Dale Dusterhoft - CEO Mike Baldwin - SVP, Finance & CFO Gary Summach - Senior Director, IR

Dan MacDonald - RBC Capital Markets Scott Treadwell - TD Securities Brian Purdy - PI Financial Kevin Lo - FirstEnergy Jon Morrison - CIBC World Markets John Daniel - Simmons & Company Dana Benner - AltaCorp Capital Jeff Fetterly - Peters & Co.

Thank you very much. Good morning, ladies and gentlemen.

I'd like to thank you for attending the Trican Well Service conference call for the fourth quarter of 2014. Here's a brief outline of how we intend to conduct the call.

First of all, Mike Baldwin, our Senior Vice President of Finance and CFO, will give an overview of the quarterly results. I will then address issues around current operating conditions and the nearer term outlook for each of our regions.

We'll then open the call up for questions. Joining us today and available to address questions are Don Luft, our President and Chief Operating Officer and Gary Summach, our Senior Director of Investor Relations.

Before we begin our discussion, I'm sad to report on the recent and sudden passing of Robert Hoskins, President of our U.S. Operations.

Robert had become a valuable member of Trican's senior management team, was a friend to all of us and will be sincerely missed inside and outside the organization. Our thoughts and condolences are with Robert's family and friends at this time.

Effective immediately, Sam Daniel will be assuming the role of President of our U.S. Operations.

Sam was previously the Vice President of our U.S. Operations and has been a key team member in the improvement of our U.S.

operations last year. He has over 30 years' experience in the pressure pumping business and before joining Trican a year ago, was President of another pressure pumping company.

We have complete confidence that Sam will continue to provide excellent leadership to our U.S. Operations.

I would now like to turn the call over to Mr. Baldwin to discuss the overview of the financial results.

Thank you, Dale. Before we begin, I would like to point out that this conference call may contain forward-looking statements and other information based on current expectations or results for the company.

Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. A number of business risks and uncertainties could cause the actual results to differ materially from these forward-looking statements and financial outlook.

These risks and uncertainties include but are not limited to fluctuating prices for crude oil and natural gas, changes in drilling activity, general global, economic, political and business conditions, weather conditions, regulatory changes. The successful exploitation and integration of technology, customer acceptance of technology, success in obtaining issued patents, the potential development of competing technologies by market competitors and availability of products, qualified personnel, manufacturing capacity and raw materials.

Among the risks are the ability of the oil and gas companies to finance their operations and other unforeseen factors. Please refer to our 2013 annual information form dated March 21, 2014 for a more complete description of business risks and uncertainties facing Trican.

Our Fourth Quarter results were released yesterday and are available on our website at www.Trican.ca. As noted in our press release, consolidated revenue for the fourth quarter of 2014 was CAD755 million, an increase of 37% compared to the fourth quarter of 2013.

The adjusted consolidated profit was CAD33 million and adjusted profit per share was CAD0.22, compared to an adjusted loss CAD16 million and an adjusted loss per share of CAD0.11 for the same period in 2013. Finance provided by operations were CAD90 million compared to CAD30 million in the fourth quarter of 2013.

I will provide commentary on the financial results of our geographic segments on a sequential quarterly basis. As we believe this comparison provides the most meaningful insight and analysis into the Fourth Quarter financial results.

Canadian revenue in the fourth quarter of 2014 decreased by 5% compared to the third quarter of 2014. The job count decreased by 15%, due largely to a substantial drop in activity over the last two weeks of December.

The lower job count was partially offset by a 10% increase in revenue per job due to an increase in fracturing job sizes. Fracturing job sizes continued to grow due to sand volume and stage count growth per well.

Canadian pricing levels were relatively flat on a sequential basis and did not impact the sequential change in revenue per job during the fourth quarter. Canadian operating margins for the fourth quarter of 2014 declined by 520 basis points on a sequential basis.

Margins were negatively impacted by lower utilization in December, sequential cost increases and changes to customer mix. For our U.S.

operations, revenue increased sequentially by 8% due largely to increases in the utilization of our fracturing fleet. The financial results for our U.S.

operations improved due to cost control initiatives that favorably impacted operating margins in the fourth quarter of 2014. Notable decreases in sand hauling and product logistics costs were realized in the quarter and contributed to the 400 basis point sequential improvement in operating margins.

Our international operations include the financial results for our operations in Russia, Kazakhstan, Algeria, Australia, Norway, Saudi Arabia and Colombia. With Russia comprising the majority of our international results.

International revenue decreased by 25% sequentially, due largely to lower revenue in Russia caused by a weaker ruble and an expected seasonal slowdown, which was partially offset by increased revenue in Saudi Arabia. International operating margins decreased sequentially by 490 basis points, due largely to lower margins in Russia caused by seasonal slowdowns that reduced operating leverage on fixed costs.

Higher operating costs in Columbia and Algeria also negatively impacted sequential operating margins. Based on the results of impairment testing performed at December 31, 2014, our Fourth Quarter results include asset impairment write-downs of CAD12.4 million.

The write-downs include CAD5.4 million relating to micro seismic software, CAD5 million of goodwill and equipment associated with our coil tubing operations in Canada and CAD2 million relating to cementing assets in Australia. Capital expenditures for the fourth quarter of 2014 totaled CAD21 million compared to CAD28 million in the third quarter of 2014.

Capital expenditures have largely consisted of maintenance capital programs for the past several quarters. Given the reduced North American activity expectations for 2015, capital spending will be kept to a minimum throughout the year.

Based on existing capital budget commitments, we expect capital spending to be between CAD50 million and CAD60 million during 2015. Trican regularly reviews its capital equipment requirements and will continue to follow its policy of adjusting the capital budget on a quarterly basis to reflect changing operating conditions and capital equipment needs.

Despite the conservative capital program, Trican is committed to maintaining a high standard of equipment quality and [inaudible] of our existing base. We will continue to invest in the maintenance of our fleet to ensure that equipment quality and performance remains industry leading.

Given the expected declines in North American activity, managing the balance sheet and cash flow will be a key focus for Trican in 2015. Cash flow in 2015 will be significantly influenced by changes to working capital throughout the year.

Slowing market conditions are expected to result in substantial working capital reductions during 2015, which should provide Trican with meaningful cash inflows. A conservative capital spending program combined with reductions in working capital is expected to provide us with opportunities to pay down a significant amount of debt in 2015 despite the weak financial outlook.

I will now turn the call over to Dale, who will be providing comments on operating conditions and strategic outlook.

Thanks, Mike. We were pleased with our fourth quarter financial results that reflected our strong market position in Canada and Russia and improved performance in the United States.

Canadian activity was strong during most of the fourth quarter and led to a strong demand for pressure pumping services. Fracturing demand continued to benefit from an increase of fracturing intensity, which contributed to a higher revenue per job for our fracturing service line in Canada.

However, activity declined substantially near the end of the corridor with the rate count falling approximately 50% over the last two weeks of December. Although a decline was expected, the extent of the slowdown exceeded expectations as we began to see the impact of lower oil prices and demand for our services.

The utilization of our U.S. equipment was strong for most of the fourth quarter as well and benefited from a full quarter of activity for additional crude that was deployed in the Bakken and Permian regions.

Our U.S. operations reached our goal of exceeding 15% operating margins in November and then saw a seasonal slowdown in the second half of December.

Sharp oil price declines and weak natural gas prices are expected to result in a significant decrease in North American drilling and completions activity in 2015 relative to 2014. We have already seen large declines in pressure pumping demand in our Canadian, Permian, Bakken and the Eagle Ford regions and I'm starting to adjust our operations accordingly.

Our operational strategies throughout this downturn will be to reduce the size of our active plate and maximize the utilization of the remaining equipment. In the U.S., we have parked one fracturing crew in each of our Eagle Ford, Bakken, Permian and Hazel regions during the first quarter of 2015.

We have also closed our operating base in Longview, Texas, where one fracturing crew and two [inaudible] crews had previously operated despite the significant decline in our active U.S. plate, we remain committed to the U.S.

pressure pumping market long-term. We're pleased with the recent operational and financial improvements made to our U.S.

operations and expect to emerge from the current downturn with a stronger U.S. business.

In Canada, we expect a slowdown over spring break up to begin early and end late, given the lack of urgency by our customers to drill and complete wells in the current commodity price environment. We also expect to park 20% to 25% of our Canadian pressure pumping equipment by the end of the first quarter of 2015 and reduce the fixed and variable costs associated with this equipment.

Collectively, these measures to down size our Canadian and U.S. operations are expected to impact fixed costs through reductions in people and infrastructure.

Although these reductions are unfortunate, we believe they are a necessary response to the current and expected drop in Canadian and U.S. activity.

We will continue to monitor the activity levels of our customers and make additional changes as required. Substantial cost cutting measures in Canada and the U.S.

were initiated late in the fourth quarter of last year and we expect to see the early results of these measures in February of 2015. The most significant cost cutting initiatives relates to product, product transportation and people costs.

We have already obtained a number of pricing concessions from our suppliers and are currently in negotiations with additional suppliers to reduce product and product transportation costs. We're pleased with the progress made to date, but will continue to focus on this initiative as it will have the most significant impact on our cost structure and profitability.

Effective February 1st of this year, a 10% average salary reduction was implemented across North America for our Canadian, U.S. and Corporate employees.

Which included a 15% to 18% reduction for senior executives, in addition our directors have taken a 15% reduction in retainer and meeting fees. The salary reduction is expected to result in annual cost savings of approximately CAD15 million for our Canadian operations, CAD10 million for our U.S.

operations and CAD3 million for the Corporate division. We have also reduced our North American workforce by approximately 600 people to date, with the majority of those being in our U.S.

operations. Cost cutting measures targeting all other operational and administrative costs have also been initiated.

We will be focused on cutting our costs and maintaining an acceptable level of profitability through this downturn and will continue to right-size our North American business for the level of activity that occurs. Average Canadian pricing levels are expected to decline by approximately 10% during the first quarter of this year, compared to recent peak pricing levels from the second half of 2014.

For the U.S. pressure pumping market overall, we expect pricing to decline by approximately at 15% to 20% during this year.

However, U.S. pricing declines are expected to vary based on the region, customer and existing contracts.

We're working closely with our customers to reduce their long costs, while still maintaining a level of profit margin in our business. We're passing on the supply cost savings in many areas, increasing efficiency and utilization of our existing crews and are redesigning jobs with lower-priced products to lower our customer's costs while still maintaining their production levels.

Our customers understand the need for a healthy service industry in the future and are working with us to ensure that we have a viable industry in this time of lower commodity prices. Internationally, activity levels and financial results in Russia were strong during the fourth quarter of the year.

Fourth Quarter operating conditions in Russia are usually impacted by extreme cold temperatures. However, similar to 2013, our Russian customers remained active in order to complete 2014 work programs despite the cold weather.

Low oil prices combined with economic sanctions against Russia have caused the Russian ruble to weaken substantially. This decline had a significant impact on Canadian dollar revenue and operating income, as all revenue generated by our Russian operations is denominated in rubles.

The decline had a minimal impact on Russian operating income as a percentage of revenue, as most of the Fourth Quarter expenses in Russia were also denominated in rubles. 2015 context and work scope have been finalized for our Russian operations.

We have a strong Russian business that is valued by our customers and we expect activity to be up slightly compared to last year, as contract awards have increased year-over-year. The value of the Russian ruble relative to the Canadian Dollar, however, will have a significant impact on Russian financial results this year.

Revenue and operating income for our Russian operations is expected to be 40% to 50% lower in 2015 relative to last year, given the current ruble to Canadian dollar spot rate. Although most of our operating costs are incurred in rubles, many of our Russian suppliers incur costs in other currencies.

As a result, we expect some cost inflation as the year progresses. A continued to focus on cost control measures in Russia is expected to offset the impact of inflation during 2015.

Coil tubing activity increased for our Saudi Arabia operations during the fourth quarter, however activity levels in this region tended to be uneven. Our goal in 2015 will be to add additional contracts and equipment into the region that will ensure a steady flow of activity and revenue.

Operating and financial results for the Norwegian completion tools division continued to be strong during the fourth quarter and we currently expect activity and demand to be steady for this division in 2015 based on our customer commitments. We will however, closely monitor activity in this region as well as in Saudi Arabia, as they could both be impacted by low oil prices going forward.

Our operations in Australia brew sequentially, but still did not have a meaningful impact on Fourth Quarter international operating income. Activity levels in Australia will be slow for the first half of 2015, but are expected to increase later this year with the development of LNG export facilities.

Due to the low price of oil and a reduction in our customer's drilling and completion programs, activity levels were weak in Colombia during the fourth quarter. We do not expect activity levels to recover in the near future and as a result, we suspended in Colombia in early 2015.

We will continue to evaluate opportunities in the region, but do not expect to resume operations until economic conditions improve. 2015 is expected to be a challenging year for Trican, however our management team has experienced several business cycles and understands what is needed to effectively manage the business during a downturn.

With our experienced management team and the commitment, of our people we remain confident in our ability to manage through this must recent downturn and emerge as a stronger organization. I thank you for your attention today and your interest in Trican.

I would now like to turn the call over to the operator for any questions.

Just wondering if we think about the flexibility you're building here on the balance sheet, how do you balance debt repayment and the share buyback? Could we possibly see that increased as well while still focusing on paying down some of the debt?

I think at this time with the uncertainty that we have on a go-forward basis, the primary focus is going to be on debt repayment. Obviously, as the year unfolds and hopefully we get more certainty on where the business is going, we'll reevaluate that decision I think.

But at this point in time, I think it's safe to say that the primary use of those funds will be on debt repayment.

And then if we switch over to Canada with the parking of 20% to 25% of the fleet post Q1, what do you expect to be running on 24-hour operations out of what's left?

There hasn't been a lot of change there. It's still about 70% of the fleet and that's where we expect it to stay in the second half of the year.

And then just lastly, internationally with pulling back from a bunch of the regions that hadn't developed the way you had liked. Are you satisfied with the more concentrated footprint that you have, or are there potentially other international markets it that might be interesting?

No. I would say at the present time, we're just focused on what we have.

We do like the long-term potential of Saudi Arabia, we really like the customer that we're working with there. Their response to Trican and the value they place in our technology and operating culture and we think there's opportunities to grow there.

So I would say we're committed to continue to work in that market. It's a slow developing market and we knew that going in.

In Australia, we've made really good progress. We've got a good operational reputation and good technology reputation.

And really it's just a matter of that marketing picking up. I think we're well-positioned to grow within that market as we see a pickup.

It is going to be slower in Australia definitely through the first half of 2015, but we believe that later in 2015 and into 2016 we'll see some increased drilling activity programs as our customers start having to fill their LNG facilities and start having wells on production that are going to start declining and they'll have to replace them.

I wanted to maybe just ask about December in Canada. You tend not to read too much into that stuff and it's easy to do it too much.

But is it fair to say some of that slowdown was industry fundamentals, there could've been some weather, there could've been some scheduling and there may even have been some customers that pushed work into this year in hopes of getting better price? And it's not just one thing that contributed to the slowdown.

Is that fair to say?

Yes, that was very correct. I think it was -- we always see a slowdown in the second half of December.

We were planning on that, it was just a little bit more than normal but not massively more than normal. And pretty all normal type occurrences that caused it.

So it was just scheduling like you said where customers were running up against Christmas break and decided to push their work forward in and start those wells in January rather than the end of the year. And it's just kind of a combination of a lot of things and nothing that we really said was fundamental or structural I guess in the business.

So turning to the equipment you have shut down and are planning to shut down. At this point, are you turning down work and choosing to shut the equipment because of pricing?

Or is it really more just a factor that the market has shrunk to the point where that gears a bit superfluous and you can handle the demand that you see with less equipment?

No, I think it's -- well I'll reply both based on Canada and the U.S. separately.

So in the Canadian market, activity is still relatively strong in February. It's not peak and we're not peak utilization but it's still quite strong.

And we anticipate that it starts to fall off in March, the first glimpse of warm weather we think the breakup starts to kick in and it will come off. So our plan in Canada to park equipment is more related to Q2.

And we think it will be a slower Q3 in Canada as our customers really don't have any urgency to drill programs right now. In the U.S., it's a little bit more of what you're saying in that in some cases, we've tendered some work where we have submitted pricing and didn't like the pricing on it.

And weren't prepared to work at that pricing, so we shut down the crew in that area. In other cases, it was just customers shutting down their or slowing their activity programs and us not having another customer to go to.

And of course we again, work tendering other work in those cases, but weren't able to either get the tenders or did not like the pricing that we had to go to get the tenders in a few of those. So a combination of things in the U.S., but a little bit more towards not liking the pricing and decided not to pursue work at negative EBITDA margins or low EBITDA margins.

We'd rather park the equipment.

And my last one, you guys have a slightly different revenue profile in terms of service lines and cementing is a little more meaningful. I don't know that there's huge fundamental differences, it's obviously driven by a lot of the same fundamentals.

But is there anything in the cementing business that gives you an ability to insulate margins either better or maybe there's more margin exposure or maybe more or less top line exposure? Just trying to get a handle of how the business evolves, given your guys' slightly different mix.

Right. Yes.

So this is primarily in the Canadian business where cementing makes up a meaningful part the U.S.. Cementing is still not a very big part of our business, so it doesn't really influence us much.

In Canada, not as many businesses, less competitive. We have less competitors in that business, so it holds in a little bit better in the pricing side and you don't see as much competition on it.

So normally, that's the case and we anticipate that going forward. Our market share is very high in cementing and we anticipate it will continue to keep a very high market share there.

So it gives us a little bit of insulation in the Canadian market. Saying that, it's going to trap the rig count as most of our services do and it does directly.

So I would say if the rigs a certain percentage, the overall market for our cementing services goes down by that same percentage.

You mentioned your experience in previous down cycles a few times and I was wondering maybe if you could give us some insight maybe compared to 2009 or another period if that's more applicable? But obviously, in that prior downturn, things maybe do seem to decline at similar rates.

Margins in the U.S. went negative for you guys.

It seems to be even activity is contracting even faster this time. Do you think your reaction has been faster in this cycle and how do you expect your margins to be relative to those prior periods, do you think better or worse?

Yes, so our reaction has been faster. I would say we were acting already in Q4 and we reacted pretty steeply in Q1 and will continue to react as the market changes more.

So probably steeper decline this time around than we've seen in the last down cycle in the 2009 timeframe and potentially deeper as well. We think that Q3 is going to be relatively slow across North America, we can't really comment too much on Q4.

Our Canadian business still is, as it has in the past, we still have a good baseline of loyal customers that have lined up work for us in Q3 and we're comfortable with that. And that gives us a baseline much like we saw in 2009 that maintains a level of profitability.

I can't comment on where margins will go on our Canadian business just yet, but I am comfortable with our customer commitments through the third quarter in this reduced environment. In the U.S., much the same.

In that activity is coming off probably quicker in the U.S. than in Canada, which is not to be unexpected.

I would say we're reacting quite a bit quicker in terms of shutting down crews. We probably had a little more patience in the 2009 downturn to put up with negative EBITDA margins if we saw a fall off.

Where this time we're reacting quite quickly to get our costs under control because it is a steep drop. So we'll continue to do that as we see the market unfold in 2009 and basically we'll just keep continuing to adjust our cost structure as we see activity fall off.

I wanted to ask too about capital spending. I wasn't sure from your commentary here if there had been a further change to the 2015 budget and if there was, is there some place you took out the capital?

There hasn't been a change. We're deferring as many of the costs as we can and that's where we're coming up with CAD50 million to CAD60 million estimated in cash spend for 2015.

I think previously, we were saying CAD90 million to CAD100 million, it's really just deferring as much as we can for now and keeping that cash outflow to a minimum of CAD50 million.

Okay. And I just wanted to ask as well about the horsepower either parked or forecast to be parked.

How much do you think you're going to have on the sideline maybe by the end of Q1, since you've given some guidance around that?

Yes. Based on what we said in the press release, it's about 150,000 in the U.S., that would be the four crews that we mentioned in those four regions.

And in Canada, we've got just over 400,000 horsepower active, so it's about 100,000 is what we're looking at right now. Three or four crews, so 250,000 total by the end of Q1, that's on top of about 30,000 that we had previously.

So I guess it's about 280,000 by the end of Q1.

First, I want to offer my condolences to the passing up Bob. I just wanted to start with that.

In terms of their operations in Canada and the U.S., what's the plan in terms of the types of operations you're going to run? Are you going to run more 24 ops or it going to be still more I guess non-24 ops?

Well we were already running quite a few 24 ops. As Gary mentioned, we were in the 65%, 70% range in both markets and we'll continue to do that.

Our plan is to work with our clients pretty closely to reduce their costs, because they legitimately need to reduce their completion costs during this downturn and still maintain margins in our business. And so that being sitting with your clients.

And if 24 hour ops will help our clients reduce their cost structure down, then we'll added additional ones. But it's good, for the most part, it's quite client specific as to whether we add additional 24 hour ops.

We certainly have the people to do it, so we could do it if we want. And as long as it benefits the overall cost to the client our cost structure, we're not going to do it and take it on the chin for it, then we'll look at it.

So it's got to be an evolving thing.

Second thing is, in terms of trends for increased stage count in volumes. That's been the commentary from you and the industry participants.

Is that continuing as you step into I guess February and March and producers are being more concerned, are they still seeing that trend -- are you still seeing that trend?

We're still saying it stay up there, so we haven't seen any pullback in it. Quite honestly, I don't have the stats on the full quarter of it's gone up or not, but I did check recently as to whether there was drop-off on that.

And no, it's hanging in where it was will still a lot of stages per well. I would say that the one thing we're doing is changing our product mix around for clients to try and reduce their well costs again and still maintain our margins.

So instead of using a higher cost product, we're trying to lower cost of products to our clients and reduce the overall well cost to them that way. So we'll probably see some changes on that front, but not in the number of stages or the size of the jobs.

Lastly, it's a follow-on to what Brian was asking, particularly in the U.S.. if the commentary sounds like pricing is down 15%, 20%, but your operating margins are basically 10% in Q4.

And I understand the costs are coming down, how does that shift? If your price is coming down 20% let's say on the high-end and your operating margin is at 10%, do you think there's going to be basins inside this year that's going to be unprofitable and what's the trajectory curve in the U.S.?

Yes. I think, Kevin, that obviously you'd do the math on that and it obviously depends on the cost reductions.

So that's why we've been so focused on vendor reduction pricing with vendors and as well on the headcount side of things. And really focusing in on our fixed cost structure.

Obviously you do the math on that and you squeeze out as much as you can, you're still going to see a margin decline. And there are certain situations where the margins have gone into a negative and that's why you've seen us park a heck of a lot more equipment quicker than we have in the past.

So I think it's still been a very fluid situation and we're basically at a stage now where we consider each bid on a project by project basis. And we not only are we trying to get our price as low as we can, but we're also going up to our vendors and asking them for realized pricing based on that the profitability associated with that job.

So it's gotten very granular and we're attacking that as much as we can. But we're really trying to draw a line in the sand for not having negative margins.

So do expect a margin impact, pretty happy with the progress to date on our vendor and cost reductions, although we've got a heck of a lot further to go on that end of things. We're at the stage where we think we've got close to 10% reductions on our vendor costs.

Frankly, that's not enough. We're at the stage where we've been talking to everybody and probably the next stage is to narrow down the vendors and play ball more with people that are giving us greater than 10% pricing reductions.

So as all that plays out, you start figuring out where your margins are going to come in at, but it's probably the best color I can give you at this stage.

Removing the four crews that you guys have already parked in the U.S., can you give a sense for what U.S. utilization is currently looking like?

Yes, I would say we're still a little underutilized on our existing equipment that we have in place. So in the 50% to 60% range where we're at right at the present time and so we continue to evaluate every basin by basin and every crew by crew as to whether there's additional stuff that we'll park going forward here.

Just to follow on Kevin's question, can you give sense for what constitutes an acceptable margin in 2015 or an acceptable economic return? And is it as simple as 0% you shut down if you're below that and above that you keep running?

No, I think obviously the margin is probably the key focus that we have right now and ultimately cash flow is a big part of it as well. But every time you take a look at it, you've got to be looking at the customer relationship, how much activity are you going to have through the downturn, the timing of all of the changes.

You obviously have seen a pretty significant reduction in activity and pricing. The cost reduction is coming down fast as well, but it's lagging.

So you need to have a little bit of patience on that end of things. So you start playing all that stuff out and trying to figure it out.

So I think at the end of the day, you draw line in the sand and say here's as far down as we're willing to go. But it's not as soon as you drop below that line everything gets shut down.

So there's a lot of factors that play into it. But that being said, I think at the end of the day, to have a viable business on a go-forward basis, you definitely have to maintain positive margins both in Canada and the United States.

What's your expectations and third-party contractor costs in the coming year? And should we be assuming or modeling a lag in that you don't get to see a lot of those until Q3 or beyond, or will a lot of those show up in the Q1 numbers?

I think it's going to start showing up in the Q1 numbers, we've already seen a pretty meaningful price reduction there in Q1. I think the other factor that we're really looking at is our internal hauling capabilities and because activity has fallen down, you're seeing that become a larger percentage of our overall hauling requirements.

So that's playing out. But no, you're already seeing 10%, 15% reductions on that end of things and I expect that to be even greater.

So it won't be fully baked into the Q1 numbers, but I expect it to be fully baked in in Q2.

Are any of the infrastructure initiatives that you guys have taken on over the past year concerning in 2015, in that you could be over committed from a rail or sand volume perspective and it's a drag to performance, or your vendors on that side have been fairly good to work with as well?

We're actually in good shape there in both Canada and the U.S.. So a couple things is that we do not have a lot of commitments in the Canadian market, it's actually not going to bite us at all there.

In the U.S., we would have a little bit more commitments, but still not a lot. And our vendors in both markets are working with us to make sure that it works for both parties.

They understand the issues that are out there and I don't anticipate that that's going to be an issue for us.

I realize it's a little early at this stage, but can you give a sense for how many of your customers you've actually sat down with and have some fair understanding for or mutual understanding I guess of what you expect to generate for a return and what they're expecting for price? And I guess what I'm really getting at is, how much of the 15% to 20% that you're signaling in the U.S.

is based on signed contracts or bids that are out there on the market versus a broad feel at this point?

That's a broad feeling right now, so that's not based on -- we've still got work going on at higher prices and some work coming in at lower prices for new work. And it's kind of a mish mash.

So that's a broad feeling of where we think pricing is going to shake out in the U.S. And I would say all of our customers are asking us to work with them on lowering costs.

I don't think there's too many that would say we're happy with what we have, and they will continue to work with us on that. Every situation is different, depending on the region that you're in, depending on the customer's work skills that they have, depending on our cost structure within certain areas.

So I don't think there's any overall comment I can make on a macro level of how much each customer is going down, or how you even sit with each customer. In some cases, they're pretty focused on a number.

In other cases, we work really closely together with them and come up with a number jointly that works for both parties. So it's kind of as usual and as always in our business there's different approaches that every customer will take.

Given how fluid it is, do you expect any major changes in customer mix in that producers are pretty aggressive with price and pretty focused on price and that more things are going to go to an active bid and customer mix could change?

I don't anticipate that we'll see a big change in customer mix. I think it's more if some of our customers do shut down some projects because they're slowing their activity in certain regions due to their own capital budgets, then if we're going to go up and try and look for other work.

So in the U.S. in particular, if we have a slowdown of a certain region where we've got a crew that we've idled or that we see low utilization on, we're looking for other work.

So you may see a bit of an expansion of our customer list in areas like that. In Canada, the customers are very loyal to us, they've been sticking with us and they stick with us going forward much like they have in previous downturns.

The last one just from me. Mike, do you care to share a number of how much you think you're going to be able to pull out for working capital, or what your base assumption is going to be for working capital recovery in 2015?

Yes. It's obviously quite dependent on what happens in the second half of the year.

But we could easily see in the first half of the year close to between CAD100 million and CAD150 million in capital release. So that's where our expectations are at this stage.

Just a follow-up on pricing. As you guys renegotiate rates, are you locking them in for a period of time and getting any type of minimum utilization guarantees?

Or is that completely off the table? And then second, are any of the pricing agreements being tied to the price of oil?

So the first part is, you're always trying to get high utilization to give up price, so yes, the two are always tied together. That's always in our business what we're trying to do.

In terms of the customer's ability to do that, I think they recognize that that's one of our big cost drivers. So they are willing to do that trade for us in most cases.

And in terms of being tied to the price of oil, I wouldn't necessarily say that there's any exact mechanism for that. But there's certainly an understanding that when oil comes up and cash flow comes up that we'll have some price increases.

I think it's more that there's regular pricing reviews in most of our contracts now at periodic times and one of the factors that we'd look at is price of oil but probably more so activity levels.

Some of the sand companies have suggested they're trying to tie the sand prices to the price of oil. Are you guys entertaining that or signing any of those agreements?

No, it's not just sand companies. We've had a few suppliers look at approaches like that and I think we've tied a little bit more to rig count when we do because the price of oil isn't always the best measure.

If the customers aren't spending and the prices are high, that's not going to help us. So we're trying to lever that back to okay well let's see if our rig count comes above a certain level in an area, we're willing to look at pricing there.

Because that means we're getting our utilization up. So lots of things are proposed, but I would say that's the way we'd lean on our thinking on it.

And this is more of an industry question, but it raises the possibility that there could be a mismatch right? Where all of a sudden, your input costs could go up before you all as and industry could get that release.

Maybe that's how it always happens, but it just seems like there could be a mismatch.

That's why we don't like tying to price of oil quite honestly. We've been reluctant to do that.

We believe that the price of oil is going to come up first and our customers won't spend right away. They're going to pool some money for a while and so we want to make sure we're in a position that when our activity actually goes up, that's when we start seeing -- start looking out for our suppliers as well.

Okay. Last one from me and I know this is a really smart part of your overall business, but you had a very nice improvement in your U.S.

coil tubing operations. Can you share with us what drove the improvement and comment on the near-term outlook for those units?

Well I think it was mainly internal help on that, John. It wasn't so much that we saw market improvement.

We don't run a big U.S. coil business, but just through sales efforts, contracts that we've picked up and I think good operational performance and good cost control in that area that's what drove the improvement.

And going forward, I think the U.S. overall coil tubing market is competitive just like the frac market is.

Again, it's not really big for us and I don't really anticipate that it's going to be a big change either way for Trican. But we'll continue to evaluate that and evaluate customer commitments on the outside as well.

Were all six units working in Q4?

Four.

Four of the six. Okay.

Thanks guys.

Let's just assume that we return to let's say a CAD60 to CAD70 oil world, maybe that's the new balancing price. What types of initiatives longer-term help you drive down unit costs the most to become maximally profitable?

Would it be things like looking at your crew sizes and automation, would it be logistics management, would it be industry consolidation that lowers unit costs? But these have to be questions I would think you guys are noodling on as you think about the fracking business over the next few years.

Yes, it's a good question, because I think a CAD70 per barrel reality is possible going into 2016 or something like that. So we have to make sure we get good margins out of that type of business.

So yes, it's basically I'd say we have an R&D projects underway along this nature, as reducing the overall cost of a delivered service to our clients, so that they can lower their well costs on the fracturing side of the business without giving up higher margins. That is technology driven in terms of automation.

That means potentially less people on location. And then the supply chain is a big part of it.

It's getting that streamlined down to a lower level than it would be in say last year and making sure that it's a real efficient process there. And there's some things we think we could do on that front.

It's R&M to an extent. So if I looked out two years from now if we want to maximize our margins in this business, some efforts we have underway right now to reduce our R&M through fluid end use, things like that.

And as I said, we've got an R&D project that we're going to keep going this year that's looking at a more efficient fracturing process. And we still think that that's where the industry has to head a little bit longer-term.

So obviously no easy answers, but it is got to be something of considerable effort by you and others, I'm sure. Secondly, given the way you have to go into CapEx lockdown mode here, you and others to get through this, what is the potential for equipment write-downs here in the next couple of years given the mismatch of spending versus depreciation?

At the end of the day, I think the write-downs are more driven by the health business. So I think the view right now is that this is a typical downturn, it's probably more severe and quicker than what we've seen in the past.

But it's still going to be a typical downturn, so you see that activity level come back up. At the end of the day, we still believe we've got sufficient maintenance CapEx and the dollars that we spend on the R&M side maintains our equipment to the standard that Trican historically has maintained.

So at the end of the day, I don't see a problem where all of a sudden the unit just is worthless because it doesn't operate any more. That being said, if things pick up, I would expect there to be an increase on the maintenance CapEx side of things as cash flows dictate.

But over the next couple years, as long as the market doesn't become permanently impaired, which I don't anticipate at this stage, than I don't see much of the risk there.

Okay. And then just one last question.

We're seeing a variety of different approaches to the dividend, some companies cutting, others not. I'd be curious to understand the thinking behind leaving it as is.

Leverage ratios are higher and it's not a ton of money, but it's still escapes you more on side with respect to managing future uncertainties et cetera. So widely, what's the benefit to leaving it where it is?

Right. Well the benefit is to our shareholders and that's why we would leave it.

And the other thing I'd say is, is that with our pretty significant working capital release, it puts us in a financial position that we could do it if we wanted to, but saying that, we examine it every quarter. And we'll examine it at our next Board meeting and make sure that we're comfortable with the outlook going forward, what our cash position is.

Right now, I don't see a lot of issues with it, but we'll continue to look at it.

On the U.S. side, the 180,000 horsepower you've idled today, how much do you expect that could increase in the coming months or coming quarters?

We're continuing to evaluate that, so I think it's too early to say where that will shake out. We have utilization in various regions and customer's programs in various regions and it's all a moving target right now.

So too early to evaluate where that will go.

Previously you've mentioned some concern over the second fracturing crew in the Bakken and obviously some of the activity going on in Oklahoma. Would those be the two most vulnerable areas beyond the capacity that's been idled so far?

Yes, I think that any of the oil-producing areas are probably under more pressure than gas producing areas. So traditionally, the Bakken is one area.

So yes, I think in broad terms, yes, that's the answer. But there is still a level of activity in these regions that we're still trying to tender into additional work or whatever it may be in terms of contracts, positions and that to try to keep our utilization up in there.

But yes, I don't change my views that those are the two of the more susceptible areas.

What does your contract coverage position look like on the U.S. side for this year and what does the rollover status look like for this year?

Right now, we've got about 60% of our active fleet under contract. Most of those take us till the end of the year.

But the reality is in this environment, things can change quickly within contracts even. So there's no guarantee going forward, right now, based on what we have active, it's 60%.

But are you seeing a need to provide concessions within those agreements, or reductions in pricing, or is that the cash you can rely upon right now?

I think every contract is a little bit different and every region is different. So it's probably a little more regional.

But in some regions, you actually have to adjust your pricing within the contract to make sure the customer can still go on with their programs.

On the U.S. side, how predatory would you say pricing has become?

I know that's more of a regional question. But within your key regions or on a broader basis, are you seeing many competitors price at or below cash breakeven?

I think it varies a lot by region like you said and in some regions and at the odd time you do see some tenders go out there and you go, don't understand this one. Because it's breakeven or right around there.

So yes, I would say that at times pricing has been predatory. But it's up and down depending on the contract, the customer, the region.

So I can't really say on an overall U.S. basis that the whole U.S.

basin has become this predatory environment.

Okay. And in terms of cost structure reductions, on the Canadian side with the Canadian dollar having obviously weakened significantly.

For the larger input costs in Canada, do you expect on a year-over-year basis that those will actually be lower in terms of Canadian dollars?

That's been one of the biggest challenges we've had in the costs reduction side in Canada is exactly that. So the reality is this is, this is where the business is going to and we need these cost reductions to maintain a minimum level of profitability and the conversations are such that it's, okay we need this price reduction or it basically goes away.

So that's where most of the pushback has been and we're still the middle of it to really figure out exactly where that lands. So we can't give you a good answer yet, to say okay we're going to be able to get that 15% or 20% we need because of that exchange rate, but we're still trying to maintain that and expect to continue to push.

Is it fair to assume on the Canadian side that the largest levers you have in terms of cost reductions are more in terms of people and idling equipment than input for 2015?

No. Obviously, those are large, but I still think there's significant opportunity for cost reductions on the product and chemical side.

Obviously, we've talked a lot about getting pricing reductions, but I think there's other efficiencies and looking at chemical systems and going to a lower cost chemical systems and that type of thing. As well as we talked about earlier on the third-party hauling end of it and seeing pricing reductions there as more efficiencies, as well as relying more on our internal hauling.

So I think there's a few more levers to uphold other than just people and equipment.

Okay. And I recognize you have essentially a year before it comes, but the CAD130 million of debt maturities for 2016.

What's your thought process in terms of preparing for that at this point?

Well as we've maintained over the last few years and will continue to maintain, is we have substantial liquidity and availability on our four-year committed revolver that got extended in October. So that's a plan B type of a scenario.

That if it worst case scenario we had to repay it, we have that liquidity and that availability to do so. As with every in front of the placement, no, we go to the market a few months before hand and try to negotiate another deal to refinance it.

And it's really come down to what does that market look like near the late through 2015 and early 2016 before we're really going to be able to make that call. But our intention would be to try to refinance it with new private placement notes and worst-case scenario refinance it with the revolver.

I just wanted to follow up with Dale on your comments about working with clients to reduce completion costs outside of absolute price. And does that include or have you had the ability to bundle some of the completion tool's business into that process?

We haven't had a lot of our success to date hasn't included bundling, but we're going forward and we're working it pretty hard now as to bundling the stuff together to lower the cost of the overall frac using our completion tools. So yes it's a marketing tool that we'll be using, we have been using slightly, escalating our efforts in that area.

I'll add that we're doing the same with cementing. So in cases where customers love our cementing services, we're trying to layer in our fracturing right behind it.

And we have a big, big broad customer base on the cementing side of the business in Canada and have had some success to with that and continue to push that as well. You're probably off the line by now.

Yes. So thank you very much for your interest in Trican and for participating in our call this quarter.

We certainly look forward to talking to you when we release our Q1 2015 results in the May timeframe. Thank you and have a great day.