Precision Drilling surges on plans for debt reduction, shareholder returns

Oil drilling rig at dawn

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Precision Drilling (NYSE:PDS) +9.4% in Tuesday’s trading after reporting better than expected Q4 earnings and revenues, and saying it will increase debt reduction and shareholder returns.

Q4 net earnings jumped to C$147M, or C$10.42/share, from C$3M, or C$0.27/share, in the year-earlier quarter, and revenues and adjusted EBITDA totaled C$507M and C$151M, respectively, compared with C$511M and C$91M in 2022.

Analyst consensus had called for Q4 EPS of C$2.59/share, revenues of C$492M, and adjusted EBITDA of C$146.7M.

Precision (PDS) was helped by higher revenue per rig utilization day, which jumped 16% Y/Y in Canada to C$34,616 while in the U.S. the result rose 10% to $34,452.

CEO Kevin Neveu said the company plans to reduce debt by another C$100M by year-end 2026 and continue to move shareholder capital returns toward 50% of free cash flow.

Precision’s (PDS) Q4 beat was driven by stronger than expected results from Canadian and International drilling, Stifel analyst Cole Pereira said, noting the increased buyback plans imply C$89M-C$124M spent on buybacks this year, which translates to 8%-11% of the company’s market value.

Harry Byrne

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