Enservco Corporation

Good day, ladies and gentlemen, and welcome to the InserveCo first quarter 2021 earnings call. At this time, all participants have been placed on listening mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jay Pfeiffer. Sir, the floor is yours.

Hello, and welcome to InserveCo's 2021 first quarter conference call. Presenting on behalf of the company today are Rich Murphy, Executive Chairman, and Margie Bill Meyers- Hargrave president and CFO as a reminder matters discussed during this call may include forward looking statements that are based on management's estimates projections and assumptions. Bill Meyers- As of today's date and are subject to risks and uncertainties disclosed in the company's most recent 10 K, as well as other filings with the SEC. Bill Meyers- The company's business is subject to certain risks that could cause actual results to different materially from those anticipated in its forward looking statements. And Servco assumes no obligation to update forward-looking statements that become untrue because of subsequent events. I'll also point out that management's ability to respond to questions during this call is limited by SEC Reg FD, which prohibits selective disclosure of material public information. A webcast replay of today's call will be available at inservco.com after the call. In addition, the telephone replay will be available beginning approximately two hours after the call. Instructions for accessing the webcast or replay are available in today's news release. With that, I'll turn the call over to Rich Murphy. Rich, please go ahead.

Thanks, Jay. Welcome, everyone, and thanks for joining our call. This morning, we released our first quarter financial results before the market opened. As stated in our news release, we did not enjoy the uptick in completions activity that we had hoped for in the first quarter. Despite the steady increase in commodity prices, And over the past six months, the demand for our frack water heating services did not approach the expected levels. While the pandemic and some unseasonably warm weather played a part, the fact is the operators that we served had been slow to commit budgets to drilling and completion activity. The good news is of those frack projects that were conducted in our service areas in the first quarter, we certainly won our fair share. And oddly enough, given my earlier comments about weather impact on the frack activity, We continue to heat water for one customer in Colorado today, and it's possible that project may even extend into June. Unfortunately, that's the exception rather than the rule this season. All that said, we do anticipate improved results over the next heating season, and here's why. First, the world is reopening, and the economic recovery now underway bodes well for our increased demand for oil, higher commodity prices, and increased drilling and completion activities. You may recall that back in February 2020, when the pandemic really kicked in, the domestic rig count plummeted from 790 to a low of 250 rigs in August of last year. Although the count has run back up above 400, it's still well below pre-pandemic levels. We are confident that if the rig count normalizes back to near 800, our equipment utilization will grow alongside. Our optimism is further buoyed by growing RFP bid activity from new and existing customers, as well as recent new customer wins. We're also encouraged by customer acceptance of up to 20% price increase for hot oil and services in several basins. We think we can achieve similar increases in the frack water heating business in the upcoming season. In addition, over the past couple of quarters, we continue to grow partnerships with two oil field services companies who refer us into their customer projects. And we have good reason to believe those relationships will continue to grow into the future. These services companies do a lot of water management work for producers and use us for water heating due to our solid reputation for reliability and safety. Lastly, we've been focusing more resources, time, and attention on our hot oil business, where we see good potential for expansion of a service that can generate revenue on a year-round basis. In March, we initiated a $400,000 CapEx program to refresh our hot oil fleet. That program is scheduled to conclude in September in time for our upcoming heating season. Right now, our Jorgenton yard that serves customers in the Eagle Forge Shale in South Texas is our most active area and has our largest concentration of high loaders with 19 units. We are also pursuing a good opportunity to capture market share in the Haynesville Shale, which encompasses East Texas, Southwest Arkansas, and Northwest Louisiana. We're still early in the process, but we're very excited about this expansion opportunity. Our sales team is doing a great job down there. We are in the process of deploying two hot oilers to the area and just recently found a permanent yard location. Ultimately, we believe this area can support up to another dozen hot oilers over the next 12 months. In the meantime, we are augmenting our traditional services with non-oil field services in order to keep our equipment and key field personnel working and contributing to revenue and profit. Specifically, we've been doing equipment hauling as well as dirt hauling, the latter for a customer that engaged us for initial project in May with the expectation of two additional projects in June and July. These three projects alone are expected to generate approximately $750,000 in total revenue in 2021. With that, I'll turn the call over to Margie to recap financial results.