Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Trican Well Service Ltd (TOLWF, Financial) reported solid revenue of $221.6 million for Q3 2024, despite a challenging commodity price environment.
- The company generated free cash flow of $32.4 million during the quarter, demonstrating strong financial management.
- Trican's balance sheet remains robust with positive working capital of approximately $136.5 million.
- The cementing division performed well with a 7% increase in revenue and over 1% increase in EBITDA, showcasing strong market share and expertise.
- Trican is actively modernizing its systems and investing in technology to ensure long-term growth and sustainability.
Negative Points
- Adjusted EBITDA for Q3 2024 was $50.2 million, down from $65.7 million in Q3 2023, indicating a decline in profitability.
- Certain customers delayed portions of their capital programs due to water restrictions and well licensing requirements, impacting revenue.
- Frac crew revenue was down 18% year over year, reflecting reduced demand in certain areas.
- The coil tubing division's revenue decreased by 5% year over year, highlighting challenges in scaling the division.
- Trican is experiencing pricing pressure from competitors, which could impact future margins.
Q & A Highlights
Q: Can you elaborate on Trican's strategy for 100% natural gas-fueled operations and what factors are considered in selecting this technology?
A: Bradley Fedora, President and CEO, explained that while the technology for 100% natural gas-fueled operations is available, factors such as operational reliability, equipment footprint, and return on investment are critical. The Tier 4 technology offers 80% efficiency with minimal operational changes, allowing for diesel use if gas supply is interrupted. The decision will depend on practicality in Canadian settings and cost-effectiveness.
Q: Is the Canadian market open to take-or-pay contracts for funding equipment upgrades, similar to the US model?
A: Bradley Fedora noted that while contracts are available in Canada, they are not as prevalent as in the US. The market has seen more reliable contracts recently, but a single customer cannot drive technological changes. The equipment must be viable in competitive bidding situations without relying solely on contracts.
Q: How will the new sand terminal in British Columbia impact Trican's operations and logistics?
A: The new terminal will significantly reduce trucking time by half, enhancing operational efficiency. Currently, trucks travel 8-12 hours from Grand Prairie to Northeast BC. The terminal will allow Trican to use its fleet more effectively, potentially expanding logistics services beyond fracturing.
Q: What is the current ratio of US to domestic sand usage in the Canadian pumping market, and is this changing?
A: Bradley Fedora stated that the ratio is approximately 60% US sand to 40% domestic sand, and this has remained stable. Customers occasionally experiment with different sands to optimize production, but the ratio has not significantly shifted.
Q: What is the current supply of Tier 4 DGB or next-generation fleets in Canada?
A: There are about 31 fleets in Canada, with 22 focused on deep basin operations. Of these, 7-10 are Tier 4 fleets, with Trican owning 5. Trican believes it leads in nonproductive time efficiency due to robust upgrades in transmissions and pumps.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
