Ensign Energy Services (TSE:ESI) reported higher second-quarter revenue and adjusted EBITDA as operating activity increased across Canada, the United States and international markets, while the company continued to reduce debt and prepared to close its acquisition of Citadel Drilling Ltd.
Revenue for the second quarter of 2026 rose 7% year over year to C$397.3 million. Adjusted EBITDA increased 6% to C$85.8 million, compared with C$81.4 million in the prior-year quarter. For the first six months of 2026, revenue increased 1% to C$815.4 million, while adjusted EBITDA declined 2% to C$180.7 million.
Debt Reduction and Capital Spending
Ensign repaid C$30 million of debt during the quarter and C$37.37 million during the first six months of the year. Interest expense fell 13% year over year to C$16.1 million, which Russell attributed to lower debt, lower effective interest rates and foreign-exchange translation effects.
The company revised its 2026 debt-reduction target to net C$60 million from a previously announced C$125 million target. Russell said the revision reflects the planned Citadel acquisition and increased capital investment. He said Ensign expects liquidity to be in the low C$90 million range at the end of 2026 after the acquisition closes.
Net purchases of property and equipment totaled C$58.1 million in the quarter, including C$25.4 million in upgrade capital and C$41.4 million in maintenance capital, offset by C$8.7 million in asset-disposition proceeds. Ensign maintained its 2026 maintenance capital expenditure outlook at about C$162 million and projected selective upgrade spending of approximately C$95.8 million, including C$68.6 million that is customer funded.
Citadel Deal Expands Permian Presence
President and COO Bob Geddes said the Citadel Drilling acquisition was expected to close the following week and would add six active 2,000-horsepower rigs to Ensign’s Permian fleet. He said the rigs were fully utilized but declined to provide further financial details prior to closing.
Geddes said the acquisition would increase Ensign’s presence in the Permian Basin to roughly 11%, from approximately 7% to 8% currently. The company had 41 rigs under contract in the U.S. at the time of the call, excluding the Citadel fleet, and expected to add approximately one rig per month through year-end. Including Citadel’s rigs, management indicated Ensign expected to add four additional U.S. rigs by year-end.
In the company’s U.S. operations, Ensign had five high-specification ADR rigs under contract in California, eight active rigs in the Rockies and 27 active rigs in its U.S. Southern division. Geddes said the Permian remained the company’s most active market, with demand supporting expectations for four to five additional rigs to begin work by year-end. Nearly half of the company’s U.S. rigs were operating under performance-based contracts, he said.
Canadian Activity, Pricing and International Operations
Ensign had 51 rigs active in the Western Canadian Basin, up 17% from a year earlier. Geddes said all five rigs that underwent five-year recertifications during breakup had returned to work. Management expects to add several Canadian rigs by year-end and said some operators are seeking to secure high-specification ADR rigs into spring 2027 and beyond.
Geddes said Ensign was raising rates by C$1,000 per day per quarter as contracts move into the second half of 2026 and into 2027. More broadly, he said the company expects rates on contract renewals to rise roughly 5% to 10% amid tightening supplies of high-specification rigs, rising contractor costs and longer lead times for new equipment.
Internationally, Ensign’s fleet reached 27 rigs following the transfer of a high-specification ADR 1500 rig to Venezuela and commissioning of a fifth ADR rig in Oman. The company’s two rigs in Kuwait and two rigs in Bahrain were shut down amid the Middle East conflict, while all five Oman rigs remained active. Ensign expects one Bahrain rig to be recontracted before year-end and has submitted bids for its two Kuwait rigs, though potential Kuwait work would not begin until mid-2027.
Ensign had four rigs operating in Australia, with a fifth expected to start within 30 days. Its two ADR 2000 rigs in Argentina remained contracted into 2027. In Venezuela, Ensign had three rigs in the country and signed a contract for a fourth rig expected to arrive in early 2027. Geddes said all of the Venezuela rigs are under three-year contracts.
Contract Backlog and Automation
Geddes said Ensign’s forward guaranteed contract book expanded 25%, bringing its long-term contracted revenue runway to C$1.4 billion. He said oilfield-service conditions remained supported by limited excess high-specification rig capacity, although producers continued to focus on cash flow and maintaining production.
The company’s Edge drilling-rig control platform was installed on 65% of Ensign’s rigs globally. Geddes said Ensign sees an opportunity to grow the automation business’s revenue and profit by 15% annually. Its directional drilling, trucking, rentals and managed-pressure-drilling businesses continued to generate steady revenue and margins with little or no capital required, he added.
About Ensign Energy Services (TSE:ESI)
Ensign is a global leader in oilfield services, headquartered out of Calgary, Alberta, operating in Canada, the United States and internationally. We are one of the world’s top land-based drilling and well servicing contractors serving crude oil, natural gas, and geothermal operators. Our premium services include contract drilling, directional drilling, underbalanced and managed pressure drilling, rental equipment and well servicing. Please visit our website at www.ensignenergy.com.
