprint have and digital crews and efficiency, end and expanding

and We to demonstrate also expect continue to our to this continue continue value add to trajectory to of I growth our AlphaApps customers. drive further advantage. the library and our competitive

very I'm of about we've Turning excited our a progress short ESG. environmental very suite with to solutions. the made time EverGreen in

EverGreen been EverGreen to combustion will operating solution. expect fleet today equipped With reduce we XX% and with and acceptance emission, range targets. right earlier of Precision's mid-year. operating our next at least installed systems bookings and increasingly customers XX the mentioned alternatives, emissions down and today, solutions real-time on EverGreen sustainability. combustion our meeting technologies zero. I strong rig COX EverGreen power systems several utilize storage of grid power power fuel of monitoring to reduction products focused I As are some with to our battery hybrid years of systems fuel by hybrid combustion GHD customers encompass reduce our emission few systems, customers expected over running battery monitor and to systems offering a six Customer have emissions our uptake one lower monitoring has rigs current all and emissions combination

and we I of to turning strategic of on employees for at our annual beginning contributing priorities. thank that XXXX. pleased we the to delivered the priorities. And those outlined the completed priorities very I'm Now Precision

structure believe with For that flow. debt We'll strong is by runway XXXX, we a our capital I indication free to adjusted allocation want capital have reduce a we've capital to of also and deliver prioritizing a now stable returns be This deployable us that our plans and to we cash shareholders. guided. clear clear sustainable continue targeted

will our a technology continue priorities focus in other on expanding flow Our strong cash and XXXX. free including offerings

to underpins the we the everything our their want for with offices back for centers oil do that, an the now comments, work the I'll And support the safety and service provider. that out thank and people operator turn I finally, execution as rigs So and precision of our to call questions.

Operator

[Operator gentlemen. from Thank TD and of you, MacNeil ladies first coming Aaron with the Now question Securities. Instructions] line

is line Your now open.

Aaron MacNeil

my taking for questions. Thanks

much it peers over much cost your I'm a You've more just reported wondering weeks. of mentioned keeping the guess XXs the the given the have capturing last and in I sector? the would in improvement with lot matching economic mid how leading-edge is that of day rates rent inflation few be up of how that

Carey Ford

Aaron, Carey. it's

say we would $XXX that labor day. a that increase a which I implemented So, is was in it about part December, of

we for another we're day. I kind our for think about And market in $XXX,XXX $XXX,XXX that six QX. standard to we're We was U.S. a QX cost of that trending have rigs six plan reactivate kind at of do - We in talking standard the that's absorbing. still peers. kind of and some rigs reactivated to reactivation

bit. inflation, a pushing segments do than it's of of a the sector, have bit service we lot little a bit costs of little a other have I it's inflation. do but lower So field up oil little And we think

of would be passing And a cost mark the thought our as day So that all-in-all, it that be or cycle call increasing last rest $XXXX QX. bottom expansion. the The the of for in we through. it QX we're would we might call, it increased margins of And trough we margins. mentioned margin showed

to margins show in expect increase QX. to and in QX continue We

So we most we the more would -- XXXX. of capturing rates higher be than through through more day saw margin of the of

Aaron MacNeil

again have the order if January release companies press of seen for any announce your Chevron U.S. you since like is you for time changed your activity And on Exxon And Understood. you provide to out? for I the guess magnitude? the release But since both that question and And with put in and in that going they're we've outlook margin expectations the my the QX. Canada start guidance could so, growing Permian. acknowledging press

Kevin Neveu

expect kind our of There's shifting and on prices. that of question, saying commodity in passes different month kind or of with our of well each kind team our we're right into Beginning majors that say, I'd positive rigs. now as the of controlled seeing optimism. particularly And like really through moderately QX changed. feels And almost amounts super carry and these the kind with there comments to stronger would customers bringing of on think we cycle half small of have managed backup U.S. very go and making and my activity more But commodity is reflect they depends we can with into we it both and upside than I the have activity team yes, the in no -- growth. cycles. the are small not a say our some QX, be guidance showing that each it had announcements. to the quickly the that, that year But balance overshoot more could back just modestly say, in We're our we were back it how sales I'd We're previous to gains the Aaron, the customers bidding Canada price. pivot year. for we but this shifting to

Aaron MacNeil

be that that true the don't top drillers north seems or largely with four it Understood. is not that your if smaller an stages that there's of discipline or wondering we know Seems on cycle. also I like we're may returns agree the in also tracking disagree. American But as among you and five competitors I closely? equipment early of upgrade I'm intact. like remains some guess But

Kevin Neveu

two other be of up don't where or case competing. a other the often just and the hard others. U.S. it's two in Super with drillers it'll But true in see one three one We It's large always the about competing kind smaller talking say. Canada, lot almost days, we're when competitors. these the Triples. That's we're of us, it's especially to customer a Generally, or of us

sense So drillers we're the a what are smaller of not really good getting doing.

don't -- from smaller lot what see a drillers. those we of So just competition

Aaron MacNeil

expand And for committed higher the Okay. throughout a Is would we committed that million it Carey, the program, mostly year the $XX placeholder? of mentioned activity ultimately end is than you and And prepared be number all is in that That's sort I'm you front your what question or or see expansion at drive loaded. guess upgrades. helpful. that's to on it capital remarks that earmarked expect? this I are that if at levels point trying it could begs

Carey Ford

Okay.

growth So some it's on committed. capital of the

get some made of technologies. our to we think Triples commitments out XX Alpha I with Super

right. have upgrade that for some But there are grow some we If is So opportunities than we expect does committed the and committed. activity throughout long-lead near-term economic could And go more faster items we've part then up that that upgrades. number year. you're

Aaron MacNeil

question last for asked. me, Okay, understood. already I've And

just in But turn I'll been unusual here So, it winter Alberta. such an over. it's

potential you provide the or of would break-up So helpful? be shape just activities on can comments any that spring

Kevin Neveu

situations yet. some location some it's already have we've get can't onto No Certainly, we quite warm week guidance where into this rigs. They and run yet.

causing but late a that short-term So if a year. pushes delays. is, be it few QX, net drag pricing work more it's breakup lot early probably into a might on tension and sense QX, the My there's activity, a for weather positive

Aaron MacNeil

Okay.

Kevin Neveu

that Does sense? makes

Aaron MacNeil

Yes, makes Thanks. it turn sense. I'll over.

Kevin Neveu

Aaron. Thanks

Operator

coming line James next question of from the West Evercore Our with ISI.

Your is open. line

James West

Kevin, how Carey, doing? Hey, you

Carey Ford

James. How you? are Good

James West

well. doing I'm

America. What or your growth North it you see to to it specifications? point. First is biggest Is need this upgrade you at Is labor for rigs the constraint is question on do it impediment you in to see that? And going it curious seems what on counts. is a mean, see nice supply chain? pickup the the to me rig to like I we're

Carey Ford

that of good Well, story. news a would that you -- think I I it's bit the a tell

about think going have rigs, candidates. rigs, this a side. three the run day super-spec rigs would take have of group during upgrade they're our in that really left-hand out XX I another we're we of And fleet strong to probably rates year. on That calendar

James West

Okay.

Carey Ford

of out contracts to calendar high spec need good Precision two be year probably year long-term some contracts. XXXX. problem see we to in three rigs super quality for But running And

Carey Ford

is you're the we I'll spare super-spec add drill operating capacity we of the in leverage talking in low digits and the have -- adding pipe that kind dollars. talk single upgrades the automation, adding or within address capacity we're upgrades We're that. about what to we're about millions And to still high When are market just required. year torque Yes. calendar still doing, of Precision, limited the pumping where Alpha

don't think spend capital to have to the we're So address lot market. to going we of that a whole

Kevin Neveu

we rigs U.S. running XX running have available we XX Carey, have XX rigs and in super-spec the or today, rigs

Carey Ford

right. That's

James West

magnitude very to call then we're clearly comment Or those some region? of, the rigs on they're or And additional if East, would if one a of course more be successful at Thanks move your many going program? you be might on point. you why producers tendering That's to just that you of have how were those the to And helpful. upgrades and guys. in work how you impact the Okay. and large capital on that for be Could would Middle you more now. successful commit production are maybe are me some for rigs And aware that's you tenders? when the of would the -- would big

Carey Ford

fair There's of a right amount going on. bidding now activity

We've might we're So some we've horsepower Dubai the be XXXX be get Super end our of to utilizing rigs or that got during Dhabi tenders in in in expect are the on rigs year. Abu Dubai, had that we we've some at Georgia, activated. looking is Recently, two tenders. might that in year. Kurdistan, like Saudi be in idle possibly ground Kuwait idle Actually one and Singles one in could the And two more this wrecked. rigs of three and three idle some reactivated Kurdistan got class. up that those in the it Georgia that right? one activated So rig looking other be could

those America if North However, tenders. utilized would we're probably back away we from

James West

Okay. Got guys. Thanks it.

Kevin Neveu

AC I which they're term all in require $X be likely capacity lot won't kind [ph], near of -- go range theme. new most per old activations just contract had kind three capital along leverage comment years and million Kuwait all the rig. rigs super-spec into the The a operating deep another would that there rig that are six are of to rigs a whole of

James West

Thanks. it. Got Okay.

Carey Ford

Thanks.

Operator

and lineup Pickering Holt. Our Zurcher next from with coming question Tutor, Taylor the

Your line open. of

Taylor Zurcher

afternoon. good Carey, and Kevin Hey,

Canada. First question on

Again, few those down prepared some past been echoed really the two U.S. comments weeks in the U.S. -- pricing you significant in talk for Over And past today. of market, so here improvements. the about much remarks there's

just a a you compare pricing what up pricing of classes each a from Canada. with from So in Canada? there improvement curious standpoint of rig U.S. curious the seeing number in just contrast those if could perspective in for where and in Canada. classes I'm we going Obviously, you're what's And up different rig, sit on

Carey Ford

Yes, Taylor.

So a It's in rig have I think it's it's for highly in pricing for a of a ahead fully rig. is fleet are U.S. rig super-spec there the movement Precision efficient rigs. Canada a isn't and is side, on Super kind quarter or market's that more with the that. the Super the Single there's balance in And a competitor bit for Triples Singles of the super-spec Canada, And drillers the really of reasons tighter consolidated of two strong it's probably that Super also Canada. a couple primarily cost One, its There own. two utilized. just

Canada. to pricing bit that spring There's with type move QX had kind sooner. rising demand those component opportunities seasonality we've So, into circle. summer comes a tight utilization for And a of there's prices and a

for pricing in second coming a Sometimes the the round happens that winter season. fall

when there's that's engage created hard across space. So particularly has some customers. we tension, to kind third And Canada. a and Canada kind of been of there's of services natural right windows factor attention It's oil in personnel recruit crewing. that's the with lot And in driven that a

get to hoping of things to help but in rates of are into back all kind worked Canada, move sustainable in range, there think have I kind So XXXX. of not which a those we're quite yet out

the think I sold U.S., or come in out play spec, but effectively the in rig some factors essentially, regional weeks sold not -- into next differences see sold you'll getting couple it's the out, it think few I of various and And those dislocations now out. rig super-spec almost markets between months. it's a of

today So, front hearing U.S. us. from and of QX And Canada see on think between the track that that the we do the end QX. same I you're gets in piece

Taylor Zurcher

pricing market including not pretty least at the mean, just XXXX? conversations Yes. throughout I'm that And larger these with you there Good up It fleet, even some here pretty not have just lock customer over the coverage at how fully ahead the much just going XXXX. significant is it's to of but if I yourselves just super-spec to wonder drillers hear. customer are rigs doesn't backdrop curious, higher go of of I feel contract if utilized to be term mentioned, for broader going many beyond market. like term against the your durations? to and urgency contract land soon And is for respect course

Carey Ford

seen we've this kind up sneaking I'd a tightening the two little up opportunities in all years. rigs contract way of think I bit been anywhere that. has to that on to everybody from Well, pad-to-pad say

I yet, drillers really market well. customers has customers any the Taylor, none don't really I know is. think like But the And nobody a approved think understand XXXX our tight it fully budget how do. of

rates. people of lower necessarily to long there's a higher there's preponderance So maybe for a customers in handful would longer not I term, try just not looking rates to term. at that say looking huge locking of in lock a

as jump shorter at think reprice and term more looking tightens. I rate the been higher opportunities certainly case, that we've reluctant market to in those So ability to opportunities our the

Taylor Zurcher

from Got question it. And then, one quick last me.

a sorts And are rigs some going works then tries so, do do You're Alpha to expect And on outfitted I almost go you systems of you Or that XX already for paying that the phase be to to get it? field system basically year I those where put through for on operator curious, by just compensated demand for that XX it going systems? a I'm talking rig, and the are trial of mean, we roughly end. how from the those starts pool in out immediately? about today? imagine

Kevin Neveu

We be performance contracts expect that more. achieve based performance almost a got to immediately. we handful for compensated levels, We've earn where we'll if certain of

the and it the that we But the deliver where that pricing well. are put in could case, see you compensation. to quite of and Majority we customers the system we the carte So, those we la have a value, say on we working value applications on. earn the run move are

Taylor Zurcher

Kevin. Understood. answers Thanks for the

Kevin Neveu

about for capital costs that kind customer standardized And to that how by what with low we that this. committing just, lock-in those installations period on acquisition an over We've part is partners. do And working extended of closely of on deployment, been on we've course always We're our for done year. pool. asked you Taylor of the the

So so keep we also it's as systems the as fleet getting across low, our fast the but possible. side, risk the the both balancing inflation on costs

Taylor Zurcher

Thank sense. make Yes, you.

Carey Ford

Thank you. Great.

Operator

the Waqar Syed ATB And coming our Markets. Capital of next line question from with

Your now is open. line

Waqar Syed

Carey, cost the reactivation or yet? question. they number included in my potential Are Thanks for the rigs. not for taking Kuwait the CapEx

Carey Ford

Yes.

We haven't specified.

a I basket upgrades of think upgrades. securing the we've got of a we're of on we likelihood see put trying percentage to board and that those

So basket. included that in you somewhat can say that

Waqar Syed

of floors. well rig the kind talk draw foot as customers? high And same and competitors one right. the very super-spec there Okay. with are you U.S. on to demanding segmentation All XX customers works rig that that Kevin, today clearance, further to your have mentioned is seeing Are the of that your the you rig in as differentiation a of rigs market XX floors

Kevin Neveu

super-spec In have rig of a rigs be say actually interpretation could Waqar, that design. first super-spec. and three of whether what view rig So, I the skidding all, can would have API it mud on optimum that walking floor. And includes thing of pumps up good we I pumps or thing elevated as works Whether no bad case, the contractor And draw has drilling mud the is or an definition floors includes of our guess the that fleet a there each be they rig a is with two debate. debate. wide

drive floor. a so we controls keep rig that [ph] the fact assembly, all rig up the on LER split In

So that Super need particular our we can with meet rigs. Triple

Waqar Syed

But versus those that Okay. a in and still have there in rigs day is rates do not super-spec? that for capability differentiation those

Kevin Neveu

existing comes well it he might he to a want a down maybe you heads, to where have is that who rig clearance. pad over if has What walk extra he client the wants

in you've that not drilling If may which a pad you're line, is you need a pad a got it and clearance. new

depends. I'd just than more specific. it So it's It's industry -- customer specific say,

Waqar Syed

And great. then - Okay,

Kevin Neveu

both. have Waqar, we

existing we're wells ones We new clear pads, walking where over we of have wellheads. rigs some drilling have other on. those They're

Waqar Syed

your before rigs down Okay, be great. you have with international renegotiate there able time to then the And would contract six or currently current do -- coming market you think see up. they you you before two expire? start again any Do in the contracts working up expirations -- the contract

Kevin Neveu

We don't.

We expect time. down no

Waqar Syed

the may delayed. relatively this -- then Kuwait, in get year you quickly? do tenders Do they for that think you see happen And Okay. them Kuwait typically rigs,

Carey Ford

I've about tender. been talking Well, that

XXXX. all think now I XXXX and into almost of

and about say, So, a thing every from pops a the decision it's already making. new I'd year it And variant my delayed time weeks up projection conversations. is make I early slows down one seems like other four later

going Try So what's Kuwait tenders those to Waqar, ahead I'm quickly. But if in predict think I production Kuwait. say that I happen their would reluctant curtailments too. really go has very to removed,

Waqar Syed

Yes.

Carey Ford

when have they curtailments think Or, I move production those should their removed, I quickly. say tenders

Waqar Syed

were very you all Thank much. sense. my Those Makes Right. questions.

Carey Ford

Thank you, Waqar.

Operator

Piper coming And with Ian the of line our Sandler. next question from MacPherson

Your line open. is

Ian MacPherson

Kevin afternoon, and Good Carey. Thanks.

Carey Ford

Hi, Ian.

Ian MacPherson

description happening Clearwater little play, I I Martin wanted I a appreciate ask the it and think the of bit, Hill, what's asked again. but was to in

between If us more about the a talk Canada? versus you for your little that's And Triples or of to we mix? your think rates Super into and in a breakout about play two speak material day bit maybe differential margins that the Singles if consideration could Super folding as

Kevin Neveu

coverage capable the necessary, in exactly break that developed They The small small can designed spring just throughout were specifically for missed of here. was and Super I a a light Single in bit Carey play. give I'll heavy be efficient I mean, if of back fast-moving, cost. Precision rig gaps Sure. where really run drilling. something oil up operating pad fill have footprint, to XXXX, have type and low rigs this kind of for a

kind kept really competitive us edge with years it's there. now. that's out that XX design, cool of really And last stuck really So

rig up costs the $X,XXX typically Triple? about of rig that operating would a Carey, market Super fits be very well. So or than $X,XXX less

Carey Ford

Correct.

Kevin Neveu

In to teens that pushing in getting even. that those for And rig day we're now mid and upper range. levels rates the

Ian MacPherson

Okay, great.

Kevin Neveu

Tele-Double. rig the what does that in called actually with Canada is And overlap

same try with higher has cost again operating Tele-Double a margins. and higher the slightly us, the will rate typically compete people needs probably to day to So use a to which get

Ian MacPherson

Okay.

Kevin Neveu

the In all the a now guidance things low to utilized mid that. range above right are They're here have And are on in above the charges that. given we've Canada, you those fully rig. right put for XX lot rates. we also base Technology Super of now. Triples. And Those are rig on the XX's rates

Ian MacPherson

Okay. That's you. Thank great.

Sort U.S. of a the simple high-level question for market.

your where you market all that If the pro able for at of takes spec this year? forma to the And were you upgrades of reactivation end leading they a pricing fleet for today for your absorb stops and fleet at And and you wide that you're the everything model costs.? planning all year? repriced do this your edge Is asking you moving if

Kevin Neveu

a Are they you for asking model if you? do

Ian MacPherson

above Yes. margin Wouldn't pro on forma hypothetical cash your easily basis? XX,XXX be that

Carey Ford

reactivation cost go where don't any I cost. right think bit XXs. mid reporting leading-edge fixed you're now. from better Daily And have and being down looking at we costs the probably getting operating a absorption we're in if we're

margin generating a the above So, I $XX,XXX average on could fleet day see think you

Ian MacPherson

Yes.

I whole entire a Alpha your leading-edge the would extrapolating so. majority and me and unfair project think it one But with extrapolating point -- will -- I is probably not fleet be carte or on spear across and that. the to with vast that other your it your it careful data of of add-ons that capability to of la higher inappropriately I at fleet. the the not that to be seems want saturation tip be just pricing thing sort the

So I just wanted that [Indiscernible]? Okay.

Carey Ford

Yes.

were getting contracts and two to at $XX,XXX you on some where and and in cases margin you're looked you segment that above were if in year day that fleet. we rigs our one without think of I Alpha, go three XXXX well back pricing our a super-spec

Ian MacPherson

framework the then discussed buybacks you're if already Have don't me, I this with the we've know And versus Thanks. examining return Yep. talked call. other plan? the on dividends for the capital which you one about through

Carey Ford

it's four-year So a plan.

a almost first the as this going And leverage level to assume But buybacks. closer years we little share share and more to the likely. it's framework capital be of business, years couple first this becomes is get more be there's plan in bit visibility for For dividend of exclusively a couple going the to the target buybacks.

Ian MacPherson

Carey. Thanks Thanks it. Got Kevin.

Kevin Neveu

you. Thank

Operator

question coming the Stifel. next with from Our Instructions] line [Operator Pereira of Cole

open. is line Your

Cole Pereira

everyone. Afternoon

you outlook that good U.S. in to the the pretty highlighted relative on bright the some far Canada a color was near term. And so verse So Canada for quarters of the U.S. couple especially

the wondering the being factoring stronger. of you seasonality now, Just either see in or obviously Canada currently is some if relatively Right Canada? really U.S. in

Kevin Neveu

of what customers. with that I farther little kind is me trajectory leave to think, down Cole, pricing the drives our Canadian a

So helping make better. that's Canada look

Triple heavy market I think areas, and two Super part rig oil those consolidation our is of that Super tighter in in in the the area area. Singles

structured Does a the That's markets. make rational behaves It's now. and a it industrial it sense? the thinking that are or you've more mature so. way generally more that much market got -- feels in more So more more just less players their right it behaves public rational with more -- disciplined than

Cole Pereira

Yes. That's a good color. Thanks.

activity. on mean, have on of I kind issues putting lid logistics talking restriction you a Canada curious, a about briefly so be in touch quarter? much maybe a of I'm QX seen And rigs getting really just labor the in some you customer into of activated bit

Kevin Neveu

the and time but worked well side, typically today. for lot higher On over there's know time. It's And a and slightly tougher been good them the heavy pretty it's objective have for but lift I team, much, drilling listening some in is get a of the they've consistent much and hard, a drilling met rate, work more hourly servicing. and and are repeatable over our more The jobs that. drilling. they a couple consistent more pretty reasons They've been

that could total work be call-out call-out good been lot work, to more or a the of much it's like So oil be it it's could of pay well sort tougher services. bad, field stick day-to-day a people a and lot And the other -- higher attracts much that to recruit little drilling. is it's servicing,

And drilling. task team, in they've well really hard our the drilling, work hard servicing in accomplished but for So work. no

great QX We've stepped to it's rigs XX would for limited stepped I done that now. right in breakup. have well say after got But job. more guys have You a up Expect activity. servicing up

Cole Pereira

great. Okay, Thanks. perfect. That's

just the awards, clarify international might to mid-year. mean, occur an I think reasonable on enough there on clarity Is to by And still so rig that timelines? not maybe just announcement

Kevin Neveu

But middle a I been, customer. on clarity for quarters has lot this there's that's work they're of gone I the but next we No limited ready entire eminent America. has timeline, east now. And means oil know step. slightly and different they're right behind mean, been several in terms tenders that than to North for process imminent recognize I start into We our the signals production waiting that the making these think at know scenes the

Cole Pereira

it perfect. I'll Okay, me. back. turn for That's Thanks. all

Kevin Neveu

Cole. Thanks

Operator

coming next of from RBC question the Our with Capital. line Mackey Keith

Your open. is line

Keith Mackey

winter break be for my it's off. say thanks looks I and to to QX Kevin, it's anyways that I well to Or hear was the break XX% up, taking going to to afternoon right? as Did be comment is thought, trying out I stronger last I Good to strong than but them? QX you and level. be you to wanted year. XX% start heard or what higher Hi. said the just there going think going potentially questions. And than like then I

Kevin Neveu

and like all guess the that I previous heard a the I decision after It given say making. variant right. popped that COVID QX. weeks and slowed Well, QX projection projections it you gave few another I've after I'll up is down seems

barring projections or And once again exceeding levels. kind So a those macro any XX% think more Again, dislocation. year. dislocation, I QX or of like maybe looks than activity kind of it's see I last barring QX think what I we could matching macro little QX said, better any are

Keith Mackey

for you maybe is level just certainly it these talk that an the macro Can Appreciate sure. for confidence. that would gives in difficult certainly what's incredibly to what But strong QX. forecast happening the Yes, about you days. be

to of different at make what based mix about will Or you be QX will gap. time? Will and maybe So, on sort to today that the little similar be based bit that drilling rig that talk types do a the up on say the just seasonal think? the

Carey Ford

Yes.

better. just I a of good, great So bit qualified and little kind

good does it compared to XXXX and pretty look XXXX. So

or go of we're Just well below back levels. kind those to XXXX still XXXX,

ago, strong So long much while much, through, relative what a it's we've better a pretty wasn't looks it to like very been times. year it just

keep mind. much So like right mix that the pretty winter But the would have fully look in utilized. now. We'd our mix Super Triples

bring maybe happens. to one more to if out Super of potential We're a up that see have Triple We the customers with U.S. working

kind as or a cycle of in current Singles, run we But Canada. Super mix our there. good have maxed kind XX XX driven that's five, there's So to this to well add by another We Super Triple could reactivate little clearwater. a -- I within be we've think in Super more And resurgence with Super heavy pretty the one set. of oil right then opportunity got more But with out. fully room certainly that'll fully Singles more And Singles. now

Keith Mackey

where need seeing as maybe bringing about rigs kind be around Triple you're Got result? couple as tightness up up where you're and the and could think about I moved And think follow tight Super then and rig the those most that imagine well it's things in talk just most the maybe just could I just of talk eventually U.S. where a that potentially and tightness Canada, the basins it. you category in U.S. another you there supply? some if move And Can of in [Indiscernible] regional was the to seeing

Kevin Neveu

redeploy December of paying We're we biggest surprise of glad I slock a the in thought a some in particular basin. into they're now That's from was for, this there some they Permian had to was customer we're rigs customer if I've asking, from rig a the maybe one move question. one rigs late the to probably that right Permian. moved opportunities to the for limit Haynesville. Eagleford. working the it. Oklahoma really a to still our XXXX you Permian at year great move raised could in Last But the capacity of some I'm looking Permian smoke rig basin? Because actually

like excess now seems regional place rigs on basin. couple is it a we the right tightness everywhere. The of coming is it DJ So kind of seems only like have

Keith Mackey

it. Got

you fairly Okay. well? EverGreen just maybe us a caught were customers on Very that similar the adopt as good. U.S. to historically think And to been traction of line it or has I the Canada Canada. gained Has know little you've talked in up follow-on I than quicker as faster or changed and adoption. or that the Canada tech a that know has

Kevin Neveu

lines I'd most with too. our is EverGreen emissions have but first differentiation. actually across ESG been that responsibility no almost good markets universal focus getting our private public customers actually say in particularly traction of the customers, both So, And

a So, we're customer across mixed mix. trend that's and the seeing right geographic

so piece, longer simple show wells more technology to is improvements. clear this. the technology On duration room On answer has the

So in narrower duration or whether bit the to shallower wells little gains customer sell. for faster, they're shorter and little a tend the be maybe a tougher

little So are sell Canadian wells. shallower easier wells some wells tend and really wells. there short areas and duration to be much long a that style short duration Tougher are duration

Keith Mackey

Got much. Thanks it. so

Kevin Neveu

eight -- I'm be would I short. but four way, short Long would the and days. by days long be and talking And about

Keith Mackey

Great. Thank you.

Operator

coming question John next Partners. of Energy the Daniel Our of from Daniel lineup

open. is line Your

John Daniel

guys. afternoon, Good

Kevin Neveu

Hey, John.

John Daniel

potentially a of reference at being for people talked multi-year quick lots There's our space one cycle. just us obviously that Kevin, the me. of in about start

are if arrangements how the -- they're you way, to beyond this the kind belief they're I'm if it provide as customers color of commodity can we viewing think And if on year? you at that is about I at are true? actually curious multi-year some same just look they life talking see Just looking backdrop.

Kevin Neveu

to I down would that really. looking planning is contracts yet short of John, around lot that's pay. say trying to answer transmitted take customers longer. not Other rates for in low dwellers -- long-term a at land isn't long-term a there there's the or few than lock

handful less a that half one they trend. have than where But are a year. a seriously dozen a making of that beyond as call We customers I plans wouldn't

John Daniel

bit seemed follow-on kind to all Fair environment of commodity and Ian's a just enough. of to today, because how trends suspect where it a price the If and seems being it the recent higher just is. is the where questions. you of that? your rates this it pricing look if me you all if are equal stays When year business else volatility, going because Do at it next that's of

be if So the why wouldn't that proactive you you're want in to risk mitigating customer.

kind great? any be of and a thought color Just would

Kevin Neveu

drilling of part very be cost wells fraction these that small of it is efficiency John Well, the on rig the still just of a high well. total might the

it So where an the if have it sand they're probably be be putting it financial pumping, would wouldn't would their exposure, focus on be lot profit, rig. area they of pressure a

John Daniel

appreciate time Thanks. always. Okay. I Fair as the enough.

Kevin Neveu

Thank you.

Operator

I'm showing for to turn closing any time. would not like further I back the questions to call over no Mr. Ford remarks. at this Carey

Carey Ford

afternoon. connecting joining you for a you forward Thank day. Have conference April. with to Okay. We our on this in us call look QX good

Operator

for conclude you Ladies for and our your gentlemen, participation. that conference Thank does today.

now may You disconnect.

Precision Drilling (PDS) 11 Feb 222021 Q4 Earnings call transcript