Mr. Lyle Whitmarsh reports

STAMPEDE DRILLING INC. ANNOUNCES 2023 RECORD BREAKING THIRD QUARTER RESULTS

Stampede Drilling Inc. has released its consolidated financial and operational results for the three- and nine-month periods ended Sept. 30, 2023.

This news release should be read in conjunction with the Dec. 31, 2022, audited consolidated financial statements prepared in accordance with international financial reporting standards (IFRS), the Dec. 31, 2022, annual MD&A (management's discussion and analysis) and the annual information form (AIF) for the year ended Dec. 31, 2022, as well as the condensed unaudited consolidated interim financial statements and notes for the three- and nine-month periods ended Sept. 30, 2023, and Sept. 30, 2022. Additional information regarding Stampede, including the AIF, is available on SEDAR+.

All amounts or dollar figures are denominated in thousands of Canadian dollars except for per-share amounts, number of drilling rigs and operating days, or unless otherwise noted.

Third quarter 2023 operational highlights

For the three months ended Sept. 30, 2023, the corporation recorded the following record-breaking third quarter results since inception:

• Revenue for the three-month period ended Sept. 30, 2023, was $25,520, up $4,798 (23 per cent) compared with $20,722 for the corresponding 2022 period.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the three-month period ended Sept. 30, 2023, was $6,201, up $1,218 (24 per cent) compared with $4,983 for the corresponding 2022 period.
• Net income for the three-month period ended Sept. 30, 2023, was $3,559, up $694 (24 per cent) compared with a net income of $2,865 for the corresponding 2022 period.
• Free cash flow for the three-month period ended Sept. 30, 2023, was $4,168, up $2,296 (123 per cent) compared with $1,872 for the corresponding 2022 period.

The corporation's results were driven by both higher operating days and higher revenue per day. The higher revenue per day was primarily due to increased field labour costs, which were passed through to its customers. Total operating days in the quarter were 978, up 156 (19 per cent) from the 822 operating days in the corresponding period of 2022. The increase in operating days was the result of the corporation crewing and contracting the rigs acquired throughout 2022 in 2023. The corporation currently has 19 marketable rigs, which includes a high-spec triple purchased in August, 2022.

During Q3 2023, the corporation entered into a new $50,000 syndicated credit agreement. Under the credit agreement, which has an initial term of three years, the corporation will have an available limit of $20,000 under a non-revolving term loan, $15,000 under a revolving credit facility and $15,000 under an additional revolving credit facility.

The corporation repurchased 3,838 shares at an average share price of 25 cents during the three months ended Sept. 30, 2023, as part of its previously announced normal course issuer bid (NCIB) on June 7, 2022.

Outlook

Stampede is anticipating continued commodity volatility throughout the remainder of 2023 due to current macroeconomic influences, including the impact of the Russian invasion of Ukraine and the Israeli-Palestine conflict. Despite the anticipated volatility, Stampede is forecasting to continue its strong utilization and day rates for its fleet of 19 rigs for the remainder of 2023 and into 2024. Access to qualified field labour will continue to be an industry-wide challenge for the remainder of 2023, however, management has proven its ability to attract and crew qualified field hands since Stampede's inception.

Stampede ended Q3 2023 with a debt to EBITDA of under one times and will continue to focus on maintaining its strong balance sheet and corresponding low debt levels. The corporation will continue to align all levels of compensation and G&A (general and administrative) spending to ensure shareholder value and alignment.

The corporation will continue to assess capital allocations on its normal course issuer bid, acquisition opportunities and capital expenditures to further enhance customer desirability of its current fleet in 2023.

Description of Stampede's business

Stampede is an energy services company that provides premier contract drilling services in Western Canada. Stampede operates a fleet of 18 telescopic double drilling rigs and one high-spec triple drilling rig suited for most formations within the Western Canadian sedimentary basin (WCSB). The corporation's head office is located in Calgary, Alta., with operations based out of Nisku, Alta., and Estevan, Sask. The corporation's common shares trade on the TSX Venture Exchange under the symbol SDI.

Results from operations for the nine-month period ended Sept. 30, 2023:

• Revenue of $64,462, an increase of $20,820 (48 per cent) from $43,642 compared with the corresponding 2022 period. The increase was primarily related to the addition of nine drilling rigs to the corporation's fleet throughout 2022 that increased number of operating days and increased day rate from the flow through field labour charges to Stampede's customers;
• Operating days of 2,404, an increase of 597 operating days (33 per cent) from 1,807 operating days compared with the corresponding 2022 period. Operating days increased primarily as a result of the increase in rig count compared with the prior period. Drilling rig utilization for the nine-month period ended Sept. 30, 2023, was 46 per cent, which was a 13-per-cent decrease from 59 per cent compared with the corresponding 2022 period, due to the lower utilization for the nine drilling rigs acquired in 2022, and 12 per cent higher than the CAOEC industry average utilization rate of 34 per cent for the nine-month period ended Sept. 30, 2023;
• Gross margin percentage of 32 per cent, remaining the same at 32 per cent as compared with the corresponding 2022 period. The gross margin was impacted by higher rig operating expenses due to inflationary pressures and labour costs and offset by the increase in revenue per day;
• Adjusted EBITDA of $14,193, an increase of $4,625 (48 per cent) from $9,568 compared with the corresponding 2022 period. The increase is primarily related to increased operating days and increased revenue per day, and partially offset by higher operating expenses and general and administrative expenses;
• Net income of $7,265, an increase of $2,538 (54 per cent) from $4,727 compared with the corresponding 2022 period. The increase is primarily related to increased operating days and revenue per day, and partially offset by higher operating expenses, general and administrative expenses, and finance costs;
• General and administrative expenses of $7,574, an increase of $2,700 (55 per cent) from $4,874 compared with the corresponding 2022 period. The increase is primarily related to the corporation's increased headcount and administration expenses due to the increased activity levels.

Results from operations for the three-month period ended Sept. 30, 2023:

• Revenue of $25,520, an increase of $4,798 (23 per cent) from $20,722 compared with the corresponding 2022 period. The increase was primarily related to the addition of six drilling rigs to the corporation's fleet throughout 2022, combined with increased revenue per day and flow through field labour charges to Stampede's customers;
• Operating days of 978, an increase of 156 operating days (19 per cent) from 822 operating days compared with the corresponding 2022 period. Operating days increased as a result of the increase in rig count compared with the prior period. Drilling rig utilization for the three-month period ended Sept. 30, 2023, was 56 per cent, which was a 12-per-cent decrease from 68 per cent compared with the corresponding 2022 period and 23 per cent higher than the CAOEC industry average utilization rate of 33 per cent for the three-month period ended Sept. 30, 2023;
• Gross margin percentage of 33 per cent, remaining the same at 33 per cent as compared with the corresponding 2022 period. The gross margin was impacted by higher rig operating expenses due to inflationary pressures and labour costs, and offset by the increase in revenue per day;
• Adjusted EBITDA of $6,201, an increase of $1,218 (24 per cent) from $4,983 compared with the corresponding 2022 period. The increase is primarily related to increased operating days and increased revenue per day, and partially offset by higher operating expenses and general and administrative expenses;
• Net income of $3,559, an increase of $694 (24 per cent) from net income of $2,865 compared with the corresponding 2022 period. The increase is primarily related to increased operating days and revenue per day, and partially offset by higher operating expenses, general and administrative expenses, and finance costs;
• General and administrative expenses of $2,711, an increase of $814 (43 per cent) from $1,897 compared with the corresponding 2022 period. The increase is primarily related to increased headcount and administration expenses due to the increased activity levels.

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