Q2 2025 Trican Well Service Ltd Earnings Call

Speaker #3: Good morning, ladies and gentlemen. Welcome to the Trican Well Service second quarter 2025 earnings conference call and webcast. As a reminder, the conference call is being recorded.

Speaker 4: Good morning, ladies and gentlemen. Welcome to the TRICAN WELL SERVICE second quarter 2025 earnings conference call and webcast. As a reminder, the conference call is being recorded. I would now like to turn the meeting over to Brad Fedora, President and CEO of TRICAN WELL SERVICE LTD. Please go ahead, Mr. Fedora.

Speaker #3: I would now like to turn the meeting over to Brad Fedora, president and CEO of TRICAN WELL SERVICE LTD. Please go ahead, Mr. Fedora.

Speaker #4: Thank you, everyone. Good morning and thanks for joining us. First, Scott will give an overview of the quarterly results. And then I'll provide some comments on the quarter and current operating conditions and the outlook in the near future.

Brad Fedora: Thank you, everyone. Good morning, and thanks for joining us. First, Scott will give an overview of the quarterly results, and then I'll provide some comments on the quarter and current operating conditions and the outlook in the near future. And then we'll go to questions. We'll try to be a little quicker on this call than we normally are, just so we leave more time for questions. Several members of the team are with us today as well, so there shouldn't be a question that we can't answer. I'll now turn the call to Scott.

Speaker #4: And we'll go to questions. We'll try to be a little quicker on this call than we normally are, just so we leave more time for questions.

Speaker #4: Several members of the team are with us today as well. So there should be, we shouldn't, there shouldn't be a question that we can't answer.

Speaker #4: I'll now turn the call to Scott.

Speaker #5: Thanks, Brad. So before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements and other information based on current expectations or results for company.

Scott Matson: Thanks, Brad. So before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements and other information based on current expectations or results for the company. Certain material factors or assumptions that were applied in drawing conclusions or making projections are reflected in the forward-looking information section of our MD&A for Q2 of 2025. A number of business risks and uncertainties could cause actual results to differ materially from these forward-looking statements and our financial outlook. Please refer to our 2024 annual information form for the year ended December 31st, 2024, for a more complete description of business risks and uncertainties facing TRICAN. This document is available both on our website and on CDAR. During this call, we will refer to several common industry terms and use certain non-GAAP measures, which are more fully described in our Q4 2024 MD&A.

Speaker #5: Certain material factors or assumptions that were applied in drawing conclusions or making projections are reflected in the forward-looking information section of our MD&A for Q2 of 2025.

Speaker #5: The business risks and uncertainties could cause actual results to differ materially from these forward-looking statements and our financial outlook. Please refer to our 2024 annual information form for the year-end of December 31, 2024, for a more complete description of the business risks and uncertainties facing TRICAN.

Speaker #5: This document is available both on our website and on CDAR. During this call, we will refer to several common industry terms and use certain non-GAAP measures, which are more fully described in our Q4 2024 MD&A.

Speaker #5: Our quarterly results were released after close of market last night and are available both on CDAR and our website. So with that, I'll provide a brief summary of our quarter.

Scott Matson: Our quarterly results were released after close of market last night and are available both on CDAR and our website. So with that, I'll provide a brief summary of our quarter. My comments will draw comparisons to the second quarter of last year, and I'll also make some comments about our quarterly activity and our expectations going forward. TRICAN's results for the quarter compared to last year's Q2 were slightly higher due to increased operating activity. Customers continued to level-load their programs, and as a result, activity was reasonably strong throughout the quarter. On the cost side, we saw a bit of decrease on certain items like fuel costs due to the removal of some of the carbon taxes, and we were able to do a bit more of our own trucking this quarter, which helped our transportation costs.

Speaker #5: My comments will draw comparisons to the second quarter of last year, and I'll also make some comments about our quarterly activity and our ectations going forward.

Speaker #5: Trican's results for the quarter compared to last year's Q2 were slightly higher due to increased operating activity. Customers continued to level-load their programs, and as a result, activity was reasonably strong throughout the quarter.

Speaker #5: On the cost side, we saw a bit of decrease on certain items like fuel costs due to removal of some of the carbon taxes.

Speaker #5: And we were able to do a bit more of our trucking this quarter, which helped our transportation costs. In general, our cost structure was stable through the quarter, although we did experience some cost creep in certain areas like cement costs, which went up predictably on May 1st.

Scott Matson: In general, our cost structure was generally stable through the quarter, although we did experience some cost creep in certain areas like cement costs, which went up predictably May 1st. That resulted in revenue for the quarter of 213.8 million with adjusted EBITDA of 44.9 million, or about 21% of revenue, compared to adjusted EBITDA of 40.7 million, or 19% of revenues that we generated in Q2 of 2024. Adjusted EBITDA for the quarter came in at 47.3 million, or 22% of revenues, up from the 45.2 million, or 21% of revenues we generated in Q2 of last year. To arrive at EBITDA, we add back the effects of cash settled share-based compensation expense recognized in the quarter to more clearly show the results of our operations and remove some of the financial noise associated with changes in our share price as we mark to market these items.

Speaker #5: That resulted in revenue the quarter of $213.8 million, with adjusted EBITDA of $44.9 million, or about 21% of revenue. Compared adjusted EBITDA of $40.7 million, or 19% of revenues that we generated in Q2 of 2024.

Speaker #5: Adjusted EBITDAs for the quarter came in at $47.3 million, or 22% of revenues, up from the $45.2 million, or 21% of revenues we generated in Q2 of last year.

Speaker #5: To arrive at BITDAs, we add back the effects of cash-settled share-based compensation expense recognized in the quarter to more clearly show the results of our operations and remove some of the financial noise associated with changes in our share price as we mark to market these items.

Speaker #5: On a consolidated basis, we generated positive earnings of $19.5 million during the quarter, which translates to $0.11 per share both on a fully diluted and basic basis.

Scott Matson: On a consolidated basis, we generated positive earnings of 19.5 million during the quarter, which translates to 11 cents per share, both on a fully diluted and basic basis. TRICAN generated free cash flow of 24.4 million during the quarter. Our definition of free cash flow is essentially EBITDA less non-discretionary cash expenditures, which includes maintenance capital, interest, current taxes, and cash settled stock-based comp. You can see more details on this in the non-GAAP measures section of our MD&A. CapEx for the quarter totaled 16.3 million, split between maintenance capital of about 14.3 million and upgrade capital of about 2. Our upgrade capital was mainly dedicated to the electrification of our fourth set of ancillary frac support equipment and ongoing investments to maintain the productive capability of our active gear.

Speaker #5: TRICAN generated free cash flow of $24.4 million during the quarter. Our definition of free cash flow is essentially EBITDAs less non-discretionary cash expenditures, which includes maintenance capital, interest, current taxes, and cash settled stock-based comp.

Speaker #5: You can see more details on this in the non-GAAP measures section of our MD&A. CapEx for the quarter totaled $16.3 million, split between maintenance capital of about $14.3 million and growth capital of about $2 million.

Speaker #5: Our upgrade capital was mainly dedicated to the electrification of our fourth set of ancillary frac support equipment and ongoing investments to maintain the productive capability of our active gear.

Speaker #5: For 2025, our capital budget remains at $70.4 million, focused on a mixture of ongoing maintenance capital and targeted growth initiatives, including the fourth set of electric ancillary frac support equipment.

Scott Matson: For 2025, our capital budget remains at 70.4 million, focused on a mixture of ongoing maintenance capital and targeted growth initiatives, including the fourth set of electric ancillary frac support equipment, investments in our logistics fleet, and our support infrastructure. Balance sheet remains very solid. We exited the quarter with positive working capital of approximately 114.1 million, including cash of 36.3 million. And I would note that we had a significant unwind at working capital as we worked our way through the quarter that benefited our cash position. I would expect this will build back up to a more normal level as we move through a fairly busy Q3. With respect to our return of capital strategy, we repurchased and canceled 8 million shares under our NCIB program during the second quarter at a weighted average price of about $4 per share.

Speaker #5: Investments in our logistics fleet and our support infrastructure. Balance sheet remains very solid. We exited the quarter with positive working capital of approximately $114.1 million, including cash of $36.3 million.

Speaker #5: And I would note that we had a significant unwind of working capital as we worked our way the quarter that benefited our cash position.

Speaker #5: I would expect this will build back up to a more normal level as we move through a fairly busy Q3. With respect to our return of capital strategy, we repurchased and canceled $8 million shares under our NCIB program during the second quarter at a weighted average price of about $4.00 per share.

Speaker #5: We've urchased and canceled $13.2 million shares to date under our 2024-2025 NCIB program, which represents about 69% of the total available program. As noted in our press release following impending closing of the acquisition of Ironhorse, the board of directors has approved a 10% increase to our quarterly base dividend.

Scott Matson: We've repurchased and canceled 13.2 million shares to date under our 2024-2025 NCIB program, which represents about 69% of the total available program. As noted in our press release, following a pending closing of the acquisition of Iron Horse, the board of directors has approved a 10% increase to our quarterly-based dividend. The increased quarterly dividend will be about 5.5 cents per share per quarter, up from 5 cents per share currently, which equates to 22 cents per share on an annual basis. The distribution is scheduled to be made on September 30th, 2025, to shareholders of record as of the close of business on September 12th, 2025. And I would note that the dividends are designated as eligible dividends for Canadian income tax purposes. So with that, I'll turn things back to you, Brad.

Speaker #5: The increased quarterly dividend will be about $5.5 per share per quarter, up from $0.05 per share currently, which equates to $0.22 per share on an annual basis.

Speaker #5: The distribution is scheduled to be made on September 30, 2025, to shareholders of record as of the close of business on September 12, 2025.

Speaker #5: And I would note that the dividends are designated as eligible dividends for Canadian income tax purposes. So with that, 'll turn things back to Brad.

Speaker #6: Okay, thanks. I'll just talk about the market in general, and I'll try to keep my comments a little more brief than usual so that I can see mostly analysts on the call.

Brad Fedora: Okay, thanks. I'll just talk about the market in general, and I'll try to keep my comments a little more brief than than usual so that I could see mostly analysts on the call. So I assume there'll be lots of questions. The Q2 went well, but it went as forecast. And we did have some work push out of Q1 and into Q2, as we had mentioned on our last call. And so we had, you know, I would say, sort of a better quarter than maybe we would have predicted earlier in the year. June, in particular, was really busy. I think the first 10 days of June were maybe our best revenue days since I've joined the company. so you know it's it's it's just more a testament of how our customers are level-loading throughout the year. It's really helpful to the organization.

Speaker #6: So I assume there'll be lots of questions. The Q2 went well, but it came in as forecast. You know, we did have some work pushed out of Q1 and into Q2, as we had mentioned on our last call.

Speaker #6: And so we had, you know, I would say, sort of a better quarter than maybe we would have predicted earlier in the year. June, in particular, was really busy.

Speaker #6: I think the first 10 days of June were maybe our best revenue days, since I've joined the company. so, you know, it's it's it's just more a testament of how our ustomers are level loading throughout the year.

Speaker #6: It's really helpful to the organization. You know, you're not staffing for seasonal peaks anymore. from a staffing pective as well, you know, their incomes are are more evenly distributed throughout the year.

Brad Fedora: You know you're not staffing for seasonal peaks anymore. From a staffing perspective as well, you know their incomes are are more evenly distributed throughout the year. And it shows you know our turnover is below 5%. If you looked at these types of businesses even five years ago, they would have been in the 20, 30 percent turnover range. So really helpful to have have our customers level-load through all all four quarters. There is a little bit of pricing pressure out there. I you know I think margins are maybe a little bit lower than we would like them to be. And just with natural gas where it's at, and just a reminder, you know in the last couple of years, or the last 18 months, these gas prices have been the lowest they've ever been on an inflation-adjusted basis in Canada.

Speaker #6: And it shows, you know, like our turnover is below 5%. If you looked at these types of businesses even five years ago, they would have been in the 20% to 30% turnover range.

Speaker #6: It's really helpful to have our customers level load through all four quarters. There is a little bit of pricing pressure there. I think margins are maybe a little bit lower than we would like them to be.

Speaker #6: and just with natural gas where it's at and just a inder, you know, last couple of years, or the last 18 months, these gas prices have been the lowest they've ever been.

Speaker #6: On an inflation-adjusted basis in Canada. And so, it's it's, you know, we're actually very fortunate that it's as busy it is. And but the good news is, you ow, I think there's only one way for gas prices to go.

Brad Fedora: And so it's it's you know we're actually very fortunate that it's as busy as it is. And but the good news is you know I think there's only one way for gas prices to go. And now with LNG active or you know the facilities actually exporting gas now, I mean most analysts are predicting that gas will steadily climb from here and that next year looks really good. Most of our work is is very gas-focused. About 75% of our work is is is some type of gas play, whether it's dry or liquids-rich. And so you know we are we are very attuned to gas prices in our business. And I would you know the other the rig count is down slightly. And so you know we are, like I said, we are seeing a little bit of pricing pressure.

Speaker #6: And now with LNG, active or, you know, the facilities actually exporting gas now, I mean, most analysts are predicting that gas will steadily climb from here.

Speaker #6: And that next year looks really good. Most of our work is very gas-focused; about 75% of our work is some type of gas play, whether it's dry or liquids-rich.

Speaker #6: and so, you know, we are, we are very attuned to gas prices. and in our business, and I would, you know, the other the rate count is down slightly.

Speaker #6: And so, you know, we are, like I said, we are seeing a little bit of pricing pressure. But I would say, for the most part, that has sort of leveled out.

Brad Fedora: But I would say for the most part, that has sort of leveled out. I think everybody has settled into Q3 and Q4 now. And we actually have a surprising amount of visibility into Q4, which is not actually typical for this point in the summer. And it's funny, you know for the first time in a long time, our customers are coming to us with next year's plans and wanting to talk about equipment availability, you know even like commodity pricing, like on on sand and chemicals and things like that. So that's a really good sign for next year. So I think I think pricing will will settle out here in the second half. But we're expecting a good Q3.

Speaker #6: I think everybody has settled into Q3 and Q4 now. We actually have a surprising amount of visibility into Q4, which is not typically the case.

Speaker #6: For this point in the summer, and it's funny, you know, for the first time in a long time, our customers are coming to us with next year's plans.

Speaker #6: And wanting to talk about equipment availability, you know, even like, commodity pricing, like on on sand and chemicals and things like . So, that's a really good sign.

Speaker #6: for next year. So I think, I think pricing will will settle out here. in second half, but we're ecting a good Q3. And, and, you know, maybe Q4, I don't think it's going to be as good as Q3 as it just as we go into the, into the Christmas break.

Brad Fedora: And and you know maybe a Q4, I don't think it's going to be as good as Q3 is just as we go into the into the Christmas break. But we expect that we're going to have a pretty good second half, probably look a lot like last year. We're still very focused in the Montaigne to Duvernay and the deep basin. Nothing's changed there, and I don't I don't anticipate that'll change. And I you know I'll just say I won't get into the particulars that I usually get into, but all three divisions, you know frac coil and cement are all running really well. Coil, we've had some great improvements from a market share and and sort of technical recognition by our customers given the lengths of of of the coil jobs that we're doing.

Speaker #6: But we expect that we're going to have a pretty good second half. It'll probably look a lot like last year. We're still very focused on the monthly to-do grenade and the deep base, and nothing's changed there.

Speaker #6: And I don't, I don't anticipate that'll change. And I, you know, I'll just say, I won't get into the particulars that I usually get into, but all three divisions, you know, frac, oil, and cement are all running really well.

Speaker #6: Coil, we've had some great improvements from a market share and sort of technical recognition by our customers given the lengths of the coil jobs we're doing.

Speaker #6: But, you know, in general, all all three frac, all three divisions are are running really well or really happy with how things are going.

Brad Fedora: But you know in general, all all three all three divisions are are running really well. We're really happy with how things are going. And you know I I think the rest of this year will look very similar to last year. We're going to keep an eye on commodity prices. Like LNG Canada now is averaging about half a B a day of export. And that'll slowly ramp up to two BCF a day early next year. And as that happens, you know we'll we'll pull lots of gas out of the basin, and that'll be that'll be a great help for natural gas prices. And you know the the strip pricing is is a lot better than the spot pricing. And so I think most of our customer base is sort of looking at the rest of this year as being sort of steady as she goes.

Speaker #6: and, you know, I, I think the rest of this year will look very similar to last year. we're going to keep an eye on commodity prices.

Speaker #6: LNG Canada is now averaging about half a BCF a day in exports, and that'll slowly ramp up to 2 BCF a day early next year.

Speaker #6: And as that happens, you know, we'll pull lots of gas out of the basin. That'll be a great help for natural gas prices.

Speaker #6: And, you know, the strip pricing is a lot better than the spot pricing. And so, I think most of our customer base is sort of looking at the rest of this year as being steady as she goes.

Speaker #6: And then in 2026, they're probably going to speed things up a little bit. On the tariff side, we did have the sand tariffs removed, which is a great help.

Brad Fedora: And then 2026, they're probably going to speed things up a little bit. On the tariff side, we did have the sand tariffs removed, which is a great help. Those are about $10 a ton. You know just on a 5,000-ton well, that's $50,000. So you know anytime we can lower our well, our completion costs for our customers, that's that's great news. And the and the tariff removal is retroactive. It goes back to March when it was when it was put in. You know on the the other tariffs that we're looking at now are are on the steel side. You know a lot of our parts come from the US, like fluid ends, power ends, and the coil the strings come out of the US. And with the the steel tariffs and the reciprocal tariffs, you know the the cost of those things are going up.

Speaker #6: Those are about $10 a ton. You know, just on a $5,000 ton well, that's 50, 50,000 dollars. So, you ow, anytime we can lower, our well, our completion costs for our ustomers, that's, that's great news.

Speaker #6: And the tariff removal is retroactive. It goes back to March, when it was, when it was put in. You know, on the the other tariffs that we're oking at now are, are on the steel side.

Speaker #6: You know, a lot of our parts come from the US, like fluid ends, power ends. And the coil, the coil strings come out of the US.

Speaker #6: And with the the steel tariffs and the reciprocal tariffs, you know, the the cost of those things are going up. And so, you know, we're, we're a lot more active in trying to find, better price alternatives, from around various places around the world.

Brad Fedora: And so you know we're we're a lot more active in trying to find better price alternatives from our various places around the world. But all I can say is you know we'll keep an eye on it, and we'll do the best job we can to keep our to keep our costs low. On the sand logistics side, we continue to build that out. You know I think we're one of the we're really proud of our sort of last-mile logistics capabilities. And I think our customer base recognizes that you know when you're when you're pumping these these amounts of sand, whether it's 5,000 tons or 10,000 tons, which equates to 50 to 100 rail cars of sand. So it's it's incredible to think that all of that sand is getting pumped in sort of a 48-hour period, almost.

Speaker #6: But all I can say is, you know, we'll keep an eye on it. And we'll do the best job we can to keep our costs low.

Speaker #6: On the sand logistics side, we continue to build that out. You know, I think we’re really proud of our sort of last mile logistics capabilities.

Speaker #6: And I think our customer base recognizes that. You know, when you're pumping these amounts of sand, whether it's 5,000 tons or 10,000 tons, which equates to 50 to 100 rail cars of sand.

Speaker #6: So, it's incredible to think that all of that sand is getting pumped in sort of a 48-hour period, almost. You know, our ability to make sure that sand is showing up on location, whether it's a B train every 12 minutes for 36 straight hours or, you know, the ability to store it. But anyway, we're really proud of our capabilities there.

Brad Fedora: You know our ability to make sure that sand is showing up on location, you know whether it's a beach rain every 12 minutes for 36 straight hours or you know the ability to store it. but anyways, it's we're really proud of our capabilities there, and we'll continue to build that out. And it's it's turning into a profit center for the company as well. On the technology side, I think we're at the stage where we're sort of ready to pick the next generation of pumps. We did talk about in the past about reviewing the various technologies that were available for 100% natural gas. And so we're not we're not approved yet, or we haven't finalized the details. But I would assume by next by sort of this time next year, we will have a 100% natural gas frac spread operating in the field.

Speaker #6: And we'll continue to build that out. It's turning into a profit center for the company as well. On the technology side, I think we're at the stage where we're sort of ready to pick the next generation of pumps.

Speaker #6: We did talk about, in the past, reviewing the various technologies that were available for 100% natural gas. And so we're not approved yet.

Speaker #6: Or we haven't finalized the details. But I would assume that by this time next year, we will have a 100% natural gas frac spread operating in the field.

Speaker #6: And so, what to future conference calls to us for us to provide more details on that. Long term, you know, we still think Western Canada is a great place to be.

Brad Fedora: And so look to future conference calls to us for us to provide more details on that. Long term, you know we still we think Western Canada is a great place to be. You know we believe in the in the business, whether in Northwest Alberta, Northeast BC, and even Central Alberta with the Duvernay and the deep basin. We think all of those areas are going to be very busy. We're proud of the relationships we've formed with the First Nations, both in in Alberta and BC. And we we think that will be sort of a catalyst to to more activities in in our areas. you know when you look at the Montaigne now, it's considered arguably one of the best resources in North America, and it's in the second inning, depending on who you ask. so there's lots of runway there.

Speaker #6: You know, we believe in the business, whether in Northwest Alberta or Northeast BC, and even Central Alberta with the Dover Day and the deep basin. We think all of those areas are going to be very busy.

Speaker #6: we're proud of the relationships we formed with the First Nations, both in in Alberta and BC. And we, we think that will be, sort of a catalyst to, to more activities in the, in our areas.

Speaker #6: You know, when you look at the monthly, it's considered arguably one of the best resources in North America. And it's in the second inning, depending on who you ask.

Speaker #6: so there's lots of runway there. You know, I ink Canadian companies now are, are, are being viewed with NB for the amount of sort of locations and, and, and undeveloped plays that, that remain.

Brad Fedora: You know I think Canadian companies now are are are being viewed with envy for the amount of sort of locations and and, and undeveloped plays that that remain. And again, LNG Canada is finally working. You know it wasn't wasn't that long ago that investors were still doubtful of whether or not that was ever going to happen. And here it is. It's up and running. It's you know, it's having its usual startup hiccups, as you would expect. but it's already at basically half a BCF a day of of export, volume. So that's that's great news. before I before I wrap up, I'll just talk about the Iron Horse acquisition. As everybody recalls, you know about a month or so ago, we put out a press release that we we will be acquiring Iron Horse. we're very excited about this.

Speaker #6: And again, LNG Canada is finally working. You know, it wasn't that long ago that investors were still doubtful of whether or not that was ever going to happen.

Speaker #6: And here it is. It's up and running. It's, you know, it's having its usual startup hiccups, as you would expect. but it's already at basically half a BCF a day of, of export, volume.

Speaker #6: So that's, that's great news. before I, before I wrap up, I'll just k about the Iron Horse acquisition. Is everybody recalls, you know, about a month or so ago, we put out a press release that we, we will be acquiring Iron Horse, we're very excited about this.

Speaker #6: We view this as the combination of the two best frac companies in Canada. You know, we're going to work with each other to adopt best practices from both companies.

Brad Fedora: We view this as the combination of the two best frac companies in Canada. you know we're going to work with each other to to adopt best practices from both companies. it will operate as a as a separate division. and so you know we we will not be rebranding it or anything like that. And so we've I think our the Iron Horse customers and the TRICAN customers you know will still get great service. If anything, our service offering should improve with the with the acquisition as we adopt best practices and we allocate equipment and, you know, completion designs in the most efficient in the most way. we're working with the Competition Bureau through through that approval process. That's I think it's going well.

Speaker #6: and we'll operate as a, as a separate division. and so, you know, e, we, we will not be rebranding it or anything like that.

Speaker #6: And so we've, I think our, the Iron Horse customers and the TRICAN customers, you know, we'll get great service if anything, our service offering should improve with the, with the acquisition as we adopt best practices and we allocate equipment, and, completion, you ow, completion designs and the most efficient in the most efficient way.

Speaker #6: We're working with the Competition Bureau through that approval process. I think it's going well. We hope to close sometime late this quarter or early next quarter.

Brad Fedora: we hope to close, you know, sometime late this quarter, early next quarter, but you know we really will, we'll, we'll have to wait and see. But we're not expecting any any issues there at all. so on the on the shareholder return side, you know, we, as Scott was saying, we still, you know, even in Q2, we're generating significant free cash flow. I think we had about 25 million or so in free cash flow in the quarter. And that's, you know, typically our lowest quarter of the year. so we'll look for ways to get that money back to our to our shareholders if we don't have attractive organic growth opportunities. You know, we, as everybody knows, our return to capital strategy is a combination of the dividends and the NCIB. And, we we expect to maintain both of those going forward.

Speaker #6: But, you know, we really, we'll, we'll, we'll have to wait and see. But we're not expecting any, any issues there at all. so on the, on the shareholder return, side, you know, we, Scott was saying we still, you know, even in Q2, we're generating significant free cash flow.

Speaker #6: I think we had about $25 million or so of free cash flow in the quarter, and that's typically our lowest quarter of the year.

Speaker #6: so we'll ok for ways to get that money back to our to our shareholders if we don't have attractive organic growth opportunities. You know, we, as everybody knows, we, our return to capital strategy is a combination of the dividends and the NCIB.

Speaker #6: And, we expect to maintain both of those going forward. We're not afraid to use our bank lines when we find something attractive to invest in, just like we did with Iron Horse.

Brad Fedora: we're not afraid to use our bag lines when we find something attractive to invest in, just like we did with Iron Horse. You know, we are taking on a little bit of debt for the first time in a long time, and happy to do more of that if we find more more really attractive acquisitions. either way, we're always, you know, we're always going to do what we think is best from a returns perspective, whether it's dividends, NCIBs, M&A, or just organic equipment growth. And we'll just continue to evaluate all of those and and and pick our best on a risk-adjusted basis. Our corporate priorities, you know, they remain unchanged. We want to build a resilient, sustainable, and differentiated company that's active in Canada. We want to continue to invest in high-quality growth opportunities, make good acquisitions when they're when they're available to us.

Speaker #6: You know, we are taking on a little bit of debt for the first time in a long time. And I’m happy to do more of that if we find more really attractive acquisitions.

Speaker #6: Either way, we're always going to do what we think is best from a returns perspective, whether it's dividends, NCIBs, M&A, or just organic equipment growth.

Speaker #6: And we'll continue to evaluate, all of those and, and, and pick our best on a risk-adjusted basis. Our corporate priorities, you know, they remain unchanged.

Speaker #6: We want to build a resilient, sustainable, and differentiated company that's active in Canada. We want to continue to invest in high-quality growth opportunities and make good acquisitions when they're available to us.

Speaker #6: And, you know, all of this is to make sure that the service offering for our customers is best in class. You know, without the customers, obviously, we don't have the business.

Brad Fedora: And you know, all of this is to make sure that the service offering for our customers is best in class. You know, without the customers, obviously, we don't have the business. And so everything we do is is designed around providing a better a better value-adding service offering for our customers. And you know, we're very fortunate to have long-term customers. So I think that's that's going quite well. And then through through all of this, we'll we'll provide a consistent return of capital to our shareholders through the dividend and and the NCIB when it's appropriate. The operator, I think I'll stop there, and we can go to questions.

Speaker #6: And so everything we do is designed around providing a better, value-adding service offering for our customers. And, you know, we're very fortunate to have long-term customers.

Speaker #6: So, I think that's going quite well. And then, through all of this, we'll provide a consistent return of capital to our shareholders through the dividend and the NCIB when it's appropriate.

Speaker #6: The operator: I think I'll stop there, and we can go to questions.

Speaker #2: Thank you. We'll now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad.

Speaker 2: Thank you. We'll now begin the question-and-answer session. To join the question queue, you may press star then one on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Our first question is from Aaron McNeil with TD Cullen. Please go ahead.

Speaker #2: You'll ar a tone acknowledging your request. If you're ing a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two.

Speaker #2: Our first question is from Aaron McNeil with TD Collins. Please go ahead.

Speaker #7: Hey, morning all. Scott, you mentioned it in the prepared remarks. Obviously, margin performance was very good in the quarter. You referenced the carbon tax and internal trucking as areas where you saw reduced costs.

Aaron MacNeil: Hey, morning all. Scott, you mentioned it in the prepared remarks. You know, obviously, margin performance was was very good in the quarter. You referenced the carbon tax, internal trucking as areas where you saw the reduced costs. Can you expand on sort of the materiality of each of those items and give us a sense of what you think we should be applying on a go-forward basis?

Speaker #7: Can you expand on the materiality of each of those items and give us a sense of what you think we should be applying on a go-forward basis?

Speaker #8: Yeah. I probably won't go into the details of each of the lines. But, you know, those would have been the major contributors for the, you know, one or two or three points of margin that was a bit different year over year.

Scott Matson: Yeah, I probably won't go into the details of each of the lines, but you know those would have been the major contributors for the, you know, one or two or three points of margin that that was a bit different year over year. So if you look at the run rate of, you know, just that percentage EBITDA at the bottom line, you know, that probably stays as a fairly representative view as we go into the next few quarters, right? Q3 is probably a little better. Q4, depending on how active it is, moderates a little bit. But I think you just focus on the run rate piece, and you'll be you'll probably be right on track here.

Speaker #8: So if you look at the run rate of, you ow, this, that percentage EBITDA at the bottom line, you know, that probably stays as a fairly representative view as we go into the next few quarters, right?

Speaker #8: Q3 is probably a little tier. Q4, depending on how active it is, moderates a little bit. But I think you just focus on the run rate piece, and you'll probably be right on track, Aaron.

Speaker #7: Do you think we should apply the year-over-year difference, like, in Q2 to Q3 as well? Is that what you're saying to clarify? Is that what you're saying?

Aaron MacNeil: Do you think we should apply the year-over-year difference like in Q2 to Q3 as well? Is that what you're just to clarify, is that what you're saying?

Speaker #8: Yeah, I think we'll continue to see a little bit of that margin benefit, right? I expect it to be similar in Q3 and probably just come down a bit in Q4.

Scott Matson: Yeah, I think we'll we'll continue to see a little bit of that margin benefit, right? I expect it to be similar in Q3 and probably just come down a bit in Q4.

Speaker #7: Gotcha. Okay. And then maybe, Brad, one for you. you know, I, I assume it'll be a retrofit and not a new build. But can you speak to the potential capital cost of a 100% natural gas frac spread?

Aaron MacNeil: Gotcha. Okay. And then maybe, Brad, one for you. You know, I assume it'll be a retrofit and not a new build, but can you speak to the potential capital cost of a 100% natural gas frac spread? And if you're looking to activate an incremental frac spread or displace an operating frac spread?

Speaker #7: And if you're looking to activate an incremental frac spread or displace an operating frac spread?

Speaker #6: Yeah. With actually, it would be a new build.

Brad Fedora: Yeah, it would actually, it would be a new build.

Speaker #7: Okay.

Aaron MacNeil: Okay.

Speaker #6: And it, you know, rough math, the 40-ish, you know, we do have some, you know, we're not going to build everything. You know, we have, we're going to continue to build the electric ancillary equipment.

Brad Fedora: And if, you know, rough math, the 40-ish. You know, we do have some, you know, we're not going to build everything. You know, we, we, you know, we have, we're going to continue to build the electric ancillary equipment as well. And we'll combine that with the natural gas engines. But we we haven't finalized any of this. None of this is board-approved yet. But yeah, it would be an incremental spread as well. So it would be a new build and an incremental, like be spread eight for us that we would, you know, we would hope to have, if all goes well, sort of this time next year.

Speaker #6: As well, we'll combine that with the natural gas engines. However, we haven't finalized any of this; none of this is board approved yet.

Speaker #6: But, yeah, it would be an incremental spread as well. So it would be a new build and an incremental, like, be spread eight for us.

Speaker #6: That we would, you know, hope to have, if all goes well, sort of this time next year.

Speaker #7: Gotcha. Thanks. I'll turn it back.

Aaron MacNeil: Gotcha. Thanks. I'll turn it back.

Speaker #4: I think we're ready for the questions.

Speaker #2: Pardon me. I

Speaker 2: We're ready for questions.

Keith Mackey: I apologize. The next question is from Keith Mackey with RBC Capital Markets. Please go ahead.

Speaker #4: Yeah.

Speaker #2: Apologies. The next question is from Keith Mackey with RBC Capital Markets. Please go ahead.

Speaker #9: Hi. Good morning. And thanks for, taking my estions. I, I guess, I guess I'd have to follow up on the comments around the, natural gas frac spread there, there, Brad.

Aaron MacNeil: Hi, good morning, and thanks for taking my questions. I guess I'd have to follow up on the comments around the natural gas frac spread there, Brad, recognizing that it's not all approved and certainly early. But what are you seeing or what would you need to see in the market in order to activate that eighth frac spread if you did so?

Speaker #9: recognizing that it's, it's not all approved and, and, and certainly early. But, what, what, what are you seeing or what would you need to see in the market in order to activate that eighth frac spread, if, if you did so?

Speaker #6: More activity, which I'm predicting we will have next year. You know, I think with gas pricing firming up just due to LNG, I think there'll be an opportunity for us to put more equipment to work on a, you know, on a very targeted basis.

Brad Fedora: More activity, which I'm predicting we will have next year. So I think with gas pricing firming up just due to LNG, I think there'll be an opportunity for us to put more equipment to work on a, you know, on a very targeted basis. These types of spreads, they're not deployable anywhere and everywhere, sort of like a tier four would be because you do have to have the gas infrastructure to run them. But you know, like even today at these activity levels, our tier four equipment is is basically sold out every day.

Speaker #6: These types of spreads are not deployable anywhere and everywhere, sort of like a Tier 4 would be, because you do have to have the gas infrastructure to run them.

Speaker #6: so, but, you know, like even today, at these activity levels, our tier four equipment is, is basically sold out every day. So, you know, and what, what will happen with the Iron Horse acquisition, opefully, will be that the diesel equipment that we currently have parked, which, you ow, was our spare capacity, would, you know, we would, we would hope that the Iron Horse division could put that equipment to work because the parts of the basin that they operate in, as, as more appropriate, for just conventional equipment.

Brad Fedora: So, you know, and what what will happen with the Iron Horse acquisition, hopefully, will be that the diesel equipment that we currently have parked, at which, you know, was our spare capacity, would, you know, we would we would hope that the Iron Horse division could put that equipment to work because the parts of the basin that they operate in is is more appropriate for just conventional equipment. You know, they don't, they're not on location sort of long enough to justify running the the natural gas engines. But so, you know, we've basically, with the Iron Horse acquisition, we we we hope that we will lose all of our spare capacity to them.

Speaker #6: You know, they don't, they're not on location sort of long enough to justify, running the, the, natural gas engines. But so, you know, we've basically, with the Iron Horse acquisition, we, we, hope that we will lose all of our spare capacity to them.

Speaker #7: Got it. Got it. Okay. And, and just speaking of Iron Horse, you, you teased it a little bit in your comments, Brad. But, can you just speak to maybe some of the initial feedback from customers on, on, on the announcement and, you know, just, in terms of, in terms of what you're hearing from them, and, and just kind of your, your response or proposition?

Aaron MacNeil: Got it. Got it. Okay. And and just speaking of Iron Horse, you you teased it a little bit in your comments, Brad, but can you just speak to maybe some of the initial feedback from customers on on on the announcement and you know just in terms of in terms of what you're hearing from them and and just kind of your your response or proposition?

Speaker #6: Yeah. It's, I would say it's overwhelmingly positive. You got to ember, like, the, the customers, you know, they're consolidating. they, you ow, they want to know that they have service providers that are, basically, keeping up.

Brad Fedora: Yeah, it's I would say it's overwhelmingly positive. You got to remember, like the the customers, you know, they're consolidating. they want to know that they have service providers that are basically keeping up, you know, and have sophisticated logistics and supply chain and safety programs, and have the ability to continue to reinvest with equipment. And and so, you know, they have we have expertise on on the TRICAN side. They have expertise on the Iron Horse. You know, we're going to mine all of that knowledge. and you know, that'll allow us to to provide better service to our customers. And so both our customers and the Iron Horse customers, I think, are all are all really positive on the deal. You know, and they have infrastructure that we can use to expand things like cementing.

Speaker #6: You know, and have sophisticated logistics, and, supply chain, and safety programs, and have the ability to continue to reinvest, with equipment. And, and so, you know, they have, we have expertise on, on the TRICAN side.

Speaker #6: They have expertise on the Iron Horse. You know, we're ing to mine all of that knowledge, and, you know, that'll allow us to provide better service to our customers.

Speaker #6: And so, both our customers and the Iron Horse customers, I think, are all, are all really positive on deal. You know, and they have infrastructure that we can use.

Speaker #6: To expand, things like cementing, you know, they were trying to grow into the north, right? And so we already have all that infrastructure in place.

Brad Fedora: You know, we, you know, they were trying to grow into the north, right? And so we already have all that infrastructure in place. So it's it makes a, you know, it makes a lot of a lot of sense. And whether you're a sort of a traditional TRICAN customer or an Iron Horse customer, your your service offering should get better with this deal.

Speaker #6: So it's, it makes all the, you know, it makes a lot of, a lot of sense. And whether you're a sort of a traditional TRICAN customer or an Iron Horse customer, you're, you're service offering should get better with this deal.

Speaker #7: Got it. Thanks for the color. I'll turn it back.

Aaron MacNeil: Got it. Thanks for the color. I'll turn it back.

Speaker #2: Once again, if you have a question, please press star, then one. Our next question is from Wakar Syed with ATB Capital Markets. Please go ahead.

Speaker 2: Once again, if you have a question, please press star then one. Our next question is from Wakhar Syed with ATP Capital Markets. Please go ahead.

Speaker #10: Brad, Scott, thanks for taking my question. Brad, you know, obviously, you know, you, you're, pretty optimistic about pickup and activity, with LNG Canada. But, ou know, there's, we also hear about, like, there's an ample gas out there.

Waqar Syed: Brad, Scott, thanks for taking that question. Brad, you know, obviously, you know, you're pretty optimistic about pickup in activity with LNG Canada. But you know, there's we also hear about like there's ample gas out there, obviously, gas storage when you look in Canada. That's a very high level. So do you really expect that from LNG Canada, there could be increased activity in the second half? Or do you think mostly it's sometimes of a late late next year type phenomena when you have your, you know, you may have your next crew out?

Speaker #10: Obviously, gas storage in Canada is at a very high level. Do you really expect that from LNG Canada, there could be increased activity in the second half?

Speaker #10: Or do you think mostly it's some, sometimes of a late, late next year type phenomenon, when you have your, you know, you may have your next crew out?

Speaker #6: Yeah. I think it'll be in next year. change. But I, I'm optimistic. Like, I, I, I failed to see how you can take two BCF a day of gas out of the basin, and not have it affect pricing.

Brad Fedora: Yeah, I think it'll be a next year change. But I'm optimistic. Like I I I've failed to see how you can take two BCF a day of gas out of the basin and not have it affect pricing. You know, and I I think everybody underestimates how difficult it is to actually add a BCF a day of production in Canada, right? There's an incredible amount of work that goes into that. And it's, you know, flush production is one thing, but keeping that production a year a year after you've turned the well on is a whole nother issue. So when you, you know, when you talk to the gas players in in in in Calgary here, you know, we all kind of chuckle at that, how how easy people think it is to just ramp up to this up, right?

Speaker #6: You know, and I, I think everybody underestimates how difficult it is to actually add a BCF a day of production. In Canada, right? There's a, there's an incredible amount of work goes into that.

Speaker #6: And it's, you know, flush production's one thing. But keeping that production a year after you've turned the well on is a whole other issue.

Speaker #6: So when you, you know, when you talk to the gas players, and, and, and, and, and Calgary here, you ow, we all kind of chuckle at that, how, how easy people think it is to just ramp up, to ramp this up, right?

Speaker #6: I mean, we're all operating 24 hours a day, 365 days a year. To try to grow production, and of course we have. I mean, these wells are very prolific, thanks to the awesome fracking that we provide.

Brad Fedora: I mean, we're all we're all operating 24 hours a day, 365 days a year to try to grow production. And of course, we have. I mean, these wells are very prolific thanks to the awesome fracking that we provide. But yeah, I don't I don't see how you're going to take two BCF a day out of Canada and not have it not have it increase price. And you know the other thing that all of our customers are doing too is their their their marketing programs are so diversified now that they're not tied to ACO like they used to be, right? And and you know there's all sorts of points throughout North America. And now, and I expect that Canada will be a will provide another good pricing point for their marketing plans. So I'm optimistic about next year, Wakhar.

Speaker #6: But, yeah, I don't see how you're going to export 2 BCF a day out of Canada and not have it increase in price.

Speaker #6: And, you know, the other thing that all of our customers are doing, too, is their marketing programs are so diversified now that they're tied to ACO.

Speaker #6: Like, they used to be, right? And, and, you know, there's all sorts of points throughout North America. And now, and I expect that, Canada will be a, will, will provide another good pricing point for their marketing plans.

Speaker #6: So I, I'm optimistic about next year, Wakar. You know, like, this year is probably steady as she goes. But I think, I think people are, are too cynical on, on how long it takes gas prices to recover.

Brad Fedora: This year is probably steady as she goes, but I think I think people are too cynical on on how long it takes gas prices to recover.

Speaker #10: That, my second question relates to this balance between rising underlying demand, but then offset by improving completion efficiency, so that overall demand for, you know, crews or horsepower doesn't change.

Waqar Syed: My second question relates to this balance between rising underlying demand, but then offset by improving completion efficiencies so that overall demand for you know crews or horsepower doesn't change. Like we've seen in the US side with simul frac and primal frac and all that, like you know the the footage that is completed may be increasing overall, but with the same crews or with the same or even you know less horsepower, industry is able to achieve more completion, you know well footage completed per day. So how do you see, you know is there structurally anything different in Canada that you wouldn't see those kind of efficiency improvements, or it's just a matter of time that Canada catches up as well?

Speaker #10: Like, I've seen on the US side, with simul frac and thermal frac and all that, you know, the footage that is completed may be increasing overall.

Speaker #10: but with the same crews or the same or even the, you know, less horsepower, industry is able to achieve more completion, you know, well, footage completed per day.

Speaker #10: Yeah. So how do you see, you know, is this structurally anything different in Canada that you wouldn't see those kinds of efficiency improvements?

Speaker #10: Or it's just a matter of time that Canada catches up as well?

Speaker #6: No, like, I agree with what you said. I mean, I think people sort of forget how much wear and tear gets put on the equipment.

Brad Fedora: No, I I I agree with what you you said. I mean, I I think people sort of forget how much wear and tear gets put on the equipment. and so you can work it really hard for a month, but you know there's there's going to be some shop time. And so over over the course of a year, does it actually mean there's more equipment available? The answer is probably yes, but not as maybe as much as you might think. And of course, Canada will catch up. The only difference is the sand concentrations, they are a little bit higher here. And so simul frac, it's easy to set up the equipment for that, but it's a whole nother animal to get that much sand onto the location and keep up with this with the amount of sand being pumped.

Speaker #6: and so you can work it ally hard for a month, but, you know, there's, there's going be some shop time. And so over, over the course of a year, does it actually, I mean, there's more equipment available?

Speaker #6: The answer is probably yes, but not as maybe as much as you might think. And, of course, Canada will catch up. The only difference is the sand concentrations; they are a little bit higher here.

Speaker #6: And so, SimulFrac, it's easy to set up the equipment for that. But it's a whole other animal to get that much sand onto the location.

Speaker #6: And keep up with this, with the amount of sand being pumped. You know, like, just our office, so many of our operations are so remote, right, that it just isn't, it, it just isn't that simple when you're, you know, we're not driving down the freeway to, to locate, to location, right?

Brad Fedora: You know, like so many of our operations are so remote, right, that it just isn't it just isn't that simple when you're, you know, we're not driving down the freeway to to look like to location, right? We're a couple of hours on a gravel road. is a is a lot different. So there's little differences like that, which you know, you might not see exactly what you're imagining. But everybody, like including us, is always looking for a better way of doing things. And our ultimate goal is to reduce our customers' costs, right? The the less these wells cost, the more they're going to drill. but you know their economics are very, you know, they're very attractive. so you know we'll we'll continue to look for efficiencies, certainly.

Speaker #6: We're a couple of hours on a gravel road, and it's a lot different. So, there are little differences like that, which you might not see exactly as you're imagining.

Speaker #6: But everybody, including us, is always looking for a better way to do things. Our ultimate goal is to reduce our customers' costs, right?

Speaker #6: The, the less these wells cost, the more they're going drill. but, you know, they're ics are very, you ow, they're very attractive. so, you know, we'll, we'll continue to look for efficiencies.

Speaker #6: Certainly. And, and, and the, the fleet will, every year, will do a little bit more than it was capable of doing last year. But, you ow, it's not, you know, the gains are getting tougher and tougher and tougher to, to find here.

Brad Fedora: And and and the the fleet will every year will do a little bit more than it was capable of doing last year. But you know it's not, you know, the gains are getting tougher and tougher and tougher to find here.

Speaker #10: Yeah. Okay. Well, thank you very much, Brad.

Waqar Syed: Yeah. Okay. Well, thank you very much, Brad.

Speaker #6: Yes.

Speaker #2: The next question is from John Gibson with BMO Capital Markets. Please go ahead.

Speaker 2: The next question is from John Gibson with BMO Capital Markets. Please go ahead.

Speaker #11: Morning all. Congrats on a good quarter here. just wondering if you could talk about pricing the next year in Q2. Expectations for the remainder of the year.

Aaron MacNeil: Morning all. Congrats on a good quarter here. Just wondering if you could talk about pricing dynamics here in Q2, expectations for the remainder of the year. And then you'll say we get some incremental demand into 2026, how much do you think they could potentially move up next year?

Speaker #11: And then, you know, say we get some incremental demand into 2026, how much do ou think they could potentially move up next year?

Speaker #6: I think I missed that. Did you say to talk about pricing?

Brad Fedora: I think I missed that. Did you say talk about pricing?

Speaker #11: Yeah. Pricing that makes now, you know, maybe expectations for the back half of the year. And then, you know, if, if we do get incremental demand in 2026, you know, is there a potential for them to move up a little bit more?

Aaron MacNeil: Yeah, pricing dynamics now, you know, maybe expectations for the back half of the year. And then you know if we do get incremental demand in 2026, you know, is there a potential for them to move up a little bit more?

Speaker #6: Yeah, we are a touch maybe unique in that, you know, we have these long-term customers, so we have a bit of smoothing on pricing.

Brad Fedora: Yeah. We we we are a touch maybe unique in that you know we have these long-term customers. So we have a bit of smoothing on pricing. So we don't they don't get the sort of jagged ups and downs of spot market changes because, you know, as you know, the spot market has almost all been eliminated here. I don't, so I don't think you'll see any real pricing changes for the rest of this year. You'll see panic pricing in Q4, I'm guessing, like we did last year. but I think I think the the optimism about next year, I think, is going to grow, even with the service companies. And so I do think we'll see higher prices in the industry next year, but I I wouldn't even be able to guess at what they'll what they'll be.

Speaker #6: So we don't, they don't get the sort of jagged ups and downs of spot market changes because, you know, as you know, the spot market is almost all been about eliminated here.

Speaker #6: I don't think you'll see any real pricing changes for the rest of this year. You'll see panic pricing in Q4, I'm guessing, like we did last year.

Speaker #6: but I think, I think the, the optimism about next year, I think, is going to grow. even with the service companies, and so, I do think we'll e, higher prices in the industry next year.

Speaker #6: But I, I wouldn't even be able to guess what they'll... at they'll be. And, you know, there's a million things that go into pricing.

Brad Fedora: And you know there's a million things that go into to pricing. But I you know, I would I would I would say if our you know our customers are listening that it's you know they're not you know little price changes can make big differences to our bottom line, but you know they're not making huge differences to the to the well cost. I'm not imagining anything drastic.

Speaker #6: But I, you know, I would, I would, I would, I would say if our, you know, our customers are listening, that it's, you know, they're , you know, little price changes can make a big differences to our bottom line.

Speaker #6: But, you know, they're not making huge differences to the well costs. I'm not imagining anything drastic.

Speaker #11: Fair enough. Last one for me. I'm just wondering, and you may have touched on this, wondering if wet weather impacted operations in July at all.

Aaron MacNeil: Fair enough. Last one from me. I'm just wondering, and you may have touched on this, wondering if wet weather impacted operations in July at all, either for you or Iron Horse. And if so, do you see some movements here into maybe late Q3 or Q4?

Speaker #11: Either for you or Iron Horse, and if so, could you see some movements here into maybe late Q3 or Q4?

Speaker #6: Yeah, I won't comment on Iron Horse's activity until the transaction closes. But it didn't hurt us. You know, it's not nearly as wet up north as it is here.

Brad Fedora: Yeah, I won't comment on Iron Horse's activity until the transaction closes, but it didn't hurt us. You know, it's not nearly as wet up north as it is here. so they didn't get this all this rain that we got. So we're not feeling it so far. You know, you never know what comes. But so it like the July's been good. August looks good. September looks good. October looks good. you know, and if you get wet weather and work just gets moved around, it's not the end of the world. It goes from one quarter into the next. So it's you know no not a big deal.

Speaker #6: So, they didn't get all this rain that we got. So, we're not feeling it. So far, you know, you never know what comes.

Speaker #6: But, so, like, July's been good. August looks good. September looks good. October looks good. You know, and if you get wet weather, work just gets moved around.

Speaker #6: It's not the end of the world. It goes from one quarter into the next. So it's, you know, no, not a big deal.

Speaker #11: You got it. Congrats on the quarter again, and I'll turn it back. Thanks.

Aaron MacNeil: You got it. Congrats on the quarter again, and I'll turn it back. Thanks.

Speaker #6: Thanks.

Brad Fedora: Thanks.

Speaker #2: The next question is from John Daniel with Daniel Energy Partners. Please go ahead.

Speaker 2: The next question is from John Daniel with Daniel Energy Partner. Please go ahead.

Speaker #9: Hey, Brad. Thank you for including me. In your prepared remarks, you made a statement about customers starting to reach out to you in 2026.

Aaron MacNeil: Hey, Brad, thank you for including me. in your prepared remarks, you made a statement about customers starting to reach out to you on 2026. I'm just curious, those that are reaching out to you, are they asking for the same? Are they asking for more? And how, you know, what percent of them are actually giving you some color on that?

Speaker #9: I'm just curious: those that are reaching out to you, are they asking for the same? Are they asking for more? And how, you know, what percent of them are actually giving you some color on that?

Speaker #6: Oh, they're basically asking for more of the same equipment. And they're, you know, they're always interested to know what we're doing from a natural gas versus diesel perspective, just given the, you know, the fuel savings are so significant.

Brad Fedora: Oh, they're basically asking for more of the same equipment. And you know they're always interested to know what we're doing from a natural gas versus diesel perspective, just given the you know, the fuel savings are so significant. right. But from a percentage basis, it's it's low at this at this stage. You know, I think it'll it'll speed up. But it's you know, it's it's no secret, like some of our customers are, you know, they're very thoughtful about sort of planning 24 months out. And so, you know, they they would stand out for sure on on sort of getting ahead of this.

Speaker #6: right. But from a, from a percentage basis, it's, it's low at this, at this stage. You know, I think it'll, it'll speed up. But it's, you know, it's, it's no secret.

Speaker #6: Like, some of our customers are, you know, they're very thoughtful about sort of planning 24 months out. And so, you know, they would stand out for sure on sort of getting ahead of this.

Speaker #9: Okay. If memory serves correctly, you were one of the first adopters of Tier 4 dual fuel up there. I'm curious, if you look at that first fleet that you built back in the day, when does that come due for its first major overhaul, if you will?

Aaron MacNeil: Okay. And if memory serves correctly, you guys were one of the first adopters of tier four dual fuel up there. I'm curious, if you look at that first fleet that you re, you know, built back in the day, when does that come due for its first major overhaul, if you will? And when that day?

Speaker #9: And when that day?

Speaker #6: Good question. Because I think it's got a lot of hours on it. I'm looking to our TUI here a little bit, probably in the next 18 to 24 months.

Brad Fedora: Good question because it's got a lot of hours on it. I'm looking at Todd Tooey here. Probably in the next 18 to 24 months.

Speaker #6: How much.

Speaker #9: Okay.

Aaron MacNeil: Okay.

Speaker #6: Would it cost? Let's see. yeah. I'd be speculating, but. But yeah, we would, we would, we would, we would fold that into our, in our, our maintenance cap and upgrade piece, right, on COVID.

Brad Fedora: For the cost. I'd be speculating, but.

Aaron MacNeil: Fair enough. But yeah, we would we would free fold that into our maintenance cap and upgrade piece, right?

Speaker #9: Yeah.

Speaker #6: Yeah. So that was six hard years, basically. On the equipment.

Brad Fedora: Yeah. So that's six six hard six hard years, basically, on that equipment.

Speaker #9: Yeah.

Speaker #6: Yeah.

Aaron MacNeil: Yeah. Yeah. And I mean, I think your colleague mentioned it might be 18 to 24 months. And so clearly, no decision's been made. But you know your gut would be in 18 to 24 months when that that comes due, do you just replace it with 100% natural gas-powered equipment, or do you go through the rebuild?

Speaker #9: And I, I mean, I, I think your colleague mentioned it might be 18 to 24 months. And so clearly, no decision's been made.

Speaker #9: But, you know, your gut—it would be in 18 to 24 months when that comes due. Do you just replace it with 100% natural gas?

Speaker #9: Powered equipment, or do you go through the rebuild?

Speaker #6: No. I bet you we will have sort of two or, I guess, three sets of equipment. And we'll have the 100% natural gas that will get used.

Brad Fedora: No, I bet you we will have sort of two or, I guess, three sets of equipment. And we'll have the 100% natural gas that'll get used on, you know, the longer-term pads where they can justify setting up the the gas infrastructure and and getting the gas to the quality standards that this kind of equipment needs, which is not easily done. and harder to do in Canada than it is in the US, just given the liquids' content and stuff like that. But, and then you'll have the tier four equipment. I mean, the tier four equipment's great. You know, it allows you to run, you know, you combine tier four equipment with the electric ancillary stuff like the blender and things, and you're up to sort of 80%-ish.

Speaker #6: On, you know, the longer-term pads where they can justify setting up the gas infrastructure and getting the gas to the quality standards that this kind of equipment needs, which is not easily done.

Speaker #6: Right. And it's harder to do in Canada than it is in the U.S., just given the liquid content and stuff like that. But then you'll have the Tier 4 equipment.

Speaker #6: I mean, the tier four equipment's great. You know, it allows you to run, you know, your tier four equipment with the electric ancillary stuff like the blender and things.

Speaker #6: And you, you're up to sort of 80%-ish. But you, you know, you have that, you, you always have the option to go to diesel if you have any issues, right?

Brad Fedora: But you, you know, you have that you always have the option to go to diesel if you have any issues, right? And so you sort of get there. And so it's there's a lot of customers that are like, "Yeah, that's kind of good enough because if we have gas flow interruptions, like we have to shut the frac down," right? So, right. And then the third set will just be good old-fashioned diesel pumps that'll get used in places where you're on and off location quickly, and you know you're not necessarily, you know, using large amounts of fuel. Right. So I think we'll have, I think we'll always, I think we'll have those three classes of equipment for a while yet.

Speaker #6: And so, you sort of get the, and so it's, there's a lot of customers who are e, "Yeah, that's kind of good enough." Because if we have gas flow interruptions, like, we have to shut the frac down, right?

Speaker #6: So.

Speaker #9: Right.

Speaker #6: And then the third set will just be good old-fashioned diesel pumps. That'll get used in places where you're on and off location quickly.

Speaker #6: And, you know, you're necessarily using large amounts of fuel. So, I think,

Speaker #9: Right.

Speaker #6: we'll have, I think we'll ways, I think we'll have those three classes of equipment for a while yet.

Speaker #9: Okay, well, so I have. Thank you for letting me chime in.

Aaron MacNeil: Okay. Well, that's all I have. Thank you for letting me chime in.

Speaker #6: Thanks.

Brad Fedora: Thanks.

Speaker #2: This concludes the question and answer session. I'd like to turn the conference back over to Mr. Fedora for any closing remarks.

Speaker 2: This concludes the question-and-answer session. I'd like to turn the conference back over to Mr. Fedora for any closing remarks.

Speaker #6: Thanks, everyone. I appreciate your time and interest. If there are any more questions, please let us know. We should be easy to find for the rest of the week.

Brad Fedora: Thanks, everyone. Appreciate your time and interest. If there's any more questions, please let us know. we should be easy to find for the rest of the week. Thanks, everyone.

Speaker #6: Thanks, everyone.

Speaker 2: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.