Core Viewpoint - The Iran conflict has led to a surge in oil and natural gas prices, but future price trajectories remain uncertain. Scotia Capital Markets analysts suggest focusing on Canadian energy stocks with above-average yields amid this uncertainty [1] Oil Sector Summary - Oil-weighted companies are currently pricing oil at an average of US$71 per barrel, while West Texas Intermediate (WTI) is trading around US$95 [1] - Scotia's top picks in the oil category include: - Cenovus Energy Inc. (CVE:TSX) - Whitecap Resources Inc. (WCP:TSX) - Ovintiv Inc. (OVV:TSX) - These companies are favored due to their outlooks based on lower WTI prices compared to peers and solid exposure to stronger oil prices [1] - Defensive picks in the oil sector are: - Freehold Royalties Ltd. (TSX:FRU) - PrairieSky Royalty Ltd. (PSK:TSX) [1] Natural Gas Sector Summary - Scotia's top picks in the natural gas space include: - Topaz Energy Corp. (TPZ:TSX) - Spartan Delta Corp. (SDE:TSX) - Peyto Exploration and Development Corp. (PEY:TSX) - Expand Energy Corp. (EXE:NYSE) - Topaz Energy offers ultra-high margin exposure to prime assets in the Western Canada Sedimentary Basin [1] - Spartan Delta is recognized as a top-growth name operating in the Duvernay region [1] - Expand Energy is highlighted as the best option in the U.S. gas space for its upside potential and downside protection [1] - Vermilion Energy Inc. (VET:TSX) provides exposure to the European gas market [1]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $150.5 million, an increase of approximately 6% compared to Q4 2024, and within the guidance range of $146 million to $152 million [5] - Adjusted EBITDA for the quarter was $16.5 million, reflecting a 17% increase quarter over quarter, with incremental adjusted EBITDA margins of approximately 26% [5][6] - Cash and cash equivalents as of March 31, 2025, were $17.3 million, with total liquidity of $53.8 million [11] Business Line Data and Key Metrics Changes - Cementing revenue increased by approximately 4% to $57.2 million, with jobs completed rising by approximately 11% [12][13] - Wireline revenue grew by approximately 7% to $29.6 million, with 7,713 wireline stages completed, an increase of approximately 15% [13] - Coiled tubing revenue increased by approximately 16% to $29.9 million, with utilization significantly higher compared to Q4 [8][14] Market Data and Key Metrics Changes - The U.S. rig count remained flat in Q1, yet the company achieved revenue growth across all service lines [6] - Pricing across service lines was mostly stable, except for wireline operations in the Northeast, which experienced lower stage pricing due to bidding impacts [7] Company Strategy and Development Direction - The company is focused on market share gains and cost reductions, with a strong emphasis on technology development and maintaining service quality [5][19] - The recent appointment of Joey Hall to the Board of Directors is aimed at enhancing industry expertise within the company [20] Management's Comments on Operating Environment and Future Outlook - Management noted uncertainty in the energy industry due to declining oil prices and increased costs from tariffs, impacting customer plans and activity levels [16][18] - The company anticipates Q2 revenue to decline compared to Q1, projecting between $138 million and $148 million [19] - Management remains optimistic about the long-term outlook for natural gas and its potential positive impact on earnings [17] Other Important Information - The company completed a refinancing of its ABL revolving credit facility, increasing liquidity and financial flexibility [9][10] - General and administrative expenses for Q1 were $13.3 million, with a full-year CapEx budget unchanged at $15 million to $25 million [14][15] Q&A Session Summary Question: Pricing pressures and impacted business lines - Management indicated that pricing pressure is primarily seen in the cementing division, largely due to tariffs and commodity price fluctuations [22][23] Question: Oil price guidance - Management stated it is too early to provide specific guidance on oil prices, emphasizing the importance of market conditions and customer evaluations [27][28] Question: Ability to pass on tariff costs - Management confirmed plans to pass tariff costs onto customers, as the service sector cannot absorb these increases [30][31] Question: Natural gas market outlook - Management expressed excitement about the natural gas market and confirmed no plans to relocate equipment at this time [33][34] Question: International tool sales - Management reported positive performance in international tool sales and highlighted ongoing development of completion tools [36]