ICD - Earnings call transcript Q1 2020 | Independence Contract Drilling, Inc.

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Operator

Good day and welcome to the Independence Contract Drilling First Quarter 2020 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, that this event is being recorded.

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

Philip Choyce

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

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

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

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

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

Anthony Gallegos

Thank you, Philip.

take ICD impactful kept and to themselves in to on of that our work, open, and society dealing started, the I and of those moment our this COVID-XX sick care behalf of like have stores the with energy you have who men millions virus. thank helped a provided out say effects pandemic, take the to of and of most the needed workers, this the to and kept grocery during cars our Before I'd full elderly, our frontline get found thousands front the keep comforting family line, stocked, comfortable homes fuel our highways our of women the on directly

the sacrifice as during for unprecedented grateful eternally time, hard impact this navigate of challenging extremely this are and work event. we ICD at We your

you. we've our in we'll a overcome overcome like because part, history As this, and of in heroes country, a all small also lot

we first Philip talk quarter in environment I the of about go market our my and the to to through discuss undertaken have results current XXXX. turning land business. the of briefly the regarding perspective remarks, want initiatives how of drilling impacting details first to rig all and quarter, response ICD key our and some offer it's Now the In this. will for some prepared

ways the first The the seeing to Obviously, couple and prices believe, by still was predicted. out are reaction strong significantly to in the of dramatic. customers one Unfortunately, our a lower quarter we no out. play played recoil back oil end has of months swift that I

XX of markets to more rigs recently advanced As March. we end discussions three contracted were had by start-up the as target our in ICD in February, and rigs

United as As implanted virus futures just to WTI before state in contract the and on at economy responded, governments prices unprecedented firmly number itself May culminating we Monday, April in decline started saw in expiration. oil the local, the federal ways COVID-XX shut closing a global the down, mid-March States negative we and contract in seeing early XX,

it you see was oil There upstream CapEx and reasons count expectations rig and E&P prices to storage mount cuts fall supply oil of cuts another April, and concerns by and to continue as followed of CapEx wave during March, a and during continue first wave we These and already revise more if cuts me XXXX expectations. some of reduced, the surprise lower, saw wouldn't why to beyond. for are to continue others analysts

rigs The the as of As working decline with of the to expect trend this of decline continue the began earlier had over rig count Permian representing the end in the months. rigs XX saw exited XX operating six another was as backdrop idle, XXX, rig see alone since since call. This of quarter's this XXX. XX quarter pandemic dropped rig February release of being XX% decline the last we you go count downward of suppose, our two count We week. has at in industry, we've contracted rigs I ICD's XX grew. laid today, rigs Like happened date XXX press everyone, means Last and our the rigs COVID-XX effects against the to quarter. throughout a week's across the rigs last down second

During the we completed of quarter of successfully our pump a to and prior onset handful COVID-XX the third to upgrades pandemic, fleet.

In existing terminated one activity, first with quarter extensions the effect, four and new customers end COVID-XX at quarter. to more of and had quarter. contracting terminations during second the operators had executed terms here in of the executed with early taking contract prior three early contracts four we first the we've two new ICD

operational safety our year-to-date approximately TRI one dividends, a and well below are to initiatives as uptime pay continue XX%. Operationally, and other ongoing evidenced by operational

downturn, the COVID-XX well. So performing into transitioned as rig exceptionally our operations were we

Now proud of more first be to faces how team those the I some professionals the like has our to the of to challenging extremely responded ICD and concern adapted our industry In could share well-being most environment, conditions. stakeholders. our and taken actions perspective significant any our and of their employees, other is the of confront and have I'd safety about current our today. families not challenges important

activated world chain and our rig rigs well our coordinated adapted execution could disease early and March. COVID-XX. of we we have plant, ensuring infectious protocols have supply disruptions, continue other distancing plan, control of our supply new to which significant field-based personnel and the Our planning to Because avoided in the in social prescribed and our was of operate

had COVID-XX I the support performed working this functions impact have has and women time. material for their the professional and days thank Corporate, work company XX during mission for and ensuring remotely perseverance a IT supported exceptionally diligence and men without not us. that Operationally the past ICD while at hitch, And integrity and a well other on unprecedented plus. speaking,

of meanwhile structure elements to with mid-March to salary cost provide reducing at in personnel. we parallel our on in all And worker arriving In compensation everything with COVID-XX, services headcount, in to actions and took ensuring drilling table, a the retaining light right-size goal preserve cost, safety through ability beginning other for put reducing the expect. manner we plan, our of daywork our customers our liquidity, order

pay terms reductions, nature headcount company of which of which layers, reductions and warranted, the the transactional the Directors, were some impacted. support of within given elimination in levels we the Board executive company, are In including Most management by activity headcount and level management envisioned. was of of every of department and each the driven the is lower

drop Overall, levels also operating reduced and we in reduced on per of by and of to approximately director The support and approximately cost expected the cost $X annualized and steady reduction cash these state basis. budgeted net executive our of positions SG&A an a XX%. compared corporate reductions in million is day headcount effect number a

rig our rig the preservation experience and we to as stacking deal with associated lease we costs will we number Unfortunately, with storage, unprecedented need of address. idle as count drops, will rigs

costs fixed operating are our nature. in of Some

levels, items operating toward moves reported in day trough basis. will our pure count operating per as So metric pressure rig these under our be cost by necessary driven

capital Much was We for our capital operating except associated also XX%. all $X CapEx essential already by or forward this completed mud CapEx thus conditions year with will operating pump items substantially maintenance upgrades committed, overhauls expenditure be about improve budget rigs million during on approximately and and the of first the expenditures go suspended budget of the run until remainder lower. quarter which rate for reduces equipment

rig count customers projects. including will told a trajectory the what operating on working we six expect so us have natural far, with our on From gas based second exit quarter we perspective, rigs two directed

expiring third and in four we the which working with second past wells the Re-contracting in gas late quarter, is drilling is expiring few with fourth quarter, projects. rigs between. quarter contracts one have on two gas far are contracts today the of which Looking one opportunities of and

associated natural conversations improve opportunity gas equipment marker a a gas or perspective, the spot you there by, rate from the reputation are oil of From we would place say, operating going I there could really us any and And I day day there in in to two our the out bring in. the isn't prices couple continue confidence a rate to or decline an Haynesville shale basins. on. helped But productions history can point believe, of

over spend doesn't rigs like I'd to return oil rig minutes ball contract's like the liquidity In or may few the liquidity will most the not times the is critical. two Right ICD. to done rig. ball enhance for performance has to last respect now is operator with part wait. projects. a the about company. months or up you that your the for eye talking the your working that at to the When matter have these directed we on term today, liquidity. technical And specification Everything been And keeping early just

end availability the $X.X the We press base million million summarized and draw that cash a our issued we our were of million $XX we of first and cash with debt term we borrowing of down quarter, cash earlier of At our million almost sitting liquidity in our under release, did March, some which in at loan the ABL with balances a $XX.X today. was end. undrawn. additional ABL At committed increased the $XX accordion from quarter end current

ABL. cash And be under loan availability our our accordion. liquidity our of forward, sources availability hand on under Looking will term

come by cash We therefore to a under used which we of as the our plays AR out expect balance function from evolve, as reduced of which decline is which that a determine one reduced declining this count. year as In our down balances collateral flows availability driven addition, be reduce have result contracted will rig to will availability. the will eligible activity challenges will our ABL AR to

other service the with availability in the we and term out during uncertain backdrop U.S. our draw combined need quarters, on micro-cap view over unprecedented couple capital lack look deterioration for expenses. fundamentals fund this we to an we to macroeconomic land of industry. market operations accordion with non-operating was oilfield It XXXX companies support As the down industry will in next of loan expect

the permitted Act. COVID-XX and available be with loan Philip Protection the this under pursuant expenses the details through, will that funding $XX impacts deal business. Payroll but the we be of for fund will will of some for after loan Reference as and the company sources the assessing our go operations very Act And the source which to on a of liquidity to important company to of applied million requirements used a Cares under liquidity the company's issued Program received fund

Obviously, when on normal seen didn't about calls, we previous we expect what talked we've year-to-date. new earnings the

result of land believe, a will predicted finding which some needs for the further the capital in crisis I that accelerate, markets. space in in important drilling trends we the challenges as of financial the growth consolidation current However, the includes

cost over maximizing on, Our focus control laser a customers efficiencies. maintaining our production drilling customers prioritizing and efficiency growth and

optimal our fleet ICD's will well within technology placed of the drilling challenges efforts the some this For the deploy offerings marketplace. with And we pad which and to believe, be very customers. rigs the of meaningful remain in control, to a our will results in solutions paradigm enable best these optimization I

We structure robust scalable and financial have operating operating rationalized our development And put people have employees HS&E our evaluate SG&A continuing are ways place to industry-leading processes and very to and by including importantly our reduce in target cost and systems costs. revered and customers.

array markets. a E&P Also in And of the major target operating wide ICD's including of we super many independents. largest oil work companies companies for

consolidation world. We that with will social said is of willing necessity COVID-XX believe further of have reasons rig can't our new overcome. predict is We a capability. in happen could But a the further ICD normal host many there be We and and fleets for whole challenges a pad-optimal that a industry. times be are for when participant consolidation in economic never demonstrated than more, an must structural consolidation true

with knowledge, processes And we're positioned supported record integrating of and proven a institutional robust extremely underlying successfully well systems track competitors. by

consolidation shown ability our opportunities on our for substantial we're again. execute to have shareholders, value and through ready unleash employees and to these We initiatives creation our our customers

us participate and continue have So pursue and a summing storm. incentivized to we'll positioned to help the all the very in consolidation. we pulled this mentality. to available In possesses evolving is meantime is properly ICD levers company the up, Management the for weather believe, well I pledger current and the to need implies

Our our support systems operation and processes best-in-class. are which

for efficiencies And fleet manufacturing customers. our and is maximize rig young flexible to engineered our

and drilling ESG customers drilling Our and and capable oil with our focus concerns gas the to their wells. are focus once and by ready rigs optimization regarding returns actions mandates continued

most and implanted services are and and in a states. firmly We efficient safest oil for most brand America's strong and regions reputation with gas-producing prolific the which in drilling contract reside the providing North contiguous Texas

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

Philip Choyce

Anthony. Thanks,

During write-down of the held calculating quarter, million with $X.X EBITDA adjusted impairment of million. of Excluded $X.XX sale we associated costs and EBITDA adjusted net the a with and was reported non-cash equipment per resulting an and $X.X of adjusted reductions million $XX.X COVID-XX. loss in million or share $XX.X and net from loss associated for of severance assets personnel adjusted

With $XXX revenue $XXXXX respect reported per quarter per to of other day items representing quarterly during guidance consistent the with decline a sequential and day. was

slightly our towards pandemic. of Rig reduced operating quarter utilization provided the rig in rig $XX,XXX days higher mainly in than call, count quarter. of day came end per Cost primarily the guidance end slightly below and declines was by quarter that due the at stacking XX% of guidance conference caused due began to year-end COVID-XX costs to

with of reduction principally expense compensation with in Depreciation, accruals. the guidance our million SG&A of expense in incentive than approximately and in came non-cash $X.X interest consistent $X.X compensation lower tax to prior guidance. difference came relating million including expense

first During progress completed or expenditures quarter, million manifesting in Current equipment of from the with to in net capital year including prior of overhauls included completion the for itself. third cash pump accounts pandemic payments COVID-XX and year-end. upgrades $X.X associated projects changes disposals payable

to counts finance comprised vehicles million. payments $XXX.X on return financing to our our At deferred Finance sheet. operating balance of end net lease fall is rig sheet by the borrowings. March of end. we quarter and associated loan of debt of million $X.X excluding reported net debt were at at XXst, revolver reduced on begin and quarter reflected as certain Moving net term million $XX costs This leases balance our of with and leases

to seasonal compensation and addition incentive as sheet, taxes the valorem during the the at payments. quarter year cash such anticipated under balance our with borrowings items first associated In of end to revolver add quarter borrowings the to prior ad were

loan on of million of and liquidity At a comprised March total XXst, accordion. and under we revolver $XX.X million term availability had $XX.X cash hand of

in Our original backlog this more with all reported end quarter six expire $XX.X of at And backlog. included had contracts we operating XXXX. short-term months at million, or at terms March XXst not rigs on which stood three contracts in of

exit second quarter had expected six Anthony mentioned the we As to with rigs operating.

contracts with contracts throughout in four expiring the two have quarter We terms the late terms third with expiring and fourth quarter.

guidance on on as operations as to moving quarter well liquidity. Now second

expect visibility we to working approximate forward that rigs nonexistent representing the caveat with almost nine-point with six to days, rate the With an respect quarter during average intentions, is XXX customer of operating days exit operating. rigs

cost day around per and in and day come revenue in expect to $XX,XXX We between $XX,XXX and come $XX,XXX day. $XX,XXX to per per

substantially costs each items day expect term the and early furlough we are during quarter. which from Excluding these and revenues costs, guidance to offset per stacking other

compensation SG&A an $XXX,XXX top We on And second cash to approximate SG&A in expense stock-based and comp. $X.X $X.X on expect $X we quarter that. with million during stock-based approximate including non-cash million between after to the the annualized expect run quarter, million rate annualized of

million relatively we expense non-cash and $X.X during expense be quarter the first depreciation million the flat expect expense interest negligible. approximate $X interest expect quarter including quarter during remained tax of to and to with We the

cash capital flow $X.X in of so top in we reduced that expect of will remainder statement our the through the to million have budget accrued For we which on March CapEx million, another CapEx spent of of that expenditures, flow XXst, At during accounts $X.X $X through annual the our have million year. first or was the payable quarter. and maintenance majority

and sheet our moving Now on financial balance to liquidity.

of we XXst, March at million. total mentioned previously liquidity $XX.X had I As

quarter lease million and payable per payments approximately quarter liability as current affiliate. of non-operating payment expenditures we an million on a approximately balance consist shown $X expense, that is interest a finance to required of forward, Looking of $X.X sheet $X.X per our million will expect our as

term drawing estimate would To down in required. approximately begin For to the remainder to as Capex. our accordion loan $XX.X million to of these in we be operations, payments expect addition XXXX, we fund these payments

With harvest capital fall. rig we our will although respect cash counts as revolver, to working and

fall. tied Anthony be availability going discussed other non-operating or of liquidity don't accounts to balance. revolver source availability As cash flow shortfalls. expect our as fund words, expenses a fall will revolver our Thus forward is meaningful receivable In operations to eligible to our we

on unprecedented market our after lack COVID-XX the following period must related. of be assessing interest the XX% million and loan loan is situation, The of will can during Act. leases, received Funds loan CARES payments stabilize, of of our eight-week on program the impacts applied payroll, the Thus, obligations. $XX Paycheck utilities, eligible the on when and payroll which for the this forgiveness from the under business clarity for we of for Protection be based loan certain expenditures a used

The beginning a to of receiving eight-week Because do receiving headcount begun the to loan, prior on based the not loan be full the loan. the in company the amount forgiven the forgiven. company's had amount comparison following to is already of expect period compared pre-COVID we headcount March reducing

government on will are Additional in approximately how and the X% equal interest are guidance we of installments from November at right is assumption beginning will $X paid forgiven. calculated, XX the XX, under be loan forgiveness but expected be XXXX. now amounts million back Unforgiven monthly operating bear

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

Anthony Gallegos

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

Operator

you. Thank

Zurcher question and will We Pickering question-and-answer [Operator session. Holt. Instructions] Tudor, will the come Please now begin Our Taylor ahead. from with first go

Taylor Zurcher

gas asking past been the of the and I over there. mean, least has outlook player question and you. years And the start you've morning, several I on one improved your natural months. Anthony, for clearly weeks past thank wanted big a Hey, and by a Haynesville. somewhat about good to the comments at several

discussions today? like any rig in it some are uptick customers been you've expect discussions Haynesville you're what too or count XXXX? in with And Haynesville is so do those just the I towards place that the curious the the portion nature having And mean, of are potential latter today taking of you soon? in

Anthony Gallegos

just talk Yes, customers for It's in ones have for, contact we yes some question. the continued and couple we working we've that stay in good continue Taylor, customers to to question. the Great other recently have or there. over years. with that positive. current had something But with thanks over last Both people then for about to and additional today, words are of discussions worked

about area where mean, year, next I optimism commodity. some the rest one encouraged there's I least quarters. you that's As of the look, of my what the couple I'm in the by the think see happening at for perspective, From

associated you look of what shut know. expectations as And which You at there what's terms is happen in going happening as to wells gas. are in,

I think for optimism, ICD, here some there's the reasons for quarters. industry just of the but specifically not next over for couple

So discussions are are am There yes, underway. I optimistic. that

upside to of some we're the I picture. rest optimism some think But I of position just it's we numbers what's this in. year. love the given think big happening that is about that the Obviously, over cautious that optimism,

we've as out. have we know, the at strategically talk that advantage plays customers in stacked area. continue expectation puts the us the that you we rest an up some of these As assumption year so it rigs, to as stacked just to and on Again

Taylor Zurcher

the the into you And drawn at do receivables. sounds XXXX? at will encouraging. on expect million if over point will Right least tap you'll on accordion do that it. covenants moving $XX million some liquidity $XX the expect million have that into forward. got Got is loan put the like revolver course term relatively at accordion, the But now, the $XX the from have the look million in revolver clearly you the follow-up it on or drawn revolver. you've current debt My come perspective to to -- availability That's with debt you you be the covenant we down on a And just safe need today, the of position. $XX

Philip Choyce

springing our two until play charge of fixed is covenant is there's There's in we covenant, Hey, doesn't minimum There's the than in a million covenants loan. have Taylor, $X term Philip. $XX and million this minimum, revolver got. into that that we've availability. come debt a One less liquidity

there So yet. we're not

be and will business the cash we rigs We capital. stack hard working -- as into will bring

that So of that cash, revolver balance revolver the -- down now. will some pay the

just source of source operations the don't revolver is So the non-operating we'll availability it meaningful come of going a see expenditures, won't the will business, to just down. we -- sourcing. the as It our because but support

back We back. as in cash. as pay capital well, converts part come will to But our as cash will to our we have to working of do revolver balance rigs that getting be that

Taylor Zurcher

Okay, thanks for answers. understood. Well, Appreciate. the

Philip Choyce

you. Thank

Operator

question will next Please Kurt with come Our from RBC. Hallead ahead. go

Kurt Hallead

all well morning. Hey, Hopefully, staying and your doing healthy. respective families good

Philip Choyce

same sir. you, Hope Kurt. the Thank Yes, for you.

Kurt Hallead

Appreciate Yeah, that maybe on commentary, indeed. questioning. the following-up just line

front kind Phil. What a Specifically you on working are capital? a the working on basis expecting of cash capital from full-year contribution

Philip Choyce

each rig as -- probably is operating of From it's -- our about yes, positive down, say goes it I'd capital. working to $XXX,XXX $XXX,XXX

you're expect. door. the that exactly that as in to -- -- cash, would much done the the front that we in operating that something would had would go of I've or end don't So come the me. But cash have rigs I we the to of like it so we be at math to that six we down rigs the moving that say, harvest quarter going XX from

Kurt Hallead

So $XXX,XXX to $XXX,XXX from rigs.

to working contribution. So to from XX down whatever six, so you go $XXX,XXX our times capital XX

Philip Choyce

correct. That' Right.

Kurt Hallead

Okay, great.

You referenced, CARES into here protection you payment guys loan. tapped the Act loan for the

the debt second I'm into quarter. So assuming as you go in that your up balance shows

we look forward is move about right? aggregate as million should about do debt when to we $XXX think that be does the going So, -- balance we sound

Philip Choyce

$XX down. million we'll of the in capital working what pay And on start down be that under some you we the use with CARES to got that March have we today, would that at cash XX, paying borrowed it million plus $XX Act. that would the we release, then the the just Well, comes

So that will probably you get close.

Kurt Hallead

rigs natural maybe the you quarter otherwise. kind gas discussions What the coming Okay. And respect having second of at six then exiting six in question of putting to the to about are half? with Anthony basins above again, context some prior back the to around in beyond work that and or rigs,

E&P I were some on fact guess activity, or WTI E&Ps conversations There quarter. company get back if range. look, down the of course commentary pretty maybe shutting to from every into some the much is I'm have very during been that the $XX increasing about well to versed second

So just curious prospect, through do you're for your fourth a line you on put think one you end, do rigs flat range rest fixed the into the And think could or quarter? a the two going you of the year? there's third and to work back to quarter

Anthony Gallegos

No.

I you position, mind latter Look, our laid inbound one think it what or are it's there? is comes hearing. hear that's drilling is question Kurt. out my -- justify these truly I is opportunities a trying engineer that the everything with they just it When is, business to we're to consistent

there's the is those some terms There's commodity $X aren't it at rigs going activity. levels the gas like above hear increase like -- least we released. that our stuff thresholds And at to in a and feels of sounds WTI, $XX kind on would customers -- and that customers talk get about of margin

we last we're Just customers. this In given would does they're late competitor. an new year. may or words, displace be company incremental up to And some like earlier in other it include said, that some dropped opportunity cases, In cases, they've it's have the rigs. talking nature of where year picking rigs about, current the a for people the opportunities it I

a a think get strong said earlier, come about was reputation calls And that. customers we've from has we said the acquisition lot activity it ICD It Haynesville. or of an and they or a inquiries very reputation like As as there. over through anything and inbound as in didn't a business that ourselves. It's built you

So, been They're of They're time. Crews some safe. at we've performed very exceptionally they've a rigs together very the you look running long have efficient. had well.

So advantage. go the and an we're some mix. as I at think think we're some forward in cases And certainly, customers about in ways obviously think I in operations,

you about evolve to going I the into say have see optimistic put are see We that's just opportunities August year. there's work a this But kind back and And things need and would happen. that second Obviously up opportunity summer area. couple contracting the we're in there said think, now, opportunity. we to lot that am lining some that of a quarter I the that right like I we'll not of to wins will that talking would later I out. But up beyond plays how a expect July, are rigs us to

Kurt Hallead

And follow-up. Do during the just of you during the one second then be Great. EBITDA year? the to positive last remainder -- expect

Philip Choyce

variables to Kurt then many in on challenge. chance It's going to how that's depend just it's lot six rigs going that. -- six the less we to know going running more a it's to a than are and than we've If got there's don't If of answer do it's that. be a to that. But

Kurt Hallead

context, for. Thanks. appreciate Well that’s Really was looking I the that.

Philip Choyce

Kurt. it, Appreciate Thanks.

Operator

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

Ryan Pfingst

Good morning, guys.

Philip Choyce

Good morning.

Ryan Pfingst

Just your conversations. customer a on follow-up

of different outright discussions might maybe cuts? For having day guys around to drilling customers that you rate pricing more instead want are continue just models seeing

Anthony Gallegos

Yes.

model possible more arrangement today. of this as are day looking -- the for model people Obviously, based work would I lower performance But think them day we've I rate upside customers there's everybody, are type cost. focused to up talk at We've most couple their Ryan that the right interested. be on day work Like been every when most them. in way now, straight We are even at think got a we contracts. I of like looking to it. had some to And us. suggest

Ryan Pfingst

this the mentioned are some consolidation on of Got potentially take the in prepared M&A remarks Anthony. what in guys you. your paths environment? of could Thanks, kind you And front you in

Anthony Gallegos

mind result from capital mean buyers big the you big more cash is picture. any consolidation. have right? efficiency on picture the not would in focused Well, to my there that be out So I The

in spending SG&A. You think We're dozen half dozen, fleet. million all all We're same in working companies there's of to vendors. of pursuing customers. -- all about $XX there's a kind the same the rigs with dozen We're two maybe year million $XX all type their it a or more that

that you when the a ICD as opportunities that very to has relative be able there. value Debt factored now social of that And And that's It good at you and it's every issues has look bring resolved the There get gets like as think to debt are -- has being be. basis opportunity look ability on of out that. synergy company on bit something load this have into we obviously demonstrated do a the to reasons probably about well. done.

my in point hands. a necessary. We in going consolidation the think the for bringing is look get chances optimistic been on And it's now happening is banging But our of to while. that, done. what's trying we're force think call to industry drum it some some about We up this we've

Ryan Pfingst

could. you. May Got be one just I more, Thanks. if

Anthony Gallegos

Sure.

Ryan Pfingst

Can a you cost we detail guys the going get the structure work see the year? operating to more and of daily you costs initiatives to rest give if to expenses little stage... come are affect more are how down going the through rigs on Maybe guys

Anthony Gallegos

Yes.

absorption operating rigs far So, goes. does as as yes, operating -- matter how many fixed cost

in say, obviously, a XX. to to the what little would second our at third the little us that back clearly can that's rigs. then expect if that bit that I absorption cost at quarter was it's more six come out. And running a quarter, fixed XX.X we even there's it's better we if -- it for more then For down little we're guidance, if were we're if helps get yes, a rigs But then running to than worse. running work we less get the

we they're stack lease a have make quarter the costs ongoing stack. substantial where things as things, rig deal the engines are rig then this going actually are dealing maintenance keep But to there's and do One payments to with and the that comes we to like some the in of on there's the stacking that. -- the running we rig you'll

going impact inefficiencies cost and As some you in this day as create to go well our that's per environment. forward

Ryan Pfingst

answers, the Great. healthy. I Stay appreciate guys.

Operator

will Burke ahead. go Rice question & next Please with The from Daniel Company. come

Daniel Burke

morning. Good guys. Hey,

Philip Choyce

morning. Good

Daniel Burke

Really the small of just left a couple front. ones liquidity on

how count or the worth how the terms flow contracted those there's associated And mentioning six those sound included with you is dollars? early for exit QX contracts. much didn't it You the early with count the duration of referenced the associated But in those were accounting are and It three we probably do terms. – cash guide? not like in

Philip Choyce

that gave day $X.X coming going the operating we get anything So we the that's probably out to count $X the terms by have The in. when between going those early that day, and be million, cost we're million the early and the to rig offset revenue and terms. per per are revenue costs we on stacking excluded about

of furlough of Act as going put things be number quarter opportunities And that We're during a come to large for chunk that's new you've have the to rigs term revenues employees that loan there's a in we're getting preservation and of to able during those some the change. result going probably to the the quarter. a take got costs will CARES our the quarter that during on offset and early

Daniel Burke

is per this day? missed have cost might I stack And op cost in Okay. your

Philip Choyce

it's preservation... No not. No The it's not.

Daniel Burke

Okay. one. maybe one And then other

on in that accordion trying out use in highlighted But we revolver, – you to to I be you the way business? ongoing just about guess as – I'm a figure how funds to in needed free as have of also how or much the a well that we question the really just of use the when think fund the in flow. think of it's diligent cash addition about and borrowings will Just cost should the you that offloading current accordion them. – PPP is as

Philip Choyce

Yes.

and forward. think as I if it. to to for be going kind And non-operating slow to our expenditures really it down non-operating important is look because draw we'll as is in of going be far the the here. money booking buckets, as But fungible the be expenditures important expensive important funding can I is you're cash. we think be the accordion it it look possible how as as it's will about accordion But

Daniel Burke

guys. here helpful. Thank That’s it Okay. I’ll right. you. All leave

Operator

our back go session. Anthony to remarks. would ahead. like the Gallegos I Please question-and-answer for conference closing concludes to any over This turn

Anthony Gallegos

be Okay. We forward talking day time one in, this to soon. care ask that of we dialing everybody another. call. in to Everyone, do again you Chuck, you appreciate thank morning hopefully, you seeing look the participate one safe, you. We'd take and taking eventually to

So we'll call here. from the end Thank you.

Operator

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

disconnect. now You may

Independence Contract Drilling (ICDIQ) 9 May 202020 Q1 Earnings call transcript