SEDAR Interim Financial Statements

Western Energy Services Corp. Condensed Consolidated Financial Statements September 30, 2025 and 2024 (Unaudited) 2 Western Energy Services Corp. Condensed Consolidated Balance Sheets (unaudited) (thousands of Canadian dollars) Note Assets Current assets Cash and cash equivalents 3,457 $ 3,785 $ Trade and other receivables 17 35,707 37,558 Other current assets 5 1,721 3,494 40,885 44,837 Non current assets Property and equipment 6 365,048 386,144 Other non current assets 5 16 - 405,949 $ 430,981 $ Liabilities Current liabilities Trade payables and other current liabilities 18,850 $ 27,589 $ Current portion of long term debt 7 791 5,864 Current portion of lease obligations 8 1,826 1,473 21,467 34,926 Non current liabilities Long term debt 7 90,445 91,657 Lease obligations 8 3,760 4,668 Deferred taxes 2,583 3,880 118,255 135,131 Shareholders' equity Share capital 9 521,604 521,604 Contributed surplus 20,247 21,178 Retained earnings (deficit) (286,544) (281,830) Accumulated other comprehensive income 30,088 32,669 Non controlling interest 2,299 2,229 287,694 295,850 405,949 $ 430,981 $ September 30, 2025 December 31, 2024 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Western Energy Services Corp. Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) (thousands of Canadian dollars except share and per share amounts) Note 2025 2024 2025 2024 Revenue 50,035 $ 58,343 $ 159,050 $ 163,358 $ Expenses Operating 33,680 42,417 114,069 116,123 Administrative 3,293 4,493 11,990 15,324 Depreciation 6 10,524 10,067 30,915 30,665 Stock based compensation 10 238 157 (931) 433 Finance costs 12 2,162 2,476 6,801 7,626 Other items 13 3,050 316 1,883 (456) Loss before income taxes (2,912) (1,583) (5,677) (6,357) Income tax recovery 14 670 393 1,236 1,486 Net loss (2,242) (1,190) (4,441) (4,871) Other comprehensive loss (1) Gain (loss) on translation of foreign operations 854 (625) (1,526) 1,019 Unrealized foreign exchange gain (loss) on net investment in subsidiary 627 (424) (1,055) 616 Comprehensive loss (761) $ (2,239) $ (7,022) $ (3,236) $ Net income (loss) attributable to: Shareholders of the Company (2,352) $ (1,261) $ (4,714) $ (5,012) $ Non controlling interest 110 71 273 141 Comprehensive income (loss) attributable to: Shareholders of the Company (871) $ (2,310) $ (7,295) $ (3,377) $ Non controlling interest 110 71 273 141 Net loss per share: Basic and diluted (0.07) $ (0.04) $ (0.13) $ (0.14) $ Weighted average number of shares: Basic and diluted 11 33,843,022 33,843,022 33,843,022 33,843,017 (1) Other comprehensive gain includes items that may be subsequently reclassified into profit and loss. Three months ended Sept 30 Nine months ended Sept 30 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Western Energy Services Corp. Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) (thousands of Canadian dollars) Share capital Contributed surplus (1) Retained earnings (deficit) Accumulated other comprehensive income(2) Non controlling interest Total shareholders' equity Balance at December 31, 2023 $ 521,603 $ 20,371 $ (274,675) $ 26,071 $ 2,295 $ 295,665 Common shares: Issued on vesting of restricted share units 1 (1) - - - - Stock based compensation - 433 - - - 433 Distributions to non controlling interest - - - - (213) (213) Comprehensive income (loss) - - (5,012) 1,635 141 (3,236) Balance at S --- eptember 30, 2024 521,604 20,803 (279,687) 27,706 2,223 292,649 Common shares: Issued on vesting of restricted share units - 1 - - - 1 Stock based compensation - 374 - - - 374 Distributions to non controlling interest - - - - (142) (142) Comprehensive income (loss) - - (2,143) 4,963 148 2,968 Balance at December 31, 2024 521,604 21,178 (281,830) 32,669 2,229 295,850 Stock based compensation - (931) - - - (931) Distributions to non controlling interest - - - - (203) (203) Comprehensive income (loss) - - (4,714) (2,581) 273 (7,022) Balance at September 30, 2025 $ 521,604 $ 20,247 $ (286,544) $ 30,088 $ 2,299 $ 287,694 (1) Contributed surplus relates to stock based compensation described in Note 10. (2) At September 30, 2025, the accumulated other comprehensive income balance consists ofthe translation of foreign operations and unrealized foreign exchange on the net investment in subsidiary. The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Western Energy Services Corp. Condensed Consolidated Statements of Cash Flows (unaudited) (thousands of Canadian dollars) Note 2025 2024 2025 2024 Operating activities Net loss (2,242) $ (1,190) $ (4,441) $ (4,871) $ Adjustments for: Depreciation 6 10,524 10,067 30,915 30,665 Non cash stock based compensation 10 238 157 (931) 433 Finance costs 12 2,162 2,476 6,801 7,626 Income tax recovery 14 (670) (393) (1,236) (1,486) Other 3,089 313 2,018 (483) Change in non cash working capital (4,649) (6,026) (2,192) 582 Cash flow from operating activities 8,452 5,404 30,934 32,466 Investing activities Additions to property and equipment 6 (5,465) (8,223) (16,398) (15,760) Proceeds on sale of property and equipment 403 154 2,815 1,674 Repayment of promissory note - 38 - 151 Distributions to non controlling interest (112) (123) (203) (213) Change in non cash working capital (1,943) 1,250 (1,245) 3,117 Cash flow used in investing activities (7,117) (6,904) (15,031) (11,031) Financing activities Finance costs paid (3,943) (4,477) (8,663) (9,884) Principal repayment of second lien facility 7 (270) (10,270) (5,810) (10,810) Principal repayment of lease obligations 8 (233) (771) (1,086) (2,049) Draw on credit facilities 7 1,898 6,000 1,076 1,000 Principal repayment of HSBC facility 7 (313) (313) (938) (938) Principal repayment of US paycheck protection plan 7 (244) (272) (810) (752) Cash flow used in financing activities (3,105) (10,103) (16,231) (23,433) Decrease in cash and cash equivalents (1,770) (11,603) (328) (1,998) Cash and cash equivalents, beginning of period 5,227 15,535 3,785 5,930 Cash and cash equivalents, end of period 3,457 $ 3,932 $ 3,457 $ 3,932 $ Three months ended Sept 30 Nine months ended Sept 30 The accompanying notes are an integral part of these condensed consolidated financial statements. Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 6 1. Reporting entity: Western Energy Services Corp. (“Western”) is a company domiciled in Canada. The address of the head office is 1700, 215 - 9th Avenue SW, Calgary, Alberta. Western is a publicly traded company listed on the Toronto Stock Exchange (“TSX”) under the symbol “WRG”. These condensed consolidated financial statements as at September 30, 2025 and for the three and nine months ended September 30, 2025 and 2024 (the “Financial Statements”) are compris --- ed of Western, its divisions and its wholly owned subsidiary (together referred to as the “Company”). The Company is an energy service company providing contract drilling services through its division, Horizon Drilling (“Horizon”) in Canada, and its wholly owned subsidiary, Stoneham Drilling Corporation (“Stoneham”) in the United States. Western provides production services in Canada through its division Eagle Well Servicing (“Eagle”) which provides well servicing and its division Aero Rental Services (“Aero”) which provides rental equipment services. Financial and operating results for Horizon and Stoneham are included in the contract drilling segment, while financial and operating results for Eagle and Aero are included in the production services segment. 2. Basis of preparation and material accounting policies: Statement of compliance: These Financial Statements have been prepared using accounting policies consistent with International Financial Reporting Standards (“IFRS®”) and in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting” as issued by the International Accounting Standards Board. The condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Company as at and for the years ended December 31, 2024 and 2023. These Financial Statements have been prepared using accounting policies and estimates which are consistent with Note 3 and 4 of the consolidated financial statements as at and for the years ended December 31, 2024 and 2023 as filed on SEDAR+ at www.sedarplus.ca. These Financial Statements were approved for issuance by Western’s Board of Directors on October 21, 2025. Functional and presentation currency: These Financial Statements are presented in Canadian dollars, which is Western’s functional currency. Critical accounting estimates and recent developments: The preparation of these Financial Statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The current economic environment and volatility of global demand for commodities results in uncertainty for the Company, as well as estimates and assumptions used by management to prepare these Financial Statements. Estimates and judgments made by management are subject to a higher degree of volatility in this uncertain time. A full list of critical accounting estimates is included in the Company’s annual consolidated financial statements for the year ended December 31, 2024. 3. Seasonality: The Company’s operations are often weather dependent, which has a seasonal effect. During the first quarter, the working conditions in the field are conducive to oilfield activities including frozen conditions allowing crude oil and natural gas exploration and production companies to move heavy equipment to otherwise inaccessible areas and the resulting demand for services, such as those provided by the Company, is typically high. The second quarter is normally a slower period in Canada, as the spring thaw and wet conditions create weight restrictions on roads, reducing the mobility of heavy equipment, which slows activity levels in the industry. The third and fourth quarters are usually representative of average activity levels. T --- herefore, interim periods may not be representative of the results expected for the full year of operation due to seasonality. Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 7 4. Operating segments: The Company provides energy services primarily to oil and natural gas exploration companies through its contract drilling and production services segments in both Canada and the United States. Contract drilling includes drilling rigs along with related ancillary equipment. Production services includes well servicing rigs and related equipment, as well as rental equipment. The Company’s executive officers review internal management reports for these operating segments on at least a monthly basis. Information regarding the results of the operating segments is included below. Performance is measured based on operating earnings (loss), as included in internal management reports. Operating earnings (loss) is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain operating segments relative to other entities that operate within these industries. Operating earnings (loss) is calculated as revenue less operating expenses, administrative expenses, and depreciation. The following is a summary of the Company’s results by operating segment for the three and nine months ended September 30, 2025 and 2024: Total Revenue 37,840 $ 12,206 $ - $ (11) $ 50,035 $ Expenses Operating (25,428) (8,263) - 11 (33,680) Administrative (1,611) (1,280) (402) - (3,293) Depreciation (8,305) (1,906) (313) - (10,524) Operating earnings (loss) 2,496 757 (715) - 2,538 Add (deduct) Stock based compensation (24) (165) (49) - (238) Finance costs - - (2,162) - (2,162) Other items (3,198) 17 131 - (3,050) Income (loss) before income taxes (726) $ 609 $ (2,795) $ - $ (2,912) $ Inter-segment Elimination Three months ended September 30, 2025 Contract Drilling Production Services Corporate Total Revenue 43,590 $ 14,813 $ - $ (60) $ 58,343 $ Expenses Operating (32,369) (10,108) - 60 (42,417) Administrative (2,334) (1,270) (889) - (4,493) Depreciation (7,669) (2,033) (365) - (10,067) Operating earnings (loss) 1,218 1,402 (1,254) - 1,366 Add (deduct) Stock based compensation 3 (36) (124) - (157) Finance costs - - (2,476) - (2,476) Other items - - (316) - (316) Income (loss) before income taxes 1,221 $ 1,366 $ (4,170) $ - $ (1,583) $ Inter-segment Elimination Three months ended September 30, 2024 Contract Drilling Production Services Corporate Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 8 4. Operating segments (continued): Total Revenue 118,627 $ 40,622 $ - $ (199) $ 159,050 $ Expenses Operating (85,070) (29,198) - 199 (114,069) Administrative (5,633) (3,970) (2,387) - (11,990) Depreciation (24,044) (5,789) (1,082) - (30,915) Operating earnings (loss) 3,880 1,665 (3,469) - 2,076 Add (deduct) Stock based compensation 97 149 685 - 931 Finance costs - - (6,801) - (6,801) Other items (2,259) 281 95 - (1,883) Income (loss) before income taxes 1,718 $ 2,095 $ (9,490) $ - $ (5,677) $ Inter-segment Elimination Nine months ended September 30, 2025 Contract Drilling Production Services Corporate Total Revenue 110,3 --- 77 $ 53,246 $ - $ (265) $ 163,358 $ Expenses Operating (80,970) (35,418) - 265 (116,123) Administrative (6,533) (3,834) (4,957) - (15,324) Depreciation (23,211) (6,303) (1,151) - (30,665) Operating earnings (loss) (337) 7,691 (6,108) - 1,246 Add (deduct) Stock based compensation 41 (104) (370) - (433) Finance costs - - (7,626) - (7,626) Other items - - 456 - 456 Income (loss) before income taxes (296) $ 7,587 $ (13,648) $ - $ (6,357) $ Inter-segment Elimination Nine months ended September 30, 2024 Contract Drilling Production Services Corporate Total assets and liabilities by operating segment are as follows: As at September 30, 2025 Contract Drilling Production Services Corporate Total Total assets 335,271 $ 65,881 $ 4,797 $ 405,949 $ Total liabilities 47,393 25,279 45,583 118,255 As at December 31, 2024 Contract Drilling Production Services Corporate Total Total assets 353,250 $ 71,201 $ 6,530 $ 430,981 $ Total liabilities 49,087 26,109 59,935 135,131 Additions to property and equipment by operating segment are as follows: Total Additions to property and equipment - Three months ended September 30, 2025 4,788 $ 677 $ - $ 5,465 $ Additions to property and equipment - Three months ended September 30, 2024 7,652 560 11 8,223 Additions to property and equipment - Nine months ended September 30, 2025 14,658 1,485 255 16,398 Additions to property and equipment - Nine months ended September 30, 2024 14,150 1,585 25 15,760 Contract Drilling Production Services Corporate Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 9 4. Operating segments (continued): Segmented information by geographic area is as follows: As at September 30, 2025 Canada United States Total Property and equipment 293,181 $ 71,867 $ 365,048 $ Total assets 327,082 78,867 405,949 As at December 31, 2024 Canada United States Total Property and equipment 303,959 $ 82,185 $ 386,144 $ Total assets 338,622 92,359 430,981 Canada United States Total Revenue - Three months ended September 30, 2025 43,275 $ 6,760 $ 50,035 $ Revenue - Three months ended September 30, 2024 49,484 8,859 58,343 Revenue - Nine months ended September 30, 2025 140,641 18,409 159,050 Revenue - Nine months ended September 30, 2024 141,165 22,193 163,358 Revenue from long term contracts: For both the three and nine months ended September 30, 2025, and 2024, the Company had no revenue from long term contracts in the contract drilling or production services segments. 5. Other assets: The Company’s other assets as at September 30, 2025 and December 31, 2024 are as follows: September 30, 2025 December 31, 2024 Current Prepaid expenses $ 1,258 $ 2,762 Inventory 95 262 Deposits 272 346 Deferred charges 96 124 Total current portion of other assets 1,721 3,494 Non current Deferred charges 16 - Total non current portion of other assets 16 - Total other assets $ 1,737 $ 3,494 Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 10 6. Property and equipment: The following table summarizes the Company’s property and equipment: Land Buildings Contract drilling equipment Production services equipment Office and shop equipment Finance lease assets Total Cost: Balance at December 31, 2024 5,089 $ 5,141 $ 865,279 $ 196,304 $ 12 --- ,882 $ 17,042 $ 1,101,737 $ Additions to property and equipment - 347 14,312 1,481 258 - 16,398 Lease additions - - - - - 531 531 Disposals - - (19,551) (989) - (1,288) (21,828) Foreign exchange adjustment - - (6,769) - 11 (25) (6,783) Balance at September 30, 2025 5,089 $ 5,488 $ 853,271 $ 196,796 $ 13,151 $ 16,260 $ 1,090,055 $ Accumulated depreciation: Balance at December 31, 2024 - $ 3,379 $ 551,035 $ 138,491 $ 12,825 $ 9,863 $ 715,593 $ Depreciation - 119 23,604 5,186 390 1,616 30,915 Disposals - - (15,557) (960) - (872) (17,389) Foreign exchange adjustment - - (4,032) - (64) (16) (4,112) Balance at September 30, 2025 - $ 3,498 $ 555,050 $ 142,717 $ 13,151 $ 10,591 $ 725,007 $ Carrying amounts: At December 31, 2024 $ 5,089 $ 1,762 $ 314,244 $ 57,813 57 $ $ 7,179 $ 386,144 At September 30, 2025 $ 5,089 $ 1,990 $ 298,221 $ 54,079 - $ $ 5,669 $ 365,048 7. Long term debt: This note provides information about the contractual terms of the Company’s long term debt instruments. September 30, 2025 December 31, 2024 Current: 1,080 $ 1,080 $ - 3,000 - 1,423 - 836 (289) (475) Total current portion of long term debt 791 5,864 Non current: 81,372 87,181 3,750 4,688 5,499 - (176) (212) Total non current portion of long term debt 90,445 91,657 Total long term debt 91,236 $ 97,521 $ Second Lien Facility Second Lien Facility PPP Loan HSBC Facility Revolving Facility Operating Facility Operating Facility Less: unamortized issue costs Less: unamortized issue costs Credit Facilities: As at September 30, 2025, the Company’s credit facilities consisted of a $35.0 million syndicated revolving credit facility (the “Revolving Facility”) and a $10.0 million committed operating facility (the “Operating Facility” and together the “Credit Facilities”). On January 27, 2025, the Company extended the maturity date of its second lien term loan facility (the “Second Lien Facility”) with Alberta Investment Management Corporation (“AIMCo”) to May 18, 2027, which resulted in an automatic one year extension of the Credit Facilities maturity date from November 18, 2025, to the earlier of (i) six months prior to the maturity date of the Second Lien Facility, which is now November 18, 2026 or (ii) March 22, 2027. Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 11 7. Long term debt (continued): Amounts borrowed under the Credit Facilities bear interest at the bank’s Canadian prime rate, or the Canadian overnight repo rate average rate plus an applicable margin depending, in each case, on the ratio of Consolidated Debt to Consolidated EBITDA as defined by the Credit Facilities agreement. The Credit Facilities are secured by the assets of the Company. As at September 30, 2025, the Company’s Credit Facilities are subject to the following financial covenants: Covenant September 30, 2025 Maximum Consolidated Senior Debt to Consolidated EBITDA Ratio (1)(2) 3.0:1.0 or less 0.1:1.0 Maximum Consolidated Debt to Consolidated Capitalization Ratio (3)(4) 0.5:1.0 or less 0.2:1.0 Minimum Debt Service Coverage Ratio(5) 1.15:1.0 or greater Not applicable (5) The Debt Service Coverage Ratio is defined as the ratio of Consolidated EBITDA to the total of all regularly scheduled debt payments, including interest, paid on a trailing twelve month basis. It is only applicable ifthe Company has more than $25.0 million drawn on its Credit Facili --- ties, or if the net book value of property and equipment is less than $250.0 million. As at September 30, 2025, the Company had $5.5 million drawn on its Credit Facilities and the net book value of its property and equipment was greater than $250.0 million, therefore the covenant was not applicable. (1) Consolidated Senior Debt in the Credit Facilities is defined as indebtedness under the Credit Facilities and vehicle lease obligations, reduced by unrestricted cash. (2) Consolidated EBITDA in the Credit Facilities is defined on a trailing twelve month basis as consolidated net income (loss), plus interest, income taxes, depreciation and amortization and any other non-cash items or extraordinary or non-recurring losses, less gains on sale of property and equipment and any other non-cash items or extraordinary or non-recurring gains that are included in the calculation of consolidated net income (loss). (3) Consolidated Debt in the Credit Facilities is defined as Consolidated Senior Debt plus the HSBC Facility, and Second Lien Facility less unrestricted cash. (4) Consolidated Capitalization in the Credit Facilities is defined as the aggregate of Consolidated Debt and total shareholders` equity as reported on the consolidated balance sheet. As at September 30, 2025, the Company was in compliance with all covenants related to its Credit Facilities. Second Lien Facility: At September 30, 2025, the Company had $82.4 million outstanding on the Second Lien Facility with AIMCo. Interest is payable semi-annually, at a rate of 8.5% per annum, on January 1 and July 1 each year or the next applicable business day. Amortization payments equal to 1.0% of the initial principal amount of $108.0 million are payable annually, in quarterly installments. On January 27, 2025, the Company extended the maturity date of the Second Lien Facility from May 18, 2026 to May 18, 2027. HSBC Facility: At September 30, 2025, the Company had $3.8 million outstanding related to its committed term non-revolving facility (the “HSBC Facility”). The HSBC Facility bears interest at a floating rate that is payable monthly. In 2023, the Company prepaid all monthly principal amounts for the remaining term of the loan, with the remaining outstanding balance due upon maturity on December 31, 2026. US Paycheck Protection Program (“PPP Loan”): On August 7, 2025, the Company’s PPP Loan matured and the Company made its final principal payment on the loan. As such, there is no balance outstanding at September 30, 2025 related to the PPP loan. Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 12 8. Lease obligations: The following table provides information about the Company’s lease obligations: Amount Balance at December 31, 2024 6,141 $ Additions 531 Finance costs 366 Lease payments (1,452) Balance at September 30, 2025 5,586 Less: current portion of lease obligations (1,826) Balance at September 30, 2025 - non current portion 3,760 $ Lease obligations include leases capitalized under IFRS 16, Leases. During the three and nine months ended September 30, 2025 and 2024, the Company expensed $0.1 million and $0.2 million respectively, related to leases of low value assets or leases with a term of less than one year. 9. Share capital: The Company is authorized to issue an unlimited number of common shares. The following table summarizes W --- estern’s common shares: Amount Balance at September 30, 2025 and December 31, 2024 33,843,022 521,604 $ Issued and outstanding shares 10. Stock based compensation: Stock options: The Company's stock option plan provides for stock options to be issued to directors, officers, employees and consultants of the Company so that they may participate in the growth and development of Western. Subject to the specific provisions of the stock option plan, eligibility, vesting period, terms of the options and the number of options granted are to be determined by the Board of Directors at the time of grant. The stock option plan allows the Board of Directors to issue up to 10% of the Company’s outstanding common shares as stock options, provided that, when combined, the maximum number of common shares reserved for issuance under all stock based compensation arrangements of the Company does not exceed 10% of the Company’s outstanding common shares. The following table summarizes the movements in the Company’s outstanding stock options: Stock options Weighted average outstanding exercise price Balance at December 31, 2024 2,666,189 4.33 $ Forfeited (1,421,451) 4.47 Expired (135,817) 5.92 Balance at September 30, 2025 1,108,921 3.95 $ For the three and nine months ended September 30, 2025 and 2024 no stock options were cancelled. For the three and nine months ended September 30, 2025 no stock options were granted (three and nine months ended September 30, 2024: 655,480 options granted). As at September 30, 2025, Western had 653,109 (December 31, 2024: 995,001) vested and exercisable stock options outstanding at a weighted average exercise price equal to $4.25 (December 31, 2024: $4.99) per stock option. The stock based compensation expense (recovery) recognized in the condensed consolidated statements of operations and comprehensive loss is comprised of the following: 2025 2024 2025 2024 Stock options 238 $ 157 $ (931) $ 433 $ Total stock based compensation expense (recovery) 238 $ 157 $ (931) $ 433 $ Three months ended Sept 30 Nine months ended Sept 30 Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 13 11. Earnings per share: The weighted average number of common shares is calculated as follows: 2025 2024 2025 2024 Issued common shares, beginning of period 33,843,022 33,843,015 33,843,022 33,843,009 Weighted average number of common shares issued - 7 - 8 Weighted average number of common shares (basic and diluted) 33,843,022 33,843,022 33,843,022 33,843,017 Three months ended Sept 30 Nine months ended Sept 30 For the three and nine months ended September 30, 2025, 1,108,921 stock options (three and nine months ended September 30, 2024, 2,731,741 stock options) were excluded from the diluted weighted average number of common shares calculation as their effect would have been anti-dilutive. 12. Finance costs: Finance costs recognized in the condensed consolidated statements of operations and comprehensive loss are comprised of the following: 2025 2024 2025 2024 Interest expense on long term debt $ 2,075 $ 2,351 $ 6,546 $ 7,277 Amortization of debt financing fees 24 34 64 88 Accretion expense on Second Lien Facility 65 114 192 334 Accretion expense on HSBC Facility 10 13 31 40 Interest income (12) (36) (32) (113) Total finance costs $ 2,162 $ 2,476 $ 6,801 $ 7,626 Three months ended Sept 30 Nine months --- ended Sept 30 The Company had an effective interest rate on its borrowings of 8.7% and 8.6% for the three and nine months ended September 30, 2025 respectively (three and nine months ended September 30, 2024: 8.6% and 8.7% respectively). 13. Other items: Other items recognized in the condensed consolidated statements of operations and comprehensive loss are comprised of the following: 2025 2024 2025 2024 Loss (gain) on sale of fixed assets 3,169 $ 248 $ 1,624 $ (360) $ Realized foreign exchange (gain) loss (40) 2 (148) (27) Unrealized foreign exchange (gain) loss (79) 66 407 (69) Total other items 3,050 $ 316 $ 1,883 $ (456) $ Three months ended Sept 30 Nine months ended Sept 30 14. Income taxes: Income taxes recognized in the condensed consolidated statements of operations and comprehensive loss are comprised of the following: 2025 2024 2025 2024 Current tax expense $ - $ - (14) $ (54) $ Deferred tax recovery 670 393 1,250 1,540 Total income tax recovery $ 670 $ 393 1,236 $ $ 1,486 Three months ended Sept 30 Nine months ended Sept 30 As at September 30, 2025, the Company has loss carry forwards in Canada equal to approximately $192.5 million, which will expire between 2036 and 2043. In the United States, the Company has approximately US$50.0 million loss carry forwards, some of which expire between 2028 and 2038, and others that have an indefinite expiry. Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 14 15. Costs by nature: The Company presents certain expenses in the condensed consolidated statements of operations and comprehensive loss by function. The following table presents significant expenses by nature: 2025 2024 2025 2024 Employee salaries and benefits $ 22,755 $ 28,186 $ 77,297 $ 81,643 Repairs and maintenance 3,832 5,922 13,530 15,028 Third party charges 1,392 1,467 5,133 4,371 Three months ended Sept 30 Nine months ended Sept 30 Employee salaries and benefits for the nine months ended September 30, 2025 in the above table includes $3.2 million related to one-time reorganization costs (three and nine months ended September 30, 2024: $0.6 million and $2.8 million respectively). There were no one-time reorganization costs in the three months ended September 30, 2025. 16. Capital management: The overall capitalization of the Company at September 30, 2025 and December 31, 2024 is as follows: Note Second Lien Facility 7 $ 82,452 $ 88,261 HSBC Facility 7 3,750 4,688 Revolving Facility 7 - 3,000 Operating Facility 7 5,499 1,423 PPP Loan 7 - 836 Lease obligations 8 5,586 6,141 Total debt 97,287 104,349 Shareholders' equity 287,694 295,850 Less: cash and cash equivalents (3,457) (3,785) Total capitalization $ 381,524 $ 396,414 December 31, 2024 September 30, 2025 17. Financial risk management: Interest rate risk: The Company is exposed to interest rate risk on certain debt instruments, such as the Credit Facilities and the HSBC Facility, to the extent the prime interest rate changes and/or the Company’s interest rate margin changes. Other long term debt, such as the Second Lien Facility and the Company’s lease obligations, have fixed interest rates, however they are subject to interest rate fluctuations relating to refinancing. Inflation risk: The general rate of inflation impacts the economies and business environments in which Western operates. Increased inflation and any econ --- omic conditions resulting from governmental attempts to reduce inflation, such as the imposition of higher interest rates, could negatively impact Western’s borrowing costs, which could, in turn, have a material adverse effect on Western’s cash flow and ability to service obligations under the Credit Facilities, HSBC Facility and the Second Lien Facility. Foreign exchange risk: The Company is exposed to foreign currency fluctuations in relation to its US dollar capital expenditures and operations. At September 30, 2025, portions of the Company’s cash balances, trade and other receivables, trade payables and other current liabilities were denominated in US dollars and subject to foreign exchange fluctuations which are recorded within net income. In addition, Stoneham, Western’s US subsidiary, is subject to foreign currency translation adjustments upon consolidation, which is recorded separately within other comprehensive income. Credit risk: Credit risk arises from cash and cash equivalents held with banks and financial institutions, as well as credit exposure to customers in the form of outstanding trade and other receivables. The maximum exposure to credit risk is equal to the carrying amount of the financial assets which reflects management’s assessment of the credit risk. The Company’s trade receivables are with customers in the energy industry and are subject to industry credit risk. Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 15 17. Financial risk management (continued): In accordance with IFRS 9, Financial Instruments, the Company evaluates the collectability of its trade and other receivables and its allowance for doubtful accounts at each reporting date. The Company records an allowance for doubtful accounts if an account is determined to be uncollectable. The allowance for doubtful accounts could materially change due to fluctuations in the financial position of the Company’s customers. The Company reviews its historical credit losses as part of its impairment assessment. The Company has had low historical impairment losses on its trade receivables, due in part to its credit management processes. As such, the Company assesses impairment losses on an individual customer account basis, rather than recognizing an impairment loss on all outstanding trade and other receivables. The following table provides an analysis of the Company’s trade and other receivables as at September 30, 2025 and December 31, 2024: September 30, 2025 December 31, 2024 Trade receivables $ 29,741 $ 30,473 Accrued trade receivables 7,688 8,392 Other receivables 165 678 Allowance for doubtful accounts (1,887) (1,985) Total $ 35,707 $ 37,558 For the three months ended September 30, 2025, the Company had one customer comprising 11.5% of the Company’s total revenue. This customer was also a significant customer for the nine months ended September 30, 2025, comprising 10.1% of the Company’s total revenue. There was a second significant customer for the nine months ended September 30, 2025 comprising 12.1% of the Company’s total revenue. The total trade receivable balance outstanding related to the two significant customers for 2025 represented 10.0% and 5.4% respectively, of the Company’s total trade and other receivables as at September 30, 2025. For the three and nine months ended September 30, 2024, the --- Company had no customers comprising 10.0% or more of the Company’s total revenue. There were no significant customers for the year ending December 31, 2024. Liquidity risk: Liquidity risk is the exposure of the Company to the risk of not being able to meet its financial obligations as they become due. The Company manages liquidity risk through management of its capital structure, monitoring and reviewing actual and forecasted cash flows and the effect on bank covenants and maintaining unused credit facilities where possible to ensure there are available cash resources to meet the Company’s liquidity needs. The Company’s cash and cash equivalents, cash flow from operating activities, the Credit Facilities, the HSBC Facility, and the Second Lien Facility are expected to be greater than anticipated capital expenditures and the contractual maturities of the Company’s financial liabilities. This expectation could be adversely affected by a material negative change in the energy service industry, which in turn could lead to covenant breaches on the Company’s Credit Facilities, which if not amended or waived, could limit, in part, or in whole, the Company’s access to the Credit Facilities and Second Lien Facility. Western Energy Services Corp. Notes to the condensed consolidated financial statements (unaudited) (tabular amounts are in thousands of Canadian dollars, except common share and per common share amounts) 16 18. Commitments: As at September 30, 2025, the Company has commitments which require payments based on the maturity terms as follows: 2025 2026 2027 2028 2029 Thereafter Total Trade payables and other current liabilities(1) 17,082 $ - $ - $ - $ - $ - $ 17,082 $ Operating commitments(2) 2,202 852 772 770 769 372 5,737 Second Lien Facility principal 270 1,080 81,102 - - - 82,452 Second Lien Facility interest - 6,974 6,057 - - - 13,031 HSBC Facility principal - 3,750 - - - - 3,750 HSBC Facility interest 64 199 - - - - 263 Lease obligations(3) 639 2,012 1,547 1,235 720 450 6,603 Operating Facility - 5,499 - - - - 5,499 Total 20,257 $ 20,366 $ 89,478 $ 2,005 $ 1,489 $ 822 $ 134,417 $ (1)Trade payables and other current liabilities exclude interest accrued as at September 30, 2025 on the Second Lien Facility and HSBC Facility which are stated separately. (3) Lease obligations represent the gross lease commitments to be paid over the term of the Company's outstanding long term leases. (2) Operating commitments include purchase commitments, short term operating leases, and operating expenses associated with long term leases.