Thank you for standing by. This is the conference operator. Welcome to Total Energy's Fourth Quarter Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Daniel Halyk, President and CEO of Total Energy Services, Inc. Please go ahead. Thank you. Good morning and welcome to Total's Fourth Quarter 2022 Conference Call. Present with me this morning is Yulia Gorbach, Total's VP Finance and CFO. We will review with you Total's financial and operating highlights for the three months ended December 31st, 2022, and then provide an outlook for our business and open up the phone lines for questions. Yulia, please go ahead. Thank you, Dan. During the course of this conference call, information may be provided containing forward-looking information concerning Total's projected operating results, anticipated capital expenditure trends, and projected activity in the oil and gas industry. Actual events or results may differ materially from those reflected in Total's forward-looking statements due to a number of risks, uncertainties and other factors affecting Total's businesses and oil and gas service industry in general. These risks, uncertainties and other factors are described under heading Risk Factors and elsewhere in Total's most recently filed annual information form and other documents filed with Canadian provincial securities authorities that are available to the public at www.sedar.com. Our discussions during this conference call are qualified with reference to the notes to the financial highlights contained in the news release issued yesterday. Unless otherwise indicated, all financial information in this conference call is presented in Canadian dollars. Total Energy's financial results for the three months ended December 31, 2022 reflect the continued recovery of global energy industry, particularly in North America. Fourth quarter net income of CAD 12.3 million was a substantial improvement compared to CAD 1 million of net income in the fourth quarter of 2021. Reported fourth quarter consolidated EBITDA increased 59% as compared to 2021. After adjusting to exclude COVID-19 relief funds and unrealized foreign exchange impacts arising from the translation of each company working capital balances, fourth quarter EBITDA increased by 76% on a year-over-year basis. By business segment, Compression and Process Servicing generated 44% of 2022 fourth quarter consolidated revenue, followed by Contract Drilling Services at 33%, Well Servicing at 14%, and Rental and Transportation Services at 9%. In comparison, for the fourth quarter of 2021, the CPS segment contributed 37% of consolidated revenue, Contract Drilling Services 36%, Well Servicing 19%, and RTS segment contributed 8%. Consolidated 2022 fourth quarter gross margin of 23% was consistent with Q4 2021 as increased prices and economies of scale offset the increased relative contribution of the CPS segment, as well as significant cost inflation and the absence of COVID-19 assistance. Excluding COVID-19 relief funds, gross margin as a percentage of revenue was 23% for the fourth quarter of 2022 as compared to 22% in Q4 of 2021. Selling, General, and Administrative expenses for the fourth quarter of 2022 increased by CAD 2.7 million or 32% compared to Q4 of 2021 as employee compensation was reinstated to pre-COVID levels. Higher profit-based employee compensation was recognized in certain segments and no COVID-19 funds were recorded during the quarter compared to CAD 100,000 of COVID-19 relief funds being received in Q4 of 2021. Increased North American drilling activity offset lower Canadian activity due to bad weather conditions, resulting in an 11% year-over-year increase in fourth quarter total operating days in CDS segment. This, combined with a 28% increase in revenue per operating day, resulted in a 42% year-over-year increase in fourth quarter CDS segment revenue. The year-over-year increase in both North American operating days and revenue per operating days in all geographical regions drove a 42% increase in fourth quarter CDS segment EBITDA as compared to 2021, despite significant cost inflation and the absence of COVID-19 assistance. In Canada, increased industry activity and market share gains contributed to 18% year-over-year increase in fourth quarter Canadian operating days. Price increases, in part due to rig upgrades, resulted in a 33% year-over-year increase in fourth quarter Canadian drilling revenue per day, which in turn gave rise to a 57% year-over-year increase in Canadian drilling revenue, sixfold increase in operating income. In the United States, a 4% year-over-year increase in the fourth quarter operating days, combined with a 35% increase in revenue per operating day due to higher pricing, resulting in a 40% year-over-year increase in fourth quarter U.S. drilling revenue. After adjusting for a CAD 1.6 million realized foreign exchange loss on settlements of intercompany balances, fourth quarter operating income in the United States increased by CAD 1 million as compared to 2021. Fourth quarter operating days in Australia decreased by 4% compared to 2021 as wet weather conditions continue to negatively impact Australian activity. Such lower activity was offset by 10 increase in revenue per operating day, such that Australian drilling revenue increased 6% as compared to the fourth quarter of 2021. Australian operating income was significantly and negatively impacted by crew retention and equipment reactivation costs following extended periods of inactivity due to the wet weather. The RTS segment also benefited from improving North American industry conditions. A 21% year-over-year improvement in fourth quarter equipment utilization, combined with a 51% increase in revenue per utilized piece of equipment, resulted in an 84% year-over-year increase in fourth quarter revenue in the RTS segment. This segment's leverage to high activity levels, given its relatively high cost structure, was demonstrated by a 128% year-over-year increase in segment EBITDA and a six percentage point increase in EBITDA margin, despite incurring equipment reactivation costs in response to high activity as well as general cost inflation and the absence of COVID-19 assistance in 2022. Fourth quarter revenue in total CPS segment increased by 90% as compared to 2021. This segment saw a ninth consecutive quarterly increase to its fabrication sales backlog, which was 49% higher on a year-over-year basis and 11% higher on a sequential quarterly basis. Improved natural gas prices provided tailwinds for the CPS's segments. Parts and service and rental business lines, with fourth quarter utilization of the compression rental equipment fleet increasing by 50% as compared to 2021. CPS segment EBITDA for the fourth quarter of 2022 increased by 207% on a year-over-year basis, with improved pricing and increased activity driving a 57% year-over-year increase in fourth quarter EBITDA margin, despite cost inflation and the absence of COVID-19 assistance. The Well Servicing segment saw fourth quarter revenue increase by 11% compared to 2021, underpinned by a 15% increase in revenue per service hour. Fourth quarter service hours decreased 3% due to cold weather conditions and an extended holiday shutdown in Canada and continued wet weather in Australia. A decrease in service hours, crew retention and equipment reactivation costs, general cost inflation in the absence of COVID-19 assistance more than offset increased North American pricing, with the result that fourth quarter segment EBITDA decreased by 6% compared to 2021. From a consolidated perspective, Total Energy's financial position remains very strong. During the fourth quarter of 2022, Total reduced its bank debt by CAD 28.6 million on 19% and repurchased 525,638 common shares on this normal course issue, but at a cost of CAD 4.5 Million dollars. Total net debt position at December 31st, 2022 was CAD 15.5 million and is by far the lowest since we completed the acquisition of Savanna in June 2017. Total currently has CAD 155 million of credit available under its CAD 225 million of available credit facilities. Total Energy's bank covenants consist of maximum senior debt to trailing 12-month bank-defined EBITDA of 3x and a minimum bank-defined EBITDA to interest expense of 3 x. At December 31st, 2022, the company's senior bank debt to bank EBITDA ratio was 0.46, and the bank interest coverage ratio was 22.66 x. Thank you, Yulia. 2022 saw a return to profitability following two years of challenging industry conditions. Entering the year, the global economy continued to recover from the devastation caused by the COVID-19 pandemic, which in turn contributed to relatively strong oil and natural gas prices. While producers increased their capital expenditure programs in response to higher prices, budgets remained constrained relative to prior periods of similar prices. Offsetting this muted response to higher prices was a reduction in energy service industry capacity following several years of industry contraction and consolidation. In this environment. Total Energy was able to substantially improve its financial performance and increase shareholder returns through significant debt repayment, share buybacks, and the restoration of a dividend. Of note is the fact that for the first time in our history, during the fourth quarter, Total Energy generated more revenue in the United States than in Canada. The United States represents a tremendous opportunity for future growth, and we are focused on opportunities to continue to expand our U.S. presence in all business segments. We are optimistic as we enter our 27th year in business. While we certainly cannot predict the future, we remain committed to Total Energy's core values that have served us well in a highly cyclical industry. This includes taking seriously our role of stewards of our owners' capital, which in turn drives us to only pursue investments that offer appropriate risk-adjusted returns. Absent such opportunities, we will look to return capital to our owners through debt repayment, share buybacks and dividends. We currently anticipate operating cash flow and cash on hand will be sufficient to fund debt and capital lease obligations and anticipated capital expenditures for the foreseeable future. With this perspective in mind, our Board of Directors approved a 33% increase to Total's dividend. We look forward to what appears to be better times for our industry, on behalf of our Board of Directors and our many employees throughout North America and Australia, I would like to thank our shareholders for supporting us through some very difficult times. We will continue to work hard to ensure your trust and confidence is warranted. I would now like to open up the phone lines for any questions. Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. To join the question queue, please press star then one now. Our first question comes from Ernest Long of Baskin Wealth Management. Please go ahead. Good morning. Good morning, everyone. How are you? Well, thanks. How are you this morning? Doing well. I just wanted to ask, you guys spent a lot of time talking about how you expect industry conditions to be better going forward. I was thinking what you think an appropriate return on invested capital would be going for the next couple of years? We have our weighted average cost of capital calculated every year. We don't publish that, but I can certainly say over the years, we expect to receive a minimum 15% pretax return on invested capital over the life of the investment, Ernest. If we can't see that with some reasonable certainty, we're not interested. Obviously, you know, you're looking at future cash flows. There'll be some years where it's, you know, zero. Other years, it's got to be much higher. On average, over the life of investment, if we can't see 15%, and that's pretax net appreciation, we're not interested. Got it. You mentioned that you were interested in continuing your expansion in the U.S. Given where your stock is, roughly, I think 70% of book value, how do you balance your ongoing investments to grow in the U.S. with buybacks and like things like special dividends and debt reduction at this point? We look at buybacks as just another opportunity to invest capital. What we're seeing in the United States— I just came back from a visit to our operations in Texas and New Mexico— is there's a huge opportunity. I think the underinvestment within the industry over the past number of years has really caught up, and I think there's a great opportunity for well-run service companies to gain some significant market share. You know, part of our growth strategy is certainly relocation of underutilized equipment, you know, M&A, organic new equipment builds. But again, we balance that against, you know, share buybacks. You know, everything else being equal, though, we would prefer growth over contraction. You know, in the event of a tie, we prefer to grow as opposed to shrink. Again, that's the lens through which we look at all of these opportunities. Will your primary use of cash, apart from the dividend, be focused on debt reduction again, in 2023? You know, we have, there's two components to our debt. One is our revolving credit facilities, which, as we mentioned in the release, are currently drawn at $70 million. You know, we'll take that to zero. The other component is a fixed term debt. It's mortgage debt. That's always been kind of our permanent component of debt. That's secured by a portion of our real estate. We've been rolling that. It's been $50 million initial debt that after five years is down to $40 million. We've rolled that now, I think three consecutive times or two. To us, that's sort of our permanent debt. You know, the way we look at the real estate is we're sitting on, you know, real estate that's substantially —worth substantially more than the net book value. A fraction of it is used to secure fixed rate mortgage debt. We use our real estate to lower our overall cost of capital. You know, the flip side, we could turn around and sell that real estate, do a sale leaseback. The negative would be our operating costs would go up materially. You know, if we sold at market, obviously the buyer would want market rent. We've tended to use our real estate to basically backstop our, what we see as kind of permanent fixed portion of debt on our balance sheet, and that'll likely continue. Got it. That's all from me. Thank you. Thanks. Our next question comes from Josef Schachter of Schachter Energy Research. Please go ahead. Good morning, Dan and Yulia, and congratulations on a great quarter and the dividend increase. I have three areas I wanted to talk about. First one is, when the E&P companies have been talking, they've been saying that the price increases for rigs, fracking, et cetera, kind of peaked in Q4, Q1, and they thought they'd be steady going forward. How do you see things from the point of view of your operations, drilling service rigs, et cetera? Do you see more price upside in the near term, or would you have to wait until the summer and see where natural gas prices are then maybe based on activity levels, look at price increases? You know, it really depends on the business line and the geographical area, and frankly, the specific piece of equipment. I think there's a lot of different submarkets within this. I would say overall, you're probably not gonna see the rate of price increases that you saw last year. That said, there's many areas within our business that, supply currently is less than demand. You know, so there's gonna be areas where we're gonna continue to see good pricing momentum. There's other areas that'll be flattened out for sure. I think, it really depends on the specific market and the specific product or service we're talking about. You know, I'm hesitant to get too specific there for competitive reasons, but overall, I think, you know, we see all the markets we're operating in right now is relatively healthy markets that are working for both the customer and the supplier, but there's probably some further room for growth on price. You know, in other words, we're not at a point where there's new build economics in a lot of our business areas. Okay. Second question is Australia. Can you talk about what's going on there, weather related? Is this just something that happens over the winter months here and summer months there? You know, do you see an improvement in the months ahead? Just how do you perceive what's going on in Australia now, profitability, you know, will go for you going forward? What we saw last year was basically the back half of the year was extremely wet. Typically, you know, historically, the first quarter is actually their wet season, and we're talking primarily in the Queensland area. Interestingly, it's been a lot drier so far in 2023, which is a positive. Literally through the back half of last year, we had rigs sitting for weeks, just couldn't move. It was wet. The wet weather's actually abated during what's typically the rainy season. It looks like the rainy season came early. So far in Q1, weather's been more cooperative. You know, it was definitely a material impact on the business. Okay. Are you already seeing activity in terms of people trying to book equipment, you know, for the next month or in the next few months? Are you seeing a pickup there? Yeah. We currently have five drilling rigs in Australia, all of which are drilling. Our service rigs, I'm not sure on the daily count. But our drilling rigs today are operating at 100%, you know, which they were pretty on and off during Q4. As we announced in our preliminary CapEx budget, we're in the process of Australianizing a Canadian rig to bring over to Australia for first quarter next year. We'll be up to six next year. Okay, good. On my last question, you mentioned about M&A in the United States. Are you looking at M&A in all business lines? How much traffic is there? Is this something that you know, you're giving us a heads up to look at that we might see some announcements in the months ahead? No, I wouldn't. I think we're open to growing. You know, the biggest challenge we have to complete M&A is our cost of capital right now, notably our cost of equity. It's a real limitation. You know, but what I'm saying is, we see the U.S. as a significant growth market for us. We're just scratching the surface. We're open to all segments. The reality is where we tend to see most of the opportunities is in the capital asset heavy businesses, but it's gotta work for us. I wouldn't say you need to lay awake at night waiting for press releases. The flip side is we can move when we need to move and when it makes sense. You know, certainly, it's a massive market and, you know, we're just scratching the surface and certainly you tend to spend your time focusing on jurisdictions where you believe you've got, you know, good opportunity, you're able to differentiate yourself and there's room to take market share. Do you have, one or two core areas where you're working in the States now where you might try to, you know, infill on that area? Like, are we looking at the Permian, the Eagle Ford? Are, you know, where. Are there certain basins that you're, that you have a structure in there now that you could build upon that we should be watching? Certainly, my recent visit to West Texas and New Mexico, what I saw —and the focus in part was our rental business. What I saw was, our rental equipment down there is heads and tails better than most competitors in terms of quality. There's certain equipment lines we were completely sold out. You know, there's opportunities to continue to relocate equipment, you know, from Canada. And there's also opportunities to probably introduce new equipment, which will help pull demand for other equipment that we have plenty of. So, I'm quite excited about what that market offers for us. In large part, just again, the quality of the industry fleet in general is quite poor. You know, these are big capital investments where I think a lot of the private players have. It's been a tough few years both in Canada and the U.S., and I think there's a real hesitation, you know, for those privates that have survived to, you know, put a whole bunch more money into a sector that hasn't been kind. Super. I look forward to seeing— keeping up with the quarterly notes and then also, hopefully any announcements on growth in the States. Congratulations on the good quarter and the dividend increase and look forward to more good news. Thanks, Joseph. Our next question comes from Jonathan Orford of BMO Capital Markets. Please go ahead. Hi, guys. Thanks for taking my call. I might have missed it in the prepared remarks, but I was just wondering if you could provide the color on what impacted the RTS margins quarter-over-quarter? One thing we had, frankly, both in the drilling and the RTS was a lot of equipment reactivation. On the negative was like literally we were pulling equipment off the fence that hadn't worked for years. You know, a prime example would be a heavy truck. Simple things that you'd, you know, one wouldn't think about, but for example, heavy trucks in Canada, there's regulatory requirements that tires can't be more than five years old. You gotta change out all the tires. You know, we expensed all that. There was some significant equipment reactivation costs that were all expensed to basically get ready for Q1. The flip side, on the positive side is what you can see is a relatively, you know, not a huge increase in year-over-year equipment utilization translates into a pretty significant increase in EBITDA margin. Again, that reflects the fixed cost structure within that division. Okay. That's helpful. A lot of Q4, particularly in Canada, was getting ready for Q1. That's helpful. I was also just wondering about U.S. gas prices. Are you seeing any impact from the weak gas prices on any business lines in the U.S.? In the U.S. or generally? Okay. No, sorry, your question, did you say in the U.S. or is this just a general question across all our pieces? More of a general, like, are you seeing any impact from the weak gas prices for activity or anything like that? The reality is, most of our— the vast majority of our drilling rigs, in North America are drilling for oil. Australia is all gas. You know, what drives Australia is LNG. Frankly, what we're seeing, and probably our most gas exposed business would be our Compression Process Services, is you know, you saw another, you know, meaningful increase in the backlog, and we continue to see very, very strong bid activity and quoting activity. You know, my sense is a lot of the driver behind that is more a infrastructure build. These are, you know, projects, capital projects that are looking beyond short-term gas prices. We have not seen any I would call it fallout from, you know, the weakness in gas here over the last couple months. Okay, perfect. Congrats on a great quarter. It's probably impacting gas drilling per se, but again, not a lot of our rig activity is tied to, you know, dry gas drilling. Awesome. Thanks for the color. That was it for me. I'll turn it back. Once again, if you have a question, please press star then one. Our next question comes from John Bereznicki of Canaccord Genuity. Please go ahead. Yeah, thanks and good morning, everybody. Good morning, John. I just wanna pick up on the comments you're making about, you know, what you're seeing in Canada versus the U.S. I know at least one major producer's indicated they're seeing, you know, maybe less cost inflation in Canada versus, you know, the Permian and whatnot. Just wondering if that kind of correlates with what you're seeing. More generally, can you give us any color on what you're seeing with, you know, producer sentiment on either side of the border where you operate? You know, I would say cost inflation's an issue everywhere. You know, there's supply chain bottlenecks are, I would say, generally easing, but they're still in certain instances fairly significant. You know, we're continuing to see really long lead times on, for example, you know, Caterpillar drivers. You know, we're having to plan a year in advance in terms of, you know, the CPS segment major component inventory management. In terms of sentiment within the customer field, I think, it's again, fairly uniform. You know, the reality is none of the producers have been drilling for the past two years like there's been $100-dollar oil. You know, we didn't see the craziness that you'd normally see with a $100-dollar oil when oil was $100. Correspondingly, we haven't seen, you know, any material changes, you know, when oil settles in at $75 or $80. Same thing with gas. You know, when gas was $8, we didn't see a drilling response to that. You know, again, gas historically in Canada has been a much larger part of the drilling piece. You know, it's certainly not what it was 10, 15 years ago, but, you know, it's gonna be interesting, John, and you'd have as good a or better idea than I. As we continue to build out North American LNG export capacity, it's— I'm bullish on gas. I just think, for many, many reasons, gas, you know, apart from becoming a global commodity is gonna be a desired fuel, energy source. You know, with energy security becoming an increasing problem, I'm bullish on gas in the medium to long term, and I think what we're seeing on the infrastructure build, supports that. Yeah, that's great color, Dan. Appreciate it. Kind of related to that, you know, on the heels of the Blueberry announcement, you know, historically you've always had a strong presence in BC. Can you give us a little bit of a feel for what, you know, you might see on the ground there, you know, as we move through 2023? Well, we finally saw some licenses issued this week, a big number. Honestly, I think the biggest question, John, is gonna be where the rig's gonna come from. You know, Right now to get, you know, deep capacity, high hook load, high pressure rigs to substantially increase drilling activity in Northeast BC, I don't know where they're gonna come from. Interesting. That's good color. Also the collateral equipment surrounding those rigs, you know, key pieces on solids control, all that kind of stuff, I don't know where it's gonna come from. Okay. no, that's helpful. Just one last one. Just given the performance of CPS in Q4, is it reasonable to assume that, you know, the legacy mandates you were doing that were kind of dragging on margins are in the rearview mirror now? Yes. Okay. That's, that's helpful, Dan. appreciate the color. That's all for me. Thanks, John. This concludes the question and answer session. I would like to turn the conference back over to Mr. Halyk for any closing remarks. Thank you all for joining us this morning, and we look forward to speaking with you after our first quarter. Have a great weekend. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.