Ensign Energy Services Inc. Reports 2025 Second Quarter Results

Ensign Energy Services Inc. Reports 2025 Second Quarter Results

CALGARY, AB, Aug. 8, 2025 /CNW/ - 

FINANCIAL HIGHLIGHTS
(Unaudited, in thousands of Canadian dollars, except per common share data)

• Revenue for the second quarter of 2025 was $372.4 million, a five percent decrease from the second quarter of 2024 revenue of $391.8 million.
• Revenue by geographic area:
  • Canada - $100.8 million, 27 percent of total;
  • United States - $197.2 million, 53 percent of total; and
  • International - $74.4 million, 20 percent of total.
• Adjusted EBITDA for the second quarter of 2025 was $81.4 million, a 19 percent decrease from Adjusted EBITDA of $100.2 million for the second quarter of 2024.
• Funds flow from operations for the second quarter of 2025 decreased 26 percent to $72.5 million from $98.3 million in the second quarter of the prior year.
• Net loss attributable to common shareholders for the second quarter of 2025 was $26.4 million, down from net loss attributed to common shareholders of $4.5 million for the second quarter of 2024.
• During the second quarter of 2025, $19.7 million of debt was repaid and a total of $42.9 million was repaid during the first half of 2025. The Company is on track to achieve its stated debt reduction target of $600.0 million for the period beginning of 2023 to the end of 2025. The remaining amount of debt to be repaid to achieve this target is $119.8 million. If industry conditions change, this target could be increased or decreased.
• Total debt, net of cash has decreased $68.5 million during the first half of 2025 due to debt repayments and foreign exchange translation of converting USD denominated debt.
• Interest expense decreased by 27 percent to $18.6 million from $25.5 million. The decrease is the result of lower debt levels and effective interest rates.

OPERATING HIGHLIGHTS
(Unaudited)

• Canadian drilling recorded 2,494 operating days in the second quarter of 2025, a two percent increase from 2,451 operating days in the second quarter of 2024. Canadian well servicing recorded 11,987 operating hours in the second quarter of 2025, fairly consistent with 12,027 operating hours in the second quarter of 2024.
• United States drilling recorded 2,943 operating days in the second quarter of 2025, a one percent increase from 2,912 operating days in the second quarter of 2024. United States well servicing recorded 25,747 operating hours in the second quarter of 2025, a 27 percent decrease from 35,312 operating hours in the second quarter of 2024.
• International drilling recorded 1,081 operating days in the second quarter of 2025, a 14 percent decrease from 1,255 operating days recorded in the second quarter of 2024.

FINANCIAL POSITION HIGHLIGHTS

CAPITAL EXPENDITURE HIGHLIGHTS

• Net purchases of property and equipment for the second quarter of 2025 totaled $49.2 million, consisting of $13.3 million in upgrade capital and $37.4 million in maintenance capital, offset by disposition proceeds of $1.5 million. Maintenance capital expenditures for 2025 are targeted to be approximately $154.0 million, with selective upgrade capital of approximately $30.5 million, of which  $19.0 million is customer funded. The increase in the 2025 targeted capital spend relates to the upgrade of two drilling rigs in the Company's Oman operations. These two rigs are expected to begin operations in the first half to 2026 under a five-year contract.  In addition, the Company may consider other upgrade or growth projects in response to customer demand and appropriate contract terms.

This news release contains "forward-looking information and statements" within the meaning of applicable securities legislation. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Advisory Regarding Forward-Looking Statements" later in this news release. This news release contains references to Adjusted EBITDA, Adjusted EBITDA per common share and working capital. These measures do not have any standardized meaning prescribed by IFRS Accounting Standards ("IFRS") and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this news release should not be considered as an alternative to, or more meaningful than, the IFRS measures from which they are derived or to which they are compared. See "Non-GAAP Measures" later in this news release.

OVERVIEW

Revenue for the second quarter of 2025 was $372.4 million, a five percent decrease from $391.8 million in revenue for the second quarter of 2024. Revenue for the six months ended June 30, 2025, was $808.9 million, a decrease of two percent from revenue for the six months ended June 30, 2024, of $823.1 million.

Adjusted EBITDA totaled $81.4 million ($0.44 per common share) in the second quarter of 2025, 19 percent lower than Adjusted EBITDA of $100.2 million ($0.54 per common share) in the second quarter of 2024. For the six months ended June 30, 2025, Adjusted EBITDA totaled $183.7 million ($1.00 per common share), 16 percent lower than Adjusted EBITDA of $217.7 million ($1.18 per common share) in the first six months ended June 30, 2024.

Net loss attributable to common shareholders for the second quarter of 2025 was $26.4 million ($0.14 per common share) compared to a net loss attributable to common shareholders of $4.5 million ($0.02 per common share) for the second quarter of 2024. Net loss attributable to common shareholders for the six months ended June 30, 2025, was $22.7 million ($0.12 per common share), compared to a net loss attributable to common shareholders of $5.8 million ($0.03 per common share) for the six months ended June 30, 2024.

Funds flow from operations decreased 26 percent to $72.5 million ($0.39 per common share) in the second quarter of 2025 compared to $98.3 million ($0.53 per common share) in the second quarter of the prior year. Funds flow from operations decreased 18 percent to $169.1 million ($0.92 per common share) for the six months ended June 30, 2025, compared to $206.7 million ($1.12 per common share) for the six months ended June 30, 2024.

The oilfield services sector maintains a generally constructive outlook despite a year-over-year activity decline in some operating regions. Geopolitical tensions and global trade uncertainties have kept activity in the United States subdued and reinforced customer capital discipline in regard to drilling programs. Volatile commodity prices and shifts in the United States trade policies under the new administration, including tariffs, are further clouding the global economic outlook and pressuring commodity prices. Additionally, OPEC+ nations easing voluntary production cuts has increased crude supply, keeping a ceiling on crude oil commodity prices.

Geopolitical tensions, hostilities in areas of the Middle East, the ongoing Russia-Ukraine conflict, and global trade policy changes continue to impact global commodity prices and add uncertainty to the outlook for crude oil supply and commodity prices over the short-term.

The Company's operating days were lower for the six months ended June 30, 2025, when compared with the same periods in 2024 as operations were negatively impacted by the above-mentioned uncertainty in the global economy and volatility in the crude oil and natural gas commodity pricing.

The average United States dollar exchange rate was $1.41 for the first half of 2025 (2024 - $1.36), higher than the first half of 2024. The higher exchange rate helped offset the net loss for the three and six months ended June 30, 2025, with the positive foreign exchange translation on USD denominated earnings.

The Company's working capital deficit as at June 30, 2025, was $96.0 million, compared to $100.9 million as at December 31, 2024. The working capital deficit is the result of the classification of the current portion of long-term debt.

The Company's available liquidity, consisting of cash and available borrowings under its $750.0 million revolving credit facility (the "Credit Facility"), was $20.9 million as at June 30, 2025 (December 31, 2024: $31.9 million).

REVENUE AND OILFIELD SERVICES EXPENSE

Revenue for the three months ended June 30, 2025, totaled $372.4 million, a decrease of five percent from the three months ended June 30, 2024 of $391.8 million. Revenue for the six months ended June 30, 2025, totaled $808.9 million, a two percent decrease from the six months ended June 30, 2024 of $823.1 million.

The decrease in total revenue during the first half of 2025 was primarily due to the lower operating activity. Offsetting the decrease is a four percent positive foreign exchange translation of converting USD denominated revenue.

CANADIAN OILFIELD SERVICES

Revenue increased eight percent to $100.8 million for the three months ended June 30, 2025, from $93.4 million for the three months ended June 30, 2024. The Company recorded revenue of $252.8 million in Canada for the six months ended June 30, 2025, an increase of nine percent from $231.9 million recorded for the six months ended June 30, 2024.

Canadian revenue accounted for 27 percent of the Company's total revenue in the second quarter of 2025 (2024 - 24 percent) and 31 percent (2024 - 28 percent) for the first half of 2025.

The Company's Canadian drilling operations recorded 2,494 operating days in the second quarter of 2025, compared to 2,451 operating days for the second quarter of 2024, an increase of two percent. For the six months ended June 30, 2025, the Company recorded 6,497 operating days compared to 6,203 days for the six months ended June 30, 2024, an increase of five percent. Canadian well servicing hours remained flat at 11,987 operating hours in the second quarter of 2025 compared to 12,027 operating hours in the corresponding period of 2024. For the six months ended June 30, 2025, Canadian well servicing hours increased by two percent totaling 24,324 compared to 23,953 in the corresponding period of 2024.

The financial results for the Company's Canadian operations for the first half of 2025 were higher as a result of increased operating activity and revenue rates. Our Canadian operations continue to see growth following the completion of the Trans Mountain Pipeline expansion in May 2024.

During the first half of 2025, the Company transferred five under-utilized Canadian drilling rigs into its reserve fleet and transferred one marketed rig to its United States operations.

UNITED STATES OILFIELD SERVICES

The Company's United States operations recorded revenue of $197.2 million in the second quarter of 2025, a decrease of five percent from the $208.6 million recorded in the corresponding period of the prior year. During the six months ended June 30, 2025, revenue of $403.0 million was recorded, a decrease of 3 percent from the $417.0 million recorded in the corresponding period of the prior year.

The Company's United States operations accounted for 53 percent of the Company's revenue in the second quarter of 2025 (2024 - 53 percent) and 50 percent of the Company's revenue in the first half of 2025 (2024 - 51 percent).

Drilling rig operating days increased by one percent to 2,943 operating days in the second quarter of 2025 from 2,912 operating days in the second quarter of 2024 and decreased by five percent to 5,715 operating days in the first half of 2025 from 6,046 operating days in the first half of 2024. United States well servicing recorded 25,747 operating hours in the second quarter of 2025 which was a 27 percent decrease from 35,312 operating hours recorded in the second quarter of 2024. For the first half of 2025, well servicing activity decreased by 19 percent to 49,929 operating hours from 61,563 operating hours in the first half of 2024.

Operating and financial results for the Company's United States operations were impacted by the uncertainty over the global economy, the volatility in the crude oil and natural gas commodity pricing, customer capital discipline and one time expenses related to the reactivation and deactivation of drilling rigs. Offsetting the decline is the four percent positive USD translation difference.

During the first half of 2025, the Company transferred seven under-utilized United States drilling rigs into its reserve fleet and transferred one marketed rig from its Canadian operations to the United States.

INTERNATIONAL OILFIELD SERVICES

The Company's international operations recorded revenue of $74.4 million in the second quarter of 2025, a 17 percent decrease from the $89.8 million recorded in the corresponding period of the prior year. International revenues for the six months ended June 30, 2025, decreased 12 percent to $153.1 million from $174.2 million recorded for the six months ended June 30, 2024.

The Company's international operations contributed 20 percent of the total revenue in the second quarter of 2025 (2024 - 23 percent) and 19 percent of the Company's revenue in the second quarter of 2025 (2024 - 21 percent).

International operating days for the three months ended June 30, 2025, totaled 1,081 operating days, a decrease of 14 percent from 1,255 operating days in the same period of 2024. For the six months ended June 30, 2025, international operating days totaled 2,230 operating days compared to 2,574 operating days for the six months ended June 30, 2024, a decrease of 13 percent.

Operating and financial results from international operations declined as a result of rigs coming off contract. Offsetting the decline is the four percent positive USD translation difference.

During the first half of 2025, the Company transferred four under-utilized international drilling rigs into its reserve fleet.

DEPRECIATION

Depreciation expense totaled $82.8 million for the second quarter of 2025 compared with $82.5 million for the second quarter of 2024, fairly consistent with the comparative period. Depreciation expense for the first six months of 2025 decreased by four percent, to $164.7 million compared with $170.8 million for the same period of 2024. The decrease in depreciation is due to certain operating assets having become fully depreciated in which case no further depreciation expense will be incurred on such assets. Offsetting the decrease is the negative four percent translation effect on converting depreciation on USD denominated assets.

GENERAL AND ADMINISTRATIVE

General and administrative expense decreased 17 percent to $12.8 million (3.4 percent of revenue) for the second quarter of 2025 compared to $15.5 million (4.0 percent of revenue) for the second quarter of 2024. For the six months ended June 30, 2025, general and administrative expense totaled $27.9 million (3.4 percent of revenue) compared to $30.6 million (3.7 percent of revenue) for the six months ended June 30, 2024. General and administrative expenses decreased due to non-recurring expenses incurred in the prior year. Offsetting the decrease is the annual wage increases and the negative four percent translation effect of converting USD denominated expenses.

FOREIGN EXCHANGE AND OTHER

Included in this amount is the impact of foreign currency fluctuations in the Company's subsidiaries that have functional currencies other than the Canadian dollar. In addition, during the three and six months ended June 30, 2025, the Company received $0.8 million and $2.6 million in premiums from foreign exchange financial instruments offset by settlement costs of $6.9 million.

INTEREST EXPENSE

Interest expense was incurred on the Company's Credit and Term Facilities, Convertible Debentures (defined below), capital lease and other obligations.

Interest expense decreased by 25 percent for the first half of 2025 compared to the same period of 2024, as a result of lower debt levels and effective interest rates. The Company remains committed to disciplined capital allocation and debt repayment. Offsetting the decrease is the negative four percent translation effect on converting USD denominated interest expense.

INCOME TAXES (RECOVERY)

FUNDS FLOW FROM OPERATIONS AND WORKING CAPITAL

During the three months ended June 30, 2025, the Company generated funds flow from operations of $72.5 million ($0.39 per common share) compared to funds flow from operations of $98.3 million ($0.53 per common share) for the three months ended June 30, 2024, a decrease of 26 percent. For the six months ended June 30, 2025, the Company generated funds flow from operations of $169.1 million ($0.92 per common share), a decrease of 18 percent from $206.7 million ($1.12 per common share) for the six months ended June 30, 2024. The decrease in funds flow from operations for the six months ended June 30, 2025, compared to the same period of 2024, is largely due to the decrease in operating activity and cost escalation year over year. Offsetting the decrease is the positive four percent translation effect on converting USD denominated earnings.

At June 30, 2025, the Company's working capital deficit was $96.0 million, compared to a working capital deficit of $100.9 million at December 31, 2024. The improvement in working capital deficit is the result of utilizing funds flow from operations to reduce the Company's accounts payable and accrued liabilities as well as a reduction in the current portion of long-term debt.

The Company's existing bank facility provides for total borrowings of $750.0 million, of which $5.9 million was undrawn and available as at June 30, 2025 (December 31, 2024: $3.8 million).

INVESTING ACTIVITIES

Net purchases of property and equipment for the second quarter of 2025 totaled $49.2 million (2024 - $40.3 million). Net purchases of property and equipment during the first six months of 2025 totaled $86.0 million (2024 - $91.8 million). The purchase of property and equipment for the first six months of 2025 consists of $16.2 million in upgrade capital and $73.0 million in maintenance capital.

FINANCING ACTIVITIES

As at June 30, 2025, the amount of available borrowings under the Credit Facility was $5.9 million.

On October 13, 2023, the Company amended and restated its existing credit agreement with its syndicate of lenders, which provides a revolving Credit Facility and a three-year $369.0 million Term Facility. The amendments include an extension to the maturity date of the now $750.0 million Credit Facility to the earlier of (i) the date that is six months prior to the earliest maturity of any future Senior Notes, and (ii) October 13, 2026. The Credit Facility includes a reduction of the facility by $25.0 million at the end of the third quarter of 2025 and a further reduction of $25.0 million by the end of the fourth quarter of 2025. The final size of the Credit Facility will then be $700.0 million.

The Term Facility requires repayments of at least $27.7 million each quarter beginning in the first quarter of 2024 to the fourth quarter 2025; and then repayments of at least $36.9 million each quarter from the first quarter 2026 to the fourth quarter 2026.

The amended and restated Credit Facility provides the Company with continued access to revolver capacity in a dynamic industry environment.

On June 26, 2024, the Company amended and restated its existing credit agreement with its syndicate of lenders to include a US $50.0 million secured Letter of Credit Facility and various updates regarding the replacement of the Canadian Dollar Offered Rate ("CDOR") with the Canadian Overnight Repo Rate Average ("CORRA"). Furthermore, the Company finalized an additional US $25.0 million unsecured Letter of Credit Facility in the third quarter of 2024. As at June 30, 2025, the amount available was US $21.2 million on the Letter of Credit Facility.

On December 31, 2024, the Company issued a non-brokered private placement of unsecured, subordinated convertible debentures ("Convertible Debentures") for aggregate gross proceeds of $25.0 million. The Convertible Debentures bear interest from the date of closing at 7.5% per annum, payable semi-annually in arrears, on April 1 and October 1 each year. The Convertible Debentures will mature on January 31, 2029, and have a conversion price of $3.50 per common share.

If, on and after March 31, 2028, the closing price of the Company's common shares on the Toronto Stock Exchange exceeds 125% of the Conversion Price for at least 30 consecutive trading days, the Convertible Debentures may be redeemed by the Company for cash on a pro rata basis, in whole or in part from time to time, on not more than 90 days and not less than 60 days prior notice, at a redemption price equal to the outstanding principal amount of the Convertible Debentures plus accrued and unpaid interest thereon (if any), up to, but excluding, the date of redemption.

The liability component of the Convertible Debentures was recognized initially at fair value and revalued quarterly using a similar liability that does not have an equity conversion option, which was calculated based on an estimated market interest rate of 7.6%.

There was no material difference between the principal amount of the Convertible Debentures and the fair value of the liability component.

The Convertible Debentures include $20.8 million issued to management and directors of the Company.

The current capital structure of the Company consisting of the Credit and Term Facility and the Convertible Debentures, allows the Company to utilize funds flow generated to reduce debt in the near term with greater flexibility than a more non-callable weighted capital structure.

Covenants

The following is a list of the Company's currently applicable covenants pursuant to the Credit Facility and the associated calculations as at June 30, 2025:

As at June 30, 2025, the Company was in compliance with all covenants related to the Credit Facility.

The Credit Facility

The amended and restated credit agreement, a copy of which is available on SEDAR+, provides the Company with its Credit Facility and includes requirements that the Company comply with certain covenants including a Consolidated Net Debt to Consolidated EBITDA ratio, a Consolidated EBITDA to Consolidated Interest Expense ratio and a Consolidated Net Senior Debt to Consolidated EBITDA ratio.

OUTLOOK

Industry Overview  

The outlook for oilfield services continues to be relatively constructive despite a complex backdrop. Global oil demand continues to remain steady in 2025; however, the market is currently well supplied keeping a ceiling on global crude oil prices. In the second quarter of 2025, OPEC+ announced further easing of production cuts, adding additional supply to the market. Furthermore, new hostilities between Israel and Iran, while currently abated, led to crude oil commodity price volatility during the second quarter. The benchmark price of West Texas Intermediate ("WTI") crude prices increased from an average of $62/bbl in May 2025 to currently average $68/bbl in July 2025, reflecting hostilities in the Middle East and oil supply risk. The United States renewed trade policy changes, economic growth concerns, and OPEC+ production changes continue to add uncertainty to the oil and natural gas market and commodity prices.

Oil producers have shown capital discipline keeping drilling programs steady in the Company's United States operating region, while Canadian activity continues to show strength as a result of the completion of the Trans Mountain Pipeline expansion in May of 2024. The pending activation of the Coastal GasLink Pipeline and several liquefied natural gas ("LNG") projects, including LNG Canada, are expected to drive longer-term growth in Canada.

In the present environment, the Company remains committed to disciplined capital allocation, driving free cash flow generation, and debt repayment. The Company has targeted, from the period beginning 2023 to the end of 2025, debt reduction of approximately $600.0 million. If industry conditions change, these targets may be increased or decreased.

The Company has budgeted maintenance capital expenditures for 2025 of approximately $154.0 million and selective upgrade capital of approximately $30.5 million, of which $19.0 million is customer funded. The increase in capital expenditures in 2025 is due to a recently awarded five year contract for two rigs in the Company's Oman operating region as well as a rig being relocated from Canada to the United States. The Company continues to consider rig relocation or upgrade projects in response to customer demand and under appropriate contract terms, which may impact capital expenditures.

Canadian Activity   

Canadian activity, representing 31 percent of total revenue in the first half of 2025, declined in the second quarter of 2025 due to seasonal spring break-up. Canadian activity is expected to improve in the third quarter of 2025 due to positive market conditions. However, potential future trade tariffs imposed between Canada and the United States, including tariffs on crude oil, may impact Canadian activity over the near term. 

As of August 7, 2025, of our 88 marketed Canadian drilling rigs, approximately 56 percent were engaged under term contracts of various durations. Approximately 57 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

United States Activity

United States activity, representing 50 percent of total revenue in the first half of 2025, improved in the second quarter with rig additions in the Company's California and Rockies operating regions. In addition, during the second quarter, the Company moved one rig from Canada down to the United States on a long-term contract in the Rockies region. United States activity is expected to remain steady or modestly improve in the second half of 2025 due to potential rig additions in the Company's California region.

As of August 7, 2025, of our 71 marketed United States drilling rigs, approximately 56 percent were engaged under term contracts of various durations. Approximately eight percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination. 

International Activity   

International activity, representing 19 percent of total revenue in the first half of 2025, declined in the second quarter due to rig declines in Venezuela and Bahrain. However, international operations are expected to remain steady and improve exiting the year due to a two-rig award in Oman.

Activity in Oman remained steady in the second quarter with three rigs. In addition, the Company was recently awarded a two-rig five-year contract with a major international producer. The two rigs are currently in-country and both are expected to begin operations by the first half of 2026. Operations in Kuwait remained steady in the second quarter with two rigs. Activity in Bahrain decreased in the second quarter with one of the two rigs coming off contract. In the third quarter, the Company expects activity in the Middle East to be steady at three rigs in Oman, two rigs in Kuwait, and one rig in Bahrain.

Operations in Australia improved by an additional rig in the second quarter to four active rigs. The Company expects activity to improve by one rig to a total of five rigs in the third quarter.

Operations in Argentina remained steady at two rigs in the second quarter of 2025. However, exiting the second quarter, activity in Argentina temporarily declined by one rig. Argentina is expected to remain at one rig active in the third quarter of 2025 and increase back to two rigs in the fourth quarter of 2025. In the second quarter, operations in Venezuela declined by two rigs and operations suspended as a result of announced changes by the United States administration regarding sanction waivers. Operations in Venezuela are expected to remain suspended for the remainder of 2025.  

As of August 7, 2025, of our 27 marketed international drilling rigs, approximately 48 percent were engaged under term contracts of various durations. Approximately 85 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination. 

RISK AND UNCERTAINTIES

The Company is subject to numerous risks and uncertainties. A discussion of certain risks faced by the Company may be found under the "Risk Factors" section of the Company's Annual Information Form ("AIF") and the "Risks and Uncertainties" section of the Company's Management's Discussion &  Analysis ("MD&A") for the year ended December 31, 2024, which are available under the Company's SEDAR+ profile at www.sedarplus.com.

The Company's risk factors and management of those risks have not changed substantially from those as disclosed in the AIF. Additional risks and uncertainties not presently known by the Company, or that the Company does not currently anticipate or deem material, may also impair the Company's future business operations or financial condition. If any such potential events described in the Company's AIF or otherwise actually occur, or described events intensify, overall business, operating results and the financial condition of the Company could be materially adversely affected.

CONFERENCE CALL

A conference call will be held to discuss the Company's second quarter 2025 results at 10:00 a.m. MDT (12:00 p.m. EDT) on Friday, August 8, 2025. The conference call number is 1-888-510-2154 and the conference call ID is: 29695. A taped recording of the conference call will be available until August 15, 2025, by dialing 1-888-660-6345 and entering the reservation number 29695#. A live broadcast may be accessed through the Company's website at www.ensignenergy.com/presentations.

Ensign Energy Services Inc. is an international oilfield services contractor and is listed on the Toronto Stock Exchange under the trading symbol ESI.

Ensign Energy Services Inc.
Consolidated Statements of Financial Position

Ensign Energy Services Inc.
Consolidated Statements of Loss

Ensign Energy Services Inc.
Consolidated Statements of Cash Flows

Ensign Energy Services Inc.

Non-GAAP Measures

Adjusted EBITDA, Adjusted EBITDA per common share, working capital and Consolidated EBITDA. These non-GAAP measures do not have any standardized meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this news release should not be considered as an alternative to, or more meaningful than, the IFRS measure from which they are derived or to which they are compared.

Adjusted EBITDA is used by management and investors to analyze the Company's profitability based on the Company's principal business activities prior to how these activities are financed, how assets are depreciated, amortized and how the results are taxed in various jurisdictions. Additionally, in order to focus on the core business alone, amounts are removed related to foreign exchange, share-based compensation expense, the sale of assets and fair value adjustments on financial assets and liabilities, as the Company does not deem these to relate to its core drilling and well services business. Adjusted EBITDA is not intended to represent income (loss) as calculated in accordance with IFRS.

Consolidated EBITDA 

Consolidated EBITDA, as defined in the Company's Credit Facility agreement, is used in determining the Company's compliance with its covenants. The Consolidated EBITDA is substantially similar to Adjusted EBITDA. Consolidated EBITDA is calculated on a rolling twelve-month basis.

Working Capital

Working capital is defined as current assets less current liabilities as reported on the consolidated statements of financial position.

ADVISORY REGARDING FORWARD-LOOKING STATEMENTS

Certain statements herein constitute forward-looking statements or information (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements generally can be identified by the words "believe", "anticipate", "expect", "plan", "estimate", "target", "continue", "could", "intend", "may", "potential", "predict", "should", "will", "objective", "project", "forecast", "goal", "guidance", "outlook", "effort", "seeks", "schedule", "contemplates" or other expressions of a similar nature suggesting future outcome or statements regarding an outlook.

Disclosure related to expected future commodity pricing or trends, revenue rates, equipment utilization or operating activity levels, operating costs, capital expenditures and other prospective guidance provided herein including, but not limited to, information provided in the "Funds Flow from Operations and Working Capital" section regarding the Company's expectation that funds generated by operations combined with current and future credit facilities will support current operating and capital requirements, information provided in the "Financial Instruments" section regarding Venezuela and information provided in the "Outlook" section regarding the general outlook for 2025 and beyond, are examples of forward-looking statements.

Forward-looking statements are not representations or guarantees of future performance and are subject to certain risks and unforeseen results. The reader should not place undue reliance on forward-looking statements as there can be no assurance that the plans, initiatives, projections, anticipations or expectations upon which they are based will occur. The forward-looking statements are based on current assumptions, expectations, estimates and projections about the Company and the industries and environments in which the Company operates, which speak only as of the date such statements were made or as of the date of the report or document in which they are contained. These assumptions include, among other things: the fluctuation in commodity prices which may pressure customers to modify their capital programs; the status of current negotiations with the Company's customers and vendors; customer focus on safety performance; royalty regimes and effects of regulation by government agencies; existing term contracts that may not be renewed or are terminated prematurely; the Company's ability to provide services on a timely basis and successfully bid on new contracts; successful integration of acquisitions; future operating costs; the general stability of the economic and political environments in the jurisdictions where we operate; tariffs, economic sanctions, inflation, interest rate and exchange rate expectations; pandemics; and impacts of geopolitical events such as the hostilities in the Middle East and between Ukraine and the Russian Federation, and the global community responses thereto; that the Company will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that the Company's conduct and results of operations will be consistent with its expectations; and other matters.

The forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Such risk factors include, among others: general economic and business conditions which will, among other things, impact demand for and market prices of the Company's services and the ability of the Company's customers to pay accounts receivable balances; volatility of and assumptions regarding commodity prices; foreign exchange exposure; fluctuations in currency and interest rates; inflation; economic conditions in the countries and regions in which the Company conducts business; political uncertainty and civil unrest; the Company's ability to implement its business strategy; impact of competition and industry conditions; risks associated with long-term contracts; force majeure events; artificial intelligence development and implementation; cyber-attacks; determinations the by Organization of Petroleum Exporting Countries ("OPEC") and other countries (OPEC and various other countries are referred to as "OPEC+") regarding production levels; loss of key customers; litigation risks, including the Company's defence of lawsuits; risks associated with contingent liabilities and potential unknown liabilities; availability and cost of labour and other equipment, supplies and services; business interruption and casualty losses; the Company's ability to complete its capital programs; operating hazards and other difficulties inherent in the operation of the Company's oilfield services equipment; availability and cost of financing and insurance; access to credit facilities and debt capital markets; availability of sufficient cash flow to service and repay its debts; impairment of capital assets; the Company's ability to amend or comply with covenants under the credit facility and other debt instruments; actions by governmental authorities; impact of and changes to laws and regulations impacting the Company and the Company's customers, and the expenditures required to comply with them (including safety and environmental laws and regulations and the impact of climate change initiatives on capital and operating costs); safety performance; environmental contamination; shifting interest to alternative energy sources; environmental activism; the adequacy of the Company's provision for taxes; tax challenges; the impact of, and the Company's response to future pandemics; workforce and reliance on key management; technology; cybersecurity risks; seasonality and weather risks; risks associated with acquisitions and ability to successfully integrate acquisitions; risks associated with internal controls over financial reporting; the impact of the ongoing hostilities in the Middle East and between Ukraine and the Russian Federation and the global community responses thereto; the economic and tariff policies pursued by the new United States administration, including the impact of recent United States Government pronouncements regarding imposition of global tariffs and curtailment of our customer's license to operate in Venezuela, which have recently suspend our operations in the area, along with any retaliatory policies by other governments and other risks and uncertainties affecting the Company's business, revenues and expenses.

In addition, the Company's operations and levels of demand for its services have been, and at times in the future may be, affected by political risks and developments, such as tariffs, economic sanctions, expropriation, nationalization, or regime change, and by national, regional and local laws and regulations such as changes in taxes, royalties and other amounts payable to governments or governmental agencies, environmental protection regulations, pandemics, pandemic mitigation strategies and the impact thereof upon the Company, its customers and its business, ongoing hostilities in the Middle East and between Ukraine and the Russian Federation, including recent developments in discussions regarding cessation of hostilities in Ukraine and pursuit of a resolution of the dispute, related potential future impact on the supply of oil and natural gas to Europe by Russia and the impact of global community responses to the ongoing conflicts, including the impact of shipping through the Red Sea and governmental energy policies, laws, rules or regulations that limit, restrict or impede exploration, development, production, transportation or consumption of hydrocarbons and/or incentivize development, production, transportation or consumption of alternative fuel or energy sources.

Should one or more of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results from operations may vary in material respects from those expressed or implied by the forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors, and the Company's course of action would depend upon its assessment of the future considering all information then available. Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements.

Readers are cautioned that the lists of important factors contained herein are not exhaustive. For additional information on these and other factors that could affect the Company's business, operations or financial condition, refer to the "Risk Factors" section of the Company's Annual Information Form for the year ended December 31, 2024 available on SEDAR+ at www.sedarplus.ca.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE Ensign Energy Services Inc.