Precision Drilling Corporation (PD) Earnings Call Transcript & Summary

Hello, and welcome to the Annual and Special Meeting of Shareholders of Precision Drilling Corporation. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant the Computershare and the corporation that you first obtained all required consents for the disclosure, recording, transfer and use of such personal information from all appropriate persons before your disclosure. It is now my pleasure to turn today's meeting over to Steve Krablin, Chairman of the Board of Directors of Precision Drilling Corporation. Mr. Krablin, the floor is yours.

Thank you, and good morning. On behalf of myself and the Board, I welcome you to today's 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; Vice President, Investor Relations, Lavonne Zdunich; and our slate of nominated directors as named in our 2025 Management Information Circular. Today's meeting will be virtual. This virtual meeting will provide shareholders the same opportunity to participate as an in-person meeting, including voting and submitting questions. After the formal business of today's meeting is concluded and the meeting is terminated, we will then have a Q&A session. You can submit questions at any time by clicking on the Q&A tab. If your question does not get answered during the meeting, we will respond by e-mail afterwards. With that, I officially call the meeting to order. I will act as Chairman of the meeting, and I appoint Veronica Foley to act as Secretary of the meeting. I also appoint Kyle Gould and Stephanie Tuss of Computershare to act as 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 April 2, 2025, which accompanied the Notice of Meeting. I will take the Notice of Meeting as read. I have proof of filing and mailing of the notice of this 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 28, 2025, the record date of this meeting, or their validly appointed proxy holders are entitled to vote at this meeting. All items of business will be voted simultaneously. If you are a registered shareholder or proxy holder and have not already done so, you can vote now by clicking on the Voting icon on your phone, computer or tablet. Once discussion on all items of business has concluded, I will provide 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. The final results of the meeting will be released today and available on our website. I now declare the polls open on all resolutions. The first item of business is the receipt of the audited consolidated financial statements of the corporation for the fiscal year ended December 31, 2024, 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 appointment of auditors. As Chair, I propose the following: that KPMG LLP be appointed auditor of the corporation until the next Annual 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.

Mr. Chairman, my name is [ Catalina Galvan ], and I second the motion.

Thank you. 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 the following: that the 8 nominated directors as named in our 2025 Management Information Circular 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.

Mr. Chairman, my name is [ Catalina Galvan ], 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 Chair, I propose the following: that on an advisory basis and not to diminish the role and responsibilities of the Board of Directors, the shareholders accept the approach to executive compensation disclosed in our 2025 Management Information Circular.

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

Mr. Chairman, my name is [ Catalina Galvan ], and I second the motion.

Thank you. The next item of business is to approve the reconfirmation and continuation of our amended and restated shareholder rights plan agreement dated as of May 3, 2019. As Chair, I propose a resolution approving the reconfirmation of and continued existence of the amended and restated shareholder rights plan agreement between Precision Drilling Corporation and Computershare Trust Company as rights agent, dated May 3, 2019. Details of the plan are included in the Management Information Circular. I ask for a motion that the ordinary resolution as set out on Page 62 of our Management Information Circular be approved.

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

Mr. Chairman, my name is [ Catalina Galvan ], and I second the motion.

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

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, I hereby declare this meeting concluded. At this time, I am 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. It is my honor to welcome you to Precision Drilling's 2025 Annual and Special Meeting. While I will not be making a presentation today, I would like to make a few comments about our financial results, outlook expectations and our strategic priorities for 2025. A few weeks ago, we issued our first quarter financial results, and I am pleased with how the Precision team is managing through a period of unusual volatility and market uncertainty. We reported positive earnings for the 11th consecutive quarter and made great progress on our capital allocation targets for the year. Our strong Canadian drilling activity was complemented by steady cash flow generation from our drilling operations in the United States and Middle East as well as our Completion and Production Services business. In Canada, land drilling fundamentals remain strong. The Trans Mountain pipeline expansion, which became operational in May of 2024, has improved heavy oil pricing for our producers, supporting drilling activity and demand for our Super Single rigs. The imminent start-up of LNG Canada plus the potential approval of Phase 2 is expected to provide additional long-term stability and demand in the Montney and increased demand for our Super Triple rigs. Now despite the trade and tariff uncertainty and oil prices at least temporarily dipping below $60 per barrel, we have not experienced any meaningful change in customer demand or their long-term plans. In the United States, our producers continue to show capital discipline with drilling activity stable, but influenced by crude oil prices. With significant LNG export capacity expansion underway in the U.S., we believe our market positioning for these additional LNG opportunities is constructive. While global events and conflicts have the potential to impact global economic growth, Precision remains focused on controlling all aspects of our business and specifically managing our cash flows within the cyclicality of the industry. With a strong balance sheet, a highly experienced team, highly experienced rig crews and high-performance rigs, Precision is better positioned than at any time in the past decade to navigate these uncertain times while simultaneously creating shareholder value. Our 2025 strategic priorities will focus on free cash flow through disciplined capital deployment and strict cost management, enhancing shareholder returns through debt reduction and share repurchases and growing revenue in the existing service lines. And with that, I'll now be happy to answer any questions that have been submitted by shareholders.

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

Ladies and gentlemen, on behalf of Precision Drilling, I would like to thank each of you for attending this virtual meeting. You may now disconnect.

And this concludes the meeting. You may now disconnect.