Mr. Lyle Whitmarsh reports

STAMPEDE DRILLING INC. ANNOUNCES 2023 RECORD BREAKING ANNUAL AND FOURTH QUARTER RESULTS

Stampede Drilling Inc. has released its consolidated financial and operational results for the three- and 12-month periods ended Dec. 31, 2023.

This press release should be read in conjunction with the Dec. 31, 2023, audited consolidated financial statements prepared in accordance with international financial reporting standards as issued by the International Accounting Standards Board, the related management's discussion and analysis (MD&A), and the annual information form (AIF) for the year ended Dec. 31, 2023. 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.

Fourth quarter 2023 operational highlights

• Revenue of $21,494 -- This represents a decrease of $1,744 or 8 per cent from the fourth quarter of 2022 driven by lower rig utilization as a result of commodity price volatility and unseasonably warmer weather. This was partially offset by a 10-per-cent increase in revenue per day.
• Achieved record Q4 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $6,287 -- This represents a 10-per-cent increase from the fourth quarter of 2022. The increase was due to an increase in gross margin driven by higher day rates and decreased operational costs.
• Net income of $3,237 -- This represents a decrease of $246 or 7 per cent from the fourth quarter 2022. The decrease was primarily related to increased depreciation costs due to an increased asset base and a one-time loss on the disposition of assets partially offset by increased adjusted EBITDA and a lower share-based payments expense.
• Gross margin of 40 per cent -- This represents an increase of 5 per cent from 35 per cent in the corresponding 2022 period. The increase was primarily related to an increase in revenue per day combined with a slight decrease in operating costs.
• Repurchase of 12,171 common shares -- In the fourth quarter of 2023 the corporation repurchased and cancelled 12,761 common shares under its normal course issuer bid (NCIB) at a weighted average price per common share of 24 cents for total consideration of $3,079. The total amount of common shares repurchased and cancelled during the fourth quarter of 2023 represents 5.58 per cent of the total issued and outstanding shares of the corporation.
• Free cash flow of $5,409 -- This represents an increase of $4,971 primarily related to a $4,270 decrease in maintenance and sustaining capital spending for the corresponding 2022 period.
• Decreased total net financed debt to adjusted EBITDA covenant ratio to 0.80 times -- the 0.32 times decrease from 1.12 times was a result of the increased adjusted EBITDA while keeping the corporations total net financed debt flat with prior year.

2023 annual operational highlights

• Achieved record revenue of $85,956 -- This represents a 29-per-cent increase as compared with 2022. The increase was primarily driven by a 17-per-cent increase in operating days for 2023 as a result of the addition of nine drilling rigs to the corporation's fleet throughout the second half of 2022. The corporation also experienced a 10-per-cent increase in revenue per day primarily related to higher field wages charged back to the company's customers.
• Achieved record net income of $10,504 -- This represents a 28-per-cent increase from 2022. The increase was primarily related to increased adjusted EBITDA partially offset by increased depreciation and finance costs.
• Achieved record adjusted EBITDA of $20,479 -- This represents a 34-per-cent increase as compared with 2022. The increase was primarily due to increased revenue, partially offset by higher rig operating expenses due to inflationary pressures, and an increase in general and administrative expenses.
• Repurchase of 16,585 common shares -- In 2023, the corporation repurchased and cancelled 16,585 common shares under its NCIB at a weighted average price per common share of 24 cents, for total consideration of $4,047. The total amount of common shares repurchased and cancelled during the financial year ended Dec. 31, 2023, represents 7.3 per cent of the total issued and outstanding common shares of the corporation.
• Capital expenditures of $14,455 -- Capital expenditures for 2023 comprised $9,271 of growth capital and $5,184 of maintenance and sustaining capital.
• New syndicated debt agreement -- During the year ended Dec. 31, 2023, the corporation entered into a new $50,000 credit agreement, which has an initial term of three years. Under the credit agreement, Stampede has an available limit of $20,000 under a non-revolving term loan, $15,000 under a revolving credit facility (the syndicated facility) and $15,000 under an additional revolving credit facility (the operating facility, and collectively with the term loan facility and the syndicated facility, the credit facilities).

Outlook

Stampede is on pace for another strong start to the year, as it has consistently run 16 out of its 19 rig fleet throughout the first few months of 2024. Stampede believes commodity volatility will continue throughout the remainder of 2024 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 2024 based on current discussions with its customer base. Maintaining Stampede's qualified field labour force will continue to be a top priority for the remainder of 2024. Management has proven its ability to attract and crew qualified field hands since Stampede's inception. Stampede is currently running full crews with relief on all its operating rigs.

On June 7, 2023, Stampede received approval from the TSX Venture Exchange to commence a NCIB (normal course issuer bid) to repurchase up to 10 per cent of Stampede's Public Float (as such term is defined in TSX-V Policy 1.1 -- Interpretation) during a 12-month period commencing on June 1, 2023. As of the date hereof, Stampede has returned $4,335 back to shareholders by repurchasing and cancelling 17,841 common shares under its NCIB at an average share price of 24 cents. The board of directors and management believe there is a substantive disparity between Stampede's share price and the fundamental value of the business. Stampede will continue to assess capital allocations on it's NCIB against potential acquisition opportunities and capital expenditures to further enhance customer desirability of its current fleet.

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-V under the symbol SDI.

• Revenue of $85,956 -- An increase of $19,077 (29 per cent) from $66,879 in the corresponding 2022 period. The increase was primarily related to the addition of nine drilling rigs to the corporation's fleet throughout the second half of 2022, which increased the number of operating days for 2023. Revenue also increased due to a 10-per-cent increase in revenue per day, which was primarily due to wage field increases charged back to our customers.
• Operating days of 3,131 -- An increase of 457 operating days (17 per cent) from 2,674 operating days in the corresponding 2022 period. Operating days increased primarily as a result of the increase in rig count compared with the prior period.
• Gross margin percentage of 34 per cent -- An increase of 1 per cent from 33 per cent in the corresponding 2022 period. The gross margin increase was primarily related to the increase in revenue per day, partially offset by the higher rig operating expenses due to inflationary pressures.
• Net income of $10,504 -- An increase of $2,294 (28 per cent) from $8,210 in the corresponding 2022 period. The increase was primarily related to increased operating days and revenue per day, partially offset by higher operating expenses, general and administrative expenses, and finance costs.
• General and administrative expenses of $10,088 -- An increase of $1,786 (22 per cent) from $8,302 in the corresponding 2022 period. The increase in general and administrative expense was primarily related to the increase in headcount compensation and corresponding administration expenses due to increased 2023 activity levels.
• Adjusted EBITDA of $20,479 -- An increase of $5,174 (34 per cent) from $15,305 in the corresponding 2022 period. The increase was primarily related to the increase in operating days and gross margin.

• Revenue of $21,494 -- A decrease of $1,744 (8 per cent) from $23,238 in the corresponding 2022 period. The decrease was due to a reduction in operating days. This was partially offset by a 10-per-cent increase in revenue per day during the three month period ended Dec. 31, 2023.
• Operating days of 727 -- A decrease of 140 operating days (16 per cent) from 867 operating days in the corresponding 2022 period. Operating days decreased due to a reduction in operating activities as a result of customer capital discipline, commodity price volatility and unseasonably warmer weather during the three-month period ended Dec. 31, 2023. Drilling rig utilization for the three-month period ended Dec. 31, 2023, was 42 per cent, which was a 19-per-cent decrease from 61 per cent in the corresponding 2022 period, but 6-per-cent higher than the CAOEC industry average utilization rate of 36 per cent for the three months ended Dec. 31, 2023.
• Gross margin percentage of 40 per cent -- An increase of 5 per cent from 35 per cent in the corresponding 2022 period. The change was related to an increase in revenue per day combined with a slight decrease in operating costs.
• Net income of $3,237 -- A decrease of $246 (7 per cent) from $3,483 in the corresponding 2022 period. The decrease was primarily related to increased depreciation costs due to an increased asset base and a one-time loss on the disposition of assets partially offset by increased adjusted EBITDA and a lower share-based payments expense.
• General and administrative expenses of $2,514 -- A decrease of $915 (27 per cent) from $3,429 in the corresponding 2022 period. The decrease was primarily due to a reduction in stock-based compensation in the last quarter of 2023 compared with the corresponding 2022 period.
• adjusted EBITDA of $6,287 -- An increase of $550 (10 per cent) from $5,737 in the corresponding 2022 period. The increase was primarily related to the increase in gross margin, partially offset by a reduction in administrative expenses.

We seek Safe Harbor.