Marcel Kessler - President and CEO Jon Faber - CFO Chad Yetka - VP, Operations, USA David Holodinsky - VP, Operations, Canada Kevin Boston - VP, International and Offshore

Steve Li - Industrial Alliance Securities Sean Wetmore - National Bank Financial John Gibson - AltaCorp Capital Dana Benner - AltaCorp Capital Kevin Lo - First Energy Capital Jon Morrison - CIBC World Markets Jeff Fetterly - Peters & Co.

Thank you. Good morning and welcome to Pason's third quarter 2014 conference call.

With me here in Denver today are Jon Faber, our CFO, and Chad Yetka, the Head of our U.S. business unit.

And on the phone we have David Holodinsky, the Head of our Canadian business unit, and Kevin Boston, the Head of our International business unit. I will start off with a high-level overview of third quarter performance and Jon Faber will then dive into the financials.

I will conclude with a brief outlook before taking any questions. The drilling environment in North America continued to be favorable during the third quarter of 2014: Drilling industry days in the United States increased by 8% from the third quarter of last year and by 4% from the previous quarter.

In Canada, drilling industry days were up 11% from the previous year. Pason demonstrated strong operational and financial performance during the period.

Total revenue increased 29% from the previous year period to $134 million, representing all-time record quarterly revenue for the Company. In addition to a favorable market environment in North America, growth was driven by an increase in U.S.

market share, continued growth in product penetration, robust growth in international markets, and a strengthening of the U.S. dollar relative to the Canadian dollar.

The forex impact accounted for 11% of the revenue increase during the period. All of Pason's major product categories generated revenue growth above industry activity, led by a year-over-year increase in the communications category of 50% and strong acceptance of the new Pason Rig Display and ePVT software.

We currently have 930 Rig Displays and 450 ePVTs installed on drilling rigs. EBITDA for the third quarter was $76 million, an increase of 52% compared to the previous year period.

The Company recorded a net income of $26.5 million. Capital expenditures for the third quarter were $39.6 million, up significantly from the previous year, as deployment of new hardware, including the Rig Display and components of the EDR evolution, continued.

On September 30, our cash position stood at $151 million, plus $14 million held in trust for the payment of the dividend in October. There is no debt on the balance sheet.

We are holding our quarterly dividend steady at $0.17 per share. And I'm now turning over to Jon Faber for a more detailed look at the financials.

Thank you, Marcel. As Marcel noted in his opening remarks, Pason achieved record revenue in the third quarter of $134 million, a 29% increase from $104 million in the same quarter of 2013.

Increased industry activity, increased penetration of existing products and early adoption of new products, expansion in U.S. market share and the strengthening of the U.S.

dollar relative to the Canadian dollar, all contributed to revenue growth in the quarter. EBITDA for the quarter of $76.1 million was up 52% from EBITDA of $50 million in the third quarter of 2013, and sequentially up 65% from $46 million in the second quarter of 2014.

Net income for the quarter of $26.5 million or $0.31 per share was up from net income of $9.1 million or $0.11 per share a year ago. Sequentially, net income increased 50% from $17.6 million or $0.21 per share in the second quarter of 2014.

Year-to-date revenue of $361 million is up 22% over revenue of $295.7 million in the first nine months of 2013. EBITDA of $192.6 million for the nine month period ended September 30, 2014 was up from $82.1 million in the same period of 2013 when the Company recorded the final litigation provision.

Net income for the first nine months of the year of $64.9 million is up from a net loss of $633,000 in the first nine months of 2013. Corporate expenses including R&D and IT are higher year-over-year due to planned investments in our business infrastructure and systems as well as expanding our business development capabilities.

Stock-based compensation in the third quarter of $15.3 million was largely unchanged from $15.8 million in the same quarter of 2013, while year-to-date stock-based compensation of $40 million is up 52% from $26.4 million over the first nine months of 2013 due to the increases in the Company's share price in 2014. I'll now turn to the U.S.

business unit, which includes our rental business in the United States and 3PS, our Austin-based sensor manufacturer. The U.S.

business unit posted quarterly revenue of $79.4 million in the quarter, an increase of 32% over revenue of $60.2 million in the third quarter of 2013. Sequentially, revenue increased 11% from second quarter revenue of $71.8 million.

We experienced strong revenue growth in each of our major product categories in the quarter due to greater product penetration, an 8% increase in industry activity, continued growth in U.S. market share and a strengthening of the U.S.

dollar. Growth in the communications category and increased penetration of EDR peripheral devices again led revenue [to increase] [ph] during the quarter.

Quarterly operating income of $45.8 million was up $15.3 million from operating income of $30.5 million in the third quarter of 2013, and up 14% sequentially from $40.2 million in the second quarter of 2014. For the nine months ended September 30, revenue for the U.S.

business unit totaled $215.3 million, up 25% from $172.2 million for the same period in 2013. For the same period, operating income of $119.4 million was $36.4 million or 44% higher than the previous year.

Our Canadian business unit is our second largest business unit representing 29% of revenue for the quarter and year to date periods. Canadian revenue of $38.6 million in the third quarter was up 20% year-over-year from $32.3 million in the second quarter of 2013.

Sequentially, Canadian business unit revenue increased 95% from $19.8 million in the second quarter. An 11% increase in industry activity coupled with greater product penetration helped drive increased revenue in the quarter.

Operating profit for the Canadian business of $21.4 million was up 35% year-over-year from $15.9 million in the third quarter of 2013 and up $16.9 million sequentially from the second quarter of 2014. Year-to-date revenue of $106.3 million was 16% higher than $91.8 million in the comparative period of 2013, while operating profit of $56.3 million for the nine month period was 21% higher than $46.6 million in the first nine months of 2013.

Increased industry activity and increased product penetration have combined to drive year-over-year growth increases in the Canadian business unit. In the International business unit, increased product penetration and higher activity levels drove strong results in the third quarter.

Revenue in the International business unit totaled $16.1 million, up 39% as compared to $11.5 million in the comparative period of 2013. Included in revenue during the third quarter of 2014 was the receipt of a $1.5 million payment related to a contractual foreign exchange and inflation related adjustment clause.

The Company saw revenue growth in each of its major product categories and each of its geographic regions, Latin America, Australia and the offshore and frontier regions. Segment operating profit of $7.1 million in the quarter exceeded 2013 third quarter operating profit of $2.5 million by $4.6 million.

Nine-month revenue for the International businesses unit totaled $39.5 million, up 25% from $31.7 million in the first nine months of 2013, while operating profit of $13.7 million was 147% ahead of the $5.5 million total in the comparative period of 2013. Finally, I'll briefly review capital expenditures and the balance sheet.

The third quarter of 2014 saw a significant increase in the Company's capital expenditures as the Company continued its rollout of the Enhanced Pit Volume Totalizer and the EDR evolution, as well as investments in the Company's business infrastructure. Capital expenditures of $39.6 million in the third quarter were $18.2 million higher than the same quarter of 2013.

Year-to-date, capital expenditures of $74.3 million were up 48% from $50.2 million in the first nine months of 2013. At September 30, we had positive working capital of $174 million, including a cash balance of $151 million which do not include $14.4 million held in trust in respect of the dividend which was paid in October.

There is no debt on the balance sheet. I'll turn the call back to Marcel to provide comments on our outlook.

Thank you, Jon. We have obviously seen significant declines in oil prices since July and a reduction in near-term and medium term price forecasts.

As a result, we do expect more conservative CapEx budgets from producers going forward. This could result in material reductions of active rig counts and drilling days in the North American land market.

Pason is not immune to reductions in North American land drilling. However, we do believe that we will be able to continue to outgrow underlying drilling activity through increased product penetration and international growth.

Our capital expenditure budget for the next 12 months is up to $124 million, $94 million of which is directed towards new hardware that can generate incremental revenue or save operating costs. Our cash-generating capacity and our cash position are more than sufficient to cover new business development, planned equipment upgrades and the dividend.

And we would be happy to take any questions at this point.

Congrats for the quarter. First question, it seems that you guys have great traction this quarter.

Like you guys mentioned, there was a steep decline in prices, your business [is always] [ph] purchase driven, any ways that you guys can adapt your cost structure to reflect lower volume?

So the cost structure basically is, CapEx aside on the operations side, it's about a third, a third, a third. A third of our cost is field related, field staff and the related services, a third would be R&D and IT related, and a third is everything else.

And I think in the short term, most of costs are reasonably fixed, but obviously if there was a sustained downturn, all of those cost buckets can become variable.

Okay, great. Second question is more related to the adoption of technologies in the oil and gas base, and I've attended a conference recently discussing about Internet of things, and maybe can you guys relate or share your views on where do you guys see the adoption of technology broadly speaking, and what are the opportunities that you guys may want to tackle going forward?

This is a very broad question, Steve, and I think in the interest of time we probably have to stick with some very high level themes and maybe we can follow up one-on-one afterwards. But obviously there are two broad areas that we're actually more into but at a very high level there are at least three areas of oilfield technology, one being the drilling side where we're active, second being completions where a lot of new technology has been or is being deployed, and then the third the whole notion of the digital royalty around the production side especially in non-conventionals.

Now the one that's [drilling] [ph], for us here is primarily number one at this point. So in terms of the drilling side, a bunch of big themes and trends obviously.

One is the modernization of the rig fleet, to [indiscernible] away from the older mechanical rigs to the modern AC rigs with more integration, with PLC controls, with top drives and everything that goes with it. That's one theme where much of our development is actually lined with that to make sure that our products and services continue to stay relevant on the modern rig as they would have been on the older rigs.

Secondly, as you know that we have seen a significant shift over the last two to three years from traditional vertical drilling towards [indiscernible] directional. So those directional technologies and all the downhole tools associated with that is obviously a big trend, one where we also have a product suite and continue to invest significantly to add value to that segment.

And then third, it's the whole ICT segment, so information and communication technology. With the modern rigs, with more people at the rig site, with higher well complexity, that drives higher computing needs at the well site and also higher bandwidth needs, that we provide through a combination of satellite and terrestrial bandwidth.

So these are the three themes really on the drilling side, and I think we are active in all three and make significant investments in all three areas.

Great. Maybe a last question, regarding your increasing market share in the U.S., anything has changed in the Company's landscape there and can you maybe share with us how you plan to continue in that trend?

I will let Chad Yetka answer the question for the U.S.

Obviously the uncertain environment moving forward is going to provide us with a challenge on continued advancements in market share. We've had some success this year predominantly in the smaller operators and contractors at leveraging our service advantage and gaining additional market share there.

We also had a big push on the larger contractors and operators and better able to serve those needs, as evident by the product penetration for the PRD as well as the ePVT system. Additionally, we've had some advances on our communications capability which have found some traction with the larger operators.

As far as moving forward, we will continue to leverage those advances as best we can. I cannot say for sure in this uncertain environment what that's going to yield.

Maybe to just follow on this subject, is it possible that some of the market share increases that are actually due to the fact that you guys have this increased communication capability and some of your customers may use two different EDRs at a rig site but because there are either some of your products that the really want, they have to install that EDR?

I think that's broadly correct, Steve. There are a number of rigs in the U.S.

where there would be two EDR systems because – typically driven by operator needs and operator demand. So as you know, there are two large contractors that's our prime customers in the United States and we are on a significant percentage of those rigs driven by operator demand.

And that can either be driven by the desire to have a specific product, just specific based on product at the rig site like the gas analyzer for instance that's proven to be a very valuable product to operators, or more by the desire of the back-office at the operator side to receive one data stream essentially from one provider in their back offices maybe in their real-time operation vendors from just one provider and not from several sources.

Great quarter. In past you have provided some color on the rollout of the VSP new product and I was wondering if you could touch on that and maybe just how – the process for monetizing that new technology?

So the process of rolling out the VSP is in handful of [ring] [ph] so to speak. The Canadian business unit should receive enough VSPs – and just as a reminder, the VSP is essentially the core server in the EDR, a modern server replacing an older product that we call the Tool Push Computer or TPC – the Canadian business unit should have the full compliment to switch over the whole rig fleet before the winter drilling season.

And we'll see immediate benefit from that because the new VSP is significantly more reliable and robust than the product it replaces, should reduce service cost and increase our customer satisfaction. At the same time, the U.S.

is also getting a limited number of VSP more on a trial basis which will be deployed for certain basins and certain high-value customers, but the full rollout for the U.S. has not yet started.

Now on your question regarding monetizing that, there are several, and we've spoken about that in the past, there are several avenues to monetize the VSP investment. The one that's currently already underway is enablement of more advanced rig communications.

And maybe, so that's primarily in Canada right now, maybe Dave Holodinsky, the Head of Canadian business unit, can give us a brief update as to how those installations are going in Canada.

Sure, Marcel, and thanks for the question, Sean. So today we've got approximately 410 rigs running that we are servicing in Canada, and of those 253 are running the VSP, and we do have a total of 326 VSPs installed although not all of the rigs are running today that are running the VSP.

To Marcel's point about monetizing the communication aspect, we have a Diamond Level Internet and as a result it required the VSP and the rig tenant to enable the diamond, and out of the 253 VSPs we have today, 70 of those are paying for the diamond, so roughly 28%, and that's a significant premium offering for our communications offering. So we're monetizing it initially in that regard.

Okay, great color, thanks guys. Maybe, Marcel, just on some of the other bets you have, new product bets you have in the pipeline, maybe a bit of color there?

I think you might have rolled out some software initially over the summer.

So what you might be referring to here are the analytics offerings. They were launched this summer, they are called ARAD on the one hand and DTR.

ARAD stands for Automated Rig Activity Detection, and the other one is DTR, the Daily Tracking Report. Both are fairly simple analytics packages catering to the needs of our customers.

It is quite early days. So it has been launched this summer.

There are I think about 50 active clients, if I'm not mistaken, at this point using the packages. I don't know off the top of my head what the revenue number would be.

Okay. And then looking ahead, is there sort of a timeline or wave where some more new products are going to hit and have the potential to be I guess influential to your results, like is it potentially more over the first quarter or second half 2015, just trying to get an understanding of timing?

So I think in the first half of 2015, we should see continued traction on the Rig Display, on ePVT. Despite the fact that penetration is already at a very attractive level, I think we still have a significant opportunity here to continue that penetration.

Also building on David Holodinsky's comments, the high-level satellite bandwidth offering, the high-level Internet offering enabled by the VSP, the Diamond offering, that should see a significant growth in 2015. There's another aspect there that Dave did not touch on enabled by the VSP, which is actually rig internal communications.

Rig phones that also generate new revenues offshore carry essentially our increasing product penetration in the first half of 2015. Then in terms of brand-new products, we are looking at the second half of 2015 at this point.

Okay, thanks very much. On the pricing side, I think in the sort of recent past, you guys have opened the door for potentially thinking about pricing increases because you've held pricing flat over the last little period.

Just wondering with the move in commodities if that's off the table?

So there will be very minor pricing adjustments in some of our products, but I think on average given the environment we are in and the environment we're likely heading into in 2015, prices are largely going to be held flat, especially in North American land. I think there's more nuance there in some of the international markets where some of the big operator contracts with NOCs come up for renewal, we'll probably see pricing changes there.

But the North American land by and large we are holding our current pricing.

Okay, and last one for me, just a follow-up on the cost structure question. Marcel, you're talking about the three buckets.

If you just split operating cost into fixed over the short term and variable, is it sort of like 80/20 fixed/variable?

You want to take that? I'll let Jon take that one.

Sean, it probably actually depends on which of the three buckets you are actually talking about. So certainly some of the things on the field bucket for example are much more activity driven than some of the more corporate costs or R&D costs would be.

But I would say sort of en masse it probably wouldn't be as high as kind of the 80/20, it's probably something more in the sort of 60% fixed. But again, that all depends on timeframe as well, to Marcel's earlier comment that everything is variable over some amount of timeframe.

And so it's a timeframe question and which specific buckets you're talking about.

Sure, that's helpful to think about. Thanks very much for the answers, guys.

This is actually John Gibson for Dana. Just wondering if you could maybe touch on your large cash position and how you may sort of weigh your options going forward, [Indiscernible] change that in the last month or two here?

I think there really has not been a significant change with our view to cash position. I think as you know we are very [familiar] [ph] with this on the balance sheet structure.

There are [no] [ph] immediate plan to deploy the cash. I think in principle, I think that we have always said, I think one of the key priorities or the first key priority obviously is organic growth, deploying our resources in that space.

Secondly, in terms of deployment of the cash, steady dividend growth, there has been no change around that. And third, in principle I think at the right time open to repurchasing our shares.

But there's nothing specific that we can announce around that today.

Okay, great. Thanks for the color and congrats on a great quarter.

I'm in an airport, so apologies [I wasn't able to make] [ph] the call. I guess the question that I've got is, given the rather remarkable pullback in the last few months in oil prices been a pretty swift move, I understand the comments about wanting to be careful on pricing strategies, et cetera, how do you weigh a pricing strategy against the desire to continue to add product per rig, you may very well find [indiscernible] behave like additional Pason product but certainly not with any [sort of] [ph] price increase or clearly maybe a big sense for you to try to generate more pricing on what you have and back off a little bit on new product penetration, et cetera, so just curious to hear your approach?

So I think in my mind the broad pricing decisions are not directly connected to introduction of new products. I think the introduction of new products is largely driven by our ability to quickly go through products and being able to articulate the value around that.

And then the pricing of a new product introduction is very much tied I think to the value we generate. So we have always been speaking about our new products and services, either improving the effectiveness, the efficiency or the safety of drilling operations that we try to associate the value with, put the value to that and determine your pricing based on that.

So I don't think there's any change around that. I think the introduction of new product has to be value based, it has to create value for the operators, the contractors or the directional drillers and then the price point has to capture some percentage of that value, but I don't think we are making the connection with at this point the overall environment and the broader move on prices.

Now that being said, I think one consideration for new product introduction always is if the environment was to be very adverse, very hostile, you may not want to launch of very promising new product into a next ordinarily weak market because you may have to establish a price point that you bind yourselves. [Indiscernible] you might have a few years after to help yourself up to a level that you think is fair.

So if we were to enter into an extraordinarily challenging environment, on balance we might actually hold back some of the new product introductions until the environment turned around a bit.

Great. I guess secondly, have you seen any pushback?

I know you talked about considerable uncertainty in those markets but have you seen any pushback at all from clients in relation to your current strategies by virtue of this pricing environment, and I'll let you define that broadly, so has customer behavior changed in any way yet?

So I actually asked all the business unit heads those questions over the last couple of days, and I think the short answer is, nothing has materially changed yet but clearly people are nervous and concerned, but there has not been any tangible or significant impact in terms of positions or purchasing behavior. But there is clearly nervousness that our sales and business development people and field technicians are picking up, but it's not [significant] [ph] at this point.

Okay. Just one final one for me, with respect to the international environment your trajectory continues to be quite impressive and I wonder if you can give us some more color.

I know you mentioned I think it was Middle East and Australia or maybe it was Latin America. So maybe just some more color on where things are going well, do you see an acceleration in any market, product penetration rates, anything like that would be helpful?

Kevin, you want to take that question?

Sure. Thanks for the kind words.

In terms of what's been going well, as highlighted in Marcel's opening, our best quarter ever, that was true in all of our regions and it's true essentially from both rig count and revenues per rig in all those regions as well. So I couldn't point to one region more than the other in terms of our past and current success.

When you look forward, I think the three things are similar things that have driven our success all over the world. We have a lot of runway for increased product penetration in our existing markets.

We will see more market share gains in some of our markets. Obviously Australia, Argentina are some markets where we have Canada like market share and there isn't too much room but there are other markets we currently serve where we have plenty of room for market share growth and we think we can achieve that.

And then finally, the Middle East and other new frontier market expansion we think will be a big part of our growth story going forward. So I can't tell you that in one of the three it's going to be significantly more impactful than the other in the near-term.

All three things are going to play into the story.

Marcel and team, I wanted to congratulate you on such superb results in this quarter. I'm getting a lot of static on my line.

I hope you can hear me. Can you hear me okay?

We can hear you okay. Yes, there is a lot of static for some reason.

Okay. So when I first saw these numbers, I said, I think this is a record revenue and record operating profit, and I read the release and I didn't see any boasting about record, record, but of course in your oral presentation you are breaking records and I just think I guess kudos for being so demure and modest on this great results.

At the beginning of the queue when I was putting my question, I was interested in penetration of your Pason Rig Display, your PRD, and I think we've asked a lot of questions around that, but as I understand it, part of your penetration success and I'll just say looking at the U.S. where you're up to 62% versus 57%, the question is, how much more rollout of the PRD is there or is that largely complete?

And you have so many products flowing now, you kind of have to build a model like [indiscernible] but is your PRD rollout generally complete or is there still more to do?

First of all, thank you very much for your kind words, much appreciated. On the specific PRD question, so currently installed on about 900 rigs, that is approximately 50% of the currently active rig fleet where we do have Pason equipment, and we believe that is by no means complete.

Now I don't think we will get to 100% penetration, but I think 80% or so is realistic. So there is still a significant ways to go here.

In addition, we believe that certainly for some of the bigger modern rigs, there is actually the opportunity to put more than one Rig Display on each rig, and that's already happened, there are rigs that have more than one. So the average may actually be more than one.

As to how far that goes, I don't know. And obviously in a tighter CapEx and tighter cost environment, that increasing penetration may be slower than it otherwise might be.

But fundamentally I think the Rig Display still has significant opportunity for growth.

Great. That's all I have.

Thanks for the great results and keep it up.

Can I get an update or just get an approximation on if your – given all the new products you guys have, how much revenue per day you can actually fit on a rig in Canada and U.S. fully loaded?

So a good question, Kevin. I think the highest end rigs at this point would be of the order of $2,000 per day.

Okay, great. In terms of the international market, I mean you guys made $1.5 million this quarter.

That was from, it sounds like a one-time item. Is it really one-time item or should we expect something that's more recurring on that front?

Kevin, it's Jon here. It's not necessarily one-time but it's impossible to forecast when these adjustments come because they are sort of triggered by threshold levels, and that's why they sort of – as they sort of trip over these thresholds, you sort of trigger the payment.

So it's impossible to forecast when it could possibly happen again. So in terms of modeling, you almost [indiscernible].

Now of course they are intended to offset declines in exchange rates, right. So as such they should be largely neutral.

So I guess in effect I mean the $7 million in operating income might have been a bit high but it's not extraordinary given the performance of the division?

I think the way to think about the performance of that division is to look at the nine-month performance because that would capture the first quarter where we had a significant negative currency impact, which we essentially corrected up in the third quarter through the payment. So if you looked at the nine months, you'd have a better view of what it looks like.

Okay. And just staying on International for a second, what is maybe a magnitude revenue potential increase into next – if you had a rig that's fully loaded or let's say a regular rig in International, how much revenue could you actually make from that?

So Kevin, interestingly as of today the most profitable or the highest revenue rigs at least are in fact in the International business unit, and I believe there are some rigs in Kurdistan who are north of the number that I just spoke of a couple of minutes ago. So if you are actually able to get equipment and services of those regions, the [indiscernible].

So there is significant upside potential there as well.

Kevin, if I can just add, I think when you look at the International and you look when we talked about the revenue per EDR day for this segment as a whole, you actually have quite a distribution of revenue per day based on the regions and the region with the average would be well today. Certain regions have quite a bit of activity and lower revenue per day.

So Argentina is a good example. Now as Argentina moves towards more horizontal drilling, we expect that to sort of hold more products, more advanced products, and so it's probably less impact than what the upper end of the distribution could be as much as what the skew of the distribution ultimately looks like.

[So today] [ph] it would be fairly less skewed if you well.

Great. Just one last thing.

In your U.S., you increased your market share. Is that stealing market share away from existing players or is that on new rigs?

I'll take that. I think it's a combination of both.

We do have certain contractors that we have a strong partnership with that are turning out new rigs and we tend to follow those rigs and gain the market share in that fashion. But we also have multiple efforts underway to make sure that we're effectively servicing the entire market and doing as much as we can to increase the penetration there.

So on both accounts.

In regards to the PRD rollout, the 900 rigs that you referenced the PRD actually being on, can you give a sense of what percentage of those rigs witnessed some form of cannibalization once you installed that either through a SideKick or other hardware adjustment on the back of that?

So there has been some cannibalization. It was less than we had anticipated.

I will let maybe Chad and Dave give the update on that specifically to the U.S. and Canada.

So just briefly, Marcel is indeed correct, the initial installations of the PRD, we didn't see much cannibalization although we planned for substantial cannibalization. As we continue to increase the penetration of the Pason Rig Display, we are starting to see limited cannibalization predominantly of the SideKick here in the U.S.

business unit. Dave, you want to add?

So in Canada, we typically average two SideKicks for each EDR. Year-to-date last year we were averaging 195 and this year we are right around that same mark.

So the cannibalization has been very minimal, but whatever cannibalization we felt it has really come in the last couple of months. So I think the early adopters of the PRDs were just that early adopters interested in new technology.

Now that we've worked through about 60 plus percent of our customer base, we're starting to find those that are a little bit more price conscious and are doing some trading out, if you will. But to the earlier comments, it's been very minimal.

So is it fair to say that it's sub-10% at this point, broadly across North America?

I think that's fair. Yes, I think that's right, Jon.

Okay. Marcel, just a point of clarification, when you referenced pricing adjustments earlier in the call, am I right in assuming that that's modest gains in some cases and not actual reductions or you're looking at reducing?

That's correct. No, we are not looking at reducing at this point.

Sorry if I missed this earlier, but Chad, can you give a sense of the geographic concentration of the U.S. market share adds and was it broadly across the Lower 48 or specific to one region or one large customer add?

I'll start with the last first. It would not be one large customer add where we have seen the market share gains.

I would say that broadly speaking we've got market share gains across all of our regions with a little bit probably increased penetration in our Texas markets where traditionally we faced the stiffest competition in our lowest market share. We've probably seen the biggest gains in market share in that region.

In those cases you are displacing a large competitor product, is that the right assumption?

In most cases, yes. There are limited instances where there will be dual systems on the rig where for the sake of the operator predominantly they will have dual EDRs, but in most cases it's displacement.

On the International side, can you just highlight whether there is any major new customer adds in the quarter or was this largely better penetration across the existing customer base, either through them being more active or you just getting more of their market share going forward?

It would be the latter. So we've been continuing penetration, pricing increase and market share gains.

Broadly speaking, you could not point to one customer or contract to attribute our growth to.

How quickly do you expect the Enhanced PVT to be rolled out and now [indiscernible] commercial status how much more incremental revenue can you get off of that versus the previous generation product on a per day basis ballpark if you displaced an old one with a new one?

So currently about 450 installations of the ePVT, so it is quite substantial already, and extraordinarily good market and customer reception. The current price differential between the old and the new, each country has slightly different price points, but on average is approximately a $75 uplift for this version of the ePVT.

Now one of the key product development areas for us in 2015 is actually add-ons to this ePVT, essentially add-on software packages, add-on algorithms with more capabilities that will most likely be separate line items on the price list and could lead to a significantly higher price point for the whole well-control package.

Marcel, can you give any update on the partnership you have with Schlumberger on the joint drilling apps at this point?

I am not able to provide a detailed update on that.

Is it in commercial status at this point?

It is not yet commercial, no. It's still in development.

In Argentina, is it fair to say that the drilling contractor is your primary customer or are you more weighted towards [indiscernible]?

We are more – so [YPS] [ph] is our customer as are other operators and as our contractors. So we have approximately 75% to 80% market share in Argentina.

It's a mix in terms of who is driving the buying decision, but certainly it is not predominantly contractor focused. I characterize it as more operator driven on the whole.

Jon, just following to Kevin's earlier question, it's fair to say that you're not getting U.S. dollar backed contracts in Argentina but there are some peso inflation/deflation adjustments that are constantly ongoing?

So the contracts, it's paid out in pesos but related to the U.S. dollar.

So that's where that forex adjustment clause comes in. So it's mostly linked to the U.S.

dollar in terms of the pricing because of that adjustment clause, but paid in pesos.

Okay. Last one just for me, just on the communications side, are you guys seeing any incremental competition for Internet services or data feed on well-sites at this point in North America?

The situation is very different in various areas. So in the U.S., your typical well-site has always had several providers of bandwidth.

If you go to a typical U.S. well-site, there are two, three or four satellite dishes.

So we are typically one of those providers. Now with the upgrading of our communications capabilities enabled by some of the products we talked about, we hope to be able to take more share here over time.

In Canada, it's typically one dish and I think we have seen some specialized providers appear. I think we have seen a little bit of an erosion of market share, I think a few percentage points in 2014 on the communication side.

So there are some situations where you will have more than one dish in Canada which you wouldn't have seen that a few years ago.

Appreciate the color. Great quarter, guys.

Two quick questions. In the context of North American newbuild cycle for drilling rigs, do you expect the profile of newbuilds from a contractor standpoint to be positive or negative to your overall market share, specifically in the U.S.?

So obviously we have seen signification numbers of newbuilds here over the last couple of years and in fact the majority of the U.S. rig fleet is in fact switched over at this point to the modern AC rig.

Now there are various iterations of that, but that has already happened. And we have – let me take a step back here.

What really is helping us fundamentally is well complexity. So that is the direct driver of product adoption and service adoption of everything we provide.

The more complex the well, the deeper, it's horizontal if it's [indiscernible] directional, that helps us. And it's typically the larger more modern rigs that drill for those.

So that has helped our revenue growth. And looking out, I actually expect that with the challenges we see, we will probably see – we could see a fairly rapid decline in newbuilds, and I know that the order books of the manufacturers are actually getting thinner every day here.

So I think we have probably seen the transition of the rig fleet in the U.S. to be significantly steady, may not see much more of a shift here over the next year or so, but I'm speculating now.

So when you guys look at the rig builds that have been announced in the U.S. at a contractor level, do you ask expect that those will help – and the contractors that are building those rigs, do you expect that those will help or impact your market share in the U.S.?

We think it's neutral, that we have no indication to believe that it will go one way or another.

Okay. Second question, your comments earlier in terms of investment priorities for cash and cash flow, you notably left off acquisitions and M&A opportunities.

Where do you fit today in the context of evaluating those and how they fit into the business going forward?

As always, Jeff, we are evaluating those, and as always there is not a long list of attractive targets for us that make sense for us. So it's not off the table, nothing has changed.

We continue to look at attractive opportunities, but they are few and far between and there's certainly nothing that we are able to announce today on that front.

But has the priority from an M&A standpoint shifted in the context of capital investment for Pason?

It has not.

Okay, thank you. Appreciate the color.

Thank you very much for your time and we wish you a nice day.