Earnings call transcript Q1 2023

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Operator

Good day and welcome to the Independence Contract Drilling Inc. first quarter 2023 financial results conference call. [Operator Instructions].

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

Philip Choyce

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

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

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

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

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

Anthony Gallegos

for thank conference for Hello, call. you first earnings everyone, joining quarter XXXX us and our

prepared four want remarks to During I about talk today, my items.

our update impacting quarter Haynesville results; from rigs; I the super First, close a and I current our I about first how to for efforts and of with around XXXX all transition want perspective out on want want to second, be. want to spec is third, market where pad-optimal fleet; the talk you highlight this our to financial I ICD focus will

that net revenue data produced terms is EBITDA. the adjusted to Overall, quarter ICD. pandemic. regarding adjusted in row ICD's out more our the and results a first third go again, of transformation per these one through the provides day, margin financial operating and revenues, day, came in results day, ICD's just quarter were another exiting adjusted of per and EBITDA areas the record since of or point I all for first, detail, records quarter. comments ahead expectations few This quarterly reported we want will But in on a margin point Philip in but and income, per

X% sequential $X.X margin income in drove EBITDA that adjusted buoyed adjusted net improvements by at came sequential in improvements Overall, XX%. million, of per day of

being it end quarter In capital priorities. a strategic when important also transition ICD comes to addition quarter the financially, and pivotal to of milestone marks for allocation focus first record and an the

August focus capital by the to decisions Since were allocation of operating our XXXX, in scale. driven need increase

priority rig signaled As and the will XXst last conference capital and ratios last market delivery strategic we allocation our debt net highest financial improve, our will reducing reactivate rig in a the which means of related our from call, perspective. conditions meaningfully until overall our be be

our his million of plans more In our stockholders. first in quarter. we'll net revolver by $XX.X fact, already look we to improved net steadily And million, working prepared forward. go of repaid have around debt we $X Philip end will the of important as since going capital debt very position for the remarks today, initiative details regarding this our through reduce ICD and and

market. the to turning Now,

super spec Basin. spec In strong terms markets the for target market pad-optimal demand overall and rigs of the super in states, rigs and Permian pad-optimal of the outlook Texas for contiguous our remains in

oil Hughes While reduction rig reduction count the Permian. XXXX, most quarter of the US land Baker in the of since overall shows end a occurred rig fourth unconventional the outside for that of basins

has which be since Haynesville, the of reductions coming more there seen beginning while fact, count a rigs the address the in rig added year, will drop. Basin Permian Haynesville a In But I'll the minute. in

from the by E&Ps rigs relocating being count being rig higher Eagle made we're basin Permian specification And market. by or some and rig Permian churn what trimming including higher rigs replaced is and with spec Haynesville in the lower other some specification seeing AC Ford rigs witnessing rigs, displaced available some are We into being basins. the the AC

consequence, are exists. additions replacement occurring seeing a a opportunity or are more As rig rig little where a competition rig-on-rig we

expected to quarter, momentum last slow, and out. indicated we see As that dayrate we playing expectation is

While flatten second next the margin be quarters us and robust, could allow for from as not during and rigs in the around terms to Haynesville do and the corporate expect on the per for cost choppy we goals pursuing few those transition bad situation it ICD, third levels in day deleveraging. levels particular Still will what remains given of quarters, Permian. line for the a our current to will us

We challenging in rolling WTI for into again back rig market that based in rest half the the remain at believe Permian, XXXX. primarily on will year. remain of the remain optimistic our accelerating back momentum elevated the least We the market of will this in expectation about part the XXXX year, of Haynesville

back the our I successful the This started we October last rig for reactivation and spite of a reactivation operating quarter. the while. be Permian choppiness XXst were last securing rig contract Permian for project XXst earlier Basin second year mentioned early In which a we in was in market, in in went to in our would a that work of rig the that

mud XXX this capabilities bear the to to other brings rigs, that Series our being generator today, existing went the spec, in target three by customer, prefer the technical pad-optimal, our operating rig one super pump private The including setback four and work Basin. rig happens customers largest for of racking which companies E&P to be configuration, enhanced an Permian and to Like capacity.

like the a transition fleet. quick efforts update Now, rig regarding our involving provide Haynesville I'd to

call, the rig described expected we be During what our last impact gas drilling of natural earnings the market. in low would I Haynesville prices

couple gas market. decline prior scaled rigs as companies significant number US the natural in the Haynesville quarters, activities, a drilling natural oversupplied to prices E&P in anticipating in aligning were of gas the and significantly we working reference, back an of had For declined

those made E&P first as count that see are contractors Haynesville during has when rig finishing quarter can decisions commenced the they second quarter in here were earnest that the on You companies. pads reduction were up trimming in drilling the by

Permian earnings forth our of to XX in Haynesville portion rig fleet, In with end to was our with from obvious. a And we impending decision prior to effective XXXX count the Haynesville of the year set of deployed the Basin XX this of to rigs working us, relocate rigs to the rig started market. on a goal response Permian the relocate for utilization decline Haynesville rigs to the reach our our the approximately call, Haynesville rebalancing. ICD the fleet by operating following plans XX%

caveat the we $X in are time, goals still we these to that range XX seen on schedule now. the could estimated I'm if choppiness that the pace remain that recent the of million. we achieve Today, oil costs million rigs have At report $X the pleased right end we to of could to ICD process reaching this in continues, relocation And stages . the by between of with operating early trend slow some which, prices,

and below these are have physically not rigs for our rigs absorbed relocated with out-of-pocket for transition costs were rigs by transitional been already also these Permian in drilling minimal and trucking our that both budgeted time costs Two been were relocated. and have relocations idle customers. the additional estimates. material primarily Out-of-pocket of pleased I'm our Three

into to in operations Permian as Overall, currently we earning is pad-optimal as rigs to it customer while dates. start believe marketing our early the with market these three absorb are mid-June and be and demand May for plan late the base strong super-spec rig additions for will to strength enough well basin. third quarter, expect the of two opportunities until would rigs term customers the we and recommence who One rigs not we revenue other

That with time. leaves us five this remaining the in Haynesville rigs at

signed or For which rigs successfully those had first for rigs, early as of quarter. today, re-contracted second expirations during extensions quarter occurring we contract have or the two

Haynesville rigs could later and conditions customer in quarters, on be year, move to terms we standby the candidates the requirements. we continue expect markets. those between this on terms Depending have two depending or revenue of any For on third during market rigs, rig depending the these fourth other also the three operating in west which to their earning contract extending interplay rigs the

overall early confident costs our so on constructive. rig coming time. we prices but The big better in feel our plans long process, this expected are in in remain than and Again, transition outlook still are with oil we're as the at we picture, relocation track

significant I today our and goals generating strategic around and financial of flow cash reducing am free all pleased that intact. remain leverage overall

capital we reactivations. have cash plans accelerate the and capital net year perspective. a We ICD the flow free a slow position our commenced reduction term, per margin balance we record additional day, as and to paying cash investments per sheet excited I'm day, for putting and down flow our improve and be debt by XXXX from in cash expect revenue and free will as near debt on rig our that EBITDA, working

on cash debt remain convertible move and decreasing net we as notes. position toward our flow Strategically, steadily for generating pathway laser a the towards focused free we our refinancing window creating

In the on par. offer fact, that balance accept notes offer our the quarter, convertible The worth the at must of in here they our lender's don't repurchase will at to so $X is offer, we second if option, cash remain million sheet.

of $XX make accepted over the balance offers must XXXX seven over and million we lenders, if will the our $XX XXXX. Overall, million in by total next which, quarters,

I lenders dependent market depending of to just outlined. than a the upon indicated, which we sooner in picking mandatory be may upon we've previously to In relating elections conditions, offers likely addition, is stop our interest also position also the

have in to our range discussed, meaningfully of a window to XXXX. during one reduce to which net involving towards early our less we adjusted than As of X.X begins times is goals EBITDA long-term refinancing the our notes ratio convertible debt X

capital we completion first on levered For which, investments, working quarter currently rig CapEx of X.X at quarter times the reactivation of reference, first annualized even the represented metric year seasonal same are using results, an basis and X.XX times our over end. an improvement with

paying in for As its long-term Everything's financial we've goals. strategic achieve process short down I already mentioned of to debt. and ICD and the earlier, begun place

Philip, right to concluding weeks of make I the but service to to as over thank results Danny McNease our Before call some ICD's to retired outlook remarks, and over a financial aware Philip more board. ago, want to I'll few years wanted turn for detail. I'm discuss I a I Board the little now, to Danny in our his additional hand sure everyone from call is many

Philip Choyce

Thanks, Anthony.

fully $XX.X net diluted During EBITDA and average the or per share We adjusted $X.XX million of of quarter. quarter, million. operated reported the rigs adjusted during an XX.X we $X.X income

did benefit the Our April commenced quarter. XXst early rig not operations and

to day quarter Cost R&M during per Revenue due per was $XX,XXX of and was sequential improvements. sequentially, primarily day expense. higher $XX,XXX, all increased margin day $XX,XXX the per

$XXX,XXX costs which program, relocation day related are increases First quarter metrics. incurred costs per for of also the from to include excluded to In payroll cost Permian quarter, Haynesville taxes. seasonal unreimbursed we our our

included approximately cash and which million Selling, the general and sequential relate expense, quarter, to of compensation $X.X fourth decreases million stock-based prior $X.X SG&A accruals in quarter. compared incentive costs administrative to were lower over the primarily the during deferred compensation quarter

This paid during accrued on the excluded with the in-kind of and expense $X.X deferred quarter convertible aggregated income. when $X.X the net presenting We million. included non-cash end debt adjusted quarter. million amortization Interest discount, we've notes of at which issuance interest our associated

Tax quarter minimis. was benefit de for the

$XX.X quarter, Breaking during XXst included related rig, approximately Series commenced operations approximately payments drill investments and was approximately at December; payments maintenance related late XXX our inventory, to capital quarter; CapEx; X% has and which During reactivations in which which prior to the end. XXX to accrued these to related with the year cash payments and million our related pipe, capital completed well for XXth $XX.X as associated in XX% expenditures of we rig, disposals as conversions, spares. payment year of rig CapEx net cash to out, million, XX%

mentioned, we paused program. As rig have Anthony our reactivation

CapEx weighted. So front-end time which going purchases. to and XXXX, our will being, CapEx not for adjusted we budget Overall, CapEx have relate maintenance the for forward, tubular principally was

CapEx that to Anthony we and impact our for schedule currently maintenance rig remain relocation rig the mentioned, expect with currently any assumptions. our on would major do year not program our As adjustment assumptions operating

quarter $XX.X as related year working ad CapEx addition during payments balance a Moving taxes, overall, Those capital increased prior from our these of And approximately payments our payments of first aggregated quarter. in the valorem sheet, and $X.X incentive seasonal net balance payments the from and normal deliveries, working impacts during payments. million sheet the result CapEx, perspective to reflects the a on year-end onto capital million payments on compensation, the the quarter.

costs, quarter of at impacts represents This cash and debt net our amount financing amount Adjusted our leases. finance ABL $XXX debt notes million. end face convertible borrowings and from net deferred was under and the discounts, of ignores

rig, XXst end, reactivations since our paid following quarter reduction. we capital debt. pivoted reactivation mentioned, debt already million have Anthony As from of now our away allocation of down $X focus And has towards

end liquidity And $XX.X million improvement in of comprised was to at mentioned. on revolving and capital our hand credit facility. working quarter of Financial cash million, $XX.X on the I is just availability addition this

X,XXX was Now, commence pursuing. revenue to were second operating days. approximately on opportunities approximate we recently materialize. guidance. XX.X several to which mid-June days, or the rigs right the idle operations of during contracted moving are late on not quarter, earning slid operating XX representing days average our to currently quarter Exposure rigs the quarter May assumes to did Those projects The

$XX,XXX overall, quarter churn, between some estimate inefficiencies We the expect given $XX,XXX with margin to with moving day. basins. come number come rigs And per margins but with first the of and in in day generally contractual higher per flat we cost associated between

will $XXX,XXX with program guidance. quarter day then unreimbursed approximately per during be the to are And included in and are also expected the day our Unabsorbed relocation Haynesville per to million not overhead costs in associated during and cost quarter about our cost be included guidance. expenses Permian not our $X

stock-based expense second-quarter to million approximately $X million. $X.X to cash SG&A be expect expense approximately compensation We be and

this expect discounts. financing depreciation quarter. And to deferred for the amount, be be tax interest minimis expense and of the first for with of de approximately we costs second We second to relatively to debt non-cash to expense $X.X quarter. relate finally, And million; quarter million be $X.X amortization expected is expect flat the approximately expense

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

Anthony Gallegos

Thanks, Philip.

briefly the what it opening I up ICD's stockholders. strategic ICD's summarize all call Before to for positioning want questions, and for means

Here points are you a for couple consider. of to

XXXX August to best-in-class. This First, been our quality our performance. and our our of utilization of speaks growth since and assets, margin has people, the

company from best on of professionalism. customer and has today, customers large the rig of and margins Permian. company of the we XXXX some never on remainder with, in are and as to fleet recognition I Haynesville from will display believe performed our the our be The the better, and par part our larger we for Also, a continue industry-leading peers transitioning of all history rig ICD's over exceeding, as this daily earn our service to navigate

strong Second, youngest basis. outside and fleet. we The the for best-in-class gas driven have rigs we of market rig believe the super-spec pad-optimal remains

XXst through and demonstrate We balance And deferring substantially continue quarter. fiscal reactivations we out rig, early by and additional expect and came our which progress to have finally, we second discipline improved investments further liquidity beyond. move continued beyond XXXX the our sheet and as

better gas Although rig is requiring to to and types of the in challenges. softness in has a rigs, reactivations never markets some these ICD reposition us short-term will impact position been navigate drilling pace of

never has Our our which never has more been of transformed penetration operational rigs, reputation the our fleet, and customers XXX has valuable. strength been with been stronger, Series by market our

day our work safety, of ICD. like from customer professionalism, and deliver team I'd which service, support, which customers to corporate operations, expect every performance, hard thank to many and members, our levels high

ahead With and for go questions. line up operator, that, the open let's

Operator

[Operator Instructions].

from Our first with Don Johnson Rice. question comes Crist

Don Crist

I start wanted with to rig demand.

reported other up market companies see that One rig assumption the if because me some very magnitude coming curious, thought markets that a to seeing rigs anything of you aggressive of offered count demand well? seeing of Are I oil And as just reduction out that softness that late the another any would would in there? imply that off kind surprised of you XX XX the summer. significant by in you're was and today

Anthony Gallegos

for lot as visibility I of to to don't markets feels markets. But oil me. into or conventional outside the markets the gas you our summer of conventional or a XX question. by of rigs end have the thanks extreme know, Don, XX the target

the I think what That's Haynesville. XX clear out the another is in to we've see on going rigs expect XX been motion. we in pretty coming We to happen of Haynesville.

it and I and when how drill many up why and haven't take activity to a we of wells the are pad I long think questions just Haynesville. made in now function the how scale decisions in that's were wells on to know been a some seen really there's until there back

deceleration. the here I started So quarter, that you've think in second to see

We going continue. that's to expect

target our as well. given within some market, Ford staying rigs Again, Eagle has up

three-quarters the working the Could market's -- in XX%. trimming since today Lower oil it, would XX in basins. beginning call But about out, think down be XX US the of I of rigs unconventional little that especially That's bit point more year, there, are rigs. a gas in the about the just down the I

on prices, we've oil while some back And recently. it up has moved softness seen

of actions the about talking adding When a certainly. customers QX, most Opec+ just year, not that to some couple think are activity; ago talking actually QX, rigs. cases, of helpful but took this flat in weekends we're about I activity is them

think to a drop that XX and markets our Haynesville. be in XX going me, rigs. So feels target extreme to do to from it to in going But principally little the I that's here more is

Don Crist

on putting LNG to fourth LNG a to pipes early early third, the discussions, in early in And around quarter that back filling any it, just on on 'XX, before gas the that, obviously, particularly rigs comes in to of work or call the late there's 'XX. 'XX? follow you seeing basins Are discussion Okay. lot up and

Anthony Gallegos

be sometime that the that There to capacity the of infrastructure Coast. have to the there need a they're by have out in high moved started concerned a rig we're lot will market of that going us spec talking about, And hey, Don. Not then. XXXX. to a built for customers issues going got The lot, bit. a Gulf along takeaway out We've a are are to little few get

on aware here recommence a but So planning of certainly in activity of lot people I to not do minds, know we're XXXX. their that's

Don Crist

a debt, the quarter. interest cash I of mean one bit offer -- final are bought you But the versus you me. about the back second cash just And that you're you and contemplating Obviously, fall? one required for in-kind, decision to little $X now million Okay. that from in have taxes what payment

Philip Choyce

well. that would next at the market point where Don, of time, make whether the the we're That to So And at we payments, -- the have the end pick at next September. elected million, we'll $X that have impact it take we'll could depend June the end whether in decision, where see of the interest September. may buydown, to six on as That of is. end lenders

decision whether we September. of up that at not pick end interest And interest September make six-month would taking after of our interest plan that March. pick the March not for we'll hopefully, any after payment we're XXXX. And until And to be

Don Crist

can exactly cash paid would in And remind that you Okay. what if me cash? you be it

Philip Choyce

it's XX.X%. to SOFR Yes, plus be going

going it's So XX%. close to to be

Don Crist

it. I you. appreciate Okay. Thank

Operator

Our Sidoti. from question Ferazani Steve with next comes

Steve Ferazani

everyone. all morning, call. Good the detail Appreciate the on

You're obviously to Permian. move rigs the not the contractor only into looking

kind a that on One, what's that rigs? is replace think super-spec, So question. enough pressure multiple lower contractors dayrates two-part rigs And whether move specifically knowing many anticipation of be can your be spec I you'd rigs to able this guess do then for really absorbed, you looking the to how on there? are

Anthony Gallegos

Great. is capacity there think We incremental Thank supply. Permian receive the market Steve. to super-spec do you, in

dial last good. still It greatest remember, have You you hands was pretty the on technology. to to latest, QX back their some to get if operators say, things hard for year, were in

that us immediate opportunities to displace spec. lower for are there some rigs are So

mud of has And looking there, they into more that. had than outfitted then there gens. generators. basin two of some AC only course, that four only the pumps example. are mud that for you three all are SCR we're maybe realize pumps, to rigs out equipment There's or And the might with Three move rigs running

like pathway toward setback We enhanced and stuff a have and the capacity ability that.

we there flat a put in are these even the environment So Permian, in. in opportunities to rigs think

the I Permian would of point added out dozen that since year, rigs. almost has the beginning the a

from them work feel Haynesville these in we'll may to choppier, So and put the pretty able move to confident the it that be Permian. rigs but we're

rigs that spec only days we we the other many compete geometry. to lower the that facing that's dayrate. especially super-spec value rig be provide, cases, this, value get It's across technology be But and can deeper reduced being begin as the way in could into seeing interesting, that lower question the that versus Your the deploy industries, customers he of dayrate. as depth. fleet, can threat those in displaced, regarding hole It are rig on better is can is

at going those to dayrate. to But really, that a lower spec it's even that are really for lower be things rig tough compete much against

So on We market that dayrates, we be pressure feel but the pretty will there that the will able some absorb nothing think extreme. to in. be equipment coming confident

just said And and of lot with, I'll the we're to do what close moving doing into in a that. aware We've the going basin. rigs not of we're of we're process

have a out heading couple that Basin of of Permian these as I from a Ford out bunch certainly think the other but aware well, to there's been come rigs of not Eagle the [indiscernible].

Steve Ferazani

That's helpful. Right. helpful. That's

Do guess the biggest the begin -- you again. you've I mark can on they of any So really XQ any timing on drilling provide when be have the three you color that? moved; will question might rigs

Anthony Gallegos

think supportive I Lot to Yes, require we've is be end the goal going year. there. XX is now. of obviously of have the of which we back by right market, the air believe rigs balls Steve, to getting that's we operating a out going a said what to in

minimal the there done step a first think great that And The at out ICD. financial job impact getting I to rigs was done. we've with getting

right the finding for them. contracting it's opportunities Now,

expect which and the rig people, idle next told was quarter see vocal QX. for to QX pretty and been any two a or quarters, given We've two

we expect we're to WTI optimistic the get the able way to. fourth quarter, pretty So it the to Brent assuming back operating, that XX rigs react and that that during

Steve Ferazani

assumption this quarter. be drilling So would are it those -- assume safer for assume to to rigs should three be us the not

Philip Choyce

a out. and They'll be lot There's -- of in

Steve Ferazani

Okay.

Philip Choyce

of lot the fleet. churn within a there's Steve,

for relocated reason, about in and given type of those days. them. any at obviously and late their next looking they are timing in some last the move time, And drilled for you June. actually to they're opportunities. second So think rigs of then XX when the we the be have wouldn't the then If opportunity point And -- working mid-June quarter whatever opportunities left part about rigs talked those the in those May, of those we

about the they're you if -- during all there's can probably to but operate to into every quarter, have think quarter, the single There's moving reposition day we think not that XX really going fleet. rigs third operate the we as

So an the that will quarter. we've dealing a might chance of with third you what we during of to give -- the bit a little idea And then have be quarter. in quarter, the really we rigs got think, all the operate fourth

Now, the whether quarter, different operate full all a they that's question.

Steve Ferazani

That's course. in. last And Of just again, helpful. Thanks. one

rigs potential mention Haynesville did change, the You going second can standby moving to the staying remaining them of what you so. know terms versus do there? get you I And at points weigh some in for How out different half. that the things

Anthony Gallegos

contracted the standby And obviously, example. those are wouldn't to pay customer into Yeah, willing and market continue as choose year, they to that on be standby they're couple decided of rigs stay the pay for rig. a rate, our location. we so going once rate that's to have -- of as to by long be some fourth whether able quarter to A this

So they would drive that.

we of the fleet the rig we're we year trying if I pull next the where how guess going into to and for to expect, where can my probably that that decision, rolling opportunity west, make go was is comments Permian a we optionality market year balance I about see with in obviously this of thinking part strengthening contracting have the things. that is way back the in is

Operator

comes next Storms Our question from with Dave Capital Stonegate Markets.

Dave Storms

as I touch quarter. a contracts? quarter it down bit. signing on this here? is over is -- Just new contracts there -- by story Was Or this design backlog the an wanted come to saw you're another

Anthony Gallegos

I'll start.

for the of the half environment I is we seen a is most contracts back pad market, maybe think around Again, to and except pad of part term function in signed we've it's of really this a the much right of some dayrates. for in pressure back contracting our that the year, Dave, year. stronger of last now. the just the fleet, working And outlook

in months a that. us, longer. So been have signed won't or shorter something unless of six show we contracts that the -- than it's recently up for And we our backlog lot

Philip Choyce

already And Yeah, move there's move just the trying we rolling off to renegotiate all them when enter had we couple five They actually -- obviously, and talked so. of with were contracts they about, a to rigs renewed term from those. into Haynesville we're Permian. -- contracts, -- new

Now, those won't all to pad contracts that numbers. our pad backlog are hit actually

I So could backlog. bit little our think decline more. a Reported backlog

quarter move from we first for to second the quarter reason. As same

of we're most to contracts to think pad. some be remains There be contracts I to but sign just six-month seen. the to looking are going be longer, could pad or it

Dave Storms

that. costs, but in What still then million know looking more And worth in million helpful. relocation leave might Very Understood. million you're $X $X your the range of $X at for be range? as maybe to that $X mentioned million you're you I in are that of stages to opposed early to the factors prepared you remarks that still on the pace the

Philip Choyce

are costs the costs to Haynesville that. all on to from transportation We've So talking had the Permian. -- We've about you're for the share rig costs. of move most part, absorb done we've the those of the of well the bucket that lion's our very customers

it a hard crews really when our rigs, people. portion in of is and a worked maintain our you're other we're it choppy situation to because The -- we've moving is,

that will than lower of be that And rigs so And will quickly part inefficiencies some that the are how help just what are number. there get go these there re-contracted.

cost May at goals our far So the very period going here talked more to about second quickly coming variable be up the if quarter is the and we're positive the couple the able to to that's as as that get helpful what just execute of we rigs those then But June, on maintaining big in and costs. of during just having these end going rigs how upon on time. impact be crews a re-contracted of of

Operator

Singular. David from comes Marsh question with next Our

David Marsh

questions. Thanks for taking the

regard sequentially in the with side it margin. margin I'm trying conservative to outlook Or be So is there going of second just Is driving an through comments quarter. the that's are dayrates more that that? on to the for a cost flattish to work implication projection more

Philip Choyce

when Well, to some do the lower. you won't that the in do have the capital really second which There quarter had dayrate, is we margins certain guidance quarter, slightly revenues paying our compare upgrades first guidance, it for rigs. first to to with has to quarter the in customers with equipment nothing were

in quarter. going second as to we're have we I don't think much the -- forecasting aren't that

mentioned, there some is As dayrates. pressure Anthony on

when third the that margin above not think it's grow either. quarter you number, going think, the about for to we So forward, going

think flat. it's to I going be

pressure is concerned Could how about rigs the just probably like could depends absorbed. around it. But be There so that it? that things most there the get really quickly cost to back on where line be on work line, depends I'd really and the be overhead our and Potentially. on fully it we cost get

David Marsh

everybody price Okay. generally nat high-level That's gas could dayrates of fleet what need of and oil have and of for do levels stabilized to and commodity guys just for types a good about talk to you to price for with types involved? you the levels a the helpful. ability And believe then side, margins make you at good what have on that kind

Philip Choyce

know. Again, you Yeah. we're David, as drillers,

different a we react you $X. our might So to that. been And business, we've gas to when get the business long enough think environments. needs I how think the don't calculating for But our about above in gas to make feel me, customers be in living

with And $XX oil $XX, think range. going going environment in be to I also everybody going think is is what's feels like as to where stable trajectory. the different is feel to right? oil $XX $XX lower to $XX than important I needs bias to stay above

issue gas you've the And is as know, very, got is you nat now -- gas low. very

think to I it's stay expect $X most people in that range. going sub

as just If think year the part buildout think in good in be are export takeaway -- that where for to you to you the think LNG, this in remarks, to that year, just of next is challenging a infrastructure well. me my I we that going year you and -- basin, the about rest said like constraints signals I about the of Haynesville all of

into commodity. as look this worse. to you and a a with, or what You've headlines of Oil that beginning dealt on -- going oil a we've of There's into other going year not? lot was the couple we There's thought know, times just year. you twice situation banking here. dip is the of a Are been hand, been a much the global seen XXs we recession get since the at the

officially we think getting machine basis. But global year look the and that XXXX, economy and activity, year-over-year setup X% as part the is very markets. on or Brent. we're like the going to part the the the be year, of drive the especially WTI back of by that's our the a Permian. And demand . why out expectation every at is industrial the and increase terms not, a are is customers' going the this is And US the commodity for a of back very, these for in strong year does And -- is optimistic in of for is real it going it's what's of recession least you out to in positive reasons reopening all whether oil oil really the to so in about going,

Operator

Dick Ridge next with Financial. Ryan Our Oak question comes from

Dick Ryan

Thank you.

your from look or that with Permian? the is re-contracting, you as marketing headway marketing perspective, just Anthony, to you you existing seeing a customers new how coming at into So when they're rigs doing look at making team back your Are customers? absorbing

Anthony Gallegos

do job. First, Dick, a they fantastic

good as only the into the that the put they're service we course, as equipment market. and Of

whole it's a the really part good company. on So of effort just the

those. question, of both really to your answer But it's

April, a that with then the for the out You we rig that XXst chance look past beginning to came at customer never some here had of beginning for. work for went of the biggest example, since the gone work customer. rig work to in for that we've well. in We've slid another or year as for to the E&Ps at, had to we've same that And work our

So those. mixture of a both it of really is

But re-contracting ICD what's the customer having to very about too, lot focus And high of good allowed goes that over. I heavy of satisfaction. really equipment, reputation really levels then good on they there basin believe, calls. and a what'll The of do on, great don't out on for a a job. And has, company so people, strong that bring together, rigs within -- that's that a all lot talk these we there's a these

hopefully, So question. that answers your

Dick Ryan

retransition this period? these with rigs, pause during are the or of -- constant transitioning labor And you the Sure. levels keeping

Anthony Gallegos

Yes.

It's about and we that about per some -- that. day Philip the next hear we've when quarters. per couple expectations able It's -- that's the to talk do of cost our inefficiencies margin So of you been choppy. over it's talk far, day just

why maybe we've on going But And -- rebalancing a been a And those benefits market get the fact would are look, long we've haven't actions occur think the and stockholders, going I relatively for that. a like it couple to the this longer taken And be we the able because we transitory quick of as our if taken see our up reasons was then given situation, made. period tough decisions that run, a are should we over quarters. rigs now. of some we've felt have the time, in that's to to company that of until made basis, recontract we're that we

Operator

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

Anthony Gallegos

wish making forward and hear time to quarter want prosperity to first I soon. you talking for Thank safety everybody you. to XXXX say call. again look all earnings you you and We do thank just to to our

Operator

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

now may disconnect. You

Independence Contract Drilling (ICDIQ) 9 May 232023 Q1 Earnings call transcript