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    James Kubik • CIBC World Markets

    James Kubik's questions to Enerflex Ltd (EFXT) leadership

    James Kubik's questions to Enerflex Ltd (EFXT) leadership • Q4 2024

    Question

    James Kubik of CIBC asked about the potential for future M&A activity now that Enerflex has reached its leverage target and inquired about the company's acquisition criteria. He also questioned the business dynamics between Canada and the U.S. given the divergence in natural gas prices.

    Answer

    President and CEO Marc Rossiter responded that it is too early to discuss new M&A, as the company sees greater value in organic growth by leveraging its strong market position. He noted that acquisitions are not a near-term priority. Regarding geographic dynamics, Rossiter described the U.S. market as 'steady as she goes' with consistent demand, while suggesting Canadian infrastructure providers might adopt a 'wait-and-see' approach due to tariff uncertainty, despite a strong 2024 for that region.

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    James Kubik's questions to Enerflex Ltd (EFXT) leadership • Q1 2024

    Question

    James Kubik asked for more detail on the source of the cost overruns and delays on the Kurdistan cryo project and questioned the rationale for recording the entire $41 million charge in Q1, especially since the project is now suspended.

    Answer

    President and CEO Marc Rossiter explained that the Q1 cost re-assessment was primarily due to subcontractor-related delays. This increased the estimated cost to complete to $105 million, which resulted in a projected negative margin for the project. Accounting rules then required the company to recognize the full imminent loss of $41 million immediately. Rossiter clarified that the $105 million in future costs is 'parked' and will not be spent while the project is in force majeure, and the company has a net asset of $147 million on its books for work already completed.

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    James Kubik's questions to Precision Drilling Corp (PDS) leadership

    James Kubik's questions to Precision Drilling Corp (PDS) leadership • Q2 2024

    Question

    James Kubik asked about the dynamic in the Canadian gas market, questioning if operators might defer drilling activity given weak forward gas prices, despite Precision's high rig count.

    Answer

    CFO Carey Ford acknowledged customer discussions but noted their Montney rig count is higher than a year ago. He explained that while some operators are slowing down temporarily, they are booking rigs for January 1 in anticipation of LNG Canada's needs. He also emphasized that all wells are liquids-rich, with condensate driving the drilling economics, not dry gas.

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