Precision Drilling Corporation

Good day and thank you for standing by. Welcome to the Precision Drilling Corporation 2024 First Quarter Conference Call. I would like to hand the conference over to LaVon Zadunic, Vice President in Investor Relations. Please go ahead.

Thank you, Operator, and welcome everyone to our First Quarter Conference Call. Today, I'm joined by Kevin Nebue, Precision's President and CEO, and Kerry Ford, our CFO. Earlier today, we reported our first quarter results. To begin our call today, Kerry will review these results and then Kevin will provide an operational update and outlook commentary. Once we have finished our prepared comments, we will open the call for questions. Please note that some comments today will refer to non-IFRS financial measures and 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 available on CDAR and EDGAR. As a reminder, we express our financial results in Canadian dollars unless otherwise stated. With that, I will turn it over to Kerry.

Thanks, Lavonne. Precision's Q1 financial results exceeded our expectations for adjusted EBITDA earnings and cash flow. Adjusted EBITDA of $143 million was driven by strong drilling activity, improved pricing, and strict cost controls. Our Q1 adjusted EBITDA included a share-based compensation charge of $23 million. Without this charge, adjusted EBITDA would have been $166 million, which compares to $191 million in Q1 2023, a decrease of 13%. Net earnings were $37 million, or $2.53 per share, representing the seventh consecutive quarter of positive earnings per precision. Funds provided by operations and cash provided by operations were $118 million and $66 million respectively. Margins in the U.S. and Canada were higher than guidance, resulting from stronger than expected pricing, higher ancillary revenues, and improved cost performance. The importance of cost management in field margin generation cannot be overstated, and on this front, I am pleased with the performance of the business. Reducing costs remains a high priority for me, and I continue to work closely with the finance, operations, and supply chain teams to demonstrate continued progress in 2024. In the U.S., drilling activity for precision averaged 38 rigs in Q1, a decrease of seven rigs from the previous quarter. Daily operating margins in Q1, excluding the impacts of turnkey and IBC, were $11,057, a decrease of $755 from Q4, but significantly higher than guidance. For Q2, we expect normalized margins to be above $10,000 per day. In Canada, drilling activity for precision averaged 73 rigs, an increase of four rigs from Q1 2023. Daily operating margins in the quarter were $15,647, an increase of $2,089 from Q1 2023. For Q2, our daily operating margins are expected to be between $13,000 and $14,000. Internationally, drilling activity for precision in the current quarter averaged eight rigs. International average day rates were $52,808, an increase of 2% from the prior year due to rig mix. With the rig activations completed last year, we expect international EBITDA to increase approximately 50% from 2023 to 2024. In our C&P segment, adjusted EBITDA this quarter was $19 million, up 7% compared to the prior year quarter. Adjusted EBITDA was positively impacted by a 28% increase in well-service hours and improved pricing, reflecting the higher demand for our services and the impact of the CWC acquisition completed in November. We continue to create value with the CWC business on both sides of the border, and to date, we have achieved $16 million of the projected $20 million of annual synergies. Capital expenditures for the quarter were $56 million and included $14 million for upgrading and expansion, and $41 million for maintenance and infrastructure. Our full-year 2024 capital plan remains at $195 million and is comprised of $155 million for sustaining and infrastructure, and $40 million for upgrade and expansion. If increased rig activity materializes and upgrade demands continue, our capital plan could increase slightly in the second half of the year. April 24th, we had an average of 46 contracts in hand for the third quarter and an average of 44 contracts for the full year of 2024. 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 first quarter, we had a slight decrease in cash. As we have lower seasonal activity in Canada during the second quarter and no semi-annual interest payments, cash is coming in the door, and we expect to begin reducing debt in Q2. As of March 31st, our long-term debt position net of cash was approximately $900 million, and our total liquidity position was over $600 million, excluding letters of credit. Our net debt to trailing 12-month EBITDA ratio is approximately 1.5 times, and our average cost of debt is 7%. We expect our net debt to adjust before share-based compensation expense to continue to decline throughout the year. And we are committed to reducing debt by $600 million between 2022 and 2026 and achieving a normalized leverage level of below one times. Our debt reduction target for 2024 is $150 million to $200 million, and we plan to allocate 25% to 35% of free cash flow before principal payments directly to shareholders. Based on a robust free cash flow outlook, we repurchased $10 million of shares during the quarter, twice the pace of last year, a pace we plan to meet or exceed throughout 2024. Moving on to additional guidance for the year, which remains largely unchanged from the prior call, we expect depreciation of approximately $290 million, cash interest expense of approximately $75 million, cash taxes to remain relatively low and our effective tax rate to be approximately 25 percent, selling general and administrative expenses of $100 million before share-based compensation expense. We expect share-based compensation charges for the year to range between $40 million and $50 million at a share price range of $80 to $100, and the charge may increase or decrease by up to $15 million based on the share price performance relative to Precision's peer group. With that, I'll turn the call over to Kevin.