Precision Drilling Corp (PDS) 2006 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Precision Drilling Trust first quarter 2006 results conference call.

At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded today, Wednesday, April 26, 2006 at 2:00 p.m. eastern time.

I will now turn the conference over to Mr. Hank Swartout, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good afternoon, ladies and gentlemen. We'll start with Doug Strong, our CFO, giving a review of the numbers. Please, Doug.

Thank you, Hank.

First, we would like to remind our audience that some of today's comments will include forward-looking statements reflecting Precision's views and events and their potential impact on our performance, including expansion plans for the United States, capital expenditure estimates and planning, and the cash distribution policy of the trust. These expectations involve risks and uncertainties that could impact Precision's operations and financial results and cause actual results to differ from forward-looking statements.

Earlier today, a detailed news release was issued that included the unaudited consolidated financial statement for Precision Drilling Trust, consisting of the consolidated statement of earnings [inaudible] deficits, the consolidated balance sheets, the consolidated statement of cash flow, business segment information, and operating statistics for the contract drilling industry in western Canada.

Before we get to the numbers, it is important to emphasize that Precision's conversion to an [inaudible] trust on November 7th, 2005. Precision's trust as the successor in [ inaudible] has been accounted for as a continuity of interest. This means that consolidated financial statements of Precision for the first quarter ended March 31, 2006, and comparables for the quarter ended March 31, 2005, reflect the financial positions, results of operations, and cash flows as if Precision Drilling had always carried [inaudible].

I'll begin with 2006 first quarter financial statement review. We ask that our listeners refer to the consolidated statement of earnings. For the quarter, Precision's oil field services generated record revenue of $536 million, an increase of $153 million and 40% over the comparable period of 2005.

Operating earnings or EBIT's, earnings before interest and taxes, before the quarter was $246 million, an increase of $93 million and 61% over Q1 of 2005. The financial improvement over Q1 '05 is attributable to an increase in work volume and price.

In terms of volume, both service and drilling rigs benefited from a 19% increase in operating activity with an asset base that was essentially the same size. In terms of net price or revenue rate, net of expenses, drilling rig operations generated an increase of approximately $2,100 in operating day EBIT margins, and service rig operations generated an increase of approximately $105 in operating hour EBIT margins as compared to the first quarter of 2005.

The 2006 operating earnings margin as a percentage of revenue equates to 46%, an improvement of 6 percentage points over the 40% margin for the comparable first quarter of 2005. The improvement was widespread, as both of Precision's operating segments and each division contributed as a result of record industry activity levels in the western Canada sedimentary basin.

As noted in our press release, industry well completions increased 21% to 6,178 for the quarter over Q1 last year. Industry operating days increased to 23% to almost 56,000 and industry rig count was approximately 780 for an increase of 9%. This increase in demand from customers enabled Precision to increase presence throughout all divisions.

While industry operating days were up 23%, and the rig count 9%, Precision increased 19% and 2% respectively. Precision's fleet utilization was within a percent of industry utilizations for the quarter at 80%. The growth of our rig fleet lagged as the year over year increase on March 31 was plus 4 rigs to 233, while industry added almost 70 rigs.

With our 2005 divestitures and refocused on core Canadian and now U.S. opportunities, Precision is responding to North American drilling opportunities. Our capital expenditures for the first quarter of 2006 were $49 million, an increase of 63% over Q1 '05. The 2006 spending increase is primarily associated with our new drilling rig build program, as expansionary capital expenditures amounted to $32 million. Sustaining capital expenditures or, as some say, maintenance capital expenditures, make up the remaining $17 million.

Included in our earnings release is the segmented financial disclosure of our continuing operations. There are two operating segments in addition to Corporate and Other. The contract drilling services segment contains our contract drilling rig, camp and catering, oil field supply, and manufacturing divisions. The completion and production services segment contains our service rig, snubbing, and rental divisions.

For Q1 2006, revenue from Precision's contract drilling services segment represented 71% of total revenue while completion and production services generated the remaining 29%. As a percentage of revenue, contract drilling services generated an operating earnings margin of 50% in 2004 versus 46% in Q1 of 2005. Completion and production services generated an operating earnings margin of 41% in the current quarter versus 32% for Q1 '05.

In summary, compared to the first quarter of 2005, 2006 results for contract drilling were 4 percentage points ahead of last year and the completion and production segment improved by 9 percentage points.

Consistent with the latter half of fiscal 2005, the service rig division has shown tremendous improvement in 2006 through pricing, higher utilization in the latter half of the year, and cost efficiency. The snubbing and rental divisions also made meaningful contributions over Q1 of 2005 towards the improvement in the completion and production segment.

As disclosed in the segmented information, Corporate and Other reduced operating earnings by 11.5 million in Q1 2006 versus 11.7 for Q1 2005 for a marginal improvement.

Below the operating earnings line for the quarter, earnings was reduced by interest expense in the amount of 2.8 million, a reduction of 76% over Q1 '05, with repayment of Precision's public debt in October of 2005.

Shifting down to income tax expense for the current quarter, income tax expense was $19 million for an effective tax rate of 8% on earnings from continuing operations of $224 million. The 30% reduction in effective tax rate over Q1 '05 is primarily associated with the conversion to an income trust, which has the effect of shifting all or a portion of the income tax burden for Precision to its unit holders.

These factors combined to generate earnings from continuing operations of $224 million in Q1 of 2006 on a diluted unit basis. Net of the favorable income tax rate reduction, the improvement over Q1 '05 amounts to $0.50 per unit for an increase of 70% over the $0.71 generated in Q1 '05.

Operating statistics and average revenue rate information for Q1 2006 as compared to the first quarter in 2005 is as follows: For our drilling rig fleet, we achieved 16,694 drilling rig operating days for 80% utilization, an increase of 2,695 days or 19% over last year. Average revenue per operating day was $20,886 compared to $18,545, an increase of $2,341 per day Or 13% over last year.

For our service rig fleet, we achieved 165,591 service rig operating hours for 77% utilization, and increase of 25,917 hours or 19% over last year. Average revenue per operating hour was $732 compared to $600, an increase of $132 or 22% over last year.

In terms of operating expenses on a daily or hourly basis for drilling and service rigs, costs increased by 3% and 5% respectively in comparison to Q1, 2005.

Turning to the balance sheet, Precision began the quarter with a positive net debt position of $56 million based on working capital of $153 million, less long-term debt of 07 million. During the quarter of 2006, this position improved by $108 million to a positive net debt position of $164 million based on March 31 balances for working capital of $388 million and long-term debt of $225 million. We continue to strengthen the balance sheet and continue to work well within our $550 million loan facility.

Unit holder book equity increased during the quarter by $0.97 a unit or $122 million as net earnings in the amount of $224 million were greater than declared cash distributions to the unit holders of $102 million. Declared distributions amounted to $0.27 each per unit for each month in the quarter.

For those listeners that are new to Precision and the Canadian oil field service industry, we would emphasize that Precision's activity is seasonal and that first quarter activity levels are greatly reduced in the second quarter with what our industry refers to as spring breakout. We would advise that listeners reflect on our regulatory filings, including our 2005 annual report and 2005 information form.

Hank, that concludes our comments on our pretty good first quarter.

Thank you very much, Doug. Gene Stahl, the Chief Operating Officer. Gene, can you give us an update, please?

Yes. Thanks very much, Hank, and thank you, Doug.

First off, on behalf of the whole management team of Precision, I would like to say that we're extremely proud of the extraordinary results that we delivered in the first quarter of 2006.

Once again, our strong results are attributable to a number of factors: Momentum generated in the fourth quarter; near perfect weather conditions, especially in March; and, once again, our exemplary performance from all of our 7,000 employees, managers and Vice Presidents at Precision.

Talk a little bit about our current operating environment. While licensing remains strong, with 8,728 licenses issued so far this year, with each previous month being ahead of last year's pace, we use this as a good near-term measure of drilling activity levels. Indications are that we should have above average activity levels in Q2. Conditions are improving: Things are starting to dry up, and road bans are being lifted in the East, and that trend should work its way west shortly. We still have some locations that do remain a little bit soft, at especially the zero disturbance locations, which affect a lot of our shallow gas drilling, may be held up if land spreading cannot occur, regardless of any road ban situation.

We're also reminded, as Doug alluded to, that heading into the second quarter, poor weather conditions, namely, rain, can shut things down quite quickly.

Our backlog of work continues to exist, with demand for all depth capacities remaining strong. We're continuing to see a lot of project proposals with a real sense of urgency for equipment from our customers. Pricing is holding in all divisions of this breakup, with potential opportunities for price increases in the spot market going into the summer months.

I'll talk a little bit about our labor situation. In the first quarter, our personnel departments made some significant gains in attracting new employees to Precision. We welcomed 1,000 new hires and required to train 661 of them in our two-day training program. That's up 12% from the fourth quarter of 2005.

This quarter, we also made some extremely huge gains in reducing our injury frequency rate, our Target Zero mission. We're extremely proud that year-to-date, we've seen a 35% reduction in our recordable frequency rate.

Jump right into our growth opportunities. This past December we announced our rig expansion program with 19 new rigs to be commissioned through Q1 2007. Since then, five have been delivered: Four Super Single rigs and one 4,000 meter electric triple. The remaining 14 rigs, six of which are electric triples and eight of which are Super Singles, will be completed over the next year. We're announcing today that we'll be adding four more rigs to our build program for Canadian customers: Two Super Singles, which will be delivered in the second quarter of 2007, and another two 4,000 meter rigs, delivered late this year.

Prior to our conversion to a trust, Precision's operations in the U.S. were limited to its technology division. We did not have rigs operating south of the border because at that stage in the Company's evolution, it did not make sense. As we've refocused our strategy, it became clear that this would be a good fit, if we could find the right opportunities going forward. And we believe we have found those opportunities.

In the second quarter, we'll be providing one of our existing Super Single rigs under customer contract. And we will continue to construct ten more rigs, five to be delivered over the next 12 to 18 months under contract, and another five will be built by the second quarter of 2008 in anticipation of growing demand. Therefore, these 11 rigs will serve as the base platform for our new U.S. operations. These rigs will be rated at 3200 meters and will incorporate technologies creating the 11th generation of Super Single. They will provide a unique technology to the U.S. market. We're also planning on marketing our full slate of rental equipment with each of these rig packages.

So, a quick summary of our build program. Going into 2008, Precision will be delivering now a total of 28 rigs, 18 for the Canadian market and 10 for the U.S. market. And as such, we have revised our capital expenditure program to $430 million from the previously announced $285 million, with $330 million incurred -- costs occurred in 2006 and the remainder throughout the second quarter of 2008.

We're extremely excited about these new opportunities at Precision, and on that note, I'll hand the meeting back over to Hank.

Thank you very much, Gene.

Ladies and gentlemen, from what you've heard and what has happened this quarter, obviously it is a record for Precision. We're very proud of the new team that has stepped in and taken control of this -- this corporation had done a wonderful job, and we've also had some other things we were very pleased with. The safety record is exemplary. We're very proud of it, we're still fighting every day to continue and make it work.

We've also been able to form new contracts with all of our employees at Precision drilling, so I'm very pleased that the group that's here are certainty entrenched and will stay here quite handily, regardless of what some people thought there would be a mass exodus. Hard to believe, but we didn't lose one. But those things happen. We won't go into that in detail.

Without further ado, I'm going to let it open up for questions, please.

Thank you. [OPERATOR INSTRUCTIONS] Your first question comes from Alan Laws from Merrill Lynch. Please go ahead.

Good afternoon. Hey, I'm going to ask the obvious question first, the U.S. market entrance. Why now? Why the U.S.?

I'll simply say that we have a very unique opportunity in that some of the reservoirs that are being drilled in the United States right now are extremely attracted to our technology. We're getting some huge horizontal demands in certain areas which limits the hook load and with our very quick fast-moving rigs and our hook loads, it is a great combination and I think we can work in that field very well. Obviously, we have the signed contracts going forward. We're not going to disclose where or with who, and there's also the first right on the next five rigs coming forward. We think that they will be revolutionary in certain areas and I will have to be honest that the areas didn't exist three or four years ago.

So, the first five new builds here, they have contracts? That's what you're saying?

That's correct.

Okay. And what are the features of the rigs that are sort of the technology add that you're bringing to the table?

Sure. I'll add to that. It's typical to our Super Single rig, so they're left-loads, automated pipe handling systems, and really, the ability to drill horizontal wells in an efficient manner. Really, the Canadian rigs, the mobilization, the time it takes to go from well to well, has really become efficient. So we believe that this style of rig will work well in the U.S. market.

So, this is better than, say, H&P's Flex 4s and that kind of thing.

Totally different concept, and until you understand the drilling rig, I can't go into it in detail, but I'm going to be very nice here.

What we're talking about is that these are huge horizontal displacements, they don't need a major hook load capability. We also have not only automatic pipe handling, we have a very unique movement system, when we've worked with the facility or the requirements in the road moving in Texas to come up with some new ideas. We also have total AC drives on draw works and pumps, which other people have, and we've gotten into a smaller, tighter configuration for less weight.

So what we're doing is something that's totally new to us. We're very comfortable and have been through it very thoroughly, and what we think is we have a niche little market, it's not going to change the United States in any way, shape, or form, and what you're talking about and what I'm talking about are totally different concepts in rigs and different usages.

All right. So, do you have -- have you already started to establish an operating base down there?

We are going through the throes of doing that at this point in time, correct.

Okay. And just as an extension of that, does this say anything about the Canadian market as far as opportunities for growth there?

Well, Gene alluded to the fact already that we're building another 18 for Canada right now. We have five that we've already delivered this year, we're building 18 under guaranteed contract, which are very good. We also are discussing with another 12. But I can't go into anymore detail than if we add another 50 rigs, that's not a bad addition for this company.

Okay. I'll leave it at that. Thanks, guys.

Thank you.

Your next question comes from James Stone from UBS. Please go ahead.

My first question, I guess you're not going to give us a sense as to where in the U.S., even in the basin that you may be going into?

Good thought, Jamie.

Okay. Secondly, just on the distribution, you just last week announced the distribution for April. I was a little surprised that the Board announced the May and June distributions today. Maybe you could just walk us through as to why today. Why now. And also why for, say, two months as opposed to one month at a time as you've done the last five months or so.

I think that's a great question, and I'm going to answer that with respect to my Board, who is extremely conservative, they wanted to see the numbers all finalized by the quarter before we came out with the distribution. I alluded to the fact earlier last fall and also at Christmastime or in January when we talked, there would potentially be an increase in distribution.

If you take the model that we had today and you went forward with it, we're very comfortable that if you put things in perspective of depending on weather and subject to a few other things, that we probably are going to generate $650 million to $700 million in EBITDA, which is easy to do in any type of calculation you do. Weather could diminish that. We won't take that into consideration.

But our trust is set up to deliver $470 million that's going to be tax free, and obviously we have to start delivering that. That's why we're very comfortable with the increase in distributions, Jamie. We do realize that as we go forward, the way the trust is today and unless there is another acquisition or some other things that are done to change the trust as it exists today, that we're going to pay income tax of probably $40 million and we're going to generate another couple hundred million that we're going to pay taxes on. We're comfortable with that. And we'll pay the taxes and it will help us to build going forward. We're not going to talk about dividending that out, but what it amounts to is if you take today's numbers, we're comfortable that our distribution is less than 75%, if you looked at it in its entirety.

Yes.

And obviously, the Board is trying to help me get my credibility back, saying yes, you know, I think we can actually give out a few more cents.

Okay. That leads me to my next question. Maybe Doug, you could explain to me what triggered the small amount of taxes that you actually reported, even for this quarter. I would have thought that you hadn't hit that threshold yet. And so I'm just trying to understand how to think about the tax rate as we go through the next several quarters.

Yes, I think that's exactly what we try to do each quarter as well. So, when you saw our results come out this quarter and we've got an effective tax rate of 8%, I think you can certainly rely upon that.

Okay. So, the 8%, you took your model now, you think the full year number is 8%, unless the model varies from that. That's kind of your estimated number for the year.

It takes in some judgment, that's correct.

Okay.

That's correct, Jamie, and you can understand that this could change, it could vary. But if we make more money, it's going to go up.

And just going back to what you just said, the trust is set up to distribute a certain amount of money. If we look out into 2007 and the cash flows are higher, you've got more assets coming in. Does the trust need to be changed? Or does something need to be changed in order to exceed that threshold? Of distribution?

Jamie, my comment on that would be that most trusts do have a set structure and a lot of it's depending on the timing of when you do convert and if you look at Precision, if you look at our annual information form, there is some good information in there. We are a trust over limited partnership with a corporation on the bottom. So the reality of it is, we have the high grade problem, if you will, of being very profitable. A lot of trusts end up being a hybrid where you have a very excellent flow-through mechanism of cash to unit holders, and you've got a good bit of a retention there as well, in terms of after- tax cash as it's been [inaudible].

Jamie, as we go forward this year, there are some certain things that are certainly in the realm of the trust to allow us to protect some more distribution. Obviously with the advent of another $400 million of the new capital, that's going to allow us some more distribution as well. But keep in mind that the $400 million over the two years can generate comfortably another $150 million in EBITDA as we go forward. This thing could grow dramatically over the next two years, when you go into 2008 with the numbers that were generated.

Okay. And then I'll just ask one more question before I get off. Would I be wrong in assuming that sort of the incremental cash flow on a per rig basis from these rigs that you're putting into the U.S. is somewhere in the 4 to $5 million per year cash flow?

I'm not going to comment on that. We have confidentiality with our customer, and obviously, we're trying to be fair. They've been very fair with us and we're cognizant of what the rates are in the United States.

Okay. Thanks.

Your next question comes from Katherine Sterrit from Scotia Capital. Please go ahead.

Good afternoon. With respect to your U.S. expansion strategy, is it possible that you've looked to make that go faster through acquisition?

I'll comment on that. At this point our eyes are open. Our first priority is quality assets that have a strategic advantage. Today the way we're looking at our U.S. expansion is that we're going in in a very comfortable way, exporting our Super Single technology. And we'll take them as they come from there.

Thank you very much.

Your next question comes from Chris Kendall from Sprott Securities. Please go ahead.

I have two questions, if that would be okay. One, I was wondering if you guys could provide a little light on maybe the magnitude of the price increases you're looking at this summer. And the other question I had was in terms of gas pricing, if gas comes off a bit, where would you start to see a softening in the demand?

Well, obviously, gas has come off from the winter and we don't see any softening in demand at this point in time, so we're very cognizant of the fact that it could happen. Everything we have, every rig we have in Canada is spoken for. And we're certainly building more rigs on a long-term basis. So that leads us to believe that some people actually think the gas could go back up again. Obviously, if storage gets full, September, October could be a challenge and gas could go a little lower. We start the treadmill again in November and we don't have the vision, since we're drilling contractors, not economists that can tell what the world's going to do in 2007. I'm very comfortable that we're certainly competitive with the market place. We're looking after our customers, we're giving them a first-class job, and that's why our technicians get paid what they get paid.

And specific to the price increases, again, we do have customers and I don't think it would be appropriate to comment on where we think spot pricing could go. It just depends on our demand.

Okay. That's great. Thank you.

Your next question comes from Matt Mackenzie from Dundee Securities. Please go ahead.

Good afternoon, guys. I just wanted to get a bit of clarification on the U.S., the timing of that. You mentioned 12 to 18 months for the first five rigs. So do we expect to see the first one 12 month from now, and then one -- ?

Correct.

That's a fair assumption? Okay. And as for the next five, any clarification there?

Depending on our manufacturing ability, you could think of one every six weeks.

Okay. so call it late Q4 '07 and then going into Q1 '08, Q2 '08?

Sure.

Okay. Is it fair to say the economics of what you're getting for these U.S. rigs is trumping what you get in Canada?

We'll just comment that we think that they're great contracts and very accretive to precision.

Okay. And the last question on the U.S., just to clarify. All 10 -- or, I guess, or 11 rigs, are with the same operator? Or potentially the same operator? I know they have, I guess, an option on the second five?

We actually aren't going to comment on that. We have one operator that has committed to us and there are other operators that are discussing with us as well, so we're very fortunate that we're very comfortable these will be place quite quickly once we hit the market.

And last question. Just on the CapEx, once again for clarification, where you have, I guess, a total of $450 million this year and 330 of expansion, 120 of maintenance. Looking into next year, you said there is 100 million of carry over. I would assume we still have to add on another, call it, 100 million then of maintenance CapEx for '07?

That's correct. That's an ongoing number. Now keep in mind that because we are as efficient as we are and we have the inventories that we've had, our maintenance number, we can change that quite readily. That's a very good number, but we could bring that down quite easily and survive for three or four years.

Got it. Okay. And the total debt facility you guys have right now is 550?

No. Today -- that is not correct. Doug, our total debt today?

Total available facilities.

The actual syndicated bank loan facility we have is 550 million. The long-term debt that we have on the balance sheet at the end of March 31, '06, is 225 million.

Right.

But keep in mind, we have a large working capital surplus, too.

Yes, sure. A lot of that will probably come in in Q2. Okay. That's all for me, guys.

Thank you.

Your next question comes from Dana Benner from Westwind Partners. Please go ahead.

Thanks. Hank or Gene, I would be curious to get your thoughts on the fallout that we may see either this summer or in the fall from the rather intensive pace of E&P Trusts consolidating. In prior up-cycles we've seen large E&P companies merge and there's always been that temporary slowdown as programs got sorted out. I would be curious to know what you may be hearing from some of your E&P trust clients that are merging and just maybe if you don't know, maybe if you could even just give us your judgment on the issue.

Sure, Dana. Gene here. To date, we haven't had any of our customers, merged or not, cancel or slow down on any projects. And Hank, I don't know if you want to follow that up with any insight?

Dana, talking to -- most of the mergers that have taken place, obviously, I know the players personally on a lot of these mergers. Some of them have actually got rigs under construction for us. They're still very happy going forward with some of the things that we're doing. I don't see a slowdown in our side of it. Where it could really hit would be the very shallow drilling. And we've seen some pull-back on coal bed methane and other areas where it's very high cost and the infrastructure is expensive.

But from our view and everybody we've talked to, we can't handle the demand we have. We have more wells on backlog, and these are from small to intermediate, and keep in mind that every time we see a merger of two trusts, we have a new explorer code coming out and then we start another company, and for every two that merge, the management teams go off and start their own thing. So we're actually creating three versus creating one. And fortunately, they all have to drill because they don't have any production.

All right. Okay. That's all I got, guys. Thanks.

[OPERATOR INSTRUCTIONS] Your next question comes from Dan Barrett from Fortis Bank. Please go ahead.

Good afternoon, guys. Great quarter.

One quick clarification on the rigs that you're building for the U.S. market, the 11 rigs, in your press release, the 115 million is related to those 11 rigs or for all 28 or 29 rigs?

I'll clarify for you. One is an existing rig so there are ten new rigs.

Okay.

And we have said that 115 million is for those ten rigs.

Okay. So, $11.5 million a rig. That seems like a lot of money for a Super Single. Am I just not cognizant of how much a Super Single costs to build? Because I think you can build like a triple 1500 horsepower for roughly that price. Are prices for new reconstruction going up that rapidly?

Now, keep in mind, we're talking Canadian, not American to start with.

Okay.

We're also adding more to these rigs than you would anticipate from just a singular rig. There's a few other additions that come to this that make it rather unique.

And there's also some infrastructure cost in there.

Okay.

We don't have a yard, and that's all part of the process. That's going to cost us some money and I'm sure somebody in America is waiting us to step through the doorstep and say, pick me, but we haven't picked that area yet. Thank you.

Thanks. That's all for me.

Mr. Swartout, there are no further questions. Please continue.

Thank you. Ladies and gentlemen, one thing I wanted to allude to the fact and be very careful with is that I said that the $400 million we had could generate up to $150 million in EBITDA going forward. My gentlemen here are very quick to account that that would be very high end. It is probably closer to 120 to 140, somewhere in that range. So depending on how it all folds out, and of course I'm adding the 11th rig that we took down out of the U.S. to Canada. So it doesn't take us long for this group to correct me when I open my mouth and I'm not totally correct, which I very much appreciate.

So as we go forward, we look at another record year. We see the road bans diminishing here in the next week to two weeks and we are definitely going to be in full force and in all honesty, that we're oversubscribed, one and a half times to our capability to deliver, so if there is a change, that will help us all. We would all like to see a more normalized activity. But we're in a business where when there is supply, it's certainly less than demand. We have to look after our unit holders going forward and we try to be very professional and make sure that our customers have a first class job.

So, without any further explanations on anything, I would like to thank you all for listening and look forward to talking to you on the second quarter, and hopefully it will be as banner as this one, and I'm going to allude to the fact that the new team that's running Precision Drilling, which I'm really not part of on a day-to-day basis and I'm very comfortable saying that, have done a tremendous job and as unit holders and analysts, you should be very proud of what this new group has done. They're certainly doing a lot better since I left than when I was here.

Thank you very much. Bye.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. You may now disconnect your lines.