Good day, and welcome to the Civeo Third Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Regan Nielsen, Manager, Corporate Development and Investor Relations. Please go ahead.

Thank you, and welcome to Civeo's third quarter 2018 earnings conference call. Today, our call will be led by Bradley Dodson, Civeo's President and Chief Executive Officer and Frank Steininger, Civeo's Executive Vice President and Chief Financial Officer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, please note that we are relying on the Safe Harbor protections afforded by federal law. Any such remarks should be read in the context of the many factors that affect our business, including risks disclosed in our Form 10-K, 10-Q, and other SEC filings. I will now turn the call over to Bradley.

Thank you, Regan, and thank you to everyone for joining us today on our third quarter 2018 earnings call. I'll begin with an overview of the third quarter before offering some commentary on our three business segments, Frank will then give a detailed financial and segment level review and I'll conclude with our updated guidance for the fourth quarter of 2018 and our preliminary outlook for 2019 before we move to question-and-answer portion of the call. Our release and highlights include continued improvement in our Australian and U.S. segments, the announcement of additional room commitments at our Sitka Lodge associated with the recently sanctioned LNG Canada and Coastal Gasoline projects and the completion of an amendment to our credit facility that provide Civeo with additional near-term financial flexibility. As you likely saw on our press release, Civeo has been awarded additional room commitments with CGL and LNGC's EPC contractor to provide rooms and services at our Sitka Lodge contingent upon notice to proceed which is expected shortly. This room commitment in addition to the four previously announced awards for mobile camps to support the CGL project solidifies our position as the accommodations partner of choice in the region and we expect to secure more room commitments for our Sitka Lodge. It also represents a significant commercial opportunity for Civeo, the Sitka Lodge room commitments to-date are expected to generate approximately C$55 million in total revenues over the initial 18 months. In accordance with this room commitment, CGL will utilize the Sitka Lodge for accommodations required for the construction of the western most portion of the first natural gas pipeline and LNG Canada's EPC partner will also utilize Sitka for the initial construction phases of the LNGC export facility. The award covers expected room needs over the initial 18 month time…

Thank you, Bradley. And thanks everyone for joining us this morning. I'll begin with a review of our third quarter results across our three segments. Today, we reported revenues in the third quarter of a $120.5 million with the net loss on a GAAP basis of $14.3 million or $0.09 per diluted share. During the third quarter, the company generated adjusted EBITDA of $22.4 million, operating cash flow of $11.9 million and free cash flow of $9.8 million. We also recently completed the amendment to our credit facility to provide flexibility and capital availability to fund our growth initiatives, including those related to LNG Canada in 2019 as we manage through an expected softer fourth quarter and 2019 first quarter in the Canadian Oil Sands. We view this as an important opportunity for our company and this amendment to our credit agreement will allow us to strategically maximize the potential impact of the LNG project. Now turning to the fourth quarter results of our segment, I'll begin with the review of the Canadian segment performance performed compared to the prior quarter. Revenues from our Canadian segment were $76.8 million, decreasing from $86.5 million in the second quarter. Revenues for the quarter were primarily impacted by overlapping turnaround schedules between two customers, related - operations related - sorry, the reduced operations related room demand from an outage at a customer's project and a favorable impact from exchange rate fluctuations. Adjusted EBITDA in Canada was $16.5 million for the quarter, down from $18.6 million in the second quarter. The decrease is attributed to the lower turnaround activity captured as well as a temporary shutdown of a lodge due to maintenance related issues that Bradley mentioned earlier. During the third quarter, build rooms in our Canadian lodges totaled 816,295, down 12% sequentially due…

Thank you, Frank. I'll now outline our guidance for the fourth quarter and full year of 2018 and give a preliminary outlook for 2019, provide a brief outlook for our business segments and make some closing remarks before we open up the call for questions and answers. In Canada, the delay of the Trans Mountain Pipeline project and softness in SAGD drilling activity potentially due to the current WCS discount are expected to impact the occupancy for our Southern oil sands lodges and equate to modestly sequential declines in revenues and EBITDA during the fourth quarter of 2018. For the fourth quarter we are assuming the Canadian dollar exchange rate of 0.76 and we anticipate segment revenue of $71 million to $75 million and adjusted EBITDA of $11.5 million to $13.5 million for the fourth quarter of 2018. These expectations are based on a range of approximately 720,000 to 740,000 room nights and a room rate of approximately C$119 per night in the fourth quarter. For the full year in Canada, we are assuming a Canadian dollar exchange rate of 0.77 and we anticipate segment revenue of $298 million to $302 million and adjusted EBITDA of $55.5 million to $57.5 million for 2018. These expectations are based on a range of approximately 3.04 million to 3.06 million room nights at a room rate of approximately C$115 per night. Moving to Australia, fourth quarter results will be impacted by the typical holiday downtime and the unfavorable foreign exchange rate movement experienced so far in 2018, which in light of and otherwise healthy commodity price environment. We remain very encouraged that customers will continue to utilize rooms above their base commitments for maintenance and turnaround work as we finish 2018 and move into 2019. For the fourth quarter of 2018 we are…

Thank you. [Operator Instructions] We will now take our first question from Stephen Gengaro of Stifel. Please go ahead.

Thanks. Good morning, gentlemen. Thanks for the color on 2019. That helps. So, I just wanted to clarify a couple of things quickly. When you talk about the room needs and the new C$55, the estimated revenues of $55 over the first 18 months of this contract that is in addition to the CGL project, but are those rooms at Sitka that you're expanding being used for part of these contracts?

We have been occupied or the project has been using rooms at Sitka since July. We expect them to continue to use rooms under a nomination basis through year end. Once we get notice to proceed, we expect that that will trigger the commitments that we have so far from the EPC contractor and CGL and those will be in addition to the room needs of the mobile camp contracts that we previously announced for CGL.

Okay. That makes sense. And second, as you look at the third quarter numbers, would you say, and I might have missed it on the call, but the overlapping turnaround schedules of two customers. Was that a logistics issue or did you not have room availability, like what was exactly the dynamic there?

It was a timing and location issue for the two customers. They're primarily using rooms what we call the base plant region which is the vast majority of the Noralta assets plus Athabasca and Beaver River. Based on the loading curves, we couldn't accommodate all the people that they needed us to. So, we lost out on about 800 rooms for about 30 to 40 days.

Great. And then just one final, when you think about this massive shale LNG project that's about to start and you start thinking about the overall impact that it has on you. When you look at your JV, I think from - was it Bird, when does the impact of that start to kick in?

Again, while we've had positive FID or they've had positive FID on the project, all of us that are hoping to serve the project are waiting on notice to proceed. And so, we've been involved in the discussions around the Cedar Valley Lodge which is the contract for the Bird-Civeo JV. We are still waiting for a positive notice to proceed before really any activity would be. In general, they're going to get started pretty quickly because they will want to start to construct those rooms and get those up and running for the overall labor curves of projects.

Of the projects, right.

And is that contemplating all in your 2019, your initial 2019 thoughts?

Not at this point, no.

Okay, good. Thank you.

We'll now take our next question from Mike Malouf of Craig-Hallum Capital Group. Please go ahead.

Great. Thanks for taking my questions. I'll start with Australia just real quick. It sounds like there are some preliminary indications of some strength there; we've obviously been waiting for that for a while. Can you contrast that with where you were in 2014 and 2015 and are you getting any indications that if you get this cycle headed into maybe the direction that perhaps the commodity would indicate?

Sure. Well, Mike, I think we share your comment which is met coal prices have been constructed for a fair amount of time. I think the thing that is possibly since the last earnings call is we're starting to see customers submit environmental impact studies and is trying to move tangibly towards a position where they get positive FID and expansionary project. I think for our Australian business it is fairly straight forward in terms of the projects that would be impactful to gaining some construction related or expansion related occupancy. Again, the projects that we have on our radar screen will utilize existing assets and latent capacity. So, there wouldn't be a CapEx component to it with maybe minor exceptions, but it's BMA expansions, it's Whitehaven expansions, it would be a new project for the Chinese firm [ph] Shinwell and then potentially a partnership with Woodside. So, those are kind of the big four that are on our radar screen that would materially impact our operations. That being said, I would say that we've seen kind of a steady march, albeit not at maybe the slope that we would like, but a steady march up and occupancy for that operation and I think they're delivering good results as relates to margins as well. So, I think Australia, we'd like that shot in the arm of getting one of these expansion projects kicked off. But I think that right now as we see it, the 2019 guidance that we've provided and we'll kind of fill that out as we get into the fourth quarter earnings call, the 2018 guidance doesn't anticipate any major project influencing that occupancy for Australia. That at this point looks like more of a 2020 story if they get a positive FID sometime in 2019. It could be upside, but at this point, based on timing, we think that that's more of a 2020 story.

Okay, good. That's helpful. And then just a question on CapEx, you got C$10 million related to the mobile camps, four that you announced and then of course the C$15 million for the Sitka operation. That C$25 million, can you give us a sense of how that will be paid? I mean what will be the schedule of that CapEx over the next quarter?

Sure. That's a great question. The Sitka piece will be paid assuming we get notice to proceed here shortly. We'll be in the fourth quarter going into the first half of 2019. And then there will be some spending of the C$10 million of the CGL CapEx in 2019, but a portion of that will be spent in 2020. So, I would say half and half on that one.

Yeah. Spread across both years.

And by the way both of those numbers are Canadian dollar numbers not U.S. dollar numbers.

Got it. Okay, great. Thanks for the help. I appreciate it.

Thanks Mike.

[Operator instructions] It appears we have no further questions. So, - my apologies. Stephen Gengaro from Stifel. Please go ahead, your line is open.

Hi. Thanks. Just as a follow up. As I sort of think about the impact of LNG Canada, so just to be clear, so the CGL revenue stream of a $100 million that starts up in 2019, but the bulk of it is 2020. Is that right?

We'll have a portion in 2019 let's call it C$8 million to C$10 million - first of all C$100 million is Canadian. I would say C$8 million to C$10 million assuming we get notice to proceed in 2019. Then you'll have - then the other part will be split between 2020 and 2021.

Okay great. And have you --I know it's still early, have you had any indications of incremental work around this outside of what we've heard about so far?

So, in the press release we talk about a commitment from - and we're talking about Sitka primarily. The work for CGL has been led up from an accommodation standpoint. So, they…

Both [Indiscernible] pipeline and our Sitka Lodge.

Right.

So, we have the work for CGL from the four mobile camp locations plus they'll be utilizing CGL, I mean to say Sitka for that project. So, the incremental work would be situated at Sitka. We have the commitment again from CGL, we have it from the EPC contractor and we are working for additional commitments at that location. We've got 646 rooms today. We expect that once we get notice to proceed that we will expand that location to 1,100 rooms. We have - we are in the process of seeking approval from the local district to expand that to as large as 2,000 rooms subject to the need and obviously customer commitments to substantiate that expansion. The expansion of Sitka will be largely using existing Civeo assets both mobile camp and other assets that will be relocated to Kitimat. So, while we'll be expanding by roughly 500 rooms, $50 million is a capital light, I think smart way to expand that asset in anticipation of clearly 18 months of commitment, but then hopefully longer than that.

Good. Thank you. And then just one final. When you think about the U.S. market and obviously there has been really nice traction there over the last several quarters. Are there larger awards that are out there that are in discussion around some of these needs in the Permian or other basins that could show up and that you've looked out and talked about pursuing or should we think about the existing infrastructure as kind of the way the U.S. market will be for a while?

Well, I think on the U.S. market by year end we'll have the wellsite assets we won in the Permian and in the MidCon and that mobilization cost has been run through the P&L for the balance of the last two years, 2017 and 2018 will be complete. I mean the teams have done a very good job of mobilizing those assets, getting them to work, using customers that we - historical customers we've had in our legacy market of the Rockies and the Bakken who have moved into West Texas and Oklahoma and leveraging those relationships to get those assets to work. So, we're seeing good results out of our El Reno and in Pecos locations on wellsite side. We do have an existing location that's more of a lodge location in Pecos. We expanded that in the second and third quarter. We are seeing good occupancy at that location. And I think we're all cognizant of the fact that the U.S. market can pivot on a dime. And so, we're trying to be looking for growth opportunities and assets and expansion assets similar to Pecos or similar to Louisiana location we acquired in February in the West Texas market if we can make the economics work and get comfortable with where activity is going to be over the next two to three years.

Got you. That's very helpful. Thank you.

It appears there are no further questions at this time. Mr. Dodson, I would like to turn the conference back to you for any additional or closing remarks.

Thank you very much. Thank you all for joining us today. We think we've positioned the company very well for what looks like to be an improving environment certainly in Australia and the U.S. and with LNG activity picking up in Canada and an improving environment in Canada as we move into 2019. We look forward to speaking to you on the fourth quarter of 2018 conference call. And thank you very much.

This concludes today's conference call. We thank you for your participation. You may now disconnect.