Precision Drilling Corporation

Good day and thank you for standing by. Welcome to the Precision Drilling Corporation 2024 Fourth Quarter and End of Year Results Conference Call and Webcast. I would like to turn the conference over to LaVon Zunonic, Vice President of Investor Relations. Please go ahead.

Thank you, Kevin. Welcome to Precision Drilling's Fourth Quarter and Year End Conference Call and Webcast. Today, I'm joined by Kevin Nephew, Precision's President and CEO, and Kerry Ford, our CFO. Yesterday, we reported our fourth quarter results, concluding another year of strong cash flow and profitability. In our news release, we revealed our 2025 strategic priorities that the whole Precision team is aligned with. Our 2025 priorities remain focused on generating shareholder value by maximizing CRE cash flow through disciplined capital deployment and strict cost management, enhancing shareholder returns through further debt reduction and increased share repurchases, and growing revenue in existing service lines. Before I turn the call over to Kevin and Kerry, I would like to remind our listeners 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'll turn it over to Kerry.

Thanks, Lavonne, and good afternoon. Precision's 2024 annual financial results demonstrated our resilient business model and ability to meet our financial commitments despite lower industry activity in certain core markets. Before detailing our 2024 financial results, I will recap Precision's 2024 strategic priorities and our performance against each. Number one, concentrate organizational efforts on leveraging our scale and generating free cash flow. We generated cash provided by operations of $482 million, reached near full utilization on our Canadian Super Series rigs, increased year-over-year activity in international drilling, Canada drilling, and well servicing, By 37%, 12%, and 26% respectively, we also achieved full synergies in our CWC acquisition. Number two, reduce debt by $150 million and $200 million and allocate 25% to 35% of free cash flow before debt repayment to share repurchases. We've reached the midpoint of both of these targets and lowered our net debt to EBITDA leverage ratio. And number three, continue to deliver operational excellence and strengthen our competitive position and extend market penetration of our alpha and evergreen products. During the year, we nearly doubled our evergreen revenue year over year and added two new major product offerings on our super single rigs, which were LED mass lighting and hydrogen combustion catalyst systems. We also invested $52 million into our fleet and grew market share year over year in Canada. I will now cover annual financial highlights, which include Revenue of $1.9 billion, essentially flat year over year. Adjusted EBITDA of $521 million, 15% decrease year over year. Funds from operation of $463 million, a 13% decrease. Cash from operations of $482 million, similar to prior year. We achieved debt reduction of $176 million and $75 million in share repurchases, representing 4% of our outstanding shares, and generated positive earnings per share every quarter during 2024 and for the past 10 consecutive quarters. Moving on to fourth quarter results. Our fourth quarter adjusted EBITDA of $121 million included a share-based compensation charge of $15 million and non-recurring charges of $8 million. Non-recurring charges included $4 million of rig reactivations and $4 million of severance inventory write-downs and year-end accrual cleanups. As of these charges adjusted EBITDA would have been $144 million. In U.S. drilling, activity for precision averaged 34 rigs in Q4, a decrease of one rig from Q3. Daily operating margins in the quarter absent impacts of IPC and turnkey were 9,165 USD, just shy of our guidance of 9,500 USD, and 1,719 USD below Q3 levels. For Q1, we expect normalized margins to range between 8,500 USD and 9,000 USD, The expected margin decreases due to slightly lower day rates and higher overhead costs spread over fewer activity days compared to Q4. In Canada, drilling activity for precision averaged 65 rigs, an increase of one rig from Q4 2024. Daily operating margins in the quarter were $14,559, an increase of approximately $2,131 from Q3 2024 and slightly below our guidance of $15,000 per day. Q4 margins included approximately $4 million or just over $500 per day in rig reactivation costs. Absent these costs, margin performance would have exceeded guidance. For Q1, we expect margins to remain consistent with Q4 at $14,500 to $15,000 per day. Compared to Q1 2024, margins are down approximately $1,000 per day, and this is due to rig mix and planned rig reactivations versus zero rig reactivations last year. Internationally, precision drilling activity in the quarter averaged eight rigs and average day rates were 49,636 USD in line with the prior year. We expect 2025 activity to be consistent with 2024 levels. In our C&P segment, adjusted EBITDA this quarter was $16 million, a $4 million increase from the prior year quarter. Adjusted EBITDA was positively impacted by a 6% increase in well service hours reflecting a full quarter with the CWC service rates. We expect results to improve in Q1 with increased rates, activity, and rental performance. Capital expenditures for the quarter were $59 million and for the year they were $217 million. Due to timing of equipment deliveries, our capital expenditures were slightly higher than our guidance of $210 million. Our 2025 capital plan of $225 million is comprised of $175 million for sustaining and infrastructure and $50 million for upgrades and expansion. This plan will increase or decrease based on activity levels and contracted customer upgrades. Moving to our contract book, as of February 12th, we had an average of 43 contracts in hand for the first quarter and an average of 37 contracts for the full year 2025. Based on customer conversations for super triple and upgraded super single grades, we expect the number of Canadian contracts to increase over the coming quarters. Moving to the balance sheet, as of December 31st, our long-term debt position net of cash was $748 million, and our total liquidity position was approximately $600 million, excluding letters of credit. Our net debt to trailing 12-month EBITDA ratio is approximately 1.4 times, and our average cost of debt is 6.9%. For 2025, It is clear that we are nearing our long-term capital structure target of below one times leverage, and we continue to balance our cash liquidity, debt maturities, total debt, and leverage ratios while optimizing our cost of capital. This year, we plan to reduce debt by at least $100 million and have increased our long-term debt production goal from $600 million to $709 million between 2022 and 2027. As of December 31st, 2024, we have reduced debt by $435 million over this period and now have an additional $265 million reduction over the next three years to achieve our goal. Moving on to guidance for 2025, we expect depreciation of $300 million, cash and interest expense of $65 million, effective tax rate of 25% to 30% with low cash taxes, SG&A before share-based comp expense of $100 million, share-based comp expense of $25 to $35 million with a share price range of $80 to $100 Canadian, assuming a one times multiplier. Please note that this is a preliminary estimate and we will provide updated guidance on our Q1 call following the settlement of past grants and issuance of new grants later this quarter. That concludes my prepared comments. I'll now turn the call over to Kevin.