Hello, and welcome to Enservco's 2020 fourth quarter and full year conference call. Presenting on behalf of the company today are Rich Murphy, Executive Chairman; and Marjorie Hargrave, President and CFO.

As a reminder, matters discussed during this call may include forward-looking statements that are based on management's estimates, projections and assumptions as of today's date and are subject to risks and uncertainties disclosed in the company's most recent 10-K as well as other filings with the SEC. The company's business is subject to certain risks that could cause actual results to differ materially from those anticipated in its forward-looking statements.

Enservco assumes no obligation to update forward-looking statements that become untrue because of subsequent events. I'll also point out that management's ability to respond to questions during this call is limited by SEC Reg FD, which prohibits selective disclosure of material nonpublic information.

A webcast replay of today's call will be available at enservco.com after the call. In addition, a telephone replay will be available beginning approximately two hours after the call.

Instructions for accessing the webcast or replay are available in today's news release. With that, I'll turn the call over to Rich Murphy.

Rich, please go ahead.

Thanks, Jay. Welcome, everyone, and thanks for joining our call.

2020 was quite a year for Enservco. On one hand, it's no secret that reduced customer demand brought on by depressed commodity prices and the pandemic made a tough going for all players in the oilfield services space.

And that was certainly reflected in our year-over-year financial results. On the other hand, we have had more than our share of positive developments, and those are what I want to be off with today because our achievements over the past 12 months have literally transformed our company and let us in the strongest position, at least from a balance sheet perspective that we've enjoyed in a long time.

Where our team was able to accomplish during 2020 and to the first quarter of 2021 is nothing short of remarkable. Enservco's employees at all levels of the organization came together to overcome unprecedented challenges, and I am proud to be associated with this group and be part of such a resilient organization.

You'll recall that we entered 2020 with some serious challenges over and above the low commodity prices and the emerging COVID-19 pandemic. We had an unsustainable debt load.

We had a burdensome cost structure. And we were undercapitalized.

So earlier in the year, we developed a 3-point plan based around debt restructuring, cost reductions and raising capital. While it wasn't always easy, and we had to clear a lot of hurdles along the way, I'm pleased to say that we've been successful on all 3 fronts.

Debt restructuring was a cornerstone of our effort. As of the second quarter of 2021, we expect total debt reduction since August 2020 to be in the range of $24 million that will represent nearly two-thirds reduction of what our total debt was at the highest point.

This effort included several components. First, our bank, East West Bank wrote off $16 million of our $33 million term loan, leaving us with a new $17 million term loan and $1 million revolver.

And by the way, we recently negotiated a 1-year term extension. On both the term loan and revolver to October 15, 2022.

In exchange for this write-off, we issued the bank on a reversible adjusted basis, 533,334 shares of common stock and a warrant to purchase another 1 million shares at $3.75 per share. East West Bank is now one of our largest shareholders, and their interests are more closely aligned with us more than ever.

The second component of our debt restructuring involved a conversion of a subordinated debt and accrued interest held by my firm, Cross River Partners. Into Enservco equity and two separate transactions that took Enservco's total debt down another $3 million.

Cross River continues to be Enservco's largest shareholder, and I can tell you I'm very happy with this investment. Then in February of this year, we paid our $17 million term loan down another $3 million with proceeds of a public offering that I'll talk about in just a minute.

And finally, we apply for and may receive for given us our SBA PPP loan and that will take our debt down another $1.9 million, which lowered our breakeven and puts us in a position to operate more profitably as the industry continues to recover and economy rebounds. The third element of our plan was raising additional equity capital.

In the fourth quarter, we raised $3.6 million of gross proceeds at the market transaction to support the ramp-up of our heating season. In the first quarter of 2021, we raised an additional $9.6 million gross in an effort S-1 offering, $3 million of which, as I said, was used to pay our term loan down further with a balanced reserve for working capital and potential M&A activity.

These raises, which totaled approximately $12.5 million, went a long way towards shoring up our balance sheet and giving us breathing room we haven't enjoyed for some time. So with the transformation of our balance sheet completed, we're now excited to turn our attention to further strengthening our operations and taking advantage of rising oil prices, renewed industry activity and a rebounding economy.

With that, I'll turn the call over to Marjorie to recap our financial results.

Thank you, Rich. Before I get into the numbers, I want to again express our appreciation to East West Bank for working with us throughout the refinancing process.

We value their partnership as a leader and now as a fellow shareholders. We also appreciate the confidence of our legacy investors who remained loyal to Enservco throughout a difficult year as well as new investors who have come on board through our various equity offerings.

The refinancing and fresh capital provided by these offerings was not only instrumental in the retention of our New York Stock Exchange American listing, but it resulted in the removal of the concern language on our financial statements in the Form 10-K we filed today. And now to the numbers.

Enservco reported Q4 revenue of $2.4 million down from revenue of $8.1 million in the same quarter last year due to lower commodity prices and COVID-19 impact on our industry. The lower revenue in Q4 and for the full year, belies the fact that we won new customers and increased our market share in 2020.

In Q4, we also won some non-oilfield services business that we've been pursuing to augment traditional revenue streams and maximize fleet utilization. For competitive reasons, we're not going to get too detailed about the non-oilfield services we're providing.

Q4 Production Services segment revenue declined to $1.8 million from $3.5 million. However, production services generated a segment profit of $11,000 versus a segment loss of $116,000 a year ago, due to the fairly dramatic impact of our cost-cutting program.

Similarly, even though our Completion Services segment revenue was $600,000 in Q4 down $4 million from $4.6 million of revenue a year ago, we reported a segment loss of $600,000 compared to a profit of $400,000 in the same quarter last year. Again, this illustrates the importance of our cost reduction initiatives.

On the corporate side, we reduced SG&A expenses to $900,000 in the fourth quarter, down from $1.3 million in the year ago fourth quarter. Primarily reflecting savings derived from consolidation of physical locations and lower corporate staffing levels.

Total operating expenses in the fourth quarter declined 44% to $5.9 million from $10.5 million year-over-year due primarily to reduced activity, cost reductions and lower depreciation and amortization. Q4 net loss was $3.7 million or $0.69 per share compared to a net loss of $3.3 million or $0.90 per share in the same quarter last year.

Approximately $730,000 of the $3.7 million net loss represented a noncash equipment impairment charge. Adjusted EBITDA in the fourth quarter was a negative $1.5 million, compared with a negative $1 million in the same quarter last year.

Turning to our full year results. Total revenue for the full year ended December 31, 2020, was $15.7 million versus $43 million in the prior year.

In addition to lower commodity prices in the COVID impact, warmer than normal temperatures during the 2020, first and fourth quarters played a part in the decline. Production services revenue for the year was $7.7 million versus $14.7 million year-over-year and generated a segment loss of $700,000 compared to a segment profit of $1.1 million in 2019.

Completion services revenue for the same year came in at $8 million compared to $28.3 million in 2019 and generated a segment loss of $800,000 versus a segment profit of $7.3 million year-over-year. The segment losses were largely attributable to a sharp reduction in the company's higher-margin frac water heating service due to the decline in drilling and completion activity resulting from lower commodity prices and the pandemic.

Total operating expenses for 2020 were reduced to $28.4 million from $46.6 million in 2019 due to lower work volumes and our cost-cutting program. SG&A expenses improved to $5 million from $6.2 million year-over-year, reflecting cost cuts.

Depreciation and amortization expense decreased to $5.3 million from $5.7 million due to disposal of assets in the second quarter of 2020. Net loss for 2020, which reflected the impact of a large third quarter gain on debt restructuring was $2.5 million or $0.60 per diluted share compared to a net loss of $7.7 million or $2.06 per diluted share in 2019.

Adjusted EBITDA in 2020 was a negative $5.7 million versus a positive $2.8 million in the prior year. I'll hand it back to Rich now for some closing comments.

Thanks, Marjorie. So in closing, we're excited about our prospects going forward.

With a significantly deleveraged balance sheet and ample working capital, we think our prospects are bright. We have a large fleet, a broad geographic footprint, great customers and a strong team.

As the economy continues to rebound, we can focus on getting back to the capacity utilization we enjoyed prior to the downturn. Thank you again for all your continued support Enservco, and operator, please open up for questions.

Rich, first of all, congratulations on all the great financial work in recent months. I understand -- I understand you don't want to get in the on this new non-oilfield business.

But I just wondered if you could comment broadly whether this requires any investment in any kind of new equipment or personnel or if these are tasks that can be performed with current capabilities?

The answer is no to new equipment. And we've actually, prior to -- we've had -- well less than 5% of revenues come from non-oilfield in the past.

This isn't something new. The issue is what the energy drop or oil energy recession has allowed us to do is kind of dust that off and refocus on it.

And what we found is there is -- we've lost a lot of low-hanging fruit out there that has real business to it, not one-off stuff. So without getting into the industry and specific stuff, we're pretty excited, and we know our trust can do that stuff at a cheaper rate than what our customers that we talk to can do it the way they're currently doing it.

So that's -- we can add value as a key point.

And just to follow that up, when do you think you'll be able to share more on this effort?

It's -- we have to -- we get over 10% of revenue. We would have to, obviously, we probably did that before.

That happens. But when we're comfortable, we've got a real strategy that is solid and it's going to be something that's going to go.

It's not just a 2 or 3 or 4 quarters saying that we would -- we want to outline that for you guys in detail.

Okay. That's all.

We'll look forward to that, and I hope it works. You've talked in the past, this 1 the previous people in the world are sell-side analysts have for politicians.

So I've got 1 more question I got for. You've talked about wanting to grow and serve those oil franchise.

So here are some questions. First, does this growth require additional units?

Or is it more about increasing utilization of the existing fleet?

Increased utilization for the energy space. And then for the non-oilfield space, it's we don't need additional units.

If we want additional units, we could probably go out and get them. I don't -- I mean, the very little secret in the way in world isn't the units.

It's not the metal that's it's hard to come by. It's good operators who bring business with them.

So the beauty of us is, we have a broad geographic footprint. So how do comes to work with us.

He is -- he's able to get better probably more hours. And if he goes to work for a small mom-and-pop with 3 or 4 hot oilers.

And that is a true strategic advantage for us. And so once we can recruit and retain and get all these hot oilers and we look at the equipment side.

But as of now, we're probably -- we're finding that with our equipment. We can grow our business.

As you know, we used to do $50 million in revenue. So you saw our fourth year, it wasn't close to that number.

So it there's plenty of room for us to put that stuff to utilization. And that number, our -- was never focused as company.

It will be going forward. So that's something that we're excited about.

Okay. No, that's helpful.

And the thinking about the expansion, do you see that more Enservco maintaining a share and an expanding well services recovery? Or is it more about taking additional share and a more static market environment.

I think it's taking share. It's pricing improvement.

Oilfield services companies across the board, not just our services. We've all taken a taken a hit to our pricing during the downturn because the E&P has demanded it.

Our clients are now reversing that. And we're a price leader because we are the biggest player.

So because we have more equipment and operators, we can push those prices up, and we're starting to do that. So if that's part of the equation, so margin improvement, which will lead to cash flow improvement.

As I said to the team, I think I don't care if -- I'd rather do $20 million in revenue at a 30% margin and $50 million at a 3% margin. So we're totally focused on cash flow.

And when the utilization is right, we get the right pricing, we'll push that lever.

Okay. And it sounds like from what you just said a minute ago, I was going to ask you what advantages you think you have versus competitors, but it sounds like that the -- just the size of the business and your ability to attract the best labor is perhaps your biggest advantage.

Was anything else I'm missing?

Safety. I can guarantee you the small 1 to 3 to 1 to 5 operator companies can't have a focus -- as big a focus on safety, particularly in a downturn like this, you have to -- I mean, you -- a lot of the guys are pricing the business below cost just to stay alive.

And so safety becomes a -- I wouldn't even call it a secondary tertiary. But given our balance sheet we have now and the size of our business, and we've been -- we'll be able to focus on safety.

And I think so safety and geographic footprint. Give us a lot of let -- give us a little a leg up on our smaller operators.

Okay. And my last one here is actually to shift gears.

So I was wondering with this focus on growing the hot oil franchise, I wonder if that any material changes in the frac water heating side of the business?

No, it's just more -- it talks about seasonality more than anything. It's tough running a business that operates North Dakota is a longer season, obviously, than, let's say, Colorado, but it's just -- I prefer businesses that run 12 months of the year that we can get a nice margin off of than businesses that run 5 months of the year that we can get nice margin off of it.

The way I see it, I think -- could be a -- at a good utilization rate, a very good revenue generator for us. And then how oil are the heating that becomes a cherry on the top, where we could have very big years if that -- if we get the cold weather.

And that's more of a completion business, too. So as activity picks up, that you're going to see that business really start to pull its weight, but -- is more maintenance.

So it's just -- it's a better sleep at night business, if you will. That's kind of what I'm referring to versus a fundamental change in heating.

Congratulations on all the work that you had done last year. With the price of oil rebounding, what are you hearing from your customers?

Do you think that they see it as sustainable? Are they getting a lot more interest in drilling activity?

Or are people still very cautious?

Good question. It's a tough question today when oils down 4% or whatever the you're exactly right.

What we're seeing from our business development guys. Is they're getting for the first time, we actually had a call today, they're getting priced -- they're asking for price and they're getting it.

So that's a really encouraging sign. Now it's -- I caution that's going from probably the worst energy recession since the 1980s, but it is encouraging to see the E&P guys, they understand that we're partners with them, and we try to do the best we can buy them.

Oil price has gone from 30 to 60. So they can afford -- as long as we do the job right, provide good safety and on-time and real high-quality service, they're willing to pay a little more for it.

Do you anticipate a return back to pricing the way it was before the downturn? Or do you think that it's going to take a long time?

It depends on the basin, and I won't get into specific basin by basin, but certain basins are a little more competitive than others. I think there's much more room to run on the pricing.

Not we're just, I would say, in baseball -- probably in the third inning. Our price.

We're just starting now to ask for that pricing, so -- and we're guiding it. So it's -- we don't want to be -- we're a huge, obviously, huge fans of our customers.

We love them. But the -- they understand we have to make a margin on our business, too.

So I would say this $60 oil price is a great sweet spot, in my opinion, both from the economy and for our customers.

Great. And then my final question is on the competitive landscape.

Obviously, like you said, this recession probably took out a lot of people, a lot of smaller mom-and-pop under capitalized to get a lot of your customers. As things come back to normal, how does the competitive landscape look like?

Will there be just a lot less competitors out there? Or do you think everybody is going to come back once activity resumes?

I think it goes back to your first question on price. Like if -- again, we're a bigger player in the services we provide, so we should be price leaders.

If you're not getting price, if oil is $100 a barrel, it doesn't matter if you're still getting X dollars an hour for your service, you're done. So you got to start seeing that the hourly rates start to rebound for us and for all of our -- especially our smaller guys, they won't come back.

And I think the mitigating factor in all this will be labor, quite frankly, at in the day. It won't be the steel.

There's a lot of steel out there. It's going to be -- can they get the good people.

Can you get them hours? You give a good livelihood.

So we're able to do that.

Well, I want to thank everyone for joining us on the call today. I want to thank everyone on the Enservco and the team.

Marjorie, and everyone at corporate for all their hard work to get us to where we are. And I can't wait to update you guys in a couple of weeks on our first quarter.

So thanks again, and enjoy the rest of the day.

Thank you.