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Precision Drilling: 3 Key Takeaways for Long-Term Investors

Source The Motley Fool

Key Points

Third-quarter revenue increased 15% year over year to $532 million.
Canadian contracted drilling rigs increased year over year from 16 to 28.
Precision Drilling reduced total debt by $75 million through nine months.
10 stocks we like better than Precision Drilling ›

On its third quarter of 2026 earnings call, held on Oct. 28, 2026, Precision Drilling (NYSE:PDS) announced a 15% year-over-year revenue increase to $532 million, driven by rising North American drilling activity. For long-term investors, the company is translating higher operational utilization into customer contract commitments and debt reduction. Three things management said stand out.

1. Contracted Fleet Upgrades Lock In Multiyear Customer Commitments

Precision Drilling upgrades drilling rigs only under customer contracts, thereby securing multiyear commitments and improving returns. This strategy helped expand its Canadian contract book from 16 to 28 rigs year over year.

Contracted upgrades remain the best opportunity to deploy capital and create short and long term shareholder value.
-- Carey Ford, President and Chief Executive Officer

2. Near-Term Reactivation Costs Set Up U.S. Margin Expansion

Reactivating six rigs in the United States added $2,130 per utilization day in temporary operating expenses during the third quarter. While these start-up costs compressed daily rig margins, the expanded fleet doubled the company's active rigs in the Permian Basin, an oil-producing region in West Texas, to 16.

Margin expansion remains a critical deliverable for the business following the completed reactivations in the second and third quarters.
-- Dustin Honing, Chief Financial Officer

3. Proprietary Digital Technologies Generate Record Financial Performance

Demand is growing for Alpha, the company's automated rig operating technology, and Evergreen, its suite of systems designed to reduce diesel fuel consumption and field emissions. Over 100 customer representatives visited the firm's remote operations center in Calgary to evaluate real-time data and artificial intelligence tools.

Our Alpha and Evergreen businesses are on track to have their highest revenue and contribution margin ever.
-- Carey Ford, President and Chief Executive Officer

Looking Ahead

U.S. drilling is stabilizing as reactivations slow, with early 2027 start-up inquiries building. The company leverages its internal supply chain and automated rigs to manage labor and fuel inflation.

Expect our rig count to range for the U.S. in the low to mid forties for the remainder of the year and are experiencing an elevated number of requests for rig start ups early next year.
-- Carey Ford, President and Chief Executive Officer

With debt down $75 million through nine months, management is prioritizing share repurchases as leverage hits target levels.

Despite the higher working capital build that is expected this year, we remain committed to reaching our $100 million debt reduction target for 2026 while continuing to repurchase shares in the fourth quarter.
-- Dustin Honing, Chief Financial Officer

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Disclaimer: For information purposes only. Past performance is not indicative of future results.

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