Good morning, ladies and gentlemen, and welcome to the Step Energy Services Fourth Quarter and year-end Conference Call and Webcast. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, March 2nd, 2023. I would now like to turn the conference over to Mr. Benner, Advisor Investor Relations. Please go ahead. Thanks, operator. Good morning, everyone. Welcome to STEP's Fourth Quarter and Year-end 2022 conference call and webcast. The quarter capped off a terrific year for the company. 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. 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 Q4 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 December 31, 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, good morning. Thank you for joining our year-end 2022 conference call. As noted, my name is Steve Glanville, I am the President and CEO of Step Energy Services. We'll be providing an operational update and commentary about our Q4 and full year results. By now, hopefully you will have had the opportunity to look at them. The year 2022 set new records for revenue and adjusted EBITDA, interestingly, each of the quarters showed a different stamp of quality on what makes Step successful in the pressure pumping and coiled tubing space. Our first quarter featured our return to profitability, which reflected years of balancing continued investment in our people and equipment with strong cost management along the way. The return to profitability happened more quickly at Step than with many companies in the energy services space. Our second quarter showed the power of our field efficiencies when working with western Canadian clients on large, well-planned pad-based programs. It was one of the strongest results for a second quarter that I've seen in my 30 years in this business. This was during a period of extreme inflationary pressures, something that our sales and supply chain professionals did an excellent job at managing. Our third quarter showed further evidence of our strong operating efficiencies by achieving even higher consolidated adjusted EBITDA than Q2, and that occurred on a modest tick down in revenue. It is very unusual for a pressure pumping company to achieve this given the fixed costs in the business. We also made an important acquisition of four ultradeep capacity coiled tubing units in the Permian, and we also announced a novel funding arrangement for a Tier 4 dual-fuel frack fleet upgrade, won back by a $10 million prepayment from one of our major clients. Our fourth quarter showed the power of the North American business model, where our U.S. well fracturing and coiled tubing business units both put up record quarters on a revenue and adjusted EBITDA basis. Thinking back to the full year, our achievements support the notion that pressure pumping is a project-based business. It is rare for everything to go perfectly all at the same time. What you'll often see is that a sound company and business model will show different strengths at different times, which is good for all shareholders. I liken this year's performance to a hockey team that wins a championship or at least goes deep into the playoffs. A successful team needs everyone to contribute and needs scoring from all four lines. We scored from all four lines this year from both the U.S. and Canada and in both fracturing and coiled tubing. We have entered 2023 with a different set of opportunities and challenges in front of us, I genuinely feel that we are in great shape to face them. Before I address our outlook more specifically and take questions, I wanna hand the call over to Klaas Deemter, our CFO, to go over our financial highlights of the quarter and full year. Thanks, Steve, good morning, everyone. Before I start, a quick reminder to listeners that all numbers are in Canadian dollars, unless noted otherwise. Our consolidated revenue in the quarter was CAD 251.4 million, the second-highest quarter in our history. Over four quarters, revenue was just slightly under CAD 1 billion, a truly impressive achievement accomplished by everyone who works at Step. Approximately 76% of this revenue was in fracturing, the remaining 24% was in coiled tubing. Turning to consolidated adjusted EBITDA, Step posted CAD 48.6 million in Q4, as compared to the roughly CAD 58 million in Q3 and CAD 55 million in our exceptional Q2. For the full year, STEP earned CAD 198.9 million in adjusted EBITDA, more than three times the CAD 63 million that we earned in 2021. Our consolidated adjusted EBITDA margin was 20% for the year versus 12% last year. Great progress, although we feel that the best days are still yet to come. We turn to the geographic regions now to provide more color on a solid quarter and a very exciting year overall. The full detail is in our MD&A, I'm just gonna hit the important highlights. Given the record quarter that we had in the U.S., I'll start there. The U.S. had a revenue of $136.6 million, which is up 31% versus Q3 2022, while adjusted EBITDA of $28.6 million was up 38% sequentially. Adjusted EBITDA margin was 21% in the U.S. for Q4, up from 20% in Q3. The fourth quarter in the U.S. was our best quarter ever for both of the business units, fracturing and coiled tubing. For context, the Baker Hughes land rig count was up 2% sequentially, while the U.S. fracturing activity was also up 2% sequentially according to Rystad Energy consulting firm. Full year results were similarly impressive, with segment revenues of $421.2 million, up 136% YoY. Full year adjusted EBITDA in the U.S. was $79.6 million, almost eight times higher than the 2021 level of $10 million and demonstrating the earnings potential in our business model. U.S. fracturing revenue in Q4 was $97.7 million, up 44% from Q3 levels and up 20% from our very strong Q2. Fracturing operating days increased about 31% sequentially. Proppant pump was up 27%, while the number of stages was up 16% versus Q3. Stepping back a little, the largest factor in the growth of our fracturing service line was on the pricing side. Consider that full year U.S. fracturing operating days are up around 20%. Proppant pump was up 22%, while U.S. fracturing revenues overall were up about 170%. Another factor in the substantial year-over-year growth was the amount of STEP supplied proppant. For 2022, this proportion was 49% of total volumes pumped, while in 2021 it was 36%. Strong US coiled tubing performance also contributed nicely in Q4 and the full year. As noted earlier, U.S. coiled tubing had its best top line for a quarter ever, with revenue of $38.9 million, up roughly 7% from Q3 2022. Operating days were roughly flat sequentially, but pricing notched higher. On a full year basis, the acquisition of the four Permian-based ultradeep capacity coiled tubing units in September 2022 increased our scale and allowed operating days to rise almost 37% over all of 2022 versus 2021. This acquisition enabled us to put 12 coiled tubing units in the field today. It's also important to note that this acquisition was from a U.S. pressure pumping competitor that took STEP equity in the transaction, something we saw as a good endorsement of where we're headed as a company. Full year coiled tubing revenue was CAD 412 million, up 80% versus 2021 and reflective of the better pricing in addition to higher operating days. Turning to Canada, we had a bit of a mixed fourth quarter. Q4 can be a tough quarter as clients begin to wind down their capital programs, without a strong commodity price prompt to pull capital forward, activity can start to slow in December, if not sooner at times. We saw this in our business, also in industry stats. The Canadian rig count was down 7% versus Q3, while fracturing activity was down 17% sequentially. By contrast, a year ago, against a more stable and actually rising commodity price backdrop, Q4 fracturing activity was in line with Q3 2021. The Q4 revenue in the Canadian segment was CAD 114.8 million, down 19% from the previous quarter. Segment adjusted EBITDA was CAD 23.6 million versus CAD 40.9 million in the Q3. Adjusted EBITDA margin was 21%, which is down from 29% in Q3 2022, which was the highest quarterly Canadian margin that we achieved this year. Our full-year Canadian segment revenue was a record CAD 567.8 million, which was up 59% YoY. Adjusted EBITDA in Canada was CAD 136 million, which is also our best ever achievement and roughly double the 2021 level. Full year margins in this segment were 24%, up from 19% last year. In Canada, fracturing made up 72% of revenue Q4 and 80% of full-year revenue. We'll start there. Revenue on our five fracturing crews was CAD 83.1 million in the quarter, down 25% from Q3. Frac operating days were 8% shy of what we had in Q3, while proppant pumped was 38% less than Q3, indicative of the lower intensity completions in our job mix. Beyond these two factors, a third factor in our fourth quarter Canadian results was the addition of fracturing capacity, which put the market into an oversupplied position. Notwithstanding this lower Q4, full year results in Canadian fracturing were very commendable and posted a new high-water mark of CAD 453.6 million, up 64% YoY and up 24% from the previous high-water mark of 2017. We ran eight coiled tubing units in 2022, up from seven in 2021. Our Canadian coiled tubing business unit, which also includes ancillary fluid and nitrogen pumping crews, had its best quarter of the year in Q4, with revenue of CAD 31.7 million, up 5% sequentially. This top line was achieved despite the number of operating days declining 7.5% from Q3. Full year performance was also commendable, with revenue increasing to CAD 114.2 million, up 42% YoY and the highest level since 2018. Moving to the balance sheet and our free cash flow performance. Our year-end net debt was CAD 142.2 million, CAD 45 million lower than a year ago. Measured against our full year 2022 adjusted EBITDA of CAD 198.9 million, the net debt to adjusted EBITDA ratio has improved to 0.7x. One year ago, our net debt of CAD 186.9 million was almost 3x our 2021 adjusted EBITDA of CAD 63 million. It's been a remarkable year of balance sheet improvement for STEP. More broadly, the company has paid down about CAD 170 million since our peak in 2018 during some pretty challenging market conditions. Free cash flow is the other half of the story. In Q4, STEP generated over CAD 22.4 million of free cash flow. For the full year, the number was almost CAD 111.8 million. While the free cash generation and debt pay down have been impressive, what many investors may not realize is the extent to which we have invested in our fleet along the way. It's important for companies to keep CapEx at a level where it matches longer-term depreciation, something that we view as a sign of a properly maintained asset base. We have a slide in our IR deck which compares our ratio on this against our North American peers. You'll see that STEP compares very favorably against the group. On the capital spending side, STEP's board of directors approved a budget for 2023 of CAD 103.2 million, with CAD 55 million allocated towards sustaining capital and CAD 48 million for optimization capital. The budget for sustaining capital is tied to activity levels and is generally geared towards replacing the major components required for daily operations. The optimization capital is for projects that improve efficiency or reliability and also includes capital for our fleet refurbishments. We review this capital budget against current market conditions quarterly, and we will adjust up or down as needed. The last couple things I want to address is our EPS and book value per share, something we haven't had good news to report on for a while. As Steve noted, we returned to profitability this year, posting four quarters of positive net earnings and even during the seasonally challenged second quarter. Q4 EPS was CAD 0.23 diluted versus CAD 0.43 in Q3. Full year EPS was CAD 1.03 diluted versus a loss of CAD 0.41 in 2021. Consistent positive EPS will hopefully introduce a much larger focus on earnings and returns on invested capital, which is where we feel STEP excels. Our book value per share has increased to CAD 4.27 as of year-end, up from CAD 2.60 a year ago. That's measurable value creation for equity holders. With that, I'll turn it back to Steve for some key remarks on our strategy and outlook. Yeah, thanks, Klaas. At the beginning of the call, I highlighted that STEP put up record results this year because we received a strong contribution from each of the business units, and that when we saw a bit of a slowdown in performance in one unit, another one was there to pick up the slack and power us forward. At STEP, we firmly believe that it makes the most sense to be a full North American player in the pressure pumping space because each of the major geographic regions offer different opportunities and often at different times. Today, LNG is clearly the biggest story in global energy going forward to at least 2030, particularly in the U.S. It reminds me of how the Permian became the biggest story in global energy five to six years ago. The best business models should strive to have exposure to these major energy growth areas. At STEP, we have that. We are largely Permian-focused today in our U.S. operations but are within operating range of the Haynesville natural gas play as it becomes a major source area of the natural gas that will flow through the growing list of U.S. LNG export facilities. Although natural gas prices are weaker today, we see prices recovering as the year progresses and are excited to see how the industry develops as new LNG capacity comes online in 2024 and onwards. Interestingly, whereas the U.S. exports roughly 10%-12% of its natural gas production today, research suggests that that level will move up to 20% and beyond in the coming years, which will start to decouple U.S. natural gas prices from domestic factors. U.S. natural gas prices should start to better reflect global supply-demand forces and move to a tighter competitive spread with global oil prices. Our diverse business model also puts us in a good position to benefit from the anticipated startup of Canada's first LNG project and all the completion activity that will be needed to reach the over two BCF a day of target export capacity by 2025 or early 2026. The recent agreement with the Blueberry River First Nations on regional development, combined with what may be even a doubling of LNG to Canada's eventual export capacity to over four BCF per day, gives us great confidence in Canada as a growth market going forward. Our diverse business model also features STEP as one of North America's largest coiled tubing companies, one with the technical capability and expertise to serve the growing extended reach well market. What we see the same trends unfolding in this area as in the fracturing market. The size and scale are keys to success in coiled tubing, and we continue to pursue that growth initiative by activating idle units or through acquisitions as we did last year. These are the pillars of STEP's strategy going forward, and we have the people, the equipment, the technology, and the balance sheet to make it happen. I'm very excited at the platform right now. Finally, I wanna finish by offering up some comments on our outlook. Every year brings a different set of opportunities and challenges, and that is a good place to start with 2023. Canada has started strongly for us, and the market has soaked up the extra capacity brought to it later in 2022 by a competitor. Our Canadian fracturing crews are all very busy, and although our Canadian coiled tubing operation had a typical start to January, today we have nine coiled tubing units working in Canada, which is up from eight a year ago. Overall, we have good visibility in the Canadian business to end the quarter in both fracturing and coiled tubing. Whatever work we can't complete in Canada in Q1 shows every indication of being pushed out into Q2, which suits us fine as it helps us level load our operations like last year. Having said that, we think we will be hard pressed to duplicate the outstanding Canadian second quarter of 2022 as everything came together perfectly, including a sizable number of large pads to work on, while spring conditions slowed everything else down. In Q2, we anticipate taking delivery of our first upgraded Tier 4 dual fuel frac fleet in Canada, the one I spoke of earlier that is partially funded by a client. It's an exciting development for us, and it shows how energy service companies and E&P companies can partner and work to each other's benefit. Activity should remain fairly robust in the back half of 2023 as a result of agreement signed with the Blueberry River First Nations. Large fracturing crews are required to perform the bulk of the stimulation operations in this region, that should help to keep the fractured market as tight as possible. In the U.S., it's been a slower start to 2023 than we were expecting. First, there's the backdrop of the U.S. land rig count rolling over from lower natural gas prices, which has freed up some fracturing capacity, caused a modest rollover in some pricing and led to some margin compression. Second, more specific to STEP. We have seen lower U.S. frac fleet utilization due to significant drilling delays on two of our clients' locations. These are large multi-well pads that take 20-30 days to complete. Having these delays come at the start of the year when capital programs and schedules had just been reset, meant we couldn't find replacement work for these crews. Once client activity was able to move forward on the same locations, they were affected by winter storms in early February. Utilization has since picked up, and we expect this level of solid U.S. fracturing activity to continue into Q2. On the coiled tubing side, utilization has been strong so far this quarter, helped by the strong Q4 drilling and fracturing activity levels in the U.S. Other than some spring break-up effects with part of the fleet in the U.S. Rockies and in North Dakota in late Q1 and early Q2, we expect continued strong utilization of our U.S. fleet. We are now running 12 coiled tubing units in the U.S., which is up from 10 there last quarter. Before I turn the call back to the operator, I wanna close by saying how proud I am of what we accomplished together at STEP in 2022. It was a total team effort, it could not have happened without the efforts of our exceptional team and the deep collaborative relationships we have with our clients. We have much to look forward to in the coming quarters and years in this business. Operator, we would be pleased to take any questions. Thank you. Ladies and gentlemen, should you have a question, please press the star followed by the 1 on your touch-tone phone. If you'd like to withdraw your question, please press the star followed by the 2. One moment, please, for your first question. Your first question comes from Cole Pereira from Stifel. Please go ahead. Hi. Yeah, morning, all. Just wanted to start on the Q2 activity outlook in Canada. I mean, Steve, you touched on it a little bit, and that last Q2 is really a perfect quarter. Are you seeing any factors other than that? Like, are you seeing E&Ps pulling back? Have you seen a shift in work mix, maybe some customer changes or losses or anything like that? Yeah. Good morning, Cole. Not really. We haven't seen any pullback at all in the Canadian market whatsoever. You know, it's gonna be really hard to obviously duplicate, as I mentioned, how our Q2 unfolded last year. It was a pretty remarkable quarter. To have that high, high bar set and to try to overcome that is gonna be a bit difficult. I can tell you we're starting to see a lot of work kind of pile into kind of that June timeframe for us, and even April and May seem to be fairly steady. You know, although I don't think we're gonna hit the top line revenue that we did last year, it's still gonna be a great quarter for Canada. I think where that comes from, Cole, is a lot of our clients are looking at level loading their programs on a yearly basis. The cost to heat water in the wintertime, particularly, you know, in the northern regions, they've been able to access these pads, you know, close to highway, which helps from a break-up, you know, having the road ban situation alleviated. I think as I mentioned before, we should see more of that going forward as a more level loaded kinda Q2. The other factor to consider, Cole, is that there's a couple more frac fleets on the market, which will soak up some of that work in Q2. Got it. You talked about it a little bit, but can you touch on, you know, the visibility you have for the second half, you know, right now, how customer conversations are going and how we should think about the balance of, you know, lower natural gas prices with perhaps some incremental LNG and Blueberry development? Yeah. I mean, early signs right now, Cole, on that. We are obviously filling the back half of the year. You know, I think some of the hold up on our activity could be based on the drilling rig supply. What I'm hearing is, you know, there's some rigs moving from the U.S. up into Canada to support some of the additional growth. So we see that as perhaps a minor bottleneck, and that will get sorted out in time. We do expect the back half of the year, as we mentioned in the call, just the LNG development, it needs to get going. We're starting to hear signs of we're gonna see some of that back in the back half of this year. Okay. Got it. Thanks. Obviously, the U.S. business looked very strong this quarter. You have some weather issues early in the year, which it is what it is. Do you think that's kind of a peak for the business or, you know, do you think pricing and utilization can go higher and maybe you can beat that in 2023? Yeah. If you look at Q4, I mean, gas prices were at $6, today we're at $2.75. You know, there's been a bit of a rollover, but I can honestly say that our business is positioned extremely well in the Permian. It's still a tight market on the fracturing side in the Permian. You know, I talk about in our Q1 delays, that's sort of a one-off situation that it was literally the two of our clients had drilling rig problems that just pushed out the schedule. We are seeing visibility, you know, past Q2, with a lot of our fleets to be highly utilized, so. Yeah, Cole, I think it's important points. Just again, the beginning of the year, all those schedules like client schedules, pumper schedules, like all OFS schedules, basically get reset after Christmas, right? Everybody starts from zero. We're all at the starting line together. The drilling delays that we had with these particular clients, because everybody else is basically ready to go, you don't have that same kind of slipping and sliding of schedules where it's easier to backfill. Had this happened in, you know, April, May, June, whatever, pick a month, somewhere midyear, it's much easier to find kind of backup work. In this case, it just happened to be where they just came right at the beginning of the year, which made it really challenging for us to find work right away. We were able to start some other work a little bit earlier, going back to getting that, you know, it's 20-30 days sometimes on these pads, it's hard just to pick up another job and just move over. These are not two or three day jobs. Got it. Just one more from me. Obviously, you're bringing your Tier 4 into service here shortly. I mean, any desire to, you know, increase that footprint in the near term, or you're sort of happy with that one fleet for now? Yeah. No, I think I could tell you, we've been talking to many clients. They're really interested on how that deal came apart or came together. We've had lots of interest, and we're, you know, very excited about, you know, moving forward as our equipment gets to an end of life cycle on the major components, we will be looking at upgrading that with Tier 4. That's our plan. Our team's working really hard. Our sales team is working hard on getting additional contracts in place. We would only do that with additional kind of co-commitments from clients to wanna expand into Tier 4. Got it. Okay, that's all for me. Thanks. I'll turn it back. Thanks, Cole. Your next question comes from John Daniel from Daniel Energy Partners. Please go ahead. Hey, guys. Thanks for putting me on. Taking down speakers. I wanna dig a little bit more into the just the Tier 4 upgrades that you've got. I know there's the one fleet, but really with respect to the customer interest, if we keep hearing about the long lead times on capital equipment. Do you have to, forgive me for being sort of forward, but should you not order some of the stuff ahead of time in anticipation of a contract that presumably could be forthcoming? How are you playing that angle? Hey, good morning, John. We've got some Tier 4 engines in reserve, and we also have builders that have major components that are ready to go. Okay. I acknowledge the question around lead times. We feel like we have that in hand, and if we have an opportunity that presents itself, we should be able to respond. Fair enough. We always tend to talk about Tier 4 dual fuel, but you also have Tier 2 dual fuel. Is there a willingness to use that? I would think that the lead times would be a bit shorter. Yeah. I mean, we have two different types of engines in our fleet. One, of course, Cat is primarily in Canada that are Tier 2, and we're getting, you know, superior substitution with our, with our Cat engines, up to 55% on a Tier 2 fleet. In the U.S. we've went ahead and we've spent some money in the last year and a half developing a technology. On our Tier 2 fleet, we're actually getting up to 70% substitution. Right. It's almost a similar system to the Tier 4, where it's a direct injection versus a fogging system. A lot different. We're really excited about that, John. You know, I guess it comes down to the natural gas prices being lower today. It's a huge advantage to our clients to go with obviously a natural gas fleet. We're pretty happy that, you know, 65% of our fleet today is on that or continuing to invest and that's the platform that you should expect us to continue to invest in. Okay. I would say too, John, on that Tier, on that Tier 4 theme, as you look at the development of engine technology, what's on the kind of the horizon there with that, with the full gas powered is that's a really exciting development. That's something that we're quite interested in pursuing and something that we think has a lot of opportunity for the industry. Okay. Well, I'll ask more about that offline. Thank you all very much for putting me on. Thanks, John. Your next question comes from Waqar Syed from ATB Capital Markets. Please go ahead. Good morning. Thanks for taking my question. Steve, the Tier 4 fleet that's going to be coming on in Q2, would that become your sixth fleet, or would you continue to have like, you know, take out the smaller fleet and just, you know, keep five crews running? Yeah, it's really replacing some assets, Waqar, that we have. We're refurbishing existing assets. We'll continue to maintain four large fleets, so Montney/Duvernay fleets in Canada, and then the fifth fleet, you know, it's fairly specialized where we have an electric combination blender, data van hydration unit, all-in-one unit. It's really specific for our bundled services offering with coiled tubing. More angular type of fracs that unit will be tied up with. Okay. Sounds good. Then could you talk, you know, you mentioned a pricing pressure in the U.S. Could you maybe elaborate to that and what the magnitude, are we talking about here? Sort of early days right now, Waqar. We're seeing some minor competitive pressures, I guess, in the U.S. It's really kind of pad by pad basis. The U.S. market is interesting when it's a, you know, a tight market, you can really move prices. When it's more of a balanced market, there's a bit more competitors that are, you know, aggressively looking to fill gaps. I can't really put a number on it, Waqar, because it is pad by pad that we're seeing it. On our coiled tubing business in the U.S., we've actually been able to increase price. We believe that's an undersupplied market for sure on our unique offering with our deep capacity units. We're seeing more three-mile laterals being drilled, particularly in the Permian, and it suits our equipment complement extremely well. Hey, Waqar. I'd also just add, it's interesting, we go to various industry events, and we chat with our peers in the industry, not necessarily competitors. One of the things that we've been hearing a lot is the number of drilling delays that happened because of cementing in wells or sidetracking or other kind of really weird one-off things that can really be tied more to kind of inexperienced crews. We heard it even with the last caller at the Thrive Conference. The efficiencies are starting to drop. In the beginning of the year, going back to what I said to Cole, we had, you know, there's a few delays. It wasn't just us that had some delays. There's a few others. All of a sudden you see there's a bunch of frac crews that get sprung loose, and then there's a bit of a scramble for the little bit of spot work that's out there. That's really when we talk about pricing pressure, I would say it's more localized to that. We feel it was more of a January, early February thing. What we're seeing now from client inbounds is that we're much more back to a, to a balanced market here and pricing pressure has kind of relieved it, been relieved. Oh, thank you. That's very helpful commentary. Then just I missed a little bit of your explanation of how many days of work was actually lost in January from these delays in drilling? Yeah. You know, it's about three weeks of delays, Waqar. You know, 20-30 days is what we've estimated. Yeah, we. On how many fleets? On all three fleets? on basically two fleets, yeah. We've been able to pick that up. Obviously right now we're at full utilization and, you know, that's we see visibility really till the end of April, beginning of May for all three fleets. Okay. Then could you talk about your input cost inflation? You know, what are you seeing both in Canada and the U.S. in terms of prices per frac sand? Yeah. I would say those inflationary pressures that we saw last year, you know, obviously we're pretty stabilized right now compared to what we went through last year. We haven't seen much from an inflationary standpoint on any products. We're seeing some on, you know, some capital equipment. As far as, you know, any type of products, it's quite stabilized right now. Okay. How about labor availability? Yeah. You know, we've been extremely successful. You know, we're very, very proud of our retention percentage within our company. You know, we're back to, call it 1,450 employees, which is back to a pre-COVID level. You know, I would say it's been a bit of a challenge. Well, I would say in the U.S. on our coiled tubing business, we've been obviously successful at reactivating two additional fleets here this year. Took some time, but we were able to get it done. Yeah, I would say it's always an ongoing problem with labor. We've had to obviously increase our labor rates, which is a well needed thing for our professionals in the field, but we did that back in November last year. Okay, great. That's all I have. Thank you very much. Thank you, Waqar. Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. Your next question comes from Andrew Bradford from Raymond James. Please go ahead. Good morning, guys. Hey, Andrew. Hi. Thanks. Maybe just begin with your U.S. customer base. You know, having those delays, that's unfortunate. If you're only, you know, if you're running three crews, then, you know, obviously that can have a, you know, having one crew down or two crew down for a couple of weeks can have an impact in the quarter. I just wondered if maybe if you could describe your customer base a bit, how that's changed to the extent to which it hasn't changed and the extent to which your guidance is predicated on work with the existing customer base. I guess, like, couched in this is sort of the uncomfortable question is, do you have the right customers in the Permian? Yeah. Andrew, that's a good question, of course. We have obviously a small footprint in the U.S. It's one thing that we're focusing on wanting to grow our business would be in the U.S., just to be able to handle a bit of these ups and downs. Our client base that we have today is Permian focused, primarily the larger private companies. With Klaas Deemter in regards to drilling delays, we're not the only ones that have seen this. It's happened across the industry, you know, having these kind of short notice delays. Of course, trying to fill that has been difficult. From our client base, we have basically one dedicated fleet that is with a large private and the other two fleets work between three or four other clients on the spot market. We're obviously focusing on getting longer term commitments for those two fleets. By the addition of, you know, our dual fuel assets to make it more competitive to the market that's down there, we expect to have that happen in the back half of the year. Okay. Hello? You got that, Andrew? Yeah. No, I'm sorry. Yeah, I did. Thank you very much. Yeah. Yeah. Okay. Some of these questions are gonna seem like they're disjointed, but they're in a weird little way, they're tied together. Shift gears to technology a bit. In the U.S., you know, you described sort of this proprietary approach to increasing the gas mix in your Tier 2 dual fuels. I guess the first question I have about that is, do your customers see it as competitive with Tier 4, or is Tier 4 kinda like, you know, checking a Tier 4 box? Like it comes from as directive from the top, get us some, we need more Tier 4 engines in our service mix. I don't care how good your upgraded Tier 2 is, I still need a Tier 4. Is that sort of... or is it sort of like, well, 70 is almost 85, substitution or whatever you can achieve with Tier 4, and that's, you know, we're most of the way there, and that's, you know, at the, at the margin, a very similar technology. I would say in general, Andrew, most of the clients today that we are working for, you know, Tier 4 has a higher substitution of percentage, obviously. It's not because they're ticking a box on ESG, it's really on the overall savings that they're achieving. It makes a big difference, you know, 10%-15% or 30% when, you know, with gas prices being as low as it is right now, it actually, it's not that big of a differentiator today. We have basically 80,000 hp of Tier 4 in the U.S. that is not on dual fuel, and that is some of the capital that we talked about on our optimization will be put towards that fleet to make it dual fuel. Do you play this technology in Canada? It's a different asset quality in Canada. We're primarily Cat engines up here, our Tier 2 is the Cat technology. Of course, the Tier 4 upgrade that we announced is Cat as well. Okay. Okay. You know, I'll just ask, like, when it comes to your strategy here, like I think you've had a very sensible approach when it comes to, you know, bringing in these upgrades and it, where you know, need customer commitments on the one hand, and it was really nice to get customer involvement in the capital cost of the upgrade. My feeling is that, you know, in the current environment, that's gonna be a bit more challenging and to get arrangements like that. As you even more look at this, do you sort of is one of the concerns that you're addressing that if we wait around to get really good commercial terms like we did in that last upgrade, that full system upgrade, that, you know, we'll just sort of start slipping in terms of competitiveness because we don't have the same amount of Tier 4s, maybe some of our competitors? Yeah. I talked a little bit about our, you know, our life cycle of our engines, and it's about a $300,000 upgrade to go from Tier 2 to Tier 4, or even a little bit more. You know, since we've done a great job of, you know, getting our balance sheet in a pristine position, you should expect some of that as we move forward. Ideally, you know, getting a client commitment is what we are striving for. As the units end up, the engines start getting to end of life, it will be our focus to convert them to Tier 4. I guess I would add to that, Andrew, is that some of my commentary, we adapt to what market conditions are. We review that quarterly, and we'll respond accordingly. Okay. I appreciate that. I'm gonna shift gears for just one second here to coil. Obviously killing it in the U.S. with that acquisition, doing really well there. In your commentary, Steve, if I didn't mishear you said you're still looking to advance that business further, and I think you even used the acquisition word, or at least I wrote it down. I'm wondering now, is that it like as you keep pushing the balance sheet toward effectively zero debt, how do you compare the value in doing that versus the value in continuing to advance that obviously profitable business in the U.S.? I'm kind of thinking about this in the context of valuation as well, not just yours, but also of what you could be buying because looking, you know, looking at my screen, the world seems to be on sale right now. You know, extremely happy with the acquisition that we made back in September, that's helped our U.S. business get scale. Currently today, we're really operating. I'll just talk on North American basis. We're operating 21 coiled tubing units, and we have 33 that could go to work. We have a very, very large, you know, asset base that is relevant to today's market and wouldn't require a lot of capital. The team has looked at that on ways to, you know, add to perhaps different basins with that asset base. When you're talking acquisition, it would have to be a fire sale kind of sale price that we would be looking at to wanna kinda grow that business outside of our current assets that we have. You gotta think we have extremely like assets, you know, they're very similarly made. We actually bought some assets through an auction back in November that was a competitor that ended up, you know, kind of selling some assets through an auction, and we were the beneficiaries of that on a low price. We do have some additional capacity to add to the market. Just going to your M&A comment there, Andrew, it's been interesting the bid ask has really changed today versus what we saw, you know, kinda October, November, back when we're still riding the crest of that $6 gas price. Parties who were pretty confident in a very high valuation back in those days have come back to us with a much reduced valuation. To Steve's point, with coil, we run some of the best equipment in the business, and if you take a look at our client list, these are all large blue chip clients who are using us and very happy with the work. Some of those surplus assets that we picked up from at the auction were from a competitor who didn't appreciate the value and couldn't run that equipment the same way we can. To do an M&A transaction, it would have to be very compelling from an equipment technology perspective. Otherwise, we feel like we're diluting the brand. That's when we have good quality equipment sitting on the fence, there's not a lot of interest in doing that. Okay. You know, I appreciate that discussion. Thank you. I'm not meaning to hog the puck here, so I'll just ask one last question. Shifting gears just a second. When you talk about your visibility for the second half, either in Canada or the U.S., I find that kind of a like, it's a difficult thing to do because, you know, you never really know what your customers are gonna be doing. Maybe we could contextualize it. Your visibility for the second half here, sitting here at the beginning of March, how would. If you can remember, how do you recall your visibility a year ago in March? Then, like, do you also remember, like, how your expectations a year ago actually played out? You know, did your visibility kinda match realizations from a year ago as well? Yeah. A year ago seemed like a long time ago in this business, but I do remember it. You know, we were seeing our back half of the year starting to fill up, really call it kind of right after spring break-up. You know, as you can remember, we were increasing prices, et cetera, trying to catch the inflationary pressures that we had in our business, you know, passing that on to clients. Of course, we were able to be successful with majority of our clients on moving pricing forward. Some didn't like it. Some went to market to look at it, and we were very disciplined on keeping our prices to be able to, you know, get the margins that we need out of this business. This year, you know, I would say... Well, I'll go back to Q4. There was too much frac capacity in Canada. There was absolutely, I would call it probably two to three too many crews that were added. You know, obviously here some of our competitors were staffing up to get ready for some work in Q1. Having that extra capacity, you know, ends up hurting the market, of course. We saw a couple clients of ours that decided to take a cheaper price, I guess, for the services. As I look into this year, that capacity is gonna get soaked up. I believe, you know, as I mentioned about LNG and getting that development kicked off, Blueberry River agreements in place, starting to see a lot of permits. You know, when you look at the drill rig count, that is, that is for our mix of services, you know, Montney, Duvernay, we're up 40% from the beginning of December. Sixty-five drill rigs working in the, in the Montney today. Of course, that is high intensity frac work and the crews will be on location a long time. I do believe come the back half of the year, you know, starting in July, August, that the tightness of the frac supply will be there. Nice. Okay. The U.S. market, there's that bit of that shifting going on from gassier markets to oilier markets, clients aren't as concerned about locking up frac capacity. Some of the longer-term discussions, there's not as much pressure on there. That being said, I guess we're looking at some Q2, Q3 work that carries us kind of from the back half of Q2 into Q3. There's still interest there. It's just not quite the same intensity as it was last year, Andrew, kind of as it shifts to a bit more of a balanced market. Okay. I lied. I do have one more question. I apologize for that. When you look at, like, your operating metrics in Canada, you know, the operating statistics, whether it's fracturing operating days or proppant pumped or stages completed, any of those numbers, how would you position how the first quarter is looking compared to the first quarter last year? Yeah, a lot higher. A lot higher. Okay. That's it for me, guys. Thank you very much. Thanks, Andrew. There are no further questions at this time. Steve, please proceed with your closing remarks. I just wanna thank everyone for joining the call. As I mentioned, we're really excited about how the business unfolded for us in 2022 and look forward to the opportunities that we have in 2023. Thank you very much. Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines. Thank you.