Q1 2021 Trican Well Service Ltd Earnings Call
Good morning, ladies and gentlemen.
Welcome to the Tri Con well service first quarter 2021 earnings results conference call and webcast.
As a reminder of this conference call is being recorded.
I would now like to turn the conference over to Mr. Brad Fedora, President and Chief Executive Officer of Tri County, Well service. Please go ahead Sir.
Thank you very much good morning, ladies and gentlemen, I would like to thank you for attending the Tri can conference call. Today, just a brief outline of how we intend to conduct the call first the clock deemed to our interim CFO will give an overview of the quarterly results I will then address issues pertaining to current market conditions and near term outlook.
And then well open up the call for questions. We have several members of our.
Our executive team here as well so we should be able to answer any questions I'll now turn the call over to class.
Thanks, Brad the Oregon, I'd like to point out of this conference call may contain forward looking statements and other information based on current expectations of results.
Certain material factors or assumptions were applied in drawing the conclusion or making a projection as reflected in the forward looking information section of our Q1 2021 MD&A the.
A number of business risks and uncertainties could cause the actual results to differ materially from these forward looking statements and financial outlook. Some of these risks and uncertainties are further amplified due to the current global health crisis caused by the COVID-19 pandemic.
Please refer to our 2020 annual information form and the business risks section of our MD&A for the quarter ended March 31 for a more complete description of the business risks and uncertainties facing <unk>. This conference call refers to several common industry terms of certain non-GAAP measures, which are more fully described in our quarterly MD&A. Our quarterly results were released after the close on market.
The 12 that are available on SEDAR.
Revenue in the first quarter of 2021 was $148 million, an increase of $45 million from fourth quarter 2020 levels are recovering commodity prices improved cash flows for our customers and as a result led to higher activity levels for <unk> the bed.
It's part of West, Texas Intermediate oil price also known as <unk> of <unk>.
The $8 of U S per barrel, 36% higher out of sequential basis April of the benchmark Canadian natural gas price was up 17% sequentially increasing to an average of 294 per Mcf of Q1, 2021 day.
Average western Canadian rig count was 146 in Q1, 2021 of the significant increase over the average of 89 in Q4 of 2020, the rig count as per the quickly at the start of the quarter and stayed relatively consistent from mid January to mid March before declining with the onset of spring breakup.
The sequential increase was welcome of service companies about the rig count is still of the lower end of the five year range and is reflective of the capital discipline being exercised by customers as the focus on returning value to their shareholders their balance sheets, rather than through the drilling.
We're proud of our operational execution for even the coldest days of the quarter strong operational efficiency and argue well activity combined the structural fixed cost improvements made in the last year and led to sequential improvements in key financial categories.
Our adjusted EBITDA came in at $27 million, a significant improvement over the prior year period, despite a year over year rig count decline of 20% the corresponding year over year revenue decline of 23% adjusted EBITDA was negatively affected by cash stock compensation expense of $1 8 million, which fluctuates with the movement of the company's share price and my fluid on expenditures of $2 three.
So I kind of expenses fluid ends of it as a useful license typically less than 12 months due to the type of works out and the higher intensity areas of strength.
We are aware of that this is not of uniforms practice across the pressure pumping industry sort of remind readers of our statements to bear in mind, when comparing our bear that in line when comparing our results against other market participants. So I can also recognize $5 5 million from the Canadian emergency wage and read the subsidies during the quarter.
The operations were supported by large pad work driving high utilization of 46% increase in proppant pumped compared to Q4 of 2020 levels in.
In response to strong customer demand the company activated on the additional fracturing crew in early January at minimal cost. This resulted in the six fracturing crews operating through the quarter compare to five crews in Q4 improved fraction margins were a significant factor in the overall sequential improvement of margins for the company the.
The company was also pleased to introduce the cat for the.
Cash tier four dynamic gas blending fashion of copper in Q1, which is trial of the multiple customer locations. This new generation dual fuel engine can displace up to 85% of diesel with cleaner burning natural gas reducing costs of our customers and emissions obligation positive feedback from customers on our own desire to reduce the company's environmental impact as.
Part of all of our ESG commitment or factors, leading to our decision to upgrade 30000 horsepower of convinced of existing conventionally powered diesel pumps to the tier four engines.
So that activity was largely tracks the rig count saw sharp wrap up of in January of steady utilization through the quarter until spring breakup conditions start to be more started to be felt in mid March the average job size increase over Q4 as the company had more jobs in the deep technically challenging wells that are found in the Montney and deep basin areas.
Coiled tubing activity was up on a sequential basis with steady utilization and cost control driving an improvement in margins.
The utilization was supported by a 122, well Coalbed methane program that ran from Q4 2020 through to the end of Q1 2021.
Depreciation and amortization was $24 million lower than the 25 recorded in Q4.
This reduction is attributable to the age of the company's fleet and due to the impairment taken the non financial assets from 2020.
First quarter profit before income tax from continuing operations was $1 7 million a significant improvement over the loss of $21 9 million in Q4, 2020, and the loss of a 155 million of Q1 2020, both comparative quarters recognized significant impairments related to the impact of the COVID-19 pandemic.
The company was also pleased to report on the sale of the software business for cash proceeds of $6 5 million. This drove a gain of $4 2 million, which was reflected in the profit from discontinued operations shutdowns combined net profit for the period was $5 $9 million of approximately <unk> <unk> per share.
The company's cash balances remained steady on a sequential basis, even with the working capital build through the quarter operating cash flow and proceeds from the disposition of non core assets were sufficient to fund the company's capital expenditures of $6 9 million along with the company's ongoing investments around Civ program.
The company expects its full year 2021 capital budget to be approximately $40 million. Following the announcement of the tier four fleet upgrade made in April of this investment will upgrade of existing conventionally of diesel powered bumpers with the cat tier four engine that was trialed in Q1 as noted earlier. These engines can displace up to 85% of diesel and used in the conventional paper was clean.
Burning natural gas, reducing carbon dioxide in particular the matter of emissions. This low emission fleet is a key part of <unk>.
Furthermore, refurbishing and upgrading of existing equipment has a lower environmental footprint relative to building the dose it's not all components of required to be replaced.
The capital budget is expected to be funded from available cash on hand, as well as from free cash flow that will be generated from the business through the balance of the year, Chuck that exited the quarter of $23 million in cash and no drawn debt.
Additionally, the company has a positive noncash working capital position of approximately $70 million.
The strong cash position and available credit lines provide the company with sufficient liquidity to invest into our equipment and give us the flexibility to make investments such as of recently announced tier of our program as well as consider other opportunities as they arise.
The company will continue to dispose of surplus of non core assets.
Difficult to predict the quantum of these disposals. The disposals of these assets allow us to monetize stratus of capital and redeploy it back into the business, but our capital program is funded independently from these activities.
During the quarter, we also invested $1 7 million into our SCID program. The company continues to view share repurchase as a good long term investment opportunity for the use of any excess capital, although well always evaluate various opportunities that will offer the best long term investments of the company.
I also want to note that that we recast the comparative periods for our 2020 quarterly results to reflect the change in the recognition of the Canadian emergency wage subsidy program. We reviewed our 2020 submissions following the CRA audit and determined that our initial applications understated. What we were eligible for we have corrected our submissions and youll see it in the notes of the financial statements that we recast.
Of those amounts into 2020 of.
They are associated with activities of that year as a result of this positive adjustment. Our recast 2020 results reflect an increase of $5 7 million to our earnings and adjusted EBITDA. Please see note 13 in our March 31, 2021 statements for details I'll now turn the call over to Brad will provide some comments on the operating conditions in the strategic outlook. Thanks.
I'll make some general comments, both on Q1 and on.
What we are seeing for Q2 in the second half of 2021. So just in Q1 activity increased significantly when you compare to Q4, we were active with all of our core customers and we were fortunate enough to have had a very short Christmas break and had most of our crews back working actually before year end.
Ignore very early January and even during the extreme cold in February we had very minimal delays are our crews worked really well through that whole that whole week from.
From the quarter began with about 150 rigs running in the basin. We peaked at about 182, and then exited the quarter I think it was 79 active rigs.
The pricing was stable.
Impaired to exit 2021 levels, even though the the state it was stable the pricing is always competitive but.
But the company's jockeying for market share, particularly Liberty was one of our one of the bigger price offenders in the market in Q1 and continue to be in Q2.
And so that is that has provided some.
On needed pressure into the pricing market.
Our strategy has not changed we plan on moving pricing up in the second half of the year, we simply cannot operate at these pricing levels and maintain a sustainable business and I think most of our customers understand this.
As I have discussed prior in prior calls any positive pricing movement goes straight to cash flows and are in the bottom line. So.
The operating leverage.
Works well both on the way up just as it does on the way down much of the the fleet in Canada is nearing.
At the end of life for the main components on the pumps, especially and so the sector as a whole will need capital reinvestment going forward and so when you look at today's pricing conditions, you simply cannot afford to to to reinvest into our equipment and I think generally the the reactivation cost of of bringing fleets.
Back into the market has generally been underestimated and so I think youll see continued pressure to get pricing up to more reasonable and sustainable levels throughout the rest of this year.
As Carlos was saying, we ran six frac crews in the.
In Q1, we average about 186000 working horsepower throughout the quarter 17 cement crews and six coil crews, we don't expect that this will change.
The significantly going forward the cementing crews.
Go up and down with the number of drilling rigs that are running but the six frac crews in the six coil crews, we think will be stable until this fall.
We continue to focus on the Montney in the deep basin with the improved commodity prices, particularly natural gas over the last sort of nine months activity has been stable and growing in that area.
Q1.
The above 85% of our work was was natural gas or liquids rich gas at about 15% oil well.
Don't expect out of it will change much.
Now that we've got oil in the mid sixties, we may we may see some more royal share grow a little bit, but certainly the core our core business is focused on gas and liquids rich gas areas.
The number of the the amount of proppant pumped in Q1 increased by about 45% and we pumped about 335000 tons in the quarter.
Most of that was internally sourced.
The 65 per cent of the proppant, we pump comes from from northeastern U S or is the Ottawa white sand versus the domestic sand and more.
More of it more of our customers are pumping.
Their own sand, but.
No that's okay.
We will charge corkage on customer stand going forward and so we don't see that as it has been a significant impact on our business.
We achieved a really good cost reductions in the quarter, especially in our fixed cost infrastructure and of course this leads to higher margins.
Improved improved cash flow and earning margins and as a result, we generated about 19 million of of free cash flow in Q1.
Significantly invested into our infrastructure and our business in the past and so we're able to add revenue to our business in the future without any significant increases to our fixed costs or our G&A and that's the operating leverage that I often referred to.
So just on the second half we have had a really good start to Q2 I think customers are taking advantage of of good commodity prices and actually very stable weather, which has been a treat this year.
If we don't get any prolonged weather interruptions. This will be our best Q2 that the company's had in years, we expect to actually to be EBITDA positive for the quarter, which which will be a nice change and we'll have the significant impact on our on our annual EBITDA and cash flows I think our customers are doing a better job of level loading their programs. This year.
And we hope that continues into into the future in the following years. The Q2 rig count has generally been better than what we expected. We're currently at about 64 rigs. This is a really good sign for the second half of this year. When you think back to this time last year. There was there was almost no rigs running the basin as always remains very gas.
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The improved oil prices youll see more more liquids rich in oil and oil plays being pursued but in general Canada. The gas basin and gas prices have really firmed up nicely in the last nine months and certainly the forward curve looks encouraging so we're expecting activity from slowly increase in AR.
In Canada.
And.
Backdrop to that increase in activity that we're expecting we are not going to be running any more frac crews like I said, we're going to run six frac crews until the fall six coiled crew cementing crews will fluctuate with the drilling rigs, but we don't expecting to add any any crews into this into the space and we don't have a great visibility.
The summer is we never do it this time of year generally our summer looks very busy we of.
Our our board is full of per se.
And so we're expecting a busy summer and just as budgets get firmed up over the next sort of six to eight weeks, we expect to have a better sense of Q4, but we expect to stay busy for the second half of the year.
Hum.
The strong commodity prices that we're seeing today I don't think are being reflected in budgets and so when you think about budgets coming out of over the next six to eight weeks I think generally the will trade they will trend up but certainly we're aware of that our customers are under pressure to reduce debt payments increased dividends not grow production for the <unk>.
<unk> of growing but to focus on returns and we're doing the same and we're working with them to make sure of that.
The programs that the Arcandor acting there are sufficient as possible and we certainly want to add to their profitability and we hope that well they will see us of partner as a partner in there and theyre growing profitability and efficiency going forward.
That being said fuel margins are still skinny.
Starting to see some cost creep into the system from our suppliers, which is expected.
Both of us and our suppliers have reduced prices to unsustainable levels and they were held there for for the most most of 2020.
And they just can't stay there forever. So we understand that our suppliers need to you have to give us price increases and just like we need to give our customers.
Price increase.
Going forward if the basin does continue to grow its activity.
People will remain the bottleneck for future true Activations.
The the Labor force, although it is not an issue today, we do expect that if we start growing activity, 10% of year that will become an issue and it will become an issue for all service companies not just the pressure bumpers.
It will increase the of the reactivation times any of that combined with higher reactivation costs and I think what has been previously anticipated.
Should maintain the market in the fairly tight supply demand balance.
On the supply chain and cost efficiency side, we did a great job. The company has done a great job of getting its SG&A down in the last few years, our SG&A levels today are sort of less than half of what they were a couple of years ago and the same would apply to our fixed operating costs, where we're operating on a monthly basis now.
Less than half of what it would've been two years ago. So that there is of great. That's.
Great augmentation to profitability and we don't expect that that's going to change going forward. We expect that if we do add crews whether it's on the coil fracking, our cementing side that our fixed costs will remain very stable.
On the supplier side the biggest pressures we've had is diesel and third party trucking and those of course are intimately connected.
Connected to each other hotel costs have gone up.
The amount of density in the rooms that were we're able to implement.
Implement due to COVID-19 has obviously declined we used to put two people in the room now we can only one.
Those costs are definitely showing up in our cost structure, we have been able to pass some of that on to our customers, but you have had a huge increase in diesel.
In the past six months.
I don't think thats been truly appreciated in the marketplace.
This will put pressure on all third party costs and so we expect that as our cost increase we will pass on those those cost increases to our customers.
Given the events of line five I think we get questions how will that impact your operations and even though it's not a direct impact to us if we do end up with more crude by rail over the next year.
Depending on what happens that could cause.
Some logistics bottlenecks, particularly with respect to sand coming out of the U S, but well just continue to monitor that and.
And hedge your bets accordingly.
We're always looking to invest in technology advances within our industry, we of the balance sheet to look at anything and everything.
And we showed that I guess, a few weeks back when we announced a three year deal with one of our customers on a tier four low emissions fracturing spread that fracturing spread becomes active in Q4 of this year, we will look and well look for more of those.
I think what's important to note is that the.
The price and volume or volume negotiations at that result of where we're at levels that we felt we were getting good returns on that investment we would never make investments whether it's technology of equipment, unless we thought we were going to get.
The returns above our cost of capital and certainly we would have no issues with parking spreads if prices go down.
I wanted to just stress that we're very returns focused and we will make moves accordingly.
We've made other the implementation into into technology and things like that.
Idle free.
And in the field with our large pumps, we expect that that's going to expand through our fleet and just what that does is just shut the engines down when it's not being used.
<unk> on diesel saves on emissions saves on repairs and maintenance. So it's a good technology to implement is just making sure of that.
The pricing environment can support that that ongoing investment.
The capital program for 2021, we've announced previously that we expect our capital to be about $40 million for the for the year, that's going to be split evenly between our tier four spread upgrade and maintenance capital well continue to monitor opportunities for investment in and the need for continued maintenance capital, but for now our.
The program is set at around $40 million for the for the remainder of the year.
When we look at sort of growth opportunities and acquisitions, we often get asked about this consolidation opportunities. Our primary focus still remains on getting our existing equipment fleet to work.
We have a lot of equipment parked.
We have a company built for much higher levels of revenue.
So certainly from a returns on investment perspective that is the that is the best way to increase cash flows and earnings is to get our existing equipment in the field and working so we're going to be looking at ways to make our existing fleet and our potential adds more efficient.
And Thats basically where our efforts are going to are going to be for the next few quarters I mean, well.
We're always open to the right deal and you know, we're always evaluating opportunities as they arise but I.
I, certainly wouldnt expect anything but continued focus on on the operations and making them as efficient as possible and getting our equipment back into the field when when the pricing environment is right where the.
Not currently active in honor of NCI right now where the shares currently trade above our price threshold and as class was saying, we're currently weighing that investment against potential technology investments of reactivation costs et cetera, and so well be in and out of the market as we see as we see fit from a returns perspective.
I think I'll end my comments, there and well turn the call over to to the operator for questions.
Sure.
Thank you we will now begin the question and answer session. The joined the question queue. You May Press Star then one on your telephone keypad, you will hear the cone acknowledging your request.
If youre using a speakerphone please pick up your handset before pressing any keys to withdraw your question. Please press Star then two well.
We'll pause for a moment of callers join the queue.
Yes.
Our first question is from John Gibson with BMO capital markets. Please go ahead.
Good morning, all thanks for taking my questions first one from me just can you maybe talk about pricing in terms of around 7%. The hit the field in Q4 I was wondering if did that fleet receive a bit of of premium or is it kind of in line with the current pricing levels.
Yeah, we're not we're not disclosing terms of the contract, but certainly given that it is the sort of the newest evolution of equipment in the field and it provides big cost savings to our customers.
It fulfills all of their ESG requirements.
We would not have entered into that contract at today's pricing there at Q1 pricing I should say so.
So yes, there was there was a price premium, but we're not discussing details.
Okay fair enough.
The second one from me it kind of leads.
The last one when you look at opportunities for new work would you say theres a clear directive for Newbuild tier four fleets or is it sort of a combination of.
The legacy equipment sitting on the sidelines.
Well I think.
There is demand for all of like we basically of the three tiered equipment fleet now we've got conventional horsepower that runs on diesel we've got dual fuel equipment.
Which is the result of all of the retrofits that have occurred in the industry over the last.
Well of $5 six years, mainly and that provides about 50% to 60% diesel replacement with natural gas.
We have lots of that as well as our competitors do and then there's the third tier which is our tier four engines, which is the 85% replacement. So we now have sort of three classes of equipment and certainly we get demand for all but there is a growing.
Interest in the in the tier four technology all of our customers are we're all getting pressure in the oil and gas industry.
Two to run more efficiently and to run cleaner from the emissions perspective, and so the demand for that equipment.
Is substantial.
Could definitely put more of that equipment to work today.
It's just getting the right the right pricing and work volume commitments.
<unk>.
To encourage us to make that investment they are not cheap as you as you can imagine and so we're not just we're not going to put more of that on the street on spec.
Put it to work for the prices that we were seeing in Q1, we need higher prices to the justify that kind of investment I'm sure. Our competitors would stay the same thing.
Okay, Great last one from me utilization, obviously is the big driver of profitability and it was nice to see an uptick in Q1, I'm just kind of wondering what what's the threshold you need to see across your active fleet before you'd start to think about either adding or even subtracting crews.
Absent the spring breakup obviously.
Well, if there is any price pressure downward we will pull the crew immediately.
We're not tolerating a reduction in pricing.
That's crazy.
We're not even running at economic levels in the Q from our Q1 pricing perspective, and some of the bids that we've seen by our competitors, particularly the U S firms.
Habit.
So we'd rather part of the equipment and go to work for those prices.
So from a price increase perspective to reactivate I Wouldnt say we are in.
In the environment that would require reactivation as yet.
So I would think prices will have to grow sort of.
Even more than what we're anticipating for the summer before we would start to think about equipment reactivation.
I can't give you a firm answer on it because there's just too many variables but.
We'd have to see what happens from a pricing pressure from our own suppliers.
So that we were able to calculate our net price increases so theres a lot of moving pieces, but the short answer is I don't foresee any new fleet Activations anytime soon.
Yes.
Okay, Great I appreciate the response I will turn it back.
Our next question is from call Pereira with Stifel. Please go ahead.
Good morning, everyone.
Wanted to come back to your comments on pricing, Brad I mean it.
Sounds like the E&ps are fairly understanding I mean as it stands today do you think you have <unk>.
Reasonable line of sight to get the modest pricing increases in that in the second half then or is it still too unclear at this point.
No I mean, it's never clear but.
Absolutely, we're not we're not sort of changing our views on pricing and certainly the larger more sophisticated customers completely understand that two.
2020 COVID-19.
Level of pricing was not in any way sustainable.
And so we've had lots of encouraging conversations with our core customers. So we're the we're proceeding as per our plan and if we get to the summer and we're not able to achieve price increases with all of our customers well well well pull the group.
Well it might be might be of choppy summer and might not be but we simply cannot continue to operate at these prices.
I think anybody or any of our core customers understand that and so we still are of the view that we're going to get price increases for the second half of the year.
Okay perfect. That's helpful. Thanks, as we think about some of your other competitors call. It the large U S. Frac companies and the small private I mean is it is it fair to say from from what you guys see that you think they will maintain their current footprint through the rest of the year as well.
Alright, I can't speak for them.
Sure.
So I honestly.
I can't answer that I don't know what they'll do.
Yes, okay.
Fair enough and just kind of a general question here I mean, you talked about.
Some of your Montney deep basin work I mean are you getting much inquiries for Duvernay work at this point in the back half of the year.
Yes.
It's not.
It's not I wouldn't say, it's overly significant but yes, we definitely to get we are definitely getting more inquiries for per Duvernay style work I mean, everybody knows who's sort of bought into that fleet recently and so we've had some of some of our customers exit in some of our customers enter the the duvernay. So is it significant to our.
Activity levels, no I wouldn't say so.
Certainly montney and just general deep basin is still the driver of our utilization.
Okay got it.
I'll turn it back thanks for the answers.
Our next question is from Keith Mackey with RBC. Please go ahead.
Okay.
Hi, Good morning, Thanks for taking the question just wanted to maybe start off with the <unk>.
Comment around potentially using the balance sheet for growth opportunities.
If conditions warrant.
Just curious if you have any more any more color you can put around that maybe the comfort leverage levels and things like that as you think about your strategic goals.
Yes, we would view that as temporary.
I think it's.
It's always a mistake to get logged into a sense of comfort that the industries.
Going to stay at existing levels going forward.
And as the industry increases of course, so to your direct industry activity has increased so to your cash flows and so I don't foresee us ever.
Really outspending cash flows other than on a sort of temporary basis for a few quarters may be but we're not we're not at the point, where we would see any kind of significant amount of debt to be a permanent part of our capital structure.
We would use it sort of just as a shock absorber from a capex versus free cash flow perspective.
Our operating cash flow perspective, sorry.
Got it.
Got it makes sense.
Just as ESG becomes a larger part of your strategy you mentioned that as part of the one of the reasons to upgrade to.
The DGB fleets.
In that context, do you have a view or a stance on the sustainability reporting and that kind of thing or anything we should expect to see there.
We will have a sustainability report.
Out later this year hopefully this summer.
And that would be something that we would view as sort of a permanent part of our corporate strategy is is incorporated as of sub sector of our corporate strategy would be our ESG strategy and the amount of time and effort. We're spending on that is going to grow we would anticipate and we would.
We're anticipating that we will have an annual report out.
Well have targets.
And what we're doing to meet those targets.
It would be published annually just just like <unk> seen with the larger companies.
Got it okay looking forward to well thanks very much for the color I'll turn it back thanks.
Okay.
Once again, if you have a question. Please press Star then one on your telephone.
Our next question is from Josef Schachter with Schachter Energy reported. Please go ahead Sir.
Good morning, everyone and thanks for taking my questions I have two of them.
When you when you upgraded and created the four of D. G.
The tier four equipment.
She was gonna be locked in for three years did.
Did you use of tier three upgrade or would you use earlier tears and if theres more demand in the future would it be which equipment would you want to upgrade from the different tiers is it are the economics to do tier three tier for the lower cost or would you take your oldest of equipment and upgrade.
So we upgraded conventional like of conventional frac engine and by upgrade meaning we threw it in the garbage and put out and put out new tier four engine on the pumping unit and then we upgraded the the transmission and actually also upgraded the pump.
So that is now considered of 3000 or <unk>, we are going to be upgrading all of this so that the pump is now considered of 3000 horsepower pump and it would have would have a more durable transmission and a brand new tier four engine.
And so when we think about further upgrades, yes, we would.
Yes.
I can't even make those predictions because it's it could be a mix of things but.
Would we upgrade in all of 2500 horsepower pump no no we wouldn't alright.
Alright, and we don't even have any $22 50 pumps and all of our tier two engines that have natural gas kits retrofitted on them.
There is still going to be an active market for that equipment going forward and so it's not like we think the whole industry is going to transition to tier four anytime soon.
There is there is still an issue with the with natural gas logistics on location to fuel those bumps and.
And theyre not all always applicable in all parts and all parts of the basin. So it's.
I can't really answer that question.
Clearly I mean, we would look at our equipment and see what makes the most economic sense, but I don't I don't have that kind of I don't have my equipment list sitting in front of me now.
Okay Super.
And pass the call.
Calls you've talked about.
M&A consolidation have you got any further thoughts on that and do you see potentially.
Try can making.
Entries into new areas or consolidating in the.
Well I guess you are currently and is that something that's the have you seen anything of of attractiveness there.
I wouldn't say, there's any interest in expanding outside of Canada at this stage so.
So we don't look at consolidation opportunities in the U S or international and we won't be for the time from.
For the foreseeable future well.
We obviously look at anything and everything.
We do we do have the balance sheet, we have the luxury of a clean balance sheet that will allow us to.
To complete almost any transaction thats available in Canada.
But our main focus is just making our business as efficient as possible.
Waiting to see what happens from an activity growth perspective, because of our most profitable growth.
In the near term, meaning over the next sort of 12 to 18 months as is getting our old equipment off the fence and getting it into the field and getting it working just because we do have an infrastructure that supports a much higher much higher levels of revenue.
And all of that operating leverage goes to the bottom line as you know so that's our main focus now from an M&A perspective, we do look at other service lines from time to time.
And we do understand as a public company, we need to continue to grow in a 500 million dollar of enterprise value is not meeting investment thresholds for many of the funds around North America, and so sort of our five year plan would I guess would be we'd be more flexible from an M&A perspective, but our.
Sort of our 12 month plan as is.
It's going to be very M&A light I would say.
Okay Super and that covers it from me thanks very much.
Thanks.
This concludes the question and answer session I would like to turn the conference back over to Mr. <unk> for any closing remarks.
Okay, well thanks for attending everyone I'd like to also remind our shareholders that <unk> annual General meeting will take place. This afternoon at $1 30 mountain time, and it will be of virtual format it'll.
It'll be a very short meeting please see the investors section on our website for details on how to call into that and participate in the meeting.
With that thanks, everyone. The management team will remain available for the next few days for questions. If any further questions come up thanks for calling in.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Yeah.
Yes.
Okay.
Yes.
Okay.
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