Regan Nielsen - Corporate Development Associate Bradley Dodson - Chief Executive Officer and Director Frank Steininger - Senior Vice President, Chief Financial Officer and Treasurer.

Stephen Gengaro - Loop Capital Markets Louie Toma - Craig-Hallum Capital Group LLC Ben Owens - RBC Capital Markets.

Good day, everyone, and welcome to the Civeo First Quarter Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Regan Nielsen, Manager Corporate Development and Investor Relations. Please go ahead, sir..

Thank you and welcome to Civeo’s first quarter of 2017 earnings conference call. Our call today will be led by Bradley Dodson, Civeo’s President and Chief Executive Officer; and Frank Steininger, Senior 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’re relying on the Safe Harbor protections supported 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. Good morning to all of you and thank you for joining us on the first quarter 2017 earnings call.

We’ll start with an overview of our overall operational performance during the quarter, Frank will then provide a detailed review of our financial results for the quarter, and then I will wrap up with our prepared remarks with the discussion of each segment in our guidance before we take questions.

We had good top line performance in the first quarter, which resulted in revenues of $91.4 million above the high-end of our guidance range. We recorded adjusted EBITDA of $15.2 million modestly below our guidance range, due to higher share-based compensation expense and higher-than-expected labor costs in Canada.

We continue to focus on cost management, diligent execution, and firming customer activity. We continue to see signs of improvement in the macro economic indicators of our industry. As previously noted, demand for our services is primarily tied to the outlook for crude oil and metallurgical coal prices.

Oil prices appear to have stabilized, providing optimism that market demand for our services has bottomed and will increase in the future. Additionally, met coal prices remain significantly higher than last year.

In fact, as of Q1 2017, contract met coal prices were approximately $285 per ton, significantly higher than the 2016 – September 2016 contract price of $92.50 per ton.

The recent increase in met coal prices is primarily attributable to Chinese domestic coal production policies combined with adverse Australian weather condition, both of which impacted by volumes.

While we’re encouraged that the worst of a multi-year downturn appears to be behind us, customers are still deploying capital very cautiously and managing their portfolios within tight budgetary constraints.

While we’re seeing some limited investment in Australia, we expect that spot prices for met coal and contract prices for met coal will need to be sustained at levels above $150 a ton for, at least, nine to 12 months before customers significantly increased activity levels.

We’re hopeful that market conditions will continue to stabilize and improve throughout the year. However, we manage our business as if in the advance the recovery starts. Many of the principles we’ve adopted in the low point of the cycle continue to guide our company.

We continue to judiciously spend capital, remain focused on generating free cash flow, and reducing leverage, while growing organically in our key markets. We will remain focused on our strategic objectives as our industry continues to cover from the downturn.

To that end, we generated $9.8 million in operating cash flow and $6.5 million in free cash flow during the quarter. During the first quarter of 2017, we also closed the public offering of 23 million common shares and used a portion of net proceeds of $55 million to repay our revolving credit facility.

As previously mentioned, until market conditions demonstrate sustainably favorable tailwinds, we’ll continue to manage our leverage while focusing on growing our core markets. Today, we are pleased to announce the 15-month contract renewal at McClelland Lake Lodge supporting the Fort Hills Oil Sands Project in Canada.

We are encouraged by the renewal of this contract and believe it is a testament to our best-in-class customer service. In Australia, we have largely dealt with the operational impact with Cyclone Debbie last month. We’re fortunate that our assets were not materially impacted and our team and guest remain safe.

Met coal prices rose dramatically in recent weeks in large part due to rail outages associated with the storm and flooding. However, we continue to manage our business with the expectation that the local supply disruptions that are associated with price pipe could be temporary.

Nevertheless, it does appear that met – global met coal market is much more in balance than previously. In the U.S., the ongoing recovery in the U.S. rig count has resulted in improved occupancy at our West Permian and Killdeer Lodges, but lingering industry overcapacity continues to weigh on our pricing.

However, we’re encouraged that market condition should continue to improve beyond the first quarter, as drilling and completion activity continues to increase. As we stated in our year-end call in February, we believe that 2017 will be a transitional year for Civeo, as we navigate our way out of this to support downturn our industry has faced.

I believe the macro economic recovery continues to improve, particularly in Australia and the U.S., and we’re seeing some green shoots and activity in our core market, but we still have a lot of work ahead.

Until our customers in Canada and Australia shift their focus from capital preservation to growth, we will stick to the playbook that has enabled us persevere through the trough of this cycle. Now, I would like to turn it over to Frank, who will take you through the details of our consolidated and segment results and our financial position.

Frank?.

Thank you, Bradley and good morning. This morning, we reported total revenues of $91.4 million, with a net loss on a GAAP basis of $21 million, or $0.17 per diluted share. During the first quarter of 2017, adjusted EBITDA was $15.2 million and cash flow from operations was $9.8 million, with free cash flow generated of $6.5 million.

I’ll begin with our Canadian segment and I will be comparing our sequential performance, that is first quarter of 2017 to first – to fourth quarter 2016. Revenues from our Canadian segment were $60.5 million, which is down 3% from the fourth quarter of 2016.

Adjusted EBITDA decreased by 6% sequentially to $13.2 million, primarily due to higher-than-expected labor costs, partially offset by increased rentable rooms. Although, we experienced the benefit of a stronger Canadian exchange rate, the decline in mobile, open camp and product revenues also affected the results in the Canadian segment.

Average occupancy in our Canadian lodges was 72% for the quarter versus 65% in the prior quarter. This was driven by higher occupancy at our Athabasca and McClelland Lake Lodges is somewhat attributable to a decrease in the number of multiple rooms of approximately 9,300 rooms in the prior quarter to approximately 8,900 rooms this quarter.

Our average daily rate in U.S. dollars was $70 – was $97 versus $99 in the fourth quarter. In the first quarter, our occupancy in Canada benefited from continued activity related to Kearl and Fort Hills project.

As Bradley mentioned, we are pleased to announce that this team mark contract renewals of the McClelland Lake Lodge for the Fort Hills project. The adjusted EBITDA margin on our Canadian operations was 22% in the first quarter versus 23% in the fourth quarter.

To echo Bradley’s comments, our adjusted EBITDA performance came in modestly below expectations, due to higher-than-expected labor costs and lower pipeline activity in the Southern Athabasca play, as expected.

Moving to the Australian segment, during the quarter, we recorded revenues of $27 million, which were up approximately 3% relative to the fourth quarter. Adjusted EBITDA of $10.6 million, was up 2% when compared to our fourth quarter results last year.

Our top line performance in the segment was driven by increased occupancy and our ability in Western Australia Australia, due to increased activity from anchored tenant at full villages sequentially. The average daily room rate for the Australian villages increased modestly to U.S. dollar $81 in the first quarter versus $80 in the fourth quarter.

Village occupancy modestly increased sequentially by 1% to 42% and adjusted EBITDA margin in Australia with 39%, staying relatively flat versus the fourth quarter of last year. In the U.S., last week’s active land rig count of 837 was up more than 450 rigs from last year’s trough. U.S.

revenues for the quarter improved to $3.9 million versus $2.5 million in the fourth quarter of 2016. We experienced some softness in our offshore business, which was partially offset by higher occupancy at our Western Permian and Killdeer Lodges with the increased U.S. drilling activity. Pricing remains challenged due to lingering overcapacity.

However, U.S. EMP operators have continued to add rigs thus far in the second quarter, with oil prices hovering near $50 a barrel. So we believe our business should benefit from a gradual improvement beyond the first quarter. Our adjusted EBITDA loss of $1.3 million in the U.S.

narrowed from the adjusted EBITDA loss of $1.5 million sequentially, due to top line improvement and cost reduction efforts. Moving to CapEx, on a consolidated basis, we invested $3.8 million on CapEx in the first quarter, primarily for routine maintenance purposes and investments in the enterprise information system.

We continue to expect our capital expenditures for 2017 to be in the range of $15 million to $18 million, which excludes any expenditures for unannounced projects, or uncommitted projects spending for which is contingent on obtaining customer contract.

During the first quarter of 2017, we made $44 million in debt reduction payment, reducing total debt outstanding by $41 million, that is a net of $3 million in exchange rate translation. The debt reduction was primarily attributable to proceeds generated from our February equity offering.

As of March 31, we have a $193 million of available capacity on our revolving credit facility, and total liquidity of approximately $200 million. And we expect to continue to generate free cash flow and reduce our debt balance throughout 2017.

Now, I’ll turn the call back over to Bradley, who will provide a review of operations and update our second quarter and full-year 2017 guidance.

Bradley?.

Thank you, Frank. Looking at our expectations for the second quarter of 2017, overall, I’m optimistic about the recovering activities in our three core market as we progress through 2017.

Canada appears to be stabilizing and Australia seems to be poised for a late 2017 improvement, and we’re seeing a clear improvement in occupancy and utilization in the U.S. albeit at continued compromise pricing.

In Canada, we are pleased to complete the McClelland extension, which should result in broad occupancy at this location for the rest of the year. The Beaver River and Athabasca locations will be largely pulled during the second and third quarters with turnaround work, and we continue to work on growing these locations for the fourth quarter.

Occupancy at Wapasu will be consistent with past quarters in the second quarter of 2017. We do expect seasonally lower occupancy in our Southern in-situ locations in the second quarter.

Overall, we expect to get our cost back in line with our initial expectations in the second quarter, and our focus remains on filling the lodges in the fourth quarter and winning mobile camp work for the balance of the year.

Translating all that into our guidance, we’re assuming a Canadian dollar exchange rate of 0.75 and we’re guiding to segment revenues in Canada of $51 million to $54 million and adjusted EBITDA of a $11 million to $13 million for the second quarter of 2017.

Our expectations are based on a 8,500 rentable rooms and we expect occupancy levels to be between 71% to 73%, for the room rent of approximately CAD$117 to CAD$118 per night in Canadian dollars. For the full-year for our Canadian segment assuming that Canadian dollar exchange rate of 0.75 to the U.S.

dollar, we’re guiding to revenues of $214 million to $222 million. We expect full-year adjusted EBITDA from Canada to range between $45 million and $47 million.

This all assumes 8,600 average rentable rooms for the year with lodge occupancy between 53% and 55% and a room rent of approximately CAD$125 per night in Canadian dollars for the full-year of 2017. Moving to Australia, our locations have largely returned to normal operations after recovering from the cyclone and related flooding.

While we have seen some occupancy in April from the rail recovery efforts, we expect to see lot of momentum. We are pleased with the increase in shorter-term occupancy related to maintenance and turnaround activities by our customers in the Bowen Basin over the past several quarters.

And it appears this activity will continue through the end of this year. However, customers continue to focus on cost reduction containment and efficiently managing their accommodations need. We expect that the recently announced capital project by DMA, we’ll have a positive impact on several of our Bowen Basin locations.

Overall, the activity levels in Australia are improving with some higher met coal prices, although, it is at a measured pace. Translating that into guidance, we are assuming an Australian dollar exchange rate of 0.76 to the U.S. dollar in second quarter of 2017.

We expect $26 million to $28 million of revenues and adjusted EBITDA of $10 million to $11 million from Australia. This is based on 8,800 rentable rooms and village occupancy of 40% to 42%, with average daily rates of approximately AUD$104 to AUD$106 in Australian dollars.

For the full-year, we’re assuming Australian dollar exchange rate of 0.75 to U.S. dollars. We expect $105 million to $108 million of revenues and adjusted EBITDA of $40 million to $42 million.

This is based on approximately 8,800 rentable rooms with village occupancy between 43% and 44%, and an average daily rate of approximately AUD$100 in Australian dollars for the full-year of 2017.

So to consolidate that in the second quarter, we’re expecting revenues to be in the range of $82 million to $87 million and adjusted EBITDA in the range of $14 million to $17 million. For the full-year, our guidance remains unchanged. We expect revenues to be in a range of $337smillion to $353 million.

Our adjusted EBITDA guidance for the full-year remains $60 million to $65 million. In conclusion, as we stated earlier, we expect 2017 to be a transitional year as commodity prices and macroeconomic environment are expected to continue to improve. Actually it appears to be improving in Australia and the U.S. and stabilizing in Canada.

Our strategy remains the same, maintain our market-leading guest service, focus on revenue opportunities, utilizing existing assets, remain diligent on costs and discipline in our capital spending. All this is to serve our customers, drive free cash flow, reduce debt, and deliver long-term returns to our shareholders.

We also continue to pursue organic growth opportunities and inorganic opportunities in our core markets, as we believe will create value for our shareholders. With that, we’re now ready for questions..

Thank you. [Operator Instructions] We’ll go first to Stephen Gengaro with Loop Capital..

Stephen Gengaro:.

.:.

Sure. So we’re starting as we came into fourth quarter earnings call and then we’re giving full-year 2017 guidance. We’re fairly conservative I think on at the time what we saw in Australian activity. As we’ve moved through the year, we’re getting a little more conviction in terms of what we think the occupancy can be at the villages.

We’re seeing better turnaround work certainly following the capital announcements by BMA should help our Dysart and Moranbah locations. And so we put some of that into our guidance for Australia. So Australia is a little bit better than we initially thought coming into the year.

Canada with the labor inefficiency and labor cost issues we ran into in the first quarter and essentially set them back for the full-year, we’ll catch up some of that. But what we really need to focusing on is filling the rooms in the fourth quarter for Canada and getting the mobile camps to work.

U.S., I think continuing – putting assets to work very well. We’ve entered into a couple of new markets. We’ve got some well side units going into the Permian. We’ve got some well side units going into the Mid Con, the two lodges we have in the U.S. are running at much higher occupancy levels than they did last year or even in the fourth quarter.

So, it’s looking up, we hope again – as I’m think that, last quarter we were hoping that by the end of the year the run rate for U.S. business will be a breakeven or positive EBITDA, but they continue to work on their cost and we’re doing a good job there.

We are certainly pleased to give the equity offering and the price amount we’ve done in the first quarter, so we feel like we’re pretty well positioned.

So pluses and minuses, pluses in Australian and to a much lesser degree in the U.S., with the Canada falling behind in the first quarter, but we should be able to pick come of that back up, but not all of it. But net-net, too early to move guidance up..

Okay, thank you.

And then my second question was really, when you look at the opportunity set out there and the potentials to either add something likely via acquisition or even any other incremental work, what are you seeing? I mean, are you seeing any closing of the bid-ask on some potential acquisitions or not yet?.

We’ll we continue to pursue acquisitions. Again, I think it’s important, they are going to be in our core markets right now, meaning our core geographic markets. They will be consistent with what we do now. We have stated that we are interested in expanding our queue in only business model and so that’s something that we’re working on.

I do think the bid-ask spread is starting to narrow, but as you know, transactions are always hard to get completed for various reasons, but we’re – the team is working hard on them and we do have some of opportunities to pursue it.

On the organic side, there are a couple of projects in Australia that we are working on, hopefully we will know about where those are headed possible by the second quarter. We got a couple in Canada that we’re looking at, those are probably second, third quarter opportunities.

And then of course in Canada they are saying although it is delayed, it is LNG in British Columbia. We are seeing – we are actively pursuing the two pipeline projects that we’ll pursue or were approved I should say in November by [indiscernible], line III and Trans Mountain.

I think we’ve got a reasonable shot at getting to work on those for mobile camp business, I think the real question there is, is whether or not – and again, that would largely be using existing assets of….

And not any real CapEx..

No real CapEx to capture that work, but that would likely be an 2018 opportunity, maybe we can get through late 2017 actually growing, but it really spins on when they get FID, but mostly likely and 2018 opportunity..

Okay, great, thank you..

Thank you, Stephen..

Next to Louie Toma at Craig-Hallum Capital..

Hi, guys, thanks for taking my question. I wanted to dig in a little bit more on the McClelland Lake Lodge contract that you renewed.

I guess my first question is, can you give us a little bit of insight into the impact that this had on your 2017 guidance, because this sounds like you have the renewals, but yet you guidance in Canada for the year declined slightly.

Can you just kind of help us quantify what this impact was to that guidance?.

Sure, the McClelland renewal had no impact on guidance. The impact on EBITDA guidance for Canada was largely due to the cost issues we ran into in the first quarter and….

So we had expected in our guidance that the contract would be renewed..

Correct. And it was renewed in line with what our expectations were in setting [indiscernible]..

Okay, that’s helpful, thank you.

And can you talk a little bit more about the higher labor cost that you had in Canada? Is this temporary or is there structural change in labor cost? Can you give us just a little bit more detail on that please?.

I would be happy to. Louie, I think it’s probably important to highlight that it’s higher than expected, but lower than where we were even in the fourth quarter on a per unit basis.

We got – in terms of where we thought we could get in terms of labor efficiency and labor rate, we didn’t get all the way there in the first quarter, I think we’ll catch up to where we want the cost to be and we had some service enhancement rollouts that impacted cost, but it really is more we had expectations we could get cost lower, we set guidance on that, we didn’t get all the way there, but in an absolute sense, our labor costs are lower, we just didn’t get all the way to where we wanted to..

That’s helpful, that’s all I had. Thanks for taking my question..

Thank you..

[Operator Instructions] Next to Ben Owens, RBC Capital Markets..

Hey guys, good morning..

Good morning..

I wanted to see if you guys could maybe give me your thought on, you know what you think the impact will be if some of the recent asset divestiture and acquisition transaction that’s taken place in Canada in the oil sands among international companies and some domestic Canadian companies and what the effect of that could be potentially on the outlook for productivity for you guys and going forward over the next couple of years?.

Sure. Well, I think when you have asset transaction amongst your customer raise, there are usually a couple things you have worry about as a service provider. One, there can be a dislocation in activity on a temporary basis as the new owner tries to get their arms around what they just bought.

And two, there is always the risk that it goes from a customer that wiped your services to one that perhaps wiped somebody else’s services.

I think the good news for us in these two scenarios are, the oil sands, the activity is going to continue to the bulk of producing assets, largely producing assets, there are some that are prospective asset, but they are largely producing assets. There the activity levels will continue just based on the continuation of the production.

The second piece is that, we do have very good relationships with both of the new buyers and in particular, with CNRL. There we had a very close relationship with them long-term, but they certainly had a strengthening relationship with them over the last year or so.

We worked for them during the turnaround of the third quarter of last year and work very closely with them during the forest fire.

So I feel – we feel fortunate that the assets that are being put into the hands of someone is that – of two players that are clearly making a long-term investment and that on the oil sands region will likely be focused on the assets more diligently than perhaps the previous owners and that we have good relationships with both..

Okay, that makes sense. Last, kind of turning to the U.S., it makes sense that you guys would expect revenue to kind of grind higher as activity increases, but I was wondering is there a rig count where the market gets tighter in the U.S.

and demand for your services to kind of take a step change?.

Well, what we’re trying to do right now is on a contracted basis move assets out of slower market, predominantly the Rocky into the Permian and to the Mid-Con, as we acquire new customers in those markets. I would say, the Permian is a very tight market right now, both for large rooms and for well funds. I don’t know if….

I agree with you 100% of that comment and we’re actually going to be able to put some asset to work in the Permian because of that tightness [indiscernible]..

But we’re seeing and we’re seeing better pricing in those markets, but it is nickels and dimes, I mean it’s not shaping to really growth rate over, but it’s starting to improve which is good. I mean we’re putting assets to work.

And the same utilization improved nicely for our well side units and the sales team and the ops team are doing a great job, getting the assets ready to go out and selling them. So I’m really pleased with how the team has been doing. That has been – it’s been a tough slog and their efforts are appreciated..

Got it, understood. And then last one from me.

You guys mentioned, too optimistic about a few green shoots in some of your market, I was wondering if you could maybe give us a little additional color on, you know specifically may be what regions or what kind of the green shoots you’ve seen?.

Well, I think we’ve covered the U.S. and then certainly the U.S. for us is of each of our geographic regions little bit easier for the – for investors and outsiders to track U.S. rig count is going to be pretty good broader for us.

In Australia, the setbacks related to the cyclone and the flooding, thankfully all of our people were safe; all of our guests were safe.

We didn’t run out of food, while the roads were down and our customers assets which really say, there was some rail issues, but it appears probably by – at least by mid-May or end of this month, on the earlier and they should be relatively back to normal, they are for us, but certainly for the customer base.

All of that is on the backup already improving maintenance work that has been deferred and here I’m talking predominantly about our Bowen Basin customers. They were seeing shorter term maintenance turnaround work. And as we talked about on the fourth quarter call, that’s good for us.

That can lead to an additional 30, 40, 50 rooms for a period of time usually measured in a month or two, but that’s very important momentum.

Certainly the conveyor expansion project announced by BMA that should positively impact our Dysart and Moranbah location and hopefully we’ll get that – some of that in – under contract, which would help build the uncontracted revenue that’s built into guidance so and with some upsides.

And so I think as we look at Australia, we are continuing to see some tangible green shoots there. Canada, as in the comments, it feels better. The funnel, the sales funnel is good there. We’re very focused on filling in Rims in the fourth quarter and on guest level camp work out in the back half of the year..

And just to make the pipeline project.

And as we make our pipeline….

Primarily for the Department of Energy..

And so Canada feels more stable I would say and the other two markets clearly are having an improvement. U.S.

will get the assets out to work, we need to get pricing up a little bit, both really starts to fall at the bottom line, in Australia I think we just need a little more ownership to carry us through and then hopefully in the back-half of the year, we’ll the benefit of the higher met coal prices..

Okay, great, that’s great color. I have one more actually, on your comment about filling fill-ins in the fourth quarter in Canada.

What’s kind of in the typical lead time on establishing kind of the occupancy for the rooms and those lodges in Canada for the fourth quarter, you know at what point of the year did you kind of do that historically?.

Yes, historically you’d want to – the customers have to book that pretty far in advance. Needless to say over the last few years, there has been an availability of rooms, both ours and others. And so as a result, you typically can think about contracting those out a month or two ahead of when they want to take off the project.

So I would think in the mid third quarter we’ll have a better idea and really the focus for us is going to be on the Southern in situ locations, those historically have been doing well occupied by pipeline project and some of the in situ projects down there.

And then how much of Beaver River and Athabasca are going to be utilized going into the winter. Ben, I don’t know if you had anything further on that question..

No, I think my line got disconnected briefly, no that’s from me, thanks I’ll turn it back, I appreciate you guys..

Thanks Ben, I appreciate it..

This concludes today’s question-and-answer session. I’d like to turn the conference back for any closing or additional comments..

Well, thank you all for your interest in Civeo and the call today. We look forward to speaking to you at the second quarter earnings call and I appreciate the interest in the company. That’s it, thank you..

This concludes today’s conference. We do thank you for your participation, you may now disconnect..