Dale Dusterhoft - President and Chief Executive Officer Mike Baldwin - Senior Vice President of Finance and Chief Financial Officer

Ben Owens - RBC Capital Markets Ian Gillies - GMP Brian Purdy - PI Financial Westley Nixon - National Bank Financial Jon Morrison - CIBC World Markets Jeff Fetterly - Peters & Co.

Thank you very much. Good morning ladies and gentleman.

I'd like to thank you for attending the Trican Well Service conference call for the third quarter of 2016. Here is 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 quarter the results. I will then address issues around current operating conditions and near-term outlook.

We'll then open up the call for questions. I would now like to the call over to Mr.

Baldwin to discuss the overview of the financial results.

Thanks, 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 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 2016 annual information form dated March 29, 2016 and the business risks section of our MD&A for the year ended December 31, 2015 for a more complete description of business risks and uncertainties facing Trican. Our third quarter results were released yesterday and are available on our website at www.TricanWellService,com.

Please note that all comparatives to previous quarters of 2016 and year-over-year comparatives two 2015 are for our continuing operations and we have back out the discontinued and disposed portions of our business. As noted in our press release, continuing operations revenue for the third quarter of 2016 was $78 million, a decrease of 59% compared to the third quarter of 2015 when industry conditions for pricing and activity were considerably more favorable.

The adjusted operating losses $3.2 million and adjusted diluted loss per share was $0.08 compared to an adjusted operating income of $32.2 million and adjusted diluted income per share of $0.07 in the third quarter of 2015. Our Canadian operations continue to be our soul operating region and revenue generated in Canada decreased largely on a year-over-year basis due to reduced activity, adverse weather, customer delays and lower pricing.

The company witnessed high utilization in our cementing, [indiscernible] industrial services and acidizing service lines but was lower than expected in fracturing and nitrogen. We estimate that an additional $12 million to $18 million in fracking revenue could have been generated during the quarter if we had not encountered scheduling [indiscernible] due to wet weather and customer delays.

Our cementing service lines showed a significant increase in sales mix contribution declined to 28% of total revenue conversion from 15% in the same period last year. Overall revenue per job decreased by 43% year-over-year which was primarily a result of continued pricing pressure and a shift in sales mix away from fracturing and towards lower revenue cement jobs in the quarter.

Overall job count decreased by 29% year-over-year and as a result we continue to have 50% of our equipment idle during the quarter. The adjusted Canadian operating losses for the third quarter was $369,000 compared to an adjusted operating loss of $10.7 million for the second quarter of 2016 and an adjusted operating income of $38.5 million in Q3 of 2015.

The reduction in activity in corresponding revenue continues to be mitigated by cost control initiatives that have been implemented throughout 2016, Trican's fixed cost structure in 3Q 2016 has been increased by 46% when compared to Q1 2016 as a result of workforce reductions, discretionary spending reductions, lower compensation programs and the transition to a day rate field composition system at the beginning of June. Trican's variable cost as a percent of revenue improved slightly and management expects variable costs to stabilized for the remainder of the year and into 2017.

We have not yet seen an increase to our supply chain but anticipate that as industry activity levels continue to improve and we see price improvement with our customers, we will see increases to our products and supply chain that normally [indiscernible] our pricing improvement by a quarter or two. We do expect a slight increase in unit expenses through the fourth quarter as the increased activity levels in colder weather are expected to lead to an increase in both fuel costs and repairs and maintenance but will be offset by the anticipated price improvement.

Trican remains committed to maintaining our active fleet to the highest standards to ensure high-quality service for our clients. Total overhead expenses for Q3 2016 which is the total of corporate expenses plus general and administrative costs equaled $6.3 million, $4.6 million lower relative to the second quarter of 2016 after adjusting for nonrecurring costs such as severance professional fees, amortization of debt issuance costs and equity settled share-based compensation.

Severance cost incurred in the quarter as a result of the sale of our completion tools business and the continued wind down of our US and international operations. Additionally meaningful reductions in overall personal costs, legal fees and costs associated with IT have contributed into significant improvement in Trican's corporate and G&A cost structure.

Management believes that it has taken meaningful steps optimize it cost structure and will remain vigilant in maintaining a lean and a in a competitive cost structure continue to improve Trican's profitability. We ended the third quarter with approximately $58 million of cash and available debt, managing cash flow and strengthening our balance sheet has been a primary focus for Trican for over a year now and we will continue to focus on this for the duration of this downturn as the industry strengthens moving forward.

We believe that most of our cost savings are sustainable and will be retained as activity increases. Trican's net debt exhibited the third quarter at approximately $175 million, the increase in net debt over the second quarter was primarily related to an increase of working capital as activity ramped up.

Management believes this net debt level is appropriate given the size of the company's asset base however we will continue to manage our net debt as our financial results from cash flow are expected to improve but from the cross level seen during 2016. Capital expenditures for the first nine months of 2016 totaled $600,000 compared with a $8.5 million for the first nine months of 2015.

With the instability of commodity prices and decrease in pressure pumping demand during the year capital expenditures were kept to a bare minimum. As in the past, most of our repairs and maintenance customer flowed through our P&L and are not capitalized.

We will explore our capital expenditure requirements further as operating conditions improve however we don't anticipate a meaningful increase in capital expenditures until the company starts generating sustainable cash flow to fund the capital expenditure. Trican successfully closed the flow of it's [indiscernible] pressure pumping business during the quarter to Petro-Welt Technologies.

This sale agreement includes the purchasing company acquiring the complete business in [indiscernible] and all shared equipment, facilities, products and employees. Trican continues to hold real estate in Australia and has one coil and associated equipment unit and associated equipment in Saudi Arabia that is for sale.

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

Thanks, Mike. Though we experienced a significant drop in revenue from our Canadian operations during the third quarter with revenue dropping 59% compared to the same period in 2015, Trican experienced a meaningful increase in demand for services in the quarter.

All service lines with the exception of fracturing and nitrogen were running at full utilization throughout the quarter on our active equipment. Fracturing was fully built in Q3 but ran into scheduling gaps which led to inefficient utilization as a result of adverse weather and customer delays.

Looking forward come all service lines with the exception of nitrogen are fully booked throughout the fourth quarter and we expect activity in utilization to remain high into the first quarter of 2017. Although fractured services was more affected by weather and started from lower utilization and poor operating results we were pleased with activity levels and the results we saw from our other service lines and we believe that having multiple service lines in Canada will continue to offer a financial advantage for our company.

Cost savings implemented in the first three quarters of 2016 mitigated much of the year-over-year revenue drop. We were pleased with the progress made and reducing our overhead cost which dropped 46% since Q1 and we continue to and we expect to continue to realize these savings going forward.

In addition we are expecting variable cost to remain stable for the remainder of the year relative to the first quarter variable cost structure. All of these initiatives combined with an increase in revenue resulting from activity and price improvement are expected to improve our fourth-quarter results.

We continue to look at driving further efficiencies in our company that will reduce fixed costs and lowering our variable cost to introducing technology to lower our costs and we believe will be required to give us and our customers a sustainable competitive advantage in that market with lower commodity prices in the future. Service intensity remains strong as our sand per well and stages per well are both up on a year over year basis.

This increase in service intensity combined with longer laterals and better rate efficiency will help to rebalance our Canadian pressure pumped market as the recovery starts to happen. Activity in liquids rich gas plays in areas such as the Montney, Deep Basic and Duvernay remained strong and is expected to continue to trend positively.

As the price of oil stabilizes and continues to improve we anticipate a meaningful increase in Cardium, Viking and other oil related plays throughout the remainder of this year and into 2017. As commodity prices stabilize at current rates, we anticipate rate and activity levels to continue to rise from 2017 is our customers cash flow increases.

We expect our customers to increase capital budgets for 2017 and indications from our client of increased activity programs resulting from this increase in cash flow. Rig count today is slightly higher than it was a year ago and with increasing sand per stage service intensity and stages per well we are currently seeing higher demand for our equipment than we saw last year and current tightness in the industry's as most of our competitors are also getting [indiscernible].

October and November utilization is high on our active fleet which improves our leverage on a fixed cost structure and should improve operating results over 3Q levels. Weather has not helped us in October and early November due to a later freeze up and road bands that are on in a number of northern areas.

Utilization has been slightly affected in our frac [ph] service line however it is substantially improved over September levels as we worked with our customers to minimize scheduling delays. December bookings are strong and remains to be seen when our customers will slow for Christmas season.

Our customers are currently booking cruise for Q1 '17 and we anticipated to be fully utilized throughout the quarter as long as commodity prices hold the current ranges. As utilization is improved Trican started to approach our clients with pricing improvements in August, third quarter pricing on average was still approximately 3% below Q1 levels but company has experienced some traction in pricing improvements as of late and saw a 9.3% improvement throughout the third quarter, essentially gain back the further degradation witnessed in Q2 this year.

We're confidently assumed the bottom in pricing and our environment where we expect pricing to gradually improve. We are working with and have the support of our long-term clients to ensure that our margins improved to sustainable levels and they continue to have good economics on their play that drives growth in our basin.

We expect that with some pricing improvements and increasing utilization from our right sized fleet a reduction in our cost structure will lead to improved margins and cash flow in Q4 of this year. We do not anticipate adding any additional increment to the market's operating margins improve and will instead work to improve pricing as activity and demand change and managed costs and also manage our costs going forward.

We will only consider activating part equipment if margin increased to a sustainable level and we are confident that long-term demand exists. Staffing challenges and labor constraints have begun to emerge and may become a significant risk to activating part equipment in the future, we will continue to monitor this risk.

Cost to reactivate the first 2/3rds of our part fractured equipment are expected to be approximately $500,000 for 30,000 to 35,000 [indiscernible] and about $650,000 for the same size crew for the last 1/3rd of our fleet and that $500,000 is for the first 2/3rds of our fleet. The cost to activate this very equipment will be about $50,000 per year.

We will continue to monitor industry conditions as to when we should activate additional equipment and crews. We continue to be pleased with our initial -- with our investment in Keane as it allows us to participate financially in a recovery of the U.S.

market. We also continue to hold approximately 558,000 shares and that we will be able to free trade in January 2017.

We anticipate both of these investments to be beneficial to the company and sources of additional capital when they become liquid. Pressure pumping industry has improved to the point where management believes Trican is in a position to realize improved margins, and cash flow in the coming quarters.

We will continue to optimize costs in all areas and are committed to taking the steps necessary to generate positive cash flow going forward. Trican is committed to strengthening this balance sheet to this downturn and we believe that we are well positioned to remain a segment leader in the Canadian market and take advantage of the recent and further expected improvements in the industry.

I thank you for your attention today and your interest in Trican and like to turn the call over to the operator for any other questions. Thank you.

So given that the utilization of your active fleet is quite high, it appears to be the same way for a lot of your competitors in Canada. Do you see the need for equipment to come off the fence for the activity levels you see shaping up in fourth quarter and first quarter industrywide?

I think it could be, there could be a short of equipment into Q1 2017 but as we said in our, want to see surprising equipment, there's no point of taking equipment off the path if we’re generating the result we did off that equipment in -- similar to what we did in Q3 so when we’re not doing for negative EBITDA or even breakeven. So we’re going to see some price improvement before we activity equipment I believe our competitors are the same mindset it just doesn't make sense.

But likely with activity levels coming in where we think and the shortage of people and industry as well, I believe that if we’re going to meet the demand of our clients as industry in Q1 this call we can [indiscernible].

And in terms of that price improvement you would like to see, you talked about a sustainable level of margin. How do you define a sustainable margin level in terms of EBITDA or operating margin?

Yes. Traditionally, our equipment expense has to build and traditionally we had to round up about 20% EBITDA levels, 20% to 25% of EBITDA levels to have a sustainable business going over all long-term cycle and be able to replace equipment and do all things you need to run the business.

I think that if we get into the 15% range then we're comfortable with activating equipment. We have said that in the past that makes sense to us.

I likely have some line of sight to an improved market in that point in time as well.

With respect to the pricing that's been presented to customers and continues to be, is it sticking with all your customers or is that at the fringes at this point? Could you give us a sense of how you're going about increasing pricing across your customer base?

There's three aspects of it, there's short-term bends which are one-off pads or a month worth of work or something like that. And were just edging those higher now and we now been for some time, we weren’t winning a lot of higher priced tenders in Q3 because we didn’t really see a meaningful improvement in spot market pricing at all.

We're starting to win some of those now on the shorter-term there's the one year bids, there's a few three-year stuff out there but nothing really meaningful on that front. But some of the one year bids we tend to be doing higher as well and kind of consistent with the short-term lease.

We’re looking for proven pricing that gets us better margins and then the last piece, it it's a big chunk of our client base is our long-term clients that being very loyal to us during the downturn and loyal customer for a number of years and we just work closely with them to make sure that their economics still work and our economics work and I will say this because certainly cognizant about the fact that we need to have a sustainable business and we’re cognizant of the fact that they need to be able to grow and do all the things that they need to be able to -- they compete in a price world purpose so we weren’t pretty closely with them. Where we're at on all of them is I would say we've seen some improvements on pricing on the short-term spot market.

We've seen some on long-term contracts and we're in discussions with our major clients on primarily for '17 increases on the negotiated deals, but it's discussion phase right now.

You provided some goal posts around operating margins to reactivate equipment, but do those goalposts change at all given the change in frac intensity and the change in absolute dollars earned per well i.e. have those goalposts or could they move lower if you're earning enough money per well because of changes in frac intensity?

Yes. I mean, they basically , there are a couple of things, I guess.

They could potentially move lower but I think it's mostly around visibility of going forward. As much as anything.

So we may activate a little bit earlier on a crew but we want to have good visibility that the markets improve where I can activate a crew and find the markets deteriorating and we have to drop our pricing back to that later.

For my perspective, the first step is making sure that you're earning enough dollars to be able to replace your equipment and then going a step further than that actually providing a return to your shareholders and that's type of thing, so the 15% that talked about assets generally been the margin that kind of gets us to that bare minimum level. Obviously, if service tends to be improved actually all about the margin dollars that you generate positive so if that goes up a little bit, then yes, that margin potential comes out a little bit.

But we don't see, we still see that as a pretty good benchmark to use from activation perspective.

Now on the cementing side, are you able to provide any color around where margins may be in that this is, it's a relative to the frac business or relative to the Canadian business as a whole? And I guess a relative health of that business compared to the state of frac business press

Yes if we looked at our 3Q numbers, cementing was positive margins for us not actively so but getting to a level going forward where we probably could look at activity some equipment here through 4Q to make sure we have all demand in Q1.

And last one for me. Mike, do you have any go forward targets for DSOs or just so we have a general sense of how to model that.

Obviously this is a working capital-intensive business. Are you able to provide any formal insights around that?

Lower. It is tough to give you more color, Ian, I'm going to check on you.

we have actually improved our DSO pretty significantly e. It's kind of getting back in line with where we've seen midmarket DSO around 75 days.

Obviously we would like to continue to improve that and we're working primarily on our internal processes to get that done a little bit more and more focused on working with the customers. So if we could squeeze out another five days, that would be great.

We’re certainly in a point now where I think for the most part of DSO is kind of in-line with midmarket. So the more gains are going to be a little bit more challenging to get.

I wanted to ask about pricing. You mentioned gave us some percentages there on Q3 pricing.

Would the leading edge price that your bidding to-date be materially different than that Q3 average and by how much? Can you give us any color there?

Yes, we’re tendering now at a higher level than what we would have in Q3. And I would say we’re tendering already in Q3 some of that just by winning any.

So we're shooting for 10%. We won't get that full 10% but getting in 7% or 8% out of that I think we would be happy with.

And then you mentioned that sand per well and number of stages per will continue to increase obviously the focus has been on balance sheet management over the past year, but I'm just wondering if you guys are seeing any technology changes in the market that would change the way that you operate in Canada?

Not materially. We're still continuing to see, much like we've seen for some time, a lot of our Canadian customers follow-on the U.S.

fleet of more sand per well, and more stages per well. There's always technology, not always, but I think a lot of customers there is technology innovations that they are always trying, but it involves clustering of [indiscernible] it involves pursuing certain parts of the reservoir.

So there's things that are happening there. From our side, we still are big believers in our MVP fluid.

I don't think it has done as well in the downturn because it does add additional cost but we continue to demonstrate great results from the wells we do at the MVP and it also reduces the amount of water that our customers -- [indiscernible] water is a big issue with clients. And then as I mentioned in the call, we’re working on some additional new technology that we hope will lower our costs, the innovative technology that we've been working on for some time we're field testing it and if we implement that, that is probably a product substitution type situation where we can lower our variable costs further, past some of that onto the clients and also put some more margin in our pockets.

Okay. I wanted to ask about cost inflation and I thought I heard two different comments in your prepared remarks about cost potentially going up in Q4 but then maybe staying stable and maybe there were two different parts of the cost picture there, is there any color you can provide?

Yes. I think the message is that we expect our cost structure to remain essentially flat through Q4.

We're not expecting meaningful price increases on proppant and chemicals and that type of thing. So for the most part that’s flat.

We're starting to see some pressures here and there, it's just not sustained pressure. So really the message is if you start seeing continued increase in activity levels and more proppant being pumped in that and then there is probably going to be some pricing increases that we start seeing kind of post Q4 but for the most this quarter we think we're going to be relatively stable.

Okay. And then finally I just want to ask about the Keane sale or I guess investigation of a sale, do you’ve any visibility as to what the market is for companies to be sold in today's environment?

It seems like things have gotten a little bit better but I just can't imagine that it's a great time to be selling a fracturing assets?

Yes, I cannot comment on that too much. We're not in the U.S.

market. I think that it's better than it certainly was early in the year and that there is strong investor demand for pressure pumping services which is positive and we will have to see how that plays out going forward

So in the cost structure if pricing exiting the quarter had been in place for the entire quarter do you think you could have broken even?

Yes, we probably could have and then if we had gotten a little bit more traction on the utilization that have been positive.

Okay. And I was wondering could you provide some additional detail on the mix of R&M that's split between CapEx and the P&L?

The R&M is basically all run to the P&L. We had $600,000 worth of CapEx on a year-to-date basis which is almost nothing and obviously aren't repairs and maintenance so it's all running through the P&L.

I guess my last question would be are you seeing any trend in some of your customers in housing the sand sourcing function?

Not too much Canada. The major customers have been doing it for a while here.

And we've had no change there. And I would say even with our best majority of our customer base we source sand.

Mike, based on your comments is it fair to assume that we shouldn’t expect any other one-time restructuring costs in future quarters based on what you know today?

We don’t have any plans on more restructuring costs, Jon. I'm not going to give you an assurance that that won't happen but at this point in time with the sales been completed and that type of thing we don't expect anything else.

So I wouldn't anticipate more.

You referenced the company's averaged realized pricing up 9% quarter over quarter and that you exited near Q1 levels, I think 3% below and yet the majority of your competitors have said that that that [indiscernible] pricing was relatively flat in the quarter. Should we interpret that as Trican perhaps being one of the more aggressive competitors on price earlier in the year when you try to maintain market share during a remarkably quiet period?

I think we dropped our pricing back pretty substantially through Q2. I wouldn’t say that we were trying to a market share too much.

It wasn't that bad it was just you need a level of revenue through Q2 to try to fixed cost down as much as possible and have a little bit of leverage on them. So yes, we came off quite a bit in Q2 and we've now recovered trying to getting closer, as you said in the call, getting close to that Q1 level now progress

Dale, was the 9% price increase that you referenced specific to fracturing or the broader service line including cementing, coal and nitrogen?

Broader.

Mike, I realize you don't want to get into too many hypotheticals with Keane but is it fair to assume the likelihood of you guys holding a publicly equity in the stake and company would be fairly low instead of just turning around and selling it for the cash and reducing debt on the balance sheet? Would that be the most likely outcome should Keane contemplate a public transaction?

At this point in time it's really too early to tell exactly how we are going to play those, there is all kinds of things that have to be worked through before anything happens, include whether they do anything. So it's pretty difficult to comment on that.

Suffice it to say the simpler to the NOV shares I don't think that you’re going to get a lot of long-term value on our share price if you hold onto to that so if we have the option to sell at a decent price then we are certainly know [indiscernible].

Dale, in terms of the base 15% EBITDA margins that you referenced, meaning to see in order to reactivate equipment, would you need to get that realized across your entire fleet on a trailing basis to contemplate putting more capacity in the field? Or if you believe they are on the come or they are embedded into work you're bidding on you might move a little bit early in order to win over some customers?

Yes, absolutely, it's a forward number. So we will look at what we're tendering at and what we anticipate the EBITDA to be on the contract or the work we're tendering and that’s going to determine whether we activate fleets.

Just to follow-on to that, we have the benefit of having a lot of the infrastructure in place to add equipment, we're not going to have open up a new base certainly like that I mean you also have to go hire the people and that type of thing but that margin really need to be viewed as an incremental market. I don’t think there is going to be lot of cost creep on that if you activate something beyond the people side of things.

So it has to make sense that as you get incremental margin like that, that will help overall and then you start getting the leverage off your cost structure.

As you sit in a tighter pumping market, are you actively pumping smaller customers or lower margin work from your frac border if a larger customer comes with a larger program or ultimately better margin work or how are you managing some of the contracts that you engaged in with certain customers with some guys may be coming to you with better economics today?

Basically, we don't have a practice of bumping small clients. We believe every client is important.

What we do is basically work with all of our clients to try and get them into the schedule. If there into the schedule already, then we honor our commitments to them.

So if another client can buy and offered us more money to bump someone else, we don't bump someone else. On the next round though, the next time they're scheduling, customers don't schedule that far in advance you know they are scheduled maybe a month out or something or two.

If they are trying to get a new slide in the scheduled then we’re certainly are looking at economics to some extent and customer relationships and the long-standing clients and everything else that you look at in our business. So if it came down to , I think booking cruise into January right now, we want to make sure that we're booking positive work, positive EBITDA work.

Just as a point of clarification, has your realized pricing in Q4 to-date expanded over average Q3 levels or exit Q3 levels? Or is it something that you expect to unfold over the next three, four, five weeks through pricing increases?

We've seen some pricing improvements, they have been relatively small and they are kind of incremental every week. We’re certainly [indiscernible] our clients about improving pricing going forward and we’re getting some wins on that.

Not massive yet but it gets trending upwards all the time.

Dale, do you’ve a sense for what you're cementing market share has expanded if you were to look at Q3 versus what it was a year or two years ago just given some of the changes we've had in the Canadian landscape in the past year?

We've actually always had quite a large spanning market share for the last three or four years. So it's expanded, say, 500 basis points more, probably where it was once traditionally, but as I said, it's always been there.

I think the growth and spending that we saw was primarily due to the increase in rig count we’re forecasting a rig count between 100 and 120 going into Q3 and we saw rig counts 150 plus growing through the quarter . So as much as anything it was us maintaining, I guess having a little bit better market share and then also the market growing.

Given what you know today about the work you're doing -- what you're talking to your customers about for 2017, do you have any sense for what sand intensity per well could expand on a year-over-year basis?

I don't have a number that we can finalize, every customer is a different plan on that area, I don’t have an aggregated average of that yet,

Last one just from me, will outsourcing trucking to third party be a material drag to margins going forward as you get more active and can do it on a internalized basis? Or do you believe you should be able to pass all of that through to your customers at this point?

Right now, I would say, and always in our business, there's an optimum level of using third parties in your business because sometimes third parties are actually more beneficial to your hold than our people are. Just the way the way they charge out.

So we try to we come out we basically have a group that will ratio the number of the third parties we have in our business as compared to our drivers to get the best economic results for Trican. We've been doing that for some time, as you get busier of course, we're going to have to employ more third parties and if we do that, it's not an issue unless the third party rates go up.

That’s the third party trucking is actually quite economical and not that big of an increase but if rates start going up on third party then it is going to be an issue to us and we will have to slow that with our clients.

You talked about the 15% margin that's sort of a trigger point to reactivate equipment. How close to that would you be today?

We're not reactivating equipment today but we’re looking at it, kind of going into Q1 2017 as I said there is a possibility well it kind of looks like there will be a tightness on equipment and customer programs coming up so we're looking at potential reactivations and people additions around that going into Q1.

Okay. Just a clarification, the 15%, with that be a number that you would burden with corporate overhead and other corporate costs?

Or is there more of a field economics?

That's a field level incremental margin and because we don't expect the corporate costs and the type of thing to go up.

Yes. So how do you think about reactivating equipment in the context of the labor constraints that you referenced and potential challenges on that front?

Yes It's significant. First of all you have to take on additional people, which the cost of that is, if you looked at a large factory right now it's about $130,000 to bring on those additional people.

So there's costs associated with that. And then probably bigger issue is getting those people, as I mentioned, labor is tighter than all of us thought it would be because a lot of people have left our industry and others who just want to see stability in the service industry for they reenter it from other jobs that they may have.

And so I believe that we can activate probably a couple of cruise if we wanted to, I don’t know if we can activate any more than that by Q1 2017. It would be, might get three if you're really good [indiscernible] but two is probably reasonable and probably three to four sand trucks.

Any clarity can provide in terms of the settlement around the sand type in the US and the indemnity claim coming from Keane?

The sand deal with the take-or-pay contract that our U.S. operations had entered into back in 2011 at the height of the peak, and basically with us as exiting out of that resulted in a situation where we had to negotiate the settlement on that.

So the amounts that we settled on have been accrued for in our Q3 financial statements and will be paid out over Q4 and Q1. In regards to the indemnity claims, was really early days on that side of it, don't have much color for you other than that we’re taking a look at the information that's been provided and we will be providing a rebuttal.

Okay. And lasting just on the balance sheet, I know you referenced in the MD&A that you expect you will be able to remain on site with covenants during the first half of 2017, but under a scenario where you don't get to those thresholds, how are you thinking about your options and what are the preferable scenarios?

The preferable scenarios is faster covenants is really where it at. Obviously, I think you’ve seen some situations where the debt markets have opened up a little bit more.

You take look at various types of debt that you may be able to take out, I do think we’re at a stage where the debt levels are low enough that further conversations with our note holders as well as our bankers probably depending on where things are at would be fruitful. So I kind of look at it as two different ways as you obviously take a look at your overall debt structure and see what you can to on that front first.

I think there are some option there, our preference would be if we're going to do anything like that that it fits into our longer term capital structure that we want to see on a go forward basis. Second phase would be continuing to talk with existing lenders and then third phase, you know you look at whatever else you can do and obviously some things that play into that are going to be the NAV shares and the monetization of that in January as well as what we have on our I swaps and all that thing and seeing if we can pull some of those levers as well.

I'm just wondering I'm not sure how much robust detail you can provide on this but I'm curious if you could provide any color on the amount of layoffs you've had to do, and what kind of reduction you had to look at and you mentioned sort on the cost side whether a rehire to look like and I'm just curious how many people we are talking about?

So I will just talk around Q3 to address the public like we've done in the past but on Q3 we hire people back so we hired about 75 people back into our Canadian operations. Those are primarily operations people in the field that were working with our equipment and our crews.

And we kind of came out of the first half of the year with the low people count and as activity ramped up we added those additional people. If we go ahead with staffing additional crews, you could be looking at another 75 to 100 people going into Q1 2017 but that's still a little bit speculative as to whether we're going to do that or not.

I would say that that’s not confirmed.

Okay. And what is your view of demand, seem to -- other indicators is sort of steady as she goes.

Are you seeing look -- what kind of interests are you getting from your clients in terms of what kind of activity you might be seeing in early next year and into the spring?

It's a steady increase, but is not a boom. So our clients, are still living with the $40 to $50 roll right now and gas prices that vary between 2 and low 3s.

So it's not a boom type environment. So it's better.

We see cash flow in [indiscernible] for our clients and I think some of the analysts and we have done work, it says cash flow is up 35% next year so that's an improvement in activity but not a boom yet. So we're at cap that’s improved '17 but not a boom '17 and probably continues to improve throughout the year as '17 goes on.

Okay. As of the comment you made earlier about finding difficult workforce, do you would likely have to top out around 75 to 100?

No, I would say so. I think I will -- if there's I know to add additional equipment we will focus really hard on getting people for that equipment.

In the past we've had a tight labor market in the Canadian market many times in the past, we've always been able to find people as a company we’re very good at training people and bringing them on board and we have to make sure we're good at doing that again.

Thank you much for your interest in Trican today and have a good day. We look forward to talking to you after our Q4 is complete.

Thank you.