Total Energy Services (TSE:TOT) reported record quarterly revenue, EBITDA and net income for the second quarter of 2026, supported by demand for North American compression and process equipment and higher activity from upgraded drilling and service rigs in Canada and Australia.
Consolidated revenue increased 31% from a year earlier, Chief Financial Officer Yuliya Gorbach said during the company’s earnings call. Compression and Process Services, or CPS, accounted for the largest share of quarterly revenue at 55%, followed by Contract Drilling Services at 29%, Well Servicing at 10% and Rentals and Transportation Services, or RTS, at 6%.
Segment Growth Drives Record Results
Gorbach said CPS revenue rose by C$49.1 million year over year, while Contract Drilling Services revenue increased by C$23.5 million. Well Servicing revenue grew by C$3.4 million and RTS revenue increased by C$2.5 million.
Quarterly EBITDA increased C$15.5 million from the prior-year period, driven by higher activity and improved fabrication margins in CPS, as well as the deployment of upgraded rigs at higher day rates in Australia and Canada. Results also included a C$3 million year-over-year increase in gains on the sale of property, plant and equipment following the disposition of assets associated with the company’s discontinued U.S. Well Servicing business.
Those gains were partly offset by C$2.3 million of non-recurring expenses in the U.S. Contract Drilling business, related to rig reactivations and the resolution of legacy legal disputes.
Consolidated gross margin was 22%, down 157 basis points from a year earlier. Gorbach attributed much of the decline to CPS representing a larger portion of revenue; the segment generally carries lower margins than Total’s other operations.
Contract Drilling Services revenue rose 33% as operating days increased 24% and revenue per operating day increased 7%. Segment EBITDA rose 39%, while EBITDA margin expanded 110 basis points. Excluding C$2.2 million in non-recurring U.S. expenses, Contract Drilling EBITDA increased 54% and its EBITDA margin increased by 353 basis points.
RTS revenue increased 16%, aided by a U.S. acquisition completed in June 2025 and higher Canadian industry activity. However, segment EBITDA declined 4% as changes in operating equipment mix, competitive market conditions and the segment’s fixed-cost structure weighed on profitability.
CPS Backlog Reaches Record Level
CPS revenue increased 37% year over year, driven by stronger fabrication sales and higher parts and service activity. Segment EBITDA increased C$4.7 million, or 21%, although EBITDA margin declined 193 basis points due principally to lower higher-margin rental revenue after several rental units were sold in 2025.
The fabrication sales backlog reached C$554.5 million at June 30, up 82% from C$303.9 million a year earlier and 24% higher than the C$446.9 million reported at the end of the first quarter. President and Chief Executive Officer Daniel Halyk said the backlog provides visibility into 2028, while quoting activity remains strong.
Halyk said the company’s expansion of U.S. fabrication capacity in Weirton, West Virginia, remains on schedule and on budget, with construction expected to be completed in the first quarter of 2027. He said the company has begun to realize some efficiency gains from internal manufacturing changes, but expects a more material increase in throughput after the facility is completed and staffed.
Major component availability, especially engines, remains a near-term constraint, according to Halyk. He said longer lead times on such inputs will affect the pace of production growth until the Weirton facility is fully operational.
Australia, Canada Rig Upgrades Support Activity
Well Servicing revenue increased 11%, as revenue per service hour rose 7% and service hours increased 4%. Higher activity in Australia and Canada was partly offset by a substantial reduction in U.S. activity after the company discontinued U.S. Well Servicing operations in January.
Well Servicing EBITDA increased 194% from the prior year. Gorbach said stronger pricing, higher fleet utilization and cost optimization following fleet upgrades improved Australian results, while the end of losses in the U.S. business also benefited the comparison.
During the question-and-answer session, Halyk said Australia’s growth has primarily reflected market-share gains following investments in the company’s fleet, including the Saxon rigs acquired about two years ago. He characterized the Australian market as stable, citing strength in natural gas prices in Southeast Asia and domestic Australian pricing.
Total had 11 drilling rigs operating in Australia and expected to have 12 operating soon, Halyk said. One additional idle Australian rig is being upgraded and is expected to enter service by year-end.
In Canada, the company is upgrading three idle service rigs that are already committed to work, along with an idle drilling rig that has been upgraded and returned to service. Halyk said the Canadian drilling market has been strong, particularly in oil and liquids-focused plays, while U.S. activity is beginning to improve, especially in Texas and New Mexico.
Capital Program Expanded as Balance Sheet Remains Strong
Total invested C$65.8 million during the first half of 2026 to maintain and grow the business, returned C$22.5 million to shareholders through dividends and share buybacks, and reduced bank debt by C$30 million.
At June 30, the company had C$81.9 million of positive working capital, including C$50.5 million in cash. Cash exceeded bank debt by C$25.5 million, and Total had C$150 million available under its revolving credit facilities.
The board approved a C$32.7 million increase to the 2026 capital budget. The increase includes C$24.9 million of growth capital, including C$15.5 million for recertifying and upgrading three Canadian service rigs, one Canadian drilling rig and one Australian drilling rig. Another C$9.4 million is earmarked for the purchase and refurbishment of 44 pieces of major RTS rental equipment for North American deployment.
Including C$24.5 million of commitments carried over from 2025, Total projected 2026 capital commitments of C$144.6 million, comprising C$102 million of growth capital and C$42.6 million of maintenance capital. The company said it intends to fund the remaining C$78.8 million of commitments with cash on hand and operating cash flow.
About Total Energy Services (TSE:TOT)
Total Energy Services Inc is an energy services company. The operating segments of the company are Contract Drilling Services, Rentals & Transportation Services, Compression & Process Service, Well servicing, and Corporate. The company’s operations are conducted in Canada, the United States of America, and Australia.
