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1. Company Snapshot

1.a. Company Description

Precision Drilling Corporation, a drilling company, provides onshore drilling, completion, and production services to exploration and production companies in the oil and natural gas and geothermal industries in North America and the Middle East.The company operates in two segments, Contract Drilling Services; and Completion and Production Services.The Contract Drilling Services segment offers onshore well drilling services to exploration and production companies in the oil and natural gas industry.


This segment's services include land and turnkey drilling; and procurement and distribution of oilfield supplies, as well as manufacture and refurbishment of drilling and service rig equipment.As of December 31, 2021, it operated 227 land drilling rigs, including 109 in Canada; 105 in the United States; 6 in Kuwait; 4 in Saudi Arabia; 2 in the Kurdistan region of Iraq; and 1 in the country of Georgia.As of December 31, 2021, this segment also operated 47 AlphaTM rigs with commercial AlphaAutomation; 18 AlphaApps; 4 grid power capable rigs; and 60 natural gas or bi-fuel rigs.


The Completion and Production Services segment provides service rigs for well completion, workover, abandonment, maintenance, and re-entry preparation services; wellsite accommodations; oilfield surface equipment rentals; and camp and catering services to oil and natural gas exploration and production companies.As of December 31, 2021, it operated 123 well completion and workover service rigs, including 113 in Canada and 10 in the United States; 1,900 oilfield rental items, including surface storage, small-flow wastewater treatment, power generation, and solids control equipment; 109 wellsite accommodation units; 943 drill camp beds; 822 base camp beds; and three kitchen diners in Canada.Precision Drilling Corporation was incorporated in 1951 and is headquartered in Calgary, Canada.

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1.b. Last Insights on PD

Precision Drilling Corporation's recent performance was driven by its ability to meet annual capital allocation targets, as announced on January 6, 2026. The company's financial and operational updates highlighted its commitment to delivering value to shareholders. Additionally, the company's strong backlog and improving balance sheet, as seen in the offshore drilling industry, support its stability. Furthermore, Precision Drilling's focus on operational efficiency and cost management is expected to drive future growth.

1.c. Company Highlights

2. Precision Drilling's Q4 2025 Earnings: A Deeper Dive into Financial Performance

Precision Drilling reported adjusted EBITDA of $126 million and a net loss of $42 million in Q4 2025, which included non-cash charges related to decommissioning of drilling rigs and drill pipe. The company's EPS came out at -$3.23, significantly lower than the estimated $2.59. Revenue growth is expected to be modest, with analysts estimating a 1.9% increase for the next year. The company's Canadian drilling activity averaged 66 active rigs, while in the U.S., it averaged 37 active rigs, and internationally, it averaged 7 active rigs, with day rates increasing 8% from the prior year.

Publication Date: Feb -25

📋 Highlights
  • Shareholder Returns Enhanced: Repurchased $76M of shares and reduced debt by $101M in 2025, achieving a net debt to EBITDA ratio of 1.2x.
  • Q4 2025 Financial Performance: Adjusted EBITDA of $126M offset by a $42M net loss, driven by $67M in non-cash rig decommissioning charges.
  • 2026 Capital Allocation: $245M in capex planned, including $182M for sustaining infrastructure and $63M for rig upgrades, alongside $305M depreciation and $45M cash interest.
  • Argentina Expansion Potential: MOU with San Antonio Drilling targets 1–3 rig deployments over 2–3 years, leveraging Precision’s tech and San Antonio’s customer base.
  • 2026 Rig Activity and Margins: Canadian rig count peaks at 87 rigs in Q1 2026 with $14K–$15K/day margins, while U.S. margins remain stable at $8K–$9K/day despite competitive pricing shifts.

Financial Highlights and Operational Performance

The company's financial performance was impacted by non-cash charges, but operationally, Precision Drilling saw an increase in day rates internationally and maintained a stable rig count in Canada and the U.S. The company's focus on enhancing shareholder returns and maximizing free cash flow is evident in its debt reduction of $101 million and share repurchase of $76 million in 2025.

Guidance and Outlook for 2026

For 2026, Precision expects capital expenditures of $245 million, with $182 million for sustaining and infrastructure and $63 million for upgrades. The company anticipates depreciation of $305 million and cash interest expense of approximately $45 million. Its effective tax rate is expected to be 25-30%, with cash taxes remaining low. In Q1 2026, Precision expects its Canadian rig count to peak at 87 rigs, with operating margins ranging between $14,000 and $15,000 a day.

Valuation and Growth Prospects

With a P/E Ratio of 849.73 and an EV/EBITDA of 4.55, the market seems to be pricing in significant growth prospects. However, the company's ROE (%) is 0.11, and ROIC (%) is 0.57, indicating room for improvement in returns. The Free Cash Flow Yield (%) is 9.46, which is a positive sign. As Precision Drilling focuses on driving revenue growth, deepening customer relationships, and maintaining financial discipline, its valuation metrics will be crucial in determining its attractiveness to investors.

Strategic Initiatives and Expansion Plans

The company has signed a memorandum of understanding (MOU) with San Antonio Drilling to explore drilling opportunities in Argentina, which could lead to 1-3 rig deployments over the next few years. Precision Drilling has also increased its capital allocation guidance for share repurchases, indicating a commitment to returning value to shareholders. With a strong outlook in Canada and stable rig activity in the U.S., the company's strategic initiatives are poised to drive growth.

3. NewsRoom

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Precision Drilling Corporation (PDS) Reports 2025 Fourth Quarter and Year End Unaudited Financial Results

Mar -03

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How The PDS (NSEI:PDSL) Story Is Shifting As Analysts Weigh Upside And Execution Risks

Mar -01

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Precision Drilling Corporation Announces Dual Listing on NYSE Texas

Feb -27

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What Makes Precision Drilling (PDS) a Strong Momentum Stock: Buy Now?

Feb -16

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Precision Drilling Price Target Raised at CIBC, RBC

Feb -13

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What Could Shift The Evolving PDS (NSEI:PDSL) Story After The ₹545 Fair Value Reset

Feb -13

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Precision Drilling Q4 Earnings Call Highlights

Feb -13

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Precision Drilling (PDS) Q4 Earnings Beat Estimates

Feb -12

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.15%)

6. Segments

Contract Drilling

Expected Growth: 1.2%

Precision Drilling Corporation's 1.2% growth in Contract Drilling is driven by increasing demand for oil and gas, improved operational efficiency, and strategic expansion into new markets. Additionally, the company's focus on technology adoption, such as automation and digitalization, has enhanced its drilling capabilities, leading to increased customer satisfaction and loyalty.

Completion and Production

Expected Growth: 0.8%

Precision Drilling Corporation's 0.8 growth in Completion and Production is driven by increasing demand for oilfield services, improved operational efficiency, and strategic acquisitions. Additionally, the company's focus on technology advancements, such as its DrillBit and Rig Automation, has enhanced its competitive edge, leading to increased market share and revenue growth.

Inter-segment Eliminations

Expected Growth: 0.5%

Precision Drilling Corporation's 0.5% inter-segment eliminations growth is driven by increased drilling activity, improved operational efficiency, and strategic cost management. Additionally, the company's diversified service offerings and expansion into new markets have contributed to this growth, offsetting the impact of fluctuating oil prices and industry volatility.

7. Detailed Products

Drilling Rigs

Precision Drilling Corporation offers a fleet of drilling rigs that provide efficient and safe drilling operations for oil and gas exploration and production companies.

Well Servicing

The company provides well servicing solutions, including well maintenance, workovers, and abandonment services to optimize well performance and extend the life of oil and gas wells.

Directional Drilling

Precision Drilling Corporation offers directional drilling services that enable precise wellbore placement and navigation in complex geological formations.

Drilling Fluids

The company provides drilling fluids and mud logging services to optimize drilling operations, improve wellbore stability, and reduce drilling risks.

Camp and Catering Services

Precision Drilling Corporation offers camp and catering services to provide comfortable and safe accommodations for drilling personnel in remote locations.

Drilling Waste Management

The company provides drilling waste management services to handle and dispose of drilling waste in an environmentally responsible manner.

8. Precision Drilling Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Precision Drilling Corporation is medium due to the availability of alternative drilling services and equipment. However, the company's specialized drilling services and equipment may limit the threat of substitutes.

Bargaining Power Of Customers

The bargaining power of customers for Precision Drilling Corporation is low due to the company's strong market position and the lack of alternative drilling services. Customers have limited bargaining power to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Precision Drilling Corporation is medium due to the availability of alternative suppliers of drilling equipment and services. However, the company's large scale of operations may give it some bargaining power over suppliers.

Threat Of New Entrants

The threat of new entrants for Precision Drilling Corporation is low due to the high capital requirements and regulatory barriers to entry in the drilling services industry. New entrants may find it difficult to compete with established players like Precision Drilling Corporation.

Intensity Of Rivalry

The intensity of rivalry for Precision Drilling Corporation is high due to the competitive nature of the drilling services industry. The company faces intense competition from other drilling services providers, which may lead to pricing pressures and reduced market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 37.24%
Debt Cost 7.85%
Equity Weight 62.76%
Equity Cost 18.38%
WACC 14.46%
Leverage 59.34%

11. Quality Control: Precision Drilling Corporation passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Teekay

A-Score: 7.9/10

Value: 8.6

Growth: 6.2

Quality: 6.5

Yield: 10.0

Momentum: 9.5

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
PHX Energy

A-Score: 7.1/10

Value: 8.6

Growth: 7.2

Quality: 5.8

Yield: 10.0

Momentum: 3.5

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Precision Drilling

A-Score: 5.1/10

Value: 8.3

Growth: 6.4

Quality: 5.5

Yield: 0.0

Momentum: 5.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Borr Drilling

A-Score: 4.5/10

Value: 8.1

Growth: 8.2

Quality: 4.7

Yield: 0.0

Momentum: 4.0

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Ensign Energy Services

A-Score: 4.4/10

Value: 9.8

Growth: 4.8

Quality: 3.0

Yield: 0.0

Momentum: 4.5

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
Independence Contract Drilling

A-Score: 3.8/10

Value: 10.0

Growth: 3.8

Quality: 2.2

Yield: 0.0

Momentum: 6.0

Volatility: 1.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

119.49$

Current Price

119.49$

Potential

-0.00%

Expected Cash-Flows