PHX Energy Announces Highest Second Quarter Revenue in its History and Continued Record RSS Activity

Second Quarter Highlights * For the three-month period ended June 30, 2026, PHX Energy generated consolidated revenue of $178.9 million, which is 7 percent higher than the $167.7 million generated in the second quarter of 2025 and the highest level of second quarter revenue in the Corporation’s history. For the second consecutive quarter, the Corporation achieved record Rotary Steerable Systems (“RSS”) activity which represented 21 percent of the Corporation’s consolidated activity (2025 – 20 percent). PHX Energy’s consolidated operating days increased by 7 percent quarter-over-quarter which was mainly driven by increased Canadian division activity. Consolidated revenue in the 2026-quarter included $15.4 million of motor rental revenue (2025 - $13.8 million). * In the second quarter of 2026, adjusted EBITDA((1)) was $33 million, 18 percent of consolidated revenue((1)), an increase of 20 percent compared to $27.4 million, 16 percent of consolidated revenue, in the same 2025-quarter. * Earnings in the 2026 three-month period were $11 million, $0.21 per share, as compared to $8.5 million, $0.17 per share, in the same 2025-period. Higher earnings were primarily driven by increased revenue and strong performance in RSS and motor rental activities, both of which are high-margin businesses for the Corporation. In addition, earnings in the 2026-quarter benefited from lower cash-settled share-based compensation expense and tariff refund recoveries. Earnings in the 2026-period included depreciation and amortization expenses for drilling and other equipment of $17.2 million (pre-tax) which is a 37 percent increase when compared to the $12.6 million (pre-tax) in the corresponding 2025-quarter. This increase is the result of ongoing fixed asset additions as well as $2.6 million in additional depreciation recognized in the 2026-quarter relating to a change in the estimated useful life of certain primary components of motors that became effective in the third quarter of 2025. * In the 2026-quarter, PHX Energy’s US division’s revenue was $127.8 million, virtually the same level as the $128.1 million generated in the second quarter of 2025. The US division’s operating days held steady with a marginal decline of 1 percent. In comparison, the average number of active horizontal and directional rigs per day in the US industry declined by 4 percent quarter-over-quarter. Despite the contraction in industry activity, the US division achieved record RSS activity which represented 25 percent of the division’s operating days in the second quarter of 2026 (2025 - 24 percent). US division revenue in the 2026-quarter represented 71 percent of consolidated revenue (2025 - 76 percent). * PHX Energy’s Canadian division reported $51.1 million of quarterly revenue, a 29 percent increase compared to $39.6 million in the 2025-quarter and the highest level of second quarter revenue for the division. In the 2026 three-month period, the segment achieved record RSS activity which represented 15 percent of its operating days (2025 – 13 percent). In addition to strong RSS activity, the division’s revenue growth was supported by increased activity levels. Quarter-over-quarter, the Canadian division reported a 24 percent increase in operating days, which is slightly ahead of the 22 percent increase in industry drilling days. * The Corporation’s net capital expenditures((2)), which account for proceeds on disposition of drilling and other equipment, were $1.9 million for the 2026-quarter. For the three-month period ended June 30, 2026, PHX Energy spent $15.1 million in capital expenditures and proceeds on disposition of drilling and other equipment were $13.1 million. Proceeds on disposition of drilling and other equipment mainly result from instances of downhole equipment losses where operators compensate the Corporation for the replacement cost of the lost drilling equipment and therefore fund the related capital expenditure rather than the expenditure being solely funded by the Corporation’s cash flows from operating activities, and its credit facilities when required. * For the three-month period ended June 30, 2026, the Corporation generated excess cash flow(()(2)()) of $20.5 million, after deducting net capital expenditures((2)) of $1.9 million (2025 - $9.3 million and $9.9 million, respectively). * On June 12, 2026, the Corporation declared a dividend of $0.20 per share or $9.2 million, payable on July 15, 2026, to shareholders of record on June 30, 2026. * As of June 30, 2026, the Corporation had CAD $64.5 million drawn on its Canadian credit facilities, nothing drawn on its US operating facility, and a cash balance of $20.6 million, resulting in net debt((2)) of $43.9 million (December 31, 2025 - $6.4 million). The proceeds from loans and borrowings were primarily used to fund capital acquisitions, dividends, share-based payments, and working capital. The Corporation had CAD $45.1 million and USD $25 million available to be drawn from its credit facilities as at the end of the 2026-quarter. * As at June 30, 2026, the Corporation had a working capital(()(2)()) of $135 million.