Enerflex Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the Enerflex second quarter 2021 results conference call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your speaker, Mr. Stephan Ali, Vice President, Strategy and Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Here with me are Mark Rossiter, Interflex's President and Chief Executive Officer, Sanjay Bishnoi, Interflex's Senior Vice President and Chief Financial Officer, and Ben Park, Enerflex's Vice President, Corporate Controller. During this call, we'll be providing our financial results for the three months ended June 30th, 2021, a brief commentary on the performance of our three business segments, and a summary of our financial position. Today's discussion will include forward-looking statements regarding Enerflex's expectations for future performance and business prospects. Forward-looking information involves risks and uncertainties, and the stated expectations could differ materially from actual results or performance. For more information, please see the advisory comments within our news release, MD&A, and other regulatory filings. Approximately one hour following the completion of this call, a recording will be available on our website under the Investor section. During this call, unless otherwise stated, we'll be referring to the three months ended June 30, 2021, compared to the same period of 2020. We'll proceed on the basis that you've all taken the opportunity to read yesterday's press release. I'll now turn the call over to Mark.

Thanks, Stephan, and good morning, everyone. At this time last year, WTI was recovering from negative territory, while natural gas was near all-time lows. Fast forward a year, and commodity prices have staged an incredible rebound as the global economy recovers. Oil is seeing its highest price since 2018, steadying around $70 a barrel, while both Henry Hub and Eco Gas prices are respectively hovering near $4, their highest price in five years. underpinned by increased fuel switching, industrial use, and power demand. In addition, rig counts are increasing at a healthy pace, up over 100% since this time last year, with additional increases expected through to year end. This tailwind for the industry resulted in Enerflex delivering solid second quarter results across all regions and business lines. Benefiting our results were stronger contributions from our asset ownership platform, where utilization of our U.S. contract compression fleet improved to a second quarter average of 85%, while exiting the quarter at 88%, illustrating the resilience of these investments and meeting our expectations of stronger utilization as commodity prices rebounded and production returned to the market. U.S. gas production is approximately 93 BCF per day, which is nearing 2019's average of 95 BCF per day. and is concentrated in locations such as the Permian Basin, which is well-suited to the configuration of Enterplex's fleet. Our contract compression business has been further supported by exercising patience in deploying large horsepower to ensure favorable contracts, including with respect to duration and pricing. We've also witnessed increasing demand for electrified rental compression as our customers turn their minds to managing their environmental impact and reducing Scope 1 emissions. In fact, over half of our 2021 contract compression build schedule is dedicated toward electric compression. We expect that demand for e-compression will continue to strengthen in geographies where it can be readily deployed as clients continue prioritizing their decarbonization efforts. In addition to our contract compression fleet, our international boom assets continue their strong performance across all geographies. We are progressing the 10-year boom project book during the first quarter of 2021 and have line of sight to several other 10-year boom opportunities in our rest of world segment that would be underpinned by take or pay contracts with strong counterparties. As we've stated before, provided that our expectations for strengthening engineer systems bookings activity come to fruition, we are prepared to deploy additional capital this year toward accretive asset ownership opportunities that can further contribute to the stability and predictability of our earnings profile. Consequently, very meaningful to us is the increase in engineered systems backlog for the second consecutive quarter. Bookings of over 154 million represent the highest bookings quarter since the first quarter of 2020 and are reflective of improved macro indicators for oil and gas demand and strengthening balance sheets across the sector. As stated in our last earnings call, we anticipated bookings improvement to occur this year given the rapid increase in rig counts, which our bookings typically lag by roughly six to eight months. While bookings activity accelerated near the end of the second quarter, our outlook for the remainder of the year remains unchanged in that we expect the second half of 2021 to show stronger bookings activity than the first half. Notably, bookings activity is roughly allocable in thirds by end destination, fueling optimism for a broad-based recovery. While some regions may recover faster than others, our geographically diversified platform ensures we're positioned to participate wherever activity is focused. We are also happy to see recent bookings more heavily concentrated towards gas processing applications versus compression, with demand coming from each of the upstream, midstream, and petrochemical sectors. We've dedicated resources over the years to increasing our capabilities and expertise in complex gas processing applications and are proud that our reputation for successfully delivering has assisted us in securing additional gas processing projects this year. Our aftermarket services business was stable through the quarter, recovering from the prior quarter's seasonality and weather-induced weakness. A recovery for the AMS business will likely take several quarters, but we do expect a gradual return of activity as the year progresses. Turning to our energy transition efforts, we have completed significant work in deepening our understanding of how the transition might unfold and are already seeing significant number of inquiries for lower carbon solutions, including in respect of e-compression, where we're currently bidding several opportunities, and other constructive discussions regarding carbon capture and sequestration, biofuels and renewable natural gas, and hydrogen. With rate counts increasing, economies reopening, and supportive demand dynamics for both oil and gas and certain energy transition solutions. We're optimistic that the industry is turning the corner and are focusing our attention towards supporting our global customers and their development plans while simultaneously building capabilities to capture opportunities within the energy transition landscape. Lastly, I would like to once again thank Interflex's employees for their devotion and commitment through this downturn. This has been one of the most turbulent periods for the oil and gas industry, which we can only navigate because of the talents of our hardworking, dedicated team. As we return to in-person collaboration, the future looks bright for Enerflex, and we're well-positioned to continue participating in the industry's recovery. I will now turn things over to Sanjay to review our financial results.