Ensign Energy Services (TSE:ESI) executives said the company closed 2025 with results that exceeded analyst estimates and continued to pay down debt, while navigating uneven conditions across its Canada, U.S., and international operations. On a conference call discussing fourth-quarter 2025 results, President and CEO Bob Geddes and CFO Mike Gray highlighted contract coverage improvements, technology adoption, and a continued focus on deleveraging amid what management described as a constructive, though volatile, operating backdrop.
Financial results and activity trends
Gray said Ensign generated fourth-quarter 2025 revenue of CAD 418.8 million, down 2% from CAD 426.5 million in the prior-year quarter. For the full year, revenue was CAD 1.64 billion, down 3% from CAD 1.68 billion in 2024.
On operations, Gray said total operating days rose 1% in the fourth quarter versus the prior-year period, driven by a 14% increase in the United States, partially offset by an 8% decline in Canadian and international operations. For full-year 2025, total operating days fell 3% year over year, with U.S. operating days up 2%, Canadian operating days down 3%, and international operating days down 15%.
Costs, capital spending, and debt reduction
Depreciation expense for 2025 decreased 3% to CAD 345.4 million, compared with CAD 355.8 million in 2024. Interest expense declined 23% year over year, which Gray said reflected lower debt levels and reduced effective interest rates, partially offset by negative exchange translation on U.S.-denominated debt.
General and administrative expense was CAD 14.5 million in the fourth quarter, up from CAD 13.1 million a year earlier. For the full year, G&A totaled CAD 55.5 million, down from CAD 57.4 million in 2024, which Gray said reflected fewer non-recurring costs than the prior year, partly offset by wage increases and foreign-exchange translation impacts on U.S.-denominated expenses.
Net capital expenditures were CAD 35.3 million in the fourth quarter, up from CAD 22.3 million in the same period of 2024. For full-year 2025, net capital expenditures totaled CAD 183.7 million, including:
- CAD 48.1 million in upgrade capital
- CAD 146.3 million in maintenance capital
- Offset by CAD 10.6 million in proceeds from equipment disposals
Looking ahead, Gray said Ensign budgeted 2026 maintenance capital expenditures of about CAD 161.4 million and CAD 32.8 million of selective upgrade capital, of which CAD 24 million is expected to be customer funded.
Geddes said the company “clipped off an additional $80 million of debt in 2025.” Gray added debt repayments totaled CAD 80.3 million for the year, and said total net debt declined CAD 105 million when also factoring in foreign exchange.
With Adjusted EBITDA lower, Gray said Ensign’s stated debt reduction target of CAD 600 million would “now likely be achieved in the first half of 2026,” with timing dependent on industry conditions and capital reinvestment. In the Q&A, management said it remains “laser-focused” on debt reduction, with Gray describing a target leverage level of roughly 1.5x, and noting any shift toward increased capital returns such as share buybacks would depend on liquidity requirements and board-level discussions.
Contract coverage and regional operational update
Geddes said Ensign expanded its forward long-term contract book to CAD 1.2 billion, with 60% of the fleet contracted forward. He also said that in 2025 the company was successful in getting operators to fund roughly half of CAD 48 million in upgrades executed during the year, and that upgraded rigs are tied to long-term contracts.
In Canada, Geddes said activity was down 3% year over year in 2025, but EBITDA rose year over year due to a focus on high-spec rigs and high-performance crews. He cited a drilling performance record from one of Ensign’s ADR high-spec singles, which drilled 2,500 meters in a 24-hour period. For early 2026, Geddes said industry activity was down 10% year over year in the first quarter, while Ensign peaked at 51 rigs and had 43 drilling rigs active at the time of the call. Heading into spring breakup, the company expected about 20 rigs to remain working, similar to the prior year.
In the United States, Geddes described a tougher market, noting that keeping rigs active meant spot pricing was falling, while rigs with consistent work saw little rate degradation. He said the U.S. operations team placed 10 Ensign rigs in the top 20 across the U.S. for performance metrics. Ensign had 38 high-spec rigs operating in the U.S. out of a fleet of 70 high-spec ADRs, with its busiest area the Permian Basin, where it runs roughly 26 rigs daily and holds about 9% market share. Geddes also said California activity increased, with the company’s drilling rig count there rising from five to eight in 2025, and management expecting to stay at that level through 2026.
Internationally, Geddes said Ensign has 25 high-spec rigs across six countries outside North America, with 13 active at the time of the call. He said the Middle East was a “day-to-day situation,” with Ensign’s seven rigs there operating either at standby-with-crews or full operational rates, and described the region as on “yellow alert” with personnel safety and asset security the priority. The company reported contract extensions in Kuwait for two 3,000-horsepower ADRs through mid-2026. In Venezuela, Geddes said Ensign restarted operations and had two rigs running, describing them as the only two drilling rigs operating in the country. He also said Ensign has “three rigs” in Venezuela (two drilling rigs and a deeper workover rig) and has capacity to deploy additional rigs if opportunities develop, though he characterized development as likely to be gradual.
Technology adoption and margin contribution
Management emphasized Ensign’s EDGE automation and controls systems as a contributor to performance and incremental revenue. Geddes said EDGE drilling rig automation continues to gain adoption in Canada and provides a “high margin bolt-on incremental revenue stream.” In the Q&A, he said Ensign is rolling out EDGE at about a 15% annual pace, has the EDGE AUTOPILOT system installed on 60% of rigs globally, and is adding about 10 rigs per year. He described revenue uplift of roughly CAD 1,000 to CAD 1,500 per day on average, and characterized it as “all margin.”
Geddes also said Ensign doubled deployments of its Automated Drilling System in 2025 and is now fully commercial with its EDGE ATC (auto toolface control) system, charging it on five rigs. He added that Ensign initiated development of a directional guidance system (DGS) and is beta testing it on a super spec ADR 1500 in the U.S.
Management’s outlook and key themes from Q&A
Asked about the impact of recent oil price strength, Geddes said he expected “very little impact” on activity in the short term, but suggested that if high prices persist for about six months, increased capital could lead to more drilling. On pricing, he said day rates are driven by rig supply and that increased bid activity typically supports higher bids.
On Venezuela, Geddes said rig conditions among competitors appear poor and that many U.S. competitors have exited over the last five years. He said additional deployments would require long-term contracts of three to five years and protections around mobilization and demobilization, with work conducted in U.S. dollars and within OFAC-related restrictions. In response to a question about payment conditions, Geddes said that “since Maduro’s left, nothing has changed” in the company’s relationship with its customer or how it is paid, though he said the development created “more blue sky ahead” for the country.
Closing the call, Geddes said the outlook for drilling remains constructive, supported by stronger commodity prices and ongoing global energy demand, though he noted the macroeconomic and geopolitical backdrop remains volatile. He said operators are likely to continue prioritizing efficiency and capital discipline, and argued that high-performance contractors with a global footprint should remain active.
About Ensign Energy Services (TSE:ESI)
Ensign Energy Services Inc offers services in drilling and well servicing, oil sands coring, directional drilling, underbalanced and managed pressure drilling, equipment rentals, transportation, wireline services, and production testing services. Ensign produces enhanced drilling with the help of its proprietary automated drilling rigs. The automated drilling rigs are built for improved safety and a reduced environmental footprint. Most of the company’s revenue is derived from the United States and Canada.
