Precision Drilling Q3 Earnings Call Highlights

Precision Drilling NYSE: PDS reported higher third-quarter revenue and a return to profitability as increased North American drilling activity and U.S. day rates offset weaker international results and elevated costs in the Middle East.

Revenue for the third quarter of 2026 rose 15% from a year earlier to C$532 million. Adjusted EBITDA was C$125 million, compared with C$118 million in the prior-year period. Net earnings totaled C$21 million, versus a C$7 million net loss in the third quarter of 2025.

“Precision delivered differentiated North American revenue growth across the drilling and CMP service lines and continued to make strategic investments in our fleet while meeting our capital return commitments,” President and CEO Carey Ford said on the company’s earnings call.

North American activity rises

In Canada, Precision averaged 73 active drilling rigs during the quarter, up 10 rigs from the same period last year. Daily operating margins were C$12,817, compared with C$13,007 a year earlier and in line with the company’s previous guidance.

The company said heavy-oil activity increased utilization of its Super Single rig fleet by 18% year over year. Ford said Precision’s Montney activity was steady from a year earlier, while demand in heavy-oil markets remained strong.

For the fourth quarter, Precision expects its Canadian active rig count to average in the low 70s, compared with 66 rigs in the prior-year fourth quarter. It forecast Canadian daily operating margins of C$13,500 to C$14,500. The company expects Super Triple and Super Single fleets to operate at near-full utilization during the winter drilling season, though holiday shutdowns affect fourth-quarter activity.

In the U.S., Precision averaged 43 active rigs, up from 36 in the third quarter of 2025. U.S. daily operating margins declined to $7,653 from $8,700, despite higher revenue per day, as the company reactivated six rigs during the quarter. Those reactivations cost $2,125 per utilization day, CFO Dustin Honing said.

Precision expects U.S. activity to average in the low-to-mid 40s during the fourth quarter and forecast daily operating margins of $9,500 to $10,500. Ford said the company expects the fourth-quarter margin level to be more sustainable as the pace of rig reactivations slows.

“We have just over 50 rigs that are warm, ready to go right now,” Honing said, adding that Precision was reactivating one additional rig in the fourth quarter. Ford said the company was receiving an elevated number of customer requests for early-2027 rig startups, particularly in the Permian, with some interest in the Haynesville and Rockies.

Precision was operating 16 rigs in the Permian at the time of the call, up from eight rigs a year earlier. Ford attributed the increase to field performance, new customer relationships and contracted rig upgrades.

International costs and CMP performance

Internationally, Precision averaged seven active rigs, roughly unchanged from the prior-year quarter. International day rates averaged $46,304, down 14% from a year earlier. The company cited elevated operating expenses tied to regional tensions in the Middle East, as well as the idling of one of its higher-performing Kuwait rigs.

That rig is expected to return to work in mid-2027 under a five-year contract. Precision expects to continue operating seven international rigs in the fourth quarter and said elevated costs are expected to persist during the period.

Precision’s Completion and Production Services segment generated adjusted EBITDA of C$21 million, up 10% from a year earlier. The company cited stronger Canadian well-servicing demand, especially in heavy-oil regions, along with growth in its rentals business. For the fourth quarter, Precision expects CMP EBITDA to remain in line with prior-year levels.

Capital spending, debt reduction and fleet upgrades

Cash from operations was C$71 million, compared with C$76 million a year earlier. Honing said cash flow was affected by a working-capital build associated with rising Canadian and U.S. activity and by a semiannual interest payment.

Capital expenditures were C$82 million in the quarter, including C$58 million for maintenance and infrastructure and C$24 million for upgrades. Precision also spent C$31 million on share repurchases.

The company increased its 2026 capital expenditure budget to a range of C$275 million to C$285 million. The lower end supports long-lead purchases for projects expected to be completed next year, while the higher end includes a potential Canadian upgrade opportunity involving multiple rigs contracted through 2029 for a large producer.

Ford said potential 2027 upgrades could include extended-reach drilling upgrades in Canada’s Montney region, pad upgrades for Super Single rigs serving heavy-oil markets, and reactivations and upgrades of Super Triple 1500 rigs in the U.S., particularly for the Permian and potentially the Haynesville.

Precision ended the quarter with more than C$460 million of total liquidity. Through the first nine months of 2026, it reduced debt by C$75 million and repurchased C$47 million of shares. The company reiterated its target to reduce debt by C$100 million for the full year while continuing buybacks in the fourth quarter.

Management said it was nearing its long-term net debt-to-adjusted-EBITDA target of less than one times. Ford said the company could reach that leverage level by year-end or early 2027, giving it greater flexibility for shareholder returns.

Technology and Canadian market outlook

Ford said the company sees a more constructive backdrop for Canadian energy investment following developments including the TMX expansion, LNG Canada Phase One, Shell’s final investment decision on LNG Canada Phase Two, and the designation of the Pacific Link Pipeline as a project of national interest.

He said customer consolidation in the Montney, Duvernay and heavy-oil regions is increasing demand for efficiency, field support and technology. Precision had 28 Canadian rigs under contract in the third quarter, up from 16 a year earlier.

The company also said its Alpha and EverGreen technology businesses are on track for their highest revenue and contribution margin to date. Precision opened a Calgary remote operations center in August, which Ford said has since hosted more than 100 representatives from 12 customers to review the company’s optimization and AI-driven drilling technologies.

About Precision Drilling (NYSE:PDS)

Precision Drilling Corporation is an oilfield services company headquartered in Calgary, Alberta. The company provides contract drilling and related services to oil and natural gas exploration and production companies, with operations serving customers primarily in Canada and the United States as well as selected international markets.

Its Contract Drilling Services segment operates land-based drilling rigs and provides associated equipment, personnel and technical expertise. Precision also offers directional drilling and other technologies designed to support the construction of complex horizontal and extended-reach wells.

Through its Completion and Production Services business, the company provides well servicing, snubbing, rental equipment, camp and catering services, and other support activities used during well completion, maintenance and production.

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