ACT Energy Technologies Reports 2026 Q2 Interim Results

CALGARY, AB, Aug. 7, 2026 /CNW/ -- (TSX: ACX) ACT Energy Technologies Ltd (the "Company" or "ACT")'s news release contains "forward-looking statements" within the meaning of applicable Canadian securities laws. For a full disclosure of forward-looking statements and the risks to which they are subject, see the 'Forward-Looking Statements' section in this news release. This news release contains references to Adjusted gross margin, Adjusted gross margin percentage, Adjusted EBITDAS, Adjusted EBITDAS margin percentage, Free cash flow, Net debt, Working capital and Net capital expenditures. These terms do not have standardized meanings prescribed under International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and may not be comparable to similar measures used by other companies. See the 'Non-GAAP measures' section in this news release for definitions and tabular calculations.

2026 Q2 FINANCIAL RESULTS

• Revenues of $178.5 million in 2026 Q2 increased 59% compared to $112.0 million one year ago, reflecting higher activity in the Canadian segment together with the contributions of Stryker Directional Services, acquired January 5, 2026, and SB Directional Services, acquired April 1, 2026.
• Adjusted EBITDAS⁽¹⁾ of $26.9 million increased 76% compared to $15.3 million in 2025 Q2, the highest Adjusted EBITDAS the Company has recorded in a second quarter.
• Income before income taxes was $9.4 million, compared to a loss before income taxes of  $9.0 million in 2025 Q2, resulting from stronger and expanded operational activity and foreign exchange gains. 
• Canadian operating days⁽²⁾ increased 81% to 3,805 well ahead of the 29% increase in the average Western Canadian directional rig count, reflecting new customer additions and the deployment of additional revenue-generating technologies. Canadian revenues increased 85% to $55.3 million. 
• U.S. operating days⁽²⁾ increased 76% to 5,000, while the average U.S. directional rig count increased 1%. The increase was principally attributable to the Stryker and SB acquisitions. U.S. revenues increased 50% to $123.2 million. 
• Free cash flow⁽¹⁾ of $9.7 million in 2026 Q2, compared to $1.0 million in 2025 Q2. 
• Cash flow from operating activities was $9.4 million, compared to $26.0 million in 2025 Q2, reflecting the investment in operating working capital required to support higher Canadian activity and the acquired businesses. 
• Net debt⁽¹⁾ was $142.1 million as at June 30, 2026, compared to $53.6 million as at December 31, 2025, reflecting the debt used to fund the Stryker and SB acquisitions. 
• The exchangeable subordinated promissory notes were repaid in full during the quarter and had a carrying value of $nil as at June 30, 2026, compared to US$20.0 million as at December 31, 2025. 
• On April 1, 2026, the Company acquired the directional drilling services business of SB Directional Services for estimated total consideration of $65.6 million in cash and common shares (the "SB acquisition"). 
• During the six months ended June 30, 2026, the Company purchased 285,072 common shares under the normal course issuer bid ("NCIB") for a total purchase price of $1.7 million at an average cost of $5.79 per common share, of which 6,000 common shares were purchased during the second quarter.

PRESIDENT'S MESSAGE

Comments from President & CEO Tom Connors:

"The second quarter was the strongest second quarter in ACT's history, and the clearest evidence to date that the platform we have been building is working as designed. Revenues of $178.5 million increased 59% and Adjusted EBITDAS⁽³⁾ of $26.9 million increased 76% over the same quarter last year. We delivered that growth in the quarter that is seasonally our most difficult, and against a United States land rig count that was essentially unchanged year over year.

"Canada produced a record second quarter for activity. Operating days⁽²⁾ increased 81% to 3,805, well ahead of the 29% increase in the average Western Canadian directional rig count⁽²⁾, reflecting new customer additions, the continued adoption of rotary steerable and other revenue-generating technologies, and the multi-lateral drilling franchise that remains the foundation of the Canadian business. Just as importantly, the incremental activity converted into margin rather than volume alone. Canadian direct costs declined to 67% of revenue from 72% a year ago, which is the operating leverage this business is built to deliver when equipment and crews are working.

"In the United States, operating days⁽²⁾ increased 76% to 5,000 while the average U.S. directional rig count⁽²⁾ rose 1%. Stryker and SB Directional were the principal drivers, and both businesses have performed in line with our expectations since closing. Our pre-existing U.S. operations held their position in a market where pricing remains competitive and where the industry continues to absorb the effects of customer consolidation.

"The quarter is also a proof point for how we operate. ACT is one platform with many strong local operators. Capital allocation, technology development and manufacturing, procurement, safety systems and financial discipline sit at the centre; customer relationships, basin-level judgement and day-to-day execution stay with the leaders who built these businesses and who understand their operators, their crews and their formations better than any head office can. Stryker and SB joined ACT with their teams, their customers and their identities intact, and their contribution this quarter reflects that. The model is designed to protect the earnings we acquire and then improve them, which is what allows us to integrate at pace without losing the entrepreneurial character that made these businesses worth owning in the first place.

"We also strengthened the balance sheet while absorbing two acquisitions. The Company generated Free cash flow⁽¹⁾ of $9.7 million in the quarter, retired the exchangeable promissory notes in full, and ended the period with Net debt⁽¹⁾ of $142.1 million and a Consolidated Funded Debt to Consolidated Credit Agreement EBITDA ratio of 1.4 times against a covenant limit of 3.0 times. Working capital⁽¹⁾ of $105.2 million reflects the investment required to support a materially larger business, and we expect a portion of that investment to unwind as activity levels normalize. Reducing leverage is the first call on free cash flow through the balance of the year, alongside continued measured purchases under our Normal Course Issuer Bid.

"Activity in the third quarter to date has continued to build in both Canada and the United States. We enter the second half with more scale and more owned technology in the field than at any prior point in the Company's history, and at a lower cost of delivery than a year ago," stated Tom Connors, ACT President and Chief Executive Officer.

FINANCIAL HIGHLIGHTS

OUTLOOK

The second quarter's commodity price environment was driven by supply risk rather than by demand. WTI averaged US$95.75 per barrel, up from US$71.98 in the first quarter, as disruption to traffic through the Strait of Hormuz removed barrels and shipping capacity from the market. Most of that risk premium has since unwound. WTI has traded in the low-to-mid US$80s through July, and forward curves and third-party forecasts point to a lower average price through the balance of the year as OPEC+ barrels return, shut-in production is restored and global inventories rebuild. We are planning the business against that lower and more volatile path rather than against second-quarter realized prices.

The more instructive observation from the quarter is that the price move did not move the rig count. A one-third sequential increase in WTI produced a 1% year-over-year change in the U.S. land rig count and a Western Canadian rig count that, while up 29% against a weak comparative period, remains well below prior-cycle peaks. Exploration and production companies are budgeting against mid-cycle assumptions and the strip prices, not spot, and a more consolidated customer base has reinforced that discipline. At the same time, well designs continue to lengthen and drilling performance continues to improve, so each active rig delivers more lateral footage and more technical complexity than it did even two years ago. The practical consequence for our sector is that rig count is a weaker proxy for demand than it once was. Footage, well complexity and technology intensity per rig are the better indicators, and each of those factors favours service providers with owned downhole technology and consistent performance across basins.

North American natural gas presents the opposite picture. NYMEX averaged US$2.95 per Mmbtu in the second quarter, down from US$4.79 in the first, and near-term gas-directed drilling is likely to remain restrained. The medium-term case is considerably more constructive: LNG Canada volumes, incremental liquefaction capacity on the U.S. Gulf Coast and growing gas-fired power demand all point to a call on additional supply from the Montney, Duvernay, Deep Basin and Haynesville from 2027 onward. These are long-lateral, technically demanding plays that align closely with our capabilities and with the technology we manufacture.

In Canada, we expect a seasonally stronger third quarter and a busier second half than the same period last year. Industry commentary points to increased drilling in the Western Canadian Sedimentary Basin through the balance of 2026, and oil-directed multi-lateral development in the Clearwater, Mannville and adjacent plays continues to offer some of the most attractive drilling economics in North America. Our objective is to hold and, where possible, extend the market share gains achieved in the first half of the year, and to continue converting activity into margin as owned measurement-while-drilling systems and mud motors displace third-party rentals. Weather-related interruptions remain a normal source of quarter-to-quarter variability.

In the United States, we expect activity to build modestly from second-quarter levels rather than to step change. Consolidation on both sides of the market - fewer and larger operators, and reduced directional drilling capacity following several years of attrition - is concentrating work with providers that can demonstrate scale, technical capability and balance sheet strength. Continued adoption of rotary steerable systems raises revenue capture per operating day and remains a priority for capital deployment. A weaker Canadian dollar remains a modest tailwind on the translation of U.S. earnings. Trade policy and cross-border tariff treatment of equipment remain unresolved, and the Company continues to monitor and assess the potential impact on its supply chain and cost base.

From an oilfield services perspective, we continue to expect a gradual, technology-led recovery rather than a conventional cyclical upswing, and we do not require a higher rig count to grow. Our priorities for the balance of 2026 are unchanged: convert activity into cash, reduce leverage, complete the integration of Stryker and SB, and retain the flexibility to act on further consolidation opportunities where they are accretive and where the acquired team and customer base can be preserved.

RESULTS OF OPERATIONS

Financial

Operational 

Summary

The Company delivered the strongest second quarter in its history, demonstrating the effectiveness of its operating platform despite a challenging seasonal period and relatively flat U.S. land drilling activity. The combination of record second-quarter activity in Canada and the successful integration of the Stryker and SB acquisitions in the United States led to significantly higher operating activity and revenue compared to the prior-year quarter. Gross margin and Adjusted gross margin percentages⁽¹⁾ remained stable, reflecting disciplined operational execution.

Net income of $2.5 million in 2026 Q2, and $7.3 million for the six months ended June 30, 2026 was an improvement from the losses realized a year earlier (net losses of $10.0 million and $2.7 million for the same periods in 2025, respectively). The improvement is a direct result of increased Canadian activity and the Company's operating model which enabled the successful integration of Stryker and SB, contributing to earnings growth while preserving the entrepreneurial culture and operational strengths of the acquired businesses. Net income for the current periods did benefit from a foreign exchange gain, comparative periods foreign exchange loss, offset by a higher income tax expense compared to the prior periods. Additional details on key impacts to net income are described below.

SEGMENTED INFORMATION

United States

Revenues

U.S. revenues were $123.2 million in 2026 Q2, an increase of $41.1 million or 50%, compared to $82.1 million in 2025 Q2. The Company experienced a 76% increase in operating days⁽²⁾ in 2026 Q2 (2026 - 5,000 days; 2025 - 2,838 days). The Company's activity outperformed a 1% increase in the average U.S. land rig count, mainly due to the recent Stryker and SB acquisitions, combined with steady activity from its pre-existing U.S. business. The average revenues per operating day^([5]) decreased 15% in 2026 Q2 (2026 - $24,642 per day; 2025 - $28,918 per day) due to a lower proportion of revenue from our rental and technology businesses, which have no associated operating days. 

U.S. revenues were $206.4 million in the six months ended June 30, 2026, an increase of $42.7 million or 26%, compared to $163.7 million for the same period in 2025. The Company experienced a 39% increase in operating days⁽²⁾ in the six months ended June 30, 2026 in comparison to the same period in 2025 (2026 - 8,184 days; 2025 - 5,878 days). The Company's activity increased despite a 2% decrease in the average U.S. land rig count, mainly due to the recent Stryker and SB acquisitions. The average revenues per operating day⁽²⁾ decreased 9% in the six months ended June 30, 2026 (2026 - $25,218 per day; 2025 - $27,847 per day), compared to the same period in 2025 due to a lower proportion of revenue from our rental and technology businesses, which have no associated operating days. 

Direct costs

U.S. direct costs included in cost of sales were $90.1 million in 2026 Q2, an increase of $32.0 million or 55%, compared to $58.1 million in 2025 Q2. Direct costs as a percentage of revenues were 73% in 2026 Q2, compared to 71% in 2025 Q2, which reflects a higher proportion of lost-in-hole revenue in the prior year period.

U.S. direct costs included in cost of sales were $156.3 million in the six months ended June 30, 2026, an increase of $36.1 million or 30%, compared to $120.2 million for the same period in 2025, below the 39% increase in U.S. operating days⁽²⁾. Direct costs as a percentage of revenues were 76% in the six months ended June 30, 2026, compared to 73% in the same period in 2025, which reflects a higher proportion of lost-in-hole revenue in the prior year period.

Canadian

Revenues

Canadian revenues were $55.3 million in 2026 Q2, an increase of $25.4 million or 85%, compared to $29.9 million in 2025 Q2, due to an 81% increase in operating days⁽²⁾ in 2026 Q2 (2026 - 3,805 days; 2025 - 2,107 days), significantly higher than the Canada average land rig count increase of 29%. Canadian activity increased more than the industry activity levels reflecting new customer additions, partially as a result of the deployment of additional revenue generating technologies. The average revenues per operating day⁽²⁾ increased 2% in 2026 Q2 (2026 - $14,524 per day; 2025 - $14,211 per day). The increase in the average revenues per operating day⁽²⁾ is mainly attributable to a favorable job mix requiring additional revenue generating technologies.

Canadian revenues were $116.6 million in the six months ended June 30, 2026, an increase of $32.9 million or 39%, compared to $83.7 million for the same period in 2025, with the increase primarily attributable to a 30% increase in operating days⁽²⁾ in the six months ended June 30, 2026 (2026 - 8,278 days; 2025 - 6,361 days). Canadian activity increased more than the industry activity levels reflecting new customer additions, partially as a result of the deployment of additional revenue generating technologies. The average revenues per operating day⁽²⁾ increased in the six months ended June 30, 2026 (2026 - $14,080 per day; 2025 - $13,156 per day). The increase in the average revenues per operating day⁽²⁾ is mainly attributable to a favorable job mix requiring additional revenue generating technologies.

Direct costs

Canadian direct costs included in cost of sales were $36.9 million in 2026 Q2, an increase of $15.4 million or 72%, compared to $21.5 million in 2025 Q2. The increase is mainly due to higher operating activities in 2026 Q2. As a percentage of revenues, direct costs were 67% in 2026 Q2, compared to 72% in 2025 Q2, reflecting disciplined cost management and economies of scale associated with higher activity levels.

Canadian direct costs included in cost of sales were $75.4 million in the six months ended June 30, 2026, an increase of $18.2 million or 32%, compared to $57.2 million for the same period in 2025. The increase is mainly due to higher activity levels in the six months ended June 30, 2026. As a percentage of revenues, direct costs were 65% in the six months ended June 30, 2026, compared to 68% for the same period in 2025, reflecting disciplined cost management and economies of scale associated with higher activity levels.

CONSOLIDATED

Revenues

The Company's revenues were $178.5 million in 2026 Q2, an increase of $66.5 million or 59%, compared to $112.0 million in 2025 Q2. The increase is driven by a 78% increase in operating days⁽²⁾ (2026 - 8,805 days; 2025 - 4,945 days) offset by an 11% decrease  in the average revenues per operating day⁽²⁾ (2026 - $20,270; 2025 - $22,651). The decrease in average revenues per operating day⁽²⁾ is due to a lower proportion of revenue from our rental and technology businesses, which have no associated operating days. 

The Company recognized $322.9 million of revenues in the six months ended June 30, 2026, an increase of $75.5 million or 31%, compared to $247.4 million for the same period in 2025. The increase is driven by a 35% increase in operating days⁽²⁾ (2026 - 16,462 days; 2025 - 12,239 days). 

Direct Costs

The Company recognized $127.0 million of direct costs in 2026 Q2, an increase of $47.4 million or 60%, compared to $79.6 million in 2025 Q2. The increase is mainly due the 78% increase in consolidated operating days⁽²⁾.

The Company recognized $231.7 million of direct costs in the six months ended June 30, 2026, an increase of $54.3 million or 31%, compared to $177.4 million for the same period in 2025. The increase is mainly due to an increase in operating days⁽²⁾_.

Direct costs as a percentage of revenues remained consistent at 71% in 2026 Q2, compared to 71% in 2025 Q2. Direct costs for the six months ended June 30, 2026 remained consistent as a percentage of revenues at 72% when compared to the same period in 2025.

Gross margin and Adjusted gross margin⁽¹⁾

The Gross margin and Adjusted gross margin percentages⁽¹⁾ remained consistent in 2026 periods when compared to the same periods in 2025.  However, dollar margins improved for the three and six months ended June 30, 2026 compared to the same periods in 2025 arising from a 59% and 31% year-over-year increase in revenues in 2026 Q2 and the six months ended June 30, 2026, respectively. Improved results are primarily driven by higher activity levels.

Depreciation and amortization expense

Depreciation and amortization expense included in cost of sales increased to $11.3 million in 2026 Q2 (2025 Q2 - $7.4 million), and $21.0 million for the six months ended June 30, 2026 (six months ended June 30, 2025 - $14.8 million).  The increases noted are mainly due to the addition of Stryker and SB assets.

Selling, general and administrative ("SG&A") expenses

The Company recognized direct costs included in SG&A expenses of $21.8 million and $38.7 million in 2026 Q2 and the six months ended June 30, 2026, which were higher than $14.9 million and $31.4 million for the same periods in 2025, respectively. The increases noted are mainly due to the recent Stryker and SB acquisitions. Severance costs paid in the three and six months ended June 30, 2026 of $0.2 million and $2.0 million, respectively also impacted SG&A expenses. Direct costs included in SG&A expenses as a percentage of revenues improved to 12% for 2026 Q2 and the six months ended June 30, 2026, compared to 13% for the same periods in 2025.

Depreciation and amortization included in SG&A expenses were $4.1 million and $7.2 million in 2026 Q2 and the six months ended June 30, 2026, compared to $2.7 million and $5.6 million for the same periods in 2025, respectively. The increases are  mainly due to amortization expense associated with intangible assets associated with the acquisitions of Stryker and SB.

Share-based compensation included in SG&A expenses were $0.7 million and $1.2 million in 2026 Q2 and the six months ended June 30, 2026, compared to $1.0 million and $1.5 million for the same periods in 2025, respectively. The decrease for the three and six months ended June 30, 2026 is mainly due to certain stock options being fully vested and therefore no longer accruing an expense during the 2026 period. The cash portion of share-based compensation expense were $0.5 million and $0.9 million in 2026 Q2 and the six months ended June 30, 2026, compared to $0.4 million and $0.4 million for the same periods in 2025, respectively. Cash settled share-based compensation expense will fluctuate with the Company's share price and therefore amounts recognized are subject to this volatility.

Provision

The Company is subject to a historical U.S. sales and use tax audit (the "Audit") period that originated prior to the Company's acquisition of Altitude Energy Partners ("AEP Acquisition") on July 14, 2022, with certain errors extending into the period after the AEP Acquisition (the "Post-Closing Audit Period"). In 2025, the Company received additional information relating to this Audit impacting the Post-Closing Audit Period and recorded an incremental provision of $4.8 million. No revisions to this estimate were made in the six months ended June 30, 2026.

Also in relation to the Audit, certain liabilities originated prior to the AEP Acquisition (the "Pre-Closing Audit Period"). Pursuant to the Equity Purchase Agreement related to the AEP Acquisition, the sellers provided the Company with an indemnity related to pre-closing tax issues, specifically identifying the risk related to the Audit. Accordingly, the Company has recognized an offsetting indemnity receivable included in Other receivable of $15.9 million. This assessment relies on estimates and assumptions and may involve a series of judgments about future events.

All figures in this section are presented in Canadian dollars; however, the underlying figures are denominated in U.S. dollars and are therefore subject to fluctuations in foreign currency exchange rates. New information may become available that prompts the Company to adjust its judgment regarding the adequacy of this provision.

Research and development ("R&D") costs

The Company recognized R&D costs of $1.4 million and $2.8 million in 2026 Q2 and the six months ended June 30, 2026, compared to $1.2 million and $2.6 million for the same periods in 2025, respectively. R&D costs include salaries, benefits, purchased materials and shop supply costs related to new product development and technology and engineering.

Write-off of property, plant and equipment

The Company recognized a write-off of property, plant and equipment of $1.5 million and $2.5 million in 2026 Q2 and the six months ended June 30, 2026, compared to $1.2 million and $1.4 million for the same periods in 2025, respectively. The write-offs related to equipment lost-in-hole and damaged beyond repair. Lost-in-hole equipment and damaged beyond repair reimbursements from customers are based on service agreements held with clients and are recognized as revenue.

Finance costs

Finance costs - loans and borrowings and promissory notes were $3.4 million, an increase of $2.1 million, compared to $1.3 million in 2025 Q2. Finance costs - loans and borrowings and promissory notes were $5.7 million in the six months ended June 30, 2026, an increase of $2.2 million, compared to $3.5 million for the same period in 2025. The increase is mainly due to a higher outstanding balance of loans and borrowings in 2026 Q2 compared to 2025 Q2 resulting from the acquisitions of Stryker and SB and due to payment of the remaining scheduled interest through the original maturity date on the EP Notes.

In addition, the Company had finance costs - lease liabilities of $0.3 million and $0.7 million in 2026 Q2 and the six months ended June 30, 2026, related to lease liabilities, compared to $0.3 million and $0.5 million for the same periods in 2025, respectively.

Foreign exchange

The Company recognized a foreign exchange gain of $3.5 million and a foreign exchange gain of $5.8 million in 2026 Q2 and the six months ended June 30, 2026, respectively, compared to a foreign exchange loss of $6.6 million and a foreign exchange loss of $6.8 million for the same periods in 2025, respectively. During 2026, the Canadian dollar has depreciated against the U.S.dollar with the Company recognizing foreign exchange gains on the revaluation of the Company's intercompany loans issued by the parent company to its self-sustaining foreign subsidiaries.

The Company's foreign operations are denominated in USD and differences due to fluctuations in the foreign currency exchange rates are recorded in other comprehensive income. The Company recognized a foreign currency translation gain on foreign operations of $1.2 million in 2026 Q2, compared to a loss of $4.0 million in 2025 Q2. The Company recognized a foreign currency translation gain of $2.3 million in the six months ended June 30, 2026, compared to a loss of $4.1 million for the same period in 2025. As the Canadian dollar depreciated against the U.S. dollar, the Company's net investments in its US subsidiaries result in gains recognized in other comprehensive income.  

Acquisition costs

Acquisition costs were $0.8 million in 2026 Q2 and $1.7 million in the six months ended June 30, 2026. The costs are related to the acquisition of Stryker in January 2026 and SB Directional in April 2026. See the Transactions section of this News Release for further discussion.

Income tax expense (recovery)

The Company recognized an income tax expense of $6.9 million and $8.6 million in 2026 Q2 and the six months ended June 30, 2026, compared to an income tax expense of $1.0 million and an income tax recovery of $0.2 million for the same periods in 2025, respectively.

During three and six months ended June 30, 2026, the Company recognized a deferred tax expense of $5.3 million, being an adjustment in respect of prior period tax returns. The amount is non-cash and no current income tax is payable in respect of it. The adjustment has been excluded from the estimated average annual effective tax rate applied to income in the current period. The change has no effect on gross margin, Adjusted EBITDAS⁽¹⁾ or Net Debt⁽¹⁾.

In addition to the change in estimates, the increase in deferred income tax expense is partly attributable to higher earnings before income taxes in 2026 compared with the same periods in 2025, as well as the full utilization of previously unrecognized deferred tax assets by the end of 2025, resulting in fewer available tax attributes to offset taxable income in 2026.

Income tax expense (recovery) is recognized based upon expected annualized rates using the statutory rates of 23% for both Canada and the U.S. adjusted for key items that will affect the Company's actual tax for the period.  

LIQUIDITY AND CAPITAL RESOURCES

Annually, the Company's principal source of liquidity is cash generated from its operations. In addition, the Company has the ability to fund liquidity requirements through its credit facility and the issuance of additional debt and/or equity, if available.  The Company remains focused on sustaining reasonable levels of Net debt^([7]), deploying excess Free cash flow⁽¹⁾ and utilizing excess available capital resources for high return  investment opportunities, including the NCIB and strategic and accretive acquisitions.

In order to facilitate the management of its liquidity, the Company prepares an annual budget, which is updated, as necessary, depending on varying factors, including changes in capital structure, execution of the Company's business plan and general industry conditions. The annual budget is approved by the Board of Directors and updated forecasts are prepared as the fiscal year progresses with changes reviewed by the Board of Directors.

Cash flow - operating activities was $9.4 million and $9.1 million in 2026 Q2 and the six months ended June 30, 2026, compared to $26.0 million and $44.7 million for the same periods in 2025, respectively. The decrease was primarily attributable to higher working capital requirements resulting from increased business activity, including stronger Canadian operations, as well as the acquisitions of Stryker and SB, which did not include the acquisition of working capital. As a result, working capital investment in 2026 Q2 was higher than in the prior-year period.

Free cash flow⁽¹⁾ of $9.7 million in 2026 Q2, compared to Free cash flow⁽¹⁾ of $1.0 million in 2025 Q2. The increase is attributable to higher levels of revenues and  Adjusted EBITDAS⁽¹⁾. 

At June 30, 2026, the Company had Working capital⁽¹⁾, excluding current portion of debt (loans and borrowings and promissory notes) of $105.2 million (December 31, 2025 - $84.1 million).

Normal course issuer bid

During the six months ended June 30, 2026, 285,072 (2025 - 1,110,858) common shares were purchased under the NCIB for a total purchase amount of $1.7 million (2025 - $6.3 million) at an average price of $5.79 (2025 - $5.69) per common share. A portion of the purchase amount reduced share capital by $1.6 million (2025 - $6.0 million) and the residual purchase amount of $0.1 million (2025 - $0.3 million) was recorded to the surplus.

The maximum number of shares approved for purchase under the NCIB is 2,034,285. The NCIB commenced on August 11, 2025 and expires August 10, 2026. The company intends to seek renewal once the current NCIB has expired.

In connection with the NCIB, the Company established an automatic securities purchase plan ("the Plan"). Accordingly, the Company may repurchase its common shares under the Plan on any trading day during the NCIB, including during regulatory restrictions or self-imposed trading blackout periods. The Plan commenced on August 11, 2025, and will terminate on August 10, 2026. As at June 30, 2026, the Company did not recognize accrued liability for the common shares to be purchased under the Plan. As at December 31, 2025, the accrued liability related to the reduction of share capital was $1.4 million. During the six months ended June 30, 2026, the Company reversed the previously recognized accrual, resulting in a net decrease to share capital of $1.4 million.

Syndicated and revolving credit facilities

On March 24, 2026, the Company entered into a Sixth Amended and Restated Credit Agreement with its existing syndicate of lenders co-led by ATB Financial and Royal Bank of Canada ("Amended Credit Agreement"). The Amended Credit Agreement took effect as at April 1, 2026 in connection with the closing of the SB Directional Services acquisition on April 1, 2026 (see the Transactions section in this News Release). The Amended Credit Agreement provided for the following:

As at June 30, 2026, $36.8 million of the $187.6 million total credit facility remained undrawn.

At June 30, 2026, the Company was in compliance with all covenants, including its financial covenants, which were as follows:

• Consolidated Funded Debt to Consolidated Credit Agreement EBITDA ratio shall not exceed 3.0 : 1.0 (calculated - 1.4);
• Consolidated Interest Coverage ratio shall not be less than 3.0 : 1.0 (calculated - 12.0);
  and 
• Consolidated Fixed Charge Coverage Ratio shall not be less than 1.25 : 1.0 (calculated - 2.8).

Contractual obligations and contingencies

As at June 30, 2026, the Company's commitment to capital is approximately $25.9 million (December 31, 2025 - $3.7 million), which is expected to be incurred over the next six to nine months.

The Company holds six letters of credit totaling $1.8 million (December 31, 2025 - $1.7 million) related to rent payments, corporate credit cards and a utilities deposit.

The Company is involved in various other legal claims and tax audits associated with the normal course of operations. The Company believes that any liabilities that may arise pertaining to such matters would not have a material impact on its financial position. Refer to the 'Provision' section in this News Release for more details.

The following table outlines the anticipated payments related to contractual commitments subsequent to June 30, 2026:

Off balance sheet

Other than letters of credit totaling $1.8 million (December 31, 2025 - $1.7 million) related to rent payments, corporate credit cards and a utilities deposit, there are no other off balance sheet arrangements.

Capital structure

As at August 6, 2026, the Company has 38,634,896 common shares and 1,866,985 stock options.

NET CAPITAL EXPENDITURES                                                            

The following table details the Company's Net capital expenditures⁽¹⁾:

As at June 30, 2026, property, plant and equipment included $1.2 million (June 30, 2025 - $14.3 million) of equipment not yet being depreciated as they are currently being manufactured and tested. Depreciation of these assets will commence upon the assets being fully operational.

Given the current market uncertainty, the Company's 2026 gross and Net capital expenditures^([8]) budget will be dynamic and adjusted to reflect management's expectation of future activity levels. Currently, the Company's target Net capital expenditures⁽¹⁾ budget is anticipated to relate to sustaining and growth capital expenditures that will enhance realized gross margin percentage levels, including optimizing ACT's high-performance mud motors, MWD in both Canada and the U.S., and selective RSS deployments. ACT intends to fund its 2026 capital plan from cash flow - operating activities.

TRANSACTIONS

On January 5, 2026 the Company acquired all the assets of Stryker Energy Directional Services, LLC ("Stryker") for total purchase consideration of $32.8 million.  Stryker was founded in 2010 and is based in Conroe, Texas. It is a well-established directional drilling services provider with a highly experienced management team and a strong operating history across the Southern United States. In 2025, Stryker averaged approximately 17 active jobs per operating day, including work utilizing RSS technology. See the notes to the financial statements for further details on the purchase price allocation.

On April 1, 2026, the Company acquired the directional drilling services business of SB Directional Services ("SB"). The total consideration is estimated around $65.6 million. The consideration was comprised of US$30 million in cash and 3,624,232 in ACT common shares valued at approximately US$17.6 million. The acquisition of SB adds to ACT's position as one of the leading independent directional drilling companies in the US, increasing exposure in the Anadarko and Permian basins. In addition, the acquisition included SB's proven leadership team with deep industry expertise and established customer relationships, as well as key personnel, strengthening ACT's U.S. operations through enhanced leadership, skilled work crews, and expanded sales capabilities. See the notes to the financial statements for further details on the purchase price allocation.

In connection with the SB Acquisition, the Company entered into a Sixth Amended and Restated Credit Agreement with its existing syndicate of lenders co-led by ATB Financial and Royal Bank of Canada (refer to Liquidity and Capital Resources section of this News Release).

There are no further proposed transactions as at the date of this News Release.

NON-GAAP MEASURES

ACT uses certain performance measures throughout this News Release that are not defined under IFRS Accounting Standards or Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures do not have a standardized meaning and may differ from that of other organizations, and accordingly, may not be comparable. Investors should be cautioned that these measures should not be construed as alternatives to IFRS Accounting Standards measures as an indicator of ACT's performance.

These measures include the Adjusted gross margin, Adjusted gross margin percentage, Adjusted EBITDAS, Adjusted EBITDAS margin percentage, Free cash flow, Net debt, Working capital and Net capital expenditures. Management believes these measures provide supplemental financial information that is useful in the evaluation of ACT's operations.

These non-GAAP measures are defined as follows:

The following tables provide reconciliations from the IFRS Accounting Standards to non-GAAP measures included in this News Release.

Adjusted gross margin

Adjusted EBITDAS

Free cash flow

Working capital

Net debt

SUPPLEMENTARY FINANCIAL MEASURES AND OTHER DEFINITIONS

COMMON INDUSTRY TERMS

INDUSTRY PRICING METRICS

Common industry pricing metrics that affect our business directly, such as $CAD/$US foreign exchange, and indirectly through our customer's cash flows, such as WTI and US NYMEX natural gas, are as follows:

FORWARD LOOKING STATEMENTS

This News Release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws.  All statements other than statements of present or historical fact are forward-looking statements.  Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. In particular, this News Release contains forward-looking statements relating to, among other things:

• The 2026 Net capital expenditure budget and financing thereof; 
• Given the current market uncertainty, the Company's 2026 Net capital expenditure budget will be dynamic and adjusted to reflect management's expectation of future activity levels; 
• The expectation that the model is designed to protect the earnings the Company acquire and then improve them which is what allows the Company to integrate at pace without losing the entrepreneurial character that made these businesses worth owning in the first place; 
• The expectation that a portion of the working capital investment will unwind as activity levels normalize; 
• The statement that reducing leverage is the first call on free cash flow through the balance of the year, alongside continued measured purchases under our Normal Course Issuer Bid; 
• The expectation that most of the second-quarter crude oil risk premium has unwound and that average prices through the balance of 2026 will be lower and more volatile than second-quarter realized prices; 
• The expectation that near-term North American gas-directed drilling will remain restrained, and that LNG Canada volumes, incremental U.S. Gulf Coast liquefaction capacity and gas-fired power demand will support a call on additional supply from the Montney, Duvernay, Deep Basin and Haynesville from 2027 onward; 
• The expectation of a seasonally stronger third quarter in Canada and a busier second half of 2026 than the comparable period of 2025, and the Company's objective of holding or extending its Canadian customer base and market share; 
• Industry commentary about increased drilling in the Western Canadian Sedimentary Basin through the balance of 2026; 
• The expectation that U.S. activity will build modestly from second-quarter levels, and that industry consolidation and reduced service capacity will concentrate work with providers demonstrating scale, technical capability and balance sheet strength; 
• The expectation that continued adoption of rotary steerable systems will raise revenue capture per operating day and remain a priority for capital deployment; 
• The expectation that the displacement of third-party rental equipment with owned measurement-while-drilling systems and mud motors will continue to support margins; 
• The expectation of a gradual, technology-led recovery in oilfield services activity rather than a conventional cyclical upswing; 
• The Company's intention to cover activity into cash, reduce leverage and complete the integration of Stryker and SB and to retain flexibility to pursue further accretive consolidation opportunities; 
• The statement that the Company does not require a higher rig count to grow; 
• The statement that a weaker Canadian dollar remains a modest tailwind on translation of U.S. earnings.

The Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including information obtained from third-party industry analysts and other third-party sources.  In some instances, material assumptions and material factors are presented elsewhere in this News Release in connection with the forward-looking statements.  You are cautioned that the following list of material factors and assumptions is not exhaustive.  Specific material factors and assumptions include, but are not limited to:

• the performance of ACT's business; 
• impact of economic and social trends; 
• oil and natural gas commodity prices and production levels; 
• capital expenditure programs and other expenditures by ACT and its customers; 
• the ability of ACT to attract and retain key management personnel; 
• the ability of ACT to retain and hire qualified personnel; 
• the ability of ACT to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities; 
• the ability of ACT to maintain good working relationships with key suppliers; 
• the ability of ACT to retain customers, market its services successfully to existing and new customers and reliance on major customers; 
• risks associated with technology development and intellectual property rights; 
• obsolescence of ACT's equipment and/or technology; 
• the ability of ACT to maintain safety performance; 
• the ability of ACT to obtain adequate and timely financing on acceptable terms; 
• the ability of ACT to comply with the terms and conditions of its credit facility; 
• the ability to obtain sufficient insurance coverage to mitigate operational risks; 
• currency exchange and interest rates; 
• risks associated with future foreign operations; 
• the ability of ACT to integrate its transactions and the benefits of any acquisitions, dispositions and business development efforts; 
• environmental risks; 
• business risks resulting from weather, disasters and related to information technology; 
• changes under governmental regulatory regimes including tariffs and tax, environmental, climate and other laws in Canada and the U.S.; and 
• competitive risks.

Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties some of which are described herein.  Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Company's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements.  These risks and uncertainties include, but are not limited to, the risks identified in this News Release and in the Company's Annual Information Form under the heading "Risk Factors".  Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

All forward-looking statements contained in this News Release are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Company's current Annual Information Form that has been filed with Canadian provincial securities commissions and is available on www.sedarplus.ca and the Company's website (www.actenergy.com). 

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at June 30, 2026 and December 31, 2025
Canadian dollars in '000s

See accompanying notes to the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three and six months ended June 30, 2026 and 2025
Canadian dollars in '000s except per share amounts

See accompanying notes to the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Six months ended June 30, 2026 and 2025
Canadian dollars in '000s

See accompanying notes to the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three and six months ended June 30, 2026 and 2025
Canadian dollars in '000s

See accompanying notes to the unaudited condensed consolidated financial statements.

SOURCE ACT Energy Technologies LTD.

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