Calfrac Well Services Ltd.
Q2 2019 Earnings Call Transcript

Published: 4 Aug 2019

[Operator:]

Good morning. My name is Adam, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Calfrac Well Services Limited Second Quarter Earnings Release and Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I'd now like to introduce your host, Scott Treadwell, Vice President, Capital Markets and Strategy. Please go ahead.

[Scott Treadwell:]

Thanks, Adam. Good morning, and welcome to our discussion of Calfrac Well Services second quarter results. Also on the call today are Lindsay Link, Calfrac's President and Chief Operating Officer; and Michael Olinek, our Chief Financial Officer. This morning's conference call will be conducted as follows. Lindsay will provide some introductory remarks, after which, Mike will provide an overview of the financial performance of the company. Lindsay will then close the presentation with an outlook for Calfrac's business. After the presentation, we'll open the call to questions. In a news release issued earlier today, Calfrac reported its second quarter 2019 results. Please note that all financial figures are in Canadian dollars, unless otherwise indicated. Some of our comments today will refer to non-IFRS financial measures, such as adjusted EBITDA and operating income. Please see our news release for additional disclosure on these financial measures. Our comments today will also include forward-looking statements regarding Calfrac's future results and prospects. We caution you that these forward-looking statements are subject to a number of known and unknown risks and uncertainties that could cause our results to differ materially from our expectations. Please see our news release and other regulatory filings, including our 2018 annual report for more information on forward-looking statements and these risk factors. Lindsay, over to you.

[Lindsay Link:]

Thanks, Scott. Good morning and thank you all for joining our call today. Before Mike summarizes the financial performance in the quarter, I'd like to offer a few opening remarks. Although activity levels in North America remain acceptable, uncertainty around producer spending intentions and an oversupply of fracturing equipment continued to cloud the outlook for the upcoming quarters. Results in the second quarter were characterized by challenging market conditions across all of our geographies, especially in the United States, where a number of unexpected gaps came into the frack calendar. And in Russia, where activity slowed due to pipeline contamination issues, restricting egress capacity. However, we did see some successes in the quarter. Our Canadian division exceeded expectations through diligent cost management while maintaining an outstanding level of safety in service. In fact, recordable incident rate of our Canadian division is at an all-time low, thanks to the hard work and leadership of everyone in the group. In Argentina, Calfrac began work on a fracturing contract for a large producer in the country that expands our reach in the Vaca Muerta shale. Additionally, we executed on the purchase of incremental fracturing equipment in Argentina that allows Calfrac the flexibility to market two shale fracturing spreads while maintaining our presence in other basins in the country. Now I'll pass the call over to Mike, who will present an overview of our quarterly financial performance.

[Mike Olinek:]

Thank you, Lindsay, and thank you everyone for joining us for today's call. Consolidated revenue in the second quarter decreased by 21% year-over-year, primarily due to lower activity levels and pricing in North America. This was offset by higher year-over-year activity in Russia and Argentina. Adjusted EBITDA reported for the quarter was 45.1 million compared to 81.9 million a year ago. Operating income was down 38% to 41.1 million from 66.5 million in 2018. These weaker results were due mainly to lower North American revenue. In Canada, second quarter revenue was down 33% from the same quarter in 2018 due to a smaller active fleet and lower pricing, offset somewhat by job mix. Calfrac's Canadian operations had a total of 306,000 horsepower and 14 coiled tubing units in its operations in the second quarter. This was down 14% and 7%, respectively, from the prior year. With changes to our field work schedule, Calfrac is now able to deploy approximately 250,000 horsepower and eight coiled tubing units in the Canadian market. Operating income of 8.1 million fell 27% from 2018, primarily due to the lower pricing and revenue generated during the quarter, although this was offset somewhat by proactive cost management. In the United States, operations in North Dakota and Pennsylvania recovered after the weather impacts that were experienced in the previous quarter, but these improvements were largely offset by unexpected gaps in the fracturing schedule throughout the quarter. As a result, revenue was flat sequentially and down 24% from the prior year. The company's United States operations generated operating income of 37.1 million during the second quarter of 2019 versus $69 million in the same period in 2018. This 46% decrease in operating income was mainly due to lower pricing and activity as compared to the same quarter in 2018. Revenue from Calfrac's Russian operations of 28.7 million was 15% higher than the corresponding period of 2018. This increase in revenue was largely driven by higher activity with a key customer in Khanty-Mansiysk region. The higher revenue base, combined with cost management, improved operating income to 0.1 million, which was up from a loss of 0.8 million that was recorded in 2018. Calfrac's Argentinian operations generated revenue of 53.4 million during the second quarter of 2019, an increase of 17% from the prior year. This increase was mainly due to higher work volumes across the division, but particularly in the Neuquén region. The company's operations in Argentina reported operating income of 3.8 million compared to 2.1 million in the second quarter of 2018. Improved utilization and cost control at all levels were the main drivers of the improved profitability. The company's corporate division recorded total cost of 8 million during the second quarter, a decrease of 6.9 million from the prior year. The decrease was primarily due to lower stock-based compensation and bonus expenses. The company also recorded interest expense of 21.5 million during the quarter, which was 0.4 million below the prior year after adjusting for onetime costs related to last year's refinancing of the company's long-term indebtedness. In December, Calfrac's Board of Directors approved the company's 2019 capital budget of 149 million. Although our North American operations have under spend their forecasted capital budget to date, as Lindsay referenced, this surplus was redeployed to fund the purchase of fracturing equipment in Argentina, and we will continue to prudently manage these costs throughout the remainder of the year. To summarize the balance sheet, the company had working capital of 291.1 million at June 30, which included approximately 41.2 million of cash. In addition, Calfrac had used 0.8 million of its credit facilities for letters of credit and had borrowings of 136.2 million on its credit facilities, leaving 238 million in potential borrowing capacity at the end of the second quarter. As at June 30, 2019, the company was in full compliance with its financial covenants. On April 30, 2019, the company formally agreed to extend its syndicated bank credit facilities to June 2022. The terms of this extension are essentially unchanged from the previous agreement and provide Calfrac with further stability to its capital structure. I would now like to turn the call back to Lindsay to provide our outlook.

[Lindsay Link:]

Thanks Mike. I will now present an outlook for Calfrac's operations across our geographical footprint. In our US operations, we expect marked improvement from first half levels. Although market conditions remain challenged, we believe the stacking of fleets should quickly balance the market and provide more clarity to near-term forecast into 2020. As expected, we are seeing the beginnings of an uptick in activity for our client base in Texas, which is likely to continue into the fourth quarter. Combined with strong activity in our other US operating areas, our current outlook suggests utilizations improving from the first half levels over the coming months, although activity levels post US Thanksgiving remain less certain. As we disclosed, we have idle fleets in Texas and in Grand Junction, given market conditions at present and have essentially sized our operations to meet near-term demand for our services. We also have taken note of weakening natural gas prices in North America and continue to monitor the outlook of our customers in Pennsylvania. As expected, average pricing eroded in the second quarter, but we do not see significant downside risk from current levels, given commentary from a number of fracturing peers suggesting a further supply response. We believe managing supply in a choppy market is the simplest way to signal inadequate returns and is also a prudent decision as stewards of capital. In Canada, our outlook remains neutral, although we believe the worst of the market conditions are behind us. Activity in the second quarter was in line with our expectations, although the cost management shown by our team was outstanding and resulted in profitability levels better than planned. Part of that cost management was a change in sales schedule that effectively reduced our headcount by over 20%. Combined with prior equipment reductions, this personnel change means Calfrac can consistently operate four to five crews in the basin, down from eight in 2018. Let me be clear in stating that the reductions were not in response to a spring breakup condition. Calfrac will not augment our capacity without a significant improvement in pricing and returns in the Canadian marketplace. Our fracturing calendar is nearly full for the crews that we have working, marked by significant pad activity with our largest and longest-standing clients, some of whom are completing more wells in the second half of the year than the first half. We expect steady activity levels into the early part of fourth quarter, and we believe bidding activity will be high, which may allow for more typical levels of visibility as we enter 2020. Now a few words on Calfrac's international operations, in Russia, the second quarter was below our expectations, largely due to the slowing of activity due to reduced pipeline egress capacity resulting from contamination issues. While it appears the problems are largely solved and activity has improved from May levels, it is unclear as to when completion volumes will approach our forecast levels. As a result, we have temporarily idled crews in country as we await clarity on a return to full activity. Once again, results in Argentina were reflective of improved activity, especially in the Neuquén region of the country, but also strong performance in the southern operating areas of Las Heras and Comodoro. Calfrac has commenced work under the recently awarded fracturing contract in Neuquén, but many operators in Argentina are uncertain as to the outcome of pending elections and the potential impact on their plans. This uncertainty has impacted near-term programs, and we now do not expect a significant ramp-up in activity until the beginning of 2020. To summarize, our second quarter results were reflective of challenging fundamentals in our industry in all areas of operations. While some of these challenges may dissipate in the near term, we believe a balanced forecast on safety and service quality, our licensed to operate as well as proactive cost management and capital prudence is called for. Calfrac intends to stay this course as we move ahead. Thank you all very much for joining us today. And I will now turn the call back to the operator for questions.

[Operator:]

Thank you. [Operator Instructions] And we do have a question already from Greg Colman of National Bank Financial. Please go ahead.

[Greg Colman:]

Hey, thanks a lot. Nice results in a very challenging time, gentlemen. I just have a handful of questions here, starting in the US. When you were talking about the results in the US, you mentioned unplanned idle periods. Was this isolated entirely to Q2 or did it happen at the end of the quarter and was rolling over into Q3 as well?

[Scott Treadwell:]

Hi, Greg, it's Scott. I think its normal course in the business that you get spots come into the calendar. I think they happened a little bit throughout the quarter. There's not a huge hangover from issues we saw in the second quarter into the third quarter. It is more of a bit of a shift where you're now seeing strength in our northern operating areas, and we're kind of waiting for the Permian to catch up, which as we said, probably happens later this quarter and into the fourth quarter where you start to see more strength across all other divisions.

[Greg Colman:]

Okay, got it. And then, Scott, just keeping on that track there, with a bit more strength in North Dakota, Pennsylvania, you mentioned South Texas as well, but also two warm stack fleets at the moment. How many fleets do you have operating in the US today?

[Scott Treadwell:]

I think we're running 15 fleets in the US today. It moves kind of plus or minus one or two depending on scheduling. And that's really about all. We have the capacity to do on a sort of sustainable basis given the horsepower and staffing we've got.

[Greg Colman:]

Got it, okay. So we should be thinking about 15 fleets for the back part of the year kind of in and around that?

[Scott Treadwell:]

I wouldn't run that as the average though. I think what we were trying to kind of construct is that July was probably a bit of a transition. And then you get to that sort of higher levels for August, September, probably October and a good part of November, but then it can fall off again in December. So I certainly wouldn't expect a month to go above 15. But the months where it's weaker, it probably drops by one or two.

[Greg Colman:]

Got it, okay. Moving up to Canada for a second there, just trying to read the TVs here, you mentioned that some of your customers are apt to increase activity in H2. Okay. So should we interpret that, that on aggregate, second half activity in Canada should be higher than first? Or do you have sort of puts and takes there, and that's just indicating some of your customers might do that, but on balance, you're not sure?

[Scott Treadwell:]

Yes, lot of moving parts in Canada, as I'm sure you know. I think our view is that Q3 is shaping up to be a very strong quarter, very close or maybe better than Q1, but its early days there. One of the challenges we had in Q1 was a lot of our – what we call anchor tenant customers were either they were under their forecast or their forecast was just not first half weighted from a completion side. So we're seeing that come back. If you think first half versus second half, that's a lot tougher to handicap because now you're thinking how does Q4 shape up. But certainly through Q3, we're seeing a good amount of activity, and we think that should translate into decent results.

[Greg Colman:]

So if we look at Q1 as a guide for Q3 that may be close to right than wrong?

[Scott Treadwell:]

I think you're in the ballpark. As long as the weather doesn't work against you or something happen on the commodity that causes a real slowdown, I wouldn't expect there to be a big change from that kind of outlook.

[Greg Colman:]

Okay, got it. And then shifting over to the cash flow and spending, and this is it for me, I don't want to hog the time here. But on the CapEx side, you reiterated the 149 million budget and a little bit of spending from 2018 rolling over. Should we still be thinking about 155 million total spend in 2019 or as we're kind of eight months into the year here and the activities coming into clarity, are you revisiting that spending at all, either higher or lower?

[Mike Olinek:]

Hi, Greg, it's Mike here. Well, as I mentioned on the call, we've already reduced our capital budget in theory for the Argentinian purchase that wasn't planned. So that is down. And we certainly remain very focused on our CapEx spend and trying to align that best with our operating activities. So at this point, as a general guidance, I think we're pointing to the same number of about $150 million, but we're certainly focused on trying to reduce that as much as we can here going forward to preserve free cash flow.

[Greg Colman:]

Got it, so I mean no change officially, but it sounds like you're opening the door to a potential change in the future is not outside the realm of possible?

[Mike Olinek:]

That's right.

[Greg Colman:]

Yeah, that's it for me. I'll hand it back. Thanks for the clarity everyone.

[Mike Olinek:]

Thanks, Greg.

[Scott Treadwell:]

Thanks, Greg.

[Operator:]

Your next question comes from Jason Mandel of RBC Capital Markets. Please go ahead.

[Jason Mandel:]

Hi, guys. Thanks for the call and taking the question. Can you help out a little bit with the outlook for the second half of the year, particularly in the US, it seems like we're talking about some work that you can kind of hang your head on for some improvements. We've kind of heard some different from a number of other operators, particularly in the US and North America. So is there anything you can give us detail wise to give us more comfort there on that outlook?

[Lindsay Link:]

Jason, Lindsay. I appreciate the question. We always have been fairly strong in North Dakota and in Pennsylvania, and we feel fairly comfortable with the clients. We are staying very close to them, obviously. And the indications that we have from them is solid work path in the coming quarter. And the same goes down in for South Texas and even for a small operation in Grand Junction. So compared to a lot of the white space that we incurred in Q2, we actually feel more comfortable in Q3.

[Jason Mandel:]

Okay. I appreciate that help. And then maybe slightly bigger picture for the industry. There's been talk about the possibility of some improvements in the supply and demand balance through attrition, through running machines too hard or running machines harder. Anything you're seeing in your equipment that concerns you? Or on the flip side, anything you're seeing in the industry that gives you some comfort that we're starting to see a little bit of attrition?

[Lindsay Link:]

Jason, I think the attrition is always sitting there, but we're pretty good at keeping the fleet in what I would call good condition. That being said, I think you are seeing a number of people that are going to be, like ourselves, warm stacking equipment, because you're not prepared to take no profit even at a gross margin level for the work that's going on in there because you're absolutely correct, there is wear and tear that occurs that you just you need a return to in order to keep that fleet alive. So I think that's what we're seeing, it's more parking of equipment. Of course, we don't know directly what our competitors are doing. But I do believe that with some of the pricing that is out there, there has to be people continuing to reduce the supply of our equipment.

[Scott Treadwell:]

And Jason, it's Scott. I guess, one thing to add to that, we've talked about attrition in the past, but I think one of the things that's quite bullish for sort of the supply-demand outlook is as you move up from where we were five years ago, kind of 12 hour a day operations may be pumping eight. Today, good frack crews are pumping, 16, 18, 20 hours a day. That only lasts so long, and that can only really be sustained by higher levels of redundancy because you just don't have the time and the day to do a quick swap of a pump in the line. You have to have the spare pumps break in and ready to go. So that means more iron, more people on location. And it's not a spread that tracks well. It's actually those pieces of horsepower. And so if a spread has to creep up from 45 to 50, up to 55 or 60, that's effective attrition on the supply side because that horsepower is captive to the same well it was doing. Maybe it went a little bit faster, but we think, on balance, that's about the positive for supply demand.

[Lindsay Link:]

That's a great point, Scott, because basically we've seen that creep up of – between 5,000 and 10,000 horsepower, which if you blow it out on a higher level that Jason was talking about, that could be 50 less fleets running if you're running 50,000 horsepower per spread rather than 45.

[Jason Mandel:]

Great, thanks guys and I appreciate it.

[Scott Treadwell:]

Thanks, Jason.

[Lindsay Link:]

Thanks, Jason.

[Operator:]

And your next question comes from Maryana Kushnir of Nomura Asset Research Management. Please go ahead.

[Maryana Kushnir:]

Hi, I have a few questions. First of all, on the financial side, the borrowing base has been coming down with the kind of AR inventories coming down. What do you sense on the borrowing base? When do you expect that to stabilize?

[Mike Olinek:]

I think right now, we're kind of stabilizing at the low point. We've seen kind of the drop-down in accounts receivable levels from where they might have been at the third quarter of last year. And as you've seen, our revenue base on a consolidated basis is relatively stable now. And so I think right now, we're kind of at the low point.

[Maryana Kushnir:]

Okay. And regarding working capital fluctuations, there was a working capital use in the quarter. How should we be thinking about working capital use or inflow for the remainder of the year?

[Mike Olinek:]

Yeah. I mean, I would say that it's really accounts receivable collections at the end of the second quarter really dictated sort of how the working capital shaped up for Q2. I would see that certainly just being a timing issue into the third quarter. And I think, as I mentioned before, I think working capital will be a bit of a tailwind for Calfrac here on a full year basis, just given the drop-down in revenue on a year-over-year basis.

[Maryana Kushnir:]

Okay. And I wanted to clarify reported revenue, fracturing revenue per job in Canada. It has fluctuated quite a bit from Q1 to Q2. Were there any specifics that impacted that? And how should we be thinking for the rest of the year, given your guidance on the activity? What's the right level to – of revenue per job to use versus Q1 and Q2?

[Scott Treadwell:]

Yes. So the way to think about that is Canada really suffers or is impacted more by job mix than any of our other jurisdictions. Really, Canada is almost two markets in one. There's a lot of small fracturing jobs that go on and also the sort of large shale pads. And so the relative contributions of those two have a big impact on what your average job pricing looks like. I don't necessarily want to guide on how things are going to look in the third quarter. But what I'd say is, if you look at the seasonal trend kind of where we were a year ago in Q3 and make an assumption that pricing is down 10% or 15%, you're probably in the right ballpark. We're not seeing significant changes in terms of relative work contribution on the fracturing side and so that's probably the best instruction I can give you about how Q3 should shape up.

[Maryana Kushnir:]

Okay, thank you.

[Operator:]

[Operator Instructions] And then your next question does come from Stan Manoukian of Independent Creative Research. Please go ahead.

[Stan Manoukian:]

Good morning. Thanks for taking my questions. I was wondering if you can help me with the number of active fleets in the US in the second quarter versus 15 projected in the third. So did you – have you warm stacked two active fleets in the US, which implies that in the second quarter, you had 17 fleets or am I wrong about this?

[Scott Treadwell:]

Yeah, Stan, it's Scott. What I would say is the decision wasn't made right at the end of the quarter. To be honest, I think it would have been a stretch for us to run 17 fleets throughout the second quarter. The warm stacking happened as we got towards the end of it. So what I'd say in the second quarter is we were working a similar number of fleets as we did in the first quarter, which I think we talked about in sort of 13 range. But we weren't necessarily fully staffed and resourced to run 17. And then as the white space came in, in the second quarter, that offset sort of gains we got out of the weather improvement and gave us a similar number, but a bit of a shift in geography. And once that started to settle out near the end of the second quarter, we could take the decisions to warm stack some of the fleets.

[Stan Manoukian:]

Understood and how many fleets do you have in the US warm stack at this point?

[Scott Treadwell:]

Just the two.

[Stan Manoukian:]

Just the – and in Canada, how many active fleets did you have in the second quarter?

[Scott Treadwell:]

Again, it's a bit of a moving number. We could have run probably five fleets, if we called some guys in from days off, maybe six. But it always depends on the number and the configuration. If we were doing more smaller job size work, we could probably have done six quite easily. But in Q2, we tend to be more focused on sort of large shale pads. And so that means, really, you can do four consistently, you can get to five. But really, anything beyond that is not doable. And we've got horsepower stacked for one sort of large fleet in Canada. So there's one warm stacked fleet that would have been active in Q1 when we reported seven fleets and now kind of we've got a maximum potential of six.

[Stan Manoukian:]

But those stack fleets are warm stack, you don't have any cold stack, do you or you do?

[Scott Treadwell:]

There might be a little bit of horsepower that needs some work to go back to work. But in terms of what we report, the vast majority of the idle horsepower is warm stacked.

[Stan Manoukian:]

And in the – out of 20 million of capital expenditures in the US that you had approximately in the second quarter, which part is related to the maintenance CapEx if I may ask?

[Mike Olinek:]

Yes, it's Mike here. All of that 20 million is related to maintenance CapEx for the US fleet.

[Stan Manoukian:]

Okay, understood. And probably the same thing is in Canada, right, out of six –

[Mike Olinek:]

That's correct, yeah.

[Stan Manoukian:]

And then, well, obviously, sort of looking through the second half of the year, you have expressed some confidence in improvements in the US, sort of more stable environment. And I was wondering, this attrition that people are talking about all the time, do you think that this attrition will mostly sort of derive from – sort of from the horsepower that majors have at this point or independent frackers will also sort of – will have to stock sort of more of their equipment?

[Scott Treadwell:]

Stan, I think that's probably a question where your answer is probably as good as ours. I think everybody has newer equipment, middle aged equipment, older equipment and it will depend very much on the outlook and the capital discipline of that specific tier as to who retires equipment, who refurbishes equipment, who buys new. So I don't know that there's really a trend we could speak to there.

[Stan Manoukian:]

Okay, thank you very much.

[Scott Treadwell:]

Thank you.

[Mike Olinek:]

Thanks, Stan.

[Operator:]

Your next question comes from Jason Mandel of RBC Capital Markets. Please go ahead.

[Jason Mandel:]

Hi, guys. Sorry, just one follow-up on the M&A side, specifically as it relates to the international assets. You've had a little bit of a management change. I don't know if that would potentially lead to any change in views on the international assets to maybe stay or go. And then maybe bigger picture, we've seen at least one other transaction of merger that take out costs? Anything you kind of see going forward that might be an opportunity for Calfrac or that you might see just more bigger picture M&A for horsepower?

[Scott Treadwell:]

Yes, Jason, no change to the outlook in terms of management change, about the value or the inherent value of the international operations to Calfrac. I think we've said very consistently and continue to believe that while we certainly like the value that those operations bring, they're certainly not core to the business in a way that North America is where 95% of global fracturing activity happens. Now that being said, if they're generating free cash flow and they expose us to customers we wouldn't otherwise get exposed to and give us some insight into other markets, then there's value over and above the equipment there. But in terms of – if there's a transaction that could happen out there, certainly there's nothing religious that we've got that we have to keep the international pieces in Calfrac. But to be clear, it's not like we're running a process today. We certainly don't have a mandate to get them transacted in an X period of time. We just want to highlight that they always retain some optionality in terms of potential disposition. And then in terms of the North American landscape, I think we've said pretty consistently that consolidation is a good thing. We like it. The challenge is always trying to put two businesses together when the market is relatively busy. I think where we come in would be – we would really like to be a consolidator at some point in the cycle. Obviously, we've got issues to take care of ourselves in terms of how our balance sheet trends over the next number of years, to your point about the international divisions. But I think where you really create value for shareholders is trying to do these acquisitions in a somewhat distressed market where you can buy at significant discounts. You don't have significant integration costs and then can grow significantly into the next upturn. That's certainly how Calfrac has had success in the past through previous downturns. And I think it's where we'd like to get back to as we move forward.

[Jason Mandel:]

Thanks very much.

[Scott Treadwell:]

Thank you.

[Operator:]

And your next question comes from Waqar Syed of AltaCorp Capital. Please go ahead.

[Waqar Syed:]

Your guidance regarding Canada for the third quarter was just going to look relatively similar to the first quarter. Now is that comment related to just revenues or both revenues as well as EBITDA?

[Scott Treadwell:]

Yes. I think we try to stay away from the financial numbers, Waqar. I think from an activity perspective, how the calendar looks, I think that's where the similarity lies. You certainly draw your own conclusions. We haven't really given a huge amount of commentary on pricing. But I'll leave it to you to sort of go from there. The cost structure, we talked about the headcount reduction from the fields schedule change. So that's probably a bit of a tailwind in terms of profitability. But outside of that, I'll let your experience and intelligence come up with the right number.

[Waqar Syed:]

All right, best of luck to me then. Okay. In terms of your net debt numbers, they went up in the second quarter. Where do you think they trend in the second half?

[Mike Olinek:]

Hi, Waqar, it's Mike here. We're likely going to trend up a little bit here in the third quarter. Just obviously some borrowings related to working capital replenishment there. But I think, overall, kind of on a year-over-year basis, they should be fairly consistent with the end of last year.

[Waqar Syed:]

Okay, great. And then just one final question, in terms of the number of crews that are actually manned in the US, the number is 15, is that correct?

[Mike Olinek:]

Yeah.

[Waqar Syed:]

Okay, great. That's all I have. Thank you.

[Mike Olinek:]

Thank you, Waqar.

[Scott Treadwell:]

Thanks for calling.

[Operator:]

And we have no further questions at this time. So I will turn the call back over to Scott Treadwell for any closing remarks.

[Scott Treadwell:]

Thanks, Adam, and thanks, everyone, for joining us today. I appreciate your time and interest in the company. We look forward to reporting our third quarter results in a few months. Thanks. Have a good day.

[Operator:]

And this does conclude today's conference call. You may now disconnect.