Canada's Precision Drilling swings to Q3 profit on absence of year-ago US deferred tax expense

Overview

• Canada contract driller's Q3 revenue rose 15%, beating analyst expectations

• Adjusted EBITDA grew 6% on stronger North American activity, offset by higher U.S. reactivation costs

• Net earnings attributable to shareholders reached C$21 mln, reversing a loss last year

Outlook

• Precision Drilling expects Q4 Canadian operating margins of C$13,500-C$14,500 per utilization day

• Company expects Q4 U.S. operating margins of US$9,500-US$10,500 per utilization day

Result Drivers

• NORTH AMERICAN ACTIVITY - Co said higher rig utilization and robust heavy oil activity in Canada, along with increased U.S. rig count and day rates, drove revenue growth

• U.S. REACTIVATION COSTS - Co said higher U.S. rig reactivation costs offset some North American gains

• INTERNATIONAL MARGINS - Co said lower international margins and non-billable days reduced segment results

• NET INCOME - Increased primarily due to higher deferred income tax expense in 2025 related to our US operations, partially offset by $8 million of additional depreciation expense in 2026 resulting from our previously communicated change in useful life estimates

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 9 "strong buy" or "buy", 1 "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$152.50, about 8.9% above its October 27 closing price of C$140.02

• The stock recently traded at 14 times the next 12-month earnings vs. a P/E of 12 three months ago

Reuters Recommended Reads

• Oct 27 - Canada's Trican Well Service Q3 profit rises on higher activity, Iron Horse contribution

• Oct 27 - Baker Hughes rounds out oilfield services earnings with lower quarterly profit

• Oct 27 - Nabors Q3 revenue beats estimates

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(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.)