Precision Drilling's Q2 2025 Earnings Call: Unpacking Contradictions in Rig Costs, Contract Strategies, and Market Activity

U.S. rig mobilization costs, U.S. contract durations and day rates, activity levels and contract durations in gas basins are the key contradictions discussed in Precision Drilling Corporation's latest 2025Q2 earnings call.



Financial Performance and Debt Reduction:
- Precision Drilling Corp reported adjusted EBITDA of $108 million for Q2 2025, driven by strong drilling activity in Canada and improved activity in the U.S., along with steady cash flow generation from Middle East operations.
- The company reduced long-term debt by $74 million in Q2.
- This performance was supported by aggressive cost management and debt reduction strategies.

U.S. Market Growth and Rig Activity:
- Precision's drilling activity in the U.S. averaged 33 rigs in Q2, an increase of 3 rigs from the previous quarter, with operating days increasing 13%.
- Daily operating margins in Q2 were USD 9,026, surpassing the guidance range of $7,000 to $8,000 per day.
- Growth was driven by customer demand in gas basins like the Haynesville and Marcellus, with private companies leading the activity.

Canadian Market and Rig Utilization:
- Precision's Canadian drilling activity averaged 50 rigs, with daily operating margins of $15,306, exceeding guidance.
- Utilization of Super Triple and Super Single rigs was strong, especially during the breakup period, indicating improved customer demand.
- The company anticipates full rig utilization by early 2026 due to increased demand from projects like LNG Canada Phase 1 and the Trans Mountain expansion.

Capital Expenditure and Upgrade Investments:
- The company increased its full year 2025 capital plan to $240 million, including $150 million for sustaining and infrastructure and $86 million for upgrade and expansion.
- The increased capital plan is driven by customer demand for upgrades, particularly in Canadian heavy oil and gas-directed drilling.