Precision Drilling Corporation

Good day and thank you for standing by. Welcome to the Precision Drilling Corporation 2024 Second Quarter Conference Call. I would like to hand the call over to LaVonne Dunick, Vice President of Investor Relations. Please go ahead.

Thank you and welcome to Precision's Second Quarter Earnings Conference Call and Webcast. Participating on today's call with me will be Kevin Neveu, our President and CEO, and Kerry Ford, our CFO. Earlier last night, we reported strong second quarter results, which Kerry will review 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. 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. Please see our news release and other regulatory filings for more information on financial measures, forward-looking statements, and risk factors. As a reminder, we express our financial results in Canadian dollars unless otherwise indicated. With that, I'll pass it over to Kerry.

Thank you, LaVon. Precision's Q2 financial results exceeded our expectations for revenue, adjusted EBITDA earnings, and cash flow. The resiliency of our high-performance, high-value business model, geographic diversification, and organizational focus on cash flow and return on capital drove our financial results. Precision's demonstrated commitment to strengthen our balance sheet continues with year-to-date debt reduction and share repurchases of $103 million and approximately $40 million, respectively. For 2024, we expect to reduce debt by $150 million to $200 million and utilize 25% to 35% of free cash flow before debt repayments to repurchase shares. Longer term, we plan to reduce debt by $600 million between 2022 and 2026, with approximately $240 million remaining over the next two and a half years. We expect to achieve a leverage level of below one times net debt to EBITDA and increase our direct shareholder returns towards 50% over that time period. The progress on these capital allocation targets is clear and the longer term trend remains in place as we've reduced debt by over $1.3 billion since the beginning of 2016. Moving on to Q2 performance. The U.S. sterling recount has declined 15% over the past year And while this data point is typically used as a proxy for broader oilfield service activity and financial performance, this is not the case for precision, as we have achieved year-over-year growth and consolidated Q2 revenue, driven by substantial growth in international drilling, Canada drilling, and completion in production services. Q2 EBITDA of $115 million included a share-based compensation charge of $10 million. Without this charge, adjusted EBITDA would have been $125 million. Net earnings were $21 million, or $1.44 per share, representing the eighth consecutive quarter of positive earnings for Precision. Funds provided by operations and cash provided by operations were $112 million and $174 million, respectively. Margins in both Canada and the US were higher than guidance, resulting from stronger than expected pricing and cost recoveries, higher ancillary revenues, and improved cost performance. In the U.S., drilling activity for precision averaged 36 rigs in Q2, a decrease of two rigs from the previous quarter. Daily operating margins in Q2, excluding the impacts of turnkey and IBC, were $10,838, a decrease of $219 for Q1. For Q3, we expect margins to be stable and above $10,000 per day. In Canada, drilling activity for precision averaged 49 rigs, increase of 7 rigs, or 18% from Q2 2023. Daily operating margins for the quarter were $14,423, an increase of $2,220 from Q2 2023. For Q3, our daily operating margins are expected to be between $13,500 and $14,000 per day, with higher fixed cost absorption and improved pricing largely offsetting the impact of rig mix. Internationally, drilling activity for precision in Q2 averaged eight rigs, a 61% increase over Q2 2023. International average day rates were $55,301, an increase of 9% from the prior year due to rig mix. In our C&P segment, adjusted EBITDA this quarter was $12.4 million, up 66% compared to the prior year quarter. Adjusted EBITDA was positively impacted by a 44% increase in well service hours, the integration of the CWC acquisition, and improved pricing. CMP results were further supported by Precision's rental business, which has realized an increased demand and utilization for centrifuge equipment on super triple rigs for customers in the Montney. Our contracted rig fleet continues to support our outlook, with average annual rigs under contract for 2024 of 17 in the US, 23 in Canada, and eight internationally. Moving into the balance sheet, as of June 30, our long-term debt position net of cash was approximately $800 million, and our total liquidity position was over $540 million, excluding letters of credit. Our net debt to trailing 12-month adjusted EBITDA ratio is approximately 1.5 times, and our average cost of debt is approximately 7%. We expect our net debt to adjusted EBITDA ratio to be approximately 1.25 times by year-end, we expect net debt to be between 700 million dollars and 750 million dollars and our run rate interest expense at that time will be approximately 50 million dollars moving on to guidance for 2024 depreciation is expected to be approximately 290 million dollars cash interest approximately 75 million dollars cash taxes are expected to remain low and our effective tax rate to be approximately 25 percent sgna is expected to be approximately $100 million before share-based compensation expense. And we expect share-based compensation charges for the year to range between $40 million and $60 million at a share price range of between $80 and $120 per share. And the charge may increase or decrease by up to $20 million based on the share price performance relative to Precision's peer group. Given Precision's share price performance year to date, We have increased the upper end of our guidance from $100 to $120 per share to provide increased visibility for our investors. With that, I will now turn the call over to Kevin.