Precision Drilling Corporation

Good day, and thank you for standing by. Welcome to the Precision Drilling Corporation 2025 Second Quarter Results Conference Call-In Webcast. I would now like to hand the conference over to LaVon Zudunik, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Welcome, everyone, to Precision Drilling Second Quarter Conference Call-In Webcast. Today, I'm joined by Kevin Neveu, Precision's President and CEO, and Carrie Ford, our CFO. Yesterday, we reported our second 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've 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 Plus and EDGAR. As a reminder, we express our financial results in Canadian dollars unless otherwise stated. With that, I'll pass it over to you, Kerry.

Thank you, Lavonne. Precision's Q2 financial results exceeded our expectations for adjusted EBITDA earnings and cash flow. Adjusted EBITDA was $108 million, was driven by strong drilling activity in Canada, improved activity in the U.S., and steady cash flow generation from our drilling operations in the Middle East, as well as our completion and production services business. Our Q2 adjusted EBITDA included a share-based compensation charge of $4 million and additional revenue of $7 million related to customer-funded upgrade projects in Canada. Without these items, adjusted EBITDA would have been $105 million. Revenue was $407 million, a decrease of 5% from Q2 2024. Net earnings were $60 million, or $1.21 per share, representing Precision's 12th consecutive quarter of positive earnings. Funds and cash provided by operations were $104 million and $147 million, respectively. In the US, Precision's drilling activity averaged 33 rigs in Q2, an increase of three rigs from the previous quarter, with operating days increasing 13%. Daily operating margins in Q2, excluding the impacts of turnkey and IBC, were 9,026 USD, an increase of 666 USD from Q1, and well ahead of our guidance of $7,000 to $8,000 per day. For Q3, we expect normalized margins to be between 8,000 USD and 9,000 USD per day. This includes anticipated rig activations in Q3. Daily operating costs in the U.S. were lower than the first quarter due to improved fixed cost absorption with higher activity levels and fewer one-time items. Our reported daily operating costs included costs associated with reactivating four rigs during the quarter, negatively impacting operating costs by $648 per day. In Canada, precision drilling activity averaged 50 rigs, an increase of one rig from Q2 2024. Our daily operating margins in the quarter were $15,306, an increase of $883 from Q2 2024. Our Q2 margins included revenue associated with upfront customer payments for rig upgrades amounting to $1,440 per day. Without this payment, Q2 margins would have been $13,866, slightly ahead of the high end of our guidance of $12,500 to $13,500 per day. For Q3, our daily operating margins are expected to be between $12,000 and $13,000. Internationally, precision drilling activity in the quarter averaged seven rigs. International average day rates were 53,129 USD, an increase of 4% from the prior year due to rig mix. In our C&P segment, adjusted EBITDA this quarter was $10 million. down 18% compared to the prior year quarter. Adjusted EBITDA was negatively impacted by a 23% decrease in wealth service hours, slightly offset by higher margins. Capital expenditures for the quarter were $53 million, including $27 million for upgrade and expansion and $26 million for maintenance and infrastructure. Our full year 2025 capital plan has been increased from $200 million to $240 million and is comprised at $150 million for sustaining the infrastructure, and $86 million for upgrade and expansion. Our original 2025 plan was $225 million and was subsequently reduced in April as a result of heightened market uncertainty around tariff discussions and potential deterioration of U.S. and Canada trade relations. Since our last conference call, oil and gas prices have increased. Broad public indices, including the OSX, are up in the 10 to 20% range. And year-over-year rig counts are either stable or up in many of our key operating basins, including the Hainesville, Marcellus, Montney, and Canadian Heavy Oil. The improved outlook and increased activity in several of our core geographic areas has resulted in a material increase in customer demand for upgrades to rigs versus three months ago. As of July 29th, we had an average of 38 contracts in hand for the third quarter and an average of 39 contracts for the full year 2025. Moving to the balance sheet, our Q2 cash flow momentum continued, with strong cash flow supporting debt reduction of $74 million and share repurchases of $14 million. As of June 30th, our long-term debt position net of cash was approximately $644 million, and our total liquidity position was approximately $530 million, excluding letters of credit. Our net debt to trailing 12-month EBITDA ratio is approximately 1.3 times, and our average cost of debt is 6.9%. Moving on to guidance for 2025, we expect strong free cash flow for the year, depreciation of approximately $300 million, cash interest expense of approximately $65 million. Cash taxes, we expect to remain low and our effective tax rate to be approximately 25% to 30%. We expect SG&A of approximately $95 million before share-based compensation expense. And we expect share-based compensation charges for the year to range between $15 million and $35 million at a share price range of $60 to $100. And the charge may increase or decrease based on the share price and performance relative to Precision's peer group. Our debt reduction target for 2025 remains at $100 million, and we plan to allocate 35% to 45% of the free cash flow before debt principal payments to share repurchases. With $91 million of debt reduction and $45 million of share repurchases through June 30, we are well on our way to achieving another annual capital allocation goal. We are committed to reducing debt by $700 million between 2022 and 2027 and achieving a normalized leverage level below one times. Since 2022, we have reduced debt by $525 million. With that, I will turn the call over to Kevin.