Canada's Precision Drilling Q2 revenue tops estimates on higher rig activity

Overview

• Canada oilfield services firm's Q2 revenue rose 11%, beating analyst expectations

• Adjusted EBITDA fell 10% yr/yr due to higher U.S. rig reactivation costs, lower international margins

• Company posted net loss attributable to shareholders, mainly from increased depreciation expense

Outlook

• Precision Drilling expects North American drilling activity to improve modestly through remainder of 2026

• Company sees Canada third-quarter operating margins averaging C$12,000-C$13,000 per utilization day

• Precision Drilling expects U.S. fourth-quarter margins to approach US$10,000 per utilization day

Result Drivers

• CANADIAN ACTIVITY MIX - Higher rig activity in Canada, especially in heavy oil drilling and well servicing, drove revenue growth but was offset by lower upfront capital payments and a shift toward more Super Single rigs

• U.S. REACTIVATION COSTS - Revenue growth in the U.S. was driven by higher rig utilization and day rates, but margins declined due to increased rig reactivation costs

• INTERNATIONAL MARGINS - Lower international margins resulted from a change in rig mix and geopolitical tensions

Company press release: ID:nGNXb4FyW

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 7 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the oil gas drilling peer group is "buy"

• Wall Street's median 12-month price target for Precision Drilling Corp(Calgary) is C$150.00, about 35.5% above its July 28 closing price of C$110.68

• The stock recently traded at 12 times the next 12-month earnings vs. a P/E of 16 three months ago

Reuters Recommended Reads

• July 28 - Canada's Trican Q2 revenue slightly misses estimates on weather-related slowdown

• July 28 - Nabors Q2 revenue misses estimates on lower rig activity

• July 26 - Oilfield services provider Baker Hughes beats Q2 profit estimates

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)