ICD - Earnings call transcript Q4 2019 | Independence Contract Drilling, Inc.

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Operator

Good day, and welcome to the Independence Contract Drilling Incorporated Fourth Quarter and Year End 2019 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Philip Choyce, Executive Vice President and Chief Financial Officer. ahead. go Please

Philip Choyce

Executive and discuss everyone, With for us and joining today Good fourth thank quarter to Chief President our ICD's Anthony results. and today is, morning Gallegos, you Officer. year-end me XXXX

what Before differ subject that include comments talk participants, remind cause we our and risks certain results, I materially and we periods which number today actual are uncertainties of would factors begin, today. statements, to all like forward-looking from to will to uncertainties. future about A could

For discussion read the complete on and of a encourage these with you the our risks, to SEC. file release we company's earnings documents

In addition, measures. loss net definitions loss, and during release our non-GAAP call. we public EBITDA of EBITDA filings our and to Please adjusted adjusted full measures and net the refer for for to of earnings to refer the a non-GAAP reconciliation

over I'll that, turn with And Anthony it remarks. for opening to

Anthony Gallegos

Thank you.

market the fourth prepared and our will conditions the positioning as navigate by key market Philip and of results near-term ICD's details have land typical, will continue drilling I remarks, we guidance. the for where XXXX focusing market, in be go we As we and the regard. on and see market recent this XXXX of concerns. In through And uncertainty talk the corona about initiatives current this to finally, in underway the strategy activity quarter my caused

and in to flow now our course that our right be priorities customer growth and contracted and and a from U.S. XXXX count drilling industry generally typically recalibrated generating which highlighted were prices rigs, the base between year case we production, between normal. free to is of the may returns. and As XXXX contract barrel, and believe land range was ICD bound pivotal we new as the of range a counts our call, rig as XXX conference readjusted shifting bound E&P $XX what previous for rig we below mindsets and on $XX Oil cash

capital made drilling new order prioritized In this prosper. are contract normal, efficiency markets, financial the over there's efficient cost in and laser-focused are our on efficiencies from and available and modern and services most customers growth to to growth access maximizing drilling require limited control

the we this of the replacement the For final means, contract industry, drilling believe manifestation rig cycle.

rig further XXXX, over in Since legacy are we XX% It We coronavirus XXX with fall potential seen have some fall even faced share to the the market in land did count rigs return sense moment. count these U.S. in simply specification of some in in economic or discuss that never AC down and was such XXXX capital nor in rigs rig return is a And adjustment the in XXXX, work reactivate rig these. The to will it's return if not to believe operation. recent required recent as And the time. this AC we a available, operation uptick activity rig short rigs it environments we current obvious we U.S. will and have laid the during to never near-term by land accelerate upgrade not seen increase laid the believe over trends. will down issues in has market. I any to such make will equipment and most lesser the

our place and costs people duplicative have eliminating robust over development and strengthened systems successfully significantly $XX deal We operating SG&A by target processes order. extremely and in this operating new order position XXXX backdrop, scalable, financial was and million including industry-leading with this important the ICD Sidewinder in our a in fiscal competitive customers. against to and HS&E for preferred integration, Now as we completed world

we our reduces operational of further internally. knew in our target We scale built and our within we point being, larger rig happen. when normal further operating benefits believe we've The fleet, can't new that predict to a scale redundant demonstrated Furthermore, necessity the industry pad-optimal that. consolidation offers much efficiencies fleets addition, we run cost is main In to the consolidation and customers in in order will operating to maximize consolidation an markets. economic

participant record supported There must and and of for in customers. of opportunities by value our challenges with demonstrated a ICD process the that structural unleashing and employees and a knowledge, successfully social be challenges willing institutional capability competitors wrinkles systems but well underlying processes is and integrating extremely creation our positioned and are we are overcome track bring course uncertainties, a consolidation robust proven substantial with our shareholders,

in we very taken rigs early also positioned with our order area leads the industry, latest the seen our technology. remains still position drilling in ICD vis-à-vis where XXXX, significantly This stages is We've prudent competitive it is our enhanced outfit third well be technology. regard. multiple parties in In it partnerships but to and to with very established this and optimization steps

And in we deployed As one not additional in the contracts major the on of last awarded rigs operator were rig, three upon systems recently fourth promised, we evidence during partly our but this as a quarter. our regarding momentum just of regard. year, on Permian our based these capabilities with initiatives,

down additional may margin consolidation. our create that customers, which ICD rig value XXXX. of drilling that our inception drilling continue in has drive should The rig a technological and through efforts with market across competing important scalable are this helping fleet of existing the those ICD for technology we and And further point other today. evolving is since operating solutions have in place which being our and evolution history any provide we eventually come in fleet

take of and this reconfirm required sober has fleet maximize beyond, new normal also strategy following as Now hard into at our look drilling ICD the look and our integration we XXXX Sidewinder returns. to completion

and review equipment of sold. rigs of to that recorded we approximately quarter, or a $XX impairment quarter be fourth during result the during scrapped will As the relating an million this charge

sold the equipment in included acquired This equipment also include old not two acquired in that operated five years and in does which merger fleet require operate rigs in an over CapEx we marketed to future. target that be AC upgrade reactivate, which liquidation. These the in and the will merger foreseeable they for significant primarily our never our believe rigs relates markets were have to in do not orderly Sidewinder will legacy

efforts this current fleet modest connection near are in reclassified but environment, In fleet at energy for a after assets sale. will we several to expend exercise, term, from rigs. marketable require focused, rigs CapEx. that In additional $X.X of upgrade this with well held marketed million of equipped and impairment the very highly Excluded the relevant year-end on we are XX

market and Completion projects until to marketed dayrates contracts higher conditions. drive our market being we and higher until not re-enter of fleet. fleet time. is will These and longer-term want working improvement, rigs these deferred with In that margin marketed meantime, our meaning conditions steadier our fleet and for the utilization sustainable warrant,

expect operating the half bi-fuel the On talking this issues power important. rig's fleet ESG front, ICD or capable, bi-fuel and that to rigs now we are utilization the more rigs its increase. years our of becomes approximately bi-fuel to even capabilities been moving are utilizing with rate of continue and Today, today of ESG the has for to highline actually all about ShaleDriller the and capabilities forefront, our

require. CapEx a fleet, reduction significant we XXXX at means we've support to that marketed including at discrete $XX.X which million, of of fleet ICD. made equipment maintenance to engines as additions our relates set capital budget customers which the adding has remaining to Regarding our pumps have million fourth rightsized spend mud levels for to $X CapEx, been approximately and CapEx our our and historical well, To as third marketed

flexible which additions to pumps this fourth as we our deteriorate, already adjust out surfaced. in was this before operating speak, during our point equipment planned outfitted will concern third conditions coronavirus first is such the want half approximately XX% If accordingly. of engines. motion of rigs Following market be will the with and approved our is year, of and capital we that expenditures I budget

rig our to on progression conditions. market Moving near-term and count

the ICD's count quarter inquiries and discussed Permian place improve part, the in Basin. XXXX rig contracted were the for we And conference during and to our into contract transitional As based the quarter upon taking last most to issues discussions and principally first on which expected negotiations, that's true. subside XXXX fourth of of call, held

or Permian. three under Gulf contract and the signed contracts XX Permian work During went new customers contract new exited including and the Haynesville. XX different count Coast expanded extensions Ford three in XXXX, quarter, process the our operating in and fourth rigs Overall, we working with Eagle, to we in basins rig the

elected have larger operating completion On natural reduce hand, largest the our or rigs of we Haynesville operating CapEx allocate where two customers our a quarter, other light during six sub and the almost drilling prices. of their quarter a to count gas of fourth had budgets the in rig the programs in percentage activity $X to

rigs has of our the safe operating environments in of most Fortunately, the in one most XX. the some operations the provided in efficient Lower Haynesville challenging

worked rigs continuously for the part most the have In through fact, downturn. these even XXXX

five had re-contracting we're so which the we've customer as negotiating far, extensions with speak. first a a new including new be In so and remarketing we quarter couple. contract we have signed but we success Thus rigs far, are will and dealing a these still contracts fifth two

this to XX what We on contract So been rigs in very as the the opportunities at of actively near-term are marketed on currently you busy XX the are over reactivations days. incremental call and where working we rigs XX would there next be have contracted can fleet see, meaning we've rigs three our front. time under contracting for

difficult. forward of contract, weeks first least concerns all with rigs said that, exit quarter extremely expect makes to the under coronavirus two over visibility last at XX Having although we developing the

drilling signed Just light customer this in meaning to otherwise coming us contract, we week also new changes, week one us a that commodity this call, rig they before are in this reducing contract back program not expecting. a had their price potentially we we of were extensions tell several

market a rig fleet. adjust remain will would But count expect our early too we our tell operations dynamics will what to we operating decline and barrel a $XX for prices simply on U.S. if oil the impact while, and It's virus land the to have accordingly. below

we that, associated So, with position market the plan to and handle want softness discuss financial how any I with to coronavirus. ICD's

to eye significant have purchased operate products not but potentially items affected. inventory reviewed keep rigs purchase sure an chain could our are continue The are equipment we and of our items domestically, at key to First, make supply vast consumable be manufactured risk. we to we majority on our review to and continue that

perspective, comprised undrawn available October and availability cash to our loan From term of us do we and of under XXXX not debt $XX year-end have had of and accordion. financial committed balance a sheet liquidity maturity a million until at revolver

to efforts basis an our undertaken Even had million starting on second support-related early costs $X reduce an by surfaced, before annualized coronavirus issues we already additional quarter.

capital our addition, on activity focused vast In scalable operating of and majority CapEx as cost budget maintenance and of is SG&A our a our portion support is is budget. principally the levels, to

contract dayrates dayrate some on seen have greater Moving where The today. remained dayrates. Haynesville pressure when including utilization new with environment pressure relatively renewals, opportunities, to is in but we stable rig for under respect has to competing

in on Right week of net renewals near tenors pass-throughs near-term our the the Thus with the this in are for today, the some on XX-ish even per reported range. now, of high Contract day to revenue predominantly backlog greatest. uncertainty, us, teens is range in see substantially coronavirus competition six-month contract leading-edge pad and signings term. pad renewals metrics face don't in in improving I opportunities where and

side, higher-than-expected we go repositioning with included associated quarter will R&M details, cost through costs, continue. day reported our but but were which fourth do which Philip the the also of included not will On expect rigs, expense, anticipated, cost per

positioned well with very this importantly, U.S. due up, foreseeable Summing all in positioned market more well headwinds extremely ICD to that to see for matters is the coronavirus strategically existing I future. market land any drilling and believe, developed the deal we that is

adjustments in Our rig maximize near support in can technology cash initiatives are and to rightsized and the are gaining organization the fleet, flow headwinds. market make event capital have near-term there budgets our term marketed momentum and further we

highlight of portion incentive largest aligned programs want the long-term and with directly that annual to goals. compensation these incentive are also now I our same

it's young, efficiencies manufacturing is customers. our fleet maximize rig for to Our engineered

and ESG and drilling to and our efforts Our industry mandates. rigs existing are are optimization address capable concerns already customers'

merger integration complete. Our is

reside states. participate and focused cost, from fit we opportunities synergy appropriate most are more the ready economic and present substantially to remain America's resulting merger prolific our contiguous We which opportunities from rationale customer the and with on and and enjoying regions, North in Texas consolidation vendor oil themselves. are with gas-producing We industrial

With for turn call company. Philip walk I'll results that, us the the the back he so can through to over financial

Philip Choyce

Anthony. Thanks,

intend and million $X.XX $XX.X an Adjusted non-cash of reported contract. was per equipment per of loss share net premerger quarter, of the loss associated include or Included an and net $X.X to approximately loss impairment adjusted During in with charge the a EBITDA associated of we share write-down adjusted a million. both or net or of calculating we adjusted $XX of with accounts million collectibility scrap $X.XX receivable related sell. the to EBITDA, $XXX,XXX adjusted

respect Anthony the issues quarter, to With due quarterly discussed in increased on utilization his to per came well provided reported decline a quarter, items, rig delay prepared of sequential sequentially, during guidance in Haynesville during revenue in the $XX,XXX, remarks. reactivations in but a as call, $XXX guidance conference quarter was transition Permian with as day. day scheduled and below the our primarily other third representing of per Rig consistent XX% slightly

I of approximately per which per difference principally Overall, higher non-cash expect $X.X due guidance, came impacted reserve compensation do in expected expense of to in the guidance SG&A day mentioned. to we during the negatively million, costs. by to not principally higher $XXX,XXX relating expense costs than Cost than accounts continue. with came was of including transition $XX,XXX rig the receivable previously higher quarter, day R&M costs

state consistent Depreciation de year a deferred accruals. related guidance. our and in tax for approximately an minimis. quarter to for tax the benefit the Overall, interest of came We expense expense recorded was adjustment Louisiana $XXX,XXX to with prior tax

payments for insurance the expenditures, million quarter. Cash recoveries, $X.X during of net and disposals were capital

not of on balance requires net which is amortization net December XX, any million. and Moving reported $XXX.X The at we prepayable of debt contains loan, to minimal At covenants. our time is XXXX. debt October term costs This does finance until no comprised entirely deferred excluding sheet. leases and net financing of and financial facility mature our

purchases. of million replacing accounting reflected timing at retooling revolver purposes total to availability liquidity balance Finance vehicles is undrawn under vehicle of for lease of and with term comprised quarter hand vehicles depreciated December sheet our fleet of cash on related leases a did we our and accordion. equipment leased end new XX, $XX.X upgrade on few our had At and loan increase

This contracts approximately includes with expires which of $XX.X years years short-term backlog at Our contracts original terms December representing six all reported -- XX not and of greater, backlog of in included rigs contracts months six of at work stood this million, rig of reported work principally thus, under in are under pad-to-pad XXXX. or rigs operating backlog.

Now to XXXX. quarter of first for on fiscal and guidance the XXXX moving

For interest approximate year, be million $XX.X million expect annual including the guidance, to million, for expense to we non-cash depreciation we of $XX approximately interest expense. expense $X expect

be and $X if compensation adjusted excluding activity stock-based million on million. and between $XX We to expect to we expenses This SG&A deteriorate. will current budget $X.X levels million predicated conditions is expect compensation approximate stock-based and SG&A range market

but our too on As activity in million payments of maintaining affecting is items sale XXXX, levels. held that a predicated for XX XXXX months. sell approximately million, financed flows $X by Other with of is XX, the be will lease mentioned, million and sale XX capital Sidewinder our to legacy payment of over and $XX.X that as we December final the budget assets cash At non-operating for mechanical $X.X XXXX consideration merger the current had company. classified associated also owned equipment we next intend of associated rigs Anthony

quarter first for on Moving to of the guidance XXXX.

this other we and first will day operating from X,XXX changing quarter rigs revenue rigs utilization quarter in transitioning days. to to around our cost between be the are rigs impact regions Haynesville during per backdrop, we discussed, conditions. expect XX.X average metrics. ranging to market and operating the Anthony With This response days As with X,XXX

average will currently we and contract potential of mentioned, exit Thus sight a the rigs quarter our Anthony exceed As line couple rate on first our under during first XX other quarter. have operating contracts. rigs of

Anthony very forward is developments. visibility limited upon However, mentioned, based as current

still we reported per fourth payroll the the cost during quarter around from normalized of seasonal $XX,XXX On rate. lower transition during XXXX, to to A Haynesville. of will expect by rigs than be costs, due but the first expect day $XX,XXX revenue matters, quarter. We per be the than day to higher the normal run but more quarter amount the significantly small first

first expect We and $XX,XXX the between day quarter cost $XX,XXX to range during per quarter.

to merger acquired of million First stock-based to compensation, fourth interest seasonal that in of due placed And quarter, and during should had is quarter be quarter our expense SG&A ICD. $XXX,XXX annual than expense $XXX,XXX. Sidewinder charges expense audit equipment flat by including reporting most been year-end be $X.X the approximate in and the costs. average be should relatively should to tax expense the first Depreciation related as million, to higher approximately service impairment never $X.X expected

forecasting On are the working modest due to quarter first we a investment, balance first sheet front, quarter payments. seasonal capital

As half fourth upgrades timing third asset offset obviously predict. these front-loaded The to year. is of engine to to somewhat potential are sales the first our items the difficult of the pump, Anthony mentioned, planned Planned this. have

And Anthony. call I over turn the with that, to back will

Anthony Gallegos

Operator, open comments I this further go ahead Thanks and up Phil. for the questions. have time. no at line let's

Operator

Thank you.

the Our ahead. Instructions] from come first Hallead will session. We [Operator go question-and-answer question today with Kurt now will RBC. begin Please

Kurt Hallead

good morning. Hey,

Anthony Gallegos

Good morning.

Philip Choyce

Good Kurt. morning,

Kurt Hallead

reducing be thing attention commentary Tricky times and indeed, of uncertainties you But one your about though they're come their tell effectively that one count. and summary operation of had customers my E&P kind So back you in future terms of give Anthony, great was overall the going rig here. you preparation for caught did you right? made to a the that

you that's Or you kind kind on coal from in canary to that's think the want of get of sense do a general that think you a one-off do a is, Just mine? dynamic?

Anthony Gallegos

don't know, we Yes really Kurt.

for to for some a to thanks not for things perspective rig question. even week. just literally really into how That had been executed extensions the week the so It's in put a contract came in up, productive new it. contract First call a and to late go us pretty negotiated successfully and sure gauge

never discussions that know going over hand means. do. that the exactly weeks. the the or the of just call, not I negotiation obviously customer, he the let that we'll end people of I ultimately walking into work couple having until next what the real in least that and is discussion You information with felt should in so through know, at them what we're Obviously, now sure with to

sorry So more visibility the you I their drilling this only contemplating because of any first one I is can't that just at is give the know, one beyond Kurt. and aware But schedules that we're don't time. adjusting that it

Kurt Hallead

and I that. appreciate for candor. your Yes Thanks

So rigs? dynamic, explore rig bi-fuel your to wanted packages you little as bit you the mentioned I X-year software And kind got other around think capability. a dynamics the about talked on of then I the you

packages you sense So that? us rigs what first the revenue give operating, on maybe general on that for as is some can the software three model the to are

Anthony Gallegos

now. we're through that working Yes right

And I up really years. this excited playing we couple what It's well. for about of working companies our some on a people smart great We've First now about competitors I'm really as the I've some been been smart out believe, with have we've this amongst have really technology. some teamed to with talking for that offer industry. quarters.

it's important manage the us that really, For situation. really we

curiosity, I conviction. higher lot is and today wait customer think is a But certainly year see. I today ago. think interest a there's it of lacking was still than There's what's

use. technology that in -- getting getting the really standpoint the So is strategy from a we've pricing it out it putting employed

demonstrating customers obvious. I up that's capability there be technology, value think getting that creation worried to proving its our More than the the -- paid. about will

out support the there as use I I Kurt will the technology. think rig at further cost obviously, think customers and to out able some cost of the that are enjoy -- our I think through be reductions site

well. going then things cost will drill and of to cycle ultimately the that better obviously that in penetration be to times efficiencies also reducing there's show And like rates themselves reducing

TBD this a it's at time. So

we're we're there's people there's have wouldn't prudent it. we about to it. that's a different I end. proceed. do But to created. taken to be we've think paying value opinions value ICD. to to I approach going attention be Different front accrue toward think investing on Obviously, And to it, what very going that's the And do going how

Kurt Hallead

the And -- you on are and element demand kind in maybe using what maybe in just an seeing, interest rigs? acceleration of pull is bi-fuel there bi-fuel

Anthony Gallegos

too. I almost I of power their when highline talk interesting ago also Kurt, in to to ESG mentioned was It's focus weeks every customers. saw and out a about was is. two almost I to them there them Midland dozen ESG. that surprised one really it's Yes, for XXXX learn me. addressing

and today the uptick of ago recently were bi-fuel Our significantly so up year bi-fuel certainly rigs ICD then power, that to and I on highline the an second within the the on see pretty rig we them expect that seen expect we've using are use at capable. A I use use that, have. discussion of least bi-fuel increased fewer highline capability, in certainly one much would than will surrounding quarter more of picked capability rigs but the the so It's power. have running would

Kurt Hallead

margin? to And a translate higher does that cash

Anthony Gallegos

generators. There's with expense the it R&M Well associated should.

the expect the level out areas the in electricity would that. same Basin reliability. -- you But of and of because not Permian of can So all provide especially

So latency, those there on the to of still generators redundancy be depending have power systems.

on more one may another. might location run on generators You than you the

can one thing through, try are go that up to concerns ESG feel you to But out going industry So, expect address to going for more our importantly we're them certainly is to the there. ICD. go have aren't do what costs to the very and down. just would continuing If it anything that way to

Kurt Hallead

Anthony. Thanks Okay.

Anthony Gallegos

Thank you.

Operator

FBR. go question B. with will Please ahead. Pfingst next Our Ryan come Riley from

Ryan Pfingst

guys. good morning Hey

Anthony Gallegos

morning. Good

Ryan Pfingst

Permian rigs the the you is a Ford. move Haynesville? the to really quarter you the second focus Do guys moved Eagle you as out the In some Or see more of rig there? opportunities

Anthony Gallegos

Yeah.

across, terms Permian adding Haynesville of Ford obviously back rank the work. the is strongest to going in look Eagle as the run. would rigs. in I softest of the second terms we rigs is As

working even we are an as on We speak. opportunity down there,

certainly expect of I So rigs to go the to the see first year in do incremental half work.

industry as but expect many the as to pick Eagle a I the in the Ford, would there. For Permian, see not down

Ryan Pfingst

we're away three earliest but of years ability that can debt expand restructure in how XXXX? maturity, to terms necessary debt over from still renegotiate And as becomes your march if you flexible we on the your towards you. Got terms, is

Anthony Gallegos

loan is you our also Well, know term holder our largest stockholder.

So it's not a call a if minimal Obviously, now. like really near a It's not think play. terms that. do liquidity like three phone away $XX covenant don't anything facility. of It's – really we're it's covenants we come that something million of current it's minimum into a years to right – away got need and financial we that from the

So at point time. it's in – and prepayable any

as a call. we'll there, negotiation. drawn-out down closer have but So to It's not address those phone it's we – things a get closer

Ryan Pfingst

technology just do then margins? following have Thanks, can one idea explain Anthony. drilling additive you and – how up technology, or to that more when any the maybe you optimization your And becomes on how and

Anthony Gallegos

I I there's Yeah, not this eventually expect approach a end now even think would had. we when invest the the to that it and to rig be begin cost year we that's be to CapEx of that maybe amount that value that minimal taken. large is The versus we hyper-focused think I Look, we've accrue the our that our value the part. see a front I to just able but partner. situation the lot especially where of hope They're value the on customers But Right are are considering that approach in have that to do their incentivized cost. bottom I will additive. sometime line. mitigation on reducing we've taken the risk is invest the we're upon on of sometime really to to during this based would would CapEx contractor. that take think The would year – Ryan certainly flow

Ryan Pfingst

it, Great. appreciate I guys.

Anthony Gallegos

Thank Ryan. you,

Operator

Our next from go with Johnson come Please question Daniel Rice. will Burke ahead.

Daniel Burke

guys. morning, Good Yeah.

Anthony Gallegos

morning. Good

Daniel Burke

Let's see.

recognize Haynesville exposure? just see you we $XX count can with the achieve been ongoing the able I stability sort Haynesville of you So as do rigs? level But just industry remaining overall what is WTI. you've concluded? maybe regards period of have you rig Is risked below lingering what sit to that summarize from transitional to the Or risk there in

Anthony Gallegos

Yeah.

So customers exposed better Haynesville an decided They read it then held our two in $X believe is CapEx roll-off. the also hedges recalibrate today. what their reduce up think spend and for They of were budgets. thought, put began to budgets Both had were but to the Daniel than market as just customers I Haynesville in ICD Mcf. there completions. to of a XXXX, of out is what's over last customers people happening we had those my into year back just activity below to the prices, as percentage had rounded know perspective And large in the lot to November year happened three reallocate toward six I became rigs which you contracted

change a at it couple to what that's of been very XXXX. In the reduction in on precipitated least ICD compared words to rig quick count those. We've side. And was other re-contract a the

In fact of now second here the on the rig that as one one them of out already move we also has And well. been Permian that out has and February. nearing we're west – contract during the to will in require moved contract completion

about more got to working those. worry on and ICD, we're for a So couple we've

a it nearing we're for certain little market. before feels here more We we have stabilization ICD like for what in bit know rigs. the But time happens those with Haynesville

Daniel Burke

$X million follow-up, sort could be component a to cash outlook. held-for-sale account flow a the Then That Thanks. this Great. meaningful Okay. for held year's of sale.

that about ease auctionable Is What's that – some bucket? time? to the of what's likely that stuff? that You Or of is – for talk linger selling easily in that the some equipment?

Philip Choyce

Yeah.

look So, at kind orderly there's which purposes, way a a it expect wait it accounting there. – fair valued Daniel. Sidewinder a of really to to how we what The couple gets million not of to things see have to would for is of to going come account. to get. liquidation so they We'll couple of is value that's think two-year that that's a shareholders how to we at it There's sell the former really quickly and to our go about

about XXXX remaining never And in there. AC about Sidewinder that X,XXX so in assets. that rigs. as X,XXX talked that AC rigs And you're there's rig million since there we've the talked in legacy really never really about about – never with operated some that's as horsepower million well. we've SCR There's that's one $X $X was rig say horsepower a And Anthony small older-generation really talked it's

I we're -- it's to going monetize when hard be it's to flow, to we're a steady this -- year. I but would that's think half of going like marketing going predict that -- I'd to happen. to can today. would try expect that those we

Daniel Burke

Okay. That’s the it there great. time. for guys. Thanks I’ll leave

Philip Choyce

Thank you.

Operator

next Zurcher and with will ahead. question Our come Please from Taylor Tudor, go Holt. Pickering

Taylor Zurcher

going near-term over and talked about the back on past you've the think cost Hey, we cost in can keep some normalized you the that balance the elevated. kind level XXXX? thank towards of as get talked the Haynesville level. good you rig XX.X side, a to churn being was Phil think you. as of year of you in morning Is the to count about the half But the

Philip Choyce

about the are. we're transportation do for the Haynesville. they the the a really on Permian. pay stays have rigs going to That's -- our everything all the the about. the again drilling we're paying not talking the as What rigs Typically, costs we're what in costs. transition crew transition between long contract as transition we're you that's cost in cost stable the Yeah But time off for projections that the for talking that time start to go

about remainder to the So we we I pretty make any for think to feel can If normalized assuming -- year, of this good a XX-plus that running in pretty feel But back that we'll -- about getting rig count that address softness then rate. we're rigs the that. number. there's good have the

Taylor Zurcher

some delta XX you a a some that renewals or for between perspective, I talked high there's new it. subset me, Okay, opportunities. within got But or a then just -- from about excuse and of realized XX-ish pricing And incremental opportunities. bit customer follow rigs? Or between any of your Is XXX it rigs talked in prepared remarks? renewals that XXX the that within customer newer for teens you bifurcation does and and there high of about really some these Series delta Series

Anthony Gallegos

today competition delta, existing today is mud a just a Really versus pumps you an not good of win situation -- There's customer that's those to and intense. the it's requirement and tied incremental Yeah. with a rig available equipment we're Taylor to negotiating have pumps pretty we're be tied generators. rigs then the delta is for rollover people as third lot that jobs. working for Also know want customer an fourth would where and to

upon for really outfitting that incremental or the the is not working opportunity pumps. you're today. rig, based So the of bifurcation the gins whether And customer not an and for it's

Taylor Zurcher

Okay.

marks from of, the see that marks the you QX. If the deterioration lower bottom? $XX,XXX $XX,XXX of don't over You're near basically day Or kind a are Is a guiding year half fleet, bias to of you number kind back the as guided $XX,XXX and the to number fleet market? to the we here. any pricing to market for high

Philip Choyce

rigs are So lot. has We couple. that new last do There's contracts is a our year our a there's recontracted one to about we have to way and backlog how of the been rate. think -- fleet higher. many not Most that negotiate

not but to had a So under. contracts repriced in be that that under two, we're slight last today I months. operating to six we're downward, operating believe three not We've the haven't backlog our -- it's bunch a there's going in legacy of bias

a significant. downward slight bias there's think not but I there'll a be slight So --

Taylor Zurcher

guys. right. Thanks All

Philip Choyce

Thank you, Taylor.

Operator

like conclude will would turn session. question-and-answer our back closing for any Gallegos over This Mr. I to the conference Anthony remarks. to

Anthony Gallegos

We'll taking end call We look dial safe Okay, the everyone today's great I a seeing time call. out weekend. appreciate road. and in now. everyone forward you. and Thank participate to in you wish the We nice on guys. to the do

Operator

The conference has you now you for disconnect. Thank today's may attending presentation concluded. now and

Independence Contract Drilling (ICDIQ) 28 Feb 202019 Q4 Earnings call transcript