Precision Drilling (NYSE:PDS) executives highlighted debt reduction, share repurchases and steady operating performance across its North American drilling business during the company’s fourth-quarter and year-end conference call. Management also outlined expectations for early 2026 activity and provided a full-year 2026 outlook for capital spending, costs and shareholder returns.
Fourth-quarter results included non-cash charges
Chief Financial Officer Dustin Honing said Precision recorded fourth-quarter adjusted EBITDA of $126 million, or $132 million before share-based compensation. That compared with prior-year EBITDA of $121 million, or $136 million before share-based compensation.
Segment performance: Canada steady, U.S. margins firm, international rates higher
In Canada, Precision averaged 66 active rigs in the fourth quarter, up one rig from the year-ago period. Reported daily operating margins were CAD 14,132, versus CAD 14,559 in the fourth quarter of 2024, and management said results landed within prior guidance. Honing noted the company incurred reactivation costs tied to two Super Triple rigs mobilized from the U.S. to Canada in September; both began operations in the fourth quarter and are expected to be “fully operational throughout 2026 and beyond,” supported by long-term contracts.
In the U.S., Precision averaged 37 active rigs, slightly higher than the third quarter and up three rigs year-over-year. Daily operating margins were $8,754, compared with $8,700 in the third quarter, also within guidance. Honing said the company increased its U.S. rig count during 2025 despite lower industry activity levels, attributing the momentum to rig upgrades, digital offerings and positioning in U.S. natural gas markets.
Internationally, Precision averaged seven active rigs, down from eight a year earlier, while international day rates averaged $53,505 per day, up 8% year-over-year due to fewer non-billable days tied to prior-year rig recertifications.
In the company’s completion and production segment, adjusted EBITDA was CAD 17 million, compared with CAD 16 million a year ago. Honing said increased well servicing demand in Canada more than offset the impact of winding down U.S. operations in that business during the second quarter of 2025.
2025 capital spending, debt reduction, and share buybacks
Investor Relations Vice President Lavonne Zdunich said Precision reduced debt by CAD 101 million in 2025 and ended the year with a net debt-to-adjusted EBITDA ratio of 1.2x. She also said Precision repurchased CAD 76 million of shares during the year, meeting the midpoint of its guidance to allocate 35% to 45% of free cash flow to buybacks.
Honing said full-year 2025 capital expenditures were CAD 263 million, including CAD 156 million for sustaining and infrastructure and CAD 107 million for upgrades. He added that the company increased its year-end cash balance to CAD 86 million, up CAD 12 million from the prior year.
Guidance: Q1 2026 activity and full-year 2026 cost and capital framework
For the first quarter of 2026, Honing said all of the company’s 32 Super Triple and 47 Super Single rigs were active during the winter drilling season, alongside several Tele-Doubles, resulting in a peak rig count of 87 rigs in Canada. For the full quarter, Precision expects average active rig counts to exceed the 74-rig average from the prior-year first quarter. Canadian operating margins are expected to range from CAD 14,000 to CAD 15,000 per day.
In the U.S., the company expects first-quarter average active rig count to be in line with 37 rigs, with management citing “encouraging customer conversations” for potential additional deployments. U.S. operating margins are expected to range from $8,000 to $9,000 per day.
Internationally, Precision expects to run seven rigs in the first quarter, though management said operating margins will be lower year-over-year due to one Kuwait rig coming down, partially offset by one reactivated rig in Saudi Arabia. Honing said the Saudi reactivation will involve $2 million of one-time charges in the first quarter.
For full-year 2026, Precision budgeted CAD 245 million in capital expenditures, including CAD 182 million for sustaining and infrastructure and CAD 63 million for upgrades. Honing said sustaining and infrastructure includes long-lead components that could be allocated to upgrades as projects materialize, along with a bulk purchase for drill pipe to be used in late 2026 and into 2027. Depreciation is expected to be CAD 305 million, and cash interest expense is expected to be approximately CAD 45 million. The effective tax rate is expected to be 25% to 30%, with cash taxes expected to remain low in 2026.
Precision expects 2026 SG&A to be flat at about $95 million before share-based compensation. Share-based compensation expense is expected to range from $25 million to $45 million, assuming a share price range of $100 to $140, with management emphasizing the estimate is preliminary and will be updated after grant settlements and new issuances.
Strategy and Q&A: international reactivations, Argentina MOU, and U.S. “modest growth” opportunities
President and CEO Carey Ford said Precision’s 2026 priorities remain focused on free cash flow generation, investor returns and high-performance service, with an emphasis on revenue growth and deeper customer relationships. He described demand drivers across basins and said Precision is pursuing “creative commercial arrangements” that combine equipment upgrades, digital technology, and performance contracts. Ford said that of the company’s 130 drilling rigs active globally, 25 customers are running multiple Precision rigs, and the company aims to expand that number.
On Canada, Ford said the company’s Q1 peak activity of 87 rigs exceeded last year’s peak by four rigs and said Precision has not seen any broad change in near-term demand, noting all Super Triples and Super Singles were active in the winter season. He cited takeaway capacity and customer inventory depth as supportive factors in the medium-to-long-term view, while acknowledging that weather and commodity price volatility can influence short-term activity.
On the international business, management provided more detail on Kuwait and Saudi Arabia during Q&A. Precision said it has six rigs in Kuwait, with four active on long-term contracts and two idle rigs that the company is looking to redeploy in Kuwait or elsewhere in the region. In Saudi Arabia, Precision said it has two active rigs, with one suspended rig returning to work on a multi-year contract; management indicated Saudi could be “up to three” rigs after the reactivation is complete, while overall international activity remains seven rigs in the near term.
Ford also discussed an MOU in Argentina with San Antonio International, describing it as a way to bring Precision’s idle Super Series rigs, digital technology and operational support to the market while de-risking complexity by using an established partner. He said Precision is deploying its first Alpha automation system on one of its partner’s rigs to demonstrate performance, but emphasized there are no near-term rig deployment plans. If a first rig moved “at light speed,” Ford said it could be late this year or early next year, and suggested the opportunity could amount to roughly one to three rigs over the next couple of years. In additional Q&A, Ford described the concept as involving two revenue streams: operational support revenue from the partner and a direct rig leasing payment from the customer, with mobilization and demobilization addressed in the contract economics.
In the U.S., management said potential upside to steady rig counts includes active discussions in the Marcellus, Haynesville, Permian, and Rockies, driven by performance and efficiency opportunities. Ford said at least half of expected U.S. growth would likely come from displacements rather than customers adding incremental rigs.
Management also addressed the decommissioning and drill pipe charges. Honing said the rig decommissioning charge followed a review of industry trends and fleet capabilities, concluding certain rigs were no longer competitive as drilling programs become more complex. The company said it would strip usable parts and scrap the rest, without classifying them as assets held for sale due to an uncertain timeline. On drill pipe, management said the $17 million charge reflected an adjustment to useful life and some disposal losses, citing accelerated wear as an industry-wide dynamic.
About Precision Drilling (NYSE:PDS)
Precision Drilling Corporation (NYSE: PDS) is a Calgary, Alberta–based oilfield services company that has provided drilling solutions since its founding in 1951. With more than seven decades of industry experience, the company delivers contract drilling services, directional and horizontal drilling, well servicing, and a suite of specialized equipment designed to meet the evolving needs of exploration and production companies worldwide.
The company’s core business activities include operating a fleet of onshore drilling rigs, offering managed pressure drilling, measurement-while-drilling (MWD) and logging-while-drilling (LWD) services, and providing completion and workover rigs.
