Precision Drilling Reports 11% Revenue Gain as Canadian Rigs Hit 61, U.S. Operating Costs Compress EBITDA

Precision Drilling reported $452.8 million in second-quarter 2026 revenue, an 11.4% increase from $406.6 million in the same period last year. Active rig counts rose in both Canada and the United States, with Canadian rigs climbing 22% to 61 and U.S. rigs reaching 43 by late July from 33 a year earlier. Adjusted EBITDA fell 10.2% to $97.1 million, as surging U.S. per-day operating costs more than offset the activity gains. The company posted a net loss of $1.2 million, compared with net earnings of $16.3 million in Q2 2025.

Canadian Operations: Higher Utilization, Softer Day Rates

Canada's contract drilling segment generated 5,510 utilization days in Q2 2026, up 20.3% from 4,580 days a year earlier. Revenue per utilization day fell 6.0% to CAD $35,448 from CAD $37,725 in Q2 2025. Operating margin per utilization day declined from CAD $15,306 to CAD $13,855, a 9.5% drop. CEO Carey Ford noted that the company's Super Triple and Super Single rigs are expected to be nearly fully utilized through Canada's fall drilling season.

Ford guided Q3 2026 Canadian operating margins in the range of CAD $12,000 to $13,000 per utilization day. H1 2026 Canadian utilization reached 12,626 days, up 12.1% from 11,260 in H1 2025. Canada's overall active rig count reached 204 in the week ended July 24, 2026, per Baker Hughes data, up 22 rigs year-over-year. Precision Drilling's 61 active Canadian rigs represent approximately 30% of that national total, confirming its position as Canada's largest contract drilling company.

U.S. Cost Surge Erases Margin Gains

The U.S. contract drilling segment generated 3,216 utilization days in Q2 2026 at a revenue rate of US$32,802 per day, a 5.4% improvement year-over-year. Operating costs per utilization day rose 20.4% to US$26,590 from US$22,087, compressing the per-day margin from US$9,026 to US$6,212. Applied across those 3,216 utilization days, the cost increase erased approximately US$14.5 million in operating margin compared with Q2 2025. Adjusted EBITDA for contract drilling fell 15.0% to $94.7 million despite the 9.7% revenue increase.

Post-quarter, U.S. active rigs climbed to 43 from 35 at June 30, signaling stronger demand through July. Baker Hughes reported a U.S. total of 587 active rigs in the week ended July 24, 2026, up 45 year-over-year. Ford guided Q3 2026 U.S. margins at US$7,000 to $8,000 per utilization day, recovering toward an expected US$10,000 level in Q4. The company attributed incremental revenue to higher activity and contributions from its Alpha technology rigs and the EverGreen environmental efficiency program.

International Segment: Saudi Arabia, Kuwait, and a New Five-Year Contract

Precision Drilling operates internationally in two countries: three rigs in Saudi Arabia and four rigs in Kuwait, for a total of seven active international rigs. The Saudi Arabia count grew from two rigs in Q2 2025. International revenue per utilization day was US$50,524 in Q2 2026, down 4.9% from US$53,129 a year earlier. The company secured a new five-year contract that management expects will expand its international fleet to eight rigs by mid-2027, primarily in the Middle East.

International utilization days fell 6.3% to 637 in Q2 2026 from 680 in Q2 2025. Elevated crew-related operating costs in the international segment are expected to persist through year-end. Precision Drilling's global fleet totals 184 contract drilling rigs, with the international component representing a growth area as demand from Gulf state operators remains steady. The new five-year contract anchors that segment's revenue through 2031 at current activity levels.

Capital Allocation and CRA Tax Contingency

Precision Drilling invested $76.4 million in capital during Q2 2026, up from $52.8 million in Q2 2025. Debt reduction of $50 million in the quarter brought the first-half total to $75 million, on pace to meet the $100 million full-year target. Long-term debt stood at $626.3 million at June 30, down from $679.3 million at December 31, 2025. The company repurchased 99,416 shares for $12.0 million in Q2 and 136,290 shares for $16.0 million in the first half of 2026.

Canada Revenue Agency issued a notice of reassessment for the company's 2018 tax year, denying intercompany dividend deductions. Precision Drilling estimates the potential tax liability at approximately $155 million covering tax years 2018 through 2023, excluding interest. No liability has been recognized in the company's financial statements, and management intends to contest the reassessment. Available liquidity exceeded $500 million at quarter end.