Trican Well Service (TSX:TCW) released third-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
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Summary
Trican Well Service reported Q3 2026 revenues of $338.3 million, up from $300.6 million in Q3 2025, driven by improved utilization and the contribution of the Ironhorse Division.
Adjusted EBITDA for the quarter was $87.7 million, representing 26% of revenue, an increase from $59.5 million or 20% of revenue in Q3 2025.
Net earnings were $48 million or $0.23 per share, compared to $28.9 million or $0.15 per share in Q3 2025.
The company generated $66 million in free cash flow and maintained a strong balance sheet with positive non-cash working capital of $139.7 million.
Strategic initiatives include a fleet modernization strategy, focusing on natural gas-fueled hydraulic frac fleets and electric ancillary equipment.
Trican repurchased and canceled 6.9 million shares and declared a dividend of $0.055 per share, reflecting a capital return strategy.
Operational highlights include record sand pumping in September and strong performance across divisions despite pricing pressures and cost inflation.
Future outlook indicates a strong start to Q4 with expectations of a slowdown towards the end of the quarter, with 2027 expected to be busy.
The company emphasized technological leadership and efficiency, particularly in natural gas and electric equipment, as key differentiators.
Management expressed confidence in continued growth in the Western Canadian basin and the expansion into heavy oil and SAGD markets.
Full Transcript
Jordan (Operator)
Thank you for standing by. My name is Jordan and I’ll be your conference operator today. At this time I’d like to welcome everyone to the Trican Well Service third quarter 2026 results. All lines have been placed on mute to prevent any background noise. I would now like to turn the conference over to Brad Fedora. You may begin.
Brad Fedora (President & CEO)
Thank you everyone. Good morning. First, Scott Matson, our CFO, will give an overview of the quarter results and then I’ll provide some comments with respect to the quarter overall and talk a little bit about what we’re seeing for the next sort of six to nine months, and then we’ll take questions as usual. We have all the senior members of our executive team in the room today, so we should be able to handle any questions that may come up. If you do have a question about your model or anything like that, please leave that for later today.
Now I’ll turn the call over to Scott.
Scott Matson (Chief Financial Officer)
Thanks Brad. Before we begin, I’d like to remind everyone that this conference call may contain forward-looking statements and other information based on current expectations or results for the company. Certain material factors or assumptions that were applied in drawing conclusions or making projections are reflected in the forward-looking information section of our MD&A for Q3 2026. A number of business risks and uncertainties could cause actual results to differ materially from these forward-looking statements and our financial outlook.
Please refer to our 2025 Annual Information Form for the year ended December 31, 2025 for a more complete description of the business risks and uncertainties facing Trican. This document is available both on our website and on SEDAR. During this call we will refer to several common industry terms and use certain non-GAAP measures which are more fully described in our Q4 2025 MD&A. Our quarterly results were released after close of market last night and again are available both on SEDAR and on our website.
So with that I’ll give a brief summary of our quarterly results. My comments will draw comparisons mostly to the third quarter of last year and also provide some comments about our current activity levels and expectations going forward. Overall third quarter reflected strong activity levels after a bit of a slow start with improved utilization and a solid contribution from the Ironhorse Division for the full quarter. Commodity prices remained supportive of activity, particularly for oil and liquids-focused producers, and completion programs continue to increase in scale and complexity across many of the resource plays where Trican operates.
Overall revenues for the quarter were 338.3 million compared to the 300.6 million we generated in Q3 of 2025. The increase was driven again by stronger operating activity and utilization levels during the quarter together with the contribution from Ironhorse for the full quarter of this year versus effectively one month of Q3 of 2025 just due to the timing of the acquisition. Adjusted EBITDA for the quarter was 87.7 million or 26% of revenue compared to adjusted EBITDA of 59.5 million or 20% of revenue in Q3 2025.
Adjusted EBITDAS for the quarter came in at 87.1 million or 26% of revenue compared to the 66.9 million or 22% of revenue we printed in Q3 of last year. To arrive at EBITDAS, we add back the effects of our cash-settled stock-based comp recognized in the quarter to more clearly show the results of our operations and remove some of the mark-to-market impact of the movements in our share price between reporting dates. So on a consolidated basis this results in earnings of 48 million during the quarter which translates to $0.23 per share on both a basic and fully diluted basis compared to earnings of 28.9 million or $0.15 a share on a basic and fully diluted basis in Q3 of last year. We generated free cash flow of 66 million during the quarter and our definition of free cash flow is effectively EBITDA less non-discretionary cash expenditures such as maintenance capital, interest and current taxes.
You can see more details on this in the non-GAAP measures section of our MD&A. CapEx for the quarter totaled 26.5 million split between maintenance capital of 7.7 million, and upgrade capital of 18.8 million, and our upgrade capital was primarily directed towards the construction of our first 100% natural-gas-fueled continuous heavy-duty hydraulic frac fleet and the purchase of electric ancillary frac equipment. These investments form part of our broader fleet modernization strategy and support our focus on technological leadership, operating efficiency and the ability to execute larger and more complex customer completion programs.
Continue to maintain a strong balance sheet exiting the quarter with positive non-cash working capital of 130 39.7 million, net debt of 50.3 million in line with what we were expecting, and approximately 127 million of accessible liquidity during the quarter. Strong cash flow generation from operations partially offset by a seasonal build in working capital following a spring breakup session, but again in line with where we were expecting, and I would expect some of this to unwind as we move through the back half or the back part of the year.
With respect to our return of capital strategy, we repurchased and canceled 6.9 million shares under our NCIB program in the third quarter. The weighted average price of $6.09 per share representing approximately 3.3% of the shares that were outstanding at the beginning of the year. Subsequent to the quarter, we repurchased and canceled about 600,000 shares and will continue to be active in our buyback program when market prices are at levels that provide a favorable investment opportunity.
And as noted in our press release, the Board of Directors approved a dividend of 5 and a half cents per share, reflecting approximately 11.1 million in aggregate distributions to shareholders. That distribution is scheduled to be made December 31, 2026 to shareholders of record as of the close of business on December 15, 2026. I would note that the dividends are designated as eligible dividends for Canadian income tax purposes. So with that, I’ll turn things back to Brad.
Brad Fedora (President & CEO)
Okay, thanks. Overall, Q3 came in as expected. It was a good quarter, but believe it or not, our results were again significantly impacted by wet weather, much more than normal for a third quarter. So even though it was very busy, we actually still had a lot of down days, particularly in the two frac divisions. All divisions performed really well. Margins were quite consistent across all four service lines. We pumped record amounts of sand in September.
Unfortunately, nowadays much of it is self-supplied by our customers, which is a significant loss of margin for us, meaning that we have to work a lot harder to make the same amount of cash flows that we used to in prior years. We are still experiencing significant pricing pressure in the bidding processes that have been unfolding over the last couple of months. And we’re still seeing cost inflation across our entire supply chain, due mainly to higher diesel prices that started earlier this year.
It doesn’t look like any of that is going to abate anytime soon. It’s still too early to determine the impact of the counter-tariffs against U.S. parts and steel, but we expect that those will be material. As with what happened with sand, we got all those tariffs back, but in the meantime they can be a little bit painful and feel a little bit costly. But I think overall in the long run that’ll probably work out much like sand did last year. Q4 has started off great. We’re having a record month in October. We do expect though that all divisions except cementing will slow down as we approach the end of Q4, and we do expect our results to be lower than Q3.
I know we’ve seen some analyst comments out there that they’re actually showing growth in Q4 over Q3. I think that’s a bit of a stretch. As I think with normal seasonality and budget exhaustion going into year end, you should see Q4 a little bit lower than Q3. And that would be, I think, the normal cadence going forward. Nothing’s changed. Our customers are still very focused on technology and efficiency. Efficiency is king on location. Now, just given the size of these fracs and these frac programs, any little time savings or cost savings that you can provide are significant over the course of a year, particularly the opportunity to burn natural gas instead of diesel.
The cost savings for that are well over $100,000 a day. Obviously, way lower emissions. Natural gas is available right on location in many cases. And so it’s a very important part of our frac strategy going forward. You know, our natural gas assets combined with our electric backside equipment are leading the industry in Canada. You know, we get diesel substitution rates well over 90%. When you combine our 100% natural gas pumps with our electric blenders and sand handling equipment, we still remain very focused.
Montney Duvernay. Probably 70% of our work is still directed toward natural gas plays. I mean, they all have, I think, fairly heavy liquids components for the most part, but it’s still very much a natural gas basin. And we actually see the oily parts of the basin as a great opportunity to expand our services, particularly in cement and coil. So in the deep frac division, it’s going very well. Continue to build out our differentiated service offering with our 100% natural gas GMS pumps. You know, we’re definitely the leader in this space. When you combine our natural gas equipment with our electric backside equipment combined with our engineering and lab facilities, you know, we view ourselves as a technical leader, and I think our clients do too. Wells are getting longer, there’s more stages.
The sand per well just continues to grow. You know, I’m always referencing sand numbers, but, you know, I think this basin could approach 10 million tons any day. Now, you compare that to sort of four or five years ago, it’s double the amount of sand that’s getting pumped. So to us, that just means more time on location, the need for more robust, efficient equipment. And certainly we are leading that war on innovation and technical ability in the field.
Almost 30% of our work now is in the Duvernay. That’s a big increase from even two years ago. Very positive for future frac demand. It’s a very pressure-pumping-intensive play and it pumps at very high pressures. And so the importance of new robust equipment designed for long pumping rates at very high pressures, you know, is, is just amplified in that place. So you know, we’re really happy with our position there. You know, unfortunately there is an undisputed trend of customer-supplied sand that’s been a big loss for us from a cash flow perspective.
And you know, the only way to deal with that is to increase your last mile logistics and try to find, try to find returns in sort of the logistics value chain. That is not a trend that we see going away. It probably continues to increase. But you know, we’ve really focused a lot of our work in driving efficiencies from our last mile logistics. We have the largest fleet of sand trucks in Western Canada and, and we continue to focus on that division.
We have received our 100% natural gas pumps as I discussed earlier. You know, those are coming in, they’re a little behind but we do expect to have, we do expect to have all of our pumps in the field by year end. They’re performing very well in the field so far. You know, better than expected, actually better at burning fuel gas than the old Tier 4 engines that we were using, that we continue to use. And it’s just the more gas you can burn, especially at these diesel prices, the more fuel savings are provided for the customer.
So something that the customers are very focused on. It looks like the pumps will be more spread across our deep fleets instead of being combined into an 8 fleet in the near term. What that does, it just makes each of our fleets sort of more technically and operationally advanced and as a result a little bit more profitable. So you may want to adjust your models accordingly. And then as we add more of these pumps then we will evaluate at that time whether or not we want to add incremental fleets or we want to just continue to increase the profile of each of our deep fleets.
We need more of these. We simply can’t get them fast enough. You know, it’s a, they’re, they’re, they’re a huge win for our customer and they’re a win for us. So this is certainly a technology that we expect to be deploying over the next few years. We’re the only company that is now running, in the pressure pumping space anyway, that is, is now running natural gas-fueled semi-trucks. We’ve received two of three so far. They’re performing well. They have a great fuel range. There’s a significant savings on fuel versus diesel. So even though these trucks are expensive, we expect that we’re going to be getting reasonable returns just on fuel savings alone. So we’ll be deploying those into our trucking fleet as they arrive.
And, you know, what I would say is demand for the natural gas pumps far exceeds our ability to supply them as well as our electric backsides as well, which is composed of the blenders and the sand handling and the chemical handling equipment. So, you know, it’s frustrating for us that we can’t get more of this equipment, but there’s basically a global demand for these engines. And so we’re just trying to make sure that we position ourselves in the queue and we’ll get them as fast as we can, but we fully expect that we’ll be ordering more of those pumps going forward.
On the Iron Horse side, you know, as anticipated where oil prices went, Q3 was a great quarter for them. Clients were busy in the field. They especially had a lot of weather delays, but they still had a great quarter. You know, it really highlights, you know, the oil price conditions like we’re experiencing today really, really highlight why, you know, why we thought that was a good acquisition. And, you know, it’s broadened our exposure to parts of the basin that we were not present in before.
And we’re looking forward to, you know, a really busy 2027 in that division. On the cement side, we continue to be, you know, really happy with how that division continues to operate. We maintained really high market share in both Montney and the Duvernay. We secured a Q1 SAGD project twice the size of our 2026 program. You know, in-depth discussions with additional customers to provide, you know, equipment and provide efficiencies in their programs. You know, we currently have almost no market share in heavy oil and SAGD.
So as we expand into that market share, that’s pure, you know, that’s pure organic growth and incremental to what, to what we’re, what we’re doing today. From a revenue and cash flow perspective, you know, those jobs are smaller, but there’s lots of them. And the margins on those are almost as good as our deep gas margins. So that’ll be an area of expansion for this company in the future. We successfully cemented the longest well in Canada in the summer.
It was just over 9,600 meters. So great job to the cement division and the crew that executed there. You know, as wells get longer, more expensive for the customer, you know, they of course are more, more and more reliant on companies like us that have advanced blends, a deep engineering program, a deep lab expertise, and years and years of operating experience. So our competitive positioning should just do nothing but improve as wells get bigger and more complicated.
Going forward, we are, we are working on electrification in that division as well. We expect delivery of a hybrid mixing unit in Q1 of 2027 that is delayed from Q4 this year. But with that equipment, we’ll see the elimination of hydraulics, which will mean less breakdown, less R&M and just better reliability for the customer and especially in the cold, a much more pleasant operating experience for the operators as well. On the coil side, we had a good summer in coil. Again, lots of delays due to weather, but August and September were two of the busiest months ever in that division. This has continued into October as well, which will probably be the busiest month for this division. As with everything, wells get longer, creating challenges for coil. Trican Well Service manages all of these challenges with an extensive string inventory, lots of high-rate injectors, and our relationships with tool companies that continue to allow us to take on technical challenges and provide really good service for our customers.
This coil division as well, we look at heavy oil and SAGD as a great opportunity for us to expand. And again, we’ve done very little in that part of the world just due to equipment and staffing shortages over the past few years. But we see that as a great opportunity to, to show significant organic growth in that division. I’ll just make a few comments about our outlook for Q4 and 2027. I’d say Q4 is going very well. October is basically a continuation of Q3. Probably will be a record month for this company overall, but we do, you know, you should expect things to slow down significantly in December. And so, you know, financial results will be good, but I do expect them to be a little bit lower than Q3. You know, we’re seeing research notes that are implying Q4 is going to be higher than Q3.
I think that’s very, very unlikely unless there’s significant roll forward of budgets from 2027 into 2026. So I think the normal cadence will be, you know, Q3 is probably the busiest quarter of the year and then Q4 and Q1 are just slightly, slightly below it, you know. And again, the loss of sand is a real impact to our operations. And so we have to end up doing a lot more work to show the same sort of EBITDA and cash flows. At this time, we’re not seeing any significant budget being pulled forward from Q1 2027 into Q4.
I won’t be surprised if we see a little bit of that. You know, Q1 2027 is very, very busy. All of our customers are telling us that they’re going to be busier next year. You know, Q1 2027 is almost, is almost fully booked and the conditions for Q1 are improving as the weeks go by. So you know, we are expecting a very busy, very busy winter and a very busy spring. Overall when we look at the basin we think, we think in terms of we expect activity probably goes up 5% or so a year and we probably see a similar increase in pricing to go along with it. This might be conservative, but I think until we get a much more constructive natural gas market, we’re taking I think a conservative stance on growth and focusing on getting the right people, getting the right equipment, making sure that even though things are getting busier, we continue to operate at an extremely high level of not just quality of operations, but efficiency of operations as well.
Still a very competitive space to operate in and lots of pricing, lots of pressure from our suppliers across our entire supply chain. So you know, even though it’s growing, we want to continue to operate on efficiencies, providing very good service for our customers, making sure that we have the right people in place as this market grows. I would echo our comments in the last few years. You know, we view Western Canada as a great place to be. You know, we expect that this basin is going to continue to expand over the next four years, four or five years.
Just given everything that we’ve seen from an egress perspective on both oil and natural gas. And you know, we hope to be a big part of that. You know, we see growth coming from five key areas. Just overall industry activity and pricing is one, you know, our market share within that market is two, just given our technology and equipment advantage. The third is just well intensity growth. More sand means more time on location for us which just means, you know, higher frac builds, reducing the effective capacity of the fleet in Canada as a whole.
So that’ll just, you know, more hours on location I think is, is a win. Cement and coil will have lots of organic expansion just in the heavy oil and SAGD areas. And as our last mile logistics expand, you know, we’ll start seeing that as a separate operating division that, you know, is also providing profits to the overall company. And I’ll just finish off with sort of our view of value for shareholders and return of capital. It’s a grind, but we continue to generate free cash flow and maintain a conservative balance sheet. We’re not totally debt free, but we’re effectively debt free. We do subscribe to a diversified return of capital strategy, a combination of sustainable dividends and the NCIB. Since 2020, you know, Trican Well Service has returned over 540 million to shareholders in the form of buybacks and dividends.
So, you know, it’s a very, very significant number that I think, you know, it’s almost getting taken for granted. For now, you know, we look at buying our own share as probably the best M&A we ever could have done. So we’re really happy with how that’s worked out. I think we’re, I don’t know, Scott, what are we? Almost 55% of the shares since 2017. So, you know, we’ll continue to flex our NCIB up and down based on share prices and other market opportunities.
You know, we are very active in sort of our M&A, in our, in our M&A department. You know, we’re, we’re combing through deals trying to find the right places to invest, making sure that they’re exposed to the, to the markets that we want to be in. It’s, as always, very tough to find the right deal. And we’ll just keep, we’ll keep digging and in the meantime we’ll keep buying our shares as a form of M&A. So don’t expect that to change anytime soon on a go forward basis.
Like we’ve said in the past, give or take, you should expect about 50% of our free cash flow to go to shareholders in the form of buybacks or dividends. I think over the long term that’s probably a good metric and it’ll vary from year to year depending on the stock price environment and what’s available from an M&A perspective. But over a 10 year period, I think that 50% number is probably about right. You know, we’re not afraid to use our bank lines.
We feel a lot better about debt today than we did even a couple of years ago. You know, I think it’s no surprise to people that this management team is very conservative from a debt perspective. But just given the stability that we’re seeing in the market and how we, you know, our views of the future for the Canadian market over the next five to 10 years, we wouldn’t hesitate to use our bank lines to make the right investment. I’ll just finish off by saying our priorities have not changed.
Build a resilient, sustainable and differentiated company. Invest in high quality growth and upgrading opportunities to ensure that we’re adding value for our customers. It’s not enough to just show up and execute. You have to show them that why using our services creates incremental value for them and then provide a consistent return of capital to our shareholders through the dividend and the NCIB when appropriate. Okay, operator, I think I’ll stop there and we’ll go to questions.
Jordan (Operator)
As a reminder, if you’d like to ask a question, simply press star followed by the number one on your telephone keypad. Your first question comes from the line of Aaron McNeil from TD Cowen. Your line is live.
Aaron McNeil (Analyst at TD Cowen)
Hey, morning all. Thanks for taking my questions. Brad, you highlighted that pricing pressure persisted in Q3 and then you later mentioned the potential 5% inflection in both activity and pricing next year. I’m hoping you can just expand a bit more on how you see the competitive intensity evolving into 2027 and maybe just couch it as both on the sort of supply side as well as the demand side. I know demand, you said maybe 5%. Would you characterize the market today as sort of adequately supplied, oversupplied, and what would it take to change your view?
Brad Fedora (President & CEO)
Yeah, it’s a bit of a, bit of a quirky market in the sense that I don’t think activity is necessarily in any particular month that consistent across all the service providers. You know, I think we sort of take turns having very busy months, but there’s certainly some white space present if you look at the industry as a whole. And so you haven’t. Even though I think everybody’s expecting a much busier next year. You know, I think our customers have played this really well.
You know, they’re securing longer term relationships, you know, using today’s maybe angst about white space. And so even though I think the market’s going to be undersupplied very soon, you’re not seeing it in pricing today. But it’ll happen, it’ll happen quickly. Is it going to be a huge 20% jump in pricing? No, I don’t think so. And that’s why I think taking a sort of a conservative view of starting with cost recoveries, just given how much our margins have been squeezed, starting with cost recoveries and a little bit more activity, you know, will allow you maybe to inch pricing up a little bit.
But remember, this is a, you know, a very torquey business. You know, we have about 1.2 billion top line. You don’t need a big price increase to really move earnings around and free cash flow. So, you know, a little bit of activity combined with a little bit of pricing and a little bit of cost recovery, you know, it’s very, very significant. The timing, the exact timing of which nobody knows.
Aaron McNeil (Analyst at TD Cowen)
Gotcha. Any, just to maybe clarify, anything you’re—
Brad Fedora (President & CEO)
Well, I think as everybody knows, supply side has actually improved here. There’s chatter about maybe up to four spreads leaving Canada going to the U.S. My sense is, you know, once they get down there, it’s going to be really hard to bring them back. It’s busy down—it’s busy in the States too. You know, maybe I would even say like the slope of their recovery curve has been higher than Canada’s in some of those basins. So, you know, my guess is some of that equipment’s going to go south and not be back anytime soon.
So the number of frac fleets in Canada doesn’t take—as we all know—like a marginal fleet, either additions or subtractions, can have a big influence on the overall market. So, you know, thanks for asking that question. It’s a good point.
Aaron McNeil (Analyst at TD Cowen)
And then, you know, you mentioned again back to the supply side that you couldn’t get some of these natural gas pumps fast enough. Maybe in broad strokes, like how many pumps do you think you can get your hands on next year and do you think you’ll sort of maximize your ability to do that? And I know you said, you know, no modeling questions, but to the extent that you’d like to comment on what, you know, the 27 CAPEX could look like, I’d be interested in getting your views.
Brad Fedora (President & CEO)
I would say, I would say the cap, you should assume the same Capex for next year. I’m looking at Scott and he’s nodding. So. But if we could double it, we would, you know, but there’s not. You can’t buy what they won’t sell you. Yeah.
Scott Matson (Chief Financial Officer)
The other comment I’d make, Aaron, is that, you know, there’s a timeline around these things. Like we ordered our first set of these natural gas pumps about a year ago and so we’ve taken delivery of kind of 3 out of 10. But there’s quite a lead time and then there’s quite a build slot time. So, you know, even if we could order double them, we wouldn’t get them for, you know, a full season. So.
Brad Fedora (President & CEO)
Yeah. Anything ordered today is 2028, basically. Yeah. So it’s frustrating but there’s demand for those engines, you know, in all parts of the economy, especially in power.
Aaron McNeil (Analyst at TD Cowen)
Right, right. Okay. Well, appreciate the time and turn it over. Thank you.
Jordan (Operator)
Your next question comes from the line of Keith Mackey from RBC. Your line is live.
Keith Mackey (Analyst at RBC Capital Markets)
Hey, thanks and good morning. Maybe we could just start out on that sand pumping trend that you mentioned a few times there, Brad. What portion of your sand did you pump that you pumped in the quarter? Did you supply versus third-party supply? And how might you expect that to change going forward? Are we in the eighth or ninth inning of that or is there a significant amount of sand that might be supplied by third parties going forward?
Brad Fedora (President & CEO)
Yeah, in the quarter that number was, call it roughly 50% supplied by Trican or customer supplied. You know, that’s been a slow, steady trend upwards as we’ve moved for the last year or two. We would have been 70-30 a year ago. 70-30 a year ago. You know, that trend will probably continue, but you know it’s not—there will still be an element of Trican supplied sand specifically for, you know, certain customers want us to be able to handle that process for them. And the larger, and the bigger demand on sand from a program perspective that you have like a larger oper—the larger the operator, the more likely they are to procure their own sand. So we’re probably in the sixth, seventh inning of that as we go forward.
So I think we’ll see more, but not dramatically.
Keith Mackey (Analyst at RBC Capital Markets)
Okay, very helpful, very helpful. And let me just talk a little bit about business development—you mentioned M&A active. Can you just kind of speak to some of the things that you’ve, in general, in broad strokes, looked at? What types of things might meet your return thresholds versus what types of things might not? And how do you want to bolt those into Trican as an existing business? Is it about creating more integration or more breadth or what is the approach and the latest thinking today?
Brad Fedora (President & CEO)
We’re looking at everything. We’re very bullish on, not just Canada, but we’re bullish on the U.S. as well. Again, we’d never buy fracturing operations or sole fracturing operations in the U.S.—that’s not, we don’t think we have anything to offer there. But we’re looking at everything. We’re a logistics-based business today and we do have seasonal issues that we have to deal with. So we’re always looking to smooth those out. But quite frankly it’s hard to do in Canada.
I would say we are underexposed to the oily parts of the basin. You know, we’re—like I said, we’re 70-plus percent focused on natural gas. You know, our first foray into the oil world was the Iron Horse acquisition and, you know, frankly, just given everything that’s happening from an egress perspective, you know, we’re not really participating in the oily side of the market. You know, like look at the Clearwater. It’s, you know, it’s not going to slow down anytime soon and there’s really nothing for us to do there other than coil.
And, you know, we’re actively looking to expand our coil services in that play. But, you know, if there’s acquisitions that could speed up our exposure to heavy oil and SAGD and things like that, you know, we would look at it. So I’m giving you a non-answer answer. But so we’re not fussed with it having to be, you know, a vertical integration. We’re happy to add business lines on that we’re not currently in and, you know, or we may be in sort of indirectly in our own operations. And so, you know, I think when people talk about M&A and other service lines, I think you have to remember we’re all calling on the same people. Right? Like our coil and fracking divisions call on the completions departments, you know, our cement division calls on the drilling departments.
And so it’s very easy for us to make step-out acquisitions in other service lines because you have the same customers. You know, we all know who those customers are. So, and you know, the people that we’re calling on, they have a long positive experience with Trican. They’re very familiar with our company and the quality of our service offering. And so we’re not afraid to add what appear to be unrelated service lines. But we all go to the same well and we all call on the same customer. So they’re not actually all that unrelated. And at the end of the day, much of oilfield services is, can you move lots of people and lots of equipment around efficiently?
So, you know, we obviously know what our core competencies are and we’re not afraid to use them in other places.
Keith Mackey (Analyst at RBC Capital Markets)
Okay, understood. Thanks very much for the color.
Jordan (Operator)
Your next question comes from the line of Tim Monticello from ATB Markets Cormark Capital. Your line is live.
Tim Monticello (Analyst at ATB Capital Markets)
Hey guys. Most of my questions have been answered, but just curious on the addition of new 100% natural gas pumps that probably comes in the 2027 budget. Are you seeing inflation in the cost of that equipment given, I guess, the demand that those OEMs are seeing across different end markets?
Scott Matson (Chief Financial Officer)
Not a ton, Tim. Yeah, the thing that probably keeps me the most up at night would be what potential tariff impact of those things moving back and forth. Any engine is predominantly steel, so there’s lots of impact there. But to date, we haven’t seen a rapid increase in what we’ve been getting and what we’ve seen delivered so far. But TBD for 2027, it’ll come in some form for sure.
Brad Fedora (President & CEO)
Yeah, they never get less expensive. Yeah, it’ll come one way or another. The price will go up.
Tim Monticello (Analyst at ATB Capital Markets)
Okay, and have you guys made a decision on that formally or when do you think that you’ll pull the trigger on that decision?
Scott Matson (Chief Financial Officer)
No, we make a formal board approval on a 2027 budget in early December, but we’ll certainly be asking for more of them.
Tim Monticello (Analyst at ATB Capital Markets)
Got it. And so it sounds like the new equipment that you have coming in in late ’26 will be largely complementary to the current frac spreads that you have in the market, adding capacity and some margin there. How do you think about the idle equipment that you have in the fleet? Assume it’s largely Tier 2 stock. Does that ever go back to work or is that something that you think about divesting to other markets or something?
Brad Fedora (President & CEO)
Yeah, like just—I’ll back up a little bit. Yeah. Like when we, as we think about the fleet and the quality of the fleets going forward, you know, our goal is to high-grade those fleets and make them as technically advanced as possible to increase their sort of profile for customers. And what that means is we will continue to sort of bring in the new state-of-the-art technology and move out the diesel pumps or the old Tier 2 pumps. And that equipment’s old, really old.
It’s not just here, it’s everywhere. And so the good thing about the pressure pumping business is even though we all continue to invest in our fleets, the fleet isn’t growing, which sets up good supply and demand dynamics going forward. We’ve had three to four spreads parked on the fence now, you know, just to make sure we don’t sort of ruin the industry by bringing that equipment back to work. But the reality is, you know, we may never bring that equipment back to work. And we continue to dispose of a sort of parked equipment, you know, that we talk very little of. And it doesn’t get sold into the Canadian market, it only gets sold outside of Canada. So you’ll just see a continuous improvement in the quality of our fleet.
It’s a totally different frac fleet than it was three, four years ago.
Tim Monticello (Analyst at ATB Capital Markets)
Yeah. Okay. And then last one for me, I’m just curious if you can give an update on, I guess, the profitability and activity level that you’re seeing within the Iron Horse fleet, look for that fleet in ’27.
Brad Fedora (President & CEO)
Yeah, we don’t talk divisional margins or anything like that, but certainly that Q3 would be a good indication of how we expected that business to perform. And they have more seasonal issues than the deep fleet just due to road bans and things like that. But it’s fair to say when that equipment is highly utilized, we’re really happy with the purchase.
Jordan (Operator)
Your next question comes from the line of Nathan Ritchie from Schachter. Your line is live.
Nathan Ritchie (Analyst at Schachter Energy Research)
Hi, Brad. First of all, I just want to thank you for everything you’re doing for shareholders. I’ve been following your story since prior to the Canyon merger and you guys continue to deliver. So first off, thanks for that. On behalf of shareholders, what I wanted to speak about is if you can speak more on your application of AI in the business and some context. Why I ask is I was at a presentation this summer that Liberty Energy did and they spent so much time talking about technology and AI and data.
By the end of the presentation, I had to remind myself it was an oilfield services firm. And I know they’re not that big in Canada. You’re not probably competing with them as much as far as customers go, but you may be competing with them for investors. So I just want to see if there’s a focus. I know the focus right now is use technology to deliver results for your customers, which is obviously prime, like a priority and is obviously working for you.
But is there also a way that you can talk about your technology a little bit more and promote what you’re doing in the market so that you’re viewed more as a, you know, a technology company that’s in oil and gas services rather than an oil and gas service company that uses technology and then from that potentially be able to trade at a little bit higher multiple.
Brad Fedora (President & CEO)
Well, I hope none of the board is listening. Yeah, we hear you. But first and foremost, my job is to provide returns, not glossy brochures. And we are an oilfield services company that uses technology. And that’s never going to change in the next few years. So I’m never going to say I’m a technology company that is in the oilfield services business. I shouldn’t say I’m never going to say that, but in the next 36 months, that’s very unlikely. You know, we very much understand what you’re saying. We’re all fighting for the marginal dollars from investors. And we probably could do a better job talking about the technology investments that we’re making, particularly using data that is in the trillions of data points in this organization. We are going through a great big systems upgrade and I do not want to be a first mover on AI, so I’m happy to be a number two on AI and let the non-return money get spent by somebody else.
And where we’re seeing probably the best opportunities in the near future on using AI and data management is on frac automation and preventative maintenance. And so as that gets more developed and it gets field-tested, we’ll start talking more about it. But rest assured, we understand sort of the comments you’re making. I don’t agree with all of them, but I certainly understand what you’re getting at.
Nathan Ritchie (Analyst at Schachter Energy Research)
Yeah, thanks, Brad. That’s the main thing.
Jordan (Operator)
As a reminder, if you’d like to ask a question, simply press star followed by the number one on your telephone keypad. Your next question comes from the line of Colby Sasso from Daniel Energy Partners. Your line is live.
Colby Sasso (Analyst at Daniel Energy Partners)
Hi, thanks for having me on. Just a quick question from me. You’ve discussed the trend towards longer laterals, more stages, and higher sand intensity across the Montney and Duvernay. Are you seeing any indication that operators are beginning to reach diminishing returns on completion intensity, or do you expect these trends to continue driving higher service requirements over the next several years?
Brad Fedora (President & CEO)
Yeah, remember we make sort of blanket statements for the basin as a whole. Not, you know, there’s always exceptions from, you know, this area versus that area or this operator’s view of how they should do it versus that operator’s view. But in general, yes, we expect this trend is going to continue.
Colby Sasso (Analyst at Daniel Energy Partners)
And then one last one, you delivered a strong EBITDA margin of 26% in Q3, which is one of the highest levels we’ve seen over the past several years. As you look ahead towards 2027, how sustainable are these margins and should we expect this level going forward, or does Q3 represent a high watermark of sorts?
Brad Fedora (President & CEO)
Yeah, good question. I mean, if you look through the year, this has been our highest margin quarter probably in the last four or five or six quarters. I mean, I think this will kind of moderate as we go through 2027. There was a bit of G&A stuff in this quarter that gave us a bit of a benefit as well. So, you know, if you’re in the mid-20s as we go forward, that’s probably a pretty good indicator. You know, some of that changes the relative proportion of sand in versus sand out work moves that margin percentage number up a little bit, but not the dollars—not the aggregate dollars, if that makes sense. So this is probably a decent run rate to go forward. If you blend this thing out for the whole year, we’re probably mid-20s, and I would expect that’s pretty safe.
Colby Sasso (Analyst at Daniel Energy Partners)
That’s all from me. I’ll turn it back.
Jordan (Operator)
That concludes our question and answer session. I would now like to turn the call back over to Brad Fedora for closing remarks.
Brad Fedora (President & CEO)
Okay, thank you, everyone. Thanks for your time and your interest. I know it’s a busy time of year. We are available for any follow-up calls that you may have, particularly with respect to the financial models, etc. So we won’t be hard to find for the next couple of days. We can help you. Please, please reach out. Thank you.
Jordan (Operator)
This concludes today’s meeting. You may now disconnect.
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