Tom Simons - President & CEO Craig Nieboer - CFO

Jason Sawatzky - AltaCorp Capital Stephen Kammermayer - Clarus Securities Dan Macdonald - RBC Capital Markets Bhakti Pavani - Euro Pacific Capital Greg Colman - National Bank Financial Elias Foscolos - Industrial Alliance

Welcome to the Canadian Energy Services and Technology Corp's Conference Call and Webcast with respect to the recently announced results for the fourth quarter and year-end December 31, 2014. Presenting for the company today will be Mr. Tom Simons, President and Chief Executive Officer and Mr. Craig Nieboer, Chief Financial Officer. Please be advised that this call is being recorded. A question and answer session will follow at the end of the presentation. I would now like to turn the conference call over to Mr. Craig Nieboer, Chief Financial Officer of Canadian Energy Services and Technology Corp. Please go ahead Mr. Nieboer.

Good morning everyone and thanks for attending the call. Before we start, I would like to note that in our commentary today, there will be forward-looking financial information and that our actual results may differ materially from the expected results due to various risk factors and assumptions. These risk factors and assumptions are summarized in our Q4 MD&A, our Q4 press release and our recently filed annual information form dated March 12th, 2015. In addition, certain financial measures that we will refer to today are not recognized under current generally-accepted accounting policies and for a description and definition of these, please see our fourth quarter MD&A. I think I will operate the call today it's a little bit different than the past few -- I will off kind of reviewing 2014 results and then Tom will get into the current state of the business and the go-forward. So obviously for us 2014 results reflect a very buoyant drilling market we all enjoyed in both Canada and United States in 2014 and the continued growth of our JACAM and PureChem businesses in the production and especially chemical space. Gross revenue for full year 2014 was $972.7 million versus what was the top of our guidance of 965 million. EBITDAC for the full year 2014 was 177.2 million versus the top of our guidance of a 178 million so basically right on top of guidance. For Q4 in particular gross revenue was 278.7 million versus Q4 of 2013 of 200.6 million for an increase of 78.1 million or 39%. EBITDAC for the fourth quarter was 47.6 million versus Q4, 2013 of 36.5 million, an increase of 11.1 million or 30%. There were some effects to Q4 in particular with respect to a little bit of a drilling slow-down in response to the start of the lower oil price environment as well as some price pressure starting to creep into the business in reflect of the current economic situation and in addition we took some onetime charges in inventory and other provisions around receivables and liabilities reflective of the lower oil price environment. Very proud obviously of our 2014 results and all the hardwork, all our people and all the different divisions helps to create that outcome but obviously investors are most interested in the current business in the go forward. So this time I will turn it over to Tom Simons, our CEO.

Thanks, Craig. Good morning everyone. What I would like to do this morning is give a succinct update on sort of current operations for our different business units. Canadian Drilling fluids, U.S. drilling fluids, Canadian specialty production chemicals, U.S. the same and I will touch briefly on Clear and EQUAL. I would like to start by saying that we’re very proud of 2014. We accomplished most of the goals that we set out for the company, all pieces of the business grew. We continue to create additional vertical integration in the business which we think is going to pay us back in the down market. We would like to thank our customers and very much our employees for a great job. I will get into current update of the business and then I would like to walk listeners through what our plan is for $50 oil. In the Canadian market for drilling fluids the start of this week we were running high-80s for jobs, we’re already down to 50, so the impact of a very early and what we think will be a protracted breakup is definitely on. AES, we have went through 10% of the market, today we have a 117 jobs running. We’re not sure where the U.S. market will bottom out but we think we’re sort of beating the odds and that our customers are being slightly more active and we have picked up some work through technology as the rig count went down. PureChem in Canada are specialty production chemical business. We expect '15 to be a year of growth over '14 and '14 was a brilliant year for PureChem. The reason that we’re very busy in growing that business is twofold, we’re bringing in the unique chemistries of JACAM into the Canadian market and probably just as importantly we’re being able to attract very high end talent or people from industry as consolidation of our competitors occurs and we create more of a certain known brand in the Canadian market and that our customers and people in the production chemical business can see that we’re serious about it and are a player in this market. JACAM had a fantastic year in 2014, we expect JACAM to show modest growth in '15, we’re succeeding in putting JACAM chemistry in West Texas. Expanding our Eagle Ford business and our traditional oil markets continue to remain robust. As tough as it is on us drilling people, the U.S. and Canada are growing Canada are growing oil production and all of that production needs to be treated with chemistry. Clear, had a good year in '14 but it is a tough market right now. Clear will remain profitable, it's a great compliment to our drilling fluid business. We’re trying to attract some talent to that market so that as industry turns and year to we’re there to be a leading supplier. EQUAL remains an important way for us to keep cost of goods down in Canada and it does give us very modest profit so we will stay in that business. On to probably what the most important part of the call is and that’s what's our plan to run our business through $50 oil. Today we’re very pleased that the initiatives we started four years ago to enter the production chemical business and become a basic manufacturer so to be vertically integrated in our chemistries, in our mine materials [ph] that we’re significantly along in those initiatives. We think that it's very important long term and especially the $50 oil not to be a reseller of the consumable chemistry in mine materials that our business sells. The first thing we have done with our business to meet our strategy and our strategy is we want to retain all of the accounts that we can profitable on. Our thinking is that if an operator has been running five rigs and they are going to two, you want to be on location at the bottom so that as the industry comes back whether it's in one or two years and the operator looks to increase their program that you’re the people they are with them through the bottom and we think naturally then you’re going to have some uptick, it's going to be harder to get back into places that you’ve been on the outside looking in while it's been slow. With that in mind the first thing we have done and we have started this in December and have done it through January, February is we have reduced our prices to our customers. We’re still -- we think running the business like a small business we think our disperse business model where the business units have people over top of them that are ex-owners, have P&L responsibility we think that’s allowed us to act quickly and decisively and wisely to retain business. So we have went to customers and given them discounts that are reflective of lower oil prices. We understand that our customers are getting seriously pinched with this price. The second thing that we have done as a business is unfortunately we have had to reduce our headcount. We have been through this before, we went through it in '08 - '09. The people running the business have been doing this for 20 plus years so we have seen this before. We know what to do, so we have lowered headcounts in our drilling fluid groups in both Canada and the U.S. how we went about that is we have kept the people that have the broadest skills or kept young talent that we can see in five years can either be a source of technology or a source of revenue. We have also unlike in past down terms as a company had the ability to take drilling people and move them to our production site of our business which is still growing [indiscernible] this people. So we have been able to move warehouse people, engineering people and some field people and sort of reset on how you compensate those people but keep them inside of your organization and allow yourself to grow another pieces of the business. The other thing that we have done as an austerity measure is we have significantly reduced variable compensation, we’re doing that across the board in the company. But we’re treating sort of the four different parts of our business so Canadian drilling fluids, U.S. drilling fluids, Canadian specialty production chemicals and U.S. specialty production chemicals distinctly and uniquely we’re trying to do the right things for those business units in their markets and they are not all sort of one size fits all. We have in general created or implemented significant austerity measures that reflect the impact of $50 oil sort of a light-hearted example as you’re not going to see our name around the Calgary Stampede a lot this year. We’re obviously reducing inventory levels very significantly as a business. I will remind listeners that what's going to happen in '15 for us financially will be the same as '09. Our receivables will be turned into cash and the pile of inventory that ordinarily is constantly being replaced as we turn things 5 or 10 times a year is going to be a lot less. We’re very carefully managing CapEx as well as people saw in our release yesterday we have got about 25 million of committed CapEx and about 25 of discretionary, we’re taking a long term view to the business. We think that our cash or balance sheet position allows us to continue to take a long term view to things, what we will spend money on in '15 is completing nitrile and hydrogenation expansion at JACAM, we will also complete our barite mill in Corpus Christi. We expect that mill to be live. In August we’re actually physically under construction there. Additional CapEx sort of over the 25 that’s committed. We need to see a clear sign or line of sight to new business or to have significant strategic long term value to us. We’re in this for the long term so where appropriate we’re going to try and look at things in the down market. In general we’re staying focused on creating the best possible outcome for our customers. We think that we beat bigger competitors by bringing technology to customers that saves time and money on drilling rigs, we have been able to create chemistry that improves results in horizontal fracs. The use of our unique chemistry and very importantly how our people apply it for the customer at the pump jacks on existing production that’s been of course a big part of our business and we will stay focused on that and obviously our chemistry to protect pipelines. We very much believe in the long term viability of our business and our industry. We think that we built a unique business really in two ways, we think that we have built a business that allows investors to invest in the energy space and services space in a business that isn't heavy in equipment, heavy in CapEx. We have bigger companies through bringing new technology and ideas to customers to become the leading independent North American drilling fluids company and we think a serious player in the specialty and production chemical business. We have done it by being basic or vertically integrated and we have done that ahead of some very large businesses. The second way that we think we’re unique is that we have built a business that we did in 2014 almost a $1 billion in sales with minimal required CapEx. We built consumable chemistry and we mill mine materials that we turn 5 to 10 times a year. This business is a business we started privately in '01. We think we understand how to either shrink or grow as opportunity and market conditions and dictate and while we think '15 will be a tough year for the industry we think that we can quickly and successfully right size our business and then double down on how we treat the customer on location in planning their wells, planning their production so that we’re the service company of choice on the work that they do have. I'm now going to turn it over to Craig to give sort of an update on our balance sheet and go forward financially for 2015 and then we will open up the call for some questions.

Thanks, Tom. As you would have noted in our release and in our MD&A we have chosen not to provide specific guidance on revenue and EBITDA for 2015 in-light of you know the ever moving changes in activity, oil price and uncertainty with that we didn’t feel that we could add a lot of value to the market by trying to take a shot at that. I wanted to at this stage to talk through the balance sheet and the obligations of the company in-light of the current circumstances to give investors' confidence that we do have a very sound financial plan through this lower oil price environment. The key financial commitments of the business outside of the operations obviously for us are the dividend which is estimated at $72 million for the year, our interest charges which are going to be about $25 million for the year and obviously we have to continue to run the business so the maintenance CapEx of 6 million. That totals a $103 million of commitments to be funded out of EBITDAC, if we look at the analyst estimates the range is as low as 111 and the average is in the 140-150 range. It would suggest that based on those numbers, our key commitments are all covered by EBITDAC. Obviously cash taxes is another cash cost of the business, we have organized ourselves very tax efficiently as the business will have some slow down this year just speaking to the range of numbers that the analyst have put out at a $111 million of EBITDAC if that -- were to be the case, our cash taxes this year would almost be zero. At a $150 million of EBITDAC based on our structuring and our business model, that cash taxes would be about 10, so you get a sense of the power of the tax planning that’s been put in place in our business. And Tom touched on the expansion CapEx about 25 say is committed and so there is still flexibility with that. We decided in the MD&A to put in the number of 50 to give people a marker that is probably going to be the number we spend because we do expect to find things that are strategically important to us that we can see ways to grow the business going forward and with some hope that there is some turnaround in the industry as we approach the back half of the year. Speaking of balance sheet flexibility, I will remind callers that in 2014 we advantageously took advantage of market conditions and termed out another $75 million worth of debt putting our high yield debt at 300 million that’s due in 2020 so we have lots of room around that debt and the cost of carrying that capital was included in the 25 million of interest cost for the year that I mentioned earlier. In addition we had added $75 million worth of equity in 2014 as well and in 2014 we upsized our operating line to $200 million and we have a $100 million accordion on that line off which today currently we have drawn $55 million. As Tom mentioned a unique part of our business is the low capital intensity but we do have a work capital intensity as we turn consumable chemicals into cash. Net working capital at December 31 is 300 million, obviously a slow-down on the drilling side just like in '09 as Tom mentioned. We will be buying less inventory and AR will come back to the balance sheet as cash during the year. Obviously if as we expect the production especially chemical business grows there will be a little bit of an offset there as we will be adding working capital on that side of the business. I will remind callers as well in '09 when we were just a drilling fluids business, we are one of the very few trust models at that time to be able to pay our distribution and we had a 122% payout ratio but why we were able to do that was the accordion like aspects of our business model. We had cash coming back to the balance sheet through that working capital. Based on those analyst estimates on average we’re looking at a 70% plus or minus range of payout ratio for 2015 so obviously much, much stronger position on the balance sheet than we were in '09. Under all scenarios in 2015 we do not see any issues with our debt covenants and we have lots of headroom. In addition to insulate ourselves on the working capital and receivable side. We made a decision in the last few weeks and we have taken trade credit insurance over our U.S. receivables. Not that we have thought that are any particular risks in those U.S. receivables greater than our Canadian receivables but for those of you who are very familiar with the industry, the U.S. business is spread out in many different centers and many more customers versus the Canadian business which is centered here essentially in Calgary. So our feeling was that was good insurance to buy over book of business that’s harder for us to touch day to day ourselves personally. Obviously another moving part for everyone's business these days is exchange rate, the continued Canadian dollar weakness is actually a big tailwind to our overall business given how much of our earnings and revenues generated U.S. dollars and the fact some of those key obligations that I mentioned including our debt, our interest and our dividend are denominating Canadian dollars. That being said it's been a big challenge for our Canadian business units who have significant input costs in U.S. dollar denominated currency and in an environment where it's very difficult to pass that price increase on to your customer. But net-net that’s a positive for us in this downturn which also makes our business model I think somewhat unique to some of the peers in the Canadian public service company space. All-in-all we feel that 2015 will be a challenging year, we think we’re up to it, we think our people are up to it and we will be looking forward to working with our customers through this slower time in more difficult economic time and position our business in a way that it can take advantage of the next upturn. At this time we will turn it over to callers for questions.

[Operator Instructions]. Your first question comes from Jason Sawatzky with AltaCorp Capital. Your line is open.

Tom, just with respect to rationalizing costs. I'm just wondering if you’re able to quantify maybe in terms of the headcount reductions I know it's a sensitive topic but are you able to quantify the headcount reductions, wage reductions, anything like that?

Well I don’t think I want to say what we have done on wages, I don’t think that’s fair to our people. What I will say is that our expectation is that drilling off 40% in both the Canadian and U.S. market and so we have right sized our field count to match that.

And then just on the price discounts that you mentioned, so did you guys give price discounts in both the drilling fluids and in production chemicals or was it just the drilling fluids?

It's both but it's more weighted to drilling that’s where there has been more pressure in -- I will maybe try and describe what we have been able to do for customers Jason so that guys can compare that to the expectations you’re hearing from the E&Ps that are on the street. A general drilling fluid invoice has two parts to it, one part is all the consumable materials which is where we make money. We make those things and then obviously mix them every day into the mud tanks on the rig. That’s about half of the typical drilling fluid invoice, the other half is invert or base oil that comes from a refiner. It's largely a pass-through, we have come off in the range of 5% in general on the consumables. The base soil that makes up the other half of the invoice that’s market based pricing, it lagged the drop in oil but it's now down significantly it's done the same thing as the fuel price you see at the pump. So when you mix those two together on average our customers have been able to see a 12% to 20% drop in their total drilling fluid invoice and that is what the drilling people are being told to create by management. So we being successful in staying on the accounts that we have and going about 5% on the consumables.

And then I would assume on the production chemical side, I mean that’s going to be less on the production chemicals for sure?

Well the operator wants to pay less for everything Jason, so we being able to move on that stuff and have where we have room. We think that sort of operating a mid-sized business like a small company still has allowed us to know quickly what guy's expectations are and being a basic manufacturer we’re seeing some reduction in input pricing out of Kansas and so you’re able to certainly pass that along. But there is price expectations I think on every service side item that an E&P is buying today.

And then just last question with respect to maybe this is for Craig but with respect to discretionary spending I think you said 20 million or 25 million. If we look at the production chemicals business you’re expecting year-over-year growth in that business. So would that suggest that there could be some areas within production chemicals that you can spend that 20 million to 25 million?

I think there is lots of different things we’re looking at Jason, a lot of it is just in this environment. We may be going into new areas with a little more scale down version of a yard [indiscernible] versus a yard in a new building type of approach let's say as opposed we’re not going to make investments where we see growth of being able to sell chemicals.

Your next question comes from Stephen Kammermayer with Clarus Securities. Your line is open.

Just a question on the expected growth here in the production in specialty chemicals. I'm wondering is that growth predicated on upselling existing customers sort of to get the most out of their wells using more chemicals or is the majority of that growth expected to come from signing up new customers, new regions like the oil sands moving into mid-stream markets as well?

A little bit of it Steve, is that overall North American production is rising so all of us in the business will track that but the vast majority of it is growth that our competitors expense that’s through technology like solid chemistry, through our corrosion inhibitor supercore and we’re starting to see a pretty big amount of interest in stimulation chemistry where people can work over existing stuff and increase production volumes without having to spot a new well.

Are you seeing much more, are people looking at that stimulation chemistry as they pull back on the drilling site?

Yes we sure are, we have got an opportunity with a big independent in West Texas for revive, what we’re telling our sales people is this is in our view when the customer is going to look at new ideas. I don’t think people will do things that are risker or unproven but all of the operators more than ever need to stretch every cent they make. So if you can demonstrate to a customer that you’ve done something in an area that works, guys will listen and potentially will listen and potentially give it a try.

And maybe just on the dividend here. So, the payout ratio was 46% in '14 so presumably like you said that does go up in 2015. Is there a ratio that you’re targeting over the long term for that or what sort of long term ratio would you start to get uncomfortable if we’re in this environment say for 2015-2016?

So what we have said all along as opposed to targeting a specific payout ratio, we have tried to run the business in the long term on a zero sum gain of EBITDA less dividend less interest less maintenance CapEx, less cash taxes and over the long term less expansion CapEx as a zero sum gain. Obviously as markets turn up and down that expansion CapEx is something that might have to get funded out of our operating line to make it all go around in a slower year but that’s our long term business model and if you go back in history you will find that math has been pretty consistent. What that probably works out to though is a long term payout ratio in that 70% range and so that’s by default becomes somewhat of a barometer but we’re not managing to that percentage, we’re really managing, can we fund the internal growth of the business model from the generated cash.

Your next question comes from Dan Macdonald with RBC Capital Markets. Your line is open.

Just wondering, if we look at the production chemicals business have you seen any change in the range of growth in the first quarter here to-date when you look at kind of what the growth rates were in the fourth quarter or has it held fairly constant?

The trajectories went down for sure. There is a little top line pressure because you’re charging less for something now than you were in November and part of that businesses are selling chemistry that operators use in their fracs and as you have I have talked about there is lots of wells being drilled that are not being completed yet. So some of that has come out. So the growth of the business is slower by quite a bit but it is still going up. The growth rate of PureChem in Canada probably can be a little better than in the states just because we’re so new here and we have been very pleased with some of the personnel editions that we have been able to do over the winter. All the consolidation of competitors is having very experienced people in the field look around and they are coming and they are bringing business.

And just on the acquisition side guys, have you if you might be can give us maybe an update on what you’re seeing in that, is it still bit too early to kind of see people start to capitulate and really what might be on the top of the wish list when you look, there is probably lot of opportunity is going to come available here in these kind of condition.

I mean our -- for us M&A is different than an operator. We’re not going to buy a business that has a bad balance sheet and has to give up. We’re going to look at businesses that expand our technology, accelerate our growth and the frac chemistry, pipeline chemistry and revenue attached to those businesses and then probably most importantly will leadership and the people stay so that the book of business stays, so for us it's a little different. I think what could make something go around in this down-market is if you can get a business deal or sort of terms and price that you like with the business this is when a vendor should look in my mind to transact because they can step into a very successful business where the equity probably rises with commodity prices at some point in the future. So unless they want to get out of industry they are going to have to wait for that anyways. So why not wait inside a public company where your equity can go up.

[Operator Instructions]. Your next question comes from Bhakti Pavani with Euro Pacific Capital. Your line is open.

Just wanted to ask further into production and specialty chemical business, I know Tom you mentioned that you’re expecting some kind of growth in the business, by chance would you be able to quantify that growth?

As per our disclosures we’re not giving guidance to the whole chemicals and drilling fluid segment that we report on for 2015, so obviously we’re not going to give any specific on sub-segment of that.

Just another question, on the last call you guys had mentioned that the JACAM products have been used for treatment of some section of the pipeline market but just kind of curious are you guys targeting any kind of Mid-Stream market given that the up-stream market currently is not performing well given the oil price environment? And what would be your strategy to claim the mid-stream market?

What we have done is build a team of people with technical expertise around asset integrity in the mid-stream market. We have customer schools to talk about the ways that those assets can be comprised and then the ways you can use our unique chemistries both supercore and solid chemistry to basically protect those assets in ways that are economic and makes sense for the mid-stream operator. So that’s a part of the business that we think is very long term. It's recurring and we have lots of capacity in our manufacturing facilities to make those consumables.

Okay. Also the Canadian Energy Services business is quite diversified across different basins, you guys are in Permian, Marcellus. Just from the beginning of the year to-date what areas have being the most affected or have you seen the most fall in the business given that it is coming down.

We have certainly seen West Texas come off, we have seen midcon in the U.S. come off, we’re actually up year-over-year in the North East U.S. we’re maybe flat in the Eagle Ford. In Canada the deep basin has come off a bit but we’re very active in that market. We have got some unique technology that our customers verify, saves a lot of money and we were very dominant in the Seg-D [ph] market in '14. We expect that will be a slower market in '15 but we’re very confident long term that that’s a place that a lot of money is going to go and we have the lion share of the work through performance in that market.

Just another question with the barite facility, I know on the last call you mentioned that over the 3 to 6 month of the delay because of the [indiscernible] and now it's expected to go online in August. So just kind of curious is there -- I mean are the issues solved or is there any kind of new thing happening there?

Well unfortunately the delay was about 18 months and the facility is under construction and buildings are being erected and we’re confident that we’re crushing our own ore or barite by fall.

Okay, the last question in the press release you know in the press release it was mentioned that all the acquisitions need to comply with the stringent financial and operating metrics. Just kind of curious does any of the acquisitions that you’ve made at this point that are kind of not meeting those guidelines?

All of our acquisitions in our mines have been quite positive. We have some earn-out payable on our balance sheet for the current year based on those acquisitions achieving their targets and they are going to achieve their targets in our mine at this time and that’s why we have recognized that liability.

Your next question comes from Greg Colman with National Bank Financial. Your line is open.

I just do have one quick one here and I want to apologize because I missed the first part of the presentation and so if this has already been said then just please refer me to the transcript. But, regarding your change in working capital, the working capital harvest that you tend to get because of the structure of the business. In prior years when we have seen downturn in activity, the magnitude of the cash flow from operations excluding your working capital change and the cash flow generated from working capital change tend to be similar to each other in a sense that it's not -- so one is materially larger and just the example I'm going to pull is, you know in 2009 you generated about 10 million for cash flow from ops and about 10 million from working capital harvest in 2012, 50 million in cash flow from operations and 40 million in working capital harvest. Not getting into specific numbers but because of the change and the addition of GKM in the production fluids business, in this downturn would we expect them to be similar in size to each other or is the nature of the business changed the working capital harvest will be materially larger or materially smaller than the cash flow from operations.

Greg, that’s an excellent question. I will do my best to give you some guidance around how that might work. I mean it's a lot of moving parts and what you highlighted is exactly the biggest differences that in '09 there was no production chemical business in '12. There was a very small production chemical business burgeoning in Canada and now we have a very robust production chemical business on both sides of the border that will grow in 2015. So you’ve part of the business that will be growing and adding working capital to it. The other difference I think definitely '09 and now is that we have vastly improved the vertical integration of our business which has allowed us to control IP, it has allowed us to reduce input cost. Allowed us to not be a reseller but obviously that tail of buying raw products, manufacturing them into fixed products, putting them into warehouses and then putting them down whole is a longer road than buying from wholesalers and mixing it down whole. So net-net it's definitely not going to be the ratio of '09, you saw a change to the ratio in '12 there would be a continued change in my mind in this environment based on those factors that I just talked about. Can I estimate that off the top of my head? No. But it's probably closer to a 50% range if you want to take a barometer on it.

[Operator Instructions]. Your next question comes from the line of Elias Foscolos with Industrial Alliance. Your line is open.

I just wanted to follow-up on the deferred consideration that you kind of answered. I believe in Q4 the current and long term portion of deferred consideration is about 29 million and in Q3 it was about 39 million or 40 million. Is that reduction due to pay out?

Yes, absolutely. We have yet to have an experience in our history where we haven't paid out our earn-out [ph] so that’s a great credit to the people we brought into our business.

The last one is Rheotech. I'm trying to understand if Rheotech is classified as sort of a drill bidder at chemical acquisition, in other words really what it breaks down to is when you talk about market share of Canadian drilling fluids are you including the revenue from Rheotech in there or not?

Yes, absolutely. Rheotech was a drilling fluids business.

There are no further questions in queue at this time. I will turn the call back to Mr. Tom Simons for any closing comments.

We would like to thank listeners for their time. We like to assure listeners that we think we understand what needs to be done to take the company through $50 oil. We need to stay on the work that we have, we need to be where the customer needs us to be so that we’re the preferred vendor. We think that isn't just about price. We think it's significantly about technology that lowers days at the drill bit that lowers costs, that improves frac performance, that allows wells to keep producing and not go down by applying the right chemistry properly during production and by working with mid-stream companies to protect their assets. We like the team that we have built, we like the balance sheet that we have built and protected and we very much like that we’re vertically integrated business in a very tough market. We think that as operators rationalize their service providers through this time that is the industry comes out of this we’re going to be a relevant player in the business and be able to appropriately go up as the market allows. We appreciate your time. I want to say thanks to our customers for their work and thank you very much to our employees for what they do. Thanks.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.