Ladies and gentlemen, welcome to the Step Energy Services Q3 2022 Earnings Webcast Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during the call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 3, 2022. I would now like to turn the conference over to Dana Benner, Senior Advisor, Investor Relations. Please go ahead. Thanks, operator, and good morning, everyone. Welcome to Step's Q3 conference call and webcast. It was a quarter that delivered more record results, but in different ways than the Q2. I am pleased to introduce today's roster of speakers. Steve Glanville, our President and CEO, will give some opening remarks. Klaas Deemter, our CFO, will follow with an overview of the financial highlights before turning it back to Steve for some strategy and outlook-focused commentary, and then closing remarks. We will host a Q&A session to follow. Before I turn it over to Steve, I would 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 in drawing conclusions or making projections are reflected in the forward-looking information section of our Q3 2022 MD&A. Several business risks and uncertainties could cause actual results to differ materially from these forward-looking statements and our financial outlook. Please refer to the risk factor and risk management section of our MD&A for the quarter ended September 30, 2022 for a more complete description of business risks and uncertainties facing Step. This document is available both on our website and on SEDAR. During this call, we will also refer to several common industry terms and certain non-IFRS measures that are fully described in our MD&A, which again is available on SEDAR and on our website. With that, I will pass the call over to Steve. Thanks, Dana, and good morning. Thank you for joining our Q3 2022 conference call. As noted, my name is Steve Glanville, and I'm the President and CEO of Step Energy Services. I am pleased to share our Q3 results, as well as an outlook for the remainder of 2022 and into 2023. By now, you will have had the opportunity to look at our most recent results. I would like to address four major themes up front. First, following the remarkable strength of our Q2, in Q3, we set a new quarterly record for adjusted EBITDA, even though our revenue dipped slightly from the record level achieved in Q2. Traditionally, the fracturing business is one where movements in top line are accompanied with larger proportional moves in midline, or in Step's case, adjusted EBITDA. This achievement in midline was due to the diversity of our business and the exceptional execution that our team of Step professionals continue to deliver to our clients. Second, our North American coiled tubing operation posted excellent results, including the strongest quarterly top-line results ever for our U.S. business. This included only one month of contribution from our U.S. deep coiled tubing acquisition on September 1, 2022. We will have more to say on the acquisition later, but we remain very excited by the future possibilities for our North American coiled tubing business unit. Third, the benefits that result from having a cross-border business were very evident in Q3. Aside from the fact that the U.S. dollar increased by about 2% versus the Q2, which helps our results when translated back into our home currency, U.S. revenues were closer to our Q2 record levels than our Canadian revenues. U.S. Margins also increased slightly despite the small revenue decline. In short, we believe the right business model in pressure pumping is a cross-border one, and we will pursue growth in both geographic regions. Fourth and finally, during this quarter, we entered into a unique partnership with a major client, which gave Step a CAD 10 million deposit to upgrade a Canadian frac fleet to a Tier 4 dual fuel capable fleet. This will result in an operational savings for our client, quality and consistent fracturing pricing for Step, and a great ESG story for both of our companies. With that, I will turn it over to Klaas, our CFO, to go over the financial highlights. Good morning. Thank you, Steve. If we take a look at the context for our Q3 results, it was a quarter of continued volatility in markets as central banks tightened financial conditions to fight inflation. The effect on commodity prices was mixed through the quarter. WTI oil prices slid from about $108 per barrel at start of the quarter to about $80 by quarter end. U.S. natural gas prices jumped around a little bit, starting just below $6, peaking roughly at $9 before finishing the quarter just a little bit higher than $6. Despite this, the rig count continued to increase, recognizing that global supplies of oil and gas are still tight and need to increase. Canada had an average of 200 land-based drilling rigs operating in Q3 2022, and the U.S. had 745 rigs. Although the rate of increase is slowing as the industry continues to struggle with labor and supply chain issues, the steady march upwards in rig count supports our thesis that 2023 will continue to remain constructive for our services. Turning to the details. As a management team, we are pleased that this quarter showed the adaptability and strength of the broad business model. Consolidated revenue was CAD 245 million, which was up 84% year-over-year, but off sequentially from the Q2 2022 levels. As expected, fracturing revenue was impacted by a change in job mix and by additional maintenance days. In contrast to the large pad work that we had in the Q2, the Canadian service line shifted to smaller jobs in the Q3. These jobs have lower revenue, but internal operational efficiencies and improvements in pricing earned through the quarter were key factors that allowed us to drive margins higher. In the U.S., following an extremely busy Q2, our U.S. fracturing service line was expected to have lower utilization due to planned maintenance days. Utilization was also impacted by client NPT in the quarter, which is obviously hard to predict. Coiled tubing revenue increased significantly in both countries, reflecting the growing strength in this service line. Canadian coiled tubing revenue increased just over 20%, largely due to the ramp up from spring breakup. While U.S. coiled tubing revenue increased by almost 40%. We're seeing much stronger utilization and pricing in the U.S. Market than we've been used to, and we are very pleased with how well the acquisition we made in early September is performing. The coiled tubing service line is foundational to our company, and it doesn't always get the profile it deserves when we talk about our business. The results in Q3 show again why it continues to play a key role in STEP's success. In contrast to the decline in revenue, adjusted EBITDA hit a new high-water mark of CAD 58 million, up nicely from CAD 18 million a year ago and up 5% from the CAD 55 million in Q2 2022. Adjusted EBITDA margins continue to trend higher as well to 24% in Q3 from 20% in Q2 and 17% in the Q1 of this year. We don't disclose individual service line margins, but I want to emphasize that we saw improvement across the board in all service lines, underscoring a structural improvement across our business. Net income, which is a critical profitability measure and one that we haven't been able to focus on for many years, was solid as well. We earned CAD 30.9 million in net income, up from a net loss of CAD 3.4 million last year in Q3. It was down from the CAD 38.1 million earned in Q2. Please note that we had several one-time non-cash items in that quarter that positively affected earnings. Details are available in our Q2 MD&A. The improvements in EBITDA and net income margins comes from increased pricing to our clients, which is not always an easy discussion. We work hard to maintain strong client relationships, and we see the improvements in our margins as an acknowledgement from our clients that they depend on a strong oilfield service sector to support their production goals. Free cash flow, which is ultimately the most important metric in our business, improved to CAD 40.1 million, up massively from the CAD 5.4 million in Q3 2021 and up from the CAD 33.2 million in Q2 of this year. This robust level of cash flow enabled the company to continue reducing leverage, bring our net debt to CAD 148 million, achieving our year-end target of CAD 150 million Q1 early. We now have reduced debt by CAD 160 million since the peak in 2018, which is a major accomplishment when one considers what our industry has gone through in those years. From a capital markets perspective, the reduction in our balance sheet leverage has accrued to our shareholders. I also want to acknowledge that this progress would not have been possible without the shared sacrifice of our employees, to whom we owe a huge debt of gratitude. Finally, I'll touch on our announcements around the capital spending. We added a modest amount of sustaining capital to our 2022 capital budget, reflective of the significant change we've seen in our business since that initial sustaining capital budget was approved in late Q4 of 2021. Our business is capital-intensive, and the results we are posting don't come for free. We also announced our 2023 sustaining capital budget earlier than usual, given the long lead times for major components and parts. We will evaluate the optimization portion of our capital budget for 2023 as part of our regular business planning cycle and expect to have an announcement around that in early Q1 2023. With that, I'll turn it back to Steve for some key remarks on our operations, strategy, and outlook. Thanks, Klaas. At the beginning of the call, I highlighted a number of important themes that contributed to our success in the Q3. I'll expand on how those themes support our ongoing strategy. Generating a record amount of adjusted EBITDA takes great teamwork, especially when you don't have record revenues as the base to achieve it. Our team of professionals are doing an exceptional job of scaling our operations to the mix of business that our clients want to perform. We can't control our clients' programs, but we can control how we react and execute our programs while keeping efficiencies and safety top of mind. An important insight from Q3 is that we are willing to capitalize on key acquisition opportunities when they are strategically aligned with our business model and offer good value for our shareholders. Our $17 million acquisition of 4 ultradeep capacity coiled tubing units in the Permian on September 1 extends our lead as North America's deepest coiled tubing provider. Three of the 4 units will be working in the quarter, and the fourth will be brought online in Q1 2023 after some minor upgrades. Our U.S. fleet will total 13 active coiled tubing units in the quarter. I will mention that all 4 of the units were manufactured in the last four years and are purpose-built for the growing number of 3-mile plus laterals being completed in West Texas today. It is also important to note that the seller of these assets is a competitor and was willing to take most of the purchase price in STEP equity, roughly 2.6 million shares. The payback on this investment of STEP is expected to be in the 18-24 month range, which we believe is very attractive. This is a good opportunity to address our strategic position as a North American pressure pumping company. That includes both fracturing and coiled tubing services. We believe that the U.S. and Canada are the two premier global markets for land-based pressure pumping. The U.S. has been the world's swing supplier of oil, predominantly in the Permian for the last five-seven years. The Permian is where our operations are largely focused. The U.S. has also become the largest exporter of global LNG. While the ongoing war in Ukraine, global natural gas markets are even more dislocated, requiring more U.S. LNG projects in the years to come. Our deep coiled tubing acquisition gives us more exposure to the gas development that will occur in the Southern U.S. In Canada, our fracturing and coiled tubing businesses are in the excellent position to grow as the market ramps up its natural gas deliveries into LNG Canada and other smaller LNG projects in the next three-five years. In short, it makes a lot of sense to be a North American pressure pumper, especially as LNG increases in the global energy mix. In mid-September, we announced the first example of a strategic and very unique partnership with a global pressure pumping space. One of our major Canadian clients paid a CAD 10 million deposit to help us upgrade 16 pumps with Tier 4 Dynamic Gas Blending or DGB engine technology. These pumps, which will make up one complete Canadian frac fleet, are state-of-the-art assets and will allow operators to displace diesel and use their own field natural gas as the principal fuel input, saving up to 85% of the diesel cost and dramatically lowering emissions. For our client, they get the first right of refusal or first right of use of the fleet for three years, which will ensure they get best-in-class equipment to fracture their wells. First step, we receive a commitment from a trusted client partner that will result in predictable utilization and embedded pricing that will meet internal thresholds. This partnership represents a new capital model that we believe can be utilized with great success in our industry and could see the introduction of new emission-friendly, operationally efficient equipment to the marketplace. We expect the upgrade to be finished in Q2 of 2023. From an ESG perspective, when finished, 63% of STEP's North American frac fleet will be made up of low emission horsepower. On the operations side, I will sum up my thoughts as well as some strategy discussion as follows. We continue to focus on maximizing our field efficiencies for our clients. Every minute matters, and for us, as job mix changes, funding operational efficiencies and focusing on the execution of safe and repeatable programs can generate very positive returns. We like the diversity of our business between well fracturing and deep capacity coiled tubing operations. We also like the diversity between geographic areas in Canada and the U.S. Finally, we will continue to look for unique opportunities and partnering arrangements where we can drive value creation for all parties. To close, I will address the outlook for STEP and start with Canada. As we move through the early parts of the Q4, we are likely to see more of a traditional modest Q4 rollover in activity as 2022 completion budgets are exhausted and as producers gear up for an extremely busy Q1 in 2023. In our Q2 investor conference call, we noted that several Canadian frac fleets have been added in the back half of this year. The combination of these extra fleets and budget exploration for some energy producers has pushed the Canadian market into what we believe a slightly oversupplied position in Q4. However, looking into the Q1 of 2023 and beyond in Canada, we once again expect a balanced supply demand situation in fracturing, underpinned by a growth in year-over-year E&P budgets. Progress in the willingness of the Blueberry River First Nations to allow development with territorial lands and the ramp-up of completion activity related to the LNG Canada project. As well, early indications suggest there will be some level loading of Canadian completion budgets into Q2 of 2023. As noted earlier, we activated our ninth coiled tubing unit in Q4, which will facilitate further growth in that business unit even before the ongoing strengthening of pricing. Turning to the U.S., the outlook is more consistently positive. The U.S. fracturing market remains very tight overall, and when we expect a more favorable mix of business in Q4 with a focus on pad work where our efficiencies really shine. Early indications of U.S. activity in 2023 are also very strong. Material increases in fracturing capacity seem unlikely in the H1 of the year, which should keep market tightness intact and lead to further improvements in pricing, much as we are seeing now on the U.S. Land drilling side. Finally, our U.S. coiled tubing operation will enjoy the benefit of activating our thirteenth unit in the field sometime in the Q1. Year-over-year growth in the business unit on the top and midline should be attractive for STEP in 2023. Before I turn it over to the operator, I would like to highlight two final points. Congratulations goes out to one of our West Texas crews for achieving a new STEP depth record on one of our ultra-deep coiled tubing units. The record was set in late September, where we were drilling up plugs on a lateral well, roughly 8,100 meters or 26,600 feet of total depth. Great work, team. Finally, on September thirtieth, our former CEO and one of our co-founders, Regan Davis, retired from Step. I want to personally thank Regan for his guidance and mentorship over the last 11 years. His vision helped us steer our company through some very good and also some very turbulent times. He leaves an enduring legacy in his relentless pursuit of flawless execution, a passion for building a unique company culture, and his ability to inspire possibility thinking within the minds of those he connected with. Thank you, Regan, for all you have done, and good luck in your next chapter. With that, I would like to turn it back to the operator and open it up to any questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by one on your touch tone phone. You will hear a three-tone prompt acknowledging your request. If you'd like to withdraw your request, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Your first question comes from the line of John Gibson from BMO Capital Markets. Please go ahead. Morning, guys. Morning, John. Nice work on the balance sheet, obviously over the past few years and especially in Q3. I'm just wondering what your optimal net debt level is as we move into next year and beyond. Not just looking at leverage metrics, but actually, a firm number. That's a great question, John. Thanks for that. Just again, very pleased with the performance that we've seen from our business on our balance sheet. If we think ahead to where we wanna be 2023 and beyond, I think what we're seeing from all the OFS companies, particularly pressure pumpers, is a continued focus on debt reduction. I think optimally maybe the perfect number is zero. I think there's an argument to be made for a capital efficiency to have it slightly higher than that. We kind of look at our working capital as a good kind of benchmark to say debt should be kind of within that working capital number. If you do head into a downturn, then as you unwind working capital, you'll harvest some cash and be able to pay down debt. Our goal is absolutely to be prepared for any kind of situation that comes across, I guess, comes down the road to us to be able to respond through all phases of the cycle, and that really means a lower, much lower debt number. I guess to follow on, like once you get there, does your thinking change just in terms of capital priorities with regard to further debt repayment, both on M&A like we saw this quarter or even capital returns to shareholders? Yeah. T hose are all. As we think I guess in 2023, back half of 2023, we've been very active as a company through our history on the acquisition front. We're focused on adding capacity where we think it makes sense for us. The ProPetro deal was a great example of that, where we were able to use a little bit of balance sheet and a lot of equity. If there's opportunities like that that present themselves, we'll look really hard at them. Shareholder returns is something that we're seeing our peers in the U.S. talk a lot more actively about. One of our competitors here in Canada has been very active with an NCIB. Those are things that we would consider. Dividends, NCIBs, those kinds of things would be on the table as we look at what to do with our cash flow, kinda when we get the debt down to a reasonable level. Then as we think about our business and where we've been over the last number of years, the Tier 4 announcement that we made was an example of the reinvestment that we see provides opportunity for us, and that'll lead to increased cash flow. There'll be some of that mixed into it as well. Okay, great. Thanks. Just last one from me. Can you comment on staffing issues, not just for you, but for your peers as well, just given the recently added capacity in Canadian pressure pumping? Yeah, John, it's Steve here. It's real for sure. We've been extremely fortunate with our business. We've offered up kinda different rotations that fit kind of a work-life balance, kind of mindset for a lot of new professionals coming into this industry. I would say, though, it is a concern. T he growing, I guess, average age of our field professionals is around that 35-37 mark. It is a concern bringing in kind of new entrants into this industry. We're looking at ways to attract those new professionals. We also offer a unique kinda driver training program within the company where we are a certified driver trainer and offer Class 1 licenses. It's helped expedite a lot of the training time to get into the field. Okay, great. That's all from me. I'll turn it back. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by one. Your next question comes from the line of Josef Schachter from Schachter Energy Research. Please go ahead. Good morning, Steve and Klaas. A lot of the questions I had were answered, but with the problems in the Permian, we take away capacity for natural gas and the negative natural gas there. Is there solutions with pipe to get that natural gas taken away to market so that the activity level doesn't kinda pause until that solution comes here? Is that something that's a solution in the next few months, or is that something that's gonna take a year or two to get the pipeline approvals? Will that kind of put a crimp on how much further growth you have in the Permian? Hey, good morning, Josef. Yeah, great question, it is obviously top of mind for us. We haven't seen any pullback from our clients on reducing any activity. In fact, some of our clients are talking about expanding their programs in the Permian in 2023, and you're seeing that from an active rig count that's being deployed. T here are solutions that are out there today, and I know there's a number of major projects in the works of basically adding additional pipe capacity, increasing the overall output of the existing infrastructure. There's a number of things that are in the works right now, Josef. I just really can't comment 100% on when those are gonna be done and et cetera. From our side, from what we understand today, the business is carrying on and, in fact, is increasing. Okay. The other one for me is, nice margin improvement on both sides of the border. In the past, we've talked about kind of peak margins might be in the 30s. Is that something you think is possible in, H1 of, 2023? Or is that something that's gonna take more time for both sides of the border to get to those?, you're very close on the Canadian side in Q3, 20% on the U.S. Do you see, the 30 handle being reachable, on both sides of the border in H2 of 2023? I'll go back to my comment around pricing that I made, Josef. Yeah. Those aren't easy discussions to have with clients. W e appreciate the support that they've given us through this. They always think they're paying too much. We don't think they're paying enough. I think when both parties walk away a little bit unhappy, that means we probably struck the right balance. In Canada, as we look forward to Q1, I think we'll probably see some improvement there, as overall everybody's busy and some of that softness that we're seeing in Q4 will go away. I would say there's limited room for improvement in Canada. In the U.S., certainly as we continue to grow in that business, or I guess continue to progress into 2023, we'll see some more improvements in our frac margin there. As we continue to grow coil, I think there's room to grow there. The challenge that we have as a three frac crew company is we do get hit sometimes by some of these maintenance, planned maintenance, slowdowns that we had in Q3, and it does affect the efficiency of our margins. We're reinvesting back into that business and the work that we did in Q3 set us up well for Q4 and into Q1. I think we'll see an improvement down there. Are we gonna hit a consolidated 30% in the back half? I'm looking forward to seeing that, but I'm not gonna predict that that's gonna happen right away. Super. Thanks so much. One more from me. Do you need to bring more coil of the sixteen units, and you had eight working in the quarter in Canada? Do you need a long-term contract? Do you need is there somebody needs to cover the cost of upgrading? How do you perceive bringing on an additional unit or units in Canada? What are the kind of parameters that we need to think about in terms of what needs to happen for that for that to occur? Is it covering a long-term contract? Is it spending the money for the upgrades if needed? How do you perceive that? Yeah, Josef, the units that we have that's available to enter the market do not require a lot of capital, if any at all. They were kinda parked in great working order. I t's an interesting market. Of course, we are one of two from a market leader perspective in Canada. I guess if you can predict and we see obviously a higher activity level in the Montney and Duvernay plays where you need coiled tubing to mill out plugs, et cetera. We do have the capacity to stand up additional units. Right now I believe it's a quite balanced market and to be able to stand up another fleet is quite easy. , it's minimal headcount when you compare it to a fracturing fleet. It's easier to stand up in that manner. We wouldn't require a longer-term contract. T hese are as we see the business, it's obviously primarily milling out plugs or tied with a frac crew for frac downhole analysis or down coil. It's quite repetitious, I guess, in that way. We're pretty happy where we're positioned today on that business. Super. That's it for me. Thanks very much, and again, congratulations on a great quarter. Thank you. There are no further questions at this time. Please proceed. Okay. Well, thanks everyone for joining our Q3 conference call, and we look forward to chatting to you after our Q4 results are out. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for your participation and ask that you disconnect your lines.