CALGARY, AB, March 3, 2023 /CNW/ - Ensign Energy Services Inc. Logo (CNW Group/Ensign Energy Services Inc.)

2022 HIGHLIGHTS

Revenue for 2022 was $1,577.3 million, a 58 percent increase from 2021 revenue of $995.6 million. Revenue amounts and percentage of total by geographic area: Canadian drilling recorded 13,589 operating days in 2022, a 51 percent increase from 8,979 operating days in 2021. Canadian well servicing recorded 47,269 operating hours in 2022, a 30 percent increase from 36,254 operating hours in 2021. United States drilling recorded 17,928 operating days in 2022, a 46 percent increase from 12,242 operating days in 2021. United States well servicing recorded 124,035 operating hours in 2022, a one percent decrease from the 124,916 operating hours in 2021. International drilling recorded 3,973 operating days in 2022, an 11 percent increase from 3,574 operating days recorded in 2021. Adjusted EBITDA for 2022 was $373.6 million, a 75 percent increase from Adjusted EBITDA of $213.2 million for 2021. Funds flow from operations for 2022 increased 95 percent to $372.0 million from $190.7 million in the prior year. During 2022, the Company did not recognize any Canada Emergency Wage Subsidy program payments as compared with $16.0 million recognized in 2021. Net capital expenditures for the calendar year 2022 totaled $126.8 million, consisting of $68.8 million in upgrade capital, $105.6 million in maintenance capital, offset by proceeds of $47.5 million from equipment disposals. Within the upgrade and growth capital, two drilling rigs were reactivated in Oman in the fourth quarter of 2022, and a third rig in Oman will be reactivated in the first half of 2023. In addition, as at December 31, 2022, 31 drilling rigs have been reactivated and upgraded during 2022. Capital expenditures for the calendar year 2023 are targeted to be approximately $157.0 million, primarily related to maintenance expenditures and selective growth projects. In addition, the Company may consider additional upgrade or growth projects in response to customer demand and appropriate contract terms. Long-term debt, net of cash, was reduced by $50.9 million since December 31, 2021. 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. General and administrative expense increased 27 percent to $48.6 million (3.1 percent of revenue) for year-ended 2022 from $38.2 million (3.8 percent of revenue) for year-ended 2021. On June 7, 2022, the Company settled its Convertible Debentures of $37.0 million through the issuance of 21,142,857 common shares of the Company at conversion price of $1.75. During the fourth quarter of 2022, the Company sold its Canadian directional drilling business, including all operating assets and personnel for a purchase price of $5.0 million to Cathedral Energy Services Ltd. ("Cathedral"). The purchase price was satisfied through the issuance of 7,017,988 common shares of Cathedral to the Company. As part of the transaction, Cathedral and the Company have entered into a marketing and technology alliance which will further help support and expand the customer base of both companies in the Canadian market. Due to the strong financial performance of the Company in 2022, the annual bonus and performance share unit payments to employees and management of the Company was capped at 5% of 2022 EBITDA, in accordance with the Company's compensation plan. The Company believes that this level of payments provides incentive to employees and management to achieve strong financial performance while at the same time providing shareholders with returns on their investment.

OVERVIEW

Revenue for the year ended December 31, 2022 was $1,577.3 million, an increase of 58 percent from 2021 revenue of $995.6 million. Adjusted EBITDA for 2022 totaled $373.6 million ($2.13 per common share), 75 percent higher than Adjusted EBITDA of $213.2 million ($1.31 per common share) for the year ended 2021.

Net income attributed to common shareholders for the year ended December 31, 2022 was $8.1 million ($0.05 per common share) compared with a net loss attributed to common shareholders of $159.5 million ($0.98 per common share) for the year ended December 31, 2021.

During 2022, the Company did not recognize any Canada Emergency Wage Subsidy program payments as compared with $16.0 million recognized in 2021.

During the fourth quarter of 2022, the Company sold its Canadian directional drilling business, including all operating assets and personnel for a purchase price of $5.0 million to Cathedral Energy Services Ltd. ("Cathedral"). The purchase price was satisfied through the issuance of 7,017,988 common shares of Cathedral. As part of the transaction, Cathedral and the Company have entered into a marketing and technology alliance which will further help support and expand the customer base of both companies in the Canadian market.

The Company's operating days were higher in 2022, as compared with 2021, as a result of supportive industry conditions driving activity improvements year-over-year.

The outlook for oilfield services continues to be positive reflecting year-over-year increases in oilfield services demand and activity. Global inflationary concerns have continued to prompt central banks to tighten monetary policies. Increasing interest rates, largely resulting from efforts to quell rising inflation, have subsequently led to uncertainty for global economies regarding recession risk and contracting economic growth. These factors continue to impact global energy commodity prices and add uncertainty to the macro-economic outlook over the short-term.

However, despite a potential economic slowdown in select major economies, demand for crude oil continues to improve year-over-year. Furthermore, OPEC+ nations continue to moderate supply and respond to market conditions. Moderate crude oil supply, coupled with positive commodity prices, have resulted in increased demand for oilfield services, driving both improved activity and drilling rig rates in the Company's North American segments year-over-year.

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

The Company exited 2022 with a working capital deficit of $707.8 million, compared with a working capital surplus of $104.2 million as of December 31, 2021. The change in working capital year-over-year was largely due to its $900.0 million 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. The Company's available liquidity consisting of cash and available borrowings under its Credit Facility totaled $67.2 million as of December 31, 2022, compared to $15.8 million at December 31, 2021. The available liquidity increased by $51.4 million primarily due to the increase in operating activity and increasing funds flow from operations.

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.

FINANCIAL AND OPERATING HIGHLIGHTS

(Unaudited, in thousands of Canadian dollars, except per share data and operating information)

Three months ended December 31 Twelve months ended December 31 2022 2021 % change 2022 2021 % change Revenue  467,980 296,166 58 1,577,329 995,594 58 Adjusted EBITDA 1 129,963 57,861 nm 373,618 213,173 75 Adjusted EBITDA per common share 1 Basic $         0.76 $         0.35 nm $         2.13 $         1.31 63 Diluted $         0.76 $         0.36 nm $         2.12 $         1.31 62 Net (loss) income attributable to common shareholders 11,897 (29,235) nm 8,128 (159,475) nm Net (loss) income attributable to common shareholders per common share Basic $         0.07 $       (0.18) nm $         0.05 $       (0.98) nm Diluted $         0.07 $       (0.18) nm $         0.05 $       (0.98) nm Cash provided by operating activities  121,497 39,221 nm 319,962 178,642 79 Funds flow from operations  110,361 46,644 nm 371,956 190,695 95 Funds flow from operations per common share  Basic $         0.65 $         0.28 nm $         2.12 $         1.17 81 Diluted $         0.65 $         0.29 nm $         2.11 $         1.17 80 Long-term debt, net of cash 2 507,009 1,440,579 (65) 507,009 1,440,579 (65) Weighted average common shares - basic (000s) 183,574 162,385 13 175,578 162,541 8 Weighted average common shares - diluted (000s) 184,652 163,454 13 176,430 163,195 8 Drilling 2022 2021 % change 2022 2021 % change Number of marketed rigs 3 Canada 4 123 127 (3) 123 127 (3) United States 89 93 (4) 89 93 (4) International 5 34 42 (19) 34 42 (19) Total 246 262 (6) 246 262 (6) Operating days 6 Canada 4 3,483 3,229 8 13,589 8,979 51 United States 5,026 3,688 36 17,928 12,242 46 International 5 1,074 942 14 3,973 3,574 11 Total 9,583 7,859 22 35,490 24,795 43 Well Servicing 2022 2021 % change 2022 2021 % change Number of rigs Canada 47 52 (10) 47 52 (10) United States 47 48 (2) 47 48 (2) Total 94 100 (6) 94 100 (6) Operating hours Canada 11,053 9,821 13 47,269 36,254 30 United States 30,744 29,419 5 124,035 124,916 (1) Total 41,797 39,240 7 171,304 161,170 6

nm - calculation not meaningful 1. Refer to Adjusted EBITDA calculation in Non-GAAP Measures. 2. Change in long-term debt, net of cash was largely due to its $900.0 million revolving credit facility being classified as current. 3. Total rigs: Canada - 131, United States - 117, International - 43 (2021: Canada - 137, United States - 127, International - 48). 4. Excludes coring rigs.  5. Includes workover rigs 6. Defined as contract drilling days, between spud to rig release.

FINANCIAL POSITION AND CAPITAL EXPENDITURES HIGHLIGHTS

As at ($ thousands) 2022 2021 2020 Working capital (deficit)1, 2 (707,800) 104,228 103,036 Cash 49,880 13,305 44,198 Long-term debt 556,889 1,453,884 1,384,605 Long-term debt, net of cash 507,009 1,440,579 1,340,407 Total long-term financial liabilities 562,837 1,458,211 1,390,647 Total assets 3,183,904 2,977,054 3,054,493 Long-term debt to long term-debt plus shareholder's equity ratio 0.30 0.55 0.50

1 See Non-GAAP Measures section. 2 Change in working capital (deficit), was largely due to its $900.0 million revolving credit facility being classified as current.

Three months ended December 31 Twelve months ended December 31 ($ thousands) 2022 2021 % change 2022 2021 % change Capital expenditures Upgrade/growth  13,748 3,395 nm 68,763 20,492 nm Maintenance  27,491 19,518 41 105,630 44,760 nm Proceeds from disposals of property and equipment (608) (2,581) (76) (47,544) (7,228) nm Net capital expenditures before acquisitions 40,631 20,332 nm 126,849 58,024 nm Acquisition of 35 drilling rigs, related equipment, land and buildings — — — —