Ladies and gentlemen, thank you for standing by, and welcome to Precision Drilling's Fourth Quarter and Year-End Conference Call. I will now pass the call over to Lavonne Zdunich, Vice President, Investor Relations. Please go ahead.

Good day, and thank you all for joining Precision Drilling's Fourth Quarter and Year-end Conference Call and Webcast. Today, I'm joined by Carey Ford, our President and CEO; and Dustin Honing, the CFO. Please note that some comments today will refer to non-IFRS financial measures and include forward-looking statements, which are subject to a number of risks and uncertainties. For more information on financial measures, forward-looking statements and risk factors, please refer to our news release and other regulatory filings available on SEDAR and EDGAR. Before I pass the call over to Carey and Dustin, I would like to recap how we delivered on our 2025 strategic priorities. First, we enhanced our shareholder returns by reducing debt $101 million, ending the year with a net debt to adjusted EBITDA ratio of 1.2x. And we also repurchased $76 million of our shares, meeting the midpoint of our guidance of allocating between 35% and 45% of our free cash flow to share buybacks. During the year, we maximized our free cash flow by delivering resilient drilling margins in both Canada and the U.S., even though average industry activity declined. And finally, we grew revenue organically by increasing our Canadian market share and increasing our U.S. rig utilization from a low of 27 in February to a high of 40 in the fall and exited the year with 38 active rigs. Today, Precision is the second most active driller in North America. With that, I will turn it over to Dustin Honing.

Great. Thank you, Lavonne. Good morning, good afternoon. Precision's 2025 financial results demonstrate our long-standing commitment towards delivering on our strategic priorities and further strengthening the competitive positioning of the business. Last year, we continued to generate strong free cash flow, allowing Precision to meet our shareholder return commitments while significantly reinvesting into our rig assets and Alpha digital technologies. As we enter the final stages of our long-term deleveraging journey, the business is positioned with immense financial flexibility and a platform to maximize value for our shareholders. Moving on to fourth quarter results. We recorded adjusted EBITDA of $126 million, which equates to $132 million before share-based compensation expense. This compares to prior year EBITDA of $121 million, $136 million before share-based compensation expense. During the quarter, we reported a net loss of $42 million, which includes a noncash charge of $67 million related to decommissioning of drilling rigs and another noncash charge of $17 million related to drill pipe. Without these onetime expenses, net income would have been positive $42 million compared to $15 million in the fourth quarter of 2024. In Canada, drilling activity averaged 66 active rigs, an increase of one rig from Q4 '24. Our reported Q4 daily operating margins were $14,132 a day compared to $14,559 a day in the fourth quarter of '24, falling within our prior guidance range. During the fourth quarter, Precision incurred reactivation costs associated with the 2 Super Triples that were mobilized to Canada from the U.S. back in September. Both rigs began operations in Q4 and will be fully operational throughout 2026 and beyond, backed by long-term contracts. In the U.S., we averaged 37 active rigs, a slight increase sequentially from Q3 and an increase of 3 rigs from prior year Q4. Our daily operating margins for the…

Thank you, Dustin, and good morning and good afternoon. As Dustin and Lavonne mentioned, Precision Drilling had a successful 2025, reflecting industry trends with differentiated activity levels and financial outperformance in a flat to declining North American market. Certainly, there is plenty for the Precision team to be proud of about 2025. As our recent performance has been well covered in previous disclosures and on this conference call, I would like to spend time talking about our 2026 priorities and why Precision Drilling is positioned for continued differentiated performance in the year ahead. Our 2026 priorities may sound familiar to listeners because they are consistent with those of prior years with a focus on generating free cash flow, delivering financial returns to our investors and providing high-performance services to our customers. Financial discipline has been important for strengthening Precision's balance sheet, reducing share count and building trust with our investors through our decade-long track record of delivering on commitments. This part is ingrained into Precision's strategy and will continue this year. Our first strategic priority is to drive revenue growth and deepen our customer relationships, and it is listed first because this focus area will be how Precision differentiates itself this year. Our platform provides multiple avenues to achieve this priority. First, I'll discuss our options to grow revenue in the current market. Precision is uniquely positioned to capture demand across North America's diverse basins, each with distinct demand drivers and equipment requirements. What remains constant across every basin is the increasing complexity of well designs and our customers' relentless demand for footage per day performance. Starting in Canada, our heavy oil regions require long horizontals and complex wellbore geometries, including wine rack, feather and fish bone designs. And we're meeting that demand with 17, soon to be 19, pad…

[Operator Instructions] Our first question comes from Derek Podhaizer with Piper Sandler.

Maybe just starting off with Kuwait and the rig that was demobilized over there. I was hoping to get a little more color and context around what happened there. It's great that you're able to backfill as far as reactivating the Saudi rig. And then separately, you also talked about potential reactivations of idle rigs in the region. Can you maybe help refresh us on how many rigs you have idle there and would be candidates to return to work? And where could your active rig count, which is at 7 now go to? So just a little more color on Kuwait and then just potentially the upside to your 7 active rig count today?

Sure, Derek. So we have 6 rigs in the Kuwait market, 4 are active and are on long-term contracts for the next couple of years. We do have 2 idle rigs. One of them just finished its last 6-year contract. And we didn't demobilize it. We just racked it in-country, and we'll be looking for opportunities to deploy that in the region, either in Kuwait or another country. And there will be opportunities to tender that rig, we think, later this year. So we are looking to reactivate that rig. We do have another idle rig in Kuwait that we're -- it's in the same situation. It's a modern rig. We deployed it in, I think, 2017, and we would expect to have opportunities to deploy that rig as well. In Saudi Arabia, we have 2 active rigs. One of them just went back to work. It was a suspended rig that have been well publicized in the market. And that one just went back to work last week, and will be running on a multiple year contract. So we have 2 rigs there and then one rig idle in the region. So first priority for Precision is to reactivate idle rigs in the region, and we think that's a near term -- near- to medium-term opportunity. And I think more medium and long term, we'll be looking for new avenues for growth in the region.

Yes. And Derek, just to clarify, like the 2 will be up to 3 in Saudi after this reactivation is complete.

Right, right. Super helpful. Switching over to the U.S. Obviously, an encouraging guide as far as steady rig count with some potential for the upside. Could you maybe help us understand that potential upside comment that you guys made? Is this, again, more gas-associated rigs like in the Haynesville or Permian, you talked about getting in with maybe some of these performance-based contracts. Just maybe a little more help as far as what the upside there and also publics versus privates?

Yes. I think the answer is all of the above. We're having active rig addition conversations with customers in the Marcellus, in the Haynesville and the Permian. And I think that we're looking at modest growth opportunities, but all of the discussions are driven by performance and efficiency where we think we can outperform several of the rigs that are operating today. I probably should add, we are having conversations with customers in the Rockies as well.

Our next question comes from Keith MacKey with RBC Capital Markets.

Can we just maybe start on the U.S. margin guide for Q1, USD 8,000 to USD 9,000 per day, pretty consistent guide with what you did in Q4, although there was a significant amount of reactivation costs that came through in Q4. So can you just break down some of the pieces for us in terms of the Q1 guide and what we should be expecting for reactivation or changes in day rates or changes in your core OpEx?

Keith, it's Dustin here. I'll start. I'll let Carey jump in. But I would say it's kind of a mixed bag because we're seeing different pricing trends in each one of our operating segments in the Lower 48. We've seen some encouraging pricing play with a lot of the upgraders we've staged into the natural gas markets, that would be the Marcellus and Haynesville, a little bit more competitive in the oil-based markets. But we've been able to leverage our Alpha technologies as an a la carte charge to help support our margins. And then the benefit of fixed cost absorption certainly helps as we've been increasing our activity in the U.S. market. So from what we see, it's very short-term visibility. Contracts are quite short term in nature in the U.S. market, a little bit longer in gas, but overall, shorter than Canada. But from what we see, we feel comfortable with that guidance range for -- to hold firm.

I don't have anything to add there, Dustin. It's a good answer.

Got it. Just anything on reactivation costs we should be expecting for Q1 in the U.S.?

I would expect to see a fairly similar trend, Keith. It's not perfectly linear, but this is just the reality of the constant churn that we see in the U.S. market. But we've been able to absorb those quite well. And I would say you probably want to expect something similar going forward.

Got it. Okay. And just turning to the MOU in Argentina. Just maybe give us a little bit more comments on that. How did this opportunity come about? And what ultimately do you hope to achieve from executing this MOU in terms of financial performance or further international expansion, et cetera?

Sure. So I would say that this was announced in the industry press in the fourth quarter. So it's been out there. I would say that we've looked at Argentina as a really interesting market from both the resource that's there and the growth opportunities. And we've been trying to figure out the way that we can get to the market, have a differentiated offering and reduce some of the challenges and risks associated with that market. We understand that a lot of parts of the market are improving for the better for Western countries or North American countries to go into that region. But we still want to find a solution where we can offer performance and technology, but derisk some of the complexities of doing business in the market. So we think that this is a really good opportunity for us to explore, and that's all that we have right now is an MOU to go to the market in a way that we have an established partner. It's San Antonio Drilling. They have a long-standing relationship and very good customer relationships in the -- long-established reputation and very good customer relationships in the region. And we want to partner with them with our rig technology and digital technology to go and work. And it's hard to say at this point how big of an opportunity this is going to be. But I'll stress that we don't have anything to announce right now. I think that the first rig deployment, if it moved at light speed would be late this year, maybe early next year. And I think we're probably talking about 1 to 3 rigs over the next couple of years. It's not going to be a fast-moving program for us.

Our next question comes from Aaron MacNeil with TD Securities.

Carey, you mentioned the strength of the longer-term Canadian outlook. And I'm sure you don't want to get into anything too specific on a customer-by-customer basis. But with their Q4 results, ARC recently removed Attachie Phase 2 from its 5-year plan and withdrew its broader Attachie guidance. So just curious to see if you've had -- if you've seen any direct impact of this yet, if you're expecting it in the future, how you're thinking about this in the context of overall basin demand for Super Triples or any other color that you could provide?

Yes. So I certainly won't speak to any particular customers' plans and Precision, I think we work for 8 of the top 10 most active customers in the Canadian market. So we do see quite a bit. You did hear my comments that we had 87 rigs running in the winter drilling season. We peaked in January at 87 rigs, which is up from last year. We've had all of our Super Triples and all of our Super Singles active during this winter drilling season. So certainly, we haven't seen any change in demand in the short term. We've been as active as we've ever been, at least in the last decade. And then longer term, I think our point is that takeaway capacity for both oil and gas is strong. We also have deep resources -- deep inventory resources for almost all of our customer base. So I think despite an individual customer with a specific change in plans, we have not seen a broad change in demand from our customers.

Okay. Fair enough. And then maybe to build on Keith's question on the direct leasing opportunity in Argentina. What would a contract look like in terms of daily margin? Who is responsible for the mob and demob? Like how does that -- like all sort of the nuts and bolts of all of that work?

Yes. So I won't get into all the specific details. But yes, the mob and demob would be contemplated in the contract and an economic consideration will be given for that. But think about it as 2 revenue streams for Precision, one from our partner for what we provide on operational support and one from the customer on a direct leasing payment for the rig itself. And I think that's the crux of the contract and why the opportunity is attractive for us if we're able to secure a rig contract or 2 with a customer down there over the next few years.

Our next question comes from Tim Monachello with ATB Cormark Capital Markets.

It was good to see the capital allocation guidance pushing higher on the share repurchases. So I wanted to start there. You're getting to the tail end of your deleveraging target. And I'm curious what you think your allocations are going to look like once you hit that target?

I think we're stretching to give annual allocations for share repurchases. And we like the model. We get feedback from investors all the time that they like the way that we're allocating capital to both debt and equity, and we've been consistent that as we reduce our absolute debt levels, we will increase our direct allocations to shareholders. And that's a broad bucket. It could be share buybacks, it could be dividends at some point, but we'd like to continue that. And based on the current market, based on where valuations have been, we're comfortable continuing that. Now a year from now, we might be in a different market. And so I can't really comment on what form that would take. And I think the key thing for investors to remember about Precision is we are generating significant cash flow in just about any market, and we will continue to use that cash flow to deliver returns for investors.

Okay. And then on the rig upgrade capital, $63 million earmarked for 2026, how much of that is a home currently? And can you speak to which markets you're seeing opportunities for rig upgrades? And I guess a follow-on to that would be, how do you think that will impact your contracted status, particularly in the U.S.?

Yes. So I'll comment about the capital plan. So remember, our capital plan is always activity driven, and that is definitely the case for maintenance, and it is the case for upgrades as well. Upgrades are demand driven. It's where we have customer request and customers willing to enter into contracts. I would say that only a portion of that has been fully committed, and I don't know if it's 15% or 20% or 30% has been fully committed. The rest is what we expect based on conversations with customers. So that could go up and down. The other part of the capital plan that Dustin covered a bit in his opening comments is that the maintenance and infrastructure portion of our capital spend contains long lead items that may either be used in maintenance, may be pushed into 2027 or if we get upgrade contracts, you can think about the absolute total dollar amount of capital expenditures not necessarily going up, but the shift from maintenance to upgrade may change with more capital going to upgrades as we go throughout the year. So that's one comment. Did you have anything?

I would just add, Tim, if you're asking just regionally where we're seeing the upgrade opportunities? It's really a similar allocation that we commented in Q3. So in Canada, it's the deeper extended reach drilling programs in natural gas, specifically the Montney. And then we're seeing continued demand for pad Super Single upgrades with our heavy oil customers, significantly improving the agility of those rigs and converting those rigs from 250 days a year to an asset that might work 325 days. So we really like those upgrades. In the U.S., continued momentum with upgrade opportunities in the Marcellus and Haynesville. And to Carey's comments earlier, we're seeing increased opportunities playing out in the Permian.

Okay. That's helpful. I guess in Q1, which is anticipated to be, I guess, the peak of the oil glut, and you guys are talking about sort of stable rig activity and opportunities in the Permian and gas basins in the U.S. Do you think that when you look through the back half of '26, you continue to think that the rig count in the U.S. is stable? Or do you think you're going to start to see that move higher?

Yes. I think when we comment about flat activity, it's kind of a combination of what we hear and what we read from the experts. And then in the shorter term, what we're hearing from customers. And I think our view from customers is shorter than back half of this year. I think it's -- we've got some customers that are looking a year or 2 out, but the broad market is still largely 6 months out.

Okay. And then last one for me. Just on the Argentina opportunity, would that be served with rigs in your fleet that would assume be upgraded from the U.S.? Or would that be -- assume it probably not a new build. Is that the right way to think of it?

No. And that's one of the reasons why it's attractive to us. It wouldn't be new builds. We still have some idle Super Triple rigs in the U.S. market. And some of them would have minor upgrades before they were deployed and some would require a bit more capital. But all of those capital investments and mobilization would be contemplated in the economics of any contract that we pursue.

Our next question comes from John Daniel with Daniel Energy Partners.

A quick question. You mentioned potentially modest growth expectation in the U.S. market and you cited 4 basins. I'm curious, is that growth -- is that Precision adding rigs that are being displaced -- you're displacing others? Or do you actually see your customers in those 4 basins looking to add incremental activity?

I would say at least half are displacements, and I'd probably add on more of those being displacements than customer rig adds.

Got it. And then as we continue to see more and more consolidation within your customer base, how is that influencing your appetite to potentially participate or prosecute more consolidation within your businesses?

Yes. I would say we've been pretty consistent. We don't look at any of the targets as strategic. So there's not one that we think we have to have to make Precision Drilling a better and more competitive company. There are some decent targets out there, and it's just a matter of whether it works on a strictly financial basis where we pay something below our multiple and get synergies and we can integrate well within our fleet. So possible, but not strategic priority #1.

Fair enough. And the final one is just housekeeping. How many -- in the budget for '26 -- if you said this, I apologize, I missed it, but how many rig upgrades does that contemplate?

I would say it's -- right now, I mean, it can move around a lot. It's -- think about it as a big bucket of capital and sometimes it might be a high-torque top drive on a rig and that's an upgrade and that's not a huge dollar amount or it might be creating a 2,000-horsepower Super Triple rig, which could be $6 million, $7 million, $8 million. So I would say, as we sit here today, think about it as 10 upgrades, plus or minus a few.

[Operator Instructions] Our next question comes from Josef Schachter with SER.

Two questions. Going through the decommissioning of the drilling rigs and the $67 million charge, can you talk -- is there a certain class of rigs that you were -- and age of rigs that you decommissioned? And then in the balance sheet under assets held for sale, you don't even have anything there either for scrap value. Can you give me some background on all of that?

Yes. So we did a deep dive on really analyzing the forward trends in the industry and what's really evolved in these more complex drilling programs. It's really starting to surface and take hold, I'd say, over the last 1 or 2 years where rigs -- drilling programs are becoming more complex, higher strain on equipment. There's just a specific capacity that you need. So when we look deep into our fleet and scrutinize the capabilities, it just was clear that we had a few that were falling not competitive, and we had that review late in the year and booked the appropriate charge.

Yes, in terms of the assets held for sale, there's going to be 2 things that we do with those rigs. One will be strip the rigs with any parts that we might be able to use in our fleet. So there will be some of that. And the rest, we would scrap, but we wouldn't necessarily have a held-for-sale item on our financials because we don't have a time line on that.

Okay. Next one, going to the drill pipe, $17 million. What's going on in pricing? Because you mentioned you're going to be buying quite a bit in Q4. How big of a swing are you seeing in these numbers in terms of the timing of when it's appropriate and attractive for you to add more drill pipe?

Yes. I would say that when we pursue bulk drill pipe purchases, and we've done this throughout the history of our company, usually, there are times in the market where a supplier will have extra drill pipe. They'll need to have a home for production schedule, and we're able to capitalize with some liquidity and planning to where we can take advantage of a discount. And don't think about this as being a 40% or 50% discount. But on large dollar amounts, it can be meaningful, and it makes us act a little bit quicker than we would have otherwise.

And the $17 million happened for any specific reason?

Similar to our rigs, we made an adjustment on useful life for drill pipe and similar comment. As wells have become more complex, harder on equipment, we've noticed that our drill pipe life spans have been shortened up. And then we did have some that were disposed as well at a loss.

Yes. And I would just say that this is not a Precision dynamic. This is an industry dynamic in both the Canadian market and the U.S. market. Drill pipe is just wearing out a whole lot faster than it used to, and we need to adjust our accounting treatment to account for that.

I'm not showing any further questions at this time. I'd like to turn the call back over to Lavonne.

Thank you, everyone, for joining today. If you have any further questions, you can call me or contact me through e-mail. Thank you.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.