Superior Energy Services (SPN) David D. Dunlap on Q4 2015 Results - Earnings Call Transcript

| About: Superior Energy (SPN)

Superior Energy Services, Inc. (NYSE:SPN)

Q4 2015 Earnings Call

February 23, 2016 11:00 am ET

Executives

Paul Vincent - Vice President-Investor Relations

David D. Dunlap - President, Chief Executive Officer

Robert S. Taylor - Chief Financial Officer, Treasurer & Executive Vice President

Analysts

J. Marshall Adkins - Raymond James & Associates, Inc.

Sean C. Meakim - JPMorgan Securities LLC

Kurt Hallead - RBC Capital Markets LLC

Blake Allen Hutchinson - Scotia Howard Weil

Robin E. Shoemaker - KeyBanc Capital Markets, Inc.

James Wicklund - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Christopher G. Denison - Stephens, Inc.

Daniel J. Burke - Johnson Rice & Co. LLC

Darren Gacicia - KLR Group LLC

Judson E. Bailey - Wells Fargo Securities LLC

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

Operator

Greetings and welcome to the Superior Energy Services Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer section will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Vincent, Vice President of Investor Relations. Thank you, Mr. Vincent, you may now begin.

Paul Vincent - Vice President-Investor Relations

Good morning and thank you for joining today's conference call. With me today are Superior's President and CEO, Dave Dunlap; and CFO, Robert Taylor.

During this conference call, management may make forward-looking statements regarding future expectations about the company's business, management's plans for future operations or similar matters. The company's actual results could differ materially due to several important factors, including those described in the company's filings with the Securities and Exchange Commission.

Management will refer to non-GAAP financial measures during this call. In accordance with Regulation G, the company provides a reconciliation of these measures on its website.

With that, I'll turn the call over to Dave Dunlap.

David D. Dunlap - President, Chief Executive Officer

Thank you, Paul, and good morning to everyone listening to our call today. I'll briefly review our fourth quarter activity, Robert will discuss segment results, and I'll conclude with thoughts on our strategy and outlook before turning the call over to Q&A.

For the fourth quarter of 2015, Superior Energy generated revenue of $545 million, adjusted EBITDA of $77 million and an adjusted loss from continuing operations of $61 million or $0.41 per share after excluding special items. In what has become a persistent refrain, the fourth quarter of 2015 was marked by further degradation of industry operating conditions, lower rig counts and lower oil prices. We don't control these variables, but we do control our cost structure, cash allocation and commitment to maintaining our business at a level of readiness for market recovery.

An internal highlight of the quarter was the conclusion of an extensive U.S. land and Gulf Coast business unit restructuring and reorganization. As discussed last quarter, this restructuring exercise results in between $40 million to $50 million of annual savings, while better positioning us to package our services.

Businesses impacted tended to be non-technologically advantaged, labor-intensive service lines such as well service rigs, coiled tubing, pressure control, E-line and slickline. The result of this effort is a simplified business offering of this broad range of services that we will refer to as Well Services moving forward. These businesses are now organized in a consistent way throughout the company to serve specific geomarkets in the U.S. land, Gulf of Mexico and each international region.

Superior Energy performs well in these businesses due to our focus on field-level quality and responsiveness. As a result, this process went remarkably well and was led by our field-level business unit managers. Through this process, we made changes which impacted businesses that generated revenue in prior periods, but were either made redundant or were marginally economic due to the environment.

We also suspended horizontal well fracturing operations in North Dakota during the quarter, although we expect to be active and supportive of our customers there in the future when the market recovers.

These changes improve our competitive position, lower costs during this downturn and allow us to be more profitable in an up cycle. Operationally, the U.S. land business continues to be marred by meaningful overcapacity and pricing pressure. To highlight how precipitous customer activity declines have been, consider that year-over-year, our U.S. land revenues are down 70% and 28% sequentially from the third quarter of 2015.

This is severe even for those of us who would have been through a number of downturns in our careers. The ugly fact is there continues to be too many competitors who are becoming increasingly distressed financially and making what can politely be described as questionable operational decisions.

The behavior of these competitors is causing the U.S oilfield service industry to weaken even further, as these organizations are setting prices significantly below any objective measure of acceptable cash returns.

We have finally begun to see some competitors park assets or exit businesses that were unprofitable for them even during 2014. This behavior, should it continue, would be supportive of an improving competitive landscape.

Highlighting the value of diversification and geographic expansion are our Gulf of Mexico and international results. I've mentioned the weakness in the U.S. land markets, and while the Gulf of Mexico and international markets are impacted by declines in oil prices, the competitive issues that are exacerbating U.S. land declines are not as pronounced in these areas.

Our Gulf of Mexico revenues grew 29% quarter-over-quarter, 11% if we consider the performance without the benefit of a contract termination fee that we recorded during the period. While our rental businesses were off slightly, our hydraulic workover and snubbing and completion tools businesses both performed better sequentially, but in line with our expectations. While not immune to slowing activity, both businesses are expected to generate lower revenue in 2016. They highlight the advantage of diversification geographically and represent specialized value-adding services in markets with limited amounts of competitors. Not surprisingly, these businesses can generate positive operating income even in markets like the one we're faced with today.

Moving to our international activity, rig activity has continued to recede, impacting our Drilling Products and Services segment, in which revenues were lower across all of its product offerings. Offsetting these declines were an anticipated increase in hydraulic workover and snubbing results; an uplift from our well control business, and an increase in coiled tubing as additional equipment relocated from the U.S. was activated.

We continue to execute our international expansion strategy, and despite the obvious hurdles posed by the market conditions, we believe there are opportunities to continue to win business in select areas. Even if we're successful, our expectation is for international revenues to decline approximately 20% during 2016 as conditions continue to worsen globally in oil and gas markets.

Our entire industry has been impacted by what is now a severe and extended downturn as any in recent memory. Fortunately for Superior Energy, we have a veteran management and personnel across all of our product and service lines. Our people have responded early and often from the field level to our corporate offices and it has resulted in our maintaining a strong position financially and operationally.

When the market recovers, we'll leverage these strengths towards market share gains and rapid improvements in financial performance, but for now, our near-term priorities are a bit more muted.

As financial distress in our sector increases, we believe it prudent to emphasize decision making and capital allocation that prioritizes cash preservation, liquidity and financial flexibility. To that end, we expect 2016 capital expenditures to be $100 million or less. And we will continue to bolster our balance sheet over the course of the year through further cost reductions. We have also amended and extended our credit facility.

It became evident during negotiations that commercial oil and gas lenders are extremely concerned about the credit quality of the entire oil and gas industry. While it is somewhat disappointing to have to reduce our credit facility, the fact of the matter is that given market conditions and our stated priorities, we don't envision a scenario where accessing significant new borrowings will occur until the market shows signs of improving. More importantly, we pushed our nearest term debt maturity out to 2019 and modified the covenants governing our facility to reflect the extent and duration of this downturn. It's times like these that test all of an organization's relationships and we're proud to work with a diverse group of lenders committed to this industry through the cycle.

The outlook for 2016 is cloudy as it relates to potential cyclical inflection points. But we do anticipate activity levels to decline as our customers align their spending with current cash inflows. Our leadership and employees are extremely engaged in evaluating our businesses as closely as possible. Although we are compelled to evaluate our businesses and forecasts on a monthly basis and in some cases, even a weekly basis, we will maintain our long-term readiness to respond to a recovery and focus on our core strategic objective of geographic expansion of our product lines.

I'll now turn the call over to Robert for our fourth quarter financial review.

Robert S. Taylor - Chief Financial Officer, Treasurer & Executive Vice President

Thank you, Dave. In discussing our operating segments, all sequential comparisons have been adjusted to exclude the impact of special items that were disclosed in our earnings release.

Drilling Products and Services segment's revenue decreased 13% to $112 million and an adjusted loss from operations of $8 million compared to adjusted income from operations of $8 million in the third quarter 2015. U.S. Land revenue decreased 13% to $29 million; Gulf of Mexico revenue decreased 10% to $50 million and international revenue decreased 18% to $33 million. The lower revenues across all geographic regions in this segment are attributable to a combination of pricing pressure and lower utilization, resulting from further reductions of customer activity and spending.

In the Onshore Completion and Workover Services segment, revenue decreased 24% to $154 million and the segment recorded an adjusted loss from operations of $65 million compared to an adjusted loss from operations of $53 million in the third quarter. Horizontal well fracturing revenue was down approximately 30% during the period. This is greater than market activity declines and due to suspension of operations in North Dakota during the fourth quarter. Revenues in this area tended to be among our highest per job historically due to the sale of consumables. Yet cash returns were also more challenged as operating costs tended to be above average as well. As a frame of reference, well fracturing revenue in North Dakota was just shy of $15 million in Q3 and was zero in Q4 after electing to suspend activity there.

Our well services revenues were down approximately 25% as a result of deliberate discontinuation of certain businesses, which we believe would have been challenged from a cash return perspective after we concluded our U.S. well services reorganization late last year. These decisions reflect Dave's comments earlier that our near-term focus is on cash preservation and maintaining liquidity in the face of uncertain market conditions.

Our Production Services segment revenue decreased 17% to $135 million, which resulted in an adjusted loss from operations of $22 million, a slight improvement from a loss of $24 million in the third quarter. U.S. land revenue decreased 44% to $48 million due to declines in activity and the closure of businesses and locations included in our U.S. land well service reorganization.

Gulf of Mexico revenue increased 14% to $14 million and international revenue increased 12% to $73 million, primarily due to expected activity increases in hydraulic workover and snubbing activity.

In the Technical Solutions segment, revenue increased 36% to $144 million, resulting in adjusted income from operations of $27 million. During the fourth quarter, the primary customer of our Marine Technical Services business discontinued its arctic exploration program and a contract termination fee of $23 million was recorded. This fee is included in segment revenues for the quarter and is included geographically in our Gulf of Mexico results.

U.S. land revenue decreased 23% to $12 million due to lower completion tools revenue. Gulf of Mexico revenue increased 65% to $106 million due to the previously noted contract termination fee, increased completion tools revenue from deepwater project sales and increased P&A activity. International revenue of $26 million was unchanged quarter over quarter.

On a consolidated basis, we recorded a pre-tax expense for the reduction in value of assets and other charges of $212 million. These charges included $176 million of impairments of long-lived assets, primarily in our Technical Solutions segment and $36 million for restructuring-related costs related to our product line integration and reorganization.

Turning to the balance sheet, at the end of the fourth quarter, our debt-to-EBITDA ratio was 4.1 times. Our debt-to-capital ratio was 43% and our total debt at quarter end remained $1.6 billion. Offsetting our long-term debt, we reported a cash balance of $564 million as of December 31, resulting in unchanged net debt of $1.1 billion.

Free cash flow for the quarter was $28 million and total free cash flow for 2015 was $274 million after full-year capital expenditures of $358 million. As market conditions continue to deteriorate, we expect our ability to generate free cash flow will grow increasingly difficult. With that in mind, our focus for 2016 is to conserve our cash and maintain the integrity of our balance sheet.

While we continue to reduce operating costs and overhead costs across our businesses and manage our working capital efficiently, there are further measures we can take to accomplish our goals. For example, we expect our capital expenditures this year to be primarily maintenance-related and continue to be within our operating cash flows. I'd also remind listeners that our cash dividend payment is a quarterly decision made by our Board and will continue to be evaluated based on its impact to our goals and objectives in future quarters.

As mentioned earlier, we have amended our credit facility. This amended facility is now comprised of a $470 million credit facility which matures in 2019 and no longer has a term loan component. We also revised the financial covenants of this agreement, which now include a net debt to EBITDA and EBITDA to interest coverage ratios as well as a minimum cash balance requirement.

We believe these covenants reflect the changes that occurred in our industry. We currently have $325 million drawn against the facility. Other details relating to this agreement can be found in the filing made yesterday. Most listeners are aware of the concerns surrounding credit in our industry as well as that of our customers.

Given these concerns, we believe this agreement, which pushes our nearest debt maturity to 2019, is a signal of the strength and quality of the financial institutions we work with and their understanding of our businesses, strategy and the cyclical nature of the industry that we participate in. Reviewing assumptions for the first quarter, I'll begin with G&A, which was $107 million, down from $123 million in the third quarter and is reflective of our continued cost cutting efforts.

For the year, G&A totaled $511 million, a decrease from 2014 of $113 million or 18%. We exited 2015 at a quarterly rate substantially lower than that which we entered the year and believe Q1 2016 G&A will be between and $100 million and $105 million. We expect DD&A, after taking into account any reductions associated with the reduction in asset values, to be in the range of $138 million to $142 million for the first quarter of 2016. First quarter interest expense should be in the range of $24 million to $26 million. Our first quarter effective tax rate is expected to be approximately 34%.

I will now turn the call back over to Dave.

David D. Dunlap - President, Chief Executive Officer

Okay. Thanks, Robert. It should be evident from our remarks so far that we don't believe this downturn has bottomed. We've been vocal for quite some time now that the continued pricing pressure that results from the massive overcapacity of equipment and services primarily in the U.S. As our E&P customers continue to announce 2016 plans, the only visibility we have past the next quarter is that expected levels of spending will be down meaningfully from 2015. This isn't supportive of any type of recovery scenario in the near term and is causing us to continue to pursue aggressive cost improvements and savings in our business.

Before recapping today's call, I'd like to take a step back for our listeners' benefit. We're almost a year and a half into a downturn in which oil price reductions are causing unprecedented revenue erosion and bankruptcies across the energy complex. And rig counts are headed towards generationally low levels. Through this, Superior Energy has grown its cash balances and reduced costs meaningfully in a long-lasting fashion, without compromising our ability to perform when the markets recover. Make no mistake, we can always do more, and as long as we aren't profitable, we will. But how a business is managed in one portion of the cycle will dictate its success in the next. We will emerge from this down cycle with capacity to pursue market share that we believe few of our competitors will have.

Our service model aligns us with our customers, who seek efficient, utilization-maximizing service providers. This model has proven successful through the years and will be even more successful as the cycle continues to play out and smaller operators are either acquired or face restructuring, which may hinder their capacity to respond to a recovery.

We believe when a recovery does occur, it will be the larger, well-capitalized oil and gas customers, who we have relationships with and are already our largest customers, who will drive initial incremental oilfield spending.

So, primary takeaways from today's call are, an inline quarter operationally with few surprises, $28 million of free cash flow during the quarter, which concluded with $564 million of cash on our balance sheet.

An extension of the credit facility to 2019 removing any debt maturity before 2019, significantly lower cost structure when compared to 2015 with additional measures being assessed for 2016, a meaningful reduction of capital expenditure planned in 2016, a customer list that is comprised of leaders in shale, offshore and international markets, who themselves are financially sound, and will be first movers towards activity, when oil prices recover.

Finally, a dedicated workforce, that has not wavered through the many difficult decisions and cost reduction initiatives, we've executed over the past 18 months.

And with that operator, we'll turn the call over to Q&A.

Question-and-Answer Session

Operator

Thank you. We'll now be conducting the question-and-answer session. Thank you. Our first question is coming from the line of Marshall Adkins with Raymond James. Please proceed with your questions.

J. Marshall Adkins - Raymond James & Associates, Inc.

Morning, Dave. You having fun yet?

David D. Dunlap - President, Chief Executive Officer

Hey, Marshall. We're having a great time.

J. Marshall Adkins - Raymond James & Associates, Inc.

Yeah. Yeah. We all are. Let's talk about the credit facility, because I'm just – and I may have my numbers wrong, a bunch of companies reporting today, but it looks like you have $1.1 billion of net debt, and the covenants are 5.5 times, which would imply kind of an EBITDA next year in the $200 million-ish range, which presumably since you always did this you're fairly comfortable with, did I do my math right or am I doing something wrong there?

David D. Dunlap - President, Chief Executive Officer

Well, Marshall, our projections don't show us busting covenants. You may not be aware of the add-backs that the facility allows, and I certainly invite you to look at the details in the credit agreement to see that, but it's not uncommon to have add-backs to EBITDA, and in fact it's not uncommon for companies to have EBITDA measures within their credit facility covenants that are different than the EBITDA numbers that we report for that reason.

J. Marshall Adkins - Raymond James & Associates, Inc.

Okay. All right. That's all, because I haven't had a chance to go through all that. So adjust for that. And it seems like the follow-up question then obviously is, you have a bunch of cash on the balance sheet and a little bit on the credit line, how do you feel about M&A? Do you have room to make it or is this just hunker down, no, we're not doing anything till we get past the storm?

David D. Dunlap - President, Chief Executive Officer

Yeah. I mean I don't think that our thoughts on M&A really changed very much from where they were when we visited on this call from last year. We will continue to be interested in opportunities that are in line with our overall strategies, mainly associated with international growth. We've kicked the tires on a lot of things during the course of the year, but clearly we hadn't executed. And I think part of the reason that we haven't executed on any of the opportunities is it always feels better to execute on M&A when you've got better certainty about the market going forward.

And so what we'll continue to do is to kind of look at the opportunities that are out there and stay involved in the process, but execution is going to require a little bit better certainty as to what the future market has to hold for us.

J. Marshall Adkins - Raymond James & Associates, Inc.

I assume the deal flow along that line is going up pretty meaningfully recently, particularly in pressure pumping?

David D. Dunlap - President, Chief Executive Officer

I don't know that it's going up meaningfully. Certainly, most of what we've laid eyes on here recently has been very distressed. And in most cases, when I say very distressed, that means companies whose financials are very distressed and assets that are very distressed.

J. Marshall Adkins - Raymond James & Associates, Inc.

All right. Thank you, all.

David D. Dunlap - President, Chief Executive Officer

You bet.

Operator

Thank you. Our next question is from the line of Sean Meakim with JPMorgan. Please proceed with your question.

Sean C. Meakim - JPMorgan Securities LLC

Hi. Good morning.

David D. Dunlap - President, Chief Executive Officer

Hey, Sean.

Sean C. Meakim - JPMorgan Securities LLC

So, Dave, is it fair to say that perhaps you're willing to trade at significant level of liquidity in exchange for that duration to get you out to 2019, perhaps you didn't see a need for that level in the current environment?

David D. Dunlap - President, Chief Executive Officer

Well, listen, as I said in our comments, I mean we're disappointed that the overall size of the facility is less, but I think when you take it within the context of where the industry is today, and attitude from commercial lenders towards the industry today, in addition to the overall financial state of not just our company, but other companies as well, I mean, keep in mind this is a credit facility which was – the one that is expiring was done in 2012 at a point in time where we were generating $1.2 billion in EBITDA; it's a little bit less now. And so, you think about in the context of that, then there should be an expectation that bank lending facilities are going to be smaller going forward.

Sean C. Meakim - JPMorgan Securities LLC

Now, that's totally fair. I guess, on the cost side, are we at a point in the cycle now where the only – and especially as you're getting through with the re-org – are there any more meaningful pockets left to explore or have we reached to the point now where stacking equipment is what's left and we need to cut cost on lower activity?

David D. Dunlap - President, Chief Executive Officer

We absolutely do have more pockets to explore and we will continue – this is an – I've described this all along as an iterative process. And we will continue to go through iterations of reducing the cost structure in this company to a point where we can approach profitable levels in this kind of market environment. I guess the process that we've gone through in this iterative process that I describe is one that was very focused last quarter and at the end of Q3 on the well services restructuring, but there are other parts of our organization that we'll continue to work on and refine as time goes on to bring down the overall cost structure.

Sean C. Meakim - JPMorgan Securities LLC

Got it. That's all fair. Thanks, Dave.

David D. Dunlap - President, Chief Executive Officer

You bet.

Operator

Our next question is from the line of Kurt Hallead with RBC. Please go ahead with your questions.

Kurt Hallead - RBC Capital Markets LLC

Hey, good morning.

David D. Dunlap - President, Chief Executive Officer

Good morning, Kurt.

Kurt Hallead - RBC Capital Markets LLC

You guys laid out pretty solid game plan to kind of manage through the downturn here and obviously getting that deal done clearly helps. You mentioned not calling for the bottom, but can you talk a little bit about how much more intense pricing is getting? Just give us some maybe color or flavor of the slope kind of flattening out here a little bit, what's the general sense?

David D. Dunlap - President, Chief Executive Officer

Sure. I mean, I would certainly describe the pricing pressure that we are seeing in the field today, along with the pricing pressure we saw in Q4, as being – it's minor; it's not like the significant declines that we saw in pricing in the first half of 2015, but it's this pesky nagging type of pricing pressure. So it's not across every geographic area and every product line at the same time, but when you're working at low margins as we all are, pesky price declines are – they hurt and so every time you see one, you've got to go find a way to go capture that efficiency somewhere else. One thing we are seeing in the U.S. services business is, very low decrementals on the revenue that were given up. So that tells me that, where we are pressured from a price standpoint, we're also finding leverage we can pull from a cost standpoint that allow us to deal with it. But, Kurt, it's just pesky pricing pressure that won't go away with the kind of overcapacity that we have.

Kurt Hallead - RBC Capital Markets LLC

Okay. So, I think, we're all aware of the budget dynamics that are happening in the U.S., you are not as broad and diverse as the bigger players are internationally, but I'm sure you're going to wind up being exposed one way or the other. So what's your assessment on international, and how are you looking to manage through the reductions in spend internationally?

David D. Dunlap - President, Chief Executive Officer

Yeah. So, I mean, it is a bit more muted internationally than what we see in the U.S. land market, I should say. It's very country specific and not every single market is moving downward at the same pace. As you pointed out, we're not nearly as diverse geographically as the large cap guys, so we're not a perfect measure of the macro market internationally, but are kind of characterize some of the countries, I mean, in Latin America, I think, Colombia has probably been the most impact at this point from an activity decline. I've been quite frankly a bit surprised, where Brazil revenue has held up though.

We've seen declines in West Africa, mainly in offshore activities and that's impacted our Drilling Products and Services arena. At the same time, we've picked up new contract opportunities in India, which was a acquisition expansion that we executed on in 2014. So it's kind of a mixed bag as a smaller market share player in virtually all the international markets that we're in, we're never a perfect marker for the total market and it does give us the opportunity in some cases being a lower market share player to actually step up our revenue with certain contracts we're able to win. So, a bit of a mixed bag. I mean, I think clearly from our comments though, we do expect international revenue to be down next year in the 20% range, and that could be offset by some contract wins that we're not planning on, but I think better to plan for kind of a 20% reduction overall.

Kurt Hallead - RBC Capital Markets LLC

And then, the decrements on that 20%, Dave, is it harder to get in front of the cost curve internationally than it is in U.S. let's say?

David D. Dunlap - President, Chief Executive Officer

I mean it depends. Once again, I hate to keep referencing country-to-country, but each country has a little bit different dynamic there and a little bit difference in the way labor laws work. So, I mean a big part of our cost lever in the U.S. has been in reduction of head count, as well as in reduction of labor cost. In some countries, you get that latitude internationally; in other countries, you don't. So, I think, there's different levers that you can pull. Clearly, we don't have the same kind of maturity in our infrastructure overall internationally, which means that it's already running at a fairly efficient level whereas I'd say in the U.S., we've had a lot of G&A levers that we've been able to pull, probably few of those levers internationally.

So certainly try and get out front of it, and the other thing about it, I would say is this, pricing pressure internationally is nowhere near what we've seen in the U.S. land market. So, yeah, most of the revenue deterioration that I think we'll experience is more related to activity than it is to price.

Kurt Hallead - RBC Capital Markets LLC

All right. That's great color. I appreciate it, Dave.

David D. Dunlap - President, Chief Executive Officer

You bet.

Operator

Our next question comes from the line of Blake Hutchinson with Howard Weil. Please go ahead with your question.

Blake Allen Hutchinson - Scotia Howard Weil

Good morning.

David D. Dunlap - President, Chief Executive Officer

Hi, Blake.

Blake Allen Hutchinson - Scotia Howard Weil

Just thinking about kind of the U.S. markets and thanks for the number on the comparison on the shutting down of the hydraulic fracturing in North Dakota. As we look at the rest of the U.S. results sequentially, I think, we can leave it to our own imagination in terms of what came out in terms of redundant and marginally profitable business to the restructure. Do you think you kicked most of that out in 4Q, and I guess what I'm trying to understand here is maybe kind of manage first quarter expectations in terms of why you may or may not be in line on the top line front with kind of general activity. Is there another leg of you – understanding this process is probably iterative too, is there another large leg of you kicking out that marginally profitable business that we should be considering as we kind of look into first quarter?

David D. Dunlap - President, Chief Executive Officer

Yeah. I mean, I think it's a great question. From where we sit today, I don't see another significant iteration such as the one that we saw from Q3 to Q4, and I'll try and give you a little bit better color on what – on what some of the things are that we stopped doing in the fourth quarter that we were doing in the third quarter. So, think about – think about for instance, our wireline business, which is all – now it's all part of a well services organization, and may operate it in 20 different districts around the U.S. And when we rationalized and reorganized, we may choose to exit the wireline business in four or five of those markets.

Now, the reason we chose to exit is, because they were – we couldn't make money in those markets, we didn't see through a reorganized structure that was going to lead us to a moneymaking organization. And so, we just discontinued offering the service in that particular market, that puts some pressure on top line that doesn't repeat next quarter. And those are the kinds of decisions that we made as we went through that well services rationalization.

Now, could some of that happen going forward, I mean, the answer to that is yes. I mean, that is where we'll be iterative and we'll continue to evaluate the various product lines within well services on a month-to-month basis, and if we see that we've got certain product lines, that continue to be a drag on us from a cash standpoint, we're not going to tolerate them for long.

So, the essence of my answer here is that you probably saw a bit more of that type of discontinued revenue from the third quarter to the fourth quarter than you see going forward, but I certainly don't want to promise that you won't see us stop certain unprofitable operations in the future.

Blake Allen Hutchinson - Scotia Howard Weil

Sure. It would at least – I think as much as we can ask to just think about, where the next quarter maybe in this type of market. And I guess, following up, on that, from an international perspective, thanks for the guide and the color. Is there anything we need to consider just in the first quarter from a service lines standpoint internationally as kind of more of a reset than just a continuum where you would kind of call out the hit year-over-year is going to be more immediate rather than, again, kind of a continuum over the course of the year?

David D. Dunlap - President, Chief Executive Officer

I don't think so, I think you ought to consider it as a continuum. I mean, I do think this that if we say that overall international revenues is going to be down 20% year-over-year that that revenue decline is probably weighted towards the first half of the year versus the second half of the year, and that just coincides with budget reductions, right.

Blake Allen Hutchinson - Scotia Howard Weil

Right, right. And just let me sneak one more in here. The asset held for sale figure, in this market should we be realistic in maybe thinking perhaps that window is closed here for you?

David D. Dunlap - President, Chief Executive Officer

Yes. Surprisingly, it's more open today than it was probably in middle of the year 2015.

Blake Allen Hutchinson - Scotia Howard Weil

(35:56).

David D. Dunlap - President, Chief Executive Officer

So, yes, we certainly will continue to pursue the sale of those assets. We've not marked them down to a point just to get them off of the balance sheet and convert it to cash. There continues to be interest in the asset, and I'd say the asset interest is more intense in the last few months than it has been over the course of the last year.

Blake Allen Hutchinson - Scotia Howard Weil

And as I read the agreement, those sales proceeds wouldn't be additive to your EBITDA figure for covenant purposes, correct?

David D. Dunlap - President, Chief Executive Officer

They're not additive to EBITDA, but they're additive to cash.

Blake Allen Hutchinson - Scotia Howard Weil

Yes, the cash balance, right.

David D. Dunlap - President, Chief Executive Officer

And remember one of the great features of our new facility is that it considers net debt, and so whatever cash we have on the balance sheet offsets that.

Blake Allen Hutchinson - Scotia Howard Weil

Thanks, guys. I'll turn it back.

David D. Dunlap - President, Chief Executive Officer

You bet.

Operator

Our next question comes from the line of Robin Shoemaker with KeyBanc. Please go ahead with your questions.

Robin E. Shoemaker - KeyBanc Capital Markets, Inc.

Thank you. I just wanted to clarify one thing. So the term-loan facility that was ended I guess with the new revolver, so that converts to a note that matures in 2019, the $330 million or whatever?

David D. Dunlap - President, Chief Executive Officer

Yes. Actually, it's rolled in as part of the overall facility. So what you had prior was a facility that was made up of a $600 million revolver and $325 million in term A. Now what you have is a $470 million revolver and the term A balance is now drawn from that revolver.

Robin E. Shoemaker - KeyBanc Capital Markets, Inc.

Okay, okay. Thank you. So, Dave, just one other question, you've commented on this in some ways, but for several quarters now we hear about the competitors that are willing to work below cash breakeven, and there is kind of like a timeframe that most people think that can happen and then they go under, but every quarter it seems that you continue to see those. Now, are we talking – I don't know if you can define who we're talking about here, but there are some I think larger competitors that are cutting prices as well as smaller. But will we be talking about this throughout the year from your point of view? Do they have that much staying power?

David D. Dunlap - President, Chief Executive Officer

Yes, I think they all have a different profile. And I think the peskiest competitors that we see out there from a price standpoint are those that really struggle in execution. And so you think about how pricing gets set in any market, the bottom on pricing always get set by the worst executor. And the better executors don't necessarily have to match that low price, but there's only so much of a premium that operators are willing to pay for better execution.

So what gives me some semblance of hope that as we get through the year we see a little less price competition is if you're a bad executor, ultimately customers just aren't going to let you work for them at any price. And we have certainly seen several of very large competitors in the fracturing business that have essentially suspended their operations as bad executors. So this is one of those deals you can't control your competitors' behavior. You can only observe it and choose to act accordingly.

Robin E. Shoemaker - KeyBanc Capital Markets, Inc.

Right, right. Okay. Well, thank you, Dave.

David D. Dunlap - President, Chief Executive Officer

You're welcome.

Operator

Thank you. Our next question is from the line of Jim Wicklund with Credit Suisse. Please go ahead with your questions.

James Wicklund - Credit Suisse Securities (USA) LLC (Broker)

Good morning, guys.

David D. Dunlap - President, Chief Executive Officer

Hey, Jim.

James Wicklund - Credit Suisse Securities (USA) LLC (Broker)

I noticed that this is your fourth amendment to your credit facility. So I guess we can say that the banks continue to be willing to work with you guys as we go through the cycle.

David D. Dunlap - President, Chief Executive Officer

Excellent observation, Jim.

James Wicklund - Credit Suisse Securities (USA) LLC (Broker)

My question on your vessel in Alaska, now that Shell's quit drilling, what happens to that vessel? What do you do with it?

David D. Dunlap - President, Chief Executive Officer

So, we will seek a sale of that vessel and I do not expect it to be a sale that results in significant proceeds. This is a specialty built vessel that – actually it is completely written off from an asset standpoint. So whatever we're able to get from a salvage standpoint is going to be helpful to our cash balance. That..

James Wicklund - Credit Suisse Securities (USA) LLC (Broker)

And I assume you were able to take some stuff off of it and bring it home or...

David D. Dunlap - President, Chief Executive Officer

Yes, we were able to take certain items off of it that we have use for today or continue to have value for us in generating future revenue and profit, but this was a specialty built asset and its utility in total is really specifically related to oil spill containment in cold water, specifically shallow water Alaska.

James Wicklund - Credit Suisse Securities (USA) LLC (Broker)

Okay. The second question, the impairment in Technical Solutions. Should we assume that most of that impairment was in the marine technical services or was this in other parts: well control, completion tools or other parts of Technical Solutions?

David D. Dunlap - President, Chief Executive Officer

It was not exclusive to the Arctic Containment System, but the Arctic Containment System was by far the largest item in that group.

James Wicklund - Credit Suisse Securities (USA) LLC (Broker)

Okay. That's perfect. And Robert noted that free cash flow generation will be increasingly difficult in 2016. We have seen a number of companies who are trying to maintain a 200 basis points or a couple extra people to be able to capitalize on the recovery when it begins to improve. You guys have said you'll continue to reduce cost to try and be profitable in the current market. How do you balance that? And can you reconcile that with your free cash flow hopes for 2016?

David D. Dunlap - President, Chief Executive Officer

Sure. I think that what you have to do, Jim, and certainly what we're doing is really being honest with ourselves about what are the product lines in the U.S. Land market that we really believe we've got an execution advantage and we'll be able to capitalize on significantly higher revenue whenever the market does cycle. And in those businesses, you may choose to retain certain costs that allow to onboard people in a rapid fashion in order to satisfy that particular market environment, but I would characterize the cost investment that we have in those things as being minimal.

But clearly, as the year goes on, you continue to evaluate those and I would not characterize our responsiveness in every product line in the U.S. as being equal. To be specific, we think that we have our best ability to respond in the upturn in fracturing. And it's part of the reason why we continue to make investment in rebuilding fracturing assets in 2015 that are parked on the fence right now in new condition. And so in that business I'd like to be in a position where we have on-boarding capacity to be able to man those fracturing fleets as quick as possible. Specifically, I have told those businesses that I'd like to have that capacity to on-board and staff those fleets one every three weeks.

James Wicklund - Credit Suisse Securities (USA) LLC (Broker)

Okay. And if I could, in keeping with that, one company recently reported that it's incorporating perforating capability and electrical submersible pumps and different mud motors into its fracturing offering to broaden and basically bundle that capability. Do you think that such things for Superior are necessary? Do you think you need to broaden your offering as we come out of this cycle? All the people talk about how it will be a different market coming out of this cycle than it is now.

David D. Dunlap - President, Chief Executive Officer

Yes.

James Wicklund - Credit Suisse Securities (USA) LLC (Broker)

Are those types of things that you think you might eventually need?

David D. Dunlap - President, Chief Executive Officer

I don't think that I've heard of anything that we need. But keep in mind that a big emphasis behind the reorganization that we carried out in the fourth quarter to form what I am now referring to is our well services geo-markets was to put us in a better position to package, and packaging is something that is advantageous in the market today. So we're able to go to a single customer and very seamlessly offer not only a fracturing service, but we can offer the pipe conduit to perforate if that's coil tubing or if it's the perforating guns themselves, we have that wireline business. If they don't want to use coil tubing, we've got the service rig to offer, we've got the flowback capabilities to offer, we've got the frac stacks and pressure control equipment to offer, and we can offer all the equipment that goes along with the service rig including the BOP, the pump package, the accumulator in a very seamless way. And so I very much agree with the concept that being able to package as much as possible in this environment ,as well as in a recovered environment, is an advantage and it's exactly what led us to carry out the reorganization that we did last quarter.

James Wicklund - Credit Suisse Securities (USA) LLC (Broker)

Okay, David. Thank you very much. Very helpful. Appreciate it.

David D. Dunlap - President, Chief Executive Officer

Thanks, Jim.

Operator

Our next question comes from the line of Matt Marietta with Stephens. Please go ahead with your questions.

Christopher G. Denison - Stephens, Inc.

Hey, guys. This is Chris Denison on for Matt Marietta.

David D. Dunlap - President, Chief Executive Officer

Hi, Chris.

Christopher G. Denison - Stephens, Inc.

How is it going? The GoM improvement this quarter certainly a bright spot. Wondering if you could talk about the dynamics out there from the customer side, competitive landscape, work ops that you're seeing, maybe what we can expect in the near term and for this year?

David D. Dunlap - President, Chief Executive Officer

Yes. A big part of our improvement from Q3 to Q4 was related to the hydraulic workover and snubbing business and as well as a completion tool business, which we kind of telegraphed for you guys when we reported last quarter, we thought would be up during the fourth quarter. I do think that overall the Gulf of Mexico is a market that we will continue to see some deterioration during 2016. And we certainly won't be insulated from that deterioration. That being said, hydraulic workover is something that does become favored by operators in an environment like this when they can go execute on lower cost workovers as opposed to drilling new wells or doing big recompletions, and so the snubbing unit maybe a bit more favored in this environment than it has been in recent years.

Completion tools will, I think, probably continue to be under a little bit of a decline in 2016 as the numbers of deepwater completions are just going to get reduced. Our plug and abandonment business has been a bit better than I would've expected at this point in the year, and some of that is related to some deepwater P&A work that we're doing today. So I clearly think Gulf of Mexico market is going to continue to come down. I think, we do have some product lines that may perform better than the market overall, specifically in the area of snubbing and P&A.

Christopher G. Denison - Stephens, Inc.

Right. Understood. And then kind of related, is there any indication or any color you could provide at this point what Technical Services revenues and margins might look like at least directionally in relation from this quarter?

David D. Dunlap - President, Chief Executive Officer

Yes. I don't know that we've provided any specific quarter-to-quarter guidance on any of the segments from that standpoint. The challenge in Technical Services, I understand the challenge the market has, it tends to be a bit lumpier than some of our other segments. We won't have noise in the first quarter related to some of the asset impairments and contract terminations that we have in Q4, but the product lines in that segment by their nature tend to be a bit lumpier than our other businesses.

Christopher G. Denison - Stephens, Inc.

Okay. Fair enough. I'll turn it back over.

Operator

Thank you. Our next question is from the line of Daniel Burke with Johnson Rice. Please proceed with your question.

Daniel J. Burke - Johnson Rice & Co. LLC

Good morning, guys.

David D. Dunlap - President, Chief Executive Officer

Hi, Daniel.

Daniel J. Burke - Johnson Rice & Co. LLC

Dave, the Production Services' decrementals have been pretty modest the last few quarters. When we look at that decline in U.S. Land over that time in the Gulf, the narrative would seem to be international's holding up. You've kind of alluded to that and I guess maybe you got out of the market or two like Mexico where profitability was less than notable. But could you add any color to maybe what's driven the ability to defend Production Services as that top line has continued to drop?

David D. Dunlap - President, Chief Executive Officer

Yes, sure. I think Production Services is the segment that is probably most impacted by the reorganization that we did at the end of the third quarter and during the fourth quarter and forming these well services geo-market organization. So they are the beneficiaries of a lot of the cost reductions that we've had, and I'd also say that if I thought about discontinued product lines in some of the areas where well service operates, probably have a bit of a production services weight to them. So this is where we're reducing the overall cost in those businesses plus discontinuing businesses that were operating at losses is helping us.

Daniel J. Burke - Johnson Rice & Co. LLC

Okay. And I think it's tough for you guys to break it out this way, but do you think then as soon as Q4 you saw improved profitability on the U.S. onshore portion of Product Services, sequentially?

David D. Dunlap - President, Chief Executive Officer

I think, if it was, it was very slight. I think more likely it was pretty close to flat. But, yes, it's we got a benefit from improving the cost basis from Q3 to Q4.

Daniel J. Burke - Johnson Rice & Co. LLC

Fair enough. And then one other one, if I understood you correctly, you guys were out of Bakken frac as at end of Q3. But did you have any vestigial cost there that you bore in Q4 that are lapping off as we hit Q1?

David D. Dunlap - President, Chief Executive Officer

So, what we did is, we idled our fracturing equipment in the Bakken. We still have other businesses that operate there. But from a fracturing standpoint, we idled our equipment. And so we do continue to have cost associated with facility and kind of, if you want to think about, cold stacking type cost, I guess, related to that facility that continue in North Dakota.

And I commented, I fully expect that, at some point in the future, we will be back to fracturing in North Dakota. We've got great customer relationships there. And I know that the customer that we were fracking for in the third quarter that they will be back to spend money at some point in time, and they'll want us working for them. So we'd like to maintain a certain degree of readiness to do that in the future. It's not costing us very much.

Daniel J. Burke - Johnson Rice & Co. LLC

Okay, great. Thank you for the comments.

David D. Dunlap - President, Chief Executive Officer

You're welcome.

Operator

Our next question comes from the line of Darren Gacicia with KLR Group. Please go ahead with your question.

Darren Gacicia - KLR Group LLC

Hey, good morning. Thanks for taking my questions. I'd like to talk about kind of the competitive landscape a little bit and frankly I'd like to kind of talk about outside of the category of pressure pumping. When you look at kind of where everybody's CapEx numbers are and how equipment seems to be in some form of attrition or a lack of spend, what do you think as you look across other product lines outside of pressure pumping and coiled tubing, electric line, kind of go down the list.

What's the competitive landscape looking like, where do you think the amount of capacity is relative to maybe where it was a year ago. I'm just trying to get a sense, everybody seems to kind of pressing against pressure pumping to kind of figure out where that supply number is, but how does it look across other product lines?

David D. Dunlap - President, Chief Executive Officer

Yeah. I'll try and give you some color on this. And I think the reason why people refer to pressure pumping is, pressure pumping probably wears out faster than anything else. And so, the wear and tear in pressure pumping puts it at kind of one end of the spectrum as far as assets that if they are not invested in rebuild, will wear out the fastest. But I think there are a lot of other things that may not wear out quite as fast as frac but they wear out pretty quick.

So think about flowback and flowback iron and flowback iron has a life to it. And flowback iron, if it's not replaced on a regular basis – and that's an investment in new equipment, you're ultimately getting smaller and smaller in your ability to provide those services, really anything in pressure control. The pressure control equipment does wear out and it needs to be rebuilt or recertified or replaced, if it falls below its minimal pressure rating. And so those are also things that over a period of time also will wear out fast.

Coiled tubing units don't wear out very fast. The coiled tubing pipe does, but the coiled tubing pipe is replaceable, I mean, the guts of the coiled tubing unit including the injector head and the gooseneck and the power pack and reel and all those things, actually have a pretty long life to them. And so, this is not an asset that degenerates as quickly as fracturing or maybe as quickly as pressure-control iron or flowback iron or things like this.

You asked about cased-hole wireline, cased-hole wireline doesn't wear out very fast. I mean, it's a unit that can be in the market for seven years or eight years, without having any kind of major rebuild. So everything is on a different point on that kind of lifecycle spectrum. I think people talk about frac the most because it clearly wears out the fastest.

Darren Gacicia - KLR Group LLC

Sure. So when you look at it, is there, in terms people exiting the market and the rest, and, again, outside of the pressure pumping, have you seen more or less moves in any one of the product lines in terms of where you think some of the slight capacity has come and gone away and it's just because the operator may have gone away, and does that equipment just reemerge through auction, or how do you think that that kind of works out? How does it play out?

David D. Dunlap - President, Chief Executive Officer

Yeah. I mean, auction value of many of these assets is not going to be very good. We've seen some pressure pumping auctions with pretty good assets that are not generating very good revenue. I'm not sure what auctioning of used flowback iron or used BOPs or used drill pipe or used cased-hole wireline markets would be. I just don't think there is much of a market for it. Does it show back up again? It could. It certainly could.

Darren Gacicia - KLR Group LLC

Got you. One last one, you made some mention I think in your opening comments about pricing and pricing from people who are being acquired or something like this. I was trying to get a sense of what the – if I misheard that and I think it was with regard to pressure pumping. Are you kind of seeing the final flails from people that are going away, and what's the dynamic that's happening there on the pricing side, specifically with regard to I think the comment you made with regard to people are being acquired?

David D. Dunlap - President, Chief Executive Officer

If I made that comment, I misspoke. It certainly is not related to companies that are being acquired, I didn't categorize anybody quite that well. I said that they were pesky competitors that continue to be – there are – and there are continuing to be competitors out there that seem to be willing to work at the low cash margins, which is not something that we will do and as I said and pointed out, we've had businesses that we discontinued from Q3 to Q4 because they were reaching that category, so. But it was not specific to companies that are being acquired.

Darren Gacicia - KLR Group LLC

Well, I just wanted to make sure I heard you correctly. Thanks a lot for the time.

David D. Dunlap - President, Chief Executive Officer

You're welcome.

Operator

Our next question is from the line of Jud Bailey with Wells Fargo. Please go, ahead with your question.

Judson E. Bailey - Wells Fargo Securities LLC

Thanks. Good morning.

David D. Dunlap - President, Chief Executive Officer

Hi Jud.

Judson E. Bailey - Wells Fargo Securities LLC

Question on your international operations, you gave some kind of broad commentary on what you think revenues could decline. Could you maybe comment a little bit, Dave, on where you see the biggest areas of risk, if you were to come in say below that number? What countries do you think would present the most risk to you this year with oil prices where they are?

David D. Dunlap - President, Chief Executive Officer

Well, I mean, we've got a pretty good distribution of where revenue occurs. I mean there is a bit of concentration of revenue. Our larger revenue generating areas internationally are in the UK, North Sea, as well as Argentina and Brazil. Those are probably the highest on our list, but they're still not terribly concentrated. I mean this is part of the benefit of still being relatively small on international without it being one particular country that would just really present huge exposure for us.

Judson E. Bailey - Wells Fargo Securities LLC

Okay. And then trying to think about, you talked a little bit earlier about decrementals internationally and the labor force mechanics in some of these areas. Can you help us think about your international main margins of profitability and thinking about them over the course of this year and into 2017? Do you think that becomes less of a drag in the back half of the year or do you think we kind of see a steady move down over the course of the year as activity declines?

Robert S. Taylor - Chief Financial Officer, Treasurer & Executive Vice President

Yeah. I mean, I think what we've seen during the course of 2015 was kind of a steady decline. I think whatever decline we see in international this year, which we kind of put it big broad number 20%, I think we probably see the bulk of that decline in the first half of the year quite frankly. I mean I think that in a similar way to U.S. operators that we will be bringing down their budgets, consistent with cash flows, that's going to happen during the first half of the year, and then you're likely to be I guess flatter.

I mean, my personal thought would be markets continue to be pushed down at a $30 price environment, but I think it comes down the most in the first half of the year and then it's flatter as you look at the second half of the year.

Judson E. Bailey - Wells Fargo Securities LLC

Okay. Great. I appreciate the color. I will turn it back.

David D. Dunlap - President, Chief Executive Officer

You're welcome.

Operator

Our next question is from the line of Chase Mulvehill with SunTrust Robinson. Please go ahead with your questions.

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

Thanks, Dave.

David D. Dunlap - President, Chief Executive Officer

Hi, Chase.

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

Hey. I'm going to go back to – I'm sorry if you have already asked this, and if you did, you can just say we already did and we'll will move on. So, Drilling Product and Services, did you talk about margin declines and kind of what drove that sequentially? We don't have the gross profit yet, but it appears that gross profit margins fell pretty materially, so I don't know if you've talked to that already. If you have, I will go back and read through in the transcript.

David D. Dunlap - President, Chief Executive Officer

No. I have not talked about it. I mean obviously the margin decline was driven by revenue decline and we saw revenue decline in Drilling Products and Services in all of our international regions. I don't know that it was any one particular country that led the way, but Colombia was impacted, West Africa was impacted, North Sea and Asia were impacted. And of course, the decremental margins that come with the rental businesses are going to be high because the fixed cost associated with them are very low. So, that's really the predominant reason why you'd see margin, gross margin deterioration in those businesses that are higher than what we see in other business lines.

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

So gross profit margins have been running north of 60%. Should we think that sequential decremental margins continue in the 60% range for the next few quarters for DPS?

David D. Dunlap - President, Chief Executive Officer

Yeah, I think that's reasonable and I'm not giving you an answer with this comment, but the question would be whether or not we've seen the biggest reduction that we're going to see in Drilling Products and Services already occur. And I don't know that we fully understand, when we look at 20% decline in international revenue, is that weighted more towards Production Services or Drilling Products and Services. I don't know we're prepared to give you an answer on that one yet.

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

Okay.

David D. Dunlap - President, Chief Executive Officer

So, my point is, if Drilling Products and Services revenue were to hold up better than Production Services revenue, then you're not going see as great a decremental margin.

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

Okay. What's the delta, what's the difference in margins between the international Gulf of Mexico and U.S. land for DPS? Is there a wide range between those three, I'm assuming there is, obviously U.S. land?

David D. Dunlap - President, Chief Executive Officer

Historically and this would still hold true, our most profitable market for Drilling Products and Services is the Gulf of Mexico. International and U.S. land margins historically have been similar. I would say that where we sit today the Gulf of Mexico margins continue to be the highest. And that, international margins are now higher than U.S. land margins.

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

Okay. All right, I'm going to try to squeeze a couple in before you go see Wicklund (1:01:16). So, let's see on the term loan, why are you using the revolver to pay off the term loan rather than your cash?

Robert S. Taylor - Chief Financial Officer, Treasurer & Executive Vice President

So, the revolver is – the new facility is a single facility that does not include a term piece and a revolver piece; it is just a revolver. If the question is, why did do we choose to maintain cash as opposed to paying down debt? And I think everybody's got a different position at their end with their bank facility, and ours happens to reward us having cash. And so we've kept the cash on the balance sheet to maintain maximum financial flexibility, and that has certainly worked to our advantage now.

And I think this facility that we're able to negotiate is done in such a way that it recognizes the cash that we have on the balance sheet, so we get credit from it from a net debt standpoint. You say well okay, you got a little bit higher interest cost associated with not paying down revolver debt, but revolver debt is the cheapest interest we have. And so, we've got a very low price that we're paying for tremendous financial flexibility going forward.

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

Okay. What's the difference in the interest rate between the – what the term loan interest rate was in the revolver, just so we can help this from a modeling standpoint?

David D. Dunlap - President, Chief Executive Officer

None.

Robert S. Taylor - Chief Financial Officer, Treasurer & Executive Vice President

None.

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

None. Okay, all right. The last one I'm going to squeeze in and then I'll turn it back over. If from an activity standpoint 2016 looks a lot like 2015, how much working capital or cash from working capital can you generate this year?

Robert S. Taylor - Chief Financial Officer, Treasurer & Executive Vice President

Yeah. I mean, listen, we did a great job in 2015 from a collection standpoint. I mean, we had a DSO that was pretty strong entering January 2015 and we held that DSO flat during the course of the year, which in this environment I thought was incredibly impressive and maybe a bit more difficult to do in 2016. Clearly, we're going to have a close eye on our customers' ability to pay. I would not be surprised as I expected DSO to go up during 2015 and it didn't. I would not be surprised to see DSO creep up a bit in 2016. So you're going to have a overall balance in receivables that could be offset by a bit higher DSO. I don't know that we've got great clarity on that yet.

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

Is it fair to assume to be positive, and then just say it's less than $100 million?

Robert S. Taylor - Chief Financial Officer, Treasurer & Executive Vice President

Yeah. I mean get back with us on that Chase, I am sure Paul can give you some better flavor on model building.

B. Chase Mulvehill - SunTrust Robinson Humphrey, Inc.

Okay. All righty. I'll turn it back over. Thanks Dave.

David D. Dunlap - President, Chief Executive Officer

Okay. Thanks, Chase.

Operator

Thank you. At this time, I will turn the floor back to management for closing comments.

David D. Dunlap - President, Chief Executive Officer

Okay. Well, listen, I'd like to thank everyone for joining us on the call today and we'll speak to you next quarter.

Operator

This concludes today's conference. Thank you for your participation. You may now disconnect your lines at this time.

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