Trican Well Service (OTC:TOLWF) Ltd. (TCW) reported its fourth quarter 2023 earnings, aligning with market expectations. The company saw an 8% increase in revenue to $254.9 million compared to the same quarter the previous year. While adjusted EBITDA was slightly lower at $56.4 million, Trican generated a robust free cash flow of $38.7 million.
The company, which specializes in providing well services to the energy sector, also repurchased 2.6 million shares under its Normal Course Issuer Bid (NCIB) program. Despite anticipating some market volatility in the upcoming quarters, Trican is optimistic about its growth prospects in the Canadian market, focusing on strategic basins and service expansion.
Key Takeaways
- Q4 2023 revenue increased by 8% year-over-year to $254.9 million.
- Adjusted EBITDA saw a slight decrease from the previous year, standing at $56.4 million.
- Free cash flow was strong at $38.7 million for the quarter.
- Trican repurchased 2.6 million shares under its share buyback program.
- The company expects Q1 2024 to be slightly lower than the previous year.
- Expansion plans include focusing on the Montney and Duvernay basins and growing cementing services.
- Trican is prepared for market choppiness due to gas prices and potential road bans.
- The company is actively managing its supply chain and sees Canada as a favorable business environment.
- Investments in state-of-the-art equipment and modernization, including electric ancillary equipment, are ongoing.
- Trican is open to mergers and acquisitions opportunities and has increased its dividend.
Company Outlook
- Trican anticipates a good overall quarter for Q1 2024 despite a slow start.
- The company expects some volatility in the summer due to fluctuating gas prices and potential road bans.
- Expansion into the Montney and Duvernay areas, focusing on non-potable water and frac-intensive operations, is a priority.
- The supply chain is currently operating at full capacity, with active management of third-party trucking and sand supplies.
- Trican remains committed to building a resilient, sustainable, and differentiated company.
Bearish Highlights
- Adjusted EBITDA has seen a slight decrease from the previous year.
- Q1 2024 is projected to be slightly lower than the previous year due to lower gas prices and a slow January.
- Recent budget cuts by Canadian producers could lead to a decrease in activity, potentially affecting margins.
Bullish Highlights
- Trican has the most efficient fracturing fleet in Canada and is investing in electric ancillary equipment.
- The company has increased its dividend, signaling confidence in its financial health.
- Trican is well-positioned to take advantage of investment opportunities despite potential market downturns.
Misses
- The company did not provide updates on its frac sand logistics strategy.
Q&A Highlights
- Trican has taken care of old equipment and has spare capacity in good condition.
- The company is planning to grow its coil tubing fleet from 7 to 10 units using existing idle fleet, without significant capital expenditure.
- Technology upgrades in coil tubing are being considered, with a focus on reducing diesel consumption.
- Customer discussions reveal a sensitivity to price and volume, with LNG Canada partners considering just-in-time inventory strategies.
- Trican expects a better market in 2025 and is prepared to adapt to customers' production requirements and inventory management approaches.
InvestingPro Insights
Trican Well Service Ltd. (TCW) has demonstrated a commitment to returning value to shareholders, as evidenced by its recent share repurchase activity. This aligns with the InvestingPro Tips for TOLWF, which highlight that the management has been aggressively buying back shares, indicating confidence in the company's future performance. Furthermore, Trican's positive free cash flow in Q4 2023 complements another InvestingPro Tip that TOLWF's cash flows can sufficiently cover interest payments, suggesting financial stability and resilience.
From the InvestingPro Data, TOLWF's metrics provide a snapshot of the company's financial health. With a market capitalization of $628.74M and a P/E Ratio (Adjusted) for the last twelve months as of Q4 2023 standing at 7.07, the company presents an attractive valuation for investors. Additionally, the PEG Ratio for the same period indicates significant growth potential at 0.1, which is a positive sign for those considering investment in TOLWF.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available for TOLWF, including insights on profitability, liquidity, and analyst predictions. These tips can be accessed through InvestingPro at https://www.investing.com/pro/TOLWF, and for those ready to take their investment research to the next level, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are seven more InvestingPro Tips listed for TOLWF, providing a comprehensive understanding of the company's financial landscape.
Full transcript - Trican Well Service (TOLWF) Q4 2023:
Operator: Good morning, ladies and gentlemen. Welcome to the Trican Well Service Fourth Quarter 2023 Earnings Results Conference Call and Webcast. As a reminder, this conference call is being recorded. I would now like to turn the meeting over to Mr. Brad Fedora, President and Chief Executive Officer of Trican Well Service Limited. Please go ahead, Mr. Fedora.
Brad Fedora: Thank you very much. Good morning, everyone. Thank you for attending the Trican’s fourth quarter results conference call. First of all, Scott Matson (NYSE:MATX), our Chief Financial Officer will give an overview of the quarterly results. I will then provide some comments with respect to the quarter and the current operating conditions and our outlook for the near future. And then we will open the call for questions. As usual, several members of our executive team are in the room today and are available to answer any questions anyone may have. I'd now like to turn the call over to Scott to start things off.
Scott Matson: Thanks, Brad. And good morning, everyone. Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements, and other information based on current expectations or results for the company. Certain material factors or assumptions that were applied and drawing conclusions or making projections are reflected in the forward-looking Information section of our MD&A for Q4 2023. A number of business risks and uncertainties could cause actual results to differ materially from these forward-looking statements and our financial outlook. Please refer to our 2023 Annual Information form for the year ended December 31, 2023 for a more complete description of business risks and uncertainties facing Trican. This document is available on our website and on SEDAR. During this call, we will refer to several common industry terms and use certain non-GAAP measures, which are more fully described in our Q4, 2023 MD&A. Our quarterly results were released after close of market last night and are available both on SEDAR and our website. So with that, let's move on to our results for the quarter. Most of my comments will draw comparisons to the fourth quarter of last year. And I'll provide a few comments about our quarterly activity and expectations going forward. Trican’s results for Q4 were as anticipated essentially in line with last year's Q4 was slightly more activity muted a bit by inflationary pressure and impacted by the standard Christmas break, which lasted pretty much through the end of the year. Revenue for the quarter was $254.9 million, an increase of about 8% compared to Q4 of 2022. And adjusted EBITDA came in at $56.4 million or 22% of revenues down slightly from the $59.4 million or 25% of revenues we generated in Q4 of 2022. This was mainly attributable to our job mix in the quarter based on the specific well designs and customer programs that we executed during the quarter. Adjusted EBITDAS for the quarter came in at $58.8 million or 23% of revenues, again, essentially in line with the $60.1 million or 25% of revenues we printed last year. To arrive at EBITDAS we add back the effects of cash settled share-based compensation recognized in the quarter to more clearly show the results of our operations and remove some of the financial noise associated with changes in our share price, as we mark to market these items. On a consolidated basis, we continued to generate positive earnings for printing $28.8 million in the quarter, which translates to about $0.14 per share basic and 13% per share on a fully diluted basis. We generated free cash flow of $38.7 million during the quarter as compared to $47.1 million in Q4 of 2022. Our definition of free cash flow is essentially EBITDAS less non-discretionary cash expenditures, which includes maintenance capital interest, cash taxes and cash settled stock-based compensation. As we've previously noted, we moved into a net taxable position in 2023, which is the primary driver of the year-over-year difference. You can see more details on this and the non-GAAP measures section of our MD&A. Capital expenditures of the quarter totaled $18.3 million split between maintenance capital of about $8.8 million and upgrade capital of $9.5 million. The upgrade capital was dedicated mainly to our ongoing Tier 4 capital refurbishment program and the electrification of ancillary frac equipment which Brad will touch on later. Updates to our fifth Tier 4 fleet was largely completed in the fourth quarter with final commissioning occurring early in Q1. And that equipment is now deployed and operating. The balance sheet remains in excellent shape. We exited the quarter with positive working capital of approximately $153.2 million, including cash of $88.8 million. And I would note that a portion of that cash balance will be used to satisfy our 2023 tax obligations and will flow out in Q1 of 2024. Finally, with respect to our return of capital strategy, we repurchased and canceled 2.6 million shares under our NCIB program and Q4 of 2023. On an annualized basis in 2023, we repurchase and cancel the total of 22.7 million shares, at an average price of about $3.46 per share, representing approximately 10% of the shares outstanding at the beginning of last year. We've repurchased and cancelled about 2.6 million shares since year end. And we continue to be active and opportunistic with our buyback program. As noted in our press release, our board of directors approved a dividend of $0.045 per share for the quarter representing an increase of 12.5% from our previous quarterly dividend. This essentially offsets the reduction in share counts as a result of the company's ongoing NCIB program, and will keep our annual expected dividend payout in the $34 million to $36 million range. Distribution is scheduled to be made on March 29, 2024, to shareholders of record as of the close of business on March 15. And I would note that the dividends are designated as eligible dividends for Canadian income tax purposes. So with that, I'll turn things back over to Brad.
Brad Fedora: Okay, thanks. My comments will include what happened in Q4. What's happening currently and, and what probably most people are interested in what we expect for the next few quarters, particularly the summer. So on the Q4 recap, overall, like Scott was saying, it went pretty much as expected, we now expect Q4 to be slower than Q1 and Q3, as the year winds to a close, more work has shifted to Q2, and these last few years. And we expect that continue on, which is actually great. It keeps our staff busy throughout Q2 and then gives everybody a better Christmas break, which is appreciated by the staff in this industry. All of the pricing in each business line did -- we just feel a little bit of pressure, we're continuing to feel that pressure, as people sort of get antsy with gas prices. And particularly in Q4, there was some real aggressive pricing as people position themselves in the winter, when that's happening, we typically withdraw from those situations. And we will continue to do that going forward. We believe in the value that we have to offer, and we'll make sure that it's priced accordingly. We're still in the fracturing division, we're still running with seven frac crews. We don't think the activity is there yet to justify an eighth or ninth crew. One of the highlights of Q4 is that we did our first patch for Petrobras, which is one of the LNG Canada partners went very well. The equipment, and the people performed extremely well, the customer was happy. So we expect that work to continue in 2024. On the cementing side, the results from our cementing division, continue to prove our expertise and leading mark position in the service line. And we ran our cementing division at our absolute active capacity, which means all the equipment that we can staff, we still hold about a 35% market share in the overall basin and just over 50% in the Montney, Duvernay and Deep basin, which is an indication of the customers looking to ask for anything that sort of technically tricky or critical, they turn to us for those for that service line. And, of course, we're really happy with this division. As a technical leader, we have a great customer list. And we expect that this division will continue to perform really well in the next few years. On the Coil side, made, I think we made we're making good progress there. As I've mentioned in previous calls, our coil division is one of those that we were not that happy with just because of the scale. It's very profitable at the field level. But certainly, the scale of that operation needs to increase in order for it to generate a reasonable return on invested capital. We want to run sort of more in the line of 10 coil crews as opposed to 7 that we're operating today. And we've added key salesperson from one of our competitors who is already having a significant impact on our activity going forward. And we'll just continue to focus on that and slowly build that division. So what's our outlook for the rest of the year, and for Q1 of this year? We expect Q1 of this year will be slightly lower than last year and nothing major. There's a few less rates running the low gas prices, so we have had some margin compression. It will still be a really good quarter just won't probably won't match up to last year. We had a really slow start in January, it seemed like the Christmas break seemed to extend past few years. And then just as we were ready to start we were hit with some brutally cold weather, which lasted for about a week and so we really didn't get started until the second half of January, which is slowly normally it starts much before that. And then for February and March, we're completely, completely blocked very busy limited only by weather. So we expect to have a good quarter just due to the slow start in January. We'll probably slightly behind last year. And, where do we see 2024? Again, I think it's going to be a good year, but it probably won't measure up to last year, just due to the fact that, we've had some disappointment in the natural gas prices over the last two months. And what does that mean, we've had some work move out of Q1 and pushed into the summer as people are looking for better gas prices and lower water heating costs. We've had very little in the way of outright cancellations. But we do expect drought conditions that are present in much of Western Canada to cause some water restrictions this summer. We will have to turn more to produce water or recycled water. And as we've talked about in the past, we have an extensive portfolio of chemicals to deal with this exact scenario. So, we're kind of excited to put our sort of our technical chemistry to work this year. About 70% of our frac chemistry supports non-potable water which is basically means like produced or effluent or, or recycled water and about 60% of our customers make use of non-potable water in their fracturing operations. And we would say overall, on an annual basis, about 40% of the water we pump is non-potable. So even though we do expect restrictions, you know, we think we're going to fare very well throughout that and in our chemical offering. I think we'll prove to our customers that it's well worth looking into. So we are expecting some choppiness the summer just due to gas prices. The strip for gases is good in the winter, but it's fairly soft in the summer. And anytime there's sort of any unease in the market, you do expect some margin compression that's normal. We still think that Montney will be the focal point of activity. The Duvernay is building momentum, very very frac intensive and it's sort of oil and liquid space. So that won't be affected by gas pricing. We think that our equipment fleet is very well suited for the Duvernay, our fifth fleet that just came out was built specifically with a Duvernay and mine. It's heavy-duty high horsepower pumps, built the pump at high pressures for long periods of time. And so we will actively market that equipment fleet with our with the Duvernay customers. As it's now ready and operating in the field. We are expanding our cementing services into the clear water and heavy oil, some of the ground that we gave up just due to the staffing shortage and 2020 and 2021. But I think we'll build that market back up. In general, I would say the supply chain is operating still at capacity. We're still very careful to manage, especially things like third party trucking, and sand supplies into Northwest Alberta in Northeast BC. That sort of supply chain has been playing catch up in the last few years. And so will actively manage that going forward. On the strategy side. Even though we expect we could have a choppy summer, we still think Canada's a great place to do business. We love this basin going forward, we expect it to be sort of growth, a growth avenue for us. Just in the Montney alone, LNG drilling activity has been very active, that facility is expected to come on stream early next year. So all the players they are active, making sure that they have the production required. Trican has a balance sheet to allow us to continue executing our strategy going forward. We actually look forward to times of volatility. We're uniquely set up to take advantage of any pauses or choppiness in the market. And we're certainly not concerned about anything from a gas price perspective, as we expect it's going to be short lived. And we actually looking forward to taking advantage of any opportunities that may come up. Frac intensity on a per well basis is still increasing. Large sand volumes, lots of stages, we expect over 8 million tons of sand to be pumped in Canada this year. And that's in comparison to just over 6 million in 2021. So Sands is something that we're still actively managing. We've talked about sort of our logistics, perspectives on how we're going to deal with these increased volumes going into Northeast BC. And so we're still looking at investing in that side of the business. And that's another way that we think will differentiate ourselves. And as we, we said before differentiation and modernization is a key to our strategy. We have state-of-the-art equipment, we're upgrading our systems. We have indigenous partnerships in Northeast BC, all of which makes for a very profitable and sustainable business. We still have the most efficient fracturing fleet in Canada. I think up until recently, we've displaced over 50 million liters of diesel with our Tier 4 equipment. So that's something that's been very well received by our customers. And we expect that'll be the standard technology in the Montney going forward. We run five of the nine Tier 4 fracturing fleets that are active in Canada today. So we're very fortunate to have had a sort of a two year head start in that technology. And recently, another one of our differentiation strategies has been with the electric ancillary equipment. We're the only pumping company in Canada that has electric frac equipment. And we combine this with the tier four technology, we get over 90%, natural 90% diesel displacement with natural gas. So it's very well received by the customers, it's actually something that we can continue to focus on this year. And we expect to build out our capacity on the electric side in the next few years. It's operationally very efficient, uses less people, we expect less R&M with the equipment. And it's something that we definitely intend to focus on. Excuse me. On the shareholder return of capital side. Our priorities still to build a resilient, sustainable and differentiated company going forward. It's gone very well over the last few years. We'll look for any bullets in the market to take advantage of any M&A opportunities that present themselves. And other than that, we'll just continue to focus on our strategy and deploy our equipment, particularly into Northwest Alberta in Northeast BC. We're still very active in our NCIB. Like we purchased just under 23 million shares last year, we've continued to be active every day in the market and 2024 year-to-date. And we'll continue to go forward with that. On the dividend side, as Scott mentioned, we've had a small increase, which just offsets the share reduction due to the NCIB. And the record date is March 15 payable at the end of the quarter. I think I'll stop there, and we'll go to questions.
Operator: We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Aaron MacNeil with TD Cowen. Please go ahead.
Aaron MacNeil: Good morning. Thanks for taking my questions. It's been pretty warm lately, but also pretty dry. I haven't seen anything in terms of road bans on the Alberta website. But how do you think, road bans might impact Q1 and Q2 this year? You mentioned the drought conditions are, will that impact the pace of activity? Maybe just an update sort of on external factors that are positive or negative?
Brad Fedora: Yeah, excuse me. This time of year, there's always road ban concerns? And certainly, yeah, it's been a warm Q1, there's very little snow up north. And so, yeah, you can have sort of 10 to 10 bans on. But that's quite typical for this time of year. It's certainly a lot of work booked for the rest of February and into March. And so -- and the Q2 work is always dealing with road bans and bonding roads and staging sand and water in advance. I would say the difference now that you haven't, that we're seeing this year that we haven't seen in prior years is that you're seeing customers actually start to really think about how they're going to be managing water months in advance. And so, they haven't had to worry about that before. And so you starting to see, the rentals of on site, sea rings or the big swimming pools on location that, all of that that market is extremely active. So it's nothing new. I think the industry is getting continues to get better at sort of long-term planning. And, I think with this draught that we've had for the last couple of years, people will just think about water sort of three-four months in advance instead of three or four weeks in advance. And it's really important to note that the activity in Northeast BC is mostly sort of produced and recycled water, there's not a ton of freshwater and use up there. So it's not -- just because there's water restrictions doesn't mean that the completions activity is severely impacted. There's lots of ways to work around this problem. And of course, if we get a bunch of rain in May in June, like we usually do, that'll alleviate a lot of these concerns.
Aaron MacNeil: So you mentioned the aggressive pricing in Q4, has that continued into Q1. And, I know you're not going to participate in competitive bids, but is that starting to impact your utilization is you get undercut on pricing? Like, how should we think about that?
Brad Fedora: No, our utilization has remained really high, with the exception of the first half of January. Every time the market flinches, there seems to be some nervousness that goes around. But we're one of the few companies that has a long-term customer list. And so our customer -- we're fortunate, right, we've 28-year old company. We've had many of our customers for 10-plus years now. So we're not looking for a new customer list every quarter like some of our competitors are. And so we can tend to be somewhat insulated by, by that activity. But yeah, like we don't, we don't feel the need to chase it. We don't have covenants to meet. We've -- we're well ahead of the refurbishment of our equipment into the Tier 4 technology. So, we're in a really fortunate position, we're able to sort of sit back and sort of look at how we're going to take advantage of these kinds of times in the market. And as the quarterly results are down a little bit. So it'll be right, where we run this business for the long-term, not the short term. And we're fortunately -- we're not sort of impacted by short term, sort of financial volatility.
Aaron MacNeil: Makes sense. I'll turn it back. Thanks, guys.
Brad Fedora: Thanks, Aaron.
Operator: The next question comes from Keith MacKey with RBC. Please go ahead.
Keith MacKey: Hi, good morning. So Brad, you mentioned you're going to stick with seven active fleets. And you've still got five potential fleets in the yards that you've talked about historically. How do you think about this excess capacity, given you see the market to be relatively stable in Canada for the next few years. A sentiment, we would certainly agree with. Just how do you think about that excess capacity? Is there any opportunity to rationalize and, and use that to improve margins over time? Or do you think you'll potentially still need that capacity? Or just how are you thinking about it in light of the market of today?
Brad Fedora: Yeah, it's both. We have been rationalizing our equipment fleet, in that that's just the really old equipment that was left. That's what last year, we're sort of fortunate a lot of the really old outdated equipment was taken care of a few years ago now, prior to me joining. And we were in a great position from selling equipment perspective. So yeah, we've rationalized a little bit of equipment. And we will always continue to do that. But we do generally believe that a good majority of that spare capacity will come online. And so we're happy to have it sit there until we're ready to bring it out.
Scott Matson: I maybe add one other thought, Keith that, as we went through our Tier 4 refurbishment program over the last few years, we effectively took gear off the fence, upgraded that gear, put it in the field and displace the existing operating stuff. So the stuff that we've actually got parked in our spare capacity is actually quite fresh and ready to go. So as we look forward a few years as industry activity will likely pick up, right. We'll be one of the will be able to easily respond to that incremental demand when it comes. So that capacity is still in pretty good shape and doesn't require CapEx to spend to get it going again.
Keith MacKey: Yeah, fair enough. And just Secondly, we've seen a few budget cuts from Canadian producers recently. What impact do you see direct or indirect on your outlook for market fundamentals for your services as a result of some of these cuts. And it certainly might change if we continue to see more, but overall things look to be relatively stable or are up a little bit from last year in terms of a total CapEx spending perspective, but we have seen some of those cuts recently. So how, how significant of a risk do you see this as to your business in terms of financial results differing materially year-over-year or, or just generally the tightness in the market?
Brad Fedora: Just like I think we said in the comments, we've probably changed or -- we've changed our perspective. On the last call, I would have said, we, we would have expected an increase in activity in 2024. And now, I would say we would expect a decrease in activity compared to 2023. How significantly? I don't think that significantly, but I think it's a little early to tell in the budget cycle for 2024. Pardon me, says this, anytime there's a downturns, the perfect time to increase your investment. So, how will it impact us? No, I mean, it could prove to be, it proved to be some great investment opportunities. We've run the balance, we've run the company to not just sort of weather these situations, but to take advantage of them. So we have no sort of concerns about anything other than making sure we don't miss any really good opportunities out there that may come this summer.
Keith MacKey: Okay, thanks very much. I'll leave it there.
Operator: [Operator Instructions] The next question comes from Cole Pereira with Stifel. Please go ahead.
Cole Pereira: Hi, good morning, all. So thinking about the 2024 outlook. Is it fair to say that you think maybe margins degrading year-over-year more of a factor than activity. And you talked about a slow January. But are able to talk about how activity has been year-over-year, maybe excluding that. Does that assuming the CapEx reductions will be more of a second half of ‘24 event kind of similar with what Keith said?
Brad Fedora: Yeah, anytime you have an activity downturn, even if it's 3%-5%. It always impacts margins. Because a lot of our competitors have very different balance sheets than we do. And so they get antsy. So definitely there'll be a margin impact going forward. And I think to your point that might be more than the overall activity change. I would say activity in the quarter excluding January is pretty much consistent with last year. So we've got February, yeah, February, March of this year would be would be very similar to last year.
Cole Pereira: Got you. And then any updates you can provide on, how you're kind of thinking about your frac sand logistics strategy?
Brad Fedora: No, no updates, other than I think, we will have sort of investment in the ground and working this year.
Cole Pereira: Got it. Thanks. And obviously, you're still active with the buyback. But the pace, it seems to be slowing a bit compared to last year, despite having a bunch of cash and significant free cash flow generation shares pulling back a little bit. How are you guy's kind of thinking about the buyback, relative to how active you were last year?
Brad Fedora: Well, you can't compare this year as last year without comparing the stock price. And the multiple associated with those stock prices. And so we're very opportunistic in the market. So any anytime like last year where we had a total disconnect of market price from cash flow generation will get very aggressive.
Cole Pereira: Got it. Thanks. That's all for me. I'll turn it back.
Operator: The next question comes from Josef Schachter with Schacter Energy Research. Please go ahead.
Josef Schachter: Thanks very much. Thanks for taking my questions. Brad, you mentioned that you wanted to grow your coil tubing fleet from 7 to 10. Are there any technology changes going on, like we saw in the frac fleet that building new equipment with all the latest technologies would be better than buying, equipment that's out there that's working now from a competitor that's not a strong balance sheet as yourselves. Just wondering if there's an upgrade cycle and coil tubing like we saw in the frac fleet.
Brad Fedora: Yeah, good question. Any coil that we added will come from our existing idle fleet. So we won't be purchasing any new equipment. There's not so much technology on the coil side, but there's lots of technology on the tool side. And so, those go hand in hand. And so we're quite diligent in making sure that we're participating in any new technologies that would have a corresponding effect on our coil unit utilization. Just the overall frac. I mean, the changes in frac with more stages and more, more overall sand drives coil utilization as well. So there was no real shift changes, like we've seen with the old Tier 4 natural gas engines. But, we're certainly looking at applying that same technology to coil as well. There's a reason or no reason why we eventually we can't I mean, there's, there's natural gas tractors that are in the market today. There's always looking for ways to take to reduce diesel consumption, and increase natural gas consumption on location, whether it's with fracing, cementing or coil.
Josef Schachter: Second question for me. When you're having your customer discussions related to later this year, and 2025, once LNG Canada comes on. Are you finding that they're thinking of waiting until they see a $2.50, $3 kind of handle on AECO [ph]? Or is it just that they know there's 2 BCF more, there's got to be more, if you don't have the gas, you got to drill it up? What's your thinking and the kind of conversations you're having? And what's your thought process? Is price sensitive? Or is it volume sensitive?
Brad Fedora: I think the answer to all of those questions is both. Like, we've got the LNG Canada partners that you would have some production requirements that need to be filled. But of course, other parties that whether they're selling into that or not, we're looking at gas prices. And, you've got a real differentiated, we've got a summer strip that's consistent with today's prices, followed up by a winter strip that's significantly higher. And so, I think most of the people, most of the customers that we talk to expect much better, a much better market in 2025. And certainly the LNG Canada partners, when -- in no way speak for them. But I would expect they're trying to design sort of just in time inventory as much as they possibly can.
Josef Schachter: That’s it for me. Thanks very much.
Brad Fedora: Thank you.
Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Fedora for any closing remarks. Please go ahead.
Brad Fedora: Okay. Thanks, everyone. Thank you for your time and attention to our company. The management team will be available today to answer any questions that you need to follow on with. So thanks very much.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating. And have a pleasant day.
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