Ensign Energy Services Q2 2026 Earnings Report

Ensign Energy Services EPS Results

• Actual EPS: -C$0.07
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Ensign Energy Services Revenue Results

• Actual Revenue: $397.33 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Ensign Energy Services Announcement Details

• Quarter: Q2 2026
• Date: 8/7/2026
• Time: Before Market Opens
• Conference Call Date: Friday, August 7, 2026
• Conference Call Time: 12:00PM ET

Ensign is a global leader in oilfield services, headquartered out of Calgary, Alberta, operating in Canada, the United States and internationally. We are one of the world's top land-based drilling and well servicing contractors serving crude oil, natural gas, and geothermal operators. Our premium services include contract drilling, directional drilling, underbalanced and managed pressure drilling, rental equipment and well servicing. Please visit our website at www.ensignenergy.com.

Ensign Energy Services Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second-quarter revenue rose 7% year over year to CAD 397.3 million, while adjusted EBITDA increased 6% to CAD 85.8 million, supported by higher operating activity across Canada, the U.S., and international markets.
• Positive Sentiment: Ensign expects the Citadel Drilling acquisition to close shortly, adding six fully utilized 2,000-horsepower rigs to its Permian fleet and increasing its regional market share to approximately 11%.
• Positive Sentiment: Demand for high-specification rigs is strengthening, with Ensign planning to add rigs in the U.S. and Canada, raise Canadian day rates by roughly CAD 1,000 per day per quarter, and target 5%–10% rate increases on contract rollovers.
• Neutral Sentiment: The company reported CAD 30 million of debt repayment in the quarter and reduced interest expense 13%, but revised its 2026 debt-reduction target from CAD 125 million to a net CAD 60 million to accommodate the Citadel acquisition and additional capital spending.
• Negative Sentiment: International operations face geopolitical disruption, including shutdowns of two Kuwait and two Bahrain rigs amid Middle East conflict, while producers remain cautious on capital spending and exposed to global economic and tariff uncertainty.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to Ensign Energy Services Inc.'s second quarter 2026 results conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, August 7, 2026. I would now like to turn the conference over to Trevor Russell, CFO. Please go ahead.

[Trevor Russell, CFO at Ensign Energy Services]

Thank you, John. Good morning and welcome to Ensign Energy Services' second quarter conference call and webcast. On our call today is Bob Geddes, President and COO, and myself, Trevor Russell, Chief Financial Officer. Today we will review Ensign's second quarter highlights and financial results, followed by our operational update and outlook. We will open the call for questions. Our discussion today may include forward-looking statements based on current expectations that involve several business risks and uncertainties. The factors that could result 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 defensive lawsuits, the ability of oil and gas companies to pay accounts receivable balances, or other unforeseen conditions that could impact the demand for services supplied by the company.

[Trevor Russell, CFO at Ensign Energy Services]

Additionally, our discussion today may refer to non-GAAP financial measures such as adjusted EBITDA. Please see our second quarter earnings release and SEDAR+ filings for information on forward-looking statements and the company's use of non-GAAP financial measures. With that, I'll pass it on to Bob.

[Bob Geddes, President and COO at Ensign Energy Services]

Thanks, Trevor. We've had a busy quarter reactivating and upgrading rigs for contracts, which caused some one-time expenses in the quarter. With respect to upgrades, in most cases, the operator has funded those upgrades in various areas of the world. We also announced the Citadel Drilling acquisition, which is expected to close next week and which will add six active 2,000 horsepower rigs to our Permian fleet. We clipped another CAD 30 million of debt in the quarter, and we continued to reduce our interest expense by 13%. We achieved this year-over-year improvement both on the top line and the bottom line with record operational safety results. I'll turn it back to Trevor for a deeper dive on our second quarter financial results. Trevor?

[Trevor Russell, CFO at Ensign Energy Services]

Thanks, Bob. The oilfield services sector remains a generally constructive outlook as activity has improved year-over-year. With the political and security situation in the Middle East, the disruption of shipping within the Strait of Hormuz, the continuing conflict between the Russian Federation and Ukraine, and the actions of the United States. in Venezuela, the expectation is these factors and their continued development will have a direct effect on the industry. To date, oil and natural gas producers continue to moderate their capital spend, remain committed to cash flow generation, and maintaining current production levels. Furthermore, the impact of uncertainty around the global economy and tariff policies adopted by the United States administration and the implications from such policies continue to impact operating activity. Operating days were up in the second quarter of 2026 in comparison to the second quarter of 2025.

[Trevor Russell, CFO at Ensign Energy Services]

The company saw a 7% increase in Canada to 2,667, a 5% increase in the United States to 3,088, and a 15% increase internationally to 1,246 operating days respectively. For the six months ended June 30th, 2026, overall operating days increased, with the United States recording a 10% increase and international recording an 8% increase in operating days. Offsetting these increases was a 6% decrease in Canadian operating days when compared to the same period in 2025. The company generated revenue of CAD 397.3 million in the second quarter of 2026, a 7% increase compared to the revenue of CAD 372.4 million generated in the second quarter of the prior year. For the six months ended June 30th, 2026, the company generated revenue of CAD 815.4 million, a 1% increase compared to the revenue of CAD 808.9 million generated in the same period in 2025.

[Trevor Russell, CFO at Ensign Energy Services]

Adjusted EBITDA for the second quarter of 2026 was CAD 85.8 million, 6% higher than the Adjusted EBITDA of CAD 81.4 million in the second quarter of 2025. Adjusted EBITDA for the six months ended June 30th, 2026 totaled CAD 180.7 million, 2% lower than Adjusted EBITDA of CAD 183.7 million generated in the same period in 2025. The 2026 increase in Adjusted EBITDA was primarily due to higher operating activity. Offsetting the increase is a 2%- foreign exchange translation of converting United States dollar denominated revenue. Depreciation expense in the first six months of 2026 was CAD 172.7 million, an increase of 5% compared to CAD 164.7 million for the first six months of 2025.

[Trevor Russell, CFO at Ensign Energy Services]

General and administration expense in the second quarter of 2026 was 8% higher than In the second quarter of 2025, general and administration expenses increased primarily as a result of annual wage increases to various employees.

[Trevor Russell, CFO at Ensign Energy Services]

Offsetting the increase is a 2% translation effect of converting USD-denominated expenses. Interest expense decreased by 13% to CAD 16.1 million from CAD 18.6 million. The decrease is the result of lower debt levels, effective interest rates, and the positive 2% translation effect of converting U.S.-denominated interest expense. During the second quarter of 2026, CAD 30 million of debt was repaid and a total of CAD 37.37 million was paid during the first six months of 2026. The company has revised its previously announced debt reduction target of CAD 125 million to a net CAD 60 million. The revision is a result of the previously announced Citadel Drilling Ltd. acquisition and reinvesting into the company through capital expenditure. If industry conditions change, these targets may be increased or decreased.

[Trevor Russell, CFO at Ensign Energy Services]

Net purchases of property and equipment for the second quarter of 2026 totaled CAD 58.1 million, consisting of CAD 25.4 million in upgrade capital and CAD 41.4 million in maintenance capital, offset by disposition proceeds of CAD 8.7 million. Our 2026 maintenance capital expenditure is set at approximately CAD 162 million and selective upgrade capital of approximately CAD 95.8 million, of which CAD 68.6 million is customer funded. 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. On that note, I will turn it back to Bob.

[Bob Geddes, President and COO at Ensign Energy Services]

Thanks, Trevor. Let's circle the globe now with a summary of our second quarter and some insight into what we are seeing develop under this volatile, yet still strong commodity pricing environment, starting with U.S. drilling, which is our largest business unit. Today, we have 41 rigs under contract in the U.S. and see that growing a rig a month to the end of the year. This is, of course, net of the Citadel fleet, which will add six rigs once closed. We are seeing a more active bid book over the last few months, obviously the result of generally higher commodity prices, and we are seeing more private equity and new names in the game. At these prices, a lot more shoulder plays become more compelling.

[Bob Geddes, President and COO at Ensign Energy Services]

Starting on the West Coast and moving east, we're seeing our California drilling asset base now with five high-spec ADR drill rigs under contract, with expectations of adding a couple more between now and year-end. We have eight rigs active in our Rockies division, same as last quarter, and we have 27 active today in our U.S. Southern division. The Permian continues to be our most active and prolific area, with continued strong demand for our high-spec ADR rigs, with an expectation that we should see four to five more rigs go to work between now and the year-end. Almost half our U.S. rigs are on a performance-based contract, which elevates margin opportunities. In Canada, we operate the second largest fleet, which consists of a wide range of high-spec ADR drilling rigs, from singles to triples.

[Bob Geddes, President and COO at Ensign Energy Services]

In the first quarter, we mentioned that we had five of our high-spec ADR rigs come down early in the quarter for their five-year recertifications over breakup. Those rigs are all out now, and we have 51 rigs active today in the Western Canadian Basin, up 17% year-over-year. Last year, we had 30 rigs active over breakup, building up to 43 into July. This year, we ran roughly 45 rigs over breakup, jumping to 51 today, as I just mentioned. We expect to add a few rigs between now and the end of the year, and we are already seeing operators wanting to tie up our high-spec ADR rigs into the spring of 2027 and beyond.

[Bob Geddes, President and COO at Ensign Energy Services]

We're not wanting to get our book too long in this upward demand construct. We are starting to raise rates CAD 1,000 per day per quarter as we move into the back half of the year and into next. On the international front, we now have 27 rigs in our international fleet, with the addition of another high-spec ADR 1500 into Venezuela that came from our U.S. Southern fleet and the commissioning of our fifth ADR into Oman. The Middle East conflict has put a damper on continuing operations in the area, which has caused the shutdown of our two Kuwait rigs and our two Bahrain rigs. Oman remains generally unaffected, with all five of the five running there. We have bids going in for the two 3,000-horsepower Kuwait rigs over the next few months. That work wouldn't start until mid-2027.

[Bob Geddes, President and COO at Ensign Energy Services]

We also expect one of the two Bahrain rigs to be recontracted in the immediate area before year-end. In Australia, we have four rigs operating today, with a fifth rig starting up in the next 30 days. Argentina is steady with both our high-spec ADR 2000 under contract well into 2027. Venezuela. Let's talk about Venezuela. Everything changed back on January the 6th. Ensign had the only two-- Excuse me. Ensign had the only two rigs running in the country. We now have a third just landed in Venezuela. We also signed the contract to add a fourth into Venezuela, which should hit the ground first part of 2027. These are all on three-year contracts. Infrastructure buildup will determine how fast Venezuela is able to add rigs efficiently. In any case, our strategic positioning in Venezuela will provide great opportunities for Ensign moving forward.

[Bob Geddes, President and COO at Ensign Energy Services]

On the well servicing side, we operate a fleet of 92 well service rigs in North America, with roughly 50% utilization. We run 20 well service rigs daily in Canada, our highest level in years. We run over 75% of our U.S. well servicing rigs in our U.S. well servicing business unit, primarily focused in the Rockies and California regions. On the Ensign Drilling Rig Automation, our Edge drilling rig control system platform is now on 65% of our rigs globally and growing. We continue to see the opportunity to grow this business top line and bottom line by 15% year-over-year well into the future. Our other business segments, directional drilling, trucking, rentals, and managed pressure drilling, continue to deliver steady revenue and margin with very little or no capital required. Back to the operator for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Keith Mackey from RBC Capital Markets. Please go ahead.

[Keith Mackey, Analyst at RBC Capital Markets]

Hey, good morning.

[Bob Geddes, President and COO at Ensign Energy Services]

Hey, Keith.

[Keith Mackey, Analyst at RBC Capital Markets]

Maybe if we could just start out with the Citadel acquisition required six rigs. Bob, can you talk about the financial contribution from that acquisition as well as maybe the spec of the rigs themselves and the nature of the contracts they're on a little bit more, and any capital required for upcoming on those rigs?

[Bob Geddes, President and COO at Ensign Energy Services]

Yeah, I can't talk too much about that yet, Keith. We haven't closed yet. Other than what is public documents. They're 2,000 horsepower rigs, six of them. That's kind of all we can talk about at this point in time. They're fully utilized at this point, though.

[Keith Mackey, Analyst at RBC Capital Markets]

Okay, got it. I know, recognizing it hasn't closed yet, can you just talk about, maybe from your standpoint, what that acquisition brings to your rig fleet? You obviously gain a little bit more Permian scale. Is that it, or is there some other factors we should be thinking about as far as bringing that larger footprint into Ensign?

[Bob Geddes, President and COO at Ensign Energy Services]

Yeah, no, you nailed it. They have a very nice rig platform design for the Permian. It increases our presence in the Permian. It brings us up to about 11% of the Permian. We're running about 7% in the Permian right now, 7%-8%, somewhere there. It brings our Permian presence up to 11%. We become more important in the Permian. You can draw some association into what we make in the U.S. in the Permian and probably extract that over to the acquisition and pull some numbers out. We just can't talk about some numbers until we've closed.

[Keith Mackey, Analyst at RBC Capital Markets]

Yeah, fair enough. You mentioned pricing, raising that CAD 1,000 a day per quarter in the U.S. Assuming that's Canadian dollars. Correct me if I'm wrong. Can we just talk a little bit more about what you're seeing as far as pricing going forward? Are you seeing incremental demand from public companies yet, or has it primarily been privates?

[Bob Geddes, President and COO at Ensign Energy Services]

Certainly. The public's shown at least some small demand increase. What's happening, I think, is you're seeing the drilling rig efficiency diminish down to single-digit efficiency gains these days, while the decline rates of certain reserves are accelerating at a faster pace than they may have thought. Hanging onto production or slightly increasing production seems to be requiring a rig or two with most of the pubcos. The private cos are new. That's net incremental new. We're seeing a lot more of those show up. We're doing credit checks on them. That's kind of our indication. We're getting a lot more requests from companies that we haven't heard before, and they've raised some money and they're wanting a rig to go drill a six-month or one-year program. The demand is increasing, for sure. The supply is also tightening up.

[Bob Geddes, President and COO at Ensign Energy Services]

Everyone wants the high-spec rig with at least 7,500 PSI system walking, and they want the high-torque top drive and three pumps, while we're also pushing some rigs over into Venezuela. What I'll call our lower-spec high-spec fleet is pushing over there. The Citadel fleet dovetails nicely into what we see for Ensign, an expanding market share place.

[Keith Mackey, Analyst at RBC Capital Markets]

Copy that. I appreciate the color. Thanks a lot.

[Bob Geddes, President and COO at Ensign Energy Services]

Thanks, Keith.

[Operator]

As a reminder, if you have any questions or follow-up, please press star one. Our next question comes from the line of Tim Monachello from ATB Cormark Capital Markets. Please go ahead.

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

Thanks for taking my questions. Just on the U.S., I think in your prepared remarks, I was trying to read as fast as I could, but maybe I missed it. Did you say you're running 41 rigs in the U.S. today?

[Bob Geddes, President and COO at Ensign Energy Services]

Correct.

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

And-

[Bob Geddes, President and COO at Ensign Energy Services]

Correct

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

That's not including the Citadel rigs, right?

[Bob Geddes, President and COO at Ensign Energy Services]

Correct.

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

Including the Citadel rigs, you get to, I guess, 47, you're expecting to add four rigs essentially through the end of the year?

[Bob Geddes, President and COO at Ensign Energy Services]

Correct.

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

Got it. Okay.

[Bob Geddes, President and COO at Ensign Energy Services]

Yeah.

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

Secondly, can you talk a little bit about the pricing dynamics in Canada?

[Bob Geddes, President and COO at Ensign Energy Services]

Yeah. It all depends on the rig type. What we're finding is, if we start with the bottom end, the doubles, which encompasses some of the lower-end high-spec doubles. They're in the mid-teens. The high-spec singles are in the low 20s, pushing to the mid-20s. We're sold out of our high-spec singles at this point in time. Obviously, any new bids that we're getting, we're pushing pricing up with subject to availability. On the high-spec triples, we're in the low 30s all in, and we're running about 75% utilization in that category. We're seeing more bids now starting to firm up for the winter. In most cases, most clients have picked their dancing partners for the winter already, but we always see a few. We've got one client who's wanting to pull some of 2027 capital into fourth quarter 2026. Those are notional anecdotes.

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

Got it. It sounds like pricing in Canada is flatter than it is in the U.S. Is that a fair remark?

[Bob Geddes, President and COO at Ensign Energy Services]

Yeah, I'd say it's flatter in the U.S., which is a challenge. In the U.S., there seems to be a little more discipline and understanding of the marketplace. That's where the notion of increasing rates of CAD 1,000 a quarter, we would contend is what we're trying to push for as well. It's a little bit of a tight dance, depending on the client, et cetera. Certainly new bids going out for unknown clients and also clients where we're repricing. Our costs have gone up a little bit as well, so we've got to pass that on. Of course, this is net of any labor increases or anything like that, which are covered by escalation clauses in the contract, Tim.

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

Got it. All right. Following the Citadel acquisition, looking at the balance sheet, where do you think you're going to exit 2027 now, in terms of your leverage profile?

[Bob Geddes, President and COO at Ensign Energy Services]

2027 or 2026?

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

Yeah. Sort of aspirational. I know we don't know what 2027 looks like yet, just in terms of, I guess, medium-term de-leveraging targets, how has the Citadel acquisition changed that dynamic-

[Bob Geddes, President and COO at Ensign Energy Services]

Yeah

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

to say it more broadly?

[Trevor Russell, CFO at Ensign Energy Services]

Our original debt reduction target for 2026 was CAD 125 million. We have reduced that down to CAD 60 million as a net number after the Citadel acquisition. We're kind of building that in to the debt numbers there. We're expecting liquidity to kind of end up in that low 90s or so by the end of the year of 2026, kind of get us back on track after the acquisition is completed.

[Tim Monachello, Analyst at ATB Cormark Capital Markets]

Okay. Got it. I appreciate that. That's all the questions I have.

[Bob Geddes, President and COO at Ensign Energy Services]

Thanks, Tim.

[Operator]

Once again, as a reminder, if you have any questions or follow-ups, please press star one. There are no further questions at this time. I will now turn the call over to Bob Geddes, President and COO. Please continue, sir.

[Bob Geddes, President and COO at Ensign Energy Services]

Thanks, John. Despite the pricing volatility, the macro energy construct still remains strong for the oilfield service business as we continue to see our forward guaranteed contract book expand by 25% and our long-term contract runway now out to CAD 1.4 billion of contracted revenue. The industry keeps on finding ways to deliver value by reducing well times, although we are seeing diminishing returns with only single-digit gains in drill times. When we have equipment performing at higher duty and delivering more work on a daily basis, that value has, for the last decade, been captured generally by the operators and helped keep industry competitive globally. Notwithstanding, as a result, contractors' daily costs have increased. With replacement equipment costs going up, it's time for contractors to capture the value creation generated over the last decade.

[Bob Geddes, President and COO at Ensign Energy Services]

With that, with tightening supply of high-spec rigs, we see rates moving roughly 5%-10% on contract rollovers as we move through into the future. This will help contractors monetize into the future the value we've created over the last decade. We'll see where oil pricing lands, it is certainly landing up from where it was. With very little excess rig equipment capacity and lead times on new rig equipment getting out there close to a year, the market construct looks very promising for Ensign and the industry in general. Chat in three months. Thank you for joining the call today.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Trevor Russell, CFO
• Bob Geddes, President and COO

Analysts

• Keith Mackey, Analyst at RBC Capital Markets
• Tim Monachello, Analyst at ATB Cormark Capital Markets