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| Statement |
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| Along with our reputation for operational excellence and customer service, our ability to efficiently execute our 200 series -- 200 series to 300 series conversions drove this significant market outperformance |
| While movement of this rig did cannibalize an opportunity we previously had earmarked for an incremental rig add, the rig is performing exceptionally well and we feel we have a very good opportunity to add a second rig with that customer later this year, assuming their plans remain in place |
| So, I hope we’re in a situation where a year from now we feel like we left some money on the table, because that’s going to be really good for the industry and certainly is going to be good for ICD |
| Don, I’ve been very pleased with what we’ve been able to do so far |
| These opportunities are very competitive, but so far we have been successful in winning more than our fair share |
| Our West Texas market, on the other hand, has held up much better and we obviously have been successful in adding rigs across our customer base and increasing term contract exposure where it makes sense and we currently have 14 rigs running in West Texas |
| For the second Haynesville rig where we received notice, we have been successful in placing that rig on a follow-on opportunity with a different customer, but it is a short-term program and we are continuing to market the rig for follow-on opportunities |
| Similar to our expectations around costs per day, we are expecting positive trends in our cash SG&A expense in future quarters based upon cost efficiency initiatives instituted at the beginning of the year |
| In the process, we grew our Permian Basin presence and we were able to expand some key customer relationships and attain some new customers, all the while delivering world-class performance, including industry-leading HS&E results |
| Based upon cost efficiency initiatives instituted at the beginning of 2024, we are expecting positive trends in our overall costs per day compared to 2023 |
| Beyond that, I expect we will see opportunities to grow our Permian Basin presence as this year plays out, as the benefits of our 300 series rigs and our 200 series to 300 series conversion program combined with our ICD impact offerings continue to bring new customers into the fold and allow us to expand existing customer relationships |
| You’ve got the big three that are doing a really good job at standing their ground |
| I feel pretty confident about the margin guide |
| But we are leaving the door open for an eventual return when market dynamics in that basin turn more positive for drilling contractors with strong brands and reputations in the challenging operating environment which the Haynesville presents |
| And I think we’ve proven certainly over the last year that we can increase our utilization |
| So wrapping all this up, I believe ICD performed very well last year as we navigated many challenges successfully |
| So, I feel pretty good |
| Feel pretty good about it |
| It’s very good for them |
| So to the extent the rig lines continue, we’ve proven our ability to do that and our expectation we’ll continue to be able to do it |
| Longer term, still very bullish on gas, U.S |
| But first, just a few comments looking back on the fourth quarter and full year in which ICD achieved some meaningful accomplishments |
| The message I think we’ve tried to convey is we think here in the first half of the year it’s flattish and we’re optimistic about the back half of the year |
| I think the last time we talked, Dave, we were pretty optimistic about the rig count actually starting to increase as we exited 2023 and then in the first half of this year |
| We continue to make progress on the three most important strategic initiatives we have, which include paying down debt, increasing our exposure to the 300 series market and leveraging our ICD impact offerings |
| So rolling all this up, I’m confident that ICD is ready for the year which has now started |
| Well, that other company has got a lot of capital invested in that and our strategy has been to be a very fast second mover here to partner with people that probably know more about the intricacies of it, the IT part of it than we do, that have been working on this, in some cases, for more than a decade and leverage their capability, combine it with the, the AC pad optimal superspec rig, which we have, and deliver value working together to our customer |
| Day rates and daily margins for superspec rigs are still healthy, but obviously lower than they were a year ago |
| And as we sat here and thought about the next year or two and some of the things that we have to get done, especially around addressing the convertible notes that aren’t going to mature until March 2026, we felt that it would be good and prudent for the company to put some backlog on the books, and I mean, there’s a couple of two-year contracts in that mix, just so you know |
| I want to say thank you to our many employees at ICD for their hard work and dedication |
| Statement |
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| Unfortunately, the combination of further declines in commodity prices driven by a very warm winter has paused these opportunities |
| I would note that due to white space created by rig churn, our reported average operating day during a particular quarter will likely be below 17 until we begin reactivating additional rigs |
| As I mentioned, given further declines in the Haynesville, we don’t see a recovery in that basin until mid-2025, given the very warm winter which is winding down, large gas storage levels, significantly lower net gas prices and the duck inventories which E&P companies have assembled |
| We expect margin per day to come in between $10,400 per day and $11,000 per day with a sequential decline relating to lower day rates on contract renewals |
| With these factors, combined with duck inventory builds in the area and customer consolidation, our expectation today, unfortunately, is for further decline in the Haynesville rig count overall and for ICD |
| While our margins came in on the higher end of our guidance, our overall results came in at the low end, almost entirely due to higher rig reactivation expenses, much of which was related to higher labor and related expenses originally earmarked to perform maintenance and upgrade CapEx on rig reactivations that ultimately did not materialize |
| gas, what it’s going to do for society, what it’s going to do for our country in terms of energy security, energy transition and all of that, because I think the next 12 months, 18 months are going to have some headwinds |
| This is more pronounced for incremental rig adds with new customers, for example, compared to when we renew or rollover a contract with existing customers, and as you might expect, there’s more day rate pressure in the Haynesville than in the Permian |
| The risk -- I mean, obviously, day rates could go higher |
| While we still believe we can return to a 21 rig -- operating rig fleet, that goal has been pushed to the right in light of the market dynamics I just described |
| And this fleet transformation paid significant dividends for ICD in 2023, as we navigated a severely depressed Haynesville gas market and an overall decline in the Permian rig count as well |
| Those two things, flat rig count and then the churn, have created a situation where we thought more of our smaller competitors’ rigs might get soaked up in an increase, obviously, that’s not happened, so it’s still there |
| It gets a little bit more competitive below that |
| Spot market day rates on competitive awards can be up to a couple thousand dollars per day lower than rollover rates, owing to efficiencies earned and friction costs of changing out rigs that are performing at today’s required level of performance |
| However, two of our customers with whom we were anticipating contract extensions notified us that they were not going to continue their programs |
| It’s down 500 |
| Philip Choyce For the fourth quarter of 2023, we reported an adjusted net loss of $8.6 million or $0.61 per share and adjusted EBITDA of $9.9 million |
| However, capital discipline and increasing consolidation of E&P companies kept a lid on the overall rig count in the Permian Basin during the second half of 2023 and all indications today are for a flattish overall rig count in the Permian during the first half of this year |
| In the face of a likely flat overall Permian rig count in the near-term, we will likely need to continue to punch above our weight class to drive incremental rig reactivations, but I think we have shown that we are more than able to do that |
| A number of factors and uncertainties could cause actual results in future periods to differ materially from what we talk about today |
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