Precision Drilling Corporation (NYSE:PDS) posted weaker-than-expected third-quarter earnings on Thursday, reporting a surprise loss as softer industry activity weighed on results. The company lost Cdn$0.51 per share, missing consensus forecasts for a profit of Cdn$1.48 per share. Revenue came in at Cdn$462.25 million, just below expectations of Cdn$465.63 million and down 3% from Cdn$477 million a year earlier.
The market reaction was muted, with the stock edging 0.05% higher in pre-market trading.
Lower drilling activity across North America was a key drag on performance, although the company fared better than the broader industry, which saw rig counts fall 15% in Canada and 7% in the U.S. Adjusted EBITDA slipped to Cdn$118 million from Cdn$142 million a year earlier, with results including Cdn$11 million in share-based compensation expenses.
The quarterly loss was also affected by higher deferred income tax expenses in the U.S., as the company waived certain deductions to offset minimum taxes stemming from stronger operational results.
“Precision’s third quarter not only achieved financial results that exceeded most expectations, but also demonstrated our ability to meet shareholder capital allocation commitments while continuing to strengthen our competitive position through fleet investments in key operating markets,” said Carey Ford, Precision’s President and Chief Executive Officer.
Despite a softer market backdrop, Precision maintained solid pricing power in Canada, where revenue per utilization day rose 6% year-over-year to Cdn$34,193. The company operated an average of 63 active rigs in Canada during the quarter, down 13% from a year earlier. In the U.S., the average rig count edged up to 36 from 35 in Q3 2024, but revenue per utilization day slipped to US$31,040 from US$32,949 amid pricing pressure.
Precision continued to chip away at its balance sheet, reaching its full-year debt reduction goal by cutting more than Cdn$100 million year to date. The company also repurchased Cdn$9 million of common stock in the third quarter, bringing total buybacks for the year to Cdn$54 million.
Looking ahead, Precision expects fourth-quarter activity levels to remain broadly stable year-over-year, with some potential upside. The company is targeting Canadian operating margins between Cdn$14,000 and Cdn$15,000 per utilization day and U.S. margins of US$8,000 to US$9,000 per utilization day.