Ensign Energy Services Inc.

Good afternoon, ladies and gentlemen, and welcome to the Ensign Energy Services, Inc. Second Quarter 2022 Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require any assistance, please press star and number zero for the operator. This call is being recorded on Friday, August 5th, 2022. I would now like to turn the conference over to Nicole Romano. Please go ahead.

Thank you, Sergio. Good morning and welcome to Enzyme Energy Services' second quarter 2022 conference call and webcast. On our call today, Bob Geddes, President and COO, and Mike Gray, Chief Financial Officer, will review Enzyme's second quarter highlights and financial results, followed by an operational update and outlook. We'll then open the call for questions. Our discussion today may include forward-looking statements based upon current expectations that involve several business risks and uncertainties. The factors that could cause results to differ materially include, but are not limited to, political, economic, and market conditions, crude oil and natural gas prices, foreign currency fluctuations, weather conditions, the company's defense of lawsuits, the ability of oil and gas companies to pay accounts receivable balances, or other unforeseen conditions which could impact the demand for the services supplied by the company. Additionally, our discussion today may refer to non-GAAP financial measures such as adjusted EBITDA. Please see our second quarter earnings release and CDAR filings for more information on forward-looking statements and the company's use of non-GAAP financial measures. With that, I'll pass it on to Bob.

Thanks, Nicole. Good morning, and thank you for joining in on our call today. Let's reflect on our two results. Enzyme had a very strong operational quarter with strong safety, low downtime, and continuing opportunities being landed. As we have mentioned in prior calls, the team identified 24 rigs that could be upgraded, reactivated for very little capital, approximately $40 million, and where these rigs were all contracted at rates with $5,000 a day bumps on average. And most importantly, these are all projects where we would have payout on our incremental capital within six months of commissioning. Again, the goal is to make sure we have payout on any incremental capital within the fiscal year. so as to maximize debt reduction in the period. The second quarter results were somewhat muted by the fact that only half of those 24 RIGs were actually commissioned in the back half of the second quarter, essentially contributing only one month of high margin cash flow to second quarter results. Obviously, the third quarter and onward will see the benefit of an additional 12 RIGs with significantly enhanced margin and operating days. We currently have 124 RIGs running today, 61 in the U.S., 49 in Canada, 14 internationally. And we have visibility to give or take, get up to 150 rigs by year end, 65 to 70 in the U.S., 60 to 65 in Canada, and 15 to 20 internationally. We have guided with CapEx for the year close to 165, of which $115 million is attributed to maintenance CapEx and nominal reactivation costs on the additional 50-plus rigs, which will be reactivated through 2023 to feed the uptick in the market. The other $50 million of capital is growth CapEx targeted on client-sponsored upgrading of rigs at enhanced rates of $5,000 a day or greater. In some cases, we have recovered the capital via elevated MOPE fee, but I'll point out that in all cases, with respect to the approximate $50 million of upgraded projects, mostly on the drilling side, but also some on the well-servicing side, that these projects will pay out well within the 2022 fiscal period. Again, finding that delicate balance of respecting the balance sheet within the fiscal period, while at the same time taking advantage of the upswing market and the opportunity to upgrade rigs with quick payouts on incremental capital. So when the smoke clears at the end of the year, we will have upgraded close to 30 rigs, and where these rigs will commence superior rates in the low 30s, and which will all be on long-term contracts. Also important to understand is is that over half of the contracted fleet today will be rotating over onto new contracts at significantly higher rates through the back half of the year, and that an additional 30-plus rigs active in the back half will all be at much higher rates. I'll turn it over to Mike for a more deep dive into the results. Mike? Thanks, Rob.