U.S. Markets closed

Edited Transcript of PD.TO earnings conference call or presentation 25-Jul-19 6:00pm GMT

Q2 2019 Precision Drilling Corp Earnings Call

Calgary Aug 1, 2019 (Thomson StreetEvents) -- Edited Transcript of Precision Drilling Corp earnings conference call or presentation Thursday, July 25, 2019 at 6:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Carey Thomas Ford

Precision Drilling Corporation - Senior VP & CFO

* Dustin Honing

Precision Drilling Corporation - Manager of IR

* Kevin A. Neveu

Precision Drilling Corporation - President, CEO & Director

================================================================================

Conference Call Participants

================================================================================

* Connor Joseph Lynagh

Morgan Stanley, Research Division - Equity Analyst

* Greg R. Colman

National Bank Financial, Inc., Research Division - MD and Energy Services & Special Situations Analyst

* Ian Brooks Gillies

GMP Securities L.P., Research Division - Director of Institutional Research and Research Analyst of Energy Services & Infrastructure

* John Booth Lowe

Citigroup Inc, Research Division - VP

* John H. Watson

Simmons & Company International, Research Division - VP & Senior Research Analyst of Oil Service

* Kurt Kevin Hallead

RBC Capital Markets, LLC, Research Division - Co-Head of Global Energy Research and Analyst

* Sean Christopher Meakim

JP Morgan Chase & Co, Research Division - Senior Equity Research Analyst

* Taylor Zurcher

Tudor, Pickering, Holt & Co. Securities, Inc., Research Division - Director of Oil Service Research

* Waqar Mustafa Syed

AltaCorp Capital Inc., Research Division - MD of Institutional Research for Energy Services & Head of US Institutional Research

* Dan Healing

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day, ladies and gentlemen. Welcome to the Precision Drilling Corporation 2019 Second Quarter Results Conference Call and Webcast. (Operator Instructions) As a reminder, today's conference is being recorded.

I would now like to introduce your host for today's conference call, Mr. Dustin Honing. You may begin.

--------------------------------------------------------------------------------

Dustin Honing, Precision Drilling Corporation - Manager of IR [2]

--------------------------------------------------------------------------------

Thank you, Kevin, and good afternoon, everyone. Welcome to Precision Drilling's Second Quarter 2019 Earnings Conference Call and Webcast. Participating today on the call with me are Kevin Neveu, President and Chief Executive Officer; and Carey Ford, Senior Vice President and Chief Financial Officer.

Through our news release earlier today, Precision reported its second quarter 2019 results. Please note these financial figures are in Canadian dollars unless otherwise indicated.

Some of our comments today will refer to non-IFRS financial measures, such as EBITDA and operating earnings. Please see our news release for additional disclosure on these financial measures.

Our comments today will include forward-looking statements regarding Precision's future results and prospects. We caution you that these forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from our expectations. Please see our news release and other regulatory filings for more information on these forward-looking statements and these risk factors.

Carey will begin today's call with a brief discussion of our second quarter operating results, Kevin will then provide an operational update and outlook.

With that, I'll turn it over to you Carey.

--------------------------------------------------------------------------------

Carey Thomas Ford, Precision Drilling Corporation - Senior VP & CFO [3]

--------------------------------------------------------------------------------

Thank you, Dustin. In addition to reviewing the second quarter results, I will provide an update on our 2019 capital plan and management of our capital structure.

Precision's strong 2019 financial performance continues with second quarter adjusted EBITDA of $81 million, 30% higher than the second quarter of 2018. The increase in adjusted EBITDA from last year is primarily the result of higher activity levels and day rates in our U.S. business and improved C&P performance, offset by lower activity in our Canadian drilling business. Additionally, the quarter benefited from the impact of IFRS 16 and lower share-based incentive compensation. In the quarter, we recognized a $4 million share-based compensation expense compared to $10 million in Q2 2018.

In the U.S., drilling activity for Precision increased 6% from Q2 2018, while margins were up approximately USD 850 per day, positively impacted by higher day rates and partially offset by higher operating costs. Sequentially, day rates and margins, net of turnkey and idle-but-contracted payments, increased approximately USD 220 and decreased approximately USD 240, respectively. We expect to sustain similar margins into the third quarter.

In Canada, drilling activity for Precision decreased 15% from Q2 2018, while margins were down approximately $1,160 per day from the prior year. Net of shortfall payments, margins were lower by approximately $1,600 per day. Although we experienced higher activity in the quarter than expected, margins were negatively impacted by rig mix as a higher percentage of shallower rigs worked during the quarter. As we expect Q3 activity to be down this year versus last, weaker overhead absorption is likely to cause margin pressure with daily operating margin down between $250 and $750 per day compared to Q3 2018. Internationally, drilling activity for Precision equaled activity in Q2 2018, and average day rates were up USD 1,710 per day as a result of recontracting rigs at higher rates.

In our C&P division, adjusted EBITDA this quarter was $2.8 million, an increase of approximately $4 million to the prior year, a direct result of business improvement initiatives enacted over the past several quarters. Of note, the improved financial results were delivered with lower industry activity than the prior year.

Capital expenditures for the quarter were $43 million and for 2019, our capital plan remains $169 million, flat with previous guidance. The 2019 capital plan is comprised of $52 million for sustaining and infrastructure and $117 million for upgrade and expansion. Our capital expenditure plan remains front-end loaded as we delivered a U.S. new build rig early in Q1 and completed a SCR to AC ST-1500 conversion which was delivered in the second quarter. And we also delivered our sixth new build rig to Kuwait during the quarter. We expect capital expenditures for the remainder of the year to primarily consist of maintenance expenditure.

We have continued to build our contract book during the year, and in the quarter, we signed 6 16-term contracts. As of July 24, we had an average of 63

contracts in hand for the third quarter and an average of 64 contracts for the full year 2019.

As of June 30, 2019, our long-term debt position, net of cash, is $1.45 billion. We had

$81 million in cash on our balance sheet, and our total liquidity position was $770 million. During the first half of 2019, we made open market purchases totaling USD 43 million and year-to-date have called USD 50 million outstanding of our outstanding 2021 notes. Our year-to-date 2019 debt reductions total $124 million. We continue to view cash flow generation and debt reduction as top priorities this year and have raised our targeted 2019 debt reduction to $200 million, up from a range of $100 million to $150 million.

As of June 30, our ratio of net debt to trailing 12-month EBITDA sits at 3.6x, and we continue to work towards our longer-term target ratio of below 2x. Our average cash interest cost is 6.7%. And with 2019 target debt reduction, we expect run rate interest expense will be just under $100 million to exit the year, assuming today's U.S. dollar-Canadian dollar exchange rate.

Our earliest debt maturity is USD 116 million, due December 2021 and will be a focus in our near-term debt reduction plans. The next debt maturity is not due until December 2023. For 2019, we expect depreciation to be approximately $330 million and SG&A to be approximately $105 million prior to share-based compensation expense. We would expect cash taxes to remain low, and our effective tax rate to be in the 20% to 25% range. Following our successful divestitures in the first half of 2019 generating $82 million in proceeds, we will continue to look for selective opportunities to divest noncore assets for additional cash flow.

I will now turn the call over to Kevin for further discussion on the business and outlook.

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [4]

--------------------------------------------------------------------------------

Good afternoon, and thank you, Carey. Managing a capital-intensive and labor-intensive oil service business during a period of extreme commodity price volatility is a challenge, and the second quarter of 2019 was no exception. Our North American customers faced the same issues as the cycle times to drill and complete wells, especially large pads, is often longer than the commodity priced rigs. Despite these challenges, investor expectations for capital discipline, that is spending within cash flow, are being met by the E&P community at large, and we expect our customers to stay in this mode for the balance of 2019.

For Precision, this create both opportunities for our Super Series rigs and technologies and risks with overall E&P spending constraints. Precision is extremely well positioned for these volatile market conditions, and we believe our strong second quarter results demonstrate that positioning. I'll discuss this in more detail for each of our geographic markets, but I'll start with a review of Precision's strategic priorities.

Regarding the focus on debt reduction, I reiterate Carey's comments that on every -- that our intention is to accelerate our debt reduction plans at every opportunity. Increasing our debt reduction target for this year to $200 million will position us already near the bottom end of our 4-year target just 2 years into the plan. And importantly, this also brings our debt-to-EBITDA leverage target of under 2x clearly into focus.

Every investor we have met with over the past several quarters applauds both our stated debt reduction targets and the progress we've achieved towards those targets. I will tell you that our management team has this priority well in hand, and we will continue to lever on this key priority throughout this year and the coming periods.

Just touching on our second priority, leveraging our scale to deliver free cash flow. I think Carey covered that pretty well, but I'll add that the recent organizational changes we announced are designed to leave no stone unturned and look for every single opportunity to create additional cash flow. I know our team is already uncovering some light leverage opportunities. I look forward to this increased focus on cost management.

Now before I get to our technology priority, I'll review our regional update, beginning with the United States. Looking at the U.S., our second quarter activity came in slightly lower than guidance we provided on our April conference call. Responding to the volatility in crude prices, the E&P operators began trimming back active rigs as they defended the narrative of capital discipline. Precision's active rig count pulled back nominally per our prior guidance to the mid-70s during the second quarter and is held in this rate through today with 73 rigs running and 1 rig idle but contracted. We expect the IBC rig will return to operations later this quarter when it transitions to a new customer contract.

Earlier, I mentioned how this volatility also creates opportunities, and this is evident as our customers' increased focus and attention on all avenues to increase capital efficiency with the rigs they continue to operate. Drilling efficiency, nonproductive time, increasing pad sizes and technologies aimed to improve efficiency all receive substantial increased customer attention in the quarter. For Precision, this led to stable utilization for our super-spec rigs, firm pricing on contract renewals and the signing of 15 term contracts during the quarter. We also experienced a step change in system utilization on our PAC automation and app offerings. We'll have more on this later.

Utilization of our Super Triples in the U.S. remains over 90%. We mobilized our first SCR to AC upgrade during the quarter, bringing our fleet to 68 AC pad walking rigs. I'll remind you that we have grown our U.S. Super Triple fleet 10% in last 18 months through upgrades, Canadian rig transfers and new builds, all contracted on favorable terms. We have 12 to 24 additional candidates in our fleet for similar SCR to AC upgrades and several more Canadian transfer candidates should U.S. customer demand and day rate economics support the additional investments. Currently, Precision does not have any further upgrade or transfer plans for this year.

E&P operators will continue to carefully manage spending. Industry activity may further soften, but the focus on drilling efficiency will continue. Although Precision's 68 Super Triple rigs are considered for XY pad walking, and all have long reach horizontal drilling capabilities, we expect sustained, firm demand for Precision's performance-leading Super Triple rigs and expect stable pricing and activity trends we mentioned earlier will continue through the balance of the year, of course, assuming commodity price volatilities does not widen.

Now turning to Canada. In our Canadian business, besides the commodity price volatility, Canada has the additional challenges of government-mandated production curtailments and constricted export capacity. These challenges have led to a substantial reduction in industry activity for the first half of 2019, and Precision has not been immune. You'll recall that during the first quarter, our activity was down 30% year-over-year, tracking with the overall industry.

During the second quarter, we substantially narrowed the gap by gaining market share. This was achieved through a combination of product mix with our Super Triple rigs, technology deployment of those rigs and, of course, our highly efficient, mobile Super Single rigs. Our market share rose to 30% earlier in the second quarter and has held with 45 rigs running today.

Through the second quarter, we averaged 27 active rigs, just 15% behind last year. Rain and wet weather impacted drilling and servicing activities throughout the basin in the latter part of the second quarter and through the 3rd week of July. Things seem to be drying out now and industry activity is improving. I expect for the balance of the third quarter, Precision's Canadian activity will hover in the mid-40s to low 50s. While visibility on the fourth quarter has not yet fully developed, we are not anticipating any significant reductions in activities.

Pricing in Canada is fickle. With continued pricing pressure on the shallower rigs, we expect those rigs could see margin reductions in the $500 to $1,000 range, while we expect stable margins on our Super Triple rigs operating primarily in the Montney. Overall, we expect average rates and margins for the third quarter, down just nominally from prior year.

Now moving toward our international segment. Carey mentioned that we deployed our sixth Super Triple rig in Kuwait, and this rig spudded on July 1, a couple of weeks ahead of schedule. And the rig build was completed under budget. Both of these were wins from a cash-generation perspective. Kuwait and Saudi Arabia remain key to our stable international business. With 9 rigs operating, we believe we have achieved the scale we desire. We also continue to pursue opportunities to activate our idle rigs in Kurdistan with several ongoing customer discussions. It certainly seems the interest is strengthening in this area. Our international business, primarily with NOCs, national oil companies, ensures a stable revenue stream isolated from the volatility and seasonality we experienced in North America markets.

Turning to our completions and production business. Our team locked down another strong quarter during the seasonally slow Canadian spring breakup. While we often refer to this business as noncore, the operating results and contribution cash flow turnaround is remarkable. During the second quarter, through intensive cost controls with activity down 7% from last year, the segment reported a $4 million increase in EBITDA. The improvement is excellent and consistent with the gains they have made over the last several quarters. Our C&P team, like all in Precision, are keenly focused on leveraging our scale, reducing cost and delivering free cash flow. These results are strong.

Now circling back to our 2019 key priorities. Our third priority is to fully commercialized our technology. During the second quarter, it feels like we are approaching a tipping point with our customers. As I have discussed in the past, we need to achieve high utilization levels at the rig to demonstrate the efficiency benefits. But even then, field resistance by well-side consultants has been an obstacle. Clearly, our customers are stepping up the strategic focus on efficiency. They want to ensure the capital they deploy to operating rigs is delivering the lowest cost and most-efficient drilling operation possible. This message is getting through the field, and we see support improving, even those who resisted the technology in the past.

During the quarter, we drilled 195 wells with our PAC automation suite. We added a new customer, which will see our 34th system deployed in August. We deployed our first fully commercialized drilling app, and we have several more apps approaching full commercialization.

Earlier this year, we kicked off our big data collaboration initiative with Hitachi, another partnership like we have for other technology initiatives, who's a leader in industrial automation and big data. During the second quarter, we delivered the first phase objectives, continuously processing more than 20,000 data streams per second per rig, providing actionable data to the right people at the right time, enabling the best real-time decisions. Additionally, we're leveraging insights from Hitachi's IoT analytics platform to optimize our equipment performance and to identify improvement opportunities and well delivery for our customers.

Our technology initiatives are underway in every North American region we operate. Our customers include super majors, large intermediates, regional junior producers and private equity E&Ps. The efficiency and predictability this technology provides reinforces the already remarkable efficiency of our pad walking Super Series rigs. We are on track to fully commercialized our technology offerings this year and believe this will be a competitive advantage, which positions Precision well ahead of our competitors.

So I know many Precision employees are also shareholders of Precision, and I expect many are listening to this call. So I want to thank all the employees of Precision for their hard work, supporting our customers, driving our competitive advantage and leveraging our scale to drive the costs down. Thank you.

Now just before I conclude, I've got a couple of comments I want to share. Now most of you know that I spend most of my time based in our Houston office, as does most of our leadership. You also know that Precision has moved 2 of its advanced Super Triple 1500-horsepower rigs from Canada to the U.S., and we'll consider moving more if the economics are compelling. I'll say that Precision remains committed to Canada as a leading services provider in the Canadian market, and Canada remains important to Precision as a source of high-quality key personnel and strong free cash flow.

However, I must say I'm very disappointed with the weak energy investment environment in Canada. I believe this is a direct result of the lack of federal government leadership and uncooperative political self-interest evident in British Columbia and Quebec. Like most energy firms operating in the Canadian region, we are deeply frustrated by the Canadian federal government's failure to support the Canadian oil and gas industries' globally recognized leadership for social and environmentally responsible energy development. Further, the federal government's perplexing energy infrastructure and transportation policy with the passage of Bill C-69 and C-48 is clearly intended to undermine the domestic energy industry.

With the federal election in Canada later this year, candidates on all fronts should be supporting and taking credit for the strong, vibrant, environmentally and socially responsible Canadian energy industry that Precision is a part of. There's no question that responsible Canadian energy production and export is a critically important component in global, social, environmental and climate strategies.

Now I'll turn the call back to the operator for questions. Thank you.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Our first question comes from Sean Meakim with JPMorgan.

--------------------------------------------------------------------------------

Sean Christopher Meakim, JP Morgan Chase & Co, Research Division - Senior Equity Research Analyst [2]

--------------------------------------------------------------------------------

So Kevin, just on the near-term outlook in the U.S., yours is particularly more constructive than that of your peers that has their call earlier today. I don't think that's new in terms of the consistency of the outlook that you've been sharing with us over the course of the year. But I was hoping you could just maybe opine a little bit about -- to what would you ascribe that difference? Is it near-term stronger contract coverage? Is it percentage of your fleet, customer or geographic mix? I'm trying to get a sense of how sustainable it is to stay at fairly flattish activity levels if the rest of the lower 48 continues to move lower? And then just -- does that give you any pause beyond the third quarter at some point? As contracts start to roll, could that direction change?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [3]

--------------------------------------------------------------------------------

Sean, I'll start by saying that I think the biggest risk we face is increasing commodity price volatility. So I've kind of couched my comments around the current range. And I could tell you that our customers got nervous when we saw the commodity price again drift into the lower 50s for a little while earlier in June, but it's come back above that range. So I think that's a risk.

But just turning back to our fleet for a moment. We stress that we have 68 Super Triple rigs in the U.S. They're all pad configured. They're all able to drill long reach horizontal wells. We're deploying technology in a number of those rigs. I think that you could call it our customer mix based on pad drilling and development drilling, which I think leads us to a little more stability. So I think we're less exposed to derisking drilling and kind of single one-off pads or small pads. So I think it really is the focus on development drilling is holding our stability and our activity through the third quarter and probably the fourth quarter. Certainly, the contract book that we've built up during the second quarter carries on, in most cases, through the balance of this year and to next year.

--------------------------------------------------------------------------------

Carey Thomas Ford, Precision Drilling Corporation - Senior VP & CFO [4]

--------------------------------------------------------------------------------

Yes. And Sean, I will just add to that. Kevin mentioned we've got 68 AC Triples that are working in the U.S. at above 90% utilization. So if you assume a rig count of 73 and, let's say, 63 AC Triples working, we've got 10 rigs that would not have the same characterization. So those would be at risk at a -- if the rig count were to decrease, but those are going to be lower margins than the Super Triple rigs.

--------------------------------------------------------------------------------

Sean Christopher Meakim, JP Morgan Chase & Co, Research Division - Senior Equity Research Analyst [5]

--------------------------------------------------------------------------------

Right. Right. That makes a lot of sense. And then just -- I just want to touch on free cash. It's always been the #1 priority, and you guys have been executing very well in that regard. As we think about the 2x leverage target, and you mentioned some of the volatility, there's clear lack of visibility in your business at the moment. But given the levers you have to pull, seems like you're pretty confident that within a normal range of expected outcomes that you've got good line of sight to that 2 turns even if things are a little better, a little worse than what we expect as your base case. Is that a fair way of characterizing it?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [6]

--------------------------------------------------------------------------------

Look, well, I think it is, Sean. But what I'd really draw your attention to, we haven't given 2019 -- or 2020 capital guidance yet. But if we're in some market in 2020 that just has 0 opportunities for growth, our capital spending could be anywhere from $75 million to $100 million less than it was this year if the market is that tight. So that gives us confidence that we'll still have a strong free cash flow profile next year.

--------------------------------------------------------------------------------

Sean Christopher Meakim, JP Morgan Chase & Co, Research Division - Senior Equity Research Analyst [7]

--------------------------------------------------------------------------------

That's right. You have that flexibility that gives you line of sight within that band. Okay.

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [8]

--------------------------------------------------------------------------------

Hang on. But pretty sure that we're not going to be building another rig for quite next year, so that $75 million chunk comes out of our capital spending for sure. And then we had a pretty good start to the year for upgrades and things like that. If that market is not there, then we're looking at a maintenance capital profile in 2020, which then gives us good flexibility and free cash flow.

--------------------------------------------------------------------------------

Operator [9]

--------------------------------------------------------------------------------

Our next question comes from Connor Lynagh with Morgan Stanley.

--------------------------------------------------------------------------------

Connor Joseph Lynagh, Morgan Stanley, Research Division - Equity Analyst [10]

--------------------------------------------------------------------------------

I was just hoping if we can build on Sean's question a little there. So certainly, it seems like your activity outlook is pretty [full] -- could you comment on pricing in the market in general? And just have you seen any softness? There's been sort of some emerging data points on that today. So was wondering if you could clarify how you're seeing that shake up in the market.

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [11]

--------------------------------------------------------------------------------

Yes. Connor, we'll leave our comments pretty limited in that we expect our pricing and margins to remain stable. I'd tell you that for a new price discovery or new opportunities, there's very few. And some of the other conference calls today would be people we'd be competing with. So giving away any kind of sense of how we see pricing right is not something we want to do. But we do expect our rates will remain broadly stable through the third and the fourth quarter.

--------------------------------------------------------------------------------

Connor Joseph Lynagh, Morgan Stanley, Research Division - Equity Analyst [12]

--------------------------------------------------------------------------------

That's fair. That's fair. On the technology side, I was wondering if you could -- I think you said in your prepared remarks that you're reaching full commercialization on some of the apps. Can you just give us a feel again of the overall technology portfolio? How much is running at sort of the full commercial rate versus -- or early stage testing?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [13]

--------------------------------------------------------------------------------

I don't have a number at my fingertips right now. We have all of our units right now in the field running. We've got utilization over 70% on about 2/3 of our units, and those are the units that are likely going to be earning either full rate or something near full rate.

The short answer is we expect to be fully commercial this year. We expect to be earning full rates across the PAC platforms around the end of the year. That's looking pretty good, and the results are good in the field. One app is commercial. We have 2 or 3 more apps that are likely a few weeks away from being commercial. So if you just think about this in pieces, each PA system is -- PAC system is about $1,500 per day. Each app could be in the range of $200 to $500 per day, and we expect we could see anywhere from 1 to 3 apps on a rig sometime this year.

I think the new piece you're talking about, the big data piece, we're just getting going on that. But one's pretty interesting, and we expected to see some revenue coming through on that as the year progresses. I think that in -- for 2020, we'll be able to give better guidance.

--------------------------------------------------------------------------------

Connor Joseph Lynagh, Morgan Stanley, Research Division - Equity Analyst [14]

--------------------------------------------------------------------------------

Okay. So any sort of near-term expectations that we should think of in terms of incremental EBITDA? Or do want to save that for...

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [15]

--------------------------------------------------------------------------------

I think it's fair to begin modeling those into 2020 numbers kind of based on the guidance I've given here. But there's nothing right now that I see that's not going to allow us to commercialize this year.

--------------------------------------------------------------------------------

Operator [16]

--------------------------------------------------------------------------------

Our next question comes from J.B. Lowe with Citi.

--------------------------------------------------------------------------------

John Booth Lowe, Citigroup Inc, Research Division - VP [17]

--------------------------------------------------------------------------------

Kind of attacking one of Sean's question sort of a different way. If activity kind of slows down, but you guys are still generating a pretty decent amount of free cash flow given your contract coverage, could we see debt reduction next year at the same level this year or above?

--------------------------------------------------------------------------------

Carey Thomas Ford, Precision Drilling Corporation - Senior VP & CFO [18]

--------------------------------------------------------------------------------

So we have put forward a 4-year plan. And if -- as Kevin mentioned, we will be pretty close to the low end of our 4-year range within the first 2 years of the plan. So we'll still have -- think about it as $200 million more to pay down over the next 2 years to reach our -- the high end of our target range. And if we think that we need to pay down more to get to below 2x, we will continue, and we'll go beyond that range.

But I would think about the cash flow as being in that $100 million to $200 million range next year. And if there's more opportunity to deploy capital, EBITDA is probably higher. If there's fewer opportunities to deploy capital, EBITDA is lower and CapEx is lower. But we'll keep that cash flow band in that $100 million to $200 million range.

--------------------------------------------------------------------------------

John Booth Lowe, Citigroup Inc, Research Division - VP [19]

--------------------------------------------------------------------------------

Okay, perfect. And then just on further potential divestitures. I know that you guys have done a really good job turning the C&P business around. I don't know if this was one of the businesses that you were going to try to kind of prove up and then try to sell it to somebody. I know it's kind of a separate entity at this point. But now that it's generating a pretty significant amount of free cash, I mean, is that something you'd rather just keep in your portfolio at this point? I mean -- or what type of number would it take to pry that out of your hands?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [20]

--------------------------------------------------------------------------------

I think first the comment I'd make is we're not -- we don't need to be a seller at a low point in the market, and that's really important. I think that the C&P business in Canada, particularly the well service business but also rentals and the camp and [carry] business are in a really tough spot right now industry-wide. I think just showing returned leadership, like I think we're starting to develop here, is important for us. I think that space needs to consolidate. Probably needs it more than most other segments does in Canada, and we've always said that we'd like to be part of a consolidation play. But I'd be clear that we don't see ourselves as a cash seller in the trough of the market. And we still think that Q1-- Q2 and Q1 were below 2018 activity levels in the industry. So the market is still troughing in that space.

I'm thrilled that the team is working hard and done a really good job turning the business around. And that cash flow is important to us. It's important to debt reduction. So I think we're happy with where we're going right now and not in any panic to do anything at all.

--------------------------------------------------------------------------------

Operator [21]

--------------------------------------------------------------------------------

Our next question comes from Taylor Zurcher with Tudor, Pickering, Holt.

--------------------------------------------------------------------------------

Taylor Zurcher, Tudor, Pickering, Holt & Co. Securities, Inc., Research Division - Director of Oil Service Research [22]

--------------------------------------------------------------------------------

Kevin, it feels like the past several quarters, it's been a kind of a recurring theme that you're still bidding and there's still some bid interest for tenders internationally. And I think in your prepared remarks, you talked about Kurdistan again. So kind of a 2-part question: One, are you still seeing some good interest in incremental tenders outside of Kurdistan? And then 2, just more broadly, in the Middle East, where your rigs are at today, is there any appetite today to bring some of your apps, technology and Process Automation Control over there moving forward?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [23]

--------------------------------------------------------------------------------

Okay. So first of all, I'll talk about Kurdistan for a moment. My team over there reminds me they haven't lost a tender yet. The fact is nothing we've tendered in the past couple of years has been awarded. Most of the projects have been pushed back or delayed or kind of retendered. We have a couple of ongoing negotiations now that could develop into something. So we seem to be getting a little farther down the line then we did in previous tenders. So I don't want to build up any false expectations in the market. But I think the likelihood those rigs will go to work late this year or late next year looks a little better than it did a quarter ago, but we'll have to wait and see. If we were awarded something tomorrow, it's probably 5 or 6 months before the rigs actually fire up. So it's probably at best, a 2020 event.

Coming back to technology, I'll tell you that both in Kuwait and Saudi, customers are also focused on efficiency. That efficiency trend doesn't -- unique to the U.S. or Canada. It's a global trend. And our fleet in Kuwait is all high-spec Super Triples, AC rigs. All the same control systems we use in North America. So we are confident that we could take that technology into Kuwait and deploy it quickly.

I'd say we want to be fully commercial in North America first. We want to have learned all there is to learn before we deploy something literally halfway around the world and a plane flight away, not just a pickup truck drive away. So that's our current strategy. I'd say that we're working with KOC and sort of pushing back your expectations until we are certain we could deploy this technology in that market with 0 downtime.

Your comment that -- working in Kuwait is -- for us, it's very good business, but it's a very unerring market in that it's deep, high-pressure, high-temperature drilling. You do not want to have a mechanical failure or a system control failure. You can't afford downtime. You can't afford to have an operational failure. The BOPs on the rigs are 15,000 psi. A well control issue could become fatal quickly. So all of these high-technology issues have to be very carefully vetted before we apply them to these rigs.

--------------------------------------------------------------------------------

Taylor Zurcher, Tudor, Pickering, Holt & Co. Securities, Inc., Research Division - Director of Oil Service Research [24]

--------------------------------------------------------------------------------

Okay. That's helpful. And more of a modeling-related question in the U.S. I think you said that over the back half, that outlook is still for relatively kind of flattish pricing versus today, and rig count holding in pretty firm versus today. And so I guess my question is, is my inference that margins over the back half stay relatively flattish. Is that the correct inference to make there?

--------------------------------------------------------------------------------

Carey Thomas Ford, Precision Drilling Corporation - Senior VP & CFO [25]

--------------------------------------------------------------------------------

Yes. I think the guidance we gave, Taylor, was on margins to be flat into the third quarter. And if -- I think Kevin's comment that if the market is similar to how it is today, we would expect that to continue on into the fourth quarter.

--------------------------------------------------------------------------------

Operator [26]

--------------------------------------------------------------------------------

Our next question comes from Waqar Syed with AltaCorp Capital.

--------------------------------------------------------------------------------

Waqar Mustafa Syed, AltaCorp Capital Inc., Research Division - MD of Institutional Research for Energy Services & Head of US Institutional Research [27]

--------------------------------------------------------------------------------

Kevin, your -- the turnkey revenues in the U.S. have been falling lately. Could you maybe talk about the trends? Why is that?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [28]

--------------------------------------------------------------------------------

Turnkey is a -- it's a real cyclic business for us, and it's certainly natural gas-related. So it's tied closely to gas prices. It's a Gulf Coast, deep well kind of select opportunities. And just the -- I think the fundraising that those customers or those types of clients usually do has been for the usual. So we just haven't seen a lot of turnkey business the last few months. I think in a stronger natural gas environment in the Gulf Coast, that might improve. For us, I would tell you that turnkey isn't strategic, but it's a nice opportunity to deploy some of our bigger rigs and to do what we do very well.

--------------------------------------------------------------------------------

Waqar Mustafa Syed, AltaCorp Capital Inc., Research Division - MD of Institutional Research for Energy Services & Head of US Institutional Research [29]

--------------------------------------------------------------------------------

Great. Now should you -- should your rig in Kurdistan go back to work, what would be the reactivation cost there?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [30]

--------------------------------------------------------------------------------

It depends. We have 2 rigs in Kurdistan we're looking at, and possibly the rig in Georgia is just a truck trip away. But reactivation costs could be in the range of $5 million to $15 million per rig, depending on what type of job it goes to. Obviously, we'd expect that capital to come back quickly if we activate the rig in a contract.

--------------------------------------------------------------------------------

Waqar Mustafa Syed, AltaCorp Capital Inc., Research Division - MD of Institutional Research for Energy Services & Head of US Institutional Research [31]

--------------------------------------------------------------------------------

And then just one finally. How many of your Super Triple 1500-horsepower rigs are idle in the U.S. right now?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [32]

--------------------------------------------------------------------------------

Just a small handful. But all of those rigs are either contracted to go to work shortly or sloping forward. We've commented our utilization's over 90%, so the math is pretty straightforward.

--------------------------------------------------------------------------------

Operator [33]

--------------------------------------------------------------------------------

Our next question comes from Kurt Hallead with RBC.

--------------------------------------------------------------------------------

Kurt Kevin Hallead, RBC Capital Markets, LLC, Research Division - Co-Head of Global Energy Research and Analyst [34]

--------------------------------------------------------------------------------

That's good color, Kevin. Couple of things that I just want to try to calibrate predicated on some of the things that we heard today from a couple of your competitors and then maybe get a point of clarification on your view on the Canadian market. So first on U.S., the general dynamic here is that the -- kind of echoing your comments that pricing for super-spec rigs remain pretty firm, even though the rig count has come down a tad. Yet, we had also heard that there was some signs of pricing pressure. So I know that you mentioned stability in pricing. You mentioned that you've been able to move contracts at firm pricing. Can you maybe just talk a little bit about leading edge? What you may be seeing in the marketplace and just kind of round out the picture for me? That would be great.

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [35]

--------------------------------------------------------------------------------

Kurt, there aren't many, what I call, brand-new price discovery opportunities. So I think leading-edge rates for new opportunity, kind of price discovery opportunities is a little bit meaningless. Most of what we're doing is either renewing contracts with customers that have rigs, where there's a switching cost if they decide to switch the rig. So obviously, that supports more stable pricing. Or we're going to customers who are increasing pad size, looking for pad walking rigs. So we're really not seeing a lot of rig-on-rig competition, which again, I think supports firm pricing. You've been around us long enough to know that whole when the whole tide goes down, everything gets affected a little bit. I'd say that the least effect we're seeing is on pad walking super-spec rigs.

Look, I'd say I do think that there are a handful of idle AC rigs in the market. Not all of those are super spec, but they're AC. And our customers work hard to try to use any AC rig that's available against maybe the most leading-edge rigs. So we have to be smart and thoughtful with how the market and we sell into that environment.

--------------------------------------------------------------------------------

Kurt Kevin Hallead, RBC Capital Markets, LLC, Research Division - Co-Head of Global Energy Research and Analyst [36]

--------------------------------------------------------------------------------

Okay. Appreciate that. And on -- then on the Canadian side. I'm sorry just sticking on a bit. One of those long days, and I probably didn't pick up on something you guys mentioned. So early on, I thought, Carey, when you're kind of talking about the Canadian market, you suggested that the cash margin for the Canadian land rig business will be down something like $250 to $750 a day. Did I hear that correctly?

--------------------------------------------------------------------------------

Carey Thomas Ford, Precision Drilling Corporation - Senior VP & CFO [37]

--------------------------------------------------------------------------------

Yes. That's compared to last year. So if our activity is down, call it, 10% to 20% in the third quarter relative to last year, there'll be lower overhead absorption, which will have a negative impact on margins compared to last year.

--------------------------------------------------------------------------------

Kurt Kevin Hallead, RBC Capital Markets, LLC, Research Division - Co-Head of Global Energy Research and Analyst [38]

--------------------------------------------------------------------------------

Got it. I got it. And then given the delays that's happening in Canada at least for the rest of the year, is there any reason we could think that they could be some uplift? Or is there still potential for cash margins on a sequential quarter basis going into fourth quarter, is there risk of it going down further?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [39]

--------------------------------------------------------------------------------

I guess -- again, I don't want to build any false expectations. Usually, the fourth quarter in Canada is a better proxy for what's going to happen in the coming year in 2020. So if for whatever reason, 2020 ends up being an improving market over 2019, then you might see a lift in the fourth quarter. But if, in fact, 2019 appears to be flat, 2020 appears to be flat with 2019, likely we'll see -- what we see now will flow into the fourth quarter.

I really don't expect a lot further erosion. In Canada, we've seen a recent consolidating transaction with one of our large -- 2 of our large competitors merging, and that's brought a fair amount of discipline into the market. And it's kind of blocked out one drilling contractor that might have been trying to price rigs to gain market share. Now it's a matter where there's good market disciple, especially in the Deep Basin. I'd say rigs are holding well because of that.

--------------------------------------------------------------------------------

Operator [40]

--------------------------------------------------------------------------------

Our next question comes from Greg Colman with National Bank Financial.

--------------------------------------------------------------------------------

Greg R. Colman, National Bank Financial, Inc., Research Division - MD and Energy Services & Special Situations Analyst [41]

--------------------------------------------------------------------------------

Not to beat a dead horse here, but just want to come back to capital spending and free cash flow. So Kevin, based on your comments, I think so far this year, you divested something in the range of kind of $82 million, $83 million worth of assets at sort onesie-twosies here and there. Based on your commentary about not selling equipment down far at the bottom, is it reasonable to assume that's sort of it from the divestiture side, at least in the foreseeable future?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [42]

--------------------------------------------------------------------------------

Well, we have 18 rigs in Canada, 4 rigs in the U.S. as assets held for sale. I think there's still a chance those rigs see some activity this year. But nothing else in our portfolio right now is in any sort of process or any active sales process. That doesn't mean that something might not sell. We have calls all the time with people who might be interested in some rental or something else. I think there's still a chance of a transaction.

But as we said at the beginning of this process, we're driving our debt reduction based on free cash flow. If we're successful selling assets, that will accelerate the program, but it's not required to generate our debt-reduction targets.

--------------------------------------------------------------------------------

Greg R. Colman, National Bank Financial, Inc., Research Division - MD and Energy Services & Special Situations Analyst [43]

--------------------------------------------------------------------------------

Got it. And then understanding, of course, that you hadn't provided your 2020 capital budget, but that was great color earlier on the call when you said $75 million to $100 million lower than what we saw this year mainly because of that big Kuwait build. So just make sure I'm not screwing anything up here. We could be thinking about $75 million to $100 million gross CapEx next year that would be netted down by any potential asset sales. Is that a good base level to think of absent...

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [44]

--------------------------------------------------------------------------------

No, we're not giving any guidance yet. We're really not giving 2020 guidance yet. I think we'll do that later this year. My comment was really, if you believe that 2020 has no growth opportunities, we could throttle back capital spending by $75 million to $100 million, if you believe there's no growth opportunities.

--------------------------------------------------------------------------------

Greg R. Colman, National Bank Financial, Inc., Research Division - MD and Energy Services & Special Situations Analyst [45]

--------------------------------------------------------------------------------

From a level this year of around $175 million.

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [46]

--------------------------------------------------------------------------------

That's correct.

--------------------------------------------------------------------------------

Operator [47]

--------------------------------------------------------------------------------

Our next question comes from John Watson with Simmons Energy.

--------------------------------------------------------------------------------

John H. Watson, Simmons & Company International, Research Division - VP & Senior Research Analyst of Oil Service [48]

--------------------------------------------------------------------------------

For the Kuwait rig, and congrats on getting that working ahead of schedule, are there any start-up costs? What should we be thinking about for the margin impact on the cost side from that rig going to work?

--------------------------------------------------------------------------------

Carey Thomas Ford, Precision Drilling Corporation - Senior VP & CFO [49]

--------------------------------------------------------------------------------

So we already have established scale in that market, and this is the sixth almost identical rig that we've deployed to the market. So you can assume that, that rig is going to start generating it's full EBITDA in the third quarter.

--------------------------------------------------------------------------------

John H. Watson, Simmons & Company International, Research Division - VP & Senior Research Analyst of Oil Service [50]

--------------------------------------------------------------------------------

Okay. Similarly, in the U.S. for your flat margin guidance, are you contemplating OpEx moving lower -- OpEx probably moving lower in that guide? And if so, can you talk about what those levers to lower OpEx might be?

--------------------------------------------------------------------------------

Carey Thomas Ford, Precision Drilling Corporation - Senior VP & CFO [51]

--------------------------------------------------------------------------------

So I would -- as Kevin mentioned earlier, we are looking at every opportunity to lower OpEx, and so we're working hard on trying to figure our ways to get that number lower. But at the same time, I would say that at running rig count in the low to mid-70s in the third quarter, we would expect the OpEx to be in a similar range to Q2.

--------------------------------------------------------------------------------

John H. Watson, Simmons & Company International, Research Division - VP & Senior Research Analyst of Oil Service [52]

--------------------------------------------------------------------------------

Okay. And then lastly, I think on the 1Q call, Carey, you said that we should be modeling neutral working capital for the year. Does that still hold after the nice working capital quarter in 2Q?

--------------------------------------------------------------------------------

Carey Thomas Ford, Precision Drilling Corporation - Senior VP & CFO [53]

--------------------------------------------------------------------------------

Right. So we always have a -- we have a benefit from working capital in the second quarter because of activity in Canada. There will be a slight build throughout the year, but it will be in the tens of millions of dollars.

--------------------------------------------------------------------------------

Operator [54]

--------------------------------------------------------------------------------

Our next question comes from Ian Gillies with GMP.

--------------------------------------------------------------------------------

Ian Brooks Gillies, GMP Securities L.P., Research Division - Director of Institutional Research and Research Analyst of Energy Services & Infrastructure [55]

--------------------------------------------------------------------------------

With respect to the Process Automation Control systems, has there been any change in your customer's intention for rate of adoption there just given some of the skittishness you've noticed in their spending profile? Or is it -- does interest remain very high there?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [56]

--------------------------------------------------------------------------------

I'd say during the second quarter, interest picked up. So I think that the push on capital efficiency is driving -- 2 things, let me just kind of back step here for a moment. The whole concept of capital efficiency and staying within cash flow is up and down the E&P companies, from companies out in location through CEO. And I think capital markets have been effective getting that message into the E&Ps, and we see it day in, day out, right up and down the -- our customer base and right up and down the vertical inside the customer. And if the rig is running, they are working on ways to run more efficiently, faster and maximize efficiency and that's putting a real spotlight on the benefit of the technology for us right now. So I think it's actually helping.

And I made a comment in our Q1 conference call that we saw field resistance because people's jobs were changing. The decision-making was changing, and they didn't like that. They were pushing back. As this message on efficiency is being pounded into the field by the E&P companies, our -- those resistors are very quickly becoming supporters. So we saw that transition during the second quarter. It feels like a tipping point. Hopefully, when I finish the third quarter, I will report that it was a tipping point.

--------------------------------------------------------------------------------

Ian Brooks Gillies, GMP Securities L.P., Research Division - Director of Institutional Research and Research Analyst of Energy Services & Infrastructure [57]

--------------------------------------------------------------------------------

And as we think about maybe this time next year, and I mean growth year-over-year in units I think was about 65%, like -- do you think you -- by this time next year, you'll have another, call it, 15 to 25 of these units deployed in the field?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [58]

--------------------------------------------------------------------------------

I mentioned that we're deploying one more right now, and I was really preferring not to do that until we have every single unit fully commercial. But in fact I didn't mention on the call, but we did sign a contract in Canada for a multinational E&P. And that rig will be activation of one of our Super Triples. It will include the full automation suite and some apps. So that's a piece of information that wasn't in our prepared comments. But that's the additional unit that we're deploying right now.

I do expect that if we're commercial by the end of this year, which we expect to be, we'll deploy more units next year. We'll deploy them as quickly as we can install them and train our people because we can't afford to have failures at the rig due to lack of training of our people or the customers' personnel. That could be 15 units next year, but we haven't given any guidance yet.

--------------------------------------------------------------------------------

Ian Brooks Gillies, GMP Securities L.P., Research Division - Director of Institutional Research and Research Analyst of Energy Services & Infrastructure [59]

--------------------------------------------------------------------------------

Okay. And there seems to be an increasing push on the ESG side across, I mean, all businesses at this point. Are you seeing any increased demand for biofuel kits or anything of that like on the rigs, whether it be in Canada or the U.S. right now?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [60]

--------------------------------------------------------------------------------

It's interesting right now. I think that, that question comes up on almost every customer conversation. What I would say right now is that if we're going to have a biofuel kit, it's going to mean the customer is going to pay for that with an adder to the contract. They're also going to have to source their fuel and put in place a supply chain for fuel for the natural gas location. That's a complicated number of steps, which we haven't seen kick off during the second quarter. So your short answer is not during the second quarter.

--------------------------------------------------------------------------------

Ian Brooks Gillies, GMP Securities L.P., Research Division - Director of Institutional Research and Research Analyst of Energy Services & Infrastructure [61]

--------------------------------------------------------------------------------

Okay. But we'll see.

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [62]

--------------------------------------------------------------------------------

We'll see. Certainly, I'll tell you. We just finished our quarterly Board meetings. It was a topic throughout our committee and Board meetings around our ESG footprint, our reporting. It's important for us, and we've taken a number of steps internally. And we expect to continue to both enhance our reporting and enhance our performance.

--------------------------------------------------------------------------------

Ian Brooks Gillies, GMP Securities L.P., Research Division - Director of Institutional Research and Research Analyst of Energy Services & Infrastructure [63]

--------------------------------------------------------------------------------

And last one for me, acknowledging some of the market headwinds that are appearing broadly in the U.S. But as you look around and look at what's working in the U.S. today, do you think there is still an opportunity for some of the ST-1200s in Canada to capture market share? Or is it just is it -- are customers just not willing to do that right now?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [64]

--------------------------------------------------------------------------------

Are you referring to move some of our Super Triples from Canada to the U.S.? Sorry, I missed the question completely.

--------------------------------------------------------------------------------

Ian Brooks Gillies, GMP Securities L.P., Research Division - Director of Institutional Research and Research Analyst of Energy Services & Infrastructure [65]

--------------------------------------------------------------------------------

Yes. Yes. Sorry, that's correct, moving some of the ST-1200s from Canada into the U.S.

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [66]

--------------------------------------------------------------------------------

Yes. So we have 3 ST-1500s, and the balance of our Super Triples in Canada are T-1200s. It looks like all the 1200s will be spoken for through the balance of the third and fourth quarter, so we don't have anything free to move down. I would say that it's more likely if anything moves, it's an ST-1500 target. But we also see some leading-edge demand for those in Canada. So at this point, I don't see any likelihood of rigs moving down this year. It will sort of depend how 2020 starts. If we saw a negative vector in Canada and a positive vector in the U.S., I can guarantee, rigs would move.

--------------------------------------------------------------------------------

Operator [67]

--------------------------------------------------------------------------------

Our next question comes from Dan Healing with the Canadian Press.

--------------------------------------------------------------------------------

Dan Healing, [68]

--------------------------------------------------------------------------------

I was going to ask about plans for Canada given the -- what seems to be a pretty negative outlook for the industry for the rest of the year. You say you probably won't move any rigs down this year. But going forward, is that something that you're looking at seriously?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [69]

--------------------------------------------------------------------------------

Dan, it's something we're looking at kind of all the time. I just don't see any opportunities for the balance of this year to do that. We're an important player in Canada. We're a leading service provider here. It troubles me every time we divert people, capital or assets out of Canada, knowing how well this industry operates in Canada, both from a -- as I said on my comments, environmental and socially responsible manner. So my preference is to continue to support Canada the best way we can. Love to see some political support on that front, especially in election year. But I think it depends. If -- as I said to Ian a moment ago, if for whatever reason Canada goes more negative in 2020, and the U.S. stays where it is or gets stronger, there's no doubt that we'll move more assets out.

--------------------------------------------------------------------------------

Dan Healing, [70]

--------------------------------------------------------------------------------

Okay. And this -- you mentioned the election earlier and just now. What are the implications for the fall election federally? What do you see happening if the current government is returned or maybe forms a minority government?

--------------------------------------------------------------------------------

Kevin A. Neveu, Precision Drilling Corporation - President, CEO & Director [71]

--------------------------------------------------------------------------------

I think that we -- this current government's made its policies pretty clear. We have a history of engaging, so we continue to try to engage with this government, trying to explain the benefits of industry and work as closely as we can. I'd expect that Trans Mountain proceeds, and that will be helpful for our business. I think LNG continues to have support, both provincially and federally. I think that will be helpful for our business. It's a tough situation. It doesn't need to be this tough, but it's also not as bad as the capital markets thing. Right now, there is literally 0 capital markets interest in Canada, and that's just not right.

--------------------------------------------------------------------------------

Operator [72]

--------------------------------------------------------------------------------

And I'm not showing any further questions at this time. I'd like to turn the call back over to our host.

--------------------------------------------------------------------------------

Dustin Honing, Precision Drilling Corporation - Manager of IR [73]

--------------------------------------------------------------------------------

Thank you all for joining today's call. And look forward to speaking with you when we report third quarter results in October.

--------------------------------------------------------------------------------

Operator [74]

--------------------------------------------------------------------------------

Ladies and gentlemen, that concludes today's conference. You may now disconnect, and have a wonderful day.