Precision Drilling Corp’s Mixed Q1 2025 Earnings Call

Precision Drilling Corp ((TSE:PD)) has held its Q1 earnings call. Read on for the main highlights of the call.

Precision Drilling Corp’s Latest Earnings Call: A Mixed Bag of Achievements and Challenges

The latest earnings call from Precision Drilling Corp presented a mixed sentiment. While the company showcased strong adjusted EBITDA and continued its positive earnings streak, it also faced challenges such as a revenue decline, decreased U.S. drilling activity, and international rig suspension. Despite these hurdles, the company made progress in debt reduction and saw increased drilling activity in Canada.

Strong Adjusted EBITDA

Precision Drilling Corporation reported an impressive adjusted EBITDA of $137 million for the first quarter of 2025. This achievement was largely driven by robust drilling activity in Canada and steady cash flow from operations in the U.S. and the Middle East.

Positive Earnings Streak

The company celebrated its 11th consecutive quarter of positive net earnings, posting a net income of $35 million or $2.52 per share. This consistent performance underscores the company’s resilience and effective operational strategies.

Debt Reduction Progress

Precision Drilling made significant strides in reducing its long-term debt, cutting it by $17 million in the first quarter of 2025. The company plans to further reduce its debt by at least $80 million within the year, continuing its commitment to financial stability.

Canadian Drilling Activity Increases

The company’s drilling activity in Canada saw a slight increase, averaging 74 rigs, up from 73 in the first quarter of 2024. This growth reflects the company’s strong presence and operational efficiency in the Canadian market.

Revenue Decline

Despite some positive metrics, Precision Drilling reported a revenue decline, with the quarter’s revenue at $496 million, marking a 6% decrease from the same period in 2024. This decline poses a challenge that the company needs to address moving forward.

U.S. Drilling Activity Decrease

The U.S. market presented challenges, with drilling activity averaging 30 rigs, a decrease of 4 rigs from the previous quarter. This reduction, coupled with declining daily operating margins, highlights the competitive pressures in the U.S. market.

International Rig Suspension

In Saudi Arabia, Precision Drilling faced a setback with the suspension of one rig, reducing its activity to two rigs in the region for the remainder of the year. This suspension impacts the company’s international operations and revenue potential.

Completion and Production Services EBITDA Decrease

The Completion and Production Services segment experienced a decrease in adjusted EBITDA, falling to $18 million, an 8% drop compared to the previous year. This decline was attributed to a 10% decrease in well service hours.

Forward-Looking Guidance

Precision Drilling Corp provided forward-looking guidance, emphasizing its commitment to financial discipline and strategic growth. The company aims to reduce net debt by $100 million in 2025, with a long-term goal of a $700 million reduction by 2027. Expectations for the second quarter include U.S. daily operating margins between $7,000 and $8,000, and Canadian margins between $13,500 and $14,500. The company also plans to reduce its full-year capital expenditures to $200 million.

In conclusion, Precision Drilling Corp’s earnings call highlighted a mix of achievements and challenges. While the company continues to demonstrate financial resilience with strong adjusted EBITDA and a positive earnings streak, it faces hurdles such as revenue decline and decreased U.S. drilling activity. Nevertheless, its commitment to debt reduction and strategic growth offers a promising outlook for the future.