PHX Energy Announces Second Quarter Results and Record Second Quarter Revenue
CALGARY, Alberta, Aug. 05, 2025 (GLOBE NEWSWIRE) --
Second Quarter Highlights
For the three-month period ended June 30, 2025, PHX Energy generated consolidated revenue of $167.7 million, which is 9 percent higher than the $154.2 million generated in the second quarter of 2024, and the highest level of second quarter revenue on record. Consolidated revenue in the 2025-quarter included $12.8 million of motor rental revenue and $1 million of revenue generated from the sale of motor equipment and parts (2024 - $10 million and $1.1 million, respectively).
In the second quarter of 2025, adjusted EBITDA(1) was $27.4 million, 16 percent of consolidated revenue(1), a decrease of 9 percent from the $30 million, 19 percent of consolidated revenue, in the same 2024-quarter. Included in the 2025-quarter's adjusted EBITDA is $1.2 million in cash-settled share-based compensation expense (2024 - $1.4 million). Adjusted EBITDA excluding cash-settled share-based compensation expense(1) in the second quarter of 2025 was $28.5 million, 17 percent of consolidated revenue(1) (2024 - $31.5 million, 20 percent of consolidated revenue). Profitability in the 2025 three-month period was negatively affected by higher equipment parts and repair services costs that resulted from additional tariffs implemented late in the first quarter of 2025. In addition, adjusted EBITDA in the 2025-quarter included provision for inventory obsolescence of $1.4 million (2024 - $0.2 million). The provision for inventory obsolescence in the 2025-quarter mainly related to a discontinued line of motors.
Earnings in the 2025 three-month period were $8.5 million, $0.17 per share, as compared to $12.9 million, $0.26 per share, in the same 2024-period. Earnings in the 2025-period included depreciation and amortization expenses on drilling and other equipment of $12.6 million (pre-tax) which is a 13 percent increase when compared to the $11.1 million (pre-tax) in the corresponding 2024-quarter. This increase is the result of fixed asset additions throughout 2024 and in the first half of 2025.
In the 2025-quarter, PHX Energy's US division's revenue was $128.1 million, 10 percent higher than the $116 million generated in the second quarter of 2024. In comparison, the average number of active horizontal and directional rigs per day in the US industry declined by 5 percent quarter-over-quarter. US division revenue in the 2025-quarter represented 76 percent of consolidated revenue (2024, 75 percent).
PHX Energy's Canadian division reported $39.6 million of quarterly revenue, 4 percent higher compared to $38.2 million in the 2024-quarter and the highest level of second-quarter Canadian revenue on record. In comparison, in the 2025 three-month period, Canadian industry drilling days declined by 6 percent compared to the same 2024-period.
For the three-month period ended June 30, 2025, the Corporation generated excess cash flow(2) of $9.3 million, after deducting net capital expenditures(2) of $9.9 million (2024 - $3.5 million and $19.4 million, respectively).
On June 13, 2025, the Corporation declared a dividend of $0.20 per share or $9.1 million, paid on July 15, 2025 to shareholders of record on June 30, 2025.
In the 2025 three-month period, 100,000 common shares were purchased by the Corporation and cancelled for $0.9 million under the current Normal Course Issuer Bid ("NCIB"). Subsequent to June 30, 2025, the Corporation purchased a further 279,000 common shares for $2.3 million.
The Corporation intends to make an application to the TSX for renewal of its NCIB for a further one-year term and, subject to TSX approval, it is the Corporation's intention to continue the current strategy of leveraging the NCIB to its fullest as a tool to further reward shareholders under ROCS.
As at June 30, 2025, the Corporation had working capital(2) of $92.8 million and net debt(2) of $31 million.
Financial Highlights (Stated in thousands of dollars except per share amounts, percentages and shares outstanding)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
2024
% Change
2025
2024
% Change
Operating Results
Revenue
167,670
154,230
9
361,374
320,353
13
Earnings
8,522
12,913
(34
)
28,682
30,366
(6
)
Earnings per share, diluted
0.17
0.26
(35
)
0.62
0.64
(3
)
Adjusted EBITDA(1)
27,356
30,049
(9
)
68,043
65,082
5
Adjusted EBITDA per share, diluted(1)
0.59
0.62
(5
)
1.46
1.37
7
Adjusted EBITDA as a percentage of revenue(1)
16%
19%
19%
20%
Cash Flow
Cash flows from operating activities
10,489
39,317
(73
)
21,409
50,484
(58
)
Funds from operations(2)
20,595
24,313
(15
)
53,957
50,453
7
Funds from operations per share, diluted(3)
0.45
0.50
(10
)
1.16
1.06
9
Dividends paid per share(3)
0.20
0.20
-
0.40
0.40
-
Dividends paid
9,112
9,498
(4
)
18,214
18,951
(4
)
Capital expenditures(3)
20,748
26,780
(23
)
45,441
56,420
(19
)
Excess cash flow(2)
9,322
3,546
163
27,485
10,976
150
Financial Position
Jun 30 ‘25
Dec 31 ‘24
Working capital(2)
92,823
84,545
10
Net debt(2)
31,043
2,664
n.m.
Shareholders' equity
221,840
222,205
-
Common shares outstanding
45,456,773
45,506,773
-
n.m., not meaningful
Outlook
In 2025, our operations continued to be resilient in the weaker industry environment. We expect to continue to generate strong activity and revenue in the second half of 2025 relative to the market conditions, mainly through our continued focus on differentiating ourselves as a premium Rotary Steerable Systems ("RSS") provider.
RSS remains a key driver for our success and at the forefront of our strategy and capital investment priorities. We are the largest independent provider of RSS tools in North America and were the first to own both PowerDrive Orbit and iCruise. Today, there are only a handful of directional providers who can offer both of these industry leading technologies. Additionally, our proprietary Real-Time RSS Communication technology further enhances our competitive advantage in this market.
In Canada the promising growth that resulted from establishing a fleet of owned RSS tools at the start of 2025 is expected to continue through the remainder of the year and onward. Similarly, we believe the fleet expansion and versatility in the US will continue to support further market penetration and produce stronger revenue in a declining rig count environment.
Our increased motor rental activity levels in both Canada and the US are contributing to our stronger revenue, and like RSS, are helping to offset downward pressure on margins. In prior quarters we dedicated further resources to this line of business, and we foresee the resulting momentum continuing in upcoming quarters.
Given the broader global economic instability, the softer market is expected through 2025, and we anticipate that our results and profitability may continue to be impacted by factors such as tariffs and lower commodity prices resulting from OPEC+ strategy on oil output. Although we anticipate the impact to be generally in line with what we have already seen in the most recent quarter, we will watch industry indicators and adjust plans accordingly.
There are bright spots in both the US and Canadian industries with regards to the potential for additional natural gas focused drilling rigs being added in the short to medium term, as liquified natural gas ("LNG") exports are increasing in both countries. We believe we will be able to expand our client base to include Operators focused on natural gas and capitalize on the additional industry activity.
We remain focused on rewarding shareholders through an industry leading and sustainable dividend, and a share buyback program that has resulted in 28 percent of outstanding shares being purchased and cancelled since 2017. As part of this commitment, we intend to apply to the TSX to renew our NCIB to allow us the continued opportunity to reduce our common shares outstanding to enhance our per share metrics in a softer stock market.
Although industry forecasts predict potential volatility in the short term, we still believe we will maintain our strong operational and financial position, and the high level of shareholder rewards we have delivered under our Return of Capital Strategy ("ROCS").
Michael Buker, President & CEO August 5, 2025
Overall Performance
In the second quarter of 2025, PHX Energy generated consolidated revenue of $167.7 million which is 9 percent higher than the $154.2 million generated in the same period of 2024.
During the 2025 three-month period, despite weaker industry drilling activity in the US, the Corporation's US division achieved revenue growth through increased RSS and motor rental activities. For the three-month period ended June 30, 2025, the Corporation's US division's revenue grew by 10 percent to $128.1 million compared to $116 million in the same 2024-period. The US industry's rig count declined by 5 percent quarter-over-quarter. In comparison, PHX Energy's US operating days(3) saw an increase of 8 percent to 4,486 days from 4,146 in the 2024-quarter. RSS activity represented 24 percent of the division's operating days in the 2025-quarter, up from 19 percent in the same quarter of 2024. The US division's average revenue per day(3) for directional drilling services was generally flat quarter-over-quarter. In the 2025 three-month period, the Corporation's US motor rental division's revenue grew by 24 percent to $12 million from $9.6 million in the same 2024-period. In the 2025-quarter, the US division generated $1 million of revenue from motor equipment and parts sold (2024-quarter - $1.1 million). Revenue from the Corporation's US division in the 2025-quarter represented 76 percent of consolidated revenue (2024, 75 percent).
For the three-month period ended June 30, 2025, the Corporation's Canadian division generated revenue of $39.6 million, a 4 percent increase from $38.2 million in the same 2024-period. The Canadian segment recorded 2,362 operating days in the 2025-quarter, a 12 percent decrease from the 2,682 operating days realized in the comparable 2024-quarter. In comparison, the Canadian industry drilling activity decreased by 6 percent quarter-over-quarter. Average revenue per day(3) realized by the Canadian division improved by 16 percent to $16,409 in the 2025-quarter, as compared to $14,116 in the corresponding 2024-quarter. This improvement was largely driven by the Corporation's successful expansion of its RSS activity in the region. During the 2025-quarter, RSS activity represented 13 percent of the segment's operating days, up from 6 percent in the same 2024-quarter. The Corporation's Canadian motor rental division generated $0.8 million of revenue in the 2025-period (2024 - $0.4 million).
In the 2025 three-month period, earnings were $8.5 million (2024 - $12.9 million), adjusted EBITDA(1) was $27.4 million (2024 - $30 million), and adjusted EBITDA as a percentage of consolidated revenue(1) was 16 percent (2024, 19 percent). Earnings in the 2025-period included depreciation and amortization expenses on drilling and other equipment of $12.6 million (pre-tax) which increased by 13 percent as compared to $11.1 million (pre-tax) in the corresponding 2024-quarter. This increase is the result of fixed asset additions throughout 2024 and in the first half of 2025. Included in the 2025 three-month period adjusted EBITDA is cash-settled share-based compensation expense of $1.2 million (2024 - $1.4 million). For the three-month period ended June 30, 2025, adjusted EBITDA excluding cash-settled share-based compensation expense was $28.5 million (2024 - $31.5 million). Profitability in the 2025 three-month period was negatively affected by increased equipment parts and repair services costs that resulted from additional tariffs implemented late in the first quarter of 2025. In addition, adjusted EBITDA in the 2025-quarter included provision for inventory obsolescence of $1.4 million (2024 - $0.2 million). The provision for inventory obsolescence in the 2025-quarter mainly related to a discontinued line of motors.
As at June 30, 2025, the Corporation had working capital(2) of $92.8 million and net debt(2) of $31 million. The Corporation also has CAD $53.1 million and USD $20 million available to be drawn from its credit facilities.
Dividends and ROCS
On June 13, 2025, the Corporation declared a dividend of $0.20 per share payable to shareholders of record on June 30, 2025. An aggregate of $9.1 million was paid on July 15, 2025.
The Corporation remains committed to enhancing shareholder returns through its Return of Capital Strategy ("ROCS") which targets up to 70 percent of annual excess cash flow to be used for shareholder returns and includes multiple options including the dividend program and the NCIB. For the three-month period ended June 30, 2025, excess cash flow increased primarily due to lower net capital expenditures(2). The Corporation continued to prioritize shareholder returns while protecting its financial position and in the second quarter, maintained its current level of dividends, paying $9.1 million in dividends to shareholders, and repurchased and cancelled 100,000 common shares for $0.9 million under the current NCIB. During the first half of 2025 less than 70 percent of excess cash flow was distributed for shareholder returns under ROCS and the Corporation will target the level of excess cash flow to be used for shareholder returns to stay within the 70 percent threshold for the rest of the 2025-year, particularly given the uncertainty related to economic and industry conditions in light of weak commodity prices and global trade polices.
(Stated in thousands of dollars)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
2024
2025
2024
Excess cash flow
9,322
3,546
27,485
10,976
70% of excess cash flow
6,525
2,482
19,240
7,683
Deduct:
Dividends paid to shareholders
(9,112
)
(9,498
)
(18,214
)
(18,951
)
Repurchase of shares under the NCIB
(911
)
(3,143
)
(911
)
(3,143
)
Remaining distributable balance under ROCS
(3,498
)
(10,159
)
115
(14,411
)
Normal Course Issuer Bid
During the third quarter of 2024, the TSX approved the renewal of PHX Energy's NCIB to purchase for cancellation, from time-to-time, up to a maximum of 3,363,845 common shares, representing 10 percent of the Corporation's public float of Common Shares as at August 7, 2024. The NCIB commenced on August 16, 2024 and will terminate on August 15, 2025. Purchases of common shares are to be made on the open market through the facilities of the TSX and through other alternative Canadian trading platforms. The price which PHX Energy is to pay for any common shares purchased is to be at the prevailing market price at the time of such purchase.
Pursuant to the current NCIB, 100,000 common shares were purchased by the Corporation and cancelled for $0.9 million in the six-month period ended June 30, 2025 (2024, 358,300 common shares purchased and cancelled for $3.1 million). Subsequent to June 30, 2025, the Corporation purchased and cancelled 279,000 common shares for $2.3 million.
The Corporation intends to make an application to the TSX for renewal of its NCIB for a further one-year term and, subject to TSX approval, it is the Corporation's intention to continue the current strategy of leveraging the NCIB as a tool to further reward shareholders under ROCS.
Capital Spending
For the three-month period ended June 30, 2025, the Corporation spent $20.7 million in capital expenditures, of which $12.4 million was spent on growing the Corporation's fleet of drilling equipment, $6.4 million was spent to replace retired assets, and $2 million was spent to replace equipment lost downhole during drilling operations. With proceeds on disposition of drilling and other equipment of $10.9 million, the Corporation's net capital expenditures(2) for the 2025-period were $9.9 million. Capital expenditures in the 2025-quarter were primarily directed towards Velocity Real-Time systems ("Velocity"), Atlas High Performance motors ("Atlas"), and RSS, both PowerDrive Orbit and iCruise. PHX Energy funded capital spending primarily using proceeds on disposition of drilling equipment, cash flows from operating activities, and its credit facilities when required.
(Stated in thousands of dollars)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
2024
2025
2024
Growth capital expenditures
12,386
24,513
27,991
48,737
Maintenance capital expenditures from asset retirements
6,363
2,029
14,200
6,170
Maintenance capital expenditures to replace downhole equipment losses
2,000
238
3,250
1,513
Total capital expenditures
20,749
26,780
45,441
56,420
Deduct:
Proceeds on disposition of drilling equipment
(10,886
)
(7,409
)
(21,805
)
(19,710
)
Net capital expenditures
9,863
19,371
23,636
36,710
As at June 30, 2025, the Corporation had capital commitments to purchase drilling and other equipment for $21 million, $18.8 million of which is growth capital allocated as follows: $6.4 million for Velocity systems, $5.2 million for RSS systems, $4.4 million for performance drilling motors, and $2.8 million for other equipment. Equipment on order is largely expected to be delivered before the end of 2025.
The approved capital expenditure budget for the 2025-year, excluding proceeds on disposition of drilling equipment, is $65 million. Of the total expenditures, $47 million is anticipated to be spent on growth and the remainder is anticipated to be spent to maintain capacity in the fleet of drilling and other equipment and replace equipment lost downhole during drilling operations.
The Corporation currently possesses approximately 921 Atlas motors, comprised of various configurations including its 5.25", 5.76", 6.63", 7.12", 7.25", 8.12", 9.00", and 12.00" Atlas motors, and 133 Velocity systems. The Corporation also possesses the largest independent RSS fleet in North America with 101 RSS tools and was the first of a few competitors to have a fleet comprised of both the PowerDrive Orbit and iCruise systems.
Non-GAAP and Other Financial Measures
Throughout this press release, PHX Energy uses certain measures to analyze financial performance, financial position, and cash flow. These Non-GAAP and Other Specified Financial Measures do not have standardized meanings prescribed under Canadian generally accepted accounting principles ("GAAP") and include Non-GAAP Financial Measures and Ratios, Capital Management Measures and Supplementary Financial Measures (collectively referred to as "Non-GAAP and Other Financial Measures"). These Non-GAAP and Other Specified Financial Measures include, but are not limited to, adjusted EBITDA, adjusted EBITDA per share, adjusted EBITDA excluding cash-settled share-based compensation expense, adjusted EBITDA as a percentage of revenue, gross profit as a percentage of revenue excluding depreciation and amortization, selling, general and administrative ("SG&A") costs excluding share-based compensation as a percentage of revenue, funds from operations, funds from operations per share, excess cash flow, net capital expenditures, net debt (net cash), working capital, and remaining distributable balance under ROCS. Management believes that these measures provide supplemental financial information that is useful in the evaluation of the Corporation's operations and may be used by other oil and natural gas service companies. Investors should be cautioned, however, that these measures should not be construed as alternatives to measures determined in accordance with GAAP as an indicator of PHX Energy's performance. The Corporation's method of calculating these measures may differ from that of other organizations, and accordingly, such measures may not be comparable. Please refer to the "Non-GAAP and Other Financial Measures" section of this press release for applicable definitions, rationale for use, method of calculation and reconciliations where applicable.
Footnotes throughout this document reference:
(1
)
Non-GAAP financial measure or ratio that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to Non-GAAP and Other Financial Measures section of this document.
(2
)
Capital management measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to Non-GAAP and Other Financial Measures section of this document.
(3
)
Supplementary financial measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to Non-GAAP and Other Financial Measures section of this document
Revenue The Corporation generates revenue primarily through the provision of directional drilling services which includes providing equipment, personnel, and operational support for drilling a well. Additionally, the Corporation generates revenue through the rental and sale of drilling motors and associated parts, particularly Atlas.
(Stated in thousands of dollars)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
2024
% Change
2025
2024
% Change
Directional drilling services
153,902
143,084
8
333,262
298,142
12
Motor rental
12,801
10,012
28
24,507
18,258
34
Sale of motor equipment and parts
967
1,134
(15
)
3,605
3,953
(9
)
Total revenue
167,670
154,230
9
361,374
320,353
13
For the three-month period ended June 30, 2025, PHX Energy generated consolidated revenue of $167.7 million, which is 9 percent higher than the $154.2 million generated in the second quarter of 2024, and the highest level of second quarter revenue on record. For the six-month period ended June 30, 2025, the Corporation generated consolidated revenue of $361.4 million, a 13 percent increase as compared to the same 2024-period which generated consolidated revenue of $320.4 million.
In the second quarter of 2025, as a result of the declining oil prices, the US industry rig count continued to soften. The US rig count averaged 558 horizontal and directional rigs operating per day in the second quarter, which is 3 percent lower than the daily average of 575 in the first quarter of 2025 and 5 percent lower compared to the same quarter in 2024. In Canada, industry horizontal and directional drilling activity (as measured by drilling days) was 10,826 days in the 2025-quarter, a 6 percent decrease from 11,483 days in the same 2024-quarter. In comparison, the Corporation's consolidated operating days were flat at 6,848 days in the 2025-quarter as compared to 6,828 days in the 2024-quarter. For the six-month period ended June 30, 2025, consolidated operating days increased by 4 percent to 15,448 from 14,853 days in the corresponding 2024-period. In both 2025-periods, the continued strong demand for RSS and the increased capacity in the Corporation's RSS fleet helped shelter PHX Energy's consolidated activity from the impacts of the slower industry environment.
In both the three and six-month periods of 2025, average consolidated revenue per day(3) for directional drilling services period-over-period improved by 7 percent to $22,476 (2024, $20,957) and $21,574 (2024 - $20,074), respectively. The increase was mainly driven by higher RSS activity in both Canada and the US and increased deployment of the Corporation's proprietary Real Time RSS Communications technologies. In addition, PHX Energy's US activity increased as a portion of its consolidated activity and as a result, a greater percentage of consolidated activity was at the higher average revenue per day for directional drilling services in the US.
In the 2025 three and six-month periods, revenue generated by PHX Energy's Atlas motor rental division increased by 28 percent to $12.8 million (2024 - $10 million) and 34 percent to $24.5 million (2024 - $18.3 million), respectively. Throughout the first half of 2025, the Corporation's US motor rental division successfully grew its client base through increased marketing efforts and additional resources dedicated to support the division.
For the three and six-month periods ended June 30, 2025, revenue of $1 million and $3.6 million, respectively, was generated from the sale of motor equipment and parts (2024 - $1.1 million and $4 million, respectively). Due to the sporadic and cyclical nature of the customers' ordering frequency, it is expected that revenue from this line of business will fluctuate between periods.
Operating Costs and Expenses
(Stated in thousands of dollars except percentages)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
2024
% Change
2025
2024
% Change
Direct costs
143,444
126,456
13
296,859
255,500
16
Depreciation & amortization drilling and other equipment (included in direct costs)
12,613
11,142
13
25,182
21,461
17
Depreciation & amortization right-of-use asset (included in direct costs)
864
857
1
1,751
1,706
3
Gross profit as a percentage of revenue excluding depreciation & amortization(1)
22%
26%
25%
27%
Direct costs are comprised of field and shop expenses, costs of motors and parts sold, and include depreciation and amortization of the Corporation's equipment and right-of-use assets. For the three-month period ended June 30, 2025, direct costs increased by 13 percent to $143.4 million from $126.5 million in the same 2024-period. For the six-month period ended June 30, 2025, direct costs increased 16 percent to $296.9 million from $255.5 million.
In the 2025 three and six-month periods, the Corporation's depreciation and amortization on drilling and other equipment increased by 13 percent and 17 percent, respectively, mainly as a result of the additions to fixed assets throughout 2024 and in the first half of 2025. Apart from depreciation and amortization expenses on drilling and other equipment, higher direct costs in both periods primarily resulted from greater equipment repair expenses from increased overall activity, particularly related to RSS and motor rentals. In addition, the increase in direct costs in both periods is partly attributable to rising costs of equipment parts and repair services that largely resulted from additional tariffs implemented late in the first quarter of 2025. Direct costs in the second quarter of 2025 also included provision for inventory obsolescence of $1.4 million (2024 - $0.2 million). The provision for inventory obsolescence in the 2025-quarter mainly related to a discontinued line of motors.
For the three and six-month periods ended June 30, 2025, gross profit as a percentage of revenue excluding depreciation and amortization(1) declined to 22 percent and 25 percent respectively, compared to 26 percent and 27 percent in the corresponding 2024-periods. Rising equipment servicing costs and higher provision for inventory obsolescence largely contributed to the decrease in profitability in both 2025-periods. The negative impacts of rising equipment servicing costs and provision for inventory obsolescence were partially offset by lower RSS-related equipment rentals that were displaced through increased capacity in PHX Energy's RSS fleet.
(Stated in thousands of dollars except percentages)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
2024
% Change
2025
2024
% Change
Selling, general and administrative ("SG&A") costs
16,685
13,824
21
35,815
34,841
3
Cash-settled share-based compensation (included in SG&A costs)
1,189
1,403
(15
)
3,849
7,113
(46
)
Equity-settled share-based compensation (included in SG&A costs)
151
181
(17
)
240
281
(15
)
SG&A costs excluding share-based compensation as a percentage of revenue(1)
9%
8%
9%
9%
For the three-month period ended June 30, 2025, SG&A costs were $16.7 million, a 21 percent increase as compared to $13.8 million in the corresponding 2024-period. For the six-month period ended June 30, 2025, SG&A costs were $35.8 million, a 3 percent increase as compared to $34.8 million in the corresponding 2024-period. Higher SG&A costs in both 2025-periods were primarily due to rising personnel-related costs that were partially offset by decreases in cash-settled share-based compensation expense.
Cash-settled share-based compensation relates to the Corporation's retention awards and is measured at fair value. For the three-month period ended June 30, 2025, the related compensation expense recognized by PHX Energy was $1.2 million (2024 - $1.4 million). For the six-month period ended June 30, 2025, the related compensation expense recognized by PHX Energy was $3.8 million (2024 - $7.1 million). Changes in cash-settled share-based compensation expense in the 2025-periods were mainly driven by fluctuations in the Corporation's share price and the number of awards granted in the period. There were 1,362,640 retention awards outstanding as at June 30, 2025 (2024, 1,563,114). SG&A costs excluding share-based compensation as a percentage of revenue(1) were generally flat period-over-period at 9 percent in both the 2025 periods (2024, 8 percent and 9 percent, respectively).
(Stated in thousands of dollars)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
2024
% Change
2025
2024
% Change
Research and development expense
1,607
1,409
14
3,387
2,612
30
For the three and six-month periods ended June 30, 2025, PHX Energy spent $1.6 million and $3.4 million on research and development ("R&D") expenditures, an increase of 14 and 30 percent as compared to $1.4 million and $ 2.6 million spent in the corresponding 2024-periods. Higher R&D expenditures in the 2025-periods are mainly attributable to increased personnel related costs and greater prototype and equipment parts expenses that were required to support key large-scale projects during the period.
(Stated in thousands of dollars)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
2024
% Change
2025
2024
% Change
Finance expense
703
467
51
1,309
801
63
Finance expense lease liabilities
483
531
(9
)
989
1,072
(8
)
Finance expenses mainly relate to interest charges on the Corporation's credit facilities. For the three and six-month periods ended June 30, 2025, finance expense increased to $0.7 million and $1.3 million, respectively (2024 - $0.5 million and $0.8 million). The increase in finance expenses in both 2025-periods was primarily due to higher drawings on the credit facilities in the periods.
Finance expense lease liabilities relate to interest expense incurred on lease liabilities. For the three and six-month periods ended June 30, 2025, finance expense lease liabilities remained relatively consistent at $0.5 million and $1 million, respectively (2024 - $0.5 million and $1 million) as no new significant leases were entered into in the period.
(Stated in thousands of dollars)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
2024
2025
2024
Net gain on disposition of drilling equipment
7,651
5,401
15,512
14,287
Foreign exchange losses
(200
)
(159
)
(415
)
(288
)
Other income
7,451
5,242
15,097
13,999
For the three and six-month periods ended June 30, 2025, the Corporation recognized other income of $7.5 million and $15.1 million, respectively (2024 - $5.2 million and $14 million, respectively). In both periods, other income was mainly comprised of net gain on disposition of drilling equipment. The recognized gain is net of losses, which typically result from asset retirements that were made before the end of the equipment's useful life. In both 2025-periods, more instances of high dollar valued downhole equipment losses occurred as compared to the corresponding 2024-periods, resulting in higher levels of net gain on disposition of drilling equipment recognized.
Foreign exchange losses of $0.2 million and $0.4 million in the three and six-month periods of 2025 (2024, $0.2 million and $0.3 million), were primarily due to the revaluation and settlement of CAD-denominated intercompany payables in the US.
(Stated in thousands of dollars except percentages)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
2024
2025
2024
Provision for income taxes
3,677
3,872
9,430
9,160
Effective tax rates(3)
30%
23%
25%
23%
For the three and six-month periods ended June 30, 2025, the Corporation reported a provision for income tax of $3.7 million (2024, $3.9 million) and $9.4 million (2024, $9.2 million), respectively. In the 2025 three-month period, PHX Energy's effective tax rate(3) of 30 percent is higher than the combined US federal and state corporate income tax rate of 24.5 percent and the combined Canadian federal and provincial corporate income tax rate of 23 percent mainly due to prior year related income tax adjustments and non-deductible expenses. In the 2025 six-month period, PHX Energy's effective tax rate(3) of 25 percent is relatively in line with the combined US federal and state corporate income tax rate of 24.5 percent and the combined Canadian federal and provincial corporate income tax rate of 23 percent.
On July 4, 2025, the US Administration passed into law H.R.1, One Big Beautiful Bill Act ("the Bill"), which included changes to current corporate tax laws in the US. As the enactment date is after the current interim reporting period, the impact of the changes to the tax laws were not reflected as at June 30, 2025. The newly enacted legislation impacts the classification between current and deferred taxes in the US segment. The Bill is not anticipated to have a material impact at this time, however the Corporation will continue to evaluate future periods.
Segmented Information
The Corporation reports two operating segments on a geographical basis throughout the Gulf Coast, Northeast and Rocky Mountain regions of the US and throughout the Western Canadian Sedimentary Basin. Revenue generated through the Corporation's technology partnership and sales and lease agreement for the Middle East and North Africa ("MENA") regions are included in the US division's results.
United States
(Stated in thousands of dollars)
Three-month periods ended June 30,
Six-month periods ended June 30,
2025
