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Edited Transcript of CVEO earnings conference call or presentation 27-Apr-17 3:00pm GMT

Thomson Reuters StreetEvents

Q1 2017 Civeo Corp Earnings Call

HOUSTON May 1, 2017 (Thomson StreetEvents) -- Edited Transcript of Civeo Corp earnings conference call or presentation Thursday, April 27, 2017 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Bradley J. Dodson

Civeo Corporation - CEO, President and Director

* Frank C. Steininger

Civeo Corporation - CFO, SVP and Treasurer

* Regan Nielsen

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Conference Call Participants

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* Benjamin E. Owens

RBC Capital Markets, LLC, Research Division - Associate

* Stephen David Gengaro

Loop Capital Markets LLC, Research Division - MD

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Presentation

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Operator [1]

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Good day, everyone and welcome to the Civeo First Quarter Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Regan Nielsen, Manager, Corporate Development and Investor Relations. Please go ahead, sir.

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Regan Nielsen, [2]

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Thank you, and welcome to Civeo's First Quarter 2017 Earnings Conference call. Our call today will be led by Bradley Dodson, Civeo's President and Chief Executive Officer; and Frank Steininger, Senior Vice President and Chief Financial Officer.

Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, please note that we're relying on the safe harbor protections afforded by federal law.

Any such remarks should be read in the context of the many factors that affect our business, including risks disclosed in our Form 10-K, 10-Q and other SEC filings.

I will now turn the call over to Bradley.

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [3]

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Thank you, Regan. Good morning to all of you, and thank you for joining us on the first quarter 2017 earnings call. We'll start with an overview of our overall operational performance during the quarter. Frank will then provide a detailed review of our financial results for the quarter. And I'll wrap up with our prepared remarks with the discussion of each segment and our guidance before we take questions.

We had good topline performance in the first quarter, which resulted in revenues of $91.4 million, above the high end of our guidance range. We recorded adjusted EBITDA of $15.2 million, modestly below our guidance range, due to higher share-based compensation expense and higher-than-expected labor costs in Canada. We continued to focus on cost management, diligent execution and firming customer activity. We continue to see signs of improvement in the macroeconomic indicators of our industry. As previously noted, demand for our services is primarily tied to the outlook for crude oil and metallurgical coal prices. Oil prices appear to have stabilized, providing optimism that market demand for our services has bottomed and will increase in the future. Additionally, net coal prices remain significantly higher than last year. In fact, as of Q1 2017, contract net coal prices were approximately $285 per ton, significantly higher than the 2016 -- September 2016 contract price of $92.50 per ton. The recent increase in net coal prices is primarily attributable to Chinese domestic coal production policies combined with adverse Australian weather conditions, both of which impacted supply volumes. While we're encouraged that the worst of a multiyear downturn appears to be behind us, customers are still deploying capital very cautiously and managing their portfolios within tight budgetary constraints. While we are seeing some limited investment in Australia, we expect that stock prices for met coal and contract prices for met coal will need to be sustained at levels above $150 a ton for at least 9 to 12 months before customers significantly increase activity levels.

We are hopeful that market conditions will continue to stabilize and improve throughout the year. However, we manage our business as if in the event that the recovery stalls. Many of the principles we've adopted and the low point in the cycle continue to guide our company. We continue to judiciously spend capital, remain focused on generating free cash flow and reducing leverage, while growing organically in our key markets. We will remain focused on our strategic objectives as our industry continues to recover from the downturn.

To that end, we generated $9.8 million in operating cash flow and $6.5 million of free cash flow during the quarter. During the first quarter of 2017, we also closed a public offering of 23 million common shares and used a portion of that proceed of $65 million to repay our revolving credit facilities.

As previously mentioned, until market conditions demonstrate sustainably favorable tailwinds, we'll continue to manage our leverage, while focusing on growing our core markets. Today, we are pleased to announce the 15-month contract renewal at McClelland Lake Lodge, supporting the Fort Hills Oil Sands project in Canada. We are encouraged by the renewal of this contract and believe it is a testament to our best-in-class customer service.

In Australia, we have largely dealt with the operational impacts of cyclone Debbie last month. We were fortunate that our assets were not materially impacted and our teams and guests remained safe. Met coal prices rose dramatically in recent weeks, in large part due to rail outages associated with the storm and flooding. However, we continue to manage our business with the expectation that the local supply disruptions and associated price spike could be temporary. Nevertheless, it does appear that global met coal market is much more imbalanced than previously. In the U.S., the ongoing recovery in U.S. rig count has resulted in improved occupancy at our West Permian and Killdeer Lodges, but lingering industry overcapacity continues to weigh on our pricing. However, we're encouraged that market conditions should continue to improve beyond the first quarter as drilling and completion activity continues to increase.

As we stated in our year-end call in February, we believe that 2017 will be a transitional year for Civeo as we navigate our way out of this historic downturn our industry has faced. I believe the macroeconomic recovery continues to improve, particularly in Australia and the U.S. And we're seeing some green shoots in activity in our core markets. But, we still have a lot of work ahead. Until our customers in Canada and Australia shift their focus from capital preservation to growth. We will stick to the playbook that has enabled us to persevere through the trough of the cycle.

Now I'd like to turn it over to Frank, who will take you through the details of our consolidated and segment results and our financial positions. Frank?

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Frank C. Steininger, Civeo Corporation - CFO, SVP and Treasurer [4]

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Thank you, Bradley, and good morning. This morning, we reported total revenues of $91.4 million, with a net loss on a GAAP basis of $21 million or $0.17 per diluted share. During the first quarter of 2017, adjusted EBITDA was $15.2 million and cash flow from operations was $9.8 million, with free cash flow generated of $6.5 million. I'll begin with our Canadian segment. And I will be comparing our sequential performance; that is, first quarter of 2017 to first -- to fourth quarter 2016. Revenues from our Canadian segment were $60.5 million, which is down 3% from the fourth quarter of 2016. Adjusted EBITDA decreased by 6%, sequentially, to $13.2 million, primarily due to higher-than-expected labor costs, partially offset by increased build rooms. Although we experienced the benefit of a stronger Canadian exchange rate, the decline in mobile, open camp and product revenues also affected the results in the Canadian segment.

Average occupancy in our Canadian lodges was 72% for the quarter versus 65% in the prior quarter. This was driven by higher occupancy at our Athabasca and McClelland Lake Lodges and somewhat attributable to a decrease in the number of rentable rooms from approximately 9,300 rooms in the prior quarter to approximately 8,900 rooms this quarter. Our average daily rate in U.S. dollar was 70 -- was $97 versus $99 in the fourth quarter.

In the first quarter, our occupancy in Canada benefited from continued activity related to the Kearl and Fort Hill Projects. As Bradley mentioned, we are pleased to announce a 15-month contract renewal of the McClelland Lake Lodge for the Fort Hills project. The adjusted EBITDA margin on our Canadian operations was 22% in the first quarter versus 23% in the fourth quarter. To echo Bradley's comments, our adjusted EBITDA performance came in modestly below expectations due to higher-than-expected labor cost and lower pipeline activity in the southern Athabasca play than expected.

Moving to the Australian segment. During the quarter, we recorded revenues of $27 million, which were up approximately 3% relative to the fourth quarter. Adjusted EBITDA of $10.6 million was up 2% when compared to our fourth quarter results last year. Our top-line performance in the segment was driven by increased occupancy in our villages in Western Australia, due to increased activity from anchor tenants at both villages sequentially. The average daily room rate for the Australian villages increased modestly to $81 in the first quarter versus $80 in the fourth quarter. Village occupancy modestly increased sequentially by 1% to 42% and adjusted EBITDA margin in Australia was 39%, standing relatively flat versus the fourth quarter of last year.

In the U.S., last week's active land rig count of 837 was up more than 450 rigs from last year's trial. U.S. revenues for the quarter improved to $3.9 million versus $2.5 million in the fourth quarter of 2016. We experienced some softness in our offshore business, which was partially offset by higher occupancy at our Western Permian and Killdeer Lodges with the increased U.S. drilling activity. Pricing remains challenged due to lingering overcapacity. However, U.S. E&P operators have continued to add rigs thus far in the second quarter, with oil prices hovering near $50 a barrel. So we believe our business should benefit from gradual improvement beyond the first quarter. Our adjusted EBITDA loss of $1.3 million in the U.S. narrowed from the adjusted EBITDA loss of $1.5 million sequentially, due to top line improvement and cost reduction efforts.

Moving to CapEx. On a consolidated basis, we invested $3.8 million on CapEx in the first quarter, primarily for routine maintenance purposes and investments in the enterprise information system. We continue to expect our capital expenditures for 2017 to be in the range of $15 million to $18 million, which excludes any expenditures for unannounced projects or uncommitted projects, the spending for which is contingent on obtaining customer contracts.

During the first quarter of 2017, we made $44 million in debt reduction payments, reducing total debt outstanding by 3 -- by $41 million; that is net of $3 million in exchange rate translation. The debt reduction was primarily attributable to proceeds generated from our February equity offering. As of March 31, we have $193 million of available capacity on our revolving credit facility and total liquidity of approximately $200 million. And we expect to continue to generate free cash flow and reduce our debt balance throughout 2017.

Now, I'll turn the call back over to Bradley, who will provide a review of operations and update our second quarter and full year 2017 guidance. Bradley?

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [5]

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Thank you, Frank. Looking at our expectations for the second quarter of 2017. Overall, I'm optimistic about the recovery and activity in our 3 core markets as we progress through 2017. Canada appears to be stabilizing, and Australia seems to be poised for a late 2017 improvement. And we're seeing a clear improvement in occupancy and utilization in the U.S., albeit at continued compromised pricing. In Canada, we are pleased to complete the McClelland extension, which should result in [thawed] occupancy at this location for the rest of the year. The Beaver River and Athabasca locations will be largely full during the second and third quarters with turnaround work. And we continue to work on filling these locations for the fourth quarter. Occupancy at Wapasu will be consistent with past quarters in the second quarter of 2017. We do expect seasonally lower occupancy in our southern in situ locations in the second quarter. Overall, we expect to get our costs back in line with our initial expectations in the second quarter. And our focus remains on filling the lodges in the fourth quarter and winning mobile camp work for the balance of the year.

Translating all that into our guidance, we are assuming a Canadian dollar exchange rate of 0.75, and we're guiding to segment revenues in Canada of $51 million to $54 million and adjusted EBITDA of $11 million to $13 million for the second quarter of 2017. Our expectations are based on 8,500 rentable rooms. And we expect occupancy levels to be between 71% and 73%, with a room rate of approximately CAD 117 to CAD 118 per night in Canadian dollars. For the full year, for our Canadian segment, assuming a Canadian dollar exchange rate of 0.75 to the U.S. dollar, we are guiding to revenues of $214 million to $222 million. We expect full year adjusted EBITDA from Canada to range between $45 million and $47 million. This all assumes 8,600 average rentable rooms for the year with lodge occupancy between 63% and 65% and a room rate of approximately CAD 125 per night in Canadian dollars for the full year of 2017.

Moving to Australia. Our locations have largely returned to normal operations after recovering from the cyclone and related floodings. While we have seen some occupancy in April from the rail recovery efforts, we expect this to be rather limited. We are pleased with the increase in shorter-term occupancy related to maintenance and turnaround activities by our customers in the Bowen Basin over the past several quarters. And it appears this activity will continue through the end of this year. However, customers continue to focus on cost reduction, containment and efficiently managing their accommodations needs. We expect that the recently announced capital project by DMA will have a positive impact on several of our Bowen Basin locations. Overall, the activity levels in Australia are improving [within] higher met coal prices, although it is at a measured pace.

Translating that into guidance, we are assuming an Australian dollar exchange rate of 0.76 to the U.S. dollar in the second quarter of 2017. We expect $26 million to $28 million of revenues and adjusted EBITDA of $10 million to $11 million from Australia, which is based on 8,800 rentable rooms and village occupancy of 40% to 42%, with average daily rates of approximately AUD 104 to AUD 106 in Australian dollars. For the full year, we are assuming Australian dollar exchange rate of 0.75 to the U.S. dollar. We expect $105 million to $108 million of revenues and adjusted EBITDA of $40 million to $42 million, which is based on approximately 8,800 rentable rooms, with village occupancy between 43% and 44% and an average daily rate of approximately AUD 100 in Australian dollars for the full year of 2017.

So to consolidate that from second quarter, we are expecting revenues to be in the range of $82 million to $87 million, and adjusted EBITDA in the range of $14 million to $17 million. For the full year, our guidance remains unchanged. We expect revenues to be in a range of $337 million to $353 million. Our adjusted EBITDA guidance for the full year remains $60 million to $65 million.

In conclusion, as we stated earlier, we expect 2017 to be a transitional year as commodity prices and macroeconomic environments are expected to continue to improve. Activity appears to be improving in Australia and the U.S. and stabilizing in Canada. Our strategy remains the same: Maintain our market leading desk service, focus on revenue opportunities utilizing existing assets, remain diligent on cost and disciplined on capital spending. All of this is to serve our customers, drive free cash flow, reduce debt and deliver long-term returns to our shareholders. We also are continuing to pursue organic growth opportunities and inorganic opportunities in our core markets that we believe will create value for our shareholders.

With that, we are now ready for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We will go first to Stephen Gengaro with Loop Capital.

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Stephen David Gengaro, Loop Capital Markets LLC, Research Division - MD [2]

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Two questions, if you don't mind. One -- and I think this is minor. But your guidance in Australia and I guess in Canada, to a lesser extent -- your EBITDA guidance changed a little bit, I think. And I think your Australian EBITDA guidance is a little bit higher than it was couple of months ago. Can you provide any color on that?

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [3]

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Sure. So we're starting as we came into the fourth quarter earnings call and then were giving full year 2017 guidance. We were fairly conservative, I think, on at the time what saw in Australian activity. As we've moved through the year, we're getting a little more conviction in terms of what we think the occupancy can be at the villages. We are seeing better turnaround work. Certainly, some of the capital announcements by DMA should help our Dysart and Moranbah locations. So we put some of that into our guidance for Australia. So Australia is a little bit better than we initially thought coming into the year. Canada, with the labor inefficiency and labor cost issues we ran into in the first quarter, it essentially set them back for the full year. We'll catch up some of that, but what we really need to focus in on is filling the room in the fourth quarter for Canada and getting the mobile camps to work.

U.S., I think it's seems putting assets to work very well. We've entered into a couple of new markets. We've got some wellsite units going in, in the Permian. We've got wellsite units going into Midcon. The 2 lodges we have in the U.S. are running at much higher occupancy levels than they did last year, or even in the fourth quarter. So it's looking up. I think we're hope again -- as I think you may have asked last quarter, we're hoping that by the end of the year, the run rate for the U.S. business will be a breakeven or positive EBITDA. But they continue to work on their costs and they're doing a good job there. We're certainly pleased to get the (inaudible) offering and the bank amendment done in the first quarter. So we feel like we're pretty well-positioned. So it comes to pluses and minuses, pluses in Australia and, to a much lesser degree, in the U.S. with Canada falling behind in the first quarter, but should be able to pick some of that back up, but not all of it. But net-net, too early to move guidance up.

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Stephen David Gengaro, Loop Capital Markets LLC, Research Division - MD [4]

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Okay. And then, my second question was really -- when you look at the opportunity set out there and the potentials to either add something, likely be acquisition or even any other incremental work. What are you seeing? I mean, are you seeing any closing of the bid ask on some potential acquisitions? Or not yet?

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [5]

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Well, we continue to pursue acquisitions. Again, I think it's important they're going to be in our core markets, right now, meaning our core geographic markets. They will be consistent with what we do now. We have stated that we are interested in expanding our catering only business model. So that's something that we are working on. I do think that the bid outspread is starting to narrow. But as you know, transactions are always hard to get completed for various reasons. But we're -- the team is working hard on them, and we do have some opportunities we are pursuing.

On the organic side, there are couple of projects in Australia that we are working on. Hopefully, we'll know by -- where those are headed, possibly by the second quarter call. And we've got a couple in Canada that we're looking at. Those are probably second, third quarter opportunities. And then, of course, in Canada, the thing, although it's -- it is delayed is LNG in British Columbia. We are seeing -- we are actively pursuing the 2 pipeline projects that were pursued -- or were approved, I should say, in November by Trudeau, line 3 and Transmountain. I think we've got a reasonable shot at getting some work on those, form a little camp business. I think the real question there is whether or not -- and again, that would largely be using existing assets.

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Stephen David Gengaro, Loop Capital Markets LLC, Research Division - MD [6]

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So no real CapEx.

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [7]

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No real CapEx to capture that work. But that likely may be an '18 opportunity. Maybe we can get some late '17 activity from it, but it really depends on when they get FID. But most likely an '18 opportunity.

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Operator [8]

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Next is Louie Toma at Craig-Hallum Capital Group.

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Unidentified Analyst, [9]

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Wanted to dig in a little bit more on the McClelland Lake Lodge contract that you renewed. I guess my first question is: Can you give us a little bit insight into the impact that this had on your 2017 guidance? Because this sounds like you had the renewal, but yet your guidance in Canada for the year declined slightly. Can you just kind of help us quantify what this impact was to that guidance?

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [10]

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Sure. The McClelland renewal had no impact on guidance. The impact on EBITDA guidance for Canada was largely due to the cost issues we ran into in the first quarter. And...

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Frank C. Steininger, Civeo Corporation - CFO, SVP and Treasurer [11]

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So we had expected in our guidance that the contract would be renewed.

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [12]

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Correct. And it was renewed and in line with what our expectations were in setting annual guidance.

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Unidentified Analyst, [13]

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Okay. That's helpful. And can you talk a little bit more about the higher labor cost that you had in Canada? Is this temporary? Or is there a structural change in labor cost there? Can you give us just a little bit more details on that, please?

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [14]

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Be happy to. Louie, I think it's probably important to highlight that it's higher than expected, but lower than where we were even in the fourth quarter on a per-unit basis. I think we got -- in terms of where we thought we could get in terms of labor efficiency and labor rate, we didn't get all the way there in the first quarter. I think we'll catch up to where we want the cost to be. And we had some service enhancement rollouts that impacted costs. But it really is more we had expectations we could get costs lower. We set guidance on that. We didn't get all the way there. But in an absolute sense, our labor costs are lower. We just didn't get all the way to where we wanted to.

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Operator [15]

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(Operator Instructions) Next to Ben Owens, RBC Capital Markets.

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Benjamin E. Owens, RBC Capital Markets, LLC, Research Division - Associate [16]

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I wanted to see if you guys could maybe give me your thoughts on what you think the impact could be of the some of the recent asset divestiture and acquisition transactions that were taking place in Canada in the Oil Sands, among international companies and some domestic Canadian companies? What the effect of that could be potentially on the outlook for activity for you guys and going forward over the next couple of years?

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [17]

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Sure. Well, I think when you have asset transaction amongst your customer (inaudible), there are usually a couple of things you have to worry about as a service provider. One, there can be a dislocation activity on a temporary basis as the new owner tries to get their arms around what they just bought. And two, there's always the risk that it goes from a customer that likes your services to one that perhaps likes somebody else's services. I think the good news for us in these 2 scenarios are the Oil Sands. The activity is going to continue because they're both producing assets, largely producing assets. There are some that are prospective assets. But they are largely producing assets. And so the activity levels will continue, just based on the continuation of the production.

The second piece is that we do have very good relationships with both of the new buyers and, in particular, with DNRL. We had a very close relationship with them long-term, but then certainly have strengthened the relationship with them over the last year or so. We worked for them during the turnaround of this third quarter of last year and worked very closely with them during the forest fires. So I feel fortunate -- we feel fortunate that the assets are being put into the hands of someone that is -- 2 players that are clearly making a long-term investment and bet on the Oil Sands region, likely be focused on the assets more diligently than perhaps the previous owners, and that we have good relationships with both.

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Benjamin E. Owens, RBC Capital Markets, LLC, Research Division - Associate [18]

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Okay. That make sense. Kind of turning to the U.S. Makes sense that you guys would expect revenue to kind of grind higher as activity increases. But I was wondering if there is a rig count where the market gets tighter in the U.S. and demand for your services could kind of take a step change?

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [19]

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Well, what we're trying to do right now is, on a contracted basis move assets out of slower market, predominantly the Rockies, into the Permian and into the Midcon, as we acquire new customers in those markets. I would say the Permian is a very tight market right now for -- both for lodge rooms and for [route lines].

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Frank C. Steininger, Civeo Corporation - CFO, SVP and Treasurer [20]

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I agree with you 100% with that comment. We are actually going to be putting the assets to work in Permian because of that tightening of the -- of supply.

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [21]

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So we are seeing -- and we're seeing better pricing in those markets, but it is nickels and dimes. It's not anything to really throw a parade over. But it's starting to improve, which is good.

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Frank C. Steininger, Civeo Corporation - CFO, SVP and Treasurer [22]

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It's putting the assets to work.

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [23]

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And we're seeing utilization improved nicely for our wellsite units. And the sales team and the office team are doing a great job getting the assets ready to go out and selling them. So I'm really pleased with how the team has been doing. Because it's been a tough slog and their efforts are appreciated.

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Benjamin E. Owens, RBC Capital Markets, LLC, Research Division - Associate [24]

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Got it. Understood. And then a last one for me. You guys mentioned that you're optimistic about a few green shoots in some of your markets I was wondering if you could maybe give some additional color on specifically maybe what regions? Or what kind of green shoots you're seeing?

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [25]

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So we've covered the U.S. I mean, certainly the U.S. for us is -- of each of our geographical regions is a little bit easier for the -- for investors and outsiders to track, as U.S. rig count is going to be a pretty good barometer for us.

In Australia, the setbacks related to the cyclone and the flooding -- thankfully, all of our people were safe. All our guests were safe. We didn't run out of food while the roads were down. And our customers' assets were generally safe. There were clearly some rail issues. It appears probably by -- at least by mid-May or end of this month, on the earlier end, it should be relatively back to normal. They are for us but certainly for the customer base. All of that is on the back of already improving maintenance work that has been deferred. And here I'm talking predominantly about our Bowen Basin customers. So we're seeing shorter-term maintenance turnaround work. And as we talked about on the fourth quarter call, that's good for us. That can lead to an additional 30, 40, 50 rooms for a period of time, usually measured in a month or 2. But that's starting to build momentum.

Certainly, the conveyor expansion project announced by DMA, that should positively impact our Dysart and Moranbah locations. And hopefully we can get that -- some of that under contract, which would help bill the uncontracted revenue that's built into guidance. So -- and look [from upside]. So I think as we look at Australia, we are starting to some tangible green shoots there.

Canada, in the comments -- it feels better. The funnel -- the sales funnel is good there. We're very focused on filling the rooms in the fourth quarter and on getting some mobile camp work out in the back half of the year.

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Frank C. Steininger, Civeo Corporation - CFO, SVP and Treasurer [26]

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And those 2 major pipeline project, primary focus.

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [27]

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So Canada feels more stable, I would say, then. The other 2 markets clearly are having an improvement. U.S, we're getting the assets up and to work. We need to get pricing up a little bit before it really starts to fall to the bottom line. In Australia, I think we just need a little more inertia to carry us through. And then hopefully the back of the year, we'll see the benefit of the higher met coal prices.

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Benjamin E. Owens, RBC Capital Markets, LLC, Research Division - Associate [28]

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That's great color. I have one more, actually, on your comment about filling the rooms in the fourth quarter in Canada. What's kind of been the typical lead time on establishing kind of occupancy for the rooms in those lodges in Canada for the fourth quarter? At what point in the year did you do that historically?

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [29]

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Well, historically, you'd want -- the customers have to book that pretty far in advance. Needless to say, over the last few years, there's been an availability of rooms, both ours and others. And so as a result, they typically can think about contracting those out a month or 2 ahead of when they want to take off the projects. So I would think in mid-third quarter we'll have a better idea. Really the focus for us is going to be on the southern in situ locations. Those, historically, have been well occupied by pipeline projects and some of the in situ projects down there. And then how much of Beaver River and Athabasca are going to be utilized going into the winter? I don't know if you have anything further on that question.

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Operator [30]

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This concludes today's question-and-answer session. I would like to turn the conference back for any closing or additional comments.

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Bradley J. Dodson, Civeo Corporation - CEO, President and Director [31]

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Thank you, all, for your interest in Civeo and the call in today. We look forward to speaking to you at the second quarter earnings call. And I appreciate the interest in the company. That's it. Thank you.

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Operator [32]

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This concludes today's conference. We do thank you for your participation. You may now disconnect.