RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Raymond James. C$2.30 PT Dear firstworld. Here is an answer to all your concerns.
-Apparent issues with 10-15 year old equipment breaking down. First off they aren't running 10-15 year old equipment. That is totally false. There has been a big push for these companies to meet tier 4 emissions standards across the entire fleet for the last several years. Tier 4 only came into effect for highway in 2012, so the trucks are 8 years old at the oldest. Tier 4 came into affect for off road around 2014. So the pumps they do have are going to be not much older then 6 years old. And this is the OLDEST of all their equipment. They are buying and selling equipment all the time depending on industry conditions and what is available in the market. So just to clarify once again. The equipment is not 10-15 years old,and there will not be a $150 million surprise. Also the name of the game is efficiency and minimal down time. This means it is essential to have extra equipment and mechanics in order to perform planned maintenance. Heavily indebted, and struggling companies will run break down maintenance because they are constantly trying to defer any kind of cash burn. Which from what I have seen in the past, never works. Trican doesn't have that problem. I also see Trican's equipment quite often during my travels, and they operate some of the cleanest and most respectable iron out there right now. This isn't a fleet that's being scavenged. You don't get jobs with the likes of Tourmaline by running junk. So
-Foreign capital leaving Western Canada. Most of these outfits had below average acreage and knew it. Most of the "foreign capital" wrote down paper assets. and not only did they write down assets in Canada, but the US and various 3rd world countries as well. There are plenty of very big integrated players in the WCSB and capital will come back when the time is right.