PDS

2026 Strategic Priority Progress

• Core 2026 goals are to grow revenue via differentiated service offerings, deepen customer relationships, generate strong cash flow, and return capital to shareholders via debt reduction and share repurchases. Halfway through 2026, the company is on track to meet all commitments.
• Year-to-date revenue is up 8% year-over-year, the contract book of business has expanded significantly, and contracted rig upgrades have been executed across North America. Activity has grown in both Canada and the U.S.
• 4th quarter 2026 contracted rig counts are up 12 rigs in Canada and 9 rigs in the U.S. compared to Q1 2026 disclosures. Total global customer count has grown from 25 to 30 year-to-date, with most growth coming in the U.S.

Technology Development Highlights

• The company's Alpha Arms robotic drilling system has operated continuously for 2.5 years at a major customer's operation in the Montney basin, drilling 54 wells, handling over 3 million feet of tubulars hands-free, and logging 17,000 man-free hours on the rig floor while consistently outperforming offset pacesetter wells.
• The company received a grant from Emissions Reduction Alberta to develop a robotic rig floor solution for Super Triple 1200 rigs in the Canadian market; engineering and planning are underway, and customer discussions are ongoing in both Canada and the U.S.
• A second Alpha Remote Operations Center will open in Calgary headquarters next month, complementing the existing Houston center. The two centers will operate as an integrated network to deliver real-time data-driven drilling support to customers across North America.

International Operational Updates

• The company restructured its international footprint by closing the Dubai regional office and relocating leadership closer to core operations in Saudi Arabia and Kuwait, reducing annual costs while supporting the current 7-rig operation and upcoming 8th rig activation.
• A 5-year contract was secured for the previously idled Kuwait rig; the rig will undergo recertification and upgrades, with activation planned for mid-2027. The company expects to operate an 8-rig international fleet for the foreseeable future, with no plans for large-scale new capital investment given unattractive return profiles for additional growth.
• Discussions regarding potential rig deployments in Argentina with partners and local operators are ongoing.

North American Operational Updates

• The Canadian drilling market is seeing sustained strength driven by new infrastructure projects, low operator breakeven costs, and returning foreign capital. As of the call, the company is operating 75 rigs, with a target of 80 rigs within two weeks. Full utilization of the company's 32 super triple and 48 super single fleets is expected through the end of 2026, with activity averaging 70-80 rigs in H2 2026. The 20th super single pad rig will be delivered in September, with major super triple upgrades completed by Q4.
• The Canadian CMP segment delivered strong year-over-year growth in activity, revenue, and EBITDA in Q2 2026 despite record wet weather, with Q3 off to a solid start with over 80 rigs active.
• In the U.S., the company has increased active rig count by 30% since the last conference call, expanded operations with existing customers, added new aligned customers, and concentrated activity in core markets. While near-term reactivation costs create temporary margin pressure, management views these as investments in crew training, equipment recertification, and technology that will drive long-term margin and customer growth, with multiple customers already requesting additional rigs after initial deployments in the Permian basin.

• Q3 2026 Guidance:
  • Canada: Average rig count is expected to reach the low-to-mid 70s, up from 63 rigs in Q3 2025. Daily operating margins are forecast between $12,000 and $13,000, with pricing remaining firm for super single and super triple fleets through 2026.
  • U.S.: Average rig count is expected to hit the low 40s, the highest level since 2023. Reactivation costs will continue to pressure margins in Q3, with daily operating margins forecast between US$7,000 and US$8,000. Daily margins are expected to approach US$10,000 in Q4 2026 once reactivation activity slows.
  • International: Rig count will remain at 7 active rigs, with margins lower than 2025 due to ongoing elevated operating costs from Middle East tensions.
  • CMP Segment: Q3 2026 adjusted EBITDA is expected to be in line with year-ago levels.
  • Cash Flow: Q3 will see elevated working capital builds due to the recent North American activity ramp-up and semi-annual interest payments, with cash generation rebounding to normal levels in Q4.
• Full Year 2026 Guidance:
  • Full-year capital expenditure budget remains unchanged at $265 million, consisting of $172 million for sustaining/infrastructure spending and $93 million for rig upgrades, with most spending focused on Canada. Full-year depreciation is expected to be $320 million, cash interest expense is forecast at ~$45 million, and the effective tax rate is expected to be 25% to 30%.
  • SG&A is expected to remain flat at ~$95 million before share-based compensation, with share-based compensation expected between $25 million and $45 million for the full year.
  • Capital allocation commitments are unchanged: the long-term target of net debt to adjusted EBITDA below 1x remains in place. The company plans to reduce debt by $100 million in 2026, and allocate up to 50% of free cash flow to share repurchases. At mid-year, $75 million in debt has already been retired, and $16 million in shares have been repurchased. Total liquidity currently stands at over $502 million, with an average cost of debt of 6.7%.

1. Canadian Drilling: Averaged an all-time record 61 active rigs in Q2 2026, 11 rigs higher than Q2 2025 and 1 rig above prior guidance. Reported Q2 daily operating margins were $13,855 (inclusive of $3 million in customer upfront upgrade payments), compared to $15,306 in Q2 2025 (inclusive of $7 million in upfront payments). Normalized daily operating margins (excluding upfront payments) were $13,331, exceeding the upper limit of prior guidance, and were slightly down from $13,866 in Q2 2025 due to a higher proportion of lower-margin super single and double rigs. This segment contributed the majority of North American revenue growth, which was up 14% year-over-year.
2. U.S. Drilling: Averaged 35 active rigs in Q2 2026, down sequentially from 37 in Q1 2026 and up 2 rigs from Q2 2025. Exited Q2 2026 with 42 active rigs, ahead of prior guidance. Q2 daily operating margins were US$6,212, below prior guidance, primarily due to temporary reactivation costs associated with the 10-rig increase in active rigs during the quarter. Revenue per utilization day increased due to stronger pricing and higher technology adoption.
3. International Drilling: Averaged 7 active rigs in Q2 2026, consistent with Q2 2025 levels. Average day rates decreased 5% year-over-year to US$50,524. Margins were negatively impacted by unfavorable rig mix (one idle Kuwait rig offset by one additional active rig in Saudi Arabia) and elevated operating costs from ongoing Middle East conflict. The segment incurred $3 million in one-time restructuring costs from closing the Dubai office, which is expected to generate $3 million in annualized cost savings going forward. Total international revenue decreased 11% year-over-year.
4. CMP (Well Services) Segment: Adjusted EBITDA was $14 million in Q2 2026, $4 million higher than Q2 2025. Strong demand from Canadian heavy oil regions drove the year-over-year improvement, making up 14.4% of total company adjusted EBITDA for the quarter.

• Temporary U.S. margin pressure: Large-scale rig reactivations in Q2 and Q3 2026 are creating near-term margin headwinds, though this is expected to resolve by Q4 as activity stabilizes.
• Elevated operating costs in the Middle East: Ongoing regional conflict has increased logistics and operating costs for international operations, and is expected to keep international margins below year-ago levels for the foreseeable future.
• Canada Revenue Agency (CRA) reassessment: The company recently received a 2018 Notice of Reassessment from the CRA, which it will contest via a Notice of Objection. In a worst-case scenario, maximum potential liability is $155 million plus interest, requiring an upfront 50% payment (estimated ~$40 million due late 2026/early 2027, with the remainder spread over 24 months). Any required cash outlay would accelerate the company's transition to cash tax payments in Canada, though it does not change existing capital allocation plans. The dispute process is expected to take multiple years to resolve.

Q: What are the assumptions for rig reactivations and associated costs in Q3 2026 U.S. operations, compared to Q2? / A: In Q2, the company completed 7 major reactivations to go from 32 to 42 active rigs, which exceeded expectations and created larger-than-expected margin pressure. In Q3, there will be approximately 5 total reactivations as the company rebalances activity toward the Permian basin, with planned Q3 average rig count guidance of low 40s due to expected temporary Q4 pauses in Northeast drilling programs. Per-day reactivation costs range from $1,500 to $2,000, covering additional labor and preparation to meet customer requirements. Margins are projected to approach $10,000 per day in Q4 once heavy reactivation activity ends.

Q: What is the potential impact of the CRA reassessment on cash flow and the company's return of capital commitments? / A: The company and its external tax advisors strongly believe its original tax filing position is appropriate and will vigorously contest the reassessment. In a worst-case scenario, the maximum potential liability is $155 million plus interest, requiring a 50% upfront payment of the assessed amount, with roughly $40 million due by early 2027 and the remainder spread over 24 months. The company's existing capital allocation plans for debt reduction and share repurchases have not changed as a result of this issue. Existing tax pools cover the reassessed years, but a worst-case outcome would accelerate the company's transition to cash tax payments in Canada.

Q: What is the current state of operations and strategy for the Middle East, and what is the timeline for the idled Kuwait rig reactivation? / A: The region has seen only minor, single-digit day activity disruptions in Q2, primarily from travel disruptions due to airport closures and canceled flights, which has been the main driver of elevated operating costs. The company currently has 4 active rigs and one upcoming reactivation in Kuwait, and 3 active rigs in Saudi Arabia, and expects to operate an 8-rig fleet for the foreseeable future after the Kuwait rig comes online in mid-2027. New large-scale capital investments in the region are not attractive due to overly long payback periods, so the current streamlined cost structure after closing the Dubai office is appropriate for the current business size. Reactivation costs for the Kuwait rig will be recovered within the first two years of its 5-year contract with extension options.

Q: What is the outlook for U.S. rig counts and margins beyond Q3 2026? / A: Currently, ~50 rigs are warm, recently activated, and ready to deploy with no additional major reactivation costs. Management expects U.S. rig count to reach the high 40s by the end of 2026 based on current customer discussions. Once large-scale reactivations end, per-day margin impacts will shrink significantly as fixed costs are spread across a larger active rig base, with pricing increases further supporting margin growth. Management expects to exceed the Q4 target of $10,000 per day in 2027 if market conditions remain stable.