Precision Drilling Corporation (PD) Earnings Call Transcript & Summary

Good morning. My name is Steve Krablin, and I'm the Chairman of the Board of Directors of Precision Drilling. On behalf of myself and the Board, I welcome you to today's Annual and Special Meeting of Shareholders. In the unlikely event of a technical disruption, Mr. Kevin Neveu, our President and CEO and a Director, will Chair the meeting. In addition to Kevin, also attending today are the Chief Legal and Compliance Officer, Veronica Foley, and our slate of nominated directors: Michael Culbert; William Donovan; Brian Gibson; Susan MacKenzie; Kevin Meyers; David Williams; as well as Kevin Neveu; and myself. Today's meeting will be a virtual-only meeting. The virtual meeting will offer our shareholders the same opportunities to participate as normally provided at in-person meetings. In these uncertain and complex times, one of our primary roles is to continue to safely supply the energy the world needs to continue to thrive. The importance of that role has been highlighted in recent weeks, a period marked by worldwide energy shortages and near-term record prices and volatility in commodity prices. An already tight supply and demand situation was exacerbated by the ongoing disruptive legacy of pandemic and the war in Ukraine. On behalf of the Board, I want to offer my sincere thanks to our crews in the field for their hard work in allowing us to continue to provide our industry-leading high-performance, high-value services. The confidence I have in Precision's people extends full to its leadership. Management has steadily led the company through a period of volatility and change. I want to thank the management team for continuing to deliver on the corporation's strategic priorities year-over-year. All of Precision's people deserve credit for these achievements, especially given the disruption imposed by the pandemic. With that, I welcome all of our employees, shareholders and directors joining us virtually from all around the globe. The virtual format we are utilizing today will enable all shareholders to participate by submitting questions and voting in the meeting regardless of their location. After the formal business is concluded and the meeting is terminated, we will then have a Q&A session. We will try to answer as many questions as we can. And if your question does not get answered during the meeting, we will respond on e-mail after the meeting. Now let's proceed to the formal business of the meeting. I officially call the meeting to order. I will act as Chairman, and I appoint Veronica Foley to act as Secretary of the meeting. I also appoint [ Marina St-Denis and Shannon Anderson ] of Computershare to active scrutineers of the meeting. I have been advised that a quorum is present, and I declare that the meeting is regularly called and properly constituted for the transaction of business. The business of the meeting is described in our management information circular, dated March 30, 2022, which accompanied the notice of meeting. I will take the notice of meeting as read. I have proof of filing and proof of mailing of the notice of the meeting, instrument of proxy, financial statements, management information circular and accompanying documents that were sent to the holders of the corporation's common shares. Only registered shareholders who held shares in their name as of March 23, 2022, the record date of this meeting or their validly appointed proxy holders, are entitled to vote at this meeting. For the items of business at today's meeting, we will be conducting voting on all items at once online. If you are a registered shareholder or a proxy holder and have not already done so, you can vote now by clicking on the voting icon on your phone, computer or tablet. Registered shareholders or proxy holders can submit questions at any time online by clicking the question icon. Once discussion on all items of business has concluded, I will provide another additional time to enter your votes and then declare the voting closed on all resolutions. Once the poll is closed, the preliminary results will be announced, and the final results of the meeting will be released today and available on our website. I now declare the polls open on all resolutions. Again, if you have already submitted your vote prior to this meeting, there is nothing else for you to do in that regard. The first item of business is the receipt of the audited consolidated financial statements of the corporation for the fiscal year ended December 31, 2021, and the reading of the auditor's report. As copies have been widely available and have been delivered to every shareholder who requested such, we can dispense with reading them and accept them as presented. The next item of business is the election of the nominated directors. As no other nominations were properly submitted in compliance with the corporation's bylaws, I declare the nominations closed. As Chair, I propose an ordinary resolution to approve the following 8 nominated directors who are standing for reelection: Kevin Meyers, David Williams, William Donovan, Susan MacKenzie; Michael Culbert, Brian Gibson, Kevin Neveu and Steven Krablin, and that they be elected as directors until the next Annual Meeting of the shareholders of the corporation.

Mr. Chairman, my name is Deepa Patel, and I so move.

Thank you. Is there a second?

Mr. Chairman, my name is [ Kathleen McGahan ], and I second the motion.

Thank you. The next item of business is the appointment of auditors. As Chair, I propose the following: to approve an ordinary resolution that KPMG LLP be appointed auditor of the corporation until the next Annual General Meeting of Shareholders and that the directors be authorized to set KPMG's fees.

Mr. Chairman, my name is Deepa Patel and I so move.

Thank you. And a second?

Mr. Chairman, my name is [ Kathleen McGahan ], and I second the motion.

Thank you. The next item of business is to consider an advisory resolution, commonly known as Say-on-Pay, regarding the corporation's approach to executive compensation. As this is an advisory vote, the results will not be binding upon the Board. However, in consideration and considering our approach to executive compensation in the future, the Board will take into account the results of the vote, together with other feedback we receive. As Chair, I propose the following: on an advisory basis and not to diminish the role and responsibilities of the Board, that the shareholders accept the approach to executive compensation disclosed in Precision's management information circular delivered to shareholders in advance of the 2022 Annual and Special Meeting of Shareholders.

Mr. Chairman, my name is Deepa Patel, and I so move.

And a second?

Mr. Chairman, my name is [ Kathleen McGahan ] and I second the motion.

Thank you. The next item of business is to consider a resolution, the full text of which is set forth in the management information circular, of proving the reconfirmation and continuation of our shareholder rights plan. The primary objective of our shareholder rights plan is to ensure, to the extent possible, the equal treatment of all our shareholders in connection with any takeover bid for our shares, and in event of a hostile takeover bid, to provide our Board with sufficient time to evaluate the bid and to explore and develop alternatives. In order for our shareholder rights plan to remain in effect, a majority of our shareholders must vote as a group in favor of the resolution, approving the reconfirmation and continuation of the plan. If the continuation of the plan is approved, it will remain in effect until our Annual Meeting of Shareholders in 2025, unless otherwise terminated in accordance with its terms. As Chair, I propose a motion that the ordinary resolution authorizing and approving the reconfirmation and continuation of our shareholder rights plan as described in our management information circular be approved.

Mr. Chairman, my name is Deepa Patel and I so move.

Thank you. Second?

Mr. Chairman, my name is [ Kathleen McGahan ] and I second the motion.

Thank you. The next item of business is to consider a resolution, the full text of which is set forth in the management information circular, approving amendments to the Omnibus Equity Incentive Plan. This plan was originally approved by shareholders at our 2017 Annual Meeting. The Omnibus Plan covers all of our incentive plans for officers and employees and allows the Board to settle incentives and Precision shares or cash. The Board has approved several amendments to the Omnibus Plan as summarized in the management information circular, which are subject to shareholder approval in accordance with the Omnibus Plan and TSX policies. In addition, the full text of the Omnibus Plan as proposed to be amended is available on our company profile on SEDAR as of March 30, 2022. As Chair, I propose a motion that the ordinary resolution authorizing and approving the amended and restated Omnibus Plan -- Omnibus Incentive Plan be approved.

Mr. Chairman, my name is Deepa Patel and I so move.

And a second?

Mr. Chairman, my name is [ Kathleen McGahan ], and I second the motion.

Thank you. For those of you who have not voted on all of the items of business, please do so now as I will shortly close the poll. We will now pause for a moment to allow for any final voting. [Voting]

All right. The polls are now closed. I have been advised by the scrutineers that all of the binding resolutions for consideration at today's meeting have been carried by the requisite number of votes. As there is no additional business that may properly be brought before the meeting, this concludes the formal business. I hereby declare this meeting concluded. At this time, I'm pleased to introduce Kevin Neveu, President and Chief Executive Officer of Precision Drilling.

Thank you, Steve. Good morning, shareholders, employees and friends of Precision Drilling. My name is Kevin Neveu, and I'm the President and Chief Executive Officer for Precision Drilling. It is my honor to welcome you to Precision Drilling's 2022 Annual and Special Meeting. I will not be giving a presentation today, but I invite you to look to our website for our latest investor presentation, which details our competitive advantages, strategic priorities and shareholder commitments. I also point you to our first quarter earnings release and financial statements, which provide a detailed update on our first quarter financial results and our progress regarding our strategic priorities in 2022. I will reiterate that the elements underlying our business today are the best I've seen in my career. With our fleet of Super Series rigs and very high demand, we believe the outlook for our business is excellent with both rising activity and rapidly improving prices. We are committed to generating strong and sustainable returns for our investors by scaling Precision's evergreen environmental solutions, our Alpha digital technologies, maximizing our operating leverage to generate free cash flow and strengthening our balance sheet by reducing our debt levels while also returning capital to shareholders. And with that, I'll now be happy to answer any questions that have been submitted by the shareholders.

Thank you, Kevin. My name is Veronica Foley, Precision Drilling's General Counsel. No questions have been submitted by shareholders at this time. As such, I will now turn the meeting back to our Chairman.

Thank you, Veronica. Ladies and gentlemen, on behalf of Precision Drilling, I would like to thank each of you for attending this virtual meeting. Thank you.