CALGARY, AB , Feb. 25, 2026 /CNW/ - Western Energy Services Corp. ("Western" or the "Company") (TSX: WRG) announces the release of its fourth quarter and year end 2025 financial and operating results.  Additional information relating to the Company, including the Company's financial statements and management's discussion and analysis ("MD&A") as at and for the year ended December 31, 2025, and 2024 will be available on SEDAR+ at www.sedarplus.ca.  Non-International Financial Reporting Standards ("Non-IFRS") measures and ratios, such as Adjusted EBITDA, Adjusted EBITDA as a percentage of revenue, revenue per Operating Day, and revenue per Service Hour, as well as abbreviations and definitions for standard industry terms are defined later in this press release.  All amounts are denominated in Canadian dollars (CDN$) unless otherwise identified.

Operational and Financial Highlights
Three Months Ended December 31, 2025
Financial Highlights:

• Fourth quarter revenue of $58.4 million in 2025 was $1.3 million (or 2%) lower than the fourth quarter of 2024, due to lower activity in the well servicing segment and in contract drilling in the United States ("US").
• Adjusted EBITDA of $15.4 million in the fourth quarter of 2025 was $5.1 million (or 50%) higher compared to $10.3 million in the fourth quarter of 2024, despite fourth quarter revenue decreasing by 2% compared to the same period in the prior year. The Company incurred $0.4 million of one-time reorganization costs in the fourth quarter of 2025, whereas the fourth quarter of 2024 had one-time reorganization costs of $2.9 million. After normalizing for the one-time reorganization costs in both 2025 and 2024, Adjusted EBITDA in the fourth quarter of 2025 would have totalled $15.8 million, compared to $13.2 million in the fourth quarter of 2024.
• The Company incurred a net loss of $21.2 million in the fourth quarter of 2025 ($0.63 net loss per basic common share) as compared to a net loss of $2.0 million in the fourth quarter of 2024 ($0.06 net loss per basic common share) as the loss on asset decommissioning, as described below, and higher other expenses were partially offset by higher Adjusted EBITDA, a higher income tax recovery and lower finance costs.
• Fourth quarter additions to property and equipment of $5.3 million in 2025 compared to $5.8 million in the fourth quarter of 2024, consisting of $3.4 million of expansion capital related to rig upgrades and $1.9 million of maintenance capital.
• During the fourth quarter of 2025, the Company decommissioned certain underutilized assets within its contract drilling and well servicing rig fleets as part of a strategic optimization of its Canada and US operations. In connection with this decommissioning, the Company recognized a loss on asset decommissioning of $25.1 million, with $22.8 million recognized in the contract drilling segment and $2.3 million recognized in the production services segment.

Operational Highlights:

• In Canada, Operating Days of 1,177 in the fourth quarter of 2025 were 191 days (or 19%) higher compared to 986 days in the fourth quarter of 2024. Drilling rig utilization in Canada was 38% in the fourth quarter of 2025, compared to 32% in the same period of the prior year, mainly due to improved customer retention year over year from targeted marketing efforts.
• Revenue per Operating Day in Canada averaged $34,327 in the fourth quarter of 2025, which was 2% lower than the same period of the prior year.
• In the US, drilling rig utilization averaged 22% in the fourth quarter of 2025, which was lower than the fourth quarter of 2024, due to continued low industry activity in the US as well as a change in focus to North Dakota from Texas earlier in the year.
• Revenue per Operating Day in the US for the fourth quarter of 2025 averaged US$35,165, an 8% increase compared to US$32,603 in the same period of the prior year. The improvement in pricing reflects a more favorable rig mix following the Company's strategic decision to focus its US operations more on North Dakota.
• In Canada, service rig utilization was 25% in the fourth quarter of 2025, compared to 34% in the same period of the prior year, as Service Hours decreased by 27% to 10,024 hours from 13,750 hours in the same period of the prior year, mainly due to changes in customer programs.
• Revenue per Service Hour averaged $989 in the fourth quarter of 2025 and was 2% lower than the fourth quarter of 2024.

Year Ended December 31, 2025
Financial Highlights:

• Revenue for the year ended December 31, 2025 of $217.5 million was $5.6 million (or 2%) lower than the year ended December 31, 2024, as lower production services revenue was offset by higher contract drilling revenue in Canada.
• Despite a decrease in revenue for the year ended December 31, 2025, Adjusted EBITDA of $48.4 million was $6.2 million (or 15%) higher compared to $42.2 million in the same period of 2024, due to cost synergy savings associated with a reorganization of senior management in 2025. Included in Adjusted EBITDA for the year ended December 31, 2025, was $4.0 million of one-time reorganization costs, compared to $5.7 million in 2024. After normalizing for one-time reorganization costs in both periods, Adjusted EBITDA for the year ended December 31, 2025 would have totalled $52.4 million, compared to $47.9 million in 2024, an increase of $4.5 million due to higher drilling revenue in Canada and lower administrative expenses, which were offset partially by lower production services activity in Canada and lower drilling activity in the US.
• The Company incurred a net loss of $25.6 million for the year ended December 31, 2025 ($0.76 net loss per basic common share) as compared to a net loss of $6.9 million in the same period of 2024 ($0.20 net loss per basic common share) as the $25.1 million loss on asset decommissioning and a $2.7 million higher loss on the sale of fixed assets, were offset partially by higher Adjusted EBITDA, lower stock based compensation expense, lower finance costs and a higher income tax recovery.
• For the year ended December 31, 2025, additions to property and equipment of $21.7 million, which were consistent with the prior year, consisted of $7.5 million of expansion capital related to rig upgrades and $14.2 million of maintenance capital.
• On January 27, 2025, the Company announced that it extended the maturity date of its Second Lien Facility (as defined in this press release) from May 18, 2026 to May 18, 2027. The Company also made a voluntary principal repayment of $5.0 million on its Second Lien Facility in the second quarter of 2025.

Operational Highlights:

• In Canada, Operating Days of 4,276 for the year ended December 31, 2025, were 566 days (or 15%) higher compared to 3,710 days in the same period of the prior year. Drilling rig utilization in Canada was 34% for the year ended December 31, 2025, compared to 30% in the prior year, mainly due to more upgraded rigs working through spring break up in 2025 than in 2024, as well as improved customer retention year over year due to targeted marketing efforts.
• Revenue per Operating Day in Canada averaged $32,890 for the year ended December 31, 2025, which was 1% lower than the prior year.
• In the US, drilling rig utilization averaged 22% for the year ended December 31, 2025, which was lower than 29% in the prior year, due to continued low industry activity in the US and a change in focus to North Dakota from Texas.
• Revenue per Operating Day in the US for the year ended December 31, 2025 averaged US$31,999, a 5% increase compared to US$30,621 in the prior year, mainly due to changes in rig mix.
• In Canada, service rig utilization was 26% for the year ended December 31, 2025, compared to 35% in the prior year, as Service Hours decreased by 28% to 41,970 hours from 58,117 hours in the same period of the prior year, mainly due to changes in customer programs.
• Revenue per Service Hour averaged $1,013 for the year ended December 31, 2025, and was 1% lower than the prior year.

Business Overview

Western is an energy services company that provides contract drilling services in Canada and in the US and production services in Canada through its various divisions, its subsidiary, and its first nations relationships.

Contract Drilling

As at December 31, 2025, Western decommissioned six drilling rigs from its fleet in Canada and three from its fleet in the US.  Subsequent to December 31, 2025, the six drilling rigs in Canada were deregistered with the CAOEC.  The Company currently markets a fleet of 31 drilling rigs specifically suited for drilling complex horizontal wells across Canada and the US.  Following these changes, Western remains the fourth-largest drilling contractor in Canada, based on the CAOEC¹ registered drilling rigs.

Western's marketed contract drilling rig fleets are comprised of the following:

Production Services

Production services provides well servicing and oilfield equipment rentals in Canada.  As of December 31, 2025, Western deregistered 17 well servicing rigs and now has 45 well servicing rigs registered with the CAOEC².  Following these changes, Western remains the second-largest well servicing company in Canada based on CAOEC registered well servicing rigs.

Western's well servicing rig fleet is comprised of the following:

Business Environment

Crude oil and natural gas prices impact the cash flow of Western's customers, which in turn impacts the demand for Western's services.  The following table summarizes average crude oil and natural gas prices, as well as average foreign exchange rates, for the three months ended December 31, 2025 and 2024, and for the years ended December 31, 2025 and 2024:

• West Texas Intermediate ("WTI") on average decreased by 16% and 14% for the three months and year ended December 31, 2025, respectively, compared to the same periods in the prior year. In 2025, crude oil prices were impacted by market volatility due to tariffs implemented by the US government, counter-tariffs in response by several countries, lower global demand and the continued conflict in the Middle East and Eastern Europe.
• Pricing on Western Canadian Select crude oil declined by 18% and 10% for the three months and year ended December 31, 2025, respectively, compared to the same periods of the prior year.
• Natural gas prices in Canada were higher for the three months ended December 31, 2025, as the 30-day spot AECO price increased by 53% compared to the same period of the prior year, as colder weather led to improved demand for natural gas. Similarly, for the year ended December 31, 2025, the 30-day spot AECO price increased by 22%, compared to the same period in the prior year.
• The US dollar to the Canadian dollar foreign exchange rate for the three months ended December 31, 2025 weakened by 1% compared to the same period in the prior year; however, for the year ended December 31, 2025, the US dollar strengthened by 2% compared to the prior year.
• Lower WTI prices in 2025 contributed to weaker industry drilling activity in the US. As reported by Baker Hughes Company³, the number of active drilling rigs in the US decreased by approximately 7% to 546 rigs as at December 31, 2025, as compared to 589 rigs at December 31, 2024, and averaged 562 rigs during the year ended December 31, 2025, compared to 599 rigs in the prior year.
• In Canada there were 157 active rigs in the Western Canadian Sedimentary Basin ("WCSB") at December 31, 2025, compared to 136 active rigs as at December 31, 2024, representing an increase of approximately 15%. The CAOEC⁴ reported that for drilling in Canada, the total number of Operating Days in the WCSB for the three months ended December 31, 2025, were 6% lower than the same period in the prior year, whereas the total number of Operating Days in the WSCB for the year ended December 31, 2025, were 5% lower than the same period of the prior year.

Outlook

In 2025, commodity prices faced downward pressure due to trade tensions resulting from US tariffs on imports and retaliatory measures from several countries.  These actions contributed to a broader global trade conflict, heightening uncertainty in the global economy.  Ongoing geopolitical conflict in Eastern Europe, the Middle East and more recently the uncertain economic and political environment in Venezuela, combined with persistently weak global demand for crude oil, further impacts market sentiment.  These macroeconomic factors are expected to impact commodity prices into 2026.  Additionally, in Canada, changes in government priorities arising from the change in leadership of the federal government that occurred in 2025 may lead to continuing shifts in energy policy, potentially affecting the approval of future energy infrastructure projects.  This contributes to additional uncertainty for the Canadian energy services industry.  The precise duration and extent of the adverse impacts of the current macroeconomic environment on Western's customers and operations remains uncertain at this time. 

Despite these headwinds, recent infrastructure developments present opportunities for the energy services industry. The Trans Mountain pipeline expansion entered service on May 1, 2024, adding critical takeaway capacity.  The Coastal GasLink pipeline delivered its first shipment of liquefied natural gas on June 30, 2025, and the LNG Canada project has now commenced operations in British Columbia.  Together, these projects are expected to contribute to increased activity across Western Canada's energy sector.

Western is also cautiously optimistic that the current trade environment may encourage provinces to place greater emphasis on domestic energy security, potentially accelerating approvals for future infrastructure projects.  The memorandum of understanding signed November 27, 2025 between the Government of Alberta and the Government of Canada to advance national energy infrastructure may further support this renewed focus.

To navigate this complex environment, Western implemented several strategic initiatives in 2025, including a reorganization of senior leadership to enhance operational efficiency and support long-term growth.  As part of this process, the decision was made to focus on US operations exclusively in North Dakota and redeploy assets previously operating in Texas.  The deregistration of six drilling rigs in Canada with the CAOEC and the three drilling rigs in the US, further supports Western's strategic optimization of its Canadian and US operations by allowing resources to be allocated to its current marketable fleet.  The Company remains focused on managing fixed costs, preserving balance sheet strength, deleveraging the business, and maintaining flexibility to respond to market conditions.  With these initiatives in place, Western believes it is well-positioned to benefit from improving service demand and pricing momentum.  Western's upgraded rig fleet positions the Company to remain competitive in a tightening market.  The total rig fleet in the WCSB has decreased from 373 drilling rigs at December 31, 2024 to 347 drilling rigs as of February 25, 2026, representing a decrease of 26 drilling rigs, or 7%, which reduces the supply of drilling rigs for such projects.  Currently, 18 of Western's drilling rigs and 14 of Western's well servicing rigs are operating.

Western's board of directors has approved a capital budget for 2026 of $25 million, comprised of $7 million of expansion capital and $18 million of maintenance capital.  Western will continue to manage its costs in a disciplined manner and make required adjustments to its capital program as customer demand changes. 

In the near term, the primary challenges facing the energy services industry include commodity price volatility, the impact of industry consolidation on Western's exploration and production customers and potential customers, and constrained customer drilling activity, as exploration and production companies continue to prioritize shareholder returns through share repurchases, increased dividends, and debt reduction rather than production growth.  Should commodity prices stabilize over a sustained period, and as customers further strengthen their balance sheets, an increase in drilling activity may follow.  Over the medium term, Western believes its rig fleet is well positioned to benefit from increased drilling and production activity associated with the completion of the LNG Canada project and the Trans Mountain pipeline expansion.  In addition, increased focus on domestic energy security and economic independence may support further development activity across the sector.

Non-IFRS Measures and Ratios

Western uses certain financial measures in this press release which do not have any standardized meaning as prescribed by International Financial Reporting Standards.  These measures and ratios, which are derived from information reported in the consolidated financial statements, may not be comparable to similar measures presented by other reporting issuers.  These measures and ratios have been described and presented in this press release to provide shareholders and potential investors with additional information regarding the Company.  The Non-IFRS measures and ratios used in this press release are identified and defined as follows:

Adjusted EBITDA and Adjusted EBITDA as a Percentage of Revenue

Adjusted earnings before interest and finance costs, taxes, depreciation and amortization, other non-cash items and one-time gains and losses ("Adjusted EBITDA") is a useful Non-IFRS financial measure as it is used by management and other stakeholders, including current and potential investors, to analyze the Company's principal business activities prior to consideration of how Western's activities are financed and the impact of foreign exchange, income taxes and depreciation.  Adjusted EBITDA provides an indication of the results generated by the Company's principal operating segments, which assists management in monitoring current and forecasting future operations, as certain non-core items such as interest and finance costs, taxes, depreciation and amortization, and other non-cash items and one-time gains and losses are removed.  The closest IFRS measure would be net income (loss) for consolidated results.

Adjusted EBITDA as a percentage of revenue is a Non-IFRS financial ratio which is calculated by dividing Adjusted EBITDA by revenue for the relevant period.  Adjusted EBITDA as a percentage of revenue is a useful financial measure as it is used by management and other stakeholders, including current and potential investors, to analyze the profitability of the Company's principal operating segments.

The following table provides a reconciliation of net loss, as disclosed in the consolidated statements of operations and comprehensive loss, to Adjusted EBITDA:

Revenue per Operating Day

This Non-IFRS measure is calculated as drilling revenue for both Canada and the US respectively, divided by Operating Days in Canada and the US respectively. This calculation represents the average day rate by country, charged to Western's customers.

Revenue per Service Hour

This Non-IFRS measure is calculated as well servicing revenue divided by Service Hours.  This calculation represents the average hourly rate charged to Western's customers.

Defined Terms

Drilling rig utilization:  Calculated based on Operating Days divided by total available days.

Operating Days:  Defined as contract drilling days, calculated on a spud to rig release basis.

Service Hours:  Defined as well servicing hours completed.

Service rig utilization:  Calculated as total Service Hours divided by 217 hours per month per rig multiplied by the average rig count for the period as defined by the CAOEC industry standard.

Working capital: Calculated as current assets less current liabilities as disclosed in the Company's consolidated financial statements.

Contract Drilling Rig Classifications

Cardium class rig: Defined as any contract drilling rig which has a total hookload less than or equal to 399,999 lbs (or 177,999 daN). 

Montney class rig: Defined as any contract drilling rig which has a total hookload between 400,000 lbs (or 178,000 daN) and 499,999 lbs (or 221,999 daN).

Duvernay class rig: Defined as any contract drilling rig which has a total hookload equal to or greater than 500,000 lbs (or 222,000 daN).

Abbreviations

• Barrel ("bbl");
• Canadian Association of Energy Contractors ("CAOEC");
• DecaNewton ("daN");
• International Financial Reporting Standards ("IFRS");
• Pounds ("lbs");
• Thousand cubic feet ("mcf");
• Western Canadian Sedimentary Basin ("WCSB"); and
• West Texas Intermediate ("WTI").

Forward-Looking Statements and Information

This press release contains certain forward-looking statements and forward-looking information (collectively, "forward-looking information") within the meaning of applicable Canadian securities laws, as well as other information based on Western's current expectations, estimates, projections and assumptions based on information available as of the date hereof.  All information and statements contained herein that are not clearly historical in nature constitute forward-looking information, and words and phrases such as "may", "will", "should", "could", "expect", "intend", "anticipate", "believe", "estimate", "plan", "predict", "potential", "continue", or the negative of these terms or other comparable terminology are generally intended to identify forward-looking information.  Such information represents the Company's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of additions to property and equipment, anticipated future debt levels and revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance.  This forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information.

In particular, forward-looking information in this press release includes, but is not limited to, statements relating to: the business of Western; industry, market and economic conditions and any anticipated effects on Western and its customers; commodity pricing; the future demand for the Company's services and equipment; the effect of inflation and commodity prices on energy service activity; expectations with respect to customer spending; the impact of Western's upgraded drilling rigs; the potential continued impact of the current conflicts in Eastern Europe and the Middle East on and other macroeconomic factors on commodity prices; the Company's capital budget for 2026, including the allocation of such budget; Western's plans for managing its capital program; the energy service industry and global economic activity; the expected impact of industry consolidation on Western's customers and potential customers; expectations of increased industry activity with respect to the Trans Mountain pipeline project, the Coastal GasLink pipeline project and the LNG Canada project; the impact of the US tariffs on the approach of Canadian governments towards approval of Canadian energy projects and a focus on domestic energy independence; the effect of continued changes in Canadian government policies arising from recent changes in government leadership; the Company's ability to benefit from improving service demand and pricing momentum; the Company's ability to continue to focus on deleveraging the business; expectations surrounding the level of investment in Canada and its impact on the Company; challenges facing the energy service industry; the Company's focus on debt reduction; and the Company's ability to maintain a competitive advantage, including the factors and practices anticipated to produce and sustain such advantage.

The material assumptions that could cause results or events to differ from current expectations reflected in the forward-looking information in this press release include, but are not limited to: demand levels and pricing for oilfield services; demand for crude oil and natural gas and the price and volatility of crude oil and natural gas; pressures on commodity pricing; the impact of inflation; the continued business relationships between the Company and its significant customers; crude oil transport, pipeline and LNG export facility approval and development; that all required regulatory and environmental approvals can be obtained on the necessary terms and in a timely manner, as required by the Company; liquidity and the Company's ability to finance its operations; the effectiveness of the Company's cost structure and capital budget; the effects of seasonal and weather conditions on operations and facilities; the competitive environment to which the Company's business segments are, or may be, exposed in all aspects of their business and the Company's competitive position therein; the ability of the Company's business segments to access equipment; global economic conditions and the accuracy of the Company's market outlook expectations for 2026 and in the future; the impact, direct and indirect, of epidemics, pandemics, other public health crisis and geopolitical events, including the conflicts in Eastern Europe and the Middle East, as well as the uncertain economic and political environment in Venezuela, and the import tariffs implemented by the US administration on Western's business, customers, business partners, employees, supply chain, other stakeholders and the overall economy; changes in laws, regulations or policies; currency exchange fluctuations; the ability of the Company to attract and retain skilled labour and qualified management; the ability to retain and attract significant customers; the ability to maintain a satisfactory safety record; that any required commercial agreements can be reached; that there are no unforeseen events preventing the performance of contracts and general business, economic and market conditions.

Although Western believes that the expectations and assumptions on which such forward-looking information is based on are reasonable, undue reliance should not be placed on the forward-looking information as Western cannot give any assurance that such will prove to be correct.  By its nature, forward-looking information is subject to inherent risks and uncertainties.  Actual results could differ materially from those currently anticipated due to a number of factors and risks.  These include, but are not limited to, volatility in market prices for crude oil and natural gas and the effect of this volatility on the demand for oilfield services generally; reduced exploration and development activities by customers and the effect of such reduced activities on Western's services and products; political, industry, market, economic, and environmental conditions in Canada, the US and globally; supply and demand for oilfield services relating to contract drilling, well servicing and oilfield rental equipment services; the proximity, capacity and accessibility of crude oil and natural gas pipelines and processing facilities; liabilities and risks inherent in oil and natural gas operations, including environmental liabilities and risks; changes to laws, regulations and policies; the ongoing geopolitical events in Eastern Europe, the Middle East and Venezuela and the duration and impact thereof; fluctuations in foreign exchange, inflation or interest rates; failure of counterparties to perform or comply with their obligations under contracts; regional competition and the increase in new or upgraded rigs; the Company's ability to attract and retain skilled labour; Western's ability to obtain debt or equity financing and to fund capital operating and other expenditures and obligations; the potential need to issue additional debt or equity and the potential resulting dilution of shareholders; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; the Company's ability to comply with the covenants under its debt facilities, including the Second Lien Facility, and the restrictions on its operations and activities if it is not compliant with such covenants; Western's ability to protect itself from "cyber-attacks" which could compromise its information systems and critical infrastructure; disruptions to global supply chains; and other general industry, economic, market and business conditions.  Readers are cautioned that the foregoing list of risks, uncertainties and assumptions are not exhaustive.  Additional information on these and other risk factors that could affect Western's operations and financial results are discussed under the headings "Risk Factors" in Western's annual information form for the year ended December 31, 2025, which is available under the Company's SEDAR+ profile at www.sedarplus.ca.

The forward-looking statements and information contained in this press release are made as of the date hereof and Western does not undertake any obligation to update publicly or revise any forward-looking statements and information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.  Any forward-looking statements contained herein are expressly qualified by this cautionary statement.

SOURCE Western Energy Services Corp.