Precision Drilling(US:PDS)2026-02-12 19:02Financial Data and Key Metrics Changes - The company recorded adjusted EBITDA of $126 million for Q4 2025, compared to $121 million in Q4 2024, reflecting a year-over-year increase [4] - A net loss of $42 million was reported, which included non-cash charges of $67 million for decommissioning drilling rigs and $17 million for drill pipe, while net income would have been positive $42 million without these charges [5] - The net debt to adjusted EBITDA ratio ended the year at 1.2 times, with a reduction in debt by CAD 101 million [2][13] Business Line Data and Key Metrics Changes - In Canada, drilling activity averaged 66 active rigs, an increase of 1 rig from Q4 2024, with daily operating margins reported at CAD 14,132, down from CAD 14,559 in Q4 2024 [5] - In the U.S., the average active rig count was 37, an increase of three rigs from the prior year, with daily operating margins of $8,754, slightly up from $8,700 in Q3 [7] - The CMP segment reported adjusted EBITDA of CAD 17 million, compared to CAD 16 million in Q4 2024, driven by increased well servicing demand in Canada [8] Market Data and Key Metrics Changes - Internationally, the company averaged seven active rigs, down from eight in the prior year, with international day rates averaging $53,505, an 8% increase from Q4 2024 [7][8] - The Canadian market outlook remains solid with supportive commodity prices and resilient demand for Super Series rigs, while the U.S. market outlook is generally flat with pockets of opportunity for performance differentiation [20] Company Strategy and Development Direction - The company aims to drive revenue growth and deepen customer relationships, focusing on performance and efficiency across various North American basins [16][18] - The strategy includes leveraging technology and digital platforms to optimize drilling and enhance customer communication, with a focus on capital-light initiatives [19] - The company plans to continue its long-term deleveraging journey while increasing free cash flow allocated to shareholders up to 50% [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Canadian market's medium to long-term outlook, citing strong takeaway capacity and deep resource inventories [20][54] - In the U.S., while the industry outlook is flat, the company expects to capture modest growth driven by performance differentiation and customer efficiency [20] - The company is exploring international growth opportunities, including a memorandum of understanding (MOU) in Argentina to provide idle rigs and digital technology [22][45] Other Important Information - Capital expenditures for 2025 were CAD 263 million, with CAD 156 million for sustaining and infrastructure and CAD 107 million for upgrades [9] - The company expects to incur $2 million in one-time charges related to rig reactivations in Q1 2026 [10] Q&A Session Summary Question: Context around the rig demobilization in Kuwait - The company has six rigs in Kuwait, with four active and two idle, looking for opportunities to deploy the idle rigs [26][27] Question: Potential upside in the U.S. market - Management indicated that growth opportunities are being driven by performance and efficiency discussions with customers across various basins [34] Question: Guidance on U.S. margin for Q1 - The expected margin range is $8,000-$9,000 per day, with mixed pricing trends across operating segments [40][41] Question: Details on the MOU in Argentina - The MOU aims to explore opportunities in Argentina with an established partner, focusing on performance and technology while reducing market risks [45] Question: Impact of customer changes on Canadian demand - Management noted no broad change in demand despite individual customer adjustments, maintaining a peak activity of 87 rigs in the winter drilling season [54]