Key Highlights

  • Revenue rose 15.0% to C$531.7 million, and adjusted EBITDA rose 6.4% to C$125.1 million.
  • Basic and diluted EPS were C$1.65, against a loss of C$0.51 a year earlier.
  • Fourth-quarter U.S. operating margin is guided to US$9,500 to US$10,500 per day, from US$7,653 in the third quarter.
  • The 2026 capital budget was raised to C$275 million to C$285 million from C$265 million.
  • Share repurchases were C$30.6 million in the quarter, and long-term debt fell to C$629.1 million.

Precision Drilling Earnings: Why Is Management Guiding U.S. Margins Higher for the Fourth Quarter?

Precision Drilling (NYSE:PDS) released third-quarter results on Tuesday, October 27, reporting in Canadian dollars. Revenue was C$531.7 million, up 15.0% from C$462.3 million, and net earnings were C$21.3 million against a loss of C$6.5 million a year earlier. Basic and diluted EPS came to C$1.65. The screen showed an estimate of 1.72 and a surprise of negative 3.99% as screened.

For the fourth quarter, management guided U.S. operating margins to US$9,500 to US$10,500 per utilization day, a step up from US$7,653 in the third quarter. The company said reactivation costs are slowing, which supports the roughly 30% expected rise. Canadian margins are guided to C$13,500 to C$14,500 per day, about flat with the fourth quarter of 2025.

Rig Activity and Day Rates: What Drove the 15.0% Revenue Gain?

Average active rigs reached 123, against 106 a year ago. Canada averaged 73 rigs versus 63, the U.S. averaged 43 versus 36, and international held at seven. Canadian utilization days rose 15.8% to 6,675, and U.S. utilization days rose 18.8% to 3,968.

Pricing was mixed. U.S. revenue per utilization day rose 7.2% to US$33,270, but Canadian revenue per day slipped 1.6% to C$33,654 and international fell 14.0% to US$46,304.

Margin Pressure: Why Did EBITDA Grow Only 6.4% on 15.0% More Revenue?

Adjusted EBITDA was C$125.1 million, and the margin was 23.5% (derived), against 25.4% last year. U.S. operating cost per day rose 14.7% to US$25,617, and reactivation costs averaged US$2,125 per day across six rigs, against US$502 for four rigs a year earlier.

U.S. operating margin per day (calculated) fell to US$7,653 from US$8,700, while the Canadian figure was C$12,817 against C$13,007.

The earnings swing reflects a year-ago deferred tax charge of C$33 million tied to U.S. deductions. Third-quarter depreciation included about C$8 million of added expense from a useful-life change, or C$30 million year to date.

Capex, Buybacks and Debt: Where Is the Cash Going?

The 2026 capital budget moved to C$275 million to C$285 million from C$265 million, with C$103 million to C$113 million for expansion and upgrades across 25 rigs. The increase reflects long delivery times and a pending upgrade for a large Canadian producer, with multiple rigs contracted through 2029.

Cash from operations was C$70.8 million, and capital expenditures were C$82.5 million. Precision bought back 269,331 shares for about C$31 million in the quarter, and 405,621 shares for about C$47 million year to date.

Long-term debt was C$629.1 million, against C$679.3 million at year-end 2025, with cash of C$23.2 million and liquidity above C$460 million. Debt reduction is C$75 million this year, against a C$100 million target.

What to Watch Next for Precision Drilling After the October 28 Call

The conference call on Wednesday, October 28 should address the US$9,500 to US$10,500 margin path, the large Canadian upgrade opportunity, and a Canada Revenue Agency matter with maximum exposure of about C$155 million, which the company intends to contest. Management expects North American activity to hold near current levels, with growth potential in early 2027 and an idle Kuwait rig returning mid-2027.