Precision Drilling Corporation

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

Good morning, and thank you for joining Precision Drilling's Third Quarter Conference Call and Webcast. Earlier this month, we announced the retirement of Kevin Neveu and the appointment of Terry Ford to President and Chief Executive Officer. Jean Stahl to Chief Operating Officer, and Dustin Honing to Chief Financial Officer. Kevin retires after serving as President and CEO for one of the longest tenures of any oilfield service CEO. We would like to thank Kevin for his many contributions during his time with PD. Before I pass the call over to Kerry and Dustin today, I would like to recap some of our Q3 highlights. Precision drilling activity outperformed industry and our U.S. drilling activity continues to grow. Our operating margins are resilient and within guidance. We increased our 2025 capital budget by $20 million to allow for five additional contracted rig upgrades as several of our Canadian and U.S. customers are taking a long-term view of demand for energy. And finally, we are on track to meet our 2025 capital allocation plans, having already achieved our debt reduction target. 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. With that, I will turn it over to Dustin Honing, our new CFO.

Thank you, LaVon, and good morning or good afternoon, depending on where you're calling today. Our Q3 results demonstrate Precision's commitment to delivering on our strategic priorities in positioning the business for long-term success. We recorded adjusted EBITDA of $118 million, which equates to $129 million before share-based compensation expense, compared with prior year EBITDA of $142 million. In Canada, drilling activity averaged 63 active rigs, a decrease of nine rigs from Q3 2024, resulting from customer projects being deferred to the upcoming winter season. A report of Q3 daily operating margins were $13,007 a day, compared to $12,877 a day in the third quarter of 2024, well within our prior guidance range. In the U.S., we averaged 36 rigs, an increase of three rigs from the previous quarter, primarily due to precision strength and gas-weighted basins. In Q3, daily operating margins for the quarter were steady at U.S. $8,700 a day compared to U.S. $9,026 per day in the second quarter. also within our prior guidance range. With favorable positioning in the U.S. natural gas market, we continue to add to our U.S. rig count, which has increased from a low of 27 rigs in Q1 to a high of 40 rigs today, a reflection of strong field performance recognized by our customers and the efforts of our sales team. While contract churn continues to challenge activity levels, we are encouraged by the quantity and quality of conversations tied to future opportunities in all bases. Internationally, Precision's drilling activity averaged seven rigs, down from eight rigs in prior year Q3. International day rates averaged U.S. $53,811 a day, an increase of 14% from prior year Q3 due to rigs recertification with non-billable days recognized in 2024. In our C&P segment, adjusted EBITDA was $19.3 million, which compares to $19.7 million from prior year Q3. Our strong presence in Canada's heavy oil and unconventional natural gas markets, combined with our favorable positioning in the U.S., has provided us the ability to capitalize and rig upgrade opportunities, underpinned by firm customer contract commitments. During the quarter, we increased our planned 2025 capital expenditures from $240 million to $260 million, comprised of $151 million for sustaining and infrastructure and $109 million for upgrading and expansion. The plan is inclusive of five additional contract-backed upgrades added this quarter. Our added contracted backlog in the third quarter far exceeds the increase in our 2025 capital plan, ensuring strong financial returns as we strengthen both the marketability of our rig fleet and customer alignment in key regions. Even with this increase in capital, we remain firmly committed to our strategic priorities. As of September 30th, we've met our annual debt reduction target reducing our debt by $101 million and are well on our way to allocating between 35% and 45% of our free cash flow to share buybacks. We have repurchased $54 million worth of shares during the first nine months of the year. Moving on to forward guidance. I will begin with our expectations for the fourth quarter. While our outlook for the remainder of the year remains positive, it will continue to be commodity price dependent. In Canada, we are expecting activity for this year's winter drilling season to meet or slightly exceed last year's winter activity. Q4 rig counts should be similar to Q4 2024, which averaged 65 rigs. Keep in mind this includes the seasonal slowdown for Christmas holidays. Our operating margins in Canada are expected to range between 14,000 and 15,000 per day. In the U.S., we expect to sustain the momentum we have experienced in the last two quarters with an average active rate count in Q4 within the upper 30s. For the fourth quarter, we expect our margins to remain stable, ranging between U.S. $8,000 and U.S. $9,000 per day. Moving to guidance for the full year, we expect depreciation of approximately $300 million and cash interest expense of approximately $65 million remaining unchanged from prior guidance. Our effective tax rate will be approximately 45% to 50% due to increased deferred income tax expense related to the momentum of our U.S. operations. Cash taxes are expected to remain low in 2025, and looking to 2026, we expect to return to our traditional effective tax range within 25% to 30%, with cash taxes again remaining low. For 2025, we expect SG&A of approximately $90 to $95 million before share-based compensation expense. We refined our share-based compensation guidance for the year and now expect to range in between $5 and $30 million, assuming a share price of $60 to $100. A long-term target to achieve net debt to adjusted EBITDA of less than one times remains firmly in place. as does our plan to increase our free cash flow allocated directly to shareholders towards 50%. Our net debt to trailing 12-month EBITDA ratio is approximately 1.3 times, with an average cost of debt of 6.6%, and we have over $400 million in total liquidity today. With that, I will pass it over to Kerry.