Mr. Michael Gray, reports

ENSIGN ENERGY SERVICES INC. REPORTS 2023 RESULTS

Ensign Energy Services Inc. has released its results for 2023.

2023 HIGHLIGHTS

• Ensign's fourth quarter and year-end 2023 results reflect the Company's commitment to revenue rate discipline, focus on cash flow generation, and continued debt reduction.
• Revenue for 2023 was $1,791.8 million, a 14 percent increase from 2022 revenue of $1,577.3 million.
• Revenue amounts and percentage of total by geographic area:
• Canada - $446.4 million, 25 percent;
• United States - $1,040.8 million, 58 percent; and
• International - $304.6 million, 17 percent.
• Adjusted EBITDA for 2023 was $490.2 million, a 31 percent increase from Adjusted EBITDA of $373.6 million for 2022.
• Funds flow from operations for 2023 increased 25 percent to $464.9 million from $372.0 million in the prior year.
• Net income for 2023 was $41.2 million, up from $8.1 million of the prior year.

Canadian drilling recorded 12,373 operating days in 2023, a nine percent decrease from 13,589 operating days in 2022. Canadian well servicing recorded 46,523 operating hours in 2023, a two percent decrease from 47,269 operating hours in 2022.

United States drilling recorded 15,759 operating days in 2023, a 12 percent decrease from 17,928 operating days in 2022. United States well servicing recorded 121,147 operating hours in 2023, a two percent decrease from the 124,035 operating hours in 2022.

International drilling recorded 4,946 operating days in 2023, a 24 percent increase from 3,973 operating days recorded in 2022.

Net repayments against debt totaled $217.6 million since December 31, 2022, exceeding the Company's 2023 debt reduction target.

Since the first quarter of 2019, when the Company's total debt, net of cash, peaked at $1,688.1 million, the Company has reduced net debt by $498.2 million over the past five years. Notably, the Company reduced net debt by almost $500.0 million while completing two counter-cyclical, accretive acquisitions over the same five year period, totaling $162.7 million.

The Company's debt reduction for 2024 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.

In the fourth quarter of 2023, the Company agreed on a three-year $369.0 million term credit facility agreement with its syndicate of lenders (the "Term Facility"). Concurrently with the new Term Facility agreement, the Company has also amended and extended the existing $900.0 million Credit Facility. The maturity date of the Credit Facility has been extended for three years to October 2026. The Company now expects the blended interest rate between the Term Facility and Credit Facility for the fiscal 2024 to be approximately eight percent. In addition, the Company's outstanding Senior Notes were redeemed during the fourth quarter of 2023.

Net capital expenditures for the calendar year 2023 totaled $160.7 million, consisting of $16.1 million in upgrade capital, $159.7 million in maintenance capital, offset by proceeds of $15.1 million from equipment disposals.

Capital expenditures for the calendar year 2024 are targeted to be approximately $147.0 million, primarily related to maintenance expenditures. In addition, the Company may consider additional equipment upgrade, growth, or relocation projects in response to customer demand and under appropriate contract terms.

OVERVIEW

Revenue for the year ended December 31, 2023 was $1,791.8 million, an increase of 14 percent from 2022 revenue of $1,577.3 million. Adjusted EBITDA for 2023 totaled $490.2 million ($2.67 per common share), 31 percent higher than Adjusted EBITDA of $373.6 million ($2.13 per common share) for the year ended 2022.

Net income attributed to common shareholders for the year ended December 31, 2023 was $41.2 million ($0.22 per common share) compared with a net income attributed to common shareholders of $8.1 million ($0.05 per common share) for the year ended December 31, 2022.

The Company's operating days were lower in 2023, as compared with 2022, as a result of volatile commodity prices, customer capital discipline and acquisition and merger activity between oil and natural gas producers in both Canada and the United States.

Oilfield services continued to be constructive despite the recent volatility in global crude oil and natural gas commodity prices and uncertain global economic and geopolitical conditions. Global inflationary pressures, economic uncertainty, and geopolitical tensions had impacted global commodity prices, reinforced producer and contractor capital discipline, and added uncertainty in the back half of 2023. However, despite these short-term headwinds, the outlook for global demand for crude oil is expected to continue to increase year-over-year and OPEC+ nations continue to moderate supply in response to market conditions.

Over the near term, there remains uncertainty regarding several factors that may impact the oil and natural gas industry which will impact the demand for oilfield services. The factors are but not limited to, the impacts of ongoing hostilities in Ukraine on the global economy, the impact of recent and potential future geopolitical developments in the Middle East on global crude oil and natural gas markets, overall global economic health and recessionary pressures in certain environments.

The Company exited 2023 with a working capital surplus of $15.8 million, compared with a working capital deficit of $707.8 million as of December 31, 2022. The change in working capital year-over-year was largely due to its $900.0 million revolving credit facility (the "Credit Facility") being reclassified as long-term, following an amended and restated credit agreement. The Company's available liquidity consisting of cash and available borrowings under its Credit Facility totaled $74.6 million as of December 31, 2023, compared to $67.2 million at December 31, 2022. The available liquidity increased by $7.4 million primarily due to the increase funds flow from operations.

OUTLOOK

Industry Overview

The outlook for oilfield services continues to be constructive despite volatile commodity prices and macroeconomic pressures. Geopolitical tensions and hostilities in areas of the Middle East and the ongoing Russia-Ukraine conflict continue to impact global commodity prices. In addition, these factors continue to add uncertainty to the outlook for crude oil supply and commodity prices over the short-term.

Constructively, the outlook for global demand for crude oil continues to forecast year-over-year growth. Furthermore, OPEC+ nations continue to monitor the oil markets and are expected to maintain moderated supply over the short-term. Global crude prices remained range bound over the fourth quarter and into the first quarter of 2024, due in part to the hostilities in the Middle East, with the benchmark price of West Texas Intermediate ("WTI") averaging US $78/bbl in November, $72/bbl in December, and $74/bbl in January.

Over the short-term, volatile commodity prices have impacted the industry rig count in North America and reinforced customer discipline with capital programs. Furthermore, there have been several recent oil and gas sector mergers and acquisitions ("M&A") in both the Canadian and the US operating regions that have impacted drilling programs over the short-term. Over the long-term, the Company expects customer consolidation to be positive for oilfield services activity and facilitate relatively consistent drilling programs.

In 2024, the Company expects positive oil prices to support relatively steady oilfield services activity in order to maintain or potentially grow production, especially so in consideration of well productivity declines and low drilled but uncompleted ("DUC") well inventory in certain producing areas in the United States. In addition, the Company remains optimistic regarding Canadian drilling activity with the completion of the Trans Mountain oil pipeline expansion project and the completion of the Coastal GasLink pipeline expected in 2024. In additional, several liquefied natural gas ("LNG") projects, including LNG Canada, are expected to support activity over the medium-to-long term.

The Company remains committed to disciplined capital allocation and debt repayment. The Company successfully reached the targeted $200.0 million debt reduction in 2023 and has targeted approximately another $200.0 million in debt reduction for the 2024 year. In addition, from the period beginning 2023 to the end of 2025, the Company reaffirms its targeted debt reduction of approximately $600.0 million. If industry conditions change, these targets may be increased or decreased.

The Company has budgeted base capital expenditures for 2024 of approximately $147.0 million primarily related to maintenance expenditures. In addition to the maintenance expenditures, the Company may continue to consider rig relocation, upgrade, or growth projects in response to customer demand and under appropriate contract terms.

Canadian Activity

Canadian activity, representing 25 percent of total revenue in 2023, increased in the fourth quarter of 2023 compared to the third quarter of 2023 as operations entered the winter drilling season. Activity in Canada is expected to increase in first quarter of 2024 due to positive market conditions over the winter drilling months. In the Canadian market, additional pipeline capacity and general market conditions are expected to support positive activity in 2024.

As of February 29, 2024, of our 117 marketed Canadian drilling rigs, approximately 46 percent are engaged under term contracts of various durations. Approximately 31 percent of our contracted rigs have a remaining term of sx months or longer, although they may be subject to early termination.

United States Activity

United States activity, representing 58 percent of total revenue in 2023, declined modestly in the fourth quarter of 2023 compared to the third quarter of 2023 largely as a result of customer M&A activity and depressed activity in the Company's California region. Operations in California continue to be challenged as producers are currently working through drilling permit challenges that have impacted drilling programs over the short-term. The remaining areas of the Company's United States operations are expected to remain steady in the first quarter of 2024.

As of February 29, 2024, of our 83 marketed United States drilling rigs, approximately 51 percent are engaged under term contracts of various durations. Approximately 12 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 17 percent of total revenue in 2023, remained steady in the fourth quarter of 2023 and is expected to improve in the first quarter of 2024. Currently, the Company has three rigs active in Oman, two rigs active in Bahrain and two rigs active in Kuwait. The financial and operational performances of all seven active rigs in the Company's Middle East segment are expected to remain steady in the first quarter of 2024.

Activity in Australia remained steady in the fourth quarter of 2023 and is expected to remain steady at seven rigs active in the first quarter of 2024. Operations in Argentina, with two rigs active, are expected remain steady in the first quarter of 2024. Operations in Venezuela will improve in 2024, with one rig activating in the first quarter of 2024.

As of February 29, 2024, of our 32 marketed international drilling rigs, approximately 56 percent, were engaged under term contracts of various durations. Approximately 94 percent of our contracted rigs have a remaining term of six months or longer, although they may be subject to early termination.

CONFERENCE CALL

A conference call will be held to discuss the Company's fourth quarter 2023 results at 10:00 a.m. MST (12:00 p.m. EST) on Friday, March 1, 2024. The conference call number is 1-416-764-8659 (in Toronto) or 1-888-664-6392 (outside Toronto). The conference call ID is: 76291114. A recording will be available until March 8, 2024 by dialing 1-416-764-8677 (in Toronto) or 1-888-390-0541 (outside Toronto) and entering the reservation number 291114#. A live broadcast 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 under the trading symbol ESI.

We seek Safe Harbor.