Mr. Michael Gray reports

ENSIGN ENERGY SERVICES INC. REPORTS 2023 FIRST QUARTER RESULTS

Ensign Energy Services Inc. has released its 2023 first quarter results.

FIRST QUARTER HIGHLIGHTS

• Revenue for the first quarter of 2023 was $484.1 million, a 46 percent increase from the first quarter of 2022 revenue of $332.7 million.
• Revenue by geographic area:
• • Canada - $140.1 million, 29 percent of total;
  • United States - $274.6 million, 57 percent of total; and
  • International - $69.4 million, 14 percent of total.
• Canadian drilling recorded 3,800 operating days in the first quarter of 2023, compared to 3,728 operating days in the first quarter of 2022, an increase of two percent. Canadian well servicing recorded 13,776 operating hours in the first quarter of 2023, a 22 percent increase from 11,260 operating hours in the first quarter of 2022.
• United States drilling recorded 4,617 operating days in the first quarter of 2023, a 25 percent increase from 3,688 operating days in the first quarter of 2022. United States well servicing recorded 27,917 operating hours in the first quarter of 2023, a six percent decrease from 29,689 operating hours in the first quarter of 2022.
• International drilling recorded 1,104 operating days in the first quarter of 2023, a 26 percent increase from 873 operating days recorded in first quarter of 2022.
• Adjusted EBITDA for the first quarter of 2023 was $127.3 million, an 82 percent increase from Adjusted EBITDA of $70.0 million for the first quarter of 2022.
• Funds flow from operations for the first quarter of 2023 increased 54 percent to $118.3 million from $76.7 million in first quarter of the prior year.
• Net capital purchases for the quarter were $49.7 million, consisting of $8.3 million in upgrade capital and $41.6 million in maintenance capital, offset by sale proceeds of $0.2 million. Capital expenditures for 2023 are targeted to be approximately $157.0 million, primarily related to maintenance expenditures and selective growth projects. In addition, the Company may consider other upgrade or growth projects in response to customer demand and appropriate contract terms.
• General and administrative expense increased 33 percent and totaled $14.5 million in the first quarter of 2023, compared with $10.9 million in the first quarter of 2022.
• Long-term debt including current and non-current portions, net of cash, was reduced by $29.1 million since December 31, 2022. Our debt reduction for 2023 is targeted to be approximately $200.0 million. Our target debt reduction for the period beginning 2023 to the end of 2025 is approximately $600.0 million. If industry conditions change, this target could be increased or decreased.

OVERVIEW

Revenue for the three months ended March 31, 2023 was $484.1 million, an increase of 46 percent from revenue for the three months ended March 31, 2022 of $332.7 million. Adjusted EBITDA totaled $127.3 million ($0.69 per common share) in the first quarter of 2023, 82 percent higher than Adjusted EBITDA of $70.0 million ($0.43 per common share) in the first quarter of 2022.

Net income attributable to common shareholders for the three months ended March 31, 2023 was $4.2 million ($0.02 per common share), compared with net income attributable to common shareholders of $6.6 million ($0.04 per common share) for the three months ended March 31, 2022.

Funds flow from operations increased 54 percent to $118.3 million ($0.64 per common share) in the first quarter of 2023 compared with $76.7 million ($0.47 per common share) in the first quarter of the prior year.

The outlook for oilfield services continues to be constructive reflecting increased demand for oilfield services year-over-year resulting in steady activity levels. Global inflationary concerns have prompted central banks to tighten monetary policies. Increasing interest rates, largely resulting from efforts to quell rising inflation, have subsequently engendered uncertainty for global economies regarding recession risk and contracting economic growth. Furthermore, recent stress in the financial sector has contributed to overall economic concerns. These factors continue to impact global energy commodity prices and add uncertainty to the macro-economic outlook over the short-term. However, despite these short-term headwinds, demand for crude oil continues to improve year-over-year. Furthermore, OPEC+ nations continue to moderate supply and respond to market conditions with their most recent production cut announced in April of 2023. Moderated crude oil supply has supported commodity prices over the short-term.

Over the near term, there remains uncertainty regarding the impacts of ongoing hostilities in Ukraine on the global economy, overall global economic health and recessionary pressures in certain operating environments. Furthermore, there are several other factors that may impact the future demand for crude oil and natural gas, commodity prices, and the demand for oilfield services.

The Company's operating days were higher in the first quarter of 2023 when compared with the first quarter of 2022 as operations were positively impacted by improving industry conditions, driving activity improvements year-over-year.

The average United States dollar exchange rate was $1.35 for the first three months of 2023 (2022 - $1.27) versus the Canadian dollar, an increase of six percent, compared with the same period of 2022.

Working capital at March 31, 2023 was a deficit of $678.1 million compared to a deficit of $707.8 million at December 31, 2022. The deficit was largely due to its revolving credit facility (the "Credit Facility") being classified as current. The Company has a history with successfully negotiating contractual terms and extending the maturity of the Credit Facility. At the end of the first quarter 2023, the Company's available liquidity, consisting of cash and available borrowings under its $900.0 million revolving credit facility (the "Credit Facility"), totaled $97.9 million compared with $67.2 million at December 31, 2022. This news release contains "forward-looking information and statements" within the meaning of applicable securities legislation. For a full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Advisory Regarding Forward-Looking Statements" later in this news release. This news release contains references to Adjusted EBITDA and Adjusted EBITDA per common share. These measures do not have any standardized meaning prescribed by IFRS and accordingly, may not be comparable to similar measures used by other companies. The non-GAAP measures included in this news release should not be considered as an alternative to, or more meaningful than, the IFRS measure from which they are derived or to which they are compared. See "Non-GAAP Measures" later in this news release.

OUTLOOK

Industry Overview

The outlook for oilfield services continues to be constructive despite volatile commodity prices and macro-economic headwinds. Recessionary pressures, inflationary concerns, financial sector stress, and the potential for slowing economies continue to weigh on commodity prices. In addition, these factors continue to add uncertainty to the outlook for crude oil demand. However, demand for crude oil is generally expected to improve year-over-year. Furthermore, OPEC+ nations continue to monitor the oil markets and implement cuts to production to moderate supply. As a result, global crude oil prices have recently improved, with the benchmark price of West Texas Intermediate ("WTI") averaging US $77/bbl in February, $73/bbl in March and increasing to average $79/bbl in April.

We expect crude oil demand to remain relatively steady and anticipate that moderated oil supply in a positive oil price environment will continue to support steady oilfield services activity and revenue rates over the course of the 2023. The Company continues to expect North American oil and natural gas producers to remain committed to prioritizing shareholder returns. However, the Company also anticipates that producers will keep relatively steady drilling programs to maintain or grow production in consideration of well productivity declines and low drilled but uncompleted ("DUC") well inventory.

Over the short-term, there remains uncertainty regarding macroeconomic conditions that may impact supply and demand for, and pricing of, crude oil and natural gas and related oilfield services. These factors include but are not limited to, recession risk and global economic health, financial sector stress, the impact of ongoing hostilities in Ukraine, and the future supply of Russian oil and natural gas.

The Company remains committed to disciplined capital allocation and debt retirement. The Company has targeted approximately $200 million in debt reduction for the 2023 year. In addition, from the period beginning 2023 to the end of 2025, the Company has targeted debt reduction of approximately $600 million. If industry conditions change, this target could be increased or decreased.

The Company has budgeted base capital expenditures for 2023 of approximately $157.0 million, related to maintenance expenditures and selective growth projects. The Company may consider additional upgrade or growth projects in response to customer demand and appropriate contract terms.

Canadian Activity

Canadian activity, representing 29 percent of total revenue in the first quarter of 2023, improved in the first quarter due to supportive industry conditions and winter drilling conditions. We expect activity to decrease in the second quarter as operations enter seasonal spring break-up and then improve in the third quarter of the year. The Canadian market remains constructive as Canadian producers, familiar with capital and egress constrained environments, balanced capital programs in the current commodity price environment.

As of May 5, 2023, of our 114 marketed Canadian drilling rigs, approximately 38 percent are engaged under term contracts of various durations. Approximately 43 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

United States Activity

United States activity, representing 57 percent of total revenue in the first quarter of 2023, declined modestly in the first quarter of 2023 compared to the fourth quarter of 2022 as a result of suspended drilling programs in California. Producers operating in California are currently working through drilling permit challenges that have impacted drilling programs over the short-term.

The remaining areas the Company is active in continue to remain steady and are expected to remain stable throughout the second quarter of 2023. Furthermore, the Company currently has limited exposure to natural gas directed drilling programs with no active rigs working in the Haynesville or Marcellus basins.

As of May 5, 2023, of our 86 marketed United States drilling rigs, approximately 73 percent are engaged under term contracts of various durations. Approximately 30 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

International Activity

International activity, representing 14 percent of total revenue in the first quarter of 2023, remained steady for the first quarter of 2023. International activity is expected to improve in the second quarter of 2023 when a third Company rig in Oman is scheduled to commence drilling, joining the two rigs which are currently active in Oman. The Company expects the two rigs active in Bahrain and the two rigs active in Kuwait to remain steady.

In the second quarter of 2023, the Company expects seven of the eight Company marketed rigs in the Middle East will be active and operating on long-term contracts. Operations in Australia are expected to improve in the second quarter of 2023 and over the course of the 2023 year. Operations in Argentina, with two Company rigs active, are also expected remain steady in the second quarter of 2023.

As of May 5, 2023, of our 32 marketed international drilling rigs, approximately 53 percent, were engaged under term contracts of various durations. Approximately 76 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

RISKS AND UNCERTAINTIES

The Company is subject to several risks and uncertainties. A discussion of certain risks faced by the Company may be found under the "Risk Factors" section of the Company's Annual Information Form ("AIF") and the "Risks and Uncertainties" section of the Company's Management's Discussion & Analysis ("MD&A") for the year ended December 31, 2022, which are available under the Company's SEDAR profile at www.sedar.com [sedar.com] .

Other than as described within this document, the Company's risk factors and management of those risks have not changed substantially from as disclosed in the AIF. Additional risks and uncertainties not presently known by the Company, or that the Company does not currently anticipate or deem material, may also impair the Company's future business operations or financial condition. If any of the events described in the risk factors in this document or the Company's AIF actually occur, overall business, operating results and the financial condition of the Company could be materially adversely affected.

CONFERENCE CALL

A conference call will be held to discuss the Company's first quarter 2023 results at 10:00 a.m. MDT (12:00 p.m. EDT) on Monday, May 8, 2023. The conference call number is 1-416-764-8659 (in Toronto) or 1-888-664-6392 (outside Toronto). The conference call reservation number is: 53874848. A taped recording will be available until May 15, 2023 by dialing 1-416-764-8677 (in Toronto) or 1-888-390-0541 (outside Toronto) and entering the reservation number 874848#. A live webcast may be accessed through the Company's web site at www.ensignenergy.com/presentations/ .

Ensign Energy Services Inc. is an international oilfield services contractor and is listed on the Toronto Stock Exchange.

We seek Safe Harbor.