EXPRO GROUP HOLDINGS N.V. Q2 FY26 earnings call XPRO

Expro continues to observe a supportive backdrop for offshore and international energy markets, evidenced by increasing subsea tree orders and offshore rig utilization rates. The ongoing Middle East conflict has amplified the importance of energy security, supply diversification, and resilient energy infrastructure, which is expected to further boost offshore and international momentum in the near term. Operators are increasingly prioritizing technology-enabled performance improvements to enhance project economics and efficiency.

Expro recently closed the acquisition of Enhanced Drilling, integrating its Controlled Mud Level (CML) drilling technology. This differentiated technology is anticipated to reduce total well costs, for example, by potentially saving 5 to 7 days of drilling time through the elimination of one casing string. It also reduces operational risk when drilling through depleted reservoirs to access new reserves, as highlighted on Slide 7 of the presentation.

Currently, Enhanced Drilling's CML technology is primarily utilized in Norway and the U.S. Gulf. Expro plans to leverage its global operating footprint to accelerate the international adoption and deployment of this technology, identifying opportunities in West Africa, South America (including Brazil), and Asia Pacific. This strategy aims to expand Expro's overall margins and strengthen customer relationships earlier in the well design and planning phases.

In Q2 FY26, Expro successfully completed field trials for its 1,250-ton extended range drilling spider in the U.S. Gulf, demonstrating reliable performance and readiness for commercialization, which reduces rig time and improves safety. In the U.K., an abandonment campaign achieved 2,490 operating hours (104 days) with zero nonproductive time. The company also delivered the first in-country fluid lab services in Namibia, showcasing advanced reservoir fluid characterization capabilities.

Expro has successfully completed all internal projects related to its Drive 25 self-help program, which is now expected to realize over $40 million in annual structural cost savings for 2026, surpassing the initial target of $30 million. The company remains committed to continuous efficiency improvements and optimizing its cost base, assessing targeted actions across geographies and product lines to enhance operating leverage and support margin expansion.

Expro's capital allocation framework prioritizes maximizing long-term value creation through four key areas: investing in high-return organic projects, pursuing value-accretive M&A with clear industrial logic, returning cash to shareholders (targeting at least one-third of annual free cash flow), and maintaining a strong balance sheet. The company ended the quarter with $492 million in total liquidity and a net cash position of $121 million, with less than half a turn of net leverage pro forma for the Enhanced Drilling acquisition.