Precision Drilling Corporation

Good day and thank you for standing by. Welcome to the Precision Drilling Corporation 2023 First Quarter Results Conference Call. I would like to hand the conference over to LaVon Zudonic, Director of Investor Relations. Please go ahead.

Thank you, Operator. Welcome everyone to Precision Drilling's First Quarter Earnings Conference Call and Webcast. Today, I'm joined by Kevin Neveu, our President and CEO, and Carrie Ford, our CFO. Earlier today, Precision reported strong first quarter results. Kerry will review these results with you, followed by an operational update and outlook commentary from Kevin. Once we have finished our prepared comments, we will open the call to questions. Please note that some of our comments today will refer to non-IFRS financial measures and will include forward-looking statements, which are subject to a number of risks and uncertainties. For more information on financial measures, forward-looking statements and risk factors, please refer to our news release and other regulatory filings. As a reminder, we express our financial results in Canadian dollars unless otherwise indicated. With that, I'll turn it over to Kerry.

Thanks, Yvonne. Precision's Q1 financial results exceeded our expectations for revenue, adjusted EBITDA, earnings, and cash flow. Adjusted EBITDA of $203 million was driven by strong drilling activity, improved pricing, and strict cost control. Our Q1 adjusted EBITDA included a share-based compensation recovery of $12 million, which reflects our stock price decline during the quarter. Without this recovery, adjusted EBITDA would have been $191 million, which compares to $84 million in Q1 2022, an increase of 127%. Revenue for the quarter was $559 million, an increase of 59% from Q1 2022. Margins in both the U.S. and Canada were higher than guidance, resulting from stronger than expected pricing, higher ancillary service revenue, and improved cost performance. I commend our marketing and operations teams for achieving these results. In the U.S., drilling activity for precision averaged 60 rigs in Q1, consistent with our activity in the previous quarter. Daily operating margins in Q1, excluding the impacts of turnkey and IBC, were $14,179 U.S. dollars. an increase of $2,330 from Q4. For Q2, we expect normalized margins to be relatively flat with Q1. In Canada, drilling activity for precision averaged 69 rigs, an increase of 6 rigs, or 9% from Q1 2022. Daily operating margins for the quarter were $13,558, an increase of $1,210 from Q4 2022. For Q2, our daily operating margins are expected to be approximately $10,000, down from Q1 due to normal seasonality and lower fixed cost of absorption. Internationally, drilling activity precision in the current quarter averaged five rigs. International average day rates were $51,753, an increase of 3% from the prior year. In our C&P segment, adjusted EBITDA this quarter was $17.4 million, up 166% compared to the prior year quarter. Adjusted EBITDA was positively impacted by a 53% increase in well service hours and improved pricing, reflecting improved industry activity and higher demand for our services. Well abandonment work represented approximately 30% of well servicing operating hours in the quarter. In addition to strong performance by our well servicing operations, our rentals and camps divisions approximately doubled EBITDA contribution from Q1 last year. Capital expenditures for the quarter were $51 million and included $16 million for upgrade and expansion and $35 million for maintenance. Our full year 2023 capital plan has decreased by $40 million and the new $195 million plan is comprised of $146 million for sustaining infrastructure and $49 million for upgrade and expansion. The decrease in planned capital spending reflects our focus on capital discipline and cost control and includes fewer expected rig upgrades, long lead maintenance deferrals, and lower inflation estimates. As of April 25th, we had an average of 63 contracts in hand for the second quarter and an average of 55 contracts for the full year 2022. Moving to the balance sheet, our Q1 results reflect the seasonal working capital build within our business and one-time payments highlighted in our press release. During the quarter, we drew approximately $80 million on our revolver and built our cash balance by $20 million. The cash used during the quarter was less than expected due to strong in-the-quarter collections and completed asset sales. As we have lower seasonal activity in Canada during the second quarter and no semi-annual interest payment, cash is coming in the door and we expect to have paid down the $80 million revolver draw by the end of the second quarter, and we'll concentrate our annual debt reduction in the second half of the year, similar to last year. As of March 31st, our long-term debt position net of cash was approximately $1.1 billion, and our total liquidity position was $540 million, excluding letters of credit. Our net debt to trailing 12-month EBITDA ratio is approximately 2.4 times, down from 6.7 times last year, and our average cost of debt is 7%. We expect our net debt to adjust to EBITDA before share-based compensation expense to be approximately 1.25 times to 1.5 times by year-end. During the quarter, we utilized $5 million to repurchase shares. We remain committed to reducing debt by over $500 million between 2022 and 2025, achieving a normalized leverage of one times or below. Our net debt reduction target for 2023 is $150 million, and we plan to allocate 10% to 20% of free cash flow before principal payments directly to shareholders. Moving on to guidance for 2023, depreciation is the same at $285 million, and SG&A remains the same at $90 million before share-based compensation expense. We expect cash interest expense to be approximately $80 million for the year and cash taxes to remain low with an effective tax rate of approximately 25%. Also for 2023, we expect share-based compensation expense to range between $20 million and $40 million for the share price range between $60 and $100. The annual share-based compensation accrual could increase or decrease another $15 million based on relative share price performance and a multiple between zero and two times. With that, I'll now turn the call over to Kevin.