Good day, ladies and gentlemen, and welcome to the Precision Drilling Corporation Announces Webcast of twenty nineteen Annual and Special Meeting of Shareholders Conference Call. I would now like to introduce your host for today's conference, Mr. Steve Crablin. Sir, you may begin.
Good afternoon. My name is Steve Crablin. And on behalf of myself and the other members of the Board of Directors of Precision Drilling Corporation, I welcome you to today's annual meeting annual and special meeting of shareholders. I declare that the meeting will now come to order and I will act as Chairman of this meeting. After the formal business of the meeting and its adjournment, you're invited to stay for a presentation from Kevin Nebue, President and CEO of Precision.
I ask that you hold any questions you may have until that time. For this meeting, we will receive and consider the corporation's audited consolidated financial statements for the year ended December 3138, elect the corporation's directors, appoint KPMG as the corporation's auditors and authorize the directors to set the auditors' fees, have a say on pay vote regarding the corporation's approach to executive compensation, and confirm our amended shareholder rights plan. Sitting with me at the head table, Kevin Debut, President and Chief Executive Veronica Foley, Senior Vice President, General Counsel and Corporate Secretary and she will also act as Secretary for this meeting Carrie Ford, Senior Vice President and Chief Financial Officer And I also appoint Ms. Alisa Rojo, representative of Computershare Trust Company of Canada to act as scrutineer. I would like to take a moment to introduce our directors and senior officers of Precision who are here today.
If you would just stand to let people know who you are for the directors, Mike Culbert,
Bill
Donovan, Brian Gibson, Alan Hagerman, Sue McKenzie, Kevin Myers, David Williams, as well as Kevin Nebue and myself for the directors for this meeting. Senior officers in attendance today, Shuja Guraha, Darren Ruhr Shouza is our Chief Technology Officer. Darren is Chief Administrative Officer. Gene Stahl, President of the Drilling Operations. I also welcome the attendance of Mr.
Shane Doig, Partner at KPMG. Now turning to the formal portion of the meeting. I have proof of filing and proof of mailing of the notice of this meeting, instrument of proxy, financial statements, management information circular and accompanying documents that were sent to the holders of the corporation's common shares. I've instructed the secretary to keep a copy of these documents and the scrutineers report reflecting the shareholders in attendance and their holdings with the records of this meeting. I've been advised that a quorum is present and I declare that the meeting is regularly called and properly constituted for the transaction of business.
Regarding the voting procedures, we're going to conduct all votes by ballot. All registered shareholders and duly appointed proxy holders are entitled to vote. As you entered the meeting, you should have completed a ballot for each matter to be voted upon. I'm certain that most of you have previously voted electronically or filled out the or by mail or filled out the ballot coming in. There's anyone who is in here that is a registered shareholder or duly appointed proxy holder that did not receive the ballot form and needs one, please indicate so and we'll get that to you.
Okay. Seeing none, we can now proceed with the business of the meeting. Certain shareholders have been previously selected to make and second the nominations in order to facilitate this meeting. The first item is the presentation of the audited consolidated financial statements of the corporation for the fiscal year ended December 3138, and the reading of the auditor's reports. As copies have been mailed to every shareholder requested them, we can dispense with the reading and accept them as presented.
While approval of the financial statements is not required, if you have any questions regarding them, then you may raise your questions following Mr. Nevew's presentation. The next item of business is the election of the directors. Shareholders have been given the ability to vote for or withhold their vote for each individual director nominee. The floor is now open for nomination of the directors.
Mr. Chairman, my name is Harman Deep Daliole, and I nominate each of the nine current directors who are standing for reelection as described in the management information circular for election as directors until the next annual meeting of the shareholders of the corporation.
Thank you. As no other nominations were properly submitted in compliance with our bylaws, I declare the nominations closed. I will now ask for a motion to approve an ordinary resolution that each person nominated be individually elected as director of the corporation to hold office until the next annual meeting of the shareholders of the corporation.
Mr. Chairman, my name is Christina Wenzel and I so move.
Thank you. May I have a second?
Mr. Chairman, my name is Corey Lazar and I second the motion. Thank you. You've heard the motion. Is there any discussion?
I've been advised by the scrutineers that based on the proxy received, each of the nine current directors who are standing for reelection have been duly elected individually and by the requisite majority as directors of the corporation to hold office until the next Annual Shareholders' Meeting. I therefore declare the resolution carried. Details of the vote and of every other vote held today can be obtained from the secretary of the meeting after the meeting and be publicly filed. The next item of business is the appointment of auditors, and I'd ask for a motion to approve KPMG be appointed as auditors for the ensuing year and that the directors are hereby authorized to set the fees for KPMG.
Mr. Chairman, my name is Dustin Honing, and I so move. Thank you. Second.
Mr. Chairman, my name is Christina Wenzel and I second the motion.
Thank you.
You've heard the motion. Any discussion? Based on the proxy received, the resolution is passed. The next item of business is to consider an advisory resolution, commonly known as a say on pay, regarding the corporation's approach to executive compensation. As this is an advisory vote, the results will not be binding up on the board.
However, in considering our approach to executive compensation in the future, the board will take into account the results of the vote together with any other feedback we receive on this issue. I'll now ask for a motion that on an advisory basis and not to diminish the role and responsibilities of the board, shareholders accept the approach to executive compensation disclosed in the management information circular.
Is there
a motion? Mr. Chairman, my name is Ian Mandry and I so move.
Thank you. And second?
Mr. Chairman, my name is Eidnes Milosz and I second the motion.
Thank you. Heard the motion. Any discussion? I've also been advised by the scrutineers that the resolution has passed by the requisite majority. Therefore, I declare it's carried.
The next item of business is to confirm our shareholder rights plan. The primary objective of the shareholders rights plan is to ensure to the extent possible the equal treatment of all our shareholders in connection with any takeover bid for our shares and in event of a hostile takeover bid to provide our Board with sufficient time to evaluate the bid and to explore and develop alternatives. In order for the shareholder rights plan to remain in effect, a majority of our shareholders must vote as a group in favor of the resolution approving the confirmation and continued existence of the plan. If the continuation of the plan is approved, it will remain in effect until our annual meeting of shareholders in 2021 unless terminated in accordance with its terms prior to that. I will now ask for a motion that the ordinary resolution authorizing and approving the continuation of our shareholder rights plan as described in the management circular be approved.
Mr. Chairman, my name is Thomas McGrogan and I so move. Thank you. And a second? Mr.
Chairman, my name is Gian Utewadena and I second the motion.
Thank you. Any discussion? Based on the proxies received, the resolution has passed by the requisite majority. I now ask if there's any other meeting to be brought before the meeting. Hearing none, may I have a motion to terminate the meeting?
Mr. Chairman, my name is Brenda Lee, and I move that the meeting be terminated.
Thank you. Second? Mr. Chairman, my name is Dustin Honing, and I second the motion.
Thank you. Discussion? Would all those shareholders entitled to vote who are in favor please raise their hands? Any contrary, thank you. Therefore, the motion is carried.
I declare that the meeting is terminated. Now, Kevin Nevew will present a brief presentation on precision drilling and thank you for your attendance.
Good afternoon and welcome to Precision Drilling's Annual General Meeting and I'll commence with our typical investor presentation and walk you through how we're working hard to create value for our shareholders in a very challenging industry. All right, it'd be great if this would advance, try this. There we go. All right. Much of what I'll be saying today is either our views looking forward and how we view this business, how we interpret what we're seeing in the business.
So of course the cautionary warnings about the uncertainty of our business going forward is very important to keep in mind. Over the last several years in a very uncertain industry, we've been very clear with our investors to state our priorities for each year and the things we're going work on that are focused on creating shareholder value. And this year is no different. We began 2019 by focusing on the top three things we think will generate the most shareholder value for our shareholders over both the short term and the long term. At the top of our list is working on our capital structure and that's reducing our debt and putting more value on the equity side.
I'll speak more to this later, but it'll be clear that last year and this year we've been setting clear targets for the short term. This year our targets are 100,000,000 to $150,000,000 of debt reduction this year. And over the longer term, we've given targets now stretching 400 to $600,000,000 over the longer term. And we'll speak more to that in a few minutes. The second key priority for this year is focusing on financial performance in broad terms, but more specifically focusing on leveraging the scale we have in this business.
We're a large oilfield services company spanning Canada, United States and several international locations. We have the advantage of scale and we utilize that heavily through precision. And that results in the opportunity to create better top line revenue, better EBITDA and lower costs. And I'll speak more to that in a few minutes. Ultimately looking to maximize free cash flow.
And finally, in a business which really hasn't given us much room for growth over the past few years, we're going to focus heavily on technology and how we can improve the efficiency performance, repeatability of drilling rigs through technology and through data. And I'll speak more to that in a few minutes. So first of all, precision drilling in broad terms, as I said earlier, a large company spanning Canada, The United States and, several international jurisdictions. In fact, so much so that last year during 2018, 70% of our revenue came from outside of Canada. And, surprisingly, I'll give you a couple of data points for Q1, which is typically the winter drilling season in Canada, where we usually have our strongest activity in Canada.
During the winter drilling season, typically we'd see our Canadian revenues slightly exceed our U. S. Revenue or maybe more. Last year, 2018 Canadian revenue was just slightly less than U. S.
Revenue, slightly less. This year in twenty nineteen Q1 results we just published, less than 36% of our revenue came from Canada during Q1. So it's a testament both to the strength of our markets outside Canada and the softness we're experiencing in Canada, which I'll speak to in a few minutes. But importantly, we have a strong meaningful position in The United States and other markets. One data point that I find quite unique, Precision Drilling has over 8% market share of United States land drilling.
I can't think of any other industry where one Canadian company has a meaningful market share in The U. S. Market. In fact, if you combine the six Canadian drillers operating in The U. S, the six Canadian drillers in The U.
S. Have almost 18% market share of The U. S. Land drilling market. There are no other markets of any type of industrial product or service that I can think of, certainly not oil service where Canadian companies have a strong presence in The U.
S. Let alone Precision's 8.4% market share. I'll speak more to that in a few minutes. Our competitive advantage and this is how we're gaining market share in The U. S.
Is through our competitive advantage. It's focused on the quality of our rig crews, the scale effect I was referring to earlier, and of course our high performance super series rigs. And I'll speak more of each of these. Many people in the oil service industry discussed and talked about the challenge of finding highly skilled qualified people, how hard it is to recruit, how hard it is to train. Certainly in the Permian Basin, we're hearing lots of stories of oil service companies struggling to find people in the Permian Basin.
For Precision, we view recruiting, primarily recruiting as a core competency and we aggressively go out to recruit every year. Last year in 2019, we recruited almost 36,000 job applications. We sort through the job applications, find the best of the best of the best and bring them into And then we put them into Precision's world class training systems. We have training rigs in Houston and in NISQ, fully functional rigs with latest technology where we put these people through the training center. Last year, we ran 6,000 people through our training centers in Houston and in Calgary.
And then once they're trained, once they're on the rig running, we focus on retention, particularly we focus on leadership retention, but we focus on retention of the entire crew. And we're really pleased that over 88% of our staff were retained during 2018 on a trailing twelve month basis. Obviously retention is focused on a whole series of scale based systems from training and development to structured progression through their jobs and a very strong safety culture we have in our rigs, the inherently safe operations they get to be part of. Speaking to systems and scale, I'd say this is a key differentiator, for Precision among our Canadian peers. We have broad scale with, almost two forty rigs around the world and large number of rigs are exactly the same.
We can leverage our purchasing power, leverage our maintenance systems, our training systems so that we have to have one package in place, whether it's procurement, training, development, retention, having identical rigs and widely different markets allows us to leverage that scale. It starts with procurement and it finishes with our people. The third element is the rigs themselves. The Precision Super Triple rigs. It's interesting.
I think that Canadian drillers have been involved in development drilling longer than any other part of the industry anywhere else. And I think the real early phase of development drilling, I've got a little colleague of mine here that I worked with almost thirty years ago up in Norman Wells. Pad drilling began in Norman Wells back in 1970s and 1980s. It progressed into heavy oil drilling, say D drilling in the early 1990s. Precision has been leading edge of pad drilling going back three decades.
Today, it's actually now in vogue in The U. S. In shale plays. In fact, our pad drilling rigs like you're seeing in this picture lead the market right now in market share growth. So what we're showing you here in this picture of the slide is a typical high technology pad drilling rig.
On the right hand of the slide is the rear support complex. Connecting that support complex, the generators and the engines and the fluid handling systems, mud pumps with the rig is a utility corridor. And then the rig module itself is able to move around, walk around the pad and drill wells, move well to well. In fact, in the DJ Basin in Colorado right now, we're moving these rigs, well to well in about forty five minutes and we're drilling wells that are as deep as 26,000 feet in less than fourteen days consistently. Amazingly fast and efficient operations.
And that's a large part of our competitive advantage. It's a combination of the rig technology, the highly skilled trained crew, and then the scale effect of having a whole fleet of rigs that are identically the same. And I'll speak more to that when I come back to our newer technology that we're moving forward on. Obviously, we're quite pleased with our market share growth. We have doubled our market share in The U.
S. Since 2014. So I would comment that I don't think any other driller in The U. S. Has doubled market share during this flat last few years.
Remarkable positioning in The U. S. By a high quality rig crews, high quality rigs. A large part of this though is the money we invested in trading to develop our crews and the money we invested the rig fleet in The U. S.
During that period of time with 60 new builds entering The new U. S. And then another 25 or 30 rigs we've been upgrading to our super spec standard during that period of time. These days, the ESG, environmental social governance activities have become very topical. Investors are focusing on this.
This is becoming a screen for whether or not a company is investable. Precision has been a strong believer in being part of the community that we're working in for three decades. The systems we're talking about now and disclosing go back in Precision fifteen, twenty, thirty years. We respect our people, we focus on our people, we train and develop and provide long term career paths, very safe, work environment with continued safety improvements year over year. And we also offer a robust intern program in every place we operate.
So we're part of the community. As far as governance goes, we've been a leading, Canadian company for governance for a decade now since I've been at the company. Always going in the top 20 or 30 Canadian companies for strong governance. And in the community, for example, last year we supported 2,500 volunteer hours in their communities in The U. S.
And in Canada. We're partnered with a number of large important charities in both areas that support the environment that we work in. And we provide support at the local levels in a lot of small towns and small places. And we have scholarship programs for employees and employees children. Of course, the environment is important to all of us.
And I think, speak to this kind of from two perspectives. When I talk about drilling a DJ Basin well in fourteen days, ten years ago that well would have taken forty five days to drill. When we could drill it today in fourteen days, that's three times faster, meaning that we'll be operating at almost three times the efficiency for everything from CO2 emissions to our footprint on location. We have a smaller footprint, a more compact footprint, shorter term footprint and less emissions. So that's clear, just driving efficiency means that we can operate with smaller footprint.
But beyond that, we've been working aggressively with our customers to convert rigs to both fuel where you blend in natural gas with diesel to lower the cost and lower the emissions and pure natural gas rigs, which are powered by natural gas. Working closely with our customers and having very good progress in the front. Quite proud of our ESG performance. And we don't think we have to do anything to meet today's expectation. In fact, we think our normal business plan satisfies the requirement very well.
So moving back to our priorities for a moment. We reported these priorities every quarter. We talked about our progress against each one and we know that it creates shareholder value. Obviously the first priority is debt reduction. We had a very strong Q1 in that we had some asset sales that allowed us to free up some cash off the balance sheet and advance our plan to pay down some debt.
In fact, we reduced debt by $84,000,000 during the first quarter, maintained our strong liquidity and, continued to improve our net debt to total EBITDA and interest coverage ratio. So I love charts that in the debt world are going down to the right. And in this case, we're looking at debt reduction, both on what we've achieved so far over the last four years and what we plan to achieve through our long term targets over the next three years in the top. For investors, particularly investors that aren't specialists in this space, getting down to a leverage ratio of below two times is very important. It's a target for us.
It's a clear target. We see the horizon here, we're going to get there. Over the next three to four years as we reduce debt and continue to drive down our debt in the balance sheet, we expect to be down below two times leverage in the foreseeable future. And the one chart that's going up into the right here is how we cover our interest, how much coverage we have on interest on the balance sheet. Again, strong growth up into the right.
I talked earlier about leveraging our scale and generating free cash flow. So there's been two things going on. The market's been highly volatile, but during the first half of this decade between 2010 and 2015, we built and upgraded rigs. In fact, this chart showing 114 super series rigs added through new builds and through upgrades in our fleet. We've built, and upgraded the youngest, most technically relevant fleet in North America over the first half of the decade.
And you can see that on this cash flow chart on the right hand side, where we had capital spending in 2011, 2012, twenty thirteen, fourteen. So in fact, we were negative free cash flow during those periods. As we finished that program in 2015 and transitioned into twenty sixteen, seventeen, we went through a lot of volatility in the market. But now that we're into a more stable market in The U. S.
And managing quite well in Canada, we've moved into a very strong free cash flow mode and you can see how that projects forward using analyst estimates in 2019 and 2020. So speaking about uses of cash, once you generate free cash flow, you have to think about where that free cash flow is going to be deployed. This year, a very modest capital plan, a total of about $169,000,000 a third of that $53,000,000 is maintenance capital and that's to keep our rigs running. And it's really directly proportional to the activity. So if in fact activity goes up, which would be a good thing, maintenance capital may edge up a little bit.
If for whatever reason activity withdraws, we might have to pull down maintenance capital. It'll be active, it'll be proportional to activity. On the right hand side is expansion. This is investments we're making in the fleet to make the fleet larger. And it really comes down to just three or four things.
The biggest item is a new rig in Kuwait. Great picture of it. If you look up on the floor, you can see a really small little speck. Those are people. One of those is me standing there with my white hair.
This rig is about a $68,000,000 rig. It's going to, this year another $10,000,000 last year, Canadian dollars. It'll learn day rates roughly equal to three times the day rate of North American rig at about three times the cost with about three times the cash flow. So very good long term investment. Expanding our footprint in Kuwait from five operating rigs to six operating rigs.
All rigs have essentially the same standards, same specification. So as we add each rig, they're completely accretive to the bottom line. The revenue flows straight through to the bottom line. We like our Kuwaiti business. We've also added one new build rig to our U.
S. Fleet earlier this year. And we've commenced our first DC SCR rig conversion to an AC super triple spec rig and that will be completed during the second quarter in that budget. And we plan some further technology expansions during the quarter. Moving on to our second priority and this is specifically free cash flow leveraging our scale.
And probably my favorite chart. It's got activity, it's got revenue, it's got EBITDA growing three years of consecutive compound annual growth. Strong growth driven primarily by activity in United States international driving our activity up, our revenue up and our EBITDA up. In fact, surprisingly, Carrie, you can correct me if I'm wrong. I believe we had more billable days in Q1 in The U.
S. Than we had in Canada in Q1. Is that correct? Correct. So it's the first time in the history where our Q1 days in The U.
Exceeded our days in Canada during the first quarter. So again, that's helping us grow our revenue, our EBITDA and our activity. There's always a lot of concern about how focused service companies are in giving customers. We have an extremely diverse customer base. Almost two thirds of our customer base are large public companies operating primarily in North America.
Another large segment, about a third of our customer base is private equity companies operating primarily in United States, the Permian Basin, well funded private companies. And of course our growing slice of international business, which is primarily national oil companies. But I think what's even more interesting is as we look at our contract progression, so contracts the rigs we have locked up for the year that we have certainty on revenue on. And throughout the course of this year, we've grown that contract book. So the bottom chart on the left shows us beginning 2019 with 43 term contracts for the year.
And during the first quarter, we've signed a total now of I believe 19 in The U. S. And four internationally raising our average from 43 to 57 rigs for the average for this year, with some of those contracts stretching out five years into the future. So strong contract growth during the course of this year, despite a flattening market in The U. S.
And headwinds in Canada. So just looking at each of our markets quickly, United States, for The U. We see a strong free cash flow market. We should see market share growth. I don't anticipate us deploying a lot of capital in The U.
S. To build new rigs in the near term, but I do expect us to capture more market share. So the chart on the upper right shows our U. S. Market share progression over the past five years.
We've doubled our market share in The U. S. Adding just a couple of rigs through that period of time. All of this due to the strength of our highly skilled crews and our excellent rigs in The U. S.
We are in every unconventional shale basin in The U. S. With particularly strong positions in the DJ Basin, the Marcellus, growing footprints in the SCOOPSTACK and in the Haynesville in The U. S. And a very strong position in the Permian Basin with almost half our U.
S. Activity focused on the Permian. We did book 19 new contracts this year in The U. S. Or renewals in The U.
S. We made a comment on our Q1 conference call that we expected day rate strength to remain through the second quarter. In fact, I'm optimistic that we'll see a good progression of day rates moving forward. Again, the supply of high specification rigs stays very tight. In fact, our fleets over 90% utilized and most of our peers have been discussing utilization levels in that ninety year excess range.
Canada has been more of a challenge. No question that for the first half of this year, and we're now into the month of May, soon to be June, activity has been averaging 33% below 2018. I would categorize this right now as pretty much the second worst year ever. And I benchmarked 2016 as the worst year ever. 2016, we had the benefit of a few contracts from 2015 and 2014 that rolled through.
In 2016, the industry really came into this year in Canada in 2019 with not a lot of long term contracts and having to just float with the market. 33% less utilization, spot market day rates that while they've been firm, there's a real challenge in the marketplace with our customers. Our sales team works hard to support our day rates in Canada. Despite that, Canada Precision has an extremely strong position. This year during the first quarter, we peaked out at around 60 rigs.
Our average rig count will be in the 40s, which in most other years, even twenty fourteen would likely make us almost the largest driller in Canada. So it's a testament to our scale that even during likely the second worst year or maybe the worst year ever, we're still bigger than most would be in the peak of the market. So very strong position allowing us to generate free cash flow in Canada. The team here has worked quite hard to trim back our costs, keep our rigs running, maximize the day rate and maximize free cash flow. The result is we have very strong market share throughout the market.
And the key play is the deeper basin in Canada where our Super Triples most likely to generate the best returns for the company, the Duvernay in heavy oil in the Montney play, we enjoy market shares of 25% to 30%. Strong position on, I'm certainly concerned about Canada, but I believe that we've got a strong position that generates free cash flow and really helps support Precision's long term plans. The international market for us is quite unique. We're operating primarily today in Kuwait and Saudi Arabia. We have a handful of rigs that are available to be used either in Saudi or in Kurdistan.
We're seeing a number of bids right now. In fact, it's, we're getting more hopeful we'll see those rigs activate later this year. But in Kuwait, we'll be deploying, as I said earlier, our six rig, stable, strong business, five year contracts, automatic renewals. In fact, our first two rigs delivered automatically renewed earlier this year for another year. We have scheduled renewals coming out in 2022 and 2023.
So a long ways in the future. The sixth rig will deploy sometime in mid June. And if I find my operations team here, they're going to do the best they can to be a little bit early, but for sure we'll be running by July 1. And based on the other five rigs running, I expect that that deployment will go smooth, efficiently and with no hiccups. It's a tough place to operate.
Kuwait has extremely high expectation for performance. They've got comprehensive standards that have to be met and they're not anxious to grant any kind of waiver. So experience in the country is very important and being able to deliver exactly what you're required to deliver is critically important, something we've proven we can do. Saudi Arabia has been a little more challenging for us. We have, today we have three rigs running.
We have one idle rig. We've been saying for a long time now we need to grow scale there. So I'll start by saying the business at the rig level delivers very good returns. At the country level is cash flow positive. So it's accretive to precision, but we'd still like to gain scale.
Still like to get that fourth rig running or move additional rigs into country. We're working hard on that. And that's just a key focus for us going forward. We haven't talked a lot about our completion of production business over the past few years. That's been tough.
The business has been under a lot of pressure, but we put in place a new management team about a year ago, a little over a year ago. They've worked hard to really slim down that business and really refocus it. But I would tell you we've done is we've taken a step back from precision scale and process and structure and turn this into a line of sight business. It's streamlined, it's low overhead and the cash flow generation has been remarkable. So if you look at the graph, we were negative EBITDA in 2016.
In 2017, had an improvement and 2018 stronger yet. First quarter twenty nineteen, it was remarkably strong despite activity being off over 10% year over year. So good work bringing that business back in line and making it accretive to Precision Drilling, quite pleased with that work. Moving on to our third strategic priority, that's the development and commercialization of technology. Our objective this year is to be commercial and to have our systems generating routine revenue.
And, this is a complete change. I was explaining earlier to our board that the industry has gone through transitions. The 1970s, it went from a mechanical to a DCSER transition and that was mechanical to analog controls in the late 1970s, early 80s. In the late 1990s, early 2000s, transitioned from DCSER to AC digital. And by the way, in that transition Precision was a leader in Canada and a leader in The US.
Today, we're doing is transitioning from digital to process automation control. So you're adding automation on top of the digital control system. That's what we're doing. The results are excellent. When you put process automation control on a repeatable process, you can eliminate all variants and you can optimize the efficiency.
And you can see it in this chart. The top chart is manual drilling and that's showing adding pipe and making connections and then drilling ahead. And the cycle times vary and they're longer. The bottom chart shows process automation control doing the same thing. That's just one part of the process going from drilling to interrupting the drilling process, adding pipe back to drilling again.
But not little cycle that we typically do to three to 400 times per well, we're saving three to five minutes per cycle times three to 400 cycles on a typical rig. Very excellent way to improve the efficiency of the rig. That one improvement alone pays for the cost for our customers to pay us for process automation control. We're marketing that at $1,500 per day and rolling it out to our customers is going very well. The results are real.
Once that platform is in place, we can then bolt on different apps that can control parts of the drilling process. We can control energy at the bit, directional drilling. We can control sticks, lip and vibration in the drill string. We can extend bit life by putting apps on. And there are a precision, we have a total of 15 different apps that we're field testing.
Some written by manufacturers, some written by their service companies, some written by the oil companies, one or two written by ourselves. Our view on this is that we expect every rig will have one, two, three or four apps running. If it's an app that we've provided, we'll charge a market price of the app could be $500 to $1,000 per day. If it's an app that somebody else has written, we'll charge a residency fee. Probably a lot less, probably the 200 to $400 per day range.
So we believe that these, that the platform itself has revenue impact. We believe it's got pull through for apps. It's got pull through for the fleet and reinforces our competitive advantage. Our standardized rig fleet and our partnerships with people like National Oil, Varcos, Lumberger, Hitachi are utilizing industry experts in software. We're not trying to be the software writer.
We're trying to be the field deployer of technology. That's where our strength lies. So to summarize the presentation, we're focused on generating strong free cash flow from long life assets. We build these rigs. We pay for them over about a four year cycle with our customers then they run for about twenty more years.
Our technology is a leading edge, so those rigs do have a long life. We expect to have a number of times during those cycles to capture free cash flow from those rigs. We're going drive higher equity valuations through deleveraging. We can control that. We can control debt payments and drive a higher equity valuation through deleveraging and we'll continue to use technology as a differentiator.
So at that point, we'll end the presentation and the webcast. And I'll open it up for any questions from the floor.