Precision Drilling Corporation

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

Welcome to Precision Drilling's Third Quarter Earnings Conference Call and Webcast. Today, I'm joined by Kevin Neveu, our President and CEO, and Carrie Ford, the CFO. Hello. Yesterday, Precision reported strong third quarter results, which Kerry will review, followed by outlook commentary and an operational update 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 will pass it over to Kerry.

Thank you, Lavonne. In the quarter, precision delivered year-over-year growth in revenue, adjusted EBITDA, and net earnings. The resilience of our high-performance, high-value business model, geographic diversification, and organizational focus on cash flow and return on capital drove our financial results. We continue to strengthen our balance sheet with $49 million of debt reduction during the quarter and $152 million year to date, reaching the low end of our target range of $150 million to $200 million in 2024. Share repurchases were $17 million during the quarter and $50 million year to date, tracking the target of 25% to 35% of free cash flow allocated to shareholders. We expect strong cash flow during the fourth quarter and will continue to make progress with these targets. Longer term, we plan to reduce debt by $600 million between 2022 and 2026 over the next nine quarters with approximately $190 million remaining. Achieve a leverage level below one times net debt diva DA and increase our direct shareholder returns toward 50%. Precision's progress on balance sheet strength and shareholder returns has positioned us to be able to capture opportunistic high value investments. We are increasing our 2024 capital spending plan from $195 million to $210 million to fund multiple contracted rig upgrades and take advantage of purchasing in-demand drill pipe for 2025 drilling programs ahead of potential import tariffs. In the past, we pursued similar opportunistic investments while meeting our annual capital allocation goals. These included the high Arctic and CWC acquisitions, as well as year-end pull forward capital purchases at the end of 2023 and again this year. These investments have all produced excellent returns for our shareholders. In fact, as of the third quarter this year, we believe the assets purchased in the high Arctic transaction have paid for themselves in approximately two years. Moving on to Q3 performance, adjusted EBITDA of $142 million included a $200,000 share-based compensation recovery. Net earnings were $39 million, or $2.77 per share, representing the ninth consecutive quarter of positive earnings for precision. Funds provided by operations and cash provided by operations were $113 million and $80 million, respectively. Margins for Canada were $12,877, lower than guidance due to rig mix, as we had increased demand for super single and double rigs. Margins for Q4 are expected to be approximately $15,000 a day, with increased winter seasonal ancillary revenue pull-through. In the U.S., sterling activity per precision averaged 35 rigs in Q3, a decrease of one rig from the previous quarter. Daily operating margins in Q3, excluding the impacts of turnkey and IBC, were $10,888, essentially flat from Q2. For Q4, we expect margins to decrease slightly to approximately $9,500 a day. Internationally, drilling activity for precision in the current quarter averaged eight rigs. International average day rates were 47,223 USD, a decrease of 8% from the prior year due to incurring 44 non-billable utilization days for a rig undergoing a certification. This decrease was offset by a positive year-over-year rig mix. In our C&P segment, adjusted EBITDA this quarter was $20 million, up 40% compared to the prior year quarter. Adjusted EBITDA was positively impacted by a 34% increase in well-served hours, the integration of the CWC acquisition, and improved pricing. C&P results were further supported by precision rental business, which is realizing increased demand and utilization for centrifuge equipment on super triple rigs for customers in the Monty. Our contract rig fleet continues to support our outlook, with average annual rigs under contract in 2024 of 18 in the U.S., 23 in Canada, and 8 internationally. Now moving to the balance sheet. As of September 30th, our long-term debt position net of cash was approximately $775 million, and our total liquidity position was approximately $510 million, excluding letters of credit. Our net debt to trailing 12-month adjusted EBITDA ratio is approximately 1.4 times, and our average cost of debt is approximately 7%. We expect our net debt to adjusted EBITDA ratio to be approximately 1.3 times by year end. Moving on to guidance for 2024. We expect depreciation of approximately $300 million, cash interest expense of approximately $70 million, cash taxes to remain low, and our effective tax rate to be approximately 25%. We expect SG&A of 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 $80 to $120. And the charge may increase or decrease by up to $20 million based on the share price performance relative to Precision's peer group. With that, I will turn the call over to Kevin.